485APOS

    As filed with the Securities and Exchange Commission on February 22, 2008
                                                File Nos. 33-97598 and 811-09102

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A

           REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

                       Post-Effective Amendment No. 53 [X]

                                     and/or

       REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

                              Amendment No. 55 [X]

                        (Check appropriate box or boxes)

                                  iShares, Inc.
               (Exact Name of Registrant as Specified in Charter)

                      c/o State Street Bank & Trust Company
                              200 Clarendon Street
                                Boston, MA 02116
                (Address of Principal Executive Office)(Zip Code)

       Registrant's Telephone Number, including Area Code: (415) 597-2000

                          The Corporation Trust Company
                              300 E. Lombard Street
                               Baltimore, MD 21202
                     (Name and Address of Agent for Service)

                                 With Copies to:

                                                        
MARGERY K. NEALE, ESQ.         BENJAMIN J. HASKIN, ESQ.       KEVIN D. SMITH, ESQ.
WILLKIE FARR & GALLAGHER LLP   WILLKIE FARR & GALLAGHER LLP   BARCLAYS GLOBAL INVESTORS, N.A.
787 SEVENTH AVENUE             1875 K STREET, N.W.            45 FREMONT STREET
NEW YORK, N.Y. 10019-6099      WASHINGTON, D.C. 20006-1238    SAN FRANCISCO, CA 94105



     It is proposed that this filing will become effective (check appropriate
box):

[ ]  Immediately upon filing pursuant to paragraph (b)

[X]  60 days after filing pursuant to paragraph (a)(1)

[ ]  75 days after filing pursuant to paragraph (a)(2)

[ ]  On (date) pursuant to paragraph (b)

[ ]  On (date) pursuant to paragraph (a)(1)

[ ]  On (date) pursuant to paragraph (a)(2)

     If appropriate, check the following box:

     [X]  The post-effective amendment designates a new effective date for a
          previously filed post-effective amendment

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                                        iSHARES(Reg. TM) MSCI AUSTRIA INDEX FUND
                                                  Prospectus - February 25, 2008

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The Securities and Exchange Commission ("SEC") has not approved
or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.




iShares(Reg. TM)

iShares, Inc. (the "Company") is a registered investment company that consists
of more than 27 separate investment portfolios called funds. This Prospectus
relates to the following fund:

     iShares MSCI Austria Index Fund (the "Fund")

The Fund issues and redeems shares at their net asset value ("NAV") only in
blocks of 100,000 shares or multiples thereof ("Creation Units"). Only certain
large institutional investors known as "Authorized Participants" may purchase
or redeem Creation Units directly with the Fund at NAV. These transactions are
usually in exchange for a basket of securities similar to the Fund's portfolio
and an amount of cash. EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES OF THE
FUND ARE NOT REDEEMABLE SECURITIES. SHAREHOLDERS WHO ARE NOT AUTHORIZED
PARTICIPANTS MAY NOT REDEEM SHARES DIRECTLY FROM THE FUND AT NAV.

iShares(Reg. TM) is a registered trademark of Barclays Global Investors, N.A.
("BGI").

                       PROSPECTUS DATED FEBRUARY 25, 2008



Table of Contents

                                
  Introduction ..................   1
  Description of the Fund .......   2
  Investment Objective ..........   2
  Principal Investment              2
  Strategies
  Principal Risks ...............   3
  Portfolio Holdings Information    7
  Performance Information .......   8
  Fees and Expenses .............   9
  Management ....................   9
  Shareholder Information .......  10
  Distribution ..................  16
  Financial Highlights ..........  17
  Index Provider ................  18
  Disclaimers ...................  19
  Supplemental Information ......  21
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"MSCI Austria Index" and "MSCI Austria Investable Market Index" are servicemarks
of MSCI Inc. that have been licensed for use for certain purposes by BGI.




Introduction
This Prospectus contains important information about investing in the Fund.
Please read this Prospectus carefully before you make any investment decisions.
Additional information regarding the Fund is available at www.iShares.com.

Barclays Global Fund Advisors ("BGFA") is the investment adviser to the Fund.
Shares of the Fund are listed and trade at market prices on NYSE Arca, Inc.
("NYSE Arca"). The market price for a share of the Fund may be different from
the Fund's most recent NAV per share. The Fund has its own CUSIP number and
exchange trading symbol.

The Fund is an exchange traded fund (commonly referred to as an "ETF"). ETFs
are funds that trade like other publicly traded securities and are designed to
track an index. Similar to shares of an index mutual fund, each share of the
Fund represents a partial ownership in an underlying portfolio of securities
intended to track a market index. Unlike shares of a mutual fund, which can be
bought and redeemed from the issuing fund by all shareholders at a price based
on NAV, only Authorized Participants may purchase or redeem shares directly
from the Fund at NAV. Also unlike shares of a mutual fund, shares of the Fund
are listed on a national securities exchange and trade in the secondary market
at market prices that change throughout the day.

The Fund invests in a particular segment of the securities markets and seeks to
track the performance of a securities index that generally is not
representative of the market as a whole. The Fund is designed to be used as
part of broader asset allocation strategies. Accordingly, an investment in the
Fund should not constitute a complete investment program.

An investment in the Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, BGFA or any of its affiliates.

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Description of the Fund
CUSIP: 464286202
TRADING SYMBOL: EWO
UNDERLYING INDEX: MSCI Austria Investable Market Index
------------------------------------------------------

Investment Objective
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 Austrian market, as represented by the MSCI Austria
Investable Market Index (the "Underlying Index").

At a December 7, 2007, special meeting of shareholders of the Fund, a proposal
to change the Underlying Index of the Fund from the MSCI Austria Index to the
MSCI Austria Investable Market Index was approved.

Also at the December 7, 2007, special meeting of shareholders of the Fund, a
proposal to change the Fund's investment objective from a "fundamental"
investment policy to a "non-fundamental" investment policy was approved. As a
result, the investment objective and Underlying Index of the Fund may be
changed without shareholder approval.

The Underlying Index is sponsored by an organization (the "Index Provider")
that is independent of the Fund and BGFA. The Index Provider determines the
relative weightings of the securities in the Underlying Index and publishes
information regarding the market value of the Underlying Index. The Fund's
Index Provider is MSCI Inc. ("MSCI").

Additional information regarding the Index Provider is provided in the INDEX
PROVIDER section of this Prospectus.

Principal Investment Strategies

The Underlying Index consists of stocks traded primarily on the Vienna Stock
Exchange. As of September, 2007, the Underlying Index's three largest
industries were banks, real estate and energy.

BGFA uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try
to "beat" the index it tracks and does not seek temporary defensive positions
when markets decline or appear overvalued.

Indexing eliminates the chance that the Fund may substantially outperform its
Underlying Index but also may reduce some of the risks of active management,
such as poor security selection. Indexing seeks to achieve lower costs and
better after-tax performance by keeping portfolio turnover low in comparison to
actively managed investment companies.

The Fund will normally invest at least 80% of its assets in the securities of
its Underlying Index and ADRs based on securities of its Underlying Index, and
at least 90% of its assets in the securities of its Underlying Index or in
securities included in the relevant market, but not in its Underlying Index, or
in ADRs based on the securities in its Underlying Index. The Fund also may
invest its other assets in futures contracts, options on futures contracts,
other types of options and swaps related to its Underlying Index, as well as
cash and cash equivalents, including shares of money market funds advised by
BGFA or its affiliates.

Representative Sampling
"Representative sampling" is an indexing strategy that involves investing in a
representative sample of securities that collectively has an investment profile
similar to the Underlying Index. The securities selected are expected to have,
in the aggregate, investment characteristics (based on factors such as market

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capitalization and industry weightings), fundamental characteristics (such as
return variability and yield) and liquidity measures similar to those of the
Underlying Index. The Fund may or may not hold all of the securities that are
included in the Underlying Index.

Correlation
An index is a theoretical financial calculation while the Fund is an actual
investment portfolio. The performance of the Fund and its Underlying Index may
vary somewhat due to transaction costs, asset valuations, corporate actions
(such as mergers and spin-offs), timing variances and differences between the
Fund's portfolio and the Underlying Index resulting from legal restrictions
(such as diversification requirements that apply to the Fund but not to the
Underlying Index) or representative sampling.

BGFA expects that, over time, the correlation between the Fund's performance
and that of its Underlying Index, before fees and expenses, will be 95% or
better. A correlation percentage of 100% would indicate perfect correlation.
The difference between 100% correlation and the Fund's actual correlation with
its Underlying Index is called "tracking error." The Fund's use of a
representative sampling indexing strategy can be expected to result in greater
tracking error than if the Fund used a replication indexing strategy.
"Replication" is an indexing strategy in which a fund invests in substantially
all of the securities in its underlying index in approximately the same
proportions as in the underlying index.

Industry Concentration Policy

The Fund will concentrate its investments (I.E., hold 25% or more of its total
assets) in a particular industry or group of industries only to approximately
the same extent that its Underlying Index is concentrated. For purposes of this
limitation, securities of the U.S. government (including its agencies and
instrumentalities) and repurchase agreements collateralized by U.S. government
securities are not considered to be issued by members of any industry.

Principal Risks
The Fund may be subject to the principal risks noted below. Some or all of
these risks may adversely affect the Fund's NAV, trading price, yield, total
return and its ability to meet its investment objective.

Asset Class Risk
The securities in the Underlying Index or the Fund's portfolio may underperform
the returns of other securities or indexes that track other industries, groups
of industries, markets, asset classes or sectors. Various types of securities
or indexes tend to experience cycles of outperformance and underperformance in
comparison to the general securities markets.

Concentration Risk
To the extent that its Underlying Index or portfolio is concentrated in the
securities of companies in a particular market, industry, group of industries,
sector or asset class, the Fund may be adversely affected by the performance of
those securities, may be subject to increased price volatility and may be more
susceptible to adverse economic, market, political or regulatory occurrences
affecting that market, industry, group of industries, sector or asset class. An
investment in the Fund should not constitute a complete investment program.

Currency Risk
Because the Fund's NAV is determined on the basis of the U.S. dollar, you may
lose money if you invest in the Fund if the Austrian currency depreciates
against the U.S. dollar, even if the local currency value of the Fund's
holdings in that market increases.

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Custody Risk
Custody risk refers to the risks in the process of clearing and settling trades
and to the holding of securities by local banks, agents and depositories. Low
trading volumes and volatile prices in less developed markets make trades
harder to complete and settle. Local agents are held only to the standards of
care of the local markets. Governments or trade groups may compel local agents
to hold securities in designated depositories that are not subject to
independent evaluation. The less developed a country's securities market is,
the greater the likelihood of custody problems.

European Economic Risk
Most developed countries in Europe are members of the European Union ("EU") and
the Economic and Monetary Union of the EU (the "EMU"). The EMU requires
compliance with restrictions on inflation rates, deficits, interest rates, debt
levels and fiscal and monetary controls, each of which may significantly affect
every country in Europe. Decreasing imports or exports, changes in governmental
regulations on trade, changes in the exchange rate of the euro and recessions
among EU members may have a significant adverse effect on the economies of
other EU members and their trading partners, including Austria.

Foreign Securities Risks
Investments in the securities of non-U.S. issuers are subject to all the risks
of investing in the market of such issuers, including market fluctuations
caused by factors such as economic and political developments, changes in
interest rates and abrupt changes in stock prices. As a result of investing in
foreign securities, the Fund may be subject to the risks listed below. These
risks may decrease the value of your investment:

[]  Less liquid and less efficient securities markets;

[]  Greater securities price volatility;

[]  Exchange rate fluctuations and exchange controls;

[]  Less publicly available information about issuers;

[]  Imposition of withholding or other taxes;

[]  Imposition of restrictions on the expatriation of funds or other assets of
the Fund;

[]  Higher transaction and custody costs and delays in attendant settlement
procedures;

[]  Difficulties in enforcing contractual obligations;

[]  Lower levels of regulation of the securities markets;

[]  Different accounting, disclosure and reporting requirements;

[]  Substantial government involvement in the economy;

[]  Higher rates of inflation; and

[]  Greater social, economic and political uncertainty, the risk of
  nationalization or expropriation of assets and risk of war.

Issuer Risk
The performance of the Fund depends on the performance of individual companies
in which the Fund invests. Any issuer may perform poorly, causing the value of
its securities to decline. Poor performance may be caused by poor management
decisions, competitive pressures, changes in technology, disruptions in supply,
labor problems or shortages, corporate restructurings, fraudulent disclosures
or other factors. Issuers may, in times of distress or on their own discretion,
decide to reduce or eliminate dividends which would also cause their stock
prices to decline.

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Legal Enforcement of Shareholder Rights Risk
Legal principles relating to corporate affairs and the validity of corporate
procedures, directors' fiduciary duties and liabilities and stockholders'
rights in markets in which the Fund invests may not be as extensive as those
that apply in the U.S. The Fund may therefore have more difficulty asserting
its rights as a stockholder of a non-U.S. company in which it invests than it
would as a stockholder of a comparable U.S. company.

Management Risk
The Fund may be subject to management risk because the Fund does not fully
replicate its Underlying Index and may hold securities that are not included in
its Underlying Index. Management risk is the risk that BGFA's investment
strategy, the implementation of which is subject to a number of constraints,
may not produce the intended results.

Market Risk
The Fund's NAV will react to securities market movements. You could lose money
over short periods due to fluctuation in the Fund's NAV in response to
short-term market movements and over longer periods during market downturns.
Securities may decline in value due to factors affecting securities markets
generally or particular industries represented in the markets. The value of a
security may decline due to general market conditions, economic trends or
events that are not specifically related to a company or to factors that affect
a particular industry or industries. During a general economic downturn in the
securities markets, multiple asset classes may be negatively affected.

Market Trading Risks
ABSENCE OF ACTIVE MARKET

      Although shares of the Fund are listed for trading on a national
      securities exchange, there can be no assurance that an active trading
      market for such shares will develop or be maintained.

LACK OF MARKET LIQUIDITY

      Secondary market trading in Fund shares may be halted by a national
      securities exchange because of market conditions or for other reasons. In
      addition, trading in Fund shares is subject to trading halts caused by
      extraordinary market volatility pursuant to "circuit breaker" rules.
      There can be no assurance that the requirements necessary to maintain the
      listing of the shares of the Fund will continue to be met or will remain
      unchanged.

