UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09053
The MP 63 Fund, Inc.
(Exact name of registrant as specified in charter)
MP 63 Fund, Inc.
555 Theodore Fremd Ave., Suite B-103
Rye, NY 10580
(Address of principal executive offices)(Zip code)
MP 63 Fund Inc.
555 Theodore Fremd Ave., Suite B-103
Rye, NY 10580
(Name and address of agent for service)
Registrant's telephone number, including area code: (914) 925-0022
Date of fiscal year end: February 28
Date of reporting period: February 28, 2007
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Dear Fellow Shareholders,
Our eighth fiscal year, which ended February 28, 2007, brought further proof of the wisdom of our long-term vision, and again we have our disciplined shareholders to thank for sharing that vision. By continuing to invest on a regular basis, you helped the fund to grow its net assets from $37,726,454 to $41,137,179, and the resulting economies of scale reduced our expense ratio to 0.97% from 1.02% in the previous year. Meanwhile, investment income (dividends and interest) grew from $804,055 to $879,460, allowing us to increase the annual dividend more than 27%, from 13.16¢ to 16.75¢ per share.
It was also a year of change. As we wrote back in October, in the semi-annual report, we have replaced some companies and passed along more of the profits to you in the form of capital gains (25.04¢ per share). No less than four companies (Engelhard, BellSouth, Phelps Dodge, and ServiceMaster) were the targets of acquisitions, and we also replaced some less attractive components with a wide array of industry leaders that have histories of increasing their dividends. Our new companies include small companies (AMCOL International and Tennant) as well as large (Dover, Praxair, FPL, and Toyota). We’ll continue to evaluate our holdings with an eye toward owning the best companies available.
Our goals will continue to include enhanced value through the growth of dividends (and price appreciation), as well as minimizing costs and lowering the expense ratio. We hope that you’ll continue to focus on the long term by joining us in investing on a regular basis, either through automatic debits or regular, periodic purchases. We believe that our future could be even brighter!
<signed>Vita Nelson and David Fish, co-managers
<April 18, 2007>
Past performance is no guarantee of future results.
Must be preceded or accompanied by a prospectus. Mutual fund investing involves risk. Principal loss is possible.
The opinions reflected above are subject to change, are not investment advice, and any forecasts made cannot be guaranteed.
Fund holdings are subject to change and should not be considered a recommendation to buy or sell any security. Please refer to the schedule of investments in the report for complete holdings information.
Dollar-cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities; the investor should consider his/her financial ability to continue purchases through periods of low price levels. Dollar-cost averaging and automatic investment plans do not assure a profit and do not protect against loss in declining markets.
Quasar Distributors, LLC, Distributor. (5/07)
![[mp63ncsr200705002.jpg]](https://capedge.com/proxy/N-CSR/0001162044-07-000243/mp63ncsr200705002.jpg)
S&P 500 Index is an unmanaged composite of 500 large-capitalization companies. You cannon invest directly in an index.
The performance information shown represents past performance and should not be interpreted as indicative of the Fund’s future performance. The performance also reflects reinvestment of all dividend and capital gain distributions.
The graph does not reflect deduction for taxes shareholders would pay on fund distributions and redemption of shares. Return and share price will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
The following chart gives a visual breakdown of the Fund by the industry sectors the underlying securities represent as a percentage of the portfolio of investments.
![[mp63ncsr200705004.jpg]](https://capedge.com/proxy/N-CSR/0001162044-07-000243/mp63ncsr200705004.jpg)
The accompanying notes are an integral part of the financial statements.
