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
Charles A. Morris, Executive Vice President
Lise J. Buyer, Vice President
Henry H. Hopkins, Vice President
Brian D. Stansky, Vice President
Lenora V. Hornung, Secretary
Carmen F. Deyesu, Treasurer
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 21202
Telephone 410-547-2000
Custodian:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
Transfer and Dividend Paying Agent
and Registrar:
State Street Bank and Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
For information on the Fund, including the NAV, please call toll free
1-800-231-8432
New Age Media Fund
Annual Report
December 31, 1994
<PAGE>
Fellow Shareholders
Highlights
Stock and bond prices declined in the face of the steady rise in interest
rates which began in February 1994. New Age Media investments experienced an
even more difficult ride than the general market in the first half of the
year, as the great expectations of late 1993 for the information superhighway
moderated.
The highly publicized field trials of interactive video services became
plagued by technological problems which led to delays and downsizings. Another
negative for the industry was the failure of a number of high profile
marriages such as Bell Atlantic/Tele-Communications, Inc., and Cox
Communications/Southwestern Bell. Finally, the regulatory climate turned harsh
early in 1994. Congress failed to overhaul telecommunications legislation, and
the cable TV industry was hurt by rate re-regulation and delays in the release
of rules governing service offerings and pricing.
New Age Media stocks rebounded in the second half of 1994. Investor
expectations became more evolutionary than revolutionary, as the technological
hurdles and financial requirements became better understood. Merger and
acquisition activity increased, adding to the general turnaround in stock
prices in the New Age Media sector. Another positive factor was the Federal
Government's more favorable stance toward media regulation and its
clarification of rules governing video and telecommunications. The successful
auction during the third quarter of radio frequencies for narrowband personal
communications services also helped investor confidence.
Performance Review
Overall, New Age Media stocks posted a gain in the final quarter of 94, but
the results by sector were mixed. Technology and international holdings
experienced strength, while stocks of content and distribution companies
followed a less consistent path. The increase in the Fund's net asset value
(NAV) for the December quarter was almost enough to offset the previous
nine-month decline, and the Fund closed the year at $13.44 compared with
$13.57 at the beginning of the year. As shown below, the Fund's return was
slightly above that of the S&P 500's for the quarter but lagged for the year.
Performance Comparison
Periods Ended December 31, 1994
3 Months 12 Months
__________ __________
New Age Media 1.34% -0.90%
S&P 500 -0.02 1.32
The discount of the Fund's stock price to its net asset value widened
from 1% on December 31, 1993, to 20% at year-end 1994. The current discount
reflects what we consider to be overly pessimistic expectations for growth in
the sector. As of December 31, 1994, the Fund's NAV of $13.44 per share
compared with the New York Stock Exchange price of $10.75.
Market Environment
The increasingly robust economy kept U.S. stock markets locked in a tug of war
between optimism over strong corporate earnings growth and concern over the
rise in interest rates and potential for accelerating inflation. New Age Media
stocks are affected by the same sentiments influencing the market, but their
performance is also driven by events within industry subsectors. For example,
the change in control of Congress has the potential to extend the friendlier
regulatory environment which emerged in the latter half of 1994. Among the
possible events are revisions to rules governing the ownership of television
programming (known as financing and syndication or "fin/syn"), better
prospects for meaningful telecommunications legislation, and increases in the
number of TV and radio stations a single corporation may own.
Other significant events of late 1994 that indicate to us a more
favorable environment going forward include:
o Formation of a joint venture between Cap Cities/ABC and the "dream team"
of Steven Spielberg, Jeffrey Katzenberg, and David Geffen.
o Announcement of a wireless communications joint venture by Sprint,
Tele-Communications, Inc., Comcast, and Cox Communications.
o Further consolidation in the cable TV industry, including the announced
sale of Viacom's cable TV systems to Tele-Communications, Inc.
o Initiation of wideband radio frequency auctions on the heels of a
successful narrowband auction in the third quarter of 1994.