SHARES OF THE FUND MAY TRADE AT PRICES OTHER THAN NAV

      Shares of the Fund trade on exchanges at prices at, above or below their
      most recent NAV. The per share NAV of the Fund is calculated at the end
      of each business day and fluctuates with changes in the market value of
      the Fund's holdings since the most recent calculation. The trading prices
      of the Fund's shares fluctuate continuously throughout trading hours
      based on market supply and demand rather than NAV. The trading prices of
      the Fund's shares may deviate significantly from NAV during periods of
      market volatility. ANY OF THESE FACTORS MAY LEAD TO THE FUND'S SHARES
      TRADING AT A PREMIUM OR DISCOUNT TO NAV. However, because shares can be
      created and redeemed in Creation Units at NAV (unlike shares of many
      closed-end funds, which frequently trade at appreciable discounts from,
      and sometimes at premiums to, their NAVs), BGFA believes that large
      discounts or premiums to the NAV of the Fund are not likely to be
      sustained over the long-term. While the creation/redemption feature is
      designed to make it likely that the Fund's shares normally will trade on
      exchanges at prices close to the Fund's next calculated NAV, exchange
      prices are not expected to correlate exactly with the Fund's NAV due to
      timing reasons as well as market supply and demand factors. In addition,
      disruptions to creations and redemptions or the existence of extreme
      market volatility may result in trading prices that differ

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      significantly from NAV. If a shareholder purchases at a time when the
      market price is at a premium to the NAV or sells at a time when the
      market price is at a discount to the NAV, then the shareholder may
      sustain losses.

COSTS OF BUYING OR SELLING FUND SHARES

      Buying or selling Fund shares involves two types of costs that apply to
      all securities transactions. When buying or selling shares of the Fund
      through a broker, you will incur a brokerage commission or other charges
      imposed by brokers as determined by that broker. In addition, you will
      also incur the cost of the "spread" - that is, the difference between
      what professional investors are willing to pay for Fund shares (the "bid"
      price) and the price at which they are willing to sell Fund shares (the
      "ask" price). Because of the costs inherent in buying or selling Fund
      shares, frequent trading may detract significantly from investment
      results and an investment in Fund shares may not be advisable for
      investors who anticipate regularly making small investments.

Non-Diversification Risk
The Fund is classified as "non-diversified." A non-diversified fund generally
may invest a larger percentage of its assets in the securities of a smaller
number of issuers. As a result, the Fund may be more susceptible to risks
associated with these companies or to a single economic, political or
regulatory occurrence affecting these companies.

Passive Investment Risk
The Fund is not actively managed and may be affected by a general decline in
market segments relating to its Underlying Index. The Fund invests in
securities included in, or representative of, its Underlying Index regardless
of their investment merits. BGFA does not attempt to take defensive positions
in declining markets.

Reliance on Exports Risk
The Austrian economy is dependent on the economies of Europe, mainly Eastern
Europe, as key trading partners. Reduction in spending by these economies on
Austrian products and services or negative changes in any of these economies
may cause an adverse impact on the Austrian economy. Eastern European markets
remain relatively undeveloped and can be particularly sensitive to political
and economic developments and adverse events in these Eastern European
countries may greatly impact the economies of Western Europe.

Risk of Uncertainty of European Union
In May and June 2005, voters in France and the Netherlands, respectively,
rejected ratification of the European Constitution causing some other countries
to postpone moves toward ratification. Failure by other members of the EU to
ratify the European Constitution could cause market disruptions, and could
adversely affect the value of securities held by the Fund.

Secondary Market Trading Risk
Shares of the Fund may trade in the secondary market on days when the Fund does
not accept orders to purchase or redeem shares. On such days, shares may trade
in the secondary market with more significant premiums or discounts than might
be experienced on days when the Fund accepts purchase and redemption orders.

Tracking Error Risk
Imperfect correlation between the Fund's securities and those in its Underlying
Index, rounding of prices, changes to the Underlying Index and regulatory
requirements may cause the Fund's performance to

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diverge from the performance of its Underlying Index. This is called "tracking
error." Tracking error also may result because the Fund incurs fees and
expenses while its Underlying Index does not incur such expenses.

Trading Risk
While the creation/redemption feature of the Fund is designed to make it likely
that shares of the Fund will trade close to their NAV, disruptions to creations
and redemptions may result in trading prices that differ significantly from
NAV.

Valuation Risk
Because foreign exchanges may be open on days when the Fund does not price its
shares, the value of the securities in the Fund's portfolio may change on days
when shareholders will not be able to purchase or sell the Fund's shares.

Portfolio Holdings Information
A description of the Company's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's
Statement of Additional Information ("SAI"). The top holdings of the Fund can
be found at www.iShares.com. Fund fact sheets provide information regarding the
Fund's top holdings and may be requested by calling 1-800-iShares
(1-800-474-2737).

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Performance Information
The bar chart and table that follow show how the Fund has performed on a
calendar year basis and provide an indication of the risks of investing in the
Fund. Both assume that all dividends and distributions have been reinvested in
the Fund. Past performance (before and after taxes) does not necessarily
indicate how it will perform in the future results. Supplemental information
about the Fund's performance is shown under the heading TOTAL RETURN
INFORMATION in the SUPPLEMENTAL INFORMATION section at the end of this
Prospectus.

               YEAR BY YEAR RETURNS/1/ (YEARS ENDED DECEMBER 31)


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1998    -1.83%
1999    -10.36%
2000    -10.57%
2001    -2.57%
2002    17.27%
2003    58.46%
2004    70.93%
2005    21.50%
2006    35.84%
2007    3.95%



--------
The best calendar quarter return during the periods shown above was 28.95% in
the 4th quarter of 2004; the worst was -23.45% in the 3rd quarter of 1998.

                          AVERAGE ANNUAL TOTAL RETURNS
                   (for the periods ended December 31, 2007)



                                                                     SINCE FUND
                                    1 YEAR     5 YEARS    10 YEARS   INCEPTION
                                  ---------- ----------- ---------- -----------
                                                        
ISHARES MSCI AUSTRIA INDEX FUND:
    (Inception date: 3/12/1996)
    Return Before Taxes               3.95%      35.97%     15.37%      12.71%
    Return After Taxes on             4.05%      35.92%     15.10%      12.47%
  Distributions
    Return After Taxes on             3.34%      32.78%     13.85%      11.45%
Distributions and Sale of Fun  d
  Shares
MSCI AUSTRIA INVESTABLE MARKET
INDEX (Index returns do not
reflect
deductions for fees, expenses,        2.17%      36.17%     15.80%      13.59%
  or taxes)(2)


(1) After-tax returns in the table above are calculated using the historical
    highest individual federal marginal income tax rates and do not reflect
    the impact of state, local or foreign taxes. Actual after-tax returns
    depend on an investor's tax situation and may differ from those shown, and
    after-tax returns shown are not relevant to tax-exempt investors or
    investors who hold shares through tax-deferred arrangements, such as
    401(k) plans or individual retirement accounts ("IRAs"). Fund returns
    after taxes on distributions and sale of Fund shares are calculated
    assuming that an investor has sufficient capital gains of the same
    character from other investments to offset any capital losses from the
    sale of Fund shares. As a result, Fund returns after taxes on
    distributions and sale of Fund shares may exceed Fund returns before taxes
    and/or returns after taxes on distributions.

(2)At a December 7, 2007, special shareholder meeting of the iShares MSCI
    Austria Index Fund, a proposal to change the Underlying Index of the Fund
    from the MSCI Austria Index to the MSCI Austria Investable Market Index
    was approved in response to MSCI's combination of its standard and small
    cap indexes to form new investable market indexes. The returns reflect
    that of the former MSCI Austria Index and not the current MSCI Austria
    Investable Market Index.

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Fees and Expenses
The following table describes the fees and expenses that you will incur if you
own shares of the Fund. You will also incur usual and customary brokerage
commissions when buying or selling shares of the Fund:



                              ANNUAL FUND OPERATING EXPENSES/2/
               ----------------------------------------------------------------
                                                                       TOTAL
                                  DISTRIBUTION                      ANNUAL FUND
 SHAREHOLDER    MANAGEMENT    AND SERVICE (12B-1)       OTHER        OPERATING
   FEES/1/         FEES               FEES           EXPENSES/3/     EXPENSES
-------------  ------------  ---------------------  -------------  ------------
                                                       
      None        0.51%              None               None          0.51%


--------
/1/Fees paid directly from your investment.
/2/Expenses that are deducted from the Fund's assets, expressed as a
percentage of average net assets.
/3/The Company's Investment Advisory Agreement provides that BGFA will pay
    all operating expenses of the Fund, except interest expense and taxes
    (both expected to be DE MINIMIS), any brokerage expenses, future
    distribution fees or expenses, and extraordinary expenses.

Example
This example is intended to help you compare the cost of owning shares of the
Fund with the cost of investing in other funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then sell all of
your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:



 1 YEAR    3 YEARS    5 YEARS    10 YEARS
--------  ---------  ---------  ---------
                       
   $52       $164       $285       $640


Management

Investment Adviser
As investment adviser, BGFA has overall responsibility for the general
management and administration of the Company. BGFA provides an investment
program for the Fund and manages the investment of the Fund's assets. In
seeking to achieve the Fund's investment objective, BGFA uses teams of
portfolio managers, investment strategists and other investment specialists.
This team approach brings together many disciplines and leverages BGFA's
extensive resources. BGFA also arranges for transfer agency, custody, fund
administration and all other non-distribution related services necessary for
the Fund to operate.

Pursuant to the Investment Advisory Agreement between BGFA and the Company, on
behalf of the Fund, BGFA is responsible for substantially all expenses of the
Company including the cost of transfer agency, custody, fund administration,
legal, audit and other services except interest expense and taxes, brokerage
expenses, distribution fees or expenses and extraordinary expenses.

For its investment advisory services to the Fund, BGFA is paid a management fee
based on the Fund's allocable portion of the aggregate of the average daily net
assets of the Fund and certain other iShares funds (iShares MSCI Australia
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 Japan Small Cap 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, which are offered in separate
prospectuses), BGFA is paid a management fee

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                                                                             9




equal to each of those funds' allocable portion of: 0.59% per year of the
aggregate net assets of those funds less than or equal to $7.0 billion, plus
0.54% per year of the aggregate net assets of those funds between $7.0 billion
and $11.0 billion, plus 0.49% per year of the aggregate net assets of those
funds between $11.0 billion and $24.0 billion, plus 0.44% per year of the
aggregate net assets of those funds in excess of $24.0 billion.

For its investment advisory services to the Fund, BGFA is entitled to receive
management fees from the Fund, based on a percentage of the Fund's average
daily net assets, at the annual rate of 0.51%.

BGFA is located at 45 Fremont Street, San Francisco, CA 94105. It is a
wholly-owned subsidiary of BGI, which in turn is a majority-owned subsidiary of
Barclays Bank PLC. As of September 30, 2007, BGI and its affiliates, including
BGFA, provided investment advisory services for assets in excess of $2.0
trillion. BGI, BGFA, Barclays Global Investors Services, Barclays Bank PLC and
their affiliates deal, trade and invest for their own accounts in the types of
securities in which the Fund may also invests.

A discussion regarding the basis for the Board of Directors' approval of the
Investment Advisory Agreement with BGFA will be available in the Fund's annual
report for the period ending August 31.

Portfolio Managers
Diane Hsiung and Greg Savage (the "Portfolio Managers") are primarily
responsible for the day-to-day management of the Fund. Each Portfolio Manager
is responsible for various functions related to portfolio management including,
but not limited to, investing cash inflows, coordinating with members of his or
her team to focus on certain asset classes, implementing investment strategy
researching and reviewing investment strategy and overseeing members of his or
her portfolio management team with more limited responsibilities.

Diane Hsiung is an employee of BGFA and BGI and, together with the other
Portfolio Manager, is primarily responsible for the day-to-day management of
the Fund. Ms. Hsiung has been a senior portfolio manager for BGFA and BGI since
2007 and a portfolio manager for BGFA and BGI from 2002 to 2006.

Greg Savage is an employee of BGFA and BGI and, together with the other
Portfolio Manager, is primarily responsible for the day-to-day management of
the Fund. Mr. Savage has been a senior portfolio manager for BGFA and BGI since
2006 and a portfolio manager for BGFA and BGI from 2001 to 2006.

The Fund's SAI provides additional information about the Portfolio Managers'
compensation, other accounts managed by the Portfolio Managers and the
Portfolio Managers' ownership (if any) of shares in the Fund.

Administrator, Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street") is the administrator,
custodian and transfer agent for the Fund.

Shareholder Information
ADDITIONAL SHAREHOLDER INFORMATION, INCLUDING HOW TO BUY AND SELL SHARES OF THE
FUND, IS AVAILABLE FREE OF CHARGE BY CALLING TOLL-FREE: 1-800-ISHARES
(1-800-474-2737) OR VISITING OUR WEBSITE AT WWW.ISHARES.COM.

Buying and Selling Shares
Shares of the Fund trade on a national securities exchange during the trading
day. Shares can be bought and sold throughout the trading day like shares of
other publicly traded companies. The Company does not impose any minimum
investment for shares of the Fund purchased on an exchange. Buying or selling
Fund shares involves two types of costs that apply to all securities
transactions. When buying or selling shares of the Fund through a broker, you
will incur a brokerage commission or other charges determined by your

--------------------------------------------------------------------------------
     10
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broker. In addition, you will also incur the cost of the "spread" - that is,
the difference between the bid price and the ask price. The commission is
frequently a fixed amount and may be a significant proportional cost for
investors seeking to buy or sell small amounts of shares. The spread varies
over time for shares of the Fund based on its trading volume and market
liquidity, and is generally lower if the Fund has a lot of trading volume and
market liquidity and higher if the Fund has little trading volume and market
liquidity. The Fund's shares trade under the trading symbol listed for the Fund
in the DESCRIPTION OF THE FUND section of this Prospectus.

Shares of the Fund may be acquired or redeemed directly from the Fund only in
Creation Units or multiples thereof, as discussed in the CREATIONS AND
REDEMPTIONS section of this Prospectus. Once created, shares of the Fund
generally trade in the secondary market in amounts less than a Creation Unit.

The Company's Board of Directors has adopted a policy of not monitoring for
frequent purchases and redemptions of Fund shares ("frequent trading") that
appear to attempt to take advantage of a potential arbitrage opportunity
presented by a lag between a change in the value of the Fund's portfolio
securities after the close of the primary markets for the Fund's portfolio
securities and the reflection of that change in the Fund's NAV ("market
timing"), because the Fund sells and redeems its shares directly through
transactions that are in-kind and/or for cash with a deadline for placing
cash-related transactions no later than the close of the primary markets for
the Fund's portfolio securities. The Board of Directors has not adopted a
policy of monitoring for other frequent trading activity because shares of the
Fund are listed and traded on national securities exchanges.

