introduction - tasemayafiles.tase.co.il/rpdf/432001-433000/p432073-00.pdf · introduction 1....

- 1 - Migdal (4D) Equity for Foreigners – Mutual Fund

Introduction

1. Approvals

(a) All of the permits, approvals and licenses as required by law to offer and issue the

units and to publish the Prospectus have been granted.

(b) The Prospectus is available for inspection by the public at the distribution site of the

Israel Securities Authority, at: www.magna.isa.gov.il.

(c) The permission of the Israel Securities Authority does not constitute verification of the

details set forth in the Prospectus, confirmation of the reliability or the completeness

thereof or an opinion on the nature of the units being offered.

2. The Fund

Migdal (4D) Equity for Foreigners Mutual Fund (in this Prospectus: the “Fund”). The Fund

was established pursuant to a fund agreement entered into on March 7, 2007 and as amended

from time to time and recently under the fund agreement dated June 29, 2008 (in this

Prospectus: the “Fund Agreement”).

The Fund is an open-end fund, as defined in the Law.

The Fund has been approved by the Income Tax Commissioner as a liable fund for foreign

residents. For details regarding the Income Tax Regulations (Exemption From Tax on

Certain Income of a Liable Mutual Fund for Foreign Residents) 5763 – 2003, the restrictions

applicable to the unitholders upon purchase of the Fund units and the forms which the

purchasers of the units are required to submit to the distributors of the Fund units, see

section 1A of Chapter O and Appendix F below.

3. Fund Manager

Migdal Mutual Funds Ltd., whose sole activity is the management of joint investment trust

funds, with registered office at 26, Saadia Gaon Street, Tel Aviv.

The shareholder in the Fund Manager (approx. 100%) is Migdal Stock Exchange Services

(N.E.) Ltd. (in this Prospectus: the “Parent Company”).

The Parent Company is a member of the Tel Aviv Stock Exchange Ltd., and its main activity

is the provision of services in securities and in financial assets (brokerage services). The

Parent Company is a private company.

All of the share capital of the Parent Company is held, directly and indirectly, by Migdal

Capital Markets (1965) Ltd. (in this Prospectus: "Migdal Capital Markets"), which is a

private holding company.

The total share capital of Migdal Capital Markets is held, indirectly (through Migdal

Investment Management 2001 Ltd.),@

by Migdal Insurance And Financial Holdings Ltd. (in

this Prospectus: “Migdal Holdings”).

Migdal Holdings is a public company, whose shares are traded on the Tel Aviv Stock

Exchange.

On May 11, 2006, the seven mutual funds, which until that time had been managed by

Afikim Mutual Fund Management (1989) Ltd., were transferred to the management of the

Fund Manager. On June 5, 2006, the 48 mutual funds, which until that time had been

@ Up to October 23, 2008, Bear Stearns Asset Management Inc. held 50% of the share capital of Migdal Capital

Markets, and Migdal Investment Management 2001 Ltd. held the remaining 50% of the share capital of Migdal

Capital Markets.


managed by Dikla Mutual Fund Management Co. Ltd., were transferred to the management

of the Fund Manager.

The Fund Manager is likely to purchase securities in issues in which a company controlled

by Migdal Capital Markets serves as an underwriter.

4. The Trustee

A. Ubank Trust Co. Ltd. (hereinafter: the "Trustee"), whose primary activity is the

performance of trust duties and whose registered office is at 38 Rothschild Boulevard,

Tel Aviv. The Trustee serves as a trustee for other mutual funds.

The Trustee is a company wholly controlled by Ubank Ltd. Ubank Ltd. is a company

wholly owned by the First International Bank of Israel Ltd.

B. In accordance with the Fund Agreement:

)1( The term of the Trustee's office shall continue for three years from the date on

which the distribution of the Fund units commenced (March 28, 2007)

(hereinafter: the "First Period"), and it shall be automatically extended from

time to time for additional periods, the duration of each of which shall be that of

the minimum period as required by law as the extension period of the Trustee's

office (hereinafter: the "Extension Period"), as it shall be on the date of

commencement of each Extension Period, if any, unless either of the parties

gives notice, in writing, to the other party, at least 90 days prior to the end of the

First Period or prior to the commencement of any Extension Period, of the

termination of the Trustee's office.

)2 ( Should the Trustee's office be terminated for any reason, the Fund Manager shall

choose another trustee in its place. The selection of the trustee, the duration and

the terms of its office do not require the approval of the meeting of the Fund

unitholders. Should the fees of the new trustee (either the actual fees or the

maximum fees) exceed the maximum fees of the preceding trustee, the fees shall

be submitted for the approval of the meeting.

5. The Fund's Banker and the Fund's Securities Agent in Israel

Ubank Ltd., the Trustee's parent company, serves as the Fund's banker, with which the cash

and the deposits included in the Fund assets are deposited. Migdal Stock Exchange Services

(N.E.) Ltd., the Fund Manager's parent company, serves as the Fund's securities agent in

Israel. The majority of the securities, options and futures contracts included in the Fund

assets are purchased and sold through Migdal Stock Exchange Services (N.E.) Ltd. and are

deposited with it.

6. The Funds Managed by the Fund Manager

As of the date of the preparation of this Prospectus the following funds* are managed by the

Fund Manager:

Big Agach + (2B) – Mutual Fund Big Agach Aktivi (2B) – Mutual Fund Big (0B) Agach without shares - Mutual Fund Barometer Agach (2B) – Mutual Fund D.B.M. (2B) Agach Mutual Fund D.B.M. (2B) Agach Lo Medorag – Mutual Fund D.B.M. (4A) Achzakot Baale Inyan – Mutual Fund D.B.M. (2D) Matach Dinamit - Mutual Fund

* For details regarding the significance of the Fund's exposure profile, which is stated in the parenthesis

comprised in the names of the funds, see subsection 1(a1) of Chapter G below.


D.B.M. Maof (4A) – Mutual Fund D.B.M. Potential (2B) – Mutual Fund Hanpakot Makam (00) AD 120 - Mutual Fund Migdal (0D) Agach$ Binleumi Mutual Fund Migdal (1A) Bond Opportunities - Mutual Fund Migdal (0A) Agach Havarot Mutual Fund Migdal (2A) Agach Le'hamara Mutual Fund Migdal (0B) Agach Lelo Menayot Mutual Fund (formerly: Migdal 15/85 - Mutual Fund) Migdal (0A) Rated Bonds Without Equity - Mutual Fund Migdal Rated Bonds (1A) Tik 10 - Mutual Fund Migdal (2A) Agach Medina Ve'tik 25 Mutual Fund Migdal (1A) Agach Menuhal - Mutual Fund Migdal (0D) Agach Olami - Mutual Fund Migdal Atlas Agach Chul (OD) - Mutual Fund Migdal Afikim 20/90 (2C) Mutual Fund Migdal Afikim Agach (1B) - Mutual Fund Migdal (1C) Afikim Active Bonds - Mutual Fund (formerly: Migdal Afikim Active Bonds - Mutual Fund) Migdal Afikim (2C) Agach Tesua Kolelet Mutual Fund Migdal Afikim (4E) Hul Mutual Fund Migdal Afikim (2E) Matach Activit Mutual Fund Migdal Afikim Menayot (4A) - Mutual Fund Migdal Afikim (3D) Premium Migdal (1B) Afikim Zmuda - Mutual Fund Migdal Afikim (0B) Tzmuda Lelo Menaiot - Mutual Fund (formerly: Migdal Afikim Chul 20/80 Mutual Fund (formerly: Migdal Afikim 20/80 Chul - Mutual Fund) Migdal Afikim Record (3D) - Mutual Fund Migdal Afikim (1C) – Tsuot Mutual Fund Migdal (4D) Brazil & Latin America Mutual Fund Migdal (00) Gilon Mugan Mas Mutual Fund Migdal (1A) Gilonim Mutual Fund (formerly: Migdal Dikla Ribit Mishtana + Mutual Fund) Migdal (0E) Dollar Agresivit Mutual Fund Migdal Dinamit (00) – Mutual Fund Migdal Dikla (1A) Agach Memshalti Mutual Fund (formerly: Migdal Dikla Agach Memshalti 75/25 Mutual Fund) Migdal Dikla US (4D) Europe Mutual Fund Migdal Dikla (00) Tvach Katzar Mutual Fund Migdal Dikla (1A) Madad Mutual Fund Migdal Dikla (4A) Mamon 75 Mutual Fund Migdal Dikla (5A) Menayot Yeter Mutual Fund Migdal Dikla (6A) Maof Kiflayim Keren Memunefet (formerly: Migdal Dikla Maof Kiflaim Mutual Fund) Migdal Dikla (0A) Solidit Agach Medina Mutual Fund Migdal Dikla (4D) China Mutual Fund Migdal Dikla (00) Shkalim Arukim Mutual Fund Migdal Dikla (00) Shiklit Menuhelet Mutual Fund (formerly: Migdal Shiklit Menuhelet Mutual Fund) Migdal Dikla (4A) TA 100 Mutual Fund Migdal Dikla (4D) Turkey Mutual Fund Migdal Dikla (4D) US Mutual Fund Migdal (4D) Hodu Mutual Fund Migdal (2A) Hchnasa Hodshit Mutual Fund Migdal (5E) Far East Mutual Fund Migdal (0D) Hasifa Le'Euro Mutual Fund Migdal (4A) Yeter PI 120% - Mutual Fund Migdal (00) Kaspit Mutual Fund Migdal (0D) Kaspit Dollar Mutual Fund Migdal (0D) Kaspit Dollar Liable Mutual Fund Migdal (00) Kaspit Liable Mutual Fund Migdal (00) Kaspit Premium Mutual Fund (formerly: Migdal Yeruka Mutual Fund) Migdal Mea Menuhelet (5A) - Mutual Fund Migdal (1A) Medadit Mutual Fund Migdal (0B) Model Medina Lelo Menayot Mutual Fund (formerly: Migdal Afikim Tel Bond + Mutual Fund, formerly: Migdal Corporate + Mutual Fund (Formerly: Migdal Technologies Mutual Fund, formerly: Migdal Dikla Technologies Mutual Fund) Migdal (5E) Moked Gmisha Mutual Fund Migdal (4A) Mor (Industry) Mutual Fund Migdal (4A) Mikud 30 Mutual Fund


Migdal (4A) Menayot - Mutual Fund Migdal (4D) Nasdaq Mondial Mutual Fund Migdal (4A) Nadlan Mutual Fund Migdal (5A) Nadlan Activit Mutual Fund Migdal (0A) Solidit Lelo Menayot - Mutual Fund Migdal Platinum (0A) - Mutual Fund Migdal (00) Ktsara Premium (formerly: Migdal Australia and Asia Pacific Mutual Fund) Migdal (1A) Sha'ar Meyuad Mutual Fund (formerly: Migdal Makam Ve'tik 10 Mutual Fund, formerly: Migdal Dikla Shiklit Ve'Olamit Mutual Fund) Migdal (1A) Sha'ar Meyuad Tsamud Mutual Fund (formerly: Migdal Tsmuda Sha'ar Meyuad Mutual Fund, formerly: Migdal T.A. 100 Astrategia 120/20 Mutual Fund) Migdal (1A) Sha'ar Meyuad Rivoni Mutual Fund (formerly: Migdal Africa Mutual Fund) Migdal Shekel Katsar (00) - Mutual Fund (formerly: Migdal Extra Makam - Mutual Fund, formerly: Migdal Atidim Shiklit - Mutual Fund) Migdal (00) Shiklit Mutual Fund Migdal (00) Shiklit 1-4 Shanim Lelo Havarot Mutual Fund (formerly: Migdal Shiklit Lelo Havarot Mutual Fund, formerly: Migdal 30/70 - Mutual Fund) Migdal (4A) T.A. 26 Mutual Fund Migdal (00) Tel Bond Lelo Nadlan - Mutual Fund (formerly: Migdal Optimum Menayot – Mutual Fund) Migdal (00) Tel Bond Property and Holdings - Mutual Fund (formerly: Migdal Europe Agresivit - Mutual Fund, formerly: Migdal Europe Menayot – Mutual Fund) Migdal (1A) Yield 0-2 Years - Mutual Fund (formerly: Migdal Yield - Mutual Fund) Migdal 10/90 (1A) - Mutual Fund Migdal 20/80 (2A) - Mutual Fund) Migdal Equity (4D) for Foreigners - Mutual Fund Nasdaq Kiflayim (6F) – Mutual Fund MTF T-A 25 (40) MTF T-A 75 (40) MTF T-A 100 (40)

7. Units in Circulation

The units in the Fund have a par value of 1.00 dollar and their number in circulation from

January 29, 2009 is 224,006.

The Fund Agreement stipulates that no participation certificates shall be issued in respect of

the Fund units.

7A. The Par Value of the Units, Their Prices and the Financial Statements

The par value of the units of the Fund and their prices are in dollars.

The financial statements of the Fund are prepared in Israeli currency.

8. Fund's Fiscal Year

The Fund's fiscal year ends on December 31. The Fund Agreement provides that the Fund

Manager may change the date of expiration of the fiscal year from time to time.

8A. Governing Law, Jurisdiction and Binding Version

In accordance with the Fund Agreement:

(a) Solely the provisions of Israeli law shall constitute the governing law with regard to

the Fund Agreement. Any claim or other legal proceeding relating to or in connection

with the Fund and its assets or the Fund Agreement, and any such claim or other legal

proceeding against the Trustee or the Fund Manager, or in connection therewith, shall

be filed solely in the competent courts in Israel, in accordance with the provisions of

Israeli law, unless the Fund Manager and the Trustee give their prior written consent to

the filing of any such claim or proceeding in a court elsewhere.

(b) The Hebrew versions of the Fund Agreement and of this Prospectus are the exclusively

binding versions.


9. Terms in the Prospectus

Terms in the Prospectus which appear in the Law and in the Regulations enacted pursuant

thereto shall have such meaning as is construed in the said Law and Regulations, unless the

context requires otherwise.


Chapter A: Offer of the Fund Units

1. (a) Offer of units denominated in US dollars for foreign residents only:*

)1( An unlimited number of registered units, having a par value of 1.00 USD, is

hereby offered for sale to foreign residents* only.

The said units are offered from March 22, 2009 up to March 21, 2010 and will

be sold, subject to the provisions of sections 4 and 5 of this chapter and of

section 6 of Chapter B below, on any "Trading Day" as defined below.

In this Prospectus: "Trading Day" - A day on which trading takes place on the

Stock Exchange in Israel, and on which representative rates are published or on

which trading in US Dollars takes place among banks in Israel, including such

day on which such terms are not fulfilled provided that trading takes place on the

Stock Exchange in Israel on that day and that the value of the assets held by the

Fund, which cannot be determined in respect of such day, out of the net value of

the Fund assets, does not exceed ten percent.

Financing of the purchase of the units of the Fund shall be done solely in dollars

from a deposit with a banking corporation, in foreign currency, of a foreign

resident (known as a PATACH account).

)2( In accordance with the Fund Agreement, the Fund Manager is entitled to change

the currency in which the units of the Fund shall be denominated, by amending

the Fund Agreement, without requiring the approval of the meeting of the Fund

unitholders.

)3( In accordance with the Fund Agreement, the Fund Manager may determine that

the Fund units will also be offered to persons who are not foreign residents, by

amending the Fund Agreement, without requiring the approval of the meeting of

the Fund unitholders.

(b) Restrictions on the Offer of Units

The units of the Fund which are being offered for sale pursuant to this Prospectus have

not been registered and they shall not be registered under the US Securities Act of

1933, and therefore the units are not being offered for sale in the USA or to citizens or

residents of the USA.

The units are not being offered for sale to an individual, corporation or other entity

which is enjoined or restricted from purchasing them or from holding them or from

being their owner pursuant to the laws of the country in which he is a citizen or in

which he is a resident, or pursuant to any other law applicable to him.

