THE MP 63 FUND, INC.
The MP 63 Fund, Inc.(the "Fund") will accumulate shares in a diverse
group of companies that meet the criteria established by The Moneypaper Advisor,
Inc. (the "Adviser")for long term capital appreciation. The Fund seeks to
minimize investment risk by accumulating shares on a regular basis in the
companies whose securities are purchased and held by the Fund. The Adviser
believes this strategy will permit the Fund to buy more shares at lower prices.
See page 3 for a description of this strategy. In addition, the Fund will invest
and operate efficiently for the purpose of maintaining Fund expenses at a
minimum.
The Fund is sold without any initial sales load and is available for
your tax-deferred retirement plan. To discourage short-term trading, and to
benefit remaining shareholders for the expense of such transactions,
shareholders will be subject to a maximum redemption fee payable to the Fund
equal to 2.00% for shares redeemed that are held for less than three years.
Shares held for less than five years but more than three years will incur a
1.00% redemption fee.
This Prospectus, dated January 8, 1998, concisely describes the
information about the Fund that you ought to have before investing. Please read
it carefully before investing and retain it for future reference.
A Statement of Additional Information ("SAI") about the Fund, dated
January 8, 1998, is available free of charge. The address of the Fund is The
Hauppauge Corporate Center, 150 Motor Parkway, Suite 109W, Hauppauge, NY 11788
and its telephone number for shareholder inquiries is 1-877-MP63FUN (676-3386).
The SAI has been filed with the Securities and Exchange Commission and is
incorporated in its entirety by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TRANSACTION AND OPERATING EXPENSE TABLE
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This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER TRANSACTION FEES
(PAID DIRECTLY FROM YOUR INVESTMENT): (1)
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Maximum Sales Load Imposed on Purchases None
(as a percentage of the offering price)
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Maximum Redemption Fee (for shares held less than 3 years)(2) 2.00%
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ESTIMATED ANNUAL FUND OPERATING EXPENSES:
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS,
EXPRESSED AS A PERCENTAGE OF NET ASSETS)
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Maximum Advisory and Administration Fees (3) 0.70%
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Distribution (12b-1) Fees None
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Other Expenses (4) (5) 0.55%
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Total Estimated Fund Operating Expenses (3) (5) 1.25%
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EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period:
1 year $33.00
3 years $60.00
THE PURPOSE OF THE ABOVE TABLE IS TO HELP YOU UNDERSTAND THE VARIOUS COSTS AND
EXPENSES THAT YOU, AS A SHAREHOLDER, WILL BEAR DIRECTLY OR INDIRECTLY IN
CONNECTION WITH AN INVESTMENT IN THE FUND. THE EXAMPLE SET FORTH ABOVE ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND USES A 5% ANNUAL RATE OF RETURN AS REQUIRED BY
SEC REGULATIONS.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE CONSIDERED
INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS AND EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN.
(1) Shareholder accounts that are opened with less than $2,000 or which have an
average annual account balance of less than $2,000 as of the end of each
calendar year will be charged an account maintenance fee of $10.00 per account,
which will be paid to the Administrator. Additionally, financial institutions
selling Fund shares may charge investors a fee for their services.
(2) Shares held less than three years are subject to a 2% Redemption Fee. Shares
held less than five years but more than three years will be charged a 1%
Redemption Fee. Redemption Fee does not apply to IRAs and other tax-deferred
accounts. For an explanation of Redemption Fees see page 18.
(3) The Adviser and the Administrative each receive annual fees equal to 0.35%
of the Fund's average daily net assets. The Adviser, from time to time, may, in
its discretion, waive some or all of its advisory fees. The Adviser paid all
expenses incurred to organize the Fund and will be responsible for the costs
associated with the management of the Fund. See page 9 for further discussion of
the Adviser.
(4) Included among Other Expenses are state registration and custody fees.
(5) Other Expenses and Total Estimated Fund Operating Expenses are based on
estimated amounts assuming net assets of $10 million in the Fund.
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INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund seeks to provide investors with long-term capital appreciation
through the accumulation of shares of common stock. The Adviser will make no
effort to time the market and its investment decisions will not be influenced by
movement in the stock market in general nor will it respond to the day-to-day
ups and downs of the business activities of the companies it holds.The Adviser
identifies companies based primarily on the Moneypaper 63 Stock Index, acquiring
shares of common stock of companies which encourage shareholders to participate
in their dividend reinvestment plans. The Fund will continue to hold such common
stocks provided the companies continue to meet the Fund's and the Adviser's
investment criteria outlined below.
Unlike many other equity mutual funds, the Fund does not view a drop in
the value of the shares held by the Fund as a negative occurrence. When the
market price of its holdings are relatively low, it will be able to buy more
shares than it would if the price were higher. Because the Fund expects to
accumulate shares in the same companies over a period of years, such drops in
the market prices of any of its holdings give the Fund the ability to buy shares
at favorable prices.
Investors are encouraged to add to their Fund positions regularly as a
means of accumulating assets slowly over the long-term. Investors redeeming
their shares in less than five years will be subject to a redemption fee. See
page 18. It is anticipated that over any ten-year period the Fund will have
accumulated more shares at lower prices than it accumulated at higher
prices-thus the long-term investor in the Fund has increased the likelihood of
achieving the investment objective and has reduced the risk of negative results.
The Fund is not intended to be a complete investment program, and there
is no assurance that it will achieve its objective. The Fund's investment
objective may not be changed without shareholder approval. However, specific
investment policies employed by the Adviser to achieve the Fund's objective may
be changed or eliminated by the Fund's Board of Directors, without shareholder
approval. The Fund has also adopted investment restrictions, most of which may
not be changed without shareholder approval. See "Investment Objective, Policies
and Restrictions" in the SAI.
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INVESTMENT POLICIES
The Fund seeks to achieve its investment objective by investing in a
diversified portfolio of common stocks of companies, each of which offers a
dividend reinvestment plan. The Fund will have a wide representation among
industries. The Fund will invest at least 65% of its total assets in the common
stocks of the 63 companies that comprise the Moneypaper 63 Stock Index. The
Fund's portfolio companies will also satisfy certain other favorable investment
characteristics, including growth in earnings, continuous history of paying
dividends, low debt ratios and prospects for future growth.
The Adviser continually monitors the Fund's portfolio to ensure that the
companies comprising the portfolio continue to meet the investment criteria. The
Adviser's disciplined investment approach differs from certain more "actively
managed" equity funds because the Adviser is not buying or selling shares of
portfolio companies based on swings in economic or market conditions. The Fund,
however, should not be confused with, and is not intended to be, an index fund.
The Fund will follow closely the stock selections in the Moneypaper's MP 63
Stock Index. See page 6 for a description of such Index; however, the Adviser
reserves the right to make independent investment management decisions regarding
the composition of the Fund's portfolio. For example, a portfolio company may
cease to be listed on the MP 63 Stock Index but continue to be held by the Fund
if the Adviser believes that the Company meets its criteria for investment or if
it would be disadvantageous to the Fund and its shareholders to sell such stock
at such time. This determination may also affect the weightings of stocks or the
industries in which the Fund invests as compared to similar weightings in the
Index during such time.
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The Fund expects to receive cash on an on-going basis and will be making
regular investments in the companies it already holds. Initial investments will
go into the Fund in proportion to the current holdings of the MP 63 Stock Index.
After that, on a regular basis, cash will be invested evenly among the Fund's
portfolio companies. This process results in a strategy similar to that of
dollar-cost averaging. By utilizing this strategy when investing additional
funds or reinvesting the Fund's dividends for its shareholders and by minimizing
portfolio turnover, the Adviser believes that the Fund will maximize
accumulation, thereby compounding its value. At its onset, at least 65% and
possibly as much as 100% of the Fund's total assets will be allocated among the
common stocks of the 63 companies comprising the MP 63 Stock Index as of such
time. To the extent possible, the Adviser will ensure that equal dollar amounts
are invested in each company thereafter.
The Adviser believes that the combination of its strategy to invest equal
dollar amounts in each company, together with a secondary investment strategy it
calls "INVEST%", will better enable the Fund to achieve its investment
objective. INVEST% is a proprietary investment strategy that relies on the
relationship of a stock's market price to its 52-week high or 52-week low. The
Adviser uses INVEST% to determine whether to invest more or less than the
predetermined investment amount in a particular stock. In general, the
predetermined investment amount represents the uninvested cash balance divided
equally among all of the current portfolio companies. However, at the end of
each calendar quarter, the Adviser will invest any remaining uninvested cash
balance. Such cash balance will be invested based on the stock's INVEST%, which
indicates a larger amount when a company is selling near its low, and a smaller
amount when it is selling near its high, if deemed appropriate by the Adviser
after reviewing each portfolio holding on an individual basis.
The Fund may invest a portion of its assets in money market instruments
(high quality income securities with maturities of less than one year),
securities of money market funds or U.S. Government repurchase agreements to
maintain liquidity to meet redemptions or pending selection of investments in
accordance with its policies. For the period that the Fund may have invested any
portion of its assets in money market funds, shareholders of the Fund will be
subject to duplicative management fees.
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RISK CONSIDERATIONS
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions, and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, you should be aware that the Fund has no
operating history and that the Adviser had no prior experience in acting as an
investment adviser to a mutual fund.