The national securities exchange on which the Fund's shares are listed is open
for trading Monday through Friday and is closed on weekends and the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Fund's primary listing exchange is NYSE Arca.

Section 12(d)(1) of the Investment Company Act of 1940, as amended, restricts
investments by registered investment companies in the securities of other
investment companies. Registered investment companies are permitted to invest
in the Fund beyond the limits set forth in Section 12(d)(1), subject to certain
terms and conditions set forth in an SEC exemptive order issued to the Company,
including that such investment companies enter into an agreement with the
Company.

Book Entry
Shares of the Fund are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company ("DTC") or its nominee is
the record owner of all outstanding shares of the Fund and is recognized as the
owner of all shares for all purposes.

Investors owning shares of the Fund are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all shares of the Fund. Participants include DTC, securities brokers and
dealers, banks, trust companies, clearing corporations and other institutions
that directly or indirectly maintain a custodial relationship with DTC. As a
beneficial owner of shares, you are not entitled to receive physical delivery
of stock certificates or to have shares registered in your name, and you are
not considered a registered owner of shares. Therefore, to exercise any right
as an owner of shares, you must rely upon the procedures of DTC and its
participants. These procedures are the same as those that apply to any other
securities that you hold in book-entry or "street name" form.

Share Prices
The trading prices of the Fund's shares in the secondary market generally
differ from the Fund's daily NAV per share and are affected by market forces
such as supply and demand, economic conditions and other factors. Information
regarding the intraday value of shares of the Fund, also known as the
"indicative optimized portfolio value" ("IOPV"), is disseminated every 15
seconds throughout the trading day by the national securities exchange on which
the Fund is listed or by market data vendors or other information providers.
The IOPV is based on the current market value of the securities and cash
required to be

--------------------------------------------------------------------------------
                                                                           11




deposited in exchange for a Creation Unit. The IOPV does not necessarily
reflect the precise composition of the current portfolio of securities held by
the Fund at a particular point in time nor the best possible valuation of the
current portfolio. Therefore, the IOPV should not be viewed as a "real-time"
update of the NAV, which is computed only once a day. The IOPV is generally
determined by using both current market quotations and/or price quotations
obtained from broker-dealers that may trade in the portfolio securities held by
the Fund. The quotations of certain Fund holdings may not be updated during
U.S. trading hours if such holdings do not trade in the U.S. The Fund is not
involved in, or responsible for, the calculation or dissemination of the IOPV
and makes no representation or warranty as to its accuracy.

Determination of Net Asset Value

The NAV for the Fund is generally determined once daily Monday through Friday
generally as of the regularly scheduled close of business of the New York Stock
Exchange ("NYSE") (normally 4:00 p.m., Eastern time) on each day that the NYSE
is open for trading, based on prices at the time of closing, provided that (a)
any assets or liabilities denominated in currencies other than the U.S. dollar
shall be translated into U.S. dollars at the prevailing market rates on the
date of valuation as quoted by one or more major banks or dealers that makes a
two-way market in such currencies (or a data service provider based on
quotations received from such banks or dealers); and (b) U.S. fixed-income
assets may be valued as of the announced closing time for trading in
fixed-income instruments on any day that the Securities Industry and Financial
Markets Association announces an early closing time. The NAV of the Fund is
calculated by dividing the value of the net assets of the Fund (I.E., the value
of its total assets less total liabilities) by the total number of outstanding
shares of the Fund, generally rounded to the nearest cent.

In calculating the Fund's NAV, the Fund's investments 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. BGFA 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 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. The frequency with which the
Fund's investments are valued using fair value pricing is primarily a function
of the types of securities and other assets in which the Fund invests pursuant
to its investment objective, strategies and limitations.

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 (the "1933 Act"));
(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 the Fund's investments using fair value pricing will result in using
prices for those investments that may differ from current market valuations.
Use of fair value prices and certain current market valuations could result in
a difference between the prices used to calculate the Fund's NAV and the prices
used by the Fund's Underlying Index, which, in turn, could result in a
difference between the Fund's performance and the performance of the Fund's
Underlying Index.

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     12
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Because foreign markets may be open on different days than the days during
which a shareholder may purchase the Fund's shares, the value of the Fund's
investments may change on days when shareholders are not able to purchase the
Fund's shares.

The value of assets denominated in foreign currencies is converted into U.S.
dollars using exchange rates deemed appropriate by BGFA as investment adviser.
Any use of a different rate from the rates used by MSCI may adversely affect
the Fund's ability to track its Underlying Index.

Dividends and Distributions
GENERAL POLICIES. Dividends from net investment income, if any, are declared
and paid at least semi-annually by the Fund. The Fund generally distributes its
net capital gains, if any, to shareholders annually. The Fund also reserves the
right to declare special distributions if, in its reasonable discretion, such
action is necessary or advisable to preserve its status as a regulated
investment company ("RIC") or to avoid imposition of income or excise taxes on
undistributed income.

Dividends and other distributions on shares are distributed on a PRO RATA basis
to beneficial owners of such shares. Dividend payments are made through DTC
participants to beneficial owners then of record with proceeds received from
the Fund.

DIVIDEND REINVESTMENT SERVICE. No dividend reinvestment service is provided by
the Company. Broker-dealers may make available the DTC book-entry Dividend
Reinvestment Service for use by beneficial owners of the Fund for reinvestment
of their dividend distributions. Beneficial owners should contact their broker
to determine the availability and costs of the service and the details of
participation therein. Brokers may require beneficial owners to adhere to
specific procedures and timetables. If this service is available and used,
dividend distributions of both income and realized gains will be automatically
reinvested in additional whole shares of the Fund purchased in the secondary
market.

Taxes
As with any investment, you should consider how your investment in shares of
the Fund will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in shares of the Fund.

Unless your investment in shares is made through a tax-exempt entity or
tax-deferred retirement account, such as an IRA, you need to be aware of the
possible tax consequences when the Fund makes distributions or you sell Fund
shares.

Taxes on Distributions
Distributions from the Fund's net investment income (other than qualified
dividend income), including distributions out of the Fund's net short-term
capital gains, if any, and distributions of income from securities lending, are
taxable to you as ordinary income. Distributions by the Fund of net long-term
capital gains in excess of net short-term capital losses (capital gain
dividends) are taxable to you as long-term capital gains, regardless of how
long you have held the Fund's shares. Distributions by the Fund that qualify as
qualified dividend income are taxable to you at long-term capital gain rates.

Dividends will be qualified dividend income to you if they are attributable to
qualified dividend income received by the Fund which, in general, includes
dividend income from taxable U.S. corporations and qualified foreign
corporations, provided that the Fund satisfies certain holding period
requirements in respect of the stock of such corporations and has not hedged
its position in the stock in certain ways. For this purpose, a qualified
foreign corporation means any foreign corporation (i) that is incorporated in a
possession of the United States, (ii) that is eligible for benefits under a
comprehensive income tax treaty with the United States which includes an
exchange of information program or (iii) if the stock with respect to which the
dividend was paid is readily tradable on an established United States security
market. The term excludes a corporation that is a passive foreign investment
company. Under current Internal Revenue

--------------------------------------------------------------------------------
                                                                           13




Service ("IRS") guidance, the United States has a comprehensive income tax
treaty with Austria as well as with the following countries: Australia,
Bangladesh, Barbados, Belgium, Canada, China, Cyprus, Czech Republic, Denmark,
Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India,
Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Latvia,
Lithuania, Luxembourg, Mexico, Morocco, Netherlands, New Zealand, Norway,
Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Slovak
Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland,
Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom and
Venezuela.

Dividends received by the Fund from a real estate investment trust ("REIT") or
another RIC generally are qualified dividend income only to the extent the
dividend distributions are made out of qualified dividend income received by
such REIT or RIC. It is expected that dividends received by the Fund from a
REIT and distributed to a shareholder generally will be taxable to the
shareholder as ordinary income.

Under current law, the taxation of qualified dividend income at long-term
capital gain rates will no longer apply for taxable years beginning after
December 31, 2010.

A dividend will not be treated as qualified dividend income if the dividend is
received with respect to any share of stock held for fewer than 61 days during
the 121-day period beginning at the date which is 60 days before the date on
which such share becomes ex-dividend with respect to such dividend or in the
case of certain preferred stock 91 days during the 181-day period beginning 90
days before such date. In general, your distributions are subject to U.S.
federal income tax for the year when they are paid. Certain distributions paid
in January, however, may be treated as paid on December 31 of the prior year.

If the Fund's distributions exceed current and accumulated earnings and
profits, all or a portion of the distributions made in the taxable year may be
recharacterized as a return of capital to shareholders. A return of capital
distribution generally will not be taxable but will reduce the shareholder's
cost basis and result in a higher capital gain or lower capital loss when those
shares on which the distribution was received are sold.

If you are neither a resident nor a citizen of the United States or if you are
a foreign entity, the Fund's ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies, provided,
however, that withholding tax will generally not apply to any gain or income
realized by a non-U.S. shareholder in respect of any distributions of long-term
capital gains or upon the sale of other disposition of shares of the Fund.

Dividends and interest received by the Fund with respect to foreign securities
may give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries, including Austria, and the United States
may reduce or eliminate such taxes. Since more than 50% of the total assets of
the Fund will almost certainly consist of foreign stocks or securities, the
Fund will "pass through" to you certain foreign income taxes (including
withholding taxes) paid by the Fund. This means that you will be considered to
have received as an additional dividend your share of such foreign taxes but
you may be entitled to either a corresponding tax deduction in calculating your
taxable income or, subject to certain limitations, a credit in calculating your
U.S. federal income tax.

If you are a resident or a citizen of the United States, by law, back-up
withholding will apply to your distributions and proceeds if you have not
provided a taxpayer identification number or social security number and made
other required certifications.

Taxes When Shares are Sold
Currently, any capital gain or loss realized upon a sale of shares is generally
treated as a long-term gain or loss if shares have been held for more than one
year. Any capital gain or loss realized upon a sale of shares held for one year
or less is generally treated as short-term gain or loss, except that any
capital loss on the sale of shares held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends were paid with
respect to such shares.

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     14
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THE FOREGOING DISCUSSION SUMMARIZES SOME OF THE CONSEQUENCES UNDER CURRENT U.S.
FEDERAL TAX LAW OF AN INVESTMENT IN THE FUND. IT IS NOT A SUBSTITUTE FOR
PERSONAL TAX ADVICE. YOU MAY ALSO BE SUBJECT TO STATE AND LOCAL TAXATION ON
FUND DISTRIBUTIONS AND SALES OF SHARES. CONSULT YOUR PERSONAL TAX ADVISER ABOUT
THE POTENTIAL TAX CONSEQUENCES OF AN INVESTMENT IN SHARES OF THE FUND UNDER ALL
APPLICABLE TAX LAWS.

Creations and Redemptions
The shares that trade in the secondary market are "created" at NAV by market
makers, large investors and institutions only in block-size Creation Units of
100,000 shares or multiples thereof. Each "creator" or "Authorized Participant"
enters into an authorized participant agreement with the Fund's distributor,
SEI Investments Distribution Co. (the "Distributor"). A creation transaction,
which is subject to acceptance by the transfer agent, takes place when an
Authorized Participant deposits into the Fund a portfolio of securities
approximating the holdings of the Fund and a specified amount of cash in
exchange for a specified number of Creation Units. To the extent practicable,
the composition of such portfolio generally corresponds PRO RATA to the
holdings of the Fund.

Similarly, shares can be redeemed only in Creation Units, generally in-kind for
a portfolio of securities held by the Fund and a specified amount of cash.
EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES ARE NOT REDEEMABLE BY THE
FUND. The prices at which creations and redemptions occur are based on the next
calculation of NAV after an order is received in a form described in the
authorized participant agreement.

The Fund intends to comply with the U.S. federal securities laws in accepting
securities for deposits and satisfying redemptions with redemption securities,
including that the securities accepted for deposits and the securities used to
satisfy redemption requests will be sold in transactions that would be exempt
from registration under the 1933 Act. Further, an Authorized Participant that
is not a "qualified institutional buyer," as such term is defined under Rule
144A of the 1933 Act, will not be able to receive Fund securities that are
restricted securities eligible for resale under Rule 144A.

Creations and redemptions must be made through a firm that is either a member
of the Continuous Net Settlement System of the National Securities Clearing
Corporation or a DTC participant and has executed an agreement with the
Distributor with respect to creations and redemptions of Creation Unit
aggregations. Information about the procedures regarding creation and
redemption of Creation Units (including the cut-off times for receipt of
creation and redemption orders) is included in the SAI.

Because new shares may be created and issued on an ongoing basis, at any point
during the life of the Fund a "distribution," as such term is used in the 1933
Act, may be occurring. Broker-dealers and other persons are cautioned that some
activities on their part may, depending on the circumstances, result in their
being deemed participants in a distribution in a manner that could render them
statutory underwriters and subject to the prospectus delivery and liability
provisions of the 1933 Act. Any determination of whether one is an underwriter
must take into account all the relevant facts and circumstances of each
particular case.

Broker-dealers should also note that dealers who are not "underwriters" but are
participating in a distribution (as contrasted to ordinary secondary
transactions), and thus dealing with shares that are part of an "unsold
allotment" within the meaning of Section 4(3)(C) of the 1933 Act, would be
unable to take advantage of the prospectus delivery exemption provided by
Section 4(3) of the 1933 Act. For delivery of prospectuses to exchange members,
the prospectus delivery mechanism of Rule 153 under the 1933 Act is available
only with respect to transactions on a national securities exchange.

