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, 2014
Date of reporting period: July 1, 2013 through June 30, 2014
Item 1. Report to Stockholders
June 30, 2014
ANNUAL REPORT
TO SHAREHOLDERS
ABOUT DUPREE MUTUAL FUNDS
In 1941, Dupree & Company, Inc. began business in Harlan, Kentucky as a small securities brokerage firm specializing in tax-exempt municipal bonds.
Over the years the firm, which in 1963 moved its offices to Lexington, Kentucky, grew to become a regional leader in public finance, helping to structure complex and innovative municipal bond financing for some of the largest public projects in the Commonwealth of Kentucky.
In 1979, Dupree & Company began what is now Dupree Mutual Funds with the Kentucky Tax-Free Income Series and became the Fund’s investment 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 that shares of the funds are offered directly to investors with no front or back-end sales charges, as opposed to load funds which are sold through brokerage firms or other institutions which typically carry sales charges.
At Dupree Mutual Funds, our goal is a simple one: to offer investors a high-quality, low-cost way to invest in municipal and government bonds while providing superior service to our shareholders. We encourage you to let us know how we’re doing.
TABLE OF CONTENTS
Management’s Discussion of Fund Performance: | Unaudited |
Twelve Months Ended June 30, 2014i
The investment objective of our tax-free municipal bond funds is to provide a high level of tax-free income derived from state-specific municipal bonds without incurring undue risk to principal. The investment objectives of 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 securities, respectively, without incurring undue risk to principal.
This report covers the 12-month period from June 30, 2013 through June 30, 2014 (the “reporting period”). During the first six months of the reporting period the economy grew at a modest pace. Real gross domestic product (GDP) increased at a 2.5 percent annual rate during the third quarter of 2013 and accelerated in the fourth quarter of 2013 with real GDP growing at a 4.1 percent annual rate. However, economic growth contracted at a disappointing rate of -2.1 percent in the first quarter of 2014. The economic slowdown appears to have been the result of transitory factors and an unusually harsh winter. Real GDP for the second quarter of 2014 increased at a 4.0 percent annual rate (advance estimate).The housing sector continued to gradually recover, but housing activity leveled off in the wake of last year’s increase in mortgage rates.
The unemployment rate remained elevated during the reporting period. The seasonally adjusted national unemployment rate stood at 6.1 percent at the end of the reporting period. Over the past year, the unemployment rate has fallen nearly 1- 1/2 points. The current unemployment rate is about 4 percentage points below its peak. However, the labor participation rate, which measures the number of individuals actively seeking employment, was 62.8 percent at the end of June which is a 35-year low. Average hourly earnings for all employees on private nonfarm payrolls increased at an annual rate of 2.0 percent through June which is below average. The slow pace of growth in most measures of hourly compensation and weaker labor force participation indicate that significant slack remains in labor markets.
Key measures of inflation for the most part remained subdued during the reporting period but moved up in recent months. The consumer price index (CPI) increased 2.1 percent on a year-over-year basis through June. Excluding food and energy, the core CPI increased 1.9 percent year-over-year. The Federal Reserve’s preferred inflation index, the personal consumption expenditure core price index (PCE), increased 1.6 percent on a year-over-year basis through June. All of the major inflation indices remained at or below the 2 percent target rate set by the Federal Reserve. Near-term and long-term inflation expectations have remained stable.
Against this backdrop, the Federal Open Market Committee (FOMC) continued to maintain a highly accommodative monetary policy. The FOMC kept the federal funds target rate at 0 to 1/4 percent during the reporting period and through its forward guidance conditionally pledged to keep the target rate at exceptionally low levels through mid-2015. The Fed began tapering its asset purchases in January and currently is on track to fully wind down its long-term securities purchases by October of this year. Even after the FOMC ends its purchases, the Federal Reserve’s sizeable balance sheet will help maintain accommodative financial conditions.
State and local governments continued to successfully address ongoing fiscal challenges during the reporting period. According to data compiled by The Nelson A. Rockefeller Institute of Government (“Rockefeller”), after reaching pre-recession levels, growth in state tax revenues softened in the third and fourth quarters of 2013. This primarily reflected slower economic activity and declines in capital gains and other investment income. Based on preliminary data, Rockefeller estimates that state personal income tax collections fell by 7.1 percent in January-April of 2014 compared to the same period a year earlier. The decline in personal income tax revenues was mostly due to the behavior of taxpayers, who shifted income from tax year 2013 to tax year 2012, to minimize federal tax liability. Although a decline in tax revenues was widely anticipated, the magnitude of the drop in tax receipts surprised officials in many states. Lower state tax revenues may lead to budget shortfalls in a number of jurisdictions.
In contrast to states, local governments rely primarily on property taxes to finance critical local services such as K-12 education, police and fire protection, and other front-line public services. Although property taxes are generally a stable revenue source, the housing bubble and tax limits have combined to weaken local tax collections. This has occurred at the same time that state funding assistance to localities has declined. While there are a number of factors pressuring local governments, housing prices appear to have stabilized in many geographic markets and have actually rebounded sharply in some areas that previously experienced large price declines. This should help property tax collections going forward.
Returns in the municipal bond market were impressive for the 12-month period under review. The Barclays Capital Municipal Bond Index, which tracks investment grade municipal securities across all sectors and maturities, had a total return of 6.14 percent for the twelve month period ended June 30, 2014. The performance of the municipal market during the second half of 2013 was very different than the performance during the first half of 2014.
i
The municipal bond market turned in an essentially flat performance during the second half of 2013. Yields on U.S. Treasuries and municipal bonds increased (prices declined) as concerns about potential interest rate hikes became more prevalent. However, the first half of 2014 was a completely different story. A variety of technical and fundamental factors contributed to a strong rally in the municipal bond market. Improving credit fundamentals for state and local governments; Treasury yields which stayed stubbornly low; slower economic growth; favorable supply/demand patterns; and new and higher taxes boosted demand for municipal bonds. The supply of municipal bonds continued to be constrained as state and local governments have been reluctant to add to their balance sheets. All of these factors acted to push municipal bond prices higher and yields lower during the first half of 2014. The end result was the municipal bond market turned in a strong performance for the 12-month period under review.
The municipal bond market continued to experience some “headline risk” during the review period. The bankruptcy of Detroit led to some volatility in the municipal market as bondholders are facing the prospect of receiving less full value on their claims in the reorganization. More recently, the prices of Puerto Rican bonds have fallen sharply after the government signed off on a law that would allow Puerto Rico to restructure certain debts from its public corporations, like the power authority and highway authority. The new law doesn’t apply to general obligation bonds or certain other bonds secured by sales taxes, but it has nonetheless led to a loss of confidence in Puerto Rican debt. Despite these credit-specific events, the default rate on investment grade municipal bonds remained at or below historical levels.
The Kentucky Tax-Free Income Series provided shareholders a total return of 5.65 percent for the twelve months ended June 30, 2014. The Kentucky Tax-Free Short-to-Medium Series provided shareholders with a total return of 2.35 percent during the period under review. The shorter duration of the funds as compared to the index led to the relative underperformance of the funds during the reporting period.
Kentucky’s economy is still recovering from the national recession that ended in June 2009. For the fiscal year that ended June 30, 2014, General Fund receipts were 1.2 percent higher than FY 13 tax collections. Final FY 14 General Fund revenues were $90.09 million, or 1.0 percent, less than the official revenue estimate which projected 2.2 percent growth. Road Fund collections for FY 14 increased by 4.6 percent from the previous fiscal year but fell short of official consensus estimates by $22.2 million, or 1.4 percent. The Governor signed a budget reduction order in mid-July for FY 14 that uses unexpended General Funds in the operating budgets of state agencies and money from the Budget Reserve Trust Fund to fill the revenue gap. The state’s annual average unemployment rate declined during the reporting period and was 7.4 percent at the end of June. In 2013, Kentucky had a per capita personal income of $36,239 which was below the national average of $44,543.
The state’s appropriation supported debt was rated Aa3 by Moody’s and A+ by Standard & Poor’s as of June 30, 2014. Kentucky had net tax-supported debt per capita of $2,037 as of calendar year-end 2013, which was substantially above the average state net tax-supported debt median of $1,054 (Source: Moody’s Investors Services, 2014 State Debt Medians: Appetite for Borrowing Remains Weak, May 22, 2014).
The Tennessee Tax-Free Income Series provided shareholders with a total return of 5.86 percent for the twelve months ended June 30, 2014. The Tennessee Tax-Free Short-to-Medium Series had a total return of 2.36 percent for the period under review. The shorter duration of the funds as compared to the index led to the relative underperformance of the funds during the reporting period.
Tennessee’s economy has also continued to recover from the national recession. Leisure and hospitality payrolls have led the state’s growth as tourism and convention traffic continues to recover in Nashville. Finance is also another bright spot with UBS announcing a major expansion of its operations in Nashville. Manufacturing has continued to contribute to the overall economy and has largely been driven by strong demand for motor vehicles. The state’s annual average unemployment rate at the end of June was 6.6 percent which was down significantly from 8.4 percent a year earlier. In 2013, the state had a per capita personal income of $39,324 which was below the national average of $44,543.
Tennessee relies on a combination of a state sales tax, corporate income taxes, and the Hall income tax for its revenue. Total state revenue collections through June were $289.9 million less than budgeted. Tennessee franchise and excise tax collections have lagged behind projections. Some of the shortfall in franchise and excise tax collections may be attributable to the relocation by the pharmaceutical giant McKesson Corp. of its Memphis distribution operations across the border to Olive Branch, Mississippi.
Tennessee’s general obligation (G.O.) bonds were rated Aaa by Moody’s and AA+ by Standard & Poor’s as of June 30, 2014. Tennessee had net tax-supported debt per capita of $324 as of calendar year-end 2013, which was substantially below the average state net tax-supported debt median of $1,054 (Source: Moody’s Investors Services, 2014 State Debt Median: Appetite for Borrowing Remains Weak, May 22, 2014).
ii
The North Carolina Tax-Free Income Series provided shareholders with a total return of 5.57 percent for the twelve months ended June 30, 2014. The North Carolina Tax-Free Short-to-Medium Series provided shareholders with a total return of 2.53 percent for the period under review. The shorter duration of the funds as compared to the index led to the relative underperformance of the funds during the reporting period.
North Carolina’s economy has continued to recover from the national recession. The state suffered large job losses during the recession, but the pace of economic activity picked up significantly during the second half of 2013. Economic conditions continued to improve during the first half of 2014. During the past year, North Carolina attracted 42 new factories, 98 manufacturing expansions, and 83 other major facilities such as offices and distribution centers. The state’s average annual unemployment rate at the end of June was 6.4 percent. The unemployment rate has dropped steadily over the past year (at the end of June 2013 the unemployment rate was 8.3 percent). The largest job growth has been in the professional and business services sector followed by trade, transportation & utilities, and leisure and hospitality services. In 2013, North Carolina had a per capita personal income of $38,457 which was below the national average of $44,543.
North Carolina’s G.O. bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s as of June 30, 2014. North Carolina had net tax-supported debt per capita of $806 as of calendar year-end 2013, which was below the average state net tax-supported debt median of $1,054 (Source: Moody’s Investors Services, 2014 State Debt Medians: Appetite for Borrowing Remains Weak, May 22, 2014).
The Alabama Tax-Free Income Series provided shareholders with a total return of 5.56 percent for the twelve months ended June 30, 2014. The shorter duration of the fund as compared to the index led to the relative underperformance of the fund during the reporting period.
Alabama’s economic recovery has continued to lag behind the nation, as continued weakness in the public sector and the prolonged recovery in residential and commercial construction weigh heavily on the state. Manufacturing remains a bright spot in large part to due to strong demand for motor vehicles. A new $600 million Airbus A320 jetliner assembly line is currently under construction in Mobile which will help the manufacturing industry to continue to grow. Alabama’s job market contracted more sharply than the national economy, but recently has showed signs of stabilization. The state’s average annual unemployment rate at the end of June stood at 6.8 percent. In 2013, Alabama had a per capita personal income of $36,501 which was below the national average of $44,543.
Alabama’s G.O. bonds were rated Aa1 by Moody’s and AA by Standard & Poor’s as of June 30, 2014. Alabama had net tax-supported debt per capita of $876 as of calendar year-end 2013, which was lower than the average state net tax-supported debt median of $1,054 (Source: Moody’s Investors Services, 2014 State Debt Medians: Appetite for Borrowing Remains Weak, May 22, 2014).
The Mississippi Tax-Free Income Series had a total return of 6.08 percent for the twelve month period ended June 30, 2014. During the reporting period, the Mississippi Tax-Free Income Series performed in line with the index.
Mississippi’s economic recovery has also continued to lag behind the nation, as labor market fundamentals remain relatively weak. The government is the largest source of jobs and employs roughly one in five residents. State and local government jobs have continued to contract. The strength in construction employment has occurred outside the housing sector and largely reflects a new $5.2 billion power plant that utility Southern Co. is building in Kemper County southwest of Tuscaloosa. The project is the first large-scale power plant in the U.S. designed to transform coal into gas, capture the carbon dioxide and pump it underground. The state’s average annual unemployment rate at the end of June was 7.9 percent which is the highest unemployment rate among the states (along with Rhode Island). In 2013, Mississippi had a per capita personal income of $34,478 which was the lowest in the nation.
The state’s G.O. bonds were rated Aa2 by Moody’s and AA by Standard & Poor’s as of June 30, 2014. Mississippi has net tax-supported debt per capita of $1,746 as of calendar year-end 2013, which was higher than the average state net tax-supported debt median of $1,054 (Source: Moody’s Investors Services, 2014 State Debt Median: Appetite for Borrowing Remains Weak, May 22, 2014).
The Intermediate Government Bond Series had a total return of 4.89 percent for the twelve months ended June 30, 2014. The Barclays Capital U.S. Intermediate Government Bond Index had a total return of 1.53 percent for the one year period ended June 30, 2014. The longer nominal maturity and duration of the Intermediate Government Bond Series led to its relative outperformance as compared to the index during the reporting period.
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The Taxable Municipal Bond Series had a total return of 6.90 percent for the twelve month period ended June 30, 2014. The Barclays Capital Municipal Bond Taxable Index had a total return of 9.47 percent for the same period. The shorter duration of the fund compared to the index led to the relative underperformance of the fund during the reporting period.
Please note that index information is provided for reference only. No index can perfectly match the investments that make up a fund’s portfolio. In making investment decisions for our portfolios we do not attempt to track indices. The Barclays Capital Municipal Bond index is national in scope and does not necessarily reflect the performance of state-specific municipal bond funds. Indices do not take into account any operating expenses or transaction costs. An investment cannot be made directly in an index.
i Data are from the Bureau of Economic Analysis, the U.S. Department of Labor Bureau of Labor Statistics, and various other sources management deems to be reliable. Some of the quoted data are preliminary in nature and may be subject to revision. Any opinions expressed herein are those of the funds’ portfolio management and are current as of June 30, 2014. They are not guarantees of performance or investment results and should not be taken as investment advice. Past performance is not a guarantee of future performance and you may lose money investing in the funds.
iv
The illustrations below provide each Fund’s sector allocation and Unaudited |
summarize key information about each Fund’s investments.
| | | | |
Kentucky Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 3.70% | |
Aa/AA | | | 87.40% | |
A | | | 7.68% | |
Not Rated | | | 1.22% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Miscellaneous Public Improvement | | | 26.96% | |
Municipal Utility Revenue | | | 14.31% | |
Turnpikes and Toll Roads Revenue | | | 11.33% | |
Refunded | | | 9.47% | |
Prerefunded | | | 8.24% | |
University Consolidated Education and Building Revenue | | | 7.51% | |
Hospital and Healthcare Revenue | | | 6.03% | |
School Improvements | | | 5.35% | |
Public Facilities Revenue | | | 3.50% | |
Escrowed to Maturity | | | 3.06% | |
State and Local Mortgage Revenue | | | 2.05% | |
Airport Revenue | | | 0.81% | |
Miscellaneous Revenue | | | 0.24% | |
Other Assets Less Liabilities | | | 1.14% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Kentucky Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 2.17% | |
Aa/AA | | | 89.03% | |
A | | | 8.80% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Miscellaneous Public Improvement | | | 25.34% | |
School Improvements | | | 17.13% | |
Refunded | | | 13.15% | |
Turnpikes and Toll Roads Revenue | | | 10.80% | |
University Consolidated Education and Building Revenue | | | 9.76% | |
Municipal Utility Revenue | | | 8.11% | |
Prerefunded | | | 6.28% | |
Public Facilities Revenue | | | 3.18% | |
Hospital and Healthcare Revenue | | | 3.15% | |
State and Local Mortgage Revenue | | | 1.89% | |
Other Assets Less Liabilities | | | 1.21% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Alabama Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 2.05% | |
Aa/AA | | | 88.95% | |
A | | | 7.43% | |
Baa/BBB | | | 0.52% | |
Not Rated | | | 1.05% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
School Improvement Revenue | | | 26.67% | |
University Consolidated Education and Building Revenue | | | 24.82% | |
Municipal Utility Revenue | | | 19.05% | |
Public Facilities Revenue | | | 13.23% | |
Miscellaneous Public Improvement | | | 6.10% | |
Prerefunded | | | 5.26% | |
Escrowed to Maturity | | | 1.44% | |
Refunded | | | 1.07% | |
State and Local Mortgage Revenue | | | 0.61% | |
Industrial Revenue | | | 0.11% | |
Other Assets Less Liabilities | | | 1.64% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Mississippi Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 0.25% | |
Aa/AA | | | 80.08% | |
A | | | 17.78% | |
Baa/BBB | | | 1.74% | |
Not Rated | | | 0.15% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
University Consolidated Education and Building Revenue | | | 28.28% | |
Public Facilities Revenue | | | 14.72% | |
Turnpikes and Toll Roads Revenue | | | 12.96% | |
Municipal Utility Revenue | | | 12.55% | |
School Improvement Revenue | | | 7.09% | |
Miscellaneous Public Improvement | | | 6.57% | |
Prerefunded | | | 5.65% | |
Hospital and Healthcare Revenue | | | 3.60% | |
Refunded | | | 3.33% | |
Airport Revenue | | | 1.68% | |
State and Local Mortgage Revenue | | | 0.25% | |
Escrowed to Maturity | | | 0.10% | |
Other Assets Less Liabilities | | | 3.22% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
v
The illustrations below provide each Fund’s sector allocation and | Unaudited |
summarize key information about each Fund’s investments.
| | | | |
Tennessee Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 6.42% | |
Aa/AA | | | 85.64% | |
A | | | 7.22% | |
Not Rated | | | 0.72% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Municipal Utility Revenue | | | 42.72% | |
University Consolidated Education and Building Revenue | | | 12.46% | |
Public Facilities Revenue | | | 11.96% | |
Hospital and Healthcare Revenue | | | 8.67% | |
Refunded | | | 6.31% | |
Prerefunded | | | 4.85% | |
State and Local Mortgage Revenue | | | 4.32% | |
School Improvement Revenue | | | 3.96% | |
Miscellaneous Public Improvement | | | 2.16% | |
Escrowed to Maturity | | | 1.14% | |
Industrial Revenue | | | 0.91% | |
Other Assets Less Liabilities | | | 0.54% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Tennessee Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 3.55% | |
Aa/AA | | | 76.99% | |
A | | | 17.27% | |
Not Rated | | | 2.19% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Refunded | | | 20.89% | |
Municipal Utility Revenue | | | 16.98% | |
Miscellaneous Public Improvement | | | 12.29% | |
Prerefunded | | | 10.48% | |
Public Facilities Revenue | | | 9.37% | |
School Improvement Revenue | | | 8.17% | |
Hospital and Healthcare Revenue | | | 6.87% | |
State and Local Mortgage Revenue | | | 5.91% | |
University Consolidated Education and Building Revenue | | | 3.59% | |
Airport Revenue | | | 2.32% | |
Other Assets Less Liabilities | | | 3.13% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
North Carolina Tax-Free Income Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 4.73% | |
Aa/AA | | | 79.98% | |
A | | | 13.50% | |
Baa/BBB | | | 1.20% | |
Not Rated | | | 0.59% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Municipal Utility Revenue | | | 20.65% | |
University Consolidated Education and Building Revenue | | | 18.21% | |
School Improvement Revenue | | | 14.74% | |
Hospital and Healthcare | | | 11.07% | |
Public Facilities Revenue | | | 8.90% | |
Refunding | | | 6.51% | |
Prefunded | | | 5.04% | |
Miscellaneous Public Improvement | | | 4.83% | |
Airport Revenue | | | 4.54% | |
Turnpikes and Toll Roads Revenue | | | 2.14% | |
Lease Revenue | | | 1.75% | |
Other Assets Less Liabilities | | | 1.62% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
North Carolina Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 0.06% | |
Aa/AA | | | 86.77% | |
A | | | 11.44% | |
Not Rated | | | 1.73% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Municipal Utility Revenue | | | 21.96% | |
School Improvement Revenue | | | 16.94% | |
Public Facilities Revenue | | | 14.05% | |
Prefunded | | | 11.98% | |
Refunded | | | 9.48% | |
Miscellaneous Public Improvement | | | 7.41% | |
University Consolidated Education and Building Revenue | | | 6.77% | |
Hospital and Healthcare Revenue | | | 5.37% | |
Airport Revenue | | | 2.28% | |
Turnpikes and Toll Roads Revenue | | | 1.38% | |
Lease Revenue | | | 1.05% | |
State and Local Mortgage Revenue | | | 0.48% | |
Other Assets Less Liabilities | | | 0.85% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
vi
The illustrations below provide each Fund’s sector allocation and | Unaudited |
summarize key information about each Fund’s investments.
| | | | |
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 | | | 59.02% | |
Federal Home Loan Bank | | | 33.39% | |
Federal National Mortgage Association | | | 6.12% | |
Other Assets Less Liabilities | | | 1.47% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | |
Taxable Municipal Bond Series | |
| CREDIT QUALITY (reflects highest credit rating)* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 2.40% | |
Aa/AA | | | 81.33% | |
A | | | 16.27% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Public Facilities Revenue | | | 39.56% | |
Municipal Utility Revenue | | | 25.41% | |
School Improvement Revenue | | | 13.66% | |
Miscellaneous Public Improvement | | | 12.00% | |
University Consolidated Education and Building Revenue | | | 2.96% | |
Turnpikes and Toll Roads Revenue | | | 2.74% | |
Hospital and Healthcare Revenue | | | 2.27% | |
Other Assets Less Liabilities | | | 1.40% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | * | | Bond ratings reflect the highest credit quality rating assigned to a specific bond by a Nationally Recognized Statistical Rating Organization (NRSRO) as of June 30, 2014. |
vii
PERFORMANCE COMPARISON (Unaudited)
The following graphs compare the change in value of a $10,000 investment in each series of Dupree Mutual Funds with the change in value of a $10,000 investment in a comparable index. The comparisons are made over 10 years or since the inception of the series, if shorter than ten years. Results are for the fiscal years ended June 30.
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xii
xiii
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xvi
xvii
xviii
Notes on Graphs:
Results reflect reinvestment of all dividend and capital gain distributions. No index can perfectly match the investments that make up a fund’s portfolio. For each series, we have selected an index that we believe gives the most accurate picture of how the series performed during the reporting period. The investor should understand that an index is a mathematical hypothesis and does not reflect a real market situation. For example, the portfolio of each index is replaced with an entirely different portfolio each year without reflecting operating expenses or transaction costs, an impossibility in reality. On the other hand, the fund’s performance reflects not only these factors but management costs as well. Past performance is not indicative of future results.
The performance tables and the graphs above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Please note that all legacy Lehman Brothers benchmark indices were rebranded as Barclays Capital (“BarCap”) indices in November 2008.
xix
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| SCHOOL IMPROVEMENT BONDS | |
| 26.67% of Net Assets | |
AL State Public Schools & College Authority Capital Improvement | | | 5.000 | % | | | 12/01/2024 | | | Aa1/AA* | | $ | 100,000 | | | $ | 112,657 | |
AL State Public Schools & College Authority Capital Improvement | | | 5.000 | | | | 12/01/2025 | | | Aa1/AA* | | | 640,000 | | | | 719,629 | |
AL State Public School & College Authority Refinancing | | | 5.000 | | | | 05/01/2024 | | | Aa1/AA*/AA+@ | | | 125,000 | | | | 143,070 | |
Elmore County AL Public Education Cooperative | | | 5.000 | | | | 08/01/2032 | | | Aa3 | | | 50,000 | | | | 53,123 | |
Etowah County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 09/01/2037 | | | A+* | | | 200,000 | | | | 217,442 | |
Jasper AL Warrants | | | 5.000 | | | | 03/01/2032 | | | A2/AA* | | | 450,000 | | | | 497,556 | |
Madison County AL Board of Education Capital Outlay Tax | | | 4.950 | | | | 09/01/2025 | | | Aa3/AA* | | | 100,000 | | | | 111,022 | |
Madison County AL Board of Education Capital Outlay Tax | | | 5.100 | | | | 09/01/2028 | | | Aa3/AA* | | | 285,000 | | | | 315,945 | |
Madison County AL Board of Education Capital Outlay Tax | | | 5.125 | | | | 09/01/2034 | | | Aa3/AA* | | | 505,000 | | | | 546,950 | |
Mobile AL Public Education Building Authority | | | 5.000 | | | | 03/01/2033 | | | A3/AA*/AA-@ | | | 200,000 | | | | 213,720 | |
Montgomery County AL Warrants | | | 5.000 | | | | 03/01/2028 | | | Aa1/AA* | | | 175,000 | | | | 190,580 | |
Morgan County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 03/01/2035 | | | AA-* | | | 1,050,000 | | | | 1,142,315 | |
Opelika AL Warrants | | | 5.000 | | | | 11/01/2031 | | | Aa2/AA* | | | 150,000 | | | | 167,523 | |
Phenix City AL School Warrants | | | 5.000 | | | | 08/01/2024 | | | AA-* | | | 80,000 | | | | 86,166 | |
Scottsboro AL Warrants | | | 5.000 | | | | 07/01/2028 | | | A+* | | | 250,000 | | | | 276,050 | |
Shelby County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 02/01/2031 | | | Aa2/A* | | | 615,000 | | | | 672,607 | |
Shelby County AL Board of Education Special Tax School Warrants | | | 5.000 | | | | 02/01/2025 | | | Aa3/A+* | | | 300,000 | | | | 313,929 | |
Sumter County AL Limited Obligation School Warrants | | | 5.100 | | | | 02/01/2034 | | | A* | | | 100,000 | | | | 104,863 | |
Sumter County AL Limited Obligation School Warrants | | | 5.200 | | | | 02/01/2039 | | | A* | | | 95,000 | | | | 98,802 | |
Troy AL Public Educational Building Authority Educational | | | 5.250 | | | | 12/01/2036 | | | A2/AA* | | | 225,000 | | | | 246,373 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,230,322 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 24.82% of Net Assets | |
AL State Private Colleges & Universities Tuskegee University | | | 4.750 | | | | 09/01/2026 | | | AA* | | | 500,000 | | | | 510,600 | |
AL State Board Education Bishop State Community College | | | 4.600 | | | | 01/01/2021 | | | A1 | | | 100,000 | | | | 100,181 | |
AL State University Revenue General Tuition and Fee | | | 5.250 | | | | 09/01/2034 | | | A3/AA* | | | 75,000 | | | | 81,044 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA* | | | 45,000 | | | | 47,871 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA* | | | 300,000 | | | | 329,607 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2033 | | | Aa2/AA* | | | 420,000 | | | | 450,114 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2038 | | | Aa2/AA* | | | 600,000 | | | | 634,494 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2022 | | | Aa2/AA-* | | | 50,000 | | | | 56,008 | |
Auburn University General Fee Revenue | | | 5.000 | | | | 06/01/2036 | | | Aa2/AA-* | | | 150,000 | | | | 164,199 | |
Jacksonville AL State University Revenue Tuition and Fee | | | 5.125 | | | | 12/01/2033 | | | AA* | | | 450,000 | | | | 481,590 | |
Mobile AL Spring Hill College Educational Building | | | 5.100 | | | | 09/01/2019 | | | Baa3 | | | 120,000 | | | | 120,002 | |
Tuscaloosa AL Public Education Building Authority Student Housing | | | 6.375 | | | | 07/01/2028 | | | AA* | | | 250,000 | | | | 285,965 | |
Tuscaloosa AL Public Education Building Authority Student Housing | | | 6.750 | | | | 07/01/2033 | | | AA* | | | 495,000 | | | | 566,330 | |
University of AL General Revenue | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA-*/AA+@ | | | 325,000 | | | | 349,300 | |
University of AL General Revenue | | | 5.000 | | | | 07/01/2032 | | | Aa2/AA-*/AA+@ | | | 500,000 | | | | 530,115 | |
University of Alabama General Revenue | | | 5.000 | | | | 07/01/2034 | | | Aa2/AA-* | | | 250,000 | | | | 271,678 | |
University South AL University Revenues Refunding Tuition | | | 5.000 | | | | 12/01/2029 | | | Aa1/AA+* | | | 105,000 | | | | 113,882 | |
University of Southern AL University Revenues Facilities | | | 5.000 | | | | 08/01/2029 | | | Aa1/AA+* | | | 550,000 | | | | 600,397 | |
University of South AL University Revenues Facilities Capital | | | 4.750 | | | | 08/01/2033 | | | Aa1/AA+* | | | 100,000 | | | | 105,224 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,798,601 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 19.05% of Net Assets | |
Bessemer AL Governmental Utility Services Water Supply | | | 4.750 | | | | 06/01/2033 | | | A2 | | | 100,000 | | | | 103,719 | |
Birmingham AL Waterworks Board Water Revenue | | | 5.000 | | | | 01/01/2026 | | | Aa2/AA* | | | 80,000 | | | | 91,009 | |
Birmingham AL Waterworks Board Water Revenue | | | 4.750 | | | | 01/01/2036 | | | Aa2/AA* | | | 215,000 | | | | 227,941 | |
Birmingham AL Waterworks Board Water Revenue | | | 5.000 | | | | 01/01/2038 | | | Aa2/AA* | | | 550,000 | | | | 602,597 | |
Chatom AL Industrial Board Gulf Opportunity Zone | | | 5.000 | | | | 08/01/2037 | | | A3/AA*/A-@ | | | 150,000 | | | | 162,147 | |
Cullman AL Utility Board Water Revenue | | | 4.750 | | | | 09/01/2037 | | | Aa3/AA* | | | 400,000 | | | | 421,156 | |
Cullman County AL Water Revenue | | | 5.000 | | | | 05/01/2021 | | | A3/AA-* | | | 125,000 | | | | 129,311 | |
Fort Payne AL Waterworks Board Water Revenue | | | 4.750 | | | | 07/01/2034 | | | AA-* | | | 100,000 | | | | 106,115 | |
Huntsville AL Water Systems Revenue | | | 5.000 | | | | 11/01/2033 | | | Aa1/AAA* | | | 300,000 | | | | 329,685 | |
Jasper AL Water Works and Sewer Board Utility Revenue | | | 5.000 | | | | 06/01/2030 | | | A+* | | | 455,000 | | | | 499,863 | |
Limestone County AL Water and Sewer Authority Water Revenue | | | 5.000 | | | | 12/01/2029 | | | A+* | | | 275,000 | | | | 281,688 | |
The accompanying footnotes are an integral part of the financial statements.
