These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

BlueStar Israel Equity Update Fourth Quarter 2014

The S&P 500 index gained 1.10% in Q3 2014. MSCI EAFE and MSCI EM lost

-5.80% and -3.40%, respectively.

The BlueStar Israel Global Index (“BIGI ®”) declined 0.90% in Q3. Financials,

Materials and Telecommunication Services stocks led the decline in Israeli

Global Equities while Information Technology, Energy and Health Care stocks

moved higher.

Volatility in global equity indexes rose sharply towards the end of Q3 as

investors began to fear a recession in Europe, slower global economic growth,

and a rise in U.S. interest rates.

Israeli Global Equities demonstrated resilience during Israel’s Operation

Defensive Edge in the Gaza Strip. As a result of the conflict though, tourism and

consumer spending declined in Q3 compared to the previous year.

Israeli companies continued to list on U.S. exchanges during the quarter.

Among the most notable were technology companies Mobileye, CyberArk and

ReWalk. They will all be eligible to enter the BIGI and/or the BIGITech during the

December 2014 rebalancing.

The Bank of Israel lowered its policy interest rate twice during the third quarter.

That and the expectation that the Federal Reserve will increase U.S. interest

rates in mid-to-late 2015 contributed to a sharp depreciation of the Shekel

against the Dollar. This should be supportive of export growth going forward, a

recent problem for the Israeli economy.

The IMF lowered its global GDP growth forecast as well as its forecast for

Israeli GDP growth for both 2014 and 2015. The Bank of Israel’s also lowered its

GDP growth forecast for Israel.

Q3 2014 in Review & Q4 2014 Outlook

BIGI® Performance (BlueStar Israel Global Index, Jan. 2010- Sept. 2014)

1

1.

2.-4.

5-6.

7.

8.

9.

10.

Israeli Global

Equities in Q2

2014

About the BIGI®

Index

Technical Analysis

About the

BIGITech Index

Israeli IPOs in

2014

Israeli Economic

Review & Outlook

Geopolitical

Environment

What’s Inside

70

90

110

130

150

170

190

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

TA-100

S&P 500

BIGI

About the BlueStar Israel Global Index ® The BlueStar Israel Global Index (’BIGI®’) provides a benchmark for investors to track the broadest and deepest universe of Israeli

public companies. The index is constructed using BlueStar Indexes’ unique methodology and proprietary database of Israeli and

Israel-linked companies. BIGI® includes the largest and most liquid companies as well as mid and small cap companies that display

sufficient liquidity for global investors. The index methodology allows for the inclusion of Israeli companies listed on the Tel Aviv

Stock Exchange as well as other exchanges such as the London Stock Exchange, New York Stock Exchange, and NASDAQ. The

BlueStar Israel Global Index has been created to provide investors with an investable product allowing them to quickly take

advantage of both event-driven news and long-term economic trends as the economy and companies of Israel continue to evolve.

Comparative Sector Weights Long- Term Returns*

Five Year Correlations Comparative Risk (Standard Deviation of Returns)*

*Annualized 1Inception Date: Dec. 1992 Source: BlueStar Global Investors LLC Sept. 30, 2014

*Annualized 1Inception Date: Dec. 1992 Source: BlueStar Global Investors LLC Sept. 30, 2014

Source: BlueStar Global Investors LLC Sept. 30, 2014

Source: BlueStar Global Investors LLC Sept. 30, 2014

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

2

Sector BIGI® MSCI -

EIS

FTSE

Israel TA-25 TA-100

Information Technology 31.5% 6.1% 3.2% 4.7% 8.1%

Health Care 30.1% 24.5% 57.3% 24.3% 25.2%

Financials 18.5% 37.8% 19.9% 33.2% 32.6%

Materials 5.2% 9.9% 6.0% 7.9% 6.8%

Energy 4.7% 5.7% 3.8% 14.7% 12.0%

Telecom. Services 3.2% 6.7% 4.9% 9.5% 7.0%

Industrials 2.7% 5.1% 2.6% 2.9% 4.4%

Consumer Discretionary 1.9% 0.7% 0.4% 0.0% 1.3%

Consumer Staples 1.7% 3.5% 1.8% 2.8% 2.6%

Utilities 0.4% 0.0% 0.0% 0.0% 0.0%

Q3 2014 1yr. 3yrs. 5yrs. 10yrs.

