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 29
Date of reporting period: February 29, 2008
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,
February 29, 2008 marked the end of our ninth fiscal year, and it was a year of accomplishment and a year of change. As you’ll see in the Financial Highlights, we once again managed to lower the expense ratio (to 0.88% from 0.97% in the previous fiscal year) and to increase the annual dividend (from 16.75¢ to 19.28¢ per share). We also made a significant (73.59¢-per-share) capital gains distribution in December, largely the result of replacements that we made to the portfolio in November 2006 and January 2007. Several of those changes were the result of acquisitions, most notably of Phelps Dodge and BellSouth, which produced the bulk of those gains. In the process, we believe that we improved the quality of our components, adding companies such as Praxair, Dover, FPL Group, Tennant, and Toyota.
As we begin our 10th year of operation, we continue to sharpen our focus on owning what we believe are the best companies available, while maintaining our tight cost controls and steadily accumulating shares on your behalf. Although not yet reflected in the Schedule of Investments, we announced changes in March that we believe will add a significant degree of quality to our holdings. We will soon begin to replace Countrywide Financial (which is being acquired by Bank of America), as well as Gannett, Limited Brands, National City, and Popular. Our new components include the Bank of New York Mellon (which boasts strength in American Depository Receipts (ADRs), Exchange-Traded Funds (ETFs), and DRIP administration); Cash America (the nation’s largest chain of pawn shops); Costco Wholesale (the leader in warehouse club memberships); Pentair (a manufacturer of electrical and fluid-handling products, including water purification); and U.S. Bancorp (a Minneapolis-based regional bank and asset manager). Unlike last year’s changes, we do not expect that these replacements will trigger significant capital gains.
We hope that you’ll join us in continuing to invest in our fund on a regular basis, enjoying the benefits of accumulating what we feel are high-quality shares over the long-term.
<signed>Vita Nelson and David Fish, co-managers
<April 15, 2008>
Must be preceded or accompanied by a prospectus. Mutual fund investing involves risk. Principal loss is possible.
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.
Quasar Distributors, LLC, Distributor. (5/08)
![[mp63ncsr200805002.jpg]](https://capedge.com/proxy/N-CSR/0001162044-08-000245/mp63ncsr200805002.jpg)
S&P 500 Index is an unmanaged composite of 500 large-capitalization companies. You cannot 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.
![[mp63ncsr200805004.jpg]](https://capedge.com/proxy/N-CSR/0001162044-08-000245/mp63ncsr200805004.jpg)
The MP63 Fund, Inc. |
|
Statement of Assets and Liabilities | |
February 29, 2008 | |
Assets: | |
Investments at Market Value (Cost $34,354,708) | $ 39,851,764 |
Cash | 46,021 |
Receivables | |
Fund Shares Sold | 1,333 |
Dividends and Interest | 101,270 |
Prepaid Insurance | 1,500 |
Prepaid Registration | 16,683 |
Total Assets | 40,018,571 |
Liabilities | |
Accrued Expenses | 15,219 |
Accrued Management Fees | 11,332 |
Total Liabilities | 26,551 |
Net Assets | $ 39,992,020 |
Net Assets Consist of: | |
Capital Stock, $.001 par value; 1 billion shares | |
authorized; 3,305,583 shares issued and outstanding | $ 3,305 |
Additional Paid in Capital | 34,463,514 |
Accumulated Undistributed Net Investment Income | 72,992 |
Realized Loss on Investments - Net | (44,847) |
Unrealized Appreciation in Value | |
of Investments Based on Identified Cost - Net | 5,497,056 |
Net Assets | $ 39,992,020 |
Net Asset Value and Offering Price ($39,992,020/3,305,583) | $ 12.10 |
Redemption Price Per Share ($12.1 x .98)* | $ 11.86 |
* The Fund will deduct a 2% redemption fee from redemption proceeds if purchased and redeemed with- | |
