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					   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 each, offered to foreign residents**
   only, as follows:
   (a)    Reduced Price Offer
          Effective from March 30, 2009 to June 30, 2009, at 15:00, the units are being offered at the unit price, as calculated from
          time to time, without the addition of a supplement (see, however, section 6 of Chapter A of the Prospectus).
   (b)    Ordinary Offer
          Effective from June 30, 2009 at 15:00 up to March 29, 2010, the units are being offered, so long as not otherwise decided
          by the Fund Manager, at such unit price as calculated from time to time, with the addition of a 0.5% supplement. The Fund
          Manager may increase or decrease such rate as set out in sections 2(b)(2) and 3 of Chapter A and 1(c) of Chapter D of the
          Prospectus (see, however, section 6 of Chapter A of the Prospectus).
   The sale of the units shall be done, subject to that stated in sections 4 and 5 of Chapter A and in section 6 of Chapter B of the
   Prospectus, on Mondays to Thursdays which are Trading Days, as defined in section 1(a) of 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).
   So long as not otherwise resolved by the Fund Manager, any unit purchase application will be for units in a value of not less than
   USD 1,000.
   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 resources of the Fund 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)     Exposure to Israel shares (as defined below) will not fall below 50% of the net value of the Fund assets.
                  In this subsection: "Israel Shares" – Shares issued by corporations that were incorporated in the State of Israel, which
                  are traded in Israel and/or overseas.
          (b)     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.
          (c)     Exposure to foreign currency will not exceed 30% of the net value of the Fund assets and will not fall below (-30%)
                  of the net value of the Fund assets.
          (d)     The Fund is unlimited in terms of investment in foreign securities, as defined in section 1(a)(2)(d) 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 the Fund's investments 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: (1) The Fund Manager has remedied the deviation by the end of the second
                  day of calculating the prices after the day on which it began. (2) If the investments of the Fund deviated from the
                  Fund's investment policy, as aforesaid, not more than five times during a period of twelve months.
   The Fund's Exposure profile: 4B (See section 1(a1) of Chapter G of the Prospectus)
   The 4B 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 30% 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 for the Fund any transaction 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 under the Fund’s investment
   policy, provided that it is permitted by law to perform such transaction or to make such an 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                                                                           78.2
Foreign shares                                                                                               2.6
Non linked corporate Notes                                                                                   2.1
Cash in foreign currency                                                                                     1.7
Cash in NIS                                                                                                 15.3
Additional data on the Fund’s investments:
Exposure to Israel Shares as set out in subsection 2(a) above                                               80.7
Exposure to shares as set out in subsection 2(b) above                                                      83.1
Exposure to foreign currency as set out in subsection 2(c) above                                             4.2
Information concerning the return on the Fund units compared with changes in various indices:
                                                              Rate of change (by %) during the year ended on:
                                                                                   31.12.08         31.12.07
Return on Fund units, calculated on the basis of redemption prices,
as published on the quotation list of the Stock Exchange:
Dollar return:                                                                     -50.1                       15.8
NIS return:                                                                        -50.7                         5.9
Index of shares that are traded on the Tel Aviv Stock Exchange                     -46.5                       23.3
Representative exchange rate of the US Dollar                                       -1.1                        -9.0
Consumer Price Index (based on the index for the last month during                   3.8                         3.4
each period)
Merger into the Fund (See section 2A. of the Introduction to the Prospectus)
The Fund Manager intends to merge Psagot (4B) Real Estate for Foreign Residents into the Fund. The implementation of the
merger is subject to the adoption of a special resolution of the unitholders in the merging fund, approving the merger, and is further
subject to obtaining the approval of the Tax Authority for the merger.

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 an annual fee equal to 4% 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 1.9% of such value.
Pursuant to the Fund Agreement, the Trustee is entitled to receive an annual fee equal to 0.2% of the said value; however, so long
as not otherwise agreed between the Trustee and the Fund Manager, the Trustee shall receive an annual fee equal to 0.04% of such
value.
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.
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.
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 of
the Prospectus into English shall be submitted together with the Report of an Event in the Fund (K-123).

Prospectus date: March 30, 2009             Trustee: Kesselman & Kesselman Trust Company (1971) Ltd.
(Hebrew date: Nissan 5, 5769)
                                                                                                                  ___________
**     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, which are set forth in Appendix F of the Prospectus.
                                 Table of Contents
                                                                                 Page
               Introduction                                                         1
Chapter A:     Offer of the Fund Units                                              8
Chapter B:     Order, Sale and Redemption of Units                                 14
Chapter C:     Prices of the Fund Units                                            17
Chapter D:     Calculation of Prices and Days for which They Shall Be
               Calculated                                                          17
Chapter E:     Units which were Issued and Redeemed                                22
Chapter F:     List of the Fund Assets as at February 2, 2009                     I-1
               Summary of the Fund Assets as at February 2, 2009                  24
Chapter G:     The Fund's Investment Policy and Transactions for the Fund          25
Chapter H:     The Directors and Officers of the Trustee and of the Fund
               Manager                                                             35
Chapter I:     The Fund Agreement                                                  38
Chapter J:     Interest of the Fund Manager and the Trustee in the Fund and in
               its Units, and their Liability                                      38
Chapter K:     Income of the Fund Manager, the Trustee, Stakeholders and
               Securities Agents                                                   42
Chapter L:     Interest in the Fund Assets                                         45
Chapter M:     Holding of the Fund Units                                           45
Chapter N:     Payments to Unitholders                                             46
Chapter O:     Taxation                                                            47
Chapter P:     Unitholders Register and Transfer of Units                          50
Chapter Q:     Dissolution of the Fund                                             51
Chapter R:     Details Regarding General Meetings of the Unitholders               55
Chapter S:     Financial Statements as at December 31, 2008 and as at            II-1
               December 31, 2007 and Auditor’s Report
Chapter T:     Additional Information                                              58
Appendix A:    Joint Investment Trust (Purchase and Sale Prices of Fund
               Assets and Value of Fund Assets) Regulations, 5755 – 1994         A-1
Appendix B:    Joint Investment Trust (Assets that may be Bought and Held
               by a Fund and their Maximum Amounts) Regulations, 5755 –
               1994                                                               B-1
Appendix B1:   Joint Investment Trust (Options, Futures and Short Sales)
               Regulations, 5761 - 2001                                          B1-1
Appendix C:    Joint Investment Trust (Transactions that may Involve
               a Conflict of Interests, Substantial Transactions and Off-Floor
               Transactions) Regulations, 5755 – 1995                             C-1
Appendix D:    Joint Investment Trust (Credit Transactions and Redemption
               Of Credit Units) Regulations, 5761 - 2001                         D-1
Appendix E:    Definition of "Foreign Resident" In Section 1 Of The Income
               Tax Ordinance [New Version]                                        E-1
Appendix F:    Income Tax Regulations (Exemption From Tax on Certain
               Income of a Liable Mutual Fund for Foreign Residents) 5763 -
               2003                                                               F-1
                                                       -1-
                                                                              Psagot (4B) Israel Horizon



                                                Introduction

    1.   Approvals
         (a)   All of the permits, approvals and licenses required by law to offer the units, to issue
               same and to publish the Prospectus have been granted.
         (b)   The Prospectus is available for perusal by the public on 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 as to the reliability or the completeness
               thereof or an opinion on the nature of the units being offered.
    2.   The Fund
         Psagot (4B) Israel Horizon (Fund No.: 5100201) (in this Prospectus: the “Fund”). The Fund
         was established pursuant to a fund agreement signed on March 15, 1998 and as was amended
         from time to time and recently under a fund agreement dated June 23, 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 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 below.
2A. Merger into the Fund
         The Fund Manager intends to merge Psagot (4B) Real Estate for Foreign Residents into the
         Fund. The performance of the merger is subject to the adoption of a special resolution of the
         unitholders in the merging fund, approving the merger, and is further subject to obtaining the
         approval of the Tax Authority for the merger. It is hereby clarified that the value of the Fund
         units following the merger, in terms of a holder of Fund units prior to the merger, will not
         change in consequence of the merger and that the Fund Agreement as well as the prospectus
         for the Fund will remain in full force and effect following the completion of the merger.
    3.   Fund Manager*
         Psagot Mutual Funds Ltd., whose sole activity is the management of mutual funds, with its
         registered office at 14, Achad Ha’am Street, Tel Aviv.
         The Fund Manager is a wholly owned company of Psagot Investment House Ltd. (hereinafter:
         the “Parent Company” or: "Psagot Investment House"), which holds a license as an
         investment marketer, and which is engaged, inter alia, in the provision of administrative
         services to companies of the Psagot Group (as defined below).
         On January 15, 2009 the Parent Company and Psagot Gadish Provident Funds Ltd.
         (hereinafter: "Psagot Gadish") entered into an agreement with Prisma Provident Funds Ltd.
         and Prisma New Provident Funds Ltd. (hereinafter, jointly: the "Prisma Companies"),
         pursuant to which, inter alia: (a) Shares in the Parent Company will be allocated to the
         Prisma Companies, so that the Prisma Companies will hold, jointly, approximately 24%
         (subject to adjustments) of the Parent Company's shares following the implementation of the
         agreement (the "New Shares"). Furthermore, the Prisma Companies, jointly, will be granted


*        Up to September 10, 2006 the Fund was managed by Psagot Mutual Funds Management – Leumi Ltd.
                                                     -2 -
                                                                                Psagot (4B) Israel Horizon


    an option to purchase approximately an additional 6% (subject to adjustments) of the Parent
    Company's share capital, as it shall be prior to the allocation of the New Shares to the Prisma
    Companies. (b) The Prisma Companies will sell and transfer to Psagot Gadish the activity of
    managing all provident funds managed by the Prisma Companies. The closing of the said
    transaction is subject to the fulfillment of several suspending conditions, including the
    obtaining of regulatory approvals and the consent of the financing banks of the Psagot Group
    and the Prisma Companies.
    All shares in the Parent Company are owned by York Global Finance 50 S.ar.l (hereinafter:
    "York Luxembourg"), a company incorporated in Luxembourg. 74.5% of the ownership in
    York Luxembourg is held by York Global Finance II S.ar.l, another company which was
    incorporated in Luxembourg and which is wholly owned by investment funds in the York
    Capital Management Group, which are managed by investment managers, that are
    corporations which are jointly controlled by James Dinan and Daniel A. Schwartz
    (hereinafter, jointly: the “Controlling Shareholders”). The Controlling Shareholders may
    adopt all material business resolutions on behalf of each of the said investment managers.
    21.7% of the ownership in York Luxembourg is held by Plainfield Special Situations Master
    Fund Limited (hereinafter: "Plainfield"), which, as advised to the Fund Manager, is a foreign
    investment fund that was incorporated in the Cayman Islands and 3.8% of the ownership in
    York Luxembourg is held by foreign investment funds which are not controlled by the
    Controlling Shareholders.
    The Parent Company also controls the following companies (hereinafter: the “Psagot
    Group”): Psagot Securities Ltd., which is engaged, inter alia, in portfolio management, and
    which is a member of the Tel Aviv Stock Exchange Ltd. and of the clearinghouse of the said
    stock exchange; Psagot Gadish Provident Funds Ltd., which is engaged in the management of
    provident funds and advanced study funds; Psagot Underwriting Ltd. (hereinafter: "Psagot
    Underwriting"),@; Psagot Exchange Traded Notes Ltd., which is engaged in the issuance of
    basket certificates, commodities certificates and short certificates; Psagot Basket Certificates
    (Trade 2000) Ltd., which is engaged in the trading certificates issued by Psagot Exchange
    Traded Notes Ltd., and manages the liabilities of such certificates; Psagot Binding
    Certificates Foreign Currency Ltd., engaged in the issuance of liability certificates; Psagot
    Binding Certificates Foreign Currency Trade (2003) Ltd., engaged in the trading of liability
    certificates issued by Psagot Binding Certificates Foreign Currency Ltd., and manages the
    liabilities of such certificates; Psagot Platinum Structured Products Ltd., which issued
    debentures and published a prospectus for the offering of debentures within the framework of
    a shelf prospectus; Psagot Basket Certificates Indexes Ltd., engaged in the issuance of
    indexed products; Psagot Exchange Traded Notes Indexes (Trade 2007) Ltd., engaged in
    trade of the indexed products issued by Psagot Basket Certificates Indexes Ltd. and manages
    the liabilities of the said indexed products; Psagot Business Opportunities Funds Ltd.,
    serving as a general partner in limited partnerships overseas, while Psagot Securities Ltd.
    manages part of the investments of such partnerships; Omega Savings And Finance An
    Agency For Insurance Pension (2008) Ltd., which is an insurance agency; Compass
    Investments Ltd., which is a holding company; Compass Hedge Funds Ltd., which is the
    general partner in the hedge fund Compass International Management, L.P.
    The Parent Company is also a stakeholder in Magen Management Funds Co. Ltd.
    (hereinafter: "Magen"), which is engaged in the management of a pension fund and which
    belongs to the Ayalon Insurance Co. Ltd. group. The Parent Company has an option to
    acquire a holding rate of up to 49% in Magen.


@
    On September 24, 2008, Psagot Underwriting Ltd. discontinued its activity as an underwriter.
                                               -3 -
                                                                      Psagot (4B) Israel Horizon


     As part of the financing of the overall transaction pursuant to which York Global Finance I
     Pte. Ltd. (Hereinafter: "York Singapore") (which was, as of the acquisition date, the Fund
     Manager's parent company) and the companies of the Psagot Group, purchased the assets,
     activity, liabilities and goodwill of Psagot Ofek Investments House Ltd. and its subsidiaries,
     and as part of which, inter alia, the Fund Manager purchased the goodwill, the activity, the
     assets and the liabilities of Psagot Mutual Fund Managers-Leumi Ltd., inter alia, the entire
     issued share capital of the Fund Manager as well as the entire issued share capital of Psagot
     Investment House were encumbered, by means of a first fixed charge, in favor of Poalim
     Trust Services Ltd., on behalf of Bank Hapoalim Ltd. and Discount Bank Ltd. (hereinafter:
     the “Banks”). Due to the transfer of the Fund Manager's shares in November 2007 to Psagot
     Investments House and the transfer of Psagot Investments House's shares to York
     Luxemburg, inter alia, the entire issued share capital of the Fund Manager as well as the
     entire issued share capital of Psagot Investments House were encumbered, by means of a first
     fixed charge, in favor of Poalim Trust Services Ltd., on behalf of the Banks. Furthermore, the
     Fund Manager encumbered, by means of a floating charge, all of the Fund Manager's assets,
     as they shall be from time to time (in such manner as shall not adversely affect the minimum
     shareholders' equity required of a fund manager by law), in favor of Poalim Trust Services
     Ltd., on behalf of the Banks.
     It should be noted that pursuant to another finance agreement entered into by Psagot Gadish
     Provident Funds Ltd. (a sister company of the Fund Manager), the entire issued share capital
     of the Fund Manager, as well as the entire issued share capital of Psagot Investments House
     Ltd. were encumbered by means of another first fixed charge in the name of Discount Trust
     Ltd., in favor of Discount Bank Ltd.
     On February 14, 2008 all five mutual funds that were managed by Compass Mutual Funds
     Ltd. were transferred to the management of the Fund Manager.
     On February 27, 2007 an agreement was entered into between the Fund Manager and Psagot
     Securities Ltd., concerning the provision of various professional services to the Fund
     Manager on the part of Psagot Securities Ltd., in consideration of a payment from the Fund
     Manager’s resources. Furthermore, on November 22, 2007 an agreement was entered into by
     and between the Fund Manager and the Parent Company, concerning the provision of various
     services, including marketing, operation, management, housing and other services, to the
     Fund Manager on the part of the Parent Company, in consideration of a payment from the
     Fund Manager’s resources.
4.   The Trustee
     Kesselman & Kesselman Trust Co. (1971) Ltd., whose main activity is the performance of
     trust duties and whose registered office is at 25, Hamered Street, Tel-Aviv.
     The shareholder of this Company is Kesselman & Kesselman, an accounting firm. Kesselman
     & Kesselman may provide services in their area of activity to entities in which the Fund holds
     their securities or from which it acquires assets, or which hold the Fund units.
     The Trustee also serves as a trustee for other mutual funds.
     In accordance with the Fund Agreement:
     (a)   Subject to the provisions of the Law, the Trustee's office shall continue so long as
           the Fund Manager does not give written notice to the Trustee, or the Trustee does
           not give written notice to the Fund Manager, of the termination of the Trustee’s
           office, at least 12 months in advance, provided that the date of termination of the
           Trustee’s office occurs on one of the following dates:
            (1) At the end of three years from the date on which the Fund Agreement dated
                March 15, 1998 took effect (hereinafter: the “Minimum Term”).
                                                           -4 -
                                                                                       Psagot (4B) Israel Horizon


                 (2) At the end of a period of two years from the end of the Minimum Term, or a
                     multiple of two years from the end of the Minimum Term.
         (b)    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@
         Bank Leumi Le Israel Ltd. serves as the Fund’s banker and the Fund’s securities agent in
         Israel. Most of the Fund assets are acquired and sold through and deposited with the securities
         agent.
    6.   The Funds Managed by the Fund Manager
         As of the date of the preparation of this Prospectus the following funds were managed by the
         Fund Manager:*

         Psagot (0A) AA and Government (Fund No.: 5111364)
         Psagot (2B) Best Invest (Fund No.: 5102686 )
         Psagot (0B) Best Invest Without Stocks (Fund No.: 5111463)
         Psagot (0B) High Yield Without Shares (Fund No.: 510873)
         Psagot (4D) Global Large Cap (Fund No.: 5101621 )
         Psagot (0C) Israeli FoF Without Shares (Fund No.: 5110226 )
         Psagot (4D) Israeli FoF for Foreign Shares (Fund No.: 5110267 )
         Psagot (4B) Equity Israeli Fund of Funds (Fund No.: 5110184 )
         Psagot (1D) Bonds (Fund No.: 5110168 )
         Psagot (0D) Global Bonds (Fund No.: 5101910 )
         Psagot (0D) Dollar Bonds Without Stocks (formerly: Psagot Global Corporate Bonds Without
         Stocks) (Fund No.: 5102363 )
         Psagot (2C) Bonds + Opportunities (formerly: Psagot Makam + Europe (Fund No.: 5100730 )
         Psagot (0B) Corporate Bonds Without Stocks (Fund No.: 5100433 )
         Psagot (0B) Rated Corporate Bonds Without Stocks (formerly: Psagot Corporate + Up To 10%
         (Fund No.: 5110721 )
         Psagot (0D) Global Bonds (Fund No.: 5103460 )
         Psagot (00) General Bonds (formerly: Small Cap USA (Fund No.: 5108121 )
         Psagot (00) Balanced Bond Without Stocks (Fund No.: 5111489 )
         Psagot (0B) Government Bonds Without Stocks (formerly: Psagot Portfolio Without Stocks (Fund
         No.: 5100748 )
         Psagot (0B) Government Bonds 1-4 years Without Corporate (formerly: Psagot Platinum
         Government Bonds) (Fund No.: 5111422 )
         Psagot (B2) Government Bonds + 20 (Fund No.: 5110762 )




@
         Up to September 10, 2006 the Fund was managed by Psagot Mutual Funds Management – Leumi Ltd., which
         belonged to the Bank Leumi Le Israel Ltd. group.
*
         For details regarding the significance of the Fund's exposure profile, which is stated in the parentheses included
         in the names of the funds, see subsection 1(a1) of Chapter G below.
                                        -5 -
                                                              Psagot (4B) Israel Horizon



Psagot (00) Linked Government Bonds 2-4 years (formerly: Psagot Platinum CPI-Linked + Up To 10
(Fund No.: 5103114 )
Psagot (0B) Short Term Bonds Without Stocks (Fund No.: 5108675 )
Psagot (0B) Inflation (Fund No.: 5109996)
Psagot (00) Protected Inflation (Fund No.: 5111208)
Psagot (4D) Europe (Fund No.: 5104781)
Psagot (4D) USA (formerly: Psagot Growth USA (Fund No.: 5105655 )
Psagot (00) Shekel Bond (Fund No.: 5111224 )
Psagot Beta (0C) Bonds (formerly: Psagot Dollar Corporate (Fund No.: 5102181 )
Psagot Beta (3B) Corporate and Convertible (formerly: Psagot Platinum Corporate and Convertible
(formerly: Psagot Portfolio Up to 50%) (Fund No.: 5110705 )
Psagot Beta (00) Money Market (Fund No.: 5111588 )
Psagot Beta (0D) Pamach Dollar Money Market (Fund No.: Psagot Pamach Jumbo Dollar Money
Market (Fund No.: 5111661)
Psagot Beta (0D) Foreign Currency (formerly: Psagot Dollar) (Fund No.: 5110739 )
Psagot Beta Shekel Without Stocks (formerly: Psagot Yeruka (Fund No.: 5109061 )
Psagot Beta (2B) 20/80 (formerly: Psagot Platinum Bonds + 20%; formerly: Psagot Corporate + Up To
20%) (Fund No.: 5103429 )
Psagot Beta (1C) 10/90 (formerly: Psagot Portfolio Up to 20%) (Fund No.: 5110747 )
Psagot (4D) Brazil and Latin America (Fund No.: 5109053 )
Psagot (00) Gilon Plus (Fund No.: 5102702 )
Psagot (4D) Globe (Fund No.: 5110879 )
Psagot (4D) Flexible (Fund No.: 5110754 )
Psagot (4D) Hi Tech (Fund No.: 5100151 )
Psagot (0D) Dollar Saving (Fund No.: 5103106 )
Psagot (1B) Saving plus Global Equities (Fund No.: 5102579 )
Psagot (4D) York (Fund No.: 5100243 )
Psagot (2C) York Portfolio 20% (Fund No.: 5108725 )
Psagot (4D) Japan (Fund No.: 5104278 )
Psagot (4B) Israel Horizon (Fund No.: 5100201 )
Psagot (A4) Yeter (Fund No.: 5110820 )
Psagot (00) Kol Rega (Fund No.: 5110812 )
Psagot (00) Money Market (Fund No.: 5111257 )
Psagot (00) Jumbo Money Market (Fund No.: 5111604 )
Psagot (0D) Dollar Money Market (Fund No.: 5109046 )
Psagot (00) Money Market Monthly Income (Fund No.: 5111406 )
Psagot (00) Government Money Market (Fund No.: 5111265 )
Psagot (00) Protected Money Market Without Corporate (formerly: Psagot Pakam Money Market
(Fund No.: 5109913 )
Psagot (0D) Pamach Dollar Money Market (Fund No.: 5110382 )
Psagot (00) Shekel Money Market (Fund No.: 5109038 )
Psagot (4D) Megama (Fund No.: 5110796 )
Psagot (00) CPI-linked without Stocks (Fund No.: 5103098 )
Psagot (00) CPI-Linked + 4 Years (formerly: Psagot CPI-linked + 4 Without Stocks) (Fund No.:
5111240)
Psagot (0B) CPI-Linked 120% (Fund No.: 5103270 )
Psagot (2C) Model + 15 (Fund No.: 5110424 )
Psagot (0B) Model Without Stocks (Fund No.: 5110408 )
Psagot (4A) Equities (Fund No.: 5110846 )
Psagot (4D) Global Equities (Fund No.: 5110838)
Psagot (4B) Maof (Fund No.: 5100508)
                                                -6 -
                                                                       Psagot (4B) Israel Horizon