ACWI -2.20% 11.89% 17.24% 10.65% 7.84%

EAFE -5.83% 4.70% 14.16% 7.04% 6.80%

MSCI EM -3.36% 4.66% 7.56% 4.76% 11.03%

S&P 500 1.13% 19.73% 22.99% 15.70% 8.11%

MSCI Israel 0.38% 29.77% 11.20% 2.63% 8.45%

TA-100 -3.00% 9.39% 10.70% 7.50% 11.01%

TA-25 -2.20% 10.38% 10.90% 8.38% 12.82%

BIGI® -0.91% 15.03% 13.65% 9.55% 12.46%

Q3 2014 1yr. 3yrs. 5yrs. 10yrs.

ACWI 9.55% 9.13% 12.12% 14.62% 16.62%

EAFE 6.35% 9.60% 14.24% 16.60% 18.28%

MSCI EM 19.10% 13.69% 17.19% 18.55% 23.85%

S&P 500 10.78% 8.87% 10.57% 13.20% 14.71%

MSCI Israel 8.57% 11.33% 16.04% 18.17% 18.44%

TA-100 4.61% 8.81% 14.26% 17.50% 21.46%

TA-25 8.15% 9.90% 15.27% 18.08% 21.71%

BIGI® 4.05% 9.54% 13.68% 17.26% 19.69%

ACWI MSCI EM EAFE S&P 500 MSCI

Israel TA-100 TA-25 BlueStar

ACWI 1.00

MSCI EM 0.90 1.00

EAFE 0.97 0.86 1.00

S&P 500 0.96 0.80 0.87 1.00

MSCI Israel 0.66 0.68 0.60 0.62 1.00

TA-100 0.76 0.75 0.74 0.71 0.85 1.00

TA-25 0.75 0.75 0.73 0.69 0.84 0.99 1.00

BIGI® 0.81 0.77 0.78 0.76 0.86 0.97 0.93 1.00

3

BlueStar Israel Global Index ® Constituents and Weights

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

Company Name Ticker Exchange Index Weight as of Sept. 30, 2014

1 Teva Pharmaceutical Industries TEVA IT 13.08%

2 Perrigo Company plc PRGO UN 11.76%

3 Check Point Software (US) CHKP UQ 6.36%

4 Amdocs Ltd DOX UQ 4.77%

5 Bank Hapoalim BM Reg POLI IT 3.80%

6 Bank Leumi Le-Israel BM LUMI IT 3.63%

7 Stratasys Ltd SSYS UQ 3.34%

8 VeriFone Systems Inc PAY UN 2.34%

9 Bezeq BEZQ IT 2.22%

10 Israel Chemical Corp ICL IT 2.08%

11 VERINT SYSTEMS VRNT UQ 1.92%

12 Nice Systems Ltd NICE IT 1.65%

13 Playtech PTEC LN 1.52%

14 Israel Corp ILCO IT 1.44%

15 Taro Pharmaceutical Industries TARO UN 1.42%

16 Delek US Holdings DK UN 1.29%

17 MELLANOX TECH MLNX UQ 1.18%

18 Opko Health Inc OPK UN 1.17%

19 Delek Group Ltd DLEKG IT 1.16%

20 Israel Discount Bank 0.1 DSCT IT 1.12%

21 Mizrahi Tefahot Bank Ltd MZTF IT 1.11%

22 Elbit Systems Ltd ESLT IT 1.04%

23 Caesar Stone Sdot Yam Ltd CSTE UQ 0.89%

24 Azrieli Group AZRG IT 0.79%

25 Paz Oil Company Ltd PZOL IT 0.76%

26 Frutarom FRUT IT 0.75%

27 Gazit Globe 1982 Ltd GZT IT 0.71%

28 LivePerson Inc LPSN UQ 0.59%

29 Osem Investment OSEM IT 0.58%

30 Radware Ltd RDWR UQ 0.58%

31 Ezchip Semiconduct EZCH IT 0.57%

32 Imperva Inc IMPV UN 0.55%

33 Strauss Group STRS IT 0.55%

34 Harel Insurance Inv Ltd 1 HARL IT 0.49%

35 Orbotech Ltd (US) ORBK UQ 0.49%

36 Cellcom Israel Ltd. CEL IT 0.49%

37 Partner Communications Co PTNR IT 0.49%

38 Shikun & Binui Ltd. SKBN IT 0.47%

39 Wix.com Ltd WIX UQ 0.47%

40 Aloni Hetz Properties ALHE IT 0.46%

41 SodaStream International Ltd SODA UQ 0.46%

42 Delek Energy Systems Ltd DLEN IT 0.44%

43 Ormat Technologies ORA UN 0.44%

44 Migdal Insurance Hdlgs MGDL IT 0.43%

45 Oil Refineries Ltd ORL IT 0.41%

46 NITSBA Hldgs NTBA IT 0.41%

47 Ormat Industries ORMT IT 0.40%

48 Delek Automotive Systems Ltd DLEA IT 0.40%

49 Compugen Ltd CGEN UQ 0.40%

50 Clal Insurance Enterprises CLIS IT 0.40%

51 First Intl Bank of Israel FTIN IT 0.39%

52 Plus500 Ltd PLUS LN 0.38%

53 Alon Usa Energy ALJ UN 0.37%

54 Melisron MLSR IT 0.37%

