N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09102

iShares, Inc.

(Exact name of registrant as specified in charter)

c/o: State Street Bank and Trust Company

200 Clarendon Street, Boston, MA 02116

(Address of principal executive offices) (Zip code)

Corporation Trust Incorporated

300 East Lombard Street, Baltimore, MD 21202

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-800-474-2737

Date of fiscal year end: August 31, 2007

Date of reporting period: August 31, 2007

Item 1. Reports to Stockholders.

Table of Contents

Management’s Discussions of Fund Performance	1
Shareholder Expenses (Unaudited)	23
Schedules of Investments	25
iShares MSCI Austria Index Fund	25
iShares MSCI Belgium Index Fund	27
iShares MSCI EMU Index Fund	28
iShares MSCI France Index Fund	33
iShares MSCI Germany Index Fund	36
iShares MSCI Italy Index Fund	38
iShares MSCI Netherlands Index Fund	40
iShares MSCI Spain Index Fund	41
iShares MSCI Sweden Index Fund	43
iShares MSCI Switzerland Index Fund	45
iShares MSCI United Kingdom Index Fund	47
Financial Statements	51
Financial Highlights	63
Notes to Financial Statements	74
Report of Independent Registered Public Accounting Firm	83
Tax Information (Unaudited)	84
Board Review and Approval of Investment Advisory Contract (Unaudited)	85
Supplemental Information (Unaudited)	88
Director and Officer Information (Unaudited)	94
iShares Family of Funds	98

Management’s Discussion of Fund Performance

iSHARES^® MSCI AUSTRIA INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
22.35%	21.81%	22.88%	37.03%	37.35%	37.69%	15.25%	15.27%	16.23%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
22.35%	21.81%	22.88%	383.12%	388.78%	394.81%	313.26%	314.01%	350.10%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 1

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	43.88	%
Industrial	17.90
Energy	12.17
Communications	10.54
Basic Materials	7.90
Utilities	5.74
Consumer Cyclical	0.82
Short-Term and Other Net Assets	1.05
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Erste Bank der Oesterreichischen Sparkassen AG	16.74	%
OMVAG	12.17
Telekom Austria AG	10.54
Meinl European Land Ltd.	5.09
voestalpine AG	4.92
Raiffeisen International Bank Holding AG	4.90
Oesterreichische Elektrizitaetswirtschafts AG Class A	4.88
Wienerberger AG	4.82
Andritz AG	4.78
Immoeast AG	4.59
TOTAL	73.43	%

The iShares MSCI Austria Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Austrian market, as measured by the MSCI Austria Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 22.35%, while the Index returned 22.88%.

The Austrian stock market experienced sound gains for the reporting period, due largely to the healthy economic environment of its European neighbors. Because Austria relies on the European Union for the vast majority of its exports, it is sensitive to the economic health of the constituent markets of the European Union. In particular, economic expansion in Germany, Europe’s largest economy and Austria’s leading export market, translated into rising demand for Austrian goods. Increased export growth contributed largely to 2006 gross domestic product (“GDP”) growth of 3.2%, according to the National Bank of Austria. Continued strength in the first half of 2007 led the National Bank of Austria to revise its expectations for 2007 GDP growth upward, from 2.8% to 3.2%.

The Fund’s ten largest holdings represented more than 73% of Fund net assets as of August 31, 2007. Most of the Fund’s ten largest holdings as of August 31, 2007 posted gains for the reporting period. Steel maker voestalpine AG was the strongest performer, logging triple-digit gains. Machinery company Andritz AG and bank Raiffeisen International Bank Holding AG also delivered solid gains, as did Wienerberger AG, the world’s largest producer of bricks. Real estate company Meinl European Land Ltd. declined for the reporting period.

2 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI BELGIUM INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
15.36%	14.81%	14.97%	23.90%	24.03%	23.17%	10.70%	10.73%	10.80%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
15.36%	14.81%	14.97%	191.98%	193.53%	183.53%	176.33%	177.16%	178.91%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 3

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI BELGIUM INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	47.14	%
Consumer Non-Cyclical	22.51
Basic Materials	9.28
Diversified	7.92
Communications	6.82
Industrial	4.59
Consumer Cyclical	1.09
Short-Term and Other Net Assets	0.65
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Fortis	23.51	%
KBC Group NV	15.04
InBev	9.03
Belgacom SA	5.04
Dexia SA	4.93
Groupe Bruxelles Lambert SA	4.93
Solvay SA	4.88
Delhaize Group	4.76
Umicore	4.40
UCB SA	4.23
TOTAL	80.75	%

The iShares MSCI Belgium Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Belgian market, as measured by the MSCI Belgium Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 15.36%, while the Index returned 14.97%.

Belgium’s equity market benefited from healthy economic conditions during the reporting period. Belgium enjoyed a period of economic expansion, reporting 2.9% annualized gross domestic product (GDP) growth for the second quarter of 2007. Supporting economic growth, Belgium experienced increased export levels with trading partners both within Europe and globally. Private investment and private consumption, which increased largely as a result of a multi-year tax reform plan, also contributed to the healthy economic climate.

Within the Fund, the ten largest holdings accounted for approximately 81% of the net assets of the Fund as of August 31, 2007. Among the ten largest Fund holdings, performance was largely positive for the reporting period. InBev, the world’s largest brewer, and metals and mining company Umicore both delivered strong gains for the reporting period. Retail food chain Delhaize Group also performed well, as did telecommunications company Belgacom SA and chemical company Solvay SA. Biopharmaceutical company UCB SA and financial company Fortis, the Fund’s largest holding, both posted modest declines for the reporting period.

4 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI EMU INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
26.10%	25.79%	26.12%	21.80%	21.90%	22.16%	6.32%	6.32%	6.63%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
26.10%	25.79%	26.12%	168.08%	169.15%	172.01%	54.57%	54.57%	57.77%

Total returns for the period since inception are calculated from the inception date of the Fund (7/25/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (7/31/00), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 5

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI EMU INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	30.42	%
Communications	12.96
Industrial	11.60
Consumer Non-Cyclical	10.97
Utilities	9.04
Consumer Cyclical	7.69
Basic Materials	6.99
Energy	6.79
Technology	2.53
Diversified	0.82
Short-Term and Other Net Assets	0.19
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Total SA (France)	3.39	%
Nokia OYJ (Finland)	2.79
Banco Santander SA (Spain)	2.38
Telefonica SA (Spain)	2.26
Siemens AG (Germany)	2.24
E.ON AG (Germany)	2.16
Allianz SE (Germany)	2.00
Eni SpA (Italy)	1.87
BNP Paribas (France)	1.85
ABN AMRO Holding NV (Netherlands)	1.77
TOTAL	22.71	%

The iShares MSCI EMU Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the European Monetary Union (“EMU”) markets, as measured by the MSCI EMU Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 26.10%, while the Index returned 26.12%.

European markets generally delivered strong gains for the reporting period, driven by a sound global economic environment. In August 2007, as concerns grew about the sub-prime mortgage market in the U.S. and its possible effect on international markets, European stocks generally weakened, trimming some of the gains achieved earlier in the reporting period.

Within Europe, healthy economic growth led the European Central Bank to raise rates four times during the reporting period. Germany, whose stock market advanced in 11 of the past 12 months, registered annualized gross domestic product (“GDP”) growth of 3% for the first quarter of 2007, its highest rate since 2000. In addition, Germany’s unemployment rate declined to 9% in July 2007, its lowest level in 12 years. France also experienced economic expansion during the reporting period, although GDP growth in the second quarter of 2007 slowed amid growing import levels and declining investment levels. France’s jobless rate dropped to its lowest rate in 25 years by June 2007. Against the backdrop of economic growth, the euro appreciated against the U.S. dollar during the reporting period.

Among the Fund’s ten largest holdings as of August 31, 2007, performance was positive for the reporting period. Bank ABN AMRO Holding NV (Netherlands) delivered the strongest returns among the ten largest holdings, followed by mobile phone maker Nokia OYJ (Finland). Industrial conglomerate Siemens AG (Germany) and Telefonica SA (Spain) also performed well. The most modest return among the Fund’s ten largest holdings came from bank BNP Paribas (France).

6 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI FRANCE INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
18.83%	18.59%	19.20%	20.22%	20.34%	20.55%	11.53%	11.57%	11.87%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
18.83%	18.59%	19.20%	151.08%	152.37%	154.55%	197.84%	198.76%	207.06%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns ”represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 7

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	19.59	%
Consumer Non-Cyclical	16.57
Industrial	14.13
Energy	12.34
Communications	11.00
Consumer Cyclical	8.16
Utilities	6.87
Basic Materials	6.59
Technology	2.71
Diversified	1.98
Short-Term and Other Net Assets	0.06
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Total SA	11.76	%
BNP Paribas	6.43
Sanofi-Aventis	6.04
AXA	4.57
Arcelor Mittal	4.36
Societe Generale Class A	4.32
Suez SA	4.22
France Telecom SA	3.98
Vivendi SA	3.43
Carrefour SA	3.04
TOTAL	52.15	%

The iShares MSCI France Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the French market, as measured by the MSCI France Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 18.83%, while the Index returned 19.20%.

French equities posted sound gains during the reporting period, amid a backdrop of generally healthy economic conditions for most of the period. France’s jobless rate dropped during the reporting period, reaching its lowest rate in 25 years by June 2007, and this drop appeared to spur consumer spending. The euro continued to appreciate against the U.S. dollar, enhancing returns for U.S. investors. The French economy experienced modest expansion during the reporting period, although gross domestic product (GDP) growth in the second quarter of 2007 slowed modestly and failed to meet the Bank of France’s estimate amid growing imports and declining investment levels.

The ten largest Fund holdings represented approximately 52% of the net assets of the Fund as of August 31, 2007. Among the Fund’s ten largest holdings, performance was largely positive for the reporting period. Steel company Arcelor Mittal was the strongest performer among the ten largest holdings, posting triple-digit gains. France Telecom SA also delivered healthy returns, as its mobile telephone unit Orange^® won the rights to market the Apple iPhone^® in France. Utilities company Suez SA and entertainment company Vivendi SA also both performed well, as did retail chain Carrefour SA. Pharmaceutical company Sanofi-Aventis declined for the reporting period.

8 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI GERMANY INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
38.47%	38.40%	39.03%	23.13%	23.20%	23.43%	9.44%	9.49%	9.73%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
38.47%	38.40%	39.03%	182.99%	183.80%	186.53%	146.49%	147.59%	153.02%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns ”represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 9

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	23.70	%
Consumer Cyclical	16.94
Industrial	15.33
Utilities	14.01
Basic Materials	13.42
Technology	5.52
Consumer Non-Cyclical	5.43
Communications	5.07
Energy	0.37
Short-Term and Other Net Assets	0.21
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Siemens AG	9.46	%
E.ON AG	9.24
Allianz SE	8.54
DaimlerChrysler AG Registered	7.27
BASF AG	5.88
Deutsche Bank AG	5.57
Bayer AG	4.95
Deutsche Telekom AG	4.66
RWE AG	4.42
SAP AG	4.23
TOTAL	64.22	%

The iShares MSCI Germany Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the German market, as measured by the MSCI Germany Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 38.47%, while the Index returned 39.03%.

The German stock market posted strong gains for the reporting period against a backdrop of healthy economic conditions. Europe’s largest economy, Germany was also Europe’s strongest performing market, advancing in 11 of the past 12 months and posting a positive return in August 2007 even as developed markets as a whole declined. Germany’s economy expanded during the reporting period, registering annualized gross domestic product (GDP) growth of 3% for the first quarter of 2007, its highest rate since 2000. Additionally, Germany’s jobless rate declined throughout the reporting period, dipping to 9% in July 2007, the lowest level in 12 years.

The ten largest Fund holdings represented approximately 64% of the net assets of the Fund as of August 31, 2007. All of the Fund’s ten largest holdings posted double-digit gains for the reporting period. The strongest performer was car maker DaimlerChrysler AG. Chemical company BASF AG and Bayer AG, Germany’s largest drug maker, both delivered strong results. The Fund’s largest holding and Germany’s largest engineering company, Siemens AG, also logged solid gains for the reporting period. Additionally, utility company E.ON AG performed well. The most modest return among the ten largest holdings came from Deutsche Bank AG.

10 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI ITALY INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
13.20%	13.04%	13.68%	20.29%	20.38%	20.27%	11.88%	12.02%	11.76%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
13.20%	13.04%	13.68%	151.86%	152.85%	151.62%	207.21%	211.16%	203.98%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or ”NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 11

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI ITALY INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	49.31	%
Energy	17.03
Communications	10.46
Utilities	8.81
Consumer Cyclical	6.20
Consumer Non-Cyclical	5.20
Industrial	2.84
Short-Term and Other Net Assets	0.15
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Eni SpA	17.03	%
UniCredito Italiano SpA	12.42
Intesa Sanpaolo SpA	10.66
Telecom Italia SpA	5.72
Assicurazioni Generali SpA	4.85
Enel SpA	4.78
Terna SpA	4.03
Fiat SpA	3.84
Unione di Banche Italiane ScpA	3.59
Capitalia SpA	3.29
TOTAL	70.21	%

The iShares MSCI Italy Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Italian market, as measured by the MSCI Italy Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 13.20%, while the Index returned 13.68%.

Italy’s equity market delivered gains for the reporting period against a backdrop of moderate economic growth. The first half of the reporting period saw economic recovery for Italy, which benefited from increasing export levels. During the second half of the reporting period, however, Italy experienced lower levels of gross domestic product (“GDP”) growth, which were already low in comparison with neighboring European countries. For the second quarter of 2007, annualized GDP growth registered 1.8%, below official forecasts, as net export levels shrank. Countering lower levels of export demand, though, personal consumption levels increased late in the reporting period. Helped by a strong euro, inflation levels remained benign.

The ten largest Fund holdings represented approximately 70% of the net assets of the Fund as of August 31, 2007. Performance among the Fund’s ten largest holdings was mostly positive for the reporting period. The strongest returns by far came from car maker Fiat SpA, which reintroduced its popular 500 model during the reporting period. Electricity transmission firm Terna SpA, insurance company Assicurazioni Generali SpA, and power company Enel SpA all delivered solid returns. Banking group Intesa Sanpaolo SpA also performed well, as did the Fund’s largest holding, oil company Eni SpA. Bank Unione di Banche Italiane ScpA declined for the reporting period.

12 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI NETHERLANDS INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
25.22%	24.74%	25.54%	17.40%	17.44%	17.86%	6.26%	6.22%	7.23%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
25.22%	24.74%	25.54%	122.99%	123.44%	127.46%	83.52%	82.78%	101.06%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 13

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI NETHERLANDS INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	38.74	%
Consumer Non-Cyclical	21.83
Industrial	13.31
Communications	11.48
Basic Materials	7.34
Technology	3.79
Energy	2.25
Consumer Cyclical	0.99
Short-Term and Other Net Assets	0.27
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
ABN AMRO Holding NV	16.25	%
ING Groep NV	14.71
Unilever NV	8.63
Koninklijke Philips Electronics NV	8.56
Akzo Nobel NV	4.97
Heineken NV	4.84
TNT NV	4.75
Aegon NV	4.74
Koninklijke KPN NV	4.66
Reed Elsevier NV	4.52
TOTAL	76.63	%

The iShares MSCI Netherlands Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Dutch market, as measured by the MSCI Netherlands Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 25.22%, while the Index returned 25.54%.

The Dutch stock market posted strong gains for the reporting period, supported by a generally healthy economic climate. Because the Dutch economy relies heavily on its export trade for its livelihood, it is sensitive to the economic health of its trading partners, particularly its neighboring European countries, which account for roughly 75% of its export market. During the reporting period, these European trading partners generally enjoyed solid economic expansion. As their economies grew, so did their demand for Dutch products. This demand was reflected in annualized gross domestic product (GDP) growth, which, according to official estimates, registered 2.4% for each of the first and second quarters of 2007. Unemployment levels declined during the reporting period, and inflation levels remained below the average in Europe.

The ten largest Fund holdings accounted for approximately 77% of the net assets of the Fund as of August 31, 2007. Among the ten largest holdings, performance was mostly positive for the reporting period. The top performer among the ten largest holdings was the Fund’s largest holding, financial company ABN AMRO Holding NV. Chemicals company Akzo Nobel NV and brewer Heineken NV also delivered sound gains. Consumer product company Unilever NV and telecommunications company Koninklijke KPN NV both performed well. Financial conglomerate ING Groep NV posted a slight decline for the reporting period.

14 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SPAIN INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
30.47%	30.36%	30.93%	28.07%	28.20%	28.49%	14.29%	14.30%	14.42%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
30.47%	30.36%	30.93%	244.53%	246.24%	250.19%	280.15%	280.58%	284.72%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 15

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	37.15	%
Communications	20.66
Utilities	15.46
Consumer Non-Cyclical	7.64
Industrial	7.61
Energy	6.35
Consumer Cyclical	3.18
Basic Materials	0.94
Technology	0.75
Short-Term and Other Net Assets	0.26
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Telefonica SA	18.68	%
Banco Santander SA	18.32
Banco Bilbao Vizcaya Argentaria SA	12.03
Iberdrola SA	4.95
Repsol YPF SA	4.89
Endesa SA	4.81
Banco Popular Espanol SA	4.58
Altadis SA	3.63
Gas Natural SDG SA	2.95
Actividades de Construcciones y Servicios SA	2.74
TOTAL	77.58	%

The iShares MSCI Spain Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Spanish market, as measured by the MSCI Spain Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 30.47%, while the Index returned 30.93%.

The Spanish equity market delivered strong gains for the reporting period, reflecting solid economic growth in the country. Because Spain’s trade with neighboring European countries accounts for the vast majority of its exports, it benefited from the economic expansion in major European countries during the reporting period. Export trade outside of Europe also grew, reflecting demand from the U.S. and Asia. According to the Bank of Spain, annualized gross domestic product (GDP) growth for Spain was 4.1% for the first quarter of 2007 and is estimated to be 4.0% for the second quarter of 2007. Unemployment levels dropped throughout the reporting period, investment in capital goods expanded, and inflation levels remained below 2.5%, all contributing to positive market performance.

The ten largest Fund holdings represented approximately 78% of the net assets of the Fund as of August 31, 2007. Performance among the ten largest holdings as of August 31, 2007 was positive for the reporting period. Gas Natural SDG SA delivered the strongest returns, followed by electric utility companies Endesa SA and Iberdrola SA. Telecommunications company Telefonica SA, the Fund’s largest holding, and tobacco company Altadis SA also posted solid gains. The most modest gain among the ten largest holdings for the reporting period came from bank Banco Bilbao Vizcaya Argentaria SA.

16 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SWEDEN INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
35.01%	35.43%	35.29%	30.15%	30.18%	30.38%	10.80%	10.81%	12.01%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
35.01%	35.43%	35.29%	273.48%	273.82%	276.73%	178.84%	179.06%	210.79%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 17

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Industrial	27.39	%
Communications	24.17
Financial	20.09
Consumer Cyclical	12.78
Basic Materials	8.02
Consumer Non-Cyclical	6.74
Energy	0.66
Short-Term and Other Net Assets	0.15
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Telefonaktiebolaget LM Ericsson AB Class B	16.00	%
Nordea Bank AB	9.19
Hennes & Mauritz AB Class B	7.79
Sandvik AB	5.63
Volvo AB Class B	5.49
TeliaSonera AB	5.03
Skandinaviska Enskilda Banken AB Class A	4.08
Svenska Handelsbanken AB Class A	3.98
Atlas Copco AB Class A	3.11
Svenska Cellulosa AB Class B	2.84
TOTAL	63.14	%

The iShares MSCI Sweden Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swedish market, as measured by the MSCI Sweden Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 35.01%, while the Index returned 35.29%.

Sweden’s equity market delivered very healthy returns for the reporting period. Supporting market strength, economic growth was solid, unemployment levels dropped, and inflation levels remained among the lowest in Europe. Swedish gross domestic product (GDP) growth for 2006 was 4.4%, and is anticipated to be 3.7% for 2007, according to the Swedish Ministry of Finance. A decline in unemployment levels during the reporting period also helped to spur strength in personal consumption. In response to the strong economic activity, the Riksbank, Sweden’s central bank, raised its short-term repo rate throughout the reporting period in order to curb inflation. During the course of the period, the Riksbank raised the rate five times, moving from a low of 2.25% to a high of 3.50%.

The ten largest Fund holdings represented about 63% of the net assets of the Fund as of August 31, 2007. Performance was positive among the Fund’s ten largest holdings for the reporting period. Machinery company Sandvik AB delivered the strongest returns among the ten largest holdings. The class B shares of car maker Volvo AB also logged solid gains, as did Atlas Copco AB Class A. The class B shares of clothing retailer Hennes & Mauritz AB and mobile telephone operator TeliaSonera AB also both performed well. The most modest gain among the Fund’s ten largest holdings came from the class A shares of bank Svenska Handelsbanken AB.

18 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SWITZERLAND INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
15.53%	14.83%	13.16%	17.94%	17.89%	17.91%	7.96%	7.90%	9.17%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
15.53%	14.83%	13.16%	128.18%	127.71%	127.91%	115.07%	113.90%	140.49%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 19

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Consumer Non-Cyclical	45.93	%
Financial	26.79
Industrial	10.94
Consumer Cyclical	6.73
Basic Materials	6.02
Communications	2.53
Technology	0.60
Short-Term and Other Net Assets	0.46
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Nestle SA Registered	15.99	%
Roche Holding AG	12.12
Novartis AG Registered	11.01
UBS AG Registered	9.33
ABB Ltd. Registered	4.98
Zurich Financial Services AG Registered	4.74
Credit Suisse Group Registered	4.67
Swiss Reinsurance Co. Registered	4.32
Compagnie Financiere Richemont AG Class A	4.14
Holcim Ltd. Registered	3.11
TOTAL	74.41	%

The iShares MSCI Switzerland Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swiss market, as measured by the MSCI Switzerland Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 15.53%, while the Index returned 13.16%.

Switzerland posted sound results for the reporting period. Because it relies on countries in the euro zone for more than half of its exports, Switzerland benefited from economic expansion in some of its neighboring countries. A declining Swiss franc (which dropped against the euro) also appeared to contribute to Switzerland’s economic health, as it helped Switzerland’s exports become more affordable to its trading partners. In addition, the jobless rate declined during the reporting period, dipping to 2.5%, its lowest level in five years and well below the euro zone average. Economic growth, combined with the second lowest borrowing costs among industrialized nations, helped the Swiss market, as measured by the Index, reach an all-time record level during the reporting period.

The ten largest Fund holdings accounted for approximately 74% of the net assets of the Fund as of August 31, 2007. The top performer among the ten largest holdings for the reporting period was ABB Ltd., the world’s largest producer of power grids. Holcim Ltd., a manufacturer and supplier of building materials, also performed well, as did the Class A shares of apparel company Compagnie Financiere Richemont AG. The Fund’s largest holding, Nestle SA also contributed positively to Fund performance. Financial companies generally performed well, as insurance company Zurich Financial Services AG and Credit Suisse Group both provided healthy returns. Healthcare company Novartis AG declined for the reporting period.

20 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
16.77%	15.89%	17.56%	17.35%	17.24%	18.24%	7.48%	7.49%	8.15%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
16.77%	15.89%	17.56%	122.53%	121.52%	131.12%	105.81%	105.93%	118.93%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 21

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	25.42	%
Consumer Non-Cyclical	21.20
Energy	16.72
Communications	10.92
Basic Materials	8.94
Consumer Cyclical	6.24
Utilities	4.47
Industrial	4.02
Technology	0.63
Diversified	0.14
Short-Term and Other Net Assets	1.30
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
BP PLC	6.93	%
HSBC Holdings PLC	6.83
Vodafone Group PLC	5.49
GlaxoSmithKline PLC	4.81
Royal Dutch Shell PLC Class A	4.59
Royal Bank of Scotland Group PLC	3.53
Royal Dutch Shell PLC Class B	3.45
Barclays PLC	2.61
Anglo American PLC	2.49
AstraZeneca PLC	2.37
TOTAL	43.10	%

The iShares MSCI United Kingdom Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the British market, as measured by the MSCI United Kingdom Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 16.77%, while the Index returned 17.56%.

The United Kingdom experienced healthy equity market gains for the reporting period, helped by economic growth and a strong currency. The British pound reached its highest level versus the U.S. dollar in 25 years during the period. The appreciating currency had a dampening effect on exports: because the higher currency value raised the price of British exports, the UK’s trade deficit widened. Economic growth accelerated during the reporting period, pushing inflation levels above the 2% target rate. In response, the Bank of England raised its benchmark lending rate four times during the reporting period, moving from a low of 4.75% to a high of 5.75%, its highest rate since 2001.

The ten largest Fund holdings represented approximately 43% of the net assets of the Fund as of August 31, 2007. Among the Fund’s ten largest holdings, performance was mostly positive for the reporting period. Wireless telecommunications company Vodafone Group PLC was the strongest performer among the ten largest holdings, followed by mining company Anglo American PLC. The Fund held both the A and B shares of Royal Dutch Shell PLC, and both share classes performed well as oil prices remained high. Pharmaceutical company AstraZeneca PLC suffered a double-digit decline for the reporting period, while GlaxoSmithKline PLC posted a modest decline.

22 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited)

iSHARES^®, INC.

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2007 to August 31, 2007.

ACTUAL EXPENSES

The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

iShares MSCI Index Fund	Beginning Account Value (3/1/07)	Ending Account Value (8/31/07)	Annualized Expense Ratio		Expenses Paid During Perioda (3/1/07 to 8/31/07)
Austria
Actual	$    1,000.00	$    1,041.00	0.51	%	$    2.62
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
Belgium
Actual	1,000.00	1,014.50	0.51		2.59
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
EMU
Actual	1,000.00	1,101.70	0.51		2.70
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
France
Actual	1,000.00	1,071.60	0.51		2.66
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60

SHAREHOLDER EXPENSES 23

Shareholder Expenses (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Index Fund	Beginning Account Value (3/1/07)		Ending Account Value (8/31/07)		Annualized Expense Ratio		Expenses Paid During Perioda (3/1/07 to 8/31/07)
Germany
Actual	$	1,000.00	$	1,168.10	0.51	%	$    2.79
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60
Italy
Actual		1,000.00		1,026.10	0.51		2.60
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60
Netherlands
Actual		1,000.00		1,129.50	0.51		2.74
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60
Spain
Actual		1,000.00		1,069.50	0.51		2.66
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60
Sweden
Actual		1,000.00		1,099.60	0.51		2.70
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60
Switzerland
Actual		1,000.00		1,038.70	0.51		2.62
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60
United Kingdom
Actual		1,000.00		1,070.60	0.51		2.66
Hypothetical (5% return before expenses)		1,000.00		1,022.60	0.51		2.60

^a Expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days).

24 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 98.95%
BANKS – 21.64%
Erste Bank der Oesterreichischen Sparkassen AG	1,093,223	$	79,270,985
Raiffeisen International Bank Holding AG	160,691		23,220,573
			102,491,558
BUILDING MATERIALS – 4.82%
Wienerberger AG	319,966		22,843,461
			22,843,461
CHEMICALS – 0.19%
Lenzing AG	1,746		880,687
			880,687
ELECTRIC – 5.74%
EVN AGa	34,494		4,062,869
Oesterreichische Elektrizitaetswirtschafts AG Class A	465,159		23,101,283
			27,164,152
ENGINEERING & CONSTRUCTION – 3.60%
Flughafen Wien AG	170,003		17,034,109
			17,034,109
ENTERTAINMENT – 0.82%
Bwin Interactive Entertainment AGa,b	150,318		3,903,745
			3,903,745
ENVIRONMENTAL CONTROL – 0.63%
BWT AG	41,895		2,541,545
Christ Water Technology AGb	22,745		429,449
			2,970,994
FOREST PRODUCTS & PAPER – 2.79%
Mayr-Melnhof Karton AGa	122,287		13,203,254
			13,203,254
INSURANCE – 3.75%
Wiener Staedtische Allgemeine Versicherung AG	258,167		17,745,126
			17,745,126
IRON & STEEL – 4.92%
voestalpine AG	284,950		23,311,370
			23,311,370

Security	Shares	Value
MACHINERY – 4.78%
Andritz AG	349,247	$	22,620,032
			22,620,032
MACHINERY - CONSTRUCTION & MINING – 1.19%
Palfinger AG	117,998		5,646,213
			5,646,213
MANUFACTURING – 2.88%
RHI AGa,b	278,959		13,656,245
			13,656,245
OIL & GAS – 12.17%
OMV AG	927,897		57,618,727
			57,618,727
REAL ESTATE – 18.49%
CA Immobilien Anlagen AGb	809,418		21,009,480
Immoeast AGb	1,773,337		21,733,340
IMMOFINANZ AGb	1,673,830		20,719,187
Meinl European Land Ltd.b	1,317,355		24,082,807
			87,544,814
TELECOMMUNICATIONS – 10.54%
Telekom Austria AG	1,935,452		49,920,513
			49,920,513
TOTAL COMMON STOCKS (Cost: $461,520,903)			468,555,000
SHORT-TERM INVESTMENTS – 4.42%
MONEY MARKET FUNDS – 4.42%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	66,690		66,690
BGI Cash Premier Fund LLC 5.47%c,d,e	20,831,439		20,831,439
			20,898,129
TOTAL SHORT-TERM INVESTMENTS (Cost: $20,898,129) 20,898,129
TOTAL INVESTMENTS IN SECURITIES – 103.37% (Cost: $482,419,032)			489,453,129
Other Assets, Less Liabilities – (3.37)%			(15,939,309	)
NET ASSETS – 100.00%		$	473,513,820

SCHEDULES OF INVESTMENTS 25

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2007

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

26 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI BELGIUM INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.35%
BANKS – 43.93%
Banque Nationale de Belgique	293	$	1,354,063
Dexia SA	543,353		14,970,072
Fortis	1,944,833		71,346,310
KBC Group NV	363,916		45,651,903
			133,322,348
BEVERAGES – 9.03%
InBev	333,850		27,398,285
			27,398,285
CHEMICALS – 4.88%
Solvay SA	99,760		14,808,803
			14,808,803
ELECTRICAL COMPONENTS & EQUIPMENT – 1.40%
NV Bekaert SA	32,191		4,234,843
			4,234,843
ELECTRONICS – 0.65%
Barco NV	20,829		1,977,153
			1,977,153
FOOD – 7.94%
Colruyt SA	45,266		9,662,993
Delhaize Group	147,456		14,431,182
			24,094,175
HOLDING COMPANIES - DIVERSIFIED – 7.92%
Groupe Bruxelles Lambert SA	126,491		14,955,622
Sofina SA	78,316		9,074,964
			24,030,586
MANUFACTURING – 1.51%
AGFA-Gevaert NV	218,871		4,571,119
			4,571,119
MINING – 4.40%
Umicore	58,235		13,345,268
			13,345,268
PHARMACEUTICALS – 5.54%
Omega Pharma SA	45,229		3,989,301
UCB SA	227,828		12,827,223
			16,816,524

Security	Shares	Value
REAL ESTATE INVESTMENT TRUSTS – 3.21%
Cofinimmo	56,723	$	9,754,107
			9,754,107
RETAIL – 1.09%
SA D’Ieteren NV	8,326		3,314,323
			3,314,323
TELECOMMUNICATIONS – 6.82%
Belgacom SA	349,349		15,316,201
Mobistar SA	66,393		5,392,601
			20,708,802
TRANSPORTATION – 1.03%
Compagnie Maritime Belge SA	32,282		2,116,806
Euronav SA	31,938		1,008,374
			3,125,180
TOTAL COMMON STOCKS (Cost: $274,807,471)			301,501,516
SHORT-TERM INVESTMENTS – 0.00%
MONEY MARKET FUNDS – 0.00%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%a,b	9,787		9,787
			9,787
TOTAL SHORT-TERM INVESTMENTS (Cost: $9,787)			9,787
TOTAL INVESTMENTS IN SECURITIES – 99.35% (Cost: $274,817,258)			301,511,303
Other Assets, Less Liabilities – 0.65%			1,972,096
NET ASSETS – 100.00%		$	303,483,399

^a Affiliated issuer. See Note 2.

^b The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 27

Schedule of Investments

iSHARES^® MSCI EMU INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 98.42%
AUSTRIA – 1.72%
Andritz AG	27,412	$	1,775,421
Bwin Interactive Entertainment AGa	19,144		497,168
Erste Bank der Oesterreichischen Sparkassen AG	123,809		8,977,548
Flughafen Wien AG	6,534		654,699
Immoeast AGa	307,596		3,769,779
IMMOFINANZ AGa	383,952		4,752,677
Mayr-Melnhof Karton AG	11,205		1,209,797
Oesterreichische Elektrizitaetswirtschafts AG Class A	52,554		2,610,000
OMV AG	108,182		6,717,674
Raiffeisen International Bank Holding AG	24,440		3,531,690
RHI AGa	22,092		1,081,498
Telekom Austria AG	215,222		5,551,154
voestalpine AG	69,277		5,667,457
Wiener Staedtische Allgemeine Versicherung AG	18,756		1,289,195
Wienerberger AG	42,481		3,032,863
			51,118,620
BELGIUM – 3.42%
AGFA-Gevaert NV	88,400		1,846,233
Barco NV	8,366		794,127
Belgacom SA	78,882		3,458,354
Cofinimmo	15,179		2,610,186
Colruyt SA	10,156		2,168,015
Compagnie Maritime Belge SA	15,642		1,025,682
Delhaize Group	47,827		4,680,719
Dexia SA	363,588		10,017,316
Euronav SA	13,938		440,063
Fortis	762,072		27,956,655
Groupe Bruxelles Lambert SA	49,280		5,826,605
InBev	102,814		8,437,703
KBC Group NV	114,264		14,333,992
Mobistar SA	19,836		1,611,128
NV Bekaert SA	9,567		1,258,574
Omega Pharma SA	13,000		1,146,630
SA D’Ieteren NV	1,608		640,095
Solvay SA	41,052		6,093,935

Security	Shares	Value
UCB SA	66,966	$	3,770,335
Umicore	14,872		3,408,102
			101,524,449
FINLAND – 5.11%
Amer Group OYJb	39,225		891,938
Cargotec Corp. Class B	27,245		1,324,475
Elisa OYJ Class A	96,570		2,688,274
Fortum OYJ	263,718		8,728,989
Kesko OYJ Class B	35,496		2,082,218
Kone OYJ Class B	51,254		3,348,267
Konecranes OYJ	43,932		1,669,143
Metso OYJ	77,778		4,985,571
Neste Oil OYJ	92,394		3,196,766
Nokia OYJ	2,513,160		82,808,000
Nokian Renkaat OYJ	70,720		2,487,353
OKO Bank PLC Class A	48,546		966,895
Orion OYJ	54,288		1,294,402
Outokumpu OYJ	73,320		2,218,967
Rautaruukki OYJ	56,898		3,099,545
Sampo OYJ	249,661		7,143,954
SanomaWSOY OYJ Class B	20,358		621,113
Stora Enso OYJ Class R	398,970		7,114,158
TietoEnator OYJb	47,502		1,103,461
UPM-Kymmene OYJ	336,798		7,635,496
Uponor OYJ	46,458		1,782,215
Wartsila OYJ Class B	38,237		2,379,579
YIT OYJ	71,128		2,146,810
			151,717,589
FRANCE – 28.65%
Accor SA	117,584		10,100,275
Aeroports de Paris	21,308		2,439,753
Air France-KLM	72,558		3,006,018
Alcatel-Lucent	1,421,160		15,557,293
ALSTOM	68,904		12,462,141
Arcelor Mittal	551,200		36,346,350
Atos Origin SAa	42,142		2,372,688
AXA	970,572		38,913,320
BNP Paribas	522,225		55,117,097
Bouygues SA	128,466		10,124,339
Business Objects SAa	59,702		2,628,043
Cap Gemini SA	81,954		5,306,880
Carrefour SA	376,002		26,331,477

28 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2007

Security	Shares	Value
Casino Guichard-Perrachon SAb	25,921	$	2,650,260
CNP Assurances SA	22,673		2,898,025
Compagnie de Saint-Gobain	203,508		22,155,742
Compagnie Generale des Etablissements Michelin Class B	89,960		11,340,333
Credit Agricole SA	418,444		15,801,293
Dassault Systemes SA	31,048		1,826,798
Essilor International SA	121,104		7,354,984
European Aeronautic Defence and Space Co.b	200,809		5,962,337
France Telecom SA	1,120,080		33,806,652
Gaz de France	124,968		6,269,345
Gecina SA	4,720		775,169
Groupe Danone	267,496		20,388,360
Hermes Internationalb	40,716		4,394,417
Imerys SA	21,591		1,978,254
Klepierre	13,656		2,155,609
Lafarge SA	96,570		15,006,675
Lagardere SCA	73,220		5,980,046
L’Air Liquide SA	150,419		19,183,242
L’Oreal SA	159,840		18,735,204
LVMH Moet Hennessy Louis Vuitton SA	150,390		16,809,522
M6-Metropole Television	38,628		1,166,411
Neopost SA	19,314		2,956,574
PagesJaunes SA	69,765		1,415,194
Pernod Ricard SA	55,133		11,614,484
PPR SAb	42,804		7,404,939
PSA Peugeot Citroen SA	97,490		8,306,453
Publicis Groupe SA	86,139		3,724,848
Renault SA	115,362		15,572,603
Safran SA	102,688		2,426,017
Sanofi-Aventis	631,890		51,616,529
Schneider Electric SA	136,177		18,100,221
SCOR SE	109,200		2,675,138
Societe BIC	15,283		1,160,484
Societe des Autoroutes Paris-Rhin-Rhone	18,309		1,869,485
Societe Generale Class A	231,712		37,390,879
Societe Television Francaise 1	75,168		2,192,917
Sodexho Alliance SA	65,909		4,346,964
STMicroelectronics NV	436,032		7,596,696

Security	Shares	Value
Suez SA	627,714	$	35,718,216
Technip SA	56,898		4,544,604
Thales SA	69,382		3,939,466
Thomson	160,081		2,629,677
Total SA	1,337,099		100,709,712
Unibail-Rodamco	45,953		11,072,579
Valeo SA	46,218		2,241,148
Vallourec SA	28,903		7,738,556
Veolia Environnement	200,900		15,413,793
Vinci SA	248,580		17,702,918
Vivendi SA	720,630		29,481,789
Zodiac SA	36,089		2,607,511
			851,514,746
GERMANY – 22.48%
Adidas AG	125,334		7,372,677
Allianz SEb	276,946		59,395,637
ALTANA AG	48,360		1,106,251
Arcandor AGa,b	42,282		1,152,819
BASF AG	309,654		41,002,052
Bayer AG	452,736		35,747,781
Beiersdorf AG	54,287		3,646,313
Bilfinger Berger AG	20,880		1,715,850
Celesio AG	44,978		2,817,482
Commerzbank AG	393,750		16,151,701
Continental AG	84,042		10,931,148
DaimlerChrysler AG Registered	569,196		50,576,841
Deutsche Bank AG	326,358		40,321,971
Deutsche Boerse AG	128,960		14,240,182
Deutsche Lufthansa AG	142,560		4,162,868
Deutsche Post AG	486,720		14,152,904
Deutsche Postbank AG	55,640		4,036,803
Deutsche Telekom AG	1,691,460		31,452,242
Douglas Holding AG	18,305		1,100,484
E.ON AG	382,788		64,264,072
Fresenius Medical Care AG & Co. KGaA	119,016		5,850,683
HeidelbergerDruckmaschinen AG	40,716		1,846,688
Henkel KGaA	38,480		1,804,550
Hochtief AG	28,080		2,818,561
Hypo Real Estate Holding AG	91,002		4,999,557
Infineon Technologies AGa,b	471,120		7,334,545
IVG Immobilien AG	55,854		1,999,514

SCHEDULES OF INVESTMENTS 29

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2007

Security	Shares	Value
Linde AG	71,760	$	8,427,780
MAN AG	72,800		10,449,464
Merck KGaA	37,440		4,804,913
METRO AG	98,166		8,511,257
MLP AG	42,640		680,109
Muenchener Rueckversicherungs- Gesellschaft AG	135,108		23,351,099
Premiere AGa	50,157		1,089,922
Puma AG	4,680		1,880,444
Rheinmetall AG	21,924		1,821,069
RWE AG	273,114		30,731,512
Salzgitter AG	26,100		5,159,220
SAP AG	557,712		30,054,694
Siemens AG	528,480		66,418,319
SolarWorld AG	50,440		2,489,196
Suedzucker AG	54,339		1,045,976
ThyssenKrupp AG	224,038		13,102,510
TUI AGa,b	152,478		3,959,840
Volkswagen AG	98,800		20,418,868
Wincor Nixdorf AG	17,782		1,529,869
			667,928,237
GREECE – 1.66%
Coca-Cola Hellenic Bottling Co. SA ADR	190,584		9,149,938
Hellenic Telecommunications Organization SA SP ADR	925,893		15,249,458
National Bank of Greece SA ADR	2,085,333		25,023,996
			49,423,392
IRELAND – 2.34%
Allied Irish Banks PLC	559,278		14,288,046
Bank of Ireland	625,104		11,589,553
C&C Group PLC	206,960		1,520,725
CRH PLC	340,452		14,759,054
DCC PLC	53,346		1,410,844
DEPFA Bank PLC	236,520		4,488,308
Elan Corp. PLCa	290,579		5,545,846
Grafton Group PLCa	136,410		1,822,417
Greencore Group PLC	126,473		793,106
IAWS Group PLC	68,382		1,339,876
Independent News & Media PLC	385,401		1,812,623
Irish Life & Permanent PLC	178,103		4,431,080
Kerry Group PLC Class A	79,866		1,943,460

Security	Shares	Value
Kingspan Group PLC	78,303	$	2,028,185
Paddy Power PLC	49,920		1,507,384
Ryanair Holdings PLCa	43,520		316,874
			69,597,381
ITALY – 10.38%
Alleanza Assicurazioni SpAb	240,441		3,102,449
Arnoldo Mondadori Editore SpA	62,540		589,557
Assicurazioni Generali SpA	635,380		26,011,439
Atlantia SpA	181,972		6,070,354
Autogrill SpA	103,199		2,162,344
Banca Monte dei Paschi di Siena SpAb	709,229		4,510,385
Banca Popolare di Milano Scrl	275,724		4,006,889
Banco Popolare SpAa	413,439		10,348,076
Bulgari SpA	90,206		1,266,625
Capitalia SpA	1,052,480		10,036,380
Enel SpA	2,660,483		27,491,928
Eni SpA	1,602,414		55,442,379
Fiat SpA	440,686		11,714,921
Finmeccanica SpA	214,760		6,297,517
Fondiaria-Sai SpA	46,426		2,180,982
Intesa Sanpaolo SpA	4,780,292		36,037,534
Italcementi SpA	54,740		1,354,431
Lottomatica SpA	66,040		2,374,966
Luxottica Group SpA	79,287		2,708,685
Mediaset SpA	460,893		4,894,553
Mediobanca SpAb	301,000		6,487,448
Mediolanum SpAb	166,172		1,215,355
Parmalat SpA	894,642		3,231,995
Pirelli & C. SpAa	1,615,199		1,815,483
Seat Pagine Gialle SpAb	2,560,576		1,411,990
Snam Rete Gas SpA	519,588		3,061,749
Telecom Italia SpAb	6,330,372		17,971,724
Terna SpA	739,347		2,615,539
UniCredito Italiano SpA	4,847,895		41,569,936
Unione di Banche Italiane ScpA	408,720		10,452,838
			308,436,451
NETHERLANDS – 9.76%
ABN AMRO Holding NV	1,127,304		52,450,888
Aegon NV	901,872		16,462,697
Akzo Nobel NV	170,748		13,447,251
ASML Holding NVa	291,200		8,626,341

30 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2007

Security	Shares	Value
Corio NV	24,156	$	1,882,975
Corporate Express NV	81,997		921,087
Fugro NV	33,195		2,307,907
Hagemeyer NV	339,930		1,441,204
Heineken NV	145,365		9,210,887
ING Groep NV	1,160,370		46,696,932
Koninklijke Ahold NVa	777,891		10,392,507
Koninklijke DSM NV	93,538		4,785,663
Koninklijke KPN NV	1,170,288		18,251,320
Koninklijke Philips Electronics NV	706,755		27,873,585
Oce NV	55,848		1,202,930
QIAGEN NVa,b	104,213		1,791,482
Randstad Holding NV	26,191		1,466,757
Reed Elsevier NV	424,181		7,656,225
Royal Numico NV	106,620		7,847,431
SBM Offshore NV	76,721		2,877,268
TNT NV	258,498		10,924,319
Unilever NV	1,057,899		32,348,116
Vedior NV	101,682		2,310,762
Wereldhave NV	13,050		1,563,599
Wolters Kluwer NV CVA	177,012		5,159,242
			289,899,375
PORTUGAL – 1.12%
Banco BPI SA Registered	210,132		1,853,412
Banco Comercial Portugues SA Class R	1,479,920		6,920,028
Banco Espirito Santo SA	158,411		3,429,346
Brisa-Auto Estradas de Portugal SA	206,244		2,651,359
CIMPOR-Cimentos de Portugal SGPS SA	151,026		1,420,615
Energias de Portugal SA	1,223,606		6,722,366
Jeronimo Martins SGPS SA	134,457		768,021
Portugal Telecom SGPS SA	456,515		6,260,781
PT Multimedia Servicos de Telecomunicacoes e Multimedia SGPS SAb	57,668		943,391
Sonae Industria SGPS SAa	66,560		862,918
Sonae SGPS SA	555,616		1,484,589
			33,316,826
SPAIN – 11.78%
Abertis Infraestructuras SAb	165,367		5,018,218
Acciona SA	17,748		4,454,292

Security	Shares	Value
Acerinox SAb	113,796	$	2,863,744
Actividades de Construcciones y Servicios SA	152,162		8,365,847
Altadis SA	163,256		10,849,739
Antena 3 de Television SAa,b	77,071		1,441,520
Banco Bilbao Vizcaya Argentaria SA	2,239,640		51,568,366
Banco Popular Espanol SA	567,320		10,355,812
Banco Santander SA	3,877,407		70,830,726
Cintra Concesiones de Infraestructuras de Transporte SAb	156,208		2,457,450
Ebro Puleva SA	68,932		1,515,761
Endesa SAb	384,253		20,895,694
Fomento de Construcciones y Contratas SA	26,520		2,312,009
Gamesa Corporacion Tecnologica SA	117,520		4,687,720
Gas Natural SDG SA	91,520		4,875,802
Gestevision Telecinco SA	55,032		1,462,936
Grupo Ferrovial SAb	39,748		3,489,608
Iberdrola SA	565,240		31,361,932
Iberia Lineas Aereas de Espana SA	283,133		1,289,177
Indra Sistemas SA	85,608		2,238,404
Industria de Diseno Textil SA	133,686		7,845,752
Mapfre SA	368,996		1,629,830
Promotora de Informaciones SA	51,777		1,108,185
Repsol YPF SA	519,481		18,752,672
SacyrVallehermoso SAb	58,986		2,340,008
Sociedad General de Aguas de Barcelona SA Class A	41,705		1,518,011
Sogecable SAa,b	31,842		1,205,891
Telefonica SA	2,709,324		67,295,314
Union Fenosa SA	74,124		4,053,097
Zardoya Otis SAb	31,000		977,914
Zeltia SAb	109,748		1,093,678
			350,155,109
TOTAL COMMON STOCKS (Cost: $2,383,885,064)			2,924,632,175

SCHEDULES OF INVESTMENTS 31

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2007

Security	Shares	Value
PREFERRED STOCKS – 1.39%
GERMANY – 0.93%
Henkel KGaA	106,488	$	5,488,869
Porsche AG	5,230		9,350,587
ProSiebenSat.1 Media AG	55,332		1,897,098
RWE AG	22,968		2,340,194
Volkswagen AG	66,949		8,382,986
			27,459,734
ITALY – 0.46%
Intesa Sanpaolo SpA RNC	606,798		4,218,808
Telecom Italia SpA RNC	3,598,476		8,069,749
Unipol SpA	440,440		1,400,503
			13,689,060
TOTAL PREFERRED STOCKS (Cost: $30,881,835)			41,148,794
SHORT-TERM INVESTMENTS – 2.31%
MONEY MARKET FUNDS – 2.31%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	447,660		447,660
BGI Cash Premier Fund LLC 5.47%c,d,e	68,317,861		68,317,861
			68,765,521
TOTAL SHORT-TERM INVESTMENTS (Cost: $68,765,521)			68,765,521
TOTAL INVESTMENTS IN SECURITIES – 102.12% (Cost: $2,483,532,420)			3,034,546,490
Other Assets, Less Liabilities – (2.12)%			(62,981,160	)
NET ASSETS – 100.00%		$	2,971,565,330

ADR – American Depositary Receipts

SP ADR – Sponsored American Depositary Receipts

^a Non-income earning security.

^b All or a portion of this security represents a security on loan. See Note 5.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

32 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.94%
ADVERTISING – 0.61%
PagesJaunes SA	38,126	$	773,392
Publicis Groupe SA	45,283		1,958,141
			2,731,533
AEROSPACE & DEFENSE – 1.57%
European Aeronautic Defence and Space Co.	105,957		3,146,031
Safran SA	54,351		1,284,049
Thales SA	28,853		1,638,255
Zodiac SA	12,688		916,737
			6,985,072
AIRLINES – 0.38%
Air France-KLM	40,593		1,681,734
			1,681,734
APPAREL – 0.55%
Hermes Internationala	22,521		2,430,658
			2,430,658
AUTO MANUFACTURERS – 2.75%
PSA Peugeot Citroen SA	49,015		4,176,231
Renault SA	59,747		8,065,189
			12,241,420
AUTO PARTS & EQUIPMENT – 1.56%
Compagnie Generale des Etablissements Michelin Class B	46,371		5,845,516
Valeo SA	22,814		1,106,269
			6,951,785
BANKS – 12.55%
BNP Paribas	271,298		28,633,555
Credit Agricole SA	212,956		8,041,650
Societe Generale Class A	119,356		19,260,227
			55,935,432
BEVERAGES – 1.39%
Pernod Ricard SA	29,341		6,181,064
			6,181,064
BUILDING MATERIALS – 4.53%
Compagnie de Saint-Gobain	107,671		11,722,050
Imerys SA	10,370		950,141
Lafarge SA	48,450		7,528,978
			20,201,169

Security	Shares	Value
CHEMICALS – 2.23%
L’Air Liquide SA	77,953	$	9,941,505
			9,941,505
COMMERCIAL SERVICES – 0.17%
Societe des Autoroutes Paris-Rhin-Rhone	7,442		759,883
			759,883
COMPUTERS – 0.93%
Atos Origin SAb	22,529		1,268,433
Cap Gemini SA	44,561		2,885,520
			4,153,953
COSMETICS & PERSONAL CARE – 2.13%
L’Oreal SA	80,910		9,483,642
			9,483,642
ENGINEERING & CONSTRUCTION – 3.64%
Aeroports de Paris	11,369		1,301,743
Bouygues SA	71,963		5,671,367
Vinci SA	129,625		9,231,397
			16,204,507
FOOD – 5.82%
Carrefour SA	193,564		13,555,316
Casino Guichard-Perrachon SA	14,173		1,449,101
Groupe Danone	143,219		10,916,053
			25,920,470
FOOD SERVICE – 0.46%
Sodexho Alliance SA	31,191		2,057,172
			2,057,172
GAS – 0.72%
Gaz de France	63,867		3,204,054
			3,204,054
HAND & MACHINE TOOLS – 2.09%
Schneider Electric SA	70,057		9,311,758
			9,311,758
HEALTH CARE - PRODUCTS – 0.87%
Essilor International SA	64,050		3,889,935
			3,889,935
HOLDING COMPANIES - DIVERSIFIED – 1.98%
LVMH Moet Hennessy Louis Vuitton SA	79,044		8,834,975
			8,834,975

SCHEDULES OF INVESTMENTS 33

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2007

Security	Shares	Value
HOME FURNISHINGS – 0.30%
Thomson	80,180	$	1,317,130
			1,317,130
HOUSEHOLD PRODUCTS & WARES – 0.15%
Societe BIC	8,869		673,450
			673,450
INSURANCE – 5.29%
AXA	507,566		20,349,936
CNP Assurances SA	14,457		1,847,869
SCOR SE	57,137		1,399,719
			23,597,524
IRON & STEEL – 4.36%
Arcelor Mittal	294,705		19,432,966
			19,432,966
LODGING – 1.19%
Accor SA	61,756		5,304,740
			5,304,740
MACHINERY – 1.37%
ALSTOM	33,868		6,125,447
			6,125,447
MEDIA – 4.58%
Lagardere SCA	41,481		3,387,849
M6-Metropole Television	21,472		648,368
Societe Television Francaise 1	38,554		1,124,757
Vivendi SA	373,358		15,274,499
			20,435,473
METAL FABRICATE & HARDWARE – 0.93%
Vallourec SA	15,455		4,137,957
			4,137,957
OFFICE & BUSINESS EQUIPMENT – 0.36%
Neopost SA	10,444		1,598,761
			1,598,761
OIL & GAS – 11.76%
Total SA	695,660		52,396,807
			52,396,807
OIL & GAS SERVICES – 0.58%
Technip SA	32,662		2,608,806
			2,608,806

Security	Shares	Value
PHARMACEUTICALS – 6.04%
Sanofi-Aventis	329,394	$	26,906,859
			26,906,859
REAL ESTATE – 1.75%
Gecina SA	4,410		724,257
Klepierre	7,942		1,253,650
Unibail-Rodamco	24,229		5,838,085
			7,815,992
RETAIL – 0.97%
PPR SA	25,021		4,328,544
			4,328,544
SEMICONDUCTORS – 0.86%
STMicroelectronics NV	219,423		3,822,861
			3,822,861
SOFTWARE – 0.56%
Business Objects SAb	31,842		1,401,664
Dassault Systemes SA	18,790		1,105,564
			2,507,228
TELECOMMUNICATIONS – 5.81%
Alcatel-Lucent	746,563		8,172,549
France Telecom SA	586,819		17,711,579
			25,884,128
WATER – 6.15%
Suez SA	330,873		18,827,354
Veolia Environnement	112,015		8,594,206
			27,421,560
TOTAL COMMON STOCKS (Cost: $437,782,839)			445,417,954
SHORT-TERM INVESTMENTS – 0.33%
MONEY MARKET FUNDS – 0.33%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	54,520		54,520
BGI Cash Premier Fund LLC 5.47%c,d,e	1,420,965		1,420,965
			1,475,485
TOTAL SHORT-TERM INVESTMENTS (Cost: $1,475,485)			1,475,485

34 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2007

	Value
TOTAL INVESTMENTS IN SECURITIES – 100.27% (Cost: $439,258,324)	$	446,893,439
Other Assets, Less Liabilities – (0.27)%		(1,197,679	)
NET ASSETS – 100.00%	$	445,695,760

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 35

Schedule of Investments

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 95.84%
AIRLINES – 0.59%
Deutsche Lufthansa AG	331,973	$	9,693,882
			9,693,882
APPAREL – 1.30%
Adidas AG	296,573		17,445,682
Puma AG	9,690		3,893,484
			21,339,166
AUTO MANUFACTURERS – 10.18%
DaimlerChrysler AG Registered	1,343,090		119,342,458
Volkswagen AG	230,690		47,676,402
			167,018,860
AUTO PARTS & EQUIPMENT – 1.52%
Continental AG	192,376		25,021,900
			25,021,900
BANKS – 9.58%
Commerzbank AG	904,741		37,112,650
DEPFA Bank PLC	487,279		9,246,821
Deutsche Bank AG	740,010		91,429,233
Deutsche Postbank AG	119,851		8,695,449
Hypo Real Estate Holding AGa	195,315		10,730,406
			157,214,559
BIOTECHNOLOGY – 0.27%
QIAGEN NVa,b	260,510		4,478,319
			4,478,319
CHEMICALS – 10.83%
BASF AG	728,978		96,525,779
Bayer AG	1,029,010		81,250,053
			177,775,832
COMPUTERS – 0.25%
Wincor Nixdorf AG	47,940		4,124,504
			4,124,504
COSMETICS & PERSONAL CARE – 0.52%
Beiersdorf AG	127,220		8,545,027
			8,545,027
DIVERSIFIED FINANCIAL SERVICES – 2.06%
Deutsche Boerse AG	293,420		32,400,390
MLP AGa	83,470		1,331,349
			33,731,739

Security	Shares	Value
ELECTRIC – 13.66%
E.ON AG	903,134	$	151,621,963
RWE AG	644,916		72,567,661
			224,189,624
ENERGY - ALTERNATE SOURCES – 0.37%
SolarWorld AG	121,850		6,013,255
			6,013,255
ENGINEERING & CONSTRUCTION – 1.91%
Bilfinger Berger AG	53,867		4,426,613
Hochtief AG	60,414		6,064,121
Linde AG	177,990		20,903,855
			31,394,589
FOOD – 1.38%
METRO AG	237,490		20,591,024
Suedzucker AG	109,055		2,099,209
			22,690,233
HEALTH CARE - PRODUCTS – 0.83%
Fresenius Medical Care AG & Co. KGaA	276,420		13,588,474
			13,588,474
HOUSEHOLD PRODUCTS & WARES – 0.42%
Henkel KGaA	148,750		6,975,750
			6,975,750
INSURANCE – 11.77%
Allianz SE	653,310		140,113,103
Muenchener Rueckversicherungs- Gesellschaft AG	307,020		53,063,137
			193,176,240
IRON & STEEL – 2.59%
Salzgitter AG	59,673		11,795,637
ThyssenKrupp AG	524,790		30,691,517
			42,487,154
LEISURE TIME – 0.49%
TUI AGb	312,320		8,110,923
			8,110,923
MACHINERY - DIVERSIFIED – 1.95%
Heidelberger Druckmaschinen AG	86,406		3,918,972
MAN AG	164,075		23,550,766
Rheinmetall AG	53,751		4,464,710
			31,934,448

36 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2007

Security	Shares	Value
MANUFACTURING – 9.46%
Siemens AG	1,235,272	$	155,246,536
			155,246,536
MEDIA – 0.16%
Premiere AGb	121,012		2,629,616
			2,629,616
PHARMACEUTICALS – 1.20%
Celesio AG	122,837		7,694,674
Merck KGaA	93,569		12,008,304
			19,702,978
REAL ESTATE – 0.29%
IVG Immobilien AG	134,611		4,818,932
			4,818,932
RETAIL – 0.32%
Arcandor AGa,b	92,187		2,513,479
Douglas Holding AG	45,498		2,735,309
			5,248,788
SEMICONDUCTORS – 1.04%
Infineon Technologies AGb	1,091,570		16,993,906
			16,993,906
SOFTWARE – 4.23%
SAP AG	1,287,761		69,396,503
			69,396,503
TELECOMMUNICATIONS – 4.66%
Deutsche Telekom AG	4,109,279		76,410,933
			76,410,933
TRANSPORTATION – 2.01%
Deutsche Post AG	1,136,790		33,055,719
			33,055,719
TOTAL COMMON STOCKS (Cost: $1,374,723,807)			1,573,008,389
PREFERRED STOCKS – 3.95%
AUTO MANUFACTURERS – 2.54%
Porsche AG	12,674		22,659,529
Volkswagen AG	152,516		19,097,216
			41,756,745

Security	Shares	Value
ELECTRIC – 0.35%
RWE AG	56,019	$	5,707,737
			5,707,737
HOUSEHOLD PRODUCTS & WARES – 0.81%
Henkel KGaA	257,274		13,261,055
			13,261,055
MEDIA – 0.25%
ProSiebenSat.1 Media AG	120,938		4,146,449
			4,146,449
TOTAL PREFERRED STOCKS (Cost: $50,333,115)			64,871,986
SHORT-TERM INVESTMENTS – 0.47%
MONEY MARKET FUNDS – 0.47%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	55,019		55,019
BGI Cash Premier Fund LLC 5.47%c,d,e	7,617,411		7,617,411
			7,672,430
TOTAL SHORT-TERM INVESTMENTS (Cost: $7,672,430)			7,672,430
TOTAL INVESTMENTS IN SECURITIES – 100.26% (Cost: $1,432,729,352)			1,645,552,805
Other Assets, Less Liabilities – (0.26)%			(4,307,692	)
NET ASSETS – 100.00%		$	1,641,245,113

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 37

Schedule of Investments

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 94.96%
AEROSPACE & DEFENSE – 2.27%
Finmeccanica SpA	133,756	$	3,922,194
			3,922,194
AUTO MANUFACTURERS – 3.84%
Fiat SpA	248,982		6,618,782
			6,618,782
AUTO PARTS & EQUIPMENT – 0.78%
Pirelli & C. SpAa	1,191,274		1,338,992
			1,338,992
BANKS – 36.63%
Banca Monte dei Paschi di Siena SpAb	507,453		3,227,178
Banca Popolare di Milano Scrl	182,036		2,645,392
Banco Popolare SpAa	225,285		5,638,719
Capitalia SpA	594,630		5,670,352
Intesa Sanpaolo SpA	2,439,878		18,393,685
UniCredito Italiano SpA	2,498,902		21,427,691
Unione di Banche Italiane ScpA	241,984		6,188,637
			63,191,654
BUILDING MATERIALS – 0.57%
Italcementi SpA	39,696		982,198
			982,198
COMMERCIAL SERVICES – 2.31%
Atlantia SpA	119,704		3,993,173
			3,993,173
DIVERSIFIED FINANCIAL SERVICES – 2.94%
Mediobanca SpAb	235,450		5,074,650
			5,074,650
ELECTRIC – 8.81%
Enel SpA	798,209		8,248,241
Terna SpA	1,962,345		6,942,058
			15,190,299
ENTERTAINMENT – 0.46%
Lottomatica SpA	21,930		788,658
			788,658
FOOD – 1.28%
Parmalat SpA	611,864		2,210,428
			2,210,428

Security	Shares	Value
HEALTH CARE - PRODUCTS – 1.61%
Luxottica Group SpA	81,206	$	2,774,244
			2,774,244
INSURANCE – 6.93%
Assicurazioni Generali SpA	204,317		8,364,411
Fondiaria-Sai SpA	47,040		2,209,826
Mediolanum SpAb	188,724		1,380,297
			11,954,534
MEDIA – 2.66%
Arnoldo Mondadori Editore SpA	45,494		428,866
Mediaset SpA	303,116		3,219,006
Seat Pagine Gialle SpA	1,710,582		943,274
			4,591,146
OIL & GAS – 17.03%
Eni SpA	848,914		29,371,818
			29,371,818
RETAIL – 1.12%
Autogrill SpA	56,494		1,183,727
Bulgari SpA	53,150		746,304
			1,930,031
TELECOMMUNICATIONS – 5.72%
Telecom Italia SpA	3,475,800		9,867,685
			9,867,685
TOTAL COMMON STOCKS (Cost: $172,887,600)			163,800,486
PREFERRED STOCKS – 4.89%
BANKS – 1.03%
Intesa Sanpaolo SpA RNC	254,889		1,772,135
			1,772,135
INSURANCE – 1.78%
Unipol SpA	966,819		3,074,272
			3,074,272
TELECOMMUNICATIONS – 2.08%
Telecom Italia SpA RNC	1,599,947		3,587,955
			3,587,955
TOTAL PREFERRED STOCKS (Cost: $9,531,434)			8,434,362

38 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2007

Security	Shares	Value
SHORT-TERM INVESTMENTS – 3.67%
MONEY MARKET FUNDS – 3.67%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	29,985	$	29,985
BGI Cash Premier Fund LLC 5.47%c,d,e	6,299,869		6,299,869
			6,329,854
TOTAL SHORT-TERM INVESTMENTS (Cost: $6,329,854)			6,329,854
TOTAL INVESTMENTS IN SECURITIES – 103.52% (Cost: $188,748,888)			178,564,702
Other Assets, Less Liabilities – (3.52)%			(6,069,486	)
NET ASSETS – 100.00%		$	172,495,216

^a Non-income earning security.

