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, 2011
Date of reporting period: July 1, 2010 through December 31, 2010
Item 1. Report to Stockholders
[LOGO]
December 31, 2010
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
(Unaudited)
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 adviser. 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;
Mississippi Tax-Free Income Series in 2000; and
Taxable Municipal Bond Series in 2010.
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 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) |
Six Months Ended December 31, 2010
The investment objective for our municipal bond funds is to provide a high level of tax-free income derived from state-specific municipal securities without incurring undue risk to principal. Similarly, the investment objective for our government bond fund is to provide a high level of income derived from securities of the U.S. Government and its agencies without incurring undue risk to principal. As a general rule, we do not try to anticipate market direction; instead, we attempt to buy high quality bonds at the best possible prices and hold them in down markets as well as up markets.
Factors which may influence the performance of a state-specific municipal bond fund include, but are not limited to, movements in interest rates, a downgrading or upgrading of credit ratings assigned to bonds issued by state or local governments, changes in the credit ratings assigned to bond insurers, downturns or upturns in the specific economies of a given state, the rate at which bonds are called, and the rate at which revenues are received by state and local governments which are used to pay debt service on issued bonds. Similarly, many factors may influence the performance of a government bond fund including, but not limited to, movements in interest rates, prevailing conditions in the U.S. Government securities markets, changes in an issuer’s financial strength, changes in the credit rating assigned to an obligation, and the rate at which bonds are called.
During the six month period ended December 31, 2010 (the “reporting period”), the economy continued to recover from the deep recession which began in December 2007. Real gross domestic product (GDP), a measure of the output of goods and services produced by labor and property in the United States, increased at an annual rate of 2.6 percent in the third quarter of 2010. Real GDP increased at a 3.2 percent annual rate (advance estimate) during the fourth quarter of 2010. The gradually improving economy was reflected in higher consumer and business spending during the second half of the year. For all of 2010, the economy expanded at an annual rate of 2.9 percent, in contrast to a decrease of 2.6 percent in 2009. While the economy has expanded, growth has been at a pace that has been insufficient to reduce the rate of unemployment significantly.
The Federal Reserve kept the fed funds target rate range unchanged at 0 to 1/4 percent during the reporting period. In addition to keeping policy interest rates stable, last summer the Federal Reserve modified its reinvestment policy to keep the Federal Reserve’s balance sheet from shrinking as mortgage-related securities matured or redeemed. Additionally, in early November the Federal Reserve announced a new plan to purchase an additional $600 billion in longer-term Treasury securities by mid-2011. The goal of the Federal Reserve’s quantitative easing program is to provide stimulus to the economy by keeping longer-term interest rates lower than they would be otherwise.
Conditions in the labor market continued to exhibit weakness during the reporting period. Private payrolls expanded at a below average rate of roughly 100,000 per month in 2010. The seasonally adjusted national unemployment rate remained elevated by historical standards and stood at 9.4 percent at the end of December. The housing market continued to show signs of weakness despite support from various government programs. An elevated supply of available homes and an overhang of foreclosed homes contributed to a further decline in home prices during the second half of the year.
Consumer price inflation continued to subside during the six month period ended December 31, 2010. The Federal Reserve’s preferred inflation measure, the personal consumption expenditures price index, increased at an annual rate of 1.3 percent in December. Core inflation, excluding food and energy, increased at an annual rate of 0.7 percent in December. Price declines were evident across a wide variety of goods and services. The exception to this was food, energy, and commodity prices which generally increased during the reporting period. Long-term inflation expectations remained well-anchored during the reporting period.
Interest rates at intermediate and longer maturities rose substantially during the reporting period with the bulk of the increase occurring in December. The yield on the benchmark 10-year Treasury note increased approximately 32 basis points and ended the year at 3.25 percent. The yield on the 30-year Treasury bond increased approximately 45 basis points and ended the year at 4.34 percent. The increase in Treasury yields primarily reflected renewed confidence in the economy and concerns that the passage of a package of fiscal measures would bolster economic growth and increase the deficit over coming quarters.
Yields in the municipal bond market moved higher in tandem with U.S. Treasuries during the reporting period. The yield on a 10-year AAA-rated municipal bond increased approximately 37 basis points during the second half of the year and ended the reporting period at 3.16 percent while yields on a 30-year AAA-rated municipal bond increased 66 basis points and ended the reporting period at 4.68 percent.
The municipal bond market experienced a significant selloff at the end of the year. The selloff was precipitated by a number of factors and/or events which all came together during the month of December. The sunset of the taxable Build America Bond (“BAB”) program on December 31st was perhaps the most important factor. Ultimately, the widely expected extension of the BAB program was not part of the tax compromise legislation agreed to in December by legislators. Yields in the tax-exempt market
i
increased dramatically in response to the expiration of the BAB program as market participants anticipated that the supply of tax-exempt bonds would increase substantially in 2011.
The main feature of the tax compromise legislation passed by Congress in December was an extension of the Bush-era marginal rates. The extension of the Bush tax cuts negatively impacted the tax-exempt market since higher marginal tax rates which were scheduled to be effective on January 1 would actually have been more supportive of tax-exempts (higher marginal rates make municipal bonds more attractive). The expiration of the BAB program and the fiscal package passed by Congress at year-end occurred at the same time that “headline risk” in the municipal bond market was reaching a peak. Ongoing fears about state budget deficits (particularly in a handful of states such as Illinois, California, Michigan, Pennsylvania, New York, and New Jersey) led to a significant outflow of funds from the municipal bond sector as investors pared their exposure to state and municipal debt. The ongoing headline risk in the municipal bond market added to price pressures at year-end.
A discussion of the performance of each of our funds for the six month period ended December 31, 2010 follows:
The Kentucky Tax-Free Income Series achieved a total return of -0.51% during the reporting period compared to a total return of -0.90% for the Barclays Capital Municipal Bond Index. The Kentucky Tax-Free Short-to-Medium Series achieved a total return of 0.29% during the period under review compared to a total return of -0.90% for the Barclays Capital Municipal Bond Index.
The Tennessee Tax-Free Income Series achieved a total return of -0.53% during the reporting period compared to a total return of - -0.90% for the Barclays Capital Municipal Bond Index. The Tennessee Tax-Free Short-to-Medium Series provided shareholders with a total return of 0.38% during the reporting period compared to -0.90% for the Barclays Capital Municipal Bond Index.
The North Carolina Tax-Free Income Series achieved a total return of -1.58% during the reporting period compared to -0.90% for the Barclays Capital Municipal Bond Index. The North Carolina Tax-Free Income Series had a nominal maturity of 16.85 years as of December 31, 2010, compared to a nominal maturity of 13.28 for the index. Longer-dated bonds generally underperformed shorter bonds in last year’s market environment, leading to the fund’s underperformance. The North Carolina Tax-Free Short-to-Medium Series achieved a total return of 1.04% during the reporting period compared to -0.90% for the Barclays Capital Municipal Bond Index.
The Alabama Tax-Free Income Series achieved a total a total return of -1.27% during the reporting period compared to -0.90% for the Barclays Capital Municipal Bond Index. The Alabama Tax-Free Income Series had a nominal maturity of 17.55 years as of December 31, 2010, compared with a nominal maturity of 13.28 for the index. Longer-dated bonds generally underperformed shorter bonds in last year’s market environment, leading to the fund’s underperformance.
The Mississippi Tax-Free Income Series achieved a total return of -0.80% during the reporting period compared to -0.90% for the Barclays Capital Municipal Bond Index.
The Intermediate Government Bond Series achieved a total return of -1.33% during the reporting period compared to 0.54% for the Barclays Capital U.S. Government Intermediate Bond Index. The Intermediate Government Bond Series had a significant number of higher coupon bonds that were called during the reporting period which caused it to underperform the index.
The Taxable Municipal Bond Series achieved a total return of -5.11% for the two month period ended December 31, 2010 compared with a total return of -3.30% for the Barclays Capital Taxable Municipal Bond Index during the same period. The Taxable Municipal Bond Series had a nominal maturity of 26.14 years as of December 31, 2010, compared to 20.77 years for the index. Longer-dated bonds generally underperformed in last year’s market environment, leading to the fund’s underperformance.
It should be noted that none of the Barclays Capital indices take into account any operating expenses or transaction costs. An investment cannot be made directly in an index.
Thank you for investing with Dupree Mutual Funds.
Total returns include changes in share price, reinvestment of dividends, and reinvestment of capital gains, if any. Performance data quoted represents past performance which is not a guarantee of future results. The opinions expressed herein are those of the funds’ portfolio management and are current as of December 31, 2010. Management’s opinions are not guarantees of performance or investment results and should not be taken as investment advice.
ii
| | | | | | |
| | The illustrations below provide each Fund’s sector allocation and summarize key information about each Fund’s investments. | | | Unaudited | |
| | | | |
Kentucky Tax-Free Income Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 10.90% | |
Aa/AA | | | 72.97% | |
A | | | 8.96% | |
Baa/BBB | | | 5.84% | |
Not Rated | | | 1.33% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Prerefunded | | | 4.61% | |
Lease Revenue | | | 12.34% | |
Municipal Utility Revenue | | | 2.35% | |
Hospital and Healthcare Revenue | | | 3.41% | |
State and Local Mortgage Revenue | | | 3.88% | |
University Consolidated Education and Building Revenue | | | 0.92% | |
Public Facilities Revenue | | | 1.10% | |
Insured Municipal | | | 65.68% | |
Escrowed to Maturity | | | 4.54% | |
Other Assets Less Liabilities | | | 1.17% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Kentucky Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 19.75% | |
Aa/AA | | | 75.54% | |
A | | | 3.23% | |
Baa/BBB | | | 1.48% | |
Not Rated | | | 0.00% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Prerefunded | | | 1.47% | |
Certificates of Participation | | | 1.13% | |
Lease Revenue | | | 14.90% | |
Municipal Utility Revenue | | | 3.26% | |
Hospital and Healthcare Revenue | | | 4.07% | |
State and Local Mortgage Revenue | | | 3.31% | |
Insured Municipal | | | 70.92% | |
Other Assets Less Liabilities | | | 0.94% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Alabama Tax-Free Income Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 7.35% | |
Aa/AA | | | 65.11% | |
A | | | 18.18% | |
Baa/BBB | | | 1.61% | |
Not Rated | | | 7.75% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
General Obligation | | | 8.71% | |
Lease Revenue | | | 1.93% | |
Municipal Utility Revenue | | | 4.61% | |
Industrial Revenue | | | 0.52% | |
University Consolidated Education and Building Revenue | | | 6.32% | |
Public Facilities Revenue | | | 0.52% | |
Insured Municipal | | | 76.26% | |
Other Assets Less Liabilities | | | 1.13% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Mississippi Tax-Free Income Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 16.12% | |
Aa/AA | | | 50.95% | |
A | | | 20.84% | |
Baa/BBB | | | 3.41% | |
Not Rated | | | 8.68% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
General Obligation | | | 1.61% | |
Prerefunded | | | 0.43% | |
Lease Revenue | | | 3.67% | |
University Consolidated Education and Building Revenue | | | 8.44% | |
Public Facilities Revenue | | | 2.50% | |
Insured Municipal | | | 79.41% | |
Escrowed to Maturity | | | 0.62% | |
Other Assets Less Liabilities | | | 3.32% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
iii
| | | | | | |
| | The illustrations below provide each Fund’s sector allocation and summarize key information about each Fund’s investments. | | | Unaudited | |
| | | | |
Tennessee Tax-Free Income Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 4.52% | |
Aa/AA | | | 69.37% | |
A | | | 18.00% | |
Baa/BBB | | | 4.73% | |
Not Rated | | | 3.38% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Prerefunded | | | 3.85% | |
General Obligation | | | 9.86% | |
Lease Revenue | | | 2.32% | |
Municipal Utility Revenue | | | 5.35% | |
Hospital and Healthcare Revenue | | | 6.70% | |
State and Local Mortgage Revenue | | | 6.70% | |
University Consolidated Education and Building Revenue | | | 7.95% | |
Public Facilities Revenue | | | 0.54% | |
Insured Municipal | | | 53.37% | |
Escrowed to Maturity | | | 2.46% | |
Other Assets Less Liabilities | | | 0.90% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Tennessee Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 20.91% | |
Aa/AA | | | 64.55% | |
A | | | 12.07% | |
Baa/BBB | | | 2.47% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Prerefunded | | | 9.32% | |
General Obligation | | | 7.45% | |
Lease Revenue | | | 6.49% | |
Municipal Utility Revenue | | | 4.63% | |
Hospital and Healthcare Revenue | | | 0.95% | |
Public Facilities Revenue | | | 3.26% | |
State and Local Mortgage Revenue | | | 5.24% | |
Insured Municipal | | | 61.20% | |
Other Assets Less Liabilities | | | 1.46% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
North Carolina Tax-Free Income Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 3.96% | |
Aa/AA | | | 71.29% | |
A | | | 20.12% | |
Baa/BBB | | | 3.26% | |
Not Rated | | | 1.37% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Prerefunded | | | 1.36% | |
General Obligation | | | 2.87% | |
Certificates of Participation | | | 14.53% | |
Lease Revenue | | | 4.96% | |
Municipal Utility Revenue | | | 5.06% | |
Hospital and Healthcare Revenue | | | 7.97% | |
State and Local Mortgage Revenue | | | 0.13% | |
University Consolidated Education and Building Revenue | | | 3.92% | |
Public Facilities Revenue | | | 6.65% | |
Insured Municipal | | | 51.31% | |
Escrowed to Maturity | | | 0.47% | |
Other Assets Less Liabilities | | | 0.77% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
North Carolina Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 28.33% | |
Aa/AA | | | 43.44% | |
A | | | 25.94% | |
Baa/BBB | | | 0.06% | |
Not Rated | | | 2.23% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
General Obligation | | | 1.46% | |
Prerefunded | | | 1.62% | |
Certificates of Participation | | | 14.81% | |
Lease Revenue | | | 2.92% | |
Municipal Utility Revenue | | | 5.94% | |
Hospital and Healthcare Revenue | | | 4.08% | |
State and Local Mortgage Revenue | | | 0.65% | |
University Consolidated Education and Building Revenue | | | 3.79% | |
Public Facilities Revenue | | | 3.83% | |
Insured Municipal | | | 58.92% | |
Other Assets Less Liabilities | | | 1.98% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
iv
| | | | | | |
| | The illustrations below provide each Fund’s sector allocation and summarize key information about each Fund’s investments. | | | Unaudited | |
| | | | |
Intermediate Government Bond Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Federal Farm Credit | | | 53.33% | |
Federal Home Loan Bank | | | 30.41% | |
Federal Home Loan Mortgage | | | 3.02% | |
Federal National Mortgage Association | | | 7.39% | |
Student Loan Marketing Association | | | 4.44% | |
Other Assets Less Liabilities | | | 1.41% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | |
| | | | |
| | | | |
Taxable Municipal Bond Series | |
| CREDIT QUALITY | | % of Net Assets
at Market | |
Aaa/AAA | | | 6.13% | |
Aa/AA | | | 89.73% | |
A | | | 4.14% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
General Obligation | | | 17.46% | |
Certificates of Participation | | | 15.98% | |
Lease Revenue | | | 21.97% | |
Municipal Utility Revenue | | | 16.27% | |
University Consolidated Education and Building Revenue | | | 3.45% | |
Turnpike Road Revenue | | | 2.71% | |
Insured Municipal | | | 19.48% | |
Other Assets Less Liabilities | | | 2.68% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
v
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 76.26% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
AL Drinking Water Finance Authority Revolving Fund Loan | | | | | | | 4.750 | % | | | 08/15/2027 | | | NR | | $ | 75,000 | | | $ | 70,951 | |
AL Housing Finance Authority Single Family Mortgage Revenue | | | | | | | 5.375 | | | | 10/01/2033 | | | Aaa | | | 200,000 | | | | 202,918 | |
AL Private College & Universities Facilities Authority Revenue | | | | | | | 4.750 | | | | 09/01/2026 | | | AA+* | | | 500,000 | | | | 468,915 | |
AL State Board Education Bishop State Community College | | | | | | | 4.600 | | | | 01/01/2021 | | | A1 | | | 100,000 | | | | 100,531 | |
AL State Board of Education Revenue Calhoun Community | | | # | | | | 5.000 | | | | 05/01/2022 | | | A1 | | | 450,000 | | | | 460,341 | |
AL State University Revenue General Tuition & Fee -Series A | | | # | | | | 5.000 | | | | 01/01/2019 | | | A2/A* | | | 50,000 | | | | 51,518 | |
AL State University Revenue General Tuition and Fee | | | | | | | 5.000 | | | | 08/01/2026 | | | A2/A* | | | 150,000 | | | | 150,791 | |
AL State University Revenue General Tuition and Fee | | | | | | | 5.250 | | | | 09/01/2034 | | | Aa3/AA+* | | | 75,000 | | | | 75,879 | |
AL Water Pollution Control Authority Revolving Fund Loan | | | | | | | 4.800 | | | | 08/15/2018 | | | NR | | | 50,000 | | | | 50,454 | |
AL Water Pollution Control Authority Revolving Fund Loan | | | | | | | 4.800 | | | | 08/15/2022 | | | NR | | | 170,000 | | | | 160,009 | |
AL Water Pollution Control Authority Revolving Fund Loan | | | | | | | 5.000 | | | | 08/15/2026 | | | NR | | | 130,000 | | | | 121,170 | |
Albertville AL Warrants | | | | | | | 5.000 | | | | 02/01/2035 | | | AA+* | | | 110,000 | | | | 110,503 | |
Alexander City AL Warrants | | | | | | | 4.700 | | | | 05/01/2021 | | | Baa1/A* | | | 200,000 | | | | 201,878 | |
Auburn AL Capital Improvement School Warrants | | | | | | | 5.000 | | | | 08/01/2030 | | | Aa2/AA+* | | | 260,000 | | | | 262,743 | |
Auburn University AL General Fee Revenue — Series A | | | | | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA+* | | | 45,000 | | | | 44,998 | |
Auburn University AL General Fee Revenue — Series A | | | | | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA+* | | | 300,000 | | | | 307,092 | |
Auburn University AL General Fee Revenue — Series A | | | | | | | 5.000 | | | | 06/01/2033 | | | Aa2/AA+* | | | 420,000 | | | | 411,659 | |
Auburn University AL General Fee Revenue — Series A | | | # | | | | 5.000 | | | | 06/01/2038 | | | Aa2/AA+* | | | 600,000 | | | | 586,830 | |
Baldwin County AL Water and Sewer Series A General Obligation | | | | | | | 5.000 | | | | 01/01/2025 | | | Aa1/AA+* | | | 295,000 | | | | 305,138 | |
Bessemer AL Public Educational Building Authority Revenue | | | | | | | 5.000 | | | | 07/01/2030 | | | AA+* | | | 250,000 | | | | 252,638 | |
Chatom AL Industrial Board Gulf Opportunity Zone | | | | | | | 5.000 | | | | 08/01/2037 | | | Aa3/AA+*/A-@ | | | 150,000 | | | | 145,277 | |
Choctaw County AL Revenue School Warrants | | | | | | | 4.700 | | | | 03/01/2017 | | | NR | | | 200,000 | | | | 185,188 | |
Cullman County AL Water Revenue | | | | | | | 5.000 | | | | 05/01/2021 | | | Baa1/A+* | | | 125,000 | | | | 129,971 | |
Daphne AL Warrants | | | | | | | 5.000 | | | | 04/01/2023 | | | Aa2/AA* | | | 250,000 | | | | 257,893 | |
Elmore County AL Limited Obligation School Warrants | | | | | | | 5.000 | | | | 02/01/2022 | | | Aa3/AA+* | | | 190,000 | | | | 197,230 | |
Elmore County AL Public Education Cooperative | | | | | | | 5.000 | | | | 08/01/2032 | | | Aa3 | | | 50,000 | | | | 46,032 | |
Enterprise AL Water General Obligation | | | | | | | 5.000 | | | | 10/01/2019 | | | NR | | | 55,000 | | | | 57,244 | |
Enterprise AL Water General Obligation | | | | | | | 5.000 | | | | 10/01/2023 | | | NR | | | 450,000 | | | | 458,429 | |
Gadsden AL Warrants — Series B | | | | | | | 4.600 | | | | 08/01/2022 | | | NR | | | 100,000 | | | | 100,685 | |
Hoover AL Board of Education Capital Outlay Warrants | | | | | | | 4.750 | | | | 02/15/2024 | | | Aa2/AA+* | | | 250,000 | | | | 258,585 | |
Huntsville AL Health Care Authority — Series A | | | | | | | 5.000 | | | | 06/01/2024 | | | A2/BBB* | | | 100,000 | | | | 98,460 | |
Huntsville AL Public Building Authority Lease Revenue | | | | | | | 5.000 | | | | 10/01/2027 | | | Aa1/AA+* | | | 375,000 | | | | 383,039 | |
Huntsville AL Public Building Authority Lease Revenue | | | | | | | 5.000 | | | | 10/01/2033 | | | Aa1/AA+* | | | 175,000 | | | | 173,810 | |
Huntsville AL Water Systems Revenue | | | | | | | 5.000 | | | | 11/01/2033 | | | Aa1/AAA* | | | 300,000 | | | | 297,960 | |
Jacksonville AL State University Revenue Tuition and Fee | | | | | | | 5.125 | | | | 12/01/2033 | | | AA+* | | | 450,000 | | | | 437,274 | |
Lee County AL School Warrants | | | | | | | 5.000 | | | | 02/01/2018 | | | Aa2 | | | 100,000 | | | | 105,042 | |
Lee County AL School Warrants Limited Obligation | | | | | | | 5.000 | | | | 02/01/2021 | | | Aa2 | | | 75,000 | | | | 77,270 | |
Limestone County AL Water & Sewer Authority Water Revenue | | | | | | | 5.000 | | | | 12/01/2029 | | | A+* | | | 275,000 | | | | 260,491 | |
Linden AL Warrants | | | | | | | 5.250 | | | | 06/01/2023 | | | NR | | | 25,000 | | | | 25,198 | |
Madison County AL Board of Education Capital Outlay Tax | | | | | | | 4.950 | | | | 09/01/2025 | | | AA+* | | | 100,000 | | | | 102,883 | |
Madison County AL Board of Education Capital Outlay Tax | | | | | | | 5.100 | | | | 09/01/2028 | | | AA+* | | | 285,000 | | | | 288,950 | |
Madison County AL Board of Education Capital Outlay Tax | | | | | | | 5.125 | | | | 09/01/2034 | | | AA+* | | | 505,000 | | | | 496,466 | |
Mobile AL Limited Obligation Tax Warrants | | | | | | | 5.500 | | | | 02/15/2023 | | | Ba2 | | | 35,000 | | | | 34,602 | |
Mobile AL Public Education Building Authority | | | | | | | 5.000 | | | | 03/01/2033 | | | Aa3/AA+*/AA-@ | | | 200,000 | | | | 195,530 | |
Montgomery AL Waterworks & Sanitation Sewer Board Revenue | | | | | | | 5.000 | | | | 03/01/2025 | | | Aa2/AAA* | | | 250,000 | | | | 256,403 | |
Montgomery County AL Warrants | | | | | | | 5.000 | | | | 03/01/2028 | | | Aa1/AA* | | | 175,000 | | | | 179,086 | |
Montgomery County AL Public Building Authority Revenue | | | | | | | 5.000 | | | | 03/01/2031 | | | Aa2/AA-* | | | 175,000 | | | | 175,303 | |
Morgan County AL Water and Sewer General Obligation Warrants | | | | | | | 5.000 | | | | 04/01/2028 | | | Aa3 | | | 100,000 | | | | 100,647 | |
Morgan County AL Warrants | | | | | | | 5.000 | | | | 04/01/2029 | | | Aa3 | | | 25,000 | | | | 25,095 | |
Muscle Shoals AL Refunded Warrants | | | | | | | 4.600 | | | | 08/01/2024 | | | Aa3 | | | 250,000 | | | | 250,808 | |
North Marshall AL Utilities Board Water Revenue | | | | | | | 5.100 | | | | 10/01/2030 | | | AA+* | | | 375,000 | | | | 375,918 | |
Opelika AL Water Board Revenue | | | | | | | 5.000 | | | | 06/01/2037 | | | Aa3/AA+* | | | 250,000 | | | | 244,960 | |
Phenix City AL Schools Warrants — Series B | | | | | | | 5.000 | | | | 08/01/2024 | | | A+* | | | 200,000 | | | | 205,476 | |
Phenix City AL Water & Sewer Revenue | | | | | | | 5.000 | | | | 08/15/2034 | | | Aa3/AA+*/AA-@ | | | 40,000 | | | | 39,943 | |
Roanoke AL Warrants | | | | | | | 4.450 | | | | 05/01/2020 | | | NR | | | 150,000 | | | | 151,638 | |
St Clair County AL Board Education School Tax Warrants | | | | | | | 4.400 | | | | 02/01/2022 | | | Aa3/AA+* | | | 50,000 | | | | 50,530 | |
The accompanying footnotes are an integral part of the financial statements.
1
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
Shelby County AL Board of Education Special Tax School Warrants | | | | | | | 5.000 | % | | | 02/01/2025 | | | Aa3/A+* | | $ | 300,000 | | | $ | 302,664 | |
Talladega County AL Industrial Development Revenue | | | | | | | 4.700 | | | | 01/01/2022 | | | Baa3 | | | 100,000 | | | | 88,312 | |
Trussville AL Warrants | | | | | | | 4.800 | | | | 10/01/2021 | | | Aa2 | | | 85,000 | | | | 87,127 | |
Tuscaloosa AL Warrants | | | | | | | 5.000 | | | | 01/01/2030 | | | Aa1/AA+* | | | 150,000 | | | | 151,460 | |
Tuscaloosa AL Public Education Building Authority | | | | | | | 6.375 | | | | 07/01/2028 | | | AA+* | | | 250,000 | | | | 274,555 | |
Tuscaloosa AL Public Education Building Authority | | | | | | | 6.750 | | | | 07/01/2033 | | | AA+* | | | 475,000 | | | | 519,318 | |
University of AL General Revenue — Series A | | | | | | | 5.000 | | | | 07/01/2032 | | | Aa2/AA-*/AA@ | | | 500,000 | | | | 504,060 | |
University of AL General Revenue — Series A | | | | | | | 5.000 | | | | 07/01/2034 | | | Aa2/AA-*/AA@ | | | 350,000 | | | | 350,333 | |
University of AL General Revenue — Series A | | | | | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA-*/AA@ | | | 325,000 | | | | 332,998 | |
University South AL University Revenues Refunding Tuition | | | | | | | 5.000 | | | | 12/01/2029 | | | Aa1/AAA* | | | 105,000 | | | | 105,527 | |
University of Southern AL University Revenues Facilities | | | | | | | 5.000 | | | | 08/01/2029 | | | Aa1/AA+* | | | 550,000 | | | | 553,421 | |
West Morgan — East Lawrence Water Authority AL Water Revenue | | | | | | | 5.000 | | | | 08/15/2025 | | | Aa3/AA+* | | | 300,000 | | | | 315,597 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 14,851,644 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 8.71% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
AL State — Series A | | | | | | | 4.625 | | | | 09/01/2022 | | | Aa1/AA* | | | 100,000 | | | | 103,276 | |
AL 21st Century Authority Tobacco Settlement Revenue | | | | | | | 5.750 | | | | 12/01/2020 | | | Baa1/A-* | | | 50,000 | | | | 50,031 | |
AL 21st Century Authority Tobacco Settlement Revenue | | | | | | | 5.850 | | | | 12/01/2013 | | | Baa1/A-* | | | 15,000 | | | | 15,317 | |
Mobile AL Refunding Warrants — Series A | | | | | | | 5.000 | | | | 02/15/2027 | | | Aa2/AA-* | | | 335,000 | | | | 341,248 | |
Montgomery AL Warrants — Series A | | | | | | | 5.000 | | | | 02/01/2030 | | | Aa1/AA+* | | | 300,000 | | | | 304,580 | |
Montgomery AL Warrants — Series C General Obligation Unlimited | | | # | | | | 5.000 | | | | 01/01/2023 | | | Aa1/AA+*/AAA@ | | | 580,000 | | | | 613,044 | |
Sumter County AL Limited Obligation School Warrants | | | | | | | 5.100 | | | | 02/01/2034 | | | A* | | | 100,000 | | | | 94,675 | |
Tuscaloosa AL Warrants — Series A | | | | | | | 5.000 | | | | 10/15/2034 | | | Aa1/AA+* | | | 175,000 | | | | 174,263 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,696,434 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 6.32% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
AL State Public School & College Authority Capital Improvement | | | | | | | 5.000 | | | | 12/01/2024 | | | Aa1/AA* | | | 250,000 | | | | 260,668 | |
AL State Public School & College Authority Capital | | | # | | | | 5.000 | | | | 12/01/2025 | | | Aa1/AA* | | | 640,000 | | | | 662,272 | |
AL State Public Schools & College Authority Refinancing | | | | | | | 5.000 | | | | 05/01/2024 | | | Aa1/AA*/AA+@ | | | 125,000 | | | | 132,594 | |
Auburn University AL General Fee Revenue | | | | | | | 5.000 | | | | 06/01/2022 | | | Aa2/AA-* | | | 50,000 | | | | 53,212 | |
Mobile AL Spring Hill College Educational Building | | | | | | | 5.100 | | | | 09/01/2019 | | | Ba2 | | | 120,000 | | | | 122,520 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,231,266 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 4.61% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Jasper AL Water Works and Sewer Board Utility Revenue | | | | | | | 5.000 | | | | 06/01/2030 | | | A+* | | | 455,000 | | | | 448,862 | |
Muscle Shoals AL Utilities Board Water & Sewer Revenue | | | | | | | 5.750 | | | | 12/01/2033 | | | AA-* | | | 430,000 | | | | 449,135 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 897,997 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 1.93% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
AL Incentives Financing Authority Special Obligation | | | | | | | 5.000 | | | | 09/01/2029 | | | AA+* | | | 125,000 | | | | 125,602 | |
University of Alabama General Revenue — Series A | | | | | | | 5.000 | | | | 07/01/2034 | | | Aa2/AA-* | | | 250,000 | | | | 250,930 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 376,532 | |
| INDUSTRIAL REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| .52% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Auburn AL Industrial Development Board Facilities Revenue | | | | | | | 5.800 | | | | 11/01/2011 | | | A+* | | | 75,000 | | | | 75,908 | |
Auburn AL Industrial Development Board Facilities Revenue | | | | | | | 6.200 | | | | 11/01/2020 | | | A+* | | | 25,000 | | | | 25,023 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 100,931 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| .52% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Rockford AL Public Building Authority Building Revenue | | | | | | | 5.750 | | | | 09/01/2015 | | | NR | | | 10,000 | | | | 10,002 | |
Sumter County AL Limited Obligation School Warrants | | | | | | | 5.200 | | | | 02/01/2039 | | | A* | | | 95,000 | | | | 90,811 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 100,813 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $19,621,585) (See (a) below for further explanation) 98.87% of Net Assets | | | | | | | | | $ | 19,255,617 | |
| | | | | | | | | | | | | | | | | | | | | | |
The accompanying footnotes are an integral part of the financial statements.
