SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended         September 30, 1995                 
                               -------------------------------------------

                                    OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from                      to                    
                               ---------------------  --------------------

                         Commission file number 2-1271
                                                ------

                 PEC Israel Economic Corporation                          
--------------------------------------------------------------------------
          (Exact name of registrant as specified in its charter)


                 Maine                                 13-1143528        
----------------------------------------       --------------------------
    (State or other jurisdiction                    (I.R.S. employer
  of incorporation or organization)               identification no.)


     511 Fifth Avenue, New York, N.Y.                     10017           
----------------------------------------       ---------------------------
(Address of principal executive offices)                (Zip code)


Registrant's telephone number, including area code      (212) 687-2400    
                                                   -----------------------


                                                                          
--------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.

     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES  X   
                                                                  -----
NO     .
  -----

     As of November 13, 1995 there were outstanding 18,758,588 shares of
Common Stock with par value of $1.00 per share.



                                                     Page 1 of 14 pages

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                                               PART 1 - FINANCIAL INFORMATION
                                               ------------------------------
                                       PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
                                       ------------------------------------------------
                                         CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                                         ---------------------------------------------
                                                       For the Nine Months Ended:         For the Three Months Ended:
                                                       ------------------------------     ------------------------------
                                                            9/30/95       9/30/94 *            9/30/95       9/30/94 *
<S>                                                  <C>              <C>               <C>              <C>
    Revenues:
      Interest and dividends                         $    1,615,059   $     2,753,690   $      650,023   $    1,079,749
      Equity in net income of Affiliated Companies       18,764,178        21,186,831        7,761,425        9,508,131
      Net gain on issuance of shares
        by Affiliated Companies                                 ---         6,442,335              ---           54,151
      Revenues of General Engineers Limited               4,600,000         4,534,351        1,666,418        1,233,060
      Net gain on sales of investments                    1,160,669           355,947          608,723           48,356
      Change in market value of marketable securities     3,165,157        (1,332,022)       1,040,637          583,886
      Other                                                 530,165           406,787          262,603           45,803
                                                         ----------        ----------       ----------       ----------
                                                         29,835,228        34,347,919       11,989,829       12,553,136
                                                         ----------        ----------       ----------       ----------
    Expenses:
      General and administrative                          2,459,505         2,114,923          769,300          569,894
      Cost of sales and expenses of
        General Engineers Limited                         4,599,332         4,426,153        1,483,439        1,389,423
                                                         ----------        ----------       ----------       ----------
                                                          7,058,837         6,541,076        2,252,739        1,959,317
                                                         ----------        ----------       ----------       ----------
    Income before income taxes, loss
      from discontinued operations and
      cumulative effect of accounting change             22,776,391        27,806,843        9,737,090       10,593,819
    Income taxes                                          4,925,019         2,206,243          597,765        1,050,785
                                                         ----------        ----------       ----------       ----------
    Income before loss from discontinued 
      operations and cumulative effect
      of accounting change                               17,851,372        25,600,600        9,139,325        9,543,034

    Loss from discontinued operations of
      General Engineers Limited, net of income taxes       (564,942)         (126,120)        (163,597)         (38,120)
    Cumulative effect of change in accounting 
      for marketable securities, net of income taxes            ---         2,472,879              ---              ---
                                                         ----------        ----------       ----------       ----------
    Net income                                       $   17,286,430   $    27,947,359   $    8,975,728   $    9,504,914
                                                         ==========        ==========       ==========       ==========

    Earnings per common share before
      loss from discontinued operations and
      cumulative effect of change in accounting               $0.95             $1.36            $0.49            $0.51
    Loss from discontinued operations of General
      Engineers Limited, net of income taxes                  (0.03)              ---            (0.01)             ---
    Cumulative effect on earnings per share
      for change in accounting for marketable securities,
      net of income taxes                                       ---              0.13              ---              ---
                                                         ----------        ----------       ----------       ----------
    Earnings per common share                                 $0.92             $1.49            $0.48            $0.51
                                                         ==========        ==========       ==========       ==========

    Number of shares outstanding                         18,758,588        18,758,588       18,758,588       18,758,588


    Dividend per share                                     None              None             None             None

    See notes to consolidated financial statements.
    * Restated

                                                                                                     Page 2 of 14 Pages
</TABLE>

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<TABLE><CAPTION>
                               PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
                               ------------------------------------------------

