N-CSRS 1 mp63ncsrs200811.htm UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number 811-09053


The MP 63 Fund, Inc.

(Exact name of registrant as specified in charter)


MP 63 Fund, Inc.

555 Theodore Fremd Ave., Suite B-103

Rye, NY 10580

(Address of principal executive offices)(Zip code)


MP 63 Fund Inc.

555 Theodore Fremd Ave., Suite B-103

Rye, NY 10580

(Name and address of agent for service)


Registrant's telephone number, including area code: (914) 925-0022


Date of fiscal year end: February 28


Date of reporting period: August 31, 2008


Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).  The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.


A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public.  A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


Item 1.  Reports to Stockholders.



Dear Fellow Shareholders,

    As we write this letter, the stock market has been through a series of sharp sell-offs that qualify it as a bear market, generally defined as a decline of more than 20%. Many stocks have lost one-third of their market capitalization, and our portfolio hasn’t been immune to that trend. However, we firmly believe that there is plenty of reason for hope. First, the good news. For the first six months of our 10th fiscal year, ending on August 31, 2008, net investment income (dividends and interest, less expenses) totaled $370,696, compared with the $273,495 earned a year earlier. Our Net Asset Value per share rose from $12.10 on February 29, 2008 to $12.23 as of August 31, 2008, and the expense ratio for the six months ending August 31 was 0.85%, down from 0.88% for the fiscal year that ended in February. The higher net investment income, the result of generally rising dividends paid by our portfolio companies (as well as lower expenses), should result in another increase in the year-end dividend, which was 19.28¢ per share at the end of 2007.

    Now the “bad” news. The market decline accelerated in September and early October, sending our NAV lower along with the market and creating a decidedly negative investing climate. However, from a long-term perspective, the current market also presents potential buying opportunities, especially for the stocks of high-quality, well-capitalized companies. And the changes we made in the spring--trading companies in decline for firms that should benefit from long-term demographic trends, such as the need for water infrastructure upgrades and the growing popularity of warehouse clubs-- spared us from some of the carnage, while improving the quality of out portfolio. Our latest replacement was the addition of United Technologies, a solid, growing conglomerate, for Wrigley, which was acquired by Mars Inc.

    DRIPX shareholders deserve to be congratulated for their restraint. While many investors have given in to short-term, panic selling, our shareholders have, by and large, exhibited a more logical, long-term perspective. Therefore, we have not been forced to sell into the bear market and we are in position to potentially benefit from the array of bargain prices on high-quality companies that should be providing their shareholders (and ours) with a steady stream of higher profits and dividends. We feel that it’s more important than ever to continue to invest, either through dollar-cost averaging (which can be accomplished via automatic debits) or through periodic purchases, so that we take advantage of the potential opportunities provided by this market.

<signed>Vita Nelson and David Fish, co-managers

<October 20, 2008>


Past performance is not a guarantee of future results.


Must be preceded or accompanied by a prospectus. Mutual fund investing involves risk. Principal loss is possible.


Fund holdings are subject to change and should not be considered a recommendation to buy or sell any security. Please refer to the schedule of investments in the report for complete holdings information.


Dollar-cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities; the investor should consider his/her financial ability to continue purchases through periods of low price levels. Dollar-cost averaging and automatic investment plans do not assure a profit and do not protect against loss in declining markets.


Quasar Distributors, LLC, Distributor. (10/08)


[mp63ncsrs200811002.jpg]



The MP63 Fund, Inc.

 

   
  

Schedule of Investments

  

August 31, 2008 (Unaudited)

 Shares/Principal Amount of Assets

 Market Value

   

 COMMON STOCKS - 99.63%

 
   

 Automotive Parts- Retail/Wholesale - 0.85%   

 

                    8,100

Genuine Parts Co.

 $           343,602

   

 Automobile - Manufacturing - 0.89%

 

                    4,000

Toyota Motor Corp. (Japan) *

              358,360

   

 Banks- Money Center - 1.62%  

 

                  21,000

Bank of America Corp.

              653,940

   

 Banks - Regional - 2.19%   

 

                  20,200

BB&T Corp.

              606,000

                    8,700

US Bancorp

              277,182

  

              883,182

 Beverages- Alcoholic/Soft Drink - 2.23%

 

                    8,300

Anheuser-Busch Companies, Inc.

              563,238

                    6,400

Coca-Cola Corp.

