<PAGE> 1
DUPREE MUTUAL FUNDS
June 30, 2000
ANNUAL REPORT
TO SHAREHOLDERS
<PAGE> 2
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 state of Kentucky.
In 1979, Dupree & Company began what is now Dupree Mutual Funds with the
Kentucky Tax-Free Income Series and became the fund's investment advisor. The
fund was one of the first single-state municipal bond funds in the country, and
the first mutual fund to invest solely in Kentucky municipal bonds. Since then,
several new offerings have been added to the Dupree Mutual Funds family:
Kentucky Tax-Free Short-to-Medium Series in 1987;
Intermediate Government Bond Series in 1992;
Tennessee Tax-Free Income Series in 1993;
Tennessee Tax-Free Short-to-Medium Series in 1994;
North Carolina Tax-Free Income Series in 1995;
North Carolina Tax-Free Short-to-Medium Series in 1995;
Alabama Tax-Free Income Series in 2000, and
Mississippi Tax-Free Income Series in 2000.
Today, after more than 50 years in business, Dupree continues to be a pioneer in
the industry. Our Kentucky, Tennessee, and Mississippi Series are currently the
ONLY 100% "no-load" municipal bond funds available in those states. No-load
means simply that shares of the funds are offered directly to investors with no
front or back-end sales charges, as opposed to load funds which are sold through
brokerage firms or other institutions.
At Dupree Mutual Funds, our goal is a simple one: to offer investors a
high-quality, low-cost way to invest in municipal and government bonds while
providing superior service to our shareholders. We encourage you to let us know
how we're doing.
TABLE OF CONTENTS
Presidents letter i
Performance Comparison ii
FINANCIAL STATEMENTS
Alabama Tax-Free Income Series 1
Kentucky Tax-Free Income Series 4
Kentucky Tax-Free Short-to-Medium Series 10
Mississippi Tax-Free Income Series 14
North Carolina Tax-Free Income Series 18
North Carolina Tax-Free Short-to-Medium Series 23
Tennessee Tax-Free Income Series 27
Tennessee Tax-Free Short-to-Medium Series 33
Intermediate Government Bond Series 37
Notes to Financial Statements 40
Report of Independent Auditors 48
<PAGE> 3
To the Shareholders of
Dupree Mutual Funds
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
July 1, 1999 - June 30, 2000
INVESTMENT PERFORMANCE:
This year was one in which share prices rose during the first half of
the period and then gradually declined during the second half with a significant
decline in the last month.
The ALABAMA TAX-FREE INCOME SERIES began business January 1, 2000 at a
price of $10.00 per share and closed on June 30th at a price of $10.31 with
total net assets of $221,864. The average effective maturity of this issue is
11.81 years.
The KENTUCKY TAX-FREE INCOME SERIES began the period at a price of
$7.47 per share with net assets of $422,995,942. On June 30th its price per
share was $7.22 and total net assets were $416,957,445. There was no capital
gains distribution accrued during the period.
The KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES began the period at $5.20
per share with total net assets of $58,629,711. On June 30th the price per share
was $5.09 and total net assets were $51,205,495. There was no capital gains
distribution accrued during the period.
The MISSISSIPPI TAX-FREE INCOME SERIES began business January 1, 2000
at a price of $10.00 per share and closed on June 30th at a price of $10.35 with
total net assets of $238,311. The average effective maturity of this issue is
13.08 years.
The NORTH CAROLINA TAX-FREE INCOME SERIES began the period at a price
of $10.61 and assets of $19,456,344. On June 30th the price was $10.21 with
total net assets of $21,660,179. A capital gains distribution of .015 per share
was paid during the period.
The NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES BEGAN the period at
a price of $10.09 and assets of $3,938,101. On June 30th the price was $9.94
with total net assets of $4,246,351. There was no capital gains distribution
accrued during the period.
The TENNESSEE TAX-FREE INCOME SERIES began the period at $10.77 with
total assets of $46,086,375. On June 30th the price per share was $10.32 and
total net assets were $40,524,301. A capital gains distribution of .002 was paid
during the period.
The TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES began the period at a
price of $10.33 per share with total net assets of $5,818,739. On June 30th the
price per share was $10.18 with total net assets of $6,415,480. There was no
capital gains distribution accrued during the period.
The INTERMEDIATE GOVERNMENT BOND SERIES began the period at $9.73 per
share and ended the year at $9.43. Total net assets at the beginning of the
period were $10,778,197 and at the end of the period were $10,167,292. There was
no capital gains distribution during the period.
THE OUTLOOK:
The repetitive increase of interest rates by the Federal Reserve Board,
has taken the Fed Fund Rate from 4.75% in early 1999 to 6.50% at the current
point in time. While the stated reason for this long term tightening has been to
cool an economy bordering on inflation, the action clearly has been taken with
an eye on the stock market, which I suspect has been worrying the Fed as much as
any other economic figure. In the last quarter it appears the stock market has
cooled, but may be poised to bounce back quickly if the Fed eases.
The long term Treasury bond reached levels near 6.50% before U. S.
Treasury Department buying developed in this longer maturity, using surplus
budget funds. This has had the effect of offsetting some of the Federal Reserve
tightening during the period. The current level of the long term Treasury is
around 5.90%.
The municipal bond market seems to have hit its low in late May and had
begun a slow recovery by June 30th. As in the past, full recovery of bonds is
probably dependent upon the stock market avoiding another frenzied rise.
This has been a period of decline in assets invested in bond funds, but
not for us! The loyalty of our shareholders has had much to do with our growth
during this period. Thank you! If you have questions or suggestions feel free to
call us at (800) 866-0614 or, in Lexington, at 254-7741.
Yours truly,
/s/ Thomas P. Dupree, Sr.
Thomas P. Dupree, Sr.
President
<PAGE> 4
PERFORMANCE COMPARISON
--------------------------------------------------------------------------------
The following graphs compare the change in value of a $10,000 investment in each
series of Dupree Mutual Funds with the change in value of a $10,000 investment
in a comparable index. The comparisons are made over ten years or since the
inception of the series, if shorter than ten years. Results are for the fiscal
years ended June 30.
--------------------------------------------------------------------------------
<PAGE> 5
ALABAMA TAX-FREE INCOME SERIES
SINCE JANUARY 1, 2000
[LINE GRAPH]
ALABAMA LEHMAN LEHMAN
INCOME 10-YEAR 20-YEAR
SERIES INDEX INDEX
1-Jan-00 10,000.00 10,000.00 10,000.00
Mar-00 10,309.03 10,233.00 10,446.00
Jun-00 10,573.90 10,396.73 10,602.69
Average Annual Total Return
Since
01/01/00
5.79%
<PAGE> 6
KENTUCKY TAX-FREE INCOME SERIES
SINCE JUNE 30, 1990
[LINE GRAPH]
KENTUCKY LEHMAN
INCOME 10-YEAR
SERIES INDEX
Jun-90 10,714.89 10,711.78
Sep-90 10,851.82 10,706.42
Dec-90 11,181.82 11,192.49
Mar-91 11,429.21 11,468.95
Jun-91 11,614.77 11,701.77
Sep-91 12,009.59 12,167.50
Dec-91 12,374.23 12,549.56
Mar-92 12,582.37 12,538.26
Jun-92 12,880.34 13,027.26
Sep-92 13,327.74 13,406.35
Dec-92 13,488.48 13,669.11
Mar-93 14,090.69 14,198.11
Jun-93 14,476.40 14,666.65
Sep-93 14,885.24 15,193.18
Dec-93 15,199.25 15,415.00
Mar-94 14,706.81 14,598.00
Jun-94 14,586.25 14,812.59
Sep-94 14,751.60 14,916.28
Dec-94 14,756.11 14,680.60
Mar-95 15,476.34 15,696.50
Jun-95 15,689.68 16,112.46
Sep-95 16,167.36 16,676.40
Dec-95 16,845.97 17,200.03
Mar-96 16,579.09 17,088.23
Jun-96 16,690.73 17,141.21
Sep-96 17,191.30 17,484.03
Dec-96 17,466.60 17,982.33
Mar-97 17,531.54 17,978.73
Jun-97 17,882.95 18,570.23
Sep-97 18,409.52 19,145.91
Dec-97 18,868.63 19,448.41
Mar-98 19,007.40 19,648.73
Jun-98 19,272.06 19,945.43
Sep-98 19,789.79 20,627.56
Dec-98 19,930.39 20,763.70
Mar-99 20,063.50 20,882.06
Jun-99 19,756.65 20,403.86
Sep-99 19,688.12 20,534.44
Dec-99 19,646.61 20,505.69
Mar-00 19,954.50 20,983.48
Jun-00 20,101.84 21,319.21
Average Annual Total Return
One Five Ten
Year Years Years
1.78% 5.08% 6.44%
<PAGE> 7
KENTUCKY SHORT-TO-MEDIUM SERIES
SINCE JUNE 30, 1990
[LINE GRAPH]
KY
SHORT LEHMAN
TO 3-YEAR
MEDIUM INDEX
SERIES
Jun-90 10,636.25 10,706.08
Jul-90 10,730.56 10,845.58
Aug-90 10,784.12 10,800.36
Sep-90 10,815.41 10,839.89
Oct-90 10,870.01 11,008.12
Nov-90 10,965.66 11,165.98
Dec-90 11,063.67 11,213.21
Jan-91 11,116.68 11,370.87
Feb-91 11,229.46 11,487.42
Mar-91 11,280.91 11,462.61
Apr-91 11,330.43 11,604.51
May-91 11,381.64 11,676.34
Jun-91 11,384.29 11,666.07
Jul-91 11,458.21 11,777.48
Aug-91 11,555.65 11,934.36
Sep-91 11,629.34 12,079.96
Oct-91 11,748.82 12,173.45
Nov-91 11,774.64 12,227.75
Dec-91 11,870.97 12,493.09
Jan-92 12,064.88 12,529.95
Feb-92 12,063.31 12,535.58
Mar-92 12,112.07 12,500.99
Apr-92 12,183.41 12,608.37
May-92 12,254.95 12,730.04
Jun-92 12,257.92 12,920.86
Jul-92 12,448.00 13,256.81
Aug-92 12,497.57 13,150.49
Sep-92 12,521.15 13,256.87
Oct-92 12,544.92 13,188.73
Nov-92 12,591.12 13,342.25
Dec-92 12,686.03 13,445.52
Jan-93 12,731.31 13,606.33
Feb-93 12,895.29 13,946.21
Mar-93 12,966.33 13,798.38
Apr-93 13,011.87 13,880.21
May-93 13,034.23 13,921.15
Jun-93 13,104.48 14,120.23
Jul-93 13,175.15 14,131.52
Aug-93 13,246.03 14,335.02
Sep-93 13,315.72 14,443.96
Oct-93 13,360.93 14,480.07
Nov-93 13,329.29 14,406.22
Dec-93 13,408.22 14,619.44
Jan-94 13,526.38 14,749.55
Feb-94 13,410.91 14,509.13
Mar-94 13,299.45 14,207.34
Apr-94 13,241.45 14,295.43
May-94 13,362.85 14,366.90
Jun-94 13,328.86 14,359.72
Jul-94 13,451.29 14,478.91
Aug-94 13,471.01 14,531.03
Sep-94 13,436.89 14,494.70
Oct-94 13,428.09 14,459.92
Nov-94 13,472.52 14,433.89
Dec-94 13,545.16 14,469.97
Jan-95 13,565.51 14,626.25
Feb-95 13,633.66 14,781.29
Mar-95 13,641.20 14,914.32
Apr-95 13,686.58 14,970.99
May-95 13,893.78 15,200.05
Jun-95 13,913.37 15,236.53
Jul-95 13,933.23 15,398.04
Aug-95 14,033.35 15,518.14
Sep-95 14,105.55 15,561.59
Oct-95 14,179.99 15,636.29
Nov-95 14,337.20 15,736.36
Dec-95 14,387.09 15,802.45
Jan-96 14,436.26 15,925.71
Feb-96 14,427.45 15,928.90
Mar-96 14,339.32 15,890.67
Apr-96 14,442.85 15,909.74
May-96 14,466.11 15,924.06
Jun-96 14,541.92 16,019.60
Jul-96 14,647.39 16,107.71
Aug-96 14,698.15 16,131.87
Sep-96 14,776.45 16,230.27
Oct-96 14,882.83 16,343.89
Nov-96 14,989.66 16,495.88
Dec-96 14,956.64 16,504.13
Jan-97 14,980.26 16,576.75
Feb-97 15,055.97 16,657.98
Mar-97 14,994.57 16,571.35
Apr-97 15,046.78 16,642.61
May-97 15,158.35 16,777.42
Jun-97 15,210.17 16,876.40
Jul-97 15,437.67 17,077.23
Aug-97 15,402.91 17,043.08
Sep-97 15,513.85 17,165.79
Oct-97 15,656.18 17,241.32
Nov-97 15,677.62 17,291.32
Dec-97 15,731.26 17,408.90
Jan-98 15,844.98 17,485.50
Feb-98 15,863.42 17,522.22
Mar-98 15,857.61 17,550.25
Apr-98 15,850.41 17,525.68
May-98 15,966.66 17,688.67
Jun-98 15,988.78 17,748.81
Jul-98 16,042.75 17,828.68
Aug-98 16,156.84 18,001.62
Sep-98 16,299.48 18,118.63
Oct-98 16,322.95 18,205.60
Nov-98 16,406.09 18,249.29
Dec-98 16,460.17 18,293.09
Jan-99 16,483.25 18,459.56
Feb-99 16,469.00 18,479.86
Mar-99 16,491.75 18,496.50
Apr-99 16,514.15 18,553.84
May-99 16,505.78 18,527.86
Jun-99 16,401.58 18,416.69
Jul-99 16,425.42 18,506.93
Aug-99 16,417.20 18,529.14
Sep-99 16,405.80 18,599.55
Oct-99 16,429.83 18,601.41
Nov-99 16,484.32 18,683.26
Dec-99 16,508.59 18,653.37
Jan-00 16,467.43 18,686.94
Feb-00 16,551.33 18,744.87
Mar-00 16,607.99 18,840.47
Apr-00 16,632.18 18,844.24
May-00 16,594.12 18,863.08
Jun-00 16,720.64 19,102.64
Average Annual Total Return
One Five Ten
Year Years Years
1.95% 3.74% 4.61%
<PAGE> 8
MISSISSIPPI TAX-FREE INCOME SERIES
SINCE JANUARY 1, 2000
[LINE GRAPH]
MISSISSIPPI LEHMAN LEHMAN
INCOME 10-YEAR 20-YEAR
SERIES INDEX INDEX
1-Jan-00 10,000.00 10,000.00 10,000.00
Mar-00 10,301.82 10,233.00 10,446.00
Jun-00 10,619.08 10,396.73 10,602.69
Average Annual Total Return
Since
01/01/00
6.24%
<PAGE> 9
NORTH CAROLINA TAX-FREE INCOME SERIES
SINCE NOVEMBER 16, 1995
[LINE GRAPH]
N. LEHMAN LEHMAN
C. 10-YEAR 20-YEAR
INCOME INDEX INDEX
SERIES
16-Nov-95 10,000.00 10,000.00 10,000.00
Dec-95 10,345.02 10,314.00 10,585.00
Mar-96 10,070.70 10,246.96 10,350.01
Jun-96 10,202.03 10,278.72 10,468.00
Sep-96 10,618.84 10,484.30 10,767.39
Dec-96 10,900.45 10,783.10 11,057.03
Mar-97 10,851.21 10,780.94 10,988.48
Jun-97 11,240.16 11,135.64 11,452.19
Sep-97 11,615.76 11,480.84 11,853.02
Dec-97 11,971.80 11,778.20 12,256.02
Mar-98 12,159.97 11,899.51 12,403.09
Jun-98 12,362.27 12,079.19 12,620.15
Sep-98 12,761.88 12,492.30 13,045.45
Dec-98 12,871.03 12,574.75 13,092.41
Mar-99 12,955.94 12,646.43 13,222.02
Jun-99 12,696.73 12,356.83 12,944.36
Sep-99 12,534.82 12,435.91 12,710.07
Dec-99 12,521.23 12,418.50 12,478.75
Mar-00 12,723.18 12,707.85 13,035.30
Jun-00 12,827.77 12,911.18 13,230.83
Average Annual Total Return
One Since
Year 11/16/95
1.07% 5.54%
<PAGE> 10
NORTH CAROLINA SHORT-TO-MEDIUM SERIES
SINCE NOVEMBER 16, 1995
[LINE GRAPH]
N. C. LEHMAN
STM 3-YEAR
SERIES INDEX
16-Nov-95 10,000.00 10,000.00
Nov-95 10,055.31 10,064.00
Dec-95 10,118.99 10,106.27
Jan-96 10,162.61 10,185.10
Feb-96 10,163.92 10,187.13
Mar-96 10,136.52 10,162.69
Apr-96 10,157.98 10,174.88
May-96 10,182.19 10,184.04
Jun-96 10,236.53 10,245.14
Jul-96 10,312.11 10,301.49
Aug-96 10,347.14 10,316.94
Sep-96 10,412.21 10,379.88
