Miles Funds N-CSR Certified annual shareholder report (management investment company)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT

COMPANIES

REGISTRATION NO. 33-87498
811-08910

MILES FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1415 28^th STREET, SUITE 200
WEST DES MOINES, IOWA 50266
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

AMY M. MITCHELL, TREASURER
MILES FUNDS, INC.
1415 28^th STREET, SUITE 200
WEST DES MOINES, IOWA 50266
(NAME AND ADDRESS OF AGENT FOR SERVICE)

COPIES OF ALL COMMUNICATI ONS TO:

GWENETH K. GOSSELINK	JOHN C. MILES, ESQ.
MILES FUNDS, INC.	CLINE, WILLIAMS, WRIGHT, JOHNSON &
1415 28th STREET, SUITE 200	OLDFATHER
WEST DES MOINES, IOWA 50266	1900 U.S. BANK BUILDING, 233 S. 13TH STREET
	LINCOLN, NEBRASKA 68508

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (515) 244-5426

DATE OF FISCAL YEAR END: 03/31/2014

DATE OF REPORTING PERIOD: 03/31/2014

ITEM 1. REPORTS TO STOCKHOLDERS.

ANNUAL REPORT FOR THE PERIOD ENDING MARCH 31, 2014.

INSTITUIONAL MONEY MARKET FUND

ANNUAL FINANICAL REPORT

MARCH 31, 2014

The

Education

Liquidity

Fund

Miles Funds, Inc.

Table of Contents

Message from the President

Page  1

Message from the Investment Adviser

Page  2

Performance Report and Schedule of Portfolio Investments

Page  3

Statement of Assets and Liabilities

Page  6

Statement of Operations

Page  7

Statements of Changes in Net Assets

Page  8

Notes to Financial Statements

Page 9

Financial Highlights

Page  13

Report of Independent Registered Public Accounting Firm

Page  14

Directors and Officers

Page  15

Additional Information

Page  16

Miles Funds, Inc.

Message from the President

We are pleased to present the annual report for Miles Funds, Inc. for the twelve month period from April 1, 2013 through March 31, 2014.

Yields on money market funds continued at historically low levels throughout this fiscal year.  The letter from the investment adviser will give you detailed commentary and data for a more in-depth review of the economy over the last fiscal year.

We at Miles Capital believe that discipline, focus, experience, and teamwork are the keys to investment performance.  We thank you for your continued confidence and support of the Miles Funds, Inc.

David W. Miles

President, Miles Funds, Inc.

The Miles Funds are distributed by Foreside Distribution Services, L.P.

Shares of the Miles Funds are NOT INSURED BY THE FDIC.  Investment products involve investment risk, including the possible loss of principal.  Past performance is not predictive of future results, and the composition of each Fund’s portfolio is subject to change.

Information is not authorized for distribution unless accompanied by a current prospectus.  An investor should consider the Funds’ investment objectives, risks, charges, and expenses carefully before investing or sending money.  This and other important information can be found in the Funds’ prospectus.  To obtain more information, please call 1-866-720-2995.  Please read the prospectus carefully before investing.

Miles Funds, Inc.

Message from the Investment Adviser

Dear Valued Shareholder:

The harsh winter weather played out in first quarter economic headlines but it wasn’t enough to push the Fed off its taper timeline.  With her first meeting as chair of the Federal Reserve, Janet Yellen injected a bit of volatility into markets by sounding more hawkish (concerned about inflation) than expected.  She downplayed the guidepost of a 6.5% unemployment rate as a marker for the beginning of rate hikes, which made sense given that February’s rate at 6.7% was within shooting distance of the goal.  However, she also suggested that a six month window between the end of tapering asset purchases and the beginning of rate hikes is reasonable.  While markets initially responded with lower equity and bond prices, subsequent dovish commentary coupled with weaker economic news softened the response.

Despite the weather, GDP growth remains solid.  Although fourth quarter was revised down to 2.6% on lower consumer spending, momentum may be building driven by lower unemployment claims and an increase in building permits.  Manufacturing appears healthy with the ISM manufacturing index reaching 57 in November before falling back to 53 in the first quarter.  And the housing market has also been a positive contributor over the past couple years as reflected by the S&P/ Case Shiller 20 City Home Price index which is up 13.2% year over year.  However, some measures of housing activity such as existing home sales and mortgage applications fell in the first quarter, raising concern that housing activity has peaked and may not improve without additional wage growth.  The spring selling season will be a good indicator of the relative health of the housing market.

Another concern that has been brewing for some time is the level of valuation in equity markets.  The S&P 500 reached an all-time high in the first quarter and corporate profit margins are strong.  While an accommodative Fed is supportive of a strong equity market, it seems likely that consensus earnings expectations are overly optimistic which could lead to some market retracement.  We continue to favor equities for the long haul but would not be surprised by some disruption in the coming weeks that allows for a better entry point.  