     Psagot (4A) Maala (Fund No.: 5103924)
     Psagot (0A) Makam Plus Without Stocks (formerly: Psagot Makam Plus (formerly: Psagot Makam +
     High Yield (Fund No.: 5109988)
     Psagot (4B) Real Estate for Foreign Residents (Fund No.: 5101860 )
     Psagot (0B) Solidit Mehaleket (Fund No.: 5100839)
     Psagot (4D) China and Eastern Asia (Fund No.: 5103577 )
     Psagot (5B) Top (Fund No.: 5110861 )
     Psagot (4A) Potential Yeter (Fund No.: 5100938 )
     Psagot (4A) Focus (Fund No.: 5110853 )
     Psagot (4D) Global Financials (Fund No.: 5106653 )
     Psagot (3C) Platinum (Fund No.: 5108105 )
     Psagot Platinum (0B) Bonds Without Stocks (Fund No.: 5104401 )
     Psagot Platinum (1B) Bonds + 10 (Fund No.: 5109012 )
     Psagot Platinum (00) Money Market (Fund No.: 5110366 )
     Psagot Platinum (0B) CPI-Linked Without Stocks (Fund No.: 5109970 )
     Psagot Platinum (4A) Israeli Stocks (formerly: Psagot Equity Portfolio (Fund No.: 5100722 )
     Psagot Platinum (00) Shekel Without Stocks (formerly: Psagot Platinum Shekel) (Fund No.:
     5102173)
     Psagot Platinum (1A) Shekel + 10 (formerly: Psagot Government Bonds + 10% (Fund No. 5110770 )
     Psagot Platinum (0A) Tel Bond (Fund No.: 5110945 )
     Psagot Compass (4B) Israeli Equities 120% (formerly: Compass Long Short) (Fund No.: 5105762 )
     Psagot Compass (4D) Global Equities (formerly: Compass Global Equities) (Fund No.: 5105770 )
     Psagot Compass (0A) Tel - Bond 120% (Fund No.: Psagot Compass Israeli Equities (formerly:
     Compass Israeli Equities) (Fund No.: 5105788 )
     Psagot Compass (2B) 25/75 (Fund No.: 5107172 )
     Psagot Compass Beta (0B) Bonds (formerly: Psagot Compass Bonds Without Stocks (formerly:
     Compass Bonds Without Stocks) (Fund No.: 5105754 )
     Psagot (4D) Emerging Markets (Fund No.: 5101431 )
     Psagot (00) Short Term Shekel Without Stocks (formerly: Psagot Short Term Shekel Plus) (Fund
     No.:5109020 )
     Psagot (0A) Shekel 120% (Fund No.: 5102827 )
     Psagot (00) Shekel Without Stocks (formerly: Psagot Shekel) (Fund No.: 5103122 )
     Psagot (0B) 0-2 Years Shekel Without Corporate (formerly: Psagot Shekel 0-2 Years (formerly:
     Psagot Makam + 10 (Fund No.: 5105457)
     Psagot (00) Shekel 0-3 Years (formerly: Psagot Short Shekel) (Fund No.: 5110804 )
     Psagot (00) 1-4 Years Without Corporate (formerly: Psagot 1-4 Shekel Without Corporate (formerly: Psagot
     Pure Shekel, formerly: Psagot Shekel Plus) (Fund No.: 5101456 )
     Psagot (00) Shekel + 2 Years (formerly: Psagot Shekel + 2 Without Stocks (formerly: Psagot Long
     Term Shekel) (Fund No.: 5110887)
     Psagot (4A) T-A 75 (Fund No.: 5110713 )
     Psagot (4A) T-A 100 (Fund No.: 5110788 )
     Psagot (4A) T-A 100 Plus (Fund No.: 5101316 )
     Psagot (2D) Global Portfolio (Fund No.: 5104682)
     Psagot (1B) Portfolio Up to 10%) (Fund No.: 5104195)
     Psagot (0B) Portfolio No. 1 (Fund No.: 5111646)
     Psagot (2B) Portfolio No. 2 (Fund No.: 5111653)
7.   Units in Circulation
     The units in the Fund have a par value of 1.00 dollar and their number in circulation as of
     February 2, 2009 is 3,979,558.
     The Fund Agreement stipulates that no participation certificates shall be issued in respect of
     the Fund units.
                                                -7 -
                                                                        Psagot (4B) Israel Horizon


 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. Law and Jurisdiction
     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.
                                                  -8 -
                                                                           Psagot (4B) Israel Horizon



                           Chapter A: Offer of the Fund Units
1.   (a)   Offer of units denominated in US dollars for foreign residents* only
           An unlimited number of registered units, having a par value of 1.00 US dollar, are
           hereby offered for sale to foreign residents*, only.
           The said units 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" - each of the days Monday to Thursday in a week on
           which trading takes place on the stock exchange in Israel, and on which representative
           rates are published or inter-bank trading in US dollar takes place in Israel, and where,
           pursuant to the Price Regulations, the value of all the foreign securities and foreign
           options held by the Fund and the liabilities in respect of such assets can be determined;
           In the event that the Fund is exposed to an underlying asset traded overseas through
           activity in derivatives on stock exchanges overseas, and, due to the fact that no trading
           in derivatives takes place, the effect of the changes in the value of the underlying asset
           on the value of the Fund assets cannot be calculated, the exposure to such underlying
           asset will be treated as holding of foreign securities, whose value cannot be calculated
           in accordance with the Price Regulations, including the day on which the said
           conditions are not fulfilled, provided that trading on the stock exchange in Israel takes
           place on such a day and that the value of the assets held by the Fund, which cannot be
           determined in respect of such a day, of the net value of the Fund assets, does not exceed
           ten percent.
           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).
           So long as not otherwise resolved by the Fund Manager, any unit purchase application
           will be for units in a value of not less than USD 1,000.
     (b) Restrictions on the Offer of Units
           The units are not being offered for sale to a person, 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.
           The Fund Manager and the Trustee are not liable to the purchasers of the units in
           connection with the restrictions applicable thereto on the purchase of the units of the
           Fund pursuant to any law.



*
     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.
                                                 -9 -
                                                                         Psagot (4B) Israel Horizon




2.   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 being offered as follows:
     (a)   Reduced Price Offer
           Effective from March 30, 2009 to June 30, 2009 at 15:00, the units are being offered at
           the unit price, as calculated from time to time, without the addition of a supplement.
     (b) (1)      Ordinary Offer
                  Effective from June 30, 2009 at 15:00 up to March 29, 2010, the units are being
                  offered, so long as not otherwise decided by the Fund Manager, at such unit price
                  as is calculated from time to time, with the addition of 0.5% supplement. The
                  Fund Manager may increase or decrease such rate as set out in subsection 1(c) of
                  Chapter D and in subsections 2(b)(2) and 3 of this chapter below.
           ( 2)   Discounts in Special Cases (see section 6 below)
                  So long as not otherwise resolved by the Fund Manager, upon the acquisition of
                  units for any amount whatsoever, pursuant to this Prospectus, the following
                  discounts shall be given:
                  (a)   No supplement shall be paid for units purchased in consideration of amounts
                        received for units redeemed in other funds which are managed by the Fund
                        Manager, provided that the order for the purchase of Fund units is submitted
                        to the Stock Exchange member together with the instruction to redeem the
                        units in the other funds. The redemption price of the redeemed units and the
                        unit price of the offered units will be such prices as shall be calculated as of
                        the date of submission of the units for redemption.
                  (b)   No supplement shall be paid for units purchased in consideration of net
                        payment made to the Fund unitholders, and in all other funds managed by
                        the Fund Manager, from the assets of such funds, as well as in consideration
                        of any additional amount not exceeding the net payment made as aforesaid,
                        provided that the units are purchased on the date designated for such
                        payment. Unit purchase applications in consideration of such payment shall
                        be submitted not later than two business days prior to the date designated
                        for the payment thereof.
                  (c)   A supplement at a rate of 0.25% of the price per unit shall be paid for re-
                        purchase of the Fund units, in such number as shall not exceed the number
                        of the Fund units, which the purchaser has redeemed within six months prior
                        to the date of the re-purchase, provided that the redeemed units as aforesaid
                        were registered in his name or were deposited at the time of the redemption
                        thereof in a depositary account in his name with one of the Stock Exchange
                        members.
                  (d)   A supplement at a rate of 0.25% of the price per unit will be paid for a
                        purchase effected pursuant to a standing order in advance, to the Fund
                        Manager for the purchase of units in consideration of USD 100 or more
                        (rounded downward, to whole units), on each occasion, at a fixed date, on a
                        monthly basis. In the event of an offer under section 3 below during the
                        period in respect of which the standing order was issued, pursuant to which
                                               - 10 -
                                                                        Psagot (4B) Israel Horizon


                       a supplement at a rate lower than 0.25% or no supplement is to be paid, the
                       terms of such offer shall apply.
                 (e)   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 this section 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 section 2(b) of this Chapter
     above, the Fund Manager may offer units to the community of foreign residents, in
     consideration of payment of the unit price without any supplement, or with the addition of a
     supplement at such rates as are lower or higher than the above stated rate, which shall not
     exceed the maximum supplement rate pursuant to the Fund Agreement (see subsection 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 presented 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
     2009.
     "Minimum Number" – 200 unitholders.
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.
                                               - 11 -
                                                                       Psagot (4B) Israel Horizon


     (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 placed 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 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 so permitted. The rates of commission for such acts shall be
           displayed at the Distributor's office, in a prominent place.
7.   Order of Units
     The applications to order the units being offered shall be submitted by foreign residents only
     to members of the Stock Exchange and they shall be transferred to the Fund Manager by way
     of the Stock Exchange clearinghouse. 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 the Stock
     Exchange clearinghouse, 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.
                                           - 12 -
                                                                   Psagot (4B) Israel Horizon


      (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 determine, 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 were determined which a Distributor
            who is not a Marketer may collect and 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 excluded), in accordance with
            the type of the fund from among the four types that were prescribed, as follows:
            In a fund of Type 1 – the daily redemption price X 0.25% / 365.
            In a fund of Type 2 – the daily redemption price X 0.80% / 365.
            In a fund of Type 3 – the daily redemption price X 0.40% / 365.
            In a fund of Type 4 – the daily redemption price X 0.125% / 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 the calculation of 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 state, in a report which it
      shall submit with regard to the said change, also the new fund type.
                                               - 13 -
                                                                        Psagot (4B) Israel Horizon


    (d)   Psagot Mutual Funds Management – Leumi Ltd.@ notified the Distributors: Mizrahi
          Tefahot Bank Ltd., Israel Discount Bank Ltd., the First International Bank of Israel
          Ltd., Union Bank of Israel Ltd., Bank Otsar Ha-Hayal Ltd., Mercantile Discount Bank
          and Jerusalem Bank Ltd., that it has transferred all rights and obligations in connection
          with the entering into distribution agreements with them, to the Fund Manager, Psagot
          Mutual Funds Ltd.
          Furthermore, as of the date of the preparation of the Prospectus, the Fund Manager has
          entered into distribution agreements with Bank Hapoalim Ltd., Bank Leumi Le Israel
          Ltd., Ubank Ltd., Bank Poaley Agudat Israel Ltd., and Bank Yahav for Government
          Employees Ltd.
          Pursuant to the said distribution agreements, the Fund Manager shall pay to the said
          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 said 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.
          Pursuant to the distribution agreement with Bank Leumi Le Israel Ltd., the said
          agreement shall apply to the mutual funds managed on August 10, 2005 by Psagot
          Mutual Funds Management–Leumi Ltd.,@ which shall be managed by the Fund
          Manager, for the minimal period provided in the said agreement.
          Furthermore, the Fund Manager has entered into a distribution agreement with Psagot
          Securities Ltd., a distributor serving as 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), controlled by the Fund Manager’s
          parent company. Pursuant to the said distribution agreement, the Fund Manager shall
          pay to the said distributor a distribution commission in accordance with the maximum
          rates that may be collected under the Distribution Commission Regulations, as they
          shall be from time to time, calculated in the manner provided in the said agreement.
          Should the Fund Manager enter into additional distribution agreements, the Fund
          Manager shall submit an immediate report in respect thereof.




@
    On September 11, 2006 the mutual funds managed at that time by Psagot Mutual Funds Management–Leumi
    Ltd. were transferred to the management of Psagot Mututal Funds Ltd.
                                                - 14 -
                                                                        Psagot (4B) Israel Horizon



                  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 that 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
           Clearinghouse (hereinafter: the "Clearinghouse") the total of the orders for units which
           ite has received, and the total of instructions for the redemption of units which it 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-floor transaction, or in a coordinated transaction, during a period
           of 30 days, the presumption is that borth pruchases have been made 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 Clearinghouse, 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 Clearinghouse, in such manner as is 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 Clearinghouse, 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
           Clearinghouse on the very same day by the Appointed Hour, or within such period of
           time as determined by the Clearinghouse 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 the selling price should be calculated.
     (b)   Should an order be received by the Clearinghouse for a purchase or should an
           instruction be received for the redemption of a unit as stated in subsection (a) of this
           section, the Clearinghouse shall transfer it to the Fund Manager on the very same day
                                               - 15 -
                                                                       Psagot (4B) Israel Horizon


           within such period of time as determined by the Clearinghouse in the rules as stated in
           section 46(i) of the Law.
     (c)   Should a Distributor or the Clearinghouse 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 selling price of the Fund assets.
            (2) Approve, at the written request of the manager of an open-end fund, which was
                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 a period of
                cessation, units shall not be offered to the public.
            (3) Order, 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 express 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 order pursuant to subsection (a)(1) of this section,
           as long as grounds exist as stated therein, 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 one daily newspaper
           with a wide circulation, as construed in section 1A of the Planning and Construction
           Law, 5725 – 1965, which is published in Israel, in Hebrew, and in one daily newspaper
           with a wide circulation which is published in Israel, in English (in this Prospectus: the
           "Two Newspapers") 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.
                                             - 16 -
                                                                     Psagot (4B) Israel Horizon


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 the above-mentioned deposit.
                                               - 17 -
                                                                       Psagot (4B) Israel Horizon



                              Chapter C: Prices of the Fund Units
The unit prices of the Fund units 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 January 1, 2007 up to February 2, 2009, were as follows:

                 Period                      Highest             Date          Lowest            Date
 Jan. 1, 2007 to Dec. 31, 2007              204.34         May 16, 2007       160.66        Jan. 1, 2007
 Jan. 1, 2008 to Dec. 31, 2008              186.73         Jan. 2, 2008        88.34        Dec. 29,
                                                                                            2008
 Jan. 1, 2009 to Feb. 2, 2009               100.10         Jan. 19, 2009       94.99        Jan. 5, 2009
The Purchase Rate on February 2, 2009 was 95.48 and on February 23, 2009 - 96.33.



Chapter D: Calculation of Prices and Days for which They Shall Be Calculated
 1.   Calculation of Prices
      (a)   General
            The Fund Agreement provides that the purchase and selling prices of the Fund assets,
            the unit prices and the redemption prices of the units of the Fund, 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 "Price 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 selling 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 selling 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
            distribution of the types of assets in the Fund.
                                                                - 18 -
                                                                                            Psagot (4B) Israel Horizon




 Table of Commissions@
 Below are details of the commissions taken into account at present, for the purpose of calculating
 the purchase and selling price of the Fund assets, according to the type of the asset:
                                                                                            In % of the value of the transaction
 Shares, convertibles and basket certificates (other than basket
 certificates for bonds) as classified in the quotation list of the                               0.10
 Stock Exchange, which are traded in Israel (1)

 Short term loan and securities issued for a period of up to                                     0.025
 one year, which are traded in Israel (2)(3)
 Bonds (with the exception of convertible bonds, short term                                       0.05
 loans (makam) and bonds issued for a period of up to one
 year), which are traded in Israel (4)

 Call 1 options on the Tel Aviv 25 Index                              NIS 10 per option
 Other options on the Tel Aviv 25 Index                               NIS 2.50 per option

 Call 1 options on the on the Tel Aviv Bank Index                     NIS 10 per option
 Other options on the Tel Aviv Bank Index                             NIS 2.50 per option
 Call 1 options on the dollar rate                                    NIS 10 per option

 Other Shekel / dollar options                                        NIS 2.50 per option

 Call 1 options on the Euro rate                                      NIS 10 per option
 Other Shekel / Euro options                                          NIS 2.50 per option

 Futures contracts on interest rate and on Shachar bonds              NIS 50 per contract
 traded in Israel

 Shares, option warrants and units or shares in foreign
 funds traded overseas (6) -
 Commission to the Fund’s banker                                                                  0.10        (Minimum commission
                                                                                                              per transaction $ 10)
 Commission to the securities agent overseas                                                     (9)(5)

 Bonds traded overseas (6) -
 Commission to the Fund’s banker                                                                  0.10        (Minimum commission
                                                                                                              per transaction $ 10)

 Options traded on overseas stock exchanges -
 Commission to the Fund’s banker                                      $ 2 per option                          (Minimum commission
                                                                                                              per transaction $ 10)
 Commission to the securities agent overseas                          $ 2 per      option
                                                                      (7)(10)
 Futures contracts on share indexes traded overseas (8) -
 Commission to the Fund’s banker, including the                       $ 30 per contract
 commission to the securities agent overseas

All commissions to Bank Leumi are subject to the minimum commissions customary at the said
bank, and in any event that pursuant to the tariff of the said bank for large businesses, customary
from time to time, a minimum commission should apply.
                                                                                                         _______________
@   See section 5 of the Introduction above. Furthermore, in accordance with Bank Leumi's notice, the said
    commissions to the Fund’s banker will remain in effect up to November 30, 2009, or until such time as a prior
    notice of not less than 35 days is received from Bank Leumi, whichever is earlier.
(1) In a securities transaction as aforesaid to be performed via instructions with a value of NIS 5 million or more, to be
    delivered directly to the Israeli securities dealing room of Bank Leumi, commission is paid at a rate of 0.05% of the
    transaction value. (For the purpose of calculating the purchase and selling prices of the Fund assets, the rate of the
    commission stated in the above table is taken into account).
                                                           - 19 -
                                                                                       Psagot (4B) Israel Horizon

(2) A commission at a rate of 0.02% of the transaction value is paid on redemption of a short term loan (makam). (This
     commission is not taken into account for the purpose of calculating the purchase and selling prices of the Fund
     assets).
(3) A commission at a rate of 0.02% of the transaction value is paid on an off-floor transaction in a short term loan
     (makam) or which is delivered to the dealing room of Bank Leumi with a value of NIS 3 million or more and on the
     purchase of short term loan (makam) from an issue with a value of NIS 3 million or more in Bank Leumi's dealing
     room. (For the purpose of calculating the purchase and selling prices of the Fund assets, the rate of the commission
     stated in the above table is taken into account).
(4) In the purchase (including order from an issue) and sale of government bonds at a value of NIS 5 million or more
     effected via the Israeli securities dealing room of Bank Leumi, commission is paid at a rate of 0.04% of the
     transaction value. (For the purpose of calculating the purchase and selling prices of the Fund assets, the rate of the
     commission stated in the above table is taken into account).
(5) In respect of the said securities which are traded in the United States – 3 cent or 4 cent per security. For the purpose
     of calculating the purchase and selling prices of the Fund assets a commission of 3 cent per security is taken into
     account, since the Fund Manager estimates that in most transactions in these securities a commission at such rate
     will be paid.
     In respect of these securities which are traded in Europe – Agent A – 0.08% of the transaction value but a minimum
     of 10 Euro per transaction, apart from securities traded in Greece, in respect of which the commission is 0.2% of the
     transaction value, but a minimum of 20 Euro per transaction. Agent B – 0.15% of the transaction value but a
     minimum of 35 Euro per transaction. In transactions in shares traded in stock exchanges in England, purchase tax is
     also paid (on purchase only) to the British government, at a rate of 0.5% of the transaction value. In transactions in
     shares traded on the Swiss Electronic Stock Exchange, stamp duty is also paid at a rate of 0.075% of the transaction
     value. For the purpose of calculating the purchase and selling prices of the Fund assets apart from such securities as
     are traded in Greece, a commission at a rate of 0.15% of the transaction value is taken into account, but a minimum
     of 35 Euro per transaction, since the Fund manager estimates that in most transactions with these securities a
     commission at such rate will be paid, and in respect of securities traded in Greece, a commission at a rate of 0.2% of
     the transaction value is taken into account, but a minimum of 20 Euro per transaction.
     In respect of the said securities which are traded in Canada – 0.2% of the transaction value, but a minimum of C$ 20
     per transaction.
     In respect of these securities which are traded in Japan – 0.15% of the transaction value but a minimum of 10 Euro
     per transaction, or 0.2% of the transaction value, but a minimum of 10 Euro per transaction. For the purpose of
     calculating the purchase and selling prices of the Fund assets a commission representing 0.15% of the transaction
     value is taken into account, but a minimum of 10 Euro per transaction, since the Fund Manager estimates that in
     most transactions with these securities a commission at such rate will be paid.
     In respect of the said securities which are traded in Hong Kong, Singapore and Australia – 0.2% of the transaction
     value, but a minimum of 10 Euro per transaction.
     In respect of the said securities which are traded in South Africa – 0.15% of the transaction value, but a minimum of
     15 Euro per transaction. Furthermore, tax is also paid (upon purchase only) at a rate of 0.25% of the transaction
     value.
(6) 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 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.
(7) In practice, the commission paid to a securities agent overseas for performing transactions with the said options is
     USD 2 per option or USD 1.8 per option, according to the identity of the agent. (For the purpose of calculating the
     purchase and selling prices of the Fund assets, a commission at a rate of 2 dollar per option is taken into account).
(8) The said commission is paid on the closing of the contract only, and accordingly is taken into account for the
     purpose of calculating the selling prices of the Fund assets only and not for the purpose of calculating the purchase
     prices of the Fund assets.
(9) The weighted average of the rates of the commissions actually paid to securities agents overseas during the year
     ended December 31, 2008 for transactions in the said securities was 0.15% of the transaction value.
(10) In the year ending on December 31, 2008 no transactions were made for the Fund in the said options.

                The minimum commissions set out in the above table are taken into account for the
                purpose of computing the purchase and selling prices of the Fund assets where purchase
                or sale of the entire quantity held by the Fund of such type of asset requires the payment
                of a minimum commission.

                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.

                Transfer of registration of securities traded both in Israel and overseas, from the books
                of the companies overseas to the books of companies in Israel and vice versa, shall be
                                          - 20 -
                                                                  Psagot (4B) Israel Horizon


      subject to a commission at a rate of NIS 19 per transfer. This commission is not taken
      into account for the purpose of calculating the purchase and selling prices of the Fund
      assets.

      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 with which the Fund shall be charged shall not
            exceed 0.6% 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 assets of the Fund.

(b1) Discounts in Respect of the Purchase of Securities Directly from New Issues
      The Fund receives, until such time as shall be determined otherwise, the distribution
      commissions as received by Bank Leumi Le Israel Ltd. from the issuer, for the purchase
      of securities (with the exception of short-term loans and other government bonds),
      directly from new issues, less 0.1% of the value of the transaction, if the distribution
      commission exceeds the said rate, and it does not pay commissions in connection with
      these purchases.
(b2) Information on the Purchase and Sale Prices of Foreign Securities
      (1)   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.
      (2)   The dates of registration of the foreign securities and foreign options in the Fund’s
            books, the date of payment for the purchase thereof and the dates of receipt of the
            consideration from the sale thereof shall be governed by the provisions of the
            Joint Investment Trust (Credit Transactions and Redemption of Units by means of
            Credit) Regulations, 5761-2001, as set forth in Appendix D to this Prospectus.
(b3) Taxation
      For the purpose of calculating the purchase and selling prices of the Fund assets, an
      amount of tax in respect of the Fund assets for which the tax has not yet been paid, is
      deducted from the value of the Fund assets. For details with regard to 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 Chapter O below - "Taxation", and Appendix F to
      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.
                                               - 21 -
                                                                        Psagot (4B) Israel Horizon


           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 shall be possible to determine in the Prospectus or pursuant to provisions
           which shall be determined in the Prospectus regarding 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, determine and change from time to time
     the Appointed Hour and any other time in connection with placing 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.)
     For details regarding the provisions of the Law with regard to the order of units, the sale and
     redemption thereof, see 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)   For the purpose of applications which shall be submitted by 15:00 (Israel time) on a day
           in respect of which the prices of the Fund assets are calculated (in this Prospectus: the
           "Appointed Hour") – the price which shall be calculated on that day.
     (b)   With regard to other applications – the price which shall be calculated for the nearest
           day in respect of which the prices of the Fund assets are calculated.
                                                    - 22 -
                                                                               Psagot (4B) Israel Horizon



                       Chapter E: Units which were Issued and Redeemed
   From the Fund Inception Date on April 9, 1998 up to December 31, 2006, 33,000,547 units of USD
   1 par value were issued and 28,710,083 units were redeemed.
   For details regarding units which were issued and redeemed, purchase rates* and redemption prices
   as of the last date of calculation of prices on each month from January 1, 2007 up to February 2,
   2009 see the table below.
Month                     Number of    Consideration         No. of       Payments for    Purchase     Redemption
                          the units    for issued units,     redeemed     units which     rate*        price
                          which were   calculated            units        were            in %         In %
                          issued       at price per unit                  redeemed,       of par       of par value**
                          _________    (In NIS)**            _________    calculated at   value**
                          ___                                __           redemption
                                                                          price **
                                                                          (In NIS)
Jan. to Dec. 2007
January                      271,660         1,897,855          189,726      1,329,770        167.44     167.07
February                      96,005           704,500          113,425        827,030        171.35     170.96
March                        247,915         1,772,039           38,592        274,004        176.72     176.34
April                        192,723         1,503,681           42,195        323,656        195.98     195.57
May                          390,272         3,121,841          356,501      2,843,132        199.62     199.19
June                         443,219         3,590,914          324,674      2,600,787        190.87     190.48
July                         239,101         1,982,259          147,886      1,211,795        184.54     184.16
August                       112,012           850,053          217,427      1,629,008        180.07     179.69
September                     11,551            86,124           20,408        152,009        187.55     187.15
October                      347,593         2,713,701          184,629      1,448,266        197.36     196.96
November                     184,519         1,408,695          102,389        758,978        191.74     191.34
December                      34,895           254,726           53,877        399,717        183.28     182.90
Total 1/07–12/07           2,571,465        19,886,388        1,791,729     13,798,152

Jan. to Dec. 2008
January                       11,580             73,365         186,891      1,224,793        171.92     171.56
February                      11,470             72,449          30,117        187,025        172.80     172.44
March                         63,750            369,591          40,034        235,150        158.44     158.12
April                         12,100             70,843          48,432        277,103        169.66     169.31
May                           32,902            192,635          34,470        196,982        176.30     175.97
June                             -                  -           126,993        706,262        158.78     158.46
July                             -                  -           212,172      1,093,868        152.38     152.06
August                           -                  -           177,464        927,009        144.94     144.63
September                        -                  -            10,849         52,911        140.14     139.84
October                        1,108              4,665         101,110        419,173        103.40     103.15
November                         -                  -           183,479        656,365         94.02      93.79
December
                                   -                  -          54,311   198,549              91.48   ***91.23
Total Jan. to Dec. 2008      132,910            783,548       1,206,322 6,175,190

