<PAGE> 1
DUPREE MUTUAL FUNDS
December 31, 1999
SEMI 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 adviser. The
fund was one of the first single-state municipal bond funds in the country, and
the first mutual fund to invest solely in Kentucky municipal bonds. Since then,
several new offerings have been added to the Dupree Mutual Funds family:
Kentucky Tax-Free Short-to-Medium Series in 1987;
Intermediate Government Bond Series in 1992;
Tennessee Tax-Free Income Series in 1993;
Tennessee Tax-Free Short-to-Medium Series in 1994;
North Carolina Tax-Free Income Series in 1995 and,
North Carolina Tax-Free Short-to-Medium Series in 1995.
Today, after more than 50 years in business, Dupree continues to be a pioneer in
the industry. Our Kentucky and Tennessee 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.
SHAREHOLDER SERVICES
- --------------------
TO HELP YOU ADD TO YOUR ACCOUNT:
Automatic Reinvestment of Distributions
All dividend and capital gain distributions can be automatically reinvested in
additional shares of the fund, thus providing the added potential for growth
through compounding.
Automatic Investment Plan
You may make automatic monthly investments by authorizing us, in writing, to
deduct a specified amount from your bank account.
TO HELP INCREASE YOUR CASH FLOW:
Dividends in Cash
You have the option of taking your dividends in cash. Dividends are paid
QUARTERLY for the three Income Series and MONTHLY for the three Short-to-Medium
Series and the Intermediate Government Bond Series.
Automatic Withdrawal Plan
You can arrange to make automatic monthly redemptions of a specified amount and
have the proceeds sent to you.
Telephone Redemption
Unless you choose otherwise, convenient redemption by telephone privileges are
automatically available to all shareholders.
Check-Writing
Check-writing privileges are available on the three Short-to-Medium Series (KY,
NC, and TN), and the Intermediate Government Bond Series.
TO HELP MEET YOUR CHANGING NEEDS:
Exchange Privileges
Should your investment objectives or financial needs change, you may exchange
shares of your fund for shares of another Dupree fund at any time at no charge.
<PAGE> 3
TABLE OF CONTENTS
President's letter to the Shareholders I
FINANCIAL STATEMENTS:
Kentucky Tax-Free Income Series 1
Kentucky Tax-Free Short-to-Medium Series 8
North Carolina Tax-Free Income Series 12
North Carolina Tax-Free Short-to-Medium Series 16
Tennessee Tax-Free Income Series 20
Tennessee Tax-Free Short-to-Medium Series 26
Intermediate Government Bond Series 30
Notes to financial statements 33
<PAGE> 4
To the Shareholders of
Dupree Mutual Funds
KENTUCKY TAX-FREE INCOME SERIES
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
NORTH CAROLINA TAX-FREE INCOME SERIES
NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
TENNESSEE TAX-FREE INCOME SERIES
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
INTERMEDIATE GOVERNMENT BOND SERIES
July 1, 1999 - December 31, 1999
INVESTMENT PERFORMANCE:
This last half of the calendar year was one of rising interest rates
and declining bond prices. Municipal bonds declined somewhat less in price than
Treasury bonds during the period.
The Kentucky Tax-Free Income Series began the period at a price of
$7.47 per share with total assets of $422,995,942. At the period's end its price
per share was $7.24 and total assets were $413,540,897. There was no capital
gains distribution during the period.
The Kentucky Tax-Free Short-to-Medium Series began the period at $5.20
per share with total assets of $58,629,711. On December 31st the price per share
was $5.13 and total assets were $57,625,016. There was no capital gains
distribution during the period.
The North Carolina Tax-Free Income Series began the period at a price
of $10.61 per share with total assets of $19,456,344. On December 31st the
Income Series had assets of $19,146,128 and a price of $10.21. There was a
capital gains distribution during the period of 1.54 cents per share.
The North Carolina Tax-Free Short-to-Medium Series began the period at
$10.09 per share with total assets of $3,938,101. On December 31st this series
had assets of $4,753,840 and a price of $10.00. There was no capital gains
distribution.
The Tennessee Tax-Free Income Series began the period at $10.77 with
total assets of $46,086,375. On December 31st price per share was $10.32 and
total assets were $39,983,417. There was no capital gains distribution.
The Tennessee Tax-Free Short-to-Medium Series began the period at a
price of $10.33 per share with total assets of $5,818,739. At year end price per
share was $10.23 with total assets of $8,197,710. There was no capital gains
distribution.
The Intermediate Government Bond Series began the period at $9.73 per
share and ended December 31st at $9.42. Total assets at the beginning of the
period were $10,778,197 and at the end of the period were $11,152,339. The
average maturity of this series was 8.80 years reflecting callable bonds in the
portfolio which, with market declines, are now priced to their longer maturity
dates. There was no capital gains distribution during the period.
OVERVIEW:
The Federal Reserve Board made three increases in the level of short
term interest rates during the period if you include the June 30th increase. The
thirty year Treasury Bond started the period a 6.01% and increased in rate to
6.48% at the period's end. In the first two weeks of January 2000 this rated has
climbed even higher to a 6.75% level. Obviously, the market expects the Federal
Reserve to raise rates at least one more time, and maybe two. The Fed is pushed
by a robust economy and a frantic bubble-like stock market, particularly
technical stocks. Everyone who has predicted a stock market correction in the
past few years has been wrong. In tech stocks particularly, there is no longer
any reference to earnings in stock evaluations, and earnings multiples on the
Dow stocks are at all time highs. In this atmosphere the Fed seems to feel the
bond market must be held hostage to the stock market, and is doing so. A weaker
stock market would quickly take the pressure off of bonds, but when that day
will arrive, nobody knows. There will, however, be a day again when investors
will see the wisdom to balancing their investment portfolios with a substantial
portion of bonds. The unanswerable question is, "when?".
I am pleased to report that our MORNINGSTAR ratings continue to be
among the very best for all our funds. At the period's end four of our series
were five star and three were four star.
THE LOYALTY OF SHAREHOLDERS has had much to do with our growth during
this period. If you have questions or suggestions feel free to call us at (800)
866-0614 or, in Lexington, at 254-7741. In North Carolina you can also call
Carolina Financial Group, Inc. at (800) 284-2562.
Yours truly,
Thomas P. Dupree, Sr.
President
I
<PAGE> 5
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
INSURED MUNICIPAL REVENUE BONDS
<S> <C> <C> <C> <C> <C>
50.10% of Net Assets
Boyle County KY Hospital Revenue-Ephraim McDowell Regional 5.800 04/01/2014 Aaa/AAA* $ 1,000,000 $ 1,025,670
Danville KY Multi-City Lease Revenue-Shelbyville 6.550 07/01/2006 Aaa/AAA* 495,000 529,422
Danville KY Multi-City Lease Revenue 6.875 12/01/2010 Aaa/AAA* 400,000 431,420
Daviess County KY Hospital Revenue 6.250 08/01/2012 Aaa/AAA* 3,000,000 3,162,690
Daviess County Ky Hospital Revenue 6.250 08/01/2022 Aaa/AAA* 1,000,000 1,000,720
Floyd County KY Hospital Revenue-Low Highland Hospital 7.500 08/01/2010 AAA 1,305,000 1,365,748
Greater KY Housing Assistance Corporation 5.350 07/01/2022 Aaa/AAA* 1,000,000 955,930
Greater KY Housing-Tug Fork Apartments 5.600 01/01/2007 Aaa/AAA* 310,000 314,489
Greater KY Housing-Tug Fork Apartments 6.350 01/01/2022 Aaa/AAA* 2,105,000 2,132,218
Greater KY Housing Assistance Corporation 6.050 07/01/2022 Aaa/AAA* 1,435,000 1,450,828
Greater KY Housing Assistance Corporation 6.100 01/01/2024 Aaa/AAA* 4,000,000 4,066,640
Greater Ky Housing Assistance Corporation 6.200 02/01/2025 AAA* 8,735,000 8,797,543
Hopkins County KY Hospital Revenue-Trover Clinic Foundation 6.625 11/15/2011 Aaa/AAA* 2,000,000 2,119,960
Jefferson County KY Health Facilities Alliant Health Services 5.125 10/01/2017 Aaa/AAA* 6,700,000 6,209,225
Jefferson County KY Health Facilities-Alliant Health System 5.125 10/01/2027 Aaa/AAA* 500,000 442,395
Jefferson County KY Health Facilities Jewish Hospital 5.700 01/01/2021 Aaa/AAA* 8,000,000 8,169,280
Jefferson County KY Health Facilities University Medical Center 5.500 07/01/2017 Aaa/AAA* 6,000,000 5,855,220
Jefferson County KY Health Facilities-Jewish Hospital 6.500 05/01/2015 Aaa/AAA* 6,380,000 6,747,871
Jefferson County Ky School District Finance Corporation 5.250 01/01/2016 Aaa/AAA* 1,000,000 966,400
Jefferson County KY Health Services - Alliant Health 5.125 10/01/2018 Aaa/AAA* 28,000,000 26,188,120
Jefferson County KY Capital Projects Corporation Revenue 5.600 04/01/2014 Aaa/AAA* 1,000,000 1,001,860
Jefferson County KY Capital Projects Corporation Revenue 5.375 06/01/2018 Aaa/AAA* 1,500,000 1,438,170
Jefferson County KY Hospital Revenue 6.436 10/01/2014 Aaa/AAA* 1,500,000 1,598,325
Jefferson County KY Multi Family Revenue 5.000 08/20/2018 AAA* 385,000 355,944
Kentucky Counties 1987 Single Family Mortgage Revenue 8.625 09/01/2015 AAA* 10,000 10,325
Kentucky Economic Development Finance Authority Medical Center 5.000 02/01/2018 Aaa/AAA* 2,550,000 2,325,881
Kentucky Development Finance Authority-Ashland Hospital 6.125 02/01/2012 Aaa/AAA* 4,000,000 4,209,680
Kentucky Economic Development Finance Authority-Ashland Hospital 5.000 02/01/2028 Aaa/AAA* 1,000,000 858,930
Kentucky Development Finance Authority-St Clair Medical 5.875 09/01/2013 AAA* 2,000,000 2,054,660
Kentucky Development Finance Authority-St Elizabeth Hospital 5.900 12/01/2015 Aaa/AAA* 2,500,000 2,569,750
Kentucky Development Finance Authority-St Claire Medical 5.625 09/01/2021 AAA* 2,500,000 2,518,400
Kentucky Development Finance Authority-Methodist Hospital 5.625 02/01/2017 AAA* 6,500,000 6,432,855
Kentucky Economic Development Authority-South Central Nursing 6.000 07/01/2011 Aaa/AAA* 3,650,000 3,858,233
Kentucky Economic Development Finance Authority-Baptist Hospital 5.000 08/15/2015 Aaa/AAA* 5,250,000 5,024,618
Kentucky Housing Corporation 5.950 07/01/2017 Aaa/AAA* 500,000 513,985
Kentucky Housing Corporation 5.400 07/01/2014 Aaa/AAA* 3,000,000 2,970,270
Kentucky Housing Corporation 7.125 01/01/2010 Aaa/AAA* 3,935,000 4,159,177
Kentucky Housing Corporation 7.250 01/01/2017 Aaa/AAA* 470,000 497,622
Kentucky Housing Corporation 6.600 07/01/2011 Aaa/AAA* 335,000 356,551
Kentucky Housing Corporation 6.600 07/01/2011 Aaa/AAA* 4,500,000 4,789,485
Kentucky Housing Corporation 6.625 07/01/2014 Aaa/AAA* 1,000,000 1,064,910
Kentucky Housing Corporation 6.600 01/01/2011 Aaa/AAA* 620,000 662,848
Kentucky Housing Corporation 5.800 01/01/2019 Aaa/AAA* 6,755,000 6,754,932
Kentucky Housing Corporation 6.500 07/01/2017 Aaa/AAA* 5,900,000 6,327,455
Kentucky Housing Corporation 5.700 07/01/2017 Aaa/AAA* 500,000 502,545
Kentucky Housing Corporation 6.400 01/01/2017 Aaa/AAA* 11,185,000 11,899,498
Kentucky Housing Corporation 5.500 01/01/2015 Aaa/AAA* 1,000,000 985,950
Kentucky State Property & Building Commission Project #64 5.500 05/01/2017 Aaa/AAA* 8,000,000 7,747,520
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* 400,000 425,548
Lexington Fayette Urban County Government KY Sewer System 6.375 07/01/2010 Aaa/AAA* 2,900,000 3,080,525
Lexington Fayette Urban County Government KY Sewer System 6.375 07/01/2012 Aaa/AAA* 2,500,000 2,652,575
Lexington Fayette Urban County Government Public Facilities 5.125 10/01/2015 Aaa/AAA* 1,770,000 1,682,615
Lexington Fayette Urban County Government Public Facilities 5.125 10/01/2018 Aaa/AAA* 2,135,000 1,975,985
Lexington Fayette Urban County Government Public Facilities 5.125 10/01/2019 Aaa/AAA* 2,415,000 2,216,608
Lexington-Fayette Urban County Government Transylvania University 5.125 08/01/2018 Aaa/AAA* 4,000,000 3,813,120
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
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<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lexington-Fayette Urban County KY Government Project Revenue 5.000 11/01/2018 Aaa $ 6,205,000 $ 5,529,213
Louisville & Jefferson County KY Metropolitan Sewer District 5.300 05/15/2019 Aaa/AAA* 5,000,000 4,688,900
Louisville & Jefferson County KY Metropolitian Sewer District 5.200 05/15/2026 Aaa/AAA* 3,000,000 2,669,430
Louisville KY Parking Authority-River City First Mortgage 5.000 12/01/2017 Aaa/AAA* 1,000,000 910,500
McCreary County Courthouse & Public Square Corporation Revenue 5.400 09/01/2020 AAA* 1,550,000 1,484,745
Pike County KY Mortgage Revenue-Phelps Regional Health 5.350 09/20/2012 AAA* 290,000 291,940
Radcliff KY Mortgage Revenue-Lincoln Trail Care 5.650 01/20/2019 AAA* 3,110,000 3,135,004