Any person wishing to invest in the units is required to ascertain that he complies with

all the provisions of the law applicable to him in this matter, as aforesaid, including

also to obtain any government or other permit, to comply with any formal request and

to pay any tax which is payable pursuant to any law applicable to him as aforesaid in

respect of the purchase of the units or the transfer thereof or any other tax applicable to

him in this matter, and should he have any doubts in this regard, he should consult

with a professional consultant in the matter.

* See definition of “Foreign Resident” in Appendix E to the Prospectus and the Income Tax Regulations

(Exemption from Tax on Certain Income of a Liable Mutual Fund for Foreign Residents) 5763 – 2003, which are set forth in Appendix F of the Prospectus.


The Fund Manager and the Trustee are not liable to the purchasers of the units in

connection with the restrictions applicable thereto in the purchase of the units of the

Fund pursuant to any law.

2. (a) The Price of the Units Being Offered

The price of the units being offered shall be calculated by the Fund Manager on any

Trading Day (as set forth in Chapter D "Calculation of the prices and the days in

respect of which they will be calculated").

The units are offered, so long as not otherwise resolved by the Fund Manager, at the

unit price, as calculated from time to time, without the addition of any supplement, and

should the Fund Manager decide otherwise, with the addition of a supplement at such

rates as shall be determined, as set forth in section 1(c) of Chapter D and in sections

2(b) and 3 of this chapter below.

(b) Discount in Special Cases (see section 6 below)

Should, in accordance with the Fund Manager's decision, a supplement be collected in

respect of the purchase of units of the Fund, then the Fund Manager shall be entitled,

in its discretion, to give a discount on the supplement to be paid for the units, or not to

collect the supplement at all.

All payments pursuant to the above sections shall be made solely in dollars from a deposit

with a banking corporation, in foreign currency, of a foreign resident (known as a PATACH

account).

3. An Offer with Different Supplement Rates within the Prospectus Period (see section 6

below)

At any time, during the period of the receipt of orders pursuant to this Prospectus, the Fund

Manager may decide to offer units to the community of foreign residents in consideration of

payment of the unit price plus a supplement at such rates as shall be determined, which shall

not exceed the maximum supplement rate in accordance with the Fund Agreement (see

section 1(c) of Chapter D below). The Fund Manager may determine that the offer shall be

valid for a certain period or shall be limited to a maximum number of units, all as shall be

determined by the Fund Manager.

4. Cessation of the Sale and Renewal Thereof

The Fund Manager may, in its sole discretion, subject to the provisions of the Law, cease

from time to time the issuance of new units in the Fund and renew the issuance thereof.

In accordance with section 46(g) of the Law, if the net value of the assets of an open-end

fund is less than the minimum value (as set forth below), or if the number of its unitholders

is less than the minimum number (as set forth below) as determined by the Minister of

Finance, for 30 consecutive days or for 60 days out of a period of 90 days (in this section:

the "Interim Period"), the Fund Manager shall be required to continue to offer its units to the

public, and should it not be a fund for foreign residents – it shall offer them to any person

(other than to a foreign citizen or to a foreign resident who is prevented, pursuant to the laws

of the country in which he is a citizen or resident, from purchasing or holding units of the

Fund) until the net value of its assets and the number of its unitholders shall reach the

minimum value and the minimum number as determined by the Minister of Finance, for 30

consecutive days. Should the publication of a Prospectus be required for such an offer of

units – the Fund Manager shall publish it, not less than 30 days from the end of the Interim

Period. The said provisions shall not apply if the Fund Manager gave notice of the

dissolution of the Fund.


In this context, the Joint Investment Trust (Minimum Value of Assets of an Open Fund and

Minimum Number of Unit Holders) Regulations, 5755 - 1994, provide as follows:

"Minimum Value" – NIS 4 million linked to the Consumer Price Index in accordance with

the provisions of Regulation 2(b) of the said Regulations, i.e. an amount of NIS 6,690,000

for the year 2009.

"Minimum Number" – 200 unitholders.

On January 29, 2009, the net value of the Fund assets amounted to NIS 437,001. This value

is lower than the "Minimum Value" as defined in this section above. In view of the duration

of the period during which the net value of the Fund assets was less than the Minimum

Value (as defined above) and in accordance with Section 46(g) of the Law, then, from

January 29, 2009, the Fund Manager is not authorized to discontinue the offering of the Fund

units to the public until the net value of the Fund units reaches the Minimum Value for 30

continuous days.

5. Rejection of Surplus Orders

(a) At any time that the Fund Manager shall decide to create units in a smaller number

than the number of units that were ordered, or not to create units at all, the Fund

Manager may reject applications, in whole or in part, subject to that stated in

subsection (b) of this section below.

(b) Section 46 (h) of the Law provides that should the number of units that were ordered

on any day exceed the number of units that were offered on the said day, then the Fund

Manager shall accept every order at a uniform rate.

6. Purchase of Units through Members of the Stock Exchange

(a) Members of the Tel Aviv Stock Exchange Ltd. (in this Prospectus: the "Stock

Exchange") may collect, subject to the provisions of the Law, commissions at different

rates in respect of the sale of units of the Fund. As a consequence, the purchaser of

units may pay for the units a price which is higher than the purchase rate (as defined in

Chapter C below) pursuant to this Prospectus.

(b) In accordance with section 42(d) of the Law, the rate of commission which a member

of the Stock Exchange, with whom orders may be submitted for units (hereinafter: the

"Distributor"), may collect from the purchaser of a unit or from the redeemer of a unit,

due to the sale of the unit or the redemption thereof, or from a unitholder due to the

holding of the unit through the Distributor, shall not vary due to the fact that the units

which he has sold or redeemed, or which are held through him, were issued by

different fund managers, unless this was permitted pursuant to section 42(e) of the

Law, and upon such terms as are so permitted. The rates of commission for such

actions shall be displayed at the Distributor's office, in a prominent place.

7. Order of Units

Applications to order the units being offered shall be submitted by foreign residents* only to

the members of the Stock Exchange and they shall be transferred to the Fund Manager by

way of the Stock Exchange Clearing House. The financing of the purchase of the units of the

Fund shall be done solely in dollars from a deposit with a banking corporation, in foreign

currency, of a foreign resident (known as a PATACH account). The member of the Stock

Exchange shall transfer to the Fund Manager's account or to the Fund's account, by way of

* See definition of “Foreign Resident” in Appendix E to the Prospectus and the Income Tax Regulations

(Exemption From Tax on Certain Income of a Liable Mutual Fund For Foreign Residents) 5763 – 2003, which

are set forth in Appendix F of the Prospectus.


the Stock Exchange Clearing House, the full consideration which shall be due for units that

were sold in respect of orders submitted by the said member. The provisions of the Law with

regard to the order and sale of units are set forth in Chapter B below.

8. Distribution Commissions and Prohibition on Grant of Bonus

(a) In accordance with section 82 of the Law:

)1( No payment or other bonus shall be offered in connection with the purchase,

redemption, sale or holding of units. The provisions of this section shall not

apply to the following:

(a) The grant of a discount on the supplement.

(b) Payment of a distribution commission to a Distributor who is an

investment marketer as defined in the Law for the Regulation of

Engagement in Investment Counseling, in Investment Marketing and in

Investment Portfolio Management, 5755 – 1995 (hereinafter: "Marketer").

(c) Payment of a distribution commission to another Distributor in accordance

with the terms pursuant to this section.

(d) Payment of fees or commission, by a Marketer or by a fund manager, to his

employee or to a person hired by him.

(e) Payment by a Distributor to a person who holds units through him, in an

amount that does not exceed the amount of the distribution commission

which the Distributor collects from the Fund Manager due to the holding

of the said units through him.

)2( The rate of commission which shall be collected by a Distributor in connection

with the sale of units of funds, the redemption thereof or the holding thereof,

shall not vary due to the fact that it is collected from different fund managers.

)3( The Minister of Finance, at the proposal of the Israel Securities Authority or after

consultation therewith, and with the approval of the Finance Committee of the

Knesset, may prescribe, subject to the provisions of subsection (a)(2) of this

section, in general, or for particular types of funds, conditions upon which the

Fund Manager may pay a distribution commission to a Distributor, and the

provisions with regard to the maximum rate of the said commission and the

manner of calculation thereof.

(b) In accordance with the Distribution Commission Regulations:

)1( A fund manager may pay to a distributor who is not a marketer a distribution

commission for units of a fund managed by the fund manager, which are held

through the said distributor, subject to that stated in the Distribution Commission

Regulations.

)2( Should no agreement be reached between the fund manager and a distributor

who is not a marketer with regard to the payment of such a distribution

commission, the distributor who is not a marketer may collect, from the

purchaser of a unit, commission in an amount which shall not exceed the amount

of the distribution commission which he would have been entitled to collect

from the fund manager had agreement been reached in this regard between them,

subject to that stated in the Distribution Commission Regulations.

)3( Maximum distribution commission amounts have been determined which a

distributor who is not a marketer may collect and which a fund manager may pay

for each day on which a unit of a fund is held which is managed by the fund


manager through the said distributor (apart from cases which have been

excepted), in accordance with the type of the fund from among the four types

that have been prescribed, as follows:

In a fund of Type 1 – the daily redemption price X 0.25% / 365.




In this subsection: "the daily redemption price" – the redemption price of the unit

that was published for that day, and if no redemption price was published for that

day – the redemption price most recently published prior to that day.

(c) The type of this Fund, for the purpose of calculating the distribution commission

pursuant to the Distribution Commission Regulations, was determined according to the

investment policy of the Fund and is: Type 2.

It is hereby clarified that a change in the investment policy of the Fund is likely to

result in a change in the type of the Fund, and, consequently, in a change in the

distribution commission in connection with the distribution and the holding of the

Fund units. Should a change occur in the investment policy of the Fund in such a

manner that would give rise to a change in the fund type, the Fund Manager shall also

state, in a report which it shall submit with regard to the said change, the new fund

type.

(d) On the date of preparation of the Prospectus, the Fund Manager is bound by

distribution agreements with the following distributors: Bank Leumi LeIsrael Ltd.,

Bank Hapoalim Ltd., Israel Discount Bank Ltd., Mizrahi Tefahot Bank Ltd., the First

International Bank of Israel Ltd., Jerusalem Bank Ltd., Mercantile Discount Bank Ltd.,

Otzar Hahayal Bank Ltd., Union Bank Of Israel Ltd. and Ubank Ltd. (in this section:

the “Banks”).

In the distribution agreements, it was provided, inter alia, that the Fund Manager

would pay to the Banks, a distribution commission in respect of the units of the mutual

funds managed by the Fund Manager, in respect of which a distribution commission is

duly payable, which are held through the Banks, at the maximum rate which could

have been collected from the Fund Manager at that time, in accordance with the

provisions of the Law.

If the Fund Manager enters into additional distribution agreements, the Fund Manager

shall submit an immediate report in respect thereof.


Chapter B: Order, Sale and Redemption of Units

In accordance with the provisions of sections 44, 45, 46, 48 and 108(e) of the Law:

1. (a) Orders for the units being offered in the Prospectus and instructions for the redemption

thereof shall be submitted to the Distributor. The Distributor shall not refuse to

distribute units of a fund which are being offered pursuant to a prospectus in respect of

which the Israel Securities Authority has permitted the publication thereof, for reasons

related to the Fund or to the Fund Manager.

(b) The Distributor shall transfer to the Fund Manager through the Stock Exchange

Clearing House (hereinafter: the "Clearing House") the total of the orders for units

which he has received, and the total of instructions for the redemption of units which

he has received, orders for units separately and instructions for redemption separately,

all in such manner as determined by the Minister of Finance.

(c) For units of a fund under its management, the Fund Manager shall receive payment in

cash only. Should units of a fund be purchased by an individual, and should securities

be purchased from the same individual by the Fund Manager for a fund under its

management, in an off-market transaction, or in a coordinated transaction, during a

period of 30 days, the presumption is that both purchases have been performed within

a single transaction in which the Fund Manager received payment for units of the fund,

not in cash, unless proven otherwise.

2. Should a unit in an open-end fund be sold, the Distributor shall transfer to the Fund Manager's

account or to the Fund's account, through the Clearing House, in such a manner as determined

by the Minister of Finance, an amount in cash which is equal to the price of the unit. Should the

amount be transferred to the Fund Manager's account, the Fund Manager shall transfer it to the

Fund's account on the same day.

3. The manager of an open-end fund shall sell the units and shall redeem them only on the days in

respect of which he is required to calculate the purchase price and the sale price of the Fund

assets. (Namely, on any Trading Day. See also sections 4 and 5 of Chapter A above and

sections 6 and 7 of this Chapter below).

4. The manager of an open-end fund shall redeem a unit pursuant to an instruction which he has

received from the Distributor. Should the Fund Manager receive an instruction to redeem a unit,

he shall cancel the unit and shall transfer, from the Fund's account to the Distributor, by way of

the Clearing House, in such manner as determined by the Minister of Finance, an amount in

cash that is equal to the redemption price of the redeemed unit, and the Distributor shall transfer

the said amount to the unitholder on the same day.

5. (a) A Distributor who has received an order for a unit or an instruction to redeem a unit

before the time stated in the Prospectus and which was determined in accordance with

the rules set by the Clearing House, after consultation with the Authority (see section 2

of Chapter D below – in this Prospectus: the "Appointed Hour") on a day in respect of

which it is required to calculate the sale price in respect thereof, shall transfer it to the

Clearing House on the very same day by the Appointed Hour, or within such period of

time as determined by the Clearing House in the said rules. Should an order or

instruction as stated be received on another day or after the Appointed Hour – the

Distributor shall transfer it before the Appointed Hour on the following day in respect

of which it is necessary to calculate the sale price.

(b) Should an order be received by the Clearing House for a purchase or should an

instruction be received for the redemption of a unit as stated in subsection (a) of this


section, the Clearing House shall transfer it to the Fund Manager on the very same day

within such period of time as determined by the Clearing House in the rules as stated

in section 46(i) of the Law.

(c) Should a Distributor or the Clearing House not transfer an order for a purchase or an

instruction for redemption, prior to the time stated in subsections (a) and (b) of this

section, they shall be deemed to have been submitted on the date on which the Fund

Manager received them, unless they were cancelled by the entity which ordered same

or which gave the instruction, provided that if the Fund Manager received them after

the said time, they shall be deemed to have been submitted before the Appointed Hour

on the first day of the calculation of the prices after the day on which the Fund

Manager received them.

(d) The provisions of subsection (c) of this section shall not derogate from the right of an

entity ordering a unit or giving a redemption instruction, to compensation pursuant to

any law due to the non-transfer of the order or instruction as stated in subsection (a) or

(b) of this section.

6. (a) Notwithstanding the foregoing, the Chairman of the Israel Securities Authority may:

)1( Order, after consultation with the Chairman of the Board of Directors of the

Stock Exchange in Israel, in general, or for specific types of funds, the cessation

of the offer of the units of an open-end fund or the redemption of same, for a

period which shall not exceed three Trading Days, if trading did not take place or

if the results of the trading seriously affected the ability to buy or sell securities

for a fund, or to calculate the purchase price and the sale price of the Fund assets.

)2( Approve, at the written request of the manager of an open-end fund, which has

been approved by the Trustee, the cessation of the redemption of units for a

period which shall not exceed three Trading Days, if, due to a serious disruption

to the normal course of work of the Fund Manager or of the entity providing

services to the Fund Manager, he is not able to redeem units. During such period

of cessation, units shall not be offered to the public.

)3( Instruct, after consultation with the Commissioner of Capital Market, Insurance

and Savings at the Ministry of Finance, and after giving a proper opportunity to

the Fund Manager and to the Trustee to state their claims, the cessation of the

offer of units of an open-end fund and the redemption thereof for a period which

shall not exceed seven Trading Days, if he believed that without the said

cessation, the interests of the unitholders may be adversely affected.

(b) The Chairman of the Israel Securities Authority may, with the approval of the Minister

of Finance, extend the validity of his instruction pursuant to subsection (a)(1) of this

section, as long as grounds exist as stated herein, and pursuant to subsection (a)(3) of

this section, for additional periods each of which shall not exceed seven Trading Days,

and not more than sixty consecutive days in total.