2
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100%
December 31, 2010
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 78,951 | |
| | Unrealized depreciation | | | (444,919 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (365,968 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
| | | | | | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 19,255,617 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 19,255,617 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
3
ALABAMA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $19,621,585) | | | | | | $ | 19,255,617 | |
Cash | | | | | | | 29,499 | |
Interest receivable | | | | | | | 291,665 | |
Prepaid expenses | | | | | | | 758 | |
| | | | | | | | |
Total assets | | | | | | | 19,577,539 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 78,943 | | | | | |
Fund shares redeemed | | | 4,353 | | | | | |
Investment advisory fee | | | 5,708 | | | | | |
Transfer agent fee | | | 840 | | | | | |
Accrued expenses | | | 12,676 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 102,520 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 19,882,397 | |
Net accumulated realized loss on investment transactions | | | | | | | (41,410 | ) |
Net unrealized depreciation in value of investments | | | | | | | (365,968 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 19,475,019 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($19,475,019 -:- 1,707,854 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.40 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 451,375 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 51,811 | |
Transfer agent fee | | | 15,446 | |
Custodian expense | | | 1,700 | |
Professional fees | | | 6,453 | |
Trustee fees | | | 1,084 | |
Other expenses | | | 3,292 | |
| | | | |
Total expenses | | | 79,786 | |
Fees waived by Adviser | | | (22,367 | ) |
Custodian expense reduction | | | (119 | ) |
| | | | |
Net expenses | | | 57,300 | |
| | | | |
Net investment income | | | 394,075 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized gain | | | 24,700 | |
Net change in unrealized appreciation/depreciation | | | (677,326 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (652,626 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (258,551 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
4
ALABAMA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 394,075 | | | $ | 656,017 | |
Net realized gain/(loss) on investments | | | 24,700 | | | | 20,127 | |
Net change in unrealized appreciation/depreciation | | | (677,326 | ) | | | 470,753 | |
| | | | | | | | |
Net increase/decrease in net assets resulting from operations | | | (258,551 | ) | | | 1,146,897 | |
Distributions from net investment income | | | (394,075 | ) | | | (656,017 | ) |
Net fund share transactions (Note 4) | | | 274,613 | | | | 5,100,485 | |
| | | | | | | | |
Total increase/decrease | | | (378,013 | ) | | | 5,591,365 | |
Net assets: | | | | | | | | |
Beginning of period | | | 19,853,032 | | | | 14,261,667 | |
| | | | | | | | |
End of period | | $ | 19,475,019 | | | $ | 19,853,032 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/2010 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $11.77 | | | | $11.40 | | | | $11.43 | | | | $11.59 | | | | $11.52 | | | | $11.91 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.23 | | | | 0.46 | | | | 0.46 | | | | 0.46 | | | | 0.47 | | | | 0.47 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.37 | ) | | | 0.37 | | | | (0.03 | ) | | | (0.14 | ) | | | 0.07 | | | | (0.39 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.14 | ) | | | 0.83 | | | | 0.43 | | | | 0.32 | | | | 0.54 | | | | 0.08 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.23 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.47 | ) | | | (0.47 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | (0.02 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.40 | | | | $11.77 | | | | $11.40 | | | | $11.43 | | | | $11.59 | | | | $11.52 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | (1.27% | )(b) | | | 7.40% | | | | 3.95% | | | | 2.84% | | | | 4.70% | | | | 0.65% | |
Net assets, end of period (in thousands) | | | $19,475 | | | | $19,853 | | | | $14,262 | | | | $13,537 | | | | $11,810 | | | | $10,754 | |
Ratio of net expenses to average net assets (a) | | | 0.56% | (c) | | | 0.47% | | | | 0.45% | | | | 0.45% | | | | 0.43% | | | | 0.46% | |
Ratio of net investment income to average net assets | | | 3.84% | (c) | | | 3.94% | | | | 4.14% | | | | 4.00% | | | | 4.00% | | | | 3.97% | |
Portfolio turnover | | | 7.56% | (c) | | | 15.73% | | | | 14.06% | | | | 8.46% | | | | 5.43% | | | | 7.72% | |
| (a) | | Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions. |
| | | Expenses waived by the Adviser and expense reductions by the Custodian were as follows: |
| | | | | | | | |
| Adviser | | | Custodian | | | |
| | .22% | (c) | | | 0% | (c) | | For the six months ended December 31, 2010. |
| | .33% | | | | 0% | | | For the year ended June 30, 2010 |
| | .37% | | | | .03% | | | For the year ended June 30, 2009 |
| | .35% | | | | .04% | | | For the year ended June 30, 2008 |
| | .37% | | | | .04% | | | For the year ended June 30, 2007 |
| | .38% | | | | .05% | | | For the year ended June 30, 2006 |
The accompanying notes are an integral part of the financial statements.
5
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 65.68% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Ballard County KY School District Finance Corporation | | | | | | | 5.000 | % | | | 06/01/2020 | | | Aa2 | | $ | 1,240,000 | | | $ | 1,300,996 | |
Barren County KY School District Finance Corporation | | | | | | | 4.750 | | | | 08/01/2022 | | | Aa2 | | | 3,085,000 | | | | 3,180,111 | |
Boone County KY Pollution Control Revenue — Dayton Power | | | | | | | 4.700 | | | | 01/01/2028 | | | Aa3/A* | | | 12,445,000 | | | | 11,924,426 | |
Boone County KY School District Finance Corporation | | | | | | | 5.000 | | | | 05/01/2023 | | | Aa2 | | | 4,070,000 | | | | 4,203,293 | |
Boone County KY School District Finance Corporation | | | | | | | 5.000 | | | | 05/01/2024 | | | Aa2 | | | 4,265,000 | | | | 4,381,861 | |
Boone County KY Water — Florence | | | | | | | 5.000 | | | | 12/01/2015 | | | Aa3 | | | 1,000,000 | | | | 1,040,560 | |
Boyle County KY College Improvement — Centre College — A | | | | | | | 4.750 | | | | 06/01/2032 | | | A3/A-* | | | 5,330,000 | | | | 5,061,741 | |
Bullitt County KY School District Finance Corporation | | | | | | | 4.750 | | | | 07/01/2022 | | | Aa2 | | | 2,440,000 | | | | 2,506,417 | |
Bullitt County KY School District Finance Corporation | | | # | | | | 4.500 | | | | 10/01/2024 | | | Aa2 | | | 2,720,000 | | | | 2,730,064 | |
Campbell & Kenton Counties Sanitary District No. 1 | | | | | | | 5.000 | | | | 08/01/2025 | | | Aa2/AA* | | | 2,395,000 | | | | 2,499,901 | |
Campbell & Kenton Counties Sanitary Sewer | | | | | | | 5.000 | | | | 08/01/2026 | | | Aa2/AA* | | | 4,175,000 | | | | 4,328,724 | |
Campbell & Kenton Counties Sanitary Sewer | | | | | | | 5.000 | | | | 08/01/2027 | | | Aa2/AA* | | | 4,385,000 | | | | 4,528,740 | |
Campbell & Kenton Counties Sanitary Sewer | | | | | | | 5.000 | | | | 08/01/2017 | | | Aa2/AA+* | | | 1,000,000 | | | | 1,036,680 | |
Campbell County KY School District Finance Corporation | | | | | | | 4.500 | | | | 08/01/2023 | | | Aa2 | | | 980,000 | | | | 992,025 | |
Carter County KY Detention Center | | | | | | | 5.125 | | | | 05/01/2029 | | | Aa3 | | | 960,000 | | | | 971,357 | |
Eastern Kentucky University Consolidated Educational Building | | | | | | | 5.000 | | | | 05/01/2021 | | | A1/A* | | | 1,580,000 | | | | 1,659,458 | |
Fayette County KY School District Finance Corporation | | | | | | | 5.000 | | | | 04/01/2024 | | | Aa2/AA+* | | | 6,985,000 | | | | 7,307,847 | |
Fayette County KY School District Finance Corporation | | | | | | | 5.000 | | | | 04/01/2025 | | | Aa2/AA+* | | | 7,340,000 | | | | 7,638,371 | |
Fayette County KY School District Finance Corporation | | | | | | | 4.500 | | | | 03/01/2022 | | | Aa2/AA+* | | | 4,100,000 | | | | 4,152,972 | |
Franklin County School Building Revenue | | | | | | | 4.750 | | | | 05/01/2027 | | | Aa2 | | | 3,570,000 | | | | 3,577,497 | |
Greater KY Housing Assistance Corporation — Chenowith Woods | | | | | | | 6.100 | | | | 01/01/2024 | | | Baa1/BBB* | | | 460,000 | | | | 460,046 | |
Greater KY Housing Assistance Corporation — Northside Apts | | | | | | | 6.200 | | | | 02/01/2025 | | | AAA* | | | 3,320,000 | | | | 3,320,133 | |
Greater KY Housing Assistance Corporation Mortgage Revenue | | | | | | | 5.450 | | | | 05/20/2027 | | | Aaa | | | 1,115,000 | | | | 1,125,871 | |
Hardin County School District Finance Corporation | | | | | | | 4.750 | | | | 06/01/2027 | | | Aa2 | | | 1,250,000 | | | | 1,254,063 | |
Jefferson County KY Health Facilities — Jewish Hospital | | | | | | | 5.650 | | | | 01/01/2017 | | | Baa1/A-* | | | 3,450,000 | | | | 3,451,104 | |
Jefferson County KY Health Facilities — Jewish Hospital | | | | | | | 5.700 | | | | 01/01/2021 | | | Baa1/A-* | | | 4,520,000 | | | | 4,520,316 | |
Jefferson County KY Health Facilities University Medical Center | | | | | | | 5.500 | | | | 07/01/2017 | | | Baa1/BBB* | | | 8,675,000 | | | | 8,675,521 | |
Jefferson County KY School District Finance Corporation | | | | | | | 4.750 | | | | 12/01/2026 | | | Aa2/AA+* | | | 3,770,000 | | | | 3,800,801 | |
Jefferson County KY School District Finance Corporation | | | | | | | 4.500 | | | | 07/01/2023 | | | Aa2/AA+* | | | 2,500,000 | | | | 2,534,025 | |
Jefferson County KY School District Finance Corporation | | | | | | | 4.625 | | | | 07/01/2025 | | | Aa2/AA+* | | | 7,545,000 | | | | 7,579,481 | |
Jefferson County KY School District Finance Corporation | | | | | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+* | | | 5,025,000 | | | | 5,156,052 | |
Jefferson County KY Health Facilities — Alliant Health | | | | | | | 5.125 | | | | 10/01/2017 | | | Baa1/BBB*/A-@ | | | 2,940,000 | | | | 2,941,264 | |
Jefferson County School District Finance Corporation | | | | | | | 4.750 | | | | 06/01/2027 | | | Aa3/AA-* | | | 3,000,000 | | | | 2,979,600 | |
Kenton County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2021 | | | Aa2 | | | 4,055,000 | | | | 4,267,847 | |
Kenton County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2023 | | | Aa2 | | | 4,465,000 | | | | 4,668,515 | |
Kenton County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2024 | | | Aa2 | | | 4,665,000 | | | | 4,885,281 | |
KY Asset Liability Commission General Fund | | | | | | | 5.000 | | | | 05/01/2020 | | | Aa2/A+*/AA-@ | | | 2,000,000 | | | | 2,109,660 | |
KY Asset Liability Commission Project Notes | | | | | | | 5.000 | | | | 05/01/2023 | | | Aa2/A+*/AA-@ | | | 5,600,000 | | | | 5,827,248 | |
KY Asset Liability Commission General Fund | | | | | | | 5.000 | | | | 05/01/2024 | | | Aa2/A+*/AA-@ | | | 5,880,000 | | | | 6,118,610 | |
KY Asset Liability Commission | | | | | | | 5.000 | | | | 05/01/2025 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,034,540 | |
KY Asset Liability Project Notes | | | | | | | 5.000 | | | | 09/01/2015 | | | Aa2/AA*/AA-@ | | | 6,000,000 | | | | 6,665,160 | |
KY Asset Liability Commission Federal Highway | | | | | | | 5.250 | | | | 09/01/2019 | | | Aa2/AA*/AA-@ | | | 1,765,000 | | | | 2,006,823 | |
Ky Asset Liability Commission University of KY | | | | | | | 5.000 | | | | 10/01/2024 | | | Aa2/AA-* | | | 5,445,000 | | | | 5,662,637 | |
KY Asset Liability Commission University of KY Project Notes | | | | | | | 5.000 | | | | 10/01/2026 | | | Aa2/AA-* | | | 6,090,000 | | | | 6,261,555 | |
KY Asset Liability Commission University of KY Project Notes | | | | | | | 5.000 | | | | 10/01/2023 | | | Aa2/AA-* | | | 8,075,000 | | | | 8,431,350 | |
KY Asset Liability Commission University of KY Project Notes | | | | | | | 5.000 | | | | 10/01/2024 | | | Aa2/AA-* | | | 7,405,000 | | | | 7,735,041 | |
KY Asset Liability Commission University of KY Project Notes | | | | | | | 5.000 | | | | 10/01/2025 | | | Aa2/AA-* | | | 3,700,000 | | | | 3,843,782 | |
KY Economic Development Finance Authority — Methodist Hospital | | | | | | | 5.625 | | | | 02/01/2017 | | | NR | | | 6,500,000 | | | | 6,501,300 | |
KY Economic Development Finance Authority — Christian Care | | | | | | | 5.375 | | | | 11/20/2035 | | | AAA* | | | 1,805,000 | | | | 1,843,844 | |
Kentucky Economic Development Authority — Louisville Arena | | | | | | | 5.750 | | | | 12/01/2028 | | | Aa3/AA+* | | | 625,000 | | | | 647,063 | |
KY Economic Development Authority — Louisville Arena | | | | | | | 6.000 | | | | 12/01/2033 | | | Aa3/AA+* | | | 1,000,000 | | | | 1,028,220 | |
KY Housing Corporation | | | | | | | 4.750 | | | | 07/01/2017 | | | Aaa/AAA* | | | 1,335,000 | | | | 1,335,000 | |
KY Housing Corporation | | | | | | | 4.400 | | | | 01/01/2017 | | | Aaa/AAA* | | | 1,000,000 | | | | 1,018,000 | |
KY Housing Corporation | | | | | | | 5.200 | | | | 01/01/2031 | | | Aaa/AAA* | | | 1,000,000 | | | | 988,970 | |
KY Housing Corporation | | | | | | | 4.650 | | | | 07/01/2023 | | | Aaa/AAA* | | | 3,595,000 | | | | 3,602,190 | |
KY Housing Corporation Country Place Apartments | | | | | | | 4.750 | | | | 04/20/2031 | | | AAA* | | | 935,000 | | | | 881,434 | |
The accompanying footnotes are an integral part of the financial statements.
6
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
KY State Property & Building #93 | | | | | | | 5.250 | % | | | 02/01/2025 | | | Aa2/AA+*/AA-@ | | $ | 7,250,000 | | | $ | 7,584,733 | |
KY State Property & Building #93 | | | | | | | 4.875 | | | | 02/01/2028 | | | Aa2/AA+*/AA-@ | | | 500,000 | | | | 497,395 | |
KY State Property & Building #93 | | | | | | | 5.000 | | | | 02/01/2029 | | | Aa2/AA+*/AA-@ | | | 500,000 | | | | 502,285 | |
KY State Property & Building #93 | | | | | | | 5.250 | | | | 02/01/2029 | | | Aa2/AA+*/AA-@ | | | 14,035,000 | | | | 14,274,577 | |
KY State Property & Building #76 | | | | | | | 5.500 | | | | 08/01/2021 | | | Aa2/A+*/AA-@ | | | 1,400,000 | | | | 1,575,840 | |
KY State Property & Building #73 | | | | | | | 5.000 | | | | 11/01/2021 | | | Aa2/AA+*/AA-@ | | | 1,000,000 | | | | 1,038,460 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2019 | | | Aa2/A+*/AA-@ | | | 3,000,000 | | | | 3,250,950 | |
KY State Property & Building #83 | | | | | | | 5.000 | | | | 10/01/2013 | | | Aa2/A+*/AA-@ | | | 610,000 | | | | 666,253 | |
KY State Property & Building #83 | | | | | | | 5.000 | | | | 10/01/2017 | | | Aa2/A+*/AA-@ | | | 5,000,000 | | | | 5,622,950 | |
KY State Property & Building #83 | | | | | | | 5.000 | | | | 10/01/2018 | | | Aa2/A+*/AA-@ | | | 17,750,000 | | | | 19,823,378 | |
KY State Property & Building #83 | | | # | | | | 5.250 | | | | 10/01/2020 | | | Aa2/A+*/AA-@ | | | 24,220,000 | | | | 26,932,398 | |
KY State Property & Building #73 | | | | | | | 5.500 | | | | 11/01/2017 | | | Aa2/AA+*/AA-@ | | | 1,000,000 | | | | 1,058,010 | |
KY State Property & Building #73 | | | | | | | 5.000 | | | | 11/01/2019 | | | Aa2/AA+*/AA-@ | | | 1,360,000 | | | | 1,420,506 | |
KY State Property & Building #73 | | | | | | | 5.000 | | | | 11/01/2020 | | | Aa2/AA+*/AA-@ | | | 3,255,000 | | | | 3,397,406 | |
KY State Property & Building #84 | | | | | | | 5.000 | | | | 08/01/2019 | | | Aa2/A+*/AA-@ | | | 10,000,000 | | | | 11,048,800 | |
KY State Property & Building #84 | | | | | | | 5.000 | | | | 08/01/2021 | | | Aa2/A+*/AA-@ | | | 310,000 | | | | 335,690 | |
KY State Property & Building #84 | | | | | | | 5.000 | | | | 08/01/2022 | | | Aa2/A+*/AA-@ | | | 17,500,000 | | | | 18,823,000 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2022 | | | Aa2/A+*/AA-@ | | | 1,665,000 | | | | 1,740,291 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2023 | | | Aa2/A+*/AA-@ | | | 5,175,000 | | | | 5,397,525 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2025 | | | Aa2/A+*/AA-@ | | | 14,835,000 | | | | 15,205,430 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2026 | | | Aa2/A+*/AA-@ | | | 8,230,000 | | | | 8,360,281 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2027 | | | Aa2/A+*/AA-@ | | | 10,290,000 | | | | 10,398,045 | |
KY State Property & Building #88 | | | | | | | 4.750 | | | | 11/01/2027 | | | Aa2/A+*/AA-@ | | | 5,800,000 | | | | 5,773,030 | |
KY State Property & Building #89 | | | | | | | 5.000 | | | | 11/01/2025 | | | Aa2/AA+*/AA-@ | | | 5,000,000 | | | | 5,136,600 | |
KY State Property & Building #89 | | | | | | | 5.000 | | | | 11/01/2026 | | | Aa2/AA+*/AA-@ | | | 13,390,000 | | | | 13,649,766 | |
KY State Property & Building #89 | | | | | | | 5.000 | | | | 11/01/2027 | | | Aa2/AA+*/AA-@ | | | 4,900,000 | | | | 4,963,014 | |
KY State Property & Building #80 | | | | | | | 5.250 | | | | 05/01/2018 | | | Aa2/A+*/AA-@ | | | 2,940,000 | | | | 3,308,529 | |
KY State Property & Building #80 | | | | | | | 5.250 | | | | 05/01/2020 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,111,320 | |
KY State Property & Building #81 | | | | | | | 5.000 | | | | 11/01/2017 | | | Aa3/A+*/AA-@ | | | 2,060,000 | | | | 2,218,105 | |
KY State Property & Building #81 | | | | | | | 5.000 | | | | 11/01/2018 | | | Aa3/A+*/AA-@ | | | 1,720,000 | | | | 1,839,763 | |
KY State Property & Building #81 | | | | | | | 5.000 | | | | 11/01/2019 | | | Aa3/A+*/AA-@ | | | 2,385,000 | | | | 2,538,928 | |
KY State Property & Building #81 | | | | | | | 5.000 | | | | 11/01/2020 | | | Aa3/A+*/AA-@ | | | 3,560,000 | | | | 3,772,746 | |
KY State Property & Building #81 | | | | | | | 5.000 | | | | 11/01/2022 | | | Aa3/A+*/AA-@ | | | 3,930,000 | | | | 4,117,814 | |
KY State Turnpike Economic Development | | | | | | | 5.150 | | | | 07/01/2019 | | | Aa2/AA+*/AA-@ | | | 1,000,000 | | | | 1,017,910 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2022 | | | Aa2/AA+*/AA-@ | | | 1,625,000 | | | | 1,726,368 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2023 | | | Aa2/AA+*/AA-@ | | | 4,325,000 | | | | 4,537,790 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2024 | | | Aa2/AA+*/AA-@ | | | 3,770,000 | | | | 3,915,973 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+*/AA-@ | | | 2,000,000 | | | | 2,063,320 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+*/AA-@ | | | 4,720,000 | | | | 4,850,036 | |
Laurel County KY School District Finance Corporation | | | | | | | 4.625 | | | | 08/01/2026 | | | Aa2 | | | 3,150,000 | | | | 3,148,142 | |
Laurel County KY School District Finance Corporation | | | | | | | 4.750 | | | | 06/01/2026 | | | Aa2 | | | 1,000,000 | | | | 1,008,210 | |
Letcher County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2022 | | | Aa2 | | | 1,755,000 | | | | 1,822,392 | |
Letcher County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2024 | | | Aa2 | | | 1,930,000 | | | | 1,985,391 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA-*/AA-@ | | | 3,270,000 | | | | 3,364,372 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA-*/AA-@ | | | 3,230,000 | | | | 3,310,782 | |
Louisville & Jefferson Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2032 | | | Aa3/AA-*/AA-@ | | | 1,060,000 | | | | 1,051,678 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | # | | | | 4.750 | | | | 05/15/2028 | | | Aa3/AA-*/AA-@ | | | 10,425,000 | | | | 10,425,000 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2030 | | | Aa3/AA-*/AA-@ | | | 3,505,000 | | | | 3,505,000 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2032 | | | Aa3/AA-*/AA-@ | | | 4,000,000 | | | | 4,072,039 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.500 | | | | 05/15/2034 | | | Aa3/AA-*/AA-@ | | | 3,645,000 | | | | 3,770,096 | |
Louisville & Jefferson County Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2036 | | | Aa3/AA-*/AA-@ | | | 1,330,000 | | | | 1,349,711 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2038 | | | Aa3/AA-*/AA-@ | | | 9,500,000 | | | | 9,443,284 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2024 | | | Aa3/AA-* | | | 7,000,000 | | | | 7,313,950 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2022 | | | Aa3/AA+*/AA-@ | | | 2,855,000 | | | | 3,004,602 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2023 | | | Aa3/AA+*/AA-@ | | | 2,990,000 | | | | 3,140,516 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2024 | | | Aa3/AA+*/AA-@ | | | 3,135,000 | | | | 3,285,072 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA+*/AA-@ | | | 3,285,000 | | | | 3,416,761 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA+*/AA-@ | | | 14,000,000 | | | | 14,363,580 | |
The accompanying footnotes are an integral part of the financial statements.
7
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
Louisville & Jefferson County KY Metropolitan Sewer | | | | | | | 5.000 | % | | | 05/15/2025 | | | Aa3/AA+* | | $ | 5,185,000 | | | $ | 5,418,636 | |
Louisville & Jefferson County KY Regional Airport Authority | | | | | | | 5.500 | | | | 07/01/2017 | | | Aa3/AA+*/A+@ | | | 2,655,000 | | | | 2,735,685 | |
Louisville & Jefferson County KY Visitors & Convention Center | | | | | | | 4.500 | | | | 12/01/2023 | | | Aa3/AA+* | | | 2,340,000 | | | | 2,360,054 | |
Louisville & Jefferson County KY Visitors & Convention Center | | | | | | | 4.500 | | | | 12/01/2024 | | | Aa3/AA+* | | | 2,250,000 | | | | 2,276,888 | |
Louisville & Jefferson County KY Visitors & Convention Center | | | | | | | 4.600 | | | | 12/01/2025 | | | Aa3/AA+* | | | 1,490,000 | | | | 1,520,724 | |
Louisville & Jefferson County KY Student Housing | | | | | | | 5.000 | | | | 06/01/2025 | | | NR | | | 2,030,000 | | | | 2,044,291 | |
Louisville KY Health Care Facilities | | | | | | | 6.650 | | | | 12/20/2030 | | | Aaa | | | 47,000 | | | | 49,005 | |
Marshall County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2022 | | | Aa2 | | | 1,400,000 | | | | 1,447,851 | |
Nelson County KY School District Finance Corporation | | | | | | | 4.500 | | | | 04/01/2021 | | | Aa2 | | | 1,130,000 | | | | 1,153,945 | |
Nelson County KY School District Finance Corporation | | | | | | | 4.500 | | | | 04/01/2023 | | | Aa2 | | | 2,505,000 | | | | 2,542,325 | |
Northern KY Water District | | | | | | | 4.750 | | | | 02/01/2019 | | | Aa3 | | | 1,000,000 | | | | 1,020,310 | |
Northern KY Water District | | | | | | | 5.000 | | | | 02/01/2020 | | | Aa3 | | | 3,080,000 | | | | 3,159,372 | |
Northern KY Water District | | | | | | | 5.000 | | | | 02/01/2021 | | | Aa3 | | | 2,635,000 | | | | 2,700,058 | |
Northern KY Water District | | | | | | | 4.125 | | | | 02/01/2021 | | | Aa3 | | | 1,380,000 | | | | 1,371,513 | |
Northern KY Water District | | | | | | | 4.500 | | | | 02/01/2022 | | | Aa3 | | | 1,385,000 | | | | 1,390,859 | |
Northern KY Water District | | | | | | | 6.500 | | | | 02/01/2033 | | | Aa3 | | | 1,585,000 | | | | 1,758,747 | |
Northern KY Water District | | | | | | | 6.000 | | | | 02/01/2028 | | | Aa3 | | | 1,010,000 | | | | 1,095,577 | |
Northern KY Water District | | | | | | | 6.000 | | | | 02/01/2031 | | | Aa3 | | | 1,000,000 | | | | 1,085,390 | |
Owensboro Water Revenue | | | | | | | 5.000 | | | | 09/15/2025 | | | Aa3 | | | 545,000 | | | | 563,258 | |
Pike County KY Mortgage Revenue — Phelps Regional Health | | | | | | | 5.350 | | | | 09/20/2012 | | | NR | | | 50,000 | | | | 50,049 | |
Shelby County KY School District Finance Corporation | | | | | | | 5.000 | | | | 05/01/2022 | | | Aa2 | | | 1,815,000 | | | | 1,879,614 | |
Spencer County KY School District Finance Corporation | | | | | | | 5.000 | | | | 07/01/2023 | | | Aa2 | | | 1,000,000 | | | | 1,041,640 | |
Taylor County Detention Facility | | | | | | | 4.750 | | | | 09/01/2027 | | | A1 | | | 2,110,000 | | | | 2,048,346 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 559,175,318 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 12.34% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Danville KY Multi-City Lease Campbellsville Water & Sewer | | | | | | | 3.500 | | | | 07/01/2012 | | | A1 | | | 820,000 | | | | 831,390 | |
Davies County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2021 | | | Aa2 | | | 1,155,000 | | | | 1,203,117 | |
Hopkins County KY School District Finance Corporation | | | | | | | 5.125 | | | | 06/01/2019 | | | Aa2 | | | 4,120,000 | | | | 4,210,805 | |
Kenton County School District Finance Corporation | | | | | | | 5.000 | | | | 02/01/2029 | | | Aa2 | | | 3,270,000 | | | | 3,313,229 | |
KY Area Development Districts Financing Lease — Ewing | | | | | | | 5.350 | | | | 12/01/2022 | | | AA* | | | 2,560,000 | | | | 2,599,501 | |
KY Area Development Districts Financing Lease — Ewing | | | | | | | 5.400 | | | | 12/01/2021 | | | AA* | | | 710,000 | | | | 720,742 | |
KY Area Development Districts Financing Lease — Ewing | | | | | | | 5.400 | | | | 12/01/2021 | | | NR | | | 1,095,000 | | | | 1,112,192 | |
KY Area Development Districts Financing Lease — Ewing | | | | | | | 4.700 | | | | 06/01/2024 | | | NR | | | 2,625,000 | | | | 2,622,296 | |
KY Asset Liability Project | | | | | | | 5.000 | | | | 09/01/2021 | | | Aa2/AA*/AA-@ | | | 1,570,000 | | | | 1,737,205 | |
Kentucky Asset Liability Highway Trust | | | | | | | 5.000 | | | | 09/01/2022 | | | Aa2/AA*/AA-@ | | | 3,500,000 | | | | 3,819,165 | |
KY Association of Counties | | | | | | | 5.000 | | | | 02/01/2030 | | | A+* | | | 625,000 | | | | 620,413 | |
KY Association of Counties | | | | | | | 5.000 | | | | 02/01/2032 | | | A+* | | | 1,000,000 | | | | 974,520 | |
KY Association of Counties | | | | | | | 5.000 | | | | 02/01/2035 | | | A+* | | | 995,000 | | | | 950,703 | |
KY Infrastructure Authority Wastewater & Drinking Water | | | | | | | 5.000 | | | | 02/01/2027 | | | Aaa/AAA*/AAA@ | | | 2,500,000 | | | | 2,624,575 | |
KY Infrastructure Authority Wastewater & Drinking Water | | | | | | | 5.000 | | | | 02/01/2028 | | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | | 2,082,880 | |
KY Infrastructure Authority — Series A | | | | | | | 5.000 | | | | 06/01/2019 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,009,850 | |
KY State Property & Building #68 | | | | | | | 5.250 | | | | 10/01/2018 | | | Aa2/A+*/AA-@ | | | 1,500,000 | | | | 1,512,645 | |
KY State Property & Building #68 | | | | | | | 5.000 | | | | 10/01/2019 | | | Aa2/A+*/AA-@ | | | 5,500,000 | | | | 5,542,570 | |
KY State Property & Building #88 | | | | | | | 5.000 | | | | 11/01/2024 | | | Aa2/A+*/AA-@ | | | 1,355,000 | | | | 1,398,414 | |
KY State Property & Building #90 | | | | | | | 5.375 | | | | 11/01/2023 | | | Aa2/A+*/AA-@ | | | 1,200,000 | | | | 1,285,764 | |
KY State Property & Building #90 | | | | | | | 5.500 | | | | 11/01/2028 | | | Aa2/A+*/AA-@ | | | 20,190,000 | | | | 20,968,728 | |
KY State Property & Building | | | | | | | 5.000 | | | | 11/01/2029 | | | Aa2/A+*/AA-@ | | | 5,000,000 | | | | 4,999,650 | |
KY State Property & Building #98 | | | | | | | 5.000 | | | | 08/01/2021 | | | Aa2/A+*/AA-@ | | | 2,505,000 | | | | 2,698,561 | |
KY State Property & Building #91 | | | | | | | 5.750 | | | | 04/01/2029 | | | Aa3/A+*/A+@ | | | 210,000 | | | | 221,680 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+*/AA-@ | | | 2,925,000 | | | | 3,051,243 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2027 | | | Aa2/AA+*/AA-@ | | | 9,530,000 | | | | 9,793,790 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA+*/AA-@ | | | 1,460,000 | | | | 1,489,258 | |
KY Turnpike Authority Economic Development | | | | | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+*/AA-@ | | | 4,440,000 | | | | 4,614,448 | |
KY State Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2027 | | | Aa2/AA+*/AA-@ | | | 1,550,000 | | | | 1,597,601 | |
KY Turnpike Authority Economic Development | | | | | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA+*/AA-@ | | | 8,140,000 | | | | 8,263,891 | |
Montgomery County KY School District Finance Corporation | | | | | | | 4.375 | | | | 04/01/2023 | | | Aa2 | | | 3,105,000 | | | | 3,122,978 | |
Pendleton County KY Multi-County Lease Revenue | | | | | | | 6.400 | | | | 03/01/2019 | | | A* | | | 3,000,000 | | | | 3,520,020 | |
The accompanying footnotes are an integral part of the financial statements.