Portfolio Review
Because New Age Media stocks are driven to a great extent by events within
industry sectors, the Fund's concentration in a relatively limited number of
industries tends to make its price more volatile than the broader market.
Based on our outlook at this time a year ago, we implemented an investment
strategy that emphasized stocks with lower price volatility and higher market
capitalizations in order to preserve capital in a jittery market. Then,
through a cautious deployment of cash reserves over the course of the year, we
sought to take advantage of the rolling correction in New Age Media stock
sectors to build positions in companies that might benefit from secular themes
and provide superior long-term returns.
Some of these themes and the portfolio companies which could capitalize
on them include:
o The expanding universe of electronic entertainment and commerce which
should be favorable for First Financial Management.
o The seemingly insatiable appetite for quality entertainment on a global
scale should drive demand for products from Viacom, Time Warner, and
Turner Broadcasting.
o Greater consumer demand for wireless communications products and
services could benefit Nokia, Vodafone, and AirTouch Communications.
o The importance of technology in communications and entertainment should
favor Glenayre Technologies, Sybase, and Xilinx.
o Continued corporate mergers, repositionings, and restructurings should
favorably impact holdings in CBS, Tele-Communications, Inc., and Time
Warner.
The portfolio has become more concentrated over the past year, with the
number of positions declining from 56 to 41 and the percentage invested in the
top 10 holdings rising from 36% to 45%. Only one of the 10 largest holdings at
the end of 1993, Time Warner, remained among the top 10 at year-end 1994. We
also increased the commitment to smaller-capitalization, faster growing
domestic companies and the weighting in international stocks. Reserves
declined from 19% to 6% over this period.
There was little overall change in the sector diversification of the
portfolio in the fourth quarter. We again took advantage of share-price
weakness to add to positions in content-rich companies and initiated a
position in Reader's Digest, a content-rich "old age" media company with
significant potential in video and electronic media markets. We further
increased the holding in First Financial Management, a leading electronic
financial services company.
Chart 1 - Sector Diversification
Within the technology enablers sector, we continued to emphasize
smaller, faster growing companies. New investments included Shiva, a provider
of remote access communications software and equipment, and Xilinx, a leading
manufacturer of programmable semiconductors.
In the distribution sector, we lowered the overall commitment but
increased the positions in AirTouch Communications, a leading wireless
communications services provider, and in AT&T.
During the final quarter, international investments rose from 20% to 26%
as we increased existing positions and initiated new holdings in: British Sky
Broadcasting, a leading entertainment and broadcasting company in the U.K.;
and Central European Media, a private television station operator in Germany
and Eastern Europe.
Major individual contributors to the Fund's modestly positive fourth
quarter performance were Intuit, which agreed to be acquired by Microsoft,
Nokia, a leading wireless communications device manufacturer, and United
International Holdings, a leading international cable television systems
operator.
On the worst performers side were Turner Broadcasting, CBS, and
Telefonos de Mexico.
Investment Outlook
In contrast to the enthusiasm of a year ago, investor expectations about the
timing and magnitude of the New Age Media revolution are more realistic, if
not somewhat skeptical. We see encouraging signs in the implementation of
field trials of new video and telecommunications services and in the expanding
number of alliances, joint ventures, and asset purchases. We continue to
believe that factors such as benefits of scale and vertical integration will
be driving forces behind corporate activity. The emergence of technical
standards, upgraded infrastructures, and a more coherent regulatory structure
will help put in place the building blocks essential for long-term growth in
the media and telecommunications industries.
Over the long term, the secular themes we are pursuing should, in our
opinion, be reflected in strong returns from companies able to capitalize on
them. We thank stockholders for their support and reiterate our commitment to
seeking wealth-building opportunities on their behalf.