55 Telit Communications Plc TCM LN 0.37%

56 Jerusalem Oil Exploration JOEL IT 0.36%

57 AMOT Investment Ltd AMOT IT 0.35%

Company Name Ticker Exchange Index Weight as of Sept. 30, 2014

58 Syneron Medical Ltd ELOS UQ 0.35%

59 Rami Levi Chain Stores RMLI IT 0.34%

60 888 Holdings Plc 888 LN 0.34%

61 Allot Communications ALLT UQ 0.32%

62 Ceva Inc CEVA UQ 0.32%

63 Nova Measuring Instruments Ltd NVMI IT 0.32%

64 Ituran Location & Control Ltd ITRN IT 0.31%

65 SafeCharge International Group SCH LN 0.31%

66 Menorah Insurance Co Ltd 1 MMHD IT 0.31%

67 Delta-Galil Industries DELT IT 0.30%

68 Electra (Israel) ELTR IT 0.30%

69 Naphtha Israel Petroleum Corp NFTA IT 0.29%

70 Clicksoftware Technologies Ltd CKSW UQ 0.29%

71 Evogene Ltd. EVGN IT 0.29%

72 DSP Group DSPG UQ 0.28%

73 Africa Israel Properties AFPR IT 0.27%

74 Bayside LandCorp 1 BYSD IT 0.27%

75 FIBI Hldgs FIBI IT 0.27%

76 SuperCom Ltd. SPCB UQ 0.26%

77 Shufersal Ltd. SAE IT 0.26%

78 Discount Investment Corp DISI IT 0.26%

79 Matrix MTRX IT 0.25%

80 Formula Systems (1985) Ltd FORT IT 0.25%

81 Israel Phoenix Assurance 1 PHOE1 IT 0.25%

82 Fox Wizel FOX IT 0.25%

83 Mazor Robotics Ltd. MZOR IT 0.25%

84 Magic Software Enterprises Ltd. MGIC IT 0.24%

85 Africa-Israel Inv Ltd AFIL IT 0.24%

86 Sapiens Intl Corp SPNS UQ 0.24%

87 PLURISTEM THERAP PSTI UQ 0.24%

88 Mivtach Shamir Hldgs Ltd MISH IT 0.23%

89 Meitav DS Investments Ltd MTDS IT 0.23%

90 Plasson Industries Ltd. PLSN IT 0.22%

91 Varonis Systems Inc VRNS UQ 0.21%

92 Big Shopping Centers Ltd. BIG IT 0.21%

93 Ceragon Networks [US Listing] CRNT UQ 0.21%

94 Audiocodes Ltd AUDC UQ 0.20%

95 Jerusalem Economic Corp (ECJ) ECJM IT 0.20%

96 Silicom Limited SILC UQ 0.20%

97 Al-Rov (Israel) Ltd ALRO IT 0.20%

98 Industrial Building Corp IBLD IT 0.20%

99 Attunity Ltd. ATTU UQ 0.20%

100 Property & Building Corp (Isrl) PTBL IT 0.19%

101 Elco Hldgs ELCO IT 0.18%

102 Alcobra Ltd ADHD UQ 0.18%

103 Elbit Imaging Ltd EMIT IT 0.18%

104 Borderfree Inc BRDR UQ 0.17%

105 Lumenis Ltd. LMNS UQ 0.17%

106 Kamada KMDA IT 0.16%

107 Medgenics Inc MDGN UA 0.15%

108 Perion Network Ltd PERI UQ 0.15%

109 Brainsway Ltd. BRIN IT 0.15%

110 Photomedex Inc PHMD UQ 0.13%

111 Enzymotec Ltd ENZY UQ 0.12%

112 Elron Electronic Indust ELRN IT 0.12%

113 Clal Biotechnology Industrie CBI IT 0.10%

114 Babylon Ltd. BBYL IT 0.08%

4

BlueStar Israel Global Index ® Q3 2014 Performance Attribution and Differentiators

BIGI® Internal Characteristics Attribution Currency Attribution Exchange-Related Attribution

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

BlueStar Israel Global Index ® Constituent Attribution vs Peers

Total Index Weight Listed

on Local Exchange(s)

Sept. 30, 2014

Local Currency

Performance vs USD (Q3

2014)

Attribution of Currency

Performance to BIGI®

Performance

Israel – New Israeli Shekel (TASE)

51.92% -6.84% -3.55%

US - US Dollar (NYSE, NASDAQ, AMEX)

45.18% 0.00% 0.00%

UK – GB Pound (London)

2.90% -4.65% -0.13%

Total Direct Effect of Currency Fluctuation on

BIGI® Price Level - - -3.69%

Total Index Weight as of

Sept. 30, 2014

Attribution of Category to BIGI® Performance (Q3

2014)