Shelbyville KY Certificate of Participation 5.150 07/01/2018 Aaa 4,165,000 3,932,426
University of Kentucky Consolidated Educational Buildings 5.750 05/01/2015 Aaa/AAA* 1,850,000 1,869,647
Warren County Ky Hospital Revenue 5.000 04/01/2017 Aaa/AAA* 1,000,000 901,310
Warren County KY Hospital Facility Revenue 5.000 04/01/2016 Aaa/AAA* 1,000,000 911,530
-----------
208,339,339
PUBLIC FACILITIES REVENUE BONDS
13.77% OF NET ASSETS
Boone County KY Public Property 6.250 12/15/2012 A1 960,000 1,019,789
Calloway County Public Property Corporation-Courthouse 5.625 03/01/2018 A 1,000,000 995,970
Campbell County KY Public Property 6.250 12/01/2015 A 810,000 844,652
Danville Ky Multi-City Lease Revenue 5.000 09/01/2011 NR 545,000 524,900
Danville KY Multi-City Lease Revenue-Cambellsville 7.000 04/01/2002 NR 240,000 256,800
Danville KY Multi-City Lease Revenue-Owensboro Museum 7.050 08/01/2011 A 440,000 472,626
Danville KY Multi-City Lease Revenue Housing Authority 6.500 02/01/2012 A1 1,170,000 1,245,301
Danville KY Multi-City Lease Revenue Paducah Public Property 7.200 06/01/2011 A 500,000 528,470
Danville KY Multi-City Lease Revenue-Mt Sterling 7.375 06/01/2007 NR 240,000 256,459
Danville KY Multi-City Lease Revenue-Mt Sterling 7.500 06/01/2011 NR 205,000 218,846
Jeffersontown KY Certificate of Participation 6.500 09/01/2009 A 1,400,000 1,509,158
Jeffersontown KY Certificate of Participation 5.750 11/01/2015 A 1,095,000 1,115,389
Kenton County KY Public Property Corporation Revenue 5.700 12/01/2015 A 1,305,000 1,292,811
Kenton County KY Public Property Corporation Revenue 5.700 12/01/2016 A 1,380,000 1,356,416
Kenton County KY Public Properties Corporation-Courthouse Facility 5.000 03/01/2020 A1 2,000,000 1,787,020
Kentucky League of Cities-Middlesboro Series 6.200 08/01/2017 A-* 555,000 579,403
Mt. Sterling KY Lease Revenue-Kentucky League of Cities 6.100 03/01/2008 Aa 1,500,000 1,588,260
Mt. Sterling KY Lease Revenue-Kentucky League of Cities 6.150 03/01/2013 Aa 17,860,000 18,796,221
Mt. Sterling KY Lease Revenue-Kentucky League of Cities 6.200 03/01/2018 Aa 5,500,000 5,778,080
Oldham County KY Public Facilities Construction Corporation 5.250 06/01/2017 A-* 1,060,000 1,003,226
Pendleton County KY Multi-County Lease Revenue 6.500 03/01/2019 A* 11,000,000 11,628,320
Richmond KY Public Recreation Corporation Revenue 7.250 10/01/2011 NR 290,000 307,093
Shelbyville KY Certificates of Participation Revenue Refunding 5.350 10/01/2013 NR 1,295,000 1,235,456
Shelbyville KY Certificates of Participation Revenue Refunding 5.450 10/01/2017 NR 1,130,000 1,045,148
Somerset KY Municipal Projects Corporation Revenue 7.500 05/01/2000 NR 140,000 141,604
Union County KY Public Property Corporation 6.125 09/01/2015 NR 700,000 712,264
Woodford County KY Public Property Corporation Revenue 5.600 11/01/2017 A 1,065,000 1,047,225
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57,286,907
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
8.29% OF NET ASSETS
Ashland KY Pollution Control Revenue-Ashland Oil Project 6.650 08/01/2009 Baa1 8,835,000 9,334,796
Campbellsville KY Industrial Revenue-Campbellsville College 6.950 03/01/2015 NR 1,150,000 1,231,340
Campbellsville KY Industrial Revenue-Campbellsville College 6.000 03/01/2017 NR 1,920,000 1,954,445
Carroll County KY Collateralized Pollution Control Revenue 6.250 02/01/2018 Aa2/AA-* 1,000,000 1,045,060
Jefferson County KY Pollution Control Revenue-E I DuPont 6.300 07/01/2012 Aa3/AA* 3,500,000 3,738,630
Jefferson County KY Pollution Control-Louisville Gas 7.450 06/15/2015 Aa2/AA* 1,750,000 1,811,950
Jefferson County KY Pollution Control-Louisville Gas 5.625 08/15/2019 Aa2/AA* 9,150,000 8,942,204
Kentucky League of Cities-Ashland Series 6.250 08/01/2017 A- 1,550,000 1,624,478
Meade County KY Pollution Control Revenue-Olin Corporation 6.000 07/01/2007 NR 660,000 671,266
Mercer County KY Collateralized Pollution Control Revenue 6.250 02/01/2018 Aa2/AA-* 2,500,000 2,615,200
Middlesboro KY Industrial Building Revenue-Fern Lake Project 6.200 12/01/2002 NR 430,000 455,800
Muhlenberg County KY Collateralized Pollution Control Revenue 6.250 02/01/2018 Aa2/AA* 1,000,000 1,037,750
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34,462,919
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 7
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL AND HEALTHCARE REVENUE BONDS
7.96% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Christian County KY Hospital Revenue-Jennie Stuart Medical 5.800 07/01/2011 A-* $ 270,000 $ 277,838
Christian County KY Hospital Revenue-Jennie Stuart Medical 6.000 07/01/2017 A-* 4,000,000 4,018,480
Christian County KY Hospital Revenue-Jennie Stuart Medical 6.000 07/01/2013 A-* 2,870,000 2,974,267
Jefferson County KY Health Facilities Jewish Hospital 5.700 01/01/2011 A1/AA-* 1,200,000 1,240,944
Jefferson County KY Medical Center Services Revenue 7.300 05/01/2009 A 400,000 415,400
Kentucky Development Finance Authority-Catholic Health 5.000 12/01/2027 Aa2/AA* 10,000,000 8,628,600
Kentucky Development Finance Association-Green River 6.000 11/01/2010 Aa3 1,000,000 1,064,010
KY Economic Development Finance Authority-Appalachian Regional 5.875 10/01/2022 BBB* 3,500,000 3,116,365
Kentucky Economic Development Finance Authority-Catholic Health 5.000 12/01/2018 Aa2/AA* 6,950,000 6,368,285
Ky Economic Development Finance Authority Hospital-Appalachan 5.850 10/01/2017 BBB* 1,000,000 915,300
Madison County Ky Industrial Building Revenue - McCready Manor 5.500 06/01/2020 AA* 1,785,000 1,715,117
Pike County KY Mortgage Revenue Phelps Regional Health 5.650 09/20/2027 AAA* 2,435,000 2,361,853
------------
33,096,459
SCHOOL BUILDING REVENUE BONDS
7.72% OF NET ASSETS
Boone County KY School District Finance Corporation 6.000 02/01/2018 Aa3 1,000,000 1,029,140
Boone County KY School District Finance Corporation 5.700 05/01/2018 Aa3 2,500,000 2,485,725
Boone County Ky School District Finance Corporation 5.500 09/01/2019 Aa3 1,860,000 1,809,743
Bullitt County KY School District Finance Corporation 6.000 08/01/2014 Aa3 1,100,000 1,166,231
Clark County KY School District Finance Corporation 6.000 05/01/2012 Aa3 320,000 333,795
Estill County KY School District Finance Corporation 5.875 08/01/2016 A 1,780,000 1,845,789
Floyd County KY School District Finance Corporation 6.000 06/01/2014 A 1,000,000 1,037,840
Greenup County KY School District Finance Corporation 6.100 09/01/2014 A/A* 1,105,000 1,153,664
Hardin County KY School District Finance Corporation 6.000 07/01/2016 A 1,025,000 1,075,020
Harlan KY Independent School District Finance Corporation 6.000 05/01/2015 A 275,000 295,559
Hopkins County KY School District Finance Corporation 6.200 06/01/2015 A 2,500,000 2,627,100
Jefferson County Ky Improvement 6.000 04/01/2020 Aa2/AA* 1,985,000 1,998,776
Jefferson County KY College Project Bellarmine College 5.250 05/01/2019 Baa2 2,000,000 1,857,600
Jessamine County KY School District Finance Corporation 6.125 06/01/2015 A 1,000,000 1,053,590
Laurel County KY School District Finance Corporation 5.600 03/01/2017 A1 1,000,000 998,820
Letcher County KY School District Finance Corporation 6.700 10/01/2014 A 1,490,000 1,646,018
Martin County KY School District Finance Corporation 5.500 06/01/2015 A 1,650,000 1,666,632
McLean County KY School District Finance Corporation 6.000 06/01/2014 NR 1,405,000 1,501,650
Pendleton County KY School District Finance Corporation 5.125 06/01/2019 Aa3 1,140,000 1,082,795
Pike County KY School District Finance Corporation 6.200 08/01/2010 A 305,000 321,735
Pike County KY School District Finance Corporation 6.200 08/01/2011 A 325,000 342,833
Powell County KY School District Finance Corporation 5.900 08/01/2016 A* 1,185,000 1,246,016
Scott County KY School District Finance Corporation 5.900 06/01/2016 A/A* 3,450,000 3,530,661
--------------
32,106,732
STATE AGENCY REVENUE BONDS
3.55% OF NET ASSETS
Kentucky Higher Education Student Loan 9.250 06/01/2001 Aa/AA-* 180,000 192,184
Kentucky Infrastructure Authority 5.750 08/01/2013 Aa3/A* 900,000 918,432
Kentucky Infrastructure Authority 5.750 08/01/2018 Aa3/A* 1,500,000 1,501,320
Kentucky Infrastructure Authority 6.375 08/01/2014 Aa3/A* 700,000 746,718
Kentucky Infrastructure Authority 5.375 02/01/2018 Aa3/A* 2,000,000 1,929,300
Kentucky Infrasturcture Authority 5.000 06/01/2017 Aa3/A* 1,035,000 932,328
Kentucky State Property & Buildings Commission Project #59 5.700 11/01/2014 Aa3/A* 1,000,000 1,003,660
Kentucky State Property & Building Commission Project #63 5.100 11/01/2018 Aa3/A* 2,000,000 1,845,000
Kentucky State Property & Buildings Commission Project #54 6.000 09/01/2012 Aa3/A+ 1,210,000 1,264,063
Kentucky State Property & Buildings Commission Project #59 5.625 11/01/2015 Aa3/A* 1,000,000 993,180
Kentucky State Property & Buildings Commission Project #40 6.875 11/01/2007 Aa3/A* 3,250,000 3,458,260
--------------
14,784,445
PREREFUNDED AND ESCROWED TO MATURITY BONDS
2.64% OF NET ASSETS
Danville KY Multi-City Lease Revenue-Shelbyville 6.700 07/01/2011 Aaa/AAA* 2,500,000 2,665,425
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 8
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Elsmere KY Industrial Development Revenue-Courtaulds plc 6.750 04/01/2010 NR $ 2,000,000 $ 2,226,880
Erlanger KY Public Property Revenue-Fire Protection 7.400 11/01/2008 BBB+* 75,000 79,407
Erlanger KY Public Property Revenue-Fire Protection 7.400 11/01/2009 BBB+* 100,000 105,876
Hardin County KY Water District Number 1 Water Revenue 7.400 09/01/2006 A 85,000 88,064
Hardin County KY Water District Number 1 Water Revenue 7.400 09/01/2007 A 90,000 93,245
Hardin County KY Water District Number 1 Water Revenue 7.400 09/01/2008 A 100,000 103,605
Hardin County KY Water District Number 1 Water Revenue 7.400 09/01/2009 A 105,000 108,785
Jefferson County KY Hospital Revenue 6.436 10/01/2014 Aaa/AAA* 2,500,000 2,667,900
Kentucky Infrastructure Authority 6.000 08/01/2011 Aaa/AAA* 90,000 92,480
Lexington-Fayette Urban County Government KY Public Parking 6.875 02/01/2008 A1 300,000 306,735
Martin County KY Public Property Corporation Revenue 7.250 09/01/2010 NR 150,000 158,355
Martin County KY Public Property Corporation Revenue 7.250 09/01/2011 NR 160,000 168,912
Owensboro KY Water Revenue 6.250 09/15/2009 Aaa/AAA* 800,000 839,168
Richmond KY Public Recreation Corporation Revenue 6.750 08/01/2013 NR 575,000 624,519
Shelbyville KY Public Property Recreational Corporation 6.900 10/01/2012 NR 400,000 432,696
Wurtland KY Sewer System Revenue 7.700 10/01/2004 A+* 200,000 211,528
----------------
10,973,580
STATE AND LOCAL REVENUE BONDS
2.00% OF NET ASSETS
Covington Independent School District Finance Corporation 5.250 06/02/2019 Aa3 1,225,000 1,168,993
Fayette County Ky School District Finance Corporation School 5.500 09/01/2019 Aa3/A+* 4,830,000 4,716,205
Junction City KY College Revenue-Center College Project 5.875 04/01/2017 A2 1,000,000 1,025,340
KY Interlocal Transportation Equipment Lease Revenue 6.000 12/01/2020 A 400,000 412,028
Richmond KY Court Facilities Corporation Revenue 5.250 02/01/2019 A3 1,035,000 977,744
----------------
8,300,310
STATE AND LOCAL MORTGAGE REVENUE BONDS
1.60% OF NET ASSETS
Floyd County KY Public Property Revenue-Justice Center 6.125 09/01/2018 A 1,240,000 1,299,024
Jefferson Oldham & Bullitt Counties KY Home Mortgage 0.750 11/01/2014 A1 5,000 5,613
Kentucky Housing Corporation 7.400 01/01/2010 Aaa/AAA* 2,290,000 2,369,578
Kentucky Housing Corporation 7.550 01/01/2016 Aaa/AAA* 2,300,000 2,381,604
Louisville Housing Assistance Mortgage Corp Rivertown Project 5.100 07/01/2024 Aa2 655,000 599,417
----------------
6,655,236
MUNICIPAL UTILITY REVENUE BONDS
1.29% OF NET ASSETS
Cynthiana KY Waterworks & Sewer Revenue 6.400 01/01/2007 BBB-* 575,000 614,060
Danville KY Multi-City Lease Revenue-Ashland Utilities 6.750 04/01/2012 BBB+* 915,000 979,123
Danville KY Multi-City Lease Revenue-Hopkinsville 6.875 06/01/2012 Baa1 2,170,000 2,473,648
Franklin KY Water & Sewer Revenue Refunding 6.200 12/01/2011 Baa 1,000,000 1,053,080
Pendleton County KY Multi-County Lease Revenue 7.450 03/01/2004 AA* 245,000 257,025
----------------
5,376,936
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
.58% OF NET ASSETS
Kentucky Housing Corporation Revenue Series E 4.750 07/01/2017 Aaa/AAA* 1,335,000 1,199,805
University of Louisville Health & Education 6.000 11/01/2013 A2 1,180,000 1,220,639
----------------
2,420,444
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 9
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTY GENERAL OBLIGATION BONDS
.50 % OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Hardin County KY General Obligation 5.125 06/01/2019 A2 $ 2,255,000 $ 2,078,905
---------------
2,078,905
---------------
Total Investments (cost $415,914,702)(a) - 100.57% of Net Assets $ 415,882,212
=================
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ Bond ratings are unaudited.