Transaction Fees
The Fund will impose a creation transaction fee and a redemption transaction
fee to offset transfer and other transaction costs associated with the issuance
and redemption of Creation Units. Purchasers and redeemers of Creation Units
for cash are required to pay an additional variable charge to compensate for
brokerage and market impact expenses. The creation and redemption transaction
fees for creations and redemptions in-kind for the Fund are discussed below.
The standard creation transaction fee is charged to

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                                                                           15




each purchaser on the day such purchaser creates a Creation Unit. The fee is a
single charge and will be the amount indicated below regardless of the number
of Creation Units purchased by an investor on the same day. BGFA may, from time
to time, at its own expense, compensate purchasers of Creation Units who have
purchased substantial amounts of Creation Units and other financial
institutions for administrative or marketing services. Similarly, the standard
redemption transaction fee will be the amount indicated regardless of the
number of Creation Units redeemed that day. The standard creation and
redemption transaction fees for creations and redemptions through DTC for cash
(when cash creations and redemptions are available or specified) will also be
subject to an additional variable charge up to the maximum amount shown below
under "Maximum Additional Variable Charge for Cash Purchases" and "Maximum
Additional Variable Charge for Cash Redemptions." In addition, purchasers of
shares in Creation Units are responsible for payment of the costs of
transferring securities to the Fund. Redeemers of shares in Creation Units are
responsible for the costs of transferring securities from the Fund. Investors
who use the services of a broker or other such intermediary may pay fees for
such services. The following table also shows, as of September 30, 2007, the
approximate value of one Creation Unit, including the standard creation and
redemption transaction fee:



                                       MAXIMUM        MAXIMUM
                      FEE FOR        ADDITIONAL     ADDITIONAL      NUMBER
                    IN-KIND AND       VARIABLE       VARIABLE      OF SHARES
  APPROXIMATE           CASH           CHARGE         CHARGE          PER
    VALUE OF         PURCHASES        FOR CASH       FOR CASH      CREATION
 CREATION UNIT    AND REDEMPTIONS    PURCHASES*    REDEMPTIONS*      UNIT
---------------  -----------------  ------------  --------------  ----------
                                                      
   $3,765,000           $600           0.67%          0.67%        100,000


  *     As a percentage of amount invested.

Householding
Householding is an option available to certain Fund investors. Householding is
a method of delivery, based on the preference of the individual investor, in
which a single copy of certain shareholder documents can be delivered to
investors who share the same address, even if their accounts are registered
under different names. Please contact your broker-dealer if you are interested
in enrolling in householding and receiving a single copy of prospectuses and
other shareholder documents, or if you are currently enrolled in householding
and wish to change your householding status.

Distribution
The Distributor distributes Creation Units for the Fund on an agency basis. The
Distributor does not maintain a secondary market in shares of the Fund. The
Distributor has no role in determining the policies of the Fund or the
securities that are purchased or sold by the Fund. The Distributor's principal
address is One Freedom Valley Drive, Oaks, PA 19456.

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     16
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Financial Highlights
The financial highlights table is intended to help investors understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single share of the Fund. The total returns in
the table represent the rate that an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions. This information has been audited by PricewaterhouseCoopers LLP,
whose report is included, along with the Fund's financial statements, in the
Fund's Annual Report (available upon request).

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



                                                         ISHARES MSCI AUSTRIA INDEX FUND
                                  ------------------------------------------------------------------------------
                                       YEAR ENDED      YEAR ENDED      YEAR ENDED      YEAR ENDED     YEAR ENDED
                                    AUG. 31, 2007   AUG. 31, 2006   AUG. 31, 2005   AUG. 31, 2004  AUG. 31, 2003
                                  --------------- --------------- --------------- --------------- --------------
                                                                                   
NET ASSET VALUE, BEGINNING OF        $  31.08        $  26.62        $  17.04         $ 10.61        $  8.19
                                     --------        --------        --------         -------        -------
  YEAR
INCOME FROM INVESTMENT
  OPERATIONS:
 Net investment income/a/                0.51            0.44            0.29            0.21           0.09
 Net realized and unrealized             6.42            4.31            9.38            6.39           2.43
                                     --------        --------        --------         -------        -------
  gain/b/
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            0.51%           0.54%           0.57%           0.77%          0.84%
  net assets
 Ratio of net investment income
to average
  net assets                             1.36%           1.48%           1.26%           1.37%          0.98%
 Portfolio turnover rate/c/                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.

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                                                                           17




Index Provider
MSCI is a leading provider of global indexes and benchmark-related products and
services to investors worldwide. Morgan Stanley, a global financial services
firm and a market leader in securities, asset management, and credit services,
is the majority shareholder of MSCI and The Capital Group Companies, Inc., a
global investment management group, is the minority shareholder. MSCI is not
affiliated with the Company, BGI, BGFA, State Street, the Distributor or any of
their respective affiliates.

BGI has entered into a license agreement with the Index Provider to use the
Underlying Index. BGI is sub-licensing rights in the Underlying Index to the
Company at no charge.

--------------------------------------------------------------------------------
     18
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Disclaimers
THE FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI. MSCI MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE SHARES OF
THE FUND OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF INVESTING IN
SECURITIES GENERALLY OR IN THE FUND PARTICULARLY OR THE ABILITY OF THE
UNDERLYING INDEX TO TRACK GENERAL STOCK MARKET PERFORMANCE. MSCI'S ONLY
RELATIONSHIP TO THE FUND, BGI AND BGFA IS THE LICENSING OF CERTAIN TRADEMARKS
AND TRADE NAMES OF MSCI AND OF THE UNDERLYING INDEX, WHICH IS DETERMINED,
COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THE COMPANY, BGI, BGFA OR THE
FUND. MSCI HAS NO OBLIGATION TO TAKE THE NEEDS OF THE COMPANY, BGI, BGFA OR THE
OWNERS OF SHARES OF THE FUND INTO CONSIDERATION IN DETERMINING, COMPOSING OR
CALCULATING THE UNDERLYING INDEX. MSCI IS NOT RESPONSIBLE FOR, AND HAS NOT
PARTICIPATED IN, THE DETERMINATION OF THE PRICES AND AMOUNT OF SHARES OF THE
FUND OR THE TIMING OF THE ISSUANCE OR SALE OF SUCH SHARES OR IN THE
DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH SHARES OF THE FUND ARE TO
BE CONVERTED INTO CASH. MSCI HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH
THE ADMINISTRATION, MARKETING OR TRADING OF THE FUND. MSCI DOES NOT GUARANTEE
THE ACCURACY AND/OR THE COMPLETENESS OF THE UNDERLYING INDEX OR ANY DATA
INCLUDED THEREIN AND MSCI SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR
INTERRUPTIONS THEREIN.

MSCI MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY
BGI, BGFA, OWNERS OF SHARES OF THE FUND OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. MSCI MAKES NO EXPRESS
OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE UNDERLYING INDEX OR ANY
DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
MSCI, HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS) RESULTING FROM THE USE OF THE UNDERLYING INDEX
OR ANY DATA INCLUDED THEREIN EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.

SHARES OF THE FUND ARE NOT SPONSORED, ENDORSED OR PROMOTED BY NYSE ARCA. NYSE
ARCA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF
THE SHARES OF THE FUND OR ANY MEMBER OF THE PUBLIC REGARDING THE ABILITY OF THE
FUND TO TRACK THE TOTAL RETURN PERFORMANCE OF THE UNDERLYING INDEX OR THE
ABILITY OF THE UNDERLYING INDEX IDENTIFIED HEREIN TO TRACK STOCK MARKET
PERFORMANCE. NYSE ARCA IS NOT RESPONSIBLE FOR, NOR HAS IT PARTICIPATED IN, THE
DETERMINATION OF THE COMPILATION OR THE CALCULATION OF THE UNDERLYING INDEX,
NOR IN THE DETERMINATION OF THE TIMING OF, PRICES OF OR QUANTITIES OF THE
SHARES OF THE FUND TO BE ISSUED, NOR IN THE DETERMINATION OR CALCULATION OF THE
EQUATION BY WHICH THE SHARES ARE REDEEMABLE. NYSE ARCA HAS NO OBLIGATION OR
LIABILITY TO OWNERS OF THE SHARES OF THE FUND IN CONNECTION WITH THE
ADMINISTRATION, MARKETING OR TRADING OF THE SHARES OF THE FUND.

NYSE ARCA DOES NOT GUARANTEE THE ACCURACY OR THE COMPLETENESS OF THE UNDERLYING
INDEX OR ANY DATA INCLUDED THEREIN. NYSE ARCA MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE COMPANY, ON BEHALF OF THE FUND AS
LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES, OWNERS OF THE SHARES OR ANY
OTHER PERSON OR ENTITY, FROM THE USE OF THE UNDERLYING INDEX OR ANY DATA
INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED AS DESCRIBED HEREIN OR
FOR ANY OTHER USE.

NYSE ARCA MAKES NO EXPRESS OR IMPLIED WARRANTIES AND HEREBY EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING
ANY OF THE FOREGOING, IN NO EVENT SHALL NYSE ARCA HAVE ANY LIABILITY FOR ANY
DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (LOST
PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.

BGFA DOES NOT GUARANTEE THE ACCURACY OR THE COMPLETENESS OF THE UNDERLYING
INDEX OR ANY DATA INCLUDED THEREIN AND BGFA SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN.

--------------------------------------------------------------------------------
                                                                           19




BGFA MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
FUND, TO THE OWNERS OF THE SHARES OF THE FUND OR TO ANY OTHER PERSON OR ENTITY,
FROM THE USE OF THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. BGFA MAKES
NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL BGFA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
DIRECT, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

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     20
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Supplemental Information

I. Premium/Discount Information
The table that follows presents information about the differences between the
daily market price on secondary markets for shares of the Fund and the Fund's
NAV. 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 price used to calculate market returns ("Market Price") of the Fund
generally is determined using the midpoint between the highest bid and the
lowest offer on the national securities exchange on which the shares of the
Fund are 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 of distributions of premiums and
discounts for the Fund. The information shown for the Fund is for the calendar
year of 2006 through December 31, 2007, the date of the most recent calendar
quarter-end.

EACH LINE IN THE TABLE SHOWS THE NUMBER OF TRADING DAYS IN WHICH THE FUND
TRADES 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.



                                                                              NUMBER     PERCENTAGE
FUND                              PREMIUM/DISCOUNT RANGE                     OF DAYS    OF TOTAL DAYS
================================  ========================================  =========  ==============
                                                                              
iShares MSCI Austria Index Fund   Greater than 1.5%                              2           0.80%
                                  Greater than 1.0% and Less than 1.5%          13           5.18%
                                  Greater than 0.5% and Less than 1.0%          24           9.56%
                                  BETWEEN 0.5% AND -0.5%                       161          64.14%
                                  Less than -0.5% and Greater than -1.0%        25           9.96%
                                  Less than -1.0% and Greater than -1.5%        16           6.37%
                                  Less than -1.5% and Greater than -2.0%         6           2.39%
                                  Less than -2.0% and Greater than -2.5%         2           0.80%
                                  Less than -2.5% and Greater than -3.0%         1           0.40%
                                  Less than -3.0% and Greater than -3.5%         1           0.40%
                                                                               ---          -----
                                                                               251         100.00%
                                                                               ===         ======


II. Total Return Information
The table that follows presents information about the total return of the
Fund's Underlying Index and the total return of the Fund. The information
presented for the Fund is as of its fiscal year ended August 31, 2007.

"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 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 Price

--------------------------------------------------------------------------------
                                                                           21




is determined by using the midpoint between the highest bid and the lowest
offer on the national securities 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, the NAV of the Fund is used as
a proxy for the 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, the Underlying 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 below 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.

                        ISHARES MSCI AUSTRIA INDEX FUND



                                        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%


                                       ^

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     22
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Copies of the Prospectus, SAI and recent shareholder reports can be found on
our website at www.iShares.com. For more information about the Fund, you may
request a copy of the SAI. The SAI provides detailed information about the Fund
and is incorporated by reference into this Prospectus. This means that the SAI,
for legal purposes, is a part of this Prospectus.

Additional information about the Fund's investments is available in the Fund's
Annual or Semi Annual reports to shareholders. In the Fund's Annual Report, you
will find a discussion of the market conditions and investments strategies that
significantly affected the Fund's performance during the last fiscal year.

If you have any questions about the Company or shares of the Fund or you wish
to obtain the SAI, Semi-Annual or Annual report free of charge, please:

             
     Call:         1-800-iShares
     (toll free)   1-800-474-2737
                   Monday through Friday
                   8:30 a.m. to 6:30 p.m. (Eastern Time)

     E-mail:       iSharesETFs@barclaysglobal.com

     Write:        c/o SEI Investments Distribution Co.
                   One Freedom Valley Drive
                   Oaks, PA 19456



Information about the Fund (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C., and information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-202-551-8090. Reports and other information about the Fund are available on
the EDGAR Database on the SEC's website at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing to
the SEC's Public Reference Section, Washington, D.C. 20549-0102.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
ABOUT THE FUND AND ITS SHARES NOT CONTAINED IN THIS PROSPECTUS AND YOU SHOULD
NOT RELY ON ANY OTHER INFORMATION. READ AND KEEP THE PROSPECTUS FOR FUTURE
REFERENCE.

                   Investment Company Act File No.: 811-09729

                     For more information visit our website
                     or call 1-800-iShares (1-800-474-2737)
                                WWW.ISHARES.COM

BGI-F-120-02008
[GRAPHIC APPEARS HERE]

[GRAPHIC APPEARS HERE]





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                                    iSHARES(Reg. TM) MSCI NETHERLANDS INDEX FUND
                                                  Prospectus - February 25, 2008





[GRAPHIC APPEARS HERE]







The Securities and Exchange Commission ("SEC") has not approved
or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.





iShares(Reg. TM)

iShares, Inc. (the "Company") is a registered investment company that consists
of more than 27 separate investment portfolios called funds. This Prospectus
relates to the following fund:


     iShares MSCI Netherlands Index Fund (the "Fund").


The Fund issues and redeems shares at their net asset value ("NAV") only in
blocks of 50,000 shares or multiples thereof ("Creation Units"). Only certain
large institutional investors known as "Authorized Participants" may purchase
or redeem Creation Units directly with the Fund at NAV. These transactions are
usually in exchange for a basket of securities similar to the Fund's portfolio
and an amount of cash. EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES OF THE
FUND ARE NOT REDEEMABLE SECURITIES. SHAREHOLDERS WHO ARE NOT AUTHORIZED
PARTICIPANTS MAY NOT REDEEM SHARES DIRECTLY FROM THE FUND AT NAV.


iShares(Reg. TM) is a registered trademark of Barclays Global Investors, N.A.
("BGI").