The MP63 Fund, Inc. |
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Statement of Assets and Liabilities | |
February 28, 2007 | |
Assets: | |
Investment Securities at Market Value | $ 41,023,433 |
(Cost $ 33,308,934) | |
Cash | 7,450 |
Receivable for Fund Shares Sold | 3,706 |
Receivable for Securities Sold | 64,385 |
Dividends and Interest Receivable | 104,946 |
Total Assets | 41,203,920 |
Liabilities | |
Accrued Expenses | 9,926 |
Accrued Management Fees | 11,332 |
Payable for Securities Purchased | 45,483 |
Total Liabilities | 66,741 |
Net Assets | $ 41,137,179 |
Net Assets Consist of: | |
Capital Stock, $.001 par value; 1 billion shares | |
authorized; 3,079,764 shares issued and outstanding | $ 3,079 |
Additional Paid in Capital | 31,497,419 |
Accumulated Undistributed Net Investment Income | 89,617 |
Realized Gain on Investments - Net | 1,832,565 |
Unrealized Appreciation in Value | |
of Investments Based on Identified Cost - Net | 7,714,499 |
Net Assets | $ 41,137,179 |
Net Asset Value and Redemption Price | |
Per Share ($41,137,179/3,079,764 shares) | $ 13.36 |
The accompanying notes are an integral part of the financial statements. | |
The MP63 Fund, Inc. |
|
Statement of Operations | |
For the year ending February 28, 2007 | |
Investment Income: | |
Dividend Income | $ 866,411 |
Interest Income | 13,049 |
Total Investment Income | 879,460 |
Expenses: | |
Investment advisor fees | 136,723 |
Administration fees | 63,145 |
Fund servicing expense | 83,997 |
Registration fees | 22,334 |
Insurance expense | 14,874 |
Printing and postage expense | 15,263 |
Custody fees | 8,669 |
Legal fees | 7,008 |
Audit fees | 8,260 |
Director fees | 6,001 |
Compliance fees | 12,001 |
Miscellaneous expense | 1,095 |
Total Expenses | 379,370 |
Net Investment Income | 500,090 |
Realized and Unrealized Gain on Investments: | |
Realized Gain on Investments | 2,656,039 |
Unrealized Appreciation on Investments | 693,493 |
Net Realized and Unrealized Gain on Investments | 3,349,532 |
Net Increase in Net Assets from Operations | $ 3,849,622 |
The accompanying notes are an integral part of the financial statements.
The MP63 Fund, Inc. |
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Statements of Changes in Net Assets | |||
For the | For the | ||
Year Ended | Year Ended | ||
February 28, 2007 | February 28, 2006 | ||
From Operations: | |||
Net Investment Income | $ 500,090 | $ 439,354 | |
Net Realized Gain (Loss) on Investments | 2,656,039 | 18,130 | |
Net Unrealized Appreciation | 693,493 | 1,647,475 | |
Increase in Net Assets from Operations | 3,849,622 | 2,104,959 | |
From Distributions to Shareholders: | |||
Net Investment Income | (502,810) | (394,959) | |
Net Realized Gain from Security Transactions | (751,664) | - | |
Change in Net Assets from Distributions | (1,254,474) | (394,959) | |
From Capital Share Transactions | |||
Proceeds From Sale of Shares | 3,822,541 | 5,139,091 | |
Shares Issued on Reinvestment of Dividends | 1,252,785 | 390,671 | |
Cost of Shares Redeemed | |||
(net of redemption fees $19,879 and $19,086, respectively) | (4,259,749) | (2,857,628) | |
Net Increase from Shareholder Activity | 815,577 | 2,672,134 | |
Net Increase in Net Assets | 3,410,725 | 4,382,134 | |
Net Assets at Beginning of Period | 37,726,454 | 33,344,320 | |
Net Assets at End of Period | $ 41,137,179 | $ 37,726,454 | |
| |||
Share Transactions: | |||
Issued | 296,194 | 424,759 | |
Reinvested | 93,841 | 31,788 | |
Redeemed | (332,159) | (234,999) | |
Net increase in shares | 57,876 | 221,548 | |
Shares outstanding beginning of period | 3,021,888 | 2,800,340 | |
Shares outstanding end of period | 3,079,764 | 3,021,888 |
The accompanying notes are an integral part of the financial statements.
