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.
8000 Town Centre Drive Suite 400
Broadview Heights, OH 44147
(Address of principal executive offices)(Zip code)
MP 63 Fund Inc.
8000 Town Centre Drive Suite 400
Broadview Heights, OH 44147
(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, 2017
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 28, 2017 marked the end of our eighteenth fiscal year, a year of strong results in the stock market. For the Fund's fiscal year, the Fund achieved a total return of 21.55%, closing the year at a Net Asset Value (NAV) of $19.41, after the payment of approximately 79¢ per share in dividends and capital gains distributions in December 2016.
According to Morningstar, the fund returned 21.55% for the year ended February 28, 2017, compared with 24.98% for the S&P 500® index. And while the Fund’s investment strategy is not affected by short-term market conditions, those conditions did have an affect on the Fund’s holdings. The companies that benefited most during the period were Bank of America (total return during the period, including dividends: 112.71%), Tennant Company (56.32%), Boeing Company (56.27%), Corning (54.79%, and BB&T Corp. (54.74%). Our laggards included CenturyLink (-22.11%), VF Corp. (-19.22%), Hormel Foods (-15.01%), Owens & Minor (-7.27%), and Coca-Cola (-2.33%).
We are continually building up positions in our portfolio holdings by reinvesting dividends. From time to time, we will take profits off the table when a holding exceeds a certain percentage of portfolio representation and buy more shares of companies that we think offer better opportunities.
A few highlights once again confirm the fundamental strength of our strategy, which is to manage the fund efficiently from the point of view of expenses, while continually building our holdings over the long-term, without regard to short-term market conditions, by investing primary in companies that comprise the Moneypaper 63 Stock Index, a widely-diversified portfolio of high-quality companies that offer direct investing and dividend reinvestment to their shareholders.
1.
We surpassed the $1 million mark in dividends and interest received for the ninth straight year, receiving $1,591,412, up 10.7% from the $1,437,396 received in fiscal 2016.
2.
Fund performance again benefited from the tight lid we kept on expenses, which totaled $441,640 (up just 4.0% from $424,548 a year earlier) and resulted in an expense ratio of 0.77% (down from 0.80% last year and down significantly from 0.91% in fiscal 2013). As we noted last year, paying for services at established prices (instead of a percentage of the fund’s NAV) allows the Fund to grow without increasing expenses. Any continuing market recovery or increase in subscriptions would further reduce the expense ratio, providing meaningful “economies of scale” for shareholders.
3.
We paid an annual dividend of 37.602¢ per share and capital gains distributions of 41.318¢ per share (long-term) and 0.0025¢ (short-term). Since inception, the fund has paid a total of $6.20332 per share in dividends and capital gains distributions.
4.
We limited portfolio turnover to 3.95%, despite realizing the capital gains mentioned above – which included the tax inversion of Johnson Controls International, which became an Irish corporation.
We continue to believe that these results confirm the validity of our fundamental approach. We congratulate DRIPX shareholders once again for their discipline and patience, and hope that you will join us in continuing to add to your holdings on a regular basis, allowing us to take advantage of what we believe are exceptional opportunities in the stock market over the long term.
Vita Nelson and David Fish, co-managers
April 28, 2017
Must be preceded or accompanied by a prospectus.
Mutual fund investing involves risk. Principal loss is possible.
Past performance is not a guarantee of future results.
THE MP63 FUND, INC.
PERFORMANCE ILLUSTRATION
FEBRUARY 28, 2017 (UNAUDITED)
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDING FEBRUARY 28, 2017
| 1 Year | 5 Year | 10 Year | Ending Value |
The MP63 Fund, Inc. | 21.55% | 13.32% | 7.42% | $ 20,450 |
S&P 500 Index | 24.98% | 14.00% | 7.61% | $ 20,834 |
This chart assumes an initial investment of $10,000 made on the closing of February 28, 2007. Total return is based on the net change in NAV and assuming reinvestment of all dividends and other distributions. Performance figures represent past performance which is not predictive of future performance. Investment return and principal value will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.