in 3 years and a 1% redemption fee if purchased and redeemed after 3 years and before 5 years. | |
The MP63 Fund, Inc. |
|
Statement of Operations | |
For the year ending February 29, 2008 | |
Investment Income: | |
Dividend Income | $ 945,657 |
Interest Income | 8,077 |
Total Investment Income | 953,734 |
Expenses: | |
Investment advisor fees | 150,775 |
Fund servicing expense | 68,014 |
Administration fees | 63,318 |
Registration fees | 20,304 |
Insurance expense | 14,915 |
Printing and postage expense | 14,087 |
Compliance fees | 12,034 |
Custody fees | 8,693 |
Legal fees | 7,027 |
Audit fees | 6,129 |
Director fees | 6,017 |
Miscellaneous expense | 5,757 |
Total Expenses | 377,070 |
Net Investment Income | 576,664 |
Realized and Unrealized Gain (Loss) on Investments: | |
Realized Gain on Investments | 387,118 |
Unrealized Depreciation on Investments | (2,217,443) |
Net Realized and Unrealized Gain (Loss) on Investments | (1,830,325) |
Net Decrease in Net Assets from Operations | $ (1,253,661) |
The MP63 Fund, Inc. |
|
|
Statements of Changes in Net Assets | ||
For the | For the | |
Year Ended | Year Ended | |
February 29, 2008 | February 28, 2007 | |
From Operations: | ||
Net Investment Income | $ 576,664 | $ 500,090 |
Net Realized Gain on Investments | 387,118 | 2,656,039 |
Net Unrealized Appreciation (Depreciation) | (2,217,443) | 693,493 |
Increase (Decrease) in Net Assets from Operations | (1,253,661) | 3,849,622 |
From Distributions to Shareholders: | ||
Net Investment Income | (613,907) | (502,810) |
Net Realized Gain from Security Transactions | (2,243,913) | (751,664) |
Change in Net Assets from Distributions | (2,857,820) | (1,254,474) |
From Capital Share Transactions | ||
Proceeds From Sale of Shares | 3,681,195 | 3,822,541 |
Shares Issued on Reinvestment of Dividends | 2,847,660 | 1,252,785 |
Cost of Shares Redeemed | ||
(net of redemption fees $13,102 and $19,879, respectively) | (3,562,533) | (4,259,749) |
Net Increase from Shareholder Activity | 2,966,322 | 815,577 |
Net Increase (Decrease) in Net Assets | (1,145,159) | 3,410,725 |
Net Assets at Beginning of Period | 41,137,179 | 37,726,454 |
Net Assets at End of Period (Including Undistributed Net | ||
Investment Income of $72,992 and $89,617, respectively) | $ 39,992,020 | $ 41,137,179 |
Share Transactions: | ||
Issued | 270,988 | 296,194 |
Reinvested | 215,080 | 93,841 |
Redeemed | (260,249) | (332,159) |
Net increase in shares | 225,819 | 57,876 |
Shares outstanding beginning of period | 3,079,764 | 3,021,888 |
Shares outstanding end of period | 3,305,583 | 3,079,764 |
The MP63 Fund, Inc. |
|
|
|
|
|
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 29, 2008 | February 28, 2007 | February 28, 2006 | February 28, 2005 | February 28, 2004 | |
Net Asset Value - | |||||
Beginning of Period | $ 13.36 | $ 12.48 | $ 11.91 | $ 11.01 | $ 8.09 |
Net Investment Income | 0.18 | 0.17 | 0.15 | 0.10 | 0.07 |
Net Gains or Losses on Securities | |||||
(realized and unrealized) | (0.51) | 1.13 | 0.55 | 0.90 | 2.92 |
Total from Investment Operations | (0.33) | 1.30 | 0.70 | 1.00 | 2.99 |
Distributions (From Net Investment Income) | (0.19) | (0.17) | (0.13) | (0.09) | (0.07) |
Distributions (From Capital Gains) | (0.74) | (0.25) | 0.00 | (0.01) | 0.00 |
Total Distributions | (0.93) | (0.42) | (0.13) | (0.10) | (0.07) |
Net Asset Value - | |||||
End of Period | $ 12.10 | $ 13.36 | $ 12.48 | $ 11.91 | $ 11.01 |
Total Return (a) | (3.08)% | 10.40 % | 5.91 % | 9.06 % | 37.01 % |
Ratios/Supplemental Data | |||||
Net Assets - End of Period (Thousands) | 39,992 | 41,137 | 37,726 | 33,344 | 27,799 |
Ratio of Expenses to Average Net Assets | 0.88% | 0.97% | 1.02% | 1.22% | 1.25% |
Ratio of Net Income to Average Net Assets | 1.34% | 1.28% | 1.23% | 0.85% | 0.75% |
Portfolio Turnover Rate | 4.75% | 25.90% | 6.58% | 8.77% | 9.16% |
(a) Total returns are historical and assume changes in share price, reinvestment of dividends and capital gain distributions | |||||
and assume no redemption fees. | |||||
THE MP63 FUND, INC.
