U. S.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-2918

DUPREE MUTUAL FUNDS

(Exact Name of Registrant as Specified in Charter)

125 South Mill Street, Bluegrass Corporate Center, Suite 100

Lexington, Kentucky 40507

(Address of Principal Executive Offices) (Zip Code)

Thomas P. Dupree

125 South Mill Street, Bluegrass Corporate Center, Suite 100

Lexington, Kentucky 40507

(Name and address of agent for service)

Registrant’s Telephone Number, including Area Code (859) 254-7741

Date of fiscal year end: June 30, 2014

Date of reporting period: July 1, 2013 through December 31, 2013

Item 1. Report to Stockholders

December 31, 2013

SEMI-ANNUAL REPORT

TO SHAREHOLDERS

(Unaudited)

ABOUT DUPREE MUTUAL FUNDS

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

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

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

Kentucky Tax-Free Short-to-Medium Series in 1987;

Intermediate Government Bond Series in 1992;

Tennessee Tax-Free Income Series in 1993;

Tennessee Tax-Free Short-to-Medium Series in 1994;

North Carolina Tax-Free Income Series in 1995;

North Carolina Tax-Free Short-to-Medium Series in 1995;

Alabama Tax-Free Income Series in 2000;

Mississippi Tax-Free Income Series in 2000; and

Taxable Municipal Bond Series in 2010.

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

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

TABLE OF CONTENTS

Management’s Discussion of Fund Performance	i
Sector Allocation of Funds	iii
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	20
North Carolina Tax-Free Income Series	25
North Carolina Tax-Free Short-to-Medium Series	30
Tennessee Tax-Free Income Series	36
Tennessee Tax-Free Short-to-Medium Series	41
Intermediate Government Bond Series	45
Taxable Municipal Bond Series	48
Notes to Financial Statements	52
Trustee & Officer Information	60
Board of Trustee Approval of Existing Advisory Agreements	61
Schedule of Shareholder Expenses	67
Shareholder Meeting	68

Management’s Discussion of Fund Performance: (Unaudited)

Six Months Ended December 31, 2013

The investment objective for our tax-exempt municipal bond funds is to provide a high level of tax-free income derived from state-specific municipal securities without incurring undue risk to principal. Similarly, the investment objectives for our government bond fund and taxable municipal bond fund are to provide a high level of taxable income derived from securities of the U.S. Government and its agencies and taxable municipal bonds, respectively, without incurring undue risk to principal. As a general rule, we do not try to anticipate market direction; instead, we attempt to buy high quality investment grade bonds at the best possible prices and yields and hold them in down markets as well as up markets.

Factors which may influence the performance of a state-specific tax-exempt municipal bond fund or a taxable municipal bond fund include, but are not limited to, movements in interest rates, a downgrade or upgrade of credit ratings assigned to bonds issued by state or local governments, changes in the credit ratings assigned to bond insurers, downturns or upturns in the specific economies of a given state, the rate at which bonds are called, and the rate at which revenues are received by state and local governments which are used to pay debt service on issued bonds. Similarly, many factors may influence the performance of a government bond fund including, but not limited to, movements in interest rates, prevailing conditions in the U.S. Government securities markets, changes in an issuer’s financial strength, changes in the credit rating assigned to an obligation, and the rate at which bonds are called.

During the six month period ended December 31, 2013 (the “reporting period”), economic activity expanded at a moderate pace. Real gross domestic product (GDP), a measure of the output of goods and services produced by labor and property in the United States, increased at an annual rate of 4.1 percent in the third quarter of 2013. Real GDP increased at a 3.2 percent annual rate (advance estimate) during the fourth quarter of 2013. Economic growth during the second half of 2013 showed a meaningful improvement over the growth rates experienced during the first half of the year. Real GDP increased at a 1.8 percent annual rate during the first quarter and at a 2.5 percent annual rate during the second quarter. Increases in manufacturing production and higher retail and auto sales helped the economy grow at a quicker pace during the second half of the year.

The Federal Reserve Board (“Fed”) left the federal funds target rate range at 0 to  ¹/₄ percent during the reporting period. The Fed also maintained its accommodative monetary policy stance by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and also purchasing longer-term Treasury securities at a pace of $45 billion per month. The Fed announced at its December meeting that it would begin to taper its bond purchases beginning in January by $10 billion per month. However, it emphasized that its plan to taper asset purchases was not on a preset course and could increase or decrease depending upon incoming economic data. The Fed also strengthened its forward guidance in its December statement and emphasized that the fed funds rate would remain at exceptionally low levels “well beyond” the time the 6.5 percent unemployment threshold is breached.

Conditions in the labor market improved somewhat during the reporting period. The seasonally adjusted national unemployment rate dropped to 6.7 percent in December, the lowest since October 2008. However, the unemployment rate remained elevated by historical standards. The labor participation rate dropped during the second half of the year meaning that people continued to leave the work force. The housing market continued to recover with home prices in most regions increasing on a year-over-year basis. Rising mortgage rates acted as a slight damper on housing activity (i.e., housing sales and building permits) during the second half of the year.

Measures of inflation continued to be subdued. The Consumer Price Index (CPI) increased at a 1.5 percent annual rate in December. This was the smallest calendar year gain in the CPI since 2010. The core CPI, which excludes food and energy prices, increased at a 1.7 percent annual rate in December. The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures Index, increased by 1.2 percent on a year-over-year basis in December. All of these inflation measures continue to be well below the Fed’s longer-run objective of a 2 percent target rate. Longer-term inflation expectations also remained stable during the reporting period.

The yield on the 10-year and 30-year Treasury increased during the second half of the year. For the full calendar year, the yield on the 10-year and 30-year Treasury were up 188 and 92 basis points, respectively. Yields in the municipal bond market also moved higher with yields on the long end of the curve showing the biggest movement. During the reporting period, yields on 10-year and 30-year AAA rated municipal securities increased 21 and 36 basis points, respectively.

Beginning in early June outflows from the Treasury market and municipal bond market picked up steam. The sell-off was largely related to investor fears that the Fed was considering ending its quantitative easing policies and the possibility that interest rates might increase sooner than anticipated. As such, investors rotated out of fixed-income securities into other asset classes. The selloff in fixed-income markets led to higher yields and lower prices. Credit concerns, focused mainly on Detroit’s bankruptcy filing

i

and Puerto Rico’s deteriorating fiscal condition, also contributed to the sell-off in the municipal bond sector. On a full year basis, the municipal bond market had its worst year in 2013 since 1994 when the Fed embarked on a tightening spree.

State revenues continued to show positive trends as the economy has continued to recover. According to data compiled by the Rockefeller Institute, state tax revenue collections slowed down in the third quarter and grew by 6.1 percent on a year-over-year basis. This was down slightly from second quarter growth of 9.0 percent and first quarter growth of 8.6 percent. States have now reported fifteen consecutive quarters of growth in tax collections, beginning with the first quarter of 2010. While the fiscal health of states and localities has continued to slowly improve, unfunded pension obligations still present challenges for many jurisdictions. Moreover, new Government Accounting Standards Board (GASB) pension accounting standards are scheduled to become effective in the near future which will likely cause the reported funded ratios for many government pension plans to decline even further. However, this is a long-term problem and there is ample time for a solution. Many jurisdictions, including Kentucky, have already taken steps in the right direction to address their pension funding shortfalls.

A discussion of the performance of each of our funds for the six month period ended December 31, 2013 follows:

The Kentucky Tax-Free Income Series achieved a total return of 0.71 percent during the reporting period compared to a total return of 0.138 percent for the Barclays Capital Municipal Bond Index. The Kentucky Tax-Free Short-to-Medium Series achieved a total return of 0.88 percent during the period under review compared to a total return of 0.138 percent for the Barclays Capital Municipal Bond Index. During the reporting period, the longest portion of the index underperformed the shorter elements of the index. Both funds outperformed the index primarily due to their position on the shorter part of the yield curve.

The Tennessee Tax-Free Income Series achieved a total return of 0.48 percent during the reporting period compared to a total return of 0.138 percent for the Barclays Capital Municipal Bond Index. The Tennessee Tax-Free Short-to-Medium Series provided shareholders with a total return of 0.53 percent during the reporting period compared to 0.138 percent for the Barclays Capital Municipal Bond Index. Both funds performed in line with the index.

The North Carolina Tax-Free Income Series achieved a total return of 0.01 percent during the reporting period compared to 0.138 percent for the Barclays Capital Municipal Bond Index. The North Carolina Tax-Free Short-to-Medium Series achieved a total return of 0.88 percent during the reporting period compared to 0.138 percent for the Barclays Capital Municipal Bond Index. The North Carolina Tax-Free Income Series performed in line with the index. During the reporting period, the longest portion of the index underperformed the shorter elements of the index. The North Carolina Tax-Free Short-to-Medium Series outperformed the index primarily due to its position on the shorter part of the yield curve.

The Alabama Tax-Free Income Series achieved a total a total return of 0.15 percent during the reporting period compared to 0.138 percent for the Barclays Capital Municipal Bond Index. The fund performed in line with the index.

The Mississippi Tax-Free Income Series achieved a total return of -0.25 percent during the reporting period compared to 0.138 percent for the Barclays Capital Municipal Bond Index. The fund performed in line with the index.

The Intermediate Government Bond Series achieved a total return of -0.88 percent during the reporting period compared to -0.017 percent for the Barclays Capital U.S. Government Intermediate Bond Index. The duration and average maturity of the fund is slightly longer than the index, which led to the relative underperformance of the fund as shorter securities outperformed during the reporting period.

The Taxable Municipal Bond Series achieved a total return of -0.41 percent during the reporting period compared with a total return of -1.247 percent for the Barclays Capital Taxable Municipal Bond Index during the same period. The worst performing parts of the index were the longest maturities and the 5-10 year portion. The fund’s positioning between those two sections led to its relative outperformance of the index.

It should be noted that none of the Barclays Capital indices take into account any operating expenses or transaction costs. An investment cannot be made directly in an index.

Thank you for investing with Dupree Mutual Funds.

Total returns include changes in share price, reinvestment of dividends, and reinvestment of capital gains, if any. Performance
data quoted represents past performance which is not a guarantee of future results. The opinions expressed herein are those of
the funds’ portfolio management and are current as of December 31, 2013. Management’s opinions are not guarantees of
performance or investment results and should not be taken as investment advice. You may lose money investing in the funds.

ii

The illustrations below provide each Fund’s sector allocation and Unaudited

summarize key information about each Fund’s investments.

Kentucky Tax-Free Income Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		3.84%
Aa/AA		86.21%
A		8.66%
Baa/BBB		0.35%
Not Rated		0.94%
		100.00%
COMPOSITION
	% of Net Assets
Miscellaneous Public Improvement		26.92%
Municipal Utility Revenue		14.39%
Turnpikes and Toll Roads Revenue		11.73%
Prerefunded		10.27%
Refunded		9.67%
University Consolidated Education and Building Revenue		5.73%
Hospital and Healthcare Revenue		5.36%
School Improvements		4.68%
Public Facilities Revenue		3.37%
Escrowed to Maturity		3.19%
State and Local Mortgage Revenue		2.15%
Airport Revenue		0.79%
Miscellaneous Revenue		0.24%
Other Assets Less Liabilities		1.51%
		100.00%

Kentucky Tax-Free Short-to-Medium Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		1.90%
Aa/AA		90.39%
A		7.71%
		100.00%
COMPOSITION
	% of Net Assets
Miscellaneous Public Improvement		25.04%
Turnpikes and Toll Roads Revenue		16.60%
School Improvements		15.48%
Refunded		13.15%
University Consolidated Education and Building Revenue		10.00%
Municipal Utility Revenue		7.95%
Public Facilities Revenue		3.87%
Hospital and Healthcare		3.20%
State and Local Mortgage Revenue		1.87%
Prerefunded		0.92%
Other Assets Less Liabilities		1.92%
		100.00%

Alabama Tax-Free Income Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		2.22%
Aa/AA		86.58%
A		9.08%
Baa/BBB		0.58%
Not Rated		1.54%
		100.00%
COMPOSITION
	% of Net Assets
University Consolidated Education and Building Revenue		27.05%
School Improvement Revenue		26.53%
Municipal Utility Revenue		18.68%
Public Facilities Revenue		11.01%
Miscellaneous Public Improvement		7.43%
Prerefunded		5.56%
Escrowed to Maturity		1.62%
Refunded		1.22%
State and Local Mortgage Revenue		0.69%
Industrial Revenue		0.12%
Other Assets Less Liabilities		0.09%
		100.00%

Mississippi Tax-Free Income Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		0.35%
Aa/AA		79.18%
A		20.29%
Not Rated		0.18%
		100.00%
COMPOSITION
	% of Net Assets
University Consolidated Education and Building Revenue		31.35%
Public Facilities Revenue		16.34%
Turnpikes and Toll Roads Revenue		13.40%
Municipal Utility Revenue		9.21%
Miscellaneous Public Improvement		7.48%
School Improvement Revenue		6.38%
Hospital and Healthcare Revenue		4.12%
Refunded		3.81%
Prerefunded		3.71%
Airport Revenue		1.97%
State and Local Mortgage Revenue		0.35%
Escrowed to Maturity		0.29%
Other Assets Less Liabilities		1.59%
		100.00%

iii

The illustrations below provide each Fund’s sector allocation and Unaudited

summarize key information about each Fund’s investments.

Tennessee Tax-Free Income Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		6.68%
Aa/AA		83.22%
A		8.56%
Baa/BBB		0.78%
Not Rated		0.76%
		100.00%
COMPOSITION
	% of Net Assets
Municipal Utility Revenue		41.00%
University Consolidated Education and Building Revenue		12.23%
Public Facilities Revenue		11.56%
Hospital and Healthcare Revenue		8.81%
Prerefunded		6.36%
Refunded		5.87%
State and Local Mortgage Revenue		4.59%
School Improvement Revenue		4.57%
Miscellaneous Public Improvement		2.16%
Escrowed to Maturity		1.23%
Industrial Revenue		0.92%
Other Assets Less Liabilities		0.70%
		100.00%

Tennessee Tax-Free Short-to-Medium Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		3.54%
Aa/AA		77.05%
A		19.02%
Baa/BBB		0.39%
		100.00%
COMPOSITION
	% of Net Assets
Refunded		21.08%
Municipal Utility Revenue		17.22%
Miscellaneous Public Improvement		14.49%
Prerefunded		10.78%
School Improvement Revenue		9.46%
Hospital and Healthcare Revenue		6.80%
State and Local Mortgage Revenue		6.09%
University Consolidated Education and Building Revenue		5.17%
Public Facilities Revenue		3.64%
Airport Revenue		2.41%
Other Assets Less Liabilities		2.86%
		100.00%

North Carolina Tax-Free Income Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		4.25%
Aa/AA		75.35%
A		18.98%
Baa/BBB		1.36%
Not Rated		0.06%
		100.00%
COMPOSITION
	% of Net Assets
Municipal Utility Revenue		21.52%
School Improvement Revenue		16.97%
University Consolidated Education and Building Revenue		16.18%
Public Facilities Revenue		10.78%
Hospital and Healthcare		10.17%
Refunding		7.17%
Miscellaneous Public Improvement		6.55%
Airport Revenue		4.98%
Prefunded		3.01%
Turnpikes and Toll Roads Revenue		2.32%
Other Assets Less Liabilities		0.35%
		100.00%

North Carolina Tax-Free Short-to-Medium Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		0.06%
Aa/AA		83.07%
A		15.30%
Not Rated		1.57%
		100.00%
COMPOSITION
	% of Net Assets
Municipal Utility Revenue		20.82%
School Improvement Revenue		17.38%
Prerefunded		14.44%
Public Facilities Revenue		12.73%
Refunded		7.83%
Miscellaneous Public Improvement		7.33%
University Consolidated Education and Building Revenue		6.68%
Hospital and Healthcare Revenue		5.34%
Airport Revnue		2.31%
Turnpikes and Toll Roads Revenue		1.33%
Lease Revenue		1.00%
State and Local Mortgage Revenue		0.53%
Other Assets Less Liabilities		2.28%
		100.00%

iv

The illustrations below provide each Fund’s sector allocation and Unaudited

summarize key information about each Fund’s investments.

Intermediate Government Bond Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aaa/AAA		100.00%
COMPOSITION
	% of Net Assets
Federal Farm Credit		65.80%
Federal Home Loan Bank		21.21%
Federal National Mortgage Association		5.75%
Federal Home Loan Mortgage Corp		3.95%
Other Assets Less Liabilities		3.29%
		100.00%

Taxable Municipal Bond Series
CREDIT QUALITY (reflects highest credit rating)*	% of Net Assets at Fair Value
Aa/AA		89.68%
A		10.32%
		100.00%
COMPOSITION
	% of Net Assets
Public Facilities Revenue		35.29%
Municipal Utility Revenue		28.17%
School Improvement Revenue		14.21%
Miscellaneous Public Improvement		12.25%
University Consolidated Education and Building Revenue		2.83%
Turnpikes and Toll Roads Revenue		2.79%
Hospital and Healthcare Revenue		2.36%
Other Assets Less Liabilities		2.10%
		100.00%

* Bond ratings reflect the highest credit quality rating assigned to a specific bond by a Nationally Recognized Statistical Rating Organization (NRSRO)

v

DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Alabama Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
27.05% of Net Assets
Mobile AL Spring Hill College Educational Building		5.100	%		09/01/2019	Baa3	$	120,000	$	119,584
AL State Board Education Bishop State Community College		4.600			01/01/2021	A1		100,000		100,043
AL State Private Colleges & Universities Tuskegee University		4.750			09/01/2026	AA-*		500,000		505,510
AL State University Revenue General Tuition and Fee		5.250			09/01/2034	A3/AA-*		75,000		77,516
Auburn University AL General Fee Revenue		5.000			06/01/2032	Aa2/AA-*		45,000		46,413
Auburn University AL General Fee Revenue		5.000			06/01/2027	Aa2/AA-*		300,000		322,368
Auburn University AL General Fee Revenue		5.000			06/01/2033	Aa2/AA-*		420,000		433,411
Auburn University AL General Fee Revenue		5.000			06/01/2038	Aa2/AA-*		600,000		608,808
Auburn University AL General Fee Revenue		5.000			06/01/2022	Aa2/AA-*		50,000		55,284
Auburn University AL General Fee Revenue		5.000			06/01/2036	Aa2/AA-*		150,000		156,023
Jacksonville AL State University Revenue Tuition and Fee		5.125			12/01/2033	AA-*		450,000		460,670
Tuscaloosa AL Public Education Building Authority Student Housing		6.375			07/01/2028	AA-*		250,000		280,017
Tuscaloosa AL Public Education Building Authority Student Housing		6.750			07/01/2033	AA-*		495,000		549,480
University of AL General Revenue		5.000			07/01/2028	Aa2/AA-*/AA+@		325,000		345,630
University of AL General Revenue		5.000			07/01/2032	Aa2/AA-*/AA+@		500,000		515,145
University of AL General Revenue		5.000			07/01/2034	Aa2/AA-*		250,000		258,020
University South AL University Revenue Refunding Tuition		5.000			12/01/2029	Aa1/AA+*		105,000		111,575
University of Southern AL University Revenues Facilities		5.000			08/01/2029	Aa1/AA+*		550,000		572,104
University of South AL University Revenues Facilities Capital		4.750			08/01/2033	Aa1/AA+*		100,000		101,767
										5,619,368
SCHOOL IMPROVEMENT BONDS
26.53% of Net Assets
Montgomery County AL Warrants		5.000			03/01/2028	Aa1/AA*		175,000		185,873
Opelika AL Warrants		5.000			11/01/2031	Aa2/AA*		150,000		159,165
Phenix City AL School Warrants		5.000			08/01/2024	AA-*		80,000		85,480
Scottsboro AL Warrants		5.000			07/01/2028	A+*		250,000		262,425
AL State Public Schools & College Authority Capital Improvement		5.000			12/01/2024	Aa1/AA*		100,000		110,967
AL State Public Schools & College Authority Capital Improvement**		5.000			12/01/2025	Aa1/AA*		640,000		704,608
AL State Public Schools & College Authority Refinancing		5.000			05/01/2024	Aa1/AA*/AA+@		125,000		138,075
Elmore County AL Public Education Cooperative		5.000			08/01/2032	Aa3		50,000		51,906
Etowah County AL Board of Education Capital Outlay Warrants		5.000			09/01/2037	A+*		200,000		203,080
Madison County AL Board of Education Capital Outlay Tax		4.950			09/01/2025	Aa3/AA-*		100,000		106,365
Madison County AL Board of Education Capital Outlay Tax		5.100			09/01/2028	Aa3/AA-*		285,000		301,567
Madison County AL Board of Education Capital Outlay Tax		5.125			09/01/2034	Aa3/AA-*		505,000		522,847
Mobile AL Public Education Building Authority		5.000			03/01/2033	A3/AA-*/AA-@		200,000		204,817
Morgan County AL Board of Education Capital Outlay Warrants**		5.000			03/01/2035	AA-*		1,050,000		1,093,071
Shelby County AL Board of Education Capital Outlay Warrants		5.000			02/01/2031	Aa2/A*		615,000		641,027
Shelby County AL Board of Education Special Tax School Warrants		5.000			02/01/2025	Aa3/A+*		300,000		311,283
Sumter County AL Limited Obligation School Warrants		5.100			02/01/2034	A*		100,000		100,752
Sumter County AL Limited Obligation School Warrants		5.200			02/01/2039	A*		95,000		94,207
Troy AL Public Educational Building Authority Educational		5.250			12/01/2036	A2/AA-*		225,000		233,574
										5,511,089
MUNICIPAL UTILITY REVENUE BONDS
18.68% of Net Assets
Tallassee AL Water Gas and Sewer Warrants		5.125			05/01/2036	A2/AA-*		75,000		78,310
AL Drinking Water Finance Authority Revolving Fund Loan		4.750			08/15/2027	NR		75,000		75,167
Bessemer AL Governmental Utility Services Water Supply		4.750			06/01/2033	A2		100,000		101,159
Birmingham AL Waterworks Board Water Revenue		4.750			01/01/2036	Aa2/AA*		215,000		212,399
Birmingham AL Waterworks Board Water Revenue		5.000			01/01/2026	Aa2/AA*		80,000		86,618
Birmingham AL Waterworks Board Water Revenue		5.000			01/01/2038	Aa2/AA*		100,000		102,107
Chatom AL Industrial Board Gulf Opportunity Zone		5.000			08/01/2037	A3/AA-*/A-@		150,000		154,400
Cullman AL Utility Board Water Revenue		4.750			09/01/2037	Aa3/AA-*		400,000		400,656
Cullman County AL Water Revenue		5.000			05/01/2021	Baa1/A+*		125,000		130,090
Fort Payne AL Waterworks Board Water Revenue		4.750			07/01/2034	AA-*		100,000		102,282
Huntsville AL Water Systems Revenue		5.000			11/01/2033	Aa1/AAA*		300,000		317,811
Jasper AL Water Works and Sewer Board Utility Revenue		5.000			06/01/2030	A+*		455,000		481,567

The accompanying notes are an integral part of the financial statements.

1

DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Alabama Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
Limestone County AL Water and Sewer Authority Water Revenue		5.000	%		12/01/2029	A+*	$	275,000	$	278,566
Muscle Shoals AL Utilities Board Water and Sewer Revenue		5.750			12/01/2033	AA-*		430,000		464,864
North Marshall AL Utilities Board Water Revenue		5.100			10/01/2030	AA-*		375,000		393,323
Opelika AL Water Board Revenue		5.000			06/01/2037	Aa3/AA-*		250,000		256,943
Opelika AL Water Board Revenue		5.250			06/01/2036	Aa3/A+*		70,000		72,776
Phenix City AL Water and Sewer Revenue		5.000			08/15/2034	A3/AA-*/AA-@		90,000		93,386
West Morgan East Lawrence AL Water and Sewer Revenue		4.750			08/15/2030	AA-*		75,000		76,750
										3,879,174
PUBLIC FACILITIES REVENUE BONDS
11.01% of Net Assets
Anniston AL Public Building Authority DHR Project		5.250			05/01/2030	AA-*		50,000		53,899
Anniston AL Public Building Authority Revenue		5.500			05/01/2033	AA-*		200,000		213,055
Anniston AL Public Building Authority		5.000			03/01/2032	A2/AA-*		400,000		417,592
Bessemer AL Public Educational Building Authority Revenue		5.000			07/01/2030	AA-*		250,000		263,892
Huntsville AL Public Building Authority Lease Revenue		5.000			10/01/2027	Aa1/AA+*		375,000		400,684
Huntsville AL Public Building Authority Lease Revenue		5.000			10/01/2033	Aa1/AA+*		175,000		181,571
Lowndes County AL Warrants		5.250			02/01/2037	A2/AA-*		250,000		254,873
Montgomery AL Warrants		5.000			02/01/2030	A1/AA*		300,000		319,716
Montgomery County AL Public Building Authority Revenue		5.000			03/01/2031	Aa2/AA-*		175,000		182,058
										2,287,340
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
7.43% of Net Assets
Tuscaloosa AL Warrants		5.000			10/15/2034	Aa1/AA+*		175,000		182,296
Tuscaloosa AL Warrants		5.125			01/01/2039	Aa1/AA+*		150,000		155,720
Daphne AL Warrants		5.000			04/01/2023	Aa2/AA*		250,000		267,670
Mobile AL Refunding Warrants		5.000			02/15/2027	Aa2/AA-*		335,000		355,137
AL Incentives Financing Authority Special Obligation		5.000			09/01/2029	AA-*		125,000		131,274
AL State Incentives Financing Authority Special Obligation		5.000			09/01/2037	Aa3/A+*		450,000		451,539
										1,543,636
PREREFUNDED BONDS
5.56% of Net Assets
Albertville AL Warrants		5.000			02/01/2035	AA-*		110,000		129,186
Enterprise AL Warrants General Obligation		5.000			10/01/2019	NR		55,000		56,918
Enterprise AL Warrants General Obligation		5.000			10/01/2023	NR		50,000		51,751
Huntsville AL Health Care Authority		5.000			06/01/2024	A1/A*		100,000		106,580
Montgomery AL Warrants		5.000			01/01/2023	A1/AA*		80,000		87,323
Morgan County AL Warrants		5.000			04/01/2029	Aa3		25,000		25,295
Oxford AL Warrants		5.000			10/01/2036	Aa2		50,000		54,568
Phenix City AL School Warrants		5.000			02/01/2017	NR		120,000		135,594
Tuscaloosa AL Warrants		5.000			01/01/2030	Aa1/AA+*		150,000		153,203
University of AL General Revenue		5.000			07/01/2034	Aa2/AA-*/AA+@		350,000		354,374
										1,154,792
ESCROWED TO MATURITY BONDS
1.62% of Net Assets
West Morgan — East Lawrence Water Authority AL Water Revenue		5.000			08/15/2025	A2/AA-*		300,000		335,862
REFUNDING BONDS
1.22% of Net Assets
Muscle Shoals AL Refunded Warrants		4.600			08/01/2024	Aa3		250,000		252,858
STATE AND LOCAL MORTGAGE/HOUSING BONDS
.69% of Net Assets
AL Housing Finance Authority Single Family Mortgage Revenue		5.375			10/01/2033	Aaa		140,000		143,646

The accompanying notes are an integral part of the financial statements.

