Dupree Mutual Funds

Unrealized appreciation

$ 2,029,588

Unrealized depreciation

Net unrealized appreciation

$ 2,029,502

In 1941, Dupree & Company, Inc. began business in Harlan, Kentucky as a small securities brokerage firm specializing in tax-exempt municipal bonds.

Over the years the firm, which in 1963 moved its offices to Lexington, Kentucky, grew to become a regional leader in public finance, helping to structure complex and innovative municipal bond financing for some of the largest public projects in the Commonwealth of Kentucky.

In 1979, Dupree & Company began what is now Dupree Mutual Funds with the Kentucky Tax-Free Income Series and became the Fund’s investment adviser. The Fund was one of the first single-state municipal bond funds in the country, and the first mutual fund to invest solely in Kentucky municipal bonds. Since then, several new offerings have been added to the Dupree Mutual Funds family:

Today, after more than 60 years in business, Dupree continues to be a pioneer in the industry. Our Kentucky, Tennessee, and Mississippi Series are currently the ONLY 100% “no-load” municipal bond funds available in those states. No-load means simply that shares of the funds are offered directly to investors with no front or back-end sales charges, as opposed to load funds, which are sold through brokerage firms or other institutions that typically carry sales charges.

At Dupree Mutual Funds, our goal is a simple one: to offer investors a high-quality, low-cost way to invest in municipal and government bonds while providing superior service to our shareholders. We encourage you to let us know how we’re doing.

The investment objective of our tax-free municipal bond funds is to provide a high level of tax-free income derived from state-specific municipal bonds without incurring undue risk to principal. The investment objective of our government bond fund is to provide a high level of taxable income derived from securities of the U.S. government and its agencies without incurring undue risk to principal. Similarly, the investment objective of the taxable municipal bond fund is to provide a high level of taxable income derived from taxable municipal securities without incurring undue risk to principal.

This report covers the 12-month period from July 1, 2015 through June 30, 2016 (the “reporting period”). During the first six months of the reporting period, the economy grew at a moderate pace. Real gross domestic product (GDP) increased at a 2.0 percent annual rate during the third quarter of 2015 and at a 0.9 percent annual rate in the fourth quarter of 2015. Real GDP increased at an annual rate of 0.8 percent during the first quarter of 2016. Economic growth ticked up slightly in the second quarter of 2016 with real GDP increasing at a 1.2 percent annual rate (advance estimate). All four of the quarterly GDP readings during the review period came in well below the trend growth rate. Economic growth during the first half of 2016 was anemic.

In the labor market, the national unemployment rate has fallen more than 5 percentage points from its peak and was 4.9 percent at the end of June. The labor participation rate (which measures the number of people actively seeking employment) was 62.7 percent at the end of June which is elevated by historical standards. Average hourly earnings increased at an annual rate of 2.6 percent through June.

Key measures of inflation remained subdued during the reporting period. The consumer price index (CPI) increased 1.0 percent on a year-over-year basis through June. Excluding food and energy, the core CPI increased 2.3 percent year-over-year. The personal consumption expenditure price index (PCE) increased 0.9 percent on a year-over-year basis through June. The core PCE (less food and energy) increased 1.6 percent year-over year. The core PCE has remained below the 2 percent target rate set by the Federal Reserve. Near-term and long-term inflation expectations remained well anchored.

The Federal Open Market Committee (FOMC) continued to maintain a highly accommodative stance during the period under review. The FOMC raised the federal funds target rate 25 basis points in December from 0-0.25 percent to 0.25 to 0.5 percent. This increase marked the end of a seven-year period during which the federal funds rate was held near zero. The FOMC left the fed funds target rate unchanged since its December meeting.

State and local governments have continued to successfully address ongoing fiscal challenges. However, state tax revenue growth slowed significantly in the second half of 2015 and in the first quarter of 2016. According to data compiled by the Rockefeller Institute, state and local government revenue from major taxes tracked by the Census Bureau grew by 4.2 percent in the fourth quarter of 2015, a substantial slowing from the 5.8 percent average for the four previous quarters. Total state tax revenue from all sources grew by 1.9 percent in the fourth quarter of 2015 and preliminary data for the first quarter of 2016 indicate another quarter of 1.9 percent growth.

Slowing revenue growth combined with volatile financial markets and increasing pension liabilities suggest that the outlook for state budgets in the 2016-17 state fiscal year will be less certain. Medicaid spending by states has continued to rise as a percentage of total state spending, growing from 20.5 percent in fiscal 2008 to an estimated 27.4 percent in fiscal 2015 (Source: National Association of State Budget Officers’ State Spending Report, 2015). State spending on Medicaid is expected to continue to increase in the coming years as federal funding is decreased under the Affordable Care Act.

Returns in the municipal bond market were very strong for the 12-month period under review. The Barclays Capital Municipal Bond Index (“BCMBI”), which tracks investment grade municipal securities across all sectors and maturities, had a total return of 7.65 percent for the twelve month period ended June 30, 2016. As of June 30, the BCMBI had a modified adjusted duration of 5.55 years.

A number of factors including declining interest rates, improving credit quality, and favorable supply/demand patterns led to lower yields and higher bond prices during the reporting period. Duration was the key factor in performance during the reporting period, with bonds with longer maturities significantly outperforming those with shorter maturities. Additionally, with a couple of exceptions (Puerto Rican bonds being a notable example) lower rated bonds generally outperformed higher rated bonds during the review period. As in the past, none of our single-state municipal bonds hold any Puerto Rican bonds.

The Kentucky Tax-Free Income Series provided shareholders a total return of 6.25 percent for the twelve months ended June 30, 2016. The Kentucky Tax-Free Short-to-Medium Series provided shareholders with a total return of 3.88 percent during

the period under review. The shorter duration of the funds (Kentucky Tax-Free Income Series had a modified adjusted duration of 4.65 years and the Kentucky Tax-Free Short-to-Medium Series had a modified adjusted duration of 3.82 years as of June 30) as compared to the index led to the relative underperformance of the funds during the reporting period.

Kentucky’s economy has continued to rebound from the recession in 2009. Kentucky’s General Fund receipts have risen for six consecutive years. For the fiscal year that ended June 30, 2016, General Fund receipts were 3.7 percent more than FY 15 tax collections. General Fund revenues exceeded the official revenue estimate by $49.0 million. Road Fund collections for FY 16 decreased by 2.9 percent from the previous fiscal year but still exceeded estimates by $36.6 million. The state’s annual average unemployment rate declined during the reporting period and stood at 5.0 percent at the end of June. In 2015, Kentucky had a per capita personal income of $38,989 which was well below the national average of $48,703.

The state’s appropriation supported debt was rated Aa3 by Moody’s and A by Standard & Poor’s as of June 30, 2016. Kentucky had net tax-supported debt per capita of $1,954 as of calendar year-end 2015, which was substantially above the state net tax-supported debt median of $1,025 (Source: Moody’s Investors Services, Medians-Total Debt Remains Static in 2016,State Debt Medians 2016, May 6, 2016).

The Tennessee Tax-Free Income Series provided shareholders with a total return of 6.40 percent for the twelve months ended June 30, 2016. The Tennessee Tax-Free Short-to-Medium Series had a total return of 3.28 percent for the period under review. The shorter duration of the funds (Tennessee Tax-Free Income Series had a modified adjusted duration of 4.60 years and Tennessee Tax-Free Short-to-Medium Series had a modified adjusted duration of 3.56 years as of June 30) as compared to the index led to the relative underperformance of the funds during the reporting period.

Economic growth in Tennessee has largely mirrored that of the U.S. in recent years. Both the state and the nation have now had more than six years of growth since the end of the Great Recession. In Tennessee, inflation-adjusted gross domestic product (GDP) expanded by 2.4 percent in 2015 and is projected to increase at an annual rate of 2.3 percent in 2016. The state has continued to diversify its manufacturing base by adding high-tech employers. Automobile manufacturing continues to be an important part of the state’s economy. The state’s annual average unemployment rate at the end of June was 4.1 percent. In 2015, the state had a per capita personal income of $42,069 which was below the national average of $48,703.

Tennessee relies on a combination of a state sales tax, corporate income taxes, franchise and excise taxes, and the Hall income tax for its revenue. Total state revenue collections through June (on an accrual basis June is the eleventh month in the 2015-2016 fiscal year) were $911.2 million more than the budgeted estimate. The general fund recorded revenues in the amount of $841.1 million more than the budgeted estimate, and the four other funds $70.1 million more than the budgeted estimate.