(c) The Chairman of the Israel Securities Authority shall publish in two daily newspapers

with a wide circulation, which are published in Israel, in Hebrew, at least one of which

is a newspaper with a wide circulation within the meaning of section 1A of the

Planning and Construction Law, 5725 – 1965 (in this Prospectus: the "Two

Newspapers") a notice of the exercise of his power pursuant to this section.

(d) The Fund Manager may appeal to the Court against the decisions of the Chairman of

the Israel Securities Authority pursuant to this section, in accordance with the

provisions of the Law.


7. The manager of an open-end fund shall not sell and shall not redeem units from the date of the

commencement of the dissolution of the fund, other than redemption in the realization of the

Fund assets in dissolution.

Purchase and Redemption of Units in Dollars through a Foreign Resident Deposit

The financing of the purchase of the units of the Fund shall be done solely in Dollars from a

deposit with a banking corporation, in foreign currency, of a foreign resident (known as a

PATACH account).

The consideration which shall be received from the redemption of the units of the Fund shall be

deposited in Dollars only, in a deposit as aforesaid.


Chapter C: Prices of the Fund Units

The Unit prices of the units in the Fund plus the supplement at the maximum rate at that time (in

this Prospectus: the “Purchase Rate”), at % of their highest and lowest par value, during any

period, from the Fund Inception Date on March 28, 2007 up to January 29, 2009, were as follows:

Period Highest Date Lowest Date

28.3.07-31.12.07 121.56 22.7.07 97.10 16.8.07

1.1.08-31.12.08 104.83 1.1.08 42.91 23.11.08

1.1.09-29.1.09 51.59 6.1.09 47.65 22.1.09

The Purchase Rate on January 29, 2009 was 48.62 and on February 9, 2009 - 53.05.

Chapter D: Calculation of Prices and the Days for which They Shall Be

Calculated

1. Calculation of Prices

(a) General

The Fund Agreement prescribes that the purchase and sale prices of the Fund assets,

the unit prices and the redemption prices of the Fund units, the days in respect of

which the said prices shall be calculated and the value of the Fund assets, shall be

determined in accordance with the Law and with the regulations enacted by virtue

thereof.

Appendix A of this Prospectus sets forth the Joint Investment Trust (Purchase and Sale

Prices of Fund Assets and Value of Fund Assets) Regulations, 5755 – 1994 (in this

Prospectus: the "Prices Regulations"), formalizing the said issues.

For details with regard to expenses which may be paid out of the Fund assets see

section 3 of Chapter K below.

The purchase price of the Fund assets is the net value of the Fund assets plus the

purchase expenses of the Fund assets, and the sale price of the Fund assets is the net

value of the Fund assets less the selling expenses of the Fund assets.

The purchase expenses and the selling expenses for the purpose of determining the

purchase and sale price of the Fund assets are calculated according to the purchase and

sale commissions of the Fund assets, as set forth below, in accordance with the spread

of the types of assets in the Fund.


(b) Table of Commissions

Below are details of the commissions currently taken into account for the purpose of

calculating the purchase and sale price of the Fund assets, according to the type of asset. In % of the value of the

transaction Securities traded in Israel (with the exception of short term loans and bonds)

0.075

Short term loan 0.025^ Notes (apart from short term loans (Makam)) 0.05^^ Call 1 options on the Tel Aviv 25 Index 0.075 Other options on the Tel Aviv 25 Index NIS 2 per option Options on the Tel Aviv Bank Index NIS 2 per option Shekel / Dollar options NIS 2 per option Shekel / Euro options NIS 2 per option Futures contracts traded in Israel NIS 2 per contract Foreign shares and units or shares in foreign funds which are traded in the USA

2 + 0.075 US cent per share / unit*

Foreign shares and units or shares in foreign funds which are traded in Europe

0.25@

Foreign bonds 0.10

Foreign options US$ 3 per option *

Futures contracts traded overseas US$ 5 per contract *

___________________ ^ The commission for the purchase of a short term loan (makam) within the issue is 0.02% of the transaction

value. For the purpose of calculating the purchase prices of the Fund assets, the commission stated in the above table is taken into account.

^^ The commission for the purchase of notes (apart from makam) within the issue is 0.03% of the transaction value. For the purpose of calculating the purchase prices of the Fund assets, the commission stated in the above table is taken into account.

* The said commission also includes the commission to the securities agent overseas. @ But a minimum of 30 units of the currency in which the transaction is effected. For the purpose of calculating

the purchase and selling prices of the Fund assets, a commission at a rate of 0.25% of the value of the transaction is taken into account.


A foreign security which is traded over the counter is purchased at the "ask" price, and

sold at the "bid" price. The difference between the two prices is the margin which

remains in the possession of the market maker, and its meaning, in terms of the Fund,

is similar to the payment of a commission by the Fund. This difference may reach high

rates in the event of securities with low negotiability, and whose rate is difficult to

evaluate.

The commission paid by the Fund to a foreign securities agent for transactions made

over the counter, as set forth in the table presented above, is in addition to the said

difference.

The higher the rate of the commissions, the unit price will increase and the redemption

price will decrease.

Should there be a change in the commissions set forth in the table specified in this

subsection above, the above-mentioned commissions, as shall be taken into account

for the purpose of the calculation of the unit prices and the redemption prices of the

units of the Fund, shall be modified accordingly.

Borrowing Commission

So long as not otherwise resolved by the Fund Manager:

(a) The Fund Manager shall borrow for the Fund only those securities in respect of

which the borrowing commission charged to the Fund does not exceed 4% per

annum of the value of the borrowed securities.

(b) The proportionate rate of the said borrowing commission shall be deducted

during the borrowing period, once a week, from the value of the Fund assets.

(b1) Purchase of Securities Directly from New Issues

So long as not otherwise determined, in the event of the purchase of securities (apart

from makam and other government bonds) for the Fund, directly from new issues, the

Fund will receive from the Fund's securities agent through which the said transaction

took place, the distribution commissions received by the said agent from the issuer, for

the purchase of the said securities. It should be noted that the Fund will pay in respect

of the said transaction, the commission set forth in subsection (b) above for any

transaction of this nature.

(b2) Information on the Purchase and Sale Prices of Foreign Securities

Until such time as shall be determined otherwise by the Fund Manager, the prices of

foreign securities in the Fund shall be determined in accordance with the information

received from the Bloomberg L.P. agency in London, and in the event that it is not

possible to receive such a report, the Fund Manager shall obtain the information

regarding the said prices in another manner.

(b3) Taxation

For the purpose of calculating the purchase and sale prices of the Fund assets, an

amount of tax in respect of the Fund assets in respect of which the tax has not yet been

paid, is deducted from the value of the Fund assets. For details regarding the taxation

provisions applicable to the Fund including the provisions of the Income Tax

Regulations (Exemption From Tax On Certain Income Of A Liable Mutual Fund For

Foreign Residents) 5763 – 2003 see below in Chapter O "Taxation" and in Appendix F

of the Prospectus.


(c) Supplement

The Fund Manager is entitled to receive, as stated, a supplement which constitutes part

of its fee, in addition to its annual fees.

The Fund Agreement provides that the Fund Manager shall be entitled to add to the

unit price or to deduct from the redemption price a supplement in accordance with the

provisions of the Law, which shall not exceed 5% of the unit price.

The supplement, up to a rate of 5% as aforesaid, shall be determined from time to time

by the Fund Manager, and shall be published in the Prospectus. The Fund Manager

shall be entitled, at its exclusive discretion, to set a supplement at different rates, or not

to collect the supplement at all.

In addition, it will be permitted to determine in the Prospectus or pursuant to

provisions which shall be determined in the Prospectus with respect to an offer with

different supplement rates, during the period of the Prospectus, events, conditions or

periods (including the entire period during which the Prospectus shall be in effect) in

which the supplement shall be collected at a rate different from the rate set forth in the

Prospectus, or in which such a supplement shall not be collected at all.

The supplement to the units being offered pursuant to this Prospectus is set forth in

Chapter A: "Offer of the Units of the Fund".

2. The Days for which the Prices shall be Calculated

The Fund Agreement provides that the Fund Manager may, subject to the provisions of the

Law and the regulations enacted by virtue thereof, to determine and change from time to

time the Appointed Hour and any other time in connection with the submission of orders for

the purchase of a unit or an instruction for the redemption of a unit. (As of the date of the

preparation of the Prospectus, no other date as aforesaid has been determined by the Fund

Manager.)

The provisions of the Law with regard to the ordering of units, the sale and redemption

thereof, are set forth in Chapter B above.

The selling and purchase prices of the Fund assets shall be calculated by the Fund Manager,

subject to the provisions of the Law, on any Trading Day, and the calculation of the purchase

and selling prices of the Fund assets immediately after the submission of the unit purchase

applications or the instructions for the redemption thereof shall serve as a basis for the

calculation of the unit price and the redemption price. In other words:

(a) With regard to applications submitted on a Trading Day by 15:00 (Israel time) (in this

Prospectus: the "Appointed Hour") – the price which shall be calculated for that

Trading Day.

(b) With regard to other applications – the price which shall be calculated for the nearest

Trading Day.


Chapter G: The Fund's Investment Policy and Transactions for the Fund

1. (a) The Fund's Investment Policy and Transactions for the Fund

(1) The Fund Agreement provides as follows:

(a) Exposure to shares will not fall below 50% of the net value of the Fund

assets. (The foregoing is subject to subsection (a)(4) of this section below.)

(b) The provisions of subsection (a)(1)(a) of this section may be changed by

the amendment of the Fund Agreement without requiring the approval of

the unitholders meeting.

(c) Subject to the foregoing and to the provisions of any law, the Fund

Manager may invest the Fund's resources, in its absolute discretion, and it

is further authorized to determine the amount of cash which shall be

included in the Fund assets from time to time.

)2( So long as not otherwise resolved by the board of directors of the Fund Manager:

(a) The Fund assets shall not include securities listed for trading under dual

listing, either on the Stock Exchange in Israel or on stock exchanges or

regulated markets overseas (dual securities).

(b) Exposure to shares traded in Israel will not be less than 50% of the net

value of the Fund assets.

(c) Exposure to shares will not exceed 120% of the net value of the Fund

assets and will not fall below 50% of the net value of the Fund assets.

(d) Exposure to foreign currency will not exceed 120% of the net value of the

Fund assets and will not fall below (-120%) of the net value of the Fund

assets (See also subsection (a)(2)(e) of this section below).

(e) The Fund is limited in terms of investment in foreign securities, as defined

below.

"A Fund which is limited in terms of investment in foreign securities" – A

fund in which, under its investment policy, the total value of the foreign

securities, foreign options, units of foreign mutual funds and foreign

currency, to be held, together with the exposure to an underlying asset

traded overseas via activity in derivatives traded on overseas stock

exchanges shall not exceed ten percent of the net value of its assets.

(The foregoing is subject to subsection (a)(4) of this section below.)

)3( Subject to the provisions of the law and to the Fund's investment policy, the

Fund Manager may perform, for the Fund, the following transactions:

(a) Purchase, sale and creation of options and futures contracts.

(b) A short sale.

(c) The provision of securities for the purpose of a short sale transaction.

(d) Re-sale transactions.

)4( Pursuant to the Fund Agreement and to the resolution of the board of directors of

the Fund Manager, a deviation of the Fund's investments from the Fund's

investment policy will not be deemed as a violation of the duty to invest the

Fund assets in accordance with such policy, upon satisfaction of the terms laid

down in the law, to the effect that such a deviation shall not be deemed as a


violation of the provisions of the Law. (For details regarding the provisions of

the Law in this context see section 1(b) of this Chapter below.)

(a1) Classification of the Fund for Publication Purposes: For foreign residents only, foreign

residents, shares.

The Fund's Exposure profile: 4D.

The exposure profile of the Fund is a combination of two characters, representing the

absolute value (on a scale consisting of the digits 0-6) of the maximum exposure rate

of the Fund to shares and the absolute value (on a scale consisting of the digits 0 and

the letters A-F) of the maximum exposure rate of the Fund to foreign currency. The

higher the digit or the letter on the scale the higher the absolute value of the maximum

exposure rate.

Level of Exposure to Shares Absolute Value of the Maximum Exposure

To Foreign Currency (In % of the net value of the Fund assets)

0 No exposure 1 Up to 10% 2 Up to 30% 3 Up to 50% 4 Up to 120% 5 Up to 200% 6 Exceeding 200%

Level of Exposure to Foreign

Currency

Absolute Value of the Fund's Maximum

Exposure Rate To Foreign Currency

(In % of the net value of the Fund assets)

0 No exposure

A Up to 10%

B Up to 30%

C Up to 50%

D Up to 120%

E. Up to 200%

F Exceeding 200%

For details concerning the rate of exposure to shares and the rate of exposure to foreign

currency prescribed in the Fund's investment policy see subsection (a)(2) of this

section above.

(a2) Transactions and Undertakings for the Fund

The Fund Agreement provides that the Fund Manager shall be entitled, without

requiring the approval of the unitholders meeting, to perform any transaction for the

Fund and to make any undertaking for the Fund (with the exception of increasing the

maximum fees of the Fund Manager and the Trustee), which were not prohibited in the

Fund Agreement or in the Fund's investment policy, provided that it is permitted by

law to perform such transaction or to make such undertaking, as the case may be,

without the approval of such meeting.

For details regarding the Fund assets as at January 29, 2009 see Chapter F above.

(b) Deviation from the Investment Policy

In accordance with section 61 of the Law, if investments of the Fund have deviated

from the Fund's investment policy, as prescribed in the Fund Agreement and in the


Prospectus, the deviation shall not be deemed to be a breach, if the following two

conditions have been satisfied:

)1( If the Fund Manager remedied the deviation by the end of the second day of

calculating the prices after the day on which it began.

)2( If the Fund's investments deviated from the Fund's investment policy, as stated,

not more than five times during a period of twelve months.

Notwithstanding the foregoing, additional deviations shall not be deemed to be a

breach, if the Chairman of the Israel Securities Authority is satisfied that the Fund

Manager has taken the proper measures to prevent the breach and remedied the

deviation as stated above in subsection (1) of this section.

(c) Significant Change in the Investment Policy

)1( In accordance with section 61(b1) of the Law, The Fund Manager shall not

make a significant change in the investment policy of a fund under its

management, which was prescribed in the Fund Agreement, in the Prospectus or

in a report submitted pursuant to the Law, more than once during a period of

twelve months, other than under such conditions as are laid down in regulations.

In this context, "significant change in the investment policy of a fund" – a

change in the investment policy of a fund which requires a change in the

classification of the Fund in the publication which was made in accordance with

the provisions of section 73(a) of the Law or which could significantly affect the

fluctuations of the unit prices and the redemption prices of the Fund units.

)2( The Joint Investment Trust (Significant Change in the Investment Policy of a

Fund) Regulations, 5768 – 2007 lay down conditions upon the satisfaction of

which the Fund Manager may make a significant change in the investment policy

of a fund under its management prior to the lapse of twelve months from the date

on which such change was last effected.

(c1) Nature of the Options and the Risks Entailed in Investing therein and in the Creation

Thereof

CALL options on any security confer on the optionholder the right to purchase the

security (the asset underlying the option) at the price determined in the terms of the

option (the exercise price). The exercise of the option, when the price of the security

on the Stock Exchange is higher than the exercise price, creates a profit for the option

holder in the amount of the difference between the price of the security and the

exercise price, less the premium and the commission paid for the option.

A PUT option on a security confers on the optionholder the right to sell the security at

the exercise price. The exercise of the option, when the price of the security on the

Stock Exchange is lower than the exercise price, creates a profit for the optionholder in

the amount of the difference between the price of the security and the exercise price,

less the premium and the commission paid for the option.