                       PROSPECTUS DATED FEBRUARY 25, 2008






Table of Contents

                                
  Introduction ..................   1
  Description of the Fund .......   2
  Investment Objective ..........   2
  Principal Investment              2
  Strategies
  Principal Risks ...............   3
  Portfolio Holdings Information    7
  Performance Information .......   8
  Fees and Expenses .............   9
  Management ....................   9
  Shareholder Information .......  10
  Distribution ..................  16
  Financial Highlights ..........  17
  Index Provider ................  18
  Disclaimers ...................  19
  Supplemental Information ......  21
--------------------------------------------------------------------------------



"MSCI Netherlands Index" and "MSCI Netherlands Investable Market Index" are
servicemarks of MSCI Inc. that have been licensed for use for certain purposes
by BGI.


                                                                            i





Introduction
This Prospectus contains important information about investing in the Fund.
Please read this Prospectus carefully before you make any investment decisions.
Additional information regarding the Fund is available at www.iShares.com.


Barclays Global Fund Advisors ("BGFA") is the investment adviser to the Fund.
Shares of the Fund are listed and trade at market prices on NYSE Arca, Inc.
("NYSE Arca"). The market price for a share of the Fund may be different from
the Fund's most recent NAV per share. The Fund has its own CUSIP number and
exchange trading symbol.



The Fund is an exchange traded fund (commonly referred to as an "ETF"). ETFs
are funds that trade like other publicly traded securities and are designed to
track an index. Similar to shares of an index mutual fund, each share of the
Fund represents a partial ownership in an underlying portfolio of securities
intended to track a market index. Unlike shares of a mutual fund, which can be
bought and redeemed from the issuing fund by all shareholders at a price based
on NAV, only Authorized Participants may purchase or redeem shares directly
from the Fund at NAV. Also unlike shares of a mutual fund, shares of the Fund
are listed on a national securities exchange and trade in the secondary market
at market prices that change throughout the day.


The Fund invests in a particular segment of the securities markets and seeks to
track the performance of a securities index that generally is not
representative of the market as a whole. The Fund is designed to be used as
part of broader asset allocation strategies. Accordingly, an investment in the
Fund should not constitute a complete investment program.


An investment in the Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency, BGFA or any of its affiliates.

--------------------------------------------------------------------------------
                                                                             1




Description of the Fund
CUSIP: 464286814
TRADING SYMBOL: EWN
UNDERLYING INDEX: MSCI Netherlands Investable Market Index
----------------------------------------------------------



Investment Objective
The Fund seeks 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
Investable Market Index (the "Underlying Index").


At a December 7, 2007, special meeting of shareholders of the Fund, a proposal
to change the MSCI Netherlands Index to the MSCI Netherlands Investable Market
Index was approved.


Also at the December 7, 2007, special meeting of shareholders of the Fund, a
proposal to change the Fund's investment objective from a "fundamental"
investment policy to a "non-fundamental" investment policy was approved. As a
result, the investment objective and Underlying Index of the Fund may be
changed without shareholder approval.



The Underlying Index is sponsored by an organization (the "Index Provider")
that is independent of the Fund and BGFA. The Index Provider determines the
relative weightings of the securities in the Underlying Index and publishes
information regarding the market value of the Underlying Index. The Fund's
Index Provider is MSCI Inc. ("MSCI").


Additional information regarding the Index Provider is provided in the INDEX
PROVIDER section of this Prospectus.



Principal Investment Strategies

The Underlying Index consists of stocks traded primarily on the Amsterdam Stock
Exchange. As of September, 2007, the Underlying Index's three largest
industries were banks, food, beverages and tobacco and diversified financials.



BGFA uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try
to "beat" the index it tracks and does not seek temporary defensive positions
when markets decline or appear overvalued.


Indexing eliminates the chance that the Fund may substantially outperform its
Underlying Index but also may reduce some of the risks of active management,
such as poor security selection. Indexing seeks to achieve lower costs and
better after-tax performance by keeping portfolio turnover low in comparison to
actively managed investment companies.


The Fund will normally invest at least 80% of its assets in the securities of
its Underlying Index and ADRs based on securities of its Underlying Index, and
at least 90% of its assets in the securities of its Underlying Index or in
securities included in the relevant market, but not in its Underlying Index, or
in ADRs based on the securities in its Underlying Index. The Fund also may
invest its other assets in futures contracts, options on futures contracts,
other types of options and swaps related to its Underlying Index, as well as
cash and cash equivalents, including shares of money market funds advised by
BGFA or its affiliates.

Representative Sampling
"Representative sampling" is an indexing strategy that involves investing in a
representative sample of securities that collectively has an investment profile
similar to the Underlying Index. The securities selected


--------------------------------------------------------------------------------
     2
[GRAPHIC APPEARS HERE]




are expected to have, in the aggregate, investment characteristics (based on
factors such as market capitalization and industry weightings), fundamental
characteristics (such as return variability and yield) and liquidity measures
similar to those of the Underlying Index. The Fund may or may not hold all of
the securities that are included in the Underlying Index.


Correlation
An index is a theoretical financial calculation while the Fund is an actual
investment portfolio. The performance of the Fund and its Underlying Index may
vary somewhat due to transaction costs, asset valuations, corporate actions
(such as mergers and spin-offs), timing variances and differences between the
Fund's portfolio and the Underlying Index resulting from legal restrictions
(such as diversification requirements that apply to the Fund but not to the
Underlying Index) or representative sampling.


BGFA expects that, over time, the correlation between the Fund's performance
and that of its Underlying Index, before fees and expenses, will be 95% or
better. A correlation percentage of 100% would indicate perfect correlation.
The difference between 100% correlation and the Fund's actual correlation with
its Underlying Index is called "tracking error." The Fund's use of a
representative sampling indexing strategy can be expected to result in greater
tracking error than if the Fund used a replication indexing strategy.
"Replication" is an indexing strategy in which a fund invests in substantially
all of the securities in its underlying index in approximately the same
proportions as in the underlying index.


Industry Concentration Policy

The Fund will concentrate its investments (I.E., hold 25% or more of its total
assets) in a particular industry or group of industries only to approximately
the same extent that its Underlying Index is concentrated. For purposes of this
limitation, securities of the U.S. government (including its agencies and
instrumentalities) and repurchase agreements collateralized by U.S. government
securities are not considered to be issued by members of any industry.



Principal Risks
The Fund may be subject to the principal risks noted below. Some or all of
these risks may adversely affect the Fund's NAV, trading price, yield, total
return and its ability to meet its investment objective.


Asset Class Risk
The securities in the Underlying Index or the Fund's portfolio may underperform
the returns of other securities or indexes that track other industries, groups
of industries, markets, asset classes or sectors. Various types of securities
or indexes tend to experience cycles of outperformance and underperformance in
comparison to the general securities markets.


Concentration Risk
To the extent that its Underlying Index or portfolio is concentrated in the
securities of companies in a particular market, industry, group of industries,
sector or asset class, the Fund may be adversely affected by the performance of
those securities, may be subject to increased price volatility and may be more
susceptible to adverse economic, market, political or regulatory occurrences
affecting that market, industry, group of industries, sector or asset class. An
investment in the Fund should not constitute a complete investment program.


Currency Risk
Because the Fund's NAV is determined on the basis of the U.S. dollar, you may
lose money if you invest in the Fund if the Dutch currency depreciates against
the U.S. dollar, even if the local currency value of the Fund's holdings in
that market increases.

--------------------------------------------------------------------------------
                                                                             3




Custody Risk
Custody risk refers to the risks in the process of clearing and settling trades
and to the holding of securities by local banks, agents and depositories. Low
trading volumes and volatile prices in less developed markets make trades
harder to complete and settle. Local agents are held only to the standards of
care of the local markets. Governments or trade groups may compel local agents
to hold securities in designated depositories that are not subject to
independent evaluation. The less developed a country's securities market is,
the greater the likelihood of custody problems.


European Economic Risk
Most developed countries in Europe are members of the European Union ("EU") and
the Economic and Monetary Union of the EU (the "EMU"). The EMU requires
compliance with restrictions on inflation rates, deficits, interest rates, debt
levels and fiscal and monetary controls, each of which may significantly affect
every country in Europe. Decreasing imports or exports, changes in governmental
regulations on trade, changes in the exchange rate of the euro and recessions
among EU members may have a significant adverse effect on the economies of
other EU members and their trading partners, including Netherlands.


Foreign Securities Risks
Investments in the securities of non-U.S. issuers are subject to all the risks
of investing in the market of such issuers, including market fluctuations
caused by factors such as economic and political developments, changes in
interest rates and abrupt changes in stock prices. As a result of investing in
foreign securities, the Fund may be subject to the risks listed below. These
risks may decrease the value of your investment:

[]  Less liquid and less efficient securities markets;

[]  Greater securities price volatility;

[]  Exchange rate fluctuations and exchange controls;

[]  Less publicly available information about issuers;

[]  Imposition of withholding or other taxes;

[]  Imposition of restrictions on the expatriation of funds or other assets of
the Fund;

[]  Higher transaction and custody costs and delays in attendant settlement
procedures;

[]  Difficulties in enforcing contractual obligations;

[]  Lower levels of regulation of the securities markets;

[]  Different accounting, disclosure and reporting requirements;

[]  Substantial government involvement in the economy;

[]  Higher rates of inflation; and

[]  Greater social, economic and political uncertainty, the risk of
  nationalization or expropriation of assets and risk of war.


Geographic Risk
The Netherlands' geographical position near the center of Europe's
transportation network makes it vulnerable to environmental events (such as
pollution, oil spills, etc.) which may adversely impact the Dutch economy and
trade.


--------------------------------------------------------------------------------
     4
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Issuer Risk
The performance of the Fund depends on the performance of individual companies
in which the Fund invests. Any issuer may perform poorly, causing the value of
its securities to decline. Poor performance may be caused by poor management
decisions, competitive pressures, changes in technology, disruptions in supply,
labor problems or shortages, corporate restructurings, fraudulent disclosures
or other factors. Issuers may, in times of distress or on their own discretion,
decide to reduce or eliminate dividends which would also cause their stock
prices to decline.


Legal Enforcement of Shareholder Rights Risk
Legal principles relating to corporate affairs and the validity of corporate
procedures, directors' fiduciary duties and liabilities and stockholders'
rights in markets in which the Fund invests may not be as extensive as those
that apply in the U.S. The Fund may therefore have more difficulty asserting
its rights as a stockholder of a non-U.S. company in which it invests than it
would as a stockholder of a comparable U.S. company.


Management Risk
The Fund may be subject to management risk because the Fund does not fully
replicate its Underlying Index and may hold securities that are not included in
its Underlying Index. Management risk is the risk that BGFA's investment
strategy, the implementation of which is subject to a number of constraints,
may not produce the intended results.


Market Risk
The Fund's NAV will react to securities market movements. You could lose money
over short periods due to fluctuation in the Fund's NAV in response to
short-term market movements and over longer periods during market downturns.
Securities may decline in value due to factors affecting securities markets
generally or particular industries represented in the markets. The value of a
security may decline due to general market conditions, economic trends or
events that are not specifically related to a company or to factors that affect
a particular industry or industries. During a general economic downturn in the
securities markets, multiple asset classes may be negatively affected.


Market Trading Risks
ABSENCE OF ACTIVE MARKET

      Although shares of the Fund are listed for trading on a national
      securities exchange, there can be no assurance that an active trading
      market for such shares will develop or be maintained.

LACK OF MARKET LIQUIDITY

      Secondary market trading in Fund shares may be halted by a national
      securities exchange because of market conditions or for other reasons. In
      addition, trading in Fund shares is subject to trading halts caused by
      extraordinary market volatility pursuant to "circuit breaker" rules.
      There can be no assurance that the requirements necessary to maintain the
      listing of the shares of the Fund will continue to be met or will remain
      unchanged.


SHARES OF THE FUND MAY TRADE AT PRICES OTHER THAN NAV


      Shares of the Fund trade on exchanges at prices at, above or below their
      most recent NAV. The per share NAV of the Fund is calculated at the end
      of each business day and fluctuates with changes in the market value of
      the Fund's holdings since the most recent calculation. The trading prices
      of the Fund's shares fluctuate continuously throughout trading hours
      based on market supply and demand rather than NAV. The trading prices of
      the Fund's shares may deviate significantly from NAV during periods of
      market volatility. ANY OF THESE FACTORS MAY LEAD TO THE FUND'S


--------------------------------------------------------------------------------
                                                                             5




      SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV. However, because shares
      can be created and redeemed in Creation Units at NAV (unlike shares of
      many closed-end funds, which frequently trade at appreciable discounts
      from, and sometimes at premiums to, their NAVs), BGFA believes that large
      discounts or premiums to the NAV of the Fund are not likely to be
      sustained over the long-term. While the creation/redemption feature is
      designed to make it likely that the Fund's shares normally will trade on
      exchanges at prices close to the Fund's next calculated NAV, exchange
      prices are not expected to correlate exactly with the Fund's NAV due to
      timing reasons as well as market supply and demand factors. In addition,
      disruptions to creations and redemptions or the existence of extreme
      market volatility may result in trading prices that differ significantly
      from NAV. If a shareholder purchases at a time when the market price is
      at a premium to the NAV or sells at a time when the market price is at a
      discount to the NAV, then the shareholder may sustain losses.

COSTS OF BUYING OR SELLING FUND SHARES

      Buying or selling Fund shares involves two types of costs that apply to
      all securities transactions. When buying or selling shares of the Fund
      through a broker, you will incur a brokerage commission or other charges
      imposed by brokers as determined by that broker. In addition, you will
      also incur the cost of the "spread" - that is, the difference between
      what professional investors are willing to pay for Fund shares (the "bid"
      price) and the price at which they are willing to sell Fund shares (the
      "ask" price). Because of the costs inherent in buying or selling Fund
      shares, frequent trading may detract significantly from investment
      results and an investment in Fund shares may not be advisable for
      investors who anticipate regularly making small investments.


Non-Diversification Risk
The Fund is classified as "non-diversified." A non-diversified fund generally
may invest a larger percentage of its assets in the securities of a smaller
number of issuers. As a result, the Fund may be more susceptible to risks
associated with these companies or to a single economic, political or
regulatory occurrence affecting these companies.


Passive Investment Risk
The Fund is not actively managed and may be affected by a general decline in
market segments relating to its Underlying Index. The Fund invests in
securities included in, or representative of, its Underlying Index regardless
of their investment merits. BGFA does not attempt to take defensive positions
in declining markets.


Reliance on Exports Risk
The Dutch economy is dependent heavily upon the economies of Europe as they are
key trading partners. Reduction in spending by these economies on Dutch
products and services or negative changes in any of these economies may cause
an adverse impact in the Dutch economy.