The Standard & Poor’s 500 Index (“S&P 500”) is a market value-weighted index, representing the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange. The S&P 500 is a widely recognized, unmanaged index of common stock prices. The figures for the S&P 500 reflect all dividends reinvested but do not reflect any deductions for fees, expenses or taxes.
The performance information shown represents past performance and should not be interpreted as indicative of The MP63 Fund, Inc.'s future performance. The performance also reflects reinvestment of all dividend and capital gain distributions. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the redemption of fund shares.
THE MP63 FUND, INC.
Portfolio Illustration
February 28, 2017 (Unaudited)
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.
Sectors are categorized using Morningstar® classifications.
The MP63 Fund, Inc. |
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| Schedule of Investments | |
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| February 28, 2017 | |
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Shares/Principal Amount of Assets | Market Value | ||
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COMMON STOCKS - 99.21% |
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Aerospace/Aircrafts/Defense - 6.04% |
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6,500 |
| Boeing Co. | $ 1,171,495 |
9,600 |
| Raytheon Co. | 1,479,840 |
9,500 |
| United Technologies Corp. | 1,069,225 |
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| 3,720,560 |
Auto Parts - Retail/Wholesale - 1.59% |
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10,200 |
| Genuine Parts Co. | 976,242 |
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Banks - 5.44% |
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32,800 |
| Bank of America Corp. | 809,504 |
27,300 |
| BB&T Corp. | 1,316,406 |
22,200 |
| US Bancorp | 1,221,000 |
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| 3,346,910 |
Beverages - 2.62% |
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21,400 |
| Coca-Cola Co. | 897,944 |
6,500 |
| PepsiCo, Inc. | 717,470 |
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| 1,615,414 |
Cable & Other Pay Television Services - 1.40% |
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23,000 |
| Comcast Corp., Class A | 860,660 |
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Chemicals - Diversified - 1.90% |
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21,900 |
| RPM International, Inc. | 1,167,051 |
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Chemicals - Specialty - 1.56% |
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8,100 |
| Praxair, Inc. | 961,551 |
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Commercial Services - 1.71% |
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8,500 |
| Ecolab, Inc. | 1,053,745 |
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Communication Equipment - 0.49% |
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5,300 |
| Qualcomm, Inc. | 299,344 |
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Containers - Paper/Plastic - 1.55% |
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19,300 |
| Bemis Co., Inc. | 956,701 |
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Cosmetics & Personal Care - 1.49% |
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12,600 |
| Colgate-Palmolive Co. | 919,548 |
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Diversified Operations - 5.02% |
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6,400 |
| 3M Co. | 1,192,640 |
35,000 |
| Corning, Inc. | 966,350 |
31,300 |
| General Electric Co. | 933,053 |
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| 3,092,043 |
Electronic Equipment - 1.50% |
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15,400 |
| Emerson Electric Co. | 925,540 |
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Electronic - Semiconductors - 1.89% |
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32,200 |
| Intel Corp. | 1,165,640 |
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Finance - Investment Management - 1.21% |
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17,300 |
| Franklin Resources, Inc. | 744,592 |
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Financial Services - 2.11% |
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21,100 |
| Paychex, Inc. | 1,295,962 |
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Food - Misc. Preparation - 5.22% |
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16,600 |
| Archer Daniels-Midland Co. | 779,702 |
22,400 |
| ConAgra Foods, Inc. | 923,104 |
8,800 |
| General Mills, Inc. | 531,256 |
27,300 |
| Hormel Foods Corp. | 962,325 |
400 |
| Lamb Weston Holdings, Inc. | 15,676 |
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| 3,212,063 |
General Household Products - 1.90% |
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9,200 |
| Stanley Black & Decker, Inc. | 1,169,780 |
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Insurance - Life/Property/Casual - 2.93% |
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9,900 |
| AFLAC, Inc. | 716,265 |
8,900 |
| Travelers Companies, Inc. | 1,087,936 |
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| 1,804,201 |
Leisure Products - 1.09% |