MP 63 STOCK INDEX
The MP 63 Stock Index was created by the editors of The Moneypaper, (a
monthly investment newsletter)at the start of 1994 in order to track a
representative sampling of companies that offer dividend reinvestment plans
("DRPs"). With an emphasis on quality and diversity, the Index contains
companies that can easily serve as "core" holdings in any portfolio, and typify
the long-term aims of the small investor who uses DRPs to build wealth. The
result is a mixture of industrial companies, utilities, and transportation firms
and runs the gamut from pharmaceuticals to retailers. Included are blue chip
companies, banks, food companies and other companies that should do well over
the long-term.
The MP 63 Index is equally weighted among companies, regardless of size,
and basically follows the fate of $100 investments in each company, with
dividends reinvested, individually and in the aggregate. Each company has its
own "index", regardless of price level or stock split history, and the overall
index is the aggregate performance of all stocks. When an individual company has
a reading of 200, it has doubled the value of its initial investment, which was
made at the start of 1994, turning $100 into $200. When the MP 63 passed the 200
level, as it did on June 6, 1997, it meant that an initial investment of $6,300
($100 in each company) had achieved a value of over $12,600.
The MP 63 Index is designed to demonstrate and encourage individual
investors to achieve long-term wealth by investing in a diverse group of
companies, which decreases risk, and to focus on high-quality, investor-friendly
firms that offer DRPs. By and large, the companies included require ownership of
just one share to enroll in their dividend reinvestment plan. In addition, these
companies do not charge any fees or, in some cases, charge minimal fees for
participating in such plans. Although the Fund may not exactly mirror the
holdings of the MP 63 Stock Index, its investing philosophy, as described above,
is inspired by it.
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PORTFOLIO TURNOVER
Portfolio turnover generally involves some expense, including brokerage
commissions or dealer markups and other transaction costs on the sale of
securities and investment in other securities. These transactions may also
result in the realization of taxable capital gains, some or all of which may be
short-term capital gains not eligible for favored tax treatment. As a result of
the Fund's investment policies, the Adviser believes that its portfolio turnover
rate will be lower than that of most other equity mutual funds. In general, the
Fund's portfolio turnover rate is expected to be less than 10%.
DIVERSIFICATION
The Fund is a "diversified" investment company under the Investment
Company Act of 1940. This means that with respect to 75% of its total assets,
(a) the Fund may not invest more than 5% of its total assets in the securities
of any one issuer (except U.S. Government securities) and (b) the Fund may not
own more than 10% of the outstanding voting securities of any one issuer. The
remaining 25% of its total assets is not subject to this restriction. To the
extent that the Fund invests a significant portion of its assets in the
securities of a particular issuer, it will be subject to an increased risk of
loss if the market value of such issuer's securities declines.
OTHER INVESTMENT PRACTICES
SECURITIES LENDING. The Fund may lend portfolio securities amounting to
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not more than 25% of its assets to broker-dealers. These transactions must be
fully collateralized at all times with cash and short-term debt obligations.
These transactions involve risk to the Fund only if the other party should
default on its obligation and the Fund is delayed or prevented from recovering
the collateral.
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REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
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collateralized by the securities in which it may invest. A repurchase agreement
involves the purchase by the Fund of securities with the condition that the
original seller (a bank or broker-dealer) will buy back the same securities
("collateral") at a predetermined price or yield. Repurchase agreements involve
certain risks not associated with direct investments in securities. In the event
the original seller defaults on its obligation to repurchase, the Fund will seek
to sell the collateral, which could involve costs or delays. To the extent
proceeds from the sale of collateral are less than the repurchase price, the
Fund would suffer a loss.
BORROWING. The Fund may borrow money from banks for temporary or emergency
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purposes in order to meet redemption requests. The reason the Fund might borrow
would be to avoid selling a portion of its investments at a time when it may be
disadvantageous to do so. Interest paid by the Fund on borrowed funds would
decrease its net earnings.
MANAGEMENT
BOARD OF DIRECTORS
The Fund's Board of Directors has the primary responsibility for
overseeing the overall management of the Fund and electing its officers. The
Fund's Board of Directors is comprised of the following six persons: Ted S.
Gladstone, President, Gladstone Development Corporation; Gloria L. Schaffer,
retired since 1996; prior thereto from 1991-1995, Commissioner of Consumer
Protection for the State of Connecticut; Harold G. Weinreb, Consultant since
1987; prior thereto from 1966 to 1987, employed by W.R. Grace & Co.; Angela
Shashoua, commercial real estate developer in Boston, Massachusetts since 1975;
Vita Nelson, Chief Executive Officer of The Moneypaper, Inc.; and Michael Miola,
Chief Executive officer of American Data Services, Inc.
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INVESTMENT ADVISER
The Moneypaper Advisor, Inc. (the "Adviser") has been retained under an
Investment Advisory Agreement with the Fund to act as the Fund's investment
adviser subject to the authority of the Board of Directors. Vita Nelson, David
Fish and Rod Drysdale will be responsible for the overall management of the
Fund's portfolio.
Ms. Nelson's first job in the financial industry was as a bond trader at
Granger & Co., in New York, where she made a market in municipal bonds. She is
the Chief Executive Officer of The Moneypaper, Inc. and the editor and publisher
of four well-respected financial publications. Ms. Nelson has, among her
achievements, popularized the use of dividend reinvestment plans (DRPs). These
plans accept investments from individuals directly (thereby permitting the
individual to bypass brokers).
THE MONEYPAPER'S GUIDE TO DIVIDEND REINVESTMENT PLANS is the acknowledged
authority on the operations of company-sponsored direct investment plans. The
Guide provides eligibility criteria and plan features of more than 1,100
companies that accept direct investments. In addition, Ms. Nelson is the Editor
and Publisher of THE DRP AUTHORITY, DIRECT INVESTING, as well as THE MONEYPAPER,
which began publishing in 1981 as a monthly guide for the self-reliant investor.
Mrs. Nelson graduated from Boston University with a degree in Comparative
Literature.
Mr. Fish is the Executive Editor of three publications of The Moneypaper,
Inc.: THE MONEYPAPER, DIRECT INVESTING, and THE DRP AUTHORITY. He is responsible
for the daily management of the MP 63 Stock Index and his responsibilities at
The Moneypaper Inc. include research, editing, and revising THE MONEYPAPER'S
GUIDE TO DIVIDEND REINVESTMENT PLANS. Prior to joining The Moneypaper, Inc. in
1994, Mr. Fish was a Senior Accountant with Thom McAnn Shoe Company since 1974.
Mr. Fish graduated magna cum laude with a B.S. degree in Business Administration
from Worcester State College, Worcester, MA (1974).
Mr. Drysdale is the Chief Financial Officer of Temper of the Times
Communications, Inc., a registered broker-dealer, an affiliate of the Adviser.
From 1989 through 1998, Mr. Drysdale was employed by Citibank, N.A. in both its
retail banking and brokerage services division. He earned a B.S. degree in
Finance from the University of Vermont in 1989.
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The Adviser furnishes the Fund with investment advice and supervises the
Fund's management and investment programs. The Adviser furnishes at its own
expense all necessary administrative services, office space, equipment and
clerical personnel for servicing the investments of the Fund. The Adviser also
provides investment advisory facilities and executive and supervisory personnel
for managing the investments and effecting the portfolio transactions of the
Fund. In addition, the Adviser pays the salaries and fees of all officers of the
Fund who are affiliated with the Adviser.
Under the Investment Advisory Agreement, the Fund pays the Adviser a
monthly advisory fee equal, on an annual basis, to 0.35% of its average daily
net assets. The Adviser may, from time to time, voluntarily waive a portion of
its fees.
CODE OF ETHICS
The Fund and the Adviser have adopted a Code of Ethics, that restricts
personal investing practices by employees of the Adviser and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the Fund's portfolio
obtain preclearance before executing personal trades. With respect to Ms. Nelson
and other investment personnel, the Code of Ethics prohibits acquisition of
securities in an initial public offering, as well as profits derived from the
purchase and sale of the same security within 60 calendar days. These provisions
are designed to ensure that the interests of the Fund and its shareholders come
before the interests of the people who manage the Fund.
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PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Portfolio transactions for the Fund will generally be executed with
broker-dealers on an agency basis. The Adviser will be responsible for placing
all orders for purchases and sales of the Fund's securities. In selecting
broker-dealers, the Adviser may consider research and brokerage services
furnished to the Fund as well as to the Adviser and its affiliates. Subject to
seeking the most favorable price and execution available, the Adviser may
consider sales of shares of the Fund's shares (and of those of future series of
the Fund) as a factor in the selection of broker-dealers. In addition, any
portfolio transactions for the Fund that are executed on an agency basis may be
effected through an affiliate of the Adviser. For more information, see
"Portfolio Transactions and Allocation of Brokerage" in the SAI.
FUND ADMINISTRATOR
The Fund's Administrator is American Data Services, Inc. ("ADS" or the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, NY 11788, and is primarily in the business
of providing administrative, fund accounting, and stock transfer services to
retail and institutional mutual funds with approximately $6 billion in total
assets through its offices in New York, Denver, Tampa, and Los Angeles.
Pursuant to an Administrative Service Agreement with the Fund, the
Administrator provides all administrative, transfer agency, and fund accounting
services necessary for the Fund, subject to the supervision of the Board of
Directors.