Finally, geopolitical risk bubbled over between Russian and Ukraine during the quarter, buffeting emerging markets and raising concerns about the flow of Russian commodities such as natural gas to the European Union.  And several European governments are facing challenges from a populace that is tired of austerity but unconvinced that proposed reform is the right answer.  Although geopolitical risk is an unpredictable element, the fragility of the global economic recovery suggests heightened sensitivity to this type of unrest.  

The domestic economy appears to be gaining traction, but there are many obstacles and influences that will impact the trend.  We appreciate your partnership in these interesting times and remain vigilant for those disruptions that produce relative value for portfolios.

Thank you for your ongoing support of the Miles Funds, Inc.

Laurie Mardis, CFA

Director, Fixed Income

Miles Capital, Inc.

Miles Funds, Inc.

Performance Report

Money Market Funds

The money market yield curve flattened with twelve month paper falling despite Federal Reserve commentary that suggested rates may rise quicker than the market expects.  The Fed expects to end quantitative easing in the fall but rate hikes will come only when the recovery appears sustainable.  Money market rates will be anchored at these historically low rates until domestic growth improves and the Fed normalizes monetary policy.  

Institutional Money Market Fund

The Fund’s average days remain short as the money market area of the yield curve flattened with longer rates falling.  Bank deposit accounts remain attractive and we continue to add to those investments.  

An investment in the Miles Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.  Although the Fund seeks to preserve the value of your investment of $1.00 per share, it is possible to lose money by investing in the Fund.