                                           CONSOLIDATED BALANCE SHEETS
                                           ---------------------------

                                                     September 30,       December 31,
                                                         1995               1994
Assets                                                (unaudited)
-------                                              -------------     --------------
<S>                                                 <C>                <C>
 Cash and cash equivalents                          $   31,217,138     $   20,736,416
 Investments                                           366,891,795        349,623,830
 Assets of General Engineers Limited                     5,817,696          9,018,224
 Other assets                                            3,918,308          4,312,494
                                                    --------------     --------------

     Total assets                                   $  407,844,937     $  383,690,964
                                                    ==============     ==============

 Liabilities and Shareholders' Equity

 Liabilities:
   Liabilities of General Engineers Limited         $    2,538,898     $    5,262,094
   Deferred income taxes                                29,143,794         31,702,309
   Other liabilities                                    12,267,967          5,258,196
                                                    --------------     --------------
     Total liabilities                                  43,950,659         42,222,599
                                                    --------------     --------------

 Shareholders' equity:
   Common stock, $1.00 par value                        31,952,180         31,952,180
   Additional paid-in capital                          102,459,118         99,612,887
   Unrealized gain on marketable securities, net         4,122,672          2,845,350
   Cumulative translation adjustment                   (12,098,073)       (13,114,003)
   Retained earnings                                   250,651,973        233,365,543
                                                    --------------     --------------
                                                       377,087,870        354,661,957


   Treasury stock                                      (13,193,592)       (13,193,592)
                                                    --------------     --------------
     Total shareholders' equity                        363,894,278        341,468,365
                                                    --------------     --------------

     Total liabilities and shareholders' equity     $  407,844,937     $  383,690,964
                                                    ==============     ==============





 See notes to consolidated financial statements.
                                                                   Page 3 of 14 pages

</TABLE>


<PAGE>
<TABLE><CAPTION>

                                      PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995




                                           Additional   Unrealized Gain      Cumulative
                               Common        Paid-in     on Marketable      Translation     Retained      Treasury
                                Stock        Capital       Securities        Adjustment     Earnings       Stock          Total
                             -----------  ------------  ----------------  -------------   ------------  -------------   ------------
<S>                          <C>          <C>           <C>               <C>             <C>           <C>             <C>
Balance, January 1, 1995     $31,952,180   $99,612,887     $2,845,350     ($13,114,003)   $233,365,543  ($13,193,592)   $341,468,365
                                                                                                                       
Change in market value                                                                                                 
    for available-for-                                                                                                 
    sale equity securities,                                                                                            
    net of tax                   ---           ---          1,277,322          ---             ---           ---           1,277,322
                                                                                                                       
Paid-in capital of                                                                                                     
    Affiliated Companies         ---         2,846,231        ---              ---             ---           ---           2,846,231
                                                                                                                       
Change in cumulative                                                                                                   
    translation adjustment       ---           ---            ---            1,015,930         ---           ---           1,015,930
                                                                                                                       
Net income                       ---           ---            ---              ---          17,286,430       ---          17,286,430
                             -----------  ------------  ----------------  --------------  ------------  -------------   ------------
                                                                                                                       
                                                                                                                       
Balance, September 30, 1995  $31,952,180  $102,459,118     $4,122,672     ($12,098,073)   $250,651,973  ($13,193,592)   $363,894,278
                             ===========  ============  ================  ==============  ============  =============   ============





See notes to consolidated financial statements.








                                                                                                                  Page 4 of 14 pages

</TABLE>
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<TABLE><CAPTION>

                         PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
                         ------------------------------------------------

                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                               -------------------------------------
                                            (Unaudited)
                                                                        For the Nine Months Ended:
                                                                       9/30/95            9/30/94*
                                                                  --------------    ----------------
<S>                                                               <C>               <C>
Cash Flows from Operating Activities:                      
                                                           