Risk of Uncertainty of European Union
In May and June 2005, voters in France and the Netherlands, respectively,
rejected ratification of the European Constitution causing some other countries
to postpone moves toward ratification. Failure by other members of the EU to
ratify the European Constitution could cause market disruptions, and could
adversely affect the value of securities held by the Fund.


Secondary Market Trading Risk
Shares of the Fund may trade in the secondary market on days when the Fund does
not accept orders to purchase or redeem shares. On such days, shares may trade
in the secondary market with more significant


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     6
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premiums or discounts than might be experienced on days when the Fund accepts
purchase and redemption orders.


Security Risk

Some geographic areas in which the Fund invests have experienced acts of
terrorism or have strained international relations due to territorial disputes,
historical animosities or other defense concerns. These situations may cause
uncertainty in the markets of these geographic areas and may affect the
performance of their economies.


Structural Risks
The Dutch economy has been susceptible to high unemployment and a heavy
reliance on trade. Many firms have had to deal with the loss competitiveness in
recent times due to increasing labor costs and competition within the European
Union.


Tracking Error Risk
Imperfect correlation between the Fund's securities and those in its Underlying
Index, rounding of prices, changes to the Underlying Index and regulatory
requirements may cause the Fund's performance to diverge from the performance
of its Underlying Index. This is called "tracking error." Tracking error also
may result because the Fund incurs fees and expenses while its Underlying Index
does not incur such expenses.


Trading Risk
While the creation/redemption feature of the Fund is designed to make it likely
that shares of the Fund will trade close to their NAV, disruptions to creations
and redemptions may result in trading prices that differ significantly from
NAV.


Valuation Risk
Because foreign exchanges may be open on days when the Fund does not price its
shares, the value of the securities in the Fund's portfolio may change on days
when shareholders will not be able to purchase or sell the Fund's shares.



Portfolio Holdings Information
A description of the Company's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's
Statement of Additional Information ("SAI"). The top holdings of the Fund can
be found at www.iShares.com. Fund fact sheets provide information regarding the
Fund's top holdings and may be requested by calling 1-800-iShares
(1-800-474-2737).


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                                                                             7




Performance Information
The bar chart and table that follow show how the Fund has performed on a
calendar year basis and provide an indication of the risks of investing in the
Fund. Both assume that all dividends and distributions have been reinvested in
the Fund. Past performance (before and after taxes) does not necessarily
indicate how it will perform in the future results. Supplemental information
about the Fund's performance is shown under the heading TOTAL RETURN
INFORMATION in the SUPPLEMENTAL INFORMATION section at the end of this
Prospectus.


               YEAR BY YEAR RETURNS/1/ (YEARS ENDED DECEMBER 31)




[GRAPHIC APPEARS HERE]







     
1998    24.09%
1999    4.54%
2000    -7.80%
2001    -23.96%
2002    -20.52%
2003    25.71%
2004    13.49%
2005    12.79%
2006    32.06%
2007    18.59%







--------
The best calendar quarter return during the periods shown above was 22.23% in
the 2nd quarter of 2003; the worst was -30.27% in the 3rd quarter of 2002.



                          AVERAGE ANNUAL TOTAL RETURNS
                   (for the periods ended December 31, 2007)






                                                                      SINCE FUND
                                     1 YEAR     5 YEARS    10 YEARS   INCEPTION
                                  ----------- ----------- ---------- -----------
                                                         
ISHARES MSCI NETHERLANDS INDEX
  FUND:
    (INCEPTION DATE: 3/12/1996)
    Return Before Taxes               18.59%      20.30%      6.18%      8.89%
    Return After Taxes on             18.43%      20.02%      5.64%      8.31%
  Distributions
    Return After Taxes on             13.29%      18.07%      5.23%      7.71%
Distributions and Sale of Fun  d
  Shares
MSCI NETHERLANDS INVESTABLE
MARKET INDEX (Index returns d  o
not
reflect deductions for fees,          20.59%      20.99%      7.27%     10.14%
  expenses, or taxes)(2)



(1) After-tax returns in the table above are calculated using the historical
    highest individual federal marginal income tax rates and do not reflect
    the impact of state, local or foreign taxes. Actual after-tax returns
    depend on an investor's tax situation and may differ from those shown, and
    after-tax returns shown are not relevant to tax-exempt investors or
    investors who hold shares through tax-deferred arrangements, such as
    401(k) plans or individual retirement accounts ("IRAs"). Fund returns
    after taxes on distributions and sale of Fund shares are calculated
    assuming that an investor has sufficient capital gains of the same
    character from other investments to offset any capital losses from the
    sale of Fund shares. As a result, Fund returns after taxes on
    distributions and sale of Fund shares may exceed Fund returns before taxes
    and/or returns after taxes on distributions.

(2)At a December 7, 2007, special shareholder meeting of the iShares MSCI
    Netherlands Index Fund, a proposal to change the Underlying Index of the
    Fund from the MSCI Netherlands Index to the MSCI Netherlands Investable
    Market Index was approved in response to MSCI's combination of its
    standard and small cap indexes to form new investable market indexes. The
    returns reflect that of the former MSCI Netherlands Index and not the
    current MSCI Netherlands Investable Market Index.


--------------------------------------------------------------------------------
     8
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Fees and Expenses
The following table describes the fees and expenses that you will incur if you
own shares of the Fund. You will also incur usual and customary brokerage
commissions when buying or selling shares of the Fund:






                              ANNUAL FUND OPERATING EXPENSES/2/
               ----------------------------------------------------------------
                                                                       TOTAL
                                  DISTRIBUTION                      ANNUAL FUND
 SHAREHOLDER    MANAGEMENT    AND SERVICE (12B-1)       OTHER        OPERATING
   FEES/1/         FEES               FEES           EXPENSES/3/     EXPENSES
-------------  ------------  ---------------------  -------------  ------------
                                                       
      None        0.51%              None               None          0.51%



--------
/1/Fees paid directly from your investment.
/2/Expenses that are deducted from the Fund's assets, expressed as a
percentage of average net assets.
/3/The Company's Investment Advisory Agreement provides that BGFA will pay
    all operating expenses of the Fund, except interest expense and taxes
    (both expected to be DE MINIMIS), any brokerage expenses, future
    distribution fees or expenses, and extraordinary expenses.



Example
This example is intended to help you compare the cost of owning shares of the
Fund with the cost of investing in other funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then sell all of
your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:






 1 YEAR    3 YEARS    5 YEARS    10 YEARS
--------  ---------  ---------  ---------
                       
   $52       $164       $285       $640



Management

Investment Adviser
As investment adviser, BGFA has overall responsibility for the general
management and administration of the Company. BGFA provides an investment
program for the Fund and manages the investment of the Fund's assets. In
seeking to achieve the Fund's investment objective, BGFA uses teams of
portfolio managers, investment strategists and other investment specialists.
This team approach brings together many disciplines and leverages BGFA's
extensive resources. BGFA also arranges for transfer agency, custody, fund
administration and all other non-distribution related services necessary for
the Fund to operate.


Pursuant to the Investment Advisory Agreement between BGFA and the Company, on
behalf of the Fund, BGFA is responsible for substantially all expenses of the
Company including the cost of transfer agency, custody, fund administration,
legal, audit and other services except interest expense and taxes, brokerage
expenses, distribution fees or expenses and extraordinary expenses.



For its investment advisory services to the Fund, BGFA is paid a management fee
based on the Fund's allocable portion of the aggregate of the average daily net
assets of the Fund and certain other iShares funds (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 Japan Small Cap 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, which are offered in separate prospectuses),


--------------------------------------------------------------------------------
                                                                             9




BGFA is paid a management fee equal to each of those funds' allocable portion
of: 0.59% per year of the aggregate net assets of those funds less than or
equal to $7.0 billion, plus 0.54% per year of the aggregate net assets of those
funds between $7.0 billion and $11.0 billion, plus 0.49% per year of the
aggregate net assets of those funds between $11.0 billion and $24.0 billion,
plus 0.44% per year of the aggregate net assets of those funds in excess of
$24.0 billion.

For its investment advisory services to the Fund, BGFA is entitled to receive
management fees from the Fund, based on a percentage of the Fund's average
daily net assets, at the annual rate of 0.51%.



BGFA is located at 45 Fremont Street, San Francisco, CA 94105. It is a
wholly-owned subsidiary of BGI, which in turn is a majority-owned subsidiary of
Barclays Bank PLC. As of September 30, 2007, BGI and its affiliates, including
BGFA, provided investment advisory services for assets in excess of $2.0
trillion. BGI, BGFA, Barclays Global Investors Services, Barclays Bank PLC and
their affiliates deal, trade and invest for their own accounts in the types of
securities in which the Fund may also invests.



A discussion regarding the basis for the Board of Directors' approval of the
Investment Advisory Agreement with BGFA will be available in the Fund's annual
report for the period ending August 31.


Portfolio Managers
Diane Hsiung and Greg Savage (the "Portfolio Managers") are primarily
responsible for the day-to-day management of the Fund. Each Portfolio Manager
is responsible for various functions related to portfolio management including,
but not limited to, investing cash inflows, coordinating with members of his or
her team to focus on certain asset classes, implementing investment strategy
researching and reviewing investment strategy and overseeing members of his or
her portfolio management team with more limited responsibilities.


Diane Hsiung is an employee of BGFA and BGI and, together with the other
Portfolio Manager, is primarily responsible for the day-to-day management of
the Fund. Ms. Hsiung has been a senior portfolio manager for BGFA and BGI since
2007 and a portfolio manager for BGFA and BGI from 2002 to 2006.


Greg Savage is an employee of BGFA and BGI and, together with the other
Portfolio Manager, is primarily responsible for the day-to-day management of
the Fund. Mr. Savage has been a senior portfolio manager for BGFA and BGI since
2006 and a portfolio manager for BGFA and BGI from 2001 to 2006.


The Fund's SAI provides additional information about the Portfolio Managers'
compensation, other accounts managed by the Portfolio Managers and the
Portfolio Managers' ownership (if any) of shares in the Fund.


Administrator, Custodian and Transfer Agent
State Street Bank and Trust Company ("State Street") is the administrator,
custodian and transfer agent for the Fund.



Shareholder Information
ADDITIONAL SHAREHOLDER INFORMATION, INCLUDING HOW TO BUY AND SELL SHARES OF THE
FUND, IS AVAILABLE FREE OF CHARGE BY CALLING TOLL-FREE: 1-800-ISHARES
(1-800-474-2737) OR VISITING OUR WEBSITE AT WWW.ISHARES.COM.


Buying and Selling Shares
Shares of the Fund trade on a national securities exchange during the trading
day. Shares can be bought and sold throughout the trading day like shares of
other publicly traded companies. The Company does not impose any minimum
investment for shares of the Fund purchased on an exchange. Buying or selling
Fund shares involves two types of costs that apply to all securities
transactions. When buying or selling shares of the Fund through a broker, you
will incur a brokerage commission or other charges determined by your


--------------------------------------------------------------------------------
     10
[GRAPHIC APPEARS HERE]




broker. In addition, you will also incur the cost of the "spread" - that is,
the difference between the bid price and the ask price. The commission is
frequently a fixed amount and may be a significant proportional cost for
investors seeking to buy or sell small amounts of shares. The spread varies
over time for shares of the Fund based on its trading volume and market
liquidity, and is generally lower if the Fund has a lot of trading volume and
market liquidity and higher if the Fund has little trading volume and market
liquidity. The Fund's shares trade under the trading symbol listed for the Fund
in the DESCRIPTION OF THE FUND section of this Prospectus.


Shares of the Fund may be acquired or redeemed directly from the Fund only in
Creation Units or multiples thereof, as discussed in the CREATIONS AND
REDEMPTIONS section of this Prospectus. Once created, shares of the Fund
generally trade in the secondary market in amounts less than a Creation Unit.


The Company's Board of Directors has adopted a policy of not monitoring for
frequent purchases and redemptions of Fund shares ("frequent trading") that
appear to attempt to take advantage of a potential arbitrage opportunity
presented by a lag between a change in the value of the Fund's portfolio
securities after the close of the primary markets for the Fund's portfolio
securities and the reflection of that change in the Fund's NAV ("market
timing"), because the Fund sells and redeems its shares directly through
transactions that are in-kind and/or for cash with a deadline for placing
cash-related transactions no later than the close of the primary markets for
the Fund's portfolio securities. The Board of Directors has not adopted a
policy of monitoring for other frequent trading activity because shares of the
Fund are listed and traded on national securities exchanges.


The national securities exchange on which the Fund's shares are listed is open
for trading Monday through Friday and is closed on weekends and the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Fund's primary listing exchange is NYSE Arca.


Section 12(d)(1) of the Investment Company Act of 1940, as amended, restricts
investments by registered investment companies in the securities of other
investment companies. Registered investment companies are permitted to invest
in the Fund beyond the limits set forth in Section 12(d)(1), subject to certain
terms and conditions set forth in an SEC exemptive order issued to the Company,
including that such investment companies enter into an agreement with the
Company.


Book Entry
Shares of the Fund are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company ("DTC") or its nominee is
the record owner of all outstanding shares of the Fund and is recognized as the
owner of all shares for all purposes.


Investors owning shares of the Fund are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all shares of the Fund. Participants include DTC, securities brokers and
dealers, banks, trust companies, clearing corporations and other institutions
that directly or indirectly maintain a custodial relationship with DTC. As a
beneficial owner of shares, you are not entitled to receive physical delivery
of stock certificates or to have shares registered in your name, and you are
not considered a registered owner of shares. Therefore, to exercise any right
as an owner of shares, you must rely upon the procedures of DTC and its
participants. These procedures are the same as those that apply to any other
securities that you hold in book-entry or "street name" form.


Share Prices
The trading prices of the Fund's shares in the secondary market generally
differ from the Fund's daily NAV per share and are affected by market forces
such as supply and demand, economic conditions and other factors. Information
regarding the intraday value of shares of the Fund, also known as the
"indicative optimized portfolio value" ("IOPV"), is disseminated every 15
seconds throughout the trading day by the national securities exchange on which
the Fund is listed or by market data vendors or other information providers.
The IOPV is based on the current market value of the securities and cash
required to be


--------------------------------------------------------------------------------
                                                                           11




deposited in exchange for a Creation Unit. The IOPV does not necessarily
reflect the precise composition of the current portfolio of securities held by
the Fund at a particular point in time nor the best possible valuation of the
current portfolio. Therefore, the IOPV should not be viewed as a "real-time"
update of the NAV, which is computed only once a day. The IOPV is generally
determined by using both current market quotations and/or price quotations
obtained from broker-dealers that may trade in the portfolio securities held by
the Fund. The quotations of certain Fund holdings may not be updated during
U.S. trading hours if such holdings do not trade in the U.S. The Fund is not
involved in, or responsible for, the calculation or dissemination of the IOPV
and makes no representation or warranty as to its accuracy.


