Fellow Shareholders
The New Age Media Fund completed a successful initial public offering of 14.95
million shares at $15 each on October 10, 1993. We at T. Rowe Price are
gratified by the tremendous response we received from New Age Media
shareholders throughout the offering process. Also worthy of mention is the
high level of sophisticated support and guidance provided by the underwriters
of the offering: Bear Stearns, Alex Brown, and Robinson Humphrey.
The Fund had approximately $181 million available for investment on
October 13, 1993, at an initial net asset value per share of $13.93. By the
close of the year, the net asset value of New Age Media was at $13.57, down
2.6%. The general market, represented by the unweighted Standard & Poor's 500
Stock Index, was up 1.7% on a total return basis during the same period.
The Environment
The last six months have been characterized by rapid fundamental change and
increased levels of activity in the New Age Media area. The rush to build the
electronic information superhighway is on. Both cable companies and telephone
companies (telcos) are accelerating their plans to put these broadband
networks in place. For example, on the telco side, Pacific Telesis and Bell
Atlantic have announced specific timetables and budgets to upgrade their
networks over the next few years. On the cable side, live tests of broadband
networks will be launched in 1994 by Time Warner in Orlando, Florida, and by
Viacom in Castro Valley, California. The technological architectures, ultimate
costs, and economic justifications of these massive network modernizations,
while still uncertain, are inexorably coming into clearer focus.
In the wireless communications area, there has been a spate of activity.
The FCC has awarded three pioneers preference licenses for personal
communication systems (PCS) covering the metropolitan areas of New York City,
Baltimore-Washington, and Los Angeles-San Diego. The specialized mobile radio
(SMR) industry has consolidated down to three players as a result of
Motorola's divesting its radio channels. Pacific Telesis has completed the
first part of the spinoff of its existing wireless businesses through a
successful initial public offering of PacTel Corporation.
On the regulatory front, Congress appears likely to enact the first
comprehensive communications legislation in decades. The Clinton
Administration, with Vice President Gore at the lead, has made the updating of
these laws a priority for 1994.
Internationally, the telcos are not as mature as their U.S.
counterparts, and, as a result, they are growing faster. The same is true of
cable television. The fundamentals of telcos in emerging markets and cable in
more developed countries remain outstanding.
Portfolio Strategy
The portfolio structure reflects our belief that the two greatest
beneficiaries of the New Age Media trends are the content providers and the
technology enablers. The content providers own the copyrights, software,
information, and entertainment that will travel to homes and businesses over
the information superhighway. They are the "toll collectors." These companies
make up the largest sector of the Fund. The technology enablers are the
technology and equipment vendors whose products and services will transform
the telephone and cable networks of today into the broadband networks of the
future. These companies represent the second largest sector investment in the
portfolio.
Due to the timing of the receipt of the proceeds from the offering-two
days after the announcement of the now scuttled Bell
Atlantic-Telecommunications, Inc. deal-we made two immediate adjustments to
our initial investment strategy. The first was to invest a higher portion of
assets in lower volatility, higher market capitalization stocks-namely,
telephone companies and print publishers-in order to preserve capital in a
jittery market. The second was to proceed cautiously and retain more cash
reserves. As a result, the portfolio ended the year with almost 20% in cash,
higher than anticipated, but justified by the rolling correction in New Age
Media stock sectors over the last six weeks of 1993. In 1994, we expect the
portfolio to become more fully invested and have a greater percentage of
smaller-capitalization, faster growth companies whose stocks are more
volatile.
The 10 largest holdings represented over one-third of the portfolio at
year-end. This degree of concentration is likely to remain over time, as we
place significant portfolio bets based on our evaluation of changes in
regulation, technology, demand, and relative stock prices.
Summary
The future for New Age Media appears bright for a number of reasons. We see
growth for the industry as networks are built and new products and services
are offered. The complexity involved in analyzing the effects of evolving
technologies and markets creates opportunities for professional investment
managers, who have the resources and access to the information needed for the
in-depth analysis which is required to make educated bets on where to invest.
Uncertainties still abound, however, and we know there will be losers as well
as winners.