Jan. 1 to Feb. 2, 2009
January                        4,210             15,761          21,440      81,809            96.50       96.26
February (up to Feb. 2)            -                  -               -           -            95.48       95.24
Total Jan. 1 to Feb. 2,
20009                          4,210             15,761          21,440      81,809


Total as of the Fund
Inception Date            35,709,132                         31,729,574
                                                       - 23 -
                                                                                    Psagot (4B) Israel Horizon

*
     The purchase rate is the unit price plus the supplement at the maximum rate as of that date.
**
     The consideration for the units issued and the payments for units which were redeemed, received or paid, as the
     case may be, is in USD and is set out in this table in NIS, at the representative rate of the USD on the dates of
     receipt of the consideration or on the dates of payment, as the case may be.
*** As at the last date of calculation of prices in that month.
**** The redemption price as of such date, as presented in the Fund’s financial statements (Chapter S below) is
     91.17. The difference between the redemption price presented in the Fund's financial statements and the
     redemption price published in the quotation list of the Stock Exchange arises from the fact that due to a technical
     failure, an error occurred in the redemption price published in the quotation list of the Stock Exchange as at such
     date. It should be noted that on the said date there was no creation and redemption of Fund units.
                                                                   I-1
CHAPTER SIX: SCHEDULE OF THE FUND’S ASSETS AND SUMMARY OF INVESTMENTS AS AT FEBRUARY 02, 2009
SCHEDULE OF ASSETS AS AT FEBRUARY 02, 2009 (UNAUDITED)


                                                                                                               MARKET VALUE AS A
                                                                                                               PERCENTAGE OF THE TOTAL NET
                                                    02.02.2009                                                 WORTH OF THE FUND'S, ASSETS
                                         ---------------------------------------                              -----------------------------------------------
                                         NUMBER OF               PRICE IN          MARKET VALUE
                                         SHRAES                  AGOROT            IN N.I.S                   02.02.09           30.09.08
                                         ------------            ------------      ------------------------   ----------         ----------

SECURITES AND TRADED IN ISRAEL
===============================
SHARES
======
 @ BANK AND INSURANCE
----------------------
   ISRAEL DISCOUNT BANK LTD.
                 COMMON SHARES 0.1          40,000               316.00                   126,400               0.82               2.05

  HAREL INSURANCE INVESTMENTS & FINANCIAL SERVICES LTD.
          COMMON SHARES 1.0              1,200      9,100.00                              109,200               0.71             ---

  BANK LEUMI LE- ISRAEL B.M.
         COMMON SHARES 1.0                  40,000               771.00                   308,400               2.00               4.05

  MIGDAL INSURANCE & FINANCIAL HOLDINGS LTD.
          COMMON SHARES 0.01            118,522                  324.60                   384,722               2.50               0.86

  MIZRAHI TEFAHOT BANK LTD.
          COMMON SHARES 0.1                 14,500              1,888.00                  273,760               1.78               1.08

  Others                                                                               ------                 ---                  0.72

                                                                                       ------                 ----               ----
       TOTAL BANK AND INSURANCE                                                         1,202,482              7.81               8.76
                                                                                       ------                 ----               ----
 @ INVESTMENTS AND HOLDINGS
----------------------------
   DELEK GROUP LTD.
                 COMMON SHARES 1.0           1,000              31,500.00                 315,000               2.04             ---

  THE ISRAEL CORPORATION LTD.
          COMMON SHARES 1.0                    145              95,500.00                 138,475               0.90             ---

  MIVTACH SHAMIR HOLDINGS LTD.
         COMMON SHARES 1.0                   1,000              4,686.00                  46,860                0.30               0.47

  PAZ OIL COMPANY LTD.
           COMMON SHARES 5.0                   500              36,710.00                 183,550               1.19             ---

  Others                                                                               ------                 ---                  3.28

                                                                                       ------                 ----               ----
       TOTAL INVESTMENTS AND HOLDINGS                                                    683,885               4.43               3.75
                                                                                       ------                 ----               ----
 @ SEARCHING GAZ AND OIL
-------------------
   AVNER OIL EXPLORATION - LIMITED PARTNERSHIP
                 COMMON SHARES 0.01      1,373,088                52.90                  726,364               4.71               1.32
                                                                                       ------                 ----               ----

 @ TRADE AND SERVICES
----------------------
   ILEX MEDICAL LTD.
                 COMMON SHARES 1.0          20,140              1,418.00                  285,585               1.85               2.16

  INTERNET GOLD GOLDEN LINES LTD
         COMMON SHARES 1.0                   8,938              1,733.00                  154,896               1.01               0.90

  ITURAN LOCATION AND CONTROL LTD.
          COMMON SHARES 1.0                 11,473              3,446.00                  395,360               2.57               2.17

  EXCELLENCE INVESTMENTS LTD.
         COMMON SHARES 1.0                   2,736              2,544.00                  69,604                0.45               0.73
                                                                            I-2
                                                                                                                        MARKET VALUE AS A
                                                                                                                        PERCENTAGE OF THE TOTAL NET
                                                             02.02.2009                                                 WORTH OF THE FUND'S, ASSETS
                                                  ---------------------------------------                              -----------------------------------------------
                                                  NUMBER OF               PRICE IN          MARKET VALUE
                                                  SHRAES                  AGOROT            IN N.I.S                   02.02.09           30.09.08
                                                  ------------            ------------      ------------------------   ----------         ----------

      BEZEK THE ISRAELI TELECOMUNICATION CORP. LTD.
              COMMON SHARES 1.0              98,256                       595.00                   584,623               3.80             ---

      GRANITE HACARMEL INVESTMENTS LTD.
             COMMON SHARES 1.0                       48,000               700.80                   336,384               2.18               2.20

      DELEK AUTOMOTIVE SYSTEMS LTD.
             COMMON SHARES 1.0                        9,000              2,227.00                  200,430               1.30               1.48

      DANEL (ADIR YEOSHUA) LTD.
              COMMON SHARES 1.0                      16,605              1,275.00                  211,714               1.37               1.29

      HAMAMA MEIR TRADING (1996) LTD.
            COMMON SHARES 1.0                        20,000               365.00                   73,000                0.47               0.40

      TELSYS LTD.
              COMMON SHARES 1.0                      11,000              1,140.00                  125,400               0.81               0.72

      TESNET SOFTWARE TESTING LTD.
              COMMON SHARES 0.01                     53,707               220.70                   118,531               0.77               0.87

      MATRIX I.T LTD.
              COMMON SHARES 1.0                      17,500               774.60                   135,555               0.88               0.95

      NETVISION LTD.
              COMMON SHARES 1.0                       3,000              3,574.00                  107,220               0.70             ---

      NISKO INDUSTRIES (1992) LTD.
              COMMON SHARES 1.0                       9,205               595.00                   54,770                0.36               0.53

      STARLIMS TECHNOLOGIES LTD.
             COMMON SHARES 1.0                        2,206              1,896.00                  41,826                0.27               2.31

      CELLCOM ISRAEL LTD.
             COMMON SHARES 1.0                        5,400              8,568.00                  462,672               3.00             ---

      PARTNER COMMUNICATIONS COMPANY LTD.
             COMMON SHARES 0.01                       5,000              6,175.00                  308,750               2.00               2.08

      TOP-LINE,THE ISRAELI IMPORTING & MARKETING ELECTRICAL LTD.
              COMMON SHARES 1.0               14,000      532.50                                   74,550                0.48               1.05

      RAMI LEVI CHAIN STORES HASHIKMA MARKETING 2006 LTD
              COMMON SHARES 0.01             2,700       2,757.00                                  74,439                0.48             ---

      RAPAC COMMUNICATION & INFRASTRUCTURE LTD
             COMMON SHARES 1.0             15,466                         835.10                   129,157               0.84               0.71

      SHUFERSAL LTD.
             COMMON SHARES 0.1                       13,498              1,338.00                  180,603               1.17               1.82

      Others                                                                                    ------                 ---                  2.92

                                                                                                ------                 ----               ----
           TOTAL TRADE AND SERVICES                                                              4,125,069             26.76              25.29
                                                                                                ------                 ----               ----
   @ REAL ESTATE, CONSTRACTION
  ---------------------------------------------
     Y.H.DIMRI BUILDING & DEVELOPMENT LTD
                   COMMON SHARES 1.0                  8,000              1,531.00                  122,480               0.80               0.94

      VILLAR INTERNATIONAL LTD.
              COMMON SHARES 1.0                       7,898              1,123.00                  88,695                0.58               0.61

      HABAS H.Z. INVESTMENTS (1960) LTD.
              HABAS                                  38,000               501.10                   190,418               1.24               1.33

σ #   HEFTSIBA GLOBAL LTD
             COMMON SHARES 1.0                       35,450                   0.0001                       0             0.00               0.00
                                                                   I-3
                                                                                                               MARKET VALUE AS A
                                                                                                               PERCENTAGE OF THE TOTAL NET
                                                    02.02.2009                                                 WORTH OF THE FUND'S, ASSETS
                                         ---------------------------------------                              -----------------------------------------------
                                         NUMBER OF               PRICE IN          MARKET VALUE
                                         SHRAES                  AGOROT            IN N.I.S                   02.02.09           30.09.08
                                         ------------            ------------      ------------------------   ----------         ----------


  MALRAG - ENGINEERING AND CONSTRUCTION LTD
         COMMON SHARES 1.0              21,851                   179.40                   39,201                0.25               0.42

  MINRAV HOLDINGS LTD.
         COMMON SHARES 5.0                   2,649              13,170.00                 348,873               2.26               1.84

  Others                                                                               ------                 ---                  3.60

                                                                                       ------                 ----               ----
       TOTAL REAL ESTATE, CONSTRACTION                                                   789,667               5.13               8.74
                                                                                       ------                 ----               ----
 @ INDUSTRY
------------
   AVGOL INDUSTRIES 1953 LTD.
             COMMON SHARES 1.0E-4            5,430               112.90                    6,130                0.04             ---

  IMCO INDUSTRIES LTD.
          COMMON SHARES 1.0                 19,209              1,474.00                  283,141               1.84               1.36

  ELBIT SYSTEMS LTD.
          COMMON SHARES 1.0                  3,200              17,700.00                 566,400               3.68               2.89

  OSEM INVESTMENTS LTD.
          COMMON SHARES 1.0                  4,000              4,151.00                  166,040               1.08             ---

  BET SHEMESH ENGINES HOLDINGS (1997) LTD.
          COMMON SHARES 1.0                6,761                 550.00                   37,186                0.24               0.46

  OIL REFINERIES LTD.
           COMMON SHARES 1.0                260,000               95.50                   248,300               1.61             ---

  TEVA- PHARMACEUTICAL INDUSTRIES LTD.
          COMMON SHARES 0.1                  5,600              16,800.00                 940,800               6.11               4.79

  ICL-ISRAEL CHEMICALS LTD.
          COMMON SHARES 1.0                 20,000              2,860.00                  572,000               3.71               2.27

  CLAL INDUSTRIES LTD.
          COMMON SHARES 1.0                 15,000               880.90                   132,135               0.86               0.88

  MAKHTESHIM AGAN INDUSTRIES LTD.
        COMMON SHARES 1.0                   10,500              1,265.00                  132,825               0.86               1.96

  MAABAROT PRODUCTS LTD.
        COMMON SHARES 1.0                    7,300              4,115.00                  300,395               1.95               1.51

  NETO M.E HOLDINGS LTD.
          COMMON SHARES 1.0                  1,057              5,320.00                  56,232                0.36               0.44

  NICE SYSTEMS LTD.
          COMMON SHARES 1.0                  6,000              7,563.00                  453,780               2.95             ---

  SANO BRUNO'S ENTERPRISES LTD.
         COMMON SHARES 1.0                   2,500              5,898.00                  147,450               0.96               0.89

  SPECTRONIX LTD.
         COMMON SHARES 1.0                  23,010               918.00                   211,232               1.37               1.43

  PLASSON INDUSTRIES LTD.
         COMMON SHARES 1.0                   3,600              5,355.00                  192,780               1.25               0.93

  PLASTO-SAC LTD.
          COMMON SHARES 1.0                 12,695               494.30                   62,751                0.41               0.75

  PLASTOPIL HAZOREA COMPANY LTD.
          COMMON SHARES 1.0                 20,000               934.00                   186,800               1.21               0.88
                                                                    I-4
                                                                                                                MARKET VALUE AS A
                                                                                                                PERCENTAGE OF THE TOTAL NET
                                                     02.02.2009                                                 WORTH OF THE FUND'S, ASSETS
                                          ---------------------------------------                              -----------------------------------------------
                                          NUMBER OF               PRICE IN          MARKET VALUE
                                          SHRAES                  AGOROT            IN N.I.S                   02.02.09           30.09.08
                                          ------------            ------------      ------------------------   ----------         ----------

  PERRIGO COMPANY
          COMMON SHARES 0.0                   2,500              11,840.00                 296,000               1.92             ---

  RIMONI INDUSTRIES LTD.
          COMMON SHARES 1.0                  15,180               830.00                   125,994               0.82               1.15

  Others                                                                                ------                 ---                 4.51
                                                                                        ------                 ----               ----
       TOTAL INDUSTRY                                                                    5,118,371             33.23              27.10
                                                                                        ------                 ----               ----

                                                                                        ------                 ----               ----
       TOTAL SHARES                                                                     12,645,838             82.07              74.96
                                                                                        ===========            =======            =======

BONDS DEBENTURE NOT ADJECTIVE
=================================
BONDS KONZERNI
==================
          AVERAG DURATION 1-2 YEARS                                                       338,400               2.20               2.96
                                                                                        ------                 ----               ----

           Others                                                                       ------                 ---                 0.05
                                                                                        ------                 ----               ----
                                                                                        ------                 ----               ----
       TOTAL SECURITES TRADED IN ISRAEL                                                 12,984,238             84.27              77.97
                                                                                        ===========            =======            =======

                                                                         PRICE
                                           NUMBER                       IN FOREIGN
                                           OF SECURITIES                CURRENCY            N..I..S (&)
                                           --------------------          -----------        -----------
SECURITES TRADED OUTSIDE OF ISRAEL
==================================
ISRAEL FOREIGN SHARES TRADED UN FOREIGN CURFENIG
================================================
SHARES TRADED IN US DOLLARS
===========================
PHARMA
-------
   TEVA PHARMACEUTICAL-ADR                 2,400                   41.6700                406,533               2.64               1.84
                                                                                        ------                 ----               ----
SOFTWARE
---------
   RADVISION                                  2,300                 4.7950                44,831                0.29               0.23
                                                                                        ------                 ----               ----

                                                                                        ------                 ----               ----
       TOTAL SHARES TRADED IN US DOLLARS                                                  451,364               2.93               2.07
                                                                                        ===========            =======            =======

           Others                                                                       ------                 ---                  0.45

                                                                                        ------                 ----               ----
                                                                                        ------                 ----               ----
       TOTAL ISRAEL FOREIGN SHARES TRADED UN FOREIGN CURFENIG                             451,364               2.93               2.52
                                                                                        ===========            =======            =======

OTHER FOREIGN SHARES TRADED IN FOREIGN CURRENCY
===============================================
SHARES TRADED IN US DOLLARS
===========================
SOFTWARE
---------
   ATTUNITY LIMITED                       46,010                    0.1400                26,184                0.17               0.14
                                                                                        ------                 ----               ----

                                                                                        ------                 ----               ----
       TOTAL SECURITES TRADED OUTSIDE OF ISRAEL                                           477,548               3.10               2.66
                                                                                        ===========            =======            =======
                                                         I-5
                                                                                     MARKET VALUE AT 02.02.09
                                                                                     ------------------------------
                                                                                     AS A PERCENTAGE OF THE
                                                                                     THE TOTAL NET WORTH OF THE
                                                                                     FUND’S ASSETS
                                                                                      ------------------------------

                                                                        N.I.S          02.02.09     30.09.08
                                                                     ------------     ----------   ----------




          TOTAL SECURITIES AT MARKET VALUE                           13,461,786        87.37        80.63
          SELLING EXPENSES OF SECURITIES                              (19,491)        (0.12)       (0.10)
                                                                     ------           ----         ----

      TOTAL VALUE OF SECURITIES AT SELLING PRICES                    13,442,295       87.25        80.53
                                                                     ------           ----         ----



OTHER ASSETS
============
          CASH IN ISRAELI CURRENCY                                    1,819,735       11.81        18.53
          CASH IN FOREIGN CURRENCY                                     167,079         1.08         0.10
          ACCRUED INCOME                                                21,892         0.14         0.99
                                                                     ------           ----         ----
      TOTAL OTHER ASSETS                                              2,008,706       13.03        19.62
                                                                     ===========      =======      =======

      TOTAL ASSETS                                                   15,451,001       100.28       100.15
                                                                     ------           ----         ----

LIABILITIES
===========
           ACCRUED EXPENSES                                            (2,461)        (0.02)       (0.02)
           INCOME TAX PAYABKS                                         (41,351)        (0.26)       (0.13)
           DEFERRED TAXES                                                 (18)        (0.00)       ----
                                                                     ------           ----         ----
      TOTAL LIABILITIES                                               (43,830)        (0.28)       (0.15)
                                                                     ===========      =======      =======

      TOTAL ASSETS, NET                                              15,407,171       100.00       100.00
                                                                     ===========      =======      =======


@ SECURITIES AS MENTIONED IN PARAGRAPH 2 (A) ON THE COVER OF THE PROSPECTUS.
σ THE PRICE OF THE SECURITIES IS DETERMINED BY THE FUND MANAGER.
# TRADING IN THESE SECURITIES WAS DISCONTINUED.
& TRANSLATED ACCORDING TO THE REPRESENTATIVE EXCHANGE RATE AS AT FEBRUARY 02, 2009: 1 U.S. DOLLAR = 4.0650 N.I.S.
                                                                                    1 EURO        = 5.1949 N.I.S.
                                                      I-6
                                                                                    MARKET VALUE AT 02.02.09
                                                                                    ------------------------------
                                                                                    AS A PERCENTAGE OF THE
                                                                                    THE TOTAL NET WORTH OF THE
                                                                                    FUND’S ASSETS
                                                                                     ------------------------------

                                                                        N.I.S        02.02.09     30.09.08
                                                                     ------------   ----------   ----------



BONDS (EXCEPT FOR BONDS EXCHANGE)
=====================================
OTHER ISSUING
=================
          STAR-WORLD INVESTMENTS PRODUCTS LTD                          338,400       2.20         2.96

                                                                     ------         ----         ----

THE SORTING ABOVE REFER TO THE PARAGRAPH IN THE ESTATE FOR FOREIGN
====================================================
BONDS DEBENTURE NOT ADJECTIVE                                          338,400       2.20         2.96
                                                                     ------         ----         ----
                                                     - 24 -
                                                                                 Psagot (4B) Israel Horizon




                           Summary of the Fund Assets as at February 2, 2009
                                                  (Unaudited)


                                                     Market value         % of the Fund’s total assets, net, as at:
                                                     as at Feb. 2,
                                                     2009                 Feb. 2, 2009 Sept. 30,             June 30,
                                                     (In NIS)&                         2008                  2008
Securities traded in Israel
Shares                                                    12,645,838              82.07            74.96               75.85
Option Warrants                                                       -                -            0.05                0.05
Non-linked loans and bonds                                     338,400             2.20              2.96               2.61
Securities traded outside of Israel
Israel Shares traded overseas in foreign                       451,364             2.93              2.52               2.12
currency
Other foreign shares which are traded in                        26,184             0.17              0.14               0.21
foreign currency
Total securities, at market value                         13,461,786              87.37            80.63               80.84
Expenses relating to sale of securities                        (19,491)          (0.12)            (0.10)              (0.10)
Total securities, at selling prices                       13,442,295              87.25            80.53               80.74
Cash in Israeli currency                                      1,819,735           11.81            18.53               18.94
Cash in foreign currency                                       167,079             1.08              0.10               0.38
Income receivable                                               21,892             0.14              0.99               0.04
Accounts payable - Income Tax                                  (41,351)          (0.26)            (0.13)              (0.08)
Deferred taxes                                                     (18)          (0.00)                  -                  -
Accrued expenses                                                (2,461)          (0.02)            (0.02)              (0.02)
Total Fund assets, net                                    15,407,171            100.00           100.00*          100.00*
Exposure to Israel Shares as set out in
subsection 1(a)(2)(a) of Chapter G below                                          87.20            80.59               80.73
Exposure to shares as set out in subsection
1(a)(2)(b) of Chapter G below                                                     87.37            80.73               80.94
Exposure to foreign currency as set out in
subsection 1(a)(2)(c) of Chapter G below                                           4.18              2.76               2.71




&
      Translated into NIS at the representative rate of exchange of the USD as at February 2, 2009 ($1 = NIS 4.065).
*     The net value of the assets as at September 30, 2008, was NIS 20,385,861 and NIS 7,503,359 as at June 30,
      2008.
                                                - 25 -
                                                                        Psagot (4B) Israel Horizon


     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 resources of the Fund 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)   Exposure to Israel Shares (as defined below) will not fall below 50% of the
                        net value of the Fund assets.

                        In this subsection: "Israel Shares" – Shares issued by corporations that were
                        incorporated in the State of Israel, which are traded in Israel and/or
                        overseas.

                  (b) 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.

                  (c) Exposure to foreign currency will not exceed 30% of the net value of the
                      Fund assets and will not fall below (-30%) of the net value of the Fund
                      assets.

                  (d)   The Fund is not limited in terms of investment in foreign securities, as
                        defined below.

                        "Fund which is not 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 therein, together with the exposure to an underlying
                        asset traded overseas via activity in derivatives traded on overseas stock
                        exchanges, may 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.
                                         - 26 -
                                                                Psagot (4B) Israel Horizon


           (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: 4B.

     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 Absolute Value of the Fund's Maximum
Currency                               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 for the Fund any
     transaction 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
                                         - 27 -
                                                                 Psagot (4B) Israel Horizon


      the Fund Agreement or under the Fund’s investment policy, provided that it is permitted
      by law to perform such a transaction or to make such an undertaking, as the case may
      be, without the approval of such meeting.

For details regarding the Fund assets as at February 2, 2009 see Chapter F above.

(b)   Deviation from the Investment Policy

      In accordance with section 61 of the Law, if investments of the Fund deviated from the
      Fund's investment policy, as provided 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:

      (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
            implement 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 in the Options 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.
                                    - 28 -
                                                            Psagot (4B) Israel Horizon


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 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 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.

Options on shares, share indices and currencies, inter alia, are traded abroad.

The Fund Manager may purchase PUT options in Israel and overseas as an investment,
if it foresees a drop 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 drop below the exercise price, a gain will 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 drop to such extent as is forecast by the Fund Manager, the price
of the options will drop or they shall expire without being exercised, and the Fund may
sustain a loss in the amount of the premiums paid for the options which expired.

The Fund Manager may purchase PUT options on the Tel Aviv 25 Index, for the Fund,
as a protection of the Fund's investment portfolio against a drop 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 such extent as is 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
                                   - 29 -
                                                           Psagot (4B) Israel Horizon


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 which shall be generated from the sale of the
options or from the exercise thereof shall 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 the 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 the trading in the shares included in the listing of the Tel Aviv 25 shares
may give rise to a cessation of the 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, 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, 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.
                                               - 30 -
                                                                       Psagot (4B) Israel Horizon


           (2) If the underlying asset of the option is the Tel Aviv 25 Index – the Fund Manager
               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 a person who purchased
           the contract prior to the Trading Day on which the Effective Price was fixed), then the
           purchaser's account shall 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 shall 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 a person who purchased the contract prior to the Trading Day on which
           the Effective Price was fixed), then the purchaser's account shall 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 shall 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 prescribed by the
           Minister of Finance in the Regulations, all being of such type and upon such conditions
           as he has prescribed, 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, prescribed which assets may be bought and held by a mutual 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
                                         - 31 -
                                                                 Psagot (4B) Israel Horizon


      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 dropped 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 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 sections 1(a)(2)-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 "Option Regulations"), which
      are set forth as Appendix B1 of the Prospectus.

      (1) In accordance with section 63 of the Law, the Fund Manager may loan securities
          which are held in a fund under its management for the purpose of a short sale
          transaction, provided that such loan is not for the Fund Manager, for a person who
          controls same, for a company controlled by such a person, for a director or for an
          employee of any of the above, for the purpose of a short sale transaction by them,
          or for another fund under the management of the Fund Manager, for the purpose
          of a short sale transaction for such fund.

      (2) In accordance with the Option 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
                                          - 32 -
                                                                  Psagot (4B) Israel Horizon


                   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 has remedied the deviation by the end of the
                         second day of calculation of the prices after the day on which it began.