              333,248

  

              896,486

 Building Products- Retail/Whole - 1.21%   

 

                    7,700

Black & Decker Corp.

              487,025

   

 Chemicals- Diversified - 0.88%

 

                  16,500

RPM International, Inc.

              356,400

   

 Chemicals - Specialty - 3.80%   

 

                  17,000

Praxair, Inc.

           1,527,280

   

 Commercial Services - 2.66%

 

                  23,400

Ecolab, Inc.

           1,070,316

   

 Communications Equipment - 3.46%

 

                  55,300

Nokia Corp. (Finland) ADR

           1,391,901

   

 Computer- Mini/Micro - 2.12%  

 

                  18,200

Hewlett-Packard Co.

              853,944

   

 Containers- Paper/Plastic - 1.06%

 

                  15,300

Bemis Co., Inc.

              427,176

   

 Cosmetics & Personal Care - 4.14%

 

                  23,400

Avon Products, Inc.

           1,002,222

                    8,700

Colgate-Palmolive Co.

              661,461

  

           1,663,683

 Diversified Operations - 5.97%

 

                    6,600

3M Company

              472,560

                  16,500

Corning, Inc.

              338,910

                  13,400

Fortune Brands

              788,188

                  19,600

General Electric Co.

              550,760

                    3,800

United Technologies

              249,242

  

           2,399,660

 Electronic Equipment - 1.55%

 

                  13,300

Emerson Electric Co.

              622,440

   

 Electronic- Semiconductors - 1.90%

 

                  33,400

Intel Corp.

              763,858

   

 Finance- Investment Management - 2.34%

 

                    9,000

Franklin Resources, Inc.

              940,500

   

 Financial Services -  6.04%

 

                    7,400

Bank of New York Mellon Corp.

              256,114

                    7,100

Cash America International, Inc.

              293,869

                  15,000

H&R Block, Inc.

              383,100

                  43,900

Paychex, Inc.

           1,496,112

  

           2,429,195

 Food- Misc. Preparation - 1.98%

 

                  15,200

ConAgra Foods, Inc.

              323,304

                  13,300

Hormel Foods Corp.

              474,278

  

              797,582

 Insurance- Life/Property/Casual - 4.59%

 

                  26,100

AFLAC, Inc.

           1,479,870

                    8,300

Travelers Companies, Inc.

              366,528

  

           1,846,398

 Leisure Products - 1.74%

 

                  15,500

Polaris Industries, Inc.

              698,895

   

 Machinery - Const./Mining/Farming - 1.79%

 

                  19,700

Amcol International Corp.

              718,262

   

 Machinery- Electrical Equipment - 4.81%  

 

                    9,100

Dover Corp.

              449,358

                  34,700

Johnson Controls, Inc.

           1,072,924

                  13,200

Tennant Company

              411,180

  

           1,933,462

 Manufacturing - 3.60%

 

                  14,700

Illinois Tool Works, Inc.

              729,267

                  12,200

Ingersoll-Rand Co.

              450,546

                    7,300

Pentair, Inc.

              268,275

  

           1,448,088

 Medical Instruments/Products - 3.23%

 

                  23,800

Medtronic, Inc.

           1,299,480

   

 Medical Drugs - 5.07%

 

                  11,500

Abbott Laboratories

              660,445

                  12,300

Johnson & Johnson

              866,289

                  26,800

Pfizer, Inc.

              512,148

  

           2,038,882

 Oil & Gas- International - 3.68%

 

                  11,500

BP Plc (United Kingdom) ADR

              662,745

                  10,200

Exxon Mobil Corp.

              816,102

  

           1,478,847

 Paper & Paper Products - 1.53%

 

                    6,300

International Paper

              170,415

                    7,200

Kimberly Clark Corp.

              444,096

  

              614,511

   

 Retail- Variety Stores - 0.75%

 

                    4,500

Costco Wholesale Corp.

              301,770

   

 Retail/Wholesale- Building Products - 1.11%

 

                  16,400

Home Depot, Inc.

              444,768

   

 Services-Prepackaged Software - 3.77%

 

                  55,500

Microsoft Corp.

           1,514,595

   

 Telecommunications Services - 1.97%

 

                    9,999

AT&T Corp.

              319,868

                  12,200

Centurytel, Inc.

              471,286

  

              791,154

 Textile- Apparel/Mill Products - 1.48%

 

                    7,500

VF Corp.

