The essential problem that arises when developing hybrid excitation machines or alternators is the creation of advanced nanocomposite magnetic materials. The problem can be overcome by utilizing new nano-structured soft/permanent magnetic materials with the required magnetic, thermal and elastic properties. The real advance in this direction is the creation of new functional matrices and the use of novel principles for the fabrication of nano-sized incorporated elements. One of the possible ways to progress in this field is to utilize magnetic nano-particles in new matrices such as polyethylene and ceramics. The suitable properties of these materials, which would operate under such hazardous environmental conditions as high and low temperatures, mechanical shock, humidity, etc., as a result of the bonding or sintering of nano-particles will open up the possibility of using these materials as a part of the Army's hybrid excitation machines/alternators. The brittleness that limits the area of potential application of ceramics can be overcome by reducing the particle sizes to nano-meter levels. Beltran proposes to utilize magnetic materials in the form of nano-particles incorporated in thermostable polyethylene or ceramic matrices. The proposed concept should improve active control, increase the operating temperature and prevent aging. The main technical objectives of the Phase I effort are to develop a new approach to improve the magnetic, thermal, elastic and aging properties of permanent magnets. New methods of introducing nano-sized particles of magnetic materials into thermally stable matrices will be created. Advanced magnetic and thermal properties will be demonstrated utilizing prototypes of the magnetic material. The anticipated benefits are: The creation of a novel technology that provides rather large versatility (variations in chemical procedure, nano-particle control, tailored size control, narrow size distribution, variation in processing, sequential routes). The anticipated benefits of the high performance magnets will include: power density, efficiency, compactness, reduced complexity/higher reliability, reduced costs. Other possible benefits are: improved rotor system stability, lowering of total weight of ground and air/space platforms, new nano-scaled magnetic material; improved aging properties and minimal electrical loss; possibility to machine without cracking or breaking; possibility to use special coatings in order to prevent corrosion and improve durability; possibility to develop this technology approach for other technical needs; Potential commercial applications are the fabrication of, for example, magnet bearing systems, brushless dc motors and actuators, cordless tools for powerful robots, turbo-vacuum pumps, novel nano-particle-based magnetic materials for microelectronics, an artificial heart and magneto-electronics components. Potential DOD applications of improved permanent magnets are also ship propulsion motors 10-50 kHp, HEV wheel motors 50-500 Hp, UUV propulsion, torpedo propulsion, auxiliary motors, levitated trains, aircraft carrier catapult and arresting gear, magnetic bearings and magnetic refrigerators.