                   (2)   The number of deviations from the provisions pursuant to this section
                         was not 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 prescribes 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 determined 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 Option 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 Option Regulations provides
      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 prescribes that a fund manager, a trustee, a controlling
             shareholder in one of them, a person holding ten percent or more of the issued
             share capital of one of them or a company controlled by either of them, as well as
             a director, a person engaged by a fund manager or a trustee or their employee, a
             company controlled by either of them or a company in which either of them is a
             stakeholder or employed by it -

             (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
                                           - 33 -
                                                                    Psagot (4B) Israel Horizon


                   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 prescribe 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.

             The transaction determined by the Trustee is as follows:

             A transaction in markets in which the Fund Manager has not yet operated for any
             fund whatsoever which is managed by it.

      (3)    Pursuant to section 18(7a) of the Law, the Minister of Finance may determine the
             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,
                                   - 34 -
                                                           Psagot (4B) Israel Horizon


      unless it has been 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 have considered and approved as set forth in
      sections 18(6), 18(7) or 18(7.a.) of the Law. The board of directors of the Fund
      Manager prescribed such a procedure and the procedure was approved by the
      Trustee.
                                       - 35 -
                                                                 Psagot (4B) Israel Horizon



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

(a)   The Trustee’s Board of
      Directors
       Name                     Address              Main Occupation

      Joshua (Howard) Glaser,   25 Asher Barash      Chairman     of   the   Trustee’s   Board   of
      Chairman                  Street, Herzliya     Directors

      Prof. Tamir Agmon         5, Mizpe Yam,        Professor of finance and international affairs
                                Herzliya B           at the Graduate School of Business, the
                                                     academic program of the College of
                                                     Management, Rishon Lezion.

      Abraham Berger            2 Simtat Har         Accountant at Kesselman & Kesselman,
                                Dafna, Savyon        CPAs (Isr.)

      Itamar Herman             36, Ben Shalom       Advocate
                                Ramat Hasharon

      Arye Weizler              42 Yaacov Hazan      Accountant at Kesselman & Kesselman,
                                Street, Ra’anana     CPAs (Isr.)

      Michael Tamir             4, Komemiyut         Accountant at Kesselman & Kesselman,
                                Street, Tel Aviv     CPAs (Isr.)

      Tzvi Yehezkel             5, Hagilboa Street   Accountant at Kesselman & Kesselman,
                                Mevaseret Zion       CPAs (Isr.)

      Claudio Yirze             2C, Szold Street,    Accountant at Kesselman & Kesselman,
                                Kfar Saba            CPAs (Isr.)

      Joseph Flus               11 Yehuda            Accountant at Kesselman & Kesselman,
                                Halevy Street,       CPAs (Isr.)
                                Ra’anana

      Assaf Shemer              43 Shlomo            Accountant at Kesselman & Kesselman,
                                Hamelech Street,     CPAs (Isr.)
                                Herzliya


      Trustee’s CEO             Address              Main Occupation And Education
      Batya Ron                 7, Bosmat Street,    Accountant,     MBA       in      Business
                                                     Administration (Herriot-Watt University),
                                Shoham               LLM in Law (Bar Ilan University), BA in
                                                     Business Administration and Accounting
                                                     (College of Management), Trustee’s CEO
                                                - 36 -
                                                                      Psagot (4B) Israel Horizon




(b)   Fund Manager’s Board of Directors

      Name                   Address                     Main Occupation And Education

      Arye Steinberg,        14, Yehiam Street           A director of and consultant to companies,
      Chairman               Ramat Hasharon              chairman of Psagot Securities Ltd. and of Psagot
                                                         Investments House Ltd.

      Jeremy Blank           13 Arthur Rubinstein B.A. in Finance and Associate in Bible (Yeshiva
                             Street, Tel Aviv     University), a director of J Blank Management
                                                  Ltd., a director of Gilat Satellite Networks Ltd.,
                                                  Psagot Securities Ltd., and Psagot Investments
                                                  House Ltd.

      Yael Efron, outside 23, Shlomo Ben Yossef BA in economics (Tel Aviv University), CEO
      director*           Street, Tel Aviv      and Chairman of Oceana Advanced Industries
                                                Ltd., a director of Rosebud Medical Ltd., in
                                                Isralom Properties Ltd. and Elcon Recycling
                                                Industries Ltd.

      Gad Arbel, outside 96, Hashalom Street             MBA in Business Administration and MBA in
      director**         Mevaseret Zion                  Economics (the Hebrew University of
                                                         Jerusalem),    economic-financial    consultant,
                                                         outside director in the managing corporation of
                                                         the Compulsory Motor Insurance Pool ("Pool")
                                                         Ltd. and in Elron Electronic Industries Ltd.,
                                                         member of the administration of the senior
                                                         pension funds, director of the academic program
                                                         of the College of Management.

      Vered Dar              7, Ben Sira Street,         MBA and BA in Economics and Business
                             Tel Aviv                    Administration    (Hebrew     University   of
                                                         Jerusalem), chief economist and strategist at
                                                         Psagot Investments House Ltd.

      Eithan Shashinsky      20, Tura Street,            Dr. in Economics (Massachusetts Institute of
                             Jerusalem                   [MIT] Technology, Boston, United States),
                                                         MBA in Economics and Statistics and BA in
                                                         Economics (The Hebrew University of
                                                         Jerusalem), Prof. of Economics at the Hebrew
                                                         University of Jerusalem, a director of Israel
                                                         Discount Bank Ltd.




*
      Has served as an outside director of the Fund Manager from September 11, 2006.
**
      Has served as an outside director of the Fund Manager from September 11, 2006.
                                                     - 37 -
                                                                                 Psagot (4B) Israel Horizon




(c)   Fund Manager’s CEO
      Name                        Address                        Main Occupation And Education
      Roy Vermos                  5, Baresky Street              MBA in Business Administration (Bar Ilan
                                  Tel Aviv                       University), BA in Economics and Sociology
                                                                 (The Hebrew University of Jerusalem), Fund
                                                                 Manager’s CEO, CEO of Psagot Investments
                                                                 House Ltd. and chairman of the board of
                                                                 directors of Psagot Gadish Provident Funds Ltd.

(d)   Investment Committee
      Yael Efron, outside director*

      Gad Arbel, outside director**

      Roy Vermos
      Ilan Rokach                                                Accountant, BA in Economics and Accounting
                                                                 (Haifa University), Deputy CEO of the Fund
                                                                 Manager
      Eithan Shashinsky

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

(f)   Fund's auditors
      Somekh Chaikin,             17, Ha’Arbaah Street,
      Accounting Firm             Tel Aviv

(g)   Fund Manager’s internal auditor
      Gil Gabai***                14 Achad Ha’am Street          CPA (Isr.), BA in Accounting and Economics
                                  Tel Aviv                       (Bar Ilan University), works at Psagot
                                                                 Investments House Ltd., internal auditor of the
                                                                 Group of Psagot Investments House Ltd.




*
      Has served as an outside director of the Fund Manager from September 11, 2006.
**
      Has served as an outside director of the Fund Manager from September 11, 2006.
***
      Up to November 30, 2008, Mr. Meir Ilya served as the Fund Manager's internal auditor.
                                                - 38 -
                                                                         Psagot (4B) Israel Horizon


                             Chapter I: The Fund Agreement
 1.   The details set forth in this Prospectus with regard to the conditions pursuant to which the
      Fund has been active, 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 modification, amendment, reduction 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.
      (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 transactions 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 be interested parties 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 severally,
                       as the manager of other funds for investments in trust.
                   (b) The Trustee shall be entitled to act and to serve, jointly or severally, 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
                                           - 39 -
                                                                   Psagot (4B) Israel Horizon


(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,
                                    - 40 -
                                                             Psagot (4B) Israel Horizon


      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 carried out in accordance
            with the procedures which the Board of Directors of the Fund Manager
            determined pursuant to section 18(8) of the Law.
      Section 78 of the Law further provides 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 has 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 it
            because it 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 did
            not comply 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.
                                         - 41 -
                                                                 Psagot (4B) Israel Horizon


      (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 profited 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.
                                                   - 42 -
                                                                              Psagot (4B) Israel Horizon



     Chapter K: Income of the Fund Manager, the Trustee, Stakeholders and
                               Securities Agents
1.   Income of the Fund Manager* from January 1, 2006 up to February 2, 2009
     (a)   From a Supplement
           The Fund Manager* is entitled to receive a supplement in such manner and at such rates
           as specified in Chapters A and D of this Prospectus.
           In the course of the period from January 1, 2006 to March 31, 2006, the Fund Manager
           had no income from supplement, after deduction of distribution commission.**
           In the course of the period from April 1, 2006 to February 2, 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 4% of the average annual value of the Fund assets, as shall be calculated for the
           purpose of determining the price of a unit, 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.
           So long as not otherwise resolved by the Fund Manager, the Fund Manager shall
           receive an annual fee equal to 1.9% 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 on a daily basis and shall be paid on a weekly basis.
           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 January 1, 2006 up to February 2, 2009,
           was as follows:

                            Period                           Amount in NIS
              Jan. 1, 2006 to Dec. 31, 2006                     428,358
              Jan. 1, 2007 to Dec. 31, 2007                     687,653
              Jan. 1, 2008 to Dec. 31, 2008                     462,638
              Jan. 1, 2009 to Feb. 2, 2009                       25,821




*    Up to September 10, 2006 the Fund was managed by Psagot Mutual Funds Management – Leumi Ltd.
**   In this subsection: Distribution commission – A distribution commission deducted from the supplement before
     the Distribution Commission Regulations took effect (April 1, 2006).
                                              - 43 -
                                                                      Psagot (4B) Israel Horizon


2.   Income of the Trustee from January 1, 2006 up to February 2, 2009
     Pursuant to the Fund Agreement, the Trustee is entitled to receive an annual fee equal to 0.2%
     of the average annual value of the Fund assets, as shall be calculated for the purpose of
     determining the price of the unit, as set forth in the Law and in the regulations by virtue
     thereof, or a smaller amount, as shall be agreed from time to time between the Trustee and the
     Fund Manager.
     So long as not otherwise agreed between the Trustee and the Fund Manager, the Trustee
     receives an annual fee equal to 0.04% 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 on a daily basis and shall be paid on a weekly basis.
     The Trustee’s fee that was collected from the Fund assets, from January 1, 2006 up to
     February 2, 2009, was as follows:

                            Period                      Amount in NIS
             Jan. 1, 2006 to Dec. 31, 2006                  9,018
             Jan. 1, 2007 to Dec. 31, 2007                 14,477
             Jan. 1, 2008 to Dec. 31, 2008                  9,740
             Jan. 1, 2009 to Feb. 2, 2009                      544
     In accordance with the Fund Agreement, the Trustee shall cover, in consideration of this
     payment, all of the expenses incurred in the audit of the accounts of the Fund and its assets,
     including the fees of the accountants and all of the payments, expenses and charges in relation
     to the holding or the deposit of the Fund assets, if any.
     In practice, the Trustee shall cover, out of the said expenses, until such time as decided
     otherwise, the fees of the accountants only.
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 provided 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 the provisions of subsection (a), the Fund Manager may, 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.
                                                       - 44 -
                                                                                Psagot (4B) Israel Horizon


    4.     Income of Bank Leumi Le Israel Ltd.* and Securities Agents Overseas from Transactions for
           the Fund, which were paid out of the Fund’s resources, from January 1, 2005 up to February
           2, 2009
                         Period              Income of Bank     Income of           Total
                                             Leumi Le Israel    securities agents
                                             Ltd. (in NIS)      overseas (in NIS) (in NIS)
            Jan. 1, 2006 to Dec. 31, 2006          ^53,781               1,224        55,005
            Jan. 1, 2007 to Dec. 31, 2007           32,049                 288        32,337
            Jan. 1, 2008 to Dec. 31, 2008           31,467                  72        31,539
            Jan. 1, 2009 to Feb. 2, 2009             1,695                   -         1,695
         5. Income of Bank Leumi Le Israel Ltd. from Distribution of the Fund Units that was paid out
            of the Fund Manager's Resources, from January 1, 2006 to September 10, 2006 *

                                Period                           Amount in NIS
                 Jan. 1, 2006 to September 10, 2006                 72,145

6.         Income of Psagot Ofek Investments House Ltd.~, that was paid out of the resources of Psagot
           Mutual Funds Management Leumi Ltd., from January 1, 2006 up to September 10, 2006
           (a)   Income from Distribution of the Fund units
                 In the course of the period from January 1, 2006 to September 10, 2006, Psagot Ofek
                 Investment House Ltd. had no income from distribution of the Fund units.
           (b)   Income of the Fund Manager from Other Services
                 Psagot Ofek Investment House Ltd. had income from services of investment
                 management, investment consultation and various managerial and professional services,
                 which it provided to Psagot Mutual Funds Management – Leumi Ltd.~




*          Up to September 10, 2006 the Fund was managed by Psagot Mutual Funds Management – Leumi Ltd., which
           belonged to the Bank Leumi Le Israel Ltd. group of companies.
^          The income of the said banker during the period January 1, 2006 to September 10, 2006 was NIS 37,962.
~          Up to September 10, 2006 the Fund was managed by Psagot Mutual Funds Management – Leumi Ltd., which
           belonged to the Psagot Ofek Investments House Ltd. group of companies
                                                  - 45 -
                                                                            Psagot (4B) Israel Horizon


7.   Income of Psagot Securities Ltd., from September 11, 2006 up to February 2, 2009&

     (a)    Income from Distribution of the Fund units


                              Period                           Amount in NIS
               Sept. 11, 2006 to Dec. 31, 2006                    723
               Jan. 1, 2007 to Dec. 31, 2007                    7,104
               Jan. 1, 2008 to Dec. 31, 2008                    7,384
               Jan. 1, 2009 to Feb. 2, 2009                       464

      (b)   Income of the Fund Manager from Other Services

               Psagot Securities Ltd. had income from various professional services which it
               provided to the Fund Manager, which was paid from the Fund Manager's resources.
               (See section 3 of the Introduction above).&

8.    Income of Psagot Investments House Ltd., that was paid from the Fund Manager's resources,
      from September 11, 2006 up to February 2, 2009&&
      Psagot Investments House Ltd. had income from various services which it provided to the
      Fund Manager, which was paid from the Fund Manager's resources. (See section 3 of the
      Introduction above).&&


                            Chapter L: Interest in the Fund assets
Securities Issued by Stakeholders in the Fund Manager and in the Trustee
The list of the Fund assets as at February 2, 2009 (see Chapter F) does not include securities which
were issued by stakeholders in the Fund Manager and 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.

&     As of September 11, 2006 the Fund has been managed by Psagot Mutual Funds Ltd. The said company and
      Psagot Securities Ltd. belong to the Parent Company's group of companies.
&&
      As of September 11, 2006 the Fund has been managed by Psagot Mutual Funds Ltd., which is a wholly owned
      company of Psagot Investments House Ltd.
                                                - 46 -
                                                                          Psagot (4B) Israel Horizon


           "Rate of Held Units" – 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 from the Fund Manager information, 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 fees of the Fund Manager 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.   As at February 2, 2009 stakeholders in the Fund Manager and in the Trustee did not hold
     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").
                                                  - 47 -
                                                                           Psagot (4B) Israel Horizon


      (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 Residents'
      Account

      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,
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                                                                             Psagot (4B) Israel Horizon


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 business. 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:
      Liable Mutual Fund
      (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 determined otherwise. Should no special rate of tax be determined 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 on the sale or on the redemption of a unit in a fund is exempt from tax.
      (c)   A capital loss that is created for a unit holder 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.
     Exempt Mutual Fund
     (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 gain up to the date of the transition
            (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.
     (d)    Real capital gains in 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 in 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 unitholder would have been liable to tax, may be offset, solely in
            accordance with the provisions set forth in the Ordinance.

@     During the period from January 1, 2003 to December 31, 2005, another tax classification existed: a mixed
      mutual fund.
                                                - 49 -
                                                                        Psagot (4B) Israel Horizon


            The offsetting of tax which was not carried out 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 the tax provisions overseas, which may apply to the overseas investments of a
            mutual fund.
     (b)    The income and profits of an exempt mutual fund and of a liable mutual fund may be
            taxed abroad.
     (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 replace
            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.
6.    In Note 3.D. of the Funds’ financial statements as at December 31, 2008, set out in Chapter S
      of the Prospectus, it is stated that in the wake of the amendments to the Income Tax
      Ordinance, which took effect on January 1, 2003, an unclarity was created in respect of the
      interpretation of certain sections of the Income Tax Ordinance concerning the calculation of
      the tax liability of mutual funds, and that for the purpose of calculating the provisions for tax
      in the Fund’s financial statements, the Fund Manager’s interpretation was applied, which is
      based, inter alia, on professional opinions, which with regard to the aforesaid issues, do not
      fall in line with the Tax Authorities’ position. It was further stated there that the Fund
      Manager estimates that as at the date of the financial statements, the exposure to additional
      tax liability, if any, to which the Fund is likely to be subject, is insubstantial.
                                                 - 50 -
                                                                         Psagot (4B) Israel Horizon



                  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 14, 2006:
      (a)   As of June 28, 2006 no registration will be permitted of new units, directly in the name
            of the unitholders, in the Fund's register of unitholders.
      (b)   As of June 28, 2006 onward, only a decrease will be allowed in the number of units
            directly registered in the name of the unitholders in the Fund's register of unitholders.
2.    Register of Unitholders
      Should the Fund Manager maintain directly, subject to the provisions of the Law, records 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 was 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
            given by 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 a 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 determined 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.
                                               - 51 -
                                                                       Psagot (4B) Israel Horizon


     (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 the approval that were 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 bind them.
                 (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 tax
                 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 was adopted to dissolve the Fund in accordance with provisions in
                 the Fund Agreement.
                                           - 52 -
                                                                 Psagot (4B) Israel Horizon


(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 cases, 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 a period and in such a 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 determine in regulations, in general or for types of
            funds, 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
            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:
                                          - 53 -
                                                                  Psagot (4B) Israel Horizon


            (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, no earlier than sixty days and no 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 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 the 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 granted 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
                                          - 54 -
                                                                  Psagot (4B) Israel Horizon


                  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 for protecting 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 use his
            best endeavors to distribute cash as stated also 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.
                                              - 55 -
                                                                      Psagot (4B) Israel Horizon



       Chapter R: Details Regarding General Meetings of the Unitholders
1.   (a)   Section 111(a) of the Law provides as follows:
           (1)   A mutual fund manager may convene a general meeting of the unitholders.
           (2)   A trustee, or at least five unitholders who hold at least ten percent of the number
                 of units, may demand that the fund manager convene 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 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 approving 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 a 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 a 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.
                                                 - 56 -
                                                                         Psagot (4B) Israel Horizon


 6.   Subsections (b), (c) and (d) of section 111 of the Law provide 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 prescribed
      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 possesses approval
      from 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 end 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 a 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 about the convening
            of a meeting of the unitholders to adopt a special resolution under subsections 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 to 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 it is required to send the notice to the
                                               - 57 -
                                                                       Psagot (4B) Israel Horizon


            unitholders. The distributor shall send the notice to the unitholders who hold units
            through it, to their addresses known at that time, immediately after the mutual fund
            manager has given it 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 no earlier than seven days after the date of the publication in Two
      Newspapers and no 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 about 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 date designated for carrying it out. (See also section
      1(b) of Chapter T below).
                                                            II-3

                                                                              Psagot (4B) Israel Horizon

Statement of Profit and Loss for the Year Ended December 31



                                                                                   2008            2007
                                                                                    NIS             NIS


Income (losses)
Interest on cash balances                                                     128,072          169,544
Exchange differences on foreign currency cash balances                         (97,432)       (178,850)
Dividends                                                                    1,331,545        1,501,097
Net income (loss) from sale and changes in value of:
shares, warrants and index tracking certificates                           (16,795,414)        484,221
Debentures (excluding debentures convertible into shares)                    (239,242)                -

Total net income (loss)                                                    (15,672,471)       1,976,012


Expenses
Fee of the Fund Manager                                                       462,638          687,653
Fee of the Trustee                                                               9,740          14,477

Income tax – Note 3                                                           273,864          262,869

Total expenses                                                                746,242          964,999

Net profit (loss) for the year                                             (16,418,713)       1,011,013




The accompanying notes are an integral part of the financial statements.
                                                          II-4

                                                                                            Psagot (4B) Israel Horizon

Statement of the Movement of the Units and Changes in their Worth
for the year ended December 31, 2008 and for the year ended December 31, 2007



                                                                         Par value of
                                                                                units   Unappropriated       Total worth
                                                                         outstanding            profit       of the units
                                                                                 NIS              NIS                NIS

Balance as at January 1, 2007                                          18,127,210         10,438,601        28,565,811

Net profit for the year                                                           -         1,011,013        1,011,013

Receipts from the issue of 2,571,465 units – Note 2C                   10,576,260          9,310,128        19,886,388

Payments on the redemption of 1,791,729 units - Note 2C                 (7,394,536)       (6,403,616)      (13,798,152)

Adjustments of the par value of the units to the exchange
rate of the dollar as at the end of the year                           (1,808,945)         1,808,945                   -

Balance as at December 31, 2007                                       #19,499,989         16,165,071        35,665,060

Net loss for the year                                                              -     (16,418,713)      (16,418,713)

Receipts from the issue of 132,910 units- Note 2C                          467,797            315,751          783,548

Payments on the redemption of 1,206,322 units - Note 2C                (4,365,553)        (1,809,637)       (6,175,190)

Adjustments of the par value of the units to the exchange
rate of the dollar as at the end of the year                             (406,445)            406,445                  -

Balance as at December 31, 2008                                       #15,195,788         (1,341,083)       13,854,705


#   The amount represents 3,996,788 units of a par value of $1 each as at December 31, 2008 and 5,070,200 units of a par
    value of $1 each as at December 31, 2007.