1
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Muscle Shoals AL Utilities Board Water and Sewer Revenue | | | 5.750 | % | | | 12/01/2033 | | | AA-* | | $ | 430,000 | | | $ | 486,579 | |
North Marshall AL Utilities Board Water Revenue | | | 5.100 | | | | 10/01/2030 | | | AA* | | | 375,000 | | | | 403,256 | |
Opelika AL Water Board Revenue | | | 5.000 | | | | 06/01/2037 | | | Aa3/AA* | | | 250,000 | | | | 268,360 | |
Opelika AL Water Board Revenue | | | 5.250 | | | | 06/01/2036 | | | Aa3/A+* | | | 70,000 | | | | 76,458 | |
Phenix City AL Water and Sewer Revenue | | | 5.000 | | | | 08/15/2034 | | | A3/AA*/AA-@ | | | 90,000 | | | | 96,892 | |
Tallassee AL Water Gas and Sewer Warrants | | | 5.125 | | | | 05/01/2036 | | | A2/AA* | | | 75,000 | | | | 82,209 | |
West Morgan East Lawrence AL Water and Sewer Revenue | | | 4.750 | | | | 08/15/2030 | | | AA* | | | 75,000 | | | | 80,040 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,449,025 | |
| PUBLIC FACILITIES REVENUE BONDS | |
| 13.23% of Net Assets | |
Anniston AL Public Building Authority DHR Project | | | 5.250 | | | | 05/01/2030 | | | AA-* | | | 50,000 | | | | 55,838 | |
Anniston AL Public Building Authority Revenue | | | 5.500 | | | | 05/01/2033 | | | AA-* | | | 200,000 | | | | 221,495 | |
Anniston AL Public Building Authority | | | 5.000 | | | | 03/01/2032 | | | A2/AA* | | | 400,000 | | | | 437,388 | |
Bessemer AL Public Educational Building Authority Revenue | | | 5.000 | | | | 07/01/2030 | | | AA* | | | 250,000 | | | | 274,113 | |
Huntsville AL Public Building Authority Lease Revenue | | | 5.000 | | | | 10/01/2027 | | | Aa1/AA+* | | | 375,000 | | | | 410,044 | |
Huntsville AL Public Building Authority Lease Revenue | | | 5.000 | | | | 10/01/2033 | | | Aa1/AA+* | | | 175,000 | | | | 189,478 | |
Lowndes County AL Warrants | | | 5.250 | | | | 02/01/2037 | | | A2/AA* | | | 250,000 | | | | 269,578 | |
Montgomery AL Warrants | | | 5.000 | | | | 02/01/2030 | | | A1/AA* | | | 300,000 | | | | 331,290 | |
Montgomery County AL Public Building Authority | | | 5.000 | | | | 03/01/2031 | | | Aa2 | | | 70,000 | | | | 73,571 | |
Trussville AL Warrants | | | 5.000 | | | | 10/01/2039 | | | Aa2/AA+* | | | 750,000 | | | | 826,380 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,089,175 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 6.10% of Net Assets | | | | | | | | | | | | | | | | | | |
AL Incentives Financing Authority Special Obligation | | | 5.000 | | | | 09/01/2029 | | | AA-* | | | 125,000 | | | | 135,761 | |
Daphne AL Warrants | | | 5.000 | | | | 04/01/2023 | | | Aa2/AA+* | | | 250,000 | | | | 268,647 | |
Jasper AL Warrants | | | 5.000 | | | | 03/01/2031 | | | A2/AA* | | | 250,000 | | | | 279,220 | |
Mobile AL Refunding Warrants | | | 5.000 | | | | 02/15/2027 | | | Aa2/AA-* | | | 335,000 | | | | 382,681 | |
Tuscaloosa AL Warrants | | | 5.000 | | | | 10/15/2034 | | | Aa1/AA+* | | | 175,000 | | | | 192,269 | |
Tuscaloosa AL Warrants | | | 5.125 | | | | 01/01/2039 | | | Aa1/AA+* | | | 150,000 | | | | 166,400 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,424,978 | |
| PREREFUNDED BONDS | |
| 5.26% of Net Assets | | | | | | | | | | | | | | | | | | |
Albertville AL Warrants | | | 5.000 | | | | 02/01/2035 | | | AA* | | | 110,000 | | | | 128,919 | |
Enterprise AL Warrants General Obligation | | | 5.000 | | | | 10/01/2019 | | | NR | | | 55,000 | | | | 55,657 | |
Enterprise AL Warrants General Obligation | | | 5.000 | | | | 10/01/2023 | | | NR | | | 50,000 | | | | 50,631 | |
Huntsville AL Health Care Authority | | | 5.000 | | | | 06/01/2024 | | | A1/AA-* | | | 100,000 | | | | 104,426 | |
Montgomery AL Warrants | | | 5.000 | | | | 01/01/2023 | | | A1/AA* | | | 80,000 | | | | 85,595 | |
Montgomery County AL Public Building Authority | | | 5.000 | | | | 03/01/2031 | | | Aa2/AA-* | | | 105,000 | | | | 113,267 | |
Oxford AL Warrants | | | 5.000 | | | | 10/01/2036 | | | Aa2 | | | 50,000 | | | | 53,461 | |
Phenix City AL School Warrants | | | 5.000 | | | | 02/01/2017 | | | NR | | | 120,000 | | | | 133,593 | |
Tuscaloosa AL Warrants | | | 5.000 | | | | 01/01/2030 | | | Aa1/AA+* | | | 150,000 | | | | 152,903 | |
University of AL General Revenue | | | 5.000 | | | | 07/01/2034 | | | Aa2/AA-*/AA+@ | | | 350,000 | | | | 350,720 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,229,172 | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | |
| 1.44% of Net Assets | | | | | | | | | | | | | | | | | | |
West Morgan — East Lawrence Water Authority AL Water Revenue | | | 5.000 | | | | 08/15/2025 | | | A2/AA* | | | 300,000 | | | | 337,230 | |
| | | | | | | | | | | | | | | | | | |
| REFUNDING BONDS | | | | | | | | | | | |
| 1.07% of Net Assets | | | | | | | | | | | | | | | | | | |
Muscle Shoals AL Refunded Warrants | | | 4.600 | | | | 08/01/2024 | | | Aa3 | | | 250,000 | | | | 250,897 | |
| | | | | | | | | | | | | | | | | | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | |
| .61% of Net Assets | | | | | | | | | | | | | | | | | | |
AL Housing Finance Authority Single Family Mortgage Revenue | | | 5.375 | | | | 10/01/2033 | | | Aaa | | | 135,000 | | | | 142,025 | |
| | | | | | | | | | | | | | | | | | |
The accompanying footnotes are an integral part of the financial statements.
2
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| INDUSTRIAL REVENUE/POLLUTION CONTROL BONDS | |
| .11% of Net Assets | | | | | | | | | | | | | | | | | | |
Auburn AL Industrial Development Board Facilities Revenue | | | 6.200 | % | | | 11/01/2020 | | | A* | | $ | 25,000 | | | $ | 25,001 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.36% of Net Assets (cost $21,842,888) (See (a) below for further explanation) | | | | | | | | | $ | 22,976,426 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.64% | | | | | | | | | | 381,952 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 23,358,378 | |
| | | | | | | | | | | | | | | | | | |
| | * | | 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) | | Cost for federal income tax purposes is $21,842,779 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 1,153,940 | |
| | Unrealized depreciation | | | (20,293 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 1,133,647 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 22,976,426 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 22,976,426 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
3
ALABAMA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $21,842,888) | | | | | | $ | 22,976,426 | |
Cash | | | | | | | 188,050 | |
Interest receivable | | | | | | | 319,628 | |
| | | | | | | | |
Total assets | | | | | | | 23,484,104 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 92,854 | | | | | |
Fund shares redeemed | | | 8,903 | | | | | |
Investment advisory fee | | | 8,100 | | | | | |
Transfer agent fee | | | 3,458 | | | | | |
Trustee fees | | | 714 | | | | | |
Accrued expenses | | | 11,697 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 125,726 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 22,329,147 | |
Accumulated net investment income | | | | | | | 109 | |
Accumulated net realized loss on investment transactions | | | | | | | (104,416 | ) |
Net unrealized appreciation in value of investments | | | | | | | 1,133,538 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 23,358,378 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(1,896,260 shares outstanding; unlimited number of shares authorized no par value) | | | | | | $ | 12.32 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 937,333 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 111,606 | |
Transfer agent fee | | | 33,704 | |
Custodian expense | | | 9,166 | |
Professional fees | | | 4,971 | |
Trustees fees | | | 2,490 | |
Other expenses | | | 18,111 | |
| | | | |
Total expenses | | | 180,048 | |
Fees waived by Adviser | | | (19,345 | ) |
Custodian expense reduction | | | (5 | ) |
| | | | |
Net expenses | | | 160,698 | |
| | | | |
Net investment income | | | 776,635 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (104,413 | ) |
Net change in unrealized appreciation/depreciation | | | 478,821 | |
| | | | |
Net realized and unrealized gain on investments | | | 374,408 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,151,043 | |
| | | | |
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 years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 776,635 | | | $ | 842,102 | |
Net realized gain/(loss) on investments | | | (104,413 | ) | | | 30,045 | |
Net change in unrealized appreciation/depreciation | | | 478,821 | | | | (687,104 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 1,151,043 | | | | 185,043 | |
Distributions from net investment income | | | (776,616 | ) | | | (842,439 | ) |
Distributions from capital gains | | | (29,276 | ) | | | (16,538 | ) |
Net fund share transactions (Note 4) | | | (1,286,648 | ) | | | 2,062,926 | |
| | | | | | | | |
Total increase/(decrease) | | | (941,497 | ) | | | 1,388,992 | |
Net assets: | | | | | | | | |
Beginning of year | | | 24,299,875 | | | | 22,910,883 | |
| | | | | | | | |
End of year | | $ | 23,358,378 | | | $ | 24,299,875 | |
| | | | | | | | |
Accumulated net investment income | | $ | 109 | | | $ | 90 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of period | | | $12.10 | | | | $12.41 | | | | $11.72 | | | | $11.77 | | | | $11.40 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.42 | | | | 0.43 | | | | 0.44 | | | | 0.45 | | | | 0.46 | |
Net gains/(losses) on securities | | | 0.23 | | | | (0.30 | ) | | | 0.70 | | | | (0.05 | ) | | | 0.37 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.65 | | | | 0.13 | | | | 1.14 | | | | 0.40 | | | | 0.83 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.42 | ) | | | (0.43 | ) | | | (0.44 | ) | | | (0.45 | ) | | | (0.46 | ) |
Distributions from capital gains | | | (0.01 | ) | | | (0.01 | ) | | | (0.01 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.43 | ) | | | (0.44 | ) | | | (0.45 | ) | | | (0.45 | ) | | | (0.46 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $12.32 | | | | $12.10 | | | | $12.41 | | | | $11.72 | | | | $11.77 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 5.56% | | | | 0.94% | | | | 9.81% | | | | 3.45% | | | | 7.40% | |
Net assets, end of period (in thousands) | | | $23,358 | | | | $24,300 | | | | $22,911 | | | | $21,235 | | | | $19,853 | |
Ratio of net expenses to average net assets (a) | | | 0.72% | | | | 0.70% | | | | 0.68% | | | | 0.60% | | | | 0.47% | |
Ratio of gross expenses to average net assets | | | 0.81% | | | | 0.78% | | | | 0.78% | | | | 0.78% | | | | 0.80% | |
Ratio of net investment income to average net assets | | | 3.48% | | | | 3.40% | | | | 3.59% | | | | 3.83% | | | | 3.94% | |
Portfolio turnover | | | 10.48% | | | | 6.46% | | | | 7.80% | | | | 4.70% | | | | 15.73% | |
| (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. |
The accompanying footnotes are an integral part of the financial statements.
5
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 26.96% of Net Assets | |
KY Asset Liability Commission General Fund | | | 5.000 | % | | | 05/01/2020 | | | Aa3/AA-*/A+@ | | $ | 2,000,000 | | | $ | 2,070,860 | |
KY Asset Liability Commission Project Notes | | | 5.000 | | | | 05/01/2023 | | | Aa3/AA-*/A+@ | | | 5,600,000 | | | | 5,790,736 | |
KY Asset Liability Commission General Fund | | | 5.000 | | | | 05/01/2024 | | | Aa3/AA-*/A+@ | | | 5,880,000 | | | | 6,077,274 | |
KY Asset Liability Commission | | | 5.000 | | | | 05/01/2025 | | | Aa3/AA-*/A+@ | | | 1,000,000 | | | | 1,033,720 | |
KY Association of Counties | | | 5.000 | | | | 02/01/2030 | | | AA-* | | | 625,000 | | | | 674,906 | |
KY Association of Counties | | | 5.000 | | | | 02/01/2032 | | | AA-* | | | 1,000,000 | | | | 1,076,440 | |
KY Association of Counties | | | 5.000 | | | | 02/01/2035 | | | AA-* | | | 995,000 | | | | 1,067,128 | |
KY Bond Corporation Finance Program | | | 5.500 | | | | 02/01/2031 | | | AA-* | | | 1,115,000 | | | | 1,247,206 | |
Ky State Property & Building #93 | | | 5.250 | | | | 02/01/2025 | | | Aa3/AA*/A+@ | | | 7,250,000 | | | | 8,257,025 | |
KY State Property & Building #93 | | | 4.875 | | | | 02/01/2028 | | | Aa3/AA*/A+@ | | | 500,000 | | | | 545,925 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2028 | | | Aa3/AA*/A+@ | | | 10,500,000 | | | | 11,830,875 | |
KY State Property & Building #93 | | | 5.000 | | | | 02/01/2029 | | | Aa3/AA*/A+@ | | | 500,000 | | | | 552,465 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2029 | | | Aa3/AA*/A+@ | | | 22,640,000 | | | | 25,415,438 | |
KY State Property & Building #96 | | | 5.000 | | | | 11/01/2029 | | | Aa3/A+*/A+@ | | | 5,000,000 | | | | 5,559,850 | |
KY State Property & Building #98 | | | 5.000 | | | | 08/01/2021 | | | Aa3/A+*/A+@ | | | 2,505,000 | | | | 2,922,634 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2026 | | | Aa3/A+*/A+@ | | | 2,000,000 | | | | 2,267,240 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2027 | | | Aa3/A+*/A+@ | | | 1,710,000 | | | | 1,922,177 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2028 | | | Aa3/A+*/A+@ | | | 4,000,000 | | | | 4,469,280 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2029 | | | Aa3/A+*/A+@ | | | 2,500,000 | | | | 2,784,900 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2030 | | | Aa3/A+*/A+@ | | | 9,980,000 | | | | 11,063,928 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2031 | | | Aa3/A+*/A+@ | | | 5,100,000 | | | | 5,633,511 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2019 | | | Aa3/AA-*/A+@ | | | 3,000,000 | | | | 3,306,900 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2022 | | | Aa3/AA-*/A+@ | | | 1,665,000 | | | | 1,826,555 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2023 | | | Aa3/AA-*/A+@ | | | 5,175,000 | | | | 5,671,386 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2025 | | | Aa3/AA-*/A+@ | | | 14,835,000 | | | | 16,082,624 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2026 | | | Aa3/AA-*/A+@ | | | 8,230,000 | | | | 8,895,313 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2027 | | | Aa3/AA-*/A+@ | | | 10,290,000 | | | | 11,110,628 | |
KY State Property & Building #88 | | | 5.000 | | | | 11/01/2024 | | | Aa3/AA-*/A+@ | | | 1,355,000 | | | | 1,504,524 | |
KY State Property & Building #88 | | | 4.750 | | | | 11/01/2027 | | | Aa3/AA-*/A+@ | | | 5,800,000 | | | | 6,275,020 | |
KY State Property & Building #76 | | | 5.500 | | | | 08/01/2021 | | | Aa3/A+*/A+@ | | | 1,400,000 | | | | 1,696,463 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2025 | | | Aa3/AA*/A+@ | | | 5,000,000 | | | | 5,702,550 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2026 | | | Aa3/AA*/A+@ | | | 13,390,000 | | | | 15,002,825 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2027 | | | Aa3/AA*/A+@ | | | 4,900,000 | | | | 5,500,985 | |
KY State Property & Building #90 | | | 5.375 | | | | 11/01/2023 | | | Aa3/A+*/A+@ | | | 1,200,000 | | | | 1,395,575 | |
KY State Property & Building #90 | | | 5.500 | | | | 11/01/2028 | | | Aa3/A+*/A+@ | | | 24,805,000 | | | | 28,549,067 | |
KY State Property & Building #91 | | | 5.750 | | | | 04/01/2029 | | | A1/A+*/A@ | | | 210,000 | | | | 233,260 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2017 | | | Aa3/A+*/A+@ | | | 5,000,000 | | | | 5,671,150 | |
KY State Property & Building #105 | | | 4.750 | | | | 04/01/2031 | | | A1/A+*/A@ | | | 2,110,000 | | | | 2,300,616 | |
KY State Property & Building #105 | | | 4.750 | | | | 04/01/2032 | | | A1/A+*/A@ | | | 2,205,000 | | | | 2,393,814 | |
KY State Property & Building #105 | | | 4.750 | | | | 04/01/2033 | | | A1/A+*/A@ | | | 2,310,000 | | | | 2,496,995 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2029 | | | Aa3/A+*/A+@ | | | 4,130,000 | | | | 4,682,181 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2030 | | | Aa3/A+*/A+@ | | | 7,165,000 | | | | 8,062,130 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2031 | | | Aa3/A+*/A+@ | | | 4,910,000 | | | | 5,495,812 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2032 | | | Aa3/A+*/A+@ | | | 6,000,000 | | | | 6,695,760 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2033 | | | Aa3/A+*/A+@ | | | 4,870,000 | | | | 5,410,327 | |
Pendleton County KY Multi-County Lease Revenue | | | 6.400 | | | | 03/01/2019 | | | B* | | | 3,000,000 | | | | 3,202,290 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 261,428,268 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 14.31% of Net Assets | |
Campbell and Kenton Counties Sanitary District No. 1 | | | 5.000 | | | | 08/01/2025 | | | Aa2/AA* | | | 2,395,000 | | | | 2,638,452 | |
Campbell and Kenton Counties Sanitary Sewer | | | 5.000 | | | | 08/01/2026 | | | Aa2/AA* | | | 4,175,000 | | | | 4,610,035 | |
Campbell and Kenton Counties Sanitary Sewer | | | 5.000 | | | | 08/01/2027 | | | Aa2/AA* | | | 4,385,000 | | | | 4,832,139 | |
Campbell and Kenton Counties Sanitary District No. 1 | | | 5.000 | | | | 08/01/2037 | | | Aa2/AA* | | | 11,220,000 | | | | 11,924,167 | |
KY Infrastructure Authority Wastewater and Drinking Water | | | 5.000 | | | | 02/01/2027 | | | Aaa/AAA*/AAA@ | | | 2,500,000 | | | | 2,880,225 | |
KY Infrastructure Authority Wastewater and Drinking Water | | | 5.000 | | | | 02/01/2028 | | | Aaa/AAA*/AAA@ | | | 2,000,000 | | | | 2,297,340 | |
KY Rural Water Financial Corporation Public Project Revenue | | | 5.375 | | | | 02/01/2020 | | | A+* | | | 345,000 | | | | 345,611 | |
The accompanying footnotes are an integral part of the financial statements.
6
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Kentucky Rural Water Financing Corporation | | | 4.500 | % | | | 02/01/2023 | | | A+* | | $ | 1,085,000 | | | $ | 1,240,014 | |
Kentucky Rural Water Financing Corporation | | | 4.500 | | | | 02/01/2024 | | | A+* | | | 880,000 | | | | 992,024 | |
KY Rural Water Finance Corporation | | | 5.125 | | | | 02/01/2035 | | | A+* | | | 525,000 | | | | 562,973 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA*/AA-@ | | | 3,270,000 | | | | 3,509,789 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA*/AA-@ | | | 3,230,000 | | | | 3,461,848 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2032 | | | Aa3/AA*/AA-@ | | | 4,590,000 | | | | 4,855,164 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2036 | | | Aa3/AA*/AA-@ | | | 2,000,000 | | | | 2,111,360 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2024 | | | Aa3/AA* | | | 7,000,000 | | | | 7,842,520 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2025 | | | Aa3/AA* | | | 5,185,000 | | | | 5,794,963 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2021 | | | Aa3/AA* | | | 2,865,000 | | | | 3,343,828 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2023 | | | Aa3/AA* | | | 2,500,000 | | | | 2,892,775 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2034 | | | Aa3/AA*/AA-@ | | | 27,730,000 | | | | 30,696,833 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2022 | | | Aa3 | | | 975,000 | | | | 1,012,372 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2023 | | | Aa3 | | | 1,020,000 | | | | 1,058,648 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2024 | | | Aa3 | | | 1,070,000 | | | | 1,110,061 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/01/2025 | | | Aa3 | | | 1,120,000 | | | | 1,162,235 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA* | | | 4,775,000 | | | | 4,947,760 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2031 | | | Aa3/AA*/AA-@ | | | 2,465,000 | | | | 2,780,988 | |
Louisville & Jefferson County Waterworks | | | 5.000 | | | | 11/15/2027 | | | Aaa/AAA* | | | 2,000,000 | | | | 2,177,900 | |
Louisville & Jefferson County Waterworks | | | 5.000 | | | | 11/15/2031 | | | Aaa/AAA* | | | 10,695,000 | | | | 11,593,701 | |
Northern KY Water District | | | 4.500 | | | | 02/01/2022 | | | Aa3 | | | 1,385,000 | | | | 1,389,238 | |
Northern KY Water District | | | 6.000 | | | | 02/01/2028 | | | Aa3 | | | 1,010,000 | | | | 1,174,640 | |
Northern KY Water District | | | 6.000 | | | | 02/01/2031 | | | Aa3 | | | 1,000,000 | | | | 1,147,280 | |
Northern KY Water District | | | 6.500 | | | | 02/01/2033 | | | Aa3 | | | 1,585,000 | | | | 1,843,846 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2033 | | | Aa3 | | | 3,580,000 | | | | 3,910,935 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2026 | | | Aa3 | | | 1,000,000 | | | | 1,128,260 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2027 | | | Aa3 | | | 4,315,000 | | | | 4,846,738 | |
Owensboro Water Revenue | | | 5.000 | | | | 09/15/2025 | | | A1 | | | 545,000 | | | | 600,688 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 138,717,350 | |
| TURNPIKES/TOLLROAD/HIGHWAY BONDS | |
| 11.33% of Net Assets | |
KY Asset Liability Commission Federal Highway | | | 5.250 | | | | 09/01/2019 | | | A2/AA*/A+@ | | | 1,765,000 | | | | 2,081,447 | |
KY Asset Liability Project | | | 5.000 | | | | 09/01/2021 | | | A2/AA*/A+@ | | | 1,570,000 | | | | 1,831,138 | |
Kentucky Asset Liability Highway Trust | | | 5.000 | | | | 09/01/2022 | | | A2/AA*/A+@ | | | 3,500,000 | | | | 4,051,425 | |
KY Asset Liability Commission Federal Highway Trust | | | 5.250 | | | | 09/01/2025 | | | A2/AA*/A+@ | | | 3,400,000 | | | | 4,036,140 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+*/A+@ | | | 4,720,000 | | | | 5,069,988 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+*/A+@ | | | 3,225,000 | | | | 3,619,192 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2027 | | | Aa2/AA+*/A+@ | | | 9,530,000 | | | | 10,706,574 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA+*/A+@ | | | 2,460,000 | | | | 2,751,584 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA+*/A+@ | | | 4,440,000 | | | | 5,041,664 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2027 | | | Aa2/AA+*/A+@ | | | 3,080,000 | | | | 3,491,118 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA+*/A+@ | | | 10,035,000 | | | | 11,333,830 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+*/A+@ | | | 3,775,000 | | | | 4,367,335 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA+*/A+@ | | | 5,165,000 | | | | 5,918,367 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2030 | | | Aa2/AA+*/A+@ | | | 1,845,000 | | | | 2,106,529 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2024 | | | Aa2/AA+*/A+@ | | | 1,500,000 | | | | 1,763,325 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA+*/A+@ | | | 4,930,000 | | | | 5,672,261 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2030 | | | Aa2/AA+*/A+@ | | | 1,465,000 | | | | 1,675,447 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2031 | | | Aa2/AA+*/A+@ | | | 9,350,000 | | | | 10,607,669 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA+*/A+@ | | | 7,235,000 | | | | 8,279,879 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2032 | | | Aa2/AA+*/A+@ | | | 8,755,000 | | | | 9,800,872 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2033 | | | Aa2/AA+*/A+@ | | | 5,000,000 | | | | 5,682,400 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 109,888,184 | |
| REFUNDED BONDS | |
| 9.47% of Net Assets | |
KY State Property & Building #80 | | | 5.250 | | | | 05/01/2018 | | | Aa3/AA-*/A+@ | | | 2,940,000 | | | | 3,398,228 | |
KY State Property & Building #80 | | | 5.250 | | | | 05/01/2020 | | | Aa3/AA-*/A+@ | | | 1,000,000 | | | | 1,186,030 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2018 | | | Aa3/A+*/A+@ | | | 17,750,000 | | | | 20,602,070 | |
The accompanying footnotes are an integral part of the financial statements.
7
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
KY State Property & Building #83 | | | 5.250 | % | | | 10/01/2020 | | | Aa3/A+*/A+@ | | $ | 24,220,000 | | | $ | 28,902,695 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2019 | | | Aa3/AA-*/A+@ | | | 10,000,000 | | | | 11,702,300 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2021 | | | Aa3/AA-*/A+@ | | | 310,000 | | | | 365,546 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2022 | | | Aa3/AA-*/A+@ | | | 18,000,000 | | | | 21,246,840 | |
KY State Property & Building #104 | | | 5.000 | | | | 11/01/2021 | | | A1/A+*/A@ | | | 2,085,000 | | | | 2,452,189 | |
KY State Property & Building #104 | | | 5.000 | | | | 11/01/2022 | | | A1/A+*/A@ | | | 1,290,000 | | | | 1,517,479 | |
KY State Property & Building #102 | | | 5.000 | | | | 05/01/2024 | | | Aa3/A+*/A+@ | | | 405,000 | | | | 471,473 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 91,844,850 | |
| PREREFUNDED BONDS | |
| 8.24% of Net Assets | |
Barren County KY School District Finance Corporation | | | 4.750 | | | | 08/01/2022 | | | Aa3 | | | 3,085,000 | | | | 3,097,217 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 04/01/2024 | | | Aa2/AA* | | | 6,985,000 | | | | 7,234,854 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 04/01/2025 | | | Aa2/AA* | | | 7,340,000 | | | | 7,602,552 | |
Jefferson County KY School District Finance Corporation | | | 4.500 | | | | 07/01/2023 | | | Aa2/AA* | | | 2,500,000 | | | | 2,705,825 | |
Jefferson County KY School District Finance Corporation | | | 4.625 | | | | 07/01/2025 | | | Aa2/AA* | | | 7,545,000 | | | | 8,189,796 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 07/01/2026 | | | Aa2/AA* | | | 5,025,000 | | | | 5,491,973 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2020 | | | Aa3/AA* | | | 5,760,000 | | | | 6,058,483 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2022 | | | Aa3/AA* | | | 5,200,000 | | | | 5,469,464 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2024 | | | Aa3/AA* | | | 8,300,000 | | | | 8,730,106 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2025 | | | Aa3/AA* | | | 2,500,000 | | | | 2,629,550 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2022 | | | Aa2/AA+*/A+@ | | | 1,625,000 | | | | 1,703,439 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2023 | | | Aa2/AA+*/A+@ | | | 575,000 | | | | 602,755 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2025 | | | Aa2/AA+*/A+@ | | | 2,000,000 | | | | 2,096,540 | |
Knox County General Obligation | | | 5.625 | | | | 06/01/2036 | | | NR | | | 2,490,000 | | | | 2,679,514 | |
Louisville & Jefferson County KY Metropolitan Sewer District | | | 5.000 | | | | 05/15/2015 | | | Aa3/AA* | | | 2,065,000 | | | | 2,151,234 | |
Louisville & Jefferson County KY Metropolitan Sewer District | | | 5.000 | | | | 05/15/2015 | | | Aa3/AA* | | | 2,165,000 | | | | 2,255,410 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2026 | | | Aa3/AA* | | | 9,225,000 | | | | 9,610,236 | |
Louisville & Jefferson County Metropolitan Health — St. Marys | | | 6.125 | | | | 02/01/2037 | | | NR | | | 1,300,000 | | | | 1,541,696 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 79,850,644 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 7.51% of Net Assets | |
Boyle County KY College Improvement — Centre College — A | | | 4.750 | | | | 06/01/2032 | | | A3/AA* | | | 5,330,000 | | | | 5,517,723 | |
KY Asset Liability Commission University of KY Project Notes | | | 5.000 | | | | 10/01/2023 | | | Aa2/AA-* | | | 8,075,000 | | | | 8,509,353 | |
KY Asset Liability Commission University of KY Project Notes | | | 5.000 | | | | 10/01/2024 | | | Aa2/AA-* | | | 7,405,000 | | | | 7,790,875 | |
KY Asset Liability Commission University of KY Project Notes | | | 5.000 | | | | 10/01/2025 | | | Aa2/AA-* | | | 3,700,000 | | | | 3,888,996 | |
KY Asset Liability Commission University of KY Project Notes | | | 5.000 | | | | 10/01/2024 | | | Aa2/AA-* | | | 5,445,000 | | | | 6,069,759 | |
KY Asset Liability Commission University of KY Project Notes | | | 5.000 | | | | 10/01/2026 | | | Aa2/AA-* | | | 6,090,000 | | | | 6,757,950 | |
Louisville & Jefferson County University of Louisville Housing | | | 5.000 | | | | 06/01/2025 | | | NR | | | 2,030,000 | | | | 2,087,632 | |
Louisville & Jefferson County Univeristy of Louisville | | | 4.750 | | | | 03/01/2028 | | | Aa2/AA-* | | | 3,250,000 | | | | 3,545,328 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2036 | | | Aa2/AA-* | | | 4,820,000 | | | | 5,468,194 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2037 | | | Aa2/AA-* | | | 3,815,000 | | | | 4,311,103 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2038 | | | Aa2/AA-* | | | 7,395,000 | | | | 8,343,556 | |
University of Kentucky General Receipts | | | 5.000 | | | | 09/01/2029 | | | Aa2/AA-* | | | 2,280,000 | | | | 2,606,884 | |
University of Louisville | | | 5.000 | | | | 09/01/2030 | | | Aa2/AA-* | | | 440,000 | | | | 500,628 | |
University of Louisville | | | 5.000 | | | | 09/01/2031 | | | Aa2/AA-* | | | 2,580,000 | | | | 2,922,985 | |
Western KY University | | | 4.750 | | | | 09/01/2033 | | | Aa3/A+* | | | 2,505,000 | | | | 2,798,661 | |
Western KY University | | | 5.000 | | | | 05/01/2032 | | | Aa3/A+* | | | 1,500,000 | | | | 1,671,466 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 72,791,093 | |
| HOSPITAL AND HEALTHCARE BONDS | | | | | | | | | | | |
| 6.03% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Development Finance Authority — Baptist Heathcare | | | 5.375 | | | | 08/15/2024 | | | A2/A+@ | | | 1,205,000 | | | | 1,334,465 | |
KY Development Finance Authority — Baptist Healthcare | | | 5.625 | | | | 08/15/2027 | | | A2/A+@ | | | 4,855,000 | | | | 5,335,936 | |
KY Development Finance Authority — St. Elizabeth | | | 5.125 | | | | 05/01/2029 | | | AA*/AA@ | | | 2,750,000 | | | | 2,977,645 | |
KY Development Finance Authority — St. Elizabeth | | | 5.375 | | | | 05/01/2034 | | | AA*/AA@ | | | 2,560,000 | | | | 2,828,058 | |
KY Development Finance Authority — St. Elizabeth | | | 5.500 | | | | 05/01/2039 | | | AA*/AA@ | | | 1,000,000 | | | | 1,100,840 | |
KY Development Finance Authority — Catholic Health | | | 5.000 | | | | 05/01/2029 | | | A1/A+*/A+@ | | | 2,500,000 | | | | 2,505,575 | |
KY Development Finance Authority — Catholic Health | | | 5.000 | | | | 05/01/2029 | | | A1/A+*/A+@ | | | 2,410,000 | | | | 2,576,073 | |
Lexington-Fayette Urban County Government Healthcare | | | 5.250 | | | | 06/01/2028 | | | Aa3/A+*/A+@ | | | 1,000,000 | | | | 1,114,490 | |
The accompanying footnotes are an integral part of the financial statements.
