BlueStar 0617 Equity Review and Outlook Monthly Update

The BlueStar Indexes® Monthly Update covers Israeli equities traded worldwide. The BlueStar Israel Global Index® (BIGI® or BLS:IND on Bloomberg) is used as the benchmark for our review as it represents the complete opportunity set of Israeli equities. BIGI® is tracked by the NYSE-listed ISRA Israel ETF, by two TASE-listed ETNs, and by an Israeli-registered mutual fund. Israel has one of the world’s most resilient economies, its technology sector is a global innovation leader, and its companies have a global footprint. The Update provides insight into macro forces, the geopolitical environment in which Israel’s economy operates, andtheindividualcompanies thathave contributedtoIsraeliGlobal Equities’impressive long-term performance.

Global Growth Bodes Well For Israel in 2H 2017 But Mid-June Tech Swoon is a Setback June 15, 2017 PerformanceReview Israeli Global Equities, as measured by BIGI®, gained 2.65% in May and 13.42% in 2017 to-date. BIGI® outpaced US equities for the fifth month in a row, and has performed in-line with other Global Developed Market equities in 2017 to-date. In May, the top performing Israeli stocks belonged to the consumer staples and energy sectors. Notably, BIGI® is also outperforming theMSCI Israel and TA-125Indexes since the start of 2017 by 7.5 and 4.5 percentage points, respectively.

Israeli Global Technology stocks, as measured by the TA-BIGITech® benchmark underperformed other major global technology indexes again in May. TA-BIGITech® is up over 20% in 2017, in-line with its US and Global Technology sector peers. Israeli technology stocks were led higher by some of the sub-top-five-weighted companies such as LivePerson, Nova Measuring Instruments, , and Solaredge. Also, TA-BIGITech® has outperformed the local TA-Tech Elite Index by 6 percentage points since the beginning of 2017. Click here for BlueStar’s monthly Technical Analysis updatewhere weshare our outlook for both BIGI® and TA-BIGITech®

Segmenting the Israeli market, the Solactive-BlueStar Israel Domestic Exposure Index outpaced the Solactive-BlueStar Global Exposure Index by a wide margin of nearly 6 percentage points, demonstrating theunderlying strength of companies tied todomestic sources of GDP.

BlueStar Israel Global Index Global Equity Benchmark Comparison Ten Year Relative Performance Ending May 2017 200 Benchmark May Return (%) YTD (%)

150 BIGI 2.65 13.42 MSCI Israel Uncapped -0.51 5.71 100 TA-125 4.34 9.00 50 S&P 500 1.41 8.66 - MSCI EM 2.96 17.25 5/31/2007 5/31/2009 5/31/2011 5/31/2013 5/31/2015 5/31/2017 BIGI TA-125 MSCI Israel Uncapped MSCI EM MSCI EAFE MSCI EAFE 3.67 14.01

TASE-BlueStar Israel Global Technology Index Global Technology Stock Index Comparison Ten Year Relative Performance Ending May 2017 300 Benchmark May Return (%) YTD (%) 250 TA-BIGITech 3.78 20.84 200 150 Dow Jones US Tech 4.36 20.48 100 S&P Global 1200 Info 21.53 50 Tech 4.75 - 28.25 5/31/2007 5/31/2009 5/31/2011 5/31/2013 5/31/2015 5/31/2017 MSCI EM Tech 4.78 TA-BIGITech S&P Global 1200 Info Tech MSCI EM Tech MSCI EAFE TA-Tech Elite 8.45 14.96

www.bluestarindexes.com 1 BlueStar Israel 0617 Equity Review and Outlook Monthly Update EconomicUpdate andMid-JuneMarketTrends Over the last three or so years Israel’s Developed Market-leading economic growth has been anchored in domestic consumption and fixed capital investment (both related to real estate and the development of natural gas facilities). Acceleration in growth Is likely to be achieved by an acceleration in Israeli exports. An acceleration in exports depends largely on a pick up in global trade and economic activity in theeconomies of Israel’s largest trading partners.

Israel’s government has madesome remarkable strides in helping to diversify Israel’s export destinations with stronger trade ties to the Far East and Africa. But still, Israel’s main trading partners continue to be Europe and the US. Despite pundits’ persistent rhetoric expressing that there is no global economic growth, there was some very encouraging evidence that there has in fact been a pick up in economic activity in Developed Markets around the world. Whether growth is robust by historic standards is of little consequence, rather that growth is above economist andanalystexpectations is whatis important for investors topay attention to.

In May, the Eurozone economy expanded by 0.5% from Q4 2016 to Q1 2017, which is higher than many economists were expecting. In general, Eurozone economic growth is being driven not by fiscal stimulus, but by more sustainable private consumption supplemented by tightening labor market conditions. Another sign that the Eurozone economic recovery has legs, is thatinflation in April camein atthe highest level since January2013. Lastly, Japanhas now posted four consecutive quarters of positive economic growth led mostly by strong exports…

The Bank of Israel left its policy interest rate unchanged at 0.10% as inflation Israeli vs. Global Technology Stocks expectations picked up a bit in May but are still below the bank’s target level. Data related to Israel’s Q1 GDP growth indicate that the drivers of growth 102 through Mid-June began shifting from consumption to exports while Israel continues to enjoy 102 excellent labor market conditions with record low unemployment and increasing labor marketparticipation. 101 101 Mid-JuneTech Swoon 100 US mega-cap technology stocks were hit hard between June 9th and June 12, 100 on on news that analysts and leading investment banks saw the sector as overvalued relative to other sectors which have received less investor 99 attention since the start of the year. Israeli technology stocks did not suffer 99 as severe of a sell off immediately but volatility did pick up on June 12. Israeli technology stocks were led lower during this mid-month sell off by Mazor 98 Robotics, Tower Semiconductor, Wix.com and CheckPoint, though the pullback comes after aperiod of exceptional share price performance. 98 97 30-May 1-Jun 3-Jun 5-Jun 7-Jun 9-Jun 11-Jun 13-Jun TA-BIGITech Dow Jones US Tech S&P Global 1200 Info Tech

Top Israeli Equity Gainers and Losers: April 2017 Israeli Equity Sector Performance April 2017 Top-Performing Israeli Stocks (%) Bottom-Performing Israeli Stocks (%) GICS Sector Return (%) Liveperson Inc 36.20 Aevi Genomic Medicine Inc -33.13 Consumer Staples 22.27 Inrom Construction Industrie 35.62 Opko Health Inc -20.98 Energy 8.87 Nova Measuring Instruments 23.48 Neuroderm Ltd -17.40 Real Estate 8.36 Compugen Ltd 21.84 Kornit Digital Ltd -16.67 Financials 8.28 Tower Semiconductor Ltd 20.78 Networks Ltd -11.71 Telecommunication Services 8.09 Industrials 6.26 Ceva Inc 19.69 Telit Communications Plc -10.91 Utilities 5.74 Matrix It Ltd 13.91 Wix.Com Ltd -10.61 Information Technology 4.91 Varonis Systems Inc 13.49 Teva Pharmaceutical Ind Ltd -9.77 Materials 4.16 Solaredge Technologies Inc 12.98 Attunity Ltd -9.28 Consumer Discretionary 3.59 Nice Ltd 12.11 Taro Pharmaceutical Indus -8.76 Health Care -3.60 Sources: BlueStarIndexes and BloombergLP

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