^b All or a portion of this security represents a security on loan. See Note 5.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 39

Schedule of Investments

iSHARES^® MSCI NETHERLANDS INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.73%
BANKS – 16.25%
ABN AMRO Holding NV	877,790	$	40,841,569
			40,841,569
BEVERAGES – 4.84%
Heineken NV	191,815		12,154,139
			12,154,139
CHEMICALS – 7.34%
Akzo Nobel NVa	158,522		12,484,393
Koninklijke DSM NV	116,441		5,957,444
			18,441,837
COMMERCIAL SERVICES – 1.51%
Randstad Holding NV	19,874		1,112,990
Vedior NV	118,300		2,688,412
			3,801,402
DISTRIBUTION & WHOLESALE – 0.99%
Corporate Express NV	89,908		1,009,953
Hagemeyer NV	350,506		1,486,043
			2,495,996
ELECTRONICS – 8.56%
Koninklijke Philips Electronics NV	545,651		21,519,833
			21,519,833
FOOD – 15.48%
Koninklijke Ahold NVb	751,205		10,035,986
Royal Numico NV	97,513		7,177,139
Unilever NV	709,774		21,703,255
			38,916,380
INSURANCE – 19.45%
Aegon NV	652,678		11,913,930
ING Groep NV	918,853		36,977,530
			48,891,460
MEDIA – 6.82%
Reed Elsevier NV	629,356		11,359,517
Wolters Kluwer NV CVA	198,744		5,792,649
			17,152,166
OFFICE & BUSINESS EQUIPMENT – 0.58%
Oce NV	67,600		1,456,060
			1,456,060

Security	Shares	Value
OIL & GAS SERVICES – 2.25%
Fugro NV	34,814	$	2,420,470
SBM Offshore NV	86,190		3,232,384
			5,652,854
REAL ESTATE INVESTMENT TRUSTS – 3.04%
Corio NV	53,797		4,193,510
Wereldhave NV	28,660		3,433,928
			7,627,438
SEMICONDUCTORS – 3.21%
ASML Holding NVb	272,259		8,065,243
			8,065,243
TELECOMMUNICATIONS – 4.66%
Koninklijke KPN NV	751,230		11,715,868
			11,715,868
TRANSPORTATION – 4.75%
TNT NV	282,490		11,938,239
			11,938,239
TOTAL COMMON STOCKS (Cost: $232,907,988)			250,670,484
SHORT-TERM INVESTMENTS – 2.26%
MONEY MARKET FUNDS – 2.26%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	50,472		50,472
BGI Cash Premier Fund LLC 5.47%c,d,e	5,630,400		5,630,400
			5,680,872
TOTAL SHORT-TERM INVESTMENTS (Cost: $5,680,872)			5,680,872
TOTAL INVESTMENTS IN SECURITIES – 101.99% (Cost: $238,588,860)			256,351,356
Other Assets, Less Liabilities – (1.99)%			(4,997,494	)
NET ASSETS – 100.00%		$	251,353,862

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

40 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.74%
AGRICULTURE – 3.63%
Altadis SA	285,743	$	18,990,033
			18,990,033
AIRLINES – 0.48%
Iberia Lineas Aereas de Espana SA	546,720		2,489,355
			2,489,355
BANKS – 35.88%
Banco Bilbao Vizcaya Argentaria SA	2,729,569		62,849,125
Banco Popular Espanol SA	1,311,318		23,936,691
Banco Santander SA	5,240,523		95,731,516
Bankinter SAa	324,455		4,989,294
			187,506,626
BIOTECHNOLOGY – 0.30%
Zeltia SAa	158,380		1,578,313
			1,578,313
COMMERCIAL SERVICES – 2.59%
Abertis Infraestructuras SAa	334,726		10,157,577
Cintra Concesiones de Infraestructuras de Transporte SAa	212,769		3,347,262
			13,504,839
COMPUTERS – 0.75%
Indra Sistemas SA	150,629		3,938,517
			3,938,517
ELECTRIC – 11.44%
Endesa SAa	461,687		25,106,559
Iberdrola SA	466,253		25,869,710
Union Fenosa SA	160,914		8,798,771
			59,775,040
ENERGY – ALTERNATE SOURCES – 1.46%
Gamesa Corporacion Tecnologica SA	191,348		7,632,622
			7,632,622
ENGINEERING & CONSTRUCTION – 7.11%
Acciona SA	37,264		9,352,307
Actividades de Construcciones y Servicios SA	260,501		14,322,312

Security	Shares	Value
Fomento de Construcciones y Contratas SA	56,680	$	4,941,353
Grupo Ferrovial SAa	60,837		5,341,081
Sacyr Vallehermoso SAa	81,010		3,213,713
			37,170,766
FOOD – 0.79%
Ebro Puleva SA	154,208		3,390,914
Viscofan SA	30,246		725,698
			4,116,612
FOREST PRODUCTS & PAPER – 0.20%
Grupo Empresarial ENCE SAa	89,200		1,064,017
			1,064,017
GAS – 2.95%
Gas Natural SDG SA	289,731		15,435,654
			15,435,654
INSURANCE – 1.27%
Mapfre SA	1,497,128		6,612,709
			6,612,709
IRON & STEEL – 0.74%
Acerinox SAa	153,448		3,861,610
			3,861,610
MACHINERY – 0.50%
Zardoya Otis SA	82,521		2,603,175
			2,603,175
MEDIA – 1.98%
Antena 3 de Television SAb	58,643		1,096,846
Gestevision Telecinco SA	180,996		4,811,484
Promotora de Informaciones SA	127,910		2,737,661
Sogecable SAb	44,229		1,675,000
			10,320,991
OIL & GAS – 4.89%
Repsol YPF SA	707,840		25,552,217
			25,552,217
PHARMACEUTICALS – 0.33%
FAES FARMA SAa	88,598		1,729,587
			1,729,587
RETAIL – 2.70%
Industria de Diseno Textil SA	240,744		14,128,763
			14,128,763

SCHEDULES OF INVESTMENTS 41

Schedule of Investments (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2007

Security	Shares	Value
TELECOMMUNICATIONS – 18.68%
Telefonica SA	3,929,785	$	97,609,631
			97,609,631
WATER – 1.07%
Sociedad General de Aguas de Barcelona SA Class Aa	153,097		5,572,543
			5,572,543
TOTAL COMMON STOCKS (Cost: $499,856,632)			521,193,620
SHORT-TERM INVESTMENTS – 8.32%
MONEY MARKET FUNDS – 8.32%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	55,951		55,951
BGI Cash Premier Fund LLC 5.47%c,d,e	43,415,105		43,415,105
			43,471,056
TOTAL SHORT-TERM INVESTMENTS (Cost: $43,471,056)			43,471,056
TOTAL INVESTMENTS IN SECURITIES – 108.06% (Cost: $543,327,688)			564,664,676
Other Assets, Less Liabilities – (8.06)%			(42,108,660	)
NET ASSETS – 100.00%		$	522,556,016

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

42 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.85%
AGRICULTURE – 1.50%
Swedish Match AB	446,048	$	8,629,093
			8,629,093
AIRLINES – 0.41%
SAS ABa	122,656		2,341,698
			2,341,698
AUTO MANUFACTURERS – 2.45%
Scania AB Class B	603,566		14,020,422
			14,020,422
BANKS – 17.25%
Nordea Bank AB	3,455,724		52,679,867
Skandinaviska Enskilda Banken AB Class A	773,178		23,348,508
Svenska Handelsbanken AB Class A	821,096		22,828,587
			98,856,962
COMMERCIAL SERVICES – 1.78%
Securitas AB Class B	523,330		6,914,063
Securitas Direct AB Class Ba	519,132		1,469,700
Securitas Systems AB Class B	518,936		1,823,247
			10,207,010
COSMETICS & PERSONAL CARE – 0.65%
Oriflame Cosmetics SA	67,639		3,711,977
			3,711,977
DIVERSIFIED FINANCIAL SERVICES – 1.18%
D. Carnegie & Co. ABb	115,988		1,881,815
OMX AB	141,415		4,886,397
			6,768,212
ENGINEERING & CONSTRUCTION – 2.22%
Skanska AB Class B	628,481		12,751,471
			12,751,471
FOOD – 0.30%
Axfood AB	47,968		1,713,180
			1,713,180
FOREST PRODUCTS & PAPER – 3.61%
Billerud AB	70,756		988,736
Holmen AB Class B	88,847		3,398,910
Svenska Cellulosa AB Class B	938,370		16,280,148
			20,667,794

Security	Shares	Value
HAND & MACHINE TOOLS – 5.63%
Sandvik AB	1,584,414	$	32,261,746
			32,261,746
HEALTH CARE - PRODUCTS – 1.46%
Elekta AB Class Bb	142,115		2,171,593
Getinge AB Class B	284,437		6,214,968
			8,386,561
HOME FURNISHINGS – 2.13%
Electrolux AB Series B	423,515		9,499,781
Nobia AB	244,527		2,724,718
			12,224,499
HOUSEHOLD PRODUCTS & WARES – 1.05%
Husqvarna AB	470,322		6,008,890
			6,008,890
IRON & STEEL – 2.64%
SSAB Svenskt Stal AB Class A	259,701		8,822,787
SSAB Svenskt Stal AB Class B	115,008		3,606,601
SSAB Svenskt Stal AB Class B Newa,c	24,722		775,271
SSAB Svenskt Stal AB Newa,c	56,140		1,907,237
			15,111,896
MACHINERY – 12.79%
Atlas Copco AB Class A	1,072,306		17,825,452
Atlas Copco AB Class B	648,114		10,256,383
Volvo AB Class A	794,109		13,748,484
Volvo AB Class B	1,815,935		31,439,455
			73,269,774
MANUFACTURING – 2.24%
Alfa Laval AB	158,501		9,538,341
Trelleborg AB Class B	137,208		3,306,769
			12,845,110
MEDIA – 1.51%
Eniro AB	306,029		3,709,927
Modern Times Group MTG AB Class B	86,194		4,936,741
			8,646,668

SCHEDULES OF INVESTMENTS 43

Schedule of Investments (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2007

Security	Shares	Value
METAL FABRICATE & HARDWARE – 4.51%
Assa Abloy AB Class Bb	521,218	$	10,802,191
Hoganas AB Class Bb	40,508		1,161,513
SKF AB	681,028		13,891,771
			25,855,475
MINING – 1.77%
Boliden AB	482,046		10,147,821
			10,147,821
OIL & GAS – 0.66%
Lundin Petroleum ABa,b	390,069		3,765,992
			3,765,992
REAL ESTATE – 1.66%
Castellum AB	256,512		3,184,125
Fabege AB	236,062		2,656,098
Kungsleden AB	226,138		2,774,256
Wihlborgs Fastigheter AB	48,451		881,042
			9,495,521
RETAIL – 7.79%
Hennes & Mauritz AB Class B	791,191		44,626,074
			44,626,074
TELECOMMUNICATIONS – 22.66%
Tele2 AB Class B	510,373		9,336,295
Telefonaktiebolaget LM Ericsson AB Class B	24,673,127		91,702,353
TeliaSonera AB	3,696,197		28,843,629
			129,882,277
TOTAL COMMON STOCKS (Cost: $541,353,926)			572,196,123

Security	Shares	Value
SHORT-TERM INVESTMENTS – 0.78%
MONEY MARKET FUNDS – 0.78%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%d,e	379,453	$	379,453
BGI Cash Premier Fund LLC 5.47%d,e,f	4,077,844		4,077,844
			4,457,297
TOTAL SHORT-TERM INVESTMENTS (Cost: $4,457,297)			4,457,297
TOTAL INVESTMENTS IN SECURITIES – 100.63% (Cost: $545,811,223)			576,653,420
Other Assets, Less Liabilities – (0.63)%			(3,627,220	)
NET ASSETS – 100.00%		$	573,026,200

^a Non-income earning security.

^b All or a portion of this security represents a security on loan. See Note 5.

^c Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^d Affiliated issuer. See Note 2.

^e The rate quoted is the annualized seven-day yield of the fund at period end.

f This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

44 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.54%
BANKS – 6.16%
Banque Cantonale Vaudoise	1,417	$	669,624
Credit Suisse Group Registered	227,908		14,891,448
Julius Baer Holding AG	36,521		2,418,009
Vontobel Holding AG Registered	33,913		1,655,936
			19,635,017
BUILDING MATERIALS – 3.76%
Geberit AG Registered	14,001		2,062,549
Holcim Ltd. Registered	91,896		9,932,647
			11,995,196
CHEMICALS – 6.02%
Ciba Specialty Chemicals AG Registered	34,223		1,872,168
Clariant AG Registereda	63,716		848,984
Givaudan SA Registered	6,231		5,626,104
Lonza Group AG Registered	15,277		1,498,241
Syngenta AG Registered	49,963		9,349,197
			19,194,694
COMMERCIAL SERVICES – 1.88%
Adecco SA Registered	45,693		2,978,005
SGS SA Registered	2,537		3,031,886
			6,009,891
COMPUTERS – 0.39%
Logitech International SA Registereda	45,614		1,230,668
			1,230,668
DIVERSIFIED FINANCIAL SERVICES – 9.33%
UBS AG Registered	570,558		29,748,534
			29,748,534
ENGINEERING & CONSTRUCTION – 4.98%
ABB Ltd. Registered	646,065		15,880,270
			15,880,270
FOOD – 15.99%
Nestle SA Registered	117,311		51,019,557
			51,019,557

Security	Shares	Value
HAND & MACHINE TOOLS – 0.81%
Schindler Holding AG Participation Certificates	31,936	$	1,955,859
Schindler Holding AG Registered	9,778		611,378
			2,567,237
HEALTH CARE - PRODUCTS – 4.93%
Nobel Biocare Holding AG	15,360		4,185,451
Sonova Holding AG Registered	32,235		2,849,208
Straumann Holding AG Registered	8,219		2,254,902
Synthes Inc.	56,366		6,442,228
			15,731,789
INSURANCE – 10.03%
Swiss Life Holdinga	13,101		3,109,089
Swiss Reinsurance Co. Registered	163,793		13,786,103
Zurich Financial Services AG Registered	52,805		15,109,930
			32,005,122
LEISURE TIME – 0.04%
Kuoni Reisen Holding AG Registered	247		124,696
			124,696
MACHINERY – 0.24%
Rieter Holding AG	1,457		776,552
			776,552
MANUFACTURING – 0.43%
Sulzer AG Registered	1,024		1,358,497
			1,358,497
PHARMACEUTICALS – 23.13%
Novartis AG Registered	666,067		35,141,746
Roche Holding AG	222,422		38,656,476
			73,798,222
REAL ESTATE – 1.27%
PSP Swiss Property AGa	75,409		4,065,957
			4,065,957
RETAIL – 6.69%
Compagnie Financiere Richemont AG Class A	213,466		13,214,646
Swatch Group (The) AG Class B	16,718		5,005,161
Swatch Group (The) AG Registered	55,635		3,126,390
			21,346,197

SCHEDULES OF INVESTMENTS 45

Schedule of Investments (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2007

Security	Shares	Value
SEMICONDUCTORS – 0.21%
OC Oerlikon Corp. AG Registereda	2,075	$	668,025
			668,025
TELECOMMUNICATIONS – 2.53%
Swisscom AG Registered	22,950		8,062,795
			8,062,795
TRANSPORTATION – 0.72%
Kuehne & Nagel International AG Registered	24,524		2,297,539
			2,297,539
TOTAL COMMON STOCKS (Cost: $261,851,055)			317,516,455
SHORT-TERM INVESTMENTS – 0.02%
MONEY MARKET FUNDS – 0.02%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%b,c	73,619		73,619
			73,619
TOTAL SHORT-TERM INVESTMENTS (Cost: $73,619)			73,619
TOTAL INVESTMENTS IN SECURITIES – 99.56% (Cost: $261,924,674)			317,590,074
Other Assets, Less Liabilities – 0.44%			1,407,982
NET ASSETS – 100.00%		$	318,998,056

^a Non-income earning security.

^b Affiliated issuer. See Note 2.

^c The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

46 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 98.70%
ADVERTISING – 0.61%
Aegis Group PLC	307,572	$	817,361
WPP Group PLC	424,841		6,049,894
			6,867,255
AEROSPACE & DEFENSE – 1.96%
BAE Systems PLC	1,221,556		11,389,560
BBA Aviation PLC	149,420		726,344
Cobham PLC	419,064		1,698,999
Meggitt PLC	233,856		1,501,183
Rolls-Royce Group PLCa	658,498		6,787,222
			22,103,308
AGRICULTURE – 2.62%
British American Tobacco PLC	557,557		18,500,005
Imperial Tobacco Group PLC	244,872		11,068,726
			29,568,731
AIRLINES – 0.16%
British Airways PLCa	210,312		1,799,710
			1,799,710
APPAREL – 0.17%
Burberry Group PLC	156,864		1,931,637
			1,931,637
AUTO PARTS & EQUIPMENT – 0.17%
GKN PLC	251,397		1,866,056
			1,866,056
BANKS – 17.11%
Barclays PLCb	2,376,453		29,407,659
HBOS PLC	1,361,130		24,132,657
HSBC Holdings PLC	4,254,637		76,978,886
Lloyds TSB Group PLC	2,052,040		22,557,917
Royal Bank of Scotland Group PLC	3,436,595		39,823,099
			192,900,218
BEVERAGES – 2.95%
Diageo PLC	966,273		20,640,132
SABMiller PLC	328,083		8,999,933
Scottish & Newcastle PLC	291,156		3,635,240
			33,275,305

Security	Shares	Value
BUILDING MATERIALS – 0.13%
Travis Perkins PLC	41,233	$	1,484,567
			1,484,567
CHEMICALS – 0.72%
Imperial Chemical Industries PLC	434,679		5,558,717
Johnson Matthey PLC	79,916		2,587,173
			8,145,890
COMMERCIAL SERVICES – 1.91%
Aggreko PLC	92,112		994,930
Bunzl PLC	120,477		1,674,326
Capita Group PLC	227,942		3,450,577
Davis Service Group PLC (The)	65,732		782,913
De La Rue PLC	53,203		798,409
Experian Group Ltd.	373,802		3,943,301
G4S PLC	415,413		1,661,154
Hays PLC	520,752		1,670,109
Intertek Group PLC	56,316		1,115,475
Michael Page International PLC	122,892		1,189,201
Rank Group PLC	144,962		490,494
Rentokil Initial PLC	663,252		2,317,091
Serco Group PLC	171,971		1,464,676
			21,552,656
COMPUTERS – 0.16%
LogicaCMG PLC	548,358		1,802,887
			1,802,887
DISTRIBUTION & WHOLESALE – 0.58%
Inchcape PLC	158,340		1,507,472
Wolseley PLC	241,360		5,063,086
			6,570,558
DIVERSIFIED FINANCIAL SERVICES – 1.63%
Cattles PLC	138,060		1,015,734
Close Brothers Group PLC	47,880		745,087
ICAP PLC	184,734		1,818,374
INVESCO PLC	291,842		3,546,676
Investec PLC	143,403		1,563,402
London Stock Exchange Group PLCc	54,482		1,501,137
Man Group PLC	657,454		6,544,390
Schroders PLC	40,355		1,077,710
Tullett Prebon PLC	64,442		543,328
			18,355,838

SCHEDULES OF INVESTMENTS 47

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2007

Security	Shares	Value
ELECTRIC – 2.79%
British Energy Group PLC	372,653	$	3,483,943
International Power PLC	541,956		4,421,801
National Grid PLC	982,875		14,720,122
Scottish & Southern Energy PLC	310,856		8,891,031
			31,516,897
ELECTRONICS – 0.11%
Electrocomponents PLC	158,692		810,627
Premier Farnell PLC	124,944		458,673
			1,269,300
ENGINEERING & CONSTRUCTION – 0.27%
AMEC PLC	119,928		1,578,402
Balfour Beatty PLC	153,519		1,466,219
			3,044,621
ENTERTAINMENT – 0.34%
Ladbrokes PLC	228,132		2,003,969
PartyGaming PLCa	422,918		240,986
William Hill PLC	131,312		1,628,907
			3,873,862
ENVIRONMENTAL CONTROL – 0.06%
Biffa PLC	124,531		633,615
			633,615
FOOD – 5.06%
Cadbury Schweppes PLC	764,237		9,033,215
J Sainsbury PLC	569,790		6,367,094
Tate & Lyle PLC	176,565		2,010,413
Tesco PLC	2,875,692		24,651,762
Unilever PLC	475,065		14,977,133
			57,039,617
FOOD SERVICE – 0.42%
Compass Group PLC	720,103		4,720,572
			4,720,572
FOREST PRODUCTS & PAPER – 0.12%
Mondi PLC	133,324		1,316,369
			1,316,369
GAS – 0.92%
Centrica PLC	1,330,813		10,348,040
			10,348,040
HEALTH CARE - PRODUCTS – 0.41%
Smith & Nephew PLC	339,820		4,002,934

Security	Shares	Value
SSL International PLC	73,644	$	655,077
			4,658,011
HOLDING COMPANIES - DIVERSIFIED – 0.14%
Tomkins PLC	325,881		1,569,347
			1,569,347
HOME BUILDERS – 0.89%
Barratt Developments PLC	106,932		2,002,656
Bellway PLC	40,812		1,045,462
Berkeley Group Holdings PLC (The)a	30,198		978,838
Bovis Homes Group PLC	43,548		675,478
Persimmon PLC	104,424		2,436,971
Taylor Wimpey PLC	411,740		2,883,912
			10,023,317
HOME FURNISHINGS – 0.05%
Galiform PLCa	227,982		597,806
			597,806
HOUSEHOLD PRODUCTS & WARES – 1.07%
Reckitt Benckiser PLC	221,329		12,049,190
			12,049,190
INSURANCE – 4.67%
Aviva PLC	942,082		13,463,105
Friends Provident PLC	668,892		2,413,698
Legal & General Group PLC	2,378,310		6,960,694
Old Mutual PLC	1,908,699		6,148,356
Prudential PLC	894,158		12,679,037
Resolution PLC	251,424		3,136,629
Royal & Sun Alliance Insurance Group PLC	1,144,981		3,267,920
Standard Life PLC	763,572		4,624,339
			52,693,778
LEISURE TIME – 0.44%
Carnival PLC	62,129		2,754,474
First Choice Holidays PLC	206,187		1,229,993
Thomas Cook Group PLCa	175,585		1,012,908
			4,997,375
LODGING – 0.20%
InterContinental Hotels Group PLC	106,985		2,237,785
			2,237,785

48 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2007

Security	Shares	Value
MANUFACTURING – 0.80%
Charter PLCa	59,736	$	1,343,469
Cookson Group PLC	69,925		1,082,499
FKI PLC	200,640		426,960
IMI PLC	124,716		1,417,532
Invensys PLCa	284,088		1,958,295
Smiths Group PLC	140,609		2,799,284
			9,028,039
MEDIA – 2.88%
British Sky Broadcasting Group PLC	413,136		5,629,049
Daily Mail & General Trust PLC Class A	105,043		1,437,585
Emap PLC	77,292		1,411,691
ITV PLC	1,408,812		3,117,284
Pearson PLC	292,752		4,399,191
Reed Elsevier PLC	466,278		5,628,929
Reuters Group PLC	455,821		5,875,054
Trinity Mirror PLC	107,296		1,014,475
United Business Media PLC	90,025		1,373,690
Yell Group PLC	284,367		2,588,291
			32,475,239
MINING – 8.10%
Anglo American PLC	488,956		28,048,913
BHP Billiton PLC	838,805		24,684,991
Rio Tinto PLC	363,617		25,156,775
Xstrata PLC	229,422		13,443,051
			91,333,730
OIL & GAS – 16.72%
BG Group PLC	1,234,381		19,769,077
BP PLC	6,949,229		78,144,454
Royal Dutch Shell PLC Class A	1,331,966		51,717,859
Royal Dutch Shell PLC Class B	999,042		38,972,376
			188,603,766
PACKAGING & CONTAINERS – 0.22%
Rexam PLC	236,797		2,495,624
			2,495,624
PHARMACEUTICALS – 7.18%
AstraZeneca PLC	543,246		26,791,194
GlaxoSmithKline PLC	2,075,824		54,222,178
			81,013,372

Security	Shares	Value
REAL ESTATE – 1.58%
British Land Co. PLC	190,239	$	4,961,520
Brixton PLC	96,475		769,623
Great Portland Estates PLC	67,443		880,152
Hammerson PLC	106,047		2,840,620
Land Securities Group PLC	170,316		6,224,870
Liberty International PLC	90,665		2,192,681
			17,869,466
REAL ESTATE INVESTMENT TRUSTS – 0.16%
SEGRO PLC	158,267		1,746,202
			1,746,202
RETAIL – 2.82%
Carphone Warehouse Group PLC (The)	145,464		1,000,522
DSG International PLC	671,460		2,099,271
Enterprise Inns PLC	197,342		2,565,424
Home Retail Group PLC	314,499		2,627,837
Kesa Electricals PLC	190,608		1,188,000
Kingfisher PLC	844,535		3,551,734
Marks & Spencer Group PLC	618,204		7,793,427
Mitchells & Butlers PLC	144,921		2,082,729
Next PLC	81,116		3,159,406
Punch Taverns PLC	95,103		2,108,184
Signet Group PLC	639,732		1,219,401
Whitbread PLC	71,151		2,357,954
			31,753,889
SEMICONDUCTORS – 0.19%
ARM Holdings PLC	496,356		1,474,230
CSR PLCa	48,216		631,179
			2,105,409
SOFTWARE – 0.28%
Misys PLC	190,545		886,862
Sage Group PLC	472,127		2,249,818
			3,136,680
TELECOMMUNICATIONS – 7.43%
BT Group PLC	2,973,702		18,939,018
Cable & Wireless PLC	872,967		3,012,760
Vodafone Group PLC	19,199,161		61,883,617
			83,835,395

SCHEDULES OF INVESTMENTS 49

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2007

Security	Shares	Value
TRANSPORTATION – 0.47%
Arriva PLC	71,902	$	1,097,151
FirstGroup PLC	161,539		2,122,797
National Express Group PLC	47,880		1,211,067
Stagecoach Group PLC	187,763		840,775
Stagecoach Group PLC Class C Deferredd	303,597		61
			5,271,851
VENTURE CAPITAL – 0.27%
3i Group PLC	144,842		3,082,220
			3,082,220
WATER – 0.76%
Kelda Group PLC	102,356		1,800,307
Kelda Group PLC Deferredd	132,009		27
Severn Trent PLC	84,668		2,331,141
United Utilities PLC	316,433		4,416,767
			8,548,242
TOTAL COMMON STOCKS (Cost: $909,828,202)			1,113,113,242
SHORT-TERM INVESTMENTS – 0.14%
MONEY MARKET FUNDS – 0.14%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%b,e	94,249		94,249
BGI Cash Premier Fund LLC 5.47%b,e,f	1,485,604		1,485,604
			1,579,853
TOTAL SHORT-TERM INVESTMENTS (Cost: $1,579,853)			1,579,853
TOTAL INVESTMENTS IN SECURITIES – 98.84% (Cost: $911,408,055)			1,114,693,095
Other Assets, Less Liabilities – 1.16%			13,045,243
NET ASSETS – 100.00%		$	1,127,738,338

^a Non-income earning security.

^b Affiliated issuer. See Note 2.

^c All or a portion of this security represents a security on loan. See Note 5.

^d Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^e The rate quoted is the annualized seven-day yield of the fund at period end.

^f This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

50 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities

iSHARES^®, INC.

August 31, 2007

	iShares MSCI
	Austria Index Fund			Belgium Index Fund			EMU Index Fund			France Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	461,520,903		$	274,807,471		$	2,414,766,899		$	437,782,839
Affiliated issuers (Note 2)		20,898,129			9,787			68,765,521			1,475,485
Total cost of investments	$	482,419,032		$	274,817,258		$	2,483,532,420		$	439,258,324
Investments in securities, at value (including securities on loana) (Note 1):
Unaffiliated issuers	$	468,555,000		$	301,501,516		$	2,965,780,969		$	445,417,954
Affiliated issuers (Note 2)		20,898,129			9,787			68,765,521			1,475,485
Total value of investments		489,453,129			301,511,303			3,034,546,490			446,893,439
Foreign currencies, at valueb		310,423			68,741			7,613,407			322,889
Receivables:
Investment securities sold		16,487,691			14,801,734			13,792,190			1,615,681
Dividends and interest		1,907,950			1,776,954			3,372,055			107,272
Capital shares sold		–			–			–			71,265
Total Assets		508,159,193			318,158,732			3,059,324,142			449,010,546
LIABILITIES
Payables:
Investment securities purchased		13,598,087			14,544,288			18,159,958			1,714,125
Collateral for securities on loan (Note 5)		20,831,439			–			68,317,861			1,420,965
Investment advisory fees (Note 2)		215,847			131,045			1,280,993			179,696
Total Liabilities		34,645,373			14,675,333			87,758,812			3,314,786
NET ASSETS	$	473,513,820		$	303,483,399		$	2,971,565,330		$	445,695,760
Net assets consist of:
Paid-in capital	$	477,138,685		$	272,804,022		$	2,372,670,897		$	440,360,295
Undistributed net investment income		6,668,789			6,750,550			62,166,681			5,048,619
Accumulated net realized loss		(17,393,861	)		(2,769,497	)		(14,307,240	)		(7,353,090	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		7,100,207			26,698,324			551,034,992			7,639,936
NET ASSETS	$	473,513,820		$	303,483,399		$	2,971,565,330		$	445,695,760
Shares outstandingc		12,700,000			11,720,000			26,000,000			12,200,000
Net asset value per share	$	37.28		$	25.89		$	114.29		$	36.53

^a Securities on loan with market values of $19,535,280, $–, $66,030,657 and $1,350,617, respectively. See Note 5.

^b Cost of foreign currencies: $309,102, $69,426, $7,615,383 and $319,265, respectively.

^c $0.001 par value, number of shares authorized: 19.8 million, 136.2 million, 500 million and 340.2 million, respectively.

See notes to financial statements.

FINANCIAL STATEMENTS 51

Statements of Assets and Liabilities (Continued)

iSHARES^®, INC.

August 31, 2007

	iShares MSCI
	Germany Index Fund			Italy Index Fund			Netherlands Index Fund			Spain Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	1,425,056,922		$	182,419,034		$	232,907,988		$	499,856,632
Affiliated issuers (Note 2)		7,672,430			6,329,854			5,680,872			43,471,056
Total cost of investments	$	1,432,729,352		$	188,748,888		$	238,588,860		$	543,327,688
Investments in securities, at value
(including securities on loana) (Note 1):
Unaffiliated issuers	$	1,637,880,375		$	172,234,848		$	250,670,484		$	521,193,620
Affiliated issuers (Note 2)		7,672,430			6,329,854			5,680,872			43,471,056
Total value of investments		1,645,552,805			178,564,702			256,351,356			564,664,676
Foreign currencies, at valueb		1,356,170			43,635			3,268,430			636,057
Receivables:
Investment securities sold		9,533,674			5,310,620			–			15,103,087
Dividends and interest		2,240,460			73,294			301,054			108,177
Total Assets		1,658,683,109			183,992,251			259,920,840			580,511,997
LIABILITIES
Payables:
Investment securities purchased		9,079,856			5,121,904			2,823,154			14,315,537
Collateral for securities on loan (Note 5)		7,617,411			6,299,869			5,630,400			43,415,105
Investment advisory fees (Note 2)		740,729			75,262			113,424			225,339
Total Liabilities		17,437,996			11,497,035			8,566,978			57,955,981
NET ASSETS	$	1,641,245,113		$	172,495,216		$	251,353,862		$	522,556,016
Net assets consist of:
Paid-in capital	$	1,439,537,051		$	181,937,427		$	235,066,386		$	495,114,603
Undistributed net investment income		27,920,700			7,309,944			8,180,561			10,548,212
Accumulated net realized loss		(39,058,595	)		(6,590,139	)		(9,656,499	)		(4,442,877	)
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies		212,845,957			(10,162,016	)		17,763,414			21,336,078
NET ASSETS	$	1,641,245,113		$	172,495,216		$	251,353,862		$	522,556,016
Shares outstandingc		51,000,000			5,100,000			8,450,000			9,000,000
Net asset value per share	$	32.18		$	33.82		$	29.75		$	58.06

^a Securities on loan with market values of $7,584,277, $6,017,887, $5,434,092 and $41,598,052, respectively. See Note 5.

^b Cost of foreign currencies: $1,344,524, $43,730, $3,269,974 and $636,923, respectively.

^c $0.001 par value, number of shares authorized: 382.2 million, 63.6 million, 255 million and 127.8 million, respectively.

See notes to financial statements.

52 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities (Continued)

iSHARES^®, INC.

August 31, 2007

	iShares MSCI
	Sweden Index Fund			Switzerland Index Fund			United Kingdom Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	541,353,926		$	261,851,055		$	882,840,896
Affiliated issuers (Note 2)		4,457,297			73,619			28,567,159
Total cost of investments	$	545,811,223		$	261,924,674		$	911,408,055
Investments in securities, at value (including securities on loana) (Note 1):
Unaffiliated issuers	$	572,196,123		$	317,516,455		$	1,083,705,583
Affiliated issuers (Note 2)		4,457,297			73,619			30,987,512
Total value of investments		576,653,420			317,590,074			1,114,693,095
Foreign currencies, at valueb		157,660			687,353			8,124,751
Receivables:
Investment securities sold		2,911,312			1,849,599			3,338,947
Dividends and interest		4,235			916,482			7,968,799
Capital shares sold		86,892			153,810			–
Total Assets		579,813,519			321,197,318			1,134,125,592
LIABILITIES
Payables:
Investment securities purchased		2,470,547			1,885,654			4,343,465
Securities related to in-kind transactions (Note 4)		–			–			68,937
Collateral for securities on loan (Note 5)		4,077,844			–			1,485,604
Capital shares redeemed		–			174,019			–
Investment advisory fees (Note 2)		238,928			139,589			489,248
Total Liabilities		6,787,319			2,199,262			6,387,254
NET ASSETS	$	573,026,200		$	318,998,056		$	1,127,738,338
Net assets consist of:
Paid-in capital	$	533,247,608		$	266,092,374		$	924,686,581
Undistributed net investment income		13,788,192			3,929,999			32,407,502
Accumulated net realized loss		(4,848,282	)		(6,693,025	)		(32,666,239	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		30,838,682			55,668,708			203,310,494
NET ASSETS	$	573,026,200		$	318,998,056		$	1,127,738,338
Shares outstandingc		16,575,000			12,375,000			45,600,000
Net asset value per share	$	34.57		$	25.78		$	24.73

^a Securities on loan with market values of $3,798,619, $– and $1,441,292, respectively. See Note 5.

^b Cost of foreign currencies: $161,169, $688,604 and $8,105,285, respectively.

^c $0.001 par value, number of shares authorized: 63.6 million, 318.625 million and 943.2 million, respectively.

See notes to financial statements.

FINANCIAL STATEMENTS 53

Statements of Operations

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI
	Austria Index Fund			Belgium Index Fund			EMU Index Fund			France Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	9,430,851		$	8,814,132		$	77,381,976		$	6,619,316
Interest from affiliated issuers (Note 2)		10,155			8,445			59,897			6,487
Securities lending income from unaffiliated issuers		19,097			6,081			190,332			4,526
Securities lending income from affiliated issuers (Note 2)		48,264			3,978			104,142			2,589
Total investment income		9,508,367			8,832,636			77,736,347			6,632,918
EXPENSES
Investment advisory fees (Note 2)		2,601,711			1,332,129			12,839,319			1,269,129
Total expenses		2,601,711			1,332,129			12,839,319			1,269,129
Net investment income		6,906,656			7,500,507			64,897,028			5,363,789
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(9,903,652	)		(363,935	)		(15,482	)		(1,882,369	)
In-kind redemptions		99,817,913			5,065,909			77,978,980			18,755,055
Foreign currency transactions		15,084			(3,457	)		437,798			29,445
Net realized gain		89,929,345			4,698,517			78,401,296			16,902,131
Net change in unrealized appreciation (depreciation) on:
Investments		(27,298,952	)		13,473,422			371,998,534			127,437
Translation of assets and liabilities in foreign currencies		60,179			(2,284	)		2,964			3,960
Net change in unrealized appreciation (depreciation)		(27,238,773	)		13,471,138			372,001,498			131,397
Net realized and unrealized gain		62,690,572			18,169,655			450,402,794			17,033,528
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	69,597,228		$	25,670,162		$	515,299,822		$	22,397,317

^a Net of foreign withholding tax of $1,664,268, $1,538,709, $12,426,148 and $1,150,608, respectively.

See notes to financial statements.

54 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations (Continued)

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI
	Germany Index Fund			Italy Index Fund			Netherlands Index Fund			Spain Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	34,096,149		$	9,268,474		$	8,881,380		$	15,115,729
Interest from affiliated issuers (Note 2)		34,774			6,644			5,653			12,443
Securities lending income from unaffiliated issuers		116,547			15,117			2,935			172,099
Securities lending income from affiliated issuers (Note 2)		40,627			10,113			1,423			97,528
Total investment income		34,288,097			9,300,348			8,891,391			15,397,799
EXPENSES
Investment advisory fees (Note 2)		6,219,398			1,055,455			1,140,068			2,757,796
Total expenses		6,219,398			1,055,455			1,140,068			2,757,796
Net investment income		28,068,699			8,244,893			7,751,323			12,640,003
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(7,243,668	)		(2,300,792	)		348,261			(1,061,371	)
In-kind redemptions		159,192,620			48,056,432			25,202,247			114,051,981
Foreign currency transactions		95,641			56,244			16,143			56,359
Net realized gain		152,044,593			45,811,884			25,566,651			113,046,969
Net change in unrealized appreciation (depreciation) on:
Investments		148,405,583			(31,578,205	)		4,801,818			(7,853,194	)
Translation of assets and liabilities in foreign currencies		890			3,303			(121	)		(2,527	)
Net change in unrealized appreciation (depreciation)		148,406,473			(31,574,902	)		4,801,697			(7,855,721	)
Net realized and unrealized gain		300,451,066			14,236,982			30,368,348			105,191,248
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	328,519,765		$	22,481,875		$	38,119,671		$	117,831,251

^a Net of foreign withholding tax of $5,775,511, $1,583,482, $1,164,141 and $2,635,913, respectively.

See notes to financial statements.

FINANCIAL STATEMENTS 55

Statements of Operations (Continued)

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI
	Sweden Index Fund			Switzerland Index Fund			United Kingdom Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	15,839,331		$	5,309,006		$	41,567,003
Dividends from affiliated issuers (Note 2)		–			–			1,492,094
Interest from affiliated issuers (Note 2)		11,146			5,509			29,956
Securities lending income from unaffiliated issuers		10,534			939			–
Securities lending income from affiliated issuers (Note 2)		10,508			733			2,087
Total investment income		15,871,519			5,316,187			43,091,140
EXPENSES
Investment advisory fees (Note 2)		2,071,508			1,413,051			5,507,753
Total expenses		2,071,508			1,413,051			5,507,753
Net investment income		13,800,011			3,903,136			37,583,387
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		2,112,379			335,301			8,190,777
Investments in affiliated issuers (Note 2)		–			–			1,012,481
In-kind redemptions		33,226,378			8,429,365			30,998,050
Foreign currency transactions		(13,082	)		27,071			418,872
Net realized gain		35,325,675			8,791,737			40,620,180
Net change in unrealized appreciation (depreciation) on:
Investments		28,150,049			19,148,861			76,390,949
Translation of assets and liabilities in foreign currencies		(2,327	)		(6,128	)		(5,371	)
Net change in unrealized appreciation (depreciation)		28,147,722			19,142,733			76,385,578
Net realized and unrealized gain		63,473,397			27,934,470			117,005,758
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	77,273,408		$	31,837,606		$	154,589,145

^a Net of foreign withholding tax of $2,348,241, $1,156,225 and $285,740, respectively.

See notes to financial statements.

56 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets

iSHARES^®, INC.

	iShares MSCI Austria Index Fund						iShares MSCI Belgium Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	6,906,656		$	4,573,969		$	7,500,507		$	3,228,861
Net realized gain		89,929,345			34,514,511			4,698,517			2,556,361
Net change in unrealized appreciation (depreciation)		(27,238,773	)		(8,534,884	)		13,471,138			12,287,153
Net increase in net assets resulting from operations		69,597,228			30,553,596			25,670,162			18,072,375
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(8,705,133	)		(2,357,719	)		(4,042,358	)		(2,145,588	)
Total distributions to shareholders		(8,705,133	)		(2,357,719	)		(4,042,358	)		(2,145,588	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		345,391,061			289,063,151			145,006,107			103,356,773
Cost of shares redeemed		(324,406,725	)		(122,573,813	)		(15,634,722	)		(13,758,909	)
Net increase in net assets from capital share transactions		20,984,336			166,489,338			129,371,385			89,597,864
INCREASE IN NET ASSETS		81,876,431			194,685,215			150,999,189			105,524,651
NET ASSETS
Beginning of year		391,637,389			196,952,174			152,484,210			46,959,559
End of year	$	473,513,820		$	391,637,389		$	303,483,399		$	152,484,210
Undistributed net investment income included in net assets at end of year	$	6,668,789		$	5,185,808		$	6,750,550		$	3,029,133
SHARES ISSUED AND REDEEMED
Shares sold		8,800,000			9,400,000			5,640,000			4,880,000
Shares redeemed		(8,700,000	)		(4,200,000	)		(600,000	)		(680,000	)
Net increase in shares outstanding		100,000			5,200,000			5,040,000			4,200,000

See notes to financial statements.

FINANCIAL STATEMENTS 57

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI EMU Index Fund						iShares MSCI France Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	64,897,028		$	36,506,832		$	5,363,789		$	2,234,907
Net realized gain		78,401,296			83,839,198			16,902,131			24,946,517
Net change in unrealized appreciation (depreciation)		372,001,498			101,409,737			131,397			(236,936	)
Net increase in net assets resulting from operations		515,299,822			221,755,767			22,397,317			26,944,488
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(39,632,439	)		(12,287,252	)		(2,600,180	)		(1,093,386	)
Total distributions to shareholders		(39,632,439	)		(12,287,252	)		(2,600,180	)		(1,093,386	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		890,425,624			1,281,531,733			308,549,207			193,944,708
Cost of shares redeemed		(189,448,664	)		(243,363,438	)		(94,536,345	)		(89,235,841	)
Net increase in net assets from capital share transactions		700,976,960			1,038,168,295			214,012,862			104,708,867
INCREASE IN NET ASSETS		1,176,644,343			1,247,636,810			233,809,999			130,559,969
NET ASSETS
Beginning of year		1,794,920,987			547,284,177			211,885,761			81,325,792
End of year	$	2,971,565,330		$	1,794,920,987		$	445,695,760		$	211,885,761
Undistributed net investment income included in net assets at end of year	$	62,166,681		$	35,261,892		$	5,048,619		$	2,255,565
SHARES ISSUED AND REDEEMED
Shares sold		8,300,000			15,050,000			8,200,000			6,800,000
Shares redeemed		(1,750,000	)		(2,900,000	)		(2,800,000	)		(3,200,000	)
Net increase in shares outstanding		6,550,000			12,150,000			5,400,000			3,600,000

See notes to financial statements.

58 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Germany Index Fund						iShares MSCI Italy Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	28,068,699		$	16,579,393		$	8,244,893		$	3,283,210
Net realized gain		152,044,593			43,262,838			45,811,884			2,217,054
Net change in unrealized appreciation (depreciation)		148,406,473			55,951,665			(31,574,902	)		13,029,731
Net increase in net assets resulting from operations		328,519,765			115,793,896			22,481,875			18,529,995
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(17,227,480	)		(2,745,191	)		(4,310,712	)		(1,062,571	)
Total distributions to shareholders		(17,227,480	)		(2,745,191	)		(4,310,712	)		(1,062,571	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		972,720,932			611,158,486			255,824,310			90,441,632
Cost of shares redeemed		(445,562,698	)		(236,206,028	)		(247,823,971	)		(4,111,384	)
Net increase in net assets from capital share transactions		527,158,234			374,952,458			8,000,339			86,330,248
INCREASE IN NET ASSETS		838,450,519			488,001,163			26,171,502			103,797,672
NET ASSETS
Beginning of year		802,794,594			314,793,431			146,323,714			42,526,042
End of year	$	1,641,245,113		$	802,794,594		$	172,495,216		$	146,323,714
Undistributed net investment income included in net assets at end of year	$	27,920,700		$	16,624,623		$	7,309,944		$	3,319,519
SHARES ISSUED AND REDEEMED
Shares sold		31,800,000			28,500,000			7,500,000			3,300,000
Shares redeemed		(14,700,000	)		(11,100,000	)		(7,200,000	)		(150,000	)
Net increase in shares outstanding		17,100,000			17,400,000			300,000			3,150,000

See notes to financial statements.

FINANCIAL STATEMENTS 59

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Netherlands Index Fund						iShares MSCI Spain Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	7,751,323		$	2,460,966		$	12,640,003		$	2,816,735
Net realized gain		25,566,651			8,002,115			113,046,969			7,154,162
Net change in unrealized appreciation (depreciation)		4,801,697			11,681,549			(7,855,721	)		15,105,957
Net increase in net assets resulting from operations		38,119,671			22,144,630			117,831,251			25,076,854
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(3,524,849	)		(1,617,341	)		(4,483,132	)		(1,611,053	)
Total distributions to shareholders		(3,524,849	)		(1,617,341	)		(4,483,132	)		(1,611,053	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		202,315,940			63,102,133			743,582,607			102,462,370
Cost of shares redeemed		(95,548,185	)		(37,612,147	)		(512,504,767	)		(14,743,172	)
Net increase in net assets from capital share transactions		106,767,755			25,489,986			231,077,840			87,719,198
INCREASE IN NET ASSETS		141,362,577			46,017,275			344,425,959			111,184,999
NET ASSETS
Beginning of year		109,991,285			63,974,010			178,130,057			66,945,058
End of year	$	251,353,862		$	109,991,285		$	522,556,016		$	178,130,057
Undistributed net investment income included in net assets at end of year	$	8,180,561		$	2,661,198		$	10,548,212		$	2,334,982
SHARES ISSUED AND REDEEMED
Shares sold		7,350,000			2,850,000			14,100,000			2,475,000
Shares redeemed		(3,450,000	)		(1,650,000	)		(9,075,000	)		(375,000	)
Net increase in shares outstanding		3,900,000			1,200,000			5,025,000			2,100,000

See notes to financial statements.

60 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Sweden Index Fund						iShares MSCI Switzerland Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	13,800,011		$	3,522,482		$	3,903,136		$	1,856,248
Net realized gain		35,325,675			18,268,143			8,791,737			6,236,495
Net change in unrealized appreciation (depreciation)		28,147,722			(9,543,135	)		19,142,733			25,594,505
Net increase in net assets resulting from operations		77,273,408			12,247,490			31,837,606			33,687,248
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(3,600,238	)		(1,227,638	)		(1,891,314	)		(773,209	)
Total distributions to shareholders		(3,600,238	)		(1,227,638	)		(1,891,314	)		(773,209	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		453,975,174			133,924,232			119,606,280			94,447,210
Cost of shares redeemed		(106,048,705	)		(55,030,029	)		(18,873,671	)		(18,366,262	)
Net increase in net assets from capital share transactions		347,926,469			78,894,203			100,732,609			76,080,948
INCREASE IN NET ASSETS		421,599,639			89,914,055			130,678,901			108,994,987
NET ASSETS
Beginning of year		151,426,561			61,512,506			188,319,155			79,324,168
End of year	$	573,026,200		$	151,426,561		$	318,998,056		$	188,319,155
Undistributed net investment income included in net assets at end of year	$	13,788,192		$	3,601,501		$	3,929,999		$	1,891,106
SHARES ISSUED AND REDEEMED
Shares sold		13,725,000			5,250,000			4,750,000			4,750,000
Shares redeemed		(3,000,000	)		(2,250,000	)		(750,000	)		(875,000	)
Net increase in shares outstanding		10,725,000			3,000,000			4,000,000			3,875,000

See notes to financial statements.

FINANCIAL STATEMENTS 61

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI United Kingdom Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	37,583,387		$	31,286,621
Net realized gain		40,620,180			6,097,571
Net change in unrealized appreciation (depreciation)		76,385,578			85,793,247
Net increase in net assets resulting from operations		154,589,145			123,177,439
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(34,304,512	)		(16,085,262	)
Total distributions to shareholders		(34,304,512	)		(16,085,262	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		229,005,308			344,797,700
Cost of shares redeemed		(93,960,543	)		(44,331,266	)
Net increase in net assets from capital share transactions		135,044,765			300,466,434
INCREASE IN NET ASSETS		255,329,398			407,558,611
NET ASSETS
Beginning of year		872,408,940			464,850,329
End of year	$	1,127,738,338		$	872,408,940
Undistributed net investment income included in net assets at end of year	$	32,407,502		$	28,709,755
SHARES ISSUED AND REDEEMED
Shares sold		9,800,000			17,200,000
Shares redeemed		(4,000,000	)		(2,200,000	)
Net increase in shares outstanding		5,800,000			15,000,000

See notes to financial statements.