8
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
Shelby County KY School District Finance Corporation | | | | | | | 5.000 | % | | | 02/01/2028 | | | Aa2 | | $ | 500,000 | | | $ | 509,970 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 105,023,794 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 4.61% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY State Property & Building #85 | | | | | | | 5.000 | | | | 08/01/2024 | | | Aa2/AA+*/AA-@ | | | 8,300,000 | | | | 9,573,967 | |
KY State Property & Building #85 | | | | | | | 5.000 | | | | 08/01/2020 | | | Aa2/AA+*/AA-@ | | | 5,760,000 | | | | 6,644,102 | |
KY State Property & Building #85 | | | | | | | 5.000 | | | | 08/01/2022 | | | Aa2/AA+*/AA-@ | | | 8,200,000 | | | | 9,458,618 | |
KY State Property & Building #85 | | | | | | | 5.000 | | | | 08/01/2025 | | | Aa2/AA+*/AA-@ | | | 2,500,000 | | | | 2,883,725 | |
Knox County General Obligation | | | | | | | 5.625 | | | | 06/01/2036 | | | NR | | | 2,490,000 | | | | 2,938,748 | |
Louisville KY General Obligation — Series A | | | # | | | | 5.000 | | | | 10/01/2020 | | | Aa1/AA+* | | | 7,165,000 | | | | 7,707,677 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 39,206,837 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 4.54% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Danville KY Multi-City Lease Revenue — Hopkinsville | | | | | | | 6.875 | | | | 06/01/2012 | | | A2 | | | 650,000 | | | | 687,674 | |
Jefferson County KY Health Facilities — Alliant Health | | | | | | | 5.125 | | | | 10/01/2017 | | | BBB* | | | 4,980,000 | | | | 4,980,100 | |
Jefferson County KY Health Facilities — Alliant Health | | | | | | | 5.125 | | | | 10/01/2018 | | | BBB* | | | 33,000,000 | | | | 33,012,870 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 38,680,644 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.88% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY Housing Corporation | | | | | | | 4.850 | | | | 01/01/2024 | | | Aaa/AAA* | | | 7,380,000 | | | | 7,409,225 | |
KY Housing Corporation | | | | | | | 4.950 | | | | 01/01/2033 | | | Aaa/AAA* | | | 5,065,000 | | | | 4,932,550 | |
KY Housing Corporation | | | | | | | 4.750 | | | | 07/01/2032 | | | Aaa/AAA* | | | 1,265,000 | | | | 1,187,152 | |
KY Housing Corporation — Series E | | | | | | | 4.875 | | | | 07/01/2023 | | | Aaa/AAA* | | | 1,535,000 | | | | 1,560,926 | |
KY Housing Corporation | | | | | | | 4.750 | | | | 07/01/2035 | | | Aaa/AAA* | | | 4,140,000 | | | | 3,889,033 | |
KY Housing Corporation — Series E | | | | | | | 5.375 | | | | 07/01/2033 | | | Aaa/AAA* | | | 4,175,000 | | | | 4,183,434 | |
Kentucky Housing Corporation | | | | | | | 5.450 | | | | 07/01/2038 | | | Aaa/AAA* | | | 4,185,000 | | | | 4,192,198 | |
KY Housing Corporation | | | | | | | 4.900 | | | | 07/01/2028 | | | Aaa/AAA* | | | 2,000,000 | | | | 1,972,260 | |
KY Housing Corporation | | | | | | | 4.850 | | | | 07/01/2029 | | | Aaa/AAA* | | | 3,200,000 | | | | 3,161,504 | |
KY Housing Corporation | | | | | | | 4.625 | | | | 07/01/2033 | | | Aaa/AAA* | | | 610,000 | | | | 566,086 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 33,054,368 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.41% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Jefferson County KY Health Facilities — Jewish Hospital | | | | | | | 5.700 | | | | 01/01/2011 | | | Baa1/A-* | | | 535,000 | | | | 535,000 | |
KY Development Finance Authority — Kings Daughters | | | | | | | 5.000 | | | | 02/01/2030 | | | A1/A+*/A+@ | | | 4,000,000 | | | | 3,774,280 | |
KY Development Finance Authority — Baptist Heathcare System | | | | | | | 5.375 | | | | 08/15/2024 | | | Aa3/AA-@ | | | 1,205,000 | | | | 1,258,888 | |
KY Development Finance Authority — Baptist Healthcare | | | | | | | 5.625 | | | | 08/15/2027 | | | Aa3/AA-@ | | | 3,000,000 | | | | 3,154,320 | |
KY Development Finance Authority — Catholic Health | | | | | | | 5.000 | | | | 05/01/2029 | | | Aa2/AA*/AA@ | | | 2,500,000 | | | | 2,441,175 | |
KY Development Finance Authority — Catholic Health | | | | | | | 5.000 | | | | 05/01/2029 | | | Aa2/AA*/AA@ | | | 2,410,000 | | | | 2,353,293 | |
KY Development Finance Authority — St. Elizabeth | | | | | | | 5.125 | | | | 05/01/2029 | | | AA-*/AA-@ | | | 2,750,000 | | | | 2,756,270 | |
KY Development Finance Authority — St. Elizabeth | | | | | | | 5.375 | | | | 05/01/2034 | | | AA-*/AA-@ | | | 2,560,000 | | | | 2,567,450 | |
KY Development Finance Authority — Catholic Health | | | | | | | 5.125 | | | | 10/01/2021 | | | A1/AA-*/AA-@ | | | 1,000,000 | | | | 1,013,710 | |
Louisville & Jefferson Metropolitan Health — St Mary’s | | | | | | | 6.125 | | | | 02/01/2037 | | | Baa1/A-* | | | 1,300,000 | | | | 1,334,788 | |
Louisville & Jefferson Metropolitan Government Health | | | | | | | 5.000 | | | | 10/01/2026 | | | A-*/A-@ | | | 595,000 | | | | 558,770 | |
Louisville & Jefferson Co Health System — Norton | | | | | | | 5.000 | | | | 10/01/2030 | | | A-*/A-@ | | | 2,000,000 | | | | 1,776,540 | |
Louisville & Jefferson County Metropolitan Health — Norton | | | | | | | 5.250 | | | | 10/01/2036 | | | A-*/A-@ | | | 3,460,000 | | | | 3,063,795 | |
Pike County KY Mortgage Revenue — Phelps Regional Health | | | | | | | 5.650 | | | | 09/20/2027 | | | NR | | | 2,435,000 | | | | 2,435,097 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 29,023,376 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 2.35% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY Rural Water Financial Corporation Public Project Revenue | | | | | | | 5.375 | | | | 02/01/2020 | | | AA-* | | | 1,140,000 | | | | 1,164,191 | |
Louisville & Jefferson County Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2021 | | | Aa3/AA-* | | | 2,865,000 | | | | 3,117,263 | |
Louisville & Jefferson County Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2023 | | | Aa3/AA-* | | | 2,500,000 | | | | 2,667,725 | |
Louisville & Jefferson County Waterworks | | | | | | | 5.000 | | | | 11/15/2027 | | | Aaa/AAA* | | | 2,000,000 | | | | 2,089,820 | |
Louisville & Jefferson County KY Waterworks & Water System | | | | | | | 5.000 | | | | 11/15/2031 | | | Aaa/AAA* | | | 10,695,000 | | | | 10,928,900 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 19,967,899 | |
The accompanying footnotes are an integral part of the financial statements.
9
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 1.10% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Boone County KY Public Property Corporation — AOC Judicial | | | | | | | 5.000 | % | | | 09/01/2019 | | | Aa2 | | $ | 1,000,000 | | | $ | 1,058,580 | |
Boone County KY Public Property Corporation — Judicial Facilities | | | | | | | 5.125 | | | | 09/01/2022 | | | Aa2 | | | 1,750,000 | | | | 1,837,430 | |
Louisville & Jefferson County KY Parking Authority | | | | | | | 5.000 | | | | 12/01/2022 | | | Aa2/AA* | | | 625,000 | | | | 666,631 | |
Louisville & Jefferson County Metropolitan Parking | | | | | | | 5.750 | | | | 12/01/2034 | | | Aa2/AA* | | | 2,750,000 | | | | 2,870,643 | |
Wolfe County Public Property | | | | | | | 5.000 | | | | 04/01/2030 | | | Aa2 | | | 2,855,000 | | | | 2,959,637 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 9,392,921 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | |
| .92% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Berea KY Educational Facilities Revenue | | | | | | | 4.125 | | | | 06/01/2022 | | | Aaa | | | 2,190,000 | | | | 2,213,783 | |
KY Housing Corporation | | | | | | | 5.000 | | | | 07/01/2033 | | | Aaa/AAA* | | | 2,405,000 | | | | 2,344,731 | |
Louisville & Jefferson County — Papa Johns Stadium | | | | | | | 4.750 | | | | 03/01/2028 | | | Aa2/AA-* | | | 3,250,000 | | | | 3,275,318 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 7,833,832 | |
| GENERAL OBLIGATION BONDS | | | | | | | | |
| .16% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Bowling Green KY General Obligation | | | | | | | 4.600 | | | | 06/01/2018 | | | Aa2 | | | 1,290,000 | | | | 1,339,910 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,339,910 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $837,594,441) (See (a) below for further explanation) 98.99% of Net Assets | | | | | | | | | $ | 842,698,899 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 13,010,451 | |
| | Unrealized depreciation | | | (7,905,993 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 5,104,458 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 842,698,899 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 842,698,899 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
10
KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $837,594,441) | | | $ | 842,698,899 | |
Cash | | | | | | | 1,657,366 | |
Receivable for fund shares sold | | | | | | | 2,251 | |
Interest receivable | | | | | | | 11,908,306 | |
Prepaid expenses | | | | | | | 66 | |
| | | | | | | | |
Total assets | | | | | | | 856,266,888 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 3,727,182 | | | | | |
Fund shares redeemed | | | 826,407 | | | | | |
Investment advisory fee | | | 284,821 | | | | | |
Transfer agent fee | | | 5,592 | | | | | |
Accrued expenses | | | 116,706 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 4,960,708 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 843,821,037 | |
Net accumulated realized gain on investment transactions | | | | 2,380,685 | |
Net unrealized appreciation in value of investments | | | | 5,104,458 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 851,306,180 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($851,306,180 -:-114,012,109 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 7.47 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 19,353,165 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 1,761,541 | |
Transfer agent fee | | | 542,167 | |
Custodian expense | | | 70,737 | |
Professional fees | | | 107,110 | |
Trustee fees | | | 47,192 | |
Other expenses | | | 73,789 | |
| | | | |
Total expenses | | | 2,602,536 | |
Custodian expense reduction | | | (5,176 | ) |
| | | | |
Net expenses | | | 2,597,360 | |
| | | | |
Net investment income | | | 16,755,805 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 4,267,659 | |
Net change in unrealized appreciation/depreciation | | | (25,395,045 | ) |
| | | | |
Net realized and unrealized gain/(loss) on investments | | | (21,127,386 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (4,371,581 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
11
KENTUCKY TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 16,755,805 | | | $ | 31,722,118 | |
Net realized gain on investments | | | 4,267,659 | | | | 592,049 | |
Net change in unrealized appreciation/depreciation | | | (25,395,045 | ) | | | 20,690,042 | |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | (4,371,581 | ) | | | 53,004,209 | |
Distributions from net investment income | | | (16,755,806 | ) | | | (31,722,118 | ) |
Distributions from capital gains | | | (2,195,987 | ) | | | (1,628,317 | ) |
Net fund share transactions (Note 4) | | | (8,267,329 | ) | | | 74,320,068 | |
| | | | | | | | |
Total increase/(decrease) | | | (31,590,703 | ) | | | 93,973,842 | |
Net assets: | | | | | | | | |
Beginning of period | | | 882,896,882 | | | | 788,923,040 | |
| | | | | | | | |
End of period | | $ | 851,306,179 | | | $ | 882,896,882 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/10 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $7.67 | | | | $7.49 | | | | $7.39 | | | | $7.43 | | | | $7.40 | | | | $7.67 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.15 | | | | 0.29 | | | | 0.29 | | | | 0.29 | | | | 0.30 | | | | 0.30 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.18 | ) | | | 0.20 | | | | 0.11 | | | | (0.04 | ) | | | 0.04 | | | | (0.27 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.03 | ) | | | 0.49 | | | | 0.40 | | | | 0.25 | | | | 0.34 | | | | 0.03 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.15 | ) | | | (0.29 | ) | | | (0.29 | ) | | | (0.29 | ) | | | (0.30 | ) | | | (0.30 | ) |
Distributions from capital gains | | | (0.02 | ) | | | (0.02 | ) | | | (0.01 | ) | | | — | (b) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $7.47 | | | | $7.67 | | | | $7.49 | | | | $7.39 | | | | $7.43 | | | | $7.40 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | (0.51% | )(c) | | | 6.58% | | | | 5.65% | | | | 3.47% | | | | 4.51% | | | | 0.41% | |
Net assets, end of period (in thousands) | | | $851,306 | | | | $882,897 | | | | $788,923 | | | | $734,613 | | | | $702,473 | | | | $686,929 | |
Ratio of net expenses to average net assets (a) | | | 0.58% | (d) | | | 0.58% | | | | 0.58% | | | | 0.58% | | | | 0.58% | | | | 0.58% | |
Ratio of net investment income to average net assets | | | 3.76% | (d) | | | 3.81% | | | | 3.99% | | | | 3.94% | | | | 3.94% | | | | 4.00% | |
Portfolio turnover | | | 15.34% | (d) | | | 4.76% | | | | 6.09% | | | | 5.69% | | | | 6.76% | | | | 17.60% | |
| (a) | | Percentages are after custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | | | |
| | 0.58% | (d) | | For the six months ended December 31, 2010 |
| | 0.58% | | | For the year ended June 30, 2010 |
| | 0.58% | | | For the year ended June 30, 2009 |
| | 0.58% | | | For the year ended June 30, 2008 |
| | 0.58% | | | For the year ended June 30, 2007 |
| | 0.59% | | | For the year ended June 30, 2006 |
| (b) | | Rounds to less than .01 |
The accompanying notes are an integral part of the financial statements.
12
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 70.92% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Boone County School District Finance Corporation | | | | | | | 4.000 | % | | | 08/01/2018 | | | Aa2 | | $ | 145,000 | | | $ | 151,605 | |
Bowling Green General Obligation — Series A | | | | | | | 4.000 | | | | 06/01/2016 | | | Aa2 | | | 375,000 | | | | 399,004 | |
Breathitt County School District Finance Corporation | | | | | | | 3.875 | | | | 07/01/2017 | | | Aa2 | | | 280,000 | | | | 296,288 | |
Bullitt County KY School District Finance Corporation | | | | | | | 4.000 | | | | 10/01/2014 | | | Aa2 | | | 150,000 | | | | 162,421 | |
Christian County School District Finance Corporation | | | | | | | 4.000 | | | | 08/01/2019 | | | Aa2 | | | 720,000 | | | | 740,945 | |
Clay County School District Finance Corporation | | | | | | | 3.750 | | | | 06/01/2017 | | | Aa2 | | | 210,000 | | | | 218,852 | |
Fayette County KY School District Finance Corporation | | | | | | | 4.000 | | | | 06/01/2019 | | | Aa2/AA+* | | | 140,000 | | | | 146,678 | |
Hardin County School District Finance Corporation | | | | | | | 4.000 | | | | 02/01/2019 | | | Aa2 | | | 1,475,000 | | | | 1,511,270 | |
Jefferson County School District Finance Corporation | | | | | | | 5.250 | | | | 01/01/2017 | | | Aa2/AA+* | | | 200,000 | | | | 229,866 | |
Kenton County KY School District Finance Corporation | | | | | | | 5.000 | | | | 06/01/2016 | | | Aa2 | | | 250,000 | | | | 272,655 | |
KY Asset Liability Commission | | | | | | | 5.000 | | | | 05/01/2016 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,100,730 | |
KY Asset Liability Project Notes | | | | | | | 5.000 | | | | 09/01/2013 | | | Aa2/AA*/AA-@ | | | 865,000 | | | | 946,448 | |
KY Asset Liability Project Notes | | | # | | | | 5.000 | | | | 09/01/2016 | | | Aa2/AA*/AA-@ | | | 2,000,000 | | | | 2,215,840 | |
KY Asset Liability Project Notes | | | | | | | 5.000 | | | | 09/01/2015 | | | Aa2/AA*/AA-@ | | | 275,000 | | | | 310,920 | |
KY Asset Liability Project Notes | | | | | | | 4.500 | | | | 09/01/2016 | | | Aa2/AA*/AA-@ | | | 175,000 | | | | 194,259 | |
KY Asset Liability Project Notes | | | # | | | | 5.000 | | | | 09/01/2017 | | | Aa2/AA*/AA-@ | | | 1,500,000 | | | | 1,700,325 | |
KY Asset Liability University of Kentucky Project Notes | | | | | | | 5.000 | | | | 10/01/2016 | | | Aa2/AA-* | | | 1,250,000 | | | | 1,387,313 | |
KY Asset Liability Project Notes | | | | | | | 4.400 | | | | 10/01/2019 | | | Aa2/AA-* | | | 1,750,000 | | | | 1,812,073 | |
KY Economic Development Finance Authority — Norton Health | | | | | | | 6.000 | | | | 10/01/2018 | | | Baa1/BBB* | | | 560,000 | | | | 592,967 | |
KY Rural Water Finance Corporation | | | | | | | 3.625 | | | | 02/01/2016 | | | Baa1/AA-* | | | 350,000 | | | | 364,756 | |
KY Rural Water Finance Corporation | | | # | | | | 4.000 | | | | 02/01/2014 | | | Baa1/AA-* | | | 300,000 | | | | 317,592 | |
KY State Property & Building #84 | | | | | | | 5.000 | | | | 08/01/2019 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,104,880 | |
KY State Property & Building #87 | | | | | | | 5.000 | | | | 03/01/2020 | | | Aa2/A+*/AA-@ | | | 3,000,000 | | | | 3,204,600 | |
KY State Property & Building #82 | | | | | | | 5.250 | | | | 10/01/2013 | | | Aa2/AA+*/AA-@ | | | 1,400,000 | | | | 1,544,466 | |
KY State Property & Building #82 | | | | | | | 5.250 | | | | 10/01/2015 | | | Aa2/AA+*/AA-@ | | | 2,525,000 | | | | 2,866,784 | |
KY State Property & Building #82 | | | | | | | 5.250 | | | | 10/01/2017 | | | Aa2/AA+*/AA-@ | | | 1,260,000 | | | | 1,442,763 | |
Ky State Property & Building #85 | | | | | | | 5.000 | | | | 08/01/2016 | | | Aa2/AA+*/AA-@ | | | 835,000 | | | | 927,910 | |
KY State Property & Building #88 | | | | | | | 5.000 | | | | 11/01/2014 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,113,660 | |
KY Property & Building Project #88 | | | | | | | 5.000 | | | | 11/01/2015 | | | Aa2/A+*/AA-@ | | | 955,000 | | | | 1,076,008 | |
KY State Property & Building #83 | | | | | | | 5.000 | | | | 10/01/2016 | | | Aa2/A+*/AA-@ | | | 775,000 | | | | 876,804 | |
KY State Property & Building #83 | | | | | | | 5.000 | | | | 10/01/2019 | | | Aa2/A+*/AA-@ | | | 1,750,000 | | | | 1,929,638 | |
KY State Property & Building #89 | | | | | | | 5.000 | | | | 11/01/2014 | | | Aa2/AA+*/AA-@ | | | 2,000,000 | | | | 2,234,400 | |
KY State Property & Building #89 | | | | | | | 5.000 | | | | 11/01/2015 | | | Aa2/AA+*/AA-@ | | | 2,230,000 | | | | 2,521,305 | |
KY State Turnpike Authority Economic Development | | | | | | | 5.250 | | | | 07/01/2014 | | | Aa2/AA+*/AA-@ | | | 500,000 | | | | 561,875 | |
KY State Turnpike Authority Economic Development | | | | | | | 5.000 | | | | 07/01/2017 | | | Aa2/AA+*/AA-@ | | | 2,570,000 | | | | 2,885,596 | |
Lexington Fayette Urban County Government Public Property | | | | | | | 4.000 | | | | 05/01/2017 | | | Aa2/AA* | | | 180,000 | | | | 195,892 | |
Louisville & Jefferson Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2018 | | | Aa3/AA-*/AA-@ | | | 1,220,000 | | | | 1,334,484 | |
Louisville & Jefferson Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2016 | | | Aa3/AA+*/AA-@ | | | 500,000 | | | | 556,715 | |
Louisville & Jefferson County Metropolitian Sewer | | | | | | | 5.000 | | | | 05/15/2016 | | | Aa3/AA-* | | | 100,000 | | | | 113,568 | |
Madison County KY School District Finance Corporation | | | | | | | 3.600 | | | | 02/01/2017 | | | Aa2 | | | 300,000 | | | | 312,372 | |
Oldham County School Building Corporation | | | | | | | 4.375 | | | | 06/01/2018 | | | Aa2 | | | 2,570,000 | | | | 2,785,726 | |
Paducah Electric Plant | | | | | | | 3.000 | | | | 10/01/2014 | | | Aa3/A@ | | | 750,000 | | | | 783,870 | |
Warren County KY School District Finance Corporation | | | | | | | 4.000 | | | | 02/01/2015 | | | Aa2 | | | 785,000 | | | | 847,211 | |
Warren County KY School District Finance Corporation | | | | | | | 4.000 | | | | 02/01/2016 | | | Aa2 | | | 1,330,000 | | | | 1,436,533 | |
Western KY University | | | | | | | 3.000 | | | | 09/01/2014 | | | Aa2/AA+* | | | 1,000,000 | | | | 1,040,930 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 48,770,797 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 14.90% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Bullitt County KY School District Finance Corporation | | | | | | | 4.100 | | | | 10/01/2018 | | | Aa2 | | | 165,000 | | | | 171,504 | |
Gallatin County School District Finance Corporation | | | | | | | 4.000 | | | | 05/01/2016 | | | Aa2 | | | 175,000 | | | | 190,857 | |
Grant County School District Finance Corporation | | | | | | | 3.750 | | | | 06/01/2017 | | | Aa2 | | | 190,000 | | | | 202,325 | |
Hazard KY Independent School District Finance Corporation | | | | | | | 3.850 | | | | 09/01/2017 | | | Aa2 | | | 200,000 | | | | 211,636 | |
KY Association of Counties | | | | | | | 4.250 | | | | 02/01/2017 | | | A+* | | | 500,000 | | | | 532,500 | |
KY Infrastructure Authority — Series A | | | | | | | 5.250 | | | | 06/01/2014 | | | Aa2/A+*/AA-@ | | | 1,240,000 | | | | 1,258,538 | |
KY Infrastructure Authority | | | | | | | 5.250 | | | | 08/01/2013 | | | AA* | | | 1,185,000 | | | | 1,301,924 | |
KY State Property & Building Project #94 | | | | | | | 5.000 | | | | 05/01/2014 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,101,340 | |
KY State Property & Building Project #94 | | | | | | | 5.000 | | | | 05/01/2015 | | | Aa2/A+*/AA-@ | | | 1,245,000 | | | | 1,389,383 | |
The accompanying footnotes are an integral part of the financial statements.
13
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
KY State Property & Building Project #94 | | | | | | | 5.000 | % | | | 05/01/2017 | | | Aa2/A+*/AA-@ | | $ | 500,000 | | | $ | 562,485 | |
KY State Property & Building | | | | | | | 5.000 | | | | 11/01/2015 | | | Aa2/A+*/AA-@ | | | 250,000 | | | | 281,678 | |
KY State Property & Building | | | | | | | 5.000 | | | | 11/01/2014 | | | Aa2/A+*/AA-@ | | | 750,000 | | | | 835,244 | |
KY Turnpike Authority Economic Development Road Revenue | | | | | | | 5.000 | | | | 07/01/2014 | | | Aa2/AA+*/AA-@ | | | 750,000 | | | | 833,753 | |
KY Turnpike Economic Development | | | | | | | 5.000 | | | | 07/01/2016 | | | Aa2/AA+*/AA-@ | | | 750,000 | | | | 855,720 | |
Pulaski County KY Public Property | | | | | | | 3.750 | | | | 12/01/2014 | | | Aa2 | | | 480,000 | | | | 515,803 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 10,244,690 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | |
| 4.07% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY Development Finance Authority — Kings Daughters | | | | | | | 5.000 | | | | 02/01/2016 | | | A1/A+*/A+@ | | | 1,000,000 | | | | 1,076,990 | |
KY Economic Development Finance Authority — Catholic Health | | | | | | | 4.500 | | | | 10/01/2011 | | | A1/AA-*/AA-@ | | | 1,000,000 | | | | 1,024,240 | |
KY Development Finance Authority — St. Elizabeth | | | | | | | 5.000 | | | | 05/01/2015 | | | AA-*/AA-@ | | | 400,000 | | | | 434,636 | |
KY Economic Development Finance Authority — Catholic Health | | | | | | | 4.000 | | | | 05/01/2015 | | | Aa2/AA*/AA@ | | | 250,000 | | | | 263,225 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,799,091 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.31% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY Housing Corporation — Series E | | | | | | | 4.875 | | | | 07/01/2023 | | | Aaa/AAA* | | | 1,500,000 | | | | 1,525,335 | |
KY Housing Corporation | | | | | | | 4.850 | | | | 01/01/2024 | | | Aaa/AAA* | | | 750,000 | | | | 752,970 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,278,305 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.26% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Louisville & Jefferson County Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2015 | | | AA3/AA-* | | | 1,000,000 | | | | 1,122,300 | |
Louisville & Jefferson County Metropolitan Sewer | | | | | | | 5.000 | | | | 05/15/2015 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,119,630 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,241,930 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 1.47% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY Development Finance Authority — Norton Health | | | | | | | 5.850 | | | | 10/01/2015 | | | BBB* | | | 885,000 | | | | 1,009,210 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,009,210 | |
| CERTIFICATES OF PARTICIPATION BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 1.13% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
KY Interlocal School Transportation Assistance Equipment | | | | | | | 3.750 | | | | 03/01/2015 | | | Aa2 | | | 770,000 | | | | 778,601 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 778,601 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $66,144,471) (See (a) below for further explanation) 99.06% of Net Assets | | | | | | | | | $ | 68,122,624 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 2,085,827 | |
| | Unrealized depreciation | | | (107,674 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 1,978,153 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
| | | | | | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 68,122,624 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 68,122,624 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
14
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $66,144,471) | | | | | | $ | 68,122,624 | |
Cash | | | | | | | 16,513 | |
Receivable for fund shares sold | | | | | | | 246 | |
Interest receivable | | | | | | | 830,110 | |
| | | | | | | | |
Total assets | | | | | | | 68,969,493 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 45,517 | | | | | |
Fund shares redeemed | | | 24,966 | | | | | |
Investment advisory fee | | | 29,881 | | | | | |
Transfer agent fee | | | 1,339 | | | | | |
Trustee fees | | | 3,716 | | | | | |
Notes payable | | | 80,008 | | | | | |
Accrued expenses | | | 10,885 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 196,312 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 67,915,809 | |
Net accumulated realized loss on investment transactions | | | | (1,120,781 | ) |
Net unrealized appreciation in value of investments | | | | 1,978,153 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 68,773,181 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($68,773,181 -:- 12,940,331
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 5.31 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 1,127,400 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 178,352 | |
Transfer agent fee | | | 45,829 | |
Custodian expense | | | 5,594 | |
Professional fees | | | 10,596 | |
Trustee fees | | | 3,722 | |
Other expenses | | | 12,142 | |
| | | | |
Total expenses | | | 256,235 | |
Custodian expense reduction | | | (426 | ) |
| | | | |
Net expenses | | | 255,809 | |
| | | | |
Net investment income | | | 871,591 | |
| | | | |
Realized and unrealized gain/loss on investments: | | | | |
Net realized gain | | | 109,715 | |
Net change in unrealized appreciation/depreciation | | | (778,870 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (669,155 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 202,436 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
15
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 871,591 | | | $ | 1,809,942 | |
Net realized gain on investments | | | 109,715 | | | | 150,390 | |
Net change in unrealized appreciation/depreciation | | | (778,870 | ) | | | 1,168,163 | |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 202,436 | | | | 3,128,495 | |
Distributions from net investment income | | | (871,591 | ) | | | (1,809,942 | ) |
Net fund share transactions (Note 4) | | | 275,985 | | | | 7,277,772 | |
| | | | | | | | |
Total increase/(decrease) | | | (393,170 | ) | | | 8,596,325 | |
Net assets: | | | | | | | | |
Beginning of period | | | 69,166,351 | | | | 60,570,026 | |
| | | | | | | | |
End of period | | $ | 68,773,181 | | | $ | 69,166,351 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/10 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $5.36 | | | | $5.25 | | | | $5.16 | | | | $5.13 | | | | $5.14 | | | | $5.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.07 | | | | 0.15 | | | | 0.17 | | | | 0.17 | | | | 0.17 | | | | 0.15 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.05 | ) | | | 0.11 | | | | 0.09 | | | | 0.03 | | | | (0.01 | ) | | | (0.14 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.02 | | | | 0.26 | | | | 0.26 | | | | 0.20 | | | | 0.16 | | | | 0.01 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.07 | ) | | | (0.15 | ) | | | (0.17 | ) | | | (0.17 | ) | | | (0.17 | ) | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $5.31 | | | | $5.36 | | | | $5.25 | | | | $5.16 | | | | $5.13 | | | | $5.14 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 0.29% | (b) | | | 4.99% | | | | 5.02% | | | | 3.94% | | | | 3.10% | | | | 0.22% | |
Net assets, end of period (in thousands) | | | $68,773 | | | | $69,166 | | | | $60,570 | | | | $53,955 | | | | $61,302 | | | | $84,048 | |
Ratio of net expenses to average net assets (a) | | | 0.72% | (c) | | | 0.72% | | | | 0.72% | | | | 0.72% | | | | 0.72% | | | | 0.71% | |
Ratio of net investment income to average net assets | | | 2.46% | (c) | | | 2.80% | | | | 3.16% | | | | 3.28% | | | | 3.25% | | | | 2.92% | |
Portfolio turnover | | | 22.10% | (c) | | | 20.26% | | | | 15.64% | | | | 14.17% | | | | 4.87% | | | | 17.86% | |
| (a) | | Percentages are after custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | |
| 0.72%(c) | | For the six months ended December 31, 2010 |
| 0.72% | | For the year ended June 30, 2010 |
| 0.72% | | For the year ended June 30, 2009 |
| 0.73% | | For the year ended June 30, 2008 |
| 0.72% | | For the year ended June 30, 2007 |
| 0.72% | | For the year ended June 30, 2006 |
The accompanying notes are an integral part of the financial statements.