8
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Lexington-Fayette Urban County Government | | | 5.250 | % | | | 06/01/2032 | | | Aa3/A+*/A+@ | | $ | 1,500,000 | | | $ | 1,638,885 | |
Lexington-Fayette Urban County Government Public Facilities | | | 5.000 | | | | 06/01/2033 | | | Aa3/A+*/A+@ | | | 5,000,000 | | | | 5,346,200 | |
Louisville & Jefferson Metropolitan Government Health | | | 5.000 | | | | 10/01/2026 | | | A-*/A-@ | | | 535,000 | | | | 549,402 | |
Louisville & Jefferson County Metropolitan Health — Norton Health | | | 5.000 | | | | 10/01/2030 | | | A-*/A-@ | | | 2,000,000 | | | | 2,045,580 | |
Louisville & Jefferson County Metropolitan Health — Norton Health | | | 5.250 | | | | 10/01/2036 | | | A-*/A-@ | | | 3,460,000 | | | | 3,538,577 | |
Louisville & Jefferson County Metropolitan Health — Norton Health | | | 5.500 | | | | 10/01/2033 | | | A-*/A-@ | | | 2,000,000 | | | | 2,212,040 | |
Louisville & Jefferson County Catholic Health Initiatives | | | 5.000 | | | | 12/01/2030 | | | A1/A+*/A+@ | | | 2,000,000 | | | | 2,195,720 | |
Louisville & Jefferson County Catholic Health Initiatives | | | 5.000 | | | | 12/01/2035 | | | A1/A+*/A+@ | | | 11,325,000 | | | | 12,190,343 | |
Louisville & Jefferson County Catholic Health Initiatives | | | 5.000 | | | | 12/01/2031 | | | A1/A+*/A+@ | | | 2,750,000 | | | | 3,017,135 | |
Pike County KY Mortgage Revenue — Phelps Regional Health | | | 5.650 | | | | 09/20/2027 | | | NR | | | 2,265,000 | | | | 2,268,239 | |
Warren County Hospital | | | 5.000 | | | | 04/01/2028 | | | A* | | | 3,325,000 | | | | 3,663,784 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 58,438,987 | |
| SCHOOL IMPROVEMENT BONDS | | | | | | | | | | | |
| 5.35% of Net Assets | | | | | | | | | | | | | | | | | | |
Campbell County KY School District Finance Corporation | | | 4.500 | | | | 08/01/2023 | | | Aa3 | | | 980,000 | | | | 1,032,272 | |
Fayette County School District Finance Corporation | | | 5.000 | | | | 06/01/2031 | | | A1/A+* | | | 3,705,000 | | | | 4,108,623 | |
Fayette County School District Finance Corporation | | | 5.000 | | | | 10/01/2029 | | | A1/A+* | | | 3,660,000 | | | | 4,205,962 | |
Fayette County School District Finance Corporation | | | 5.000 | | | | 10/01/2032 | | | A1/A+* | | | 3,615,000 | | | | 4,086,034 | |
Fayette County School District Finance Corporation | | | 5.000 | | | | 10/01/2033 | | | A1/A+* | | | 4,385,000 | | | | 4,930,363 | |
Franklin County School Building Revenue | | | 4.750 | | | | 05/01/2027 | | | Aa3 | | | 3,570,000 | | | | 3,788,484 | |
Hardin County School District Finance Corporation | | | 4.750 | | | | 06/01/2027 | | | Aa3 | | | 1,250,000 | | | | 1,330,138 | |
Hardin County School District Finance Corporation | | | 5.000 | | | | 05/01/2030 | | | Aa3 | | | 450,000 | | | | 500,531 | |
Hardin County School District Finance Corporation | | | 5.000 | | | | 05/01/2031 | | | Aa3 | | | 470,000 | | | | 521,553 | |
Jefferson County School District Finance Corporation | | | 4.750 | | | | 06/01/2027 | | | Aa2/AA-* | | | 3,000,000 | | | | 3,204,570 | |
Jefferson County School District Finance Corporation | | | 5.000 | | | | 05/01/2034 | | | Aa2/AA-* | | | 5,405,000 | | | | 6,098,516 | |
Jefferson County KY School District Finance Corporation | | | 4.750 | | | | 12/01/2026 | | | Aa2/AA* | | | 3,770,000 | | | | 4,071,261 | |
Kenton County School District Finance Corporation | | | 5.000 | | | | 02/01/2029 | | | Aa3 | | | 3,270,000 | | | | 3,549,650 | |
Laurel County KY School District Finance Corporation | | | 4.625 | | | | 08/01/2026 | | | Aa3 | | | 3,150,000 | | | | 3,302,240 | |
Laurel County KY School District Finance Corporation | | | 4.750 | | | | 06/01/2026 | | | Aa3 | | | 1,000,000 | | | | 1,069,950 | |
Scott County School District Finance Corporation | | | 4.500 | | | | 01/01/2025 | | | Aa3 | | | 4,890,000 | | | | 5,504,380 | |
Shelby County KY School District Finance Corporation | | | 5.000 | | | | 02/01/2028 | | | Aa3 | | | 500,000 | | | | 535,665 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 51,840,192 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | |
| 3.50% of Net Assets | | | | | | | | | | | | | | | | | | |
Bracken County Public Property | | | 5.000 | | | | 08/01/2029 | | | Aa3 | | | 840,000 | | | | 934,038 | |
Bracken County Public Property | | | 5.000 | | | | 08/01/2030 | | | Aa3 | | | 1,110,000 | | | | 1,226,861 | |
Franklin County Public Properties Justice Center | | | 5.000 | | | | 04/01/2029 | | | Aa3 | | | 2,630,000 | | | | 2,890,186 | |
Louisville & Jefferson County International Convention Center | | | 4.500 | | | | 12/01/2023 | | | A2/AA* | | | 2,340,000 | | | | 2,364,313 | |
Louisville & Jefferson County International Convention Center | | | 4.500 | | | | 12/01/2024 | | | A2/AA* | | | 2,250,000 | | | | 2,273,850 | |
Louisville & Jefferson County International Convention Center | | | 4.600 | | | | 12/01/2025 | | | A2/AA* | | | 1,490,000 | | | | 1,505,764 | |
Louisville & Jefferson County Metropolitan Parking Authority | | | 5.000 | | | | 12/01/2022 | | | Aa2/AA* | | | 625,000 | | | | 714,963 | |
Louisville & Jefferson County Metropolitan Parking Authority | | | 5.750 | | | | 12/01/2034 | | | Aa2/AA* | | | 2,750,000 | | | | 3,213,953 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2029 | | | Aa2/AA* | | | 1,160,000 | | | | 1,294,711 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2031 | | | Aa2/AA* | | | 1,270,000 | | | | 1,408,151 | |
River City, Inc. Parking Authority | | | 5.000 | | | | 06/01/2033 | | | Aa2/AA* | | | 1,395,000 | | | | 1,563,167 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2027 | | | Aa2/AA* | | | 750,000 | | | | 848,265 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2028 | | | Aa2/AA* | | | 940,000 | | | | 1,055,357 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2029 | | | Aa2/AA* | | | 980,000 | | | | 1,093,807 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2030 | | | Aa2/AA* | | | 1,025,000 | | | | 1,142,352 | |
River City, Inc. Parking Authority | | | 5.000 | | | | 06/01/2031 | | | Aa2/AA* | | | 1,080,000 | | | | 1,219,946 | |
River City, Inc. Parking Authority | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA* | | | 1,130,000 | | | | 1,270,843 | |
Taylor County Detention Facility | | | 4.750 | | | | 09/01/2027 | | | Aa3 | | | 2,110,000 | | | | 2,216,893 | |
Warren County Downtown Economic Development Authority | | | 5.000 | | | | 06/01/2038 | | | AA-* | | | 2,345,000 | | | | 2,563,412 | |
Wolfe County Public Property | | | 5.000 | | | | 04/01/2030 | | | Aa3 | | | 2,855,000 | | | | 3,175,245 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 33,976,077 | |
The accompanying footnotes are an integral part of the financial statements.
9
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| ESCROWED TO MATURITY BONDS | |
| 3.06% of Net Assets | |
Jefferson County KY Health Facilities — Alliant Health | | | 5.125 | % | | | 10/01/2017 | | | AA-* | | $ | 3,980,000 | | | $ | 4,189,507 | |
Jefferson County KY Health Facilities — Alliant Health | | | 5.125 | | | | 10/01/2018 | | | AA-* | | | 23,905,000 | | | | 25,445,677 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 29,635,184 | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | |
| 2.05% of Net Assets | |
Greater KY Housing Assistance Corporation — Chenowith Woods | | | 6.100 | | | | 01/01/2024 | | | A3/AA-* | | | 375,000 | | | | 375,199 | |
KY Economic Development Finance Authority — Christian Care | | | 5.375 | | | | 11/20/2035 | | | AA+* | | | 1,905,000 | | | | 2,002,041 | |
KY Housing Corporation Country Place Apartments | | | 4.750 | | | | 04/20/2031 | | | AA+* | | | 935,000 | | | | 992,344 | |
KY Housing Corporation | | | 4.750 | | | | 07/01/2032 | | | Aaa/AAA* | | | 1,265,000 | | | | 1,295,866 | |
KY Housing Corporation | | | 4.900 | | | | 07/01/2028 | | | Aaa/AAA* | | | 2,000,000 | | | | 2,070,500 | |
KY Housing Corporation | | | 5.000 | | | | 07/01/2033 | | | Aaa/AAA* | | | 1,695,000 | | | | 1,742,511 | |
KY Housing Corporation | | | 4.875 | | | | 07/01/2023 | | | Aaa/AAA* | | | 1,535,000 | | | | 1,592,716 | |
KY Housing Corporation | | | 4.850 | | | | 07/01/2029 | | | Aaa/AAA* | | | 3,200,000 | | | | 3,363,552 | |
KY Housing Corporation | | | 5.150 | | | | 07/01/2039 | | | Aaa/AAA* | | | 2,050,000 | | | | 2,154,878 | |
KY Housing Corporation | | | 4.750 | | | | 07/01/2035 | | | Aaa/AAA* | | | 4,140,000 | | | | 4,312,761 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 19,902,368 | |
| AIRPORT BONDS | |
| .81% of Net Assets | |
Lexington-Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2028 | | | Aa2/AA* | | | 1,170,000 | | | | 1,313,267 | |
Lexington-Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2030 | | | Aa2/AA* | | | 1,250,000 | | | | 1,390,950 | |
Lexington-Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2032 | | | Aa2/AA* | | | 1,430,000 | | | | 1,578,591 | |
Lexington-Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2033 | | | Aa2/AA* | | | 1,520,000 | | | | 1,672,365 | |
Lexington-Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2038 | | | Aa2/AA* | | | 1,720,000 | | | | 1,863,740 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,818,913 | |
| MISCELLANEOUS REVENUE BONDS | |
| .24% of Net Assets | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2028 | | | Aa3/A+*/A+@ | | | 2,030,000 | | | | 2,317,042 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.86% of Net Assets (cost $902,011,069) (See (a) below for further explanation) | | | | | | | | | $ | 958,449,152 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.14% | | | | | | | | | | | | | | | | | 11,100,067 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 969,549,219 | |
| | | | | | | | | | | | | | | | | | |
| | * | | 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) | | Cost for federal income tax purposes is $901,973,292 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 57,853,495 | |
| | Unrealized depreciation | | | (1,377,635 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 56,475,860 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 958,449,152 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 958,449,152 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
10
KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $902,011,069) | | | | | | $ | 958,449,152 | |
Cash | | | | | | | 2,772,503 | |
Receivable for fund shares sold | | | | | | | 112,704 | |
Interest receivable | | | | | | | 12,811,276 | |
| | | | | | | | |
Total assets | | | | | | | 974,145,635 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 3,348,541 | | | | | |
Fund shares redeemed | | | 457,151 | | | | | |
Investment advisory fee | | | 299,137 | | | | | |
Transfer agent fee | | | 95,443 | | | | | |
Trustees fees | | | 52,232 | | | | | |
Accrued expenses | | | 343,912 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 4,596,416 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 912,692,808 | |
Accumulated net investment income | | | | | | | 37,777 | |
Accumulated net realized gain on investment transactions | | | | | | | 380,551 | |
Net unrealized appreciation in value of investments | | | | | | | 56,438,083 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 969,549,219 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(122,824,492 shares outstanding; unlimited number of shares authorized no par value) | | | | | | $ | 7.89 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 37,857,860 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 3,576,703 | |
Transfer agent fee | | | 1,159,557 | |
Custodian expense | | | 98,299 | |
Professional fees | | | 206,497 | |
Trustees fees | | | 102,940 | |
Other expenses | | | 226,320 | |
| | | | |
Total expenses | | | 5,370,316 | |
Custodian expense reduction | | | (212 | ) |
| | | | |
Net expenses | | | 5,370,104 | |
| | | | |
Net investment income | | | 32,487,756 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 1,367,897 | |
Net change in unrealized appreciation/depreciation | | | 18,191,482 | |
| | | | |
Net realized and unrealized gain on investments | | | 19,559,379 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 52,047,135 | |
| | | | |
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 years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 32,487,756 | | | $ | 33,453,684 | |
Net realized gain on investments | | | 1,367,897 | | | | 382,491 | |
Net change in unrealized appreciation/depreciation | | | 18,191,482 | | | | (31,045,800 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 52,047,135 | | | | 2,790,375 | |
Distributions from net investment income | | | (32,479,238 | ) | | | (33,471,869 | ) |
Distributions from capital gains | | | (1,302,574 | ) | | | (146,341 | ) |
Net fund share transactions (Note 4) | | | 3,007,520 | | | | (10,299,757 | ) |
| | | | | | | | |
Total increase/(decrease) | | | 21,272,843 | | | | (41,127,592 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 948,276,376 | | | | 989,403,968 | |
| | | | | | | | |
End of year | | $ | 969,549,219 | | | $ | 948,276,376 | |
| | | | | | | | |
Accumulated net investment income | | $ | 37,777 | | | $ | 29,294 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $7.74 | | | | $7.99 | | | | $7.63 | | | | $7.67 | | | | $7.49 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.27 | | | | 0.27 | | | | 0.28 | | | | 0.29 | | | | 0.29 | |
Net gains/(losses) on securities | | | 0.16 | | | | (0.25 | ) | | | 0.39 | | | | (0.02 | ) | | | 0.20 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.43 | | | | 0.02 | | | | 0.67 | | | | 0.27 | | | | 0.49 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.27 | ) | | | (0.27 | ) | | | (0.28 | ) | | | (0.29 | ) | | | (0.29 | ) |
Distributions from capital gains | | | (0.01 | ) | | | 0.00 | (b) | | | (0.03 | ) | | | (0.02 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.28 | ) | | | (0.27 | ) | | | (0.31 | ) | | | (0.31 | ) | | | (0.31 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $7.89 | | | | $7.74 | | | | $7.99 | | | | $7.63 | | | | $7.67 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 5.65% | | | | 0.17% | | | | 8.97% | | | | 3.57% | | | | 6.58% | |
Net assets, end of year (in thousands) | | | $969,549 | | | | $948,276 | | | | $989,404 | | | | $896,625 | | | | $882,897 | |
Ratio of net expenses to average net assets (a) | | | 0.57% | | | | 0.57% | | | | 0.57% | | | | 0.58% | | | | 0.58% | |
Ratio of gross expenses to average net assets | | | 0.57% | | | | 0.57% | | | | 0.57% | | | | 0.58% | | | | 0.58% | |
Ratio of net investment income to average net assets | | | 3.45% | | | | 3.35% | | | | 3.60% | | | | 3.78% | | | | 3.81% | |
Portfolio turnover | | | 9.43% | | | | 7.02% | | | | 8.39% | | | | 11.42% | | | | 4.76% | |
| (a) | | Percentages are after custodian reduction for which no recovery will be sought. |
| (b) | | Rounds to less than $0.01. |
The accompanying footnotes are an integral part of the financial statements.
12
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 25.34% of Net Assets | |
KY Asset Liability Commission | | | 5.000 | % | | | 05/01/2016 | | | Aa3/AA-*/A+@ | | $ | 1,000,000 | | | $ | 1,038,700 | |
KY Association of Counties | | | 4.250 | | | | 02/01/2017 | | | AA-* | | | 500,000 | | | | 531,595 | |
KY Association of Counties | | | 4.000 | | | | 02/01/2018 | | | AA-* | | | 115,000 | | | | 126,866 | |
KY Association of Counties | | | 4.250 | | | | 02/01/2019 | | | AA-* | | | 255,000 | | | | 286,447 | |
KY State Property & Building #94 | | | 5.000 | | | | 05/01/2017 | | | Aa2/A+*/A+@ | | | 500,000 | | | | 558,020 | |
KY State Property & Building #95 | | | 5.000 | | | | 08/01/2017 | | | Aa3/A+*/A+@ | | | 200,000 | | | | 225,684 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2019 | | | Aa3/A+*/A+@ | | | 100,000 | | | | 116,916 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2017 | | | Aa3/A+*/A+@ | | | 500,000 | | | | 564,210 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2025 | | | Aa3/A+*/A+@ | | | 500,000 | | | | 571,625 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2017 | | | Aa3/AA-*/A+@ | | | 850,000 | | | | 944,571 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2018 | | | Aa3/AA-*/A+@ | | | 100,000 | | | | 111,041 | |
KY State Property & Building #87 | | | 5.000 | | | | 03/01/2020 | | | Aa3/AA-*/A+@ | | | 4,500,000 | | | | 4,970,385 | |
KY State Property & Building #88 | | | 5.000 | | | | 11/01/2014 | | | Aa3/AA-*/A+@ | | | 250,000 | | | | 254,030 | |
KY State Property & Building #88 | | | 5.000 | | | | 11/01/2015 | | | Aa3/AA-*/A+@ | | | 955,000 | | | | 1,015,203 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2015 | | | Aa3/AA*/A+@ | | �� | 2,230,000 | | | | 2,370,579 | |
KY State Property & Building #89 | | | 3.750 | | | | 11/01/2017 | | | Aa3/AA*/A+@ | | | 100,000 | | | | 109,449 | |
KY State Property & Building #76 | | | 5.500 | | | | 08/01/2017 | | | Aa3/A+*/A+@ | | | 190,000 | | | | 217,292 | |
KY State Property & Building #76 | | | 5.500 | | | | 08/01/2018 | | | Aa3/A+*/A+@ | | | 1,415,000 | | | | 1,659,993 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2020 | | | Aa3/AA*/A+@ | | | 200,000 | | | | 229,368 | |
KY State Property & Building #90 | | | 5.000 | | | | 11/01/2015 | | | Aa3/A+*/A+@ | | | 250,000 | | | | 265,795 | |
KY State Property & Building #90 | | | 5.000 | | | | 11/01/2018 | | | Aa3/A+*/A+@ | | | 250,000 | | | | 290,248 | |
KY State Property & Building #90 | | | 5.750 | | | | 11/01/2019 | | | Aa3/A+*/A+@ | | | 200,000 | | | | 238,148 | |
KY State Property & Building #90 | | | 5.000 | | | | 11/01/2020 | | | Aa3/A+*/A+@ | | | 495,000 | | | | 569,710 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2017 | | | Aa3/A+*/A+@ | | | 100,000 | | | | 113,423 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2018 | | | Aa3/A+*/A+@ | | | 510,000 | | | | 584,409 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2021 | | | Aa3/AA*/A+@ | | | 200,000 | | | | 231,194 | |
KY State Property & Building #85 | | | 5.000 | | | | 08/01/2016 | | | Aa3/AA*/A+@ | | | 835,000 | | | | 875,923 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2021 | | | Aa3/A+*/A+@ | | | 750,000 | | | | 887,288 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2025 | | | Aa3/A+*/A+@ | | | 750,000 | | | | 874,335 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 20,832,447 | |
| SCHOOL IMPROVEMENT BONDS | |
| 17.13% of Net Assets | |
Boone County School District Finance Corporation | | | 4.000 | | | | 08/01/2018 | | | Aa3 | | | 145,000 | | | | 149,064 | |
Breathitt County School District Finance Corporation | | | 3.875 | | | | 07/01/2017 | | | Aa3 | | | 280,000 | | | | 288,638 | |
Bullitt County KY School District Finance Corporation | | | 4.000 | | | | 10/01/2014 | | | Aa3 | | | 150,000 | | | | 151,428 | |
Campbell County School District Finance Corporation | | | 4.375 | | | | 08/01/2019 | | | Aa3 | | | 875,000 | | | | 931,123 | |
Corbin KY Independent School District | | | 4.000 | | | | 02/01/2018 | | | Aa3 | | | 300,000 | | | | 318,558 | |
Daviess County School District Finance Corporation | | | 4.250 | | | | 08/01/2019 | | | Aa3 | | | 100,000 | | | | 108,958 | |
Fayette County School District Finance Corporation | | | 4.000 | | | | 06/01/2019 | | | A1/AA* | | | 140,000 | | | | 145,985 | |
Fayette County School District Finance Corporation | | | 4.375 | | | | 05/01/2021 | | | A1/AA* | | | 200,000 | | | | 214,402 | |
Fayette County School District Finance Corporation | | | 4.000 | | | | 06/01/2022 | | | A1/A+* | | | 1,000,000 | | | | 1,104,120 | |
Fayette County School District Finance Corporation | | | 5.000 | | | | 06/01/2023 | | | Aa3/A+* | | | 500,000 | | | | 594,530 | |
Gallatin County School District Finance Corporation | | | 4.000 | | | | 05/01/2016 | | | Aa3 | | | 175,000 | | | | 186,380 | |
Grant County School District Finance Corporation | | | 3.750 | | | | 06/01/2017 | | | Aa3 | | | 190,000 | | | | 202,091 | |
Hardin County School District Finance Corporation | | | 4.000 | | | | 02/01/2019 | | | Aa3 | | | 1,475,000 | | | | 1,495,208 | |
Hazard KY Independent School District Finance Corporation | | | 3.850 | | | | 09/01/2017 | | | Aa3 | | | 200,000 | | | | 206,822 | |
Jefferson County School District Finance Corporation | | | 5.250 | | | | 01/01/2017 | | | Aa2/AA* | | | 200,000 | | | | 220,958 | |
Jessamine County KY School District | | | 4.100 | | | | 01/01/2018 | | | Aa3 | | | 100,000 | | | | 101,399 | |
Johnson County School District Finance Corporation | | | 3.000 | | | | 12/01/2019 | | | Aa3 | | | 180,000 | | | | 193,711 | |
KY Interlocal School Transportation Assistance Equipment | | | 3.750 | | | | 03/01/2015 | | | Aa3 | | | 770,000 | | | | 771,463 | |
Madison County KY School District Finance Corporation | | | 3.600 | | | | 02/01/2017 | | | Aa3 | | | 300,000 | | | | 304,509 | |
Oldham County School Building Corporation | | | 4.375 | | | | 06/01/2018 | | | Aa3 | | | 2,570,000 | | | | 2,774,906 | |
Pendleton County School District Finance Corporation | | | 4.000 | | | | 02/01/2020 | | | Aa3 | | | 450,000 | | | | 473,382 | |
Warren County KY School District Finance Corporation | | | 4.000 | | | | 02/01/2015 | | | Aa3 | | | 785,000 | | | | 801,854 | |
Warren County KY School District Finance Corporation | | | 4.000 | | | | 02/01/2016 | | | Aa3 | | | 1,330,000 | | | | 1,401,926 | |
The accompanying footnotes are an integral part of the financial statements.
13
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Warren County KY School District Finance Corporation | | | 4.000 | % | | | 04/01/2018 | | | Aa3 | | $ | 125,000 | | | $ | 138,144 | |
Warren County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2022 | | | Aa3 | | | 725,000 | | | | 805,990 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 14,085,549 | |
| REFUNDED BONDS | |
| 13.15% of Net Assets | |
KY State Property & Building #82 | | | 5.250 | | | | 10/01/2015 | | | Aa3/AA*/A+@ | | | 2,525,000 | | | | 2,681,828 | |
KY State Property & Building #82 | | | 5.250 | | | | 10/01/2017 | | | Aa3/AA*/A+@ | | | 1,260,000 | | | | 1,439,222 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2016 | | | Aa3/A+*/A+@ | | | 775,000 | | | | 852,104 | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2019 | | | Aa3/A+*/A+@ | | | 1,750,000 | | | | 2,064,055 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2019 | | | Aa3/AA-*/A+@ | | | 1,000,000 | | | | 1,170,230 | |
KY State Property & Building #101 | | | 5.000 | | | | 10/01/2019 | | | Aa3/A+*/A+@ | | | 1,050,000 | | | | 1,233,782 | |
KY State Property & Building #104 | | | 5.000 | | | | 11/01/2021 | | | A1/A+*/A@ | | | 1,000,000 | | | | 1,176,110 | |
Lexington-Fayette Urban County Government Public Property | | | 4.000 | | | | 05/01/2017 | | | Aa2/AA* | | | 180,000 | | | | 194,701 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 10,812,032 | |
| TURNPIKES/TOLLROAD/HIGHWAY BONDS | |
| 10.80% of Net Assets | |
KY Asset Liability Project Notes | | | 5.000 | | | | 09/01/2015 | | | A2/AA*/A+@ | | | 275,000 | | | | 290,243 | |
KY Asset Liability Project Notes | | | 4.500 | | | | 09/01/2016 | | | A2/AA*/A+@ | | | 175,000 | | | | 190,045 | |
KY Asset Liability Project Notes | | | 5.000 | | | | 09/01/2017 | | | A2/AA*/A+@ | | | 1,500,000 | | | | 1,695,750 | |
KY Asset Liability Project Notes | | | 4.300 | | | | 09/01/2019 | | | A2/AA*/A+@ | | | 900,000 | | | | 986,796 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2017 | | | Aa2/AA+*/A+@ | | | 2,570,000 | | | | 2,796,391 | |
KY Turnpike Authority Economic Development | | | 4.125 | | | | 07/01/2019 | | | Aa2/AA+*/A+@ | | | 105,000 | | | | 116,273 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2016 | | | Aa2/AA+*/A+@ | | | 750,000 | | | | 820,020 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2024 | | | Aa2/AA+*/A+@ | | | 1,000,000 | | | | 1,170,890 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2023 | | | Aa2/AA+*/A+@ | | | 600,000 | | | | 713,454 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2024 | | | Aa2/AA+*/A+@ | | | 85,000 | | | | 99,922 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 8,879,784 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 9.76% of Net Assets | |
Boyle County Centre College | | | 5.000 | | | | 06/01/2018 | | | A3/AA* | | | 200,000 | | | | 221,982 | |
Boyle County Centre College | | | 5.000 | | | | 06/01/2020 | | | A3/AA* | | | 150,000 | | | | 162,786 | |
KY Asset Liability University of Kentucky Project Notes | | | 5.000 | | | | 10/01/2016 | | | Aa2/AA-* | | | 1,250,000 | | | | 1,321,612 | |
KY Asset Liability Project Notes | | | 4.400 | | | | 10/01/2019 | | | Aa2/AA-* | | | 1,750,000 | | | | 1,829,258 | |
Ky Asset Liability University of Kentucky Project Notes | | | 4.450 | | | | 10/01/2020 | | | Aa2/AA-* | | | 500,000 | | | | 522,505 | |
KY Asset Liability Commission University of Kentucky Project | | | 5.000 | | | | 10/01/2019 | | | Aa2/AA-* | | | 320,000 | | | | 360,752 | |
KY Asset Liability — University of Kentucky | | | 4.000 | | | | 10/01/2019 | | | Aa2/AA-* | | | 100,000 | | | | 106,735 | |
Louisville & Jefferson County University of Louisville | | | 4.000 | | | | 03/01/2020 | | | Aa2/AA-* | | | 300,000 | | | | 323,550 | |
Morehead State University^ | | | 5.000 | | | | 10/01/2022 | | | Aa3 | | | 310,000 | | | | 367,966 | |
Northern Ky University General Receipts | | | 4.000 | | | | 09/01/2018 | | | Aa3/A+* | | | 150,000 | | | | 166,512 | |
Western KY University | | | 4.000 | | | | 09/01/2020 | | | Aa3/AA-* | | | 290,000 | | | | 307,905 | |
Western Ky University** | | | 4.000 | | | | 09/01/2017 | | | Aa3/AA* | | | 2,145,000 | | | | 2,332,602 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 8,024,165 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 8.11% of Net Assets | |
Bourbon County Public Project | | | 3.800 | | | | 02/01/2019 | | | A2 | | | 260,000 | | | | 272,405 | |
KY Infrastructure Authority Wastewater & Drinking Water | | | 5.000 | | | | 02/01/2025 | | | Aaa/AAA*/AAA@ | | | 175,000 | | | | 206,117 | |
Kentucky Rural Water Finance Corporation | | | 3.000 | | | | 02/01/2018 | | | A+* | | | 530,000 | | | | 560,125 | |
Kentucky Rural Water Finance Corporation | | | 3.000 | | | | 08/01/2019 | | | A+* | | | 545,000 | | | | 575,831 | |
Kentucky Rural Water Finance Corporation | | | 3.000 | | | | 02/01/2018 | | | A+* | | | 300,000 | | | | 316,836 | |
Kentucky Rural Water Finance Corporation | | | 3.000 | | | | 02/01/2019 | | | A+* | | | 250,000 | | | | 263,373 | |
Kentucky Rural Water Finance Corporation | | | 3.625 | | | | 02/01/2016 | | | A3/AA-* | | | 45,000 | | | | 45,292 | |
Kentucky Rural Water Finance Corporation | | | 4.500 | | | | 08/01/2021 | | | A3/AA-* | | | 100,000 | | | | 108,760 | |
Lawrenceburg Water and Sewer | | | 3.000 | | | | 10/01/2018 | | | A1 | | | 375,000 | | | | 394,597 | |
Louisville & Jefferson County Municipal Sewer | | | 5.000 | | | | 05/15/2018 | | | Aa3/AA*/AA-@ | | | 1,220,000 | | | | 1,318,735 | |
Louisville & Jefferson County Municipal Sewer | | | 5.000 | | | | 05/15/2016 | | | Aa3/AA* | | | 100,000 | | | | 108,740 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2015 | | | Aa3/AA* | | | 500,000 | | | | 520,745 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2015 | | | Aa3/AA* | | | 1,000,000 | | | | 1,041,130 | |
The accompanying footnotes are an integral part of the financial statements.