62 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Austria Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	31.08		$	26.62		$	17.04		$	10.61		$	8.19
Income from investment operations:
Net investment incomea		0.51			0.44			0.29			0.21			0.09
Net realized and unrealized gainb		6.42			4.31			9.38			6.39			2.43
Total from investment operations		6.93			4.75			9.67			6.60			2.52
Less distributions from:
Net investment income		(0.73	)		(0.29	)		(0.09	)		(0.17	)		(0.10	)
Total distributions		(0.73	)		(0.29	)		(0.09	)		(0.17	)		(0.10	)
Net asset value, end of year	$	37.28		$	31.08		$	26.62		$	17.04		$	10.61
Total return		22.35	%		18.00	%		56.82	%		62.70	%		31.15	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	473,514		$	391,637		$	196,952		$	57,920		$	22,288
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.77	%		0.84	%
Ratio of net investment income to average net assets		1.36	%		1.48	%		1.26	%		1.37	%		0.98	%
Portfolio turnover ratec		21	%		32	%		21	%		11	%		26	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 63

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Belgium Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	22.83		$	18.94		$	14.77		$	11.16		$	10.43
Income from investment operations:
Net investment incomea		0.76			0.75			0.71			0.37			0.41
Net realized and unrealized gainb		2.74			3.95			3.75			4.25			0.43
Total from investment operations		3.50			4.70			4.46			4.62			0.84
Less distributions from:
Net investment income		(0.44	)		(0.81	)		(0.29	)		(1.01	)		(0.11	)
Total distributions		(0.44	)		(0.81	)		(0.29	)		(1.01	)		(0.11	)
Net asset value, end of year	$	25.89		$	22.83		$	18.94		$	14.77		$	11.16
Total return		15.36	%		25.66	%		30.22	%		42.88	%		8.25	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	303,483		$	152,484		$	46,960		$	24,813		$	21,871
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.78	%		0.84	%
Ratio of net investment income to average net assets		2.90	%		3.60	%		3.89	%		2.79	%		4.10	%
Portfolio turnover ratec		12	%		10	%		10	%		21	%		8	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

64 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI EMU Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	92.28		$	74.97		$	59.38		$	50.12		$	46.02
Income from investment operations:
Net investment incomea		2.80			2.73			1.76			1.36			0.93
Net realized and unrealized gainb		21.06			15.90			15.13			8.69			3.62
Total from investment operations		23.86			18.63			16.89			10.05			4.55
Less distributions from:
Net investment income		(1.85	)		(1.32	)		(1.30	)		(0.79	)		(0.45	)
Total distributions		(1.85	)		(1.32	)		(1.30	)		(0.79	)		(0.45	)
Net asset value, end of year	$	114.29		$	92.28		$	74.97		$	59.38		$	50.12
Total return		26.10	%		25.18	%		28.54	%		20.07	%		10.05	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	2,971,565		$	1,794,921		$	547,284		$	326,606		$	165,388
Ratio of expenses to average net assets		0.51	%		0.54	%		0.58	%		0.79	%		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		n/a			n/a			0.57	%		0.79	%		n/a
Ratio of net investment income to average net assets		2.60	%		3.23	%		2.50	%		2.29	%		2.08	%
Portfolio turnover ratec		5	%		8	%		8	%		11	%		7	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 65

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI France Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	31.16		$	25.41		$	20.40		$	16.90		$	15.52
Income from investment operations:
Net investment incomea		0.77			0.55			0.47			0.24			0.23
Net realized and unrealized gainb		5.06			5.52			4.84			3.54			1.33
Total from investment operations		5.83			6.07			5.31			3.78			1.56
Less distributions from:
Net investment income		(0.46	)		(0.32	)		(0.30	)		(0.28	)		(0.18	)
Total distributions		(0.46	)		(0.32	)		(0.30	)		(0.28	)		(0.18	)
Net asset value, end of year	$	36.53		$	31.16		$	25.41		$	20.40		$	16.90
Total return		18.83	%		24.13	%		26.13	%		22.44	%		10.22	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	445,696		$	211,886		$	81,326		$	61,201		$	54,075
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.79	%		0.84	%
Ratio of net investment income to average net assets		2.17	%		1.95	%		1.98	%		1.23	%		1.56	%
Portfolio turnover ratec		6	%		10	%		7	%		9	%		9	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

66 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Germany Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	23.68		$	19.08		$	14.96		$	12.57		$	12.07
Income from investment operations:
Net investment incomea		0.68			0.57			0.28			0.19			0.21
Net realized and unrealized gainb		8.33			4.15			4.03			2.40			0.41
Total from investment operations		9.01			4.72			4.31			2.59			0.62
Less distributions from:
Net investment income		(0.51	)		(0.12	)		(0.19	)		(0.20	)		(0.12	)
Total distributions		(0.51	)		(0.12	)		(0.19	)		(0.20	)		(0.12	)
Net asset value, end of year	$	32.18		$	23.68		$	19.08		$	14.96		$	12.57
Total return		38.47	%		24.82	%		28.89	%		20.55	%		5.39	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,641,245		$	802,795		$	314,793		$	98,764		$	101,800
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.80	%		0.84	%
Ratio of net investment income to average net assets		2.32	%		2.62	%		1.54	%		1.27	%		1.98	%
Portfolio turnover ratec		4	%		12	%		9	%		9	%		11	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 67

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Italy Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	30.48		$	25.77		$	20.21		$	16.67		$	15.15
Income from investment operations:
Net investment incomea		1.35			1.07			0.78			0.56			0.43
Net realized and unrealized gainb		2.66			4.15			5.42			3.59			1.47
Total from investment operations		4.01			5.22			6.20			4.15			1.90
Less distributions from:
Net investment income		(0.67	)		(0.51	)		(0.64	)		(0.61	)		(0.38	)
Total distributions		(0.67	)		(0.51	)		(0.64	)		(0.61	)		(0.38	)
Net asset value, end of year	$	33.82		$	30.48		$	25.77		$	20.21		$	16.67
Total return		13.20	%		20.61	%		30.74	%		25.09	%		12.79	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	172,495		$	146,324		$	42,526		$	27,279		$	29,997
Ratio of expenses to average net assets		0.52	%		0.54	%		0.57	%		0.83	%		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		n/a			n/a			n/a			0.79	%		n/a
Ratio of net investment income to average net assets		4.02	%		3.87	%		3.18	%		2.85	%		2.84	%
Portfolio turnover ratec		16	%		15	%		18	%		9	%		22	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

68 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Netherlands Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	24.17		$	19.10		$	15.70		$	14.31		$	14.69
Income from investment operations:
Net investment incomea		0.98			0.60			0.57			0.39			0.30
Net realized and unrealized gain (loss)b		5.05			4.95			3.09			1.37			(0.43	)
Total from investment operations		6.03			5.55			3.66			1.76			(0.13	)
Less distributions from:
Net investment income		(0.45	)		(0.48	)		(0.26	)		(0.37	)		(0.25	)
Total distributions		(0.45	)		(0.48	)		(0.26	)		(0.37	)		(0.25	)
Net asset value, end of year	$	29.75		$	24.17		$	19.10		$	15.70		$	14.31
Total return		25.22	%		29.53	%		23.40	%		12.28	%		(0.78	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	251,354		$	109,991		$	63,974		$	28,265		$	18,599
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.78	%		0.84	%
Ratio of net investment income to average net assets		3.50	%		2.78	%		3.13	%		2.45	%		2.37	%
Portfolio turnover ratec		8	%		17	%		6	%		9	%		18	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 69

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Spain Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	44.81		$	35.70		$	27.55		$	22.39		$	17.95
Income from investment operations:
Net investment incomea		1.30			1.07			0.79			0.44			0.24
Net realized and unrealized gainb		12.33			8.78			7.97			4.99			4.36
Total from investment operations		13.63			9.85			8.76			5.43			4.60
Less distributions from:
Net investment income		(0.38	)		(0.74	)		(0.61	)		(0.27	)		(0.16	)
Total distributions		(0.38	)		(0.74	)		(0.61	)		(0.27	)		(0.16	)
Net asset value, end of year	$	58.06		$	44.81		$	35.70		$	27.55		$	22.39
Total return		30.47	%		28.09	%		31.85	%		24.28	%		25.81	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	522,556		$	178,130		$	66,945		$	45,456		$	50,372
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.80	%		0.84	%
Ratio of net investment income to average net assets		2.36	%		2.67	%		2.33	%		1.64	%		1.22	%
Portfolio turnover ratec		12	%		6	%		8	%		6	%		17	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

70 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Sweden Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	25.88		$	21.58		$	16.82		$	12.59		$	9.88
Income from investment operations:
Net investment incomea		1.15			0.76			0.46			0.28			0.25
Net realized and unrealized gainb		7.88			3.96			4.45			4.20			2.58
Total from investment operations		9.03			4.72			4.91			4.48			2.83
Less distributions from:
Net investment income		(0.34	)		(0.42	)		(0.15	)		(0.25	)		(0.12	)
Total distributions		(0.34	)		(0.42	)		(0.15	)		(0.25	)		(0.12	)
Net asset value, end of year	$	34.57		$	25.88		$	21.58		$	16.82		$	12.59
Total return		35.01	%		22.16	%		29.21	%		35.81	%		29.04	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	573,026		$	151,427		$	61,513		$	27,758		$	16,992
Ratio of expenses to average net assets		0.51	%		0.54	%		0.58	%		0.92	%		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		n/a			n/a			0.57	%		0.79	%		n/a
Ratio of net investment income to average net assets		3.42	%		3.13	%		2.28	%		1.74	%		2.44	%
Portfolio turnover ratec		7	%		14	%		6	%		9	%		12	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 71

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Switzerland Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	22.49		$	17.63		$	14.58		$	12.23		$	11.59
Income from investment operations:
Net investment incomea		0.36			0.27			0.22			0.09			0.05
Net realized and unrealized gainb		3.12			4.71			2.92			2.31			0.62
Total from investment operations		3.48			4.98			3.14			2.40			0.67
Less distributions from:
Net investment income		(0.19	)		(0.12	)		(0.09	)		(0.05	)		(0.03	)
Total distributions		(0.19	)		(0.12	)		(0.09	)		(0.05	)		(0.03	)
Net asset value, end of year	$	25.78		$	22.49		$	17.63		$	14.58		$	12.23
Total return		15.53	%		28.36	%		21.54	%		19.56	%		5.89	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	318,998		$	188,319		$	79,324		$	41,920		$	33,643
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.79	%		0.84	%
Ratio of net investment income to average net assets		1.42	%		1.34	%		1.34	%		0.64	%		0.43	%
Portfolio turnover ratec		5	%		11	%		5	%		4	%		10	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

72 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI United Kingdom Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	21.92		$	18.74		$	15.72		$	13.00		$	12.77
Income from investment operations:
Net investment incomea		0.84			0.97			0.60			0.48			0.39
Net realized and unrealized gainb		2.78			2.79			2.76			2.72			0.12
Total from investment operations		3.62			3.76			3.36			3.20			0.51
Less distributions from:
Net investment income		(0.81	)		(0.58	)		(0.34	)		(0.48	)		(0.28	)
Total distributions		(0.81	)		(0.58	)		(0.34	)		(0.48	)		(0.28	)
Net asset value, end of year	$	24.73		$	21.92		$	18.74		$	15.72		$	13.00
Total return		16.77	%		20.61	%		21.53	%		24.77	%		4.20	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,127,738		$	872,409		$	464,850		$	452,870		$	150,809
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.77	%		0.84	%
Ratio of net investment income to average net assets		3.51	%		4.81	%		3.39	%		3.11	%		3.23	%
Portfolio turnover ratec		8	%		10	%		11	%		6	%		6	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 73

Notes to Financial Statements

iSHARES^®, INC.

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation. As of August 31, 2007, the Company offered 24 investment portfolios or funds.

These financial statements relate only to the iShares MSCI Austria, iShares MSCI Belgium, iShares MSCI EMU, iShares MSCI France, iShares MSCI Germany, iShares MSCI Italy, iShares MSCI Netherlands, iShares MSCI Spain, iShares MSCI Sweden, iShares MSCI Switzerland and iShares MSCI United Kingdom Index Funds (each, a “Fund,” collectively, the “Funds”).

The investment objective of each Fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded equity securities in the aggregate in a particular market, as measured by that market’s equity securities index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve each Fund’s investment objective. Each of the Funds is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.

Each Fund invests in the securities of foreign issuers of a single country or region, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.

Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.

1. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by the Company in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

SECURITY VALUATION

The securities and other assets of each Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing

74 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).

Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.

Valuing a Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, fair value pricing could result in a difference between the prices used to calculate a Fund’s net asset value and the prices used by the Fund’s benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method.

FOREIGN CURRENCY TRANSLATION

The accounting records of the Funds are maintained in U.S. dollars. Foreign currencies, as well as investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates deemed appropriate by the investment adviser. Any use of a rate different from the rates used by MSCI may adversely affect a Fund’s ability to track its underlying index. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Funds as a component of realized and unrealized gains and losses from investments for financial reporting purposes.

FOREIGN TAXES

The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, capital gains on investments or currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign markets in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are disclosed in their Statements of Operations. Foreign taxes payable as of August 31, 2007, if any, are reflected in the Funds’ Statements of Assets and Liabilities.

NOTES TO FINANCIAL STATEMENTS 75

Notes to Financial Statements (Continued)

iSHARES^®, INC.

DISTRIBUTIONS TO SHAREHOLDERS

Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by each Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

As of August 31, 2007, the tax year-end of the Funds, the components of net distributable earnings (accumulated losses) on a tax basis were as follows:

iShares MSCI Index Fund	Undistributed Ordinary Income		Unrealized Appreciation (Depreciation)			Capital and Other Losses			Net Distributable Earnings (Accumulated Losses)
Austria	$	6,768,337	$	2,756,738		$	(13,149,940	)	$	(3,624,865	)
Belgium		8,182,646		24,872,512			(2,375,781	)		30,679,377
EMU		63,668,545		542,488,302			(7,262,414	)		598,894,433
France		5,048,619		5,696,645			(5,409,799	)		5,335,465
Germany		28,435,651		205,009,672			(31,737,261	)		201,708,062
Italy		7,309,944		(11,713,397	)		(5,038,758	)		(9,442,211	)
Netherlands		8,180,561		16,749,951			(8,643,036	)		16,287,476
Spain		10,548,212		19,458,639			(2,565,437	)		27,441,414
Sweden		13,788,192		29,538,550			(3,548,150	)		39,778,592
Switzerland		3,929,999		54,744,853			(5,769,170	)		52,905,682
United Kingdom		32,430,562		190,779,452			(20,158,257	)		203,051,757

For the years ended August 31, 2007 and August 31, 2006, the tax characterization of distributions paid for each Fund represents ordinary income. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for all Funds.

FEDERAL INCOME TAXES

Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2007.

76 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

From November 1, 2006 to August 31, 2007, certain Funds incurred net realized capital losses. As permitted by tax regulations, these Funds have elected to defer these losses and treat them as arising in the year ending August 31, 2008, as follows:

iShares MSCI Index Fund	Deferred Net Realized Capital Losses
Austria	$	8,377
Belgium		310,710
EMU		2,511,594
France		177,085

iShares MSCI Index Fund	Deferred Net Realized Capital Losses
Germany	$	2,444,190
Italy		472,268
Netherlands		586,997
Spain		140,758

The Funds had tax basis net capital loss carryforwards as of August 31, 2007, the tax year-end of the Funds, as follows:

iShares MSCI Index Fund	Expiring 2008		Expiring 2009		Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Expiring 2014		Expiring 2015		Total
Austria	$	491,457	$	336,553	$	1,291,324	$	370,948	$	855,364	$	–	$	–	$	9,795,917	$	13,141,563
Belgium		–		59,876		1,677,678		117,767		175,781		33,969		–		–		2,065,071
EMU		–		–		–		–		2,876,857		1,873,963		–		–		4,750,820
France		–		–		2,436,748		236,944		2,400,550		–		–		158,472		5,232,714
Germany		–		–		8,697,227		5,469,732		8,656,712		2,241,687		–		4,227,713		29,293,071
Italy		–		–		2,648,775		848,408		541,980		527,327		–		–		4,566,490
Netherlands		–		60,885		3,222,792		1,497,810		2,481,175		129,137		403,525		260,715		8,056,039
Spain		–		–		163,675		678,910		1,582,094		–		–		–		2,424,679
Sweden		–		–		713,472		1,577,551		1,149,514		–		107,613		–		3,548,150
Switzerland		–		–		2,247,442		1,018,305		2,149,171		354,252		–		–		5,769,170
United Kingdom		–		–		856,798		6,448,554		4,272,059		1,517,783		7,063,063		–		20,158,257

Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.

The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

Each Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset values per share.

NOTES TO FINANCIAL STATEMENTS 77

Notes to Financial Statements (Continued)

iSHARES^®, INC.

As of August 31, 2007, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

iShares MSCI Index Fund	Tax Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation (Depreciation)
Austria	$	486,762,501	$	24,844,230	$	(22,153,602	)	$	2,690,628
Belgium		276,643,070		30,232,422		(5,364,189	)		24,868,233
EMU		2,492,079,110		559,030,477		(16,563,097	)		542,467,380
France		441,201,615		18,745,471		(13,053,647	)		5,691,824
Germany		1,440,565,637		215,321,827		(10,334,659	)		204,987,168
Italy		190,300,269		–		(11,735,567	)		(11,735,567	)
Netherlands		239,602,323		22,652,238		(5,903,205	)		16,749,033
Spain		545,205,128		28,828,783		(9,369,235	)		19,459,548
Sweden		547,111,355		38,655,351		(9,113,286	)		29,542,065
Switzerland		262,848,529		55,543,285		(801,740	)		54,741,545
United Kingdom		923,939,097		195,262,068		(4,508,070	)		190,753,998

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as an investment by the Fund, collateralized by securities, which are delivered to the Fund’s custodian or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of each Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of each of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.

For its investment advisory services to each Fund, BGFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of all the Funds offered by the Company (except for the iShares MSCI Brazil, iShares MSCI Emerging Markets, iShares MSCI Pacific ex-Japan, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds) as follows:

Investment Advisory Fee	Aggregate Average Daily Net Assets
0.59%	First $7 billion
0.54	Over $7 billion, up to and including $11 billion
0.49	Over $11 billion, up to and including $24 billion
0.44	Over $24 billion

78 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.

SEI Investments Distribution Co. (“SEI”) serves as each Fund’s underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Funds for its distribution services.

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Company. BarCap and BGI are affiliates of BGFA, the Funds’ investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2007, BGI earned securities lending agent fees as follows:

iShares MSCI Index Fund	Securities Lending Agent Fees
Austria	$	67,361
Belgium		10,059
EMU		294,474
France		7,115
Germany		157,174
Italy		25,230

iShares MSCI Index Fund	Securities Lending Agent Fees
Netherlands	$	4,358
Spain		269,627
Sweden		21,042
Switzerland		1,672
United Kingdom		2,087

Cross trades for the year ended August 31, 2007, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

Each Fund may invest in the Institutional Shares of certain money market funds managed by BGFA, the Funds’ investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”) and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statements of Operations. Income distributions earned by the Funds from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statements of Operations.

Each Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.

NOTES TO FINANCIAL STATEMENTS 79

Notes to Financial Statements (Continued)

iSHARES^®, INC.

The following table provides information about the direct investment by the iShares MSCI United Kingdom Index Fund (exclusive of short-term investments) in issuers of which BGFA is an affiliate, for the year ended August 31, 2007.

Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Dividend Income		Net Realized Gain
Barclays PLC	1,993	663	280	2,376	$	29,407,659	$	1,492,094	$	1,012,481

As of August 31, 2007, certain directors and officers of the Company are also officers of BGI and/or BGFA.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2007, were as follows:

iShares MSCI Index Fund	Purchases		Sales
Austria	$	103,951,933	$	121,201,357
Belgium		42,458,950		30,432,602
EMU		168,753,285		126,069,590
France		21,871,238		16,379,569
Germany		67,003,290		54,098,356
Italy		51,972,967		32,265,273
Netherlands		34,988,412		16,832,683
Spain		64,498,903		62,711,901
Sweden		38,150,611		28,567,381
Switzerland		24,705,273		13,796,424
United Kingdom		90,486,904		81,088,109

80 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

In-kind transactions (see Note 4) for the year ended August 31, 2007, were as follows:

iShares MSCI Index Fund	In-kind Purchases		In-kind Sales
Austria	$	339,979,430	$	307,581,914
Belgium		135,255,049		15,489,469
EMU		871,560,506		186,749,441
France		305,584,488		94,076,788
Germany		968,696,683		444,593,589
Italy		234,311,816		242,104,379
Netherlands		187,563,341		94,932,261
Spain		741,284,064		504,920,418
Sweden		450,859,577		105,467,376
Switzerland		109,691,851		18,581,984
United Kingdom		227,679,530		93,226,386

4. CAPITAL SHARE TRANSACTIONS

The Company issues and redeems capital shares of each Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.

The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation, of the corresponding MSCI Index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.

5. LOANS OF PORTFOLIO SECURITIES

Each Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The risks to the Funds of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.

During the year ended August 31, 2007, the Funds received cash as collateral for securities loaned. The cash collateral received was invested in a joint account and/or in the Premier Fund. Pursuant to an exemptive order issued by the SEC, a portion of the cash collateral received was invested in a joint account with other investment funds managed by BGFA. The joint account invests in securities with

NOTES TO FINANCIAL STATEMENTS 81

Notes to Financial Statements (Continued)

iSHARES^®, INC.

remaining maturities of 397 days or less, repurchase agreements and money market mutual funds, including money market funds managed by BGFA. Repurchase agreements are fully collateralized by U.S. government securities or non-U.S. government debt securities. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.

The market value of the securities on loan as of August 31, 2007 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The SEC staff has stated that it would not object if a fund does not implement FIN 48 in its NAV calculation until the date of the fund’s last NAV calculation in the first required financial statement reporting period for its fiscal year beginning after December 15, 2006. The Company is currently evaluating the impact of applying the various provisions of FIN 48.

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact the adoption of FAS 157 will have on the Funds’ financial statement disclosures.

82 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

iShares, Inc.

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Austria Index Fund, iShares MSCI Belgium Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Netherlands Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, each a portfolio of the iShares MSCI Fund Series (the “Funds”) at August 31, 2007, the results of each of their operations, the changes in each of their net assets and their financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 23, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 83

Tax Information (Unaudited)

iSHARES^®, INC.

For the fiscal year ended August 31, 2007, certain Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”) as follows:

iShares MSCI Index Fund	Foreign Source Income Earned		Foreign Taxes Paid
Austria	$	11,095,118	$	1,624,325
Belgium		10,352,842		1,538,709
EMU		89,808,124		12,179,559
France		7,769,924		1,112,837
Germany		39,871,660		5,772,220

iShares MSCI Index Fund	Foreign Source Income Earned		Foreign Taxes Paid
Italy	$	10,851,956	$	1,540,655
Netherlands		10,045,521		1,163,577
Spain		17,751,642		2,635,913
Sweden		18,187,573		1,728,830
Switzerland		6,433,637		1,132,990

Under Section 854(b)(2) of the Code, the Funds hereby designate the following maximum amounts as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2007:

iShares MSCI Index Fund	Qualified Dividend Income
Austria	$	8,675,729
Belgium		4,042,358
EMU		39,632,439
France		2,600,180
Germany		17,227,480
Italy		4,310,712

iShares MSCI Index Fund	Qualified Dividend Income
Netherlands	$	3,524,849
Spain		4,483,132
Sweden		3,600,238
Switzerland		1,891,314
United Kingdom		34,304,512

In January 2008, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2007. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.

84 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory

Contract (Unaudited)

iSHARES^®, INC.

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Funds. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 13, 2007, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board determined that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Funds; therefore, comparative performance information was generally not available. However, the Board also noted that the Funds had met their investment objectives consistently since their respective inception dates. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other funds registered under the 1940 Act objectively selected solely by Lipper as comprising each Fund’s applicable comparative group (the “Lipper Group”). In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three-, five- and ten-year periods, as applicable, and the “last quarter” period ended March 31, 2007, and a comparison of each Fund’s performance to that of the funds in its Lipper Group for the same periods. Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Groups included in part, at the request of BGFA, mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board noted that most of the Funds generally performed in line with the funds in their respective Lipper Groups over the relevant periods; however, certain of the Funds may have underperformed or outperformed funds in their respective Lipper Groups over such periods. In considering this information, the Board noted that the Lipper Groups include funds that may have different

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT 85

Board Review and Approval of Investment Advisory

Contract (Unaudited) (Continued)

iSHARES^®, INC.

investment objectives and/or benchmarks from the Funds. In addition, the Board noted that each Fund seeks to track an index and that during the prior year the Board received periodic reports on the Funds’ performance in comparison with their relevant benchmark indexes. Such comparative performance information was also considered by the Board.

The Board also noted that the investment advisory fees and overall expenses for the Funds were generally lower than the median or average investment advisory fee rates and overall expense components of the funds in their respective Lipper Groups. The Board also reviewed statistical information from Lipper displaying the effects of the current breakpoints in the investment advisory fee rates for the Funds (as discussed below) at various assets levels of such Funds as compared to their Lipper Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.

COSTS OF SERVICES PROVIDED TO FUNDS AND PROFITS REALIZED BY BGFA AND AFFILIATES

The Board reviewed information about the profitability to BGFA of the Funds based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Funds). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board noted that the Advisory Contract already provided for breakpoints in the Funds’ investment advisory fee rates as the assets of the Funds, on an aggregated basis with the assets of certain other iShares funds, increase. The Board also discussed the substantial growth in assets of certain iShares funds, including the iShares funds in the group with which the Funds’ assets are aggregated for the purpose of applying breakpoints in the investment advisory fee rates, over the last few years. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had made a significant investment in the iShares funds and had incurred operating losses during earlier years when the iShares funds, including the Funds, had not yet reached scale. In light of this history, the Board determined that the current breakpoints were appropriate and warranted at this juncture for the Funds. Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees, with the current breakpoints for the Funds, reflects the current sharing and potential further sharing of economies of scale with the Funds’ shareholders.

FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES

The Board received and considered certain information regarding the Funds’ annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information

86 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory

Contract (Unaudited) (Continued)

iSHARES^®, INC.

was not available, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as the Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the Other Accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contract are fair and reasonable.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Funds in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board further noted that any portfolio transactions on behalf of the Funds placed through a BGFA affiliate are reported to the Board pursuant to Rule 10f-3 and Rule 17e-1, as applicable under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.

Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates, with the current breakpoints, is fair and reasonable in light of all relevant circumstances and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract for the coming year.

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT 87

Supplemental Information (Unaudited)

iSHARES^®, INC.

The tables that follow present information about the differences between the daily market price on secondary markets for shares of a Fund and that Fund’s net asset value. Net asset value, or “NAV,” is the price per share at which each Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of each Fund generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of such Fund is listed for trading, as of the time that the Fund’s NAV is calculated. Each Fund’s Market Price may be at, above or below its NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of each Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.

Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of a Fund on a given day, generally at the time the NAV is calculated. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV.

The following information shows the frequency distributions of premiums and discounts for each of the Funds included in this report. The information shown for each Fund is for five calendar years (or for each full calendar quarter completed after inception date of such Fund if less than five years) through the date of the most recent calendar quarter-end. The specific periods covered for each Fund are disclosed in the table for such Fund.

Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by each table. All data presented here represents past performance, which cannot be used to predict future results.

iShares MSCI Austria Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	3	0.22	%
Greater than 2.0% and Less than 2.5%	3	0.22
Greater than 1.5% and Less than 2.0%	22	1.59
Greater than 1.0% and Less than 1.5%	62	4.49
Greater than 0.5% and Less than 1.0%	232	16.80
Between 0.5% and –0.5%	820	59.38
Less than –0.5% and Greater than –1.0%	158	11.44
Less than –1.0% and Greater than –1.5%	61	4.42
Less than –1.5% and Greater than –2.0%	11	0.80
Less than –2.0% and Greater than –2.5%	4	0.29
Less than –2.5% and Greater than –3.0%	2	0.14
Less than –3.0% and Greater than –3.5%	1	0.07
Less than –3.5% and Greater than –4.0%	2	0.14
	1,381	100.00	%

88 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Belgium Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	1	0.07	%
Greater than 2.5% and Less than 3.0%	3	0.22
Greater than 2.0% and Less than 2.5%	11	0.80
Greater than 1.5% and Less than 2.0%	19	1.38
Greater than 1.0% and Less than 1.5%	72	5.21
Greater than 0.5% and Less than 1.0%	224	16.22
Between 0.5% and –0.5%	880	63.73
Less than –0.5% and Greater than –1.0%	134	9.70
Less than –1.0% and Greater than –1.5%	25	1.81
Less than –1.5% and Greater than –2.0%	5	0.36
Less than –2.0% and Greater than –2.5%	3	0.22
Less than –2.5% and Greater than –3.0%	2	0.14
Less than –3.0%	2	0.14
	1,381	100.00	%

iShares MSCI EMU Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0% and Less than 3.5%	2	0.14	%
Greater than 2.5% and Less than 3.0%	3	0.22
Greater than 2.0% and Less than 2.5%	7	0.51
Greater than 1.5% and Less than 2.0%	19	1.38
Greater than 1.0% and Less than 1.5%	63	4.56
Greater than 0.5% and Less than 1.0%	276	19.99
Between 0.5% and –0.5%	867	62.77
Less than –0.5% and Greater than –1.0%	102	7.39
Less than –1.0% and Greater than –1.5%	32	2.32
Less than –1.5% and Greater than –2.0%	7	0.51
Less than –2.0% and Greater than –2.5%	1	0.07
Less than –2.5% and Greater than –3.0%	1	0.07
Less than –3.0%	1	0.07
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 89

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI France Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	1	0.07	%
Greater than 2.0% and Less than 2.5%	3	0.22
Greater than 1.5% and Less than 2.0%	6	0.43
Greater than 1.0% and Less than 1.5%	19	1.38
Greater than 0.5% and Less than 1.0%	121	8.76
Between 0.5% and –0.5%	1,078	78.05
Less than –0.5% and Greater than –1.0%	119	8.62
Less than –1.0% and Greater than –1.5%	27	1.96
Less than –1.5% and Greater than –2.0%	3	0.22
Less than –2.0% and Greater than –2.5%	1	0.07
Less than –2.5% and Greater than –3.0%	3	0.22
	1,381	100.00	%

iShares MSCI Germany Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	2	0.14	%
Greater than 2.5% and Less than 3.0%	1	0.07
Greater than 2.0% and Less than 2.5%	1	0.07
Greater than 1.5% and Less than 2.0%	12	0.87
Greater than 1.0% and Less than 1.5%	34	2.46
Greater than 0.5% and Less than 1.0%	162	11.73
Between 0.5% and –0.5%	959	69.46
Less than –0.5% and Greater than –1.0%	144	10.43
Less than –1.0% and Greater than –1.5%	50	3.62
Less than –1.5% and Greater than –2.0%	8	0.58
Less than –2.0% and Greater than –2.5%	5	0.36
Less than –2.5% and Greater than –3.0%	2	0.14
Less than –3.0%	1	0.07
	1,381	100.00	%

90 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Italy Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	1	0.07	%
Greater than 2.0% and Less than 2.5%	2	0.14
Greater than 1.5% and Less than 2.0%	7	0.51
Greater than 1.0% and Less than 1.5%	22	1.59
Greater than 0.5% and Less than 1.0%	120	8.69
Between 0.5% and –0.5%	1,076	77.92
Less than –0.5% and Greater than –1.0%	124	8.98
Less than –1.0% and Greater than –1.5%	19	1.38
Less than –1.5% and Greater than –2.0%	4	0.29
Less than –2.0% and Greater than –2.5%	3	0.22
Less than –2.5% and Greater than –3.0%	1	0.07
Less than –3.0% and Greater than –3.5%	1	0.07
Less than –3.5%	1	0.07
	1,381	100.00	%

iShares MSCI Netherlands Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 4.0%	2	0.14	%
Greater than 3.5% and Less than 4.0%	1	0.07
Greater than 3.0% and Less than 3.5%	1	0.07
Greater than 2.5% and Less than 3.0%	2	0.14
Greater than 2.0% and Less than 2.5%	5	0.36
Greater than 1.5% and Less than 2.0%	10	0.72
Greater than 1.0% and Less than 1.5%	44	3.19
Greater than 0.5% and Less than 1.0%	204	14.77
Between 0.5% and –0.5%	935	67.72
Less than –0.5% and Greater than –1.0%	119	8.62
Less than –1.0% and Greater than –1.5%	41	2.97
Less than –1.5% and Greater than –2.0%	10	0.72
Less than –2.0% and Greater than –2.5%	3	0.22
Less than –2.5% and Greater than –3.0%	1	0.07
Less than –3.0%	3	0.22
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 91

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Spain Index Fund Period

Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	3	0.22	%
Greater than 2.5% and Less than 3.0%	2	0.14
Greater than 2.0% and Less than 2.5%	5	0.36
Greater than 1.5% and Less than 2.0%	5	0.36
Greater than 1.0% and Less than 1.5%	38	2.75
Greater than 0.5% and Less than 1.0%	167	12.09
Between 0.5% and –0.5%	984	71.26
Less than –0.5% and Greater than –1.0%	131	9.49
Less than –1.0% and Greater than –1.5%	33	2.39
Less than –1.5% and Greater than –2.0%	7	0.51
Less than –2.0% and Greater than –2.5%	4	0.29
Less than –2.5%	2	0.14
	1,381	100.00	%

iShares MSCI Sweden Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5%	4	0.29	%
Greater than 3.0% and Less than 3.5%	1	0.07
Greater than 2.5% and Less than 3.0%	4	0.29
Greater than 2.0% and Less than 2.5%	19	1.38
Greater than 1.5% and Less than 2.0%	28	2.03
Greater than 1.0% and Less than 1.5%	77	5.58
Greater than 0.5% and Less than 1.0%	243	17.60
Between 0.5% and –0.5%	815	59.00
Less than –0.5% and Greater than –1.0%	119	8.62
Less than –1.0% and Greater than –1.5%	44	3.19
Less than –1.5% and Greater than –2.0%	11	0.80
Less than –2.0% and Greater than –2.5%	10	0.72
Less than –2.5% and Greater than –3.0%	4	0.29
Less than –3.0% and Greater than –3.5%	1	0.07
Less than –3.5%	1	0.07
	1,381	100.00	%

92 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Switzerland Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	2	0.14	%
Greater than 2.5% and Less than 3.0%	3	0.22
Greater than 2.0% and Less than 2.5%	5	0.36
Greater than 1.5% and Less than 2.0%	35	2.53
Greater than 1.0% and Less than 1.5%	84	6.08
Greater than 0.5% and Less than 1.0%	275	19.91
Between 0.5% and –0.5%	841	60.92
Less than –0.5% and Greater than –1.0%	92	6.66
Less than –1.0% and Greater than –1.5%	26	1.88
Less than –1.5% and Greater than –2.0%	13	0.94
Less than –2.0% and Greater than –2.5%	2	0.14
Less than –2.5%	3	0.22
	1,381	100.00	%

iShares MSCI United Kingdom Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 4.0% and Less than 4.5%	2	0.14	%
Greater than 3.5% and Less than 4.0%	3	0.22
Greater than 3.0% and Less than 3.5%	2	0.14
Greater than 2.5% and Less than 3.0%	1	0.07
Greater than 2.0% and Less than 2.5%	10	0.72
Greater than 1.5% and Less than 2.0%	42	3.04
Greater than 1.0% and Less than 1.5%	156	11.30
Greater than 0.5% and Less than 1.0%	376	27.23
Between 0.5% and –0.5%	697	50.48
Less than –0.5% and Greater than –1.0%	71	5.14
Less than –1.0% and Greater than –1.5%	15	1.09
Less than –1.5% and Greater than –2.0%	3	0.22
Less than –2.0% and Greater than –2.5%	1	0.07
Less than –2.5% and Greater than –3.0%	1	0.07
Less than –3.0%	1	0.07
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 93

Director and Officer Information (Unaudited)

iSHARES^®, INC.

The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.

iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”), Master Investment Portfolio (“MIP”) and Barclays Foundry Investment Trust (“BFIT”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 138 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF, MIP and BFIT and oversees an additional 24 portfolios within the fund complex.

Unless otherwise noted in the tables below, the address for each Director and Officer is c/o Barclays Global Investors, N.A., 45 Fremont Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.

Interested Directors and Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
*Lee T. Kranefuss, 1961	Director and Chairman (since 2003).	Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (since 2003); Director of Barclays Global Fund Advisers (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director, Chairman and Chief Executive Officer of Barclays Global Investors Services (since 2005); Chief Executive Officer of the Individual Investor Business of BGI (1999-2003).	Trustee (since 2003) of iShares Trust; Trustee (since 2001) of BGIF and MIP; Trustee (since 2007) of BFIT; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.
*John E. Martinez, 1962	Director, (since 2003).	Co-Chief Executive Officer of Global Index and Markets Group of BGI (2000-2003); Chairman of Barclays Global Investors Services (2000-2003).	Trustee (since 2003) of iShares Trust; Director (since 2005) of Real Estate Equity Exchange.

* Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser, BGI, the parent company of BGFA, and Barclays Global Investors Services, an affiliate of BGFA and BGI.

94 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
George G.C. Parker, 1939	Director (since 2002). Lead Independent Director (since 2006).	Dean Witter Distinguished Professor of Finance, Emeritus (since 1994).	Trustee (since 2000) of iShares Trust; Lead Independent Trustee (since 2006) of iShares Trust; Director (since 1996) of Continental Airlines, Inc.; Director (since 1995) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2004) of Threshold Pharmaceuticals; Director (since 2007) of NETGEAR, Inc.
Cecilia H. Herbert, 1949	Director (since 2005).	Member of Finance Council, Archdiocese of San Francisco (1999-2006); Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee (2004-2005) of Pacific Select Funds; Trustee (1992-2003) of the Montgomery Funds; Trustee (since 2002) and Chair of Finance and Investment Committee (since 2006) of the Thacher School.	Trustee (since 2005) of iShares Trust.
Charles A. Hurty, 1943	Director (since 2005).	Retired; Partner, KPMG LLP (1968-2001).	Trustee (since 2005) of iShares Trust; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio); Director (since 2005) of CSFB Alternative Investments Fund (6 portfolios).
John E. Kerrigan, 1955	Director (since 2005).	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Trustee (since 2005) of iShares Trust; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.

DIRECTOR AND OFFICER INFORMATION 95

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Robert H. Silver, 1955	Director (since 2007).	President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Vice Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006).	Trustee (since 2007) of iShares Trust; Director and Member (since 2006) of the Audit and Compensation Committee of EPAM Systems, Inc.
Officers
Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael A. Latham, 1965	President (since 2007).	Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005); Director of Mutual Fund Delivery in the U.S. Individual Investor Business of BGI (2000-2003).	None.
Geoffrey D. Flynn, 1956	Treasurer and Chief Financial Officer (since 2007).	Director of Mutual Fund Operations of BGI (since 2007); President of Van Kampen Investor Services (2003-2007); Managing Director of Morgan Stanley (2002-2007); President of Morgan Stanley Trust, FSB (2002-2007).	None.

96 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Officers (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Eilleen M. Clavere, 1952	Secretary (since 2007).	Head of Legal Administration of Intermediary Investor Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005).	None.
Ira P. Shapiro, 1963	Vice President and Chief Legal Officer (since 2007).	Associate General Counsel of BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004).	None.
Amy Schioldager, 1962	Executive Vice President (since 2007).	Head of U.S. Indexing of BGI (since 2006); Head of Domestic Equity Portfolio Management of BGI (2001-2006).	None.
H. Michael Williams, 1960	Executive Vice President (since 2007).	Head of Global Index and Markets Group of BGI (since 2006); Global Head of Securities Lending of BGI (2002-2006).	Trustee (since 2007) of BFIT.
Patrick O’Connor, 1967	Vice President (since 2007).	Head of iShares Portfolio Management of BGI (since 2006); Senior Portfolio Manager of BGI (1999-2006).	None.
Lee Sterne, 1965	Vice President (since 2007).	Senior Portfolio Manager of BGI (since 2004); Portfolio Manager of BGI (2001-2004).	None.
Matt Tucker, 1972	Vice President (since 2007).	Head of U.S. Fixed-Income Investment Solutions of BGI (since 2005); Fixed- Income Investment Strategist of BGI (2003-2005); Fixed-Income Portfolio Manager of BGI (1997-2003).	None.

DIRECTOR AND OFFICER INFORMATION 97

The iShares^® Family of Funds

The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectu(es) carefully before investing. Investing involves risk, including possible loss of principal.

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares S&P GSSI^™ Natural Resources (IGE)

iShares S&P GSTI^™ Networking (IGN)

iShares S&P GSTI^™ Semiconductor (IGW)

iShares S&P GSTI^™ Software (IGV)

iShares S&P GSTI^™ Technology (IGM)

iShares Domestic Sector Index Funds

iShares Cohen & Steers Realty Majors (ICF)

iShares Dow Jones U.S. Basic Materials Sector (IYM)

iShares Dow Jones U.S. Consumer Services Sector (IYC)

iShares Dow Jones U.S. Consumer Goods Sector (IYK)

iShares Dow Jones U.S. Energy Sector (IYE)

iShares Dow Jones U.S. Financial Sector (IYF)

iShares Dow Jones U.S. Financial Services (IYG)

iShares Dow Jones U.S. Healthcare Sector (IYH)

iShares Dow Jones U.S. Industrial Sector (IYJ)

iShares Dow Jones U.S. Real Estate (IYR)

iShares Dow Jones U.S. Technology Sector (IYW)

iShares Dow Jones U.S. Telecommunications Sector (IYZ)

iShares Dow Jones Transportation Average (IYT)

iShares Dow Jones U.S. Utilities Sector (IDU)

iShares Dow Jones U.S. Total Market (IYY)

iShares Nasdaq Biotechnology (IBB)

iShares Domestic Subsector Index Funds

iShares Dow Jones U.S. Aerospace & Defense (ITA)

iShares Dow Jones U.S. Broker-Dealers (IAI)

iShares Dow Jones U.S. Healthcare Providers (IHF)

iShares Dow Jones U.S. Home Construction (ITB)

iShares Dow Jones U.S. Insurance (IAK)

iShares Dow Jones U.S. Medical Devices (IHI)

iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)

iShares Dow Jones U.S. Oil Equipment & Services (IEZ)

iShares Dow Jones U.S. Pharmaceuticals (IHE)

iShares Dow Jones U.S. Regional Banks (IAT)

iShares FTSE NAREIT Industrial/Office (FIO)

iShares FTSE NAREIT Mortgage REITs (REM)

iShares FTSE NAREIT Real Estate 50 (FTY)

iShares FTSE NAREIT Residential (REZ)

iShares FTSE NAREIT Retail (RTL)

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Industrials Sector (EXI)

iShares S&P Global Materials Sector (MXI)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap^™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman Short Treasury (SHV)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 3-7 Year Treasury (IEI)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 10-20 Year Treasury (TLH)

iShares Lehman 20+ Year Treasury (TLT)

iShares Lehman TIPS (TIP)

iShares Lehman Credit (CFT)

iShares Lehman 1-3 Year Credit (CSJ)

iShares Lehman Intermediate Credit (CIU)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Lehman Government/Credit (GBF)

iShares Lehman Intermediate Government/Credit (GVI)

iShares Lehman MBS (MBB)

iShares iBoxx $ High Yield Corporate (HYG)

iShares S&P National Municipal (MUB)

iShares S&P California Municipal (CMF)

iShares S&P New York Municipal (NYF)

iShares Specialty Index Funds

iShares KLD Select Social SM (KLD)

iShares KLD 400 Social (DSI)

iShares Dow Jones Select Dividend (DVY)

iShares Dow Jones EPAC Select Dividend (IDV)

iShares S&P U.S. Preferred Stock (PFF)

iShares International Index Funds

iShares MSCI EAFE (EFA)

iShares MSCI EAFE Growth (EFG)

iShares MSCI EAFE Value (EFV)

iShares MSCI Emerging Markets (EEM)

iShares MSCI EMU (EZU)

iShares MSCI Pacific ex-Japan (EPP)

iShares S&P Europe 350 (IEV)

iShares S&P Latin America 40 (ILF)

iShares S&P World ex-U.S. Property (WPS)

iShares Morningstar Index Funds

iShares Morningstar Large Core (JKD)

iShares Morningstar Large Growth (JKE)

iShares Morningstar Large Value (JKF)

iShares Morningstar Mid Core (JKG)

iShares Morningstar Mid Growth (JKH)

iShares Morningstar Mid Value (JKI)

iShares Morningstar Small Core (JKJ)

iShares Morningstar Small Growth (JKK)

iShares Morningstar Small Value (JKL)

iShares NYSE Index Funds

iShares NYSE Composite (NYC)

iShares NYSE 100 (NY)

iShares^® is a registered trade mark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx, KLD Research & Analytics, Inc., MSCI Inc., Morningstar, Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. iBoxx is a registered trademark of International Index Company Limited. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor

NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50 Index, FTSE NAREIT Residential Index, FTSE NAREIT Retail Index, FTSE NAREIT Mortgage REITs Index or FTSE NAREIT Industrial/Office Index; all rights vest in NAREIT. “FTSE” is a trade and service mark of London Stock Exchange and The Financial Times; “Xinhua” is a trade and service mark of Xinhua Financial Network Limited. “NAREIT^®” is a trademark of NAREIT.

An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. This advertising section does not constitute part of the 2007 Annual Report.

5508-iS-1007

98 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

iShares^®

iShares, Inc.

Supplement dated October 30, 2007

to the Prospectus dated January 1, 2007

for the iShares MSCI Australia Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Emerging Markets Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Index Fund, iShares MSCI Pacific ex-Japan Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index Fund (the “Prospectus”).

The information in this Supplement updates the information in, and should be read in conjunction with, the Prospectus for the iShares MSCI Brazil Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index Fund.

The following information replaces the second paragraph found under the heading “Investment Adviser” on page 46:

For its investment advisory services to the iShares MSCI Pacific ex-Japan Index Fund, BGFA is paid advisory fees equal to 0.50% per year of the average daily net assets of that Fund; for its investment advisory services to the iShares MSCI Emerging Markets Index Fund, BGFA is paid advisory fees equal to 0.75% per year of the average daily net assets of that Fund less than or equal to $14.0 billion, plus 0.68% per year of the average daily net assets of that Fund between $14.0 billion and $28.0 billion, plus 0.61% per year of the average daily net assets of that Fund in excess of $28.0 billion; for its investment advisory services to each of the other Funds included in this Prospectus, BGFA is paid a fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of iShares MSCI Australia Index Fund, iShares MSCI Austria Index Fund, iShares MSCI Belgium Index Fund, iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Japan Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Index Fund, iShares MSCI Netherlands Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund, and iShares MSCI United Kingdom Index Fund (iShares MSCI Austria Index Fund, iShares MSCI Belgium Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Netherlands Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund, and iShares MSCI United Kingdom Index Fund are offered in a separate Prospectus) equal to each of those Funds’ allocable portion of: 0.59% per year of the aggregate of the average daily net assets of those Funds less than or equal to $7.0 billion, plus 0.54% per year of the aggregate of the average daily net assets of those Funds between $7.0 billion and $11.0 billion, plus 0.49% per year of the aggregate of the average daily net assets of those Funds between $11.0 billion and $24.0 billion, plus 0.44% per year of the aggregate of the average daily net assets of those Funds in excess of $24.0 billion.

Effective September 1, 2007, for its investment advisory services to the iShares MSCI Brazil Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund, and iShares MSCI Taiwan Index Fund, BGFA is paid advisory fees equal to each of those Funds’ allocable portion of: 0.74% per year of the aggregate of the average daily net assets of those Funds less than or equal to $2 billion, plus 0.69% per year of the aggregate of the average daily net assets of those Funds between $2 billion and $4 billion, plus 0.64% per year of the aggregate of the average daily net assets of those Funds between $4 billion and $8 billion, plus 0.57% per year of the aggregate of the average daily net assets of those Funds in excess of $8 billion.

If you have any additional questions, please call 1-800-iShares (1-800-474-2737).

iShares^® is a registered trademark of Barclays Global Investors, N.A.

PLEASE RETAIN THIS SUPPLEMENT

FOR FUTURE REFERENCE

Table of Contents

Management’s Discussions of Fund Performance	1
Shareholder Expenses (Unaudited)	27
Schedules of Investments	29
iShares MSCI Australia Index Fund	29
iShares MSCI Brazil Index Fund	32
iShares MSCI Canada Index Fund	35
iShares MSCI Emerging Markets Index Fund	38
iShares MSCI Hong Kong Index Fund	45
iShares MSCI Malaysia Index Fund	47
iShares MSCI Mexico Index Fund	49
iShares MSCI Pacific ex-Japan Index Fund	51
iShares MSCI Singapore Index Fund	54
iShares MSCI South Africa Index Fund	56
iShares MSCI South Korea Index Fund	58
iShares MSCI Taiwan Index Fund	61
Financial Statements	64
Financial Highlights	76
Notes to Financial Statements	88
Report of Independent Registered Public Accounting Firm	97
Tax Information (Unaudited)	98
Board Review and Approval of Investment Advisory Contract (Unaudited)	99
Supplemental Information (Unaudited)	102
Director and Officer Information (Unaudited)	109
iShares Family of Funds	116

Management’s Discussion of Fund Performance

iSHARES^® MSCI AUSTRALIA INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
33.97%	35.85%	33.51%	28.66%	28.88%	28.14%	13.45%	13.56%	13.62%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
33.97%	35.85%	33.51%	252.57%	255.51%	245.52%	253.31%	256.66%	258.44%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 1

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	47.33	%
Basic Materials	19.94
Consumer Non-Cyclical	11.76
Industrial	7.31
Consumer Cyclical	4.36
Energy	4.09
Communications	3.15
Utilities	0.66
Technology	0.51
Short-Term and Other Net Assets	0.89
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
BHP Billiton Ltd.	12.68	%
Commonwealth Bank of Australia	7.06
National Australia Bank Ltd.	6.41
Australia and New Zealand Banking Group Ltd.	5.27
Westpac Banking Corp.	4.95
Westfield Group	3.60
Woolworths Ltd.	3.55
QBE Insurance Group Ltd.	2.96
Rio Tinto Ltd.	2.63
Woodside Petroleum Ltd.	2.13
TOTAL	51.24	%

The iShares MSCI Australia Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Australian market, as measured by the MSCI Australia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 33.97%, while the Index returned 33.51%.

The Australian stock market enjoyed robust returns for the reporting period. The Australian economy, now in its 16th consecutive year of expansion, grew by 4.3% for the 12 months ended June 30, 2007. The growth was paced by strong commodity exports, especially to China but also elsewhere in Asia and Europe. The inflation rate also increased modestly, leading the Reserve Bank of Australia to raise interest rates twice during the reporting period. The Australian central bank boosted its cash rate target to 6.5%, its highest level in 11 years.

The stock market’s strong gains reflected the favorable economic environment and strength in commodity-based industries, such as mining and metals producers. In addition, currency fluctuations enhanced Australian stock returns for U.S. investors; the U.S. dollar declined by approximately 6.9% versus the Australian dollar during the reporting period.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted double-digit gains for the reporting period. The leading performers included retailer Woolworths Ltd., which reported strong sales and improving profit margins, and QBE Insurance Group Ltd., which exceeded earnings expectations in the first half of 2007. Two mining companies among the ten largest holdings, BHP Billiton Ltd. and Rio Tinto Ltd., also delivered strong returns due to high demand for metals and minerals. The weaker performers among the ten largest holdings were commercial bank Australia and New Zealand Banking Group Ltd. and energy producer Woodside Petroleum Ltd.

2 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI BRAZIL INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
60.82%	58.64%	61.26%	51.98%	52.42%	54.03%	19.57%	19.45%	21.96%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
60.82%	58.64%	61.26%	710.96%	722.60%	766.98%	258.51%	255.95%	313.51%

Total returns for the periods since inception are calculated from the inception date of the Fund (7/10/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (7/14/00), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 3

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Basic Materials	31.14	%
Energy	22.13
Financial	17.46
Consumer Non-Cyclical	8.27
Utilities	7.51
Communications	7.02
Industrial	3.66
Consumer Cyclical	2.10
Short-Term and Other Net Assets	0.71
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Petroleo Brasileiro SA Preferred	12.02	%
Companhia Vale do Rio Doce Class A Preferred	11.37
Petroleo Brasileiro SA	10.11
Companhia Vale do Rio Doce ADR	9.56
Banco Bradesco SA Preferred	6.65
Banco Itau Holding Financeira SA Preferred	4.85
Companhia de Bebidas das Americas Preferred	4.41
Unibanco-Uniao de Bancos Brasileiros SA	4.19
Gerdau SA Preferred	2.47
Companhia Siderurgica Nacional	2.27
TOTAL	67.90	%

The iShares MSCI Brazil Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Brazilian market, as measured by the MSCI Brazil Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 60.82%, while the Index returned 61.26%.

The Brazilian stock market enjoyed robust returns for the reporting period. The Brazilian economy grew by 5.4% for the 12 months ended June 30, 2007, driven largely by strong commodity exports, particularly metals and oil. The inflation rate came in at 3.9%, below the government’s 4.5% target. As a result, the Brazilian central bank lowered its benchmark interest rate seven times during the reporting period. Since November 2005, the central bank has enacted 17 interest rate cuts, bringing the benchmark interest rate down from 19.75% to a 20-year low of 11.50%.

The sharp rise in the Brazilian stock market resulted from surging commodity exports and foreign investment in the country’s stocks and bonds. In addition, currency fluctuations enhanced Brazilian stock returns for U.S. investors; the Brazilian real hit a seven-year high versus the U.S. dollar in July 2007 and gained 8.8% overall against the U.S. currency during the reporting period.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted returns of more than 35% for the reporting period. The leading performers were the Class A preferred and ADR shares of Companhia Vale do Rio Doce, the world’s largest iron-ore and nickel exporter, which benefited from very strong global demand for metals. Also benefiting from this trend were steelmakers Companhia Siderurgica Nacional and the preferred shares of Gerdau SA. The lowest returns for the reporting period came from the Fund’s largest holding, the preferred shares of energy producer Petroleo Brasileiro SA.

4 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI CANADA INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
22.33%	22.28%	22.69%	26.97%	26.75%	27.40%	13.30%	13.31%	13.74%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
22.33%	22.28%	22.69%	230.05%	227.19%	235.63%	248.71%	248.89%	262.31%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 5

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI CANADA INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	29.75	%
Energy	26.82
Basic Materials	17.49
Communications	6.82
Industrial	5.64
Technology	4.65
Consumer Cyclical	3.49
Diversified	2.15
Consumer Non-Cyclical	1.83
Utilities	1.08
Short-Term and Other Net Assets	0.28
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Royal Bank of Canada	6.01	%
Manulife Financial Corp.	5.47
Bank of Nova Scotia	4.46
EnCana Corp.	4.08
Research In Motion Ltd.	3.91
Suncor Energy Inc.	3.76
Canadian Natural Resources Ltd.	3.36
Alcan Inc.	3.31
Bank of Montreal	2.80
Canadian Imperial Bank of Commerce	2.79
TOTAL	39.95	%

The iShares MSCI Canada Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Canadian market, as measured by the MSCI Canada Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 22.33%, while the Index returned 22.69%.

The Canadian stock market enjoyed strong returns for the reporting period. The Canadian economy grew by 2.5% for the 12 months ended June 30, 2007, boosted by strong global demand for commodities such as oil, natural gas, and metals. Rising commodity exports, especially to China and other countries outside of the U.S., helped lower the Canadian unemployment rate to 6%, its lowest level in 30 years, and boosted domestic consumption. In addition, Canada continued to generate a federal budget surplus, as it has every year since 1998. As a result, the Canadian dollar strengthened to a 30-year high versus the U.S. dollar, rising 5% for the reporting period and 35% since its 2002 low.

The Canadian stock market benefited from the favorable economic environment, as well as healthy corporate earnings growth and increasing merger activity. However, Canadian shares fell late in the reporting period amid concerns about the sub-prime lending crisis in the U.S., which is Canada’s largest trading partner.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted positive returns for the reporting period, and two delivered returns of more than 100%. The leading performers were wireless handheld device maker Research In Motion Ltd., which continued to benefit from the success of its Blackberry^® wireless device, and aluminum producer Alcan Inc., which was the subject of a bidding war before agreeing to be acquired by Australian mining company Rio Tinto Ltd. Other top performers included energy producer Canadian Natural Resources Ltd. and commercial bank Canadian Imperial Bank of Commerce. The only stock among the ten largest holdings to post a single-digit gain during the reporting period was Bank of Montreal.

6 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns						Cumulative Total Returns
Year Ended 8/31/07			Inception to 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
39.86%	39.06%	43.63%	38.18%	38.06%	38.75%	315.33%	313.67%	322.50%

Total returns for the periods since inception are calculated from the inception date of the Fund (4/7/03). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (4/11/03), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 7

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	21.12	%
Energy	14.95
Basic Materials	14.79
Communications	14.02
Industrial	10.18
Technology	8.90
Utilities	4.48
Consumer Non-Cyclical	4.39
Consumer Cyclical	3.92
Diversified	2.22
Funds	0.55
Short-Term and Other Net Assets	0.48
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
POSCO ADR (South Korea)	4.33	%
Samsung Electronics Co. Ltd. GDR (South Korea)	3.54
OAO Gazprom SP ADR (Russia)	3.47
Taiwan Semiconductor Manufacturing Co. Ltd. SP ADR (Taiwan)	2.74
China Mobile Ltd. (Hong Kong)	2.33
Siliconware Precision Industries Co. SP ADR (Taiwan)	2.23
Kookmin Bank SP ADR (South Korea)	2.23
Chunghwa Telecom Co. Ltd. ADR (Taiwan)	1.87
United Microelectronics Corp. SP ADR (Taiwan)	1.67
Companhia Vale do Rio Doce Preferred SP ADR (Brazil)	1.63
TOTAL	26.04	%

The iShares MSCI Emerging Markets Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Index (the “Index”). The Index is designed to measure equity market performance in the global emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 39.86%, while the Index returned 43.63%.

Emerging markets stocks continued to enjoy robust returns during the reporting period, extending a 4 ¹/2-year rally. From the rally’s start in March 2003 through the end of the reporting period, the Index had a cumulative total return of over 340%.

The key to the strong performance of emerging equity markets during the reporting period was healthy economic growth, particularly in China and India, but also across Latin America and the rest of Asia. With global growth on the rise, demand for energy and commodities increased from already strong levels. Many emerging markets are major exporters of commodities – primarily oil, gas, and metals – and rising prices boosted profits for companies that produce and export these commodities.

Despite the sizable overall returns, however, many emerging markets gave up some of their gains toward the end of the reporting period. Concerns about the sub-prime lending crisis in the U.S. led to a “flight to quality” as many investors shifted assets out of riskier markets, including many emerging markets.

Latin American markets delivered the best returns for the reporting period. Peru was the top performer in the region due to very strong economic growth and a rapidly growing trade surplus. Brazil, the largest market in Latin America, also rallied sharply as base metals exports soared, and Mexico also fared well, led by telecommunications and materials stocks.

8 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

Emerging markets in Asia also produced large-sized returns for the reporting period. In China, the stock market surged, as the Chinese economy continued to grow at a double-digit annualized pace, driven by soaring exports. In addition, outsourcing contributed to the strong performance of the stock markets in the Philippines and India.

Markets in Eastern Europe and the Middle East generally posted sound gains for the reporting period. Russia was one of the weaker performers, rising only slightly for the reporting period. On the positive side, Turkey and the Czech Republic both delivered strong gains.