(a) Represents cost for financial reporting and federal income tax
purpose and differs from market value by net unrealized
depreciation of securities as follows:
Unrealized appreciation $ 9,916,347
Unrealized depreciation (9,948,837)
----------------
Net unrealized depreciation $ (32,490)
=================
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 10
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES UNAUDITED
DECEMBER 31, 1999
<S> <C> <C>
ASSETS:
Investment in securities, at value (Cost: $415,914,702) $ 415,882,211
Interest receivable 7,836,316
Receivable for investments sold 2,245,000
-----------------
Total assets 425,963,527
LIABILITIES:
Cash Overdraft $ 6,791,208
Payable for:
Distributions 5,185,414
Fund shares redeemed 340,899
Management fee 19,537
Transfer agent 6,056
Other fees 79,516
----------------------
Total liabilities 12,422,630
-----------------
NET ASSETS:
Net assets consist of:
Capital $ 415,092,897
Net accumulated realized losses on investment transactions (1,519,510)
Net unrealized depreciation in value of investments (32,490)
-----------------
Net assets at value $ 413,540,897
=================
NET ASSET VALUE, offering price and redemption price per share
($413,540,897/57,158,161 shares outstanding) $ 7.24
=================
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 12,191,162
------------------
Expenses:
Investment advisory fees 918,120
Transfer agent 259,557
Professional fees 41,248
Trustee fees 22,617
Other expenses 48,085
------------------
Total expenses 1,289,627
------------------
Net investment income 10,901,535
------------------
Realized and unrealized losses on investments
Net realized loss (1,388,136)
Net decrease in unrealized appreciation (12,392,670)
------------------
Net realized and unrealized loss on investments (13,780,806)
------------------
Net decrease in net assets resulting from operations $ (2,879,271)
==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 11
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE INCOME SERIES
UNAUDITED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
Six Months One Year
12/31/99 1999
-----------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 10,901,534 $ 20,084,548
Net realized gain/(loss) on investments (1,388,136) 1,281,160
Net decrease in unrealized appreciation (12,392,670) (11,896,917)
-----------------------------------------------
Net increase/(decrease) in net assets resulting from operations (2,879,272) 9,468,791
Distributions to shareholders (10,901,534) (20,084,548)
Net fund share transactions 4,325,761 60,459,091
-----------------------------------------------
Total increase/(decrease) (9,455,045) 49,843,334
Net assets:
Beginning of year 422,995,942 373,152,608
-----------------------------------------------
End of period $ 413,540,897 $ 422,995,942
===============================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING:
6 months For the years ended June 30,
--------------- ------------------------------------------------------------------
12/31/99 1999 1998 1997 1996
--------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 7.65 $ 7.65 $ 7.47 $ 7.35 $ 7.29
--------------- -------------- -------------- -------------- ---------------
Income from investment operations:
Net investment income 0.19 0.37 0.39 0.40 0.40
Net gains/(losses) on securities,
both realized and unrealized (0.41) (0.18) 0.18 0.12 0.06
--------------- -------------- -------------- -------------- ---------------
Total from investment operations (0.22) 0.19 0.57 0.52 0.46
Less distributions:
Distributions from capital gains
Distributions from net investment income (0.19) (0.37) (0.39) (0.40) (0.40)
--------------- -------------- -------------- -------------- ---------------
Net asset value, end of period $ 7.24 $ 7.47 $ 7.65 $ 7.47 $ 7.35
=============== ============== ============== ============== ===============
Total return -0.55% 2.52% 7.77% 7.14% 6.38%
Net assets, end of period (in thousands) $413,541 $422,996 $373,153 $327,304 $295,029
Ratio of expenses to average net assets 0.30% 0.61% 0.62% 0.63% 0.62%
Ratio of net investment income to
average net assets 2.57% 4.88% 5.14% 5.32% 5.39%
Portfolio turnover 10.07% 10.69% 11.80% 6.64% 4.29%
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 12
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
INSURED MUNICIPAL BONDS
29.43% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Carrolton & Henderson KY Public Building Authority Gas Revenue 4.500 01/01/2003 Aaa/AAA* $ 620,000 $ 617,421
Greater KY Housing Assistance Corporation Mortgage Revenue 6.250 01/01/2005 Aaa/AAA* 725,000 738,253
Jefferson County KY Health System Revenue Alliant Health 5.000 10/01/2005 AAA* 1,000,000 1,009,865
Jefferson County KY Capital Project Corporation Lease Revenue 5.500 04/01/2005 Aaa/AAA* 365,000 381,002
KY Economic Development Finance Authority Baptist Health System 4.750 08/15/2005 Aaa/AAA* 4,000,000 3,995,880
Kentucky Economic Development Finance Authority Ashland Hospital 5.000 02/01/2005 Aaa/AAA* 1,600,000 1,614,208
KY Property & Building Authority Project No 55 4.800 09/01/2005 Aaa/AAA* 3,000,000 3,011,610
KY Turnpike Authority Economic Development Road Revenue 5.500 07/01/2007 Aaa/AAA* 3,000,000 3,134,790
Lexington-Fayette Urban County Government Ky Alumni Association 5.000 11/01/2009 Aaa 1,360,000 1,348,454
Northern KY University Certificate of Participation Housing Facility 4.500 12/01/2004 Aaa/AAA* 1,000,000 996,470
---------------
16,847,953
PUBLIC FACILITY BONDS
12.77% OF NET ASSETS
Danville KY Multi-City Lease Jefferson Housing Authority 5.750 02/01/2000 A1 150,000 150,236
Danville KY Mutli-City Lease Revenue Owensboro 4.650 07/01/2000 A 340,000 341,064
Jeffersontown KY Certificates of Participation 4.450 11/01/2000 A 555,000 556,771
Mt Sterling KY Lease Revenue KY League of Cities Series:A 5.625 03/01/2003 Aa 4,500,000 4,647,555
Shelbyville Certificates of Participation Refinancing 4.900 10/01/2007 NR 1,205,000 1,185,118
---------------
6,880,744
STATE MORTGAGE REVENUE BONDS
12.14% OF NET ASSETS
KY Housing Corporation Housing Revenue 4.850 07/01/2004 Aaa/AAA* 1,700,000 1,717,085
KY Housing Corporation Housing Revenue 5.150 07/01/2007 Aaa/AAA* 2,500,000 2,528,250
KY Housing Corporation Housing Revenue 5.300 01/01/2004 Aaa/AAA* 2,250,000 2,295,405
---------------
6,540,740
STATE GENERAL OBLIGATION BONDS
11.39% OF NET ASSETS
KY Higher Education Student Loan 6.400 06/01/2000 A1/AA-* 1,835,000 1,853,772
Kentucky Infrastructure Authority Revolving Fund Series G 6.000 06/01/2000 A2/A* 375,000 377,430
KY Infrastructure Authority Revolving Fund Program Series:L 5.000 06/01/2006 A2/A* 1,000,000 1,010,890
KY State Property & Building Community Revenue Project#55 4.700 09/01/2004 A2/A+* 2,880,000 2,892,989
---------------
6,135,081
HOSPITAL AND HEALTHCARE REVENUE BONDS
9.52% OF NET ASSETS
Christian County KY Hospital Jennie Stuart Medical Center 5.250 07/01/2003 A-* 200,000 203,162
KY Development Finance Authority-Sisters of Charity 6.000 11/01/2000 A1/A+* 2,000,000 2,034,960
KY Economic Development Finance Authority Catholic Health 5.500 12/01/2005 Aa2/AA* 1,000,000 1,038,760
KY Economic Development Finance Authority Catholic Health 5.500 12/01/2006 Aa2/AA* 1,790,000 1,851,218
---------------
5,128,100
RENTALS/MUNICIPAL LEASE BONDS
6.70% OF NET ASSETS
KY Asset Liability Community General Fund Project Notes 4.000 03/01/2003 A2/A+* 1,000,000 989,990
Pendleton County KY Multi-Lease Revenue 7.550 03/01/2010 AA-* 2,500,000 2,618,225
---------------
3,608,215
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.83% OF NET ASSETS
University of KY Consolidated Education Building Series:N 5.900 05/01/2003 A1/AA-* 725,000 759,699
University of Louisville KY Consolidated Education Building 5.200 05/01/2004 A1/AA-* 1,000,000 1,027,610
University of Louisville KY Consolidated Education Building 4.700 05/01/2000 A1/AA-* 1,350,000 1,354,455
---------------
3,141,764
</TABLE>
The accompanying notes are an integral part of the
financial statements.
8
<PAGE> 13
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
KENTUCKY MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PREREFUNDED BONDS
5.39% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Danville KY Multi-City Lease Revenue Hopkinsville 6.100 06/01/2000 Baa1 $ 140,000 $ 141,289
Danville KY Multi-City Lease Revenue Hopkinsville 6.200 06/01/2001 Baa1 165,000 169,577
Owensboro KY Electric Light & Power Revenue 10.500 01/01/2004 AAA* 2,270,000 2,592,340
-------------
2,903,207
INDUSTRIAL REVENUE BONDS
3.87% OF NET ASSETS
Ashland KY Pollution Control Revenue-Ashland Oil 7.375 07/01/2009 BAA1 1,370,000 1,408,100
Meade County KY Pollution Control Revenue-Olin Corporation 6.000 07/01/2007 NR 665,000 676,099
-------------
2,084,199
LOCAL GENERAL OBLIGATION BONDS
2.00% OF NET ASSETS
KY Interlocal Transportation Equipment Lease 6.000 03/01/2000 A/A* 500,000 501,835
KY Interlocal Transportation Equipment Lease 4.750 12/01/2000 Aa/AA* 39,000 39,741
KY Interlocal Transportation Equipment Lease 4.500 12/01/2000 AA-* 204,000 211,956
KY Interlocal Transportation Equipment Lease 4.550 12/01/2000 AA-* 319,000 322,988
-------------
1,076,520
COUNTY GENERAL OBLIGATION BONDS
.96% OF NET ASSETS
Kenton County KY School District Finance Corporation 5.200 03/01/2005 Aa3/AA* 500,000 517,570
-------------
517,570
-------------
Total Investments (cost $54,804,695)(a) - 95.11% of Net Assets $ 54,864,093
=============
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ 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 $ 59,398
Unrealized depreciation -
-------------
Net unrealized appreciation $ 59,398
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 14
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
STATEMENT OF ASSETS AND LIABILITIES UNAUDITED
December 31, 1999
<S> <C> <C>
ASSETS:
Investment in securities, at value (Cost: $54,804,695) $ 54,864,092
Cash 1,040,794
Interest receivable 1,046,524
Receivable for investments sold 880,000
----------------------
Total assets 57,831,410
LIABILITIES:
Payable for:
Distributions 190,416
Management fee 3,134
Transfer agent 816
Other fees 12,028
------------------
Total liabilities 206,394
----------------------
NET ASSETS:
Net assets consist of:
Capital $ 58,319,802
Net accumulated realized losses on investment transactions (754,184)
Net unrealized appreciation in value of investments 59,398
----------------------
Net assets at value $ 57,625,016
======================
NET ASSET VALUE, Offering price and redemption price per share
($57,625,017 / 11,243,102 shares outstanding) $ 5.13
======================
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 1,337,905
----------------------
Expenses:
Investment advisory fees 143,197
Transfer agent 37,392
Professional fees 3,821
Trustee fees 3,017
Other expenses 9,768
----------------------
Total expenses 197,195
----------------------
Net investment income 1,140,710
----------------------
Realized and unrealized gain on investments
Net realized loss (138,492)
Net decrease in unrealized appreciation (633,632)
----------------------
Net realized and unrealized loss on investments (772,124)
----------------------
Net increase in net assets resulting from operations $ 368,586
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 15
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES
UNAUDITED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
SIX MONTHS ONE YEAR
12/31/99 1999
-------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 1,140,710 $ 2,317,228
Net realized gain/(loss) on investments (138,492) 69,983
Net decrease in unrealized appreciation (633,632) (948,824)
-------------------------------------------
Net increase in net assets resulting from operations 368,586 1,438,387
Distributions to shareholders (1,140,710) (2,317,228)
Net fund share transactions (232,571) 5,384,908
-------------------------------------------
Total increase / (decrease) (1,004,695) 4,506,067
Net assets:
Beginning of year 58,629,711 54,123,644
-------------------------------------------
End of period $ 57,625,016 $ 58,629,711
===========================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
6 MONTHS FOR THE YEARS ENDED JUNE 30,
---------------- -----------------------------------------------------------
12/31/99 1999 1998 1997 1996
---------------- -------------- ------------- ------------- -------------
<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 0.10 0.21 0.21 0.22 0.21
Net gains/(losses) on securities,
both realized and unrealized (0.07) (0.07) 0.05 0.02 0.02
---------------- -------------- ------------- ------------- -------------
Total from investment operations 0.03 0.14 0.26 0.24 0.23
Less distributions:
Distributions from capital gains
Distributions from net investment income (0.10) (0.21) (0.21) (0.22) (0.21)
---------------- -------------- ------------- ------------- -------------
Net asset value, end of period $ 5.13 $ 5.20 $ 5.27 $ 5.22 $ 5.20
================ ============== ============= ============= =============
Total return 0.65% 2.58% 5.12% 4.59% 4.51%
Net assets, end of period (in thousands) $57,625 $58,630 $54,124 $53,829 $66,574
Ratio of expenses to average net assets 0.35% 0.72% 0.74% 0.72% 0.75%
Ratio of net investment income to
average net assets 2.01% 3.89% 4.05% 4.11% 4.04%
Portfolio turnover 10.11% 27.38% 20.98% 20.03% 57.80%
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 16
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
INSURED MUNICIPAL BONDS
45.92% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Catawba County NC Catawba Memorial Hospital Revenue 5.000 10/01/2017 Aaa/AAA* $500,000 $ 461,720
Craven NC Regional Medical Authortiy Health Care Facilities 5.625 10/01/2017 Aaa/AAA* 10,000 10,129
Cumberland County NC Civic Center Project Certificates of Partcipation 5.000 12/01/2018 Aaa/AAA* 500,000 461,955
Cumberland County NC Detention Center & Mental Health Revenue 5.500 06/01/2019 Aaa/AAA* 1,000,000 972,060
Dare County NC Utility System Revenue 5.250 06/01/2018 Aaa/AAA* 250,000 237,533
Elizabeth City NC Housing Developement Mortgage Revenue 6.125 04/01/2023 Aa 140,000 143,394
Fayetteville NC Public Works Community Revenue 5.100 03/01/2015 Aaa/AAA* 400,000 382,860
Gaston County NC Public Facilities Project Certificates of Partcipation 5.250 12/01/2016 Aaa/AAA* 850,000 835,006
Gastonia NC Combined Utilities Systems Revenue 5.625 05/01/2019 Aaa/AAA* 500,000 491,570
Greenville NC Housing Developement Corp Series A 5.800 07/01/2024 Aaa/AAA* 40,000 40,952
New Hanover County NC Certificates of Participation 5.000 12/01/2017 Aaa/AAA* 250,000 234,773
New Hanover County NC Hospital Revenue 5.750 10/01/2026 Aaa/AAA* 100,000 101,638
New Hanover County NC Hospital Revenue 5.000 10/01/2019 Aaa/AAA* 1,110,000 1,003,873
NC Central University Housing System Revenue 5.800 11/01/2018 Aaa/AAA* 50,000 51,741
NC Central University Housing System Revenue 5.800 11/01/2020 Aaa/AAA* 60,000 62,003
NC Eastern Municipal Power Agency Power System Refunding 5.375 01/01/2024 Aaa/AAA* 1,000,000 949,020
NC Eastern Municipal Power Agency Power System Revenue 5.700 01/01/2015 Aaa/AAA* 345,000 355,022
NC Eastern Municipal Power Agency Power System Revenue 5.750 01/01/2019 Aaa/AAA* 100,000 101,467
NC Medical Care Community Hospital Revenue-High Point 5.000 10/01/2019 Aaa/AAA* 500,000 460,455
NC Medical Care Community Hospital Revenue-St Joseph 5.100 10/01/2014 Aaa/AAA* 5,000 4,949
NC Medical Care Community Hospital Revenue-Stanly Hospital 5.375 10/01/2014 Aaa/AAA* 50,000 50,395
NC Medical Care Community Hospital Revenue-Wilson Memorial 5.625 11/01/2018 Aaa/AAA* 80,000 81,848
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.750 01/01/2020 Aaa/AAA* 50,000 51,200
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.125 01/01/2017 Aaa/AAA* 550,000 521,010
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.000 01/01/2015 Aaa/AAA* 5,000 4,801
NC Municipal Power Agency No. 1 Catawba Electric Revenue 5.125 01/01/2017 Aaa/AAA* 500,000 464,845
Pitt County NC Public Facilities Certificates of Participation 5.850 04/01/2017 Aaa/AAA* 100,000 103,749
Union County NC Enterprise System Revenue 5.500 06/01/2021 Aaa/AAA* 245,000 246,463
University of NC at Wilmington Dorm & Dining System Revenue 5.400 01/01/2018 Aaa/AAA* 120,000 119,453
Winston Salem NC State University Revenue Student Services 5.400 06/01/2012 Aaa/AAA* 10,000 10,220
------------
9,016,101
HOSPITAL AND HEALTHCARE REVENUE BONDS
27.88% OF NET ASSETS
Charlotte-Mecklenburg NC Health Care System 5.750 01/15/2021 Aa3/AA* 250,000 244,035
Charlotte-Mecklenburg NC Health Care System 5.875 01/15/2026 Aa3/AA* 50,000 49,051
Cumberland County NC Hospital Facilities Revenue 5.250 10/01/2019 A3/A-* 1,000,000 914,870
NC Medical Care Community Hospital Revenue-Baptist Hospital 6.375 06/01/2014 Aa3/AA* 45,000 47,484
NC Medical Care Community Hospital Revenue-Baptist Hospital 6.000 06/01/2022 Aa/AA* 45,000 46,635
NC Medical Care Community Hospital Revenue-Carolina Medicorp 5.500 05/01/2015 Aa3/AA* 70,000 70,638
NC Medical Care Community Hospital Revenue-Duke University Hospital 5.000 06/01/2018 Aa3/AA* 300,000 270,216
NC Medical Care Community Hospital Revenue-Duke University Hospital 5.250 06/01/2017 Aa3/AA* 900,000 853,695
NC Medical Care Community Hospital Revenue-Duke University Hospital 5.250 06/01/2021 Aa3/AA* 150,000 141,174
NC Medical Care Community Hospital Revenue-Gaston Memorial 5.500 02/15/2019 A2/A+* 150,000 143,994
NC Medical Care Community Hospital Revenue-Pitt County 5.000 12/01/2018 Aa3/AA-* 500,000 453,325