Miles Funds, Inc.
Institutional Money Market Fund
						Schedule of Portfolio Investments
					March 31, 2014
					Amortized						Amortized
Par Value	Description				Cost		Par Value	Description			Cost
U.S. Government Agencies (22.43%)							Certificates of Deposit (continued)
Federal Farm Credit Bank							Safra National, NY CD
$   6,000,000	0.150%	**	04/01/14	…………………………………………	$ 6,000,000		$      245,000	0.300%	06/13/14	…………………………………………	$     245,000
500,000	0.260%	*	07/14/14	…………………………………………	499,899		Transport Alli Bank, CD
2,000,000	0.166%	***	10/24/14	…………………………………………	1,999,885		245,000	0.350%	06/13/14	…………………………………………	245,000
							Bank Atlanta, StoneCastle CD
Federal Home Loan Bank							245,000	0.400%	07/15/14	…………………………………………	245,000
4,000,000	0.375%		06/12/14	…………………………………………	4,001,275		NXT Bank, IA CD
1,500,000	0.180%		08/05/14	…………………………………………	1,500,014		247,961	0.550%	07/28/15	…………………………………………	247,961
							Bank Baroda, NY CD
Federal National Mortgage Association							245,000	0.300%	08/14/14	…………………………………………	245,000
3,400,000	0.360%	**	06/23/14	…………………………………………	3,401,487		Prime South Bank, StoneCastle CD
1,000,000	2.625%		11/20/14	…………………………………………	1,015,840		245,000	0.250%	08/14/14	…………………………………………	245,000
	(Cost $18,429,616)				18,418,400		Investors Bank, NJ CD
							245,000	0.300%	08/15/14	…………………………………………	245,000
Certificates of Deposit (10.77%)							Beal Bank, TX CD
Beal Bank, NV CD							245,000	0.300%	08/20/14	…………………………………………	245,000
$      245,000	0.250%		04/02/14	…………………………………………	$    245,000		Firstbank, PR CD
Mizuho Bank, NY CD							245,000	0.400%	08/29/14	…………………………………………	245,000
245,000	0.250%		05/01/14	…………………………………………	245,000		Meridian Bank, StoneCastle CD
GE Capital Retail Bank, UT CD							245,000	0.450%	09/27/14	…………………………………………	245,000
245,000	0.360%		05/02/14	…………………………………………	245,000		BBCN Bank, CA CD
Customers Bank, PA CD							245,000	0.300%	11/18/14	…………………………………………	245,000
245,000	0.260%		05/06/14	…………………………………………	245,000		First Bank, NC CD
Bank of India, NY CD							245,000	0.300%	11/28/14	…………………………………………	245,000
245,000	0.400%		05/07/14	…………………………………………	245,000		Newburyport Bank, MA CD
Discover Bank, DE CD							247,462	0.450%	11/29/14	…………………………………………	247,462
245,000	0.300%		05/20/14	…………………………………………	245,000		Wex Bank, UT CD
First Niagara Bank, NY CD							245,000	0.400%	12/12/14	…………………………………………	245,000
245,000	0.300%		05/22/14	…………………………………………	245,000		OneWest Bank, StoneCastle CD
Bank Hapoalim, CD							245,033	0.800%	12/26/14	…………………………………………	245,033
245,000	0.400%		05/27/14	…………………………………………	245,000		Frontenac Bank, StoneCastle CD
Bankers Bank, OK CD							245,000	0.610%	12/27/14	…………………………………………	245,000
245,000	0.200%		05/30/14	…………………………………………	245,000		Amer Enter, StoneCastle CD
Treynor State Bank, IA Certificate of Deposit							245,000	0.500%	01/15/15	…………………………………………	245,000
Account Registry Service (CDARS) *****							Merrick Bank, StoneCastle CD
500,000	0.160%		06/05/14	…………………………………………	500,000		245,000	0.550%	01/15/15	…………………………………………	245,000
Medallion Bank, UT CD							EnerBank, StoneCastle CD
$      245,000	0.300%		06/13/14	…………………………………………	$    245,000		245,000	0.550%	01/22/15	…………………………………………	245,000
*	Interest rate fluctuates daily with Fed Fund rate
**	Interest rate fluctuates daily with Prime rate
***	Interest rate fluctuates monthly with Libor
****	Deposit Account interest rates fluctuate as determined by individual bank
*****	Fully FDIC insured through the CDARS program which places funds into certificates of deposit issued by banks in the
	CDARS network in increments of less than the standard FDIC insurance maximum
******	Fully FDIC insured through American Depository Management which places funds into individual banks in increments
	of less than the standard FDIC insurance maximum
						See accompanying notes to financial statements
Miles Funds, Inc.
Institutional Money Market Fund
						Schedule of Portfolio Investments
					March 31, 2014
					Amortized						Amortized
Par Value	Description				Cost		Par Value	Description			Cost
Certificates of Deposit (continued)							Deposit Accounts (continued)
Central Bank IL, StoneCastle CD							Nationwide Bank, Columbus, OH
$      245,000	0.400%		02/05/15	…………………………………………	$    245,000		$      245,000	0.300%	…………………………………………		$     245,000
Freedom Financial Bank, IA CD							Northwest Bank, Spencer, IA
250,000	0.500%		02/07/15	…………………………………………	250,000		245,000	0.400%	…………………………………………		245,000
Seaside National, StoneCastle CD							Treynor State Bank, Treynor, IA
245,000	0.540%		02/14/15	…………………………………………	245,000		245,000	0.500%	…………………………………………		245,000
Solera National Bank, CD							Wells Fargo Bank, Des Moines, IA
245,000	0.400%		03/07/15	…………………………………………	245,000		3,500,000	0.270%	…………………………………………		3,500,000
TriState Capital Bank, CD							American Money Market ******
245,000	0.700%		03/27/15	…………………………………………	245,000		33,072,905	0.200%	…………………………………………		33,072,905
	(Cost $8,840,456)				8,840,456			(Cost $39,267,905)			39,267,905
Deposit Accounts **** (47.82%)							Repurchase Agreements (18.98%)
Bank of the West, Des Moines, IA							Wells Fargo
$      245,000	0.350%		…………………………………………		$    245,000		$ 15,581,658	0.060%	04/01/14	…………………………………………	$15,581,658
Central State Bank, State Center, IA								(Cost $15,581,658)			15,581,658
245,000	1.000%		…………………………………………		245,000			(Purchased on 03/31/14; proceeds at
Citizens State Bank, Pocahontas, IA								maturity $15,581,684; collateralized by
245,000	0.400%		…………………………………………		245,000			$16,899,533 U.S. Government Agencies
Community Bank, Oelwein, IA								with maturies ranging from 8/28/20 to
245,000	0.500%		…………………………………………		245,000			02/20/44, collateral worth $15,894,087)
Community Savings Bank, Manchester, IA
245,000	0.520%		…………………………………………		245,000			Total Investments (99.9977%)
Fidelity Bank, Huxley, IA								(Cost $82,108,419) (1)			$82,108,419
245,000	0.300%		…………………………………………		245,000			Other Assets and Liabilities (0.0023%)			1,857
First National Bank, Creston, IA
245,000	0.400%		…………………………………………		245,000			Net Assets			$82,110,276
Iowa State Bank, Des Moines, IA
245,000	0.300%		…………………………………………		245,000
*	Interest rate fluctuates daily with Fed Fund rate
**	Interest rate fluctuates daily with Prime rate
***	Interest rate fluctuates monthly with Libor
****	Deposit Account interest rates fluctuate as determined by individual bank
*****	Fully FDIC insured through the CDARS program which places funds into certificates of deposit issued by banks in the
	CDARS network in increments of less than the standard FDIC insurance maximum
******	Fully FDIC insured through American Depository Management which places funds into individual banks in increments
	of less than the standard FDIC insurance maximum
(1)	Also approximates cost for tax purposes
						See accompanying notes to financial statements

