New Age Media Fund
Annual Report
December 31, 1996
Fellow Shareholders
Fellow Shareholders
New Age Media stocks posted weak results during the last six
months. Technology and international holdings were strong, while
content and distribution holdings were poor performers.
For the second half of 1996, the fund produced a 4.5% loss
based on net asset value and a 3.1% gain on its stock price. The
general market, represented by the Standard & Poor's 500 Stock
Index, rose 11.7% on a total return basis during the same period.
The discount between the fund's net asset value and the price of
the New Age Media Fund as quoted on the New York Stock Exchange
decreased from 20.5% to 17%. A $3.09 capital gain distribution
($1.59 of which was short-term), equivalent to approximately 17% of
net asset value, was declared and paid in December. As a result,
the net asset and stock values closed at $15.22 and $12.63,
respectively. The distribution was made in accordance with the
Internal Revenue Service Code and was the result of profit-taking
on selected holdings throughout the year. We regard the size of the
distribution as unusually large.
The fund's net asset value gain for the year was 1.8%, and its
return based on share price was 5.7%.
Performance Comparison
Periods Ended December 31, 1996
6 Months 12 Months
__________ __________
New Age Media Fund
Based on NAV* - 4.54% 1.78%
Based on NYSE Share Price* 3.08 5.65
S&P 500 11.68 22.96
* Total Return
Market Environment
For the U.S. stock market, 1996 was a surprisingly strong year in
which equities had seemingly everything working in their favor. The
investment environment was benign with stable interest rates,
minimal inflation, and solid corporate profit growth. Demand for
stocks was enhanced by record merger and acquisition activity,
large share repurchases by U.S. corporations, record mutual fund
inflows, and minimal returns from most fixed income investments.
After declining in midsummer, most domestic stock groups rebounded
strongly in the second half of the year. Although most sectors
benefited from the turn, large-capitalization stocks, especially
those of blue chip companies, tended to outperform smaller-cap
shares as investors sought safety and liquidity.
The performance of New Age Media stocks was mostly poor in the
second half. Technology enablers rebounded sharply after a
midsummer rout to provide the lone bright spot in terms of
fundamental and stock performance. The content sector posted
lackluster results due to factors such as fundamental softness and
concerns about the immediacy of benefits from the entertainment
megadeals of 1995. After a strong first half fueled by speculation
about the rewards of telecommunications reform legislation, the
performance of the distribution sector was weak. Investor focus
shifted from optimism about the opportunities created by
deregulation to concerns about the final details of the legislation
and the ultimate impact of increased competition on incumbent
service providers.
For the whole of 1996, New Age Media sectors produced widely
divergent results with technology sectors such as semiconductors,
computers, and software ranking among the best-performing groups,
while cable and broadcasting, entertainment, and communications
technology were among the worst-performing.
Merger and acquisition activity, especially among large
telecommunications companies, and the strong rebound in technology
stocks were the major developments for fund stocks during the past
six months. The passage of telecommunications reform legislation in
early 1996 created the opportunity and strategic need for large
acquisitions by distribution companies. The broadcast companies
started this process in earnest in mid-1996, only to be followed by
huge communications deals such as the proposed acquisitions of
Pacific Telesis by SBC Communications (formerly Southwestern Bell),
MCI by British Telecom, and MFS by World Comm. Investor enthusiasm
for many of these mergers was cooled by uncertainties about
approvals from the Federal Trade Commission. This was especially
true in the broadcast sector, where significant stock appreciation
in the first half was often erased in the second. The stocks of
content providers generally lagged the broader market due to
uninspiring fundamental performances.
Portfolio Review
Our investment approach continues to focus on secular themes as
guides in the investment process and also on individual company
analysis in stock selection. In pursuing secular opportunities, we
continually reassess our expectations against changes in
fundamentals, government regulation, and the ability of companies
to secure attractive financing. The themes we attempt to exploit
include:
o The increased use of wireless distribution systems for voice,
video, and data transmission, which should be favorable for
holdings such as PanAmSat, Pegasus Communications, and
Omnipoint.
o The growth in electronic commerce, which should benefit First
Data, Intuit, and Sterling Commerce.
o The global demand for quality entertainment, which should drive
demand for products from Disney and Time Warner.
o The increasing pervasiveness of technology in communications and
entertainment, which should benefit Analog Devices, Maxim
Integrated Products, and Xilinx.
o Growth in networked communications infrastructure, which should
continue to drive demand for products from Ascend
Communications, 3Com, and Security Dynamics Technology.