Among the Fund’s ten largest holdings as of August 31, 2007, eight registered positive returns for the reporting period, and three returned more than 100%. The two best performers were metals companies – the ADR shares of South Korean steelmaker POSCO and the sponsored ADR shares of the preferred shares of the Brazilian nickel and iron-ore producer Companhia Vale do Rio Doce – both of which benefited from strong global demand for metals and rising prices. The other top ten holding with a triple-digit return was Chinese wireless telecommunications services provider China Mobile Ltd., which enjoyed a strong increase in its subscriber base. The only two stocks among the ten largest holdings to decline for the reporting period were OAO Gazprom SP ADR and Samsung Electronics Co. Ltd. GDR.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 9

Management’s Discussion of Fund Performance

iSHARES^® MSCI HONG KONG INDEX FUND

Performance as of August 31, 2007

			Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
31.44%	32.64%	32.17%	20.50%	20.97%	21.39%	4.70%	4.78%	6.31%
			Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
31.44%	32.64%	32.17%	154.08%	159.02%	163.61%	58.26%	59.54%	84.32%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or ”NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

10 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	47.85	%
Diversified	14.05
Consumer Cyclical	13.35
Utilities	9.41
Communications	6.21
Industrial	5.84
Basic Materials	1.32
Consumer Non-Cyclical	0.93
Technology	0.66
Short-Term and Other Net Assets	0.38
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Cheung Kong (Holdings) Ltd.	8.57	%
Hutchison Whampoa Ltd.	8.15
Hong Kong Exchanges and Clearing Ltd.	7.55
Sun Hung Kai Properties Ltd.	7.00
Esprit Holdings Ltd.	5.86
Hang Seng Bank Ltd.	4.61
Swire Pacific Ltd. Class A	3.55
CLP Holdings Ltd.	3.52
BOC Hong Kong Holdings Ltd.	3.43
Hong Kong and China Gas Co. Ltd. (The)	3.23
TOTAL	55.47	%

The iShares MSCI Hong Kong Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Hong Kong market, as measured by the MSCI Hong Kong Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 31.44%, while the Index returned 32.17%.

The Hong Kong stock market enjoyed robust returns for the reporting period. The Hong Kong economy grew by 6.9% for the 12 months ended June 30, 2007, in line with the 6.8% growth rate for all of 2006. Hong Kong’s close relationship and trade partnership with mainland China appeared to be the key driver behind this healthy growth rate. The Chinese economy surged during the reporting period – its 11.9% annualized growth rate in the second quarter of 2007 was the fastest rate in 12 years – and this helped lift economic activity in Hong Kong. The Hong Kong market also appeared to benefit from the expansion of China’s Qualified Domestic Institutional Investors program, which allows institutional investors (banks, insurance companies, and asset managers) to place funds in foreign securities.

Hong Kong’s ties with China led to some stock market volatility during the reporting period. A sharp drop in the Chinese market in late February 2007 – triggered by a government statement threatening to crackdown on stock market speculation – caused a similar decline in the Hong Kong market. Hong Kong shares also fell late in the reporting period as concerns about the sub-prime lending crisis in the U.S. led to a re-pricing of risk in markets around the world.

Each of the Fund’s ten largest holdings as of August 31, 2007, gained ground for the reporting period. By far, the leading performer was stock exchange Hong Kong Exchanges and Clearing Ltd., which delivered triple-digit gains for the reporting period as increased trading boosted profits. Other top performers included apparel maker Esprit Holdings Ltd. and property developer Cheung Kong (Holdings) Ltd.; the Fund’s largest holding as of August 31, 2007. The class A shares of diversified conglomerate Swire Pacific Ltd. posted the most modest return among the ten largest holdings for the reporting period.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 11

Management’s Discussion of Fund Performance

iSHARES^® MSCI MALAYSIA INDEX FUND

Performance as of August 31, 2007

			Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
44.64%	48.05%	45.66%	16.84%	17.38%	17.80%	5.57%	5.75%	6.64%
			Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
44.64%	48.05%	45.66%	117.72%	122.80%	126.87%	71.88%	74.83%	90.26%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. As the Fund has a NAV which is determined prior to the opening of the regular trading day on the stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

12 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI MALAYSIA INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	32.23	%
Consumer Non-Cyclical	16.13
Consumer Cyclical	15.90
Industrial	13.33
Diversified	7.17
Utilities	6.92
Communications	5.62
Energy	1.76
Technology	0.28
Short-Term and Other Net Assets	0.66
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Bumiputra-Commerce Holdings Bhd	10.59	%
Malayan Banking Bhd	8.62
IOI Corp. Bhd	6.77
Sime Darby Bhd	5.41
Genting Bhd	5.20
Tenaga Nasional Bhd	4.90
Telekom Malaysia Bhd	3.82
MISC Bhd	3.81
Public Bank Bhd	3.74
Resorts World Bhd	3.72
TOTAL	56.58	%

The iShares MSCI Malaysia Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Malaysian market, as measured by the MSCI Malaysia Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 44.64%, while the Index returned 45.66%.

The Malaysian stock market enjoyed robust returns for the reporting period. The Malaysian economy grew at a 5.7% annualized rate in the second quarter of 2007, down slightly from its 5.9% growth rate for all of 2006. Exports appeared to be the key to Malaysia’s strong economy and stock market as commodity prices rose sharply during the reporting period. Malaysia is the world’s leading producer of palm oil, whose prices hit record highs during the reporting period. Malaysia’s energy and mining operations also benefited from strong global demand, especially from China. Currency fluctuations enhanced Malaysian stock returns for U.S. investors; the U.S. dollar declined by 4.9% versus the Malaysian ringgit for the reporting period.

Despite its strong overall performance, the Malaysian stock market experienced some volatility during the reporting period. A sharp drop in the Chinese market in late February 2007 – triggered by a government statement threatening to crackdown on stock market speculation – caused a similar decline in the Malaysian market. Malaysian shares also fell late in the reporting period as concerns about the sub-prime lending crisis in the U.S. – Malaysia’s largest trading partner – led to a re-pricing of risk in markets around the world.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted positive returns for the reporting period. The leading performers were commercial bank Bumiputra-Commerce Holdings Bhd, the Fund’s largest holding, and conglomerate Sime Darby Bhd, which benefited from its exposure to both palm oil and energy production. Other top performers included resort operator Resorts World Bhd and Public Bank Bhd. The lowest returns among the ten largest holdings came from Malayan Banking Bhd and shipping company MISC Bhd, although both firms still produced double-digit returns.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 13

Management’s Discussion of Fund Performance

iSHARES^® MSCI MEXICO INDEX FUND

Performance as of August 31, 2007

			Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
42.58%	42.24%	40.85%	36.02%	35.86%	35.10%	16.53%	16.60%	17.69%
			Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
42.58%	42.24%	40.85%	365.59%	362.92%	350.10%	361.89%	364.59%	409.85%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

14 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI MEXICO INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Communications	42.25	%
Industrial	18.95
Consumer Cyclical	12.01
Consumer Non-Cyclical	9.81
Basic Materials	8.15
Diversified	4.73
Financial	3.96
Short-Term and Other Net Assets	0.14
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
America Movil SAB de CV Series L	24.09	%
Cemex SA de CV Series CPO	14.84
Telefonos de Mexico SA de CV Series L	10.23
Wal-Mart de Mexico SAB de CV Series V	4.97
Grupo Televisa SA Series CPO	4.96
Grupo Mexico SA de CV Series B	4.83
Fomento Economico Mexicano SAB	4.76
Grupo Financiero Banorte SAB de CV Series O	3.96
Carso Global Telecom SAB de CV Class A1	2.97
Grupo Carso SA de CV Series A1	2.91
TOTAL	78.52	%

The iShares MSCI Mexico Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Mexican market, as measured by the MSCI Mexico Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 42.58%, while the Index returned 40.85%.

The Mexican stock market enjoyed robust returns for the reporting period, despite a deceleration in the Mexican economy in 2007. The economy grew at a 2.7% annualized rate in the first half of 2007, down from 4.8% for all of 2006. Growth was driven primarily by a strong export market, particularly for commodities such as oil – by volume, Mexico’s government-owned energy company Pemex is the third-largest oil producer in the world. Inflation in Mexico came in at 4% for the reporting period, up from 3.5% for the previous 12 months. Much of the increase resulted from higher food prices as ethanol production in the U.S. and elsewhere led to a sharp increase in the price of corn. The Mexican central bank raised interest rates to 7.25% in April 2007 to keep inflation in check.

The healthy export market provided a lift to the Mexican stock market, as did strong results for companies in the telecommunications and materials sectors. However, Mexico’s close ties with the U.S. led to a decline late in the reporting period amid concerns about the sub-prime lending crisis in the U.S.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted positive returns for the reporting period. The leading performers included the Series B shares of metals producer Grupo Mexico SA de CV, which benefited from a sharp increase in global demand for metals, and the Series L shares of wireless telecommunications services provider America Movil SAB de CV, which reported very strong subscriber growth and better-than-expected profits. Other top performers included Carso Global Telecom SAB de CV Class A1 and the Series L shares of telecommunications provider Telefonos de Mexico SA de CV. The series V shares of the discount retailer Wal-Mart de Mexico SAB de CV posted the most modest return among the ten largest holdings during the reporting period.

  MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 15

Management’s Discussion of Fund Performance

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
34.86%	36.24%	34.89%	26.27%	26.10%	26.15%	23.17%	23.33%	23.12%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
34.86%	36.24%	34.89%	220.95%	218.79%	219.45%	238.63%	241.21%	237.57%

Total returns for the periods since inception are calculated from the inception date of the Fund (10/25/01). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (10/26/01), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

16 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	47.33	%
Basic Materials	13.28
Consumer Non-Cyclical	8.55
Industrial	8.14
Consumer Cyclical	6.56
Communications	5.76
Diversified	3.75
Energy	2.75
Utilities	2.55
Technology	0.56
Short-Term and Other Net Assets	0.77
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
BHP Billiton Ltd. (Australia)	8.38	%
Commonwealth Bank of Australia (Australia)	4.65
National Australia Bank Ltd. (Australia)	4.22
Australia and New Zealand Banking Group Ltd. (Australia)	3.47
Westpac Banking Corp. (Australia)	3.25
Westfield Group (Australia)	2.36
Woolworths Ltd. (Australia)	2.35
QBE Insurance Group Ltd. (Australia)	1.95
Cheung Kong (Holdings) Ltd. (Hong Kong)	1.82
Rio Tinto Ltd. (Australia)	1.75
TOTAL	34.20	%

The iShares MSCI Pacific ex-Japan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Australia, Hong Kong, New Zealand and Singapore markets, as measured by the MSCI Pacific ex-Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 34.86%, while the Index returned 34.89%.

The Fund enjoyed robust returns during the reporting period as the four markets comprising the Fund – Australia, Hong Kong, New Zealand, and Singapore – delivered very strong results.

The Australian stock market benefited from the strength of the Australian economy, now in its 16th consecutive year of expansion. The economy grew by 4.3% for the 12 months ended June 30, 2007, paced by strong commodity exports, especially to China but also elsewhere in Asia and Europe. The stock market’s strong gains reflected the favorable economic environment and strength in commodity-based industries, such as mining and metals producers. In addition, currency fluctuations enhanced Australian stock returns for U.S. investors; the U.S. dollar declined by 6.9% versus the Australian dollar during the reporting period.

In Hong Kong, the economy grew by 6.9% for the 12 months ended June 30, 2007, driven largely by its close relationship and trade partnership with mainland China. The Chinese economy surged during the reporting period – its 11.9% annualized growth rate in the second quarter of 2007 was the fastest rate in 12 years – and this helped lift economic activity in Hong Kong. The Hong Kong market also appeared to benefit from the expansion of China’s Qualified Domestic Institutional Investors program, which allows institutional investors (banks, insurance companies, and asset managers) to place funds in foreign securities.

The Singapore economy grew by 7.9% in 2006 and followed that with a 7.6% annualized growth rate in the first half of 2007 – one of the fastest growth rates in Asia. Singapore’s trade-reliant economy appeared to benefit from strong growth in China, as well as solid expansion in Europe and the rest of Asia. The rally in the Singapore stock market was broad-based, producing strong results across a variety of economic sectors. As in Australia, currency fluctuations boosted Singapore stock returns for U.S. investors; the U.S. dollar declined by 3.1% versus the Singaporean dollar for the reporting period.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 17

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

The New Zealand market posted the lowest return among the four markets represented in the Fund, though it still gained 25%. The most recent economic growth figures show the New Zealand economy growing by 2.2% for the 12 months ended June 30, 2007, a slower pace than many of the region’s economies. Nonetheless, the New Zealand market benefited from the strength of its trading partners, particularly China and other emerging Asian markets. In addition, investors borrowing at low interest rates in Japan were attracted to the relatively high interest rates in New Zealand – a practice known as the “carry trade.” In part because of this demand, the New Zealand dollar reached a 22-year high against the U.S. dollar in July 2007 and rose 7.3% overall against the U.S. currency for the reporting period.

Each of the Fund’s ten largest holdings (nine of which are Australian companies) as of August 31, 2007, posted double-digit returns for the reporting period. The leading performers included retailer Woolworths Ltd., which reported strong sales and improving profit margins, and QBE Insurance Group Ltd., which exceeded earnings expectations in the first half of 2007. Mining companies BHP Billiton Ltd. and Rio Tinto Ltd. also delivered strong returns due to high demand for metals and minerals. The weakest performers among the ten largest holdings were commercial banks Australia and New Zealand Banking Group Ltd. and National Australia Bank Ltd.

18 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SINGAPORE INDEX FUND

Performance as of August 31, 2007

			Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
49.92%	50.40%	51.08%	25.00%	24.83%	24.71%	6.88%	6.91%	7.64%
			Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
49.92%	50.40%	51.08%	205.23%	203.12%	201.63%	94.49%	95.06%	108.85%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or ”NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 19

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Financial	51.08	%
Communications	15.94
Industrial	13.70
Diversified	7.02
Consumer Cyclical	5.75
Consumer Non-Cyclical	4.06
Energy	0.58
Technology	0.51
Short-Term and Other Net Assets	1.36
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Singapore Telecommunications Ltd.	12.73	%
United Overseas Bank Ltd.	11.27
DBS Group Holdings Ltd.	9.85
Oversea-Chinese Banking Corp.	8.96
Keppel Corp. Ltd.	5.82
Singapore Airlines Ltd.	4.78
CapitaLand Ltd.	4.74
City Developments Ltd.	3.67
Singapore Exchange Ltd.	3.47
Singapore Press Holdings Ltd.	3.21
TOTAL	68.50	%

The iShares MSCI Singapore Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Singaporean market, as measured by the MSCI Singapore Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 49.92%, while the Index returned 51.08%.

The Singapore stock market enjoyed robust returns for the reporting period. The Singapore economy grew by 7.9% in 2006 and followed with a 7.6% annualized growth rate in the first half of 2007 – one of the fastest growth rates in Asia. Singapore’s trade-reliant economy appeared to benefit from strong growth in China, as well as solid expansion in Europe and the rest of Asia. Meanwhile, the inflation rate in Singapore rose to its highest level in 12 years, increasing 2.6% for the 12 months ended July 31, 2007, though much of the increase resulted from a recent sales tax increase.

The rally in the Singapore stock market was broad-based, producing strong results across a variety of economic sectors. In addition, currency fluctuations enhanced Singapore stock returns for U.S. investors; the U.S. dollar declined by 3.1% versus the Singaporean dollar for the reporting period. Despite its steady rise, the Singapore market experienced some volatility during the reporting period. A sharp drop in the Chinese market in late February 2007 – triggered by a government statement threatening to crack down on stock market speculation – caused a similar decline in the Singapore market. Singapore shares also fell late in the reporting period as concerns about the sub-prime lending crisis in the U.S. led to a re-pricing of risk in markets around the world.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted at least double-digit gains for the reporting period. By far, the leading performer was stock exchange Singapore Exchange Ltd., which soared by well over 100% for the reporting period as increased trading boosted profits. Other top performers among the ten largest holdings included energy and shipping conglomerate Keppel Corp. Ltd. and property developer CapitaLand Ltd. The weaker returns among the Fund’s ten largest positions came from financial services provider DBS Group Holdings Ltd. and newspaper publisher Singapore Press Holdings Ltd.

20 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns						Cumulative Total Returns
Year Ended 8/31/07			Inception to 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
30.34%	29.60%	31.42%	31.43%	31.55%	32.90%	249.20%	250.71%	267.91%

Total returns for the periods since inception are calculated from the inception date of the Fund (2/3/03). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (2/7/03), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 21

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Basic Materials	24.93	%
Financial	20.91
Communications	17.76
Energy	11.07
Consumer Cyclical	7.61
Industrial	6.57
Diversified	5.97
Consumer Non-Cyclical	4.96
Short-Term and Other Net Assets	0.22
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Sasol Ltd.	11.07	%
MTN Group Ltd.	10.42
Standard Bank Group Ltd.	8.27
Impala Platinum Holdings Ltd.	7.32
Gold Fields Ltd.	4.36
Anglo Platinum Ltd.	4.32
FirstRand Ltd.	4.23
Naspers Ltd.	4.01
Telkom South Africa Ltd.	3.33
Sanlam Ltd.	3.18
TOTAL	60.51	%

The iShares MSCI South Africa Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the South African market, as measured by the MSCI South Africa Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 30.34%, while the Index returned 31.42%.

The South African stock market enjoyed robust returns for the reporting period. The South African economy grew by 5% for the 12 months ended June 30, 2007, extending an economic expansion that began in 1999. Exports make up nearly 30% of South African economic output, most notably in commodities such as metals and minerals. Strong global demand for these commodities helped boost both the economy and stock market in South Africa. Currency fluctuations added modestly to South African stock returns for U.S. investors; the U.S. dollar declined by 0.5% versus the South African rand for the reporting period.

Despite its strong overall performance, the South African stock market experienced some volatility during the reporting period. A sharp drop in the Chinese market in late February 2007 – triggered by a government statement threatening to crack down on stock market speculation – caused a similar decline in the South African market. South African shares also fell late in the reporting period as concerns about the sub-prime lending crisis in the U.S. led to a re-pricing of risk in markets around the world.

All but one of the Fund’s ten largest holdings as of August 31, 2007, posted double-digit gains for the reporting period. The leading performers were wireless telecommunications services provider MTN Group Ltd., which benefited from strong subscriber growth across Africa and the Middle East, and diversified financial services company Sanlam Ltd., which reported strong results due to burgeoning growth in its life insurance business. Other top performers included electronic media company Naspers Ltd. and Standard Bank Group Ltd. The only stock among the ten largest holdings to decline for the reporting period was gold producer Gold Fields Ltd.

22 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SOUTH KOREA INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
39.18%	41.04%	38.94%	25.25%	25.95%	27.16%	17.38%	17.53%	18.02%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
39.18%	41.04%	38.94%	208.28%	216.90%	232.53%	222.97%	225.86%	236.28%

Total returns for the periods since inception are calculated from the inception date of the Fund (5/9/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such exceptional returns will be repeated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. As the Fund has a NAV which is determined prior to the opening of the regular trading day on the stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (5/12/00), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 23

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Industrial	35.95	%
Financial	19.13
Consumer Cyclical	13.87
Basic Materials	13.70
Communications	5.81
Consumer Non-Cyclical	4.97
Energy	3.36
Utilities	2.39
Technology	0.75
Short-Term and Other Net Assets	0.07
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Samsung Electronics Co. Ltd.	14.26	%
POSCO	9.43
Kookmin Bank	5.64
Shinhan Financial Group Ltd.	3.99
Hyundai Heavy Industries Co. Ltd.	3.47
Korea Electric Power Corp.	2.39
Hyundai Motor Co. Ltd.	2.35
Samsung Corp.	1.97
Shinsegae Co. Ltd.	1.93
Samsung Heavy Industries Co. Ltd.	1.85
TOTAL	47.28	%

The iShares MSCI South Korea Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the South Korean market, as measured by the MSCI Korea Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 39.18%, while the Index returned 38.94%.

The South Korean stock market enjoyed robust returns for the reporting period. The South Korean economy grew by a stronger-than-expected 4.9% for the 12 months ended June 30, 2007. Exports, which comprise approximately 40% of South Korea’s economy, were a key contributing factor to the solid economic growth, surging by 16%. The economy and stock market also appeared to benefit from the free trade agreement between South Korea and the U.S., signed in April 2007. The accord is South Korea’s largest trade deal ever – as well as the biggest deal for the U.S. in 13 years – and is expected to facilitate trade between the two countries.

Despite its strong overall performance, the South Korean stock market experienced some volatility during the reporting period. Geopolitical instability resulting from tensions between North and South Korea weighed on the market early in the period. North Korea tested a nuclear weapon in October 2006, but later pledged to end its nuclear program. South Korean shares also fell late in the reporting period amid concerns about the sub-prime lending crisis in the U.S. since South Korea has substantial exposure to the U.S. consumer.

Among the Fund’s ten largest holdings as of August 31, 2007, four posted triple-digit returns for the reporting period. The leading performers were shipbuilder Hyundai Heavy Industries Co. Ltd., which reported a record increase in profits, and steelmaker POSCO, which benefited from strong global demand for metals and higher steel prices. Other top performers included conglomerate Samsung Corp. and shipbuilder Samsung Heavy Industries Co. Ltd. The only two stocks among the ten largest holdings to decline during the reporting period were electronics manufacturer Samsung Electronics Co. Ltd. and auto maker Hyundai Motor Co. Ltd.

24 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI TAIWAN INDEX FUND

Performance as of August 31, 2007

			Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
29.91%	30.70%	30.22%	13.56%	15.17%	14.59%	(1.57)%	(1.53)%	(0.63)%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Inception to 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
29.91%	30.70%	30.22%	88.84%	102.59%	97.61%	(10.79)%	(10.51)%	(4.45)%

Total returns for the periods since inception are calculated from the inception date of the Fund (6/20/00). “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. As the Fund has a NAV which is determined prior to the opening of the regular trading day on the stock exchange on which it is listed, the market return is calculated using the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (6/23/00), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSIONS OF FUND PERFORMANCE 25

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI TAIWAN INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Technology	36.61	%
Industrial	26.20
Financial	14.13
Basic Materials	11.84
Communications	4.32
Consumer Cyclical	3.20
Energy	1.72
Consumer Non-Cyclical	1.01
Short-Term and Other Net Assets	0.97
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Taiwan Semiconductor Manufacturing Co. Ltd.	10.81	%
Hon Hai Precision Industry Co. Ltd.	10.03
MediaTek Inc.	3.90
Cathay Financial Holding Co. Ltd.	3.41
Nan Ya Plastic Corp.	3.26
China Steel Corp.	3.18
Formosa Plastic Co.	2.72
United Microelectronics Corp.	2.65
Chunghwa Telecom Co. Ltd.	2.56
Asustek Computer Inc.	2.52
TOTAL	45.04	%

The iShares MSCI Taiwan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Taiwanese market, as measured by the MSCI Taiwan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 29.91%, while the Index returned 30.22%.

The Taiwanese stock market enjoyed robust returns for the reporting period, though it lagged many other emerging Asian markets. The Taiwan economy grew by 5.1% for the 12 months ended June 30, 2007, exceeding expectations as exports rose sharply. Growing demand from China and Europe more than offset a decline in exports to the U.S. Although inflation remained generally below the government’s target, concerns about rising inflation in the second half of 2007 led the Taiwan central bank to extend its program of interest rate increases. The central bank raised rates four times during the reporting period, for a total of 12 rate hikes since June 2003, boosting its discount rate to a six-year high of 3.125%. Nonetheless, with the exception of Japan, Taiwan still has the lowest interest rates in Asia. As a result, investment outflows have weighed on the Taiwanese dollar, which declined by 0.5% versus the U.S. dollar during the reporting period.

Materials and industrials were the leading export sectors in Taiwan during the reporting period, and consequently they were also the major drivers of equity market performance. Technology, especially contract manufacturing of semiconductors and consumer electronics, also comprised a substantial portion of the country’s exported goods, and a number of technology companies are expanding production capacity.

Each of the Fund’s ten largest holdings as of August 31, 2007, posted positive returns for the reporting period. The leading performer was chipmaker MediaTek Inc., which benefited from strong demand for its wireless and digital media chips. Other top performers included steelmaker China Steel Corp. and plastics manufacturers Nan Ya Plastic Corp. and Formosa Plastic Co. The lowest returns among the ten largest holdings came from chipmakers United Microelectronics Corp. and Taiwan Semiconductor Manufacturing Co. Ltd., the Fund’s largest holding.

26 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited)

iSHARES^®, INC.

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2007 to August 31, 2007.

ACTUAL EXPENSES

The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line under each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

iShares MSCI Index Fund	Beginning Account Value (3/1/07)	Ending Account Value (8/31/07)	Annualized Expense Ratio		Expenses Paid During Perioda (3/1/07 to 8/31/07)
Australia
Actual	$1,000.00	$1,126.90	0.51	%	$2.73
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
Brazil
Actual	1,000.00	1,345.10	0.68		4.02
Hypothetical (5% return before expenses)	1,000.00	1,021.80	0.68		3.47
Canada
Actual	1,000.00	1,176.00	0.51		2.80
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
Emerging Markets
Actual	1,000.00	1,204.70	0.73		4.06
Hypothetical (5% return before expenses)	1,000.00	1,021.50	0.73		3.72

SHAREHOLDER EXPENSES 27

Shareholder Expenses (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Index Fund	Beginning Account Value (3/1/07)	Ending Account Value (8/31/07)	Annualized Expense Ratio		Expenses Paid During Perioda (3/1/07 to 8/31/07)
Hong Kong
Actual	$1,000.00	$1,151.70	0.51	%	$2.77
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
Malaysia
Actual	1,000.00	1,079.70	0.51		2.67
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
Mexico
Actual	1,000.00	1,155.20	0.51		2.77
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
Pacific ex-Japan
Actual	1,000.00	1,131.00	0.50		2.69
Hypothetical (5% return before expenses)	1,000.00	1,022.70	0.50		2.55
Singapore
Actual	1,000.00	1,133.10	0.51		2.74
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60
South Africa
Actual	1,000.00	1,081.00	0.68		3.57
Hypothetical (5% return before expenses)	1,000.00	1,021.80	0.68		3.47
South Korea
Actual	1,000.00	1,287.20	0.68		3.92
Hypothetical (5% return before expenses)	1,000.00	1,021.80	0.68		3.47
Taiwan
Actual	1,000.00	1,115.90	0.85		4.53
Hypothetical (5% return before expenses)	1,000.00	1,020.90	0.85		4.33

a Expenses are calculated using each Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days).

28 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.11%
AIRLINES – 0.53%
Qantas Airways Ltd.	1,721,765	$	7,816,140
			7,816,140
APPAREL – 0.26%
Billabong International Ltd.	293,534		3,785,053
			3,785,053
BANKS – 25.83%
Australia and New Zealand Banking Group Ltd.	3,274,511		77,228,735
Commonwealth Bank of Australia	2,302,179		103,292,515
Macquarie Office Trust	3,511,769		4,485,489
National Australia Bank Ltd.	2,888,682		93,862,484
Suncorp-Metway Ltd.	1,637,020		26,769,132
Westpac Banking Corp.	3,275,736		72,487,321
			378,125,676
BEVERAGES – 1.98%
Coca-Cola Amatil Ltd.	931,010		7,203,095
Foster’s Group Ltd.	3,488,257		17,935,348
Lion Nathan Ltd.	520,008		3,879,392
			29,017,835
BIOTECHNOLOGY – 0.47%
Sonic Healthcare Ltd.	552,672		6,928,741
			6,928,741
BUILDING MATERIALS – 1.13%
Boral Ltd.	1,068,400		6,857,963
CSR Ltd.	1,548,098		4,231,769
James Hardie Industries NV	826,478		5,446,288
			16,536,020
COMMERCIAL SERVICES – 2.93%
A.B.C. Learning Centres Ltd.a	667,236		3,729,241
Brambles Ltd.b	2,512,783		28,210,990
Transurban Group	1,886,801		10,990,650
			42,930,881
COMPUTERS – 0.51%
Computershare Ltd.	889,998		7,457,796
			7,457,796

Security	Shares	Value
DIVERSIFIED FINANCIAL SERVICES – 3.69%
ASX Ltd.	302,230	$	11,408,796
Babcock & Brown Ltd.a	409,762		7,887,342
Challenger Financial Services Group Ltd.	634,184		2,806,716
Macquarie Bank Ltd.	466,292		27,806,491
Perpetual Ltd.a	65,732		4,098,956
			54,008,301
ELECTRIC – 0.66%
AGL Energy Ltd.	767,358		9,613,975
			9,613,975
ENGINEERING & CONSTRUCTION – 1.66%
Downer EDI Ltd.	529,229		2,789,992
Leighton Holdings Ltd.	246,181		8,780,299
Multiplex Group	1,111,701		4,513,077
WorleyParsons Ltd.	261,809		8,221,596
			24,304,964
ENTERTAINMENT – 1.71%
Aristocrat Leisure Ltd.a	619,959		7,061,147
Tabcorp Holdings Ltd.	930,943		11,580,167
Tattersall’s Ltd.	1,892,650		6,451,617
			25,092,931
FOOD – 3.82%
Goodman Fielder Ltd.	1,876,457		3,969,138
Woolworths Ltd.	2,137,694		52,034,499
			56,003,637
FOREST PRODUCTS & PAPER – 0.15%
PaperlinX Ltd.	784,337		2,156,769
			2,156,769
HEALTH CARE - PRODUCTS – 0.36%
Cochlear Ltd.	97,201		5,298,217
			5,298,217
HOUSEHOLD PRODUCTS & WARES – 0.17%
Pacific Brands Ltd.	889,291		2,430,902
			2,430,902
INSURANCE – 6.43%
AMP Ltd.	3,319,048		28,406,225
AXA Asia Pacific Holdings Ltd.	1,526,774		9,365,487

SCHEDULES OF INVESTMENTS 29

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2007

Security	Shares	Value
Insurance Australia Group Ltd.	3,177,513	$	13,002,880
QBE Insurance Group Ltd.	1,527,152		43,298,146
			94,072,738
INVESTMENT COMPANIES – 1.39%
Macquarie Airports	1,213,050		4,292,914
Macquarie Communications Infrastructure Groupa	753,558		3,555,731
Macquarie Infrastructure Group	4,682,683		12,571,669
			20,420,314
IRON & STEEL – 1.21%
BlueScope Steel Ltd.	1,300,278		11,287,165
OneSteel Ltd.	1,310,651		6,461,658
			17,748,823
MANUFACTURING – 2.67%
Ansell Ltd.	259,607		2,766,763
Futuris Corp. Ltd.	1,026,766		2,046,547
Orica Ltd.	548,682		12,784,330
Wesfarmers Ltd.	687,399		21,564,042
			39,161,682
MEDIA – 1.49%
APN News & Media Ltd.	531,014		2,376,035
John Fairfax Holdings Ltd.	2,100,538		7,929,262
Publishing and Broadcasting Ltd.	794,367		11,580,930
			21,886,227
MINING – 18.58%
Alumina Ltd.	1,998,498		11,283,594
BHP Billiton Ltd.	5,940,720		185,686,656
Fortescue Metals Group Ltd.b	222,288		6,148,642
Iluka Resources Ltd.	430,732		1,944,842
Newcrest Mining Ltd.	595,301		11,865,525
Paladin Resources Ltd.a,b	959,964		4,732,731
Rio Tinto Ltd.a	505,922		38,492,163
Zinifex Ltd.	861,852		11,835,576
			271,989,729
OIL & GAS – 4.09%
Caltex Australia Ltd.	238,880		4,703,048
Origin Energy Ltd.	1,544,946		12,531,201
Santos Ltd.	1,065,343		11,483,905
Woodside Petroleum Ltd.	843,973		31,103,625
			59,821,779

Security	Shares	Value
PACKAGING & CONTAINERS – 0.67%
Amcor Ltd.	1,577,776	$	9,755,357
			9,755,357
PHARMACEUTICALS – 2.03%
CSL Ltd.	323,748		25,864,425
Symbion Health Ltd.	1,142,400		3,866,302
			29,730,727
REAL ESTATE – 9.99%
Centro Properties Group	1,495,855		9,966,844
CFS Retail Property Trust	2,449,029		4,722,006
Commonwealth Property Office Fund	2,574,206		3,518,332
DB RREEF Trust	5,127,445		8,384,580
Goodman Group	2,546,607		13,963,879
GPT Group	3,633,482		14,129,772
ING Industrial Fund	1,766,951		3,852,508
Lend Lease Corp. Ltd.	637,420		9,961,788
Mirvac Group	1,806,112		7,905,170
Stockland	2,457,500		17,173,980
Westfield Group	3,093,712		52,678,495
			146,257,354
RETAIL – 1.86%
Coles Group Ltd.	2,016,450		23,245,643
Harvey Norman Holdings Ltd.	936,914		4,055,044
			27,300,687
TELECOMMUNICATIONS – 1.66%
Telstra Corp. Ltd.	5,077,496		18,051,582
Telstra Corp. Ltd. Installment Receipt	2,632,079		6,209,851
			24,261,433
TRANSPORTATION – 1.18%
Asciano Groupb	951,851		6,620,935
Toll Holdings Ltd.	957,426		10,593,229
			17,214,164
TOTAL COMMON STOCKS (Cost: $1,282,017,415)			1,451,128,852

30 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2007

Security	Shares	Value
SHORT-TERM INVESTMENTS – 4.13%
MONEY MARKET FUNDS – 4.13%
Barclays Global Investors Funds
Institutional Money Market Fund, Institutional Shares 5.44%c,d	196,327	$	196,327
BGI Cash Premier Fund LLC 5.47%c,d,e	60,181,361		60,181,361
			60,377,688
TOTAL SHORT-TERM INVESTMENTS (Cost: $60,377,688)			60,377,688
TOTAL INVESTMENTS IN SECURITIES – 103.24% (Cost: $1,342,395,103)			1,511,506,540
Other Assets, Less Liabilities – (3.24)%			(47,394,064	)
NET ASSETS – 100.00%		$	1,464,112,476

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 31

Schedule of Investments

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 40.17%
AEROSPACE & DEFENSE – 1.63%
Empresa Brasileira de Aeronautica SA	6,449,760	$	72,395,265
			72,395,265
AGRICULTURE – 0.61%
Souza Cruz SA	1,296,000		27,103,592
			27,103,592
BANKS – 4.44%
Banco Nossa Caixa SA	720,000		11,020,408
Unibanco-Uniao de Bancos Brasileiros SA	16,560,020		185,877,776
			196,898,184
COMMERCIAL SERVICES – 0.85%
Companhia de Concessoes Rodoviarias	2,160,000		37,469,388
			37,469,388
COSMETICS & PERSONAL CARE – 0.48%
Natura Cosmeticos SA	2,016,000		21,291,429
			21,291,429
DIVERSIFIED FINANCIAL SERVICES – 0.75%
Redecard SAa	2,160,000		33,061,225
			33,061,225
ELECTRIC – 2.41%
Centrais Eletricas Brasileiras SA	3,456,000		44,769,306
CPFL Energia SA	1,259,564		22,569,330
EDP Energias do Brasil SA	1,152,000		18,220,408
Tractebel Energia SA	1,861,800		21,277,714
			106,836,758
FOOD – 0.70%
Cosan SA Industria e Comercio	90		1,001
Perdigao SA	1,584,000		30,871,837
			30,872,838
HEALTH CARE - SERVICES – 0.30%
Diagnosticos da America SA	596,300		13,383,284
			13,383,284
INTERNET – 0.75%
B2W - Companhia Global do Varejo	864,030		33,282,788
			33,282,788

Security	Shares	Value
IRON & STEEL – 2.74%
Companhia Siderurgica Nacional	1,769,784	$	100,534,567
Gerdau SA	1,035,600		20,918,063
			121,452,630
MINING – 9.56%
Companhia Vale do Rio Doce ADR	8,595,360		424,009,109
			424,009,109
OIL & GAS – 10.11%
Petroleo Brasileiro SA	14,400,000		448,163,265
			448,163,265
REAL ESTATE – 0.77%
Cyrela Brazil Realty SA	2,448,000		23,168,571
Cyrela Commercial Properties SA Empreendimentose e Participacoesa	1,208,700		1,480,041
Gafisa SA	803,500		9,715,791
			34,364,403
RETAIL – 0.73%
Lojas Renner SA	1,872,000		32,311,102
			32,311,102
TELECOMMUNICATIONS – 1.15%
Brasil Telecom Participacoes SA	901,000		20,410,408
Tele Norte Leste Participacoes SA	897,938		30,690,238
			51,100,646
TRANSPORTATION – 1.39%
All America Latina Logistica SA	5,328,000		61,706,939
			61,706,939
WATER – 0.80%
Companhia de Saneamento Basico do Estado de Sao Paulo	1,458,000		35,557,347
			35,557,347
TOTAL COMMON STOCKS (Cost: $1,080,151,400)			1,781,260,192

32 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2007

Security	Shares	Value
PREFERRED STOCKS – 59.12%
AIRLINES – 0.35%
Gol Linhas Aereas Inteligentes SA	295,000	$	6,547,194
Tam SA	399,700		9,105,411
			15,652,605
BANKS – 11.50%
Banco Bradesco SA	11,808,000		294,898,776
Banco Itau Holding Financeira SA	4,896,070		214,827,561
			509,726,337
BEVERAGES – 4.41%
Companhia de Bebidas das Americas	2,819,891		195,665,906
			195,665,906
BUILDING MATERIALS – 0.64%
Duratex SA	1,152,000		28,564,898
			28,564,898
CHEMICALS – 0.48%
Braskem SA Class A	2,304,036		21,277,067
			21,277,067
ELECTRIC – 4.30%
Centrais Eletricas Brasileiras SA Class B	2,880,200		35,561,653
Companhia Energetica de Minas Gerais	3,950,500		76,188,214
Companhia Energetica de Sao Paulo Class Ba	2,016,000,000		34,446,848
Companhia Paranaense de Energia Class B	1,584,000		25,861,225
Eletropaulo Metropolitana Electricidade de Sao Paulo SA Class B	331,200,000		18,689,142
			190,747,082
FOOD – 0.92%
Companhia Brasileira de Distribuicao Grupo Pao de Acucar	221,700,000		7,114,761
Sadia SA	6,717,000		33,859,163
			40,973,924

Security	Shares	Value
FOREST PRODUCTS & PAPER – 2.39%
Aracruz Celulose SA Class B	7,200,400	$	45,553,551
Klabin SA	8,816,000		25,998,204
Votorantim Celulose e Papel SA	1,440,100		34,400,756
			105,952,511
IRON & STEEL – 4.60%
Gerdau SA	4,464,373		109,331,584
Usinas Siderurgicas de Minas Gerais SA Class A	1,584,000		94,450,041
			203,781,625
MEDIA – 0.82%
Net Servicos de Comunicacao SAa	2,410,560		36,281,388
			36,281,388
MINING – 11.37%
Companhia Vale do Rio Doce Class A	12,164,400		503,953,714
			503,953,714
OIL & GAS – 12.02%
Petroleo Brasileiro SA	20,016,000		533,079,184
			533,079,184
RETAIL – 0.82%
Lojas Americanas SA	4,464,000		36,440,816
			36,440,816
TELECOMMUNICATIONS – 4.30%
Brasil Telecom Participacoes SA	3,312,000		48,159,184
Tele Norte Leste Participacoes SA	3,515,139		78,821,612
Telesp Celular Participacoes SA	6,912,083		32,832,394
TIM Participacoes SA	8,784,000		30,923,265
			190,736,455
TEXTILES – 0.20%
Companhia de Tecidos Norte de Minas	1,467,908		9,062,085
			9,062,085
TOTAL PREFERRED STOCKS (Cost: $1,580,926,937)			2,621,895,597

SCHEDULES OF INVESTMENTS 33

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2007

Security	Shares	Value
SHORT-TERM INVESTMENTS – 0.25%
MONEY MARKET FUNDS – 0.25%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%b,c	10,991,195	$	10,991,195
			10,991,195
TOTAL SHORT-TERM INVESTMENTS (Cost: $10,991,195)			10,991,195
TOTAL INVESTMENTS IN SECURITIES – 99.54% (Cost: $2,672,069,532)			4,414,146,984
Other Assets, Less Liabilities – 0.46%			20,186,654
NET ASSETS – 100.00%		$	4,434,333,638

ADR – American Depositary Receipts

^a Non-income earning security.

^b Affiliated issuer. See Note 2.

^c The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

34 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI CANADA INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.72%
ADVERTISING – 0.02%
Aeroplan Income Funda	16,282	$	325,532
			325,532
AEROSPACE & DEFENSE – 0.30%
CAE Inc.	307,797		3,971,668
			3,971,668
AIRLINES – 0.18%
ACEAviation Holdings Inc. Class Ab	97,520		2,285,315
Jazz Air Income Funda	20,078		146,526
			2,431,841
APPAREL – 0.34%
Gildan Activewear Inc.b	137,223		4,442,868
			4,442,868
AUTO PARTS & EQUIPMENT – 0.89%
Magna International Inc. Class A	131,443		11,781,846
			11,781,846
BANKS – 16.82%
Bank of Montreal	604,092		37,090,112
Bank of Nova Scotia	1,196,050		59,064,756
Canadian Imperial Bank of Commerce	407,807		36,892,877
National Bank of Canada	192,913		10,015,392
Royal Bank of Canada	1,547,398		79,487,269
			222,550,406
BEVERAGES – 0.07%
Cott Corp.b	86,063		964,888
			964,888
CHEMICALS – 3.59%
Agrium Inc.	161,567		7,369,294
Methanex Corp.	124,684		2,788,697
NOVA Chemicals Corp.	99,266		3,611,805
Potash Corp. of Saskatchewan Inc.	380,897		33,695,081
			47,464,877
COAL – 0.45%
Fording Canadian Coal Trust	179,528		5,907,614
			5,907,614

Security	Shares	Value
COMMERCIAL SERVICES – 0.25%
QuebecorWorld Inc.b	101,498	$	903,825
Ritchie Bros. Auctioneers Inc.	36,389		2,352,205
			3,256,030
COMPUTERS – 4.21%
CGI Group Inc.b	354,768		3,923,794
Research In Motion Ltd.b	606,906		51,754,966
			55,678,760
DIVERSIFIED FINANCIAL SERVICES – 0.93%
CI Financial Income Fund	72,118		1,733,668
IGM Financial Inc.	144,438		7,070,000
TSX Group Inc.	83,758		3,523,402
			12,327,070
ELECTRIC – 0.88%
Fortis Inc.	186,560		4,682,297
TransAlta Corp.	245,179		6,929,954
			11,612,251
ELECTRONICS – 0.11%
Celestica Inc.b	238,222		1,416,473
			1,416,473
ENGINEERING & CONSTRUCTION – 0.54%
SNC-Lavalin Group Inc.	182,980		7,161,102
			7,161,102
FOOD – 1.06%
George Weston Ltd.	62,209		4,210,582
Loblaw Companies Ltd.	132,040		5,635,587
Saputo Inc.	87,460		4,195,864
			14,042,033
FOREST PRODUCTS & PAPER – 0.17%
Abitibi-Consolidated Inc.b	480,623		931,396
Canfor Corp.b	111,273		1,300,122
			2,231,518
GAS – 0.20%
Canadian Utilities Ltd. Class A	58,373		2,684,545
			2,684,545
HAND & MACHINE TOOLS – 0.48%
Finning International Inc.	216,531		6,314,677
			6,314,677

SCHEDULES OF INVESTMENTS 35

Schedule of Investments (Continued)

iSHARES^® MSCI CANADA INDEX FUND

August 31, 2007

Security	Shares	Value
HEALTH CARE - SERVICES – 0.22%
MDS Inc.	147,560	$	2,887,453
			2,887,453
HOLDING COMPANIES - DIVERSIFIED – 2.15%
Brookfield Asset Management Inc. Class A	598,164		20,260,166
Onex Corp.	123,583		4,042,134
Sherritt International Corp.	279,555		4,215,061
			28,517,361
INSURANCE – 11.20%
Fairfax Financial Holdings Ltd.	20,480		4,247,202
Great-West Lifeco Inc.	323,056		10,917,665
Manulife Financial Corp.	1,872,723		72,405,701
Power Corp. of Canada	414,625		15,874,001
Power Financial Corp.	298,681		11,570,589
Sun Life Financial Inc.	690,369		33,146,327
			148,161,485
MANUFACTURING – 0.77%
Bombardier Inc. Class Bb	1,736,208		10,175,819
			10,175,819
MEDIA – 4.15%
Astral Media Inc. Class A	60,237		2,422,918
Rogers Communications Inc. Class B	603,341		27,365,223
Shaw Communications Inc. Class B	422,286		9,788,205
Thomson Corp.	271,575		11,475,542
Yellow Pages Income Fund	305,056		3,933,416
			54,985,304
MINING – 13.73%
Aber Diamond Corp.	71,073		2,529,563
Agnico-Eagle Mines Ltd.	162,213		7,240,817
Alcan Inc.	444,964		43,850,732
Barrick Gold Corp.	1,044,969		33,911,978
Cameco Corp.	428,374		17,271,022
Eldorado Gold Corp.b	412,595		2,032,065
First Quantum Minerals Ltd.	81,515		6,164,579
Goldcorp Inc.	851,399		20,064,638
Ivanhoe Mines Ltd.b	294,627		3,300,402
Kinross Gold Corp.b	717,074		8,757,949
Lundin Mining Corp.b	397,780		4,549,925

Security	Shares	Value
Meridian Gold Inc.b	121,389	$	3,344,982
Pan American Silver Corp.b	88,291		2,203,415
Teck Cominco Ltd. Class B	521,737		22,194,229
Yamana Gold Inc.	385,576		4,260,891
			181,677,187
OIL & GAS – 23.39%
ARC Energy Trust	124,175		2,393,466
Canadian Natural Resources Ltd.	652,089		44,499,981
Canadian Oil Sands Trust	284,371		8,196,315
Canetic Resources Trust	276,554		3,845,639
Duvernay Oil Corp.b	55,173		1,655,946
EnCana Corp.	922,653		53,980,237
Enerplus Resources Fund	149,748		6,327,679
Ensign Resource Service Group	156,120		2,730,274
First Calgary Petroleums Ltd.b	304,964		1,455,847
Harvest Energy Trust	157,816		4,087,686
Husky Energy Inc.	307,301		11,256,713
Imperial Oil Ltd.	396,903		17,337,891
Nexen Inc.	573,128		15,998,932
Niko Resources Ltd.	52,696		4,632,725
OPTI Canada Inc.b	208,131		3,836,607
Penn West Energy Trust	287,885		8,283,991
Petro-Canada	599,688		30,532,869
Precision Drilling Trust	74,469		1,445,241
PrimeWest Energy Trust	173,565		3,547,266
Provident Energy Trust	262,104		3,035,188
Suncor Energy Inc.	556,601		49,774,972
Talisman Energy Inc.	1,267,600		21,712,825
UTS Energy Corp.b	514,310		2,722,632
Western Oil Sands Inc. Class Ab	175,890		6,221,869
			309,512,791
OIL & GAS SERVICES – 0.20%
Trican Well Service Ltd.	146,893		2,610,567
			2,610,567
PHARMACEUTICALS – 0.23%
Biovail Corp.	174,097		3,064,410
			3,064,410
PIPELINES – 2.78%
Enbridge Inc.	422,887		14,231,486
TransCanada Corp.	648,150		22,547,545
			36,779,031

36 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI CANADA INDEX FUND

August 31, 2007

Security	Shares	Value
REAL ESTATE – 0.59%
Brookfield Properties Corp.	265,232	$	6,055,067
MI Developments Inc. Class A	57,383		1,817,748
			7,872,815
REAL ESTATE INVESTMENT TRUSTS – 0.21%
RioCan Real Estate Investment Trust	123,911		2,756,181
			2,756,181
RETAIL – 2.08%
Alimentation Couche-Tard Inc. Class B	167,776		3,441,640
Canadian Tire Corp. Ltd. Class A	93,899		6,888,974
Jean Coutu Group Inc. Class A	173,236		2,546,505
RONA Inc.b	137,910		2,804,220
Shoppers Drug Mart Corp.	235,027		11,832,999
			27,514,338
SOFTWARE – 0.44%
Cognos Inc.b	109,032		4,364,991
Open Text Corp.b	59,140		1,468,088
			5,833,079
TELECOMMUNICATIONS – 2.65%
BCE Inc.	318,891		12,175,646
Nortel Networks Corp.b	528,119		9,240,897
TELUS Corp.	70,995		3,748,235
TELUS Corp. NVS	190,624		9,858,713
			35,023,491
TRANSPORTATION – 3.44%
Canadian National Railway Co.	613,600		32,308,475
Canadian Pacific Railway Ltd.	188,276		13,206,106
			45,514,581
TOTAL COMMON STOCKS (Cost: $1,062,442,389)			1,319,451,892

Security	Shares	Value
SHORT-TERM INVESTMENTS – 0.02%
MONEY MARKET FUNDS – 0.02%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	234,233	$	234,233
			234,233
TOTAL SHORT-TERM INVESTMENTS (Cost: $234,233)			234,233
TOTAL INVESTMENTS IN SECURITIES – 99.74% (Cost: $1,062,676,622)			1,319,686,125
Other Assets, Less Liabilities – 0.26%			3,436,018
NET ASSETS – 100.00%		$	1,323,122,143

NVS – Non-Voting Shares

^a Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 37

Schedule of Investments

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 91.17%
ARGENTINA – 0.75%
BBVA Banco Frances SA ADR	978,195	$	8,960,266
Petrobras Energia Participaciones SA SP ADR	1,840,503		17,061,463
Tenaris SA ADR	2,355,927		110,563,654
			136,585,383
BRAZIL – 3.54%
Companhia Vale do Rio Doce ADR	5,235,650		258,274,615
Empresa Brasileira de Aeronautica SA ADR	1,233,498		55,704,770
Petroleo Brasileiro SA ADR	4,087,010		252,740,698
Unibanco-Uniao de Bancos Brasileiros SA GDR	697,116		77,784,203
			644,504,286
CHILE – 1.88%
Banco Santander
Chile SA ADR	1,788,916		85,152,402
Compania de Telecomunicacionesde Chile SA SP ADR	2,160,444		18,515,005
Enersis SA SP ADR	5,261,514		94,602,022
LAN Airlines SA SP ADR	2,425,110		38,923,016
Sociedad Quimica y Minerade Chile SA SP ADR	655,878		104,540,394
			341,732,839
CHINA – 8.96%
Aluminum Corporation of China Ltd. Class H	5,418,000		14,836,220
BBVA Banco
Angang New Steel Co. Ltd. Class Ha	12,642,000		42,481,855
Bank of China Ltd. Class Ha	153,510,000		78,952,781
Bank of Communications Co. Ltd. Class Ha	42,547,000		47,803,472
Beijing Capital International Airport Co. Ltd. Class Ha	14,452,000		23,503,557
China Communications Construction Co. Ltd. Class H	9,039,000		19,546,290

Security	Shares	Value
China Construction Bank Class Ha	181,503,000	$	152,013,928
China Eastern Airlines Corp. Ltd. Class Ha,b,c	62,370,000		29,838,086
China Foods Ltd.a	5,424,000		3,457,502
China Life Insurance Co. Ltd. Class H	46,956,000		226,747,478
China Petroleum & Chemical Corp. Class H	117,474,000		128,069,901
China Shenhua Energy Co. Ltd. Class H	5,535,500		23,997,166
China Shipping Development Co. Ltd. Class H	16,272,000		49,149,402
COSCO Pacific Ltd.	7,224,000		20,059,589
Datang International Power Generation Co. Ltd. Class H	14,464,000		15,304,838
Guangshen Railway Co. Ltd. Class Ha	57,862,363		45,344,411
Guangzhou R&F Properties Co. Ltd. Class H	722,400		2,918,601
Huadian Power International Corp. Ltd.a	30,736,000		17,700,278
Huaneng Power International Inc. Class Ha	21,672,000		24,933,189
Hunan Non-Ferrous Metal Corp. Ltd. Class Ha	25,312,000		14,739,023
Industrial and Commercial Bank of China Class Ha	186,939,000		121,800,765
Jiangsu Expressway Co. Ltd. Class H	5,424,000		5,648,877
Jiangxi Copper Co. Ltd.a	18,078,000		41,782,225
Maanshan Iron & Steel Co. Ltd. Class Ha	19,866,000		17,708,494
PetroChina Co. Ltd. Class H	122,822,000		179,583,904
Ping An Insurance (Group) Co. of China Ltd. Class H	9,936,500		103,357,187
Shanghai Forte Land Co. Class Ha	5,418,000		3,231,308
Sinopec Shanghai Petrochemical Co. Ltd. Class Ha	21,696,000		14,776,126
Sinotrans Ltd.a	21,672,000		11,896,772

38 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
Travelsky Technology Ltd. Class H	3,616,000	$	2,907,919
Tsingtao Brewery Co. Ltd. Class Ha	3,616,000		12,614,897
Weichai Power Co. Ltd. Class Ha	3,613,000		28,730,689
XinAo Gas Holdings Ltd.a	3,624,000		5,977,444
Yanzhou Coal Mining Co. Ltd. Class Ha	21,672,800		38,137,790
Zhejiang Expressway Co. Ltd. Class H	21,696,000		28,884,404
Zijin Mining Group Co. Ltd. Class H	36,120,000		31,872,973
			1,630,309,341
CZECH REPUBLIC – 1.83%
Central European Media Enterprises Ltd. Class Ab	17,090		1,539,602
CEZ AS	3,990,357		211,448,909
Komercni Banka AS	253,759		55,035,261
Philip Morris CR AS	10,839		5,202,822
Unipetrol ASb	3,895,100		54,024,615
Zentiva NVa	110,742		6,538,402
			333,789,611
EGYPT – 0.61%
Orascom Construction Industries Co. GDR	497,883		66,218,439
Orascom Telecom Holding SAE GDR	790,829		45,630,833
			111,849,272
HONG KONG – 6.72%
Agile Property Holdings Ltd.a	5,418,000		9,867,650
Air China Ltd.a	27,090,000		33,702,889
Beijing Enterprises Holdings Ltd.a	3,616,000		15,745,432
Brilliance China Automotive Holdings Ltd.a,b	23,214,000		5,537,954
Chaoda Modern Agriculture (Holdings) Ltd.	1,806,000		1,392,126
China Agri-Industries Holdings Ltd.a,b	5,424,000		3,123,579

Security	Shares	Value
China Everbright Pacific Ltd.a,b	20,094,000	$	62,884,356
China Mengniu Dairy Co. Ltd.	3,612,000		13,620,137
China Merchants Holdings International Co. Ltd.	7,224,000		37,756,501
China Mobile Ltd.	31,153,500		423,544,554
China Overseas Land & Investment Ltd.	28,954,000		60,531,658
China Resources Enterprises Ltd.	12,656,000		51,537,884
China Resources Land Ltd.	28,928,000		50,014,357
China Resources Power Holdings Co. Ltd.	5,418,000		15,287,908
China Travel International Investment Hong Kong Ltd.a	63,496,951		40,068,618
Citic Pacific Ltd.	9,933,000		54,335,775
CNOOC Ltd.	108,360,000		132,448,880
Country Garden Holdings Co.b	18,060,000		27,796,197
Denway Motors Ltd.a	34,314,000		16,063,886
FU JI Food and Catering Services Holdings Ltd.a	2,709,000		7,991,407
Global Bio-Chem Technology Group Co. Ltd.	9,030,000		3,949,376
GOME Electrical Appliances Holdings Ltd.a	8,127,000		12,820,996
Guangdong Investment Ltd.	12,646,110		7,931,443
Guangzhou Investment Co. Ltd.	30,702,000		8,505,636
Lenovo Group Ltd.a	37,926,000		25,148,609
Li Ning Co. Ltd.a	3,612,000		10,261,430
Nine Dragons Paper Holdings Ltd.a	9,933,000		29,684,022
Shanghai Industrial Holdings Ltd.a	3,616,000		15,815,000
Shenzhen Investment Ltd.	28,918,000		23,737,480
Sinofert Holdings Ltd.a	30,390,000		21,554,712
			1,222,660,452
HUNGARY – 1.72%
Gedeon Richter Rta	421,983		83,476,843
Magyar Telekom Telecommunications PLC	2,848,512		14,285,328

SCHEDULES OF INVESTMENTS 39

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
MOL Magyar Olaj-es Gazipari Rta	571,046	$	81,822,967
OTP Bank Ltd.a	2,643,081		133,540,076
			313,125,214
INDIA – 5.79%
HDFC Bank Ltd. ADR	2,289,105		202,929,158
ICICI Bank Ltd. SP ADR	3,666,180		162,961,701
Infosys Technologies Ltd. SP ADR	3,635,868		173,467,262
Mahanagar Telephone Nigam Ltd. ADR	5,410,951		37,443,781
Reliance Industries Ltd. GDRd	1,749,557		167,082,694
Satyam Computer Services Ltd. ADR	5,298,860		135,014,953
Videsh Sanchar Nigam Ltd. ADRa	4,958,373		100,109,551
Wipro Ltd. ADRa	5,142,042		75,228,074
			1,054,237,174
INDONESIA – 2.19%
PT Aneka Tambang Tbk	228,007,500		54,634,384
PT Astra Agro Lestari Tbk	2,257,500		3,437,939
PT Astra International Inc. Tbk	14,003,500		26,620,072
PT Bank Central Asia Tbk	40,670,000		25,987,221
PT Bank Danamon Indonesia Tbk	14,007,487		12,008,548
PT Bank Internasional Indonesia Tbk	126,871,500		2,729,291
PT Bank Mandiri Tbk	30,250,500		10,470,088
PT Bank Pan Indonesia Tbkb	228,533,522		16,306,438
PT Bank Rakyat Indonesia Tbk	36,449,061		24,260,557
PT Berlian Laju Tanker Tbk	23,956,000		3,954,398
PT Bumi Resources Tbk	133,403,500		36,227,788
PT Indosat Tbk	1,354,500		1,038,594
PT Kalbe Farma Tbk	262,863,156		38,071,767
PT Perusahaan Gas Negara Tbk	17,157,000		18,728,355
PT Ramayana Lestari Sentosa Tbk	90,409,870		8,184,067
PT Semen Gresik (Persero) Tbk	4,675,000		2,464,457
PT Telekomunikasi Indonesia Tbk	84,882,000		98,079,840
PT United Tractors Tbk	17,672,271		15,244,451
			398,448,255