The accompanying notes are an integral part of the financial statements.
                                                                  II-5
                                     PSAGOT (4B) ISRAEL HORIZONS
                                     LIST OF FUND'S ASSETS AS AT
                                           December 31, 2008
                                                                                         MARKET VALUE AT 31.12.08
                                                                                          ----------------------------------------
                                                                                                                  AS A PERCENTAGE OF THE
                                           NUMBER                        PRICE IN                                 TOTAL NET WORTH OF THE
                                           OF SHARES                     AGOROT        N..I..S                     FUND'S ASSETS
                                           --------------------          -----------   -----------                 -------------------------------


SECURITES TRADED IN ISRAEL
============================
SHARES
======
BANK AND INSURANCE
-------------------
   ISRAEL DISCOUNT BANK LTD.
                 COMMON SHARES 0.1                   40,000              340.00          136,000                  0.98

  HAREL INSURANCE INVESTMENTS & FINANCIAL SERVICES LTD.
          COMMON SHARES 1.0                    1,200                     9,500.00        114,000                  0.82

  BANK LEUMI LE- ISRAEL B.M.
         COMMON SHARES 1.0                           96,452              790.00          761,971                  5.50

  MIGDAL INSURANCE & FINANCIAL HOLDINGS LTD.
          COMMON SHARES 0.01                        118,522              398.80          472,666                  3.41

  MIZRAHI TEFAHOT BANK LTD.
          COMMON SHARES 0.1                          14,500              1,945.00        282,025                  2.04

                                                                                       ------                    ----
       TOTAL BANK AND INSURANCE                                                         1,766,662                12.75
                                                                                       ------                    ----
INVESTMENTS AND HOLDINGS
-------------------------
   THE ISRAEL CORPORATION LTD.
                 COMMON SHARES 1.0                     145               85,650.00       124,193                  0.90

  MIVTACH SHAMIR HOLDINGS LTD.
         COMMON SHARES 1.0                           1,000               4,525.00         45,250                  0.32

  PAZ OIL COMPANY LTD.
           COMMON SHARES 5.0                           500               36,000.00       180,000                  1.30

                                                                                       ------                    ----
       TOTAL INVESTMENTS AND HOLDINGS                                                    349,443                  2.52
                                                                                       ------                    ----
SEARCHING GAZ AND OIL
-------------------
   AVNER OIL EXPLORATION - LIMITED PARTNERSHIP
                 COMMON SHARES 0.01            1,946,969                  25.70          500,371                  3.61
                                                                                       ------                    ----

TRADE AND SERVICES
-------------------
   ILEX MEDICAL LTD.
                 COMMON SHARES 1.0                   20,140              961.00          193,545                  1.40

  INTERNET GOLD GOLDEN LINES LTD
         COMMON SHARES 1.0                           8,938               867.00           77,492                  0.56

  ITURAN LOCATION AND CONTROL LTD.
          COMMON SHARES 1.0                          11,473              2,700.00        309,771                  2.24

  EXCELLENCE INVESTMENTS LTD.
         COMMON SHARES 1.0                           2,736               2,290.00         62,654                  0.45

  BEZEK THE ISRAELI TELECOMUNICATION CORP. LTD.
          COMMON SHARES 1.0                     98,256                   620.00          609,187                  4.40

  GRANITE HACARMEL INVESTMENTS LTD.
         COMMON SHARES 1.0                           48,000              600.00          288,000                  2.08

  DELEK AUTOMOTIVE SYSTEMS LTD.
         COMMON SHARES 1.0                           9,000               1,940.00        174,600                  1.26
                                                                        II-6

                                                                                               MARKET VALUE AT 31.12.08
                                                                                                ----------------------------------------
                                                                                                                        AS A PERCENTAGE OF THE
                                                 NUMBER                        PRICE IN                                 TOTAL NET WORTH OF THE
                                                 OF SHARES                     AGOROT        N..I..S                     FUND'S ASSETS
                                                 --------------------          -----------   -----------                 -------------------------------


      DANEL (ADIR YEOSHUA) LTD.
              COMMON SHARES 1.0                            16,605              1,115.00        185,146                  1.34

      HAMAMA MEIR TRADING (1996) LTD.
            COMMON SHARES 1.0                              20,000              310.00           62,000                  0.45

      TELSYS LTD.
              COMMON SHARES 1.0                            11,000              1,100.00        121,000                  0.87

      TESNET SOFTWARE TESTING LTD.
              COMMON SHARES 0.01                           53,707              180.00           96,673                  0.70

      MATRIX I.T LTD.
              COMMON SHARES 1.0                            17,500              599.00          104,825                  0.75

      NETVISION LTD.
              COMMON SHARES 1.0                            3,000               2,445.00         73,350                  0.53

      NISKO INDUSTRIES (1992) LTD.
              COMMON SHARES 1.0                            9,205               404.80           37,262                  0.27

      STARLIMS TECHNOLOGIES LTD.
             COMMON SHARES 1.0                             2,206               1,556.00         34,325                  0.25

      CELLCOM ISRAEL LTD.
             COMMON SHARES 1.0                             5,400               8,375.00        452,250                  3.26

      PARTNER COMMUNICATIONS COMPANY LTD.
             COMMON SHARES 0.01                            5,000               6,150.00        307,500                  2.22

      TOP-LINE,THE ISRAELI IMPORTING & MARKETING ELECTRICAL LTD.
              COMMON SHARES 1.0                     14,000       400.00                         56,000                  0.40

      RAMI LEVI CHAIN STORES HASHIKMA MARKETING 2006 LTD
              COMMON SHARES 0.01                   2,700                       1,913.00         51,651                  0.37

      RAPAC COMMUNICATION & INFRASTRUCTURE LTD
             COMMON SHARES 1.0                             15,466              651.00          100,684                  0.73

      SHUFERSAL LTD.
             COMMON SHARES 0.1                             13,498              1,270.00        171,425                  1.24

                                                                                             ------                    ----
          TOTAL TRADE AND SERVICES                                                            3,569,340                25.77
                                                                                             ------                    ----
    REAL ESTATE, CONSTRACTION
    ------------------------------------------
       Y.H.DIMRI BUILDING & DEVELOPMENT LTD
                     COMMON SHARES 1.0                     8,000               1,554.00        124,320                  0.90

      VILLAR INTERNATIONAL LTD.
              COMMON SHARES 1.0                            7,898               770.00           60,815                  0.44

      HABAS H.Z. INVESTMENTS (1960) LTD.
              HABAS                                        38,000              368.80          140,144                  1.01

σ   # HEFTSIBA GLOBAL LTD
              COMMON SHARES 1.0                            35,450                  0.01               4                 0.00

      MALRAG - ENGINEERING AND CONSTRUCTION LTD
             COMMON SHARES 1.0                             21,851               95.10           20,780                  0.15

      MINRAV HOLDINGS LTD.
             COMMON SHARES 5.0                             2,649               5,792.00        153,430                  1.11

                                                                                             ------                    ----
          TOTAL REAL ESTATE, CONSTRACTION                                                      499,493                  3.61
                                                                                             ------                    ----
                                                                    II-7


                                                                                           MARKET VALUE AT 31.12.08
                                                                                            ----------------------------------------
                                                                                                                    AS A PERCENTAGE OF THE
                                             NUMBER                        PRICE IN                                 TOTAL NET WORTH OF THE
                                             OF SHARES                     AGOROT        N..I..S                     FUND'S ASSETS
                                             --------------------          -----------   -----------                 -------------------------------
INDUSTRY
---------
   AVGOL INDUSTRIES 1953 LTD.
           COMMON SHARES 1.0E-4                        5,430               110.00           5,973                   0.04

  IMCO INDUSTRIES LTD.
          COMMON SHARES 1.0                            19,209              1,154.00        221,672                  1.60

  ELBIT SYSTEMS LTD.
          COMMON SHARES 1.0                            3,200               17,270.00       552,640                  3.99

  OSEM INVESTMENTS LTD.
          COMMON SHARES 1.0                            4,000               4,555.00        182,200                  1.32

  BIO LIGHT ISRAELI LIFE SCIENCES INVESTMENTS LTD
          COMMON SHARES 0.01                      7,094                     12.00             851                   0.01

  BET SHEMESH ENGINES HOLDINGS (1997) LTD.
          COMMON SHARES 1.0                            10,761              302.60           32,563                  0.24

  OIL REFINERIES LTD.
           COMMON SHARES 1.0                          260,000               95.00          247,000                  1.78

  TEVA- PHARMACEUTICAL INDUSTRIES LTD.
          COMMON SHARES 0.1                            5,600               16,180.00       906,080                  6.54

  KOOR INDUSTRIES LTD.
          COMMON SHARES 0.0010                         5,262               4,000.00        210,480                  1.52

  ICL-ISRAEL CHEMICALS LTD.
          COMMON SHARES 1.0                            20,000              2,630.00        526,000                  3.80

  CLAL INDUSTRIES LTD.
          COMMON SHARES 1.0                            15,000              815.00          122,250                  0.88

  MAKHTESHIM AGAN INDUSTRIES LTD.
        COMMON SHARES 1.0                              10,500              1,228.00        128,940                  0.93

  MAABAROT PRODUCTS LTD.
        COMMON SHARES 1.0                              7,300               3,730.00        272,290                  1.97

  NETO M.E HOLDINGS LTD.
          COMMON SHARES 1.0                            1,057               3,619.00         38,253                  0.28

  SANO BRUNO'S ENTERPRISES LTD.
         COMMON SHARES 1.0                             2,500               5,300.00        132,500                  0.95

  SPECTRONIX LTD.
         COMMON SHARES 1.0                             23,010              1,100.00        253,110                  1.83

  PLASSON INDUSTRIES LTD.
         COMMON SHARES 1.0                             3,600               3,800.00        136,800                  0.98

  PLASTO-SAC LTD.
          COMMON SHARES 1.0                            12,695              400.00           50,780                  0.37

  PLASTOPIL HAZOREA COMPANY LTD.
          COMMON SHARES 1.0                            20,000              832.70          166,540                  1.20

  PERRIGO COMPANY
          COMMON SHARES 0.0                            2,500               12,250.00       306,250                  2.21

  RIMONI INDUSTRIES LTD.
          COMMON SHARES 1.0                            15,180              632.00           95,938                  0.69

                                                                                         ------                    ----
      TOTAL INDUSTRY                                                                      4,589,110                33.13
                                                                                         ------                    ----
                                                                                         ------                    ----
      TOTAL SHARES                                                                       11,274,419                81.39
                                                                                         ===========               =======
                                                            II-8

                                                                                     MARKET VALUE AT 31.12.08
                                                                                     ----------------------------------------
                                                                                                                   PERCENTS OF THE TOTAL
                                                                                        N.I.S                      NET ASSETS OF THE FUND
                                                                                     -----------                   ----------------------

BONDS DEBENTURE NOT ADJECTIVE
=================================
BONDS KONZERNI
==================
          AVERAG DURATION 1-2 YEARS                                                    321,760               2.32
                                                                                     ------                 ----

                                                                                     ------                 ----
      TOTAL SECURITES ANDOPTIONS TRADED IN ISRAEL                                    11,596,179             83.71
                                                                                     ===========            =======




                                                                         PRICE
                                                NUMBER                  IN FOREIGN
                                               OF SECURITIES            CURRENCY      N..I..S (&)
                                               --------------------      ----------- -----------


SECURITES TRADED OUTSIDE OF ISRAEL
==================================
ISRAEL FOREIGN SHARES TRADED UN FOREIGN CURFENIG
================================================
SHARES TRADED IN US DOLLARS
===========================
PHARMA
-------

  TEVA PHARMACEUTICAL-ADR                         2,400               42.4550          387,393               2.80
                                                                                     ------                 ----

SOFTWARE
---------
   RADVISION                                      2,300               5.4000           47,221                0.34
                                                                                     ------                 ----

                                                                                     ------                 ----
      TOTAL SHARES TRADED IN US DOLLARS                                                434,614               3.14
                                                                                     ===========            =======


OTHER FOREIGN SHARES TRADED IN FOREIGN CURRENCY
===============================================
SHARES TRADED IN US DOLLARS
===========================
SOFTWARE
---------
   ATTUNITY LIMITED                             46,010                0.1000           17,493                0.12
                                                                                     ------                 ----



                                                                                     ------                 ----
      TOTAL SECURITES TRADED OUTSIDE OF ISRAEL                                         452,107               3.26
                                                                                     ===========            =======

          TOTAL SECURITIES AT MARKET VALUE                                           12,048,286              86.97
          SELLING EXPENSES OF SECURITIES                                              (17,692)              (0.13)
                                                                                     ------                 ----

      TOTAL VALUE OF SECURITIES AT SELLING PRICES                                     12,030,594            86.84

                                                                                     ------                 ----
                                                         II-9


                                                                            MARKET VALUE AT 31.12.08
                                                                            ----------------------------------------
                                                                                                          PERCENTS OF THE TOTAL
                                                                               N.I.S                      NET ASSETS OF THE FUND
                                                                            -----------                   ----------------------
OTHER ASSETS
============
          CASH IN ISRAELI CURRENCY                                           1,828,081             13.20
&         CASH IN FOREIGN CURRENCY                                             33,149               0.24
          ACCRUED INCOME                                                       3,600                0.02
                                                                            ------                 ----
      TOTAL OTHER ASSETS                                                     1,864,830             13.46
                                                                            ===========            =======

      TOTAL ASSETS                                                          13,895,424             100.30
                                                                            ------                 ----


LIABILITIES
===========
           ACCRUED EXPENSES                                                   (3,657)              (0.03)
           INCOME TAX PAYABKS                                                (36,451)              (0.27)
           DEFERRED TAXES                                                    (611)                 (0.00)
                                                                              ------               ----
      TOTAL LIABILITIES                                                      (40,719)              (0.30)
                                                                            ===========            =======

      TOTAL ASSETS, NET                                                     13,854,705             100.00
                                                                            ===========            =======




σ THE PRICE OF THE SECURITIES IS DETERMINED BY THE FUND MANAGER.
# TRADING IN THESE SECURITIES WAS DISCONTINUED.
& TRANSLATED ACCORDING TO THE REPRESENTATIVE EXCHANGE RATE AS AT DECEMBER 31, 2008: 1 U.S. DOLLAR = 3.8020 N.I.S.
                                                                                    1 EURO        = 5.2973 N.I.S.
                                                     II-10

                                                                     MARKET VALUE AT 31.12.08
                                                                     ----------------------------------------
                                                                                                   PERCENTS OF THE TOTAL
                                                                        N.I.S                      NET ASSETS OF THE FUND
                                                                     -----------                   ----------------------

BONDS (EXCEPT FOR BONDS EXCHANGE)
=====================================
OTHER ISSUING
=================
          STAR-WORLD INVESTMENTS PRODUCTS LTD                          321,760               2.32
                                                                     ------                 ----


THE SORTING ABOVE REFER TO THE PARAGRAPH IN THE ESTATE FOR FOREIGN
====================================================
BONDS DEBENTURE NOT ADJECTIVE
                                                                      321,760                2.32
                                                                     ------                 ----
                                                     II-11

                                                                                     Psagot (4B) Israel Horizon

Notes to the Financial Statements



Note 1 - General
       A.      The Fund is a mutual investment fund incorporated under the "Joint Investments in Trust Law -
               1994", and the Fund Agreement between the Trustee - Kesselman and Kesselman Trust
               Company (1971) Ltd. and the Fund Manager, Psagot Mutual Funds Ltd., a subsidiary of Psagot
               Investment House Ltd., a group company of York.

       B.      In accordance with Joint Investments in Trust Regulations (Classification of Mutual funds for
               Publication Purposes) - 2007, the managers of mutual funds are required to determine and
               publish the exposure profile of the funds managed by them under the name of the Fund, so that
               it includes the information regarding the maximum exposure profile of the Fund to shares and
               to foreign currency, in absolute values, as provided in the aforementioned regulations.


Note 2 - Accounting Policy
       A.      In the Statement of Condition of the Fund the securities are stated at market value, as detailed
               below, net of the expense of their sale.
               The market value of the securities traded on stock exchanges in Israel and abroad is determined
               according to the closing market prices on the various stock exchanges on the last trading day of
               the current year. The market value of foreign securities traded over the counter is determined
               according to the average price of the securities between the average purchase price and the
               average sale price, on the last trading day of the current year. Securities no longer traded are
               stated in accordance with the estimate of the Fund manager.
               Securities traded in foreign currency and foreign currency cash balances are translated
               according to the representative exchange rate of the currencies. The representative exchange
               rate of the US dollar as at December 31, 2008 was US$ 1= NIS 3.802 and as at December 31,
               2007 the representative exchange rate of the US dollar was US$ 1=NIS 3.846.


       B.      The increase or decrease, during the current year, in the value of the securities held by the Fund
               is recognized on a current basis.


       C.      The difference between the price of the units issued or redeemed and their par value is
               transferred to unappropriated profit (accumulated loss) and is included in the Statement of the
               Movement in Units and Changes in their Worth.


       D.      All of the Fund’s assets and liabilities are monetary items. As a result, the Fund’s financial
               statements are presented in reported amounts (which are the same as the nominal historical
               amounts) in accordance with the provisions of Accounting Standard No. 12.
                                                    II-12
                                                                                    Psagot (4B) Israel Horizon

Notes to the Financial Statements



Note 3 - Income Tax
       A.      On January 1, 2003, the Law for the Amendment of the Income Tax Ordinance (No. 132),
               2002, entered into effect, and on January 1,2006, the Law for Amendment of the Income Tax
               Ordinance (No. 147), 2005 entered into effect (hereinafter together – “the Amendment”). The
               Amendment impacts taxation of the capital market, including taxation of mutual funds.
               The Law provides, among other things, that the manger of a Liable Mutual Fund is permitted to
               notify the Supervisor of the Taxes Authority up to 30 days prior to January 1, 2006 of his
               decision that the Fund shall be considered an Exempt Mutual Fund commencing from January
               1, 2006. The Manager of the Fund decided not to change the tax classification of the Fund and
               the Fund remained a Liable Mutual Fund for foreign residents.

       B.      Composition of the tax expense:

                                                                                      For the         For the
                                                                                   year ended      year ended
                                                                                  December 31     December 31
                                                                                         2008            2007
                                                                                          NIS             NIS

               Current taxes*                                                        300,006          235,758
               Deferred taxes                                                        (27,020)          27,111
               Taxes in respect of previous years                                        878                -

                                                                                     273,864          262,869

               * Out of which the amount of NIS 697 was deducted abroad during the year (previous year –
                 NIS 1,680).

       C.      The provision for deferred taxes was calculated in respect of timing differences in recognizing
               the income from dividend between the financial statements and tax return.

       D.      Following the amendments to the Income Tax Ordinance as mentioned in 3A above, the
               interpretation of certain items in the Ordinance relating to calculation of the tax liability of
               mutual funds has become unclear.
               The interpretation of the Fund Manager was implemented in the calculation of the tax provision
               in the financial statements. The Fund Manager’s interpretation is based, inter alia, on
               professional opinions, which do not comply with the position of the Tax Authorities with
               respect to the aforementioned items.
               In the opinion of the Fund Manager, as at balance sheet date the exposure, if any, of the Fund
               being required to pay any additional tax, is insignificant.

       E.      The Fund has tax assessments considered final up to and including the 2003 tax year.
                                                    II-13
                                                                                    Psagot (4B) Israel Horizon

Notes to the Financial Statements



Note 4 - Related Parties
       A.      Parties considered to be related parties of the Fund are the: Fund Manager, the Trustee and
               their interested Parties..

       B.      Balances with related parties:
                                                                                         As at           As at
                                                                                   December 31     December 31
                                                                                         2008            2007
                                                                                          NIS             NIS

               Accrued expenses                                                         3,657           5,766

       C.      Expenses paid to related parties:
               Fees of the Fund Manager and the Trustee - as detailed in the Statement of Profit and Loss.



Note 5 – Various Indices
       Details on the rate of change in the redemption price of the units for the years ended December 31, 2008
       and for the year ended December 31, 2007, in the Consumer Price Index and in the representative
       exchange rate of the US dollar.
                                                                                       For the       For the
                                                                                    year ended    year ended
                                                                                   December 31   December 31
                                                                                          2008          2007
                                                                                            %             %

       Change in the redemption price of the Fund’s units -
        In terms of US dollars – yield in US$                                          (50.15)               16.06

         In terms of NIS – yield in NIS                                                (50.72)                5.65

       Change in the Consumer Price Index (index for
       the last month of the reported year)                                              3.80                 3.40

       Change in the representative exchange rate of the US dollar                      (1.14)               (8.97)
                                                  - 58 -
                                                                           Psagot (4B) Israel Horizon



                             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 in compliance with the obligation of filing
            with 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 takes 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 such payment as 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
      prices listing of the Stock Exchange in Israel, which is published immediately 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.
                                            - 59 -
                                                                  Psagot (4B) Israel Horizon




Names of the Fund Manager’s Directors
who signed the Prospectus                    Signatures

Arye Steinberg, Chairman:               _______________________

Jeremy Blank                            _______________________

Yael Efron, outside director            ________________________

Gad Arbel, outside director             ________________________

Vered Dar                               _______________________

Eithan Shashinsky                       _______________________


Fund Manager:                           _______________________________
                                        Psagot Mutual Funds Ltd.

Trustee:                                __________________________________________
                                        Kesselman & Kesselman Trust Company (1971) Ltd.
                                                   A-1


                                             Appendix A
 Joint Investment Trust (Purchase and Sale Prices of Fund Assets And Value of Fund
                          Assets) Regulations, 5755 - 1994

        By virtue of my authority under sections 43(b), 46(d) and (e), 50(b), 56(b) and 131(a) of the
Joint Investment Trust Law, 5754 -1994 (hereafter — the Law), in accordance with a proposal by the
Authority and with the approval of the Finance Committee of the Knesset, I enact the following
regulations:
                                         Chapter A: Interpretation
Definitions
1.      In these regulations -
        "FoF", "Fund of Funds", "Foreign FoF", "Israeli FoF" and "Hedge Fund" – as defined in the
Assets Regulations;
        "Unlimited Israeli FoF" - an Israeli FoF in which, pursuant to the investment policy, the value
of the units of funds which are not limited in terms of foreign securities to be held therein, may exceed
ten percent of the net value of its assets;
        "Limited Israeli FoF" - an Israeli FoF in which pursuant to the investment policy, the value of
the units of funds which are not limited in terms of foreign securities to be held therein, may not
exceed ten percent of the net value of its assets;
        "Trading Day" - any one of the following:
             (1) With regard to a fund which is limited in terms of foreign securities and with regard
             to a limited Israeli FoF - a day on which trading takes place on the stock exchange in
             Israel and on which representative rates are published or on which inter-bank trading takes
             place;
             (2) With regard to a fund which is not limited in terms of foreign securities - each of the
             days Monday to Thursday in a week on which trading takes place on the stock exchange in
             Israel, on which representative rates are published or inter-bank trading takes place, and
             where pursuant to these regulations the value, as of such date, of all the foreign securities
             and the foreign options held by the fund and the liabilities in respect of such assets can be
             determined; in the event that the fund is exposed to an underlying asset traded overseas via
             activity in derivatives on overseas stock exchanges, and due to the fact that no trading in
             derivatives takes place, the effect of the changes in the value of the underlying asset on the
             value of the fund's assets cannot be computed, the exposure to such underlying asset shall
             be deemed as the holding of foreign securities whose value cannot be computed pursuant
             to these regulations; in this paragraph "activity in derivatives" – as defined in the Joint
             Investment Trust (Classification of Funds for the purpose of Publication), 5768 – 2007;
             (3) With regard to an unlimited Israeli FoF - each of the days Monday to Thursday in a
             week on which trading takes place on the stock exchange in Israel, and on which
             representative rates are published or inter-bank trading takes place, and which is a trading
             day in respect of all the funds held therein;
             (4) With regard to a Foreign FoF - each of the days Monday to Thursday in a week on
             which trading takes place on the stock exchange in Israel, and on which representative
             rates are published or inter-bank trading takes place, and where, pursuant to the provisions
             of regulation 11(e), the value of all the units held therein as of such date can be
             determined;
             (5) A day as set forth in paragraphs (1) to (4) even if the conditions set forth therein are
             not satisfied, provided that trading takes place on such day on a stock exchange in Israel
             and that the value of the assets held in the fund, in the Israeli FoF or in the Foreign FoF,
             which cannot be determined with respect to such day, does not exceed ten percent out of
             the net value of the assets of the fund, the Israeli FoF or the Foreign FoF as the case may
             be;
        "Unit Held", "Foreign Fund Unit" – as defined in the Assets Regulations;
        "Issue Price" of a security - its price according to its terms of issue;
        "Average price" of a foreign security — the average purchase price and sale price that were
published on an international system for the distribution of information concerning securities
(hereafter: an information system) at the end of the trading day, which are based on prices
accumulated by it from at least two market makers or two traders in securities;
                                                  A-2


        "Closing Price" of a foreign security for any day - the price at which the last transaction was
made in the security on the stock exchange on that day;
        "Inter-Bank Trading" – inter-trading of US Dollar by banks in Israel;
        "Opening Trading" - according to the meaning thereof in accordance with the Stock Exchange
Rules;
        "Foreign Security" – including options traded outside of Israel;
        "Market Maker for a Security" — a person who has undertaken to publish, during each day on
which there is trading on the stock exchange or the regulated market on which the foreign security is
traded, in accordance with rules determined by whoever is entitled to determine them by law in the
country where it is traded, a price at which he undertakes to buy the security and a price at which he
undertakes to sell the security;
        "Fixed-Term Deposit" — a deposit in a banking corporation which, according to the terms of
its deposit, is for a predetermined period exceeding one day;
        "Fund which is not limited in terms of foreign securities" – a fund in which, under its
investment policy, the total value of the foreign securities, units of foreign mutual funds and foreign
currency, to be held therein, together with the exposure to an underlying asset traded overseas via
activity in derivatives traded on overseas stock exchanges may exceed ten percent of the net value of
its assets;
        "Open-End Foreign Fund" – as defined in the Assets Regulations;
        "Fund which is limited in terms of foreign securities" – a fund in which, under its investment
policy, the total value of the foreign securities, units of foreign mutual funds and foreign currency, to
be held therein, 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;
        "Representative Rate" for any day — the exchange rate of a foreign currency in new shekels
published by the Bank of Israel on that day, or by any other entity customarily publishing
representative rates which has been approved for the purpose of these regulations by the Authority,
and if it did not publish a rate on that day — the most recent rate published before that day;
        "Banking Corporation" - according to the meaning thereof in the Banking Law;
        "Certificate of Indebtedness" – As defined in the Assets Regulations;
        The "Assets Regulations" - The Joint Investment Trust (Assets that may be Bought and Held by
a Fund and their Maximum Amounts) Regulations, 5755 – 1994.
        "Stock Exchange Rules" — Rules as stated in section 46 of the Securities Law.

  Chapter B: Dates of Calculating Purchase and Sale Prices of the Assets of an Open-End Fund
Dates of Calculation
2.      (a) A manager of an open-end fund shall calculate the purchase and sale prices of the fund
assets for each trading day, at the end of trading on that day.
        (b) In an open-end fund in which the unit prices and the redemption prices of its units are
calculated twice on a trading day, the fund manager shall also calculate the purchase and sale prices of
its assets at the end of the opening trading.