Net income                                                        $   17,286,430    $     27,947,359
Adjustments to reconcile net income to net cash            
  used in operating activities:                            
    Cumulative effect of change in                         
      accounting for marketable securities                                   ---          (2,472,879)
    Change in market value of marketable securities                   (3,165,157)          1,332,022
    Purchase of marketable securities                                (31,756,217)        (14,546,985)
    Proceeds from sale of marketable securities                       23,756,695           3,427,345
    Equity in net income of Affiliated Companies                     (18,764,178)        (21,186,831)
    Gain on sales of investments                                      (1,160,669)           (355,947)
    Loss on investment in partnerships                                   264,850             233,010
    Income of consolidated subsidiaries                                 (532,736)           (447,632)
    Amortization of premiums on receivables, net                          62,580             158,067
    Net gain on issuance of shares by Affiliated Companies                   ---          (6,442,335)
    Dividends and interest from Affiliated Companies                   5,765,753           3,421,682
    Decrease (increase) in other assets                                  727,723            (951,713)
    Loss from discontinued operations of General Engineers Limited       564,942             126,120
    Provision for deferred income taxes                               (3,422,862)            840,672
    Increase in other liabilities                                      6,957,575             305,776
                                                                  --------------    ----------------
                                                           
      Net cash used in operating activities                           (3,415,271)         (8,612,269)
                                                                  --------------    ----------------
                                                           
Cash Flows from Investing Activities:                      
                                                           
    Collection of notes receivable and U.S. Government obligations       296,011          10,495,506
    Purchase of notes and bonds receivable                           (14,590,937)         (5,771,009)
    Proceeds from sale of equity interests                            31,925,432           2,399,735
    Purchase of equity interests                                      (3,734,513)        (19,383,789)
                                                                  --------------    ----------------
                                                           
      Net cash provided by (used in) investing activities             13,895,993         (12,259,557)
                                                           
Net Increase (Decrease) in Cash and Cash Equivalents                  10,480,722         (20,871,826)
Cash and Cash Equivalents, beginning of period                        20,736,416          42,665,957
                                                                  --------------    ----------------
                                                           
Cash and Cash Equivalents, end of period                          $   31,217,138    $     21,794,131
                                                                  ==============    ================
                                                           
Supplemental Disclosures of Cash Flow Information:         
  Cash paid during period for income taxes                        $    1,754,426    $      1,045,124

See notes to consolidated statements.


* Restated




                                                                   Page 5 of 14 pages
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<PAGE>



              PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
              ------------------------------------------------

                 Notes to Consolidated Financial Statements
                                (Unaudited)

1.   The December 31, 1994 balance sheet presented herein was derived from
     the audited December 31, 1994 consolidated financial statements of the
     Company and Subsidiaries.

2.   These financial statements have been prepared in accordance with
     generally accepted accounting principles for interim financial
     information and with the instructions to Form 10-Q and Rule 10-01 of
     Regulation S-X.  The financial statements should be read in
     conjunction with the audited consolidated financial statements of the
     Company and Subsidiaries for the year ended December 31, 1994 for a
     description of the significant accounting policies, which have
     continued without change, and other footnote information.

3.   During the second quarter of 1995, General Engineers Limited (i)
     entered into an agreement with a majority owned subsidiary of Discount
     Investment Corporation Ltd. for that company to distribute household
     appliances made by manufacturers represented by General Engineers and
     (ii) sold its service and repair business for household appliances to
     an unrelated party.  As a result of these transactions, PEC has
     restated its results of operations for each of the nine and three
     months ended September 30, 1995 and September 30, 1994 to reflect
     these discontinued operations  of General Engineers.  The losses from
     discontinued operations for the nine and three month periods ended
     September 30, 1995 and 1994 were $564,942, $163,597 and $126,120 and
     $38,120 respectively, net of $134,000, $29,900, $4,000 and $9,900
     respectively, of income tax benefits. 

4.   On July 25, 1995, the Company sold to Israel Discount Bank of New York
     ("IDBNY") all of the Company's nonvoting preferred shares of IDBNY for
     approximately $27 million, a price that equalled PEC's carrying value of
     those shares.   While the sale did not result in a gain for financial
     statement purposes,  PEC did realize a gain for tax purposes, for which
     PEC provided approximately $3 million of additional income taxes during
     the second quarter of 1995.

5.   All adjustments (recurring in nature) which are, in the opinion of
     management, necessary for a fair presentation of the results of the
     interim periods have been included.  The results of the interim
     periods are not necessarily indicative of the results for the full
     year.