14
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | % | | | 05/15/2016 | | | Aa3/AA* | | $ | 175,000 | | | $ | 182,244 | |
Paducah Electric Plant | | | 3.000 | | | | 10/01/2014 | | | A3/A-@ | | | 750,000 | | | | 754,590 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,669,520 | |
| PREREFUNDED BONDS | |
| 6.28% of Net Assets | |
Clay County School District Finance Corporation | | | 3.750 | | | | 06/01/2017 | | | Aa3 | | | 210,000 | | | | 216,884 | |
Jefferson County School District School Building Revenue | | | 4.250 | | | | 07/01/2017 | | | Aa2/AA* | | | 175,000 | | | | 188,610 | |
KY Asset Liability Project Notes | | | 5.000 | | | | 09/01/2016 | | | A2/AA*/A+@ | | | 2,000,000 | | | | 2,065,020 | |
KY Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2019 | | | Aa2/AA+*/A+@ | | | 2,250,000 | | | | 2,358,135 | |
Louisville & Jefferson County Metropolitan Sanitary Sewer | | | 5.000 | | | | 05/15/2015 | | | Aa3/AA* | | | 325,000 | | | | 338,572 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,167,221 | |
| PUBLIC FACILITIES REVENUE BONDS | |
| 3.18% of Net Assets | |
Adair County Public Properties | | | 4.000 | | | | 12/01/2022 | | | Aa3 | | | 170,000 | | | | 181,065 | |
Lexington-Fayette Urban County Government Public Facilities | | | 4.000 | | | | 10/01/2018 | | | Aa3 | | | 1,540,000 | | | | 1,617,585 | |
Pulaski County KY Public Property | | | 3.750 | | | | 12/01/2014 | | | Aa3 | | | 480,000 | | | | 487,099 | |
Todd County Public Properties — Court House Facilities | | | 3.250 | | | | 06/01/2019 | | | Aa3 | | | 100,000 | | | | 107,677 | |
Whitley County Public Properties — Justice Center | | | 3.375 | | | | 09/01/2019 | | | Aa3 | | | 200,000 | | | | 218,270 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,611,696 | |
| HOSPITAL AND HEALTHCARE BONDS | |
| 3.15% of Net Assets | |
KY State Asset Liability Commission General Receipts | | | 4.000 | | | | 10/01/2018 | | | Aa2/AA-* | | | 105,000 | | | | 113,895 | |
KY State Asset Liability Commission University of Kentucky | | | 4.125 | | | | 10/01/2019 | | | Aa2/AA-* | | | 150,000 | | | | 162,651 | |
KY State Asset Liability Commission University of Kentucky | | | 5.000 | | | | 10/01/2020 | | | Aa2/AA-* | | | 150,000 | | | | 168,486 | |
KY Development Finance Authority — Kings Daughters | | | 5.000 | | | | 02/01/2016 | | | A3/A*/A@ | | | 1,000,000 | | | | 1,064,420 | |
KY Economic Development — Baptist Healthcare System | | | 4.750 | | | | 08/15/2019 | | | A2/A+@ | | | 110,000 | | | | 121,826 | |
KY Development Finance Authority — St. Elizabeth | | | 5.000 | | | | 05/01/2015 | | | AA*/AA@ | | | 400,000 | | | | 414,480 | |
KY Economic Development Finance Authority — Catholic Health | | | 4.000 | | | | 05/01/2015 | | | A1/A+*/A+@ | | | 250,000 | | | | 250,637 | |
Warren County Hospital | | | 4.000 | | | | 04/01/2020 | | | A* | | | 270,000 | | | | 292,170 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,588,565 | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | | | | | | | | | | | |
| 1.89% of Net Assets | | | | | | | | | | | | | | | | | | |
KY Housing Corporation | | | 4.875 | | | | 07/01/2023 | | | Aaa/AAA* | | | 1,500,000 | | | | 1,556,400 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.79% of Net Assets (cost $78,036,473) (See (a) below for further explanation) | | | | | | | | | $ | 81,227,379 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.21% | | | | | | | | | | 990,468 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 82,217,847 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | ** | | Security is segregated — see footnote 1(D) |
| | ^ | | When-issued security or extended settlement — see footnote 1(D) |
| | @ | | 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) | | Cost for federal income tax purposes is $78,036,473 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 3,199,928 | |
| | Unrealized depreciation | | | (9,022 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 3,190,906 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
15
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds — 100% of Net Assets
June 30, 2014
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 81,227,379 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 81,227,379 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
16
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $78,036,473) | | | | | | $ | 81,227,379 | |
Cash | | | | | | | 431,191 | |
Receivable for fund shares sold | | | | | | | 47,245 | |
Interest receivable | | | | | | | 1,046,177 | |
| | | | | | | | |
Total assets | | | | | | | 82,751,992 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 367,037 | | | | | |
Distributions to shareholders | | | 50,618 | | | | | |
Fund shares redeemed | | | 40,797 | | | | | |
Investment advisory fee | | | 24,009 | | | | | |
Transfer agent fee | | | 24,925 | | | | | |
Trustees fees | | | 3,548 | | | | | |
Accrued expenses | | | 23,211 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 534,145 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 79,767,972 | |
Accumulated net realized loss on investment transactions | | | | | | | (741,031 | ) |
Net unrealized appreciation in value of investments | | | | | | | 3,190,906 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 82,217,847 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(15,104,472 shares outstanding; unlimited number of shares authorized no par value) | | | | | | $ | 5.44 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 2,426,733 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 422,165 | |
Transfer agent fee | | | 110,764 | |
Custodian expense | | | 17,844 | |
Professional fees | | | 18,750 | |
Trustees fees | | | 9,362 | |
Other expenses | | | 43,956 | |
| | | | |
Total expenses | | | 622,841 | |
Custodian expense reduction | | | (18 | ) |
| | | | |
Net expenses | | | 622,823 | |
| | | | |
Net investment income | | | 1,803,910 | |
| | | | |
Realized and unrealized gain on investments: | | | | |
Net realized gain | | | 55,994 | |
Net change in unrealized appreciation/depreciation | | | 133,435 | |
| | | | |
Net realized and unrealized gain on investments | | | 189,429 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,993,339 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
17
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,803,910 | | | $ | 1,932,832 | |
Net realized gain on investments | | | 55,994 | | | | 145,079 | |
Net change in unrealized appreciation/depreciation | | | 133,435 | | | | (1,956,078 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 1,993,339 | | | | 121,833 | |
Distributions from net investment income | | | (1,803,910 | ) | | | (1,932,832 | ) |
Net fund share transactions (Note 4) | | | (7,374,087 | ) | | | 1,685,639 | |
| | | | | | | | |
Total decrease | | | (7,184,658 | ) | | | (125,360 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 89,402,505 | | | | 89,527,865 | |
| | | | | | | | |
End of year | | $ | 82,217,847 | | | $ | 89,402,505 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $5.43 | | | | $5.54 | | | | $5.39 | | | | $5.36 | | | | $5.25 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.12 | | | | 0.12 | | | | 0.12 | | | | 0.13 | | | | 0.15 | |
Net gains/(losses) on securities | | | 0.01 | | | | (0.11 | ) | | | 0.15 | | | | 0.03 | | | | 0.11 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.13 | | | | 0.01 | | | | 0.27 | | | | 0.16 | | | | 0.26 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.12 | ) | | | (0.12 | ) | | | (0.12 | ) | | | (0.13 | ) | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $5.44 | | | | $5.43 | | | | $5.54 | | | | $5.39 | | | | $5.36 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 2.35% | | | | 0.11% | | | | 5.10% | | | | 3.04% | | | | 4.99% | |
Net assets, end of year (in thousands) | | | $82,218 | | | | $89,403 | | | | $89,528 | | | | $72,405 | | | | $69,166 | |
Ratio of net expenses to average net assets (a) | | | 0.74% | | | | 0.72% | | | | 0.73% | | | | 0.72% | | | | 0.72% | |
Ratio of gross expenses to average net assets | | | 0.74% | | | | 0.72% | | | | 0.73% | | | | 0.72% | | | | 0.72% | |
Ratio of net investment income to average net assets | | | 2.14% | | | | 2.12% | | | | 2.22% | | | | 2.44% | | | | 2.80% | |
Portfolio turnover | | | 9.06% | | | | 6.63% | | | | 4.73% | | | | 15.37% | | | | 20.26% | |
| (a) | | Percentages are after custodian reduction for which no recovery will be sought. |
The accompanying footnotes are an integral part of the financial statements.
18
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 28.28% of Net Assets | | | | | | | | | | | | | | | | | | |
Alcorn State University Educational Building MS Revenue | | | 5.125 | % | | | 09/01/2034 | | | Aa2 | | $ | 95,000 | | | $ | 102,005 | |
Jackson State University Education Building | | | 5.000 | | | | 03/01/2034 | | | Aa2/AA-* | | | 175,000 | | | | 190,638 | |
MS Development Bank Special Obligation Hinds Community | | | 5.000 | | | | 10/01/2026 | | | Aa2 | | | 85,000 | | | | 93,549 | |
MS Development Bank Special Obligation Hinds College | | | 5.125 | | | | 10/01/2028 | | | Aa2 | | | 100,000 | | | | 110,559 | |
MS Development Bank Special Obligation Hinds College | | | 5.375 | | | | 10/01/2033 | | | Aa2 | | | 60,000 | | | | 65,986 | |
MS Development Bank Special Obligation Jones County College | | | 5.100 | | | | 03/01/2028 | | | AA* | | | 55,000 | | | | 60,371 | |
MS Development Bank Special Obligation Jones County Junior | | | 5.000 | | | | 03/01/2033 | | | AA* | | | 150,000 | | | | 162,634 | |
MS Development Bank Special Obligation Jones County Junior | | | 5.125 | | | | 03/01/2039 | | | AA* | | | 45,000 | | | | 48,424 | |
MS Development Bank Special Obligation Hinds Community | | | 5.000 | | | | 04/01/2036 | | | A2/AA* | | | 250,000 | | | | 270,648 | |
MS State University Educational Building Corporation Revenue | | | 5.250 | | | | 08/01/2033 | | | Aa2/AA@ | | | 50,000 | | | | 56,223 | |
MS State University Educational Building Corporation Revenue | | | 5.000 | | | | 08/01/2036 | | | Aa2/AA@ | | | 175,000 | | | | 189,856 | |
MS State University Educational Building Corporation Revenue | | | 5.250 | | | | 08/01/2038 | | | Aa2/AA@ | | | 300,000 | | | | 340,050 | |
Southern Mississippi Educational Building Corporation | | | 5.000 | | | | 03/01/2038 | | | Aa2/AA@ | | | 600,000 | | | | 656,436 | |
University Southern MS Educational Building | | | 5.000 | | | | 03/01/2022 | | | Aa2 | | | 100,000 | | | | 106,708 | |
University Southern MS Educational Building | | | 5.000 | | | | 03/01/2032 | | | Aa2 | | | 50,000 | | | | 52,526 | |
University Southern MS Educational Building Athletics | | | 5.000 | | | | 03/01/2034 | | | Aa2 | | | 105,000 | | | | 111,735 | |
University Southern MS Educational Building Corporation | | | 5.125 | | | | 09/01/2029 | | | Aa2/A+* | | | 100,000 | | | | 111,317 | |
University of Mississippi Educational Building Corporation | | | 5.000 | | | | 10/01/2028 | | | Aa2/AA@ | | | 200,000 | | | | 226,027 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,955,692 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | |
| 14.72% of Net Assets | | | | | | | | | | | | | | | | | | |
MS State Development Bank Special Obligation Alcorn County | | | 4.750 | | | | 07/01/2031 | | | AA* | | | 100,000 | | | | 107,113 | |
MS Development Bank Special Obligation Department of Corrections | | | 5.250 | | | | 08/01/2027 | | | AA-*/AA@ | | | 50,000 | | | | 55,832 | |
MS Development Bank Special Obligation Department of Corrections | | | 5.250 | | | | 08/01/2027 | | | AA-*/AA@ | | | 305,000 | | | | 341,109 | |
MS State Development Bank Special Obligation City of Jackson Convention Center | | | 5.000 | | | | 03/01/2027 | | | Aa2/AA-* | | | 125,000 | | | | 148,998 | |
MS State Development Bank Special Obligation Refunding — City of Jackson | | | 5.000 | | | | 03/01/2036 | | | Aa2/AA-* | | | 150,000 | | | | 178,227 | |
MS State Capital Improvement Projects** | | | 5.000 | | | | 10/01/2029 | | | Aa2/AA*/AA+@ | | | 145,000 | | | | 168,174 | |
MS State Capital Improvement Projects | | | 5.000 | | | | 10/01/2036 | | | Aa2/AA*/AA+@ | | | 480,000 | | | | 539,141 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,538,594 | |
| TURNPIKES/TOLLROAD/HIGHWAY BONDS | | | | | | | | | | | |
| 12.96% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Highway Construction | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 125,000 | | | | 136,870 | |
MS Development Bank Special Obligation Highway — Desoto | | | 4.750 | | | | 01/01/2035 | | | Aa3/AA-* | | | 225,000 | | | | 237,463 | |
MS Development Bank Special Obligation Highway Construction | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 245,000 | | | | 268,525 | |
MS Development Bank Special Obligation Highway Construction | | | 4.750 | | | | 01/01/2031 | | | Aa3/AA-* | | | 125,000 | | | | 132,821 | |
MS State Development Bank Special Obligation Highway | | | 5.000 | | | | 01/01/2025 | | | Aa3/AA-* | | | 200,000 | | | | 240,000 | |
MS Development Bank Special Obligation Marshall County | | | 5.000 | | | | 01/01/2028 | | | Aa3/AA-* | | | 200,000 | | | | 225,550 | |
MS State Development Bank Desoto County Highway^ | | | 5.000 | | | | 01/01/2030 | | | Aa3/AA-* | | | 100,000 | | | | 112,989 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,354,218 | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | |
| 12.55% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Rankin Utilities | | | 5.000 | | | | 01/01/2028 | | | A2/AA* | | | 55,000 | | | | 59,545 | |
MS Development Bank Special Obligation Desoto County | | | 5.000 | | | | 07/01/2032 | | | A* | | | 45,000 | | | | 47,726 | |
MS Development Bank Special Obligation Southaven Water | | | 5.000 | | | | 03/01/2025 | | | A+* | | | 325,000 | | | | 348,982 | |
MS Development Bank Special Obligation Desoto County | | | 5.250 | | | | 07/01/2031 | | | A* | | | 225,000 | | | | 239,744 | |
MS State Development Bank Special Obligation Refunding — Jackson Water & Sewer | | | 4.500 | | | | 09/01/2034 | | | A1/AA* | | | 100,000 | | | | 105,057 | |
MS State Development Bank Special Obligation Jackson Water | | | 5.000 | | | | 09/01/2030 | | | A1/AA* | | | 125,000 | | | | 137,100 | |
Mississippi State Development Bank Special Obligation Hattiesburg Water & Sewer | | | 4.750 | | | | 12/01/2038 | | | A1/AA* | | | 350,000 | | | | 373,825 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,311,979 | |
The accompanying footnotes are an integral part of the financial statements.
19
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| SCHOOL IMPROVEMENT BONDS | | | | | | | | | | | |
| 7.09% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Jackson Public | | | 5.375 | % | | | 04/01/2028 | | | A2 | | $ | 70,000 | | | $ | 78,042 | |
MS State Development Bank Special Obligation — Jackson Schools | | | 5.000 | | | | 04/01/2028 | | | A+* | | | 600,000 | | | | 662,556 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 740,598 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | | | | | | | | | | | |
| 6.57% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Capital Projects | | | 5.000 | | | | 07/01/2031 | | | NR | | | 5,000 | | | | 5,150 | |
MS Development Bank Special Obligation Capital Projects | | | 5.875 | | | | 07/01/2024 | | | NR | | | 5,000 | | | | 5,250 | |
MS Development Bank Special Obligation Capital Projects | | | 5.000 | | | | 07/01/2024 | | | NR | | | 5,000 | | | | 5,150 | |
MS Development Bank Special Obligation Lowndes County | | | 5.000 | | | | 07/01/2022 | | | A2/AA* | | | 80,000 | | | | 87,647 | |
MS Development Bank Special Obligation Lowndes County | | | 5.000 | | | | 07/01/2027 | | | A2/AA* | | | 150,000 | | | | 162,003 | |
MS Development Bank Special Obligation Canton | | | 5.750 | | | | 10/01/2031 | | | A2 | | | 370,000 | | | | 420,864 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 686,064 | |
| PREREFUNDED BONDS | | | | | | | | | | | |
| 5.65% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Special Obligation Madison County Highway | | | 5.000 | | | | 01/01/2027 | | | Aa3/AA-* | | | 295,000 | | | | 322,229 | |
MS State University Educational Building Corporation Revenue | | | 5.000 | | | | 08/01/2024 | | | Aa2/AA-*/AA@ | | | 225,000 | | | | 236,634 | |
MS State University Educational Building Corporation Revenue | | | 5.000 | | | | 08/01/2028 | | | Aa2/AA-*/AA@ | | | 30,000 | | | | 31,562 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 590,425 | |
| HOSPITAL AND HEALTHCARE BONDS | | | | | | | | | | | |
| 3.60% of Net Assets | | | | | | | | | | | | | | | | | | |
Medical Center Educational Building Corporation MS Revenue | | | 5.500 | | | | 12/01/2023 | | | Aa2 | | | 120,000 | | | | 138,607 | |
Medical Center Educational Building Corporation — Universityof Mississippi | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA-* | | | 100,000 | | | | 105,749 | |
MS Development Bank Special Obligation Jones County Rest Home | | | 5.250 | | | | 04/01/2028 | | | A2/AA* | | | 120,000 | | | | 131,920 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 376,276 | |
| REFUNDED BONDS | | | | | | | | | | | |
| 3.33% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Development Bank Special Obligation Capital Improvement | | | 5.250 | | | | 07/01/2026 | | | A2/AA* | | | 125,000 | | | | 137,396 | |
MS State Development Bank Special Obligation Lowndes County | | | 5.125 | | | | 12/01/2027 | | | AA* | | | 135,000 | | | | 150,301 | |
MS State Refunding | | | 5.250 | | | | 11/01/2019 | | | Aa2/AA*/AA+@ | | | 50,000 | | | | 59,807 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 347,504 | |
| AIRPORT BONDS | | | | | | | | | | | |
| 1.68% of Net Assets | | | | | | | | | | | | | | | | | | |
Jackson MS Municipal Airport Authority | | | 5.000 | | | | 10/01/2031 | | | Baa1/BBB+@ | | | 170,000 | | | | 175,780 | |
| | | | | | | | | | | | | | | | | | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | | | | | | | | | | | |
| .25% of Net Assets | | | | | | | | | | | | | | | | | | |
MS Home Corporation Single Family Mortgage — Series E-1 | | | 5.050 | | | | 12/01/2028 | | | Aaa | | | 25,000 | | | | 25,674 | |
| | | | | | | | | | | | | | | | | | |
| ESCROWED TO MATURITY BONDS | | | | | | | | | | | |
| .10% of Net Assets | | | | | | | | | | | | | | | | | | |
Harrison County MS Wastewater Management District | | | 5.000 | | | | 02/01/2015 | | | AA+* | | | 10,000 | | | | 10,282 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 96.78% of Net Assets (cost $9,708,191) (See (a) below for further explanation) | | | | | | | | | $ | 10,113,086 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 3.22% | | | | | | | | | | 337,067 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 10,450,153 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | ** | | Security is segregated — see footnote 1(D) |
| | ^ | | When-issued security or extended settlement — see footnote 1(D) |
| | @ | | 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. |
The accompanying footnotes are an integral part of the financial statements.
20
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds — 100% of Net Assets
June 30, 2014
| (a) | | Cost for federal income tax purposes is $9,707,970 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 421,513 | |
| | Unrealized depreciation | | | (16,397 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 405,116 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 10,113,086 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 10,113,086 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
21
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $9,708,191) | | | | | | $ | 10,113,086 | |
Cash | | | | | | | 354,528 | |
Interest receivable | | | | | | | 154,975 | |
| | | | | | | | |
Total assets | | | | | | | 10,622,589 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 111,956 | | | | | |
Distributions to shareholders | | | 47,603 | | | | | |
Fund shares redeemed | | | 500 | | | | | |
Investment advisory fee | | | 2,627 | | | | | |
Transfer agent fee | | | 2,929 | | | | | |
Trustees fees | | | 362 | | | | | |
Accrued expenses | | | 6,459 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 172,436 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 10,052,170 | |
Accumulated net investment income | | | | | | | 156 | |
Accumulated net realized loss on investment transactions | | | | | | | (7,069 | ) |
Net unrealized appreciation in value of investments | | | | | | | 404,895 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 10,450,152 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(874,635 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.95 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 356,795 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 45,155 | |
Transfer agent fee | | | 13,958 | |
Custodian expense | | | 7,897 | |
Professional fees | | | 1,921 | |
Trustees fees | | | 952 | |
Registration fees | | | 4,456 | |
Other expenses | | | 7,112 | |
| | | | |
Total expenses | | | 81,451 | |
Fees waived by Adviser | | | (19,438 | ) |
Custodian expense reduction | | | (2 | ) |
| | | | |
Net expenses | | | 62,011 | |
| | | | |
Net investment income | | | 294,784 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (7,154 | ) |
Net change in unrealized appreciation/depreciation | | | 273,623 | |
| | | | |
Net realized and unrealized gain on investments | | | 266,469 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 561,253 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
22
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 294,784 | | | $ | 271,005 | |
Net realized gain/(loss) on investments | | | (7,154 | ) | | | 32,190 | |
Net change in unrealized appreciation/depreciation | | | 273,623 | | | | (303,574 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 561,253 | | | | (379 | ) |
Distributions from net investment income | | | (294,715 | ) | | | (287,105 | ) |
Distributions from capital gains | | | (9,925 | ) | | | — | |
Net fund share transactions (Note 4) | | | 1,885,011 | | | | 884,037 | |
| | | | | | | | |
Total increase | | | 2,141,624 | | | | 596,553 | |
Net assets: | | | | | | | | |
Beginning of year | | | 8,308,528 | | | | 7,711,975 | |
| | | | | | | | |
End of year | | $ | 10,450,152 | | | $ | 8,308,528 | |
| | | | | | | | |
Accumulated net investment income | | $ | 156 | | | $ | 174 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $11.65 | | | | $12.01 | | | | $11.33 | | | | $11.41 | | | | $11.03 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.38 | | | | 0.39 | | | | 0.42 | | | | 0.44 | | | | 0.45 | |
Net gains/(losses) on securities | | | 0.31 | | | | (0.33 | ) | | | 0.68 | | | | (0.08 | ) | | | 0.38 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.69 | | | | 0.06 | | | | 1.10 | | | | 0.36 | | | | 0.83 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.38 | ) | | | (0.42 | ) | | | (0.42 | ) | | | (0.44 | ) | | | (0.45 | ) |
Distributions from capital gains | | | (0.01 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.39 | ) | | | (0.42 | ) | | | (0.42 | ) | | | (0.44 | ) | | | (0.45 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.95 | | | | $11.65 | | | | $12.01 | | | | $11.33 | | | | $11.41 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 6.08% | | | | 0.38% | | | | 9.87% | | | | 3.19% | | | | 7.65% | |
Net assets, end of period (in thousands) | | | $10,450 | | | | $8,309 | | | | $7,712 | | | | $6,376 | | | | $6,321 | |
Ratio of net expenses to average net assets (a) | | | 0.69% | | | | 0.66% | | | | 0.65% | | | | 0.58% | | | | 0.45% | |
Ratio of gross expenses to average net assets | | | 0.90% | | | | 0.89% | | | | 0.92% | | | | 0.84% | | | | 0.91% | |
Ratio of net investment income to average net assets | | | 3.26% | | | | 3.22% | | | | 3.59% | | | | 3.86% | | | | 3.99% | |
Portfolio turnover | | | 1.96% | | | | 13.81% | | | | 9.99% | | | | 20.53% | | | | 10.04% | |
| (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. |
The accompanying footnotes are an integral part of the financial statements.
23
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 20.65% of Net Assets | |
Asheville NC Water System Revenue | | | 4.750 | % | | | 08/01/2027 | | | Aa2/AA* | | $ | 1,000,000 | | | $ | 1,091,620 | |
Buncombe County NC Metropolitan Sewerage District | | | 5.000 | | | | 07/01/2039 | | | Aa2/AA+*/AA+@ | | | 550,000 | | | | 623,590 | |
Charlotte NC Water and Sewer Systems Revenue | | | 4.500 | | | | 07/01/2028 | | | Aaa/AAA*/AAA@ | | | 750,000 | | | | 794,992 | |
High Point NC Combined Enterprise | | | 5.000 | | | | 11/01/2039 | | | Aa2/AAA*/AA+@ | | | 750,000 | | | | 851,010 | |
Mooresville NC Certificates of Participation | | | 5.000 | | | | 09/01/2032 | | | AA-* | | | 1,890,000 | | | | 2,037,250 | |
Moore County NC | | | 5.000 | | | | 06/01/2031 | | | Aa3/AA-* | | | 2,750,000 | | | | 3,035,230 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 5.000 | | | | 01/01/2021 | | | /A-*A-@ | | | 1,000,000 | | | | 1,064,480 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 6.000 | | | | 01/01/2025 | | | A3/AA-*/A-@ | | | 1,000,000 | | | | 1,265,470 | |
NC Eastern Municipal Power Agency Power System Revenue | | | 6.000 | | | | 01/01/2018 | | | Baa1 | | | 1,000,000 | | | | 1,163,420 | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2022 | | | A3/AA* | | | 915,000 | | | | 1,130,739 | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | 4.750 | | | | 01/01/2030 | | | A2/A*/A@ | | | 290,000 | | | | 315,175 | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2030 | | | A2/A*/A@ | | | 2,545,000 | | | | 2,814,363 | |
NC Municipal Power Agency Number 1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2031 | | | A2/A*/A@ | | | 500,000 | | | | 553,635 | |
Wilmington NC Store Water Revenue | | | 5.000 | | | | 06/01/2028 | | | Aa2/AA* | | | 500,000 | | | | 544,705 | |
Wilson NC Certificates of Participation Public Facilities | | | 5.000 | | | | 05/01/2021 | | | A1/AA* | | | 780,000 | | | | 858,944 | |
Wilson NC Certificates of Participation Public Facilities | | | 5.000 | | | | 05/01/2025 | | | A1/AA* | | | 750,000 | | | | 817,140 | |
Wilson County Certificates of Participation Public Facilities | | | 5.000 | | | | 05/01/2029 | | | A1/AA* | | | 1,355,000 | | | | 1,454,850 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 20,416,613 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 18.21% of Net Assets | |
Iredell County NC Community College | | | 5.000 | | | | 04/01/2026 | | | Aa2/AA*/AA+@ | | | 225,000 | | | | 251,530 | |
Iredell County NC Community College | | | 5.000 | | | | 04/01/2027 | | | Aa2/AA*/AA+@ | | | 325,000 | | | | 363,071 | |
NC Capital Facilities Financial Agency Wake Forest University | | | 5.000 | | | | 01/01/2031 | | | Aa3/AA* | | | 500,000 | | | | 557,885 | |
NC Capital Facilities Financial Agency Wake Forest University | | | 5.000 | | | | 01/01/2038 | | | Aa3/AA* | | | 1,250,000 | | | | 1,370,575 | |
NC Capital Facilities Financial Agency Revenue Duke University | | | 5.000 | | | | 10/01/2038 | | | Aa1/AA+* | | | 500,000 | | | | 550,484 | |
NC State Capital Facilities Davidson College | | | 5.000 | | | | 03/01/2032 | | | AA+* | | | 310,000 | | | | 346,552 | |
NC State University at Raleigh | | | 5.000 | | | | 10/01/2042 | | | Aa1/AA* | | | 750,000 | | | | 843,278 | |
Pitt County NC Limited Obligation | | | 5.000 | | | | 04/01/2035 | | | Aa3/AA-*/AA@ | | | 105,000 | | | | 112,515 | |
University NC Chapel Hill Revenue General Refunding | | | 5.000 | | | | 12/01/2034 | | | Aaa/AAA*/AAA@ | | | 1,000,000 | | | | 1,053,460 | |
University NC University Revenues Chapel Hill | | | 5.000 | | | | 12/01/2031 | | | Aaa/AAA*/AAA@ | | | 1,215,000 | | | | 1,360,970 | |
University of NC at Charlotte | | | 5.000 | | | | 04/01/2035 | | | Aa3/AA-* | | | 595,000 | | | | 668,697 | |
University of NC at Charlotte | | | 5.000 | | | | 04/01/2038 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,115,100 | |
University of NC at Charlotte | | | 5.000 | | | | 04/01/2031 | | | Aa3/AA-* | | | 750,000 | | | | 840,368 | |
University of NC at Greensboro | | | 5.000 | | | | 04/01/2031 | | | Aa3/A* | | | 500,000 | | | | 558,425 | |
University of NC at Greensboro | | | 5.000 | | | | 04/01/2036 | | | Aa3/A* | | | 500,000 | | | | 550,155 | |
University of NC at Greensboro | | | 5.000 | | | | 04/01/2033 | | | Aa3/A* | | | 900,000 | | | | 1,008,315 | |
University of NC System Pool Revenue | | | 5.000 | | | | 10/01/2033 | | | Aa3/AA-* | | | 430,000 | | | | 455,137 | |
University of NC System Pool Revenue | | | 5.000 | | | | 10/01/2026 | | | A1 | | | 1,000,000 | | | | 1,112,620 | |
University of NC System Pool Revenue | | | 5.000 | | | | 10/01/2033 | | | A1 | | | 1,000,000 | | | | 1,080,910 | |
University of NC System Pool Revenue General Trust Indenture | | | 5.000 | | | | 10/01/2034 | | | Aa2 | | | 1,950,000 | | | | 2,149,094 | |
University of NC Wilmington Certificates of Participation | | | 5.250 | | | | 06/01/2025 | | | A3/AA-* | | | 1,000,000 | | | | 1,044,270 | |
University of NC Wilmington Student Housing Project | | | 5.000 | | | | 06/01/2025 | | | A3/AA-* | | | 580,000 | | | | 611,361 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 18,004,772 | |
| SCHOOL IMPROVEMENT BONDS | |
| 14.74% of Net Assets | |
Cabarrus County NC Certificates of Participation Installment | | | 5.000 | | | | 06/01/2025 | | | Aa2/AA*/AA@ | | | 1,000,000 | | | | 1,112,540 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 01/01/2029 | | | Aa2/AA*/AA@ | | | 750,000 | | | | 833,093 | |
Davie County NC Public School and Community College Facility | | | 5.000 | | | | 06/01/2023 | | | Aa3/A+* | | | 1,000,000 | | | | 1,071,680 | |
Davie County NC Public School and Community College Facility | | | 5.000 | | | | 06/01/2025 | | | Aa3/A+* | | | 1,690,000 | | | | 1,797,839 | |
Franklin County NC Certificates of Participation | | | 5.000 | | | | 09/01/2027 | | | Aa3/AA-* | | | 750,000 | | | | 816,818 | |
Harnett County NC Certificates of Participation | | | 5.000 | | | | 06/01/2027 | | | A1/AA* | | | 300,000 | | | | 327,245 | |
Iredell County NC Certificates of Participation School Project | | | 5.000 | | | | 06/01/2024 | | | Aa3/AA-* | | | 1,000,000 | | | | 1,073,270 | |
Lee County NC Certificates of Participation | | | 5.000 | | | | 04/01/2025 | | | Aa3/AA* | | | 550,000 | | | | 594,116 | |
Mecklenburg County NC Certificates of Participation | | | 5.000 | | | | 02/01/2028 | | | Aa1/AA+*/AA+@ | | | 415,000 | | | | 453,466 | |
Montgomery County NC Certificates of Participation | | | 5.000 | | | | 02/01/2030 | | | A-* | | | 1,680,000 | | | | 1,750,190 | |
Nash County NC Limited Obligation | | | 5.000 | | | | 10/01/2030 | | | Aa3/AA* | | | 2,045,000 | | | | 2,287,639 | |
The accompanying footnotes are an integral part of the financial statements.