For the services rendered to the Fund by the Administrator, the Fund pays
the Administrator a monthly fee which is based on its average net assets. If the
Fund's average daily net assets are: less than $75 million, the Administrator's
fee is equal to 0.35% of its average daily net assets; between $75 million and
$200 million, the Administrator's fee is equal to 0.30% of such assets; between
$200 million and $500 million, the Administrator's fee is equal to 0.25% of such
assets; between $500 million and $1 billion, the Administrator's fee is equal to
0.20% of such assets; and in excess of $1 billion, the Administrator receives a
fee equal to 0.10% of the Fund's average daily net assets. The Fund also
reimburses the Administrator for printing, postage, and telephone costs.
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TERMINATION
Both the Investment Advisory Agreement and the Administrative Service
Agreement are terminable by the Board of Directors of the Fund, the Adviser, or
the Administrator, on sixty (60) days' written notice. The Investment Advisory
Agreement will terminate automatically in the event of an "assignment" as
defined by the Investment Company Act. The Administrative Service Agreement,
however, may be assigned provided the non-assigning party has given prior
written consent. Each Agreement shall remain in effect for two years from the
date of its initial approval, and subject to annual approval of the Board of
Directors for one-year periods thereafter. Each Agreement provides that in the
absence of willful misfeasance, bad faith, gross negligence on the part of the
Adviser or willful misuse, bad faith or negligence on the part of the
Administrator, or reckless disregard of its obligations thereunder, the Adviser
or the Administrator shall not be liable for any action or failure to act in
accordance with its duties thereunder.
DISTRIBUTOR
ADS Distributors, Inc. ("the Distributor"), an affiliate of the
Administrator, has entered into a distribution agreement with the Fund to serve
as distributor for the Fund's shares. There is no fee paid to the Distributor
for serving in this capacity.
The Adviser and/or the Administrator may, out of its own assets, pay for
certain expenses incurred in connection with the distribution of Fund shares. In
particular, either or both entities may make payments out of its own assets to
sales representatives and broker-dealers in connection with sales of Fund
shares. See "How to Purchase Shares Purchase Price."
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EXPENSES
The Fund pays certain operating expenses directly, including, but not
limited to custodial, auditing, and legal fees; fees of the independent
directors; costs of printing and mailing prospectuses, statements of additional
information, proxy statements, notices, and reports to shareholders; insurance
expenses; and costs of registering its shares for sale under federal and state
securities laws. See the SAI for a more detailed discussion of independent
director compensation.
HOW TO PURCHASE SHARES
GENERAL PURCHASE INFORMATION
The minimum initial investment in the Fund is $1,000. The Fund may waive
or reduce the minimum for certain retirement and employee savings plans or
custodial accounts for the benefit of minors. The Fund's shares may be purchased
at its net asset value from the Distributor, from other broker-dealers which are
members of the NASD, and certain financial institutions each of which has
entered into selling agreements with the Distributor.
When orders are placed for shares of the Fund, the public offering price
used for the purchase will be the net asset value per share next determined. The
Fund's net asset value is determined at 4:15 on each business day. If an order
is placed with a broker-dealer, or other financial institution, the
broker-dealer or other financial institution is responsible for promptly
transmitting the order to the Fund's Transfer Agent/Administrator.
Shares of the Fund may be purchased by opening an account either by mail,
by phone or, to the extent available and permitted by applicable law, by use of
the Internet. Shares are deemed to be purchased as of the time of determination
of the Fund's net asset value on the day the purchase order for the purchase of
its shares is received in good form by the Fund or the Administrator.
Investors may make systematic investments in fixed amounts automatically
on a monthly or quarterly basis through the Fund's Automatic Investment Plan.
The Adviser believes that shareholders should use this plan for budgetary
purposes and not for the purpose of investing according to an investor's
individual dollar-cost averaging strategy and the Adviser suggests that
investments be made quarterly, not monthly. Additional information is available
from the Fund's Transfer Agent/Administrator.
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PURCHASES BY TELEPHONE
To open an account by telephone, you must first call 1-877-MP63FUN
(676-3386) to obtain an account number and instructions. Information concerning
the account will be taken over the phone. Subject to acceptance by the
Administrator, shares of the Fund may be purchased by wiring immediately
available federal funds (subject to the minimum investment) to Star Bank, N.A.
from your bank, which may charge a fee for doing so (see instructions below).
You should provide your bank with the following information for the purpose of
wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA# 0420-0001-3
Account# 488-922-956
F/B/O MP 63 Fund
F/F/C:
Shareholder Acct. No._______________________(write in Account Number)
Shareholder Acct. Name______________________(write in Shareholder Name)
You are required to mail a signed application to the Fund's Transfer
Agent/Administrator at the address listed below in order to complete your
initial wire purchase. Wire orders will be accepted only on a day on which the
Fund, the Custodian and the Transfer Agent are open for business. A wire
purchase will not be considered completed until the wired money is received by
the Fund's Custodian Bank. Any delays in wiring money, including delays that may
occur in processing by the banks, are not the responsibility of the Fund or the
Transfer Agent/ Administrator. At present, there is no fee for the receipt of
wired funds, but the Fund reserves the right to charge shareholders for this
service.
PURCHASES BY MAIL
Subject to acceptance by the Fund's Administrator, an account may be
opened by completing and signing an account application and mailing it, together
with a check (subject to the Fund's minimum investment of $1,000) payable to:
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MP 63 Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Payment received by mail for the purchase of shares will be credited to a
shareholder's account at the net asset value per share next determined after
receipt. In the event that there are insufficient funds to cover a check, the
shareholder or prospective investor will be assessed a $15.00 charge.
ADDITIONAL INVESTMENTS
Additional investments may be made at any time (subject to the minimum
subsequent investment of $100; $50 for purchases made using the Fund's Automatic
Investment Plan) by purchasing shares of the Fund at net asset value. This may
be done by mailing a check to the Fund at the address noted under "Purchases by
Mail" or by wiring monies to the Custodian bank, as outlined above, from a bank
or financial institution with which the shareholder has an account and which is
a member of the Federal Reserve System with instructions to transmit federal
funds by wire to the Fund.
OTHER PURCHASE INFORMATION
Investors should be aware that the Fund's account application contains
provisions that exclude the Transfer Agent, the Distributor, and certain of the
Distributor's affiliates from certain liabilities (including, among others,
losses resulting from unauthorized shareholder transactions) relating to the
various services (for example, telephone exchanges) made available to investors.
The Fund must receive an order and payment by the close of business for
the purchase to be effective. If funds are received after the close of business
(4:00 p.m.), the purchase will become effective on the next business day.
All purchases of the Fund's shares will be made in full and fractional
shares calculated to three decimal places. The Fund will not issue stock
certificates evidencing ownership of Fund shares.
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HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
You may redeem all or a portion of your shares on any day that the Fund
values its shares (please refer to "Valuation of Shares" below for more
information). Your shares will be redeemed at the net asset value next
determined after receipt of your instructions in good form as explained below.
The Fund's net asset value will fluctuate on a daily basis. The value of shares
redeemed may be more or less than the purchase price, depending on the market
value of the investment securities held by the Fund.
If authorized in the account application, you may contact by telephone the
Transfer Agent with an oral request or send a written request. This request
should contain: the dollar amount or number of shares to be redeemed, your Fund
account number, and either a Social Security or tax identification number (as
applicable). You should sign your request in exactly the same way the account is
registered. If there is more than one owner of the shares, all owners must sign.
SIGNATURE GUARANTEES
No signature guarantee is required for redemptions in an amount less than
$2,500 or when the redemption amount is to be sent to a shareholder directly. To
protect shareholder accounts, the Fund, and its Transfer Agent from fraud,
signature guarantees are required to enable the Fund to verify the identity of
the person who has authorized a redemption from an account when (1) the proceeds
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are to be sent to someone other than to the registered shareholder(s) at the
registered address, and/or (2) shares are requested to be transferred to another
individual or entity other than the shareholder. Signature guarantees may be
obtained from certain eligible financial institutions, including, but not
limited to, the following: banks, trust companies, credit unions, securities
brokers and dealers, savings and loan associations, and participants in the
Securities Transfer Association Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP"), or the New York Stock Exchange Medallion Signature
Program ("MSP"). Shareholders may contact the Fund at (1-877-MP63FUN (676-3386)
for further details.
BY MAIL
The Fund will redeem its shares at the net asset value next determined
after the request is received in "good order." The net asset value per share of
the Fund is determined as of 4:15 p.m., New York time, on each day that the New
York Stock Exchange, Inc. (the "NYSE"), the Fund, and the Transfer
Agent/Administrator are open for business. Requests should be addressed to: MP
63 Fund, c/o American Data Services, Inc., P.O. Box 5536, Hauppauge, NY
11788-0132.
Requests in "good order" must include the following documentation:
(a) a letter or standard form of instruction specifying the number of
shares or dollar amount to be redeemed, signed by all registered owners of
the shares in the exact names in which they are registered;
(b) any required signature guarantees (see "Signature Guarantees" above);
and
(c) other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit-sharing
plans, and other organizations.