                                                Page 6 of 14 pages

<PAGE>




                    MANAGEMENT'S DISCUSSION AND ANALYSIS
                    ------------------------------------
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
              ------------------------------------------------

RESULTS OF OPERATIONS
---------------------

Three Months Ended September 30, 1995 Compared to Three Months
--------------------------------------------------------------
Ended September 30, 1994.
-------------------------

          Consolidated net income for the three months ended September 30,
1995 was $9.0 million compared to $9.5 million for the three months ended
September 30, 1994.  The reduction reflected decreases in equity in net
income of Affiliated Companies and in interest and dividend income.  The
reduction attributable to these items was partially offset by increases in
net gain on sales of investments and in the change in the market value of
marketable securities in the third quarter of 1995 and by a decrease in
PEC's provision for income taxes.

          Equity in net income of Affiliated Companies for the third
quarter of 1995 was $7.8 million compared to $9.5 million for the
corresponding 1994 period.  The reduction reflected losses in respect of
certain Affiliated Companies, particularly Scitex (approximately $2.2
million of losses because of special charges, compared to income of $1.1
million in the corresponding 1994 quarter) and CellCom (approximately $1.8
million of continued start-up losses compared to $460,000 of start-up
losses in the corresponding 1994 quarter), and reduced net income in
respect of some of PEC's other Affiliated Companies, principally Tambour.
This reduction was partially offset by increased net income in respect of
certain other Affiliated Companies, particularly DEP Technology Holdings
Ltd. (the holding company for PEC's interest in RDC, which had a loss in
the corresponding 1994 quarter), and Property & Building.
 

          PEC's interest and dividend income decreased to $650,000 for the
third quarter of 1995 compared to $1.1 million for the corresponding 1994
period.  PEC did not recognize any dividend income on its nonvoting
preferred shares of Israel Discount Bank of New York ("IDBNY") during the
third quarter of 1995 because it sold such shares to IDBNY at the end of
July 1995, while PEC recognized dividend income on these shares during the
third quarter of 1994.  PEC received the proceeds of the sale at the end of
July 1995 and the interest income earned on these proceeds during the last
two months of the third quarter of 1995 was less than PEC's dividend income
on these shares during the corresponding 1994 quarter. 

          The net gain on sales of investments for the third 


                                                         Page 7 of 14 pages

<PAGE>


quarter of 1995 of $609,000 resulted from PEC's sale of marketable bonds of
the U.S. Government and marketable securities of U.S. companies while PEC's
net gain on sales of investments for the corresponding 1994 period of
$48,000 resulted from PEC's sale of marketable securities of U.S.
companies.  PEC's other income for the three months ended September 30,
1995 increased to $263,000 from $46,000 for the corresponding 1994 period. 
PEC's other income in the third quarter of 1994 included a loss of $193,000
with respect to PEC's interest in a limited partnership which PEC sold in
January 1995. 

          As described in Note 2 of the Notes to the Consolidated Financial
Statements for the year ended December 31, 1994 (the "1994 Notes"), PEC
reports debt and equity securities, other than equity securities accounted
for under the equity method, at fair value with unrealized gains and losses
from those securities which are classified as "trading securities" included
in net income and unrealized gains and losses from those securities which
are classified as "available-for-sale securities" reported as a separate
component of shareholders' equity.  The market value of "trading
securities" increased by $1.0 million for the three months ended September
30, 1995 compared to an increase of $584,000 for the corresponding 1994
period.

          General Engineers' income from continuing operations, before
income taxes, increased to $183,000 in the third quarter of 1995, from a
loss from continuing operations, before income tax benefit, of $156,000, in
the corresponding 1994 quarter.

          General and administrative expenses for the three months ended
September 30, 1995 increased compared to the corresponding 1994 quarter
principally due to an increased provision for employee retirement expenses.

          As discussed in Note 2 of the 1994 Notes, PEC does not provide
deferred income taxes with respect to undistributed earnings of, and gains
on issuances of shares by, Majority-Owned Affiliated Companies.  PEC's
provision for income taxes decreased to $598,000 for the third quarter of
1995 from $1.1 million for the corresponding 1994 quarter because of the
decrease in income before income taxes, loss from discontinued operations
and cumulative effect of accounting change for the third quarter of 1995
compared to the corresponding 1994 quarter and because of an increase in
the third quarter of 1995 in the proportion of income from undistributed
earnings of Majority-Owned Affiliated Companies.