Determination of Net Asset Value

The NAV for the Fund is generally determined once daily Monday through Friday
generally as of the regularly scheduled close of business of the New York Stock
Exchange ("NYSE") (normally 4:00 p.m., Eastern time) on each day that the NYSE
is open for trading, based on prices at the time of closing, provided that (a)
any assets or liabilities denominated in currencies other than the U.S. dollar
shall be translated into U.S. dollars at the prevailing market rates on the
date of valuation as quoted by one or more major banks or dealers that makes a
two-way market in such currencies (or a data service provider based on
quotations received from such banks or dealers); and (b) U.S. fixed-income
assets may be valued as of the announced closing time for trading in
fixed-income instruments on any day that the Securities Industry and Financial
Markets Association announces an early closing time. The NAV of the Fund is
calculated by dividing the value of the net assets of the Fund (I.E., the value
of its total assets less total liabilities) by the total number of outstanding
shares of the Fund, generally rounded to the nearest cent.


In calculating the Fund's NAV, the Fund's investments 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. BGFA 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 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. The frequency with which the
Fund's investments are valued using fair value pricing is primarily a function
of the types of securities and other assets in which the Fund invests pursuant
to its investment objective, strategies and limitations.


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 (the "1933 Act"));
(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 the Fund's investments using fair value pricing will result in using
prices for those investments that may differ from current market valuations.
Use of fair value prices and certain current market valuations could result in
a difference between the prices used to calculate the Fund's NAV and the prices
used by the Fund's Underlying Index, which, in turn, could result in a
difference between the Fund's performance and the performance of the Fund's
Underlying Index.


--------------------------------------------------------------------------------
     12
[GRAPHIC APPEARS HERE]




Because foreign markets may be open on different days than the days during
which a shareholder may purchase the Fund's shares, the value of the Fund's
investments may change on days when shareholders are not able to purchase the
Fund's shares.


The value of assets denominated in foreign currencies is converted into U.S.
dollars using exchange rates deemed appropriate by BGFA as investment adviser.
Any use of a different rate from the rates used by MSCI may adversely affect
the Fund's ability to track its Underlying Index.


Dividends and Distributions
GENERAL POLICIES. Dividends from net investment income, if any, are declared
and paid at least semi-annually by the Fund. The Fund generally distributes its
net capital gains, if any, to shareholders annually. The Fund also reserves the
right to declare special distributions if, in its reasonable discretion, such
action is necessary or advisable to preserve its status as a regulated
investment company ("RIC") or to avoid imposition of income or excise taxes on
undistributed income.


Dividends and other distributions on shares are distributed on a PRO RATA basis
to beneficial owners of such shares. Dividend payments are made through DTC
participants to beneficial owners then of record with proceeds received from
the Fund.


DIVIDEND REINVESTMENT SERVICE. No dividend reinvestment service is provided by
the Company. Broker-dealers may make available the DTC book-entry Dividend
Reinvestment Service for use by beneficial owners of the Fund for reinvestment
of their dividend distributions. Beneficial owners should contact their broker
to determine the availability and costs of the service and the details of
participation therein. Brokers may require beneficial owners to adhere to
specific procedures and timetables. If this service is available and used,
dividend distributions of both income and realized gains will be automatically
reinvested in additional whole shares of the Fund purchased in the secondary
market.


Taxes
As with any investment, you should consider how your investment in shares of
the Fund will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in shares of the Fund.


Unless your investment in shares is made through a tax-exempt entity or
tax-deferred retirement account, such as an IRA, you need to be aware of the
possible tax consequences when the Fund makes distributions or you sell Fund
shares.


Taxes on Distributions
Distributions from the Fund's net investment income (other than qualified
dividend income), including distributions out of the Fund's net short-term
capital gains, if any, and distributions of income from securities lending, are
taxable to you as ordinary income. Distributions by the Fund of net long-term
capital gains in excess of net short-term capital losses (capital gain
dividends) are taxable to you as long-term capital gains, regardless of how
long you have held the Fund's shares. Distributions by the Fund that qualify as
qualified dividend income are taxable to you at long-term capital gain rates.


Dividends will be qualified dividend income to you if they are attributable to
qualified dividend income received by the Fund which, in general, includes
dividend income from taxable U.S. corporations and qualified foreign
corporations, provided that the Fund satisfies certain holding period
requirements in respect of the stock of such corporations and has not hedged
its position in the stock in certain ways. For this purpose, a qualified
foreign corporation means any foreign corporation (i) that is incorporated in a
possession of the United States, (ii) that is eligible for benefits under a
comprehensive income tax treaty with the United States which includes an
exchange of information program or (iii) if the stock with respect to which the
dividend was paid is readily tradable on an established United States security
market. The term excludes a corporation that is a passive foreign investment
company. Under current Internal Revenue


--------------------------------------------------------------------------------
                                                                           13




Service ("IRS") guidance, the United States has a comprehensive income tax
treaty with the Netherlands as well as with the following countries: Australia,
Austria, Bangladesh, Barbados, Belgium, Canada, China, Cyprus, Czech Republic,
Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,
India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea,
Latvia, Lithuania, Luxembourg, Mexico, Morocco, New Zealand, Norway, Pakistan,
Philippines, Poland, Portugal, Romania, Russian Federation, Slovak Republic,
Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand,
Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom and Venezuela.


Dividends received by the Fund from a real estate investment trust ("REIT") or
another RIC generally are qualified dividend income only to the extent the
dividend distributions are made out of qualified dividend income received by
such REIT or RIC. It is expected that dividends received by the Fund from a
REIT and distributed to a shareholder generally will be taxable to the
shareholder as ordinary income.


Under current law, the taxation of qualified dividend income at long-term
capital gain rates will no longer apply for taxable years beginning after
December 31, 2010.


A dividend will not be treated as qualified dividend income if the dividend is
received with respect to any share of stock held for fewer than 61 days during
the 121-day period beginning at the date which is 60 days before the date on
which such share becomes ex-dividend with respect to such dividend or in the
case of certain preferred stock 91 days during the 181-day period beginning 90
days before such date. In general, your distributions are subject to U.S.
federal income tax for the year when they are paid. Certain distributions paid
in January, however, may be treated as paid on December 31 of the prior year.


If the Fund's distributions exceed current and accumulated earnings and
profits, all or a portion of the distributions made in the taxable year may be
recharacterized as a return of capital to shareholders. A return of capital
distribution generally will not be taxable but will reduce the shareholder's
cost basis and result in a higher capital gain or lower capital loss when those
shares on which the distribution was received are sold.


If you are neither a resident nor a citizen of the United States or if you are
a foreign entity, the Fund's ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies, provided,
however, that withholding tax will generally not apply to any gain or income
realized by a non-U.S. shareholder in respect of any distributions of long-term
capital gains or upon the sale of other disposition of shares of the Fund.


Dividends and interest received by the Fund with respect to foreign securities
may give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Since more than 50% of the total assets of the Fund will
almost certainly consist of foreign stocks or securities, the Fund will "pass
through" to you certain foreign income taxes (including withholding taxes) paid
by the Fund. This means that you will be considered to have received as an
additional dividend your share of such foreign taxes but you may be entitled to
either a corresponding tax deduction in calculating your taxable income or,
subject to certain limitations, a credit in calculating your U.S. federal
income tax.


If you are a resident or a citizen of the United States, by law, back-up
withholding will apply to your distributions and proceeds if you have not
provided a taxpayer identification number or social security number and made
other required certifications.


Taxes When Shares are Sold
Currently, any capital gain or loss realized upon a sale of shares is generally
treated as a long-term gain or loss if shares have been held for more than one
year. Any capital gain or loss realized upon a sale of shares held for one year
or less is generally treated as short-term gain or loss, except that any
capital loss on the sale of shares held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends were paid with
respect to such shares.


--------------------------------------------------------------------------------
     14
[GRAPHIC APPEARS HERE]




THE FOREGOING DISCUSSION SUMMARIZES SOME OF THE CONSEQUENCES UNDER CURRENT U.S.
FEDERAL TAX LAW OF AN INVESTMENT IN THE FUND. IT IS NOT A SUBSTITUTE FOR
PERSONAL TAX ADVICE. YOU MAY ALSO BE SUBJECT TO STATE AND LOCAL TAXATION ON
FUND DISTRIBUTIONS AND SALES OF SHARES. CONSULT YOUR PERSONAL TAX ADVISER ABOUT
THE POTENTIAL TAX CONSEQUENCES OF AN INVESTMENT IN SHARES OF THE FUND UNDER ALL
APPLICABLE TAX LAWS.


Creations and Redemptions
The shares that trade in the secondary market are "created" at NAV by market
makers, large investors and institutions only in block-size Creation Units of
50,000 shares or multiples thereof. Each "creator" or "Authorized Participant"
enters into an authorized participant agreement with the Fund's distributor,
SEI Investments Distribution Co. (the "Distributor"). A creation transaction,
which is subject to acceptance by the transfer agent, takes place when an
Authorized Participant deposits into the Fund a portfolio of securities
approximating the holdings of the Fund and a specified amount of cash in
exchange for a specified number of Creation Units. To the extent practicable,
the composition of such portfolio generally corresponds PRO RATA to the
holdings of the Fund.


Similarly, shares can be redeemed only in Creation Units, generally in-kind for
a portfolio of securities held by the Fund and a specified amount of cash.
EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES ARE NOT REDEEMABLE BY THE
FUND. The prices at which creations and redemptions occur are based on the next
calculation of NAV after an order is received in a form described in the
authorized participant agreement.


The Fund intends to comply with the U.S. federal securities laws in accepting
securities for deposits and satisfying redemptions with redemption securities,
including that the securities accepted for deposits and the securities used to
satisfy redemption requests will be sold in transactions that would be exempt
from registration under the 1933 Act. Further, an Authorized Participant that
is not a "qualified institutional buyer," as such term is defined under Rule
144A of the 1933 Act, will not be able to receive Fund securities that are
restricted securities eligible for resale under Rule 144A.


Creations and redemptions must be made through a firm that is either a member
of the Continuous Net Settlement System of the National Securities Clearing
Corporation or a DTC participant and has executed an agreement with the
Distributor with respect to creations and redemptions of Creation Unit
aggregations. Information about the procedures regarding creation and
redemption of Creation Units (including the cut-off times for receipt of
creation and redemption orders) is included in the SAI.


Because new shares may be created and issued on an ongoing basis, at any point
during the life of the Fund a "distribution," as such term is used in the 1933
Act, may be occurring. Broker-dealers and other persons are cautioned that some
activities on their part may, depending on the circumstances, result in their
being deemed participants in a distribution in a manner that could render them
statutory underwriters and subject to the prospectus delivery and liability
provisions of the 1933 Act. Any determination of whether one is an underwriter
must take into account all the relevant facts and circumstances of each
particular case.


Broker-dealers should also note that dealers who are not "underwriters" but are
participating in a distribution (as contrasted to ordinary secondary
transactions), and thus dealing with shares that are part of an "unsold
allotment" within the meaning of Section 4(3)(C) of the 1933 Act, would be
unable to take advantage of the prospectus delivery exemption provided by
Section 4(3) of the 1933 Act. For delivery of prospectuses to exchange members,
the prospectus delivery mechanism of Rule 153 under the 1933 Act is available
only with respect to transactions on a national securities exchange.


Transaction Fees
The Fund will impose a creation transaction fee and a redemption transaction
fee to offset transfer and other transaction costs associated with the issuance
and redemption of Creation Units. Purchasers and redeemers of Creation Units
for cash are required to pay an additional variable charge to compensate for
brokerage and market impact expenses. The creation and redemption transaction
fees for creations and redemptions in-kind for the Fund are discussed below.
The standard creation transaction fee is charged to


--------------------------------------------------------------------------------
                                                                           15





each purchaser on the day such purchaser creates a Creation Unit. The fee is a
single charge and will be the amount indicated below regardless of the number
of Creation Units purchased by an investor on the same day. BGFA may, from time
to time, at its own expense, compensate purchasers of Creation Units who have
purchased substantial amounts of Creation Units and other financial
institutions for administrative or marketing services. Similarly, the standard
redemption transaction fee will be the amount indicated regardless of the
number of Creation Units redeemed that day. The standard creation and
redemption transaction fees for creations and redemptions through DTC for cash
(when cash creations and redemptions are available or specified) will also be
subject to an additional variable charge up to the maximum amount shown below
under "Maximum Additional Variable Charge for Cash Purchases" and "Maximum
Additional Variable Charge for Cash Redemptions." In addition, purchasers of
shares in Creation Units are responsible for payment of the costs of
transferring securities to the Fund. Redeemers of shares in Creation Units are
responsible for the costs of transferring securities from the Fund. Investors
who use the services of a broker or other such intermediary may pay fees for
such services. The following table also shows, as of September 30, 2007, the
approximate value of one Creation Unit, including the standard creation and
redemption transaction fee:







                                       MAXIMUM        MAXIMUM
                      FEE FOR        ADDITIONAL     ADDITIONAL      NUMBER
                    IN-KIND AND       VARIABLE       VARIABLE      OF SHARES
  APPROXIMATE           CASH           CHARGE         CHARGE          PER
    VALUE OF         PURCHASES        FOR CASH       FOR CASH      CREATION
 CREATION UNIT    AND REDEMPTIONS    PURCHASES*    REDEMPTIONS*      UNIT
---------------  -----------------  ------------  --------------  ----------
                                                      
   $1,601,000          $1,000          0.25%          0.25%         50,000




  *     As a percentage of amount invested.




Householding
Householding is an option available to certain Fund investors. Householding is
a method of delivery, based on the preference of the individual investor, in
which a single copy of certain shareholder documents can be delivered to
investors who share the same address, even if their accounts are registered
under different names. Please contact your broker-dealer if you are interested
in enrolling in householding and receiving a single copy of prospectuses and
other shareholder documents, or if you are currently enrolled in householding
and wish to change your householding status.