16
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 79.41% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Hinds County MS Revenue Refunding — MS Methodist Hospital | | | | | | | 5.600 | % | | | 05/01/2012 | | | NR | | $ | 10,000 | | | $ | 10,043 | |
Jackson MS Municipal Airport Authority | | | | | | | 5.000 | | | | 10/01/2031 | | | A3/A-@ | | | 170,000 | | | | 165,281 | |
Medical Center Educational Building Corporation MS Revenue | | | | | | | 5.500 | | | | 12/01/2023 | | | Aa3 | | | 120,000 | | | | 128,056 | |
MS Business Finance Corporation MS Pollution Control Revenue | | | | | | | 4.600 | | | | 04/01/2022 | | | Baa1/A-* | | | 100,000 | | | | 99,732 | |
MS Development Bank Special Obligation Capital Project | | | | | | | 5.000 | | | | 07/01/2031 | | | NR | | | 75,000 | | | | 67,114 | |
MS Development Bank Special Obligation Southaven Water | | | | | | | 5.000 | | | | 03/01/2025 | | | A+* | | | 325,000 | | | | 330,320 | |
MS Development Bank Special Obligation Highway Construction | | | | | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 125,000 | | | | 129,553 | |
MS Development Bank Special Obligation Highway — Desoto | | | | | | | 4.750 | | | | 01/01/2035 | | | Aa3/AA-* | | | 125,000 | | | | 121,854 | |
MS Development Bank Special Obligation Jackson Water/Sewer | | | | | | | 5.000 | | | | 09/01/2025 | | | Aa2/AA+* | | | 100,000 | | | | 104,066 | |
MS Development Bank Special Obligation Jackson Water/Sewer | | | | | | | 5.000 | | | | 09/01/2029 | | | Aa2/AA+* | | | 60,000 | | | | 60,215 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | | | | | 5.000 | | | | 09/01/2034 | | | Aa2/AA+* | | | 125,000 | | | | 119,803 | |
MS Development Bank Special Obligation Horn Lake | | | | | | | 5.000 | | | | 10/01/2020 | | | A* | | | 50,000 | | | | 50,790 | |
MS Development Bank Special Obligation Capital Improvement | | | | | | | 5.250 | | | | 07/01/2026 | | | Aa3/AA+* | | | 125,000 | | | | 126,993 | |
MS Development Bank Special Obligation Lee County School | | | # | | | | 4.500 | | | | 09/01/2021 | | | A1 | | | 100,000 | | | | 100,169 | |
MD Development Bank Special Obligation Jackson Public | | | | | | | 5.375 | | | | 04/01/2028 | | | Aa2 | | | 70,000 | | | | 73,088 | |
MS Development Bank Special Obligation Hinds Community | | | | | | | 5.000 | | | | 10/01/2026 | | | Aa2 | | | 85,000 | | | | 87,853 | |
MS Development Bank Special Obligation Hinds College | | | | | | | 5.125 | | | | 10/01/2028 | | | Aa2 | | | 100,000 | | | | 103,157 | |
MS Development Bank Special Obligation Hinds College | | | | | | | 5.375 | | | | 10/01/2033 | | | Aa2 | | | 60,000 | | | | 60,850 | |
MS Development Bank Special Obligation Capital Projects | | | | | | | 5.875 | | | | 07/01/2024 | | | NR | | | 55,000 | | | | 54,924 | |
MS Development Bank Special Obligation Capital Projects | | | | | | | 5.000 | | | | 07/01/2024 | | | NR | | | 370,000 | | | | 351,855 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | | | | | 5.000 | | | | 09/01/2032 | | | Aa2/A+* | | | 150,000 | | | | 149,595 | |
MS Home Corporation Single Family Mortgage — Series E-1 | | | | | | | 5.050 | | | | 12/01/2028 | | | Aaa | | | 50,000 | | | | 50,516 | |
MS Development Bank Special Obligation Lowndes County | | | | | | | 5.000 | | | | 07/01/2022 | | | Aa3/AA+* | | | 80,000 | | | | 82,642 | |
MS Development Bank Special Obligation Covington Hospital | | | | | | | 5.000 | | | | 07/01/2027 | | | A* | | | 150,000 | | | | 139,169 | |
MS Development Special Obligation Madison County Highway | | | | | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 295,000 | | | | 304,726 | |
MS Development Bank Special Obligation City of Jackson | | | | | | | 5.000 | | | | 03/01/2022 | | | Aa2/AA-* | | | 200,000 | | | | 208,956 | |
MS Development Bank Special Obligation Highway Construction | | | | | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 175,000 | | | | 181,374 | |
MS Development Bank Special Obligation Highway Construction | | | | | | | 4.750 | | | | 01/01/2031 | | | Aa3/AA-* | | | 125,000 | | | | 125,443 | |
MS Development Bank Special Obligation Jones County College | | | | | | | 5.100 | | | | 03/01/2028 | | | AA+* | | | 55,000 | | | | 55,952 | |
MS Development Bank Special Obligation Jones County Junior | | | | | | | 5.000 | | | | 03/01/2033 | | | AA+* | | | 150,000 | | | | 147,230 | |
MS Development Bank Special Obligation Jones County Junior | | | | | | | 5.125 | | | | 03/01/2039 | | | AA+* | | | 45,000 | | | | 43,980 | |
MS State Refunding Notes Projects — Series C | | | | | | | 5.000 | | | | 12/01/2022 | | | Aa2/AA*/AA+@ | | | 200,000 | | | | 212,414 | |
MS State University Educational Building Corporate Revenue | | | | | | | 5.000 | | | | 08/01/2024 | | | Aa2/A+*/AA@ | | | 350,000 | | | | 364,958 | |
Olive Branch MS Public Improvement | | | # | | | | 4.125 | | | | 06/01/2022 | | | A1 | | | 100,000 | | | | 100,054 | |
Pearl River County MS Certificates of Participation | | | | | | | 4.500 | | | | 04/01/2021 | | | Baa1 | | | 200,000 | | | | 202,120 | |
University Southern MS Education Building — Series A | | | | | | | 5.000 | | | | 03/01/2022 | | | Aa2 | | | 100,000 | | | | 105,576 | |
University Southern MS Educational Building Corporation | | | | | | | 5.000 | | | | 03/01/2032 | | | Aa2 | | | 50,000 | | | | 49,545 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 4,869,966 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 8.44% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Alcorn State University Educational Building MS Revenue | | | | | | | 5.125 | | | | 09/01/2034 | | | Aa2 | | | 95,000 | | | | 93,521 | |
Jackson State University Education Building | | | | | | | 5.000 | | | | 03/01/2034 | | | Aa2/AA-* | | | 175,000 | | | | 168,707 | |
MS State University Educational Building Corporate Revenue | | | | | | | 5.250 | | | | 08/01/2033 | | | Aa2/AA@ | | | 50,000 | | | | 50,687 | |
University Southern MS Educational Building Corporation | | | | | | | 5.125 | | | | 09/01/2029 | | | Aa2/A+* | | | 100,000 | | | | 102,062 | |
University Southern MS Education Building Athletics | | | | | | | 5.000 | | | | 03/01/2034 | | | Aa2 | | | 105,000 | | | | 102,459 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 517,436 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.67% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Desoto County | | | | | | | 5.250 | | | | 07/01/2031 | | | A* | | | 225,000 | | | | 225,106 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 225,106 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 2.50% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligations Department of Corrections | | | | | | | 5.250 | | | | 08/01/2027 | | | AA-*/AA@ | | | 50,000 | | | | 51,017 | |
MS Development Bank Special Obligation Department of Corrections | | | | | | | 5.250 | | | | 08/01/2027 | | | AA-*/AA@ | | | 100,000 | | | | 102,032 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 153,049 | |
The accompanying footnotes are an integral part of the financial statements.
17
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 1.61% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Jackson MS Redevelopment Authority Urban Renewal Revenue | | | | | | | 5.600 | % | | | 11/01/2021 | | | Aa3 | | $ | 20,000 | | | $ | 20,006 | |
MS State General Obligation | | | | | | | 5.100 | | | | 11/15/2012 | | | Aa2/AA*/AA+@ | | | 10,000 | | | | 10,795 | |
MS State Refunding — Series A | | | | | | | 5.250 | | | | 11/01/2019 | | | Aa2/AA*/AA+@ | | | 50,000 | | | | 57,789 | |
Richland MS Tax Increment | | | | | | | 5.600 | | | | 06/01/2013 | | | NR | | | 10,000 | | | | 10,173 | |
| | | | | | | | | | | | | | | | | | | | | | |
| �� | | | | | | | | | | | | | | | | | | | | 98,763 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | | | | | |
| .62% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Harrison County MS Wastewater Management District | | | | | | | 5.000 | | | | 02/01/2015 | | | Baa1/AAA* | | | 25,000 | | | | 27,667 | |
MS Gulf Coast Regional Wastewater Treatment Facilities | | | | | | | 7.000 | | | | 07/01/2012 | | | NR | | | 10,000 | | | | 10,554 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 38,221 | |
| PREREFUNDED BONDS | | | | | | | | | | | |
| .43% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Gulfport Combined Water | | | | | | | 5.500 | | | | 07/01/2015 | | | Aa3/AA+* | | | 10,000 | | | | 10,916 | |
MS Development Bank Special Obligation Desoto County | | | | | | | 5.900 | | | | 07/01/2021 | | | A* | | | 5,000 | | | | 5,126 | |
Southern MS University Educational Building Corporation | | | | | | | 5.750 | | | | 03/01/2021 | | | NR | | | 10,000 | | | | 10,185 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 26,227 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $6,024,243) (See (a) below for further explanation) 96.68% of Net Assets | | | | | | | | | $ | 5,928,768 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | ( All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 61,920 | |
| | Unrealized depreciation | | | (157,395 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (95,475 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund’s assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
| | | | | | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 5,928,768 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 5,928,768 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
18
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $6,024,243) | | | | | | $ | 5,928,768 | |
Cash | | | | | | | 126,878 | |
Interest receivable | | | | | | | 108,162 | |
Prepaid expenses | | | | | | | 128 | |
| | | | | | | | |
Total assets | | | | | | | 6,163,936 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 19,636 | | | | | |
Fund shares redeemed | | | 200 | | | | | |
Investment advisory fee | | | 1,649 | | | | | |
Transfer agent fee | | | 1,709 | | | | | |
Accrued expenses | | | 8,093 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 31,287 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 6,234,260 | |
Net accumulated realized loss on investment transactions | | | | (6,136 | ) |
Net unrealized depreciation in value of investments | | | | (95,475 | ) |
| | | | | | | | |
Net assets at value | | | $ | 6,132,649 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($6,132,649 -:- 552,317
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.10 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 142,995 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 16,301 | |
Transfer agent fee | | | 4,890 | |
Custodian expense | | | 615 | |
Pricing fees | | | 2,521 | |
Professional fees | | | 693 | |
Trustee fees | | | 341 | |
Registration fees | | | 501 | |
Other expenses | | | 1,227 | |
| | | | |
Total expenses | | | 27,089 | |
Fees waived by Adviser | | | (10,215 | ) |
Custodian expense reduction | | | (37 | ) |
| | | | |
Net expenses | | | 16,837 | |
| | | | |
Net investment income | | | 126,158 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 27,154 | |
Net change in unrealized appreciation/depreciation | | | (201,363 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (174,209 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (48,051 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
19
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 126,158 | | | $ | 218,128 | |
Net realized gain/(loss) on investments | | | 27,154 | | | | (9,789 | ) |
Net change in unrealized appreciation/depreciation | | | (201,363 | ) | | | 184,498 | |
| | | | | | | | |
Net increase in net assets resulting from operations | | | (48,051 | ) | | | 392,837 | |
Distributions from net investment income | | | (126,158 | ) | | | (218,128 | ) |
Net fund share transactions (Note 4) | | | (14,425 | ) | | | 1,145,823 | |
| | | | | | | | |
Total increase/(decrease) | | | (188,634 | ) | | | 1,320,532 | |
Net assets: | | | | | | | | |
Beginning of period | | | 6,321,283 | | | | 5,000,751 | |
| | | | | | | | |
End of period | | $ | 6,132,649 | | | $ | 6,321,283 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months | | | For the years ended June 30, | |
| | | 12/31/10 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $11.41 | | | | $11.03 | | | | $11.08 | | | | $11.24 | | | | $11.25 | | | | $11.84 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.22 | | | | 0.45 | | | | 0.45 | | | | 0.45 | | | | 0.45 | | | | 0.46 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.31 | ) | | | 0.38 | | | | (0.05 | ) | | | (0.16 | ) | | | 0.04 | | | | (0.54 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.09 | ) | | | 0.83 | | | | 0.40 | | | | 0.29 | | | | 0.49 | | | | (0.08 | ) |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.22 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.46 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | (b) | | | — | (b) | | | (0.05 | ) | | | (0.05 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.10 | | | | $11.41 | | | | $11.03 | | | | $11.08 | | | | $11.24 | | | | $11.25 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | (0.80% | )(c) | | | 7.65% | | | | 3.72% | | | | 2.64% | | | | 4.39% | | | | (0.76% | ) |
Net assets, end of period (in thousands) | | | $6,133 | | | | $6,321 | | | | $5,001 | | | | $4,447 | | | | $5,103 | | | | $4,970 | |
Ratio of net expenses to average net assets (a) | | | 0.52% | (d) | | | 0.45% | | | | 0.44% | | | | 0.45% | | | | 0.45% | | | | 0.46% | |
Ratio of net investment income to average net assets | | | 3.90% | (d) | | | 3.99% | | | | 4.11% | | | | 4.02% | | | | 3.98% | | | | 3.95% | |
Portfolio turnover | | | 23.84% | (d) | | | 10.04% | | | | 9.30% | | | | 2.79% | | | | 11.57% | | | | 16.33% | |
| (a) | | Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions. |
| | | Expenses waived by the Adviser and expense reductions by the Custodian were as follows: |
| | | | | | | | |
| Adviser | | | Custodian | | | |
| | .32% | (d) | | | 0% | (d) | | For the six months ended December 31, 2010. |
| | .46% | | | | 0% | | | For the year ended June 30, 2010 |
| | .53% | | | | .08% | | | For the year ended June 30, 2009 |
| | .46% | | | | .10% | | | For the year ended June 30, 2008 |
| | .43% | | | | .09% | | | For the year ended June 30, 2007 |
| | .44% | | | | .10% | | | For the year ended June 30, 2006 |
| (b) | | Rounds to less than $0.01. |
The accompanying notes are an integral part of the financial statements.
20
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 51.31% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Asheville NC Water System Revenue | | | | | | | 4.750 | % | | | 08/01/2027 | | | Aa2/AA* | | $ | 1,000,000 | | | $ | 1,004,450 | |
Burke County NC Certificates of Participation | | | | | | | 5.000 | | | | 04/01/2023 | | | A1/A-* | | | 1,000,000 | | | | 1,023,540 | |
Cabarrus County NC Certificates of Participation Installment | | | | | | | 5.000 | | | | 06/01/2025 | | | Aa2/AA+*/AA@ | | | 1,000,000 | | | | 1,036,300 | |
Catawba County NC Catawba Memorial Hospital Revenue | | | | | | | 5.000 | | | | 10/01/2017 | | | NR | | | 500,000 | | | | 500,285 | |
Charlotte NC Airport Revenue | | | | | | | 5.250 | | | | 07/01/2023 | | | A1/A+*/A+@ | | | 1,000,000 | | | | 1,035,490 | |
Charlotte NC Airport Revenue Refunding Charlotte Douglas | | | | | | | 5.000 | | | | 07/01/2025 | | | A1/A+*/A+@ | | | 1,000,000 | | | | 1,018,870 | |
Davie County NC Public School & Community College Facility | | | | | | | 5.000 | | | | 06/01/2023 | | | Aa3/A+* | | | 1,000,000 | | | | 1,026,170 | |
Davie County NC Public School & Community College Facility | | | | | | | 5.000 | | | | 06/01/2025 | | | Aa3/A+* | | | 1,690,000 | | | | 1,716,347 | |
Franklin County NC Certificates of Participation | | | | | | | 5.000 | | | | 09/01/2027 | | | Aa3/A+* | | | 750,000 | | | | 752,895 | |
Henderson County NC Certificates of Participation | | | | | | | 5.000 | | | | 05/01/2025 | | | Aa3/AA-*/AA-@ | | | 1,000,000 | | | | 1,026,950 | |
Iredell County NC Certificates of Participation Public Facilities | | | | | | | 5.250 | | | | 10/01/2020 | | | Aa3/AA@ | | | 1,000,000 | | | | 1,054,850 | |
Iredell County NC Certificates of Participation School Project | | | | | | | 5.000 | | | | 06/01/2024 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,033,950 | |
Johnston NC Memorial Hospital Authority | | | | | | | 5.250 | | | | 10/01/2028 | | | Aa3/AA+* | | | 500,000 | | | | 508,395 | |
Lee County NC Certificates of Participation | | | | | | | 5.000 | | | | 04/01/2025 | | | Aa3/AA+* | | | 550,000 | | | | 566,308 | |
Montgomery County NC Certificates of Participation — Series A | | | | | | | 5.000 | | | | 02/01/2030 | | | A-* | | | 1,680,000 | | | | 1,629,667 | |
Nash County NC Limited Obligation | | | | | | | 5.000 | | | | 10/01/2030 | | | Aa3/AA+* | | | 890,000 | | | | 884,402 | |
NC Medical Care Community Hospital Morehead Memorial Hospital | | | # | | | | 5.000 | | | | 11/01/2026 | | | Aa3/AA+* | | | 2,500,000 | | | | 2,467,525 | |
NC Eastern Municipal Power Agency System Revenue | | | | | | | 5.500 | | | | 01/01/2017 | | | Baa1 | | | 45,000 | | | | 45,041 | |
NC Eastern Municipal Power Agency Power System Revenue | | | | | | | 6.000 | | | | 01/01/2025 | | | Baa1/BBB* | | | 1,000,000 | | | | 1,125,670 | |
NC Eastern Municipal Power Agency Power System Revenue | | | | | | | 5.000 | | | | 01/01/2021 | | | A-*/A-@ | | | 1,000,000 | | | | 1,033,920 | |
NC Eastern Municipal Power Agency Power System Revenue | | | # | | | | 6.000 | | | | 01/01/2018 | | | Baa1 | | | 1,000,000 | | | | 1,161,430 | |
NC Eastern Municipal Power Agency — Series B | | | | | | | 6.000 | | | | 01/01/2022 | | | Aa3/AA+*/AA-@ | | | 915,000 | | | | 1,051,930 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2024 | | | Aa1/AA+*/AA+@ | | | 1,000,000 | | | | 1,051,280 | |
NC Medical Care Community Hospital Revenue — High Point | | | | | | | 5.000 | | | | 10/01/2019 | | | NR | | | 500,000 | | | | 491,620 | |
NC Medical Care Community Hospital Revenue — Stanly Hospital | | | | | | | 5.375 | | | | 10/01/2014 | | | BBB+@ | | | 30,000 | | | | 30,060 | |
Randolph County NC Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2027 | | | Aa3 | | | 1,000,000 | | | | 1,004,640 | |
Rockingham County NC Certificates of Participation | | | | | | | 5.000 | | | | 04/01/2032 | | | Aa3/AA+* | | | 750,000 | | | | 738,360 | |
Sampson County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2022 | | | Aa3/AA+* | | | 1,250,000 | | | | 1,324,437 | |
Sampson County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2026 | | | Aa3/AA+* | | | 1,000,000 | | | | 1,024,200 | |
University of NC Wilmington Certificates of Participation | | | | | | | 5.250 | | | | 06/01/2025 | | | A-* | | | 1,000,000 | | | | 1,022,060 | |
University of NC Wilmington Student Housing Project | | | | | | | 5.000 | | | | 06/01/2025 | | | A-* | | | 580,000 | | | | 584,350 | |
University of NC System Pool Revenue — Series A | | | | | | | 5.000 | | | | 10/01/2026 | | | Aa3 | | | 1,000,000 | | | | 1,035,650 | |
University of NC System Pool Revenue — Series A | | | | | | | 5.000 | | | | 10/01/2033 | | | Aa3 | | | 1,000,000 | | | | 1,001,190 | |
Wilmington NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA*/AA@ | | | 1,500,000 | | | | 1,502,865 | |
Wilmington NC Store Water Revenue | | | | | | | 5.000 | | | | 06/01/2028 | | | Aa2/AA* | | | 500,000 | | | | 506,545 | |
Wilson NC Certificates of Participation Public Facilities | | | | | | | 5.000 | | | | 05/01/2021 | | | Aa3/AA+*/AA-@ | | | 780,000 | | | | 822,323 | |
Wilson NC Certificates of Participation Public Facilities | | | | | | | 5.000 | | | | 05/01/2025 | | | Aa3/AA+*/AA-@ | | | 750,000 | | | | 762,563 | |
Wilson County Certificates of Participation Public Facility | | | | | | | 5.000 | | | | 05/01/2029 | | | Aa3/AA+*/AA-@ | | | 1,355,000 | | | | 1,365,134 | |
Wilson Combined Enterprise System | | | | | | | 4.700 | | | | 12/01/2022 | | | Aa3/AA@ | | | 500,000 | | | | 508,320 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 37,479,982 | |
| CERTIFICATES OF PARTICIPATION BONDS (UNINSURED) | | | | | | | | | | | | | | | |
| 14.53% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Cabarrus County NC Certificates of Participation | | | | | | | 5.000 | | | | 01/01/2029 | | | Aa2/AA*/AA@ | | | 750,000 | | | | 758,873 | |
Charlotte NC Certificates of Participation Convention Facility | | | | | | | 5.000 | | | | 12/01/2024 | | | Aa2/AA+*/AA@ | | | 1,000,000 | | | | 1,032,470 | |
Charlotte NC Certificates of Participation | | | # | | | | 5.000 | | | | 06/01/2026 | | | Aa2/AA+*/AA@ | | | 1,455,000 | | | | 1,486,573 | |
Charlotte NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA+*/AA@ | | | 775,000 | | | | 786,958 | |
Charlotte NC Certificates of Participation Convention Facility | | | | | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA+*/AA@ | | | 750,000 | | | | 742,815 | |
Forsyth County NC Certificates of Participation | | | | | | | 5.000 | | | | 10/01/2018 | | | Aa1/AA+*/AA+@ | | | 5,000 | | | | 5,003 | |
Forsyth County NC Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2026 | | | Aa1/AA+*/AA+@ | | | 550,000 | | | | 560,951 | |
Mecklenburg County NC Certificates of Participation — Series B | | | | | | | 5.000 | | | | 02/01/2026 | | | Aa1/AA+*/AA+@ | | | 1,000,000 | | | | 1,025,120 | |
Mecklenburg County NC Certificates of Participation — Series A | | | | | | | 5.000 | | | | 02/01/2028 | | | Aa1/AA+*/AA+@ | | | 415,000 | | | | 419,656 | |
Mooresville NC Certificates of Participation | | | | | | | 5.000 | | | | 09/01/2032 | | | AA-* | | | 1,640,000 | | | | 1,564,740 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2025 | | | Aa1/AA+*/AA+@ | | | 1,500,000 | | | | 1,561,680 | |
Winston Salem NC Certificates of Participation — Series A | | | | | | | 4.750 | | | | 06/01/2031 | | | Aa1/AA+*/AA+@ | | | 670,000 | | | | 670,925 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 10,615,764 | |
The accompanying footnotes are an integral part of the financial statements.
21
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 7.97% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Charlotte Mecklenburg Hospital Authority NC Healthcare | | | | | | | 5.000 | % | | | 01/15/2027 | | | Aa3/AA-* | | $ | 1,090,000 | | | $ | 1,098,328 | |
Charlotte-Mecklenburg Hospital | | | | | | | 5.250 | | | | 01/15/2039 | | | Aa3/AA-* | | | 750,000 | | | | 740,220 | |
NC Medical Care Health Care Facilities Revenue Novant Health | | | | | | | 5.000 | | | | 11/01/2017 | | | A1/A+*/AA-@ | | | 1,000,000 | | | | 1,041,720 | |
NC Medical Care Community Hospital Revenue NC Baptist Hospital | | | | | | | 5.000 | | | | 06/01/2034 | | | Aa3/AA-* | | | 1,000,000 | | | | 954,810 | |
NC MEdical Care Community Hospital Revenue Baptist Hospital | | | | | | | 4.750 | | | | 06/01/2030 | | | Aa3/AA-* | | | 355,000 | | | | 336,014 | |
NC Medical Care Community Health Care Facilities Revenue | | | | | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA*/AA@ | | | 1,620,000 | | | | 1,580,618 | |
NC Medical Care Community Hospital Revenue Unrefunded Balance | | | | | | | 5.250 | | | | 12/01/2013 | | | A1/A+*/AA-@ | | | 45,000 | | | | 45,000 | |
NC Medical Care Community Hospital Revenue Unrefunded Balance | | | | | | | 5.000 | | | | 12/01/2018 | | | A1/A+*/AA-@ | | | 25,000 | | | | 25,051 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 5,821,761 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | |
| 6.65% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Moore County NC | | | | | | | 5.000 | | | | 06/01/2031 | | | Aa3/AA-* | | | 2,750,000 | | | | 2,753,960 | |
Raleigh Durham NC Airport Authority — Series A | | | | | | | 5.000 | | | | 05/01/2029 | | | Aa3/AA-@ | | | 235,000 | | | | 237,078 | |
Raleigh Durham NC Airport | | | | | | | 5.000 | | | | 05/01/2036 | | | Aa3/AA-@ | | | 1,480,000 | | | | 1,430,390 | |
Raleigh Durham NC Airport Authority — Series A | | | | | | | 5.000 | | | | 05/01/2032 | | | Aa3/AA-@ | | | 440,000 | | | | 433,721 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 4,855,149 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 5.06% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | | | | | 4.750 | | | | 01/01/2030 | | | A2/A*/A@ | | | 290,000 | | | | 271,704 | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | | | | | 5.000 | | | | 01/01/2030 | | | A2/A*/A@ | | | 1,445,000 | | | | 1,406,968 | |
Raleigh NC Combined Enterprise System | | | | | | | 5.000 | | | | 03/01/2031 | | | Aa1/AAA*/AAA@ | | | 980,000 | | | | 994,249 | |
Raleigh NC Combined Enterprise System Revenue | | | | | | | 5.000 | | | | 03/01/2031 | | | Aa1/AAA*/AAA@ | | | 1,000,000 | | | | 1,020,450 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3,693,371 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 4.96% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Charlotte NC Water and Sewer Systems Revenue | | | | | | | 4.500 | | | | 07/01/2028 | | | Aaa/AAA*/AAA@ | | | 750,000 | | | | 751,080 | |
Johnston County NC Installment Financing Contract | | | | | | | 5.000 | | | | 10/15/2027 | | | Aa3/AA* | | | 570,000 | | | | 581,907 | |
NC Infrastructure Financial Corporation Lease Purchase | | | # | | | | 5.000 | | | | 10/01/2021 | | | Aa1/AA+*/AA+@ | | | 1,000,000 | | | | 1,049,660 | |
University NC University Revenues UNC Chapel Hill | | | | | | | 5.000 | | | | 12/01/2031 | | | Aaa/AA+*/AA+@ | | | 1,215,000 | | | | 1,241,293 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3,623,940 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 3.92% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC Capital Facilites Financial Agency Education Wake Forest | | | | | | | 5.000 | | | | 01/01/2031 | | | Aa3/AA* | | | 500,000 | | | | 509,905 | |
NC Capital Facilities Finance Agency Wake Forest University | | | | | | | 5.000 | | | | 01/01/2038 | | | Aa3/AA* | | | 1,250,000 | | | | 1,252,450 | |
NC Capital Facilities Financial Agency Revenue Duke University | | | | | | | 5.000 | | | | 10/01/2038 | | | Aa1/AA+* | | | 500,000 | | | | 502,645 | |
Pitt County NC Limited Obligation — Series A | | | | | | | 5.000 | | | | 04/01/2035 | | | Aa3/AA-*/AA@ | | | 105,000 | | | | 103,109 | |
University of NC System Pool Revenue General Trust Indenture | | | | | | | 5.000 | | | | 10/01/2034 | | | Aa2 | | | 500,000 | | | | 497,205 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,865,314 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 2.87% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Iredell County NC Community College | | | | | | | 5.000 | | | | 04/01/2026 | | | Aa2/AA*/AA+@ | | | 225,000 | | | | 237,285 | |
Iredell County NC Community College | | | | | | | 5.000 | | | | 04/01/2027 | | | Aa2/AA*/AA+@ | | | 325,000 | | | | 341,084 | |
Wake County NC Limited Obligation — Series 209 | | | | | | | 5.000 | | | | 06/01/2032 | | | Aa1/AA+*/AA+@ | | | 1,500,000 | | | | 1,517,400 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,095,769 | |
| PREREFUNDED BONDS | | | | | | | | | | | |
| 1.36% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC Eastern Municipal Power Agency Power System — Series A | | | | | | | 6.000 | | | | 01/01/2026 | | | Aaa/A-*/A-@ | | | 805,000 | | | | 993,241 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 993,241 | |
The accompanying footnotes are an integral part of the financial statements.