Oct-96 10,478.37 10,452.54
Nov-96 10,563.56 10,549.74
Dec-96 10,580.15 10,555.02
Jan-97 10,615.39 10,601.46
Feb-97 10,657.33 10,653.41
Mar-97 10,629.63 10,598.01
Apr-97 10,675.22 10,643.58
May-97 10,742.62 10,729.79
Jun-97 10,798.37 10,793.10
Jul-97 10,942.30 10,921.54
Aug-97 10,894.01 10,899.70
Sep-97 10,960.97 10,978.17
Oct-97 11,029.84 11,026.48
Nov-97 11,074.95 11,058.45
Dec-97 11,111.89 11,133.65
Jan-98 11,170.11 11,182.64
Feb-98 11,180.54 11,206.12
Mar-98 11,207.24 11,224.05
Apr-98 11,210.13 11,208.34
May-98 11,301.40 11,312.58
Jun-98 11,359.66 11,351.04
Jul-98 11,375.08 11,402.12
Aug-98 11,481.01 11,512.72
Sep-98 11,550.58 11,587.55
Oct-98 11,577.55 11,643.17
Nov-98 11,614.66 11,671.12
Dec-98 11,641.56 11,699.13
Jan-99 11,690.05 11,805.59
Feb-99 11,678.48 11,818.58
Mar-99 11,702.01 11,829.21
Apr-99 11,714.35 11,865.88
May-99 11,704.87 11,849.27
Jun-99 11,626.12 11,778.17
Jul-99 11,649.99 11,835.89
Aug-99 11,641.24 11,850.09
Sep-99 11,656.24 11,895.12
Oct-99 11,649.15 11,896.31
Nov-99 11,687.12 11,948.65
Dec-99 11,748.49 11,929.54
Jan-00 11,730.52 11,951.01
Feb-00 11,804.22 11,988.06
Mar-00 11,925.89 12,049.20
Apr-00 11,907.32 12,051.61
May-00 11,900.17 12,063.66
Jun-00 11,913.79 12,216.87
Average Annual Total Return
One Since
Year 11/16/95
2.47% 3.86%
<PAGE> 11
TENNESSEE TAX-FREE INCOME SERIES
SINCE DECEMBER 20, 1993
[LINE GRAPH]
TENNESSEE LEHMAN LEHMAN LEHMAN
INCOME 7-YEAR 10-YEAR 20-YEAR
SERIES INDEX INDEX INDEX
20-Dec-93 10,000.00 10,000.00 10,000.00 10,000.00
Dec-93 10,045.93 10,120.00 10,146.00 10,147.00
Mar-94 9,894.29 9,738.48 9,608.26 9,443.81
Jun-94 9,783.90 9,840.73 9,749.50 9,537.31
Sep-94 9,907.90 9,935.20 9,817.75 9,586.90
Dec-94 9,923.50 9,838.83 9,662.63 9,401.87
Mar-95 10,646.64 10,355.37 10,331.28 10,240.52
Jun-95 10,924.20 10,650.50 10,605.06 10,461.72
Sep-95 11,169.62 10,955.10 10,976.24 10,745.23
Dec-95 11,737.67 11,231.17 11,320.89 11,373.82
Mar-96 11,564.55 11,191.86 11,247.31 11,121.33
Jun-96 11,649.57 11,239.98 11,282.17 11,248.11
Sep-96 12,125.39 11,441.18 11,507.82 11,569.80
Dec-96 12,341.87 11,721.49 11,835.79 11,881.03
Mar-97 12,379.39 11,707.42 11,833.42 11,807.37
Jun-97 12,693.73 11,819.81 12,222.74 12,305.64
Sep-97 13,100.65 12,135.40 12,601.65 12,736.34
Dec-97 13,452.03 12,399.96 12,928.03 13,169.37
Mar-98 13,641.99 12,541.32 13,061.19 13,327.41
Jun-98 13,908.53 12,688.05 13,258.41 13,560.64
Sep-98 14,343.65 13,090.26 13,711.85 14,017.63
Dec-98 14,478.16 13,172.73 13,802.35 14,068.09
Mar-99 14,593.04 13,284.70 13,881.02 14,207.37
Jun-99 14,329.13 13,058.86 13,563.15 13,909.01
Sep-99 14,187.09 13,165.94 13,649.95 13,657.26
Dec-99 14,085.79 13,154.09 13,630.84 13,408.70
Mar-00 14,347.80 13,363.24 13,948.44 14,006.72
Jun-00 14,445.63 13,579.72 14,171.62 14,216.83
Average Annual Total Return
One Five Since
Year Years 12/20/93
.84% 5.76% 5.72%
<PAGE> 12
TENNESSEE SHORT-TO-MEDIUM SERIES
SINCE NOVEMBER 1, 1994
[LINE GRAPH]
TENN. LEHMAN
STM 3-YEAR
SERIES INDEX
01-Nov-94 10,000.00 10,000.00
Nov-94 10,075.92 9,982.00
Dec-94 10,153.56 10,006.96
Jan-95 10,150.97 10,115.03
Feb-95 10,225.22 10,222.25
Mar-95 10,289.70 10,314.25
Apr-95 10,336.61 10,353.44
May-95 10,466.63 10,511.85
Jun-95 10,501.95 10,537.08
Jul-95 10,539.17 10,648.77
Aug-95 10,658.43 10,731.83
Sep-95 10,725.57 10,761.88
Oct-95 10,793.23 10,813.54
Nov-95 10,849.84 10,882.75
Dec-95 10,876.60 10,928.45
Jan-96 10,913.57 11,013.70
Feb-96 10,916.81 11,015.90
Mar-96 10,890.55 10,989.46
Apr-96 10,904.74 11,002.65
May-96 10,931.64 11,012.55
Jun-96 10,988.83 11,078.63
Jul-96 11,057.90 11,139.56
Aug-96 11,084.27 11,156.27
Sep-96 11,153.17 11,224.32
Oct-96 11,201.58 11,302.89
Nov-96 11,292.61 11,408.01
Dec-96 11,302.98 11,413.71
Jan-97 11,330.78 11,463.93
Feb-97 11,365.21 11,520.11
Mar-97 11,359.93 11,460.20
Apr-97 11,408.27 11,509.48
May-97 11,470.25 11,602.71
Jun-97 11,519.44 11,671.16
Jul-97 11,670.89 11,810.05
Aug-97 11,642.28 11,786.43
Sep-97 11,724.59 11,871.29
Oct-97 11,798.54 11,923.52
Nov-97 11,836.90 11,958.10
Dec-97 11,911.11 12,039.42
Jan-98 11,963.49 12,092.39
Feb-98 11,967.08 12,117.79
Mar-98 11,995.64 12,137.17
Apr-98 12,011.39 12,120.18
May-98 12,098.09 12,232.90
Jun-98 12,125.27 12,274.49
Jul-98 12,152.36 12,329.73
Aug-98 12,250.95 12,449.33
Sep-98 12,335.22 12,530.25
Oct-98 12,362.51 12,590.39
Nov-98 12,411.89 12,620.61
Dec-98 12,426.66 12,650.90
Jan-99 12,488.82 12,766.02
Feb-99 12,477.21 12,780.06
Mar-99 12,503.16 12,791.57
Apr-99 12,516.97 12,831.22
May-99 12,518.44 12,813.26
Jun-99 12,449.36 12,736.38
Jul-99 12,466.42 12,798.78
Aug-99 12,469.40 12,814.14
Sep-99 12,495.94 12,862.84
Oct-99 12,500.25 12,864.12
Nov-99 12,527.57 12,920.72
Dec-99 12,567.74 12,900.05
Jan-00 12,573.80 12,923.27
Feb-00 12,639.12 12,963.33
Mar-00 12,769.30 13,029.45
Apr-00 12,738.53 13,032.05
May-00 12,658.07 13,045.08
Jun-00 12,764.38 13,210.76
Average Annual Total Return
One Five Since
Year Years 11/01/94
2.53% 3.98% 4.40%
<PAGE> 13
INTERMEDIATE GOVERNMENT BOND SERIES
SINCE JULY 14, 1992
[LINE GRAPH]
INTERMEDIATE LEHMAN
GOVERNMENT INTERMEDIATE
BOND TREASURY
SERIES INDEX
14-Jul-92 10,000.00 10,000.00
Jul-92 10,199.80 10,252.00
Aug-92 10,316.65 10,347.34
Sep-92 10,521.66 10,493.24
Oct-92 10,344.79 10,342.14
Nov-92 10,218.04 10,324.56
Dec-92 10,479.66 10,498.01
Jan-93 10,721.95 10,693.27
Feb-93 10,998.05 10,850.46
Mar-93 10,995.82 10,890.61
Apr-93 11,071.82 10,975.56
May-93 11,055.18 10,945.92
Jun-93 11,263.74 11,104.64
Jul-93 11,395.12 11,126.85
Aug-93 11,633.67 11,292.64
Sep-93 11,710.25 11,338.94
Oct-93 11,778.40 11,366.15
Nov-93 11,638.72 11,310.46
Dec-93 11,729.57 11,356.83
Jan-94 11,852.86 11,469.26
Feb-94 11,652.56 11,312.13
Mar-94 11,313.62 11,146.98
Apr-94 11,149.58 11,074.52
May-94 10,953.95 11,082.27
Jun-94 10,889.94 11,084.49
Jul-94 11,154.67 11,229.70
Aug-94 11,194.15 11,262.26
Sep-94 10,946.82 11,168.79
Oct-94 10,884.13 11,171.02
Nov-94 10,912.13 11,121.87
Dec-94 11,033.40 11,158.57
Jan-95 11,218.79 11,340.45
Feb-95 11,508.98 11,559.33
Mar-95 11,581.82 11,622.90
Apr-95 11,673.96 11,628.48
May-95 12,225.97 11,956.40
Jun-95 12,286.23 12,035.32
Jul-95 12,239.92 12,040.13
Aug-95 12,363.47 12,136.45
Sep-95 12,472.49 12,217.77
Oct-95 12,609.19 12,354.60
Nov-95 12,780.66 12,505.33
Dec-95 12,968.94 12,630.38
Jan-96 13,057.76 12,737.74
Feb-96 12,838.72 12,601.45
Mar-96 12,762.79 12,539.70
Apr-96 12,671.29 12,503.34
May-96 12,633.76 12,497.08
Jun-96 12,800.47 12,620.81
Jul-96 12,830.34 12,658.67
Aug-96 12,819.80 12,675.12
Sep-96 13,016.71 12,837.37
Oct-96 13,283.02 13,119.79
Nov-96 13,481.54 13,277.22
Dec-96 13,376.68 13,205.53
Jan-97 13,445.55 13,254.39
Feb-97 13,506.49 13,274.27
Mar-97 13,452.66 13,195.95
Apr-97 13,573.93 13,343.75
May-97 13,670.51 13,447.83
Jun-97 13,818.41 13,562.13
Jul-97 14,206.21 13,815.75
Aug-97 14,047.66 13,760.48
Sep-97 14,238.30 13,910.47
Oct-97 14,445.58 14,073.22
Nov-97 14,465.62 14,105.59
Dec-97 14,633.00 14,221.26
Jan-98 14,844.81 14,411.82
Feb-98 14,817.06 14,393.09
Mar-98 14,855.17 14,436.27
Apr-98 14,934.43 14,504.12
May-98 15,046.07 14,604.20
Jun-98 15,126.50 14,702.04
Jul-98 15,181.08 14,759.38
Aug-98 15,414.43 15,051.62
Sep-98 15,751.18 15,414.36
Oct-98 15,698.30 15,445.19
Nov-98 15,718.30 15,388.04
Dec-98 15,756.48 15,446.52
Jan-99 15,825.75 15,514.48
Feb-99 15,651.90 15,287.97
Mar-99 15,655.24 15,388.87
Apr-99 15,689.32 15,431.96
May-99 15,584.02 15,333.20
Jun-99 15,460.26 15,360.80
Jul-99 15,386.54 15,374.62
Aug-99 15,390.38 15,405.37
Sep-99 15,583.89 15,525.53
Oct-99 15,592.19 15,545.72
Nov-99 15,598.63 15,551.93
Dec-99 15,475.58 15,508.39
Jan-00 15,433.57 15,466.52
Feb-00 15,554.01 15,587.15
Mar-00 15,731.88 15,785.11
Apr-00 15,704.23 15,774.06
May-00 15,663.12 15,840.31
Jun-00 16,041.89 16,068.41
Average Annual Total Return
One Five Since
Year Years 7/14/92
3.76% 5.48% 6.09%
<PAGE> 14
NOTES ON GRAPHS:
--------------------------------------------------------------------------------
Results reflect reinvestment of all dividend and capital gain distributions. For
each series, we have chosen an index that approximates the average maturity of
the compared series. The investor should understand that an index is a
mathematical hypothesis and does not reflect a real market situation. For
example, the portfolio of each index is replaced with an entirely different
portfolio each year without reflecting 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.
--------------------------------------------------------------------------------
<PAGE> 15
DUPREE MUTUAL FUNDS - ALABAMA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
ALABAMA MUNICIPAL BONDS -- 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
INSURED MUNICIPAL REVENUE BONDS
86.07% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
AL Private Colleges & University Facilities Authority Revenue 5.900 09/01/2016 Aaa/AAA* $ 10,000 $ 10,233
Alabama Water Pollution Control Authority 5.500 08/15/2016 Aaa/AAA* 10,000 9,936
Colbert County Northwest AL Health Care Facility 5.750 06/01/2015 Aaa/AAA* 10,000 10,171
DCH Health Care Authority AL Health Care Facility 5.500 06/01/2013 Aaa/AAA* 10,080 10,000
Houston County AL Warrants 5.650 10/15/2015 Aaa/AAA* 25,289 25,000
Houston County AL Health Care - SE Alabama Medical Center 5.750 10/01/2022 Aaa/AAA* 10,000 9,974
Jefferson County AL Board of Education Capital Outlay 5.800 02/15/2020 AAA/AAA* 10,000 10,026
Lee County AL Warrants 5.500 02/01/2021 Aaa/AAA* 15,000 14,532
Northwest AL Gas District Gas System Revenue 5.900 05/01/2020 Aaa 35,000 35,597
St Clair County Board of Education School Tax Anticipation 5.500 02/01/2016 Aaa/AAA* 10,000 9,937
Southeast AL Gas District System Revenue Series A 5.500 06/01/2020 Aaa 10,000 9,659
University of Alabama Revenue - Birmingham 6.000 10/01/2020 Aaa/AAA* 25,000 25,351
University of Alabama University Revenue 5.750 12/01/2016 Aaa/AAA* 10,000 10,173
----------------
190,959
PUBLIC FACILITIES REVENUE BONDS
9.13% OF NET ASSETS
Hoover AL Wts - Series A 5.650 01/01/2014 Aa3/AA-* 10,000 10,223
Rockford AL Public Building Authority Building Revenue 5.750 09/01/2015 NR 10,000 10,030
----------------
20,252
MUNICIPAL UTILITY REVENUE BONDS
4.53% OF NET ASSETS
Douglas AL Water & Fire Protection Authority Water Revenue 5.600 06/01/2015 NR 10,000 10,060
----------------
10,060
----------------
Total Investments (cost $215,210)(a) - 99.73% of Net Assets $ 221,271
================
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized appreciation of securities as
follows:
Unrealized appreciation $ 6,061
Unrealized depreciation -
----------------
Net unrealized appreciation $ 6,061
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE> 16
DUPREE MUTUAL FUNDS - ALABAMA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $215,210) $ 221,271
Interest receivable 3,363
Receivable from Advisor 2,023
-----------------------
Total assets 226,657
LIABILITIES:
Payable for:
Distributions $ 2,832
Transfer agent 133
Other fees 1,828
-------------------
Total liabilities $ 4,793
-----------------------
NET ASSETS:
Capital 215,803
Net unrealized appreciation in value of investments 6,061
-----------------------
Net assets at value $ 221,864
=======================
NET ASSET VALUE, offering price and redemption price per share
($221,864 / 21,516 shares outstanding) $ 10.31
=======================
-------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000
Net investment income:
Interest income $ 5,095
-----------------------
Expenses:
Investment advisory fees 442
Transfer agent 133
Professional fees 1,710
Trustee fees 6
Printing 400
Registration fees 164
Other expenses 54
-----------------------
Total expenses 2,909
Expenses reimbursed by Investment Advisor (2,465)
-----------------------
Net investment income
4,651
-----------------------
Net realized and unrealized gain on investments 6,061
-----------------------
Net increase in net assets resulting from operations $ 10,712
=======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 17
DUPREE MUTUAL FUNDS - ALABAMA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
FOR THE PERIOD 1/1/2000
Increase in net assets: TO 6/30/2000
-----------------------
<S> <C>
Operations:
Net investment income $ 4,651
Net increase in unrealized appreciation 6,061
-----------------------
Net increase in net assets resulting from operations 10,712
Distributions to shareholders from net investment income (4,651)
Net fund share transactions 215,803
-----------------------
Total increase 221,864
Net assets:
Beginning of year -
End of year 221,864
-----------------------
$ 221,864
=======================
</TABLE>
--------------------------------------------------------------------------------
DUPREE MUTUAL FUNDS - ALABAMA TAX-FREE INCOME
SERIES FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
------------------------
For the period 1/1/2000
------------------------
to 6/30/2000(a)
------------------------
NET ASSET VALUE, BEGINNING OF YEAR $10.00
--------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.26
Net gains (losses) on securities
(both realized and unrealized) 0.31
--------------
Total from investment operations 0.57
LESS DISTRIBUTIONS:
Distributions (from net investment (0.26)
income)
--------------
NET ASSET VALUE, END OF YEAR $10.31
==============
Total return(c) 5.79%
Net assets, end of year (in thousands): $222
Ratio of expenses to average net assets(b) 0.50%
Ratio of net investment income to
average net assets(b) 5.23%
After expenses reimbursement(b) 2.46%
Portfolio turnover 0.00%
(a) Commencement of operations January 1, 2000.
(b) Annualized for periods less than a year.
(c) Total return is not annualized.