BY TELEPHONE
Provided the Telephone Redemption Option has been authorized in the
application, a redemption of shares may be requested by calling the Fund's
Transfer Agent at 1-877-MP63FUN (676-3386) and requesting that the redemption
proceeds be mailed to the primary
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<PAGE>
registration address or wired per the authorized instructions. If the Telephone
Redemption Option is authorized, the Fund and its Transfer Agent may act on
telephone instructions from any person representing himself or herself to be a
shareholder and believed by the Fund or its Transfer Agent to be genuine.
The Transfer Agent's records of such telephone instructions are binding
and each shareholder, and not the Fund or its Transfer Agent, bears the risk of
loss in the event of unauthorized instructions reasonably believed by the Fund
or its Transfer Agent to be genuine. The Fund will employ reasonable procedures
to confirm that instructions communicated are genuine and, if it does not, it
may be liable for any losses due to unauthorized or fraudulent instructions. The
procedures employed by the Fund in connection with transactions initiated by
telephone may include tape recording of telephone instructions and requiring
some form of personal identification information prior to acting upon
instructions received by telephone.
PAYMENT OF REDEMPTION PROCEEDS
After your shares have been redeemed, proceeds will be paid within three
business days. In no event will payment be made more than seven days after
receipt of your order in good form, except that payment may be postponed or the
right of redemption suspended for more than seven days under unusual
circumstances, such as when trading is not taking place on the NYSE. Payment of
redemption proceeds may also be delayed if the shares to be redeemed were
recently purchased by a check drawn on a bank which is not a member of the
Federal Reserve System, or until such check has cleared the banking system
(normally up to 15 days from the purchase date).
REDEMPTION FEE
The Fund is designed for long-term investors. It is not designed for
short-term traders whose frequent purchases and redemptions can generate
substantial cash flow. These cash flows can unnecessarily disrupt the Fund's
investment program. Short-term traders often redeem when the market is most
turbulent, thereby forcing the sale of underlying securities held by the Fund at
the worst possible time as far as long-term investors are concerned.
Additionally, short-term trading drives up the Fund's transaction costs -
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<PAGE>
measured by both commissions and bid/ask spreads -- which are borne by the
remaining long-term investors. Moreover, short-term sales have tax consequences
that would be borne by the remaining shareholders. For these reasons, the Fund
assesses a 2.00% fee on the redemption of shares held for less than three years.
This fee is reduced to 1% for shares held for more than three years but less
than five years and no fee is charged for shares held for more than five years.
Redemption fees will be paid to the Fund to help offset transaction costs.
The fee does not apply to any shares purchased through reinvested distributions
(dividends and capital gains) or to shares held in retirement plans (such as
401(k), 403(b), 457, Keogh, profit sharing plans, and money purchase Pension
Plans). This fee also does not apply to shares held in IRA accounts.
To calculate redemption fees, the Fund will use the first-in, first-out
(FIFO) method to determine the holding period. Under this method, the date of
the redemption will be compared with the earliest purchase date of shares held
in the account. If this holding period is less than five years, a redemption fee
will be assessed. In determining the "five year" or "three year" provision, the
Fund will use the anniversary date of a transaction. Thus, for example, shares
purchased on January 1, 1999, will be subject to a 2% fee if they are redeemed
on or prior to December 31, 2001. Shares redeemed on or after January 1, 2004,
will not be subject to any redemption fee.
INVOLUNTARY REDEMPTION
The Fund reserves the right to redeem your account at any time the net
asset value of the account falls below $500 as the result of a redemption
request. You will be notified in writing prior to any such redemption and will
be allowed 30 days to make additional investments before the redemption is
processed.
SHAREHOLDER SERVICES
The Fund offers several service options to make your account easier to
manage. These are listed on the account application. Please make note of these
options and elect the ones that are appropriate for you.
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<PAGE>
AUTOMATIC INVESTMENT PROGRAM
You can automatically transfer $50 or more per month from your bank,
savings and loan, or other financial institution to purchase additional shares.
The Adviser believes that the use of this program by shareholders should be for
budgetary purposes and not for the purpose of investing through an investor's
individual dollar-cost averaging strategy. Contact the Transfer
Agent/Administrator by calling 1-877-MP63FUN (676-3386) to obtain authorization
forms or for additional information.
TELEPHONE TRANSACTION PRIVILEGES
Shareholders purchasing shares directly from the Fund will hold their
shares with the Fund's Transfer Agent. However, you may authorize telephone
redemption transaction privileges by selecting that option on the application
form. It may be difficult to reach the Fund by telephone during periods when
market or economic conditions foster an unusually large volume of telephone
requests. Although the Adviser believes that this would not be an advantageous
time to redeem your shares, you may still elect to do so. If you cannot reach
the Fund by telephone, you should issue written instructions to the Transfer
Agent at P.O. Box 5536, Hauppauge, New York 11788-0132. The Fund reserves the
right to suspend or terminate its telephone services at any time without notice.
TAX-QUALIFIED RETIREMENT PLANS
The Fund is available for your tax-deferred retirement plan.
[ ] Individual Retirement Accounts ("IRAs"):
simple IRAs, Roth IRAs, Education IRAs, or any other form of
IRA permitted by law;
[ ] 403(b) plans for employees of public school systems and
non-profit organizations;
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<PAGE>
[ ] 401(k) plans;
[ ] Profit-sharing plans and pension plans for corporations and
employees.
You can also transfer your tax-deferred plan from another fund or
custodian. The shareholder bears the responsibility for any tax obligations
incurred, such as with respect to the conversion of a tax-deductible IRA to a
Roth IRA. An IRA Disclosure document including a Request to Transfer form is
included with this prospectus.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION
The Transfer Agent/Administrator, on behalf of the Fund, will send you
confirmations of all of your purchases or redemptions of Fund shares. If there
is no activity in your Fund account, you will receive account statements on a
quarterly basis. In addition, you will receive various IRS forms after the first
of each year detailing important tax information, and the Fund is required to
supply annual and semi-annual reports that list securities held by the Fund and
include its then current financial statements.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually. Distributions from capital gains are
made after applying any available capital losses and/or capital loss carryovers.
Although the Fund's Adviser believes that accumulating shares through the
reinvestment of all dividends and capital gains distributions contributes to the
success of this investment strategy and suggests that shareholders reinvest all
distributions in additional Fund shares, by law the Fund must allow you to
choose from among the following three options:
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<PAGE>
-- Reinvest all distributions in additional shares;
-- Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
-- Receive all distributions in cash.
You can change your distribution option by notifying the Fund in writing.
If you do not select an option when you open your account, all distributions
will be reinvested in additional shares. You will receive a statement confirming
reinvestment of distributions in additional shares promptly following the end of
each calendar year.
If a check representing a distribution is not cashed within a specified
period (generally three months), the Transfer Agent will notify you that you
have the option either of requesting another check or of reinvesting the
distribution in the Fund. If the Transfer Agent does not receive your election,
the distribution will be reinvested in the Fund. Similarly, if correspondence
sent by the Fund or the Transfer Agent is returned as "undeliverable," all Fund
distributions will automatically be reinvested in the Fund. Be sure to send the
Transfer Agent notification of any change of address.
VALUATION OF SHARES
The Fund computes its net asset value (or price per share) on each day the
NYSE is open for business. The calculation is made as of the regular close of
the Exchange (currently 4:15 p.m., New York time).
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 stated 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.
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<PAGE>
Short-term investments held by the Fund that mature in 60 days or less are
valued at amortized cost, which approximates market value. All other securities
and assets are valued at their fair value following procedures approved by the
Board of Directors.
TAX STATUS
The Fund is treated as a corporation for federal income tax purposes under
the Internal Revenue Code of 1986, as amended (the "Code"). The Fund intends to
qualify and to elect to be treated as a regulated investment company. If so
qualified, the Fund will not be liable for federal income taxes to the extent
that it distributes its taxable income to shareholders.
Distributions of income by the Fund are generally taxable to shareholders
as ordinary income. Certain Fund distributions may be considered as short- or
long-term capital gain. Interest income from direct investment by non-corporate
taxpayers in U.S. Government obligations (but not repurchase agreements)
generally is not subject to state taxation. However, some states may tax mutual
fund dividends attributable to such income. The Transfer Agent will send a
notice to each shareholder (Form 1099 or 1099 substitute) advising the
shareholder of any taxable income or capital gains distributed by the Fund for
each taxable year.
A sale of Fund shares is a taxable event that may result in a capital gain
or loss. And, to the extent that Redemption Requests result in sales of shares
of the Fund's portfolio securities, remaining shareholders may be subject to
capital gains or losses.
For a more detailed discussion of the federal income tax consequences of
investing in shares of the Fund, see "Taxation" in the SAI. Before investing in
this Fund, you should consult your tax adviser regarding the consequences of
your local and state tax laws.
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<PAGE>
PERFORMANCE COMPARISONS
Advertisements and other sales literature may refer to the Fund's total
return. The total return for the one-, five- and 10-year periods (or for the
life of the Fund until the Fund is in existence for such longer periods) through
the most recent calendar quarter represents the average annual compounded rate
of return on an investment of $1,000 in the Fund at the public offering price,
plus any applicable sales load. Total return may also be presented for other
periods.
All data are based on past investment results and do not predict future
performance. Investment performance, which will vary, is based on many factors,
including market conditions, portfolio composition, and Fund operating expenses.