Outlook
On a valuation basis, the absolute levels in the U.S. equity market appear
historically rich. However, a backdrop of low interest rates, low inflation,
and gradual improvement in economic activity should benefit equities. Your New
Age Media portfolio is comprised of companies which should grow their earnings
at solid double-digit rates over the next few years, fully twice the long-term
average of the S&P 500 companies. Yet the relative price/earnings ratio of New
Age Media based on consensus 12 months forward earnings is at a modest 13%
premium to the S&P 500. This sets the stage, in our opinion, for solid
performance for New Age Media shareholders ove
Respectfully submitted,
John D. Gillespie
President and Chairman of the
Investment Advisory Committee
February 24, 1994
Ten Largest Holdings
December 31, 1993
Percent of
Net Assets
__________
Telmex 5.7%
King World Productions 4.7
Pacific Telesis 4.0
Playboy Enterprises 4.0
Northern Telecom 3.8
Enquirer/Star Group 3.2
Capital Cities/ABC 3.1
BellSouth 2.6
SPI Holding 2.4
Time Warner 2.4
_____________________________________________________
Total 35.9%
Portfolio Highlights
Since Inception through December 31, 1993
Key Statistics
Change in N.A.V. ($13.93 to $13.57) ($0.36)
Change in NYSE ($15.00 to $13.38) ($1.62)
Total Net Assets (Millions) $202.9
Sector Diversification
December 31, 1993
Percent of
Net Assets
__________
Content 34.0%
Technology 19.4
Distribution 14.2
International 12.0
_____________________________________________________
Total 79.6%
Security Classification
December 31, 1993
Percent of Value
Net Assets (000)
_________ ________
Common Stocks 79.6% $161,489
Convertibles 1.3 2,597
Short-Term 24.6 50,001
______ _______
Total Investments 105.5 214,087
Other Assets Less Liabilities (5.5) (11,176)
______________________________________________________________________
Net Assets 100.0% $202,911
Statement of Net Assets (Value in thousands)
The New Age Media Fund, Inc. / December 31, 1993
Common Stocks - 79.6%
Content - 34.0%
Value
______
10,000 shs. Capital Cities/ABC. . . . . . . . $ 6,195
110,000 Disney. . . . . . . . . . . . . . 4,689
340,000 Enquirer/Star Group . . . . . . . 6,460
110,000 E. W. Scripps . . . . . . . . . . 3,025
125,500 * Graff Pay-Per-View. . . . . . . . 1,020
10,000 * Iwerks Entertainment. . . . . . . 267
250,000 * King World Productions. . . . . . 9,594
32,000 Knight-Ridder . . . . . . . . . . 1,912
210,000 * NTN Communications. . . . . . . . 2,100
620,000 * Playboy Enterprises
(Class B) . . . . . . . . . . 8,060
25,000 Polygram. . . . . . . . . . . . . 984
250,000 * Price Communications. . . . . . . 984
16,000 * QVC Network . . . . . . . . . . . 628
90,000 * Savoy Pictures. . . . . . . . . . 1,890
100,000 * Software Toolworks. . . . . . . . 1,013
550,000 * SPI Holding . . . . . . . . . . . 4,950
350,000 * Telescan. . . . . . . . . . . . . 3,194
110,000 Time Warner . . . . . . . . . . . 4,868
530,900 Topps . . . . . . . . . . . . . . 3,716
60,000 Turner Broadcasting
Systems (Class B) . . . . . . 1,620
75,300 * Valuevision International . . . . 1,158
15,000 * Viacom (Class B). . . . . . . . . 673
Total Content 69,000
Distribution - 14.2%
30,000 AT&T. . . . . . . . . . . . . . . 1,575
45,000 * Babbage's . . . . . . . . . . . . 641
90,000 BellSouth . . . . . . . . . . . . 5,209
50,000 * GC Companies. . . . . . . . . . . 1,731
30,000 * McCaw Cellular Communications
(Class A) . . . . . . . . . . 1,515
150,000 Pacific Telesis . . . . . . . . . 8,100
63,500 * PacTel. . . . . . . . . . . . . . 1,580
