U. S.
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
(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, 2012
Date of reporting period: July 1, 2011 through December 31, 2011
Item 1. Report to Stockholders
December 31, 2011
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, 2011
The investment objective for our tax-exempt 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 objectives for our government bond fund and taxable municipal bond fund are to provide a high level of taxable income derived from securities of the U.S. Government and its agencies and taxable municipal bonds, respectively, 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 tax-exempt municipal bond fund or a taxable 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, 2011 (the “reporting period”), economic activity expanded at a moderate pace. 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 1.8 percent in the third quarter of 2011. Real GDP increased at a 2.8 percent annual rate (advance estimate) during the fourth quarter of 2011. For the full year 2011, the economy expanded at a 1.7 percent annual rate. The good news is that real economic activity has now been expanding for more than two years. The not so good news is that while the economy has continued to expand, economic growth has been at a pace that is below trend and at a rate that has been insufficient to reduce the rate of unemployment significantly.
The Federal Reserve Board (“Fed”) left the federal funds target rate range at 0 to 1/4 percent during the reporting period. The Fed also maintained its existing monetary policy stance of extending the average maturity and reinvesting principal payments of the Federal Reserve’s holdings of securities. The statement issued by the Fed’s Open Market Committee on December 13 reaffirmed its view that current economic conditions, including low rates of resource utilization and a subdued outlook for inflation over the medium run, are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
Conditions in the labor market improved somewhat during the reporting period. The seasonally adjusted national unemployment rate dropped to 8.5 percent in December but remained elevated by historical standards. Private nonfarm employment continued to increase moderately but employment at state and local governments declined further. The housing market showed only slight signs of improvement. Activity in the housing market continued to be depressed by the large overhang of foreclosed and distressed properties and by weak demand that reflected tight lending standards for mortgage loans and uncertainty about future home prices. Home prices continued to decline in many areas of the country.
Measures of inflation continued to decrease relative to earlier in the year. The Consumer Price Index (CPI) increased at a 3.0 percent annual rate in December which was down from a 3.4 percent annual rate in November. The core CPI, which excludes food and energy prices, increased at a 2.2 percent annual rate in December. The Federal Reserve’s preferred inflation measure, the core Personal Consumption Expenditures Price Index (PCE), increased at an annual rate of 1.8 percent in December. The Fed has recently indicated that inflation at the rate of 2 percent, as measured by the annual change in the core PCE, is most consistent over the long run with its statutory mandate. Longer-term inflation expectations remained stable during the reporting period.
The yield on the benchmark 10-year Treasury note decreased approximately 128 basis points during the reporting period and ended the year at 1.88 percent. The yield on the 30-year Treasury bond decreased approximately 147 basis points during the reporting period and ended the year at 2.90 percent. The decrease in Treasury yields primarily reflected a flight-to-quality bid that was fueled in large part by ongoing worries about the sovereign debt crisis in the Euro zone countries.
Yields in the municipal bond market moved lower in tandem with U.S. Treasuries during the reporting period. The yield on a 10-year AAA-rated municipal bond decreased approximately 92 basis points during the second half of the year and ended the reporting period at 1.83 percent while yields on a 30-year AAA-rated municipal bond decreased 80 basis points and ended the reporting period at 3.55 percent.
Municipal bond yields ended 2011 with yields near the lowest in 44 years. Yields for tax-exempt securities were pushed lower (prices higher) during the reporting period as demand for tax-exempt securities surged while, at the same time, the supply of new
i
bonds in 2011 was substantially lower than historical averages. The combination of robust institutional and retail demand and a limited to supply of new bonds resulted in a very strong performance for municipal bonds for the six month period ended December 31, 2011. Approximately $295 billion in total municipal debt was issued in 2011 compared with approximately $433 billion issued in 2010. This represented the lowest amount of municipal bond issuance since 2001.
Fears of widespread defaults that led to a sell-off in the municipal bond market at the end of 2010 turned out to be misguided. These credit fears dissipated in early 2011 and led to robust demand for tax-exempt securities for the last three quarters of 2011. According to estimates by Municipal Market Advisors, defaults involving missed payments totaled about $2.6 billion of face value in 2011, excluding debt in AMR Corp’s bankruptcy. However, 2011 was marked by the largest municipal bankruptcy filing in U.S. history as Jefferson, County, Alabama sought court protection after failing to reach an agreement with creditors to restructure its sewer system debt.
State revenues continued to show positive trends as the economy continued on its slow path to recovery. U.S. Census Bureau data and Rockefeller Institute research indicate tax revenues for state governments were up approximately 6.1 percent in the third quarter of 2011, compared to the same period the previous year. This marked the seventh consecutive quarter that states reported growth in tax collections on a year-over-year basis. Overall state tax revenues are now above prerecession levels, but still below peak levels that existed in 2008.
While tax collections have been rising steadily at the state level, the picture for local governments is not as optimistic. Most local governments rely primarily on property taxes which tend to be relatively stable. However, local property tax collections have been negatively impacted by falling housing prices. After three consecutive quarter declines, property tax revenues showed a modest growth of 1.5 percent in nominal terms compared to the same quarter of 2010 according to Rockefeller Institute data. Local sales tax collections rose by 1.1 percent in the third quarter of 2011 in nominal terms on a year-over-year basis. Preliminary data for the fourth quarter of 2011 indicates that both state and local tax revenues will continue to grow, but probably at a slightly lower pace due to projections of only moderate economic growth in 2012.
A discussion of the performance of each of our funds for the six month period ended December 31, 2011 follows:
The Kentucky Tax-Free Income Series achieved a total return of 5.76 percent during the reporting period compared to a total return of 6.02 percent for the Barclays Capital Municipal Bond Index. The Kentucky Tax-Free Short-to-Medium Series achieved a total return of 3.79 percent during the period under review compared to a total return of 6.02 percent for the Barclays Capital Municipal Bond Index. Bonds with longer maturities outperformed shorter maturities throughout the reporting period, causing the Kentucky Tax-Free Income Series to slightly underperform the index and the Kentucky Tax-Free Short-to-Medium Series to underperform the index by a greater margin. Both funds had shorter durations than the index during the reporting period.
The Tennessee Tax-Free Income Series achieved a total return of 5.42 percent during the reporting period compared to a total return of 6.02 percent for the Barclays Capital Municipal Bond Index. The Tennessee Tax-Free Short-to-Medium Series provided shareholders with a total return of 2.67 percent during the reporting period compared to 6.02 percent for the Barclays Capital Municipal Bond Index. Bonds with longer maturities outperformed shorter maturities throughout the reporting period, causing the Tennessee Tax-Free Income Series to slightly underperform the index and the Tennessee Tax-Free Short-to-Medium Series to underperform the index by a greater margin. Both funds had shorter durations than the index during the reporting period.
The North Carolina Tax-Free Income Series achieved a total return of 6.29 percent during the reporting period compared to 6.02 percent for the Barclays Capital Municipal Bond Index. The North Carolina Tax-Free Short-to-Medium Series achieved a total return of 3.46 percent during the reporting period compared to 6.02 percent for the Barclays Capital Municipal Bond Index. Bonds with longer maturities outperformed shorter maturities throughout the reporting period, causing the North Carolina Tax-Free Short-to-Medium Series to underperform the longer index. The North Carolina Tax-Free Income Series held a number of longer-maturity holdings that outperformed the general market which caused the fund to outperform the index. Both funds had shorter durations than the index during the reporting period.
The Alabama Tax-Free Income Series achieved a total a total return of 6.04 percent during the reporting period compared to 6.02 percent for the Barclays Capital Municipal Bond Index. The Alabama Tax-Free Income Series performed in line with the index during the reporting period.
The Mississippi Tax-Free Income Series achieved a total return of 6.45 percent during the reporting period compared to 6.02 percent for the Barclays Capital Municipal Bond Index. The Mississippi Tax-Free Income Series held a number of longer-maturity holdings that outperformed the general market which caused the fund to outperform the index, despite the fund’s somewhat shorter overall duration as compared to the index.
ii
The Intermediate Government Bond Series achieved a total return of 7.91 percent during the reporting period compared to 3.90 percent for the Barclays Capital U.S. Government Intermediate Bond Index. The Intermediate Government Bond Series outperformed the index because of the fund’s longer average maturity as compared to the index and the fund’s concentration in non-callable bonds held during the reporting period.
The Taxable Municipal Bond Series achieved a total return of 12.68 percent during the reporting period ended December 31, 2011 compared with a total return of 11.67 percent for the Barclays Capital Taxable Municipal Bond Index during the same period. The Taxable Municipal Bond Series outperformed the index because of the fund’s longer average maturity as compared to the index during the reporting period.
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, 2011. Management’s opinions are not guarantees of performance or investment results and should not be taken as investment advice.
iii
| | | | | | |
| | 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 (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 9.55% | |
Aa/AA | | | 77.92% | |
A | | | 6.59% | |
Baa/BBB | | | 4.84% | |
Not Rated | | | 1.10% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 57.52% | |
Lease Revenue | | | 10.81% | |
Prerefunded | | | 6.18% | |
Municipal Utility Revenue | | | 5.36% | |
Turnpikes and Toll Roads Revenue | | | 4.57% | |
Escrowed to Maturity | | | 3.81% | |
State and Local Mortgage Revenue | | | 3.80% | |
Hospital and Healthcare Revenue | | | 3.42% | |
University Consolidated Education and Building Revenue | | | 1.49% | |
Public Facilities Revenue | | | 0.74% | |
General Obligation | | | 0.13% | |
Other Assets Less Liabilities | | | 2.17% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Kentucky Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 13.96% | |
Aa/AA | | | 81.81% | |
A | | | 3.10% | |
Baa/BBB | | | 1.13% | |
Not Rated | | | 0.00% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 74.91% | |
Lease Revenue | | | 12.61% | |
State and Local Mortgage Revenue | | | 2.65% | |
Municipal Utility Revenue | | | 2.57% | |
Hospital and Healthcare Revenue | | | 2.06% | |
Turnpikes and Toll Roads Revenue | | | 1.14% | |
Prerefunded | | | 1.11% | |
Certificates of Participation | | | 0.88% | |
Other Assets Less Liabilities | | | 2.07% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Alabama Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 6.52% | |
Aa/AA | | | 70.34% | |
A | | | 15.97% | |
Baa/BBB | | | 1.21% | |
Not Rated | | | 5.96% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 74.92% | |
University Consolidated Education and Building Revenue | | | 8.26% | |
General Obligation | | | 6.24% | |
Municipal Utility Revenue | | | 4.86% | |
Lease Revenue | | | 1.87% | |
Escrowed to Maturity | | | 1.63% | |
Public Facilities Revenue | | | 0.50% | |
Other Assets Less Liabilities | | | 1.72% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Mississippi Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 13.41% | |
Aa/AA | | | 65.11% | |
A | | | 16.68% | |
Baa/BBB | | | 3.03% | |
Not Rated | | | 1.77% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 67.61% | |
University Consolidated Education and Building Revenue | | | 13.40% | |
Prerefunded | | | 5.30% | |
Public Facilities Revenue | | | 4.56% | |
General Obligation | | | 3.53% | |
Lease Revenue | | | 3.33% | |
Escrowed to Maturity | | | 0.00% | |
Other Assets Less Liabilities | | | 2.27% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
iv
| | | | | | |
| | 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 (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 2.45% | |
Aa/AA | | | 70.48% | |
A | | | 20.09% | |
Baa/BBB | | | 3.71% | |
Not Rated | | | 3.27% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 49.22% | |
General Obligation | | | 9.76% | |
Municipal Utility Revenue | | | 8.38% | |
University Consolidated Education and Building Revenue | | | 7.92% | |
State and Local Mortgage Revenue | | | 6.98% | |
Hospital and Healthcare Revenue | | | 6.80% | |
Prerefunded | | | 4.62% | |
Lease Revenue | | | 2.83% | |
Escrowed to Maturity | | | 2.03% | |
Industrial Revenue | | | 0.99% | |
Other Assets Less Liabilities | | | 0.47% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Tennessee Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 21.39% | |
Aa/AA | | | 62.55% | |
A | | | 13.54% | |
Baa/BBB | | | 2.52% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 61.26% | |
General Obligation | | | 14.90% | |
Lease Revenue | | | 7.04% | |
State and Local Mortgage Revenue | | | 5.40% | |
Municipal Utility Revenue | | | 3.74% | |
Public Facilities Revenue | | | 3.46% | |
Prerefunded | | | 3.17% | |
Other Assets Less Liabilities | | | 1.03% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
North Carolina Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 4.88% | |
Aa/AA | | | 71.39% | |
A | | | 22.10% | |
Baa/BBB | | | 1.63% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 49.76% | |
Certificates of Participation | | | 14.10% | |
Hospital and Healthcare Revenue | | | 8.55% | |
Public Facilities Revenue | | | 6.89% | |
Municipal Utility Revenue | | | 6.65% | |
University Consolidated Education and Building Revenue | | | 5.33% | |
Lease Revenue | | | 3.57% | |
General Obligation | | | 2.92% | |
Prerefunded | | | 0.48% | |
State and Local Mortgage Revenue | | | 0.01% | |
Other Assets Less Liabilities | | | 1.74% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
North Carolina Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 22.55% | |
Aa/AA | | | 54.42% | |
A | | | 21.12% | |
Not Rated | | | 1.91% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 57.95% | |
Certificates of Participation | | | 18.38% | |
Municipal Utility Revenue | | | 8.85% | |
Public Facilities Revenue | | | 3.45% | |
University Consolidated Education and Building Revenue | | | 3.27% | |
Hospital and Healthcare Revenue | | | 2.28% | |
Prerefunded | | | 1.84% | |
State and Local Mortgage Revenue | | | 1.16% | |
Lease Revenue | | | 0.69% | |
Other Assets Less Liabilities | | | 2.13% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
v
| | | | | | |
| | 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 (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 100.00% | |
| | | | | |
| | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Federal Farm Credit | | | 59.92% | |
Federal Home Loan Bank | | | 26.90% | |
Federal Home Loan Mortgage | | | 7.28% | |
Student Loan Marketing Association | | | 3.96% | |
Other Assets Less Liabilities | | | 1.94% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Taxable Municipal Bond Series | |
| CREDIT QUALITY (reflects highest credit rating) | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 1.96% | |
Aa/AA | | | 93.08% | |
A | | | 4.96% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Insured Municipal | | | 23.00% | |
General Obligation | | | 19.96% | |
Certificates of Participation | | | 18.34% | |
Lease Revenue | | | 15.96% | |
Municipal Utility Revenue | | | 12.39% | |
University Consolidated Education and Building Revenue | | | 4.36% | |
Turnpike Road Revenue | | | 2.30% | |
State and Local Mortgage Revenue | | | 2.12% | |
Other Assets Less Liabilities | | | 1.57% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
vi
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 74.92% of Net Assets | | | | | | | | | | | | | | | | | | |
AL Drinking Water Finance Authority Revolving Fund Loan | | | 4.750 | % | | | 08/15/2027 | | | NR | | $ | 75,000 | | | $ | 76,138 | |
AL Housing Finance Authority Single Family Mortgage Revenue | | | 5.375 | | | | 10/01/2033 | | | Aaa | | | 190,000 | | | | 199,593 | |
AL Private College & Universities Facilities Authority Revenue | | | 4.750 | | | | 09/01/2026 | | | AA+* | | | 500,000 | | | | 512,505 | |
AL State Board Education Bishop State Community College | | | 4.600 | | | | 01/01/2021 | | | A1 | | | 100,000 | | | | 101,956 | |
AL State Board of Education Revenue Calhoun Community | | | 5.000 | | | | 05/01/2022 | | | A1 | | | 450,000 | | | | 478,647 | |
AL State University Revenue General Tuition & Fee | | | 5.000 | | | | 01/01/2019 | | | A2/A* | | | 50,000 | | | | 50,505 | |
AL State University Revenue General Tuition & Fee | | | 5.000 | | | | 08/01/2026 | | | A2/A* | | | 150,000 | | | | 158,865 | |
AL State University Revenue General Tuition & Fee | | | 5.250 | | | | 09/01/2034 | | | Aa3/AA-* | | | 75,000 | | | | 81,187 | |
AL Water Pollution Control Authority Revolving Fund Loan | | | 4.800 | | | | 08/15/2018 | | | NR | | | 50,000 | | | | 50,121 | |
AL Water Pollution Control Authority Revolving Fund Loan | | | 4.800 | | | | 08/15/2022 | | | NR | | | 170,000 | | | | 171,474 | |
AL Water Pollution Control Authority Revolving Fund Loan | | | 5.000 | | | | 08/15/2026 | | | NR | | | 130,000 | | | | 130,402 | |
Albertville AL Warrants | | | 5.000 | | | | 02/01/2035 | | | AA+* | | | 110,000 | | | | 119,338 | |
Anniston AL Public Building Authority | | | 5.000 | | | | 03/01/2032 | | | Aa3/AA-* | | | 400,000 | | | | 433,944 | |
Auburn AL Capital Improvement School Warrants | | | 5.000 | | | | 08/01/2030 | | | Aa2/AA+* | | | 260,000 | | | | 274,014 | |
Auburn University AL General Fee Revenue — Series A | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA-* | | | 45,000 | | | | 47,476 | |
Auburn University AL General Fee Revenue — Series A | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA-* | | | 300,000 | | | | 331,218 | |
Auburn University AL General Fee Revenue — Series A | | | 5.000 | | | | 06/01/2033 | | | Aa2/AA-* | | | 420,000 | | | | 446,363 | |
Auburn University AL General Fee Revenue — Series A | | | 5.000 | | | | 06/01/2038 | | | Aa2/AA-* | | | 600,000 | | | | 637,362 | |
Baldwin County AL Water and Sewer Series A General Obligation | | | 5.000 | | | | 01/01/2025 | | | Aa1/AA+* | | | 295,000 | | | | 319,296 | |
Bessemer AL Public Educational Building Authority Revenue | | | 5.000 | | | | 07/01/2030 | | | AA+* | | | 250,000 | | | | 275,248 | |
Chatom AL Industrial Board Gulf Opportunity Zone | | | 5.000 | | | | 08/01/2037 | | | Aa3/AA-*/A-@ | | | 150,000 | | | | 159,906 | |
Choctaw County AL Revenue School Warrants | | | 4.700 | | | | 03/01/2017 | | | NR | | | 200,000 | | | | 192,870 | |
Cullman AL Utility Board Water Revenue | | | 4.750 | | | | 09/01/2037 | | | Aa3/AA-* | | | 400,000 | | | | 417,896 | |
Cullman County AL Water Revenue | | | 5.000 | | | | 05/01/2021 | | | Baa2/A+* | | | 125,000 | | | | 134,481 | |
Daphne AL Warrants | | | 5.000 | | | | 04/01/2023 | | | Aa2/AA* | | | 250,000 | | | | 271,790 | |
Elmore County AL Limited Obligation School Warrants | | | 5.000 | | | | 02/01/2022 | | | Aa3/AA-* | | | 190,000 | | | | 204,782 | |
Elmore County AL Public Education Cooperative | | | 5.000 | | | | 08/01/2032 | | | Aa3 | | | 50,000 | | | | 51,619 | |
Enterprise AL Warrants General Obligation | | | 5.000 | | | | 10/01/2019 | | | NR | | | 55,000 | | | | 58,633 | |
Enterprise AL Warrants General Obligation | | | 5.000 | | | | 10/01/2023 | | | NR | | | 450,000 | | | | 472,005 | |
Gadsden AL Warrants — Series B | | | 4.600 | | | | 08/01/2022 | | | NR | | | 100,000 | | | | 103,380 | |
Huntsville AL Health Care Authority — Series A | | | 5.000 | | | | 06/01/2024 | | | A1/BBB* | | | 100,000 | | | | 103,843 | |
Huntsville AL Public Building Authority Lease Revenue | | | 5.000 | | | | 10/01/2027 | | | Aa1/AA+* | | | 375,000 | | | | 404,558 | |
Huntsville AL Public Building Authority Lease Revenue | | | 5.000 | | | | 10/01/2033 | | | Aa1/AA+* | | | 175,000 | | | | 183,206 | |
Huntsville AL Water Systems Revenue | | | 5.000 | | | | 11/01/2033 | | | Aa1/AAA* | | | 300,000 | | | | 321,657 | |
Jacksonville AL State University Revenue Tuition and Fee | | | 5.125 | | | | 12/01/2033 | | | AA+* | | | 450,000 | | | | 476,694 | |
Lee County AL School Warrants Limited Obligation | | | 5.000 | | | | 02/01/2021 | | | Aa2 | | | 75,000 | | | | 77,494 | |
Limestone County AL Water & Sewer Authority Water Revenue | | | 5.000 | | | | 12/01/2029 | | | A+* | | | 275,000 | | | | 283,484 | |
Lowndes County AL Warrants | | | 5.250 | | | | 02/01/2037 | | | Aa3/AA-* | | | 250,000 | | | | 263,465 | |
Madison County AL Board of Education Capital Outlay Tax | | | 4.950 | | | | 09/01/2025 | | | Aa3/AA-* | | | 100,000 | | | | 110,684 | |
Madison County AL Board of Education Capital Outlay Tax | | | 5.100 | | | | 09/01/2028 | | | Aa3/AA-* | | | 285,000 | | | | 312,078 | |
Madison County AL Board of Education Capital Outlay Tax | | | 5.125 | | | | 09/01/2034 | | | Aa3/AA-* | | | 505,000 | | | | 536,118 | |
Mobile AL Limited Obligation Tax Warrants | | | 5.500 | | | | 02/15/2023 | | | Ba2 | | | 35,000 | | | | 35,234 | |
Mobile AL Public Education Building Authority | | | 5.000 | | | | 03/01/2033 | | | Aa3/AA-*/AA-@ | | | 200,000 | | | | 211,270 | |
Montgomery AL Waterworks & Sanitation Sewer Board Revenue | | | 5.000 | | | | 03/01/2025 | | | Aa2/AAA* | | | 250,000 | | | | 269,078 | |
Montgomery County AL Warrants | | | 5.000 | | | | 03/01/2028 | | | Aa1/AA* | | | 175,000 | | | | 190,064 | |
Montgomery County AL Public Building Authority Revenue | | | 5.000 | | | | 03/01/2031 | | | Aa2/AA-* | | | 175,000 | | | | 183,223 | |
Morgan County AL Water and Sewer General Obligation Warrants | | | 5.000 | | | | 04/01/2028 | | | Aa3 | | | 100,000 | | | | 102,932 | |
Morgan County AL Warrants | | | 5.000 | | | | 04/01/2029 | | | Aa3 | | | 25,000 | | | | 25,657 | |
Muscle Shoals AL Refunded Warrants | | | 4.600 | | | | 08/01/2024 | | | Aa3 | | | 250,000 | | | | 259,308 | |
North Marshall AL Utilities Board Water Revenue | | | 5.100 | | | | 10/01/2030 | | | AA+* | | | 375,000 | | | | 406,095 | |
Opelika AL Water Board Revenue | | | 5.000 | | | | 06/01/2037 | | | Aa3/AA-* | | | 250,000 | | | | 268,220 | |
Oxford AL Warrants — Series A | | | 5.000 | | | | 10/01/2036 | | | Aa2 | | | 50,000 | | | | 51,769 | |
Phenix City AL Schools Warrants — Series B | | | 5.000 | | | | 08/01/2024 | | | A+* | | | 200,000 | | | | 216,962 | |
Phenix City AL Water & Sewer Revenue | | | 5.000 | | | | 08/15/2034 | | | Aa3/AA-*/AA-@ | | | 90,000 | | | | 96,656 | |
St Clair County AL Board Education School Tax Warrants | | | 4.400 | | | | 02/01/2022 | | | Aa3/AA-* | | | 50,000 | | | | 51,438 | |
Shelby County AL Board of Education Special Tax School Warrants | | | 5.000 | | | | 02/01/2025 | | | Aa3/A+* | | | 300,000 | | | | 318,042 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
Talladega County AL Industrial Development Revenue | | | 4.700 | % | | | 01/01/2022 | | | Baa3 | | $ | 100,000 | | | $ | 100,891 | |
Tallassee AL Water Gas & Sewer Warrants | | | 5.125 | | | | 05/01/2036 | | | Aa3/AA-* | | | 75,000 | | | | 81,481 | |
Troy AL Public Educational Building Authority Educational | | | 5.250 | | | | 12/01/2036 | | | Aa3/AA-* | | | 225,000 | | | | 241,722 | |
Trussville AL Warrants | | | 4.800 | | | | 10/01/2021 | | | Aa2 | | | 85,000 | | | | 87,298 | |
Tuscaloosa AL Warrants | | | 5.000 | | | | 01/01/2030 | | | Aa1/AA+* | | | 150,000 | | | | 156,621 | |
Tuscaloosa AL Public Education Building Authority Student | | | 6.375 | | | | 07/01/2028 | | | AA+* | | | 250,000 | | | | 291,003 | |
Tuscaloosa AL Public Education Building Authority Student | | | 6.750 | | | | 07/01/2033 | | | AA+* | | | 475,000 | | | | 549,437 | |
University of AL General Revenue — Series A | | | 5.000 | | | | 07/01/2032 | | | Aa2/AA-*/AA+@ | | | 500,000 | | | | 529,280 | |
University of AL General Revenue — Series A | | | 5.000 | | | | 07/01/2034 | | | Aa2/AA-*/AA+@ | | | 350,000 | | | | 362,306 | |
University of AL General Revenue — Series A | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA-*/AA+@ | | | 325,000 | | | | 350,054 | |
University South AL University Revenues Refunding Tuition | | | 5.000 | | | | 12/01/2029 | | | Aa1/AA+* | | | 105,000 | | | | 111,666 | |
University of Southern AL University Revenue Facilities | | | 5.000 | | | | 08/01/2029 | | | Aa1/AA+* | | | 550,000 | | | | 595,441 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 16,179,443 | |
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS 8.26% of Net Assets | | | | | |
AL State Public School & College Authority Captial Improvement | | | 5.000 | | | | 12/01/2024 | | | Aa1/AA* | | | 100,000 | | | | 113,321 | |
AL State Public School & College Authority Captial Improvement | | | 5.000 | | | | 12/01/2025 | | | Aa1/AA* | | | 640,000 | | | | 718,893 | |
AL State Public Schools & College Authority Refinancing | | | 5.000 | | | | 05/01/2024 | | | Aa1/AA*/AA+@ | | | 125,000 | | | | 143,744 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2022 | | | Aa2/AA-* | | | 50,000 | | | | 58,078 | |
Auburn University General Fee Revenue — Series A | | | 5.000 | | | | 06/01/2036 | | | Aa2/AA-* | | | 150,000 | | | | 163,391 | |
Mobile AL Spring Hill College Educational Building | | | 5.100 | | | | 09/01/2019 | | | Ba2 | | | 120,000 | | | | 121,274 | |