Security	Shares	Value
ISRAEL – 3.26%
Africa Israel Investments Ltd.	82,264	$	6,995,663
Aladdin Knowledge Systems Ltd.b	90,300		1,928,808
Alvarion Ltd.b	605,913		7,131,596
AudioCodes Ltd.b	202,156		1,000,672
Bank Hapoalim Ltd.	10,488,512		49,438,652
Bank Leumi Le-Israel	13,732,076		53,049,871
Check Point Software Technologies Ltd.b	1,461,957		34,297,511
Clal Industries and Investments Ltd.	492,135		2,682,036
Clal Insurance Co. Ltd.	89,397		2,098,220
Discount Investment Corp. Ltd.	75,936		2,193,717
ECI Telecom Ltd.b	443,373		4,145,538
Elbit Systems Ltd.	691,698		30,755,205
Elite Industries Ltd.	203,175		2,396,683
Israel Chemicals Ltd.	7,385,637		57,710,523
Israel Corp. Ltd. (The)	9,933		6,902,358
Israel Discount Bank Class Ab	15,504,067		31,454,525
Koor Industries Ltd.	292,629		20,121,243
Makhteshim-Agan Industries Ltd.b	3,175,072		24,300,497
Mizrahi Tefahot Bank Ltd.	4,941,388		34,013,125
NICE Systems Ltd.b	180,800		6,215,927
Orbotech Ltd.b	610,281		13,212,584
Super-Sol Ltd.b	1,774,538		6,527,730
Syneron Medical Ltd.a,b	180,600		4,085,172
Teva Pharmaceutical Industries Ltd.	4,457,208		190,060,136
			592,717,992
MEXICO – 6.43%
Alfa SAB de CV Class Aa	3,882,900		27,936,987
America Movil SAB de CV Series La	96,621,000		292,056,267
Carso Infraestructura y Construccion SA de CVa,b	3,044,400		3,176,823
Cemex SA de CV Series CPOa,b	43,184,664		139,218,300
Consorcio ARA SAB de CVa	25,312,000		38,610,671
Controladora Comercial Mexicana SA de CVa	10,113,600		27,913,675

40 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
Corporacion Geo SAB de CV Series Ba,b	6,035,100	$	31,395,115
Desarrolladora Homex SAB de CVa,b	1,160,700		10,708,282
Empresas ICA SAB de CVa,b	5,556,000		30,583,717
Fomento Economico Mexicano SABa	16,543,200		57,527,622
Grupo Carso SA de CV Series A1a	814,341		3,212,427
Grupo Financiero Banorte SAB de CV Series Oa	10,852,456		44,226,526
Grupo Mexico SA de CV Series Ba	9,842,700		61,544,736
Grupo Modelo SAB de CV Series Ca	11,856,598		58,027,499
Grupo Televisa SA Series CPOa	18,692,100		97,779,740
Industrias Penoles SAB de CVa	814,588		10,870,962
Kimberly-Clark de Mexico SA de CV Class Aa	6,682,200		28,472,498
Telefonos de Mexico SA de CV Series La	50,846,600		90,088,543
Urbi Desarrollos Urbanos SA de CVa,b	3,672,300		13,748,090
Wal-Mart de Mexico SAB de CV Series Va	29,076,600		103,402,898
			1,170,501,378
PERU – 0.34%
Compania de Minas Buenaventura SA ADR	1,598,312		61,103,468
			61,103,468
PHILIPPINE ISLANDS – 1.56%
Ayala Corp.	3,283,248		34,744,298
Ayala Land Inc. Class B	40,089,200		12,490,189
Bank of the Philippine Islands	21,452,100		27,886,808
Filinvest Land Inc.b	352,234,375		11,958,107
Globe Telecom Inc.	415,380		12,272,185
Jollibee Foods Corp.	34,285,500		40,149,543
Manila Electric Co. Class B	10,023,300		22,398,436
Megaworld Corp.	254,420,040		19,133,438
Metropolitan Bank & Trust Co.	40		47
Petron Corp.	181,503,000		22,229,633

Security	Shares	Value
Philippine Long Distance Telephone Co.	577,920	$	32,969,007
SM Investments Corp.	1,798,401		14,297,558
SM Prime Holdings Inc.	126,636,820		32,652,382
			283,181,631
RUSSIA – 9.08%
Comstar United Telesystems GDR	210,399		2,310,181
JSC MMC Norilsk Nickel ADR	548,240		122,257,520
LUKOIL SP ADR	3,250,805		241,209,731
Mobile TeleSystems SP ADR	812,700		53,768,232
OAO NOVATEK SP GDR Reg S	434,343		21,717,150
OAO Gazprom SP ADR	15,193,758		631,300,645
OAO Tatneft SP ADR	255,530		25,808,530
Polyus Gold SP ADR	589,659		23,704,292
RAO Unified Energy System of Russia GDRb	491,232		61,895,232
Rostelecom SP ADRa	646,551		38,560,302
Sberbank GDRa	356,685		152,925,885
Surgutneftegaz SP ADRa	1,742,790		108,924,375
Vimpel-Communications SP ADR	4,257,645		103,886,538
VTB Bank OJSC GDR Reg Sa,b	4,018,350		37,732,307
Wimm-Bill-Dann Foods OJSC ADR	261,870		26,805,013
			1,652,805,933
SOUTH AFRICA – 8.26%
African Bank Investments Ltd.a	8,789,897		38,590,987
Anglo Platinum Ltd.	381,801		50,782,594
AVI Ltd.	3,641,296		9,899,655
Barloworld Ltd.	1,895,565		32,374,585
Bidvest Group Ltd.	2,253,179		43,697,065
FirstRand Ltd.	23,865,399		77,693,561
Foschini Ltd.	5,042,704		40,742,377
Gold Fields Ltd.	2,975,431		45,424,844
Harmony Gold Mining Co. Ltd.b	1,303,932		11,653,125
Impala Platinum Holdings Ltd.	3,417,344		101,055,233
Imperial Holdings Ltd.	2,171,293		43,289,634
Investec Ltd.	3,758,630		42,184,694
Liberty Group Ltd.	669,125		8,369,077
Metropolitan Holdings Ltd.	7,999,844		16,507,172
Mittal Steel South Africa Ltd.	2,911,272		50,127,862

SCHEDULES OF INVESTMENTS 41

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
MTN Group Ltd.	9,423,756	$	142,949,412
Nampak Ltd.	6,253,548		17,655,538
Naspers Ltd.	3,111,213		77,688,149
Nedbank Group Ltd.	2,846,257		53,472,726
Network Healthcare Holdings Ltd.b	15,623,850		27,816,879
Pick’n Pay Stores Ltd.	4,139,366		19,160,258
Pretoria Portland Cement Co. Ltd.	3,517,200		22,189,376
Reunert Ltd.	1,433,061		13,346,598
Sanlam Ltd.	14,461,545		43,470,326
Sappi Ltd.	369,821		5,787,718
Sasol Ltd.	3,881,498		156,396,364
Shoprite Holdings Ltd.	9,424,611		44,807,143
SPAR Group Ltd. (The)	1,452,148		10,566,414
Standard Bank Group Ltd.	8,119,858		118,291,246
Steinhoff International Holdings Ltd.	1,517,943		4,865,460
Telkom South Africa Ltd.	1,093,684		26,867,497
Tiger Brands Ltd.	1,393,901		36,390,096
Truworths International Ltd.	8,070,114		36,871,054
Woolworths Holdings Ltd.	11,731,037		32,220,485
			1,503,205,204
SOUTH KOREA – 15.44%
Hyundai Heavy Industries Co. Ltd.	375,500		148,078,870
Kookmin Bank SP ADR	4,989,075		406,360,159
Korea Electric Power Corp. SP ADR	11,966,556		269,606,507
KT Corp. SP ADR	6,388,725		152,179,430
LG.Philips LCD Co. Ltd. ADRa,b	5,661,810		120,936,262
POSCO ADR	5,145,610		788,873,469
Samsung Electronics Co. Ltd. GDRd	2,031,750		645,080,627
Samsung Heavy Industries Co. Ltd.	2,036,070		102,644,403
Shinhan Financial Group Co. Ltd. ADR	144,480		17,915,520
SK Telecom Co. Ltd. ADR	5,790,192		158,477,555
			2,810,152,802

Security	Shares	Value
TAIWAN – 9.55%
AU Optronics Corp. SP ADR	12,752,778	$	187,338,309
Chunghwa Telecom Co. Ltd. ADR	19,469,678		341,108,759
Siliconware Precision Industries Co. SP ADRa,e	37,663,985		406,394,398
Taiwan Semiconductor Manufacturing Co. Ltd. SP ADR	50,258,465		498,563,973
United Microelectronics Corp. SP ADRa	92,121,351		304,000,458
			1,737,405,897
THAILAND – 2.12%
Aromatics Thailand PCL	9,068,300		19,955,018
Bangkok Bank PCL	7,865,600		27,280,863
Bangkok Expressway PCL	16,719,900		11,841,841
Banpu PCL	2,511,000		21,955,698
Charoen Pokphand Foods PCL	28,000		3,819
Electricity Generating PCL	3,378,700		11,620,128
IRPC PCLb	71,156,400		13,791,607
Kasikornbank PCL	12,854,200		29,597,254
Krung Thai Bank PCL	14,309,100		4,712,703
Precious Shipping PCL	1,514,300		1,489,584
PTT Chemical PCL	5,485,968		17,588,355
PTT Exploration & Production PCL	14,382,500		51,141,504
PTT PCL	7,990,700		68,005,957
Ratchaburi Electricity Generating Holding PCL	29,642,800		39,526,613
Siam Cement PCL	2,511,000		18,589,158
Siam City Cement PCL	543,800		4,342,792
Siam Makro PCL	9,842,700		25,818,799
Thai Airways International PCL	2,512,900		3,204,296
Thanachart Capital PCL	16,175,000		7,307,272
True Corp. PCLb	27,157,400		5,421,982
United Broadcasting Corp. PCLb,c	5,658,800		2,968,767
			386,164,010
TURKEY – 1.14%
Adana Cimento Sanayi TAS Class Aa	3,360,689		23,332,746
Akbank TASa	4,267,752		27,174,792

42 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
Akcansa Cimento Sanayi ve Ticaret ASa	459,737	$	3,509,311
Arcelik ASa	824,370		5,786,717
Dogan Yayin Holding ASa,b	2,437,800		8,864,727
Eregli Demir ve Celik Fabrikalari TASa	2,722,214		21,301,558
Hurriyet Gazetecilik ve Matbaacilik ASa,b	1,944,181		5,160,619
Migros Turk TAS	381,000		6,313,464
Tofas Turk Otomobil Fabrikasi ASa	5,811,462		26,527,195
Trakya Cam Sanayii ASa	151,272		515,264
Tupras-Turkiye Petrol Rafinerileri ASa	780,302		17,808,964
Turk Sise ve Cam Fabrikalari ASa	2,968,351		12,410,827
Turkiye Garanti Bankasi ASa	4,155,257		26,617,872
Yapi ve Kredi Bankasi ASa,b	7,872,518		22,587,814
			207,911,870
TOTAL COMMON STOCKS (Cost: $12,952,900,255)			16,592,392,012
PREFERRED STOCKS – 7.79%
BRAZIL – 7.79%
Aracruz Celulose SA SP ADR	599,620		37,434,277
Banco Bradesco SA SP ADR	10,345,042		255,315,636
Banco Itau Holding Financiera SA ADR	5,891,485		256,456,342
Brasil Telecom Participacoes SA ADR	721,660		51,584,257
Companhia Brasileira de Distribuicao Grupo Pao de Acucar SP ADR	878,744		28,234,045
Companhia de Bebidas das Americas ADR	1,117,011		78,157,260
Companhia Energetica de Minas Gerais SP ADR	447,008		8,493,152
Companhia Vale do Rio Doce SP ADR	7,123,911		297,423,284
Gerdau SA SP ADR	1,964,025		47,215,161
Net Servicos de Comunicacao SA ADR	641,384		9,678,484

Security	Shares	Value
Petroleo Brasileiro SA SPADR	5,313,572	$	282,841,438
Tele Norte Leste Participacoes SA ADR	2,053,192		45,355,011
Votorantim Celulose e Papel SA SP ADR	832,566		19,465,393
			1,417,653,740
TOTAL PREFERRED STOCKS (Cost: $998,200,522)			1,417,653,740
RIGHTS – 0.00%
HONG KONG – 0.00%
Global Bio-chem Technology Group Co. Ltd.c	58,636		1
			1
PHILIPPINE ISLANDS – 0.00%
Ayala Land Inc.c	41,453,200		89
			89
TOTAL RIGHTS (Cost: $0)			90
WARRANTS – 0.01%
HONG KONG – 0.01%
China Overseas Land & Investment Ltd. (Expires 8/27/08)	2,421,333		1,509,306
			1,509,306
TOTAL WARRANTS (Cost: $0)			1,509,306
EXCHANGE-TRADED FUNDS – 0.55%
iShares MSCI Malaysia Index Funda,e	1,099,526		12,182,748
iShares MSCI South Korea Index Funda,e	601,591		38,561,983
iShares MSCI Taiwan Index Funde	3,100,003		49,414,048
TOTAL EXCHANGE-TRADED FUNDS (Cost: $79,935,148)			100,158,779

SCHEDULES OF INVESTMENTS 43

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2007

Security	Shares	Value
SHORT-TERM INVESTMENTS – 7.78%
MONEY MARKET FUNDS – 7.78%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%e,f	25,663,971	$	25,663,971
BGI Cash Premier Fund LLC
5.47%e,f,g	1,389,487,748		1,389,487,748
			1,415,151,719
TOTAL SHORT-TERM INVESTMENTS
(Cost: $1,415,151,719)			1,415,151,719
TOTAL INVESTMENTS
IN SECURITIES – 107.30%
(Cost: $15,446,187,644)			19,526,865,646
Other Assets, Less Liabilities – (7.30)%			(1,328,494,514	)
NET ASSETS – 100.00%		$	18,198,371,132

ADR – American Depositary Receipts

GDR – Global Depositary Receipts

SP ADR – Sponsored American Depositary Receipts

SP GDR – Sponsored Global Depositary Receipts

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^d This security may be resold to qualified institutional buyers under Rule 144A of the Securities Act of 1933.

^e Affiliated issuer. See Note 2.

^f The rate quoted is the annualized seven-day yield of the fund at period end.

^g This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

44 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.62%
AIRLINES – 1.39%
Cathay Pacific Airways Ltd.a	7,641,000	$	20,041,485
			20,041,485
APPAREL – 0.67%
Yue Yuen Industrial Holdings Ltd.a	3,215,000		9,710,873
			9,710,873
BANKS – 11.94%
Bank of East Asia Ltd.a	7,792,300		43,475,172
BOC Hong Kong Holdings Ltd.	20,641,500		49,560,250
Hang Seng Bank Ltd.a	4,251,000		66,681,284
Wing Hang Bank Ltd.	985,500		12,842,120
			172,558,826
CHEMICALS – 1.32%
Kingboard Chemical Holdings Co. Ltd.	3,235,500		19,089,108
			19,089,108
DISTRIBUTION & WHOLESALE – 9.02%
Esprit Holdings Ltd.	5,815,000		84,650,976
Li & Fung Ltd.	12,311,000		45,632,847
			130,283,823
DIVERSIFIED FINANCIAL SERVICES – 7.55%
Hong Kong Exchanges and Clearing Ltd.a	5,931,000		109,160,676
			109,160,676
ELECTRIC – 6.18%
CLP Holdings Ltd.	7,371,200		50,816,302
Hongkong Electric Holdings Ltd.	7,678,500		38,506,987
			89,323,289
ELECTRICAL COMPONENTS & EQUIPMENT – 0.30%
Johnson Electric Holdings Ltd.a	8,424,000		4,386,628
			4,386,628
ENGINEERING & CONSTRUCTION – 2.83%
Cheung Kong Infrastructure Holdings Ltd.a	2,471,000		9,143,342
New World Development Co. Ltd.a	13,310,800		31,788,514
			40,931,856

Security	Shares	Value
FOOD – 0.93%
Tingyi (Cayman Islands) Holding Corp.a	9,346,000	$	13,425,491
			13,425,491
GAS – 3.23%
Hong Kong and China Gas Co. Ltd. (The)a	20,203,829		46,643,656
			46,643,656
HAND & MACHINE TOOLS – 0.48%
Techtronic Industries Co. Ltd.a	6,197,500		6,994,966
			6,994,966
HOLDING COMPANIES - DIVERSIFIED – 14.05%
Hutchison Whampoa Ltd.	11,842,800		117,793,842
Melco International Development Ltd.a	4,069,000		6,231,296
Swire Pacific Ltd. Class A	4,646,000		51,365,659
Wharf Holdings Ltd. (The)	6,733,000		27,720,435
			203,111,232
INTERNET – 1.77%
Tencent Holdings Ltd.a	4,930,000		25,608,747
			25,608,747
LODGING – 1.07%
Shangri-La Asia Ltd.a	6,440,000		15,396,364
			15,396,364
MEDIA – 0.66%
Television Broadcasts Ltd.	1,557,000		9,505,653
			9,505,653
REAL ESTATE – 26.71%
Cheung Kong (Holdings) Ltd.	8,424,000		123,927,637
Hang Lung Properties Ltd.	11,583,000		42,414,423
Henderson Land Development Co. Ltd.	4,820,000		33,444,961
Hopewell Holdings Ltd.	3,477,000		16,567,230
Hysan Development Co. Ltd.	3,474,000		8,751,000
Kerry Properties Ltd.a	3,180,000		23,533,652
Shui On Land Ltd.a	10,530,000		11,128,637
Shun Tak Holdings Ltd.a	4,815,000		7,237,862
Sino Land Co. Ltd.	7,618,000		17,821,826
Sun Hung Kai Properties Ltd.	7,587,000		101,202,167
			386,029,395

SCHEDULES OF INVESTMENTS 45

Schedule of Investments (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2007

Security	Shares	Value
REAL ESTATE INVESTMENT TRUSTS – 1.65%
Link REIT (The)	11,966,000	$	23,880,586
			23,880,586
RETAIL – 1.20%
Belle International Holdings Ltd.a,b	11,583,000		13,296,290
Giordano International Ltd.a	8,424,000		4,073,297
			17,369,587
SEMICONDUCTORS – 0.66%
ASM Pacific Technology Ltd.a	1,073,000		9,516,523
			9,516,523
TELECOMMUNICATIONS – 3.78%
Foxconn International Holdings Ltd.a,b	11,671,000		30,462,032
Hutchison Telecommunications International Ltd.a	8,066,000		10,531,552
PCCW Ltd.	22,463,576		13,656,633
			54,650,217
TRANSPORTATION – 2.23%
MTR Corp. Ltd.a	7,830,083		19,061,144
Orient Overseas International Ltd.	1,216,200		13,173,193
			32,234,337
TOTAL COMMON STOCKS (Cost: $1,206,634,031)			1,439,853,318
SHORT-TERM INVESTMENTS – 19.17%
MONEY MARKET FUNDS – 19.17%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	3,139,655		3,139,655
BGI Cash Premier Fund LLC 5.47%c,d,e	273,919,378		273,919,378
			277,059,033
TOTAL SHORT-TERM INVESTMENTS (Cost: $277,059,033)			277,059,033

	Value
TOTAL INVESTMENTS IN SECURITIES – 118.79% (Cost: $1,483,693,064)	$	1,716,912,351
Other Assets, Less Liabilities – (18.79)%		(271,603,459	)
NET ASSETS – 100.00%	$	1,445,308,892

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

46 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI MALAYSIA INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.34%
AGRICULTURE – 12.76%
British American Tobacco (Malaysia) Bhd	1,271,400	$	15,159,489
Golden Hope Plantations Bhd	5,766,400		13,010,013
Highlands & Lowlands Bhd	1,441,600		2,923,136
IOI Corp. Bhd	35,139,030		50,177,110
Kuala Lumpur Kepong Bhd	4,234,800		13,303,670
			94,573,418
AIRLINES – 1.04%
AirAsia Bhda	8,289,200		4,474,250
Malaysian Airline System Bhda	2,432,700		3,209,788
			7,684,038
AUTO MANUFACTURERS – 0.95%
DRB-Hicom Bhdb	6,036,700		2,999,817
Proton Holdings Bhd	2,703,000		4,014,165
			7,013,982
AUTO PARTS & EQUIPMENT – 1.26%
UMW Holdings Bhd	2,342,600		9,299,483
			9,299,483
BANKS – 27.07%
AMMB Holdings Bhda	13,695,200		16,974,773
Bumiputra-Commerce Holdings Bhd	25,228,032		78,533,642
Hong Leong Bank Bhd	4,685,200		7,961,428
Malayan Banking Bhd	19,281,400		63,876,693
Public Bank Bhd	10,271,400		27,720,900
RHB Capital Bhd	3,694,100		5,644,277
			200,711,713
BEVERAGES – 0.27%
Guinness Anchor Bhd	1,261,400		1,999,363
			1,999,363
BUILDING MATERIALS – 0.71%
Lafarge Malayan Cement Bhd	11,352,600		5,252,381
			5,252,381
COMMERCIAL SERVICES – 1.82%
PLUS Expressways Bhd	14,866,500		13,501,491
			13,501,491

Security	Shares	Value
DIVERSIFIED FINANCIAL SERVICES – 2.09%
Bursa Malaysia Bhd	3,063,400	$	8,836,310
Hong Leong Credit Bhd	2,072,300		3,314,260
TA Enterprise Bhd	7,568,400		3,350,284
			15,500,854
ELECTRIC – 4.90%
Tenaga Nasional Bhd	12,794,250		36,356,644
			36,356,644
ENGINEERING & CONSTRUCTION – 7.93%
Gamuda Bhd	7,658,500		16,404,041
IJM Corp. Bhd	5,856,500		12,209,753
Malaysian Resources Corp. Bhda	8,289,200		6,226,073
MMC Corp. Bhd	3,063,400		6,430,384
YTL Corp. Bhd	8,289,288		17,518,415
			58,788,666
ENTERTAINMENT – 3.73%
Berjaya Sports Toto Bhd	7,388,200		10,507,850
Magnum Corp. Bhd	8,018,900		6,366,569
Tanjong PLC	2,252,500		10,807,368
			27,681,787
FOOD – 1.28%
PPB Group Bhd	4,595,166		9,514,481
			9,514,481
GAS – 2.02%
Petronas Gas Bhd	4,955,500		15,001,656
			15,001,656
HOLDING COMPANIES - DIVERSIFIED – 7.17%
Mulpha International Bhda	7,388,200		2,954,014
Multi-Purpose Holdings Bhd	5,586,200		2,791,903
Sime Darby Bhd	14,956,600		40,151,946
UEM World Bhd	6,216,900		7,279,535
			53,177,398
LODGING – 8.92%
Genting Bhd	18,380,400		38,582,305
Resorts World Bhd	25,408,200		27,574,228
			66,156,533

SCHEDULES OF INVESTMENTS 47

Schedule of Investments (Continued)

iSHARES^® MSCI MALAYSIA INDEX FUND

August 31, 2007

Security	Shares	Value
MEDIA – 1.80%
Astro All Asia Networks PLC	3,694,100	$	3,587,017
Media Prima Bhd	6,847,600		5,280,171
Star Publications (Malaysia) Bhd	4,595,160		4,461,958
			13,329,146
OIL & GAS – 1.39%
Petronas Dagangan Bhd	2,522,800		6,052,126
Shell Refining Co.	1,351,500		4,207,154
			10,259,280
OIL & GAS SERVICES – 0.37%
Scomi Group Bhd	6,577,300		2,761,283
			2,761,283
REAL ESTATE – 3.07%
IGB Corp. Bhd	7,388,200		5,169,524
IOI Properties Bhd	818,150		3,294,564
KLCC Property Holdings Bhd	4,144,600		4,095,478
SP Setia Bhd	4,955,500		10,189,804
			22,749,370
SEMICONDUCTORS – 0.28%
Malaysian Pacific Industries Bhd	810,900		2,095,858
			2,095,858
TELECOMMUNICATIONS – 3.82%
Telekom Malaysia Bhd	10,181,300		28,350,043
			28,350,043
TRANSPORTATION – 4.69%
Malaysian Bulk Carriers Bhd	3,063,450		3,412,096
MISC Bhd	10,992,200		28,253,549
Pos Malaysia Bhda	3,604,000		3,128,990
			34,794,635
TOTAL COMMON STOCKS (Cost: $479,638,443)			736,553,503

Security	Shares	Value
SHORT-TERM INVESTMENTS – 0.09%
MONEY MARKET FUNDS – 0.09%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	643,520	$	643,520
			643,520
TOTAL SHORT-TERM INVESTMENTS (Cost: $643,520)			643,520
TOTAL INVESTMENTS IN SECURITIES – 99.43% (Cost: $480,281,963)			737,197,023
Other Assets, Less Liabilities – 0.57%			4,242,498
NET ASSETS – 100.00%		$	741,439,521

^a Non-income earning security.

^b Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

48 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.86%
BEVERAGES – 7.87%
Coca-Cola FEMSA SAB de CV SP ADRa	284,400	$	11,546,640
Fomento Economico Mexicano SABa	18,912,608		65,767,045
Grupo Modelo SAB de CV Series Ca	6,446,400		31,549,393
			108,863,078
BUILDING MATERIALS – 14.84%
Cemex SA de CV Series CPOa,b	63,647,903		205,187,492
			205,187,492
DIVERSIFIED FINANCIAL SERVICES – 3.96%
Grupo Financiero Banorte SAB de CV Series Oa	13,437,900		54,762,869
			54,762,869
ENGINEERING & CONSTRUCTION – 4.61%
Carso Infraestructura y Construccion SA de CVa,b	6,612,300		6,899,916
Empresas ICA SAB de CVa,b	3,294,374		18,134,306
Grupo Aeroportuario del Pacifico SA de CV Class Ha	4,527,400		22,850,661
Grupo Aeroportuario del Sureste SA de CV ADRa	317,817		15,776,436
			63,661,319
FOOD – 1.94%
Grupo Bimbo SAB de CV Series Aa	4,550,400		26,775,302
			26,775,302
FOREST PRODUCTS & PAPER – 1.95%
Kimberly-Clark de Mexico SA de CV Class Aa	6,332,900		26,984,150
			26,984,150
HOLDING COMPANIES - DIVERSIFIED – 4.73%
Alfa SAB de CV Class Aa	3,507,600		25,236,751
Grupo Carso SA de CV Series A1a	10,191,030		40,201,757
			65,438,508

Security	Shares	Value
HOME BUILDERS – 4.70%
Consorcio ARA SAB de CVa	10,238,400	$	15,617,552
Corporacion Geo SAB de CV Series Ba,b	4,005,300		20,835,919
Desarrolladora Homex SAB de CVa,b	1,493,130		13,775,185
Urbi Desarrollos Urbanos SA de CVa,b	3,934,200		14,728,572
			64,957,228
MEDIA – 4.96%
Grupo Televisa SA Series CPOa	13,106,199		68,559,484
			68,559,484
MINING – 5.70%
Grupo Mexico SA de CV Series Ba	10,688,700		66,834,631
Industrias Penoles SAB de CVa	900,600		12,018,823
			78,853,454
RETAIL – 7.31%
Controladora Comercial Mexicana SA de CVa	5,166,600		14,259,887
Organizacion Soriana SAB de CV Class Ba	5,611,565		18,049,845
Wal-Mart de Mexico SAB de CV Series Va	19,339,200		68,774,524
			101,084,256
TELECOMMUNICATIONS – 37.29%
America Movil SAB de CV Series La	110,205,040		333,116,740
Carso Global Telecom SAB de CV Class A1a,b	8,655,031		41,096,462
Telefonos de Mexico SA de CV Series La	79,845,300		141,467,605
			515,680,807
TOTAL COMMON STOCKS (Cost: $1,354,172,287)			1,380,807,947

SCHEDULES OF INVESTMENTS 49

Schedule of Investments (Continued)

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2007

Security	Shares	Value
SHORT-TERM INVESTMENTS – 10.23%
MONEY MARKET FUNDS – 10.23%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	568,513	$	568,513
BGI Cash Premier Fund LLC 5.47%c,d,e	140,955,798		140,955,798
			141,524,311
TOTAL SHORT-TERM INVESTMENTS (Cost: $141,524,311)			141,524,311
TOTAL INVESTMENTS IN SECURITIES – 110.09% (Cost: $1,495,696,598)			1,522,332,258
Other Assets, Less Liabilities – (10.09)%			(139,522,608	)
NET ASSETS – 100.00%		$	1,382,809,650

ADR – American Depositary Receipts

SP ADR – Sponsored American Depositary Receipts

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

50 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.23%
AUSTRALIA – 65.41%
A.B.C. Learning Centres Ltd.a	1,078,724	$	6,029,084
AGL Energy Ltd.	1,232,154		15,437,251
Alumina Ltd.	3,341,568		18,866,617
Amcor Ltd.	2,590,304		16,015,798
AMP Ltd.	5,283,330		45,217,623
Ansell Ltd.	419,904		4,475,129
APN News & Media Ltd.	861,362		3,854,186
Aristocrat Leisure Ltd.a	987,396		11,246,144
Asciano Groupb	1,573,068		10,942,029
ASX Ltd.	493,856		18,642,432
Australia and New Zealand Banking Group Ltd.	5,196,813		122,565,871
AXA Asia Pacific Holdings Ltd.	2,452,500		15,044,044
Babcock & Brown Ltd.	656,576		12,638,164
BHP Billiton Ltd.	9,483,768		296,430,258
Billabong International Ltd.	469,101		6,048,948
BlueScope Steel Ltd.	2,215,244		19,229,599
Boral Ltd.	1,715,808		11,013,616
Brambles Ltd.b	4,029,430		45,238,370
Caltex Australia Ltd.	384,972		7,579,294
Centro Properties Group	2,402,668		16,008,915
CFS Retail Property Trust	3,896,697		7,513,274
Challenger Financial Services Group Ltd.	1,053,104		4,660,735
Coca-Cola Amatil Ltd.	1,490,840		11,534,421
Cochlear Ltd.a	154,501		8,421,517
Coles Group Ltd.	3,201,768		36,909,993
Commonwealth Bank of Australia	3,663,720		164,381,160
Commonwealth Property Office Fund	4,099,389		5,602,897
Computershare Ltd.	1,456,924		12,208,389
CSL Ltd.	518,256		41,403,788
CSR Ltd.	2,533,120		6,924,355
DB RREEF Trust	8,144,964		13,318,934
Downer EDI Ltd.	871,711		4,595,490
Foster’s Group Ltd.	5,606,304		28,825,575
Futuris Corp. Ltd.	1,701,920		3,392,263
Goodman Fielder Ltd.	3,000,315		6,346,356
Goodman Group	4,053,192		22,224,977
GPT Group	5,728,323		22,276,125

Security	Shares	Value
Harvey Norman Holdings Ltd.	1,549,876	$	6,707,997
Iluka Resources Ltd.a	721,503		3,257,732
ING Industrial Funda	2,662,941		5,806,048
Insurance Australia Group Ltd.	5,044,117		20,641,316
James Hardie Industries NV	1,368,596		9,018,712
John Fairfax Holdings Ltd.	3,405,996		12,857,199
Leighton Holdings Ltd.	398,208		14,202,499
Lend Lease Corp. Ltd.	1,026,996		16,050,197
Lion Nathan Ltd.	832,179		6,208,266
Macquarie Airports	1,949,457		6,899,016
Macquarie Bank Ltd.	739,972		44,126,910
Macquarie Communications Infrastructure Group	1,236,104		5,832,668
Macquarie Infrastructure Group	7,514,193		20,173,467
Macquarie Office Trust	5,360,274		6,846,536
Mirvac Group	2,857,728		12,507,987
Multiplex Group	1,783,659		7,240,968
National Australia Bank Ltd.	4,590,277		149,152,729
Newcrest Mining Ltd.	952,820		18,991,584
OneSteel Ltd.a	2,430,484		11,982,561
Orica Ltd.	894,992		20,853,378
Origin Energy Ltd.	2,489,288		20,190,848
Pacific Brands Ltd.	1,542,812		4,217,320
Paladin Resources Ltd.a,b	1,532,917		7,557,454
PaperlinX Ltd.	1,305,400		3,589,588
Perpetual Ltd.	105,531		6,580,766
Publishing and Broadcasting Ltd.	1,264,872		18,440,336
Qantas Airways Ltd.	2,866,268		13,011,736
QBE Insurance Group Ltd.	2,431,816		68,947,376
Rio Tinto Ltd.a	814,032		61,934,156
Santos Ltd.	1,699,216		18,316,763
Sonic Healthcare Ltd.	862,333		10,810,901
Stockland	4,023,316		28,116,519
Suncorp-Metway Ltd.	2,587,379		42,309,740
Symbion Health Ltd.	1,815,941		6,145,813
Tabcorp Holdings Ltd.	1,474,698		18,344,033
Tattersall’s Ltd.	3,128,324		10,663,751
Telstra Corp. Ltd.	8,120,564		28,870,339
Telstra Corp. Ltd. Installment Receipt	4,191,144		9,888,145
Toll Holdings Ltd.a	1,543,300		17,075,503
Transurban Group	3,049,316		17,762,320

SCHEDULES OF INVESTMENTS 51

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Wesfarmers Ltd.a	1,098,295	$	34,454,050
Westfield Group	4,896,932		83,383,006
Westpac Banking Corp.	5,201,348		115,098,341
Woodside Petroleum Ltd.	1,346,775		49,633,797
Woolworths Ltd.	3,408,360		82,964,309
WorleyParsons Ltd.	429,928		13,501,042
Zinifex Ltd.	1,366,225		18,761,991
			2,312,991,334
HONG KONG – 20.77%
ASM Pacific Technology Ltd.a	610,000		5,410,139
Bank of East Asia Ltd.a	3,998,000		22,305,832
Belle International Holdings Ltd.a,b	5,860,000		6,726,777
BOC Hong Kong Holdings Ltd.	10,332,000		24,807,136
Cathay Pacific Airways Ltd.a	3,997,000		10,483,682
Cheung Kong (Holdings) Ltd.a	4,363,000		64,185,218
Cheung Kong Infrastructure Holdings Ltd.a	1,235,000		4,569,821
CLP Holdings Ltd.	3,690,500		25,441,931
Esprit Holdings Ltd.	2,952,000		42,973,290
Foxconn International Holdings Ltd.a,b	5,966,000		15,571,629
Giordano International Ltd.a	4,428,000		2,141,092
Hang Lung Properties Ltd.	5,968,736		21,856,211
Hang Seng Bank Ltd.	2,140,200		33,571,227
Henderson Land Development Co. Ltd.a	2,460,000		17,069,420
Hong Kong and China Gas Co. Ltd. (The)a	10,223,419		23,602,340
Hong Kong Exchanges and Clearing Ltd.	3,050,000		56,135,569
Hongkong Electric Holdings Ltd.a	3,867,500		19,395,165
Hopewell Holdings Ltd.	1,793,000		8,543,297
Hutchison Telecommunications International Ltd.a	4,273,000		5,579,138
Hutchison Whampoa Ltd.	6,150,000		61,170,680
Hysan Development Co. Ltd.	1,781,000		4,486,336
Kerry Properties Ltd.	1,628,000		12,048,046
Kingboard Chemical Holdings Co. Ltd.	1,638,500		9,666,977

Security	Shares	Value
Li & Fung Ltd.a	6,397,600	$	23,713,809
Link REIT (The)	6,075,500		12,124,896
MTR Corp. Ltd.a	3,905,500		9,507,345
New World Development Co. Ltd.a	6,774,941		16,179,742
Noble Group Ltd.a	2,856,000		3,130,017
Orient Overseas International Ltd.	634,000		6,867,130
PCCW Ltd.	11,838,845		7,197,374
Shangri-La Asia Ltd.a	3,444,000		8,233,708
Shui On Land Ltd.a	5,450,000		5,759,836
Shun Tak Holdings Ltd.a	2,460,000		3,697,848
Sino Land Co. Ltd.a	3,936,000		9,208,021
Sun Hung Kai Properties Ltd.a	3,808,000		50,794,498
Swire Pacific Ltd. Class A	2,353,000		26,014,506
Techtronic Industries Co. Ltd.a	3,217,500		3,631,513
Television Broadcasts Ltd.	811,000		4,951,242
Tencent Holdings Ltd.	2,530,000		13,142,014
Tingyi (Cayman Islands) Holding Corp.a	4,790,000		6,880,816
Wharf Holdings Ltd. (The)	3,395,000		13,977,555
Wing Hang Bank Ltd.	510,000		6,645,846
Yue Yuen Industrial Holdings Ltd.a	1,677,500		5,066,871
			734,465,540
NEW ZEALAND – 1.54%
Auckland International Airport Ltd.	2,797,654		5,947,811
Contact Energy Ltd.	794,036		5,097,789
Fisher & Paykel Appliances Holdings Ltd.	758,965		1,965,028
Fisher & Paykel Healthcare Corp. Ltd.	1,486,260		3,524,780
Fletcher Building Ltd.	1,460,064		12,047,578
Kiwi Income Property Trust	1,999,019		2,033,787
Sky City Entertainment Group Ltd.	1,228,188		3,946,852
Sky NetworkTelevision Ltd.	541,060		2,118,362
Telecom Corp. of New Zealand Ltd.	5,567,631		16,719,941
Vector Ltd.	699,515		1,251,577
			54,653,505
SINGAPORE – 11.51%
Allgreen Properties Ltd.	2,196,000		2,464,339

52 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Ascendas Real Estate Investment Trusta	2,952,000	$	4,552,566
CapitaCommercial Trusta	2,706,000		4,475,075
CapitaLand Ltd.	4,392,000		21,328,783
CapitaMall Trust Management Ltd.a	2,928,622		6,534,529
Chartered Semiconductor Manufacturing Ltd.a,b	2,931,000		2,077,359
City Developments Ltd.	1,442,000		14,100,144
ComfortDelGro Corp. Ltd.	5,166,000		6,610,907
COSCO Corp. (Singapore) Ltd.	2,264,104		7,503,429
DBS Group Holdings Ltd.	3,198,000		41,974,012
Fraser and Neave Ltd.	2,291,150		7,457,740
Haw Par Corp. Ltd.	278,397		1,461,593
Jardine Cycle & Carriage Ltd.	382,000		3,935,818
Keppel Corp. Ltd.	3,172,000		26,644,967
Keppel Land Ltd.a	1,020,000		5,154,220
Neptune Orient Lines Ltd.	1,288,000		4,141,751
Olam International Ltd.a	1,730,000		3,428,665
Oversea-Chinese Banking Corp.	7,107,600		39,880,548
Parkway Holdings Ltd.a	1,722,251		4,475,728
SembCorp Industries Ltd.	2,505,240		9,289,018
SembCorp Marine Ltd.a	2,391,200		6,559,401
Singapore Airlines Ltd.	1,578,000		19,675,811
Singapore Exchange Ltd.	2,249,000		14,390,176
Singapore Land Ltd.a	343,000		2,228,442
Singapore Petroleum Co. Ltd.a	492,000		1,904,974
Singapore Post Ltd.	3,936,000		3,202,940
Singapore Press Holdings Ltd.a	4,119,517		11,732,973
Singapore Technologies Engineering Ltd.a	3,690,000		8,911,406
Singapore Telecommunications Ltd.a	22,207,328		53,048,086
SMRT Corp. Ltd.	1,952,000		2,228,954
Suntec REIT	2,952,000		3,428,954
United Overseas Bank Ltd.a	3,444,000		47,010,894
UOL Group Ltd.	1,426,000		4,660,376

Security	Shares	Value
Venture Corp. Ltd.	732,695	$	7,501,012
Wing Tai Holdings Ltd.	1,302,333		2,974,222
			406,949,812
TOTAL COMMON STOCKS (Cost: $2,497,886,231)			3,509,060,191
SHORT-TERM INVESTMENTS – 9.39%
MONEY MARKET FUNDS – 9.39%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	555,636		555,636
BGI Cash Premier Fund LLC 5.47%c,d,e	331,361,817		331,361,817
			331,917,453
TOTAL SHORT-TERM INVESTMENTS (Cost: $331,917,453)			331,917,453
TOTAL INVESTMENTS IN SECURITIES – 108.62% (Cost: $2,829,803,684)			3,840,977,644
Other Assets, Less Liabilities – (8.62)%			(304,682,341	)
NET ASSETS – 100.00%		$	3,536,295,303

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 53

Schedule of Investments

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 98.64%
AIRLINES – 4.78%
Singapore Airlines Ltd.	6,398,000	$	79,775,561
			79,775,561
BANKS – 30.08%
DBS Group Holdings Ltd.	12,530,000		164,457,278
Oversea-Chinese Banking Corp.a	26,633,000		149,437,033
United Overseas Bank Ltd.a	13,784,000		188,152,776
			502,047,087
BEVERAGES – 1.98%
Fraser and Neave Ltd.	10,128,000		32,966,846
			32,966,846
DISTRIBUTION & WHOLESALE – 0.97%
Jardine Cycle & Carriage Ltd.a	1,577,000		16,248,130
			16,248,130
DIVERSIFIED FINANCIAL SERVICES – 3.47%
Singapore Exchange Ltd.a	9,043,000		57,861,432
			57,861,432
ELECTRONICS – 1.62%
Venture Corp. Ltd.	2,646,522		27,093,938
			27,093,938
ENGINEERING & CONSTRUCTION – 4.67%
SembCorp Industries Ltd.	10,418,000		38,628,232
Singapore Technologies Engineering Ltd.a	16,289,000		39,338,181
			77,966,413
FOOD – 0.90%
Olam International Ltd.	7,558,000		14,979,105
			14,979,105
HEALTH CARE - SERVICES – 1.18%
Parkway Holdings Ltd.a	7,596,500		19,741,528
			19,741,528
HOLDING COMPANIES - DIVERSIFIED – 7.02%
Haw Par Corp. Ltd.a	1,443,000		7,575,797
Keppel Corp. Ltd.	11,571,000		97,197,008
Noble Group Ltd.a	11,394,000		12,487,190
			117,259,995
MEDIA – 3.21%
Singapore Press Holdings Ltd.	18,795,000		53,530,844
			53,530,844

Security	Shares	Value
OIL & GAS – 0.58%
Singapore Petroleum Co. Ltd.a	2,506,000	$	9,702,980
			9,702,980
REAL ESTATE – 13.93%
Allgreen Properties Ltd.	8,771,000		9,842,768
CapitaCommercial Trusta	11,394,000		18,842,945
CapitaLand Ltd.a	16,289,000		79,103,951
City Developments Ltd.	6,266,000		61,270,114
Keppel Land Ltd.a	4,162,000		21,031,238
Singapore Land Ltd.	1,569,000		10,193,660
UOL Group Ltd.	6,330,000		20,687,361
Wing Tai Holdings Ltd.a	5,064,000		11,564,982
			232,537,019
REAL ESTATE INVESTMENT TRUSTS – 3.60%
Ascendas Real Estate Investment Trusta	11,394,000		17,571,794
CapitaMall Trust Management Ltd.a	12,530,000		27,957,737
Suntec REIT	12,530,000		14,554,469
			60,084,000
SEMICONDUCTORS – 0.51%
Chartered Semiconductor Manufacturing Ltd.a,b	12,050,000		8,540,491
			8,540,491
SHIPBUILDING – 1.54%
SembCorp Marine Ltd.a	9,375,000		25,716,957
			25,716,957
TELECOMMUNICATIONS – 12.73%
Singapore Telecommunications Ltd.	88,963,568		212,513,051
			212,513,051
TRANSPORTATION – 5.87%
ComfortDelGro Corp. Ltd.a	21,922,000		28,053,484
COSCO Corp. (Singapore) Ltd.a	8,862,000		29,369,405
Neptune Orient Lines Ltd.a	5,064,000		16,284,027
Singapore Post Ltd.	17,542,000		14,274,892
SMRT Corp. Ltd.a	8,771,000		10,015,448
			97,997,256
TOTAL COMMON STOCKS (Cost: $1,420,262,590)			1,646,562,633

54 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2007

Security	Shares	Value
SHORT-TERM INVESTMENTS – 17.84%
MONEY MARKET FUNDS – 17.84%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	759,387	$	759,387
BGI Cash Premier Fund LLC 5.47%c,d,e	297,019,475		297,019,475
			297,778,862
TOTAL SHORT-TERM INVESTMENTS (Cost: $297,778,862)			297,778,862
TOTAL INVESTMENTS IN SECURITIES – 116.48% (Cost: $1,718,041,452)			1,944,341,495
Other Assets, Less Liabilities – (16.48)%			(275,131,311	)
NET ASSETS – 100.00%		$	1,669,210,184

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

^e This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 55

Schedule of Investments

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.78%
BANKS – 14.28%
FirstRand Ltd.	6,072,225	$	19,768,066
Nedbank Group Ltd.	441,150		8,287,900
Standard Bank Group Ltd.	2,652,225		38,637,991
			66,693,957
BUILDING MATERIALS – 1.57%
Pretoria Portland Cement Co. Ltd.	1,162,050		7,331,162
			7,331,162
DIVERSIFIED FINANCIAL SERVICES – 1.80%
African Bank Investments Ltd.	966,825		4,244,729
Investec Ltd.	369,300		4,144,810
			8,389,539
ELECTRONICS – 0.76%
Reunert Ltd.	380,550		3,544,195
			3,544,195
ENGINEERING & CONSTRUCTION – 2.80%
Aveng Ltd.	855,825		6,312,045
Murray & Roberts Holdings Ltd.	643,275		6,753,379
			13,065,424
FOOD – 3.49%
Shoprite Holdings Ltd.	936,750		4,453,562
SPAR Group Ltd. (The)	369,600		2,689,358
Tiger Brands Ltd.	350,775		9,157,563
			16,300,483
FOREST PRODUCTS & PAPER – 2.14%
Mondi Ltd.	321,300		3,090,931
Sappi Ltd.	441,375		6,907,542
			9,998,473
HEALTH CARE - PRODUCTS – 0.49%
Aspen Pharmacare Holdings Ltd.a	461,325		2,278,164
			2,278,164
HEALTH CARE - SERVICES – 0.98%
Network Healthcare Holdings Ltd.a	2,576,625		4,587,452
			4,587,452
HOLDING COMPANIES - DIVERSIFIED – 5.97%
AVI Ltd.	709,050		1,927,707
Barloworld Ltd.	438,000		7,480,655
Bidvest Group Ltd.	561,675		10,892,854
Imperial Holdings Ltd.	381,000		7,596,096
			27,897,312

Security	Shares	Value
HOME FURNISHINGS – 1.82%
Lewis Group Ltd.	203,775	$	1,758,616
Steinhoff International Holdings Ltd.	2,098,650		6,726,799
			8,485,415
INSURANCE – 4.41%
Liberty Group Ltd.	250,050		3,127,499
Metropolitan Holdings Ltd.	1,265,325		2,610,918
Sanlam Ltd.	4,934,250		14,831,987
			20,570,404
IRON & STEEL – 2.65%
Kumba Iron Ore Ltd.	169,800		4,924,141
Mittal Steel South Africa Ltd.	432,975		7,455,199
			12,379,340
MEDIA – 4.01%
Naspers Ltd.	749,625		18,718,416
			18,718,416
MINING – 20.14%
Anglo Platinum Ltd.	151,800		20,190,617
AngloGold Ashanti Ltd.	327,750		12,758,603
Gold Fields Ltd.	1,332,675		20,345,474
Harmony Gold Mining Co. Ltd.a	734,025		6,559,917
Impala Platinum Holdings Ltd.	1,156,350		34,194,749
			94,049,360
OIL & GAS – 11.07%
Sasol Ltd.	1,283,100		51,699,672
			51,699,672
PACKAGING & CONTAINERS – 0.69%
Nampak Ltd.	1,137,075		3,210,285
			3,210,285
REAL ESTATE – 0.42%
Fountainhead Property Trust	2,181,750		1,946,769
			1,946,769
RETAIL – 5.79%
Ellerine Holdings Ltd.	265,575		2,777,013
Foschini Ltd.	440,175		3,556,381
JD Group Ltd.	388,125		3,771,671
Massmart Holdings Ltd.	434,175		5,569,062
Pick’n Pay Stores Ltd.	473,550		2,191,964
Truworths International Ltd.	967,875		4,422,065
Woolworths Holdings Ltd.	1,733,400		4,760,959
			27,049,115

56 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

August 31, 2007

Security	Shares	Value
TELECOMMUNICATIONS – 13.75%
MTN Group Ltd.	3,208,725	$	48,673,305
Telkom South Africa Ltd.	632,175		15,530,043
			64,203,348
TRANSPORTATION – 0.75%
Grindrod Ltd.	716,100		2,465,041
Super Group Ltd.	619,200		1,061,856
			3,526,897
TOTAL COMMON STOCKS (Cost: $432,895,740)			465,925,182
SHORT-TERM INVESTMENTS – 0.03%
MONEY MARKET FUNDS – 0.03%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%b,c	116,686		116,686
			116,686
TOTAL SHORT-TERM INVESTMENTS (Cost: $116,686)			116,686
TOTAL INVESTMENTS IN SECURITIES – 99.81% (Cost: $433,012,426)			466,041,868
Other Assets, Less Liabilities – 0.19%			898,388
NET ASSETS – 100.00%		$	466,940,256

^a Non-income earning security.

^b Affiliated issuer. See Note 2.

^c The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 57

Schedule of Investments

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 97.54%
ADVERTISING – 0.18%
Cheil Communications Inc.	15,280	$	4,429,694
			4,429,694
AEROSPACE & DEFENSE – 0.42%
Hyundai Merchant Marine Co. Ltd.a	191,000		10,117,453
			10,117,453
AGRICULTURE – 1.78%
KT&G Corp.	567,652		43,197,818
			43,197,818
AIRLINES – 0.73%
Asiana Airlines Inc.	473,680		4,573,984
Korean Air Co. Ltd.	192,642		13,037,854
			17,611,838
APPAREL – 0.15%
LG Fashion Corp.a	124,194		3,699,677
			3,699,677
AUTO MANUFACTURERS – 2.88%
Hyundai Motor Co. Ltd.a	771,640		57,240,761
Kia Motors Corp.a,b	947,360		12,823,312
			70,064,073
AUTO PARTS & EQUIPMENT – 1.74%
Hankook Tire Co. Ltd.a	504,240		11,044,105
Hyundai Mobis	290,326		31,252,785
			42,296,890
BANKS – 7.31%
Daegu Banka	611,200		11,399,947
Kookmin Bank	1,696,089		137,024,829
Korea Exchange Bank	1,191,840		18,863,655
Pusan Bank	550,080		10,259,952
			177,548,383
BEVERAGES – 0.38%
Hite Brewery Co. Ltd.a	53,480		6,982,467
Lotte Chilsung Beverage Co. Ltd.	1,500		2,310,152
			9,292,619
CHEMICALS – 3.05%
Hanwha Chemical Corp.	252,120		6,596,905
Honam Petrochemical Corp.	68,760		10,626,379
KCC Corp.a	22,920		11,725,659

Security	Shares	Value
Korea Zinc Co. Ltd.a	61,120	$	12,246,800
LG Chem Ltd.a	229,200		23,866,603
LG Petrochemical Co. Ltd.a	106,975		5,176,302
Samsung Fine Chemicals Co. Ltd.a	68,760		3,884,125
			74,122,773
COMMERCIAL SERVICES – 0.22%
S1 Corp.a	99,320		5,441,032
			5,441,032
COSMETICS & PERSONAL CARE – 0.56%
AmorePacific Corp.a	17,030		12,070,290
Pacific Corp.a	7,649		1,520,425
			13,590,715
DISTRIBUTION & WHOLESALE – 3.42%
Daewoo International Corp.a	221,560		9,374,828
Hanwha Corp.	213,920		13,771,136
Hyosung Corp.	91,685		6,703,534
LG International Corp.a	160,445		5,318,241
Samsung Corp.a	702,880		47,870,005
			83,037,744
DIVERSIFIED FINANCIAL SERVICES – 9.51%
Daewoo Securities Co. Ltd.a	588,280		18,151,565
Daishin Securities Co. Ltd.a	191,000		6,493,898
Hana Financial Group Inc.	588,281		27,838,717
Hyundai Securities Co. Ltd.a	565,360		17,233,462
Korea Investment Holdings Co. Ltd.a	191,005		12,295,979
Mirae Asset Securities Co. Ltd.a	90,274		8,033,977
Samsung Securities Co.a	275,040		23,422,005
Shinhan Financial Group Ltd.a	1,589,120		96,880,004
Tong Yang Investment Banka	404,922		7,660,395
Woori Investment & Securities Co. Ltd.a	466,040		13,088,360
			231,098,362
ELECTRIC – 2.39%
Korea Electric Power Corp.a	1,298,800		58,001,300
			58,001,300
ELECTRICAL COMPONENTS & EQUIPMENT – 16.20%
LG Electronics Inc.a	481,326		36,936,288
LS Cable Ltd.a	99,320		10,204,581
Samsung Electronics Co. Ltd.	550,080		346,493,237
			393,634,106

58 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2007

Security	Shares	Value
ELECTRONICS – 2.34%
Hyundai Autonet Co. Ltd.a	504,240	$	3,976,953
LG.Philips LCD Co. Ltd.a,b	504,240		21,443,300
Samsung Electro-Mechanics Co. Ltd.a	366,720		20,285,391
Samsung SDI Co. Ltd.a	168,080		11,053,063
			56,758,707
ENGINEERING & CONSTRUCTION – 5.78%
Daelim Industrial Co. Ltd.a	129,880		21,733,184
Daewoo Engineering & Construction Co. Ltd.a	786,920		22,561,309
Doosan Heavy Industries & Construction Co. Ltd.a	137,520		13,191,367
GS Engineering & Construction Corp.a	183,360		28,923,293
Hanjin Heavy Industries & Construction Co. Ltd.a,b	174,966		15,011,738
Hanjin Heavy Industries & Construction Holdings Co. Ltd.a	64,714		2,941,702
Hyundai Engineering & Construction Co. Inc.a,b	213,920		17,282,319
Samsung Engineering Co. Ltd.	162,710		18,729,209
			140,374,121
ENVIRONMENTAL CONTROL – 0.28%
Woongjin Coway Co. Ltd.a	213,920		6,725,969
			6,725,969
FOOD – 1.08%
CJ Corp.a,c	91,680		12,116,515
Lotte Confectionery Co. Ltd.a	3,500		5,968,558
Nong Shim Co. Ltd.a	15,282		3,909,065
ORION Corp.a	15,289		4,138,989
			26,133,127
HOME BUILDERS – 1.21%
Hyundai Development Co.a	328,527		29,412,489
			29,412,489
HOUSEHOLD PRODUCTS & WARES – 0.38%
LG Household & Health Care Ltd.a	61,120		9,315,385
			9,315,385
INSURANCE – 2.31%
Dongbu Insurance Co. Ltd.	191,000		7,990,141
Hyundai Marine & Fire Insurance Co. Ltd.a	374,360		7,660,764
Korean Reinsurance Co.	359,080		4,879,584

Security	Shares	Value
Samsung Fire & Marine Insurance Co. Ltd.a	183,360	$	35,665,548
			56,196,037
INTERNET – 1.90%
Daum Communications Corp.a,b	50,424		3,584,632
NCsoft Corp.a,b	76,400		6,351,399
NHN Corp.b	187,944		36,256,716
			46,192,747
IRON & STEEL – 10.54%
Dongkuk Steel Mill Co. Ltd.	175,731		8,081,847
Hyundai Steel Co.	236,840		18,932,054
POSCO	374,360		229,024,929
			256,038,830
LODGING – 0.54%
Kangwon Land Inc.a	542,442		13,008,201
			13,008,201
MACHINERY - DIVERSIFIED – 0.49%
Doosan Infracore Co. Ltd.a	328,520		11,957,323
			11,957,323
MANUFACTURING – 0.52%
Cheil Industries Inc.a	229,200		12,556,227
			12,556,227
MINING – 0.11%
Poongsan Corp.a	99,338		2,699,834
			2,699,834
MULTIPLE UTILITIES – 0.51%
KT Freetel Co. Ltd.	382,000		12,417,799
			12,417,799
OIL & GAS – 3.36%
SK Corp.a	131,284		20,219,065
SK Energy Co. Ltd.b	313,244		42,900,990
S-Oil Corp.a	229,200		18,467,914
			81,587,969
PHARMACEUTICALS – 0.57%
Hanmi Pharm Co. Ltd.a	31,873		5,197,516
Yuhan Corp.a	39,848		8,706,464
			13,903,980
RETAIL – 2.88%
Hyundai Department Store Co. Ltd.	76,400		8,631,388
Lotte Shopping Co. Ltd.a	38,200		14,270,290
Shinsegae Co. Ltd.a	71,090		46,976,605
			69,878,283

SCHEDULES OF INVESTMENTS 59

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2007

Security	Shares	Value
SEMICONDUCTORS – 0.75%
Samsung Techwin Co. Ltd.a	252,120	$	18,218,743
			18,218,743
SHIPBUILDING – 7.27%
Daewoo Shipbuilding & Marine Engineering Co. Ltd.a	488,960		29,183,864
Hyundai Heavy Industries Co. Ltd.a	213,920		84,359,606
Hyundai Mipo Dockyard Co. Ltd.	61,120		18,109,630
Samsung Heavy Industries Co. Ltd.a	893,880		45,063,175
			176,716,275
TELECOMMUNICATIONS – 3.22%
KT Corp.	474,501		22,530,263
KT Corp. SP ADR	458,400		10,919,088
SKTelecom Co. Ltd.	117,540		25,869,448
SKTelecom Co. Ltd. ADR	688,364		18,840,523
			78,159,322
TRANSPORTATION – 0.58%
Hanjin Shipping Co. Ltd.a	252,120		14,107,434
			14,107,434
TOTAL COMMON STOCKS (Cost: $1,260,633,830)			2,369,543,279
PREFERRED STOCKS – 2.39%
AUTO MANUFACTURERS – 0.32%
Hyundai Motor Co. Ltd.	198,640		7,907,492
			7,907,492
ELECTRICAL COMPONENTS & EQUIPMENT – 2.07%
LG Electronics Inc.	122,240		5,393,803
Samsung Electronics Co. Ltd.a	95,680		44,818,929
			50,212,732
TOTAL PREFERRED STOCKS (Cost: $57,446,069)			58,120,224

Security	Shares	Value
SHORT-TERM INVESTMENTS – 24.06%
MONEY MARKET FUNDS – 24.06%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%d,e	2,202,657	$	2,202,657
BGI Cash Premier Fund LLC 5.47%d,e,f	582,296,616		582,296,616
			584,499,273
TOTAL SHORT-TERM INVESTMENTS (Cost: $584,499,273)			584,499,273
TOTAL INVESTMENTS IN SECURITIES – 123.99% (Cost: $1,902,579,172)			3,012,162,776
Other Assets, Less Liabilities – (23.99)%			(582,709,987	)
NET ASSETS – 100.00%		$	2,429,452,789

ADR – American Depositary Receipts

SP ADR – Sponsored American Depositary Receipts

^a All or a portion of this security represents a security on loan. See Note 5.