              594,375

   

 Transportation- Equipment/Leasing - 0.88%

 

                    5,500

Ryder Systems, Inc.

              354,860

   

 Transportation- Railroads - 1.42%

 

                    6,800

Union Pacific Corp.

              570,520

   

 Utility- Electric - 6.49%

 

                  18,800

Duke Energy Corp.

              327,872

                    9,800

Edison International

              450,016

                    8,400

FPL Group, Inc.

              504,504

                  40,200

MDU Resources Group, Inc.

           1,328,208

  

           2,610,600

 Utility-Gas Distribution -  2.35%

 

                  11,700

National Fuel Gas Co.

              553,527

                  10,000

SCANA Corp.

              392,000

  

              945,527

 Utility- Water - 2.48%

 

                  54,500

Aqua America, Inc.

              996,805

   

 Total for Common Stock (Cost $33,449,806) - 99.63%

         40,068,329

   
 

Total Investments - 99.63% (Cost $33,449,806) (Note 4)

         40,068,329

 

          

 

   

Other Assets Less Liabilities - 0.37%

              150,524

   
 

Net Assets - 100.00%

 $      40,218,853

   
   
   
   

 * Non-income producing security.  

 

 ADR- American Depository Receipt.

 



The MP63 Fund, Inc.

 

  

Statement of Assets and Liabilities

 

August 31, 2008 (Unaudited)

 
  

Assets:

 

     Investments at Market Value (Cost $33,449,806)

 $                   40,068,329

     Cash

                             41,492

     Receivables

 

    Dividends and Interest

                           104,353

 Prepaid Registration

                             26,282

               Total Assets

                      40,240,456

Liabilities

 

     Accrued Expenses

                             10,422

 Accrued Management Fees

                             11,181

               Total Liabilities

                             21,603

  

Net Assets

 $                   40,218,853

  

Net Assets Consist of:

 

     Capital Stock, $.001 par value; 1 billion shares

 

          authorized; 3,289,822 shares issued and outstanding

 $                            3,290

     Additional Paid in Capital

                      34,262,659

     Accumulated Undistributed Net Investment Income

                           452,623

     Realized Loss on Investments - Net

                       (1,118,242)

     Unrealized Appreciation in Value

 

          of Investments Based on Identified Cost - Net

                        6,618,523

Net Assets

 $                   40,218,853

  

Net Asset Value and Offering Price ($40,218,853/3,289,822)

 $                            12.23

  

Redemption Price Per Share ($12.23 x .98)*

 $                            11.98

  

* The Fund will deduct a 2% redemption fee from redemption proceeds if purchased and redeemed

    within 6 months.

 
  



The MP63 Fund, Inc.

 

  

 Statement of Operations

 

 For the year six months ended August 31, 2008 (Unaudited)

 

Investment Income:

 

     Dividend Income

 $                        540,283

     Interest Income

                               1,685

          Total Investment Income

                           541,968

Expenses:

 

     Investment advisor fees

                             70,457

     Administration fees

                             31,486

     Fund servicing expense

                             20,943

     Registration fees

                             10,055

     Insurance expense

                               7,417

     Printing and postage expense

                               7,005

     Compliance fees

                               5,984

 Miscellaneous expense

                               5,105

     Custody fees

                               4,323

     Legal fees

                               3,494

     Director fees

                               2,992

     Audit fees

                               2,011

          Total Expenses

                           171,272

  

Net Investment Income

                           370,696

  

Realized and Unrealized Gain (Loss) on Investments:

 

     Realized Gain on Investments

                       (1,073,395)

     Unrealized Depreciation on Investments

                        1,121,467

Net Realized and Unrealized Gain (Loss) on Investments

                             48,072

  

Net Increase in Net Assets from Operations

 $                        418,768



The MP63 Fund, Inc.