22
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | |
| .47% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Pitt County NC Memorial Hospital Revenue | | | | | | | 5.500 | % | | | 12/01/2015 | | | Aaa | | $ | 325,000 | | | $ | 344,042 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 344,042 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | |
| .13% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC Housing Finance Agency Single Family Revenue — Series II | | | | | | | 6.200 | | | | 03/01/2016 | | | Aa2/AA* | | | 25,000 | | | | 25,037 | |
NC Housing Finance Agency Single Family Revenue — Series KK | | | | | | | 5.875 | | | | 09/01/2017 | | | Aa2/AA* | | | 40,000 | | | | 40,063 | |
NC Housing Finance Agency Home Ownership Revenue | | | | | | | 5.125 | | | | 07/01/2013 | | | Aa2/AA* | | | 30,000 | | | | 30,011 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 95,111 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $73,786,141) (See (a) below for further explanation) 99.23% of Net Assets | | | | | | | | | $ | 72,483,444 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 283,958 | |
| | Unrealized depreciation | | | (1,586,655 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (1,302,697 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 72,483,444 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 72,483,444 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
23
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $73,786,141) | | | | | | $ | 72,483,444 | |
Cash | | | | | | | 983 | |
Interest receivable | | | | | | | 921,132 | |
Prepaid expenses | | | | | | | 3,178 | |
| | | | | | | | |
Total assets | | | | | | | 73,408,737 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 231,237 | | | | | |
Fund shares redeemed | | | 44,053 | | | | | |
Investment advisory fee | | | 33,212 | | | | | |
Transfer agent fee | | | 1,206 | | | | | |
Notes Payable | | | 29,003 | | | | | |
Accrued expenses | | | 19,564 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 358,275 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 74,519,025 | |
Net accumulated realized loss on investment transactions | | | | | | | (165,866 | ) |
Net unrealized depreciation in value of investments | | | | | | | (1,302,697 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 73,050,462 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($73,050,462 -:- 6,866,798
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.64 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 1,721,267 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 199,227 | |
Transfer agent fee | | | 50,839 | |
Custodian expense | | | 6,270 | |
Professional fees | | | 8,525 | |
Trustee fees | | | 4,190 | |
Other expenses | | | 9,407 | |
| | | | |
Total expenses | | | 278,458 | |
Custodian expense reduction | | | (451 | ) |
| | | | |
Net expenses | | | 278,007 | |
| | | | |
Net investment income | | | 1,443,260 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 298,881 | |
Net change in unrealized appreciation/depreciation | | | (3,020,450 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (2,721,569 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (1,278,309 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
24
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,443,260 | | | $ | 2,648,834 | |
Net realized gain/(loss) on investments | | | 298,881 | | | | (117,110 | ) |
Net change in unrealized appreciation/depreciation | | | (3,020,450 | ) | | | 2,027,701 | |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | (1,278,309 | ) | | | 4,559,425 | |
Distributions from net investment income | | | (1,443,260 | ) | | | (2,648,834 | ) |
Net fund share transactions (Note 4) | | | (1,343,723 | ) | | | 8,314,549 | |
| | | | | | | | |
Total increase/(decrease) | | | (4,065,292 | ) | | | 10,225,140 | |
Net assets: | | | | | | | | |
Beginning of period | | | 77,115,754 | | | | 66,890,614 | |
| | | | | | | | |
End of period | | $ | 73,050,462 | | | $ | 77,115,754 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/10 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $10.71 | | | | $10.71 | | | | $10.62 | | | | $10.74 | | | | $10.74 | | | | $11.10 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.20 | | | | 0.40 | | | | 0.41 | | | | 0.41 | | | | 0.41 | | | | 0.42 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.07 | ) | | | 0.30 | | | | 0.09 | | | | (0.12 | ) | | | — | (b) | | | (0.36 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.13 | | | | 0.70 | | | | 0.50 | | | | 0.29 | | | | 0.41 | | | | 0.06 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.20 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.42 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.64 | | | | $11.01 | | | | $10.71 | | | | $10.62 | | | | $10.74 | | | | $10.74 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | (1.58% | )(c) | | | 6.62% | | | | 4.83% | | | | 2.69% | | | | 3.85% | | | | 0.59% | |
Net assets, end of period (in thousands) | | | $73,050 | | | | $77,116 | | | | $66,891 | | | | $65,300 | | | | $54,994 | | | | $48,770 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | (d) | | | 0.72% | | | | 0.72% | | | | 0.71% | | | | 0.73% | | | | 0.72% | |
Ratio of net investment income to average net assets | | | 3.66% | (d) | | | 3.66% | | | | 3.89% | | | | 3.76% | | | | 3.79% | | | | 3.89% | |
Portfolio turnover | | | 19.88% | (d) | | | 5.92% | | | | 7.82% | | | | 11.03% | | | | 5.20% | | | | 12.73% | |
| (a) | | Percentages are after Custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | | | |
| | 0.70% | (d) | | For the six months ended December 31, 2010 |
| | 0.72% | | | For the year ended June 30, 2010 |
| | 0.72% | | | For the year ended June 30, 2009 |
| | 0.72% | | | For the year ended June 30, 2008 |
| | 0.74% | | | For the year ended June 30, 2007 |
| | 0.74% | | | For the year ended June 30, 2006 |
| (b) | | Rounds to less than $0.01. |
The accompanying notes are an integral part of the financial statements.
25
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | ` | | | | | |
| 58.92% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Appalachian State University NC Revenue | | | | | | | 5.000 | % | | | 07/15/2018 | | | Aa3 | | $ | 75,000 | | | $ | 81,287 | |
Asheville NC Water System Revenue Refunding | | | | | | | 5.000 | | | | 08/01/2017 | | | Aa2/AA+* | | | 140,000 | | | | 157,976 | |
Buncombe County NC Certificates of Participation | | | | | | | 4.000 | | | | 04/01/2016 | | | Aa2/AA* | | | 125,000 | | | | 136,030 | |
Burke County NC Certificates of Participation | | | | | | | 4.250 | | | | 04/01/2016 | | | A1/A-* | | | 50,000 | | | | 53,515 | |
Cabarrus County NC Certificates of Participation | | | | | | | 5.625 | | | | 02/01/2016 | | | Aa2/AA*/AA@ | | | 125,000 | | | | 144,374 | |
Catawba County NC Certificates of Participation Public Schools | | | | | | | 5.250 | | | | 06/01/2016 | | | Aa2 | | | 125,000 | | | | 137,436 | |
Catawba County NC Certificates of Participation Public Schools | | | | | | | 5.250 | | | | 06/01/2018 | | | Aa2 | | | 125,000 | | | | 135,036 | |
Catawba County NC Certificates of Participation | | | | | | | 5.250 | | | | 06/01/2019 | | | Aa2/BBB* | | | 200,000 | | | | 216,242 | |
Craven County NC Certificates of Participation | | | | | | | 4.375 | | | | 06/01/2016 | | | Aa3/AA-* | | | 115,000 | | | | 125,127 | |
Dare County NC Certificates of Participation | | | | | | | 5.250 | | | | 06/01/2014 | | | Aa3/AA-*/AA-@ | | | 150,000 | | | | 165,392 | |
Davie County NC Community College | | | | | | | 4.000 | | | | 06/01/2013 | | | Aa3/A+* | | | 250,000 | | | | 265,265 | |
Edgecombe County NC Schools | | | | | | | 4.000 | | | | 02/01/2015 | | | A1/A+* | | | 235,000 | | | | 253,624 | |
Harnett County NC Certificates of Participation — Series A | | | | | | | 5.000 | | | | 12/01/2015 | | | Aa3/AA+* | | | 125,000 | | | | 141,598 | |
Harnett County Certificates of Participation | | | | | | | 3.500 | | | | 06/01/2016 | | | Aa3/AA+* | | | 250,000 | | | | 264,145 | |
Haywood NC Certificates of Participation Refunding | | | | | | | 5.000 | | | | 10/01/2016 | | | A1/A* | | | 635,000 | | | | 684,251 | |
Henderson County NC Certificates of Participation — Series A | | | # | | | | 5.250 | | | | 05/01/2020 | | | Aa3/AA-*/AA-@ | | | 300,000 | | | | 320,550 | |
Henderson County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2014 | | | Aa3/AA-*/AA-@ | | | 50,000 | | | | 54,136 | |
Iredell County NC Certificates of Participation School Project | | | | | | | 5.000 | | | | 06/01/2018 | | | Aa3/AA-* | | | 425,000 | | | | 467,861 | |
Johnston NC Memorial Hospital Authority | | | | | | | 4.000 | | | | 10/01/2012 | | | Aa3/AA+* | | | 200,000 | | | | 208,600 | |
Johnston NC Memorial Hospital Authority | | | | | | | 4.000 | | | | 04/01/2015 | | | Aa3/AA+* | | | 100,000 | | | | 105,760 | |
Lee County NC Certificates of Participation | | | | | | | 5.000 | | | | 04/01/2016 | | | Aa3/AA+* | | | 215,000 | | | | 232,857 | |
Lincoln County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2016 | | | Aa3/AA+*/AA@ | | | 200,000 | | | | 223,672 | |
Lincolnton NC Enterprise System Revenue | | | | | | | 5.000 | | | | 05/01/2016 | | | NR | | | 385,000 | | | | 405,636 | |
Nash County NC Limited Obligation | | | | | | | 3.000 | | | | 10/01/2015 | | | Aa3/AA+* | | | 400,000 | | | | 414,716 | |
Nash County NC Limited Obligation | | | # | | | | 5.000 | | | | 10/01/2018 | | | Aa3/AA+* | | | 150,000 | | | | 167,196 | |
New Hanover County NC Certificates of Participation | | | | | | | 5.000 | | | | 03/01/2017 | | | Aa1/AA* | | | 250,000 | | | | 268,600 | |
NC Medical Care Community Hospital — Rowan Medical | | | | | | | 5.250 | | | | 09/01/2016 | | | Aa3/AA+* | | | 1,100,000 | | | | 1,173,843 | |
NC Eastern Municipal Power Agency | | | | | | | 5.250 | | | | 01/01/2019 | | | Aa3/AA+*/A-@ | | | 250,000 | | | | 277,773 | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | | | | | 5.250 | | | | 01/01/2019 | | | A2/A*/A@ | | | 400,000 | | | | 419,248 | |
NC Medical Care Community Hospital — Scotland Memorial | | | # | | | | 5.375 | | | | 10/01/2011 | | | BBB* | | | 10,000 | | | | 10,028 | |
NC Infrastructure Finance Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2017 | | | Aa1/AA+*/AA+@ | | | 150,000 | | | | 170,765 | |
NC Medical Care — Caromont Health | | | | | | | 3.250 | | | | 02/15/2018 | | | Aa3/AA+* | | | 370,000 | | | | 361,460 | |
NC Medical Community Hospital — Wayne Memorial | | | | | | | 4.750 | | | | 10/01/2011 | | | A2 | | | 350,000 | | | | 350,039 | |
NC Medical Care Community Healthcare Facilities | | | | | | | 4.000 | | | | 10/01/2018 | | | Aa3/AA+*/AA-@ | | | 50,000 | | | | 51,134 | |
Onslow County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2018 | | | Aa3/A+* | | | 140,000 | | | | 150,777 | |
Pitt County NC Certificates of Participation School Facility | | | | | | | 4.000 | | | | 04/01/2015 | | | Aa3/AA-*/AA@ | | | 100,000 | | | | 106,632 | |
Randolph County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2016 | | | Aa3/AA+* | | | 170,000 | | | | 188,317 | |
Rockingham NC Certificates of Participation | | | | | | | 5.250 | | | | 04/01/2013 | | | Aa3/A+* | | | 125,000 | | | | 132,006 | |
Rutherford County NC Certificates of Participation | | | | | | | 5.000 | | | | 12/01/2018 | | | Aa3/AA+* | | | 205,000 | | | | 227,593 | |
Sampson County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2014 | | | Aa3/AA+* | | | 50,000 | | | | 55,612 | |
Sampson Area Development Corporation NC Refunding | | | | | | | 4.000 | | | | 06/01/2015 | | | AA+* | | | 150,000 | | | | 160,388 | |
Union County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2012 | | | Aa2/AA-*/AA@ | | | 100,000 | | | | 105,962 | |
Union County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2020 | | | Aa2/AA-*/AA@ | | | 250,000 | | | | 268,350 | |
University NC Wilmington Certificates of Participation | | | # | | | | 5.000 | | | | 06/01/2014 | | | A-* | | | 40,000 | | | | 43,460 | |
University NC Wilmington Certificates of Participation | | | | | | | 4.250 | | | | 06/01/2017 | | | A-* | | | 300,000 | | | | 317,535 | |
University NC System Pool Revenue Asheville Wilmington | | | | | | | 5.000 | | | | 10/01/2016 | | | Aa3/AA+* | | | 230,000 | | | | 262,727 | |
Wilson NC Certificates of Participation | | | | | | | 5.000 | | | | 05/01/2016 | | | Aa3/AA+*/AA-@ | | | 200,000 | | | | 224,812 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 10,889,343 | |
| CERTIFICATES OF PARTICIPATION BONDS (UNINSURED) | | | | | | | | | | | | | | | | | | | |
| 14.81% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Cabarrus County NC Certificates of Participation | | | | | | | 5.000 | | | | 06/01/2014 | | | Aa3/AA*/AA@ | | | 135,000 | | | | 149,203 | |
Cabarrus County NC Certificates of Participation | | | | | | | 4.000 | | | | 01/01/2015 | | | Aa2/AA*/AA@ | | | 225,000 | | | | 242,665 | |
Cabarrus County NC Certificates of Participation | | | | | | | 5.000 | | | | 01/01/2017 | | | Aa3/AA*/AA-@ | | | 150,000 | | | | 167,933 | |
Chapel Hill NC Certificates of Participation Operations Center | | | # | | | | 5.250 | | | | 06/01/2019 | | | Aa1/AA+* | | | 260,000 | | | | 284,586 | |
Charlotte NC Certificates of Participation | | | | | | | 4.000 | | | | 06/01/2012 | | | Aa2/AA+*/AA@ | | | 50,000 | | | | 52,126 | |
The accompanying footnotes are an integral part of the financial statements.
26
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
Charlotte NC Certificates of Participation Refunding | | | | | | | 5.000 | % | | | 12/01/2021 | | | Aa2/AA+*/AA@ | | $ | 270,000 | | | $ | 285,514 | |
Charlotte NC Certificates of Participation | | | | | | | 4.375 | | | | 12/01/2014 | | | Aa2/AA+* | | | 50,000 | | | | 51,862 | |
Cumberland County NC Certificates of Participation | | | # | | | | 5.000 | | | | 12/01/2015 | | | Aa2/AA* | | | 75,000 | | | | 85,034 | |
Forsyth County NC Certificates of Participation | | | | | | | 5.000 | | | | 10/01/2019 | | | Aa1/AA+*/AA+@ | | | 600,000 | | | | 660,330 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2016 | | | Aa1/AA+*/AA+@ | | | 200,000 | | | | 222,828 | |
NC State Certificates of Participation Wildlife Resources | | | | | | | 5.250 | | | | 06/01/2018 | | | Aa1/AA+*/AA+@ | | | 500,000 | | | | 534,835 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,736,916 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 5.94% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC Eastern Municipal Power Agency — Series D | | | | | | | 4.000 | | | | 01/01/2016 | | | Baa1/A-*/A-@ | | | 95,000 | | | | 100,148 | |
NC Eastern Municipal Power Agency | | | | | | | 5.375 | | | | 01/01/2017 | | | Baa1/A-*/A-@ | | | 200,000 | | | | 209,432 | |
NC Eastern Municipal Power Agency — Series B | | | | | | | 3.250 | | | | 01/01/2015 | | | Baa1/A-*/A-@ | | | 250,000 | | | | 259,317 | |
NC Eastern Municipal Power Agency — Series A | | | | | | | 5.000 | | | | 01/01/2016 | | | A-*/A-@ | | | 50,000 | | | | 55,841 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | | | | | 5.250 | | | | 01/01/2017 | | | A2/A*/A@ | | | 200,000 | | | | 225,830 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | | | | | 4.000 | | | | 01/01/2016 | | | A2/A*/A@ | | | 100,000 | | | | 107,545 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | | | | | 5.000 | | | | 01/01/2016 | | | A2/A*/A@ | | | 125,000 | | | | 139,601 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,097,714 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 4.08% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Charlotte-Mecklenburg Hospital | | | | | | | 5.000 | | | | 01/15/2019 | | | Aa3/AA-* | | | 200,000 | | | | 215,410 | |
Charlotte-Mecklenburg Hospital | | | | | | | 4.375 | | | | 01/15/2019 | | | Aa3/AA-* | | | 150,000 | | | | 156,883 | |
NC Medical Care Community Hospital — Pitt Memorial | | | | | | | 4.400 | | | | 12/01/2011 | | | A1/A+*/AA-@ | | | 275,000 | | | | 275,039 | |
NC Medical Care Mission Health Combined Group | | | | | | | 4.000 | | | | 10/01/2014 | | | Aa3/AA*/AA@ | | | 100,000 | | | | 106,889 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 754,221 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.83% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Charlotte NC Airport — Charlotte Douglas International | | | | | | | 4.125 | | | | 07/01/2016 | | | A1/A+*/A+@ | | | 100,000 | | | | 107,079 | |
Charlotte NC Airport Revenue Refunding | | | | | | | 5.000 | | | | 07/01/2015 | | | A1/A+*/A+@ | | | 350,000 | | | | 390,338 | |
Mecklenburg County NC Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2017 | | | Aa1/AA+*/AA+@ | | | 105,000 | | | | 118,965 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | | | | | 5.000 | | | | 02/01/2019 | | | Aa1/AA+*/AA+@ | | | 85,000 | | | | 91,318 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 707,700 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | |
| 3.79% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
University of NC Ashville Revenue | | | | | | | 5.000 | | | | 06/01/2014 | | | A1 | | | 20,000 | | | | 20,882 | |
University NC System Pool Revenue | | | | | | | 5.000 | | | | 10/01/2016 | | | Aa2 | | | 250,000 | | | | 287,313 | |
University NC System Pool Revenue | | | | | | | 5.000 | | | | 10/01/2015 | | | Aa3 | | | 350,000 | | | | 391,608 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 699,803 | |
| LEASE REVENUE BONDS | | | | | | | | |
| 2.92% of Net Assets | | | | | �� | | | | | | | | | | | | | | | | | |
NC Municipal Power Agency Number 1 Catawba Electric | | | | | | | 5.250 | | | | 01/01/2018 | | | A2/A*/A@ | | | 125,000 | | | | 139,959 | |
NC Infrastructure Finance Corporation — Correctional Facilities | | | | | | | 5.000 | | | | 10/01/2017 | | | Aa1/AA+*/AA+@ | | | 150,000 | | | | 161,726 | |
NC Infrastructure Correctional Facilities Projects | | | | | | | 5.000 | | | | 10/01/2019 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 106,681 | |
Wake County NC | | | | | | | 3.000 | | | | 01/01/2015 | | | Aa1/AA+*/AA+@ | | | 125,000 | | | | 131,505 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 539,871 | |
| PREREFUNDED BONDS | | | | | | | | |
| 1.62% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC State Public Improvement — Series A | | | | | | | 5.000 | | | | 03/01/2019 | | | Aaa | | | 235,000 | | | | 267,686 | |
University of NC Ashville Revenue | | | # | | | | 5.000 | | | | 06/01/2014 | | | A1 | | | 30,000 | | | | 31,859 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 299,545 | |
| GENERAL OBLIGATION BONDS | | | | | | | | |
| 1.46% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Cabarrus County NC Public Improvement | | | | | | | 5.000 | | | | 03/01/2018 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 111,837 | |
Mecklenburg County NC Refunding — Series A | | | | | | | 5.000 | | | | 08/01/2014 | | | Aaa/AAA*/AAA@ | | | 125,000 | | | | 141,046 | |
NC State Public Improvement — Series A | | | | | | | 5.000 | | | | 03/01/2019 | | | Aaa/AAA* | | | 15,000 | | | | 16,625 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 269,508 | |
The accompanying footnotes are an integral part of the financial statements.
27
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | |
| .65% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
NC Housing Financial Agency Home Ownership — Series 16B | | | | | | | 4.125 | % | | | 07/01/2012 | | | Aa2/AA* | | $ | 115,000 | | | $ | 119,234 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 119,234 | |
Total Investments (cost $17,806,830) (See (a) below for further explanation) 98.02% of Net Assets | | | | | | | | | $ | 18,113,855 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 307,025 | |
| | Unrealized depreciation | | | — | |
| | | | | | |
| | Net unrealized appreciation | | $ | 307,025 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 18,113,855 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 18,113,855 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
28
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $17,806,830) | | | | | | $ | 18,113,855 | |
Cash | | | | | | | 184,776 | |
Interest receivable | | | | | | | 218,151 | |
Prepaid expenses | | | | | | | 69 | |
| | | | | | | | |
Total assets | | | | | | | 18,516,851 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 8,053 | | | | | |
Fund shares redeemed | | | 2,855 | | | | | |
Investment advisory fee | | | 7,815 | | | | | |
Transfer agent fee | | | 135 | | | | | |
Accrued expenses | | | 14,898 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 33,756 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 18,225,538 | |
Net accumulated realized loss on investment transactions | | | | | | | (49,468 | ) |
Net unrealized appreciation in value of investments | | | | | | | 307,025 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 18,483,095 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($18,483,095 -:- 1,718,017
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.76 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 280,441 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 43,894 | |
Transfer agent fee | | | 13,168 | |
Custodian expense | | | 1,355 | |
Professional fees | | | 4,342 | |
Trustee fees | | | 896 | |
Other expenses | | | 3,816 | |
| | | | |
Total expenses | | | 67,471 | |
Custodian expense reduction | | | (113 | ) |
| | | | |
Net expenses | | | 67,358 | |
| | | | |
Net investment income | | | 213,083 | |
| | | | |
Realized and unrealized gain/loss on investments: | | | | |
Net realized gain | | | 30,054 | |
Net change in unrealized appreciation/depreciation | | | (124,075 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (94,021 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 119,062 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
29
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 213,083 | | | $ | 372,430 | |
Net realized gain on investments | | | 30,054 | | | | 60,038 | |
Net change in unrealized appreciation/depreciation | | | (124,075 | ) | | | 188,565 | |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 119,062 | | | | 621,033 | |
Distributions from net investment income | | | (213,083 | ) | | | (372,430 | ) |
Net fund share transactions (Note 4) | | | 2,626,108 | | | | 4,040,525 | |
| | | | | | | | |
Total increase | | | 2,532,087 | | | | 4,289,128 | |
Net assets: | | | | | | | | |
Beginning of period | | | 15,951,008 | | | | 11,661,880 | |
| | | | | | | | |
End of period | | $ | 18,483,095 | | | $ | 15,951,008 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
2010 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $10.78 | | | | $10.57 | | | | $10.37 | | | | $10.30 | | | | $10.31 | | | | $10.60 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.13 | | | | 0.29 | | | | 0.32 | | | | 0.32 | | | | 0.32 | | | | 0.30 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.02 | ) | | | 0.21 | | | | 0.20 | | | | 0.07 | | | | (0.01 | ) | | | (0.29 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.11 | | | | 0.50 | | | | 0.52 | | | | 0.39 | | | | 0.31 | | | | 0.01 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | (b) | | | — | |
Distributions from net investment income | | | (0.13 | ) | | | (0.29 | ) | | | (0.32 | ) | | | (0.32 | ) | | | (0.32 | ) | | | (0.30 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.76 | | | | $10.78 | | | | $10.57 | | | | $10.37 | | | | $10.30 | | | | $10.31 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 1.04% | (c) | | | 4.77% | | | | 5.07% | | | | 3.78% | | | | 2.97% | | | | 0.60% | |
Net assets, end of period (in thousands) | | | $18,483 | | | | $15,951 | | | | $11,662 | | | | $11,134 | | | | $11,281 | | | | $13,187 | |
Ratio of net expenses to average net assets (a) | | | 0.78% | (d) | | | 0.82% | | | | 0.81% | | | | 0.82% | | | | 0.81% | | | | 0.74% | |
Ratio of net investment income to average net assets | | | 2.44% | (d) | | | 2.69% | | | | 3.04% | | | | 3.03% | | | | 3.01% | | | | 2.83% | |
Portfolio turnover | | | 9.88% | (d) | | | 17.94% | | | | 10.14% | | | | 23.91% | | | | 13.33% | | | | 19.07% | |
| (a) | | Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions. |
| | | Expenses waived by the Adviser and expense reductions by the Custodian were as follows: |
| | | | | | | | |
| Adviser | | | Custodian | | | |
| | 0% | (d) | | | 0% | (d) | | For the six months ended December 31, 2010. |
| | 0% | | | | 0% | | | For the year ended June 30, 2010 |
| | .02% | | | | .03% | | | For the year ended June 30, 2009 |
| | 0% | | | | .04% | | | For the year ended June 30, 2008 |
| | 0% | | | | .04% | | | For the year ended June 30, 2007 |
| | .05% | | | | .03% | | | For the year ended June 30, 2006 |
| (b) | | Rounds to less than $0.01. |
The accompanying notes are an integral part of the financial statements.
