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
DUPREE MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
125 South Mill Street, Vine Center, Suite 100
Lexington, Kentucky 40507
(Address of Principal Executive Offices) (Zip Code)
Allen E. Grimes, III
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, 2018
Date of reporting period: July 1, 2017 through June 30, 2018
Item 1. Report to Stockholders
June 30, 2018
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 that 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, 2018i
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 objective of our government bond fund is to provide a high level of taxable income derived from securities of the U.S. government and its agencies without incurring undue risk to principal. Similarly, the investment objective of the taxable municipal bond fund is to provide a high level of taxable income derived from taxable municipal securities without incurring undue risk to principal.
This report covers the twelve month period from July 1, 2017 through June 30, 2018 (the “reporting period”). Economic activity increased at a moderate pace during the reporting period. Economic growth during the third quarter of 2017 was modest with real gross domestic product (GDP) increasing at a 3.2% annual rate. The pace of economic growth then dipped slightly in the fourth quarter of 2017 with real GDP increasing at a 2.9% annual rate. The slowdown in economic growth became more pronounced this year with real GDP increasing during the first quarter of 2018 at a 2.2% annual rate. The advanced estimate for real GDP for the second quarter of 2018 came in substantially higher at a 4.1% annual rate.
The labor market continued to strengthen during the reporting period. The national unemployment rate was 4.0% in June, approaching a level last seen nearly two decades ago. An average of 215,000 net new jobs were created each month in the first half of 2018. The labor force participation rate remained relatively stable and stood at 62.9% at the end of June. Wage growth was modest with average hourly earnings increasing at a 2.7% annualized rate in June.
Key measures of inflation ticked up slightly and, towards the end of the reporting period, actually reached the 2% target rate set by the Fed. The Fed’s preferred inflation index, the core personal consumption expenditure price index (PCE), increased 1.9% on a year-over-year basis through June. The core consumer price index (CPI) increased 2.3% on an annual basis through June. Measures of near-term and longer-run inflation expectations remained stable over the past twelve months.
During the reporting period, the Federal Open Market Committee (FOMC) continued to gradually reduce the amount of monetary policy accommodation. The FOMC increased the federal funds target rate 25 basis points on three separate occasions during the review period. The fed funds target rate range at the end of the reporting period was 1.75 to 2%. While acknowledging a slightly stronger economy, the Fed retained its “further gradual” guidance on future rate hikes.
Starting in October of last year the Fed began implementing its balance sheet reduction plan. This plan has allowed the Fed to gradually reduce its holdings by decreasing its reinvestment of the principal payments it receives from Treasury securities, agency debt, and mortgage-backed securities it currently holds. At the end of the reporting period, the size of the Fed’s balance sheet had contracted somewhat, but still remained elevated by historical standards at close to $4 trillion.
Credit quality in the tax-exempt sector has generally continued to improve as state fiscal conditions show signs of improvement and greater stability. According to the Fiscal Survey of States compiled by the National Association of State Budget Officers (“NASBO”), states are expected to increase general fund spending by 3.2% in fiscal 2019; by comparison, last spring, states were expecting an increase of just 1.0% based on governors’ fiscal 2018 budgets. After weak revenue growth in fiscal 2016 and 2017, tax collections are projected to rebound in fiscal 2018, with total general fund revenues growing an estimated 4.9%. States are also expected to add to their rainy day funds, with the median balance as a share of general fund spending rising to 6.2% in fiscal 2019.
Medicaid spending continues to be a significant line item for state budgets. According to NASBO, the median growth rate for Medicaid spending from all fund sources is estimated at 5.2% for fiscal 2018. Medicaid expansion spending from state funds is estimated to increase $3.6 billion in fiscal 2018 with the state share gradually set to increase to 10% by 2020.
Returns in the municipal bond market were positive for the twelve month period under review. The Bloomberg Barclays Municipal Bond Index (“BBMBI”), which tracks investment grade municipal securities across all sectors and maturities, had a total return of 1.56% for the twelve month period ended June 30, 2018. Longer-dated bonds outperformed shorter-dated bonds and lower-rated bonds generally outperformed higher- rated bonds during the reporting period. As of June 30, 2018, the BBMBI had a modified adjusted duration of 5.99 years, an average coupon of 4.69% and an average credit quality of AA2/AA3.
Within the reporting period, municipal bond performance was broadly positive during the second half of 2017. Positive technical conditions, which consisted of a combination of manageable supply and strong demand, led to positive total returns for the BBMBI during both the third (+1.06%) and fourth quarters (+0.75%) of 2017. In the fourth quarter of 2017, primary market municipal bond issuance increased considerably as issuers rushed to market in the face of tax reforms that eliminated tax-exempt advance refunding bonds.
i
The positive performance of the municipal bond market came to an abrupt halt during the first quarter of 2018. Treasury and municipal yields reached multiyear highs during the first quarter as rising inflation expectations and an increasing supply of Treasury bonds worried investors. As yields move higher, bond prices moved lower. The BBMBI posted a -1.11% total return during the first quarter of 2018.
Municipal bonds posted gains during the second quarter of 2018 with the BBMBI up 0.87%. The rebound during the second quarter of 2018 was aided by two U.S. Supreme Court decisions which had been highly anticipated by the municipal bond market. In South Dakota v. Wayfair, Inc., the court ruled that states can collect and remit sales taxes on internet purchases even if the seller doesn’t maintain a physical presence in that state. This decision is expected to enhance state tax revenue collections. The second decision was Janus v. AFSCME in which the court held that non-union public employees were no longer required to pay union dues. This decision is expected to benefit state and local governments in future rounds of collective bargaining.
The Kentucky Tax-Free Income Series provided shareholders a positive total return of 0.93% for the twelve month period ended June 30, 2018. The Kentucky Tax-Free Short-to-Medium Series provided shareholders with a slightly negative total return of -0.32% for the same time period. Both of the Kentucky funds had shorter durations and held fewer lower-rated issues than the BBMBI, thereby causing both to underperform the index during the reporting period.
Kentucky’s economy has continued to expand at a moderate pace. In 2017, Kentucky’s real GDP grew 1.8% which was slightly below the national average. Kentucky’s 2017 current-dollar GDP was $202.5 billion and ranked 28th in the United States. The state’s General Fund receipts have continued their upward trend and have risen for eight consecutive years. The state reported that final FY18 General Fund revenues were 3.4% more than FY17 collections and 1.1% more than the revised official revenue estimate which projected 2.3% growth. The state’s annual average unemployment rate declined during the reporting period and stood at 4.2% at the end of June. In 2017, Kentucky had a per capita personal income of $39,393 which was well below the national average of $50,392.
Kentucky’s appropriation supported debt was rated A1 by Moody’s and A- by Standard & Poor’s as of June 30, 2018. It should be noted that Kentucky’s appropriation-backed debt was downgraded one notch by both Moody’s Investors Services (downgraded from Aa3 to A1 on 7/20/17) and S&P (downgraded from A to A- on 5/18/18) due primarily to below average economic growth and income levels, unfunded pension obligations, and increased Medicaid spending. Kentucky had net tax-supported debt per capita of $1,995 as of calendar year-end 2017, which was substantially above the state net tax-supported debt median of $987 (Source: Moody’s Investors Services, Medians-State Debt Continues Slow Growth Trend, April 24, 2018).
The Tennessee Tax-Free Income Series provided shareholders with a positive total return of 0.94% for the twelve months ended June 30, 2018. The Tennessee Tax-Free Short-to-Medium Series provided a slightly negative total return of -0.17% for the same time period. Both of the Tennessee funds had shorter durations and held fewer lower-rated issues than the BBMBI, thereby causing both to underperform the index during the reporting period.
Economic growth in Tennessee has continued to outpace the national average. In 2017, real GDP increased by 2.5% which was above the national average. Tennessee’s current-dollar GDP in 2017 was $345.2 billion and ranked 18th in the United States. Finance, insurance, real estate, rental, and leasing are the largest industries in the state and collectively in 2017 accounted for 16.7% of the state’s real GDP. Automobile manufacturing continues to be an important part of the state’s economy. The state’s annual average unemployment rate at the end of June was 3.5%. In 2017, the state had a per capita personal income of $44,266 which was below the national average of $50,392.
Tennessee relies on a combination of a state sales tax, corporate income taxes, franchise and excise taxes, and the Hall income tax for its revenue. Total state revenue collections through June (on an accrual basis June is the eleventh month in Tennessee’s 2017-2018 FY) were $352.5 million more than the budgeted estimate.
Tennessee’s general obligation (G.O.) bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s as of June 30, 2018. Tennessee had net tax-supported debt per capita of $312 as of calendar year-end 2017, which was substantially below the state net tax-supported debt median of $987 (Source: Moody’s Investors Services, Medians-State Debt Continues Slow Growth Trend, April 24, 2018).
The North Carolina Tax-Free Income Series provided shareholders with a positive total return of 1.27% for the twelve months ended June 30, 2018. The North Carolina Tax-Free Short-to-Medium Series provided shareholders with a slightly negative total return of -0.45% for the same time period. Both of the North Carolina funds had shorter durations and held fewer lower-rated issues than the BBMBI, thereby causing both to underperform the index during the reporting period.
North Carolina’s economy continued to perform well during the 2017-18 fiscal year. In 2017, North Carolina real GDP grew 2.3% which was slightly better than the national average. North Carolina’s 2017 current-dollar GDP was $538.3 billion and ranked
ii
10th in the United States. The state’s FY 2017-18 Unreserved Fund Balance (“UFB”) increased by 17% from the year-end FY 2016-17 balance. After adjustments, the remaining UFB available for appropriation was estimated to be $902.7 million. The revenue surplus resulted from stronger-than-expected individual income, franchise, and insurance gross premium taxes. The state’s average annual unemployment rate at the end of June was 4.2%. In 2017, North Carolina had a per capita personal income of $43,303 which was below the national average of $50,392.
North Carolina’s general obligation (G.O.) bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s as of June 30, 2018. North Carolina had net tax-supported debt per capita of $611 as of calendar year-end 2017, which was below the state net tax-supported debt median of $987 (Source: Moody’s Investors Services, Medians-State Debt Continues Slow Growth Trend, April 24, 2018).
The Alabama Tax-Free Income Series provided shareholders with a positive total return of 1.24% for the twelve months ended June 30, 2018. The fund held fewer lower-rated issues and had a shorter duration than the BBMBI, thereby causing it to underperform the index during the reporting period.
Economic growth in Alabama has continued to fall short of the national average. In 2017, Alabama’s real GDP grew 1.2% which was well below the national average. Alabama’s 2017 current-dollar GDP was $211.0 billion which ranked 27th in the United States. Automotive manufacturing, aerospace, tourism, healthcare, biotechnology, and manufacturing continue to be the state’s main economic drivers. The state’s average annual unemployment rate at the end of June stood at 4.1%. In 2017, Alabama had a per capita personal income of $39,976 which was below the national average of $50,392.
Alabama’s G.O. bonds were rated Aa1 by Moody’s and AA by Standard & Poor’s as of June 30, 2018. Alabama had net tax-supported debt per capita of $898 as of calendar year-end 2017, which was lower than the state net tax-supported debt median of $987 (Source: Moody’s Investors Services, Medians-State Debt Continues Slow Growth Trend, April 24, 2018).
The Mississippi Tax-Free Income Series provided shareholders with a positive total return of 0.99% for the twelve month period ended June 30, 2018. The fund held less lower-rated issues and had a shorter duration than the BBMBI, thereby causing it to underperform the index during the reporting period.
Mississippi’s economic recovery has continued to lag behind the nation. In 2017, Mississippi’s real GDP grew by a mere 0.3% which was substantially below the national average. Mississippi’s 2017 current-dollar GDP was $111.7 billion and ranked 36th in the United States. The state’s average annual unemployment rate at the end of June was 4.7%. In 2017, Mississippi had a per capita personal income of $36,346 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, 2018. Mississippi has net tax-supported debt per capita of $1,854 as of calendar year-end 2017, which was higher than the state net tax-supported debt median of $987 (Source: Moody’s Investors Services, Medians-State Debt Continues Slow Growth Trend, April 24, 2018).
The Intermediate Government Bond Series had a negative total return of -1.05% for the twelve months ended June 30, 2018. The Bloomberg Barclays U.S. Intermediate Government Bond Index (“BBGBI”) had a total return of -0.73% for the twelve month period ended June 30, 2018. The fund had a longer duration than the BBGBI, thereby causing it to slightly underperform the index during the reporting period.
The Taxable Municipal Bond Series provided shareholders with a positive total return of 2.66% for the twelve month period ended June 30, 2018. The Bloomberg Barclays Municipal Bond Taxable Index had a total return of 2.65% for the same time period. The Taxable Municipal Bond Series performed in line with the index 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 Bloomberg Barclays 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, 2018. 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.
iii
The illustrations below provide each Fund’s sector allocation and
summarize key information about each Fund’s investments. | Unaudited |
| | | | |
Kentucky Tax-Free Income Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 0.50% | |
Aa/AA | | | 45.69% | |
A | | | 48.62% | |
Baa/BBB | | | 0.03% | |
B | | | 0.32% | |
Not Rated | | | 4.84% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Miscellaneous Public Improvement | | | 26.76% | |
University Consolidated Education and Building Revenue | | | 11.74% | |
Prerefunded | | | 11.32% | |
School Improvement | | | 10.96% | |
Municipal Utility Revenue | | | 9.87% | |
Turnpikes/Toll Road/Highway Revenue | | | 8.03% | |
Hospital and Healthcare Revenue | | | 6.53% | |
Refunding | | | 6.52% | |
Public Facilities | | | 5.22% | |
Airport Revenue | | | 1.10% | |
Miscellaneous Revenue | | | 0.23% | |
Ad Valorem Property | | | 0.13% | |
State and Local Mortgage/Housing Revenue | | | 0.13% | |
Other Assets Less Liabilities | | | 1.46% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | |
Kentucky Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 0.32% | |
Aa/AA | | | 29.67% | |
A | | | 69.92% | |
Not Rated | | | 0.09% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
School Improvement | | | 19.32% | |
Miscellaneous Public Improvement | | | 19.12% | |
Public Facilities | | | 14.11% | |
Refunding | | | 11.17% | |
Turnpikes/Toll Road/Highway Revenue | | | 9.67% | |
University Consolidated Education and Building Revenue | | | 8.88% | |
Municipal Utility Revenue | | | 6.30% | |
Hospital and Healthcare Revenue | | | 6.12% | |
Prerefunded | | | 3.36% | |
Other Assets Less Liabilities | | | 1.95% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | |
Alabama Tax-Free Income Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 1.57% | |
Aa/AA | | | 84.89% | |
A | | | 5.78% | |
Baa/BBB | | | 0.66% | |
Not Rated | | | 7.10% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Municipal Utility Revenue | | | 22.99% | |
School Improvement | | | 20.38% | |
Prerefunded | | | 19.88% | |
Public Facilities | | | 10.50% | |
Refunding | | | 8.53% | |
University Consolidated Education and Building Revenue | | | 6.49% | |
Miscellaneous Public Improvement | | | 5.85% | |
Hospital and Healthcare Revenue | | | 2.35% | |
Turnpikes/Toll Road/Highway Revenue | | | 1.05% | |
Other Assets Less Liabilities | | | 1.98% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | |
Mississippi Tax-Free Income Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aa/AA | | | 89.56% | |
A | | | 10.44% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Prerefunded | | | 38.55% | |
University Consolidated Education and Building Revenue | | | 19.19% | |
Municipal Utility Revenue | | | 11.95% | |
Turnpikes/Toll Road/Highway Revenue | | | 8.20% | |
Public Facilities | | | 7.89% | |
Refunding | | | 4.60% | |
School Improvements | | | 4.50% | |
Hospital and Healthcare Revenue | | | 1.88% | |
Miscellaneous Public Improvement | | | 1.21% | |
Other Assets Less Liabilities | | | 2.03% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
iv
The illustrations below provide each Fund’s sector allocation and
summarize key information about each Fund’s investments. | Unaudited |
| | | | |
North Carolina Tax-Free Income Series | |
| CREDIT QUALITY * | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 5.10% | |
Aa/AA | | | 78.15% | |
A | | | 16.75% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
University Consolidated Education and Building Revenue | | | 16.98% | |
Prerefunded | | | 16.90% | |
Hospital and Healthcare Revenue | | | 12.24% | |
School Improvement | | | 10.94% | |
Refunding | | | 10.70% | |
Municipal Utility Revenue | | | 10.32% | |
Public Facilities | | | 6.29% | |
Airport Revenue | | | 5.09% | |
Miscellaneous Public Improvement | | | 4.58% | |
Turnpikes/Toll Road/Highway Revenue | | | 2.13% | |
Lease Revenue | | | 1.30% | |
Escrowed to Maturity | | | 0.79% | |
Miscellaneous Revenue | | | 0.43% | |
Other Assets Less Liabilities | | | 1.31% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | |
North Carolina Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY * | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 3.85% | |
Aa/AA | | | 74.46% | |
A | | | 21.25% | |
Not Rated | | | 0.44% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Refunding | | | 23.94% | |
University Consolidated Education and Building Revenue | | | 16.92% | |
Municipal Utility Revenue | | | 13.95% | |
School Improvement | | | 11.50% | |
Prerefunded | | | 8.26% | |
Public Facilities | | | 7.37% | |
Hospital and Healthcare Revenue | | | 6.21% | |
Miscellaneous Public Improvement | | | 3.65% | |
Escrowed to Maturity | | | 2.37% | |
Turnpikes/Toll Road/Highway Revenue | | | 2.00% | |
Ad Valorem Property | | | 1.28% | |
Lease Revenue | | | 1.19% | |
Other Assets Less Liabilities | | | 1.36% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | |
Tennessee Tax-Free Income Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 3.67% | |
Aa/AA | | | 81.03% | |
A | | | 13.20% | |
Baa/BBB | | | 0.50% | |
Not Rated | | | 1.60% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Municipal Utility Revenue | | | 34.96% | |
Prerefunded | | | 12.40% | |
Public Facilities | | | 11.30% | |
Hospital and Healthcare Revenue | | | 9.42% | |
University Consolidated Education and Building Revenue | | | 8.58% | |
Refunding | | | 6.90% | |
Miscellaneous Public Improvement | | | 5.86% | |
School Improvement | | | 5.51% | |
Airport Revenue | | | 2.31% | |
State and Local Mortgage/Housing Revenue | | | 1.02% | |
Industrial Revenue | | | 0.84% | |
Escrowed to Maturity | | | 0.01% | |
Other Assets Less Liabilities | | | 0.89% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | |
Tennessee Tax-Free Short-to-Medium Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aa/AA | | | 79.17% | |
A | | | 16.25% | |
Baa/BBB | | | 2.83% | |
Not Rated | | | 1.75% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Municipal Utility Revenue | | | 19.67% | |
Public Facilities | | | 17.86% | |
Refunding | | | 16.39% | |
School Improvement | | | 13.48% | |
Prerefunded | | | 11.48% | |
University Consolidated Education and Building Revenue | | | 9.88% | |
Miscellaneous Public Improvement | | | 3.34% | |
Hospital and Healthcare Revenue | | | 2.72% | |
Airport Revenue | | | 1.08% | |
Other Assets Less Liabilities | | | 4.10% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
v
The illustrations below provide each Fund’s sector allocation and
summarize key information about each Fund’s investments. | Unaudited |
| | | | |
Intermediate Government Bond Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aaa/AAA | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Federal Farm Credit Bank | | | 62.39% | |
Federal Home Loan Bank | | | 34.77% | |
Federal National Mortgage Association | | | 0.71% | |
Other Assets Less Liabilities | | | 2.13% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | |
Taxable Municipal Bond Series | |
| CREDIT QUALITY* | | % of Net Assets
at Fair Value | |
Aa/AA | | | 84.88% | |
A | | | 15.12% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| COMPOSITION | | | |
| | | % of Net Assets | |
Public Facilities | | | 32.73% | |
Municipal Utility Revenue | | | 26.30% | |
School Improvement | | | 14.03% | |
Miscellaneous Public Improvements | | | 10.97% | |
Hospital and Healthcare Revenue | | | 4.58% | |
Turnpikes/Toll Road/Highway Revenue | | | 2.84% | |
Marina/Port Authority Revenue | | | 2.42% | |
University Consolidated Education and Building Revenue | | | 1.22% | |
Airport Revenue | | | 1.08% | |
Other Assets Less Liabilities | | | 3.83% | |
| | | | | |
| | | | 100.00% | |
| | | | | |
| | | | | |
| * | Ratings by Moody’s Investors Services, Inc. unless noted otherwise. See Schedules of Portfolio Investments for individual bond ratings. |
vi
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.
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 on August 24, 2016, Bloomberg LP completed its acquisition of Barclays Risk Analytics and Index Solutions Limited from Barclays Bank PLC and co-branded the indices as the Bloomberg Barclays Indices.
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xvii
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 22.99% of Net Assets | |
Auburn AL Waterworks Board Water Revenue | | | 5.000 | % | | | 09/01/2036 | | | Aa2 | | $ | 250,000 | | | $ | 284,808 | |
Birmingham AL Waterworks | | | 5.000 | | | | 01/01/2026 | | | Aa2 | | | 80,000 | | | | 85,796 | |
Birmingham AL Waterworks | | | 4.000 | | | | 01/01/2037 | | | Aa2 | | | 360,000 | | | | 375,296 | |
Birmingham AL Waterworks | | | 4.000 | | | | 01/01/2038 | | | Aa2 | | | 205,000 | | | | 213,557 | |
Birmingham AL Waterworks | | | 5.000 | | | | 01/01/2038 | | | Aa2 | | | 550,000 | | | | 600,394 | |
Birmingham AL Waterworks | | | 5.000 | | | | 01/01/2040 | | | Aa2 | | | 150,000 | | | | 167,517 | |
Chatom AL Industrial Board Gulf Opportunity Zone | | | 5.000 | | | | 08/01/2037 | | | A3 | | | 150,000 | | | | 157,364 | |
Cullman AL Utility Board Water Revenue | | | 4.750 | | | | 09/01/2037 | | | A1 | | | 400,000 | | | | 415,712 | |
Gadsden AL Waterworks & Sewer Board | | | 4.000 | | | | 06/01/2034 | | | A1 | | | 120,000 | | | | 124,387 | |
Huntsville AL Water System Revenue | | | 5.000 | | | | 11/01/2033 | | | Aa1 | | | 125,000 | | | | 125,218 | |
Jasper AL Waterworks & Sewer Board Utility Revenue | | | 5.000 | | | | 06/01/2030 | | | A+* | | | 455,000 | | | | 477,259 | |
Limestone County AL Water & Sewer Authority | | | 5.000 | | | | 12/01/2033 | | | A* | | | 300,000 | | | | 332,772 | |
Limestone County AL Water & Sewer Authority | | | 4.750 | | | | 12/01/2033 | | | AA* | | | 290,000 | | | | 322,497 | |
Limestone County AL Water & Sewer Authority | | | 5.000 | | | | 12/01/2034 | | | A* | | | 250,000 | | | | 277,618 | |
Limestone County AL Water & Sewer Authority | | | 4.750 | | | | 12/01/2034 | | | AA* | | | 375,000 | | | | 415,474 | |
Limestone County AL Water & Sewer Authority | | | 4.750 | | | | 12/01/2035 | | | AA* | | | 400,000 | | | | 434,276 | |
Opelika AL Utilities Board | | | 4.000 | | | | 06/01/2039 | | | Aa3 | | | 250,000 | | | | 260,088 | |
Prattville AL Sewer Warrants | | | 4.000 | | | | 11/01/2042 | | | AA-* | | | 375,000 | | | | 387,394 | |
Tallassee AL Water Gas & Sewer Warrants | | | 5.125 | | | | 05/01/2036 | | | A2 | | | 10,000 | | | | 10,474 | |
West Morgan East Lawrence AL Water & Sewer | | | 4.750 | | | | 08/15/2030 | | | AA* | | | 75,000 | | | | 78,093 | |
West Morgan East Lawrence AL Water & Sewer | | | 4.850 | | | | 08/15/2035 | | | AA* | | | 250,000 | | | | 259,875 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,805,869 | |
| SCHOOL IMPROVEMENT BONDS | |
| 20.38% of Net Assets | |
Alabaster AL Board of Education Special Tax Warrants** | | | 5.000 | | | | 09/01/2039 | | | A1 | | | 600,000 | | | | 668,922 | |
Decatur City AL Board of Education Special Tax | | | 5.000 | | | | 02/01/2040 | | | Aa2 | | | 225,000 | | | | 249,023 | |
Etowah County AL Board of Education Capital Outlay Tax | | | 5.000 | | | | 09/01/2037 | | | A+* | | | 200,000 | | | | 214,918 | |
Jasper AL Warrants | | | 5.000 | | | | 03/01/2032 | | | A2 | | | 450,000 | | | | 499,829 | |
Limestone County AL Board of Education | | | 5.000 | | | | 07/01/2033 | | | AA* | | | 255,000 | | | | 285,513 | |
Madison County AL Board of Education Capital Outlay** | | | 5.000 | | | | 09/01/2031 | | | Aa3 | | | 660,000 | | | | 747,905 | |
Marshall County AL Board of Education Special Tax School Warrants | | | 4.000 | | | | 03/01/2033 | | | A2 | | | 250,000 | | | | 259,875 | |
Montgomery County AL Board of Education Capital Outlay School Warrants | | | 5.000 | | | | 09/01/2039 | | | BBB+* | | | 150,000 | | | | 164,387 | |
Morgan County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 03/01/2035 | | | AA-* | | | 405,000 | | | | 441,316 | |
Opelika AL Warrants | | | 5.000 | | | | 11/01/2031 | | | Aa2 | | | 150,000 | | | | 162,890 | |
Shelby County AL Board of Education Capital Outlay Warrants** | | | 5.000 | | | | 02/01/2031 | | | Aa2 | | | 615,000 | | | | 655,848 | |
Sumter County AL Limited Obligation School Warrants | | | 5.100 | | | | 02/01/2034 | | | NR | | | 100,000 | | | | 100,532 | |
Sumter County AL Limited Obligation School Warrants | | | 5.200 | | | | 02/01/2039 | | | NR | | | 95,000 | | | | 95,494 | |
Troy AL Public Educational Building Authority | | | 5.250 | | | | 12/01/2036 | | | A2 | | | 30,000 | | | | 31,883 | |
Tuscaloosa County AL Board of Education Special Tax School Warrants | | | 5.000 | | | | 02/01/2036 | | | Aa3 | | | 250,000 | | | | 284,763 | |
Tuscaloosa County AL Board of Education Special Tax School Warrants | | | 5.000 | | | | 02/01/2037 | | | Aa3 | | | 250,000 | | | | 283,955 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,147,053 | |
| PREREFUNDED BONDS | |
| 19.88% of Net Assets | |
AL State Public School & College Authority Refinancing | | | 5.000 | | | | 05/01/2024 | | | Aa1 | | | 125,000 | | | | 128,546 | |
Albertville AL Warrants | | | 5.000 | | | | 02/01/2035 | | | AA* | | | 110,000 | | | | 112,221 | |
Auburn University AL General Fee Revenue | | | 5.000 | | | | 06/01/2036 | | | Aa2 | | | 150,000 | | | | 163,469 | |
Birmingham AL Waterworks Board Water Revenue | | | 4.750 | | | | 01/01/2036 | | | Aa2 | | | 215,000 | | | | 230,525 | |
Fort Payne AL Waterworks Board Water Revenue | | | 4.750 | | | | 07/01/2034 | | | AA-* | | | 100,000 | | | | 103,130 | |
Jacksonville AL State University | | | 5.125 | | | | 12/01/2033 | | | AA* | | | 235,000 | | | | 238,549 | |
Jacksonville AL State University | | | 5.125 | | | | 12/01/2033 | | | AA* | | | 215,000 | | | | 218,247 | |
Madison County AL Board of Education Capital Outlay Tax** | | | 5.125 | | | | 09/01/2034 | | | Aa3 | | | 505,000 | | | | 508,131 | |
Morgan County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 03/01/2035 | | | NR | | | 155,000 | | | | 172,909 | |
Morgan County AL Board of Education Capital Outlay Warrants | | | 5.000 | | | | 03/01/2035 | | | NR | | | 490,000 | | | | 546,615 | |
Muscle Shoals AL Utilities Board Water & Sewer | | | 5.750 | | | | 12/01/2033 | | | NR | | | 330,000 | | | | 335,749 | |
Muscle Shoals AL Utilities Board Water & Sewer | | | 5.750 | | | | 12/01/2033 | | | AA-* | | | 100,000 | | | | 101,737 | |
The accompanying notes are an integral part of the financial statements.