 

 

 

    

Statements of Changes in Net Assets

(Unaudited)

  
 

For  the

 

For  the

 

Six Months Ended

 

Year Ended

 

August 31, 2008

 

February 28, 2008

From Operations:

   

     Net Investment Income

 $                       370,696

 

$                     576,664

     Net Realized Gain on Investments

                      (1,073,395)

 

                        387,118

     Net Unrealized Appreciation (Depreciation)

                       1,121,467

 

                   (2,217,443)

     Increase (Decrease) in Net Assets from Operations

                          418,768

 

                   (1,253,661)

From Distributions to Shareholders:

   

      Net Investment Income

                                    -   

 

                      (613,907)

      Net Realized Gain from Security Transactions  

                                    -   

 

                   (2,243,913)

      Change in Net Assets from Distributions

                                    -   

 

                   (2,857,820)

From Capital Share Transactions

   

     Proceeds From Sale of Shares

                       1,781,431

 

                     3,681,195

     Shares Issued on Reinvestment of Dividends

                                    -   

 

                     2,847,660

     Cost of Shares Redeemed

   

     (net of redemption fees $7,176 and $13,102, respectively)

                      (1,973,366)

 

                   (3,562,533)

Net Increase from Shareholder Activity

                         (191,935)

 

                     2,966,322

    

Net Increase (Decrease) in Net Assets

                          226,833

 

                   (1,145,159)

    

Net Assets at Beginning of Period  

                     39,992,020

 

                   41,137,179

Net Assets at End of Period (Including Undistributed Net

   

     Investment Income of $452,623 and $72,992, respectively)

 $                  40,218,853

 

$                39,992,020

    

Share Transactions:

   

     Issued

                          145,673

 

                        270,988

     Reinvested

                                    -   

 

                        215,080

     Redeemed

                         (161,434)

 

                      (260,249)

Net increase in shares

                           (15,761)

 

                        225,819

Shares outstanding beginning of period

                       3,305,583

 

                     3,079,764

Shares outstanding end of period

                       3,289,822

 

                     3,305,583



            

 The MP63 Fund, Inc.

 

 

 

 

 

 

 

 

 

 

 

            

Financial Highlights

(Unaudited)

          

Selected data for a share outstanding throughout the period:

For the

 

For the

 

For the

 

For the

 

For the

 

For the

 

Six Months Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

Year Ended

 

August 31, 2008

 

February 29, 2008

 

February 28, 2007

 

February 28, 2006

 

February 28, 2005

 

February 28, 2004

Net Asset Value -

           

     Beginning of Period

      $         12.10

 

 $             13.36

 

 $             12.48

 

$               11.91

 

$              11.01

 

$                  8.09

Net Investment Income

0.11

 

0.18

 

0.17

 

0.15

 

0.10

 

0.07

Net Gains or Losses on Securities

           

     (realized and unrealized)

0.02

 

(0.51)

 

1.13

 

0.55

 

0.90

 

2.92

Total from Investment Operations

0.13

 

(0.33)

 

1.30

 

0.70

 

1.00

 

2.99

            

Distributions (From Net Investment Income)

0.00

 

(0.19)

 

(0.17)

 

(0.13)

 

(0.09)

 

(0.07)

Distributions (From Capital Gains)

0.00

 

(0.74)

 

(0.25)

 

0.00

 

(0.01)

 

0.00

    Total Distributions

0.00

 

(0.93)

 

(0.42)

 

(0.13)

 

(0.10)

 

(0.07)

            

Net Asset Value -

           

     End of Period

 $               12.23

 

 $             12.10

 

 $           13.36

 

 $             12.48

 

 $             11.91

 

 $               11.01

            

Total Return (a)

1.07 %

 

(3.08)%

 

10.40 %

 

5.91 %

 

9.06 %

 

37.01 %

            

Ratios/Supplemental Data

           

    Net Assets - End of Period (Thousands)

40,219

 

39,992

 

41,137

 

37,726

 

33,344

 

27,799

    Ratio of Expenses to Average Net Assets

0.85%

 

0.88%

 

0.97%

 

1.02%

 

1.22%

 

1.25%

    Ratio of Net Income to Average Net Assets

1.84%

 

1.34%

 

1.28%

 

1.23%

 

0.85%

 

0.75%

    Portfolio Turnover Rate

6.93%

 

4.75%

 

25.90%

 

6.58%

 

8.77%

 

9.16%

            
            

(a) Total returns are historical and assume changes in share price, reinvestment of dividends and capital gain distributions

  

      and assume no redemption fees.

           


THE MP63 FUND, INC.

Notes to Financial Statements

August 31, 2008 (Unaudited)


Note 1. Organization

The MP63 Fund (the "Fund") is organized as a Maryland Corporation, incorporated on October 13, 1998, and registered as an open-end, diversified, management investment company under the Investment Company Act of 1940, as amended.  The Fund's business and affairs are managed by its officers under the direction of its Board of Directors.  The Fund's investment objective is to seek long-term capital appreciation for shareholders.


