1. 1 Stock Markets Performance & Its Effect On Company Valuations by Eran Goren Nessuah Zannex Ltd. The science of money® November 2000 www.pjc.com

2. 2 Nasdaq

3. 3 Performance Score Card IsraTech 50: +32% NASDAQ: -16% Seems like the Israeli tech stocks had a good year

4. 4 The Gorillas Are The Winners NASDAQ: -16% TA 100: -2% Isratech 45: -25% Isratech 5: +24% Israeli gorillas were the big gainers-- 24% (the gorillas include: Checkpoint, Comverse, Amdocs, Mercury and Teva)

5. 5 You Get What You Pay For Flight to quality pushes gorillas values higher…...While valuations of smaller companies shrink The Israeli discount: »For a while there was an Israeli premium, but it evaporated »The political crisis brought some discount to the smaller stocks »We expect the discount to narrow as things settle down * Current P/E

6. 6 2000 IPO Activity Israeli IPOs are down for the year, most of them were floated more than 4 months ago Telecomm & Biotech IPOs have returned 30%, while Internet lags at -20% Internet IPOs issued after June 30th are up 13%, as the market adjusted so did the offerings. In the same period Telecomm was up 24% and HC 38%.

7. 7 Review of 2000 IPO Activity Performance by Sector Total AmtPriceReturnReturn Return to NoMillionsFTO1 Day30 DayCurrent Comm & Comp13235,55016%70%90%30% Consumer8630-2%16%18%21% Energy184,28810%34%35%30% Financial126,537-6%5%4%17% Healthcare807,6311%36%51%30% Industrial Growth3759-8%51%12%-30% Internet & Software10911,42722%71%57%-20% Media5897-3%7%-2%3% Other3919-6%15%25%10% Total37068,63913%57%62%14% Year to Date Since 7/1/2000 Total AmtPriceReturnReturn Return to NoMillionsFTO1 Day30 dayCurrent Comm & Comp6010,3809%51%58%24% Consumer4513-5%14%20%11% Energy123,27515%32%30%21% Financial6237-3%6%8%4% Healthcare444,1763%31%46%38% Internet & Software272,037-2%27%34%13% Other29112%12%23%30% Total15521,5305%36%45%25% Note: Tables exclude close-end funds and REITs. Returns through 10/27/2000 Israeli IPO’s201,955-14.8%

8. 8 2000 Follow-On Activity Healthcare lead all sectors with a 12% return and has a large backlog Telecomm returned -19% and Internet was down -48% Israel’s 6 Secondaries during the period returned -38%, suffering the same fate as the Telecom and Internet sectors.

9. 9 Israeli Secondary’s6763 -38.7% Note: Tables exclude close-end funds and REITs. Returns through 10/27/2000 Total AmtPriceReturnReturn Return to NoMillionsFTO1 Day30 DayCurrent Comm & Comp13952,2752%4%5%-19% Consumer91,258-15%1%1%-11% Energy418,3571%0%1%11% Financial137,590-3%2%13%12% Healthcare6213,375-3%3%8%12% Industrial Growth92,06613%4%11%-9% Internet & Software6317,850-4%4%-9%-48% Media91,705-8%1%-6%-40% Other11999-5%7%11%-3% Real Estate2540-3%4%17%-32% Transportation4248-10%1%-1%-31% Total362106,264-1%4%3%-14% Year to Date Since 7/1/2000 Total AmtPriceReturnReturn Return to NoMillionsFTO1 Day30 dayCurrent Comm & Comp359,198-9%3%3%-8% Consumer2666-12%-2%2%-7% Energy173,4355%1%3%-1% Financial66,7591%5%19%10% Healthcare183,989-7%3%21%10% Industrial Growth61,8333%5%12%-2% Internet & Software8928-9%3%-3%-10% Media1109-10%-8%-8%-0% Other8695-7%4%9%-1% Real Estate1116-10%3%3%3% Transportation1651%0%-12%-19% Total10327,792-5%3%7%-2% Review of 2000 Follow-on Activity Performance by Sector