2

DUPREE MUTUAL FUNDS — ALABAMA TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Alabama Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
INDUSTRIAL REVENUE/POLLUTION CONTROL BONDS
.12% of Net Assets
Auburn AL Industrial Development Board Facilities Revenue		6.200	%		11/01/2020	A*	$	25,000	$	24,998
Total Investments (cost $20,449,346) (See (a) below for further explanation) 99.91% of Net Assets									$	20,752,763
Other assets in excess of liabilities .09%										18,859
Net Assets 100%									$	20,771,622

* Standard and Poor’s Corporation

** Segregated security — see footnote 8

@ Fitch’s Investors Service

(All other ratings by Moody's Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $20,449,248 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	521,341
Unrealized depreciation		(217,826	)
Net unrealized appreciation	$	303,515

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		20,752,763
Level 3	Significant Unobservable Inputs		—
		$	20,752,763

The accompanying notes are an integral part of the financial statements.

3

ALABAMA TAX-FREE INCOME SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $20,449,346)		$	20,752,763
Cash			1,265
Interest receivable			304,523
Total assets			21,058,551
LIABILITIES:
Payable for:
Distributions to shareholders	100,995
Fund shares redeemed	53,604
Investment advisory fee	7,455
Transfer agent fee	3,416
Trustee fees	655
Notes payable	111,000
Accrued expenses	9,804
Total liabilities			286,929
NET ASSETS:
Capital			20,516,563
Accumulated net investment income			98
Net accumulated realized loss on investment transactions			(48,456	)
Net unrealized appreciation in value of investments			303,417
Net assets at value		$	20,771,622
NET ASSET VALUE, offering price and redemption price per share ($20,771,622 ÷ 1,747,160 shares outstanding; unlimited number of shares authorized; no par value)		$	11.89

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	476,526
Expenses:
Investment advisory fee		56,553
Transfer agent fee		17,098
Custodian expense		4,945
Professional fees		2,578
Trustee fees		1,378
Other expenses		9,242
Total expenses		91,794
Fees waived by Adviser		(9,752	)
Custodian expense reduction		(2	)
Net expenses		82,040
Net investment income		394,486
Realized and unrealized loss on investments:
Net realized loss		(48,453	)
Net change in unrealized appreciation/depreciation		(351,300	)
Net realized and unrealized loss on investments		(399,753	)
Net decrease in net assets resulting from operations	$	(5,267	)

The accompanying notes are an integral part of the financial statements.

4

ALABAMA TAX-FREE INCOME SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	394,486		$	842,102
Net realized gain/(loss) on investments		(48,453	)		30,045
Net change in unrealized appreciation/depreciation		(351,300	)		(687,104	)
Net increase/(decrease) in net assets resulting from operations		(5,267	)		185,043
Distributions from net investment income		(394,478	)		(842,439	)
Distributions from capital gains		(29,276	)		(16,538	)
Net fund share transactions (Note 4)		(3,099,232	)		2,062,926
Total increase/(decrease)		(3,528,253	)		1,388,992
Net assets:
Beginning of period		24,299,875			22,910,883
End of period	$	20,771,622		$	24,299,875
Accumulated net investment income	$	98		$	90

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/2013			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of period		$12.10			$12.41			$11.72			$11.77			$11.40			$11.43
Income from investment operations:
Net investment income		0.21			0.43			0.44			0.45			0.46			0.46
Net gains/(losses) on securities, both realized and unrealized		(0.20	)		(0.30	)		0.70			(0.05	)		0.37			(0.03	)
Total from investment operations		0.01			0.13			1.14			0.40			0.83			0.43
Less distributions:
Distributions from net investment income		(0.21	)		(0.43	)		(0.44	)		(0.45	)		(0.46	)		(0.46	)
Distributions from capital gains		(0.01	)		(0.01	)		(0.01	)		—			—			—
Total distributions		(0.22	)		(0.44	)		(0.45	)		(0.45	)		(0.46	)		(0.46	)
Net asset value, end of period		$11.89			$12.10			$12.41			$11.72			$11.77			$11.40
Total return		0.15%	(b)		0.94%			9.81%			3.45%			7.40%			3.95%
Net assets, end of period (in thousands)		$20,772			$24,300			$22,911			$21,235			$19,853			$14,262
Ratio of net expenses to average net assets (a)		0.73%	(c)		0.70%			0.68%			0.60%			0.47%			0.45%
Ratio of net investment income to average net assets		3.52%	(c)		3.40%			3.59%			3.83%			3.94%			4.14%
Portfolio turnover		1.17%	(b)		6.46%			7.80%			4.70%			15.73%			14.06%

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions.

Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser	Custodian
.04%(c)		0%	(c)	For the six months ended December 31, 2013
.08%		0%		For the year ended June 30, 2013
.10%		0%		For the year ended June 30, 2012
.18%		0%		For the year ended June 30, 2011
.33%		0%		For the year ended June 30, 2010
.37%		.03%		For the year ended June 30, 2009

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

5

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
26.92% of Net Assets
KY Asset Liability Commission General Fund		5.000	%		05/01/2020	Aa3/A+*/A+@	$	2,000,000	$	2,102,100
KY Asset Liability Commission Project Notes		5.000			05/01/2023	Aa3/A+*/A+@		5,600,000		5,859,952
KY Asset Liability Commission General Fund		5.000			05/01/2024	Aa3/A+*/A+@		5,880,000		6,144,953
KY Asset Liability Commission		5.000			05/01/2025	Aa3/A+*/A+@		1,000,000		1,042,490
Ky State Property & Building #93		5.300			02/01/2025	Aa3/AA-*/A+@		7,250,000		7,913,520
KY State Property & Building #93		4.900			02/01/2028	Aa3/AA-*/A+@		500,000		520,160
KY State Property & Building #93		5.300			02/01/2028	Aa3/AA-*/A+@		10,500,000		11,222,505
KY State Property & Building #93		5.000			02/01/2029	Aa3/AA-*/A+@		500,000		523,010
KY State Property & Building #93		5.300			02/01/2029	Aa3/AA-*/A+@		22,640,000		24,273,476
KY State Property & Building #96		5.000			11/01/2029	Aa3/A+*/A+@		5,000,000		5,297,600
KY State Property & Building #98		5.000			08/01/2021	Aa3/A+*/A+@		2,505,000		2,843,851
KY State Property & Building #100		5.000			08/01/2026	Aa3/A+*/A+@		2,000,000		2,166,360
KY State Property & Building #100		5.000			08/01/2027	Aa3/A+*/A+@		1,710,000		1,832,402
KY State Property & Building #100		5.000			08/01/2028	Aa3/A+*/A+@		4,000,000		4,256,600
KY State Property & Building #100		5.000			08/01/2029	Aa3/A+*/A+@		2,500,000		2,640,300
KY State Property & Building #100		5.000			08/01/2030	Aa3/A+*/A+@		9,980,000		10,493,571
KY State Property & Building #100		5.000			08/01/2031	Aa3/A+*/A+@		5,100,000		5,345,565
KY State Property & Building #87		5.000			03/01/2019	Aa3/A+*/A+@		3,000,000		3,311,700
KY State Property & Building #87		5.000			03/01/2022	Aa3/A+*/A+@		1,665,000		1,811,071
KY State Property & Building #87		5.000			03/01/2023	Aa3/A+*/A+@		5,175,000		5,551,637
KY State Property & Building #87		5.000			03/01/2025	Aa3/A+*/A+@		14,835,000		15,775,094
KY State Property & Building #87		5.000			03/01/2026	Aa3/A+*/A+@		8,230,000		8,720,837
KY State Property & Building #87		5.000			03/01/2027	Aa3/A+*/A+@		10,290,000		10,862,227
KY State Property & Building #88		5.000			11/01/2024	Aa3/A+*/A+@		1,355,000		1,461,571
KY State Property & Building #88		4.800			11/01/2027	Aa3/A+*/A+@		5,800,000		6,102,412
KY State Property & Building #76		5.500			08/01/2021	Aa3/A+*/A+@		1,400,000		1,656,620
KY State Property & Building #89		5.000			11/01/2025	Aa3/AA-*/A+@		5,000,000		5,418,500
KY State Property & Building #89		5.000			11/01/2026	Aa3/AA-*/A+@		13,390,000		14,318,328
KY State Property & Building #89		5.000			11/01/2027	Aa3/AA-*/A+@		4,900,000		5,217,275
KY State Property & Building #90		5.400			11/01/2023	Aa3/A+*/A+@		1,200,000		1,348,547
KY State Property & Building #90		5.500			11/01/2028	Aa3/A+*/A+@		24,805,000		27,269,873
KY State Property & Building #91		5.800			04/01/2029	A1/A+*/A@		210,000		229,016
KY State Property & Building #83		5.000			10/01/2017	Aa3/A+*/A+@		5,000,000		5,712,400
KY State Property & Building #106		5.000			10/01/2029	Aa3/A+*/A+@		4,130,000		4,412,285
KY State Property & Building #106		5.000			10/01/2032	Aa3/A+*/A+@		6,000,000		6,253,500
KY State Property & Building #106		5.000			10/01/2030	Aa3/A+*/A+@		7,165,000		7,589,812
KY State Property & Building #106		5.000			10/01/2031	Aa3/A+*/A+@		4,910,000		5,153,094
Ky State Property & Building #106		5.000			10/01/2033	Aa3/A+*/A+@		4,870,000		5,052,333
KY State Property & Building #105		4.800			04/01/2031	A1/A+*/A@		2,110,000		2,160,661
KY State Property & Building #105		4.800			04/01/2032	A1/A+*/A@		2,205,000		2,244,514
KY State Property & Building #105		4.800			04/01/2033	A1/A+*/A@		2,310,000		2,344,419
KY Association of Counties		5.000			02/01/2030	AA-*		625,000		647,294
KY Association of Counties		5.000			02/01/2032	AA-*		1,000,000		1,028,180
KY Association of Counties		5.000			02/01/2035	AA-*		995,000		1,013,388
KY Bond Corporation Finance Program		5.500			02/01/2031	AA-*		1,115,000		1,190,307
Pendleton County KY Multi-County Lease Revenue		6.400			03/01/2019	B*		3,000,000		3,204,390
										251,539,700
MUNICIPAL UTILITY REVENUE BONDS
14.39% of Net Assets
Campbell and Kenton Counties Sanitary District No. 1		5.000			08/01/2025	Aa2/AA*		2,395,000		2,593,809
Campbell and Kenton Counties Sanitary Sewer		5.000			08/01/2026	Aa2/AA*		4,175,000		4,452,178
Campbell and Kenton Counties Sanitary Sewer		5.000			08/01/2027	Aa2/AA*		4,385,000		4,656,212
Campbell and Kenton Counties Sanitary District No. 1		5.000			08/01/2037	Aa2/AA*		11,220,000		11,624,818
KY Infrastructure Authority Wastewater and Drinking Water		5.000			02/01/2027	Aaa/AAA*/AAA@		2,500,000		2,793,750
KY Infrastructure Authority Wastewater and Drinking Water		5.000			02/01/2028	Aaa/AAA*/AAA@		2,000,000		2,216,180
KY Rural Water Financial Corporation Public Project Revenue		5.400			02/01/2020	A+*		395,000		395,470

The accompanying notes are an integral part of the financial statements.

6

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
KY Rural Water Finance Corporation		5.100	%		02/01/2035	A+*	$	525,000	$	540,866
Kentucky Rural Water Financing Corporation		4.500			02/01/2023	A+*		1,085,000		1,185,547
Kentucky Rural Water Financing Corporation		4.500			02/01/2024	A+*		880,000		947,945
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2031	Aa3/AA*/AA-@		2,465,000		2,624,239
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2025	Aa3/AA*/AA-@		3,270,000		3,472,609
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2026	Aa3/AA*/AA-@		3,230,000		3,417,082
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2032	Aa3/AA*/AA-@		4,590,000		4,767,541
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2036	Aa3/AA*/AA-@		2,000,000		2,053,400
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2024	Aa3/AA*		7,000,000		7,612,150
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2025	Aa3/AA*		5,185,000		5,660,102
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2021	Aa3/AA*		2,865,000		3,250,486
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2023	Aa3/AA*		2,500,000		2,774,400
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2034	Aa3/AA*/AA-@		27,730,000		29,107,904
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2022	Aa3		975,000		1,015,999
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2023	Aa3		1,020,000		1,061,616
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2024	Aa3		1,070,000		1,112,030
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/01/2025	Aa3		1,120,000		1,162,906
Louisville & Jefferson County Waterworks		5.000			11/15/2027	Aaa/AAA*		2,000,000		2,159,640
Louisville & Jefferson County Waterworks		5.000			11/15/2031	Aaa/AAA*		10,695,000		11,373,170
Louisville & Jefferson County Metropolitan Sewer District		5.000			05/15/2026	Aa3/AA*		4,775,000		4,955,924
Northern KY Water District		4.500			02/01/2022	Aa3		1,385,000		1,408,213
Northern KY Water District		6.000			02/01/2028	Aa3		1,010,000		1,132,846
Northern KY Water District		6.000			02/01/2031	Aa3		1,000,000		1,104,540
Northern KY Water District		6.500			02/01/2033	Aa3		1,585,000		1,776,847
Northern KY Water District		5.000			02/01/2033	Aa3		3,580,000		3,740,384
Northern KY Water District		5.000			02/01/2026	Aa3		1,000,000		1,090,080
Northern Ky Water District		5.000			02/01/2027	Aa3		4,315,000		4,663,005
Owensboro Water Revenue		5.000			09/15/2025	A1		545,000		588,257
										134,492,145
TURNPIKES/TOLLROAD/HIGHWAY BONDS
11.73% of Net Assets
KY Asset Liability Commission Federal Highway		5.300			09/01/2019	Aa3/AA*/A+@		1,765,000		2,057,443
KY Asset Liability Project		5.000			09/01/2021	Aa3/AA*/A+@		1,570,000		1,785,828
Kentucky Asset Liability Highway Trust		5.000			09/01/2022	Aa3/AA*/A+@		3,500,000		3,917,725
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2022	Aa2/AA+*/A+@		1,625,000		1,725,051
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2023	Aa2/AA+*/A+@		575,000		609,604
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2025	Aa2/AA+*/A+@		2,000,000		2,115,100
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2026	Aa2/AA+*/A+@		4,720,000		5,061,209
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2025	Aa2/AA+*/A+@		3,225,000		3,548,822
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2027	Aa2/AA+*/A+@		9,530,000		10,393,799
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2028	Aa2/AA+*/A+@		2,460,000		2,667,821
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2026	Aa2/AA+*/A+@		4,440,000		4,875,342
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2027	Aa2/AA+*/A+@		3,080,000		3,364,068
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2029	Aa2/AA+*/A+@		10,035,000		10,813,414
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2025	Aa2/AA+*/A+@		3,775,000		4,203,614
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2029	Aa2/AA+*/A+@		5,165,000		5,548,760
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2030	Aa2/AA+*/A+@		1,845,000		1,974,630
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2028	Aa2/AA+*/A+@		4,930,000		5,367,537
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2030	Aa2/AA+*/A+@		1,465,000		1,587,254
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2031	Aa2/AA+*/A+@		9,350,000		10,011,232
KY State Turnpike Economic Development Road Revenue		5.000			07/01/2029	Aa2/AA+*/A+@		7,235,000		7,816,983
Ky State Turnpike Economic Development Road Revenue		5.000			07/01/2032	Aa2/AA+*/A+@		8,755,000		9,296,322
KY Asset Liability Commission Federal Highway Trust		5.300			09/01/2025	Aa3/AA*/A+@		3,400,000		3,810,176
Kentucky State Turnpike Economic Development		5.000			07/01/2024	Aa2/AA+*/A+@		1,500,000		1,697,160
KY Turnpike Authority Economic Development Road Revenue		5.000			07/01/2033	Aa2/AA+*/A+@		5,000,000		5,330,850
										109,579,744

The accompanying notes are an integral part of the financial statements.

7

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
PREREFUNDED BONDS
10.27% of Net Assets
Barren County KY School District Finance Corporation		4.800	%		08/01/2022	Aa3	$	3,085,000	$	3,166,413
Boone County KY School District Finance Corporation		5.000			05/01/2024	Aa3		1,765,000		1,792,975
Davies County KY School District Finance Corporation		5.000			06/01/2021	Aa3		1,155,000		1,177,730
Eastern Kentucky University Consolidated Education Building		5.000			05/01/2021	Baa1/A*		1,580,000		1,604,601
Fayette County KY School District Finance Corporation		5.000			04/01/2024	Aa2/AA-*		6,985,000		7,393,343
Fayette County KY School District Finance Corporation		5.000			04/01/2025	Aa2/AA-*		7,340,000		7,769,096
Jefferson County KY School District Finance Corporation		4.500			07/01/2023	Aa2/AA-*		2,500,000		2,746,825
Jefferson County KY School District Finance Corporation		4.600			07/01/2025	Aa2/AA-*		7,545,000		8,313,307
Jefferson County KY School District Finance Corporation		5.000			07/01/2026	Aa2/AA-*		5,025,000		5,583,428
Kenton County KY School District Finance Corporation		5.000			06/01/2021	Aa3		4,055,000		4,134,802
KY State Property & Building #85		5.000			08/01/2020	Aa3/AA-*		5,760,000		6,182,496
KY State Property & Building #85		5.000			08/01/2022	Aa3/AA-*		5,200,000		5,581,420
KY State Property & Building #85		5.000			08/01/2024	Aa3/AA-*		8,300,000		8,908,805
KY State Property & Building #85		5.000			08/01/2025	Aa3/AA-*		2,500,000		2,685,875
Knox County General Obligation		5.600			06/01/2036	NR		2,490,000		2,734,618
Letcher County KY School District Finance Corporation		5.000			06/01/2022	Aa3		1,755,000		1,788,872
Letcher County KY School District Finance Corporation		5.000			06/01/2024	Aa3		1,930,000		1,967,249
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2015	Aa3/AA-*		1,880,000		2,001,166
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2015	Aa3/AA-*		1,970,000		2,096,967
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2015	Aa3/AA-*		2,065,000		2,198,089
Louisville & Jefferson County KY Metropolitan Sewer District		5.000			05/15/2015	Aa3/AA-*		2,165,000		2,304,534
Louisville & Jefferson County Metropolitan Health — St. Mary’s		6.100			02/01/2037	NR		1,300,000		1,564,745
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2026	Aa3/AA-*		9,225,000		9,819,552
Marshall County KY School District Finance Corporation		5.000			06/01/2022	Aa3		1,400,000		1,427,440
Spencer County KY School District Finance Corporation		5.000			07/01/2023	Aa3		1,000,000		1,023,670
										95,968,018
REFUNDED BONDS
9.67% of Net Assets
KY State Property & Building #80		5.300			05/01/2018	Aa3/A+*/A+@		2,940,000		3,404,843
KY State Property & Building #80		5.300			05/01/2020	Aa3/A+*/A+@		1,000,000		1,165,220
KY State Property & Building #83		5.000			10/01/2018	Aa3/A+*/A+@		17,750,000		20,543,494
KY State Property & Building #83		5.300			10/01/2020	Aa3/A+*/A+@		24,220,000		28,381,723
KY State Property & Building #84		5.000			08/01/2019	Aa3/A+*/A+@		10,000,000		11,594,400
KY State Property & Building #84		5.000			08/01/2021	Aa3/A+*/A+@		310,000		356,299
KY State Property & Building #84		5.000			08/01/2022	Aa3/A+*/A+@		18,000,000		20,632,680
KY State Property & Building #102		5.000			05/01/2024	Aa3/A+*/A+@		405,000		451,450
KY State Property & Building #104		5.000			11/01/2021	A1/A+*/A@		2,085,000		2,381,925
KY State Property & Building #104		5.000			11/01/2022	A1/A+*/A@		1,290,000		1,465,259
										90,377,293
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
5.73% of Net Assets
Boyle County KY College Improvement — Centre College — A		4.800			06/01/2032	A3/AA-*		5,330,000		5,385,005
KY Asset Liability Commission University of KY Project Note		5.000			10/01/2023	Aa2/AA-*		8,075,000		8,569,836
KY Asset Liability Commission University of KY Project Note		5.000			10/01/2024	Aa2/AA-*		7,405,000		7,854,780
KY Asset Liability Commission University of KY Project Note		5.000			10/01/2025	Aa2/AA-*		3,700,000		3,924,738
KY Asset Liability Commission University of KY Project Note		5.000			10/01/2024	Aa2/AA-*		5,445,000		5,939,406
KY Asset Liability Commission University of KY Project Note		5.000			10/01/2026	Aa2/AA-*		6,090,000		6,550,039
Louisville & Jefferson County University of Louisville Housing		5.000			06/01/2025	NR		2,030,000		2,075,350
Louisville & Jefferson County Univeristy of Louisville		4.800			03/01/2028	Aa2/AA-*		3,250,000		3,425,435
University of Louisville General Receipts		5.000			09/01/2029	Aa2/AA-*		2,280,000		2,438,460
University of Louisville		5.000			09/01/2030	Aa2/AA-*		440,000		467,289
University of Louisville		5.000			09/01/2031	Aa2/AA-*		2,580,000		2,720,868
Western KY University		4.800			09/01/2033	Aa3/A+*		2,505,000		2,629,649
Western KY University		5.000			05/01/2032	Aa3/A+*		1,500,000		1,586,805
										53,567,660

The accompanying notes are an integral part of the financial statements.

8

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
HOSPITAL AND HEALTHCARE BONDS
5.36% of Net Assets
Lexington-Fayette Urban County Government Healthcare		5.300	%		06/01/2028	Aa3/A+*/A+@	$	1,000,000	$	1,051,320
Lexington-Fayette Urban County Government Public Facilities		5.000			06/01/2033	Aa3/A+*/A+@		5,000,000		5,064,700
Lexington-Fayette Urban County Government		5.300			06/01/2032	Aa3/A+*/A+@		1,500,000		1,554,915
Louisville & Jefferson County Metropolitan Health—Norton Healthcare		5.500			10/01/2033	A-*/A-@		2,000,000		2,016,340
KY Development Finance Authority — St. Elizabeth		5.500			05/01/2039	AA*/AA@		1,000,000		1,046,880
KY Development Finance Authority — Baptist Heathcare		5.400			08/15/2024	A2/A+@		1,205,000		1,304,883
KY Development Finance Authority — Baptist Healthcare		5.600			08/15/2027	A2/A+@		4,855,000		5,263,548
KY Development Finance Authority — St. Elizabeth		5.100			05/01/2029	AA*/AA@		2,750,000		2,856,948
KY Development Finance Authority — St. Elizabeth		5.400			05/01/2034	AA*/AA@		2,560,000		2,694,733
KY Development Finance Authority — Catholic Health		5.000			05/01/2029	A1/A+*/A+@		2,500,000		2,515,200
KY Development Finance Authority — Catholic Health		5.000			05/01/2029	A1/A+*/A+@		2,410,000		2,488,349
Louisville & Jefferson Metropolitan Government Health		5.000			10/01/2026	A-*/A-@		535,000		540,157
Louisville & Jefferson County Metropolitan Health — Norton Health		5.000			10/01/2030	A-*/A-@		2,000,000		1,962,040
Louisville & Jefferson County Metropolitan Health — Norton Health		5.300			10/01/2036	A-*/A-@		3,460,000		3,387,755
Louisville & Jefferson County Catholic Health Initiatives		5.000			12/01/2030	A1/A+*/A+@		1,000,000		1,042,500
Louisville & Jefferson County Catholic Health Initiatives		5.000			12/01/2035	A1/A+*/A+@		7,685,000		7,544,134
Louisville and Jefferson County Catholic Health Initiatives		5.000			12/01/2031	A1/A+*/A+@		2,750,000		2,837,560
Pike County KY Mortgage Revenue — Phelps Regional Health		5.700			09/20/2027	NR		2,320,000		2,320,905
Warren County Hospital		5.000			04/01/2028	A*		2,475,000		2,546,849
										50,039,716
SCHOOL IMPROVEMENT BONDS
4.68% of Net Assets
Laurel County KY School District Finance Corporation		4.800			06/01/2026	Aa3		1,000,000		1,029,820
Campbell County KY School District Finance Corporation		4.500			08/01/2023	Aa3		980,000		1,029,725
Fayette County School District Finance Corporation		5.000			06/01/2031	Aa3/AA-*		3,705,000		3,906,588
Fayette County School District Finance Corporation		5.000			10/01/2029	Aa3/AA-*		3,660,000		3,916,237
Fayette County School District Finance Corporation		5.000			10/01/2032	Aa3/AA-*		3,615,000		3,785,230
Fayette County School District Finance Corporation		5.000			10/01/2033	Aa3/AA-*		4,385,000		4,549,174
Franklin County School Building Revenue		4.800			05/01/2027	Aa3		3,570,000		3,750,428
Hardin County School District Finance Corporation		4.800			06/01/2027	Aa3		1,250,000		1,282,038
Hardin County School District Finance Corporation		5.000			05/01/2030	Aa3		450,000		468,171
Hardin County School District Finance Corporation		5.000			05/01/2031	Aa3		470,000		484,810
Jefferson County KY School District Finance Corporation		4.800			12/01/2026	Aa2/AA-*		3,770,000		3,975,540
Jefferson County KY School District Finance Corporation		4.800			06/01/2027	Aa2/AA-*		3,000,000		3,145,320
Kenton County School District Finance Corporation		5.000			02/01/2029	Aa3		3,270,000		3,405,215
Laurel County KY School District Finance Corporation		4.600			08/01/2026	Aa3		3,150,000		3,279,434
Scott County School District Finance Corporation		4.500			01/01/2025	Aa3		4,890,000		5,231,762
Shelby County KY School District Finance Corporation		5.000			02/01/2028	Aa3		500,000		520,910
										43,760,402
PUBLIC FACILITIES REVENUE BONDS
3.37% of Net Assets
Bracken County Public Property		5.000			08/01/2029	Aa3		840,000		890,501
Franklin County Public Properties Justice Center		5.000			04/01/2029	Aa3		2,630,000		2,746,798
Wolfe County Public Property		5.000			04/01/2030	Aa3		2,855,000		3,050,396
Taylor County Detention Facility		4.800			09/01/2027	Aa3		2,110,000		2,133,569
Louisville & Jefferson County International Convention Center		4.500			12/01/2023	A2/AA-*		2,340,000		2,383,454
Louisville & Jefferson County International Convention Center		4.500			12/01/2024	A2/AA-*		2,250,000		2,281,478
Louisville & Jefferson County International Convention Center		4.600			12/01/2025	A2/AA-*		1,490,000		1,510,026
Louisville & Jefferson County Metropolitan Parking Authority		5.000			12/01/2022	Aa2/AA*		625,000		695,512
Louisville & Jefferson County Metropolitan Parking Authority		5.800			12/01/2034	Aa2/AA*		2,750,000		3,101,478
River City, Inc. Parking Authority		4.800			06/01/2027	Aa2/AA*		750,000		802,868
River City, Inc. Parking Authority		4.800			06/01/2028	Aa2/AA*		940,000		998,627
River City, Inc. Parking Authority		4.800			06/01/2030	Aa2/AA*		1,025,000		1,072,499
River City, Inc. Parking Authority		4.800			06/01/2029	Aa2/AA*		1,160,000		1,220,227
River City, Inc. Parking Authority		4.800			06/01/2031	Aa2/AA*		1,270,000		1,317,816

The accompanying notes are an integral part of the financial statements.