Sector Diversification
December 31, 1996
Chart 1 - Sector Diversification
The fund's concentration in a limited number of industries makes
its performance more volatile than the overall stock market. Since
volatility works both ways, we attempt to use it to take profits
and also to initiate new investments.
We adjusted the portfolio's sector diversification modestly in
the second half. The percentage of assets invested in the content
sector increased from 23% at the end of June to 27% at year-end.
Distribution stocks fell from 32% of assets to 27%. Technology
enablers went from 17% to 22% of assets as the technology sector
continued to be a significant source of strength for both the fund
and the overall market. International investments remained at 20%
of assets, while reserves decreased from 7% of assets to 1% during
the six-month period. We did not make any additional private
company investments during the second half of 1996.
Media and entertainment holdings declined modestly as a
percentage of assets. We reduced positions in the combined Time
Warner/Turner Broadcasting company and eliminated shares in Viacom.
We attempted to use share price weakness to increase our exposure
to information-related companies with superior growth prospects.
New positions include Sterling Commerce, a leader in electronic
commerce software and services, and Electronic Data Systems, a
major provider of computer consulting services.
The distribution sector of the fund underwent change during the
second half of 1996. Positions were eliminated or reduced in a
number of wireless communications holdings due to concerns about
fundamentals and the ability to secure financing on attractive
terms. We eliminated positions in Echostar and Air Touch
Communications and reduced our holdings of Centennial Cellular and
Wireless One. We reestablished positions on price weakness in AT&T,
the leading U.S. long distance provider, and American Radio
Systems, a major consolidator of radio stations. New holdings
include Smartalk Teleservices, a provider of prepaid telephone
cards, and Pegasus Communications, a provider of direct television
broadcast services in rural markets.
Technology enablers continued to be strong contributors to
performance. We took advantage of the summer correction in
technology stocks to increase positions in 3Com, a network systems
provider, and Maxim Integrated Products, a programmable
semiconductor manufacturer. New positions were initiated later in
the second half in BMC Software and Oracle, two leading business
software companies. Positions were eliminated in Bay Networks and
Informix due to weak fundamental prospects.
Open-End Proposal Approved
As you know, there has been a persistent discount between the
fund's net asset value and its share price on the New York Stock
Exchange, a problem that has affected many closed-end funds during
the past few years. A share repurchase program authorized by your
fund's Board of Directors has not been successful in reducing this
discount. Consequently, after careful consideration, the Board
approved a proposal to open-end the fund, subject to approval of
shareholders at the fund's annual meeting later this year. The
Board believed that open-ending the fund would enable stockholders
to realize the full value of their investment.
As of February 11, 1997, the stock price was $12.37, an 18%
discount to the net asset value of $15.09 per share. At the close
of trading on February 12, following the announcement of the
Board's action, the discount narrowed to 4.7%. Pending necessary
approval, the fund would be renamed the T. Rowe Price New Age Media
Fund and become part of the T. Rowe Price family of no-load funds,
offering investors all the benefits and services associated with
them.
International holdings increased modestly during the second half
of 1996. We reduced wireless communications holdings such as
Vodafone, Cellular Communications International, and Grupo
Iusacell. New investments included Getty Communications, a provider
of stock photographs and film footage. The international sector
remains a significant growth area but is subject to volatility from
outside sources. We continue to seek wealth-building opportunities
based on individ-ual company prospects and market-specific
developments.
The fund experienced mixed results in most sectors in the second
half, with technology enablers and international holdings being the
major net contributors to positive results. The technology sector
included major performers such as 3Com, Maxim Integrated Products,
and Xilinx but also contained laggards such as Shiva and Intuit.