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 18
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
47.04% OF NET ASSETS
Danville KY Multi-City Lease Revenue-Shelbyville 6.550 07/01/2006 Aaa/AAA* $ 495,000 $ 521,037
Danville KY Multi-City Lease Revenue 6.875 12/01/2010 Aaa/AAA* 400,000 424,852
Daviess County KY Hospital Revenue 6.250 08/01/2012 Aaa/AAA* 3,000,000 3,139,560
Daviess County Ky Hospital Revenue 6.250 08/01/2022 Aaa/AAA* 1,000,000 1,017,550
Floyd County KY Hospital Revenue-Low Highland Hospital 7.500 08/01/2010 AAA* 1,255,000 1,296,779
Greater KY Housing Assistance Corporation 5.350 07/01/2022 Aaa/AAA* 1,000,000 939,730
Greater KY Housing-Tug Fork Apartments 5.600 01/01/2007 Aaa/AAA* 290,000 293,405
Greater KY Housing-Tug Fork Apartments 6.350 01/01/2022 Aaa/AAA* 2,105,000 2,127,524
Greater KY Housing Assistance Corporation 6.050 07/01/2022 Aaa/AAA* 1,435,000 1,450,555
Greater KY Housing Assistance Corporation 6.100 01/01/2024 Aaa/AAA* 4,000,000 4,065,640
Greater Ky Housing Assistance Corporation 6.200 02/01/2025 AAA* 8,735,000 8,823,486
Hopkins County KY Hospital Revenue-Trover Clinic Foundation 6.625 11/15/2011 Aaa/AAA* 2,000,000 2,093,540
Jefferson County KY Health Facilities Alliant Health Service 5.125 10/01/2017 Aaa/AAA* 6,700,000 6,258,805
Jefferson County KY Health Facilities-Alliant Health System 5.125 10/01/2027 Aaa/AAA* 500,000 448,985
Jefferson County KY Health Facilities Jewish Hospital 5.700 01/01/2021 Aaa/AAA* 8,000,000 7,923,680
Jefferson County KY Health Facilities University Medical 5.500 07/01/2017 Aaa/AAA* 6,000,000 5,889,600
Jefferson County KY Health Facilities-Jewish Hospital 6.500 05/01/2015 Aaa/AAA* 6,380,000 6,688,282
Jefferson County Ky School District Finance Corporation 5.250 01/01/2016 Aaa/AAA* 1,000,000 967,050
Jefferson County KY Health Services - Alliant Health 5.125 10/01/2018 Aaa/AAA* 28,000,000 26,397,560
Jefferson County KY Capital Projects Corporation Revenue 5.600 04/01/2014 AAA/Aaa* 1,000,000 1,014,330
Jefferson County KY Capital Projects Corporation Revenue 5.375 06/01/2018 Aaa/AAA* 1,500,000 1,455,450
Jefferson County KY Hospital Revenue 6.436 10/01/2014 Aaa/AAA* 1,500,000 1,581,270
Jefferson County KY Multi Family Revenue 5.000 08/20/2018 AAA* 385,000 349,888
KY Area Development Districts Financing Trailer Lease Program 6.150 12/01/2022 AA* 1,020,000 1,046,316
Kentucky Counties 1987 Single Family Mortgage Revenue 8.625 09/01/2015 AAA* 10,000 10,100
Kentucky Economic Development Finance Authority Medical Center 5.000 02/01/2018 Aaa/AAA* 1,000,000 897,220
Kentucky Development Finance Authority-Ashland Hospital 6.125 02/01/2012 Aaa/AAA* 4,000,000 4,191,040
Kentucky Economic Development Finance Authority-Ashland Hospital 5.000 02/01/2028 Aaa/AAA* 1,000,000 871,950
Kentucky Development Finance Authority-St Clair Medical 5.875 09/01/2013 Aaa 2,000,000 2,052,260
Kentucky Development Finance Authority-St Elizabeth Hospital 5.900 12/01/2015 AAA/Aaa* 2,500,000 2,562,825
Kentucky Development Finance Authority-St Claire Medical 5.625 09/01/2021 AAA* 2,500,000 2,443,850
Kentucky Development Finance Authority-Methodist Hospital 5.625 02/01/2017 AAA* 6,500,000 6,475,365
Kentucky Economic Development Authority-South Central Nursing 6.000 07/01/2011 Aaa/AAA* 3,650,000 3,860,934
Kentucky Economic Development Finance Authority-Baptist Hospital 5.000 08/15/2015 Aaa/AAA* 5,250,000 5,034,488
Kentucky Housing Corporation 5.950 07/01/2017 Aaa/AAA* 1,500,000 1,524,855
Kentucky Housing Corporation 5.400 07/01/2014 Aaa/AAA* 3,000,000 2,942,280
Kentucky Housing Corporation 7.125 01/01/2010 Aaa/AAA* 3,935,000 4,109,596
Kentucky Housing Corporation 7.250 01/01/2017 Aaa/AAA* 330,000 345,045
Kentucky Housing Corporation 6.600 07/01/2011 Aaa/AAA* 285,000 299,923
Kentucky Housing Corporation 6.600 07/01/2011 Aaa/AAA* 4,500,000 4,735,620
Kentucky Housing Corporation 6.625 07/01/2014 Aaa/AAA* 1,000,000 1,052,830
Kentucky Housing Corporation 6.600 01/01/2011 Aaa/AAA* 620,000 655,526
Kentucky Housing Corporation 5.800 01/01/2019 Aaa/AAA* 6,755,000 6,772,360
Kentucky Housing Corporation 6.500 07/01/2017 Aaa/AAA* 5,615,000 5,997,550
Kentucky Housing Corporation 5.700 07/01/2017 Aaa/AAA* 500,000 501,510
Kentucky Housing Corporation 6.400 01/01/2017 Aaa/AAA* 10,955,000 11,689,095
Kentucky Housing Corporation 5.500 01/01/2015 Aaa/AAA* 1,000,000 995,060
Kentucky State Property & Building Commission Project #64 5.500 05/01/2017 Aaa/AAA* 8,000,000 7,930,000
Kentucky State Turnpike Authority Resource Recovery Revenue 6.000 07/01/2009 Aaa/AAA* 740,000 745,550
Lexington Fayette Urban County Government KY Sewer System 6.350 07/01/2007 Aaa/AAA* 400,000 419,844
Lexington Fayette Urban County Government KY Sewer System 6.375 07/01/2010 AAA/Aaa* 2,900,000 3,037,808
Lexington Fayette Urban County Government KY Sewer System 6.375 07/01/2012 AAA/Aaa* 2,500,000 2,618,800
Lexington Fayette Urban County Government Public Facilities 5.125 10/01/2015 Aaa/AAA* 1,770,000 1,698,386
Lexington Fayette Urban County Government Public Facilities 5.125 10/01/2018 Aaa/AAA* 2,135,000 1,994,325
Lexington Fayette Urban County Government Public Facilities 5.125 10/01/2019 Aaa/AAA* 2,415,000 2,240,396
Lexington-Fayette Urban County KY Government Project Revenue 5.000 11/01/2018 Aaa 1,000,000 921,990
Louisville & Jefferson County KY Metropolitan Sewer District 5.300 05/15/2019 Aaa/AAA* 4,000,000 3,838,520
Louisville KY Parking Authority-River City First Mortgage 5.000 12/01/2017 Aaa/AAA* 1,000,000 930,590
McCreary County Courthouse & Public Square Corporation Revenue 5.400 09/01/2020 AAA 1,550,000 1,509,034
Pike County KY Mortgage Revenue-Phelps Regional Health 5.350 09/20/2012 AAA* 280,000 281,798
Radcliff KY Mortgage Revenue-Lincoln Trail Care 5.650 01/20/2019 AAA* 3,110,000 3,145,019
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 19
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS - 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shelbyville KY Certificate of Participation 5.150 07/01/2018 Aaa $ 4,165,000 $ 3,843,087
University of Kentucky Consolidated Educational Buildings 5.750 05/01/2015 AAA/Aaa* 1,850,000 1,889,627
Warren County Ky Hospital Revenue 5.000 04/01/2017 Aaa/AAA* 1,000,000 917,910
Warren County KY Hospital Facility Revenue 5.000 04/01/2016 AAA/Aaa* 1,000,000 925,800
Boyle County KY Hospital Revenue-Ephraim McDowell Regional 5.800 04/01/2014 Aaa/AAA* 1,000,000 1,020,450
---------------
196,145,085
PUBLIC CORPORATION REVENUE BONDS
15.03% OF NET ASSETS
Boone County KY Public Property 6.250 12/15/2012 A1 960,000 1,006,234
Calloway County Public Property Corporation-Courthouse 5.625 03/01/2018 A 1,000,000 994,930
Campbell County KY Public Property 6.250 12/01/2015 A 810,000 840,885
Danville Ky Multi-City Lease Revenue 5.000 09/01/2011 NR 545,000 523,314
Danville KY Multi-City Lease Revenue-Campbellsville 7.000 04/01/2002 NR 165,000 169,125
Danville KY Multi-City Lease Revenue-Owensboro Museum 7.050 08/01/2011 A 440,000 464,024
Danville KY Multi-City Lease Revenue Housing Authority 6.500 02/01/2012 A1 1,170,000 1,230,302
Danville KY Multi-City Lease Revenue Paducah Public Property 7.200 06/01/2011 A 500,000 522,895
Jeffersontown KY Certificate of Participation 6.500 09/01/2009 A 1,400,000 1,497,538
Jeffersontown KY Certificate of Participation 5.750 11/01/2015 A 1,095,000 1,120,360
Kenton County KY Public Property Corporation Revenue 5.700 12/01/2015 A 1,305,000 1,311,186
Kenton County KY Public Property Corporation Revenue 5.700 12/01/2016 A 1,380,000 1,383,229
Kenton County KY Public Properties Corporation-Courthouse Facility 5.000 03/01/2020 A1 2,000,000 1,826,700
Kentucky League of Cities-Middlesboro Series 6.200 08/01/2017 A-* 555,000 578,732
Mt. Sterling KY Lease Revenue-Kentucky League of Cities 6.100 03/01/2008 Aa 1,500,000 1,570,380
Mt. Sterling KY Lease Revenue-Kentucky League of Cities 6.150 03/01/2013 Aa 17,860,000 18,720,138
Mt. Sterling KY Lease Revenue-Kentucky League of Cities 6.200 03/01/2018 Aa 6,500,000 6,738,615
Oldham County KY Public Facilities Construction Corporation 5.250 06/01/2017 A-* 1,060,000 1,013,021
Pendleton County KY Multi-County Lease Revenue 6.500 03/01/2019 A* 16,000,000 16,785,600
Richmond KY Public Recreation Corporation Revenue 7.250 10/01/2011 NR 290,000 303,079
Shelbyville KY Certificates of Participation Revenue Refunding 5.350 10/01/2013 NR 1,295,000 1,236,880
Shelbyville KY Certificate of Participation Revenue Refunding 5.450 10/01/2017 NR 1,130,000 1,051,024
Union County KY Public Property Corporation 6.125 09/01/2015 NR 700,000 719,390
Woodford County KY Public Property Corporation Revenue 5.600 11/01/2017 A 1,065,000 1,060,229
---------------
62,667,810
COUNTY GENERAL OBLIGATION AND SCHOOL BONDS
8.39% OF NET ASSETS
Boone County KY School District Finance Corporation 6.000 02/01/2018 Aa3 1,000,000 1,028,000
Boone County KY School District Finance Corporation 5.700 05/01/2018 Aa3 2,500,000 2,503,200
Boone County Ky School District Finance Corporation 5.500 09/01/2019 Aa3 1,860,000 1,818,913
Boone County KY School District Finance Corporation 5.750 02/01/2020 Aa3 1,200,000 1,208,004
Bullitt County KY School District Finance Corporation 6.000 08/01/2014 Aa3 1,100,000 1,153,955
Clark County KY School District Finance Corporation 6.000 05/01/2012 Aa3 320,000 331,997
Estill County KY School District Finance Corporation 5.875 08/01/2016 A 1,780,000 1,840,734
Floyd County KY School District Finance Corporation 6.000 06/01/2014 Aa3 1,000,000 1,042,170
Greenup County KY School District Finance Corporation 6.100 09/01/2014 Aa3 1,105,000 1,154,073
Hardin County KY General Obligation 5.125 06/01/2019 A2 2,255,000 2,093,632
Hardin County KY School District Finance Corporation 6.000 07/01/2016 Aa3 1,025,000 1,066,554
Harlan KY Independent School District Finance Corporation 6.000 05/01/2015 Aa3 275,000 288,206
Hopkins County KY School District Finance Corporation 6.200 06/01/2015 Aa3 2,500,000 2,633,825
Jefferson County Ky Improvement 6.000 04/01/2020 Aa2/AA* 1,985,000 2,037,761
Jefferson County KY College Project Bellarmine College 5.250 05/01/2019 Baa2 2,000,000 1,857,480
Jessamine County KY School District Finance Corporation 6.125 06/01/2015 Aa3 1,000,000 1,053,450
Laurel County KY School District Finance Corporation 5.600 03/01/2017 Aa3 1,000,000 1,007,580
Laurel County School District School Building Revenue 5.750 06/01/2020 Aa3 1,250,000 1,236,775
Letcher County KY School District Finance Corporation 6.700 10/01/2014 Aa3 1,490,000 1,615,339
McLean County KY School District Finance Corporation 6.000 06/01/2014 NR 1,405,000 1,470,866
Pendleton County KY School District Finance Corporation 5.125 06/01/2019 Aa3 1,140,000 1,073,458
Pike County KY School District Finance Corporation 6.200 08/01/2010 Aa3 305,000 319,006
Pike County KY School District Finance Corporation 6.200 08/01/2011 Aa3 325,000 339,924
Powell County KY School District Finance Corporation 5.900 08/01/2016 Aa3 1,185,000 1,229,046
Scott County KY School District Finance Corporation 5.900 06/01/2016 Aa3 3,450,000 3,567,473
---------------
34,971,420
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 20
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS - 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HOSPITAL AND HEALTHCARE REVENUE BONDS
8.33% OF NET ASSETS
Christian County KY Hospital Revenue-Jennie Stuart Medical 5.800 07/01/2011 A-* $ 270,000 $ 274,836
Christian County KY Hospital Revenue-Jennie Stuart Medical 6.000 07/01/2017 A-* 4,000,000 4,030,280
Christian County KY Hospital Revenue-Jennie Stuart Medical 6.000 07/01/2013 A-* 2,870,000 2,952,541
Jefferson County KY Health Facilities Jewish Hospital 5.700 01/01/2011 A1/AA-* 1,200,000 1,234,992
Jefferson County KY Medical Center Services Revenue 7.300 05/01/2009 A 400,000 414,440
Kentucky Development Finance Authority-Catholic Health 5.000 12/01/2027 Aa2/AA* 10,000,000 8,614,500
Kentucky Development Finance Association-Green River 6.000 11/01/2010 Aa3 1,000,000 1,052,780
KY Economic Development Financial Authority Catholic Health 5.972 12/01/2015 Aa3/AA-* 2,000,000 2,042,020
KY Economic Development Finance Authority-Appalachian Regional 5.875 10/01/2022 BBB* 3,500,000 2,744,105
Kentucky Economic Development Finance Authority-Catholic Health 5.000 12/01/2018 Aa2/AA* 6,950,000 6,340,068
Ky Economic Development Finance Authority Hospital-Appalachian Regional 5.850 10/01/2017 BBB* 1,000,000 866,820
Madison County Ky Industrial Building Revenue - McCready Manor 5.500 06/01/2020 AA* 1,785,000 1,755,226
Pike County KY Mortgage Revenue Phelps Regional Health 5.650 09/20/2027 AAA 2,435,000 2,408,069
---------------
34,730,677
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
7.74% OF NET ASSETS
Ashland KY Pollution Control Revenue-Ashland Oil Project 6.650 08/01/2009 Baa1 8,835,000 9,243,354
Campbellsville KY Industrial Revenue-Campbellsville College 6.950 03/01/2015 NR 1,150,000 1,227,407
Campbellsville KY Industrial Revenue-Campbellsville College 6.000 03/01/2017 NR 1,920,000 1,948,205
Carroll County KY Collateralized Pollution Control Revenue 6.250 02/01/2018 Aa2/AA-* 1,000,000 1,040,690
Jefferson County KY Pollution Control Revenue-E I DuPont 6.300 07/01/2012 Aa3/AA* 3,500,000 3,731,140
Jefferson County KY Pollution Control-Louisville Gas 5.625 08/15/2019 Aa2/AA* 9,150,000 8,873,304
Kentucky League of Cities-Ashland Series 6.250 08/01/2017 A- 1,550,000 1,619,084
Meade County KY Pollution Control Revenue-Olin Corporation 6.000 07/01/2007 NR 575,000 578,019
Mercer County KY Collateralized Pollution Control Revenue 6.250 02/01/2018 Aa2/AA-* 2,500,000 2,589,675
Middlesboro KY Industrial Building Revenue-Fern Lake Project 6.200 12/01/2002 NR 365,000 373,329
Muhlenberg County KY Collateralized Pollution Control Revenue 6.250 02/01/2018 Aa2/AA* 1,000,000 1,036,490
---------------
32,260,696
STATE GENERAL OBLIGATION AND AGENCY BONDS
4.05% OF NET ASSETS
Kentucky Higher Education Student Loan 9.250 06/01/2001 Aa/Aa-* 180,000 188,269
Kentucky Infrastructure Authority 5.750 08/01/2013 Aa3/A* 900,000 918,198
Kentucky Infrastructure Authority 5.750 08/01/2018 Aa3/A* 1,500,000 1,507,770
Kentucky Infrastructure Authority 6.375 08/01/2014 Aa3/A* 700,000 744,821
Kentucky Infrastructure Authority 5.375 02/01/2018 Aa3/A* 2,000,000 1,936,920
Kentucky Infrasturcture Authority 5.000 06/01/2017 Aa3/A* 1,035,000 955,895
Kentucky State Property & Buildings Commission Project #59 5.700 11/01/2014 Aa3/A* 1,000,000 1,012,460
KY State Property & Building Revenue Project #65 5.950 02/01/2017 Aa3/A+* 1,000,000 1,035,380
Kentucky State Property & Building Commission Project #63 5.100 11/01/2018 Aa3/A* 2,000,000 1,875,240
KY State Property & Buildings Revenue Project #65 6.000 02/01/2018 Aa3/A+* 1,000,000 1,030,800
Kentucky State Property & Buildings Commission Project #54 6.000 09/01/2012 Aa3/A+* 1,210,000 1,261,824
Kentucky State Property & Buildings Commission Project #59 5.625 11/01/2015 Aa3/A* 1,000,000 1,004,980
Kentucky State Property & Buildings Commission Project #40 6.875 11/01/2007 Aa3/A* 3,250,000 3,418,675
---------------
16,891,232
PREREFUNDED BONDS
2.55% OF NET ASSETS
Danville KY Multi-City Lease Revenue-Shelbyville 6.700 07/01/2011 Aaa/AAA* 2,500,000 2,641,050
Danville KY Multi-City Lease Revenue-Mt Sterling 7.375 06/01/2007 NR 240,000 249,077
Danville KY Multi-City Lease Revenue-Mt Sterling 7.500 06/01/2011 NR 205,000 212,755
Elsmere KY Industrial Development Revenue-Courtaulds plc 6.750 04/01/2010 NR 2,000,000 2,195,700
Erlanger KY Public Property Revenue-Fire Protection 7.400 11/01/2008 BBB+* 75,000 78,174
Erlanger KY Public Property Revenue-Fire Protection 7.400 11/01/2009 BBB+* 100,000 104,232
Jefferson County KY Hospital Revenue 6.436 10/01/2014 Aaa/AAA* 2,500,000 2,635,450
Kentucky Infrastructure Authority 6.000 08/01/2011 Aaa/AAA* 90,000 92,890
Martin County KY Public Property Corporation Revenue 7.250 09/01/2010 NR 150,000 156,302
Martin County KY Public Property Corporation Revenue 7.250 09/01/2011 NR 160,000 166,722
Owensboro KY Water Revenue 6.250 09/15/2009 Aaa/AAA* 800,000 830,584
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 21
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS - 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richmond KY Public Recreation Corporation Revenue 6.750 08/01/2013 NR $ 575,000 $ 617,740
Shelbyville KY Public Property Recreational Corporation 6.900 10/01/2012 NR 400,000 426,476
Wurtland KY Sewer System Revenue 7.700 10/01/2004 A+* 200,000 207,974
---------------
10,615,125
STATE AND LOCAL MORTGAGE REVENUE BONDS
2.12% OF NET ASSETS
Florence KY Housing Facility Revenue 6.300 08/15/2019 A/A* 2,615,000 2,616,831
Floyd County KY Public Property Revenue-Justice Center 6.125 09/01/2018 A 1,240,000 1,296,048
Kentucky Housing Corporation 7.400 01/01/2010 Aaa/AAA* 2,290,000 2,335,983
Kentucky Housing Corporation 7.550 01/01/2016 Aaa/AAA* 1,955,000 1,998,714
Louisville Housing Assistance Mortgage Corp Rivertown Project 5.100 07/01/2024 Aa2 655,000 589,723
---------------
8,837,298
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
1.80% OF NET ASSETS
Georgetown College Project Series A 6.000 11/15/2016 A 1,000,000 1,029,850
Georgetown College Project Series A 6.250 11/15/2020 A 4,000,000 4,054,920
Kentucky Housing Corporation Revenue Series E 4.750 07/01/2017 Aaa/AAA* 1,335,000 1,196,721
University of Louisville Health & Education 6.000 11/01/2013 A2 1,180,000 1,222,091
---------------
7,503,581
MUNICIPAL UTILITY REVENUE BONDS
1.28% OF NET ASSETS
Cynthiana KY Waterworks & Sewer Revenue 6.400 01/01/2007 BBB-* 575,000 604,296
Danville KY Multi-City Lease Revenue-Ashland Utilities 6.750 04/01/2012 BBB+* 915,000 966,597
Danville KY Multi-City Lease Revenue-Hopkinsville 6.875 06/01/2012 Baa1 2,170,000 2,479,377
Franklin KY Water & Sewer Revenue Refunding 6.200 12/01/2011 Baa 1,000,000 1,042,630
Pendleton County KY Multi-County Lease Revenue 7.450 03/01/2004 AA* 245,000 253,604
---------------
5,346,504
LOCAL GENERAL OBLIGATION AND SCHOOL BONDS
.86% OF NET ASSETS
Covington Independent School District Finance Corporation 5.250 06/02/2019 Aa3 1,225,000 1,167,070
Junction City KY College Revenue-Center College Project 5.875 04/01/2017 A2 1,000,000 1,024,280
KY Interlocal Transportation Equipment Lease Revenue 6.000 12/01/2020 A 400,000 411,732
Richmond KY Court Facilities Corporation Revenue 5.250 02/01/2019 A3 1,035,000 987,690
---------------
3,590,772
Total Investments (cost $413,013,050)(a) - 99.19% of Net Assets $ 413,560,200