NC Medical Care Community Hospital Revenue-Presbyterian 5.500 10/01/2014 Aa/AA+* 35,000 35,288
NC Medical Care Community Hospital Revenue-Presbyterian 5.500 10/01/2020 Aa3/AA* 1,100,000 1,062,930
NC Medical Care Community Hospital Revenue-Rex Hospital 5.000 06/01/2017 Aaa/AAA* 500,000 458,540
University of NC at Chapel Hill Hospital Revenue 6.000 02/15/2024 Aa/AA* 100,000 104,609
University of NC at Chapel Hill Hospital Revenue 5.250 02/15/2019 Aa3/AA* 105,000 100,238
University of NC at Chapel Hill Hospital Revenue 5.250 02/15/2017 Aaa/AAA* 500,000 477,675
------------
5,474,397
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 17
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
COUNTY GENERAL OBLIGATION BONDS
6.82% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Forsyth County NC Certificates of Participation 5.000 10/01/2018 Aa2/AA* $ 400,000 $ 359,872
Union County NC General Obligation Series B 5.400 03/01/2017 Aaa/AAA* 1,000,000 979,110
----------------
1,338,982
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.91% OF NET ASSETS
NC Educational Facilities Finance Agency St Augustines 5.250 10/01/2018 AA* 600,000 581,166
NC Educational Facilities Finance Agency St Augustines 5.250 10/01/2028 AA* 630,000 579,272
----------------
1,160,438
MUNICIPAL UTILITY REVENUE BONDS
5.77% OF NET ASSETS
Charlotte NC Water & Sewer System Revenue 5.250 12/01/2021 Aa/AA* 715,000 670,734
Greenville NC Enterprise System Revenue 6.000 09/01/2010 A1/A+* 100,000 105,544
NC Eastern Municipal Power Agency Power System Revenue 5.500 01/01/2017 Aaa/AAA* 150,000 151,277
Orange NC Water and Sewer Revenue Bond 5.200 07/01/2016 Aa2/AA* 210,000 205,449
----------------
1,133,004
STATE MORTGAGE REVENUE BONDS
3.25% OF NET ASSETS
Lenoir NC Housing Authority Mortgage Revenue 5.700 08/20/2024 AAA* 100,000 100,286
NC Housing Finance Agency Single Family Revenue Series Y 6.300 09/01/2015 Aaa/AA* 145,000 155,363
NC Housing Finance Agency Single Family Revenue Series II 6.200 03/01/2016 Aa2/AA* 90,000 93,372
NC Housing Finance Agency Single Family Revenue Series KK 5.875 09/01/2017 Aa2/AA+* 90,000 90,833
NC Housing Finance Agency Home Ownership Revenue 5.125 07/01/2013 Aa2/AA* 100,000 95,907
Vance County NC Housing Mortgage Revenue Henderson Project 6.150 03/01/2022 Aa2 100,000 101,724
----------------
637,486
PREREFUNDED BONDS
2.79% OF NET ASSETS
Catawba County NC Catawba Memorial Hospital Revenue 6.000 10/01/2017 Aaa/AAA* 100,000 105,868
Cumberland County NC Hospital Facilities Revenue 6.000 10/01/2021 Aaa/AAA* 90,000 92,714
Forsyth County NC General Obligation Public Improvement 5.600 08/01/2009 Aa1/AAA* 5,000 5,105
NC Eastern Municipal Power Agency Power System Revenue 6.000 01/01/2026 AAA/BBB* 15,000 15,793
Pitt County NC Memorial Hospital Revenue 5.500 12/01/2015 Aaa/AAA* 325,000 327,886
----------------
547,365
PUBLIC FACILITIES REVENUE BONDS
1.66% OF NET ASSETS
Charlotte NC Certificate of Participation Law Project B 5.375 06/01/2013 Aa1/AA* 100,000 100,765
Greensboro NC Coliseum Complex Improvement Project Series A 5.700 12/01/2010 A1/AA* 55,000 58,104
Monroe NC Combined Enterprise System Revenue 6.000 03/01/2019 A/A* 100,000 106,233
Shelby NC Combined Enterprise System Revenue 5.625 05/01/2014 A/A-* 20,000 20,438
Shelby NC Combined Enterprise System Revenue 5.625 05/01/2014 A/A-* 40,000 40,875
----------------
326,415
----------------
Total Investments (cost $20,460,681)(a) - 106.87% of Net Assets $ 19,634,188
================
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ 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 $ 74,885
Unrealized depreciation (901,378)
---------------
Net unrealized depreciation $ (826,493)
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 18
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES
UNAUDITED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost $20,460,681) $ 19,634,189
Interest receivable 277,445
Receivable from advisor 226
----------------------
Total assets 19,911,860
LIABILITIES:
Cash overdraft $ 458,271
Payable for:
Distributions 255,829
Fund shares redeemed 50,000
Management fee 1,048
Transfer agent 315
Other fees 269
--------------------
Total liabilities 765,732
----------------------
NET ASSETS:
Net assets consist of:
Capital $ 20,090,830
Net accumulated realized losses on investment transactions (118,209)
Net unrealized depreciation in value of investments (826,493)
----------------------
Net assets at value $ 19,146,128
======================
NET ASSET VALUE, offering price and redemption price per share
($19,146,128/1,875,737 shares outstanding) $ 10.21
======================
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 540,174
----------------------
Expenses:
Investment advisory fees 49,843
Transfer agent 14,950
Professional fees 2,376
Trustee fees 1,052
Other expenses 3,126
----------------------
Total expenses 71,347
Expenses reimbursed by Investment Advisor (16,520)
----------------------
Net investment income 485,347
----------------------
Realized and unrealized loss on investments
Net realized loss (148,320)
Net decrease in unrealized appreciation (621,551)
----------------------
Net realized and unrealized loss on investments (769,871)
----------------------
Net decrease in net assets resulting from operations $ (284,524)
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 19
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE INCOME SERIES UNAUDITED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
Six Months One Year
12/31/99 1999
------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 485,347 $ 631,271
Net realized gain (loss) on investments (148,320) 49,547
Net decrease in unrealized appreciation (621,551) (528,565)
------------------------------------------
Net increase in net assets resulting from operations (284,524) 152,253
Net capital gains (6,826)
Distributions to shareholders (485,347) (631,271)
Net fund share transactions 459,655 10,030,995
------------------------------------------
Total increase/(decrease) (310,216) 9,545,151
Net assets:
Beginning of year 19,456,344 9,911,193
------------------------------------------
End of year $ 19,146,128 $ 19,456,344
==========================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
For the years ended June 30,
6 months ------------------------------------------------------------
12/31/99 1999 1998 1997 1996(a)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.61 $ 10.82 $10.33 $ 9.88 $10.00
------------- ------------- ------------- ------------- -------------
Income from investment operations:
Net investment income 0.13 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 (0.27) 0.30 1.02 0.99 0.20
Less distributions:
Distributions from capital gains 0.00 (0.01) 0.00 0.00 0.00
Distributions from net investment income (0.13) (0.50) (0.53) (0.54) (0.32)
------------- ------------- ------------- ------------- -------------
Net asset value, end of period $ 10.21 $ 10.61 $10.82 $ 10.33 $ 9.88
============= ============= ============= ============= =============
Total return (b) -1.38% 2.71% 9.99% 10.21% 3.23%
Net assets, end of period (in thousands) $19,146 $19,456 $9,911 $ 3,586 $1,063
Ratio of expenses to average net assets (b) 0.28% 0.45% 0.33% 0.25% 0.18%
Before expense reimbursement (b) 0.36% 0.77% 0.76% 0.81% 2.47%
Ratio of net investment income to
average net assets (b) 2.45% 4.43% 4.47% 4.72% 0.99%
After expense reimbursement (b) 2.36% 4.74% 4.90% 5.29% 3.27%
Portfolio turnover 19.44% 11.70% 16.77% 24.13% 22.83%
(a) Commencement of operations November 16, 1995.
(b) Annualized for periods less than a year.
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 20
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL AND HEALTHCARE REVENUE BONDS
36.28% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
Charlotte-Mecklenburg Hospital Authority NC Health Care System 5.400 01/15/2007 Aa3/AA* $ 200,000 $ 203,980
Charlotte-Mecklenburg Hospital Authority Revenue Series-A 4.400 01/15/2003 Aa3/AA* 100,000 99,885
Charlotte-Mecklenberg Hospital Authority NC Health Care System 6.000 01/01/2003 Aa/AA* 150,000 155,780
Cumberland County NC Hospital Facility Revenue 4.100 10/01/2003 A3/A-* 175,000 171,358
Cumberland County NC Hospital Facility Revenue 4.500 10/01/2007 Aa3/AA* 200,000 193,002
NC Community Health Care Facility Duke Hospital 4.100 06/01/2005 Aa3/AA* 100,000 96,738
NC Medical Care Community Health Care Facility Duke University 4.500 06/01/2007 Aa3/AA* 200,000 193,496
North Carolina Medical Care Community Hospital-Scotland Memoral 5.375 10/01/2011 AA* 60,000 60,146
NC Medical Care Community Hospital-Baptist Hospital 5.400 06/01/2001 Aa/AA-* 10,000 10,200
NC Medical Care Community Hospital-Presbytarian Health 5.000 10/01/2002 Aa3/AA* 40,000 40,726
NC Medical Care Community Hospital-Presbytarian Health 5.350 10/01/2001 Aa/AA* 25,000 25,542
NC Medical Care Community Hospital Gaston Memorial 5.250 02/15/2007 A2/A+* 50,000 50,679
North Carolina Medical Care Community Hospital - Southeastern 5.000 06/01/2003 A*/A* 200,000 200,114
NC Medical Care Community Hospital Pitt County Memorial 4.750 12/01/2004 Aa3/AA* 170,000 169,772
-----------------
1,671,418
INSURED MUNICIPAL BONDS
30.56% OF NET ASSETS
Asheville NC Certificates of Participation Series B 4.300 06/01/2002 Aaa/AAA* 25,000 25,005
Burke County NC General Obligation 6.250 03/01/2000 Aaa/AAA* 50,000 50,218
Catawba County NC Hospital Revenue Catawba Memorial Hospital 4.000 10/01/2003 Aaa 110,000 108,077
Coastal Regualtion Solid Waste Management Authority NC 4.250 06/01/2005 Aaa/AAA* 125,000 122,566
Elizabeth City NC Housing Mortgage Corp Virginia Dare Apartment 6.500 01/01/2005 Aaa/AAA* 135,000 144,450
Johnston County NC Finance Corporation School & Museum Project 4.650 08/01/2008 Aaa/AAA* 200,000 196,248
New Hanover County NC Regional Medical Center Hospital Revenue 4.250 10/01/2009 Aaa/AAA* 100,000 93,673
NC Medical Care Community Hospital-High Point Health System 4.400 10/01/2003 Aaa/AAA* 50,000 49,843
NC Municipal Power Agency No 1 Catawba Electric Revenue 5.500 01/01/2001 Aaa/AAA* 70,000 71,019
NC Municipal Power Agency No 1 Catawba Electric Revenue 5.100 01/01/2007 Aaa/AAA* 125,000 126,614
NC Medical Care Community Hospital Wilson Memorial Hospital 4.900 11/01/2007 Aaa/AAA* 75,000 75,043
Pitt County NC Certificates Of Participation 5.500 04/01/2002 Aaa/AAA* 70,000 71,793
Sanford NC Refunding-Water & Sewer General Obligation 4.500 03/01/2000 Aaa/A+* 15,000 15,022
Wilkes County NC Refinancing 5.250 06/01/2006 Aaa/AAA* 250,000 258,605
-----------------
1,408,176
PREREFUNDED BONDS
10.66% OF NET ASSETS
Charlotte-Mecklenburg Hospital Nc Health Care Systems 6.000 01/01/2022 Aa3/AA* 150,000 157,799
Charlotte NC General Obligation 6.900 10/01/2006 Aaa/AAA* 25,000 26,027
Charlotte NC Certificates of Participation Convention Center 6.750 12/01/2021 Aaa/AAA* 200,000 213,326
Forsyth County NC General Obligation 6.700 03/01/2004 Aa1/AAA* 30,000 30,746
Franklin County NC Certificates of Participation Jail & School 6.000 06/01/2002 Aaa/AAA* 15,000 15,600
Pitt County NC Revenue-Pitt County Memorial Hospital 6.900 12/01/2021 Aaa/AA-* 5,000 5,341
Polk County NC General Obligation 6.700 05/01/2011 Aaa/AAA* 40,000 42,112
-----------------
490,950
LOCAL GENERAL OBLIGATION BONDS
6.70% OF NET ASSETS
Asheville NC Certificates of Participation Series:A 4.600 06/01/2005 A1/A* 50,000 49,856
Charlotte NC Certificates of Participation Equipment Aquisition 4.350 09/01/2000 AA* 70,000 70,225
Durham NC Certificates of Participation 5.100 06/01/2005 Aa3/AA* 100,000 102,273
Forsyth County NC Refunding General Obligation 4.600 03/01/2001 Aa1/AAA* 15,000 15,131
Greensboro NC Refunding General Obligation 4.600 03/01/2000 Aa1/AAA* 25,000 25,042
Rocky Mount NC General Obligation 6.100 05/01/2001 A/A+* 25,000 25,644
Surf City NC Refunding General Obligation 5.400 03/01/2001 BBB- 20,000 20,301
-----------------
308,471
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 21
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
NORTH CAROLINA MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
STATE GENERAL OBLIGATION BONDS
5.47% OF NET ASSETS
<S> <C> <C> <C> <C> <C>
NC State General Obligation 5.000 06/01/2003 Aaa/AAA* $ 50,000 $ 51,259
North Carolina State General Obligation Series A 4.750 04/01/2006 Aaa/AAA* 200,000 200,952
---------------
252,211
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
3.28% OF NET ASSETS
NC Education Facility Finance Agency (St Augustine College) 4.450 10/01/2002 AA* 100,000 100,456
University of NC Utility System Revenue 4.900 08/01/2003 Aa2/AA* 50,000 50,835
---------------
151,291
ESCROWED TO MATURITY BONDS
3.10% OF NET ASSETS
Durhan County NC Certificates of Participation 5.200 05/01/2002 Aa/AA* 100,000 102,060
Durham NC General Obligation 7.000 05/01/2000 Aaa/AAA* 40,000 40,550
----------------
142,610
MUNICIPAL UTILITY REVENUE BONDS
2.18% OF NET ASSETS
Buncombe County NC Water & Sewer Revenue 6.100 07/01/2001 A/A+* 25,000 25,720
Orange County NC Water & Sewer Authority Revenue Refunding 4.250 07/01/2001 Aa/AA* 5,000 5,015
Winston-Salem NC Water & Sewer Revenue Refunding 4.300 06/01/2003 Aa2/AA* 70,000 69,910
----------------
100,645
COUNTY GENERAL OBLIGATION BONDS
1.11% OF NET ASSETS
Caldwell County NC General Obligation 6.000 02/01/2005 A1/A* 50,000 51,263
---------------
51,263
STATE MORTGAGE REVENUE BONDS
.66% OF NET ASSETS
NC Housing Finance Agency Single Family 4.750 03/01/2002 Aa/AA* 30,000 30,275
---------------
30,275
---------------
Total Investments (cost $4,661,439)(a) - 98.06% of Net Assets $ 4,607,310
===============
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ 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 $ 25,062
Unrealized depreciation (79,191)
--------------
Net unrealized depreciation $ (54,129)
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 22
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
UNAUDITED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<S> <C> <C>
ASSETS:
Investments in securities,at value (Cost: $4,661,439) $ 4,607,310
Cash 86,825
Receivable from investments sold 15,000
Interest receivable 62,815
Receivable from advisor 1,780
-------------------
Total assets 4,773,730
LIABILITIES:
Payable for:
Distributions $14,640
Transfer agent 1,914
Other fees 3,337
--------------
Total liabilities 19,891
-------------------
NET ASSETS:
Net assets consist of:
Capital $ 4,823,147
Net accumulated realized losses on investment transactions (15,179)
Net unrealized depreciation in value of investments (54,129)
-------------------
Net assets at value $ 4,753,839
===================
NET ASSET VALUE, offering price and redemption price per share
($4,753,840/475,292.930 shares outstanding) $ 10.00
===================
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 95,980
-------------------
Expenses:
Investment advisory fees 11,064
Transfer agent 3,319
Professional fees 1,030
Trustee fees 227
Other expenses 2,120
-------------------
Total expenses 17,760
Expenses Reimbursed by Investment Advisor (7,143)
-------------------
Net investment income 85,363
-------------------
Realized and unrealized loss on investments
Net realized loss (9,997)
Net increase in unrealized depreciation (31,613)
-------------------
Net realized and unrealized loss on investments (41,610)
-------------------
Net increase in net assets resulting from operations $ 43,753
===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 23
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES
UNAUDITED
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
Six Months One Year
12/31/99 1999
------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 85,363 $ 105,607
Net realized loss on investments (9,997) (1,920)
Net increase in unrealized depreciation (31,613) (56,088)
------------------------------------------
Net increase in net assets resulting from operations 43,753 47,599
Distributions to shareholders (85,363) (105,607)
Net fund share transactions 857,349 1,802,142
------------------------------------------
Total increase 815,739 1,744,134
Net assets:
Beginning of year 3,938,100 2,193,967
------------------------------------------
End of period $ 4,753,839 $ 3,938,101
==========================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
6 months For the years ended June 30,
-----------------------------------------------------------------------------
12/31/99 1999 1998 1997 1996(a)
-------------- ----------- ----------- ------------ ----------
<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 0.19 0.39 0.40 0.41 0.24
Net gains/(losses) on securities,
both realized and unrealized (0.09) (0.15) 0.12 0.13 (0.01)
-------------- ----------- ----------- ------------ ----------
Total from investment operations 0.10 0.24 0.52 0.54 0.23
Less distributions:
Distributions from capital gains 0.00 0.00 0.00 0.00 0.00
Distributions from net investment income (0.19) (0.39) (0.40) (0.41) (0.24)
-------------- ----------- ----------- ------------ ----------
Net asset value, end of period $10.00 $10.09 $10.24 $10.12 $9.99
============== =========== =========== ============ ==========
Total return (b) 1.05% 2.35% 5.20% 5.49% 3.79%
Net assets, end of period (in thousands) $4,754 $3,938 $2,194 $1,458 $1,159
Ratio of expenses to average net assets (b) 0.24% 0.44% 0.41% 0.23% 0.16%
Before expense reimbursement (b) 0.41% 0.78% 0.86% 0.82% 1.78%
Ratio of net investment income to
average net assets (b) 1.78% 3.44% 3.44% 3.46% 0.85%
After expense reimbursement (b) 1.95% 3.78% 3.89% 4.06% 2.47%
Portfolio turnover 9.30% 25.54% 14.89% 17.20% 17.18%
(a) Commencement of operations November 16, 1995.