Contributions by international holdings such as Flextech, Central
European Media, and Getty Communications were offset by declines in
holdings such as Scandinavian Broadcasting and Toolex Alpha, both
of which suffered from weakness. Content holdings also turned in
mixed results, with gains in Sterling Commerce offset by declines
in Gaylord Entertainment and Premenos Technology. Distribution
holdings were the major laggards with declines in wireless
communications holdings Centennial Cellular, Intercel, Omnipoint,
and Sinclair Broadcasting, which failed to meet fundamental
expectations.
Investment Outlook
Fund performance is driven more by developments specific to the
media industry than by overall market valuations and trends. The
sentiment surrounding New Age Media stocks and their relative
performance has vacillated between extreme optimism and pessimism
over the last few years. The euphoria of 1993 turned into the
negativism of 1994, which in turn was followed by the recovery of
1995.
The current sentiment toward many fund sectors is pessimistic
and lacks the speculative nature and complacency of 1993. After
numerous false starts, the essential building blocks for New Age
Media stocks started to move tangibly into place in 1996.
Telecommunications reform legislation was finally enacted. Merger
and acquisition activity was once again surprising in its scale and
pace, and equipment for advanced services started to move beyond
field trials and into limited commercial deployment. While these
developments are positive for the deployment of advanced voice,
video, and data services, they also create uncertainties about
which competitors and services will emerge as fundamental and
financial winners.
The outlook for our holdings in 1997 contains both promise and
uncertainty. The promise lies in the first commercial launches of
advanced services, the uncertainty in the gradual nature of these
launches, and the long-term impact of the new services on incumbent
providers. As is often the case with major athletic events, the
contestants (both companies and investors in this case) are
experiencing jitters as the real action finally starts. Investors
dislike uncertainty, regardless of long-term prospects, which was
clearly evident in the second half of 1996. While we are
disappointed with the near-term performance of the sector and the
fund, we remain optimistic about the long-term, wealth-building
opportunities and our ability to exploit them.
From a portfolio management standpoint, we have lessened
exposure to companies that depend on external sources of capital to
fund growth plans and increased exposure to companies with more
visible near- to intermediate-term prospects.
Brian D. Stansky will assume day-to-day management of the fund
in his new role as Chairman of the Investment Advisory Committee,
and John D. Gillespie will remain President of the New Age Media
Fund. Mr. Stansky, who is a Chartered Financial Analyst, joined T.
Rowe Price in 1989 and has been a member of the fund's Investment
Advisory Committee since 1995.
We once again would like to thank you for your support and
reaffirm our commitment to seizing long-term opportunities on your
behalf.
Respectfully submitted,
John D. Gillespie
President
Brian D. Stansky
Chairman of the
Investment Advisory Committee
February 12, 1997
Portfolio Highlights
New Age Media Fund, Inc. / December 31, 1996
Key Statistics
Six months ended December 31, 1996
Change in NAV ($19.18 to $15.22) -$3.96
Change in NYSE
Share Price ($15.25 to $12.63) - 2.62
________________________________________________________________
Total Net Assets (Millions) $222.6
Ten Largest Holdings
Percent of
Company Net Assets
________________________________________ __________
Flextech 3.1%
Getty Communications 2.7
3Com 2.6
Gaylord Entertainment 2.6
PanAmSat 2.5
Sterling Commerce 2.4
Maxim Integrated Products 2.2
CUC International 2.2
Central European Media 2.2
Xilinx 2.1
____________________________________________________________
Total 24.6%
Security Classification
Percent of Value
Net Assets (000)
__________ ________
Common Stocks 97.1% $216,053
Preferred Stocks 1.7 3,831
Short-Term Investments 1.7 3,736
______ ________
Total Investments 100.5 223,620
Other Assets Less Liabilities -0.5 -1,064
____________________________________________________________
Net Assets 100.0% $222,556
Average Annual
Compound Total Return
This table shows how the fund would have performed each year if its
actual (or cumulative) returns for the periods shown had been
earned at a constant rate.
Since Inception
1 Year 10/13/93
________ ______________
Periods Ended 12/31/96 5.65% 13.17%
Investment return and principal value represent past performance
and will vary. Shares may be worth more or less at redemption than
at original purchase. Returns are based on net asset value for the
periods presented.