24
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Sampson County NC Certificates of Participation | | | 5.000 | % | | | 06/01/2022 | | | A2/AA* | | $ | 1,250,000 | | | $ | 1,377,138 | |
Sampson County NC Certificates of Participation | | | 5.000 | | | | 06/01/2026 | | | A2/AA* | | | 1,000,000 | | | | 1,080,800 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 14,575,834 | |
| HOSPITAL AND HEALTHCARE BONDS | |
| 11.07% of Net Assets | |
Charlotte Mecklenburg NC Hospital Authority Healthcare | | | 5.000 | | | | 01/15/2031 | | | Aa3/AA-* | | | 450,000 | | | | 469,616 | |
Charlotte Mecklenburg NC Hospital Authority Healthcare | | | 5.000 | | | | 01/15/2027 | | | Aa3/AA-* | | | 1,090,000 | | | | 1,162,713 | |
Charlotte-Mecklenburg Hospital | | | 5.250 | | | | 01/15/2039 | | | Aa3/AA-* | | | 750,000 | | | | 804,008 | |
Charlotte Mecklenburg NC Hospital Healthcare System | | | 5.000 | | | | 01/15/2039 | | | Aa3/AA-* | | | 1,500,000 | | | | 1,633,650 | |
Johnston NC Memorial Hospital Authority | | | 5.250 | | | | 10/01/2028 | | | A2/AA* | | | 490,000 | | | | 533,923 | |
NC Medical Care Community Hospital Revenue — Stanly Hospital | | | 5.375 | | | | 10/01/2014 | | | BBB+@ | | | 5,000 | | | | 5,009 | |
NC Medical Care Community Hospital Revenue Baptist Hospital | | | 5.000 | | | | 06/01/2034 | | | A1/A+* | | | 1,100,000 | | | | 1,181,411 | |
NC Medical Care Community Hospital Revenue Baptist Hospital | | | 5.250 | | | | 06/01/2029 | | | A1/A+* | | | 645,000 | | | | 712,480 | |
NC Medical Care Community Hospital Revenue Baptist Hospital | | | 4.750 | | | | 06/01/2030 | | | A1/A+* | | | 405,000 | | | | 430,730 | |
NC Medical Care Community Health Care Facilities Revenue | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA*/AA@ | | | 1,670,000 | | | | 1,841,743 | |
NC State Medical Care Commission Healthcare Facilities | | | 5.000 | | | | 07/01/2030 | | | A1/AA-*/AA-@ | | | 500,000 | | | | 538,885 | |
NC State Medical Care Commission Duke University Health | | | 5.000 | | | | 06/01/2035 | | | Aa2/AA*/AA@ | | | 500,000 | | | | 552,565 | |
NC State Medical Care Commission Wake Forest Baptist Hospital | | | 5.000 | | | | 12/01/2033 | | | A1/A+* | | | 1,000,000 | | | | 1,082,750 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 10,949,483 | |
| PUBLIC FACILITIES REVENUE BONDS | |
| 8.90% of Net Assets | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA+* | | | 500,000 | | | | 567,320 | |
Charlotte NC Certificates of Participation Transit Project | | | 5.000 | | | | 06/01/2035 | | | Aa2/AA+*/AA+@ | | | 500,000 | | | | 517,035 | |
Charlotte NC Certificates of Participation Convention Facilities | | | 5.000 | | | | 06/01/2034 | | | Aa2/AA+*/AA@ | | | 900,000 | | | | 961,758 | |
Forsyth County Limited Tax | | | 5.000 | | | | 04/01/2031 | | | Aa1/AA+*/AA+@ | | | 335,000 | | | | 373,418 | |
Jacksonville Public Facilities Corporation Limited Obligation | | | 5.000 | | | | 04/01/2031 | | | A1/A+@ | | | 265,000 | | | | 295,006 | |
Jacksonville Public Facilities Corporation Limited Obligation | | | 5.000 | | | | 04/01/2032 | | | A1/A+@ | | | 100,000 | | | | 110,675 | |
Mecklenburg County NC Certificates of Participation | | | 5.000 | | | | 02/01/2026 | | | Aa1/AA+* | | | 550,000 | | | | 608,828 | |
Raleigh NC Limited Obligation | | | 5.000 | | | | 10/01/2038 | | | Aa1/AA+*/AA+@ | | | 500,000 | | | | 560,920 | |
Rockingham County NC Certificates of Participation | | | 5.000 | | | | 04/01/2032 | | | Aa3/AA* | | | 1,325,000 | | | | 1,397,597 | |
Wake County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa1/AA+*/AA+@ | | | 1,500,000 | | | | 1,668,870 | |
Watauga NC Public Facilities Corporation Limited Obligation | | | 5.000 | | | | 06/01/2027 | | | Aa3/AA-* | | | 750,000 | | | | 848,242 | |
Winston Salem NC Limited Obligation | | | 5.000 | | | | 06/01/2031 | | | Aa2/AA+*/AA+@ | | | 800,000 | | | | 891,232 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 8,800,901 | |
| REFUNDING BONDS | | | | | | | | | | | |
| 6.51% of Net Assets | | | | | | | | | | | | | | | | | | |
Charolotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2033 | | | Aa2/AA+*/AA+@ | | | 340,000 | | | | 378,498 | |
Charlotte NC Certificates of Participation Convention Facilities | | | 5.000 | | | | 12/01/2024 | | | Aa2/AA+*/AA@ | | | 1,000,000 | | | | 1,056,080 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2026 | | | Aa2/AA+*/AA+@ | | | 1,455,000 | | | | 1,608,895 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA+*/AA+@ | | | 775,000 | | | | 854,817 | |
Dare County NC Limited Obligation Refunding | | | 5.000 | | | | 06/01/2029 | | | Aa3/AA-*/AA-@ | | | 100,000 | | | | 112,725 | |
Johnston County NC Installment Financing Contract | | | 5.000 | | | | 10/15/2027 | | | Aa3/AA* | | | 570,000 | | | | 637,671 | |
New Hanover County NC Limited Obligation | | | 5.000 | | | | 12/01/2027 | | | Aa1/AA+* | | | 505,000 | | | | 585,346 | |
Pitt County NC Certificates of Participation | | | 5.000 | | | | 04/01/2027 | | | Aa3/AA-*/AA@ | | | 500,000 | | | | 565,370 | |
Thomasville NC Combined Enterprise System Revenue | | | 4.750 | | | | 05/01/2028 | | | A1/AA* | | | 435,000 | | | | 484,255 | |
Union County NC Limited Obligation Refunding | | | 5.000 | | | | 12/01/2024 | | | Aa2/AA-*/AA@ | | | 125,000 | | | | 150,956 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,434,613 | |
| PREREFUNDED BONDS | | | | | | | | | | | |
| 5.04% of Net Assets | | | | | | | | | | | | | | | | | | |
Burke County NC Certificates of Participation | | | 5.000 | | | | 04/01/2023 | | | A1/A* | | | 250,000 | | | | 270,340 | |
Forsyth County NC Certificates of Participation | | | 5.000 | | | | 02/01/2026 | | | Aa1/AA+*/AA+@ | | | 550,000 | | | | 565,290 | |
Henderson County NC Certificates of Participation | | | 5.000 | | | | 05/01/2025 | | | Aa3/AA*/AA-@ | | | 250,000 | | | | 259,997 | |
Mecklenburg County NC Certificates of Participation | | | 5.000 | | | | 02/01/2026 | | | NR | | | 450,000 | | | | 515,133 | |
NC Eastern Municipal Power Agency Power System | | | 6.000 | | | | 01/01/2026 | | | A-* | | | 275,000 | | | | 353,716 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 02/01/2025 | | | Aa1/AA+*/AA+@ | | | 200,000 | | | | 205,476 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 02/01/2024 | | | Aa1/AA+*/AA+@ | | | 1,000,000 | | | | 1,107,550 | |
Raleigh NC Combined Enterprise System | | | 5.000 | | | | 03/01/2031 | | | Aa1/AAA*/AAA@ | | | 500,000 | | | | 539,715 | |
The accompanying footnotes are an integral part of the financial statements.
25
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Randolph County NC Certificates of Participation | | | 5.000 | % | | | 02/01/2027 | | | Aa3 | | $ | 1,000,000 | | | $ | 1,115,480 | |
Winston-Salem NC Certificates of Participation | | | 4.750 | | | | 06/01/2031 | | | NR | | | 50,000 | | | | 54,266 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,986,963 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | | | | | | | | | | | |
| 4.83% of Net Assets | | | | | | | | | | | | | | | | | | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2030 | | | Aa2/AA+* | | | 250,000 | | | | 283,688 | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA+* | | | 250,000 | | | | 281,255 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 12/01/2029 | | | Aa1/AA+* | | | 340,000 | | | | 381,796 | |
Johnston County TN Limited Obligation | | | 4.750 | | | | 06/01/2033 | | | Aa3/AA* | | | 500,000 | | | | 541,540 | |
Orange County NC Public Facilities Company Limited Obligation | | | 4.750 | | | | 10/01/2032 | | | Aa1/AA+*/AA+@ | | | 750,000 | | | | 822,855 | |
Wilmington NC Certificates of Participation | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA+*/AA@ | | | 1,500,000 | | | | 1,549,980 | |
Wilmington NC Certificates of Participation | | | 5.000 | | | | 06/01/2038 | | | Aa2/AA+*/AA@ | | | 250,000 | | | | 267,493 | |
Winston Salem NC Certificates of Participation | | | 4.750 | | | | 06/01/2031 | | | AA+*/AA+@ | | | 620,000 | | | | 649,424 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,778,031 | |
| AIRPORT BONDS | | | | | | | | | | | |
| 4.54% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte NC Airport Revenue | | | 5.250 | | | | 07/01/2023 | | | Aa3/AA-*/A+@ | | | 1,000,000 | | | | 1,002,190 | |
Charlotte NC Airport Revenue Refunding Charlotte-Douglas International | | | 5.000 | | | | 07/01/2025 | | | Aa3/A+*/A+@ | | | 1,000,000 | | | | 1,103,320 | |
Raleigh-Durham NC Airport | | | 5.000 | | | | 05/01/2029 | | | Aa3/AA-@ | | | 235,000 | | | | 265,484 | |
Raleigh-Durham NC Airport | | | 5.000 | | | | 05/01/2036 | | | Aa3/AA-@ | | | 1,480,000 | | | | 1,626,520 | |
Raleigh-Durham NC Airport | | | 5.000 | | | | 05/01/2032 | | | Aa3/AA-@ | | | 440,000 | | | | 490,015 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,487,529 | |
| TURNPIKES/TOLLROAD/HIGHWAY BONDS | | | | | | | | | | | |
| 2.14% of Net Assets | | | | | | | | | | | | | | | | | | |
NC State Turnpike Authority Monroe Connector System | | | 5.000 | | | | 07/01/2029 | | | Aa2/AA* | | | 500,000 | | | | 563,410 | |
NC State Turnpike Authority Monroe Connector System | | | 5.000 | | | | 07/01/2031 | | | Aa2/AA* | | | 1,385,000 | | | | 1,548,582 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,111,992 | |
| LEASE REVENUE BONDS | | | | | | | | | | | |
| 1.75% of Net Assets | | | | | | | | | | | | | | | | | | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa2/AA+* | | | 1,500,000 | | | | 1,730,655 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.38% of Net Assets (cost $92,538,860) (See (a) below for further explanation) | | | | | | | | | $ | 97,277,386 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.62% | | | | | | | | | | 1,601,213 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 98,878,599 | |
| | | | | | | | | | | | | | | | | | |
| | * | | 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) | | Cost for federal income tax purposes is $92,535,622 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 4,927,952 | |
| | Unrealized depreciation | | | (186,188 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 4,741,764 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 97,277,386 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 97,277,386 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
26
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $92,538,860) | | | | | | $ | 97,277,386 | |
Cash | | | | | | | 872,075 | |
Receivable for fund shares sold | | | | | | | 30,000 | |
Interest receivable | | | | | | | 1,091,381 | |
| | | | | | | | |
Total assets | | | | | | | 99,270,842 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 278,303 | | | | | |
Fund shares redeemed | | | 47,338 | | | | | |
Investment advisory fee | | | 41,755 | | | | | |
Transfer agent fee | | | 20,806 | | | | | |
Accrued expenses | | | 4,041 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 392,243 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 94,719,676 | |
Accumulated net investment income | | | | | | | 3,238 | |
Accumulated net realized loss on investment transactions | | | | | | | (582,841 | ) |
Net unrealized appreciation in value of investments | | | | | | | 4,738,526 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 98,878,599 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(8,567,247 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.54 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 3,649,663 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 455,288 | |
Transfer agent fee | | | 119,243 | |
Custodian expense | | | 18,353 | |
Professional fees | | | 20,045 | |
Trustees fees | | | 10,021 | |
Other expenses | | | 34,802 | |
| | | | |
Total expenses | | | 657,752 | |
Custodian expense reduction | | | (22 | ) |
| | | | |
Net expenses | | | 657,730 | |
| | | | |
Net investment income | | | 2,991,933 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (582,841 | ) |
Net change in unrealized appreciation/depreciation | | | 2,463,156 | |
| | | | |
Net realized and unrealized gain on investments | | | 1,880,315 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 4,872,248 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
27
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 2,991,933 | | | $ | 3,025,345 | |
Net realized gain/(loss) on investments | | | (582,841 | ) | | | 112,821 | |
Net change in unrealized appreciation/depreciation | | | 2,463,156 | | | | (2,631,334 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 4,872,248 | | | | 506,832 | |
Distributions from net investment income | | | (2,991,028 | ) | | | (3,026,417 | ) |
Capital gains distributed to shareholders | | | (112,821 | ) | | | (131,685 | ) |
Net fund share transactions (Note 4) | | | 1,983,498 | | | | 9,474,078 | |
| | | | | | | | |
Total increase | | | 3,751,897 | | | | 6,822,808 | |
Net assets: | | | | | | | | |
Beginning of year | | | 95,126,702 | | | | 88,303,894 | |
| | | | | | | | |
End of year | | $ | 98,878,599 | | | $ | 95,126,702 | |
| | | | | | | | |
Accumulated net investment income | | $ | 3,238 | | | $ | 2,333 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $11.31 | | | | $11.59 | | | | $10.92 | | | | $11.01 | | | | $10.71 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.37 | | | | 0.36 | | | | 0.39 | | | | 0.40 | | | | 0.40 | |
Net gains/(losses) on securities | | | 0.24 | | | | (0.26 | ) | | | 0.67 | | | | (0.09 | ) | | | 0.30 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.61 | | | | 0.10 | | | | 1.06 | | | | 0.31 | | | | 0.70 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.37 | ) | | | (0.36 | ) | | | (0.39 | ) | | | (0.40 | ) | | | (0.40 | ) |
Distributions from capital gains | | | (0.01 | ) | | | (0.02 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.38 | ) | | | (0.38 | ) | | | (0.39 | ) | | | (0.40 | ) | | | (0.40 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $11.54 | | | | $11.31 | | | | $11.59 | | | | $10.92 | | | | $11.01 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 5.57% | | | | 0.76% | | | | 9.87% | | | | 2.90% | | | | 6.62% | |
Net assets, end of year (in thousands) | | | $98,879 | | | | $95,127 | | | | $88,304 | | | | $75,312 | | | | $77,116 | |
Ratio of net expenses to average net assets (a) | | | 0.72% | | | | 0.71% | | | | 0.71% | | | | 0.70% | | | | 0.72% | |
Ratio of gross expenses to average net assets | | | 0.72% | | | | 0.71% | | | | 0.71% | | | | 0.70% | | | | 0.72% | |
Ratio of net investment income to average net assets | | | 3.29% | | | | 3.07% | | | | 3.46% | | | | 3.69% | | | | 3.66% | |
Portfolio turnover | | | 9.73% | | | | 3.59% | | | | 5.94% | | | | 14.16% | | | | 5.92% | |
| (a) | | Percentages are after Custodian reduction for which no recovery will be sought. |
The accompanying footnotes are an integral part of the financial statements.
28
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | |
| 21.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Asheville NC Water System Revenue Refunding | | | 5.000 | % | | | 08/01/2017 | | | Aa2/AA* | | $ | 140,000 | | | $ | 147,098 | |
Lincolnton NC Enterprise System Revenue | | | 5.000 | | | | 05/01/2016 | | | NR | | | 385,000 | | | | 393,804 | |
Monroe NC Certificates of Participation | | | 4.000 | | | | 03/01/2019 | | | Aa3/AA* | | | 100,000 | | | | 109,997 | |
Mooreville NC Certificates of Participation | | | 4.125 | | | | 09/01/2018 | | | AA-* | | | 250,000 | | | | 271,288 | |
Moore County NC | | | 5.000 | | | | 06/01/2017 | | | Aa3/AA-* | | | 685,000 | | | | 768,487 | |
Moore County NC | | | 5.000 | | | | 06/01/2021 | | | Aa3/AA-* | | | 200,000 | | | | 231,640 | |
NC Eastern Municipal Power Agency | | | 4.000 | | | | 01/01/2016 | | | Baa1/A-*/A-@ | | | 95,000 | | | | 100,133 | |
NC State Eastern Municipal Power Agency | | | 5.000 | | | | 01/01/2021 | | | Baa1/A-*/A-@ | | | 125,000 | | | | 145,934 | |
NC Eastern Municipal Power Agency | | | 5.000 | | | | 01/01/2016 | | | /A-*A-@ | | | 50,000 | | | | 53,419 | |
NC Eastern Municipal Power Agency | | | 5.000 | | | | 01/01/2020 | | | /A-*A-@ | | | 250,000 | | | | 266,315 | |
NC Eastern Municipal Power Agency | | | 5.250 | | | | 01/01/2019 | | | A3/AA*/A-@ | | | 550,000 | | | | 625,982 | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2022 | | | A3/AA* | | | 220,000 | | | | 271,872 | |
NC Eastern Municipal Power Agency | | | 6.500 | | | | 01/01/2018 | | | A3/AA* | | | 100,000 | | | | 117,863 | |
NC Eastern Municipal Power Agency | | | 3.250 | | | | 01/01/2015 | | | Baa1/A-*/A-@ | | | 250,000 | | | | 253,753 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.250 | | | | 01/01/2017 | | | A2/A*/A@ | | | 200,000 | | | | 222,696 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.250 | | | | 01/01/2018 | | | A2/A*/A@ | | | 125,000 | | | | 143,149 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 4.000 | | | | 01/01/2016 | | | A2/A*/A@ | | | 100,000 | | | | 105,357 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.000 | | | | 01/01/2021 | | | A2/A*/A@ | | | 250,000 | | | | 287,138 | |
NC Municipal Power Agency Number 1 Catawba Electric | | | 5.000 | | | | 01/01/2016 | | | A2/A*/A@ | | | 125,000 | | | | 133,529 | |
Onslow NC Water & Sewer | | | 4.250 | | | | 06/01/2022 | | | A3/AA-* | | | 150,000 | | | | 162,483 | |
Union County NC Enterprise System Revenue | | | 4.000 | | | | 12/01/2022 | | | Aa2/AA-*/AA@ | | | 100,000 | | | | 111,101 | |
Wilson NC Certificates of Participation | | | 5.000 | | | | 05/01/2016 | | | A1/AA* | | | 200,000 | | | | 216,120 | |
Wilson NC Certificates of Participation | | | 5.000 | | | | 05/01/2018 | | | A1/AA* | | | 160,000 | | | | 177,470 | |
Wilson NC Certificates of Participation | | | 5.000 | | | | 05/01/2022 | | | A1/AA* | | | 350,000 | | | | 383,065 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,699,693 | |
| SCHOOL IMPROVEMENT BONDS | | | | | | | | | | | |
| 16.94% of Net Assets | | | | | | | | | | | | | | | | | | |
Buncombe County NC Certificates of Participation | | | 4.000 | | | | 04/01/2016 | | | Aa2/AA+* | | | 125,000 | | | | 133,010 | |
Burke County NC Certificates of Participation | | | 4.250 | | | | 04/01/2016 | | | A1/A* | | | 50,000 | | | | 52,996 | |
Cabarrus County NC Certificates of Participation | | | 4.250 | | | | 06/01/2017 | | | Aa2/AA*/AA@ | | | 175,000 | | | | 190,953 | |
Cabarrus County NC Certificates of Participation | | | 4.000 | | | | 01/01/2015 | | | Aa2/AA*/AA@ | | | 225,000 | | | | 229,388 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 01/01/2017 | | | Aa2/AA*/AA@ | | | 150,000 | | | | 165,816 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 01/01/2019 | | | Aa2/AA*/AA@ | | | 100,000 | | | | 114,620 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 01/01/2021 | | | Aa2/AA*/AA@ | | | 200,000 | | | | 227,562 | |
Catawba County NC Certificates of Participation | | | 5.250 | | | | 06/01/2019 | | | Aa2/AA-* | | | 200,000 | | | | 208,456 | |
Edgecombe County NC Schools | | | 4.000 | | | | 02/01/2015 | | | A1/AA-* | | | 235,000 | | | | 239,766 | |
Harnett County NC Certificates of Participation | | | 5.000 | | | | 12/01/2015 | | | A1/AA* | | | 125,000 | | | | 132,890 | |
Harnett County NC Certificates of Participation | | | 5.000 | | | | 12/01/2021 | | | A1/AA* | | | 200,000 | | | | 223,031 | |
Harnett County NC Certificates of Participation | | | 3.500 | | | | 06/01/2016 | | | A1/AA* | | | 250,000 | | | | 264,210 | |
Iredell County NC Certificates of Participation School Project | | | 5.000 | | | | 06/01/2018 | | | Aa3/AA-* | | | 425,000 | | | | 459,697 | |
Lincoln County NC Certificates of Participation | | | 5.000 | | | | 06/01/2016 | | | A1/AA*/AA-@ | | | 200,000 | | | | 217,210 | |
Montgomery County NC Certificates of Participation | | | 5.000 | | | | 02/01/2017 | | | A-* | | | 125,000 | | | | 136,355 | |
Nash County NC Limited Obligation | | | 3.000 | | | | 10/01/2015 | | | Aa3/AA* | | | 400,000 | | | | 412,828 | |
Nash County NC Limited Obligation | | | 5.000 | | | | 10/01/2018 | | | Aa3/AA* | | | 150,000 | | | | 173,022 | |
Onslow County NC Certificates of Participation** | | | 5.000 | | | | 06/01/2018 | | | Aa3/A+* | | | 140,000 | | | | 151,430 | |
Pitt County NC Certificates of Participation School Facility | | | 4.000 | | | | 04/01/2015 | | | Aa3/AA-*/AA@ | | | 100,000 | | | | 102,564 | |
Rutherford County NC Certificates of Participation | | | 5.000 | | | | 12/01/2017 | | | A1/AA* | | | 105,000 | | | | 118,366 | |
Sampson County NC Certificates of Participation | | | 5.000 | | | | 06/01/2020 | | | A2/AA* | | | 400,000 | | | | 442,503 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,396,673 | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | |
| 14.05% of Net Assets | | | | | | | | | | | | | | | | | | |
Cabarrus County NC Certificates of Participation | | | 5.625 | | | | 02/01/2016 | | | Aa2/AA*/AA@ | | | 125,000 | | | | 135,295 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 06/01/2019 | | | Aa2/AA*/AA@ | | | 420,000 | | | | 476,431 | |
Charlotte NC Certificates of Participation Refunding | | | 5.000 | | | | 12/01/2021 | | | Aa2/AA+*/AA@ | | | 270,000 | | | | 286,011 | |
Charlotte NC Certificates of Participation Transit Projects | | | 4.000 | | | | 06/01/2016 | | | Aa2/AA+*/AA+@ | | | 100,000 | | | | 103,413 | |
Charlotte NC Certificates of Participation | | | 4.000 | | | | 12/01/2022 | | | Aa1/AA+* | | | 170,000 | | | | 190,840 | |
The accompanying footnotes are an integral part of the financial statements.
29
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Craven County NC Certificates of Participation | | | 4.375 | % | | | 06/01/2016 | | | Aa3/AA-* | | $ | 115,000 | | | $ | 122,769 | |
Durham County NC Certificates of Participation | | | 5.000 | | | | 06/01/2020 | | | Aa1/AA+* | | | 435,000 | | | | 503,135 | |
Durham County NC Certificates of Participation | | | 5.000 | | | | 06/01/2021 | | | Aa1/AA+* | | | 240,000 | | | | 276,242 | |
Forsyth County NC Certificates of Participation | | | 5.000 | | | | 10/01/2019 | | | Aa1/AA+*/AA+@ | | | 600,000 | | | | 645,756 | |
Lee County NC Certificates of Participation | | | 5.000 | | | | 04/01/2018 | | | Aa3/AA* | | | 225,000 | | | | 247,757 | |
Mecklenburg NC Certificate of Participation | | | 5.000 | | | | 02/01/2017 | | | NR | | | 45,000 | | | | 50,122 | |
Mecklenburg NC Certificate of Participation | | | 5.000 | | | | 02/01/2017 | | | Aa1/AA+* | | | 60,000 | | | | 66,568 | |
Rockingham County NC Certificates of Participation | | | 4.000 | | | | 04/01/2019 | | | Aa3/AA* | | | 100,000 | | | | 108,858 | |
Watauga NC Public Facillities Corporation Limited Obligation | | | 5.000 | | | | 06/01/2023 | | | Aa3/AA-* | | | 275,000 | | | | 321,101 | |
Wilmington NC Certificates of Participation | | | 4.200 | | | | 06/01/2019 | | | Aa2/AA+*/AA@ | | | 100,000 | | | | 110,682 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,644,980 | |
| PREREFUNDED BONDS | | | | | | | | | | | |
| 11.98% of Net Assets | | | | | | | | | | | | | | | | | | |
Appalachian State University NC Revenue Refunding | | | 5.000 | | | | 07/15/2018 | | | Aa3 | | | 35,000 | | | | 36,747 | |
Appalachian State University NC Revenue Refunding | | | 5.000 | | | | 07/15/2018 | | | Aa3 | | | 40,000 | | | | 42,036 | |
Brunswick County NC Community College | | | 4.250 | | | | 05/01/2022 | | | Aa2/AA*/AA@ | | | 125,000 | | | | 137,960 | |
Burke County NC Certificates of Participation | | | 5.000 | | | | 04/01/2020 | | | A1/A* | | | 180,000 | | | | 194,645 | |
Cabarrus County NC Public Improvement | | | 5.000 | | | | 03/01/2018 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 107,838 | |
Chapel Hill NC Certificates of Participation Operations Center | | | 5.250 | | | | 06/01/2019 | | | Aa1/AA+* | | | 260,000 | | | | 271,905 | |
Henderson County NC Certificates of Participation | | | 5.250 | | | | 05/01/2020 | | | Aa3/AA*/AA-@ | | | 300,000 | | | | 312,624 | |
NC Medical Care Community Hospital Rowan Medical | | | 5.250 | | | | 09/01/2016 | | | A2/AA* | | | 600,000 | | | | 605,046 | |
NC Infrastructure Certificates of Participation | | | 5.000 | | | | 06/01/2018 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 108,968 | |
NC Medical Care Community Healthcare Facilities | | | 4.000 | | | | 10/01/2018 | | | A1/AA* | | | 50,000 | | | | 50,481 | |
NC Medical Care Duke University Health Systems | | | 3.000 | | | | 06/01/2019 | | | Aa2/AA*/AA@ | | | 150,000 | | | | 159,675 | |
NC State Public Improvement | | | 5.000 | | | | 03/01/2019 | | | Aaa/AAA* | | | 15,000 | | | | 15,490 | |
Randolph County NC Certificates of Participation | | | 5.000 | | | | 02/01/2018 | | | Aa3 | | | 200,000 | | | | 222,876 | |
Rutherford County NC Certificates of Participation | | | 5.000 | | | | 12/01/2018 | | | A1/AA* | | | 205,000 | | | | 234,508 | |
Rutherford NC Certificates of Participation | | | 4.000 | | | | 12/01/2019 | | | A1/AA* | | | 200,000 | | | | 222,118 | |
Rutherford County NC Certificates of Participation | | | 5.000 | | | | 12/01/2020 | | | A1/AA* | | | 100,000 | | | | 114,394 | |
Union County NC Certificates of Participation | | | 5.000 | | | | 06/01/2020 | | | Aa2/AA-* | | | 250,000 | | | | 272,117 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,109,428 | |
| REFUNDING BONDS | | | | | | | | | | | |
| 9.48% of Net Assets | | | | | | | | | | | | | | | | | | |
Bertie County Limited Obligation | | | 4.000 | | | | 06/01/2022 | | | A1/A* | | | 200,000 | | | | 218,572 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 04/01/2021 | | | AA* | | | 150,000 | | | | 173,276 | |
Charlotte NC Certificates of Participation | | | 4.000 | | | | 06/01/2022 | | | Aa2/AA+*/AA+@ | | | 125,000 | | | | 141,755 | |
Cumberland County NC Certificates of Participation Refunding | | | 3.500 | | | | 12/01/2020 | | | Aa2/AA* | | | 185,000 | | | | 200,670 | |
Cumberland County NC Certificates of Participation | | | 5.000 | | | | 12/01/2015 | | | Aa2/AA* | | | 75,000 | | | | 79,956 | |
Cumberland County NC Certificates of Participation | | | 5.000 | | | | 12/01/2017 | | | Aa2/AA* | | | 350,000 | | | | 397,450 | |
Dare County NC Limited Obligation | | | 4.000 | | | | 06/01/2019 | | | Aa3/AA-*/AA-@ | | | 100,000 | | | | 112,267 | |
Dare County NC Limited Obligation | | | 5.000 | | | | 06/01/2024 | | | Aa3/AA-*/AA-@ | | | 335,000 | | | | 391,420 | |
Pender County NC Limited Obligation | | | 3.000 | | | | 06/01/2019 | | | Aa3 | | | 220,000 | | | | 234,945 | |
Richmond County NC Limited Obligation Refunding | | | 4.000 | | | | 04/01/2019 | | | A1/A* | | | 225,000 | | | | 246,692 | |
Sampson Area Development Corporation NC Refunding | | | 4.000 | | | | 06/01/2015 | | | AA* | | | 150,000 | | | | 154,838 | |
Union County NC Limited Obligation | | | 3.000 | | | | 12/01/2018 | | | Aa2/AA-*/AA@ | | | 100,000 | | | | 107,277 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,459,118 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | | | | | | | | | | | |
| 7.41% of Net Assets | | | | | | | | | | | | | | | | | | |
Johnston County NC Limited Obligation | | | 4.000 | | | | 06/01/2019 | | | Aa3/AA* | | | 150,000 | | | | 168,401 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 02/01/2017 | | | Aa1/AA+*/AA+@ | | | 150,000 | | | | 166,460 | |
NC Infrastructure Finance Corporation Certificates of Participation | | | 5.000 | | | | 02/01/2020 | | | Aa1/AA+*/AA+@ | | | 425,000 | | | | 469,786 | |
NC State Capital Improvement Obligation | | | 4.000 | | | | 05/01/2020 | | | Aa1/AA+*/AA+@ | | | 120,000 | | | | 131,611 | |
NC State Capital Improvement Obligation | | | 5.000 | | | | 05/01/2022 | | | Aa1/AA+*/AA+@ | | | 100,000 | | | | 113,920 | |
NC State Capital Improvement Obligation Annual Appropriation | | | 5.000 | | | | 05/01/2022 | | | Aa1/AA+*/AA+@ | | | 155,000 | | | | 179,194 | |
NC State Capital Improvement Obligation | | | 5.000 | | | | 05/01/2021 | | | Aa1/AA+*/AA+@ | | | 350,000 | | | | 413,266 | |
NC State Capital Improvement Obligation ** | | | 4.000 | | | | 05/01/2025 | | | Aa1/AA+*/AA+@ | | | 105,000 | | | | 113,917 | |
Salisbury NC Certificates of Participation | | | 5.000 | | | | 03/01/2019 | | | A3/AA* | | | 145,000 | | | | 166,038 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,922,593 | |
The accompanying footnotes are an integral part of the financial statements.