===============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes
and differs from market value by net unrealized appreciation of securities
as follows:
Unrealized appreciation $ 9,450,125
Unrealized depreciation (8,902,975)
---------------
Net unrealized appreciation $ 547,150
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 22
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $413,013,050) $ 413,560,200
Cash 127,884
Interest receivable 7,756,734
Receivable for investments sold 1,005,000
-----------------------
Total assets 422,449,818
LIABILITIES:
Payable for:
Distributions $ 5,190,058
Fund shares redeemed 24,191
Management fee 146,875
Transfer agent 41,474
Other fees 89,775
-------------------
Total liabilities 5,492,373
-----------------------
NET ASSETS:
Capital 419,482,317
Net accumulated realized losses on investment transactions (3,072,022)
Net unrealized appreciation in value of investments 547,150
-----------------------
Net assets at value $ 416,957,445
=======================
NET ASSET VALUE, offering price and redemption price per share
($416,957,445 / 57,761,324 shares outstanding) $ 7.22
=======================
-------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 24,280,129
-----------------------
Expenses:
Investment advisory fees 1,811,557
Transfer agent 511,881
Professional fees 82,453
Trustee fees 42,032
Other expenses 95,219
-----------------------
Total expenses 2,543,142
-----------------------
Net investment income 21,736,987
-----------------------
Realized and unrealized gain on investments
Net realized loss (2,940,650)
Net decrease in unrealized appreciation (11,813,030)
-----------------------
Net realized and unrealized loss on investments (14,753,680)
-----------------------
Net increase in net assets resulting from operations $ 6,983,307
=======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 23
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
Increase in net assets: 2000 1999
----------------------------------------------------
<S> <C> <C>
Operations:
Net investment income
Net realized gain (loss) on investments $ 21,736,987 $ 20,084,548
Net decrease in unrealized appreciation (2,940,650) 1,281,160
(11,813,030) (11,896,917)
----------------------------------------------------
Net increase in net assets resulting from operations
Distributions to shareholders from net investment income 6,983,307 9,468,791
Net fund share transactions (21,736,987) (20,084,548)
8,715,183 60,459,091
----------------------------------------------------
Total increase (decrease)
(6,038,497) 49,843,334
Net assets:
Beginning of year
End of year 422,995,942 373,152,608
----------------------------------------------------
$ 416,957,445 $ 422,995,942
====================================================
</TABLE>
--------------------------------------------------------------------------------
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
<TABLE>
<CAPTION>
For the years ended June 30,
-----------------------------------------------------------------
2000 1999 1998 1997 1996 (a)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $7.47 $7.65 $7.47 $7.35 $7.29
-----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.38 0.37 0.39 0.40 0.40
Net gains (losses) on securities
(both realized and unrealized) (0.25) (0.18) 0.18 0.12 0.06
-----------------------------------------------------------------
Total from investment operations 0.13 0.19 0.57 0.52 0.46
LESS DISTRIBUTIONS:
Distributions (from capital gains) -- -- -- -- --
Distributions (from net investment (0.38) (0.37) (0.39) (0.40) (0.40)
income)
-----------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $7.22 $7.47 $7.65 $7.47 $7.35
=================================================================
Total return 1.78% 2.52% 7.77% 7.14% 6.38%
Net assets, end of year (in thousands): $416,957 $422,996 $373,153 $327,304 $295,029
Ratio of expenses to average net assets 0.61% 0.61% 0.62% 0.63% 0.62%
Ratio of net investment income to
average net assets 5.17% 4.88% 5.14% 5.32% 5.39%
Portfolio turnover 15.74% 10.69% 11.80% 6.64% 4.29%
(a) Audited by other auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 24
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
31.34% OF NET ASSETS
Carrolton & Henderson KY Public Building Authority Gas Revenue 4.500 01/01/2003 Aaa/AAA* $ 620,000 $ 619,126
Greater KY Housing Assistance Corporation Mortgage Revenue 6.250 01/01/2005 Aaa/AAA* 620,000 631,011
Jefferson County KY Capital Project Corporation Lease Revenue 5.500 04/01/2005 Aaa/AAA* 365,000 375,242
KY Economic Development Finance Authority Baptist Health System 4.750 08/15/2005 Aaa/AAA* 4,000,000 3,951,480
Kentucky Economic Development Finance Authority Ashland Hospital 5.000 02/01/2005 Aaa/AAA* 500,000 500,785
KY Turnpike Authority Economic Development Road Revenue 5.500 07/01/2007 Aaa/AAA* 3,000,000 3,093,060
Lexington-Fayette Urban County Government Ky Alumni Association 5.000 11/01/2009 Aaa 1,360,000 1,355,893
Louisville & Jefferson County Metro Sewer District Revenue 5.000 05/15/2006 Aaa/AAA* 2,505,000 2,509,158
Louisville & Jefferson County Airport Authority System Revenue 5.600 07/01/2013 Aaa/AAA* 2,000,000 2,022,540
Northern KY University Certificate of Participation Housing Facilities 4.500 12/01/2004 Aaa/AAA* 1,000,000 991,280
--------------
16,049,575
PUBLIC FACILITIES REVENUE BONDS
15.65% OF NET ASSETS
Jeffersontown KY Certificates of Participation 4.450 11/01/2000 A 555,000 556,093
Mt Sterling KY Lease Revenue KY League of Cities Series:A 5.625 03/01/2003 Aa 6,150,000 6,303,074
Shelbyville Certificates of Participation Refinancing 4.900 10/01/2007 NR 1,205,000 1,156,800
--------------
8,015,967
STATE MORTGAGE REVENUE BONDS
14.11% OF NET ASSETS
KY Housing Corporation Housing Revenue 4.850 07/01/2004 Aaa/AAA* 1,700,000 1,693,897
KY Housing Corporation Housing Revenue 5.150 07/01/2007 Aaa/AAA* 3,225,000 3,247,994
KY Housing Corporation Housing Revenue 5.300 01/01/2004 Aaa/AAA* 2,250,000 2,280,803
--------------
7,222,694
HOSPITAL AND HEALTHCARE REVENUE BONDS
12.13% OF NET ASSETS
Christian County KY Hospital Jennie Stuart Medical Center 5.250 07/01/2003 A-* 200,000 200,620
KY Development Finance Authority-Sisters of Charity 6.000 11/01/2000 A1/A+* 1,000,000 1,007,780
KY Economic Development Finance Authority Catholic Health 5.500 12/01/2010 Aa3/AA-* 2,100,000 2,143,302
Kentucky Economic Development Finance Authority Catholic Health 5.500 12/01/2005 Aa2/AA* 1,000,000 1,022,950
KY Economic Development Finance Authority Catholic Health 5.500 12/01/2006 Aa2/AA* 1,790,000 1,835,573
--------------
6,210,225
RENTALS/MUNICIPAL LEASE BONDS
6.96% OF NET ASSETS
KY Asset Liability Community General Fund Project Notes 4.000 03/01/2003 A2/A+* 1,000,000 979,140
Pendleton County KY Multi-Lease Revenue 7.550 03/01/2010 AA-* 2,500,000 2,586,450
--------------
3,565,590
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.44% OF NET ASSETS
Murray State University Revenue Series G, Second Series 5.600 05/01/2006 A3/A* 1,000,000 1,022,830
University of KY Consolidated Education Building Series:N 5.900 05/01/2003 A1/AA-* 725,000 747,018
University of Louisville KY Consolidated Education Building 5.200 05/01/2004 A1/AA-* 1,000,000 1,013,790
--------------
2,783,638
PREREFUNDED BONDS
5.23% OF NET ASSETS
Danville KY Multi-City Lease Revenue Hopkinsville 6.200 06/01/2001 Baa1 165,000 167,581
Owensboro KY Electric Light & Power Revenue 10.500 01/01/2004 AAA* 2,270,000 2,510,620
--------------
2,678,201
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 25
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT TO MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS - 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATE GENERAL OBLIGATION AND AGENCY BONDS
3.93% OF NET ASSETS
KY State Property & Building Community Revenue Project#55 4.700 09/01/2004 A2/A+* $2,030,000 $ 2,014,734
--------------
2,014,734
LOCAL GENERAL OBLIGATION AND SCHOOL BONDS
2.37% OF NET ASSETS
KY Interlocal School Transportation Association Equipment L 4.800 03/01/2003 Aa3 500,000 500,960
KY Interlocal School Transportation Association Equipment L 4.900 03/01/2004 Aa3 500,000 502,295
Kentucky Interlocal Transportation Equipment Lease 4.750 12/01/2000 Aa/AA* 3,000 3,010
KY Interlocal Transportation Equipment Lease 4.550 12/01/2000 AA* 89,000 89,000
KY Interlocal Transportation Equipment Lease 4.500 12/01/2000 AA-* 204,000 205,224
--------------
1,300,489
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
1.15% OF NET ASSETS
Meade County KY Pollution Control Revenue-Olin Corporation 6.000 07/01/2007 NR 580,000 589,118
--------------
589,118
COUNTY GENERAL OBLIGATION AND SCHOOL BONDS
.99% OF NET ASSETS
Kenton County KY School District Finance Corporation 5.200 03/01/2005 Aa3/AA* 500,000 507,200
--------------
507,200
Total Investments (cost $50,934,082)(a) - 99.47% of Net Assets $ 50,937,431
==============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes
and differs from market value by net unrealized appreciation of securities
as follows:
Unrealized appreciation $ 170,057
Unrealized depreciation (166,708)
----------------
Net unrealized appreciation $ 3,349
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 26
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investment in securities, at value (Cost: $50,934,082) $ 50,937,431
Interest receivable 960,041
Receivable for investments sold 668,918
-----------------------
Total assets 52,566,390
LIABILITIES:
Cash overdraft $ 780,019
Payable for:
Distributions 190,321
Fund shares redeemed 353,574
Management fee 21,485
Transfer agent 5,647
Other fees 9,849
------------------
Total liabilities 1,360,895
-----------------------
NET ASSETS:
Capital
52,233,613
Net accumulated realized losses on investment transactions (1,031,467)
Net unrealized appreciation in value of investments 3,349
-----------------------
Net assets at value $ 51,205,495
=======================
NET ASSET VALUE, offering price and redemption price per share
($51,205,495 / 10,051,447 shares outstanding) $ 5.09
=======================
-----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 2,644,436
-----------------------
Expenses:
Investment advisory fees 278,951
Transfer agent 72,965
Professional fees 7,663
Trustee fees 5,614
Other expenses 18,256
-----------------------
Total expenses 383,449
-----------------------
Net investment income
2,260,987
-----------------------
Realized and unrealized gain/loss on investments
Net realized loss
(415,775)
Net decrease in unrealized appreciation (689,681)
-----------------------
Net realized and unrealized loss on investments (1,105,456)
-----------------------
Net increase in net assets resulting from operations $ 1,155,531
=======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 27
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
---------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 2,260,987 $ 2,317,228
Net realized gain (loss) on investments (415,775) 69,983
Net increase (decrease) in unrealized appreciation (689,681) (948,824)
---------------------------------------------
Net increase in net assets resulting from operations 1,155,531 1,438,387
Distributions to shareholders from net investment income (2,260,987) (2,317,228)
Net fund share transactions (6,318,760) 5,384,908
---------------------------------------------
Total increase (decrease) (7,424,216) 4,506,067
Net assets:
Beginning of year 58,629,711 54,123,644
---------------------------------------------
End of year $ 51,205,495 $ 58,629,711
=============================================
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
<TABLE>
<CAPTION>
For the years ended June 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996(a)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $5.20 $5.27 $5.22 $5.20 $5.18
------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.21 0.21 0.21 0.22 0.21
Net gains ( losses) on securities
(both realized and unrealized) (0.11) (0.07) 0.05 0.02 0.02
------------------------------------------------------------------
Total from investment operations 0.10 0.14 0.26 0.24 0.23
LESS DISTRIBUTIONS:
Distributions (from net investment (0.21) (0.21) (0.21) (0.22) (0.21)
income)
------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $5.09 $5.20 $5.27 $5.22 $5.20
==================================================================
Total return 1.95% 2.58% 5.12% 4.59% 4.51%
Net assets, end of year (in thousands) $51,205 $58,630 $54,124 $53,829 $66,574
Ratio of expenses to average net assets 0.69% 0.72% 0.74% 0.72% 0.75%
Ratio of net investment income to
average net assets 4.06% 3.89% 4.05% 4.11% 4.04%
Portfolio turnover 30.57% 27.38% 20.98% 20.03% 57.80%
(a) Audited by other
auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 28
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
MISSISSIPPI MUNICIPAL BONDS -- 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
69.11% OF NET ASSETS
Region IV Financial Corporation MS Greentree Apts - Series A 5.550 08/01/2010 Aa2* 10,000 $ 10,007
Gautier Mississippi Utilities District 6.375 03/01/2019 Aaa/AAA* 10,000 10,216
Hinds County MS Revenue Refunding-MS Methodist Hospital 5.600 05/01/2012 Aaa/AAA* 5,000 5,132
MS Business Financial Corporation Pollution Control Revenue 5.500 02/01/2026 Aaa/AAA* 10,000 9,525
MS Development BK Special Obligation Flowood Revenue Project 5.625 11/01/2019 Aaa/AAA* 10,000 9,912
MS Development BK Special Obligation Natchez Convention Center 5.800 07/01/2019 Aaa/AAA* 25,000 25,325
MS Development BK Special Obligation Gulfport Combined Water 5.500 07/01/2015 Aaa/AAA* 10,000 9,970
MS Development Bank Special Obligation Desoto County 5.900 07/01/2021 AAA* 5,000 5,004
MS Hospital Equipment & Facilities Singing River Hospital 5.500 03/01/2023 Aaa/AAA* 15,000 14,254
MS Development BK Special Obligation Culkin Water District 5.800 07/01/2018 Aaa/AAA* 25,000 25,297
Tupelo MS Public School District 5.375 11/01/2015 Aaa/AAA* 20,000 19,660
University MS Educational Building - Stadium A 5.500 12/01/2017 Aaa/AAA* 5,000 4,939
Walnut Grove Correctional Authority Certificates of Participation 6.000 11/01/2019 Aaa/AAA* 15,000 15,446
---------------
164,688
MUNICIPAL UTILITY REVENUE BONDS
10.13% OF NET ASSETS
Harrison County MS Wastewater Management District 5.000 02/01/2015 AAA/Aaa* 15,000 14,254
MS Development Bank Special Obligation-Bay St Louis 5.375 07/01/2014 A* 10,000 9,889
---------------
24,142
COUNTY GENERAL OBLIGATION BONDS
8.46% OF NET ASSETS
MS Development BK Special Obligation Adams County Juvenile 5.900 07/01/2017 A* 10,000 10,182
Richland MS Tax Increment 5.600 06/01/2013 NR 10,000 9,972
---------------
20,154
PUBLIC FACILITIES REVENUE BONDS
4.26% OF NET ASSETS
Mississippi Development Bank Special Obligation - Southaven 6.200 03/01/2020 A* 10,000 10,153
---------------
10,153
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 29
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
MISSISSIPPI MUNICIPAL BONDS -- 100%
JUNE 30, 2000
<TABLE>
<CAPTION>
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOCAL GENERAL OBLIGATION BONDS
4.25% OF NET ASSETS
Biloxi MS Tax Increment - Limited Obligation - Series A 5.900 10/01/2019 A* 10,000 10,127
---------------
10,127
Total Investments (cost $222,405)(a) - 96.20% of Net Assets $ 229,264
===============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized appreciation of securities as
follows:
Unrealized appreciation $ 6,859
Unrealized depreciation -
---------------
Net unrealized appreciation $ 6,859
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 30
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $222,405) $ 229,264
Cash 16,000
Interest receivable 5,622
Receivable from Advisor 2,030
-----------------------
Total assets 252,916
LIABILITIES:
Payable for:
Investment purchased $ 9,963
Distributions 2,680
Transfer agent 129
Other fees 1,833
-------------------
Total liabilities $ 14,605
-----------------------
NET ASSETS:
Capital 231,452
Net unrealized appreciation in value of investments 6,859
-----------------------
Net assets at value $ 238,311
=======================
NET ASSET VALUE, offering price and redemption price per share
($238,311 / 23,034 shares outstanding) $ 10.35
=======================
-------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000
Net investment income:
Interest income $ 5,005
-----------------------
Expenses:
Investment advisory fees 431
Transfer agent 129
Professional fees 1,709
Trustee fees 6
Printing 400
Registration fees 163
Other expenses 53
-----------------------
Total expenses 2,891
Expenses reimbursed by Investment Advisor (2,461)
-----------------------
Net investment income
4,575
-----------------------
Net realized and unrealized gain on investments 6,859
-----------------------
Net increase in net assets resulting from operations $ 11,434
=======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 31
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1/2000
Increase in net assets: TO 6/30/2000
-----------------------
<S> <C>
Operations:
Net investment income $ 4,575
Net realized gain (loss) on investments -
Net increase in unrealized appreciation 6,859
-----------------------
Net increase in net assets resulting from operations 11,434
Distributions to shareholders from net investment income (4,575)
Net fund share transactions 231,452
-----------------------
Total increase 238,311
Net assets:
Beginning of year -
End of year 238,311
-----------------------
$ 238,311
=======================
</TABLE>
--------------------------------------------------------------------------------
DUPREE MUTUAL FUNDS - MISSISSIPPI TAX-FREE INCOME SERIES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
For the period 1/1/2000
to 6/30/2000(a)
--------------
NET ASSET VALUE, BEGINNING OF YEAR $10.00
--------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.27
Net gains (losses) on securities
(both realized and unrealized) 0.35
--------------
Total from investment operations 0.62
LESS DISTRIBUTIONS:
Distributions (from net investment (0.27)
income)
--------------
NET ASSET VALUE, END OF YEAR $10.35
==============
Total return (c) 6.24%
Net assets, end of year (in thousands): $238
Ratio of expenses to average net assets(b) 0.50%
Ratio of net investment income to
average net assets(b) 5.31%
After expenses reimbursement(b) 2.45%
Portfolio turnover 0.00%
(a) Commencement of operations January 1, 2000.