Investment performance also often reflects the risks associated with the Fund's
investment objective and policies. These factors should be considered when
comparing the Fund's investment results with those of other mutual funds and
other investment vehicles. Fund performance may be compared with that of various
indexes.
For additional information regarding comparative performance information
and the calculation of total return, see "Performance Comparisons" in the SAI.
GENERAL INFORMATION
The Fund is a diversified, open-end management investment company which
was incorporated under the laws of the State of Maryland on October 13, 1998.
The Fund's business and affairs are managed by its officers under the direction
of its Board of Directors. The Fund currently offers its shares in one series,
which is being offered for sale in this prospectus.
All shares of the Fund, when issued, will be fully paid and nonassessable
and will be redeemable. They can be issued as full or fractional shares. A
fractional share has, pro rata, the same rights and privileges as a full share.
The shares possess no preemptive or conversion rights. The shares of the Fund
will share ratably in the dividends of the Fund, if any, as may be declared by
the Board of Directors, and in the distribution of any net assets upon
liquidation of the Fund, after the payment of all debts and liabilities of the
Fund.
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<PAGE>
Each share of the Fund has one vote (with proportionate voting for
fractional shares) regardless of the relative net asset values of the Fund's
shares. If pursuant to the Fund's Bylaws, the holders of shares representing at
least 10% of the Fund's total outstanding shares request that the Fund hold a
special meeting of shareholders it will do so. Unless required under the
Investment Company Act, the Fund will not necessarily hold annual meetings of
shareholders. As a result, shareholders may not vote each year on the election
of members of the Board of Directors or the appointment of auditors. The Fund
will assist in the communication with other shareholders. In addition, the
Investment Company Act requires a shareholder vote for all amendments to the
Fund's fundamental investment objective and policies and investment restrictions
and for any amendments to investment advisory contracts.
The Fund may hold informal informational meetings of shareholders to
discuss the Fund's and the Adviser's current investment philosophy and to
address any concerns that shareholders may have. Shareholders will receive
advance notice of the date, time and location of such meetings. However, no
official business may be conducted at such meetings.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND AGENT
Star Bank, N.A. serves as custodian for the Fund's cash and securities.
The Custodian does not assist in, and is not responsible for, investment
decisions involving assets of the Fund. American Data Services, Inc., the Fund's
Administrator, also acts as the Fund's Transfer Agent and Dividend Disbursing
Agent.
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<PAGE>
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common stock of
the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New York,
NY 10022. McGladrey & Pullen LLP, 555 Fifth Avenue, New York, NY 10017 have been
selected as independent accountants for the Fund.
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<PAGE>
THE MP 63 FUND, INC. PROSPECTUS
INVESTMENT ADVISER
Moneypaper Advisers, Inc.
ADMINISTRATOR, TRANSFER AGENT AND
SHAREHOLDER SERVICING AGENT
American Data Services, Inc.
DISTRIBUTOR
ADS Distributors, Inc.
CUSTODIAN
Star Bank, N.a.
INDEPENDENT ACCOUNTANTS
McGladrey & Pullen Llp
LEGAL COUNSEL THE MP 63 FUND, INC.
Spitzer & Feldman P.C.
TABLE OF CONTENTS PAGE
Introduction.................................................................. 1
Transaction and Operating
Expense Table................................................................ 2
Investment Objective and
Policies..................................................................... 3
Management.................................................................... 8
How to Purchase Shares........................................................12
How to Redeem Shares..........................................................14
Shareholder Services..........................................................18
Dividends and Distributions...................................................19
Valuation of Shares...........................................................20
Tax Status....................................................................21
Performance Comparisons.......................................................21
General Information...........................................................22
Custodian, Transfer Agent and
Dividend Agent...............................................................23
Counsel and Independent Auditors..............................................23
January 8, 1998
<PAGE>
<PAGE>
MP 63 FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
________________, 1998
TABLE OF CONTENTS
PAGE
Investment Objective, Policies and Restrictions................................2
Directors and Executive Officers...............................................4
Investment Advisory and Other Services.........................................7
Portfolio Transactions and Allocation of Brokerage............................10
Taxation......................................................................12
Ownership of Shares...........................................................14
Dividends and Distributions...................................................14
Net Asset Value ..............................................................14
Performance Comparisons.......................................................15
Counsel and Independent Accountants...........................................18
Other Information.............................................................18
Financial Statements..........................................................18
This Statement of Additional Information is not a prospectus, but should
be read in conjunction with the Fund's Prospectus dated , 1998. A copy of the
Prospectus may be obtained from the Fund c/o American Data Services, Inc. at The
Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 or
telephone 1-877-MP63FUND (676-3386).
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The Fund is an open-end, diversified management investment company. The
Fund's investment objective and a summary of its investment policies are set
forth in the Prospectus. Additional information regarding the Fund's investment
policies and restrictions is set forth below.
INVESTMENT POLICIES. The following paragraphs provide a more detailed
-------------------
description of the investment policies identified in the Prospectus. Unless
otherwise noted, the policies described in this Statement of Additional
Information are not fundamental and may be changed by the Board of Directors.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. A
---------------------
repurchase agreement involves the purchase by the Fund of the securities with
the condition that after a stated period of time the original seller will buy
back the same securities at a predetermined price or yield. The Fund's custodian
will hold the securities underlying any repurchase agreement or such securities
will be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement will be determined on each
business day. If at any time the market value of the Fund's collateral falls
below the repurchase price of the repurchase agreement (including any accrued
interest), the Fund will promptly receive additional collateral (so the total
collateral is an amount at least equal to the repurchase price plus accrued
interest).
SECURITIES LOANS. Although not currently the intention of the Fund to do
----------------
so, the Fund reserves the right to make secured loans of its portfolio
securities, on either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional income. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss rights in the
collateral should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to agreements requiring
that the loans be continuously secured by collateral consisting of cash or
short-term debt obligations at least equal at all times to the value of the
securities on loan, "marked-to-market" daily. The borrower pays to the Fund an
2
<PAGE>
amount equal to any dividends or interest received on securities lent. The Fund
retains all or a portion of the interest received on investment of the cash
collateral or receives a fee from the borrower. Although voting rights, or
rights to consent, with respect to the loaned securities may pass to the
borrower, the Fund retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise voting rights on any
matters materially affecting the investment. The Fund may also call such loans
in order to sell the securities.
INVESTMENT RESTRICTIONS
In addition to the investment objective and policies set forth in the
Prospectus and in this Statement of Additional Information, the Fund is subject
to certain fundamental and non-fundamental investment restrictions, as set forth
below. Fundamental investment restrictions may not be changed with respect to
the Fund, without the vote of a majority of the Fund's outstanding shares.
Non-fundamental investment restrictions of the Fund may be changed by the Board
of Directors.
As fundamental investment restrictions, the Fund will not:
1. Invest 25% or more of the value of its total assets in the securities
of issuers conducting their principal business activities in any one industry.
This restriction also does not apply to securities of the U.S. Government or its
agencies and instrumentalities and repurchase agreements relating thereto.
2. Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities), if, as a
result, as to 75% of the Fund's total assets, more than 5% of its net assets
would be invested in the securities of one issuer or the Fund would hold more
than 10% of the outstanding voting securities of any one issuer.
3. Issue any senior securities, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), other than as set forth in restriction
number 4 below.
4. Borrow amounts in excess of 10% of the cost or 5% of the market value
of its total assets, whichever is less, and then only from a bank and as a
3
<PAGE>
temporary measure for extraordinary or emergency purposes. To secure any such
borrowing, the Fund may pledge or hypothecate not in excess of 15% of the value
of its total assets.
5. Purchase or sell real estate, commodities or commodity futures
contracts.
6. Act as an underwriter of securities of other issuers, except insofar
as the Fund may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of portfolio securities.
7. Engage in any short-selling operations.
8. Lend money other than through the purchase of debt securities in
accordance with its investment policies.
9. Engage in margin transactions or in transactions involving puts,
calls, straddles, or spreads, except as permitted by the Fund under its
investment policies.
10.Acquire or retain more than 5% of the securities of any other
investment company.
The Fund is also subject to the following restrictions that are not
fundamental and may therefore be changed by the Board of Directors without
shareholder approval.
The Fund will not:
1. Acquire securities for the purpose of exercising control over
management.
2. Invest more than 15% of its net assets in illiquid securities.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time the Fund enters into a transaction. Accordingly,
any later increase or decrease beyond the specified limitation resulting from a
change in the Fund's net assets will not be considered in determining whether it
has complied with its investment restrictions.
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information concerning the directors and
officers of the Fund and their principal occupations during the past five years.
Directors who are interested persons, as defined by the 1940 Act, are indicated
by asterisk.
POSITIONS HELD WITH PRINCIPAL OCCUPATION LAST
NAME AND ADDRESS WITH THE FUND FIVE YEARS
Ted S. Gladstone - Age 56 Director President, Gladstone
183 Round Hill Road Development Corporation.
Greenwich, Connecticut 06831
Gloria L. Schaffer - Age 68 Director Retired since 1996; Prior
51 Tumblebrook Road thereto from 1991-1995,
Woodbridge, Connecticut 06525 Commissioner of Consumer
Protection for the of
State Connecticut
Angela Shashoua - Age 62 Director Developer of commercial
176 Tappan Street real estate in Boston,
Brookline, Massachusetts 02445 Massachusetts since 1975.