Shelby County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 02/01/2031 | | | Aa2/A* | | | 430,000 | | | | 465,196 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,783,897 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 6.24% of Net Assets | | | | | | | | | | | | | | | | | | |
AL State — Series A | | | 4.625 | | | | 09/01/2022 | | | Aa1/AA* | | | 100,000 | | | | 103,441 | |
Mobile AL Refunding Warrants — Series A | | | 5.000 | | | | 02/15/2027 | | | Aa2/AA-* | | | 335,000 | | | | 370,436 | |
Montgomery AL Warrants — Series A | | | 5.000 | | | | 02/01/2030 | | | Aa2/AA+* | | | 300,000 | | | | 331,665 | |
Montgomery AL Warrants — Series C General Obligation Unlimited | | | 5.000 | | | | 01/01/2023 | | | Aa2/AA+*/AAA@ | | | 80,000 | | | | 88,408 | |
Sumter County AL Limited Obligation School Warrants | | | 5.100 | | | | 02/01/2034 | | | A* | | | 100,000 | | | | 104,651 | |
Tuscaloosa AL Warrants — Series A | | | 5.000 | | | | 10/15/2034 | | | Aa1/AA+* | | | 175,000 | | | | 187,693 | |
Tuscaloosa AL Warrants — Series A | | | 5.125 | | | | 01/01/2039 | | | Aa1/AA+* | | | 150,000 | | | | 160,689 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,346,983 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 4.86% of Net Assets | | | | | | | | | | | | | | | | | | |
Jasper AL Water Works and Sewer Board Utility Revenue | | | 5.000 | | | | 06/01/2030 | | | A+* | | | 455,000 | | | | 492,647 | |
Muscle Shoals AL Utilities Board Water & Sewer Revenue | | | 5.750 | | | | 12/01/2033 | | | AA-* | | | 430,000 | | | | 480,026 | |
Opelika AL Water Board Revenue | | | 5.250 | | | | 06/01/2036 | | | Aa3/A+* | | | 70,000 | | | | 75,992 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,048,665 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 1.87% of Net Assets | | | | | | | | | | | | | | | | | | |
AL Incentives Financing Authority Special Obligation | | | 5.000 | | | | 09/01/2029 | | | AA+* | | | 125,000 | | | | 135,845 | |
University of Alabama General Revenue — Series A | | | 5.000 | | | | 07/01/2034 | | | Aa2/AA-* | | | 250,000 | | | | 268,035 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 403,880 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | |
| 1.63% of Net Assets | | | | | | | | | | | | | | | | | | |
West Morgan — East Lawrence Water Authority AL Water Revenue | | | 5.000 | | | | 08/15/2025 | | | Aa3/AA-* | | | 300,000 | | | | 351,471 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 351,471 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .50% of Net Assets | | | | | | | | | | | | | | | | | | |
Rockford AL Public Building Authority Building Revenue | | | 5.750 | | | | 09/01/2015 | | | NR | | | 10,000 | | | | 10,028 | |
Sumter County AL Limited Obligation School Warrants | | | 5.200 | | | | 02/01/2039 | | | A* | | | 95,000 | | | | 97,370 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 107,398 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INDUSTRIAL REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .12% of Net Assets | | | | | | | | | | | | | | | | | | |
Auburn AL Industrial Development Board Facilities Revenue | | | 6.200 | % | | | 11/01/2020 | | | A+* | | $ | 25,000 | | | $ | 25,007 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 25,007 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $20,262,598) (See (a) below for further explanation) 98.4% of Net Assets | | | | | | | | | $ | 21,246,744 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 1,012,577 | |
| | Unrealized depreciation | | | (28,431 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 984,146 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 in 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 | | | 21,246,744 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 21,246,744 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
3
ALABAMA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $20,262,598) | | | | | | $ | 21,246,744 | |
Cash | | | | | | | 169,394 | |
Interest receivable | | | | | | | 297,883 | |
Prepaid expenses | | | | | | | 300 | |
| | | | | | | | |
Total assets | | | | | | | 21,714,321 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 99,644 | | | | | |
Investment advisory fee | | | 7,611 | | | | | |
Transfer agent fee | | | 3,437 | | | | | |
Accrued expenses | | | 8,160 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 118,852 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 20,601,208 | |
Accumulated net investment income | | | | | | | 361 | |
Net accumulated realized gain on investment transactions | | | | | | | 9,754 | |
Net unrealized appreciation in value of investments | | | | | | | 984,146 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 21,595,469 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($21,595,469 -:- 1,769,806 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 12.20 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 465,760 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 53,346 | |
Transfer agent fee | | | 16,221 | |
Custodian expense | | | 1,655 | |
Professional fees | | | 6,513 | |
Trustee fees | | | 1,456 | |
Other expenses | | | 3,070 | |
| | | | |
Total expenses | | | 82,261 | |
Fees waived by Adviser | | | (11,064 | ) |
Custodian expense reduction | | | (59 | ) |
| | | | |
Net expenses | | | 71,138 | |
| | | | |
Net investment income | | | 394,622 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 58,835 | |
Net change in unrealized appreciation/depreciation | | | 810,926 | |
| | | | |
Net realized and unrealized gain on investments | | | 869,761 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,264,383 | |
| | | | |
The accompanying footnotes 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, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 394,622 | | | $ | 774,546 | |
Net realized gain on investments | | | 58,835 | | | | 29,066 | |
Net change in unrealized appreciation/depreciation | | | 810,926 | | | | (138,138 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 1,264,383 | | | | 665,474 | |
Distributions from net investment income | | | (394,261 | ) | | | (774,546 | ) |
Distributions from capital gains | | | (12,037 | ) | | | — | |
Net fund share transactions (Note 4) | | | (497,166 | ) | | | 1,490,590 | |
| | | | | | | | |
Total increase | | | 360,919 | | | | 1,381,518 | |
Net assets: | | | | | | | | |
Beginning of period | | | 21,234,550 | | | | 19,853,032 | |
| | | | | | | | |
End of period | | $ | 21,595,469 | | | $ | 21,234,550 | |
| | | | | | | | |
Accumulated net investment income | | $ | 361 | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months | | | For the years ended June 30, | |
| | | 12/31/2011 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $11.72 | | | | $11.77 | | | | $11.40 | | | | $11.43 | | | | $11.59 | | | | $11.52 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.22 | | | | 0.45 | | | | 0.46 | | | | 0.46 | | | | 0.46 | | | | 0.47 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.49 | | | | (0.05 | ) | | | 0.37 | | | | (0.03 | ) | | | (0.14 | ) | | | 0.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.71 | | | | 0.40 | | | | 0.83 | | | | 0.43 | | | | 0.32 | | | | 0.54 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.22 | ) | | | (0.45 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.47 | ) |
Distributions from capital gains | | | (0.01 | ) | | | — | | | | — | | | | — | | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.23 | ) | | | (0.45 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.48 | ) | | | (0.47 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $12.20 | | | | $11.72 | | | | $11.77 | | | | $11.40 | | | | $11.43 | | | | $11.59 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 6.04% | (b) | | | 3.45% | | | | 7.40% | | | | 3.95% | | | | 2.84% | | | | 4.70% | |
Net assets, end of period (in thousands) | | | $21,595 | | | | $21,235 | | | | $19,853 | | | | $14,262 | | | | $13,537 | | | | $11,810 | |
Ratio of net expenses to average net assets (a) | | | 0.67% | (c) | | | 0.60% | | | | 0.47% | | | | 0.45% | | | | 0.45% | | | | 0.43% | |
Ratio of net investment income to average net assets | | | 3.72% | (c) | | | 3.83% | | | | 3.94% | | | | 4.14% | | | | 4.00% | | | | 4.00% | |
Portfolio turnover | | | 6.89% | (c) | | | 4.70% | | | | 15.73% | | | | 14.06% | | | | 8.46% | | | | 5.43% | |
| (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 | | | |
| .10%(c) | | | 0% | (c) | | For the six months ended December 31, 2011 |
| .18% | | | 0% | | | For the year ended June 30, 2011 |
| .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 |
The accompanying footnotes 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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 57.52% of Net Assets | | | | | | | | | | | | | | | | | | |
Ballard County KY School District Finance Corporation | | | 5.000 | % | | | 06/01/2020 | | | Aa3 | | $ | 1,240,000 | | | $ | 1,338,716 | |
Barren County KY School District Finance Corporation | | | 4.750 | | | | 08/01/2022 | | | Aa3 | | | 3,085,000 | | | | 3,260,876 | |
Boone County KY Pollution Control Revenue — Dayton Power | | | 4.700 | | | | 01/01/2028 | | | A3/BBB+* | | | 6,195,000 | | | | 6,311,032 | |
Boone County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2023 | | | Aa3 | | | 4,070,000 | | | | 4,327,957 | |
Boone County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2024 | | | Aa3 | | | 4,265,000 | | | | 4,515,313 | |
Boyle County KY College Improvement — Centre College | | | 4.750 | | | | 06/01/2032 | | | A3/AA-* | | | 5,330,000 | | | | 5,546,558 | |
Bullitt County KY School District Finance Corporation | | | 4.750 | | | | 07/01/2022 | | | Aa3 | | | 2,440,000 | | | | 2,598,673 | |
Bullitt County KY School District Finance Corporation | | | 4.500 | | | | 10/01/2024 | | | Aa3 | | | 2,720,000 | | | | 2,860,026 | |
Campbell & Kenton Counties Sanitary District No. 1 | | | 5.000 | | | | 08/01/2025 | | | Aa2/AA* | | | 2,395,000 | | | | 2,659,121 | |
Campbell & Kenton Counties Sanitary Sewer | | | 5.000 | | | | 08/01/2026 | | | Aa2/AA* | | | 4,175,000 | | | | 4,608,198 | |
Campbell & Kenton Counties Sanitary Sewer | | | 5.000 | | | | 08/01/2027 | | | Aa2/AA* | | | 4,385,000 | | | | 4,804,469 | |
Campbell & Kenton Counties Sanitary District No. 1 | | | 5.000 | | | | 08/01/2037 | | | Aa2/AA* | | | 5,500,000 | | | | 5,849,085 | |
Campbell County KY School District Finance Corporation | | | 4.500 | | | | 08/01/2023 | | | Aa3 | | | 980,000 | | | | 1,045,121 | |
Carter County KY Detention Center | | | 5.125 | | | | 05/01/2029 | | | Aa3 | | | 960,000 | | | | 970,387 | |
Eastern Kentucky University Consolidated Educational Building | | | 5.000 | | | | 05/01/2021 | | | A1/A* | | | 1,580,000 | | | | 1,686,492 | |
Fayette County KY School District Finance Corporation | | | 4.500 | | | | 03/01/2022 | | | Aa2/AA* | | | 4,100,000 | | | | 4,205,739 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 04/01/2024 | | | Aa2/AA* | | | 6,985,000 | | | | 7,486,244 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 04/01/2025 | | | Aa2/AA* | | | 7,340,000 | | | | 7,826,569 | |
Franklin County School Building Revenue | | | 4.750 | | | | 05/01/2027 | | | Aa3 | | | 3,570,000 | | | | 3,797,837 | |
Greater KY Housing Assistance Corporation — Chenowith Woods | | | 6.100 | | | | 01/01/2024 | | | Baa2/BBB | | | 440,000 | | | | 440,220 | |
Greater KY Housing Assistance Corporation — Northside Apts | | | 6.200 | | | | 02/01/2025 | | | AA+* | | | 3,320,000 | | | | 3,320,199 | |
Hardin County School District Finance Corporation | | | 4.750 | | | | 06/01/2027 | | | Aa3 | | | 1,250,000 | | | | 1,333,475 | |
Jefferson County KY Health Facilities — Jewish Hospital | | | 5.650 | | | | 01/01/2017 | | | Baa1/A-* | | | 3,450,000 | | | | 3,450,000 | |
Jefferson County KY Health Facilities — Jewish Hospital | | | 5.700 | | | | 01/01/2021 | | | Baa1/A-* | | | 4,520,000 | | | | 4,520,000 | |
Jefferson County KY Health Facilities University Medical Center | | | 5.500 | | | | 07/01/2017 | | | Baa2/BBB | | | 8,675,000 | | | | 8,675,000 | |
Jefferson County KY School District Finance Corporation | | | 4.750 | | | | 12/01/2026 | | | Aa2/AA-* | | | 3,770,000 | | | | 4,021,572 | |
Jefferson County KY School District Finance Corporation | | | 4.500 | | | | 07/01/2023 | | | Aa2/AA-* | | | 2,500,000 | | | | 2,676,425 | |
Jefferson County KY School District Finance Corporation | | | 4.625 | | | | 07/01/2025 | | | Aa2/AA-* | | | 7,545,000 | | | | 7,986,005 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA-* | | | 5,025,000 | | | | 5,405,845 | |
Jefferson County KY Health Facilities — Alliant Health | | | 5.125 | | | | 10/01/2017 | | | Baa2/BBB | | | 1,410,000 | | | | 1,410,000 | |
Jefferson County KY School District Finance Corporation | | | 4.750 | | | | 06/01/2027 | | | Aa2/AA-* | | | 3,000,000 | | | | 3,194,220 | |
Kenton County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2021 | | | Aa3 | | | 4,055,000 | | | | 4,342,824 | |
Kenton County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2023 | | | Aa3 | | | 4,465,000 | | | | 4,723,256 | |
Kenton County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2024 | | | Aa3 | | | 4,665,000 | | | | 4,912,292 | |
KY Asset Liability Commission General Fund | | | 5.000 | | | | 05/01/2020 | | | Aa3/A+* | | | 2,000,000 | | | | 2,189,260 | |
KY Asset Liability Commission Project Notes | | | 5.000 | | | | 05/01/2023 | | | Aa3/A+* | | | 5,600,000 | | | | 5,996,984 | |
KY Asset Liability Commission General Fund | | | 5.000 | | | | 05/01/2024 | | | Aa3/A+* | | | 5,880,000 | | | | 6,271,608 | |
KY Asset Liability Commission | | | 5.000 | | | | 05/01/2025 | | | Aa3/A+* | | | 1,000,000 | | | | 1,061,360 | |
KY Asset Liability Commission Federal Highway | | | 5.250 | | | | 09/01/2019 | | | Aa3/A+* | | | 1,765,000 | | | | 2,196,472 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/01/2024 | | | Aa2/AA-* | | | 5,445,000 | | | | 6,067,962 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/01/2026 | | | Aa2/AA-* | | | 6,090,000 | | | | 6,698,452 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/01/2023 | | | Aa2/AA-* | | | 8,075,000 | | | | 8,977,301 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/01/2024 | | | Aa2/AA-* | | | 7,405,000 | | | | 8,195,558 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/01/2025 | | | Aa2/AA-* | | | 3,700,000 | | | | 4,076,697 | |
KY Economic Development Finance Authority — Christian Care | | | 5.375 | | | | 11/20/2035 | | | AA+* | | | 1,905,000 | | | | 1,991,220 | |
KY Economic Development Authority — Louisville Arena | | | 6.000 | | | | 12/01/2033 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,078,160 | |
KY Housing Corporation | | | 4.400 | | | | 01/01/2017 | | | Aaa/AAA* | | | 1,000,000 | | | | 1,031,440 | |
KY Housing Corporation | | | 4.650 | | | | 07/01/2023 | | | Aaa/AAA* | | | 3,595,000 | | | | 3,623,796 | |
KY Housing Corporation Country Place Apartments | | | 4.750 | | | | 04/20/2031 | | | AA+* | | | 935,000 | | | | 967,370 | |
KY Housing Corporation | | | 5.750 | | | | 07/01/2039 | | | Aaa/AAA* | | | 840,000 | | | | 882,403 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2025 | | | Aa3/AA-* | | | 7,250,000 | | | | 8,165,820 | |
KY State Property & Building #93 | | | 4.875 | | | | 02/01/2028 | | | Aa3/AA-* | | | 500,000 | | | | 538,895 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2028 | | | Aa3/AA-* | | | 10,000,000 | | | | 11,036,700 | |
KY State Property & Building #93 | | | 5.000 | | | | 02/01/2029 | | | Aa3/AA-* | | | 500,000 | | | | 541,795 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2029 | | | Aa3/AA-* | | | 16,940,000 | | | | 18,607,235 | |
KY State Property & Building #76 | | | 5.500 | | | | 08/01/2021 | | | Aa3/A+* | | | 1,400,000 | | | | 1,751,932 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2019 | | | Aa3/A+* | | | 3,000,000 | | | | 3,446,190 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
KY State Property & Building #83 | | | 5.000 | % | | | 10/01/2017 | | | Aa3/A+* | | $ | 5,000,000 | | | $ | 5,918,500 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2018 | | | Aa3/A+* | | | 17,750,000 | | | | 21,246,040 | |
KY State Property & Building #83 | | | 5.250 | | | | 10/01/2020 | | | Aa3/A+* | | | 24,220,000 | | | | 29,746,520 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2019 | | | Aa3/A+* | | | 10,000,000 | | | | 12,062,600 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2021 | | | Aa3/A+* | | | 310,000 | | | | 373,637 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2022 | | | Aa3/A+* | | | 17,500,000 | | | | 21,112,525 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2022 | | | Aa3/A+* | | | 1,665,000 | | | | 1,858,773 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2023 | | | Aa3/A+* | | | 5,175,000 | | | | 5,713,925 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2025 | | | Aa3/A+* | | | 14,835,000 | | | | 16,045,833 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2026 | | | Aa3/A+* | | | 8,230,000 | | | | 8,881,405 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2027 | | | Aa3/A+* | | | 10,290,000 | | | | 11,043,845 | |
KY State Property & Building #88 | | | 4.750 | | | | 11/01/2027 | | | Aa3/A+* | | | 5,800,000 | | | | 6,185,758 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2025 | | | Aa3/AA-* | | | 5,000,000 | | | | 5,535,500 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2026 | | | Aa3/AA-* | | | 13,390,000 | | | | 14,669,281 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2027 | | | Aa3/AA-* | | | 4,900,000 | | | | 5,343,156 | |
KY State Property & Building #80 | | | 5.250 | | | | 05/01/2018 | | | Aa3/A+* | | | 2,940,000 | | | | 3,540,818 | |
KY State Property & Building #80 | | | 5.250 | | | | 05/01/2020 | | | Aa3/A+* | | | 1,000,000 | | | | 1,225,130 | |
KY State Property & Building #81 | | | 5.000 | | | | 11/01/2018 | | | A1/A+*/A | | | 1,720,000 | | | | 1,841,243 | |
KY State Property & Building #81 | | | 5.000 | | | | 11/01/2019 | | | A1/A+*/A | | | 2,385,000 | | | | 2,544,103 | |
KY State Property & Building #81 | | | 5.000 | | | | 11/01/2020 | | | A1/A+*/A | | | 3,560,000 | | | | 3,801,510 | |
KY State Property & Building #81 | | | 5.000 | | | | 11/01/2022 | | | A1/A+*/A | | | 3,930,000 | | | | 4,165,564 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2022 | | | Aa2/AA+* | | | 1,625,000 | | | | 1,794,341 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2023 | | | Aa2/AA+* | | | 4,325,000 | | | | 4,771,081 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2024 | | | Aa2/AA+* | | | 3,770,000 | | | | 4,138,668 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+* | | | 2,000,000 | | | | 2,193,440 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+* | | | 4,720,000 | | | | 5,194,171 | |
Laurel County KY School District Finance Corporation | | | 4.625 | | | | 08/01/2026 | | | Aa3 | | | 3,150,000 | | | | 3,331,692 | |
Laurel County KY School District Finance Corporation | | | 4.750 | | | | 06/01/2026 | | | Aa3 | | | 1,000,000 | | | | 1,073,450 | |
Letcher County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2022 | | | Aa3 | | | 1,755,000 | | | | 1,878,289 | |
Letcher County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2024 | | | Aa3 | | | 1,930,000 | | | | 2,028,604 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA* | | | 3,270,000 | | | | 3,562,763 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA* | | | 3,230,000 | | | | 3,494,278 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2032 | | | Aa3/AA* | | | 4,590,000 | | | | 4,847,774 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2036 | | | Aa3/AA* | | | 2,000,000 | | | | 2,093,340 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2036 | | | Aa3/AA* | | | 1,265,000 | | | | 1,278,814 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2038 | | | Aa3/AA* | | | 12,500,000 | | | | 13,411,874 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2024 | | | Aa3/AA* | | | 7,000,000 | | | | 7,885,220 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2022 | | | Aa3/AA* | | | 2,855,000 | | | | 3,154,775 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2023 | | | Aa3/AA* | | | 2,990,000 | | | | 3,290,525 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2024 | | | Aa3/AA* | | | 3,135,000 | | | | 3,421,068 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA* | | | 3,285,000 | | | | 3,571,353 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA* | | | 14,000,000 | | | | 15,210,860 | |
Louisville & Jefferson County KY Metropolitan Sewer | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA* | | | 5,185,000 | | | | 5,808,030 | |
Louisville & Jefferson County KY Visitors & Convention Center | | | 4.500 | | | | 12/01/2023 | | | Aa3/AA-* | | | 2,340,000 | | | | 2,432,992 | |
Louisville & Jefferson County KY Visitors & Convention Center | | | 4.500 | | | | 12/01/2024 | | | Aa3/AA-* | | | 2,250,000 | | | | 2,329,830 | |
Louisville & Jefferson County KY Visitors & Convention Center | | | 4.600 | | | | 12/01/2025 | | | Aa3/AA-* | | | 1,490,000 | | | | 1,540,660 | |
Louisville & Jefferson County KY Student Housing | | | 5.000 | | | | 06/01/2025 | | | NR | | | 2,030,000 | | | | 2,129,267 | |
Northern KY Water District | | | 4.750 | | | | 02/01/2019 | | | Aa3 | | | 1,000,000 | | | | 1,003,090 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2020 | | | Aa3 | | | 3,080,000 | | | | 3,090,410 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2021 | | | Aa3 | | | 2,635,000 | | | | 2,643,247 | |
Northern KY Water District | | | 4.125 | | | | 02/01/2021 | | | Aa3 | | | 1,380,000 | | | | 1,415,921 | |
Northern KY Water District | | | 4.500 | | | | 02/01/2022 | | | Aa3 | | | 1,385,000 | | | | 1,445,788 | |
Northern KY Water District | | | 6.500 | | | | 02/01/2033 | | | Aa3 | | | 1,585,000 | | | | 1,818,280 | |
Northern KY Water District | | | 6.000 | | | | 02/01/2028 | | | Aa3 | | | 1,010,000 | | | | 1,148,431 | |
Northern KY Water District | | | 6.000 | | | | 02/01/2031 | | | Aa3 | | | 1,000,000 | | | | 1,126,460 | |
Owensboro Water Revenue | | | 5.000 | | | | 09/15/2025 | | | Aa3 | | | 545,000 | | | | 605,860 | |
Pike County KY Mortgage Revenue — Phelps Regional Health | | | 5.350 | | | | 09/20/2012 | | | NR | | | 20,000 | | | | 20,017 | |
Taylor County Detention Facility | | | 4.750 | | | | 09/01/2027 | | | Aa3 | | | 2,110,000 | | | | 2,207,799 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 546,752,484 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 10.81% of Net Assets | | | | | | | | | | | | | | | | | | |
Bracken County Public Property | | | 5.000 | % | | | 08/01/2029 | | | Aa3 | | $ | 840,000 | | | $ | 939,658 | |
Danville KY Multi-City Lease Campbellsville Water & Sewer | | | 3.500 | | | | 07/01/2012 | | | A1 | | | 415,000 | | | | 417,432 | |
Fayette County School District Finance Corporation | | | 5.000 | | | | 06/01/2031 | | | Aa2/AA* | | | 3,705,000 | | | | 4,144,413 | |
Franklin County Public Properties Justice Center | | | 5.000 | | | | 04/01/2029 | | | Aa3 | | | 2,630,000 | | | | 2,887,004 | |
Hardin County School District Finance Corporation | | | 5.000 | | | | 05/01/2030 | | | Aa3 | | | 450,000 | | | | 491,715 | |
Hardin County School District Finance Corporation | | | 5.000 | | | | 05/01/2031 | | | Aa3 | | | 470,000 | | | | 508,578 | |
Kenton County School District Finance Corporation | | | 5.000 | | | | 02/01/2029 | | | Aa3 | | | 3,270,000 | | | | 3,560,376 | |
KY Area Development Districts Financing Lease — Ewing | | | 4.700 | | | | 06/01/2024 | | | NR | | | 2,625,000 | | | | 2,679,128 | |
KY Asset Liability Project | | | 5.000 | | | | 09/01/2021 | | | Aa2/AA* | | | 1,570,000 | | | | 1,900,030 | |
Kentucky Asset Liability Highway Trust | | | 5.000 | | | | 09/01/2022 | | | Aa2/AA* | | | 3,500,000 | | | | 4,169,025 | |
KY Association of Counties | | | 5.000 | | | | 02/01/2030 | | | A+* | | | 625,000 | | | | 673,788 | |
KY Association of Counties | | | 5.000 | | | | 02/01/2032 | | | A+* | | | 1,000,000 | | | | 1,057,870 | |
KY Association of Counties | | | 5.000 | | | | 02/01/2035 | | | A+* | | | 995,000 | | | | 1,040,163 | |
KY Infrastructure Authority Wastewater & Drinking Water | | | 5.000 | | | | 02/01/2027 | | | Aaa/AAA* | | | 2,500,000 | | | | 2,889,575 | |
KY Infrastructure Authority Wastewater & Drinking Water | | | 5.000 | | | | 02/01/2028 | | | Aaa/AAA* | | | 2,000,000 | | | | 2,294,520 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2027 | | | Aa3/A+* | | | 500,000 | | | | 558,890 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2028 | | | Aa3/A+* | | | 4,000,000 | | | | 4,447,040 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2029 | | | Aa3/A+* | | | 2,500,000 | | | | 2,758,050 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2030 | | | Aa3/A+* | | | 7,980,000 | | | | 8,722,937 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2031 | | | Aa3/A+* | | | 5,100,000 | | | | 5,527,941 | |
KY State Property & Building #88 | | | 5.000 | | | | 11/01/2024 | | | Aa3/A+* | | | 1,355,000 | | | | 1,491,408 | |
KY State Property & Building #90 | | | 5.375 | | | | 11/01/2023 | | | Aa3/A+* | | | 1,200,000 | | | | 1,384,536 | |
KY State Property & Building #90 | | | 5.500 | | | | 11/01/2028 | | | Aa3/A+* | | | 24,470,000 | | | | 27,373,853 | |
KY State Property & Building #96 | | | 5.000 | | | | 11/01/2029 | | | Aa3/A+* | | | 5,000,000 | | | | 5,456,150 | |
KY State Property & Building #98 | | | 5.000 | | | | 08/01/2021 | | | Aa3/A+* | | | 2,505,000 | | | | 2,994,702 | |
KY State Property & Building #91 | | | 5.750 | | | | 04/01/2029 | | | A1/A+*/A | | | 210,000 | | | | 234,442 | |
Lexington-Fayette Urban County Government Public Facilities | | | 5.000 | | | | 06/01/2033 | | | Aa3/A+* | | | 5,000,000 | | | | 5,300,400 | |
Pendleton County KY Multi-County Lease Revenue | | | 6.400 | | | | 03/01/2019 | | | A* | | | 3,000,000 | | | | 3,767,940 | |
Shelby County KY School District Finance Corporation | | | 5.000 | | | | 02/01/2028 | | | Aa3 | | | 500,000 | | | | 549,320 | |
Warren County Downtown Economic Development Authority | | | 5.000 | | | | 06/01/2038 | | | AA-* | | | 2,345,000 | | | | 2,551,407 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 102,772,291 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| 6.18% of Net Assets | | | | | | | | | | | | | | | | | | |
Boone County KY Public Property Corporation — AOC Judicial | | | 5.000 | | | | 09/01/2019 | | | Aa3 | | | 1,000,000 | | | | 1,041,590 | |
Boone County KY Public Property Corporation — Judicial Facility | | | 5.125 | | | | 09/01/2022 | | | Aa3 | | | 1,750,000 | | | | 1,824,235 | |
Bowling Green KY General Obligation | | | 4.600 | | | | 06/01/2018 | | | Aa2 | | | 1,290,000 | | | | 1,312,226 | |
Daviess County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2021 | | | Aa3 | | | 1,155,000 | | | | 1,278,054 | |
KY State Property & Building #73 | | | 5.000 | | | | 11/01/2021 | | | Aa2/AA-* | | | 1,000,000 | | | | 1,039,640 | |
KY State Property & Building #73 | | | 5.000 | | | | 11/01/2019 | | | Aa2/AA-* | | | 1,360,000 | | | | 1,413,910 | |