Miles Funds, Inc.
Statement of Assets and Liabilities
March 31, 2014
			Institutional
			Money Market
			Fund
ASSETS:
Investments, at value (amortized cost):
	Unaffiliated issuers		$      66,526,761
	Repurchase agreements		15,581,658
		Total investments	82,108,419
Interest and dividends receivable			33,890
Prepaid expenses			6,300
		Total assets	82,148,609
LIABILITIES:
Dividends payable			585
Accrued expenses and other payables:
	Investment advisory fees		213
	Administration fees		4,022
	Accrued expenses and accounts payable		33,513
		Total liabilities	38,333
		Net assets	$      82,110,276
NET ASSETS:
Paid-in capital			$      82,110,276
		Net assets	$      82,110,276
Authorized shares			1,250,000,000
Capital shares outstanding			82,110,276
Net asset value--offering and redemption price per share			$                 1.00
See accompanying notes to financial statements

Miles Funds, Inc.
Statement of Operations
For the Year Ended March 31, 2014
	Institutional
	Money Market
	Fund
INVESTMENT INCOME:
Interest income	$           176,558
Total investment income	176,558
EXPENSES:
Investment advisory fees	185,095
Administration fees	92,547
Accounting fees	27,765
Custody fees	14,841
Legal fees	7,683
Audit and tax fees	22,650
Directors' fees	11,510
Affiliated transfer agent fees	6,000
Registration and filing fees	1,175
Insurance expense	8,676
Pricing service expense	2,915
Other	3,647
Total expenses	384,504
Less:  Expenses voluntarily reduced/waived	(216,212)
Net expenses	168,292
Net investment income	$               8,266
See accompanying notes to financial statements

Miles Funds, Inc.
Statements of Changes in Net Assets
March 31, 2014 and 2013
	Institutional Money Market Fund
	Year	Year
	Ended	Ended
	March 31, 2014	March 31, 2013
OPERATIONS:
Net investment income	$                  8,266	$                16,758
Change in net assets resulting from operations	8,266	16,758
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Capital shares	(8,266)	(16,758)
Change in net assets from shareholder distributions	(8,266)	(16,758)
CAPITAL SHARE TRANSACTIONS:
Issued:
Capital shares	217,597,602	238,071,147
Reinvestments:
Capital shares	8,363	18,229
Redemptions:
Capital shares	(224,128,061)	(222,283,122)
Change in net assets from capital transactions	(6,522,096)	15,806,254
Change in net assets	(6,522,096)	15,806,254
NET ASSETS:
Beginning of period	88,632,372	72,826,118
End of period	$         82,110,276	$         88,632,372
SHARE TRANSACTIONS:
Issued:
Capital shares	217,597,602	238,071,147
Reinvestments:
Capital shares	8,363	18,229
Redemptions:
Capital shares	(224,128,061)	(222,283,122)
Change in shares	(6,522,096)	15,806,254
See accompanying notes to financial statements

Miles Funds, Inc.

Notes to Financial Statements

March 31, 2014

1.  Organization

The Miles Funds, Inc. (the “Miles Funds”) was registered on November 16, 1994 under the Investment Company Act of 1940 (the “1940 Act”), as amended, as a diversified open-end management investment company issuing its shares in one portfolio.  Miles Capital, Inc. (“Miles Capital”) is the investment adviser.  The Miles Funds currently consist of the following diversified portfolio: Institutional Money Market Fund (the “Fund”).

2.  Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of the financial statements. The policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements 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 increase and decrease in net assets from operations during the period.  Actual results could differ from those estimates.

Securities Valuation

In accordance with Rule 2a-7 under the 1940 Act, the Fund’s investments are valued at amortized cost, which approximates fair value, in order to maintain a constant net asset value of $1 per share.  Under the amortized cost method of valuation, discount or premium is amortized on an effective yield basis to the maturity of the security.

Security Transactions and Investment Income

Security transactions are accounted for on the date the security is purchased or sold (“trade date”).  Interest income is recognized on the accrual basis and includes, when applicable, the pro rata amortization of premium or accretion of discount.  Dividends are recorded on the ex-dividend date.  Gains or losses realized on sales of securities are determined on the identified cost basis.

Repurchase Agreements

The Fund may engage in repurchase agreements with financial institutions such as banks, brokers, or dealers that Miles Capital deems creditworthy under guidelines approved by the Fund’s Board of Directors (the “Board”), subject to the seller’s agreement to repurchase such securities at a mutually agreed-upon date and price.  The seller under a repurchase agreement will be required to continually maintain the value of collateral held pursuant to the agreement at not less than the repurchase price (including accrued interest).  If the seller were to default on its repurchase obligation or become insolvent, the Fund holding such obligation would suffer a loss to the extent that the proceeds from a sale of the underlying portfolio were less than the repurchase price under the agreement, or to the extent that the disposition of such securities by the Fund was delayed pending court action.  The repurchase price generally equals the price paid plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities.  Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the Fund and the counterparty.