Dual-Listed Constituents

35.61% -0.04%

Constituents With No TASE Listing

32.47% 1.19%

Technology Constituents With

No TASE Listing 26.37% 0.98%

Company Name

BIGI® Weight Relative to MSCI

Israel Capped Index

Q3 2014 Positive Relative Weight

Attribution

Israel Chemical Corp -3.37% 0.54%

Perrigo Company plc 11.76% 0.36%

Mellanox 1.18% 0.34%

Verint Systems 1.92% 0.26%

Delek US Holdings 1.29% 0.22%

Stratasys Ltd 3.34% 0.21%

Check Point Software 6.36% 0.21%

Bezeq -2.29% 0.18%

Bank Hapoalim BM Reg -6.51% 0.17%

Delek Group Ltd -1.90% 0.16%

Company Name

BIGI® Weight Relative to MSCI

Israel Capped Index

Q3 2014 Negative Relative Weight

Attribution

Teva Pharmaceutical -11.25% -0.22%

Bank Leumi -5.51% -0.20%

VeriFone Systems Inc 2.34% -0.15%

Wix.com Ltd 0.47% -0.08%

Oil Refineries Ltd -0.31% -0.08%

Mazor Robotics Ltd. 0.25% -0.08%

Perion Network Ltd 0.15% -0.07%

Audiocodes Ltd 0.20% -0.07%

Photomedex Inc 0.13% -0.06%

Evogene Ltd. 0.29% -0.06%

GICS Sector Q3 2014 Performance

Attribution Q2 2014 Performance

Attribution Q1 2014 Performance

Attribution Q4 2013 Performance

Attribution Q3 2013 Performance

Attribution

Info. Technology 0.56% -0.09% 0.51% 2.32% 2.06%

Energy 0.15% -0.46% 1.66% 3.34% 3.08%

Health Care 0.04% 0.07% -0.36% 0.67% 0.41%

Utilities -0.14% -0.17% -0.15% 0.35% 0.10%

Industrials -0.15% -0.16% 0.09% 0.87% 0.62%

Consumer Disc. -0.17% -0.46% 4.97% 1.39% 1.14%

Consumer Staples -0.21% -0.34% -0.38% -0.11% -0.10%

Telecom Services -0.37% -0.17% -0.04% 1.37% 1.11%

Materials -0.40% -0.15% -0.09% 0.09% -0.16%

Financials -0.58% -0.15% 0.24% -0.10% -0.35%

BlueStar Israel Global Index ® Sector Performance Attribution

5

Market Trends - Technical Analysis

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

LT Support: 195-200

MT Support: 245-255

MT Target: 310-325

The two parallel trend lines connecting the tops in 2008 and 2011, and now 2014, in the chart above were confirmed in March and early April as the most significant area of upside resistance for Israeli Global Equities in the long-term chart of BIGI®. The highest of the two trend lines should serve as major resistance for the index in the medium-term. That line is doubly-significant, as it equates with the measured target from the 2009 lows with respect to the 2012 low. If theses trend lines are breached they will likely turn into a key support area for the index and serve as a strong base for this multi-year bull-market in Israeli Global Equities to continue onward. On the other hand, if the 275 level is decisively broken, as it seems to have been in early October, we would expect a sharper correction from current levels, a drop of approximately 6-9%.

Strong Support Area

~9% Below

ST Support: 275-283

6

Market Trends - Technical Analysis

6

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

Short-Term Support 1: 280-282 Short-Term Support 2: 273-275 Mid-Term Support: 1 255-265 Mid-Term Support: 2 240-245

Short-Term Target: 295-298

7

About the BlueStar Israel Global Technology Index (BIGI®Tech)

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

7

The BlueStar Israel Global Technology Index provides a benchmark for investors to track Israeli and Israel-linked technology

companies trading worldwide. The index is constructed using BlueStar Indexes’ unique methodology and proprietary database

of Israeli and Israel-linked companies. BIGI®Tech is a modified market capitalization weighted index, capping the top-weighted

constituents at 10%. It includes the largest and most liquid technology companies, as well as mid and small cap companies that

display sufficient liquidity for global investors. The methodology allows for the inclusion of Israeli companies listed on the Tel

Aviv Stock Exchange and other major exchanges such as the London Stock Exchange, New York Stock Exchange, and

NASDAQ. Furthermore the methodology provides for the inclusion of companies that develop, manufacture, and/or deliver

innovative technologies in a wide range of tech sectors, including Bio-Tech, Agri-Tech, Defense-Tech, Clean-Tech as well as

Info-tech. The BIGI®Tech Index provides investors with an investable benchmark that allows them to quickly take advantage of

event-driven news, industry trends, market/industry cycles, as well as the potential for capital appreciation driven by Israeli

technological innovation.

Index Internals Data

Preliminary Index Statistics

No. of Securities 53

Currency USD

Max. Security Weighting 11.25%

Concentration Ratio 64.00%

Annualized 5 Year Performance 11.60%

Primary Listing of Constituents

New York (NYSE/NQ) US Dollar 68.68%

Tel Aviv (TASE) Israeli Shekel 22.22%

London (LSE) British Pound 9.10%

Industry Weight

Software 31.86%

I.T. Services 19.59%

Computers & Peripherals 11.25%

Semiconductors 9.40%

Communications Equipment 5.53%

Internet Software & Services 4.14%

Aerospace & Defense 3.40%

Biotechnology 3.00%

Health Care Equipment & Supplies 2.96%

Electronic Equipment & Components 1.52%

Independent Power Producers 1.34%

Electrical Compoenents & Equipment 1.24%

Life Sciences Tools & Services 1.20%

Diversified Financial Services 1.17%

Hotels, Restaurants & Leisure 0.99%

Diversified Telecommunication Services 0.94%

Pharmaceuticals 0.48%

GICS Industry Breakdown

Sept. 30, 2014 Sept. 30, 2014

Sept. 30, 2014

Recent IPOs and IPO Pipeline

Recent Israeli Global Company IPOs and Other Corporate Action

8

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

Israeli Company IPO Pipeline

2014 has been a record year for Israeli companies going public. Three of the most notable IPOs happened during the third

quarter. Mobileye, CyberArk and ReWalk are all excellent examples of innovative Israeli companies with global footprints. Each

of these companies are changing paradigms in their respective industries and are undisputed leaders in the markets they serve.