9

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
River City, Inc. Parking Authority		4.800	%		06/01/2029	Aa2/AA*	$	980,000	$	1,030,881
River City, Inc. Parking Authority		5.000			06/01/2033	Aa2/AA*		1,395,000		1,471,014
River City, Inc. Parking Authority		5.000			06/01/2031	Aa2/AA*		1,080,000		1,150,048
River City Inc. Parking Authority		5.000			06/01/2032	Aa2/AA*		1,130,000		1,196,965
Warren County Downtown Economic Development Authority		5.000			06/01/2038	AA-*		2,345,000		2,430,170
										31,484,327
ESCROWED TO MATURITY BONDS
3.19% of Net Assets
Jefferson County KY Health Facilities — Alliant Health		5.100			10/01/2017	A*		3,980,000		4,209,527
Jefferson County KY Health Facilities — Alliant Health		5.100			10/01/2018	A*		23,905,000		25,557,791
										29,767,318
STATE AND LOCAL MORTGAGE/HOUSING BONDS
2.15% of Net Assets
Greater KY Housing Assistance Corporation — Chenowith Woods		6.100			01/01/2024	Baa1/A*		390,000		390,218
KY Economic Development Finance Authority — Christian Care		5.400			11/20/2035	AA+*		1,905,000		1,965,484
KY Housing Corporation Country Place Apartments		4.800			04/20/2031	AA+*		935,000		946,108
KY Housing Corporation		4.800			07/01/2032	Aaa/AAA*		1,265,000		1,271,667
KY Housing Corporation		4.900			07/01/2028	Aaa/AAA*		2,000,000		2,032,120
KY Housing Corporation		5.000			07/01/2033	Aaa/AAA*		2,270,000		2,290,294
KY Housing Corporation		4.900			07/01/2023	Aaa/AAA*		1,535,000		1,569,383
KY Housing Corporation		4.900			07/01/2029	Aaa/AAA*		3,200,000		3,265,440
KY Housing Corporation		5.200			07/01/2039	Aaa/AAA*		2,185,000		2,221,555
KY Housing Corporation		4.800			07/01/2035	Aaa/AAA*		4,140,000		4,140,000
										20,092,269
AIRPORT BONDS
.79% of Net Assets
Lexington-Fayette Urban County Airport Board		5.000			07/01/2030	Aa2/AA*		1,250,000		1,322,700
Lexington-Fayette Urban County Airport Board		5.000			07/01/2032	Aa2/AA*		1,430,000		1,500,642
Lexington-Fayette Urban County Airport Board		5.000			07/01/2033	Aa2/AA*		1,520,000		1,585,193
Lexington-Fayette Urban County Airport Board		5.000			07/01/2038	Aa2/AA*		1,720,000		1,759,440
Lexington-Fayette Urban County Government Airport		5.000			07/01/2028	Aa2/AA*		1,170,000		1,253,608
										7,421,583
MISCELLANEOUS REVENUE BONDS
.24% of Net Assets
KY State Property & Building #106		5.000			10/01/2028	Aa3/A+*/A+@		2,030,000		2,187,345
Total Investments (cost $893,280,835) (See (a) below for further explanation) 98.49% of Net Assets									$	920,277,520
Other assets in excess of liabilities 1.51%										14,057,209
Net Assets 100%									$	934,334,729

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $893,247,317 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	35,718,910
Unrealized depreciation		(8,688,707	)
Net unrealized appreciation	$	27,030,203

The accompanying notes are an integral part of the financial statements.

10

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		920,277,520
Level 3	Significant Unobservable Inputs		—
		$	920,277,520

The accompanying notes are an integral part of the financial statements.

11

KENTUCKY TAX-FREE INCOME SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $893,280,835)		$	920,277,520
Cash			9,130,704
Receivable for fund shares sold			18,719
Interest receivable			12,751,515
Total assets			942,178,458
LIABILITIES:
Payable for:
Investments purchased	2,147,136
Distributions to shareholders	3,758,175
Fund shares redeemed	1,194,791
Investment advisory fee	300,971
Transfer agent fee	97,438
Trustees fees	49,961
Accrued expenses	295,257
Total liabilities			7,843,729
NET ASSETS:
Capital			907,107,089
Accumulated net investment income			33,518
Net accumulated realized gain on investment transactions			197,437
Net unrealized appreciation in value of investments			26,996,685
Net assets at value		$	934,334,729
NET ASSET VALUE, offering price and redemption price per share ($934,334,729 ÷ 122,112,898 shares outstanding; unlimited number of shares authorized; no par value)		$	7.65

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	18,864,075
Expenses:
Investment advisory fee		1,783,862
Transfer agent fee		577,828
Custodian expense		47,997
Professional fees		102,085
Trustees fees		54,390
Other expenses		113,051
Total expenses		2,679,213
Custodian expense reduction		(106	)
Net expenses		2,679,107
Net investment income		16,184,968
Realized and unrealized gain/(loss) on investments:
Net realized gain		1,184,818
Net change in unrealized appreciation/depreciation		(11,249,916	)
Net realized and unrealized loss on investments		(10,065,098	)
Net increase in net assets resulting from operations	$	6,119,870

The accompanying notes are an integral part of the financial statements.

12

KENTUCKY TAX-FREE INCOME SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	16,184,968		$	33,453,684
Net realized gain on investments		1,184,818			382,491
Net change in unrealized appreciation/depreciation		(11,249,916	)		(31,045,800	)
Net increase in net assets resulting from operations		6,119,870			2,790,375
Distributions from net investment income		(16,180,744	)		(33,471,869	)
Distributions from capital gains		(1,302,574	)		(146,341	)
Net fund share transactions (Note 4)		(2,578,199	)		(10,299,757	)
Total (decrease)		(13,941,647	)		(41,127,592	)
Net assets:
Beginning of period		948,276,376			989,403,968
End of period	$	934,334,729		$	948,276,376
Accumulated net investment income	$	33,518		$	29,294

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months Ended 12/31/13			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year	$	7.74		$	7.99		$	7.63		$	7.67		$	7.49		$	7.39
Income from investment operations:
Net investment income		0.13			0.27			0.28			0.29			0.29			0.29
Net gains/(losses) on securities,
both realized and unrealized		(0.08	)		(0.25	)		0.39			(0.02	)		0.20			0.11
Total from investment operations		0.05			0.02			0.67			0.27			0.49			0.40
Less distributions:
Distributions from net investment income		(0.13	)		(0.27	)		(0.28	)		(0.29	)		(0.29	)		(0.29	)
Distributions from capital gains		(0.01	)		0.00	(b)		(0.03	)		(0.02	)		(0.02	)		(0.01	)
Total distributions		(0.14	)		(0.27	)		(0.31	)		(0.31	)		(0.31	)		(0.30	)
Net asset value, end of period	$	7.65		$	7.74		$	7.99		$	7.63		$	7.67		$	7.49
Total return		0.71%	(c)		0.17%			8.97%			3.57%			6.58%			5.65%
Net assets, end of period (in thousands)	$	934,335		$	948,276		$	989,404		$	896,625		$	882,897		$	788,923
Ratio of net expenses to average net assets (a)		0.58%	(d)		0.57%			0.57%			0.58%			0.58%			0.58%
Ratio of net investment income to average net assets		3.48%	(d)		3.35%			3.60%			3.78%			3.81%			3.99%
Portfolio turnover		6.23%	(c)		7.02%			8.39%			11.42%			4.76%			6.09%

(a) Percentages are after custodian reduction for which no recovery will be sought.

Percentages before custodian reductions were:

0.58%	(d)	For the six months ended December 31, 2013
0.57%		For the year ended June 30, 2013
0.57%		For the year ended June 30, 2012
0.58%		For the year ended June 30, 2011
0.58%		For the year ended June 30, 2010
0.58%		For the year ended June 30, 2009

(b) Rounds to less than $0.01.

(c) Not annualized

(d) Annualized

The accompanying notes are an integral part of the financial statements.

13

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
25.04% of Net Assets
KY State Property & Building #94		5.000	%		05/01/2017	Aa2/A+*/A+@	$	500,000	$	561,544
KY State Property & Building #95		5.000			08/01/2017	Aa3/A+*/A+@		200,000		227,482
KY State Property & Building #100		5.000			08/01/2019	Aa3/A+*/A+@		100,000		115,887
KY State Property & Building #100		5.000			08/01/2017	Aa3/A+*/A+@		500,000		568,704
KY State Property & Building #87		5.000			03/01/2017	Aa3/A+*/A+@		850,000		954,295
KY State Property & Building #87		5.000			03/01/2018	Aa3/A+*/A+@		100,000		111,573
KY State Property & Building #87		5.000			03/01/2020	Aa3/A+*/A+@		4,500,000		4,931,010
KY State Property & Building #88		5.000			11/01/2014	Aa3/A+*/A+@		250,000		259,727
KY State Property & Building #88		5.000			11/01/2015	Aa3/A+*/A+@		955,000		1,033,511
KY State Property & Building #89		5.000			11/01/2015	Aa3/AA-*/A+@		2,230,000		2,413,328
KY State Property & Building #89		3.800			11/01/2017	Aa3/AA-*/A+@		100,000		109,722
KY State Property & Building #76		5.500			08/01/2017	Aa3/A+*/A+@		190,000		219,439
KY State Property & Building #76		5.500			08/01/2018	Aa3/A+*/A+@		1,415,000		1,664,083
KY State Property & Building #89		5.000			11/01/2020	Aa3/AA-*/A+@		200,000		227,408
KY State Property & Building #90		5.000			11/01/2015	Aa3/A+*/A+@		250,000		270,407
KY State Property & Building #90		5.000			11/01/2018	Aa3/A+*/A+@		250,000		289,883
KY State Property & Building #90		5.800			11/01/2019	Aa3/A+*/A+@		200,000		236,408
KY State Property & Building #90		5.000			11/01/2020	Aa3/A+*/A+@		495,000		563,325
KY State Property & Building #83		5.000			10/01/2017	Aa3/A+*/A+@		100,000		114,248
KY State Property & Building #93		5.300			02/01/2018	Aa3/A+*/A+@		510,000		586,123
KY State Property & Building #93		5.300			02/01/2021	Aa3/AA-*/A+@		200,000		226,404
KY State Property & Building #85		5.000			08/01/2016	Aa3/AA-*/A+@		835,000		891,847
KY State Property & Building #106		5.000			10/01/2021	Aa3/A+*/A+@		750,000		864,203
KY State Property & Building #99		5.000			11/01/2021	Aa3/A+*/A+@		1,000,000		1,136,590
KY Asset Liability Commission		5.000			05/01/2016	Aa3/A+*/A+@		1,000,000		1,058,200
KY Association of Counties		4.300			02/01/2017	AA-*		500,000		535,955
KY Association of Counties		4.000			02/01/2018	AA-*		115,000		126,585
KY Association of Counties		4.300			02/01/2019	AA-*		255,000		282,076
										20,579,967
TURNPIKES/TOLLROAD/HIGHWAY BONDS
16.60% of Net Assets
KY Asset Liability Project Notes		5.000			09/01/2016	Aa3/AA*/A+@		2,000,000		2,102,380
KY Asset Liability Project Notes		5.000			09/01/2015	Aa3/AA*/A+@		275,000		295,130
KY Asset Liability Project Notes		4.500			09/01/2016	Aa3/AA*/A+@		175,000		193,026
KY Asset Liability Project Notes		5.000			09/01/2017	Aa3/AA*/A+@		1,500,000		1,713,720
KY Asset Liability Projects — Federal Highway		4.200			09/01/2018	Aa3/AA*/A+@		1,500,000		1,641,134
KY Asset Liability Project Notes		4.300			09/01/2019	Aa3/AA*/A+@		1,400,000		1,518,426
KY Turnpike Authority Economic Development		5.000			07/01/2019	Aa2/AA+*/A+@		2,250,000		2,394,113
KY Turnpike Authority Economic Development		5.000			07/01/2017	Aa2/AA+*/A+@		2,570,000		2,836,638
KY Turnpike Authority Economic Development		4.100			07/01/2019	Aa2/AA+*/A+@		105,000		115,699
KY Turnpike Authority Economic Development		5.000			07/01/2016	Aa2/AA+*/A+@		750,000		831,173
										13,641,439
SCHOOL IMPROVEMENT BONDS
15.48% of Net Assets
KY Interlocal School Transportation Assistance Equipment		3.800			03/01/2015	Aa3		770,000		770,601
Boone County School District Finance Corporation		4.000			08/01/2018	Aa3		145,000		150,742
Breathitt County School District Finance Corporation		3.900			07/01/2017	Aa3		280,000		291,102
Bullitt County KY School District Finance Corporation		4.000			10/01/2014	Aa3		150,000		154,143
Campbell County School District Finance Corporation		4.400			08/01/2019	Aa3		875,000		938,735
Corbin KY Independent School District		4.000			02/01/2018	Aa3		300,000		321,387
Daviess County School District Finance Corporation		4.300			08/01/2019	Aa3		100,000		107,061
Fayette County School District Finance Corporation		4.000			06/01/2019	Aa3/AA-*		140,000		146,696
Fayette County School District Finance Corporation		4.400			05/01/2021	Aa3/AA-*		200,000		213,968
Fayette County School District Finance Corporation		4.000			06/01/2022	Aa3/AA-*		1,000,000		1,060,570
Gallatin County School District Finance Corporation		4.000			05/01/2016	Aa3		175,000		187,919
Grant County School District Finance Corporation		3.800			06/01/2017	Aa3		190,000		203,547

The accompanying notes are an integral part of the financial statements.

14

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
Hardin County School District Finance Corporation		4.000	%		02/01/2019	Aa3	$	1,475,000	$	1,509,486
Hazard KY Independent School District Finance Corporation		3.900			09/01/2017	Aa3		200,000		208,480
Jefferson County School District Finance Corporation		5.300			01/01/2017	Aa2/AA-*		200,000		224,554
Jessamine County KY School District		4.100			01/01/2018	Aa3		100,000		102,621
Johnson County School District Finance Corporation		3.000			12/01/2019	Aa3		180,000		190,512
Madison County KY School District Finance Corporation		3.600			02/01/2017	Aa3		300,000		308,052
Oldham County School Building Corporation		4.400			06/01/2018	Aa3		2,570,000		2,802,585
Pendleton County School District Finance Corporation		4.000			02/01/2020	Aa3		450,000		471,267
Warren County KY School District Finance Corporation		4.000			02/01/2015	Aa3		785,000		811,344
Warren County KY School District Finance Corporation		4.000			02/01/2016	Aa3		1,330,000		1,409,786
Warren County KY School District Finance Corporation		4.000			04/01/2018	Aa3		125,000		135,400
										12,720,558
REFUNDED BONDS
13.15% of Net Assets
KY State Property & Building #82		5.300			10/01/2015	Aa3/AA-*/A+@		2,525,000		2,734,145
KY State Property & Building #82		5.300			10/01/2017	Aa3/AA-*/A+@		1,260,000		1,453,070
KY State Property & Building #83		5.000			10/01/2016	Aa3/A+*/A+@		775,000		865,605
KY State Property & Building #83		5.000			10/01/2019	Aa3/A+*/A+@		1,750,000		2,036,878
KY State Property & Building #84		5.000			08/01/2019	Aa3/A+*/A+@		1,000,000		1,159,440
KY State Property & Building #101		5.000			10/01/2019	Aa3/A+*/A+@		1,050,000		1,222,127
KY State Property & Building #104		5.000			11/01/2021	A1/A+*/A@		1,000,000		1,142,410
Lexington-Fayette Urban County Government Public Property		4.000			05/01/2017	Aa2/AA*		180,000		196,475
										10,810,150
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
10.00% of Net Assets
Boyle County Centre College		5.000			06/01/2018	A3/AA-*		200,000		222,660
Boyle County Centre College		5.000			06/01/2020	A3/AA-*		150,000		162,460
KY Asset Liability University of Kentucky Project Notes		5.000			10/01/2016	Aa2/AA-*		1,250,000		1,348,100
KY Asset Liability Project Notes		4.400			10/01/2019	Aa2/AA-*		1,750,000		1,837,290
KY Asset Liability University of Kentucky Project Notes		4.500			10/01/2020	Aa2/AA-*		500,000		523,865
KY Asset Liability University of Kentucky Project Notes		5.000			10/01/2019	Aa2/AA-*		320,000		360,560
KY Asset Liability — University of Kentucky		4.000			10/01/2019	Aa2/AA-*		100,000		106,013
Louisville & Jefferson County University of Louisville		4.000			03/01/2020	Aa2/AA-*		300,000		319,899
Northern KY University General Receipts		4.000			09/01/2018	Aa3/A+*		150,000		165,839
Western KY University		4.000			09/01/2020	Aa3/A+*		290,000		304,517
Western KY University		3.000			09/01/2014	Aa3/AA-*		500,000		508,985
Western KY University		4.000			09/01/2017	Aa3/AA-*		2,145,000		2,356,540
										8,216,728
MUNICIPAL UTILITY REVENUE BONDS
7.95% of Net Assets
Bourbon County Public Project		3.800			02/01/2019	A2		260,000		272,254
KY State Rural Water Corporation		3.000			02/01/2018	A+*		530,000		560,936
KY State Rural Water Corporation		3.000			08/01/2019	A+*		545,000		569,830
KY Rural Water Finance Corporation		3.000			02/01/2018	A+*		300,000		317,268
KY Rural Water Finance Corporation		3.000			02/01/2019	A+*		250,000		261,038
KY Rural Water Finance Corporation		3.600			02/01/2016	Baa1/A+*		60,000		60,664
KY Rural Water Finance Corporation		4.500			08/01/2021	Baa1/A+*		100,000		106,919
Lawrenceburg Water and Sewer		3.000			10/01/2018	A1		375,000		394,166
Louisville & Jefferson County Municipal Sewer		5.000			05/15/2018	Aa3/AA*/AA-@		1,220,000		1,340,158
Louisville & Jefferson County Municipal Sewer		5.000			05/15/2016	Aa3/AA*		100,000		110,273
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2015	Aa3/AA*		500,000		531,655
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2015	Aa3/AA*		1,000,000		1,062,740
Louisville & Jefferson County Metropolitan Sewer		5.000			05/15/2016	Aa3/AA*		175,000		185,780
Paducah Electric Plant		3.000			10/01/2014	A3/A-@		750,000		762,930
						NR				6,536,611

The accompanying notes are an integral part of the financial statements.

15

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
PUBLIC FACILITIES REVENUE BONDS
3.87% of Net Assets
Lexington-Fayette Urban County Government		5.000	%		06/01/2021	Aa3/A+*/A+@	$	500,000	$	560,740
Adair County Public Properties		4.000			12/01/2022	Aa3		170,000		175,345
Lexington-Fayette Urban County Government Public Facilities		4.000			10/01/2018	Aa3		1,540,000		1,631,322
Pulaski County KY Public Property		3.800			12/01/2014	Aa3		480,000		495,149
Todd County Public Properties — Courthouse Facilities		3.300			06/01/2019	Aa3		100,000		105,385
Whitley County Public Properties — Justice Center		3.400			09/01/2019	Aa3		200,000		212,782
										3,180,723
HOSPITAL AND HEALTHCARE
3.20% of Net Assets
KY State Asset Liability Commission General Receipts		4.000			10/01/2018	Aa2/AA-*		105,000		114,938
KY Asset Liability Comission Revenue University of Kentucky		4.100			10/01/2019	Aa2/AA-*		150,000		162,930
KY Asset Liability Comission Revenue University of Kentucky		5.000			10/01/2020	Aa2/AA-*		150,000		166,635
KY Development Finance Authority — King’s Daughters		5.000			02/01/2016	A2/A*/A+@		1,000,000		1,075,790
KY Economic Development — Baptist Healthcare System		4.800			08/15/2019	A2/A+@		110,000		121,091
KY Development Finance Authority — St. Elizabeth		5.000			05/01/2015	AA*/AA@		400,000		422,396
KY Economic Development Finance Authority — Catholic Health		4.000			05/01/2015	A1/A+*/A+@		250,000		252,978
Warren County Hospital		4.000			04/01/2020	A*		300,000		314,526
										2,631,284
STATE AND LOCAL MORTGAGE/HOUSING BONDS
1.87% of Net Assets
KY Housing Corporation		4.900			07/01/2023	Aaa/AAA*		1,500,000		1,533,600
PREREFUNDED BONDS
.92% of Net Assets
Clay County School District Finance Corporation		3.800			06/01/2017	Aa3		210,000		219,958
Jefferson County School District School Building Revenue		4.300			07/01/2017	Aa2/AA-*		175,000		191,238
Louisville & Jefferson County Metropolitan Sanitary Sewer		5.000			05/15/2015	Aa3/AA-*		325,000		345,947
										757,143
Total Investments (cost $77,707,632) (See (a) below for further explanation) 98.08% of Net Assets									$	80,608,203
Other assets in excess of liabilities 1.92%										1,573,545
Net Assets 100%									$	82,181,748

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $77,707,632 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	3,108,886
Unrealized depreciation		(208,315	)
Net unrealized appreciation	$	2,900,571

The accompanying notes are an integral part of the financial statements.

16

DUPREE MUTUAL FUNDS — KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Kentucky Municipal Bonds — 100% of Net Assets

December 31, 2013

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		80,608,203
Level 3	Significant Unobservable Inputs		—
		$	80,608,203

The accompanying notes are an integral part of the financial statements.

17

KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $77,707,632)		$	80,608,203
Cash			846,345
Receivable for fund shares sold			292,680
Interest receivable			1,024,820
Total assets			82,772,048
LIABILITIES:
Payable for:
Distributions to shareholders	45,708
Fund shares redeemed	473,125
Investment advisory fee	26,286
Transfer agent fee	25,806
Trustees fees	3,272
Accrued expenses	16,103
Total liabilities			590,300
NET ASSETS:
Capital			80,046,889
Net accumulated realized loss on investment transactions			(765,712	)
Net unrealized appreciation in value of investments			2,900,571
Net assets at value		$	82,181,748
NET ASSET VALUE, offering price and redemption price per share ($82,181,748 ÷ 15,155,237 shares outstanding; unlimited number of shares authorized; no par value)		$	5.42

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	1,240,933
Expenses:
Investment advisory fee		218,688
Transfer agent fee		57,414
Custodian expense		8,843
Professional fees		14,599
Trustees fees		5,087
Other expenses		16,773
Total expenses		321,404
Custodian expense reduction		(10	)
Net expenses		321,394
Net investment income		919,539
Realized and unrealized gain/(loss) on investments:
Net realized gain		31,313
Net change in unrealized appreciation/depreciation		(156,900	)
Net realized and unrealized loss on investments		(125,587	)
Net increase in net assets resulting from operations	$	793,952

The accompanying notes are an integral part of the financial statements.