KY State Property & Building #73 | | | 5.000 | | | | 11/01/2020 | | | Aa2/AA-* | | | 3,255,000 | | | | 3,384,027 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2020 | | | Aa2/AA-* | | | 5,760,000 | | | | 6,631,200 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2022 | | | Aa2/AA-* | | | 8,200,000 | | | | 9,440,250 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2024 | | | Aa2/AA-* | | | 8,300,000 | | | | 9,555,375 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2025 | | | Aa2/AA-* | | | 2,500,000 | | | | 2,878,125 | |
Knox County General Obligation | | | 5.625 | | | | 06/01/2036 | | | NR | | | 2,490,000 | | | | 2,938,897 | |
Louisville KY General Obligation — Series A | | | 5.000 | | | | 10/01/2020 | | | Aa1/AA+* | | | 4,165,000 | | | | 4,305,569 | |
Marshall County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2022 | | | Aa3 | | | 1,400,000 | | | | 1,548,442 | |
Montgomery County KY School District Finance Corporation | | | 4.375 | | | | 04/01/2023 | | | Aa3 | | | 3,105,000 | | | | 3,260,654 | |
Nelson County KY School District Finance Corporation | | | 4.500 | | | | 04/01/2021 | | | Aa3 | | | 1,130,000 | | | | 1,188,862 | |
Nelson County KY School District Finance Corporation | | | 4.500 | | | | 04/01/2023 | | | Aa3 | | | 2,505,000 | | | | 2,633,507 | |
Shelby County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2022 | | | Aa3 | | | 1,815,000 | | | | 2,001,292 | |
Spencer County KY School District Finance Corporation | | | 5.000 | | | | 07/01/2023 | | | Aa3 | | | 1,000,000 | | | | 1,109,660 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 58,785,515 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 5.36% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Rural Water Financial Corporation Public Project Revenue | | | 5.375 | % | | | 02/01/2020 | | | AA-* | | $ | 1,060,000 | | | $ | 1,081,529 | |
KY Rural Water Finance Corporation | | | 5.125 | | | | 02/01/2035 | | | AA-* | | | 525,000 | | | | 564,312 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2021 | | | Aa3/AA* | | | 2,865,000 | | | | 3,416,942 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2023 | | | Aa3/AA* | | | 2,500,000 | | | | 2,915,025 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2034 | | | Aa3/AA* | | | 23,380,000 | | | | 25,350,233 | |
Louisville & Jefferson County Waterworks | | | 5.000 | | | | 11/15/2027 | | | Aaa/AAA* | | | 2,000,000 | | | | 2,196,260 | |
Louisville & Jefferson County KY Waterworks & Water System | | | 5.000 | | | | 11/15/2031 | | | Aaa/AAA* | | | 10,695,000 | | | | 11,572,204 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2033 | | | Aa3 | | | 3,580,000 | | | | 3,887,271 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 50,983,776 | |
| TURNPIKES AND TOLL ROAD BONDS | | | | | | | | | | | | | | | | | | |
| 4.57% of Net Assets | | | | | | | | | | | | | | | | | | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2020 | | | Aa2/AA+* | | | 1,000,000 | | | | 1,187,430 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+* | | | 2,925,000 | | | | 3,286,647 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2027 | | | Aa2/AA+* | | | 9,530,000 | | | | 10,571,153 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA+* | | | 2,460,000 | | | | 2,698,423 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+* | | | 4,440,000 | | | | 4,991,359 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2027 | | | Aa2/AA+* | | | 1,550,000 | | | | 1,731,505 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA+* | | | 10,035,000 | | | | 11,069,408 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA+* | | | 5,165,000 | | | | 5,817,856 | |
KY State Turnpike Economic Development | | | 5.000 | | | | 07/01/2030 | | | Aa2/AA+* | | | 1,845,000 | | | | 2,062,341 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 43,416,122 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | |
| 3.81% of Net Assets | | | | | | | | | | | | | | | | | | |
Danville KY Multi-City Lease Revenue — Hopkinsville | | | 6.875 | | | | 06/01/2012 | | | A2 | | | 335,000 | | | | 344,849 | |
Jefferson County KY Health Facilities — Alliant Health | | | 5.125 | | | | 10/01/2017 | | | BBB* | | | 3,980,000 | | | | 4,249,486 | |
Jefferson County KY Health Facilities — Alliant Health | | | 5.125 | | | | 10/01/2018 | | | BBB* | | | 29,605,000 | | | | 31,600,081 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 36,194,416 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.80% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Housing Corporation | | | 4.850 | | | | 01/01/2024 | | | Aaa/AAA* | | | 7,380,000 | | | | 7,513,725 | |
KY Housing Corporation | | | 4.950 | | | | 01/01/2033 | | | Aaa/AAA* | | | 5,065,000 | | | | 5,102,836 | |
KY Housing Corporation | | | 4.750 | | | | 07/01/2032 | | | Aaa/AAA* | | | 1,265,000 | | | | 1,283,545 | |
KY Housing Corporation — Series E | | | 4.875 | | | | 07/01/2023 | | | Aaa/AAA* | | | 1,535,000 | | | | 1,606,040 | |
KY Housing Corporation | | | 4.750 | | | | 07/01/2035 | | | Aaa/AAA* | | | 4,140,000 | | | | 4,228,430 | |
KY Housing Corporation — Series E | | | 5.375 | | | | 07/01/2033 | | | Aaa/AAA* | | | 4,175,000 | | | | 4,360,829 | |
KY Housing Corporation | | | 5.450 | | | | 07/01/2038 | | | Aaa/AAA* | | | 3,250,000 | | | | 3,396,933 | |
KY Housing Corporation | | | 4.900 | | | | 07/01/2028 | | | Aaa/AAA* | | | 2,000,000 | | | | 2,068,120 | |
KY Housing Corporation | | | 4.850 | | | | 07/01/2029 | | | Aaa/AAA* | | | 3,200,000 | | | | 3,336,864 | |
KY Housing Corporation | | | 5.150 | | | | 07/01/2039 | | | Aaa/AAA* | | | 2,580,000 | | | | 2,681,342 | |
KY Housing Corporation | | | 4.625 | | | | 07/01/2033 | | | Aaa/AAA* | | | 560,000 | | | | 571,833 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 36,150,497 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.42% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Development Finance Authority — Kings Daughters | | | 5.000 | | | | 02/01/2030 | | | A1/A+*/A | | | 4,000,000 | | | | 4,150,600 | |
KY Development Finance Authority — Baptist Heathcare System | | | 5.375 | | | | 08/15/2024 | | | A1/AA-@ | | | 1,205,000 | | | | 1,355,709 | |
KY Development Finance Authority — Baptist Healthcare | | | 5.625 | | | | 08/15/2027 | | | A1/AA-@ | | | 4,855,000 | | | | 5,357,444 | |
KY Development Finance Authority — Catholic Health | | | 5.000 | | | | 05/01/2029 | | | Aa2/AA* | | | 2,500,000 | | | | 2,555,650 | |
KY Development Finance Authority — Catholic Health | | | 5.000 | | | | 05/01/2029 | | | Aa2/AA* | | | 2,410,000 | | | | 2,557,058 | |
KY Development Finance Authority — St. Elizabeth | | | 5.125 | | | | 05/01/2029 | | | AA-*/AA- | | | 2,750,000 | | | | 2,926,853 | |
KY Development Finance Authority — St. Elizabeth | | | 5.375 | | | | 05/01/2034 | | | AA-*/AA- | | | 2,560,000 | | | | 2,719,821 | |
KY Development Finance Authority-Catholic Health | | | 5.125 | | | | 10/01/2021 | | | A1/AA-* | | | 1,000,000 | | | | 1,010,310 | |
Louisville & Jefferson Metropolitan Health — St Mary’s | | | 6.125 | | | | 02/01/2037 | | | Baa1/A-* | | | 1,300,000 | | | | 1,350,297 | |
Louisville & Jefferson Metropolitan Government Health | | | 5.000 | | | | 10/01/2026 | | | A-*/A-@ | | | 575,000 | | | | 592,463 | |
Louisville & Jefferson Co Health System — Norton | | | 5.000 | | | | 10/01/2030 | | | A-*/A-@ | | | 2,000,000 | | | | 2,020,900 | |
Louisville & Jefferson County Metropolitan Health — Norton | | | 5.250 | | | | 10/01/2036 | | | A-*/A-@ | | | 3,460,000 | | | | 3,500,274 | |
Pike County KY Mortgage Revenue-Phelps Regional Health | | | 5.650 | | | | 09/20/2027 | | | NR | | | 2,435,000 | | | | 2,435,365 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 32,532,744 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 1.49% of Net Assets | | | | | | | | | | | | | | | | | | |
Berea KY Educational Facilities Revenue | | | 4.125 | % | | | 06/01/2022 | | | Aaa | | $ | 2,190,000 | | | $ | 2,246,699 | |
KY Housing Corporation | | | 5.000 | | | | 07/01/2033 | | | Aaa/AAA* | | | 2,405,000 | | | | 2,472,460 | |
Louisville & Jefferson County — Papa Johns Stadium | | | 4.750 | | | | 03/01/2028 | | | Aa2/AA-* | | | 3,250,000 | | | | 3,490,305 | |
University of Louisville General Receipts | | | 5.000 | | | | 09/01/2029 | | | Aa2/AA-* | | | 2,280,000 | | | | 2,580,368 | |
University of Louisville | | | 5.000 | | | | 09/01/2030 | | | Aa2/AA-* | | | 440,000 | | | | 492,958 | |
University of Louisville | | | 5.000 | | | | 09/01/2031 | | | Aa2/AA-* | | | 2,580,000 | | | | 2,857,066 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 14,139,856 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .74% of Net Assets | | | | | | | | | | | | | | | | | | |
Louisville & Jefferson County KY Parking Authority | | | 5.000 | | | | 12/01/2022 | | | Aa2/AA* | | | 625,000 | | | | 737,106 | |
Louisville & Jefferson County Metropolitan Parking | | | 5.750 | | | | 12/01/2034 | | | Aa2/AA* | | | 2,750,000 | | | | 3,101,643 | |
Wolfe County Public Property | | | 5.000 | | | | 04/01/2030 | | | Aa3 | | | 2,855,000 | | | | 3,194,231 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,032,980 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| .13% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Bond Corporation Finance Program | | | 5.500 | | | | 02/01/2031 | | | A+* | | | 1,115,000 | | | | 1,206,865 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,206,865 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $873,630,464) (See (a) below for further explanation) 97.83% of Net Assets | | | | | | | | | $ | 929,967,546 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 56,984,702 | |
| | Unrealized depreciation | | | (647,620 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 56,337,082 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 in 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 | | | 929,967,546 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 929,967,546 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
10
KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $873,630,464) | | | | | | $ | 929,967,546 | |
Cash | | | | | | | 13,363,956 | |
Receivable for fund shares sold | | | | | | | 212,239 | |
Interest receivable | | | | | | | 12,656,194 | |
| | | | | | | | |
Total assets | | | | | | | 956,199,935 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 352,067 | | | | | |
Distributions to shareholders | | | 4,580,400 | | | | | |
Fund shares redeemed | | | 115,513 | | | | | |
Investment advisory fee | | | 301,781 | | | | | |
Transfer agent fee | | | 97,893 | | | | | |
Trustee fee | | | 19,559 | | | | | |
Accrued expenses | | | 166,031 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 5,633,244 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 894,085,046 | |
Accumulated net investment income | | | | | | | 39,785 | |
Net accumulated realized gain on investment transactions | | | | | | | 104,778 | |
Net unrealized appreciation in value of investments | | | | | | | 56,337,082 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 950,566,691 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($950,566,691 -:- 120,526,559 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 7.89 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 19,832,066 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 1,767,398 | |
Transfer agent fee | | | 570,336 | |
Custodian expense | | | 70,075 | |
Professional fees | | | 114,758 | |
Trustee fees | | | 63,162 | |
Other expenses | | | 88,583 | |
| | | | |
Total expenses | | | 2,674,312 | |
Custodian expense reduction | | | (887 | ) |
| | | | |
Net expenses | | | 2,673,425 | |
| | | | |
Net investment income | | | 17,158,641 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 740,542 | |
Net change in unrealized appreciation/depreciation | | | 32,747,955 | |
| | | | |
Net realized and unrealized gain on investments | | | 33,488,497 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 50,647,138 | |
| | | | |
The accompanying footnotes 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, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 17,158,641 | | | $ | 33,202,621 | |
Net realized gain on investments | | | 740,542 | | | | 4,995,471 | |
Net change in unrealized appreciation/depreciation | | | 32,747,955 | | | | (6,910,375 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 50,647,138 | | | | 31,287,717 | |
Distributions from net investment income | | | (17,118,856 | ) | | | (33,202,621 | ) |
Distributions from capital gains | | | (3,744,261 | ) | | | (2,195,987 | ) |
Net fund share transactions (Note 4) | | | 24,157,645 | | | | 17,839,034 | |
| | | | | | | | |
Total increase/(decrease) | | | 53,941,666 | | | | 13,728,143 | |
Net assets: | | | | | | | | |
Beginning of period | | | 896,625,025 | | | | 882,896,882 | |
| | | | | | | | |
End of period | | $ | 950,566,691 | | | $ | 896,625,025 | |
| | | | | | | | |
Accumulated net investment income | | $ | 39,785 | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $7.63 | | | | $7.67 | | | | $7.49 | | | | $7.39 | | | | $7.43 | | | | $7.40 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.14 | | | | 0.29 | | | | 0.29 | | | | 0.29 | | | | 0.29 | | | | 0.30 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.29 | | | | (0.02 | ) | | | 0.20 | | | | 0.11 | | | | (0.04 | ) | | | 0.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.43 | | | | 0.27 | | | | 0.49 | | | | 0.40 | | | | 0.25 | | | | 0.34 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.14 | ) | | | (0.29 | ) | | | (0.29 | ) | | | (0.29 | ) | | | (0.29 | ) | | | (0.30 | ) |
Distributions from capital gains | | | (0.03 | ) | | | (0.02 | ) | | | (0.02 | ) | | | (0.01 | )(b) | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions: | | | (0.17 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.30 | ) | | | (0.29 | ) | | | (0.31 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $7.89 | | | | $7.63 | | | | $7.67 | | | | $7.49 | | | | $7.39 | | | | $7.43 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 5.76% | (c) | | | 3.57% | | | | 6.58% | | | | 5.65% | | | | 3.47% | | | | 4.51% | |
Net assets, end of period (in thousands) | | | $950,567 | | | | $896,625 | | | | $882,897 | | | | $788,923 | | | | $734,613 | | | | $702,473 | |
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 | | | 3.71% | (d) | | | 3.78% | | | | 3.81% | | | | 3.99% | | | | 3.94% | | | | 3.94% | |
Portfolio turnover | | | 6.23% | (d) | | | 11.42% | | | | 4.76% | | | | 6.09% | | | | 5.69% | | | | 6.76% | |
| (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, 2011 |
| | 0.58% | | | For the year ended June 30, 2011 |
| | 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 |
| (b) | | Rounds to less than .01 |
The accompanying footnotes 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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 74.91% of Net Assets | | | | | | | | | | | | | | | | | | |
Boone County School District Finance Corporation | | | 4.000 | % | | | 8/1/2018 | | | Aa3 | | $ | 145,000 | | | $ | 156,604 | |
Bourbon County Public Project | | | 3.800 | | | | 2/1/2019 | | | Aa3 | | | 260,000 | | | | 283,707 | |
Bowling Green General Obligation — Series A | | | 4.000 | | | | 6/1/2016 | | | Aa2 | | | 375,000 | | | | 401,449 | |
Boyle County Centre College | | | 5.000 | | | | 6/1/2018 | | | Aa3/AA-* | | | 200,000 | | | | 234,482 | |
Boyle County College — Center College | | | 5.000 | | | | 6/1/2020 | | | Aa3/AA-* | | | 150,000 | | | | 171,591 | |
Breathitt County School District Finance Corporation | | | 3.875 | | | | 7/1/2017 | | | Aa3 | | | 280,000 | | | | 301,613 | |
Bullitt County KY School District Finance Corporation | | | 4.000 | | | | 10/1/2014 | | | Aa3 | | | 150,000 | | | | 161,549 | |
Campbell County School District Finance Corporation | | | 4.375 | | | | 8/1/2019 | | | Aa3 | | | 875,000 | | | | 968,039 | |
Christian County School District Finance Corporation | | | 4.000 | | | | 8/1/2019 | | | Aa3 | | | 720,000 | | | | 771,127 | |
Clay County School District Finance Corporation | | | 3.750 | | | | 6/1/2017 | | | Aa3 | | | 210,000 | | | | 225,981 | |
Corbin KY Independent School District | | | 4.000 | | | | 2/1/2018 | | | Aa3 | | | 300,000 | | | | 332,553 | |
Fayette County KY School District Finance Corporation | | | 4.000 | | | | 6/1/2019 | | | Aa2/AA* | | | 140,000 | | | | 152,880 | |
Hardin County School District Finance Corporation | | | 4.000 | | | | 2/1/2019 | | | Aa3 | | | 1,475,000 | | | | 1,564,193 | |
Jefferson County School District Finance Corporation | | | 5.250 | | | | 1/1/2017 | | | Aa2/AA-* | | | 200,000 | | | | 238,356 | |
Jefferson County School District School Building Revenue | | | 4.250 | | | | 7/1/2017 | | | Aa2/AA-* | | | 175,000 | | | | 196,364 | |
Jessamine County KY School District | | | 4.100 | | | | 1/1/2018 | | | Aa3 | | | 100,000 | | | | 107,423 | |
Kenton County KY School District Finance Corporation | | | 5.000 | | | | 6/1/2016 | | | Aa3 | | | 250,000 | | | | 272,458 | |
KY Asset Liability Commission | | | 5.000 | | | | 5/1/2016 | | | Aa3/A+*/AA-@ | | | 1,000,000 | | | | 1,115,180 | |
KY Asset Liability Project Notes | | | 5.000 | | | | 9/1/2016 | | | Aa2/AA*/AA-@ | | | 2,000,000 | | | | 2,248,260 | |
KY Asset Liability Project Notes | | | 5.000 | | | | 9/1/2015 | | | Aa2/AA*/AA-@ | | | 275,000 | | | | 313,354 | |
KY Asset Liability Project Notes | | | 4.500 | | | | 9/1/2016 | | | Aa2/AA*/AA-@ | | | 175,000 | | | | 201,661 | |
KY Asset Liability Project Notes | | | 5.000 | | | | 9/1/2017 | | | Aa2/AA*/AA-@ | | | 1,500,000 | | | | 1,797,810 | |
KY Asset Liability Projects — Federal Highway | | | 4.200 | | | | 9/1/2018 | | | Aa2/AA*/AA-@ | | | 1,500,000 | | | | 1,707,915 | |
KY Asset Liability | | | 4.300 | | | | 9/1/2019 | | | Aa2/AA*/AA-@ | | | 1,400,000 | | | | 1,582,966 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/1/2019 | | | Aa2/AA-* | | | 320,000 | | | | 375,712 | |
KY Asset Liability Commission University of Ky Project Notes | | | 4.000 | | | | 10/1/2019 | | | Aa2/AA-* | | | 100,000 | | | | 109,545 | |
KY Asset Liability Commission University of Ky Project Notes | | | 5.000 | | | | 10/1/2016 | | | Aa2/AA-* | | | 1,250,000 | | | | 1,428,713 | |
KY Asset Liability Project Notes | | | 4.400 | | | | 10/1/2019 | | | Aa2/AA-* | | | 1,750,000 | | | | 1,934,485 | |
KY Asset Liability Commission University of Ky Project Notes | | | 4.450 | | | | 10/1/2020 | | | Aa2/AA-* | | | 500,000 | | | | 548,815 | |
KY Economic Development Finance Authority — Norton Health | | | 6.000 | | | | 10/1/2018 | | | Baa2/BBB* | | | 560,000 | | | | 593,466 | |
KY Rural Water Finance Corporation | | | 3.625 | | | | 2/1/2016 | | | Baa2/AA-* | | | 350,000 | | | | 362,698 | |
KY Rural Water Finance Corporation | | | 4.000 | | | | 2/1/2014 | | | Baa1/AA-* | | | 300,000 | | | | 312,363 | |
KY State Property & Building #84 | | | 5.000 | | | | 8/1/2019 | | | Aa3/A+*/AA-@ | | | 1,000,000 | | | | 1,206,260 | |
KY State Property & Building #93 | | | 5.250 | | | | 2/1/2021 | | | Aa3/AA-*/AA-@ | | | 200,000 | | | | 236,076 | |
Ky State Property & Building #87 | | | 5.000 | | | | 3/1/2017 | | | Aa3/A+*/AA-@ | | | 850,000 | | | | 994,194 | |
KY State Property & Building #87 | | | 5.000 | | | | 3/1/2020 | | | Aa3/A+*/AA-@ | | | 4,500,000 | | | | 5,102,955 | |
KY State Property & Building #82 | | | 5.250 | | | | 10/1/2013 | | | Aa3/AA-*/AA-@ | | | 500,000 | | | | 540,015 | |
KY State Property & Building #82 | | | 5.250 | | | | 10/1/2015 | | | Aa3/AA-*/AA-@ | | | 2,525,000 | | | | 2,888,070 | |
KY State Property & Building #82 | | | 5.250 | | | | 10/1/2017 | | | Aa3/AA-*/AA-@ | | | 1,260,000 | | | | 1,507,161 | |
Ky State Property & Building #85 | | | 5.000 | | | | 8/1/2016 | | | Aa3/AA-*/AA-@ | | | 835,000 | | | | 939,450 | |
KY State Property & Building #88 | | | 5.000 | | | | 11/1/2014 | | | Aa3/A+*/AA-@ | | | 1,000,000 | | | | 1,110,070 | |
KY State Property & Building #88 | | | 5.000 | | | | 11/1/2015 | | | Aa3/A+*/AA-@ | | | 955,000 | | | | 1,087,554 | |
KY State Property & Building #76 | | | 5.500 | | | | 8/1/2017 | | | Aa3/A+*/AA-@ | | | 190,000 | | | | 228,992 | |
KY State Property & Building #76 | | | 5.500 | | | | 8/1/2018 | | | Aa3/A+*/AA-@ | | | 1,415,000 | | | | 1,731,875 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/1/2016 | | | Aa3/A+*/AA-@ | | | 775,000 | | | | 902,828 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/1/2017 | | | Aa3/A+*/AA-@ | | | 100,000 | | | | 118,370 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/1/2019 | | | Aa3/A+*/AA-@ | | | 1,750,000 | | | | 2,114,070 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/1/2014 | | | Aa3/AA-*/AA-@ | | | 2,000,000 | | | | 2,224,900 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/1/2015 | | | Aa3/AA-*/AA-@ | | | 2,230,000 | | | | 2,536,848 | |
KY State Turnpike Authority Economic Development | | | 5.000 | | | | 7/1/2019 | | | AA2/AA+*/AA-@ | | | 2,250,000 | | | | 2,518,538 | |
KY State Turnpike Authority Economic Development | | | 5.000 | | | | 7/1/2017 | | | Aa2/AA+*/AA-@ | | | 2,570,000 | | | | 2,984,567 | |
Lexington-Fayette Urban County Government Public Facilities | | | 4.000 | | | | 10/1/2018 | | | Aa3 | | | 1,540,000 | | | | 1,688,456 | |
Lexington Fayette Urban County Government Public Property | | | 4.000 | | | | 5/1/2017 | | | Aa2/AA* | | | 180,000 | | | | 203,789 | |
Louisville & Jefferson County Metropolitian Sewer | | | 5.000 | | | | 5/15/2018 | | | Aa3/AA*/AA-@ | | | 1,220,000 | | | | 1,400,694 | |
Louisville & Jefferson County Metropolitian Sewer | | | 5.000 | | | | 5/15/2016 | | | Aa3/AA*/AA-@ | | | 500,000 | | | | 565,845 | |
Louisville & Jefferson County Metropolitian Sewer | | | 5.000 | | | | 5/15/2016 | | | Aa3/AA* | | | 100,000 | | | | 116,008 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
Madison County KY School District Finance Corporation | | | 3.600 | % | | | 2/1/2017 | | | Aa3 | | $ | 300,000 | | | $ | 318,738 | |
Oldham County School Building Corporation | | | 4.375 | | | | 6/1/2018 | | | Aa3 | | | 2,570,000 | | | | 2,924,454 | |
Paducah Electric Plant | | | 3.000 | | | | 10/1/2014 | | | Aa3/A-@ | | | 750,000 | | | | 792,300 | |
Warren County KY School District Finance Corporation | | | 4.000 | | | | 2/1/2015 | | | Aa3 | | | 785,000 | | | | 849,150 | |
Warren County KY School District Finance Corporation | | | 4.000 | | | | 2/1/2016 | | | Aa3 | | | 1,330,000 | | | | 1,467,402 | |
Western Ky University | | | 3.000 | | | | 9/1/2014 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,047,140 | |
Western Ky University | | | 4.000 | | | | 9/1/2017 | | | Aa3/AA-* | | | 2,145,000 | | | | 2,406,819 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 65,926,900 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 12.61% of Net Assets | | | | | | | | | | | | | | | | | | |
Bullitt County KY School District Finance Corporation | | | 4.100 | | | | 10/1/2018 | | | Aa3 | | | 165,000 | | | | 176,385 | |
Gallatin County School District Finance Corporation | | | 4.000 | | | | 5/1/2016 | | | Aa3 | | | 175,000 | | | | 192,600 | |
Grant County School District Finance Corporation | | | 3.750 | | | | 6/1/2017 | | | Aa3 | | | 190,000 | | | | 207,888 | |
Hazard KY Independent School District Finance Corporation | | | 3.850 | | | | 9/1/2017 | | | Aa3 | | | 200,000 | | | | 216,342 | |
KY Association of Counties | | | 4.250 | | | | 2/1/2017 | | | A+* | | | 500,000 | | | | 556,954 | |
KY Association of Counties | | | 4.000 | | | | 2/1/2018 | | | A+* | | | 115,000 | | | | 127,421 | |
KY Association of Counties | | | 4.250 | | | | 2/1/2019 | | | A+* | | | 255,000 | | | | 286,804 | |
Ky Asset Liability Commission Revenue University of Kentucky | | | 4.125 | | | | 10/1/2019 | | | Aa2/AA-* | | | 150,000 | | | | 168,626 | |
KY Infrastructure Authority | | | 5.250 | | | | 8/1/2013 | | | AA* | | | 1,185,000 | | | | 1,269,491 | |
KY State Property & Building #94 | | | 5.000 | | | | 5/1/2014 | | | Aa2/A+*/AA-@ | | | 1,000,000 | | | | 1,088,230 | |
KY State Property & Building #94 | | | 5.000 | | | | 5/1/2015 | | | Aa2/A+*/AA-@ | | | 1,245,000 | | | | 1,391,001 | |
KY State Property & Building #94 | | | 5.000 | | | | 5/1/2017 | | | Aa2/A+*/AA-@ | | | 500,000 | | | | 586,605 | |
KY State Property & Building #93 | | | 5.250 | | | | 2/1/2018 | | | Aa3/A+*/AA-@ | | | 410,000 | | | | 490,663 | |
KY State Property & Building #87 | | | 5.000 | | | | 3/1/2018 | | | Aa3/A+*/AA-@ | | | 100,000 | | | | 116,154 | |
KY State Property & Building | | | 5.000 | | | | 11/1/2015 | | | Aa3/A+*/AA-@ | | | 250,000 | | | | 284,600 | |
KY State Property & Building | | | 5.000 | | | | 11/1/2014 | | | Aa3/A+*/AA-@ | | | 750,000 | | | | 832,553 | |
KY State Property & Building #100 | | | 5.000 | | | | 8/1/2017 | | | Aa3/A+*/AA-@ | | | 500,000 | | | | 591,370 | |
KY State Property & Building #95 | | | 5.000 | | | | 8/1/2017 | | | Aa3/A+*/AA-@ | | | 200,000 | | | | 236,548 | |
KY State Property & Building #101 | | | 5.000 | | | | 10/1/2019 | | | Aa3/A+*/AA-@ | | | 1,050,000 | | | | 1,265,103 | |
Pendleton County School District Finance Corporation | | | 4.000 | | | | 2/1/2020 | | | Aa3 | | | 450,000 | | | | 494,681 | |
Pulaski County KY Public Property | | | 3.750 | | | | 12/1/2014 | | | Aa3 | | | 480,000 | | | | 515,294 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 11,095,313 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.65% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Housing Corporation | | | 4.875 | | | | 7/1/2023 | | | Aaa/AAA* | | | 1,500,000 | | | | 1,569,420 | |
KY Housing Corporation | | | 4.850 | | | | 1/1/2024 | | | Aaa/AAA* | | | 750,000 | | | | 763,590 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,333,010 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.57% of Net Assets | | | | | | | | | | | | | | | | | | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 5/15/2015 | | | Aa3/AA* | | | 1,000,000 | | | | 1,131,690 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 5/15/2015 | | | Aa3/AA* | | | 1,000,000 | | | | 1,131,690 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,263,380 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.06% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Development Finance Authority — Kings Daughters | | | 5.000 | | | | 2/1/2016 | | | A1/A+*/A+@ | | | 1,000,000 | | | | 1,110,480 | |
KY Development Finance Authority — St. Elizabeth | | | 5.000 | | | | 5/1/2015 | | | AA-*/AA-@ | | | 400,000 | | | | 440,432 | |
KY Economic Development Finance Authority — Catholic Health | | | 4.000 | | | | 5/1/2015 | | | Aa2/AA*/AA@ | | | 250,000 | | | | 263,580 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,814,492 | |
| TURNPIKES AND TOLL ROAD BONDS | | | | | | | | | | | | | | | | | | |
| 1.14% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Turnpike Authority Economic Development Road Revenue | | | 4.125 | | | | 7/1/2019 | | | Aa2/AA+*/AA-@ | | | 105,000 | | | | 120,056 | |
KY Turnpike Economic Development | | | 5.000 | | | | 7/1/2016 | | | Aa2/AA+*/AA-@ | | | 750,000 | | | | 879,232 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 999,288 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| 1.11% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Development Finance Authority — Norton Health | | | 5.850 | | | | 10/1/2015 | | | BBB* | | | 885,000 | | | | 978,102 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 978,102 | |
The accompanying footnotes are an integral part of the financial statements.