Notes to Financial Statements
February 29, 2008
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 traded on a national securities exchange are stated at the last reported sales price or a market’s official close price on the day of 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 2008 or 2007.
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 29, 2008
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 29, 2008, the Advisor earned fees of $150,775.
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 $68,014 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 29, 2008 the Chief Compliance Officer was paid $12,000.
NOTE 4. INVESTMENT TRANSACTIONS
For the year ended February 29, 2008, purchases and sales of securities, excluding short-term investments, aggregated $2,574,604 and $2,027,354, respectively.
Unrealized appreciation
$ 8,580,375
Unrealized depreciation
(3,083,319)
Net unrealized appreciation
$ 5,497,056
For Federal income tax purposes, the cost of investments owned at February 29, 2008 was $34,354,708.
THE MP63 FUND, INC.
Notes to Financial Statements
February 29, 2008
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.
As of February 29, 2008, the components of net assets on a tax basis were as follows:
Ordinary income
$ 72,992
Long term gains (loss)
$ (44,847)
Unrealized appreciation
$ 8,580,375
Unrealized depreciation $(3,083,319)
The tax character of distributions paid during the year were as follows:
Distributions paid from:
Ordinary income
$ 611,414
Long term capital gains
2,236,245
Total
$ 2,847,659
THE MP 63 FUND INC
Financial Statements
With Report of Independent Registered Public Accounting Firm
Report of Independent Registered 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 , 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 and , and the financial highlights for the years ended , , 2006 and 2005. The financial highlights for the years ended February 29, 2004 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 , 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 , 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.
/s/ WithumSmith+Brown, P.C.
New Brunswick, NJ
April 18, 2008
Expense Example
As a shareholder of the MP63 Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution [and/or service] (12b-1) fees; and other Fund expenses. 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, 2007 through February 29, 2008.
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, 2007 | February 29, 2008 | September 1, 2007 to February 29, 2008 | |
Actual | $1,000.00 | $969.12 | $4.34 |
Hypothetical | |||
(5% Annual Return before expenses) | $1,000.00 | $1,020.66 | $4.46 |
* Expenses are equal to the Fund's annualized expense ratio of 0.88%, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). | |||
| |||
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: 75 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 1998 | President, Gladstone Development Corporation (real estate development) | 1 | None |
Gloria Schaffer Age: 76 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 1998 | Partner, CA White (real estate development) | 1 | None |
Richard Yaffa Age: 75 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Director | Indefinite – since 2005 | President, Manhattan Products, Inc. | 1 | None |
Interested Directors:
Vita Nelson1,2 Age: 69 555 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: 78 555 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: 58 555 Theodore Fremd Ave., Suite B103 Rye, NY 10580 | Treasurer | Indefinite – since 2003 | Executive Editor of The Moneypaper, Inc. (newsletter) | 1 | None |
(1)
Vita Nelson and Lester Nelson are married
(2)
Vita Nelson is President of the Fund and a Director of the Fund’s Advisor, The Moneypaper Advisor, Inc. and therefore, is an “Interested Director” of the Fund.
THE MP63 FUND, INC.
Additional Information (Unaudited)
February 29, 2008
Information Regarding Proxy Voting
A description of the policies and procedures that these Funds use to determine how to vote proxies relating to portfolio securities and information regarding how these Funds voted proxies during the most recent 12-month period ended June 30, are available without charge upon request by (1) calling the Funds at 1-877-676-3386 and (2) from Funds’ documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
Information Regarding Portfolio Holdings
The Fund file a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q. The Fund first and third fiscal quarters end on May 31 and November 30. The Fund Form N-Q’s are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room). You may also obtain copies by calling the Funds at 1-877-676-3386.
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 2007
$ 13,500
FY 2008
$ 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 2007
NONE
NONE
FY 2008
NONE
NONE
Nature of the fees:
(c)
Tax Fees
Registrant
Adviser
FY 2007
$ 1,100
NONE
FY 2008
$ 1,200
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 2007
NONE
NONE
FY 2008
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
FY2007
$ 1,100
FY2008
$ 1,200
(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 18, 2008, 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 6, 2008
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 6, 2008
By /s/David Fish
*David Fish
Treasurer
(principal financial officer)
Date May 6, 2008
* Print the name and title of each signing officer under his or her signature.