Securities Purchased on a When-Issued or Delayed-Delivery Basis

The Fund may purchase securities on a when-issued or delayed-delivery basis.  When-issued securities are securities purchased with delivery to occur at a later date at a stated price and/or yield, thereby involving the risk that the price and/or yield obtained may be more or less than those available in the market when delivery takes place.  At the time the Fund makes a commitment to purchase a security on a when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value.  A segregated account is established and the Fund maintains cash and marketable securities at least equal in value to commitments for when-issued securities.

Miles Funds, Inc.

Notes to Financial Statements (continued)

March 31, 2014

Dividends to Shareholders

Dividends from net investment income are declared daily and paid monthly.

The amount and timing of dividends from net investment income and distributions from net realized gains are determined in accordance with federal income tax regulations, which may differ from the character of distributions under GAAP.  These “book/tax” differences are either considered temporary or permanent in nature.  To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal treatment; temporary differences do not require reclassification.

Taxes

The Fund’s policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute taxable income to shareholders in amounts that will avoid or minimize federal income or excise taxes of the Fund.

The Fund evaluates its tax positions taken or expected to be taken in the course of preparing the Fund’s tax return to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as an expense in the current year.  The Fund is no longer subject to examination by tax authorities for years prior to 2010.  At this time, management believes there are no uncertain tax positions which, based on their technical merit, would more-likely-than-not be sustained upon examination.  Accordingly, no provision has been made for federal or state income taxes.  Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense.

Subsequent Events

The Fund has evaluated the effects of subsequent events that occurred subsequent to March 31, 2014 through the date the financial statements were issued.  There have been no material events that would require recognition in the Fund’s financial statements or disclosure in the notes to the financial statements.

3.  Related Party Transactions

Under the terms of its Investment Advisory Agreement, Miles Capital is entitled to receive fees at an annual rate of 0.20 percent of the average daily net assets of the Fund.  Miles Capital voluntarily limited advisory fees for the Fund to a range from 0.00 to 0.10 percent during the year ended March 31, 2014.

The Fund has entered into a Management and Administration Agreement with Miles Capital pursuant to which the Fund pays administrative fees at an annual rate of 0.10 percent of the average daily net assets.  Miles Capital voluntarily limited administrative fees for the Fund to a range from 0.00 to 0.07 percent during the year ended March 31, 2014.

Miles Capital also provides fund accounting services for the Fund pursuant to a Fund Accounting Agreement and receives a fee of 0.03 percent of the average daily net assets of the Fund for such services.  Miles Capital voluntarily waived all fund accounting fees for the Fund during the year ended March 31, 2014.

Foreside Distribution Services, L.P. serves as distributor to the Fund pursuant to a Distribution Agreement. The Distributor receives no compensation under the Distribution Agreement with the Fund, but may receive compensation under a Distribution and Shareholder Service Plan (the “Plan”) adopted pursuant to Rule 12b-1 under the 1940 Act under which the Fund is authorized to pay the Distributor for payments it makes to

Participating Organizations. As authorized by the Plan, the Distributor will enter into Shareholder Agreements with Participating Organizations pursuant to which the Participating Organization agrees to provide certain administrative and shareholder support

Miles Funds, Inc.

Notes to Financial Statements (continued)

March 31, 2014

services in connection with shares of a Fund purchased and held by Customers of the Participating Organization.  The

Distributor will be compensated by a Fund up to the amount of any payments it makes to Participating Organizations under the Rule 12b-1 Agreement.  No fees have been approved for the Fund.  However, Miles Capital as adviser and administrator of the Fund may in its sole discretion make payments to the Distributor to supplement shareholder fees paid by the Fund up to the maximum fee approved by the Plan without further notice to shareholders and at no cost to the Fund.

Miles Capital also serves as the Fund's transfer agent.  Miles Capital is paid a fee for transfer agency services based on the number of shareholder accounts serviced or a minimum fee amount.  During the year ended March 31, 2014, Miles Capital received no transfer agent service fees.

Miles Capital reimburses the Fund for various other fees in order to maintain a targeted yield.  Expenses voluntarily reduced/waived by Miles Capital for the year ended March 31, 2014 are as follows:

Expenses Voluntarily Reduced/Waived:
Investment advisory fees	$ 153,583
Administration fees	28,864
Accounting fees	27,765
Transfer agent fees	6,000
Total expenses voluntarily reduced/waived	$ 216,212

4.  Federal Income Taxes

The Fund’s policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute taxable income to shareholders in amounts that will avoid or minimize federal income or excise taxes of the Fund.

