Dear Participating Musician/Beneficiary,

I am extremely pleased to inform you that the Film Musicians Secondary Markets Fund (FMSMF) has again experienced tremendous growth with collections reaching an all-time high in excess of $74 million (including interest). This represents an increase of more than $8.9 million (or approximately 13.6%) over the prior year’s collections. Clearly, the explosion of the DVD market has had an extremely positive effect on the Fund. It is interesting to note that between 2002 and 2004 the motion picture industry had a 14.8% growth. During this same period of time, however, the Fund grew by an incredible 27.9%! This unquestionably is due to several factors. Obviously, the growth of DVD sales alone cannot begin to account for this increase. Rather, a greater penetration in the market (i.e. more independent pictures choosing to score under AFM jurisdiction), more aggressive collection efforts on the part of the Fund and the settlement of outstanding claims in addition to increased market activity are all factors contributing to the Fund’s impressive growth over the past few years.

The Fund has continued to refine its operation with the goal to better serve the Participants. One of the more significant initiatives this past year has been the complete overhaul of our website. While functional, the old website had a number of navigational issues and was in need of a “facelift.” With this in mind, the Fund engaged the services of “ad2,” a highly respected web design firm. Due to a long-standing relationship with that company and the fact that we were able to commit to multiple projects, we were able to negotiate an extremely favorable rate. The end result is a completely updated website that not only has a “new” look, but is also much easier to navigate and boasts a number of new features. One such new feature is a listing of all those Participants for whom we may be holding payments but have not been able to locate.

Please take a few minutes to explore our new site where you can search for a particular film title (in order to determine whether contributions have been paid or required to be paid for that title), download the “Motion Picture Master List,” submit an “Inquiry Form” to report a film omission online. If you haven’t already done so, please consider registering for “Private Area” access, where you can view and download your personal statements from this or prior year(s), modify your address, beneficiary designation, direct deposit, or tax withholding information and more.

In addition, building on the past decision to bring the computer system completely “in-house,” this year we initiated plans to expand the Computer Department, creating in essence, two departments; one for software development and one to manage the Fund’s hardware requirements. I am happy to report that while this was not something that was accomplished during fiscal year 2004, this became a reality effective April 1, 2004, with the commencement of the new fiscal year. The positive benefits of this have already been realized beyond our expectations, and will no doubt be one of the major accomplishments of the new fiscal year.

As a result of the modification made to the collective bargaining agreement at the 2002 Motion Picture Negotiation, numerous musicians whose performances on phonograph records were utilized in motion pictures but who never received an AFM new use payment for such use, are now receiving payments from the Fund. Due to this, the “Omission Fund” which is set aside to pay anyone left off the regular distribution is again much larger this year to account for the inclusion of those musicians.

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

*Note: In addition to this amount, a balance of $267,435 is carried over from amounts not distributed from the prior omission reserve: $2,000,000. This leaves a total of $2,000,000 for omissions this year-September 2004.

Enclosed in the Fund’s most recent mailing was:

• A check (or Direct Deposit verification) for your portion of the annual disbursal.
• Your individual Participant’s Statement.
• The “Motion Picture Master List” to cross-check your statement against all motion pictures paying into the Fund during this fiscal year period (April 1, 2003–March 31, 2004).
• An “Inquiry Form” and a Postage-Paid return envelope to report any new or previously unreported film-related inquiries or other changes you would like the Fund to be aware of.
• For the first time this year, we are also enclosed a Direct Deposit Form, which can also be obtained via the website.
• A new website flyer.

Please note that the check enclosed with that mailing is valid for a period of 90 days from the issue date (July 1, 2004), and cannot be cashed beyond that time.

The Fund is here to serve you. Please feel free to contact us directly at (818) 755-7777, and ask for the Research Department, or better yet, you may utilize the Fund’s website for this purpose.

Wishing you continued success.

Sincerely,

Dennis Dreith
Fund Administrator

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