30
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 53.37% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority Local Government | | | | | | | 5.000 | % | | | 06/01/2025 | | | Aa2/AA-* | | $ | 100,000 | | | $ | 104,035 | |
Blount County TN Public Building Authority Local Government | | | | | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA-* | | | 1,500,000 | | | | 1,536,150 | |
Blount County TN Public Building Authority Local Government | | | | | | | 4.750 | | | | 06/01/2031 | | | Aa2/AA-* | | | 750,000 | | | | 726,150 | |
Blount County TN Public Building Authority General Obligation | | | | | | | 5.250 | | | | 06/01/2019 | | | NR | | | 1,050,000 | | | | 1,077,647 | |
Blount County TN Building Authority Local Government Public | | | | | | | 5.000 | | | | 06/01/2032 | | | Aa3 | | | 750,000 | | | | 731,670 | |
Chattanooga TN Industrial Development Board Lease Rent Revenue | | | | | | | 5.000 | | | | 10/01/2027 | | | Aa3/AA+*/AA@ | | | 1,000,000 | | | | 1,016,530 | |
Clarksville TN Electric System Revenue | | | | | | | 5.000 | | | | 09/01/2032 | | | Aa2 | | | 1,250,000 | | | | 1,216,050 | |
Cleveland TN General Obligation — Series A | | | | | | | 5.000 | | | | 06/01/2027 | | | Aa3/A+* | | | 680,000 | | | | 687,031 | |
Columbia TN Refunded — Sewer System | | | | | | | 5.000 | | | | 12/01/2024 | | | Aa2 | | | 1,235,000 | | | | 1,290,143 | |
Columbia TN Broadband Network Revenue & Tax | | | | | | | 5.000 | | | | 03/01/2025 | | | Aa2 | | | 1,000,000 | | | | 1,033,320 | |
Franklin County TN Health & Educational Facilities Board | | | | | | | 5.000 | | | | 09/01/2025 | | | A+* | | | 1,000,000 | | | | 1,022,880 | |
Gallatin TN Water & Sewer Revenue | | | | | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 2,540,000 | | | | 2,607,843 | |
Giles County TN | | | # | | | | 4.500 | | | | 02/01/2018 | | | Aa3 | | | 1,000,000 | | | | 1,040,970 | |
Greene County TN General Obligation — Series B | | | | | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 505,000 | | | | 516,024 | |
Hallsdale-Powell Utility District Knox County TN Water and Sewer Revenue | | | | | | | 5.000 | | | | 04/01/2026 | | | AA* | | | 1,000,000 | | | | 1,024,170 | |
Hallsdale-Powell Utility District Knox County TN Water and Sewer Revenue | | | | | | | 5.000 | | | | 04/01/2031 | | | AA* | | | 740,000 | | | | 741,517 | |
Harpeth Valley Utilities TN Davidson and Williamson Counties | | | | | | | 5.000 | | | | 09/01/2029 | | | Aa3 | | | 1,410,000 | | | | 1,423,522 | |
Harpeth Valley Utilities TN Davidson and Williamson Counties | | | | | | | 5.000 | | | | 09/01/2032 | | | Aa3 | | | 1,420,000 | | | | 1,408,754 | |
Hawkins County TN Refunding General Obligation | | | | | | | 4.750 | | | | 05/01/2017 | | | Aa3 | | | 200,000 | | | | 205,034 | |
Jackson TN Energy Authority Gas System Revenue | | | | | | | 5.000 | | | | 10/01/2028 | | | Aa2 | | | 1,000,000 | | | | 1,004,470 | |
Knox County TN Health Educational & Housing Facilities Ft. Sanders | | | | | | | 6.250 | | | | 01/01/2013 | | | Baa1/BBB* | | | 10,000 | | | | 10,671 | |
Knox County TN Health Educational & Housing — Covenant Health | | | | | | | 5.000 | | | | 01/01/2022 | | | Aa3/AA+*/AA@ | | | 450,000 | | | | 450,932 | |
Knoxville TN Gas Revenue Refunded System — Series K | | | | | | | 4.750 | | | | 03/01/2022 | | | Aa2/AA* | | | 1,550,000 | | | | 1,579,915 | |
Knoxville TN Wastewater System Revenue — Series A | | | | | | | 4.750 | | | | 04/01/2021 | | | Aa2/AA+* | | | 1,150,000 | | | | 1,177,301 | |
Knoxville TN Waste Water System Revenue Improvement — Series A | | | | | | | 5.000 | | | | 04/01/2037 | | | Aa2/AA+* | | | 370,000 | | | | 371,939 | |
Manchester TN Refunding General Obligation | | | | | | | 5.000 | | | | 06/01/2038 | | | Aa3/AA+* | | | 100,000 | | | | 100,893 | |
Marion County TN Schools | | | | | | | 5.000 | | | | 06/01/2025 | | | A1 | | | 1,050,000 | | | | 1,071,399 | |
Memphis Shelby County Airport Authority — Series A | | | | | | | 5.000 | | | | 07/01/2035 | | | Aa3/AA+*/A+@ | | | 1,000,000 | | | | 956,460 | |
Metro Nashville & Davidson County TN General Obligation | | | | | | | 5.000 | | | | 01/01/2023 | | | Aa1/AA*/AA@ | | | 1,000,000 | | | | 1,044,140 | |
Metro Nashville & Davidson County TN General Obligation | | | | | | | 5.000 | | | | 01/01/2024 | | | Aa1/AA*/AA@ | | | 1,000,000 | | | | 1,038,500 | |
Metro Nashville & Davidson County TN Multi-Family | | | | | | | 4.600 | | | | 11/01/2026 | | | NR | | | 870,000 | | | | 844,222 | |
Metro Government Nashville & Davidson County TN Sports Authority | | | | | | | 5.000 | | | | 07/01/2021 | | | Aa2/AA+* | | | 1,000,000 | | | | 1,056,090 | |
Metropolitan Government Nashville and Davidson County TN | | | | | | | 5.000 | | | | 05/15/2027 | | | Aa1/AA*/AA@ | | | 1,400,000 | | | | 1,463,560 | |
Metropolitan Government Nashville and Davidson County | | | | | | | 5.000 | | | | 05/15/2028 | | | Aa1/AA*/AA@ | | | 240,000 | | | | 248,182 | |
Montgomery County TN General Obligation | | | | | | | 4.750 | | | | 05/01/2020 | | | Aa2/AA+* | | | 1,000,000 | | | | 1,052,880 | |
Oak Ridge TN Industrial Development Board Refunding Revenue | | | | | | | 5.250 | | | | 08/20/2018 | | | Aaa | | | 255,000 | | | | 255,148 | |
Overton County TN Refunding — Schools General Obligation | | | | | | | 5.000 | | | | 04/01/2018 | | | Baa1 | | | 1,000,000 | | | | 1,069,910 | |
Pigeon Forge TN Refunding — Series A | | | | | | | 4.900 | | | | 06/01/2028 | | | Aa3/AA+* | | | 1,000,000 | | | | 1,006,750 | |
Rutherford County TN Construction Utility District Waterworks | | | | | | | 5.000 | | | | 02/01/2031 | | | Aa2/AAA* | | | 1,435,000 | | | | 1,447,097 | |
Shelby County TN Health Educational & Housing Facilities | | | | | | | 5.250 | | | | 09/01/2027 | | | Aa3/AA+* | | | 1,000,000 | | | | 1,005,850 | |
Smith County TN General Obligation | | | | | | | 5.000 | | | | 04/01/2021 | | | NR | | | 720,000 | | | | 753,746 | |
South Blount County TN Utility District Waterworks Revenue | | | | | | | 5.000 | | | | 12/01/2028 | | | Aa3/AA+* | | | 1,125,000 | | | | 1,150,121 | |
TN Housing Development Agency Homeownership Program Series | | | | | | | 5.150 | | | | 07/01/2022 | | | Aa1/AA+* | | | 570,000 | | | | 570,946 | |
TN State School Board Authority Refunding Higher Education | | | | | | | 5.000 | | | | 05/01/2024 | | | Aa1/AA*/AA+@ | | | 1,395,000 | | | | 1,468,056 | |
TN State School Board Authority Refunding Higher Education | | | | | | | 5.000 | | | | 05/01/2025 | | | Aa1/AA*/AA+@ | | | 1,440,000 | | | | 1,503,101 | |
West Wilson Utility District TN Waterworks Revenue | | | | | | | 4.750 | | | | 06/01/2028 | | | Aa3 | | | 2,460,000 | | | | 2,476,113 | |
White House Utility District TN Water & Sewer | | | | | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 1,235,000 | | | | 1,254,809 | |
White House Utility District TN Water & Sewer | | | | | | | 5.000 | | | | 01/01/2030 | | | Aa3 | | | 2,505,000 | | | | 2,516,573 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 49,359,214 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 9.86% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Franklin TN Water & Sewer Revenue & Tax | | | | | | | 5.000 | | | | 04/01/2024 | | | Aaa | | | 750,000 | | | | 840,473 | |
The accompanying footnotes are an integral part of the financial statements.
31
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
Knoxville TN General Obligation — Series A | | | | | | | 5.000 | % | | | 05/01/2020 | | | Aa1/AA+*/AAA@ | | $ | 1,000,000 | | | $ | 1,140,730 | |
Memphis TN General Improvement | | | | | | | 5.000 | | | | 05/01/2020 | | | Aa2/AA*/AA-@ | | | 1,000,000 | | | | 1,020,800 | |
Metro Government Nashville & Davidson County TN — Series B | | | | | | | 5.000 | | | | 08/01/2024 | | | Aa1/AA*/AA@ | | | 500,000 | | | | 531,980 | |
Metropolitan Government Nashville and Davidson County TN | | | | | | | 5.000 | | | | 01/01/2025 | | | Aa1/AA*/AA@ | | | 4,025,000 | | | | 4,261,066 | |
Shelby County TN — Series A | | | | | | | 4.600 | | | | 11/01/2022 | | | Aa1/AA+*/AA+@ | | | 500,000 | | | | 507,880 | |
Williamson County TN Series A General Obligation | | | | | | | 4.750 | | | | 04/01/2021 | | | Aaa | | | 750,000 | | | | 811,590 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 9,114,519 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | |
| 7.95% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Metro Nashville & Davidson County TN McKendree | | | | | | | 5.125 | | | | 01/01/2020 | | | AA* | | | 1,700,000 | | | | 1,701,190 | |
TN State School Board Authority Higher Education Facilities | | | | | | | 5.000 | | | | 05/01/2028 | | | Aa1/AA*/AA@ | | | 1,000,000 | | | | 1,039,100 | |
TN State School Board Authority Higher Educational Facilities | | | | | | | 5.125 | | | | 05/01/2033 | | | Aa1/AA*/AA@ | | | 1,300,000 | | | | 1,331,421 | |
TN State School Board Authority Higher Educational Facilities | | | | | | | 5.000 | | | | 05/01/2034 | | | Aa1/AA*/AA+@ | | | 500,000 | | | | 507,110 | |
TN State School Board Authority Higher Education Facilities | | | # | | | | 4.750 | | | | 05/01/2030 | | | Aa1/AA*/AA+@ | | | 2,750,000 | | | | 2,769,140 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 7,347,961 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 6.70% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Rutherford County TN Health & Education Facilities Board | | | | | | | 5.000 | | | | 11/15/2040 | | | Aa1/AA*/AA+@ | | | 1,500,000 | | | | 1,468,020 | |
Shelby County TN Health Education & Housing Facilities | | | | | | | 5.000 | | | | 07/01/2031 | | | Aa2/AA+@ | | | 4,750,000 | | | | 4,731,855 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 6,199,875 | |
| STATE AND LOCAL MORTGAGE REVENUE | | | | | | | | | | | | | | | | | | | | | | |
| 6.70% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
TN Housing Development Agency | | | | | | | 5.000 | | | | 07/01/2028 | | | Aa1/AA+* | | | 960,000 | | | | 957,773 | |
TN Housing Development Agency | | | | | | | 5.400 | | | | 07/01/2035 | | | Aa1/AA+* | | | 720,000 | | | | 725,731 | |
TN Housing Development Agency Homeownership Program 1 | | | | | | | 5.000 | | | | 07/01/2029 | | | Aa1/AA+* | | | 825,000 | | | | 807,461 | |
TN Housing Development Agency Homeownership Program 2 | | | | | | | 4.700 | | | | 07/01/2027 | | | Aa1/AA+* | | | 1,500,000 | | | | 1,458,045 | |
TN Housing Development Agency Series 2001 — 3B | | | | | | | 5.250 | | | | 01/01/2020 | | | Aa1/AA+* | | | 230,000 | | | | 230,729 | |
TN Housing Development Agency Mortgage Financing — Series A | | | # | | | | 5.200 | | | | 07/01/2023 | | | Aa2/AA* | | | 1,950,000 | | | | 1,978,704 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 6,158,443 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 5.35% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Citizens Gas Utility District TN Gas Revenue Refunding | | | | | | | 5.000 | | | | 05/01/2029 | | | A* | | | 250,000 | | | | 231,305 | |
Clarksville TN Electric System Revenue — Series A | | | | | | | 5.000 | | | | 09/01/2028 | | | Aa2/AA-* | | | 1,000,000 | | | | 1,045,960 | |
Clarksville TN Electric System Revenue — Series A | | | | | | | 5.000 | | | | 09/01/2033 | | | Aa2/AA-* | | | 2,000,000 | | | | 2,019,720 | |
Metropolitan Government Nashville & Davidson County TN | | | | | | | 4.750 | | | | 05/15/2028 | | | AA+*/AA+@ | | | 460,000 | | | | 465,106 | |
West Wilson Utility District TN Waterworks Revenue | | | | | | | 5.000 | | | | 06/01/2033 | | | Aa3 | | | 1,170,000 | | | | 1,185,116 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 4,947,207 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.85% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Johnson City TN Health & Educational Facilities | | | | | | | 5.125 | | | | 07/01/2025 | | | BBB* | | | 2,000,000 | | | | 2,000,000 | |
Kingsport TN Industrial Development Board Multi-family | | | | | | | 5.400 | | | | 04/20/2021 | | | NR | | | 375,000 | | | | 419,055 | |
Williamson County TN Series B General Obligation | | | | | | | 5.000 | | | | 05/01/2023 | | | Aaa | | | 1,000,000 | | | | 1,140,870 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3,559,925 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 2.46% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Johnson City TN Health & Educational Revenue | | | | | | | 5.000 | | | | 07/01/2018 | | | BBB* | | | 1,000,000 | | | | 1,000,000 | |
Johnson City TN Health & Educational Facilities | | | | | | | 6.500 | | | | 07/01/2014 | | | Baa1/BBB*/BBB+@ | | | 1,000,000 | | | | 1,114,410 | |
Metro Nashville & Davidson County TN Dandridge Tower | | | | | | | 6.375 | | | | 01/01/2011 | | | A2 | | | 90,000 | | | | 90,000 | |
Metro Nashville & Davidson County TN Water & Sewer | | | | | | | 6.500 | | | | 12/01/2014 | | | Aaa/BBB* | | | 60,000 | | | | 71,926 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,276,336 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 2.32% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Chattanooga TN Electric Revenue — Series A | | | | | | | 5.000 | | | | 09/01/2026 | | | AA* | | | 250,000 | | | | 262,725 | |
Memphis/Shelby County TN Special Facilities Revenue FedEx | | | | | | | 5.050 | | | | 09/01/2012 | | | Baa2/BBB* | | | 250,000 | | | | 261,758 | |
Memphis-Shelby County Sports Authority | | | | | | | 5.250 | | | | 11/01/2027 | | | Aa2/AA-*/A+@ | | | 750,000 | | | | 747,450 | |
TN Housing Development Agency — Series 1B | | | | | | | 5.000 | | | | 07/01/2029 | | | Aa1/AA+*/NR@ | | | 895,000 | | | | 877,011 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2,148,944 | |
The accompanying footnotes are an integral part of the financial statements.
32
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | |
| .54% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Memphis Shelby County TN Sports Authority Memphis Arena | | | | | | | 5.250 | % | | | 11/01/2026 | | | Aa2/AA-*/A+@ | | $ | 500,000 | | | $ | 502,415 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 502,415 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $92,086,189) (See (a) below for further explanation) 99.10% of Net Assets | | | | | | | | | $ | 91,614,837 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 806,700 | |
| | Unrealized depreciation | | | (1,278,052 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (471,352 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 91,614,837 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 91,614,837 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
33
TENNESSEE TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $92,086,189) | | | | | | $ | 91,614,837 | |
Cash | | | | | | | 727 | |
Interest receivable | | | | | | | 1,427,751 | |
Prepaid expenses | | | | | | | 3,901 | |
| | | | | | | | |
Total assets | | | | | | | 93,047,216 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 389,340 | | | | | |
Fund shares redeemed | | | 12,994 | | | | | |
Investment advisory fee | | | 39,675 | | | | | |
Transfer agent fee | | | 638 | | | | | |
Notes payable | | | 71,020 | | | | | |
Accrued expenses | | | 50,953 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 564,620 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 93,974,859 | |
Net accumulated realized loss on investment transactions | | | | | | | (1,020,911 | ) |
Net unrealized depreciation in value of investments | | | | | | | (471,352 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 92,482,596 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($92,482,596 -:- 8,582,396
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.78 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 2,098,717 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 243,432 | |
Transfer agent fee | | | 61,448 | |
Custodian expense | | | 7,661 | |
Professional fees | | | 10,389 | |
Trustee fees | | | 5,106 | |
Other expenses | | | 8,426 | |
| | | | |
Total expenses | | | 336,462 | |
Custodian expense reduction | | | (568 | ) |
| | | | |
Net expenses | | | 335,894 | |
| | | | |
Net investment income | | | 1,762,823 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 210,243 | |
Net change in unrealized appreciation/depreciation | | | (2,564,671 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (2,354,428 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (591,605 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
34
TENNESSEE TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,762,823 | | | $ | 3,415,997 | |
Net realized gain/(loss) on investments | | | 210,243 | | | | (992,378 | ) |
Net change in unrealized appreciation/depreciation | | | (2,564,671 | ) | | | 3,849,827 | |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | (591,605 | ) | | | 6,273,446 | |
Distributions from net investment income | | | (1,762,823 | ) | | | (3,415,997 | ) |
Net fund share transactions (Note 4) | | | (122,677 | ) | | | (119,960 | ) |
| | | | | | | | |
Total increase/(decrease) | | | (2,477,105 | ) | | | 2,737,489 | |
Net assets: | | | | | | | | |
Beginning of period | | | 94,959,701 | | | | 92,222,212 | |
| | | | | | | | |
End of period | | $ | 92,482,596 | | | $ | 94,959,701 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/10 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $11.04 | | | | $10.71 | | | | $10.77 | | | | $10.87 | | | | $10.84 | | | | $11.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.20 | | | | 0.40 | | | | 0.41 | | | | 0.41 | | | | 0.41 | | | | 0.42 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.26 | ) | | | 0.33 | | | | (0.06 | ) | | | (0.10 | ) | | | 0.03 | | | | (0.37 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.06 | ) | | | 0.73 | | | | 0.35 | | | | 0.31 | | | | 0.44 | | | | 0.05 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.20 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.42 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.78 | | | | $11.04 | | | | $10.71 | | | | $10.77 | | | | $10.87 | | | | $10.84 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | (0.53% | )(b) | | | 6.92% | | | | 3.40% | | | | 2.87% | | | | 4.05% | | | | 0.45% | |
Net assets, end of period (in thousands) | | | $92,483 | | | | $94,960 | | | | $92,222 | | | | $90,397 | | | | $99,697 | | | | $88,268 | |
Ratio of net expenses to average net assets (a) | | | 0.68% | (c) | | | 0.70% | | | | 0.70% | | | | 0.71% | | | | 0.72% | | | | 0.71% | |
Ratio of net investment income to average net assets | | | 3.66% | (c) | | | 3.67% | | | | 3.90% | | | | 3.74% | | | | 3.70% | | | | 3.82% | |
Portfolio turnover | | | 5.70% | (c) | | | 14.51% | | | | 7.62% | | | | 15.71% | | | | 8.55% | | | | 6.14% | |
| (a) | | Percentages are after Custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | | | |
| | 0.68% | (c) | | For the six months ended December 31, 2010 |
| | 0.70% | | | For the year ended June 30, 2010 |
| | 0.71% | | | For the year ended June 30, 2009 |
| | 0.72% | | | For the year ended June 30, 2008 |
| | 0.73% | | | For the year ended June 30, 2007 |
| | 0.72% | | | For the year ended June 30, 2006 |
The accompanying notes are an integral part of the financial statements.
35
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 61.20% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Cross Anchor TN Utility District | | | | | | | 4.250 | % | | | 12/01/2015 | | | AA+* | | $ | 65,000 | | | $ | 71,271 | |
Cross Anchor TN Utility District | | | | | | | 4.250 | | | | 12/01/2016 | | | AA+* | | | 65,000 | | | | 71,106 | |
Dickson County TN Refunding | | | | | | | 5.000 | | | | 03/01/2014 | | | A1/A+* | | | 250,000 | | | | 271,335 | |
Dickson County TN Refunding | | | | | | | 5.000 | | | | 06/01/2015 | | | A1/A+* | | | 140,000 | | | | 148,630 | |
Fayetteville TN Electric System Revenue | | | | | | | 3.000 | | | | 06/01/2015 | | | AA+* | | | 105,000 | | | | 108,068 | |
Johnson City TN Refunding | | | | | | | 4.000 | | | | 06/01/2015 | | | AA@ | | | 400,000 | | | | 433,120 | |
Johnson City TN Electric Revenue | | | | | | | 4.500 | | | | 05/01/2021 | | | Aa2/AA+* | | | 50,000 | | | | 52,350 | |
Johnson City TN Public Building Authority Revenue | | | | | | | 4.250 | | | | 09/01/2014 | | | AA@ | | | 50,000 | | | | 53,976 | |
Kingsport TN Series B Water & Sewer | | | | | | | 5.000 | | | | 03/01/2013 | | | Aa2/AA-* | | | 100,000 | | | | 108,191 | |
Knoxville TN Electric Revenue — Series V | | | | | | | 4.750 | | | | 07/01/2021 | | | Aa2/AA+* | | | 150,000 | | | | 155,456 | |
Lawrenceburg TN Refunding Water & Sewer | | | | | | | 5.000 | | | | 07/01/2015 | | | Aa3 | | | 125,000 | | | | 140,774 | |
Madison County TN Refunding — School and Public Improvement | | | | | | | 5.000 | | | | 04/01/2018 | | | Aa2/AA+* | | | 175,000 | | | | 192,465 | |
Maury County TN School & Public Improvement | | | # | | | | 5.000 | | | | 04/01/2016 | | | Aa2 | | | 1,000,000 | | | | 1,091,270 | |
Memphis-Shelby TN Sports Authority Memphis Arena Project | | | | | | | 5.500 | | | | 11/01/2012 | | | Aa2/AA-*/A+@ | | | 500,000 | | | | 533,765 | |
Memphis-Shelby County TN Sports Authority Memphis Arena | | | | | | | 5.000 | | | | 11/01/2017 | | | Aa2/AA-*/A+@ | | | 275,000 | | | | 299,167 | |
Memphis TN General Obligation General Improvement | | | | | | | 5.000 | | | | 10/01/2016 | | | Aa2/AA*/AA-@ | | | 450,000 | | | | 499,383 | |
Memphis TN — Series A | | | # | | | | 5.000 | | | | 04/01/2024 | | | Aa2/AA+*/AA-@ | | | 200,000 | | | | 211,744 | |
Metro Nashville Davidson County Water and Sewer | | | | | | | 5.200 | | | | 01/01/2013 | | | Aa2/BBB* | | | 270,000 | | | | 283,532 | |
Metropolitan Nashville Airport Authority — Series A | | | | | | | 4.500 | | | | 07/01/2014 | | | Aa3/AA+* | | | 250,000 | | | | 270,848 | |
New Market Utility District Jefferson County TN Waterworks | | | | | | | 3.500 | | | | 06/01/2014 | | | Aa3/AA+* | | | 100,000 | | | | 105,098 | |
New Market Utility District Jefferson County TN Waterworks | | | | | | | 3.500 | | | | 06/01/2015 | | | Aa3/AA+* | | | 100,000 | | | | 105,397 | |
New Market Utility District Jefferson County TN Waterworks | | | | | | | 4.000 | | | | 06/01/2016 | | | Aa3/AA+* | | | 100,000 | | | | 107,447 | |
New Market Utility District Jefferson County Waterworks | | | | | | | 4.000 | | | | 06/01/2017 | | | Aa3/AA+* | | | 100,000 | | | | 106,275 | |
Robertson County Tennesee Refunding | | | | | | | 4.000 | | | | 12/01/2012 | | | Aa3/A+* | | | 150,000 | | | | 157,962 | |
Sevier County TN Public Building Authority | | | | | | | 4.000 | | | | 03/01/2014 | | | AA+* | | | 100,000 | | | | 106,581 | |
Shelby County TN Refunding — Series A | | | | | | | 5.000 | | | | 04/01/2018 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 110,911 | |
Shelby County Health Education | | | | | | | 5.250 | | | | 09/01/2020 | | | Aa3/AA+* | | | 400,000 | | | | 426,500 | |
Washington County TN Refunding School and Public Improvement | | | | | | | 5.000 | | | | 04/01/2015 | | | Aa2 | | | 200,000 | | | | 223,476 | |
Washington County TN Refunding School and Public Improvement | | | | | | | 5.000 | | | | 04/01/2016 | | | Aa2 | | | 125,000 | | | | 137,826 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 6,583,924 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 9.32% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Memphis TN Electric System Revenue — Series A | | | | | | | 5.000 | | | | 12/01/2015 | | | Aa2/AA+*/AAA@ | | | 900,000 | | | | 1,002,114 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,002,114 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 7.45% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Claiborne County TN Public Improvement — Series A | | | | | | | 5.000 | | | | 04/01/2017 | | | A+* | | | 170,000 | | | | 192,341 | |
Memphis TN Refunding General Improvement | | | | | | | 5.000 | | | | 10/01/2017 | | | Aa2/AA*/AA-@ | | | 100,000 | | | | 114,966 | |
Metro Government Nashville & Davidson County TN Refunding | | | | | | | 5.000 | | | | 05/15/2019 | | | Aa1/AA*/AA@ | | | 250,000 | | | | 280,028 | |
Sevier County TN Public Building Authority | | | | | | | 4.000 | | | | 06/01/2014 | | | AA* | | | 200,000 | | | �� | 213,828 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 801,163 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 6.49% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Chattanooga TN Electric Revenue — Series A | | | | | | | 5.000 | | | | 09/01/2021 | | | AA* | | | 400,000 | | | | 436,659 | |
Memphis-Shelby County TN Airport — Federal Express Corporation | | | | | | | 5.050 | | | | 09/01/2012 | | | Baa2/BBB* | | | 250,000 | | | | 261,758 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 698,417 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 5.24% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
TN Housing Development Agency Homeownership Program | | | | | | | 4.200 | | | | 01/01/2016 | | | Aa1/AA+* | | | 150,000 | | | | 155,921 | |
TN Housing Development Agency — Series 1B | | | | | | | 4.800 | | | | 07/01/2024 | | | Aa1/AA+* | | | 305,000 | | | | 306,260 | |
TN Housing Development Agency Homeownership Program — 2 | | | | | | | 2.950 | | | | 01/01/2015 | | | Aa1/AA+* | | | 100,000 | | | | 101,054 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 563,235 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 4.63% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Harpeth Valley Utilities District | | | | | | | 5.000 | | | | 03/01/2014 | | | A1 | | | 250,000 | | | | 260,173 | |
Murfreesboro TN Refunding Water and Sewer | | | | | | | 5.000 | | | | 06/01/2014 | | | Aa2/AA-* | | | 100,000 | | | | 111,613 | |
The accompanying footnotes are an integral part of the financial statements.
36
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
Sevier County TN Utility District Gas System Revenue | | | | | | | 2.650 | % | | | 06/01/2015 | | | A+* | | $ | 125,000 | | | $ | 125,881 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 497,667 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| 3.26% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority — Series B-19 | | | | | | | 3.500 | | | | 06/01/2015 | | | AA+* | | | 200,000 | | | | 213,404 | |
Metropolitian Government Nashville Davidson County Convention | | | | | | | 5.000 | | | | 07/01/2015 | | | A1/A*/AA-@ | | | 125,000 | | | | 137,439 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 350,843 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | | | | | |
| .95% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Knox County TN Hospital Facility Revenue Catholic Healthcare | | | | | | | 4.500 | | | | 10/01/2011 | | | A1/AA-*/AA-@ | | | 100,000 | | | | 102,454 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 102,454 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $10,279,113) (See (a) below for further explanation) 98.54% of Net Assets | | | | | | | | | $ | 10,599,817 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 320,704 | |
| | Unrealized depreciation | | | — | |
| | | | | | |
| | Net unrealized appreciation | | $ | 320,704 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 10,599,817 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 10,599,817 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
37
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $10,279,113) | | | | | | $ | 10,599,817 | |
Cash | | | | | | | 20,883 | |
Receivable for fund shares sold | | | | | | | 17,516 | |
Defaulted securities receivable | | | | | | | 24,000 | |
Interest receivable | | | | | | | 120,464 | |
| | | | | | | | |
Total assets | | | | | | | 10,782,680 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 7,712 | | | | | |
Fund shares redeemed | | | 140 | | | | | |
Investment advisory fee | | | 4,625 | | | | | |
Transfer agent fee | | | 80 | | | | | |
Trustee fees | | | 407 | | | | | |
Accrued expenses | | | 8,486 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 21,450 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 10,805,553 | |
Net accumulated realized loss on investment transactions | | | | | | | (365,027 | ) |
Net unrealized appreciation in value of investments | | | | | | | 320,704 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 10,761,230 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($10,761,230 -:- 1,002,717
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.73 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 173,867 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 27,386 | |
Transfer agent fee | | | 8,216 | |
Custodian expense | | | 851 | |
Professional fees | | | 1,149 | |
Pricing fees | | | 2,521 | |
Trustee fees | | | 565 | |
Other expenses | | | 3,385 | |
| | | | |
Total expenses | | | 44,073 | |
Fees waived by Adviser | | | (1,947 | ) |
Custodian expense reduction | | | (67 | ) |
| | | | |
Net expenses | | | 42,059 | |
| | | | |
Net investment income | | | 131,808 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 11,834 | |
Net change in unrealized appreciation/depreciation | | | (106,151 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (94,317 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 37,491 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
38
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 131,808 | | | $ | 255,710 | |
Net realized gain on investments | | | 11,834 | | | | 7,938 | |
Net change in unrealized appreciation/depreciation | | | (106,151 | ) | | | 238,347 | |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 37,491 | | | | 501,995 | |
Distributions from net investment income | | | (131,809 | ) | | | (255,710 | ) |
Net fund share transactions (Note 4) | | | 742,374 | | | | 792,348 | |
| | | | | | | | |
Total increase | | | 648,056 | | | | 1,038,633 | |
Net assets: | | | | | | | | |
Beginning of period | | | 10,113,174 | | | | 9,074,541 | |
| | | | | | | | |
End of period | | $ | 10,761,230 | | | $ | 10,113,174 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/10 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $10.82 | | | | $10.54 | | | | $10.31 | | | | $10.32 | | | | $10.29 | | | | $10.60 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.13 | | | | 0.28 | | | | 0.31 | | | | 0.31 | | | | 0.31 | | | | 0.30 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.09 | ) | | | 0.28 | | | | 0.23 | | | | (0.01 | ) | | | 0.03 | | | | (0.31 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.04 | | | | 0.56 | | | | 0.54 | | | | 0.30 | | | | 0.34 | | | | (0.01 | ) |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.13 | ) | | | (0.28 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.30 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.73 | | | | $10.82 | | | | $10.54 | | | | $10.31 | | | | $10.32 | | | | $10.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 0.38% | (b) | | | 5.39% | | | | 5.31% | | | | 2.90% | | | | 3.34% | | | | (0.10% | ) |
Net assets, end of period (in thousands) | | | $10,761 | | | | $10,113 | | | | $9,075 | | | | $10,335 | | | | $10,880 | | | | $15,056 | |
Ratio of net expenses to average net assets (a) | | | 0.78% | (c) | | | 0.81% | | | | 0.82% | | | | 0.81% | | | | 0.79% | | | | 0.71% | |
Ratio of net investment income to average net assets | | | 2.42% | (c) | | | 2.63% | | | | 2.97% | | | | 2.96% | | | | 3.00% | | | | 2.86% | |
Portfolio turnover | | | 9.40% | (c) | | | 16.16% | | | | 15.00% | | | | 22.22% | | | | 0.00% | | | | 23.21% | |
| (a) | | Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions. |
| | | Expenses waived by the Adviser and expense reductions by the Custodian were as follows: |
| | | | | | | | |
| Adviser | | | Custodian | | | |
| | .04% | (c) | | | 0% | (c) | | For the six months ended December 31, 2010 |
| | .02% | | | | 0% | | | For the year ended June 30, 2010 |
| | 0% | | | | .04% | | | For the year ended June 30, 2009 |
| | 0% | | | | .05% | | | For the year ended June 30, 2008 |
| | 0% | | | | .04% | | | For the year ended June 30, 2007 |
| | .04% | | | | .03% | | | For the year ended June 30, 2006 |
The accompanying notes are an integral part of the financial statements.
