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Index returns do not represent actual performance of the NASDAQ Biotechnology Index Fund and are for illustration only. Past performance is no guarantee of future results. For actual performance of the iShares NASDAQ Biotechnology Index Fund, request a prospectus by calling 1-800-iShares (1-800-474-2737) or contact your financial advisor.

Biotechnology Index Security Eligibility Criteria
To be eligible for inclusion in the Index, a security must be listed on the Nasdaq Stock Market and meet the following criteria:

• the security U.S. listing must be exclusively on the NASDAQ National Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing);
• the issuer of the security must be classified according to the Industry Classification Benchmark as either Biotechnology or Pharmaceuticals;
• the security may not be issued by an issuer currently in bankruptcy proceedings;
• the security must have a market capitalization of at least $200 million;
• the security must have an average daily trading volume of at least 100,000 shares;
• the issuer of the security may not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being Index;
• the issuer of the security may not have annual financial statements with an audit opinion that is currently withdrawn; and
• the issuer of the security must have "seasoned" on NASDAQ or another recognized market for at least 6 months; in the case of spin-offs, the operating history of the spin-off will be considered.

Semi-annual Ranking Review
The Index Securities are evaluated semi-annually as follows. Securities currently within the Index must meet the maintenance criteria of $100 million in market capitalization and 50,000 shares average daily trading volume. Index securities not meeting the maintenance criteria are retained in the Index provided that such security met the maintenance criteria in the previous semi-annual ranking. Securities not meeting the maintenance criteria for two consecutive rankings are removed. Index-eligible securities not currently in the Index are added. Changes will occur after the close of trading on the third Friday in May and November. The data used in the ranking includes end of March and September NASDAQ market data and is updated for total shares outstanding submitted in a publicly filed SEC document via EDGAR through the end of April and October.

In addition to the Ranking Review, the securities in the Index are monitored every day by NASDAQ with respect to changes in total shares outstanding arising from secondary offerings, stock repurchases, conversions, or other corporate actions. NASDAQ has adopted the following weight adjustment procedures with respect to such changes. Changes in total shares outstanding arising from stock splits, stock dividends, or spin-offs are generally made to the Index on the evening prior to the effective date of such corporate action. If the change in total shares outstanding arising from other corporate actions is greater than or equal to 5.0%, the change will be made as soon as practicable, normally within ten (10) days of such action. Otherwise, if the change in total shares outstanding is less than 5%, then all such changes are accumulated and made effective at one time on a quarterly basis after the close of trading on the third Friday in each of March, June, September, and December. In either case, the Index share weights for such Index Securities are adjusted by the same percentage amount by which the total shares outstanding have changed in such Index Securities.

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