18

KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	919,539		$	1,932,832
Net realized gain on investments		31,313			145,079
Net change in unrealized appreciation/depreciation		(156,900	)		(1,956,078	)
Net increase in net assets resulting from operations		793,952			121,833
Distributions from net investment income		(919,539	)		(1,932,832	)
Net fund share transactions (Note 4)		(7,095,170	)		1,685,639
Total (decrease)		(7,220,757	)		(125,360	)
Net assets:
Beginning of period		89,402,505			89,527,865
End of period	$	82,181,748		$	89,402,505

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/2013			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year		$5.43			$5.54			$5.39			$5.36			$5.25			$5.16
Income from investment operations:
Net investment income		0.06			0.12			0.12			0.13			0.15			0.17
Net gains/(losses) on securities, both realized and unrealized		(0.01	)		(0.11	)		0.15			0.03			0.11			0.09
Total from investment operations		0.05			0.01			0.27			0.16			0.26			0.26
Less distributions:
Distributions from net investment income		(0.06	)		(0.12	)		(0.12	)		(0.13	)		(0.15	)		(0.17	)
Net asset value, end of period		$5.42			$5.43			$5.54			$5.39			$5.36			$5.25
Total return		0.88%	(b)		0.11%			5.10%			3.04%			4.99%			5.02%
Net assets, end of period (in thousands)		$82,182			$89,403			$89,528			$72,405			$69,166			$60,570
Ratio of net expenses to average net assets (a)		0.74%	(c)		0.72%			0.73%			0.72%			0.72%			0.72%
Ratio of net investment income to average net assets		2.12%	(c)		2.12%			2.22%			2.44%			2.80%			3.16%
Portfolio turnover		2.60%	(b)		6.63%			4.73%			15.37%			20.26%			15.64%

(a) Percentages are after custodian reduction for which no recovery will be sought.

Percentages before custodian reductions were:

0.74%	(c)	For the six months ended December 31, 2013
0.72%		For the year ended June 30, 2013
0.73%		For the year ended June 30, 2012
0.72%		For the year ended June 30, 2011
0.72%		For the year ended June 30, 2010
0.72%		For the year ended June 30, 2009

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

19

DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Mississippi Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
31.35% of Net Assets
Alcorn State University Education Building MS Revenue		5.125	%		09/01/2034	Aa2	$	95,000	$	98,319
Jackson State University Education Building		5.000			03/01/2034	Aa2/AA-*		175,000		180,511
MS Development Bank Special Obligation Hinds College		5.000			10/01/2026	Aa2		85,000		90,671
MS Development Bank Special Obligation Hinds College		5.125			10/01/2028	Aa2		100,000		106,674
MS Development Bank Special Obligation Hinds College		5.375			10/01/2033	Aa2		60,000		63,344
MS Development Bank Special Obligation Jones County Junior College		5.100			03/01/2028	AA-*		55,000		58,775
MS Development Bank Special Obligation Jones County Junior College		5.000			03/01/2033	AA-*		150,000		157,574
MS Development Bank Special Obligation Jones County Junior College		5.125			03/01/2039	AA-*		45,000		46,616
MS Development Bank Special Obligation Hinds Community		5.000			04/01/2036	A2/AA-*		250,000		260,628
MS State University Education Building Corporation Revenue		5.000			08/01/2024	Aa2/A*/AA@		225,000		234,747
MS State University Education Building Corporation Revenue		5.000			08/01/2028	Aa2/A*/AA@		30,000		31,176
MS State University Education Building Corporation Revenue		5.250			08/01/2033	Aa2/AA@		50,000		52,460
MS State University Education Building Corporation Revenue		5.000			08/01/2036	Aa2/AA@		175,000		180,450
MS State University Education Building Corporation Revenue		5.250			08/01/2038	Aa2/AA@		100,000		106,102
Southern Mississippi Education Building Corporation		5.000			03/01/2038	Aa2/AA@		500,000		514,035
University of Mississippi Education Building Corporation		5.000			10/01/2028	Aa2/AA@		200,000		216,528
University Southern MS Education Building		5.000			03/01/2022	Aa2		100,000		106,745
University Southern MS Education Building Corporation		5.000			03/01/2032	Aa2		50,000		51,740
University Southern MS Education Building Athletics		5.000			03/01/2034	Aa2		105,000		107,460
University Southern MS Education Building Corporation		5.125			09/01/2029	Aa2/A+*		100,000		105,596
										2,770,151
PUBLIC FACILITIES REVENUE BONDS
16.34% of Net Assets
MS Development Bank Special Obligation Department of Corrections		5.250			08/01/2027	AA-*/AA@		50,000		53,914
MS Development Bank Special Obligation Department of Corrections		5.250			08/01/2027	AA-*/AA@		305,000		329,982
MS State Capital Improvement Projects		5.000			10/01/2029	Aa2/AA*/AA+@		145,000		157,695
MS State Capital Improvement Projects		5.000			10/01/2036	Aa2/AA*/AA+@		480,000		505,795
MS State Development Bank Special Obligation City of Jackson Convention Center		5.000			03/01/2027	Aa2/AA-*		125,000		137,154
MS State Development Bank Special Obligation Refunding — City of Jackson		5.000			03/01/2036	Aa2/AA-*		150,000		155,612
MS State Development Bank Special Obligation Alcorn County		4.750			07/01/2031	AA-*		100,000		103,271
										1,443,423
TURNPIKES/TOLLROAD/HIGHWAY BONDS
13.40% of Net Assets
MS Development Bank Special Obligation Highway Construction		5.000			01/01/2027	Aa3/AA-*		125,000		133,676
MS Development Bank Special Obligation Highway — Desoto		4.750			01/01/2035	Aa3/AA-*		225,000		225,650
MS Development Bank Special Obligation Highway Construction		5.000			01/01/2027	Aa3/AA-*		245,000		261,910
MS Development Bank Special Obligation Highway Construction		4.750			01/01/2031	Aa3/AA-*		125,000		127,369
MS State Development Bank Special Obligation Highway		5.000			01/01/2025	Aa3/AA-*		200,000		224,862
MS Development Bank Special Obligation Marshall County		5.000			01/01/2028	Aa3/AA-*		200,000		210,498
										1,183,965
MUNICIPAL UTILITY REVENUE BONDS
9.21% of Net Assets
MS Development Bank Special Obligation Rankin Utilities		5.000			01/01/2028	A2/AA-*		55,000		56,892
MS Development Bank Special Obligation Desoto County		5.000			07/01/2032	A*		45,000		45,896
MS Development Bank Special Obligation Southaven Water		5.000			03/01/2025	A+*		325,000		343,476
MS Development Bank Special Obligation Desoto County		5.250			07/01/2031	A*		225,000		237,551
MS State Development Bank Special Obligation Jackson Water		5.000			09/01/2030	A1/AA-*		125,000		129,710
										813,525
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
7.48% of Net Assets
MS Development Bank Special Obligation Lowndes County		5.000			07/01/2022	A2/AA-*		80,000		87,139
MS Development Bank Special Obligation Lowndes County		5.000			07/01/2027	A2/AA-*		150,000		158,924
MS Development Bank Special Obligation Canton		5.750			10/01/2031	A2		370,000		399,448

The accompanying notes are an integral part of the financial statements.

20

DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Mississippi Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MS Development Bank Special Obligation Capital Projects		5.000	%		07/01/2031	NR	$	5,000	$	5,150
MS Development Bank Special Obligation Capital Projects		5.875			07/01/2024	NR		5,000		5,250
MS Development Bank Special Obligation Capital Projects		5.000			07/01/2024	NR		5,000		5,150
										661,061
SCHOOL IMPROVEMENT BONDS
6.38% of Net Assets
MD Development Bank Special Obligation Jackson Public		5.375			04/01/2028	A2		70,000		75,568
MS State Development Bank Special Obligation — Jackson Schools		5.000			04/01/2028	A+*		475,000		487,711
										563,279
HOSPITAL AND HEALTHCARE REVENUE BONDS
4.12% of Net Assets
Medical Center Education Building Corporation MS Revenue		5.500			12/01/2023	Aa2		120,000		135,418
Medical Center Education Building Corporation — University of Mississippi		5.000			06/01/2034	Aa2/AA-*		100,000		102,039
MS Development Bank Special Obligation Jones County Rest Home		5.250			04/01/2028	A2/AA-*		120,000		126,568
										364,025
REFUNDED BONDS
3.81% of Net Assets
MS State Refunding		5.250	%		11/01/2019	Aa2/AA*/AA+@	$	50,000	$	59,419
MS State Development Bank Special Obligation Lowndes County		5.125			12/01/2027	AA-*		135,000		143,841
MS Development Bank Special Obligation Capital Improvement		5.250			07/01/2026	A2/AA-*		125,000		133,764
										337,024
PREREFUNDED BONDS
3.71% of Net Assets
MS Development Special Obligation Madison County Highway		5.000			01/01/2027	Aa3/AA-*		295,000		327,471
AIRPORT BONDS
1.97% of Net Assets
Jackson MS Municipal Airport Authority		5.000			10/01/2031	A3/A-@		170,000		174,253
STATE AND LOCAL MORTGAGE/HOUSING BONDS
.35% of Net Assets
MS Home Corporation Single Family Mortgage — Series E-1		5.050			12/01/2028	Aaa		30,000		30,526
ESCROWED TO MATURITY BONDS
.29% of Net Assets
Harrison County MS Wastewater Management District		5.000			02/01/2015	AA+*		25,000		25,701
Total Investments (cost $8,698,070) (See (a) below for further explanation) 98.41% of Net Assets									$	8,694,404
Other assets in excess of liabilities 1.59%										140,593
Net Assets 100%									$	8,834,997

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $8,697,864 and net unrealized depreciation of investments is as follows:

Unrealized appreciation	$	177,496
Unrealized depreciation		(180,956	)
Net unrealized depreciation	$	(3,460	)

The accompanying notes are an integral part of the financial statements.

21

DUPREE MUTUAL FUNDS — MISSISSIPPI TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Mississippi Municipal Bonds — 100% of Net Assets

December 31, 2013

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs.

There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		8,694,404
Level 3	Significant Unobservable Inputs		—
		$	8,694,404

The accompanying notes are an integral part of the financial statements.

22

MISSISSIPPI TAX-FREE INCOME SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $8,698,070)		$	8,694,404
Cash			154,258
Interest receivable			144,366
Total assets			8,993,028
LIABILITIES:
Payable for:
Distributions to shareholders	52,983
Fund shares redeemed	95,012
Investment advisory fee	2,110
Transfer agent fee	2,827
Trustees fees	337
Accrued expenses	4,762
Total liabilities			158,031
NET ASSETS:
Capital			8,845,724
Accumulated net investment income			206
Net accumulated realized loss on investment transactions			(7,267	)
Net unrealized depreciation in value of investments			(3,666	)
Net assets at value		$	8,834,997
NET ASSET VALUE, offering price and redemption price per share ($8,834,997 ÷ 772,829 shares outstanding; unlimited number of shares authorized; no par value)		$	11.43

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	171,054
Expenses:
Investment advisory fee		21,431
Transfer agent fee		6,658
Custodian expense		4,062
Professional fees		910
Trustee fees		482
Registration fees		2,221
Other expenses		3,557
Total expenses		39,321
Fees waived by Adviser		(9,773	)
Custodian expense reduction		(1	)
Net expenses		29,547
Net investment income		141,507
Realized and unrealized loss on investments:
Net realized loss		(7,267	)
Net change in unrealized appreciation/depreciation		(134,938	)
Net realized and unrealized loss on investments		(142,205	)
Net decrease in net assets resulting from operations	$	(698	)

The accompanying notes are an integral part of the financial statements.

23

MISSISSIPPI TAX-FREE INCOME SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	141,507		$	271,005
Net realized gain/(loss) on investments		(7,267	)		32,190
Net change in unrealized appreciation/depreciation		(134,938	)		(303,574	)
Net decrease in net assets resulting from operations		(698	)		(379	)
Distributions from net investment income		(141,475	)		(287,105	)
Distributions from capital gains		(9,925	)		—
Net fund share transactions (Note 4)		678,567			884,037
Total increase		526,469			596,553
Net assets:
Beginning of period		8,308,528			7,711,975
End of period	$	8,834,997		$	8,308,528
Accumulated net investment income	$	206		$	174

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/2013			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year		$11.65			$12.01			$11.33			$11.41			$11.03			$11.08
Income from investment operations:
Net investment income		0.19			0.39			0.42			0.44			0.45			0.45
Net gains/(losses) on securities, both realized and unrealized		(0.21	)		(0.33	)		0.68			(0.08	)		0.38			(0.05	)
Total from investment operations		(0.02	)		0.06			1.10			0.36			0.83			0.40
Less distributions:
Distributions from net investment income		(0.19	)		(0.42	)		(0.42	)		(0.44	)		(0.45	)		(0.45	)
Distributions from capital gains		(0.01	)		—			—			—			—	(b)		—	(b)
Total distributions		(0.20	)		(0.42	)		(0.42	)		(0.44	)		(0.45	)		(0.45	)
Net asset value, end of period		$11.43			$11.65			$12.01			$11.33			$11.41			$11.03
Total return		(0.25	)%(c)		0.38%			9.87%			3.19%			7.65%			3.72%
Net assets, end of period (in thousands)		$8,835			$8,309			$7,712			$6,376			$6,321			$5,001
Ratio of net expenses to average net assets (a)		0.69%	(d)		0.66%			0.65%			0.58%			0.45%			0.44%
Ratio of net investment income to average net assets		3.32%	(d)		3.22%			3.59%			3.86%			3.99%			4.11%
Portfolio turnover		1.85%	(c)		13.81%			9.99%			20.53%			10.04%			9.30%

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions.

Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser	Custodian
.23%(d)		0%	(d)	For the six months ended December 31, 2013
.23%		0%		For the year ended June 30, 2013
.27%		0%		For the year ended June 30, 2012
.26%		0%		For the year ended June 30, 2011
.46%		0%		For the year ended June 30, 2010
.53%		.08%		For the year ended June 30, 2009

(b) Rounds to less than $0.01.

(c) Not annualized

(d) Annualized

The accompanying notes are an integral part of the financial statements.

24

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MUNICIPAL UTILITY REVENUE BONDS
21.52% of Net Assets
Mooresville NC Certificates of Participation		5.000	%		09/01/2032	AA-*	$	1,890,000	$	1,938,838
Wilson NC Certificates of Participation Public Facilities		5.000			05/01/2021	A1/AA-*		780,000		830,380
Wilson NC Certificates of Participation Public Facilities		5.000			05/01/2025	A1/AA-*		750,000		783,390
Wilson County Certificates of Participation Public Facilities		5.000			05/01/2029	A1/AA-*		1,355,000		1,398,523
Asheville NC Water System Revenue		4.800			08/01/2027	Aa2/AA*		1,000,000		1,036,270
Beaufort NC Limited Obligation		5.000			06/01/2025	A1		500,000		546,250
Charlotte NC Water and Sewer Systems Revenue		4.500			07/01/2028	Aaa/AAA*/AAA@		750,000		774,345
Moore County NC		5.000			06/01/2031	Aa3/AA-*		2,750,000		2,897,813
NC Municipal Power Agency Number 1 Catawba Electric Revenue		5.000			01/01/2031	A2/A*/A@		500,000		516,640
NC Eastern Municipal Power Agency Power System Revenue		5.000			01/01/2021	/A-*A-@		1,000,000		1,067,270
NC Eastern Municipal Power Agency Power System Revenue		6.000			01/01/2025	Baa1/A*/A-@		1,000,000		1,198,290
NC Eastern Municipal Power Agency Power System Revenue		6.000			01/01/2018	Baa1		1,000,000		1,176,630
NC Eastern Municipal Power Agency		6.000			01/01/2022	A3/AA-*		915,000		1,093,141
NC Municipal Power Agency Number 1 Catawba Electric Revenue		4.800			01/01/2030	A2/A*/A@		290,000		297,917
NC Municipal Power Agency Number 1 Catawba Electric Revenue		5.000			01/01/2030	A2/A*/A@		2,545,000		2,661,662
Wilmington NC Store Water Revenue		5.000			06/01/2028	Aa2/AA*		500,000		535,255
										18,752,614
SCHOOL IMPROVEMENT BONDS
16.97% of Net Assets
Nash County NC Limited Obligation		5.000			10/01/2030	Aa3/AA-*		2,045,000		2,182,260
Cabarrus County NC Certificates of Participation Installment		5.000			06/01/2025	Aa2/AA*/AA@		1,000,000		1,087,740
Cabarrus County NC Certificates of Participation		5.000			01/01/2029	Aa2/AA*/AA@		750,000		800,130
Davie County NC Public School and Community College Facility		5.000			06/01/2023	Aa3/A+*		1,000,000		1,058,980
Davie County NC Public School and Community College Facility		5.000			06/01/2025	Aa3/A+*		1,690,000		1,771,001
Forsyth County NC Certificates of Participation		5.000			02/01/2026	Aa1/AA+*/AA+@		550,000		568,370
Franklin County NC Certificates of Participation		5.000			09/01/2027	Aa3/A+*		750,000		792,600
Harnett County NC Certificates of Participation		5.000			06/01/2027	A1/AA-*		300,000		317,013
Iredell County NC Certificates of Participation School Project		5.000			06/01/2024	Aa3/AA-*		1,000,000		1,074,840
Lee County NC Certificates of Participation		5.000			04/01/2025	Aa3/AA-*		550,000		583,974
Mecklenburg County NC Certificates of Participation		5.000			02/01/2028	Aa1/AA+*/AA+@		415,000		440,174
Montgomery County NC Certificates of Participation		5.000			02/01/2030	A-*		1,680,000		1,715,986
Sampson County NC Certificates of Participation		5.000			06/01/2022	A2/AA-*		1,250,000		1,346,600
Sampson County NC Certificates of Participation		5.000			06/01/2026	A2/AA-*		1,000,000		1,045,910
										14,785,578
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
16.18% of Net Assets
Pitt County NC Limited Obligation		5.000			04/01/2035	Aa3/AA-*/AA@		105,000		107,251
Iredell County NC Community College		5.000			04/01/2026	Aa2/AA*/AA+@		225,000		246,017
Iredell County NC Community College		5.000			04/01/2027	Aa2/AA*/AA+@		325,000		355,358
NC State University at Raleigh		5.000			10/01/2042	Aa1/AA*		750,000		788,963
NC Capital Facilites Financial Agency Education Wake Forest		5.000			01/01/2031	Aa3/AA*		500,000		536,265
NC Capital Facilites Financial Agency Education Wake Forest		5.000			01/01/2038	Aa3/AA*		1,250,000		1,302,113
NC Capital Facilities Financial Agency Revenue Duke University		5.000			10/01/2038	Aa1/AA+*		500,000		521,750
NC State Capital Facilities Davidson College		5.000			03/01/2032	AA+*		310,000		326,758
University NC Chapel Hill Revenue General Refunding		5.000			12/01/2034	Aaa/AAA*/AAA@		1,000,000		1,047,630
University NC University Revenues UNC Chapel Hill		5.000			12/01/2031	Aaa/AAA*/AAA@		1,215,000		1,315,820
University of NC at Charlotte		5.000			04/01/2031	Aa3/AA-*		750,000		795,720
University of NC Greensboro		5.000			04/01/2031	Aa3/A+*		500,000		531,200
University of NC System Pool Revenue		5.000			10/01/2033	Aa3/A+*		430,000		439,267
University of NC System Pool Revenue		5.000			10/01/2026	A1		1,000,000		1,061,470
University of NC System Pool Revenue		5.000			10/01/2033	A1		1,000,000		1,039,740
University of NC System Pool Revenue General Trust Indenture		5.000			10/01/2034	Aa2		1,950,000		2,058,401
University of NC Wilmington Certificates of Participation		5.300			06/01/2025	Baa1/A*		1,000,000		1,031,380
University of NC Wilmington Student Housing Project		5.000			06/01/2025	Baa1/A*		580,000		599,842
										14,104,945

The accompanying notes are an integral part of the financial statements.

25

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
PUBLIC FACILITIES REVENUE BONDS
10.78% of Net Assets
Chatham County NC Limited Obligation		4.500	%		06/01/2033	Aa3/AA*	$	815,000	$	826,940
Raleigh NC Limited Obligation		5.000			10/01/2038	Aa1/AA+*/AA+@		500,000		525,975
Wake County NC Limited Obligation Series 209		5.000			06/01/2032	Aa1/AA+*/AA+@		1,500,000		1,587,330
Charlotte NC Certificiates of Participation Transit Project		5.000			06/01/2035	Aa2/AA+*/AA+@		500,000		502,830
Charlotte NC Certificates of Participation Convention Facilities		5.000			06/01/2034	Aa2/AA+*/AA@		900,000		922,689
Mecklenburg County NC Certificates of Participation		5.000			02/01/2026	Aa1/AA+*/AA+@		1,000,000		1,088,740
NC Infrastructure Finance Corporation Certificates of Participation		5.000			02/01/2025	Aa1/AA+*/AA+@		200,000		208,686
Rockingham County NC Certificates of Participation		5.000			04/01/2032	Aa3/AA-*		1,325,000		1,348,227
Winston Salem NC Limited Obligation		5.000			06/01/2031	Aa2/AA+*/AA+@		800,000		841,696
Forsyth County Limited Tax		5.000			04/01/2031	Aa1/AA+*/AA+@		335,000		354,701
Jacksonville Public Facilities Corporation Limited Obligation		5.000			04/01/2031	A1/A+@		265,000		277,940
Jacksonville Public Facilities Corporation Limited Obligation		5.000			04/01/2032	A1/A+@		100,000		104,107
Watauga NC Public Facilities Corporation Limited Obligation		5.000			06/01/2027	Aa3/AA-*		750,000		805,898
										9,395,759
HOSPITAL AND HEALTHCARE
10.17% of Net Assets
Charlotte Mecklenburg NC Hospital Authority Health Care		5.000			01/15/2031	Aa3/AA-*		450,000		455,171
Charlotte Mecklenburg NC Hospital Authority Health Care		5.000			01/15/2027	Aa3/AA-*		1,090,000		1,138,112
Charlotte-Mecklenburg Hospital		5.300			01/15/2039	Aa3/AA-*		750,000		773,385
Johnston NC Memorial Hospital Authority		5.300			10/01/2028	A2/AA-*		490,000		512,133
NC Medical Care Community Hospital Revenue-Stanly Hospital		5.400			10/01/2014	BBB+@		5,000		5,008
NC Medical Care Community Hospital Revenue NC Baptist Hospital		5.000			06/01/2034	A1/A+*		1,100,000		1,110,769
NC Medical Care Community Hospital Revenue NC Baptist Hospital		5.300			06/01/2029	A1/A+*		645,000		686,828
NC Medical Care Community Hospital Revenue Baptist Hospital		4.800			06/01/2030	A1/A+*		405,000		411,703
NC Medical Care Community Health Care Facilities Revenue		5.000			06/01/2034	Aa2/AA*/AA@		1,670,000		1,723,457
NC State Medical Care Commission Health Care Facilities		5.000			07/01/2030	A1/A+*/A+@		500,000		519,950
NC State Medical Care Commission Duke University Health		5.000			06/01/2035	Aa2/AA*/AA@		500,000		513,810
NC State Medical Care Commission Wake Forest Baptist Hospital		5.000			12/01/2033	A1/A+*		1,000,000		1,015,050
										8,865,376
REFUNDING BONDS
7.17% of Net Assets
Charolotte NC Certificates of Participation		5.000			06/01/2033	Aa2/AA+*/AA+@		340,000		352,128
Dare County NC Limited Obligation Refunding		5.000			06/01/2029	Aa3/AA-*/AA-@		100,000		107,083
New Hanover County NC Limited Obligation		5.000			12/01/2027	Aa1/AA+*		505,000		558,908
Union County NC Limited Obligation Refunding		5.000			12/01/2024	Aa2/AA-*/AA@		125,000		144,716
Charlotte NC Certificates of Participation Convention Facilities		5.000			12/01/2024	Aa2/AA+*/AA@		1,000,000		1,061,180
Charlotte NC Certificates of Participation		5.000			06/01/2026	Aa2/AA+*/AA+@		1,455,000		1,577,642
Charlotte NC Certificates of Participation		5.000			06/01/2027	Aa2/AA+*/AA+@		775,000		832,676
Pitt County NC Certificates of Participation		5.000			04/01/2027	Aa3/AA-*/AA@		500,000		541,385
Johnston County NC Installment Financing Contract		5.000			10/15/2027	Aa3/AA*		570,000		614,448
Thomasville NC Combined Enterprise System Revenue		4.800			05/01/2028	A1/AA-*		435,000		457,590
										6,247,756
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
6.55% of Net Assets
Buncombe County Limited Obligation		5.000			06/01/2030	Aa2/AA+*		250,000		267,155
Buncombe County NC Limited Obligation		5.000			06/01/2032	Aa2/AA+*		250,000		264,593
Johnston County TN Limited Obligation		4.800			06/01/2033	Aa3/AA*		500,000		505,280
Orange County NC Public Facilities Company Limited Obligation		4.800			10/01/2032	Aa2/AA+*/AA+@		750,000		777,120
Charlotte NC Certificates of Participation		5.000			12/01/2029	Aa1/AA+*		340,000		364,533
NC Infrastructure Finance Corporation Certificates of Participation		5.000			02/01/2024	Aa1/AA+*/AA+@		1,000,000		1,084,880
Wilmington NC Certificates of Participation		5.000			06/01/2032	Aa2/AA*/AA@		1,500,000		1,549,080
Wilmington NC Certificates of Participation		5.000			06/01/2038	Aa2/AA*/AA@		250,000		251,168
Winston Salem NC Certificates of Participation		4.800			06/01/2031	AA+*/AA+@		620,000		644,360
										5,708,169

The accompanying notes are an integral part of the financial statements.