Tennessee’s general obligation (G.O.) bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s as of June 30, 2016. Tennessee had net tax-supported debt per capita of $298 as of calendar year-end 2015, which was substantially below the state net tax-supported debt median of $1,025 (Source: Moody’s Investors Services, Medians-Total Debt Remains Static in 2016, State Debt Medians 2016, May 6, 2016).

The North Carolina Tax-Free Income Series provided shareholders with a total return of 7.28 percent for the twelve months ended June 30, 2016. The North Carolina Tax-Free Short-to-Medium Series provided shareholders with a total return of 2.59 percent for the period under review. The shorter duration of the funds (North Carolina Tax-Free Income Series had a modified adjusted duration of 5.38 years and North Carolina Tax-Free Short-to-Medium Series had a modified adjusted duration of 3.61 years as of June 30) led to the relative underperformance of the funds during the reporting period.

North Carolina’s economy has rebounded strongly from the national recession. The state finished FY 15 with a budget surplus of approximately $400 million. The state’s average annual unemployment rate at the end of June was 4.9 percent. In 2015, North Carolina had a per capita personal income of $40,656 which was below the national average of $48,703.

North Carolina’s general obligation (G.O.) bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s as of June 30, 2016. North Carolina had net tax-supported debt per capita of $721 as of calendar year-end 2015, which was below the state net tax-supported debt median of $1,025 (Source: Moody’s Investors Services, Medians- Total Debt Remains Static in 2016, State Debt Medians 2016, May 6, 2016).

The Alabama Tax-Free Income Series provided shareholders with a total return of 6.61 percent for the twelve months ended June 30, 2016. The shorter duration of the fund (4.09 years as of June 30) as compared to the index led to the relative underperformance of the fund during the reporting period.

Alabama is finally beginning to see growth accelerate following years of relatively subdued recovery. Manufacturing, professional, and business services have led the recent improvement. Tuscaloosa is a bright spot for the state as it is home to the University of Alabama and a Mercedes plant that has recently undergone an expansion. An Airbus jetliner plant is being built in Mobile which will help the state’s manufacturing sector to continue to grow. The state’s average annual unemployment rate at the end of June stood at 6.0 percent. In 2015, Alabama had a per capita personal income of $38,965 which was below the national average of $48,703.

Alabama’s G.O. bonds were rated Aa1 by Moody’s and AA by Standard & Poor’s as of June 30, 2016. Alabama had net tax-supported debt per capita of $849 as of calendar year-end 2015, which was lower than the state net tax-supported debt median of $1,025 (Source: Moody’s Investors Services, Medians-Total Debt Remains Static in 2016,State Debt Medians 2016, May 6, 2016).

The Mississippi Tax-Free Income Series had a total return of 7.49 percent for the twelve month period ended June 30, 2016. The shorter duration of the fund (4.79 years as of June 30) as compared to the index led to the relative underperformance of the fund during the reporting period.

Mississippi’s economic recovery has also continued to lag behind the nation. Employment across all levels of government, the largest employer of Mississippians, has remained relatively flat. Out-migration has weighed on local industries, most notably retail, financial services and construction. The manufacturing sector has showed some signs of improvement. The shipbuilding industry continues to be negatively impacted by policies that would allow more competition for U.S. shipbuilding. The state’s average annual unemployment rate at the end of June was 5.9 percent. In 2015, Mississippi had a per capita personal income of $35,444 which was the lowest in the nation.

The state’s G.O. bonds were rated Aa2 by Moody’s and AA by Standard & Poor’s as of June 30, 2016. Mississippi has net tax-supported debt per capita of $1,707 as of calendar year-end 2015, which was higher than the state net tax-supported debt median of $1,025 (Source: Moody’s Investors Services, Medians-Total Debt Remains Static in 2016, State Debt Medians 2016, May 6, 2016).

The Intermediate Government Bond Series had a total return of 6.57 percent for the twelve months ended June 30, 2016. The Barclays Capital U.S. Intermediate Government Bond Index had a total return of 3.93 percent for the one year period ended June 30, 2016. The longer duration of the fund (5.87 years as of June 30 compared to 3.89 years for the index) led to the relative outperformance of the fund during the reporting period.

The Taxable Municipal Bond Series had a total return of 9.29 percent for the twelve month period ended June 30, 2016. The Barclays Capital Municipal Bond Taxable Index had a total return of 12.71 percent for the same period. The shorter duration of the fund (7.10 years as of June 30 compared to 9.73 for the index) led to the relative underperformance of the fund during the reporting period.

Please note that index information is provided for reference only. No index can perfectly match the investments that make up a fund’s portfolio. In making investment decisions for our portfolios we do not attempt to track indices. The Barclays Capital Municipal Bond index is national in scope and does not necessarily reflect the performance of state-specific municipal bond funds. Indices do not take into account any operating expenses or transaction costs. An investment cannot be made directly in an index.

ⁱ Data are from the Bureau of Economic Analysis, the U.S. Department of Labor Bureau of Labor Statistics, and various other sources management deems to be reliable. Some of the quoted data are preliminary in nature and may be subject to revision. Any opinions expressed herein are those of the funds’ portfolio management and are current as of June 30, 2016. They are not guarantees of performance or investment results and should not be taken as investment advice. Past performance is not a guarantee of future performance and you may lose money investing in the funds.


Kentucky Tax-Free Income Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		2.68%
Aa/AA		82.38%
A		11.97%
B		0.31%
Not Rated		2.66%

		100.00%

COMPOSITION
	% of Net Assets
Prerefunded		23.17%
Miscellaneous Public Improvement		18.22%
Municipal Utility Revenue		11.81%
Refunded		9.08%
Turnpikes and Toll Roads Revenue		8.74%
School Improvements		7.80%
University Consolidated Education and Building Revenue		7.53%
Hospital and Healthcare Revenue		6.52%
Public Facilities Revenue		3.82%
Airport Revenue		1.11%
State and Local Mortgage Revenue		1.09%
Miscellaneous Revenue		0.24%
Other Assets Less Liabilities		0.87%

		100.00%


Kentucky Tax-Free Short-to-Medium Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		1.19%
Aa/AA		84.44%
A		14.37%

		100.00%

COMPOSITION
	% of Net Assets
Miscellaneous Public Improvement		22.66%
School Improvements		14.88%
Refunded		14.45%
Public Facilities Revenue		11.56%
Prerefunded		8.72%
Turnpikes and Toll Roads Revenue		8.59%
University Consolidated Education and Building Revenue		6.21%
Municipal Utility Revenue		5.52%
Hospital and Healthcare Revenue		5.04%
State and Local Mortgage Revenue		0.92%
Other Assets Less Liabilities		1.45%

		100.00%


Alabama Tax-Free Income Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		0.40%
Aa/AA		75.30%
A		21.89%
Not Rated		2.41%

		100.00%

COMPOSITION
	% of Net Assets
School Improvement Revenue		19.76%
Prerefunded		19.49%
Municipal Utility Revenue		19.11%
Public Facilities Revenue		11.79%
University Consolidated Education and Building Revenue		11.56%
Miscellaneous Public Improvement		6.91%
Refunded		5.80%
Hospital and Healthcare Revenue		3.55%
State and Local Mortgage Revenue		0.39%
Industrial Revenue		0.07%
Other Assets Less Liabilities		1.57%

		100.00%


Mississippi Tax-Free Income Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		0.22%
Aa/AA		59.13%
A		40.56%
Not Rated		0.09%

		100.00%

COMPOSITION
	% of Net Assets
Prerefunded		28.84%
University Consolidated Education and Building Revenue		26.13%
Public Facilities Revenue		15.59%
Municipal Utility Revenue		12.83%
Turnpikes and Toll Roads Revenue		6.08%
School Improvement Revenue		4.93%
Hospital and Healthcare Revenue		3.40%
Refunded		1.87%
Miscellaneous Public Improvement		1.39%
State and Local Mortgage Revenue		0.22%
Other Liabilities in Excess of Assets		(1.28	)%

		100.00%


Tennessee Tax-Free Income Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		2.34%
Aa/AA		78.78%
A		15.70%
Not Rated		3.18%

		100.00%

COMPOSITION
	% of Net Assets
Municipal Utility Revenue		39.83%
Prerefunded		16.11%
Public Facilities Revenue		12.20%
University Consolidated Education and Building Revenue		7.98%
Hospital and Healthcare Revenue		7.45%
Refunded		7.28%
State and Local Mortgage Revenue		2.18%
Miscellaneous Public Improvement		2.04%
Airport Revenue		1.83%
School Improvement Revenue		1.40%
Industrial Revenue		0.84%
Escrowed to Maturity		0.07%
Other Assets Less Liabilities		0.79%

		100.00%


Tennessee Tax-Free Short-to-Medium Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aa/AA		69.89%
A		26.48%
Not Rated		3.63%

