Letter from the Fund Administrator

July 1st, 2003

I am extremely pleased to inform you that this has once again been a banner year for the Film Musicians Secondary Markets Fund (FMSMF) with collections reaching an all-time high in excess of $64 million (including interest). This represents an increase of more than $5.4 million over the prior year’s collections.

While for past years I have reported massive changes and enhancements to the Fund’s operation, this year has been one of further developing and refining those items. Certainly, there have been some significant changes. The name change from Theatrical and Television Motion Picture Special Payments Fund to the Film Musicians Secondary Markets Fund which more accurately reflects the true nature of the Fund has been one such change, and has done a great deal to help belie misconceptions about the Fund to both current and potential employers.

The Fund also lobbied heavily at the 2002 Motion Picture Negotiation to modify the collective bargaining agreement to allow the inclusion of musicians whose performances on phonograph records were utilized in motion pictures but who never received an AFM new-use payment for such use. By making this change, numerous phonograph musicians who have been unfairly denied their rightful participation in the FMSMF are now receiving payments from the Fund.

The Fund staff has worked extremely hard over the past year to enhance the efficiency of the Fund’s operations with the long-term goals of both maximizing the dollars coming in and minimizing administrative costs.

One of the most significant factors adding to this increase was last year’s decision to bring the computer system completely “in-house.” I am very happy to report that as a result, we have completely revamped our computer department. The results have not only met our needs, but have actually significantly surpassed our expectations.

The further development of this system has become one of the major objectives of the Fund and no doubt will become the cornerstone of the Fund’s operation for many years to come.

Included among the other accomplishments since last year’s disbursal are:

· Continued enhancement of the Fund’s Web site where online access to annual statements, and the update/modify capability to direct deposit, beneficiary, address, tax profile, and other important information is fully operational via the “Participant Private Area.”

· An online quarterly newsletter to keep participants informed as to what’s new at the Fund.

· The ability to send group e-mails, to our participants, as a way of effectively communicating relevant information at a moment’s notice in a quick and efficient way.

· Continued to streamline and increase efficiency of the Fund’s Compliance/Agreed Upon Procedures (auditing) process.

· Upgrade systems equipment and develop staff in the IT department to maximize support and minimize expense for the Participants.

· Implemented new policies: Allowing for beneficiaries of beneficiaries and the inclusion of phonograph (new-use musicians) as participants who were entitled to payments but who did not actually receive new-use payments qualifying them for participation in specific films.

I must also add that none of this would be possible without the superlative effort of a dedicated and dynamic staff, for which I am extremely grateful.

Financial Summary

Fiscal Year Ended
3/31/2003

Fiscal Year Ended
3/31/2002

Contribution available for distribution

$ 63,674,338

$ 57,651,577

Interest earned

759,534

1,495,639

Prior year's unclaimed distributions

1,009,009

821,621

Subtotal

$ 65,442,881

$ 59,968,837

Cash expenditures

(4,560,759)

(4,175,378)

Employer's share of payroll taxes

(3,950,000)

(4,000,000)

Reserve for omissions

*(1,907,488)

(123,951)

Subtotal

(10,418,247)

(8,299,329)

Distribution amount

$ 55,024,634

$ 51,669,508

*Note: In addition to this amount, a balance of $92,512 is carried over from amounts not distributed from the prior omission reserve: $750,000. This leaves a total of $2,000,000 for omissions this year.

The Fund is here to serve you. Please feel free to contact us directly at (818) 755-7777 and ask for the Research Dept. Better yet, continue to utilize the Fund’s Web site at www.fmsmf.org or www.mpspf.org to search for a particular film title (in order to determine whether contributions have been paid or are required to be paid for that title), download the “Motion Picture Master List,” or submit an “Inquiry Form” to report a film omission online.

If you already haven’t signed up for access to the “Participant’s Private Area,” we strongly urge you to do so. The Private Area (which is secured) allows you to view and download your personal statements from this or prior year(s), modify your address, beneficiary designation, direct deposit, or tax withholding information.

Watch this section for new enhancements as the Fund continues to increase its services to the participants.

Wishing you continued success.

