months (with a one month lag); and the low size score is derived from a global
equity model that seeks to measure the market capitalization of a company as compared to other companies based in the same country.
As of September 30, 2015, the Underlying Index consisted of
approximately 180 companies from the following countries: Brazil, Chile, China, Colombia, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, the Philippines, Poland, Qatar, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and the United
Arab Emirates. The Underlying Index may include large- and mid-capitalization companies and components primarily include consumer discretionary, financials, industrials and information technology companies. The components of the Underlying Index,
and the degree to which these components represent certain industries/countries, are likely to change over time.
As of its inception date, in seeking to track the investment
results of the Indian securities included in the Underlying Index, the Fund invests a portion of its assets in the Underlying Funds (the iShares MSCI India ETF and/or the iShares India 50 ETF).
BFA uses a “passive” or indexing approach to try to
achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to “beat” the index it tracks and does not seek temporary defensive positions when markets decline or appear overvalued.
Indexing may eliminate the chance that the Fund will
substantially outperform the Underlying Index but also may reduce some of the risks of active management, such as poor security
selection. Indexing seeks to achieve lower costs and better after-tax
performance by keeping portfolio turnover low in comparison to actively managed investment companies.
BFA uses a representative sampling indexing strategy to manage
the Fund. “Representative sampling” is an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to that of the Underlying Index. The securities selected are
expected to have, in the aggregate, investment characteristics (based on factors such as market capitalization and industry weightings), fundamental characteristics (such as return variability and yield) and liquidity measures similar to those of
the Underlying Index. The Fund may or may not hold all of the securities in the Underlying Index.
The Fund generally will invest at least 90% of its assets in
the component securities of the Underlying Index and in investments that have economic characteristics that are substantially identical to the component securities of the Underlying Index (i.e., depositary
receipts representing securities of the Underlying Index) and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds advised by BFA or its affiliates, as
well as in securities not included in the Underlying Index, but which BFA believes will help the Fund track the Underlying Index.
The Fund may invest all of its assets that are invested in
India through a wholly owned subsidiary located in the Republic of Mauritius or indirectly through a wholly owned Mauritius subsidiary of an Underlying Fund (each,