14
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| CERTIFICATES OF PARTICIPATION BONDS | | | | | | | | | | | | | | | | | | |
| .88% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Interlocal School Transportation Assistance Equipment | | | 3.750 | % | | | 3/1/2015 | | | Aa3 | | $ | 770,000 | | | $ | 770,454 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 770,454 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| .19% of Net Assets | | | | | | | | | | | | | | | | | | |
Northern Ky University General Receipts | | | 4.000 | | | | 9/1/2018 | | | Aa3/A+* | | | 150,000 | | | | 170,547 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 170,547 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $81,499,501) (See (a) below for further explanation) 98.12% of Net Assets | | | | | | $ | 86,351,486 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 4,909,326 | |
| | Unrealized depreciation | | | (57,341 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 4,851,985 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 | | | 86,351,486 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 86,351,486 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
15
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $81,499,501) | | | | | | $ | 86,351,486 | |
Cash | | | | | | | 693,066 | |
Interest receivable | | | | | | | 1,074,423 | |
Prepaid expenses | | | | | | | 259 | |
| | | | | | | | |
Total assets | | | | | | | 88,119,234 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 47,723 | | | | | |
Fund shares redeemed | | | 750 | | | | | |
Investment advisory fee | | | 36,792 | | | | | |
Transfer agent fee | | | 16,311 | | | | | |
Accrued expenses | | | 11,840 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 113,416 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 84,138,358 | |
Net accumulated realized loss on investment transactions | | | | | | | (984,524 | ) |
Net unrealized appreciation in value of investments | | | | | | | 4,851,985 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 88,005,819 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($88,005,819 -:- 15,921,978 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 5.53 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 1,255,133 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 208,107 | |
Transfer agent fee | | | 54,519 | |
Custodian expense | | | 6,206 | |
Professional fees | | | 12,124 | |
Trustee fees | | | 5,581 | |
Other expenses | | | 15,092 | |
| | | | |
Total expenses | | | 301,629 | |
Custodian expense reduction | | | (134 | ) |
| | | | |
Net expenses | | | 301,495 | |
| | | | |
Net investment income | | | 953,638 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 46,150 | |
Net change in unrealized appreciation/depreciation | | | 1,917,862 | |
| | | | |
Net realized and unrealized gain on investments | | | 1,964,012 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 2,917,650 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
16
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 953,638 | | | $ | 1,714,591 | |
Net realized gain on investments | | | 46,150 | | | | 199,821 | |
Net change in unrealized appreciation/depreciation | | | 1,917,862 | | | | 177,100 | |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 2,917,650 | | | | 2,091,512 | |
Distributions from net investment income | | | (953,638 | ) | | | (1,714,591 | ) |
Net fund share transactions (Note 4) | | | 13,636,349 | | | | 2,862,186 | |
| | | | | | | | |
Total increase | | | 15,600,361 | | | | 3,239,107 | |
Net assets: | | | | | | | | |
Beginning of period | | | 72,405,458 | | | | 69,166,351 | |
| | | | | | | | |
End of period | | $ | 88,005,819 | | | $ | 72,405,458 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $5.39 | | | | $5.36 | | | | $5.25 | | | | $5.16 | | | | $5.13 | | | | $5.14 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.06 | | | | 0.13 | | | | 0.15 | | | | 0.17 | | | | 0.17 | | | | 0.17 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.14 | | | | 0.03 | | | | 0.11 | | | | 0.09 | | | | 0.03 | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.20 | | | | 0.16 | | | | 0.26 | | | | 0.26 | | | | 0.20 | | | | 0.16 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.06 | ) | | | (0.13 | ) | | | (0.15 | ) | | | (0.17 | ) | | | (0.17 | ) | | | (0.17 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.06 | ) | | | (0.13 | ) | | | (0.15 | ) | | | (0.17 | ) | | | (0.17 | ) | | | (0.17 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $5.53 | | | | $5.39 | | | | $5.36 | | | | $5.25 | | | | $5.16 | | | | $5.13 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 3.79% | (b) | | | 3.04% | | | | 4.99% | | | | 5.02% | | | | 3.94% | | | | 3.10% | |
Net assets, end of period (in thousands) | | | $88,006 | | | | $72,405 | | | | $69,166 | | | | $60,570 | | | | $53,955 | | | | $61,302 | |
Ratio of net expenses to average net assets (a) | | | 0.73% | (c) | | | 0.72% | | | | 0.72% | | | | 0.72% | | | | 0.72% | | | | 0.72% | |
Ratio of net investment income to average net assets | | | 2.30% | (c) | | | 2.44% | | | | 2.80% | | | | 3.16% | | | | 3.28% | | | | 3.25% | |
Portfolio turnover | | | 3.24% | (c) | | | 15.37% | | | | 20.26% | | | | 15.64% | | | | 14.17% | | | | 4.87% | |
| (a) | | Percentages are after custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | |
| 0.73%(c) | | For the six months ended December 31, 2011 |
| 0.72% | | For the year ended June 30, 2011 |
| 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 |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 67.61% of Net Assets | | | | | | | | | | | | | | | | | | |
Hinds County MS Revenue Refunding — MS Methodist Hospital | | | 5.600 | % | | | 05/01/2012 | | | NR | | $ | 5,000 | | | $ | 5,042 | |
Jackson MS Municipal Airport Authority | | | 5.000 | | | | 10/01/2031 | | | A3/A-@ | | | 170,000 | | | | 175,200 | |
Medical Center Educational Building Corporation MS Revenue | | | 5.500 | | | | 12/01/2023 | | | Aa2 | | | 120,000 | | | | 137,900 | |
MS Development Bank Special Obligation Jones County Rest Home | | | 5.250 | | | | 04/01/2028 | | | Aa3/AA-* | | | 120,000 | | | | 131,303 | |
MS Development Bank Special Obligation Capital Project | | | 5.000 | | | | 07/01/2031 | | | NR | | | 20,000 | | | | 20,761 | |
MS Development Bank Special Obligation Canton — Series A | | | 5.750 | | | | 10/01/2031 | | | Aa3 | | | 270,000 | | | | 302,041 | |
MS Development Bank Special Obligation Meridian Water and Sewer | | | 5.125 | | | | 07/01/2026 | | | A* | | | 50,000 | | | | 51,011 | |
MS Development Bank Special Obligation Southaven Water | | | 5.000 | | | | 03/01/2025 | | | A+* | | | 325,000 | | | | 349,765 | |
MS Development Bank Special Obligation Highway Construction | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 125,000 | | | | 137,629 | |
MS Development Bank Special Obligation Highway — Desoto | | | 4.750 | | | | 01/01/2035 | | | Aa3/AA-* | | | 125,000 | | | | 131,389 | |
MS Development Bank Special Obligation Jackson Water/Sewer | | | 5.000 | | | | 09/01/2025 | | | Aa3/AA-* | | | 100,000 | | | | 106,413 | |
MS Development Bank Special Obligation Jackson Water/Sewer | | | 5.000 | | | | 09/01/2029 | | | Aa3/AA-* | | | 60,000 | | | | 63,053 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | 5.000 | | | | 09/01/2034 | | | Aa3/AA-* | | | 335,000 | | | | 346,300 | |
MS Development Bank Special Obligation Horn Lake | | | 5.000 | | | | 10/01/2020 | | | A* | | | 50,000 | | | | 50,031 | |
MS Development Bank Special Obligation Rankin Utilities | | | 5.000 | | | | 01/01/2028 | | | Aa3/AA-* | | | 55,000 | | | | 58,787 | |
MS Development Bank Special Obligation Capital Improvement | | | 5.250 | | | | 07/01/2026 | | | Aa3/AA-* | | | 125,000 | | | | 135,408 | |
MS Development Bank Special Obligation Lee County School | | | 4.500 | | | | 09/01/2021 | | | A1 | | | 100,000 | | | | 101,009 | |
MD Development Bank Special Obligation Jackson Public | | | 5.375 | | | | 04/01/2028 | | | Aa2 | | | 70,000 | | | | 78,016 | |
MS Development Bank Special Obligation Hinds Community | | | 5.000 | | | | 10/01/2026 | | | Aa2 | | | 85,000 | | | | 95,303 | |
MS Development Bank Special Obligation Hinds College | | | 5.125 | | | | 10/01/2028 | | | Aa2 | | | 100,000 | | | | 112,171 | |
MS Development Bank Special Obligation Hinds College | | | 5.375 | | | | 10/01/2033 | | | Aa2 | | | 60,000 | | | | 66,333 | |
MS Development Bank Special Obligation Hinds Community | | | 5.000 | | | | 04/01/2036 | | | Aa3/AA-* | | | 100,000 | | | | 106,707 | |
MS Development Bank Special Obligation Capital Projects | | | 5.875 | | | | 07/01/2024 | | | NR | | | 35,000 | | | | 36,855 | |
MS Development Bank Special Obligation Capital Projects | | | 5.000 | | | | 07/01/2024 | | | NR | | | 45,000 | | | | 45,838 | |
MS Development Bank Special Obligation Desoto County | | | 5.000 | | | | 07/01/2032 | | | A* | | | 45,000 | | | | 47,293 | |
MS Home Corporation Single Family Mortgage — Series E-1 | | | 5.050 | | | | 12/01/2028 | | | Aaa | | | 35,000 | | | | 37,053 | |
MS Development Bank Special Obligation Lowndes County | | | 5.000 | | | | 07/01/2022 | | | Aa3/AA-* | | | 80,000 | | | | 88,617 | |
MS Development Bank Special Obligation Lowndes County | | | 5.000 | | | | 07/01/2027 | | | Aa3/AA-* | | | 150,000 | | | | 160,013 | |
MS Development Bank Special Obligation Covington Hospital | | | 5.000 | | | | 07/01/2027 | | | A* | | | 150,000 | | | | 150,479 | |
MS Development Special Obligation Madison County Highway | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 295,000 | | | | 325,563 | |
MS Development Bank Special Obligation Highway Construction | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 175,000 | | | | 192,680 | |
MS Development Bank Special Obligation Highway Construction | | | 4.750 | | | | 01/01/2031 | | | Aa3/AA-* | | | 125,000 | | | | 133,115 | |
MS Development Bank Special Obligation Jones County College | | | 5.100 | | | | 03/01/2028 | | | AA+* | | | 55,000 | | | | 61,383 | |
MS Development Bank Special Obligation Jones County Junior | | | 5.000 | | | | 03/01/2033 | | | AA+* | | | 150,000 | | | | 162,567 | |
MS Development Bank Special Obligation Jones County Junior | | | 5.125 | | | | 03/01/2039 | | | AA+* | | | 45,000 | | | | 48,885 | |
MS State University Educational Building Corporate Revenue | | | 5.000 | | | | 08/01/2024 | | | Aa2/A+*/AA@ | | | 225,000 | | | | 245,225 | |
MS State University Educational Building Corporation | | | 5.000 | | | | 08/01/2028 | | | Aa2/A+*/AA@ | | | 30,000 | | | | 32,066 | |
Olive Branch MS Public Improvement | | | 4.125 | | | | 06/01/2022 | | | Aa2 | | | 100,000 | | | | 102,151 | |
University Southern MS Education Building — Series A | | | 5.000 | | | | 03/01/2022 | | | Aa2 | | | 100,000 | | | | 110,086 | |
University Southern MS Educational Building Corporation | | | 5.000 | | | | 03/01/2032 | | | Aa2 | | | 50,000 | | | | 52,547 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,793,988 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | |
| 13.40% of Net Assets | | | | | | | | | | | | | | | | | | |
Alcorn State University Educational Building MS Revenue | | | 5.125 | | | | 09/01/2034 | | | Aa2 | | | 95,000 | | | | 101,993 | |
Jackson State University Education Building | | | 5.000 | | | | 03/01/2034 | | | Aa2/AA-* | | | 175,000 | | | | 186,958 | |
MS State Capital Improvements Projects — Series A | | | 5.000 | | | | 10/01/2036 | | | Aa2/AA*/AA+@ | | | 180,000 | �� | | | 199,469 | |
MS State University Educational Building Corporate Revenue | | | 5.250 | | | | 08/01/2033 | | | Aa2/AA@ | | | 50,000 | | | | 53,985 | |
MS State University Educational Building Corporation | | | 5.000 | | | | 08/01/2036 | | | Aa2/AA@ | | | 175,000 | | | | 187,661 | |
University Southern MS Educational Building Corporation | | | 5.125 | | | | 09/01/2029 | | | Aa2/A+* | | | 100,000 | | | | 110,276 | |
University Southern MS Education Building Athletics | | | 5.000 | | | | 03/01/2034 | | | Aa2 | | | 105,000 | | | | 110,002 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 950,344 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| 5.30% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Gulfport Combined Water | | | 5.500 | | | | 07/01/2015 | | | Aa3/AA-* | | | 10,000 | | | | 10,453 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | 5.000 | | | | 09/01/2032 | | | Aa3/A+* | | | 150,000 | | | | 154,772 | |
The accompanying footnotes are an integral part of the financial statements.
18
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
Pearl River County MS Certificate of Participation | | | 4.500 | % | | | 04/01/2021 | | | Baa2 | | $ | 200,000 | | | $ | 210,363 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 375,588 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 4.56% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Department of Corrections | | | 5.250 | | | | 08/01/2027 | | | AA-*/AA@ | | | 50,000 | | | | 55,733 | |
MS Development Bank Special Obligation Department of Corrections | | | 5.250 | | | | 08/01/2027 | | | AA-*/AA@ | | | 240,000 | | | | 267,516 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 323,249 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 3.53% of Net Assets | | | | | | | | | | | | | | | | | | |
MS State General Obligation | | | 5.100 | | | | 11/15/2012 | | | Aa2/AA*/AA+@ | | | 10,000 | | | | 10,401 | |
MS State Capital Improvement Projects — Series A | | | 5.000 | | | | 10/01/2029 | | | Aa2/AA*/AA+@ | | | 145,000 | | | | 166,579 | |
MS State Refunding — Series A | | | 5.250 | | | | 11/01/2019 | | | Aa2/AA*/AA+@ | | | 50,000 | | | | 63,263 | |
Richland MS Tax Increment | | | 5.600 | | | | 06/01/2013 | | | NR | | | 10,000 | | | | 10,207 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 250,450 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.33% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Desoto County | | | 5.250 | | | | 07/01/2031 | | | A* | | | 225,000 | | | | 235,917 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 235,917 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | |
| .46% of Net Assets | | | | | | | | | | | | | | | | | | |
Harrison County MS Wastewater Management District | | | 5.000 | | | | 02/01/2015 | | | Baa1/AA+* | | | 25,000 | | | | 27,621 | |
MS Gulf Coast Regional Wastewater Treatment Facilities | | | 7.000 | | | | 07/01/2012 | | | NR | | | 5,000 | | | | 5,146 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 32,767 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $6,626,157) (See (a) below for further explanation) 98.19% of Net Assets | | | | | | | | | $ | 6,962,303 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 346,194 | |
| | Unrealized depreciation | | | (9,920 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 336,274 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 | | | 6,962,432 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 6,962,432 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
19
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $6,626,157) | | | | | | $ | 6,962,303 | |
Cash | | | | | | | 57,536 | |
Interest receivable | | | | | | | 116,390 | |
| | | | | | | | |
Total assets | | | | | | | 7,136,229 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 32,626 | | | | | |
Fund shares redeemed | | | 5,000 | | | | | |
Investment advisory fee | | | 1,733 | | | | | |
Transfer agent fee | | | 2,594 | | | | | |
Trustee fee | | | 8 | | | | | |
Accrued expenses | | | 3,148 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 45,109 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 6,766,042 | |
Accumulated net investment income | | | | | | | 129 | |
Net accumulated realized loss on investment transactions | | | | | | | (11,197 | ) |
Net unrealized appreciation in value of investments | | | | | | | 336,146 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 7,091,120 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($7,091,120 -:- 598,829 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.84 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 146,387 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 16,848 | |
Transfer agent fee | | | 5,201 | |
Custodian expense | | | 879 | |
Pricing fees | | | 2,262 | |
Professional fees | | | 1,551 | |
Trustee fees | | | 456 | |
Registration fees | | | 654 | |
Other expenses | | | 1,177 | |
| | | | |
Total expenses | | | 29,028 | |
Fees waived by Adviser | | | (7,074 | ) |
Custodian expense reduction | | | (53 | ) |
| | | | |
Net expenses | | | 21,901 | |
| | | | |
Net investment income | | | 124,486 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (27,265 | ) |
Net change in unrealized appreciation/depreciation | | | 321,012 | |
| | | | |
Net realized and unrealized gain on investments | | | 293,747 | |
| | | | |
Net decrease in net assets resulting from operations | | $ | 418,233 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
20
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 124,486 | | | $ | 242,439 | |
Net realized gain/(loss) on investments | | | (27,265 | ) | | | 49,358 | |
Net change in unrealized appreciation/depreciation | | | 321,012 | | | | (90,754 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 418,233 | | | | 201,043 | |
Distributions from net investment income | | | (124,357 | ) | | | (242,439 | ) |
Net fund share transactions (Note 4) | | | 421,177 | | | | 96,180 | |
| | | | | | | | |
Total increase | | | 715,053 | | | | 54,784 | |
Net assets: | | | | | | | | |
Beginning of period | | | 6,376,067 | | | | 6,321,283 | |
| | | | | | | | |
End of period | | $ | 7,091,120 | | | $ | 6,376,067 | |
| | | | | | | | |
Accumulated net investment income | | $ | 129 | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $11.33 | | | | $11.41 | | | | $11.03 | | | | $11.08 | | | | $11.24 | | | | $11.25 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.22 | | | | 0.44 | | | | 0.45 | | | | 0.45 | | | | 0.45 | | | | 0.45 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.51 | | | | (0.08 | ) | | | 0.38 | | | | (0.05 | ) | | | (0.16 | ) | | | 0.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.73 | | | | 0.36 | | | | 0.83 | | | | 0.40 | | | | 0.29 | | | | 0.49 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.22 | ) | | | (0.44 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.45 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | (b) | | | — | (b) | | | — | | | | (0.05 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions: | | | (0.22 | ) | | | (0.44 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.50 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.84 | | | | $11.33 | | | | $11.41 | | | | $11.03 | | | | $11.08 | | | | $11.24 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 6.45% | (c) | | | 3.19% | | | | 7.65% | | | | 3.72% | | | | 2.64% | | | | 4.39% | |
Net assets, end of period (in thousands) | | | $7,091 | | | | $6,376 | | | | $6,321 | | | | $5,001 | | | | $4,447 | | | | $5,103 | |
Ratio of net expenses to average net assets (a) | | | 0.65% | (d) | | | 0.58% | | | | 0.45% | | | | 0.44% | | | | 0.45% | | | | 0.45% | |
Ratio of net investment income to average net assets | | | 3.71% | (d) | | | 3.86% | | | | 3.99% | | | | 4.11% | | | | 4.02% | | | | 3.98% | |
Portfolio turnover | | | 6.70% | (d) | | | 20.53% | | | | 10.04% | | | | 9.30% | | | | 2.79% | | | | 11.57% | |
| (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% | (d) | | | 0% | (d) | | For the six months ended December 31, 2011 |
| | .26% | | | | 0% | | | For the year ended June 30, 2011 |
| | .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 |
| (b) | | Rounds to less than $0.01. |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 49.76% of Net Assets | | | | | | | | | | | | | | | | | | |
Asheville NC Water System Revenue | | | 4.750 | % | | | 08/01/2027 | | | Aa2/AA* | | $ | 1,000,000 | | | $ | 1,079,750 | |
Burke County NC Certificates of Participation | | | 5.000 | | | | 04/01/2023 | | | A1/A* | | | 1,000,000 | | | | 1,082,150 | |
Cabarrus County NC Certificates of Participation Installment | | | 5.000 | | | | 06/01/2025 | | | Aa2/AA*/AA@ | | | 1,000,000 | | | | 1,111,640 | |
Charlotte NC Airport Revenue | | | 5.250 | | | | 07/01/2023 | | | Aa3/A+*/A+@ | | | 1,000,000 | | | | 1,054,110 | |
Charlotte NC Airport Revenue Refunding Charlotte Douglas | | | 5.000 | | | | 07/01/2025 | | | Aa3/A+*/A+@ | | | 1,000,000 | | | | 1,084,380 | |
Davie County NC Public School & Community College Facility | | | 5.000 | | | | 06/01/2023 | | | Aa3/A+* | | | 1,000,000 | | | | 1,081,750 | |
Davie County NC Public School & Community College Facility | | | 5.000 | | | | 06/01/2025 | | | Aa3/A+* | | | 1,690,000 | | | | 1,799,326 | |
Franklin County NC Certificates of Participation | | | 5.000 | | | | 09/01/2027 | | | Aa3/A+* | | | 750,000 | | | | 802,583 | |
Henderson County NC Certificates of Participation | | | 5.000 | | | | 05/01/2025 | | | Aa3/AA-*/AA-@ | | | 1,000,000 | | | | 1,068,580 | |
Iredell County NC Certificates of Participation School Project | | | 5.000 | | | | 06/01/2024 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,086,920 | |
Johnston NC Memorial Hospital Authority | | | 5.250 | | | | 10/01/2028 | | | Aa3/AA-* | | | 500,000 | | | | 545,795 | |
Lee County NC Certificates of Participation | | | 5.000 | | | | 04/01/2025 | | | Aa3/AA-* | | | 550,000 | | | | 599,990 | |
Montgomery County NC Certificates of Participation — Series A | | | 5.000 | | | | 02/01/2030 | | | A-* | | | 1,680,000 | | | | 1,768,418 | |
Nash County NC Limited Obligation | | | 5.000 | | | | 10/01/2030 | | | Aa3/AA-* | | | 890,000 | | | | 1,001,998 | |
NC Medical Care Community Hospital Morehead Memorial Hospital | | | 5.000 | | | | 11/01/2026 | | | Aa3/AA-* | | | 2,500,000 | | | | 2,576,400 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 5.500 | | | | 01/01/2017 | | | Baa1/A-@ | | | 45,000 | | | | 45,064 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 6.000 | | | | 01/01/2025 | | | Baa1/BBB*/A-@ | | | 1,000,000 | | | | 1,266,560 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 5.000 | | | | 01/01/2021 | | | A-*/A-@ | | | 1,000,000 | | | | 1,096,650 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 6.000 | | | | 01/01/2018 | | | Baa1 | | | 1,000,000 | | | | 1,225,830 | |
NC Eastern Municipal Power Agency — Series B | | | 6.000 | | | | 01/01/2022 | | | Aa3/AA-*/AA-@ | | | 915,000 | | | | 1,161,574 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 02/01/2024 | | | Aa1/AA+*/AA+@ | | | 1,000,000 | | | | 1,115,640 | |
NC Medical Care Community Hospital Revenue — Stanly Hospital | | | 5.375 | | | | 10/01/2014 | | | BBB+@ | | | 20,000 | | | | 20,033 | |
Randolph County NC Certificates of Participation | | | 5.000 | | | | 02/01/2027 | | | Aa3 | | | 1,000,000 | | | | 1,067,850 | |
Rockingham County NC Certificates of Participation | | | 5.000 | | | | 04/01/2032 | | | Aa3/AA-* | | | 1,325,000 | | | | 1,395,331 | |
Sampson County NC Certificates of Participation | | | 5.000 | | | | 06/01/2022 | | | Aa3/AA-* | | | 1,250,000 | | | | 1,406,088 | |
Sampson County NC Certificates of Participation | | | 5.000 | | | | 06/01/2026 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,088,360 | |
University NC System Pool Revenue — Series A | | | 5.000 | | | | 10/01/2033 | | | Aa3/A+* | | | 430,000 | | | | 452,028 | |
University of NC Wilmington Certificates of Participation | | | 5.250 | | | | 06/01/2025 | | | A-* | | | 1,000,000 | | | | 1,063,530 | |
University of NC Wilmington Student Housing Project | | | 5.000 | | | | 06/01/2025 | | | A-* | | | 580,000 | | | | 616,053 | |
University of NC System Pool Revenue — Series A | | | 5.000 | | | | 10/01/2026 | | | Aa3 | | | 1,000,000 | | | | 1,112,980 | |
University of NC System Pool Revenue — Series A | | | 5.000 | | | | 10/01/2033 | | | Aa3 | | | 1,000,000 | | | | 1,069,590 | |
Wilmington NC Certificates of Participation | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA*/AA@ | | | 1,500,000 | | | | 1,554,240 | |
Wilmington NC Store Water Revenue | | | 5.000 | | | | 06/01/2028 | | | Aa2/AA* | | | 500,000 | | | | 539,535 | |
Wilson NC Certificates of Participation Public Facilities | | | 5.000 | | | | 05/01/2021 | | | Aa3/AA-* | | | 780,000 | | | | 872,266 | |
Wilson NC Certificates of Participation Public Facilities | | | 5.000 | | | | 05/01/2025 | | | Aa3/AA-* | | | 750,000 | | | | 816,855 | |
Wilson County Certificates of Participation Public Facility | | | 5.000 | | | | 05/01/2029 | | | Aa3/AA-* | | | 1,355,000 | | | | 1,442,899 | |
Wilson Combined Enterprise System | | | 4.700 | | | | 12/01/2022 | | | Aa3/AA@ | | | 500,000 | | | | 512,740 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 38,685,486 | |
| CERTIFICATES OF PARTICIPATION BONDS (UNINSURED) | | | | | | | | | | | |
| 14.10% of Net Assets | | | | | | | | | | | | | | | | | | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 01/01/2029 | | | Aa2/AA*/AA@ | | | 750,000 | | | | 816,900 | |
Charlotte NC Certificates of Participation Convention Facility | | | 5.000 | | | | 12/01/2024 | | | Aa2/AA+*/AA@ | | | 1,000,000 | | | | 1,078,780 | |
Charlotte NC Certificiates of Participation Transit Project | | | 5.000 | | | | 06/01/2035 | | | Aa2/AA+*/AA+@ | | | 500,000 | | | | 518,565 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2026 | | | Aa2/AA+*/AA+@ | | | 1,455,000 | | | | 1,594,360 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA+*/AA+@ | | | 775,000 | | | | 845,021 | |
Charlotte NC Certificates of Participation Convention Facility | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA+*/AA@ | | | 750,000 | | | | 798,203 | |
Forsyth County NC Certificates of Participation | | | 5.000 | | | | 10/01/2018 | | | Aa1/AA+*/AA+@ | | | 5,000 | | | | 5,002 | |
Forsyth County NC Certificates of Participation | | | 5.000 | | | | 02/01/2026 | | | Aa1/AA+*/AA+@ | | | 550,000 | | | | 583,011 | |
Mecklenburg County NC Certificates of Participation — Series B | | | 5.000 | | | | 02/01/2026 | | | Aa1/AA+*/AA+@ | | | 1,000,000 | | | | 1,098,790 | |
Mecklenburg County NC Certificates of Participation — Series A | | | 5.000 | | | | 02/01/2028 | | | Aa1/AA+*/AA+@ | | | 415,000 | | | | 455,391 | |
Mooresville NC Certificates of Participation | | | 5.000 | | | | 09/01/2032 | | | AA-* | | | 1,890,000 | | | | 1,982,950 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 02/01/2025 | | | Aa1/AA+*/AA+@ | | | 200,000 | | | | 218,180 | |
Wilmington NC Certificates of Participation — Series A | | | 5.000 | | | | 06/01/2038 | | | Aa2/AA*/AA@ | | | 250,000 | | | | 264,020 | |
Winston Salem NC Certificates of Participation — Series A | | | 4.750 | | | | 06/01/2031 | | | Aa1/AA+*/AA+@ | | | 670,000 | | | | 705,678 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 10,964,851 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 8.55% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte Mecklenburg NC Hospital Authority Health Care | | | 5.000 | % | | | 01/15/2031 | | | Aa3/AA-* | | $ | 450,000 | | | $ | 467,231 | |
Charlotte Mecklenburg Hospital Authority NC Health Care | | | 5.000 | | | | 01/15/2027 | | | Aa3/AA-* | | | 1,090,000 | | | | 1,165,461 | |
Charlotte-Mecklenburg Hospital | | | 5.250 | | | | 01/15/2039 | | | Aa3/AA-* | | | 750,000 | | | | 784,073 | |
NC Medical Care Health Care Facilities Revenue Novant Health | | | 5.000 | | | | 11/01/2017 | | | A1/A+*/AA-@ | | | 1,000,000 | | | | 1,054,340 | |
NC Medical Care Community Hospital Revenue NC Baptist Hospital | | | 5.000 | | | | 06/01/2034 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,036,100 | |
NC Medical Care Community Hospital Revenue Baptist Hospital | | | 4.750 | | | | 06/01/2030 | | | Aa3/AA-* | | | 355,000 | | | | 365,664 | |
NC Medical Care Community Health Care Facilities Revenue | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA*/AA@ | | | 1,620,000 | | | | 1,701,826 | |
NC Medical Care Community Hospital Revenue Unrefunded Balance | | | 5.250 | | | | 12/01/2013 | | | A1/A+*/AA-@ | | | 45,000 | | | | 45,015 | |
NC Medical Care Community Hospital Revenue Unrefunded Balance | | | 5.000 | | | | 12/01/2018 | | | A1/A+*/AA-@ | | | 25,000 | | | | 25,048 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,644,758 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 6.89% of Net Assets | | | | | | | | | | | | | | | | | | |
Moore County NC | | | 5.000 | | | | 06/01/2031 | | | Aa3/AA-* | | | 2,750,000 | | | | 3,023,213 | |
Raleigh Durham NC Airport | | | 5.000 | | | | 05/01/2029 | | | Aa3/AA-@ | | | 235,000 | | | | 260,821 | |
Raleigh Durham NC Airport | | | 5.000 | | | | 05/01/2036 | | | Aa3/AA-@ | | | 1,480,000 | | | | 1,591,548 | |
Raleigh Durham NC Airport | | | 5.000 | | | | 05/01/2032 | | | Aa3/AA-@ | | | 440,000 | | | | 483,336 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,358,918 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 6.65% of Net Assets | | | | | | | | | | | | | | | | | | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | 4.750 | | | | 01/01/2030 | | | A2/A*/A@ | | | 290,000 | | | | 303,711 | |
NC Municipal Power Agency Number 1 Catawba Electic Revenue | | | 5.000 | | | | 01/01/2030 | | | A2/A*/A@ | | | 2,545,000 | | | | 2,742,594 | |
Raleigh NC Combined Enterprise System | | | 5.000 | | | | 03/01/2031 | | | Aa1/AAA*/AAA@ | | | 980,000 | | | | 1,032,028 | |
Raleigh NC Combined Enterprise System | | | 5.000 | | | | 03/01/2031 | | | Aa1/AAA*/AAA@ | | | 1,000,000 | | | | 1,090,500 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,168,833 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | |
| 5.33% of Net Assets | | | | | | | | | | | | | | | | | | |
NC Capital Facilites Financial Agency Education Wake Forest | | | 5.000 | | | | 01/01/2031 | | | Aa3/AA* | | | 500,000 | | | | 547,520 | |
NC Capital Facilities Finance Agency Wake Forest University | | | 5.000 | | | | 01/01/2038 | | | Aa3/AA* | | | 1,250,000 | | | | 1,339,875 | |
NC Capital Facilities Financial Agency Revenue Duke University | | | 5.000 | | | | 10/01/2038 | | | Aa1/AA+* | | | 500,000 | | | | 544,635 | |
Pitt County NC Limited Obligation — Series A | | | 5.000 | | | | 04/01/2035 | | | Aa3/AA-*/AA@ | | | 105,000 | | | | 112,464 | |
University NC Chapel Hill Revenue Bonds General Refunding | | | 5.000 | | | | 12/01/2034 | | | Aaa/AA+*/AAA@ | | | 1,000,000 | | | | 1,060,480 | |
University of NC System Pool Revenue General Trust Indenture | | | 5.000 | | | | 10/01/2034 | | | Aa2 | | | 500,000 | | | | 540,635 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,145,609 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.57% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte NC Water and Sewer Systems Revenue | | | 4.500 | | | | 07/01/2028 | | | Aaa/AAA*/AAA@ | | | 750,000 | | | | 797,378 | |
Johnston County NC Installment Financing Contract | | | 5.000 | | | | 10/15/2027 | | | Aa3/AA* | | | 570,000 | | | | 641,079 | |
University NC University Revenues Chapel Hill | | | 5.000 | | | | 12/01/2031 | | | Aaa/AA+*/AAA@ | | | 1,215,000 | | | | 1,335,479 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,773,936 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 2.92% of Net Assets | | | | | | | | | | | | | | | | | | |
Iredell County NC Community College | | | 5.000 | | | | 04/01/2026 | | | Aa2/AA*/AA+@ | | | 225,000 | | | | 252,927 | |
Iredell County NC Community College | | | 5.000 | | | | 04/01/2027 | | | Aa2/AA*/AA+@ | | | 325,000 | | | | 363,760 | |
Wake County NC Limited Obligation — Series 209 | | | 5.000 | | | | 06/01/2032 | | | Aa1/AA+*/AA+@ | | | 1,500,000 | | | | 1,649,970 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,266,657 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| .48% of Net Assets | | | | | | | | | | | | | | | | | | |
NC Eastern Municipal Power Agency Power System — Series A | | | 6.000 | | | | 01/01/2026 | | | Aaa/A-*/A-@ | | | 275,000 | | | | 375,169 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 375,169 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .01% of Net Assets | | | | | | | | | | | | | | | | | | |
NC Housing Finance Agency Single Family Revenue — Series II | | | 6.200 | | | | 03/01/2016 | | | Aa2/AA* | | | 10,000 | | | | 10,003 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 10,003 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $72,613,307) (See (a) below for further explanation) 98.26% of Net Assets | | | | | | | | | $ | 76,394,220 | |
| | | | | | | | | | | | | | | | | | |
The accompanying footnotes are an integral part of the financial statements.