(b) Annualized for periods less than a year.
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 24
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
27.32% OF NET ASSETS
Bristol TN Health & Educational Facility Bristol Memorial Hospital 5.250 09/01/2021 Aaa/AAA*
Chattanooga/Hamilton County TN Hospital Revenue Erlanger 5.625 10/01/2018 Aaa/AAA*
Clarksville TN Water Sewer & Gas Refunding & Improvement 6.250 02/01/2018 Aaa/AAA*
Clarksville TN Water Sewer & Gas Revenue 5.650 02/01/2017 Aaa
Franklin TN Industrial Development Board Landings Apartment 5.550 10/01/2008 Aaa/AAA*
Franklin TN Industrial Development Board Landings Apartment 5.900 10/01/2016 Aaa/AAA*
Gatlinburg TN Public Building Authority Convention Center 6.900 12/01/2012 Aaa/AAA*
Greater Tennessee Housing Assistance Refunding 7.250 07/01/2024 Aaa/AAA*
Jackson TN Hospital Revenue Refunding & Improvement 5.625 04/01/2015 Aaa/AAA*
Knox County/Chapman TN Utility District Water & Sewer 6.000 01/01/2014 Aaa/AAA*
Knox County TN Health Educational & Housing Facilities Baptist Hospital 5.500 04/15/2017 AAA*
Knox County TN Health Educational & Housing Facilities Ft Sanders 5.650 01/01/2008 Aaa/AAA*
Knox County TN Health Educational & Housing Facilities Ft Sanders 6.250 01/01/2013 Aaa/AAA*
Knox County TN Health Educational & Housing Facilities Ft Sanders 5.250 01/01/2023 Aaa/AAA*
Knox County TN Health Educational & Housing Facilities Mercy Health 5.875 09/01/2015 Aaa/AAA*
Knox County TN Health Educational & Housing Facilities Mercy Health 6.000 09/01/2019 Aaa/AAA*
Knox County TN Utility District Water & Sewer 5.625 12/01/2019 Aaa
Knoxville TN Development Corp Housing Revenue Morningside 6.100 07/20/2020 AAA
Lawrence County TN Public Improvements General Obligation 6.300 03/01/2008 Aaa/AAA*
Memphis Shelby County TN Airport Revenue Refunding 5.650 09/01/2015 Aaa/AAA*
Metropolitan Nashville & Davidson County TN Stadium Project 5.750 07/01/2014 Aaa/AAA*
Metropolitan Nashville & Davidson County TN Stadium Project 5.875 07/01/2021 Aaa/AAA*
Metropolitan Nashville & Davidson County TN Airport Series C 6.625 07/01/2007 Aaa/AAA*
Metropolitan Nashville & Davidson County TN Airport Series C 6.600 07/01/2015 Aaa/AAA*
North Anderson TN Utility District Waterworks Revenue 5.600 01/01/2015 Aaa/AAA*
Oak Ridge TN Industrial Development Board Gardens Refunding Revenue 5.250 08/20/2018 Aaa
Sevier County TN Public Buildings Authority Solid Waste Facility 5.600 09/01/2015 Aaa/AAA*
Shelby County TN Health Educational & Housing Heritage Place 6.900 07/01/2014 Aaa/AAA*
Shelby County TN Health Educational & Housing Methodist Health Systems 5.300 08/01/2015 Aaa/AAA*
Shelby County TN Health Educational & Housing Methodist Health Systems 5.375 04/01/2013 Aaa/AAA*
Shelby County TN Health Educational & Housing Methodist Health Systems 5.000 04/01/2018 Aaa/AAA*
Sullivan County TN Health Educational & Housing Holston Valley 5.750 02/15/2013 Aaa/AAA*
TN Housing Development Agency Homeownership Program 5.900 07/01/2017 Aaa/AAA*
TN Housing Development Agency Mortgage Finance Program 5.900 07/01/2018 Aaa/AAA*
TN Housing Development Agency Mortgage Finance Program 5.850 07/01/2013 Aaa/AAA*
TN Housing Development Agency Mortgage Finance Program 6.200 07/01/2018 Aaa/AAA*
TN Local Development Authority Student Loan Program 5.125 03/01/2022 Aaa/AAA*
HOSPITAL AND HEALTHCARE REVENUE BONDS
18.97% OF NET ASSETS
Anderson County TN Health & Educational Facilities Revenue 5.650 07/01/2007 A1
Chattanooga TN Health Educational & Housing Revenue 5.000 12/01/2018 Aa2/AA*
Knox County TN Health Educational & Housing Facilities University 5.750 04/01/2019 Baa1
Metropolitan Nashville & Davidson County TN Modal 5.500 05/01/2023 AA*
Metropolitan Nashville & Davidson County TN Open Arms 5.100 08/01/2016 AA*
Metropolitan Nashville & Davidson County TN Open Arms 5.100 08/01/2019 AA*
Montgomery County TN Health Educational & Housing Hospital 5.375 01/01/2018 Baa/BBB*
Signal Mountain TN Health Educational & Housing Alexian Village 7.500 01/01/2019 A2
Sumner County TN Health Educational & Housing Sumner Health 7.500 11/01/2014 A-
STATE AND LOCAL MORTGAGE REVENUE
14.11% OF NET ASSETS
Knoxville TN Development Corp Housing Revenue Clinton Tower 6.650 10/15/2010 A*
Memphis TN Health Education & Housing Board Riverdale Plaza 6.350 07/20/2028 AAA*
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
BOND DESCRIPTION PAR VALUE MARKET VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
27.32% OF NET ASSETS
Bristol TN Health & Educational Facility Bristol Memorial Hospital $400,000 $ 369,776
Chattanooga/Hamilton County TN Hospital Revenue Erlanger 30,000 29,301
Clarksville TN Water Sewer & Gas Refunding & Improvement 200,000 206,586
Clarksville TN Water Sewer & Gas Revenue 200,000 197,402
Franklin TN Industrial Development Board Landings Apartment 50,000 51,532
Franklin TN Industrial Development Board Landings Apartment 800,000 808,072
Gatlinburg TN Public Building Authority Convention Center 90,000 96,018
Greater Tennessee Housing Assistance Refunding 5,000 5,234
Jackson TN Hospital Revenue Refunding & Improvement 310,000 308,869
Knox County/Chapman TN Utility District Water & Sewer 40,000 41,694
Knox County TN Health Educational & Housing Facilities Baptist Hospital 1,315,000 1,289,029
Knox County TN Health Educational & Housing Facilities Ft Sanders 20,000 20,656
Knox County TN Health Educational & Housing Facilities Ft Sanders 10,000 10,787
Knox County TN Health Educational & Housing Facilities Ft Sanders 400,000 370,816
Knox County TN Health Educational & Housing Facilities Mercy Health 15,000 15,570
Knox County TN Health Educational & Housing Facilities Mercy Health 100,000 102,348
Knox County TN Utility District Water & Sewer 400,000 393,160
Knoxville TN Development Corp Housing Revenue Morningside 500,000 515,950
Lawrence County TN Public Improvements General Obligation 50,000 53,053
Memphis Shelby County TN Airport Revenue Refunding 55,000 55,472
Metropolitan Nashville & Davidson County TN Stadium Project 100,000 102,087
Metropolitan Nashville & Davidson County TN Stadium Project 350,000 352,674
Metropolitan Nashville & Davidson County TN Airport Series C 30,000 31,674
Metropolitan Nashville & Davidson County TN Airport Series C 120,000 126,040
North Anderson TN Utility District Waterworks Revenue 100,000 101,327
Oak Ridge TN Industrial Development Board Gardens Refunding Revenue 655,000 622,106
Sevier County TN Public Buildings Authority Solid Waste Facility 100,000 100,560
Shelby County TN Health Educational & Housing Heritage Place 150,000 163,707
Shelby County TN Health Educational & Housing Methodist Health Systems 760,000 755,980
Shelby County TN Health Educational & Housing Methodist Health Systems 690,000 699,439
Shelby County TN Health Educational & Housing Methodist Health Systems 1,000,000 921,130
Sullivan County TN Health Educational & Housing Holston Valley 130,000 133,935
TN Housing Development Agency Homeownership Program 35,000 35,557
TN Housing Development Agency Mortgage Finance Program 95,000 96,288
TN Housing Development Agency Mortgage Finance Program 100,000 102,978
TN Housing Development Agency Mortgage Finance Program 755,000 774,539
TN Local Development Authority Student Loan Program 1,000,000 915,140
----------------
10,976,484
HOSPITAL AND HEALTHCARE REVENUE BONDS
18.97% OF NET ASSETS
Anderson County TN Health & Educational Facilities Revenue 155,000 158,948
Chattanooga TN Health Educational & Housing Revenue 1,000,000 914,150
Knox County TN Health Educational & Housing Facilities University 1,000,000 941,160
Metropolitan Nashville & Davidson County TN Modal 1,755,000 1,705,439
Metropolitan Nashville & Davidson County TN Open Arms 1,000,000 930,040
Metropolitan Nashville & Davidson County TN Open Arms 1,660,000 1,496,208
Montgomery County TN Health Educational & Housing Hospital 1,500,000 1,377,555
Signal Mountain TN Health Educational & Housing Alexian Village 15,000 15,300
Sumner County TN Health Educational & Housing Sumner Health 75,000 84,413
----------------
7,623,212
STATE AND LOCAL MORTGAGE REVENUE
14.11% OF NET ASSETS
Knoxville TN Development Corp Housing Revenue Clinton Tower 285,000 298,386
Memphis TN Health Education & Housing Board Riverdale Plaza 300,000 307,386
The accompanying notes are an integral part of the financial statements
</TABLE>
20
<PAGE> 25
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Memphis TN Health Education & Housing Board River Trace II 6.250 10/01/2013 Aaa
Metropolitan Nashville & Davidson County TN Dandridge Tower 6.375 01/01/2011 A*
Metropolitan Nashville & Davidson County TN Hermitage Apartments 5.900 02/01/2019 A*
Murfreesboro TN Housing Authority Westbrooks Towers Project 5.875 01/15/2010 A*
Shelby County TN Health Educational & Housing Corners Apartments 6.000 01/01/2017 A
Shelby County TN Health Educational & Housing Four Stones 5.350 01/01/2019 A*
Shelby County TN Health Educational & Housing Harbour Apartments 6.000 04/15/2018 A*
Shelby County TN Health Educational & Housing Harbour Apartments 6.000 04/15/2024 A*
Shelby County TN Health Educational & Housing Harbour Apartments 5.750 04/15/2011 A*
Shelby County TN Health Educational & Housing Windsor Apartments 6.750 10/01/2017 AA*
TN Housing Development Agency Homeownership Program 6.700 07/01/2012 Aa2/AA*
TN Housing Development Agency Homeownership Program 5.850 01/01/2011 Aa2/AA*
TN Housing Development Agency Mortgage Finance Program 5.700 01/01/2008 A1/A+*
TN Housing Development Agency Mortgage Finance Program 5.850 07/01/2013 A1/A+*
TN Housing Development Agency Mortgage Finance Program 5.900 07/01/2018 A1/A+*
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
9.56% OF NET ASSETS
Metropolitan Nashville & Davidson County TN Belmont University 6.300 12/01/2014 Baa3
Metropolitan Nashville & Davidson County TN McKendree 5.125 01/01/2020 AA*
Metropolitan Nashville & Davidson County TN Vanderbilt 6.500 05/01/2016 Aa3/AA*
Metropolitan Nashville & Davidson County TN Vanderbilt 6.000 10/01/2016 Aa3/AA*
Metropolitan Nashville & Davidson County TN Vanderbilt 5.375 07/01/2018 Aa3/AA*
COUNTY GENERAL OBLIGATION
9.05% OF NET ASSETS
Marion County TN General Obligation 6.000 04/01/2018 Aaa
Metropolitan Nashville & Davidson County TN General Obligation 5.125 05/15/2025 Aa2/AA*
Metropolitan Nashville & Davidson County TN Limited Obligation 7.000 09/01/2011 A1/A*
Shelby County TN General Obligation 5.625 04/01/2014 Aa3/AA+*
Shelby County TN Health Educational & Housing Cameron Kirby 5.900 07/01/2018 A*
Shelby County TN Health Educational & Housing Cameron Kirby 6.000 07/01/2028 A*
STATE GENERAL OBLIGATION AND AGENCY
6.73% OF NET ASSETS
Hamilton County TN Multi-Family Housing Revenue 6.700 03/01/2021 A*
Knoxville TN Development Corp Housing Revenue Clinton Tower 6.600 10/15/2007 A*
Metropolitan Nashville & Davidson County TN General Obligation 5.125 11/15/2019 Aa2/AA*
Shelby County TN General Olbigation Refunding 5.875 03/01/2007 Aa2/AA+*
TN Local Development Authority Student Loan Program 5.750 03/01/2011 A2/AA-*
Wilson County TN General Obligation Refunding 5.100 05/01/2016 AAA