1
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
North Marshall AL Utilities Board Water Revenue | | | 5.100 | % | | | 10/01/2030 | | | AA* | | $ | 375,000 | | | $ | 378,311 | |
Opelika AL Water Board Revenue | | | 5.000 | | | | 06/01/2037 | | | Aa3 | | | 250,000 | | | | 261,758 | |
Opelika AL Water Board Revenue | | | 5.250 | | | | 06/01/2036 | | | Aa3 | | | 70,000 | | | | 74,652 | |
Phenix City AL Water & Sewer | | | 5.000 | | | | 08/15/2034 | | | A3 | | | 75,000 | | | | 77,829 | |
Tallassee AL Water Gas & Sewer Warrants | | | 5.125 | | | | 05/01/2036 | | | A2 | | | 65,000 | | | | 68,915 | |
Troy AL Public Educational Building Authority | | | 5.250 | | | | 12/01/2036 | | | A2 | | | 195,000 | | | | 210,873 | |
Trussville AL Warrants | | | 5.000 | | | | 10/01/2039 | | | NR | | | 445,000 | | | | 507,451 | |
Tuscaloosa AL Warrants | | | 5.000 | | | | 10/15/2034 | | | Aa1 | | | 175,000 | | | | 178,056 | |
Tuscaloosa AL Warrants | | | 5.125 | | | | 01/01/2039 | | | Aa1 | | | 150,000 | | | | 152,690 | |
University of Alabama General Revenue | | | 5.000 | | | | 07/01/2034 | | | Aa2 | | | 250,000 | | | | 250,048 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,020,411 | |
| PUBLIC FACILITIES BONDS | |
| 10.50% of Net Assets | |
Anniston AL Public Building Authority | | | 5.000 | | | | 03/01/2032 | | | A2 | | | 400,000 | | | | 424,720 | |
Anniston AL Public Building Authority DHR Project | | | 5.250 | | | | 05/01/2030 | | | AA-* | | | 50,000 | | | | 52,742 | |
Anniston AL Public Building Authority DHR Project | | | 5.500 | | | | 05/01/2033 | | | AA-* | | | 200,000 | | | | 211,564 | |
Bessemer AL Public Educational Building Authority Revenue | | | 5.000 | | | | 07/01/2030 | | | AA* | | | 250,000 | | | | 263,963 | |
Boaz AL Warrants | | | 4.000 | | | | 02/01/2037 | | | AA* | | | 250,000 | | | | 260,103 | |
Lowndes County AL Warrants | | | 5.250 | | | | 02/01/2037 | | | A2 | | | 250,000 | | | | 263,966 | |
Montgomery AL Warrants | | | 5.000 | | | | 02/01/2030 | | | A1 | | | 300,000 | | | | 312,945 | |
Trussville AL Warrants** | | | 5.000 | | | | 10/01/2039 | | | Aa2 | | | 775,000 | | | | 862,970 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,652,973 | |
| REFUNDING BONDS | |
| 8.53% of Net Assets | |
Enterprise AL Warrants | | | 4.500 | | | | 11/01/2032 | | | Aa3 | | | 115,000 | | | | 122,640 | |
Montgomery AL Warrants | | | 5.000 | | | | 06/15/2035 | | | A1 | | | 500,000 | | | | 571,645 | |
Northport AL Warrants** | | | 5.000 | | | | 08/01/2040 | | | AA-* | | | 735,000 | | | | 811,499 | |
Shelby County AL | | | 4.000 | | | | 08/15/2038 | | | AA+* | | | 250,000 | | | | 257,565 | |
Tuscaloosa AL Warrants | | | 5.000 | | | | 01/01/2032 | | | Aa1 | | | 350,000 | | | | 392,067 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,155,416 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 6.49% of Net Assets | |
Troy University AL Facilities Revenue | | | 5.000 | | | | 11/01/2028 | | | A1 | | | 250,000 | | | | 282,347 | |
Troy University AL Facilities Revenue | | | 4.000 | | | | 11/01/2032 | | | A1 | | | 300,000 | | | | 315,516 | |
University AL Huntsville General Fee Revenue | | | 5.000 | | | | 09/01/2038 | | | Aa3 | | | 435,000 | | | | 501,629 | |
University of AL Birmingham | | | 5.000 | | | | 10/01/2037 | | | Aa2 | | | 225,000 | | | | 249,955 | |
University of AL General Fee Revenue University of AL Huntsville | | | 5.000 | | | | 09/01/2037 | | | Aa3 | | | 250,000 | | | | 288,520 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,637,967 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 5.85% of Net Assets | |
AL Incentives Financing Authority Special Obligation | | | 5.000 | | | | 09/01/2029 | | | A* | | | 125,000 | | | | 129,173 | |
Jasper AL Warrants | | | 5.000 | | | | 03/01/2031 | | | A2 | | | 250,000 | | | | 277,683 | |
Madison AL Warrants | | | 5.000 | | | | 04/01/2035 | | | Aa2 | | | 350,000 | | | | 392,500 | |
Mobile AL Refunding Warrants | | | 5.000 | | | | 02/15/2027 | | | Aa2 | | | 335,000 | | | | 342,484 | |
Tuscaloosa AL Warrants | | | 5.000 | | | | 07/01/2034 | | | Aa1 | | | 300,000 | | | | 336,426 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,478,266 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | |
| 2.35% of Net Assets | |
Chilton County AL Health Care Authority Chilton County Hospital** | | | 5.000 | | | | 11/01/2035 | | | AA-@ | | | 550,000 | | | | 592,262 | |
| | | | | | | | | | | | | | | | | | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | |
| 1.05% of Net Assets | |
AL Federal Aid Highway Finance Authority | | | 4.000 | | | | 06/01/2037 | | | Aa1 | | | 250,000 | | | | 264,352 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.02% of Net Assets (cost $24,296,238) (See (a) below for further explanation) | | | $ | 24,754,569 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.98% | | | | | | | | | | | | | | | | | 500,436 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 25,255,005 | |
| | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
2
DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Alabama Municipal Bonds
June 30, 2018
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $24,296,238 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 609,126 | |
| | Unrealized depreciation | | | (150,795 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 458,331 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 24,754,569 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 24,754,569 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
3
ALABAMA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $24,296,238) | | | | | | $ | 24,754,569 | |
Cash | | | | | | | 374,149 | |
Interest receivable | | | | | | | 321,171 | |
| | | | | | | | |
Total assets | | | | | | | 25,449,889 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 102,846 | | | | | |
Fund shares redeemed | | | 62,215 | | | | | |
Investment advisory fee | | | 4,536 | | | | | |
Transfer agent fee | | | 6,897 | | | | | |
Insurance expense | | | 4,178 | | | | | |
Registration expense | | | 2,754 | | | | | |
Legal fees | | | 2,706 | | | | | |
Pricing expense | | | 1,166 | | | | | |
Accrued expenses | | | 7,586 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 194,884 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 24,860,546 | |
Accumulated net realized loss on investment transactions | | | | | | | (63,872 | ) |
Net unrealized appreciation in value of investments | | | | | | | 458,331 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 25,255,005 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(2,090,370 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 12.08 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 955,508 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 130,664 | |
Transfer agent fee | | | 37,359 | |
Custodian expense | | | 9,729 | |
Compliance fee | | | 7,178 | |
Registration fees | | | 6,913 | |
Pricing fees | | | 6,001 | |
Trustees fees | | | 2,983 | |
Other expenses | | | 13,967 | |
| | | | |
Total expenses | | | 214,794 | |
Fees waived by Adviser (Note 2) | | | (31,422 | ) |
Custodian expense reduction | | | (317 | ) |
| | | | |
Net expenses | | | 183,055 | |
| | | | |
Net investment income | | | 772,453 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized loss | | | (29,010 | ) |
Net change in unrealized appreciation/depreciation | | | (421,512 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (450,522 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 321,931 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
4
ALABAMA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 772,453 | | | $ | 839,476 | |
Net realized gain/(loss) on investments | | | (29,010 | ) | | | 1,274 | |
Net change in unrealized appreciation/depreciation | | | (421,512 | ) | | | (1,149,505 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 321,931 | | | | (308,755 | ) |
Distributions from net investment income (Note 6) | | | (772,453 | ) | | | (839,451 | ) |
Net Fund share transactions (Note 4) | | | (849,482 | ) | | | (1,675,263 | ) |
| | | | | | | | |
Total decrease | | | (1,300,004 | ) | | | (2,823,469 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 26,555,009 | | | | 29,378,478 | |
| | | | | | | | |
End of year | | $ | 25,255,005 | | | $ | 26,555,009 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | 181 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $12.29 | | | | $12.77 | | | | $12.36 | | | | $12.32 | | | | $12.10 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.36 | | | | 0.37 | | | | 0.39 | | | | 0.41 | | | | 0.42 | |
Net gains/(losses) on securities | | | (0.21 | ) | | | (0.48 | ) | | | 0.41 | | | | 0.04 | | | | 0.23 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.15 | | | | (0.11 | ) | | | 0.80 | | | | 0.45 | | | | 0.65 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.36 | ) | | | (0.37 | ) | | | (0.39 | ) | | | (0.41 | ) | | | (0.42 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.36 | ) | | | (0.37 | ) | | | (0.39 | ) | | | (0.41 | ) | | | (0.43 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $12.08 | | | | $12.29 | | | | $12.77 | | | | $12.36 | | | | $12.32 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 1.24% | | | | (0.82)% | | | | 6.61% | | | | 3.64% | | | | 5.56% | |
Net assets, end of year (in thousands) | | | $25,255 | | | | $26,555 | | | | $29,378 | | | | $25,511 | | | | $23,358 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.70% | | | | 0.71% | | | | 0.71% | | | | 0.72% | |
Ratio of gross expenses to average net assets | | | 0.82% | | | | 0.78% | | | | 0.78% | | | | 0.79% | | | | 0.81% | |
Ratio of net investment income to average net assets | | | 2.96% | | | | 3.00% | | | | 3.14% | | | | 3.26% | | | | 3.48% | |
Portfolio turnover | | | 13.83% | | | | 6.95% | | | | 5.37% | | | | 9.65% | | | | 10.48% | |
| (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 notes are an integral part of the financial statements.
5
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 26.76% of Net Assets | |
KY Association of Counties | | | 4.000 | % | | | 02/01/2033 | | | AA-* | | $ | 420,000 | | | $ | 440,408 | |
KY Association of Counties | | | 4.000 | | | | 02/01/2034 | | | AA-* | | | 435,000 | | | | 453,314 | |
KY Association of Counties | | | 4.000 | | | | 02/01/2035 | | | AA-* | | | 460,000 | | | | 478,704 | |
KY Association of Counties | | | 4.000 | | | | 02/01/2038 | | | AA-* | | | 3,165,000 | | | | 3,306,001 | |
KY Bond Corporation Finance Program | | | 5.500 | | | | 02/01/2031 | | | AA-* | | | 1,115,000 | | | | 1,208,549 | |
KY State Association of Counties Finance Corporation | | | 5.000 | | | | 02/01/2030 | | | AA-* | | | 100,000 | | | | 105,390 | |
KY State Association of Counties Finance Corporation | | | 5.000 | | | | 02/01/2032 | | | AA-* | | | 165,000 | | | | 173,790 | |
KY State Association of Counties Finance Corporation | | | 5.000 | | | | 02/01/2035 | | | AA-* | | | 120,000 | | | | 125,966 | |
KY State Property & Building #76 | | | 5.500 | | | | 08/01/2021 | | | A1 | | | 1,400,000 | | | | 1,537,648 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2028 | | | AA* | | | 1,195,000 | | | | 1,216,331 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2029 | | | AA* | | | 2,580,000 | | | | 2,631,548 | |
KY State Property & Building #98 | | | 5.000 | | | | 08/01/2021 | | | A1 | | | 2,505,000 | | | | 2,655,826 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2026 | | | A1 | | | 2,000,000 | | | | 2,150,780 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2027 | | | A1 | | | 1,710,000 | | | | 1,834,180 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2028 | | | A1 | | | 4,000,000 | | | | 4,299,120 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2029 | | | A1 | | | 2,500,000 | | | | 2,680,000 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2030 | | | A1 | | | 9,980,000 | | | | 10,664,828 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2031 | | | A1 | | | 5,100,000 | | | | 5,449,962 | |
KY State Property & Building #105 | | | 4.750 | | | | 04/01/2031 | | | A2 | | | 2,110,000 | | | | 2,270,487 | |
KY State Property & Building #105 | | | 4.750 | | | | 04/01/2032 | | | A2 | | | 2,205,000 | | | | 2,368,655 | |
KY State Property & Building #105 | | | 4.750 | | | | 04/01/2033 | | | A2 | | | 2,310,000 | | | | 2,482,511 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2029 | | | A1 | | | 4,130,000 | | | | 4,549,773 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2030 | | | A1 | | | 7,165,000 | | | | 7,889,595 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2031 | | | A1 | | | 4,910,000 | | | | 5,401,540 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2032 | | | A1 | | | 6,275,000 | | | | 6,887,126 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2033 | | | A1 | | | 4,870,000 | | | | 5,330,166 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2026 | | | A1 | | | 955,000 | | | | 1,083,304 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2031 | | | A1 | | | 8,290,000 | | | | 9,285,297 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2032 | | | A1 | | | 8,820,000 | | | | 9,849,206 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2033 | | | A1 | | | 5,270,000 | | | | 5,874,311 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2034 | | | A1 | | | 4,900,000 | | | | 5,442,185 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2030 | | | A1 | | | 5,000,000 | | | | 5,613,800 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2028 | | | A1 | | | 2,670,000 | | | | 3,010,478 | |
KY State Property & Building #110 | | | 5.000 | | | | 08/01/2029 | | | A1 | | | 4,200,000 | | | | 4,727,016 | |
KY State Property & Building #110 | | | 5.000 | | | | 08/01/2032 | | | A1 | | | 1,515,000 | | | | 1,691,785 | |
KY State Property & Building #110 | | | 5.000 | | | | 08/01/2033 | | | A1 | | | 1,000,000 | | | | 1,114,670 | |
KY State Property & Building #110 | | | 5.000 | | | | 08/01/2034 | | | A1 | | | 1,900,000 | | | | 2,110,235 | |
KY State Property & Building #110 | | | 5.000 | | | | 08/01/2035 | | | A1 | | | 3,030,000 | | | | 3,357,179 | |
KY State Property & Building #112 | | | 5.000 | | | | 02/01/2035 | | | A1 | | | 8,325,000 | | | | 9,168,156 | |
KY State Property & Building #112 | | | 5.000 | | | | 02/01/2036 | | | A1 | | | 7,920,000 | | | | 8,711,050 | |
KY State Property & Building #112 | | | 5.000 | | | | 11/01/2028 | | | A1 | | | 2,500,000 | | | | 2,832,850 | |
KY State Property & Building #115 | | | 5.000 | | | | 04/01/2033 | | | A1 | | | 4,565,000 | | | | 5,110,198 | |
KY State Property & Building #115 | | | 5.000 | | | | 04/01/2034 | | | A1 | | | 13,975,000 | | | | 15,587,995 | |
KY State Property & Building #115 | | | 5.000 | | | | 04/01/2036 | | | A1 | | | 14,460,000 | | | | 16,048,286 | |
KY State Property & Building #115 | | | 5.000 | | | | 04/01/2037 | | | A1 | | | 5,000,000 | | | | 5,541,250 | |
KY State Property & Building #117 | | | 5.000 | | | | 05/01/2031 | | | A1 | | | 5,055,000 | | | | 5,733,836 | |
KY State Property & Building #117 | | | 5.000 | | | | 05/01/2032 | | | A1 | | | 3,680,000 | | | | 4,153,064 | |
KY State Property & Building #117 | | | 5.000 | | | | 05/01/2033 | | | A1 | | | 3,550,000 | | | | 3,991,869 | |
KY State Property & Building #117 | | | 5.000 | | | | 05/01/2034 | | | A1 | | | 5,825,000 | | | | 6,531,107 | |
KY State Property & Building #117 | | | 5.000 | | | | 05/01/2035 | | | A1 | | | 5,065,000 | | | | 5,662,569 | |
KY State Property & Building #117 | | | 5.000 | | | | 05/01/2036 | | | A1 | | | 5,275,000 | | | | 5,888,852 | |
KY State Property & Building #119 | | | 5.000 | | | | 05/01/2035 | | | A1 | | | 10,000,000 | | | | 11,203,600 | |
KY State Property & Building #119 | | | 5.000 | | | | 05/01/2036 | | | A1 | | | 10,000,000 | | | | 11,186,000 | |
Lexington Fayette Urban County Government | | | 5.000 | | | | 01/01/2028 | | | Aa2 | | | 820,000 | | | | 940,786 | |
Lexington Fayette Urban County Government | | | 5.000 | | | | 01/01/2029 | | | Aa2 | | | 345,000 | | | | 394,928 | |
Lexington Fayette Urban County Government | | | 5.000 | | | | 01/01/2033 | | | Aa2 | | | 1,685,000 | | | | 1,909,425 | |
Pendleton County KY Multi-County Lease Revenue | | | 6.400 | | | | 03/01/2019 | | | B* | | | 3,000,000 | | | | 3,036,480 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 255,383,965 | |
The accompanying notes are an integral part of the financial statements.
6
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 11.74% of Net Assets | |
Boyle County Centre College | | | 5.000 | % | | | 06/01/2037 | | | A3 | | $ | 2,865,000 | | | $ | 3,177,914 | |
Eastern KY University General Receipts | | | 5.000 | | | | 04/01/2033 | | | A1 | | | 910,000 | | | | 1,015,196 | |
Eastern KY University General Receipts | | | 4.000 | | | | 10/01/2037 | | | A1 | | | 1,540,000 | | | | 1,591,729 | |
KY State Property & Building #114 | | | 5.000 | | | | 10/01/2032 | | | Aa3 | | | 2,795,000 | | | | 3,163,828 | |
KY State Property & Building #114 | | | 5.000 | | | | 10/01/2033 | | | Aa3 | | | 2,940,000 | | | | 3,318,848 | |
KY State Property & Building #114 | | | 5.000 | | | | 10/01/2034 | | | Aa3 | | | 3,090,000 | | | | 3,476,250 | |
KY State Property & Building #114 | | | 5.000 | | | | 10/01/2035 | | | Aa3 | | | 1,945,000 | | | | 2,176,183 | |
KY State Property & Building #116 | | | 5.000 | | | | 10/01/2035 | | | Aa3 | | | 4,165,000 | | | | 4,739,812 | |
KY State Property & Building #116 | | | 5.000 | | | | 10/01/2036 | | | Aa3 | | | 2,725,000 | | | | 3,089,414 | |
Murray State University | | | 5.000 | | | | 03/01/2032 | | | A1 | | | 2,220,000 | | | | 2,495,147 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2030 | | | Aa2 | | | 5,490,000 | | | | 6,297,634 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2036 | | | Aa2 | | | 4,820,000 | | | | 5,388,037 | |
University of Kentucky General Receipts | | | 4.000 | | | | 10/01/2036 | | | Aa2 | | | 16,160,000 | | | | 16,950,386 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2037 | | | Aa2 | | | 7,180,000 | | | | 8,013,957 | |
University of Kentucky General Receipts | | | 5.000 | | | | 04/01/2038 | | | Aa2 | | | 7,395,000 | | | | 8,245,647 | |
University of Kentucky General Receipts | | | 4.000 | | | | 10/01/2038 | | | Aa2 | | | 10,855,000 | | | | 11,348,034 | |
University of Kentucky Higher Educational | | | 4.750 | | | | 04/01/2034 | | | Aa2 | | | 5,435,000 | | | | 6,030,024 | |
University of Louisville | | | 4.500 | | | | 03/01/2035 | | | A1 | | | 5,600,000 | | | | 6,040,216 | |
University of Louisville | | | 4.500 | | | | 03/01/2036 | | | A1 | | | 5,845,000 | | | | 6,291,500 | |
University of Louisville General Receipts | | | 5.000 | | | | 09/01/2029 | | | A3 | | | 2,280,000 | | | | 2,473,777 | |
University of Louisville General Receipts | | | 5.000 | | | | 09/01/2030 | | | A3 | | | 440,000 | | | | 476,269 | |
University of Louisville General Receipts | | | 5.000 | | | | 09/01/2031 | | | A3 | | | 2,580,000 | | | | 2,784,465 | |
Western KY University | | | 5.000 | | | | 05/01/2032 | | | A1 | | | 1,500,000 | | | | 1,623,810 | |
Western KY University | | | 4.000 | | | | 09/01/2034 | | | A1 | | | 575,000 | | | | 596,085 | |
Western KY University | | | 4.000 | | | | 09/01/2035 | | | A1 | | | 595,000 | | | | 615,534 | |
Western KY University | | | 4.000 | | | | 09/01/2036 | | | A1 | | | 620,000 | | | | 639,170 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 112,058,866 | |
| PREREFUNDED BONDS | |
| 11.32% of Net Assets | |
Kenton County KY School District Finance Corporation | | | 5.000 | | | | 02/01/2029 | | | A1 | | | 3,270,000 | | | | 3,333,500 | |
KY Development Finance Authority — St. Elizabeth | | | 5.125 | | | | 05/01/2029 | | | NR | | | 2,750,000 | | | | 2,828,760 | |
KY Development Finance Authority — St. Elizabeth | | | 5.375 | | | | 05/01/2034 | | | NR | | | 2,560,000 | | | | 2,638,618 | |
KY Development Finance Authority — St. Elizabeth | | | 5.500 | | | | 05/01/2039 | | | NR | | | 1,000,000 | | | | 1,031,750 | |
KY Economic Development Finance Authority Baptist Healthcare | | | 5.375 | | | | 08/15/2024 | | | NR | | | 605,000 | | | | 607,880 | |
KY Infrastructure Authority Wastewater and Drinking Water | | | 5.000 | | | | 02/01/2027 | | | Aaa | | | 2,500,000 | | | | 2,627,125 | |
KY Infrastructure Authority Wastewater and Drinking Water | | | 5.000 | | | | 02/01/2028 | | | Aaa | | | 2,000,000 | | | | 2,101,700 | |
KY State Association of Counties Finance Corporation | | | 5.000 | | | | 02/01/2030 | | | NR | | | 525,000 | | | | 558,390 | |
KY State Association of Counties Finance Corporation | | | 5.000 | | | | 02/01/2032 | | | NR | | | 835,000 | | | | 888,106 | |
KY State Association of Counties Finance Corporation | | | 5.000 | | | | 02/01/2035 | | | NR | | | 875,000 | | | | 930,650 | |
KY State Property & Building #89 | | | 5.000 | | | | 11/01/2026 | | | A1 | | | 390,000 | | | | 394,466 | |
KY State Property & Building #90 | | | 5.375 | | | | 11/01/2023 | | | NR | | | 1,060,000 | | | | 1,073,261 | |
KY State Property & Building #90 | | | 5.500 | | | | 11/01/2028 | | | NR | | | 18,805,000 | | | | 19,051,910 | |
KY State Property & Building #90 | | | 5.500 | | | | 11/01/2028 | | | A1 | | | 2,850,000 | | | | 2,888,019 | |
KY State Property & Building #93 | | | 4.875 | | | | 02/01/2028 | | | AA* | | | 440,000 | | | | 448,408 | |
KY State Property & Building #93 | | | 5.000 | | | | 02/01/2029 | | | AA* | | | 445,000 | | | | 453,851 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2029 | | | AA* | | | 12,260,000 | | | | 12,526,165 | |
KY State Property & Building #96 | | | 5.000 | | | | 11/01/2029 | | | A1 | | | 5,000,000 | | | | 5,224,900 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2024 | | | Aa3 | | | 1,500,000 | | | | 1,671,780 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2026 | | | Aa3 | | | 4,440,000 | | | | 4,587,719 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2027 | | | Aa3 | | | 3,080,000 | | | | 3,183,734 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2028 | | | Aa3 | | | 4,930,000 | | | | 5,494,584 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa3 | | | 10,035,000 | | | | 10,372,979 | |
Louisville & Jefferson County Catholic Health Initiatives** | | | 5.000 | | | | 12/01/2035 | | | NR | | | 11,290,000 | | | | 12,570,399 | |
Louisville & Jefferson County Metropolitan Parking | | | 5.000 | | | | 12/01/2022 | | | Aa3 | | | 625,000 | | | | 654,394 | |
Louisville & Jefferson County Metropolitan Parking | | | 5.750 | | | | 12/01/2034 | | | Aa3 | | | 2,750,000 | | | | 2,910,215 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2021 | | | NR | | | 1,690,000 | | | | 1,767,960 | |
The accompanying notes are an integral part of the financial statements.
7
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | % | | | 05/15/2023 | | | NR | | $ | 1,480,000 | | | $ | 1,548,272 | |
Owensboro KY Water Revenue | | | 5.000 | | | | 09/15/2025 | | | A1 | | | 175,000 | | | | 176,297 | |
Shelby County KY School District Finance Corporation | | | 5.000 | | | | 02/01/2028 | | | A1 | | | 500,000 | | | | 509,945 | |
Wolfe County KY Public Property | | | 5.000 | | | | 04/01/2030 | | | A1 | | | 2,855,000 | | | | 3,012,111 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 108,067,848 | |
| SCHOOL IMPROVEMENT BONDS | |
| 10.96% of Net Assets | |
Bullitt County KY School District Finance Corporation | | | 4.000 | | | | 10/01/2035 | | | A1 | | | 1,820,000 | | | | 1,884,683 | |
Bullitt County KY School District Finance Corporation | | | 4.000 | | | | 10/01/2036 | | | A1 | | | 2,985,000 | | | | 3,084,580 | |
Bullitt County KY Schools District Finance Corporation | | | 4.000 | | | | 10/01/2037 | | | A1 | | | 3,075,000 | | | | 3,177,582 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 08/01/2028 | | | Aa3 | | | 1,330,000 | | | | 1,515,083 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 10/01/2028 | | | Aa3 | | | 2,875,000 | | | | 3,237,365 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 10/01/2029 | | | Aa3 | | | 3,660,000 | | | | 4,069,737 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2031 | | | Aa3 | | | 3,705,000 | | | | 3,952,494 | |
Fayette County KY School District Finance Corporation | | | 4.750 | | | | 11/01/2031 | | | Aa3 | | | 1,730,000 | | | | 1,901,426 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 08/01/2032 | | | Aa3 | | | 10,600,000 | | | | 11,944,500 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 10/01/2032 | | | Aa3 | | | 3,615,000 | | | | 4,004,733 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 10/01/2033 | | | Aa3 | | | 4,385,000 | | | | 4,869,104 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 08/01/2034 | | | Aa3 | | | 9,750,000 | | | | 10,900,793 | |
Hardin County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2030 | | | A1 | | | 450,000 | | | | 489,668 | |
Hardin County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2031 | | | A1 | | | 470,000 | | | | 511,431 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 04/01/2030 | | | Aa3 | | | 975,000 | | | | 1,098,474 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 04/01/2031 | | | Aa3 | | | 1,025,000 | | | | 1,150,798 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2032 | | | Aa3 | | | 4,230,000 | | | | 4,715,858 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2033 | | | Aa3 | | | 5,145,000 | | | | 5,715,478 | |
Jefferson County KY School District Finance Corporation | | | 4.750 | | | | 04/01/2034 | | | Aa3 | | | 1,165,000 | | | | 1,269,431 | |
Jefferson County KY School District Finance Corporation | | | 5.000 | | | | 05/01/2034 | | | Aa3 | | | 5,405,000 | | | | 5,989,010 | |
Jefferson County KY School District Finance Corporation | | | 4.750 | | | | 04/01/2035 | | | Aa3 | | | 1,220,000 | | | | 1,328,592 | |
Kenton County KY School District Finance Corporation | | | 4.000 | | | | 04/01/2036 | | | A1 | | | 1,210,000 | | | | 1,264,680 | |
Kenton County KY School District Finance Corporation | | | 4.000 | | | | 04/01/2037 | | | A1 | | | 1,255,000 | | | | 1,311,714 | |
Kenton County KY School District Finance Corporation | | | 4.000 | | | | 04/01/2038 | | | A1 | | | 1,300,000 | | | | 1,356,550 | |
Meade County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2036 | | | A1 | | | 2,215,000 | | | | 2,303,445 | |
Meade County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2037 | | | A1 | | | 2,255,000 | | | | 2,340,284 | |
Meade County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2038 | | | A1 | | | 2,400,000 | | | | 2,487,384 | |
Morgan County KY School District Finance Corporation | | | 4.000 | | | | 08/01/2029 | | | A1 | | | 960,000 | | | | 1,027,958 | |
Oldham County KY School District Finance Corporation | | | 4.000 | | | | 10/01/2034 | | | A1 | | | 1,560,000 | | | | 1,627,954 | |
Scott County KY School District Finance Corporation | | | 4.500 | | | | 01/01/2025 | | | A1 | | | 4,890,000 | | | | 5,442,766 | |
Scott County KY School District Finance Corporation | | | 4.000 | | | | 02/01/2029 | | | Aa3 | | | 5,040,000 | | | | 5,513,357 | |
Scott County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2035 | | | Aa3 | | | 1,440,000 | | | | 1,499,530 | |
Scott County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2036 | | | Aa3 | | | 1,500,000 | | | | 1,562,010 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 104,548,452 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 9.87% of Net Assets | |
Cambell & Kenton County Sanitation District #1 | | | 4.000 | | | | 08/01/2032 | | | Aa3 | | | 6,100,000 | | | | 6,481,006 | |
Frankfort KY Electric & Water | | | 4.750 | | | | 12/01/2034 | | | AA* | | | 695,000 | | | | 761,296 | |
Frankfort KY Electric & Water | | | 4.750 | | | | 12/01/2035 | | | AA* | | | 725,000 | | | | 795,934 | |
Frankfort KY Electric & Water | | | 4.750 | �� | | | 12/01/2036 | | | AA* | | | 760,000 | | | | 828,339 | |
Frankfort KY Electric & Water | | | 4.750 | | | | 12/01/2037 | | | AA* | | | 800,000 | | | | 870,968 | |
Frankfort KY Electric & Water | | | 4.750 | | | | 12/01/2038 | | | AA* | | | 835,000 | | | | 907,052 | |
KY Rural Water Financing Corporation | | | 5.375 | | | | 02/01/2020 | | | A+* | | | 130,000 | | | | 130,352 | |
KY Rural Water Financing Corporation | | | 4.500 | | | | 02/01/2023 | | | A+* | | | 1,085,000 | | | | 1,188,368 | |
KY Rural Water Financing Corporation | | | 4.500 | | | | 02/01/2024 | | | A+* | | | 880,000 | | | | 958,628 | |
KY Rural Water Financing Corporation | | | 5.125 | | | | 02/01/2035 | | | A+* | | | 525,000 | | | | 545,407 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2021 | | | Aa3 | | | 1,175,000 | | | | 1,228,545 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2023 | | | Aa3 | | | 1,020,000 | | | | 1,066,481 | |
Louisville & Jefferson County Metropolitan Sewer | | | 4.000 | | | | 05/15/2030 | | | Aa3 | | | 3,120,000 | | | | 3,373,562 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2031 | | | Aa3 | | | 2,465,000 | | | | 2,743,866 | |
Louisville & Jefferson County Metropolitan Sewer | | | 4.000 | | | | 05/15/2033 | | | Aa3 | | | 1,000,000 | | | | 1,050,510 | |
The accompanying notes are an integral part of the financial statements.