		100.00%

COMPOSITION
	% of Net Assets
Prerefunded		21.78%
Public Facilities Revenue		16.69%
Municipal Utility Revenue		14.27%
Refunded		12.69%
School Improvement Revenue		9.13%
Miscellaneous Public Improvement		7.80%
University Consolidated Education and Building Revenue		6.02%
State and Local Mortgage Revenue		2.98%
Hospital and Healthcare Revenue		2.55%
Airport Revenue		1.04%
Escrowed to Maturity		0.23%
Other Assets Less Liabilities		4.82%

		100.00%


North Carolina Tax-Free Income Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		3.04%
Aa/AA		79.51%
A		15.45%
Baa/BBB		0.92%
Not Rated		1.08%

		100.00%

COMPOSITION
	% of Net Assets
Prefunded		18.69%
University Consolidated Education and Building Revenue		16.90%
Municipal Utility Revenue		13.28%
Hospital and Healthcare		13.20%
Refunded		10.13%
School Improvement Revenue		7.23%
Public Facilities Revenue		5.83%
Miscellaneous Public Improvement		4.12%
Airport Revenue		3.22%
Turnpikes and Toll Roads Revenue		1.64%
Escrowed to Maturity		1.49%
Lease Revenue		1.23%
Miscellaneous Revenue		0.41%
Other Assets Less Liabilities		2.63%

		100.00%


North Carolina Tax-Free Short-to-Medium Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		0.62%
Aa/AA		86.98%
A		12.20%
Not Rated		0.20%

		100.00%

COMPOSITION
	% of Net Assets
Prefunded		22.05%
Refunded		21.11%
Municipal Utility Revenue		14.41%
School Improvement Revenue		8.65%
Hospital and Healthcare Revenue		7.97%
University Consolidated Education and Building Revenue		5.18%
Miscellaneous Public Improvement		5.08%
Public Facilities Revenue		4.88%
Escrowed to Maturity		3.76%
Turnpikes and Toll Roads Revenue		1.36%
Ad Valorem Property		1.24%
Lease Revenue		1.12%
Airport Revenue		0.84%
Other Assets Less Liabilities		2.35%

		100.00%


Intermediate Government Bond Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aaa/AAA		100.00%

COMPOSITION
	% of Net Assets
Federal Farm Credit		59.97%
Federal Home Loan Bank		30.49%
Federal National Mortgage Association		6.98%
Other Assets Less Liabilities		2.56%

		100.00%


Taxable Municipal Bond Series
CREDIT QUALITY*	% of Net Assets at Fair Value
Aa/AA		82.77%
A		17.23%

		100.00%

COMPOSITION
	% of Net Assets
Public Facilities Revenue		30.56%
Municipal Utility Revenue		26.35%
School Improvement Revenue		13.68%
Miscellaneous Public Improvement		10.22%
Hospital and Healthcare Revenue		4.35%
Turnpikes and Toll Roads Revenue		3.54%
Marina and Port Authority Revenue		2.27%
Sales Tax Revenue		2.13%
University Consolidated Education and Building Revenue		1.13%
Other Assets Less Liabilities		5.77%

		100.00%

The following graphs compare the change in value of a $10,000 investment in each series of Dupree Mutual Funds with the change in value of a $10,000 investment in a comparable index. The comparisons are made over 10 years or since the inception of the series, if shorter than ten years. Results are for the fiscal years ended June 30.

Results reflect reinvestment of all dividend and capital gain distributions. No index can perfectly match the investments that make up a fund’s portfolio. For each series, we have selected an index that we believe gives the most accurate picture of how the series performed during the reporting period. The investor should understand that an index is a mathematical hypothesis and does not reflect a real market situation. For example, the portfolio of each index is replaced with an entirely different portfolio each year without reflecting operating expenses or transaction costs, an impossibility in reality. On the other hand, the fund’s performance reflects not only these factors but management costs as well. Past performance is not indicative of future results.

The performance tables and the graphs above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Please note that all legacy Lehman Brothers benchmark indices were rebranded as Barclays Capital (“BarCap”) indices in November 2008.

The following is a summary of the inputs used, as of June 30, 2016, involving the Fund’s investments in securities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		28,917,059
Level 3	Significant Unobservable Inputs		—

		$	28,917,059


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		1,014,809,042
Level 3	Significant Unobservable Inputs		—

		$	1,014,809,042


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		83,932,732
Level 3	Significant Unobservable Inputs		—

		$	83,932,732


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		11,652,925
Level 3	Significant Unobservable Inputs		—

		$	11,652,925


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		146,396,461
Level 3	Significant Unobservable Inputs		—

		$	146,396,461


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		24,644,401
Level 3	Significant Unobservable Inputs		—

		$	24,644,401


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		115,907,408
Level 3	Significant Unobservable Inputs		—

		$	115,907,408


	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		10,794,287
Level 3	Significant Unobservable Inputs		—

		$	10,794,287


	Valuation Inputs	Government Agencies
Level 1	Quoted Prices		—
Level 2	Other Significant Observable Inputs	$	17,028,895
Level 3	Significant Unobservable Inputs		—

		$	17,028,895


	Valuation Inputs	Taxable Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		11,478,197
Level 3	Significant Unobservable Inputs		—

		$	11,478,197

Dupree Mutual Funds is registered under the Investment Company Act of 1940, as amended, as a no-load, open-end investment company. The Declaration of Trust of Dupree Mutual Funds (the “Trust”) permits the Trustees to create an unlimited number of series of investment portfolios (each a “Fund” and collectively, the “Funds”) and with respect to each series to issue an unlimited number of full or fractional shares of a single class. The Trust currently offers ten series:

The investment strategy of the eight state tax-free funds is to maintain 100% of their investments in their respective states of Alabama, Kentucky, Mississippi, North Carolina, or Tennessee municipal securities.

The Intermediate Government Bond Series’ investment strategy is to invest only in obligations of the U.S. Treasury and Agencies of the U.S. Government. The Intermediate Government Bond Series will buy bonds and notes that will maintain an average maturity of no more than ten years.

The Taxable Municipal Bond Series’ investment strategy is to invest in taxable municipal bonds of investment grade quality.

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). The Trust operates as an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services — Investment Companies.

Securities held by the Intermediate Government Bond Series are valued using market quotations as provided by an independent pricing service. Securities held by the nine municipal bond funds are valued as determined in good faith in accordance with consistently applied procedures established by and under the general supervision of the Board of Trustees. These procedures involve the use of matrix pricing models which take into consideration price quotations or appraisals for these securities, yield, stability, risk, quality, coupon rate, maturity, type of issue, trading characteristics, special circumstances of a security or trading market, and any other factors or market data considered relevant in determining the value. The procedures also include weekly verification of market quotations provided by two independent pricing services. A bond valuation that is not supported by a valuation source requires management to fair value the security in consultation with the Trust’s Board of Trustee’s Valuation Committee. The Board of Trustees of the Trust (the “Board”) has adopted policies and procedures for the valuation of the Trust’s investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Board has delegated to a valuation committee, consisting of all of the Trustees the day-to-day responsibility for implementing the Valuation Procedures, including, under most circumstances, the responsibility for determining the fair value of the Trust’s securities or other assets. The Valuation Committee convenes as needed and reviews the valuation of all assets which have been fair valued for reasonableness. Shares of open-end mutual funds in which the Funds invest, if any, are valued at their respective net asset values as reported by the underlying funds.

The Funds have adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures”. ASC 820 establishes a hierarchy that prioritizes the

inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under ASC 820 are described as follows:

The aggregate value by input level, as of June 30, 2016, for the Funds’ investments is included at the end of the Funds’ Schedules of Portfolio Investments. The Funds recognize transfers at the end of the reporting period. There were no transfers in and out of level 1, 2 or 3 during the year ended June 30, 2016.

Security transactions are accounted for on a trade date basis. Realized gains and losses on securities sold are determined on an identified cost basis.

Interest income, which includes the amortization of premiums and the accretion of discounts, is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method.

The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations. No interest accrues to the Funds until the security is delivered and payment takes place. At the time the Funds enter this type of transaction, they are required to segregate cash or other liquid assets equal to the value of the securities purchased. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

It is each Fund’s policy to qualify as a regulated investment company by complying with the requirements of the Internal Revenue Code (the “code”) applicable to regulated investment companies, including the distribution of all or substantially all taxable and tax-exempt income to their shareholders. The Funds have met the requirements of the code applicable to regulated investment companies for the year ended June 30, 2016. Therefore, no federal income tax provision is required. Management has analyzed the Funds’ tax positions for all open tax years and all major jurisdictions, and has concluded that as of June 30, 2016, no provision for income taxes is required in the financial statements. Therefore, no additional tax expense, including any interest and penalties, was recorded in the current year and no adjustments were made to prior periods. To the extent the Funds recognize interest and penalties, they are included in interest expense and other expenses, respectively, in the Statement of Operations. Open tax years are those that are open for examination by taxing authorities (i.e. generally the last three tax year ends and the interim tax period since then).