(b) Annualized for periods less than a year.
(c) Total return is not annualized.
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 32
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY PAR MARKET
BOND DESCRIPTION COUPON DATE RATING# VALUE VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
45.02% OF NET ASSETS
Catawba County NC Catawba Memorial Hospital Revenue 5.000 10/01/2017 Aaa/AAA* $ 500,000 $ 461,835
Craven NC Regional Medical Authority Health Care Facilities 5.625 10/01/2017 Aaa/AAA* 10,000 9,917
Cumberland County NC Civic Center Project Certificates of
Participation 5.000 12/01/2018 Aaa/AAA* 500,000 464,690
Cumberland County NC Detention Center & Mental Health Revenue 5.500 06/01/2019 Aaa/AAA* 1,000,000 980,370
Dare County NC Utility System Revenue 5.250 06/01/2018 Aaa/AAA* 250,000 238,268
Elizabeth City NC Housing Development Mortgage Revenue 6.125 04/01/2023 Aa 140,000 142,185
Fayetteville NC Public Works Community Revenue 5.100 03/01/2015 Aaa/AAA* 400,000 380,520
Gaston County NC Public Facilities Project Certificates
of Participation 5.250 12/01/2016 Aaa/AAA* 850,000 833,468
Gastonia NC Combined Utilities Systems Revenue 5.625 05/01/2019 Aaa/AAA* 500,000 497,370
Greenville NC Housing Development Corp Series A 5.800 07/01/2024 Aaa/AAA* 40,000 39,795
New Hanover County NC Certificates of Participation 5.000 12/01/2017 Aaa/AAA* 250,000 232,910
New Hanover County NC Hospital Revenue 5.750 10/01/2026 Aaa/AAA* 100,000 97,999
New Hanover County NC Hospital Revenue 5.000 10/01/2019 Aaa/AAA* 1,110,000 1,020,989
NC Central University Housing System Revenue 5.800 11/01/2018 Aaa/AAA* 50,000 50,921
NC Central University Housing System Revenue 5.800 11/01/2020 Aaa/AAA* 60,000 60,785
NC Eastern Municipal Power Agency Power System Refunding 5.375 01/01/2024 Aaa/AAA* 1,000,000 940,950
NC Eastern Municipal Power Agency Power System Revenue 5.700 01/01/2015 Aaa/AAA* 345,000 348,702
NC Eastern Municipal Power Agency Power System Revenue 5.750 01/01/2019 Aaa/AAA* 100,000 100,255
NC Medical Care Community Hospital Revenue-High Point 5.000 10/01/2019 Aaa/AAA* 500,000 458,265
NC Medical Care Community Hospital Revenue-St Joseph 5.100 10/01/2014 AAA/Aaa* 5,000 4,700
NC Medical Care Community Hospital Revenue-Stanly Hospital 5.375 10/01/2014 Aaa/AAA* 50,000 49,823
NC Medical Care Community Hospital Revenue-Wilson Memorial 5.625 11/01/2018 Aaa/AAA* 80,000 78,958
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.750 01/01/2020 Aaa/AAA* 50,000 50,000
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.500 01/01/2014 Aaa/AAA* 250,000 252,853
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.125 01/01/2017 Aaa/AAA* 550,000 514,784
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.000 01/01/2015 Aaa/AAA* 5,000 4,738
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.125 01/01/2017 Aaa/AAA* 500,000 471,550
Pitt County NC Public Facilities Certificates of Participation 5.850 04/01/2017 Aaa/AAA* 100,000 102,396
Randolph County NC Certificates of Participation 5.750 06/01/2022 Aaa/AAA* 500,000 498,120
Union County NC Enterprise System Revenue 5.500 06/01/2021 AAA/Aaa* 245,000 236,721
University of NC at Wilmington Dorm & Dining System Revenue 5.400 01/01/2018 Aaa/AAA* 120,000 117,344
Winston Salem NC State University Revenue Student Services 5.400 06/01/2012 Aaa/AAA* 10,000 10,103
---------
9,752,282
</TABLE>
<TABLE>
<CAPTION>
HOSPITAL AND HEALTHCARE REVENUE BONDS
25.30% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Charlotte-Mecklenburg NC Health Care System 5.750 01/15/2021 Aa3/AA* 250,000 242,955
Charlotte-Mecklenburg NC Health Care System 5.875 01/15/2026 Aa3/AA* 50,000 50,074
Cumberland County NC Hospital Facilities Revenue 5.250 10/01/2019 A3/A-* 1,000,000 916,010
NC Medical Care Community Hospital Revenue-Baptist Hospital 6.375 06/01/2014 Aa3/AA* 45,000 47,113
NC Medical Care Community Hospital Revenue-Baptist Hospital 6.000 06/01/2022 Aa/AA* 45,000 45,199
NC Medical Care Community Hospital Revenue-Carolina Medicorp 5.500 05/01/2015 Aa3/AA* 70,000 69,434
NC Medical Care Community Hospital Revenue-Duke University
Hospital 5.000 06/01/2018 Aa3/AA* 300,000 273,456
NC Medical Care Community Hospital Revenue-Duke University
Hospital 5.250 06/01/2017 Aa3/AA* 900,000 856,359
NC Medical Care Community Hospital Revenue-Duke University
Hospital 5.250 06/01/2021 Aa3/AA* 150,000 139,725
NC Medical Care Community Hospital Revenue-Gaston Memorial 5.500 02/15/2019 A2/A+* 150,000 141,966
NC Medical Care Community Hospital Revenue-Pitt County 5.000 12/01/2018 Aa3/AA-* 500,000 456,120
NC Medical Care Community Hospital Revenue-Presbyterian 5.500 10/01/2014 Aa/AA+* 35,000 34,622
NC Medical Care Community Hospital Revenue-Presbyterian 5.500 10/01/2020 Aa3/AA* 1100,000 1,060,862
NC Medical Care Community Hospital Revenue-Rex Hospital 5.000 06/01/2017 Aaa/AAA* 500,000 466,930
University of NC at Chapel Hill Hospital Revenue 6.000 02/15/2024 Aa/AA* 100,000 104,340
University of NC at Chapel Hill Hospital Revenue 5.250 02/15/2019 Aa3/AA* 105,000 98,810
University of NC at Chapel Hill Hospital Revenue 5.250 02/15/2017 Aaa/AAA* 500,000 474,970
-----------
5,478,945
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 33
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY PAR MARKET
BOND DESCRIPTION COUPON DATE RATING# VALUE VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COUNTY GENERAL OBLIGATION BONDS
8.51% OF NET ASSETS
Forsyth County NC Certificates of Participation 5.000 10/01/2018 Aa2/AA* $ 400,000 $ 370,160
Pitt County NC Certificates of Participation School Facilities 5.500 04/01/2020 Aaa/AAA* 500,000 492,260
Union County NC General Obligation Series B 5.400 03/01/2017 Aaa/AAA* 1,000,000 981,610
---------
1,844,030
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.40% OF NET ASSETS
NC Educational Facilities Finance Agency St Augustines 5.250 10/01/2018 AA* 600,000 585,504
NC Educational Facilities Finance Agency St Augustines 5.250 10/01/2028 AA* 630,000 583,720
---------
1,169,224
MUNICIPAL UTILITY REVENUE BONDS
5.21% OF NET ASSETS
Charlotte NC Water & Sewer System Revenue 5.250 12/01/2021 Aa/AA* 715,000 671,249
Greenville NC Enterprise System Revenue 6.000 09/01/2010 A1/A+* 100,000 104,866
NC Eastern Municipal Power Agency Power System Revenue 5.500 01/01/2017 Aaa/AAA* 150,000 147,605
Orange NC Water and Sewer Revenue Bond 5.200 07/01/2016 Aa2/AA* 210,000 205,538
---------
1,129,257
PUBLIC FACILITIES REVENUE BONDS
3.89% OF NET ASSETS
Charlotte NC Certificate of Participation Law Project B 5.375 06/01/2013 Aa1/AA* 100,000 100,573
Charlotte NC Certificate Participation Convention Facility 5.500 12/01/2020 Aa2/AA+* 700,000 680,729
Shelby NC Combined Enterprise System Revenue 5.625 05/01/2014 A/A-* 20,000 19,951
Shelby NC Combined Enterprise System Revenue 5.625 05/01/2014 A/A-* 40,000 40,323
---------
841,576
PREREFUNDED BONDS
3.27% OF NET ASSETS
Catawba County NC Catawba Memorial Hospital Revenue 6.000 10/01/2017 Aaa/AAA* 100,000 104,958
Cumberland County NC Hospital Facilities Revenue 6.000 10/01/2021 AAA/Aaa* 90,000 92,182
Forsyth County NC General Obligation Public Improvement 5.600 08/01/2009 Aa1/AAA* 5,000 5,160
Greensboro NC Coliseum Complex Improvement Project Series A 5.700 12/01/2010 A1/AA* 55,000 58,237
Monroe NC Combined Enterprise System Revenue 6.000 03/01/2019 A/A* 100,000 105,805
NC Eastern Municipal Power Agency Power System Revenue 6.000 01/01/2026 AAA/BBB* 15,000 15,725
Pitt County NC Memorial Hospital Revenue 5.500 12/01/2015 Aaa/AAA* 325,000 326,160
---------
708,227
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 34
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY PAR MARKET
BOND DESCRIPTION COUPON DATE RATING# VALUE VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATE AND LOCAL MORTGAGE REVENUE BONDS
2.87% OF NET ASSETS
Lenoir NC Housing Authority Mortgage Revenue 5.700 08/20/2024 AAA* $ 100,000 $ 98,192
NC Housing Finance Agency Single Family Revenue Series Y 6.300 09/01/2015 Aaa/AA* 140,000 146,226
NC Housing Finance Agency Single Family Revenue Series II 6.200 03/01/2016 Aa2/AA* 85,000 87,231
NC Housing Finance Agency Single Family Revenue Series KK 5.875 09/01/2017 Aa2/AA+* 90,000 91,126
NC Housing Finance Agency Home Ownership Revenue 5.125 07/01/2013 Aa2/AA* 100,000 97,090
Vance County NC Housing Mortgage Revenue Henderson Project 6.150 03/01/2022 Aa2 100,000 101,278
------------
621,143
Total Investments (cost $22,334,519)(a) - 99.47% of Net Assets $ 21,544,685
============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized depreciation of securities as
follows:
Unrealized appreciation $ 102,355
Unrealized depreciation (892,189)
-------------
Net unrealized depreciation $ (789,834)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 35
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost $22,334,519) $ 21,544,685
Cash 109,527
Interest receivable 299,865
Receivable from Advisor 2,937
---------------
Total assets 21,957,014
LIABILITIES:
Payable for:
Distributions $ 252,679
Fund shares redeemed 31,734
Management fee 8,867
Transfer agent 2,620
Other fees 935
-----------
Total liabilities 296,835
---------------
NET ASSETS:
Capital
22,568,456
Net accumulated realized loss on investment transactions (118,443)
Net unrealized depreciation in value of investments (789,834)
----------------
Net assets at value $ 21,660,179
================
NET ASSET VALUE, offering price and redemption price per share
($21,660,179/2,121,326 shares outstanding) $ 10.21
================
---------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 1,097,454
---------------
Expenses:
Investment advisory fees 100,495
Transfer agent 30,070
Professional fees 4,806
Trustee fees 1,978
Other expenses 6,767
---------------
Total expenses 144,116
Expenses reimbursed by Investment Advisor (33,574)
---------------
Net investment income 986,912
---------------
Realized and unrealized loss on investments
Net realized loss
(118,443)
Net decrease in unrealized appreciation (584,892)
---------------
Net realized and unrealized loss on investments (703,335)
---------------
Net increase in net assets resulting from operations $ 283,577
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 36
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999
-----------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 986,912 $ 631,271
Net realized gain (loss) on investments (118,443) 49,547
Net decrease in unrealized appreciation (584,892) (528,565)
-----------------------------------------
Net increase in net assets resulting from operations 283,577 152,253
Distributions to shareholders from:
Net capital gains (30,111) (6,826)
Net investment income (986,912) (631,271)
Net fund share transactions 2,937,281 10,030,995
-----------------------------------------
Total increase 2,203,835 9,545,151
Net assets:
Beginning of year 19,456,344 9,911,193
-----------------------------------------
End of year $ 21,660,179 $ 19,456,344
=========================================
==========================================================================================================================
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding
For the years or period ended June 30,
-------------------------------------------------------------------
2000 1999 1998 1997 1996(a)(c)
-------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $10.61 $10.82 $10.33 $9.88 $10.00
-------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.51 0.50 0.53 0.54 0.32
Net gains (losses) on securities
(both realized and unrealized) (0.40) (0.20) 0.49 0.45 (0.12)
-------------------------------------------------------------------
Total from investment operations 0.11 0.30 1.02 0.99 0.20
LESS DISTRIBUTIONS:
Distributions (from capital gains) (0.01) (0.01) -- -- --
Distributions (from net investment income) (0.50) (0.50) (0.53) (0.54) (0.32)
-------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.21 $10.61 $10.82 $10.33 $9.88
===================================================================
Total return 1.07% 2.71% 9.99% 10.18% 3.23%
Net assets, end of year (in thousands) $21,660 $19,456 $9,911 $3,586 $1,063
Ratio of expenses to average net assets (b) 0.55% 0.45% 0.33% 0.25% 0.18%
Ratio of net investment income to average net assets 4.76% 4.43% 4.47% 4.72% 0.98%
(b)
After expense reimbursement (b) 4.92% 4.74% 4.90% 5.29% 3.27%
Portfolio turnover 16.14% 11.70% 16.77% 24.13% 22.83%
(a) Commencement of operations November 16, 1995.
(b) Annualized for periods less than a year.