8
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Louisville & Jefferson County Metropolitan Sewer** | | | 5.000 | % | | | 05/15/2034 | | | Aa3 | | $ | 27,730,000 | | | $ | 30,111,452 | |
Louisville & Jefferson County Metropolitan Sewer | | | 4.750 | | | | 05/15/2034 | | | Aa3 | | | 2,230,000 | | | | 2,475,434 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2034 | | | Aa3 | | | 4,595,000 | | | | 5,248,041 | |
Louisville & Jefferson County Metropolitan Sewer | | | 4.750 | | | | 05/15/2035 | | | Aa3 | | | 2,245,000 | | | | 2,482,431 | |
Louisville & Jefferson County Metropolitan Sewer | | | 5.000 | | | | 05/15/2035 | | | Aa3 | | | 4,825,000 | | | | 5,493,504 | |
Louisville & Jefferson County Metropolitan Sewer | | | 4.750 | | | | 05/15/2036 | | | Aa3 | | | 2,795,000 | | | | 3,080,342 | |
Louisville & Jefferson County Metropolitan Sewer | | | 4.000 | | | | 05/15/2037 | | | Aa3 | | | 10,000,000 | | | | 10,568,400 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2026 | | | Aa3 | | | 1,000,000 | | | | 1,092,480 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2027 | | | Aa3 | | | 4,315,000 | | | | 4,721,861 | |
Northern KY Water District | | | 5.000 | | | | 02/01/2033 | | | Aa3 | | | 3,580,000 | | | | 3,817,784 | |
Owensboro KY Electric Light & Power | | | 4.000 | | | | 01/01/2031 | | | A3 | | | 245,000 | | | | 257,257 | |
Owensboro KY Electric Light & Power | | | 4.000 | | | | 01/01/2033 | | | A3 | | | 275,000 | | | | 284,424 | |
Owensboro KY Electric Light & Power | | | 4.000 | | | | 01/01/2034 | | | A3 | | | 305,000 | | | | 314,321 | |
Owensboro KY Electric Light & Power | | | 4.000 | | | | 01/01/2035 | | | A3 | | | 200,000 | | | | 205,226 | |
Owensboro KY Electric Light & Power | | | 4.000 | | | | 01/01/2036 | | | A3 | | | 325,000 | | | | 333,015 | |
Owensboro KY Electric Light & Power | | | 4.000 | | | | 01/01/2037 | | | A3 | | | 410,000 | | | | 418,606 | |
Owensboro KY Water Revenue | | | 5.000 | | | | 09/15/2025 | | | A1 | | | 370,000 | | | | 372,564 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 94,207,456 | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 8.03% of Net Assets | |
KY Asset Liability Commission Federal Highway | | | 5.250 | | | | 09/01/2019 | | | A2 | | | 1,765,000 | | | | 1,838,212 | |
KY Asset Liability Commission Federal Highway | | | 5.000 | | | | 09/01/2021 | | | A2 | | | 1,570,000 | | | | 1,668,204 | |
KY Asset Liability Commission Federal Highway | | | 5.000 | | | | 09/01/2022 | | | A2 | | | 3,500,000 | | | | 3,718,155 | |
KY Asset Liability Commission Federal Highway | | | 5.250 | | | | 09/01/2025 | | | A2 | | | 3,400,000 | | | | 3,856,178 | |
KY Asset Liability Commission Federal Highway | | | 5.000 | | | | 09/01/2027 | | | A2 | | | 9,760,000 | | | | 11,159,777 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa3 | | | 5,165,000 | | | | 5,578,665 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa3 | | | 7,235,000 | | | | 7,969,642 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2029 | | | Aa3 | | | 4,000,000 | | | | 4,624,080 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2030 | | | Aa3 | | | 1,845,000 | | | | 1,989,427 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2030 | | | Aa3 | | | 1,465,000 | | | | 1,609,640 | |
KY State Turnpike Economic Development Road Revenue** | | | 5.000 | | | | 07/01/2031 | | | Aa3 | | | 9,350,000 | | | | 10,228,246 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2032 | | | Aa3 | | | 1,315,000 | | | | 1,492,499 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2032 | | | Aa3 | | | 1,765,000 | | | | 2,041,770 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2032 | | | Aa3 | | | 8,755,000 | | | | 9,573,855 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2033 | | | Aa3 | | | 5,000,000 | | | | 5,554,850 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2034 | | | Aa3 | | | 2,370,000 | | | | 2,690,661 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2036 | | | Aa3 | | | 400,000 | | | | 456,620 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2037 | | | Aa3 | | | 500,000 | | | | 569,095 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 76,619,576 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 6.53% of Net Assets | |
KY Development Corporation Hospital Facilities — St. Elizabeth | | | 4.000 | | | | 05/01/2032 | | | AA* | | | 1,810,000 | | | | 1,898,093 | |
KY Development Corporation Hospital Facilities — St. Elizabeth | | | 4.000 | | | | 05/01/2035 | | | AA* | | | 1,390,000 | | | | 1,437,232 | |
KY Development Corporation Hospital Facilities — St. Elizabeth | | | 4.000 | | | | 05/01/2036 | | | AA* | | | 1,200,000 | | | | 1,239,120 | |
KY Development Corporation Hospital Facilities — St. Elizabeth | | | 5.000 | | | | 05/01/2039 | | | AA* | | | 7,185,000 | | | | 8,064,516 | |
KY Economic Development Finance Authority Baptist Healthcare | | | 5.375 | | | | 08/15/2024 | | | Baa2 | | | 600,000 | | | | 602,442 | |
KY Economic Development Finance Authority Baptist Healthcare | | | 5.625 | | | | 08/15/2027 | | | Baa2 | | | 2,430,000 | | | | 2,440,838 | |
Lexington Fayette Urban County Government | | | 5.250 | | | | 06/01/2032 | | | A1 | | | 1,500,000 | | | | 1,613,865 | |
Lexington Fayette Urban County Government Healthcare | | | 5.250 | | | | 06/01/2028 | | | A1 | | | 1,000,000 | | | | 1,080,240 | |
Lexington Fayette Urban County Government Public Facilities | | | 5.000 | | | | 06/01/2033 | | | A1 | | | 5,260,000 | | | | 5,599,165 | |
Louisville & Jefferson County Norton Healthcare | | | 5.500 | | | | 10/01/2033 | | | A-* | | | 2,000,000 | | | | 2,249,620 | |
Louisville & Jefferson County Norton Healthcare | | | 5.000 | | | | 10/01/2033 | | | A-* | | | 8,110,000 | | | | 9,117,505 | |
Louisville & Jefferson County Norton Healthcare | | | 4.000 | | | | 10/01/2035 | | | A-* | | | 10,850,000 | | | | 11,002,008 | |
Louisville & Jefferson County Norton Healthcare | | | 4.000 | | | | 10/01/2036 | | | A-* | | | 9,005,000 | | | | 9,124,767 | |
Warren County KY Hospital | | | 5.000 | | | | 04/01/2028 | | | A+* | | | 6,225,000 | | | | 6,842,209 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 62,311,620 | |
The accompanying notes are an integral part of the financial statements.
9
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| REFUNDING BONDS | |
| 6.52% of Net Assets | |
KY State Property & Building #80 | | | 5.250 | % | | | 05/01/2020 | | | A1 | | $ | 1,000,000 | | | $ | 1,057,800 | |
KY State Property & Building #83 | | | 5.250 | | | | 10/01/2020 | | | A1 | | | 24,220,000 | | | | 25,930,172 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2019 | | | A1 | | | 7,500,000 | | | | 7,754,250 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2021 | | | A1 | | | 310,000 | | | | 336,164 | |
KY State Property & Building #84 | | | 5.000 | | | | 08/01/2022 | | | A1 | | | 18,000,000 | | | | 19,893,240 | |
KY State Property & Building #102 | | | 5.000 | | | | 05/01/2024 | | | Aa3 | | | 405,000 | | | | 449,368 | |
KY State Property & Building #104 | | | 5.000 | | | | 11/01/2021 | | | A2 | | | 2,085,000 | | | | 2,271,879 | |
KY State Property & Building #104 | | | 5.000 | | | | 11/01/2022 | | | A2 | | | 1,290,000 | | | | 1,431,320 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2025 | | | A1 | | | 2,690,000 | | | | 3,066,197 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 62,190,390 | |
| PUBLIC FACILITIES BONDS | |
| 5.22% of Net Assets | |
Bracken County KY Public Property | | | 5.000 | | | | 08/01/2029 | | | A1 | | | 840,000 | | | | 918,010 | |
Bracken County KY Public Property | | | 5.000 | | | | 08/01/2030 | | | A1 | | | 1,110,000 | | | | 1,213,086 | |
Franklin County KY Public Properties Justice Center | | | 5.000 | | | | 04/01/2029 | | | A1 | | | 2,630,000 | | | | 2,851,499 | |
KY State Certificate of Participation | | | 4.000 | | | | 04/15/2030 | | | A1 | | | 1,500,000 | | | | 1,574,385 | |
KY State Certificate of Participation | | | 4.000 | | | | 04/15/2031 | | | A1 | | | 1,000,000 | | | | 1,041,120 | |
KY State Certificate of Participation | | | 5.000 | | | | 06/15/2034 | | | A1 | | | 1,640,000 | | | | 1,814,266 | |
KY State Certificate of Participation | | | 5.000 | | | | 04/15/2038 | | | A1 | | | 5,000,000 | | | | 5,643,700 | |
KY State Certificate of Participation | | | 5.000 | | | | 06/15/2038 | | | A1 | | | 7,535,000 | | | | 8,252,181 | |
Laurel County General Obligation | | | 4.000 | | | | 05/01/2031 | | | A2 | | | 1,295,000 | | | | 1,376,222 | |
Laurel County General Obligation | | | 4.000 | | | | 05/01/2034 | | | A2 | | | 1,440,000 | | | | 1,500,955 | |
Laurel County General Obligation | | | 4.000 | | | | 05/01/2035 | | | A2 | | | 1,495,000 | | | | 1,555,966 | |
Laurel County General Obligation | | | 4.000 | | | | 05/01/2036 | | | A2 | | | 1,555,000 | | | | 1,616,018 | |
Laurel County General Obligation | | | 4.000 | | | | 05/01/2037 | | | A2 | | | 1,620,000 | | | | 1,679,810 | |
Laurel County General Obligation | | | 4.000 | | | | 05/01/2038 | | | A2 | | | 1,680,000 | | | | 1,740,732 | |
Louisville & Jefferson County Visitors & Convention Commission | | | 4.000 | | | | 06/01/2034 | | | A2 | | | 1,450,000 | | | | 1,495,690 | |
Marshall County Library | | | 4.000 | | | | 06/01/2038 | | | Aa3 | | | 1,060,000 | | | | 1,121,120 | |
Owensboro KY Public Property | | | 4.500 | | | | 04/01/2034 | | | A2 | | | 1,165,000 | | | | 1,216,179 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2027 | | | Aa3 | | | 750,000 | | | | 823,313 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2028 | | | Aa3 | | | 940,000 | | | | 1,031,424 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2029 | | | Aa3 | | | 1,160,000 | | | | 1,269,458 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2029 | | | Aa3 | | | 980,000 | | | | 1,072,473 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2030 | | | Aa3 | | | 1,025,000 | | | | 1,118,757 | |
River City, Inc. Parking Authority | | | 4.750 | | | | 06/01/2031 | | | Aa3 | | | 1,270,000 | | | | 1,382,497 | |
River City, Inc. Parking Authority | | | 5.000 | | | | 06/01/2031 | | | Aa3 | | | 1,080,000 | | | | 1,193,756 | |
River City, Inc. Parking Authority | | | 5.000 | | | | 06/01/2032 | | | Aa3 | | | 1,130,000 | | | | 1,247,373 | |
River City, Inc. Parking Authority | | | 5.000 | | | | 06/01/2033 | | | Aa3 | | | 1,395,000 | | | | 1,537,876 | |
Warren County KY Downtown Economic Development Authority | | | 5.000 | | | | 06/01/2038 | | | AA-* | | | 2,345,000 | | | | 2,527,300 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 49,815,166 | |
| AIRPORT REVENUE BONDS | |
| 1.10% of Net Assets | |
Kenton County Airport | | | 5.000 | | | | 01/01/2031 | | | A2 | | | 425,000 | | | | 477,492 | |
Kenton County Airport | | | 5.000 | | | | 01/01/2032 | | | A2 | | | 750,000 | | | | 851,220 | |
Kenton County Airport | | | 5.000 | | | | 01/01/2033 | | | A2 | | | 1,210,000 | | | | 1,368,086 | |
Lexington Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2028 | | | Aa2 | | | 1,170,000 | | | | 1,294,944 | |
Lexington Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2030 | | | Aa2 | | | 1,250,000 | | | | 1,377,438 | |
Lexington Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2032 | | | Aa2 | | | 1,430,000 | | | | 1,574,058 | |
Lexington Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2033 | | | Aa2 | | | 1,520,000 | | | | 1,663,382 | |
Lexington Fayette Urban County Airport Board | | | 5.000 | | | | 07/01/2038 | | | Aa2 | | | 1,720,000 | | | | 1,874,697 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 10,481,317 | |
| MISCELLANEOUS REVENUE BONDS | |
| .23% of Net Assets | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2028 | | | A1 | | | 2,030,000 | | | | 2,241,546 | |
| | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
10
DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Kentucky Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| AD VALOREM PROPERTY BONDS | | | | | | | | | | | | | | | | | | |
| .13% of Net Assets | |
Warren County General Obligation | | | 4.000 | % | | | 06/01/2035 | | | Aa2 | | $ | 1,175,000 | | | $ | 1,239,026 | |
| | | | | | | | | | | | | | | | | | |
| STATE AND LOCAL MORTGAGE/HOUSING REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| .13% of Net Assets | |
Greater KY Housing Assistance Corporation-Chenowith Woods | | | 6.100 | | | | 01/01/2024 | | | Baa2 | | | 250,000 | | | | 250,457 | |
KY Housing Corporation Country Place Apartments | | | 4.750 | | | | 04/20/2031 | | | AA+* | | | 935,000 | | | | 962,555 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,213,012 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.54% of Net Assets (cost $922,849,671) (See (a) below for further explanation) | | | $ | 940,378,240 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.46% | | | | | | | | | | | | | | | | | 13,955,102 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 954,333,342 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $922,848,041 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 21,911,822 | |
| | Unrealized depreciation | | | (4,381,623 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 17,530,199 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 940,378,240 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 940,378,240 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
11
KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $922,849,671) | | | | | | $ | 940,378,240 | |
Cash | | | | | | | 5,885,956 | |
Receivable for fund shares sold | | | | | | | 69,500 | |
Interest receivable | | | | | | | 11,986,776 | |
| | | | | | | | |
Total assets | | | | | | | 958,320,472 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 2,989,558 | | | | | |
Fund shares redeemed | | | 452,859 | | | | | |
Investment advisory fee | | | 295,930 | | | | | |
Transfer agent fee | | | 94,160 | | | | | |
Legal fees | | | 66,374 | | | | | |
Trustees fees | | | 48,481 | | | | | |
Registration expense | | | 20,638 | | | | | |
Accrued expenses | | | 19,130 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 3,987,130 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 935,194,348 | |
Accumulated net investment income | | | | | | | 1,630 | |
Accumulated net realized gain on investment transactions | | | | | | | 1,608,795 | |
Net unrealized appreciation in value of investments | | | | | | | 17,528,569 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 954,333,342 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(125,529,665 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 7.60 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 34,743,994 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 3,684,905 | |
Transfer agent fee | | | 1,180,197 | |
Professional fees | | | 274,559 | |
Trustees fees | | | 111,375 | |
Custodian expense | | | 99,286 | |
Other expenses | | | 125,536 | |
| | | | |
Total expenses | | | 5,475,858 | |
Custodian expense reduction | | | (3,228 | ) |
| | | | |
Net expenses | | | 5,472,630 | |
| | | | |
Net investment income | | | 29,271,364 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 1,741,513 | |
Net change in unrealized appreciation/depreciation | | | (21,246,045 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (19,504,532 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 9,766,832 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
12
KENTUCKY TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 29,271,364 | | | $ | 30,399,742 | |
Net realized gain on investments | | | 1,741,513 | | | | 193,268 | |
Net change in unrealized appreciation/depreciation | | | (21,246,045 | ) | | | (39,252,919 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 9,766,832 | | | | (8,659,909 | ) |
Distributions from net investment income (Note 6) | | | (29,267,208 | ) | | | (30,392,350 | ) |
Distributions from capital gains (Note 6) | | | (173,173 | ) | | | (393,040 | ) |
Net Fund share transactions (Note 4) | | | (16,206,584 | ) | | | 5,914,230 | |
| | | | | | | | |
Total decrease | | | (35,880,133 | ) | | | (33,531,069 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 990,213,475 | | | | 1,023,744,544 | |
| | | | | | | | |
End of year | | $ | 954,333,342 | | | $ | 990,213,475 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | 1,630 | | | $ | 45,781 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $7.76 | | | | $8.06 | | | | $7.83 | | | | $7.89 | | | | $7.74 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.23 | | | | 0.24 | | | | 0.25 | | | | 0.26 | | | | 0.27 | |
Net gains/(losses) on securities | | | (0.16 | ) | | | (0.30 | ) | | | 0.23 | | | | (0.06 | ) | | | 0.16 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.07 | | | | (0.06 | ) | | | 0.48 | | | | 0.20 | | | | 0.43 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.23 | ) | | | (0.24 | ) | | | (0.25 | ) | | | (0.26 | ) | | | (0.27 | ) |
Distributions from capital gains | | | 0.00 | (b) | | | 0.00 | (b) | | | 0.00 | (b) | | | 0.00 | (b) | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.23 | ) | | | (0.24 | ) | | | (0.25 | ) | | | (0.26 | ) | | | (0.28 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $7.60 | | | | $7.76 | | | | $8.06 | | | | $7.83 | | | | $7.89 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 0.93% | | | | (0.70)% | | | | 6.25% | | | | 2.60% | | | | 5.65% | |
Net assets, end of year (in thousands) | | | $954,333 | | | | $990,213 | | | | $1,023,745 | | | | $989,630 | | | | $969,549 | |
Ratio of net expenses to average net assets (a) | | | 0.56% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.57% | |
Ratio of gross expenses to average net assets | | | 0.56% | | | | 0.55% | | | | 0.55% | | | | 0.55% | | | | 0.57% | |
Ratio of net investment income to average net assets | | | 2.98% | | | | 3.05% | | | | 3.15% | | | | 3.29% | | | | 3.45% | |
Portfolio turnover | | | 16.81% | | | | 10.44% | | | | 11.53% | | | | 7.80% | | | | 9.43% | |
| (a) | | Percentages are after custodian expense reduction for which no recovery will be sought. |
| (b) | | Rounds to less than $0.01. |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| SCHOOL IMPROVEMENT BONDS | |
| 19.32% of Net Assets | |
Barren County KY School District Finance Corporation** | | | 5.000 | % | | | 08/01/2022 | | | A1 | | $ | 1,055,000 | | | $ | 1,168,148 | |
Barren County KY School District Finance Corporation | | | 5.000 | | | | 08/01/2023 | | | A1 | | | 500,000 | | | | 564,730 | |
Bullitt County KY School District Finance Corporation | | | 5.000 | | | | 09/01/2022 | | | A1 | | | 300,000 | | | | 332,796 | |
Fayette County KY School District Finance Corporation** | | | 5.000 | | | | 08/01/2023 | | | Aa3 | | | 1,000,000 | | | | 1,128,430 | |
Fayette County KY School District Finance Corporation** | | | 4.000 | | | | 06/01/2022 | | | Aa3 | | | 1,000,000 | | | | 1,051,240 | |
Fayette County KY School District Finance Corporation | | | 5.000 | | | | 06/01/2023 | | | Aa3 | | | 500,000 | | | | 563,225 | |
Hardin County KY School District | | | 5.000 | | | | 03/01/2023 | | | A1 | | | 770,000 | | | | 859,405 | |
Jefferson County KY School District Finance Corporation** | | | 4.000 | | | | 12/01/2023 | | | Aa3 | | | 1,000,000 | | | | 1,086,180 | |
Jessamine County KY School District Finance Corporation | | | 5.000 | | | | 02/01/2023 | | | A1 | | | 575,000 | | | | 642,235 | |
Johnson County KY School District Finance Corporation | | | 3.000 | | | | 12/01/2019 | | | A1 | | | 180,000 | | | | 182,459 | |
Laurel County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2022 | | | A1 | | | 890,000 | | | | 944,361 | |
Laurel County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2024 | | | A1 | | | 465,000 | | | | 496,034 | |
Pendleton County KY School District Finance Corporation | | | 4.000 | | | | 02/01/2020 | | | A1 | | | 450,000 | | | | 451,224 | |
Pike County School District Finance Corporation | | | 5.000 | | | | 08/01/2024 | | | A1 | | | 250,000 | | | | 283,733 | |
Pike County School District Finance Corporation | | | 5.000 | | | | 02/01/2025 | | | A1 | | | 900,000 | | | | 1,025,910 | |
Pike County School District Finance Corporation | | | 5.000 | | | | 08/01/2025 | | | A1 | | | 200,000 | | | | 229,492 | |
Pike County School District Finance Corporation | | | 4.000 | | | | 02/01/2028 | | | A1 | | | 295,000 | | | | 315,709 | |
Warren County KY School District Finance Corporation | | | 4.000 | | | | 06/01/2022 | | | A1 | | | 725,000 | | | | 772,364 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 12,097,675 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 19.12% of Net Assets | |
KY Association of Counties | | | 4.250 | | | | 02/01/2019 | | | AA-* | | | 255,000 | | | | 258,833 | |
KY State Property & Building #93 | | | 5.250 | | | | 02/01/2021 | | | AA* | | | 25,000 | | | | 25,503 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2024 | | | A1 | | | 750,000 | | | | 808,635 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2019 | | | A1 | | | 100,000 | | | | 103,500 | |
KY State Property & Building #100 | | | 5.000 | | | | 08/01/2025 | | | A1 | | | 500,000 | | | | 539,245 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2021 | | | A1 | | | 750,000 | | | | 815,108 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2023 | | | A1 | | | 540,000 | | | | 605,799 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2024 | | | A1 | | | 750,000 | | | | 839,468 | |
KY State Property & Building #106 | | | 5.000 | | | | 10/01/2025 | | | A1 | | | 2,365,000 | | | | 2,638,347 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2023 | | | A1 | | | 2,000,000 | | | | 2,238,500 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2023 | | | A1 | | | 875,000 | | | | 979,344 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2028 | | | A1 | | | 150,000 | | | | 169,128 | |
KY State Property & Building #110 | | | 5.000 | | | | 08/01/2023 | | | A1 | | | 1,750,000 | | | | 1,958,688 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 11,980,098 | |
| PUBLIC FACILITIES BONDS | |
| 14.11% of Net Assets | |
KY State Certificate of Participation** | | | 4.000 | | | | 06/15/2022 | | | A1 | | | 1,000,000 | | | | 1,064,390 | |
KY State Certificate of Participation | | | 4.000 | | | | 06/15/2023 | | | A1 | | | 940,000 | | | | 1,010,396 | |
KY State Certificate of Participation | | | 4.000 | | | | 06/15/2024 | | | A1 | | | 300,000 | | | | 323,397 | |
KY State Property & Building #109** | | | 5.000 | | | | 10/01/2022 | | | A1 | | | 1,000,000 | | | | 1,106,260 | |
Laurel County KY Justice Center | | | 5.000 | | | | 03/01/2023 | | | A1 | | | 600,000 | | | | 665,460 | |
Lexington Fayette Urban County Government — Court Facilities | | | 5.000 | | | | 10/01/2024 | | | A1 | | | 700,000 | | | | 799,862 | |
Livingston County KY Public Properties | | | 5.000 | | | | 08/01/2022 | | | A1 | | | 500,000 | | | | 549,720 | |
Livingston County KY Public Properties | | | 5.000 | | | | 08/01/2023 | | | A1 | | | 525,000 | | | | 586,808 | |
Livingston County KY Public Properties | | | 5.000 | | | | 08/01/2024 | | | A1 | | | 555,000 | | | | 628,216 | |
River City Parking Authority | | | 5.000 | | | | 12/01/2024 | | | Aa3 | | | 340,000 | | | | 389,487 | |
Todd County KY Public Properties Court House | | | 3.250 | | | | 06/01/2019 | | | A1 | | | 100,000 | | | | 101,246 | |
Warren County KY Justice Center Expansion Corporation** | | | 5.000 | | | | 09/01/2023 | | | A1 | | | 1,250,000 | | | | 1,407,800 | |
Whitley County KY Public Properties — Justice Center | | | 3.375 | | | | 09/01/2019 | | | A1 | | | 200,000 | | | | 203,260 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 8,836,302 | |
| REFUNDING BONDS | |
| 11.17% of Net Assets | |
KY State Property & Building #83 | | | 5.000 | | | | 10/01/2019 | | | A1 | | | 1,750,000 | | | | 1,817,830 | |
KY State Property & Building #84** | | | 5.000 | | | | 08/01/2019 | | | A1 | | | 1,000,000 | | | | 1,033,900 | |
KY State Property & Building #101 | | | 5.000 | | | | 10/01/2019 | | | A1 | | | 1,050,000 | | | | 1,091,370 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
KY State Property & Building #104** | | | 5.000 | % | | | 11/01/2021 | | | A2 | | $ | 1,000,000 | | | $ | 1,089,630 | |
KY State Property & Building #106** | | | 5.000 | | | | 10/01/2026 | | | A1 | | | 1,000,000 | | | | 1,111,430 | |
KY State Property & Building #108 | | | 5.000 | | | | 08/01/2022 | | | A1 | | | 200,000 | | | | 220,626 | |
KY State Property & Building #112 | | | 5.000 | | | | 11/01/2026 | | | A1 | | | 555,000 | | | | 635,453 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,000,239 | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 9.67% of Net Assets | |
KY Asset Liability Commission Federal Highway | | | 5.000 | | | | 09/01/2024 | | | A2 | | | 500,000 | | | | 571,065 | |
KY Asset Liability Commission Federal Highway | | | 5.250 | | | | 09/01/2025 | | | A2 | | | 675,000 | | | | 765,565 | |
KY Asset Liability Commission Federal Highway | | | 5.000 | | | | 09/01/2026 | | | A2 | | | 2,015,000 | | | | 2,282,914 | |
KY Asset Liability Project Notes | | | 4.000 | | | | 09/01/2023 | | | A2 | | | 250,000 | | | | 269,720 | |
KY State Turnpike Authority Economic Development | | | 5.000 | | | | 07/01/2024 | | | Aa3 | | | 1,175,000 | | | | 1,349,159 | |
KY State Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2026 | | | Aa3 | | | 700,000 | | | | 820,162 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,058,585 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 8.88% of Net Assets | |
KY State Property & Building #114 | | | 5.000 | | | | 10/01/2024 | | | Aa3 | | | 1,415,000 | | | | 1,604,596 | |
Morehead State University | | | 5.000 | | | | 10/01/2022 | | | A1 | | | 310,000 | | | | 344,000 | |
Northern Ky University General Receipts | | | 4.000 | | | | 09/01/2018 | | | A1 | | | 150,000 | | | | 150,582 | |
University of Kentucky General Receipts | | | 4.000 | | | | 04/01/2028 | | | Aa2 | | | 750,000 | | | | 801,630 | |
University of Louisville | | | 5.000 | | | | 03/01/2024 | | | A1 | | | 350,000 | | | | 396,589 | |
University of Louisville | | | 5.000 | ** | | | 03/01/2024 | | | A1 | | | 2,000,000 | | | | 2,266,220 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,563,617 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 6.30% of Net Assets | |
Campbell & Kenton Counties Sanitation District #1 | | | 4.000 | | | | 08/01/2031 | | | Aa3 | | | 1,000,000 | | | | 1,067,620 | |
Frankfort Electric & Water | | | 4.000 | | | | 12/01/2023 | | | AA* | | | 440,000 | | | | 477,220 | |
KY Rural Water Finance Corporation | | | 3.000 | | | | 08/01/2019 | | | A+* | | | 545,000 | | | | 552,134 | |
KY Rural Water Finance Corporation | | | 4.500 | | | | 08/01/2021 | | | A+* | | | 100,000 | | | | 100,140 | |
Lexington Fayette Urban County Government | | | 4.000 | | | | 09/01/2027 | | | Aa2 | | | 435,000 | | | | 469,252 | |
Northern KY Water | | | 5.000 | | | | 02/01/2026 | | | Aa3 | | | 815,000 | | | | 914,258 | |
Owensboro KY Electric Light & Power | | | 5.000 | | | | 01/01/2024 | | | A2 | | | 350,000 | | | | 366,135 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,946,759 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 6.12% of Net Assets | |
KY Asset Liability Commission General Receipts | | | 4.000 | | | | 10/01/2018 | | | Aa2 | | | 105,000 | | | | 105,148 | |
KY Economic Development Finance Authority Baptist Healthcare | | | 4.750 | | | | 08/15/2019 | | | Baa2 | | | 55,000 | | | | 55,186 | |
Lexington Fayette Urban County Government | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 2,800,000 | | | | 3,017,364 | |
Warren County Hospital | | | 4.000 | | | | 04/01/2020 | | | A+* | | | 105,000 | | | | 107,978 | |
Warren County Hospital | | | 5.000 | | | | 04/01/2023 | | | A+* | | | 500,000 | | | | 550,745 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,836,421 | |
| PREREFUNDED BONDS | |
| 3.36% of Net Assets | |
KY Economic Development Finance Authority Baptist Healthcare | | | 4.750 | | | | 08/15/2019 | | | | | | 55,000 | | | | 55,223 | |
KY Infrastructure Authority Wastewater & Drinking Water | | | 5.000 | | | | 02/01/2025 | | | Aaa | | | 175,000 | | | | 193,540 | |
KY Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2023 | | | Aa3 | | | 600,000 | | | | 668,712 | |
KY Turnpike Economic Development Road Revenue | | | 5.000 | | | | 07/01/2024 | | | Aa3 | | | 85,000 | | | | 94,734 | |
KY Turnpike Ecomonic Development Road Revenue** | | | 5.000 | | | | 07/01/2024 | | | Aa3 | | | 1,000,000 | | | | 1,090,450 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,102,659 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.05% of Net Assets (cost $61,426,259) (See (a) below for further explanation) | | | $ | 61,422,355 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.95% | | | | | | | | | | | | | | | | | 1,223,437 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 62,645,792 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
The accompanying notes 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
June 30, 2018
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $61,426,259 and net unrealized depreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 361,429 | |
| | Unrealized depreciation | | | (365,333 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (3,904 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 61,422,355 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 61,422,355 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
16
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $61,426,259) | | | | | | $ | 61,422,355 | |
Cash | | | | | | | 523,940 | |
Interest receivable | | | | | | | 801,834 | |
| | | | | | | | |
Total assets | | | | | | | 62,748,129 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 37,698 | | | | | |
Fund shares redeemed | | | 5,305 | | | | | |
Investment advisory fee | | | 22,767 | | | | | |
Transfer agent fee | | | 13,330 | | | | | |
Legal fee | | | 6,561 | | | | | |
Pricing fees | | | 5,888 | | | | | |
Insurance expense | | | 4,965 | | | | | |
Trustees fees | | | 2,002 | | | | | |
Accrued expenses | | | 3,821 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 102,337 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 62,860,243 | |
Accumulated net realized loss on investment transactions | | | | | | | (210,547 | ) |
Net unrealized depreciation in value of investments | | | | | | | (3,904 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 62,645,792 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share (12,008,760 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 5.22 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 1,665,621 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 338,479 | |
Transfer agent fee | | | 87,235 | |
Custodian expense | | | 15,918 | |
Professional fees | | | 13,746 | |
Audit fees | | | 10,483 | |
Pricing fees | | | 10,001 | |
Trustees fees | | | 7,535 | |
Other expenses | | | 22,611 | |
| | | | |
Total expenses | | | 506,008 | |
Fees waived by Adviser (Note 2) | | | (31,030 | ) |
Custodian expense reduction | | | (524 | ) |
| | | | |
Net expenses | | | 474,454 | |
| | | | |
Net investment income | | | 1,191,167 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized loss | | | (25,756 | ) |
Net change in unrealized appreciation/depreciation | | | (1,476,700 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (1,502,456 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (311,289 | ) |
| | | | |
The accompanying notes 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, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 1,191,167 | | | $ | 1,410,940 | |
Net realized loss on investments | | | (25,756 | ) | | | (156,332 | ) |
Net change in unrealized appreciation/depreciation | | | (1,476,700 | ) | | | (1,737,572 | ) |
| | | | | | | | |
Net decrease in net assets resulting from operations | | | (311,289 | ) | | | (482,964 | ) |
Distributions from net investment income (Note 6) | | | (1,191,167 | ) | | | (1,410,940 | ) |
Net Fund share transactions (Note 4) | | | (8,024,017 | ) | | | (11,102,514 | ) |
| | | | | | | | |
Total decrease | | | (9,526,473 | ) | | | (12,996,418 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 72,172,265 | | | | 85,168,683 | |
| | | | | | | | |
End of year | | $ | 62,645,792 | | | $ | 72,172,265 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $5.33 | | | | $5.45 | | | | $5.35 | | | | $5.44 | | | | $5.43 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.09 | | | | 0.10 | | | | 0.11 | | | | 0.12 | | | | 0.12 | |
Net gains/(losses) on securities | | | (0.11 | ) | | | (0.12 | ) | | | 0.10 | | | | (0.09 | ) | | | 0.01 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.02 | ) | | | (0.02 | ) | | | 0.21 | | | | 0.03 | | | | 0.13 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.09 | ) | | | (0.10 | ) | | | (0.11 | ) | | | (0.12 | ) | | | (0.12 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $5.22 | | | | $5.33 | | | | $5.45 | | | | $5.35 | | | | $5.44 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | (0.32)% | | | | (0.44)% | | | | 3.88% | | | | 0.50% | | | | 2.35% | |
Net assets, end of year (in thousands) | | | $62,646 | | | | $72,172 | | | | $85,169 | | | | $80,055 | | | | $82,218 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.71% | | | | 0.72% | | | | 0.73% | | | | 0.74% | |
Ratio of gross expenses to average net assets | | | 0.75% | | | | 0.73% | | | | 0.72% | | | | 0.73% | | | | 0.74% | |
Ratio of net investment income to average net assets | | | 1.76% | | | | 1.79% | | | | 1.96% | | | | 2.17% | | | | 2.14% | |
Portfolio turnover | | | 4.69% | | | | 14.84% | | | | 26.49% | | | | 20.19% | | | | 9.06% | |
| (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 notes are an integral part of the financial statements.