30
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 6.77% of Net Assets | | | | | | | | | | | | | | | | | | |
University of NC at Greensboro | | | 5.000 | % | | | 04/01/2025 | | | Aa3/A* | | $ | 100,000 | | | $ | 114,106 | |
University of NC | | | 4.250 | | | | 10/01/2021 | | | A1 | | | 100,000 | | | | 109,084 | |
University NC System Pool Revenue | | | 5.000 | | | | 10/01/2016 | | | Aa2 | | | 250,000 | | | | 274,693 | |
University NC System Pool Revenue | | | 5.000 | | | | 10/01/2015 | | | Aa3 | | | 350,000 | | | | 370,325 | |
University NC System Pool Revenue Asheville Wilmington | | | 5.000 | | | | 10/01/2016 | | | A1/AA* | | | 230,000 | | | | 252,772 | |
University NC Wilmington Certificates of Participation | | | 5.250 | | | | 06/01/2021 | | | A3/AA-* | | | 100,000 | | | | 103,691 | |
University NC Wilmington Certificates of Participation | | | 4.250 | | | | 06/01/2017 | | | A3/AA-* | | | 300,000 | | | | 318,192 | |
University NC Wilmington Certificates of Participation | | | 4.375 | | | | 06/01/2019 | | | A3/AA-* | | | 100,000 | | | | 105,107 | |
University NC Wilmington Certificates of Participation | | | 4.000 | | | | 06/01/2017 | | | A2/AA* | | | 100,000 | | | | 107,769 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,755,739 | |
| HOSPITAL AND HEALTHCARE BONDS | | | | | | | | | | | |
| 5.37% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte-Mecklenburg NC Hospital Authority Healthcare | | | 5.000 | | | | 01/15/2018 | | | Aa3/AA-* | | | 200,000 | | | | 218,810 | |
Charlotte-Mecklenburg Hospital | | | 5.000 | | | | 01/15/2019 | | | Aa3/AA-* | | | 200,000 | | | | 217,548 | |
Charlotte-Mecklenburg Hospital | | | 4.375 | | | | 01/15/2019 | | | Aa3/AA-* | | | 150,000 | | | | 164,222 | |
Johnston NC Memorial Hospital Authority | | | 4.000 | | | | 04/01/2015 | | | A2/AA* | | | 95,000 | | | | 97,189 | |
Johnston NC Memorial Hospital Authority Mortgage Revenue | | | 5.000 | | | | 10/01/2018 | | | A2/AA* | | | 175,000 | | | | 197,334 | |
NC Medical Care — Caromont Health | | | 3.250 | | | | 02/15/2018 | | | A1/AA* | | | 370,000 | | | | 398,464 | |
NC Medical Care Mission Health Combined Group | | | 4.000 | | | | 10/01/2014 | | | Aa3/AA-*/AA-@ | | | 100,000 | | | | 100,966 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,394,533 | |
| AIRPORT BONDS | | | | | | | | | | | |
| 2.28% of Net Assets | | | | | | | | | | | | | | | | | | |
Charlotte NC Airport — Charlotte-Douglas International | | | 4.125 | | | | 07/01/2016 | | | Aa3/A+*/A+@ | | | 100,000 | | | | 107,028 | |
Charlotte NC Airport Revenue Refunding | | | 5.000 | | | | 07/01/2015 | | | Aa3/A+*/A+@ | | | 350,000 | | | | 366,386 | |
Raleigh Durham NC Airport Authority | | | 5.000 | | | | 11/01/2017 | | | Aa3/AA-@ | | | 105,000 | | | | 118,451 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 591,865 | |
| TURNPIKES/TOLLROAD/HIGHWAY BONDS | | | | | | | | | | | |
| 1.38% of Net Assets | | | | | | | | | | | | | | | | | | |
NC State Grant Anticipation Revenue Vehicle** | | | 5.000 | | | | 03/01/2021 | | | A2/AA*/A+@ | | | 310,000 | | | | 357,083 | |
| | | | | | | | | | | | | | | | | | |
| LEASE REVENUE BONDS | |
| 1.05% of Net Assets | |
Edgecombe County NC Limited Obligation | | | 4.000 | | | | 06/01/2022 | | | A2 | | | 250,000 | | | | 273,030 | |
| | | | | | | | | | | | | | | | | | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | |
| .48% of Net Assets | |
NC Housing Finance Agency | | | 3.850 | | | | 01/01/2017 | | | Aa2/AA* | | | 120,000 | | | | 125,904 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 99.15% of Net Assets (cost $24,970,631) (See (a) below for further explanation) | | | $ | 25,730,639 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities .85% | | | | | | | | | | | | | | | | | 221,022 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 25,951,661 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | ** | | Security is segregated — see footnote 1(D) |
| | @ | | 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) | | Cost for federal income tax purposes is $24,970,631 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 774,969 | |
| | Unrealized depreciation | | | (14,961 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 760,008 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
31
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds — 100% of Net Assets
June 30, 2014
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 25,730,639 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 25,730,639 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
32
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $24,970,631) | | | | | | $ | 25,730,639 | |
Cash | | | | | | | 6,118 | |
Receivable for fund shares sold | | | | | | | 284 | |
Interest receivable | | | | | | | 261,885 | |
| | | | | | | | |
Total assets | | | | | | | 25,998,926 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 9,059 | | | | | |
Fund shares redeemed | | | 4,080 | | | | | |
Investment advisory fee | | | 10,776 | | | | | |
Transfer agent fee | | | 3,073 | | | | | |
Trustees fees | | | 1,469 | | | | | |
Notes payable | | | 15,000 | | | | | |
Accrued expenses | | | 3,808 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 47,265 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 25,194,664 | |
Accumulated net realized loss on investment transactions | | | | | | | (3,011 | ) |
Net unrealized appreciation in value of investments | | | | | | | 760,008 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 25,951,661 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(2,346,738 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.06 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 690,285 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 132,299 | |
Transfer agent fee | | | 39,184 | |
Custodian expense | | | 9,280 | |
Professional fees | | | 5,808 | |
Trustees fees | | | 2,892 | |
Other expenses | | | 23,830 | |
| | | | |
Total expenses | | | 213,293 | |
Custodian expense reduction | | | (6 | ) |
| | | | |
Net expenses | | | 213,287 | |
| | | | |
Net investment income | | | 476,998 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (2,612 | ) |
Net change in unrealized appreciation/depreciation | | | 174,905 | |
| | | | |
Net realized and unrealized gain on investments | | | 172,293 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 649,291 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
33
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 476,998 | | | $ | 497,855 | |
Net realized gain/(loss) on investments | | | (2,612 | ) | | | 48,620 | |
Net change in unrealized appreciation/depreciation | | | 174,905 | | | | (572,951 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 649,291 | | | | (26,476 | ) |
Distributions from net investment income | | | (477,000 | ) | | | (497,853 | ) |
Distributions from capital gains | | | (41,274 | ) | | | (39,121 | ) |
Net fund share transactions (Note 4) | | | (512,620 | ) | | | 2,163,181 | |
| | | | | | | | |
Total increase/(decrease) | | | (381,603 | ) | | | 1,599,731 | |
Net assets: | | | | | | | | |
Beginning of year | | | 26,333,264 | | | | 24,733,533 | |
| | | | | | | | |
End of year | | $ | 25,951,661 | | | $ | 26,333,264 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | 2 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $11.00 | | | | $11.23 | | | | $10.93 | | | | $10.78 | | | | $10.57 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.20 | | | | 0.21 | | | | 0.24 | | | | 0.26 | | | | 0.29 | |
Net gains/(losses) on securities | | | 0.08 | | | | (0.21 | ) | | | 0.30 | | | | 0.15 | | | | 0.21 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.28 | | | | 0.00 | | | | 0.54 | | | | 0.41 | | | | 0.50 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.20 | ) | | | (0.21 | ) | | | (0.24 | ) | | | (0.26 | ) | | | (0.29 | ) |
Distributions from capital gains | | | (0.02 | ) | | | (0.02 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.22 | ) | | | (0.23 | ) | | | (0.24 | ) | | | (0.26 | ) | | | (0.29 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $11.06 | | | | $11.00 | | | | $11.23 | | | | $10.93 | | | | $10.78 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 2.53% | | | | (0.06)% | | | | 4.98% | | | | 3.86% | | | | 4.77% | |
Net assets, end of year (in thousands) | | | $25,952 | | | | $26,333 | | | | $24,734 | | | | $22,079 | | | | $15,951 | |
Ratio of net expenses to average net assets (a) | | | 0.81% | | | | 0.78% | | | | 0.78% | | | | 0.77% | | | | 0.82% | |
Ratio of gross expenses to average net assets | | | 0.81% | | | | 0.78% | | | | 0.78% | | | | 0.77% | | | | 0.82% | |
Ratio of net investment income to average net assets | | | 1.80% | | | | 1.87% | | | | 2.15% | | | | 2.41% | | | | 2.69% | |
Portfolio turnover | | | 7.10% | | | | 10.19% | | | | 12.31% | | | | 5.15% | | | | 17.94% | |
| (a) | | Percentages are after custodian reduction for which no recovery will be sought. |
The accompanying footnotes are an integral part of the financial statements.
34
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MUNICIPAL UTILITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 42.72% of Net Assets | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority Local Government | | | 5.000 | % | | | 06/01/2032 | | | Aa3 | | $ | 750,000 | | | $ | 796,365 | |
Bristol TN Electric Revenue | | | 5.000 | | | | 09/01/2038 | | | AA-* | | | 1,525,000 | | | | 1,714,481 | |
Chattanooga TN Electric Revenue | | | 5.000 | | | | 09/01/2026 | | | AA+*/AA@ | | | 250,000 | | | | 280,740 | |
Citizens Gas Utility District TN Gas Revenue Refunding | | | 5.000 | | | | 05/01/2029 | | | A* | | | 250,000 | | | | 266,310 | |
Clarksville TN Electric System Revenue | | | 5.000 | | | | 09/01/2032 | | | Aa2 | | | 1,250,000 | | | | 1,349,763 | |
Clarksville TN Electric System Revenue | | | 5.000 | | | | 09/01/2028 | | | Aa2/AA-* | | | 1,000,000 | | | | 1,123,220 | |
Clarksville TN Electric System Revenue | | | 5.000 | | | | 09/01/2032 | | | Aa2/AA-* | | | 480,000 | | | | 526,032 | |
Clarksville TN Electric System Revenue | | | 5.000 | | | | 09/01/2033 | | | Aa2/AA-* | | | 2,000,000 | | | | 2,183,620 | |
Clarksville TN Water Sewer & Gas Revenue | | | 5.000 | | | | 02/01/2033 | | | Aa3/AA-@ | | | 500,000 | | | | 550,130 | |
Columbia TN Refunded — Sewer System | | | 5.000 | | | | 12/01/2024 | | | Aa2 | | | 1,235,000 | | | | 1,306,791 | |
Columbia TN Broadband Network Revenue and Tax | | | 5.000 | | | | 03/01/2025 | | | Aa2 | | | 1,000,000 | | | | 1,026,470 | |
Columbia TN Waterworks Revenue | | | 5.000 | | | | 12/01/2032 | | | Aa3 | | | 885,000 | | | | 971,668 | |
Franklin TN Water and Sewer Revenue and Tax Authority | | | 5.000 | | | | 04/01/2024 | | | Aaa | | | 750,000 | | | | 928,200 | |
Gallatin TN Water and Sewer Revenue | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 2,540,000 | | | | 2,779,394 | |
Hallsdale-Powell Utility Knox County Water & Sewer | | | 5.000 | | | | 04/01/2026 | | | A3/AA* | | | 1,000,000 | | | | 1,093,730 | |
Hallsdale-Powell Utility Knox County Water & Sewer | | | 5.000 | | | | 04/01/2031 | | | A3/AA* | | | 740,000 | | | | 797,084 | |
Harpeth Valley Utilities Davidson and Williamson Counties | | | 5.000 | | | | 09/01/2032 | | | Aa3 | | | 1,420,000 | | | | 1,550,156 | |
Harpeth Valley TN Utilities District | | | 5.000 | | | | 09/01/2040 | | | AA* | | | 1,000,000 | | | | 1,107,230 | |
Harpeth Valley TN Utilities District | | | 5.000 | | | | 09/01/2034 | | | AA* | | | 500,000 | | | | 565,515 | |
Jackson TN Energy Authority Gas System Revenue | | | 5.000 | | | | 10/01/2028 | | | Aa2 | | | 1,000,000 | | | | 1,104,640 | |
Knox-Chapman TN Utility District Knox County Water and Sewer | | | 5.250 | | | | 01/01/2036 | | | AA-* | | | 700,000 | | | | 776,705 | |
Knox-Chapman TN Utilities Refunding & Impact | | | 4.500 | | | | 01/01/2027 | | | AA-* | | | 1,000,000 | | | | 1,119,000 | |
Memphis TN Electric Systems Revenue | | | 5.000 | | | | 12/01/2034 | | | Aa2/AA+* | | | 250,000 | | | | 287,923 | |
Metropolitan Government Nashville & Davidson County Electric^ | | | 5.000 | | | | 05/15/2036 | | | AA+*/AA+@ | | | 500,000 | | | | 569,760 | |
Metropolitan Government Nashville & Davidson County Electric^ | | | 5.000 | | | | 05/15/2039 | | | AA+*/AA+@ | | | 500,000 | | | | 566,160 | |
Metropolitan Government Nashville and Davidson County TN | | | 4.750 | | | | 05/15/2028 | | | AA+*/AA+@ | | | 460,000 | | | | 506,391 | |
Metropolitan Government Nashville and Davidson County TN | | | 5.000 | | | | 05/15/2036 | | | AA+*/AA+@ | | | 3,085,000 | | | | 3,421,142 | |
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue | | | 5.000 | | | | 07/01/2030 | | | Aa3/AA-* | | | 3,250,000 | | | | 3,753,945 | |
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue | | | 5.000 | | | | 07/01/2031 | | | Aa3/AA-* | | | 500,000 | | | | 574,555 | |
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue | | | 5.000 | | | | 07/01/2033 | | | Aa3/AA-* | | | 575,000 | | | | 653,959 | |
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue | | | 5.000 | | | | 07/01/2040 | | | Aa3/AA-* | | | 750,000 | | | | 840,540 | |
South Blount County TN Utility District Waterworks Revenue | | | 5.000 | | | | 12/01/2028 | | | A2/AA* | | | 1,125,000 | | | | 1,236,150 | |
Watauga River Tn Regional Water Authority Waterworks | | | 5.000 | | | | 07/01/2034 | | | A* | | | 500,000 | | | | 538,210 | |
West Wilson Utility District TN Waterworks Revenue | | | 4.750 | | | | 06/01/2028 | | | Aa3 | | | 2,460,000 | | | | 2,632,077 | |
West Wilson Utility District TN Waterworks Revenue | | | 5.000 | | | | 06/01/2033 | | | Aa3 | | | 1,170,000 | | | | 1,329,296 | |
White House Utility District TN Water and Sewer | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 1,235,000 | | | | 1,328,144 | |
White House Utility District TN Water and Sewer** | | | 5.000 | | | | 01/01/2030 | | | Aa3 | | | 2,505,000 | | | | 2,656,653 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 44,812,149 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | | | | | | | | | | | |
| 12.46% of Net Assets | | | | | | | | | | | | | | | | | | |
Metropolitan TN Government Nashville & Davidson County Vanderbilt University | | | 5.000 | | | | 10/01/2034 | | | Aa2/AA*/AA+@ | | | 1,000,000 | | | | 1,111,380 | |
Metropolitan TN Government Nashville & Davidson County Vanderbilt University | | | 5.000 | | | | 10/01/2028 | | | Aa2/AA*/AA+@ | | | 1,150,000 | | | | 1,337,991 | |
Shelby County TN Health Educational Facilities Board Rhodes College | | | 5.000 | | | | 08/01/2030 | | | A1/A+* | | | 500,000 | | | | 564,075 | |
TN State School Board Authority Higher Educational Facilities | | | 5.000 | | | | 05/01/2028 | | | Aa1/AA*/AA@ | | | 1,000,000 | | | | 1,119,650 | |
TN State School Board Authority Higher Educational Facilities | | | 5.125 | | | | 05/01/2033 | | | Aa1/AA*/AA@ | | | 1,300,000 | | | | 1,441,128 | |
TN State School Board Authority Higher Educational Facilities | | | 5.000 | | | | 05/01/2034 | | | Aa1/AA*/AA+@ | | | 500,000 | | | | 549,175 | |
TN State School Board Authority Refunding Higher Education | | | 5.000 | | | | 05/01/2024 | | | Aa1/AA*/AA+@ | | | 1,395,000 | | | | 1,444,913 | |
TN State School Board Authority Refunding Higher Education | | | 5.000 | | | | 05/01/2025 | | | Aa1/AA*/AA+@ | | | 1,440,000 | | | | 1,490,530 | |
TN State School Board Authority Higher Educational Facilities | | | 4.750 | | | | 05/01/2030 | | | Aa1/AA*/AA+@ | | | 2,750,000 | | | | 2,896,327 | |
TN State School Bond Authority | | | 5.000 | | | | 11/01/2043 | | | Aa1/AA*/AA+@ | | | 1,000,000 | | | | 1,115,250 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 13,070,419 | |
The accompanying footnotes are an integral part of the financial statements.
35
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| PUBLIC FACILITIES REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 11.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority Local Government | | | 5.000 | % | | | 06/01/2025 | | | Aa2/AA* | | $ | 100,000 | | | $ | 113,837 | |
Blount County TN Public Building Authority Local Government | | | 5.000 | | | | 06/01/2027 | | | Aa2/AA* | | | 1,500,000 | | | | 1,691,805 | |
Blount County TN Public Building Authority Local Government | | | 4.750 | | | | 06/01/2031 | | | Aa2/AA* | | | 750,000 | | | | 817,838 | |
Memphis-Shelby County TN Sports Authority Memphis Arena | | | 5.250 | | | | 11/01/2026 | | | Aa3/AA-*/A+@ | | | 500,000 | | | | 552,995 | |
Memphis-Shelby County Sports Authority | | | 5.250 | | | | 11/01/2027 | | | Aa3/AA-*/A+@ | | | 750,000 | | | | 836,130 | |
Metropolitan Government Nashville & Davidson County TN Sports Authority | | | 5.000 | | | | 08/01/2031 | | | Aa3/AA-* | | | 1,500,000 | | | | 1,689,960 | |
Metropolitan Government Nashville & Davidson County TN Sports Authority | | | 5.000 | | | | 08/01/2038 | | | Aa3/AA-* | | | 460,000 | | | | 511,778 | |
Metropolitan Government Nashville & Davidson County TN Convention Center | | | 5.000 | | | | 07/01/2026 | | | A1/A* | | | 630,000 | | | | 702,041 | |
Pigeon Forge Industrial Development Board | | | 5.000 | | | | 06/01/2024 | | | AA* | | | 600,000 | | | | 691,464 | |
Pigeon Forge Industrial Development Board TN Public Facilities | | | 5.000 | | | | 06/01/2027 | | | AA* | | | 1,400,000 | | | | 1,597,218 | |
Pigeon Forge Industrial Development Board TN Public Facilities | | | 5.000 | | | | 06/01/2029 | | | AA* | | | 2,120,000 | | | | 2,401,514 | |
Pigeon Forge Industrial Development Board TN Public Facilities | | | 5.000 | | | | 06/01/2034 | | | AA* | | | 850,000 | | | | 942,598 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 12,549,178 | |
| HOSPITAL AND HEALTHCARE BONDS | | | | | | | | | | | | | | | | | | |
| 8.67% of Net Assets | | | | | | | | | | | | | | | | | | |
Chattanooga TN Health Educational and Housing Facilities Board | | | 5.000 | | | | 01/01/2033 | | | A1/A+*/A+@ | | | 500,000 | | | | 539,855 | |
Rutherford County TN Health & Educational Facilities Ascension Health | | | 5.000 | | | | 11/15/2040 | | | Aa2/AA+*/AA+@ | | | 1,500,000 | | | | 1,616,940 | |
Shelby County TN Health Educational and Housing Facilities | | | 5.000 | | | | 05/01/2027 | | | A2/A+* | | | 750,000 | | | | 819,495 | |
Shelby County TN Health Educational and Housing Facilities | | | 5.000 | | | | 07/01/2031 | | | Aa1/AAA@ | | | 4,750,000 | | | | 5,035,143 | |
Shelby County TN Health Educational and Housing Facilities | | | 5.250 | | | | 09/01/2027 | | | A2/AA* | | | 1,000,000 | | | | 1,070,040 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 9,081,473 | |
| REFUNDING BONDS | | | | | | | | | | | | | | | | | | |
| 6.31% of Net Assets | | | | | | | | | | | | | | | | | | |
Chattanooga TN Industrial Development Board Lease Rent Revenue | | | 5.000 | | | | 10/01/2027 | | | A2/AA+*/AA@ | | | 1,000,000 | | | | 1,089,370 | |
Greene County TN General Obligation | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 505,000 | | | | 540,800 | |
Manchester TN Refunding General Obligation | | | 5.000 | | | | 06/01/2038 | | | A2/AA* | | | 100,000 | | | | 110,828 | |
Memphis TN General Improvement | | | 5.000 | | | | 04/01/2034 | | | Aa2/AA* | | | 500,000 | | | | 567,240 | |
Memphis TN General Improvement | | | 5.000 | | | | 04/01/2039 | | | Aa2/AA* | | | 250,000 | | | | 280,088 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 05/15/2027 | | | Aa2/AA* | | | 1,195,000 | | | | 1,320,427 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 05/15/2028 | | | Aa2/AA* | | | 205,000 | | | | 225,051 | |
Pigeon Forge TN Refunding | | | 4.900 | | | | 06/01/2028 | | | Aa3/AA* | | | 1,000,000 | | | | 1,086,330 | |
Shelby County TN Refunding | | | 5.000 | | | | 03/01/2026 | | | Aa1/AA+*/AA+@ | | | 1,200,000 | | | | 1,399,043 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,619,177 | |
| PREREFUNDED BONDS | |
| 4.85% of Net Assets | | | | | | | | | | | | | | | | | | |
Johnson City TN Health & Educational Facilities Escrowed | | | 5.125 | | | | 07/01/2025 | | | AA-* | | | 270,000 | | | | 270,500 | |
Knoxville TN Waste Water System Revenue Improvement | | | 5.000 | | | | 04/01/2037 | | | Aa2/AA+* | | | 370,000 | | | | 383,350 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 01/01/2025 | | | Aa2/AA* | | | 3,000,000 | | | | 3,428,760 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 05/15/2017 | | | Aa2/AA-* | | | 205,000 | | | | 230,670 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 05/15/2017 | | | Aa2/AA-* | | | 35,000 | | | | 39,383 | |
Rutherford County TN Construction Utility District Waterworks | | | 5.000 | | | | 02/01/2031 | | | Aa2/AAA* | | | 685,000 | | | | 736,360 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,089,023 | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | |
| 4.32% of Net Assets | | | | | | | | | | | | | | | | | | |
Oak Ridge TN Industrial Development Board Refunding Revenue | | | 5.250 | | | | 08/20/2018 | | | A2 | | | 230,000 | | | | 230,014 | |
TN Housing Development Agency | | | 5.000 | | | | 07/01/2029 | | | Aa1/AA+* | | | 555,000 | | | | 576,834 | |
TN Housing Development Agency | | | 5.000 | | | | 07/01/2028 | | | Aa1/AA+* | | | 535,000 | | | | 554,608 | |
TN Housing Development Agency | | | 5.400 | | | | 07/01/2035 | | | Aa1/AA+* | | | 395,000 | | | | 416,164 | |
TN Housing Development Agency Homeownership Program | | | 5.000 | | | | 07/01/2029 | | | Aa1/AA+* | | | 660,000 | | | | 692,148 | |
TN Housing Development Agency Homeownership Program | | | 4.700 | | | | 07/01/2027 | | | Aa1/AA+* | | | 1,315,000 | | | | 1,377,975 | |
TN Housing Development Agency Housing Finance Program | | | 4.850 | | | | 01/01/2025 | | | Aa2 | | | 645,000 | | | | 684,242 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,531,985 | |
The accompanying footnotes are an integral part of the financial statements.
36
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| SCHOOL IMPROVEMENT BONDS | |
| 3.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Cleveland TN General Obligation | | | 5.000 | % | | | 06/01/2027 | | | Aa3/AA* | | $ | 680,000 | | | $ | 727,940 | |
Marion County TN Schools | | | 5.000 | | | | 06/01/2025 | | | A1 | | | 1,050,000 | | | | 1,122,776 | |
Rhea County TN | | | 5.000 | | | | 04/01/2029 | | | A1 | | | 1,385,000 | | | | 1,556,933 | |
Smith County TN General Obligation | | | 5.000 | | | | 04/01/2021 | | | | | | 720,000 | | | | 748,944 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,156,593 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 2.16% of Net Assets | | | | | | | | | | | | | | | | | | |
Memphis Shelby County TN Port Authority Community Development | | | 5.000 | | | | 04/01/2035 | | | Aa3/AA-* | | | 625,000 | | | | 680,131 | |
Memphis TN Refunding and General Impact General Obligation | | | 5.000 | | | | 05/01/2036 | | | Aa2/AA* | | | 850,000 | | | | 935,561 | |
Springfield TN Public Improvement | | | 4.500 | | | | 03/01/2024 | | | A1 | | | 565,000 | | | | 648,298 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,263,990 | |
| ESCROWED TO MATURITY BONDS | |
| 1.14% of Net Assets | | | | | | | | | | | | | | | | | | |
Johnson City TN Health & Educational Facilities Medical Center | | | 5.000 | | | | 07/01/2018 | | | AA-* | | | 135,000 | | | | 135,286 | |
Johnson City TN Health & Educational Facilities Mountain State | | | 6.500 | | | | 07/01/2014 | | | A3/AA-*/BBB+@ | | | 1,000,000 | | | | 1,000,150 | |
Metropolitan Nashville and Davidson County TN Water and Sewer | | | 6.500 | | | | 12/01/2014 | | | AA-* | | | 60,000 | | | | 61,605 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,197,041 | |
| INDUSTRIAL REVENUE BONDS | |
| 0.91% of Net Assets | | | | | | | | | | | | | | | | | | |
Industrial Development Board TN Blount County | | | 5.000 | | | | 06/01/2027 | | | Aa3/AA-* | | | 850,000 | | | | 957,755 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 99.46% of Net Assets (cost $99,073,748) (See (a) below for further explanation) | | | | | | | | | $ | 104,328,783 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities .54% | | | | | | | | | | | | | | | | | 565,508 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 104,894,291 | |
| | | | | | | | | | | | | | | | | | |
| | * | | Standard and Poor’s Corporation |
| | ** | | Segregated security — see footnote 1(D) |
| | ^ | | When-issued security or extended settlement — see footnote 1(D) |
| | @ | | 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) | | Cost for federal income tax purposes is $99,073,748 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | | | | | |
| | Unrealized appreciation | | $ | 5,334,968 | |
| | Unrealized depreciation | | | (79,933 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 5,255,035 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 104,328,783 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 104,328,783 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
37
TENNESSEE TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $99,073,748) | | | | | | $ | 104,328,783 | |
Cash | | | | | | | 752,679 | |
Receivable for fund shares sold | | | | | | | 17,255 | |
Interest receivable | | | | | | | 1,363,929 | |
| | | | | | | | |
Total assets | | | | | | | 106,462,646 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 1,127,768 | | | | | |
Distributions to shareholders | | | 245,030 | | | | | |
Fund shares redeemed | | | 96,328 | | | | | |
Investment advisory fee | | | 42,557 | | | | | |
Transfer agent fee | | | 10,980 | | | | | |
Trustees fees | | | 2,572 | | | | | |
Accrued expenses | | | 43,120 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 1,568,355 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 100,309,309 | |
Accumulated net realized loss on investment transactions | | | | | | | (670,053 | ) |
Net unrealized appreciation in value of investments | | | | | | | 5,255,035 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 104,894,291 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(9,083,451 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.55 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 4,057,646 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 511,018 | |
Transfer agent fee | | | 131,424 | |
Custodian expense | | | 19,174 | |
Professional fees | | | 22,622 | |
Trustees fees | | | 11,292 | |
Other expenses | | | 31,640 | |
| | | | |
Total expenses | | | 727,170 | |
Custodian expense reduction | | | (23 | ) |
| | | | |
Net expenses | | | 727,147 | |
| | | | |
Net investment income | | | 3,330,499 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (249,491 | ) |
Net change in unrealized appreciation/depreciation | | | 2,664,327 | |
| | | | |
Net realized and unrealized gain on investments | | | 2,414,836 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 5,745,335 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
38
TENNESSEE TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 3,330,499 | | | $ | 3,364,193 | |
Net realized gain/(loss) on investments | | | (249,491 | ) | | | 200,774 | |
Net change in unrealized appreciation/depreciation | | | 2,664,327 | | | | (3,013,866 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 5,745,335 | | | | 551,101 | |
Distributions from net investment income | | | (3,330,499 | ) | | | (3,364,193 | ) |
Net fund share transactions (Note 4) | | | (3,216,922 | ) | | | 7,926,230 | |
| | | | | | | | |
Total increase/(decrease) | | | (802,086 | ) | | | 5,113,138 | |
Net assets: | | | | | | | | |
Beginning of year | | | 105,696,377 | | | | 100,583,239 | |
| | | | | | | | |
End of year | | $ | 104,894,291 | | | $ | 105,696,377 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $11.27 | | | | $11.56 | | | | $11.04 | | | | $11.04 | | | | $10.71 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.37 | | | | 0.36 | | | | 0.40 | | | | 0.41 | | | | 0.40 | |
Net gains/(losses) on securities | | | 0.28 | | | | (0.29 | ) | | | 0.52 | | | | 0.00 | (b) | | | 0.33 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.65 | | | | 0.07 | | | | 0.92 | | | | 0.41 | | | | 0.73 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.37 | ) | | | (0.36 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.40 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $11.55 | | | | $11.27 | | | | $11.56 | | | | $11.04 | | | | $11.04 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 5.86% | | | | 0.56% | | | | 8.44% | | | | 3.78% | | | | 6.92% | |
Net assets, end of year (in thousands) | | | $104,894 | | | | $105,696 | | | | $100,583 | | | | $91,740 | | | | $94,960 | |
Ratio of net expenses to average net assets (a) | | | 0.71% | | | | 0.65% | | | | 0.70% | | | | 0.69% | | | | 0.70% | |
Ratio of gross expenses to average net assets | | | 0.71% | | | | 0.69% | | | | 0.70% | | | | 0.69% | | | | 0.70% | |
Ratio of net investment income to average net assets | | | 3.25% | | | | 3.10% | | | | 3.50% | | | | 3.68% | | | | 3.67% | |
Portfolio turnover | | | 14.44% | | | | 7.37% | | | | 8.39% | | | | 6.38% | | | | 14.51% | |
| (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. |
| (b) | | Rounds to less than $.01. |
The accompanying footnotes are an integral part of the financial statements.