NOTE 2. Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Fund.  These policies are in conformity with accounting principles generally accepted in the United States of America.


A.

Security Valuation - Portfolio securities traded on a national securities exchange are stated at the last reported sales price or a market’s official close price on the day of valuation. Portfolio securities for which market quotations are readily available are valued at market value. Portfolio securities for which market quotations are not considered readily available are valued at fair value on the basis of valuations furnished by a pricing service approved by the Board of Directors. The pricing service determines valuations for normal, institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders. There were no securities valued under this pricing service for 2008 or 2007.


B.

Security Transactions and Related Investment Income - Securities transactions are accounted for on the trade date.  Dividend income is recorded on the ex-dividend date.  Interest income is recorded on the accrual basis.


C.

Federal Income Taxes - The Fund complies with requirements of the Internal Revenue Code applicable to regulated investment companies, distributing all of its taxable income to its shareholders.  Therefore, no provision for Federal income tax is required.


D.

Dividends and Distributions to Shareholders - The Fund records dividends and distributions to shareholders on the ex-dividend date. The Fund will distribute its net investment income, if any, and net realized capital gains, if any, annually.


E.

Credit Risk - Financial instruments that potentially subject the Fund to credit risk include cash deposits in excess of federally insured limits.


F.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America

THE MP63 FUND, INC.

Notes to Financial Statements

August 31, 2008 (Unaudited)


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 management and investment programs.  As compensation for the services rendered, the Fund pays the Advisor a fee accrued daily based on an annualized rate of .35% of the daily net asset value.  For the six months ended August 31, 2008, the Advisor earned fees of $70,457.


The Advisor has voluntarily agreed to defer its advisory fee and to reimburse the Fund for other expenses if the total operating expenses of the Fund exceed an annual rate of 1.25% of average daily net assets.  Under the terms of the Agreement, fees deferred or expenses reimbursed by the Advisor are subject to reimbursement by the Fund, if so requested by the Advisor, up to five years from the fiscal year the fee or expense was incurred. However, no reimbursement payment will be made by the Fund if it would result in the Fund exceeding the voluntary expense limitation described above.


An affiliate of the Advisor provides certain administrative services to the Fund. These expenses amounted to $20,943 during the six months ended August 31, 2008.


The Fund has an administrative agreement with Mutual Shareholder Services (The "Administrator"). Under this agreement, the Administrator provides the Fund with administrative, transfer agency, and fund accounting services.  Mutual Shareholder Services charges an annual fee of approximately $60,000 for services rendered based on the Fund’s current asset size.  


The Fund is responsible for the cost of printing, postage, telephone costs and certain other out-of-pocket expenses. Vita Nelson is an officer and director of the Advisor and also an officer and director of the Fund.


The Fund currently pays each Director an annual retainer of $2,000.


The Chief Compliance Officer is paid $1,000 per month.  For the six months ended August 31, 2008 the Chief Compliance Officer was paid $6,000.




THE MP63 FUND, INC.

Notes to Financial Statements

August 31, 2008 (Unaudited)


NOTE 4. Investment Transactions

For the six months ended August 31, 2008, purchases and sales of securities, excluding short-term   investments, aggregated $3,148,375 and $2,778,373, respectively.


             Unrealized appreciation        

    $ 8,423,281

Unrealized depreciation

  (1,804,758)

Net unrealized appreciation

$ 6,618,523


For Federal income tax purposes, the cost of investments owned at August 31, 2008 was $33,449,806.



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 August 31, 2008, the components of net assets on a tax basis were as follows:


Ordinary income

$    452,623

Long term gains (loss)                                    $(1,118,242)

Unrealized appreciation             

      $ 8,423,281

Unrealized depreciation                                  $(1,804,758)


The tax character of distributions paid during the fiscal year ended February 29, 2008 was as follows:


Distributions paid from:

   Ordinary income

$   611,414

   Long term capital gains

    2,236,245

      Total

                                               $ 2,847,659


There were no distributions paid during the six months ended August 31, 2008.