(c) Audited by other auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 37
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY PAR MARKET
BOND DESCRIPTION COUPON DATE RATING# VALUE VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HOSPITAL AND HEALTHCARE REVENUE BONDS
32.78% OF NET ASSETS
Charlotte-Mecklenburg Hospital Authority NC Health Care System 5.400 01/15/2007 Aa3/AA* $200,000 $ 203,186
Charlotte-Mecklenberg Hospital Authority NC Health Care System 6.000 01/01/2003 Aa/AA* 150,000 154,340
Cumberland County NC Hospital Facility Revenue 4.100 10/01/2003 A3/A-* 175,000 168,233
Cumberland County NC Hospital Facility Revenue 4.500 10/01/2007 A3/A-* 200,000 190,686
NC Community Health Care Facility Duke Hospital 4.100 06/01/2005 Aa3/AA* 100,000 96,536
NC Medical Care Community Health Care Facility Duke University 4.500 06/01/2007 Aa3/AA* 200,000 191,942
North Carolina Medical Care Community Hospital-Scotland Memorial 5.375 10/01/2011 AA* 60,000 60,326
NC Medical Care Community Hospital-Baptist Hospital 5.400 06/01/2001 Aa/AA-* 10,000 10,132
NC Medical Care Community Hospital-Presbyterian Health 5.000 10/01/2002 Aa3/AA* 40,000 40,310
NC Medical Care Community Hospital-Presbyterian Health 5.350 10/01/2001 Aa/AA* 25,000 25,404
NC Medical Care Community Hospital Gaston Memorial 5.250 02/15/2007 A2/A+* 50,000 50,442
North Carolina Medical Care Community Hospital - Southeastern 5.000 06/01/2003 A/A* 200,000 200,474
-----------
1,392,010
INSURED MUNICIPAL BONDS
31.05% OF NET ASSETS
Asheville NC Certificates of Participation Series B 4.300 06/01/2002 Aaa/AAA* 25,000 24,913
Catawba County NC Hospital Revenue Catawba Memorial Hospital 4.000 10/01/2003 Aaa 110,000 107,372
Coastal Regulation Solid Waste Management Authority NC 4.250 06/01/2005 Aaa/AAA* 125,000 121,641
Elizabeth City NC Housing Mortgage Corp Virginia Dare Apartments 6.500 01/01/2005 Aaa/AAA* 120,000 126,409
Johnston County NC Finance Corporation School & Museum Project 4.650 08/01/2008 Aaa/AAA* 200,000 194,732
New Hanover County NC Regional Medical Center Hospital Revenue 4.250 10/01/2009 Aaa/AAA* 100,000 93,996
NC Medical Care Community Hospital-High Point Health System 4.400 10/01/2003 Aaa/AAA* 50,000 49,505
NC Municipal Power Agency No.1 Catawba Electric 5.500 01/01/2001 Aaa/AAA* 70,000 70,590
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.100 01/01/2007 Aaa/AAA* 125,000 127,984
NC Medical Care Community Hospital Wilson Memorial Hospital 4.900 11/01/2007 Aaa/AAA* 75,000 74,675
Pitt County NC Certificates Of Participation 5.500 04/01/2002 Aaa/AAA* 70,000 71,446
Wilkes County NC Refinancing 5.250 06/01/2006 Aaa/AAA* 250,000 255,338
-----------
1,318,600
PREREFUNDED BONDS
9.51% OF NET ASSETS
Charlotte NC Water & Sewer General Obligation 6.200 06/01/2016 Aaa/AAA* 100,000 104,811
Charlotte NC General Obligation 6.900 10/01/2006 Aaa/AAA* 25,000 25,691
Charlotte NC Certificates of Participation Convention Center 6.750 12/01/2021 Aaa/AAA* 200,000 210,888
Franklin County NC Certificates of Participation Jail & School 6.000 06/01/2002 Aaa/AAA* 15,000 15,501
Pitt County NC Revenue-Pitt County Memorial Hospital 6.900 12/01/2021 Aaa/AA-* 5,000 5,293
Polk County NC General Obligation 6.700 05/01/2011 Aaa/AAA* 40,000 41,701
-----------
403,885
LOCAL GENERAL OBLIGATION BONDS
6.63% OF NET ASSETS
Asheville NC Certificates of Participation Series:A 4.600 06/01/2005 A1/A* 50,000 49,479
Charlotte NC Certificates of Participation Equipment Acquisition 4.350 09/01/2000 AA* 70,000 70,080
Durham NC Certificates of Participation 5.100 06/01/2005 Aa3/AA* 100,000 101,296
Forsyth County NC Refunding General Obligation 4.600 03/01/2001 Aa1/AAA* 15,000 15,095
Rocky Mount NC General Obligation 6.100 05/01/2001 A/A+* 25,000 25,451
Surf City NC Refunding General Obligation 5.400 03/01/2001 BBB-* 20,000 20,202
-----------
281,601
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 38
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY PAR MARKET
BOND DESCRIPTION COUPON DATE RATING# VALUE VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATE GENERAL OBLIGATION BONDS
5.89% OF NET ASSETS
NC State General Obligation 5.000 06/01/2003 Aaa/AAA* $50,000 $ 50,661
North Carolina State General Obligation Series A 4.750 04/01/2006 Aaa/AAA* 200,000 199,586
-------------
250,247
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
3.54% OF NET ASSETS
NC Education Facility Finance Agency (St Augustine College) 4.450 10/01/2002 AA* 100,000 99,972
University of NC Utility System Revenue 4.900 08/01/2003 Aa2/AA* 50,000 50,497
-------------
150,469
MUNICIPAL UTILITY REVENUE BONDS
2.35% OF NET ASSETS
Buncombe County NC Water & Sewer Revenue 6.100 07/01/2001 A/A+* 25,000 25,538
Orange County NC Water & Sewer Authority Revenue Refunding 4.250 07/01/2001 Aa/AA* 5,000 5,007
Winston-Salem NC Water & Sewer Revenue Refunding 4.300 06/01/2003 Aa2/AA* 70,000 69,336
-------------
99,881
COUNTY GENERAL OBLIGATION BONDS
1.20% OF NET ASSETS
Caldwell County NC General Obligation 6.000 02/01/2005 A1/A* 50,000 51,031
-------------
51,031
STATE MORTGAGE REVENUE BONDS
.71% OF NET ASSETS
NC Housing Finance Agency Single Family 4.750 03/01/2002 Aa/AA* 30,000 30,166
-------------
30,166
Total Investments (cost $4,039,659)(a) - 93.68% of Net Assets $ 3,977,890
=============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized depreciation of securities as
follows:
Unrealized appreciation $ 1,001
Unrealized depreciation (62,770)
-------------
Net unrealized depreciation $ (61,769)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 39
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $4,039,659) $ 3,977,890
Cash 222,884
Receivable from investments sold 15,000
Interest receivable 50,105
--------------
Total assets 4,265,879
LIABILITIES:
Payable for:
Distributions $ 13,313
Fund shares redeemed
529
Management fee 620
Transfer agent 522
Other fees 4,544
-----------
Total liabilities 19,528
--------------
NET ASSETS:
Capital 4,340,458
Net accumulated realized losses on investment transactions (32,338)
Net unrealized depreciation in value of investments (61,769)
--------------
Net assets at value $ 4,246,351
==============
NET ASSET VALUE, offering price and redemption price per share
($4,246,351 / 427,272 shares outstanding) $ 9.94
==============
==================================================================================================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 192,028
--------------
Expenses:
Investment advisory fees 21,772
Transfer agent 6,532
Professional fees 2,088
Trustee fees 430
Other expenses 3,879
--------------
Total expenses 34,701
Expenses reimbursed by Investment Advisor (13,930)
--------------
Net investment income
171,257
--------------
Realized and unrealized loss on investments
Net realized loss (27,157)
Net increase in unrealized depreciation (39,253)
--------------
Net realized and unrealized loss on investments (66,410)
--------------
Net increase in net assets resulting from operations $ 104,847
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 40
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999
------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 171,257 $ 105,607
Net realized loss on investments (27,157) (1,920)
Net decrease in unrealized appreciation (39,253) (56,088)
-------------------------------------
Net increase in net assets resulting from operations 104,847 47,599
Distributions to shareholders from net investment income (171,257) (105,607)
Net fund share transactions 374,660 1,802,142
-------------------------------------
Total increase 308,250 1,744,134
Net assets:
Beginning of year 3,938,101 2,193,967
-------------------------------------
End of year $ 4,246,351 $ 3,938,101
=====================================
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
For the years or period ended June 30,
-----------------------------------------------------------------
2000 1999 1998 1997 1996(a)(c)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.09 $10.24 $10.12 $9.99 $10.00
-----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.39 0.39 0.40 0.41 0.24
Net gains (losses) on securities
(both realized and unrealized) (0.15) (0.15) 0.12 0.13 (0.01)
-----------------------------------------------------------------
Total from investment operations 0.24 0.24 0.52 0.54 0.23
LESS DISTRIBUTIONS:
Distributions (from net investment income) (0.39) (0.39) (0.40) (0.41) (0.24)
-----------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $9.94 $10.09 $10.24 $10.12 $9.99
=================================================================
Total return 2.47% 2.35% 5.20% 5.49% 3.79%
Net assets, end of year (in thousands) $4,246 $3,938 $2,194 $1,458 $1,159
Ratio of expenses to average net assets (b) 0.48% 0.44% 0.41% 0.23% 0.16%
Ratio of net investment income to average net assets (b) 3.62% 3.44% 3.44% 3.46% 0.85%
After expense reimbursement (b) 3.94% 3.78% 3.89% 4.06% 2.47%
Portfolio turnover 25.85% 25.54% 14.89% 17.20% 17.18%
(a) Commencement of operations November 16, 1995.
(b) Annualized for periods less than a year.
(c) Audited by other auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE> 41
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
--------------------------------------------------------------------------------------------------------------------------------
INSURED MUNICIPAL REVENUE BONDS
27.09% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Bristol TN Health & Educational Facilities Bristol Memorial Hospital 5.250 09/01/2021 Aaa/AAA* $ 400,000 $ 374,732
Chattanooga/Hamilton County TN Hospital Revenue Erlanger 5.625 10/01/2018 Aaa/AAA* 30,000 29,576
Clarksville TN Water Sewer & Gas Refunding & Improvement 6.250 02/01/2018 Aaa/AAA* 200,000 205,726
Clarksville TN Water Sewer & Gas Revenue 5.650 02/01/2017 Aaa 200,000 200,528
Franklin TN Industrial Development Board Landings Apartment 5.550 10/01/2008 Aaa/AAA* 50,000 51,666
Franklin TN Industrial Development Board Landings Apartment 5.900 10/01/2016 Aaa/AAA* 800,000 812,960
Gatlinburg TN Public Building Authority Convention Center 6.900 12/01/2012 Aaa/AAA* 90,000 94,712
Greater Tennessee Housing Assistance Refunding 7.250 07/01/2024 Aaa/AAA* 5,000 5,270
Jackson TN Hospital Revenue Refunding & Improvement 5.625 04/01/2015 Aaa/AAA* 310,000 310,918
Knox County/Chapman TN Utility District Water & Sewer 6.000 01/01/2014 Aaa/AAA* 40,000 41,533
Knox County TN Health Educational & Housing Facilities Baptist 5.500 04/15/2017 AAA* 1,315,000 1,292,264
Knox County TN Health Educational & Housing Facilities Ft Sanders 5.650 01/01/2008 Aaa/AAA* 20,000 20,317
Knox County TN Health Educational & Housing Facilities Ft Sanders 6.250 01/01/2013 Aaa/AAA* 10,000 10,718
Knox County TN Health Educational & Housing Facilities Ft Sanders 5.250 01/01/2023 Aaa/AAA* 400,000 373,016
Knox County TN Health Educational & Housing Facilities Mercy 5.875 09/01/2015 Aaa/AAA* 15,000 15,501
Knox County TN Health Educational & Housing Facilities Mercy 6.000 09/01/2019 Aaa/AAA* 100,000 101,899
Knox County TN Utility District Water & Sewer 5.625 12/01/2019 Aaa 400,000 396,944
Knoxville TN Development Corp Housing Revenue Morningside 6.100 07/20/2020 AAA* 500,000 514,390
Lawrence County TN Public Improvements General Obligation 6.300 03/01/2008 Aaa/AAA* 50,000 52,580
Memphis Shelby County TN Airport Revenue Refunding 5.650 09/01/2015 Aaa/AAA* 55,000 55,312
Metropolitan Nashville & Davidson County TN Stadium Project 5.750 07/01/2014 Aaa/AAA* 100,000 102,642
Metropolitan Nashville & Davidson County TN Stadium Project 5.875 07/01/2021 Aaa/AAA* 350,000 350,550
Metropolitan Nashville & Davidson County TN Airport Series C 6.625 07/01/2007 Aaa/AAA* 30,000 31,246
Metropolitan Nashville & Davison County TN Airport Series C 6.600 07/01/2015 Aaa/AAA* 120,000 125,101
North Anderson TN Utility District Waterworks Revenue 5.600 01/01/2015 Aaa/AAA* 100,000 101,084
Oak Ridge TN Industrial Development Board Gardens Refunding Revenue 5.250 08/20/2018 Aaa 655,000 628,328
Sevier County TN Public Buildings Authority Solid Waste Facility 5.600 09/01/2015 Aaa/AAA* 100,000 100,521
Shelby County TN Health Educational & Housing Heritage Place 6.900 07/01/2014 Aaa/AAA* 150,000 162,992
Shelby County TN Health Educational & Housing Methodist 5.300 08/01/2015 Aaa/AAA* 760,000 753,730
Shelby County TN Health Educational & Housing Methodist 5.375 04/01/2013 Aaa/AAA* 690,000 682,727
Shelby County TN Health Educational & Housing Methodist 5.000 04/01/2018 Aaa/AAA* 1,000,000 922,380
Sullivan County TN Health Educational & Housing Holston 5.750 02/15/2013 Aaa/AAA* 130,000 131,620
TN Housing Development Agency Homeownership Program 5.900 07/01/2017 Aaa/AAA* 35,000 35,286
TN Housing Development Agency Mortgage Finance Program 5.900 07/01/2018 Aaa/AAA* 95,000 95,611
TN Housing Development Agency Mortgage Finance Program 5.850 07/01/2013 Aaa/AAA* 100,000 101,556
TN Housing Development Agency Mortgage Finance Program 6.200 07/01/2018 Aaa/AAA* 755,000 777,424
TN Local Development Authority Student Loan Program 5.125 03/01/2022 Aaa/AAA* 1,000,000 914,940
-------------
10,978,300
HOSPITAL AND HEALTHCARE REVENUE BONDS
18.61% OF NET ASSETS
Anderson County TN Health & Educational Facilities Revenue 5.650 07/01/2007 A1 155,000 156,659
Chattanooga TN Health Educational & Housing Revenue 5.000 12/01/2018 Aa2/AA* 1,000,000 917,550
Knox County TN Health Educational & Housing Facilities University 5.750 04/01/2019 Baa1 1,000,000 928,460
Metropolitan Nashville & Davidson County TN Modal 5.500 05/01/2023 AA* 1,715,000 1,656,484
Metropolitan Nashville & Davidson County TN Open Arms 5.100 08/01/2016 AA* 1,000,000 945,350
Metropolitan Nashville & Davidson County TN Open Arms 5.100 08/01/2019 AA* 1,660,000 1,516,111
Montgomery County TN Health Educational & Housing Hospital 5.375 01/01/2018 Baa/BBB* 1,500,000 1,336,620
Sumner County TN Health Educational & Housing Sumner Health 7.500 11/01/2014 A-* 75,000 83,152
-------------
7,540,386
STATE AND LOCAL MORTGAGE REVENUE
13.99% OF NET ASSETS
Knoxville TN Development Corp Housing Revenue Clinton Tower 6.650 10/15/2010 A* 285,000 298,352
Memphis TN Health Education & Housing Board Riverdale Plaza 6.350 07/20/2028 AAA* 300,000 308,157
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 42
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Memphis TN Health Education & Housing Board River Trace II 6.250 10/01/2013 Aaa* $ 50,000 $ 52,091
Metropolitan Nashville & Davidson County TN Dandridge Tower 6.375 01/01/2011 A* 200,000 211,646
Metropolitan Nashville & Davidson County TN Hermitage Apts 5.900 02/01/2019 A* 395,000 394,092
Murfreesboro TN Housing Authority Westbrooks Towers Project 5.875 01/15/2010 A* 310,000 315,354
Shelby County TN Health Educational & Housing Corners Apts 6.000 01/01/2017 A 250,000 252,150
Shelby County TN Health Educational & Housing Four Stones 5.350 01/01/2019 A* 2,000,000 1,868,580
Shelby County TN Health Educational & Housing Harbour Apts 6.000 04/15/2018 A* 125,000 125,734
Shelby County TN Health Educational & Housing Harbour Apts 6.000 04/15/2024 A* 50,000 50,127
Shelby County TN Health Educational & Housing Harbour Apts 5.750 04/15/2011 A* 100,000 100,794
Shelby County TN Health Educational & Housing Windsor Apts 6.750 10/01/2017 AA 355,000 376,197
TN Housing Development Agency Homeownership Program 6.700 07/01/2012 Aa2/AA* 85,000 88,780
TN Housing Development Agency Homeownership Program 5.850 01/01/2011 Aa2/AA* 200,000 207,758
TN Housing Development Agency Mortgage Finance Program 5.700 01/01/2008 A1/A+* 100,000 101,299
TN Housing Development Agency Mortgage Finance Program 5.850 07/01/2013 A1/A+* 125,000 126,891
TN Housing Development Agency Mortgage Finance Program 5.900 07/01/2018 A1/A+* 785,000 790,048
-------------
5,668,049
COUNTY GENERAL OBLIGATION AND SCHOOL BONDS
13.44% OF NET ASSETS
Marion County TN General Obligation 6.000 04/01/2018 Aaa 950,000 976,572
Metropolitan Nashville & Davidson County TN General Obligation 5.125 05/15/2025 Aa2/AA* 500,000 457,035
Metropolitan Nashville & Davidson County TN Limited Obligation 7.000 09/01/2011 A1*/A 180,000 188,640
Putnam County TN School Building Revenue Bond 5.500 04/01/2019 Aaa/A2* 1,000,000 971,440
Shelby County TN General Obligation 5.625 04/01/2014 Aa3/AA+* 60,000 60,418
Shelby County TN Health Educational & Housing Cameron Kirby 5.900 07/01/2018 A* 2,300,000 2,297,470
Shelby County TN Health Educational & Housing Cameron Kirby 6.000 07/01/2028 A* 500,000 496,645
-------------
5,448,220
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
6.67% OF NET ASSETS
Metropolitan Nashville & Davidson County TN Belmont University 6.300 12/01/2014 Baa3 10,000 10,422
Metropolitan Nashville & Davidson County TN McKendree 5.125 01/01/2020 AA* 2,700,000 2,474,037
Metropolitan Nashville & Davidson County TN Vanderbilt 6.500 05/01/2016 Aa3/AA* 80,000 82,900
Metropolitan Nashville & Davidson County TN Vanderbilt 6.000 10/01/2016 Aa3/AA* 130,000 133,960
-------------
2,701,319
STATE GENERAL OBLIGATION BONDS
6.66% OF NET ASSETS
Hamilton County TN Multi-Family Housing Revenue 6.700 03/01/2021 A* 450,000 478,580
Knoxville TN Development Corp Housing Revenue Clinton Tower 6.600 10/15/2007 A* 350,000 368,904
Metropolitan Nashville & Davidson County TN General Obligation 5.125 11/15/2019 Aa2/AA* 1,000,000 927,480
Shelby County TN General Obligation Refunding 5.875 03/01/2007 Aa2/AA+* 15,000 15,362
TN Local Development Authority Student Loan Program 5.750 03/01/2011 A2/AA-* 200,000 203,498
Wilson County TN General Obligation Refunding 5.100 05/01/2016 AAA* 745,000 706,163
-------------
2,699,986
PREREFUNDED BONDS
4.75% OF NET ASSETS
Chattanooga TN General Obligation 6.000 08/01/2011 A1/AA-* 110,000 115,408
Franklin TN Industrial Development Board Sussex Downs LTD 6.250 06/01/2007 AAA 30,000 32,351
Jackson TN Water & Sewer Revenue 7.200 07/01/2012 Aaa/AAA* 10,000 10,391
Knoxville TN Gas System Revenue Refunding & Improvement 5.900 03/01/2012 A1/AA* 25,000 25,831
Lauderdale County TN General Obligation 6.000 04/01/2013 Aaa/AAA* 20,000 20,955
Marshall County TN General Obligation 5.600 06/01/2014 A* 5,000 5,169
Memphis TN General Obligation Improvement 5.500 10/01/2010 Aa/AA* 20,000 20,559
Memphis TN Health Education & Housing Board Hunters Trace 6.250 06/01/2013 Aa/AAA* 55,000 55,559
Memphis TN Water Revenue 6.000 01/01/2012 Aa/AA* 140,000 146,451
Metropolitan Nashville & Davidson County TN Electric System 6.000 05/15/2012 Aa/AA* 30,000 31,439
</TABLE>
28
<PAGE> 43
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Metropolitan Nashville & Davidson County TN Water & Sewer 6.500 12/01/2014 Aaa/AAA* $ 60,000 $ 65,853
Milan TN Special School District 6.750 04/01/2013 Aaa/AAA* 60,000 65,123
Shelby County TN General Obligation Public Improvment Series A 6.000 03/01/2013 Aa/AA+* 30,000 31,120
Shelby County TN General Obligation Bond Prerefunded 5.875 03/01/2007 AA+ 35,000 36,014
Shelby County TN General Obligation Bond Prerefunded 5.625 04/01/2014 AA+ 20,000 20,843
Shelby County TN School Building Revenue 5.875 03/01/2012 Aa/AA+* 150,000 155,301