PREREFUNDED BONDS
5.38% OF NET ASSETS
Chattanooga TN General Obligation 6.000 08/01/2011 A1/AA-*
Jackson TN Water & Sewer Revenue 7.200 07/01/2012 Aaa/AAA*
Knoxville TN Gas System Revenue Refunding & Improvement 5.900 03/01/2012 A1/AA*
Lauderdale County TN General Obligation 6.000 04/01/2013 Aaa/AAA*
Marshall County TN General Obligation 5.600 06/01/2014 A*
Memphis TN General Obligation Improvement 5.500 10/01/2010 Aa/AA*
Memphis TN Health Education & Housing Board Hunters Trace 6.250 06/01/2013 Aa/AAA*
Memphis TN Water Revenue 6.000 01/01/2012 Aa/AA*
Metropolitan Nashville & Davidson County TN Electric System 6.000 05/15/2012 Aa/AA*
Metropolitan Nashville & Davidson County TN Water & Sewer 6.500 12/01/2014 Aaa/AAA*
Milan TN Special School District 6.750 04/01/2013 Aaa/AAA*
Shelby County TN General Obligation Public Improvement Series A 6.000 03/01/2013 Aa/AA+*
Shelby County TN General Obligation 5.875 03/01/2007 AA+*
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
BOND DESCRIPTION PAR VALUE MARKET VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Memphis TN Health Education & Housing Board River Trace II $ 50,000 $ 52,690
Metropolitan Nashville & Davidson County TN Dandridge Tower 200,000 215,456
Metropolitan Nashville & Davidson County TN Hermitage Apartments 395,000 396,975
Murfreesboro TN Housing Authority Westbrooks Towers Project 310,000 317,508
Shelby County TN Health Educational & Housing Corners Apartments 250,000 251,553
Shelby County TN Health Educational & Housing Four Stones 2,000,000 1,853,780
Shelby County TN Health Educational & Housing Harbour Apartments 125,000 126,478
Shelby County TN Health Educational & Housing Harbour Apartments 50,000 50,441
Shelby County TN Health Educational & Housing Harbour Apartments 100,000 101,152
Shelby County TN Health Educational & Housing Windsor Apartments 355,000 380,546
TN Housing Development Agency Homeownership Program 85,000 88,856
TN Housing Development Agency Homeownership Program 200,000 207,310
TN Housing Development Agency Mortgage Finance Program 100,000 102,365
TN Housing Development Agency Mortgage Finance Program 125,000 126,698
TN Housing Development Agency Mortgage Finance Program 785,000 791,217
----------------
5,668,797
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
9.56% OF NET ASSETS
Metropolitan Nashville & Davidson County TN Belmont University 10,000 10,443
Metropolitan Nashville & Davidson County TN McKendree 2,700,000 2,462,076
Metropolitan Nashville & Davidson County TN Vanderbilt 80,000 84,094
Metropolitan Nashville & Davidson County TN Vanderbilt 130,000 134,260
Metropolitan Nashville & Davidson County TN Vanderbilt 1,200,000 1,149,156
----------------
3,840,029
COUNTY GENERAL OBLIGATION
9.05% OF NET ASSETS
Marion County TN General Obligation 950,000 964,032
Metropolitan Nashville & Davidson County TN General Obligation 500,000 452,955
Metropolitan Nashville & Davidson County TN Limited Obligation 180,000 191,045
Shelby County TN General Obligation 60,000 60,418
Shelby County TN Health Educational & Housing Cameron Kirby 1,500,000 1,476,795
Shelby County TN Health Educational & Housing Cameron Kirby 500,000 491,290
----------------
3,636,534
STATE GENERAL OBLIGATION AND AGENCY
6.73% OF NET ASSETS
Hamilton County TN Multi-Family Housing Revenue 450,000 483,777
Knoxville TN Development Corp Housing Revenue Clinton Tower 350,000 369,534
Metropolitan Nashville & Davidson County TN General Obligation 1,000,000 922,020
Shelby County TN General Olbigation Refunding 15,000 15,491
TN Local Development Authority Student Loan Program 200,000 206,372
Wilson County TN General Obligation Refunding 745,000 706,171
----------------
2,703,364
PREREFUNDED BONDS
5.38% OF NET ASSETS
Chattanooga TN General Obligation 110,000 116,381
Jackson TN Water & Sewer Revenue 10,000 11,700
Knoxville TN Gas System Revenue Refunding & Improvement 25,000 26,015
Lauderdale County TN General Obligation 20,000 21,084
Marshall County TN General Obligation 5,000 5,191
Memphis TN General Obligation Improvement 20,000 20,629
Memphis TN Health Education & Housing Board Hunters Trace 55,000 51,534
Memphis TN Water Revenue 140,000 147,363
Metropolitan Nashville & Davidson County TN Electric System 30,000 31,700
Metropolitan Nashville & Davidson County TN Water & Sewer 60,000 64,713
Milan TN Special School District 60,000 66,157
Shelby County TN General Obligation Public Improvement Series A 30,000 31,379
Shelby County TN General Obligation 35,000 36,289
The accompanying notes are an integral part of the financial statements
</TABLE>
21
<PAGE> 26
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shelby County TN General Obligation 5.625 04/01/2014 AA+*
Shelby County TN School Building Revenue 5.875 03/01/2012 Aa/AA+*
Shelby County TN School Building Revenue 6.000 03/01/2013 Aa/AA+*
Shelby County TN School Building Revenue 5.800 04/01/2019 Aa/AA+*
Shelby County TN School Building Revenue 5.900 03/01/2012 Aa/AA+*
Shelby County TN School Building Revenue 5.900 03/01/2016 Aa/AA+*
Shelby County TN School Building Revenue 5.950 03/01/2017 Aa/AA+*
Shelby County TN School Building Revenue 5.950 03/01/2019 Aa/AA+*
TN Local Development Authority Community Provider Pooled Loan Program 6.250 10/01/2009 A-*
TN Local Development Authority Community Provider Pooled Loan Program 6.450 10/01/2014 A-*
TN Local Development Authority Community Provider Pooled Loan Program 7.000 10/01/2011 A-*
Tennessee School Building Authority Revenue 6.250 05/01/2017 A1/AA*
Tipton County TN General Obligation High School 6.650 04/01/2014 Aaa/AAA*
Williamson County TN Rural School Building Revenue 5.800 03/01/2012 Aa
Williamson County TN General Obligation 5.600 09/01/2010 Aa
Wilson County TN Unlimited General Obligation 5.750 06/01/2017 Aaa/AAA*
Wilson County TN Certificates of Participation 6.125 06/30/2010 A
LOCAL GENERAL OBLIGATION BONDS
3.58% OF NET ASSETS
Cleveland TN Public Improvement General Obligation 5.125 06/01/2018 Aaa/AAA*
Collierville TN General Obligation Improvement 5.900 05/01/2012 A1
Johnson City TN General Obligation 5.500 05/01/2020 Aaa/AAA*
Metropolitan Nashville & Davidson County TN General Obligation 5.625 05/15/2017 Aa/AA*
Metropolitan Nashville & Davidson County TN General Obligation 5.875 05/15/2026 Aa/AA*
MUNICIPAL UTILITIES REVENUE BONDS
3.22% OF NET ASSETS
Knoxville TN Gas System Revenue 5.400 03/01/2015 Aa3/AA*
Knoxville TN Waste Water System Revenue 5.100 04/01/2018 Aa3/AA*
Memphis TN Sanitary Sewer System Revenue 5.750 10/01/2014 Aa/AA*
Metropolitan Nashville & Davidson County TN Electric System 5.625 05/15/2014 Aa/AA*
Metropolitan Nashville & Davidson County TN Water & Sewer 5.500 01/01/2016 A1/A*
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
1.35% OF NET ASSETS
Chattanooga TN Industrial Development Board F L Haney Co 7.200 08/15/2010 AAA*
Chattanooga TN Industrial Development Board F L Haney Co 7.200 02/15/2009 AAA*
Chattanooga TN Industrial Development Board F L Haney Co 7.200 08/15/2009 AAA*
Chattanooga TN Industrial Development Board F L Haney Co 7.200 02/15/2010 AAA*
Cookeville TN Industrial Development Board General Hospital 5.625 10/01/2016 A*
Franklin TN Industrial Development Board Sussex Downs LTD 6.250 06/01/2007 AAA
Maury County TN Pollution Control Revenue Saturn Corp Project 6.500 09/01/2024 A2/A*
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
BOND DESCRIPTION PAR VALUE MARKET VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shelby County TN General Obligation $ 20,000 $ 21,093
Shelby County TN School Building Revenue 150,000 156,417
Shelby County TN School Building Revenue 35,000 36,609
Shelby County TN School Building Revenue 100,000 105,862
Shelby County TN School Building Revenue 10,000 10,439
Shelby County TN School Building Revenue 50,000 52,196
Shelby County TN School Building Revenue 100,000 104,495
Shelby County TN School Building Revenue 40,000 41,798
TN Local Development Authority Community Provider Pooled Loan Program 30,000 32,639
TN Local Development Authority Community Provider Pooled Loan Program 40,000 43,802
TN Local Development Authority Community Provider Pooled Loan Program 5,000 5,435
Tennessee School Building Authority Revenue 35,000 37,021
Tipton County TN General Obligation High School 30,000 32,073
Williamson County TN Rural School Building Revenue 100,000 105,929
Williamson County TN General Obligation 45,000 47,712
Wilson County TN Unlimited General Obligation 250,000 257,013
Wilson County TN Certificates of Participation 410,000 440,783
----------------
2,161,449
LOCAL GENERAL OBLIGATION BONDS
3.58% OF NET ASSETS
Cleveland TN Public Improvement General Obligation 835,000 771,682
Collierville TN General Obligation Improvement 30,000 31,266
Johnson City TN General Obligation 300,000 291,399
Metropolitan Nashville & Davidson County TN General Obligation 250,000 242,045
Metropolitan Nashville & Davidson County TN General Obligation 100,000 100,880
----------------
1,437,272
MUNICIPAL UTILITIES REVENUE BONDS
3.22% OF NET ASSETS
Knoxville TN Gas System Revenue 100,000 98,567
Knoxville TN Waste Water System Revenue 435,000 406,990
Memphis TN Sanitary Sewer System Revenue 100,000 102,459
Metropolitan Nashville & Davidson County TN Electric System 500,000 505,450
Metropolitan Nashville & Davidson County TN Water & Sewer 185,000 181,339
----------------
1,294,805
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
1.35% OF NET ASSETS
Chattanooga TN Industrial Development Board F L Haney Co 20,000 24,329
Chattanooga TN Industrial Development Board F L Haney Co 25,000 30,128
Chattanooga TN Industrial Development Board F L Haney Co 25,000 30,223
Chattanooga TN Industrial Development Board F L Haney Co 100,000 121,297
Cookeville TN Industrial Development Board General Hospital 200,000 201,146
Franklin TN Industrial Development Board Sussex Downs LTD 30,000 32,756
Maury County TN Pollution Control Revenue Saturn Corp Project 100,000 103,702
----------------
543,581
The accompanying notes are an integral part of the financial statements
</TABLE>
22
<PAGE> 27
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RENTALS / MUNICIPAL LEASE BONDS
.73% OF NET ASSETS
Memphis Shelby County TN Airport Special Facilities Revenue 7.875 09/01/2009 Baa/BBB*
Memphis Shelby County TN Airport Revenue Refunding FedX 6.750 09/01/2012 Baa/BBB*
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
BOND DESCRIPTION PAR VALUE MARKET VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
RENTALS / MUNICIPAL LEASE BONDS
.73% OF NET ASSETS
Memphis Shelby County TN Airport Special Facilities Revenue $120,000 $ 128,935
Memphis Shelby County TN Airport Revenue Refunding FedX 155,000 164,278
----------------
293,213
----------------
Total Investments (cost $41,451,175)(a) - 103.67% of Net Assets $40,178,740
================
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ 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 $ 368,103
Unrealized depreciation (1,640,538)
----------------
Net unrealized depreciation $(1,272,435)
================
The accompanying notes are an integral part of the financial statements.