^b Non-income earning security.

^c Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^d Affiliated issuer. See Note 2.

^e The rate quoted is the annualized seven-day yield of the fund at period end.

f This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

60 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI TAIWAN INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.03%
AIRLINES – 0.27%
China Airlines	9,809,588	$	3,849,637
EVA Airways Corp.a	9,526,396		3,521,986
			7,371,623
APPAREL – 0.53%
Pou Chen Corp.	14,722,272		14,722,718
			14,722,718
AUTO MANUFACTURERS – 0.35%
China Motor Co. Ltd.	4,352,287		3,857,826
Yulon Motor Co. Ltd.	5,274,838		5,770,528
			9,628,354
AUTO PARTS & EQUIPMENT – 0.34%
Cheng Shin Rubber Industry Co. Ltd.	5,196,291		9,526,822
			9,526,822
BANKS – 5.96%
Chang Hwa Commercial Bank Ltd.	26,846,446		16,840,554
Chinatrust Financial Holding Co. Ltd.a	51,960,566		39,050,336
E.Sun Financial Holding Co. Ltd.a	20,784,378		10,959,368
First Financial Holding Co. Ltd.	32,042,324		22,139,004
Hua Nan Financial Holdings Co. Ltd.	25,114,965		16,553,547
Mega Financial Holding Co. Ltd.	63,218,136		39,273,063
Taishin Financial Holdings Co. Ltd.a	40,703,439		20,352,336
			165,168,208
BUILDING MATERIALS – 1.66%
Asia Cement Corp.	11,234,848		15,763,310
Taiwan Cement Corp.	19,246,197		24,729,196
Taiwan Glass Industrial Corp.	6,062,923		5,511,915
			46,004,421
CHEMICALS – 8.53%
Eternal Chemical Co. Ltd.	4,330,060		5,025,646
Formosa Chemicals & Fibre Co.	20,784,393		50,639,874

Security	Shares	Value
Formosa Plastic Co.	30,310,111	$	75,318,316
Nan Ya Plastic Corp.	37,238,447		90,277,759
Oriental Union Chemical Corp.	4,330,704		4,396,454
Taiwan Fertilizer Co. Ltd.	5,196,000		10,628,504
			236,286,553
COMMERCIAL SERVICES – 0.16%
Taiwan Secom Co. Ltd.	2,598,610		4,291,774
			4,291,774
COMPUTER SYSTEMS – 0.30%
Mosel Vitelic Inc.	6,928,750		8,220,266
			8,220,266
COMPUTERS – 11.51%
Acer Inc.	17,320,617		30,390,731
Advantech Co. Ltd.	1,820,588		5,500,549
CMC Magnetics Corp.a	20,784,400		9,164,309
Compal Electronics Inc.	23,500,944		26,136,690
Foxconn Technology Co. Ltd.	2,991,824		27,199,224
High Tech Computer Corp.	3,464,760		46,985,669
Innolux Display Corp.	14,722,648		62,015,457
Inotera Memories Inc.	22,516,000		22,482,566
Inventec Co. Ltd.	10,895,098		6,949,963
Lite-On Technology Corp.	13,856,998		21,877,923
MiTAC International Corp.	8,422,952		10,490,722
Qisda Corp.a	15,588,019		7,321,867
Quanta Computer Inc.	14,136,716		23,004,990
Ritek Corp.a	17,320,389		5,206,772
Wistron Corp.	7,794,884		14,172,946
			318,900,378
DIVERSIFIED FINANCIAL SERVICES – 2.79%
Fubon Financial Holding Co. Ltd.	25,980,000		22,398,588
Polaris Securities Co. Ltd.a	12,990,227		6,633,090
SinoPac Financial Holdings Co. Ltd.	45,898,193		21,767,530
Waterland Financial Holdings	10,602,000		3,277,081
Yuanta Financial Holdings Co. Ltd.a	40,702,076		23,188,552
			77,264,841
ELECTRICAL COMPONENTS & EQUIPMENT – 2.35%
Delta Electronics Inc.	11,258,675		41,965,424
Pacific Electric Wire & Cable Co. Ltd.b	986		–

SCHEDULES OF INVESTMENTS 61

Schedule of Investments (Continued)

iSHARES^® MSCI TAIWAN INDEX FUND

August 31, 2007

Security	Shares	Value
Tatung Co. Ltd.a	28,578,120	$	13,423,463
Walsin Lihwa Corp.	19,918,069		9,778,258
			65,167,145
ELECTRONICS – 20.10%
Asia Optical Co. Inc.	874,672		3,246,987
Asustek Computer Inc.	23,382,764		69,796,123
AU Optronics Corp.	46,813,097		67,810,116
Cheng Uei Precision Industry Co. Ltd.	1,821,500		4,454,530
Chi Mei Optoelectronics Corp.	31,176,504		31,555,357
Chunghwa Picture Tubes Ltd.a	43,300,105		11,127,152
Compeq Manufacturing Co. Ltd.	6,928,200		2,970,818
Gigabyte Technology Co. Ltd.	4,330,017		3,936,498
HannStar Display Corp.a	36,372,000		9,798,693
Hon Hai Precision Industry Co. Ltd.	37,409,860		277,748,286
Kinsus Interconnect Technology Corp.	1,905,600		6,583,181
Micro-Star International Co. Ltd.	5,510,989		5,703,211
Nan Ya Printed Circuit Board Corp.	866,000		5,629,171
Phoenix Precision Technology Corp.	4,352,698		5,038,730
Synnex Technology International Corp.	5,460,093		14,990,891
Tripod Technology Corp.	2,598,039		10,707,394
Unimicron Technology Corp.	6,185,480		9,709,623
Wintek Corp.	6,928,537		7,936,565
Ya Hsin Industrial Co. Ltd.b	6,845,461		1,236,369
Yageo Corp.	17,320,100		6,639,573
			556,619,268
ENERGY - ALTERNATE SOURCES – 0.32%
Motech Industries Inc.	1,052,366		8,993,218
			8,993,218
FOOD – 0.85%
Uni-President Enterprises Co.	20,198,675		23,412,810
			23,412,810
FOREST PRODUCTS & PAPER – 0.13%
Yuen Foong Yu Paper Manufacturing Co. Ltd.	8,747,863		3,698,072
			3,698,072

Security	Shares	Value
HOME FURNISHINGS – 0.26%
Teco Electric and Machinery Co. Ltd.	12,990,092	$	7,282,545
			7,282,545
INSURANCE – 4.32%
Cathay Financial Holding Co. Ltd.	42,434,905		94,516,971
Shin Kong Financial Holding Co. Ltd.	25,844,772		25,140,676
			119,657,647
INVESTMENT COMPANIES – 0.94%
China Development Financial Holding Co.	64,084,808		26,120,206
			26,120,206
IRON & STEEL – 3.18%
China Steel Corp.	64,950,762		88,178,252
			88,178,252
MANUFACTURING – 0.26%
Largan Precision Co. Ltd.	883,540		7,189,021
			7,189,021
METAL FABRICATE & HARDWARE – 0.86%
Catcher Technology Co. Ltd.a	2,598,707		20,790,286
Yieh Phui Enterprise Co. Ltd.	6,928,413		3,065,391
			23,855,677
OFFICE & BUSINESS EQUIPMENT – 0.12%
Kinpo Electronics Inc.	8,660,624		3,306,884
			3,306,884
OIL & GAS – 1.40%
Formosa Petrochemical Corp.	13,856,000		38,630,019
			38,630,019
REAL ESTATE – 0.12%
Cathay Real Estate Development Co. Ltd.	6,928,493		3,233,395
			3,233,395
RETAIL – 0.33%
President Chain Store Corp.	3,464,640		8,997,838
			8,997,838
SEMICONDUCTORS – 24.68%
Advanced Semiconductor Engineering Inc.	27,834,715		27,540,333
Epistar Corp.	2,648,364		12,439,662
Macronix International Co. Ltd.a	20,784,492		12,911,970

62 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI TAIWAN INDEX FUND

August 31, 2007

Security	Shares	Value
MediaTek Inc.	6,371,535	$	108,126,295
Nanya Technology Corp.	18,186,690		13,392,423
Novatek Microelectronics Corp. Ltd.	3,533,718		14,242,386
Powerchip Semiconductor Corp.	54,232,901		26,788,578
Powertech Technology Inc.	2,992,650		12,016,307
ProMOS Technologies Inc.	45,032,000		13,919,404
Realtek Semiconductor Corp.	2,727,623		13,349,226
Siliconware Precision Industries Co. Ltd.	18,552,074		37,386,373
Taiwan Semiconductor Manufacturing Co. Ltd.	157,612,920		299,473,624
United Microelectronics Corp.	130,766,262		73,310,581
Vanguard International Semiconductor Corp.	6,928,156		5,899,609
Via Technologies Inc.a	6,928,861		4,955,336
Winbond Electronics Corp.	25,980,280		7,817,939
			683,570,046
TELECOMMUNICATIONS – 4.32%
Chunghwa Telecom Co. Ltd.	39,836,180		70,741,542
Compal Communications Inc.	1,794,200		4,219,216
D-Link Corp.	5,301,961		11,680,735
Inventec Appliances Corp.	1,817,800		3,679,779
Taiwan Cellular Corp.	18,186,920		23,147,691
Zyxel Communications Corp.	3,534,255		6,147,648
			119,616,611
TEXTILES – 1.12%
Far Eastern Textile Ltd.	20,509,270		24,114,660
Formosa Taffeta Co. Ltd.	6,062,515		6,889,430
			31,004,090
TRANSPORTATION – 0.97%
Evergreen Marine Corp. Ltd.	7,794,467		5,054,747
U-Ming Marine Transport Corp.a	3,464,800		10,310,717
Wan Hai Lines Ltd.	7,794,794		5,503,764
Yang Ming Marine Transport Corp.a	8,660,667		6,115,141
			26,984,369
TOTAL COMMON STOCKS (Cost: $2,051,841,836)			2,742,903,071

Security	Shares	Value
SHORT-TERM INVESTMENTS – 0.05%
MONEY MARKET FUNDS – 0.05%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%c,d	1,473,944	$	1,473,944
			1,473,944
TOTAL SHORT-TERM INVESTMENTS (Cost: $1,473,944)			1,473,944
TOTAL INVESTMENTS IN SECURITIES – 99.08% (Cost: $2,053,315,780)			2,744,377,015
Other Assets, Less Liabilities – 0.92%			25,387,339
NET ASSETS – 100.00%		$	2,769,764,354

^a Non-income earning security.

^b Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^c Affiliated issuer. See Note 2.

^d The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to financial statements.

SCHEDULES OF INVESTMENTS 63

Statements of Assets and Liabilities

iSHARES^®, INC.

August 31, 2007

	iShares MSCI
	Australia Index Fund			Brazil Index Fund			Canada Index Fund			Emerging Markets Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	1,282,017,415		$	2,661,078,337		$	1,062,442,389		$	13,693,701,783
Affiliated issuers (Note 2)		60,377,688			10,991,195			234,233			1,752,485,861
Total cost of investments	$	1,342,395,103		$	2,672,069,532		$	1,062,676,622		$	15,446,187,644
Investments in securities, at value (including securities on loana) (Note 1):
Unaffiliated issuers	$	1,451,128,852		$	4,403,155,789		$	1,319,451,892		$	17,605,160,750
Affiliated issuers (Note 2)		60,377,688			10,991,195			234,233			1,921,704,896
Total value of investments		1,511,506,540			4,414,146,984			1,319,686,125			19,526,865,646
Foreign currencies, at valueb		2,369,836			771,599			2,523,950			22,225,245
Receivables:
Investment securities sold		10,776,108			32,369,210			2,991,746			103,415,275
Due from custodian (Note 4)		–			25,436			–			59,253,280
Dividends and interest		11,197,575			18,123,550			1,543,610			57,659,042
Capital shares sold		–			2,961,474			–			–
Total Assets		1,535,850,059			4,468,398,253			1,326,745,431			19,769,418,488
LIABILITIES
Payables:
Investment securities purchased		10,906,703			31,681,662			3,054,114			152,148,819
Securities related to in-kind transactions (Note 4)		–			–			–			18,588,207
Collateral for securities on loan (Note 5)		60,181,361			–			–			1,389,487,748
Investment advisory fees (Note 2)		649,519			2,382,953			569,174			10,822,582
Total Liabilities		71,737,583			34,064,615			3,623,288			1,571,047,356
NET ASSETS	$	1,464,112,476		$	4,434,333,638		$	1,323,122,143		$	18,198,371,132
Net assets consist of:
Paid-in capital	$	1,288,847,470		$	2,656,731,679		$	1,074,106,349		$	14,032,237,942
Undistributed net investment income		21,502,107			45,390,560			10,427,097			203,060,062
Accumulated net realized loss		(15,263,042	)		(10,244,694	)		(18,426,256	)		(117,716,143	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		169,025,941			1,742,456,093			257,014,953			4,080,789,271
NET ASSETS	$	1,464,112,476		$	4,434,333,638		$	1,323,122,143		$	18,198,371,132
Shares outstandingc		53,000,000			72,000,000			44,300,000			135,450,000
Net asset value per share	$	27.62		$	61.59		$	29.87		$	134.35

^a Securities on loan with market values of $56,427,222, $–, $– and $1,324,090,538, respectively. See Note 5.

^b Cost of foreign currencies: $2,374,791, $758,337, $2,524,260 and $22,177,947, respectively.

^c $0.001 par value, number of shares authorized: 127.8 million, 500 million, 340.2 million and 500 million, respectively.

See notes to financial statements.

64 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities (Continued)

iSHARES^®, INC.

August 31, 2007

	iShares MSCI
	Hong Kong Index Fund			Malaysia Index Fund			Mexico Index Fund			Pacific ex-Japan Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	1,206,634,031		$	479,638,443		$	1,354,172,287		$	2,497,886,231
Affiliated issuers (Note 2)		277,059,033			643,520			141,524,311			331,917,453
Total cost of investments	$	1,483,693,064		$	480,281,963		$	1,495,696,598		$	2,829,803,684
Investments in securities, at value (including securities on loana) (Note 1):
Unaffiliated issuers	$	1,439,853,318		$	736,553,503		$	1,380,807,947		$	3,509,060,191
Affiliated issuers (Note 2)		277,059,033			643,520			141,524,311			331,917,453
Total value of investments		1,716,912,351			737,197,023			1,522,332,258			3,840,977,644
Foreign currencies, at valueb		759,021			6,857,327			902,579			5,483,670
Receivables:
Investment securities sold		–			3,967,415			87,001,405			16,585,998
Due from custodian (Note 4)		–			–			–			43,695
Dividends and interest		2,121,544			2,338,682			1,080,030			23,532,797
Total Assets		1,719,792,916			750,360,447			1,611,316,272			3,886,623,804
LIABILITIES
Payables:
Investment securities purchased		–			8,567,036			29,940,986			17,503,349
Securities related to in-kind transactions (Note 4)		–			–			57,009,952			–
Collateral for securities on loan (Note 5)		273,919,378			–			140,955,798			331,361,817
Capital shares redeemed		–			–			14,929			–
Investment advisory fees (Note 2)		564,646			353,890			584,957			1,463,335
Total Liabilities		274,484,024			8,920,926			228,506,622			350,328,501
NET ASSETS	$	1,445,308,892		$	741,439,521		$	1,382,809,650		$	3,536,295,303
Net assets consist of:
Paid-in capital	$	1,211,576,260		$	508,503,278		$	1,358,519,960		$	2,494,602,481
Undistributed net investment income		25,204,852			18,518,153			8,312,387			43,439,186
Accumulated net realized loss		(24,694,158	)		(42,481,828	)		(10,662,263	)		(12,768,262	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		233,221,938			256,899,918			26,639,566			1,011,021,898
NET ASSETS	$	1,445,308,892		$	741,439,521		$	1,382,809,650		$	3,536,295,303
Shares outstandingc		78,975,000			67,575,000			23,700,000			24,400,000
Net asset value per share	$	18.30		$	10.97		$	58.35		$	144.93

^a Securities on loan with market values of $259,750,524, $–, $136,818,025 and $312,297,872, respectively. See Note 5.

^b Cost of foreign currencies: $758,636, $6,864,034, $907,838 and $5,483,916, respectively.

^c $0.001 par value, number of shares authorized: 191.4 million, 127.8 million, 255 million and 500 million, respectively.

See notes to financial statements.

FINANCIAL STATEMENTS 65

Statements of Assets and Liabilities (Continued)

iSHARES^®, INC.

August 31, 2007

	iShares MSCI
	Singapore Index Fund			South Africa Index Fund			South Korea Index Fund			Taiwan Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	1,420,262,590		$	432,895,740		$	1,318,079,899		$	2,051,841,836
Affiliated issuers (Note 2)		297,778,862			116,686			584,499,273			1,473,944
Total cost of investments	$	1,718,041,452		$	433,012,426		$	1,902,579,172		$	2,053,315,780
Investments in securities, at value (including securities on loana) (Note 1):
Unaffiliated issuers	$	1,646,562,633		$	465,925,182		$	2,427,663,503		$	2,742,903,071
Affiliated issuers (Note 2)		297,778,862			116,686			584,499,273			1,473,944
Total value of investments		1,944,341,495			466,041,868			3,012,162,776			2,744,377,015
Foreign currencies, at valueb		3,009,105			1,023,342			–			8,973,167
Receivables:
Investment securities sold		28,815,954			638,645			11,761,430			–
Due from custodian (Note 4)		1,069,002			–			–			–
Dividends and interest		18,186,459			747,774			408,246			22,126,432
Capital shares sold		–			82,877			–			31,983,365
Total Assets		1,995,422,015			468,534,506			3,024,332,452			2,807,459,979
LIABILITIES
Payables:
Investment securities purchased		28,442,512			1,361,508			11,224,870			34,796,821
Collateral for securities on loan (Note 5)		297,019,475			–			582,296,616			–
Foreign taxes		–			–			–			1,357,643
Investment advisory fees (Note 2)		749,844			232,742			1,358,177			1,541,161
Total Liabilities		326,211,831			1,594,250			594,879,663			37,695,625
NET ASSETS	$	1,669,210,184		$	466,940,256		$	2,429,452,789		$	2,769,764,354
Net assets consist of:
Paid-in capital	$	1,419,146,376		$	433,562,025		$	1,391,792,758		$	2,214,305,017
Undistributed net investment income		43,749,612			6,792,504			17,559,332			58,442,597
Accumulated net realized loss		(19,930,006	)		(6,449,874	)		(89,482,762	)		(193,998,132	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		226,244,202			33,035,601			1,109,583,461			691,014,872
NET ASSETS	$	1,669,210,184		$	466,940,256		$	2,429,452,789		$	2,769,764,354
Shares outstandingc		125,700,000			3,750,000			38,200,000			173,200,000
Net asset value per share	$	13.28		$	124.52		$	63.60		$	15.99

^a Securities on loan with market values of $283,623,758, $–, $558,597,793 and $–, respectively. See Note 5.

^b Cost of foreign currencies: $3,007,837, $1,021,969, $– and $8,969,798, respectively.

^c $0.001 par value, number of shares authorized: 191.4 million, 200 million, 200 million and 200 million, respectively.

See notes to financial statements.

66 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI
	Australia Index Fund			Brazil Index Fund		Canada Index Fund			Emerging Markets Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	41,724,172		$	90,135,763	$	21,176,330		$	332,793,891
Dividends from affiliated issuers (Note 2)		–			–		–			20,955,667
Interest from affiliated issuers (Note 2)		32,120			323,866		36,407			1,096,015
Securities lending income from unaffiliated issuers		73,270			–		–			6,730,075
Securities lending income from affiliated issuers (Note 2)		43,383			2,245		–			3,308,502
Total investment income		41,872,945			90,461,874		21,212,737			364,884,150
EXPENSES
Investment advisory fees (Note 2)		5,418,181			21,514,644		5,946,553			114,234,720
Foreign taxes (Note 1)		–			279,113		1,367			293,974
Total expenses		5,418,181			21,793,757		5,947,920			114,528,694
Less investment advisory fees waived		–			–		–			(558,945	)
Net expenses		5,418,181			21,793,757		5,947,920			113,969,749
Net investment income		36,454,764			68,668,117		15,264,817			250,914,401
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(4,442,009	)		58,029,884		(8,223,785	)		(79,804,856	)
Investments in affiliated issuers (Note 2)		–			–		–			79,689,076
In-kind redemptions		127,522,283			–		118,324,552			2,360,331,511
Foreign currency transactions		774,109			914,930		82,541			(524,668	)
Net realized gain		123,854,383			58,944,814		110,183,308			2,359,691,063
Net change in unrealized appreciation (depreciation) on:
Investments		84,194,178			1,248,875,549		94,925,393			2,303,531,678
Translation of assets and liabilities in foreign currencies		(111,228	)		365,370		(5,592	)		(148,417	)
Net change in unrealized appreciation (depreciation)		84,082,950			1,249,240,919		94,919,801			2,303,383,261
Net realized and unrealized gain		207,937,333			1,308,185,733		205,103,109			4,663,074,324
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	244,392,097		$	1,376,853,850	$	220,367,926		$	4,913,988,725

^a Net of foreign withholding tax of $1,455,873, $9,911,889, $3,482,219 and $41,650,645, respectively.

See notes to financial statements.

FINANCIAL STATEMENTS 67

Statements of Operations (Continued)

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI
	Hong Kong Index Fund			Malaysia Index Fund			Mexico Index Fund			Pacific ex-Japan Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	40,759,039		$	27,897,087		$	19,218,567		$	111,776,834
Interest from affiliated issuers (Note 2)		72,567			32,747			52,760			80,986
Securities lending income from unaffiliated issuers		258,233			–			734,949			276,064
Securities lending income from affiliated issuers (Note 2)		164,887			–			265,465			188,656
Total investment income		41,254,726			27,929,834			20,271,741			112,322,540
EXPENSES
Investment advisory fees (Note 2)		6,192,082			3,843,835			6,123,156			14,285,783
Total expenses		6,192,082			3,843,835			6,123,156			14,285,783
Net investment income		35,062,644			24,085,999			14,148,585			98,036,757
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(10,005,877	)		7,596,414			(2,275,522	)		8,721,822
In-kind redemptions		160,693,706			–			291,090,456			97,532,116
Foreign currency transactions		(10,842	)		80,874			(110,850	)		1,717,017
Net realized gain		150,676,987			7,677,288			288,704,084			107,970,955
Net change in unrealized appreciation (depreciation) on:
Investments		128,691,119			151,608,958			6,644,711			559,947,642
Translation of assets and liabilities in foreign currencies		2,499			(13,663	)		3,860			(265,518	)
Net change in unrealized appreciation (depreciation)		128,693,618			151,595,295			6,648,571			559,682,124
Net realized and unrealized gain		279,370,605			159,272,583			295,352,655			667,653,079
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	314,433,249		$	183,358,582		$	309,501,240		$	765,689,836

^a Net of foreign withholding tax of $–, $–, $– and $3,025,859, respectively.

See notes to financial statements.

68 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations (Continued)

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI
	Singapore Index Fund			South Africa Index Fund			South Korea Index Fund			Taiwan Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	58,666,324		$	12,249,206		$	28,271,826		$	76,016,901
Interest from affiliated issuers (Note 2)		65,855			6,986			135,118			108,920
Securities lending income from unaffiliated issuers		253,867			–			704,305			–
Securities lending income from affiliated issuers (Note 2)		207,027			–			1,071,014			–
Total investment income		59,193,073			12,256,192			30,182,263			76,125,821
EXPENSES
Investment advisory fees (Note 2)		7,038,174			2,554,012			12,507,997			15,295,138
Foreign taxes (Note 1)		–			–			5,918			2,144,022
Total expenses		7,038,174			2,554,012			12,513,915			17,439,160
Net investment income		52,154,899			9,702,180			17,668,348			58,686,661
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(3,745,050	)		(2,392,410	)		(2,011,293	)		(35,817,797	)
In-kind redemptions		209,375,938			11,763,327			–			–
Foreign currency transactions		(172,828	)		(12,770	)		(159,049	)		(244,063	)
Net realized gain (loss)		205,458,060			9,358,147			(2,170,342	)		(36,061,860	)
Net change in unrealized appreciation (depreciation) on:
Investments		154,100,193			76,026,963			592,662,922			510,479,175
Translation of assets and liabilities in foreign currencies		(77,951	)		15,911			(143	)		79,920
Net change in unrealized appreciation (depreciation)		154,022,242			76,042,874			592,662,779			510,559,095
Net realized and unrealized gain		359,480,302			85,401,021			590,492,437			474,497,235
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	411,635,201		$	95,103,201		$	608,160,785		$	533,183,896

^a Net of foreign withholding tax of $–, $–, $5,452,858 and $18,113,281, respectively.

See notes to financial statements.

FINANCIAL STATEMENTS 69

Statements of Changes in Net Assets

iSHARES^®, INC.

	iShares MSCI Australia Index Fund						iShares MSCI Brazil Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	36,454,764		$	20,156,434		$	68,668,117		$	43,261,595
Net realized gain (loss)		123,854,383			30,254,258			58,944,814			(13,454,900	)
Net change in unrealized appreciation (depreciation)		84,082,950			40,835,313			1,249,240,919			276,489,590
Net increase in net assets resulting from operations		244,392,097			91,246,005			1,376,853,850			306,296,285
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(35,850,508	)		(16,397,050	)		(59,308,876	)		(20,219,476	)
Total distributions to shareholders		(35,850,508	)		(16,397,050	)		(59,308,876	)		(20,219,476	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		964,074,872			336,128,324			1,012,054,259			1,649,177,320
Cost of shares redeemed		(394,910,991	)		(93,925,541	)		(363,560,519	)		(19,244,643	)
Net increase in net assets from capital share transactions		569,163,881			242,202,783			648,493,740			1,629,932,677
INCREASE IN NET ASSETS		777,705,470			317,051,738			1,966,038,714			1,916,009,486
NET ASSETS
Beginning of year		686,407,006			369,355,268			2,468,294,924			552,285,438
End of year	$	1,464,112,476		$	686,407,006		$	4,434,333,638		$	2,468,294,924
Undistributed net investment income included in net assets at end of year	$	21,502,107		$	13,312,374		$	45,390,560		$	35,080,996
SHARES ISSUED AND REDEEMED
Shares sold		37,000,000			16,200,000			16,700,000			44,050,000
Shares redeemed		(15,800,000	)		(4,600,000	)		(7,850,000	)		(500,000	)
Net increase in shares outstanding		21,200,000			11,600,000			8,850,000			43,550,000

See notes to financial statements.

70 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Canada Index Fund						iShares MSCI Emerging Markets Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	15,264,817		$	9,118,778		$	250,914,401		$	192,922,376
Net realized gain		110,183,308			88,304,312			2,359,691,063			1,340,943,115
Net change in unrealized appreciation (depreciation)		94,919,801			43,740,392			2,303,383,261			667,014,214
Net increase in net assets resulting from operations		220,367,926			141,163,482			4,913,988,725			2,200,879,705
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(12,092,201	)		(4,108,502	)		(209,458,860	)		(113,762,995	)
Total distributions to shareholders		(12,092,201	)		(4,108,502	)		(209,458,860	)		(113,762,995	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		285,559,364			727,046,964			7,873,614,616			6,532,568,942
Cost of shares redeemed		(271,873,681	)		(183,241,984	)		(6,349,153,507	)		(3,651,163,544	)
Net increase in net assets from capital share transactions		13,685,683			543,804,980			1,524,461,109			2,881,405,398
INCREASE IN NET ASSETS		221,961,408			680,859,960			6,228,990,974			4,968,522,108
NET ASSETS
Beginning of year		1,101,160,735			420,300,775			11,969,380,158			7,000,858,050
End of year	$	1,323,122,143		$	1,101,160,735		$	18,198,371,132		$	11,969,380,158
Undistributed net investment income included in net assets at end of year	$	10,427,097		$	7,159,513		$	203,060,062		$	156,423,079
SHARES ISSUED AND REDEEMED
Shares sold		9,900,000			31,900,000			67,200,000			71,850,000
Shares redeemed		(10,200,000	)		(8,000,000	)		(54,600,000	)		(38,850,000	)
Net increase (decrease) in shares outstanding		(300,000	)		23,900,000			12,600,000			33,000,000

See notes to financial statements.

FINANCIAL STATEMENTS 71

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Hong Kong Index Fund						iShares MSCI Malaysia Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	35,062,644		$	21,409,153		$	24,085,999		$	14,348,448
Net realized gain (loss)		150,676,987			45,228,751			7,677,288			(17,343,416	)
Net change in unrealized appreciation (depreciation)		128,693,618			17,114,750			151,595,295			40,249,132
Net increase in net assets resulting from operations		314,433,249			83,752,654			183,358,582			37,254,164
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(25,623,625	)		(17,872,090	)		(11,518,123	)		(14,088,338	)
Total distributions to shareholders		(25,623,625	)		(17,872,090	)		(11,518,123	)		(14,088,338	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		828,936,976			385,690,233			709,128,181			210,424,492
Cost of shares redeemed		(555,149,687	)		(206,843,656	)		(513,863,061	)		(246,831,356	)
Net increase (decrease) in net assets from capital share transactions		273,787,289			178,846,577			195,265,120			(36,406,864	)
INCREASE (DECREASE) IN NET ASSETS		562,596,913			244,727,141			367,105,579			(13,241,038	)
NET ASSETS
Beginning of year		882,711,979			637,984,838			374,333,942			387,574,980
End of year	$	1,445,308,892		$	882,711,979		$	741,439,521		$	374,333,942
Undistributed net investment income included in net assets at end of year	$	25,204,852		$	14,227,248		$	18,518,153		$	5,608,095
SHARES ISSUED AND REDEEMED
Shares sold		51,075,000			28,575,000			68,475,000			27,900,000
Shares redeemed		(34,275,000	)		(15,450,000	)		(49,200,000	)		(33,525,000	)
Net increase (decrease) in shares outstanding		16,800,000			13,125,000			19,275,000			(5,625,000	)

See notes to financial statements.

72 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Mexico Index Fund						iShares MSCI Pacific ex-Japan Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	14,148,585		$	9,375,502		$	98,036,757		$	67,346,500
Net realized gain		288,704,084			128,613,827			107,970,955			71,241,794
Net change in unrealized appreciation (depreciation)		6,648,571			(14,767,360	)		559,682,124			163,112,452
Net increase in net assets resulting from operations		309,501,240			123,221,969			765,689,836			301,700,746
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(11,694,155	)		(6,377,728	)		(101,866,512	)		(62,872,256	)
Total distributions to shareholders		(11,694,155	)		(6,377,728	)		(101,866,512	)		(62,872,256	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		1,841,107,484			939,038,789			979,796,715			508,919,684
Cost of shares redeemed		(1,520,212,071	)		(547,333,327	)		(202,255,658	)		(174,924,729	)
Net increase in net assets from capital share transactions		320,895,413			391,705,462			777,541,057			333,994,955
INCREASE IN NET ASSETS		618,702,498			508,549,703			1,441,364,381			572,823,445
NET ASSETS
Beginning of year		764,107,152			255,557,449			2,094,930,922			1,522,107,477
End of year	$	1,382,809,650		$	764,107,152		$	3,536,295,303		$	2,094,930,922
Undistributed net investment income included in net assets at end of year	$	8,312,387		$	5,968,807		$	43,439,186		$	37,257,104
SHARES ISSUED AND REDEEMED
Shares sold		34,500,000			24,400,000			7,300,000			4,800,000
Shares redeemed		(29,300,000	)		(14,700,000	)		(1,600,000	)		(1,700,000	)
Net increase in shares outstanding		5,200,000			9,700,000			5,700,000			3,100,000

See notes to financial statements.

FINANCIAL STATEMENTS 73

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Singapore Index Fund						iShares MSCI South Africa Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	52,154,899		$	22,841,028		$	9,702,180		$	8,177,584
Net realized gain		205,458,060			31,826,561			9,358,147			99,303,479
Net change in unrealized appreciation (depreciation)		154,022,242			28,410,392			76,042,874			(95,009,170	)
Net increase in net assets resulting from operations		411,635,201			83,077,981			95,103,201			12,471,893
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(29,331,787	)		(14,378,298	)		(9,144,852	)		(4,618,354	)
Total distributions to shareholders		(29,331,787	)		(14,378,298	)		(9,144,852	)		(4,618,354	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		1,229,979,919			245,347,020			151,649,200			395,411,010
Cost of shares redeemed		(517,692,912	)		(80,563,776	)		(68,565,161	)		(258,896,840	)
Net increase in net assets from capital share transactions		712,287,007			164,783,244			83,084,039			136,514,170
INCREASE IN NET ASSETS		1,094,590,421			233,482,927			169,042,388			144,367,709
NET ASSETS
Beginning of year		574,619,763			341,136,836			297,897,868			153,530,159
End of year	$	1,669,210,184		$	574,619,763		$	466,940,256		$	297,897,868
Undistributed net investment income included in net assets at end of year	$	43,749,612		$	18,893,779		$	6,792,504		$	6,243,135
SHARES ISSUED AND REDEEMED
Shares sold		105,300,000			28,700,000			1,300,000			3,650,000
Shares redeemed		(42,700,000	)		(9,500,000	)		(600,000	)		(2,450,000	)
Net increase in shares outstanding		62,600,000			19,200,000			700,000			1,200,000

See notes to financial statements.

74 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI South Korea Index Fund						iShares MSCI Taiwan Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006			Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	17,668,348		$	10,350,623		$	58,686,661		$	45,072,947
Net realized loss		(2,170,342	)		(54,701,832	)		(36,061,860	)		(76,184,152	)
Net change in unrealized appreciation (depreciation)		592,662,779			299,045,492			510,559,095			123,093,505
Net increase in net assets resulting from operations		608,160,785			254,694,283			533,183,896			91,982,300
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(10,954,387	)		(7,841,332	)		(44,460,389	)		(16,050,567	)
Total distributions to shareholders		(10,954,387	)		(7,841,332	)		(44,460,389	)		(16,050,567	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		471,567,107			1,159,560,093			890,014,349			1,391,773,216
Cost of shares redeemed		(260,654,404	)		(483,534,641	)		(502,724,067	)		(326,594,755	)
Net increase in net assets from capital share transactions		210,912,703			676,025,452			387,290,282			1,065,178,461
INCREASE IN NET ASSETS		808,119,101			922,878,403			876,013,789			1,141,110,194
NET ASSETS
Beginning of year		1,621,333,688			698,455,285			1,893,750,565			752,640,371
End of year	$	2,429,452,789		$	1,621,333,688		$	2,769,764,354		$	1,893,750,565
Undistributed net investment income included in net assets at end of year	$	17,559,332		$	10,954,387		$	58,442,597		$	44,460,389
SHARES ISSUED AND REDEEMED
Shares sold		8,200,000			26,100,000			58,100,000			111,950,000
Shares redeemed		(5,250,000	)		(10,950,000	)		(35,550,000	)		(26,350,000	)
Net increase in shares outstanding		2,950,000			15,150,000			22,550,000			85,600,000

See notes to financial statements.

FINANCIAL STATEMENTS 75

Financial Highlights

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Australia Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	21.59		$	18.28		$	13.56		$	11.22		$	9.36
Income from investment operations:
Net investment incomea		0.89			0.75			0.70			0.45			0.32
Net realized and unrealized gainb		6.24			3.23			4.60			2.32			1.81
Total from investment operations		7.13			3.98			5.30			2.77			2.13
Less distributions from:
Net investment income		(1.10	)		(0.67	)		(0.58	)		(0.43	)		(0.27	)
Total distributions		(1.10	)		(0.67	)		(0.58	)		(0.43	)		(0.27	)
Net asset value, end of year	$	27.62		$	21.59		$	18.28		$	13.56		$	11.22
Total return		33.97	%		22.35	%		39.58	%		24.95	%		23.33	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,464,112		$	686,407		$	369,355		$	178,998		$	87,541
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.79	%		0.84	%
Ratio of net investment income to average net assets		3.46	%		3.75	%		4.13	%		3.37	%		3.21	%
Portfolio turnover ratec		10	%		7	%		17	%		9	%		8	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

76 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Brazil Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	39.09		$	28.18		$	16.96		$	12.19		$	8.30
Income from investment operations:
Net investment incomea		1.09			1.00			0.89			0.55			0.32
Net realized and unrealized gainb		22.35			10.49			10.79			4.49			3.68
Total from investment operations		23.44			11.49			11.68			5.04			4.00
Less distributions from:
Net investment income		(0.94	)		(0.58	)		(0.46	)		(0.27	)		(0.11	)
Total distributions		(0.94	)		(0.58	)		(0.46	)		(0.27	)		(0.11	)
Net asset value, end of year	$	61.59		$	39.09		$	28.18		$	16.96		$	12.19
Total return		60.82	%		41.13	%		69.72	%		41.42	%		48.85	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	4,434,334		$	2,468,295		$	552,285		$	209,504		$	103,035
Ratio of expenses to average net assets		0.69	%		0.70	%		0.74	%		0.96	%		0.99	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.68	%		n/a			n/a			n/a			n/a
Ratio of net investment income to average net assets		2.17	%		2.65	%		3.94	%		3.59	%		3.59	%
Portfolio turnover ratec		22	%		15	%		48	%		106	%		85	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turn over rate for the years ended August 31, 2007, August 31, 2006 and August 31, 2005 would have been 6%, 13% and 9%, respectively. See Note 4.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 77

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Canada Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	24.69		$	20.30		$	14.33		$	12.25		$	9.49
Income from investment operations:
Net investment incomea		0.35			0.25			0.17			0.11			0.10
Net realized and unrealized gainb		5.11			4.29			6.00			2.17			2.69
Total from investment operations		5.46			4.54			6.17			2.28			2.79
Less distributions from:
Net investment income		(0.28	)		(0.15	)		(0.20	)		(0.20	)		(0.03	)
Total distributions		(0.28	)		(0.15	)		(0.20	)		(0.20	)		(0.03	)
Net asset value, end of year	$	29.87		$	24.69		$	20.30		$	14.33		$	12.25
Total return		22.33	%		22.46	%		43.35	%		18.70	%		29.47	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,323,122		$	1,101,161		$	420,301		$	325,298		$	503,407
Ratio of expenses to average net assets		0.52	%		0.54	%		0.57	%		0.70	%c		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.52	%		n/a			n/a			n/a			n/a
Ratio of net investment income to average net assets		1.32	%		1.09	%		1.00	%		0.81	%		0.98	%
Portfolio turnover rated		8	%		20	%		9	%		10	%		10	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Ratio of expenses to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 0.80%.

^d Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

78 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Emerging Markets Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Period from Apr. 7, 2003a to Aug. 31, 2003
Net asset value, beginning of period	$	97.43		$	77.92		$	53.96		$	45.13		$	33.75
Income from investment operations:
Net investment incomeb		1.91			1.65			1.65			1.13			0.26
Net realized and unrealized gainc		36.58			18.85			24.72			7.97			11.12
Total from investment operations		38.49			20.50			26.37			9.10			11.38
Less distributions from:
Net investment income		(1.57	)		(0.99	)		(2.41	)		(0.27	)		–
Total distributions		(1.57	)		(0.99	)		(2.41	)		(0.27	)		–
Net asset value, end of period	$	134.35		$	97.43		$	77.92		$	53.96		$	45.13
Total return		39.86	%		26.44	%		46.17	%		20.21	%		33.72	%d
Ratios/Supplemental data:
Net assets, end of period (000s)	$	18,198,371		$	11,969,380		$	7,000,858		$	1,958,596		$	297,846
Ratio of expenses to average net assets prior to waived feese		0.74	%		0.77	%		0.78	%		0.77	%		0.78	%
Ratio of expenses to average net assets after waived feese		0.74	%		0.77	%		0.77	%		0.76	%		0.78	%
Ratio of expenses to average net assets after waived fees and exclusive of foreign taxese		0.74	%		0.75	%		0.74	%		0.74	%		0.72	%
Ratio of net investment income to average net assetse		1.63	%		1.77	%		2.40	%		2.10	%		1.58	%
Portfolio turnover ratef		5	%		12	%		9	%		8	%		10	%

^a Commencement of operations.

^b Based on average shares outstanding throughout each period.

^c The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^d Not annualized.

^e Annualized for periods of less than one year.

^f Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 79

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Hong Kong Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	14.20		$	13.01		$	10.91		$	9.03		$	7.99
Income from investment operations:
Net investment incomea		0.47			0.38			0.33			0.28			0.23
Net realized and unrealized gainb		3.94			1.17			2.04			1.75			0.95
Total from investment operations		4.41			1.55			2.37			2.03			1.18
Less distributions from:
Net investment income		(0.31	)		(0.36	)		(0.27	)		(0.15	)		(0.14	)
Total distributions		(0.31	)		(0.36	)		(0.27	)		(0.15	)		(0.14	)
Net asset value, end of year	$	18.30		$	14.20		$	13.01		$	10.91		$	9.03
Total return		31.44	%		12.20	%		21.96	%		22.69	%		15.14	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,445,309		$	882,712		$	637,985		$	449,923		$	250,627
Ratio of expenses to average net assets		0.52	%		0.54	%		0.57	%		0.80	%		0.84	%
Ratio of net investment income to average net assets		2.92	%		2.87	%		2.75	%		2.78	%		3.06	%
Portfolio turnover ratec		9	%		10	%		6	%		5	%		10	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

80 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Malaysia Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	7.75		$	7.19		$	6.54		$	5.99		$	5.68
Income from investment operations:
Net investment incomea		0.34			0.26			0.20			0.13			0.10
Net realized and unrealized gainb		3.08			0.59			0.61			0.52			0.30
Total from investment operations		3.42			0.85			0.81			0.65			0.40
Less distributions from:
Net investment income		(0.20	)		(0.29	)		(0.16	)		(0.10	)		(0.09	)
Total distributions		(0.20	)		(0.29	)		(0.16	)		(0.10	)		(0.09	)
Net asset value, end of year	$	10.97		$	7.75		$	7.19		$	6.54		$	5.99
Total return		44.64	%		12.35	%		12.39	%		11.01	%		7.39	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	741,440		$	374,334		$	387,575		$	224,218		$	99,730
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.79	%		0.84	%
Ratio of net investment income to average net assets		3.21	%		3.46	%		2.85	%		1.97	%		1.91	%
Portfolio turnover ratec		87	%		60	%		15	%		39	%		35	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2007, August 31, 2006 and August 31, 2005 would have been 3%, 9% and 9%, respectively. See Note 4.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 81

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Mexico Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	41.30		$	29.04		$	19.35		$	15.04		$	13.65
Income from investment operations:
Net investment incomea		0.64			0.76			0.42			0.26			0.19
Net realized and unrealized gainb		16.87			11.98			9.55			4.26			1.72
Total from investment operations		17.51			12.74			9.97			4.52			1.91
Less distributions from:
Net investment income		(0.46	)		(0.48	)		(0.28	)		(0.21	)		(0.52	)
Total distributions		(0.46	)		(0.48	)		(0.28	)		(0.21	)		(0.52	)
Net asset value, end of year	$	58.35		$	41.30		$	29.04		$	19.35		$	15.04
Total return		42.58	%		44.11	%		51.77	%		30.28	%		14.60	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,382,810		$	764,107		$	255,557		$	129,623		$	60,155
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.78	%		0.84	%
Ratio of net investment income to average net assets		1.19	%		2.06	%		1.70	%		1.40	%		1.43	%
Portfolio turnover ratec		14	%		12	%		9	%		12	%		13	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

82 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Pacific ex-Japan Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	112.03		$	97.57		$	75.73		$	62.03		$	52.51
Income from investment operations:
Net investment incomea		4.55			3.83			3.70			2.68			1.87
Net realized and unrealized gainb		33.55			14.33			21.15			12.53			8.53
Total from investment operations		38.10			18.16			24.85			15.21			10.40
Less distributions from:
Net investment income		(5.20	)		(3.70	)		(3.01	)		(1.51	)		(0.88	)
Total distributions		(5.20	)		(3.70	)		(3.01	)		(1.51	)		(0.88	)
Net asset value, end of year	$	144.93		$	112.03		$	97.57		$	75.73		$	62.03
Total return		34.86	%		19.17	%		33.27	%		24.74	%		20.15	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	3,536,295		$	2,094,931		$	1,522,107		$	651,250		$	223,298
Ratio of expenses to average net assets		0.50	%		0.50	%		0.50	%		0.50	%		0.50	%
Ratio of net investment income to average net assets		3.43	%		3.67	%		4.09	%		3.68	%		3.47	%
Portfolio turnover ratec		11	%		8	%		16	%		8	%		8	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 83

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Singapore Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	9.11		$	7.77		$	6.52		$	5.38		$	5.01
Income from investment operations:
Net investment incomea		0.47			0.40			0.38			0.22			0.12
Net realized and unrealized gainb		4.01			1.23			1.15			1.04			0.33
Total from investment operations		4.48			1.63			1.53			1.26			0.45
Less distributions from:
Net investment income		(0.31	)		(0.29	)		(0.28	)		(0.12	)		(0.08	)
Total distributions		(0.31	)		(0.29	)		(0.28	)		(0.12	)		(0.08	)
Net asset value, end of year	$	13.28		$	9.11		$	7.77		$	6.52		$	5.38
Total return		49.92	%		21.61	%		24.06	%		23.47	%		9.30	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,669,210		$	574,620		$	341,137		$	170,047		$	108,202
Ratio of expenses to average net assets		0.51	%		0.54	%		0.57	%		0.79	%		0.84	%
Ratio of net investment income to average net assets		3.80	%		4.74	%		5.19	%		3.50	%		2.67	%
Portfolio turnover ratec		8	%		6	%		8	%		9	%		14	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

84 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI South Africa Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Period from Feb. 3, 2003a to Aug. 31, 2003
Net asset value, beginning of period	$	97.67		$	82.99		$	59.92		$	46.81		$	38.72
Income from investment operations:
Net investment incomeb		2.99			2.87			1.92			1.23			0.89
Net realized and unrealized gainc		26.37			13.78			22.36			13.24			7.20
Total from investment operations		29.36			16.65			24.28			14.47			8.09
Less distributions from:
Net investment income		(2.51	)		(1.97	)		(1.21	)		(1.36	)		–
Total distributions		(2.51	)		(1.97	)		(1.21	)		(1.36	)		–
Net asset value, end of period	$	124.52		$	97.67		$	82.99		$	59.92		$	46.81
Total return		30.34	%		20.06	%		40.62	%		31.30	%		20.89	%d
Ratios/Supplemental data:
Net assets, end of period (000s)	$	466,940		$	297,898		$	153,530		$	92,882		$	81,914
Ratio of expenses to average net assetse		0.68	%		0.70	%		0.74	%		0.95	%		0.99	%
Ratio of net investment income to average net assetse		2.58	%		2.79	%		2.62	%		2.23	%		3.86	%
Portfolio turnover ratef		8	%		7	%		32	%		13	%		17	%

^a Commencement of operations.

^b Based on average shares outstanding throughout each period.

^c The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^d Not annualized.

^e Annualized for periods of less than one year.

^f Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 85

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI South Korea Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	46.00		$	34.75		$	24.17		$	23.06		$	21.17
Income from investment operations:
Net investment incomea		0.51			0.31			0.46			0.22			0.19
Net realized and unrealized gainb		17.42			11.20			10.22			1.13			1.70
Total from investment operations		17.93			11.51			10.68			1.35			1.89
Less distributions from:
Net investment income		(0.33	)		(0.26	)		(0.10	)		(0.24	)		–
Total distributions		(0.33	)		(0.26	)		(0.10	)		(0.24	)		–
Net asset value, end of year	$	63.60		$	46.00		$	34.75		$	24.17		$	23.06
Total return		39.18	%		33.16	%		44.29	%		5.83	%		8.93	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	2,429,453		$	1,621,334		$	698,455		$	315,464		$	154,486
Ratio of expenses to average net assets		0.68	%		0.70	%		0.74	%		0.94	%		0.99	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.68	%		0.70	%		0.74	%		0.94	%		0.99	%
Ratio of net investment income to average net assets		0.96	%		0.71	%		1.49	%		0.87	%		0.98	%
Portfolio turnover ratec		20	%		47	%		30	%		29	%		39	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2007, August 31, 2006 and August 31, 2005 would have been 6%, 14% and 9%, respectively. See Note 4.

See notes to financial statements.

86 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Taiwan Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	12.57		$	11.57		$	10.66		$	10.79		$	8.82
Income from investment operations:
Net investment incomea		0.38			0.34			0.27			0.14			0.04
Net realized and unrealized gain (loss)b		3.34			0.80			0.72			(0.25	)		1.93
Total from investment operations		3.72			1.14			0.99			(0.11	)		1.97
Less distributions from:
Net investment income		(0.30	)		(0.14	)		(0.08	)		(0.02	)		–
Total distributions		(0.30	)		(0.14	)		(0.08	)		(0.02	)		–
Net asset value, end of year	$	15.99		$	12.57		$	11.57		$	10.66		$	10.79
Total return		29.91	%		9.84	%		9.28	%		(1.10	)%		22.45	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	2,769,764		$	1,893,751		$	752,640		$	390,228		$	234,727
Ratio of expenses to average net assets		0.77	%		0.85	%		1.03	%		1.19	%c		1.31	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.68	%		0.70	%		0.74	%		0.92	%		0.99	%
Ratio of net investment income to average net assets		2.61	%		2.74	%		2.34	%		1.23	%		0.43	%
Portfolio turnover rated		35	%		29	%		20	%		19	%		15	%

^a Based on average shares outstanding throughout each period.

^b The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^c Ratio of expenses to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 1.22%.

^d Portfolio turnover rates include portfolio transactions that are executed as a result of the Fund processing capital share transactions in Creation Units solely for cash in U.S. dollars. Excluding such transactions, the portfolio turnover rate for the years ended August 31, 2007, August 31, 2006 and August 31, 2005 would have been 12%, 10% and 10%, respectively. See Note 4.

See notes to financial statements.

FINANCIAL HIGHLIGHTS 87

Notes to Financial Statements

iSHARES^®, INC.

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation. As of August 31, 2007, the Company offered 24 investment portfolios or funds.

These financial statements relate only to the iShares MSCI Australia, iShares MSCI Brazil, iShares MSCI Canada, iShares MSCI Emerging Markets, iShares MSCI Hong Kong, iShares MSCI Malaysia, iShares MSCI Mexico, iShares MSCI Pacific ex-Japan, iShares MSCI Singapore, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds (each, a “Fund,” collectively, the “Funds”).

The investment objective of each Fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded equity securities in the aggregate in a particular market, as measured by that market’s equity securities index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve each Fund’s investment objective. Each of the Funds is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.

Each Fund invests in the securities of foreign issuers of a single country or region, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.

Pursuant to the Company’s organizational documents, the Funds’ officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred.

1. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by the Company in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

SECURITY VALUATION

The securities and other assets of each Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations

88 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).

Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.

Valuing a Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, fair value pricing could result in a difference between the prices used to calculate a Fund’s net asset value and the prices used by the Fund’s benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method.

FOREIGN CURRENCY TRANSLATION

The accounting records of the Funds are maintained in U.S. dollars. Foreign currencies, as well as investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates deemed appropriate by the investment adviser. Any use of a rate different from the rates used by MSCI may adversely affect a Fund’s ability to track its underlying index. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

Each Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Funds as a component of realized and unrealized gains and losses from investments for financial reporting purposes.

FOREIGN TAXES

The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, capital gains on investments or currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign markets in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are disclosed in their Statements of Operations. Foreign taxes payable as of August 31, 2007, if any, are reflected in the Funds’ Statements of Assets and Liabilities.

DISTRIBUTIONS TO SHAREHOLDERS

Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by each Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Funds.

NOTES TO FINANCIAL STATEMENTS 89

Notes to Financial Statements (Continued)

iSHARES^®, INC.

As of August 31, 2007, the tax year-end of the Funds, the components of net distributable earnings on a tax basis were as follows:

iShares MSCI Index Fund	Undistributed Ordinary Income		Undistributed Long-Term Capital Gains			Unrealized Appreciation		Capital and Other Losses			Net Distributable Earnings
Australia	$	37,193,706	$	–		$	145,879,476	$	(7,808,176	)	$	175,265,006
Brazil		45,390,657		4,077,697	a		1,728,133,605		–			1,777,601,959
Canada		12,448,856		–			250,094,438		(13,527,499	)		249,015,795
Emerging Markets		208,631,193		–			4,019,851,898		(62,349,901	)		4,166,133,190
Hong Kong		25,472,751		–			225,411,678		(17,151,797	)		233,732,632
Malaysia		24,207,294		–			234,010,029		(25,281,080	)		232,936,243
Mexico		8,312,387		–			22,203,236		(6,225,933	)		24,289,690
Pacific ex-Japan		103,374,975		4,616,285	a		933,701,562		–			1,041,692,822
Singapore		49,324,253		–			213,916,759		(13,177,204	)		250,063,808
South Africa		6,809,623		–			28,964,804		(2,396,196	)		33,378,231
South Korea		19,890,901		–			1,075,719,901		(57,950,771	)		1,037,660,031
Taiwan		58,442,597		–			630,624,792		(133,608,052	)		555,459,337

^a The Undistributed Long-Term Capital Gains have been reduced by the application of tax equalization.

For the years ended August 31, 2007 and August 31, 2006, the tax characterization of distributions paid for each Fund represents ordinary income. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for all Funds.

FEDERAL INCOME TAXES

Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2007.

From November 1, 2006 to August 31, 2007, certain Funds incurred net realized capital losses and net foreign currency losses. As permitted by tax regulations, these Funds have elected to defer these losses and treat them as arising in the year ending August 31, 2008, as follows:

iShares MSCI Index Fund	Deferred Net Realized Capital/Net Foreign Currency Losses
Australia	$	502,148
Canada		5,232,560
Hong Kong		3,185,408
Mexico		67,468
Taiwan		11,797,863

90 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

The Funds had tax basis net capital loss carryforwards as of August 31, 2007, the tax year-end of the Funds, as follows:

iShares MSCI Index Fund	Expiring 2008		Expiring 2009		Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Expiring 2014		Expiring 2015		Total
Australia	$	71,019	$	1,971,994	$	3,625,203	$	650,082	$	596,240	$	384,424	$	–	$	7,066	$	7,306,028
Canada		–		–		–		–		–		2,931,648		–		5,363,291		8,294,939
Emerging Markets		–		–		–		–		840,778		20,296,564		11,239,258		29,973,301		62,349,901
Hong Kong		–		–		4,971,970		2,870,602		2,330,414		468,716		425,440		2,899,247		13,966,389
Malaysia		–		–		9,819,029		2,898,105		775,477		6,820,474		1,543,708		3,424,287		25,281,080
Mexico		–		–		47,326		2,329,290		3,136,171		12,912		632,766		–		6,158,465
Singapore		–		–		1,934,119		4,428,316		4,256,421		2,558,348		–		–		13,177,204
South Africa		–		–		–		–		527,613		–		260,738		1,607,845		2,396,196
South Korea		–		556,540		666,642		504,041		3,363,449		11,590,303		3,172,573		38,097,223		57,950,771
Taiwan		–		–		12,532,361		8,689,663		9,129,874		12,022,719		14,435,986		64,999,586		121,810,189

Net capital loss carryforwards may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.

The Funds may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Funds may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

Each Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset values per share.

As of August 31, 2007, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

iShares MSCI Index Fund	Tax Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation
Australia	$	1,365,541,568	$	158,620,888	$	(12,655,916	)	$	145,964,972
Brazil		2,686,392,020		1,732,147,892		(4,392,928	)		1,727,754,964
Canada		1,069,597,137		270,399,632		(20,310,644	)		250,088,988
Emerging Markets		15,507,125,017		4,179,384,280		(159,643,651	)		4,019,740,629
Hong Kong		1,491,503,324		244,912,176		(19,503,149	)		225,409,027
Malaysia		503,171,852		235,608,418		(1,583,247	)		234,025,171
Mexico		1,500,132,928		70,467,640		(48,268,310	)		22,199,330
Pacific ex-Japan		2,907,124,020		943,347,886		(9,494,262	)		933,853,624
Singapore		1,730,368,895		223,709,356		(9,736,756	)		213,972,600
South Africa		437,083,223		49,222,977		(20,264,332	)		28,958,645
South Korea		1,936,442,732		1,084,586,972		(8,866,928	)		1,075,720,044
Taiwan		2,113,705,860		676,898,860		(46,227,705	)		630,671,155

NOTES TO FINANCIAL STATEMENTS 91

Notes to Financial Statements (Continued)

iSHARES^®, INC.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as an investment by the Fund, collateralized by securities, which are delivered to the Fund’s custodian or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of each Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of each of the Funds, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.