Substantially all of the net investment income of the Funds is declared as a dividend to shareholders of record as of the close of business each day. Any net realized long term capital gains are distributed annually to shareholders. Distributions are payable in cash or in additional shares at the net asset value on the payable date. Distributions are determined in accordance with income tax regulations, which may differ from U.S. GAPP.

The preparation of these financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual amounts could differ from those estimates.

Subsequent events occurring after June 30, 2016 have been evaluated by the Adviser for potential impact to this report through the date the financial statements were issued. The Adviser has determined that there were no material subsequent events that require recognition or disclosure in the Funds’ financial statements.

Subject to the direction of the Trustees, Dupree & Company, Inc. (the Adviser) is responsible for the management of the Funds’ portfolios. Under the terms of the Investment Advisory Agreements, the Funds (except the Intermediate Government Bond Series) have agreed to pay to the Adviser as compensation for all services rendered, facilities furnished and expenses paid or assumed by it under the Agreements, a fee at the annual rate of .50 of 1% of the first $100,000,000 average daily net assets of each Fund determined separately; .45 of 1% of the average daily net assets between $100,000,001 and $150,000,000 of each Fund determined separately; .40 of 1% of the average daily net assets between $150,000,001 and $500,000,000 of each Fund determined separately; .35 of 1% of the average daily net assets between $500,000,001 and 750,000,000; and .30 of 1% of the average daily net assets between $750,000,001 and 1,000,000,000; and .25 of 1% of the average daily net assets in excess of $1,000,000,000. The Intermediate Government Bond Series has agreed to pay to the Adviser, as compensation for all services rendered, facilities furnished and expenses paid or assumed by it under the Agreement, a fee at the annual rate of .20 of 1% of average daily net assets.

The Adviser may voluntarily waive investment advisory fees payable to it under the Investment Advisory Agreement with each Fund, and assume and pay other operating expenses. The Adviser will not seek to recoup any waived fees or other operating expenses it has assumed.

For the year ended June 30, 2016, fees voluntarily waived by the Adviser were as follows:

In addition, each Fund has entered into a Shareholder Service Agreement with Dupree & Company, Inc, the Funds’ transfer agent. The agreement provides for a fee computed on the average daily net asset value at the annual rate of .15 of 1% on the first $20,000,000 of average net assets and .12 of 1% of all amounts in excess of $20,000,000 of average net assets for each Fund.

For the fiscal year ended June 30, 2016, each member of the Board of Trustees who is not an “interested person” of the Funds (the “Independent Trustees”), as defined by the 1940 Act, received a fee of $25,000 per year plus $2,000 for each Audit Committee meeting attended. In addition, all Independent Trustees are reimbursed by the Funds for all reasonable out-of-pocket expenses incurred by them in performing their duties. The fees are allocated on an average net asset basis for each Fund. The Independent Trustees fees for each Fund are disclosed on the Funds’ Statement of Operations.

During the year ended June 30, 2016, the cost of purchases and the proceeds from sales/calls and maturities of securities (excluding short-term securities and U.S. government obligations, except for the Intermediate Government Bond Series which are all U.S. government obligations) for each of the Funds were as follows:

As of June 30, 2016 and 2015, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:

The Alabama Tax-Free Income Series, Kentucky Tax-Free Income Series, Kentucky Tax-Free Short-to-Medium Series, Mississippi Tax-Free Income Series, North Carolina Tax-Free Income Series, North Carolina Tax-Free Short-to-Medium Series, Tennessee Tax-Free Income Series, and Tennessee Tax-Free Short-to-Medium Series each invest solely in debt obligations issued by the states of Alabama, Kentucky, Mississippi, North Carolina, and Tennessee, respectively, and their respective political subdivisions, agencies and public authorities to obtain funds for various public purposes. Each of these state-specific Funds is more susceptible to economic and political factors adversely affecting issuers of their states’ respective municipal securities than a fund that is not concentrated in these issuers to the same extent.

During the year ended June 30, 2016, the following Funds utilized capital loss carry-forwards as follows:

During the year ended June 30, 2016, the following Funds had capital losses expire:

Capital losses incurred after October 31 (“Post-October” losses) within the taxable year are deemed to arise on the first business day of the Fund’s next taxable year. The following Fund incurred and will elect to defer net capital losses during the fiscal year 2016 as follows:

During the year ended June 30, 2016, as a result of permanent book to tax differences, the Funds’ incurred differences that affected undistributed (accumulated) net investment income (loss), accumulated net realized gain (loss) on investments and aggregate paid in capital by the amounts in the table below. The differences are due to expiration of capital loss carryforwards. Net assets were not affected by these reclassifications.

The tax character of distributions paid for the years ended June 30, 2016 and 2015 were as follows:

At June 30, 2016, the Funds’ components of distributable earnings (accumulated losses) on a tax basis were as follows:

The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which may provide for indemnification. The Funds’ maximum exposure under these arrangements is unknown, as this would involve predicting future claims that may be made against the Funds, if any. However, based on experience, the Funds believe the risk of loss is remote.

Under the terms of an agreement with the Funds’ custodian, principal amounts up to 5% of a Fund’s net assets are available on a committed line of credit. The principal amounts borrowed are due on demand. The agreement expires on August 31, 2016, but may be renewed annually. Interest is payable based on the published prime rate of the bank. Securities with a minimum value of three times the loan proceeds will be assigned as collateral until the balance of the note and unpaid interest is paid in full and terminated.

At June 30, 2016, the Funds had an aggregate unused line of credit amount of $25,000,000. During the year ended June 30, 2016, the average interest rate on borrowings was 3.37% and the daily weighted average borrowings for each Fund with borrowings were as follows:

The Tennessee Tax-Free Short-to-Medium Series and the Taxable Municipal Bond Series did not draw on the line of credit during the fiscal year.

The Funds have a contractual agreement with the custodian whereby the Funds compensate the custodian for custodial services incurred exceeding the credits realized as a result of uninvested cash balances. Credits realized as a result of uninvested cash balances are used to reduce each Fund’s expenses. During the year, these credits reduced each of the Fund’s expenses by the amount shown on the Statement of Operations as “Custodian expense reduction.”

We have audited the accompanying statements of assets and liabilities, including the schedules of portfolio investments, of Dupree Mutual Funds (comprising the Alabama Tax-Free Income Series, Kentucky Tax-Free Income Series, Kentucky Tax-Free Short-to-Medium Series, Mississippi Tax-Free Income Series, North Carolina Tax-Free Income Series, North Carolina Tax-Free Short-to-Medium Series, Tennessee Tax-Free Income Series, Tennessee Tax-Free Short-to-Medium Series, Intermediate Government Bond Series, and Taxable Municipal Bond Series) (collectively, the “Funds”) as of June 30, 2016, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2016, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective funds constituting Dupree Mutual Funds at June 30, 2016, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles.

As of June 30, 2016, none of the Trustees or members of their immediate family held any beneficial interest in the Trust’s Investment Adviser. Further, the Trust does not have an underwriter.

The Statement of Additional Information (“SAI”) includes additional information about Trustees and officers and is available upon request without charge. Please call (800) 866-0614 to request the SAI.

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling (800) 866-0614, or on the Securities and Exchange Commission’s website at http://www.sec.gov. For the year ending June 30, 2016, the Funds exercised no proxy votes due to the fact that the debt instruments in which the Funds invest carry no voting rights.

The Trust files with the Securities and Exchange Commission a complete listing of portfolio holdings for each Fund as of the end of the first and third quarters of each fiscal year on Form N-Q. The complete listing (i) is available on the commission’s website and (ii) will be made available to shareholders upon request by calling (800) 866-0614. Information on the operation of the S.E.C.’s Public Reference Room may be obtained by calling 1-800-SEC-0300.

As a shareholder of the Funds, you incur transaction costs including investment advisory fees and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six Months Ended June 30, 2016” to estimate the expenses you paid on your account during this period.

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses which is not the Funds’ actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Item 2. Code of Ethics: The registrant has adopted a code of ethics that applies to the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. There have been no waivers from the Code of Ethics during the reporting period. The Registrant’s Code of Ethics is posted on its web site at http://www.dupree-funds.com. A copy of the Code of Ethics will be provided to any person free of charge upon request by telephoning or writing the Registrant.