30,000 * Paging Network. . . . . . . . . . 915
100,000 U.S. West . . . . . . . . . . . . 4,588
155,000 Videotron (CAD) . . . . . . . . . 3,013
Total Distribution 28,867
Technology - 19.4%
80,000 shs.* BroadBand Technologies. . . . . . $ 2,540
50,000 * Compression Labs. . . . . . . . . 613
50,000 * Creative Technology . . . . . . . 1,588
30,000 * DSC Communications. . . . . . . . 1,845
57,600 * Intuit. . . . . . . . . . . . . . 2,455
295,000 *! Laser Precision . . . . . . . . . 2,470
75,000 * Learning Company. . . . . . . . . 1,134
75,000 * Microprose. . . . . . . . . . . . 694
45,000 Motorola. . . . . . . . . . . . . 4,157
250,000 Northern Telecom. . . . . . . . . 7,719
210,000 * Novell. . . . . . . . . . . . . . 4,357
50,000 * Seagate Technology. . . . . . . . 1,187
160,000 * Sierra-Broderbund . . . . . . . . 2,940
400,000 * Supermac Technology . . . . . . . 4,300
30,000 * Sybase. . . . . . . . . . . . . . 1,260
Total Technology 39,259
International - 12.0%
36,000 * Cellular Communications of
Puerto Rico . . . . . . . . . 810
150,000 Flextech (GBP). . . . . . . . . . 840
100,000 * International CableTel. . . . . . 2,350
40,000 Reuters, ADR. . . . . . . . . . . 3,160
170,000 Telmex, ADR . . . . . . . . . . . 11,475
50,000 * United International Holdings
(Class A) . . . . . . . . . . 1,712
45,000 Vodafone, ADR . . . . . . . . . . 4,016
Total International 24,363
Total Common Stocks (Cost - $165,261) 161,489
Convertible Preferred Stock - 1.3%
75,000 * Mobile Telecommunication
Technologies,
$2.25 Cv. Pfd.. . . . . . . . 2,597
Total Convertible Preferred Stock (Cost - $2,609) 2,597
Short-Term Investments - 24.6%
Commercial Paper - 19.1%
$ 1,339,000 BT Securities,
3.25%, 1/3/94 . . . . . . . . $ 1,339
5,600,000 Corporate Asset Funding,
3.25%, 1/28/94. . . . . . . . 5,554
1,500,000 Export Finance & Insurance,
3.30%, 4/15/94. . . . . . . . 1,485
5,000,000 General Electric Capital,
3.27%, 3/3/94 . . . . . . . . 4,943
5,000,000 General Mills,
3.20%, 1/19/94. . . . . . . . 4,963
2,800,000 Golden Peanut,
3.23%, 2/23/94. . . . . . . . 2,771
5,500,000 Leland Stanford Junior
University,
3.26%, 2/3/94 . . . . . . . . 5,454
5,000,000 Norfolk Southern,
3.20%, 1/27/94. . . . . . . . 4,960
2,000,000 South Australian Government,
3.30%, 2/14/94. . . . . . . . 1,991
5,500,000 US Boxax & Chemical,
3.25%, 1/28/94. . . . . . . . 5,455
38,915
Repurchase Agreements - 5.5%
9,864,800 Bear Stearns, 3.25%, 1/3/94
(Collateralized by
Fannie Mae Remic Trust,
3.637%, 3/25/22). . . . . . . 9,865
1,221,251 Bear Stearns, 3.125%, 1/3/94
(Collateralized by Tennessee
Valley, 6.00%, 1/15/97 &
Fannie Mae Remic Trust,
3.637%, 3/25/22). . . . . . . 1,221
11,086
Total Short-Term Investments (Cost - $50,001) 50,001
Total Investments in Securities -
105.5% of Net Assets (Cost - $217,871) 214,087
Other Assets Less Liabilities - (5.5)% (11,176)
Net Assets Consisting of:
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . . . $ 115
Accumulated realized gains/losses -
net of distributions . . . . . . . . . . . . . . . (1,841)
Unrealized depreciation of
investments . . . . . . . . . . . . . . . (3,781)
Paid-in-capital applicable to
14,956,666 shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares authorized. . . . . . . . . . 208,418
_______
Net Assets - 100.0% . . . . . . . . . . . . . . . $202,911
________
________
Net Asset Value Per Share $13.57
______
______
* Non-income producing
! Affiliated company
(CAD) Canadian dollar denominated
(GBP) British sterling denominated
The accompanying notes are an integral part of these financial statements.