39
DUPREE MUTUAL FUNDS — INTERMEDIATE GOVERNMENT BOND SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
U.S. Government Securities and Agencies — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | |
| Bond Description | | | | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | | | | | |
| GOVERNMENT AGENCIES | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| FEDERAL FARM CREDIT | | | | | | | | | | | | | | | | | | | | | | |
| 53.33% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank | | | | | | | 5.840 | % | | | 07/20/2022 | | | Aaa/AAA*/AAA@ | | $ | 2,850,000 | | | $ | 3,341,027 | |
Federal Farm Credit Bank | | | | | | | 5.250 | | | | 05/10/2022 | | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | | 2,254,292 | |
Federal Farm Credit Bank | | | | | | | 5.125 | | | | 11/28/2022 | | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | | 2,234,334 | |
Federal Farm Credit Bank | | | # | | | | 5.300 | | | | 06/24/2014 | | | Aaa/AAA*/AAA@ | | | 1,550,000 | | | | 1,756,507 | |
Federal Farm Credit Bank | | | | | | | 5.250 | | | | 10/25/2022 | | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | | 1,114,107 | |
Federal Farm Credit Bank | | | | | | | 5.875 | | | | 08/16/2021 | | | Aaa/AAA*/AAA@ | | | 1,900,000 | | | | 2,088,176 | |
Federal Farm Credit Bank | | | | | | | 6.200 | | | | 07/26/2022 | | | Aaa/AAA*/AAA@ | | | 500,000 | | | | 536,155 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 13,324,598 | |
| FEDERAL HOME LOAN BANK | | | | | | | | | | | | | | | | | | | | | | |
| 30.41% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Banks Medium Term Note | | | | | | | 7.000 | | | | 08/15/2014 | | | Aaa/AAA* | | | 500,000 | | | | 596,078 | |
Federal Home Loan Banks Medium Term Note | | | | | | | 5.250 | | | | 12/11/2020 | | | Aaa/AAA*/AAA@ | | | 1,485,000 | | | | 1,659,663 | |
Federal Home Loan Banks Medium Term Note | | | | | | | 5.000 | | | | 12/10/2021 | | | Aaa/AAA*/AAA@ | | | 500,000 | | | | 551,093 | |
Federal Home Loan Banks Medium Term Note | | | # | | | | 5.750 | | | | 06/10/2022 | | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | | 2,339,588 | |
Federal Home Loan Banks Medium Term Note | | | | | | | 5.550 | | | | 06/19/2023 | | | Aaa/AAA* | | | 500,000 | | | | 540,059 | |
Federal Home Loan Banks Medium Term Note | | | | | | | 4.375 | | | | 04/16/2020 | | | AAA* | | | 1,500,000 | | | | 1,555,950 | |
Federal Home Loan Banks Medium Term Note | | | | | | | 4.250 | | | | 05/04/2020 | | | Aaa/AAA*/AAA@ | | | 350,000 | | | | 354,458 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 7,596,889 | |
| FEDERAL NATIONAL MORTGAGE ASSOCIATION | | | | | | | | | | | | | | | | | | | | | | |
| 7.39% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Federal National Mortgage Association | | | | | | | 8.100 | | | | 08/12/2019 | | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | | 1,343,283 | |
Federal National Mortgage Association | | | | | | | 5.050 | | | | 02/14/2023 | | | Aaa/AAA*/AAA@ | | | 500,000 | | | | 502,031 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,845,314 | |
| STUDENT LOAN MARKETING ASSOCIATION | | | | | | | | | | | | | | | | | | | | | | |
| 4.44% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Student Loan Marketing Association | | | | | | | 7.300 | | | | 08/01/2012 | | | AAA | | | 1,000,000 | | | | 1,109,827 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1,109,827 | |
| FEDERAL HOME LOAN MORTGAGE | | | | | | | | | | | | | | | | | | | | | | |
| 3.02% of Net Assets | | | | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Mortgage Corporation | | | | | | | 4.500 | | | | 02/25/2020 | | | Aaa/AAA*/AAA@ | | | 750,000 | | | | 753,938 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 753,938 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Investments (cost $24,783,038) (See (a) below for further explanation) 98.59% of Net Assets | | | | | | | | | $ | 24,630,566 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 708,762 | |
| | Unrealized depreciation | | | (861,234 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (152,472 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | | | | |
| | | Valuation Inputs | | Government Agencies | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 24,630,566 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 24,630,566 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
40
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2010 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $24,783,038) | | | | | | $ | 24,630,566 | |
Cash | | | | | | | 80,578 | |
Interest receivable | | | | | | | 299,783 | |
Prepaid expenses | | | | | | | 1,540 | |
| | | | | | | | |
Total assets | | | | | | | 25,012,467 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 17,970 | | | | | |
Fund shares redeemed | | | 1,689 | | | | | |
Investment advisory fee | | | 5,097 | | | | | |
Transfer agent fee | | | 285 | | | | | |
Accrued expenses | | | 4,068 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 29,109 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 25,264,665 | |
Net accumulated realized loss on investment transactions | | | | | | | (128,835 | ) |
Net unrealized depreciation in value of investments | | | | | | | (152,472 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 24,983,358 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($24,983,358 -:- 2,516,826
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 9.93 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2010
| | | | |
Net investment income: | | | | |
Interest income | | $ | 778,529 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 39,981 | |
Transfer agent fee | | | 27,013 | |
Custodian expense | | | 3,265 | |
Professional fees | | | 4,444 | |
Printing | | | 5,042 | |
Trustee fees | | | 2,184 | |
Other expenses | | | 6,494 | |
| | | | |
Total expenses | | | 88,423 | |
Custodian expense reduction | | | (230 | ) |
| | | | |
Net expenses | | | 88,193 | |
| | | | |
Net investment income | | | 690,336 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 5,314 | |
Net change in unrealized appreciation/depreciation | | | (1,238,455 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (1,233,141 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (542,805 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
41
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2010 and the year ended June 30, 2010 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/10 | | | One Year
2010 | |
Operations: | | | | | | | | |
Net investment income | | $ | 690,336 | | | $ | 1,287,448 | |
Net realized gain on investments | | | 5,314 | | | | 69,152 | |
Net change in unrealized appreciation/depreciation | | | (1,238,455 | ) | | | 559,656 | |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | (542,805 | ) | | | 1,916,256 | |
Distributions from net investment income | | | (690,336 | ) | | | (1,287,448 | ) |
Net fund share transactions (Note 4) | | | (15,836,772 | ) | | | 15,993,839 | |
| | | | | | | | |
Total increase/(decrease) | | | (17,069,913 | ) | | | 16,622,647 | |
Net assets: | | | | | | | | |
Beginning of period | | | 42,053,271 | | | | 25,430,624 | |
| | | | | | | | |
End of period | | $ | 24,983,358 | | | $ | 42,053,271 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/10 | | | For the years ended June 30, | |
| | | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | |
Net asset value, beginning of period | | | $10.24 | | | | $10.05 | | | | $9.93 | | | | $9.66 | | | | $9.58 | | | | $10.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.18 | | | | 0.44 | | | | 0.46 | | | | 0.48 | | | | 0.49 | | | | 0.48 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.31 | ) | | | 0.19 | | | | 0.12 | | | | 0.27 | | | | 0.08 | | | | (0.49 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.13 | ) | | | 0.63 | | | | 0.58 | | | | 0.75 | | | | 0.57 | | | | (0.01 | ) |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.18 | ) | | | (0.44 | ) | | | (0.46 | ) | | | (0.48 | ) | | | (0.49 | ) | | | (0.48 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $9.93 | | | | $10.24 | | | | $10.05 | | | | $9.93 | | | | $9.66 | | | | $9.58 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | (1.33% | )(b) | | | 6.38% | | | | 5.99% | | | | 7.88% | | | | 6.04% | | | | (0.14% | ) |
Net assets, end of period (in thousands) | | | $24,983 | | | | $42,053 | | | | $25,431 | | | | $23,132 | | | | $22,553 | | | | $22,553 | |
Ratio of net expenses to average net assets (a) | | | 0.44% | (c) | | | 0.47% | | | | 0.47% | | | | 0.49% | | | | 0.51% | | | | 0.51% | |
Ratio of net investment income to average net assets | | | 3.48% | (c) | | | 4.30% | | | | 4.62% | | | | 4.85% | | | | 5.05% | | | | 5.05% | |
Portfolio turnover | | | 114.02% | (c) | | | 56.38% | | | | 30.35% | | | | 33.21% | | | | 6.40% | | | | 6.40% | |
| (a) | | Percentages are after custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | | | |
| | 0.44% | (c) | | For the six months ended December 31, 2010 |
| | 0.47% | | | For the year ended June 30, 2010 |
| | 0.49% | | | For the year ended June 30, 2009 |
| | 0.51% | | | For the year ended June 30, 2008 |
| | 0.53% | | | For the year ended June 30, 2007 |
| | 0.47% | | | For the year ended June 30, 2006 |
The accompanying notes are an integral part of the financial statements.
42
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND FUND | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 21.97% of Net Assets | | | | | | | | | | | | | | | | | | |
Arlington County VA Industrial Development Authority | | | 5.844 | % | | | 08/01/2031 | | | Aa2/AA+* | | $ | 100,000 | | | $ | 97,356 | |
Buncombe County NC Limited Obligation Build America Bonds | | | 6.800 | | | | 06/01/2030 | | | Aa3/AA+*/AA-@ | | | 250,000 | | | | 247,068 | |
Colorado Springs Utilities Build America Bonds | | | 5.467 | | | | 11/15/2040 | | | Aa2/AA*/AA@ | | | 140,000 | | | | 126,984 | |
Commonwealth Financing Authority PA Revenue Build America Bonds | | | 5.587 | | | | 06/01/2030 | | | Aa3/AA-*/AA@ | | | 75,000 | | | | 70,488 | |
Douglas County WA Public Utilities Wells Hydroelectric | | | 5.450 | | | | 09/01/2040 | | | Aa3/AA* | | | 250,000 | | | | 223,123 | |
Downtown Smyrna Development Authority GA | | | 6.900 | | | | 02/01/2035 | | | Aa2/AA+* | | | 250,000 | | | | 251,055 | |
Idaho Bond Bank Authority Revenue | | | 6.250 | | | | 09/15/2040 | | | Aa1 | | | 250,000 | | | | 241,470 | |
KY State Property & Buildings Build America Bonds — Series C | | | 5.921 | | | | 11/01/2030 | | | Aa2/A+*/AA-@ | | | 250,000 | | | | 240,144 | |
Northeast OH Regional Sewer District Wastewater Revenue | | | 6.038 | | | | 11/15/2040 | | | Aa1/AA+* | | | 260,000 | | | | 253,934 | |
Omaha NE Sewer Revenue Build America Bonds | | | 6.191 | | | | 12/01/2040 | | | Aa2/AA* | | | 500,000 | | | | 480,340 | |
Oviedo FL Utility Revenue Build America Bonds — Series B | | | 5.863 | | | | 10/01/2035 | | | Aa3/AA* | | | 250,000 | | | | 232,815 | |
Raleigh NC Limited Obligation Build America Bonds | | | 5.572 | | | | 06/01/2035 | | | Aa1/AA+*/AA+@ | | | 250,000 | | | | 243,228 | |
West Knox Utilities District Knox County TN Water & Sewer | | | 6.900 | | | | 06/01/2040 | | | AA+* | | | 500,000 | | | | 509,080 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,217,085 | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 19.48% of Net Assets | | | | | | | | | | | | | | | | | | |
Armstrong School District PA Build America Bonds — Series A | | | 7.000 | | | | 03/15/2041 | | | AA+* | | | 750,000 | | | | 736,943 | |
Ashland KY Independent School District Build America Bonds | | | 6.200 | | | | 08/01/2029 | | | Aa2 | | | 100,000 | | | | 103,839 | |
Bexar County TX Revenue Bonds Venue Project — Series B | | | 6.980 | | | | 08/15/2032 | | | Aa1/AA+*/A+@ | | | 250,000 | | | | 269,908 | |
Bountiful UT Electric Revenue Build America Bonds | | | 6.110 | | | | 11/01/2030 | | | AA+*/AA-@ | | | 250,000 | | | | 242,434 | |
Colorado Water Reserve & Power Development Taxable Parker | | | 5.900 | | | | 09/01/2035 | | | AA+* | | | 100,000 | | | | 93,708 | |
Lincoln AL Build America Bonds Recovery Zone Economic Development | | | 6.800 | | | | 06/01/2040 | | | AA+* | | | 500,000 | | | | 486,960 | |
Mesa State College CO Auxiliary Facilities Build America Bonds | | | 6.746 | | | | 05/15/2042 | | | Aa2/AA-* | | | 100,000 | | | | 101,647 | |
North Fort Bend Water Authority TX Water System Revenue | | | 6.018 | | | | 12/15/2035 | | | Aa3/AA+*/A+@ | | | 250,000 | | | | 238,165 | |
Nye County NV School District Build America Bonds | | | 5.700 | | | | 05/01/2027 | | | Aa3 | | | 100,000 | | | | 92,195 | |
Scottsboro AL Build America Bonds | | | 6.400 | | | | 11/01/2040 | | | Aa3/AA+* | | | 250,000 | | | | 240,655 | |
Spring Branch TX Independent School District Build America Bonds | | | 6.038 | | | | 02/01/2039 | | �� | Aaa/AAA* | | | 250,000 | | | | 246,598 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,853,052 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 17.46% of Net Assets | | | | | | | | | | | | | | | | | | |
Anne Arundel County MD Build America Bonds | | | 6.125 | | | | 04/01/2035 | | | Aa1/AAA*/AA+@ | | | 100,000 | | | | 101,720 | |
Bexar County TX Build America Bonds | | | 5.755 | | | | 06/15/2040 | | | Aaa/AA+*/AAA@ | | | 100,000 | | | | 96,362 | |
Carroll TX Independent School District Build America Bonds | | | 6.676 | | | | 02/15/2034 | | | Aa2/AA+* | | | 100,000 | | | | 102,869 | |
East Bethel MN Build America Bonds Utilities — Series B | | | 7.000 | | | | 02/01/2040 | | | Aa3 | | | 250,000 | | | | 250,155 | |
Edgewood OH City School District Build America Bonds | | | 7.500 | | | | 12/01/2037 | | | Aa3/A+* | | | 100,000 | | | | 103,207 | |
Jefferson County TN Build America Bonds | | | 6.625 | | | | 06/01/2040 | | | Aa3/A+* | | | 250,000 | | | | 246,650 | |
Mariemont OH City School District Build America Bonds | | | 6.200 | | | | 12/01/2035 | | | Aa2/AA* | | | 100,000 | | | | 99,492 | |
Middleton DE Build America Bonds | | | 5.390 | | | | 10/01/2030 | | | Aa3/AA-* | | | 100,000 | | | | 95,203 | |
Moon Area School District PA Build America Bonds | | | 5.820 | | | | 11/15/2033 | | | AA-* | | | 250,000 | | | | 236,403 | |
New York NY Build America Bonds | | | 5.968 | | | | 03/01/2036 | | | Aa2/AA*/AA@ | | | 100,000 | | | | 98,428 | |
Olentangy Local School District OH Build America Bonds | | | 6.260 | | | | 12/01/2038 | | | Aa1/AA+* | | | 100,000 | | | | 101,429 | |
Sarasota County FL Capital Improvement Revenue Build America Bonds | | | 7.016 | | | | 10/01/2040 | | | AA+*/AA+@ | | | 710,000 | | | | 693,102 | |
Spring Township PA Build America Bonds | | | 6.050 | | | | 11/15/2039 | | | Aa2 | | | 250,000 | | | | 240,427 | |
Talladega County AL Build America Bonds Recovery Zone | | | 5.600 | | | | 04/01/2040 | | | Aa3 | | | 100,000 | | | | 92,058 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,557,505 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 16.27% of Net Assets | | | | | | | | | | | | | | | | | | |
Altoona PA Water Authority Sewer Revenue Build America Bonds | | | 7.064 | | | | 12/01/2040 | | | AA+* | | | 500,000 | | | | 487,470 | |
Gainesville FL Utilities System Revenue Build America Bonds | | | 6.024 | | | | 10/01/2040 | | | Aa2/AA* | | | 250,000 | | | | 242,378 | |
Heber Light & Power Company UT Electric Revenue Build America Bonds | | | 7.000 | | | | 12/15/2030 | | | Aa3/AA-@ | | | 500,000 | | | | 488,960 | |
Metropolitan Government Nashville & Davidson County TN Water | | | 6.693 | | | | 07/01/2041 | | | Aa3/AA-* | | | 200,000 | | | | 198,530 | |
San Antonio TN Electric & Gas Build America Bonds | | | 6.308 | | | | 02/01/2037 | | | Aa2/AA-*/AA+@ | | | 500,000 | | | | 497,930 | |
Sarasota FL Water & Sewer Revenue Build America Bonds | | | 5.575 | | | | 10/01/2035 | | | Aa2/AA-@ | | | 80,000 | | | | 73,045 | |
South Valley Sewer District Utah Build America Bonds | | | 6.140 | | | | 01/01/2029 | | | AA*/AA@ | | | 105,000 | | | | 106,523 | |
Winston Salem NC Water & Sewer Systems Build America Bonds | | | 5.694 | | | | 06/01/2040 | | | Aa1/AAA*/AA+@ | | | 200,000 | | | | 191,060 | |
York County VA Sewer Revenue Build America Bonds | | | 6.607 | | | | 06/01/2040 | | | Aa3 | | | 100,000 | | | | 96,935 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,382,831 | |
The accompanying footnotes are an integral part of the financial statements.
43
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND FUND | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds — 100%
December 31, 2010
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating | | Par Value | | | Market Value | |
| | | | | | | | | | | | | | | | | | |
| CERTIFICATES OF PARTICIPATION BONDS (UNINSURED) | | | | | | | | | | | | | | | | | | |
| 15.98% of Net Assets | | | | | | | | | | | | | | | | | | |
CO State Building Excellent Schools Today Certificates of Participation | | | 7.017 | % | | | 03/15/2031 | | | Aa2/AA-* | | $ | 500,000 | | | $ | 503,435 | |
Eagle Garfield & Routt Counties CO School District Build American Bonds | | | 5.900 | | | | 12/01/2035 | | | Aa3 | | | 90,000 | | | | 82,648 | |
Grand Junction CO Certificates of Participation Build America Bonds | | | 7.500 | | | | 12/01/2030 | | | A+* | | | 500,000 | | | | 497,915 | |
Pennington County SD Certificates of Participation Build America Bonds | | | 7.200 | | | | 06/01/2037 | | | Aa2 | | | 750,000 | | | | 756,835 | |
Sedalia MO Certificates of Participation Build America Bonds | | | 7.300 | | | | 06/01/2035 | | | AA+* | | | 500,000 | | | | 498,830 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,339,663 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 3.45% of Net Assets | | | | | | | | | | | | | | | | | | |
Maine Health & Higher Educational Facilities Authority | | | 6.667 | | | | 07/01/2039 | | | Aa2 | | | 100,000 | | | | 109,055 | |
University of KY General Receipts Build America Bonds | | | 5.700 | | | | 11/01/2039 | | | Aa2/AA-* | | | 65,000 | | | | 61,992 | |
University NC Chapel Hill Hospital Revenue Build America Bonds | | | 6.329 | | | | 02/01/2031 | | | Aa3/AA-* | | | 250,000 | | | | 241,966 | |
University NC Wilmington Revenue Build America Bonds | | | 5.870 | | | | 01/01/2035 | | | A1 | | | 100,000 | | | | 92,962 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 505,975 | |
| TURNPIKE ROAD REVENUE | | | | | | | | | | | | | | | | | | |
| 2.71% of Net Assets | | | | | | | | | | | | | | | | | | |
FL State Turnpike Authority Turnpike Revenue Build America Bonds | | | 6.800 | | | | 07/01/2039 | | | Aa1/AA-*/AA-@ | | | 300,000 | | | | 304,638 | |
NC State Turnpike Authority Build America Bonds | | | 5.418 | | | | 01/01/2041 | | | Aa2/AA* | | | 100,000 | | | | 92,072 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 396,710 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $14,632,766) (See (a) below for further explanation) 97.32% of Net Assets | | | | | | | | | $ | 14,252,821 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Securities held as collateral |
| (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 | | $ | 57,214 | |
| | Unrealized depreciation | | | (207,159 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (149,945 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
| | | | | | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 14,252,821 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 14,252,821 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
44
TAXABLE MUNICIPAL BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES | UNAUDITED |
December 31, 2010
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at value (Cost: $14,632,766) | | | | | | $ | 14,482,821 | |
Cash | | | | | | | 97,516 | |
Interest receivable | | | | | | | 124,295 | |
| | | | | | | | |
Total assets | | | | | | | 14,704,632 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 53,170 | | | | | |
Investment advisory fee | | | 4,665 | | | | | |
Transfer agent fee | | | 120 | | | | | |
Trustee fee | | | 45 | | | | | |
Accrued expenses | | | 1,399 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 59,399 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 14,795,178 | |
Net unrealized depreciation in value of investments | | | | | | | (149,945 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 14,645,233 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($14,645,233 -:- 1,557,120
shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 9.41 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the two months ended December 31, 2010*
| | | | |
Net investment income: | | | | |
Interest income | | $ | 85,158 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 6,892 | |
Transfer agent fee | | | 2,068 | |
Custodian expense | | | 90 | |
Professional fees | | | 154 | |
Pricing | | | 252 | |
Trustee fees | | | 45 | |
Other expenses | | | 1,537 | |
| | | | |
Total expenses | | | 11,038 | |
Fees waived by Adviser | | | (720 | ) |
Custodian expense reduction | | | (30 | ) |
| | | | |
Net expenses | | | 10,288 | |
| | | | |
Net investment income | | | 74,870 | |
| | | | |
Realized and unrealized gain/loss on investments: | | | | |
Net change in unrealized appreciation/depreciation | | | (149,945 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (149,945 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (75,075 | ) |
| | | | |
| * | | The Fund’s inception date was November 1, 2010. Accordingly, data exists only for the two month period ended December 31, 2010 |
The accompanying notes are an integral part of the financial statements.
45
TAXABLE MUNICIPAL BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS | UNAUDITED |
For the two months ended December 31, 2010*
| | | | |
| | | Two Months*
12/31/10 | |
Operations: | | | | |
Net investment income | | $ | 74,870 | |
Net change in unrealized appreciation/depreciation | | | (149,945 | ) |
| | | | |
Net decrease in net assets resulting from operations | | | (75,075 | ) |
Distributions from net investment income | | | (74,870 | ) |
Net fund share transactions (Note 4) | | | 14,795,178 | |
| | | | |
Total increase | | | 14,645,233 | |
Net assets: | | | | |
Beginning of period | | | — | |
| | | | |
End of period | | $ | 14,645,233 | |
| | | | |
FINANCIAL HIGHLIGHTS
| | | | |
| Selected data for a share outstanding: | | Two Months* | |
| | | 12/31/10 | |
Net asset value, beginning of period | | | $10.00 | |
| | | | |
Income from investment operations: | | | | |
Net investment income | | | 0.08 | |
Net gains/(losses) on securities, both realized and unrealized | | | (0.59 | ) |
| | | | |
Total from investment operations | | | (0.51 | ) |
Less distributions: | | | | |
Distributions from net investment income | | | (0.08 | ) |
| | | | |
Net asset value, end of period | | | $9.41 | |
| | | | |
Total return | | | (5.11% | )(b) |
Net assets, end of period (in thousands) | | | $14,645 | |
Ratio of net expenses to average net assets (a) | | | 0.96% | (c) |
Ratio of net investment income to average net assets | | | 6.18% | (c) |
Portfolio turnover | | | 0.00% | (c) |
| (a) | | Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions. |
| | | Expenses waived by the Adviser and expense reductions by the Custodian were as follows: |
| | | | | | | | |
| Adviser | | | Custodian | | | |
| | .06% | (c) | | | 0% | (c) | | For the two months ended December 31, 2010 |
| | * | | The Fund’s inception date was November 1, 2010. |
The accompanying notes are an integral part of the financial statements.
46
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 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 ten 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
Taxable Municipal 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 Taxable Municipal Bond Series’ investment strategy is to invest in taxable municipal bonds of investment grade quality.
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 and the Taxable Municipal 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.
47
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 1. | | Organization and Significant Accounting Policies, continued: |
The Funds have adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures”. ASC 820 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under ASC 820 are described as follows:
| | |
| Level 1: | | Quoted prices in active markets for identical securities. |
| Level 2: | | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
| Level 3: | | Price determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, where there is little or not market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
The aggregate value by input level, as of December 31, 2010, for the Funds’ investments is included at the end of the Funds’ Schedule of Portfolio Investments. There were no significant transfers in and out of level 1, 2, or 3 during the period ending December 31, 2010.
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 this type of transaction, they are required to segregate cash or other liquid assets equal to the value of the securities purchased.
It is each Fund’s 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 or substantially all taxable and tax-exempt income to their shareholders. The Funds have met the requirements of the code applicable to regulated investment companies for the year ended June 30, 2010. Therefore, no federal income tax provision is required. Management of the Funds has concluded that there are no uncertain tax provisions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns for the last three years.
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.
48
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 1. | | Organization and Significant Accounting Policies, continued: |
Distributions are payable:
| | |
| 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 Taxable Municipal 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 |
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.
Subsequent events occurring after the date of this report have been evaluated for potential impact to this report through the date the financial statements were issued. There were no subsequent events to report that would have a material impact on the Funds’ financial statements.
| | I. | New Accounting Pronouncement |
In January 2010, the FASB issued new guidance as an amendment to fair value measurements and disclosures. The new guidance adds new requirements for disclosure about transfers into and out of level 1 and level 2 fair value measurements and separate disclosures about purchases, sales, issuances, and settlements relating to level 3 measurements. The guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques in level 2 and level 3 fair value measurements. The Funds have adopted this amendment except for level 3 reconciliation disclosures which are effective for interim and annual periods beginning after December 15, 2010. The Funds do not expect the implications of this guidance to have a material impact of its financial statements.
| 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, Tennessee Series, and the Taxable Municipal Bond 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. Each Investment Advisory Agreements except that for the Taxable Municipal Bond Series will continue in effect until October 31, 2011, and may be continued thereafter for annual periods if renewed. The agreement for the Taxable Municipal Bond Series will continue in effect until October 31, 2012 and may be continued thereafter for annual periods if renewed.
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.