A CALL option on a securities index (the asset underlying the option) confers on the

optionholder the right to receive, at the time of the exercise, the difference between the

index and the exercise price, if the index is higher than the exercise price. A PUT

option on a securities index confers on the optionholder the right to receive, at the time

of the exercise, the difference between the index and the exercise price, if the index is

lower than the exercise price.

At the present time, the following are traded on the Tel Aviv Stock Exchange: PUT

and CALL options on the Tel Aviv 25 Index, Tik Tel Aviv 25 options which are


CALL options on the Tel Aviv 25 Index whose exercise price is NIS 1 (hereinafter:

"T.A 25 CALL 1 Option"), PUT and CALL options on the rate of the dollar, CALL 1

Options on the rate of the dollar, PUT and CALL options on the rate of the Euro,

CALL 1 Options on the rate of the Euro, PUT and CALL options on the T.A Bank

Index and CALL 1 Options on the T.A Bank Index.

The holding of a T.A 25 CALL 1 Option shall be deemed to be the holding of the

shares which comprise the T.A 25 Index, in a composition which is identical to the

composition thereof on the T.A 25 Index. A change in the T.A 25 Index affects the

price of the option at a rate close to the rate of the change in the Index.

Inter alia, options on shares, share indices and currencies are traded abroad.

The Fund Manager may purchase PUT options in Israel and overseas as an investment,

if it foresees a fall in the prices of shares or in the Tel Aviv 25 Index, or in other

indices. If the forecasts of the Fund Manager are realized and the prices of the shares

or the Tel Aviv 25 Index fall below the exercise price, a gain shall be generated for the

Fund from which the amount of the premiums paid for the options shall be deducted.

If the forecasts of the Fund Manager are not realized and the prices of the shares or the

Tel Aviv 25 Index do not fall to the extent forecast by the Fund Manager, the price of

the options will fall or expire without being exercised, and the Fund may sustain a loss

in the amount of the premiums paid for the options which have expired.

The Fund Manager may purchase PUT options on the Tel Aviv 25 Index, for the Fund,

as protection of the Fund's investment portfolio against a fall in the prices of the shares

included therein. The extent of the protection which a PUT option on the Tel Aviv 25

Index provides for the investment portfolio depends on the extent of the conformity

between the composition of the investment portfolio and the composition of the shares

in the index. The closer the composition of the investment portfolio is to the

composition of the shares on the Tel Aviv 25 Index, the better the protection.

The Fund Manager may purchase CALL options for the Fund as a substitute for the

purchase of shares, an action which allows it to benefit from gains when the prices of

the shares go up. The investment required for this is smaller than that required in order

to purchase the shares themselves. If the forecasts of the Fund Manager are not

realized and the prices do not go up to the extent forecast by the Fund Manager, the

options that were purchased for the Fund may expire without being exercised, and the

Fund may sustain a loss in the amount of the premiums paid for the options which

have expired. If the forecasts of the Fund Manager are realized and the prices of the

shares do go up beyond the exercise price, the gain generated from the sale of the

options or from the exercise thereof will be reduced by the amount of the premiums

paid in respect thereof.

The option price is primarily influenced by fluctuations in the price of the underlying

asset and by the length of the period that remains until the expiration of the option. A

change in the price of the underlying asset causes a larger change in the option price,

with the exception of a T.A 25 CALL 1 Option, as explained above. Therefore, the

fluctuations in option prices are larger than the fluctuations in the price of the

underlying asset.

As aforesaid, the optionholder will lose his entire investment in the option (the price

which he paid for the option and the commissions in respect of the transaction) if he

does not exercise the option or if he does not sell it.

Cessation of trading in the shares included in the listing of the Tel Aviv 25 shares may

give rise to a cessation of trading in the options on the Tel Aviv 25 Index, and to the

prevention of the possibility of performing transactions thereon. Upon the resumption


of trading in the shares, significant price fluctuations are likely to take place, which

will significantly affect the option price.

The risk to the creator of a CALL option arises from the undertaking of the creator of

the option to sell the underlying asset at the exercise price, even when the price of the

underlying asset on the Stock Exchange is higher than the exercise price, or to pay an

amount which depends on the developments of the share rates on the Stock Exchange

(when the underlying asset is the share index) or on the rate of interest in the economy

(when the underlying asset is the interest rate) or on the foreign currency rate.

The risk to the creator of a PUT option arises from the undertaking of the creator of the

option to buy the underlying asset at the exercise price, even when its price is lower

than the exercise price, or to pay an amount which depends on the developments

mentioned above.

The risk entailed in the creation of a CALL option may be limited, if one of the

following is satisfied:

)1 ( If the option's underlying asset is held in the Fund, in a quantity which is not less

than the quantity set forth in the terms of the option.

)2 ( If a CALL option, whose underlying asset is identical to the underlying asset of

the option which the Fund Manager created, is held in the Fund, and if its

exercise price is not higher than the exercise price of the said option, and if its

exercise date is not prior to the exercise date of the said option.

The risk entailed in the creation of a PUT option may be limited, if one of the

following is satisfied:

)1 ( If a PUT option whose underlying asset is identical to the underlying asset of the

option which the Fund Manager created, is held in the Fund, and if its exercise

price is not lower than the exercise price of the said option, and if its exercise

date is not prior to the exercise date of the said option.

)2 ( If the underlying asset of the option is the Tel Aviv 25 Index – the Fund Manager

has created a Tel Aviv 25 Call 1 Option for the Fund.

(c2) Futures Contracts

On the Stock Exchange, at the present time, there is trading in futures contracts on the

Tel Aviv 25 Index, as follows: These futures contracts are for a period of up to three

months and are traded on each Trading Day until the date of expiration of the contract.

In the futures contract transaction, from the date of the transaction and thereafter, on

each Trading Day, daily clearing takes place of the accounts of the purchaser of the

contract and of the contract maker. On each Trading Day, the effective price of the

futures contract is fixed (in this section, the "Effective Price"). Should the Effective

Price exceed the transaction price (on the date of the performance of the transaction),

or the Effective Price of the previous Trading Day (with regard to an individual who

purchased the contract prior to the Trading Day on which the Effective Price was

fixed), then the purchaser's account will be credited with the difference between the

Effective Price and the transaction price, or between the Effective Price on the

previous Trading Day, as the case may be, and the contract maker's account will be

charged with the said difference.

Should the Effective Price be lower than the transaction price (on the date of the

performance of the transaction), or than the Effective Price of the previous Trading

Day (with regard to an individual who purchased the contract prior to the Trading Day

on which the Effective Price was fixed), then the purchaser's account will be charged


with the difference between the Effective Price and the transaction price, or between

the Effective Price on the previous Trading Day, as the case may be, and the contract

maker's account will be credited with the said difference.

In addition, on the Stock Exchange, at the present time, there is trading in futures

contracts on the interest rate, on the Tel Aviv Bank Index, on the rate of the Dollar, on

the rate of the Euro and on Shachar-type, non-linked government bonds.

2. Limitations on the Fund's Investments and the Spread Thereof&

(a) Section 59 of the Law provides that a fund manager shall only purchase for a fund

under its management, and shall only hold therein, securities, foreign securities,

options, futures contracts, foreign currency, cash, and any other assets as determined

by the Minister of Finance in the Regulations, all being of such types and upon such

conditions as he has determined, whether in general or for specific types of funds.

In accordance with section 1 of the Law, securities are defined as certificates issued in

series by a company, a cooperative society or any other corporation, conferring a right

of membership or participation in them or claim against them, and certificates

conferring a right to acquire securities, including securities issued by the State and

excluding securities issued pursuant to a special law.

The Joint Investment Trust (Assets that may be Bought and Held by a Fund and their

Maximum Amounts) Regulations, 5755 – 1994, which are presented in Appendix B to

this Prospectus, determine which assets may be bought and held by a trust fund and

their maximum amounts.

In accordance with section 62(c) of the Law, if the amount of securities of a

corporation or the amount of a security out of the value listed for trading or the amount

of another asset (as defined in the said section) exceeds the maximum amount

determined by the Minister of Finance, this shall not be deemed to be a breach of the

provisions of this section if the following two conditions are fulfilled:

)1 ( The amount have fallen to the permitted amount by the end of the second day for

calculating prices after the day on which it exceeded the maximum amount.

)2 ( The amount have exceeded the maximum amount no more than five times in a

period of twelve months.

Notwithstanding the foregoing, additional deviations shall not be deemed to be a

breach of the provisions of this paragraph if the Chairman of the Israel Securities

Authority is satisfied that the Fund Manager has taken the proper measures to prevent

the breach, and that stated in subsection (1) above is satisfied.

(b) For details regarding transactions in options and in futures contracts, short sale

transactions, transactions entailing the provision of securities and re-sale transactions

for the Fund, see section 1(a)(1)1-(a)(3) of this Chapter above, this subsection below,

sections 63 and 64 of the Law and the Joint Investment Trust (Options, Futures and

Short Sales) Regulations, 5761 – 2001 (hereinafter: the "Options Regulations"), which

are set forth as Appendix B1 of the Prospectus.

)1( In accordance with section 63 of the Law, the Fund Manager may borrow

securities which are held in a fund under its management for the purpose of a

short sale transaction, provided that the borrowing is not for the Fund Manager,

for a person who controls same, for a company controlled by such person, for a

director or for an employee of any of the above, for the purpose of a short sale

& For details regarding the restrictions on transactions for the Fund, in accordance with the current resolution of

the Fund Manager's board of directors, see section 1(a)(2) of this Chapter above.


transaction by them, or for another fund under the management of the Fund

Manager, for the purpose of a short sale transaction for this fund.

)2 ( In accordance with the Options Regulations:

(a) The value of the options held in the Fund shall not exceed 10% of the net

value of the Fund assets. The value of the options together with the value

of the option warrants and the value of the call options, which are held in

the Fund, shall not exceed 20% of the net value of the Fund assets. For

this purpose, the Tik T.A 25, Euro 1 options and dollar 1 Options shall

not be taken into account.

(b) The total value of the assets set forth in paragraph (1) or (2) below,

whose underlying asset is a security that was issued by a particular

corporation, shall not exceed three percent of the net value of the Fund

assets:

)1( CALL options, option warrants and purchase options which are held

in the Fund and PUT options which the Fund Manager created for

the Fund.

)2( Sale options which are held in the fund and purchase options which

the Fund Manager created for the fund.

(c) )1( In accordance with section 65 of the Law:

(a) A fund manager shall not take credit for a fund managed by it other than as

provided in the regulations in respect of types of transactions which a fund

manager may carry out with credit, and in respect of conditions under

which a fund manager may take credit in order to redeem units and the rate

of such credit.

(a1) Should the fund manager perform a transaction with credit for a fund under

its management or should he receive credit for the purpose of the

redemption of units, in deviation from the provisions pursuant to

subsection (c)(1)(a) of this section, it shall not be deemed to be a breach of

the provisions pursuant to the said section if the following two conditions

are fulfilled:

)1( If the Fund Manager remedies the deviation by the end of the second

day of calculating the prices after the day on which it began.

)2( The number of deviations from the provisions pursuant to this

section was no more than five times in a period of twelve months.

)2( In the Joint Investment Trust (Credit Transactions and Redemption of Units by

means of Credit) Regulations, 5761 - 2001, which are set forth in Appendix D of

the Prospectus, provisions were determined with regard to assets which may be

purchased and sold with credit, the period of the credit, obtaining credit for a

fund, the fund's credit leverage and the date of registration of an asset that was

purchased or sold with credit in the fund's books.

(d) Section 79 of the Law determines that the Fund assets may not be attached. The Fund

Manager shall not pledge and shall not encumber the Fund assets, other than for the

purpose of executing a transaction for the Fund, upon such terms as have been

prescribed by the Minister of Finance in the Regulations. (See also subsection (c)(2) of

this section above and subsection (e) of this section below.)


(e) Regulation no. 6 of the Options Regulations, which are set forth in Appendix B1 of the

Prospectus, provides that the Fund Manager may charge one of the Fund assets for the

purpose of creating an option, a purchase or creating a futures contract or a short sale

of a security for a fund managed by it. Regulation no. 7 of the Options Regulations

prescribes a restriction on the value of the required securities out of the net value of the

Fund assets which the Fund Manager may provide for the purpose of the performance

of activity in derivatives.

(f) )1( Section 67 of the Law provides that a mutual fund manager, trustee, person

having control of one of these, an individual holding ten percent or more of the

issued share capital of one of these or a company controlled by one of these, and

also a director, employee or member of staff of a mutual fund manager or of a

trustee, a company controlled by one of these or a company in which one of

these is a stakeholder or an employee:

(a) Shall not sell in an off-floor transaction or in an off-market transaction, in

Israel or outside Israel, or in a coordinated transaction, securities, foreign

securities or options listed for trading thereon (in this section: "Negotiable

Securities") from his own account to the account of a fund managed by the

Fund Manager, and he shall not buy for his own account from the account

of a fund as stated, Negotiable Securities in such a transaction.

(b) Shall not sell from his holding to the account of a fund as stated in section

(f)(1)(a) above or to an affiliated company of the fund (as defined in

section 1 of the Law) an asset which is not a Negotiable Security, and he

shall not buy into his possession from the account of a fund as stated or

from an affiliated company of the fund, an asset which is not a Negotiable

Security, unless the asset is offered in a tender, and the purchase or the sale

are made at the price determined in the tender. The Minister of Finance

may prescribe in regulations, conditions for the tender.

)2( The provisions of subsection (f)(1) above shall not apply with regard to an asset

which remains at the expiration of the realization period of the assets of a fund in

dissolution, when it was not possible to realize same for reasons that are not

dependent on the liquidator, as stated in section 109(c) of the Law.

(g) )1( Pursuant to section 18(6) of the Law, the Minister of Finance may determine in

regulations, the types of transactions which are material to the fund or which

may involve a conflict of interests.

For this purpose, a “material transaction” — in terms of its size in relation to the

size of the fund, the risk involved therein or the type of the asset forming the

subject matter of the transaction. “Conflict of interests” - between the interest of

the unitholders and the interest of one or more of the following: the holders of

units in another fund managed by the mutual fund manager, the fund manager, a

stakeholder in the mutual fund manager and a company controlled by a

stakeholder as stated.

The Joint Investment Trust (Transactions that may Involve a Conflict of

Interests, Substantial Transactions and Off-Floor Transactions) Regulations,

5755 – 1995, which are set forth in Appendix C of the Prospectus (hereinafter:

The "Transactions Regulations") list transactions that are likely to involve a

conflict of interests and transactions that are substantial to the fund.

)2 ( Section 78(b) of the Law provides that the Trustee may determine which are

material transactions for the Fund or types of transactions that may involve a

conflict of interests, as all of these are construed in section 18(6) of the Law.


On the date of the preparation of this Prospectus, no such transactions have been

prescribed by the Trustee.

)3( Pursuant to section 18(7a) of the Law, the Minister of Finance may determine

types of off-market transactions or types of off-market transactions which should

be considered.

The Transactions Regulations determine the types of off-floor transactions or

types of off-market transactions to be considered pursuant to section 18(7a) of

the Law.

)4( Pursuant to subsections 18(6), 18(7) and 18(7a) and section 19(b) of the Law, the

Board of Directors of the Fund Manager or a committee of the Board of

Directors that was set up specially for this purpose, is required to consider

transactions of the types determined by the Minister of Finance in regulations or

by the Trustee, as set forth in subsection (g)(1), (g)(2) and (g)(3) above.

)5( Section 60 of the Law provides that a Fund Manager shall not be entitled to

perform a transaction as stated in subsection (g)(1), (g)(2) and (g)(3) above,

unless it was approved, in advance, by the Board of Directors or by one of its

committees.

)6( In accordance with section 3(b) of the Transactions Regulations, the board of

directors of the Fund Manager may determine, in a procedure to be approved by

the Trustee, the terms at which securities are to be purchased for the Fund in a

public offering under a prospectus, including in a related issue, and a transaction

respecting which such conditions have been fulfilled, shall be deemed as a

transaction that the board of directors had considered and approved as set forth

in sections 18(6), 18(7) or 18(7.a.) of the Law.