Performance Comparison
This chart shows the value of a hypothetical $10,000 invest-
ment in the fund over the past 10 fiscal year periods or since
inception (for funds lacking 10-year records). The result is
compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted
from the fund's return.
Chart 2 - Performance Comparison
Financial Highlights
New Age Media Fund
For a share outstanding throughout each period
----------------------------------------------
10/13/93
Year Ended to
12/31/96 12/31/95 12/31/94 12/31/93
_________ ___________________________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . $17.99 $13.44 $13.57
$13.93
______ ______ ______
______
Investment activities
Net investment
income. . . . . . . . . (0.11) (0.04) (0.01)0.01
Net realized and
unrealized gain
(loss). . . . . . . . . 0.36 5.79 (0.11)(0.37)
______ ______ ______
______
Total from investment
activities. . . . . . . 0.25 5.75 (0.12)(0.36)
______ ______ ______
______
Distributions
Net investment
income. . . . . . . . . - (0.07) (0.01)-
Net realized gain . . . (3.09) (1.13) --
______ ______ ______
______
Total distributions . . (3.09) (1.20) (0.01)-
______ ______ ______
______
Total from share
repurchases. . . . . . . 0.07 - --
______ ______ ______
______
NET ASSET VALUE,
END OF PERIOD. . . . . . $15.22 $17.99 $13.44
$13.57
______ ______ ______
______
______ ______ ______
______
MARKET VALUE,
END OF PERIOD. . . . . . $12.63 $14.88 $10.75
$13.38
______ ______ ______
______
______ ______ ______
______
Total investment return
Per share market
value . . . . . . . . . 5.65% 49.26% (19.57)%(10.80)%
Per share net
asset value . . . . . . 1.78% 43.30% (0.88)%(2.58)%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses
to average net assets. . 1.22% 1.25% 1.35%
1.30%. . . . . . . . . !
Ratio of net investment income
to average net assets. . (0.55)% (0.25)% (0.15)%0.24%!
Portfolio turnover
rate . . . . . . . . . . 102.9% 118.9% 133.9%
58.7%. . . . . . . . . !
Average commission rate
paid . . . . . . . . . . $0.1057 - --
Net assets, end of period
(in thousands) . . . . . $222,556 $268,782$200,996
$202,911
! Annualized.
The accompanying notes are an integral part of these financial
statements.
Statement of Net Assets (Values in thousands)
New Age Media Fund, Inc. / December 31, 1996
Shares/Par Value
_____________ __________
Common Stocks and Warrants - 97.1%
Content - 27.4%
A. H. Belo (Class A) . . . . . . 50,000 $1,744
America Online * . . . . . . . . 115,000 3,824
CUC International *. . . . . . . 205,000 4,869
Disney . . . . . . . . . . . . . 50,000 3,481
DST Systems *. . . . . . . . . . 45,400 1,424
Electronic Data Systems. . . . . 70,000 3,027
First Data . . . . . . . . . . . 125,000 4,562
Gaylord Entertainment. . . . . . 250,000 5,719
Golden Books Family
Entertainment *. . . . . . . . . 125,000 1,375
Houghton Mifflin . . . . . . . . 22,300 1,263
New York Times (Class A) . . . . 85,000 3,230
Platinum Entertainment * . . . . 100,000 763
Premenos Technology *. . . . . . 150,000 1,275
Premiere Radio Networks
(Class A) * !. . . . . . . . . . 210,000 2,612
Reader's Digest (Class A)* . . . 75,000 3,019
SABRE Group Holdings * . . . . . 100,000 2,788
Scholastic * . . . . . . . . . . 50,000 3,344
Sterling Commerce *. . . . . . . 150,000 5,287
TeleCommunications * . . . . . . 125,000 3,570
Time Warner. . . . . . . . . . . 100,000 3,750
Total Content 60,926
Distribution - 27.4%