                      Chapter C: Purchase and Sale Prices of A Fund's Assets

Purchase and Sale Prices of A Fund's Assets
3.      (a) The purchase price of the assets of an open-end fund at the time of the calculation, as
stated in regulation 2, is the net value of its assets on that date, plus purchase expenses.
        (b) The sale price of the assets of an open-end fund at the time of the calculation, as stated in
regulation 2, is the net value of its assets on that date, less sale expenses.
        (c) The sale price of the assets of a closed-end fund is the net value of its assets at the end of
the trading day, less sale expenses.
        (d) For the purpose of this regulation, "purchase expenses" and "sale expenses" — expenses
that would have been involved in the purchase or the sale of the fund’s assets and in the purchase or
sale of the assets of investee funds of an Israeli FoF, had they been bought or sold at the time when the
purchase and sale prices of the assets of the fund or of the Israeli FoF, as the case may be, were
calculated; for this purpose, "investee fund" – as defined in the Assets Regulations.
                                                    A-3


                         Chapter D: Value of a Fund's Assets and Liabilities

A Security Traded in Israel
4.       (a) The value of a security that is traded on the stock exchange in Israel at the end of a trading
day is its effective price according to the definition thereof in the Stock Exchange Rules at the end of
that day (hereafter - effective price), and its value at the end of opening trading is the price determined
for it in the opening trading on that day.
         (b) If no price is determined for a security in trading on the stock exchange on any trading day,
its value shall be the last price determined for it.
         (c) If no transaction in a security is made on the stock exchange on three consecutive days, its
value shall be determined in accordance with guidelines that shall be determined by the board of
directors of the fund manager.
Foreign Security
5.       (a) (1) The value of a foreign security held by a fund which is not limited in terms of foreign
              securities, for a trading day, is the price determined for it for that trading day or to be
              determined for it for the day following that trading day – if it is traded in a country where
              the closing of trade, at that time, precedes the time of the closing of trade in Israel by at
              least four hours (hereinafter – preceding country).
              (2) Where the value of a foreign security cannot be determined for a day as set forth in
              paragraph (1), the value thereof shall be the price last determined for it before the day set
              forth in paragraph (1), provided that no more than three trading days have passed from the
              trading day to such day.
         (b) (1) The value of a foreign security held by a fund which is limited in terms of foreign
              securities, for a trading day, is the last price determined for it prior to the trading day,
              provided that no more than three days have passed from the trading day to such day, or the
              price determined for it for the trading day – where it is being traded in a preceding country.
              (2) Where the value of a foreign security for a trading day cannot be determined, and
              where on such trading day, the value of the assets whose value cannot be determined
              which are held by the fund, has not exceeded ten percent of the net value of the fund's
              assets, the value thereof shall be the price last determined for it before the day as set forth
              in paragraph (1), provided that no more than three trading days have passed from the
              trading day to such day.
         (c) (Cancelled).
         (d) The value of a foreign security that is a debenture, that the price that was determined for it
in trading does not take into account the interest which has been added to it under the terms of the
debenture and which has not yet been paid, is as stated in sub-regulation (a) or (b), as the case may be,
with the addition of interest as aforesaid.
         (e) If a foreign security does not have a price in respect of which its value should be
determined in accordance with this regulation, its value shall be determined in accordance with
guidelines that have been determined by the board of directors of the fund manager.
         (f) In this regulation, "price that has been determined" for the foreign security – the closing
price of the foreign security on the stock exchange where it is traded, and if it is traded in a regulated
market – its average price; if the foreign security is traded both on a stock exchange and in a regulated
market, its value may be determined at either the closing price or at the average price, at the fund
manager's option, provided that it does not change its choice, other than where the trading of the
foreign security ceases, either permanently or temporarily, on the stock exchange or in a regulated
market selected by the fund manager for the purpose of determining the value of the foreign security.
A Security in which Trading Has Not Yet Commenced
6.       (a) The value of a security in which trading has not yet commenced is the price at which it was
purchased.
         (b) Notwithstanding the provisions of sub-regulation (a), if more than three trading days
passed since the day of issue of a security or an option within the meaning thereof in section 64(b) of
the Law, and they have not yet started to be traded, their value shall be determined in accordance with
guidelines determined by the board of directors of the fund manager.
Convertible Security which is not Traded
7.       The value of a security that is not traded on the stock exchange or in a regulated market, which
is convertible into a security that is traded on the stock exchange or in a regulated market, for a trading
day, is —
         (1) The price of the security into which it can be converted on that day less the additional
                                                   A-4


        conversion price; for this purpose, "additional conversion price" — an amount of money that is
        payable at the time of the conversion;
        (2) If the convertible security is a debenture - the value as aforesaid in paragraph (1) or the
        nominal value of the debenture plus interest and linkage differentials or exchange rate
        differentials that have been added to it under its terms of issue up to that day and that have not
        yet been paid, whichever is the higher.
Debenture Prior to Redemption
8.      (a) The value of a debenture in which trading has been stopped on account of an upcoming
redemption, for any trading day during the period subsequent to the cessation of the trading up to the
redemption date, is the last price plus the proportionate share of the difference; for this purpose -
        "The last price" – the value of the debenture in new shekels on the last trading day before
termination of the trading therein (hereinafter – the last trading day);
        "The proportionate share of the difference" – a sum that the ratio between it and the difference
is the same as the ratio between the number of days since the last trading day up to the day on which
the value is calculated and the number of days since the last trading day up to the redemption date of
the debenture;
        "The difference" – The difference between the last price and the consideration to be received on
the redemption date.
        (b) If a debenture as stated in sub-regulation (a) is linked to the index or to a currency rate, the
difference will be adjusted to the changes in the currency rate or the index, as the case may be.
        (c) In the event that the Fund Manger is unsure if a debenture as stated in sub-regulation (a)
will be redeemed on the date set under its terms, it will determine its value in accordance with the
board of directors' guidelines.
        (d) In the event of termination of the trading in part of a series of debentures, the provisions of
sub-regulations (a) to (c) shall apply to such part as the trading therein has been terminated, mutatis
mutandis.
        (e) In the event that the date of redemption of a debenture has passed and such debenture has
not been redeemed, or in the event of the occurrence of any event between the date of the termination
of the trading therein and the redemption date, which in the opinion of the fund manager requires the
determination for the debenture of a value other than the value as stated in sub-regulations (a) to (d),
the fund manager shall determine its value in accordance with the guidelines issued by the board of
directors.
Security whose Trading has Ceased
9.      The value of a security or a foreign security, for which three trading days have passed since the
trading therein ceased, shall be determined in accordance with the guidelines of the board of directors
of the fund manager.
Option
10.     (a) The value of an option traded in Israel is its effective price for that day; if no transactions
were made in an option on any day, its value for that day shall be determined in accordance with
guidelines that were issued by the board of directors of the fund manager; however, the value of an
option on the last day on which it is traded shall be the value of the amount that will be paid to the
holder thereof upon its expiry.
        (b) The value of an option traded on a stock exchange outside Israel for a trading day shall be
its average price for that day or for the trading day preceding that day, as the case may be, in
accordance with the provisions of sub-regulations 5(b) or (c).
Unit of a Fund
11.     (a) The value of a unit of a closed-end fund that is traded on the stock exchange in Israel,
which is held in the fund, is as set forth in regulation 4.
        (b) The value of a unit of an open-end fund for a trading day is as follows:
             (1) If it is held in a fund which is limited in terms of foreign securities – the price last
             determined for it prior to that trading day, as published on the website of the fund or that of
             the foreign fund manager, or on an international information distribution system for mutual
             trust funds; however, if no price was published for it during the last three trading days
             before that trading day, its value will be determined in accordance with the guidelines
             issued by the board of directors of the fund manager;
             (2) If it is held in a fund which is not limited in terms of foreign securities – its price for
             that trading day or for the first trading day subsequent to that trading day, in case of a unit
             of a foreign fund in which the appointed hour precedes the appointed hour in the fund, at
             that time, by at least four hours, as published on the website of the fund or that of the
                                                    A-5


             foreign fund manager, or on an international information distribution system for mutual
             trust funds; where no such price is published, its value will be determined in accordance
             with the guidelines issued by the board of directors of the fund manager; for this purpose,
             the "designated time" – in the fund – as defined in section 46(c) of the Law; in the foreign
             fund – within the meaning thereof in such section, mutatis mutandis.
        (c) The value of a unit which is held in a limited Israeli FoF, for a trading day, is as per the
definition of unit value in section 50(a)(2) of the Law -
             (1) for that day, if it is a unit of a fund which is limited in terms of foreign securities;
             (2) for the last trading day preceding that day, if it is a unit of a fund which is not limited
             in terms of foreign securities.
        (d) The value of a unit which is held in an unlimited Israeli FoF, for a trading day, is the value
of the unit as per the definition of unit value in section 50(a)(2) of the Law, for that day.
        (e) The value for a trading day of a unit held in a foreign FoF, is its price for that trading day
or for the first trading day subsequent to that trading day, in case of a unit of a fund managed in a
country whose time precedes Israel time, at that time, by at least four hours, as published on the
website of the fund or that of the foreign fund manager, or on an international distribution system
concerning information on mutual trust funds; where no such unit price is published, its price will be
determined in accordance with the guidelines issued by the board of directors of the fund manager.
Share Issued by A Hedge Fund
11A. The value of a share issued by a hedge fund held in a special fund, for a trading day, is the price
as set forth in regulation 3.A.(2)(a) of the Assets Regulations last published prior to that day, and if
purchased subsequent to the publication thereof - the price paid for the share upon its purchase for the
special fund.
Fixed-Term Deposit
12.     The value of a fixed-term deposit, for a trading day, is the amount that was deposited, plus the
amounts that would have been added to it under the terms of the deposit, had the deposit been
withdrawn on that day.
Value of Certificate of Indebtedness
12A. (a) The value of a certificate of indebtedness, for a trading day, is its adjusted value for that
day; in this context, "adjusted value for any day" – the price of the issuance of the certificate of
indebtedness, plus interest, rate differentials or discount fees accrued thereon, by such date, under the
issuance terms.
        (b) If the fund manager has any doubt that the certificate of indebtedness will be redeemed, its
value will be determined in accordance with the guidelines issued by the board of directors of the fund
manager.
Value in New Shekels
13.     (a) The value of a foreign security, option traded on a stock exchange outside Israel, a security
traded on the stock exchange in Israel in a foreign currency and a unit or share in a foreign fund, in
new shekels, shall be calculated by multiplying their value under these regulations by the
representative rate of the currency in which they are traded.
        (b) The value of the balances of foreign currency in new shekels is the amount obtained by
multiplying them by the representative rate of that foreign currency.
        (c) If an asset as set forth in sub-regulation (a) or (b) (in this regulation – foreign asset) is held
in the fund, which is denominated in a currency in respect of which the Bank of Israel does not
customarily publish a representative rate, its value will be calculated in new shekels, for any day, as
follows:
                                                    S×E×F
             Where:
             S - The value of the foreign asset, calculated pursuant to these regulations on such a day;
             E – The exchange rate of the currency in which the foreign asset is denominated in USD,
             published on an international distribution system on which the Bank of Israel publishes the
             exchange rate of the USD;
             F – The representative rate of USD on such a day.
        (d) If no representative rates are published, for any day whatsoever, but inter-bank trading did
take place on that day, the value of an asset as set forth in sub-regulations (a) to (c) shall be determined
in new shekels, by multiplying its value in the currency in which it is traded or denominated, as the
case may be, by the rate of such currency as determined by the fund manager, according to the inter-
bank data, on a date close to the date on which the Bank of Israel would have published the
representative rate, had it been published; the trustee shall approve the rate of the foreign currency
                                                   A-6


determined by the fund manager.
Liability in respect of Short Sale of Security and in respect of an Option
14 . The value of the liability, for a trading day, in respect of a short sale of a security by the fund
manager, for the fund, or in respect of an option which the fund manager created, for the fund, is the
value of the security or the option, as the case may be, for that trading day. However, the value of the
liability in respect of an option which the fund manager created, for the fund, on the last day on which
it is traded, will be equal to the amount to be paid to its holder upon its expiry.
Determination of Value in Special Cases
14A. In the event that a value is determined for an asset pursuant to these regulations, which, in the
opinion of the fund manager, drastically deviates from the anticipated value taking account of the
value at which it can be realized or the value determined for its underlying asset, as the case may be,
its value will be determined in accordance with the regulations issued by the board of directors of the
fund manager.
The Board of Directors' Guidelines
14B. (a) In the board of directors' guidelines as to the determination of the value of an asset held in
the fund under these regulations, the considerations to be taken into account when determining the
value of the asset shall be designated; the guidelines will be approved by the trustee, having ensured
that they determine a reasonable value for the asset, taking account of the circumstances known on the
date of such determination.
         (b) The board of directors will examine the guidelines issued by it under these regulations on a
quarterly basis and will issue new guidelines or will notify the general manager of the fund manager
that there has been no change in the guidelines, as the case may be.
         (c) Guidelines and notices as set forth in this regulation will be in writing; the board of
directors will transfer them to the general manager of the fund manager, and will attach the trustee's
written approval thereto.
     Chapter E: Transfer of Unit Price to a Fund and Redemption Price to a Distributor and a
                                            Unitholder


Days on which the sale or redemption amounts of a unit are to be transferred
15.    (a) The day on which an amount as stated in section 45 of the Law or an amount as stated in
section 46(b) of the Law shall be transferred on account of a unit in an open-end fund which was sold
or redeemed, as the case may be, is as follows:
            ( 1 ) In a fund according to whose investment policy the value of foreign securities that are
            held in it shall not exceed ten percent of the net value of its assets — the day on which the
            distributor is to transfer to the clearinghouse, under section 46(c)(1) of the Law, the order
            or the instruction that he received for the purchase or redemption of the unit, as the case
            may be;
            ( 2 ) In a fund according to whose investment policy the value of foreign securities that are
            held in it may exceed ten percent of the net value of its assets — the first trading day after
            the day stated in paragraph (1).
       (b) For this purpose, the date of crediting the fund’s account with the amount as stated in
section 45 of the Law for a unit that was sold, or the distributor’s account and the account of the
unitholder with the amount as stated in section 46(b) of the Law for a unit that was redeemed, as the
case may be, shall be regarded as the day on which the aforesaid amount was transferred.
Commencement
16      These regulations will take effect on Adar B 29, 5755 (March 31, 1995).



Heshvan 20, 5755 (October 25, 1994) Avraham (Beige) Shohat
                                      Minister of Finance
                                                   B-1


                                             Appendix B
Joint Investment Trust (Assets that may be Bought and Held by a Fund and their
                Maximum Amounts) Regulations, 5755 – 1994.
      By virtue of my authority under sections 59, 62(a) and 131(a) of the Joint Investment Trust
Law, 5754-1994, in accordance with a proposal of the Authority and with the approval of the Finance
Committee of the Knesset, I enact the following regulations:


                                        Chapter A: Interpretation
Definitions
1.      In these regulations -
        "FoF" or "Fund of Funds" – an Israeli FoF or a foreign FoF;
        "Foreign FoF" – an open-end fund, for which the fund agreement provides that it will be a
foreign FoF;
        "Israeli FoF" – an open-end fund, in respect of which the fund agreement provides
that it will be an Israeli FoF;
        "Rating of a debenture" – a rating determined for a debenture by a rating company, and in the
event of a debenture issued by a state where no rating has been determined therefor - a rating
determined for the state that issued it;
        "Rating company" – one of the companies set out in the table in the schedule;
        "Rating Table" – the table in the schedule, setting forth the required ratings under these
regulations with respect to debentures held in the fund, in accordance with the rating scales of various
rating companies;
        "Trading Day" – as defined in the Joint Investment Trust (Purchase and Sale Prices
of Fund Assets Value of Fund Assets) Regulations, 5755 – 1994;
        "Units Held" – units of an investee fund;
        "Units of a foreign fund" - including shares of a foreign fund;
        "Base Index" – the index whose rates of change constitute a target to be achieved by a tracking
fund;
        "Country of origin" – the country in which the foreign fund was established;
        "Issue price" of a security - its price according to its terms of issue;
        "Shares of a hedge fund" - including participation units issued by a hedge fund,
which is a partnership;
        "Trading system for institutional investors" - as defined in the stock exchange rules, in section
A of the trading guide, chapter C, article 5A;
        "Long-term rating scale" – a rating scale in accordance with which a rating company rates a
debt whose due date exceeds one year from its issuance date;
        "Short-term rating scale" – a rating scale in accordance with which a rating
company rates a debt whose due date does not exceed one year from its issuance date;
        "Average price" of a foreign security – (cancelled);
        "Price of a market maker" – (cancelled);
        "Market maker for a security" - a person who has undertaken to publish, during
each day on which there is trading on the stock exchange or the regulated market on
which the foreign security is traded, in accordance with rules determined by whoever is
entitled to determine them by law in the country where it is traded, a price at which he
undertakes to buy the security and a price at which he undertakes to sell the security;
        "Fixed-term deposit" - a deposit in a banking corporation which, according to the terms of its
deposit, is for a predetermined period exceeding one day and not exceeding thirty days;
        "Exchange Traded Fund" - a foreign fund designated to attain rates of changes similar to the
rates of change in a specific securities index, whose units are traded on the stock exchange or in a
regulated market outside of Israel;
        "Hedge Fund" – a corporation whose purpose is joint investment in securities that are traded on
the stock exchange or in a regulated market, purchase or creation of options and futures contracts or
short sale of securities, and joint generation of profits from all the foregoing, while the investment, the
purchase, the creation and the short sale as aforesaid, may be carried out at such rates and under such
terms as deviate from the rates and terms permitted to a mutual fund under the law in the country
where the corporation was established, including a fund of hedge funds;
                                                    B-2


        "Open-end foreign fund" – a foreign fund whose units are redeemable at the demand of a
unitholder, generally on any weekday from Monday to Friday;
        "Money Market Fund" - an open-end fund, for which the fund agreement provides
that it will be a money market fund;
        "Investee Fund" – a fund or foreign fund whose units are held in an FoF;
        "Tracking Fund" – as defined in the Joint Investment Trust (Classification of Funds for the
purpose of Publication), 5768 – 2007;
        "Foreign Fund" – (cancelled);
        "List of variables" – (cancelled);
        "Value of unit or share in a fund", "value of foreign currency", "value of a security", "value of a
foreign security", "value of fund assets", "value of deposit", "value of certificate of indebtedness" – as
defined in the Joint Investment Trust (Purchase and Sale Prices of Fund Assets Value of Fund Assets)
Regulations, 5755 – 1994;
        "Value of a series" of debentures – the value of the series to which the debenture belongs;
        "Continuous trading stage" the bilateral trading stage taking place on the stock exchange in
Israel, which is carried out continuously and in a computerized manner;
        The "trading opening stage" – the multilateral trading stage at which the first transactions of the
trading day take place and at which an opening rate is determined for each security;
        "Opening rate" – the rate determined for a security at the opening trading stage;
        "Banking corporation" - according to the meaning thereof in the Banking Law;
        "Certificate of indebtedness" – a commercial paper, within the meaning of section 1 of the
Securities Law, that is not traded on the stock exchange or in a regulated market, and whose
redemption date is not later than thirty days from its issuance date, and if not linked and bearing a
variable interest that is updated in accordance with a mechanism designated in its issuance terms -
whose redemption date is not later than ninety days from the issuance date thereof;
        The "Options Regulations" – The Joint Investment Trust (Options, Futures and Short Sales)
Regulations, 5761 – 2001;
        "Stock Exchange Rules" - Rules as stated in section 46 of the Securities Law.

                             Chapter B: Assets That May be Held by a Fund
Assets in an open-end fund
2.     A fund manager may buy and hold in an open-end fund managed by it, assets of such kinds and
under such terms as are set out below:
       ( 1 ) A security traded on the stock exchange in Israel, other than the trading system for
       institutional investors;
       ( 2 ) A foreign security traded on a stock exchange or a regulated market, provided that —
             (a) If it is traded on a regulated market —
                  ( 1 ) If it is not a security issued by a State — it was offered to the public in
                  accordance with a prospectus that was approved by whoever is entitled to approve it
                  in the state where the security is listed for trading;
                  ( 2 ) On fifty-five of the sixty trading days that preceded the day on which it was
                  bought, the prices of the foreign security were published on an international
                  information distribution system concerning securities (hereafter — information
                  system), and with regard to a foreign security that has been traded for less than sixty
                  trading days from the date on which trading commenced - prices of the security were
                  published on at least ninety per cent of the trading days since it began to be traded; for
                  this purpose – "prices of a security" — the purchase price and the sale price of a
                  security last published by an information system before the end of the trading day on
                  the market where the security is traded, which are based on the purchase and sale
                  prices of the security on that trading day, which were collected on the information
                  system from two market makers for the security or from at least two traders in
                  securities;
                  ( 3 ) In the event of a debenture — the value of its series is as the value in new
                  shekels of not less than one hundred million US dollars (in this regulation – minimum
                  value); in the event that the value of the series of the debenture is less than the
                  minimum value, the fund manager may continue to hold it in the fund, however, the
                  fund manager will not purchase additional debentures of the same series;
             (b) The foreign security that was bought is deposited for safekeeping in a manner that
             protects the right of the fund to the security to the satisfaction of the fund manager;
                                             B-3


( 3 ) An option and a futures contract satisfying the conditions laid down in regulation 2 of the
Options Regulations;
( 4 ) A security or a foreign security that its trading has not yet commenced, provided that it was
bought after its listing for trading was approved, either on the stock exchange, except for the
trading system for institutional investors, or in a regulated market, at a price that does not
exceed its issue price;
( 5 ) A security that is not traded on the stock exchange, which can be converted into a security
that is traded on the stock exchange, which complies with the following conditions:
      (a) Under the terms of the issue thereof, it may be converted, on at least one day in any
      period of thirty consecutive days;
      (b) The price that will be paid for it is not higher than one of the following, as the case
      may be:
            ( 1 ) Its issue price;
            ( 2 ) Its value when it was bought;
( 6 ) A debenture which is traded on the trading system for institutional investors, which
complies with the following conditions:
      (a) It is not convertible;
      (b) If it was issued by a reporting corporation, as defined in the Securities Law (in this
      paragraph - reporting corporation) – its rating is as set forth in the rating table for the
      purpose of this sub-paragraph, on either a short term or the long term rating scale, as the
      case may be;
      (c) If it was issued by a corporation which is not a reporting corporation – its
      rating is as set forth in the rating table for the purpose of this sub-paragraph,
      on either a short term or a long term rating scale, as the case may be;
      (d) There is at least one corporation that has obtained approval from the stock exchange
      in Israel to act as a market maker for the debenture, pursuant to stock exchange rules, and
      acts as a market maker therefor;
      (e) The value listed for trading on the trading system for institutional investors of the
      debentures belonging to the same series as the debenture (in this paragraph - the value
      listed for trading), is not less than seventy five million new shekels, provided that on the
      date of the listing of the said debentures for trading, the value listed for trading did not fall
      below one hundred and fifty million new shekels;
      (f) In the event of a change in the rating of a debenture while being held in the fund,
      where in consequence of such change the provisions of sub-paragraph (b) or (c), as the
      case may be, are no longer satisfied, or where the value listed for trading has decreased so
      that the condition set forth in sub-paragraph (e) is no longer satisfied in respect thereof, the
      fund manager may continue to hold such debenture in the fund, however, the fund manager
      may not continue to buy it for the fund;
( 7 ) A security which is traded on the stock exchange in Israel, the holder of which, pursuant to
the stock exchange rules, may not carry out any transaction or act in respect thereof for a
period, all in accordance with the rules, a security which is traded on the stock exchange in
Israel that the sale thereof is subject to limitations under section 15C(a)(1) of the Securities
Law and a security which is traded on the stock exchange or in a regulated market outside of
Israel, that the sale thereof is subject to statutory limitations, for a period that does not exceed
three months;
( 8 ) A certificate of indebtedness that satisfies any of the following:
      (a) The fund manager has an undertaking from the issuer to redeem the certificate of
      indebtedness not later than seven business days from receipt of a written demand to that
      effect from the fund manager, at such amount as equals the issue price plus -
            ( 1 ) The interest accrued thereon under its terms up to the date on which it is
            redeemed;
            ( 2 ) The proportionate share of the discounting charges, if issued at discount; for this
            purpose – "the proportionate share of the discounting charges" – a sum equal to the
            difference between the issue price of the certificate of indebtedness and its
            redemption price under its terms, multiplied by the ratio between the number of days
            that passed since the date of the issue of the certificate of indebtedness up to the
            redemption date as a result of the fund manager's demand, and the number of days
            between the issue date and the redemption date under its terms;
            ( 3 ) Rate differentials, if linked to a foreign currency, or linkage differentials, if
                                                     B-4


                    linked to the CPI, which accrue thereon up to the date on which it is redeemed;
              (b) Its rating is as set forth in the rating table for the purpose of this regulation, on a short
              term rating scale or where the rating of the issuing entity is as set forth in the rating table
              for the purpose of this regulation according to a long term rating scale; in the event of a
              change in the rating of a certificate of indebtedness or if the rating of its issuer is changed
              while being held in the fund, where in consequence of such change the provisions of this
              sub-paragraph are no longer satisfied, the fund manager will demand the redemption of the
              certificate of indebtedness from the issuer and will not be entitled to continue buying it for
              the fund;
        ( 9 ) Units of a closed-end fund whose manager is a company incorporated in Israel, provided
        that the closed-end fund is not managed by the fund manager of the fund purchasing the units
        of the closed-end fund, as well as units of a foreign fund;
        ( 10 )      Foreign currency;
        ( 11 )      Cash;
        ( 12 )      A fixed-term deposit;
        ( 13 )      A security or a foreign security that was delisted from trading on a stock exchange or
        in a regulated market, provided that it was bought in a period when it was traded on the stock
        exchange or in the regulated market; for this purpose, the limited period of time in which
        trading in the security was restarted, prior to its being delisted, shall not be regarded as a period
        during which it was being traded.
Assets in a money market fund
2A.           (a) Notwithstanding the provisions of regulation 2, a fund manager may only
buy and hold in a money market fund managed by it, assets of such kinds and under such
terms as are set out below:
              ( 1 ) A debenture traded on the stock exchange or in a regulated market, which is only
              linked to a currency rate, the remaining period of which, up to its redemption date, does
              not exceed one year, and if issued other than by the state - its rating is as set forth in the
              rating table for the purpose of this regulation, in accordance with a long term rating scale;
              ( 2 ) A debenture traded on the stock exchange or in a regulated market, which
              is only linked to a currency rate, bearing a variable interest whose rate is
              determined every six months or less, and if issued other than by the state - its
              rating is as set forth in the rating table for the purpose of this regulation, in
              accordance with a long term rating scale;
              ( 3 ) A short term loan issued by the state, which is traded on the stock exchange, whose
              remaining period, up to its redemption date, does not exceed one year;
              ( 4 ) A certificate of indebtedness which is only linked to a currency rate, which satisfies
              the provisions of regulation 2(8)(a), and whose rating is as set forth in the rating table for
              the purpose of this regulation, under a short term rating scale;
              ( 5 ) A fixed-term deposit;
              ( 6 ) A debenture traded on the stock exchange or in a regulated market, which
              is only linked to a currency rate, whose remaining period, up to its redemption
              date, exceeds one year, if it is redeemable at least once in a six-month period,
              its redemption or conversion terms cause its fluctuation to be similar to that of
              a debenture as set forth in sub-paragraph (1) and whose rating is as set forth in
              the rating table for the purpose of this regulation, in accordance with a long
              term rating scale;
              ( 7 ) Cash.
        (b) Where a fund holds assets which are linked to a currency rate, all such assets will be linked
to the same currency; fixed term deposits and cash held in the fund will be in the same currency and
no unlinked assets will be held therein.
        (c) Where a fund holds assets which are not linked to a currency rate, it will hold fixed term
deposits and cash in new shekel only.
        (d) The average lifetime of all assets held in the fund shall at no time exceed ninety days; for
the purpose of calculating the average lifetime of all the fund assets, the average lifetime of each type
of asset will be calculated as follows:
        Debenture, including a short term loan and a certificate of indebtedness – in the customary
        manner for its measurement;
        Fixed term deposit – the period of time remaining up to the date on which it may be withdrawn,
        under the terms of its deposit;
                                                   B-5