Chapter H: The Directors and Officers of the Trustee and of the Fund

Manager

(a) The Trustee’s Board of Directors

Director’s Name Address Main Occupation

Ilan Raviv, Chairman 16, Maayan Harod

Street, Ramat

Hasharon

CEO, Ubank Ltd.

Avi Basson 22 Pirchei Habar

Street, Yahud

VP, Head of Capital Markets Division,

Ubank Ltd.

Attorney Michal Goren 1, Hashoshanim

Blvd. Ramat Gan

Head of Personal Banking Division,

Ubank Ltd.

Jacob Garten 54, HaHagana

Street, Herzliya

VP, Head of Central Services Division,

Ubank Ltd.

Shoshana Moshayev 4, Herut Street,

Ramat Gan

Assistant Manager and Team Manager

at the Tel Aviv Branch of Ubank Ltd.

Rafi Segev, outside director 40, HaGiva'a Street,

Kfar HaOranim

CEO of the Society for the Protection

of Nature, Megalim Eretz

Joint general managers of the

Trustee@

Sharon Malka-Koren

CPA Sarit Domani

@ Up to February 29, 2008 Attorney Michal Goren had served as the Trustee's CEO. As of March 1, 2008,

Sharon Malka-Koren and CPA Sarit Domani have served as joint general managers of the Trustee.


(b) Fund Manager’s Board of Directors@

Name Address Main Occupation And Education

Dan Laluz,

Chairman&

32, Bonei Ha'Ir Street, Tel-

Aviv

MBA in Business Administration and BA in

Economics (Tel Aviv University), Chairman

of the Board of Directors of Migdal Capital

Markets (1965) Ltd. and CEO of Migdal

Investment Management 2001 Ltd. Chairman

of the Board of Directors of Tau Hedge Funds

Management Ltd. Director in Levgum Ltd. and

in private companies wholly owned by him.

Member of the investment committee of

Migdal Gemel Platinum Ltd.

Eliezer Bihari 97 Zipman Street,

Ra’anana

B.A. in economics and statistics and M.A. in

economics (Hebrew University) Deputy CEO,

Migdal Capital Markets, director in Y.A.D.

Electronics Ltd., holder of a portfolio

manager's license.

Mordechai

Bignitz*

7 Haprachim Street,

Ramat Hasharon

B.A. in economics and accounting (Tel Aviv

University) Investment banking manager at

Shrem, Fudim Group Ltd., director and

member of the audit committee at Leader

Capital Markets Ltd.

Shalom

Hochman**

5 Pasternak Street

Ramat Aviv

B.A. in economics and M.A. in business

administration (finance) (Hebrew University),

Ph.D. in business administration (finance)

(Toronto-Canada University), outside director

in Jerusalem Bank Ltd., outside director and

member of the investment committee at Clal

Finance Provident Funds & Advanced Study

Funds Ltd., lecturer at Tel Aviv University.

Liora Rinot 32 Mohaliver Street,

Yahud

V.P. Operations of the parent company.

@ Up to December 31, 2008, Mr. Assa Sasson served as CEO, director and member of the investment committee

of the Fund Manager. & Up to December 31, 2008, Mr. Eliezer Bihari served as Chairman of the Board of Directors of the Fund

Manager. * Outside director. Commenced serving as outside director with the Fund Manager from May 11, 2006. ** Outside director. Commenced serving as outside director with the Fund Manager from October 29, 2006.


(c) Fund Manager’s CEO

Ronen Torem@ 8 Mendele Street, Haifa BA in Economics and Business Administration

(Haifa University), CEO of Migdal Capital

Markets (1965) Ltd., Chairman of the Board of

Directors of Migdal Stock Exchange Services

(N.E.) Ltd. and of Migdal Portfolio

Management (1998) Ltd. Chairman of the

Board of Directors and member of the

investment committee of Migdal Gemel

Platinum Ltd. Holder of portfolio manager

license.

(d) Investment

Committee@

Mordechai Bignitz*

Eliezer Bihari Shalom

Hochman**

Jacob Weinstein 63 Hazorea Street, Kfar Shmaryahu

B.A. in political science (Tel Aviv University). Investment manager of mutual funds managed by the Fund Manager. CEO of Afikim Investments And Securities Management Ltd. Chief Investment Manager of Migdal Capital Markets. Investment manager of provident funds of the Migdal Capital Markets Group. Holder of a portfolio management license.

David Yogev 43 Arlozorov

Ramat Gan BA in Economics and Administration and MBA in Business Administration – Finance (Tel Aviv University), Director of Research Department at Migdal Capital Markets (Management Services) Ltd.

(D1) Replacement of Officeholders in the Fund Manager during the period from August 31, 2008 to

January 1, 2009 During the period from August 31, 2008 to January 1, 2009 the following retired: Two directors

from the board of directors of the Fund Manager, five members from the investment committee of the Fund Manager and the CEO of the Fund Manager. During the said period the following were appointed: One director to the board of directors of the Fund Manager, one member to the investment committee of the Fund Manager and the CEO of the Fund Manager.

(e) Attorney for this Prospectus: Eliezer Kinderman, Law Offices 5, Shoham Street, Paz Towers

Ramat Gan

@ Up to December 31, 2008, Mr. Assa Sasson served as CEO, director and member of the investment committee

of the Fund Manager. * Outside director. Commenced serving as outside director with the Fund Manager on May 11, 2006. ** Outside director. Commenced serving as outside director with the Fund Manager from October 29, 2006.


(f) Fund's auditors Kost Forer Gabbay & Kasierer 3 Aminadav Street, Tel Aviv (g) Fund Manager’s internal auditor Tamir Solomon 32 Amir Street, Herzliya B.A. in economics and management (College

of Management) and M.A. in business administration (Manchester University), chief internal auditor of Migdal Capital Markets and of its subsidiaries.


Chapter I: The Fund Agreement

1. The details set forth in this Prospectus with regard to the conditions pursuant to which the

Fund is operated, the period of the Fund's existence and the rights of the unitholders are based

on the provisions of the Fund Agreement.

2. Subject to the provisions of the Law, the Fund Manager and the Trustee will be entitled under

an additional fund agreement, to change, amend, modify and add to the provisions of the Fund

Agreement in such a manner and to such extent as they see fit but only on such condition that

this will not adversely affect the interest of the unitholders in the Fund. And they are further

permitted by an additional fund agreement to amend the provisions of the Fund Agreement

with regard to the Fund's investment policy (see section 1(a)(1)(b) of Chapter G above).

3. Any other revision, amendment, modification or addition with regard to the provisions of the

Fund Agreement and the undertakings made by the Fund Manager or the Trustee in the Fund's

Prospectus, in respect of which it was not stated in the Fund Agreement or in the Prospectus,

as the case may be, that they may be cancelled or modified without the approval by resolution

of the unitholders meeting, may be made without restriction and subject to the provisions of

the Law, only if they are approved by a resolution of the unitholders meeting (see Chapter R

"Details Regarding Unitholders General Meetings").

Chapter J: Interest of the Fund Manager and the Trustee in the Fund and in

its Units, and their Liability

1. Interest of the Fund Manager and the Trustee in the Fund and in its Units

(a) The Fund Manager and the Trustee receive the payments set forth in Chapter K below.

(a1) Ubank Ltd., the Trustee's parent company, serves as the Fund's banker, with which the

cash and the deposits included in the Fund assets are deposited. Migdal Stock Exchange

Services (N.E.) Ltd., the Fund Manager's parent company, serves as the Fund's securities

agent in Israel. The majority of the securities, options and futures contracts included in

the Fund assets are purchased and sold through Migdal Stock Exchange Services (N.E.)

Ltd. and are deposited with it.

(b) In accordance with the Fund Agreement:

)1 ( The Fund Manager shall be entitled, subject to the provisions of the Law and the

regulations enacted by virtue thereof, to perform transactions between funds which

are managed by it (see Regulation 2(1) of the Transactions Regulations), subject to

use by the Fund Manager of its powers while taking the Fund's best interests into

consideration.

)2( Subject to the provisions of the Law and the regulations enacted by virtue thereof,

the Fund Manager and the Trustee shall be entitled to enter into agreements or

businesses with a unitholder or a corporation or an entity whose securities or in

which an investment constitutes part of the Fund assets. They shall also be entitled

to have an interest in any agreement or transaction relating to corporations or to

entities from which the Fund assets were purchased, and also relating to

corporations or entities which issued the Fund assets. In addition, they shall be

entitled to derive benefits from all of the actions mentioned above in this

subsection.


)3( (a) The Fund Manager shall be entitled to act and to serve, jointly or with

others, as the manager of other funds for investments in trust.

(b) The Trustee shall be entitled to act and to serve, jointly or with others, as

the trustee of other funds for investments in trust.

2. Prohibition on the Holding of Units by the Fund Manager and the Trustee

Section 68 of the Law provides that a fund manager shall not hold units of a fund that it

manages, and a trustee shall not hold units of a fund for which it acts as trustee.

3. Liability of the Fund Manager and the Trustee

(a) The Provisions of the Law

)1 ( Section 74 of the Law provides that a trustee and a fund manager shall comply

with their duties and shall exercise their powers solely in the best interests of the

unitholders.

)2( Section 75 of the Law provides as follows:

(a) In carrying out their duties and exercising their powers, the Trustee and the

Fund Manager shall act carefully, faithfully and diligently.

(b) A Trustee and a Fund Manager shall take reasonable steps in order to

protect the assets of the fund and all the rights deriving from these assets.

)3( In accordance with section 77 of the Law:

(a) The manager of a fund that holds shares issued by a corporation whose

securities have been issued to the public, excluding foreign securities, shall

participate in and vote at a general meeting of the corporation, either for or

against the proposed resolution submitted for the approval of the general

meeting, if in its opinion one of the following is fulfilled:

)1( A proposed resolution submitted for the approval of the general

meeting may potentially harm the interest of the unitholders. For the

purpose of this section, potential harm to the interest of the

unitholders shall include a transaction with a stakeholder.

)2( The proposed resolution may further the interests of the unitholders.

(a1) Notwithstanding the provisions of subsection (a)(3)(a) of this section, the

Fund Manager may refrain from voting at the general meeting of the

corporation, if the proposed resolution submitted for the approval of the

general meeting relates to a controlling shareholder of the Fund Manager

or if the Fund Manager has a personal interest in the approval of the

resolution. In this subsection, “personal interest” – as defined in the

Companies Law, 5759 – 1999 (hereinafter: the “Companies Law”).

(b) That stated in subsection (a)(3)(a) and subsection (a)(3)(a1) of this section

shall also apply with regard to general meetings of the holders of securities

which are not shares.

(b1) (1) With regard to subsection (a)(3)(a) and subsection (a)(3)(b) of this

section, securities which, on the date of record for participation in

and voting at the general meeting, were borrowed from the Fund

assets for the purpose of a short sale transaction, shall not be deemed

to be securities held in the Fund.

)2( In this subsection:


"Date of Record" – as construed in section 182 of the Companies

Law.

"Short Sale Transaction" – as defined in section 63 of the Law.

(c) A fund manager shall submit a report to the Israel Securities Authority and

to the Stock Exchange of the manner of its voting at the general meeting,

pursuant to rules which the Minister of Finance has laid down in

regulations. (See also section 1(b) of Chapter T below).

)4( Section 78(a) of the Law provides that the Trustee shall supervise the

implementation of provisions pursuant to the Law, the provisions of the Fund

Agreement and the undertakings pursuant to the Prospectus by the Fund

Manager, and shall ascertain, inter alia, that the Fund Manager complies with all

of the following, inter alia, by way of conducting an audit at the Fund Manager:

(a) A proper procedure for making decisions, which is consistent with the

procedure approved by the Board of Directors.

(b) An internal review system that ensures the proper keeping of the fund‘s

books.

(c) A system of measures to ensure that the fund is managed in accordance

with the provisions of the Law, the provisions of the Fund Agreement and

the undertakings pursuant to the Prospectus.

(d) The management of the investments of the fund is done in accordance with

the procedures which the Board of Directors of the Fund Manager has

determined pursuant to section 18(8) of the Law.

Section 78 of the Law also determines that the Trustee shall bring to the

attention of the employees of the Fund Manager, from time to time, and as

necessary, the provisions pursuant to the Law in connection with the

management of the Fund.

Section 78 of the Law further provides that the Trustee is required to instruct the

Fund Manager, in writing, to remedy defects which it has found in the

management of the Fund, and to inform the Israel Securities Authority, after

receipt of the Fund Manager's response, if given, of any material defects in the

management of the Fund, of defects which the Trustee instructed the Fund

Manager to remedy and which were not remedied within the period of time

determined by the Trustee, and also of recurring defects in the management of

the Fund.

)5( Section 83 of the Law provides as follows:

(a) A mutual fund manager is liable to a unitholder for damage caused to him

because it has breached a provision under the Law, one of the provisions of

the Prospectus or one of the provisions of the Fund Agreement. The said

liability shall also apply to the directors, to members of a committee of the

board of directors who are not directors, and to the general manager.

(b) The Trustee is liable to a unitholder for damage caused to him because it

has not complied with the provisions of sections 74, 75 and 78(a) of the

Law. The said liability shall also apply to the directors and the general

manager.

(c) The liability under subsection (a)(5)(a) and (a)(5)(b) of this section shall

not apply:


)1( to anyone who proves that he has taken all the proper steps in order

to prevent the breach.

)2( to anyone who proves that he did not know nor ought he to have

known nor could he have known about the breach.

)3( with regard to anyone who is proven to have bought the units when

he knew about the breach.

(d) If two or more persons are liable under subsection (a)(5) of this section,

they are liable to the injured party jointly and severally. Inter se, they shall

be liable in accordance with the rules applicable to liability in tort.

)6( Section 84 of the Law provides that the provisions of section 83 of the Law do

not derogate from any remedy available to a unitholder pursuant to any other

law.

)7( Section 86 of the Law provides that a trustee or mutual fund manager may not

delegate their powers or transfer their obligations under the Law. The

employment of a person by a trustee or a mutual fund manager shall not be

deemed a delegation of powers or a transfer of obligations, and shall not

derogate from their liability to the unitholders.

)8( Section 87 of the Law provides that should a court find, at the request of the

Chairman of the Israel Securities Authority, a unitholder, a mutual fund manager

or a trustee, that a mutual fund manager or a trustee, in the course of carrying out

their duties, has made a profit or collected payments unlawfully or paid expenses

out of the Fund assets unlawfully or in an unreasonable amount, then the court

may order them to indemnify the fund, the unitholders or former unitholders, for

such amount and in such a way as it shall direct.

(b) Provisions of the Fund Agreement

The Fund Agreement provides that the liability of the Fund Manager and of the

Trustee shall not deviate beyond their liability pursuant to the Law and any other law.


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1. Fund Manager's Income from the Fund Inception Date on March 28, 2007 up to January 29,

2009

(a) From a Supplement

The Fund Manager is entitled to receive a supplement in such manner and at such rates

as are specified in Chapters A and D of this Prospectus.

During the period from the Fund Inception Date on March 28, 2007 up to January 29,

2009 the Fund Manager had no income from supplement.

(b) Fund Manager's Fees

Pursuant to the Fund Agreement, the Fund Manager is entitled to receive an annual fee

equal to 5% of the average annual value of the Fund assets, as calculated for the

purpose of determining the unit price, as set forth in the Law and in the Regulations by

virtue thereof, or a smaller amount, as shall be decided from time to time by the Fund

Manager.

Until such time as decided otherwise by the Fund Manager, the Fund Manager shall

receive an annual fee equal to 2.5% of the said value.

Until such time as agreed otherwise between the Fund Manager and the Trustee, the

average annual value of the Fund assets, as stated, shall be calculated according to the

said value of the Fund assets at the end of each day, and the fee shall be deducted from

the value of the Fund assets at the end of each day and paid at the beginning of each

week for the last week preceding it.