They will each be considered for inclusion in the BIGI and BIGITech in the December rebalance.

Mobileye held its IPO on August 1st, selling 35.6 million shares for $25/share. The shares traded as high at $37/share on IPO

day and reached as high at $60/share in early October giving the company a market cap of over $10 billion. Mobileye is the

world leader in autonomous driving and accident-prevention solutions and counts the world’s top auto-makers as some of its

largest customers.

ReWalk held its IPO on September 12th, selling 3.0 million shares at $12/share. Shares of ReWalk reached as high as $30 on

IPO day marking a 150% intraday gain. On the second day of trading shares surged to as high as $43.71 which marked a

264% gain from its IPO price. ReWalk is a medical device company that designs, develops and commercializes exoskeletons

that allow wheel-chair bound people to stand and walk again.

CyberArk held its IPO on September 24th, selling 5.4 million shares at $16/share. After opening at $25 then dipping to $22 in the

first hour of trading, shares recovered and closed at $30 on IPO day. Shares of CyberArk hit an all-time high of $35.90 on the

second day of trading. CyberArk has created a new layer of I.T. security and is virtually the only supplier of privileged-account

security software. Recent security breaches at major U.S. institutions such as JP Morgan Chase and Home Depot among

others, show that traditional perimeter security solutions like those provided by Check Point and Palto Alto Networks, while still

necessary, are not sufficient. CyberArk serves more than 20% of Fortune 100 companies and targets companies operating in

all major industries including financial and banking institutions as well as telecommunication service providers.

Finally, $421 million worth of Israel Chemicals stock were listed on the New York Stock Exchange, after being sold by parent

company Israel Corp. in order to increase liquidity and raise the company’s profile among global investors.