          As discussed in Note 3 to the consolidated financial statements
for the three months and nine months ended              


                                                         Page 8 of 14 pages

<PAGE>


September 30, 1995 (the "September 1995 Notes"), for the third quarter of
1995, General Engineers incurred a loss of $164,000, net of income tax
benefit, in respect of discontinued operations compared to a loss of
$38,000, net of income tax benefit, in respect of discontinued operations
for the third quarter of 1994.

Nine Months Ended September 30, 1995 Compared to Nine Months Ended
------------------------------------------------------------------
September 30, 1994.
-------------------

          Consolidated net income for the nine months ended September 30,
1995 was $17.3 million compared to $27.9 million for the nine months ended
September 30, 1994.  The reduction  reflected the absence in the first nine
months of 1995 of any net gain on issuance of shares by Affiliated
Companies ($6.4 million for the first nine months of 1994), an increase of
$2.7 million in the provision for income taxes, a decrease of $2.4 million
in equity in net income of Affiliated Companies and a decrease of $1.1
million in interest and dividend income.  The decrease also reflected the
effect of PEC's adoption of Statement of Financial Accounting Standards No.
115 "Accounting for Certain Investments in Debt and Equity Securities"
effective January 1, 1994 which increased consolidated net income in the
first nine months of 1994 by a cumulative effect adjustment of $2.5
million, net of taxes.  The decrease attributable to these items was
partially offset by an increase of $3.2 million in the market value of
marketable securities (compared to a loss of $1.3 million for the
corresponding 1994 period) and by an increase of $805,000 in net gain on
sales of investments.

          Equity in net income of Affiliated Companies for the nine months
ended September 30, 1995 was $18.8 million compared to $21.2 million for
the nine months ended September 30, 1994.  The reduction reflected losses
in respect of certain of PEC's Affiliated Companies, particularly CellCom
(approximately $5.1 million of continued start-up losses compared to
$460,000 of start-up losses in the corresponding 1994 period), and Scitex
(approximately $1.2 million of losses because of special charges, compared
to $2.9 million of income in the corresponding 1994 period).  This decrease
was partially offset by increased net income in respect of certain other
Affiliated Companies, particularly DEP Technology Holdings Ltd. and Tel-Ad
(each of which had a loss in the corresponding 1994 period) as well as
Property & Building, DIC & PEC Cable TV Ltd. and Super-Sol.

          PEC did not realize any net gain on issuance of shares by
Affiliated Companies for the nine months ended September 30, 1995 while it
realized a $6.4 million gain for the corresponding 1994 period, of which
$5.9 million resulted from the exercise by 


                                                         Page 9 of 14 pages

<PAGE>


option holders of options to purchase ordinary shares of Tambour and
$528,000 resulted from Lego's initial public offering of ordinary shares in
Israel in January 1994.

          PEC's interest and dividend income decreased to $1.6 million for
the nine months ended September 30, 1995 from $2.8 million for the nine
months ended September 30, 1994 primarily because PEC did not recognize any
dividend income on its shares of IDBNY during the first nine months of
1995. 

          The net gain on sales of investments for the nine months ended
September 30, 1995 of $1.2 million resulted from PEC's sale of marketable
bonds of the U.S. Government and marketable securities of U.S. companies
while its net gain on sales of investments for the corresponding 1994
period of $356,000 resulted from PEC's sale of a small portion of the
shares of Maxima and its sale of marketable securities of U.S. companies,
which was partially offset by losses on the sale of marketable bonds of the
U.S. Government and of a U.S. Government sponsored corporation.

          General and administrative expenses for the nine months ended
September 30, 1995 increased compared to the corresponding 1994 period due
in part to an increased provision for employee retirement expenses.

          The provision for income taxes for the first nine months of 1995
increased to $4.9 million from $2.2 million for the corresponding 1994
period.  This increase was attributable primarily to the provision of $3.0
million of additional income taxes arising from PEC's sale of its IDBNY
shares, which sale did not result in a gain for financial statement
purposes. 

          As discussed in Note 3 to the September 1995 Notes, for the first
nine months of 1995 General Engineers incurred a loss of $565,000, net of
income tax benefit, in respect of discontinued operations compared to a
loss of $126,000, net of income tax benefit, in respect of discontinued
operations for the first nine months of 1994. 