49
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 2. | | Investment Advisory Fee and Other Transactions with Affiliates, continued: |
For the six months ended December 31, 2010, fees voluntarily waived by the Adviser were as follows:
| | | | |
| | | Fees Waived
by Adviser | |
Alabama Tax-Free Income Series | | $ | 22,367 | |
Mississippi Tax-Free Income Series | | | 10,215 | |
Tennessee Tax-Free Short-to-Medium Series | | | 1,532 | |
Taxable Municipal Bond Series | | | 720 | |
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 six months ended December 31, 2010, the cost of purchases and the proceeds from sales and maturities of securities (excluding short-term securities and U.S. government obligations, except for the Intermediate Government Bond Series which are all U.S. government obligations) for each of the Funds were as follows:
| | | | | | | | |
| | | Purchases | | | Sales/Calls | |
Alabama Tax-Free Income Series | | $ | 1,389,305 | | | $ | 764,004 | |
Kentucky Tax-Free Income Series | | | 67,520,807 | | | | 67,435,529 | |
Kentucky Tax-Free Short-to-Medium Series | | | 8,617,302 | | | | 7,678,009 | |
Mississippi Tax-Free Income Series | | | 528,504 | | | | 596,074 | |
North Carolina Tax-Free Income Series | | | 7,713,424 | | | | 8,368,758 | |
North Carolina Tax-Free Short-to-Medium Series | | | 3,458,603 | | | | 845,586 | |
Tennessee Tax-Free Income Series | | | 2,882,847 | | | | 2,708,034 | |
Tennessee Tax-Free Short-to-Medium Series | | | 1,430,364 | | | | 491,500 | |
Intermediate Government Bond Series | | | 21,777,938 | | | | 36,946,170 | |
Taxable Municipal Bond Series | | | 14,633,807 | | | | — | |
At December 31, 2010 and June 30, 2010, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
| | | | | | | | | | | | | | | | |
| ALABAMA TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 160,585 | | | $ | 1,907,838 | | | | 177,602 | | | $ | 2,010,089 | |
Shares reinvested | | | 19,974 | | | | 234,314 | | | | 34,467 | | | | 384,144 | |
Shares redeemed | | | (158,855 | ) | | | (1,867,539 | ) | | | (145,306 | ) | | | (1,573,209 | ) |
Net increase | | | 21,704 | | | $ | 274,613 | | | | 66,763 | | | $ | 821,024 | |
| | | | | | | | | | | | | | | | |
| KENTUCKY TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 6,778,378 | | | $ | 52,332,575 | | | | 18,393,656 | | | $ | 140,727,307 | |
Shares reinvested | | | 1,501,166 | | | | 11,451,608 | | | | 2,574,104 | | | | 19,772,340 | |
Shares redeemed | | | (9,372,247 | ) | | | (72,051,512 | ) | | | (11,258,407 | ) | | | (86,179,579 | ) |
Net (decrease)/increase | | | (1,092,703 | ) | | $ | (8,267,329 | ) | | | 9,709,353 | | | $ | 74,320,068 | |
50
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 4. | | Capital Shares, continued: |
| | | | | | | | | | | | | | | | |
KENTUCKY TAX-FREE
SHORT-TO-MEDIUM SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 2,179,001 | | | $ | 11,837,945 | | | | 3,750,824 | | | $ | 20,000,950 | |
Shares reinvested | | | 110,235 | | | | 597,575 | | | | 237,977 | | | | 1,268,895 | |
Shares redeemed | | | (2,255,047 | ) | | | (12,159,535 | ) | | | (2,624,421 | ) | | | (13,992,073 | ) |
Net increase | | | 34,189 | | | $ | 275,985 | | | | 1,364,380 | | | $ | 7,277,772 | |
| | | | | | | | | | | | | | | | |
| MISSISSIPPI TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 32,839 | | | $ | 380,412 | | | | 145,044 | | | $ | 1,645,363 | |
Shares reinvested | | | 7,628 | | | | 87,036 | | | | 13,324 | | | | 151,816 | |
Shares redeemed | | | (42,390 | ) | | | (481,873 | ) | | | (57,518 | ) | | | (651,356 | ) |
Net (decrease)/increase | | | (1,923 | ) | | $ | (14,425 | ) | | | 100,850 | | | $ | 1,145,823 | |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE
INCOME SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 672,780 | | | $ | 7,527,380 | | | | 1,247,273 | | | $ | 13,686,149 | |
Shares reinvested | | | 88,912 | | | | 974,809 | | | | 165,572 | | | | 1,826,597 | |
Shares redeemed | | | (898,735 | ) | | | (9,845,912 | ) | | | (655,126 | ) | | | (7,198,197 | ) |
Net (decrease)/increase | | | (137,043 | ) | | $ | (1,343,723 | ) | | | 757,719 | | | $ | 8,314,549 | |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE
SHORT-TO-MEDIUM SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 403,345 | | | $ | 4,424,776 | | | | 532,609 | | | $ | 5,719,346 | |
Shares reinvested | | | 14,997 | | | | 163,835 | | | | 25,104 | | | | 269,407 | |
Shares redeemed | | | (179,490 | ) | | | (1,962,503 | ) | | | (181,532 | ) | | | (1,948,228 | ) |
Net increase | | | 238,852 | | | $ | 2,626,108 | | | | 376,181 | | | $ | 4,040,525 | |
| | | | | | | | | | | | | | | | |
| TENNESSEE TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 602,540 | | | $ | 6,716,650 | | | | 1,194,144 | | | $ | 13,126,856 | |
Shares reinvested | | | 85,269 | | | | 942,026 | | | | 163,206 | | | | 1,804,520 | |
Shares redeemed | | | (705,005 | ) | | | (7,781,353 | ) | | | (1,371,602 | ) | | | (15,051,336 | ) |
Net (decrease) | | | (17,196 | ) | | $ | (122,677 | ) | | | (14,252 | ) | | $ | (119,960 | ) |
51
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 4. | | Capital Shares, continued: |
| | | | | | | | | | | | | | | | |
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 164,581 | | | $ | 1,791,040 | | | | 169,926 | | | $ | 1,824,768 | |
Shares reinvested | | | 8,462 | | | | 92,307 | | | | 18,227 | | | | 195,876 | |
Shares redeemed | | | (105,387 | ) | | | (1,140,973 | ) | | | (114,208 | ) | | | (1,228,296 | ) |
Net increase | | | 67,656 | | | $ | 742,374 | | | | 73,945 | | | $ | 792,348 | |
| | | | | | | | | | | | | | | | |
| INTERMEDIATE GOVERNMENT BOND SERIES | | Six Months Ended
December 31, 2010 | | | Year Ended June 30, 2010 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 109,455 | | | $ | 1,113,379 | | | | 1,900,840 | | | $ | 19,267,112 | |
Shares reinvested | | | 35,075 | | | | 357,546 | | | | 81,074 | | | | 821,663 | |
Shares redeemed | | | (1,735,875 | ) | | | (17,307,695 | ) | | | (404,161 | ) | | | (4,094,936 | ) |
Net (decrease)/increase | | | (1,591,345 | ) | | $ | (15,836,772 | ) | | | 1,577,753 | | | $ | 15,993,839 | |
| | | | | | | | | | | | | | | | |
| TAXABLE MUNICIPAL BOND SERIES | | Two Months Ended
December 31, 2010 | | | | |
| | | SHARES | | | AMOUNT | | | | | | | |
Shares sold | | | 1,556,936 | | | $ | 14,793,444 | | | | | | | | | |
Shares reinvested | | | 184 | | | | 1,734 | | | | | | | | | |
Shares redeemed | | | — | | | | — | | | | | | | | | |
Net increase | | | 1,557,120 | | | $ | 14,795,178 | | | | | | | | | |
| 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, 2010, the Alabama 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 have capital loss carryforwards which are available to offset future capital gains, if any. As of June 30, 2010, the Kentucky Tax-Free Income Series does not have any capital loss carryforwards.
52
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 6. | | Federal Income Taxes, continued: |
The capital loss carryforwards expire as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | Total | |
Alabama Tax-Free Income Series | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 18,298 | | | $ | 25,322 | | | $ | 43,620 | |
Kentucky Tax-Free Short-to-Medium Series | | | — | | | | — | | | | 257,605 | | | | 74,336 | | | | 446,645 | | | | 227,932 | | | | 223,977 | | | | — | | | | 1,230,495 | |
Mississippi Tax-Free Income Series | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,458 | | | | 3,910 | | | | 16,204 | | | | 26,572 | |
North Carolina Tax-Free Income Series | | | — | | | | 347,636 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 117,110 | | | | 464,746 | |
North Carolina Tax-Free Short-to-Medium Series | | | — | | | | — | | | | — | | | | — | | | | 49,489 | | | | 30,033 | | | | — | | | | — | | | | 79,522 | |
Tennessee Tax-Free Income Series | | | 18,314 | | | | 175,434 | | | | 28,670 | | | | — | | | | — | | | | — | | | | 16,360 | | | | 992,377 | | | | 1,231,155 | |
Tennessee Tax-Free Short-to-Medium Series | | | — | | | | — | | | | — | | | | 44,876 | | | | 92,566 | | | | 23,418 | | | | — | | | | — | | | | 160,860 | |
Intermediate Government Bond Series | | | — | | | | 48,696 | | | | 2 | | | | 64,307 | | | | 21,144 | | | | — | | | | — | | | | — | | | | 134,149 | |
During the year ended June 30, 2010, the following Funds utilized capital loss carryforwards as follows:
| | | | |
| | | Amount | |
Kentucky Tax-Free Short-to-Medium Series | | $ | 150,390 | |
North Carolina Tax-Free Short-to-Medium Series | | | 60,039 | |
Tennessee Tax-Free Short-to-Medium Series | | | 17,538 | |
Intermediate Government Bond Series | | | 69,152 | |
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 2010 as follows:
| | | | |
| | | Post October Losses | |
Alabama Tax-Free Income Series | | $ | (22,487 | ) |
Mississippi Tax-Free Income Series | | | (6,718 | ) |
At June 30, 2010, the effect of permanent book to tax differences (expiration of capital loss carryforwards) resulted in increases and decreases to the components of net assets as follows:
| | | | | | | | |
| | | Accumulated Net
Realized Losses | | | Capital | |
Tennessee Tax-Free Income Series | | $ | 69,805 | | | $ | (69,805 | ) |
Tennessee Tax-Free Short-to-Medium Series | | | (4,003 | ) | | | 4,003 | |
The tax character of distributions paid for the years ended June 30, 2010 and 2009 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2010 | | | 2009 | |
| | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | |
Alabama Tax-Free Income Series | | $ | 656,017 | | | $ | — | | | $ | — | | | $ | 564,154 | | | $ | — | | | $ | — | |
Kentucky Tax-Free Income Series | | | 31,722,118 | | | | — | | | | 1,628,317 | | | | 30,399,605 | | | | — | | | | 1,239,797 | |
Kentucky Tax-Free
Short-to-Medium Series | | | 1,809,942 | | | | — | | | | — | | | | 1,797,615 | | | | — | | | | — | |
Mississippi Tax-Free Income Series | | | 218,128 | | | | — | | | | — | | | | 193,916 | | | | — | | | | — | |
North Carolina Tax-Free Income Series | | | 2,648,834 | | | | — | | | | — | | | | 2,450,110 | | | | — | | | | — | |
North Carolina Tax-Free Short-to-Medium Series | | | 372,430 | | | | — | | | | — | | | | 345,549 | | | | — | | | | — | |
Tennessee Tax-Free Income Series | | | 3,415,997 | | | | — | | | | — | | | | 3,453,113 | | | | — | | | | — | |
Tennessee Tax-Free
Short-to-Medium Series | | | 255,710 | | | | — | | | | — | | | | 283,471 | | | | — | | | | — | |
Intermediate Government Bond Series | | | — | | | | 1,287,448 | | | | — | | | | — | | | | 1,121,342 | | | | — | |
53
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 6. | | Federal Income Taxes, continued: |
At June 30, 2010, the Fund’s components of distributable earnings (accumulated losses) on a tax basis were as follows:
| | | | | | | | | | | | | | | | |
| | | Undistributed
Ordinary
Income | | | Undistributed
Tax Exempt
Income | | | Undistributed Net
Long Term
Capital Gain | | | Net Unrealized
Appreciation/
Depreciation
Investments | |
Alabama Tax-Free Income | | $ | — | | | $ | 77,871 | | | $ | — | | | $ | 311,358 | |
Kentucky Tax-Free Income | | | 3,723 | | | | 3,137,837 | | | | 305,291 | | | | 30,499,502 | |
Kentucky Tax-Free Short-to-Medium | | | — | | | | 46,195 | | | | — | | | | 2,757,023 | |
Mississippi Tax-Free Income | | | — | | | | 17,438 | | | | — | | | | 105,888 | |
North Carolina Tax-Free Income | | | — | | | | 206,436 | | | | — | | | | 1,717,753 | |
North Carolina Tax-Free Short-to-Medium | | | — | | | | 8,217 | | | | — | | | | 431,100 | |
Tennessee Tax-Free Income | | | — | | | | 386,211 | | | | — | | | | 2,093,319 | |
Tennessee Tax-Free Short-to-Medium | | | — | | | | 5,114 | | | | — | | | | 210,855 | |
Intermediate Government Bond | | | 71,826 | | | | — | | | | — | | | | 1,085,983 | |
| | | | | | | | | | | | | | | | |
| | | | | | Accumulated
Capital and
Other Losses | | | Other Temporary
Differences | | | Total
Accumulated
Earnings | |
Alabama Tax-Free Income | | | | | | $ | (66,107 | ) | | $ | (77,874 | ) | | $ | 245,248 | |
Kentucky Tax-Free Income | | | | | | | — | | | | (3,137,837 | ) | | | 30,808,516 | |
Kentucky Tax-Free Short-to-Medium | | | | | | | (1,230,495 | ) | | | (46,195 | ) | | | 1,526,528 | |
Mississippi Tax-Free Income | | | | | | | (33,290 | ) | | | (17,438 | ) | | | 72,598 | |
North Carolina Tax-Free Income | | | | | | | (464,746 | ) | | | (206,436 | ) | | | 1,253,007 | |
North Carolina Tax-Free Short-to-Medium | | | | | | | (79,522 | ) | | | (8,217 | ) | | | 351,578 | |
Tennessee Tax-Free Income | | | | | | | (1,231,155 | ) | | | (386,211 | ) | | | 862,164 | |
Tennessee Tax-Free Short-to-Medium | | | | | | | (160,860 | ) | | | (5,114 | ) | | | 49,995 | |
Intermediate Government Bond | | | | | | | (134,149 | ) | | | (71,826 | ) | | | 951,834 | |
| 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 any risk of loss would not be materially significant.
| 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 a line of credit. The principal amounts borrowed are due on demand. The agreement expires on September 30, 2011, 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.
54
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
| 8. | | Line of Credit Agreement and Custodian Agreement, continued: |
At December 31, 2010, the Funds had an unused line of credit amount of $37,815,000. During the six months ended December 31, 2010, the average interest rate on borrowings was 3.25% and the daily weighted average borrowings for each Fund were as follows:
| | | | |
| | | Weighted
Average Borrowings | |
Alabama Tax-Free Income Series | | $ | 4,592 | |
Kentucky Tax Free Income Series | | | 77,207 | |
Kentucky Tax-Free Short-to-Medium Series | | | 12,538 | |
Mississippi Tax-Free Income Series | | | 2,712 | |
North Carolina Tax-Free Income Series | | | 20,957 | |
North Carolina Tax-Free Short-to-Medium Series | | | 2,880 | |
Tennessee Tax-Free Income Series | | | 6,565 | |
Tennessee Tax-Free Short-to-Medium Series | | | 467 | |
Intermediate Government Bond Series | | | 9,000 | |
Taxable Municipal Bond Series | | | — | |
The Funds have a contractual agreement with the custodian whereby the Funds compensate the custodian for custodial services incurred exceeding the credits realized as a result of uninvested cash balances. Credits realized as a result of uninvested cash balances are used to reduce each Fund’s expenses. During the year, these credits reduced each of Funds’ expenses by the amount shown on the Statements of Operation as “Custodian expense reduction.”
55
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
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 Directorships
Held by Officer/ Trustee |
| Officers: | | | | | | | | | | |
Thomas P. Dupree Sr. 125 South Mill Street Lexington, KY 40507 Age: 80 | | President | | Annual Term;
31 years of service | | Chairman of the Board of Dupree & Company, Inc. | | N/A | | KY Historical Society Foundation |
Gay M. Elste P.O. Box 28 Versailles, KY 40383 Age: 59 | | Compliance Officer | | Annual Term;
6 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: 48 | | Executive Vice President | | Annual Term;
5 years of service | | President, Dupree & Company, Inc. | | N/A | | International Book Project, Inc. |
Michelle M. Dragoo 125 South Mill Street Lexington, KY 40507 Age: 49 | | Vice President, Secretary, Treasurer | | Annual Term;
12 years of service as Vice President, 10 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: 51 | | Assistant Secretary | | Annual Term; 17 years of service | | Dupree & Company, Inc. | | N/A | | N/A |
| Trustees: | | | | | | | | | | |
William A. Combs, Jr. 111 Woodland Ave.,
#510 Lexington, KY 40502 Age: 70 | | Chairman, Trustee | | Annual Term; 9 years of service as Chairman; 21 years of service as Trustee | | Officer, Director: Mercedes-Benz of Cincinnati, Ohio; Mercedes-Benz of West Chester, Ohio and Freedom Dodge, Lexington, KY | | 10 | | N/A |
James C. Baughman, Jr. 1999 Richmond Road Suite 4 Lexington, KY 40502 Age: 48 | | Trustee | | One Year Term; 3 Years of Service | | President, Secretary, Treasurer, Director Office Suites Plus (executive office space rental) | | 10 | | N/A |
Lucy A. Breathitt 1703 Fairway Drive Lexington, KY 40502 Age: 73 | | Trustee | | Annual Term; 14 years of service | | Alexander Farms, farming | | 10 | | KY Historical Society Foundation, KY Natural Lands Trust, Bluegrass Conservancy |
C. Timothy Cone 201 West Short Street Lexington, KY 40507 Age: 66 | | Trustee | | Annual Term; 8 years of service | | President, Gess, Mattingly & Atchison, P.S.C. (law firm) | | 10 | | N/A |
J. William Howerton 3954 Primrose Place Paducah, KY 42001 Age: 79 | | Trustee | | Annual Term; 10 years of service | | Judge (retired November 1996) KY Court of Appeals; Self-Employed Mediator (through 2006), Arbitrator and Special Judge; Trustee for charitable organization and individuals. | | 10 | | KY Lottery Corporation (through 2008) |
56
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
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 Directorships
Held by Officer/ Trustee |
William S. Patterson 367 West Short Street Lexington, KY 40507 Age: 78 | | Trustee | | Annual Term; 31 years of service | | President, CEO, Cumberland Surety Co., Lexington, KY, President, Patterson & Co., Frankfort, KY, (real estate development, thoroughbred horse breeding and farming) | | 10 | | N/A |
As of December 31, 2010, 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, 2010, 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.
Board of Trustees Approval of Existing Advisory Agreements
Dupree Mutual Fund’s Board of Trustees is responsible for overseeing the Trust’s corporate policies and adhering to fiduciary standards under the Investment Company Act of 1940 (“1940 Act”). The Trustees are responsible for the annual renewal of the Trust’s investment advisory agreements with each Fund. Under the Investment Advisory Agreements, Dupree & Company, Inc. assumes responsibility for providing investment advisory and other services.
In considering whether to renew the Investment Advisory Agreements, the Trustees, at their meeting of October 26, 2010, reviewed the following factors with respect to each Fund: (1) the nature, extent and quality of services provided by Dupree & Company to each Fund; (2) the investment performance of each Fund; (3) the costs of the services provided to each Fund and the profits realized or to be realized by Dupree & Company from its relationship with the Trust; (4) the extent to which economies of scale have been realized as each Fund grows; (5) whether the level of fees reflects those economies of scale for the benefit of Fund investors; (6) comparisons of services and fees with contracts entered into by Dupree & Company with other clients, if any; and (7) other benefits derived or anticipated to be derived by Dupree & Company from its relationship with the Trust.
Set forth below are the general factors the Trustees considered for all of the Funds, followed by an outline of the selected specific factors the Trustees considered for each particular Fund.
Nature, Extent and Quality of Services
Pursuant to each agreement, the Investment Adviser provides investment supervisory services, office space and facilities and corporate administration. Specifically, the Investment Adviser obtains and evaluates relevant information regarding the economy, industries, businesses, municipal issuers, securities markets and securities to formulate a continuing program for the management of each Fund’s assets in a manner consistent with the Fund’s investment objectives’ and to implement this program by selecting the
57
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
Board of Trustees Approval of Existing Advisory Agreements, continued:
securities to be purchased or sold by the Fund and placing orders for such purchases and sales. In addition, the Investment Adviser provides for the Fund’s office needs, maintains each Fund’s books and records, assumes and pays all sales and promotional expenses incurred in the distribution of each Fund, staffs the Fund with persons competent to perform all of its executive and administrative functions, supervises and coordinates the activities of the Trust’s institutional and other agents (e.g. custodian, transfer agent, independent accounts, independent legal counsel), and permits its officers and employees to serve as officers of the Trust, all without additional cost to the Trust.
The Trustees considered that the Investment Adviser is an experienced investment adviser whose investment professionals have managed the Funds since their inception. The Investment Adviser’s personnel provide active and extensive monitoring of the investment portfolios daily and report on the investment performance of the Funds to the Trustees at their scheduled quarterly meetings. The Trustees considered that the Investment Adviser has carried out these responsibilities in a professional manner over the years.
The Trustees considered, among other things, the performance of each of the Funds, as discussed below.
Performance
The Trustees considered the performance of each Fund during historical and recent periods and compared to (i) standardized industry performance data, (ii) the performance of comparable mutual funds and (iii) the performance of recognized indices.
The Trustees considered the comparative performance and expense data for each Fund prepared by an independent third party, Morningstar, Inc., for 1, 3 and 12 months and annualized for 3, 5 and 10 years as compared with other single state funds or government bond funds. For the most part, the returns of the Funds over the periods reviewed have closely approximated the returns of the respective benchmark indices utilized by each of the Funds. For additional detail about the factors considered by the Trustees in approving the existing advisory agreements for each Fund, please see the “Series-by-Series” synopsis provided below.
Cost and Profitability
The Trustees reviewed the audited (year ended December 31, 2009) and unaudited financial statements (nine months ended September 30, 2010) of Dupree & Company, Inc; statements of Dupree & Company Inc.’s revenues and costs of and profits from furnishing services to each Fund (twelve months ended June 30, 2010). The Investment Adviser’s revenues and costs of and profits from furnishing services to each Fund are allocated to each Fund according to each Fund’s identifiable costs and according to the size of the Fund in relation to the total size of the Trust. The Trustees considered the Investment advisory fees paid to the Investment Adviser, expressed in dollar terms and as a percentage of assets under management. The Trustees considered and reviewed information concerning the costs incurred and profits derived by Dupree & Co. for services rendered in its capacity as Investment Adviser to each Fund since the inception of each Fund. The Trustees determined that the profits earned were reasonable in light of the advisory, administrative and other services provided to each Fund and the historic subsidization provided by Dupree & Co. to the several Funds.
Fees Charged by Other Advisers
The Trustees considered information regarding fees paid to other advisers for managing similar investment portfolios. The Trustees received comparative fee information for comparable peer group funds prepared by Morningstar. The Trustees considered that the proposed advisory fees to be paid to the Investment Adviser for its services to each Fund are comparable to the advisory fees charged to other similar portfolios.
Economies of Scale
In addition to considering that the Investment Adviser’s fees are comparable to fees charged to other similar portfolios, the Trustees also considered that economies of scale are integrated into the expense formulation. Accordingly, as assets increase, the Investment Adviser’s fees decrease on a percentage basis.
Fee Comparison with Other Clients
The only client served by the Investment Adviser is the Trust so there are no applicable fee comparisons.
58
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
Board of Trustees Approval of Existing Advisory Agreements, continued:
Other Benefits
The Trustees considered that the Investment Adviser derives a financial benefit from its advisory relationship with the Trust. The sole benefit that accrues to the Investment Adviser is an increase in total fees received as each Fund increases in net asset size. The benefit to the shareholders of each Fund is that the Investment Adviser’s fees decrease on a percentage basis as total net assets under management increase. Dupree & Company, Inc. reported no other indirect benefits attributable to management of the Fund, including, but not limited to, soft dollar arrangements.
Series-by-Series Factors
Alabama Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2010 the Investment Adviser processed 40 portfolio purchase transactions and 24 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $18,588 as compared to $17,294 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond index reflects no deduction for fees or expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.47% (after waiver of fees), the lowest of 7 funds compared by Morningstar. |
Kentucky Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 63 portfolio purchase transactions and 24 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $16,352 as compared to $17,294 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond index reflects no deduction for fees or expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of five stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.58%, the lowest of 16 funds compared by Morningstar. |
Kentucky Tax-Free Short-to-Medium Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 35 portfolio purchase transactions and 16 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $14,924 as compared to $17,296 for the Barclays Capital Cap Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.72%. Out of 16 funds compared by Morningstar, only three had lower expense ratios than this Fund. Of these three funds, two only accept institutional clients and the remaining Fund was the Dupree Kentucky Tax-Free Income Series. |
Mississippi Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 18 portfolio purchase transactions and 16 portfolio sale transactions. |
59
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
Board of Trustees Approval of Existing Advisory Agreements, continued:
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $18,063 as compared to $17,294 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.45% (after waiver of fees) was the lowest of two funds compared by Morningstar. |
North Carolina Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 20 portfolio purchase transactions and 11 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $16,142 as compared to $17,294 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.72%, the 5th lowest of Funds compared by Morningstar. Of the other funds each has a load, a million dollar minimum investment or was only open to employees of the Fund. |
North Carolina Tax-Free Short-to-Medium Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 37 portfolio purchase transactions and 19 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $14,826 as compared to $17,296 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of three stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.82%, the 7th lowest of 16 funds compared by Morningstar. Of the other funds compared, one charges a sales load; one is open only to employees of the fund family; three are only open to institutional clients with a one million dollar minimum investment; and the remaining Fund is the Dupree North Carolina Tax-Free Income Series. |
Tennessee Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 17 portfolio purchase transactions and 30 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $15,954 as compared to $17,294 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of three stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.70%, the second lowest of 11 funds compared by Morningstar. The fund with the lower expense ratio is open only to institutional clients with a minimum one million dollar investment. |
60
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
Board of Trustees Approval of Existing Advisory Agreements, continued:
Tennessee Tax-Free Short-to-Medium Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 16 portfolio purchase transactions and 10 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $14,546 as compared to $17,296 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of three stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.81%, the fifth lowest of 11 funds compared by Morningstar. Two of the funds have a load, one is open to institutional clients with a million dollar investment and the other is the Dupree Tennessee Tax-Free Income Series. |
Intermediate Government Bond Series
| | · | | For the Fiscal Year ending June 30, 2010, the Investment Adviser processed 29 portfolio purchase transactions and 14 portfolio sale transactions. |
| | · | | As of June 30, 2010 the ten year growth of $10,000 invested in the Fund was $17,487as compared to $18,074 for the Barclays Capital U.S. Intermediate Government Bond Index. The Barclays Capital U.S. Intermediate Government Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2010 the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2010 the Fund’s expense ratio was 0.47%, the lowest of 30 funds compared by Morningstar. |
Taxable Municipal Bond Series
Since this is a new Fund effective November 1, 2010, the Board of Trustees approved a new Investment Advisory Agreement and did not compare the Fund to other similar funds.
61
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
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 December 31, 2010” 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
December 31, 2010 | | | Beginning
Account Value
July 1, 2010* | | | Ending
Account Value
December 31, 2010** | | | Expenses Paid During
the Six Months
Ended December 31, 2010 | |
Alabama Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .57 | % | | $ | 1,000.00 | | | $ | 987.30 | | | $ | 2.79 | |
| Hypothetical | | | .57 | | | | 1,000.00 | | | | 1,025.21 | | | | 2.84 | |
Kentucky Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .58 | | | | 1,000.00 | | | | 997.43 | | | | 2.93 | |
| Hypothetical | | | .58 | | | | 1,000.00 | | | | 1,025.21 | | | | 2.97 | |
Kentucky Tax-Free
Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .72 | | | | 1,000.00 | | | | 1,001.46 | | | | 3.64 | |
| Hypothetical | | | .72 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.69 | |
Mississippi Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .52 | | | | 1,000.00 | | | | 995.97 | | | | 2.61 | |
| Hypothetical | | | .52 | | | | 1,000.00 | | | | 1,025.21 | | | | 2.65 | |
North Carolina Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 992.04 | | | | 3.53 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.36 | |
North Carolina Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .77 | | | | 1,000.00 | | | | 1,005.24 | | | | 3.91 | |
| Hypothetical | | | .77 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.95 | |
Tennessee Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 997.33 | | | | 3.50 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.55 | |
62
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2010
Schedule of Shareholder Expenses, continued:
| | | | | | | | | | | | | | | | |
| | | Net Expense
Ratio
Annualized
December 31, 2010 | | | Beginning
Account Value
July 1, 2010* | | | Ending
Account Value
December 31, 2010** | | | Expenses Paid During
the Six Months
Ended December 31, 2010 | |
Tennessee Tax-Free
Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .77 | % | | $ | 1,000.00 | | | $ | 1,001.92 | | | $ | 3.91 | |
| Hypothetical | | | .77 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.95 | |
Intermediate Government Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .44 | | | | 1,000.00 | | | | 993.30 | | | | 2.23 | |
| Hypothetical | | | .44 | | | | 1,000.00 | | | | 1,025.21 | | | | 2.26 | |
Taxable Municipal Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .97 | | | | 1,000.00 | | | | 974.45 | | | | 4.77 | |
| Hypothetical | | | .97 | | | | 1,000.00 | | | | 1,025.21 | | | | 4.96 | |
| * | | 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 [184/365] (to reflect one-half year period). |
Shareholder Meeting
A meeting of Shareholders was held on October 26, 2010. The purpose of the meeting was (i) to elect Messrs. James C. Baughman, Jr., William Combs, Jr., C. Timothy Cone, J. William Howerton, William Patterson and Ms. Lucy A. Breathitt as Trustees and (ii) to ratify the selection of Ernst & Young LLP as the Trust’s independent auditors for the fiscal year ending June 30, 2011. The results of all matters voted on by shareholders at the Shareholder Meeting held October 26, 2010 were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | FOR | | | AGAINST | | | ABSTAIN | | | WITHHELD | | | TOTAL | |
James C. Baughman | | | 85,495,104.425 | | | | 338,215.515 | | | | 746,634.486 | | | | 0.00 | | | | 86,579,954.426 | |
Lucy A. Breathitt | | | 85,131,932.439 | | | | 338,215.515 | | | | 746,634.486 | | | | 0.00 | | | | 86,216,782.440 | |
William A. Combs | | | 85,455,080.213 | | | | 338,215.515 | | | | 746,634.486 | | | | 0.00 | | | | 86,539,930.214 | |
C. Timothy Cone | | | 85,467,633.499 | | | | 338,215.515 | | | | 746,634.486 | | | | 0.00 | | | | 86,552,483.500 | |
J. William Howerton | | | 84,748,038.768 | | | | 338,215.515 | | | | 746,634,483 | | | | 0.00 | | | | 85,832,888.769 | |
William S. Patterson | | | 85,215,289.635 | | | | 338,215.515 | | | | 746,634.483 | | | | 0.00 | | | | 86,300,139.636 | |
Cumulative voting rights were exercised in the election of Trustees. The total proxy votes are distributed among those individuals selected.
| B. | | Ratification of Ernst & Young LLP for the fiscal year 2011: |
| | | | | | | | | | | | | | | | |
| | | FOR | | | AGAINST | | | ABSTAIN | | | TOTAL | |
Ernst & Young LLP | | | 85,100,983.845 | | | | 414,952.049 | | | | 1,102,428.488 | | | | 86,618,364.382 | |
| | | | | | | | | | | | | | | | |
| | | FOR | | | AGAINST | | | ABSTAIN | | | TOTAL | |
Other business | | | 76,297,719.940 | | | | 701,018.482 | | | | 9,619,626.080 | | | | 86,618,364.502 | |
The Statement of Additional Information (“SAI”) includes additional information about Fund Trustees and is available upon request without charge. Please call (800) 866-0614 to request the SAI.
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.
63
Item 2. Not applicable
Item 3. Not applicable
Item 4. Not applicable
Item 5. Not applicable.
Item 6. Included as part of item 1.
Item 7. Not applicable
Item 8. Not applicable.
Item 9. Not applicable
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 February 17, 2011 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 February 17, 2011 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 second quarter of the fiscal year that materially affected or is reasonably likely to materially affect the Registrant’s financial statements.
Item 12. Exhibits