18
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| PREREFUNDED BONDS | |
| 38.55% of Net Assets | |
Alcorn State University Educational Building | | | 5.125 | % | | | 09/01/2034 | | | Aa2 | | $ | 95,000 | | | $ | 98,871 | |
Jackson State University Educational Building | | | 5.000 | | | | 03/01/2034 | | | Aa2 | | | 175,000 | | | | 184,567 | |
MS Development Bank Special Obligation Canton | | | 5.750 | | | | 10/01/2031 | | | A2 | | | 370,000 | | | | 413,634 | |
MS Development Bank Special Obligation Department of Corrections | | | 5.250 | | | | 08/01/2027 | | | AA-* | | | 50,000 | | | | 53,616 | |
MS Development Bank Special Obligation Department of Corrections | | | 5.250 | | | | 08/01/2027 | | | AA-* | | | 305,000 | | | | 327,125 | |
MS Development Bank Special Obligation Hinds College | | | 5.000 | | | | 10/01/2026 | | | A1 | | | 85,000 | | | | 88,598 | |
MS Development Bank Special Obligation Hinds College | | | 5.125 | | | | 10/01/2028 | | | A1 | | | 100,000 | | | | 104,387 | |
MS Development Bank Special Obligation Hinds College | | | 5.375 | | | | 10/01/2033 | | | A1 | | | 60,000 | | | | 62,818 | |
MS Development Bank Special Obligation Hinds College | | | 5.000 | | | | 04/01/2036 | | | A2 | | | 250,000 | | | | 271,265 | |
MS Development Bank Special Obligation Jones County Junior College** | | | 5.000 | | | | 03/01/2033 | | | AA* | | | 150,000 | | | | 153,476 | |
MS Development Bank Special Obligation Jones County Junior College | | | 5.125 | | | | 03/01/2039 | | | AA* | | | 45,000 | | | | 46,080 | |
MS Development Bank Special Obligation Jones County Rest Home | | | 5.250 | | | | 04/01/2028 | | | A2 | | | 120,000 | | | | 130,841 | |
MS Development Bank Special Obligation Lowndes County | | | 5.125 | | | | 12/01/2027 | | | AA* | | | 135,000 | | | | 145,591 | |
MS Development Bank Special Obligation Marshall County | | | 5.000 | | | | 01/01/2028 | | | Aa3 | | | 200,000 | | | | 220,930 | |
MS State Capital Improvement Projects | | | 5.000 | | | | 10/01/2029 | | | Aa2 | | | 145,000 | | | | 159,314 | |
MS State Capital Improvement Projects | | | 5.000 | | | | 10/01/2036 | | | Aa2 | | | 480,000 | | | | 527,386 | |
MS State University Educational Building Corporation Revenue | | | 5.250 | | | | 08/01/2033 | | | Aa2 | | | 50,000 | | | | 51,984 | |
MS State University Educational Building Corporation Revenue | | | 5.000 | | | | 08/01/2036 | | | Aa2 | | | 175,000 | | | | 191,639 | |
MS State University Educational Building Corporation Revenue** | | | 5.250 | | | | 08/01/2038 | | | Aa2 | | | 300,000 | | | | 346,632 | |
Southern Mississippi Educational Building Corporation | | | 5.000 | | | | 03/01/2038 | | | Aa2 | | | 600,000 | | | | 679,320 | |
University of Mississippi Educational Building Corporation | | | 5.000 | | | | 10/01/2028 | | | Aa2 | | | 200,000 | | | | 219,343 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 4,477,417 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 19.19% of Net Assets | |
Jackson State University Educational Building | | | 5.000 | | | | 03/01/2034 | | | Aa2 | | | 440,000 | | | | 495,668 | |
Mississippi State University Educational Building | | | 5.000 | | | | 11/01/2032 | | | Aa2 | | | 125,000 | | | | 142,501 | |
MS Development Bank Special Obligation Gulf Coast Community Project** | | | 4.000 | | | | 12/01/2034 | | | AA-* | | | 300,000 | | | | 313,080 | |
MS State University Educational Building Corporation Revenue | | | 5.000 | | | | 08/01/2033 | | | Aa2 | | | 225,000 | | | | 261,144 | |
MS State University Educational Building Corporation Revenue | | | 4.000 | | | | 08/01/2036 | | | Aa2 | | | 250,000 | | | | 262,238 | |
University of Mississippi Educational Building Corporation | | | 4.000 | | | | 11/01/2039 | | | Aa2 | | | 100,000 | | | | 103,161 | |
University of Mississippi Educational Building Corporation | | | 5.000 | | | | 10/01/2031 | | | Aa2 | | | 205,000 | | | | 237,048 | |
University Southern MS Educational Building Corporation | | | 5.000 | | | | 09/01/2033 | | | Aa2 | | | 360,000 | | | | 413,514 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,228,354 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 11.95% of Net Assets | |
MS Development Bank Special Obligation Hattiesburg Water & Sewer | | | 4.750 | | | | 12/01/2038 | | | AA* | | | 700,000 | | | | 758,316 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | 4.500 | | | | 09/01/2034 | | | A2 | | | 100,000 | | | | 104,041 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | 5.000 | | | | 12/01/2033 | | | A* | | | 50,000 | | | | 54,655 | |
MS Development Bank Special Obligation Jackson Water & Sewer | | | 6.875 | | | | 12/01/2040 | | | Baa3 | | | 250,000 | | | | 301,473 | |
MS Development Bank Special Obligation Tupelo | | | 5.000 | | | | 05/01/2033 | | | Aa2 | | | 150,000 | | | | 169,692 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,388,177 | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 8.20% of Net Assets | |
MS Development Bank Special Obligation Desoto County Highway | | | 5.000 | | | | 01/01/2030 | | | Aa3 | | | 100,000 | | | | 109,607 | |
MS Development Bank Special Obligation Highway Construction | | | 5.000 | | | | 01/01/2025 | | | Aa3 | | | 200,000 | | | | 228,302 | |
MS Development Bank Special Obligation Highway Construction | | | 5.000 | | | | 01/01/2029 | | | Aa3 | | | 300,000 | | | | 344,505 | |
MS Development Bank Special Obligation Highway Construction | | | 4.000 | | | | 01/01/2030 | | | Aa3 | | | 175,000 | | | | 185,621 | |
MS Development Bank Special Obligation Marshall County | | | 5.000 | | | | 01/01/2030 | | | Aa3 | | | 75,000 | | | | 84,324 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 952,359 | |
| PUBLIC FACILITIES BONDS | |
| 7.89% of Net Assets | |
MS Development Bank Special Obligation Brandon Public Improvement | | | 5.000 | | | | 11/01/2033 | | | Aa3 | | | 150,000 | | | | 169,226 | |
MS Development Bank Special Obligation Brandon Public Improvement** | | | 4.000 | | | | 08/01/2033 | | | AA* | | | 300,000 | | | | 316,323 | |
The accompanying notes are an integral part of the financial statements.
19
DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Mississippi Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
MS Development Bank Special Obligation Brandon Public Improvement | | | 4.000 | % | | | 08/01/2035 | | | AA* | | $ | 150,000 | | | $ | 156,963 | |
MS Development Bank Special Obligation Hinds County | | | 4.000 | | | | 11/01/2035 | | | Aa3 | | | 100,000 | | | | 104,193 | |
MS Development Bank Special Obligation Meridian Arts Center | | | 5.000 | | | | 03/01/2034 | | | A2 | | | 150,000 | | | | 169,935 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 916,640 | |
| REFUNDING BONDS | |
| 4.60% of Net Assets | |
MS State Refunding | | | 5.250 | | | | 11/01/2019 | | | Aa2 | | | 50,000 | | | | 52,414 | |
MS State Refunding | | | 5.000 | | | | 10/01/2033 | | | Aa2 | | | 150,000 | | | | 175,670 | |
MS State Refunding | | | 4.000 | | | | 10/01/2036 | | | Aa2 | | | 290,000 | | | | 306,065 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 534,149 | |
| SCHOOL IMPROVEMENT BONDS | |
| 4.50% of Net Assets | |
MS Development Bank Special Obligation Canton School District | | | 5.000 | | | | 12/01/2033 | | | A1 | | | 100,000 | | | | 113,572 | |
MS Development Bank Special Obligation Jackson Schools | | | 5.000 | | | | 04/01/2028 | | | A+* | | | 375,000 | | | | 409,208 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 522,780 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 1.88% of Net Assets | |
Medical Center Educational Building Corporation University of Mississippi | | | 5.000 | | | | 06/01/2034 | | | Aa2 | | | 100,000 | | | | 103,239 | |
Medical Center Educational Building Corporation MS Revenue | | | 5.500 | | | | 12/01/2023 | | | Aa2 | | | 105,000 | | | | 115,191 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 218,430 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 1.21% of Net Assets | |
Mississippi State Gaming Tax Revenue | | | 5.000 | | | | 10/15/2035 | | | A3 | | | 125,000 | | | | 140,915 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 97.97% of Net Assets (cost $11,036,883) (See (a) below for further explanation) | | | $ | 11,379,221 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 2.03% | | | | | | | | | | | | | | | | | 235,861 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 11,615,082 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $11,036,809 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 374,637 | |
| | Unrealized depreciation | | | (32,225 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 342,412 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 11,379,221 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 11,379,221 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
20
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $11,036,883) | | | | | | $ | 11,379,221 | |
Cash | | | | | | | 159,183 | |
Interest receivable | | | | | | | 145,036 | |
| | | | | | | | |
Total assets | | | | | | | 11,683,440 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 50,324 | | | | | |
Investment advisory fee | | | 2,572 | | | | | |
Transfer agent fee | | | 3,088 | | | | | |
Custodian expense | | | 2,728 | | | | | |
Professional fees | | | 2,659 | | | | | |
Pricing fees | | | 1,267 | | | | | |
Insurance expense | | | 973 | | | | | |
Trustee fees | | | 789 | | | | | |
Accrued expenses | | | 3,958 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 68,358 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 11,276,542 | |
Accumulated net investment income | | | | | | | 9 | |
Net accumulated loss on investment transactions | | | | | | | (3,807 | ) |
Net unrealized appreciation in value of investments | | | | | | | 342,338 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 11,615,082 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(974,155 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.92 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 409,368 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 59,352 | |
Transfer agent fee | | | 17,805 | |
Custodian expense | | | 7,744 | |
Compliance fee | | | 6,680 | |
Registration fees | | | 5,929 | |
Pricing expense | | | 4,500 | |
Professional fees | | | 3,024 | |
Trustees fees | | | 1,360 | |
Other expenses | | | 2,445 | |
| | | | |
Total expenses | | | 108,839 | |
Fees waived by Adviser (Note 2) | | | (25,463 | ) |
Custodian expense reduction | | | (252 | ) |
| | | | |
Net expenses | | | 83,124 | |
| | | | |
Net investment income | | | 326,244 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 2,307 | |
Net change in unrealized appreciation/depreciation | | | (202,768 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (200,461 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 125,783 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
21
MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 326,244 | | | $ | 336,460 | |
Net realized gain on investments | | | 2,307 | | | | 1,670 | |
Net change in unrealized appreciation/depreciation | | | (202,768 | ) | | | (387,693 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 125,783 | | | | (49,563 | ) |
Distributions from net investment income (Note 6) | | | (326,227 | ) | | | (336,322 | ) |
Distributions from capital gains (Note 6) | | | (8,238 | ) | | | (4,362 | ) |
Net Fund share transactions (Note 4) | | | (624,288 | ) | | | 1,333,277 | |
| | | | | | | | |
Total increase/(decrease) | | | (832,970 | ) | | | 943,030 | |
Net assets: | | | | | | | | |
Beginning of year | | | 12,448,052 | | | | 11,505,022 | |
| | | | | | | | |
End of year | | $ | 11,615,082 | | | $ | 12,448,052 | |
| | | | | | | | |
Accumulated Net Investment (loss) income | | $ | 9 | | | $ | (8 | ) |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $12.14 | | | | $12.55 | | | | $12.03 | | | | $11.95 | | | | $11.65 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.33 | | | | 0.34 | | | | 0.36 | | | | 0.37 | | | | 0.38 | |
Net gains/(losses) on securities | | | (0.22 | ) | | | (0.41 | ) | | | 0.52 | | | | 0.08 | | | | 0.31 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.11 | | | | (0.07 | ) | | | 0.88 | | | | 0.45 | | | | 0.69 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.33 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.37 | ) | | | (0.38 | ) |
Distributions from capital gains | | | 0.00 | (b) | | | 0.00 | (b) | | | 0.00 | | | | 0.00 | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.33 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.37 | ) | | | (0.39 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $11.92 | | | | $12.14 | | | | $12.55 | | | | $12.03 | | | | $11.95 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 0.99% | | | | (0.48)% | | | | 7.49% | | | | 3.80% | | | | 6.08% | |
Net assets, end of year (in thousands) | | | $11,615 | | | | $12,448 | | | | $11,505 | | | | $10,916 | | | | $10,450 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.70% | | | | 0.70% | | | | 0.69% | | | | 0.69% | |
Ratio of gross expenses to average net assets | | | 0.92% | | | | 0.85% | | | | 0.88% | | | | 0.86% | | | | 0.90% | |
Ratio of net investment income to average net assets | | | 2.75% | | | | 2.80% | | | | 2.97% | | | | 3.07% | | | | 3.26% | |
Portfolio turnover | | | 7.26% | | | | 14.06% | | | | 3.26% | | | | 6.47% | | | | 1.96% | |
| (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 $0.01. |
The accompanying notes are an integral part of the financial statements.
22
DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
North Carolina Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 16.98% of Net Assets | |
Iredell County NC Community College | | | 5.000 | % | | | 04/01/2026 | | | Aa1 | | $ | 225,000 | | | $ | 225,621 | |
Iredell County NC Community College | | | 5.000 | | | | 04/01/2027 | | | Aa1 | | | 325,000 | | | | 325,887 | |
NC State Capital Facilities Davidson College | | | 5.000 | | | | 03/01/2032 | | | AA+* | | | 310,000 | | | | 340,222 | |
NC State Capital Facilities Duke University | | | 5.000 | | | | 10/01/2041 | | | Aa1 | | | 2,000,000 | | | | 2,278,560 | |
NC State Capital Facilities Finance Agency Davidson College | | | 4.750 | | | | 03/01/2035 | | | AA+* | | | 1,000,000 | | | | 1,074,440 | |
NC State University at Raleigh | | | 5.000 | | | | 10/01/2042 | | | Aa1 | | | 750,000 | | | | 835,515 | |
Scotland County NC | | | 5.000 | | | | 12/01/2033 | | | A* | | | 250,000 | | | | 289,213 | |
University of NC at Charlotte Board of Governors | | | 4.000 | | | | 10/01/2037 | | | Aa3 | | | 750,000 | | | | 790,328 | |
University of NC at Charlotte Board of Governors | | | 5.000 | | | | 10/01/2042 | | | Aa3 | | | 250,000 | | | | 286,870 | |
University of NC Charlotte | | | 5.000 | | | | 04/01/2035 | | | Aa3 | | | 595,000 | | | | 670,517 | |
University of NC Charlotte | | | 4.000 | | | | 10/01/2035 | | | Aa3 | | | 250,000 | | �� | | 264,258 | |
University of NC Charlotte | | | 4.000 | | | | 10/01/2036 | | | Aa3 | | | 250,000 | | | | 263,645 | |
University of NC Charlottte | | | 5.000 | | | | 04/01/2038 | | | Aa3 | | | 1,000,000 | | | | 1,122,940 | |
University of NC Charlotte | | | 5.000 | | | | 04/01/2040 | | | Aa3 | | | 2,650,000 | | | | 2,978,704 | |
University of NC Charlotte | | | 5.000 | | | | 04/01/2043 | | | Aa3 | | | 1,500,000 | | | | 1,676,775 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2033 | | | Aa3 | | | 900,000 | | | | 1,018,341 | |
University of NC Greensboro | | | 4.000 | | | | 04/01/2035 | | | Aa3 | | | 750,000 | | | | 792,818 | |
University of NC Greensboro | | | 4.000 | | | | 04/01/2036 | | | Aa3 | | | 500,000 | | | | 527,690 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2039 | | | Aa3 | | | 2,870,000 | | | | 3,221,202 | |
University of NC Wilmington Limited Obligation | | | 5.000 | | | | 06/01/2033 | | | A1 | | | 550,000 | | | | 623,062 | |
University of NC Wilmington Limited Obligation | | | 4.000 | | | | 06/01/2034 | | | A1 | | | 500,000 | | | | 524,215 | |
University of North Carolina | | | 5.000 | | | | 10/01/2033 | | | A1 | | | 30,000 | | | | 30,232 | |
Western Carolina University | | | 5.000 | | | | 10/01/2035 | | | Aa3 | | | 1,000,000 | | | | 1,167,100 | |
Western Carolina University | | | 5.000 | | | | 10/01/2045 | | | Aa3 | | | 825,000 | | | | 932,407 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 22,260,562 | |
| PREREFUNDED BONDS | |
| 16.90% of Net Assets | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 01/01/2029 | | | Aa2 | | | 750,000 | | | | 763,095 | |
Jacksonville Public Facilities Corporation Limited Obligation | | | 5.000 | | | | 04/01/2031 | | | Aa3 | | | 265,000 | | | | 294,023 | |
Jacksonville Public Facilities Corporation Limited Obligation | | | 5.000 | | | | 04/01/2032 | | | Aa3 | | | 100,000 | | | | 110,952 | |
Johnston County NC Installment Financing Contract | | | 5.000 | | | | 10/15/2027 | | | Aa2 | | | 570,000 | | | | 612,003 | |
Mecklenburg County NC Certificates of Participation | | | 5.000 | | | | 02/01/2028 | | | Aa1 | | | 415,000 | | | | 423,503 | |
Moore County NC** | | | 5.000 | | | | 06/01/2031 | | | Aa3 | | | 2,750,000 | | | | 2,921,958 | |
Nash County NC Limited Obligation** | | | 5.000 | | | | 10/01/2030 | | | Aa3 | | | 1,640,000 | | | | 1,756,571 | |
NC Capital Facilities Financial Agency Education Duke University | | | 5.000 | | | | 10/01/2038 | | | Aa1 | | | 500,000 | | | | 512,820 | |
NC Capital FacilitIes Financial Agency Education Wake Forest | | | 5.000 | | | | 01/01/2031 | | | Aa3 | | | 500,000 | | | | 508,500 | |
NC Capital Facilities Financial Agency Education Wake Forest | | | 5.000 | | | | 01/01/2038 | | | Aa3 | | | 1,250,000 | | | | 1,271,250 | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2025 | | | AAA@ | | | 1,150,000 | | | | 1,410,406 | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2026 | | | Aaa | | | 275,000 | | | | 313,063 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 4.750 | | | | 01/01/2030 | | | AAA@ | | | 210,000 | | | | 213,402 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2030 | | | AAA@ | | | 1,815,000 | | | | 1,846,690 | |
NC State Medical Care Commission Health Care Facilities | | | 5.000 | | | | 06/01/2034 | | | Aa2 | | | 1,670,000 | | | | 1,722,071 | |
Orange County NC Public Facilities Company Limited Obligation | | | 4.750 | | | | 10/01/2032 | | | Aa1 | | | 750,000 | | | | 834,690 | |
Pitt County NC Limited Obligation | | | 5.000 | | | | 04/01/2035 | | | Aa2 | | | 105,000 | | | | 111,022 | |
University of NC Charlotte | | | 5.000 | | | | 04/01/2031 | | | Aa3 | | | 750,000 | | | | 832,718 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2031 | | | Aa3 | | | 500,000 | | | | 555,720 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2036 | | | Aa3 | | | 500,000 | | | | 555,720 | |
University of NC System Pool Revenue | | | 5.000 | | | | 10/01/2026 | | | A1 | | | 1,000,000 | | | | 1,008,760 | |
University of NC System Pool Revenue | | | 5.000 | | | | 10/01/2034 | | | Aa2 | | | 1,950,000 | | | | 2,030,555 | |
Wake County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa1 | | | 1,500,000 | | | | 1,547,323 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 22,156,815 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 12.24% of Net Assets | |
Charlotte Mecklenburg NC Hospital Healthcare System | | | 5.250 | | | | 01/15/2039 | | | Aa3 | | | 750,000 | | | | 763,986 | |
Charlotte Mecklenburg NC Hospital Healthcare System | | | 5.000 | | | | 01/15/2039 | | | Aa3 | | | 1,500,000 | | | | 1,649,970 | |
NC State Medical Care Commission Duke University Health | | | 5.000 | | | | 06/01/2035 | | | Aa2 | | | 500,000 | | | | 549,555 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
NC State Medical Care Commission Health Care Facilities Mission Health** | | | 5.000 | % | | | 10/01/2036 | | | Aa3 | | $ | 3,045,000 | | | $ | 3,176,453 | |
NC State Medical Care Commission Health Care Facilities Rex Hospital | | | 5.000 | | | | 07/01/2030 | | | A2 | | | 500,000 | | | | 526,410 | |
NC State Medical Care Commission Health Care Facilities Rex Hospital | | | 5.000 | | | | 07/01/2033 | | | A2 | | | 750,000 | | | | 841,118 | |
NC State Medical Care Commission Health Care Facilities Vidant Health | | | 5.000 | | | | 06/01/2036 | | | A1 | | | 1,000,000 | | | | 1,080,000 | |
NC State Medical Care Commission Health Care Facilities Vidant Health | | | 5.000 | | | | 06/01/2040 | | | A1 | | | 1,885,000 | | | | 2,076,912 | |
NC State Medical Care Commission Health Care Facilities Wake Medical | | | 5.000 | | | | 10/01/2038 | | | A2 | | | 200,000 | | | | 218,116 | |
NC State Medical Care Commission Health Care Facilities Wake Medical | | | 5.000 | | | | 10/01/2031 | | | A2 | | | 1,000,000 | | | | 1,103,270 | |
NC State Medical Care Commission Hospital Revenue NC Baptist Hospital | | | 5.250 | | | | 06/01/2029 | | | A2 | | | 645,000 | | | | 685,964 | |
NC State Medical Care Commission Hospital Revenue NC Baptist Hospital | | | 5.000 | | | | 06/01/2034 | | | A2 | | | 1,225,000 | | | | 1,291,089 | |
NC State Medical Care Commission Hospital Revenue NC Baptist Hospital | | | 4.750 | | | | 06/01/2030 | | | A2 | | | 405,000 | | | | 423,780 | |
NC State Medical Care Commission Wake Forest Baptist Hospital | | | 5.000 | | | | 12/01/2033 | | | A2 | | | 1,000,000 | | | | 1,104,030 | |
New Hanover County NC Hospital New Hanover Regional Medical Center | | | 5.000 | | | | 10/01/2034 | | | A1 | | | 500,000 | | | | 572,010 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 16,062,663 | |
| SCHOOL IMPROVEMENT BONDS | |
| 10.94% of Net Assets | |
Brunswick County NC Limited Obligation | | | 5.000 | | | | 06/01/2030 | | | Aa3 | | | 250,000 | | | | 286,928 | |
Brunswick County NC Limited Obligation | | | 5.000 | | | | 06/01/2031 | | | Aa3 | | | 250,000 | | | | 286,418 | |
Cabarrus County NC | | | 4.000 | | | | 06/01/2034 | | | Aa2 | | | 795,000 | | | | 843,376 | |
Cabarrus County NC Limited Obligation | | | 5.000 | | | | 04/01/2035 | | | Aa2 | | | 1,435,000 | | | | 1,640,750 | |
Cabarrus County NC Limited Obligation | | | 4.000 | | | | 06/01/2035 | | | Aa2 | | | 1,500,000 | | | | 1,585,305 | |
Davidson County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa3 | | | 500,000 | | | | 580,355 | |
Duplin County NC Limited Obligation | | | 5.000 | | | | 04/01/2032 | | | A2 | | | 750,000 | | | | 853,628 | |
Duplin County NC Limited Obligation | | | 5.000 | | | | 04/01/2034 | | | A2 | | | 865,000 | | | | 978,125 | |
Onslow County NC Limited Obligation | | | 5.000 | | | | 06/01/2033 | | | Aa3 | | | 500,000 | | | | 572,835 | |
Onslow County NC Limited Obligation | | | 4.000 | | | | 10/01/2035 | | | Aa3 | | | 500,000 | | | | 523,985 | |
Pitt County NC Limited Obligation | | | 4.000 | | | | 04/01/2031 | | | Aa2 | | | 500,000 | | | | 536,685 | |
Pitt County NC Limited Obligation | | | 4.000 | | | | 04/01/2034 | | | Aa2 | | | 550,000 | | | | 577,198 | |
Sampson County NC Limited Obligation | | | 5.000 | | | | 12/01/2033 | | | A1 | | | 1,975,000 | | | | 2,254,380 | |
Sampson County NC Limited Obligation | | | 5.000 | | | | 09/01/2040 | | | A1 | | | 750,000 | | | | 853,988 | |
Wayne County NC | | | 4.000 | | | | 06/01/2034 | | | Aa3 | | | 1,500,000 | | | | 1,586,490 | |
Wilkes County NC Limited Obligation | | | 5.000 | | | | 06/01/2031 | | | A1 | | | 350,000 | | | | 396,729 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 14,357,175 | |
| REFUNDING BONDS | |
| 10.70% of Net Assets | |
Buncombe County NC Limited Obligation** | | | 5.000 | | | | 06/01/2035 | | | Aa1 | | | 2,000,000 | | | | 2,279,140 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2026 | | | Aa1 | | | 1,455,000 | | | | 1,458,156 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2027 | | | Aa1 | | | 775,000 | | | | 776,674 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2033 | | | Aa1 | | | 840,000 | | | | 936,264 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2034 | | | Aa1 | | | 750,000 | | | | 855,188 | |
Chatham County NC | | | 5.000 | | | | 11/01/2032 | | | Aa2 | | | 825,000 | | | | 948,758 | |
Dare County NC Limited Obligation Refunding | | | 5.000 | | | | 06/01/2029 | | | Aa3 | | | 100,000 | | | | 109,833 | |
Durham Capital Financing Corporation Limited Obligation | | | 5.000 | | | | 06/01/2034 | | | Aa1 | | | 500,000 | | | | 558,530 | |
Monroe NC Limited Obligation** | | | 5.000 | | | | 03/01/2039 | | | Aa3 | | | 1,250,000 | | | | 1,408,288 | |
New Hanover County NC Limited Obligation | | | 5.000 | | | | 12/01/2027 | | | Aa1 | | | 505,000 | | | | 562,237 | |
Pitt County NC Certificates of Participation | | | 5.000 | | | | 04/01/2027 | | | Aa2 | | | 500,000 | | | | 549,615 | |
Rockingham County NC Limited Obligation | | | 5.000 | | | | 04/01/2027 | | | Aa3 | | | 250,000 | | | | 286,443 | |
Rockingham County NC Limited Obligation | | | 4.500 | | | | 04/01/2032 | | | Aa3 | | | 500,000 | | | | 551,645 | |
Sampson County NC Limited Obligation | | | 4.000 | | | | 09/01/2036 | | | A1 | | | 1,000,000 | | | | 1,043,690 | |
Sampson County NC Limited Obligation | | | 4.000 | | | | 09/01/2037 | | | A1 | | | 500,000 | | | | 521,045 | |
Thomasville NC Combined Enterprise System Revenue | | | 4.750 | | | | 05/01/2028 | | | A1 | | | 435,000 | | | | 468,947 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Union County NC Limited Obligation Refunding | | | 5.000 | % | | | 12/01/2024 | | | Aa1 | | $ | 125,000 | | | $ | 145,203 | |
Wake County NC Limited Obligation | | | 5.000 | | | | 12/01/2035 | | | Aa1 | | | 500,000 | | | | 581,605 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 14,041,261 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 10.32% of Net Assets | |
Brunswick County NC Enterprise System Revenue | | | 5.000 | | | | 04/01/2031 | | | Aa3 | | | 500,000 | | | | 570,230 | |
Buncombe County NC Metropolitan Sewerage District | | | 5.000 | | | | 07/01/2039 | | | Aaa | | | 550,000 | | | | 620,675 | |
Cary NC Combined Enterprise System Revenue | | | 4.000 | | | | 12/01/2042 | | | Aaa | | | 750,000 | | | | 792,825 | |
Concord NC Utilities System Revenue | | | 4.500 | | | | 12/01/2034 | | | Aa2 | | | 1,000,000 | | | | 1,102,080 | |
Fuquay-Varina NC Combined Utilities Revenue | | | 5.000 | | | | 04/01/2040 | | | Aa2 | | | 1,000,000 | | | | 1,138,170 | |
Gastonia NC Combined Utilities System Revenue | | | 5.000 | | | | 05/01/2034 | | | Aa2 | | | 570,000 | | | | 644,881 | |