In accordance with the Fund Agreement, the Fund Manager shall cover, in

consideration of the supplement and its annual fee, the distribution expenses of the

units of the Fund as well as all the other expenses in relation to the management of the

Fund, with the exception of those expenses which are applicable to the Trustee and

with the exception of those expenses which shall be paid pursuant to the Law out of

the Fund assets, as set forth in section 3 below.

The Fund Manager's Income from fees, from the Fund Inception Date on March 28,

2007 up to January 29, 2009 was as follows:

Period Amount in NIS

28.3.07-31.12.07 57,571

1.1.08-31.12.08 21,630

1.1.09-29.1.09 857

2. Trustee's Fee from the Fund Inception Date on March 28, 2007 up to January 29, 2009

Pursuant to the Fund Agreement, the Trustee is entitled to receive an annual fee equal to

0.1% of the average annual value of the Fund assets, as calculated for the purpose of

determining the unit price, as set forth in the Law and in the Regulations by virtue thereof,

but not less than a sum in NIS equal to USD 2,500 per annum, which shall be deducted from

the Fund assets on a daily basis, namely, approximately USD 6.84 per day (hereinafter: the

"Minimum Fee"), even if such fee (calculated on an annual basis) exceeds 0.1% of the said

value, or a smaller amount than this as may be agreed from time to time between the Trustee

and the Fund Manager.


Until such time as agreed otherwise between the Trustee and the Fund Manager, the Trustee

receives an annual fee equal to 0.1% of such value, with no Minimum Fee.

Until such time as agreed otherwise between the Fund Manager and the Trustee, the average

annual value of the Fund assets, as stated, shall be calculated according to the said value of

the Fund assets at the end of each day, and the fee shall be deducted from the value of the

Fund assets at the end of each day and paid at the beginning of each week for the last week

preceding it.

The Trustee's Income from fees, from the Fund Inception Date on March 28, 2007 up to

January 29, 2009 was as follows:


28.3.07-31.12.07 2,301

1.1.08-31.12.08 864

1.1.09-29.1.09 34

3. Expenses to be Paid out of the Fund assets

Section 80 of the Law provides as follows:

(a) The following are the only expenses that may be paid out of the Fund assets:

)1( Remuneration of the Trustee and the Fund Manager, as determined in the Fund

Agreement and in the Prospectus, or in a report submitted by the Fund Manager

by law.

)2( Commissions and other expenses involved in carrying out transactions for the

Fund, as set forth in the Prospectus or in a report submitted by the Fund Manager

by law.

)3( Taxes applicable to the Fund on its assets, on its income and on transactions

made with its assets.

(b) Notwithstanding what is stated in subsection (a), the Fund Manager, with the Trustee's

approval, and the Trustee may, through the Fund Manager, offset from the Fund assets

an expense that was incurred in order to carry out their duty which was not in the

normal course of managing the Fund, provided that the expense is for a reasonable

amount.

4. Income of Migdal Stock Exchange Services (N.E.) Ltd., the Fund Manager's Parent

Company, and Securities Agents Overseas from Transactions on behalf of the Fund, which

were paid out of the Fund’s resources, from the Fund inception Date on March 28, 2007 up

to January 29, 2009

Period Income of

Migdal Stock

Exchange

Services

(N.E.) Ltd.

(in NIS)

Income of

securities

agents

overseas

(in NIS)

Total

(in NIS)

28.3.07-1.12.07 17,077 - 17,077

1.1.08-31.12.08 5,287 - 5,287

1.1.09-29.1.09 46 - 46


5. Income of Migdal Stock Exchange Services (N.E.) Ltd., the Fund Manager's Parent

Company, from distribution of the Fund units from the Fund Inception Date on March 28,

2007 up to January 29, 2009

During the period from the Fund Inception Date on March 28, 2007 up to January 29, 2009

Migdal Stock Exchange Services (N.E.) Ltd. had no income from distribution of the Fund

units.

6. Income of Ubank Ltd., the Trustee's Parent Company, from distribution of the Fund units,

which were paid out of the Fund Manager's resources, from the Fund Inception Date on

March 28, 2007 up to January 29, 2009


Ubank Ltd. had no income from distribution of the Fund units, which were paid out of the

Fund Manager's resources.

7. Income of Israel First International Bank Ltd., the controlling shareholder in the Trustee's

Parent Company, from distribution of the Fund units, which were paid out of the Fund

Manager's resources, from the Fund Inception Date on March 28, 2007 up to January 29,

2009


28.3.07-31.12.07 710

1.1.08-31.12.08 579

1.1.09-29.1.09 -

8. Income of Otzar Hahayal Bank Ltd. (which is controlled by Israel First International Bank

Ltd., the controlling shareholder in the Trustee's Parent Company), from distribution of the

Fund units, which were paid out of the Fund Manager's resources, from the Fund Inception

Date on March 28, 2007 up to January 29, 2009.


the income of Otzar Hahayal Bank Ltd. from distribution of the Fund units, which were paid

out of the Fund Manager's resources, totaled NIS 6.

Chapter L: Interest in the Fund assets

Securities Issued by Stakeholders in the Trustee

The list of the Fund assets as at January 29, 2009 (see Chapter F) includes securities which

were issued by stakeholders in the Trustee.

Chapter M: Holding of the Fund Units

1. As stated in section 2 of Chapter J above, section 68 of the Law prohibits the Fund Manager

from holding units of a fund under its management and it prohibits the Trustee from holding

units of a fund for which it acts as trustee.

2. Restriction on the Holding of Units by a Related Entity

In accordance with section 49 of the Law:

(a) In this section:

"Related Entity" – A person who controls the Fund Manager, an employee of the Fund

Manager, a member of the Investment Committee of the Fund Manager, a director of


the Fund Manager, a person who is employed by the Fund Manager in the management

of the Fund's investment portfolio, an employee of a person who is so employed, and a

corporation controlled by any one of the above.

"Related Fund" – a fund related to a Related Entity – a fund managed by a Fund

Manager which is controlled by a Related Entity or in which the Related Entity works,

holds office or is employed.

"Rate of Units Held" – the number of units of the fund held by a person, on any day,

out of the total of all the units of the fund on the last day preceding the said day.

(b) Should a Related Entity purchase units of a fund related thereto, or should there be a

change in the number of units of such a fund, which are held by a Related Entity, the

Related Entity shall inform the Fund Manager, in writing, of the purchase of the units

or of the change in the number of units which are held by him, on the date of the

purchase or the change, as the case may be.

(c) A Related Entity shall not purchase units of a fund related thereto, unless all of the

following are satisfied:

)1( He has received information from the Fund Manager, in writing, with regard to

all of the units of the fund on the last day preceding the day of the purchase of

the units, and with regard to the total rate of the units of the fund which are held

on the said day, by Related Entities.

)2( Any part of the units of the Fund is held by unitholders who are not Related

Entities.

)3( The total rate of the units of the Fund which shall be held by all the Related

Entities, immediately after the purchase, shall not exceed twenty five percent.

(d) Should the total rate of the units of the Fund held by all the Related Entities exceed the

rate set forth in subsection (c)(3) of this section, the following provisions shall apply:

)1( The Fund Manager shall be required to continue to offer the units of the Fund to

the public, until the total rate of the units held as stated shall be reduced to the

rate set forth in subsection (c)(3) of this section.

)2( The rate of the supplement with regard to the Fund shall not exceed the average

of the supplement rates at other funds managed by the Fund Manager.

)3( The rate of the Fund Manager's fees shall not exceed the average rate of the fees

of the Fund Manager in all the funds managed by the Fund Manager. In this

section: "rate of the fees of the Fund Manager" – the amount of the fees of the

Fund Manager divided by the average net value of the Fund assets during the

period for which the fees were paid. For this purpose, the average net value of

the Fund assets shall be calculated according to the net value of the Fund assets

on each one of the days of the calculation of the prices during the period for

which the fees were paid.

3. On January 29, 2009 no related entity as defined in section 49 of the Law held Fund units.

Chapter N: Payments to Unitholders

1. Provisions of the Fund Agreement

(a) The Fund Manager may determine, from time to time, the rate of the payments which

shall be paid to the holders of the units, out of the Fund assets, should it be decided to

pay same, and the dates of payment thereof.


(b) The payments shall be paid to the unitholders pro rata to the number of units

registered in their name on the date determined therefor by the Fund Manager

(hereinafter: the "Date of Record").

(c) )1( The Fund Manager may allocate bonus units to the unitholders in accordance

with the provisions of the Law.

)2( Any person entitled to receive a balance of less than one bonus unit shall receive

a cash payment in consideration thereof, which shall be calculated pro rata to the

unit value of the bonus unit on the Date of Record.

In this context, “unit value” – the net value of the Fund assets divided by the

number of its units.

2. Payments to the Unitholders in Dollars and the Deposit Thereof in a Foreign Resident's

Deposit

The payments to the unitholders, should it be decided to pay same, shall be deposited in

Dollars in a deposit with a banking corporation, in foreign currency, of a foreign resident

(known as a PATACH account), of the unitholder.

3. Provisions of the Law with regard to the Distribution of Bonus Units

Section 58(b) of the Law provides that the Fund Manager may allocate to the unitholders

only, units without consideration, pro rata to the number of units held by each unitholder on

the date determined therefor by the Fund Manager.

Chapter O: Taxation

1. The Fund is a Liable Mutual Fund, pursuant to the Income Tax Ordinance [New Version]

(hereinafter: the “Ordinance”).

1A. The Fund has been approved by the Income Tax Commissioner as a liable fund for foreign

residents.

Pursuant to the Income Tax Regulations (Exemption from Tax on Certain Income of A

Liable Mutual Fund for Foreign Residents) 5763 – 2003, which are set forth in Appendix F

of the Prospectus:

(a) The capital gains made by a Foreign Residents' Fund (as defined in the said

regulations) will be exempt from tax in any one of the following events:

)1( In the sale of securities which are listed for trading on the Stock Exchange in

Israel, if they were purchased after the listing thereof for trading on the Stock

Exchange.

)2( In the sale of a futures transaction which is traded on the Stock Exchange in

Israel.

)3( In the sale of a foreign security (as defined in the said regulations).

(b) The income of a Foreign Residents' Fund from interest and rate differentials on a

foreign-currency deposit, which is being paid by the State or a banking corporation, is

exempt from tax.

(c) The income of a Foreign Residents' Fund from a dividend, from interest and from rate

differentials on foreign securities shall be exempt from tax.


2. The terms in this Chapter shall have the meaning ascribed thereto in the same regard in the

Ordinance and in the secondary legislation by virtue thereof, unless the context requires

otherwise,

3. A general and inexhaustive explanation is given below with regard to two@ possible tax

classifications for a mutual fund. The above explanation is based solely on the provisions of

the Ordinance. (In accordance with the provisions of the Ordinance, secondary legislation

was enacted relating to the taxation of mutual funds and the unitholders therein, details of

which are not set forth in this Chapter.)

The explanation which is given relates solely to an individual investor, when the income

set forth below does not constitute, for the said investor, income from a business or

occupation, and when the unit is not a unit in a transaction. Other investors are subject to

different tax provisions and different rates of tax from those set forth below.

4. The main characteristics of the two tax classifications for a mutual fund are set forth below.

The said characteristics relate to units purchased commencing from January 1, 2006:

LLiiaabbllee MMuuttuuaall FFuunndd

(a) The fund's liable income shall be subject to the rates of tax that would have been

applicable to the gains or to such income, had they been received by an individual

when the income is not income from a business or occupation for the said investor,

unless expressly provided otherwise. Should no special rate of tax be prescribed for the

income, the income shall be taxed at the maximum rate for an individual as set forth in

section 121 of the Ordinance.

(b) The capital gain in the sale or in the redemption of a unit in a fund is exempt from tax.

(c) A capital loss that is created for a unitholder from the redemption of units in a fund

may not be offset against profits or income of any kind or nature whatsoever.

(d) Profits which a Fund Manager has distributed to a unitholder in a fund are exempt

from tax.

EExxeemmpptt MMuuttuuaall FFuunndd

(a) The income and profits of the fund are exempt from tax (however, see subsections (b)

and (c) of this section and section 5(b) of this Chapter below).

(b) If an exempt mutual fund, which prior to January 1, 2006 was a mixed mutual fund,

sold a security which prior to January 1, 2006 was a foreign security and whose date of

purchase was prior to the 2005 tax year, the capital gain on the sale thereof shall be

taxed at a rate of 19% on the part of the real capital gains up to the date of the transfer

(as defined in the Income Tax Ordinance Amendment (No. 147) Law, 5765 – 2005

(January 1, 2005).

(c) Notwithstanding the foregoing in subsection (a) of this section, tax which, in

accordance with the provisions of the Ordinance, was deducted from the liable income

that was transferred to an exempt mutual fund, which is a shareholder of a fund for

real-estate investments, shall be deemed to be final tax for which the exempt mutual

fund is liable, and the exempt mutual fund shall not be entitled to any exemption,

deduction, credit or offsetting in respect thereof.

@ During the period as of January 1, 2003 to December 31, 2005, another tax classification existed: A mixed

mutual fund.


(d) Real capital gains on a sale or redemption of a unit in the fund shall be liable to tax at a

rate which shall not exceed 20%, and the capital gains shall be deemed to be the

highest tax bracket on the scale of the unitholder's taxable income.

(e) A capital loss from the redemption of a unit in the fund, in respect of which, had it

been a capital gain, the unit holder would have been liable to tax, may be offset, solely

in accordance with the provisions set forth in the Ordinance.

The offsetting of tax which was not done by a bank or another member of the Stock

Exchange through which units of the fund were held, is contingent upon the

submission of an annual report to the Income Tax Authorities.

(f) Profits which a Fund Manager distributed to a unitholder in a fund are liable to tax at a

rate of 20%.

5. (a) The above description relates solely to the provisions of the law in Israel and does not

relate to tax provisions overseas, which may apply to the overseas investments of a

mutual fund.

(b) TThhee iinnccoommee aanndd pprrooffiittss ooff aann eexxeemmpptt mmuuttuuaall ffuunndd aanndd ooff aa lliiaabbllee mmuuttuuaall ffuunndd

mmaayy bbee ttaaxxeedd aabbrrooaadd..

(c) The description in this Chapter does not purport to constitute an exhaustive description

or agreed interpretation of the tax provisions pursuant to the law in Israel in connection

with an investment in the Fund units and in the Fund's investments, and it does not

replace a professional consultation in this regard. Therefore, the Fund Manager and the

Trustee do not assume any liability for the said description and interpretation with

regard to the purchasers of the units.


Chapter P: Unitholders Register and Transfer of Units

1. Israel Securities Authority Circular on the Registration of Units in the Unitholders' Register

In accordance with the Israel Securities Authority Circular dated June 28, 2006, the Fund

units cannot be registered directly in the name of the unitholders, in the Fund's register of

unitholders.

2. Register of Unitholders

If the Fund Manager maintains a record, directly, subject to the provisions of the Law, of

unitholders, in the Unitholders Register of the Fund, the following shall apply: (1) The

provisions of the Fund Agreement set forth in subsections (a) to (c) of this section below and

(2) the provisions of section 3(c)(1) of this Chapter below.

(a) In the event that a Unit is registered in the Fund's Register of Unitholders in the name

of more than one holder, the Fund Manager and the Trustee will be entitled to act with

respect to each of the holders as though he is the sole holder of such Unit, and, in

particular, without limitation to the generality of the foregoing, any notice given and

any payment made to one of the holders will be deemed as sufficient notice and as full

settlement and will constitute sufficient and absolute discharge and settlement of the

liabilities of the Fund Manager and the Trustee vis-à-vis all the holders, and any

receipt received from one of the holders for any such payment will be deemed as

sufficient receipt and will bind all other holders of such Unit.

(b) In the event that a unit is registered in the Fund's register of unitholders in the name of

more than one holder, and should one or more of its holders pass away, the Fund

Manager and the Trustee shall be entitled to act as if each of the surviving holders of

the said unit was and continues to be its sole holder, and as if the person who had

passed away had never been registered as the holder thereof, so long as no other person

has been registered as the holder of such unit pursuant to the provisions of subsection

(c) of this section below.