Distributable earnings for tax purposes as of March 31, 2014:
	Ordinary Income	$ 585
	Long-term Gains	--
		$ 585

Distributions for tax purposes for year ended March 31, 2014:
	Ordinary Income	$ 8,266
	Long-term Capital Gains	--
		$ 8,266

5.  Fair Value Measurement

ASC 820, Fair Value Measurement and Disclosure, defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements.  Under ASC 820, various inputs are used in

determining the value of the Fund’s investments.  These inputs are summarized into three broad levels as described below:

Miles Funds, Inc.

Notes to Financial Statements (continued)

March 31, 2014

Level 1 –

quoted prices in active markets for identical securities;

Level 2 –

other significant observable inputs (including quoted prices for similar securities, interest rates, and evaluated quotations obtained from pricing services); or

Level 3 –

significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments.)

Securities in the Fund’s investments are valued at amortized cost, which approximates fair value, pursuant to Rule 2a-7 under the Investment Company Act of 1940.  These approximate fair values are all considered Level 2 valuations with the exception of the demand accounts which are considered Level 1 valuations.

6.  Securities Transactions

Purchases and proceeds from the maturity and sale of portfolio securities in the Institutional Money Market Fund aggregated $5,650,393,498 and $5,656,730,640, respectively, for the year ended March 31, 2014.

Miles Funds, Inc.
Financial Highlights
		Institutional Money Market Fund
		Year Ended March 31,
		2014	2013	2012	2011	2010
Net Asset Value, Beginning of Period		$1.000	$1.000	$1.000	$1.000	$1.000
Net Investment Income		$0.000	$0.000	$0.001	$0.002	$0.003
Dividends and Distributions		($0.000)	($0.000)	($0.001)	($0.002)	($0.003)
Net Asset Value, End of Period		$1.000	$1.000	$1.000	$1.000	$1.000
Total Return**		0.01%	0.02%	0.05%	0.16%	0.26%
Ratio of Expenses to Average
	Net Assets, After Waivers	0.18%	0.23%	0.17%	0.19%	0.32%
Ratio of Net Investment Income to
	Average Net Assets, After Waivers	0.01%	0.02%	0.05%	0.16%	0.26%
Ratio of Expenses to Average
	Net Assets, Before Waivers*	0.42%	0.51%	0.70%	0.73%	0.73%
Ratio of Net Investment Income to
	Average Net Assets, Before Waivers*	(0.22%)	(0.26%)	(0.48%)	(0.37%)	(0.14%)
Net Assets, End of Period (000 Omitted)		$82,110	$88,632	$72,826	$55,797	$57,769
* During the period certain fees were voluntarily reduced.  If such voluntary fee reductions had not occurred, the ratios would have been as indicated.
** Total return assumes reinvestment of net investment income and is calculated based on the net asset value of the last business day.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Miles Funds, Inc.:

We have audited the accompanying statement of assets and liabilities of the Institutional Money Market Fund of Miles Funds, Inc. (the Fund), including the schedule of portfolio investments, as of March 31, 2014, and the related statement of operations for the year ended March 31, 2014, and the related statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended. 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. The accompanying financial highlights for the years ended March 31, 2010 and 2011, were audited by other auditors whose report dated May 25, 2011, expressed an unqualified opinion on those financial highlights.

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 audits 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. Our procedures included confirmation of securities owned as of March 31, 2014, by correspondence with the custodian. 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Institutional Money Market Fund of Miles Funds, Inc. as of March 31, 2014, and the results of its operations for the year ended March 31, 2014, and the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended, in conformity with U.S. generally accepted accounting principles.

/S/ KPMG LLP

Des Moines, Iowa
REPORT DATE

Miles Funds, Inc. (unaudited)

The following table contains basic information regarding directors and officers, respectively that oversee operations of the Miles Capital Funds complex.

Name, Contact Address  and Age	Position held with Miles Funds	Term of Office and Length of Time Served	Principal Occupations During Past Five Years	Number of Portfolios Overseen by Director	Other Directorships held Outside of Miles Funds (five years)
Independent Directors:
Debra L. Johnson Jones 1415 28th Street, #200 West Des Moines, IA 50266 Age 53	Director	Since 1998	CEO, Co-Founder, EnVest Partners, 2011-present President, Vodaci Technologies 2000 to 2011	1	None
Steven Zumbach 1415 28th Street, #200 West Des Moines, IA 50266 Age 64	Chair, Director	Since 1998	Attorney, Belin McCormick, P.C. 1977 to present	1	None
Interested Director:
David Miles 1415 28th Street, #200 West Des Moines, IA 50266  Age 57	Director	Since March, 2010	CEO, Miles Capital 2009 to  present; Miles Group 2007 to 2009	1	None
Officers:
David Miles 1415 28th Street, #200 West Des Moines, IA 50266 Age 57	President	Since  March, 2010	CEO, Miles Capital 2009 to  present; Miles Group 2007 to 2009	N/A	N/A
Amy Mitchell 1415 28th Street, #200 West Des Moines, IA 50266 Age 44	Secretary/ Treasurer	Since 1998	Secretary and Director  Administration, Miles Capital 1990 to present	N/A	N/A
Gweneth Gosselink 1415 28th Street, #200 West Des Moines, IA 50266 Age 58	Chief Compliance  Officer	Since 2013	Chief Compliance Officer, Miles Capital 2013 to present Director of Compliance, Aviva Investors North America 2006 to 2013	N/A	N/A

The Statement of Additional Information (SAI) has additional information about the Funds’ Directors and is available without charge, upon request, by calling 1-800-343-7084.