23
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
December 31, 2011
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 3,847,241 | |
| | Unrealized depreciation | | | (66,328 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 3,780,913 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 in 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 | | | 76,394,220 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 76,394,220 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
24
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $72,613,307) | | | | | | $ | 76,394,220 | |
Cash | | | | | | | 796,273 | |
Interest receivable | | | | | | | 891,818 | |
Receivable for fund shares sold | | | | | | | 20,000 | |
Prepaid expenses | | | | | | | 1,521 | |
| | | | | | | | |
Total assets | | | | | | | 78,103,832 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 228,375 | | | | | |
Fund shares redeemed | | | 77,621 | | | | | |
Investment advisory fee | | | 34,079 | | | | | |
Transfer agent fee | | | 9,061 | | | | | |
Accrued expenses | | | 11,571 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 360,707 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 73,949,412 | |
Accumulated net investment income | | | | | | | 2,719 | |
Net accumulated realized gain on investment transactions | | | | | | | 10,082 | |
Net unrealized appreciation in value of investments | | | | | | | 3,780,912 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 77,743,125 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($77,743,125 -:- 6,816,663 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.40 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 1,660,862 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 192,827 | |
Transfer agent fee | | | 50,832 | |
Custodian expense | | | 5,906 | |
Professional fees | | | 8,666 | |
Trustee fees | | | 5,276 | |
Other expenses | | | 10,082 | |
| | | | |
Total expenses | | | 273,589 | |
Custodian expense reduction | | | (124 | ) |
| | | | |
Net expenses | | | 273,465 | |
| | | | |
Net investment income | | | 1,387,397 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 148,972 | |
Net change in unrealized appreciation/depreciation | | | 3,188,237 | |
| | | | |
Net realized and unrealized gain on investments | | | 3,337,209 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 4,724,606 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
25
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,387,397 | | | $ | 2,813,638 | |
Net realized gain on investments | | | 148,972 | | | | 325,856 | |
Net change in unrealized appreciation/depreciation | | | 3,188,237 | | | | (1,125,078 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 4,724,606 | | | | 2,014,416 | |
Distributions from net investment income | | | (1,384,678 | ) | | | (2,813,638 | ) |
Net fund share transactions (Note 4) | | | (908,611 | ) | | | (1,004,724 | ) |
| | | | | | | | |
Total increase/(decrease) | | | 2,431,317 | | | | (1,803,946 | ) |
Net assets: | | | | | | | | |
Beginning of period | | | 75,311,808 | | | | 77,115,754 | |
| | | | | | | | |
End of period | | $ | 77,743,125 | | | $ | 75,311,808 | |
| | | | | | | | |
Accumulated net investment income | | $ | 2,719 | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $10.92 | | | | $11.01 | | | | $10.71 | | | | $10.62 | | | | $10.74 | | | | $10.74 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.20 | | | | 0.40 | | | | 0.40 | | | | 0.41 | | | | 0.41 | | | | 0.41 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.48 | | | | (0.09 | ) | | | 0.30 | | | | 0.09 | | | | (0.12 | ) | | | — | (b) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.68 | | | | 0.31 | | | | 0.70 | | | | 0.50 | | | | 0.29 | | | | 0.41 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.20 | ) | | | (0.40 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.41 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.20 | ) | | | (0.40 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.41 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.40 | | | | $10.92 | | | | $11.01 | | | | $10.71 | | | | $10.62 | | | | $10.74 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 6.29% | (c) | | | 2.90% | | | | 6.62% | | | | 4.83% | | | | 2.69% | | | | 3.85% | |
Net assets, end of period (in thousands) | | | $77,743 | | | | $75,312 | | | | $77,116 | | | | $66,891 | | | | $65,300 | | | | $54,994 | |
Ratio of net expenses to average net assets (a) | | | 0.71% | (d) | | | 0.70% | | | | 0.72% | | | | 0.72% | | | | 0.71% | | | | 0.73% | |
Ratio of net investment income to average net assets | | | 3.61% | (d) | | | 3.69% | | | | 3.66% | | | | 3.89% | | | | 3.76% | | | | 3.79% | |
Portfolio turnover | | | 2.10% | (d) | | | 14.16% | | | | 5.92% | | | | 7.82% | | | | 11.03% | | | | 5.20% | |
| (a) | | Percentages are after Custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | 0.71%(d) | | For the six months ended December 31, 2011 |
| | 0.70% | | For the year ended June 30, 2011 |
| | 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 |
| (b) | | Rounds to less than $0.01. |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | ` | | | | | |
| 57.95% of Net Assets | | | | | | | | | | | | | | | | | | |
Appalachian State University NC Revenue | | | 5.000 | % | | | 7/15/2018 | | | Aa3 | | $ | 75,000 | | | $ | 83,746 | |
Asheville NC Water System Revenue Refunding | | | 5.000 | | | | 8/1/2017 | | | Aa2/AA* | | | 140,000 | | | | 159,890 | |
Buncombe County NC Certificates of Participation | | | 4.000 | | | | 4/1/2016 | | | Aa2/AA* | | | 125,000 | | | | 140,574 | |
Burke County NC Certificates of Participation | | | 5.000 | | | | 4/1/2020 | | | A1/A* | | | 180,000 | | | | 199,422 | |
Burke County NC Certificates of Participation | | | 4.250 | | | | 4/1/2016 | | | A1/A* | | | 50,000 | | | | 55,252 | |
Cabarrus County NC Certificates of Participation | | | 5.625 | | | | 2/1/2016 | | | Aa2/AA*/AA@ | | | 125,000 | | | | 147,428 | |
Cabarrus County NC Certificates of Participation | | | 4.250 | | | | 6/1/2017 | | | Aa2/AA*/AA@ | | | 175,000 | | | | 201,136 | |
Catawba County NC Certificates of Participation | | | 5.250 | | | | 6/1/2019 | | | Aa2/BBB* | | | 200,000 | | | | 222,288 | |
Craven County NC Certificates of Participation | | | 4.375 | | | | 6/1/2016 | | | Aa3/AA-* | | | 115,000 | | | | 129,085 | |
Dare County NC Certificates of Participation | | | 5.250 | | | | 6/1/2014 | | | Aa3/AA-*/AA-@ | | | 150,000 | | | | 163,800 | |
Davie County NC Community College | | | 4.000 | | | | 6/1/2013 | | | Aa3/A+* | | | 250,000 | | | | 260,540 | |
Edgecombe County NC Schools | | | 4.000 | | | | 2/1/2015 | | | A1/A+* | | | 235,000 | | | | 255,172 | |
Harnett County NC Certificates of Participation | | | 5.000 | | | | 12/1/2015 | | | Aa3/AA-* | | | 125,000 | | | | 142,308 | |
Harnett County NC Certificates of Participation | | | 5.000 | | | | 12/1/2021 | | | Aa3/AA-* | | | 200,000 | | | | 227,702 | |
Harnett County NC Certificates of Participation | | | 3.500 | | | | 6/1/2016 | | | Aa3/AA-* | | | 250,000 | | | | 272,533 | |
Haywood NC Certificates of Participation Refunding | | | 5.000 | | | | 10/1/2016 | | | A1/A* | | | 635,000 | | | | 681,431 | |
Henderson County NC Certificates of Participation | | | 5.250 | | | | 5/1/2020 | | | Aa3/AA-*/AA-@ | | | 300,000 | | | | 328,356 | |
Henderson County NC Certificates of Participation | | | 5.000 | | | | 6/1/2014 | | | Aa3/AA-*/AA-@ | | | 50,000 | | | | 54,429 | |
High Point NC Combined Enterprise System Revenue | | | 5.000 | | | | 11/1/2018 | | | Aa2/AA+*/AA+@ | | | 145,000 | | | | 160,918 | |
Iredell County NC Certificates of Participation School Project | | | 5.000 | | | | 6/1/2018 | | | Aa3/AA-* | | | 425,000 | | | | 486,804 | |
Johnston NC Memorial Hospital Authority | | | 4.000 | | | | 10/1/2012 | | | Aa3/AA-* | | | 200,000 | | | | 204,318 | |
Johnston NC Memorial Hospital Authority | | | 4.000 | | | | 4/1/2015 | | | Aa3/AA-* | | | 100,000 | | | | 107,082 | |
Lee County NC Certificates of Participation | | | 5.000 | | | | 4/1/2016 | | | Aa3/AA-* | | | 215,000 | | | | 233,200 | |
Lincoln County NC Certificates of Participation | | | 5.000 | | | | 6/1/2016 | | | Aa3/AA-*/AA-@ | | | 200,000 | | | | 228,992 | |
Lincolnton NC Enterprise System Revenue | | | 5.000 | | | | 5/1/2016 | | | NR | | | 385,000 | | | | 412,420 | |
Nash County NC Limited Obligation | | | 3.000 | | | | 10/1/2015 | | | Aa3/AA-* | | | 400,000 | | | | 425,884 | |
Nash County NC Limited Obligation | | | 5.000 | | | | 10/1/2018 | | | Aa3/AA-* | | | 150,000 | | | | 180,917 | |
New Hanover County NC Certificates of Participation | | | 5.000 | | | | 3/1/2017 | | | Aa1/AA* | | | 250,000 | | | | 264,885 | |
NC Medical Care Community Hospital Rowan Medical | | | 5.250 | | | | 9/1/2016 | | | Aa3/AA-* | | | 1,100,000 | | | | 1,199,044 | |
NC Eastern Municipal Power Agency | | | 5.250 | | | | 1/1/2019 | | | Aa3/AA-*/A-@ | | | 550,000 | | | | 647,911 | |
NC Eastern Municipal Power Agency System Revenue | | | 5.000 | | | | 1/1/2020 | | | A-*/A-@ | | | 100,000 | | | | 110,874 | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | 5.250 | | | | 1/1/2019 | | | A2/A*/A@ | | | 100,000 | | | | 105,004 | |
NC Infrastructure Certificates of Participation | | | 5.000 | | | | 6/1/2018 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 115,188 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 2/1/2017 | | | Aa1/AA+*/AA+@ | | | 150,000 | | | | 178,203 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 2/1/2020 | | | Aa1/AA+*/AA+@ | | | 425,000 | | | | 490,140 | |
NC Medical Care — Caromont Health | | | 3.250 | | | | 2/15/2018 | | | Aa3/AA-* | | | 370,000 | | | | 391,923 | |
NC Medical Care Community Healthcare Facilities | | | 4.000 | | | | 10/1/2018 | | | Aa3/AA-*/AA-@ | | | 240,000 | | | | 252,655 | |
Onslow County NC Certificates of Participation | | | 5.000 | | | | 6/1/2018 | | | Aa3/A+* | | | 140,000 | | | | 157,678 | |
Pitt County NC Certificates of Participation School Facility | | | 4.000 | | | | 4/1/2015 | | | Aa3/AA-*/AA@ | | | 100,000 | | | | 108,503 | |
Randolph County NC Certificates of Participation | | | 5.000 | | | | 6/1/2016 | | | Aa3/AA-* | | | 170,000 | | | | 188,356 | |
Rockingham NC Certificates of Participation | | | 5.250 | | | | 4/1/2013 | | | Aa3/A+* | | | 125,000 | | | | 127,566 | |
Rutherford County NC Certificates of Participation | | | 5.000 | | | | 12/1/2017 | | | Aa3/AA-* | | | 105,000 | | | | 124,171 | |
Rutherford County NC Certificates of Participation | | | 5.000 | | | | 12/1/2018 | | | Aa3/AA-* | | | 205,000 | | | | 241,674 | |
Rutherford NC Certificates of Participation | | | 4.000 | | | | 12/1/2019 | | | Aa3/AA-* | | | 200,000 | | | | 222,103 | |
Sampson County NC Certificates of Participation | | | 5.000 | | | | 6/1/2014 | | | Aa3/AA-* | | | 50,000 | | | | 54,517 | |
Sampson Area Development Corporation NC Refunding | | | 4.000 | | | | 6/1/2015 | | | AA+* | | | 150,000 | | | | 162,608 | |
Union County NC Certificates of Participation | | | 5.000 | | | | 6/1/2020 | | | Aa2/AA-*/AA@ | | | 250,000 | | | | 280,215 | |
University NC Wilmington Certificates of Participation | | | 4.000 | | | | 6/1/2017 | | | Aa3/AA-* | | | 100,000 | | | | 111,639 | |
University NC Wilmington Certificates of Participation | | | 5.000 | | | | 6/1/2014 | | | A-* | | | 40,000 | | | | 43,384 | |
University NC Wilmington Certificates of Participation | | | 4.250 | | | | 6/1/2017 | | | A-* | | | 300,000 | | | | 329,610 | |
University NC System Pool Revenue Asheville Wilmington | | | 5.000 | | | | 10/1/2016 | | | Aa3/AA-* | | | 230,000 | | | | 269,440 | |
Wilson NC Certificates of Participation | | | 5.000 | | | | 5/1/2016 | | | Aa3/AA-* | | | 200,000 | | | | 229,820 | |
Wilson NC Certificates of Participation | | | 5.000 | | | | 5/1/2018 | | | Aa3/AA-* | | | 60,000 | | | | 69,991 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 12,642,729 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| CERTIFICATES OF PARTICIPATION BONDS (UNINSURED) | | | | | | | | | | | | | | | | | | |
| 18.38% of Net Assets | | | | | | | | | | | | | | | | | | |
Buncombe County NC Certificates of Participation | | | 5.000 | % | | | 4/1/2018 | | | Aa2/AA* | | $ | 250,000 | | | $ | 279,107 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 6/1/2019 | | | Aa2/AA*/AA@ | | | 370,000 | | | | 441,716 | |
Cabarrus County NC Certificates of Participation | | | 4.000 | | | | 1/1/2015 | | | Aa2/AA*/AA@ | | | 225,000 | | | | 244,498 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 1/1/2017 | | | Aa2/AA*/AA@ | | | 150,000 | | | | 176,798 | |
Chapel Hill NC Certificates of Participation Operations Center | | | 5.250 | | | | 6/1/2019 | | | Aa1/AA+* | | | 260,000 | | | | 291,730 | |
Charlotte NC Certificates of Participation | | | 4.000 | | | | 6/1/2012 | | | Aa2/AA+*/AA+@ | | | 50,000 | | | | 50,666 | |
Charlotte NC Certificates of Participation Refunding | | | 5.000 | | | | 12/1/2021 | | | Aa2/AA+*/AA@ | | | 270,000 | | | | 296,636 | |
Charlotte NC Certificates of Participation | | | 4.375 | | | | 12/1/2014 | | | Aa2/AA+* | | | 50,000 | | | | 50,506 | |
Charlotte NC Certificates of Participation Transit Projects | | | 4.000 | | | | 6/1/2016 | | | Aa2/AA+*/AA+@ | | | 100,000 | | | | 109,564 | |
Cumberland County NC Certificates of Participation | | | 5.000 | | | | 12/1/2015 | | | Aa2/AA* | | | 75,000 | | | | 85,879 | |
Cumberland County NC Certificates of Participation | | | 5.000 | | | | 12/1/2017 | | | Aa2/AA* | | | 350,000 | | | | 418,478 | |
Forsyth County NC Certificates of Participation | | | 5.000 | | | | 10/1/2019 | | | Aa1/AA+*/AA+@ | | | 600,000 | �� | | | 682,692 | |
Montgomery County NC Certificates of Participation | | | 5.000 | | | | 2/1/2017 | | | A-* | | | 125,000 | | | | 144,093 | |
Mooreville NC Certificates of Participation | | | 4.125 | | | | 9/1/2018 | | | AA-* | | | 250,000 | | | | 280,330 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 2/1/2016 | | | Aa1/AA+*/AA+@ | | | 200,000 | | | | 224,834 | |
Randolph County NC Certificates of Participation | | | 5.000 | | | | 2/1/2018 | | | Aa3 | | | 200,000 | | | | 231,074 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,008,601 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 8.85% of Net Assets | | | | | | | | | | | | | | | | | | |
Moore County NC | | | 5.000 | | | | 6/1/2017 | | | Aa3/AA-* | | | 685,000 | | | | 809,725 | |
NC Eastern Municipal Power Agency — Series D | | | 4.000 | | | | 1/1/2016 | | | Baa1/A-*/A-@ | | | 95,000 | | | | 104,349 | |
NC Eastern Municipal Power Agency | | | 5.375 | | | | 1/1/2017 | | | Baa1/A-* | | | 200,000 | | | | 208,010 | |
NC Eastern Municipal Power Agency — Series B | | | 3.250 | | | | 1/1/2015 | | | Baa1/A-*/A-@ | | | 250,000 | | | | 264,004 | |
NC Eastern Municipal Power Agency — Series A | | | 5.000 | | | | 1/1/2016 | | | A-*/A-@ | | | 50,000 | | | | 57,088 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.250 | | | | 1/1/2017 | | | A2/A*/A@ | | | 200,000 | | | | 234,856 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 4.000 | | | | 1/1/2016 | | | A2/A*/A@ | | | 100,000 | | | | 110,580 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.000 | | | | 1/1/2016 | | | A2/A*/A@ | | | 125,000 | | | | 143,088 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,931,700 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.45% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte NC Airport — Charlotte Douglas International | | | 4.125 | | | | 7/1/2016 | | | Aa3/A+*/A+@ | | | 100,000 | | | | 111,434 | |
Charlotte NC Airport Revenue Refunding | | | 5.000 | | | | 7/1/2015 | | | A1/A+*/A+@ | | | 350,000 | | | | 392,795 | |
Mecklenburg County NC Certificates of Participation | | | 5.000 | | | | 2/1/2017 | | | Aa1/AA+*/AA+@ | | | 105,000 | | | | 124,173 | |
Raleigh Durham NC Airport Authority — Series B | | | 5.000 | | | | 11/1/2017 | | | Aa3/AA-@ | | | 105,000 | | | | 124,491 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 752,893 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 3.27% of Net Assets | | | | | | | | | | | | | | | | | | |
University of NC Ashville Revenue | | | 5.000 | | | | 6/1/2014 | | | A1 | | | 20,000 | | | | 20,348 | |
University NC System Pool Revenue | | | 5.000 | | | | 10/1/2016 | | | Aa2 | | | 250,000 | | | | 296,300 | |
University NC System Pool Revenue | | | 5.000 | | | | 10/1/2015 | | | Aa3 | | | 350,000 | | | | 396,036 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 712,684 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.28% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte-Mecklenburg Hospital | | | 5.000 | | | | 1/15/2019 | | | Aa3/AA-* | | | 200,000 | | | | 224,450 | |
Charlotte-Mecklenburg Hospital | | | 4.375 | | | | 1/15/2019 | | | Aa3/AA-* | | | 150,000 | | | | 165,325 | |
NC Medical Care Mission Health Combined Group | | | 4.000 | | | | 10/1/2014 | | | Aa3/AA*/AA@ | | | 100,000 | | | | 106,604 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 496,379 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| 1.84% of Net Assets | | | | | | | | | | | | | | | | | | |
Catawba County NC Certificate of Participation Public School | | | 5.250 | | | | 6/1/2016 | | | Aa2 | | | 125,000 | | | | 138,971 | |
Catawba County NC Certificate of Participation Public School | | | 5.250 | | | | 6/1/2018 | | | Aa2 | | | 125,000 | | | | 138,971 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 2/1/2019 | | | Aa1/AA+*/AA+@ | | | 85,000 | | | | 92,815 | |
University of NC Ashville Revenue | | | 5.000 | | | | 6/1/2014 | | | A1 | | | 30,000 | | | | 30,570 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 401,327 | |
The accompanying footnotes are an integral part of the financial statements.
