Music Memorabilia STRONG BUY. Background: Market Update: Recommendation: Key changes: What s new?

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1 Music Memorabilia Instruments Stage-worn clothing Autographs 07 March 2012 Background: Elvis. The Beatles. The Rolling Stones. Jimi Hendrix. Iconic names from the music scene of the 50s and 60s. A golden era for music that is the focus for a significant proportion of the growing mass of music memorabilia collectors. Yet more recent acts can also be hot property on the music memorabilia markets. Individuals and groups such as Michael Jackson, Madonna, Elton John and U2 have a legion of fans and the enduring appeal to ensure that they too are sound investments for the future. The values for memorabilia connected with the top acts from pop and rock history are booming at the moment. And as we approach a number of important anniversaries, prices could be set to leap higher. What s new? A Fender Stratocaster customised with images by U2 frontman Bono, sold for 50,000 ($79,390) at a UK auction in May Remnants of the first guitar Jimi Hendrix set on fire, at the Finsbury Astoria in North London in 1967, sold for 280,000 ($575,000) at a UK sale in Recommendation: STRONG BUY Key changes: 17.65% pa Rolling Stones autographs % Michael Jackson autographs ,000 Paid for Jimi Hendrix s burned guitar from 1967 London gig $12,500 Paid for Madonna s bra from her 1994 Australia tour $1.2m Paid for John Lennon s handwritten lyrics to A Day In The Life Performance of Music Memorabilia in the PFC Autograph Index between Rolling Stone Brian Jones stage- and studio-used Harmony Stratotone guitar made 79,250 ($125,550) at Christie s in 2009, 58.5% above its 50,000 high-end estimate. John Lennon s handwritten lyrics to Beatles track A Day in The Life made $1.2m at Sotheby s in June 2010, an increase of 71.4% on the $700,000 high-end estimate. A Dolce and Gabbana bra from Madonna s Live down Under tour of Australia in 1994 sold for $12,500 at a Sotheby s auction in 2010, 212.5% more than its $4,000 estimate. A signed red leather jacket, worn by Jackson in the 1983 Thriller video, sold for $1.8m at a US auction in June 2011, 350% above its Page 1 Princess Diana Memorabilia Market Update 21 February 2012 Source: PFC40 Autograph Index Adrian Roose (Analyst) + 44 (0) ar@paulfrasercollectibles.com

2 $400,000 high-end estimate. Elvis personal address book, which included the details of many big stars, such as Frank Sinatra and Bing Crosby, made $11,000 at a US auction in July 2011, 227.3% above its $3,360 estimate. The pierrot costume Elton John wore in his Chloe and Cry to Heaven videos achieved $14,340 at an auction in July The Paul Fraser Collectibles View: Recent auction results are testament to the current strength of the top end of the music memorabilia sector. The growth in value of stars autographs is an excellent indicator of the health of their memorabilia as a whole. According to the PFC40 Autograph Index, since 2000 we have seen: The value of signed photos containing all four Beatles signatures rise 14.33% pa from 5,500 ($8,700) to 24,000 ($37,990). Rolling Stones signed photos up by 17.65% pa from 995 ($1,575) to 5,950 ($9,430). Jimi Hendrix autograph album pages up 15.70% pa, from 995 ($1,575) to 4,950 ($7,840). Elvis autographs rise in value at a rate of 14.26% pa, from 750 ($1,160) to 3,250 ($5,020. Madonna s signature up 8.82% pa, from 375 ($590) to 950 ($1,490). And between 2010 and 2011: Michael Jackson signed photos rose in value by 60% between 2010 and 2011, from 750 ($1,150) to 1,200 ($1,840). These historically strong figures give us great cause for optimism for the future, as we believe demand for these stars collectibles can only increase in the future (see Demographics and Market performance catalyst sections). It is important that potential investors have a sense of quality control, as it is the biggest names with the largest global fan base that will command the greatest prices over the coming years. Investors who limit themselves to buying only the top names will not go far Page 2 Princess Diana Memorabilia Market Update 21 February 2012 Rolling Stones signed guitar FOR SALE: 4,950 For further reports in this series please