Item 3. Audit Committee Financial Expert: The board does not have a financial expert serving on the audit committee. The registrant’s audit committee is comprised of all Trustees all of who are non-interested and independent. The audit committee believes that the collective experience and expertise of the members in assessing the performance of companies and the evaluation of financial statements is sufficient to assess the issues which can reasonably be expected to be raised by the Trust’s financial statements.

(a) Audit Fees. Fees for audit services provided to the Registrant were $141,900 and $133,800 for the fiscal years ended June 30, 2016 and 2015, respectively.

(b) Audit Related Fees. There were no fees for audit related-services that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this item.

(c) Tax Fees. Fees for tax services, which consisted of income and excise tax compliance services, were $39,500 and $49,300 for the fiscal years ended June 30, 2016 and 2015, respectively

(d) All Other Fees. Fees for all other services, which for fiscal year ended June 30, 2016 totaled $37,400 and consisted of examination of transfer agent ($10,300); Anti-Money Laundering Advisory services ($7,900); Internal control agreed upon procedures ($10,500) and Review of Semi-Annual report ($8,700) and for fiscal year ended June 30, 2015 totaled $36,300 and consisted of review of Transfer Agent ($10,000); Anti-Money Laundering services ($7,700); Internal control agreed upon procedures ($10,200); and Review of Semi-Annual report ($8,400).

(e)(1) (2) The Registrant’s Audit Committee must pre-approve all audit services and non-audit services that the principal accountant provides to the Registrant. The Audit committee must also pre-approve any engagement of the principal accountant to provide non-audit services to the Registrant’s investment adviser, or any affiliate of the adviser that provides ongoing services to the Registrant, if such non-audit services directly impact the Registrant’s operations and financial reporting.

(f) The Registrant has been advised by the Principal Accountant that no persons other than full time permanent employees have been engaged to audit the Registrant’s Financial Statements for the fiscal year ended June 30, 2016.

(g) The aggregate non audit fees billed by the Registrant’s Accountant to the Registrant’s Investment Adviser were $76,900 and $85,600 for the fiscal years ended June 30, 2016 and 2015 respectively.

Item 10. There have been no changes to the procedures by which shareholders may recommend nominees to the board of trustees nominating committee.

On August 24, 2016 the Registrant’s Executive Vice President and Treasurer assessed the disclosure controls and procedures to evaluate the effectiveness of the Registrant’s disclosure controls and procedures designed to ensure that information required to be disclosed by the investment company on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an investment company in the reports that it files on Form N-CSR is accumulated and communicated to the investment company’s management, including its principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Further, on August 24, 2016 the Registrant’s Executive Vice President and Treasurer assessed the internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the investment company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the investment company are being made only in accordance with authorizations of management and trustees of the investment company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the investment company’s assets that could have a material effect on the financial statements.

The Registrant’s Executive Vice President and Treasurer have deemed the disclosure controls and procedures and the internal control over financial reporting effective. There were no changes in the Registrant’s disclosure controls and procedures or internal control over financial reporting that occurred during the fourth quarter of the fiscal year that materially affected or is reasonably likely to materially affect the Registrant’s financial statements.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
SCHOOL IMPROVEMENT BONDS
19.76% of Net Assets
Alabaster AL Board of Education Special Tax Warrants		5.000	%		09/01/2039	A1	$	600,000	$	716,556
Decatur City AL Board of Education Special Tax		5.000			02/01/2040	Aa3		225,000		269,564
Etowah County AL Board of Education Capital Outlay Tax		5.000			09/01/2037	A+*		200,000		231,760
Jasper AL Warrants		5.000			03/01/2032	A2		450,000		536,711
Limestone County AL Board of Education		5.000			07/01/2033	AA*		255,000		304,241
Madison County AL Board of Education Capital Outlay		5.000			09/01/2031	Aa3		660,000		815,621
Marshall County AL Board of Education Special Tax School Warrants		4.000			03/01/2033	A2		250,000		279,520
Montgomery AL Warrants		5.000			03/01/2028	Aa1		35,000		35,977
Montgomery County AL Board of Education Capital Outlay School Warrants		5.000			09/01/2039	AA*		150,000		176,363
Morgan County AL Board of Education Capital Outlay Warrants		5.000			03/01/2035	AA-*		1,050,000		1,228,983
Opelika AL Warrants		5.000			11/01/2031	Aa2		150,000		176,486
Phenix City AL School Warrants		5.000			08/01/2024	AA-*		80,000		81,918
Shelby County AL Board of Education Capital Outlay Warrants		5.000			02/01/2031	Aa2		615,000		705,922
Shelby County AL Board of Education Special Tax School Warrants		5.000			02/01/2025	Aa3		5,000		5,015
Sumter County AL Limited Obligation School Warrants		5.100			02/01/2034	NR		100,000		104,247
Sumter County AL Limited Obligation School Warrants		5.200			02/01/2039	NR		95,000		99,341
Troy AL Public Educational Building Authority		5.250			12/01/2036	A2		30,000		34,653

										5,802,875
PREREFUNDED BONDS
19.49’% of Net Assets
AL State Public School & College Authority Capital Improvement		5.000			12/01/2024	Aa1		100,000		106,165
AL State Public School & College Authority Capital Improvement		5.000			12/01/2025	Aa1		640,000		679,456
AL State Public School & College Authority Refinancing		5.000			05/01/2024	Aa1		125,000		139,766
Albertville AL Warrants		5.000			02/01/2035	AA*		110,000		121,950
Auburn University AL General Fee Revenue		5.000			06/01/2027	Aa2		300,000		312,054
Auburn University AL General Fee Revenue		5.000			06/01/2033	Aa2		420,000		436,876
Auburn University AL General Fee Revenue		5.000			06/01/2038	Aa2		600,000		624,108
Auburn University AL General Fee Revenue		5.000			06/01/2022	Aa2		50,000		54,102
Elmore County AL Public Education Cooperative		5.000			08/01/2032	Aa3		50,000		52,356
Fort Payne AL Waterworks Board Water Revenue		4.750			07/01/2034	AA-*		100,000		111,760
Huntsville AL Public Building Authority Lease Revenue		5.000			10/01/2027	Aa1		130,000		134,289
Huntsville AL Public Building Authority Lease Revenue		5.000			10/01/2033	Aa1		65,000		67,144
Jacksonville AL State University		5.125			12/01/2033	AA*		235,000		259,663
Madison County AL Board of Education Capital Outlay Tax		4.950			09/01/2025	Aa3		100,000		109,134
Madison County AL Board of Education Capital Outlay Tax		5.100			09/01/2028	Aa3		285,000		312,015
Madison County AL Board of Education Capital Outlay Tax		5.125			09/01/2034	Aa3		505,000		553,142
Mobile AL Public Education Building Authority		5.000			03/01/2033	A3		200,000		214,490
Montgomery AL Warrants		5.000			03/01/2028	Aa1		140,000		144,117
Muscle Shoals AL Utilities Board Water & Sewer		5.750			12/01/2033	NR		330,000		369,402
North Marshall AL Utilities Board Water Revenue		5.100			10/01/2030	AA*		375,000		412,343
Phenix City AL School Warrants		5.000			02/01/2017	NR		120,000		123,106
Troy AL Public Educational Building Authority		5.250			12/01/2036	A2		195,000		231,483
West Morgan — East Lawrence Water Authority AL Water Revenue		5.000			08/15/2025	A2		150,000		158,372

										5,727,291
MUNICIPAL UTILITY REVENUE BONDS
19.11% of Net Assets
Auburn AL Waterworks Board Water Revenue		5.000			09/01/2036	Aa2		250,000		305,278
Bessemer AL Governmental Utility Services Water Supply		4.750			06/01/2033	A2		100,000		103,329
Birmingham AL Waterworks Board Water Revenue		4.750			01/01/2036	Aa2		215,000		243,909
Birmingham AL Waterworks Board Water Revenue		5.000			01/01/2026	Aa2		80,000		92,943
Birmingham AL Waterworks Board Water Revenue		5.000			01/01/2040	Aa2		150,000		180,860
Birmingham AL Waterworks Board Water Revenue		5.000			01/01/2038	Aa2		550,000		639,579
Chatom AL Industrial Board Gulf Opportunity Zone		5.000			08/01/2037	A3		150,000		170,220
Cullman AL Utility Board Water Revenue		4.750			09/01/2037	A1		400,000		439,408
Huntsville AL Water Systems Revenue Bonds		5.000			11/01/2033	Aa1		300,000		321,888
Jasper AL Waterworks and Sewer Board Utility Revenue		5.000			06/01/2030	A+*		455,000		521,944


Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
Limestone County AL Water & Sewer Authority		5.000	%		12/01/2033	A*	$	300,000	$	354,939
Limestone County AL Water & Sewer Authority		4.750			12/01/2034	AA*		375,000		455,948
Limestone County AL Water & Sewer Authority		5.000			12/01/2034	A*		250,000		305,520
Limestone County AL Water & Sewer Authority		4.750			12/01/2035	AA*		400,000		463,664
Muscle Shoals AL Utilities Board Water & Sewer		5.750			12/01/2033	AA-*		100,000		111,096
Opelika AL Water Board Revenue		5.000			06/01/2037	Aa3		250,000		280,213
Opelika AL Water Board Revenue		5.250			06/01/2036	Aa3		70,000		79,840
Phenix City AL Water and Sewer		5.000			08/15/2034	A3		90,000		100,047
Tallassee AL Water Gas and Sewer Warrants		5.125			05/01/2036	A2		75,000		84,113
West Morgan East Lawrence AL Water & Sewer		4.850			08/15/2035	AA*		250,000		275,360
West Morgan East Lawrence AL Water & Sewer		4.750			08/15/2030	AA*		75,000		83,756

										5,613,851
PUBLIC FACILITIES REVENUE BONDS
11.79% of Net Assets
Anniston AL Public Building Authority		5.000			03/01/2032	A2		400,000		457,264
Anniston AL Public Building Authority DHR Project		5.250			05/01/2030	AA-*		50,000		57,185
Anniston AL Public Building Authority DHR Project		5.500			05/01/2033	AA-*		200,000		230,518
Bessemer AL Public Educational Building Authority Revenue		5.000			07/01/2030	AA*		250,000		283,975
Huntsville AL Public Building Authority Lease Revenue		5.000			10/01/2027	Aa1		245,000		252,328
Huntsville AL Public Building Authority Lease Revenue		5.000			10/01/2033	Aa1		110,000		113,391
Lowndes County AL Warrants		5.250			02/01/2037	A2		250,000		282,735
Montgomery AL Warrants		5.000			02/01/2030	A1		300,000		338,877
Trussville AL Warrants		5.000			10/01/2039	Aa2		1,220,000		1,448,701

										3,464,974
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
11.56% of Net Assets
AL State Private Colleges & Universities Tuskegee University		4.750			09/01/2026	AA*		500,000		501,630
Auburn University AL General Fee Revenue		5.000			06/01/2036	Aa2		150,000		174,188
Jacksonville AL State University		5.125			12/01/2033	AA*		215,000		237,837
Troy University AL Facilities Revenue		5.000			11/01/2028	A1		250,000		307,958
Tuscaloosa AL Public Education Building Authority Student Housing		6.375			07/01/2028	AA*		250,000		275,895
Tuscaloosa AL Public Education Building Authority Student Housing		6.750			07/01/2033	AA*		495,000		549,311
University of AL Birmingham		5.000			10/01/2037	Aa2		225,000		272,383
University of Alabama General Revenue		5.000			07/01/2034	Aa2		250,000		269,780
University of South AL University Revenues Facilities		5.000			08/01/2029	Aa1		550,000		593,758
University of South AL University Revenues Facilities		4.750			08/01/2033	Aa1		100,000		107,291
University of South AL University Revenues Refunding Tuition		5.000			12/01/2029	Aa1		105,000		106,855

										3,396,886
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
6.91% of Net Assets
AL Incentives Financing Authority Special Obligation		5.000			09/01/2029	A+*		125,000		139,810
Daphne AL Warrants		5.000			04/01/2023	Aa2		75,000		75,197
Jasper AL Warrants		5.000			03/01/2031	A2		250,000		299,733
Madison AL Warrants		5.000			04/01/2035	Aa2		350,000		422,979
Mobile AL Refunding Warrants		5.000			02/15/2027	Aa2		335,000		369,445
Tuscaloosa AL Warrants		5.000			10/15/2034	Aa1		175,000		191,667
Tuscaloosa AL Warrants		5.125			01/01/2039	Aa1		150,000		164,786
Tuscaloosa AL Warrants		5.000			07/01/2034	Aa1		300,000		365,508

										2,029,123
REFUNDING BONDS
5.80% of Net Assets
Enterprise AL Warrants		4.500			11/01/2032	Aa3		115,000		128,040
Northport AL Warrants		5.000			08/01/2040	AA-*		735,000		873,496
Shelby County Alabama		4.000			08/15/2038	AA+*		250,000		278,510
Tuscaloosa AL Warrants		5.000			01/01/2032	Aa1		350,000		424,718

										1,704,764


Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
HOSPITAL AND HEALTHCARE BONDS
3.55% of Net Assets
Chilton County AL Health Care Authority Chilton County Hospital		5.000	%		11/01/2035	AA-@	$	550,000	$	672,040
Chilton County AL Health Care Authority Limited Obligation Sales Tax		5.000			11/01/2032	AA-@		300,000		370,251

										1,042,291
STATE AND LOCAL MORTGAGE/HOUSING BONDS
.39% of Net Assets
AL Housing Finance Authority Single Family Mortgage Revenue		5.375			10/01/2033	Aaa		110,000		114,981

INDUSTRIAL REVENUE/POLLUTION CONTROL BONDS
.07% of Net Assets
Auburn AL Industrial Development Board Facilities Revenue		6.200			11/01/2020	A*		20,000		20,024

Total Investments 98.43% of Net Assets (cost $26,887,711) (See (a) below for further explanation)									$	28,917,059

Other assets in excess of liabilities 1.57%										461,419

Net Assets 100%									$	29,378,478


ASSETS:
Investments in securities, at fair value (Cost: $26,887,711)		$	28,917,059
Cash			243,199
Interest receivable			365,590

Total assets			29,525,848
LIABILITIES:
Payable for:
Distributions to shareholders	106,544
Fund shares redeemed	12,087
Investment advisory fee	10,449
Transfer agent fee	4,020
Accrued expenses	14,270

Total liabilities			147,370

NET ASSETS:
Capital			27,385,291
Accumulated net investment income			156
Accumulated net realized loss on investment transactions			(36,317	)
Net unrealized appreciation in value of investments			2,029,348

Net assets at value		$	29,378,478

NET ASSET VALUE, offering price and redemption price per share (2,300,814 shares outstanding; unlimited number of shares authorized; no par value)		$	12.77


Net investment income:
Interest income	$	1,029,268

Expenses:
Investment advisory fee		133,595
Transfer agent fee		38,063
Custodian expense		9,030
Professional fees		5,730
Trustees fees		2,670
Other expenses		20,250

Total expenses		209,338
Fees waived by Adviser (Note 2)		(19,398	)
Custodian expense reduction		(46	)

Net expenses		189,894

Net investment income		839,374

Realized and unrealized gain on investments:
Net realized gain		7,105
Net change in unrealized appreciation/depreciation		879,042

Net realized and unrealized gain on investments		886,147

Net increase in net assets resulting from operations	$	1,725,521



Management’s Discussion of Fund Performance			i

Sector Allocation of Funds			iv

Performance Comparison/Performance Graphs			vii

Financial Statements

Alabama Tax-Free Income Series			1

Kentucky Tax-Free Income Series			6

Kentucky Tax-Free Short-to-Medium Series			14

Mississippi Tax-Free Income Series			19

North Carolina Tax-Free Income Series			24

North Carolina Tax-Free Short-to-Medium Series			30

Tennessee Tax-Free Income Series			36

Tennessee Tax-Free Short-to-Medium Series			42

Intermediate Government Bond Series			46

Taxable Municipal Bond Series			49

Notes to Financial Statements			53

Report of Independent Registered Public Accounting Firm			61

Other Unaudited Information			62

Schedule of Shareholder Expenses			64


	2016			2015
Operations:
Net investment income	$	839,374		$	825,995
Net realized gain on investments		7,105			60,994
Net change in unrealized appreciation/depreciation		879,042			16,768

Net increase in net assets resulting from operations		1,725,521			903,757
Distributions from net investment income (Note 6)		(839,350	)		(825,972	)
Net fund share transactions (Note 4)		2,981,730			2,074,414

Total increase		3,867,901			2,152,199
Net assets:
Beginning of year		25,510,577			23,358,378

End of year	$	29,378,478		$	25,510,577

Accumulated net investment income	$	156		$	132


Selected data for a share outstanding:	For the years ended June 30,
	2016			2015			2014			2013			2012
Net asset value, beginning of year		$12.36			$12.32			$12.10			$12.41			$11.72

Income from investment operations:
Net investment income		0.39			0.41			0.42			0.43			0.44
Net gains/(losses) on securities		0.41			0.04			0.23			(0.30	)		0.70