28
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 1.16% of Net Assets | | | | | | | | | | | | | | | | | | |
NC Housing Finance Agency Series 31-B | | | 3.850 | % | | | 1/1/2017 | | | Aa2/AA* | | $ | 145,000 | | | $ | 152,615 | |
NC Housing Financial Agency Home Ownership — Series 16B | | | 4.125 | | | | 7/1/2012 | | | Aa2/AA* | | | 100,000 | | | | 101,324 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 253,939 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .69% of Net Assets | | | | | | | | | | | | | | | | | | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.250 | | | | 1/1/2018 | | | A2/A*/A@ | | | 125,000 | | | | 149,590 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 149,590 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| .61% of Net Assets | | | | | | | | | | | | | | | | | | |
Cabarrus County NC Public Improvement | | | 5.000 | | | | 3/1/2018 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 115,760 | |
NC State Public Improvement — Series A | | | 5.000 | | | | 3/1/2019 | | | Aaa/AAA* | | | 15,000 | | | | 16,993 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 132,753 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $20,419,202) (See (a) below for further explanation) 98.48% of Net Assets | | | | | | | | | $ | 21,482,595 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 1,069,994 | |
| | Unrealized depreciation | | | (6,601 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 1,063,393 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 in 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 | | | 21,482,595 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 21,482,595 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
29
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $20,419,202) | | | | | | $ | 21,482,595 | |
Cash | | | | | | | 123,583 | |
Interest receivable | | | | | | | 237,714 | |
| | | | | | | | |
Total assets | | | | | | | 21,843,892 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 8,485 | | | | | |
Investment advisory fee | | | 9,104 | | | | | |
Transfer agent fee | | | 2,828 | | | | | |
Trustee fees | | | 373 | | | | | |
Accrued expenses | | | 7,545 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 28,335 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 20,720,651 | |
Net accumulated realized gain on investment transactions | | | | | | | 31,513 | |
Net unrealized appreciation in value of investments | | | | | | | 1,063,393 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 21,815,557 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($21,815,557 -:- 1,951,224 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.18 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 344,738 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 56,944 | |
Transfer agent fee | | | 17,261 | |
Custodian expense | | | 1,789 | |
Professional fees | | | 5,690 | |
Trustee fees | | | 1,568 | |
Other expenses | | | 3,701 | |
| | | | |
Total expenses | | | 86,953 | |
Custodian expense reduction | | | (71 | ) |
| | | | |
Net expenses | | | 86,882 | |
| | | | |
Net investment income | | | 257,856 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 78,354 | |
Net change in unrealized appreciation/depreciation | | | 412,773 | |
| | | | |
Net realized and unrealized gain on investments | | | 491,127 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 748,983 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
30
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 257,856 | | | $ | 457,012 | |
Net realized gain on investments | | | 78,354 | | | | 32,681 | |
Net change in unrealized appreciation/depreciation | | | 412,773 | | | | 219,520 | |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 748,983 | | | | 709,213 | |
Distributions from net investment income | | | (257,856 | ) | | | (457,012 | ) |
Net fund share transactions (Note 4) | | | (754,909 | ) | | | 5,876,130 | |
| | | | | | | | |
Total increase/(decrease) | | | (263,782 | ) | | | 6,128,331 | |
Net assets: | | | | | | | | |
Beginning of period | | | 22,079,339 | | | | 15,951,008 | |
| | | | | | | | |
End of period | | $ | 21,815,557 | | | $ | 22,079,339 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $10.93 | | | | $10.78 | | | | $10.57 | | | | $10.37 | | | | $10.30 | | | | $10.31 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.13 | | | | 0.26 | | | | 0.29 | | | | 0.32 | | | | 0.32 | | | | 0.32 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.25 | | | | 0.15 | | | | 0.21 | | | | 0.20 | | | | 0.07 | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.38 | | | | 0.41 | | | | 0.50 | | | | 0.52 | | | | 0.39 | | | | 0.31 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.13 | ) | | | (0.26 | ) | | | (0.29 | ) | | | (0.32 | ) | | | (0.32 | ) | | | (0.32 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | (b) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.13 | ) | | | (0.26 | ) | | | (0.29 | ) | | | (0.32 | ) | | | (0.32 | ) | | | (0.32 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.18 | | | | $10.93 | | | | $10.78 | | | | $10.57 | | | | $10.37 | | | | $10.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 3.46% | (c) | | | 3.86% | | | | 4.77% | | | | 5.07% | | | | 3.78% | | | | 2.97% | |
Net assets, end of period (in thousands) | | | $21,816 | | | | $22,079 | | | | $15,951 | | | | $11,662 | | | | $11,134 | | | | $11,281 | |
Ratio of net expenses to average net assets (a) | | | 0.77% | (d) | | | 0.77% | | | | 0.82% | | | | 0.81% | | | | 0.82% | | | | 0.81% | |
Ratio of net investment income to average net assets | | | 2.28% | (d) | | | 2.41% | | | | 2.69% | | | | 3.04% | | | | 3.03% | | | | 3.01% | |
Portfolio turnover | | | 7.80% | (d) | | | 5.15% | | | | 17.94% | | | | 10.14% | | | | 23.91% | | | | 13.33% | |
| (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 | | | |
| | 0% | (d) | | | 0% | (d) | | For the six months ended December 31, 2011 |
| | 0% | | | | 0% | | | For the year ended June 30, 2011 |
| | 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 |
| (b) | | Rounds to less than $0.01. |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 49.22% of Net Assets | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority Local Government | | | 5.000 | % | | | 06/01/2025 | | | Aa2/AA-* | | $ | 100,000 | | | $ | 113,426 | |
Blount County TN Public Building Authority Local Government | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA-* | | | 1,500,000 | | | | 1,672,830 | |
Blount County TN Public Building Authority Local Government | | | 4.750 | | | | 06/01/2031 | | | Aa2/AA-* | | | 750,000 | | | | 803,678 | |
Blount County TN Public Building Authority General Obligation | | | 5.250 | | | | 06/01/2019 | | | NR | | | 250,000 | | | | 263,685 | |
Blount County TN Building Authority Local Government Public | | | 5.000 | | | | 06/01/2032 | | | Aa3 | | | 750,000 | | | | 789,555 | |
Chattanooga TN Industrial Development Board Lease Rent Revenue | | | 5.000 | | | | 10/01/2027 | | | Aa3/AA*/AA@ | | | 1,000,000 | | | | 1,087,810 | |
Clarksville TN Electric System Revenue | | | 5.000 | | | | 09/01/2032 | | | Aa2 | | | 1,250,000 | | | | 1,336,975 | |
Cleveland TN General Obligation — Series A | | | 5.000 | | | | 06/01/2027 | | | Aa3/A+* | | | 680,000 | | | | 723,989 | |
Columbia TN Refunded — Sewer System | | | 5.000 | | | | 12/01/2024 | | | Aa2 | | | 1,235,000 | | | | 1,342,816 | |
Columbia TN Broadband Network Revenue & Tax | | | 5.000 | | | | 03/01/2025 | | | Aa2 | | | 1,000,000 | | | | 1,068,750 | |
Franklin County TN Health & Educational Facilities Board | | | 5.000 | | | | 09/01/2025 | | | A+* | | | 1,000,000 | | | | 1,070,040 | |
Gallatin TN Water & Sewer Revenue | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 2,540,000 | | | | 2,793,721 | |
Giles County TN | | | 4.500 | | | | 02/01/2018 | | | Aa3 | | | 1,000,000 | | | | 1,045,720 | |
Greene County TN General Obligation — Series B | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 505,000 | | | | 543,900 | |
Hallsdale-Powell Utility District Knox County TN Water and Sewer | | | 5.000 | | | | 04/01/2026 | | | AA* | | | 1,000,000 | | | | 1,088,360 | |
Hallsdale-Powell Utility District Knox County TN Water and Sewer | | | 5.000 | | | | 04/01/2031 | | | AA* | | | 740,000 | | | | 787,316 | |
Harpeth Valley Utilities TN Davidson and Williamson Counties | | | 5.000 | | | | 09/01/2029 | | | Aa3 | | | 1,410,000 | | | | 1,467,768 | |
Harpeth Valley Utilities TN Davidson and Williamson Counties | | | 5.000 | | | | 09/01/2032 | | | Aa3 | | | 1,420,000 | | | | 1,509,077 | |
Jackson TN Energy Authority Gas System Revenue | | | 5.000 | | | | 10/01/2028 | | | Aa2 | | | 1,000,000 | | | | 1,069,420 | |
Knox County TN Health Educational & Housing Facilities Fort Sanders | | | 6.250 | | | | 01/01/2013 | | | Baa2/BBB* | | | 10,000 | | | | 10,416 | |
Knox County TN Health Educational & Housing — Covenant Health | | | 5.000 | | | | 01/01/2022 | | | Aa3/AA-*/AA@ | | | 450,000 | | | | 457,479 | |
Knoxville TN Gas Revenue Refunded System — Series K | | | 4.750 | | | | 03/01/2022 | | | Aa2/AA* | | | 800,000 | | | | 806,392 | |
Knoxville TN Wastewater System Revenue — Series A | | | 4.750 | | | | 04/01/2021 | | | Aa2/AA+* | | | 1,150,000 | | | | 1,159,476 | |
Knoxville TN Wastewater System Revenue Improvement — Series A | | | 5.000 | | | | 04/01/2037 | | | Aa2/AA+* | | | 370,000 | | | | 385,052 | |
Manchester TN Refunding General Obligation | | | 5.000 | | | | 06/01/2038 | | | Aa3/AA-* | | | 100,000 | | | | 112,248 | |
Marion County TN Schools | | | 5.000 | | | | 06/01/2025 | | | A1 | | | 1,050,000 | | | | 1,131,323 | |
Metro Nashville & Davidson County TN Multi-Family | | | 4.600 | | | | 11/01/2026 | | | NR | | | 830,000 | | | | 838,382 | |
Metro Government Nashville & Davidson County TN Sports Authority | | | 5.000 | | | | 07/01/2021 | | | Aa2/AA-* | | | 1,000,000 | | | | 1,085,650 | |
Metropolitan Government Nashville and Davidson County TN | | | 5.000 | | | | 05/15/2027 | | | Aa1/AA*/AA@ | | | 1,400,000 | | | | 1,551,185 | |
Metropolitan Government Nashville and Davidson County TN | | | 5.000 | | | | 05/15/2028 | | | Aa1/AA*/AA@ | | | 240,000 | | | | 264,156 | |
Metro Nashville & Davidson County TN General Obligation | | | 5.000 | | | | 01/01/2023 | | | Aa1/AA* | | | 560,000 | | | | 606,334 | |
Metro Nashville & Davidson County TN General Obligation | | | 5.000 | | | | 01/01/2024 | | | Aa1/AA* | | | 565,000 | | | | 606,803 | |
Montgomery County TN General Obligation | | | 4.750 | | | | 05/01/2020 | | | Aa2/AA+* | | | 1,000,000 | | | | 1,096,070 | |
Oak Ridge TN Industrial Development Board Refunding Revenue | | | 5.250 | | | | 08/20/2018 | | | Aaa | | | 255,000 | | | | 255,268 | |
Overton County TN Refunding — Schools General Obligation | | | 5.000 | | | | 04/01/2018 | | | Baa2 | | | 500,000 | | | | 547,925 | |
Pigeon Forge TN Refunding — Series A | | | 4.900 | | | | 06/01/2028 | | | Aa3/AA* | | | 1,000,000 | | | | 1,084,620 | |
Rutherford County TN Construction Utility District Waterworks | | | 5.000 | | | | 02/01/2031 | | | Aa2/AAA* | | | 1,435,000 | | | | 1,512,318 | |
Shelby County TN Health Educational & Housing Facilities | | | 5.250 | | | | 09/01/2027 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,075,040 | |
Smith County TN General Obligation | | | 5.000 | | | | 04/01/2021 | | | NR | | | 720,000 | | | | 787,486 | |
South Blount County TN Utility District Waterworks Revenue | | | 5.000 | | | | 12/01/2028 | | | Aa3/AA-* | | | 1,125,000 | | | | 1,256,468 | |
TN Housing Development Agency Homeownership Program Series | | | 5.150 | | | | 07/01/2022 | | | Aa1/AA+* | | | 550,000 | | | | 550,297 | |
TN State School Board Authority Refunding Higher Education | | | 5.000 | | | | 05/01/2024 | | | Aa1/AA*/AA+@ | | | 1,395,000 | | | | 1,533,161 | |
TN State School Board Authority Refunding Higher Education | | | 5.000 | | | | 05/01/2025 | | | Aa1/AA*/AA+@ | | | 1,440,000 | | | | 1,572,840 | |
West Wilson Utility District TN Waterworks Revenue | | | 4.750 | | | | 06/01/2028 | | | Aa3 | | | 2,460,000 | | | | 2,675,053 | |
White House Utility District TN Water & Sewer | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 1,235,000 | | | | 1,328,144 | |
White House Utility District TN Water & Sewer | | | 5.000 | | | | 01/01/2030 | | | Aa3 | | | 2,505,000 | | | | 2,674,864 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 47,543,286 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 9.76% of Net Assets | | | | | | | | | | | | | | | | | | |
Franklin TN Water & Sewer Revenue & Tax | | | 5.000 | | | | 04/01/2024 | | | Aaa | | | 750,000 | | | | 957,743 | |
Memphis TN Refunding & General Impact General Obligation | | | 5.000 | | | | 05/01/2036 | | | Aa2/AA* | | | 850,000 | | | | 940,763 | |
Metropolitan Government Nashville and Davidson County TN | | | 5.000 | | | | 01/01/2025 | | | Aa1/AA*/AA@ | | | 4,025,000 | | | | 4,541,930 | |
Pigeon Forge Industrial Development Board TN Public Facilities | | | 5.000 | | | | 06/01/2034 | | | AA* | | | 850,000 | | | | 918,910 | |
Rhea County TN | | | 5.000 | | | | 04/01/2029 | | | A1 | | | 1,385,000 | | | | 1,553,720 | |
Shelby County TN — Series A | | | 4.600 | | | | 11/01/2022 | | | Aa1/AA+*/AA+@ | | | 500,000 | | | | 511,090 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 9,424,156 | |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 8.38% of Net Assets | | | | | | | | | | | | | | | | | | |
Citizens Gas Utility District TN Gas Revenue Refunding | | | 5.000 | % | | | 05/01/2029 | | | A* | | $ | 250,000 | | | $ | 264,602 | |
Clarksville TN Electric Systems Revenue — Series A | | | 5.000 | | | | 09/01/2028 | | | Aa2/AA-* | | | 1,000,000 | | | | 1,136,910 | |
Clarksville TN Electric Systems Revenue — Series A | | | 5.000 | | | | 09/01/2032 | | | Aa2/AA-* | | | 480,000 | | | | 528,514 | |
Clarksville TN Electric Systems Revenue — Series A | | | 5.000 | | | | 09/01/2033 | | | Aa2/AA-* | | | 2,000,000 | | | | 2,191,220 | |
Knox-Chapman TN Utility District Knox County Water & Sewer | | | 5.250 | | | | 01/01/2036 | | | AA-* | | | 700,000 | | | | 776,208 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.750 | | | | 05/15/2028 | | | AA+*/AA+@ | | | 460,000 | | | | 502,748 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 05/15/2036 | | | AA+*/AA+@ | | | 1,250,000 | | | | 1,375,613 | |
West Wilson Utility District TN Waterworks Revenue | | | 5.000 | | | | 06/01/2033 | | | Aa3 | | | 1,170,000 | | | | 1,315,747 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 8,091,562 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 7.92% of Net Assets | | | | | | | | | | | | | | | | | | |
Metropolitan Government Nashville & Davidson County TN Housing | | | 5.000 | | | | 10/01/2034 | | | Aa2/AA*/AA+@ | | | 1,000,000 | | | | 1,095,330 | |
Shelby County TN Health Education & Housing Facilities Board | | | 5.000 | | | | 08/01/2030 | | | A1/A+* | | | 500,000 | | | | 548,230 | |
TN State School Board Authority Higher Education Facilities | | | 5.000 | | | | 05/01/2028 | | | Aa1/AA*/AA@ | | | 1,000,000 | | | | 1,117,030 | |
TN State School Board Authority Higher Education Facilities | | | 5.125 | | | | 05/01/2033 | | | Aa1/AA*/AA@ | | | 1,300,000 | | | | 1,419,821 | |
TN State School Board Authority Higher Education Facilities | | | 5.000 | | | | 05/01/2034 | | | Aa1/AA*/AA+@ | | | 500,000 | | | | 543,410 | |
TN State School Board Authority Higher Education Facilities | | | 4.750 | | | | 05/01/2030 | | | Aa1/AA*/AA+@ | | | 2,750,000 | | | | 2,924,625 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,648,446 | |
| STATE AND LOCAL MORTGAGE REVENUE | | | | | | | | | | | | | | | | | | |
| 6.98% of Net Assets | | | | | | | | | | | | | | | | | | |
TN Housing Development Agency | | | 5.000 | | | | 07/01/2028 | | | Aa1/AA+* | | | 815,000 | | | | 852,237 | |
TN Housing Development Agency | | | 5.400 | | | | 07/01/2035 | | | Aa1/AA+* | | | 605,000 | | | | 633,665 | |
TN Housing Development Agency Homeownership Program 1 | | | 5.000 | | | | 07/01/2029 | | | Aa1/AA+* | | | 800,000 | | | | 831,928 | |
TN Housing Development Agency Homeownership Program 2 | | | 4.700 | | | | 07/01/2027 | | | Aa1/AA+* | | | 1,475,000 | | | | 1,542,083 | |
TN Housing Development Agency Housing Finance Program | | | 4.850 | | | | 01/01/2025 | | | Aa2 | | | 745,000 | | | | 788,054 | |
TN Housing Development Agency Series 2001 — 3B | | | 5.250 | | | | 01/01/2020 | | | Aa1/AA+* | | | 230,000 | | | | 230,205 | |
TN Housing Development Agency Mortgage Financing — Series A | | | 5.200 | | | | 07/01/2023 | | | Aa2/AA* | | | 1,825,000 | | | | 1,865,460 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,743,632 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 6.80% of Net Assets | | | | | | | | | | | | | | | | | | |
Rutherford County TN Health & Education Facilities Board | | | 5.000 | | | | 11/15/2040 | | | Aa1/AA+*/AA+@ | | | 1,500,000 | | | | 1,585,860 | |
Shelby County TN Health Education & Housing Facilities | | | 5.000 | | | | 07/01/2031 | | | Aa2/AAA@ | | | 4,750,000 | | | | 4,981,848 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,567,708 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| 4.62% of Net Assets | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority General Obligation | | | 5.250 | | | | 06/01/2019 | | | NR | | | 800,000 | | | | 889,008 | |
Hawkins County TN Refunding General Obligation | | | 4.750 | | | | 05/01/2017 | | | Aa3 | | | 200,000 | | | | 203,056 | |
Johnson City TN Health & Educational Facilities | | | 5.125 | | | | 07/01/2025 | | | BBB* | | | 2,000,000 | | | | 2,006,660 | |
Kingsport TN Industrial Development Board Multi-family | | | 5.400 | | | | 04/20/2021 | | | NR | | | 350,000 | | | | 378,175 | |
Metro Nashville & Davidson County TN General Obligation | | | 5.000 | | | | 01/01/2023 | | | Aa1/BBB* | | | 440,000 | | | | 495,422 | |
Metro Nashville & Davidson County TN General Obligation | | | 5.000 | | | | 01/01/2024 | | | Aa1/BBB* | | | 435,000 | | | | 489,793 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,462,114 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.83% of Net Assets | | | | | | | | | | | | | | | | | | |
Chattanooga TN Electric Revenue — Series A | | | 5.000 | | | | 09/01/2026 | | | AA*/AA+@ | | | 250,000 | | | | 279,753 | |
Memphis/Shelby County TN Special Facilities Revenue FedEx | | | 5.050 | | | | 09/01/2012 | | | Baa2/BBB* | | | 250,000 | | | | 255,935 | |
Memphis Shelby County TN Port Community Development Revenue | | | 5.000 | | | | 04/01/2035 | | | Aa3/AA-* | | | 500,000 | | | | 533,535 | |
Memphis-Shelby County Sports Authority | | | 5.250 | | | | 11/01/2027 | | | Aa3/AA-*/A+@ | | | 750,000 | | | | 816,697 | |
TN Housing Development Agency — Series 1B | | | 5.000 | | | | 07/01/2029 | | | Aa1/AA+*/NR@ | | | 820,000 | | | | 850,078 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,735,998 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | | | | | | | | |
| 2.03% of Net Assets | | | | | | | | | | | | | | | | | | |
Johnson City TN Health & Educational Revenue | | | 5.000 | | | | 07/01/2018 | | | BBB* | | | 775,000 | | | | 778,162 | |
Johnson City TN Health & Educational Facilities | | | 6.500 | | | | 07/01/2014 | | | Baa1/BBB*/BBB+@ | | | 1,000,000 | | | | 1,108,280 | |
The accompanying footnotes are an integral part of the financial statements.
33
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
Metro Nashville & Davidson County TN Water & Sewer | | | 6.500 | % | | | 12/01/2014 | | | Aaa/BBB* | | $ | 60,000 | | | $ | 70,210 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,956,652 | |
| INDUSTRIAL REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .99% of Net Assets | | | | | | | | | | | | | | | | | | |
Industrial Development Board TN Blount County & Cities | | | 5.000 | | | | 06/01/2027 | | | Aa3/AA-* | | | 850,000 | | | | 957,346 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 957,346 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .57% of Net Assets | | | | | | | | | | | | | | | | | | |
Memphis Shelby County TN Sports Authority Memphis Arena | | | 5.250 | | | | 11/01/2026 | | | Aa3/AA-*/A+@ | | | 500,000 | | | | 550,485 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 550,485 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $92,100,524) (See (a) below for further explanation) 100.10% of Net Assets | | | | | | | | | $ | 96,681,385 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 4,673,743 | |
| | Unrealized depreciation | | | (92,882 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 4,580,861 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 in 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 | | | 96,681,385 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 96,681,385 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
34
TENNESSEE TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $92,100,524) | | | | | | $ | 96,681,385 | |
Cash | | | | | | | 530,510 | |
Interest receivable | | | | | | | 1,368,422 | |
Prepaid expenses | | | | | | | 1,879 | |
| | | | | | | | |
Total assets | | | | | | | 98,582,196 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 1,530,993 | | | | | |
Distributions to shareholders | | | 367,081 | | | | | |
Investment advisory fee | | | 40,221 | | | | | |
Transfer agent fee | | | 10,379 | | | | | |
Accrued expenses | | | 42,510 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 1,991,184 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 92,710,583 | |
Net accumulated realized loss on investment transactions | | | | | | | (700,432 | ) |
Net unrealized appreciation in value of investments | | | | | | | 4,580,861 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 96,591,012 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($96,591,012 -:- 8,454,000 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.43 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 2,015,294 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 234,375 | |
Transfer agent fee | | | 60,431 | |
Custodian expense | | | 7,141 | |
Professional fees | | | 10,501 | |
Trustee fees | | | 6,393 | |
Other expenses | | | 9,476 | |
| | | | |
Total expenses | | | 328,317 | |
Custodian expense reduction | | | (134 | ) |
| | | | |
Net expenses | | | 328,183 | |
| | | | |
Net investment income | | | 1,687,111 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 123,215 | |
Net change in unrealized appreciation/depreciation | | | 3,100,694 | |
| | | | |
Net realized and unrealized loss on investments | | | 3,223,909 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 4,911,020 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
35
TENNESSEE TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,687,111 | | | $ | 3,451,031 | |
Net realized gain on investments | | | 123,215 | | | | 407,508 | |
Net change in unrealized appreciation/depreciation | | | 3,100,694 | | | | (613,152 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 4,911,020 | | | | 3,245,387 | |
Distributions from net investment income | | | (1,687,111 | ) | | | (3,451,031 | ) |
Net fund share transactions (Note 4) | | | 1,626,887 | | | | (3,013,841 | ) |
| | | | | | | | |
Total increase/(decrease) | | | 4,850,796 | | | | (3,219,485 | ) |
Net assets: | | | | | | | | |
Beginning of period | | | 91,740,216 | | | | 94,959,701 | |
| | | | | | | | |
End of period | | $ | 96,591,012 | | | $ | 91,740,216 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $11.04 | | | | $11.04 | | | | $10.71 | | | | $10.77 | | | | $10.87 | | | | $10.84 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.20 | | | | 0.41 | | | | 0.40 | | | | 0.41 | | | | 0.41 | | | | 0.41 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.39 | | | | 0.00 | (b) | | | 0.33 | | | | (0.06 | ) | | | (0.10 | ) | | | 0.03 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.59 | | | | 0.41 | | | | 0.73 | | | | 0.35 | | | | 0.31 | | | | 0.44 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.20 | ) | | | (0.41 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.41 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.20 | ) | | | (0.41 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.41 | ) | | | (0.41 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.43 | | | | $11.04 | | | | $11.04 | | | | $10.71 | | | | $10.77 | | | | $10.87 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 5.42% | (b) | | | 3.78% | | | | 6.92% | | | | 3.40% | | | | 2.87% | | | | 4.05% | |
Net assets, end of period (in thousands) | | | $96,591 | | | | $91,740 | | | | $94,960 | | | | $92,222 | | | | $90,397 | | | | $99,697 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | (c) | | | 0.69% | | | | 0.70% | | | | 0.70% | | | | 0.71% | | | | 0.72% | |
Ratio of net investment income to average net assets | | | 3.62% | (c) | | | 3.68% | | | | 3.67% | | | | 3.90% | | | | 3.74% | | | | 3.70% | |
Portfolio turnover | | | 4.35% | (c) | | | 6.38% | | | | 14.51% | | | | 7.62% | | | | 15.71% | | | | 8.55% | |
| (a) | | Percentages are after Custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | | | |
| | 0.70% | (c) | | For the six months ended December 31, 2011 |
| | 0.69% | | | For the year ended June 30, 2011 |
| | 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 |
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% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 61.26% of Net Assets | | | | | | | | | | | | | | | | | | |
Cross Anchor TN Utility District | | | 4.250 | % | | | 12/01/2015 | | | AA+* | | $ | 65,000 | | | $ | 71,988 | |
Cross Anchor TN Utility District | | | 4.250 | | | | 12/01/2016 | | | AA+* | | | 65,000 | | | | 73,150 | |
Dickson County TN Refunding | | | 5.000 | | | | 06/01/2015 | | | A1/A+* | | | 140,000 | | | | 147,057 | |
Fayetteville TN Electric System Revenue | | | 3.000 | | | | 06/01/2015 | | | AA+* | | | 105,000 | | | | 110,552 | |
Johnson City TN Refunding | | | 4.000 | | | | 06/01/2015 | | | AA@ | | | 400,000 | | | | 439,104 | |
Johnson City TN Electric Revenue | | | 4.500 | | | | 05/01/2021 | | | Aa2/AA-* | | | 50,000 | | | | 56,324 | |
Johnson City TN Public Building Authority Revenue | | | 4.250 | | | | 09/01/2014 | | | Aa2/AA@ | | | 50,000 | | | | 53,638 | |
Knoxville TN Electric Revenue — Series V | | | 4.750 | | | | 07/01/2021 | | | Aa2/AA+* | | | 150,000 | | | | 152,891 | |
Lawrenceburg TN Refunding Water & Sewer | | | 5.000 | | | | 07/01/2015 | | | Aa3 | | | 125,000 | | | | 141,154 | |
Madison County TN Refunding — School and Public Improvement | | | 5.000 | | | | 04/01/2018 | | | Aa2/AA-* | | | 175,000 | | | | 196,812 | |
Maury County TN School & Public Improvement | | | 5.000 | | | | 04/01/2016 | | | Aa2 | | | 1,000,000 | | | | 1,088,870 | |
Memphis-Shelby TN Sports Authority Memphis Arena Project | | | 5.500 | | | | 11/01/2012 | | | Aa3/AA-*/A+@ | | | 500,000 | | | | 518,035 | |
Memphis-Shelby County TN Sports Authority Memphis Arena | | | 5.000 | | | | 11/01/2017 | | | Aa3/AA-*/A+@ | | | 275,000 | | | | 315,972 | |
Memphis TN General Obligation General Improvement | | | 5.000 | | | | 10/01/2016 | | | Aa2/AA*/AA-@ | | | 450,000 | | | | 501,350 | |
Memphis TN — Series A | | | 5.000 | | | | 04/01/2024 | | | Aa2/AA*/AA-@ | | | 200,000 | | | | 224,566 | |
Metro Nashville Davidson County Water and Sewer | | | 5.200 | | | | 01/01/2013 | | | Aa2/BBB*/AA-@ | | | 215,000 | | | | 222,800 | |
Metro Government Nashville & Davidson County TN | | | 5.000 | | | | 01/01/2019 | | | Aa1/AA* | | | 160,000 | | | | 177,427 | |
Metro Nashville Airport Authority — Series A | | | 4.500 | | | | 07/01/2014 | | | Aa3/AA-* | | | 250,000 | | | | 269,250 | |
New Market Utility District Jefferson County TN Waterworks | | | 3.500 | | | | 06/01/2015 | | | Aa3/AA-* | | | 100,000 | | | | 107,438 | |
New Market Utility District Jefferson County TN Waterworks | | | 4.000 | | | | 06/01/2016 | | | Aa3/AA-* | | | 100,000 | | | | 110,424 | |
New Market Utility District Jefferson County TN Waterworks | | | 4.000 | | | | 06/01/2017 | | | Aa3/AA-* | | | 100,000 | | | | 111,529 | |
Polk County TN Refinancing | | | 5.000 | | | | 05/01/2020 | | | Aa3 | | | 150,000 | | | | 172,335 | |
Sevier County TN Public Building Authority | | | 4.000 | | | | 03/01/2014 | | | AA+* | | | 100,000 | | | | 106,599 | |
Shelby County TN Refunding — Series A | | | 5.000 | | | | 04/01/2018 | | | Aa1/AA+* | | | 100,000 | | | | 113,009 | |
Shelby County Health Education | | | 5.250 | | | | 09/01/2020 | | | Aa3/AA-* | | | 400,000 | | | | 455,643 | |
Washington County TN Refunding School and Public Improvement | | | 5.000 | | | | 04/01/2015 | | | Aa2 | | | 200,000 | | | | 221,494 | |
Washington County TN Refunding-School and Public Improvement | | | 5.000 | | | | 04/01/2016 | | | Aa2 | | | 125,000 | | | | 138,224 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,297,635 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 14.90% of Net Assets | | | | | | | | | | | | | | | | | | |
Claiborne County TN Public Improvement — Series A | | | 5.000 | | | | 04/01/2017 | | | A+* | | | 170,000 | | | | 199,379 | |
Memphis TN Refunding General Improvement | | | 5.000 | | | | 10/01/2017 | | | Aa2/AA*/AA-@ | | | 100,000 | | | | 121,122 | |
Metro Government Nashville & Davidson County TN Refunding | | | 5.000 | | | | 05/15/2019 | | | Aa1/AA*/AA@ | | | 250,000 | | | | 296,153 | |
Metro Government Nashville & Davidson County | | | 5.000 | | | | 01/01/2019 | | | Aa1/AA*/AA@ | | | 200,000 | | | | 240,548 | |
Rhea County TN | | | 3.000 | | | | 04/01/2018 | | | A1 | | | 200,000 | | | | 216,220 | |
Sevier County TN Public Building Authority | | | 4.000 | | | | 06/01/2014 | | | AA* | | | 200,000 | | | | 213,362 | |
Unicoi County TN Refunding | | | 5.250 | | | | 04/01/2019 | | | A1/A+* | | | 200,000 | | | | 245,036 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,531,820 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 7.04% of Net Assets | | | | | | | | | | | | | | | | | | |
Chattanooga TN Electric Revenue — Series A | | | 5.000 | | | | 09/01/2021 | | | AA*/AA+@ | | | 400,000 | | | | 467,540 | |
Memphis-Shelby County TN Airport — Federal Express Corporation | | | 5.050 | | | | 09/01/2012 | | | Baa2/BBB* | | | 250,000 | | | | 255,935 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 723,475 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 5.40% of Net Assets | | | | | | | | | | | | | | | | | | |
TN Housing Development Agency Homeownership Program | | | 4.200 | | | | 01/01/2016 | | | Aa1/AA+* | | | 145,000 | | | | 151,284 | |
TN Housing Development Agency — Series 1B | | | 4.800 | | | | 07/01/2024 | | | Aa1/AA+* | | | 285,000 | | | | 300,481 | |
TN Housing Development Agency Homeownership Program — 2 | | | 2.950 | | | | 01/01/2015 | | | Aa1/AA+* | | | 100,000 | | | | 103,733 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 555,498 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.74% of Net Assets | | | | | | | | | | | | | | | | | | |
Harpeth Valley Utilities District | | | 5.000 | | | | 03/01/2014 | | | A1 | | | 250,000 | | | | 255,088 | |
Sevier County TN Utility District Gas System Revenue | | | 2.650 | | | | 06/01/2015 | | | A+* | | | 125,000 | | | | 129,265 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 384,353 | |
The accompanying footnotes are an integral part of the financial statements.