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7,900 |
| Polaris Industries, Inc. | 673,159 |
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Machinery - Const./Mining/Farming - 3.09% |
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8,700 |
| Caterpillar, Inc. | 840,942 |
9,700 |
| Deere & Co. | 1,062,053 |
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| 1,902,995 |
Machinery - Electrical Equipment - 4.55% |
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11,900 |
| Dover Corp. | 953,190 |
18,151 |
| Johnson Controls, Inc. | 761,253 |
15,500 |
| Tennant Co. | 1,088,875 |
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| 2,803,318 |
Manufacturing - 2.23% |
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10,400 |
| Illinois Tool Works, Inc. | 1,372,904 |
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Medical/Dental - Supplies - 2.23% |
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7,500 |
| Becton Dickinson & Co. | 1,372,875 |
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Medical Instruments/Products - 1.33% |
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10,100 |
| Medtronic, Inc. | 817,191 |
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Medical Drugs - 3.22% |
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15,200 |
| Abbott Laboratories | 685,216 |
10,600 |
| Johnson & Johnson | 1,295,426 |
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| 1,980,642 |
Motor Vehicle Parts & Accessories - 0.20% |
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1,805 |
| Adient Plc. (Ireland) * | 121,170 |
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Oil & Gas - International - 1.29% |
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9,800 |
| Exxon Mobil Corp. | 796,936 |
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Paper & Paper Products - 1.62% |
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7,500 |
| Kimberly Clark Corp. | 994,125 |
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Petroleum Refining - 0.57% |
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3,100 |
| Chevron Corp. | 348,750 |
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Refuse Systems - 1.38% |
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11,600 |
| Waste Management, Inc. | 850,512 |
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Retail - Food & Restaurant - 0.81% |
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7,500 |
| Yum! Brands, Inc. | 489,900 |
400 |
| Yum China Holdings, Inc. * | 10,636 |
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| 500,536 |
Retail - Variety Stores - 1.99% |
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6,900 |
| Costco Wholesale Corp. | 1,222,542 |
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Retail/Wholesale - Building Products - 2.14% |
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9,100 |
| Home Depot, Inc. | 1,318,681 |
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Services - Prepackaged Software - 2.28% |
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21,900 |
| Microsoft Corp. | 1,401,162 |
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Soap, Detergent, Cleaning Preparations, Perfumes, Cosmetics - 1.39% |
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9,400 |
| Proctor & Gamble Co. | 856,058 |
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Telecommunications Services - 2.62% |
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23,700 |
| AT&T, Inc. | 990,423 |
25,600 |
| CenturyLink, Inc. | 621,056 |
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| 1,611,479 |
Textile - Apparel/Mill Products - 1.19% |
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14,000 |
| VF Corp. | 734,300 |
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Transportation - Equipment/Leasing - 1.51% |
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12,200 |
| Ryder Systems, Inc. | 929,030 |
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Transportation - Railroads - 1.74% |
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9,900 |
| Union Pacific Corp. | 1,068,606 |
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Utility - Electric - 7.24% |
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11,800 |
| Duke Energy Corp. | 974,090 |
15,800 |
| Edison International | 1,259,892 |
31,800 |
| MDU Resources Group, Inc. | 862,098 |
10,400 |
| NextEra Energy, Inc. | 1,362,400 |
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| 4,458,480 |
Utility - Gas Distribution - 3.03% |
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12,500 |
| National Fuel Gas Co. | 753,750 |
16,000 |
| SCANA Corp. | 1,109,600 |
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| 1,863,350 |
Utility - Water - 1.94% |
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37,700 |
| Aqua America, Inc. | 1,196,598 |
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Wholesale-Medical, Dental & Hospital Equipment & Supplies - 0.96% |
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16,300 |
| Owens & Minor, Inc. | 588,104 |
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TOTAL FOR COMMON STOCK (Cost $32,903,861) - 99.21% | 61,071,050 | ||
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MONEY MARKET FUND - 0.52% |
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318,312 |