Total from investment operations		0.80			0.45			0.65			0.13			1.14
Less distributions:
Distributions from net investment income		(0.39	)		(0.41	)		(0.42	)		(0.43	)		(0.44	)
Distributions from capital gains		—			—			(0.01	)		(0.01	)		(0.01	)

Total distributions		(0.39	)		(0.41	)		(0.43	)		(0.44	)		(0.45	)

Net asset value, end of year		$12.77			$12.36			$12.32			$12.10			$12.41

Total return		6.61%			3.64%			5.56%			0.94%			9.81%
Net assets, end of year (in thousands)		$29,378			$25,511			$23,358			$24,300			$22,911
Ratio of net expenses to average net assets (a)		0.71%			0.71%			0.72%			0.70%			0.68%
Ratio of gross expenses to average net assets		0.78%			0.79%			0.81%			0.78%			0.78%
Ratio of net investment income to average net assets		3.14%			3.26%			3.48%			3.40%			3.59%
Portfolio turnover		5.37%			9.65%			10.48%			6.46%			7.80%


Net investment income:
Interest income	$	36,822,247

Expenses:
Investment advisory fee		3,737,514
Transfer agent fee		1,201,763
Custodian expense		95,586
Professional fees		210,949
Trustees fees		101,015
Other expenses		117,572

Total expenses		5,464,399
Custodian expense reduction		(490	)

Net expenses		5,463,909

Net investment income		31,358,338

Realized and unrealized gain on investments:
Net realized gain		239,102
Net change in unrealized appreciation/depreciation		29,781,496

Net realized and unrealized gain on investments		30,020,598

Net increase in net assets resulting from operations	$	61,378,936


Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
22.66% of Net Assets
KY Association of Counties		4.250	%		02/01/2017	AA-*	$	500,000	$	509,885
KY Association of Counties		4.000			02/01/2018	AA-*		115,000		120,787
KY Association of Counties		4.250			02/01/2019	AA-*		255,000		275,762
KY State Property & Building #76		5.500			08/01/2017	Aa3		190,000		199,806
KY State Property & Building #76		5.500			08/01/2018	Aa3		1,415,000		1,549,821
KY State Property & Building #83		5.000			10/01/2017	Aa3		100,000		105,301
KY State Property & Building #87		5.000			03/01/2017	Aa3		850,000		874,769
KY State Property & Building #87		5.000			03/01/2020	Aa3		95,000		97,833
KY State Property & Building #89		3.750			11/01/2017	Aa3		100,000		104,062
KY State Property & Building #90		5.000			11/01/2018	Aa3		250,000		273,273
KY State Property & Building #90		5.750			11/01/2019	Aa3		200,000		222,174
KY State Property & Building #90		5.000			11/01/2020	Aa3		495,000		540,718
KY State Property & Building #93		5.250			02/01/2018	Aa3		510,000		545,108
KY State Property & Building #93		5.250			02/01/2021	AA*		25,000		27,706
KY State Property & Building #94		5.000			05/01/2017	Aa2		500,000		517,675
KY State Property & Building #95		5.000			08/01/2017	Aa3		200,000		209,354
KY State Property & Building #100		5.000			08/01/2019	Aa3		100,000		111,866
KY State Property & Building #100		5.000			08/01/2017	Aa3		500,000		523,385
KY State Property & Building #100		5.000			08/01/2025	Aa3		500,000		589,680
KY State Property & Building #100		5.000			08/01/2024	Aa3		750,000		885,735
KY State Property & Building #106		5.000			10/01/2021	Aa3		750,000		884,595
KY State Property & Building #106		5.000			10/01/2023	Aa3		540,000		659,448
KY State Property & Building #106		5.000			10/01/2024	Aa3		750,000		922,275
KY State Property & Building #106		5.000			10/01/2025	Aa3		2,365,000		2,909,872
KY State Property & Building #108		5.000			08/01/2023	Aa3		2,000,000		2,434,360
KY State Property & Building #108		5.000			08/01/2023	Aa3		875,000		1,064,376
KY State Property & Building #110		5.000			08/01/2023	Aa3		1,750,000		2,130,065

										19,289,691
SCHOOL IMPROVEMENT BONDS
14.88% of Net Assets
Barren County KY School District Finance Corporation		5.000			08/01/2023	Aa3		500,000		611,950
Barren County KY School District Finance Corporation		5.000			08/01/2022	Aa3		1,055,000		1,265,599
Bullitt County KY School District Finance Corporation		5.000			09/01/2022	Aa3		300,000		360,078
Fayette County KY School District Finance Corporation		5.000			08/01/2023	Aa3		1,000,000		1,220,160
Fayette County KY School District Finance Corporation		4.000			06/01/2022	A1		1,000,000		1,114,100
Fayette County KY School District Finance Corporation		5.000			06/01/2023	Aa3		500,000		612,030
Grant County KY School District Finance Corporation		3.750			06/01/2017	Aa3		190,000		191,450
Hardin County KY School District		5.000			03/01/2023	Aa3		770,000		936,058
Jefferson County KY School District Finance Corporation		5.250			01/01/2017	Aa3		200,000		204,652
Jefferson County KY School District Finance Corporation		4.000			12/01/2023	Aa3		1,000,000		1,177,210
Jessamine County KY School District Finance Corporation		5.000			02/01/2023	Aa3		575,000		699,948
Johnson County KY School District Finance Corporation		3.000			12/01/2019	Aa3		180,000		190,760
Laurel County KY School District Finance Corporation		4.000			06/01/2024	Aa3		465,000		540,558
Laurel County KY School District Finance Corporation		4.000			06/01/2022	Aa3		890,000		1,011,245
Pendleton County KY School District Finance Corporation		4.000			02/01/2020	Aa3		450,000		458,109
Pike County School District Finance Corporation		5.000			02/01/2025	Aa3		900,000		1,124,910
Warren County KY School District Finance Corporation		4.000			04/01/2018	Aa3		125,000		131,768
Warren County KY School District Finance Corporation		4.000			06/01/2022	Aa3		725,000		823,332

										12,673,916
REFUNDED BONDS
14.45% of Net Assets
KY State Property & Building #82		5.250			10/01/2017	Aa3		1,260,000		1,332,185
KY State Property & Building #83		5.000			10/01/2016	Aa3		775,000		783,990
KY State Property & Building #83		5.000			10/01/2019	Aa3		1,750,000		1,969,258
KY State Property & Building #84		5.000			08/01/2019	Aa3		1,000,000		1,121,250
KY State Property & Building #101		5.000			10/01/2019	Aa3		1,050,000		1,181,555


Net investment income:
Interest income	$	2,253,735

Expenses:
Investment advisory fee		420,648
Transfer agent fee		106,956
Custodian expense		18,371
Professional fees		17,687
Trustees fees		8,450
Pricing		5,001
Other expenses		30,898

Total expenses		608,011
Custodian expense reduction		(94	)

Net expenses		607,917

Net investment income		1,645,818

Realized and unrealized gain on investments:
Net realized gain		57,349
Net change in unrealized appreciation/depreciation		1,482,281

Net realized and unrealized gain on investments		1,539,630

Net increase in net assets resulting from operations	$	3,185,448


Net investment income:
Interest income	$	409,836

Expenses:
Investment advisory fee		55,778
Transfer agent fee		16,733
Custodian expense		6,489
Professional fees		2,430
Trustees fees		1,132
Pricing expense		5,000
Registration fees		6,011
Other expenses		4,312

Total expenses		97,885
Fees waived by Adviser (Note 2)		(19,398	)
Custodian expense reduction		(33	)

Net expenses		78,454

Net investment income		331,382

Realized and unrealized gain on investments:
Net realized gain		4,364
Net change in unrealized appreciation/depreciation		473,931

Net realized and unrealized gain on investments		478,295

Net increase in net assets resulting from operations	$	809,677


Net investment income:
Interest income	$	4,793,688

Expenses:
Investment advisory fee		654,493
Transfer agent fee		167,198
Custodian expense		21,071
Professional fees		28,474
Trustees fees		13,274
Other expenses		49,928

Total expenses		934,438
Custodian expense reduction		(108	)

Net expenses		934,330

Net investment income		3,859,358

Realized and unrealized gain on investments:
Net realized gain		2,054
Net change in unrealized appreciation/depreciation		5,728,384

Net realized and unrealized gain on investments		5,730,438

Net increase in net assets resulting from operations	$	9,589,796


Net investment income:
Interest income	$	570,909

Expenses:
Investment advisory fee		119,306
Transfer agent fee		34,634
Custodian expense		9,357
Pricing fees		9,999
Professional fees		5,217
Trustees fees		2,430
Other expenses		17,551