SHAREHOLDERS' EQUITY
--------------------

          As a result of increases in the market value of "available-for-
sale securities"  since January 1, 1995, the unrealized gain, net of taxes,
from those securities that was included in shareholders' equity as of
September 30, 1995 was approximately $4.1 million compared to $2.8 million,
net of taxes, as of December 31, 1994.


                                                        Page 10 of 14 pages

<PAGE>


          As discussed in Note 2 of the 1994 Notes, translation differences
are reflected in shareholders' equity as a "Cumulative Translation
Adjustment".  The exchange rate between the New Israel Shekel and the U.S.
dollar as of September 30, 1995 was not significantly different from the
exchange rate as of January 1, 1995.  As of September 30, 1995, the
Cumulative Translation Adjustment reduced shareholders' equity by $12.1
million compared to a reduction of $13.1 million at the end of 1994.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     As of September 30, 1995, PEC's liquid assets (consisting of cash,
money market funds, short-term bank deposits, marketable securities of U.S.
companies and marketable bonds) totaled approximately $60.1 million.  On
the basis of PEC's operations during the first nine months of 1995, PEC
will pay in December 1995 U.S. income taxes of approximately $6.4 million,
which amount has been expensed previously and is reflected in other
liabilities on PEC's consolidated balance sheet as of September 30, 1995.

     For the nine months ended September 30, 1995 PEC received cash
dividends and interest totaling $7.4 million (including $5.8 million of
cash dividends received from Affiliated Companies) which substantially
exceeded PEC's general and administrative expenses.  During the nine months
ended September 30, 1995 PEC received a total of $56 million of additional
funds, of which $27 million was generated from PEC's sale of the shares of
IDBNY, $23.8 million from the sale of securities, $5 million from the sale
of a limited partnership interest and $296,000 from the collection of
loans.  During the same period, PEC purchased equity securities of several
Affiliated Companies for approximately $3.7 million, of which (i)
approximately $1.3 million was for the purchase in September 1995 of a 5%
equity interest in VocalTec Ltd., a communications company which has
developed a personal computer-based real-time voice communication system
over the Internet software network, which system VocalTec has named the
Internet Phone, and (ii) approximately $1.2 million was for additional
capital contributions to Renaissance Fund LDC, reducing PEC's obligation to
make additional capital contributions to Renaissance to $1.6 million. 
During the first nine months of 1995, PEC purchased marketable securities
of the U.S. Government and of U.S. companies for approximately $31.8
million and purchased notes and bonds receivable for approximately $14.6
million, of which $13.2 million was for the purchase of capital notes of
CellCom and $740,000 was for the purchase of capital notes of DEP
Technology Holdings Ltd.


                                                        Page 11 of 14 pages

<PAGE>


     In October 1995, Gilat Satellite Networks Ltd. sold 1,685,000 of its
ordinary shares in a public offering in the United States for $25.00 per
share (before underwriting discounts and commissions).  As a result of such
sale, PEC will recognize a net gain on issuance of shares by Affiliated
Companies of approximately $2 million in the fourth quarter of 1995.  In
addition, PEC sold 75,000 of its ordinary shares of Gilat Satellite in the
public offering for the same price per share and, as a result, will realize
a gain of approximately $1.4 million, before income taxes, in the fourth
quarter of 1995.  As a result of the public offering and PEC's sale of
ordinary shares of Gilat Satellite, PEC's equity interest in Gilat
Satellite was reduced from 9.8% to 7.4%.


                                                        Page 12 of 14 pages

<PAGE>









                        PART II - OTHER INFORMATION
                        ---------------------------

Item 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------

          Exhibit 27     Financial  Data Schedule, which is page 14 of this
                         report.





                                 Signatures
                                 ----------

     Pursuant to the  requirements of the Securities Exchange  Act of 1934,
the registrant  has duly caused this report  to be signed on  its behalf by
the undersigned thereunto duly authorized.


Date: November 13, 1995            PEC ISRAEL ECONOMIC CORPORATION
                                   -------------------------------
                                             (Registrant)


                                   /s/ James I. Edelson           
                                   -------------------------------
                                   James I. Edelson
                                   Executive Vice President


                                   /s/ William Gold               
                                   -------------------------------
                                   William Gold
                                   Treasurer, Principal Financial
                                   Officer and Principal 
                                   Accounting Officer







                                               Page 13 of 14 pages