</TABLE>
23
<PAGE> 28
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
UNAUDITED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $41,451,175) $ 40,178,740
Interest receivable 806,632
Receivable from advisor 105
----------------------
Total assets 40,985,477
LIABILITIES:
Cash overdraft $ 353,134
Payable for:
Distributions 458,962
Fund shares redeemed 186,775
Management fee 2,179
Transfer agent 589
Other fees 421
--------------------
Total liabilities 1,002,060
----------------------
NET ASSETS:
Net assets consist of:
Capital $ 41,830,636
Net accumulated realized losses on investment transactions (574,784)
Net unrealized depreciation in value of investments (1,272,435)
----------------------
Net assets at value $ 39,983,417
======================
NET ASSET VALUE, offering price and redemption price per share
($39,983,417/3,875,042 shares outstanding) $ 10.32
======================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 1,232,972
----------------------
Expenses:
Investment advisory fees 109,758
Transfer agent 31,493
Professional fees 3,005
Trustee fees 2,372
Other expenses (17)
----------------------
Total expenses 146,611
Expenses reimbursed by Investment Advisor (26,035)
----------------------
Net investment income 1,112,396
----------------------
Realized and unrealized loss on investments
Net realized loss (465,908)
Net decrease in unrealized appreciation (1,427,316)
----------------------
Net realized and unrealized loss on investments (1,893,224)
----------------------
Net increase in net assets resulting from operations $ (780,828)
======================
The accompanying notes are an integral part of the financial statements
</TABLE>
24
<PAGE> 29
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE INCOME SERIES
UNAUDITED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
Six Months One Year
12/31/99 1999
---------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 1,112,396 $ 1,944,839
Net realized loss on investments (465,908) (57,095)
Net decrease in unrealized appreciation (1,427,316) (1,016,125)
---------------------------------------------
Net increase/(decrease) in net assets resulting from operations (780,828) 871,619
Capital gains distributed to shareholders 0 (45,331)
Distributions to shareholders (1,112,396) (1,944,839)
Net fund share transactions (4,209,734) 18,032,867
---------------------------------------------
Total increase/(decrease) (6,102,958) 16,914,316
Net assets:
Beginning of year 46,086,375 29,172,059
---------------------------------------------
End of period $ 39,983,417 $ 46,086,375
=============================================
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
6 months For the years ended June 30,
12/31/99 1999 1998 1997 1996
-------------- ------------- -------------- -------------- --------------
<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 0.13 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 (0.32) 0.35 0.99 0.90 0.66
Less distributions:
Distributions from capital gains 0.00 (0.01) (0.01) 0.00 0.00
Distributions from net investment income (0.13) (0.54) (0.54) (0.54) (0.54)
-------------- ------------- -------------- -------------- --------------
Net asset value, end of period $10.32 $10.77 $10.97 $10.53 $10.17
============== ============= ============== ============== ==============
Total return -1.70% 3.03% 9.57% 9.00% 6.65%
Net assets, end of period (in thousands) $39,983 $46,086 $29,172 $13,678 $8,056
Ratio of expenses to average net assets 0.27% 0.48% 0.44% 0.55% 0.54%
Before expense reimbursement 0.33% 0.69% 0.74% 0.77% 0.90%
Ratio of net investment income to
average net assets 2.55% 4.50% 4.64% 4.92% 4.92%
After expense reimbursement 2.49% 4.71% 4.94% 5.15% 5.27%
Portfolio turnover 4.45% 14.76% 12.62% 5.14% 9.13%
The accompanying notes are an integral part of the financial statements
</TABLE>
25
<PAGE> 30
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
27.51% OF NET ASSETS
Bristol TN Health & Education Facility-Memphis Hospital 6.30 09/01/2000 Aaa/AAA*
Chattanooga-Hamilton TN Hospital Authority-Erlanger Medical 5.10 10/01/2001 Aaa/AAA*
Chattanooga-Hamilton TN Hospital Authority-Erlanger Medical 5.13 10/01/2002 Aaa/AAA*
Hamilton County TN Industrial Development Lease Revenue 5.50 09/01/2002 Aaa/AAA*
Knox County Utility District Water & Sewer Revenue 5.25 12/01/2006 Aaa/AAA*
LaFollette TN Electric System Revenue 5.50 03/01/2001 Aaa
Lenoir City TN Electric System Revenue 4.45 06/01/2005 Aaa
Metropolitan Nashville & Davidson Counties TN Stadium Project 5.00 07/01/2003 Aaa/AAA*
Metropolitan Nashville Airport Revenue 6.20 07/01/2002 Aaa/AAA*
Metropolitan Nashville Airport Authority TN Airport 5.00 07/01/2004 Aaa/AAA*
Monroe County TN Rural School Refinancing General Obligation 4.50 06/01/2008 Aaa
Montgomery County TN General Obligation 5.25 05/01/2007 Aaa
TN Energy Acquisition Corporation Gas Revenue Ser:A 4.75 09/01/2002 Aaa/AAA*
Unicoi County TN General Obligation Unlimited 5.40 04/01/2010 Aaa/AAA*
HOSPITAL AND HEALTHCARE REVENUE BONDS
17.79% OF NET ASSETS
Chattanooga TN Catholic Health Initiatives Series A 5.50 12/01/2006 Aa2/AA*
Jackson TN Hospital Refunding & Improvement Revenue 4.80 04/01/2002 A1/A+*
Knox County TN Health Education & Housing Facility Board 4.60 04/01/2002 Baa
Knox County Tn Health Education & Housing Facilities Board 4.75 04/01/2004 Baa1
Metropolitan Government Nashville & Davidson Counties TN 4.30 08/01/2004 AA*
COUNTY GENERAL OBLIGATION
16.85% OF NET ASSETS
Cheatham County TN General Obligation 4.35 04/01/2004 A3
Madison County TN School General Obligation 6.00 04/01/2001 A1
Maury County TN General Obligation 4.50 06/01/2001 A1
Metropolitan Government Nashville & Davidson County TN GO 4.60 11/15/2001 Aa/AA*
Metropolitan Government Nashville & Davidson County GO 4.25 11/15/2005 Aa2/AA*
Metropolitan Government Nashville & Davidson County TN 6.50 09/01/2000 A1/A*
Rutherford County TN General Obligation 4.75 04/01/2001 Aa/AA*
Rutherford County TN Capital Outlay Notes General Obligation 4.70 04/01/2002 Aa/AA-*
Shelby County Tn Public Improvement General Obligation 5.63 06/01/2004 Aa3/AA+*
Shelby County Mutli-Family Housing Cameron Kibry-A General Obligation 4.70 07/01/2002 A*
PREREFUNDED BONDS
9.03% OF NET ASSETS
Bristol TN Health & Education Facility-Memorial Hospital 7.00 09/01/2021 Aaa/AAA*
Johnson City TN Health & Education Revenue 6.75 07/01/2006 Aaa/AAA*
Johnson City TN Health & Education Revenue 6.75 07/01/2016 Aaa/AAA*
Metropolitan Government Nashville & Davidson Co Elec Revenue Series:A 9.90 07/01/2005 Aaa/AAA*
Metropolitan Nashville TN Airport Improvement Revenue 7.75 07/01/2006 Aaa/AAA*
VARIABLE RATE BONDS
8.54% OF NET ASSETS
Clarksville TN Public Building Authority Pooled Financing 5.40 07/01/2011 Aa1
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.92% OF NET ASSETS
Metro Government Nashville/Davidson County TN Multi-Family 4.80 01/01/2001 AAA*
Metropolitan Government of Nashville & Davidson Counties 4.50 10/01/2003 Aa3/AA*
Shelby County TN Multi-Family Housing Memphis Series A 5.00 01/01/2009 A*
TN Housing Development Agency Mortgage Finance 5.30 01/01/2003 A1/A+*
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
BOND DESCRIPTION PAR VALUE MARKET VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURED MUNICIPAL REVENUE BONDS
27.51% OF NET ASSETS
Bristol TN Health & Education Facility-Memphis Hospital $50,000 $ 50,802
Chattanooga-Hamilton TN Hospital Authority-Erlanger Medical 10,000 10,160
Chattanooga-Hamilton TN Hospital Authority-Erlanger Medical 50,000 51,017
Hamilton County TN Industrial Development Lease Revenue 100,000 103,113
Knox County Utility District Water & Sewer Revenue 220,000 223,340
LaFollette TN Electric System Revenue 165,000 167,708
Lenoir City TN Electric System Revenue 250,000 246,328
Metropolitan Nashville & Davidson Counties TN Stadium Project 110,000 111,514
Metropolitan Nashville Airport Revenue 25,000 26,163
Metropolitan Nashville Airport Authority TN Airport 200,000 203,462
Monroe County TN Rural School Refinancing General Obligation 210,000 201,873
Montgomery County TN General Obligation 400,000 406,292
TN Energy Acquisition Corporation Gas Revenue Ser:A 250,000 251,040
Unicoi County TN General Obligation Unlimited 200,000 201,970
-------------------
2,254,782
HOSPITAL AND HEALTHCARE REVENUE BONDS
17.79% OF NET ASSETS
Chattanooga TN Catholic Health Initiatives Series A 400,000 409,676
Jackson TN Hospital Refunding & Improvement Revenue 60,000 60,569
Knox County TN Health Education & Housing Facility Board 300,000 297,894
Knox County Tn Health Education & Housing Facilities Board 400,000 396,332
Metropolitan Government Nashville & Davidson Counties TN 300,000 293,760
-------------------
1,458,231
COUNTY GENERAL OBLIGATION
16.85% OF NET ASSETS
Cheatham County TN General Obligation 200,000 198,076
Madison County TN School General Obligation 10,000 10,242
Maury County TN General Obligation 75,000 75,458
Metropolitan Government Nashville & Davidson County TN GO 50,000 50,363
Metropolitan Government Nashville & Davidson County GO 400,000 389,036
Metropolitan Government Nashville & Davidson County TN 50,000 50,824
Rutherford County TN General Obligation 100,000 100,778
Rutherford County TN Capital Outlay Notes General Obligation 45,000 45,466
Shelby County Tn Public Improvement General Obligation 250,000 260,023
Shelby County Mutli-Family Housing Cameron Kibry-A General Obligation 200,000 200,700
-------------------
1,380,966
PREREFUNDED BONDS
9.03% OF NET ASSETS
Bristol TN Health & Education Facility-Memorial Hospital 100,000 105,288
Johnson City TN Health & Education Revenue 20,000 21,149
Johnson City TN Health & Education Revenue 430,000 454,570
Metropolitan Government Nashville & Davidson Co Elec Revenue Series:A 50,000 52,468
Metropolitan Nashville TN Airport Improvement Revenue 100,000 107,170
-------------------
740,645
VARIABLE RATE BONDS
8.54% OF NET ASSETS
Clarksville TN Public Building Authority Pooled Financing 700,000 700,000
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.92% OF NET ASSETS
Metro Government Nashville/Davidson County TN Multi-Family 50,000 50,340
Metropolitan Government of Nashville & Davidson Counties 100,000 99,754
Shelby County TN Multi-Family Housing Memphis Series A 240,000 233,561
TN Housing Development Agency Mortgage Finance 100,000 101,828
-------------------
485,483
The accompanying notes are an integral part of the financial statements
</TABLE>
26
<PAGE> 31
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PUBLIC FACILITIES REVENUE BONDS
3.23% OF NET ASSETS
Hardeman County TN Correctional Facility Revenue 7.00 08/01/2005 A*
ESCROWED TO MATURITY BONDS
3.14% OF NET ASSETS
Knox County TN 1st Utility District Water Revenue 6.00 12/01/2001 Aaa
Metro Government Nashville/Davidson County TN Meharry Medical 7.88 12/01/2004 AAA*
STATE AND LOCAL MORTGAGE REVENUE
2.44% OF NET ASSETS
TN Housing Development Mortgage Agency Series A 5.50 01/01/2005 A1/A+*
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
1.78% OF NET ASSETS
Bristol TN Industrial Development Board Revenue 4.80 03/01/2001 AA*
Chattanooga TN Industrial Development-F.L.Haney Corporation 6.70 08/15/2000 AAA*
Franklin TN Industrial Development Multi-Family Housing 4.65 10/01/2000 Aaa/AAA*
STATE GENERAL OBLIGATION AND AGENCY
1.24% OF NET ASSETS
TN State General Obligation 5.00 03/01/2003 Aaa/AA+*
LOCAL GENERAL OBLIGATION BONDS
.68% OF NET ASSETS
Chattanooga TN Refunding General Obligation 5.00 11/01/2000 A1/AA-*
Kingsport TN Water Refunding General Obligation 5.30 08/01/2000 A1/A+*
</TABLE>
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
TENNESSEE MUNICIPAL BONDS -- 100%
DECEMBER 31, 1999
BOND DESCRIPTION PAR VALUE MARKET VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITIES REVENUE BONDS
3.23% OF NET ASSETS
Hardeman County TN Corrctional Facility Revenue $240,000 $ 264,715
ESCROWED TO MATURITY BONDS
3.14% OF NET ASSETS
Knox County TN 1st Utility District Water Revenue 100,000 103,333
Metro Government Nashville/Davidson County TN Meharry Medical 140,000 154,000
-------------------
257,333
STATE AND LOCAL MORTGAGE REVENUE
2.44% OF NET ASSETS
TN Housing Development Mortgage Agency Series A 195,000 199,612
INDUSTRIAL REVENUE AND POLLUTION CONTROL REVENUE BONDS
1.78% OF NET ASSETS
Bristol TN Industrial Development Board Revenue 70,000 70,493
Chattanooga TN Industrial Development-F.L.Haney Corporation 25,000 25,446
Franklin TN Industrial Development Multi-Family Housing 50,000 50,338
-------------------
146,277
STATE GENERAL OBLIGATION AND AGENCY
1.24% OF NET ASSETS
TN State General Obligation 100,000 101,808
LOCAL GENERAL OBLIGATION BONDS
.68% OF NET ASSETS
Chattanooga TN Refunding General Obligation 30,000 30,242
Kingsport TN Water Refunding General Obligation 25,000 25,199
-------------------
55,441
-------------------
Total Investments (cost $8,088,636)(a) - 98.67% of Net Assets $ 8,045,293
===================
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ 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 $ 44,184
Unrealized depreciation (87,527)
-------------------
Net unrealized depreciation $ (43,343)
===================
The accompanying notes are an integral part of the financial statements
</TABLE>
27
<PAGE> 32
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $8,088,636) $ 8,045,294
Cash 58,096
Interest receivable 122,839
Receivable from advisor 4,545
----------------------
Total assets 8,230,774
LIABILITIES:
Payable for:
Distributions $ 25,634
Transfer agent 4,995
Other fees 2,435
-----------------
Total liabilities 33,064
----------------------
NET ASSETS:
Net assets consist of:
Capital $ 8,268,799
Net accumulated realized losses on investment transactions (27,746)
Net unrealized depreciation in value of investments (43,343)
----------------------
Net assets at value $ 8,197,710
======================
NET ASSET VALUE, offering price and redemption price per share
($8,197,710/800,951.992 shares outstanding) $ 10.23
======================
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 150,314
----------------------
Expenses:
Investment advisory fees 17,063
Transfer agent 5,118
Professional fees 1,178
Trustee fees 343
Other expenses 3,548
----------------------
Total expenses 27,250
Expenses reimbursed by Investment Advisor (6,855)
----------------------
Net investment income 129,919
----------------------
Realized and unrealized loss on investments
Net realized loss (8,128)
Net decrease in unrealized appreciation (50,447)
----------------------
Net realized and unrealized loss on investments (58,575)
----------------------
Net increase in net assets resulting from operations $ 71,344
======================
The accompanying notes are an integral part of the financial statements
</TABLE>
28
<PAGE> 33
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - TENNESSEE TAX FREE SHORT-TO-MEDIUM SERIES
UNAUDITED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
Six Months One Year
12/31/99 1999
------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 129,921 $ 247,211
Net realized loss on investments (8,128) (14,486)
Net decrease in unrealized appreciation (50,447) (69,288)
------------------------------------------
Net increase in net assets resulting from operations 71,346 163,437
Dividends to shareholders (129,921) (247,211)
Net fund share transactions 2,437,547 1,157,488
------------------------------------------
Total increase 2,378,972 1,073,714
Net assets:
Beginning of year 5,818,738 4,745,025
------------------------------------------
End of period $ 8,197,710 $ 5,818,739
==========================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
6 months For the years ended June 30,
---------------- ------------------------------------------------------------
12/31/99 1999 1998 1997 1996
---------------- ------------- ------------- -------------- -------------
<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 0.20 0.39 0.41 0.42 0.42
Net gains/(losses) on securities,
both realized and unrealized (0.10) (0.11) 0.12 0.07 0.05
---------------- ------------- ------------- -------------- -------------
Total from investment operations 0.10 0.28 0.53 0.49 0.47
Less distributions:
Distributions from capital gains 0.00 0.00 0.00
Distributions from net investment income (0.20) (0.39) (0.41) (0.42) (0.42)
---------------- ------------- ------------- -------------- -------------
Net asset value, end of period $10.23 $10.33 $10.44 $10.32 $10.25
================ ============= ============= ============== =============
Total return 0.95% 2.67% 5.26% 4.83% 4.62%
Net assets, end of period (in thousands) $8,198 $5,819 $4,745 $2,993 $2,455
Ratio of expenses to average net assets 0.30% 0.56% 0.51% 0.47% 0.50%
Before expense reimbursement 0.40% 0.73% 0.81% 0.85% 1.19%
Ratio of net investment income to
average net assets 1.82% 3.52% 3.67% 3.67% 3.36%
After expense reimbursement 1.92% 3.69% 3.97% 4.04% 4.05%
Portfolio turnover 5.24% 81.81% 67.59% 24.49% 23.17%
The accompanying notes are an integral part of the financial statements
</TABLE>
29
<PAGE> 34
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES UNAUDITED
SCHEDULE OF PORTFOLIO INVESTMENTS
GOVERNMENT SECURITIES AND AGENCIES -- 100%
DECEMBER 31, 1999
MATURITY
BOND DESCRIPTION COUPON DATE RATING+ PAR VALUE MARKET VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
42.96% OF NET ASSETS
Medium Term Note 6.950% 11/13/2006 Aaa/AAA* $ 1,105,000 $ 1,070,863
Medium Term Note 7.170% 06/26/2007 Aaa/AAA* 1,000,000 970,558
Medium Term Note 6.560% 11/26/2007 Aaa/AAA* 300,000 284,668
Medium Term Note 6.470% 03/13/2008 Aaa/AAA* 600,000 570,242
Medium Term Note 7.280% 05/23/2007 Aaa/AAA* 1,000,000 979,154
Medium Term Note 6.160% 03/02/2009 Aaa/AAA* 1,000,000 915,437
-------------------
4,790,922
FEDERAL HOME LOAN BANK
42.32% OF NET ASSETS
Medium Term Note 7.500% 10/05/2009 Aaa/AAA* 1,000,000 971,666
Medium Term Note 7.000% 08/15/2014 Aaa/AAA* 500,000 486,152
Medium Term Note 8.000% 10/06/2014 Aaa/AAA* 1,040,000 1,003,115
Medium Term Note 7.560% 09/01/2004 Aaa/AAA* 150,000 153,898
Medium Term Note 8.170% 12/16/2004 Aaa/AAA* 2,000,000 2,105,320
-------------------
4,720,151
STUDENT LOAN MARKETING ASSOCIATION
9.02% OF NET ASSETS
Medium Term Note 7.300% 08/01/2012 Aaa/AAA* 1,000,000 1,005,735
-------------------
1,005,735
FEDERAL HOME LOAN MORTGAGE CORPORATION
2.19% OF NET ASSETS
Medium Term Note 7.225% 11/08/2006 Aaa/AAA* 250,000 243,769
-------------------
243,769
-------------------
Total Investments (cost $10,986,814)(a) - 96.49% of Net Assets $ 10,760,577
===================
* Standard and Poor's Corporation
** Fitch Rating Service
All other ratings by Moody's Investors Service, Inc.