Harold G. Weinreb - Age 62 Director Consultant since 1987;
112 Brite Avenue Prior thereto from 1966 to
Scarsdale, New York 10583 1987, employed by W.R.
Grace & Co., most recently
as Director, Corporate
Engineering from 1977-
1987.
*Vita Nelson - Age 60 Chairman of the
l0l0 Mamaroneck Avenue Board of Chief Executive Officer of
Mamaroneck, New York 10543 Directors, Chief the Moneypaper, Inc.
Executive
Officer and
Director
*Michael Miola - Age 46 Director Chief Executive Officer of
The Hauppauge Corporate Center American Data Services,
150 Motor Parkway Inc.
Hauppauge, New York 11788
5
<PAGE>
The executive officers of the Fund are Vita Nelson, President, Rod
Drysdale, Treasurer, Michael Miola, Assistant Treasurer and Lester Nelson,
Secretary. Mr. Drysdale is the Chief Financial Officer of Temper of the Times
Communications, Inc., a registered broker-dealer, an affiliate of the Adviser.
From 1989 through 1998, Mr. Drysdale was employed by Citibank, N.A. in both its
retail banking and brokerage services division. He earned a BS in Finance from
the University of Vermont in 1989. Mr. Nelson is a partner in the law firm of
Nelson & Nelson, 60 East 42nd Street, New York, NY and is the spouse of Vita
Nelson.
The members of the Audit Committee of the Board of Directors are Ted S.
Gladstone, Gloria Schaffer, Angela Shashoua and Harold Weinreb. Ms. Schaffer
acts as the chairperson of such committee. The Audit Committee oversees the
Fund's financial reporting process, reviews audit results and recommends
annually to the Fund a firm of independent certified public accountants.
Those Directors who are officers or employees of the Adviser, the
Administrator or their affiliates receive no remuneration from the Fund. Each
disinterested Director receives a fee from the Fund for each regular quarterly
and in-person special meeting of the Board of Directors attended. Each Member of
the Board who is not affiliated with the Adviser or the Administrator receives
$1,000 per year for serving as a director of the Fund and $250 for each meeting
attended. In addition, each Director who is not affiliated with the Adviser or
the Administrator is reimbursed for expenses incurred in connection with
attending meetings.
The following table sets forth the estimated compensation expected to be
received by each director from the Fund during the fiscal year ended November
30, 1999.
6
<PAGE>
AGGREGATE ESTIMATED COMPENSATION
DIRECTOR FROM THE FUND
-------- -------------
Ted S. Gladstone $2,000
Gloria Schaffer $2,000
Angela Shashoua $2,000
Harold Weinreb $2,000
Vita Nelson $0
Michael Miola $0
7
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for the Fund is The Moneypaper Advisor, Inc. (the
"Adviser"). The Adviser will act as such pursuant to a written agreement which,
after its initial two-year period, must be annually re-approved by the Board of
Directors. The address of the Adviser is 1010 Mamaroneck Avenue, Mamaroneck, New
York 10543.
CONTROL OF THE ADVISER
The stock of the Adviser is owned by The Moneypaper, Inc., of which Vita
Nelson is the majority shareholder.
INVESTMENT ADVISORY AGREEMENT
The Adviser acts as the investment adviser of the Fund under an
Investment Advisory Agreement which has been approved by the Board of Directors
(including a majority of the Directors who are not parties to the agreement, or
interested persons of any such party).
The Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, the agreement is terminable at any time,
without penalty, by the Board of Directors or by vote of a majority of the
Fund's outstanding voting securities on not more than sixty (60) days' written
notice to the Adviser, and by the Adviser on sixty (60) days' written notice to
the Fund. Unless sooner terminated, the agreement shall continue in effect for
more than two years after its execution only if such continuance is specifically
approved at least annually by either the Board of Directors or by a vote of a
majority of the outstanding shares of the Fund, provided that in either event
such continuance is also approved by a vote of a majority of the Directors who
are not parties to such agreement, or interested persons of such parties, cast
in person at a meeting called for the purpose of voting on such approval.
Pursuant to its Investment Advisory Agreement, the Fund will pay the
Adviser monthly an advisory fee equal, on an annual basis, to 0.35% of its
average daily net assets. The Adviser may waive a portion of its fees from time
to time.
8
<PAGE>
Under the Investment Advisory Agreement, the Adviser provides the Fund
with advice and assistance in the selection and disposition of the Fund's
investments. All investment decisions are subject to review by the Fund's Board
of Directors to ensure that they meet the criteria described in the prospectus.
The Adviser is obligated to pay the salaries and fees of any affiliates of the
Adviser serving as officers of the Fund.
ADMINISTRATOR
The Administrator for the Fund is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Bermuda.
Pursuant to an Administrative Service Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund,
subject to the supervision of the Board of Directors. The Administrator also
acts as the Fund's transfer agent and dividend disbursing agent. The
Administrator will provide persons to serve as officers of the Fund. Such
officers may be directors, officers or employees of the Administrator or its
affiliates.
The Administrative Service Agreement is terminable by the Board of
Directors of the Fund or the Administrator on sixty (60) days' written notice
and may be assigned provided the non-assigning party provides prior written
consent. The Agreement shall remain in effect for two years from the date of its
initial approval, and subject to annual approval of the Board of Directors for
one-year periods thereafter. The Agreement provides that in the absence of
willful misfeasance, bad faith or negligence on the part of the Administrator or
reckless disregard of its obligations thereunder, the Administrator shall not be
liable for any action or failure to act in accordance with its duties
thereunder.
Under the Administrative Service Agreement, the Administrator provides
all administrative services, including, without limitation: (i) provides entry
of all data from shareholders' applications; (ii) provides services of persons
competent to perform such administrative and clerical functions as are necessary
to provide effective administration of the Fund; (iii) overseeing the
9
<PAGE>
performance of administrative and professional services to the Fund by others,
including the Fund's Custodian; (iv) preparing, but not paying for, the periodic
updating of the Fund's Registration Statement, Prospectus and Statement of
Additional Information in conjunction with Fund counsel, including the printing
of such documents for the purpose of filings with the Securities and Exchange
Commission and state securities administrators, preparing the Fund's tax
returns, and preparing reports to the Fund's shareholders and the Securities and
Exchange Commission; (v) preparing in conjunction with Fund counsel, but not
paying for, all filings under the securities or "Blue Sky" laws of such states
or countries as are designated by the Distributor, which may be required to
register or qualify, or continue the registration or qualification, of the Fund
and/or its shares under such laws; (vi) preparing notices and agendas for
meetings of the Board of Directors and minutes of such meetings in all matters
required by the 1940 Act to be acted upon by the Board; and (vii) monitoring
daily and periodic compliance with respect to all requirements and restrictions
of the Investment Company Act, the Internal Revenue Code and the Prospectus.
The Administrator also provides the Fund with all accounting services,
including, without limitation: (i) daily computation of net asset value; (ii)
maintenance of security ledgers and books and records as required by the
Investment Company Act; (iii) production of the Fund's listing of portfolio
securities and general ledger reports; (iv) reconciliation of accounting
records; (v) calculation of yield and total return for the Fund; (vi)
maintaining certain books and records described in Rule 31a-1 under the 1940
Act, and reconciling account information and balances among the Fund's Custodian
and Adviser; and (vii) monitoring and evaluating daily income and expense
accruals, and sales and redemptions of shares of the Fund.
ADMINISTRATOR'S FEES
For the administrative, fund accounting, transfer agent and disbursing
agent services rendered to the Fund by the Administrator, the Fund pays the
Administrator a monthly fee based on the Fund's average net assets. The Fund
also pays the Administrator for out-of-pocket expenses for printing, postage and
telephone costs.
10
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
Star Bank, N.A. serves as custodian for the Fund's cash and securities.
Pursuant to a Custodian Agreement, it is responsible for maintaining the books
and records of the Fund's portfolio securities and cash. The Custodian does not
assist in, and is not responsible for, investment decisions involving assets of
the Fund.
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement, ADS Distributors, Inc. (the
"Distributor") has agreed to act as the principal underwriter for the Fund in
the sale and distribution to the public of shares of the Fund, either through
dealers or otherwise. The Distributor has agreed to offer such shares for sale
at all times when such shares are available for sale and may lawfully be offered
for sale and sold.
OTHER EXPENSES
Fees paid to the Adviser and the Administrator are deducted from income
of the Fund before dividends are paid. In addition, the Fund pays expenses
including, but not limited to, the expenses of reports to shareholders,
shareholders' meetings and proxy solicitations, fees and expenses of officers
and Directors who are not affiliated with the Adviser, the Administrator or any
of their respective affiliates, taxes, interest, legal fees, custodian fees,
audit fees, brokerage fees and commissions, fees and expenses of registering and
qualifying the Fund and its shares for distribution under federal and state
securities laws.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
The Fund's assets are invested by the Adviser in a manner consistent with
its investment objectives, policies, and restrictions and with any instructions
the Board of Directors may issue from time to time. Within this framework, the
Adviser is responsible for making all determinations as to the purchase and sale
of portfolio securities and for taking all steps necessary to implement
securities transactions on behalf of the Fund.