Aerial Communications *. . . . . 350,000 2,800
American Radio Systems (Class A) * 100,0002,725
AT&T . . . . . . . . . . . . . . 100,000 4,350
BHC Communications (Class A) * . 30,000 3,041
Centennial Cellular (Class A) *. 300,000 3,619
Comcast (Class A Special). . . . 150,000 2,672
Communications Broadband, warrants,
9/23/04 *. . . . . . . . . . . . 335,731 0
Cox Communications (Class A) * . 175,000 4,047
Intercel * . . . . . . . . . . . 154,500 1,873
Jacor Communications * . . . . . 125,000 3,430
Lamar Advertising *. . . . . . . 80,000 1,900
Metro Networks * . . . . . . . . 130,000 3,266
Omnipoint *. . . . . . . . . . . 163,400 3,135
Outdoor Systems* . . . . . . . . 120,000 3,405
PanAmSat * . . . . . . . . . . . 200,000 5,625
Pegasus Communications * . . . . 250,000 3,375
Renaissance Communications * . . 100,000 3,575
Sinclair Broadcast Group
(Class A) *. . . . . . . . . . . 75,000 1,969
SmarTalk TeleServices *. . . . . 250,000 4,344
Universal Outdoor Holdings * . . 50,000 $1,163
Wireless One * . . . . . . . . . 111,600 753
Total Distribution 61,067
Technology - 22.2%
3Com * . . . . . . . . . . . . . 80,000 5,865
Adobe Systems. . . . . . . . . . 80,000 2,995
Analog Devices * . . . . . . . . 100,000 3,387
Ascend Communications *. . . . . 45,000 2,796
BMC Software * . . . . . . . . . 75,000 3,117
Cascade Communications * . . . . 40,000 2,210
Cisco Systems *. . . . . . . . . 70,000 4,458
FORE Systems * . . . . . . . . . 80,000 2,635
Intuit * . . . . . . . . . . . . 75,000 2,381
Macromedia * . . . . . . . . . . 152,000 2,755
Maxim Integrated Products *. . . 115,000 4,981
Oracle * . . . . . . . . . . . . 50,000 2,084
Security Dynamics Technologies * 50,000 1,572
Shiva *. . . . . . . . . . . . . 100,000 3,475
Xilinx * . . . . . . . . . . . . 125,000 4,602
Total Technology 49,313
International - 20.1%
Cellular Communications
International *. . . . . . . . . 150,000 4,312
Central European Media Enterprises
Limited (Class A) *. . . . . . . 152,500 4,804
FlexTech (GBP) * . . . . . . . . 600,000 6,928
Getty Communications ADS * . . . 400,000 5,900
Grupo Iusacell, Series D ADR * . 298,600 1,717
Grupo Televisa ADR * . . . . . . 100,000 2,563
LM Ericsson (Class B) ADR. . . . 150,000 4,528
Metromedia International * . . . 175,000 1,728
Reuters ADR. . . . . . . . . . . 20,000 1,533
Scandinavian Broadcasting System * 175,0002,986
Toolex Alpha * . . . . . . . . . 133,000 1,388
United International Holdings
(Class A) *. . . . . . . . . . . 239,000 2,883
Vodafone ADR . . . . . . . . . . 75,000 3,103
Xeikon ADR *#. . . . . . . . . . 61,850 374
Total International 44,747
Total Common Stocks and Warrants
(Cost $190,720)
216,053
Preferred Stocks - 0.3%
Crystal Dynamics, Series D * . . 166,667 625
Total Preferred Stocks
(Cost $1,250) 625
Convertible Preferred Stocks - 1.4%
Celcore, Series C *! . . . . . . 250,000 $1,500
Communications Broadband,
Series C * . . . . . . . . . . . 1,000,000 0
Golden Books Financing Trust . . 30,000 1,706
Total Convertible Preferred Stocks
(Cost $5,010) 3,206
Short-Term Investments - 1.7%
Discount Notes - 1.7%
Federal Home Loan Mortgage,
5.40%, 1/2/97. . . . . . . . . . $ 747,000 747
Federal National Mortgage Assn.,
5.51%, 1/24/97 . . . . . . . . . 3,000,000 2,989
Total Short-Term Investments
(Cost $3,736) 3,736
Total Investments in Securities - 100.5%
of Net Assets (Cost $200,716) $
223,620
Other Assets Less Liabilities. .