Respectfully submitted,
John D. Gillespie
President and Chairman of the
Investment Advisory Committee
January 31, 1995
Portfolio Highlights
Since inception October 13, 1993, through December 31, 1994
Key Statistics
Change in N.A.V. ($13.93 to $13.44) -$0.49
Change in NYSE Share Price ($15.00 to $10.75) -$4.25
Total Net Assets (Millions) $201.0
Ten Largest Holdings
December 31, 1994
Percent of
Company Net Assets
______________________________________ __________
First Financial Management 6.1%
Nokia 5.6
Time Warner 5.2
Viacom 5.1
Vodafone 5.0
Kinnevik 4.9
AirTouch Communications 4.0
United International Holdings 3.5
CBS 3.0
Reader's Digest 3.0
__________________________________________________________________________
Total 45.4%
Security Classification
December 31, 1994
Percent of Value
Net Assets (000)
_________ ________
Common Stocks 87.2% $175,181
Preferreds 6.7 13,514
Short-Term Investments 7.1 14,315
________ ________
Total Investments 101.0 203,010
Other Assets Less Liabilities (1.0) (2,014)
__________________________________________________________________________
Net Assets 100.0% $200,996
Statement of Net Assets (Value in thousands)
The New Age Media Fund, Inc. / December 31, 1994
Common Stocks - 87.2%
Content - 28.8%
Value
______
110,000 shs. CBS. . . . . . . . . . . . $ 6,091
150,000 * CUC International . . . . . . 5,025
200,000 First Financial
Management . . . . . . . . 12,325
200,000 * Home Shopping Network . . . . 2,000
135,000 Reader's Digest (Class B) . . 6,041
300,000 Time Warner . . . . . . . . . 10,538
350,000 Turner Broadcasting Systems
(Class B). . . . . . . . . 5,731
250,000 * Viacom (Class B). . . . . . . 10,157
Total Content 57,908
Distribution - 13.8%
275,000 * AirTouch Communications . . . 8,009
75,000 AT&T. . . . . . . . . . . . . 3,769
35,000 * BHC Communications
(Class A). . . . . . . . . 2,573
75,000 * Chris-Craft Industries. . . . 2,587
200,000 * Mobile Telecommunication
Technologies . . . . . . . 3,900
165,000 * Tele-Communications
(Class A). . . . . . . . . 3,589
180,000 * Young Broadcasting
(Class A). . . . . . . . . 3,195
Total Distribution 27,622
Technology - 18.3%
125,000 Adobe Systems . . . . . . . . 3,719
80,000 * DSC Communications. . . . . . 2,870
50,000 * Glenayre Technologies . . . . 2,887
60,000 * Intuit. . . . . . . . . . . . 4,005
50,000 Motorola. . . . . . . . . . . 2,894
133,400 * Pinnacle Systems. . . . . . . 2,001
120,000 * QUALCOMM. . . . . . . . . . . 2,880
75,000 * Shiva . . . . . . . . . . . . 2,991
80,000 * Sybase. . . . . . . . . . . . 4,160
90,000 * Synopsys. . . . . . . . . . . 3,937
75,000 * Xilinx. . . . . . . . . . . . 4,444
Total Technology 36,788
International - 26.3%
125,000 shs. * British Sky
Broadcasting ADR . . . . . $ 3,000
125,000 * Central European Media
Enterprises Limited
(Class A). . . . . . . . . 1,750
550,000 FlexTech (GBP). . . . . . . . 3,442
300,000 Kinnevik (SEK). . . . . . . . 9,932
100,000 LM Ericsson (Class B) ADR . . 5,513
17,000 NRJ (FRF) . . . . . . . . . . 1,776
2,000,000 SIP (ITL) . . . . . . . . . . 5,203
650,000 TELECOM DE
ARGENTINA (ARS). . . . . . 3,315
45,000 Telmex ADR. . . . . . . . . . 1,845
400,000 * United International
Holdings (Class A) . . . . 7,000
300,000 Vodafone ADR. . . . . . . . . 10,087
Total International 52,863
Total Common Stocks (Cost $168,172) 175,181
Preferred Stocks - 6.7%
150,000 Nokia ADR . . . . . . . . . . 11,250
Miscellaneous Preferred Stocks - 1.1% 2,264
Total Preferred Stocks (Cost $11,215) 13,514
Short-Term Investments - 7.1%
Commercial Paper - 7.1%
$3,000,000 Caisse des Depots
et Consignations, 4(2),
6.02%, 1/17/95 . . . . . . 2,987
3,000,000 Delaware Funding,
5.88%, 1/23/95 . . . . . . 2,984
3,000,000 Hanson Finance (U.K.),