11
<PAGE>
U.S. Government securities generally are traded in the over-the-counter
market through broker-dealers. A broker-dealer is a securities firm or bank that
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for
the Fund, the Adviser will use its best efforts to obtain the best possible
price and execution and will otherwise place orders with broker-dealers subject
to and in accordance with any instructions the Board of Directors may issue from
time to time. The Adviser will select broker-dealers, including Temper of the
Times Communications, Inc., its affiliates, to execute portfolio transactions on
behalf of the Fund primarily on the basis of best price and execution.
Transactions on U.S. stock exchanges and other agency transactions
involve the payment by the Fund of negotiated brokerage commissions. Such
commissions vary among different brokers. A particular broker may charge
different commissions according to such factors as the difficulty and size of
the transaction.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive brokerage and research services and other
similar services from many broker-dealers with which the Adviser may place the
Fund's portfolio transactions and from third parties with which these
broker-dealers have arrangements. These services include such matters as general
economic and market reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of investments,
newspapers, magazines, pricing services, quotation services, news services and
personal computers utilized by the Adviser. Where the services referred to above
are not used exclusively by the Adviser for research purposes, the Adviser,
based upon its own allocations of expected use, bears that portion of the cost
of these services which directly relates to their non-research use. To the
extent that the Adviser receives any payments from such broker-dealers, all such
payments will be used to offset future commission payments of the Fund.
12
<PAGE>
As permitted by Section 28(e) of the 1934 Act, the Adviser may cause the
Fund to pay a broker-dealer which provides "brokerage and research services" (as
defined in the 1934 Act) to the Adviser an amount of disclosed commission for
effecting securities transactions on stock exchanges and other transactions for
the Fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. The Adviser's
authority to cause the Fund to pay any such greater commissions is also subject
to such policies as the Directors may adopt from time to time. The Adviser does
not currently intend to cause the Fund to make such payments. It is the position
of the staff of the Securities and Exchange Commission that Section 28(e) does
not apply to the payment of such greater commissions in "principal"
transactions. Accordingly, the Adviser will use its best effort to obtain the
most favorable price and execution available with respect to such transactions,
as described above.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
TAXATION
The Fund intends to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). By so qualifying, the Fund will not incur federal income or state taxes
on its net investment income and on net realized capital gains to the extent
distributed as dividends to shareholders.
13
<PAGE>
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, the Fund must distribute during each calendar
year an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term
capital gains, are taxable to shareholders as ordinary income for federal and
state tax purposes, regardless of whether such dividends are taken in cash or
reinvested in additional shares. Distributions made from the Fund's net realized
long-term capital gains (if any) and designated as capital gain dividends are
taxable to shareholders as long-term capital gains, regardless of the length of
time Fund shares are held. Corporate investors are not eligible for the
dividends-received deduction with respect to distributions derived from interest
on short-or long-term capital gains from the Fund but may be entitled to such a
deduction in respect to distributions attributable to dividends received by the
Fund. A distribution will be treated as paid on December 31st of a calendar year
if it is declared by the Fund in October, November or December of the year with
a record date in such a month and paid by the Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year the distributions are declared, rather than the calendar year in
which the distributions are received.
Distributions paid by the Fund from net long-term capital gains (excess
of long-term capital gains over long-term capital losses), if any, whether
received in cash or reinvested in additional shares, are taxable as long-term
capital gains, regardless of the length of time you have owned shares in the
Fund. Distributions paid by the Fund from net short-term capital gains (excess
of short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when the Fund realizes net capital
gains on sales of portfolio securities during the year. Realized capital gains
are not expected to be a significant or predictable part of the Fund's
investment return.
14
<PAGE>
A sale of the Fund's shares is a taxable event and may result in a
capital gain or loss. A capital gain or loss may be realized from an ordinary
redemption of shares, a checkwriting redemption, or an exchange of shares
between two mutual funds (or two portfolios of a mutual fund).
Dividend distributions, capital gains distributions, and capital gains or
losses from redemptions and exchanges may be subject to state and local taxes.
Ordinarily, distributions and redemption proceeds earned by the Fund
shareholder are not subject to withholding of federal income tax. However, 31%
of the Fund's distributions and redemption proceeds must be withheld if the Fund
shareholder fails to supply the Fund or its agent with such shareholder's
taxpayer identification number or if the Fund shareholder who is otherwise
exempt from withholding fails to properly document such shareholder's status as
an exempt recipient.
The information above is only a summary of some of the tax considerations
generally affecting the Fund and its shareholders. No attempt has been made to
discuss individual tax consequences. To determine whether the Fund is a suitable
investment based on his or her tax situation, a prospective investor may wish to
consult a tax advisor.
OWNERSHIP OF SHARES
Each share has one vote in the election of Directors. On December , 1998,
the Moneypaper, Inc. invested $100,000 in shares of the Fund at $10.00 per
share, as seed capital. The Moneypaper, Inc. will control the Fund until public
shareholders come into the Fund.
15
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Net investment income, if any, is declared as dividends and paid
annually. Substantially all the realized net capital gains for the Fund, if any,
are also declared and paid on an annual basis. Dividends are payable to
shareholders of record at the time of declaration.
Dividends are automatically reinvested in additional Fund shares unless
the shareholder has elected to have them paid in cash.
The net investment income of the Fund for each business day is determined
immediately prior to the determination of net asset value. Net investment income
for other days is determined at the time net asset value is determined on the
prior business day. See "Purchase of Shares" and "Redemption of Shares" in the
Prospectus.
NET ASSET VALUE
The method for determining the Fund's net asset value is summarized in
the Prospectus in the text following the heading "Valuation of Shares." The net
asset value of the Fund's shares is determined on each day on which the New York
Stock Exchange is open. The New York Stock Exchange is not open for business on
the following holidays (or on the nearest Monday or Friday if the holiday falls
on a weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of the Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in the Fund's net asset value during
the period.
The Fund's total return must be displayed in any advertisement containing
the Fund's yield. Total return is the average annual total return for the 1-, 5-
and 10-year period ended on the date of the most recent balance sheet included
in the Statement of Additional Information, computed by finding the average
16
<PAGE>
annual compounded rates of return over 1-, 5- and 10-year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1000 payment made at the beginning of the
1-, 5- or 10-year periods at the end of the
1-, 5-or 10-year periods (or fractions
thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10
years, the period during which the registration has been effective shall be
substituted.
Average annual total return is calculated by determining the growth or
decline in value of a hypothetical historical investment in the Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent average figures as opposed to actual
year-to-year performance.
In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
17
<PAGE>
may be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.
The Fund's performance may be compared with the performance of other
funds with comparable investment objectives, tracked by fund rating services or
with other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Fund may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate historical performance.
The agencies listed below measure performance based on their own criteria
rather than on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated
by Lipper, generally reflecting changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of
performance periods, including year-to-date, 1-year, 5-year, and
10-year performance. Lipper classifies mutual funds by investment
objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. The
ratings are divided into five groups: highest, above average, neutral,
below average and lowest. They represent the fund's historical
risk/reward ratio relative to other funds in its broad investment class
as determined by Morningstar, Inc. Morningstar ratings cover a variety
of performance periods, including 1-year, 3-year, 5-year, 10-year and
overall performance. The performance factor for the overall rating is a
weighted-average assessment of the fund's 1-year, 3-year, 5-year, and
18
<PAGE>
10-year total return performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund. The ratings are
derived from a purely quantitative system that does not utilize the
subjective criteria customarily employed by rating agencies such as
Standard & Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund rankings
and is distributed monthly. The rankings are based entirely on total
return calculated by Weisenberger for periods such as year-to-date,
1-year, 3-year, 5-year and 10-year. Mutual funds are ranked in general
categories (e.g., international bond, international equity, municipal
bond, and maximum capital gain). Weisenberger rankings do not reflect
deduction of sales charges or fees.
Independent publications may also evaluate the Fund's performance. The
Fund may from time to time refer to results published in various periodicals,
including Barrons, Financial World, Forbes, Fortune, Investor's Business Daily,
Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The
Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may be used
to present a comparative benchmark of the Fund's performance. The performance
figures of an index reflect changes in market prices, reinvestment of all
dividend and interest payments and, where applicable, deduction of foreign
withholding taxes, and do not take into account brokerage commissions or other
costs. Because the Fund is a managed portfolio, the securities it owns will not
match those in an index. Securities in an index may change from time to time.
The Dow Jones Industrial Average is an index of 30 common stocks
frequently used as a general measure of stock market performance.
Standard & Poor's 500 Composite Stock Price Index is an index of common
stocks frequently used as a general measure of stock market
performance.
19
<PAGE>
COUNSEL AND INDEPENDENT ACCOUNTANTS
Legal matters in connection with the issuance of shares of common stock
of the Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New
York, New York 10022. McGladrey & Pullen LLP, 555 Fifth Avenue, New York, New
York 10017 have been selected as independent accountants for the Fund.
OTHER INFORMATION
The Adviser has been registered with the Securities Exchange Commission
(SEC) under the Investment Advisers Act of 1940 since __________, 199_. The Fund
has filed a registration statement under the Securities Act of 1933 and the 1940
Act with respect to the shares offered. Such registrations do not imply approval
or supervision of the Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and
exhibits on file with the SEC in Washington, D.C. These documents are available
upon payment of a reproduction fee. Statements in the Prospectus and in this
Statement of Additional Information concerning the contents of contracts or
other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.