Miles Funds, Inc.

Additional Information (unaudited)

March 31, 2014

1.  About Your Fund Expenses

It is important for you to understand the impact of costs on your investment.  All mutual funds have operating expenses.  As a shareholder of the fund, you incur ongoing costs, including management fees, distribution and service fees, and other fund expenses.  Expenses, which are deducted from a fund’s investment income, directly reduce the investment return of the fund.

A fund’s expenses are expressed as a percentage of its average net assets.  This figure is known as the expense ratio.  The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and compare these costs with those of other mutual funds.  The examples are based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2013 to March 31, 2014.  The table illustrates your fund’s costs in two ways:

A.

Based on actual fund return.  This section helps you to estimate the actual expenses that you paid over the period.  The “Ending Account Value” shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund.  You may use the information here, together with the   amount you invested, to estimate the expenses that you paid over the period.

B.

Based on hypothetical 5 percent return.  This section is intended to help you compare your fund’s costs with those of other mutual funds.  It assumes that the fund had a return of 5 percent before expenses during the period shown, but that the expense ratio is unchanged.  In this case, because the return used is not the fund’s actual return, the results do not apply to your investment.  The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5 percent return.  You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Your fund does not carry a “sales load” or transaction fee.  The calculations assume no shares were bought or sold during the period.  Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund’s expenses, including annual expense ratios for the past five years, in the Financial Highlights section of this report.  For additional information on operating expenses and other shareholder costs, please refer to the prospectus.

	Beginning	Ending	Expenses Paid	Annualized
	Account Value	Account Value	During Period*	Expense
	10/1/2013	3/31/2014	10/1/13-3/31/14	Ratio*
Based on Actual Fund Return
Institutional Money Market Fund	$1,000.00	$1,000.04	$0.90	0.18%
Based on Hypothetical 5% Return
Institutional Money Market Fund	$1,000.00	$1,024.04	$0.91	0.18%
*Expenses (after waivers) are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by number of days in the most recent fiscal half-year, then divided by 365.

Miles Funds, Inc.

Additional Information (unaudited) (continued)

March 31, 2014

2.

 Proxy Voting Policies and Procedures, Proxy Voting Record, Schedule of Portfolio Holdings, and

 Form N-PX

Complete schedules of portfolio holdings that are updated monthly are available on the Internet at www.IPASeducation.org.  Form N-PX is a record of proxy votes by the Fund.  Since the Fund only holds non-voting securities, there are no votes recorded.

Form N-PX and the Form N-Q are available:

By calling the Fund toll free at 1-800-343-7084,

At www.sec.gov, or by phone at 1-800-SEC-0330 or,

By mail at Public Reference Section, SEC, Washington, D.C. 20549 (duplicating fee required).

3.  Basis for Approval of the Investment Advisory Agreement

The Board approved the continuation of the investment advisory agreement with Miles Capital at its March, 2014 meeting. The Board determined that continuing the agreement was in the best interests of the Fund and its shareholders. The decision was based on an evaluation of the investment adviser on the date of the meeting, as well as the evaluation the Board undertakes throughout the year. The Board reviewed a great deal of data, including the factors summarized below, in coming to its decision.  The Board based its decision on the totality of the information reviewed and discussed, with no single factor determining its decision.

The Board reviewed the quality of the investment advice.  The Board noted the stability of the management team, as well as their extensive experience. Miles Capital has been the Fund adviser since its inception.  

The Board reviewed the investment performance of the Fund, comparing the performance with peer group rankings as well as benchmarks. The Board reviews the investment performance throughout the year, as well as at the meeting where it decides whether to continue the investment advisory agreement. The Board noted that throughout the year the adviser had brought to the Board its recommendations for Fund improvement, and the implementation of those recommendations resulted in better fund performance.  

The Board also reviewed the advisory fees charged under the agreement, and compared those fees with fees charged by other advisers of comparable funds, as well as comparing the fees charged by the adviser to its other clients. The Board reviewed the fee waivers in effect throughout the past 12 months, and the fee waivers which were in effect at the date of the meeting.  The Board determined that the fees charged under the advisory agreement were reasonable in comparison to peer group fees for similar funds.