For its investment advisory services to the iShares MSCI Australia, iShares MSCI Canada, iShares MSCI Hong Kong, iShares MSCI Malaysia, iShares MSCI Mexico and iShares MSCI Singapore Index Funds, BGFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of all the funds offered by the Company (except for the iShares MSCI Brazil, iShares MSCI Emerging Markets, iShares MSCI Pacific ex-Japan, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds) as follows:

Investment Advisory Fee	Aggregate Average Daily Net Assets
0.59%	First $7 billion
0.54	Over $7 billion, up to and including $11 billion
0.49	Over $11 billion, up to and including $24 billion
0.44	Over $24 billion

For its investment advisory services to the iShares MSCI Brazil, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds, BGFA is entitled to an annual investment advisory fee based on each Fund’s allocable portion of the aggregate of the average daily net assets of these four Funds as follows:

Investment Advisory Fee	Aggregate Average Daily Net Assets
0.74%	First $2 billion
0.69	Over $2 billion, up to and including $4 billion
0.64	Over $4 billion

92 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

The Board approved a change to the investment advisory fee rates for the iShares MSCI Brazil, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds effective September 1, 2007. For its investment advisory services to each Fund, BGFA will be entitled to be paid annual investment advisory fees based on each Fund’s allocable portion of the aggregate of the average daily net assets of these four Funds as follows:

Investment Advisory Fee	Aggregate Average Daily Net Assets
0.74%	First $2 billion
0.69	Over $2 billion, up to and including $4 billion
0.64	Over $4 billion, up to and including $8 billion
0.57	Over $8 billion

For its investment advisory services to the iShares MSCI Emerging Markets Index Fund, BGFA is entitled to an annual investment advisory fee based on the average daily net assets of the Fund as follows:

Investment Advisory Fee	Average Daily Net Assets
0.75%	First $14 billion
0.68	Over $14 billion, up to and including $28 billion
0.61	Over $28 billion

BGFA voluntarily waived its advisory fees for the iShares MSCI Emerging Markets Index Fund in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares MSCI Index Funds.

For its investment advisory services to the iShares MSCI Pacific ex-Japan Index Fund, BGFA is entitled to an annual investment advisory fee of 0.50% of the average daily net assets of the Fund.

State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.

SEI Investments Distribution Co. (“SEI”) serves as each Fund’s underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Funds for its distribution services.

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Company. BarCap and BGI are affiliates of BGFA, the Funds’ investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2007, BGI earned securities lending agent fees as follows:

iShares MSCI Index Fund	Securities Lending Agent Fees
Australia	$	116,653
Brazil		2,245
Emerging Markets		10,038,577
Hong Kong		423,120

iShares MSCI Index Fund	Securities Lending Agent Fees
Mexico	$	1,000,414
Pacific ex-Japan		464,720
Singapore		460,894
South Korea		1,775,319

NOTES TO FINANCIAL STATEMENTS 93

Notes to Financial Statements (Continued)

iSHARES^®, INC.

Cross trades for the year ended August 31, 2007, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

Each Fund may invest in the Institutional Shares of certain money market funds managed by BGFA, the Funds’ investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”) and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statements of Operations. Income distributions earned by the Funds from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statements of Operations.

Each Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.

The iShares MSCI Emerging Markets Index Fund, in order to improve its portfolio liquidity and its ability to track the MSCI Emerging Markets Index, may invest in shares of other iShares MSCI Index Funds that invest in securities in the Fund’s benchmark index. As of August 31, 2007, the iShares MSCI Emerging Markets Index Fund held shares of the iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds.

The following table provides information about the direct investment by the iShares Emerging Markets Index Fund (exclusive of short-term investments) in issuers of which BGFA is an affiliate, or issuers of which the Fund owns 5% or more of the outstanding voting securities, for the year ended August 31, 2007.

Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Dividend Income		Net Realized Gain
iShares MSCI Malaysia Index Fund	1,039	198	137	1,100	$	12,182,748	$	176,251	$	101,664
iShares MSCI South Korea Index Fund	546	298	242	602		38,561,983		197,279		5,959,835
iShares MSCI Taiwan Index Fund	2,812	1,538	1,250	3,100		49,414,048		919,525		3,282,492
Siliconware Precision Industries Co. ADR	33,802	19,285	15,423	37,664		406,394,398		19,662,612		70,345,085

As of August 31, 2007, certain directors and officers of the Company are also officers of BGI and/or BGFA.

94 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2007, were as follows:

iShares MSCI Index Fund	Purchases		Sales
Australia	$	100,573,052	$	102,158,798
Brazil		1,325,204,669		688,314,722
Canada		121,617,566		94,150,958
Emerging Markets		991,726,211		820,839,488
Hong Kong		121,269,474		103,949,189
Malaysia		866,465,379		639,940,015
Mexico		157,179,215		159,800,238
Pacific ex-Japan		323,311,070		334,558,347
Singapore		126,972,940		102,565,312
South Africa		38,493,274		28,871,556
South Korea		581,062,061		363,946,916
Taiwan		1,177,379,851		775,307,045

In-kind transactions (see Note 4) for the year ended August 31, 2007, were as follows:

iShares MSCI Index Fund	In-kind Purchases		In-kind Sales
Australia	$	952,619,920	$	390,898,487
Canada		281,931,122		269,944,712
Emerging Markets		7,704,491,920		6,220,866,034
Hong Kong		791,910,891		529,276,727
Mexico		1,835,948,165		1,511,706,332
Pacific ex-Japan		967,839,366		195,826,583
Singapore		1,203,283,551		507,053,313
South Africa		151,100,541		68,462,949

4. CAPITAL SHARE TRANSACTIONS

The Company issues and redeems capital shares of each Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) at net asset value. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets.

The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation, of the corresponding MSCI Index and an amount of cash (except for the iShares MSCI Brazil, iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds which are offered in Creation Units solely for cash in U.S. dollars). Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash. Investors transacting

NOTES TO FINANCIAL STATEMENTS 95

Notes to Financial Statements (Continued)

iSHARES^®, INC.

in Creation Units for cash pay an additional variable charge to compensate the relevant Fund for brokerage and market impact expenses relating to investing in portfolio securities.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statements of Assets and Liabilities.

5. LOANS OF PORTFOLIO SECURITIES

Each Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by each Fund is required to have a value of at least 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The risks to the Funds of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.

During the year ended August 31, 2007, certain Funds received cash as collateral for securities loaned. The cash collateral received was invested in a joint account and/or in the Premier Fund. Pursuant to an exemptive order issued by the SEC, a portion of the cash collateral received was invested in a joint account with other investment funds managed by BGFA. The joint account invests in securities with remaining maturities of 397 days or less, repurchase agreements and money market mutual funds, including money market funds managed by BGFA. Repurchase agreements are fully collateralized by U.S. government securities or non-U.S. government debt securities. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.

The market value of the securities on loan as of August 31, 2007 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109. ”FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The SEC staff has stated that it would not object if a fund does not implement FIN 48 in its NAV calculation until the date of the fund’s last NAV calculation in the first required financial statement reporting period for its fiscal year beginning after December 15, 2006. The Company is currently evaluating the impact of applying the various provisions of FIN 48.

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact the adoption of FAS 157 will have on the Funds’ financial statement disclosures.

96 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

iShares, Inc.

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Australia Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Emerging Markets Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Index Fund, iShares MSCI Pacific ex-Japan Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index Fund, each a portfolio of the iShares MSCI Series (the “Funds”), at August 31, 2007, the results of each of their operations and the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 23, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 97

Tax Information (Unaudited)

iSHARES^®, INC.

For the fiscal year ended August 31, 2007, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”) as follows:

iShares MSCI Index Fund	Foreign Source Income Earned		Foreign Taxes Paid
Australia	$	43,055,749	$	1,455,873
Brazil		100,047,652		9,136,802
Canada		24,646,130		3,477,925
Emerging Markets		394,107,148		41,646,422
Pacific ex-Japan		114,802,692		3,006,614
South Korea		33,724,684		5,264,974
Taiwan		94,130,182		20,157,009

Under Section 852(b)(3)(C) of the Code, the iShares MSCI Brazil and iShares MSCI Pacific ex-Japan Index Funds designate $225,864 and $661,407, respectively, as long-term capital gain dividends for the fiscal year ended August 31, 2007.

Under Section 854(b)(2) of the Code, the Funds hereby designate the following maximum amounts as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2007:

iShares MSCI Index Fund	Qualified Dividend Income
Australia	$	31,659,633
Brazil		3,799,329
Canada		12,092,201
Emerging Markets		209,458,860

iShares MSCI Index Fund	Qualified Dividend Income
Mexico	$	11,694,155
Pacific ex-Japan		61,097,971
South Africa		9,144,852
South Korea		10,954,387

In January 2008, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2007. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.

98 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contract (Unaudited)

iSHARES^®, INC.

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Funds. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 13, 2007, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board determined that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Funds; therefore, comparative performance information was generally not available. However, the Board also noted that the Funds had met their investment objectives consistently since their respective inception dates. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other funds registered under the 1940 Act objectively selected solely by Lipper as comprising each Fund’s applicable peer group (the “Lipper Group”). In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three-, five- and ten-year periods, as applicable, and the “last quarter” period ended March 31, 2007, and a comparison of each Fund’s performance to that of the funds in its Lipper Group for the same periods. Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Funds, the Lipper Groups included in part, at the request of BGFA, mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board noted that most of the Funds generally performed in line with the funds in their respective Lipper Groups over the relevant periods; however, certain of the Funds may have underperformed or outperformed funds in the irrespective Lipper Groups over such periods. In considering this information, the Board noted that the Lipper Groups include funds that may have different

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT 99

Board Review and Approval of Investment Advisory

Contract (Unaudited) (Continued)

iSHARES^®, INC.

investment objectives and/or benchmarks from the Funds. In addition, the Board noted that each Fund seeks to track an index and that during the prior year the Board received periodic reports on the Funds’ performance in comparison with their relevant benchmark indexes. Such comparative performance information was also considered by the Board.

The Board also noted that the investment advisory fees and overall expense components for the Funds were generally lower than the median or average investment advisory fee rates and overall expenses of the funds in their respective Lipper Groups. The Board also reviewed statistical information from Lipper displaying the effects of the proposed extension of breakpoints in the investment advisory fee rates for certain of the Funds (as discussed below) at various assets levels of such Funds as compared to their respective Lipper Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.

COSTS OF SERVICES PROVIDED TO FUNDS AND PROFITS REALIZED BY BGFA AND AFFILIATES

The Board reviewed information about the profitability to BGFA of the Funds based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Funds). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board was also presented with materials regarding the proposed extension of breakpoints in the investment advisory fee rates at certain asset levels for the iShares MSCI Brazil Index Fund, the iShares MSCI South Africa Index Fund, the iShares MSCI South Korea Index Fund and the iShares MSCI Taiwan Index Fund. The Board noted that the Advisory Contract already provided for breakpoints in the investment advisory fee rates for most of the Funds as the assets of such Funds, on an aggregated basis with the assets of certain other iShares funds, increased, but also noted that the Advisory Contract did not currently provide for any breakpoints in the investment advisory fee rates for the iShares MSCI Pacific ex-Japan Index Fund as possible future economies of scale for that Fund had been taken into consideration by fixing the investment advisory fees at rates at the lower end of the marketplace, effectively giving Fund shareholders, from inception, the benefits of the lower average fee shareholders would have received from a fee structure with declining breakpoints where the initial fee was higher. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had made a significant investment in the iShares funds and had incurred operating losses during earlier years when the iShares funds, including the Funds, had not yet reached scale. In light of this history, the Board determined that the proposed extension of breakpoints was appropriate and warranted at this juncture for the identified Funds but that reductions in fee rates or further extensions of breakpoints were not warranted at this juncture for the other Funds. Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees, with the proposed extension of breakpoints for certain of the Funds, reflects the current sharing and potential further sharing of economies of scale with the Funds’ shareholders.

100 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory

Contract (Unaudited) (Continued)

iSHARES^®, INC.

FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES

The Board received and considered certain information regarding the Funds’ annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as the Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the Other Accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contracts, with the proposed extension of breakpoints, do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contracts are fair and reasonable.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Funds in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (including its affiliates) in selecting brokers for portfolio transactions for the Funds. The Board further noted that any portfolio transactions on behalf of the Funds placed through a BGFA affiliate are reported to the Board pursuant to Rule 10f-3 and Rule 17e-1, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Funds’ shareholders.

Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates, with the proposed extension of breakpoints, is fair and reasonable in light of all relevant circumstances, and concluded that it is in the best interest of the Funds and their shareholders to approve the Advisory Contract, with the fee schedule to the Advisory Contract as proposed to be amended to reflect the extension of breakpoints, for the coming year.

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT 101

Supplemental Information (Unaudited)

iSHARES^®, INC.

The tables that follow present information about the differences between the daily market price on secondary markets for shares of a Fund and that Fund’s net asset value. Net asset value, or “NAV,” is the price per share at which each Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of each Fund generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of such Fund is listed for trading (the “Exchange”), as of the time that the Fund’s NAV is calculated. In the case of the iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds, the NAVs of which are determined prior to the opening of the regular trading day on the Exchange, the Market Price is determined using the midpoint of the bid/ask spread as of the opening of regular trading on the Exchange. Each Fund’s Market Price may be at, above or below its NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of each Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.

Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of a Fund on a given day, generally at the time the NAV is calculated. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV.

The following information shows the frequency distributions of premiums and discounts for each of the Funds included in this report. The information shown for each Fund is for five calendar years (or for each full calendar quarter completed after the inception date of such Fund if less than five years) through the date of the most recent calendar quarter-end. The specific periods covered for each Fund are disclosed in the table for such Fund.

Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by each table. All data presented here represents past performance, which cannot be used to predict future results.

iShares MSCI Australia Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5%	2	0.14	%
Greater than 3.0% and Less than 3.5%	2	0.14
Greater than 2.5% and Less than 3.0%	2	0.14
Greater than 2.0% and Less than 2.5%	8	0.58
Greater than 1.5% and Less than 2.0%	32	2.32
Greater than 1.0% and Less than 1.5%	127	9.20
Greater than 0.5% and Less than 1.0%	323	23.39
Between 0.5% and –0.5%	682	49.38
Less than –0.5% and Greater than –1.0%	121	8.76
Less than –1.0% and Greater than –1.5%	50	3.62
Less than –1.5% and Greater than –2.0%	19	1.38
Less than –2.0% and Greater than –2.5%	7	0.51
Less than –2.5% and Greater than –3.0%	3	0.22
Less than –3.0% and Greater than –3.5%	3	0.22
	1,381	100.00	%

102 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Brazil Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	2	0.14	%
Greater than 2.5% and Less than 3.0%	5	0.36
Greater than 2.0% and Less than 2.5%	11	0.80
Greater than 1.5% and Less than 2.0%	24	1.74
Greater than 1.0% and Less than 1.5%	61	4.42
Greater than 0.5% and Less than 1.0%	157	11.37
Between 0.5% and –0.5%	870	63.00
Less than –0.5% and Greater than –1.0%	128	9.27
Less than –1.0% and Greater than –1.5%	32	2.32
Less than –1.5% and Greater than –2.0%	26	1.88
Less than –2.0% and Greater than –2.5%	23	1.67
Less than –2.5% and Greater than –3.0%	12	0.87
Less than –3.0% and Greater than –3.5%	8	0.58
Less than –3.5% and Greater than –4.0%	7	0.51
Less than –4.0% and Greater than –4.5%	6	0.43
Less than –4.5% and Greater than –5.0%	6	0.43
Less than –5.0% and Greater than –5.5%	1	0.07
Less than –5.5%	2	0.14
	1,381	100.00	%

iShares MSCI Canada Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5%	1	0.07	%
Greater than 3.0% and Less than 3.5%	4	0.29
Greater than 2.5% and Less than 3.0%	10	0.72
Greater than 2.0% and Less than 2.5%	11	0.80
Greater than 1.5% and Less than 2.0%	22	1.59
Greater than 1.0% and Less than 1.5%	61	4.42
Greater than 0.5% and Less than 1.0%	184	13.32
Between 0.5% and –0.5%	1,019	73.80
Less than –0.5% and Greater than –1.0%	62	4.49
Less than –1.0% and Greater than –1.5%	6	0.43
Less than –1.5%	1	0.07
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 103

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Emerging Markets Index Fund

Period Covered: July 1, 2003 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5% and Less than 3.0%	1	0.10	%
Greater than 2.0% and Less than 2.5%	1	0.10
Greater than 1.5% and Less than 2.0%	17	1.69
Greater than 1.0% and Less than 1.5%	53	5.27
Greater than 0.5% and Less than 1.0%	247	24.55
Between 0.5% and –0.5%	537	53.38
Less than –0.5% and Greater than –1.0%	100	9.94
Less than –1.0% and Greater than –1.5%	30	2.98
Less than –1.5% and Greater than –2.0%	15	1.49
Less than –2.0% and Greater than –2.5%	4	0.40
Less than –2.5%	1	0.10
	1,006	100.00	%

iShares MSCI Hong Kong Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0% and Less than 3.5%	2	0.14	%
Greater than 2.5% and Less than 3.0%	4	0.29
Greater than 2.0% and Less than 2.5%	17	1.23
Greater than 1.5% and Less than 2.0%	43	3.11
Greater than 1.0% and Less than 1.5%	111	8.04
Greater than 0.5% and Less than 1.0%	249	18.03
Between 0.5% and –0.5%	644	46.63
Less than –0.5% and Greater than –1.0%	149	10.79
Less than –1.0% and Greater than –1.5%	73	5.29
Less than –1.5% and Greater than –2.0%	48	3.48
Less than –2.0% and Greater than –2.5%	16	1.16
Less than –2.5% and Greater than –3.0%	12	0.87
Less than –3.0% and Greater than –3.5%	6	0.43
Less than –3.5% and Greater than –4.0%	4	0.29
Less than –4.0%	3	0.22
	1,381	100.00	%

104 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Malaysia Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5%	1	0.07	%
Greater than 3.0% and Less than 3.5%	2	0.14
Greater than 2.5% and Less than 3.0%	6	0.43
Greater than 2.0% and Less than 2.5%	35	2.53
Greater than 1.5% and Less than 2.0%	63	4.56
Greater than 1.0% and Less than 1.5%	136	9.85
Greater than 0.5% and Less than 1.0%	210	15.21
Between 0.5% and –0.5%	468	33.90
Less than –0.5% and Greater than –1.0%	180	13.03
Less than –1.0% and Greater than –1.5%	135	9.78
Less than –1.5% and Greater than –2.0%	70	5.07
Less than –2.0% and Greater than –2.5%	45	3.26
Less than –2.5% and Greater than –3.0%	18	1.30
Less than –3.0% and Greater than –3.5%	4	0.29
Less than –3.5% and Greater than –4.0%	4	0.29
Less than –4.0% and Greater than –4.5%	3	0.22
Less than –4.5%	1	0.07
	1,381	100.00	%

iShares MSCI Mexico Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	1	0.07	%
Greater than 2.0% and Less than 2.5%	1	0.07
Greater than 1.5% and Less than 2.0%	11	0.80
Greater than 1.0% and Less than 1.5%	43	3.11
Greater than 0.5% and Less than 1.0%	175	12.67
Between 0.5% and –0.5%	891	64.53
Less than –0.5% and Greater than –1.0%	170	12.31
Less than –1.0% and Greater than –1.5%	64	4.63
Less than –1.5% and Greater than –2.0%	19	1.38
Less than –2.0% and Greater than –2.5%	4	0.29
Less than –2.5% and Greater than –3.0%	2	0.14
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 105

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Pacific ex-Japan Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5% and Less than 4.0%	2	0.14	%
Greater than 3.0% and Less than 3.5%	2	0.14
Greater than 2.5% and Less than 3.0%	8	0.58
Greater than 2.0% and Less than 2.5%	11	0.80
Greater than 1.5% and Less than 2.0%	62	4.49
Greater than 1.0% and Less than 1.5%	212	15.35
Greater than 0.5% and Less than 1.0%	329	23.82
Between 0.5% and –0.5%	642	46.51
Less than –0.5% and Greater than –1.0%	72	5.21
Less than –1.0% and Greater than –1.5%	27	1.96
Less than –1.5% and Greater than –2.0%	10	0.72
Less than –2.0% and Greater than –2.5%	2	0.14
Less than –2.5% and Greater than –3.0%	1	0.07
Less than –3.0%	1	0.07
	1,381	100.00	%

iShares MSCI Singapore Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5% and Less than 4.0%	1	0.07	%
Greater than 3.0% and Less than 3.5%	1	0.07
Greater than 2.5% and Less than 3.0%	9	0.65
Greater than 2.0% and Less than 2.5%	23	1.67
Greater than 1.5% and Less than 2.0%	70	5.07
Greater than 1.0% and Less than 1.5%	182	13.18
Greater than 0.5% and Less than 1.0%	252	18.25
Between 0.5% and –0.5%	525	38.02
Less than –0.5% and Greater than –1.0%	121	8.76
Less than –1.0% and Greater than –1.5%	95	6.88
Less than –1.5% and Greater than –2.0%	40	2.90
Less than –2.0% and Greater than –2.5%	24	1.74
Less than –2.5% and Greater than –3.0%	14	1.01
Less than –3.0% and Greater than –3.5%	9	0.65
Less than –3.5% and Greater than –4.0%	8	0.58
Less than –4.0% and Greater than –4.5%	2	0.14
Less than –4.5% and Greater than –5.0%	3	0.22
Less than –5.0% and Greater than –5.5%	1	0.07
Less than –5.5%	1	0.07
	1,381	100.00	%

106 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI South Africa Index Fund

Period Covered: April 1, 2003 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	2	0.19	%
Greater than 2.5% and Less than 3.0%	6	0.56
Greater than 2.0% and Less than 2.5%	9	0.84
Greater than 1.5% and Less than 2.0%	25	2.34
Greater than 1.0% and Less than 1.5%	83	7.77
Greater than 0.5% and Less than 1.0%	212	19.85
Between 0.5% and –0.5%	576	53.94
Less than –0.5% and Greater than –1.0%	77	7.21
Less than –1.0% and Greater than –1.5%	42	3.93
Less than –1.5% and Greater than –2.0%	15	1.40
Less than –2.0% and Greater than –2.5%	10	0.94
Less than –2.5% and Greater than –3.0%	5	0.47
Less than –3.0% and Greater than –3.5%	3	0.28
Less than –3.5%	3	0.28
	1,068	100.00	%

iShares MSCI South Korea Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 4.5% and Less than 5.0%	1	0.07	%
Greater than 4.0% and Less than 4.5%	1	0.07
Greater than 3.5% and Less than 4.0%	6	0.43
Greater than 3.0% and Less than 3.5%	6	0.43
Greater than 2.5% and Less than 3.0%	12	0.87
Greater than 2.0% and Less than 2.5%	40	2.90
Greater than 1.5% and Less than 2.0%	75	5.43
Greater than 1.0% and Less than 1.5%	147	10.64
Greater than 0.5% and Less than 1.0%	241	17.45
Between 0.5% and –0.5%	504	36.51
Less than –0.5% and Greater than –1.0%	148	10.72
Less than –1.0% and Greater than –1.5%	91	6.59
Less than –1.5% and Greater than –2.0%	44	3.19
Less than –2.0% and Greater than –2.5%	28	2.03
Less than –2.5% and Greater than –3.0%	17	1.23
Less than –3.0% and Greater than –3.5%	9	0.65
Less than –3.5% and Greater than –4.0%	5	0.36
Less than –4.0% and Greater than –4.5%	2	0.14
Less than –4.5%	4	0.29
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 107

Supplement Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Taiwan Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 6.0%	4	0.29	%
Greater than 5.5% and Less than 6.0%	2	0.14
Greater than 5.0% and Less than 5.5%	1	0.07
Greater than 4.5% and Less than 5.0%	8	0.58
Greater than 4.0% and Less than 4.5%	3	0.22
Greater than 3.5% and Less than 4.0%	15	1.09
Greater than 3.0% and Less than 3.5%	20	1.45
Greater than 2.5% and Less than 3.0%	31	2.24
Greater than 2.0% and Less than 2.5%	45	3.26
Greater than 1.5% and Less than 2.0%	104	7.53
Greater than 1.0% and Less than 1.5%	130	9.41
Greater than 0.5% and Less than 1.0%	211	15.28
Between 0.5% and –0.5%	421	30.49
Less than –0.5% and Greater than –1.0%	156	11.30
Less than –1.0% and Greater than –1.5%	99	7.17
Less than –1.5% and Greater than –2.0%	62	4.49
Less than –2.0% and Greater than –2.5%	17	1.23
Less than –2.5% and Greater than –3.0%	30	2.17
Less than –3.0% and Greater than –3.5%	10	0.72
Less than –3.5% and Greater than –4.0%	4	0.29
Less than –4.0% and Greater than –4.5%	1	0.07
Less than –4.5% and Greater than –5.0%	3	0.22
Less than –5.0% and Greater than –5.5%	1	0.07
Less than –5.5%	3	0.22
	1,381	100.00	%

108 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director and Officer Information (Unaudited)

iSHARES^®, INC.

The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.

iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”), Master Investment Portfolio (“MIP”) and Barclays Foundry Investment Trust (“BFIT”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 138 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF, MIP and BFIT and oversees an additional 24 portfolios within the fund complex.

Unless otherwise noted in the tables below, the address for each Director and Officer is c/o Barclays Global Investors, N.A., 45 Fremont Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.

Interested Directors and Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
*Lee T. Kranefuss, 1961	Director and Chairman (since 2003).	Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (since 2003); Director of Barclays Global Fund Advisers (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director, Chairman and Chief Executive Officer of Barclays Global Investors Services (since 2005); Chief Executive Officer of the Individual Investor Business of BGI (1999-2003).	Trustee (since 2003) of iShares Trust; Trustee (since 2001) of BGIF and MIP; Trustee (since 2007) of BFIT; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.
*John E. Martinez, 1962	Director, (since 2003).	Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003).	Trustee (since 2003) of iShares Trust; Director (since 2005) of Real Estate Equity Exchange.

* Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser, BGI, the parent company of BGFA, and Barclays Global Investors Services, an affiliate of BGFA and BGI.

DIRECTOR AND OFFICER INFORMATION 109

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
George G.C. Parker, 1939	Director (since 2002). Lead Independent Director (since 2006).	Dean Witter Distinguished Professor of Finance, Emeritus (since 1994).	Trustee (since 2000) of iShares Trust; Lead Independent Trustee (since 2006) of iShares Trust; Director (since 1996) of Continental Airlines, Inc.; Director (since 1995) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2004) of Threshold Pharmaceuticals; Director (since 2007) of NETGEAR, Inc.
Cecilia H. Herbert, 1949	Director (since 2005).	Member of Finance Council, Archdiocese of San Francisco (1999- 2006); Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee (2004-2005) of Pacific Select Funds; Trustee (1992-2003) of the Montgomery Funds; Trustee (since 2002) and Chair of Finance and Investment Committee (since 2006) of the Thacher School.	Trustee (since 2005) of iShares Trust.
Charles A. Hurty, 1943	Director (since 2005).	Retired; Partner, KPMG LLP (1968-2001).	Trustee (since 2005) of iShares Trust; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio); Director (since 2005) of CSFB Alternative Investments Fund (6 portfolios).
John E. Kerrigan, 1955	Director (since 2005).	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Trustee (since 2005) of iShares Trust; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.

110 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Robert H. Silver, 1955	Director (since 2007).	President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Vice Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006).	Trustee (since 2007) of iShares Trust; Director and Member (since 2006) of the Audit and Compensation Committee of EPAM Systems, Inc.

		Officers
Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael A. Latham, 1965	President (since 2007).	Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005); Director of Mutual Fund Delivery in the U.S. Individual Investor Business of BGI (2000-2003).	None.
Geoffrey D. Flynn, 1956	Treasurer and Chief Financial Officer (since 2007).	Director of Mutual Fund Operations of BGI (since 2007); President of Van Kampen Investor Services (2003-2007); Managing Director of Morgan Stanley (2002-2007); President of Morgan Stanley Trust, FSB (2002-2007).	None.

DIRECTOR AND OFFICER INFORMATION 111

Director and Officer Information (Unaudited)(Continued)

iSHARES^®, INC.

Officers (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Eilleen M. Clavere, 1952	Secretary (since 2007).	Head of Legal Administration of Intermediary Investor Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005).	None.
Ira P. Shapiro, 1963	Vice President and Chief Legal Officer (since 2007).	Associate General Counsel of BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004).	None.
Amy Schioldager, 1962	Executive Vice President (since 2007).	Head of U.S. Indexing of BGI (since 2006); Head of Domestic Equity Portfolio Management of BGI (2001-2006).	None.
H. Michael Williams, 1960	Executive Vice President (since 2007).	Head of Global Index and Markets Group of BGI (since 2006); Global Head of Securities Lending of BGI (2002-2006).	Trustee (since 2007) of BFIT.
Patrick O’Connor, 1967	Vice President (since 2007).	Head of iShares Portfolio Management of BGI (since 2006); Senior Portfolio Manager of BGI (1999-2006).	None.
Lee Sterne, 1965	Vice President (since 2007).	Senior Portfolio Manager of BGI (since 2004); Portfolio Manager of BGI (2001-2004).	None.
Matt Tucker, 1972	Vice President (since 2007).	Head of U.S. Fixed-Income Investment Solutions of BGI (since 2005); Fixed- Income Investment Strategist of BGI (2003-2005); Fixed-Income Portfolio Manager of BGI (1997-2003).	None.

112 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes:

NOTES 113

Notes:

114 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes:

NOTES 115

The iShares^® Family of Funds

The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectus(es) carefully before investing. Investing involves risk, including possible loss of principal.

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares S&P GSSI^TM Natural Resources (IGE)

iShares S&P GSTI^TM Networking (IGN)

iShares S&P GSTI^TM Semiconductor (IGW)

iShares S&P GSTI^TM Software (IGV)

iShares S&P GSTI^TM Technology (IGM)

iShares Domestic Sector Index Funds

iShares Cohen & Steers Realty Majors (ICF)

iShares Dow Jones U.S. Basic Materials Sector (IYM)

iShares Dow Jones U.S. Consumer Services Sector (IYC)

iShares Dow Jones U.S. Consumer Goods Sector (IYK)

iShares Dow Jones U.S. Energy Sector (IYE)

iShares Dow Jones U.S. Financial Sector (IYF)

iShares Dow Jones U.S. Financial Services (IYG)

iShares Dow Jones U.S. Healthcare Sector (IYH)

iShares Dow Jones U.S. Industrial Sector (IYJ)

iShares Dow Jones U.S. Real Estate (IYR)

iShares Dow Jones U.S. Technology Sector (IYW)

iShares Dow Jones U.S. Telecommunications Sector (IYZ)

iShares Dow Jones Transportation Average (IYT)

iShares Dow Jones U.S. Utilities Sector (IDU)

iShares Dow Jones U.S. Total Market (IYY)

iShares Nasdaq Biotechnology (IBB)

iShares Domestic Subsector Index Funds

iShares Dow Jones U.S. Aerospace & Defense (ITA)

iShares Dow Jones U.S. Broker-Dealers (IAI)

iShares Dow Jones U.S. Healthcare Providers (IHF)

iShares Dow Jones U.S. Home Construction (ITB)

iShares Dow Jones U.S. Insurance (IAK)

iShares Dow Jones U.S. Medical Devices (IHI)

iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)

iShares Dow Jones U.S. Oil Equipment & Services (IEZ)

iShares Dow Jones U.S. Pharmaceuticals (IHE)

iShares Dow Jones U.S. Regional Banks (IAT)

iShares FTSE NAREIT Industrial/Office (FIO)

iShares FTSE NAREIT Mortgage REITs (REM)

iShares FTSE NAREIT Real Estate 50 (FTY)

iShares FTSE NAREIT Residential (REZ)

iShares FTSE NAREIT Retail (RTL)

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Industrials Sector (EXI)

iShares S&P Global Materials Sector (MXI)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap^TM (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman Short Treasury (SHV)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 3-7 Year Treasury (IEI)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 10-20 Year Treasury (TLH)

iShares Lehman 20+ Year Treasury (TLT)

iShares Lehman TIPS (TIP)

iShares Lehman Credit (CFT)

iShares Lehman 1-3 Year Credit (CSJ)

iShares Lehman Intermediate Credit (CIU)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Lehman Government/Credit (GBF)

iShares Lehman Intermediate Government/Credit (GVI)

iShares Lehman MBS (MBB)

iShares iBoxx $ High Yield Corporate (HYG)

iShares S&P National Municipal (MUB)

iShares S&P California Municipal (CMF)

iShares S&P New York Municipal (NYF)

iShares Specialty Index Funds

iShares KLD Select Social SM (KLD)

iShares KLD 400 Social (DSI)

iShares Dow Jones Select Dividend (DVY)

iShares Dow Jones EPAC Select Dividend (IDV)

iShares S&P U.S. Preferred Stock (PFF)

iShares International Index Funds

iShares MSCI EAFE (EFA)

iShares MSCI EAFE Growth (EFG)

iShares MSCI EAFE Value (EFV)

iShares MSCI Emerging Markets (EEM)

iShares MSCI EMU (EZU)

iShares MSCI Pacific ex-Japan (EPP)

iShares S&P Europe 350 (IEV)

iShares S&P Latin America 40 (ILF)

iShares S&P World ex-U.S. Property (WPS)

iShares Morningstar Index Funds

iShares Morningstar Large Core (JKD)

iShares Morningstar Large Growth (JKE)

iShares Morningstar Large Value (JKF)

iShares Morningstar Mid Core (JKG)

iShares Morningstar Mid Growth (JKH)

iShares Morningstar Mid Value (JKI)

iShares Morningstar Small Core (JKJ)

iShares Morningstar Small Growth (JKK)

iShares Morningstar Small Value (JKL)

iShares NYSE Index Funds

iShares NYSE Composite (NYC)

iShares NYSE 100 (NY)

iShares^® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx, KLD Research & Analytics, Inc., MSCI Inc., Morningstar, Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. iBoxx is a registered trademark of International Index Company Limited. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor

NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50 Index, FTSE NAREIT Residential Index, FTSE NAREIT Retail Index, FTSE NAREIT Mortgage REITs Index or FTSE NAREIT Industrial/Office Index; all rights vest in NAREIT. “FTSE” is a trade and service mark of London Stock Exchange and The Financial Times; “Xinhua” is a trade and service mark of Xinhua Financial Network Limited. “NAREIT^®” is a trademark of NAREIT.

An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. This advertising section does not constitute part of the 2007 Annual Report.

5508-iS-1007

116 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Table of Contents

Management’s Discussion of Fund Performance	1
Shareholder Expenses (Unaudited)	3
Schedule of Investments	4
Financial Statements	11
Financial Highlights	14
Notes to Financial Statements	15
Report of Independent Registered Public Accounting Firm	21
Tax Information (Unaudited)	22
Board Review and Approval of Investment Advisory Contract (Unaudited)	23
Supplemental Information (Unaudited)	26
Director and Officer Information (Unaudited)	27
iShares Family of Funds	34

Management’s Discussion of Fund Performance

iSHARES^® MSCI JAPAN INDEX FUND

Performance as of August 31, 2007

Average Annual Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
2.68%	2.98%	2.94%	12.96%	12.75%	13.53%	1.71%	1.73%	2.46%
Cumulative Total Returns
Year Ended 8/31/07			Five Years Ended 8/31/07			Ten Years Ended 8/31/07
NAV	MARKET	INDEX	NAV	MARKET	INDEX	NAV	MARKET	INDEX
2.68%	2.98%	2.94%	83.92%	82.24%	88.57%	18.48%	18.75%	27.51%

“Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption or sale of fund shares. The investment return and principal value of shares of the Fund will vary with changes in market conditions. Shares of the Fund may be worth more or less than their original cost when they are redeemed or sold in the market. The Fund’s past performance is no guarantee of future results.

Performance figures assume reinvestment of all dividends and capital gain distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance is no guarantee of future results.

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 1

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

PORTFOLIO ALLOCATION As of 8/31/07
Sector	Percentage of Net Assets
Consumer Cyclical	24.13	%
Industrial	23.38
Financial	18.50
Consumer Non-Cyclical	10.10
Basic Materials	9.35
Technology	5.21
Communications	4.10
Utilities	4.03
Energy	1.10
Short-Term and Other Net Assets	0.10
TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS As of 8/31/07
Security	Percentage of Net Assets
Toyota Motor Corp.	5.53	%
Mitsubishi UFJ Financial Group Inc.	2.72
Mizuho Financial Group Inc.	2.10
Canon Inc.	2.10
Takeda Pharmaceutical Co. Ltd.	2.02
Honda Motor Co. Ltd.	1.80
Sumitomo Mitsui Financial Group Inc.	1.79
Sony Corp.	1.71
Nintendo Co. Ltd.	1.65
Nippon Steel Corp.	1.41
TOTAL	22.83	%

The iShares MSCI Japan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Japanese market, as measured by the MSCI Japan Index (the “Index”). The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the 12-month period ended August 31, 2007 (the “reporting period”), the Fund returned 2.68%, while the Index returned 2.94%.

The Japanese equity market delivered almost flat returns for the reporting period, lagging the returns of many other developed markets. After more than a decade of economic recession, Japan had appeared to be in economic recovery in the early part of the reporting period. Fourth quarter2006 gross domestic product (GDP) growth was reported at a healthy 5.50% rate. In February 2007, the Bank of Japan raised its key interest rate from 0.25% to 0.50%, its highest level in a decade. As the reporting period progressed, however, Japan’s economy made little progress; consumer spending remained low as wages declined. Business investment dipped, raising concerns that the economy might slow.

By late summer, the same concerns surrounding sub-prime mortgage lenders in the U.S. appeared to contribute further problems to Japan’s economy, as several Japanese banks reported large losses linked to sub-prime investments. As a cautionary measure, the Bank of Japan, which had been expected by many to raise rates again, kept its key interest rate unchanged at 0.50% throughout the remainder of the reporting period.

Among the Fund’s ten largest holdings as of August 31, 2007, performance was mixed for the reporting period. The strongest performer by far was video game maker Nintendo Co. Ltd., which logged triple-digit gains. Nintendo’s interactive Wii^® game console was launched during the reporting period. Nippon Steel Corp. also posted strong results for the reporting period. Canon Inc. and consumer electronics company Sony Corp. both posted solid gains. The three financial companies among the ten largest holdings – Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc., and Sumitomo Mitsui Financial Group Inc. – all posted sharp declines for the reporting period.

2 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited)

iSHARES^® MSCI JAPAN INDEX FUND

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of fund shares and (2) ongoing costs, including management fees and other fund expenses. The following Example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2007 to August 31, 2007.

ACTUAL EXPENSES

The first line in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of fund shares. Therefore, the second line in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value (3/1/07)	Ending Account Value (8/31/07)	Annualized Expense Ratio		Expenses Paid During Perioda (3/1/07 to 8/31/07)
Actual	$1,000.00	$949.40	0.51	%	$2.51
Hypothetical (5% return before expenses)	1,000.00	1,022.60	0.51		2.60

^a Expenses are calculated using the Fund’s annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (184 days) and divided by the number of days in the year (365 days).

SHAREHOLDER EXPENSES 3

Schedule of Investments

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
COMMON STOCKS – 99.89%
ADVERTISING – 0.26%
Asatsu-DK Inc.	139,500	$	4,669,456
Dentsu Inc.	6,975		19,436,009
Hakuhodo DY Holdings Inc.	97,650		6,781,542
			30,887,007
AGRICULTURE – 0.92%
Japan Tobacco Inc.	19,530		108,336,195
			108,336,195
AIRLINES – 0.15%
All Nippon Airways Co. Ltd.	2,790,000		11,120,045
Japan Airlines Corp.a,b	2,790,000		6,354,311
			17,474,356
APPAREL – 0.22%
ASICS Corp.	461,000		5,965,578
Gunze Ltd.	1,395,000		7,004,184
Onward Kashiyama Co. Ltd.	1,105,000		13,050,468
			26,020,230
AUTO MANUFACTURERS – 8.17%
Hino Motors Ltd.	1,395,000		9,976,750
Honda Motor Co. Ltd.	6,417,000		211,473,407
Nissan Motor Co. Ltd.	9,346,800		89,827,332
Toyota Motor Corp.	11,160,000		650,835,521
			962,113,010
AUTO PARTS & EQUIPMENT – 1.74%
Aisin Seiki Co. Ltd.	837,200		31,562,472
Bridgestone Corp.	2,511,000		50,256,826
Denso Corp.	2,093,200		73,315,723
JTEKT Corp.	418,500		6,643,144
NGK Spark Plug Co. Ltd.	629,000		10,391,537
NHK Spring Co. Ltd.	406,000		3,635,664
NOK Corp.	418,500		8,105,357
Sumitomo Rubber Industries Inc.	418,500		4,650,201
Tokai Rika Co. Ltd.	139,500		3,742,786
Toyoda Gosei Co. Ltd.	279,000		9,001,941
Toyota Boshoku Corp.	139,500		4,248,242
			205,553,893
BANKS – 9.80%
Bank of Kyoto Ltd. (The)	1,395,000		16,619,894
Bank of Yokohama Ltd. (The)	5,580,000		39,618,168

Security	Shares	Value
Chiba Bank Ltd. (The)	2,790,000	$	22,480,783
Fukuoka Financial Group Inc.a	2,796,000		16,016,426
Gunma Bank Ltd.	1,395,000		9,663,849
Hachijuni Bank Ltd. (The)	1,395,000		10,783,074
Hiroshima Bank Ltd. (The)	1,395,000		7,942,889
Hokuhoku Financial Group Inc.	5,585,000		16,333,649
Joyo Bank Ltd. (The)	2,790,000		15,284,045
Mitsubishi UFJ Financial Group Inc.	33,480		320,603,891
Mitsubishi UFJ Securities Co. Ltd.	1,395,000		13,502,912
Mitsui Trust Holdings Inc.	2,795,000		23,292,672
Mizuho Financial Group Inc.	39,060		246,999,784
Nishi-Nippon City Bank Ltd. (The)	2,790,000		8,761,247
Resona Holdings Inc.b	22,320		46,983,393
Sapporo Hokuyo Holdings Inc.	1,395		14,923,004
77 Bank Ltd. (The)	1,395,000		9,411,120
Shinsei Bank Ltd.	5,580,000		18,629,686
Shizuoka Bank Ltd. (The)	2,790,000		29,147,996
Sumitomo Mitsui Financial Group Inc.	26,695		210,722,728
Sumitomo Trust and Banking Co. Ltd. (The)	5,580,000		46,020,618
Suruga Bank Ltd.	776,000		10,182,427
			1,153,924,255
BEVERAGES – 0.65%
Asahi Breweries Ltd.	1,395,000		20,663,547
Coca-Cola West Japan Co. Ltd.	279,000		6,173,791
ITO EN Ltd.b	279,000		6,980,115
Kirin Holdings Co. Ltd.	2,790,000		34,732,088
Sapporo Holdings Ltd.b	1,395,000		8,003,062
			76,552,603
BUILDING MATERIALS – 1.46%
Asahi Glass Co. Ltd.	4,185,000		52,386,965
Daikin Industries Ltd.	983,500		44,120,260
JS Group Corp.	1,116,000		22,143,812
Matsushita Electric Works Ltd.	1,395,000		17,053,142
Nippon Sheet Glass Co. Ltd.	2,790,000		16,439,374
Sumitomo Osaka Cement Co. Ltd.	1,395,000		3,441,919

4 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Taiheiyo Cement Corp.	4,185,000	$	16,535,651
			172,121,123
CHEMICALS – 4.15%
Asahi Kasei Corp.	5,580,000		41,880,689
Daicel Chemical Industries Ltd.	1,395,000		9,844,369
Dainippon Ink & Chemical Inc.	2,790,000		11,529,224
Denki Kagaku Kogyo Kabushiki Kaisha	2,790,000		14,224,993
Hitachi Chemical Co. Ltd.	279,000		5,692,404
JSR Corp.	697,500		15,614,998
Kaneka Corp.	1,395,000		11,300,565
Mitsubishi Chemical Holdings Corp.	4,882,500		45,659,578
Mitsubishi Gas Chemical Co. Inc.	1,395,000		11,757,883
Mitsui Chemicals Inc.	2,790,000		25,320,968
Nippon Kayaku Co. Ltd.	1,395,000		11,095,975
Nissan Chemical Industries Ltd.	1,103,000		13,797,610
Nitto Denko Corp.	697,500		32,493,637
Shin-Etsu Chemical Co. Ltd.	1,674,000		121,020,748
Showa Denko K.K.	4,185,000		15,235,906
Sumitomo Chemical Co. Ltd.	5,580,000		41,639,995
Taiyo Nippon Sanso Corp.	1,395,000		12,323,513
Tokuyama Corp.b	908,000		12,321,822
Tosoh Corp.	2,790,000		17,065,177
Ube Industries Ltd.	4,193,000		13,130,821
Zeon Corp.	566,000		5,732,511
			488,683,386
COMMERCIAL SERVICES – 0.88%
Benesse Corp.	279,000		10,229,479
Dai Nippon Printing Co. Ltd.	2,790,000		40,701,290
Goodwill Group Inc. (The)a,b	5,580		1,160,625
Kamigumi Co. Ltd.	1,395,000		11,974,507
KK DaVinci Advisorsa	4,185		2,902,765
Park 24 Co. Ltd.b	279,000		2,683,734
TIS Inc.	279,000		6,017,340
Toppan Printing Co. Ltd.	2,790,000		27,968,597
			103,638,337
COMPUTERS – 1.05%
CSK Holdings Corp.	279,000		10,229,479
Fujitsu Ltd.	6,975,000		47,597,162
Itochu Techno-Science Corp.	139,500		5,487,814

Security	Shares	Value
Meitec Corp.b	139,500	$	4,476,901
Obic Co. Ltd.	13,950		2,755,942
Otsuka Corp.	62,000		6,252,685
TDK Corp.	558,000		47,416,641
			124,216,624
COSMETICS & PERSONAL CARE – 0.90%
Aderans Co. Ltd.b	139,500		2,545,335
Kao Corp.	2,325,000		65,990,165
Shiseido Co. Ltd.	1,395,000		29,063,753
Uni-Charm Corp.	139,500		8,039,167
			105,638,420
DISTRIBUTION & WHOLESALE – 4.38%
Canon Marketing Japan Inc.	139,500		2,719,838
Hitachi High-Technologies Corp.	139,500		3,261,398
ITOCHU Corp.	5,580,000		60,462,235
Marubeni Corp.	5,584,000		45,523,703
Mitsubishi Corp.	5,440,500		153,008,929
Mitsui & Co. Ltd.	6,975,000		145,017,901
Sojitz Corp.	3,906,000		16,309,399
Sumitomo Corp.	4,185,000		72,388,603
Toyota Tsusho Corp.	697,500		17,269,767
			515,961,773
DIVERSIFIED FINANCIAL SERVICES – 3.03%
Acom Co. Ltd.b	292,950		8,744,399
Aeon Credit Service Co. Ltd.	419,370		5,159,140
AIFUL Corp.b	279,000		5,572,057
Credit Saison Co. Ltd.	697,500		18,292,715
Daiwa Securities Group Inc.	5,580,000		55,263,254
Mitsubishi UFJ Lease & Finance Co. Ltd.	125,550		4,949,864
Nikko Cordial Corp.	2,092,500		26,969,719
Nomura Holdings Inc.	7,254,000		128,289,695
ORIX Corp.	348,750		74,645,106
Promise Co. Ltd.b	348,950		9,603,162
Shinko Securities Co. Ltd.	1,395,000		6,643,144
Takefuji Corp.	460,470		12,354,412
			356,486,667
ELECTRIC – 3.36%
Chubu Electric Power Co. Inc.	2,650,500		70,655,610
Electric Power Development Co. Ltd.	697,500		25,573,696

SCHEDULE OF INVESTMENTS 5

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Hokkaido Electric Power Co. Inc.	697,500	$	15,765,432
Kansai Electric Power Co. Inc. (The)	3,069,000		71,618,384
Kyushu Electric Power Co. Inc.	1,534,500		40,905,879
Tohoku Electric Power Co. Inc.	1,813,600		43,261,045
Tokyo Electric Power Co. Inc. (The)	4,882,500		128,049,001
			395,829,047
ELECTRICAL COMPONENTS & EQUIPMENT – 4.22%
Casio Computer Co. Ltd.	976,500		14,860,424
Fujikura Ltd.	1,395,000		8,291,895
Furukawa Electric Co. Ltd. (The)	2,790,000		13,238,148
Hitachi Cable Ltd.	1,395,000		8,135,444
Hitachi Ltd.	13,950,000		90,019,411
Mitsubishi Electric Corp.	8,370,000		98,275,202
SANYO Electric Co. Ltd.a,b	5,631,000		8,744,166
Sharp Corp.	4,185,000		72,749,644
Stanley Electric Co. Ltd.	559,200		12,229,409
Sumitomo Electric Industries Ltd.	3,069,000		48,795,816
Toshiba Corp.	12,555,000		113,077,859
Ushio Inc.	418,500		8,159,513
			496,576,931
ELECTRONICS – 4.61%
Advantest Corp.	558,000		20,507,096
Alps Electric Co. Ltd.	697,500		8,177,565
Dainippon Screen Manufacturing Co. Ltd.	815,000		5,695,121
Fanuc Ltd.	697,500		67,815,425
Hirose Electric Co. Ltd.	139,500		16,800,414
IBIDEN Co. Ltd.	558,000		47,416,641
Keyence Corp.	139,592		30,937,484
Kyocera Corp.	697,500		63,783,807
Mabuchi Motor Co. Ltd.	139,500		9,074,149
Minebea Co. Ltd.	1,395,000		8,508,519
Mitsumi Electric Co. Ltd.	139,500		5,247,121
Murata Manufacturing Co. Ltd.	837,000		58,632,964
NEC Corp.	8,370,000		39,497,821
NGK Insulators Ltd.	1,395,000		46,092,827
Nippon Electric Glass Co. Ltd.	1,395,500		20,201,432
Omron Corp.	976,500		25,862,529
Secom Co. Ltd.	837,000		40,580,943
Tokyo Seimitsu Co. Ltd.b	139,500		4,176,034
Yaskawa Electric Corp.	1,142,000		13,940,646
Yokogawa Electric Corp.	837,000		10,376,302
			543,324,840

Security	Shares	Value
ENGINEERING &     CONSTRUCTION – 0.97%
Chiyoda Corp.	609,000	$	10,470,923
JGC Corp.	1,202,000		21,154,122
Kajima Corp.	4,185,000		17,402,148
Nishimatsu Construction Co. Ltd.b	1,395,000		4,537,074
Obayashi Corp.	2,790,000		14,393,478
Okumura Corp.b	1,395,000		7,798,473
Shimizu Corp.	2,790,000		17,763,189
Taisei Corp.	4,185,000		13,358,495
Toda Corp.b	1,395,000		7,569,814
			114,447,716
ENTERTAINMENT – 0.23%
Oriental Land Co. Ltd.	279,000		15,741,362
Toho Co. Ltd.	559,200		11,795,229
			27,536,591
ENVIRONMENTAL     CONTROL – 0.07%
Kurita Water Industries Ltd.	279,000		8,472,415
			8,472,415
FOOD – 0.96%
Ajinomoto Co. Inc.	2,790,000		35,261,614
Kikkoman Corp.b	1,395,000		18,846,310
Meiji Dairies Corp.	1,395,000		7,750,335
Meiji Seika Kaisha Ltd.	1,395,000		6,486,693
Nichirei Corp.	1,395,000		6,534,832
Nippon Meat Packers Inc.	1,118,000		12,085,184
Nisshin Seifun Group Inc.	699,500		6,402,704
Nissin Food Products Co. Ltd.b	419,300		13,311,685
Yakult Honsha Co. Ltd.b	279,000		6,414,485
			113,093,842
FOREST PRODUCTS &     PAPER – 0.24%
Nippon Paper Group Inc.	4,185		14,080,576
Oji Paper Co. Ltd.	2,790,000		13,936,160
			28,016,736

6 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
GAS – 0.67%
Osaka Gas Co. Ltd.	8,370,000	$	31,049,476
Tokyo Gas Co. Ltd.	9,765,000		48,439,589
			79,489,065
HAND & MACHINE TOOLS – 0.96%
Fuji Electric Holdings Co. Ltd.	2,790,000		12,082,820
Makita Corp.	418,500		16,174,611
Nidec Corp.	467,300		32,734,987
OSG Corp.b	279,000		3,470,802
SMC Corp.	279,000		36,970,539
THK Co. Ltd.	558,600		11,421,145
			112,854,904
HEALTH CARE - PRODUCTS – 0.77%
Hoya Corp.	1,674,000		58,055,299
Terumo Corp.	697,500		32,734,331
			90,789,630
HOME BUILDERS – 0.67%
Daiwa House Industry Co. Ltd.	2,381,000		31,550,843
Haseko Corp.a	4,185,000		11,264,461
Sekisui Chemical Co. Ltd.	2,371,000		17,550,084
Sekisui House Ltd.	1,395,000		18,100,160
			78,465,548
HOME FURNISHINGS – 3.15%
Matsushita Electric Industrial Co. Ltd.	8,370,015		145,860,590
Pioneer Corp.	697,900		8,489,315
Sony Corp.	4,185,000		201,460,553
Yamaha Corp.	697,500		14,742,484
			370,552,942
HOUSEWARES – 0.09%
TOTO Ltd.b	1,395,000		11,120,045
			11,120,045
INSURANCE – 2.22%
Millea Holdings Inc.	3,069,000		118,613,812
Mitsui Sumitomo Insurance Co. Ltd.	4,931,000		55,556,969
Sompo Japan Insurance Inc.	3,509,000		39,202,476
T&D Holdings Inc.	837,000		48,596,040
			261,969,297
INTERNET – 1.08%
Access Co. Ltd.a,b	995		2,377,734
E*Trade Securities Co. Ltd.	5,580		5,006,427

Security	Shares	Value
eAccess Ltd.	4,185	$	2,166,242
Matsui Securities Co. Ltd.b	418,500		3,487,650
SBI Holdings Inc.	39,060		10,446,103
SoftBank Corp.	3,069,800		58,925,118
Trend Micro Inc.	533,500		21,907,950
Yahoo! Japan Corp.	62,775		23,232,951
			127,550,175
IRON & STEEL – 4.02%
Daido Steel Co. Ltd.	1,395,000		11,673,640
JFE Holdings Inc.	2,232,250		145,587,802
Kobe Steel Ltd.	11,160,000		40,629,082
Nippon Steel Corp.	23,715,000		166,126,731
Nisshin Steel Co. Ltd.	4,193,000		16,784,299
Sumitomo Metal Industries Ltd.	16,740,000		84,772,290
Tokyo Steel Manufacturing Co. Ltd.	558,600		7,397,239
			472,971,083
LEISURE TIME – 0.49%
Namco Bandai Holdings Inc.	837,098		12,125,157
Round One Corp.b	1,395		3,273,433
Sankyo Co. Ltd.	279,000		11,505,155
Shimano Inc.	279,000		8,953,802
Yamaha Motor Co. Ltd.	837,200		22,028,728
			57,886,275
MACHINERY – 0.36%
Hitachi Construction Machinery Co. Ltd.	418,500		14,730,449
Japan Steel Works Ltd. (The)	1,395,000		20,651,512
Okuma Corp.b	493,000		7,336,626
			42,718,587
MACHINERY - CONSTRUCTION & MINING – 0.98%
Komatsu Ltd.	3,766,500		116,002,286
			116,002,286
MACHINERY - DIVERSIFIED – 1.02%
Amada Co. Ltd.	1,395,000		15,103,525
Ebara Corp.b	1,395,000		6,270,069
Kubota Corp.	4,185,000		32,421,430
Sumitomo Heavy Industries Ltd.	2,790,000		31,217,961

SCHEDULE OF INVESTMENTS 7

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Toyota Industries Corp.	837,000	$	35,454,169
			120,467,154
MANUFACTURING – 3.02%
FUJIFILM Holdings Corp.	2,092,500		90,982,185
Glory Ltd.	139,500		4,091,791
IHI Corp.	5,586,000		18,119,621
Kawasaki Heavy Industries Ltd.	5,580,000		21,903,118
Konica Minolta Holdings Inc.	2,092,500		32,818,574
Mitsubishi Heavy Industries Ltd.	13,950,000		85,325,886
Nikon Corp.	1,395,000		43,565,543
Olympus Corp.	1,395,000		59,451,322
			356,258,040
MEDIA – 0.10%
Fuji Television Network Inc.	1,655		3,398,094
Jupiter Telecommunications Co. Ltd.a	5,580		4,284,346
Tokyo Broadcasting System Inc.b	139,500		4,163,999
			11,846,439
METAL FABRICATE & HARDWARE – 0.30%
NSK Ltd.	2,790,000		23,973,084
NTN Corp.	1,395,000		11,420,912
			35,393,996
MINING – 0.94%
DOWA HOLDINGS Co. Ltd.b	1,395,000		15,572,876
Mitsubishi Materials Corp.	4,185,000		23,251,003
Mitsui Mining & Smelting Co. Ltd.	2,790,000		11,360,739
Nippon Light Metal Co. Ltd.	1,395,000		3,056,809
Sumitomo Metal Mining Co. Ltd.	2,322,000		46,073,416
Sumitomo Titanium Corp.b	78,400		6,141,328
Toho Titanium Co. Ltd.b	139,500		4,886,080
			110,342,251
OFFICE & BUSINESS EQUIPMENT – 2.74%
Canon Inc.	4,324,550		246,978,571
Ricoh Co. Ltd.	2,790,000		61,617,565
Seiko Epson Corp.	558,000		14,537,894
			323,134,030

Security	Shares	Value
OIL & GAS – 1.10%
INPEX Holdings Inc.	3,488	$	31,896,476
Nippon Mining Holdings Inc.	3,487,500		31,500,776
Nippon Oil Corp.	5,580,500		47,035,746
Showa Shell Sekiyu K.K.	418,500		5,076,228
TonenGeneral Sekiyu K.K.	1,395,000		13,803,779
			129,313,005
PACKAGING & CONTAINERS – 0.11%
Toyo Seikan Kaisha Ltd.	697,500		13,238,149
			13,238,149
PHARMACEUTICALS – 5.01%
Alfresa Holdings Corp.	139,500		9,266,704
Astellas Pharma Inc.	2,232,030		103,403,365
Chugai Pharmaceutical Co. Ltd.b	1,116,000		20,025,708
Daiichi Sankyo Co. Ltd.	2,929,569		79,864,022
Eisai Co. Ltd.	1,116,000		46,405,729
Kyowa Hakko Kogyo Co. Ltd.	1,395,000		13,526,981
Mediceo Paltac Holdings Co. Ltd.	558,000		8,568,693
Santen Pharmaceutical Co. Ltd.	139,500		3,453,953
Shionogi & Co. Ltd.	1,395,000		20,290,471
Suzuken Co. Ltd.	279,000		9,218,565
Taisho Pharmaceutical Co. Ltd.	1,098,000		21,455,118
Takeda Pharmaceutical Co. Ltd.	3,488,200		238,334,504
Tanabe Seiyaku Co. Ltd.	1,395,000		16,872,622
			590,686,435
REAL ESTATE – 2.89%
Aeon Mall Co. Ltd.	139,500		4,200,104
Daito Trust Construction Co. Ltd.	418,500		19,748,911
Leopalace21 Corp.	558,000		17,233,663
Mitsubishi Estate Co. Ltd.	4,484,000		119,918,906
Mitsui Fudosan Co. Ltd.	3,644,000		95,253,591
NTT Urban Development Corp.	4,185		7,509,641
Sumitomo Realty & Development Co. Ltd.	1,395,000		45,611,439
Tokyo Tatemono Co. Ltd.	1,395,000		18,425,096
Tokyu Land Corp.	1,395,000		12,853,039
			340,754,390
REAL ESTATE INVESTMENT TRUSTS – 0.51%
Japan Real Estate Investment Corp.	1,395		15,524,738

8 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Japan Retail Fund Investment Corp.	1,395	$	11,432,947
Nippon Building Fund Inc.	2,173		27,932,278
Nomura Real Estate Office Fund Inc.	520		4,934,650
			59,824,613
RETAIL – 2.71%
AEON Co. Ltd.	2,371,500		32,366,070
Aoyama Trading Co. Ltd.	279,000		7,533,710
Autobacs Seven Co. Ltd.	139,500		3,682,613
Citizen Watch Co. Ltd.	1,534,500		14,270,724
Daimaru Inc. (The)c	1,400,000		15,218,048
EDION Corp.	279,000		2,953,311
FamilyMart Co. Ltd.	279,000		7,172,670
Fast Retailing Co. Ltd.	248,700		14,568,201
Isetan Co. Ltd.	837,000		11,026,174
Lawson Inc.	279,000		9,266,704
Marui Co. Ltd.	1,255,500		14,362,188
Mitsukoshi Ltd.b	1,395,000		6,197,860
Nitori Co. Ltd.	139,500		7,256,912
Ryohin Keikaku Co. Ltd.	139,500		9,013,976
Seven & I Holdings Co. Ltd.	3,348,080		89,251,324
Shimachu Co. Ltd.	279,000		7,557,779
Shimamura Co. Ltd.	47,700		4,419,601
Takashimaya Co. Ltd.b	1,395,000		14,947,074
UNY Co. Ltd.	1,245,000		10,837,294
USS Co. Ltd.	97,650		6,562,511
Yamada Denki Co. Ltd.	306,900		30,765,457
			319,230,201
SEMICONDUCTORS – 1.17%
Elpida Memory Inc.a	418,500		16,174,611
NEC Electronics Corp.a,b	139,500		3,839,063
Rohm Co. Ltd.	418,900		37,258,845
Sanken Electric Co. Ltd.	332,000		2,299,927
Shinko Electric Industries Co. Ltd.	279,000		6,173,791
Sumco Corp.	418,500		22,348,402
Tokyo Electron Ltd.	697,552		49,827,292
			137,921,931
SHIPBUILDING – 0.12%
Mitsui Engineering & Shipbuilding Co. Ltd.	2,790,000		14,586,033
			14,586,033

Security	Shares	Value
SOFTWARE – 0.25%
Fuji Soft ABC Inc.	139,500	$	2,882,306
Konami Corp.	419,300		10,526,360
Nomura Research Institute Ltd.	279,000		9,387,051
Oracle Corp.b	139,500		6,125,652
			28,921,369
STORAGE & WAREHOUSING – 0.04%
Mitsubishi Logistics Corp.	319,000		4,350,938
			4,350,938
TELECOMMUNICATIONS – 2.66%
Hikari Tsushin Inc.	139,500		4,055,687
KDDI Corp.	9,765		75,397,274
Nippon Telegraph and Telephone Corp.	20,925		97,119,872
NTT Data Corp.	5,580		26,957,685
NTT DoCoMo Inc.	68,355		104,376,785
Oki Electric Industry Co. Ltd.a,b	2,790,000		4,982,358
			312,889,661
TEXTILES – 1.05%
Kuraray Co. Ltd.	1,395,000		18,316,784
Mitsubishi Rayon Co. Ltd.	2,790,000		17,763,189
Nisshinbo Industries Inc.	1,395,000		17,101,281
Teijin Ltd.	4,185,000		20,904,241
Toray Industries Inc.	5,580,000		42,602,769
Toyobo Co. Ltd.	2,790,000		6,474,658
			123,162,922
TOYS, GAMES & HOBBIES – 1.65%
Nintendo Co. Ltd.	418,500		193,878,704
			193,878,704
TRANSPORTATION – 4.57%
Central Japan Railway Co.	6,975		78,225,424
East Japan Railway Co.	13,950		111,080,101
Hankyu Hanshin Holdings Inc.	4,190,800		21,258,598
Kawasaki Kisen Kaisha Ltd.	2,790,000		36,007,764
Keihin Electric Express Railway Co. Ltd.b	1,399,000		8,810,508
Keio Corp.	2,790,000		17,161,455
Kintetsu Corp.b	6,979,000		20,831,938
Mitsui O.S.K. Lines Ltd.	4,185,000		61,593,495
Nippon Express Co. Ltd.	4,185,000		22,023,465

SCHEDULE OF INVESTMENTS 9

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2007

Security	Shares	Value
Nippon Yusen Kabushiki Kaisha	4,185,000	$	41,339,128
Odakyu Electric Railway Co. Ltd.	1,395,000		8,508,519
Seino Holdings Co. Ltd.	1,243,000		12,267,541
Tobu Railway Co. Ltd.	4,185,000		18,810,206
Tokyu Corp.	4,185,000		26,103,222
West Japan Railway Co.	6,975		33,636,932
Yamato Holdings Co. Ltd.	1,395,000		20,446,922
			538,105,218
VENTURE CAPITAL – 0.05%
JAFCO Co. Ltd.	139,500		5,728,508
			5,728,508
TOTAL COMMON STOCKS (Cost: $9,918,945,416)			11,767,309,821
PREFERRED STOCKS – 0.01%
BEVERAGES – 0.01%
ITO EN Ltd.a,c	84,000		1,630,505
			1,630,505
TOTAL PREFERRED STOCKS (Cost: $1,665,448)			1,630,505
SHORT-TERM INVESTMENTS – 1.51%
MONEY MARKET FUNDS – 1.51%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.44%d,e	2,620,807		2,620,807
BGI Cash Premier Fund LLC 5.47%d,e,f	174,969,065		174,969,065
			177,589,872
TOTAL SHORT-TERM INVESTMENTS (Cost: $177,589,872)			177,589,872
TOTAL INVESTMENTS IN SECURITIES – 101.41% (Cost: $10,098,200,736)			11,946,530,198
Other Assets, Less Liabilities – (1.41)%			(166,524,269	)
NET ASSETS – 100.00%		$	11,780,005,929

^a Non-income earning security.