Notable IPOs since BlueStar Indexes’ June 2014 Rebalance

CyberArk IPO on Sept. 24, 2014

Foamix IPO on Sept. 18, 2014

ReWalk IPO on Sept. 12, 2014

Mobileye IPO on Aug. 1, 2014

Bioblast Pharma IPO on Jul. 31, 2014

Marimedia IPO on May 28, 2014

Matomy Media Group IPO on May 28, 2014

XL Media IPO on Mar. 21, 2014

IPO/Prospectus Filed

Zubra Filed prospective with SEC on Feb. 27, 2014

Mapi-Pharms Filed prospectus with SEC on Mar. 26, 2014

Adama Draft prospectus filed with SEC on Aug. 11, 2014

IPO Being Planned

Oplon Planning IPO with $100 million company valuation

Outbrain Planning IPO with $1 billion company valuation

Orscan Planning TASE IPO

Kaltura- Planning IPO

Delek Energy Possible dual-listing on Wall Street

Kenshoo Planning IPO with $750 million company valuation

Shekel/Dollar

Israel GDP Growth Israel vs OECD Members

Source: OECD * Estimates as of May. 2014

Jan. 1, 2010 - Sept. 30, 2014

Shekel/Euro Jan. 1, 2010 - Sept. 30, 2014

Israel Economic Review & Outlook

Israel’s GDP Growth Factors The Bank of Israel and the IMF updated their growth expectations for the Israeli economy for 2014 and 2015. Israel’s GDP is expected to growth 2.4% in 2014 compared to the previous forecast (published in June 2014) of 2.9%. The main causes for the reduction in growth expectations are the temporary effects of Operation Protective Edge and slower economic growth in Europe. Economic growth is expected to increase to 3.0% in 2015 based on the assumption that the Israeli economy will resume a level of activity similar to that before Operation Protective Edge. The negative impact of Operation Protective Edge is reflected in consumer expenditures and tourism (tourism is reflected in the current account and net exports). Expectations for 2015 growth include an increase in fixed capital formation (or the “investment” component of GDP) of 6.6% after a decline of 1.4% in 2014. Additionally, net exports are expected to grow at 5.2% in 2015 compared to 4.1% growth in 2014. The expectations for faster net export growth in 2015 reflect the effects of a weaker shekel, and a moderate growth rate of imports by the G4 economies. Fiscal Policy and the Labor Market The government’s budget deficit from January to August 2014 was approximately NIS 3.9 billion less than the deficit consistent with the seasonal path toward the target for 2014. An acceleration in government expenditures, primarily a result of increased defense spending for Operation Protective Edge, is expected in the remainder of the second half of 2014. The unemployment rate was 6.4% at the end of July with just a slight increase in the labor market participation rate. Inflation and Monetary Policy The Bank of Israel lowered its policy benchmark rate twice during the third quarter; first to 50 bps in July then down to 25 bps in August. Reasons for a low interest rate policy include the strengthening of the Shekel throughout most of 2014, low inflation, and lower expectations for economic growth. The Bank of Israel hinted at the possibility of lowering interest rates even further as well as the possibility of taking some other monetary policy steps to promote economic growth and bring inflation back toward the midpoint of the target range. New Israeli Shekel Performance The Shekel weakened by 7.50% against the dollar during the third quarter but strengthened by 1.0% against the Euro during that period. The primary causes for the depreciation of the Shekel against the dollar were: expectations of higher interest rates in the U.S. combined with lower interest rates in Israel; direct intervention in the foreign exchange markets by the Bank of Israel to weaken the shekel; and lower Israeli economic growth forecasts for 2014. The primary causes for the strength of the shekel against the Euro during the third quarter is a deflationary environment and potential recession in Europe.