Gastonia NC Combined Utilities System Revenue | | | 5.000 | | | | 05/01/2035 | | | Aa2 | | | 250,000 | | | | 282,180 | |
High Point NC Combined Enterprise | | | 5.000 | | | | 11/01/2039 | | | Aa2 | | | 750,000 | | | | 847,523 | |
Martin County NC Limited Obligation Water and Sewer District | | | 4.750 | | | | 06/01/2034 | | | A2 | | | 1,150,000 | | | | 1,255,168 | |
Mooresville NC Limited Obligation** | | | 5.000 | | | | 11/01/2031 | | | AA-* | | | 1,250,000 | | | | 1,434,275 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2030 | | | A* | | | 500,000 | | | | 578,010 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 4.750 | | | | 01/01/2030 | | | A2 | | | 80,000 | | | | 81,114 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2030 | | | A2 | | | 730,000 | | | | 741,330 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2031 | | | A2 | | | 500,000 | | | | 542,930 | |
NC Municipal Power Agency #1 Catawba Electric Revenue | | | 5.000 | | | | 01/01/2032 | | | A* | | | 500,000 | | | | 571,090 | |
Sampson County NC Water & Sewer District | | | 5.000 | | | | 06/01/2037 | | | A1 | | | 920,000 | | | | 1,027,520 | |
Wake County NC Industrial Facilities & Pollution Control Duke Energy | | | 4.000 | | | | 06/01/2041 | | | Aa3 | | | 1,160,000 | | | | 1,191,272 | |
Wilmington NC Storm Water Fee Revenue | | | 5.000 | | | | 06/01/2028 | | | AA+* | | | 115,000 | | | | 115,621 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 13,536,894 | |
| PUBLIC FACILITIES BONDS | |
| 6.29% of Net Assets | |
Charlotte NC Certificates of Participation Convention Facilities | | | 5.000 | | | | 06/01/2034 | | | Aa2 | | | 900,000 | | | | 923,949 | |
Durham NC Limited Obligation | | | 4.000 | | | | 04/01/2036 | | | Aa1 | | | 1,000,000 | | | | 1,061,370 | |
Forsyth County NC Limited Tax | | | 5.000 | | | | 04/01/2031 | | | Aa1 | | | 335,000 | | | | 368,497 | |
Henderson County NC Limited Obligation | | | 5.000 | | | | 10/01/2030 | | | Aa3 | | | 250,000 | | | | 287,646 | |
Henderson County NC Limited Obligation | | | 5.000 | | | | 10/01/2031 | | | Aa3 | | | 500,000 | | | | 574,585 | |
Kannapolis NC Limited Obligation | | | 5.000 | | | | 04/01/2032 | | | Aa3 | | | 500,000 | | | | 563,460 | |
Onslow County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa3 | | | 500,000 | | | | 574,540 | |
Raleigh NC Limited Obligation | | | 5.000 | | | | 10/01/2038 | | | Aa1 | | | 500,000 | | | | 558,050 | |
Raleigh NC Limited Obligation | | | 5.000 | | | | 10/01/2034 | | | Aa1 | | | 1,420,000 | | | | 1,614,654 | |
Watauga NC Public Facilities Corporation Limited Obligation | | | 5.000 | | | | 06/01/2027 | | | Aa3 | | | 750,000 | | | | 824,633 | |
Winston Salem NC Limited Obligation | | | 5.000 | | | | 06/01/2031 | | | Aa1 | | | 800,000 | | | | 894,824 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 8,246,208 | |
| AIRPORT REVENUE BONDS | |
| 5.09% of Net Assets | |
Charlotte NC Airport Revenue | | | 5.000 | | | | 07/01/2036 | | | Aa3 | | | 250,000 | | | | 290,703 | |
Charlotte NC Airport Revenue | | | 4.000 | | | | 07/01/2036 | | | Aa3 | | | 500,000 | | | | 529,075 | |
Charlotte NC Airport Revenue | | | 5.000 | | | | 07/01/2037 | | | Aa3 | | | 700,000 | | | | 812,763 | |
Charlotte NC Airport Revenue | | | 5.000 | | | | 07/01/2042 | | | Aa3 | | | 1,325,000 | | | | 1,530,507 | |
Charlotte NC Douglas International Airport | | | 5.000 | | | | 07/01/2030 | | | Aa3 | | | 1,095,000 | | | | 1,246,778 | |
Raleigh Durham NC Airport | | | 5.000 | | | | 05/01/2029 | | | Aa3 | | | 235,000 | | | | 248,054 | |
Raleigh Durham NC Airport | | | 5.000 | | | | 05/01/2032 | | | Aa3 | | | 440,000 | | | | 462,722 | |
Raleigh Durham NC Airport | | | 5.000 | | | | 05/01/2036 | | | Aa3 | | | 1,480,000 | | | | 1,553,970 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,674,572 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 4.58% of Net Assets | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2030 | | | Aa1 | | | 250,000 | | | | 276,460 | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa1 | | | 250,000 | | | | 275,173 | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2034 | | | Aa1 | | | 1,100,000 | | | | 1,242,087 | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2033 | | | Aa1 | | | 600,000 | | | | 687,402 | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2034 | | | Aa1 | | | 365,000 | | | | 416,932 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 12/01/2029 | | | Aa1 | | | 340,000 | | | | 372,273 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Johnston County NC Limited Obligation | | | 4.750 | % | | | 06/01/2033 | | | Aa2 | | $ | 500,000 | | | $ | 547,420 | |
Rocky Mount NC Special Obligation | | | 4.500 | | | | 05/01/2032 | | | Aa3 | | | 1,500,000 | | | | 1,650,570 | |
Winston Salem NC Limited Obligation | | | 4.500 | | | | 06/01/2034 | | | Aa1 | | | 500,000 | | | | 544,655 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,012,972 | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.13% of Net Assets | |
NC State Grant Anticipation Revenue Vehicle Garvee | | | 5.000 | | | | 03/01/2030 | | | A2 | | | 200,000 | | | | 227,776 | |
NC State Turnpike Authority Monroe Connector System | | | 5.000 | | | | 07/01/2029 | | | Aa1 | | | 500,000 | | | | 543,545 | |
NC State Turnpike Authority Monroe Connector System | | | 5.000 | | | | 07/01/2031 | | | Aa1 | | | 1,385,000 | | | | 1,500,551 | |
NC State Turnpike Authority Triangle Expressway | | | 4.000 | | | | 01/01/2039 | | | Aa1 | | | 500,000 | | | | 528,775 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,800,647 | |
| LEASE REVENUE BONDS | |
| 1.30% | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2032 | | | Aa1 | | | 1,500,000 | | | | 1,701,675 | |
| | | | | | | | | | | | | | | | | | |
| ESCROWED TO MATURITY BONDS | |
| .79% of Net Assets | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2022 | | | A3 | | | 915,000 | | | | 1,039,641 | |
| | | | | | | | | | | | | | | | | | |
| MISCELLANEOUS REVENUE BONDS | |
| .43% of Net Assets | |
Wilmington NC Storm Water Revenue | | | 5.000 | | | | 06/01/2035 | | | Aa2 | | | 500,000 | | | | 567,425 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.69% of Net Assets (cost $127,450,673) (See (a) below for further explanation) | | | $ | 129,458,510 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.31% | | | | | | | | | | | | | | | | | 1,719,735 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 131,178,245 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $127,450,673 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 2,711,183 | |
| | Unrealized depreciation | | | (703,346 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 2,007,837 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 129,458,510 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 129,458,510 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
26
NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $127,450,673) | | | | | | $ | 129,458,510 | |
Cash | | | | | | | 1,871,697 | |
Receivable for fund shares sold | | | | | | | 100,800 | |
Interest receivable | | | | | | | 1,312,433 | |
| | | | | | | | |
Total assets | | | | | | | 132,743,440 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Investments purchased | | | 1,067,310 | | | | | |
Distributions to shareholders | | | 339,682 | | | | | |
Fund shares redeemed | | | 55,688 | | | | | |
Investment advisory fee | | | 51,866 | | | | | |
Transfer agent fee | | | 23,932 | | | | | |
Legal fees | | | 6,200 | | | | | |
Postage expense | | | 4,471 | | | | | |
Printing expense | | | 4,133 | | | | | |
Miscellaneous expense | | | 4,100 | | | | | |
Trustee fees | | | 2,597 | | | | | |
Accrued expenses | | | 5,216 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 1,565,195 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 130,515,591 | |
Accumulated net realized loss on investment transactions | | | | | | | (1,345,183 | ) |
Net unrealized appreciation in value of investments | | | | | | | 2,007,837 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 131,178,245 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share (11,563,737 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.34 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 4,593,431 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 664,847 | |
Transfer agent fee | | | 169,959 | |
Professional fees | | | 34,751 | |
Custodian expense | | | 21,085 | |
Trustees fees | | | 17,499 | |
Pricing fees | | | 13,501 | |
Other expenses | | | 43,896 | |
| | | | |
Total expenses | | | 965,538 | |
Fees waived by Adviser (Note 2) | | | (8,281 | ) |
Custodian expense reduction | | | (685 | ) |
| | | | |
Net expenses | | | 956,572 | |
| | | | |
Net investment income | | | 3,636,859 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized loss | | | (114,148 | ) |
Net change in unrealized appreciation/depreciation | | | (1,805,316 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (1,919,464 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,717,395 | |
| | | | |
The accompanying notes 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, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 3,636,859 | | | $ | 3,995,410 | |
Net realized loss on investments | | | (114,148 | ) | | | (670,190 | ) |
Net change in unrealized appreciation/depreciation | | | (1,805,316 | ) | | | (6,216,146 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 1,717,395 | | | | (2,890,926 | ) |
Distributions from net investment income (Note 6) | | | (3,636,670 | ) | | | (3,995,046 | ) |
Net Fund share transactions (Note 4) | | | (6,174,592 | ) | | | (4,188,962 | ) |
| | | | | | | | |
Total decrease | | | (8,093,867 | ) | | | (11,074,934 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 139,272,112 | | | | 150,347,046 | |
| | | | | | | | |
End of year | | $ | 131,178,245 | | | $ | 139,272,112 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | 1,744 | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $11.50 | | | | $12.02 | | | | $11.53 | | | | $11.54 | | | | $11.31 | |
| | | �� | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.31 | | | | 0.32 | | | | 0.34 | | | | 0.36 | | | | 0.37 | |
Net gains/(losses) on securities | | | (0.16 | ) | | | (0.52 | ) | | | 0.49 | | | | (0.01 | ) | | | 0.24 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.15 | | | | (0.20 | ) | | | 0.83 | | | | 0.35 | | | | 0.61 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.31 | ) | | | (0.32 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.37 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.31 | ) | | | (0.32 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.38 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $11.34 | | | | $11.50 | | | | $12.02 | | | | $11.53 | | | | $11.54 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 1.27% | | | | (1.68)% | | | | 7.28% | | | | 3.00% | | | | 5.57% | |
Net assets, end of year (in thousands) | | | $131,178 | | | | $139,272 | | | | $150,347 | | | | $123,717 | | | | $98,879 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.69% | | | | 0.70% | | | | 0.71% | | | | 0.72% | |
Ratio of gross expenses to average net assets | | | 0.71% | | | | 0.69% | | | | 0.70% | | | | 0.71% | | | | 0.72% | |
Ratio of net investment income to average net assets | | | 2.66% | | | | 2.73% | | | | 2.87% | | | | 3.04% | | | | 3.29% | |
Portfolio turnover | | | 11.76% | | | | 11.50% | | | | 6.09% | | | | 4.56% | | | | 9.73% | |
| (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 notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| REFUNDING BONDS | |
| 23.94% of Net Assets | |
Bertie County Limited Obligation | | | 4.000 | % | | | 06/01/2022 | | | A1 | | $ | 200,000 | | | $ | 213,214 | |
Cabarrus County NC Certificates of Participation | | | 5.000 | | | | 04/01/2021 | | | AA* | | | 150,000 | | | | 158,307 | |
Charlotte NC Certificates of Participation | | | 4.000 | | | | 06/01/2022 | | | Aa1 | | | 125,000 | | | | 134,286 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 06/01/2023 | | | Aa1 | | | 625,000 | | | | 708,700 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 12/01/2024 | | | Aa2 | | | 250,000 | | | | 289,758 | |
Charlotte NC Certificates of Participation | | | 4.000 | | | | 06/01/2025 | | | Aa1 | | | 300,000 | | | | 322,734 | |
Charlotte NC Certificates of Participation | | | 5.000 | | | | 12/01/2025 | | | Aa2 | | | 100,000 | | | | 117,430 | |
Cumberland County NC Certificates of Participation | | | 3.500 | | | | 12/01/2020 | | | Aa2 | | | 185,000 | | | | 189,473 | |
Dare County NC Limited Obligation | | | 4.000 | | | | 06/01/2019 | | | Aa3 | | | 100,000 | | | | 102,206 | |
Dare County NC Limited Obligation | | | 5.000 | | | | 06/01/2024 | | | Aa3 | | | 335,000 | | | | 371,123 | |
Durham NC Refunding | | | 5.000 | | | | 09/01/2022 | | | Aaa | | | 125,000 | | | | 140,469 | |
Jacksonville Public Facilities Corp Limited Obligation | | | 5.000 | | | | 04/01/2025 | | | Aa3 | | | 100,000 | | | | 116,190 | |
Johnston County NC Limited Obligation | | | 5.000 | | | | 06/01/2029 | | | Aa2 | | | 350,000 | | | | 395,003 | |
Pender County NC Limited Obligation | | | 3.000 | | | | 06/01/2019 | | | Aa3 | | | 220,000 | | | | 222,847 | |
Raleigh NC Limited Obligation Refunding | | | 5.000 | | | | 10/01/2023 | | | Aa2 | | | 250,000 | | | | 285,755 | |
Richmond County NC Limited Obligation Refunding | | | 4.000 | | | | 04/01/2019 | | | A1 | | | 225,000 | | | | 228,881 | |
Rockingham County NC Limited Obligation | | | 4.000 | | | | 04/01/2024 | | | Aa3 | | | 105,000 | | | | 113,626 | |
Rockingham County NC Limited Obligation** | | | 5.000 | | | | 04/01/2023 | | | Aa3 | | | 250,000 | | | | 281,795 | |
Sampson County NC Limited Obligation | | | 5.000 | | | | 12/01/2023 | | | A1 | | | 165,000 | | | | 188,219 | |
Sampson County NC Limited Obligation | | | 5.000 | | | | 09/01/2024 | | | A1 | | | 125,000 | | | | 143,848 | |
Sampson County NC Limited Obligation | | | 5.000 | | | | 09/01/2025 | | | A1 | | | 125,000 | | | | 145,220 | |
Sampson County NC Limited Obligation | | | 5.000 | | | | 09/01/2026 | | | A1 | | | 210,000 | | | | 245,704 | |
Union County NC Limited Obligation | | | 3.000 | | | | 12/01/2018 | | | Aa1 | | | 100,000 | | | | 100,662 | |
Warren County NC Limited Obligation** | | | 5.000 | | | | 06/01/2023 | | | A1 | | | 100,000 | | | | 112,397 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,327,847 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 16.92% of Net Assets | |
Appalachian NC State University | | | 5.000 | | | | 10/01/2025 | | | Aa3 | | | 235,000 | | | | 275,115 | |
East Carolina University | | | 5.000 | | | | 10/01/2027 | | | Aa2 | | | 250,000 | | | | 294,578 | |
Pitt County NC Limited Obligation | | | 5.000 | | | | 04/01/2027 | | | Aa2 | | | 495,000 | | | | 581,932 | |
University of NC Charlotte | | | 5.000 | | | | 10/01/2025 | | | Aa3 | | | 110,000 | | | | 128,777 | |
University of NC Charlotte | | | 5.000 | | | | 04/01/2028 | | | Aa3 | | | 250,000 | | | | 288,618 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2025 | | | A+* | | | 10,000 | | | | 10,814 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2026 | | | Aa3 | | | 400,000 | | | | 470,396 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2026 | | | Aa3 | | | 250,000 | | | | 293,998 | |
University of NC Wilmington | | | 4.000 | | | | 06/01/2029 | | | A1 | | | 750,000 | | | | 806,355 | |
University of NC Wilmington Limited Obligation | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 265,000 | | | | 303,293 | |
University of North Carolina | | | 4.250 | | | | 10/01/2021 | | | A1 | | | 50,000 | | | | 50,313 | |
Western Carolina University | | | 5.000 | | | | 10/01/2025 | | | Aa3 | | | 225,000 | | | | 264,389 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,768,578 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 13.95% of Net Assets | |
Brunswick County NC Enterprise System Revenue | | | 5.000 | | | | 04/01/2027 | | | Aa3 | | | 600,000 | | | | 691,878 | |
Cary NC Combined Enterprise Systems | | | 4.000 | | | | 12/01/2028 | | | Aaa | | | 250,000 | | | | 273,305 | |
Columbus County NC Limited Obligation | | | 5.000 | | | | 06/01/2023 | | | A1 | | | 355,000 | | | | 399,009 | |
Gastonia NC Combined Utilities System | | | 4.000 | | | | 05/01/2023 | | | Aa2 | | | 150,000 | | | | 162,758 | |
Monroe NC Certificates of Participation | | | 4.000 | | | | 03/01/2019 | | | Aa3 | | | 100,000 | | | | 101,563 | |
Monroe NC Limited Obligation | | | 5.000 | | | | 03/01/2028 | | | Aa3 | | | 195,000 | | | | 226,325 | |
Monroe NC Limited Obligation | | | 5.000 | | | | 03/01/2029 | | | Aa3 | | | 195,000 | | | | 225,886 | |
Mooresville NC Limited Obligation | | | 5.000 | | | | 11/01/2021 | | | AA-* | | | 350,000 | | | | 383,383 | |
NC Municipal Power Agency #1 Catawba Electric | | | 5.000 | | | | 01/01/2021 | | | A2 | | | 205,000 | | | | 208,495 | |
NC Municipal Power Agency #1 Catawba Electric | | | 5.000 | | | | 01/01/2028 | | | A* | | | 125,000 | | | | 144,323 | |
Union County NC Enterprise System Revenue | | | 4.000 | | | | 12/01/2022 | | | Aa1 | | | 100,000 | | | | 106,822 | |
Warren County NC Limited Obligation | | | 5.000 | | | | 06/01/2027 | | | A1 | | | 160,000 | | | | 183,525 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,107,272 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| SCHOOL IMPROVEMENT BONDS | |
| 11.50% of Net Assets | |
Cabarrus County NC Certificates of Participation | | | 5.000 | % | | | 01/01/2019 | | | Aa2 | | $ | 100,000 | | | $ | 101,771 | |
Cabarrus County NC Limited Obligation | | | 5.000 | | | | 04/01/2024 | | | Aa2 | | | 350,000 | | | | 402,084 | |
Davidson County NC Limited Obligation | | | 5.000 | | | | 06/01/2024 | | | Aa3 | | | 200,000 | | | | 230,572 | |
Cabarrus County NC Limited Obligation | | | 5.000 | | | | 06/01/2025 | | | Aa2 | | | 200,000 | | | | 233,674 | |
Nash County NC Limited Obligation | | | 5.000 | | | | 10/01/2018 | | | Aa3 | | | 150,000 | | | | 151,368 | |
New Hanover County NC | | | 4.000 | | | | 02/01/2028 | | | Aaa | | | 100,000 | | | | 108,489 | |
Onslow County NC Limited Obligation** | | | 4.000 | | | | 10/01/2024 | | | Aa3 | | | 350,000 | | | | 382,550 | |
Onslow County NC Limted Obligation | | | 5.000 | | | | 06/01/2023 | | | Aa3 | | | 250,000 | | | | 283,355 | |
Scotland County NC | | | 5.000 | | | | 12/01/2027 | | | A* | | | 140,000 | | | | 165,350 | |
Scotland County NC | | | 5.000 | | | | 12/01/2025 | | | A* | | | 270,000 | | | | 313,478 | |
Wilkes County NC Limited Obligation | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 165,000 | | | | 188,942 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,561,633 | |
| PREREFUNDED BONDS | |
| 8.26% of Net Assets | |
Durham County NC Certificates of Participation | | | 5.000 | | | | 06/01/2020 | | | Aa1 | | | 435,000 | | | | 448,359 | |
Durham County NC Certificates of Participation | | | 5.000 | | | | 06/01/2021 | | | Aa1 | | | 240,000 | | | | 247,370 | |
Moore County NC | | | 5.000 | | | | 06/01/2021 | | | Aa3 | | | 200,000 | | | | 212,506 | |
NC Medical Care Duke University Health Systems | | | 3.000 | | | | 06/01/2019 | | | Aa2 | | | 150,000 | | | | 152,039 | |
NC Municipal Power Agency #1 Catawba Electric | | | 5.000 | | | | 01/01/2021 | | | AAA@ | | | 45,000 | | | | 45,786 | |
NC State Capital Improvement Obligation | | | 5.000 | | | | 05/01/2022 | | | Aa1 | | | 155,000 | | | | 159,357 | |
NC State Capital Improvement Obligation | | | 4.000 | | | | 05/01/2025 | | | Aa1 | | | 105,000 | | | | 109,391 | |
NC State Grant Anticipation Revenue Vehicle | | | 5.000 | | | | 03/01/2021 | | | A2 | | | 310,000 | | | | 317,266 | |
University of NC Greensboro | | | 5.000 | | | | 04/01/2025 | | | NR | | | 90,000 | | | | 97,352 | |
University of North Carolina | | | 4.250 | | | | 10/01/2021 | | | A1 | | | 20,000 | | | | 20,140 | |
University of North Carolina | | | 4.250 | | | | 10/01/2021 | | | A1 | | | 20,000 | | | | 20,140 | |
University of North Carolina | | | 4.250 | | | | 10/01/2021 | | | A1 | | | 10,000 | | | | 10,071 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,839,777 | |
| PUBLIC FACILITIES BONDS | |
| 7.37% of Net Assets | |
Buncombe County NC Limited Obligation | | | 5.000 | | | | 06/01/2028 | | | Aa1 | | | 500,000 | | | | 578,650 | |
Charlotte NC Certificates of Participation | | | 4.000 | | | | 12/01/2022 | | | Aa1 | | | 170,000 | | | | 181,074 | |
Chatham County NC Limited Obligation** | | | 5.000 | | | | 11/01/2025 | | | Aa2 | | | 500,000 | | | | 578,555 | |
Watauga NC Public Facillities Corporation Limited Obligation | | | 5.000 | | | | 06/01/2023 | | | Aa3 | | | 275,000 | | | | 303,342 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,641,621 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | |
| 6.21% of Net Assets | |
Charlotte-Mecklenburg NC Hospital Authority Health Care System | | | 5.000 | | | | 01/15/2028 | | | Aa3 | | | 225,000 | | | | 260,440 | |
NC Medical Care Duke University | | | 5.000 | | | | 06/01/2026 | | | Aa2 | | | 165,000 | | | | 182,922 | |
NC State Medical Care Commission Health Care Facilities | | | 4.000 | | | | 06/01/2024 | | | A1 | | | 180,000 | | | | 195,912 | |
NC State Medical Care Commission Health Care Facilities** | | | 4.000 | | | | 06/01/2025 | | | Aa2 | | | 250,000 | | | | 276,375 | |
North Carolina State Medical Care Commission Mission Health System | | | 5.000 | | | | 10/01/2024 | | | Aa3 | | | 250,000 | | | | 260,888 | |
North Carolina State Medical Care Commission Vidant Health | | | 5.000 | | | | 06/01/2028 | | | A1 | | | 180,000 | | | | 205,488 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,382,025 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 3.65% of Net Assets | |
Johnston County NC Limited Obligation | | | 4.000 | | | | 06/01/2019 | | | Aa2 | | | 150,000 | | | | 153,407 | |
NC State Capital Improvement Obligation** | | | 5.000 | | | | 05/01/2021 | | | Aa1 | | | 350,000 | | | | 370,815 | |
Salisbury NC Certificates of Participation | | | 5.000 | | | | 03/01/2019 | | | A3 | | | 145,000 | | | | 148,103 | |
Winston Salem NC Limited Obligation | | | 5.000 | | | | 06/01/2023 | | | Aa1 | | | 125,000 | | | | 141,490 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 813,815 | |
| ESCROWED TO MATURITY BONDS | |
| 2.37% of Net Assets | |
NC Eastern Municipal Power Agency | | | 5.000 | | | | 01/01/2021 | | | AAA@ | | | 125,000 | | | | 134,756 | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2022 | | | AAA@ | | | 125,000 | | | | 141,983 | |
NC Eastern Municipal Power Agency | | | 6.000 | | | | 01/01/2022 | | | A3 | | | 220,000 | | | | 249,968 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 526,707 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.00% of Net Assets | |
NC State Grant Anticipation Revenue Vehicle | | | 5.000 | % | | | 03/01/2025 | | | A2 | | $ | 265,000 | | | $ | 307,416 | |
NC State Grant Anticipation Revenue Vehicle | | | 5.000 | | | | 03/01/2029 | | | A2 | | | 120,000 | | | | 136,980 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 444,396 | |
| AD VALOREM PROPERTY BONDS | | | | | | | | | | | | | | | | | | |
| 1.28% of Net Assets | |
Smithville Township NC** | | | 5.000 | | | | 06/01/2024 | | | A1 | | | 250,000 | | | | 285,088 | |
| | | | | | | | | | | | | | | | | | |
| LEASE REVENUE BONDS | |
| 1.19% of Net Assets | |
Edgecombe County NC Limited Obligation** | | | 4.000 | | | | 06/01/2022 | | | A2 | | | 250,000 | | | | 265,655 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 98.64% of Net Assets (cost $22,130,193) (See (a) below for further explanation) | | | $ | 21,964,414 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 1.36% | | | | | | | | | | | | | | | | | 302,513 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 22,266,927 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $22,130,193 and net unrealized depreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 104,216 | |
| | Unrealized depreciation | | | (269,995 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (165,779 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, involving the Fund’s investments in securities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.
| | | | | | |
| | | Valuation Inputs | | Municipal Bonds | |
Level 1 | | Quoted Prices | | $ | — | |
Level 2 | | Other Significant Observable Inputs | | | 21,964,414 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 21,964,414 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
31
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $22,130,193) | | | | | | $ | 21,964,414 | |
Cash | | | | | | | 186,667 | |
Interest receivable | | | | | | | 172,398 | |
| | | | | | | | |
Total assets | | | | | | | 22,323,479 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 8,050 | | | | | |
Fund shares redeemed | | | 18,461 | | | | | |
Investment advisory fee | | | 6,266 | | | | | |
Transfer agent fee | | | 2,669 | | | | | |
Professional fees | | | 5,853 | | | | | |
Insurance expense | | | 3,291 | | | | | |
Pricing fees | | | 3,882 | | | | | |
Trustees fees | | | 445 | | | | | |
Accrued expenses | | | 7,635 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 56,552 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 22,451,961 | |
Accumulated net realized loss on investment transactions | | | | | | | (19,255 | ) |
Net unrealized depreciation in value of investments | | | | | | | (165,779 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 22,266,927 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share (2,092,659 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.64 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 481,908 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 109,561 | |
Transfer agent fee | | | 32,295 | |
Professional fees | | | 12,177 | |
Custodian expense | | | 9,540 | |
Pricing fees | | | 8,001 | |
Registration fees | | | 6,565 | |
Trustees fees | | | 2,472 | |
Other expenses | | | 7,257 | |
| | | | |
Total expenses | | | 187,868 | |
Fees waived by Adviser (Note 2) | | | (33,973 | ) |
Custodian expense reduction | | | (310 | ) |
| | | | |
Net expenses | | | 153,585 | |
| | | | |
Net investment income | | | 328,323 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 4,174 | |
Net change in unrealized appreciation/depreciation | | | (419,673 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (415,499 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (87,176 | ) |
| | | | |
The accompanying notes are an integral part of the financial statements.