39
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity Date | | | Rating# | | Par Value | | | Fair Value | |
| | | | | | | | | | | | | | | | | | |
| REFUNDING BONDS | |
| 20.89% of Net Assets | | | | | | | | | | | | | | | | | | |
Johnson City TN Refunding | | | 4.000 | % | | | 06/01/2015 | | | AA@ | | $ | 400,000 | | | $ | 413,427 | |
Memphis TN General Improvement | | | 5.000 | | | | 04/01/2022 | | | Aa2/AA*/AA-@ | | | 185,000 | | | | 213,488 | |
Memphis TN General Obligation | | | 5.000 | | | | 05/01/2020 | | | Aa2/AA*/AA-@ | | | 250,000 | | | | 291,810 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2023 | | | Aa2/AA* | | | 250,000 | | | | 274,143 | |
Metropolitan Government Nashville & Davidson County TN Refunding | | | 5.000 | | | | 07/01/2021 | | | Aa2/AA* | | | 175,000 | | | | 208,044 | |
Metropolitan Government Nashville & Davidson County TN Refunding | | | 5.000 | | | | 05/15/2019 | | | Aa2/AA* | | | 215,000 | | | | 240,613 | |
Polk County TN Refinancing | | | 5.000 | | | | 05/01/2020 | | | A2 | | | 150,000 | | | | 165,845 | |
Rhea County TN | | | 3.000 | | | | 04/01/2018 | | | A1 | | | 200,000 | | | | 211,958 | |
Unicoi County TN Refunding | | | 5.250 | | | | 04/01/2019 | | | A1/AA-* | | | 200,000 | | | | 233,876 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,253,204 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 16.98% of Net Assets | | | | | | | | | | | | | | | | | | |
Castalian Springs — Bethpage TN Waterworks | | | 3.000 | | | | 01/01/2019 | | | A+* | | | 260,000 | | | | 275,288 | |
Chattanooga TN Electric Revenue | | | 5.000 | | | | 09/01/2021 | | | AA+*/AA@ | | | 400,000 | | | | 453,320 | |
Columbia TN Electric System Revenue | | | 5.000 | | | | 09/01/2021 | | | Aa3 | | | 165,000 | | | | 185,618 | |
Cross Anchor TN Utility District | | | 4.250 | | | | 12/01/2015 | | | AA* | | | 65,000 | | | | 68,168 | |
Cross Anchor TN Utility District | | | 4.250 | | | | 12/01/2016 | | | AA* | | | 65,000 | | | | 69,859 | |
Johnson City TN Electric Revenue | | | 4.000 | | | | 05/01/2022 | | | Aa2/AA-* | | | 100,000 | | | | 106,426 | |
Johnson City TN Electric Revenue | | | 4.500 | | | | 05/01/2021 | | | Aa2/AA* | | | 50,000 | | | | 55,138 | |
Lawrenceburg TN Refunding Water and Sewer | | | 5.000 | | | | 07/01/2015 | | | A2 | | | 125,000 | | | | 130,632 | |
Metropolitan Government Nashville & Davidson County Water &Sewer | | | 5.250 | | | | 01/01/2019 | | | Aa2/AA* | | | 125,000 | | | | 146,168 | |
New Market Utilty District Jefferson County TN Waterworks | | | 4.000 | | | | 06/01/2016 | | | A3/AA* | | | 100,000 | | | | 105,846 | |
New Market Utilty District Jefferson County TN Waterworks | | | 4.000 | | | | 06/01/2017 | | | A3/AA* | | | 100,000 | | | | 107,769 | |
Sevier County TN Utility District Gas System Revenue | | | 2.650 | | | | 06/01/2015 | | | A+* | | | 125,000 | | | | 126,790 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,831,022 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 12.29% of Net Assets | | | | | | | | | | | | | | | | | | |
Blount County TN Public Building Authority | | | 4.000 | | | | 06/01/2020 | | | Aa2/AA* | | | 150,000 | | | | 165,692 | |
Blount County TN Public Building Authority | | | 5.000 | | | | 06/01/2021 | | | Aa2/AA* | | | 175,000 | | | | 201,605 | |
Claiborne County TN Public Improvement | | | 5.000 | | | | 04/01/2017 | | | NR | | | 25,000 | | | | 28,013 | |
Claiborne County TN Public Improvement | | | 5.000 | | | | 04/01/2017 | | | NR | | | 145,000 | | | | 161,043 | |
Gallatin County Capital Outlay Notes | | | 4.630 | | | | 01/01/2019 | | | AA+* | | | 100,000 | | | | 113,838 | |
Memphis TN Refunding General Improvement | | | 5.000 | | | | 10/01/2017 | | | Aa2/AA*/AA-@ | | | 100,000 | | | | 113,908 | |
Sevier County TN Public Building Authority | | | 5.000 | | | | 06/01/2018 | | | AA-* | | | 150,000 | | | | 170,462 | |
Tennessee State | | | 4.000 | | | | 05/01/2021 | | | Aaa/AA+*/AAA@ | | | 340,000 | | | | 371,300 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,325,861 | |
| PREREFUNDED BONDS | |
| 10.48% of Net Assets | | | | | | | | | | | | | | | | | | |
Madison County TN Refunding — School and Public Improvement | | | 5.000 | | | | 04/01/2018 | | | Aa2/AA* | | | 175,000 | | | | 183,075 | |
Memphis TN General Obligation General Improvement | | | 5.000 | | | | 10/01/2016 | | | Aa2/AA*/AA-@ | | | 450,000 | | | | 455,468 | |
Memphis TN | | | 5.000 | | | | 04/01/2024 | | | Aa2/AA*/AA-@ | | | 200,000 | | | | 224,104 | |
Metropolitan Government Nashville & Davidson County | | | 5.000 | | | | 01/01/2019 | | | Aa2/AA* | | | 200,000 | | | | 228,584 | |
Metropolitan Government Nashville & Davidson County TN Refunding | | | 5.000 | | | | 05/15/2017 | | | NR | | | 35,000 | | | | 39,383 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,130,614 | |
| PUBLIC FACILITIES REVENUE BONDS | |
| 9.37% of Net Assets | | | | | | | | | | | | | | | | | | |
Memphis TN Center City Revenue Finance Corporation | | | 5.250 | | | | 11/01/2025 | | | Aa3/AA* | | | 100,000 | | | | 115,783 | |
Memphis TN Center City Revenue Finance Corporation Sports Facility | | | 4.000 | | | | 02/01/2021 | | | Aa3/AA-* | | | 100,000 | | | | 110,333 | |
Memphis TN Center City Revenue Finance Corporation Sports Facility | | | 4.000 | | | | 02/01/2022 | | | Aa3/AA-* | | | 220,000 | | | | 240,920 | |
Memphis-Shelby County TN Sports Authority Memphis Arena | | | 5.000 | | | | 11/01/2017 | | | Aa3/AA-*/A+@ | | | 275,000 | | | | 304,117 | |
Metropolitian Government Nashville & Davidson County Convention | | | 5.000 | | | | 07/01/2015 | | | A1/A* | | | 125,000 | | | | 130,698 | |
Metropolitian Government Nashville & Davidson County Convention | | | 3.750 | | | | 07/01/2018 | | | A1/A* | | | 100,000 | | | | 109,033 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,010,884 | |
The accompanying footnotes are an integral part of the financial statements.
40
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity Date | | | Rating# | | Par Value | | | Fair Value | |
| SCHOOL IMPROVEMENT BONDS | |
| 8.17% of Net Assets | | | | | | | | | | | | | | | | | | |
Lincoln County TN | | | 5.250 | % | | | 04/01/2019 | | | Aa3 | | $ | 200,000 | | | $ | 229,715 | |
Rhea County TN | | | 4.000 | | | | 04/01/2025 | | | A1 | | | 250,000 | | | | 267,528 | |
Robertson County TN School | | | 4.000 | | | | 06/01/2020 | | | Aa3/AA* | | | 250,000 | | | | 271,513 | |
Robertson County TN School and Public Improvement | | | 4.000 | | | | 06/01/2019 | | | AA* | | | 100,000 | | | | 111,963 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 880,719 | |
| HOSPITAL AND HEALTHCARE BONDS | |
| 6.87% of Net Assets | | | | | | | | | | | | | | | | | | |
Shelby County TN Health Educational & Housing Facilities | | | 4.250 | | | | 09/01/2020 | | | AA-* | | | 265,000 | | | | 292,494 | |
Shelby County Health Education | | | 5.250 | | | | 09/01/2020 | | | A2/AA* | | | 400,000 | | | | 448,780 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 741,274 | |
| STATE AND LOCAL MORTGAGE/HOUSING BONDS | |
| 5.91% of Net Assets | | | | | | | | | | | | | | | | | | |
TN Housing Development Agency Homeownership Program | | | 4.200 | | | | 01/01/2016 | | | Aa1/AA+* | | | 105,000 | | | | 107,960 | |
TN Housing Development Agency | | | 4.800 | | | | 07/01/2024 | | | Aa1/AA+* | | | 185,000 | | | | 191,936 | |
TN Housing Development Agency Homeownership Program | | | 2.950 | | | | 01/01/2015 | | | Aa1/AA+* | | | 90,000 | | | | 90,932 | |
TN Housing Development Agency Homeownership Program | | | 1.900 | | | | 07/01/2019 | | | Aa1/AA+* | | | 245,000 | | | | 246,284 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 637,112 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 3.59% of Net Assets | | | | | | | | | | | | | | | | | | |
Franklin County TN Health & Educational Facilities | | | 4.000 | | | | 09/01/2019 | | | A+* | | | 350,000 | | | | 386,565 | |
| | | | | | | | | | | | | | | | | | |
| AIRPORT BONDS | |
| 2.32% of Net Assets | | | | | | | | | | | | | | | | | | |
Metropolitan Nashville Airport Authority | | | 4.500 | | | | 07/01/2014 | | | A1/AA* | | | 250,000 | | | | 250,030 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 96.87% of Net Assets (cost $10,165,501) (See (a) below for further explanation) | | | | | | $ | 10,447,285 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 3.13% | | | | | | | | | | | | | | | | | 337,290 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 10,784,575 | |
| | | | | | | | | | | | | | | | | | |
| | * | | 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) | | Cost for federal income tax purposes is $10,165,501 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 289,869 | |
| | Unrealized depreciation | | | (8,085 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 281,784 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | | 10,447,285 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 10,447,285 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
41
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $10,165,501) | | | | | | $ | 10,447,285 | |
Cash | | | | | | | 240,147 | |
Interest receivable | | | | | | | 118,051 | |
| | | | | | | | |
Total assets | | | | | | | 10,805,483 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 2,786 | | | | | |
Fund shares redeemed | | | 2,431 | | | | | |
Investment advisory fee | | | 4,318 | | | | | |
Transfer agent fee | | | 1,303 | | | | | |
Trustees fees | | | 1,110 | | | | | |
Accrued expenses | | | 8,960 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 20,908 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 10,786,000 | |
Accumulated net realized loss on investment transactions | | | | | | | (283,209 | ) |
Net unrealized appreciation in value of investments | | | | | | | 281,784 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 10,784,575 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(997,386 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.81 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 283,745 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 53,656 | |
Transfer agent fee | | | 16,660 | |
Custodian expense | | | 8,882 | |
Professional fees | | | 2,378 | |
Trustees fees | | | 1,186 | |
Other expenses | | | 9,935 | |
| | | | |
Total expenses | | | 92,697 | |
Custodian expense reduction | | | (2 | ) |
| | | | |
Net expenses | | | 92,695 | |
| | | | |
Net investment income | | | 191,050 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (17,213 | ) |
Net change in unrealized appreciation/depreciation | | | 80,111 | |
| | | | |
Net realized and unrealized gain on investments | | | 62,898 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 253,948 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
42
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 191,050 | | | $ | 226,505 | |
Net realized gain/(loss) on investments | | | (17,213 | ) | | | 46,406 | |
Net change in unrealized appreciation/depreciation | | | 80,111 | | | | (312,568 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 253,948 | | | | (39,657 | ) |
Distributions from net investment income | | | (191,050 | ) | | | (226,505 | ) |
Net fund share transactions (Note 4) | | | (299,017 | ) | | | (739,399 | ) |
| | | | | | | | |
Total decrease | | | (236,119 | ) | | | (1,005,561 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 11,020,694 | | | | 12,026,255 | |
| | | | | | | | |
End of year | | $ | 10,784,575 | | | $ | 11,020,694 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $10.75 | | | | $11.01 | | | | $10.85 | | | | $10.82 | | | | $10.54 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.19 | | | | 0.20 | | | | 0.24 | | | | 0.26 | | | | 0.28 | |
Net gains/(losses) on securities both realized and unrealized | | | 0.06 | | | | (0.26 | ) | | | 0.16 | | | | 0.03 | | | | 0.28 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.25 | | | | (0.06 | ) | | | 0.40 | | | | 0.29 | | | | 0.56 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.19 | ) | | | (0.20 | ) | | | (0.24 | ) | | | (0.26 | ) | | | (0.28 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $10.81 | | | | $10.75 | | | | $11.01 | | | | $10.85 | | | | $10.82 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 2.36% | | | | (0.53)% | | | | 3.74% | | | | 2.72% | | | | 5.39% | |
Net assets, end of year (in thousands) | | | $10,785 | | | | $11,021 | | | | $12,026 | | | | $9,889 | | | | $10,113 | |
Ratio of net expenses to average net assets (a) | | | 0.86% | | | | 0.86% | | | | 0.87% | | | | 0.80% | | | | 0.81% | |
Ratio of gross expenses to average net assets | | | 0.86% | | | | 0.86% | | | | 0.87% | | | | 0.82% | | | | 0.83% | |
Ratio of net investment income to average net assets | | | 1.78% | | | | 1.86% | | | | 2.21% | | | | 2.40% | | | | 2.63% | |
Portfolio turnover | | | 11.38% | | | | 20.56% | | | | 1.86% | | | | 18.32% | | | | 16.16% | |
| (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. |
The accompanying footnotes are an integral part of the financial statements.
43
DUPREE MUTUAL FUNDS — INTERMEDIATE GOVERNMENT BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
U.S. Government Securities and Agencies — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| FEDERAL FARM CREDIT | |
| 59.02% of Net Assets | | | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank | | | 5.250 | % | | | 10/25/2022 | | | Aaa/AA+*/AAA@ | | $ | 1,500,000 | | | $ | 1,824,116 | |
Federal Farm Credit Bank | | | 5.050 | | | | 12/21/2021 | | | Aaa/AA+*/AAA@ | | | 370,000 | | | | 439,540 | |
Federal Farm Credit Bank | | | 5.840 | | | | 07/20/2022 | | | Aaa/AA+*/AAA@ | | | 2,650,000 | | | | 3,270,670 | |
Federal Farm Credit Bank | | | 5.250 | | | | 05/10/2022 | | | Aaa/AA+*/AAA@ | | | 2,000,000 | | | | 2,399,602 | |
Federal Farm Credit Bank | | | 5.125 | | | | 11/28/2022 | | | Aaa/AA+*/AAA@ | | | 2,000,000 | | | | 2,404,598 | |
Federal Farm Credit Bank | | | 2.980 | | | | 08/21/2026 | | | Aaa/AA+*/AAA@ | | | 500,000 | | | | 475,887 | |
Federal Farm Credit Bank | | | 3.000 | | | | 03/18/2026 | | | Aaa/AA+*/AAA@ | | | 750,000 | | | | 713,567 | |
Federal Farm Credit Bank | | | 3.300 | | | | 06/26/2024 | | | Aaa/AA+*/AAA@ | | | 1,000,000 | | | | 997,942 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 12,525,922 | |
| FEDERAL HOME LOAN BANK | |
| 33.39% of Net Assets | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank | | | 3.250 | | | | 06/09/2023 | | | Aaa/AA+* | | | 250,000 | | | | 259,677 | |
Federal Home Loan Bank | | | 7.000 | | | | 08/15/2014 | | | Aaa/AA+* | | | 500,000 | | | | 504,221 | |
Federal Home Loan Bank | | | 5.365 | | | | 09/09/2024 | | | Aaa/AA+* | | | 1,750,000 | | | | 2,118,767 | |
Federal Home Loan Bank | | | 5.250 | | | | 12/11/2020 | | | Aaa/AA+* | | | 985,000 | | | | 1,167,584 | |
Federal Home Loan Bank | | | 5.000 | | | | 12/10/2021 | | | Aaa/AA+* | | | 500,000 | | | | 586,624 | |
Federal Home Loan Bank | | | 5.750 | | | | 06/10/2022 | | | Aaa/AA+* | | | 2,000,000 | | | | 2,449,124 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,085,997 | |
| FEDERAL NATIONAL MORTGAGE ASSOCIATION | |
| 6.12% of Net Assets | | | | | | | | | | | | | | | | | | |
Federal National Mortgage Association | | | 8.100 | | | | 08/12/2019 | | | Aaa/AA+*/AAA@ | | | 1,000,000 | | | | 1,297,842 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.53% of Net Assets (cost $20,051,511) (See (a) below for further explanation) | | | | | | | | | $ | 20,909,761 | |
| | | | | | | | | | | | | | | | | | |
Other liabilities in excess of assets 1.47% | | | | | | | | | | | | | | | | | 313,811 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 21,223,572 | |
| | | | | | | | | | | | | | | | | | |
| | * | | 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) | | Cost for federal income tax purposes is $20,051,511 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 920,439 | |
| | Unrealized depreciation | | | (62,189 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 858,250 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 31, 2014 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 | | Government
Agencies | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 20,909,761 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 20,909,761 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
44
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $20,051,511) | | | | | | $ | 20,909,761 | |
Cash | | | | | | | 154,314 | |
Interest receivable | | | | | | | 205,395 | |
| | | | | | | | |
Total assets | | | | | | | 21,269,470 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 10,499 | | | | | |
Fund shares redeemed | | | 8,064 | | | | | |
Investment advisory fee | | | 3,489 | | | | | |
Transfer agent fee | | | 5,017 | | | | | |
Accrued expenses | | | 18,829 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 45,898 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 20,647,463 | |
Accumulated net realized loss on investment transactions | | | | | | | (282,141 | ) |
Net unrealized appreciation in value of investments | | | | | | | 858,250 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 21,223,572 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(2,071,469 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.25 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 732,871 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 43,463 | |
Transfer agent fee | | | 34,296 | |
Custodian expense | | | 10,019 | |
Professional fees | | | 4,874 | |
Pricing | | | 7,606 | |
Trustees fees | | | 2,441 | |
Other expenses | | | 19,316 | |
| | | | |
Total expenses | | | 122,015 | |
Custodian expense reduction | | | (5 | ) |
| | | | |
Net expenses | | | 122,010 | |
| | | | |
Net investment income | | | 610,861 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (225,335 | ) |
Net change in unrealized appreciation/depreciation | | | 587,581 | |
| | | | |
Net realized and unrealized gain on investments | | | 362,246 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 973,107 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
45
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 610,861 | | | $ | 713,345 | |
Net realized loss on investments | | | (225,335 | ) | | | (22,547 | ) |
Net change in unrealized appreciation/depreciation | | | 587,581 | | | | (1,213,820 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 973,107 | | | | (523,022 | ) |
Distributions from net investment income | | | (611,046 | ) | | | (713,160 | ) |
Net fund share transactions (Note 4) | | | (2,533,805 | ) | | | (1,198,761 | ) |
| | | | | | | | |
Total decrease | | | (2,171,744 | ) | | | (2,434,943 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 23,395,316 | | | | 25,830,259 | |
| | | | | | | | |
End of year | | $ | 21,223,572 | | | $ | 23,395,316 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | 185 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2014 | | | 2013 | | | 2012 | | | 2011 | | | 2010 | |
Net asset value, beginning of year | | | $10.05 | | | | $10.58 | | | | $9.96 | | | | $10.24 | | | | $10.05 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.28 | | | | 0.30 | | | | 0.34 | | | | 0.35 | | | | 0.44 | |
Net gains/(losses) on securities | | | 0.20 | | | | (0.53 | ) | | | 0.62 | | | | (0.28 | ) | | | 0.19 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.48 | | | | (0.23 | ) | | | 0.96 | | | | 0.07 | | | | 0.63 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.28 | ) | | | (0.30 | ) | | | (0.34 | ) | | | (0.35 | ) | | | (0.44 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $10.25 | | | | $10.05 | | | | $10.58 | | | | $9.96 | | | | $10.24 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 4.89% | | | | (2.34)% | | | | 9.72% | | | | 0.71% | | | | 6.38% | |
Net assets, end of year (in thousands) | | | $21,224 | | | | $23,395 | | | | $25,830 | | | | $25,004 | | | | $42,053 | |
Ratio of net expenses to average net assets (a) | | | 0.56% | | | | 0.48% | | | | 0.52% | | | | 0.46% | | | | 0.47% | |
Ratio of gross expenses to average net assets | | | 0.56% | | | | 0.54% | | | | 0.52% | | | | 0.46% | | | | 0.47% | |
Ratio of net investment income to average net assets | | | 2.81% | | | | 2.77% | | | | 3.25% | | | | 3.48% | | | | 4.30% | |
Portfolio turnover | | | 15.33% | | | | 16.02% | | | | 8.94% | | | | 72.86% | | | | 56.38% | |
| (a) | | Percentages are after expenses waived by Adviser and Custodian reduction. No recovery of these waivers and reductions will be sought. |
The accompanying footnotes are an integral part of the financial statements.
46
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| PUBLIC FACILITIES REVENUE BONDS | |
| 39.56% of Net Assets | | | | | | | | | | | | | | | | | | |
Buncombe County NC Limited Obligation Build America | | | 6.800 | % | | | 06/01/2030 | | | Aa2/AA+* | | $ | 250,000 | | | $ | 294,048 | |
Colorado State Certificates of Participation Build America | | | 6.450 | | | | 09/15/2039 | | | Aa2/AA-* | | | 390,000 | | | | 467,325 | |
Rhode Island Convention Center | | | 6.060 | | | | 05/15/2035 | | | Aa3/AA*/AA-@ | | | 70,000 | | | | 75,828 | |
Dallas Convention Center Hotel Development Corporation | | | 7.088 | | | | 01/01/2042 | | | A1/A+* | | | 280,000 | | | | 355,911 | |
Decatur GA Urban Redevelopment Agency Revenue Build America | | | 6.920 | | | | 01/01/2038 | | | Aa2/AA+* | | | 150,000 | | | | 171,359 | |
Franklin County OH ConventionFacilities Authority Build America | | | 6.640 | | | | 12/01/2042 | | | Aa2/AA* | | | 130,000 | | | | 162,387 | |
Grand Junction CO Certificates of Participation Build America | | | 7.500 | | | | 12/01/2030 | | | A+* | | | 500,000 | | | | 568,185 | |
Grand Junction CO Certificates of Participation Build America | | | 7.650 | | | | 12/01/2040 | | | A+* | | | 50,000 | | | | 56,465 | |
Memphis TN Center City Revenue Finance Corportation Sports Facility | | | 4.970 | | | | 02/01/2030 | | | Aa3/AA-* | | | 165,000 | | | | 168,272 | |
Metropolitan Government Nashville & Davidson County TN Sports Authoity | | | 5.231 | | | | 07/01/2033 | | | Aa3/AA-* | | | 50,000 | | | | 52,297 | |
Metropolitan Government Nashville & Davidson County TN Convention Build America | | | 7.431 | | | | 07/01/2043 | | | A1/A* | | | 285,000 | | | | 372,394 | |
Metropolitan Government Nashville & Davidson County TN | | | 6.731 | | | | 07/01/2043 | | | Aa3/A* | | | 125,000 | | | | 160,701 | |
Miami Lakes FL Special Obligation Build America | | | 7.627 | | | | 12/01/2040 | | | Aa3/AA@ | | | 255,000 | | | | 331,804 | |
Pennington County SD Certificates of Participation Build America | | | 7.200 | | | | 06/01/2037 | | | Aa2 | | | 750,000 | | | | 850,163 | |
Sarasota County FL Capital Improvement Revenue Build America | | | 7.016 | | | | 10/01/2040 | | | AA+*/AA+@ | | | 710,000 | | | | 805,942 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,893,081 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 25.41% of Net Assets | | | | | | | | | | | | | | | | | | |
Altoona PA Water Authority Sewer Revenue Build America | | | 7.064 | | | | 12/01/2040 | | | AA* | | | 500,000 | | | | 566,300 | |
Davie FL Water & Sewer Revenue Build America | | | 6.849 | | | | 10/01/2040 | | | A1/AA* | | | 40,000 | | | | 46,534 | |
FL State Utility Revenue | | | 6.548 | | | | 10/01/2040 | | | A2 | | | 60,000 | | | | 65,399 | |
Heber UT Light & Power Build America | | | 7.000 | | | | 12/15/2030 | | | A2/A+@ | | | 500,000 | | | | 566,380 | |
Louisville & Jefferson County KY Sewer District Build America | | | 6.250 | | | | 05/15/2043 | | | Aa3/AA*/AA-@ | | | 75,000 | | | | 95,948 | |
Metropolitan Government Nashville & Davidson County TN Recovery Zone | | | 6.693 | | | | 07/01/2041 | | | Aa3/AA-* | | | 200,000 | | | | 263,222 | |
Pigeon Forge TN Build America Recovery Zone | | | 7.125 | | | | 06/01/2040 | | | AA* | | | 300,000 | | | | 367,047 | |
Sedalia MO Certificates of Participation Build America | | | 7.300 | | | | 06/01/2035 | | | AA* | | | 500,000 | | | | 537,095 | |
West Knox Utilities District Knox County TN Water and Sewer | | | 6.900 | | | | 06/01/2040 | | | AA+* | | | 400,000 | | | | 462,768 | |
Williamsport PA Municipal Water Authority Build America | | | 6.100 | | | | 01/01/2040 | | | A2/AA* | | | 60,000 | | | | 61,814 | |
York County VA Sewer Revenue Build America | | | 6.607 | | | | 06/01/2040 | | | Aa3 | | | 100,000 | | | | 110,948 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,143,455 | |
| SCHOOL IMPROVEMENT BONDS | |
| 13.66% of Net Assets | | | | | | | | | | | | | | | | | | |
Armstrong School District PA Build America | | | 7.000 | | | | 03/15/2041 | | | AA* | | | 750,000 | | | | 841,785 | |
Ashland KY Independent School District Build America | | | 6.200 | | | | 08/01/2029 | | | Aa3 | | | 100,000 | | | | 107,647 | |
CO State Building Excellent Schools Today Certificates of Participation | | | 7.017 | | | | 03/15/2031 | | | Aa2/AA-* | | | 400,000 | | | | 456,712 | |
Jefferson County TN Build America | | | 6.625 | | | | 06/01/2040 | | | Aa3/A+* | | | 250,000 | | | | 284,138 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,690,282 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 12.00% of Net Assets | | | | | | | | | | | | | | | | | | |
Downtown Smyrna Development Authority GA | | | 6.900 | | | | 02/01/2035 | | | Aa2/AAA* | | | 250,000 | | | | 293,183 | |
KY State Property & Buildings Build America | | | 5.921 | | | | 11/01/2030 | | | Aa3/A+*/A+@ | | | 250,000 | | | | 286,378 | |
Lincoln AL Build America Recovery Zone | | | 6.800 | | | | 06/01/2040 | | | AA* | | | 500,000 | | | | 555,864 | |
Scottsboro AL Build America | | | 6.400 | | | | 11/01/2040 | | | A2/AA* | | | 250,000 | | | | 274,328 | |
Utah County UT Excise Tax Revenue | | | 7.130 | | | | 12/01/2039 | | | AA-* | | | 65,000 | | | | 74,209 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,483,962 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 2.96% of Net Assets | | | | | | | | | | | | | | | | | | |
Maine Health and Higher Educational Facilities Authority | | | 6.667 | | | | 07/01/2039 | | | Aa2 | | | 200,000 | | | | 237,950 | |
Mesa State College CO Auxiliary Facilities Build America | | | 6.746 | | | | 05/15/2042 | | | Aa2/AA-* | | | 100,000 | | | | 127,712 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 365,662 | |
The accompanying footnotes are an integral part of the financial statements.
47
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds — 100% of Net Assets
June 30, 2014
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| TURNPIKES/TOLLROAD/HIGHWAY BONDS | |
| 2.74% of Net Assets | | | | | | | | | | | | | | | | | | |
FL State Turnpike Authority Turnpike Revenue Build America | | | 6.800 | % | | | 07/01/2039 | | | Aa3/AA-*/AA-@ | | $ | 300,000 | | | $ | 338,469 | |
| | | | | | | | | | | | | | | | | | |
| HOSPITAL AND HEALTHCARE BONDS | |
| 2.27% of Net Assets | | | | | | | | | | | | | | | | | | |
University NC Chapel Hill Hospital Revenue Build America | | | 6.329 | | | | 02/01/2031 | | | Aa3/AA* | | | 250,000 | | | | 281,560 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.60% of Net Assets (cost $10,966,483) (See (a) below for further explanation) | | | | | | | | | $ | 12,196,471 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.40% | | | | | | | | | | | | | | | | | 172,656 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 12,369,127 | |
| | | | | | | | | | | | | | | | | | |
| | * | | 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) | | Cost for federal income tax purposes is $10,966,483 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 1,245,700 | |
| | Unrealized depreciation | | | (15,712 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 1,229,988 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2014 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 | | Taxable
Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 12,196,471 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 12,196,471 | |
| | | | | | |
The accompanying footnotes are an integral part of the financial statements.
48
TAXABLE MUNICIPAL BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2014
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $10,966,483) | | | | | | $ | 12,196,471 | |
Cash | | | | | | | 51,145 | |
Interest receivable | | | | | | | 155,168 | |
| | | | | | | | |
Total assets | | | | | | | 12,402,784 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 21,087 | | | | | |
Investment advisory fee | | | 5,054 | | | | | |
Transfer agent fee | | | 1,468 | | | | | |
Trustees fees | | | 978 | | | | | |
Accrued expenses | | | 5,070 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 33,657 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 11,176,932 | |
Accumulated net realized loss on investment transactions | | | | | | | (37,793 | ) |
Net unrealized appreciation in value of investments | | | | | | | 1,229,988 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 12,369,127 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(1,170,685 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.57 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2014
| | | | |
Net investment income: | | | | |
Interest income | | $ | 785,822 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 67,371 | |
Transfer agent fee | | | 20,419 | |
Custodian expense | | | 7,441 | |
Professional fees | | | 5,104 | |
Trustees fees | | | 1,561 | |
Pricing | | | 8,501 | |
Other expenses | | | 9,685 | |
| | | | |
Total expenses | | | 120,082 | |
Custodian expense reduction | | | (3 | ) |
| | | | |
Net expenses | | | 120,079 | |
| | | | |
Net investment income | | | 665,743 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized loss | | | (37,793 | ) |
Net change in unrealized appreciation/depreciation | | | 152,052 | |
| | | | |
Net realized and unrealized gain on investments | | | 114,259 | |
| | | | |
Net increase in net assets resulting from operations | | $ | 780,002 | |
| | | | |
The accompanying footnotes are an integral part of the financial statements.