Statement of Operations
The New Age Media Fund, Inc. / From October 13, 1993 (Commencement of
Operations) to December 31, 1993
Amounts in Thousands
_______________________
Investment Income
Income
Dividends . . . . . . . . . . . . . . . . . . . . $ 200
Interest. . . . . . . . . . . . . . . . . . . . . 478
________
Total income. . . . . . . . . . . . . . . . . . . $ 678
Expenses
Investment management fees. . . . . . . . . . . . 477
Prospectus & shareholder reports. . . . . . . . . 27
Shareholder servicing fees & expenses . . . . . . 26
Custodian and accounting fees & expenses. . . . . 17
Legal & auditing fees . . . . . . . . . . . . . . 12
Organizational expenses . . . . . . . . . . . . . 10
Directors' fees & expenses. . . . . . . . . . . . 4
________
Total expenses. . . . . . . . . . . . . . . . . . 573
________
Net investment income. . . . . . . . . . . . . . . . 105
Realized and Unrealized Loss on Investments
Net realized loss. . . . . . . . . . . . . . . . . . (1,841)
Change in unrealized appreciation
or depreciation . . . . . . . . . . . . . . . . . (3,781)
________
Net loss on investments. . . . . . . . . . . . . . . (5,622)
________
Decrease In Net Assets from Operations . . . . . . . $(5,517)
________
________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
The New Age Media Fund, Inc. / From October 13, 1993 (Commencement of
Operations) to December 31, 1993
Amounts in Thousands
_______________________
Increase (Decrease) In Net Assets
Operations
Net investment income . . . . . . . . . . . . . . . $ 105
Net realized loss on investments. . . . . . . . . . (1,841)
Change in unrealized appreciation
or depreciation of investments. . . . . . . . . . (3,781)
_________
Decrease in net assets from
operations. . . . . . . . . . . . . . . . . . . . (5,517)
_________
Capital share transactions
Increase in net assets from sale
of 14,950 shares. . . . . . . . . . . . . . . . . 208,328
_________
Total increase . . . . . . . . . . . . . . . . . . . . 202,811
Net Assets
Beginning of period . . . . . . . . . . . . . . . . 100
End of period . . . . . . . . . . . . . . . . . . . $ 202,911
_________
_________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
The New Age Media Fund, Inc. / December 31, 1993
Note 1 - Significant Accounting Policies
The New Age Media Fund (the Fund) is registered under the Investment Company
Act of 1940 as a diversified, closed-end management investment company.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales price on the
day the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the Fund's net asset value per share, all
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at the mean of the bid and offer prices of such currencies
against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by, or under the supervision of, the officers of
the Fund, as authorized by the Board of Directors.
B) Affiliated Companies - Investments in companies 5% or more of whose
outstanding voting securities are held by the Fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
C) Currency translation - Foreign currency amounts are translated into U.S.
dollars at prevailing exchange rates as follows: assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
securities and income and expenses at the rate of exchange prevailing on the
dates of such transactions.
D) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles.
Note 2 - Organization
The Fund was organized on August 17, 1993, and had no operations prior to
October 13, 1993, other than those related to organizational matters,
including the sale of 6,666 shares of its common stock at $15.00 per share on
October 5, 1993, to T. Rowe Price Associates, Inc. It commenced operations on
October 13, 1993, after issuing 13,000,000 shares of common stock in its
initial public offering. The Fund issued an additional 1,950,000 shares of
common stock in a secondary offering on October 28, 1993. In connection with
its organization and offering of shares, the Fund incurred $193,000 and
$225,000 of organization and offering costs, respectively. The organization
costs are being amortized using the straight-line basis over a 60-month period
from the date the Fund commenced operations. The offering costs have been
charged to capital.
Note 3 - Financial Instruments
As a part of its investment program, the Fund utilized repurchase agreements.
The nature and risk of these instruments and the reasons for using them are
set forth more fully in the Fund's Prospectus and Statement of Additional
Information.