3 Market Update: wrong. We recommend that the finest examples of music memorabilia are a STRONG BUY. Demographics behind the market: Baby boomers, those born between 1946 and 1964, are playing a key role in the buoyancy of the music memorabilia market. This demographic, which owns 80% of the world s wealth, grew up listening to the music of iconic figures from the 50s, 60 and 70s, and has the capital to invest heavily in the memorabilia of their heroes. As increasing numbers of baby boomers reach retirement, we expect them to devote more and more time to their hobbies and interests. We are already seeing this impact on the music memorabilia markets. It can only increase. Elvis and the Beatles are way out in front in terms of all-time world record sales, with an estimated 1bn each. In the week following the launch of Beatles tracks on itunes in November 2010, more than 450,000 Fab Four albums and 2m songs were downloaded. The Forbes highest earning deceased celebrity list also makes for compelling reading. Michael Jackson was the top earning deceased celebrity last year, generating $170m in the 12 months to October Elvis was the second-highest earner on the list, making $55m. 280,000 Paid for Jimi Hendrix 1967 burned guitar John Lennon was fifth, with an income of $12m. These figures confirm the continuing global appeal of these stars. In the case of Jackson, many commentators had expected to see a dropoff in interest in the singer and his collectibles following the initial surge of interest following his passing. This has not been the case, which augurs well for the future. Market Performance Catalyst: There is nothing like a poignant anniversary for reigniting the interest of collectors and introducing stars to a fresh audience. Key points on the horizon include: 2020: The 50th anniversary of the passing of Jimi Hendrix 2027: The 50th anniversary of Elvis passing 2030: The 50th anniversary of John Lennon s passing Page 3 Princess Diana Memorabilia Market Update 21 February 2012 $1.2m Paid for Lennon s handwritten lyrics to A Day In The Life in 2010

4 The loss of stars adds significant value to their autographs and other memorabilia, as noted particularly dramatically by Jackson s signature. When Paul McCartney, Ringo Starr, the remaining Stones and Madonna depart the scene, we anticipate a significant upsurge in interest and values for their memorabilia. However, such is the standing of these icons of the music scene that investors can still enjoy profits during their lifetimes. Looking short term, a couple of key catalysts stand out: Sony s recent decision to pay the Michael Jackson estate $250m for the right to produce 10 music projects over the coming seven years. Sony s confidence in Jackson to generate revenue gives us great room for optimism. Madonna s well-received set in the prestigious halftime slot at the Superbowl in February It will have helped boost her profile considerably, bringing her to the consciousness of an even wider audience. The halftime show was watched by 104m on NBC alone, and was witnessed in more than 230 countries. Madonna s world tour, which runs from May until November 2012, and is her first since 2009, will further generate interest in the singer and her memorabilia. KEY FACTS: 60% growth of Michael Jackson autographs between Growing middle class worldwide with disposable income Global appeal Record prices constantly being set Summary: The value of top-of-the-range music memorabilia, whether its stage worn clothing, guitars or signed photos, continues to head upwards. We have recently witnessed: Rolling Stones autographs up 17.65% pa since 2000 Michael Jackson autographs up 60% in 12 months The $12,500 sale of Madonna s bra Jimi Hendrix s first burned guitar sell for 280,000 The $1.2m sale of John Lennon s A Day in The Life handwritten lyrics We believe demand for memorabilia connected with the biggest names will continue to rise over the coming years, and as we approach important anniversaries or leading figures pass away, values will increase even more. We urge swift action. Key reasons to invest: The current low interest environment represents a real opportunity to build a valuable collection for long term value Many alternative investments are classified as wasting assets and do not come into inheritance or Capital Gains Tax calculations Page 4 Princess Diana Memorabilia Market Update 21 February 2012 For further reports in this series please

5 Unique collectibles have historically been considered safe havens and have a low correlation with traditional financial investments World record prices are being achieved despite the recession There are estimated to be 200m serious collectors worldwide underpinning prices The population of the BRIC countries is expected to double in the next 40 years, adding significantly to the number of collectors The Baby Boomer generation is making its way through the system and is now responsible for 80% of the world s wealth Baby Boomers are living longer than previous generations, with a higher level of disposable income, and with time on their hands to pursue collecting in a serious way Many Institutional Funds have been created in collectibles with many more waiting in the wings. These funds will add significantly to the pressure on prices and to a shortage of unique pieces on the market Collectibles as part of your overall portfolio give you greater control over allocating and preserving your wealth, and the ability to manage the process yourself, giving you confidence where it has been lost in the bigger financial product areas About Paul Fraser Collectibles is recognised as one of the world s leading boutique providers of investment grade collectibles. Our company specialises in historical manuscripts, autographs, memorabilia, rare coins, postage stamps, art, first edition books, classic cars, fine wine and military medals. We also offer a unique, free worldwide news service with subscribers in 212 countries, including a loyal following of Financial Advisers and Wealth Managers. Paul Fraser Collectibles also boasts an expert panel, with more than 250 years experience and $750m of sales to its name. Our current inventory includes John Lennon signed photos, Henry VIII signed documents and an original Declaration of Independence. Many items qualify for our unique 120% guarantee. For full details on our services, and for other free reports in this series, please contact us at: +44 (0) This document is non-independent investment research and a marketing communication. Page 5 Princess Diana Memorabilia Market Update 21 February 2012