+ 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 $ 107,501
Unrealized depreciation (333,738)
-------------------
Net unrealized depreciation $ (226,237)
===================
The accompanying notes are an integral part of the financial statements
</TABLE>
30
<PAGE> 35
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
UNAUDITED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost: $10,986,814) $ 10,760,577
Cash 314,271
Interest receivable 147,481
----------------------
Total assets 11,222,329
LIABILITIES:
Payable for:
Distributions $ 61,770
Management fee 240
Transfer agent 180
Other fees 7,800
----------------
Total liabilities 69,990
----------------------
NET ASSETS:
Net assets consist of:
Capital 12,340,454
Net accumulated realized losses on investment transactions (961,878)
Net unrealized depreciation in value of investments (226,237)
----------------------
Net assets at value $ 11,152,339
======================
NET ASSET VALUE, offering price and redemption price per share
($11,152,339 / 1,184,021 shares outstanding) $ 9.42
======================
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<S> <C>
Net investment income:
Interest income $ 393,173
----------------------
Expenses:
Investment advisory fees 11,151
Transfer agent 8,363
Professional fees 1,487
Trustee fees 589
Other expenses 1,669
----------------------
Total expenses 23,259
----------------------
Net investment income 369,914
----------------------
Realized and unrealized loss on investments
Net realized loss (209,904)
Net increase in unrealized depreciation (154,444)
----------------------
Net realized and unrealized loss on investments (364,348)
----------------------
Net increase in net assets resulting from operations $ 5,566
======================
The accompanying notes are an integral part of the financial statements
</TABLE>
31
<PAGE> 36
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS - INTERMEDIATE GOVERNMENT BOND SERIES
UNAUDITED
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 1999 AND THE SIX MONTHS ENDED DECEMBER 31, 1999
Six Months One Year
12/31/99 1999
--------------------------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income $ 369,914 $ 671,312
Net realized gain on investments (209,904) 23,592
Net increase in unrealized appreciation (154,444) (498,462)
--------------------------------------------
Net increase in net assets resulting from operations 5,566 196,442
Distributions to shareholders (369,914) (671,312)
Net fund share transactions 738,490 1,656,961
--------------------------------------------
Total increase 374,142 1,182,091
Net assets:
Beginning of year 10,778,197 9,596,106
--------------------------------------------
End of period $ 11,152,339 $ 10,778,197
============================================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
6 months For the years ended June 30,
-------------------------------------------------------------
12/31/99 1999 1998 1997 1996
------------- ------------- ------------- -------------- -------------
<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 0.16 0.64 0.66 0.72 0.72
Net gains/(losses) on securities,
both realized and unrealized (0.31) (0.41) 0.25 0.04 (0.30)
------------- ------------- ------------- -------------- -------------
Total from investment operations (0.15) 0.23 0.91 0.76 0.42
Less distributions:
Distributions from capital gains
Distributions from net investment income (0.16) (0.64) (0.66) (0.72) (0.72)
------------- ------------- ------------- -------------- -------------
Net asset value, end of period $9.42 $9.73 $10.14 $9.89 $9.85
============= ============= ============= ============== =============
Total return 0.10% 2.21% 9.47% 7.95% 4.15%
Net assets, end of period (in thousands) $11,152 $10,778 $9,596 $8,288 $7,765
Ratio of expenses to average net assets 0.21% 0.49% 0.53% 0.50% 0.40%
Ratio of net investment income to
average net assets 3.34% 6.32% 6.57% 7.20% 6.89%
Portfolio turnover 32.00% 24.04% 23.49% 40.86% 33.89%
The accompanying notes are an integral part of the financial statements
</TABLE>
32
<PAGE> 37
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
Dupree Mutual Funds is registered under the Investment Company Act of
1940, as amended, is 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 seven series:
the Kentucky Tax-Free Income Series, a diversified portfolio,
the Kentucky Tax-Free Short-to-Medium 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 six state tax-free funds is to maintain
100% of their investments in Kentucky, North Carolina or Tennessee
municipal securities. Regarding the Kentucky series, unlike many states,
payment on nearly all Kentucky municipal securities depends upon revenue
generated by the property financed by the securities, and the securities
are not general obligations of the issuer.
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.
33
<PAGE> 38
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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, 1999. 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 Kentucky 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 Adviser 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. Dupree & Company, Inc. also serves as the Trust's Transfer
Agent.
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:
34
<PAGE> 39
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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>
Intermediate Government Bond Series .20 of 1% .20 of 1% .20 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%
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%
</TABLE>
However, the Dupree firm 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 December 31, 1999 investment advisory fees for:
the North Carolina Tax-Free Income Series totaled $49,843; however,
Dupree voluntarily refunded fees and reimbursed expenses totaling $16,520
in accordance with the investment advisory agreement,
the North Carolina Tax-Free Short-to-Medium Series totaled $11,064;
however, Dupree voluntarily refunded fees and reimbursed expenses
totaling $7,143 in accordance with the investment advisory agreement,
the Tennessee Tax-Free Income Series totaled $109,758; however, Dupree
voluntarily refunded fees and reimbursed expenses totaling $26,035 in
accordance with the investment advisory agreement,
the Tennessee Tax-Free Short-to-Medium Series totaled $17,061; however,
Dupree voluntarily refunded fees and reimbursed expenses totaling $6,855
in accordance with the investment advisory agreement.
In addition, each Fund has entered into a shareholder service agreement
with Dupree. 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
and .12% of all amounts in excess of $20,000,000.
3. PURCHASES AND SALES OF SECURITIES
The Funds may purchase securities with delivery or payments to occur at a
later date. At the time the Funds enter into a commitment to purchase a
security, the transaction is recorded and the value of the security is
reflected in the net asset value. The value of the security may vary with
market fluctuations. No interest accrues to the Fund until payment takes
place. At the time the Fund enters into this type of transaction it is
required to segregate cash or other liquid assets equal to the value of
the securities purchased. At December 31, 1999 the market value of
securities segregated for these types of transactions was as follows:
Kentucky Tax-Free Income Series $19,813,550
Kentucky Tax-Free Short-to-Medium Series $ 2,295,000
North Carolina Tax-Free Income Series $ 835,006
North Carolina Tax-Free Short-to-Medium Series $ 261,330
Tennessee Tax-Free Income Series $ 1,289,029
Tennessee Tax-Free Short-to-Medium Series $ 254,675
35
<PAGE> 40
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. PURCHASES AND SALES OF SECURITIES, CONTINUED:
<TABLE>
<CAPTION>
During the period, the cost of purchases and the proceeds from sales of
securities for each Series were as follows:
Purchases Sales
----------------- -----------------
<S> <C> <C>
Kentucky Tax-Free Income Series $ 140,774,534 $ 42,597,393
Kentucky Tax-Free Short-to-Medium Series 5,692,068 8,232,700
North Carolina Tax-Free Income Series 4,446,015 3,224,274
North Carolina Tax-Free Short-to-Medium Series 1,193,587 402,932
Tennessee Tax-Free Income Series 1,930,386 5,173,643
Tennessee Tax-Free Short-to-Medium Series 2,848,958 344,954
Intermediate Government Bond Series 3,579,517 3,318,125
</TABLE>
4. CAPITAL SHARES
At December 31, 1999, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
KENTUCKY TAX-FREE INCOME SERIES SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 4,627,412 $ 33,977,867 12,037,741 $ 92,522,784
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 853,020 6,319,603 1,497,738 11,537,082
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (4,929,173) (35,971,709) (5,684,458) (43,600,775)
- ----------------------------------------------------------------------------------------------------------------------
Net increase 551,258 $ 4,325,761 7,851,021 $60,459,091
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
KENTUCKY TAX-FREE SIX MONTHS ENDED YEAR ENDED
SHORT-TO-MEDIUM SERIES DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Shares sold 3,400,220 $ 17,492,648 6,072,689 $ 32,118,854
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 160,743 830,420 320,987 1,698,602
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (3,600,900) (18,555,639) (5,379,335) (28,432,548)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease (39,937) $(232,571) 1,014,341 $5,384,908
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA TAX-FREE SIX MONTHS ENDED YEAR ENDED
INCOME SERIES DECEMBER 31, 1999 JUNE 30, 1999
- -------------------------------------------------- --------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Shares sold 316,062 $ 3,271,547 1,056,498 $11,551,644
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 30,806 322,555 35,760 391,836
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (304,620) (3,134,447) (175,335) (1,918,344)
- ----------------------------------------------------------------------------------------------------------------------
Net increase 42,248 $459,655 917,456 $10,030,98
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 41
<TABLE>
<CAPTION>
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
4. CAPITAL SHARES, CONTINUED:
- ----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA TAX-FREE SIX MONTHS ENDED YEAR ENDED
SHORT-TO-MEDIUM SERIES DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 254,770 $ 2,556,645 308,018 $ 3,155,669
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 7,561 75,833 8,750 89,774
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (177,194) (1,775,130) (140,946) (1,443,301)
- ----------------------------------------------------------------------------------------------------------------------
Net increase 85,137 $857,349 175,822 $1,802,142
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
TENNESSEE TAX-FREE INCOME SERIES SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Shares sold 776,323 $ 8,119,189 2,393,811 $ 26,549,094
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 53,325 567,657 69,683 773,724
- ----------------------------------------------------------------------------------------------------------------------
Shares issued from reinvestment from
capital gain 3,050 33,982
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (1,233,749 (12,896,580) (846,081) (9,323,933)
- ----------------------------------------------------------------------------------------------------------------------
Net increase(decrease) (404,101) ($4,209,734) 1,620,463 $18,032,867
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
TENNESSEE TAX-FREE SIX MONTHS ENDED YEAR ENDED
SHORT-TO-MEDIUM SERIES DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Shares sold 655,254 $ 6,717,953 744,695 $ 7,803,486
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 9,120 93,733 15,072 157,957
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (426,572) (4,374,139) (650,969) (6,803,955)
- ----------------------------------------------------------------------------------------------------------------------
Net increase 237,802 $2,437,547 108,798 $1,157,488
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT BOND SIX MONTHS ENDED YEAR ENDED
SERIES DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Shares sold 142,576 $ 1,365,594 382,007 $ 3,884,292
- ----------------------------------------------------------------------------------------------------------------------
Shares issued for reinvestment from
net investment income 25,003 241,188 42,147 428,535
- ----------------------------------------------------------------------------------------------------------------------
Shares redeemed (91,576) ( 868,292 ) (262,548) (2,655,866)
- ----------------------------------------------------------------------------------------------------------------------
Net increase 76,003 $738,490 161,606 $1,656,961
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 42
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
5. FEDERAL INCOME TAXES
At June 30, 1999, the Kentucky Tax-Free Income Series, the Kentucky Tax-Free
Short-to-Medium 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 carryforwards which are available
to offset future capital gains, if any. The capital loss carryforwards
expire as follows:
<TABLE>
<CAPTION>
KY NC TN
KY Tax-Free Tax-Free Tax-Free Intermediate
Tax-Free Short-to Short-to Short-to Government
Income Medium Medium Medium Bond
Series Series Series Series Series
<S> <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 ---
----------------------------------------------------------------------
Net accumulated
realized losses $131,372 $615,692 $3,255 $5,133 $751,974
======================================================================
</TABLE>
The amount of long-term capital gains paid for the fiscal year ended June
30, 1999 were as follows:
Tennessee Tax-Free Income Series $29,465
North Carolina Tax-Free Income Series $ 6,826
For the year ended June 30, 1999, all of the distributions made from net
investment income of the Dupree municipal bond funds are tax-exempt for
federal income tax purposes.
6. LINE OF CREDIT AGREEMENT
Under the terms of an agreement with Star Bank, N.A., principal amounts
up to 5% of a Funds 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 (8.50% at December 31,
1999). 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
The funds had no borrowings during the six months ended December 31,
1999.
38
<PAGE> 43
DUPREE MUTUAL FUNDS UNAUDITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
SHAREHOLDER MEETING
A meeting of Shareholders was held on October 26, 1999. The purpose of the
meeting was (I) to elect Messrs. Thomas P. Dupree Sr., Frederic L. Dupree, Jr.,
William T. Griggs II, William Combs, Robert Maddox, William Patterson and Ms.
Lucy A. Breathitt as Trustees; (ii) to ratify the selection of Ernst & Young LLP
as the Trust's independent auditors for the fiscal year ending June 30, 1999;
and (iii) amend the fundamental investment restrictions for the series to allow
additional nationally recognized statistical rating organizations' ratings of
municipal securities be utilized in determination of investment grade securities
eligible for purchase by the series.
The results of all matters voted on by shareholders at the Shareholder Meeting
held October 26, 1999 were as follows:
<TABLE>
<CAPTION>
A. ELECTION OF TRUSTEES:
FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Thomas P. Dupree, Sr. 51,896,584.761 23,394.862 77,096.004 51,997,075.627
Frederic L. Dupree, Jr. 51,871,453.721 23,394.862 77,096.004 51,971,944.587
William T. Griggs II 51,649,694.297 23,394.862 77,096.004 51,750,185.163
Lucy A. Breathitt 51,745,458.696 23,394.862 77,096.004 51,845,949.562
William A. Combs 51,803,601.616 23,394.862 77,096.004 51,904,092.482
Robert L. Maddox 51,747,609.229 23,394.862 77,096.004 51,848,100.095
William S. Patterson 51,684,782.359 23,394.862 77,096.004 51,785,273.225
</TABLE>
Cumulative voting rights were exercised in the election of Trustees. The total
proxy votes are distributed among those individuals selected.
C. RATIFICATION OF ERNST & YOUNG LLP FOR THE FISCAL YEAR 1999:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Ernst & Young LLP 51,191,857.849 209,287.505 470,657.609 51,871,802.963
</TABLE>
D. AMENDMENT OF FUNDAMENTAL INVESTMENT RESTRICTIONS:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
KY Tax-Free Income Series 37,547,353.479 415,371.924 946,360.608 38,909,086.011
KY Tax-Free Short-to- Medium Series 6,981,041.817 61,719.523 150,609.174 7,193,370.514
NC Tax-Free Income Series 1,192,140.367 22,399.794 42,442.174 1,256,982.335
NC Tax-Free Short- to- Medium Series 299,096.987 23,318.587 10,250.757 332,666.331
TN Tax-Free Income Series 2,925,413.242 14,068.901 48,775.099 2,988,257.242
TN Tax-Free Short- to- Medium Series 403,716.611 4,628.716 6,509.260 414,854.587
</TABLE>
39