(c) Any person who becomes entitled to a unit, following the death of the holder of a unit

registered in the Fund's register of unitholders or following the bankruptcy or

dissolution or receivership of such a holder, shall be entitled to be registered in the

Fund's register of unitholders as the holder of the said unit, subject to the submission

of such proof as it is customary to require for the purpose of the registration and

subject to the provisions of any law and the Fund Agreement.

3. Transfer of Units

(a) In accordance with section 58.A. of the Law:

)1( A distributor shall transfer units upon the written request of a unitholder who

holds the units through the distributor, and a fund manager shall transfer units

upon the written request of a unitholder whose units are registered in his name

with the Fund Manager. Such transfer of units shall be done in the manner set

forth in the Prospectus.

)2( Notwithstanding the provisions of subsection (a)(1) of this section, a distributor

or fund manager shall not transfer units if so provided in the Prospectus, unless

the transfer is pursuant to the Law.

(b) Until such time as decided otherwise by the Board of Directors of the Fund Manager,

the units of the Fund shall be transferable.

(c) As long as the Fund units are transferable, they shall be transferred in the manner set

forth below:


)1( Units Registered in the Register of Unitholders (subject to that stated in sections

1 and 2 of this Chapter above)

(a) Units shall be transferred in accordance with an instrument of transfer in

such form as shall be approved from time to time by the Fund Manager.

All the expenses incurred in the transfer of units, including in respect of

stamp tax and other levies, if any, shall be paid by the entity requesting the

transfer.

(b) Each instrument of transfer, duly completed and signed by the transferor

and by the transferee, shall be submitted to the Fund Manager, together

with the participation certificate or approval that was issued, if any, in

respect of the unit whose transfer is sought, and upon the request of the

Fund Manager, also accompanied by sufficient evidence to the Fund

Manager's satisfaction to prove the transferor's right to the units whose

transfer is sought.

(c) All deeds of transfer will remain in the possession of the Fund Manager.

(d) The transfer of a unit in a manner different from that determined in this

Chapter shall not entitle the transferee to a right to the said unit, and any

such transfer shall not be recognized by the Fund Manager or the Trustee,

and shall not be binding thereon.

(e) As long as the transferee has not become entitled to the unit being

transferred thereto, the transferor, and solely the transferor, shall be

deemed to be entitled to the said unit, and to be the holder of the sole right

in the said unit.

)2( Units Held through a Distributor

Units held through a distributor shall be transferred in accordance with the

procedures as shall exist from time to time at each distributor.

All the expenses incurred in the transfer of units, including in respect of stamp

duty and other levies, if any, shall be paid by the entity requesting the transfer.

Chapter Q: Dissolution of the Fund

1. Provisions of the Fund Agreement

The Fund Agreement provides that the Fund was created for an unlimited period of time, and

it shall be dissolved upon the occurrence of one of the following:

(a) By virtue of the Fund Manager's resolution to dissolve the Fund.

(b) Upon dissolution of the Fund Manager.

(c) On any of the occurrences provided in the Law.

2. The Provisions of the Law

(a) Pursuant to section 103 of the Law, the Fund shall be dissolved when:

)1( The period of the Fund’s existence as stipulated in the Fund Agreement has

ended (hereafter: the "Fund Termination Date").

)2( A resolution has been adopted to dissolve the Fund in accordance with

provisions in the Fund Agreement.

(b) Pursuant to section 104 of the Law:


)1( If the Israel Securities Authority is of the opinion, after giving the mutual fund

manager and the trustee a proper opportunity to state their case, that

circumstances have occurred in which the best interests of the unitholders

require the dissolution of the fund, it may submit an application to the court for

the dissolution of the fund.

)2( (a) If an application for the dissolution of the Fund is submitted as stated in

subsection (b)(1) of this section, the respondents therein shall be the Fund

Manager and the Trustee.

(b) Every unitholder may attend the proceeding and state his position.

(c) The mutual fund manager shall publish the fact that the application has

been submitted in two newspapers immediately after it has been served on

it.

)3( If an application for the dissolution of a mutual fund is submitted as stated in

subsection (b)(1) of this section, the court may do one of the following, as it sees

fit, in the best interests of the unitholders:

(a) Order a settlement that will ensure the continued activity of the fund for

such period and in such manner as it shall determine.

(b) Order the transfer of the management of the mutual fund to another fund

manager and determine the conditions of the transfer and the consideration

for the transfer.

(c) Dismiss the dissolution application.

(d) Grant a dissolution order.

(e) Grant any other order as it sees fit.

(c) In accordance with section 105 of the Law:

)1( The mutual fund manager shall act as the liquidator of the mutual fund, but if the

court has given an order pursuant to subsection (b)(1) of this section, it shall

appoint the trustee as the liquidator of the fund, unless it found that there are

reasons that justify the appointment of another liquidator.

(1a) The remuneration of the liquidator of the fund shall be paid out of the Fund

assets.

(1b) The amount of remuneration of the liquidator of the fund, who is the mutual

fund manager or the trustee, during the period of the dissolution, shall not exceed

the amount of the remuneration paid to the fund manager during the period of the

twelve months that preceded the date of the commencement of dissolution,

multiplied by the proportion between the period of the dissolution and twelve

months. In this context, “amount of remuneration” – as defined in the said

section.

)2( The Minister of Finance may prescribe in regulations, in general or for types of

funds, the maximum remuneration that may be paid to a liquidator who is not a

mutual fund manager or a trustee.

)3( The expenses of the dissolution, excluding commissions for sale of the fund

assets, shall be paid out of the remuneration of the liquidator. Commissions from

the sale of the fund assets shall be paid out of the Fund assets.


)4( The court shall not appoint a liquidator for the fund who is not the trustee, unless

all of the following are fulfilled:

(a) He is a member of the Israel Bar Association or is a certified public

accountant in Israel or he has the professional qualifications required in the

court’s opinion for that job.

(b) He has sufficient experience, in the court’s opinion, in order to carry out

the job of liquidator.

(c) His occupations or his connections with the mutual fund manager or with a

company that controls the mutual fund manager or with a company

controlled by such a company are not such that may create a conflict of

interests with the performance of the job.

(d) Pursuant to section 106 of the Law:

)1( The liquidator shall give notice of the dissolution of a fund to the unitholders,

the trustee, the Israel Securities Authority and the Stock Exchange and he shall

publish the notice in the Two Newspapers, not earlier than sixty days and not

later than thirty days, before the commencement of the dissolution. (See also

section 1(b) of Chapter T below).

)2( The liquidator of the fund shall send the notice under subsection (d)(1) of this

section to the unitholders who hold units through the mutual fund manager, and

shall give notice to a distributor through which units are held, by written notice

addressed thereto, that he must send the notice to the unitholders. A distributor

who has received a notice as stated shall send it, immediately after receiving it,

to the unitholders holding units through him. The notice shall be sent to their

addresses known at that time, and shall include, inter alia, the grounds for the

dissolution, the date of its commencement, the name of the liquidator and his

remuneration and where the books of the fund will be kept after the dissolution.

(e) Section 107(a) of the Law provides that if a court grants an order to dissolve a fund, it

shall designate the date of commencement of the dissolution, but this date shall not be

earlier than thirty days after the grant of the order.

(f) Pursuant to subsections (1) and (2) of section 107(b) of the Law, the date of

commencement of the dissolution of a fund which is not by virtue of a court order,

shall be:

)1( In a dissolution under section 103(1) of the Law - the end of the period for the

existence of the fund as provided in the fund agreement.

)2( In a dissolution under section 103(2) of the Law — the date stipulated in a

decision in accordance with the provisions in the fund agreement, or at the

expiration of thirty days from the date of the giving of notice of the dissolution

of the fund as stated in section 106 of the Law, whichever is the later.

(g) Pursuant to section 108 of the Law:

)1( The duties of a trustee and a mutual fund manager shall continue to apply,

mutatis mutandis, during the period of dissolution of a fund by the mutual fund

manager.

)2( If a liquidator who is not the mutual fund manager is appointed –

(a) The fund assets shall be imparted to him, and all the powers required for

the purpose of the dissolution thereof shall be vested in him.


(b) From the date of the appointment of the liquidator, the duties, powers and

liability of the mutual fund manager and the trustee shall cease with regard

to the fund and the payment of their remuneration shall cease, unless the

court determines otherwise.

)3( The court may appoint a liquidator in place of a liquidator who has resigned.

)4( Without derogating from the powers of the court, it may, on the application of at

least five unitholders who hold at least ten percent of all the units:

(a) issue any order with regard to the dissolution of the fund.

(b) remove a liquidator from office and appoint a liquidator in his stead, if it

finds that the interests of the unitholders may be prejudiced.

)5( The manager of an open-end fund shall not sell and shall not redeem units from

the date of the commencement of the dissolution of the fund, other than

redemption in the realization of the Fund assets in dissolution.

(h) Section 109 of the Law provides as follows:

)1( Realization of the fund assets in a dissolution shall be done in such a way and

during such a period as the liquidator shall think advantageous to protect the

rights of the unitholders, provided that the realization of the assets shall end

before six months have passed from the date when the dissolution commenced

(hereafter: the "Realization Period"). The liquidator shall distribute the cash

received from the realization of the assets, after deducting the expenses of the

dissolution and other payments for which the fund is liable, among the

unitholders, pro rata to the number of units that they hold, and he shall also use

his best endeavors to distribute cash as stated during the Realization Period.

)2( The provisions of sections 276, 288 to 291 and 310 to 312 of the Companies

Ordinance (New Version) 5743 – 1983 shall apply to the dissolution of a fund,

mutatis mutandis. (Section 367 of the Companies Law provides that the

provisions of these sections shall remain in effect.)

)3( If an asset that could not be realized remains at the end of the Realization Period,

for reasons that are not dependent on the liquidator, or if on the said date the

fund has a debit balance, the liquidator shall act to realize them quickly, and he

shall distribute the cash received as soon as possible among the persons who

held units on the date when the dissolution commenced, in accordance with the

number of units that they held on the said date.

(i) Pursuant to section 110 of the Law, when the dissolution of the Fund is completed:

)1( The liquidator shall submit to the Israel Securities Authority and the Stock

Exchange a report about the realization of the fund assets, the expenses of the

dissolution and the distribution of the cash to the unitholders. (See also section

1(b) of Chapter T below).

)2( The validity of the fund agreement shall expire.

)3( The fund books shall be kept for a period of seven years from the end of the

dissolution.


Chapter R: Details Regarding General Meetings of the Unitholders

1. (a) Section 111(a) of the Law provides as follows:

)1( The mutual fund manager may convene a general meeting of the unitholders.

)2( The trustee, or at least five unitholders who hold at least ten percent of the

number of units, may demand that the fund manager convenes a general meeting

of the unitholders. The fund manager shall convene the meeting not later than

twenty-one days from the date on which the demand was submitted.

)3( If the mutual fund manager does not convene a meeting within the period stated

above in subsection (a)(2) of this section, whoever demanded the convening

thereof, but not less than five unitholders as stated above in sub-section (a)(2) of

this section, may convene the meeting by himself, provided that it takes place

before three months have passed from the date on which the demand was

submitted. The mutual fund manager shall pay the persons convening the

meeting for the reasonable expenses that they have incurred in convening it out

of its own resources.

(b) In accordance with section 99(a) of the Law, the appointment of an auditor to a mutual

fund shall be brought for the approval of the general meeting of the unitholders, which

shall be convened not later than three months after the appointment. Should an

adjourned meeting be convened for the purpose of the approval of the appointment of

the auditor, and should the holders of units who hold units which confer a voting right,

not be present at the meeting at the expiration of half an hour from the time scheduled

for the commencement thereof, the appointment shall be deemed to have been

approved at the general meeting of the unitholders.

2. Pursuant to the provisions of the Fund Agreement (subject to the provisions of the Law), the

Fund Manager or the Trustee are not required to convene meetings of unitholders and they are

not required to bring before such meetings questions which arise in connection with the Fund

Agreement or the Fund, unless they are required to do so pursuant to the provisions of the Law

specified in section 1 above and in section 3 below, or, if the matter concerns a modification of

the Fund Agreement which adversely affects the holders of units in the Fund in respect of

which it was not provided in the Fund Agreement that such modification may be made without

the approval of the meeting of the unitholders (see Chapter I, the "Fund Agreement").

3. Pursuant to the Law, the matters set forth in sections 47(b), 100(a), 100(c), 101(a), 102(a) and

103(3) of the Law shall be determined by special resolution

4. Pursuant to section 1 of the Law, a “special resolution of unitholders” is a resolution that is

passed at a general meeting of the unitholders as required pursuant to the Law, when the

following two conditions are satisfied therein:

(a) The resolution was passed by a majority of at least three quarters of the unitholders, who

voted either in person or by proxy.

(b) The voters for the passing of the resolution hold at least fifty one percent of the number of

units held by the unitholders who are voting, either in person or by proxy.

5. In accordance with the Fund Agreement (subject to the provisions of the Law), any resolution

which is not a special resolution as stated in section 4 above, that was passed by a majority of

the units whose holders participated in and voted at the meeting, shall be binding on all the

unitholders, whether they were present at the meeting or not.

6. Subsections (b), (c) and (d) of section 111 of the Law determine the quorum at a general

meeting for the passing of a special resolution pursuant to the sections specified in section 3

above.


7. Section 111(j) of the Law provides that the Minister of Finance may determine in regulations a

different number of unitholders who constitute a quorum pursuant to subsections (b), (c) and

(d) of section 111 of the Law.

8. The quorum for the passing of resolutions in respect of which no quorum was determined

pursuant to the Law as stated in sections 6 and 7 above is in accordance with the provisions of

sections 78 and 79 of the Companies Law. In accordance with the said sections in the

Companies Law, the quorum for holding a general meeting is the presence of at least two

unitholders who have at least twenty five percent of the voting rights, within half an hour from

the time scheduled for the commencement of the meeting. Should no quorum be present at the

general meeting within half an hour from the time scheduled for the commencement of the

meeting, the meeting shall be adjourned by one week, to the same day, time and place, or to a

later time, if stated in the invitation to the meeting or in the notice of the meeting. Should no

quorum be present at the adjourned meeting at the expiration of half an hour from the time

scheduled for the commencement of the meeting, the meeting shall be held with whatsoever

number of participants. (See also section 10(e) below).

9. Section 111(e) of the Law provides that a "unitholder" is a person who has the approval of a

member of the Stock Exchange with regard to the holding of units through same or any person

who is registered as a unitholder in the Fund Manager’s register of unitholders.

10. In accordance with the final part of subsection (e) and subsections (f), (g), (h) and (i) of section

111 of the Law:

(a) A unitholder who has redeemed or sold units after receiving the approval and prior to

the date of the general meeting:

)1( Shall give notice of this at the beginning of the meeting.

)2( The Stock Exchange member who gave the approval shall inform the Trustee of

the redemption or sale of the units, and the Trustee shall give notice of this at the

meeting.

(b) Every unit confers the right to one vote in a ballot.

(c) Units held by a person who controls the mutual fund manager, a company controlled

by such person, a director of the mutual fund manager, a member of a committee of the

board of directors who is not a director and an employee of the mutual fund manager,

shall not confer a right to vote.

(d) The Trustee shall participate at general meetings of the unitholders but it shall not have

a voting right.

(e) The provisions of the Companies Ordinance in all matters relating to general meetings

shall apply to general meetings of the unitholders, mutatis mutandis, unless otherwise

provided in the Law.

11. In accordance with subsections (a) and (b) of section 112 of the Law:

(a) A mutual fund manager shall publish in two newspapers a notice of the convening of a

meeting of the unitholders to adopt a special resolution under sections 47(b), 100, 101,

102 and 103(3) of the Law, and it shall send a copy thereof to the distributor, the

trustee and the Israel Securities Authority. The mutual fund manager shall send the

notice to the unitholders who hold units through him at their addresses known at that

time, and it shall give notice to the distributor through whom units are held, by way of

a notice, in writing, addressed thereto, that he is required to send the notice to the

unitholders. The distributor shall send the notice to the unitholders who hold units

through it, at their addresses known at that time, immediately after the mutual fund

manager has given him notice as stated.