20
<PAGE>
MP 63 Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 28, 1998
- --------------------------------------------------------------------------------
<TABLE>
ASSETS
<S> <C>
Cash $100,000
LIABILITIES --
--------
NET ASSETS $100,000
========
Net assets applicable to 10,000 shares of common stock
par value $.001 each; 1,000,000,000 shares authorized $100,000
========
Net asset value, and offering price per share $ 10.00
========
</TABLE>
Redemption price per share (Note 4)
See Notes to Financial Statements.
<PAGE>
MP 63 Fund, Inc.
NOTES TO FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
NOTE 1. MP 63 Fund, Inc. ("the Fund") was incorporated under the
laws of the State of Maryland on October 13, 1998. The Fund is
registered with the Securities and Exchange Commission as an
open-end diversified management investment company and has had
no operations to date other than these relating to
organizational matters and the sale and issuance of 10,000
shares of its common stock to The Moneypaper, Inc.
NOTE 2. The Investment Advisory agreement, the Administrative
Service agreement and the distribution agreement are described
elsewhere in the Prospectus and Statement of Additional
Information.
NOTE 3. Organizational expenses are being paid by the Funds Investment Adviser.
NOTE 4. There is a redemption fee payable to the Fund equal to 2.00% for shares
that are held for less than three years and 1.00% for shares that are
held for more than three but less than five years.
<PAGE>
THE MP 63 FUND, INC.
NEW ACCOUNT APPLICATION FORM
- --------------------------------------------------------------------------------
This form can be used for individual accounts, joint accounts, transfers/gifts
to minors, trust accounts, and for certain tax-deferred accounts, such as Keogh,
profit-sharing plans, pension and IRA's held at another trustee or custodian.
Call for an IRA or ROTH IRA application, or, for help with this application,
1-877- MP 63FUN (676-3386) assistance.
MAIL TO: THE MP 63 FUND, INC., C/O AMERICAN DATA SERVICES, INC.,
P.O. BOX 5536, HAUPPAUGE, NY 11788-0132
- --------------------------------------------------------------------------------
ACCOUNT (FOR INDIVIDUAL ________________________________________________
REGISTRATION OR First Name Middle Name Last Name
JOINT OWNERS) _________________________
Social Security Number
________________________________________________
Joint Owner Social Security Number
Registration will be "Joint Tenants with Right
of Survivorship" unless otherwise specified:
________________________________________________
- --------------------------------------------------------------------------------
(FOR UNIFORM
TRANSFERS/GIFTS ________________________________________________
TO MINORS ACT Custodian's Name (only one allowed)
ACCOUNTS)
________________________________________________
Minor's Name Minor's Social Security Number
(only one allowed)
________________________________________________
State of Residence
- --------------------------------------------------------------------------------
(FOR CORPORATE
TRUST OR OTHER ________________________________________________
FIDUCIARY Name of Corporation, Trust, etc.
ACCOUNTS)
________________________________________________
Name and Date of Trust (continued)
________________________________________________
Name(s) of Trustee(s), Tax ID Number
Beneficiary, etc.
- --------------------------------------------------------------------------------
ADDRESS FOR
MAILINGS ________________________________________________
Number and Street
________________________________________________
Apartment, Floor or Telephone No.
Room Number (include area code)
________________________________________________
City, State, Zip
- --------------------------------------------------------------------------------
INITIAL INVESTMENT
Amount ($1,000 Minimum)
$ _____________________ [ ] By Check, Please make check payable to the
MP 63 Fund and mail to the
address above.
[ ] By wire or overnight courier please call
1-877-MP63FUN (676-3386) for instructions
IMPORTANT: THIS FORM IS CONTINUED
<PAGE>
THE MP 63 FUND, INC. 1-877-MP63FUN NEW ACCOUNT APPLICATION, CONT.
- --------------------------------------------------------------------------------
DISTRIBUTIONS U.S. Citizen [ ] Other: ________________________
(Country of Residence)
Dividends and distributions will be reinvested
unless a box is checked:
[ ] Dividends in cash; capital gain distributions
reinvested
[ ] Dividends and capital gain distributions in cash
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN (OPTIONAL)
[ ] Each month, I would like to have American Data Services draw an Automatic
Clearing House (ACH) debit electronically against the account of my Financial
Institution listed below, to purchase shares of THE MP 63 FUND, INC.:
I understand that the shares of the Fund are purchased on the day of the debit.
I also understand that if the automatic purchase can not be made due to
insufficient funds or stop payment, a $15.00 fee will be assessed.
Mark one of your personal checks "VOID" and attach the voided check to this
application, or fill in the information below. As soon as your Financial
Institution accepts your authorization, debits will be generated and purchases
of Fund shares will begin. Please note that your Financial Institution must be
able to accept ACH transactions. Please allow one month for processing of this
Automatic Investment Plan option before the first debit occurs.
Please begin Automatic Investing for me and invest $ __________ ($50 minimum) in
shares of the Fund on the:
[ ] 10th
[ ] 20th of each month, or first business day thereafter.
________________________________________________________________________________
Name of my Financial Institution Address of my Financial Institution
________________________________________________________________________________
My Financial Institution's My Account Number Name(s) on Account
ABA Number
I understand that my ACH debit will be dated each month on the day specified
above. I agree that if such debit is not honored upon presentation, American
Data Services may discontinue this service, and any purchase of Fund shares may
be reversed. I further understand that the net asset value of the shares of the
Fund at the time of such reversal may be less than the net asset value on the
day of the original purchase. American Data Services is authorized to redeem
sufficient additional full and fractional shares from my account to make up the
deficiency. The Automatic Investment Plan may be discontinued by American Data
Services upon 30 days written notice or by the investor by written notice to
American Data Services provided the notice is received no later than 5 business
days prior to the specified investment date.
________________________________________________________________________________
Signature of Depositor Signature of Co-Depositor Date
(required for joint accounts)
- --------------------------------------------------------------------------------
REDEMPTIONS BY TELEPHONE (OPTIONAL)
[ ] I would like to be able to place a redemption order by telephone and have
the proceeds mailed to me or wired directly to my Financial Institution account
listed below. I understand that these procedures are offered as a convenience to
me, and I agree that neither the Fund nor American Data Services will be liable
for any loss, expense, or cost arising from one of these transactions. IF YOU
CHOOSE TO HAVE REDEMPTION PROCEEDS WIRED TO YOUR ACCOUNT (YOU WILL BE CHARGED AN
$8.00 PROCESSING FEE FOR EACH WIRE YOU REQUEST), PLEASE FILL IN THE FOLLOWING
INFORMATION:
________________________________________________________________________________
Name of my Financial Institution Address of my Financial Institution
________________________________________________________________________________
My Financial Institution's My Account Number Name(s) on Account
ABA Number
________________________________________________________________________________
Signature of Depositor Signature of Co-Depositor Date
(required for joint accounts)
- --------------------------------------------------------------------------------
IMPORTANT: THIS FORM IS CONTINUED
<PAGE>
THE MP 63 FUND, INC. 1-877-MP63FUN NEW ACCOUNT APPLICATION, CONT.
- --------------------------------------------------------------------------------
SIGNATURES:
By signing this new account application, I/we certify under penalty of perjury
that:
-- I/We have full authority and legal capacity for myself/ourselves or the
organization named above, to purchase the Fund shares selected above and
to use the options selected on this Application.
-- I/We have received and read a current prospectus of the Fund, agree to
be bound by its terms, and understand the risks associated with
investing in the Fund.
-- I/We hereby ratify any instructions given pursuant to this Application
and for myself/ourselves and any/our successors and assigns do hereby
release the Fund, its Investment Advisers, its Administrator, its
Transfer Agent, its Distributor, its Custodian, and their respective
officers, employees, agents and affiliates from any and all liability in
the performance of the acts instructed herein.
-- The following is required by Federal law to avoid backup withholding:
By signing below, I/we certify under penalties of perjury that
the taxpayer identification number entered above is correct
and that I/we have not been notified by the IRS as subject to
backup withholding unless the box below is checked.
IF NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING,
CHECK BOX: [ ]
PLEASE SIGN BELOW: (If joint account, both owners must sign.)
________________________________________________________________________________
Signature Signature Date
(Owner, Trustee or Custodian) (Joint owner or Co-Trustee)
- --------------------------------------------------------------------------------
HOW DID YOU HEAR ABOUT OUR FUND ? ARE YOU A SUBSCRIBER TO THE MONEYPAPER?
________________________________________________________________________________
________________________________________________________________________________
Use this form only for individual, custodial, trust, profit sharing, pension or
other plan accounts, but DO NOT use this form for IRAs Unless self directed with
another trustee or custodian).
A Special application and disclosure document is
available for IRAs.
FOR INFORMATION AND ASSISTANCE PLEASE CALL 1-877-MP63FUN (676-3386)
MAILING ADDRESS: BY OVERNIGHT COURIER:
THE MP 63 FUND, INC. THE MP 63 FUND, INC.
C/O AMERICAN DATA SERVICES, INC. C/O AMERICAN DATA SERVICES, INC.
P.O. BOX 5536 150 MOTOR PARKWAY, SUITE 109 W
HAUPPAUGE, NY 11788-0132 HAUPPAUGE, NY 11788-0132