The MP63 Fund, Inc. |
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Financial Highlights | ||||||||||||||||
Selected data for a share outstanding throughout the period: | For the | For the | For the | For the | For the | |||||||||||
Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||
February 28, 2007 | February 28, 2006 | February 28, 2005 | February 29, 2004 | February 28, 2003 | ||||||||||||
Net Asset Value - | ||||||||||||||||
Beginning of Period | $ 12.48 | $ 11.91 | $ 11.01 | $ 8.09 | $ 10.24 | |||||||||||
Net Investment Income | 0.17 | 0.15 | 0.10 | 0.07 | 0.07 | |||||||||||
Net Gains or Losses on Securities | ||||||||||||||||
(realized and unrealized) | 1.13 | 0.55 | 0.90 | 2.92 | (2.15) | |||||||||||
Total from Investment Operations | 1.30 | 0.70 | 1.00 | 2.99 | (2.08) | |||||||||||
Distributions (From Net Investment Income) | (0.17) | (0.13) | (0.09) | (0.07) | (0.07) | |||||||||||
Distributions (From Capital Gains) | (0.25) | 0.00 | (0.01) | 0.00 | 0.00 | |||||||||||
Total Distributions | (0.42) | (0.13) | (0.10) | (0.07) | (0.07) | |||||||||||
Net Asset Value - | ||||||||||||||||
End of Period | $ 13.36 | $ 12.48 | $ 11.91 | $ 11.01 | $ 8.09 | |||||||||||
Total Return (a) | 10.40 % | 5.91 % | 9.06 % | 37.01 % | (20.39)% | |||||||||||
Ratios/Supplemental Data | ||||||||||||||||
Net Assets - End of Period (Thousands) | 41,137 | 37,726 | 33,344 | 27,799 | 17,865 | |||||||||||
Ratio of Expenses to Average Net Assets | 0.97% | (b) | 1.02% | 1.22% | 1.25% | 1.25% | ||||||||||
Ratio of Expenses to Average Net Assets, before reimbursement | 0.97% | (b) | 1.02% | 1.22% | 1.25% | 1.39% | ||||||||||
Ratio of Net Income to Average Net Assets | 1.28% | (b) | 1.23% | 0.85% | 0.75% | 0.79% | ||||||||||
Ratio of Net Income to Average Net Assets, before reimbursement | 1.28% | (b) | 1.23% | 0.85% | 0.75% | 0.65% | ||||||||||
Portfolio Turnover Rate | 25.90% | (b) | 6.58% | 8.77% | 9.16% | 9.28% | ||||||||||
(a) Total returns are historical and assume changes in share price, reinvestment of dividends and capital gain distributions | ||||||||||||||||
and assume no redemption fees. | ||||||||||||||||
(b) Annualized | ||||||||||||||||
The accompanying notes are an integral part of the financial statements.
THE MP63 FUND, INC.
Notes to Financial Statements
February 28, 2007
NOTE 1. ORGANIZATION
The MP63 Fund (the "Fund") is organized as a Maryland Corporation, incorporated on October 13, 1998, and registered as an open-end, diversified, management investment company under the Investment Company Act of 1940, as amended. The Fund's business and affairs are managed by its officers under the direction of its Board of Directors. The Fund's investment objective is to seek long-term capital appreciation for shareholders.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America.
A.
Security Valuation - Portfolio securities for which market quotations are readily available are valued at market value. Portfolio securities for which market quotations are not considered readily available are valued at fair value on the basis of valuations furnished by a pricing service approved by the Board of Directors. The pricing service determines valuations for normal, institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders. There were no securities valued under this pricing service for 2006.
B.
Security Transactions and Related Investment Income - Securities transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis.
C.
Federal Income Taxes - The Fund complies with requirements of the Internal Revenue Code applicable to regulated investment companies, distributing all of its taxable income to its shareholders. Therefore, no provision for Federal income tax is required.
D.
Dividends and Distributions to Shareholders - The Fund records dividends and distributions to shareholders on the ex-dividend date. The Fund will distribute its net investment income, if any, and net realized capital gains, if any, annually.
E.
Credit Risk - Financial instruments that potentially subject the Fund to credit risk include cash deposits in excess of federally insured limits.
F.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
THE MP63 FUND, INC.
Notes to Financial Statements
February 28, 2007
NOTE 3. INVESTMENT ADVISORY AGREEMENT AND OTHER RELATED PARTY
TRANSACTIONS
The Fund has entered into an investment advisory agreement (the "Agreement") with The Moneypaper Advisor, Inc. (the "Advisor"). Under this Agreement, the Advisor provides the Fund with investment advice and supervises the Fund's management and investment programs. As compensation for the services rendered, the Fund pays the Advisor a fee accrued daily based on an annualized rate of .35% of the daily net asset value. For the year ended February 28, 2007, the Advisor earned fees of $136,723.