Shelby County TN School Building Revenue 6.000 03/01/2013 Aa/AA+* 35,000 36,347
Shelby County TN School Building Revenue 5.800 04/01/2019 Aa/AA+* 100,000 104,932
Shelby County TN School Building Revenue 5.900 03/01/2012 Aa/AA+* 10,000 10,366
Shelby County TN School Building Revenue 5.900 03/01/2016 Aa/AA+* 50,000 51,828
Shelby County TN School Building Revenue 5.950 03/01/2017 Aa/AA+* 100,000 103,735
Shelby County TN School Building Revenue 5.950 03/01/2019 Aa/AA+* 40,000 41,494
TN Local Development Auth Cmnty Provider Pooled Loan Program 6.250 10/01/2009 A-* 30,000 32,167
TN Local Development Auth Cmnty Provider Pooled Loan Program 6.450 10/01/2014 A-* 40,000 43,194
TN Local Development Auth Cmnty Provider Pooled Loan Program 7.000 10/01/2011 A-* 5,000 5,359
Tennessee School Building Authority Revenue 6.250 05/01/2017 A1/AA* 35,000 36,657
Tipton County TN General Obligation High School 6.650 04/01/2014 Aaa/AAA* 30,000 31,738
Williamson County TN Rural School Building Revenue 5.800 03/01/2012 Aa 100,000 104,828
Williamson County TN General Obligation 5.600 09/01/2010 Aa 45,000 47,021
Wilson County TN Certificates of Participation 6.125 06/30/2010 A 410,000 436,802
-------------
1,924,834
LOCAL GENERAL OBLIGATION BONDS
3.59% OF NET ASSETS
Cleveland TN Public Improvement General Obligation 5.125 06/01/2018 Aaa/AAA* 835,000 778,830
Collierville TN General Obligation Improvement 5.900 05/01/2012 A1 30,000 31,104
Johnson City TN General Obligation 5.500 05/01/2020 Aaa/AAA* 300,000 296,055
Metropolitan Nashville & Davidson County TN General Obligation 5.625 05/15/2017 Aa/AA* 250,000 247,700
Metropolitan Nashville & Davidson County TN General Obligation 5.875 05/15/2026 Aa/AA* 100,000 100,023
-------------
1,453,712
MUNICIPAL UTILITY REVENUE BONDS
3.19% OF NET ASSETS
Knoxville TN Gas System Revenue 5.400 03/01/2015 Aa3/AA* 100,000 98,796
Knoxville TN Waste Water System Revenue 5.100 04/01/2018 Aa3/AA* 435,000 405,133
Memphis TN Sanitary Sewer System Revenue 5.750 10/01/2014 Aa/AA* 100,000 101,615
Metropolitan Nashville & Davidson County TN Electric System 5.625 05/15/2014 Aa/AA* 500,000 505,505
Metropolitan Nashville & Davidson County TN Water & Sewer 5.500 01/01/2016 A1/A* 185,000 182,723
-------------
1,293,772
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
1.24% OF NET ASSETS
Chattanooga TN Industrial Development Board F L Haney Co 7.200 08/15/2010 AAA* 20,000 23,288
Chattanooga TN Industrial Development Board F L Haney Co 7.200 02/15/2009 AAA* 25,000 28,927
Chattanooga TN Industrial Development Board F L Haney Co 7.200 08/15/2009 AAA* 25,000 29,108
Chattanooga TN Industrial Development Board F L Haney Co 7.200 02/15/2010 AAA* 100,000 115,809
Cookeville TN Industrial Development Board General Hospital 5.625 10/01/2016 A* 200,000 201,356
Maury County TN Pollution Control Revenue Saturn Corp Project 6.500 09/01/2024 A2/A* 100,000 104,101
-------------
502,589
RENTALS/MUNICIPAL LEASE BONDS
.72% OF NET ASSETS
Memphis Shelby County TN Airport Special Facilities Revenue 7.875 09/01/2009 Baa/BBB* 120,000 127,613
Memphis Shelby County TN Airport Revenue Refunding FedX 6.750 09/01/2012 Baa/BBB* 155,000 162,203
289,816
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 44
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY PAR MARKET
BOND DESCRIPTION COUPON DATE RATING# VALUE VALUE
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Investments (cost $41,685,427)(a) - 99.94% of Net Assets $ 40,500,980
============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized depreciation of securities as
follows:
Unrealized appreciation $ 337,302
Unrealized depreciation (1,521,749)
------------
Net unrealized depreciation $(1,184,447)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
30
<PAGE> 45
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $41,685,427) $ 40,500,980
Interest receivable 815,135
Receivable from Advisor 4,978
Receivable for fees 1,791
----------------
Total assets 41,322,884
LIABILITIES:
Cash overdraft $ 323,119
Payable for:
Distributions 447,989
Fund shares redeemed 6,387
Management fee 16,610
Transfer agent 4,478
------------
Total liabilities 798,583
----------------
NET ASSETS:
Net assets consist of:
Capital $ 42,388,978
Net accumulated capital gain distributions in excess of
realized gainson investment transactions (680,230)
Net unrealized depreciation in value of investments (1,184,447)
----------------
Net assets at value $ 40,524,301
================
NET ASSET VALUE, offering price and redemption price per share
($40,524,301/3,928,337 shares outstanding) $ 10.32
================
===============================================================================================================
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 2,372,711
---------------
Expenses:
Investment advisory fees 210,691
Transfer agent 56,566
Professional fees 5,811
Trustee fees 4,266
Other expenses 3,237
---------------
Total expenses 280,571
Expenses reimbursed by Investment Advisor (53,121)
---------------
Net investment income
2,145,261
---------------
Realized and unrealized gain on investments
Net realized loss (571,354)
Net decrease in unrealized appreciation (1,339,328)
---------------
Net realized and unrealized gain on investments (1,910,682)
----------------
Net increase in net assets resulting from operations $ 234,579
================
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 46
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999
-------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 2,145,261 $ 1,944,839
Net realized loss on investments (571,354) (57,095)
Net decrease in unrealized appreciation (1,339,328) (1,016,125)
-------------------------------------------
Net increase in net assets resulting from operations 234,579 871,619
Distributions to shareholders from:
Net capital gains (6,450) (45,331)
Net investment income (2,145,261) (1,944,839)
Net fund share transactions (3,644,942) 18,032,867
-------------------------------------------
Total increase (decrease) (5,562,074) 16,914,316
Net assets:
Beginning of year 46,086,375 29,172,059
-------------------------------------------
End of year $ 40,524,301 $ 46,086,375
===========================================
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding
For the years ended June 30,
-----------------------------------------------------------------
2000 1999 1998 1997 1996 (a)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.77 $10.97 $10.53 $10.17 $10.05
-----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.53 0.54 0.54 0.54 0.54
Net gains (losses) on securities
(both realized and unrealized) (0.45) (0.19) 0.45 0.36 0.12
-----------------------------------------------------------------
Total from investment operations 0.08 0.35 0.99 0.90 0.66
LESS DISTRIBUTIONS:
Distributions (from capital gains) 0.00 (0.01) (0.01) -- --
Distributions (from net investment income) (0.53) (0.54) (0.54) (0.54) (0.54)
-----------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.32 $10.77 $10.97 $10.53 $10.17
=================================================================
Total return 0.84% 3.03% 9.57% 8.96% 6.65%
Net assets, end of year (in thousands) $40,524 $46,086 $29,172 $13,678 $8,056
Ratio of expenses to average net assets 0.54% 0.48% 0.44% 0.55% 0.54%
Ratio of net investment income to average net assets 4.97% 4.50% 4.64% 4.92% 4.91%
After expense reimbursement 5.09% 4.71% 4.84% 5.15% 5.27%
Portfolio turnover 8.80% 14.76% 12.62% 5.14% 9.13%
(a) Audited by other auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 47
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
----------------------------------------------------------------------------------------------------------------------------------
INSURED MUNICIPAL REVENUE BONDS
35.06% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Bristol TN Health & Education Facility-Memphis Hospital 6.300 09/01/2000 Aaa/AAA* $ 50,000 $ 50,221
Chattanooga-Hamilton TN Hospital Authority-Erlanger Medical 5.100 10/01/2001 Aaa/AAA* 10,000 10,108
Chattanooga-Hamilton TN Hospital Authority-Erlanger Medical 5.125 10/01/2002 Aaa/AAA* 50,000 50,520
Hamilton County TN Industrial Development Lease Revenue 5.500 09/01/2002 Aaa/AAA* 100,000 101,913
Knox County Utility District Water & Sewer Revenue 5.250 12/01/2006 Aaa/AAA* 220,000 223,511
LaFollette TN Electric System Revenue 5.500 03/01/2001 Aaa 165,000 166,794
Lenoir City TN Electric System Revenue 4.450 06/01/2005 Aaa 250,000 245,125
Metropolitan Nashville & Davidson Counties TN Stadium Project 5.000 07/01/2003 Aaa/AAA* 110,000 110,883
Metropolitan Nashville Airport Revenue 6.200 07/01/2002 Aaa/AAA* 25,000 25,584
Metropolitan Nashville Airport Authority TN Airport 5.000 07/01/2004 Aaa/AAA* 200,000 201,874
Monroe County TN Rural School Refinancing General Obligation 4.500 06/01/2008 Aaa 210,000 202,661
Montgomery County TN General Obligation 5.250 05/01/2007 Aaa 400,000 406,396
TN Energy Acquisition Corporation Gas Revenue Ser:A 4.750 09/01/2002 Aaa/AAA* 250,000 249,728
Unicoi County TN General Obligation Unlimited 5.400 04/01/2010 Aaa/AAA* 200,000 203,786
------------
2,249,103
HOSPITAL AND HEALTHCARE REVENUE BONDS
22.57% OF NET ASSETS
Chattanooga TN Catholic Health Initiatives Series A 5.500 12/01/2006 Aa2/AA* 400,000 409,524
Jackson TN Hospital Refunding & Improvement Revenue 4.800 04/01/2002 A1/A+* 60,000 60,256
Knox County TN Health Education & Housing Facility Board 4.600 04/01/2002 Baa 300,000 298,236
Knox County Tn Health Education & Housing Facilities Board 4.750 04/01/2004 Baa1 400,000 388,204
Metropolitan Government Nashville & Davidson Counties TN 4.300 08/01/2004 AA* 300,000 291,771
------------
1,447,991
COUNTY GENERAL OBLIGATION BONDS
15.37% OF NET ASSETS
Cheatham County TN General Obligation 4.350 04/01/2004 A3 200,000 196,726
Madison County TN School General Obligation 6.000 04/01/2001 A1 10,000 10,163
Maury County TN General Obligation Bond 4.500 06/01/2001 A1 75,000 75,165
Metropolitan Government Nashville & Davidson County TN GO 4.600 11/15/2001 Aa/AA* 50,000 50,223
Metropolitan Government Nashville & Davidson County TN 6.500 09/01/2000 A1/A* 50,000 50,226
Rutherford County TN General Obligation 4.750 04/01/2001 Aa/AA* 100,000 100,625
Rutherford County TN Capital Outlay Notes General Obligation 4.700 04/01/2002 Aa/AA-* 45,000 45,298
Shelby County Tn Public Improvement General Obligation 5.625 06/01/2004 Aa3/AA+* 250,000 257,638
Shelby County Mutli-Family Housing Cameron Kibry-A General Obligation 4.700 07/01/2002 A* 200,000 199,734
------------
985,796
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
7.54% OF NET ASSETS
Metro Government Nashville/Davidson County TN Multi-Family 4.800 01/01/2001 AAA* 50,000 50,224
Metropolitan Government of Nashville & Davidson Counties 4.500 10/01/2003 Aa3/AA* 100,000 99,247
Shelby County TN Multi-Family Housing Memphis Series A 5.000 01/01/2009 A* 240,000 232,886
TN Housing Development Agency Mortgage Finance 5.300 01/01/2003 A1/A+* 100,000 101,189
------------
483,546
PREREFUNDED BONDS
5.19% OF NET ASSETS
Bristol TN Health & Education Facility-Memorial Hospital 7.000 09/01/2021 Aaa/AAA* 100,000 104,044
Johnson City TN Health & Education Revenue 6.750 07/01/2006 Aaa/AAA* 20,000 20,948
Memphis TN General Obligation 5.600 08/01/2012 Aaa/AAA* 100,000 102,451
Metropolitan Nashville TN Airport Improvement Revenue 7.750 07/01/2006 Aaa/AAA* 100,000 105,705
------------
333,148
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE> 48
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
JUNE 30, 2000
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
----------------------------------------------------------------------------------------------------------------------------------
PUBLIC FACILITIES REVENUE BONDS
4.09% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Hardeman County TN Correctional Facility Revenue 7.000 08/01/2005 A* $ 240,000 $ 262,546
------------
262,546
ESCROWED TO MATURITY BONDS
3.82% OF NET ASSETS
Knox County TN 1st Utility District Water Revenue 6.000 12/01/2001 Aaa 100,000 102,242
Metro Government Nashville/Davidson County TN Meharry Med 7.875 12/01/2004 AAA* 130,000 143,000
------------
245,242
STATE MORTGAGE REVENUE BONDS
3.09% OF NET ASSETS
TN Housing Development Mortgage Agency Series A 5.500 01/01/2005 A1/A+* 195,000 197,946
------------
197,946
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
2.27% OF NET ASSETS
Bristol TN Industrial Development Board Revenue 4.800 03/01/2001 AA* 70,000 70,381
Chattanooga TN Industrial Development-F.L.Haney Corporation 6.700 08/15/2000 AAA* 25,000 25,096
Franklin TN Industrial Development Multi-Family Housing 4.650 10/01/2000 Aaa/AAA* 50,000 50,140
------------
145,616
STATE GENERAL OBLIGATION BONDS
1.59% OF NET ASSETS
TN State General Obligation 5.000 03/01/2003 Aaa/AA+* 100,000 102,070
------------
102,070
LOCAL GENERAL OBLIGATION BONDS
.86% OF NET ASSETS
Chattanooga TN Refunding General Obligation 5.000 11/01/2000 A1/AA-* 30,000 30,118
Kingsport TN Water Refunding General Obligation 5.300 08/01/2000 A1/A+* 25,000 25,034
------------
55,152
Total Investments (cost $6,557,218)(a) - 101.44% of Net Assets $6,508,157
============
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes
and differs from market value by net unrealized depreciation of securities
as follows:
Unrealized appreciation $ 8,397
Unrealized depreciation (57,458)
-------------
Net unrealized depreciation $ (49,061)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 49
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
ASSETS:
<S> <C> <C>
Investments in securities, at value (Cost: $6,557,218) $ 6,508,157
Receivable from investments sold 51,000
Interest receivable 96,639
----------------------
Total assets 6,655,796
LIABILITIES:
Cash overdraft $ 211,840
Payable for:
Distributions 22,193
Management fee 1,693
Transfer agent 793
Other fees 3,797
------------------
Total liabilities 240,316
----------------------
NET ASSETS:
Capital
6,521,107
Net accumulated realized losses on investment transactions (56,566)
Net unrealized depreciation in value of investments (49,061)
----------------------
Net assets at value $ 6,415,480
======================
NET ASSET VALUE, offering price and redemption price per share
($6,415,480/630,148 shares outstanding) $ 10.18
======================
=============================================================================================================================
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 313,019
----------------------
Expenses:
Investment advisory fees 34,421
Transfer agent 10,326
Professional fees 2,434
Trustee fees 681
Registration fees 3,327
Other expenses 2,511
----------------------
Total expenses 53,700
Expenses reimbursed by Investment Advisor (12,785)
----------------------
Net investment income 272,104
----------------------
Realized and unrealized loss on investments
Net realized loss
(36,947)
Net decrease in unrealized appreciation (56,166)
----------------------
Net realized and unrealized loss on investments (93,113)
----------------------
Net increase in net assets resulting from operations $ 178,991
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
35
<PAGE> 50
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999
------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 272,104 $ 247,211
Net realized loss on investments (36,947) (14,486)
Net decrease in unrealized appreciation (56,166) (69,288)
------------------------------------------
Net increase in net assets resulting from operations 178,991 163,437
Dividends to shareholders from net investment income (272,104) (247,211)
Net fund share transactions 689,854 1,157,488
------------------------------------------
Total increase 596,741 1,073,714
Net assets:
Beginning of year 5,818,739 4,745,025
------------------------------------------
End of year $ 6,415,480 $ 5,818,739
==========================================
===================================================================================================================================
</TABLE>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding
<TABLE>
<CAPTION>
For the years ended June 30,
-----------------------------------------------------------------
2000 1999 1998 1997 1996(a)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year $10.33 $10.44 $10.32 $10.25 $10.20
-----------------------------------------------------------------
Income From Investment Operations:
Net investment income 0.41 0.39 0.41 0.42 0.42
Net gains or losses on securities
(both realized and unrealized) (0.15) (0.11) 0.12 0.07 0.05
-----------------------------------------------------------------
Total from investment operations 0.26 0.28 0.53 0.49 0.47
Less Distributions:
Distributions (from net investment income) (0.41) (0.39) (0.41) (0.42) (0.42)
-----------------------------------------------------------------
Net Asset Value, end of year $10.18 $10.33 $10.44 $10.32 $10.25
=================================================================
Total return 2.53% 2.67% 5.26% 4.83% 4.62%
Net assets, end of year (in thousands) $6,415 $5,819 $4,745 $2,993 $2,455
Ratio of expenses to average net assets 0.60% 0.56% 0.51% 0.47% 0.50%
Ratio of net investment income to average net assets 3.78% 3.52% 3.67% 3.67% 3.36%
After expense reimbursement 3.96% 3.69% 3.97% 4.04% 4.05%
Portfolio turnover 28.67% 81.81% 67.59% 24.49% 23.17%
(a) Audited by other auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 51
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
GOVERNMENT SECURITIES AND AGENCIES BONDS -- 100%
JUNE 30, 2000
MATURITY
BOND DESCRIPTION COUPON DATE RATING# PAR VALUE MARKET VALUE
-----------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK
46.35% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Medium Term Note 7.500 10/05/2009 Aaa/AAA* $1,000,000 $ 971,935
Medium Term Note 7.000 08/15/2014 Aaa/AAA* 500,000 493,295
Medium Term Note 8.000 10/06/2014 Aaa/AAA* 1,040,000 1,010,639
Medium Term Note 7.560 09/01/2004 Aaa/AAA* 150,000 152,721
Medium Term Note 8.170 12/16/2004 Aaa/AAA* 2,000,000 2,084,366
--------------------
4,712,955
FEDERAL NATIONAL MORTGAGE ASSOCIATION
41.13% OF NET ASSETS
Medium Term Note 6.950 11/13/2006 AAA/AAA* 1,105,000 1,071,272
Medium Term Note 7.170 06/26/2007 Aaa/AAA* 1,000,000 972,080
Medium Term Note 6.470 03/13/2008 Aaa/AAA* 250,000 238,730
Medium Term Note 7.280 05/23/2007 Aaa/AAA* 1,000,000 979,568
Medium Term Note 6.160 03/02/2009 Aaa/AAA* 1,000,000 920,185
--------------------
4,181,836
STUDENT LOAN MARKETING ASSOCIATION
9.97% OF NET ASSETS
Medium Term Note 7.300 08/01/2012 Aaa/AAA* 1,000,000 1,013,627
--------------------
1,013,627
FEDERAL HOME LOAN MORTGAGE CORPORATION
2.40% OF NET ASSETS
Medium Term Note 7.225 11/08/2006 Aaa/AAA* 250,000 244,127
--------------------
244,127
Total Investments (cost $10,330,299)(a) - 99.85% of Net Assets $ 10,152,544
====================
* Standard and Poor's Corporation
All other ratings by Moody's Investors Service, Inc.
