JANUARY 2008

Worldwide No. 1 Movie Enchanted Produced by MPF Partner
Disney's Enchanted shot to the top of the box office at Thanksgiving 2007, grossing a staggering $50 million over the 5-day period. Enchanted is one of the biggest ever Thanksgiving openings, and to date has grossed almost $200 million worldwide.

Enchanted was produced by Barry Josephson, co-founder of Pacific Media & Entertainment , a key partner of OOO and the Movie Portfolio Fund. We expect to make an important announcement regarding the OOO / PME partnership in the coming months.

Movie Revenues & Investment Up, Investors Stand To Gain
Global movie revenues are expanding rapidly as Wall St. institutions continue to invest into Hollywood.

Despite rumours of slowing growth for Hollywood movies US box-office revenues rebounded to $9.5 billion in 2006, a 5.5% increase over 2005,  with international B.O. ringing up a stunning $16.3 billion, an 11% increase.  With box-office now making up an ever-lower proportion of total movie revenues, the potential for overall movie earnings has never been higher.  2007 is forecast to be another growth year, with estimates of US box-office pushing the $10 billion mark. Industry insiders acknowledge that higher-quality movies are helping to raise attendances compared with more lacklustre movies in 2003/2005. Further, alternative platforms such as pay-per-view, DVD, streaming media etc. are helping to grow the market overall.

The trend for institutional investment into Hollywood is gaining pace as investors widen their scope from major studios and independent producers to newly-formed mini-studios. In a deal resembling the 1994 Dreamworks launch, ex-senior executives of Paramount Studios recently announced a $1 billion investment  by Merrill Lynch into their newly-formed mini-major.

Current levels of activity both in the global expansion of movie sales and investment into Hollywood movie production bode well for investors into the movie sector. The Movie Portfolio Fund continues to offer exceptional potential returns to investors.

Movie Portfolio Fund Model Validated by Major Investment Bank
In their September 2006 report Inside Film Financing, investment bank Merrill Lynch presented a thorough review of current trends in the market. Commenting on the recent wave of “slate finance” deals between Hollywood studios and financial institutions, the report confirms the validity of the risk profile and investment strategy originated by OOO's Movie Portfolio Fund. The MPF has always asserted that a portfolio of Hollywood movies provides the best opportunity for movie investors to profit in a risk-reduced structure.

The Merrill Lynch report comments: "Slate deals and the application of portfolio theory have been key to attracting institutional investors that may have previously considered film equity investments to be excessively risky. Our Monte Carlo simulation suggests median levered returns can be above 20%. Low correlation with the equity markets is also an important consideration for alternative investment managers". The report goes on to say "Using a Monte Carlo simulation, our mock film slate model suggests the median rate of return is significantly higher for a co-financed slate and the risk is markedly lower".

The MPF currently has an producer/studio slate deal in place with Pacific Media & Entertainment, and our own Monte Carlo simulations predict superior potential fund returns for investors. OOO welcomes this validation of  the MPF model by one of the top international investment banks.

MPF Featured in Industry Magazine
In its October 2006 edition, Euromoney magazine ran an in-depth feature on film financing, focusing on hedge fund investments into Hollywood. OOO was consulted for this article and the Movie Portfolio Fund's model of portfolio investing once again featured as the best way to invest into movie assets. The MPF's diverse approach ensures a lower risk profile while giving investors access to superior potential returns.

2006 A Defining Year for Film Finance
2006 saw a number of high-profile investments by Wall St. institutions and hedge funds into Hollywood as traditional investors recognised the merits of portfolio investing in the movie business. Helped in particular by strong and predictable revenue flows from DVD's and other income sources, Merrill Lynch invested $200 million into Paramount, Legendary Pictures pledged $500 to co-produce a slate of films with Warner Bros. and  Dune Capital announced a $325 million co-production investment deal with Fox. The movie sector is now seen as a mainstream investment category, underlining the strategy pioneered by the Movie Portfolio Fund. The MPF, with key partnerships in place with PME, is now operating at the heart of the industry it defined.