The Advisor has voluntarily agreed to defer its advisory fee and to reimburse the Fund for other expenses if the total operating expenses of the Fund exceed an annual rate of 1.25% of average daily net assets. Under the terms of the Agreement, fees deferred or expenses reimbursed by the Advisor are subject to reimbursement by the Fund, if so requested by the Advisor, up to five years from the fiscal year the fee or expense was incurred. However, no reimbursement payment will be made by the Fund if it would result in the Fund exceeding the voluntary expense limitation described above.
An affiliate of the Advisor provides certain administrative services to the Fund. These expenses amounted to $83,997 during the year.
The Fund has an administrative agreement with Mutual Shareholder Services (The "Administrator"). Under this agreement, the Administrator provides the Fund with administrative, transfer agency, and fund accounting services. Mutual Shareholder Services charges an annual fee of approximately $60,000 for services rendered based on the Fund’s current asset size.
The Fund is responsible for the cost of printing, postage, telephone costs and certain other out-of-pocket expenses. Vita Nelson is an officer and director of the Advisor and also an officer and director of the Fund.
The Fund currently pays each Director an annual retainer of $2,000.
The Chief Compliance Officer is paid $1,000 per month. For the year ended February 28, 2007 the Chief Compliance Officer was paid $12,000.
NOTE 4. INVESTMENT TRANSACTIONS
For the year ended February 28, 2007, purchases and sales of securities, excluding short-term investments, aggregated $10,122,032 and $10,071,959, respectively.
NOTE 5. TAX INFORMATION
Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gain as ordinary income for tax purposes.
THE MP63 FUND, INC.
Notes to Financial Statements
February 28, 2007
As of February 28, 2007, the components of distributable earnings on a tax basis were as follows:
Ordinary income
$ 89,617
Long term gains
$ 1,832,565
Unrealized appreciation $ 7,714,499
Report of Independent Public Accounting Firm
To the Shareholders and Board of Directors of
The MP63 Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of The MP63 Fund, Inc. (the “Fund”), including the schedule of investments as of February 28, 2007, and the related statements of operations and changes in net assets for the year than ended, the statement of changes in net assets for the years ended February 28, 2007 and 2006, and the financial highlights for the years ended February 28, 2007, 2006, and 2005. The financial highlights for the years ended February 29, 2004 and February 28, 2003, were audited by Mendlowitz Weitsen, LLP, who merged with WithumSmith+Brown, P.C. as of January 1, 2005, and whose report dated April 1, 2004 expressed an unqualified opinion on those statements. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of investments owned as of February 28, 2007, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The MP63 Fund, Inc as of February 28, 2007, the results of its operations, changes in its net assets and the financial highlights as described above in conformity with accounting principles generally accepted in the United States of America.
April 19, 2007
New Brunswick, New Jersey
THE MP63 FUND, INC.
Additional Information (Unaudited)
February 28, 2007
PROXY VOTING
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling the Fund at 1-877-676-3386 and on the U.S. Securities and Exchange Commission’s website at http://www.sec.gov.
THE MP63 FUND, INC.
Expense Illustration (Unaudited)
February 28, 2007
As a shareholder of the MP 63 Fund, Inc., you incur one type of cost: management fees. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, September 1, 2006 through February 28, 2007.
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 Period" 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 the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Fund’s actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The MP 63 Fund | Beginning Account Value | Ending Account Value | Expenses Paid During the Period* |
September 1, 2006 | February 28, 2007 | September 1, 2006 to February 28, 2007 | |
Actual | $1,000.00 | $1,090.02 | $5.05 |
Hypothetical | |||
(5% Annual Return before expenses) | $1,000.00 | $1,020.09 | $4.89 |
* Expenses are equal to the Fund's annualized expense ratio of 0.97%, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). | |||
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THE MP63 FUND, INC.
Board of Directors (Unaudited)
February 28, 2007
The Board of Directors supervises the business activities of the Fund. The names of the Directors and principal officers of the Fund are shown below. For more information regarding the Directors, please refer to the Statement of Additional Information, which is available free upon request by calling 1-877-676-3386.