NR Not Rated
# Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax purposes and
differs from market value by net unrealized depreciation of securities as
follows:
Unrealized appreciation $ 82,453
Unrealized depreciation (260,208)
--------------------
Net unrealized depreciation $ (177,755)
====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
<PAGE> 52
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments in securities, at value (Cost: $10,330,299) $ 10,152,544
Interest receivable 138,905
---------------
Total assets 10,291,449
LIABILITIES:
Cash overdraft $ 59,830
Payable for:
Distributions
57,045
Management fee
1,674
Transfer agent
1,255
Other fees
4,353
------------
Total liabilities 124,157
---------------
NET ASSETS:
Capital 11,345,433
Net accumulated realized losses on investment transactions (1,000,386)
Net unrealized depreciation in value of investments (177,755)
---------------
Net assets at value $ 10,167,292
===============
NET ASSET VALUE, offering price and redemption price per share
($10,167,292 / 1,077,955 shares outstanding) $ 9.43
===============
---------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
Net investment income:
Interest income $ 779,107
---------------
Expenses:
Investment advisory fees 21,535
Transfer agent 16,151
Professional fees 2,723
Trustee fees 1,083
Other expenses 2,431
---------------
Total expenses 43,923
---------------
Net investment income
735,184
---------------
Realized and unrealized gain on investments
Net realized loss (248,412)
Net increase in unrealized depreciation (106,164)
---------------
Net realized and unrealized loss on investments (354,576)
---------------
Net increase in net assets resulting from operations $ 380,608
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 53
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
--------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 735,184 $ 671,312
Net realized gain (loss) on investments (248,412) 23,592
Net decrease in unrealized appreciation (106,164) (498,462)
--------------------------------------
Net increase in net assets resulting from operations 380,608 196,442
Distributions to shareholders from net investment income (735,184) (671,312)
Net fund share transactions (256,329) 1,656,961
---------------------------------------
Total increase (decrease) (610,905) 1,182,091
Net assets:
Beginning of year 10,778,197 9,596,106
---------------------------------------
End of year $ 10,167,292 $ 10,778,197
=======================================
</TABLE>
-------------------------------------------------------------------------------
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING
<TABLE>
<CAPTION>
For the years ended June 30,
-------------------------------------------------------------------
2000 1999 1998 1997 1996(a)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $9.73 $10.14 $9.89 $9.85 $10.15
-------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.65 0.64 0.66 0.72 0.72
Net gains or losses on securities
(both realized and unrealized) (0.30) (0.41) 0.25 0.04 (0.30)
-------------------------------------------------------------------
Total from investment operations 0.35 0.23 0.91 0.76 0.42
LESS DISTRIBUTIONS:
Distributions (from net investment income) (0.65) (0.64) (0.66) (0.72) (0.72)
-------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $9.43 $9.73 $10.14 $9.89 $9.85
====================================================================
Total return 3.76% 2.21% 9.47% 7.95% 4.15%
Net assets, end of year (in thousands) $10,167 $10,778 $9,596 $8,288 $7,765
Ratio of expenses to average net assets 0.41% 0.49% 0.53% 0.50% 0.40%
Ratio of net investment income to average net assets 6.83% 6.32% 6.57% 7.20% 6.89%
Portfolio turnover 33.35% 24.04% 23.49% 40.86% 33.89%
(a) Audited by other auditors.
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
<PAGE> 54
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
1. SIGNIFICANT ACCOUNTING POLICIES
Dupree Mutual Funds is registered under the Investment Company Act of
1940, as amended, as a no-load, open-end investment company. The
Declaration of Trust of Dupree Mutual Funds (the "Trust") permits the
Trustees to create an unlimited number of series of investment portfolios
(each a "Fund" and collectively the "Funds") and with respect to each
series to issue an unlimited number of full or fractional shares of a
single class. The Trust currently offers nine series:
the Alabama Tax-Free Income Series, a non-diversified portfolio,
the Kentucky Tax-Free Income Series, a diversified portfolio,
the Kentucky Tax-Free Short-to-Medium Series, a non-diversified
portfolio,
the Mississippi Tax-Free Income Series, a non-diversified
portfolio,
the North Carolina Tax-Free Income Series, a non-diversified
portfolio,
the North Carolina Tax-Free Short-to-Medium Series, a
non-diversified portfolio,
the Tennessee Tax-Free Income Series, a diversified portfolio,
the Tennessee Tax-Free Short-to-Medium Series, a non-diversified
portfolio, and
the Intermediate Government Bond Series, a non-diversified
portfolio.
The investment strategy of the eight state tax-free funds is to maintain
100% of their investments in Alabama, Kentucky, Mississippi, North
Carolina or Tennessee municipal securities.
The Intermediate Government Bond Series' investment strategy is to invest
only in obligations of the U.S. Treasury and Agencies of the U.S.
Government. The Intermediate Government Bond Series will buy bonds and
notes that will maintain an average maturity of no more than ten years.
The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of their financial
statements. The policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION
Securities are valued by using market quotation or obtained from
yield data relating to instruments or securities with similar
characteristics as determined in good faith under the direction of
the Funds' Board of Trustees.
B. SECURITY TRANSACTIONS
Security transactions are accounted for on a trade date basis.
Gains and losses on securities sold are determined on an
identified cost basis.
C. SECURITY INCOME
Interest income, which includes the amortization of premiums and
the accretion of original issue discounts for financial and tax
reporting purposes, is recorded on the accrual basis.
40
<PAGE> 55
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
1. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
D. FEDERAL INCOME TAXES
Each of the Funds is a separate entity for federal income tax
purposes. 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 taxable
income to their shareholders. The Funds have met the requirements
of the code applicable to regulated investment companies for the
year ended June 30, 2000. Therefore, no federal income tax
provision is required.
E. DISTRIBUTIONS
All of the net investment income of the Funds is declared as a
dividend to shareholders of record as of the close of business
each day. Distributions to be paid are payable in cash or in
additional shares at the net asset value on the payable date.
Distributions are payable:
MONTHLY for: the Kentucky Tax-Free Short-to-Medium Series,
and
the North Carolina Tax-Free Short-to-Medium
Series, and
the Tennessee Tax-Free Short-to-Medium Series
and
the Intermediate Government Bond Series, and
QUARTERLY for: the Alabama Tax-Free Income Series, and
the Kentucky Tax-Free Income Series, and
the Mississippi Tax-Free Income Series, and
the North Carolina Tax-Free Income Series, and
the Tennessee Tax-Free Income Series
Timing differences relating to shareholder distributions are
reflected in the components of net assets and permanent book and
tax basis differences relating to shareholder distributions have
been reclassified to capital.
F. ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
and disclosures. Actual amounts could differ from those estimates.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trustees of the Trust consist of seven individuals, four of whom are
not "interested persons" of the Trust as defined in the Investment
Company Act of 1940. Three of the Trust's trustees are "interested
persons" of the Trust's Investment Advisor and of the Trust within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940 by
virtue of their officership, directorship and/or employment with Dupree &
Company, Inc.
The Funds have a contractual agreement with Star Bank, N.A. whereby the
bank will provide certain custodial services for $1.00 per year.
Subject to the direction of the Trustees, Dupree & Company, Inc. is
responsible for the management of the Funds' portfolios. The compensation
paid to Dupree & Company, Inc. pursuant to the Investment Advisory
Agreements is a percentage of the daily net assets of each series
(determined separately) as follows:
41
<PAGE> 56
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES,
CONTINUED:
<TABLE>
<CAPTION>
RANGE OF NET ASSETS $100,000,001-
$0-$100,000,000 $150,000,000 $150,000,001+
<S> <C> <C> <C>
Alabama Tax-Free Income Series .50 of 1% .45 of 1% .40 of 1%
Kentucky Tax-Free Income Series .50 of 1% .45 of 1% .40 of 1%
Kentucky Tax-Free Short-to-Medium Series .50 of 1% .45 of 1% .40 of 1%
Mississippi Tax-Free Income Series .50 of 1% .45 of 1% .40 of 1%
North Carolina Tax-Free Income Series .50 of 1% .45 of 1% .40 of 1%
North Carolina Tax-Free Short-to-Medium Series .50 of 1% .45 of 1% .40 of 1%
Tennessee Tax-Free Income Series .50 of 1% .45 of 1% .40 of 1%
Tennessee Tax-Free Short-to-Medium Series .50 of 1% .45 of 1% .40 of 1%
Intermediate Government Bond Series .20 of 1% .20 of 1% .20 of 1%
</TABLE>
However, the advisor may voluntarily waive or refund investment advisory
fees payable to it under the Investment Advisory Agreement with each
Fund, and assume and pay other operating expenses.
For the period ended June 30, 2000 investment advisory fees for:
the Alabama Tax-Free Income Series totaled $442; however, Dupree &
Company, Inc. voluntarily refunded fees and reimbursed expenses totaling
$2,465 in accordance with the investment advisory agreement,
the Mississippi Tax-Free Income Series totaled $431; however, Dupree &
Company, Inc. voluntarily refunded fees and reimbursed expenses totaling
$2,461 in accordance with the investment advisory agreement,
the North Carolina Tax-Free Income Series totaled $100,495; however,
Dupree & Company, Inc. voluntarily refunded fees and reimbursed expenses
totaling $33,574 in accordance with the investment advisory agreement,
the North Carolina Tax-Free Short-to-Medium Series totaled $21,772;
however, Dupree & Company, Inc. voluntarily refunded fees and reimbursed
expenses totaling $13,930 in accordance with the investment advisory
agreement,
the Tennessee Tax-Free Income Series totaled $210,691; however, Dupree &
Company, Inc. voluntarily refunded fees and reimbursed expenses totaling
$53,121 in accordance with the investment advisory agreement,
the Tennessee Tax-Free Short-to-Medium Series totaled $34,421; however,
Dupree & Company, Inc. voluntarily refunded fees and reimbursed expenses
totaling $12,785 in accordance with the investment advisory agreement,
and
In addition, each Fund has entered into a shareholder service agreement
with Dupree & Company, Inc., the Funds' Transfer Agent. The agreement
provides for a fee computed on the average daily net asset value at the
annual rate of .15% on the first $20,000,000 of average net assets and
.12% of all amounts in excess of $20,000,000 of average net assets.
42
<PAGE> 57
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
3. PURCHASES AND SALES OF SECURITIES
During the period, the cost of purchases and the proceeds from sales of
securities for each Series were as follows:
<TABLE>
<CAPTION>
Purchases Sales/Calls
---------------- ----------------
<S> <C> <C>
Alabama Tax-Free Income Series $ 215,183 $ 0
Kentucky Tax-Free Income Series 70,729,343 65,877,319
Kentucky Tax-Free Short-to-Medium Series 16,732,365 22,804,306
Mississippi Tax-Free Income Series 222,350 0
North Carolina Tax-Free Income Series 6,329,204 3,234,274
North Carolina Tax-Free Short-to-Medium Series 1,298,369 1,101,344
Tennessee Tax-Free Income Series 3,695,516 6,589,503
Tennessee Tax-Free Short-to-Medium Series 2,951,065 1,931,098
Intermediate Government Bond Series 3,579,517 3,933,500
</TABLE>
4. CAPITAL SHARES
At June 30, 2000, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
ALABAMA TAX-FREE INCOME SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 37,521 $ 378,504 0 $ 0
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 168 1,710 0 0
SHARES REDEEMED (16,173) (164,411) 0 0
NET INCREASE 21,516 $215,803 0 $0
<CAPTION>
KENTUCKY TAX-FREE INCOME SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 9,059,536 $65,847,552 12,037,741 $ 92,522,784
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 1,722,788 12,625,387 1,497,738 11,537,082
SHARES REDEEMED (9,627,903) (69,757,756) (5,684,458) (43,600,775)
NET INCREASE 1,154,421 $8,715,183 7,851,021 $60,459,091
<CAPTION>
KENTUCKY TAX-FREE
SHORT-TO-MEDIUM SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 5,370,435 $27,545,060 6,072,689 $ 32,118,854
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 313,257 1,608,716 320,987 1,698,602
SHARES REDEEMED (6,915,284) (35,472,536) (5,379,335) (28,432,548)
NET DECREASE (1,231,592) ($6,318,760) 1,014,341 $5,384,908
</TABLE>
43
<PAGE> 58
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
4. CAPITAL SHARES, CONTINUED:
<TABLE>
<CAPTION>
MISSISSIPPI TAX-FREE
INCOME SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 33,399 $ 335,828 0 $0
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 179 1,827 0 0
SHARES REDEEMED (10,544) (106,203) 0 0
NET INCREASE 23,034 $231,452 0 $0
<CAPTION>
NORTH CAROLINA TAX-FREE
INCOME SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 817,085 $ 8,330,950 1,056,498 $ 11,551,644
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 64,143 663,502 35,760 391,836
SHARES ISSUED FOR REINVESTMENT FROM
CAPITAL GAINS 2,342 23,908 533 5,859
SHARES REDEEMED (595,732) (6,081,079) (175,335) (1,918,344)
NET INCREASE 287,838 $2,937,281 917,456 $10,030,995
NORTH CAROLINA TAX-FREE
SHORT-TO-MEDIUM SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 415,570 $ 4,161,326 308,018 $ 3,155,669
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 15,153 151,679 8,750 89,774
SHARES REDEEMED (393,607) (3,938,345) (140,946) (1,443,301)
NET INCREASE 37,116 $374,660 175,822 $1,802,142
<CAPTION>
TENNESSEE TAX-FREE INCOME SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 1,196,422 $ 12,435,654 2,393,811 $ 26,549,094
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 105,725 1,109,946 69,683 773,724
SHARES ISSUED FOR REINVESTMENT FROM
CAPITAL GAINS 483 5,010 3,050 33,982
SHARES REDEEMED (1,653,436) (17,195,552) (846,081) (9,323,933)
NET DECREASE (350,806) ($3,644,942) 1,620,463 $18,032,867
</TABLE>
44
<PAGE> 59
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
4. CAPITAL SHARES, CONTINUED:
<TABLE>
<CAPTION>
TENNESSEE TAX-FREE
SHORT-TO-MEDIUM SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
----------------------------------------------------------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD 787,419 $ 8,068,503 744,695 $ 7,803,486
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 18,524 189,807 15,072 157,957
SHARES REDEEMED (738,944) (7,568,456) (650,969) (6,803,955)
NET INCREASE 66,999 $689,854 108,798 $1,157,488
<CAPTION>
INTERMEDIATE GOVERNMENT BOND
SERIES YEAR ENDED JUNE 30, 2000 YEAR ENDED JUNE 30, 1999
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD 187,444 $ 1,786,093 382,007 $ 3,884,292
SHARES ISSUED FOR REINVESTMENT FROM
NET INVESTMENT INCOME 50,182 476,716 42,147 428,535
SHARES REDEEMED (267,689) (2,519,138) (262,548) (2,655,866)
NET DECREASE (30,063) ($256,329) 161,606 $1,656,961
</TABLE>
45
<PAGE> 60
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
5. FEDERAL INCOME TAXES
At June 30, 2000 the Kentucky Tax-Free Income Series, the Kentucky Tax-Free
Short-to-Medium Series, the North Carolina Tax-Free Income Series, the North
Carolina Tax-Free Short-to-Medium Series, the Tennessee Tax-Free
Short-to-Medium Series and the Intermediate Government Bond Series have
capital loss carry forwards which are available to offset future capital
gains, if any. The capital loss carry forwards expire as follows:
<TABLE>
<CAPTION>
KY NC TN
KY Tax-Free NC Tax-Free TN Tax-Free Intermediate
Tax-Free Short-to Tax-Free Short-to Tax-Free Short-to Government
Income Medium Income Medium Income Medium Bond
Series Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C> <C>
2003 $131,372 $344,195 $ --- $ --- $ --- $ --- $664,593
2004 --- 10,144 --- 1,436 --- 807 87,381
2005 --- 188,198 --- 1,015 --- 1,660 ---
2006 --- 73,155 --- 804 --- 2,666 ---
2007 --- --- --- --- --- --- ---
2008 686,889 135,232 95,859 6858 276,976 21,890 209,853
---------------------------------------------------------------------------------------------
Net accumulated
realized losses $818,261 $750,924 $95,859 $10,113 $276,976 $27,023 $961,827
==============================================================================================
</TABLE>
The amount of long-term capital gains paid for the fiscal year ended June
30, 2000 were as follows:
Tennessee Tax-Free Income Series $ 122
North Carolina Tax-Free Income Series $ 30,111
For the year ended June 30, 2000, all of the distributions made from net
investment income of the Dupree municipal bond funds are tax-exempt for federal
income tax purposes.
Capital losses incurred after October 31 ("Post-October" losses) within the
taxable year are deemed to arise on the first business day of the Funds' next
taxable year. The Funds incurred and will elect to defer net capital losses
during fiscal 2000 as follows:
<TABLE>
<CAPTION>
KY Tax-Free KY Tax-Free NC Tax-Free NC Tax-Free TN Tax- TN Tax-Free Intermediate
Income Series Short-to-Medium Income Short-to-Medium Free Short-to-Medium Government
Series Series Series Income Series Bond Series
Series
<S> <C> <C> <C> <C> <C> <C> <C>
$2,253,761 $280,543 $22,584 $22,225 $403,254 $29,543 $38,559
</TABLE>
To the extent that these carryover losses are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.
46
<PAGE> 61
DUPREE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
6. LINE OF CREDIT AGREEMENT
Under the terms of an agreement with Star Bank, N.A., principal amounts
up to 5% of a Fund's net assets are available on an uncommitted line of
credit. The principal amounts borrowed are due on demand. Interest will
be payable based on the prime rate of the bank (9.50% at June 30, 2000).
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. Debt covenants, among others, require the
Funds to:
- Provide the lender with the Funds' annual report
- Comply with all agreements with the lender and with
applicable laws and regulations
- Maintain appropriate insurance coverage
No borrowings were outstanding nor was the line of credit drawn on during
the fiscal year 2000.
47
<PAGE> 62
[ERNST & YOUNG LLP LOGO] - 1300 Chiquita Center - Phone 513 621-6454
250 East Fifth Street
Cincinnati, Ohio 45202
Report of Independent Auditors
The Board of Trustees and Shareholders
Dupree Mutual Funds
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of Dupree Mutual Funds (comprised of
Alabama Tax-Free Income Series, Kentucky Tax-Free Income Series, Kentucky
Tax-Free Short-to-Medium Series, Mississippi Tax-Free Series, North Carolina
Tax-Free Income Series, North Carolina Tax-Free Short-to-Medium Series,
Tennessee Tax-Free Income Series, Tennessee Tax-Free Short-to-Medium Series and
Intermediate Government Bond Series) (the Funds) as of June 30, 2000, the
related statements of operations for the period then ended, the statements of
changes in net assets and the financial highlights for the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 2000, by correspondence with the
custodian and broker. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective series comprising Dupree Mutual Funds at June 30, 2000, the
results of their operations for the period then ended, the changes in their net
assets and their financial highlights for each of the indicated periods, in
conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Cincinnati, Ohio
August 1, 2000