37
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 3.46% of Net Assets | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority Series B-19 | | | 3.500 | % | | | 06/01/2015 | | | AA+* | | $ | 200,000 | | | $ | 216,344 | |
Metro Government Nashville Davidson County Convention | | | 5.000 | | | | 07/01/2015 | | | A1/A*/AA-@ | | | 125,000 | | | | 139,330 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 355,674 | |
| PREREFUNDED BONDS | | | | | | | | | | | | | | | | | | |
| 3.17% of Net Assets | | | | | | | | | | | | | | | | | | |
Memphis TN Electric System Revenue — Series A | | | 5.000 | | | | 12/01/2015 | | | Aa2/AA+*/AA+@ | | | 300,000 | | | | 325,452 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 325,452 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $9,663,097) (See (a) below for further explanation) 98.97% of Net Assets | | | | | | | | | $ | 10,173,907 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 527,956 | |
| | Unrealized depreciation | | | (17,146 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 510,810 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 in 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 | | | 10,173,907 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 10,173,907 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
38
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $9,663,097) | | | | | | $ | 10,173,907 | |
Cash | | | | | | | 197,977 | |
Defaulted securities receivable | | | | | | | 23,606 | |
Interest receivable | | | | | | | 116,774 | |
| | | | | | | | |
Total assets | | | | | | | 10,512,264 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 213,490 | | | | | |
Distributions to shareholders | | | 5,942 | | | | | |
Fund shares redeemed | | | 57 | | | | | |
Investment advisory fee | | | 4,254 | | | | | |
Transfer agent fee | | | 1,339 | | | | | |
Trustee fees | | | 621 | | | | | |
Accrued expenses | | | 5,913 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 231,616 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 10,081,937 | |
Net accumulated realized loss on investment transactions | | | | | | | (312,100 | ) |
Net unrealized appreciation in value of investments | | | | | | | 510,810 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 10,280,647 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($10,280,648 -:- 934,137 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.01 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 159,173 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 25,144 | |
Transfer agent fee | | | 7,794 | |
Custodian expense | | | 1,156 | |
Professional fees | | | 1,727 | |
Pricing fees | | | 2,262 | |
Trustee fees | | | 685 | |
Other expenses | | | 3,438 | |
| | | | |
Total expenses | | | 42,206 | |
Custodian expense reduction | | | (54 | ) |
| | | | |
Net expenses | | | 42,152 | |
| | | | |
Net investment income | | | 117,021 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 214 | |
Net change in unrealized appreciation/depreciation | | | 141,947 | |
| | | | |
Net realized and unrealized gain on investments | | | 142,161 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 259,182 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
39
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 117,021 | | | $ | 249,321 | |
Net realized gain on investments | | | 214 | | | | 64,546 | |
Net change in unrealized appreciation/depreciation | | | 141,947 | | | | (57,991 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 259,182 | | | | 255,876 | |
Distributions from net investment income | | | (117,021 | ) | | | (249,321 | ) |
Net fund share transactions (Note 4) | | | 249,349 | | | | (230,591 | ) |
| | | | | | | | |
Total increase/(decrease) | | | 391,510 | | | | (224,036 | ) |
Net assets: | | | | | | | | |
Beginning of period | | | 9,889,138 | | | | 10,113,174 | |
| | | | | | | | |
End of period | | $ | 10,280,648 | | | $ | 9,889,138 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $10.85 | | | | $10.82 | | | | $10.54 | | | | $10.31 | | | | $10.32 | | | | $10.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.13 | | | | 0.26 | | | | 0.28 | | | | 0.31 | | | | 0.31 | | | | 0.31 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.16 | | | | 0.03 | | | | 0.28 | | | | 0.23 | | | | (0.01 | ) | | | 0.03 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.29 | | | | 0.29 | | | | 0.56 | | | | 0.54 | | | | 0.30 | | | | 0.34 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.13 | ) | | | (0.26 | ) | | | (0.28 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.31 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.13 | ) | | | (0.26 | ) | | | (0.28 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.31 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.01 | | | | $10.85 | | | | $10.82 | | | | $10.54 | | | | $10.31 | | | | $10.32 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 2.67% | (b) | | | 2.72% | | | | 5.39% | | | | 5.31% | | | | 2.90% | | | | 3.34% | |
Net assets, end of period (in thousands) | | | $10,281 | | | | $9,889 | | | | $10,113 | | | | $9,075 | | | | $10,335 | | | | $10,880 | |
Ratio of net expenses to average net assets (a) | | | 0.84% | (c) | | | 0.80% | | | | 0.81% | | | | 0.82% | | | | 0.81% | | | | 0.79% | |
Ratio of net investment income to average net assets | | | 2.34% | (c) | | | 2.40% | | | | 2.63% | | | | 2.97% | | | | 2.96% | | | | 3.00% | |
Portfolio turnover | | | 1.18% | (c) | | | 18.32% | | | | 16.16% | | | | 15.00% | | | | 22.22% | | | | 0.00% | |
| (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% | (c) | | | 0% | (c) | | For the six months ended December 31, 2011 |
| | .02% | | | | 0% | | | For the year ended June 30, 2011 |
| | .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 |
The accompanying footnotes are an integral part of the financial statements.
40
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| INSURED MUNICIPAL BONDS | | | | | | | | | | | | | | | | | | |
| 23.00% of Net Assets | | | | | | | | | | | | | | | | | | |
Armstrong School District PA Build America — Series A | | | 7.000 | % | | | 03/15/2041 | | | AA+* | | $ | 750,000 | | | $ | 848,302 | |
Ashland KY Independent School District Build America | | | 6.200 | | | | 08/01/2029 | | | Aa3 | | | 100,000 | | | | 111,498 | |
Bexar County TX Revenue Bonds Venue Project — Series B | | | 6.980 | | | | 08/15/2032 | | | Aa1/AA+*/A+@ | | | 250,000 | | | | 302,640 | |
Coffee County TN Public Building Authority Build America | | | 7.200 | | | | 06/01/2044 | | | AA+* | | | 250,000 | | | | 283,895 | |
Decatur GA Urban Redevelopment Agency Revenue Build America | | | 6.920 | | | | 01/01/2038 | | | Aa2/AA+* | | | 150,000 | | | | 165,973 | |
Lincoln AL Build America Bonds Recovery Zone Economic Development | | | 6.800 | | | | 06/01/2040 | | | AA+* | | | 500,000 | | | | 538,070 | |
Mesa State College CO Auxiliary Facilities Build America | | | 6.746 | | | | 05/15/2042 | | | Aa2/AA-* | | | 100,000 | | | | 123,114 | |
North Fort Bend Water Authority TX Water System Revenue | | | 6.018 | | | | 12/15/2035 | | | Aa3/AA+-/A+@ | | | 250,000 | | | | 276,555 | |
Scottsboro AL Build America | | | 6.400 | | | | 11/01/2040 | | | Aa3/AA-* | | | 250,000 | | | | 268,633 | |
Selma AL Taxable Pension Obligation Warrants | | | 5.820 | | | | 07/01/2031 | | | AA+* | | | 350,000 | | | | 380,044 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,298,724 | |
| GENERAL OBLIGATION BONDS | | | | | | | | | | | | | | | | | | |
| 19.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Carroll TX Independent School District Build America | | | 6.676 | | | | 02/15/2034 | | | Aa2/AA+* | | | 100,000 | | | | 114,640 | |
Circleville OH City School District Build America | | | 6.300 | | | | 11/01/2040 | | | Aa2 | | | 100,000 | | | | 109,909 | |
East Bethel MN Build America Utilities — Series B | | | 7.000 | | | | 02/01/2040 | | | Aa3 | | | 250,000 | | | | 292,715 | |
Edgewood OH City School District Build America | | | 7.500 | | | | 12/01/2037 | | | Aa3/A+* | | | 100,000 | | | | 113,795 | |
Jefferson County TN Build America | | | 6.625 | | | | 06/01/2040 | | | Aa3/A+* | | | 250,000 | | | | 285,243 | |
Montgomery AL Build America Bonds Recovery Zone Economic | | | 5.600 | | | | 02/01/2035 | | | Aa2/AA+* | | | 500,000 | | | | 539,370 | |
New York NY Build America | | | 5.968 | | | | 03/01/2036 | | | Aa2/AA*/AA@ | | | 100,000 | | | | 118,516 | |
Pigeon Forge TN Build America Recovery Zone Economic | | | 7.125 | | | | 06/01/2040 | | | AA* | | | 300,000 | | | | 363,078 | |
Sarasota County FL Capital Improvement Revenue Build America | | | 7.016 | | | | 10/01/2040 | | | AA+*/AA+@ | | | 710,000 | | | | 820,199 | |
Talladega County AL Build America Recovery Zone | | | 5.600 | | | | 04/01/2040 | | | Aa3 | | | 100,000 | | | | 105,251 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,862,716 | |
| CERTIFICATES OF PARTICIPATION BONDS (UNINSURED) | | | | | | | | | | | | | | | | | | |
| 18.34% of Net Assets | | | | | | | | | | | | | | | | | | |
CO State Building Excellent Schools Today Certificates of Participation | | | 7.017 | | | | 03/15/2031 | | | Aa2/AA-* | | | 400,000 | | | | 459,556 | |
Denver County Public Schools Certificates of Participation | | | 7.017 | | | | 12/15/2037 | | | Aa3/A+* | | | 140,000 | | | | 178,381 | |
Grand Junction CO Certificates of Participation Build America | | | 7.500 | | | | 12/01/2030 | | | A+* | | | 500,000 | | | | 594,590 | |
Pennington County SD Certificates of Participation Build America | | | 7.200 | | | | 06/01/2037 | | | Aa2 | | | 750,000 | | | | 836,648 | |
Sedalia MO Certificates of Participation Build America | | | 7.300 | | | | 06/01/2035 | | | AA+* | | | 500,000 | | | | 560,685 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,629,860 | |
| LEASE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 15.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Buncombe County NC Limited Obligation Build America | | | 6.800 | | | | 06/01/2030 | | | Aa2/AA* | | | 250,000 | | | | 296,075 | |
Downtown Smyrna Development Authority GA | | | 6.900 | | | | 02/01/2035 | | | Aa2/AA+* | | | 250,000 | | | | 280,835 | |
KY State Property & Buildings Build America — Series C | | | 5.921 | | | | 11/01/2030 | | | Aa3/A+*/AA-@ | | | 250,000 | | | | 274,958 | |
Metropolitan Government Nashville & Davidson County TN Build America | | | 7.431 | | | | 07/01/2043 | | | A1/A*/AA-@ | | | 90,000 | | | | 111,591 | |
OK Development Finance Authority Lease Revenue Taxable | | | 5.650 | | | | 06/01/2041 | | | AA*/AA@ | | | 410,000 | | | | 443,243 | |
Omaha NE Sewer Revenue Build America | | | 6.191 | | | | 12/01/2040 | | | Aa2/AA* | | | 400,000 | | | | 430,051 | |
West Knox Utilities District Knox County TN Water & Sewer | | | 6.900 | | | | 06/01/2040 | | | AA+* | | | 400,000 | | | | 451,740 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,288,493 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 12.39% of Net Assets | | | | | | | | | | | | | | | | | | |
Altoona PA Water Authority Sewer Revenue Build America | | | 7.064 | | | | 12/01/2040 | | | AA+* | | | 500,000 | | | | 566,960 | |
Gainesville FL Utilities System Revenue Build America | | | 6.024 | | | | 10/01/2040 | | | Aa2/AA*/AA@ | | | 250,000 | | | | 303,240 | |
Heber Light & Power Company UT Electric Revenue Build America | | | 7.000 | | | | 12/15/2030 | | | Aa3/AA-@ | | | 500,000 | | | | 537,830 | |
Metropolitan Government Nashville & Davidson County TN Water | | | 6.693 | | | | 07/01/2041 | | | Aa3/AA-* | | | 200,000 | | | | 257,514 | |
York County VA Sewer Revenue Build America | | | 6.607 | | | | 06/01/2040 | | | Aa3 | | | 100,000 | | | | 111,363 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,776,907 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 4.36% of Net Assets | | | | | | | | | | | | | | | | | | |
Maine Health & Higher Educational Facilities Authority | | | 6.667 | | | | 07/01/2039 | | | Aa2 | | | 200,000 | | | | 234,482 | |
The accompanying footnotes are an integral part of the financial statements.
41
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
University NC Chapel Hill Hospital Revenue Build America | | | 6.329 | % | | | 02/01/2031 | | | Aa3/AA-* | | $ | 250,000 | | | $ | 285,383 | |
University NC Wilmington Revenue Build America | | | 5.870 | | | | 01/01/2035 | | | A1 | | | 100,000 | | | | 105,074 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 624,939 | |
| TURNPIKE ROAD REVENUE | | | | | | | | | | | | | | | | | | |
| 2.30% of Net Assets | | | | | | | | | | | | | | | | | | |
FL State Turnpike Authority Turnpike Revenue Build America | | | 6.800 | | | | 07/01/2039 | | | Aa1/AA-*/AA-@ | | | 300,000 | | | | 329,505 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 329,505 | |
| STATE AND LOCAL MORTGAGE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.12% of Net Assets | | | | | | | | | | | | | | | | | | |
Virginia State Housing Development Authority Taxable Rental | | | 5.251 | | | | 01/01/2039 | | | Aa1/AA+* | | | 300,000 | | | | 303,827 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 303,827 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $12,706,162) (See (a) below for further explanation) 98.43% of Net Assets | | | | | | | | | $ | 14,114,971 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | (All other ratings by Moody’s Investors Service, Inc.) |
| | # | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized appreciation of securities as follows |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 1,408,809 | |
| | Unrealized depreciation | | | — | |
| | | | | | |
| | Net unrealized appreciation | | $ | 1,408,809 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 | | | 14,114,971 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 14,114,971 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
42
TAXABLE MUNICIPAL BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $12,706,162) | | | | | | $ | 14,114,971 | |
Cash | | | | | | | 89,843 | |
Interest receivable | | | | | | | 170,392 | |
Prepaid expenses | | | | | | | 11,300 | |
| | | | | | | | |
Total assets | | | | | | | 14,386,506 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 36,601 | | | | | |
Investment advisory fee | | | 6,018 | | | | | |
Transfer agent fee | | | 1,813 | | | | | |
Trustee fee | | | 332 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 44,764 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 12,953,901 | |
Accumulated net investment income | | | | | | | 142 | |
Net accumulated realized loss on investment transactions | | | | | | | (21,110 | ) |
Net unrealized appreciation in value of investments | | | | | | | 1,408,809 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 14,341,742 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($14,341,742 -:- 1,353,353 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.60 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 390,310 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 33,195 | |
Transfer agent fee | | | 10,020 | |
Custodian expense | | | 1,015 | |
Professional fees | | | 2,293 | |
Pricing | | | 3,519 | |
Trustee fees | | | 885 | |
Other expenses | | | 2,181 | |
| | | | |
Total expenses | | | 53,108 | |
Fees waived by Adviser | | | (942 | ) |
Custodian expense reduction | | | (55 | ) |
Net expenses | | | 52,111 | |
| | | | |
Net investment income | | | 338,199 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net change in unrealized appreciation/depreciation | | | 1,159,138 | |
| | | | |
Net realized and unrealized gain on investments | | | 1,159,138 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,497,337 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
43
TAXABLE MUNICIPAL BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the eight months ended June 30, 2011* and the six months ended December 31, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | Eight Months*
6/30/11 | |
Operations: | | | | | | | | |
Net investment income | | $ | 338,199 | | | $ | 457,937 | |
Net realized loss on investments | | | — | | | | (21,110 | ) |
Net change in unrealized appreciation/depreciation | | | 1,159,279 | | | | 249,671 | |
| | | | | | | | |
Net decrease in net assets resulting from operations | | | 1,497,478 | | | | 686,498 | |
Distributions from net investment income | | | (338,057 | ) | | | (457,937 | ) |
Net fund share transactions (Note 4) | | | 2,310,549 | | | | 10,643,352 | |
| | | | | | | | |
Total increase | | | 3,469,970 | | | | 10,871,913 | |
Net assets: | | | | | | | | |
Beginning of period | | | 10,871,913 | | | | — | |
| | | | | | | | |
End of period | | $ | 14,341,883 | | | $ | 10,871,913 | |
| | | | | | | | |
Accumulated net investment income | | $ | 142 | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | Eight Months*
6/30/11 | |
Net asset value, beginning of period | | | $9.65 | | | | $10.00 | |
| | | | | | | | |
Income from investment operations: | | | | | | | | |
Net investment income | | | 0.13 | | | | 0.34 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.95 | | | | (0.35 | ) |
| | | | | | | | |
Total from investment operations | | | 1.08 | | | | (0.01 | ) |
Less distributions: | | | | | | | | |
Distributions from net investment income | | | (0.13 | ) | | | (0.34 | ) |
Distributions from capital gains | | | — | | | | — | |
| | | | | | | | |
Total distributions | | | (0.13 | ) | | | (0.34 | ) |
| | | | | | | | |
Net asset value, end of period | | | $10.60 | | | | $9.65 | |
| | | | | | | | |
Total return | | | 12.68% | (b) | | | 0.04% | (b) |
Net assets, end of period (in thousands) | | | $14,342 | | | | $10,872 | |
Ratio of net expenses to average net assets (a) | | | 0.80% | (c) | | | 0.49% | (c) |
Ratio of net investment income to average net assets | | | 5.12% | (c) | | | 3.71% | (c) |
Portfolio turnover | | | 0.00% | (c) | | | 89.93% | (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 | | | |
| | .01% | (c) | | | 0% | (c) | | For the six months ended December 31, 2011 |
| | .01% | (c) | | | 0% | (c) | | For the period ended June 30, 2011 |
| * | | Represents the period from commencement of operations (November 1, 2010) through June 30, 2011. |
The accompanying footnotes are an integral part of the financial statements.
44
DUPREE MUTUAL FUNDS — INTERMEDIATE GOVERNMENT BOND SERIES | UNAUDITED |
SCHEDULE OF PORTFOLIO INVESTMENTS
U.S. Government Securities and Agencies — 100% of Net Assets
December 31, 2011
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| FEDERAL FARM CREDIT | | | | | | | | | | | | | | | | | | |
| 59.92% of Net Assets | | | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank | | | 5.840 | % | | | 07/20/2022 | | | Aaa/AA+*/AAA@ | | $ | 2,650,000 | | | $ | 3,402,490 | |
Federal Farm Credit Bank | | | 5.250 | | | | 05/10/2022 | | | Aaa/AA+*/AAA@ | | | 2,000,000 | | | | 2,506,297 | |
Federal Farm Credit Bank | | | 5.125 | | | | 11/28/2022 | | | Aaa/AA+*/AAA@ | | | 2,000,000 | | | | 2,473,619 | |
Federal Farm Credit Bank | | | 3.200 | | | | 10/03/2023 | | | Aaa/AA+*/AAA@ | | | 250,000 | | | | 249,899 | |
Federal Farm Credit Bank | | | 3.850 | | | | 05/20/2021 | | | Aaa/AA+*/AAA@ | | | 500,000 | | | | 516,189 | |
Federal Farm Credit Bank | | | 5.300 | | | | 06/24/2014 | | | Aaa/AA+*/AAA@ | | | 1,550,000 | | | | 1,730,032 | |
Federal Farm Credit Bank | | | 5.250 | | | | 10/25/2022 | | | Aaa/AA+*/AAA@ | | | 1,500,000 | | | | 1,870,170 | |
Federal Farm Credit Bank | | | 5.875 | | | | 08/16/2021 | | | Aaa/AA+*/AAA@ | | | 1,900,000 | | | | 2,046,026 | |
Federal Farm Credit Bank | | | 5.050 | | | | 12/21/2021 | | | Aaa/AA+*/AAA@ | | | 370,000 | | | | 453,707 | |
Federal Farm Credit Bank | | | 6.200 | | | | 07/26/2022 | | | Aaa/AA+*/AAA@ | | | 500,000 | | | | 514,477 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 15,762,906 | |
| FEDERAL HOME LOAN BANK | | | | | | | | | | | | | | | | | | |
| 26.90% of Net Assets | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank | | | 7.000 | | | | 08/15/2014 | | | Aaa/AA+* | | | 500,000 | | | | 582,341 | |
Federal Home Loan Bank | | | 5.250 | | | | 12/11/2020 | | | Aaa/AA+* | | | 985,000 | | | | 1,232,603 | |
Federal Home Loan Bank | | | 5.000 | | | | 12/10/2021 | | | Aaa/AA+* | | | 500,000 | | | | 611,106 | |
Federal Home Loan Bank | | | 5.750 | | | | 06/10/2022 | | | Aaa/AA+* | | | 2,000,000 | | | | 2,603,663 | |
Federal Home Loan Bank | | | 5.550 | | | | 06/19/2023 | | | Aaa/AA+* | | | 500,000 | | | | 531,950 | |
Federal Home Loan Bank | | | 4.375 | | | | 04/16/2020 | | | Aaa/AA+* | | | 1,500,000 | | | | 1,514,244 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,075,907 | |
| FEDERAL HOME LOAN MORTGAGE | | | | | | | | | | | | | | | | | | |
| 7.28% of Net Assets | | | | | | | | | | | | | | | | | | |
Federal National Mortgage Association | | | 8.100 | | | | 08/12/2019 | | | Aaa/AA+*/AAA@ | | | 1,000,000 | | | | 1,413,584 | |
Federal National Mortgage Association | | | 4.000 | | | | 01/26/2024 | | | Aaa/AA+*/AAA@ | | | 500,000 | | | | 500,520 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,914,104 | |
| STUDENT LOAN MARKETING ASSOCIATION | | | | | | | | | | | | | | | | | | |
| 3.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Student Loan Marketing Association | | | 7.300 | | | | 08/01/2012 | | | AAA | | | 1,000,000 | | | | 1,040,762 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,040,762 | |
| | | | | | | | | | | | | | | | | | |
Total Investments (cost $24,324,502) (See (a) below for further explanation) 98.06% of Net Assets | | | | | | $ | 25,793,679 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | @ | | Fitch’s Investors Service |
| | | | All other ratings by Moody’s Investors Service, Inc. |
| | # | | Bond ratings unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| (a) | | Represents cost for financial reporting and federal income tax purposes and differs from fair value by net unrealized depreciation of securities as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 1,469,177 | |
| | Unrealized depreciation | | | — | |
| | | | | | |
| | Net unrealized appreciation | | $ | 1,469,177 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of December 31, 2011, involving the Fund’s investments in securities carried at fair 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 | | | 25,793,679 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 25,793,679 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
45
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2011 | UNAUDITED |
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $24,324,502) | | | | | | $ | 25,793,679 | |
Cash | | | | | | | 265,690 | |
Interest receivable | | | | | | | 284,080 | |
Prepaid expenses | | | | | | | 3,260 | |
| | | | | | | | |
Total assets | | | | | | | 26,346,709 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 17,304 | | | | | |
Fund shares redeemed | | | 9,987 | | | | | |
Investment advisory fee | | | 4,434 | | | | | |
Transfer agent fee | | | 5,835 | | | | | |
Accrued expenses | | | 4,508 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 42,068 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 24,952,621 | |
Accumulated net investment income | | | | | | | 200 | |
Net accumulated realized loss on investment transactions | | | | | | | (117,357 | ) |
Net unrealized appreciation in value of investments | | | | | | | 1,469,177 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 26,304,641 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share ($26,304,641 -:- 2,487,685 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.57 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the six months ended December 31, 2011
| | | | |
Net investment income: | | | | |
Interest income | | $ | 498,322 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 26,046 | |
Transfer agent fee | | | 19,655 | |
Custodian expense | | | 2,026 | |
Professional fees | | | 2,918 | |
Printing | | | 5,027 | |
Trustee fees | | | 1,777 | |
Other expenses | | | 7,296 | |
| | | | |
Total expenses | | | 64,745 | |
Custodian expense reduction | | | (79 | ) |
| | | | |
Net expenses | | | 64,666 | |
| | | | |
Net investment income | | | 433,656 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 7,635 | |
Net change in unrealized appreciation/depreciation | | | 1,548,155 | |
| | | | |
Net realized and unrealized gain on investments | | | 1,555,790 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,989,446 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
46
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 2011 and the year ended June 30, 2011 | UNAUDITED |
| | | | | | | | |
| | | Six Months
12/31/11 | | | One Year
2011 | |
Operations: | | | | | | | | |
Net investment income | | $ | 433,656 | | | $ | 1,125,601 | |
Net realized gain on investments | | | 7,635 | | | | 9,157 | |
Net change in unrealized appreciation/depreciation | | | 1,548,155 | | | | (1,164,961 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 1,989,446 | | | | (30,203 | ) |
Distributions from net investment income | | | (433,456 | ) | | | (1,125,601 | ) |
Net fund share transactions (Note 4) | | | (255,268 | ) | | | (15,893,548 | ) |
| | | | | | | | |
Total increase/(decrease) | | | 1,300,722 | | | | (17,049,352 | ) |
Net assets: | | | | | | | | |
Beginning of period | | | 25,003,919 | | | | 42,053,271 | |
| | | | | | | | |
End of period | | $ | 26,304,641 | | | $ | 25,003,919 | |
| | | | | | | | |
Accumulated net investment income | | $ | 200 | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | Six Months
12/31/11 | | | For the years ended June 30, | |
| | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | | 2007 | |
Net asset value, beginning of period | | | $9.96 | | | | $10.24 | | | | $10.05 | | | | $9.93 | | | | $9.66 | | | | $9.58 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.24 | | | | 0.35 | | | | 0.44 | | | | 0.46 | | | | 0.48 | | | | 0.49 | |
Net gains/(losses) on securities, both realized and unrealized | | | 0.61 | | | | (0.28 | ) | | | 0.19 | | | | 0.12 | | | | 0.27 | | | | 0.08 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.85 | | | | 0.07 | | | | 0.63 | | | | 0.58 | | | | 0.75 | | | | 0.57 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.24 | ) | | | (0.35 | ) | | | (0.44 | ) | | | (0.46 | ) | | | (0.48 | ) | | | (0.49 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.24 | ) | | | (0.35 | ) | | | (0.44 | ) | | | (0.46 | ) | | | (0.48 | ) | | | (0.49 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.57 | | | | $9.96 | | | | $10.24 | | | | $10.05 | | | | $9.93 | | | | $9.66 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return | | | 7.91% | (b) | | | 0.71% | | | | 6.38% | | | | 5.99% | | | | 7.88% | | | | 6.04% | |
Net assets, end of period (in thousands) | | | $26,305 | | | | $25,004 | | | | $42,053 | | | | $25,431 | | | | $23,132 | | | | $22,553 | |
Ratio of net expenses to average net assets (a) | | | 0.50% | (c) | | | 0.46% | | | | 0.47% | | | | 0.47% | | | | 0.49% | | | | 0.51% | |
Ratio of net investment income to average net assets | | | 3.35% | (c) | | | 3.48% | | | | 4.30% | | | | 4.62% | | | | 4.85% | | | | 5.05% | |
Portfolio turnover | | | 2.99% | (c) | | | 72.86% | | | | 56.38% | | | | 30.35% | | | | 33.21% | | | | 6.40% | |
| (a) | | Percentages are after custodian reductions for which no recovery will be sought. |
| | | Percentages before custodian reductions were: |
| | | | |
| | 0.50% | (c) | | For the six months ended December 31, 2011 |
| | 0.46% | | | For the year ended June 30, 2011 |
| | 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 |
The accompanying footnotes are an integral part of the financial statements.
47
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 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.
48
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 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, 2011, 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, 2011.
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, 2011. 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.