32
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 328,323 | | | $ | 346,639 | |
Net realized gain/(loss) on investments | | | 4,174 | | | | (21,849 | ) |
Net change in unrealized appreciation/depreciation | | | (419,673 | ) | | | (475,251 | ) |
| | | | | | | | |
Net decrease in net assets resulting from operations | | | (87,176 | ) | | | (150,461 | ) |
Distributions from net investment income (Note 6) | | | (328,323 | ) | | | (346,639 | ) |
Net Fund share transactions (Note 4) | | | 752,612 | | | | (2,707,103 | ) |
| | | | | | | | |
Total increase/(decrease) | | | 337,113 | | | | (3,204,203 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 21,929,814 | | | | 25,134,017 | |
| | | | | | | | |
End of year | | $ | 22,266,927 | | | $ | 21,929,814 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $10.85 | | | | $11.05 | | | | $10.94 | | | | $11.06 | | | | $11.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.16 | | | | 0.16 | | | | 0.17 | | | | 0.19 | | | | 0.20 | |
Net gains/(losses) on securities | | | (0.21 | ) | | | (0.20 | ) | | | 0.11 | | | | (0.12 | ) | | | 0.08 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.05 | ) | | | (0.04 | ) | | | 0.28 | | | | 0.07 | | | | 0.28 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.16 | ) | | | (0.16 | ) | | | (0.17 | ) | | | (0.19 | ) | | | (0.20 | ) |
Distributions from capital gains | | | — | | | | — | | | | — | | | | — | | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.16 | ) | | | (0.16 | ) | | | (0.17 | ) | | | (0.19 | ) | | | (0.22 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $10.64 | | | | $10.85 | | | | $11.05 | | | | $10.94 | | | | $11.06 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | (0.45)% | | | | (0.33)% | | | | 2.59% | | | | 0.60% | | | | 2.53% | |
Net assets, end of year (in thousands) | | | $22,267 | | | | $21,930 | | | | $25,134 | | | | $24,463 | | | | $25,952 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.73% | | | | 0.83% | | | | 0.83% | | | | 0.81% | |
Ratio of gross expenses to average net assets | | | 0.86% | | | | 0.82% | | | | 0.83% | | | | 0.83% | | | | 0.81% | |
Ratio of net investment income to average net assets | | | 1.50% | | | | 1.49% | | | | 1.56% | | | | 1.69% | | | | 1.80% | |
Portfolio turnover | | | 21.80% | | | | 11.15% | | | | 24.05% | | | | 9.79% | | | | 7.10% | |
| (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 notes are an integral part of the financial statements.
33
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 34.96% of Net Assets | |
Bristol TN Electric Revenue | | | 5.000 | % | | | 09/01/2038 | | | AA-* | | $ | 1,525,000 | | | $ | 1,686,223 | |
Chattanooga TN Electric Revenue | | | 5.000 | | | | 09/01/2035 | | | AA+* | | | 250,000 | | | | 285,855 | |
Chattanooga TN Electric Revenue | | | 5.000 | | | | 09/01/2040 | | | AA+* | | | 2,325,000 | | | | 2,645,474 | |
Citizens Gas Utility District TN Gas Revenue | | | 5.000 | | | | 05/01/2029 | | | A* | | | 110,000 | | | | 112,533 | |
Clarksville TN Electric System Revenue | | | 4.000 | | | | 09/01/2034 | | | Aa2 | | | 500,000 | | | | 531,150 | |
Clarksville TN Water Sewer & Gas Revenue | | | 5.000 | | | | 02/01/2034 | | | Aa2 | | | 500,000 | | | | 577,680 | |
Clarksville TN Water Sewer & Gas Revenue | | | 5.000 | | | | 02/01/2036 | | | Aa2 | | | 500,000 | | | | 574,725 | |
Clarksville TN Water Sewer & Gas Revenue | | | 4.000 | | | | 02/01/2036 | | | Aa2 | | | 1,475,000 | | | | 1,565,477 | |
Clarksville TN Water Sewer & Gas Revenue | | | 4.000 | | | | 02/01/2038 | | | Aa2 | | | 820,000 | | | | 868,913 | |
Clarksville TN Water Sewer & Gas Revenue | | | 5.000 | | | | 02/01/2041 | | | Aa2 | | | 2,750,000 | | | | 3,150,868 | |
Columbia TN Waterworks Revenue | | | 5.000 | | | | 12/01/2032 | | | Aa3 | | | 885,000 | | | | 962,889 | |
Franklin TN Water & Sewer Revenue and Tax Authority | | | 5.000 | | | | 04/01/2024 | | | Aaa | | | 750,000 | | | | 868,193 | |
Franklin TN Water & Sewer System Revenue | | | 4.000 | | | | 02/01/2036 | | | Aa3 | | | 250,000 | | | | 262,798 | |
Hallsdale-Powell TN Utility District Knox County Water & Sewer | | | 4.000 | | | | 04/01/2035 | | | AA* | | | 315,000 | | | | 332,174 | |
Hallsdale-Powell TN Utility District Knox County Water & Sewer | | | 4.000 | | | | 04/01/2038 | | | AA* | | | 1,000,000 | | | | 1,048,910 | |
Harpeth Valley TN Utilities District | | | 5.000 | | | | 09/01/2040 | | | AA* | | | 1,000,000 | | | | 1,092,210 | |
Harpeth Valley TN Utilities District | | | 5.000 | | | | 09/01/2034 | | | AA* | | | 500,000 | | | | 566,785 | |
Knox Chapman TN Utility District | | | 4.500 | | | | 01/01/2027 | | | AA-* | | | 1,000,000 | | | | 1,082,950 | |
Knox Chapman TN Utility District | | | 5.000 | | | | 01/01/2031 | | | AA-* | | | 250,000 | | | | 285,378 | |
Knox Chapman TN Utility District | | | 5.000 | | | | 01/01/2033 | | | AA-* | | | 250,000 | | | | 283,775 | |
Memphis TN Electric System Revenue | | | 5.000 | | | | 12/01/2031 | | | Aa2 | | | 225,000 | | | | 257,175 | |
Memphis TN Electric System Revenue | | | 5.000 | | | | 12/01/2034 | | | Aa2 | | | 1,250,000 | | | | 1,420,025 | |
Memphis TN Gas System Revenue | | | 4.000 | | | | 12/01/2033 | | | Aa1 | | | 500,000 | | | | 534,405 | |
Memphis TN Gas System Revenue | | | 4.000 | | | | 12/01/2036 | | | Aa1 | | | 800,000 | | | | 843,688 | |
Memphis TN Gas System Revenue** | | | 4.000 | | | | 12/01/2037 | | | Aa1 | | | 1,310,000 | | | | 1,379,365 | |
Metropolitan Government Nashville & Davidson County Electric | | | 5.000 | | | | 05/15/2033 | | | AA+* | | | 500,000 | | | | 571,390 | |
Metropolitan Government Nashville & Davidson County Electric | | | 5.000 | | | | 05/15/2036 | | | AA+* | | | 500,000 | | | | 562,680 | |
Metropolitan Government Nashville & Davidson County Electric** | | | 5.000 | | | | 05/15/2036 | | | AA+* | | | 3,085,000 | | | | 3,316,468 | |
Metropolitan Government Nashville & Davidson County Electric | | | 5.000 | | | | 05/15/2039 | | | AA+* | | | 500,000 | | | | 561,525 | |
Metropolitan Government Nashville & Davidson County Water & Sewer** | | | 5.000 | | | | 07/01/2030 | | | Aa3 | | | 3,250,000 | | | | 3,656,120 | |
Metropolitan Government Nashville & Davidson County Water & Sewer | | | 5.000 | | | | 07/01/2031 | | | Aa3 | | | 500,000 | | | | 561,475 | |
Metropolitan Government Nashville & Davidson County Water & Sewer | | | 5.000 | | | | 07/01/2033 | | | Aa3 | | | 575,000 | | | | 642,528 | |
Metropolitan Government Nashville & Davidson County Water & Sewer | | | 5.000 | | | | 07/01/2037 | | | Aa3 | | | 250,000 | | | | 290,273 | |
Metropolitan Government Nashville & Davidson County Water & Sewer** | | | 5.000 | | | | 07/01/2040 | | | Aa3 | | | 2,265,000 | | | | 2,506,267 | |
South Blount County TN Utility District Waterworks | | | 5.000 | | | | 12/01/2028 | | | A2 | | | 765,000 | | | | 797,337 | |
Watauga River Regional Water Authority TN Waterworks | | | 4.000 | | | | 07/01/2037 | | | A* | | | 270,000 | | | | 288,093 | |
White House TN Utility District Robertson & Sumner Counties Water & Sewer | | | 4.000 | | | | 01/01/2030 | | | AA+* | | | 750,000 | | | | 809,490 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 37,783,264 | |
| PREREFUNDED BONDS | |
| 12.40% of Net Assets | |
Blount County TN Public Building Authority Local Government | | | 5.000 | | | | 06/01/2025 | | | Aa2 | | | 100,000 | | | | 103,108 | |
Blount County TN Public Building Authority Local Government | | | 5.000 | | | | 06/01/2027 | | | Aa2 | | | 1,500,000 | | | | 1,546,620 | |
Blount County TN Public Building Authority Local Government | | | 4.750 | | | | 06/01/2031 | | | Aa2 | | | 750,000 | | | | 771,600 | |
Citizens Gas Utility District TN Gas Revenue | | | 5.000 | | | | 05/01/2029 | | | NR | | | 140,000 | | | | 143,853 | |
Clarksville TN Electric Systems Revenue | | | 5.000 | | | | 09/01/2028 | | | Aa2 | | | 1,000,000 | | | | 1,069,400 | |
Clarksville TN Electric Systems Revenue | | | 5.000 | | | | 09/01/2032 | | | Aa2 | | | 480,000 | | | | 513,312 | |
Clarksville TN Electric Systems Revenue | | | 5.000 | | | | 09/01/2033 | | | Aa2 | | | 2,000,000 | | | | 2,138,800 | |
Clarksville TN Water Sewer & Gas Revenue | | | 5.000 | | | | 02/01/2033 | | | Aa2 | | | 500,000 | | | | 564,045 | |
Clarksville TN Water Sewer & Gas Revenue | | | 5.000 | | | | 02/01/2038 | | | Aa2 | | | 1,000,000 | | | | 1,128,090 | |
Gallatin TN Water & Sewer Revenue | | | 5.000 | | | | 01/01/2032 | | | AA* | | | 235,000 | | | | 267,350 | |
Johnson City TN Health & Educational Facilities | | | 5.125 | | | | 07/01/2025 | | | NR | | | 70,000 | | | | 70,265 | |
Knox Chapman TN Utility District | | | 5.250 | | | | 01/01/2036 | | | AA-* | | | 700,000 | | | | 758,905 | |
Manchester TN | | | 5.000 | | | | 06/01/2038 | | | A2 | | | 20,000 | | | | 21,239 | |
The accompanying notes are an integral part of the financial statements.
34
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Metropolitan Government Nashville & Davidson County Vanderbilt University | | | 5.000 | % | | | 10/01/2034 | | | NR | | $ | 210,000 | | | $ | 218,621 | |
Metropolitan Government Nashville & Davidson County Vanderbilt University | | | 5.000 | | | | 10/01/2034 | | | Aa2 | | | 790,000 | | | | 822,730 | |
Shelby County TN Health Education & Housing Facilities Board Rhodes College | | | 5.000 | | | | 08/01/2030 | | | A1 | | | 500,000 | | | | 546,435 | |
South Blount County TN Utility District Waterworks | | | 5.000 | | | | 12/01/2028 | | | A2 | | | 360,000 | | | | 376,513 | |
TN State School Board Authority Higher Education Facilities | | | 5.000 | | | | 05/01/2034 | | | Aa1 | | | 500,000 | | | | 514,055 | |
Watauga River Tn Regional Water Authority Waterworks | | | 5.000 | | | | 07/01/2034 | | | A* | | | 500,000 | | | | 556,850 | |
West Wilson Utility District TN Waterworks | | | 5.000 | | | | 06/01/2033 | | | NR | | | 1,170,000 | | | | 1,273,650 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 13,405,441 | |
| PUBLIC FACILITIES BONDS | |
| 11.30% of Net Assets | |
Memphis Shelby County Sports Authority | | | 5.250 | | | | 11/01/2026 | | | Aa3 | | | 500,000 | | | | 522,705 | |
Memphis Shelby County Sports Authority | | | 5.250 | | | | 11/01/2027 | | | Aa3 | | | 750,000 | | | | 783,653 | |
Memphis Shelby County TN Industrial Development Board | | | 5.000 | | | | 11/01/2030 | | | Aa3 | | | 1,250,000 | | | | 1,450,186 | |
Memphis TN Refunding General Improvement | | | 5.000 | | | | 04/01/2031 | | | Aa2 | | | 800,000 | | | | 905,648 | |
Metropolitan Government Nashville & Davidson County Convention Center | | | 5.000 | | | | 07/01/2026 | | | A1 | | | 630,000 | | | | 665,312 | |
Metropolitan Government Nashville & Davidson County Sports Authority | | | 5.000 | | | | 08/01/2031 | | | Aa3 | | | 1,500,000 | | | | 1,674,315 | |
Metropolitan Government Nashville & Davidson County Sports Authority | | | 5.000 | | | | 08/01/2038 | | | Aa3 | | | 755,000 | | | | 839,311 | |
Pigeon Forge Industrial Development Board | | | 5.000 | | | | 06/01/2024 | | | AA* | | | 600,000 | | | | 650,478 | |
Pigeon Forge Industrial Development Board | | | 5.000 | | | | 06/01/2027 | | | AA* | | | 1,400,000 | | | | 1,516,536 | |
Pigeon Forge Industrial Development Board** | | | 5.000 | | | | 06/01/2029 | | | AA* | | | 2,120,000 | | | | 2,294,603 | |
Pigeon Forge Industrial Development Board | | | 5.000 | | | | 06/01/2034 | | | AA* | | | 850,000 | | | | 916,989 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 12,219,736 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | |
| 9.42% of Net Assets | |
Chattanooga TN Health Educational and Housing Facilities Board | | | 5.000 | | | | 01/01/2033 | | | Baa1 | | | 500,000 | | | | 532,514 | |
Jackson TN Hospital Jackson Madison County Hospital | | | 5.000 | | | | 04/01/2036 | | | A1 | | | 995,000 | | | | 1,102,987 | |
Metropolitan Government Nashville & Davidson County TN Health | | | 5.000 | | | | 07/01/2035 | | | A3 | | | 2,500,000 | | | | 2,798,725 | |
Metropolitan Government Nashville & Davidson County TN Health | | | 5.000 | | | | 07/01/2040 | | | A3 | | | 950,000 | | | | 1,056,448 | |
Rutherford County TN Health &Educational Facilities Ascension Health | | | 5.000 | | | | 11/15/2040 | | | Aa2 | | | 1,500,000 | | | | 1,557,480 | |
Shelby County TN Health Education & Housing Facilities | | | 5.000 | | | | 05/01/2027 | | | A1 | | | 750,000 | | | | 817,343 | |
Shelby County TN Health Education & Housing Facilities | | | 5.000 | | | | 05/01/2035 | | | A1 | | | 500,000 | | | | 571,690 | |
Shelby County TN Health Education & Housing Facilities | | | 5.000 | | | | 05/01/2036 | | | A1 | | | 1,535,000 | | | | 1,749,992 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 10,187,179 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 8.58% of Net Assets | |
Franklin County TN Health & Education Facilities Board Revenue | | | 5.000 | | | | 09/01/2030 | | | A+* | | | 200,000 | | | | 218,524 | |
Metropolitan Government Nashville & Davidson County Vanderbilt University | | | 5.000 | | | | 10/01/2028 | | | Aa2 | | | 1,150,000 | | | | 1,285,550 | |
Shelby County TN Health Education & Housing Facilities Board Rhodes College | | | 4.000 | | | | 08/01/2036 | | | A1 | | | 920,000 | | | | 972,550 | |
Shelby County TN Health Education & Housing Facilities Board Rhodes College | | | 4.000 | | | | 08/01/2037 | | | A1 | | | 1,030,000 | | | | 1,085,363 | |
Shelby County TN Health Education & Housing Facilities Board Rhodes College | | | 5.000 | | | | 08/01/2040 | | | A1 | | | 650,000 | | | | 731,120 | |
TN State School Bond Authority | | | 5.000 | | | | 11/01/2043 | | | Aa1 | | | 1,000,000 | | | | 1,102,590 | |
TN State School Bond Authority Higher Educational Facilities | | | 5.000 | | | | 11/01/2037 | | | Aa1 | | | 1,400,000 | | | | 1,589,014 | |
TN State School Bond Authority Higher Educational Facilities | | | 5.000 | | | | 11/01/2040 | | | Aa1 | | | 2,000,000 | | | | 2,287,140 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 9,271,851 | |
| REFUNDING BONDS | |
| 6.90% of Net Assets | |
Blount County TN | | | 5.000 | | | | 06/01/2037 | | | Aa2 | | | 1,200,000 | | | | 1,373,544 | |
The accompanying notes are an integral part of the financial statements.
35
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Chattanooga TN Industrial Development Board Lease Rent Revenue | | | 5.000 | % | | | 10/01/2027 | | | A2 | | $ | 1,000,000 | | | $ | 1,003,600 | |
Manchester TN | | | 5.000 | | | | 06/01/2038 | | | A2 | | | 80,000 | | | | 84,161 | |
Memphis TN General Improvement | | | 5.000 | | | | 04/01/2034 | | | Aa2 | | | 500,000 | | | | 562,035 | |
Memphis TN General Improvement | | | 5.000 | | | | 04/01/2039 | | | Aa2 | | | 250,000 | | | | 279,603 | |
Memphis TN Refunding | | | 5.000 | | | | 04/01/2030 | | | Aa2 | | | 1,000,000 | | | | 1,133,780 | |
Memphis TN Refunding | | | 5.000 | | | | 04/01/2033 | | | Aa2 | | | 250,000 | | | | 281,873 | |
Memphis TN Refunding | | | 5.000 | | | | 04/01/2035 | | | Aa2 | | | 250,000 | | | | 280,450 | |
Memphis TN Refunding | | | 5.000 | | | | 04/01/2040 | | | Aa2 | | | 500,000 | | | | 559,490 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 01/01/2033 | | | Aa2 | | | 500,000 | | | | 581,125 | |
Shelby County TN Refunding Series A | | | 5.000 | | | | 03/01/2026 | | | Aa1 | | | 1,200,000 | | | | 1,325,472 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 7,465,133 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 5.86% of Net Assets | |
Memphis Shelby County TN Port Authority Community Development | | | 5.000 | | | | 04/01/2035 | | | Aa3 | | | 625,000 | | | | 669,956 | |
Memphis TN | | | 4.000 | | | | 06/01/2041 | | | Aa2 | | | 250,000 | | | | 258,578 | |
Memphis TN Refunding and General Impact General Obligation | | | 5.000 | | | | 05/01/2036 | | | Aa2 | | | 850,000 | | | | 913,912 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2033 | | | Aa2 | | | 1,470,000 | | | | 1,567,313 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2034 | | | Aa2 | | | 500,000 | | | | 528,275 | |
Springfield TN Public Improvement | | | 4.500 | | | | 03/01/2024 | | | Aa3 | | | 565,000 | | | | 619,489 | |
TN State Series A | | | 5.000 | | | | 02/01/2036 | | | Aaa | | | 1,500,000 | | | | 1,781,355 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 6,338,878 | |
| SCHOOL IMPROVEMENT BONDS | |
| 5.51% of Net Assets | |
Montgomery County TN | | | 4.000 | | | | 04/01/2036 | | | AA+* | | | 260,000 | | | | 275,356 | |
Montgomery County TN | | | 4.000 | | | | 04/01/2037 | | | AA+* | | | 1,920,000 | | | | 2,024,390 | |
Rhea County TN** | | | 5.000 | | | | 04/01/2029 | | | A1 | | | 1,385,000 | | | | 1,509,886 | |
Shelby County TN | | | 5.000 | | | | 04/01/2037 | | | Aa1 | | | 500,000 | | | | 580,655 | |
Wilson County TN | | | 4.000 | | | | 04/01/2039 | | | AA+* | | | 1,495,000 | | | | 1,568,120 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,958,407 | |
| AIRPORT REVENUE BONDS | |
| 2.31% of Net Assets | |
Metropolitan Nashville Airport Authority | | | 5.000 | | | | 07/01/2034 | | | A1 | | | 800,000 | | | | 908,528 | |
Metropolitan Nashville Airport Authority | | | 5.000 | | | | 07/01/2035 | | | A1 | | | 250,000 | | | | 283,575 | |
Metropolitan Nashville Airport Authority | | | 5.000 | | | | 07/01/2040 | | | A1 | | | 1,160,000 | | | | 1,307,946 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,500,049 | |
| STATE AND LOCAL MORTGAGE/HOUSING REVENUE BONDS | |
| 1.02% of Net Assets | |
TN Housing Development Agency Homeownership Program 2 | | | 4.700 | | | | 07/01/2027 | | | Aa1 | | | 620,000 | | | | 624,935 | |
TN Housing Development Agency Housing Finance Program | | | 4.850 | | | | 01/01/2025 | | | Aa2 | | | 460,000 | | | | 479,458 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,104,393 | |
| INDUSTRIAL REVENUE BONDS | |
| 0.84% of Net Assets | |
Industrial Development Board TN Blount County | | | 5.000 | | | | 06/01/2027 | | | Aa3 | | | 850,000 | | | | 911,251 | |
| | | | | | | | | | | | | | | | | | |
| ESCROWED TO MATURITY BONDS | |
| .01% of Net Assets | |
Johnson City TN Health & Educational Facilities Medical Center | | | 5.000 | | | | 07/01/2018 | | | NR | | | 10,000 | | | | 10,001 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 99.11% of Net Assets (cost $105,003,928) (See (a) below for further explanation) | | | $ | 107,155,583 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities .89% | | | | | | | | | | | | | | | | | 965,910 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 108,121,493 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
The accompanying notes are an integral part of the financial statements.