Total expenses		198,494
Custodian expense reduction		(48	)

Net expenses		198,446

Net investment income		372,463

Realized and unrealized gain/(loss) on investments:
Net realized loss		(54	)
Net change in unrealized appreciation/depreciation		243,375

Net realized and unrealized gain on investments		243,321

Net increase in net assets resulting from operations	$	615,784


Net investment income:
Interest income	$	4,115,193

Expenses:
Investment advisory fee		555,461
Transfer agent fee		140,790
Custodian expense		20,881
Professional fees		24,433
Trustees fees		11,351
Other expenses		39,394

Total expenses		792,310
Custodian expense reduction		(107	)

Net expenses		792,203

Net investment income		3,322,990

Realized and unrealized gain on investments:
Net realized gain		54,354
Net change in unrealized appreciation/depreciation		3,628,186

Net realized and unrealized gain on investments		3,682,540

Net increase in net assets resulting from operations	$	7,005,530


Net investment income:
Interest income	$	264,169

Expenses:
Investment advisory fee		56,587
Transfer agent fee		16,976
Custodian expense		7,555
Professional fees		2,472
Trustees fees		1,152
Pricing		3,001
Other expenses		9,694

Total expenses		97,437
Custodian expense reduction		(39	)

Net expenses		97,398

Net investment income		166,771

Realized and unrealized gain on investments:
Net realized gain		6,408
Net change in unrealized appreciation/depreciation		190,782

Net realized and unrealized gain on investments		197,190

Net increase in net assets resulting from operations	$	363,961


Net investment income:
Interest income	$	540,840

Expenses:
Investment advisory fee		36,136
Transfer agent fee		27,102
Custodian expense		8,557
Professional fees		4,041
Trustees fees		1,887
Pricing fees		5,000
Postage expense		5,000
Registration fees		4,771
Other expenses		2,879

Total expenses		95,373
Custodian expense reduction		(44	)

Net expenses		95,329

Net investment income		445,511

Realized and unrealized gain on investments:
Net realized gain		93,021
Net change in unrealized appreciation/depreciation		602,867

Net realized and unrealized gain on investments		695,888

Net increase in net assets resulting from operations	$	1,141,399


Net investment income:
Interest income	$	644,207

Expenses:
Investment advisory fee		57,844
Transfer agent fee		17,353
Custodian expense		7,335
Professional fees		811
Trustees fees		1,192
Registration fees		6,367
Pricing		3,499
Other expenses		4,683

Total expenses		99,084
Custodian expense reduction		(38	)

Net expenses		99,046

Net investment income		545,161

Realized and unrealized gain on investments:
Net realized gain		66,135
Net change in unrealized appreciation/depreciation		431,560

Net realized and unrealized gain on investments		497,695

Net increase in net assets resulting from operations	$	1,042,856


Level 1:		Unadjusted quoted prices in active markets for identical securities.
Level 2:		Prices determined using other significant observable inputs. Observable inputs, either directly or indirectly, are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.
Level 3:		Price determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, where there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing a security, and would be based on the best information available.


Monthly for:		Kentucky Tax-Free Short-to-Medium Series North Carolina Tax-Free Short-to-Medium Series Tennessee Tax-Free Short-to-Medium Series Intermediate Government Bond Series Taxable Municipal Bond Series

Quarterly for:		Alabama Tax-Free Income Series Kentucky Tax-Free Income Series Mississippi Tax-Free Income Series North Carolina Tax-Free Income Series Tennessee Tax-Free Income Series


	Fees waived by Adviser
Alabama Tax-Free Income Series	$	19,398
Mississippi Tax-Free Income Series		19,398


	Purchases		Sales/Calls
Alabama Tax-Free Income Series	$	4,342,011	$	1,415,541
Kentucky Tax-Free Income Series		121,134,375		114,260,583
Kentucky Tax-Free Short-to-Medium Series		26,581,130		22,017,407
Mississippi Tax-Free Income Series		838,618		360,100
North Carolina Tax-Free Income Series		27,779,215		8,070,891
North Carolina Tax-Free Short-to-Medium Series		6,220,357		5,687,240
Tennessee Tax-Free Income Series		14,670,144		9,918,426
Tennessee Tax-Free Short-to-Medium Series		808,120		941,648
Intermediate Government Bond Series		-0-		1,524,548
Taxable Municipal Bond Series		1,229,201		1,092,414


ALABAMA TAX-FREE INCOME SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		330,008		$	4,138,437			348,252		$	4,338,373
Shares reinvested		32,626			409,976			32,772			409,254
Shares redeemed		(125,116	)		(1,566,683	)		(213,988	)		(2,673,213	)
Net increase		237,518		$	2,981,730			167,036		$	2,074,414

KENTUCKY TAX-FREE INCOME SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		8,721,953		$	69,077,836			11,235,815		$	89,064,324
Shares reinvested		2,313,486			18,380,958			2,409,836			19,091,862
Shares redeemed		(10,507,020	)		(83,116,232	)		(10,054,449	)		(79,704,854	)
Net increase		528,419		$	4,342,562			3,591,202		$	28,451,332

KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		4,222,604		$	22,772,484			3,001,267		$	16,255,332
Shares reinvested		172,866			932,860			207,625			1,123,674
Shares redeemed		(3,727,024	)		(20,131,344	)		(3,359,239	)		(18,194,879	)
Net increase/(decrease)		668,446		$	3,574,000			(150,347	)	$	(815,873	)


MISSISSIPPI TAX-FREE INCOME SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		65,087		$	797,613			100,220		$	1,222,632
Shares reinvested		9,347			115,180			9,388			114,056
Shares redeemed		(65,257	)		(799,035	)		(77,047	)		(935,063	)
Net increase		9,177		$	113,758			32,561		$	401,625

NORTH CAROLINA TAX-FREE INCOME SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		2,991,113		$	35,075,635			3,088,138		$	36,022,454
Shares reinvested		215,757			2,542,539			184,173			2,145,388
Shares redeemed		(1,425,542	)		(16,719,475	)		(1,109,825	)		(12,907,072	)
Net increase		1,781,328		$	20,898,699			2,162,486		$	25,260,770

NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		317,756		$	3,497,671			255,618		$	2,817,986
Shares reinvested		26,967			296,253			30,368			334,675
Shares redeemed		(306,621	)		(3,366,336	)		(396,396	)		(4,368,461	)
Net increase/(decrease)		38,102		$	427,588			(110,410	)	$	(1,215,800	)

TENNESSEE TAX-FREE INCOME SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		1,554,220		$	18,100,583			1,037,008		$	12,075,002
Shares reinvested		194,475			2,276,847			198,391			2,311,270
Shares redeemed		(1,450,426	)		(16,901,544	)		(793,632	)		(9,246,566	)
Net increase		298,269		$	3,475,886			441,767		$	5,139,706

TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		132,588		$	1,440,238			73,983		$	801,525
Shares reinvested		12,623			136,957			13,478			145,797
Shares redeemed		(134,818	)		(1,467,406	)		(57,469	)		(620,686	)
Net increase		10,393		$	109,789			29,992		$	326,636

INTERMEDIATE GOVERNMENT BOND SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		84,097		$	878,394			92,710		$	966,480
Shares reinvested		33,468			350,358			41,002			426,297
Shares redeemed		(302,898	)		(3,176,035	)		(385,931	)		(3,995,974	)
Net decrease		(185,333	)	$	(1,947,283	)		(252,219	)	$	(2,603,197	)


TAXABLE MUNICIPAL BOND SERIES	Year Ended June 30, 2016						Year Ended June 30, 2015
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		346,871		$	3,701,866			109,450		$	1,178,580
Shares reinvested		32,945			352,944			35,388			381,058
Shares redeemed		(343,782	)		(3,674,593	)		(241,897	)		(2,571,310	)
Net increase/(decrease)		36,034		$	380,217			(97,059	)	$	(1,011,672	)


	Short-term Expiring						No Expiration
	2017		2018		2019		Short-term		Long-term		Total
Alabama Tax Free Income Series	$	—	$	—	$	—	$	36,314	$	—	$	36,314
Kentucky Tax-Free Short-to-Medium Series		223,976		—		—		—		—		223,976
North Carolina Tax-Free Income Series		—		—		—		564,541		—		564,541
North Carolina Tax-Free Short-to-Medium Series		—		—		—		—		1,580		1,580
Tennessee Tax-Free Income Series		—		371,142		—		214,659		—		585,801
Tennessee Tax-Free Short-to-Medium Series		—		—		—		—		227,704		227,704
Intermediate Government Bond Series		—		—		—		120,261		70,623		190,884