Expense Example

As a shareholder of the MP63 Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution [and/or service] (12b-1) fees; and other Fund expenses.  This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, March 1, 2008 through August 31, 2008.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

    
    

The MP 63 Fund

Beginning Account Value

Ending Account Value

Expenses Paid During the Period*

 

March 1, 2008

August 31, 2008

March 1, 2008 to August 31, 2008

    

Actual

$1,000.00

$1,010.74

$4.32

Hypothetical

   

 (5% Annual Return before

       expenses)

$1,000.00

$1,020.98

$4.34

    
    
    

* Expenses are equal to the Fund's annualized expense ratio of 0.85%, multiplied by the average account value over the period, multiplied by 185/366 (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 Served 1

Principal Occupation(s) During Past 5 Years

Number of Portfolios in Fund Complex Overseen by Director

Other Directorships Held By Director


Disinterested Directors:



Ted S. Gladstone

Age: 76

555 Theodore Fremd Ave.,

Suite B103

Rye, NY 10580


Director


Indefinite – since 1998


President, Gladstone

Development Corporation

(real estate development)


1


None

Gloria Schaffer

Age: 77

555 Theodore Fremd Ave.,

Suite B103

Rye, NY 10580

Director

Indefinite – since 1998

Partner, CA White

(real estate development)

1

None

Richard Yaffa

Age: 76

555 Theodore Fremd Ave.,

Suite B103

Rye, NY 10580

Director

Indefinite – since 2005

President, Manhattan Products, Inc.

1

None


Interested Directors:



Vita Nelson 1,2

Age: 70

555 Theodore Fremd Ave.,

Suite B103

Rye, NY 10580


Director


Indefinite – since 1998


President, Editor and Publisher of The Moneypaper, Inc. (newsletter)


1


Director, The Moneypaper Advisor, Inc.; Director, Temper of the Times Communications, Inc.


Principal Officers who are not Directors:



Lester Nelson 1

Age: 79

555 Theodore Fremd Ave.,

Suite B103

Rye, NY 10580


Secretary


Indefinite – since 1998


Partner of the law firm of Nelson & Nelson


1


Director, Moneypaper Advisor, Inc.; Director, Temper of the Times Communications, Inc.

David Fish

Age: 59

555 Theodore Fremd Ave.,

Suite B103

Rye, NY 10580

Treasurer

Indefinite – since 2003

Executive Editor of The Moneypaper, Inc. (newsletter)

1

None


(1)

Vita Nelson and Lester Nelson are married

(2)

Vita Nelson is President of the Fund and a Director of the Fund’s Advisor, The Moneypaper Advisor, Inc. and therefore, is an “Interested Director” of the Fund.



THE MP63 FUND, INC.

Additional Information (Unaudited)

August 31, 2008




Information Regarding Proxy Voting


A description of the policies and procedures that these Funds use to determine how to vote proxies relating to portfolio securities and information regarding how these Funds voted proxies during the most recent 12-month period ended June 30, are available without charge upon request by (1) calling the Funds at 1-877-676-3386 and (2) from Funds’ documents filed with the Securities and Exchange Commission ("SEC") on the SEC's website at www.sec.gov.


Information Regarding Portfolio Holdings


The Fund file a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Form N-Q.  The Fund first and third fiscal quarters end on May 31 and November 30. The Fund Form N-Q’s are available on the SEC’s website at http://sec.gov, or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).  You may also obtain copies by calling the Funds at 1-877-676-3386.



Item 2. Code of Ethics.  Not applicable.


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.  Not applicable.


Item 5. Audit Committee of Listed Companies.  


Richard Yaffa

Ted Gladstone

Gloria L. Schaffer


Item 6.  Schedule of Investments.


Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.


Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.  Not applicable.


Item 8.  Portfolio Managers of Closed-End Management Investment Companies.  Not yet applicable.


Item 9.  Purchase of Equity Securities By Closed End Management Investment Company and Affiliates.  Not applicable.


Item 10.  Submission of Matters to a Vote of Security Holders.  


No Changes.


Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item.


Item 11.  Controls and Procedures.  


(a)

Based on an evaluation of the registrant’s disclosure controls and procedures as of September 30, 2008, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.


(b)

There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.


Item 12.  Exhibits.  


(a)(1)

Not applicable.


(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 November 5, 2008


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


By /s/Vita Nelson

*Vita Nelson

President

(principal executive officer)


Date November 5, 2008


By /s/David Fish

*David Fish

Treasurer

(principal financial officer)


Date November 5, 2008

* Print the name and title of each signing officer under his or her signature.