^b All or a portion of this security represents a security on loan. See Note 5.

^c Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

^d Affiliated issuer. See Note 2.

^e The rate quoted is the annualized seven-day yield of the fund at period end.

^f This security represents an investment of securities lending collateral. See Note 5.

See notes to financial statements.

10 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statement of Assets and Liabilities

iSHARES^®, INC.

August 31, 2007

	iShares MSCI Japan Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	9,920,610,864
Affiliated issuers (Note 2)		177,589,872
Total cost of investments	$	10,098,200,736
Investments in securities, at value (including securities on loana) (Note 1):
Unaffiliated issuers	$	11,768,940,326
Affiliated issuers (Note 2)		177,589,872
Total value of investments		11,946,530,198
Foreign currency, at valueb		10,255,878
Receivables:
Investment securities sold		10,114
Dividends and interest		4,917,774
Total Assets		11,961,713,964
LIABILITIES
Payables:
Securities related to in-kind transactions (Note 4)		10,114
Collateral for securities on loan (Note 5)		174,969,065
Capital shares redeemed		1,457,881
Investment advisory fees (Note 2)		5,270,975
Total Liabilities		181,708,035
NET ASSETS	$	11,780,005,929
Net assets consist of:
Paid-in capital	$	10,177,961,758
Undistributed net investment income		30,074,213
Accumulated net realized loss		(276,442,960	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		1,848,412,918
NET ASSETS	$	11,780,005,929
Shares outstandingc		837,000,000
Net asset value per share	$	14.07

^a Securities on loan with market value of $166,804,096. See Note 5.

^b Cost of foreign currency: $10,335,172.

^c $0.001 par value, number of shares authorized: 2,124,600,000.

See notes to financial statements.

FINANCIAL STATEMENTS 11

Statement of Operations

iSHARES^®, INC.

Year ended August 31, 2007

	iShares MSCI Japan Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuersa	$	162,797,217
Interest from affiliated issuers (Note 2)		288,662
Securities lending income from unaffiliated issuers		1,479,648
Securities lending income from affiliated issuers (Note 2)		545,457
Total investment income		165,110,984
EXPENSES
Investment advisory fees (Note 2)		70,930,669
Total expenses		70,930,669
Net investment income		94,180,315
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(59,633,850	)
In-kind redemptions		1,221,189,258
Foreign currency transactions		(2,820,743	)
Net realized gain		1,158,734,665
Net change in unrealized appreciation (depreciation) on:
Investments		(877,961,535	)
Translation of assets and liabilities in foreign currencies		319,770
Net change in unrealized appreciation (depreciation)		(877,641,765	)
Net realized and unrealized gain		281,092,900
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	375,273,215

^a Net of foreign withholding tax of $12,195,485.

See notes to financial statements.

12 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets

iSHARES^®, INC.

	iShares MSCI Japan Index Fund
	Year ended August 31, 2007			Year ended August 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	94,180,315		$	60,448,936
Net realized gain		1,158,734,665			448,842,325
Net change in unrealized appreciation (depreciation)		(877,641,765	)		1,877,307,601
Net increase in net assets resulting from operations		375,273,215			2,386,598,862
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(97,091,876	)		(55,636,178	)
Total distributions to shareholders		(97,091,876	)		(55,636,178	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		1,146,746,106			5,381,707,859
Cost of shares redeemed		(3,369,511,925	)		(1,236,187,530	)
Net increase (decrease) in net assets from capital share transactions		(2,222,765,819	)		4,145,520,329
INCREASE (DECREASE) IN NET ASSETS		(1,944,584,480	)		6,476,483,013
NET ASSETS
Beginning of year		13,724,590,409			7,248,107,396
End of year	$	11,780,005,929		$	13,724,590,409
Undistributed net investment income included in net assets at end of year	$	30,074,213		$	29,465,062
SHARES ISSUED AND REDEEMED
Shares sold		79,800,000			426,600,000
Shares redeemed		(237,000,000	)		(91,800,000	)
Net increase (decrease) in shares outstanding		(157,200,000	)		334,800,000

See notes to financial statements.

FINANCIAL STATEMENTS 13

Financial Highlights

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Japan Index Fund
	Year ended Aug. 31, 2007			Year ended Aug. 31, 2006			Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003
Net asset value, beginning of year	$	13.80		$	10.99		$	9.89		$	8.29		$	7.77
Income from investment operations:
Net investment incomea		0.10			0.06			0.06			0.03			0.00	b
Net realized and unrealized gainc		0.27			2.81			1.08			1.57			0.52
Total from investment operations		0.37			2.87			1.14			1.60			0.52
Less distributions from:
Net investment income		(0.10	)		(0.06	)		(0.04	)		(0.00	)b		–
Total distributions		(0.10	)		(0.06	)		(0.04	)		(0.00	)b		–
Net asset value, end of year	$	14.07		$	13.80		$	10.99		$	9.89		$	8.29
Total return		2.68	%		26.10	%		11.58	%		19.32	%		6.69	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	11,780,006		$	13,724,590		$	7,248,107		$	5,863,332		$	1,726,855
Ratio of expenses to average net assets		0.52	%		0.54	%		0.57	%		0.64	%d		0.84	%
Ratio of net investment income to average net assets		0.68	%		0.48	%		0.59	%		0.28	%		0.03	%
Portfolio turnover ratee		3	%		8	%		6	%		5	%		2	%

^a Based on average shares outstanding throughout each period.

^b Rounds to less than $0.01.

^c The amounts reported may not accord with the change in aggregate gains and losses in securities due to the timing of capital share transactions.

^d Ratio of expenses to average net assets prior to voluntarily reimbursed distribution fees for the year ended August 31, 2004 was 0.78%.

^e Portfolio turnover rates exclude portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to financial statements.

14 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements

iSHARES^®, INC.

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation. As of August 31, 2007, the Company offered 24 investment portfolios or funds.

These financial statements relate only to the iShares MSCI Japan Index Fund (the “Fund”).

The Fund’s investment objective is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded equity securities in the aggregate in the Japanese equity market, as measured by the MSCI Japan Index compiled by MSCI Inc. (“MSCI”). The investment adviser uses a “passive” or index approach to achieve the Fund’s investment objective. The Fund is classified as a non-diversified fund under the 1940 Act. Non-diversified funds generally hold securities of fewer companies than diversified funds and may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.

The Fund invests in the securities of foreign issuers of a single country, which may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.

Pursuant to the Company’s organizational documents, the Fund’s officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

1. SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by the Company in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

SECURITY VALUATION

The securities and other assets of the Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations

NOTES TO FINANCIAL STATEMENTS 15

Notes to Financial Statements (Continued)

iSHARES^®, INC.

are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).

Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.

Valuing a Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations. Accordingly, fair value pricing could result in a difference between the prices used to calculate a Fund’s net asset value and the prices used by the Fund’s benchmark index, which, in turn, could result in a difference between the Fund’s performance and the performance of the Fund’s benchmark index.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method.

FOREIGN CURRENCY TRANSLATION

The accounting records of the Fund are maintained in U.S. dollars. Foreign currencies, as well as investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates deemed appropriate by the investment adviser. Any use of a rate different from the rates used by MSCI may adversely affect the Fund’s ability to track its underlying index. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars on the respective dates of such transactions.

The Fund does not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. Such fluctuations are reflected by the Fund as a component of realized and unrealized gains and losses from investments for financial reporting purposes.

DISTRIBUTIONS TO SHAREHOLDERS

Distributions to shareholders from net investment income, if any, including any net foreign currency gains, are declared and distributed at least annually by the Fund. Distributions of net realized capital gains, if any, generally are declared and distributed once a year. Distributions are determined on a tax basis and may differ from net investment income and net realized capital gains for financial reporting purposes. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional shares of the Fund.

As of August 31, 2007, the tax year-end of the Fund, the components of net distributable earnings on a tax basis consisted of undistributed ordinary income of $53,910,777, unrealized appreciation of $1,773,377,463, and capital and other losses of $225,244,069, for net distributable earnings of $1,602,044,171.

16 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

For the years ended August 31, 2007 and August 31, 2006, the tax characterization of distributions paid for the Fund represents ordinary income. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for the Fund.

FEDERAL INCOME TAXES

The Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its ordinary income and any net capital gains (taking into account any capital loss carry forwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2007.

From November 1, 2006 to August 31, 2007, the Fund incurred net realized capital losses and net foreign currency losses of $45,822,642. As permitted by tax regulations, the Fund has elected to defer those losses and treat them as arising in the year ending August 31, 2008.

As of August 31, 2007, the tax year-end of the Fund, the Fund had tax basis net capital loss carryforwards of $2,959,030, $62,572,173, $3,621,148, $5,594,562, $8,733,802, $68,122,871 and $27,817,841 expiring in 2009, 2010, 2011, 2012, 2013, 2014 and 2015, respectively. Such losses may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.

The Fund may own shares in certain foreign investment entities, referred to, under U.S. tax law, as “passive foreign investment companies.” The Fund may elect to mark-to-market annually the shares of each passive foreign investment company and would be required to distribute to shareholders any such marked-to-market gains.

The Fund reclassifies at the end of its tax year certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset value per share.

As of August 31, 2007, the cost of investments for federal income tax purposes was $10,173,236,191. Net unrealized appreciation was $1,773,294,007, of which $2,363,480,896 represented gross unrealized appreciation on securities and $590,186,889 represented gross unrealized depreciation on securities.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as an investment by the Fund, collateralized by securities, which are delivered to the Fund’s custodian or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest.

NOTES TO FINANCIAL STATEMENTS 17

Notes to Financial Statements (Continued)

iSHARES^®, INC.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

Pursuant to an Investment Advisory Agreement with the Company, Barclays Global Fund Advisors (“BGFA”) manages the investment of the Fund’s assets. BGFA is a California corporation indirectly owned by Barclays Bank PLC. Under the Investment Advisory Agreement, BGFA is responsible for all expenses (“Covered Expenses”) of the Company, including the cost of transfer agency, custody, fund administration, legal, audit and other services, except interest, taxes, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution fees and extraordinary expenses.

For its investment advisory services to the Fund, BGFA is entitled to an annual investment advisory fee based on the Fund’s allocable portion of the aggregate of the average daily net assets of all the funds offered by the Company (except for the iShares MSCI Brazil, iShares MSCI Emerging Markets, iShares MSCI Pacific ex-Japan, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds) as follows:

Investment Advisory Fee	Aggregate Average Daily Net Assets
0.59%	First $7 billion
0.54	Over $7 billion, up to and including $11 billion
0.49	Over $11 billion, up to and including $24 billion
0.44	Over $24 billion

State Street Bank and Trust Company (“State Street”) serves as administrator, custodian and transfer agent for the Company. As compensation for its services, State Street receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly. These fees and expenses are Covered Expenses as defined above.

SEI Investments Distribution Co. (“SEI”) serves as the Fund’s underwriter and distributor of the shares of the Fund, pursuant to a Distribution Agreement with the Company. SEI does not receive a fee from the Fund for its distribution services.

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Fund is permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Company. BarCap and BGI are affiliates of BGFA, the Fund’s investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2007, BGI earned securities lending agent fees of $2,025,105.

Cross trades for the year ended August 31, 2007 were executed by the Fund pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter for compliance with the requirements and restrictions set forth by Rule 17a-7.

The Fund may invest in the Institutional Shares of certain money market funds managed by BGFA, the Fund’s investment adviser, including the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”), Prime Money Market Fund (“PMMF”) and Treasury Money Market Fund (“TMMF”) of Barclays Global Investors Funds. The GMMF, IMMF, PMMF and TMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio, Prime Money Market Master Portfolio and Treasury Money Market Master Portfolio (collectively, the “Money Market Master Portfolios”), respectively, which are also managed by BGFA. While the GMMF, IMMF, PMMF and TMMF do not directly charge an investment advisory fee, the Money Market Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from

18 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to Financial Statements (Continued)

iSHARES^®, INC.

the GMMF, IMMF, PMMF and TMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Fund from temporary cash investments are recorded as interest from affiliated issuers in the accompanying Statement of Operations. Income distributions earned by the Fund from the investment of securities lending collateral, if any, are included in securities lending income in the accompanying Statement of Operations.

The Fund may invest its securities lending cash collateral, if any, in the BGI Cash Premier Fund LLC (“Premier Fund”), an affiliated private money market fund managed by BGFA. Although the Premier Fund is not registered as an investment company under the 1940 Act, it intends to operate as a money market fund in compliance with Rule 2a-7 under the 1940 Act. See Note 5 for additional information regarding the Premier Fund.

As of August 31, 2007, certain directors and officers of the Company are also officers of BGI and/or BGFA.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2007, aggregated $342,318,146 and $433,721,834, respectively.

In-kind purchases and sales (see Note 4) for the year ended August 31, 2007, aggregated $1,097,506,892 and $3,235,132,609, respectively.

4. CAPITAL SHARE TRANSACTIONS

The Company issues and redeems capital shares of the Fund only in aggregations of a specified number of shares (each, a “Creation Unit”) at net asset value. Except when aggregated in Creation Units, shares of the Fund are not redeemable. Transactions in capital shares for the Fund are disclosed in detail in the Statements of Changes in Net Assets.

The consideration for the purchase of Creation Units of the Fund generally consists of the in-kind deposit of a designated portfolio of equity securities, which constitutes a substantial replication, or a portfolio sampling representation of the securities involved in the MSCI Japan Index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to State Street, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.

From time to time, settlement of securities related to in-kind contributions or in-kind redemptions may be delayed. In such cases, securities related to in-kind contributions are reflected as “Due from custodian” and securities related to in-kind redemptions are reflected as “Securities related to in-kind transactions” in the Statement of Assets and Liabilities.

5. LOANS OF PORTFOLIO SECURITIES

The Fund may lend its investment securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. government. The initial collateral received by the Fund is required to have a value of at least 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The risks to the Fund of securities lending are that the borrower may not provide additional collateral when required or may not return the securities when due.

NOTES TO FINANCIAL STATEMENTS 19

Notes to Financial Statements (Continued)

iSHARES^®, INC.

During the year ended August 31, 2007, the Fund received cash as collateral for securities loaned. The cash collateral received was invested in a joint account and/or in the Premier Fund. Pursuant to an exemptive order issued by the SEC, a portion of the cash collateral received was invested in a joint account with other investment funds managed by BGFA. The joint account invests in securities with remaining maturities of 397 days or less, repurchase agreements and money market mutual funds, including money market funds managed by BGFA. Repurchase agreements are fully collateralized by U.S. government securities or non-U.S. government debt securities. The Premier Fund seeks to achieve its investment objective by investing in a portfolio of high-quality, short-term fixed-income instruments, including money market funds (which may be managed by BGFA or its affiliate) and other instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition.

The market value of the securities on loan as of August 31, 2007 and the value of the related collateral are disclosed in the Statement of Assets and Liabilities. Securities lending income, as disclosed in the Fund’s Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The SEC staff has stated that it would not object if a fund does not implement FIN 48 in its NAV calculation until the date of the fund’s last NAV calculation in the first required financial statement reporting period for its fiscal year beginning after December 15, 2006. The Company is currently evaluating the impact of applying the various provisions of FIN 48.

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), “Fair Value Measurements.” FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact the adoption of FAS 157 will have on the Fund’s financial statement disclosures.

20 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

iShares, Inc.

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Japan Index Fund, a portfolio of the iShares MSCI Series (the “Fund”) at August 31, 2007, the results of its operations and the changes in its net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 23, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 21

Tax Information (Unaudited)

iSHARES^®, INC.

For the fiscal year ended August 31, 2007, the iShares MSCI Japan Index Fund earned foreign source income of $174,992,702 and paid foreign taxes of $12,164,174 which it intends to pass through to its shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”).

Under Section 854(b)(2) of the Code, the Fund hereby designates the maximum amount of $97,091,876 as qualified dividend income for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended August 31, 2007.

In January 2008, shareholders will receive Form 1099-DIV which will include their share of qualified dividend income distributed during the calendar year 2007. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.

22 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory

Contract (Unaudited)

iSHARES^®, INC.

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors (the “Board”), including a majority of Directors who are not “interested persons” of the Company (as that term is defined in the 1940 Act) (the “Independent Directors”), is required annually to consider the Investment Advisory Contract between the Company and BGFA (the “Advisory Contract”) on behalf of the Fund. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 13, 2007, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Fund, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board determined that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, including investment in technology and increasing the number of their employees supporting the Fund. The Board also considered BGFA’s compliance program and its compliance record with respect to the Fund. In that regard, the Board noted that BGFA reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund. In addition to the above considerations, the Board considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Fund; therefore, comparative performance information was generally not available. However, the Board also noted that the Fund had met its investment objective consistently since its inception date. Based on review of this information, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Fund under the Advisory Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.

FUND’S EXPENSES AND PERFORMANCE OF THE FUND

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of the Fund in comparison with the same information for other funds registered under the 1940 Act objectively selected solely by Lipper as comprising the Fund’s peer group (the “Lipper Group”). In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of the Fund for the one-, three-, five- and ten-year, and “last quarter” periods ended March 31, 2007 and a comparison of the Fund’s performance to that of the funds in its Lipper Group for the same periods. Because there are few, if any, exchange traded funds or index funds that track indexes similar to those tracked by the Fund, the Lipper Group included in part, at the request of BGFA, mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the Lipper Group and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the Lipper Group, the statistical information may or may not provide meaningful direct comparisons to the Fund. The Board noted that the Fund generally performed in line with the funds in its Lipper Group over relevant periods. The Board also noted that the investment advisory fees and overall expense components for the Fund were generally lower than the median or average investment advisory fee rates and overall expenses of the funds in its respective Lipper Group. The Board also reviewed statistical information from Lipper displaying the effects of the

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT 23

Board Review and Approval of Investment Advisory

Contract (Unaudited) (Continued)

iSHARES^®, INC.

current breakpoints in the investment advisory fee rates for the Fund (as discussed below) at various assets levels of the Fund as compared to its Lipper Group. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of the Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in its Lipper Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.

COSTS OF SERVICES PROVIDED TO THE FUND AND PROFITS REALIZED BY BGFA AND AFFILIATES

The Board reviewed information about the profitability to BGFA of the Fund based on the fees payable to BGFA and its affiliates (including fees under the Advisory Contract), and all other sources of revenue and expense to BGFA and its affiliates for the last calendar year. The Board discussed the sources of direct and ancillary revenue with management, including the revenues to BGI from securities lending by the Company (including any securities lending by the Fund). The Board also discussed BGFA’s profit margin as reflected in the Fund’s profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Advisory Contract and from other relationships between the Fund and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Fund’s profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Fund’s assets. The Board noted that the Advisory Contract already provided for breakpoints in the Fund’s investment advisory fee rates as the assets of the Fund, on an aggregated basis with the assets of certain other iShares funds, increase. The Board also discussed the substantial growth in assets of certain iShares funds, including the Fund, over the last few years. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had made a significant investment in the iShares funds and had incurred operating losses during earlier years when the iShares funds, including the Fund, had not yet reached scale. In light of this history, the Board determined that the current breakpoints were appropriate and warranted at this juncture for the Fund. Based on this review, as well as the discussions described above in connection with the Lipper Group comparisons, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees, with the current breakpoints for the Fund, reflects the current sharing and potential further sharing of economies of scale with the Fund’s shareholders.

FEES AND SERVICES PROVIDED FOR OTHER COMPARABLE FUNDS/ACCOUNTS MANAGED BY BGFA AND ITS AFFILIATES

The Board received and considered certain information regarding the Fund’s annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as the Fund. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the Other Accounts differed from the level of services provided to the Fund. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contract, with the current breakpoints, do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contract are fair and reasonable.

24 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory

Contract (Unaudited) (Continued)

iSHARES^®, INC.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Fund by BGFA, such as any payment of revenue to BGI, the Company’s securities lending agent, for loaning any portfolio securities, and payment of advisory fees and/or administration fees to BGFA and BGI in connection with any investments by the Fund in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board noted that BGFA does not use soft dollars or consider the value of research or other services that may be provided to BGFA (including its affiliates) in selecting brokers for portfolio transactions for the Fund. The Board further noted that any portfolio transactions on behalf of the Fund placed through a BGFA affiliate are reported to the Board pursuant to Rule 10f-3 and Rule 17e-1, as applicable, under the 1940 Act. The Board concluded that any such ancillary benefits would not be disadvantageous to the Fund’s shareholders.

Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates, with the current breakpoints, is fair and reasonable in light of all relevant circumstances, and concluded that it is in the best interest of the Fund and its shareholders to approve the Advisory Contract, with the fee schedule to the Advisory Contract for the coming year.

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT 25

Supplemental Information (Unaudited)

iSHARES^®, INC.

The table that follows presents information about the differences between the daily market price on secondary markets for shares of the iShares MSCI Japan Index Fund (the “Fund”) and the Fund’s net asset value. Net asset value, or ”NAV,” is the price per share at which the Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Market Price” of the Fund generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund is listed for trading, as of the time that the Fund’s NAV is calculated. The Fund’s Market Price may be at, above or below its NAV. The NAV of the Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of the Fund will fluctuate in accordance with changes in its NAV, as well as market supply and demand.

Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of the Fund on a given day, generally at the time the NAV is calculated. A premium is the amount that the Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that the Fund is trading below the reported NAV, expressed as a percentage of the NAV.

The following information shows the frequency distributions of premiums and discounts for the Fund. The information shown for the Fund is for five calendar years through the date of the most recent calendar quarter-end.

Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by the table. All data presented here represents past performance, which cannot be used to predict future results.

iShares MSCI Japan Index Fund

Period Covered: January 1, 2002 through June 30, 2007

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5% and Less than 4.0%	1	0.07	%
Greater than 3.0% and Less than 3.5%	5	0.36
Greater than 2.5% and Less than 3.0%	4	0.29
Greater than 2.0% and Less than 2.5%	15	1.09
Greater than 1.5% and Less than 2.0%	45	3.26
Greater than 1.0% and Less than 1.5%	135	9.78
Greater than 0.5% and Less than 1.0%	258	18.68
Between 0.5% and –0.5%	660	47.80
Less than –0.5% and Greater than –1.0%	154	11.15
Less than –1.0% and Greater than –1.5%	64	4.63
Less than –1.5% and Greater than –2.0%	30	2.17
Less than –2.0% and Greater than –2.5%	7	0.51
Less than –2.5% and Greater than –3.0%	1	0.07
Less than –3.0% and Greater than –3.5%	1	0.07
Less than –3.5% and Greater than –4.0%	1	0.07
	1,381	100.00	%

26 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director and Officer Information (Unaudited)

iSHARES^®, INC.

The Board of Directors has responsibility for the overall management and operations of the Company, including general supervision of the duties performed by BGFA and other service providers. Each Director serves until his or her successor is duly elected or appointed and qualified.

iShares, Inc., iShares Trust, Barclays Global Investors Funds (“BGIF”), Master Investment Portfolio (“MIP”) and Barclays Foundry Investment Trust (“BFIT”) are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 138 portfolios within the fund complex. In addition, Lee T. Kranefuss serves as a Trustee for BGIF, MIP and BFIT and oversees an additional 24 portfolios within the fund complex.

Unless otherwise noted in the tables below, the address for each Director and Officer is c/o Barclays Global Investors, N.A., 45 Fremont Street, San Francisco, California 94105. The Board has designated George G.C. Parker as its Lead Independent Director. Additional information about the Funds’ Directors and Officers may be found in the Funds’ combined Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.

Interested Directors and Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
*Lee T. Kranefuss, 1961	Director and Chairman (since 2003).	Chief Executive Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (since 2003); Director of Barclays Global Fund Advisers (since 2005); Director, President and Chief Executive Officer of Barclays Global Investors International, Inc. (since 2005); Director, Chairman and Chief Executive Officer of Barclays Global Investors Services (since 2005); Chief Executive Officer of the Individual Investor Business of BGI (1999-2003).	Trustee (since 2003) of iShares Trust; Trustee (since 2001) of BGIF and MIP; Trustee (since 2007) of BFIT; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.
*John E. Martinez, 1962	Director, (since 2003).	Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003).	Trustee (since 2003) of iShares Trust; Director (since 2005) of Real Estate Equity Exchange.

* Lee T. Kranefuss and John E. Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser, BGI, the parent company of BGFA, and Barclays Global Investors Services, an affiliate of BGFA and BGI.

DIRECTOR AND OFFICER INFORMATION 27

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
George G.C. Parker, 1939	Director (since 2002). Lead Independent Director (since 2006).	Dean Witter Distinguished Professor of Finance, Emeritus (since 1994).	Trustee (since 2000) of iShares Trust; Lead Independent Trustee (since 2006) of iShares Trust; Director (since 1996) of Continental Airlines, Inc.; Director (since 1995) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2004) of Threshold Pharmaceuticals; Director (since 2007) of NETGEAR, Inc.
Cecilia H. Herbert, 1949	Director (since 2005).	Member of Finance Council, Archdiocese of San Francisco (1999- 2006); Chair of Investment Committee, Archdiocese of San Francisco (1994-2005); Director (since 1998) and President (since 2007) of the Board of Directors, Catholic Charities CYO; Trustee (2004-2005) of Pacific Select Funds; Trustee (1992-2003) of the Montgomery Funds; Trustee (since 2002) and Chair of Finance and Investment Committee (since 2006) of the Thacher School.	Trustee (since 2005) of iShares Trust.
Charles A. Hurty, 1943	Director (since 2005).	Retired; Partner, KPMG LLP (1968-2001).	Trustee (since 2005) of iShares Trust; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (1 portfolio); Director (since 2005) of CSFB Alternative Investments Fund (6 portfolios).
John E. Kerrigan, 1955	Director (since 2005).	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Trustee (since 2005) of iShares Trust; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.

28 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Robert H. Silver, 1955	Director (since 2007).	President and Co-Founder of The Bravitas Group, Inc. (since 2006); Member, Non-Investor Advisory Board of Russia Partners II, LP (since 2006); President and Chief Operating Officer (2003-2005) and Director (1999-2005) of UBS Financial Services, Inc.; President and Chief Executive Officer of UBS Services USA, LLC (1999-2005); Managing Director, UBS America, Inc. (2000-2005); Director and Vice Chairman of the YMCA of Greater NYC (since 2001); Broadway Producer (since 2006).	Trustee (since 2007) of iShares Trust; Director and Member (since 2006) of the Audit and Compensation Committee of EPAM Systems, Inc.

Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael A. Latham, 1965	President (since 2007).	Head of Americas iShares (since 2007); Chief Operating Officer of the Intermediary Investor and Exchange Traded Products Business of BGI (2003-2007); Director and Chief Financial Officer of Barclays Global Investors International, Inc. (since 2005); Director of Mutual Fund Delivery in the U.S. Individual Investor Business of BGI (2000-2003).	None.
Geoffrey D. Flynn, 1956	Treasurer and Chief Financial Officer (since 2007).	Director of Mutual Fund Operations of BGI (since 2007); President of Van Kampen Investor Services (2003-2007); Managing Director of Morgan Stanley (2002-2007); President of Morgan Stanley Trust, FSB (2002- 2007).	None.

DIRECTOR AND OFFICER INFORMATION 29

Director and Officer Information (Unaudited) (Continued)

iSHARES^®, INC.

Officers (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Eilleen M. Clavere, 1952	Secretary (since 2007).	Head of Legal Administration of Intermediary Investor Business of BGI (since 2006); Legal Counsel and Vice President of Atlas Funds, Atlas Advisers, Inc. and Atlas Securities, Inc. (2005-2006); Counsel of Kirkpatrick & Lockhart LLP (2001-2005).	None.
Ira P. Shapiro, 1963	Vice President and Chief Legal Officer (since 2007).	Associate General Counsel of BGI (since 2004); First Vice President of Merrill Lynch Investment Managers (1993-2004).	None.
Amy Schioldager, 1962	Executive Vice President (since 2007).	Head of U.S. Indexing of BGI (since 2006); Head of Domestic Equity Portfolio Management of BGI (2001-2006).	None.
H. Michael Williams, 1960	Executive Vice President (since 2007).	Head of Global Index and Markets Group of BGI (since 2006); Global Head of Securities Lending of BGI (2002-2006).	Trustee (since 2007) of BFIT.
Patrick O’Connor, 1967	Vice President (since 2007).	Head of iShares Portfolio Management of BGI (since 2006); Senior Portfolio Manager of BGI (1999-2006).	None.
Lee Sterne, 1965	Vice President (since 2007).	Senior Portfolio Manager of BGI (since 2004); Portfolio Manager of BGI (2001-2004).	None.
Matt Tucker, 1972	Vice President (since 2007).	Head of U.S. Fixed-Income Investment Solutions of BGI (since 2005); Fixed- Income Investment Strategist of BGI (2003-2005); Fixed-Income Portfolio Portfolio Manager of BGI (1997-2003).	None.

30 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes:

NOTES 31

Notes:

32 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes:

NOTES 33

The iShares^® Family of Funds

The following is a list of iShares Funds being offered, along with their respective exchange trading symbols. Please call 1-800-iShares (1-800-474-2737) to obtain a prospectus for any iShares Fund. The prospectus contains more complete information, including charges, expenses, investment objectives and risk factors that should be carefully considered to determine if the Fund(s) are an appropriate investment for you. Read the prospectus(es) carefully before investing. Investing involves risk, including possible loss of principal.

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares S&P GSSI^TM Natural Resources (IGE)

iShares S&P GSTI^TM Networking (IGN)

iShares S&P GSTI^TM Semiconductor (IGW)

iShares S&P GSTI^TM Software (IGV)

iShares S&P GSTI^TM Technology (IGM)

iShares Domestic Sector Index Funds

iShares Cohen & Steers Realty Majors (ICF)

iShares Dow Jones U.S. Basic Materials Sector (IYM)

iShares Dow Jones U.S. Consumer Services Sector (IYC)

iShares Dow Jones U.S. Consumer Goods Sector (IYK)

iShares Dow Jones U.S. Energy Sector (IYE)

iShares Dow Jones U.S. Financial Sector (IYF)

iShares Dow Jones U.S. Financial Services (IYG)

iShares Dow Jones U.S. Healthcare Sector (IYH)

iShares Dow Jones U.S. Industrial Sector (IYJ)

iShares Dow Jones U.S. Real Estate (IYR)

iShares Dow Jones U.S. Technology Sector (IYW)

iShares Dow Jones U.S. Telecommunications Sector (IYZ)

iShares Dow Jones Transportation Average (IYT)

iShares Dow Jones U.S. Utilities Sector (IDU)

iShares Dow Jones U.S. Total Market (IYY)

iShares Nasdaq Biotechnology (IBB)

iShares Domestic Subsector Index Funds

iShares Dow Jones U.S. Aerospace & Defense (ITA)

iShares Dow Jones U.S. Broker-Dealers (IAI)

iShares Dow Jones U.S. Healthcare Providers (IHF)

iShares Dow Jones U.S. Home Construction (ITB)

iShares Dow Jones U.S. Insurance (IAK)

iShares Dow Jones U.S. Medical Devices (IHI)

iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)

iShares Dow Jones U.S. Oil Equipment & Services (IEZ)

iShares Dow Jones U.S. Pharmaceuticals (IHE)

iShares Dow Jones U.S. Regional Banks (IAT)

iShares FTSE NAREIT Industrial/Office (FIO)

iShares FTSE NAREIT Mortgage REITs (REM)

iShares FTSE NAREIT Real Estate 50 (FTY)

iShares FTSE NAREIT Residential (REZ)

iShares FTSE NAREIT Retail (RTL)

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Industrials Sector (EXI)

iShares S&P Global Materials Sector (MXI)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap^TM (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman Short Treasury (SHV)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 3-7 Year Treasury (IEI)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 10-20 Year Treasury (TLH)

iShares Lehman 20+ Year Treasury (TLT)

iShares Lehman TIPS (TIP)

iShares Lehman Credit (CFT)

iShares Lehman 1-3 Year Credit (CSJ)

iShares Lehman Intermediate Credit (CIU)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Lehman Government/Credit (GBF)

iShares Lehman Intermediate Government/Credit (GVI)

iShares Lehman MBS (MBB)

iShares iBoxx $ High Yield Corporate (HYG)

iShares S&P National Municipal (MUB)

iShares S&P California Municipal (CMF)

iShares S&P New York Municipal (NYF)

iShares Specialty Index Funds

iShares KLD Select Social SM (KLD)

iShares KLD 400 Social (DSI)

iShares Dow Jones Select Dividend (DVY)

iShares Dow Jones EPAC Select Dividend (IDV)

iShares S&P U.S. Preferred Stock (PFF)

iShares International Index Funds

iShares MSCI EAFE (EFA)

iShares MSCI EAFE Growth (EFG)

iShares MSCI EAFEValue (EFV)

iShares MSCI Emerging Markets (EEM)

iShares MSCI EMU (EZU)

iShares MSCI Pacific ex-Japan (EPP)

iShares S&P Europe 350 (IEV)

iShares S&P Latin America 40 (ILF)

iShares S&P World ex-U.S. Property (WPS)

iShares Morningstar Index Funds

iShares Morningstar Large Core (JKD)

iShares Morningstar Large Growth (JKE)

iShares Morningstar Large Value (JKF)

iShares Morningstar Mid Core (JKG)

iShares Morningstar Mid Growth (JKH)

iShares Morningstar Mid Value (JKI)

iShares Morningstar Small Core (JKJ)

iShares Morningstar Small Growth (JKK)

iShares Morningstar Small Value (JKL)

iShares NYSE Index Funds

iShares NYSE Composite (NYC)

iShares NYSE 100 (NY)

iShares^® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., FTSE International Limited (“FTSE”), FTSE/Xinhua Index Limited (“FXI”), iBoxx, KLD Research & Analytics, Inc., MSCI Inc., Morningstar, Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. iBoxx is a registered trademark of International Index Company Limited. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor

NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50 Index, FTSE NAREIT Residential Index, FTSE NAREIT Retail Index, FTSE NAREIT Mortgage REITs Index or FTSE NAREIT Industrial/Office Index; all rights vest in NAREIT. “FTSE” Is a trade and service mark of London Stock Exchange and The Financial Times; “Xinhua” is a trade and service mark of Xinhua Financial Network Limited. “NAREIT^®” is a trademark of NAREIT.

An investment in the Fund(s) is not a deposit of a bank and it is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. This advertising section does not constitute part of the 2007 Annual Report.

5508-iS-1007

34 2007 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Item 2. Code of Ethics.

iShares, Inc. (the “Registrant”) has adopted a code of ethics that applies to persons appointed by the Registrant’s Board of Directors as the President and/or Chief Financial Officer, and any persons performing similar functions. For the fiscal year ended August 31, 2007, there were no amendments to any provision of this code of ethics, nor were there any waivers granted from any provision of this code of ethics. A copy of this code of ethics is filed with this Form N-CSR under Item 12(a)(1).

Item 3. Audit Committee Financial Expert.

The Registrant’s Board of Directors has determined that the Registrant has more than one audit committee financial expert, as that term is defined under Item 3(b) and 3(c), serving on its audit committee. The audit committee financial experts serving on the Registrant’s audit committee are Charles A. Hurty, John E. Kerrigan, George G.C. Parker and Robert H. Silver, all of whom are independent, as that term is defined under Item 3(a)(2).

Item 4. Principal Accountant Fees and Services.

(a) Audit Fees – The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Funds’ annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years, were $374,100 for the fiscal year ended August 31, 2006 and $392,808 for the fiscal year ended August 31, 2007.

(b) Audit-Related Fees – There were no fees billed for the fiscal years ended August 31, 2006 and August 31, 2007 for assurance and related services by the principal accountant that were reasonably related to the performance of the audit of the Funds’ financial statements and are not reported under (a) of this Item.

(c) Tax Fees – The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for the review of the Funds’ tax returns and excise tax calculations, were $179,310 for the fiscal year ended August 31, 2006 and $188,280 for the fiscal year ended August 31, 2007.

(d) All Other Fees – There were no other fees billed for the fiscal years ended August 31, 2006 and August 31, 2007 for products and services provided by the principal accountant, other than the services reported in (a) through (c) of this Item.

(e) (1) The Registrant’s audit committee charter, as amended, provides that the audit committee is responsible for the approval, prior to appointment, of the engagement of the principal accountant to annually audit and provide their opinion on the Registrant’s financial statements. The audit committee must also approve, prior to appointment, the engagement of the principal accountant to provide non-audit services to the Registrant or to any entity controlling, controlled by or under common control with the Registrant’s investment adviser (“Adviser Affiliate”) that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant.

(2) There were no services described in (b) through (d) above (including services required by the audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) None of the hours expended on the principal accountant’s engagement to audit the Funds’ financial statements for the fiscal year ended August 31, 2007 were attributable to work performed by persons other than the principal accountant’s full-time, permanent employees.

(g) The aggregate non-audit fees billed by the Registrant’s principal accountant for services rendered to the Funds, to the Registrant’s investment adviser and to any Adviser Affiliate that provides ongoing services to the Registrant for the last two fiscal years, were $1,866,533 for the fiscal year ended August 31, 2006 and $2,459,117 for the fiscal year ended August 31, 2007.

(h) The Registrant’s audit committee has considered whether the provision of non-audit services rendered to the Registrant’s investment adviser and any Adviser Affiliate that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, if any, are compatible with maintaining the principal accountant’s independence, and has determined that the provision of these services do not compromise the principal accountant’s independence.

Item 5. Audit Committee of Listed Registrants.

The Registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant’s audit committee members are George G.C. Parker, Cecilia H. Herbert, Charles A. Hurty, John E. Kerrigan and Robert H. Silver.

Item 6. Schedule of Investments.

The Funds’ full schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to the Registrant.

Item 10. Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.

Item 11. Controls and Procedures.

(a) The President (the Registrant’s Principal Executive Officer) and Chief Financial Officer (the Registrant’s Principal Financial Officer) have concluded that, based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to achieve the purposes described in Section 4(a) of the attached certification.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Code of Ethics for Senior Officers that is the subject of Item 2 is attached.

(a) (2) Section 302 Certifications are attached.

(a) (3) Not applicable to the Registrant.

(b) Section 906 Certifications are attached.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

iShares, Inc.
By:	/s/ Michael A. Latham
	Michael A. Latham, President (Principal Executive Officer)
	Date: October 30, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ Michael A. Latham
	Michael A. Latham, President (Principal Executive Officer)
	Date: October 30, 2007

By:	/s/ Geoffrey D. Flynn
	Geoffrey D. Flynn, Treasurer and Chief Financial Officer (Principal Financial Officer)
	Date: October 30, 2007

EX-99.CODEETHIC

N-CSR Exhibit for Item 12(a)(1): CODE OF ETHICS

iShares Trust and iShares, Inc.

CODE OF ETHICS FOR SENIOR OFFICERS

INTRODUCTION

Section 406 of the Sarbanes-Oxley Act of 2002 directed the Securities and Exchange Commission (the “SEC”) to adopt rules requiring companies to disclose whether or not they have adopted a code of ethics for senior financial officers, and if not, why not. The SEC has adopted rules requiring registered investment companies to make such disclosures. These rules extend coverage to chief executive officers as well as senior financial officers, and require disclosure of waivers or substantive changes in any code. This Code of Ethics (this “Code”) addresses these new requirements, and is different in nature and scope from the code of ethics that was previously adopted as required under Section 17(j) of the Investment Company Act of 1940 (the “1940 Act”) and Rule 17j-1 thereunder, which focuses on personal trading activities.

POLICY STATEMENT

It is the policy of iShares Trust and iShares, Inc. (collectively the “Funds” or each individually a “Fund”) to conduct its affairs in accordance with all applicable laws and governmental rules and regulations. This Code has been adopted by the Funds’ Board of Trustees and Board of Directors (together, the “Board”) and applies to the persons appointed by the Board as Chief Executive Officer, President, Chief Financial Officer, Treasurer and/or Chief Accounting Officer, and any persons performing similar functions, all as identified in Exhibit A, as modified from time to time (“Covered Officers”). Each Covered Officer is personally responsible for adhering to the standards and restrictions imposed by applicable laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters. This Code is designed to promote:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund;

• compliance with applicable governmental laws, rules and regulations;

• prompt internal reporting to the appropriate person of violations of this Code; and

• accountability for adherence to this Code.

This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide Covered Officers. In this regard, each Covered Officer must:

• act with integrity, including being honest and candid while still maintaining the confidentiality of information where required by law or the Fund’s policies;

• observe both the form and spirit of laws and governmental rules and regulations, and accounting standards;

• adhere to high standards of business ethics; and

• place the interests of the Fund and its shareholders before the Covered Officer’s own personal interests.

All activities of Covered Officers should be guided by and adhere to these fiduciary standards. Covered Officers should not hesitate to use available resources whenever it is desirable to seek clarification. Covered

Officers are encouraged to consult with the Fund’s chief legal officer or, if none, legal counsel to the Fund’s investment adviser (“Adviser”) (“Legal Counsel”), or other appropriate resources, when in doubt about the best course of action in a particular situation.

CONFLICTS OF INTEREST

Covered Officers should handle ethically actual and apparent conflicts of interest. A “conflict of interest” occurs when an individual’s personal interests actually or potentially interfere with the interests of the Fund or its shareholders. A conflict of interest can arise when a Covered Officer takes actions or has interests that may make it difficult to perform his duties as a Fund officer objectively and effectively. Service to the Fund should never be subordinated to either a direct or indirect personal gain or advantage.

Certain conflicts of interests arise out of the relationships between Covered Officers and the Fund that already are subject to conflict of interest provisions in the 1940 Act and the Investment Advisers Act. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as “affiliated persons” of the Fund. The Funds’ and the Adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Actual or apparent conflicts may arise from, or as a result of, the contractual relationship between the Fund and the Adviser, administrator or other service provider of which the Covered Officers are also officers or employees (the “Employer”). It is recognized by the Board that the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on the Employer and the Fund. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Employer, and is consistent with the Board’s understanding of the performance by the Covered Officers of their duties as officers of the Fund. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of other investment companies advised or serviced by the Employer and the codes of those investment companies will apply to the Covered Officers acting in those distinct capacities. Nonetheless, each Covered Officer recognizes that, as an Officer of the Fund, he or she has a duty to act in the best interests of the Fund and its shareholders.

If a Covered Officer believes that his or her responsibilities as an officer or employee of the Employer are likely to materially compromise his or her objectivity or ability to perform the duties of his role as an officer of the Fund, he or she should consult with Legal Counsel, the Fund’s outside counsel, or counsel to the Directors who are not “interested persons” of the Fund as defined in the 1940 Act (“Independent Directors”), as appropriate. Under appropriate circumstances, a Covered Officer should also consider whether to present the matter to the Board or an appropriate committee thereof.

In addition, each Covered Officer must:

• avoid conflicts of interest wherever possible;

• not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

• not engage in personal, business or professional relationships or dealings which would impair his or her independence of judgment or adversely affect the performance of his or her duties in the best interests of the Fund and its shareholders; and

• not cause the Fund to take action, or fail to take action, for the personal benefit of the Covered Officer rather than the benefit the Fund.

ACCURACY OF REPORTS, RECORDS AND ACCOUNTS

All Covered Officers are responsible for the accuracy of the records and reports that they are responsible for maintaining. Each Covered Officer shall seek to obtain additional resources if he believes that existing resources

are inadequate to enable the Fund to provide full, fair and accurate financial information and other disclosure to regulators and Fund shareholders. Accurate information is essential to the Fund’s ability to meet legal and regulatory obligations. The books and records of the Fund shall meet the highest standards and accurately reflect the true nature of the transactions they record. The Covered Officers must not create false or misleading documents or accounting, financial or electronic records for any purpose, and must not direct any other person to do so. If a Covered Officer becomes aware that information filed with the SEC or made available to the public contains any false or misleading information or omits to disclose necessary information, he shall promptly report it to Legal Counsel for a determination as to what, if any, corrective action is necessary or appropriate.

No undisclosed or unrecorded account or fund shall be established for any purpose. No false or misleading entries shall be made in the Fund’s books or records for any reason. No disbursement of Fund assets shall be made without adequate supporting documentation or for any purpose other than as described in the Fund’s documents or contracts.

FUNDS DISCLOSURE CONTROLS AND PROCEDURES

Each Covered Officer is required to be familiar, and comply, with the Fund’s disclosure controls and procedures. In addition, each Covered Officer having direct or supervisory authority regarding SEC filings or the Fund’s other public communications should, to the extent appropriate within his area of responsibility, consult with other Fund officers and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure.

Each Covered Officer must:

• familiarize him- or herself with the disclosure requirements applicable to the Fund as well as the business and financial operations of the Fund;

• ensure that reasonable steps are taken within his or her areas of responsibility to promote full, fair, accurate, timely and understandable disclosure in all regulatory filings, as well as when communicating with the Fund’s shareholders or the general public, in accordance with applicable law;

• consistent with his or her responsibilities, exercise appropriate supervision over and assist relevant Fund service providers in developing financial information and other disclosure that complies with relevant law and presents information in a clear, comprehensible and complete manner; and

• not knowingly misrepresent, conceal or omit required disclosures of, or cause others to do the same, facts about the Fund, whether to persons within or outside the Fund, including to outside counsel, independent auditors and governmental regulators.

CONFIDENTIAL INFORMATION

Covered Officers who have access to confidential information are not permitted to use or share that information for their personal benefit or for any other purpose except the conduct of the Fund’s business. Covered Officers should maintain the confidentiality of information entrusted to them by the Fund or its shareholders, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information, including information that might be of use to competitors, or harmful to the Fund or its shareholders if disclosed.

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly by the Fund. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board and its counsel.

COMPLIANCE, REPORTING AND RECORDKEEPING

Compliance

Any Covered Officer who violates the provisions of this Code will be subject to disciplinary action and appropriate sanctions, up to and including termination. Sanctions shall be imposed by the Audit Committee, subject

to review by the full Board, in their sole discretion. Depending on the nature and severity of the violation, the Fund may refer such violation to appropriate authorities for civil action or criminal prosecution.

All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by the law or this Code, such reports and records shall not be disclosed to anyone other than the Fund’s Adviser, the Directors, the Fund’s outside counsel or counsel to the Independent Directors.

Reporting

Each Covered Officer shall:

• upon receipt of the Code or upon becoming a Covered Officer, sign and submit an Initial Acknowledgement (form attached) confirming that he has received, read and understands the Code;

• annually, sign and submit an Annual Acknowledgement (form attached) confirming that he has complied with the requirements of the Code;

• not retaliate against any Covered Officer or other person for making reports of violations in good faith; and

• notify Legal Counsel, the Fund’s outside counsel or counsel to the Independent Directors, as appropriate, of any actual or potential violation of this Code. Failure to do so is itself a violation of this Code. The Fund will not retaliate against any Covered Officer for making reports of violations in good faith, but will not be precluded from taking appropriate disciplinary action for the violations themselves.

Except as described otherwise below, Legal Counsel is authorized to apply this Code to situations presented to it and has the authority to interpret this Code in any particular situation. Legal Counsel shall take all action it considers appropriate to investigate any actual or potential violations reported to it, and Legal Counsel is authorized and encouraged to consult, as appropriate, with the chair of the Audit Committee, the Fund’s outside counsel or counsel to the Independent Directors. The Fund’s Audit Committee is responsible for granting waivers from the terms and provisions of this Code, as it deems appropriate.

Recordkeeping

The Fund will maintain and preserve for a period of not less than six (6) years from the date such action is taken, the first two (2) years in an easily accessible place, a copy of the information or materials supplied to the Board: (i) that provided the basis for any amendment or waiver to this Code, and (ii) relating to any violation of the Code and sanctions imposed for such violation, together with a written record of the approval or action taken by the Audit Committee and/or Board.

EXHIBIT A

“Covered Officers” covered by this Code of Ethics for Senior Officers:

1. Michael A. Latham, President (Principal Executive Officer)

2. Geoffrey D. Flynn, Treasurer and Chief Financial Officer (Principal Financial Officer)

Current as of: October 30, 2007

Form of

INITIAL ACKNOWLEDGEMENT

I acknowledge that I have received and read a copy of the Code of Ethics for Senior Officers (the “Code”) and that I understand it. I further acknowledge that I am responsible for understanding and complying with the policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code.

I also acknowledge my responsibility to report any violation of the Code to Legal Counsel, as defined in the Code.

I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also understand that, consistent with applicable law, the Fund has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.

Covered Officer Name and Title:
	(please print)
Signature		Date

Form of

ANNUAL ACKNOWLEDGEMENT

I acknowledge that I have received and read a copy of the Code of Ethics for Senior Officers (the “Code”) and that I understand it. I further acknowledge that I am responsible for understanding and complying with the policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code.

I also acknowledge that I have fully complied with the terms and provisions of the Code during the period of time since the most recent Initial or Annual Acknowledgement provided by me.

I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also understand that, consistent with applicable law, the Fund has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.

Covered Officer Name and Title:
	(please print)
Signature		Date

EX-99.CERT

N-CSR Exhibit for Item 12(a)(2): SECTION 302 CERTIFICATIONS EX-99.CERT

I, Michael A. Latham, certify that:

1. I have reviewed this report on Form N-CSR of iShares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: October 30, 2007	/s/ Michael A. Latham	President (Principal Executive Officer)
	Michael A. Latham	[Title]
	[Signature]

N-CSR Exhibit for Item 12(a)(2): SECTION 302 CERTIFICATIONS EX-99.CERT

I, Geoffrey D. Flynn, certify that:

1. I have reviewed this report on Form N-CSR of iShares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: October 30, 2007	/s/ Geoffrey D. Flynn	Treasurer and Chief Financial Officer (Principal Financial Officer)
	Geoffrey D. Flynn	[Title]
	[Signature]

EX-99.906CERT

Ex.99.906 CERT

N-CSR Exhibit for Item 12(b): CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Michael A. Latham, President (Principal Executive Officer), and Geoffrey D. Flynn, Treasurer and Chief Financial Officer (Principal Financial Officer), of iShares, Inc. (the “Registrant”), each certify that:

1. The Registrant’s periodic report on Form N-CSR for the period ended August 31, 2007 (the “Form N-CSR”) fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: October 30, 2007	/s/ Michael A. Latham	President (Principal Executive Officer)
	Michael A. Latham	[Title]
	[Signature]

Date: October 30, 2007	/s/ Geoffrey D. Flynn	Treasurer and Chief Financial Officer (Principal Financial Officer)
	Geoffrey D. Flynn	[Title]
	[Signature]