26

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
AIRPORT BONDS
4.98% of Net Assets
Charlotte NC Airport Revenue		5.300	%		07/01/2023	Aa3/A+*/A+@	$	1,000,000	$	1,022,670
Charlotte NC Airport Revenue Refunding Charlotte Douglas International		5.000			07/01/2025	Aa3/A+*/A+@		1,000,000		1,072,170
Raleigh Durham NC Airport		5.000			05/01/2029	Aa3/AA-@		235,000		249,507
Raleigh Durham NC Airport		5.000			05/01/2036	Aa3/AA-@		1,480,000		1,531,844
Raleigh Durham NC Airport		5.000			05/01/2032	Aa3/AA-@		440,000		461,868
										4,338,059
PREREFUNDED BONDS
3.01% of Net Assets
Burke County NC Certificates of Participation		5.000			04/01/2023	A1/A*		250,000		275,910
Henderson County NC Certificates of Participation		5.000			05/01/2025	Aa3/AA*/AA-@		250,000		265,693
NC Eastern Municipal Power Agency Power System		6.000			01/01/2026	A-*		275,000		344,850
Raleigh NC Combined Enterprise System		5.000			03/01/2031	Aa1/AAA*/AAA@		500,000		549,910
Randolph County NC Certificates of Participation		5.000			02/01/2027	Aa3		1,000,000		1,131,260
Winston Salem NC Certificates of Participation		4.800			06/01/2031	NR		50,000		55,136
										2,622,759
TURNPIKES/TOLLROAD/HIGHWAY BONDS
2.32% of Net Assets
NC State Turnpike Monroe Connector System		5.000			07/01/2029	Aa2/AA*		500,000		539,515
NC State Turnpike Authority Monroe Connector System		5.000			07/01/2031	Aa2/AA*		1,385,000		1,478,598
										2,018,113
Total Investments (cost $85,705,576) (See (a) below for further explanation) 99.65% of Net Assets									$	86,839,128
Other assets in excess of liabilities .35%										308,926
Net Assets 100%									$	87,148,054

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $85,702,792 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	2,292,212
Unrealized depreciation		(1,155,876	)
Net unrealized appreciation	$	1,136,336

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		86,839,128
Level 3	Significant Unobservable Inputs		—
		$	86,839,128

The accompanying notes are an integral part of the financial statements.

27

NORTH CAROLINA TAX-FREE INCOME SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $85,705,576)		$	86,839,128
Cash			296,130
Interest receivable			1,021,966
Total assets			88,157,224
LIABILITIES:
Payable for:
Distributions to shareholders	292,044
Fund shares redeemed	656,726
Investment advisory fee	39,082
Transfer agent fee	20,544
Accrued expenses	774
Total liabilities			1,009,170
NET ASSETS:
Capital			86,443,119
Accumulated net investment income			2,784
Net accumulated realized loss on investment transactions			(431,401	)
Net unrealized appreciation in value of investments			1,133,552
Net assets at value		$	87,148,054
NET ASSET VALUE, offering price and redemption price per share ($87,148,054 ÷ 7,844,962 shares outstanding; unlimited number of shares authorized; no par value)		$	11.11

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	1,824,461
Expenses:
Investment advisory fee		226,135
Transfer agent fee		59,499
Custodian expense		9,404
Professional fees		10,118
Other expenses		22,833
Total expenses		327,989
Custodian expense reduction		(10	)
Net expenses		327,979
Net investment income		1,496,482
Realized and unrealized loss on investments:
Net realized loss		(431,401	)
Net change in unrealized appreciation/depreciation		(1,141,818	)
Net realized and unrealized loss on investments		(1,573,219	)
Net decrease in net assets resulting from operations	$	(76,737	)

The accompanying notes are an integral part of the financial statements.

28

NORTH CAROLINA TAX-FREE INCOME SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	1,496,482		$	3,025,345
Net realized gain/(loss) on investments		(431,401	)		112,821
Net change in unrealized appreciation/depreciation		(1,141,818	)		(2,631,334	)
Net increase/(decrease) in net assets resulting from operations		(76,737	)		506,832
Distributions from net investment income		(1,496,031	)		(3,026,417	)
Capital gains distributed to shareholders		(112,821	)		(131,685	)
Net fund share transactions (Note 4)		(6,293,059	)		9,474,078
Total increase/(decrease)		(7,978,648	)		6,822,808
Net assets:
Beginning of period		95,126,702			88,303,894
End of period	$	87,148,054		$	95,126,702
Accumulated net investment income	$	2,784		$	2,333

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/2013			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year	$	11.31		$	11.59		$	10.92		$	11.01		$	10.71		$	10.62
Income from investment operations:
Net investment income		0.19			0.36			0.39			0.40			0.40			0.41
Net gains/(losses) on securities, both realized and unrealized		(0.19	)		(0.26	)		0.67			(0.09	)		0.30			0.09
Total from investment operations		0.00			0.10			1.06			0.31			0.70			0.50
Less distributions:
Distributions from net investment income		(0.19	)		(0.36	)		(0.39	)		(0.40	)		(0.40	)		(0.41	)
Distributions from capital gains		(0.01	)		(0.02	)		—			—			—			—
Total distributions:		(0.20	)		(0.38	)		(0.39	)		(0.40	)		(0.40	)		(0.41	)
Net asset value, end of period	$	11.11		$	11.31		$	11.59		$	10.92		$	11.01		$	10.71
Total return		0.01%	(b)		0.76%			9.87%			2.90%			6.62%			4.83%
Net assets, end of period (in thousands)	$	87,148		$	95,127		$	88,304		$	75,312		$	77,116		$	66,891
Ratio of net expenses to average net assets (a)		0.73%	(c)		0.71%			0.71%			0.70%			0.72%			0.72%
Ratio of net investment income to average net assets		3.34%	(c)		3.07%			3.46%			3.69%			3.66%			3.89%
Portfolio turnover		2.09%	(c)		3.59%			5.94%			14.16%			5.92%			7.82%

(a) Percentages are after Custodian reduction for which no recovery will be sought.

Percentages before custodian reductions were:

0.73%(c)	For the six months ended December 31, 2013
0.71%	For the year ended June 30, 2013
0.71%	For the year ended June 30, 2012
0.70%	For the year ended June 30, 2011
0.72%	For the year ended June 30, 2010
0.72%	For the year ended June 30, 2009

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

29

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MUNICIPAL UTILITY REVENUE BONDS
20.82% of Net Assets
Monroe NC Certificates of Participation		4.000	%		03/01/2019	Aa3/AA*	$	100,000	$	109,717
Mooreville NC Certificates of Participation		4.125			09/01/2018	AA-*		250,000		269,790
Wilson NC Certificates of Participation		5.000			05/01/2016	A1/AA-*		200,000		219,133
Wilson NC Certificates of Participation		5.000			05/01/2018	A1/AA-*		160,000		177,531
Wilson NC Certificates of Participation		5.000			05/01/2022	A1/AA-*		350,000		371,234
Asheville NC Water System Revenue Refunding		5.000			08/01/2017	Aa2/AA*		140,000		149,646
Lincolnton NC Enterprise System Revenue		5.000			05/01/2016	NR		385,000		398,560
Moore County NC		5.000			06/01/2017	Aa3/AA-*		685,000		776,063
Moore County NC		5.000			06/01/2021	Aa3/AA-*		200,000		228,576
NC State Eastern Municipal Power Agency		5.000			01/01/2021	Baa1/A-*/A-@		125,000		142,031
NC Eastern Municipal Power Agency		4.000			01/01/2016	Baa1/A-*/A-@		95,000		101,471
NC Eastern Municipal Power Agency		5.000			01/01/2016	A-*A-@		50,000		54,315
NC Eastern Municipal Power Agency		5.000			01/01/2020	A-*A-@		250,000		269,183
NC Eastern Municipal Power Agency		5.250			01/01/2019	A3/AA-*/A-@		550,000		624,740
NC Eastern Municipal Power Agency		6.500			01/01/2018	A3/AA-*		100,000		119,686
NC Eastern Municipal Power Agency		3.250			01/01/2015	Baa1/A-*/A-@		250,000		257,155
NC Municipal Power Agency Number 1 Catawba Electric		5.250			01/01/2017	A2/A*/A@		200,000		225,630
NC Municipal Power Agency Number 1 Catawba Electric		5.250			01/01/2018	A2/A*/A@		125,000		143,868
NC Municipal Power Agency Number 1 Catawba Electric		4.000			01/01/2016	A2/A*/A@		100,000		106,749
NC Municipal Power Agency Number 1 Catawba Electric		5.000			01/01/2021	A2/A*/A@		250,000		277,468
NC Municipal Power Agency Number 1 Catawba Electric		5.000			01/01/2016	A2/A*/A@		125,000		135,970
Onslow NC Water & Sewer		4.250			06/01/2022	Baa1/A+*		150,000		157,446
Union County NC Enterprise System Revenue		4.000			12/01/2022	Aa2/AA-*/AA@		100,000		108,097
										5,424,059
SCHOOL IMPROVEMENT BONDS
17.38% of Net Assets
Nash County NC Limited Obligation		3.000			10/01/2015	Aa3/AA-*		400,000		417,044
Nash County NC Limited Obligation		5.000			10/01/2018	Aa3/AA-*		150,000		174,504
Buncombe County NC Certificates of Participation		4.000			04/01/2016	Aa2/AA+*		125,000		133,843
Burke County NC Certificates of Participation		4.250			04/01/2016	A1/A*		50,000		53,745
Cabarrus County NC Certificates of Participation		4.250			06/01/2017	Aa2/AA*/AA@		175,000		193,123
Cabarrus County NC Certificates of Participation		4.000			01/01/2015	Aa2/AA*/AA@		225,000		232,479
Cabarrus County NC Certificates of Participation		5.000			01/01/2017	Aa2/AA*/AA@		150,000		166,982
Cabarrus County NC Certificates of Participation		5.000			01/01/2019	Aa2/AA*/AA@		100,000		114,566
Cabarrus County NC Certificates of Participation		5.000			01/01/2021	Aa2/AA*/AA@		200,000		224,062
Catawba County NC Certificates of Participation		5.250			06/01/2019	Aa2/A*		200,000		210,762
Harnett County NC Certificates of Participation		5.000			12/01/2015	A1/AA-*		125,000		135,340
Harnett County NC Certificates of Participation		5.000			12/01/2021	A1/AA-*		200,000		220,902
Harnett County NC Certificates of Participation		3.500			06/01/2016	A1/AA-*		250,000		265,192
Henderson County NC Certificates of Participation		5.000			06/01/2014	Aa3/AA*/AA-@		50,000		50,925
Iredell County NC Certificates of Participation School Project		5.000			06/01/2018	Aa3/AA-*		425,000		464,201
Lincoln County NC Certificates of Participation		5.000			06/01/2016	A1/AA-*/AA-@		200,000		220,572
Montgomery County NC Certificates of Participation		5.000			02/01/2017	A-*		125,000		138,092
Onslow County NC Certificates of Participation		5.000			06/01/2018	Aa3/A+*		140,000		151,550
Pitt County NC Certificates of Participation School Facility		4.000			04/01/2015	Aa3/AA-*/AA@		100,000		104,098
Rutherford County NC Certificates of Participation		5.000			12/01/2017	A1/AA-*		105,000		120,004
Sampson County NC Certificates of Participation		5.000			06/01/2014	A2/AA-*		50,000		50,931
Sampson County NC Certificates of Participation		5.000			06/01/2020	A2/AA-*		400,000		440,828
Edgecombe County NC Schools		4.000			02/01/2015	A1/A+*		235,000		243,484
										4,527,229
PREREFUNDED BONDS
14.44% of Net Assets
Appalachian State University NC Revenue Refunding		5.000			07/15/2018	Aa3		35,000		37,501
Brunswick County NC CommunityCollege		4.250			05/01/2022	Aa2/AA*/AA@		125,000		139,638
Burke County NC Certificates of Participation		5.000			04/01/2020	A1/A*		180,000		197,971
Cabarrus County NC Public Improvement		5.000			03/01/2018	Aa1/AA+*/AA+@		100,000		109,867

The accompanying notes are an integral part of the financial statements.

30

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
Catawba County NC Certificates of Participation Public Schools		5.250	%		06/01/2016	Aa2	$	125,000	$	127,574
Catawba County NC Certificates of Participation Public Schools		5.250			06/01/2018	Aa2		125,000		127,573
Chapel Hill NC Certificates of Participation Operations Center		5.250			06/01/2019	Aa1/AA+*		260,000		278,065
Henderson County NC Certificates of Participation		5.250			05/01/2020	Aa3/AA*/AA-@		300,000		319,827
NC Medical Care Community Hospital Rowan Medical		5.250			09/01/2016	A2/AA-*		1,100,000		1,135,860
NC Medical Care Community Healthcare Facilities		4.000			10/01/2018	A1/AA-*/AA-@		50,000		51,400
NC Medical Care Duke University Health Systems		3.000			06/01/2019	Aa2/AA*/AA@		150,000		156,485
Randolph County NC Certificates of Participation		5.000			02/01/2018	Aa3		200,000		226,318
Rutherford County NC Certificates of Participation		5.000			12/01/2018	A1/AA-*		205,000		237,187
Rutherford NC Certificates of Participation		4.000			12/01/2019	A1/AA-*		200,000		223,806
Rutherford County NC Certificates of Participation		5.000			12/01/2020	A1/AA-*		100,000		115,701
Union County NC Certificates of Participation		5.000			06/01/2020	Aa2/AA-*		250,000		276,925
										3,761,698
PUBLIC FACILITIES REVENUE BONDS
12.73% of Net Assets
Cabarrus County NC Certificates of Participation		5.625			02/01/2016	Aa2/AA*/AA@		125,000		137,327
Cabarrus County NC Certificates of Participation		5.000			06/01/2019	Aa2/AA*/AA@		420,000		476,620
Charlotte NC Certificates of Participation Refunding		5.000			12/01/2021	Aa2/AA+*/AA@		270,000		286,940
Charlotte NC Certificates of Participation Transit Projects		4.000			06/01/2016	Aa2/AA+*/AA+@		100,000		104,687
Charlotte NC Certificates of Participation		4.000			12/01/2022	Aa1/AA+*		170,000		181,280
Craven County NC Certificates of Participation		4.375			06/01/2016	Aa3/AA-*		115,000		124,531
Durham County NC Certificates of Participation		5.000			06/01/2020	Aa1/AA+*		435,000		495,674
Durham County NC Certificates of Participation		5.000			06/01/2021	Aa1/AA+*		240,000		269,954
Forsyth County NC Certificates of Participation		5.000			10/01/2019	Aa1/AA+*/AA+@		600,000		654,090
Lee County NC Certificates of Participation		5.000			04/01/2018	Aa3/AA-*		225,000		250,643
Mecklenburg County NC Certificates of Participation		5.000			02/01/2017	Aa1/AA+*/AA+@		105,000		117,482
Rockingham County NC Certificates of Participation		4.000			04/01/2019	Aa3/AA-*		100,000		108,235
Wilmington NC Certificates of Participation		4.200			06/01/2019	Aa2/AA*/AA@		100,000		109,343
										3,316,806
REFUNDING BONDS
7.83% of Net Assets
Bertie County Limited Obligation		4.000			06/01/2022	A1/A*		200,000		209,162
Dare County NC Limited Obligation		4.000			06/01/2019	Aa3/AA-*/AA-@		100,000		110,272
Pender County NC Limited Obligation		3.000			06/01/2019	Aa3		220,000		229,739
Richmond County NC Limited Obligation Refunding		4.000			04/01/2019	A1/A*		225,000		245,322
Cabarrus County NC Certificates of Participation		5.000			04/01/2021	AA*		150,000		170,730
Charlotte NC Certificates of Participation		4.000			06/01/2022	Aa2/AA+*/AA+@		125,000		134,716
Cumberland County NC Certificates of Participation		5.000			12/01/2015	Aa2/AA*		75,000		81,294
Cumberland County NC Certificates of Participation		5.000			12/01/2017	Aa2/AA*		350,000		400,012
Cumberland County NC Certificates of Participation Refunding		3.500			12/01/2020	Aa2/AA*		185,000		194,696
Sampson Area Development Corporation NC Refunding		4.000			06/01/2015	AA-*		150,000		157,184
Union County NC Limited Obligation		3.000			12/01/2018	Aa2/AA-*/AA@		100,000		106,642
										2,039,769
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
7.33% of Net Assets
Johnston County NC Limited Obligation		4.000			06/01/2019	Aa3/AA*		150,000		163,554
NC State Capital Improvement Obligation		5.000			05/01/2021	Aa1/AA+*/AA+@		350,000		400,504
NC State Capital Improvement Obligation		4.000			05/01/2020	Aa1/AA+*/AA+@		120,000		129,239
NC State Capital Improvement Obligation		5.000			05/01/2022	Aa1/AA+*/AA+@		100,000		111,905
NC Infrastructure Certificates of Participation		5.000			06/01/2018	Aa1/AA+*/AA+@		100,000		109,300
NC Infrastructure Finance Certificates of Participation		5.000			02/01/2017	Aa1/AA+*/AA+@		150,000		168,708
NC Infrastructure Finance Corporation Certificates of Participation		5.000			02/01/2020	Aa1/AA+*/AA+@		425,000		468,975
Salisbury NC Certificates of Participation		5.000			03/01/2019	A1/AA-*		145,000		165,789
NC State Public Improvement		5.000			03/01/2019	Aaa/AAA*		15,000		15,691
NC State Capital Improvement Obligation Annual Appropriation		5.000			05/01/2022	Aa1/AA+*/AA+@		155,000		175,388
										1,909,053

The accompanying notes are an integral part of the financial statements.

31

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
6.68% of Net Assets
University NC Wilmington Certificates of Participation		5.250	%		06/01/2021	Baa1/A*	$	100,000	$	104,587
University NC Wilmington Certificates of Participation		5.000			06/01/2014	Baa1/A*		40,000		40,716
University NC Wilmington Certificates of Participation		4.250			06/01/2017	Baa1/A*		300,000		318,549
University NC Wilmington Certificates of Participation		4.375			06/01/2019	Baa1/A*		100,000		104,633
University NC Wilmington Certificates of Participation		4.000			06/01/2017	A2/AA-*		100,000		108,854
Appalachian State University NC Revenue Refunding		5.000			07/15/2018	Aa3		40,000		42,342
University of NC		4.250			10/01/2021	A1		100,000		105,764
University NC System Pool Revenue		5.000			10/01/2016	Aa2		250,000		279,445
University NC System Pool Revenue		5.000			10/01/2015	Aa3		350,000		377,597
University NC System Pool Revenue Asheville Wilmington		5.000			10/01/2016	A1/AA-*		230,000		257,223
										1,739,710
HOSPITAL AND HEALTHCARE REVENUE BONDS
5.34% of Net Assets
Charlotte-Mecklenburg NC Hospital Authority Healthcare		5.000			01/15/2018	Aa3/AA-*		200,000		221,472
Charlotte-Mecklenburg Hospital		5.000			01/15/2019	Aa3/AA-*		200,000		219,840
Charlotte-Mecklenburg Hospital		4.375			01/15/2019	Aa3/AA-*		150,000		164,123
Johnston NC Memorial Hospital Authority		4.000			04/01/2015	A2/AA-*		95,000		98,482
Johnston NC Memorial Hospital Authority Mortgage Revenue		5.000			10/01/2018	A2/AA-*		175,000		195,753
NC Medical Care - Caromont Health		3.250			02/15/2018	A1/AA-*		370,000		388,959
NC Medical Care Mission Health Combined Group		4.000			10/01/2014	Aa3/AA-*/AA-@		100,000		102,501
										1,391,130
AIRPORT BONDS
2.31% of Net Assets
Charlotte NC Airport - Charlotte Douglas International		4.125			07/01/2016	Aa3/A+*/A+@		100,000		108,317
Charlotte NC Airport Revenue Refunding		5.000			07/01/2015	Aa3/A+*/A+@		350,000		373,835
Raleigh Durham NC Airport Authority		5.000			11/01/2017	Aa3/AA-@		105,000		120,158
										602,310
TURNPIKES/TOLLROAD/HIGHWAY BONDS
1.33% of Net Assets
NC State Grant Anticipation Revenue Vehicle		5.000			03/01/2021	Aa3/AA*/A+@		310,000		348,294
LEASE REVENUE BONDS
1.00% of Net Assets
Edgecombe County NC Limited Obligation		4.000			06/01/2022	A2		250,000		261,828
STATE AND LOCAL MORTGAGE/HOUSING BONDS
.53% of Net Assets
NC Housing Finance Agency Series 31-B		3.850	%		01/01/2017	Aa2/AA*		130,000		136,891
Total Investments (cost $24,884,449) (See (a) below for further explanation) 97.72% of Net Assets									$	25,458,777
Other assets in excess of liabilities 2.28%										593,112
Net Assets 100%									$	26,051,889

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $24,884,449 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	737,667
Unrealized depreciation		(163,339	)
Net unrealized appreciation	$	574,328

The accompanying notes are an integral part of the financial statements.

32

DUPREE MUTUAL FUNDS — NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

North Carolina Municipal Bonds — 100% of Net Assets

December 31, 2013

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		25,458,777
Level 3	Significant Unobservable Inputs		—
		$	25,458,777

The accompanying notes are an integral part of the financial statements.

33

NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $24,884,449)		$	25,458,777
Cash			373,092
Interest receivable			262,665
Total assets			26,094,534
LIABILITIES:
Payable for:
Distributions to shareholders	14,926
Fund shares redeemed	10,259
Investment advisory fee	10,998
Transfer agent fee	3,273
Trustees fees	1,396
Accrued expenses	1,793
Total liabilities			42,645
NET ASSETS:
Capital			25,484,738
Net accumulated realized loss on investment transactions			(7,177	)
Net unrealized appreciation in value of investments			574,328
Net assets at value		$	26,051,889
NET ASSET VALUE, offering price and redemption price per share ($26,051,889 ÷ 2,372,897 shares outstanding; unlimited number of shares authorized; no par value)		$	10.98

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	343,280
Expenses:
Investment advisory fee		66,236
Transfer agent fee		19,705
Custodian expense		4,800
Professional fees		7,408
Trustee fees		1,526
Other expenses		7,425
Total expenses		107,100
Custodian expense reduction		(3	)
Net expenses		107,097
Net investment income		236,183
Realized and unrealized loss on investments:
Net realized loss		(6,778	)
Net change in unrealized appreciation/depreciation		(10,775	)
Net realized and unrealized loss on investments		(17,553	)
Net increase in net assets resulting from operations	$	218,630

The accompanying notes are an integral part of the financial statements.

34

NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	236,183		$	497,855
Net realized gain/(loss) on investments		(6,778	)		48,620
Net change in unrealized appreciation/depreciation		(10,775	)		(572,951	)
Net increase/(decrease) in net assets resulting from operations		218,630			(26,476	)
Distributions from net investment income		(236,185	)		(497,853	)
Distributions from capital gains		(41,274	)		(39,121	)
Net fund share transactions (Note 4)		(222,546	)		2,163,181
Total increase/(decrease)		(281,375	)		1,599,731
Net assets:
Beginning of period		26,333,264			24,733,533
End of period	$	26,051,889		$	26,333,264
Accumulated Net Investment Income	$	—		$	2

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/13			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year	$	11.00		$	11.23		$	10.93		$	10.78		$	10.57		$	10.37
Income from investment operations:
Net investment income		0.10			0.21			0.24			0.26			0.29			0.32
Net gains/(losses) on securities, both realized and unrealized		0.00			(0.21	)		0.30			0.15			0.21			0.20
Total from investment operations		0.10			0.00			0.54			0.41			0.50			0.52
Less distributions:
Distributions from net investment income		(0.10	)		(0.21	)		(0.24	)		(0.26	)		(0.29	)		(0.32	)
Distributions from capital gains		(0.02	)		(0.02	)		—			—			—			—
Total distributions		(0.12	)		(0.23	)		(0.24	)		(0.26	)		(0.29	)		(0.32	)
Net asset value, end of period	$	10.98		$	11.00		$	11.23		$	10.93		$	10.78		$	10.57
Total return		0.72%	(b)		(0.06	)%		4.98%			3.86%			4.77%			5.07%
Net assets, end of period (in thousands)	$	26,052		$	26,333		$	24,734		$	22,079		$	15,951		$	11,662
Ratio of net expenses to average net assets (a)		0.82%	(c)		0.78%			0.78%			0.77%			0.82%			0.81%
Ratio of net investment income to average net assets		1.80%	(c)		1.87%			2.15%			2.41%			2.69%			3.04%
Portfolio turnover		3.52%	(b)		10.19%			12.31%			5.15%			17.94%			10.14%

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions.

Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser			Custodian
	0%	(c)		0%	(c)	For the six months ended December 31, 2013
	0%			0%		For the year ended June 30, 2013
	0%			0%		For the year ended June 30, 2012
	0%			0%		For the year ended June 30, 2011
	0%			0%		For the year ended June 30, 2010
	.02%			.03%		For the year ended June 30, 2009

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

35

DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Tennessee Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
MUNICIPAL UTILITY REVENUE BONDS
41.00% of Net Assets
Blount County TN Public Building Authority Local Government **		5.000	%		06/01/2032	Aa3	$	750,000	$	763,628
Columbia TN Refunded — Sewer System		5.000			12/01/2024	Aa2		1,235,000		1,309,347
Columbia TN Broadband Network Revenue and Tax		5.000			03/01/2025	Aa2		1,000,000		1,036,870
Franklin TN Water and Sewer Revenue and Tax Authority		5.000			04/01/2024	Aaa		750,000		891,690
Metropolitan Government Nashville and Davidson County		5.000			10/01/2033	Aa1/AA*		500,000		536,580
Bristol TN Electric Revenue		5.000			09/01/2038	AA-*		1,525,000		1,611,086
Chattanooga TN Electric Revenue		5.000			09/01/2026	AA+*/AA@		250,000		271,583
Citizens Gas Utility District TN Gas Revenue Refunding		5.000			05/01/2029	A*		250,000		258,128
Clarksville TN Electric System Revenue		5.000			09/01/2032	Aa2		1,250,000		1,282,300
Clarksville TN Electric System Revenue		5.000			09/01/2028	Aa2/AA-*		1,000,000		1,075,520
Clarksville TN Electric System Revenue		5.000			09/01/2032	Aa2/AA-*		480,000		503,237
Clarksville TN Electric System Revenue		5.000			09/01/2033	Aa2/AA-*		2,000,000		2,086,180
Clarksville TN Water Sewer & Gas Revenue		5.000			02/01/2033	Aa3/AA-@		500,000		518,830
Columbia TN Waterworks Revenue		5.000			12/01/2032	Aa3		885,000		923,144
Gallatin TN Water and Sewer Revenue		5.000			01/01/2028	Aa3		2,540,000		2,667,508
Hallsdale-Powell Utility District Knox County Water & Sewer		5.000			04/01/2026	Baa1/AA*		1,000,000		1,061,450
Hallsdale-Powell Utility District Knox County Water & Sewer		5.000			04/01/2031	Baa1/AA*		740,000		764,575
Harpeth Valley TN Utilities District		5.000			09/01/2040	AA*		1,000,000		1,041,320
Harpeth Valley Utilities Davidson and Williamson Counties		5.000			09/01/2032	Aa3		1,420,000		1,505,186
Jackson TN Energy Authority Gas System Revenue		5.000			10/01/2028	Aa2		1,000,000		1,074,070
Knox-Chapman TN Utility District Knox County Water and Sewer		5.300			01/01/2036	AA-*		700,000		742,434
Knox Chapman TN Utilities Refunding & Impact		4.500			01/01/2027	AA-*		1,000,000		1,065,500
Metropolitan Government Nashville and Davidson County TN		4.800			05/15/2028	AA+*/AA+@		460,000		482,347
Metropolitan Government Nashville and Davidson County TN		5.000			05/15/2036	AA+*/AA+@		3,085,000		3,239,929
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue		5.000			07/01/2031	Aa3/AA-*		500,000		540,430
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue		5.000			07/01/2030	Aa3/AA-*		3,250,000		3,539,640
Metropolitan Government Nashville & Davidson County TN Water & Sewer Revenue		5.000			07/01/2033	Aa3/AA-*		575,000		614,451
South Blount County TN Utility District Waterworks Revenue		5.000			12/01/2028	A2/AA-*		1,125,000		1,196,504
Watauga River Tn Regional Water Authority Waterworks		5.000			07/01/2034	A*		500,000		508,310
West Wilson Utility District TN Waterworks Revenue		4.800			06/01/2028	Aa3		2,460,000		2,578,351
West Wilson Utility District TN Waterworks Revenue		5.000			06/01/2033	Aa3		1,170,000		1,269,415
White House Utility District TN Water and Sewer		5.000			01/01/2028	Aa3		1,235,000		1,290,191
White House Utility District TN Water and Sewer		5.000			01/01/2030	Aa3		2,505,000		2,610,410
										40,860,144
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
12.23% of Net Assets
TN State School Board Authority Higher Education Facilities		5.000			05/01/2028	Aa1/AA*/AA@		1,000,000		1,068,490
TN State School Board Authority Higher Education Facilities		5.100			05/01/2033	Aa1/AA*/AA@		1,300,000		1,385,812
TN State School Board Authority Higher Education Facilities		5.000			05/01/2034	Aa1/AA*/AA+@		500,000		525,000
TN State School Board Authority Refunding Higher Education		5.000			05/01/2024	Aa1/AA*/AA+@		1,395,000		1,459,756
TN State School Board Authority Refunding Higher Education		5.000			05/01/2025	Aa1/AA*/AA+@		1,440,000		1,505,275
TN State School Board Authority Higher Education Facilities		4.800			05/01/2030	Aa1/AA*/AA+@		2,750,000		2,856,948
TN State School Board Authority Higher Education Facilities		5.000			05/01/2039	Aa1/AA*/AA+@		500,000		524,265
Metropolitan TN Government Nashville & Davidson County Vanderbilt University		5.000			10/01/2034	Aa2/AA*/AA+@		1,000,000		1,054,010
Metropolitan TN Government Nashville & Davidson County Vanderbilt University		5.000			10/01/2028	Aa2/AA*/AA+@		1,150,000		1,278,076
Shelby County TN Health Education Facilities Board Rhodes College		5.000			08/01/2030	A1/A+*		500,000		527,725
										12,185,357

The accompanying notes are an integral part of the financial statements.

36

DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Tennessee Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
PUBLIC FACILITIES REVENUE BONDS
11.56% of Net Assets
Blount County TN Public Building Authority Local Government		5.000	%		06/01/2025	Aa2/AA*	$	100,000	$	110,984
Blount County TN Public Building Authority Local Government **		5.000			06/01/2027	Aa2/AA*		1,500,000		1,640,280
Blount County TN Public Building Authority Local Government **		4.800			06/01/2031	Aa2/AA*		750,000		788,310
Pigeon Forge Industrial Development Board TN		5.000			06/01/2024	AA*		600,000		672,048
Pigeon Forge Industrial Development Board TN		5.000			06/01/2027	AA*		1,400,000		1,542,814
Pigeon Forge Industrial Development Board TN Public Facilities		5.000			06/01/2029	AA*		2,120,000		2,304,440
Pigeon Forge Industrial Development Board TN Public Facilities		5.000			06/01/2034	AA*		850,000		897,354
Memphis Shelby County TN Sports Authority Memphis Arena		5.300			11/01/2026	Aa3/AA-*/A+@		500,000		532,204
Memphis-Shelby County Sports Authority		5.300			11/01/2027	Aa3/AA-*/A+@		750,000		791,910
Metropolitan Government Nashville & Davidson County TN Convention Center		5.000			07/01/2026	A1/A*		630,000		680,715
Metropolitan Government Nashville & Davidson County Sports Authority		5.000			08/01/2031	Aa2/AA-*		1,500,000		1,557,810
										11,518,869
HOSPITAL AND HEALTHCARE
8.81% of Net Assets
Chattanooga TN Health Education and Housing Facilities Board		5.000			01/01/2033	A1/A+*/A+@		500,000		492,170
Rutherford County TN Health and Education Facilities Ascension Health		5.000			11/15/2040	Aa2/AA+*/AA+@		1,500,000		1,504,455
Shelby County TN Health Education and Housing Facilities		5.000			05/01/2027	A2/A+*		750,000		776,828
Shelby County TN Health Education and Housing Facilities		5.000			07/01/2031	Aa2/AAA@		4,750,000		4,966,647
Shelby County TN Health Education and Housing Facilities		5.300			09/01/2027	A2/AA-*		1,000,000		1,037,760
										8,777,860
PREREFUNDED BONDS
6.36% of Net Assets
Johnson City TN Health & Education Facilities Escrowed Series 2000 A		5.100			07/01/2025	A*		270,000		270,323
Knoxville TN Waste Water System Revenue Improvement		5.000			04/01/2037	Aa2/AA+*		370,000		391,823
Metropolitan Government Nashville and Davidson County TN		5.000			01/01/2025	Aa1/AA*		4,025,000		4,651,330
Metropolitan Government Nashville and Davidson County TN		5.000			05/15/2017	Aa1/A*		205,000		234,104
Metropolitan Government Nashville and Davidson County TN		5.000			05/15/2017	Aa1/A*		35,000		39,969
Rutherford County TN Construction Utility District Waterworks		5.000			02/01/2031	Aa2/AAA*		685,000		750,459
										6,338,008
REFUNDING BONDS
5.87% of Net Assets
Blount County TN Public Building Authority General Obligation		5.300			06/01/2019	Baa1		250,000		252,645
Greene County TN General Obligation Series B		5.000			06/01/2024	A1		505,000		536,376
Manchester TN Refunding General Obligation		5.000			06/01/2038	A2/AA*		100,000		105,491
Metropolitan Government Nashville and Davidson County TN		5.000			05/15/2027	Aa1/AA*		1,195,000		1,281,387
Metropolitan Government Nashville and Davidson County TN		5.000			05/15/2028	Aa1/AA*		205,000		217,847
Pigeon Forge TN Refunding Series A		4.900			06/01/2028	Aa3/AA*		1,000,000		1,053,450
Shelby County TN Refunding Series A		5.000			03/01/2026	Aa1/AA+*/AA+@		1,200,000		1,345,860
Chattanooga TN Industrial Development Board Lease Rent Revenue		5.000			10/01/2027	A2/AA+*/AA@		1,000,000		1,052,230
										5,845,286
STATE AND LOCAL MORTGAGE/HOUSING BONDS
4.59% of Net Assets
Oak Ridge TN Industrial Development Board Refunding Revenue		5.300			08/20/2018	Aa1		255,000		254,992
TN Housing Development Agency Series 1B		5.000			07/01/2029	Aa1/AA+*		595,000		603,824
TN Housing Development Agency		5.000			07/01/2028	Aa1/AA+*		560,000		579,359
TN Housing Development Agency		5.400			07/01/2035	Aa1/AA+*		410,000		420,184
TN Housing Development Agency Homeownership Program 1		5.000			07/01/2029	Aa1/AA+*		675,000		689,992
TN Housing Development Agency Homeownership Program 2		4.700			07/01/2027	Aa1/AA+*		1,340,000		1,365,701
TN Housing Development Agency Housing Finance Program		4.900			01/01/2025	Aa2		645,000		656,508
										4,570,560

The accompanying notes are an integral part of the financial statements.

37

DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE INCOME SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Tennessee Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
SCHOOL IMPROVEMENT BONDS
4.57% of Net Assets
Cleveland TN General Obligation		5.000	%		06/01/2027	Aa3/A+*	$	680,000	$	711,620
Marion County TN Schools		5.000			06/01/2025	A1		1,050,000		1,105,608
Overton County TN Refunding Schools General Obligation		5.000			04/01/2018	Baa1		500,000		515,730
Rhea County TN		5.000			04/01/2029	A1		1,385,000		1,470,427
Smith County TN General Obligation		5.000			04/01/2021			720,000		752,565
										4,555,950
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
2.16% of Net Assets
Memphis TN Refunding and General Impact General Obligation		5.000			05/01/2036	Aa2/AA*		850,000		889,755
Springfield TN Public Improvement		4.500			03/01/2024	A1		565,000		616,827
Memphis Shelby County TN Port Authority Community Development		5.000			04/01/2035	Aa3/AA-*		625,000		648,412
										2,154,994
ESCROWED TO MATURITY BONDS
1.23% of Net Assets
Johnson City TN Health & Education Facilities Medical Center		5.000			07/01/2018	A*		135,000		135,118
Johnson City TN Health & Education Facilities Mountain State		6.500			07/01/2014	Baa1/A*/BBB+@		1,000,000		1,025,780
Metropolitan Nashville and Davidson County TN Water and Sewer		6.500			12/01/2014	A*		60,000		63,436
										1,224,334
INDUSTRIAL REVENUE BONDS
0.92% of Net Assets
Industrial Development Board TN Blount County		5.000			06/01/2027	Aa3/AA-*		850,000		921,647
Total Investments (cost $97,373,725) (See (a) below for further explanation) 99.30% of Net Assets									$	98,953,009
Other assets in excess of liabilities .70%										698,218
Net Assets 100%									$	99,651,227

* Standard and Poor’s Corporation

** Segregated security — see footnote 8

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $97,373,725 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	2,591,595
Unrealized depreciation		(1,012,311	)
Net unrealized appreciation	$	1,579,284

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		98,953,009
Level 3	Significant Unobservable Inputs		—
		$	98,953,009

The accompanying notes are an integral part of the financial statements.

38

TENNESSEE TAX-FREE INCOME SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $97,373,725)		$	98,953,009
Cash			42,687
Interest receivable			1,304,391
Total assets			100,300,087
LIABILITIES:
Payable for:
Distributions to shareholders	274,938
Fund shares redeemed	180,670
Investment advisory fee	42,271
Transfer agent fee	10,881
Trustees fees	2,341
Note payable	99,000
Accrued expenses	38,759
Total liabilities			648,860
NET ASSETS:
Capital			98,780,912
Net accumulated realized loss on investment transactions			(708,969	)
Net unrealized appreciation in value of investments			1,579,284
Net assets at value		$	99,651,227
NET ASSET VALUE, offering price and redemption price per share ($99,651,227 ÷ 8,946,588 shares outstanding; unlimited number of shares authorized; no par value)		$	11.14

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	2,033,424
Expenses:
Investment advisory fee		255,929
Transfer agent fee		65,915
Custodian expense		9,785
Professional fees		11,372
Trustee fees		2,341
Other expenses		20,238
Total expenses		365,580
Custodian expense reduction		(11	)
Net expenses		365,569
Net investment income		1,667,855
Realized and unrealized loss on investments:
Net realized loss		(288,407	)
Net change in unrealized appreciation/depreciation		(1,011,424	)
Net realized and unrealized loss on investments		(1,299,831	)
Net increase in net assets resulting from operations	$	368,024

The accompanying notes are an integral part of the financial statements.

39

TENNESSEE TAX-FREE INCOME SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	1,667,855		$	3,364,193
Net realized gain/(loss) on investments		(288,407	)		200,774
Net change in unrealized appreciation/depreciation		(1,011,424	)		(3,013,866	)
Net increase in net assets resulting from operations		368,024			551,101
Distributions from net investment income		(1,667,855	)		(3,364,193	)
Net fund share transactions (Note 4)		(4,745,319	)		7,926,230
Total increase/(decrease)		(6,045,150	)		5,113,138
Net assets:
Beginning of period		105,696,377			100,583,239
End of period	$	99,651,227		$	105,696,377

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/13			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year	$	11.27		$	11.56		$	11.04		$	11.04		$	10.71		$	10.77
Income from investment operations:
Net investment income		0.18			0.36			0.40			0.41			0.40			0.41
Net gains/(losses) on securities, both realized and unrealized		(0.13	)		(0.29	)		0.52			—	(d)		0.33			(0.06	)
Total from investment operations		0.05			0.07			0.92			0.41			0.73			0.35
Less distributions:
Distributions from net investment income		(0.18	)		(0.36	)		(0.40	)		(0.41	)		(0.40	)		(0.41	)
Net asset value, end of period	$	11.14		$	11.27		$	11.56		$	11.04		$	11.04		$	10.71
Total return		0.48%	(b)		0.56%			8.44%			3.78%			6.92%			3.40%
Net assets, end of period (in thousands)	$	99,651		$	105,696		$	100,583		$	91,740		$	94,960		$	92,222
Ratio of net expenses to average net assets (a)		0.72%	(c)		0.65%			0.70%			0.69%			0.70%			0.70%
Ratio of net investment income to average net assets		3.28%	(c)		3.10%			3.50%			3.68%			3.67%			3.90%
Portfolio turnover		8.37%	(b)		7.37%			8.39%			6.38%			14.51%			7.62%

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions.

Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser	Custodian
.00%(c)		0%	(c)	For the six months ended December 31, 2013
.04%		0%		For the year ended June 30, 2013
.00%		0%		For the year ended June 30, 2012
.00%		0%		For the year ended June 30, 2011
.00%		0%		For the year ended June 30, 2010
.00%		0%		For the year ended June 30, 2009

(b) Not Annualized

(c) Annualized

(d) Rounds to less than $.01.

The accompanying notes are an integral part of the financial statements.

40

DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Tennessee Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
REFUNDING BONDS
21.08% of Net Assets
Johnson City TN Refunding		4.000	%		06/01/2015	AA@	$	400,000	$	420,204
Memphis TN General Improvement		5.000			04/01/2022	Aa2/AA*/AA-@		185,000		206,843
Memphis TN General Obligation		5.000			05/01/2020	Aa2/AA*/AA-@		250,000		285,850
Metropolitan Government Nashville & Davidson County TN Refunding		5.000			05/15/2019	Aa1/AA*		215,000		241,768
Metropolitan Government Nashville & Davidson County TN Refunding		5.000			07/01/2021	Aa1/AA*		175,000		202,005
Metropolitan Government Nashville & Davidson County TN		4.000			07/01/2023	Aa1/AA*		250,000		266,033
Polk County TN Refinancing		5.000			05/01/2020	A2		150,000		164,489
Rhea County TN		3.000			04/01/2018	A1		200,000		212,220
Unicoi County TN Refunding		5.250			04/01/2019	A1/A+*		200,000		232,344
										2,231,756
MUNICIPAL UTILITY REVENUE BONDS
17.22% of Net Assets
Lawrenceburg TN Refunding Water and Sewer		5.000			07/01/2015	A2		125,000		133,181
Castalian Springs - Bethpage TN Waterworks		3.000			01/01/2019	A+*		260,000		270,676
Chattanooga TN Electric Revenue		5.000			09/01/2021	AA+*/AA@		400,000		446,884
Columbia TN Electric System Revenue		5.000			09/01/2021	Aa3		165,000		183,058
Cross Anchor TN Utility District		4.250			12/01/2015	AA-*		65,000		69,115
Cross Anchor TN Utility District		4.250			12/01/2016	AA-*		65,000		70,684
Johnson City TN Electric Revenue		4.000			05/01/2022	Aa2/AA-*		100,000		104,897
Johnson City TN Electric Revenue		4.500			05/01/2021	Aa2/AA-*		50,000		54,360
Metropolitan Government Nashville & Davidson County Water &Sewer		5.250			01/01/2019	Aa2/AA-*		125,000		146,381
New Market Utilty District Jefferson County TN Waterworks		4.000			06/01/2016	A3/AA-*		100,000		107,145
New Market Utilty District Jefferson County TN Waterworks		4.000			06/01/2017	A3/AA-*		100,000		108,854
Sevier County TN Utility District Gas System Revenue		2.650			06/01/2015	A+*		125,000		127,538
										1,822,773
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
14.49% of Net Assets
Blount County TN Public Building Authority		4.000			06/01/2020	Aa2/AA*		150,000		163,794
Blount County TN Public Building Authority		5.000			06/01/2021	Aa2/AA*		175,000		198,741
Claiborne County TN Public Improvement		5.000			04/01/2017	A+*		170,000		191,340
Gallatin County Capital Outlay Notes		4.630			01/01/2019	AA+*		100,000		113,861
Memphis TN Refunding General Improvement		5.000			10/01/2017	Aa2/AA*/AA-@		100,000		114,884
Memphis TN		5.000			04/01/2024	Aa2/AA*/AA-@		200,000		215,181
Tennessee State		4.000			05/01/2021	Aaa/AA+*/AAA@		340,000		363,848
Sevier County TN Public Building Authority		5.000			06/01/2018	AA-*		150,000		172,077
										1,533,726
PREREFUNDED BONDS
10.78% of Net Assets
Maury County TN School and Public Improvement		5.000			04/01/2016	Aa2		400,000		404,684
Memphis TN General Obligation General Improvement		5.000			10/01/2016	Aa2/AA*/AA-@		450,000		465,970
Metropolitan Government Nashville and Davidson County		5.000			01/01/2019	Aa1/AA*		200,000		230,866
Metropolitan Government Nashville & Davidson County TN Refunding		5.000			05/15/2017	NR		35,000		39,969
										1,141,489
SCHOOL IMPROVEMENT BONDS
9.46% of Net Assets
Lincoln County TN		5.250			04/01/2019	Aa3		200,000		229,334
Madison County TN Refunding School and Public Improvement		5.000			04/01/2018	Aa2/AA-*		175,000		185,332
Robertson County TN School		4.000			06/01/2020	Aa3/AA*		250,000		269,275
Robertson County TN School and Public Improvement		4.000			06/01/2019	AA*		100,000		111,523
Washington County TN Refunding School and Public Improvement		5.000			04/01/2015	Aa2		200,000		206,270
										1,001,734
HOSPITAL AND HEALTHCARE
6.80% of Net Assets
Shelby County TN Health Education & Housing Facilities		4.250			09/01/2020	AA-*		265,000		286,441
Shelby County Health Education		5.250			09/01/2020	A2/AA-*		400,000		433,844
										720,285

The accompanying notes are an integral part of the financial statements.

41

DUPREE MUTUAL FUNDS — TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Tennessee Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
STATE AND LOCAL MORTGAGE/HOUSING BONDS
6.09% of Net Assets
TN Housing Development Agency Homeownership Program		4.200	%		01/01/2016	Aa1/AA+*	$	105,000	$	108,554
TN Housing Development Agency Series 1B		4.800			07/01/2024	Aa1/AA+*		200,000		205,414
TN Housing Development Agency Homeownership Program		2.950			01/01/2015	Aa1/AA+*		90,000		91,778
TN Housing Development Agency Homeownership Program		1.900			07/01/2019	Aa1/AA+*		245,000		238,601
										644,347
PUBLIC FACILITIES REVENUE BONDS
5.17% of Net Assets
Memphis-Shelby County TN Sports Authority Memphis Arena		5.000			11/01/2017	Aa3/AA-*/A+@		275,000		307,665
Metropolitan Government Nashville & Davidson County TN Convention		5.000			07/01/2015	A1/A*		125,000		132,463
Metropolitan Government Nashville & Davidson County TN Convention		3.750			07/01/2018	A1/A*		100,000		107,094
										547,222
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
3.64% of Net Assets
Franklin County TN Health & Education Facilities		4.000			09/01/2019	A+*		350,000		384,951
AIRPORT BONDS
2.41% of Net Assets
Metropolitan Nashville Airport Authority		4.500			07/01/2014	A2/AA-*		250,000		255,038
Total Investments (cost $10,125,807) (See (a) below for further explanation) 97.14% of Net Assets									$	10,283,321
Other assets in excess of liabilities 2.86%										302,731
Net Assets 100%									$	10,586,052

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $10,125,807 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	228,110
Unrealized depreciation		(70,596	)
Net unrealized appreciation	$	157,514

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		10,283,321
Level 3	Significant Unobservable Inputs		—
		$	10,283,321

The accompanying notes are an integral part of the financial statements.

42

TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $10,125,807)		$	10,283,321
Cash			194,226
Defaulted securities receivable			23,607
Interest receivable			119,654
Total assets			10,620,808
LIABILITIES:
Payable for:
Distributions to shareholders	3,182
Fund shares redeemed	16,080
Investment advisory fee	4,455
Transfer agent fee	1,396
Trustees fees	1,081
Accrued expenses	8,562
Total liabilities			34,756
NET ASSETS:
Capital			10,689,810
Net accumulated realized loss on investment transactions			(261,272	)
Net unrealized appreciation in value of investments			157,514
Net assets at value		$	10,586,052
NET ASSET VALUE, offering price and redemption price per share ($10,586,052 ÷ 988,509 shares outstanding; unlimited number of shares authorized; no par value)		$	10.71

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	146,138
Expenses:
Investment advisory fee		27,502
Transfer agent fee		8,566
Custodian expense		4,449
Professional fees		1,206
Trustee fees		1,649
Other expenses		4,002
Total expenses		47,374
Custodian expense reduction		(1	)
Net expenses		47,373
Net investment income		98,765
Realized and unrealized gain/(loss) on investments:
Net realized gain		4,724
Net change in unrealized appreciation/depreciation		(44,159	)
Net realized and unrealized loss on investments		(39,435	)
Net increase in net assets resulting from operations	$	59,330

The accompanying notes are an integral part of the financial statements.

43

TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	98,765		$	226,505
Net realized gain on investments		4,724			46,406
Net change in unrealized appreciation/depreciation		(44,159	)		(312,568	)
Net increase/(decrease) in net assets resulting from operations		59,330			(39,657	)
Distributions from net investment income		(98,765	)		(226,505	)
Net fund share transactions (Note 4)		(395,207	)		(739,399	)
Total (decrease)		(434,642	)		(1,005,561	)
Net assets:
Beginning of period		11,020,694			12,026,255
End of period	$	10,586,052		$	11,020,694

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/13			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year		$10.75			$11.01			$10.85			$10.82			$10.54			$10.31
Income from investment operations:
Net investment income		0.10			0.20			0.24			0.26			0.28			0.31
Net gains/(losses) on securities, both realized and unrealized		(0.04	)		(0.26	)		0.16			0.03			0.28			0.23
Total from investment operations		0.06			(0.06	)		0.40			0.29			0.56			0.54
Less distributions:
Distributions from net investment income		(0.10	)		(0.20	)		(0.24	)		(0.26	)		(0.28	)		(0.31	)
Net asset value, end of period		$10.71			$10.75			$11.01			$10.85			$10.82			$10.54
Total return		0.53%	(b)		(0.53	)%		3.74%			2.72%			5.39%			5.31%
Net assets, end of period (in thousands)		$10,586			$11,021			$12,026			$9,889			$10,113			$9,075
Ratio of net expenses to average net assets (a)		0.87%	(c)		0.86%			0.87%			0.80%			0.81%			0.82%
Ratio of net investment income to average net assets		1.81%	(c)		1.86%			2.21%			2.40%			2.63%			2.97%
Portfolio turnover		4.35%	(c)		20.56%			1.86%			18.32%			16.16%			15.00%

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions. Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser	Custodian
.00%(c)	0%(c)	For the six months ended December 31, 2013
.00%	0%	For the year ended June 30, 2013
.00%	0%	For the year ended June 30, 2012
.02%	0%	For the year ended June 30, 2011
.02%	0%	For the year ended June 30, 2010
00%	.04%	For the year ended June 30, 2009

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

44

DUPREE MUTUAL FUNDS — INTERMEDIATE GOVERNMENT BOND SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

U.S. Government Securities and Agencies — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
FEDERAL FARM CREDIT
59.64% of Net Assets
Federal Farm Credit Bank		5.300	%		06/24/2014	Aaa/AA+*/AAA@	$	1,250,000	$	1,280,765
Federal Farm Credit Bank		5.250			10/25/2022	Aaa/AA+*/AAA@		1,500,000		1,731,840
Federal Farm Credit Bank		5.050			12/21/2021	Aaa/AA+*/AAA@		370,000		420,487
Federal Farm Credit Bank		5.840			07/20/2022	Aaa/AA+*/AAA@		2,650,000		3,116,289
Federal Farm Credit Bank		5.250			05/10/2022	Aaa/AA+*/AAA@		2,000,000		2,299,404
Federal Farm Credit Bank		5.130			11/28/2022	Aaa/AA+*/AAA@		2,000,000		2,269,546
Federal Farm Credit Bank		2.980			08/21/2026	Aaa/AA+*/AAA@		750,000		659,608
Federal Farm Credit Bank		3.000			03/18/2026	Aaa/AA+*/AAA@		750,000		680,298
										12,458,237
FEDERAL HOME LOAN BANK
32.89% of Net Assets
Federal Home Loan Bank		3.250			06/09/2023	Aaa/AA+*		250,000		248,226
Federal Home Loan Bank		7.000			08/15/2014	Aaa/AA+*		500,000		521,182
Federal Home Loan Bank		5.370			09/09/2024	Aaa/AA+*		1,750,000		1,994,470
Federal Home Loan Bank		5.250			12/11/2020	Aaa/AA+*		985,000		1,140,890
Federal Home Loan Bank		5.000			12/10/2021	Aaa/AA+*		500,000		567,622
Federal Home Loan Bank **		5.750			06/10/2022	Aaa/AA+*		2,000,000		2,398,506
										6,870,896
FEDERAL NATIONAL MORTGAGE ASSOCIATION
6.23% of Net Assets
Federal National Mortgage Association **		8.100			08/12/2019	Aaa/AA+*/AAA@		1,000,000		1,300,610
FEDERAL HOME LOAN MORTGAGE
2.10% of Net Assets
Federal Home Loan Mortgage Corporation **		2.500			11/08/2024	Aaa/AA+*/AAA@		500,000		438,335
Total Investments (cost $21,182,003) (See (a) below for further explanation) 100.86% of Net Assets									$	21,068,078
Other liabilities in excess of assets (.86)%										(178,036	)
Net Assets 100%									$	20,890,042

* Standard and Poor’s Corporation

** Segregated security — see footnote 8

@ Fitch’s Investors Service

All other ratings by Moody’s Investors Service, Inc.