Sincerely,
Dennis Dreith
Fund Administrator

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*July 1st, 2003* I am extremely pleased to inform you that this has once again been a banner year for the Film Musicians Secondary Markets Fund (FMSMF) with collections reaching an all-time high in excess of $64 million (including interest). This represents an increase of more than $5.4 million over the prior year’s collections. While for past years I have reported massive changes and enhancements to the Fund’s operation, this year has been one of further developing and refining those items. Certainly, there have been some significant changes. The name change from Theatrical and Television Motion Picture Special Payments Fund to the Film Musicians Secondary Markets Fund which more accurately reflects the true nature of the Fund has been one such change, and has done a great deal to help belie misconceptions about the Fund to both current and potential employers. The Fund also lobbied heavily at the 2002 Motion Picture Negotiation to modify the collective bargaining agreement to allow the inclusion of musicians whose performances on phonograph records were utilized in motion pictures but who never received an AFM new-use payment for such use. By making this change, numerous phonograph musicians who have been unfairly denied their rightful participation in the FMSMF are now receiving payments from the Fund. The Fund staff has worked extremely hard over the past year to enhance the efficiency of the Fund’s operations with the long-term goals of both maximizing the dollars coming in and minimizing administrative costs. One of the most significant factors adding to this increase was last year’s decision to bring the computer system completely “in-house.” I am very happy to report that as a result, we have completely revamped our computer department. The results have not only met our needs, but have actually significantly surpassed our expectations. The further development of this system has become one of the major objectives of the Fund and no doubt will become the cornerstone of the Fund’s operation for many years to come. Included among the other accomplishments since last year’s disbursal are: · Continued enhancement of the Fund’s Web site where online access to annual statements, and the update/modify capability to direct deposit, beneficiary, address, tax profile, and other important information is fully operational via the “Participant Private Area.” · An online quarterly newsletter to keep participants informed as to what’s new at the Fund. · The ability to send group e-mails, to our participants, as a way of effectively communicating relevant information at a moment’s notice in a quick and efficient way. · Continued to streamline and increase efficiency of the Fund’s Compliance/Agreed Upon Procedures (auditing) process. · Upgrade systems equipment and develop staff in the IT department to maximize support and minimize expense for the Participants. · Implemented new policies: Allowing for beneficiaries of beneficiaries and the inclusion of phonograph (new-use musicians) as participants who were entitled to payments but who did not actually receive new-use payments qualifying them for participation in specific films. I must also add that none of this would be possible without the superlative effort of a dedicated and dynamic staff, for which I am extremely grateful.
Financial Summary
	Fiscal Year Ended 3/31/2003	Fiscal Year Ended 3/31/2002
Contribution available for distribution	$ 63,674,338	$ 57,651,577
Interest earned	759,534	1,495,639
Prior year's unclaimed distributions	1,009,009	821,621
Subtotal	$ 65,442,881	$ 59,968,837
Cash expenditures	(4,560,759)	(4,175,378)
Employer's share of payroll taxes	(3,950,000)	(4,000,000)
Reserve for omissions	*(1,907,488)	(123,951)
Subtotal	(10,418,247)	(8,299,329)
Distribution amount	$ 55,024,634	$ 51,669,508
*Note: In addition to this amount, a balance of $92,512 is carried over from amounts not distributed from the prior omission reserve: $750,000. This leaves a total of $2,000,000 for omissions this year.
The Fund is here to serve you. Please feel free to contact us directly at (818) 755-7777 and ask for the Research Dept. Better yet, continue to utilize the Fund’s Web site at www.fmsmf.org or www.mpspf.org to search for a particular film title (in order to determine whether contributions have been paid or are required to be paid for that title), download the “Motion Picture Master List,” or submit an “Inquiry Form” to report a film omission online. If you already haven’t signed up for access to the “Participant’s Private Area,” we strongly urge you to do so. The Private Area (which is secured) allows you to view and download your personal statements from this or prior year(s), modify your address, beneficiary designation, direct deposit, or tax withholding information. Watch this section for new enhancements as the Fund continues to increase its services to the participants. Wishing you continued success. Sincerely, Dennis Dreith Fund Administrator

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