36
DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Tennessee Municipal Bonds
June 30, 2018
| (a) | | Cost for federal income tax purposes is $105,003,928 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 2,746,013 | |
| | Unrealized depreciation | | | (594,358 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 2,151,655 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 107,155,583 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 107,155,583 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
37
TENNESSEE TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $105,003,928) | | | | | | $ | 107,155,583 | |
Cash | | | | | | | 61,466 | |
Interest receivable | | | | | | | 1,350,295 | |
| | | | | | | | |
Total assets | | | | | | | 108,567,344 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 266,698 | | | | | |
Fund shares redeemed | | | 69,445 | | | | | |
Investment advisory fee | | | 44,999 | | | | | |
Transfer agent fee | | | 11,395 | | | | | |
Insurance expense | | | 14,369 | | | | | |
Professional fees | | | 12,384 | | | | | |
Registration expense | | | 8,666 | | | | | |
Pricing fees | | | 5,100 | | | | | |
Postage expense | | | 2,693 | | | | | |
Accrued expenses | | | 10,102 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 445,851 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 106,251,315 | |
Accumulated net realized loss on investment transactions | | | | | | | (281,477 | ) |
Net unrealized appreciation in value of investments | | | | | | | 2,151,655 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 108,121,493 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(9,615,682 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 11.24 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 3,773,621 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 549,885 | |
Transfer agent fee | | | 139,303 | |
Custodian expense | | | 20,538 | |
Professional fees | | | 28,181 | |
Trustees fees | | | 12,563 | |
Other expenses | | | 36,239 | |
| | | | |
Total expenses | | | 786,709 | |
Fees waived by Adviser (Note 2) | | | (8,460 | ) |
Custodian expense reduction | | | (668 | ) |
| | | | |
Net expenses | | | 777,581 | |
| | | | |
Net investment income | | | 2,996,040 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized loss | | | (3,281 | ) |
Net change in unrealized appreciation/depreciation | | | (1,977,898 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (1,981,179 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 1,014,861 | �� |
| | | | |
The accompanying notes 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, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 2,996,040 | | | $ | 3,107,543 | |
Net realized loss on investments | | | (3,281 | ) | | | (63,537 | ) |
Net change in unrealized appreciation/depreciation | | | (1,977,898 | ) | | | (4,362,020 | ) |
| | | | | | | | |
Net increase/(decrease) in net assets resulting from operations | | | 1,014,861 | | | | (1,318,014 | ) |
Distributions from net investment income (Note 6) | | | (2,996,040 | ) | | | (3,107,543 | ) |
Net Fund share transactions (Note 4) | | | 1,843,070 | | | | (4,145,515 | ) |
| | | | | | | | |
Total decrease | | | (138,109 | ) | | | (8,571,072 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 108,259,602 | | | | 116,830,674 | |
| | | | | | | | |
End of year | | $ | 108,121,493 | | | $ | 108,259,602 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $11.44 | | | | $11.89 | | | | $11.51 | | | | $11.55 | | | | $11.27 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.31 | | | | 0.33 | | | | 0.34 | | | | 0.36 | | | | 0.37 | |
Net gains/(losses) on securities | | | (0.20 | ) | | | (0.45 | ) | | | 0.38 | | | | (0.04 | ) | | | 0.28 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.11 | | | | (0.12 | ) | | | 0.72 | | | | 0.32 | | | | 0.65 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.31 | ) | | | (0.33 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.37 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $11.24 | | | | $11.44 | | | | $11.89 | | | | $11.51 | | | | $11.55 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 0.94% | | | | (1.03)% | | | | 6.40% | | | | 2.77% | | | | 5.86% | |
Net assets, end of year (in thousands) | | | $108,121 | | | | $108,260 | | | | $116,831 | | | | $109,672 | | | | $104,894 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.70% | | | | 0.71% | | | | 0.70% | | | | 0.71% | |
Ratio of gross expenses to average net assets | | | 0.71% | | | | 0.71% | | | | 0.71% | | | | 0.70% | | | | 0.71% | |
Ratio of net investment income to average net assets | | | 2.70% | | | | 2.82% | | | | 2.96% | | | | 3.08% | | | | 3.25% | |
Portfolio turnover | | | 15.77% | | | | 9.27% | | | | 9.67% | | | | 7.01% | | | | 14.44% | |
| (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 notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 19.67% of Net Assets | |
Castalian Springs Bethpage TN Waterworks | | | 3.000 | % | | | 01/01/2019 | | | A+* | | $ | 90,000 | | | $ | 90,618 | |
Chattanooga TN Electric Revenue** | | | 5.000 | | | | 09/01/2023 | | | AA+* | | | 250,000 | | | | 286,275 | |
Hallsdale-Powell TN Utility District | | | 4.000 | | | | 04/01/2028 | | | AA* | | | 255,000 | | | | 278,983 | |
Harpeth Valley TN Utilities District Davidson & Williamson Counties | | | 4.000 | | | | 09/01/2024 | | | AA* | | | 225,000 | | | | 247,975 | |
Knoxville TN Gas Revenue | | | 4.000 | | | | 03/01/2025 | | | Aa2 | | | 240,000 | | | | 258,413 | |
Maryville TN | | | 4.000 | | | | 06/01/2029 | | | Aa3 | | | 250,000 | | | | 273,598 | |
Metropolitan Government Nashville & Davidson County TN Water & Sewer | | | 5.250 | | | | 01/01/2019 | | | Aa2 | | | 125,000 | | | | 127,378 | |
Metropolitan Government Nashville & Davidson County TN Water & Sewer | | | 5.000 | | | | 07/01/2026 | | | Aa3 | | | 100,000 | | | | 113,000 | |
Springfield TN | | | 5.000 | | | | 06/01/2027 | | | Aa3 | | | 245,000 | | | | 291,548 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,967,788 | |
| PUBLIC FACILITIES BONDS | |
| 17.86% of Net Assets | |
Memphis TN Center City Revenue Finance Corporation Sports Facility | | | 4.000 | | | | 02/01/2021 | | | Aa3 | | | 100,000 | | | | 104,916 | |
Memphis TN Center City Revenue Finance Corporation Sports Facility | | | 4.000 | | | | 02/01/2022 | | | Aa3 | | | 220,000 | | | | 233,668 | |
Memphis TN Center City Revenue Finance Corporation Sports Facility | | | 5.000 | | | | 02/01/2026 | | | Aa3 | | | 100,000 | | | | 113,297 | |
Memphis-Shelby County TN Industrial Development Board | | | 5.000 | | | | 11/01/2024 | | | Aa3 | | | 250,000 | | | | 288,480 | |
Metropolitan Government Nashville & Davidson County TN Sports Authority | | | 5.000 | | | | 07/01/2023 | | | Aa3 | | | 125,000 | | | | 141,376 | |
Metropolitan Government Nashville & Davidson County TN Sports Authority | | | 5.250 | | | | 08/01/2024 | | | Aa3 | | | 190,000 | | | | 216,376 | |
Metropolitan Government Nashville & Davidson County TN Sports Authority | | | 5.250 | | | | 08/01/2025 | | | Aa3 | | | 195,000 | | | | 221,770 | |
Metropolitan Government Nashville & Davidson County TN Sports Authority | | | 5.250 | | | | 08/01/2026 | | | Aa3 | | | 100,000 | | | | 113,574 | |
Pigeon Forge Industrial Development Board | | | 5.000 | | | | 06/01/2024 | | | AA* | | | 175,000 | | | | 189,723 | |
Pigeon Forge Public Facilities** | | | 5.000 | | | | 06/01/2023 | | | AA* | | | 150,000 | | | | 162,977 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,786,157 | |
| REFUNDING BONDS | |
| 16.39% of Net Assets | |
Maryville TN | | | 5.000 | | | | 06/01/2026 | | | Aa3 | | | 350,000 | | | | 413,907 | |
Memphis TN General Improvement** | | | 5.000 | | | | 11/01/2023 | | | Aa2 | | | 350,000 | | | | 400,239 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 07/01/2021 | | | Aa2 | | | 175,000 | | | | 186,162 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2023 | | | Aa2 | | | 110,000 | | | | 114,414 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2024 | | | Aa2 | | | 80,000 | | | | 85,714 | |
Putnam County TN | | | 4.000 | | | | 04/01/2025 | | | Aa2 | | | 300,000 | | | | 331,338 | |
Unicoi County TN Refunding | | | 5.250 | | | | 04/01/2019 | | | A1 | | | 105,000 | | | | 107,856 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,639,630 | |
| SCHOOL IMPROVEMENT BONDS | |
| 13.48% of Net Assets | |
Gibson County Special School District | | | 5.000 | | | | 04/01/2021 | | | AA* | | | 250,000 | | | | 270,493 | |
Kingsport TN General Obligation Unlimited | | | 4.000 | | | | 09/01/2028 | | | Aa2 | | | 100,000 | | | | 107,519 | |
Lincoln County TN | | | 5.250 | | | | 04/01/2019 | | | Aa3 | | | 200,000 | | | | 205,548 | |
Rhea County TN | | | 4.000 | | | | 04/01/2025 | | | A1 | | | 250,000 | | | | 263,908 | |
Robertson County TN School and Public Improvement | | | 4.000 | | | | 06/01/2019 | | | AA* | | | 100,000 | | | | 102,243 | |
Sumner County TN | | | 5.000 | | | | 12/01/2025 | | | AA+* | | | 100,000 | | | | 115,839 | |
White County TN | | | 4.000 | | | | 06/01/2027 | | | AA-* | | | 260,000 | | | | 282,575 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,348,125 | |
| PREREFUNDED BONDS | |
| 11.48% of Net Assets | |
Blount County TN Public Building Authority | | | 4.000 | | | | 06/01/2020 | | | Aa2 | | | 150,000 | | | | 153,336 | |
Blount County TN Public Building Authority | | | 5.000 | | | | 06/01/2021 | | | Aa2 | | | 175,000 | | | | 180,637 | |
Columbia TN Electric System Revenue | | | 5.000 | | | | 09/01/2021 | | | Aa3 | | | 165,000 | | | | 166,003 | |
Memphis TN Center City Revenue Finance Corporation | | | 5.250 | | | | 11/01/2025 | | | Aa3 | | | 100,000 | | | | 110,854 | |
The accompanying notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
Memphis TN General Improvement | | | 5.000 | % | | | 04/01/2022 | | | Aa2 | | $ | 185,000 | | | $ | 189,644 | |
Memphis TN General Obligation | | | 5.000 | | | | 05/01/2020 | | | Aa2 | | | 175,000 | | | | 179,979 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2023 | | | NR | | | 140,000 | | | | 146,069 | |
Metropolitan Government Nashville & Davidson County TN | | | 4.000 | | | | 07/01/2024 | | | NR | | | 20,000 | | | | 21,524 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,148,046 | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 9.88% of Net Assets | |
Franklin County TN Health & Educational Facilities Board** | | | 4.000 | | | | 09/01/2019 | | | A+* | | | 350,000 | | | | 359,338 | |
Franklin County TN Health & Educational Facilities Board | | | 4.000 | | | | 09/01/2024 | | | A+* | | | 135,000 | | | | 143,027 | |
Shelby County TN Health Educational & Housing Facilities Rhodes College | | | 5.000 | | | | 08/01/2022 | | | A1 | | | 120,000 | | | | 133,266 | |
Shelby County TN Health Educational & Housing Facilities Rhodes College | | | 4.000 | | | | 08/01/2025 | | | A1 | | | 100,000 | | | | 109,619 | |
Shelby County TN Health Educational & Housing Facilities Rhodes College | | | 4.000 | | | | 08/01/2027 | | | A1 | | | 225,000 | | | | 242,998 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 988,248 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 3.34% of Net Assets | |
Gallatin County Capital Outlay Notes | | | 4.625 | | | | 01/01/2019 | | | AA+* | | | 100,000 | | | | 101,548 | |
Metropolitan Government Nashville & Davidson County TN | | | 5.000 | | | | 07/01/2027 | | | Aa2 | | | 200,000 | | | | 232,926 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 334,474 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.72% of Net Assets | |
Shelby County TN Health Educational & Housing Facilities | | | 4.250 | | | | 09/01/2020 | | | BBB+* | | | 265,000 | | | | 271,869 | |
| | | | | | | | | | | | | | | | | | |
| AIRPORT REVENUE BONDS | |
| 1.08% of Net Assets | |
Metropolitan Nashville Airport Authority | | | 4.000 | | | | 07/01/2023 | | | A1 | | | 100,000 | | | | 107,847 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 95.90% of Net Assets (cost $9,599,413) (See (a) below for further explanation) | | | $ | 9,592,184 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 4.10% | | | | | | | | | | | | | | | | | 410,602 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 10,002,786 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $9,599,413 and net unrealized depreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 49,308 | |
| | Unrealized depreciation | | | (56,537 | ) |
| | | | | | |
| | Net unrealized depreciation | | $ | (7,229 | ) |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 9,592,184 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 9,592,184 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
41
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $9,599,413) | | | $ | 9,592,184 | |
Cash | | | | | | | 316,342 | |
Interest receivable | | | | | | | 114,250 | |
| | | | | | | | |
Total assets | | | | | | | 10,022,776 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 3,103 | | | | | |
Fund shares redeemed | | | 2,220 | | | | | |
Investment advisory fee | | | 2,025 | | | | | |
Transfer agent fee | | | 1,330 | | | | | |
Professional fees | | | 2,286 | | | | | |
Custody expense | | | 1,952 | | | | | |
Pricing fees | | | 1,624 | | | | | |
Printing expense | | | 1,316 | | | | | |
Trustees fees | | | 52 | | | | | |
Accrued expenses | | | 4,082 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 19,990 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 10,240,683 | |
Accumulated net realized loss on investment transactions | | | | (230,668 | ) |
Net unrealized depreciation in value of investments | | | | (7,229 | ) |
| | | | | | | | |
Net assets at value | | | | | | $ | 10,002,786 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(950,661 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.52 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 223,304 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 50,071 | |
Transfer agent fee | | | 15,021 | |
Professional fees | | | 9,239 | |
Custodian expense | | | 7,707 | |
Registration expense | | | 6,212 | |
Pricing expense | | | 5,001 | |
Trustees fees | | | 1,150 | |
Other expenses | | | 3,379 | |
| | | | |
Total expenses | | | 97,780 | |
Fees waived by Adviser (Note 2) | | | (27,258 | ) |
Custodian expense reduction | | | (251 | ) |
| | | | |
Net expenses | | | 70,271 | |
| | | | |
Net investment income | | | 153,033 | |
| | | | |
Realized and unrealized loss on investments: | | | | |
Net realized loss | | | (2,248 | ) |
Net change in unrealized appreciation/depreciation | | | (163,422 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (165,670 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (12,637 | ) |
| | | | |
The accompanying notes 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, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 153,033 | | | $ | 176,516 | |
Net realized loss on investments | | | (2,248 | ) | | | (716 | ) |
Net change in unrealized appreciation/depreciation | | | (163,422 | ) | | | (238,149 | ) |
| | | | | | | | |
Net decrease in net assets resulting from operations | | | (12,637 | ) | | | (62,349 | ) |
Distributions from net investment income (Note 6) | | | (153,033 | ) | | | (176,516 | ) |
Net Fund share transactions (Note 4) | | | (330,072 | ) | | | (603,058 | ) |
| | | | | | | | |
Total decrease | | | (495,742 | ) | | | (841,923 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 10,498,528 | | | | 11,340,451 | |
| | | | | | | | |
End of year | | $ | 10,002,786 | | | $ | 10,498,528 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $10.70 | | | | $10.93 | | | | $10.74 | | | | $10.81 | | | | $10.75 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.16 | | | | 0.17 | | | | 0.16 | | | | 0.18 | | | | 0.19 | |
Net gains/(losses) on securities both realized and unrealized | | | (0.18 | ) | | | (0.23 | ) | | | 0.19 | | | | (0.07 | ) | | | 0.06 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.02 | ) | | | (0.06 | ) | | | 0.35 | | | | 0.11 | | | | 0.25 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.16 | ) | | | (0.17 | ) | | | (0.16 | ) | | | (0.18 | ) | | | (0.19 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $10.52 | | | | $10.70 | | | | $10.93 | | | | $10.74 | | | | $10.81 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | (0.17)% | | | | (0.54)% | | | | 3.28% | | | | 0.99% | | | | 2.36% | |
Net assets, end of year (in thousands) | | | $10,003 | | | | $10,499 | | | | $11,340 | | | | $11,033 | | | | $10,785 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.75% | | | | 0.86% | | | | 0.85% | | | | 0.86% | |
Ratio of gross expenses to average net assets | | | 0.98% | | | | 0.88% | | | | 0.86% | | | | 0.85% | | | | 0.86% | |
Ratio of net investment income to average net assets | | | 1.53% | | | | 1.59% | | | | 1.47% | | | | 1.64% | | | | 1.78% | |
Portfolio turnover | | | 22.75% | | | | 10.95% | | | | 7.37% | | | | 14.32% | | | | 11.38% | |
| (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 notes 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
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| FEDERAL FARM CREDIT BANK | |
62.39% of Net Assets | |
Federal Farm Credit Bank | | | 5.050 | % | | | 12/21/2021 | | | Aaa | | $ | 370,000 | | | $ | 397,978 | |
Federal Farm Credit Bank** | | | 5.250 | | | | 05/10/2022 | | | Aaa | | | 2,000,000 | | | | 2,181,404 | |
Federal Farm Credit Bank** | | | 5.840 | | | | 07/20/2022 | | | Aaa | | | 2,650,000 | | | | 2,959,692 | |
Federal Farm Credit Bank** | | | 5.250 | | | | 10/25/2022 | | | Aaa | | | 1,500,000 | | | | 1,648,830 | |
Federal Farm Credit Bank | | | 5.125 | | | | 11/28/2022 | | | Aaa | | | 2,000,000 | | | | 2,191,432 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 9,379,336 | |
| FEDERAL HOME LOAN BANK | |
| 34.77% of Net Assets | |
Federal Home Loan Bank | | | 5.000 | | | | 12/10/2021 | | | Aaa | | | 500,000 | | | | 536,091 | |
Federal Home Loan Bank | | | 5.750 | | | | 06/10/2022 | | | Aaa | | | 2,000,000 | | | | 2,223,572 | |
Federal Home Loan Bank | | | 5.365 | | | | 09/09/2024 | | | Aaa | | | 1,750,000 | | | | 1,983,285 | |
Federal Home Loan Bank | | | 2.970 | | | | 08/02/2027 | | | Aaa | | | 500,000 | | | | 484,398 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 5,227,346 | |
| FEDERAL NATIONAL MORTGAGE ASSOCIATION | |
| 0.71% of Net Assets | |
Federal National Mortgage Association | | | 8.100 | | | | 08/12/2019 | | | Aaa | | | 100,000 | | | | 106,162 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 97.87% of Net Assets (cost $14,451,168) (See (a) below for further explanation) | | | $ | 14,712,844 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 2.13% | | | | | | | | | | | | | | | | | 320,314 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 15,033,158 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $14,451,168 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 276,473 | |
| | Unrealized depreciation | | | (14,797 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 261,676 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | $ | 14,712,844 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 14,712,844 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
44
INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $14,451,168) | | | | | | $ | 14,712,844 | |
Cash | | | | | | | 185,318 | |
Interest receivable | | | | | | | 154,831 | |
| | | | | | | | |
Total assets | | | | | | | 15,052,993 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 6,224 | | | | | |
Fund shares redeemed | | | 2,153 | | | | | |
Investment advisory fee | | | 2,474 | | | | | |
Transfer agent fee | | | 4,286 | | | | | |
Trustee fee | | | 746 | | | | | |
Accrued expenses | | | 3,952 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 19,835 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 14,924,490 | |
Accumulated net realized loss on investment transactions | | | | | | | (153,008 | ) |
Net unrealized appreciation in value of investments | | | | | | | 261,676 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 15,033,158 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share
(1,522,530 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 9.87 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 487,282 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 31,060 | |
Transfer agent fee | | | 23,295 | |
Custodian expense | | | 9,360 | |
Compliance fees | | | 6,820 | |
Pricing fees | | | 5,001 | |
Registration expense | | | 4,998 | |
Professional fees | | | 3,924 | |
Trustee fees | | | 1,767 | |
Other expenses | | | 8,573 | |
| | | | |
Total expenses | | | 94,798 | |
Custodian expense reduction | | | (304 | ) |
| | | | |
Net expenses | | | 94,494 | |
| | | | |
Net investment income | | | 392,788 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 6,059 | |
Net change in unrealized appreciation/depreciation | | | (551,580 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (545,521 | ) |
| | | | |
Net decrease in net assets resulting from operations | | $ | (152,733 | ) |
| | | | |
The accompanying notes 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, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 392,788 | | | $ | 405,344 | |
Net realized gain on investments | | | 6,059 | | | | 31,817 | |
Net change in unrealized appreciation/depreciation | | | (551,580 | ) | | | (778,271 | ) |
| | | | | | | | |
Net decrease in net assets resulting from operations | | | (152,733 | ) | | | (341,110 | ) |
Distributions from net investment income (Note 6) | | | (392,788 | ) | | | (405,344 | ) |
Net Fund share transactions (Note 4) | | | (27,766 | ) | | | (1,123,583 | ) |
| | | | | | | | |
Total decrease | | | (573,287 | ) | | | (1,870,037 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 15,606,445 | | | | 17,476,482 | |
| | | | | | | | |
End of year | | $ | 15,033,158 | | | $ | 15,606,445 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of year | | | $10.23 | | | | $10.70 | | | | $10.29 | | | | $10.25 | | | | $10.05 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.25 | | | | 0.26 | | | | 0.26 | | | | 0.26 | | | | 0.28 | |
Net gains/(losses) on securities | | | (0.36 | ) | | | (0.47 | ) | | | 0.41 | | | | 0.04 | | | | 0.20 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.11 | ) | | | (0.21 | ) | | | 0.67 | | | | 0.30 | | | | 0.48 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.25 | ) | | | (0.26 | ) | | | (0.26 | ) | | | (0.26 | ) | | | (0.28 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of year | | | $9.87 | | | | $10.23 | | | | $10.70 | | | | $10.29 | | | | $10.25 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | (1.05)% | | | | (1.99)% | | | | 6.57% | | | | 2.96% | | | | 4.89% | |
Net assets, end of year (in thousands) | | | $15,033 | | �� | | $15,606 | | | | $17,476 | | | | $18,728 | | | | $21,224 | |
Ratio of net expenses to average net assets (a) | | | 0.61% | | | | 0.58% | | | | 0.53% | | | | 0.51% | | | | 0.56% | |
Ratio of gross expenses to average net assets | | | 0.61% | | | | 0.58% | | | | 0.53% | | | | 0.51% | | | | 0.56% | |
Ratio of net investment income to average net assets | | | 2.53% | | | | 2.49% | | | | 2.47% | | | | 2.54% | | | | 2.81% | |
Portfolio turnover | | | 1.99% | | | | 0.00% | | | | 0.00% | | | | 2.44% | | | | 15.33% | |
| (a) | | Percentages are after expenses waived by Adviser and Custodian reduction. No recovery of these waivers and reductions will be sought. |
The accompanying notes are an integral part of the financial statements.
46
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| PUBLIC FACILITIES BONDS | |
| 32.73% of Net Assets | |
Buncombe County NC Limited Obligation Build America | | | 6.800 | % | | | 06/01/2030 | | | Aa1 | | $ | 250,000 | | | $ | 266,015 | |
Decatur GA Urban Redevelopment Agency Revenue Build America | | | 6.920 | | | | 01/01/2038 | | | Aa1 | | | 150,000 | | | | 162,279 | |
Franklin County OH Convention Facilities Authority | | | 6.640 | | | | 12/01/2042 | | | Aa2 | | | 240,000 | | | | 326,628 | |
Franklin County OH Convention Facilities Build America | | | 6.540 | | | | 12/01/2036 | | | Aa2 | | | 155,000 | | | | 200,257 | |
Grand Junction CO Certificates of Participation Build America | | | 7.500 | | | | 12/01/2030 | | | A+* | | | 425,000 | | | | 459,816 | |
Metropolitan Government Nashville & Davidson County TN | | | 7.431 | | | | 07/01/2043 | | | A1 | | | 190,000 | | | | 259,574 | |
Pennington County SD Certificates of Participation Build America | | | 7.200 | | | | 06/01/2037 | | | Aa1 | | | 750,000 | | | | 819,728 | |
Pompano Beach FL Certificates of Participation | | | 5.579 | | | | 01/01/2040 | | | A1 | | | 225,000 | | | | 236,104 | |
Rhode Island Convention Center | | | 6.060 | | | | 05/15/2035 | | | Aa3 | | | 70,000 | | | | 81,540 | |
Sarasota County FL Capital Improvement Revenue Build America | | | 7.016 | | | | 10/01/2040 | | | AA+* | | | 710,000 | | | | 773,154 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 3,585,095 | |
| MUNICIPAL UTILITY REVENUE BONDS | |
| 26.30% of Net Assets | |
Altoona PA Water Authority Sewer Revenue Build America | | | 7.064 | | | | 12/01/2040 | | | AA* | | | 425,000 | | | | 456,284 | |
Davie FL Water & Sewer Revenue Build America | | | 6.849 | | | | 10/01/2040 | | | Aa3 | | | 40,000 | | | | 43,095 | |
FL State Utility Revenue | | | 6.548 | | | | 10/01/2040 | | | A2 | | | 60,000 | | | | 64,497 | |
Heber UT Light & Power Build America | | | 7.000 | | | | 12/15/2030 | | | A2 | | | 375,000 | | | | 410,325 | |
Metropolitan Government Nashville & Davidson County TN Recovery Zone | | | 6.693 | | | | 07/01/2041 | | | Aa3 | | | 200,000 | | | | 277,508 | |
OK State Municipal Power Authority | | | 6.310 | | | | 01/01/2040 | | | A2 | | | 95,000 | | | | 113,822 | |
Pigeon Forge TN Build America Recovery Zone | | | 7.125 | | | | 06/01/2040 | | | AA* | | | 300,000 | | | | 366,744 | |
Sedalia MO Certificates of Participation Build America** | | | 7.300 | | | | 06/01/2035 | | | AA* | | | 500,000 | | | | 527,935 | |
West Knox Utilities District Knox County TN Water and Sewer** | | | 6.900 | | | | 06/01/2040 | | | AA+* | | | 400,000 | | | | 453,660 | |
Williamsport PA Municipal Water Authority Build America | | | 6.100 | | | | 01/01/2040 | | | A2 | | | 60,000 | | | | 62,510 | |
York County VA Sewer Revenue Build America | | | 6.607 | | | | 06/01/2040 | | | Aa3 | | | 100,000 | | | | 105,705 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2,882,085 | |
| SCHOOL IMPROVEMENT BONDS | |
| 14.03% of Net Assets | |
Armstrong School District PA Build America** | | | 7.000 | | | | 03/15/2041 | | | AA* | | | 750,000 | | | | 817,890 | |
CO State Building Excellent Schools Today Certificates of Participation** | | | 7.017 | | | | 03/15/2031 | | | Aa2 | | | 400,000 | | | | 438,992 | |
Jefferson County TN Build America Bonds | | | 6.625 | | | | 06/01/2040 | | | Aa3 | | | 250,000 | | | | 280,353 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,537,235 | |
| MISCELLANEOUS PUBLIC IMPROVEMENT BONDS | |
| 10.97% of Net Assets | |
KY State Property & Buildings Build America** | | | 5.921 | | | | 11/01/2030 | | | A1 | | | 250,000 | | | | 285,122 | |
Leeds AL Taxable Warrants | | | 4.125 | | | | 05/01/2039 | | | AA* | | | 125,000 | | | | 125,130 | |
Lincoln AL Build America Recovery Zone | | | 6.800 | | | | 06/01/2040 | | | AA* | | | 425,000 | | | | 455,596 | |
Scottsboro AL Build America Bonds | | | 6.400 | | | | 11/01/2040 | | | A2 | | | 250,000 | | | | 267,410 | |
Utah County UT Excise Tax Revenue | | | 7.130 | | | | 12/01/2039 | | | AA-* | | | 65,000 | | | | 68,522 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 1,201,780 | |
| HOSPITAL AND HEALTHCARE REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 4.58% of Net Assets | |
Midland County TX Hospital District | | | 6.440 | | | | 05/15/2039 | | | Aa3 | | | 185,000 | | | | 231,217 | |
University NC Chapel Hill Hospital Revenue Build America | | | 6.329 | | | | 02/01/2031 | | | Aa3 | | | 250,000 | | | | 270,770 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 501,987 | |
| TURNPIKES/TOLLROAD/HIGHWAY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.84% of Net Assets | |
FL State Turnpike Authority Turnpike Revenue Build America | | | 6.800 | | | | 07/01/2039 | | | Aa2 | | | 300,000 | | | | 311,694 | |
| | | | | | | | | | | | | | | | | | |
| MARINA/PORT AUTHORITY REVENUE BONDS | | | | | | | | | | | | | | | | | | |
| 2.42% of Net Assets | |
Miami Dade County FL Special Obligation | | | 7.500 | | | | 04/01/2040 | | | Aa3 | | | 200,000 | | | | 265,182 | |
| | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of the financial statements.
47
DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
Taxable Municipal Bonds
June 30, 2018
| | | | | | | | | | | | | | | | | | |
| Bond Description | | Coupon | | | Maturity
Date | | | Rating# | | Par Value | | | Fair Value | |
| UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS | |
| 1.22% of Net Assets | |
Mesa State College CO Auxiliary Facilities Build America | | | 6.746 | % | | | 05/15/2042 | | | Aa2 | | $ | 100,000 | | | $ | 133,730 | |
| | | | | | | | | | | | | | | | | | |
| AIRPORT REVENUE BONDS | |
| 1.08% of Net Assets | |
Tri-Cities TN Airport Authority Revenue | | | 3.625 | | | | 05/01/2038 | | | Aa2 | | | 125,000 | | | | 118,454 | |
| | | | | | | | | | | | | | | | | | |
Total Investments 96.17% of Net Assets (cost $9,665,699) (See (a) below for further explanation) | | | $ | 10,537,242 | |
| | | | | | | | | | | | | | | | | | |
Other assets in excess of liabilities 3.83% | | | | | | | | | | | | | | | | | 419,924 | |
| | | | | | | | | | | | | | | | | | |
Net Assets 100% | | | | | | | | | | | | | | | | $ | 10,957,166 | |
| | | | | | | | | | | | | | | | | | |
| | # | | Ratings by Moody’s Investors Service, Inc. unless noted otherwise. |
| | | | Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm. |
| | | | All ratings are as of the date indicated and do not reflect subsequent changes. |
| | * | | Rated by S & P Global Ratings |
| | @ | | Rated by Fitch Ratings, Inc. |
| | ** | | Security is segregated — see footnote 1(D) |
| (a) | | Cost for federal income tax purposes is $9,665,699 and net unrealized appreciation of investments is as follows: |
| | | | | | |
| | Unrealized appreciation | | $ | 879,456 | |
| | Unrealized depreciation | | | (7,913 | ) |
| | | | | | |
| | Net unrealized appreciation | | $ | 871,543 | |
| | | | | | |
Other Information
The following is a summary of the inputs used, as of June 30, 2018, 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 | | | 10,537,242 | |
Level 3 | | Significant Unobservable Inputs | | | — | |
| | | | | | |
| | | | $ | 10,537,242 | |
| | | | | | |
The accompanying notes are an integral part of the financial statements.
48
TAXABLE MUNICIPAL BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018
| | | | | | | | |
ASSETS: | | | | | | | | |
Investments in securities, at fair value (Cost: $9,665,699) | | | | | | $ | 10,537,242 | |
Cash | | | | | | | 318,601 | |
Interest receivable | | | | | | | 123,657 | |
| | | | | | | | |
Total assets | | | | | | | 10,979,500 | |
LIABILITIES: | | | | | | | | |
Payable for: | | | | | | | | |
Distributions to shareholders | | | 13,234 | | | | | |
Fund shares redeemed | | | 117 | | | | | |
Investment advisory fee | | | 2,320 | | | | | |
Transfer agent fee | | | 1,295 | | | | | |
Professional fees | | | 1,265 | | | | | |
Trustees fees | | | 824 | | | | | |
Accrued expenses | | | 3,279 | | | | | |
| | | | | | | | |
Total liabilities | | | | | | | 22,334 | |
| | | | | | | | |
NET ASSETS: | | | | | | | | |
Capital | | | | | | | 10,121,035 | |
Accumulated net realized loss on investment transactions | | | | | | | (35,412 | ) |
Net unrealized appreciation in value of investments | | | | | | | 871,543 | |
| | | | | | | | |
Net assets at value | | | | | | $ | 10,957,166 | |
| | | | | | | | |
NET ASSET VALUE, offering price and redemption price per share (1,070,522 shares outstanding; unlimited number of shares authorized; no par value) | | | | | | $ | 10.24 | |
| | | | | | | | |
STATEMENT OF OPERATIONS
For the year ended June 30, 2018
| | | | |
Net investment income: | | | | |
Interest income | | $ | 616,982 | |
| | | | |
Expenses: | | | | |
Investment advisory fee | | | 54,596 | |
Transfer agent fee | | | 16,379 | |
Custodian expense | | | 8,241 | |
Compliance fee | | | 7,177 | |
Professional fees | | | 4,749 | |
Registration expense | | | 4,738 | |
Trustees fees | | | 1,236 | |
Other expenses | | | 3,877 | |
| | | | |
Total expenses | | | 100,993 | |
Fees waived by Adviser (Note 2) | | | (24,214 | ) |
Custodian expense reduction | | | (268 | ) |
| | | | |
Net expenses | | | 76,511 | |
| | | | |
Net investment income | | | 540,471 | |
| | | | |
Realized and unrealized gain/(loss) on investments: | | | | |
Net realized gain | | | 4,037 | |
Net change in unrealized appreciation/depreciation | | | (261,258 | ) |
| | | | |
Net realized and unrealized loss on investments | | | (257,221 | ) |
| | | | |
Net increase in net assets resulting from operations | | $ | 283,250 | |
| | | | |
The accompanying notes 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, 2018 and 2017
| | | | | | | | |
| | | 2018 | | | 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 540,471 | | | $ | 544,940 | |
Net realized gain/(loss) on investments | | | 4,037 | | | | (4,449 | ) |
Net change in unrealized appreciation/depreciation | | | (261,258 | ) | | | (462,915 | ) |
| | | | | | | | |
Net increase in net assets resulting from operations | | | 283,250 | | | | 77,576 | |
Distributions from net investment income | | | (540,471 | ) | | | (544,940 | ) |
Distributions from capital gains | | | — | | | | (74,266 | ) |
Net Fund share transactions (Note 4) | | | 177,432 | | | | (601,874 | ) |
| | | | | | | | |
Total decrease | | | (79,789 | ) | | | (1,143,504 | ) |
Net assets: | | | | | | | | |
Beginning of year | | | 11,036,955 | | | | 12,180,459 | |
| | | | | | | | |
End of year | | $ | 10,957,166 | | | $ | 11,036,955 | |
| | | | | | | | |
Accumulated Net Investment Income | | $ | — | | | $ | — | |
| | | | | | | | |
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| Selected data for a share outstanding: | | For the years ended June 30, | |
| | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |
Net asset value, beginning of period | | | $10.48 | | | | $10.98 | | | | $10.53 | | | | $10.57 | | | | $10.45 | |
| | | | | | | | | | | | | | | | | | | | |
Income from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | 0.51 | | | | 0.47 | | | | 0.50 | | | | 0.52 | | | | 0.51 | |
Net gains/(losses) on securities | | | (0.24 | ) | | | (0.43 | ) | | | 0.45 | | | | (0.04 | ) | | | 0.18 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.27 | | | | 0.04 | | | | 0.95 | | | | 0.48 | | | | 0.69 | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net investment income | | | (0.51 | ) | | | (0.47 | ) | | | (0.50 | ) | | | (0.52 | ) | | | (0.51 | ) |
Distributions from capital gains | | | 0.00 | | | | (0.07 | ) | | | 0.00 | | | | 0.00 | | | | (0.06 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total distributions | | | (0.51 | ) | | | (0.54 | ) | | | (0.50 | ) | | | (0.52 | ) | | | (0.57 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.24 | | | | $10.48 | | | | $10.98 | | | | $10.53 | | | | $10.57 | |
| | | | | | | | | | | | | | | | | | | | |
Total return | | | 2.66% | | | | 0.78% | | | | 9.29% | | | | 4.49% | | | | 6.90% | |
Net assets, end of period (in thousands) | | | $10,957 | | | | $11,037 | | | | $12,180 | | | | $11,303 | | | | $12,369 | |
Ratio of net expenses to average net assets (a) | | | 0.70% | | | | 0.62% | | | | 0.86% | | | | 0.83% | | | | 0.89% | |
Ratio of gross expenses to average net assets | | | 0.92% | | | | 0.74% | | | | 0.86% | | | | 0.83% | | | | 0.89% | |
Ratio of net investment income to average net assets | | | 4.95% | | | | 4.79% | | | | 4.71% | | | | 4.80% | | | | 4.95% | |
Portfolio turnover | | | 4.31% | | | | 11.04% | | | | 10.55% | | | | 8.45% | | | | 9.71% | |
| (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 notes are an integral part of the financial statements.