# Bond ratings unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $23,182,003 and net unrealized depreciation of investments is as follows:

Unrealized appreciation	$	205,391
Unrealized depreciation		(319,316	)
Net unrealized depreciation	$	(113,925	)

Other Information

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Government Agencies		Total
Level 1	Quoted Prices		—		—
Level 2	Other Significant Observable Inputs		21,068,078		21,068,078
Level 3	Significant Unobservable Inputs		—		—
				$	21,068,078

The accompanying notes are an integral part of the financial statements.

45

INTERMEDIATE GOVERNMENT BOND SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $23,182,003)		$	21,068,078
Cash			1,394
Interest receivable			211,319
Total assets			21,280,791
LIABILITIES:
Payable for:
Distributions to shareholders	10,826
Note payable	52,000
Fund shares redeemed	302,689
Investment advisory fee	3,684
Transfer agent fee	5,355
Accrued expenses	16,195
Total liabilities			390,749
NET ASSETS:
Capital			21,251,330
Net accumulated realized loss on investment transactions			(247,363	)
Net unrealized depreciation in value of investments			(113,925	)
Net assets at value		$	20,890,042
NET ASSET VALUE, offering price and redemption price per share ($20,890,042 ÷ 2,126,409 shares outstanding; unlimited number of shares authorized; no par value)		$	9.82

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	381,125
Expenses:
Investment advisory fee		22,468
Transfer agent fee		17,738
Custodian expense		5,141
Professional fees		2,514
Pricing		3,639
Trustee fees		1,344
Other expenses		9,844
Total expenses		62,688
Custodian expense reduction		(2	)
Net expenses		62,686
Net investment income		318,439
Realized and unrealized loss on investments:
Net realized loss		(139,363	)
Net change in unrealized appreciation/depreciation		(384,594	)
Net realized and unrealized loss on investments		(523,957	)
Net decrease in net assets resulting from operations	$	(205,518	)

The accompanying notes are an integral part of the financial statements.

46

INTERMEDIATE GOVERNMENT BOND SERIES

STATEMENTS OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	318,439		$	713,345
Net realized loss on investments		(139,363	)		(22,547	)
Net change in unrealized appreciation/depreciation		(384,594	)		(1,213,820	)
Net decrease in net assets resulting from operations		(205,518	)		(523,022	)
Distributions from net investment income		(318,624	)		(713,160	)
Net fund share transactions (Note 4)		(1,981,132	)		(1,198,761	)
Total decrease		(2,505,274	)		(2,434,943	)
Net assets:
Beginning of period		23,395,316			25,830,259
End of period	$	20,890,042		$	23,395,316
Accumulated net investment income	$	—		$	185

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six Months  Ended 12/31/2013			For the years ended June 30,
				2013			2012			2011			2010			2009
Net asset value, beginning of year		$10.05			$10.58			$9.96			$10.24			$10.05			$9.93
Income from investment operations:
Net investment income		0.14			0.30			0.34			0.35			0.44			0.46
Net gains/(losses) on securities, both realized and unrealized		(0.23	)		(0.53	)		0.62			(0.28	)		0.19			0.12
Total from investment operations		(0.09	)		(0.23	)		0.96			0.07			0.63			0.58
Less distributions:
Distributions from net investment income		(0.14	)		(0.30	)		(0.34	)		(0.35	)		(0.44	)		(0.46	)
Net asset value, end of period		$9.82			$10.05			$10.58			$9.96			$10.24			$10.05
Total return		(0.88	)%(b)		(2.34	)%		9.72%			0.71%			6.38%			5.99%
Net assets, end of period (in thousands)		$20,890			$23,395			$25,830			$25,004			$42,053			$25,431
Ratio of net expenses to average net assets (a)		0.56%	(c)		0.48%			0.52%			0.46%			0.47%			0.47%
Ratio of net investment income to average net assets		2.86%	(c)		2.77%			3.25%			3.48%			4.30%			4.62%
Portfolio turnover		10.42%	(b)		16.02%			8.94%			72.86%			56.38%			30.35%

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions.

Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser	Custodian
.00%(c)		0%	(c)	For the six months ended December 31, 2013
.06%(c)		0%	(c)	For the year ended June 30, 2013
.00%		0%		For the year ended June 30, 2012
.00%		0%		For the year ended June 30, 2011
.00%		0%		For the year ended June 30, 2010
.00 %		.03%		For the year ended June 30, 2009

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

47

DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Taxable Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
PUBLIC FACILITIES REVENUE BONDS
35.29% of Net Assets
Franklin County OH Convention Facilities Authority Build America		6.640	%		12/01/2042	Aa2/AA*	$	130,000	$	145,610
Rhode Island Convention Center		6.060			05/15/2035	Aa3/AA-*/AA-@		70,000		69,378
Colorado State Certificates of Participation Build America		6.450			09/15/2039	Aa2/AA-*		160,000		171,667
Grand Junction CO Certificates of Participation Build America		7.500			12/01/2030	A+*		500,000		552,620
Grand Junction CO Certificates of Participation Build America		7.650			12/01/2040	A+*		50,000		54,641
Pennington County SD Certificates of Participation Build America		7.200			06/01/2037	Aa2		750,000		827,018
Decatur GA Urban Redevelopment Agency Revenue Build America		6.920			01/01/2038	Aa2/AA+*		150,000		165,162
Buncombe County NC Limited Obligation Build America		6.800			06/01/2030	Aa2/AA+*		250,000		287,735
Dallas Convention Center Hotel Development Corporation		7.088			01/01/2042	A1/A+*		280,000		316,187
Metro Government Nashville & Davidson County TN Sports Authoity		5.231			07/01/2033	Aa2/AA-*		100,000		100,007
Metropolitan Government Nashville & Davidson County TN Convention Build America		7.431			07/01/2043	A1/A*		160,000		185,931
Metropolitan Government Nashville and Davidson County TN		6.731			07/01/2043	Aa2/A*		125,000		138,560
Miami Lakes FL Special Obligation Build America		7.627			12/01/2040	Aa3/AA@		255,000		299,694
Sarasota County FL Capital Improvement Revenue Build America		7.016			10/01/2040	AA+*/AA+@		710,000		782,960
										4,097,170
MUNICIPAL UTILITY REVENUE BONDS
28.17% of Net Assets
Sedalia MO Certificates of Participation Build America		7.300			06/01/2035	AA-*		500,000		521,740
East Bethel MN Build America Utilities		7.000			02/01/2040	Aa3		250,000		262,915
Pigeon Forge TN Build America Recovery Zone		7.125			06/01/2040	AA*		300,000		343,380
Altoona PA Water Authority Sewer Revenue Build America		7.064			12/01/2040	AA-*		500,000		550,795
Davie FL Water & Sewer Revenue Build America		6.849			10/01/2040	A1/AA-*		40,000		42,818
FL State Utility Revenue		6.548			10/01/2040	A2		60,000		62,983
Heber UT Light & Power Build America		7.000			12/15/2030	A2/AA-@		500,000		549,200
Louisville & Jefferson County KY Sewer District Build America		6.250			05/15/2043	Aa3/AA*/AA-@		75,000		86,552
Metropolitan Government Nashville & Davidson County TN Recovery Zone		6.693			07/01/2041	Aa3/AA-*		200,000		241,534
West Knox Utilities District Knox County TN Water and Sewer		6.900			06/01/2040	AA+*		400,000		445,564
Williamsport PA Municipal Water Authority Build America		6.100			01/01/2040	A2/AA-*		60,000		59,306
York County VA Sewer Revenue Build America		6.607			06/01/2040	Aa3		100,000		103,941
										3,270,728
SCHOOL IMPROVEMENT BONDS
14.21% of Net Assets
CO State Building Excellent Schools Today Certificates of Participation		7.017			03/15/2031	Aa2/AA-*		400,000		439,144
Armstrong School District PA Build America		7.000			03/15/2041	AA-*		750,000		817,035
Jefferson County TN Build America		6.625			06/01/2040	Aa3/A+*		250,000		286,063
Ashland KY Independent School District Build America		6.200			08/01/2029	Aa3		100,000		107,442
										1,649,684
MISCELLANEOUS PUBLIC IMPROVEMENT BONDS
12.25% of Net Assets
KY State Property & Buildings Build America		5.921			11/01/2030	Aa3/A+*/A+@		250,000		266,918
Downtown Smyrna Development Authority GA		6.900			02/01/2035	Aa2/AA+*		250,000		278,815
Lincoln AL Build America Recovery Zone		6.800			06/01/2040	AA-*		500,000		540,035
Scottsboro AL Build America		6.400			11/01/2040	A2/AA-*		250,000		265,718
Utah County UT Excise Tax Revenue		7.130			12/01/2039	AA-*		65,000		70,182
										1,421,668
UNIVERSITY CONSOLIDATED EDUCATION AND BUILDING REVENUE BONDS
2.83% of Net Assets
Maine Health and Higher Education Facilities Authority		6.667			07/01/2039	Aa2		200,000		210,462
Mesa State College CO Auxiliary Facilities Build America		6.746			05/15/2042	Aa2/AA-*		100,000		118,361
										328,823
TURNPIKES/TOLLROAD/HIGHWAY BONDS
2.79% of Net Assets
FL State Turnpike Authority Turnpike Revenue Build America		6.800			07/01/2039	Aa3/AA-*/AA-@		300,000		323,598

The accompanying notes are an integral part of the financial statements.

48

DUPREE MUTUAL FUNDS — TAXABLE MUNICIPAL BOND SERIES UNAUDITED

SCHEDULE OF PORTFOLIO INVESTMENTS

Taxable Municipal Bonds — 100% of Net Assets

December 31, 2013

Bond Description	Coupon			Maturity Date		Rating#	Par Value		Fair Value
HOSPITAL AND HEALTHCARE
2.36% of Net Assets
University NC Chapel Hill Hospital Revenue Build America		6.329	%		02/01/2031	Aa3/AA*	$	250,000	$	273,810
Total Investments (cost $10,690,041) (See (a) below for further explanation) 97.90% of Net Assets									$	11,365,481
Other assets in excess of liabilities 2.10%										243,830
Net Assets 100%									$	11,609,311

* Standard and Poor’s Corporation

@ Fitch’s Investors Service

(All other ratings by Moody’s Investors Service, Inc.)

NR Not Rated

# Bond ratings are unaudited and not covered by Report of Independent Registered Public Accounting Firm.

(a) Cost for federal income tax purposes is $10,690,041 and net unrealized appreciation of investments is as follows:

Unrealized appreciation	$	800,656
Unrealized depreciation		(125,216	)
Net unrealized appreciation	$	675,440

The following is a summary of the inputs used, as of December 31, 2013 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.

The Fund held no investments or other financial instruments as of December 31, 2013 whose fair value was determined using Level 3 inputs. There were no transfers in and out of level 1, 2 or 3 during the period ending December 31, 2013.

	Valuation Inputs	Taxable Municipal Bonds
Level 1	Quoted Prices	$	—
Level 2	Other Significant Observable Inputs		11,365,481
Level 3	Significant Unobservable Inputs		—
		$	11,365,481

The accompanying notes are an integral part of the financial statements.

49

TAXABLE MUNICIPAL BOND SERIES

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013 UNAUDITED

ASSETS:
Investments in securities, at fair value (Cost: $10,690,041)		$	11,365,481
Cash			139,081
Interest receivable			153,417
Prepaid expenses			530
Total assets			11,658,509
LIABILITIES:
Payable for:
Distributions to shareholders	41,892
Investment advisory fee	4,943
Transfer agent fee	1,431
Trustees fees	932
Total liabilities			49,198
NET ASSETS:
Capital			10,973,553
Net accumulated realized loss on investment transactions			(39,682	)
Net unrealized appreciation in value of investments			675,440
Net assets at value		$	11,609,311
NET ASSET VALUE, offering price and redemption price per share ($11,609,311 ÷ 1,150,806 shares outstanding; unlimited number of shares authorized; no par value)		$	10.09

STATEMENT OF OPERATIONS

For the six months ended December 31, 2013

Net investment income:
Interest income	$	432,555
Expenses:
Investment advisory fee		37,223
Transfer agent fee		11,278
Custodian expense		3,759
Professional fees		2,759
Trustee fees		932
Pricing		4,285
Other expenses		4,948
Total expenses		65,184
Custodian expense reduction		(1	)
Net expenses		65,183
Net investment income		367,372
Realized and unrealized loss on investments:
Net realized loss		(39,682	)
Net change in unrealized appreciation/depreciation		(402,496	)
Net realized and unrealized loss on investments		(442,178	)
Net decrease in net assets resulting from operations	$	(74,806	)

The accompanying notes are an integral part of the financial statements.

50

TAXABLE MUNICIPAL BOND SERIES

STATEMENT OF CHANGES IN NET ASSETS

For the six months ended December 31, 2013 and the year ended June 30, 2013 UNAUDITED

	Six Months Ended 12/31/2013			One Year Ended 6/30/2013
Operations:
Net investment income	$	367,372		$	767,597
Net realized gain/(loss) on investments		(39,682	)		110,538
Net change in unrealized appreciation/depreciation		(402,496	)		(655,652	)
Net increase/decrease in net assets resulting from operations		(74,806	)		222,483
Distributions from net investment income		(367,902	)		(767,284	)
Distributions from capital gains		(69,960	)		(19,468	)
Net fund share transactions (Note 4)		(3,884,309	)		528,225
Total decrease		(4,396,977	)		(36,044	)
Net assets:
Beginning of period		16,006,288			16,042,332
End of period	$	11,609,311		$	16,006,288
Accumulated net investment income	$	—		$	530

FINANCIAL HIGHLIGHTS

Selected data for a share outstanding:	Six months  Ended 12/31/13			For the year ended June 30,						For the period ended June 30, 2011*
				2013			2012
Net asset value, beginning of period	$	10.45		$	10.82		$	9.65		$	10.00
Income from investment operations:
Net investment income		0.26			0.51			0.52			0.34
Net gains/(losses) on securities, both realized and unrealized		(0.30	)		(0.36	)		1.17			(0.35	)
Total from investment operations		(0.04	)		0.15			1.69			(0.01	)
Less distributions:
Distributions from net investment income		(0.26	)		(0.51	)		(0.52	)		(0.34	)
Distributions from capital gains		(0.06	)		(0.01	)		—			—
Total distributions		(0.32	)		(0.52	)		(0.52	)		(0.34	)
Net asset value, end of period	$	10.09		$	10.45		$	10.82		$	9.65
Total return		(0.41	)%(b)		1.35%			17.77%			0.04%	(b)
Net assets, end of period (in thousands)	$	11,609		$	16,006		$	16,042		$	10,872
Ratio of net expenses to average net assets (a)		0.88%	(c)		0.83%			0.85%			0.49%	(c)
Ratio of net investment income to average net assets		4.99%	(c)		4.71%			4.95%			3.71%	(c)
Portfolio turnover		4.20%	(b)		9.57%			0.00%			89.93%	(b)

(a) Percentages are after expense waivers and reductions by the Adviser and Custodian. The Adviser and Custodian have agreed not to seek recovery of these waivers and reductions.

Expenses waived by the Adviser and expense reductions by the Custodian were as follows:

Adviser	Custodian
.00%		.00%		For the six months ended December 30, 2013
.00%		.00%		For the year ended June 30, 2013
.01%		.00%		For the year ended June 30, 2012
.01%(c)		.00%	(c)	For the period ended June 30, 2011*

* Represents the period from commencement of operations (November 1, 2010) through June 30, 2011.

(b) Not annualized

(c) Annualized

The accompanying notes are an integral part of the financial statements.

51

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

1. Organization and Significant Accounting Policies

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

Alabama Tax-Free Income Series

Kentucky Tax-Free Income Series

Kentucky Tax-Free Short-to-Medium Series

Mississippi Tax-Free Income Series

North Carolina Tax-Free Income Series

North Carolina Tax-Free Short-to-Medium Series

Tennessee Tax-Free Income Series

Tennessee Tax-Free Short-to-Medium Series

Intermediate Government Bond Series

Taxable Municipal Bond Series

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

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

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

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States.

A. Security Valuation

Securities held by the Intermediate Government Bond Series and the Taxable Municipal Bond Series are valued using market quotations as provided by an independent pricing service. Securities held by the eight state tax-free 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 a matrix pricing model which takes into consideration price quotations or appraisals for these securities, yield, stability, risk, quality, coupon rate, maturity, type of issue, trading characteristics, special circumstances of a security or trading market, and any other factors or market data considered relevant in determining the value. The procedures also include weekly verification of market quotations provided by two independent pricing services. A bond valuation that is not supported by a valuation source requires management to fair value the security in consultation with the Board’s Valuation committee. Shares of open-end mutual funds in which the Funds invest are valued at their respective net asset values as reported by the underlying funds.

The Funds have adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures”. ASC 820 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under ASC 820 are described as follows:

Level 1:	Quoted prices in active markets for identical securities.
Level 2:	Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

52

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

1. Organization and Significant Accounting Policies, continued

Level 3: Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, where there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

The aggregate value by input level, as of December 31, 2013, for the Funds’ investments is included at the end of the Funds’ Schedules of Portfolio Investments. The Funds recognize transfers at the end of the reporting period. There were no transfers in and out of level 1, 2 or 3 during the year ending December 31, 2013.

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 discounts, is recorded on an accrual basis.

D. When-Issued and Extended Settlement Securities

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

E. Federal Income Taxes

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 December 31, 2013. Therefore, no federal income tax provision is required. Management of the Funds has concluded that there are no uncertain tax provisions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns for the last three years.

F. Distributions

Substantially all of the net investment income of the Funds is declared as a dividend to shareholders of record as of the close of business each day. Distributions are payable in cash or in additional shares at the net asset value on the payable date.

Distributions are payable:

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

53

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

1. Organization and Significant Accounting Policies, continued

G. Estimates

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

H. Subsequent Events

Subsequent events occurring after the date of this report have been evaluated for potential impact to this report through the date the financial statements were issued. There were no subsequent events to report that would have a material impact on the Funds’ financial statements.

2. Investment Advisory Fee and Other Transactions with Affiliates

Subject to the direction of the Trustees, Dupree & Company, Inc. (the Adviser) is responsible for the management of the Funds’ portfolios. Under the terms of the Investment Advisory Agreements, for the Alabama, Kentucky, Mississippi, North Carolina, Tennessee, and the Taxable Municipal Bond Series, the Funds 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; .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. For the Intermediate Government Bond Series, the Fund 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 six months ended December 31, 2013, fees voluntarily waived by the Adviser were as follows:

	Fees waived by Adviser
Alabama Tax-Free Income Series	$	9,752
Mississippi Tax-Free Income Series		9,773

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.

3. Purchases and Sales of Securities

During the period ended December 31, 2013, the cost of purchases and the proceeds from sales/calls and maturities of securities (excluding short-term securities and U.S. government obligations, except for the Intermediate Government Bond Series which are all U.S. government obligations) for each of the Funds were as follows:

	Purchases		Sales/Calls
Alabama Tax-Free Income Series	$	257,923	$	2,977,685
Kentucky Tax-Free Income Series		57,570,121		69,595,987
Kentucky Tax-Free Short-to-Medium Series		1,144,370		2,469,485
Mississippi Tax-Free Income Series		875,502		154,056
North Carolina Tax-Free Income Series		1,870,957		7,436,459
North Carolina Tax-Free Short-to-Medium Series		907,359		938,637
Tennessee Tax-Free Income Series		8,456,168		12,984,459
Tennessee Tax-Free Short-to-Medium Series		462,567		794,069
Intermediate Government Bond Series		2,293,533		3,159,342
Taxable Municipal Bond Series		603,449		4,263,581

54

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

4. Capital Shares

At December 31, 2013 and June 30, 2013, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:

ALABAMA TAX-FREE INCOME SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		47,761		$	569,679			382,317		$	4,839,667
Shares reinvested		18,240			217,627			33,429			417,792
Shares redeemed		(326,342	)		(3,886,538	)		(254,710	)		(3,194,533	)
Net increase/(decrease)		(260,341	)	$	(3,099,232	)		161,036		$	2,062,926
KENTUCKY TAX-FREE INCOME SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		7,989,060		$	61,293,016			12,157,634		$	98,006,608
Shares reinvested		1,319,878			10,139,597			2,362,521			18,873,478
Shares redeemed		(9,650,835	)		(74,010,812	)		(15,844,621	)		(127,179,843	)
Net decrease		(341,897	)	$	(2,578,199	)		(1,324,466	)	$	(10,299,757	)
KENTUCKY TAX-FREE SHORT-TO-MEDIUM SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		1,203,266		$	6,528,497			4,306,089		$	23,875,791
Shares reinvested		119,014			646,470			241,397			1,337,982
Shares redeemed		(2,629,301	)		(14,270,301	)		(4,245,020	)		(23,528,134	)
Net increase/(decrease)		(1,307,021	)	$	(7,095,170	)		302,466		$	1,685,639
MISSISSIPPI TAX-FREE INCOME SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		90,360		$	1,034,134			162,331		$	1,982,073
Shares reinvested		5,028			57,770			10,255			123,882
Shares redeemed		(35,955	)		(413,337	)		(101,079	)		(1,221,918	)
Net increase		59,433		$	678,567			71,507		$	884,037
NORTH CAROLINA TAX-FREE INCOME SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		499,337		$	5,557,515			1,987,555		$	23,519,667
Shares reinvested		94,326			1,051,516			183,206			2,145,758
Shares redeemed		(1,158,760	)		(12,902,090	)		(1,378,402	)		(16,191,347	)
Net increase/(decrease)		(565,097	)	$	(6,293,059	)		792,359		$	9,474,078

55

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

4. Capital Shares, continued

NORTH CAROLINA TAX-FREE SHORT-TO-MEDIUM SERIES	Six Months ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		160,506		$	1,766,119			701,612		$	7,898,764
Shares reinvested		19,801			217,915			36,890			414,632
Shares redeemed		(200,714	)		(2,206,580	)		(547,748	)		(6,150,215	)
Net increase/(decrease)		(20,407	)	$	(222,546	)		190,754		$	2,163,181
TENNESSEE TAX-FREE INCOME SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		568,463		$	6,338,147			1,604,096		$	18,817,879
Shares reinvested		94,526			1,055,766			164,725			1,914,381
Shares redeemed		(1,093,553	)		(12,139,232	)		(1,095,123	)		(12,806,030	)
Net increase/(decrease)		(430,563	)	$	(4,745,319	)		673,698		$	7,926,230
TENNESSEE TAX-FREE SHORT-TO-MEDIUM SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		109,960		$	1,176,145			177,861		$	1,960,274
Shares reinvested		7,132			76,608			13,852			152,444
Shares redeemed		(153,498	)		(1,647,960	)		(259,066	)		(2,852,117	)
Net decrease		(36,406	)	$	(395,207	)		(67,353	)	$	(739,399	)
INTERMEDIATE GOVERNMENT BOND SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		58,008		$	577,023			101,835		$	1,086,915
Shares reinvested		25,053			248,799			51,219			544,743
Shares redeemed		(283,589	)		(2,806,954	)		(266,971	)		(2,830,419	)
Net decrease		(200,528	)	$	(1,981,132	)		(113,917	)	$	(1,198,761	)
TAXABLE MUNICIPAL BOND SERIES	Six Months Ended December 31, 2013						Year Ended June 30, 2013
	SHARES			AMOUNT			SHARES			AMOUNT
Shares sold		32,743		$	333,850			223,183		$	2,421,068
Shares reinvested		21,856			223,232			31,550			343,461
Shares redeemed		(435,247	)		(4,441,391	)		(205,941	)		(2,236,304	)
Net increase/(decrease)		(380,648	)	$	(3,884,309	)		48,792		$	528,225

5. Concentration of Credit Risk

The Alabama Tax-Free Income Series, Kentucky Tax-Free Income Series, Kentucky Tax-Free Short-to-Medium Series, Mississippi Tax-Free Income Series, North Carolina Tax-Free Income Series, North Carolina Tax-Free Short-to-Medium Series, Tennessee Tax-Free Income Series, and Tennessee Tax-Free Short-to-Medium Series each invest solely in debt obligations issued by the states of Alabama, Kentucky, Mississippi, North Carolina, and Tennessee, respectively, and their respective

56

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

5. Concentration of Credit Risk, continued

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.