Name, Address and Age | Position(s) Held with the Fund | Term of Office and Length of Time Served1 | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Director | Other Directorships Held By Director |
Disinterested Directors:
Ted S. Gladstone Age: 74 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 1998 | President, Gladstone Development Corporation (real estate development) | 1 | None |
Gloria Schaffer Age: 75 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 1998 | Partner, CA White (real estate development) | 1 | None |
Richard Yaffa Age: 74 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 2005 | President, Manhattan Products, Inc. | 1 | None |
Interested Directors:
Vita Nelson1,2 Age: 68 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 1998 | President, Editor and Publisher of The Moneypaper, Inc. (newsletter) | 1 | Director, The Moneypaper Advisor, Inc.; Director, Temper of the Times Communications, Inc. |
Principal Officers who are not Directors:
Lester Nelson1 Age: 77 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Secretary | Indefinite – since 1998 | Partner of the law firm of Nelson & Nelson | 1 | Director, Moneypaper Advisor, Inc.; Director, Temper of the Times Communications, Inc. |
David Fish Age: 57 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Treasurer | Indefinite – since 2003 | Executive Editor of The Moneypaper, Inc. (newsletter) | 1 | None |
Item 2. Code of Ethics.
(a)
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(b)
For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
(1)
(1)
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2)
Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;
(3)
Compliance with applicable governmental laws, rules, and regulations;
(4)
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
(5)
Accountability for adherence to the code.
(c)
Amendments:
During the period covered by the report, there have not been any amendments to the provisions of the code of ethics.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors has determined that the registrant does not have an audit committee financial expert. The audit committee members and the full Board determined that, although none of its members meet the technical definition of an audit committee financial expert, the committee has sufficient financial expertise to adequately perform its duties under the Audit Committee Charter without the addition of a qualified expert.
Item 4. Principal Accountant Fees and Services.
(a)
Audit Fees
FY 2006
$ 12,000
FY 2007
$ 13,500
Disclose the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.]
(b)
Audit-Related Fees
Registrant
Adviser
FY 2006
NONE
NONE
FY 2007
NONE
NONE
Nature of the fees:
(c)
Tax Fees
Registrant
Adviser
FY 2006
$ 1,000
NONE
FY 2007
$ 1,100
NONE
Nature of the fees:
For 2006, preparation of the corporate federal and state income tax returns; excise tax return and review calculation of dividend distribution for tax purposes.
For 2007, preliminary preparation of the corporate federal and state income tax returns
(d)
All Other Fees
Registrant
Adviser
FY 2006
NONE
NONE
FY 2007
NONE
NONE
Nature of the fees:
(e)
(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The MP63 Fund’s
AUDIT COMMITTEE POLICY
ON
PRE-APPROVAL OF SERVICES PROVIDED BY THE INDEPENDENT ACCOUNTANTS
The Audit Committee of The MP63 Fund, Inc. (the "Fund") is charged with the responsibility to monitor the independence of the Fund's independent accountants. As part of this responsibility, the Audit Committee must pre-approve any independent accounting firm's engagement to render audit and/or permissible non-audit services, as required by law. In evaluating a proposed engagement of the independent accountants, the Audit Committee will assess the effect that the engagement might reasonably be expected to have on the accountant's independence. The Committee's evaluation will be based on:
O
a review of the nature of the professional services expected to be provided,
O
a review of the safeguards put into place by the accounting firm to safeguard independence, and
O
periodic meetings with the accounting firm.
POLICY FOR AUDIT AND NON-AUDIT SERVICES PROVIDED TO THE FUNDS
On an annual basis, the scope of audits for the Fund, audit fees and expenses, and audit-related and non-audit services (and fees proposed in respect thereof) proposed to be performed by the Fund's independent accountants will be presented by the Treasurer and the independent accountants to the Audit Committee for review and, as appropriate, approval prior to the initiation of such services. Such presentation shall be accompanied by confirmation by both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants. Proposed services shall be described in sufficient detail to enable the Audit Committee to assess the appropriateness of such services and fees, and the compatibility of the provision of such services with the auditor's independence. The Committee shall receive periodic reports on the progress of the audit and other services which are approved by the Committee or by the Committee Chairman pursuant to authority delegated in this Policy.
The categories of services enumerated under "Audit Services", "Audit-related Services", and "Tax Services" are intended to provide guidance to the Treasurer and the independent accountants as to those categories of services which the Committee believes are generally consistent with the independence of the independent accountants and which the Committee (or the Committee Chairman) would expect upon the presentation of specific proposals to pre-approve. The enumerated categories are not intended as an exclusive list of audit, audit-related or tax services which the Committee (or the Committee Chairman) would consider for pre-approval.