50
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 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 (“U.S. GAAP”). The Trust operates as an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services — Investment Companies including FASB Accounting Standard Update ASU 2013-08.
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 (the “Board”). 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. The Board has adopted policies and procedures for the valuation of the Trust’s investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Valuation Committee, consisting of all of the Trustees, has the day-to-day responsibility for implementing the Valuation Procedure including, under most circumstances, the responsibility for determining the fair value of the Trust’s securities or other assets. The Valuation Committee convenes as needed and reviews the valuation of all assets which have been fair valued for reasonableness. Shares of open-end mutual funds in which the Funds invest, if any, are valued at their respective net asset values as reported by the underlying funds.
The Funds have adopted the provisions of FASB 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
51
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 1. | | Organization and Significant Accounting Policies, continued |
unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under ASC 820 are as follows:
| | |
| Level 1: | | Unadjusted quoted prices in active markets for identical securities. |
| Level 2: | | Prices determined using other significant observable inputs. Observable inputs, either directly or indirectly, 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 Funds’ own assumptions about the factors market participants would use in pricing a security, and would be based on the best information available. |
The aggregate value by input level, as of June 30, 2018, 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 ended June 30, 2018.
| | B. | Investment Transactions |
Security transactions are accounted for on a trade date basis. Realized 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. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method.
| | 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. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
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, 2018. Therefore, no federal income tax provision is required. Management has analyzed the Funds’ tax positions for all open tax years and all major jurisdictions, and has concluded that as of June 30, 2018, no provision for income taxes is required in the financial statements. Therefore, no additional tax expense, including any interest and penalties, was recorded in the current year and no adjustments were made to prior periods. To the extent the Funds recognize interest and penalties, they are included in interest expense and other expenses, respectively, in the Statement of Operations. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last three tax year ends and the interim tax period since then).
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. Any net realized long term capital gains are distributed annually to shareholders. 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, which may differ from U.S. GAAP.
52
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 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 these 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 June 30, 2018 have been evaluated by the Funds’ adviser for potential impact to this report through the date the financial statements were issued. The Funds’ adviser has determined that there were no material subsequent events that require recognition or disclosure in 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, 2018, fees voluntarily waived by the Adviser were as follows:
| | | | |
| | | Fees waived by Adviser | |
Alabama Tax-Free Income Series | | $ | 31,422 | |
Kentucky Tax-Free Short-to-Medium Series | | | 31,030 | |
Mississippi Tax-Free Income Series | | | 25,463 | |
North Carolina Tax-Free Income Series | | | 8,281 | |
North Carolina Tax-Free Short-to-Medium Series | | | 33,973 | |
Tennessee Tax-Free Income Series | | | 8,460 | |
Tennessee Tax-Free Short-to-Medium Series | | | 27,258 | |
Taxable Municipal Bond Series | | | 24,214 | |
53
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 2. | | Investment Advisory Fee and Other Transactions with Affiliates, continued |
In addition, each Fund has entered into a Shareholder Service Agreement with Dupree & Company, Inc., the Funds’ transfer agent. The agreement provides for a fee computed on the average daily net asset value at the annual rate of 0.15% of 1% on the first $20,000,000 of average net assets and 0.12% of 1% of all amounts in excess of $20,000,000 of average net assets for each Fund.
For the year ended June 30, 2018, each member of the Board of Trustees received a fee of $28,000 per year plus $2,000 for each Audit Committee meeting attended. In addition, all Trustees are reimbursed by the Funds for all reasonable out-of-pocket expenses incurred by them in performing their duties. The fees are allocated on an average monthly net asset basis for each Fund. The Trustees fees for each Fund are disclosed on the Funds’ Statement of Operations.
| 3. | | Purchases and Sales of Securities |
During the year ended June 30, 2018, 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 Fund were as follows:
| | | | | | | | |
| | | Purchases | | | Sales/Calls | |
Alabama Tax-Free Income Series | | $ | 3,560,502 | | | $ | 4,432,361 | |
Kentucky Tax-Free Income Series | | | 162,901,668 | | | | 173,794,798 | |
Kentucky Tax-Free Short-to-Medium Series | | | 3,119,925 | | | | 10,197,002 | |
Mississippi Tax-Free Income Series | | | 849,572 | | | | 1,503,109 | |
North Carolina Tax-Free Income Series | | | 15,899,121 | | | | 21,044,457 | |
North Carolina Tax-Free Short-to-Medium Series | | | 5,950,856 | | | | 4,698,180 | |
Tennessee Tax-Free Income Series | | | 20,366,226 | | | | 17,303,722 | |
Tennessee Tax-Free Short-to-Medium Series | | | 2,235,519 | | | | 2,597,955 | |
Intermediate Government Bond Series | | | 499,125 | | | | 302,153 | |
Taxable Municipal Bond Series | | | 626,589 | | | | 452,742 | |
As of June 30, 2018 and June 30, 2017, 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, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 203,698 | | | $ | 2,490,882 | | | | 211,677 | | | $ | 2,648,793 | |
Shares reinvested | | | 28,412 | | | | 346,706 | | | | 32,007 | | | | 394,549 | |
Shares redeemed | | | (302,328 | ) | | | (3,687,070 | ) | | | (383,910 | ) | | | (4,718,605 | ) |
Net decrease | | | (70,218 | ) | | $ | (849,482 | ) | | | (140,226 | ) | | $ | (1,675,263 | ) |
| | | | | | | | | | | | | | | | |
| KENTUCKY TAX-FREE INCOME SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 11,068,186 | | | $ | 85,263,618 | | | | 13,833,178 | | | $ | 108,064,745 | |
Shares reinvested | | | 2,186,355 | | | | 16,796,593 | | | | 2,206,512 | | | | 17,150,787 | |
Shares redeemed | | | (15,389,728 | ) | | | (118,266,795 | ) | | | (15,318,951 | ) | | | (119,301,302 | ) |
Net increase/(decrease) | | | (2,135,187 | ) | | $ | (16,206,584 | ) | | | 720,739 | | | $ | 5,914,230 | |
| | | | | | | | | | | | | | | | |
54
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 4. | | Capital Shares, continued |
| | | | | | | | | | | | | | | | |
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 1,626,804 | | | $ | 8,586,503 | | | | 4,743,042 | | | $ | 25,162,542 | |
Shares reinvested | | | 129,950 | | | | 684,462 | | | | 137,343 | | | | 732,089 | |
Shares redeemed | | | (3,279,554 | ) | | | (17,294,982 | ) | | | (6,971,396 | ) | | | (36,997,145 | ) |
Net decrease | | | (1,522,800 | ) | | $ | (8,024,017 | ) | | | (2,091,011 | ) | | $ | (11,102,514 | ) |
| | | | | | | | | | | | | | | | |
| MISSISSIPPI TAX-FREE INCOME SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 60,629 | | | $ | 732,057 | | | | 256,134 | | | $ | 3,117,575 | |
Shares reinvested | | | 9,811 | | | | 118,270 | | | | 9,232 | | | | 111,987 | |
Shares redeemed | | | (121,842 | ) | | | (1,474,615 | ) | | | (156,182 | ) | | | (1,896,285 | ) |
Net increase/(decrease) | | | (51,402 | ) | | $ | (624,288 | ) | | | 109,184 | | | $ | 1,333,277 | |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE INCOME SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 1,494,438 | | | $ | 17,165,926 | | | | 2,229,529 | | | $ | 25,899,779 | |
Shares reinvested | | | 191,938 | | | | 2,200,493 | | | | 220,270 | | | | 2,540,985 | |
Shares redeemed | | | (2,231,268 | ) | | | (25,541,011 | ) | | | (2,852,231 | ) | | | (32,629,726 | ) |
Net decrease | | | (544,892 | ) | | $ | (6,174,592 | ) | | | (402,432 | ) | | $ | (4,188,962 | ) |
| | | | | | | | | | | | | | | | |
NORTH CAROLINA TAX-FREE
SHORT-TO-MEDIUM SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 423,974 | | | $ | 4,549,033 | | | | 408,759 | | | $ | 4,423,829 | |
Shares reinvested | | | 22,728 | | | | 244,094 | | | | 23,993 | | | | 260,185 | |
Shares redeemed | | | (375,401 | ) | | | (4,040,515 | ) | | | (685,824 | ) | | | (7,391,117 | ) |
Net increase/(decrease) | | | 71,301 | | | $ | 752,612 | | | | (253,072 | ) | | $ | (2,707,103 | ) |
| | | | | | | | | | | | | | | | |
| TENNESSEE TAX-FREE INCOME SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 1,244,483 | | | $ | 14,188,162 | | | | 1,098,763 | | | $ | 12,594,742 | |
Shares reinvested | | | 177,266 | | | | 2,014,239 | | | | 187,564 | | | | 2,150,826 | |
Shares redeemed | | | (1,268,235 | ) | | | (14,359,331 | ) | | | (1,647,646 | ) | | | (18,891,083 | ) |
Net increase/(decrease) | | | 153,514 | | | $ | 1,843,070 | | | | (361,319 | ) | | $ | (4,145,515 | ) |
| | | | | | | | | | | | | | | | |
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 80,706 | | | $ | 853,806 | | | | 139,038 | | | $ | 1,488,371 | |
Shares reinvested | | | 11,325 | | | | 120,143 | | | | 13,251 | | | | 142,143 | |
Shares redeemed | | | (122,644 | ) | | | (1,304,021 | ) | | | (208,786 | ) | | | (2,233,572 | ) |
Net decrease | | | (30,613 | ) | | $ | (330,072 | ) | | | (56,497 | ) | | $ | (603,058 | ) |
| | | | | | | | | | | | | | | | |
55
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 4. | | Capital Shares, continued |
| | | | | | | | | | | | | | | | |
| INTERMEDIATE GOVERNMENT BOND SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 192,308 | | | $ | 1,943,028 | | | | 81,769 | | | $ | 844,522 | |
Shares reinvested | | | 31,493 | | | | 316,610 | | | | 31,200 | | | | 323,505 | |
Shares redeemed | | | (227,258 | ) | | | (2,287,404 | ) | | | (220,899 | ) | | | (2,291,610 | ) |
Net decrease | | | (3,457 | ) | | $ | (27,766 | ) | | | (107,930 | ) | | $ | (1,123,583 | ) |
| | | | | | | | | | | | | | | | |
| TAXABLE MUNICIPAL BOND SERIES | | Year Ended June 30, 2018 | | | Year Ended June 30, 2017 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
Shares sold | | | 108,828 | | | $ | 1,127,845 | | | | 238,038 | | | $ | 2,532,827 | |
Shares reinvested | | | 36,890 | | | | 382,777 | | | | 40,541 | | | | 430,059 | |
Shares redeemed | | | (128,361 | ) | | | (1,333,190 | ) | | | (335,074 | ) | | | (3,564,760 | ) |
Net increase/(decrease) | | | 17,357 | | | $ | 177,432 | | | | (56,495 | ) | | $ | (601,874 | ) |
| 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.
At June 30, 2018, the Funds’ capital loss carry-forwards expire as follows:
| | | | | | | | | | | | |
| | | No Expiration | | | | |
| | | Short-term | | | Long-term | | | Total | |
Alabama Tax Free Income Series | | $ | 35,043 | | | $ | 28,829 | | | $ | 63,872 | |
Kentucky Tax-Free Short-to-Medium Series | | | 210,547 | | | | — | | | | 210,547 | |
North Carolina Tax-Free Income Series | | | 1,232,968 | | | | 112,215 | | | | 1,345,183 | |
North Carolina Tax-Free Short-to-Medium Series | | | 19,255 | | | | — | | | | 19,255 | |
Tennessee Tax-Free Income Series | | | 278,197 | | | | 3,280 | | | | 281,477 | |
Tennessee Tax-Free Short-to-Medium Series | | | — | | | | 230,668 | | | | 230,668 | |
Intermediate Government Bond Series | | | 120,261 | | | | 32,747 | | | | 153,008 | |
Taxable Municipal Bond Series | | | 35,412 | | | | | | | | 35,412 | |
During the year ended June 30, 2018, the following Funds utilized capital loss carry-forwards as follows:
| | | | |
| | | Amount | |
North Carolina Tax-Free Short-to-Medium Series | | $ | 4,174 | |
Intermediate Government Bond Series | | | 6,059 | |
During the year ended June 30, 2018, the following Funds had capital losses expire:
| | | | |
| | | Amount | |
Tennessee Tax-Free Income Series | | $ | 371,142 | |
56
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 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 Fund’s next taxable year. The following Funds incurred and will elect to defer net capital losses during the fiscal year 2018 as follows:
| | | | |
| | | Post October Losses | |
Mississippi Tax-Free Income Series | | $ | (3,807 | ) |
During the year ended June 30, 2018, as a result of permanent book to tax differences, the Funds incurred differences that affected undistributed (accumulated) net investment income (loss), accumulated net realized gain (loss) on investments and aggregate paid in capital by the amounts in the table below. The differences are due to expiration of capital loss carryforwards and sales of market discount bonds. Net assets were not affected by these reclassifications.
| | | | | | | | | | | | |
| | | Accumulated Net
Realized Gain/(Loss) | | | Paid In Capital | | | Accumulated Net
Investment
Income/(Loss) | |
Alabama Tax-Free Income Series | | $ | 181 | | | $ | — | | | $ | (181 | ) |
Kentucky Tax-Free Income Series | | | 48,307 | | | | — | | | | (48,307 | ) |
North Carolina Tax-Free Income Series | | | 1,933 | | | | — | | | | (1,933 | ) |
Tennessee Tax-Free Income Series | | | 371,142 | | | | (371,142 | ) | | | | |
The tax character of distributions paid for the years ended June 30, 2018 and 2017 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2018 | | | 2017 | |
| | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | | | Tax
Exempt
Income | | | Ordinary
Income | | | Long-Term
Capital
Gain | |
Alabama Tax-Free Income Series | | $ | 772,453 | | | $ | — | | | $ | — | | | $ | 839,451 | | | $ | — | | | $ | — | |
Kentucky Tax-Free Income Series | | | 29,267,208 | | | | — | | | | 173,173 | | | | 30,392,350 | | | | — | | | | 393,040 | |
Kentucky Tax-Free
Short-to-Medium Series | | | 1,191,167 | | | | — | | | | — | | | | 1,410,940 | | | | — | | | | — | |
Mississippi Tax-Free Income Series | | | 326,227 | | | | — | | | | 8,238 | | | | 336,322 | | | | — | | | | 4,362 | |
North Carolina Tax-Free Income Series | | | 3,636,670 | | | | — | | | | — | | | | 3,995,046 | | | | — | | | | — | |
North Carolina Tax-Free
Short-to-Medium Series | | | 328,323 | | | | — | | | | — | | | | 346,639 | | | | — | | | | — | |
Tennessee Tax-Free Income Series | | | 2,996,040 | | | | — | | | | — | | | | 3,107,543 | | | | — | | | | — | |
Tennessee Tax-Free
Short-to-Medium Series | | | 153,033 | | | | — | | | | — | | | | 176,516 | | | | — | | | | — | |
Intermediate Government Bond Series | | | — | | | | 392,788 | | | | — | | | | — | | | | 405,344 | | | | — | |
Taxable Municipal Bond Series | | | — | | | | 540,471 | | | | | | | | — | | | | 544,940 | | | | 74,266 | |
At June 30, 2018, the Funds’ 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 on
Investments | |
Alabama Tax-Free Income | | $ | — | | | $ | 102,846 | | | $ | — | | | $ | 458,331 | |
Kentucky Tax-Free Income | | | — | | | | 2,989,558 | | | | 1,608,795 | | | | 17,530,199 | |
Kentucky Tax-Free Short-to-Medium | | | — | | | | 37,698 | | | | — | | | | (3,904 | ) |
Mississippi Tax-Free Income | | | — | | | | 50,324 | | | | — | | | | 342,347 | |
North Carolina Tax-Free Income | | | — | | | | 339,682 | | | | — | | | | 2,007,837 | |
North Carolina Tax-Free Short-to-Medium | | | — | | | | 8,050 | | | | — | | | | (165,779 | ) |
Tennessee Tax-Free Income | | | — | | | | 266,698 | | | | — | | | | 2,151,655 | |
Tennessee Tax-Free Short-to-Medium | | | — | | | | 3,103 | | | | — | | | | (7,229 | ) |
Intermediate Government Bond | | | 6,224 | | | | — | | | | — | | | | 261,676 | |
Taxable Municipal Bond Series | | | 13,234 | | | | — | | | | — | | | | 871,543 | |
57
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
| 6. | | Federal Income Taxes, continued |
| | | | | | | | | | | | |
| | | Accumulated
Capital and
Other Losses | | | Other
Temporary
Differences | | | Total
Accumulated Earnings/(Losses) | |
Alabama Tax-Free Income | | $ | (63,872 | ) | | $ | (102,846 | ) | | $ | 394,459 | |
Kentucky Tax-Free Income | | | — | | | | (2,989,558 | ) | | | 19,138,994 | |
Kentucky Tax-Free Short-to-Medium | | | (210,547 | ) | | | (37,698 | ) | | | (214,451 | ) |
Mississippi Tax-Free Income | | | (3,807 | ) | | | (50,324 | ) | | | 338,540 | |
North Carolina Tax-Free Income | | | (1,345,183 | ) | | | (339,682 | ) | | | 662,654 | |
North Carolina Tax-Free Short-to-Medium | | | (19,255 | ) | | | (8,050 | ) | | | (185,034 | ) |
Tennessee Tax-Free Income | | | (281,477 | ) | | | (266,698 | ) | | | 1,870,178 | |
Tennessee Tax-Free Short-to-Medium | | | (230,668 | ) | | | (3,103 | ) | | | (237,897 | ) |
Intermediate Government Bond | | | (153,008 | ) | | | (6,224 | ) | | | 108,668 | |
Taxable Municipal Bond Series | | | (35,412 | ) | | | (13,234 | ) | | | 836,131 | |
| 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 believe the risk of loss is remote.
| 8. | | Line of Credit Agreement and Custodian Agreement |
Under the terms of an agreement with the Funds’ custodian, principal amounts up to 5% of a Fund’s net assets are available on a committed line of credit. The principal amounts borrowed are due on demand. The agreement expires on August 31, 2018, but may be renewed annually. Interest is payable based on the published prime rate of the bank. Securities with a minimum value of three times the loan proceeds will be assigned as collateral until the balance of the note and unpaid interest is paid in full and terminated.
At June 30, 2018, the Funds had an aggregate unused line of credit amount of $25,000,000. During the year ended June 30, 2018, the average interest rate on borrowings was 4.45% and the daily weighted average borrowings for each Fund with borrowings were as follows:
| | | | |
| | | Weighted
Average
Borrowings | |
Alabama Tax-Free Income Series | | $ | 652 | |
Kentucky Tax Free Income Series | | | 24,877 | |
Kentucky Tax-Free Short-to-Medium Series | | | 10,742 | |
Mississippi Tax-Free Income Series | | | 1,255 | |
North Carolina Tax-Free Income Series | | | 46,477 | |
North Carolina Tax-Free Short-to-Medium Series | | | 4,786 | |
Tennessee Tax-Free Income Series | | | 13,912 | |
Tennessee Short-to-Medium Tax-Free Series | | | 2,126 | |
Intermediate Government Bond Series | | | 26,403 | |
Taxable Municipal Bond Series | | | 1,167 | |
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 Fund’s expenses by the amount shown on the Statement of Operations as “Custodian expense reduction.”
58
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of
Dupree Mutual Funds
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of Dupree Mutual Funds (the “Trust”) (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 referred to as the “Funds”)), including the schedules of portfolio investments, as of June 30, 2018, 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, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds comprising Dupree Mutual Funds at June 30, 2018, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2018, by correspondence with the custodian and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Dupree Mutual Funds investment companies since 1997.
Cincinnati, Ohio
August 29, 2018
59
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2018
Trustee and officer information
The following table sets forth information as to the Trustees and officers:
| | | | | | | | | | |
| Name, Address and Age | | Position(s) Held
with Funds | | Term of Office and
Length of Time Served | | Principal Occupation(s)
During Past 5 Years | | Number of
Portfolios in
Fund Complex
Overseen by
Trustee | | Other
Director-ships
Held in Publicly
Traded Companies |
| Officers: | | | | | | | | | | |
Allen E. Grimes, III 125 South Mill Street Lexington, KY 40507 Age: 55 | | President | | Annual Term; 12 years of service as Executive Vice President, first term as President | | President, Dupree & Company, Inc. | | N/A | | N/A |
Michelle M. Dragoo 125 South Mill Street Lexington, KY 40507 Age: 57 | | Vice President, Secretary, Treasurer | | Annual Term; 20 years of service as Vice President, 18 years of service as Secretary, Treasurer | | Vice President, Secretary, Treasurer of Dupree & Company, Inc. | | N/A | | N/A |
Huston B. Combs 125 South Mill Street Lexington, KY 40507 Age: 41 | | Vice President | | First Term | | Dupree & Company, Inc. (2017 to present); Gess Mattingly & Atchison, P.S.C. (law firm) (2003-2017) | | N/A | | N/A |
Vincent H. Harrison 125 South Mill Street Lexington, KY 40507 Age: 47 | | Assistant Secretary, Assistant Treasurer | | Annual Term; 3 years of service | | Vice President Dupree & Company, Inc. | | N/A | | N/A |
Martin Dean Ultimus Fund Solutions 225 Pictoria Drive Suite 450 Cincinnati, OH 45246 Age: 54 | | Compliance Officer | | Annual Term; 1 year of service | | Vice President, Director of Fund Compliance Ultimus Fund Solutions, LLC (January 2016-present); Senior Vice President, Huntington Asset Services (July 2013-December 2015); Director of Fund Accounting and Fund Administration Product, Citi Fund Services (January 2008-June 2013) | | N/A | | N/A |
| Trustees: | | | | | | | | | | |
C. Timothy Cone 201 West Short Street Lexington, KY 40507 Age: 74 | | Trustee, Chairman | | Annual Term; 16 years of service | | Of Counsel (2016 to present) prior, President, Gess, Mattingly & Atchison, P.S.C. (law firm) | | 10 | | N/A |
James C. Baughman, Jr. 1999 Richmond Road Suite 2A Lexington, KY 40502 Age: 56 | | Trustee Chair, Nominating Committee | | Annual Term 11 Years of Service | | President, CJN Advisors, LLC (2013 – present; business consulting); President, Blue Horse Entries, LLC (2014 to present; online business support services for equestrian events); Chief Executive Officer, Secretary, Treasurer, Director Office Suites Plus, Inc. (1998-2013; executive office space rental) | | 10 | | Advisory Board, Community Trust Bank |
William A. Combs, Jr.* 111 Woodland Ave., #510 Lexington, KY 40502 Age: 78 | | Trustee | | Annual Term; 29 years of service as Trustee | | Officer, Director: Mercedes-Benz of Cincinnati, Ohio; Mercedes-Benz of West Chester, Ohio (until 2016) | | 10 | | N/A |
Ann Rosenstein Giles 343 Waller Avenue Suite 100 Lexington, KY 40504 Age: 66 | | Trustee Chair, Valuation Committee | | Annual Term; 7 years of service | | AJ Marketing Partners (self-employed marketing consultant) | | 10 | | N/A |
Marc A. Mathews 2104 Lakeside Drive Lexington, KY 40502 Age: 60 | | Trustee Chair, Audit Committee | | Annual Term; 7 years of service | | Vice President for Finance and Business, Transylvania University | | 10 | | Director, Bank of the Bluegrass |
| * | | As of July 3, 2017 William A. Combs, Jr. is an affiliated person of Dupree & Company, Inc., the Trust’s investment adviser, and is considered an “interested person” of the Trust within the meaning of section 2(a)(1a) of the 1940 Act. |
60
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2018
Trustee and officer information, continued
As of June 30, 2018, none of the Trustees or 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 and information regarding how the Funds voted those proxies during the most recent twelve months ended June 30, 2018, 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 ended June 30, 2018, 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 SEC’s Office of Investor Education and Advocacy (previously referred to as “SEC Public Reference Room”) may be obtained by calling 1-800-SEC-0330.
61
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2018
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, 2018” 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, 2018 | | | Beginning
Account Value
January 1, 2018* | | | Ending
Account Value
June 30, 2018** | | | Expenses Paid During
the Six Months
Ended June 30, 2018 | |
Alabama Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | % | | $ | 1,000.00 | | | $ | 1,012.40 | | | $ | 3.49 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.51 | |
Kentucky Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .56 | | | | 1,000.00 | | | | 1,004.62 | | | | 2.79 | |
| Hypothetical | | | .56 | | | | 1,000.00 | | | | 1,024.86 | | | | 2.82 | |
Kentucky Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 998.41 | | | | 3.45 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.50 | |
Mississippi Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 1,004.92 | | | | 3.46 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.50 | |
North Carolina Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 1,006.32 | | | | 3.47 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.50 | |
North Carolina Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 997.76 | | | | 3.44 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.49 | |
Tennessee Tax-Free Income Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 1,004.67 | | | | 3.46 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.49 | |
Tennessee Tax-Free Short-to-Medium Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 1,000.85 | | | | 3.46 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.50 | |
62
DUPREE MUTUAL FUNDS
OTHER UNAUDITED INFORMATION
June 30, 2018
Schedule of Shareholder Expenses, continued:
| | | | | | | | | | | | | | | | |
| | | Net Expense
Ratio
Annualized
June 30, 2018 | | | Beginning
Account Value
January 1, 2018* | | | Ending
Account Value
June 30, 2018** | | | Expenses Paid During
the Six Months
Ended June 30, 2018 | |
Intermediate Government Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .61 | % | | $ | 1,000.00 | | | $ | 994.78 | | | $ | 3.08 | |
| Hypothetical | | | .61 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.12 | |
Taxable Municipal Bond Series | | | | | | | | | | | | | | | | |
| Actual | | | .70 | | | | 1,000.00 | | | | 1,013.23 | | | | 3.48 | |
| Hypothetical | | | .70 | | | | 1,000.00 | | | | 1,024.86 | | | | 3.50 | |
| * | | The example is based on an investment of $1,000 invested at the beginning of the period. |
| ** | | Expenses are equal to the Funds’ annualized expense ratio, multiplied by the average account value over the period multiplied by [181/365] (to reflect one-half year period). |
63
Item 2. Code of Ethics: The registrant has not adopted a code of ethics that applies to the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. The registrant believes that the registrant’s code of ethics established pursuant to Rule 17j-1 under the Investment Company Act of 1940 covers such officers and persons.
Item 3. Audit Committee Financial Expert: The board does not have a financial expert serving on the audit committee. The registrant’s audit committee is comprised of all Trustees all of who are non-interested and independent. The audit committee believes that the collective experience and expertise of the members in assessing the performance of companies and the evaluation of financial statements is sufficient to assess the issues which can reasonably be expected to be raised by the Trust’s financial statements.
Item 4. Principal Accountant Fees and Services:
| | | Year ended June 30, 2017: $147,600 |
| | | Year ended June 30, 2018 $152,000 |
| | | Year ended June 30, 2017: None |
| | | Year ended June 30, 2018 None |
| | (c) | Tax Fees (consisting of income and excise tax compliance services) |
| | | Year ended June 30, 2017: $41,000 |
| | | Year ended June 30, 2018 $42,300 |
| | (d) | All Other Fees (Fees for all other services) |
| | | Year ended June 30, 2017 $39,200 |
| | | (consisted of examination of transfer agent ($10,800); Anti-Money Laundering advisory services ($8,300); Internal control agreed upon procedures ($11,000) and Review of Semi-Annual report ($9,100)) |
| | | Year ended June 30, 2018 $40,400 |
| | | (consisted of examination of transfer agent ($11,100); Anti-Money Laundering advisory services ($8,600); Internal control agreed upon procedures ($11,300) and Review of Semi-Annual report ($9,400)) |
| | (e) | (1) (2) 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. All services (b) through (d) were pre-approved by the Audit Committee. |
| | (f) | 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, 2018. |
| | (g) | The aggregate non audit fees billed by the Registrant’s Accountant to the Registrant were: |
| | | Year ended June 30, 2017: $80,200 |
| | | Year ended June 30, 2018: $82,700 |
| | (h) | Services were pre-approved by the Registrant’s Audit Committee. |
Item 5. Not applicable.
Item 6.
| | (a) | 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:
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant 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.
(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the last fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Not applicable.
Item 13. Exhibits
(a)(1) Code of Ethics
(a)(2) Certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002 and required by Rule 30a-2 under the Investment Company Act of 1940 are filed herewith.
(a)(3) Not applicable
(a)(4) Not applicable.
| | (b) | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | |
| Dupree Mutual Funds |
| |
| By: | | /s/ Michelle M. Dragoo |
| | Michelle M. Dragoo, |
| | Vice President, Secretary, Treasurer |
|
| Date: August 29, 2018 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | |
| By: | | /s/ Allen E. Grimes, III |
| | Allen E. Grimes, III |
|
| Date: August 28, 2018 |
| |
| By: | | /s/ Michelle M. Dragoo |
| | Michelle M. Dragoo, |
| | Vice President, Secretary, Treasurer |
|
| Date: August 29, 2018 |