49
TAXABLE MUNICIPAL BOND SERIES
STATEMENT OF CHANGES IN NET ASSETS
For the years ended June 30, 2014 and 2013
| | | | | | | | |
| | | 2014 | | | 2013 | |
Operations: | | | | | | | | |
Net investment income | | $ | 665,743 | | | $ | 767,597 | |
Net realized gain/(loss) on investments | | | (37,793 | ) | | | 110,538 | |
Net change in unrealized appreciation/depreciation | | | 152,052 | | | | (655,652 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 780,002 | | | | 222,483 | |
Distributions from net investment income | | | (666,273 | ) | | | (767,284 | ) |
Distributions from capital gains | | | (69,960 | ) | | | (19,468 | ) |
Net fund share transactions (Note 4) | | | (3,680,930 | ) | | | 528,225 | |
| | | | | | | | |
Total decrease | | | (3,637,161 | ) | | | (36,044 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | — | | | | 16,042,332 | |
| | | | | | | | |
End of year | | $ | (3,637,161 | ) | | $ | 16,006,288 | |
| | | | | | | | |
Accumulated net investment income | | $ | — | | | $ | 530 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | | | For the period
ended June 30,
2011* | |
| | | 2014 | | | 2013 | | | 2012 | | |
Net asset value, beginning of period | | | $10.45 | | | | $10.82 | | | | $9.65 | | | | $10.00 | |
| | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | |
Net investment income | | | 0.51 | | | | 0.51 | | | | 0.52 | | | | 0.34 | |
Net gains/(losses) on securities | | | 0.18 | | | | (0.36 | ) | | | 1.17 | | | | (0.35 | ) |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.69 | | | | 0.15 | | | | 1.69 | | | | (0.01 | ) |
Less distributions: | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.51 | ) | | | (0.51 | ) | | | (0.52 | ) | | | (0.34 | ) |
Distributions from capital gains | | | (0.06 | ) | | | (0.01 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Total distributions | | | (0.57 | ) | | | (0.52 | ) | | | (0.52 | ) | | | (0.34 | ) |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.57 | | | | $10.45 | | | | $10.82 | | | | $9.65 | |
| | | | | | | | | | | | | | | | |
Total return | | | 6.90% | | | | 1.35% | | | | 17.77% | | | | 0.04% | (b) |
Net assets, end of period (in thousands) | | | $12,369 | | | | $16,006 | | | | $16,042 | | | | $10,872 | |
Ratio of net expenses to average net assets (a) | | | 0.89% | | | | 0.83% | | | | 0.85% | | | | 0.49% | (c) |
Ratio of gross expenses to average net assets | | | 0.89% | | | | 0.83% | | | | 0.86% | | | | 0.50% | (c) |
Ratio of net investment income to average net assets | | | 4.95% | | | | 4.71% | | | | 4.95% | | | | 3.71% | (c) |
Portfolio turnover | | | 9.71% | | | | 9.57% | | | | 0.00% | | | | 89.93% | (b) |
| (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. |
| * | | 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.
50
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 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 their respective states of 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 are valued using market quotations as provided by an independent pricing service. Securities held by the nine municipal bond 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 matrix pricing models which take 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.
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
51
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 1. | | Organization and Significant Accounting Policies, continued |
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 no 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 June 30, 2014, for the Funds’ investments is included at the end of the Funds’ Schedules of Portfolio Investments. The Funds recognize transfers at the end of the reporting period. There were no transfers in and out of level 1, 2 or 3 during the year ending June 30, 2014.
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, 2014. 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.
52
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 1. | | Organization and Significant Accounting Policies, continued |
Distributions are payable:
| | |
| Monthly for: | | Kentucky Tax-Free Short-to-Medium Series North Carolina Tax-Free Short-to-Medium Series Tennessee Tax-Free Short-to-Medium Series Intermediate Government Bond Series Taxable Municipal Bond Series |
| |
| Quarterly for: | | Alabama Tax-Free Income Series Kentucky Tax-Free Income Series Mississippi Tax-Free Income Series North Carolina Tax-Free Income Series Tennessee Tax-Free Income Series |
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual amounts could differ from those estimates.
Subsequent events occurring after the date of this report have been evaluated for potential impact to this report through the date the financial statements were issued. There were no subsequent events to report that would have a material impact on the Funds’ financial statements.
| 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, the Funds (except the Intermediate Government Bond Series) 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. The Intermediate Government Bond Series has agreed to pay to the Adviser, as compensation for all services rendered, facilities furnished and expenses paid or assumed by it under the Agreement, a fee at the annual rate of .20 of 1% of average daily net assets.
The Adviser may voluntarily waive investment advisory fees payable to it under the Investment Advisory Agreement with each Fund, and assume and pay other operating expenses. The Adviser will not seek to recoup any waived fees or other operating expenses it has assumed.
For the year ended June 30, 2014, fees voluntarily waived by the Adviser were as follows:
| | | | |
| | | Fees waived by Adviser | |
Alabama Tax-Free Income Series | | $ | 19,345 | |
Mississippi Tax-Free Income Series | | | 19,438 | |
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.
53
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 3. | | Purchases and Sales of Securities |
During the year ended June 30, 2014, the cost of purchases and the proceeds from sales/calls 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 | | $ | 2,316,900 | | | $ | 3,533,954 | |
Kentucky Tax-Free Income Series | | | 88,383,382 | | | | 89,135,972 | |
Kentucky Tax-Free Short-to-Medium Series | | | 7,549,222 | | | | 13,293,408 | |
Mississippi Tax-Free Income Series | | | 1,935,832 | | | | 174,056 | |
North Carolina Tax-Free Income Series | | | 10,496,107 | | | | 8,806,633 | |
North Carolina Tax-Free Short-to-Medium Series | | | 2,107,575 | | | | 1,844,547 | |
Tennessee Tax-Free Income Series | | | 14,701,813 | | | | 17,252,242 | |
Tennessee Tax-Free Short-to-Medium Series | | | 1,193,290 | | | | 1,414,942 | |
Intermediate Government Bond Series | | | 3,293,533 | | | | 5,072,907 | |
Taxable Municipal Bond Series | | | 1,289,787 | | | | 4,668,774 | |
As of June 30, 2014 and 2013, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
| | | | | | | | | | | | | | | | |
| ALABAMA TAX-FREE INCOME SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 258,629 | | | $ | 3,134,098 | | | | 382,317 | | | $ | 4,839,667 | |
Shares reinvested | | | 34,093 | | | | 411,607 | | | | 33,429 | | | | 417,792 | |
Shares redeemed | | | (403,963 | ) | | | (4,832,353 | ) | | | (254,710 | ) | | | (3,194,533 | ) |
Net increase/(decrease) | | | (111,241 | ) | | $ | (1,286,648 | ) | | | 161,036 | | | $ | 2,062,926 | |
| | | | | | | | | | | | | | | | |
| KENTUCKY TAX-FREE INCOME SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 13,658,486 | | | $ | 105,555,777 | | | | 12,157,634 | | | $ | 98,006,608 | |
Shares reinvested | | | 2,500,483 | | | | 19,401,429 | | | | 2,362,521 | | | | 18,873,478 | |
Shares redeemed | | | (15,789,272 | ) | | | (121,949,686 | ) | | | (15,844,621 | ) | | | (127,179,843 | ) |
Net increase/(decrease) | | | 369,697 | | | $ | 3,007,520 | | | | (1,324,466 | ) | | $ | (10,299,757 | ) |
| | | | | | | | | | | | | | | | |
KENTUCKY TAX-FREE
SHORT-TO-MEDIUM SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 2,902,355 | | | $ | 15,783,732 | | | | 4,306,089 | | | $ | 23,875,791 | |
Shares reinvested | | | 228,221 | | | | 1,241,316 | | | | 241,397 | | | | 1,337,982 | |
Shares redeemed | | | (4,488,362 | ) | | | (24,399,135 | ) | | | (4,245,020 | ) | | | (23,528,134 | ) |
Net increase/(decrease) | | | (1,357,786 | ) | | $ | (7,374,087 | ) | | | 302,466 | | | $ | 1,685,639 | |
54
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 4. | | Capital Shares, continued |
| | | | | | | | | | | | | | | | |
| MISSISSIPPI TAX-FREE INCOME SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 195,841 | | | $ | 2,282,910 | | | | 162,331 | | | $ | 1,982,073 | |
Shares reinvested | | | 9,891 | | | | 115,460 | | | | 10,255 | | | | 123,882 | |
Shares redeemed | | | (44,493 | ) | | | (513,359 | ) | | | (101,079 | ) | | | (1,221,918 | ) |
Net increase | | | 161,239 | | | $ | 1,885,011 | | | | 71,507 | | | $ | 884,037 | |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE
INCOME SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 1,577,580 | | | $ | 17,874,045 | | | | 1,987,555 | | | $ | 23,519,667 | |
Shares reinvested | | | 177,476 | | | | 2,004,393 | | | | 183,206 | | | | 2,145,758 | |
Shares redeemed | | | (1,597,868 | ) | | | (17,894,940 | ) | | | (1,378,402 | ) | | | (16,191,347 | ) |
Net increase | | | 157,188 | | | $ | 1,983,498 | | | | 792,359 | | | $ | 9,474,078 | |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE
SHORT-TO-MEDIUM SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 314,867 | | | $ | 3,469,484 | | | | 701,612 | | | $ | 7,898,764 | |
Shares reinvested | | | 37,003 | | | | 408,034 | | | | 36,890 | | | | 414,632 | |
Shares redeemed | | | (398,436 | ) | | | (4,390,138 | ) | | | (547,748 | ) | | | (6,150,215 | ) |
Net increase/(decrease) | | | (46,566 | ) | | $ | (512,620 | ) | | | 190,754 | | | $ | 2,163,181 | |
| | | | | | | | | | | | | | | | |
| TENNESSEE TAX-FREE INCOME SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 1,285,067 | | | $ | 14,453,598 | | | | 1,604,096 | | | $ | 18,817,879 | |
Shares reinvested | | | 194,059 | | | | 2,196,993 | | | | 164,725 | | | | 1,914,381 | |
Shares redeemed | | | (1,772,826 | ) | | | (19,867,513 | ) | | | (1,095,123 | ) | | | (12,806,030 | ) |
Net increase/(decrease) | | | (293,700 | ) | | $ | (3,216,922 | ) | | | 673,698 | | | $ | 7,926,230 | |
| | | | | | | | | | | | | | | | |
TENNESSEE TAX-FREE
SHORT-TO-MEDIUM SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 170,445 | | | $ | 1,830,178 | | | | 177,861 | | | $ | 1,960,274 | |
Shares reinvested | | | 14,083 | | | | 151,789 | | | | 13,852 | | | | 152,444 | |
Shares redeemed | | | (212,057 | ) | | | (2,280,984 | ) | | | (259,066 | ) | | | (2,852,117 | ) |
Net decrease | | | (27,529 | ) | | $ | (299,017 | ) | | | (67,353 | ) | | $ | (739,399 | ) |
| | | | | | | | | | | | | | | | |
| INTERMEDIATE GOVERNMENT BOND SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 106,142 | | | $ | 1,065,074 | | | | 101,835 | | | $ | 1,086,915 | |
Shares reinvested | | | 47,742 | | | | 478,925 | | | | 51,219 | | | | 544,743 | |
Shares redeemed | | | (409,352 | ) | | | (4,077,804 | ) | | | (266,971 | ) | | | (2,830,419 | ) |
Net decrease | | | (255,468 | ) | | $ | (2,533,805 | ) | | | (113,917 | ) | | $ | (1,198,761 | ) |
55
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 4. | | Capital Shares, continued |
| | | | | | | | | | | | | | | | |
| TAXABLE MUNICIPAL BOND SERIES | | Year Ended June 30, 2014 | | | Year Ended June 30, 2013 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 68,253 | | | $ | 699,581 | | | | 223,183 | | | $ | 2,421,068 | |
Shares reinvested | | | 38,542 | | | | 397,494 | | | | 31,550 | | | | 343,461 | |
Shares redeemed | | | (467,564 | ) | | | (4,778,005 | ) | | | (205,941 | ) | | | (2,236,304 | ) |
Net increase/(decrease) | | | (360,769 | ) | | $ | (3,680,930 | ) | | | 48,792 | | | $ | 528,225 | |
| 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.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
At June 30, 2014, the Funds’ capital loss carry-forwards expire as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | No Expiration | | | | |
| | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | Long-term | | | Short-term | | | Total | |
Alabama Tax Free Income Series | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 4,036 | | | $ | 4,036 | |
Kentucky Tax-Free Short-to-Medium Series | | | 203,229 | | | | 227,932 | | | | 223,976 | | | | — | | | | — | | | | — | | | | — | | | | 655,137 | |
Mississippi Tax-Free Income Series | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,068 | | | | 7,068 | |
North Carolina Tax-Free Income Series | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 431,401 | | | | 431,401 | |
Tennessee Tax-Free Income Series | | | — | | | | — | | | | — | | | | 371,142 | | | | — | | | | — | | | | 298,875 | | | | 670,017 | |
Tennessee Tax-Free Short-to-Medium Series | | | 25,194 | | | | 23,418 | | | | — | | | | — | | | | — | | | | | | | | — | | | | 49,612 | |
Intermediate Government Bond Series | | | 21,143 | | | | — | | | | — | | | | — | | | | | | | | 49,060 | | | | 95,029 | | | | 165,232 | |
Taxable Municipal Bond Series | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 777 | | | | 777 | |
During the year ended June 30, 2014, the following Funds utilized capital loss carry-forwards as follows:
| | | | |
| | | Amount | |
Kentucky Tax-Free Short-to-Medium Series | | $ | 141,887 | |
Tennessee Tax-Free Short-to-Medium Series | | | 990 | |
During the year ended June 30, 2014 the Intermediate Government Bond Series had losses expire of $51,194.
56
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 6. | | Federal Income Taxes, continued |
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 2014 as follows:
| | | | |
| | | Post October Losses | |
Alabama Tax-Free Income Series | | $ | (100,377 | ) |
Kentucky Tax-Free Short-to-Medium Series | | | (85,893 | ) |
Mississippi Tax-Free Income Seres | | | (1 | ) |
North Carolina Tax-Free Income Series | | | (151,440 | ) |
North Carolina Tax-Free Short-to-Medium Series | | | (3,011 | ) |
Tennessee Tax-Free Income Series | | | (37 | ) |
Tennessee Tax-Free Short-to-Medium Series | | | (234,597 | ) |
Intermediate Government Bond Series | | | (116,908 | ) |
Taxable Municipal Bond Series | | | (37,016 | ) |
At June 30, 2014, the effect of permanent book to tax differences resulted in increases and decreases to the components of net assets as follows:
| | | | | | | | |
| | | Accumulated Net
Realized Gain/Loss | | | Undistributed Net
Investment Income | |
Kentucky Tax-Free Income Series | | $ | 35 | | | $ | (35 | ) |
Mississippi Tax-Free Income Series | | | 85 | | | | (85 | ) |
| | |
| | | Accumulated Net
Realized Gain/Loss | | | Capital | |
Intermediate Government Bond Series | | $ | 51,194 | | | $ | (51,194 | ) |
The tax character of distributions paid for the years ended June 30, 2014 and 2013 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2014 | | | 2013 | |
| | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | |
Alabama Tax-Free Income Series | | $ | 776,616 | | | $ | — | | | $ | 29,276 | | | $ | 842,439 | | | $ | — | | | $ | 16,538 | |
Kentucky Tax-Free Income Series | | | 32,479,238 | | | | — | | | | 1,302,574 | | | | 33,471,869 | | | | 37,796 | | | | 108,545 | |
Kentucky Tax-Free
Short-to-Medium Series | | | 1,803,910 | | | | — | | | | — | | | | 1,932,832 | | | | — | | | | — | |
Mississippi Tax-Free Income Series | | | 294,715 | | | | — | | | | 9,925 | | | | 287,105 | | | | — | | | | — | |
North Carolina Tax-Free Income Series | | | 2,991,028 | | | | — | | | | 112,821 | | | | 3,026,417 | | | | — | | | | 131,685 | |
North Carolina Tax-Free
Short-to-Medium Series | | | 477,000 | | | | — | | | | 41,274 | | | | 497,853 | | | | — | | | | 39,121 | |
Tennessee Tax-Free Income Series | | | 3,330,499 | | | | — | | | | — | | | | 3,364,193 | | | | — | | | | — | |
Tennessee Tax-Free
Short-to-Medium Series | | | 191,049 | | | | — | | | | — | | | | 226,505 | | | | — | | | | — | |
Intermediate Government Bond Series | | | — | | | | 611,046 | | | | — | | | | — | | | | 713,160 | | | | — | |
Taxable Municipal Bond Series | | | — | | | | 666,273 | | | | 69,960 | | | | — | | | | 767,284 | | | | 19,468 | |
57
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 6. | | Federal Income Taxes, continued |
At June 30, 2014, 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 | | $ | — | | | $ | 92,854 | | | $ | — | | | $ | 1,133,647 | |
Kentucky Tax-Free Income | | | — | | | | 3,348,541 | | | | 380,551 | | | | 56,475,860 | |
Kentucky Tax-Free Short-to-Medium | | | — | | | | 50,618 | | | | — | | | | 3,190,906 | |
Mississippi Tax-Free Income | | | — | | | | 47,538 | | | | — | | | | 405,116 | |
North Carolina Tax-Free Income | | | — | | | | 278,303 | | | | — | | | | 4,741,764 | |
North Carolina Tax-Free Short-to-Medium | | | — | | | | 9,059 | | | | — | | | | 760,008 | |
Tennessee Tax-Free Income | | | — | | | | 245,030 | | | | — | | | | 5,255,035 | |
Tennessee Tax-Free Short-to-Medium | | | — | | | | 2,786 | | | | — | | | | 281,784 | |
Intermediate Government Bond | | | 10,499 | | | | — | | | | — | | | | 858,250 | |
Taxable Municipal Bond Series | | | 21,087 | | | | — | | | | — | | | | 1,229,988 | |
| | | | | | | | | | | | | | |
| | | | | Accumulated
Capital and
Other Losses | | | Other Temporary
Differences | | | Total
Accumulated Earnings | |
Alabama Tax-Free Income | | | | $ | (104,416 | ) | | $ | (92,854 | ) | | $ | 1,029,231 | |
Kentucky Tax-Free Income | | | | | | | | | (3,348,541 | ) | | | 56,856,411 | |
Kentucky Tax-Free Short-to-Medium | | | | | (741,031 | ) | | | (50,618 | ) | | | 2,449,875 | |
Mississippi Tax-Free Income | | | | | (7,069 | ) | | | (47,603 | ) | | | 397,982 | |
North Carolina Tax-Free Income | | | | | (582,841 | ) | | | (278,303 | ) | | | 4,158,923 | |
North Carolina Tax-Free Short-to-Medium | | | | | (3,011 | ) | | | (9,059 | ) | | | 756,997 | |
Tennessee Tax-Free Income | | | | | (670,053 | ) | | | (245,030 | ) | | | 4,584,982 | |
Tennessee Tax-Free Short-to-Medium | | | | | (283,209 | ) | | | (2,786 | ) | | | (1,425 | ) |
Intermediate Government Bond | | | | | (282,141 | ) | | | (10,499 | ) | | | 576,109 | |
Taxable Municipal Bond Series | | | | | (37,793 | ) | | | (21,087 | ) | | | 1,192,195 | |
| 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. However, based on experience, the Funds do not expect the risk of loss to be material.
| 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 August 31, 2014, 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.
58
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
| 8. | | Line of Credit Agreement and Custodian Agreement, continued |
At June 30, 2014, the Funds had an unused line of credit amount of $24,985,000. During the year ended June 30, 2014, the average interest rate on borrowings was 3.25% and the daily weighted average borrowings for each Fund with borrowings were as follows:
| | | | |
| | | Weighted
Average
Borrowings | |
Alabama Tax-Free Income Series | | $ | 7,334 | |
Kentucky Tax Free Income Series | | | 51,090 | |
Kentucky Tax-Free Short-to-Medium Series | | | 22,112 | |
North Carolina Tax-Free Income Series | | | 28,759 | |
North Carolina Tax-Free Short-to-Medium Series | | | 3,485 | |
Tennessee Tax-Free Income Series | | | 25,712 | |
Tennessee Tax-Free Short-to-Medium Series | | | 3,170 | |
Taxable Municipal Bond Series | | | 3,551 | |
Intermediate Government Bond Series | | | 8,759 | |
The Funds have a contractual agreement with the custodian whereby the Funds compensate the custodian for custodial services incurred exceeding the credits realized as a result of uninvested cash balances. Credits realized as a result of uninvested cash balances are used to reduce each Fund’s expenses. During the year, these credits reduced each of Funds’ expenses by the amount shown on the Statement of Operations as “Custodian expense reduction.”
59
Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders of
Dupree Mutual Funds
We have audited the accompanying statements of assets and liabilities, including the schedules of portfolio investments, of Dupree Mutual Funds (comprising 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, Tennessee Tax-Free Short-to-Medium Series, Intermediate Government Bond Series, and Taxable Municipal Bond Series) (collectively, the “Funds”), as of June 30, 2014, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the years or periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2014, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective funds constituting the Dupree Mutual Funds at June 30, 2014, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the years or periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Cincinnati, Ohio
August 27, 2014
60
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2014
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 in Publicly
Traded Companies |
| Officers: | | | | | | | | | | |
Thomas P. Dupree Sr. 125 South Mill Street Lexington, KY 40507 Age: 83 | | President | | Annual Term; 35 Years of Service | | Chairman of the Board of Dupree & Company, Inc. | | N/A | | N/A |
Gay M. Elste P.O. Box 28 Versailles, KY 40383 Age: 63 | | Compliance Officer | | Annual Term; 10 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: 51 | | Executive Vice President | | Annual Term; 9 Years of Service | | President, Dupree & Company, Inc. | | N/A | | N/A |
Michelle M. Dragoo 125 South Mill Street Lexington, KY 40507 Age: 53 | | Vice President, Secretary, Treasurer | | Annual Term; 16 Years of Service as Vice President, 14 Years of Service as Secretary, Treasurer | | Vice President, Secretary, Treasurer of Dupree & Company, Inc. | | N/A | | N/A |
Eugene M. Gard 125 South Mill Street Lexington, KY 40507 Age: 34 | | Assistant Secretary, Assistant Treasurer | | Annual Term; first year of service | | Vice President, Dupree & Company, Inc. | | N/A | | N/A |
| Trustees: | | | | | | | | | | |
William A. Combs, Jr. 111 Woodland Ave., #510 Lexington, KY 40502 Age: 74 | | Chairman, Trustee | | Annual Term; 13 Years of Service as Chairman; 25 Years of Service as Trustee | | Officer, Director: Mercedes-Benz of Cincinnati, Ohio; Mercedes-Benz of West Chester, Ohio | | 10 | | N/A |
James C. Baughman, Jr. 1999 Richmond Road Suite 2A Lexington, KY 40502 Age: 51 | | Trustee Chairman, Audit Committee | | Annual Term 7 Years of Service | | Business consultant, CJN Advisors, LLC (2013 – present); Chief Executive Officer, Secretary, Treasurer, Director Office Suites Plus, Inc. (1998-2013; executive office space rental) | | 10 | | Advisory Board, Community Trust Bank |
C. Timothy Cone 201 West Short Street Lexington, KY 40507 Age: 70 | | Trustee | | Annual Term; 12 Years of Service | | President, Gess, Mattingly & Atchison, P.S.C. (law firm) | | 10 | | N/A |
Ann Rosenstein Giles 343 Waller Avenue Suite 100 Lexington, KY 40504 Age: 62 | | Trustee | | Annual Term; 3 Years of Service | | AJ Marketing Partners (self-employed marketing consultant) | | 10 | | N/A |
Marc A. Mathews 2104 Lakeside Drive Lexington, KY 40502 Age: 56 | | Trustee | | Annual Term; 3 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 |
61
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2014
Trustee and officer information, continued
As of June 30, 2014, 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, 2013, 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.
62
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2014
Schedule of Shareholder Expenses
As a shareholder of the Funds, you incur transaction costs including investment advisory fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six Months Ended June 30, 2013” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses which is not the Funds’ actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
| | | | | | | | | | | | | | | | |
| | | Net Expense
Ratio
Annualized
June 30, 2014 | | | Beginning
Account Value
January 1, 2014* | | | Ending
Account Value
June 30, 2014** | | | Expenses Paid During
the Six Months
Ended June 30, 2014 | |
Alabama Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .72 | % | | $ | 1,000.00 | | | $ | 1,026.83 | | | $ | 3.55 | |
| Hypothetical | | | .72 | | | | 1,000.00 | | | | 1,024.79 | | | | 3.55 | |
Kentucky Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .57 | | | | 1,000.00 | | | | 1,024.30 | | | | 2.83 | |
| Hypothetical | | | .57 | | | | 1,000.00 | | | | 1,024.79 | | | | 2.83 | |
Kentucky Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .74 | | | | 1,000.00 | | | | 1,007.24 | | | | 3.66 | |
| Hypothetical | | | .74 | | | | 1,000.00 | | | | 1,024.79 | | | | 3.69 | |
Mississippi Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .69 | | | | 1,000.00 | | | | 1,030.89 | | | | 3.41 | |
| Hypothetical | | | .69 | | | | 1,000.00 | | | | 1,024.79 | | | | 3.40 | |
North Carolina Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .72 | | | | 1,000.00 | | | | 1,027.57 | | | | 3.60 | |
| Hypothetical | | | .72 | | | | 1,000.00 | | | | 1,024.79 | | | | 3.60 | |
North Carolina Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .81 | | | | 1,000.00 | | | | 1,008.13 | | | | 3.97 | |
| Hypothetical | | | .81 | | | | 1,000.00 | | | | 1,024.79 | | | | 4.00 | |
Tennessee Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .71 | | | | 1,000.00 | | | | 1,026.58 | | | | 3.52 | |
| Hypothetical | | | .71 | | | | 1,000.00 | | | | 1,024.79 | | | | 3.52 | |
Tennessee Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .86 | | | | 1,000.00 | | | | 1,009.03 | | | | 4.28 | |
| Hypothetical | | | .86 | | | | 1,000.00 | | | | 1,024.79 | | | | 4.31 | |
63
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2014
Schedule of Shareholder Expenses, continued
| | | | | | | | | | | | | | | | |
| | | Net Expense
Ratio
Annualized
June 30, 2014 | | | Beginning
Account Value
January 1, 2014* | | | Ending
Account Value
June 30, 2014** | | | Expenses Paid During
the Six Months
Ended June 30, 2014 | |
Intermediate Government Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .56 | % | | $ | 1,000.00 | | | $ | 1,028.86 | | | $ | 2.82 | |
| Hypothetical | | | .56 | | | | 1,000.00 | | | | 1,024.79 | | | | 2.81 | |
Taxable Municipal Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .89 | | | | 1,000.00 | | | | 1,036.40 | | | | 4.55 | |
| Hypothetical | | | .89 | | | | 1,000.00 | | | | 1,024.79 | | | | 4.52 | |
| * | | The example is based on an investment of $1,000 invested at the beginning of the period. |
| ** | | Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period multiplied by [181/365] (to reflect one-half year period). |
64
Item 2. Code of Ethics: The registrant has adopted a code of ethics that applies to the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. There have been no waivers from the Code of Ethics during the reporting period. The Registrant’s Code of Ethics is posted on its web site at http://www.dupree-funds.com. A copy of the Code of Ethics will be provided to any person free of charge upon request by telephoning or writing the Registrant.
Item 3. Audit Committee Financial Expert: Audit Committee Financial Expert: The board does not have a financial expert serving on the audit committee. The registrant’s audit committee is comprised of all Trustees all of who are non-interested and independent. The audit committee believes that the collective experience and expertise of the members in assessing the performance of companies and the evaluation of financial statements is sufficient to assess the issues which can reasonably be expected to be raised by the Trust’s financial statements.
Item 4. Principal Accountant Fees and Services:
Audit Fees. Fees for audit services provided to the Registrant were $129,900 and $127,300 for the fiscal years ended June 30, 2014 and 2013, respectively.
(a) Audit Related Fees. Fees for audit related-services that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this item were $ -0- and $9,500 for fiscal years ended June 30, 2014 and 2013 respectively and for fiscal year 2013 consisted of review of transfer agent.
(b) Tax Fees. Fees for tax services, which consisted of income and excise tax compliance services, were $37,200 and $36,500 for the fiscal years ended June 30, 2014 and 2013, respectively
(c) All Other Fees. Fees for all other services, which for fiscal year ended June 30, 2014 totaled $35,300 and consisted of examination of transfer agent ($9,700); Anti-Money Laundering Advisory services ($7,500); Internal control agreed upon procedures ($9,900) and Review of Semi-Annual report ($8,200) and for fiscal year ended June 30, 2013 totaled $25,000 and consisted of Anti-Money Laundering services ($7,300); Internal control agreed upon procedures ($9,700); and Review of Semi-Annual report ($8,000).
(d) (1) The Registrant’s Audit Committee must pre-approve all audit services and non-audit services that the principal accountant provides to the Registrant. The Audit committee must also pre-approve any engagement of the principal accountant to provide non-audit services to the Registrant’s investment adviser, or any affiliate of the adviser that provides ongoing services to the Registrant, if such non-audit services directly impact the Registrant’s operations and financial reporting. The Registrant has been advised by the Principal Accountant that no persons other than full time permanent employees have been engaged to audit the Registrant’s Financial Statements for the fiscal year ended June 30, 2014.
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 August 20, 2014 the Registrant’s President and Treasurer assessed the disclosure controls and procedures to evaluate the effectiveness of the Registrant’s disclosure controls and procedures designed to ensure that information required to be disclosed by the investment company on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an investment company in the reports that it files on Form N-CSR is accumulated and communicated to the investment company’s management, including its principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Further, on August 20, 2014 the Registrant’s President and Treasurer assessed the internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the investment company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the investment company are being made only in accordance with authorizations of management and trustees of the investment company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the investment company’s assets that could have a material effect on the financial statements.
The Registrant’s President and Treasurer have deemed the disclosure controls and procedures and the internal control over financial reporting effective. There were no changes in the Registrant’s disclosure controls and procedures or internal control over financial reporting that occurred during the fourth quarter of the fiscal year that materially affected or is reasonably likely to materially affect the Registrant’s financial statements.
Item 12. Exhibits
(a)
(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: | | Michelle M. Dragoo, Vice President, Secretary, Treasurer /s/ |
Date: August 20, 2014
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: | | Thomas P. Dupree, Sr., President /s/ |
Date: August 20, 2014
| | |
| |
By: | | Michelle M. Dragoo, Vice President, Secretary, Treasurer /s/ |
Date: August 20, 2014