(1,064 . . . . . . . . . . . . .)
__________
NET ASSETS . . . . . . . . . . . $
222,556
__________
__________
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions . . . . . . $
(3,424)
Net unrealized gain (loss) . . . 22,904
Paid-in-capital applicable to
14,626,666 shares of $0.0001 par value
capital stock outstanding; 1,000,000,000
shares authorized. . . . . . . .
203,076
__________
NET ASSETS . . . . . . . . . . . $
222,556
__________
__________
NET ASSET VALUE PER SHARE. . . . $15.22
__________
__________
* Non-income producing
! Affiliated company
# Securities contain some restrictions as to public resale-total
of such securities at year-end amounts to 0.17% of net assets.
GBP British sterling
The accompanying notes are an integral part of these financial
statements.
Statement of Operations
New Age Media Fund
In thousands
Year
Ended
12/31/96
__________
Investment Income
Income
Interest . . . . . . . . . . . . . . . . . $1,198
Dividend (net of foreign taxes of $53) . . 677
________
Total income . . . . . . . . . . . . . . . 1,875
________
Expenses
Investment management. . . . . . . . . . . 3,056
Custody and accounting . . . . . . . . . . 138
Shareholder servicing. . . . . . . . . . . 45
Legal and audit. . . . . . . . . . . . . . 44
Proxy and annual meeting . . . . . . . . . 40
Registration . . . . . . . . . . . . . . . 24
Directors. . . . . . . . . . . . . . . . . 14
Prospectus and shareholder reports . . . . 4
Miscellaneous. . . . . . . . . . . . . . . 45
________
Total expenses . . . . . . . . . . . . . . 3,410
________
Net investment income. . . . . . . . . . . .
(1,535 . . . . . . . . . . . . . . . . . . )
________
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities . . . . . . . . . . . . . . . . 31,888
Foreign currency transactions. . . . . . . (25)
________
Net realized gain (loss) . . . . . . . . . 31,863
Change in net unrealized gain or loss on
securities . . . . . . . . . . . . . . . . .
(26,626. . . . . . . . . . . . . . . . . . )
________
Net realized and unrealized gain (loss). . . 5,237
________
Increase (Decrease) in Net Assets from
Operations . . . . . . . . . . . . . . . . . $3,702
________
________
The accompanying notes are an integral part of these financial
statements.
Statement of Changes in Net Assets
New Age Media Fund
In thousands
Year
Ended
12/31/96 12/31/95
__________ __________
Increase (Decrease) in Net Assets
Operations
Net investment income. . . . . . . $ (1,535) $(613)
Net realized gain (loss) . . . . . 31,863 46,409
Change in net unrealized
gain or loss . . . . . . . . . . . (26,626) 40,222
________
________
Increase (decrease) in net assets
from operations. . . . . . . . . . 3,702 86,018
________
________
Distributions to shareholders
Net investment income. . . . . . . -
(1,046 . . . . . . . . . . . . . . )
Net realized gain. . . . . . . . . (45,196)
(16,879. . . . . . . . . . . . . . )
________
________
Decrease in net assets from
distributions. . . . . . . . . . . (45,196)
(17,925. . . . . . . . . . . . . . )
________
________
Capital share transactions
Shares repurchased*. . . . . . . . (4,732) (307)
________
________
Increase (decrease) in net assets. . (46,226) 67,786
Net Assets
Beginning of period. . . . . . . . . 268,782
200,996
________
________
End of period. . . . . . . . . . . . $ 222,556 $
268,782
________
________
________
________
*Shares repurchased
Number of shares . . . . . . . . . (310) (20)
Weighted average discount from net
asset value per share. . . . . . . 17.97% 19.33%
The accompanying notes are an integral part of these financial
statements.
Notes To Financial Statements
New Age Media Fund, Inc. / December 31, 1996
Note 1 - Significant Accounting Policies
T. Rowe Price New Age Media Fund, Inc. (the fund) is registered
under the Investment Company Act of 1940 as a diversified,
closed-end management investment company and commenced operations
on October 13, 1993.