| Fidelity Institutional Money Market Funds Gov't Portfolio (Cost $318,312) 0.43%** | 318,312 |
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| TOTAL INVESTMENTS - 99.73% (Cost $33,222,173) (Note 4) | 61,389,362 |
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| OTHER ASSETS LESS LIABILITIES - 0.27% | 164,545 |
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| NET ASSETS - 100.00% | $ 61,553,907 |
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* Non-income producing securities during the period. |
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** Variable rate security; the money market rate shown represents the yield at February 28, 2017. |
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The accompanying notes are an integral part of these financial statements. |
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The MP63 Fund, Inc. |
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Statement of Assets and Liabilities |
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February 28, 2017 |
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Assets |
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Investments at Market Value (Cost $33,222,173) | $ 61,389,362 |
Cash | 7,600 |
Receivables |
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Dividends and Interest | 169,139 |
Shareholder Subscriptions | 25,925 |
Prepaid Expenses | 17,628 |
Total Assets | 61,609,654 |
Liabilities |
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Other Accrued Expenses | 24,868 |
Accrued Directors Fees (Note 3) | 4,889 |
Accrued Fund Servicing Fees (Note 3) | 3,500 |
Accrued Administrative Fees (Note 3) | 4,350 |
Accrued Management Fees (Note 3) | 18,140 |
Total Liabilities | 55,747 |
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Net Assets | $ 61,553,907 |
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Net Assets Consist of: |
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Capital Stock, $0.001 par value; 1 billion shares |
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authorized; 3,172,034 shares issued and outstanding | $ 3,172 |
Additional Paid in Capital | 33,188,288 |
Accumulated Undistributed Net Investment Income | 37,266 |
Realized Gain on Investments - Net | 157,992 |
Unrealized Appreciation in Value |
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of Investments Based on Identified Cost - Net | 28,167,189 |
Net Assets | $ 61,553,907 |
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Net Asset Value and Offering Price ($61,553,907/3,172,034) | $ 19.41 |
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Redemption Price Per Share ($19.41 x .99)* | $ 19.21 |
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* The Fund will deduct a 1% redemption fee from redemption proceeds if purchased and redeemed within 6 months. | |
The accompanying notes are an integral part of these financial statements. |
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The MP63 Fund, Inc. |
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Statement of Operations |
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For the year ended February 28, 2017 |
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Investment Income: |
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Dividend Income | $ 1,591,412 |
Interest Income | 1,576 |
Total Investment Income | 1,592,988 |
Expenses: |
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Investment advisor fees (Note 3) | 200,963 |
Administration fees (Note 3) | 52,555 |
Fund servicing expense (Note 3) | 42,000 |
Registration fees | 30,887 |
Insurance expense | 8,610 |
Printing and postage expense | 14,747 |
Compliance fees (Note 3) | 19,000 |
Miscellaneous expense | 4,250 |
Custody fees | 7,623 |
Legal fees | 36,705 |
Director fees (Note 3) | 6,000 |
Audit fees | 18,300 |
Total Expenses | 441,640 |
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Net Investment Income | 1,151,348 |
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Realized and Unrealized Gain on Investments: |
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Realized Gain on Investments | 1,311,818 |
Change in Unrealized Appreciation on Investments | 8,624,716 |
Net Realized and Unrealized Gain on Investments | 9,936,534 |
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Net Increase in Net Assets from Operations | $ 11,087,882 |
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The accompanying notes are an integral part of these financial statements. |
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The MP63 Fund, Inc. |
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Statements of Changes in Net Assets |
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| For the |
| For the |
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| Year Ended |
| February 28, 2017 |
| February 29, 2016 |
From Operations: |
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Net Investment Income | $ 1,151,348 |
| $ 1,012,848 |
Realized Gain on Investments | 1,311,818 |
| 1,235,725 |
Unrealized Appreciation (Depreciation) on Investments | 8,624,716 |
| (5,200,027) |
Increase (Decrease) in Net Assets from Operations | 11,087,882 |
| (2,951,454) |
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From Distributions to Shareholders: |