5.86%, 1/25/95 . . . . . . 2,972
5,376,000 Koch Industries,
6.25%, 1/3/95. . . . . . . 5,372
Total Short-Term Investments (Cost $14,315) 14,315
Total Investments in Securities -
101.0% (Cost $193,702) $203,010
Other Assets Less Liabilities . . . . . . . . (2,014)
Net Assets Consisting of:
Accumulated realized gains/losses -
net of distributions . . . . . $(16,485)
Net unrealized gain . . . . . . . 9,308
Paid-in-capital applicable to
14,956,666 shares of $.0001 par
value capital stock outstanding;
1,000,000,000 shares
authorized . . . . . . . . . . 208,173
________
NET ASSETS . . . . . . . . . . . . $200,996
_________
_________
NET ASSET VALUE PER SHARE. . . . . $13.44
______
______
* Non-income producing
4(2) Commercial Paper sold within terms of a private
placement memorandum, exempt from registration
under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that
program or other "accredited investors."
ARS Argentinean peso
FRF French franc
GBP British sterling
ITL Italian lira
SEK Swedish krona
The accompanying notes are an integral part of these financial statements.
Statement of Operations
The New Age Media Fund, Inc. / Year Ended December 31, 1994
(Amounts in thousands)
Investment Income
Income
Dividends. . . . . . . . . . . . . . . . . $ 1,508
Interest . . . . . . . . . . . . . . . . . 802
________
Total income . . . . . . . . . . . . . . . . 2,310
________
Expenses
Investment management. . . . . . . . . . . 2,109
Custody and accounting . . . . . . . . . . 159
Prospectus and shareholder reports . . . . 99
Legal and auditing . . . . . . . . . . . . 54
Proxy and annual meeting . . . . . . . . . 47
Shareholder servicing. . . . . . . . . . . 38
Directors. . . . . . . . . . . . . . . . . 16
Registrations. . . . . . . . . . . . . . . 2
Miscellaneous. . . . . . . . . . . . . . . 65
________
Total expenses . . . . . . . . . . . . . . 2,589
________
Net investment loss. . . . . . . . . . . . . (279)
________
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Securities . . . . . . . . . . . . . . . . (14,644)
Foreign currency transactions. . . . . . . 30
________
Net realized loss. . . . . . . . . . . . . (14,614)
________
Change in net unrealized gain or loss on:
Securities . . . . . . . . . . . . . . . . 13,093
Other assets and liabilities denominated in
foreign currencies . . . . . . . . . . . (4)
________
Change in net unrealized gain or loss. . . 13,089
________
Net realized and unrealized loss . . . . . . (1,525)
________
Decrease in Net Assets From Operations . . . $(1,804)
________
________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
The New Age Media Fund, Inc.
From
Oct. 13, 1993
(Commencement
Year Ended of Operations) to
Dec. 31, 1994 Dec. 31, 1993
_______________ _________________
(Amounts in thousands)
Increase (Decrease) in Net
Assets From
Operations
Net investment income
(loss) . . . . . . . . . . $ (279) $ 105
Net realized loss. . . . . . (14,614) (1,841)
Change in net unrealized gain
or loss. . . . . . . . . . 13,089 (3,781)
________ ________
Decrease in net assets from
operations . . . . . . . . (1,804) (5,517)
________ ________
Distributions to shareholders
Net investment income. . . . (111) -
________ ________
Capital share transactions1
Shares sold. . . . . . . . . - 208,328
________ ________
Increase (decrease) in net assets. . . . (1,915) 202,811
Net Assets
Beginning of period. . . . . . 202,911 100
________ ________
End of period. . . . . . . . . $200,996 $202,911
________ ________
________ ________
1Capital share transactions
(number of shares)
Shares sold. . . . . . . . . - 14,957
________ ________
________ ________
The accompanying notes are an integral part of these financial statements.