The Board also reviewed the Fund’s total expense ratio relative to the peer group.  The Board noted that money market funds are facing pressure across the board, with fee waivers and expense supplements almost universal to maintain a positive yield.

The parent company of the adviser, Miles Capital Holdings, Inc., is a privately held company.  The Board noted the extensive fee waivers in effect, and the decline in revenue to the adviser, with no decline in investment personnel. The Board also noted that no soft dollars arrangements are in effect for the Fund.

The Board will consider whether to continue the advisory agreement again in one year.

Miles Funds, Inc.

Service Providers

INVESTMENT ADVISER and

ADMINISTRATOR

Miles Capital, Inc.

1415 28th Street, Suite 200

West Des Moines, Iowa 50266-1461

DISTRIBUTOR

Foreside Distribution Services, L.P.

Three Canal Plaza, Suite 100

Portland, Maine 04101

LEGAL COUNSEL

Cline, Williams, Wright, Johnson &

Oldfather, LLP

1900 U.S. Bank Building

Lincoln, Nebraska  68508

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

KPMG LLP

2500 Ruan Center

Des Moines, Iowa  50309

ITEM 2. CODE OF ETHICS.

(A) 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) NO COMMENT REQUIRED.

(C) NOT APPLICABLE.

(D) THERE WAS NO WAIVER GRANTED UNDER THE CODE OF ETHICS DURING THE REPORTING PERIOD.

(E) NOT APPLICABLE.

(F)(1) NOT APPLICABLE.

(F)(2) NOT APPLICABLE.

(F)(3) TO REQUEST A FREE COPY OF THE MILES FUNDS, INC. CODE OF ETHICS, PLEASE CALL 1-800-438-6375.

ITEM 3. AUDIT REVIEW FINANCIAL EXPERT.

(a)(1) The registrant’s board of directors has determined that the registrant has at least one audit review financial expert serving as its audit reviewer.

(a)(2) Debra Jones is the independent director named as the audit review financial expert.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) AUDIT FEES. The aggregate fees 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 are listed below.  

March 31, 2013

$18,425

March 31, 2014

$18,750

(B)AUDIT-RELATED FEES. NONE.

(C) TAX PREPARATION FEES.

March 31, 2013

$4,725

March 31, 2014

$4,820

(D)NOT APPLICABLE.

(E)NOT APPLICABLE.

(F)NOT APPLICABLE.

(G) The aggregate fees for each of the last two fiscal years for professional services rendered by the principal accountant as well as tax preparation (both years).

March 31, 2013

$23,150

March 31, 2014

$23,570

(H) The audit reviewers of the registrant’s Board of Directors considered the effect of the services performed for the investment adviser and decided the engagement did not compromise the independence of the auditor.

ITEM 5. NOT APPLICABLE.

ITEM 6. NOT APPLICABLE.

ITEM 7. NOT APPLICABLE.

ITEM 8. NOT APPLICABLE.

ITEM 9. NOT APPLICABLE.

ITEM 10.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

THERE HAVE BEEN NO CHANGES TO THE PROCEDURES BY WHICH A SHAREHOLDER MAY RECOMMEND NOMINEES TO THE REGISTRANT’S BOARD OF DIRECTORS.

ITEM 11. CONTROLS AND PROCEDURES.

(A) THE PRINCIPAL EXECUTIVE AND FINANCIAL OFFICERS CONCLUDED THAT THE REGISTRANT'S DISCLOSURE CONTROLS AND PROCEDURES ARE EFFECTIVE BASED ON THEIR EVALUATION OF THE DISCLOSURE CONTROLS AND PROCEDURES AS OF JUNE 4, 2014, A DATE WITHIN 90 DAYS OF THE FILING DATE OF THIS REPORT.  

(B) THERE WERE NO SIGNIFICANT CHANGES IN REGISTRANT'S INTERNAL CONTROLS OR IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT THESE CONTROLS SUBSEQUENT TO THE DATE OF THEIR EVALUATION, INCLUDING ANY CORRECTIVE ACTIONS WITH REGARD TO SIGNIFICANT DEFICIENCIES AND MATERIAL WEAKNESSES.

ITEM 12. EXHIBITS.

(A)

A CERTIFICATION FROM THE CHIEF EXECUTIVE OFFICER AND THE CHIEF FINANCIAL OFFICER ARE ATTACHED AS EXHIBITS.

SIGNATURES

Pursuant to the requirements of the Securities 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.

MILES FUNDS, INC.

By

David W. Miles, President

Date: June 4, 2014

Pursuant to the requirements of the Securities 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.

Signature and Title

   

David W. Miles, President and Principal Executive

June 4, 2014

Amy M. Mitchell, Treasurer and Principal Financial and Accounting Officer

June 4, 2014