       Cash - 0.
Assets in an Israeli FoF
2B. Notwithstanding the provisions of regulation 2, a fund manager may only buy and
hold in an Israeli FoF managed by it, assets of such kinds and under such terms as set out
below:
       ( 1 ) Units of an open-end fund managed by it, a fixed term deposit and cash;
       ( 2 ) The total value of the units held by it will not fall below seventy five percent of the net
       value of its assets;
       ( 3 ) The fund held by it will not be a fund of funds.
Assets in a foreign FoF
2C. Notwithstanding the provisions of regulation 2, a fund manager may only buy and
hold in a foreign FoF managed by it assets of such kinds and under such terms as are set
out below:
       ( 1 ) Units of an open-end foreign fund, a fixed term deposit and cash;
       ( 2 ) The total value of the units held by it will not fall below seventy five percent
       of the net value of its assets;
       ( 3 ) A fund held in a foreign FoF will comply with the following conditions:
             (a) Its units are offered to the public in the country of origin under a prospectus approved
             by the entity duly authorized in that country to do so, and the prospectus satisfies at least
             one of the following:
                  ( 1 ) It is published not less than once every twelve months;
                  ( 2 ) Under the law in the country of origin, the fund manager must update it with any
                  change in the material issues contained therein;
             (b) Its units were offered to the public in the country of origin for at least twelve months
             prior to the purchase thereof for the foreign FoF;
             (c) The prices of its units are determined in accordance with the value of the assets held
             therein, and they are published on the fund's website or on that of the fund manager on the
             Internet or in an international mutual fund information distribution system, in respect of
             each day on which trading takes place on stock exchanges in the country of origin;
             (d) The value of the units of the fund, according to the information last published on the
             website of the fund or on that of the fund manager on the Internet or in an international
             mutual fund information distribution system, does not fall below the value in new shekel
             of USD five million (in this regulation - minimum value);
       ( 4 ) In the event that the value of units of a fund held in a foreign FoF falls below the minimum
       value, the manger of the foreign FoF will not continue to buy units of such investee funds, and
       where the value of the units falls below such value for a period of three consecutive months, the
       fund manager will redeem the units of the investee fund within one month from the end of such
       period, other than if the value of the units has risen during the month above the minimum
       value;
       ( 5 ) In the event that prices of units of a fund held in a foreign FoF are not published for more
       than seven trading days within a period of two months, the manager of the foreign FoF will
       redeem the units of the investee fund within one month from the end of the seventh trading day
       on which the price of the units was not published.
Assets in a closed-end fund
3.     A fund manager may hold in a closed-end fund managed by it assets of such kinds
and under such terms as are set out in regulation 3, as well as a fixed term deposit in a banking
corporation in Israel for a period exceeding thirty days.
Assets in a special fund
3A. A fund manager may buy and hold in a special fund managed by it -
       ( 1 ) Assets as set forth in regulation 3;
       ( 2 ) A share of a hedge fund, subject to satisfaction of all the following:
             (a) The share price is published on predetermined dates, at least once a month, by a
             corporation which is engaged, inter alia, in publishing prices of shares of hedge funds
             according to data received from managers of hedge funds;
             (b) The share is redeemable on predetermined dates, and at least once every
             three months;
             (c) The fund manager has current information on the investment policy of the hedge fund
             or on the composition of its assets.
                                                      B-6


Restriction on assets in a fund
4.     Notwithstanding the provisions of regulations 2 and 3, a fund manager shall not hold in a fund
managed by it a security issued by the fund manager or the trustee.
Deposit of certificates of indebtedness in the clearinghouse of the stock exchange
4A.         Certificates of indebtedness issued by a corporation that was incorporated in Israel will be
deposited in the clearinghouse of the Tel Aviv Stock Exchange.

                                 Chapter C: Maximum Amounts for Assets
Maximum amount for securities of a corporation or a state
5.       (a) The value of securities, foreign securities and shares of an exchange traded fund issued by
a corporation, which are held by a fund, shall not exceed ten percent of the net value of the fund’s
assets.
         (a1)       Notwithstanding the provisions of sub-regulation (a), in a tracking fund that
according to its investment policy, at least 90 percent of its assets are securities that are included in its
base index, the rate of the securities issued by a corporation, which are held by the fund, of the net
value of the fund's assets, shall not exceed the weighting of the corporation in the base index of the
fund plus two percentage points, and shall not exceed 20 percent; for this purpose -
         "The weighting of a corporation in the base index" – the weighting attributed to the corporation
for the purpose of calculating the changes in the base index;
         "Percentage point" – one percent of the net value of the Fund’s assets;
         (b) The value of debentures issued by a state other than the State of Israel or an international
organization as defined in the Immunities and Rights (international Organizations and Special
Missions), 5743 – 1983, which are held by a fund -
              ( 1 ) Shall not be limited, if the rating of the debentures is as set forth in the rating table for
              the purpose of this regulation, in accordance with a long term rating scale or a short term
              rating scale, as the case may be;
              ( 2 ) Shall not exceed forty percent of the net value of the fund's assets, if the
              rating of the debentures is as set forth in the rating table for the purpose of this
              regulation, in accordance with a long term rating scale or a short term rating
              scale, as the case may be;
However, if the rating of a debenture is changed at the time that it is held by the fund, and where in
consequence of such change the provisions of paragraphs (1) or (2) are no longer satisfied, the fund
manager may continue to hold same in the fund; however, the fund manager will not be entitled to buy
it for the fund.
Maximum amount of the listed trading value
6.       (a) The value of a security, excluding a debenture, and the value of a foreign security,
excluding a debenture, held by a fund, shall not exceed five percent of the amount listed for trading of
that security or foreign security, multiplied by its value at the end of the trading day (in this regulation
— listed trading value).
         (a1)       The value of a debenture, including a foreign security, which is held by a fund shall
not exceed ten percent of the listed trading value of that debenture.
         (b) The value of a security, excluding a debenture, and the value of a foreign security,
excluding a debenture, which is held by funds managed by the fund manager, shall not exceed fifteen
percent of the listed trading value of such security.
         (b1)       The value of a debenture, including a foreign security, which is held by
funds managed by the fund manager, shall not exceed twenty five percent of the listed
trading value of that debenture.
         (c) For the purpose of this regulation, securities or foreign securities of different series shall be
deemed as different securities.
Maximum amount for options
6A.           The value of options held by the fund shall not exceed the rates provided in regulations 3
and 4 of the Options Regulations.
Maximum amount for certificates of indebtedness
6B. (a) The value of certificates of indebtedness held by a fund shall not exceed five percent of the
net value of the fund's assets and in a money market fund - twenty five percent of the net value of the
fund's assets.
         (b) The value of certificates of indebtedness issued by any corporation which are
held by a money market fund shall not exceed two and a half percent of the net value of
the fund's assets.
                                                   B-7


        (c) In the event that the value of the certificates of indebtedness held by a fund exceeds the
rates set forth in sub-regulations (a) or (b) for seven consecutive trading days, a deviation from such
rates shall not be treated as a violation of the provisions of this regulation, where the fund manager has
demanded from the issuer of the certificates of indebtedness, on the first trading day following the
lapse of such period, redemption of the certificates of indebtedness at such value as shall reduce the
rate thereof to the permitted rates.
7.      (Cancelled).
Maximum amount for nontraded assets
8.      (a) The value of debentures as set forth in regulation 2(2)(a)(3), the value of whose series is
less than the minimum value, as defined in regulation 2(2)(a)(3), for a period of at least three months
together with the value of assets as set forth in regulation 2(4) to (7) which are held by a fund shall not
exceed five percent of the net value of the fund's assets, and the value of fixed term deposits as set
forth in regulation 2(12) shall not exceed five percent as aforesaid.
        (b) The value of fixed term deposits together with the value of certificates of indebtedness
shall not exceed -
              ( 1 ) Five percent of the net value of the assets of a fund which is not a money market
              fund;
              ( 2 ) Twenty five percent of the net value of the assets of a money market fund.
        (c) In the event that the value of fixed term deposits together with the value of certificates of
indebtedness in a money market fund exceeds the rate set forth in sub-regulation (b)(2), this will not
be treated as violation of the provisions of this regulation where such value has been reduced to the
permitted valued, within seven business days.
Maximum amount for units in a fund that is not an FoF
9.      In a fund which is not a fund of funds -
        ( 1 ) The value of units of closed-end funds together with the value of foreign funds that are not
        exchange traded funds which are held therein, shall not exceed fifteen percent of the net value
        of its assets;
        ( 2 ) The value of units of a closed-end fund or a foreign fund which is not an exchange traded
        fund, that are held therein, will not exceed five percent of the net value of its assets.
Maximum amount for units in an FoF
9A.           (a) The value of units of an investee fund shall not exceed 25% of the net
value of the assets of a fund of funds.
        (b) The value of units of a fund held by an Israeli FoF shall not exceed 25% of the
net value of the assets of the investee fund.
Maximum amount for units in a fund that is not an FoF
9B. (a) A manager of a special fund shall not purchase shares issued by a hedge fund so that in the
wake of the purchase the value of -
              ( 1 ) the shares issued by the hedge fund held by the fund on the purchase date will exceed
              five percent of the net value of the assets of the special fund;
              ( 2 ) all shares issued by hedge funds held by the fund on the purchase date will
              exceed thirty percent of the net value of the assets of the special fund.
        (b) For the purpose of sub-regulation (a), the holding of a fund of hedge funds (FOHF) by the
special fund shall be treated as the holding of each of the hedge funds held by the FOHF.
        (c) In the event that the value of the shares that were issued by a hedge fund or that were
issued by hedge funds which are held by a special fund, exceeds, on any day, the rates set forth in sub-
regulation (a), the manager of the special fund shall adopt measures as set forth below, until such time
as such rate is reduced to the permitted rate:
              ( 1 ) Will not continue to buy shares issued by a hedge fund;
              ( 2 ) Will redeem shares issued by a hedge fund or issued by hedge funds that are held by
              the special fund, on the first redemption date of these shares after such date.
10.     (Cancelled).
Maximum amount for fixed term deposits
11.     The value of fixed term deposits shall not exceed forty five percent of the net value
of the assets of a closed-end fund.
Maximum amount for deposits and cash
11A. (a) The value of cash and fixed term deposits shall not exceed fifty percent of the net value of
the assets of a fund; the provisions of this regulation shall not apply during the first forty five days
subsequent to the date on which the units of the fund were first offered to the public.
        (b) Where the value of the cash and fixed term deposits in a fund exceeds the said rate, this
                                                  B-8


shall not be treated as violation of the provisions of sub-regulation (a), if the cumulative number of
days on which the value exceeds such rate does not exceed one hundred and eighty in the course of
twelve months.
       (c) The value of cash and fixed term deposits that are deposited in any bank shall not exceed,
except during a period of forty five days subsequent to the initial offering of the units to the public,
twenty five percent of the net value of the fund's assets.
       (d) Where the value of cash and fixed term deposits that are deposited in any bank
exceeds the said rate, this shall not be treated as a violation of the provisions of sub-
regulation (c), if the cumulative number of trading days on which the value exceeds such
rate does not exceed twelve in the course of twelve months.
12.    (Cancelled).

           Chapter D: Terms to be complied with in an Israeli FoF and in a foreign FoF
Terms to be complied with in an Israeli FoF and in a foreign FoF
12A. (a) No fee or supplement within the meaning of section 42(c) of the Law shall be paid from
the assets of an Israeli FoF to the manager of the FoF.
       (b) No supplement for purchase or redemption of units held shall be paid from the assets of a
foreign FoF, at a rate exceeding a half percent of the price of the purchased unit. .

                                       Chapter E: Various Provisions
A fund the price of whose units is calculated twice a day
13.     Notwithstanding the provisions of these regulations, in an open-end fund that the prices of its
units are calculated twice on a trading day -
        ( 1 ) The fund manager shall neither purchase for the fund nor hold therein securities that are
        registered for trading on a stock exchange in Israel that are not traded both at the opening
        trading stage and at the stage of continuous trading;
        ( 2 ) The fund manager shall not purchase, hold or create for the fund options or futures
        contracts that are listed for trading on a stock exchange in Israel;
        ( 3 ) The value of the foreign securities held by a fund, including options traded
        outside of Israel, and cash in foreign currency, will not exceed ten percent of the
        net value of the fund's assets.
Repeal
14.     The following regulations are repealed -
        ( 1 ) Joint Investment Trust (Acquisition of Foreign Securities) Regulations, 5749 - 1989;
        ( 2 ) Joint Investment Trust (Holding of Foreign Currency) Regulations, 5741 - 1980;
Commencement
15.     These regulations will take effect on Adar B 29, 5755 (March 31, 1995).
                                                           B-9


                                                     Addendum
                                                    (Regulation 1)
                                                    Rating Table
    Rating Company:          Maalot1           Midroog2     MOODYS 3          FITCH 4              S&P 5

                                              On a long-term rating scale
Rating of a debenture    AA or a higher        Aa2 or a     A2 or a           AA or a          AA or a higher
for the purpose of       rating                higher       higher rating     higher rating    rating
regulations 2A(1),                             rating
2A(2) and 2A(6)
Rating of a debenture    -A or a               A3 or a      A3 or a           -A or a higher   -A or a higher
for the purpose of       higher rating         higher       higher rating     rating           rating
regulation 2(6)(b)                             rating
Rating of a              A or a                A2 or a      A2 or a           A or a higher    A or a higher
debenture for the        higher rating         higher       higher rating     rating           rating
purpose of                                     rating
regulation 2(6)(c)
Rating of the issuer     -A or a               A3 or a      A3 or a           -A or a higher   -A or a higher
of a debenture for       higher rating         higher       higher rating     rating           rating
the purpose of                                 rating
regulation 2(8)(b)
Rating of a                                                 Aa2or a           AA‫ א‬or a         AA or a higher
debenture for the                                           higher rating     higher rating    rating
purpose of
regulation 5(b)(1)
Rating of a                                                 Lower than Aa2    Lower than       Lower than AA
debenture for the                                           but not lower     AA but not       but not lower
purpose of                                                  than Baa2         lower than       than BBB
regulation 5(b)(2)                                                            BBB

                                       On a short-term rating scale
Rating of a              A-2 or a         P2 or a         P-2 or a higher    F2 or a       A-2 or a higher rating
debenture for the        higher           higher rating   rating             higher
purpose of               rating                                              rating
regulation 2(6)(b)
and rating of a
certificate of
indebtedness for
the purpose of
regulation 2(8)(b)
Rating of a              A-1 or a         P2 or a         P-2 or a higher    F1            A-1 or a higher rating
debenture for the        higher           higher rating   rating
purpose of               rating
regulation 2(6)(c)
Rating of a              A-1 or a         P1 or a         P-1 or a higher    F1 or a       A-1 or a higher rating
certificate of           higher           higher rating   rating             higher
indebtedness for         rating                                              rating
the purpose of
regulation 2A(a)(4)
Rating of a              -                -               P-1                F1            A-1+
debenture for the
purpose of
regulation 5(b)(1)
Rating of a              -                -               Lower than P-      Lower         Lower than A-1+ but
debenture for the                                         1 but not          than F1       not lower than A-3
purpose of                                                lower than P-3     but not
regulation 5(b)(2)                                                           lower than
                                                                             F3

             Heshvan 20, 5755 (October 25, 1994)                              Avraham (Beige) Shohat
                                                                              Minister of Finance




1
    Maalot - The Israel Securities Rating Company Ltd. (hereinafter: Maalot).
2
    Midroog Ltd. (hereinafter: Midroog).
3
    Moodys Investor Services.
4
    Fitch IBCA International Rating Agency.
5
    Standard & Poors Corporation (S&P).
                                              B1-1



                                        Appendix B1

     The Joint Investment Trust (Options, Futures and Short Sales) Regulations,
                                   5761 – 2001;



      By virtue of my authority under sections 59, 62, 63, 64, 79 and 131(a) of
the Joint Investment Trust Law, 5754-1994 (hereinafter – the "Law"), in
accordance with the proposal of the Authority and with the approval of the
Finance Committee of the Knesset, I enact the following regulations:
Definitions
1.       In these regulations -
        "Option", "future contract", "exercise price", "underlying asset" – within the meaning
of section 64(b) of the Law;
      "Euro 1 Option" – a Call option whose underlying basis is the rate of the Euro in New
Shekels and whose exercise price is one New Shekel;
     "Dollar 1 Option" – a Call option whose underlying basis is the rate of the
USD in New Shekels and whose exercise price is one New Shekel;
       "Sale Option" – an undertaking conferring on its holder the right to sell the underlying
asset at the exercise price, or to receive the difference between the value of the underlying
asset and the exercise price, under such terms and on such dates as are set out in the terms of
the option;
        "Purchase option" – a security conferring on its holder the right to purchase from the
offeror securities at the exercise price, on such date and under such terms as were determined
on its issuance date;
      "Call option" – an undertaking conferring on its holder the right to
purchase the underlying asset at the exercise price, or to receive the difference
between the value of the underlying asset and the exercise price, under such
terms and on such dates as are set out in the terms of the option;
      "Tik Tel Aviv 25 Option" – a call option whose underlying basis is the Tel
Aviv 25 Index and its exercise price is one New Shekel;
       "Required collateral" – a sum in cash which is required by the stock exchange
clearinghouse from a stock exchange member in respect of activity in derivatives which is
identical to the activity in derivatives of the fund manager on the same stock exchange or
such sum which is designated to ensure the fund manager's compliance with its undertaking
to purchase a debenture within the framework of a resale transaction;
         " Investment committee" – within the meaning thereof in section 20 of the Law;
         “Trading Day” -
             ( 1 ) With regard to a fund in which, according to its investment policy, the value
             of the foreign securities held therein, including options traded outside Israel
             (hereafter — foreign securities), shall not exceed ten percent of the net value of
             its assets — a day on which trading takes place on the stock exchange in Israel;
             ( 2 ) With regard to any other fund — each of the days Monday to Thursday on
             which trading takes place on the stock exchange in Israel and on stock exchanges
             and regulated markets outside Israel on which foreign securities that are held by
             the fund, were bought, including any of the aforesaid days on which no trading
                                             B1-2


            took place on a stock exchange outside Israel or on a regulated market outside
            Israel, if the value of the foreign securities that were bought thereon which are
            being held by the fund, does not exceed ten percent of the net value of the fund's
            assets;
        "Option Warrant" – a security that confers on the holder thereof the right to buy
securities that were issued by the offeror, in return for an amount that is payable at the time
of the purchase, on the date and on the terms stipulated in the prospectus;
         "Tel-Aviv 25 index", "Tel-Aviv 100 index" — as defined in the Stock Exchange
Rules;
         "Degree of exposure" - Any one of the following:
            ( 1 ) With regard to a debenture – the value of a debenture that does not create
            exposure to shares which are held in the fund, together with the value of the
            assets and the liabilities which is commensurate with the activity in derivatives of
            a debenture and of interest rates, which is determined in the manner customary
            for the measurement thereof;
            ( 2 ) With regard to shares or foreign currency - the value of shares or
            foreign currency, as the case may be, which are held in the fund,
            together with the value of the assets and the liabilities which is
            commensurate with the activity in their derivatives, and which is
            determined in the manner customary for the measurement thereof;
        "Underlying asset of an option warrant", "underlying asset of a purchase option" —
securities in which the right to buy them is conferred in the option warrant or the purchase
option, as the case may be, in an amount stipulated in their terms of issue;
       "Resale transaction" – a resale transaction in securities as defined in the Financial
Assets Agreements Law, 5766 – 2006;
       "Activity in derivatives" – purchase and creation of options and futures contracts,
including an undertaking to sell or purchase an asset within the framework of a resale
transaction, and the short sale of securities;
      "Leveraged Fund" - a fund in respect of which, the fund agreement
provides that it will be a leveraged fund;
       "Value of an option", "value of a security" – within the meaning of the
Joint Investment Trust (Purchase and Sale Prices of Fund Assets Value of Fund
Assets) Regulations, 5755 – 1994;
         "Exposure rate" - Any one of the following:
            ( 1 ) With regard to debentures - the degree of exposure to debentures
            out of the net value of the fund's assets;
            ( 2 ) With regard to shares or foreign currency - the degree of exposure
            to shares or foreign currency, as the case may be, out of the net value
            of the fund's assets;
       "Total exposure rate" – all the following: The absolute value of exposure rate
to shares, the absolute value of exposure rate to foreign currency and the absolute value of
the exposure rate to debentures;
     "Stock Exchange Rules" - Rules as stated in section 46 of the Securities
Law, 5728 – 1958;
       "Last trading period" - the last three months that preceded the date of the purchase,
creation, loan or short sale, as the case may be, of the security or foreign security, option or
future contract, or a period that began, for each one of these, on the date when it began to be
traded, whichever is the shorter period of the two.
                                             B1-3