10. 10 Backlog IPO Backlog in Telecomm, Internet & Biotech is Strong Biotech secondary backlog is double the other industries Half of the Internet backlog was filed before the crash Telecomm IPO backlog continues to look strong New Internet fillings are in tune with the market

11. 11 Review of Current Backlog Breakout by Sector and Expected Timing UniverseIPOsFollow-OnsTotal Communications & Computing59766 Consumer314 Energy10515 Financial426 Healthcare251641 Industrial Growth213 Internet & Software49352 Media22 Other33 Real Estate11 Total15835193 Backlog as of 10/30/2000 (Deals filed over last 180 days) Universe Less than 4545 to 9090 to 120 120to 180Total Comm & Comp20246959 Consumer1113 Energy4610 Financial224 Healthcare12102125 Industrial Growth112 Internet & Software151361549 Media112 Other213 Real Estate11 Total52581830158 IPO Backlog Aging Analysis (Days since filing)

12. 12 Nasdaq Vs Value Investing The Nasdaq outperformed value stocks by 60% at the peak. Nasdaq lowest points are narrowly edged by value investing There is no evidence that a mix of Biotech, Telecomm, and Internet will perform lower than value stocks….Yet.

13. 13 Nasdaq Vs Fidelity Value Fund

14. 14 Nasdaq Vs Biotech Nasdaq is comprised primarily of stock in the Telecomm, Biotech, and Internet & Software sectors. Biotech is up over 40% for the year. Internet has dropped and parts of Telecomm have come down (wireless). Optical Access will continue to lead future Telecomm issuings

15. 15 Nasdaq Vs Nasdaq Biotech Index

16. 16 Nasdaq Vs Telecomm For most of the year Telecomm followed the Nasdaq, as Biotech gains were offset by Internet losses. Telecomm wireless has been hit recently and the sector is now trading below the Nasdaq.

17. 17 Nasdaq Vs Nasdaq Telecomm Index

18. 18 European Market (Neuer Markt)

19. 19 Neuer Markt Performance Score Card Nemax-all-share- performance-index Vs Nasdaq 12 months Price 200 Day Average

20. 20 Neuer Markt Performance Score Card Nemax-all-share- performance-index Vs Dax 12 months

21. 21 The Neuer Markt got killed in the crash In 3Q00, the primary market again became very active. From July to September, 35 companies jointed the Neuer Markt, bringing the figure to 115 for the first nine months of 2000. Forthcoming IPO’s expected to be mostly in the internet and technology sectors. * Source: Commerzbank Securities

22. 22 Sep-00Apr-00Change Euro Change % Biotechnology 20.413.66.850% Financial Services 14.610.83.835% Industrials & Industrial Services 7.91314.7147% Internet 50.851.7-0.9-2% IT Services 9.813.9-4.1-30% Media & Entertainment 19.621.9-2.3-10% Software 9.326.1-16.8-64% Technology 34.931.13.812% Telecommunications 12.121.4-9.3-44% Total179.41221.5-14.394% Performance by Sector Review of 2000 Neuer Markt IPO Activity Changes in market cap over the last six months- Billions Euro Source: Commerzbank Securities

23. 23 Israeli Market

24. 24 Performance Score Card Mar 00 Apr 00 May 00 Jun 00 Jul 00 Aug 00 Sep 00 Oct 00 Nov 00 Dec 00 Source: NZL

25. 25 Not All Are Created Equal! Teva Bezeq TA 25 Nov 99 Jan 00 Mar 00 May 00 Jul 00 Sep 00 Nov 00 Source: NZL

26. 26 Source: NZL A Momentum Play

27. 27 Mutual Fund Assets Vs Gdp Dec. 1999 Source: FEFSI, BLOMBERG,

28. 28 ‘Growth Funds’ Share In Total Mutual Funds Assets In Israel Source: KRANOT MEYDA ZHAVE LTD.

29. 29 Hi-tech Shares Component In Shares Indices