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Net Investment Income | (1,155,325) |
| (983,856) |
Net Realized Gain from Security Transactions | (1,277,181) |
| (2,371,760) |
Change in Net Assets from Distributions | (2,432,506) |
| (3,355,616) |
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From Capital Share Transactions |
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Proceeds From Sale of Shares | 2,365,494 |
| 1,951,040 |
Shares Issued on Reinvestment of Dividends | 2,415,376 |
| 3,332,298 |
Cost of Shares Redeemed |
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(net of redemption fees $277 and $360, respectively) | (3,707,853) |
| (3,283,434) |
Net Increase from Shareholder Activity | 1,073,017 |
| 1,999,904 |
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Net Increase (Decrease) in Net Assets | 9,728,393 |
| (4,307,166) |
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Net Assets at Beginning of Year | 51,825,514 |
| 56,132,680 |
Net Assets at End of Year (Including Undistributed Net |
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Investment Income of $37,266 and $41,243, respectively) | $ 61,553,907 |
| $ 51,825,514 |
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Share Transactions: |
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Issued | 127,796 |
| 110,088 |
Reinvested | 130,068 |
| 196,944 |
Redeemed | (199,401) |
| (185,596) |
Net Increase in shares | 58,463 |
| 121,436 |
Shares outstanding beginning of year | 3,113,571 |
| 2,992,135 |
Shares outstanding end of year | 3,172,034 |
| 3,113,571 |
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The accompanying notes are an integral part of these financial statements. |
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The MP63 Fund, Inc. |
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Financial Highlights |
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Selected data for a share outstanding throughout the year: | For the |
| For the |
| For the |
| For the |
| For the |
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| Year Ended |
| Year Ended |
| Year Ended |
| Year Ended |
| Year Ended |
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| February 28, 2017 |
| February 29, 2016 |
| February 28, 2015 |
| February 28, 2014 |
| February 28, 2013 |
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Net Asset Value - |
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Beginning of Year | $ 16.65 |
| $ 18.76 |
| $ 17.13 |
| $ 14.12 |
| $ 12.61 |
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Net Investment Income | 0.37 |
| 0.34 |
| 0.29 |
| 0.26 |
| 0.28 |
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Net Gains (Losses) on Securities (realized and unrealized) | 3.18 |
| (1.31) |
| 2.06 |
| 3.19 |
| 1.55 |
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Total from Investment Operations | 3.55 |
| (0.97) |
| 2.35 |
| 3.45 |
| 1.83 |
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Early Redemption Fees | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * | 0.00 | * |
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Distributions (From Net Investment Income) | (0.37) |
| (0.33) |
| (0.29) |
| (0.27) |
| (0.32) |
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Distributions (From Capital Gains) | (0.42) |
| (0.81) |
| (0.43) |
| (0.17) |
| 0.00 |
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Total Distributions | (0.79) |
| (1.14) |
| (0.72) |
| (0.44) |
| (0.32) |
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Net Asset Value - |
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End of Year | $ 19.41 |
| $ 16.65 |
| $ 18.76 |
| $ 17.13 |
| $ 14.12 |
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Total Return (a) | 21.55 % |
| (5.25)% |
| 13.67 % |
| 24.46 % |
| 14.72 % |
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Ratios/Supplemental Data |
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Net Assets - End of Year (Thousands) | 61,554 |
| 51,826 |
| 56,133 |
| 50,460 |
| 42,707 |
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Ratio of Expenses to Average Net Assets | 0.77% |
| 0.80% |
| 0.79% |
| 0.77% |
| 0.91% |
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Ratio of Net Income to Average Net Assets | 2.00% |
| 1.92% |
| 1.60% |
| 1.66% |
| 2.11% |
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Portfolio Turnover Rate | 3.95% |
| 3.56% |
| 6.15% |
| 4.25% |
| 4.22% |
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(a) Total returns are historical and assume changes in share price, reinvestment of dividends and capital gain distributions | ||||||||||
and assume no redemption fees. |
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* Amount is less than $0.005 |
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The accompanying notes are an integral part of these financial statements. |
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THE MP63 FUND, INC.
Notes to Financial Statements
February 28, 2017
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 the significant accounting policies followed by the Fund in the preparation of their financial statements. The Fund is an investment company that follows the accounting and reporting guidance of Accounting Standards Codification Topic 946 applicable to investment companies.