__________________________________________________________________________
Notes to Financial Statements
The New Age Media Fund, Inc. / December 31, 1994
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 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, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using 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) Currency translation - Assets and liabilities are converted into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses.
C) 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 and may differ from those determined in accordance with
generally accepted accounting principles.
Note 2 - Investment Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $269,388,000 and $233,860,000, respectively,
for the year ended December 31, 1994.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The Fund has unused realized capital loss carryforwards
for federal income tax purposes of $16,485,000 of which $228,000 expire in
2001 and $16,257,000 in 2002. The Fund intends to retain gains realized in
future periods that may be offset by available capital loss carryforwards.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $275,000 of
undistributed net investment income and $30,000 of undistributed net realized
gains were reclassified as a $245,000 decrease to paid-in-capital
during the year ended December 31, 1994. The results of operations and net
assets were not affected by the reclassifications.
At December 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $193,702,000 and net
unrealized gain aggregated $9,308,000, of which $15,391,000 related to
appreciated investments and $6,083,000 to depreciated investments.
Note 4 - 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, of which $182,000 was payable at December
31, 1994. The fee is computed weekly and paid monthly at the annual rate of
1.10% of the Fund's weekly net assets.
The Manager and its subsidiaries, under separate agreements with the
Fund, are 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. The Fund incurred expenses
pursuant to these related party agreements totaling approximately $84,000 for
the year ended December 31, 1994, of which $21,000 was payable at year-end.
Financial Highlights
The New Age Media Fund, Inc.
For a share outstanding
throughout each period
________________________________
From
Oct. 13, 1993
(Commencement
Year Ended of Operations) to
Dec. 31, 1994 Dec. 31, 1993
____________ _________________
NET ASSET VALUE, BEGINNING OF
PERIOD . . . . . . . . . . . $ 13.57 $13.93
Investment Activities
Net investment income
(loss) . . . . . . . . . . (0.01) 0.01
Net realized and unrealized gain
(loss) . . . . . . . . . . (0.11) (0.37)
________ ________
Total from Investment
Activities . . . . . . . . (0.12) (0.36)
________ ________
Distributions
Net investment income. . . . (0.01) -
________ ________
Total Distributions. . . . . (0.01) -
________ ________
NET ASSET VALUE, END OF
PERIOD . . . . . . . . . . . $ 13.44 $13.57
________ ________
________ ________
PER-SHARE MARKET VALUE, END
OF PERIOD. . . . . . . . . . $ 10.75 $13.38
________ ________
________ ________
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . (0.9)% (2.6)%
Ratio of Expenses to Average Net
Assets . . . . . . . . . . . 1.35% 1.30%!
Ratio of Net Investment Income to
Average Net Assets . . . . . (0.15)% 0.24%!
Portfolio Turnover Rate. . . . 133.9% 58.7%!
Net Assets, End of Period
(in thousands) . . . . . . . $200,996 $202,911
!Annualized.
Report of Independent Accountants
To the Board of Directors and Shareholders 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, 1994, and the results of its
operations, the changes in its net assets and the selected per share data and
information for each of the fiscal periods presented, 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 audits. We conducted our audits 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 audits, which included
confirmation of securities at December 31, 1994 by correspondence with
custodians and brokers and, where appropriate, the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 19, 1995
Chart 1 - Sector Diversification
Pie chart for New Age Media Fund annual report (Dec. 31, 1994) entitled
"Sector Diversification": shows Content Providers 28.8%, Distribution 13.8%,
Technology Enablers 18.3%, International 26.3%.