Valuation Equity securities listed or regularly traded on a
securities exchange are valued at the last quoted sales price at
the time 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.
Listed securities not traded on a particular day and securities
regularly traded in the over-the-counter market are valued at the
mean of the latest bid and asked prices. Other equity securities
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 amortized 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.
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.
Currency Translation Assets and liabilities are translated 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 and losses is reflected as a component of such gains
and losses.
Premiums and Discounts Premiums and discounts on debt securities
are amortized for both financial reporting and tax purposes.
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 the 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
securities, aggregated $261,664,000 and $315,304,000, respectively,
for the year ended December 31, 1996.
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.
In order for the fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions,
the following reclassifications were made during the year ended
December 31, 1996. The results of operations and net assets were
not affected by the reclassifications.
Undistributed net investment income $ 1,535,000
Undistributed net realized gain (1,497,000)
Paid-in-capital $ (38,000)
At December 31, 1996, the aggregate cost of investments for federal
income tax and financial reporting purposes was $200,716,000, and
net unrealized gain aggregated $22,904,000, of which $40,564,000
related to appreciated investments and $17,660,000 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 fee, of which $254,000 was payable
at December 31, 1996. 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 $68,000 for the year ended
December 31, 1996, of which $6,000 was payable at period-end.
During the year ended December 31, 1996, the fund, in the ordinary
course of business, paid commissions of $3,000 to, and placed
security purchase and sale orders aggregating $523,000 with,
certain affiliates of the manager in connection with the execution
of various portfolio transactions.
Note 5 - Share Repurchase Program
The Board has authorized the fund to repurchase its shares in the
open market. Repurchases will only be made when the fund's shares
are trading at less than net asset value and at such times and
amounts as are believed to be in the best interest of the fund's
shareholders. Any repurchase of shares has the effect of increasing
the net asset value per share of the remaining shares outstanding.
Note 6 - Subsequent Event (unaudited)
On February 12, 1997, the Board of Directors approved a plan to
convert the fund to an open-end management investment company. If
the necessary shareholder approval is received and the fund
converts to open-end status, outstanding fund shares would be
redeemable, and fund shares would be offered for sale, by the fund
on a continuous basis at per-share net asset value.
Report of Independent Accountants
To the Board of Directors and Shareholders of
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 financial highlights present fairly, in all material respects,
the financial position of New Age Media Fund, Inc. (the "Fund") at
December 31, 1996, and the results of its operations, the changes
in its net assets and the financial highlights for each of the
fiscal periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (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,
1996, by correspondence with the custodian 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 20, 1997
Summary of Dividend Reinvestment & Cash Purchase Plan
The Fund operates an optional Dividend Reinvestment & Cash Purchase
Plan (the "Plan") whereby:
a) shareholders may elect to receive dividend and capital gain
distributions in the form of additional shares of the Fund
(the Share Distribution Plan).
b) shareholders may make optional payments (any amount between
$100 and $3,000) which will be used to purchase additional
shares in the open market (the Share Purchase Plan).
For a copy of the Plan brochure, as well as a dividend reinvestment
authorization card, please contact:
1) State Street Bank & Trust Company (the Plan Agent):
P. O. Box 8200
Boston, Massachusetts
02266-8200
U.S.A.
Telephone No.: 800-426-5523 (toll free)
or
2) T. Rowe Price Services, Inc.
Telephone No.: 800-231-8432 (toll free)
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
Brian D. Stansky, Executive Vice President
Robert N. Gensler, Vice President
Lise J. Buyer, Vice President
Henry H. Hopkins, Vice President
John F. Wakeman, 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
RPRTNAF 12/31/96
<PAGE>
Chart 1 - Sector Diversification
Sector Diversification pie chart showing Content Providers 27.4%,
Distribution 27.4%, Technology Enablers 22.2%, International 20.1%,
Other and Reserves 2.9%
Chart 2 - Performance Comparison
A line chart showing the cumulativ e growth of $10,000 invested in
the New Age Media Fund from inception compared with $10,000
invested in a broad-based index or average over the same period.