9

9

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

Israel Non-Government Bond Index

Shek

el S

tren

gth

Sh

ekel

Str

engt

h

Jan. 1, 2010 - Sept. 30, 2014

Israeli Equities Performance During Global Economic

and Regional Geopolitical Events (July 1997 – Sept 2014)

BLUESTAR INDEXES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY OF THE BLUESTAR INDEXES OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL BLUESTAR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. BLUESTAR INDEXES AND ISE AND ITS AFFILIATES MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF THE INDEX, TRADING BASED ON THE INDEX, OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE TRADING OF BLUESTAR INDEX ETFS OR FOR ANY OTHER USE. BLUESTAR INDEXES AND NYSE AND ITS AFFILIATES MAKE NO WARRANTIES, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. THE INDEX INFORMATION CALCULATED AND DISSEMINATED AND ANY OTHER DATA DISSEMINATED BY BLUESTAR INDEXES AND ISE OR ANY OF THEIR AFFILIATES OR AGENTS ARE FOR INFORMATIONAL PURPOSES ONLY AND ARE NOT INTENDED FOR TRADING PURPOSES. AS SUCH, THE INDEX INFORMATION AND OTHER INFORMATION DISSEMINATED BY BLUESTAR AND ISE ARE PROVIDED ON AN “AS IS” BASIS. BLUESTAR AND ISE MAKES NO WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE INDEX INFORMATION OR OTHER INFORMATION COVERED BY THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, TITLE OR NONINFRINGEMENT. BLUESTAR INDEXES AND THE ISE DO NOT WARRANT THAT THE INDEX INFORMATION WILL BE UNINTERRUPTED OR ERROR-FREE, THAT DEFECTS WILL BE CORRECTED, OR THAT THE INDEX INFORMATION IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS. BLUESTAR INDEXES AND ISE DO NOT WARRANT OR REPRESENT THE USE OF THE INDEX INFORMATION IN TERMS OF ITS CORRECTNESS, ACCURACY OR RELIABILITY.

These are not recommendations to buy or sell any security © 2014 BlueStar Global Investors, LLC

This summer’s conflict in Gaza, Operation Protective Edge, lasted approximately six weeks and, unlike Operation Pillar of Defense, involved the deployment of Israeli ground troops into Gaza. This conflict also marked the first time since the Gulf War of 1990 that numerous rockets were directed at the greater Tel Aviv area as well as points as far north as the Port of Haifa. The economic impact of this conflict was greater than that of Operation Pillar of Defense in that consumer expenditures were delayed and there was a more serious blow to the tourism industry. Nonetheless, Israeli equities performed more or less in-line with their Developed Market peers. The above chart shows a sharp initial stock market reaction to the official announcement of a military operation in Gaza. It took just seven days for the market to nearly fully recover from pre-conflict highs. After these initial seven days one cannot accurately attribute negative stock market returns to correlation with other Developed Market Equities or the ongoing conflict in Gaza.