6. Federal Income Taxes

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each Fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

At June 30, 2013, the Funds capital loss carry-forwards expire as follows:

	2014		2015		2016		2017		2018		2019		Total
Kentucky Tax-Free Short-to-Medium Series	$	—	$	345,116	$	227,932	$	223,976	$	—	$	—	$	797,024
Tennessee Tax-Free Income Series		—		—		—		—		371,142		—		371,142
Tennessee Tax-Free Short-to-Medium Series		—		26,184		23,418		—		—		—		49,602
Intermediate Government Bond Series		51,194		21,143		—		—		—		—		72,337

During the year ended June 30, 2013, the following Funds utilized capital loss carry-forwards as follows:

	Amount
Kentucky Tax-Free Short-to-Medium Series	$	145,079
Tennessee Tax-Free Income Series		250,195
Tennessee Tax-Free Short-to-Medium Series		46,104
Intermediate Government Bond Series		13,115
Taxable Municipal Bond Series		21,110

Capital losses incurred after October 31 (“Post-October” losses) within the taxable year are deemed to arise on the first business day of the Funds’ next taxable year. The following Funds incurred and will elect to defer net capital losses during the fiscal year 2013 as follows:

	Post October Losses
Tennessee Tax-Free Income Series	$	(49,421	)
Intermediate Government Bond Series		(35,662	)

57

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

6. Federal Income Taxes, continued

The tax character of distributions paid for the years ended June 30, 2013 and 2012 were as follows:

	2013						2012
	Tax Exempt Income		Ordinary Income		Long-Term Capital Gain		Tax Exempt Income		Ordinary Income		Long-Term Capital Gain
Alabama Tax-Free Income Series	$	842,439	$	—	$	16,538	$	781,226	$	—	$	12,037
Kentucky Tax-Free Income Series		33,471,869		37,796		108,545		34,105,207		58,958		3,685,303
Kentucky Tax-Free Short-to-Medium Series		1,932,832		—		—		1,911,427		—		—
Mississippi Tax-Free Income Series		287,105		—		—		235,664		—		16,068
North Carolina Tax-Free Income Series		3,026,417		—		131,685		2,780,923		—		—
North Carolina Tax-Free Short-to-Medium Series		497,853		—		39,121		495,128		—		—
Tennessee Tax-Free Income Series		3,364,193		—		—		3,364,028		—		—
Tennessee Tax-Free Short-to-Medium Series		226,505		—		—		230,540		—		—
Intermediate Government Bond Series		—		713,160		—		—		837,279		—
Taxable Municipal Bond Series		—		767,284		19,468		—		696,663		—

At June 30, 2013, the Fund's components of distributable earnings (accumulated losses) on a tax basis were as follows:

	Undistributed Ordinary Income		Undistributed Tax Exempt Income		Undistributed Net Long term Capital Gain		Net  Unrealized Appreciation/ Depreciation Investments
Alabama Tax-Free Income	$	—	$	116,420	$	29,276	$	654,807
Kentucky Tax-Free Income		—		3,713,889		315,193		38,275,895
Kentucky Tax-Free Short-to-Medium		—		58,073		—		3,057,471
Mississippi Tax-Free Income		—		39,983		9,925		131,517
North Carolina Tax-Free Income		—		278,725		112,821		2,777,703
North Carolina Tax-Free Short-to-Medium		—		11,966		40,875		585,103
Tennessee Tax-Free Income		—		378,775		—		2,590,708
Tennessee Tax-Free Short-to-Medium		—		5,685		—		(14,721	)
Intermediate Government Bond		15,268		—		—		270,669
Taxable Municipal Bond Series		38,233		—		69,960		1,077,936

	Accumulated Capital and Other Losses			Other Temporary Differences			Total Accumulated Earnings
Alabama Tax-Free Income	$	—		$	(116,423	)	$	684,080
Kentucky Tax-Free Income		—			(3,713,889	)		38,591,088
Kentucky Tax-Free Short-to-Medium		(797,024	)		(58,074	)		2,260,446
Mississippi Tax-Free Income		—			(40,054	)		141,371
North Carolina Tax-Free Income		—			(278,725	)		2,390,524
North Carolina Tax-Free Short-to-Medium		—			(11,964	)		625,980
Tennessee Tax-Free Income		(420,563	)		(378,774	)		2,170,146
Tennessee Tax-Free Short-to-Medium		(49,602	)		(5,685	)		(64,323	)
Intermediate Government Bond		(107,999	)		(15,084	)		162,854
Taxable Municipal Bond Series		—			(37,703	)		1,148,426

58

DUPREE MUTUAL FUNDS UNAUDITED

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

7. Contingencies and Commitments

The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from the 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,that have not yet occurred. However, based on experience, the Funds do not expect the risk of loss to be material.

8. Line of Credit Agreement and Custodian Agreement

Under the terms of an agreement with the Funds’ custodian, principal amounts up to 5% of a Fund’s net assets are available on an uncommitted line of credit. The principal amounts borrowed are due on demand. The agreement expires on August 31, 2014, but may be renewed annually. Interest is payable based on the published prime rate of the bank. Securities with a minimum value of three times the loan proceeds will be assigned as collateral until the balance of the note and unpaid interest is paid in full and terminated.

At December 31, 2013, the Funds had an unused line of credit amount of $24,738,000. During the six months ended December 31, 2013, the average interest rate on borrowings was 3.25% and the daily weighted average borrowings for each Fund were as follows:

	Weighted Average Borrowings
Alabama Tax-Free Income Series	$	9,630
Kentucky Tax Free Income Series		72,908
Kentucky Tax-Free Short-to-Medium Series		39,228
Mississippi Tax-Free Income Series		—
North Carolina Tax-Free Income Series		47,315
North Carolina Tax-Free Short-to-Medium Series		3,603
Tennessee Tax-Free Income Series		44,103
Tennessee Tax-Free Short-to-Medium Series		6,212
Taxable Municipal Bond Series		3,011
Intermediate Government Bond Series		1,326

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 six months ended December 31, 2013, these credits reduced each of Funds’ expenses by the amount shown on the Statement of Operation as “Custodian expense reduction.”

59

DUPREE MUTUAL FUNDS UNAUDITED

OTHER UNAUDITED INFORMATION

December 31, 2013

Trustee and officer information

Name, Address and Age	Position(s) held with Funds	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Directorships Held by Trustee During Past Five Years in Publicly Traded Companies
Officers
Thomas P. Dupree, Sr. 125 South Mill Street Lexington, KY 40507 Age: 83	President of Dupree Mutual Funds Elected President by Trustees	One Year Term; 34 Years of Service	Chairman, Dupree & Company, Inc. (broker/dealer/investment adviser)	N/A	N/A
Allen E. Grimes, III 125 South Mill Street Lexington, KY 40507 Age: 51	Executive Vice President; elected Executive Vice President by Trustees	One Year Term; 8 Years of Service	President, Dupree & Company, Inc. (broker/dealer/investment adviser);	N/A	N/A
Michelle M. Dragoo 125 South Mill Street Lexington, KY 40507 Age: 52	Vice President, Secretary, Treasurer; elected Vice President, Secretary & Treasurer by Trustees	One Year Term; 16 Years of Service as Vice President, 14 Years of Service as Secretary, Treasurer	Vice President, Secretary, Treasurer of Dupree & Company, Inc. (broker/dealer/investment adviser)	N/A	N/A
Eugene M. Gard 125 South Mill Street Lexington, KY 40507 Age: 34	Assistant Secretary, Assistant Treasurer; elected Assistant Secretary & Assistant Treasurer by Trustees	One Year Term, first year of service	Dupree & Company, Inc. (broker/dealer/investment adviser)	N/A	N/A
Gay M. Elste P.O. Box 28 Versailles, KY 40383 Age: 62	Compliance Officer; elected by Trustees	One Year Term; 9 Years of Service 32 Years of Service as legal counsel to Trust	Attorney at Law, Darsie & Elste; Anstruther Farm (cattle farming)	N/A	N/A
Trustees:
William A. Combs, Jr. 111 Woodland Ave, #510 Lexington, KY 40502 Age: 73	Chairman of the Board of Trustees and Trustee of Dupree Mutual Funds	One Year Term; 25 Years of Service 13 Years of Service as Chairman	Officer, Director: Mercedes-Benz of Cincinnati, Ohio; Mercedes-Benz of West Chester, Ohio and Ellerslie Corp., Lexington, KY	10	N/A
James C. Baughman, Jr. 1999 Richmond Road Suite 4 Lexington, KY 40502 Age: 50	Trustee and Chairman of Audit Committee of Dupree Mutual Funds	One Year Term; 6 Years of Service 3 Years of Service as Chairman of Audit Committee	Chief Executive Officer, Secretary, Treasurer, Director Office Suites Plus, Inc. (1992-2013)(executive office space rental) Business Consultant, CJN Advisors, LLC (2013 – present)	10	Advisory Board, Community Trust Bank, Lexington, KY
C. Timothy Cone 201 West Short Street Lexington, KY 40507 Age: 69	Trustee of Dupree Mutual Funds	One Year Term; 11 Years of Service 2 Years of Service as Chairman of Nominating committee	President, Gess, Mattingly & Atchison, P.S.C. (law firm)	10	N/A
Ann Rosenstein Giles 343 Waller Avenue, Suite 100 Lexington, KY 40504 Age: 61	Trustee of Dupree Mutual Funds	One Year Term; 2 Years of Service	Rosenstein Development, LLC (self-employed marketing consultant)	10	N/A
Marc A. Mathews, CPA, CTP 2104 Lakeside Drive Lexington, KY 40502 Age: 55	Trustee of Dupree Mutual Funds	One Year Term 2 Years of Service	Vice President for Finance and Business, Transylvania University, 2009 to present; Treasurer, University of Kentucky 2008-2009; Controller, University of Kentucky 2004-2008	10	Director, Bank of the Bluegrass, Lexington, KY

60

DUPREE MUTUAL FUNDS UNAUDITED

OTHER UNAUDITED INFORMATION

December 31, 2013

Trustee and officer information, continued:

The following table sets forth information as to the Trustees and officers:

As of December 31, 2013, none of the Trustees nor members of their immediate family held any beneficial interest in the Trust’s Investment Adviser. Further, the Trust does not have an underwriter.

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

Proxy Voting Information

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling (800) 866-0614, or on the Securities and Exchange Commission’s website at http://www.sec.gov. For the year ending June 30, 2013, the Funds exercised no proxy votes due to the fact that the debt instruments in which the Funds invest carry no voting rights.

Quarterly Portfolio Disclosure

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

Board of Trustees Approval of Existing Advisory Agreements

Dupree Mutual Fund’s Board of Trustees is responsible for overseeing the Trust’s corporate policies and adhering to fiduciary standards under the Investment Company Act of 1940 (“1940 Act”). The Trustees are responsible for the annual renewal of the Trust’s investment advisory agreements with each Fund. Under the Investment Advisory Agreements, Dupree & Company, Inc. assumes responsibility for providing investment advisory and other services.

In considering whether to renew the Investment Advisory Agreements for the tax-free municipal bond Series, the Intermediate Government Bond Series and the Taxable Municipal Bond Series for additional one year periods, the Trustees, at their August 27, 2013 meeting, reviewed the following factors with respect to each Series: (1) the nature, extent and quality of services provided by Dupree & Co. to each Series; (2) the investment performance of each Series; (3) the costs of the services provided to each Series and the profits realized or to be realized by Dupree & Co. from its relationship with the Trust; (4) the extent to which economies of scale have been realized as each Series grows; (5) whether the level of fees reflects those economies of scale for the benefit of investors in the Series; (6) comparisons of services and fees with contracts entered into by Dupree & Co. with other clients; and (7) other benefits derived or anticipated to be derived by Dupree & Co. from its relationship as investment adviser to the Trust.

Set forth below are the general factors the Trustees considered for all of the funds, followed by an outline of the selected specific factors the Trustees considered for each particular fund.

Nature, Extent and Quality of Services

Pursuant to each agreement, the Investment Adviser provides investment supervisory services, office space and facilities and corporate administration. Specifically, the Investment Adviser obtains and evaluates relevant information regarding the economy, industries, businesses, municipal issuers, securities markets and securities to formulate a continuing program for the management of each Series’ assets in a manner consistent with the series’ investment objectives and to implement this program by selecting the securities to be purchased or sold by the Series and placing orders for such purchases and sales. In addition, the Investment Adviser provides for the Series’ office needs, maintains each Series’ books and records, assumes and pays all sales and promotional expenses incurred in the distribution of each Series’ shares, staffs the Series with persons competent to perform all of its executive and administrative functions, supervises and coordinates the activities of the Trust’s institutional and other agents (e.g. custodian, transfer agent, independent accountants, independent legal counsel), and permits its officers and employees to serve as officers of the Trust, all without additional cost to the Trust.

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Board of Trustees Approval of Existing Advisory Agreements, continued:

Dupree & Company provides accounting services for all portfolio holdings, prepares required reports to shareholders, and prepares necessary SEC filings on a timely basis. Dupree & Company does not render services to any other clients.

The Trustees considered that the Investment Adviser is an experienced investment adviser whose investment professionals have managed the several Series of the Trust since their inception. The Investment Adviser’s personnel provide active and extensive monitoring of the investment portfolios daily and report on the investment performance of the Series to the Trustees at their scheduled quarterly meetings. The Trustees considered that the Investment Adviser has carried out these responsibilities in a professional manner over the years.

The Trustees considered, among other things, the performance of each of the Series, as discussed below.

Performance

The Trustees considered the performance of each Series during historical and recent periods and compared to (i) standardized industry performance data, (ii) the performance of comparable mutual funds and (iii) the performance of recognized indices.

The Trustees considered the comparative performance and expense data for each Series prepared by an independent third party, Morningstar^®, Inc., annualized for 1, 3, 5 and 10 years as compared with other single state funds or government bond funds. Morningstar^®, Inc. comparative performance and expense data was considered for a one year period and since inception for the Taxable Municipal Bond Series since it has been in existence only since November 1, 2010. For the most part, the Series’ returns over the periods reviewed have been very close to the Series’ benchmarks. For additional detail about the considerations for each Trust Series, see the “Series-by-Series Factors” section below.

Cost and Profitability

The Trustees reviewed the audited (years ended December 31, 2011 and December 31, 2012) and unaudited financial statements (six months ended June 30, 2013) of Dupree & Company, Inc; statements of Dupree & Company Inc.’s revenues and costs of and profits from furnishing services to each Series (twelve months ended June 30, 2013). The Investment Adviser’s revenues and costs of and profits from furnishing services to each Series are allocated to each Series according to each Series’ identifiable costs and according to the size of the Series in relation to the total size of the Trust. The Trustees considered the Investment advisory fees paid to the Investment Adviser, expressed in dollar terms and as a percentage of assets under management. The Trustees considered and reviewed information concerning the costs incurred and profits derived by Dupree & Co. for services rendered in its capacity as Investment Adviser to each Series since the inception of each Series. The Trustees determined that the profits earned were reasonable in light of the advisory, administrative and other services provided to each Series and the historic subsidization provided by Dupree & Co. to the several Series.

Fees Charged by Other Advisers

The Trustees considered information regarding fees paid to other advisers for managing similar investment portfolios. The Trustees received comparative fee information for comparable peer group funds prepared by Morningstar^®, Inc. The Trustees considered that the proposed advisory fees to be paid to the Investment Adviser for its services to each Series are comparable to the advisory fees charged to other similar portfolios.

Economies of Scale

In addition to considering that the Investment Adviser’s fees are comparable to fees charged to other similar portfolios, the Trustees also considered that economies of scale are integrated into the expense formulation. Accordingly, as assets increase, the Investment Adviser’s fees decrease on a percentage basis.

The Investment Adviser has identified no “economies of scale”, advising that growth of the Trust will require additional personnel. Further, the Investment Adviser has stated that additional compliance requirements can be expected to consume more personnel time and may preclude realization of economies of scale.

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Board of Trustees Approval of Existing Advisory Agreements, continued:

Fee Comparison with Other Clients

The only client served by the Investment Adviser is the Trust, so there are no applicable fee comparisons.

Other Benefits

The Trustees considered that the Investment Adviser derives a financial benefit from its advisory relationship with the Trust. The sole benefit that accrues to the Investment Adviser is an increase in total fees received as each Series increases in net asset size. The benefit to the shareholders of each Series is that the Investment Adviser’s fees decrease on a percentage basis as total net assets under management increase. Dupree & Company, Inc. reported no other indirect benefits attributable to management of the Series, including, but not limited to, soft dollar arrangements.

Series-by-Series Factors

Alabama Tax-Free Income Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 18 portfolio purchase transactions and 11 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $15,238 as compared to $15,416 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees or expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of five stars.

• As of June 30, 2013, the Series Expense Ratio was 0.68%, (after waiver of fees), the third lowest of 13 funds evaluated by Morningstar^®, Inc. One fund with a lower expense ratio only accepts institutional clients.

Kentucky Tax-Free Income Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 43 portfolio purchase transactions and 51 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $14,941 as compared to $15,416 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees or expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of five stars.

• As of June 30, 2013, the Series Expense Ratio was 0.57%, the third lowest of 23 funds evaluated by Morningstar^®, Inc. One fund with a lower expense ratio only accepts institutional clients.

Kentucky Tax-Free Short-to-Medium Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 20 portfolio purchase transactions and 13 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $13,212 as compared to $15,296 for the BarCap Municipal Bond Index. The Bar Cap Municipal Bond Index reflects no deduction for fees or expenses.

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Board of Trustees Approval of Existing Advisory Agreements, continued:

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of three stars.

• As of June 30, 2013, the Series Expense Ratio was 0.73%. Out of 23 funds evaluated by Morningstar^®,Inc., only 5 had lower expense ratios than this Series. Of these, several only accept institutional clients and another fund was the Dupree Kentucky Tax-Free Income Series.

Mississippi Tax-Free Income Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 13 portfolio purchase transactions and 16 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $14,756 as compared to $15,416 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of four stars.

• As of June 30, 2013, the Series Expense Ratio was 0.65% (after waiver of fees) and was the lower of 7 funds evaluated by Morningstar^®, Inc.

North Carolina Tax-Free Income Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 19 portfolio purchase transactions and 7 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $14,771 as compared to $15,416 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of five stars.

• As of June 30, 2013, the Series Expense Ratio was 0.71%, the 10th lowest of 40 funds evaluated by Morningstar^®, Inc. Other funds with lower expense ratios had larger minimum investments or were limited to institutional investors.

North Carolina Tax-Free Short-to-Medium Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 23 portfolio purchase transactions and 13 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $13,272 as compared to $15,296 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of four stars.

• As of June 30, 2013, the Series Expense Ratio was 0.78%, the 15^th lowest of 40 funds evaluated by Morningstar^®, Inc. Other funds with lower expense ratios had larger minimum investments, were limited to institutional investors and/or were not short-term municipal bond funds.

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Board of Trustees Approval of Existing Advisory Agreements, continued:

Tennessee Tax-Free Income Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 21 portfolio purchase transactions and 29 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $14,998 as compared to $15,416 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of four stars.

• As of June 30, 2013, the Series Expense Ratio was 0.70%, one of the 3 funds tied at 3rd lowest of 17 funds evaluated by Morningstar^®, Inc. The funds with the lower expense ratios are open only to institutional clients.

Tennessee Tax-Free Short-to-Medium Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 11 portfolio purchase transactions and 19 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $12,868 as compared to $15,296 for the BarCap Municipal Bond Index. The BarCap Municipal Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of three stars.

• As of June 30, 2013, the Series Expense Ratio was 0.87%, the 10th lowest of 17 funds evaluated by Morningstar^®, Inc. Other funds with lower expense ratios had larger minimum investments, were limited to institutional investors and/or were not short-term municipal bond funds.

Intermediate Government Bond Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 4 portfolio purchase transactions and 7 portfolio sale transactions.

• As of June 30, 2013, the ten year growth of $10,000 invested in the Series was $14,919 as compared to $14,389 for the BarCap U.S. Government Bond Index. The BarCap U.S. Government Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series received an overall Morningstar^®, Inc. rating of three stars.

• As of June 30, 2013, the Series Expense Ratio was 0.52%, the lowest of 27 funds evaluated by Morningstar^®, Inc.

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Board of Trustees Approval of Existing Advisory Agreements, continued:

Taxable Municipal Bond Series

Factors considered at meeting of August 27, 2013

• For the Fiscal Year ending June 30, 2013, the Investment Adviser processed 10 portfolio purchase transactions and 5 portfolio sale transactions.

• As of June 30, 2013, the thirty-two month growth of $10,000 invested in the Series was $11,942 as compared to $12,312 for the BarCap Taxable Municipal Bond Index. The BarCap Taxable Municipal Bond Index reflects no deduction for fees and expenses.

• As of June 30, 2013, the Series was not rated by Morningstar^®, Inc because the Series had not been in existence three full years.

• As of June 30, 2013, the Series Expense Ratio was 0.85%, the 3rd lowest of 5 funds evaluated by Morningstar^®, Inc.

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Schedule of Shareholder Expenses

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

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six Months Ended December 31, 2013” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

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

	Net Expense Ratio Annualized December 31, 2013			Beginning Account Value July 1, 2013*		Ending Account Value December 31, 2013**		Expenses Paid During the Six Months Ended December 31, 2013
Alabama Tax-Free Income Series
Actual		.73	%	$	1,000.00	$	1,000.76	$	3.69
Hypothetical		.73			1,000.00		1,025.21		3.74
Kentucky Tax-Free Income Series
Actual		.58			1,000.00		1,007.10		2.92
Hypothetical		.58			1,000.00		1,025.21		2.94
Kentucky Tax-Free Short-to-Medium Series
Actual		.74			1,000.00		1,004.44		3.75
Hypothetical		.74			1,000.00		1,025.21		3.76
Mississippi Tax-Free Income Series
Actual		.69			1,000.00		997.50		3.49
Hypothetical		.69			1,000.00		1,025.21		3.54
North Carolina Tax-Free Income Series
Actual		.73			1,000.00		1,000.05		3.69
Hypothetical		.73			1,000.00		1,025.21		3.73
North Carolina Tax-Free Short-to-Medium Series
Actual		.82			1,000.00		1,003.63		4.12
Hypothetical		.82			1,000.00		1,025.21		4.16
Tennessee Tax-Free Income Series
Actual		.72			1,000.00		1,002.42		3.63
Hypothetical		.72			1,000.00		1,025.21		3.67

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Schedule of Shareholder Expenses, continued

	Net Expense Ratio Annualized December 31, 2013			Beginning Account Value July 1, 2013*		Ending Account Value December 31, 2013**		Expenses Paid During the Six Months Ended December 31, 2013
Tennessee Tax-Free Short-to-Medium Series
Actual		.87	%	$	1,000.00	$	1,002.67	$	4.38
Hypothetical		.87			1,000.00		1,025.21		4.43
Intermediate Government Bond Series
Actual		.56			1,000.00		995.56		2.83
Hypothetical		.56			1,000.00		1,025.21		2.87
Taxable Municipal Bond Series
Actual		.88			1,000.00		997.93		4.45
Hypothetical		.88			1,000.00		1,025.21		4.51

* The example is based on an investment of $1,000 invested at the beginning of the period.

** Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period multiplied by [184/365] (to reflect one-half year period).

Shareholder Meeting

A meeting of Shareholders was held on October 23, 2013. The purpose of the meeting was (i) to elect Messrs.

James C. Baughman, Jr., William Combs, Jr., C. Timothy Cone, Marc A. Mathews, and Ann Rosenstein Giles as Trustees and (ii) to ratify the selection of Ernst & Young LLP as the Trust’s independent auditors for the fiscal year ending June 30, 2014. The results of all matters voted on by shareholders at the Shareholder Meeting held October 23, 2013 were as follows:

A. Election of Trustees:

	FOR		WITHHELD		TOTAL
James C. Baughman		96,339,037.419		837,958.307		97,176,995.726
William A. Combs		98,413,506.149		837,958.307		99,251,464.456
C. Timothy Cone		98,500,562.851		837,958.307		99,338,521.158
Ann Rosenstein Giles		98,224,813.155		837,958.307		99,062,771.462
Marc A. Mathews		98,414,183.177		837,958.307		99,252,141.484

Cumulative voting rights were exercised in the election of Trustees. The total proxy votes are distributed among those individuals selected.

B. Ratification of Ernst & Young LLP for the fiscal year 2014:

	FOR		AGAINST		ABSTAIN		TOTAL
Ernst & Young LLP		96,804,254.888		968,710.555		1,043,413.399		98,816,378.842

C. Other business:

	FOR		AGAINST		ABSTAIN		TOTAL
Other business		82,242,950.296		13,615,014.379		2,958,414.167		98,816,378.842

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

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Item 2. Not applicable.

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

Item 4. Not applicable.

Item 5. Not applicable.

Item 6. Included as part of item 1.

Item 7. Not applicable

Item 8. Not applicable.

Item 9. Not applicable

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

Item 11. Controls and Procedures:

On February 7, 2014 the Registrant’s President and Treasurer assessed the disclosure controls and procedures to evaluate the effectiveness of the Registrant’s disclosure controls and procedures designed to ensure that information required to be disclosed by the investment company on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an investment company in the reports that it files on Form N-CSR is accumulated and communicated to the investment company’s management, including its principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Further, on February 7, 2014 the Registrant’s President and Treasurer assessed the internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the investment company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the investment company are being made only in accordance with authorizations of management and trustees of the investment company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the investment company’s assets that could have a material effect on the financial statements.

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

Item 12. Exhibits

(a)

(1) Not applicable

(2) Certifications

(3) Not applicable

SIGNATURES

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

Dupree Mutual Funds
By:	/s/    Michelle M. Dragoo
	Michelle M. Dragoo,
	Vice President, Secretary, Treasurer

Date: February 7, 2014

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

By:	/s/    Thomas P. Dupree, Sr.
	Thomas P. Dupree, Sr.,
	President

Date: February 7, 2014

By:	/s/    Michelle M. Dragoo
	Michelle M. Dragoo,
	Vice President, Secretary, Treasurer

Date: February 7, 2014