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. Portfolio companies during this reporting period are all widely traded and pricing information is readily available.
Mutual Funds must utilize various methods to measure the fair value of most of its investments on a recurring basis. Accounting principles generally accepted in the United States of America (GAAP) establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
Level 1 - Unadjusted quoted prices in active markets for identical assets.
Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuating the asset or liability, and would be based on the best information available.
To the extent that valuation is based on models or inputs that are less observable or unobservable, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. However, the inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of February 28, 2017:
(Assets) | Level 1 |
| Level 2 |
| Level 3 |
| Total |
Common Stocks | $61,071,050 |
| $ - |
| $ - |
| $61,071,050 |
Money Market Fund | 318,312 |
| - |
| - |
| 318,312 |
Total | $61,389,362 |
| $ - |
| $ - |
| $61,389,362 |
The Fund did not hold any Level 3 assets during the year ended February 28, 2017. There were no significant transfers into or out of Level 1 or Level 2 during the period. It is the Fund’s policy to recognize transfers into and out of Level 1 and Level 2 at the end of the reporting period. The Fund did not engage in any derivative transactions during the year ended February 28, 2017.
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’s policy is to continue to comply with requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its net investment income as dividends to its shareholders. The Fund intends to distribute their net long-term capital gains and their net short-term capital gains at least once a year. Therefore, no provision for federal income taxes is required.
The Fund recognizes the tax benefits of certain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. As of, and during the year ended February 28, 2017, management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken in the Fund’s open tax years or expected to be taken in the Fund’s 2016 tax returns. The Fund identifies their major tax jurisdictions as U.S. Federal and certain State tax authorities; however, the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. As of, and during the year ended February 28, 2017, the Fund did not incur any interest or penalties.
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 GAAP 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.
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 investments. As compensation for the services rendered, the Fund pays the Advisor a fee accrued daily based on an annualized rate of 0.35% of the daily net asset value. For the year ended February 28, 2017 the Advisor earned fees of $200,963. At February 28, 2017 the Fund owed the Advisor $18,140 for advisory fees.
The Advisor has voluntarily agreed to defer its 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 are subject to reimbursement by the Fund, if so requested by the Advisor, up to three fiscal 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. The Advisor did not defer any fees or reimburse the Fund during the year ended February 28, 2017.
The Fund has agreements in place with Mutual Shareholder Services ("MSS") to provide administrative, transfer agency, and fund accounting services. Under these agreements, MSS is paid a fixed annual fee for accounting and administration services which increases incrementally at specified asset thresholds, plus blue sky servicing fees paid on a per filing basis. For transfer agency services, MSS receives a fixed fee per account, subject to an annual minimum. For the year ending February 28, 2017, the Fund paid MSS $52,555 for the services that it provided to the Fund, comprised of $36,252 in accounting and administrative services and $16,303 in transfer agency services. At February 28, 2017, $4,350 was due to MSS for services provided.
An affiliate of the Advisor provides services to the Fund. These fund servicing expenses amounted to $42,000 for the year ended February 28, 2017. At February 28, 2017, the Fund owed $3,500 for fund servicing 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 Independent Director an annual retainer of $2,000 for regular compensation. The Fund currently does not pay special compensation to any Director. Vita Nelson, as the Interested Director, does not receive any compensation from the Fund for her services as a Director. For the year ended February 28, 2017 the Fund incurred $6,000 in regular compensation director fees and expenses.
The Fund pays the Chief Compliance Officer and the Assistant Chief Compliance Officer $1,000 and $500 per month, respectively. For the year ended February 28, 2017, The Fund paid the Chief Compliance Officer $12,000 and the Assistant Chief Compliance Officer $7,000. The Chief Compliance Officer is an affiliate of a Fund Director.
NOTE 4. INVESTMENT TRANSACTIONS
For the year ended February 28, 2017, purchases and sales of securities, excluding short-term investments, aggregated $2,245,498 and $2,446,358, respectively. Cumulative unrealized appreciation (depreciation) amounted to the following: Unrealized appreciation $28,713,562 Unrealized depreciation ($546,373), Net unrealized appreciation $28,167,189.