(b) The publication in two newspapers and the notice to be sent, as stated in subsection (a)

of this section, shall state the date and place of the meeting and details about the issue

for which it is being convened. The notice shall also include a summary of the

resolution whose approval is being sought, the date planned for carrying it out, an

explanation as to why the resolution is being sought and the quorum required to

approve it.

12. Section 112(c) of the Law provides that the date of the meeting for the passing of a special

resolution shall be not earlier than seven days after the date of the publication in two

newspapers and not later than fourteen days after that date.

13. Pursuant to the Fund Agreement, a prior notice in accordance with the provisions of the Law

will be given as to the convening of a meeting.

14. In accordance with the Companies Regulations (Notice of a General Meeting and a Class

Meeting at a Public Company) 5760 – 2000, notice of the convening of a general meeting

which is not a general meeting for the passing of a special resolution shall be published at least

twenty-one days prior to the convening of the said meeting. (See also section 10(e) above).

15. Section 112(e) of the Law provides that a notice to unitholders of the convening of a general

meeting other than those listed in subsection 11 (a) above shall be published in two newspapers

by the mutual fund manager and it shall state the date and place of the meeting and details about

the issue for which it is being convened. The mutual fund manager shall send a copy of the

notice to the Trustee and to the Israel Securities Authority.

16. The Fund Agreement provides that notwithstanding the provisions of any law, no obligation

shall apply to open the discussion at a general meeting by the chairman of the board of directors

or by another director of the Fund Manager.

17. Section 112(d) of the Law provides that not later than the second business day after the passing

of a special resolution, a mutual fund manager shall submit a report to the Israel Securities

Authority and the Stock Exchange and publish in two newspapers the resolution that was

approved at the meeting and the planned date for carrying it out. (See also section 1(b) of

Chapter T below).


Chapter T: Additional Information

1. In accordance with section 72.A. of the Law:

(a) A draft prospectus of a fund, the prospectus of a fund whose publication was permitted

and any report, opinion or approval included therein, and also any report, notice,

information or other document which must be submitted to the Israel Securities

Authority pursuant to the Law, shall be submitted by way of electronic reporting,

pursuant to Chapter G1 of the Securities Law, 5728 – 1968.

(b) A report which must be filed pursuant to the provisions of the Law to the Israel

Securities Authority and also to the Stock Exchange, and also a prospectus of a fund

whose publication was permitted by the Israel Securities Authority, which were filed to

the Israel Securities Authority, as stated above in subsection (a) of this section, shall be

transferred by the Israel Securities Authority to the Stock Exchange, and the filing to the

Israel Securities Authority shall also be deemed to be compliance with the obligation of

filing to the Stock Exchange.

2. Section 8 of the Law provides as follows:

(a) A mutual fund manager shall submit the fund agreement to the Israel Securities

Authority for registration before issuing the first unit. If the fund agreement is changed,

the mutual fund manager shall file with the Israel Securities Authority the amended fund

agreement before the date on which the change comes into effect.

(b) The fund agreement shall be available for inspection by the public at the head offices of

the mutual fund manager and the trustee.

(c) The mutual fund manager shall give a copy of the fund agreement and of any change

thereto to a unitholder, at his request, in return for a payment determined by the trustee.

3. In accordance with the Joint Investment Trust (Publication of Unit Price and Redemption

Price in an Open-End Fund and Unit Price and its Value in a Closed Fund) Regulations, 5755

- 1994, the fund manager shall publish the purchase price and the redemption price, through

the daily quotation list of the Stock Exchange in Israel, which is published shortly after the

fund manager receives the information that allows it to determine the purchase price and the

redemption price.

4. In accordance with Regulation 22 of the Joint Investment Trust (Reports) Regulations, 5755 –

1994:

(a) The Fund Manager shall submit to the Israel Securities Authority not later than the 15th

of each month, a monthly report. The report shall include data with regard to the Fund

assets, its liabilities, its receipts and its expenses, as set forth in the schedule to the

above-mentioned regulations, and other details, all in such format as is set forth in the

Schedule.

(b) The data in the monthly report relating to the Fund assets and its liabilities shall relate to

the last Trading Day in the month preceding the date of the filing of the report, and

details relating to receipts and to payments shall relate to the month preceding the date

of the filing of the report.

(c) The monthly report shall be available for inspection by the public after the expiration of

forty five days from the date on which it was filed to the Israel Securities Authority.


Names of the Fund Manager’s Directors

who have signed the Prospectus

Signatures

Dan Laluz, Chairman _______________________

Eliezer Bihari _______________________

Mordechai Bignitz _______________________

Shalom Hochman ________________________

Liora Rinot _______________________

Fund Manager _______________________________

Migdal Trust Fund Ltd.

Trustee: _______________________________

Ubank Trust Co. Ltd.

Fund Manager: Migdal Mutual Funds Ltd.

Prospectus

Migdal (4D) Equity for Foreigners Mutual Fund

Liable Fund Open-End Fund The Fund is an open-end fund, as defined in the Joint Investment Trust Law, 5754 – 1994 (in this Prospectus: the “Law”). Offer of units denominated in US dollars for foreign residents only* An unlimited number of registered units, of 1 US dollar (in this Prospectus: "Dollar") par value, offered to foreign residents* only, so long as not otherwise resolved by the Fund Manager, at such unit price, as calculated from time to time, without the addition of any supplement, and should the Fund Manager decide otherwise, with the addition of a supplement at such rates as shall be determined, as set forth in sections 2(b) and 3 of Chapter A and 1(c) of Chapter D of the Prospectus (but see section 6 of Chapter A of the Prospectus). The said units are offered as of March 22, 2009 up to March 21, 2010 and will be sold, subject to the provisions of sections 4 and 5 of Chapter A and of section 6 in Chapter B of the Prospectus, on any trading day, as defined in section 1(a) in Chapter A of the Prospectus. The financing of the purchase of the units of the Fund shall be done solely in Dollars from a foreign currency deposit with a banking corporation, of a foreign resident (known as a PATACH account) (as set forth in Appendix F of the Prospectus). For details regarding the possibility of changing the currency in which the Fund units are denominated and as to the possibility of determining that the Fund units will also be offered to persons who are not foreign residents, see section 1(a) of Chapter A of the Prospectus. Classification of the Fund for Publication Purposes: For foreign residents only, foreign residents, shares. Investment Policy and Transactions for the Fund (see Chapter G of the Prospectus) 1. The Fund Agreement provides as follows:

(a) Exposure to shares will not be less than 50% of the net value of the Fund assets. (The foregoing is subject to section 4 below.) (b) The provisions of subsection (a) of this section may be revised by the amendment of the Fund Agreement without requiring the approval of the unitholders

meeting. (c) Subject to the foregoing and to the provisions of any law, the Fund Manager may invest the Fund resources, in its absolute discretion, and it is further authorized

to determine the amount of cash which shall be included in the Fund assets from time to time. 2. So long as not otherwise resolved by the board of directors of the Fund Manager:

(a) The Fund assets shall not include securities listed for trading under a dual listing, either on the Stock Exchange in Israel or on stock exchanges or regulated markets overseas (dual securities).

(b) Exposure to shares traded in Israel will not be less than 50% of the net value of the Fund assets. (c) Exposure to shares will not exceed 120% of the net value of the Fund assets and will not be less than 50% of the net value of the Fund assets. (d) Exposure to foreign currency will not exceed 120% of the net value of the Fund assets and will not be less than (-120%) of the net value of the Fund assets (See

also subsection (e) of this section below). (e) The Fund is limited in terms of investment in foreign securities, as defined in section 1(a)(2)(e) of Chapter G of the Prospectus. (The foregoing is subject to section 4 below.)

3. Subject to the provisions of the law and to the Fund's investment policy, the Fund Manager may perform, for the Fund, the following transactions: (a) Purchase, sale and creation of options and futures contracts. (b) A short sale. (c) The provision of securities for the purpose of a short sale transaction. (d) Re-sale transactions.

4. (a) Pursuant to the Fund Agreement and to the resolution of the board of directors of the Fund Manager, a deviation of the Fund's investments from the Fund's investment policy will not be deemed as a violation of the duty to invest the Fund assets in accordance with such policy, upon satisfaction of the terms laid down in the Law, to the effect that such a deviation shall not be deemed as a violation of the provisions of the Law.

(b) In accordance with section 61 of the Law, if investments of the Fund have deviated from the Fund's investment policy, as prescribed in the Fund Agreement and in the Prospectus, the deviation shall not be deemed to be a breach, if the following two conditions are satisfied: If the Fund Manager remedied the deviation by the end of the second day of calculation of the prices after the day on which it began. (2) If the investments of the Fund deviated from the Fund's investment policy, as stated, not more than five times during a period of twelve months.

The Fund's Exposure profile: 4D (See section 1(a1) of Chapter G of the Prospectus) The 4D exposure profile consists of mutual funds that the absolute value of their rate of exposure to shares will not exceed 120% of the net value of the Fund assets and that the absolute value of their rate of exposure to foreign currency will not exceed 120% of the net value of the Fund assets. For details regarding the rate of exposure to shares and the rate of exposure to foreign currency which are prescribed in the Fund's investment policy, see section 2 above. Transactions and Undertakings for the Fund The Fund Agreement provides that the Fund Manager shall be entitled, without requiring the approval of the unitholders meeting, to perform any transaction for the Fund and to make any undertaking for the Fund (with the exception of increasing the maximum fees of the Fund Manager and the Trustee), which are not prohibited in the Fund Agreement or in the Fund's investment policy, provided that it is permitted by law to perform such transaction or to give such undertaking, as the case may be, without the approval of such meeting. The Fund’s principal investments during the year ended December 31, 2008 The average of the Fund’s principal investments (by the holding rates at the end of each month) during the year ended December 31, 2008 was as follows: By % of the net value of the Fund assets Shares which are traded in Israel 73.73 Corporate index linked notes 1.36 Convertible options 1.34 Convertible index linked notes 1.18 Short term loans 0.57 Maof options 0.10 - Cash in foreign currency 4.99 Cash in NIS 16.93 Additional data on the Fund’s investments Exposure to shares traded in Israel 77.96 Exposure to shares 77.96 Exposure to foreign currency 18.47

Information concerning the return on the Fund units compared with changes in various indices:

Rate of change (by %) during the period: January 1, 2008 to

December 31, 2008 March 28, 2007 to December 31, 2007

(Fund Inception Date) (Approx. 12 months) (Approx. 9 months)

The return of the Fund units, calculated on the basis of the redemption prices, as published on the quotation list of the Stock Exchange

52.98 -

2.29

Dollar return 52.43 - 11.15 NIS return 53.51 - 5.86 - Shares index 46.45 - 13.16 Representative exchange rate of the USD 1.14 - 7.97 - Consumer Price Index (based on the index for the last month during each period) 3.80 3.64 On January 29, 2009, the net value of the Fund assets amounted to NIS 437,001. Liable Mutual Fund (see Chapter O of the Prospectus) The Fund is a liable mutual fund, pursuant to the Income Tax Ordinance [New Version]. Approval of the Fund by the Income Tax Commissioner as a Liable Fund for Foreign Residents The Fund has been approved by the Income Tax Commissioner as a liable fund for foreign residents. For details regarding the Income Tax Regulations (Exemption From Tax on Certain Income of a Liable Mutual Fund for Foreign Residents) 5763 – 2003, the restrictions applicable to the unitholders upon the purchase of the Fund units and the forms which the purchasers of the units are required to submit to the distributors of the Fund units, see section 1A of Chapter O and Appendix F of the Prospectus.

Annual Fees of the Fund Manager and of the Trustee (see Chapter K of the Prospectus) Pursuant to the Fund Agreement, the Fund Manager is entitled to receive an annual fee equal to 5% of the average annual value of the Fund assets, as calculated for the purpose of determining the unit price. However, so long as not otherwise resolved by the Fund Manager, the Fund Manager shall receive an annual fee equal to 2.5% of such value. Pursuant to the Fund Agreement, the Trustee is entitled to receive an annual fee representing 0.1% of such value, but not less than a sum in NIS representing USD 2,500 per annum, which shall be deducted from the Fund assets on a daily basis, namely, about USD 6.84 per day (hereinafter: the "Minimum Fee"), even if such fee (calculated on an annual basis) exceeds 0.1% of the said value. So long as not otherwise agreed between the Fund Manager and the Trustee, the Trustee will receive an annual fee representing 0.1% of such value, with no Minimum Fee. Type of Fund for the Purpose of Calculating the Distribution Commission (see section 8 of Chapter A of the Prospectus) The type of Fund for the purpose of calculating the distribution commission pursuant to the Joint Investment Trust Regulations (Distribution Commission) 5766 – 2006 (in this Prospectus: the “Distribution Commission Regulations”): Type 2. It is hereby clarified that a change in the investment policy of the Fund is likely to result in a change in the type of the Fund, and, consequently, in a change in the distribution commission in connection with the distribution and the holding of the Fund units. Translation into English The Hebrew versions of the Fund Agreement and of this Prospectus are the exclusively binding versions. Permission by the Israel Securities Authority for the publication of the Prospectus is given to the Hebrew version of the Prospectus only. The translation into English of the Prospectus shall be submitted together with the Report of an Event in the Fund (K-123). Terms in the Prospectus Terms in the Prospectus which appear in the Law and in the Regulations enacted pursuant thereto shall have such meaning as is construed in the said Law and Regulations, unless the context requires otherwise. Prospectus date: March 22, 2009 The Trustee: Ubank Trust Co. Ltd.

____________ * In this Prospectus: "Foreign Resident" – as defined in section 1 of the Income Tax Ordinance [New Version], as set forth in Appendix E of the Prospectus. See also

the Income Tax Regulations (Exemption From Tax On Certain Income of a Liable Mutual Fund for Foreign Residents) 5763 – 2003, as set forth in Appendix F of the Prospectus.

Ilana Kroparo-Tal טלטלטלטל----אילנה קרופרואילנה קרופרואילנה קרופרואילנה קרופרו

Legal Translation Services שירותי תרגום משפטי

5, Mantur Street, Modi’in 71706 Israel 71706מודיעין ,5מנתור ' רח

Tel: 972-8-9704456; Fax: 972-8-9704454 08-9704454: פקס; 08-9704456: 'טל

E-mail: [email protected] ============================================================================================================================================================================================================================

2009, במרץ 22

לכל מאן דבעי

4D (Equity(מגדל מאשרת בזה כי התשקיף של , טל-אילנה קרופרו, מ"הח, אני

תורגם על ידי , 2009האמור להתפרסם במהלך חודש מרץ , קרן נאמנות –לתושבי חוץ

ל "והריני מאשרת כי התרגום האנגלי של התשקיף הנ, מהשפה העברית לשפה האנגלית

ה את התוכן והמהות של הגירסה העברית המקורית והמחייבת של התשקיף משקף נכונ

.ל"הנ

קרן –לתושבי חוץ 4D (Equity(מגדל הנני מסכימה להכללת אישור זה בתשקיף של

.2009אשר אמור להתפרסם במהלך חודש מרץ נאמנות

_______________________________

ישירותי תרגום משפט, טל-אילנה קרופרו

March 22, 2009

To Whom It May Concern

I, the undersigned, Ilana Kroparo-Tal, hereby confirm that the Prospectus of Migdal (4D) Equity for Foreigners Mutual Fund, due to be published in March 2009, was translated by me from Hebrew to English, and I hereby certify that the English translation of the aforesaid Prospectus reflects the contents and substance of the original and binding version of the Prospectus in Hebrew. I agree to this certificate being included in the Prospectus of Migdal (4D) Equity for Foreigners Mutual Fund to be published in March 2009.

Ilana Kroparo-Tal, Legal Translation Services

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