Option and futures contracts, which may be bought and created
2.   A fund manager may buy and create an option and a future contract for a fund
managed by it, provided that both of the following are fulfilled:
       ( 1 ) The options and the futures contracts are traded on a stock exchange in Israel or
       on a stock exchange outside Israel;
       ( 2 ) If the options or the futures contracts are traded outside Israel — on at least
       ninety percent of the days during the last trading period, on which trading took place
       on the stock exchange on which they are traded, purchase prices and sale prices were
       published for them at the end of the trading day; for this purpose —
            "Purchase and sale prices that were published at the end of the trading day" —
            purchase prices and sale prices that were published by the stock exchange on
            which the options or the futures contracts are traded, or that are published in an
            international system of options and futures conformation, provided that the
            purchase and sale prices that are published in the aforesaid distribution system
            are not the purchase and sale prices of one market maker;
            "Price of a market maker" — the price at the end of a trading day, at which a
            market maker for a foreign security undertakes to buy it and a price as aforesaid
            at which he undertakes to sell it.
A resale transaction
2A.         A fund manager may create for a fund managed by it, an undertaking to purchase
or sell in the future a debenture which is traded on the stock exchange that is not a
convertible debenture, within the framework of a resale transaction, in such quantity, on such
date and under such terms as are set forth in the undertaking, provided that the following
conditions are satisfied:
       ( 1 ) The date designated for performance of the undertaking is not later than thirty
       days from the date on which the resale transaction was performed;
       ( 2 ) The debentures will be cleared via the stock exchange clearinghouse.
       ( 3 ) The value of the debentures that the fund manager undertook to sell shall not
       exceed, upon the entering into the resale transaction, ten percent of the value of the
       fund's assets.
Maximum value for options on a security issued by a corporation
3.    The total value of the assets set forth in paragraph (1) or (3) 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's assets:
       ( 1 ) Call options, option warrants and purchase options which are held in
       the fund and sale options which the fund manager created for the fund;
       ( 2 ) Sale options which are held in the fund and call options which the
       Fund Manager created for the fund.
Maximum value for options
4.      The value of options held in the fund shall not exceed ten percent of the net value of
the fund's assets, and in a leveraged fund — thirty percent of the aforesaid value; the value of
options, together with the value of option warrants and the value of purchase options, which
are held by a fund, shall not exceed twenty percent of the net value of the fund's assets, and
in a leveraged fund — forty percent of the aforesaid value; for the purpose of the provisions
of this regulation, Tik Tel-Aviv 25 options, Euro 1 options and Dollar 1 options shall not be
taken into account
Short sale of securities
5.     (a) A fund manager may sell short, for a fund managed by it, a security or a foreign
security which is traded on a stock exchange or a regulated market, provided that if it is not a
                                              B1-4


security that is included in the Tel-Aviv 100 index and it is not a short-term loan or
debenture issued by the State, a transaction was made with it on the stock exchange or the
regulated market on at least ninety percent of the days in the last trading period on which
there was trading of securities on the stock exchange or the regulated market.
       (b) The value of a security or a foreign security issued by a specific corporation,
which a fund manager sold short for the fund, shall not exceed, at any time, one half of a
percent of the registered trading value of the security, and the value of all the securities and
foreign securities issued by a specific corporation, which a fund manager sold short for the
fund, shall not exceed, at any time, three percent of the net value of the fund’s assets.
Maximum exposure rate
5A. (a) The absolute value of the exposure rate of a fund that is not a leveraged fund, to
shares, foreign currency or debentures shall at no time exceed 200%
      (b) The overall exposure rate of a fund that is not a leveraged fund, shall at no time
exceed 400%.
       (c) The absolute value of the exposure rate of a fund to securities issued by a specific
corporation shall at no time exceed the rate of the value of such securities as are permitted to
be held in a fund under regulation 5 of the Joint Investment Trust (Assets that may be
Bought and Held by a Fund and their Maximum Amounts) Regulations, 5755 – 1994, out of
the value of the fund's assets.
Encumbrance of securities
6.    A fund manager may encumber any of the fund's assets for the purpose of
creating an option, purchasing or creating a future contract or for a short sale of
a security for a fund managed by it.
       Taxable in Israel - on the date of payment.
Restriction on rate of collateral
7.      (a) Activity in derivatives will be carried out by the fund manager so that the value
of all collateral required in respect of such activity shall at no time exceed twenty percent of
the net value of the fund's assets, and in a leveraged fund – forty percent of such value
(hereinafter - the permitted rate).
       (b) Where the value of the collateral exceeds the permitted value, this will not be
treated as a violation of the provisions of sub-regulation (a), subject to the satisfaction of the
following two conditions:
            ( 1 ) The value of the required collateral has fallen to the permitted
            rate by the end of the second day for calculating prices after the day on
            which the value exceeded the permitted rate;
            ( 2 ) The value of the required collateral did not exceed the permitted
            rate more than five times in a period of twelve months.
Loan of a security and a foreign security
8.   A fund manager may lend a security or a foreign security from the assets of a fund
managed by it, provided that the following conditions are fulfilled:
       ( 1 ) If the security is traded in Israel and is not included in the Tel Aviv 100 index or
       is not a short-term loan or a debenture issued by the State, or if it is a foreign security
       — a transaction was made with it during the last trading period on the stock exchange
       on which it is traded or on the regulated market on which it is traded on at least ninety
       percent of the days on which trading in securities took place on them;
       ( 2 ) If the security is traded in Israel — it was loaned to a member of the Tel-Aviv
       Stock Exchange, and if it is a foreign security — it was loaned through a person who
       holds the foreign securities that are included in the fund’s assets;
                                               B1-5


       ( 3 ) The fund manager has an undertaking of the member of the stock exchange to
       whom the security was loaned, or an undertaking of the person through whom the
       foreign security was loaned, to act as follows:
            (a) To return to the fund the security or the foreign security that was loaned, in
            the amount that was loaned, at the end of the loan period or, if it was so agreed
            between the parties — to return it to the fund on the demand of the fund manager
            before the end of the loan period;
            (b) To give the fund every right or benefit to which the fund would have been
            entitled had it not loaned the security or the foreign security, except for the right
            to vote at the general meeting, on the date when it would have been entitled
            thereto;
       ( 4 ) A fund manager shall transfer to the fund any consideration that was paid for the
       loan of a security or a foreign security.
Return of securities and foreign securities before the end of the loan period
9.     The value of all the securities and foreign securities that were loaned, for which the
fund manager does not have an undertaking to return them to the fund before the end of the
loan period, immediately after a demand to return them is received from the fund manager,
shall not exceed, at the time of making any loan transaction, ten percent of the net value of
the fund’s assets; for this purpose, "immediately" — no later than the first day after the day
on which the demand of the fund manager was received, on which trading takes place on the
stock exchange or regulated market on which they are traded.
Guidelines of the investment committee
10.     (a) A fund manager shall not buy or create options or futures contracts nor sell
securities short for a fund managed by it nor lend securities from the assets of a fund
managed by it, except in accordance with the guidelines of the investment committee, to be
given in writing to the general manager of the fund manager, in the following matters:
            ( 1 ) The maximum amount of options that may be held in the fund;
            ( 2 ) The underlying assets of options and futures contracts which a fund
            manager may buy or create for the fund;
            ( 3 ) The maximum amount of collateral which the fund manager will be entitled
            to provide for options that it will create, futures contracts that it will buy or create
            and securities that it will sell short for the fund;
            ( 4 ) Types of securities which the fund manager may lend from the assets of the
            fund, the maximum amounts thereof and the consideration for the loan;
            ( 5 ) Types of securities which the fund manager may sell short, and their
            maximum amounts;
            ( 6 ) The maximum exposure rate of the fund to any one of the
            following: Shares, foreign currency and debentures as well as the fund's overall
            exposure rate.
        (b) For the purpose of this regulation, "maximum amount" — the value of options,
the value of collateral or the value of the securities, as the case may be, out of the net value
of the fund's assets.
        (c) The investment committee shall monitor, at each of its meetings, the manner in
which its guidelines are carried out by the general manager of the fund manager, and it shall
consider the possible effects of options and futures contracts that the fund manager will buy
and create and of securities that it will sell short, on the yield of the fund and the fluctuations
in unit and redemption prices.
     (d) The investment committee shall determine, in writing, which data the fund
manager shall provide to it with regard to the options held by the fund, futures contracts
                                           B1-6


which the fund manager bought or created for the fund, securities which were sold short and
securities from the fund assets which were loaned, and the general manager shall provide
these to it for each of its meetings.
Repeal
11.   The Joint Investment Trust (Options, Option Warrants, Futures and Short
Sales) Regulations, 5755 – 1995 – are repealed.
Commencement
12.    These regulations shall take effect within thirty days from the date of their
publication.


Tevet 21st, 5761 (January 16th, 2001)
                                                       Avraham (Beige) Shohat
                                                       Minister of Finance
                                                C-1




                                          Appendix C

 Joint Investment Trust (Transactions that may Involve a Conflict of Interests,
   Substantial Transactions and Off-Floor Transactions) Regulations, 5755 –
                                     1995
       By virtue of my authority under sections 18(6) and 131(a) of the Joint Investment
Trust Law, 5754-1994 (hereinafter – the "Law"), in accordance with the proposal of the
Authority and with the approval of the Finance Committee of the Knesset, I enact the
following regulations:
Definitions
1.    In these regulations, "value of a security" – within the meaning in Chapter
D of the Joint Investment Trust (Purchase and Sale Prices of Fund Assets Value
of Fund Assets) Regulations, 5755 – 1994;
       "Related issue" – the purchase of a security under a public offering pursuant to a
prospectus, in accordance with which a person holding at least 5% of the shares issued by a
fund manager or issued by a company that engages the fund manager in the management of
the fund's investment portfolio or a company controlled by such a person, are the offeror of
the security or one of the underwriters for the issue;
        "Purchase of a security under a public offering pursuant to a prospectus" – including
the purchase of a security under the offering on the eve of the publication of the prospectus
to the investors enumerated in the first schedule to the Securities Law.
Transactions that may involve a conflict of interests
2.     Transactions of the kinds set out below, which are entered into by a fund manager for
a fund managed by it, are transactions that may involve a conflict of interests:
       ( 1 ) A purchase of securities, excluding a short-term loan, in off-floor transactions or
       in coordinated transactions from another fund managed by it, on one day, when the
       value of the securities that are purchased, at the time they are purchased, is at least
       50,000 New Shekels or at least one percent of the net value of the assets of the
       purchasing fund, whichever is the lower;
       ( 2 ) Purchase of securities in a related issue;
       ( 3 ) A purchase, in an off-floor transaction or in a coordinated transaction, from a
       person who holds at least five percent of the shares issued by the fund manager, or
       from a company controlled by a person as aforesaid, who are investment portfolio
       managers for others, of a security held in a portfolio managed by them, or a sale, in an
       off-floor transaction or in a coordinated transaction, to a person as aforesaid, of a
       security for the purpose of including it in a securities portfolio managed by them.
Substantial transactions
3.   Transactions of the kinds set out below, which are entered into by a fund
manager for a fund managed by it, are substantial transactions:
       ( 1 ) Purchase of securities that were issued by a specific corporation, in
       off-floor transactions or in coordinated transactions, on one day, where the
       value of the securities that are purchased, at the time they are purchased, is
       at least one percent of the net value of the fund's assets;
       ( 2 ) Purchase of securities, in off-floor transactions or in coordinated transactions, on
       one day, if the value of the securities that are purchased, at the time they are
       purchased, is at least five percent of the net value of the fund's assets; the provisions
       of this paragraph shall not apply for forty-five days from the date on which units of an
                                             C-2


       open-end fund were offered for the first time to the public and from the date on which
       units of a closed-end fund were offered to the public;
       (3) (Cancelled);
       (4) (Cancelled);
       (5) (Cancelled).
Off-floor transactions or transactions outside a regulated market
3A.         An off-floor transaction or a transaction outside a regulated market which the
board of directors of a fund manager has to consider pursuant to section 18(7A) of the Law,
is any off-floor transaction or any transaction outside a regulated market, entered into by a
fund manager for a fund managed by it, except for a transaction in debentures issued by the
State, entered into with a principal market maker; for this purpose, a "principal market
maker" – a person appointed by the State as a principal market maker pursuant to section
6A(g) of the State Loan Law, 5739 - 1979;
Approval of transactions in a procedure
3B. The board of directors of a 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, and a transaction respecting
which such conditions have been fulfilled shall be deemed to be a transaction
that the board of directors discussed and approved as set forth in section 18(6),
(7) or (7A) of the Law; a procedure as set forth in this regulation shall refer,
inter alia, to the purchase of securities in a related issue.
Commencement
4.    These regulations shall take effect within thirty days from the date of their
publication.



Adar A 5th, 5755 (February 5, 1995)                     Avraham (Beige) Shohat
                                                        Minister of Finance
                                                    D-1



                                             Appendix D

     Joint Investment Trust (Credit Transactions and Redemption of Credit Units)
                              Regulations, 5761 – 2001



      By virtue of my authority under sections 65(a), (b) and 131(a) of the Joint
Investment Trust Law, 5754-1994, in accordance with a proposal of the Authority and
with the approval of the Finance Committee of the Knesset, I enact the following
regulations:
Definitions
1.     In these regulations -
      "Trading Day" – as defined in the Joint Investment Trust (Purchase and Sale
Prices of Fund Assets Value of Fund Assets) Regulations, 5755 – 1994;
       "Redemption date" — the date determined in the terms of issue of a security as a redemption
date or the date determined in the terms of issue of an option as an exercise date;
       "Purchase date", "sale date" — the date on which a fund manager received a notice that its
instruction to purchase an asset for the fund or to sell one of its assets has been carried out, from the
person who carried out the instruction as aforesaid;
       "Credit sale" — a sale or redemption of an asset for which the proceeds are received by the
fund on a date later than the sale date or the redemption date;
        "A fund's credit leverage" – the amount of the debt due to credit purchase for the fund, plus the
credit amount due to the redemption of units plus the leverage of activity in derivatives, less the total
proceeds from the credit sale anticipated to be received at the fund's account, and less the amounts of
cash and deposits in the fund's assets; for this purpose "amounts of cash and deposits" - except for the
funds of the proceeds anticipated to be received from the surplus created in the fund on that day and
except for fixed term deposits (as defined in the Joint Investment Trust (Assets that may be Bought
and Held by a Fund and their Maximum Amounts) Regulations, 5755 – 1994; for this purpose
"proceeds from credit sale" – except for the proceeds from the sale of an asset within the framework
of a resale transaction;
      "Leverage of activity in derivatives" – the total collateral required for the activity
in derivatives; for this purpose, "required collateral" – as defined in the Joint Investment
Trust (Options, Futures and Short Sales) Regulations, 5761 – 2001 (hereinafter – the
Options Regulations");
       "Transaction location" – for the purpose of a transaction in a security – stock exchange and
regulated market; for the purpose of a transaction in an option – stock exchange; for the purpose of a
transaction in a unit or share of a foreign fund – a transaction with a foreign fund manager and for the
purpose of a transaction in foreign currency – bank;
       "The credit amount due to redemption of units" – the amount of the debt due to the
credit received for the purpose of financing surplus redemptions in the fund;
       "Surplus created in the fund" – the difference between the value of the units that
were purchased and the value of the units that were redeemed, on the date when the value
of the units that were sold exceeds the value of the units that were redeemed;
       "Surplus redemptions in the fund" – the difference between the value of the units
that were redeemed and the value of the units that were purchased, on the day when the
value of the units that were redeemed exceeds the value of the units that were sold;
       "Resale transaction" – a resale transaction in securities as defined in the Financial
Assets Agreements Law, 5766 – 2006;
       "Fixed term deposit" – a deposit in a banking corporation that according to the
deposit terms thereof is for a fixed term exceeding one day;
                                             D-2

       "Credit purchase" – purchase of an asset in respect of which payment is effected on
a date subsequent to the purchase date or that the payment therefor is financed from
credit obtained by the fund manager or that payment therefor is effected on the same day
from the proceeds anticipated to be received from the surplus created in the fund on that
day;
       "Leveraged fund" – as defined in the Options Regulations;
       "Unit value" – net value of the fund's assets, divided by the number of units;
       "Credit term" – the period from the date of the purchase, the sale or the redemption
and the date of payment for the purchase or the date of receipt of the proceeds from the
sale or the redemption.
Purchase and sale by means of credit
2.     A fund manager may purchase or sell by means of credit at a transaction location
where the purchase or sale of an asset is customarily effected as a credit purchase or
credit sale, provided that the credit term shall not exceed the customary credit terms
acceptable at the transaction location in respect of the asset of the type purchased or sold
by it, or three days on which trading takes place at the transaction location, or three days
on which trading takes place at the transaction location, whichever is shorter.
Credit for a fund
3.     (a) A fund manager may obtain credit from a bank for a fund managed by it
provided that the credit leverage of a fund shall at no time exceed twenty percent of the
net value of the fund's assets, and in a leveraged fund – forty percent of such value.
       (b) Notwithstanding the provisions of sub-regulation (a), a fund manager may also
obtain credit due to redemption of units from a stock exchange member; in the event that
the stock exchange member is a company controlling the fund manager or the trustee or a
company controlled by such a person, the interest paid out of the fund's asset for the
credit shall not exceed the interest charged by the bank at which the fund's cash is
deposited, in a credit transaction of the same type as it enters into with other customers
in the scope effected for all the funds managed by the fund manager.
       (c) In the event that the credit leverage of the fund exceeds twenty percent of the
net value of its assets, and in a leveraged fund – forty percent of such value (hereinafter
– deviation in the credit leverage), this shall not be treated as a violation of the
provisions of sub-regulation (a) upon satisfaction of the following two conditions:
        (1)     The deviation in the credit leverage ended by the end of the second day of
        calculation of the prices from its commencement;
        (2)     The deviation in the credit leverage occurred in the fund no more than five
        times during the period of the last twelve months.
Resale transaction
3A. The fund manager may buy or sell an asset by means of credit within the
framework of a resale transaction.
Date of registration in the fund's books
4.     In the event that a fund manager bought or sold an asset by means of credit, the
asset will be added to the fund's assets, or be subtracted therefrom, on either the purchase
or the sale date, as the case may be.
Restriction on purchase of an asset for a fund
5.     A fund manager shall not buy an asset for the fund, if, subsequent to the purchase,
the fund's credit leverage exceeds twenty percent of the net value of the fund's assets and
in a leveraged fund – forty percent of such value.

Tevet 21 st , 5761 (January 16, 2001)

                                                         Avraham (Beige) Shohat
                                                         Minister of Finance
                                                  E-1


                                          APPENDIX E
 Definition of "Foreign Resident" in Section 1 of The Income Tax Ordinance (New
                                               Version)


The following definitions will apply to a person who first became an Israeli resident prior to
January 1, 2007:


"Foreign Resident" – a person who is not an Israeli resident.
"Israeli Resident" or "Resident" –
(a)   For an individual – when the center of his life is in Israel; and for this purpose, the
      following provisions shall apply:
      (1)    For the purpose of determining the place which is the center of an individual’s life,
             the entirety of his family, economic and social connections will be taken into
             account, including, inter alia:
             (a)     His permanent place of residence;
             (b)     His and his family’s place of residence;
             (c)     His regular or permanent place of work or his permanent place of
                     employment;
             (d)     The location of his active and significant economic interests;
             (e)     The location of his activities in organizations, unions or various institutions;
        (2) There is a presumption that the center of an individual’s life, during the tax year, is
             in Israel –
             (a)     If he stayed in Israel during the tax year for 183 days or more;
             (b)     If he stayed in Israel during the tax year for 30 days or more and the total
                     period of his stay in Israel in the tax year and in the two years preceding it is
                     425 days or more;
             For the purpose of this section, "day" – includes part of a day;
        (3) The presumption in section (2) may be contradicted, both by the individual and by
             the tax assessor;
        (4) The Minister of Finance, with the approval of the Knesset Finance Committee, may
             determine conditions pursuant to which an individual who is not an Israeli resident
             pursuant to sections (1) and (2) may be deemed to be an Israeli resident, provided
             that he satisfies one of the following:
             (a)     He is an employee of the State of Israel;
                                                 E-2


             (b)     He is an employee of a local authority in the State of Israel;
             (c)     He is an employee of the Jewish Agency in the State of Israel;
             (d)     He is an employee of the Jewish National Fund, Keren Hayesod - United
                     Israel Appeal.
             (e)     He is an employee of a government company;
             (f)     He is an employee of a state authority or a corporation, which was set up
                     pursuant to law;
             and he may also determine, as stated, that types of individuals who consider
             themselves to be Israeli residents pursuant to sections (1) and (2) shall not be
             deemed as such, all upon such terms as he shall determine.


(b)   For a corporate body – a corporation in which one of the following two conditions exists:
      (1)    It was incorporated in Israel;
      (2)    The control and management of its business are exercised in Israel;


The following definitions will take effect on January 1, 2007 and will apply to a person who first
became an Israeli resident on or subsequent to January 1, 2007:
"Foreign Resident" – a person who is not an Israeli resident, as well as an individual in respect of
which all the following are satisfied:

(a)   He stayed outside Israel for at least 183 days, every year, in the course of the
      tax year and in the subsequent tax year;

(b)   The center of his life was not in Israel, as provided in section (a)(1) of the definition of
      "Israeli resident" or "resident", in the two tax years subsequent to the tax years referred to
      section (a);
"Israeli Resident" or "Resident" –
(a)   For an individual – when the center of his life is in Israel; and for this purpose, the
      following provisions shall apply:
      (1)    For the purpose of determining the place which is the center of an individual’s life,
             the entirety of his family, economic and social connections will be taken into
             account, including, inter alia:
             (a)     His permanent place of residence;
             (b)     His and his family’s place of residence;
             (c)     His regular or permanent place of work or his permanent place of
                     employment;
                                                 E-3


            (d)     The location of his active and significant economic interests;
            (e)     The location of his activities in organizations, unions or various institutions;
       (2) There is a presumption that the center of an individual’s life, during the tax year, is
            in Israel –
            (a)     If he stayed in Israel during the tax year for 183 days or more;
            (b)     If he stayed in Israel during the tax year for 30 days or more and the total
                    period of his stay in Israel in the tax year and in the two years preceding it is
                    425 days or more;
            For the purpose of this section, "day" – includes part of a day;
       (3) The presumption in section (2) may be contradicted, both by the individual and by
            the tax assessor;
       (4) The Minister of Finance, with the approval of the Knesset Finance Committee, may
            determine conditions pursuant to which an individual who is not an Israeli resident
            pursuant to sections (1) and (2) may be deemed to be an Israeli resident, provided
            that he satisfies one of the following:
            (a)     He is an employee of the State of Israel;
            (b)     He is an employee of a local authority in the State of Israel;
            (c)     He is an employee of the Jewish Agency in the State of Israel;
            (d)     He is an employee of the Jewish National Fund, Keren Hayesod - United
                    Israel Appeal.
            (e)     He is an employee of a government company;
            (f)     He is an employee of a state authority or a corporation, which was set up
                    pursuant to law;
            and he may also determine, as stated, that types of individuals who consider
            themselves to be Israeli residents pursuant to sections (1) and (2) shall not be
            deemed as such, all upon such terms as he shall determine.
(b)   For a corporate body – a corporation in which one of the following two conditions exists:
      (1)   It was incorporated in Israel;
      (2)   The control and management of its business are exercised in Israel, excluding a
            corporate body in which the control and management of its business as aforesaid are
            exercised in Israel by an individual who first became an Israeli resident or became a
            veteran returning citizen, as provided in section 14(a) of the Income Tax Ordinance
            [New Version], and less than ten years have passed from the date that he became an
            Israeli resident as aforesaid, or by anyone acting on his behalf, provided that such
                                   E-4


corporate body would not have been an Israeli resident even if the control over its
business and the management thereof would not have been exercised by an
individual as aforesaid or by anyone acting on his behalf, unless the corporate body
elected otherwise;
                                                   F-1


                                            APPENDIX F


      Income Tax Regulations (Exemption from Tax on Certain Income of A Liable
                       Mutual Fund for Foreign Residents) 5763 - 2003


By virtue of my authority under sections 16(b), 129(c) and 243 of the Income Tax Ordinance
(hereinafter: the "Ordinance"), and with the approval of the Knesset Finance Committee, I hereby
enact the following Regulations:


Definitions and Interpretation
1.    (a)   In these regulations —
            "Foreign Securities" — as defined in the Income Tax Regulations (Determination of
            Foreign Securities and Temporary Provisions), 5763 – 2002.


            "Foreign Resident Deposit" — a deposit with a banking corporation in foreign currency
            of a Foreign Resident, who declared according to Form 2402, within 14 days from the
            date of the opening of the account for the first time, and once every three years if he was
            in Israel, either himself or through a representative, that he is a foreign resident;


            "Foreign Residents' Fund" — a liable mutual fund as defined in section 105k of the
            Ordinance, at which all of the following exist:
            (1) According to the Fund's prospectus, the units in it are intended for foreign residents
            only;
            (2) The financing of the purchase of the units in the Fund is done from a foreign resident's
            account only;
            (3) The foreign resident submitted to the Distributor, as defined in the Joint Investment
            Trust Law, 5754 – 1994, a declaration pursuant to Form 2408 of the fact of his being a
            foreign resident, within 14 days from the date of the purchase of the unit in the fund or
            the date of commencement of the tax year, whichever is the later of the two;
            (4) The fund was approved by the Commissioner, upon such terms as he determined in
            his approval;


     (b)    Any other term in these Regulations shall have the meaning ascribed thereto in Part E3 of
            the Ordinance.
                                                  F-2


Capital Gains
2.    The capital gains made by a Foreign Residents' Fund 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.


Income from Interest and Rate Differentials
3.    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.


Income from Foreign Securities
4.    The income of a Foreign Residents' Fund from a dividend, from interest and from rate
      differentials on foreign securities shall be exempt from tax.


Repeal
5.    The Income Tax Order (Exemption From Tax On Certain Income Of A Foreign Residents'
      Fund), 5749 – 1989 – is repealed.


Commencement
6.    The commencement of these Regulations is on Tevet 27, 5763 (January 1, 2003).


                                                                Silvan Shalom
                                                                Minister of Finance


Shvat 4, 5763 (January 7, 2003).
   Ilana Kroparo-Tal                                ‫אילנה קרופרו-טל‬
Legal Translation Services                        ‫שירותי תרגום משפטי‬
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=======================================================



2009 , ‫32 במר‬
                                ‫לכל מא דבעי‬


‫4( ישראל‬B) ‫אני, הח"מ, אילנה קרופרו-טל, מאשרת בזה כי התשקי של פסגות‬
‫הורייז / קר נאמנות, האמור להתפרס במהל חודש מר 9002, תורג על ידי‬
‫מהשפה העברית לשפה האנגלית, והריני מאשרת כי התרגו האנגלי של‬
‫התשקי הנ"ל משק נכונה את התוכ והמהות של הגירסה העברית המקורית‬
                                        .‫והמחייבת של התשקי הנ"ל‬

‫4( ישראל הורייז / קר‬B) ‫הנני מסכימה להכללת אישור זה בתשקי של פסגות‬
                     .2009 ‫נאמנות, אשר אמור להתפרס במהל חודש מר‬




_______________________________
‫אילנה קרופרו-טל, שירותי תרגום משפטי‬


                                                               March 23, 2009
                       To Whom It May Concern
I, the undersigned, Ilana Kroparo-Tal, hereby confirm that the Prospectus of
Psagot (B4) Israel Horizon / 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 Psagot (B4)
Israel Horizon / Mutual Fund to be published in March 2009.




  Ilana Kroparo-Tal, Legal Translation Services

				
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