For Federal income tax purposes, the cost of investments owned at February 28, 2017 was $33,222,173.
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 28, 2017, the components of net assets on a tax basis were as follows: Ordinary income $37,266, Long term gains $157,992 Unrealized appreciation $28,713,562 Unrealized depreciation (546,373).
The tax character of distributions paid during the fiscal year ended February 28, 2017 was as follows:
Distributions paid from: Ordinary income $1,155,325, Short term capital gains $7,681, Long term capital gains $1,269,500.
The tax character of distributions paid during the fiscal year ended February 29, 2016 was as follows:
Distributions paid from: Ordinary income $983,856, Short term capital gains $16,531, Long term capital gains $2,355,229.
NOTE 6. SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date the financial statements were issued. Based upon this evaluation, the Fund has determined no subsequent events have occurred which would require disclosure in the financial statements.
NOTE 7. NEW ACCOUTING PRONOUNCEMENT
In October 2016, the U.S. Securities and Exchange Commission (“SEC”) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is required for financial statements filed with the SEC on or after August 1, 2017. Management is currently evaluating the impact the amendments will have on the Fund’s financial statements and related disclosures.
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, 2016 through February 28, 2017.
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.
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| Beginning Account Value | Ending Account Value | Expenses Paid During the Period* |
| September 1, 2016 | February 28, 2017 | September 1, 2016 to February 28, 2017 |
|
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|
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Actual | $1,000.00 | $1,070.20 | $3.95 |
Hypothetical |
|
|
|
(5% Annual Return before expenses) | $1,000.00 | $1,020.98 | $3.86 |
|
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* Expenses are equal to the Fund's annualized expense ratio of .77%, multiplied by the average account value over the period, multiplied by 181/365 (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:
Interested Directors:
Vita Nelson1,2 Age: 78 8000 Town Centre Dr., Suite 400 Broadview Heights, OH 44147 | 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. Director, Moneypaper, Inc. |
Principal Officers who are not Directors:
Lester Nelson1 Age: 87 8000 Town Centre Dr., Suite 400 Broadview Heights, OH 44147 | Secretary | Indefinite – since 1998 | Law Firm of Lester Nelson | 1 | Director, Moneypaper Advisor, Inc.; Director, Temper of the Times Communications, Inc. Director, Moneypaper, Inc. |
David Fish Age: 67 8000 Town Centre Dr., Suite 400 Broadview Heights, OH 44147 | 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 28, 2017
INFORMATION REGARDING PROXY VOTING
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies during the most recent 12-month period ended June 30, are available without charge upon request by (1) calling the Fund at 1-877-676-3386 and (2) from Fund’s documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.
INFORMATION REGARDING PORTFOLIO HOLDINGS
The Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q. The Fund’s first and third fiscal quarters end on May 31 and November 30. The Fund’s 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 Fund 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. A copy of registrant’s code of ethics will be provided to any person who requests it, without charge. To receive a copy of the registrant's code of ethics, write to the Fund at MP63 Fund, Inc., 8000 Town Centre Drive Suite 400, Broadview Heights, OH 44147. A copy will be sent to you within three (3) business days of receipt of your request.
(b)
For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
(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.
(d)
Waivers: During the period covered by this report, the registrant has not granted any waivers, including implicit waivers, from 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.
(e)(2) | None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(h) | Not applicable. |
Item 5.
Audit Committee of Listed Companies.
Not Applicable.
Item 6.
Schedule of Investments.
(a)
Not applicable. [schedule filed with Item 1]
(b)
Not applicable.
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 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.
The registrant does not have specific procedures in place to consider nominees recommended by shareholders, but would consider such nominees if submitted in accordance with Rule 14a-8 under the Securities Exchange Act of 1934 in conjunction with a shareholder meeting to consider the election of trustees.
Item 11.
Controls and Procedures.
(a)
Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b)
There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12.
Exhibits.
(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 April 26, 2017
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 April 26, 2017
By /s/David Fish
*David Fish
Treasurer
(principal financial officer)
Date April 26, 2017
* Print the name and title of each signing officer under his or her signature.