49
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 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 Taxable Municipal Bond Series Intermediate Government Bond Series |
| |
| Quarterly for: | | Alabama Tax-Free Income Series Kentucky Tax-Free Income Series Mississippi Tax-Free Income Series North Carolina Tax-Free Income Series Tennessee Tax-Free Income Series |
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 May 2011, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in the U.S. GAAP and IFRS”. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. Management believes adoption of this pronouncement will not have a material impact on the 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, 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; .35 of 1% of the average daily net assets between $500,000,001 and 750,000,000; and .30 of 1% of the average daily net assets between $750,000,001 and 1,000,000,000; and .25 of 1% of the average daily net assets in excess of $1,000,000,000. 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. Prior to March 1, 2011 the Alabama, Kentucky, Mississippi, North Carolina, Tennessee, and the Taxable Municipal Bond Series, paid 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
50
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 2. | | Investment Advisory Fee and Other Transactions with Affiliates, continued: |
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; .35 of 1% of the average daily net assets in excess of $500,000,000.
The Adviser may voluntarily waive investment advisory fees payable to it under the Investment Advisory Agreement with each Fund, and assume and pay other operating expenses. The Adviser will not seek to recoup any waived fees or other operating expenses it has assumed.
For the six months ended December 31, 2011, fees voluntarily waived by the Adviser were as follows:
| | | | |
| | | Fees waived
by Adviser | |
Alabama Tax-Free Income Series | | $ | 11,064 | |
Mississippi Tax-Free Income Series | | | 7,074 | |
Taxable Municipal Bond Series | | | 942 | |
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, 2011, 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 | | $ | 14,917 | | | $ | 166,708 | |
Kentucky Tax-Free Income Series | | | 16,383,807 | | | | 14,270,695 | |
Kentucky Tax-Free Short-to-Medium Series | | | 12,105,513 | | | | 1,397,860 | |
Mississippi Tax-Free Income Series | | | 828,454 | | | | 435,884 | |
North Carolina Tax-Free Income Series | | | 1,593,217 | | | | 2,515,981 | |
North Carolina Tax-Free Short-to-Medium Series | | | 1,748,706 | | | | 2,444,294 | |
Tennessee Tax-Free Income Series | | | 6,683,765 | | | | 3,409,045 | |
Tennessee Tax-Free Short-to-Medium Series | | | 625,963 | | | | 115,000 | |
Taxable Municipal Bond Series | | | 2,338,913 | | | | — | |
Intermediate Government Bond Series | | | 497,750 | | | | 841,580 | |
At December 31, 2011 and June 30, 2011, 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, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 68,468 | | | $ | 820,369 | | | | 295,284 | | | $ | 3,467,858 | |
Shares reinvested | | | 17,327 | | | | 210,093 | | | | 38,791 | | | | 451,997 | |
Shares redeemed | | | (128,115 | ) | | | (1,527,628 | ) | | | (208,099 | ) | | | (2,429,265 | ) |
Net increase/(decrease) | | | (42,320 | ) | | $ | (497,166 | ) | | | 125,976 | | | $ | 1,490,590 | |
51
DUPREE MUTUAL FUNDS UNAUDITED | |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 4. | | Capital Shares, continued: |
| | | | | | | | | | | | | | | | |
| KENTUCKY TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 6,048,015 | | | $ | 47,099,614 | | | | 15,874,005 | | | $ | 120,805,735 | |
Shares reinvested | | | 1,582,942 | | | | 12,445,034 | | | | 2,782,785 | | | | 21,133,737 | |
Shares redeemed | | | (4,549,732 | ) | | | (35,387,003 | ) | | | (16,316,268 | ) | | | (124,100,438 | ) |
Net increase | | | 3,081,225 | | | $ | 24,157,645 | | | | 2,340,522 | | | $ | 17,839,034 | |
| | | | | | | | | | | | | | | | |
KENTUCKY TAX-FREE
SHORT-TO-MEDIUM SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 3,978,353 | | | $ | 21,722,727 | | | | 4,446,234 | | | $ | 23,941,652 | |
Shares reinvested | | | 117,673 | | | | 645,193 | | | | 218,910 | | | | 1,177,937 | |
Shares redeemed | | | (1,595,502 | ) | | | (8,731,572 | ) | | | (4,149,834 | ) | | | (22,257,404 | ) |
Net increase | | | 2,500,524 | | | $ | 13,636,348 | | | | 515,310 | | | $ | 2,862,184 | |
| | | | | | | | | | | | | | | | |
| MISSISSIPPI TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 50,466 | | | $ | 587,053 | | | | 94,828 | | | $ | 1,067,255 | |
Shares reinvested | | | 4,700 | | | | 55,240 | | | | 12,803 | | | | 144,939 | |
Shares redeemed | | | (18,899 | ) | | | (221,116 | ) | | | (99,309 | ) | | | (1,116,014 | ) |
Net increase | | | 36,267 | | | $ | 421,177 | | | | 8,322 | | | $ | 96,180 | |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 406,151 | | | $ | 4,539,590 | | | | 1,255,466 | | | $ | 13,738,763 | |
Shares reinvested | | | 78,741 | | | | 891,327 | | | | 175,789 | | | | 1,911,216 | |
Shares redeemed | | | (566,046 | ) | | | (6,339,528 | ) | | | (1,537,280 | ) | | | (16,654,703 | ) |
Net decrease | | | (81,154 | ) | | $ | (908,611 | ) | | | (106,025 | ) | | $ | (1,004,724 | ) |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE
SHORT-TO-MEDIUM SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 140,815 | | | $ | 1,551,542 | | | | 822,857 | | | $ | 8,957,526 | |
Shares reinvested | | | 17,154 | | | | 189,892 | | | | 32,281 | | | | 350,979 | |
Shares redeemed | | | (225,955 | ) | | | (2,496,343 | ) | | | (315,093 | ) | | | (3,432,375 | ) |
Net increase/(decrease) | | | (67,986 | ) | | $ | (754,909 | ) | | | 540,045 | | | $ | 5,876,130 | |
52
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 4. | | Capital Shares, continued: |
| | | | | | | | | | | | | | | | |
| TENNESSEE TAX-FREE INCOME SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 618,646 | | | $ | 6,957,555 | | | | 991,217 | | | $ | 10,934,026 | |
Shares reinvested | | | 82,825 | | | | 941,195 | | | | 169,356 | | | | 1,860,689 | |
Shares redeemed | | | (560,429 | ) | | | (6,271,863 | ) | | | (1,447,207 | ) | | | (15,808,556 | ) |
Net increase/(decrease) | | | 141,042 | | | $ | 1,626,887 | | | | (286,634 | ) | | $ | (3,013,841 | ) |
| | | | | | | | | | | | | | | | |
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 56,744 | | | $ | 621,186 | | | | 261,014 | | | $ | 2,830,609 | |
Shares reinvested | | | 7,201 | | | | 78,795 | | | | 15,519 | | | | 168,348 | |
Shares redeemed | | | (41,061 | ) | | | (450,632 | ) | | | (300,341 | ) | | | (3,229,548 | ) |
Net increase/(decrease) | | | 22,884 | | | $ | 249,349 | | | | (23,808 | ) | | $ | (230,591 | ) |
| | | | | | | | | | | | | | | | |
| TAXABLE MUNICIPAL BOND SERIES | | Six Months Ended
December 31, 2011 | | | Eight Months Ended
June 30, 2011* | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 226,524 | | | $ | 2,301,551 | | | | 1,831,276 | | | $ | 17,353,159 | |
Shares reinvested | | | 3,839 | | | | 40,693 | | | | 5,247 | | | | 50,193 | |
Shares redeemed | | | (3,102 | ) | | | (31,695 | ) | | | (710,431 | ) | | | (6,760,000 | ) |
Net increase | | | 227,261 | | | $ | 2,310,549 | | | | 1,126,092 | | | $ | 10,643,352 | |
| | | | | | | | | | | | | | | | |
| INTERMEDIATE GOVERNMENT BOND SERIES | | Six Months Ended
December 31, 2011 | | | Year Ended June 30, 2011 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 111,621 | | | $ | 1,144,766 | | | | 198,575 | | | $ | 1,993,251 | |
Shares reinvested | | | 31,149 | | | | 323,834 | | | | 68,351 | | | | 687,043 | |
Shares redeemed | | | (166,456 | ) | | | (1,723,868 | ) | | | (1,863,726 | ) | | | (18,573,842 | ) |
Net decrease | | | (23,686 | ) | | $ | (255,268 | ) | | | (1,596,800 | ) | | $ | (15,893,548 | ) |
| | * | | Represents the period of commencement of operations (November 1, 2010) through June 30, 2011. |
| 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, 2011, the Alabama Tax-Free Income Series, Kentucky Tax-Free Short-to-Medium Series, North Carolina Tax-Free Income Series, North Carolina Tax-Free Short-to-Medium Series, Tennessee Tax-Free Income Series, Tennessee Tax-Free Short-to-Medium Series, Intermediate Government Bond Series, and the Taxable Municipal Bond Series have capital
53
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 6. | | Federal Income Taxes, continued: |
loss carryforwards which are available to offset future capital gains, if any. As of June 30, 2011, the Kentucky Tax-Free Income Series and the Mississippi Tax-Free Income Series do not have any capital loss carryforwards.
The capital loss carryforwards expire as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | Total | |
Alabama Tax-Free Income Series | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 11,719 | | | $ | 25,322 | | | $ | — | | | $ | 37,041 | |
Kentucky Tax-Free Short-to-Medium Series | | | — | | | | 57,784 | | | | 74,336 | | | | 446,645 | | | | 227,932 | | | | 223,976 | | | | — | | | | — | | | | 1,030,673 | |
North Carolina Tax-Free Income Series | | | 21,780 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 117,110 | | | | — | | | | 138,890 | |
North Carolina Tax-Free Short-to-Medium Series | | | — | | | | — | | | | — | | | | 16,809 | | | | 30,032 | | | | — | | | | — | | | | — | | | | 46,841 | |
Tennessee Tax-Free Income Series | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 823,648 | | | | — | | | | 823,648 | |
Tennessee Tax-Free Short-to-Medium Series | | | — | | | | — | | | | — | | | | 72,502 | | | | 23,418 | | | | — | | | | — | | | | — | | | | 95,920 | |
Intermediate Government Bond Series | | | 35,846 | | | | 2 | | | | 64,306 | | | | 21,144 | | | | — | | | | — | | | | — | | | | — | | | | 121,298 | |
Taxable Municipal Bond Series | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 21,110 | | | | 21,110 | |
During the year ended June 30, 2011, the following Funds utilized capital loss carryforwards as follows:
| | | | |
| | | Amount | |
Alabama Tax-Free Income Series | | $ | 6,579 | |
Kentucky Tax-Free Short-to-Medium Series | | | 199,821 | |
Mississippi Tax-Free Income Series | | | 26,572 | |
North Carolina Tax-Free Income Series | | | 325,856 | |
North Carolina Tax-Free Short-to-Medium Series | | | 32,681 | |
Tennessee Tax-Free Income Series | | | 407,508 | |
Tennessee Tax-Free Short-to-Medium Series | | | 64,940 | |
Intermediate Government Bond Series | | | 12,850 | |
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 2011 as follows:
| | | | |
| | | Post October Losses | |
Intermediate Government Bond Series | | $ | (3,693 | ) |
The tax character of distributions paid for the periods ended June 30, 2011 and 2010 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2011 | | | 2010 | |
| | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | |
Alabama Tax-Free Income Series | | $ | 774,546 | | | $ | — | | | $ | — | | | $ | 656,017 | | | $ | — | | | $ | — | |
Kentucky Tax-Free Income Series | | | 33,202,621 | | | | 3,723 | | | | 2,192,264 | | | | 31,722,118 | | | | — | | | | 1,628,317 | |
Kentucky Tax-Free
Short-to-Medium Series | | | 1,714,591 | | | | — | | | | — | | | | 1,809,942 | | | | — | | | | — | |
Mississippi Tax-Free Income Series | | | 242,439 | | | | — | | | | — | | | | 218,128 | | | | — | | | | — | |
North Carolina Tax-Free Income Series | | | 2,813,638 | | | | — | | | | — | | | | 2,648,834 | | | | — | | | | — | |
North Carolina Tax-Free
Short-to-Medium Series | | | 457,012 | | | | — | | | | — | | | | 372,430 | | | | — | | | | — | |
Tennessee Tax-Free Income Series | | | 3,451,031 | | | | — | | | | — | | | | 3,415,997 | | | | — | | | | — | |
Tennessee Tax-Free
Short-to-Medium Series | | | 249,321 | | | | — | | | | — | | | | 255,710 | | | | — | | | | — | |
Intermediate Government Bond Series | | | — | | | | 1,125,601 | | | | — | | | | — | | | | 1,287,448 | | | | — | |
Taxable Municipal Bond Series | | | — | | | | 457,937 | | | | — | | | | — | | | | — | | | | — | |
54
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 6. | | Federal Income Taxes, continued: |
At June 30, 2011, 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 | | $ | — | | | $ | 81,923 | | | $ | | | | $ | 173,220 | |
Kentucky Tax-Free Income | | | — | | | | 3,373,479 | | | | 3,108,498 | | | | 23,589,127 | |
Kentucky Tax-Free Short-to-Medium | | | — | | | | 43,521 | | | | — | | | | 2,934,123 | |
Mississippi Tax-Free Income | | | — | | | | 31,821 | | | | 16,068 | | | | 15,134 | |
North Carolina Tax-Free Income | | | — | | | | 215,544 | | | | — | | | | 592,675 | |
North Carolina Tax-Free Short-to-Medium | | | — | | | | 11,319 | | | | — | | | | 650,620 | |
Tennessee Tax-Free Income | | | — | | | | 368,520 | | | | — | | | | 1,480,167 | |
Tennessee Tax-Free Short-to-Medium | | | — | | | | 6,060 | | | | — | | | | 152,470 | |
Intermediate Government Bond | | | 17,169 | | | | — | | | | — | | | | (78,978 | ) |
Taxable Municipal Bond Series | | | 39,711 | | | | — | | | | — | | | | 249,671 | |
| | | | | | | | | | | | | | | | |
| | | | | | Accumulated
Capital and
Other Losses | | | Other Temporary
Differences | | | Total
Accumulated
Earnings | |
Alabama Tax-Free Income | | | | | | $ | (37,041 | ) | | $ | (81,923 | ) | | $ | 136,176 | |
Kentucky Tax-Free Income | | | | | | | — | | | | (3,373,473 | ) | | | 26,697,631 | |
Kentucky Tax-Free Short-to-Medium | | | | | | | (1,030,674 | ) | | | (43,521 | ) | | | 1,903,449 | |
Mississippi Tax-Free Income | | | | | | | — | | | | (31,821 | ) | | | 31,202 | |
North Carolina Tax-Free Income | | | | | | | (138,890 | ) | | | (215,544 | ) | | | 453,785 | |
North Carolina Tax-Free Short-to-Medium | | | | | | | (46,841 | ) | | | (11,319 | ) | | | 603,779 | |
Tennessee Tax-Free Income | | | | | | | (823,648 | ) | | | (368,520 | ) | | | 658,519 | |
Tennessee Tax-Free Short-to-Medium | | | | | | | (95,920 | ) | | | (6,060 | ) | | | 56,550 | |
Intermediate Government Bond | | | | | | | (124,992 | ) | | | (17,169 | ) | | | (203,970 | ) |
Taxable Municipal Bond Series | | | | | | | (21,110 | ) | | | (39,711 | ) | | | 228,561 | |
The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Funds. Although the Act provides several benefits, including the unlimited carryover of future capital losses, there may be a greater likelihood that all or a portion of each fund’s pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses get utilized before pre-enactment capital loss carryovers. Relevant information regarding the impact of the Act on the Funds, if any, will be contained within the “Federal Tax Information” section of the financial statement notes.
| 7. | | Contingencies and Commitments |
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which may provide for indemnification. The Funds’ maximum exposure under these arrangements is unknown, as this would involve predicting future claims that may be made against the Funds, if any, that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be immaterial.
| 8. | | Line of Credit Agreement and Custodian Agreement |
Under the terms of an agreement with the Funds’ custodian, principal amounts up to 5% of a Fund’s net assets are available on an uncommitted line of credit. The principal amounts borrowed are due on demand. The agreement expires on September 1,
55
DUPREE MUTUAL FUNDS | UNAUDITED |
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
| 8. | | Line of Credit Agreement and Custodian Agreement, continued: |
2012, 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.
At December 31, 2011, the Funds had an unused line of credit amount of $25,000,000. During the six months ended December 31, 2011, 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 | | $ | 6,734 | |
Kentucky Tax Free Income Series | | | 62,500 | |
Kentucky Tax-Free Short-to-Medium Series | | | 1,880 | |
Mississippi Tax-Free Income Series | | | — | |
North Carolina Tax-Free Income Series | | | 11,864 | |
North Carolina Tax-Free Short-to-Medium Series | | | 13,174 | |
Tennessee Tax-Free Income Series | | | 9,217 | |
Tennessee Tax-Free Short-to-Medium Series | | | — | |
Taxable Municipal Bond Series | | | — | |
Intermediate Government Bond Series | | | 707 | |
The Funds have a contractual agreement with the custodian whereby the Funds compensate the custodian for treasury management 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 Statement of Operations as “Custodian expense reduction.”
56
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
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 Trustee |
| Officers: | | | | | | | | | | |
Thomas P. Dupree Sr. 125 South Mill Street Lexington, KY 40507 Age: 81 | | President | | Annual Term; 32 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: 60 | | Compliance Officer | | Annual Term; 7 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: 49 | | Executive Vice President | | Annual Term; 6 years of service | | President, Dupree & Company, Inc. | | N/A | | International Book Project, Inc. |
Michelle M. Dragoo 125 South Mill Street Lexington, KY 40507 Age: 50 | | Vice President, Secretary, Treasurer | | Annual Term; 13 years of service as Vice President, 11 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: 52 | | Assistant Secretary | | Annual Term; 18 years of service | | Dupree & Company, Inc. | | N/A | | N/A |
| Trustees: | | | | | | | | | | |
William A. Combs, Jr. 111 Woodland Ave.,
#510 Lexington, KY 40502 Age: 71 | | Chairman, Trustee | | Annual Term; 10 years of service as Chairman; 22 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: 49 | | Trustee | | One Year Term; 4 Years of Service | | President, Secretary, Treasurer, Director Office Suites Plus, Inc. (executive office space rental) | | 10 | | Advisory Board, Community Trust Bank; Treasurer/ Director Office Business Center Association International; Vice President, Director, Preferred Office Network, LLC |
Lucy A. Breathitt 1703 Fairway Drive Lexington, KY 40502 Age: 74 | | Trustee | | Annual Term; 15 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: 68 | | Trustee | | Annual Term; 9 years of service | | President, Gess, Mattingly & Atchison, P.S.C. (law firm) | | 10 | | N/A |
57
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
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 Trustee |
Ann Rosenstein Giles 343 Waller Avenue Suite 100 Lexington, KY 40504 Age: 60 | | Trustee | | Annual Term; First year of service | | Rosenstein Development, LLC (self-employed marketing consultant) | | 10 | | Trustee, Transylvania University, KY Historical Society |
Marc A. Mathews Transylvania University 300 N. Broadway Lexington, KY 40508 Age: 53 | | Trustee | | Annual Term; 32 years of service | | Vice President for Finance and Business, Transylvania University 2009 to date; Treasurer, University of Kentucky 2008-2009; Controller, University of Kentucky 2004-2008 | | 10 | | Director, Bank of the Bluegrass |
As of December 31, 2011, 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, 2011, 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 18, 2011, 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.
58
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
Board of Trustees Approval of Existing Advisory Agreements, continued:
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 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, 2010) and unaudited financial statements (nine months ended September 30, 2011) 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, 2011).
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.
59
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
Board of Trustees Approval of Existing Advisory Agreements, continued:
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.
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, 2011, the Investment Adviser processed 14 portfolio purchase transactions and 15 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $16,225 as compared to $16,270 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond index reflects no deduction for fees or expenses. |
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.60% (after waiver of fees), the lowest of seven funds compared by Morningstar |
Kentucky Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2011, the Investment Adviser processed 69 portfolio purchase transactions and 64 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $15,665 as compared to $16,270 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond index reflects no deduction for fees or expenses. |
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of five stars. |
| | · | | As of June 30, 2011, 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, 2011, the Investment Adviser processed 29 portfolio purchase transactions and 17 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $14,073 as compared to $16,273 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, 2011, the Fund received an overall Morningstar rating of three stars |
60
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
Board of Trustees Approval of Existing Advisory Agreements, continued:
| | · | | As of June 30, 2011, 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, 2011, the Investment Adviser processed 15 portfolio purchase transactions and 20 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $15,958 as compared to $16,270 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of four stars |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.58% (after waiver of fees) was the lowest of three funds compared by Morningstar |
North Carolina Tax-Free Income Series
| | · | | For the Fiscal Year ending June 30, 2011, the Investment Adviser processed 23 portfolio purchase transactions and 23 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $15,254 as compared to $16,270 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of four stars |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.70%, the 6th 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, 2011, the Investment Adviser processed 43 portfolio purchase transactions and 9 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $14,359 as compared to $16,273 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of four stars. |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.77%, the 6th lowest of 15 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, 2011, the Investment Adviser processed 9 portfolio purchase transactions and 38 portfolio sale transactions |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $15,292 as compared to $16,270 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
61
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
Board of Trustees Approval of Existing Advisory Agreements, continued:
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of three stars |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.69%, the third lowest of 13 funds compared by Morningstar. The funds with the lower expense ratios are open only to institutional clients with a minimum one million dollar investment. |
Tennessee Tax-Free Short-to-Medium Series
| | · | | For the Fiscal Year ending June 30, 2011, the Investment Adviser processed 11 portfolio purchase transactions and 14 portfolio sale transactions. |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $14,115 as compared to $16,272 for the Barclays Capital Municipal Bond Index. The Barclays Capital Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2011, the Fund received an overall Morningstar rating of three stars. |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.80%, the sixth lowest of 13 funds compared by Morningstar. Two of the funds have a load, two are 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, 2011, the Investment Adviser processed 20 portfolio purchase transactions and 44 portfolio sale transactions. |
| | · | | As of June 30, 2011, the ten year growth of $10,000 invested in the Fund was $16,355 as compared to $16,257 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, 2011, the Fund received an overall Morningstar rating of three stars. |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.46%, the second lowest of 30 funds compared by Morningstar. |
Taxable Municipal Bond Series
| | · | | For the Fiscal Year ending June 30, 2011, the Investment Adviser processed 67 portfolio purchase transactions and 31 portfolio sale transactions. |
| | · | | As of June 30, 2011, the eight month growth of $10,000 invested in the Fund was $10,006 as compared to $10,420 for the Barclays Taxable Municipal Bond Index. The Barclays Taxable Municipal Bond Index reflects no deduction for fees and expenses. |
| | · | | As of June 30, 2011, the Fund was not rated by Morningstar. |
| | · | | As of June 30, 2011, the Fund’s expense ratio was 0.49%, the third lowest of five funds compared by Morningstar. The two funds with the lower expense ratios are Exchange Traded Funds. |
62
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
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, 2011” 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, 2011 | | | Beginning
Account Value
July 1, 2011* | | | Ending
Account Value
December 31, 2011** | | | Expenses Paid During
the Six Months
Ended December 31, 2011 | |
Alabama Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .67 | % | | $ | 1,000.00 | | | $ | 1,030.45 | | | $ | 3.43 | |
| Hypothetical | | | .67 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.42 | |
Kentucky Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .58 | | | | 1,000.00 | | | | 1,029.04 | | | | 2.97 | |
| Hypothetical | | | .58 | | | | 1,000.00 | | | | 1,025.21 | | | | 2.96 | |
Kentucky Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .73 | | | | 1,000.00 | | | | 1,019.11 | | | | 3.71 | |
| Hypothetical | | | .73 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.72 | |
Mississippi Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .65 | | | | 1,000.00 | | | | 1,032.52 | | | | 3.35 | |
| Hypothetical | | | .65 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.34 | |
North Carolina Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .71 | | | | 1,000.00 | | | | 1,031.71 | | | | 3.65 | |
| Hypothetical | | | .71 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.64 | |
North Carolina Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .77 | | | | 1,000.00 | | | | 1,034.60 | | | | 3.92 | |
| Hypothetical | | | .77 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.91 | |
Tennessee Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 1,027.32 | | | | 3.60 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,025.21 | | | | 3.59 | |
63
DUPREE MUTUAL FUNDS | UNAUDITED |
OTHER UNAUDITED INFORMATION
December 31, 2011
Schedule of Shareholder Expenses, continued:
| | | | | | | | | | | | | | | | |
| | | Net Expense
Ratio
Annualized
December 31, 2011 | | | Beginning
Account Value
July 1, 2011* | | | Ending
Account Value
December 31, 2011** | | | Expenses Paid During
the Six Months
Ended December 31, 2011 | |
Tennessee Tax-Free
Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .84 | % | | $ | 1,000.00 | | | $ | 1,013.46 | | | $ | 4.28 | |
| Hypothetical | | | .84 | | | | 1,000.00 | | | | 1,025.21 | | | | 4.30 | |
Intermediate Government Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .50 | | | | 1,000.00 | | | | 1,039.88 | | | | 2.57 | |
| Hypothetical | | | .50 | | | | 1,000.00 | | | | 1,025.21 | | | | 2.55 | |
Taxable Municipal Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .79 | | | | 1,000.00 | | | | 1,126.80 | | | | 4.23 | |
| Hypothetical | | | .79 | | | | 1,000.00 | | | | 1,025.21 | | | | 4.03 | |
| * | | 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 18, 2011. The purpose of the meeting was (i) to elect Messrs. James C. Baughman, Jr., William Combs, Jr., C. Timothy Cone, Marc A. Mathews, Lucy A. Breathitt, and Ann Rosenstein Giles 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, 2012. The results of all matters voted on by shareholders at the Shareholder Meeting held October 18, 2011 were as follows:
| | | | | | | | | | | | |
| | | FOR | | | WITHHELD | | | TOTAL | |
James C. Baughman | | | 98,798,087.928 | | | | 1,225,903.175 | | | | 100,023,991.101 | |
Lucy A. Breathitt | | | 98,693,276.307 | | | | 1,225,903.175 | | | | 99,919,179.482 | |
William A. Combs | | | 99,013,664.154 | | | | 1,225,903.175 | | | | 100,239,567.329 | |
C. Timothy Cone | | | 99,106,716.366 | | | | 1,225,903.175 | | | | 100,332,619.541 | |
Ann Rosenstein Giles | | | 96,984,586.962 | | | | 1,225,903.175 | | | | 98,210,490.135 | |
Marc A. Mathews | | | 98,961,557.293 | | | | 1,225,903.175 | | | | 100,187,460.468 | |
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 2012: |
| | | | | | | | | | | | | | | | |
| | | FOR | | | AGAINST | | | ABSTAIN | | | TOTAL | |
Ernst & Young LLP | | | 98,178,123.742 | | | | 538,506.396 | | | | 1,103,521.780 | | | | 99,820,151.918 | |
| | | | | | | | | | | | | | | | |
| | | FOR | | | AGAINST | | | ABSTAIN | | | TOTAL | |
Other business | | | 86,732,683.156 | | | | 10,292,819.556 | | | | 2,794,649.206 | | | | 99,820,151.918 | |
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 a free copy of 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.
64
Item 2. Not applicable.
Item 3. Audit Committee Financial Expert: Audit Committee Financial Expert: The board does not have a financial expert serving on the audit committee. The registrant’s audit committee is comprised of all Trustees all of whom are non-interested and independent. The audit committee believes that the collective experience and expertise of the members in assessing the performance of companies and the evaluation of financial statements is sufficient to assess the issues which can reasonably be expected to be raised by the Trust’s financial statements.
Item 4. 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 15, 2012 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 15, 2012 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 fiscal quarter of the period covered by this report that materially affected or is reasonably likely to materially affect the Registrant’s financial statements.
Item 12. Exhibits
(a)
(1) Not applicable
(2) Certifications
(3) Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | |
| Dupree Mutual Funds |
| |
| By: | | /S/ MICHELLE M. DRAGOO |
| | Michelle M. Dragoo, |
| | Vice President, Secretary, Treasurer |
Date: February 21, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| |
| By: | | /S/ THOMAS P. DUPREE, SR. |
| | Thomas P. Dupree, Sr., |
| | President |
Date: February 21, 2012
| | |
| |
| By: | | /S/ MICHELLE M. DRAGOO |
| | Michelle M. Dragoo, |
| | Vice President, Secretary, Treasurer |
Date: February 21, 2012