All repurchase agreements are fully collateralized by U.S. Government
guaranteed securities and such collateral is in the possession of the Fund's
custodian. The Fund evaluates collateral daily to insure its market value
exceeds the delivery value of the repurchase agreement at maturity.
As part of its investment program, the Fund lends securities to earn
additional income. Although risk is mitigated by obtaining collateral, the
Fund could experience a delay in recovering its securities and possibly incur
a capital loss if the borrower fails to return them. At December 31, 1993, the
market value of securities on loan was $10,711,000, for which the Fund has
received collateral of $11,086,000, consisting of high-grade debt securities.
Purchases and sales of portfolio securities, other than short-term and
U.S. Government securities, aggregated $187,451,000 and $17,740,000,
respectively, for the period ended December 31, 1993.
Note 4 - Federal Income Taxes
No provision for federal income taxes is required since the Fund intends to
qualify as a regulated investment company and distribute all of its taxable
income.
At December 31, 1993, the aggregate cost of investments for federal
income tax and financial reporting purposes was $217,871,000 and net
unrealized depreciation aggregated $3,784,000, of which $7,208,000 related to
appreciated investments and $10,992,000 to depreciated investments.
Note 5 - Related Party Transactions
The investment management and administration agreement between the Fund and T.
Rowe Price Associates, Inc. (the Manager), provides for an annual investment
management and administration fee, computed weekly and paid monthly at the
annual rate of 1.10% of the Fund's weekly net assets. The Manager including
its subsidiaries, under separate agreements with the Fund, is responsible for
maintaining the financial records of the Fund, including calculating the
Fund's net asset value per share and providing certain shareholder services
for all accounts. For the period ended December 31, 1993, the Fund incurred
fees totaling approximately $31,000 for these services provided by related
parties. At December 31, 1993, investment management and services fee payable
were $220,000.
Financial Highlights
The New Age Media Fund, Inc. / From October 13, 1993 (Commencement of
Operations) to December 31, 1993
For a share outstanding through the period
__________________________________________
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . $15.00
______
Investment Activities
Net investment income . . . . . . 0.01
Net realized and
unrealized loss . . . . . . . . (1.44)
______
Total from Investment
Activities. . . . . . . . . . . . (1.43)
______
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . . $13.57
______
______
PER SHARE MARKET VALUE,
END OF PERIOD . . . . . . . . . . $13.38
______
______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . . (2.6)%
Ratio of Expenses to
Average Net Assets. . . . . . . . 1.30%!
Ratio of Net Investment Income
to Average Net Assets . . . . . . 0.24%!
Portfolio Turnover Rate. . . . . . . 58.7%!
Net Assets, End of Period
(in thousands). . . . . . . . . . $202,911
Number of Shareholder Accounts,
End of Period . . . . . . . . . . 301
! Annualized
Report of Independent Accountants
To the Shareholders and Board of Directors
of The New Age Media Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per
share data and information (which appears under the heading "Financial
Highlights") present fairly, in all material respects, the financial position
of The New Age Media Fund, Inc. at December 31, 1993, the results of its
operations, the changes in its net assets and the selected per share data and
information for the period October 13, 1993 (commencement of operations) to
December 31, 1993, in conformity with generally accepted accounting
principles. These financial statements and selected per share data and
information (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit, which included confirmation of securities at December 31, 1993 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Baltimore, Maryland
January 19, 1994
Cover Page
New Age Media Fund
Officers and Directors
James S. Riepe, Chairman of the Board
Jeffrey H. Donahue, Director
A. MacDonough Plant, Director
John D. Gillespie, President
Denise S. Jevne, Executive Vice President
Lise J. Buyer, Vice President
Henry H. Hopkins, Vice President
Charles A. Morris, Executive Vice President
Lenora V. Hornung, Secretary
Carmen F. Deyesu, Treasury
David S. Middleton, Controller
Roger L. Fiery, Assistant Vice President
Edward T. Schneider, Assistant Vice President
Manager:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland
Telephone 410-547-2000
Custodian, Transfer and Dividend Paying Agent, and Registrar:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
For Information on the Fund, including the NAV, please call toll-free
1-800-231-8432
New Age Media Fund
Annual Report
December 31, 1993