AUDIT SERVICES
The following categories of audit services are considered to be consistent with the role of the Fund's independent accountants:
O
Annual Fund financial statement audits
O
SEC and regulatory filings and consents
AUDIT-RELATED SERVICES
The following categories of audit-related services are considered to be consistent with the role of the Fund's independent accountants:
O
Accounting consultations
O
Agreed upon procedure reports
O
Attestation reports
O
Other internal control reports
Individual audit-related services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chairman (or any other Committee member on whom this responsibility has been delegated).
TAX SERVICES
The following categories of tax services are considered to be consistent with the role of the Fund's independent accountants:
O
Tax compliance services related to the filing or amendment of the following:
O
Federal, state and local income tax compliance; and
O
Sales and use tax compliance
O
Timely RIC qualification reviews
O
Tax distribution analysis and planning
O
Accounting methods studies
O
Tax consulting services and related projects
The Fund’s independent accountants do not perform individual tax services for management individuals of the Fund. Other permitted services are subject to an Audit Committee pre-approval process.
OTHER NON-AUDIT SERVICES
Certain non-audit services that the independent accountants are legally permitted to render will be subject to pre-approval by the Committee or by one or more Committee members to whom the Committee has delegated this authority and who will report to the full Committee any pre-approval decisions made pursuant to this Policy. Non-audit services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.
PROSCRIBED SERVICES
The Fund's independent accountants will NOT render services in the following categories of non-audit services:
O
Bookkeeping or other services related to the accounting records or financial statements of the Fund
O
Financial information systems design and implementation
O
Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
O
Actuarial services
O
Internal audit outsourcing services
O
Management functions or human resources
O
Broker or dealer, investment adviser, or investment banking services
O
Legal services and expert services unrelated to the audit
O
Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
PRE-APPROVAL OF NON-AUDIT SERVICES PROVIDED TO THE MONEYPAPER ADVISORS, INC. AND THE MONEYPAPER ADVISORS, INC. AFFILIATES
Certain non-audit services provided to The Moneypaper Advisors, Inc. or any entity controlling, controlled by or under common control with The Moneypaper Advisors, Inc. that provides ongoing services to the Fund (The Moneypaper Advisors, Inc. Affiliates) will be subject to pre-approval by the Audit Committee. The only non-audit services provided to these entities that will require pre-approval are those RELATED DIRECTLY TO THE OPERATIONS AND FINANCIAL REPORTING OF THE FUND. Individual projects that are not presented to the Audit Committee as part of the annual pre-approval process, will be subject to pre-approval by the Committee Chairman (or any other Committee member on whom this responsibility has been delegated Services presented for pre-appr oval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.
Although the Audit Committee will not pre-approve all services provided to The Moneypaper Advisors, Inc. Affiliates, the Committee will receive an annual report from the Fund's independent accounting firm showing the aggregate fees for all services provided to The Moneypaper Advisors, Inc. and The Moneypaper Advisors, Inc. Affiliates.
(2)
Percentages of Services Approved by the Audit Committee
Registrant
Adviser
Audit-Related Fees:
100 %
NONE
Tax Fees:
100 %
NONE
All Other Fees:
NONE
NONE
(f)
During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
(g)
The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:
Registrant
FY2006
$ 1,000
FY2007
$ 1,100
(h) The registrant's audit committee has considered whether the provision of non-audit services to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Companies.
Richard Yaffa
Ted Gladstone
Gloria L. Schaffer
Item 6. Schedule of Investments.
Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not yet applicable.
Item 9. Purchase of Equity Securities By Closed End Management Investment Company and Affiliates. Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
No Changes.
Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item.
Item 11. Controls and Procedures.
(a)
Based on an evaluation of the registrant’s disclosure controls and procedures as of April 19, 2006, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b)
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) EX-99.CODE ETH. Filed herewith.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
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.
The MP 63 Fund, Inc.
By /s/Vita Nelson
*Vita Nelson
President
(principal executive officer)
Date May 8, 2007
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/Vita Nelson
*Vita Nelson
President
(principal executive officer)
Date May 8, 2007
By /s/David Fish
*David Fish
Treasurer
(principal financial officer)
Date May 8, 2007
* Print the name and title of each signing officer under his or her signature.