Distribution
The Distributor distributes Creation Units for the Fund on an agency basis. The
Distributor does not maintain a secondary market in shares of the Fund. The
Distributor has no role in determining the policies of the Fund or the
securities that are purchased or sold by the Fund. The Distributor's principal
address is One Freedom Valley Drive, Oaks, PA 19456.


--------------------------------------------------------------------------------
     16
[GRAPHIC APPEARS HERE]




Financial Highlights
The financial highlights table is intended to help investors understand the
Fund's financial performance for the past five years. Certain information
reflects financial results for a single share of the Fund. The total returns in
the table represent the rate that an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions. This information has been audited by PricewaterhouseCoopers LLP,
whose report is included, along with the Fund's financial statements, in the
Fund's Annual Report (available upon request).


FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



                                                       ISHARES MSCI NETHERLANDS INDEX FUND
                                  ------------------------------------------------------------------------------
                                       YEAR ENDED      YEAR ENDED      YEAR ENDED      YEAR ENDED     YEAR ENDED
                                    AUG. 31, 2007   AUG. 31, 2006   AUG. 31, 2005   AUG. 31, 2004  AUG. 31, 2003
                                  --------------- --------------- --------------- --------------- --------------
                                                                                   
NET ASSET VALUE, BEGINNING OF        $  24.17        $  19.10         $ 15.70         $ 14.31        $ 14.69
                                     --------        --------         -------         -------        -------
  YEAR
INCOME FROM INVESTMENT
  OPERATIONS:
 Net investment income/a/                0.98            0.60            0.57            0.39           0.30
 Net realized and unrealized             5.05            4.95            3.09            1.37          (0.43)
                                     --------        --------         -------         -------        -------
  gain (loss)/b/
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            0.51%           0.54%           0.57%           0.78%          0.84%
  net assets
 Ratio of net investment income
to average
  net assets                             3.50%           2.78%           3.13%           2.45%          2.37%
 Portfolio turnover rate/c/                 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.

--------------------------------------------------------------------------------
                                                                           17




Index Provider
MSCI is a leading provider of global indexes and benchmark-related products and
services to investors worldwide. Morgan Stanley, a global financial services
firm and a market leader in securities, asset management, and credit services,
is the majority shareholder of MSCI and The Capital Group Companies, Inc., a
global investment management group, is the minority shareholder. MSCI is not
affiliated with the Company, BGI, BGFA, State Street, the Distributor or any of
their respective affiliates.


BGI has entered into a license agreement with the Index Provider to use the
Underlying Index. BGI is sub-licensing rights in the Underlying Index to the
Company at no charge.

--------------------------------------------------------------------------------
     18
[GRAPHIC APPEARS HERE]




Disclaimers
THE FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI. MSCI MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE SHARES OF
THE FUND OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF INVESTING IN
SECURITIES GENERALLY OR IN THE FUND PARTICULARLY OR THE ABILITY OF THE
UNDERLYING INDEX TO TRACK GENERAL STOCK MARKET PERFORMANCE. MSCI'S ONLY
RELATIONSHIP TO THE FUND, BGI AND BGFA IS THE LICENSING OF CERTAIN TRADEMARKS
AND TRADE NAMES OF MSCI AND OF THE UNDERLYING INDEX, WHICH IS DETERMINED,
COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THE COMPANY, BGI, BGFA OR THE
FUND. MSCI HAS NO OBLIGATION TO TAKE THE NEEDS OF THE COMPANY, BGI, BGFA OR THE
OWNERS OF SHARES OF THE FUND INTO CONSIDERATION IN DETERMINING, COMPOSING OR
CALCULATING THE UNDERLYING INDEX. MSCI IS NOT RESPONSIBLE FOR, AND HAS NOT
PARTICIPATED IN, THE DETERMINATION OF THE PRICES AND AMOUNT OF SHARES OF THE
FUND OR THE TIMING OF THE ISSUANCE OR SALE OF SUCH SHARES OR IN THE
DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH SHARES OF THE FUND ARE TO
BE CONVERTED INTO CASH. MSCI HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH
THE ADMINISTRATION, MARKETING OR TRADING OF THE FUND. MSCI DOES NOT GUARANTEE
THE ACCURACY AND/OR THE COMPLETENESS OF THE UNDERLYING INDEX OR ANY DATA
INCLUDED THEREIN AND MSCI SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR
INTERRUPTIONS THEREIN.


MSCI MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY
BGI, BGFA, OWNERS OF SHARES OF THE FUND OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. MSCI MAKES NO EXPRESS
OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE UNDERLYING INDEX OR ANY
DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
MSCI, HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS) RESULTING FROM THE USE OF THE UNDERLYING INDEX
OR ANY DATA INCLUDED THEREIN EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.


SHARES OF THE FUND ARE NOT SPONSORED, ENDORSED OR PROMOTED BY NYSE ARCA. NYSE
ARCA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF
THE SHARES OF THE FUND OR ANY MEMBER OF THE PUBLIC REGARDING THE ABILITY OF THE
FUND TO TRACK THE TOTAL RETURN PERFORMANCE OF THE UNDERLYING INDEX OR THE
ABILITY OF THE UNDERLYING INDEX IDENTIFIED HEREIN TO TRACK STOCK MARKET
PERFORMANCE. NYSE ARCA IS NOT RESPONSIBLE FOR, NOR HAS IT PARTICIPATED IN, THE
DETERMINATION OF THE COMPILATION OR THE CALCULATION OF THE UNDERLYING INDEX,
NOR IN THE DETERMINATION OF THE TIMING OF, PRICES OF OR QUANTITIES OF THE
SHARES OF THE FUND TO BE ISSUED, NOR IN THE DETERMINATION OR CALCULATION OF THE
EQUATION BY WHICH THE SHARES ARE REDEEMABLE. NYSE ARCA HAS NO OBLIGATION OR
LIABILITY TO OWNERS OF THE SHARES OF THE FUND IN CONNECTION WITH THE
ADMINISTRATION, MARKETING OR TRADING OF THE SHARES OF THE FUND.


NYSE ARCA DOES NOT GUARANTEE THE ACCURACY OR THE COMPLETENESS OF THE UNDERLYING
INDEX OR ANY DATA INCLUDED THEREIN. NYSE ARCA MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE COMPANY, ON BEHALF OF THE FUND AS
LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES, OWNERS OF THE SHARES OR ANY
OTHER PERSON OR ENTITY, FROM THE USE OF THE UNDERLYING INDEX OR ANY DATA
INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED AS DESCRIBED HEREIN OR
FOR ANY OTHER USE.


NYSE ARCA MAKES NO EXPRESS OR IMPLIED WARRANTIES AND HEREBY EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING
ANY OF THE FOREGOING, IN NO EVENT SHALL NYSE ARCA HAVE ANY LIABILITY FOR ANY
DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (LOST
PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.


BGFA DOES NOT GUARANTEE THE ACCURACY OR THE COMPLETENESS OF THE UNDERLYING
INDEX OR ANY DATA INCLUDED THEREIN AND BGFA SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN.


--------------------------------------------------------------------------------
                                                                           19




BGFA MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
FUND, TO THE OWNERS OF THE SHARES OF THE FUND OR TO ANY OTHER PERSON OR ENTITY,
FROM THE USE OF THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. BGFA MAKES
NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL BGFA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
DIRECT, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.


--------------------------------------------------------------------------------
     20
[GRAPHIC APPEARS HERE]




Supplemental Information

I. Premium/Discount Information
The table that follows presents information about the differences between the
daily market price on secondary markets for shares of the Fund and the Fund's
NAV. 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 price used to calculate market returns ("Market Price") of the Fund
generally is determined using the midpoint between the highest bid and the
lowest offer on the national securities exchange on which the shares of the
Fund are 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 of distributions of premiums and
discounts for the Fund. The information shown for the Fund is for the calendar
year of 2006 through December 31, 2007, the date of the most recent calendar
quarter-end.



EACH LINE IN THE TABLE SHOWS THE NUMBER OF TRADING DAYS IN WHICH THE FUND
TRADES 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.




                                                                             NUMBER     PERCENTAGE
FUND                             PREMIUM/DISCOUNT RANGE                     OF DAYS    OF TOTAL DAYS
===============================  ========================================  =========  ==============
                                                                             
iShares MSCI Netherlands Index   Greater than 2.0% and Less than 2.5%           2           0.80%
  Fund
                                 Greater than 1.5% and Less than 2.0%           1           0.40%
                                 Greater than 1.0% and Less than 1.5%           8           3.19%
                                 Greater than 0.5% and Less than 1.0%          26          10.36%
                                 BETWEEN 0.5% AND -0.5%                       173          68.91%
                                 Less than -0.5% and Greater than -1.0%        23           9.16%
                                 Less than -1.0% and Greater than -1.5%        13           5.18%
                                 Less than -1.5% and Greater than -2.0%         3           1.20%
                                 Less than -2.0%                                2           0.80%
                                                                              ---          -----
                                                                              251         100.00%
                                                                              ===         ======



II. Total Return Information
The table that follows presents information about the total return of the
Fund's Underlying Index and the total return of the Fund. The information
presented for the Fund is as of its fiscal year ended August 31, 2007.


"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 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 Price is
determined by using the midpoint between the highest bid and the lowest offer
on the national securities


--------------------------------------------------------------------------------
                                                                           21




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, the NAV of the Fund is used as a proxy for the 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, the Underlying 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 below 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.


                      ISHARES MSCI NETHERLANDS INDEX FUND





                                       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%


                                       ^

--------------------------------------------------------------------------------
     22
[GRAPHIC APPEARS HERE]





Copies of the Prospectus, SAI and recent shareholder reports can be found on
our website at www.iShares.com. For more information about the Fund, you may
request a copy of the SAI. The SAI provides detailed information about the Fund
and is incorporated by reference into this Prospectus. This means that the SAI,
for legal purposes, is a part of this Prospectus.

Additional information about the Fund's investments is available in the Fund's
Annual or Semi Annual reports to shareholders. In the Fund's Annual Report, you
will find a discussion of the market conditions and investments strategies that
significantly affected the Fund's performance during the last fiscal year.


If you have any questions about the Company or shares of the Fund or you wish
to obtain the SAI, Semi-Annual or Annual report free of charge, please:

             
     Call:         1-800-iShares
     (toll free)   1-800-474-2737
                   Monday through Friday
                   8:30 a.m. to 6:30 p.m. (Eastern Time)

     E-mail:       iSharesETFs@barclaysglobal.com

     Write:        c/o SEI Investments Distribution Co.
                   One Freedom Valley Drive
                   Oaks, PA 19456



Information about the Fund (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C., and information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-202-551-8090. Reports and other information about the Fund are available on
the EDGAR Database on the SEC's website at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing to
the SEC's Public Reference Section, Washington, D.C. 20549-0102.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
ABOUT THE FUND AND ITS SHARES NOT CONTAINED IN THIS PROSPECTUS AND YOU SHOULD
NOT RELY ON ANY OTHER INFORMATION. READ AND KEEP THE PROSPECTUS FOR FUTURE
REFERENCE.

                   Investment Company Act File No.: 811-09729

                     For more information visit our website
                     or call 1-800-iShares (1-800-474-2737)
                                WWW.ISHARES.COM



BGI-F-121-02008
[GRAPHIC APPEARS HERE]




[GRAPHIC APPEARS HERE]




ISHARES, INC.

Statement of Additional Information
Dated January 1, 2008
(as revised February 25, 2008)

This combined Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the current prospectuses (the
"Prospectuses") for the following funds of iShares , Inc. (the "Company"), as
such Prospectuses may be revised or supplemented from time to time:

iShares MSCI Australia Index Fund
iShares MSCI Austria Index Fund
iShares MSCI Belgium Index Fund
iShares MSCI Brazil Index Fund
iShares MSCI Canada Index Fund
iShares MSCI Emerging Markets 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 Pacific ex-Japan Index Fund
iShares MSCI Singapore Index Fund
iShares MSCI South Africa Index Fund
iShares MSCI South Korea Index Fund
iShares MSCI Spain Index Fund
iShares MSCI Sweden Index Fund
iShares MSCI Switzerland Index Fund
iShares MSCI Taiwan Index Fund
iShares MSCI United Kingdom Index Fund

The Prospectuses for the various iShares funds included in this SAI are dated
January 1, 2008 with the exception of the Prospectuses for the iShares MSCI
Austria Index Fund and the iShares MSCI Netherlands Index Fund which are each
dated February 25, 2008. Capitalized terms used herein that are not defined
have the same meaning as in the applicable Prospectus, unless otherwise noted.
The financial statements and notes contained in the Annual Reports of the
Company for the above-listed funds for the fiscal year ended August 31, 2007
are incorporated by reference into and are deemed to be part of this SAI. A
copy of each Prospectus and Annual Report may be obtained without charge by
writing to the Company's distributor, SEI Investments Distribution Co. (the
"Distributor"), at One Freedom Valley Drive, Oaks, PA 19456, calling
1-800-iShares (1-800-474-2737) or visiting www.iShares.com.

iShares(Reg. TM) is a registered trademark of Barclays Global Investors, N.A.
("BGI").




                              TABLE OF CONTENTS



                                         PAGE
                                        -----
                                     
General Description of the Company         1
  and its Funds
Exchange Listing and Trading               2
Investment Strategies and Risks            3
   Lack of Diversification of the          3
  Funds
   Lending Portfolio Securities            3
   Repurchase Agreements                   3
   Reverse Repurchase Agreements           4
   Currency Transactions                   4
   Short-Term Instruments and              4
  Temporary Investments
   Foreign Securities                      5
   Securities of Investment                5
  Companies
   Illiquid Securities                     5
   Futures and Options                     5
   Options on Futures Contracts            6
   Swap Agreements                         6
   Tracking Stocks                         6
   Future Developments                     7
General Considerations and Risks           7
   Risks of Derivatives                    7
   Risks of Equity Securities              7
   Risks of Futures and Options            7
  Transactions
   Risks of Swap Agreements                8
   Risks of Investing in Non-U.S.          8
  Equity Securities
   Dividend Risk                           8
Proxy Voting Policy                        8
Portfolio Holdings Information             9
Construction and Maintenance of           10
  Underlying Indexes
The MSCI Indexes                          10
   MSCI Standard Equity Indexes           11
   MSCI Global Investable Market          12
  Indexes
Price and Exchange Rates                  13
Investment Limitations                    16
Continuous Offering                       19
Management                                19
   Directors and Officers                 19
   Committees of the Board of             24
  Directors


                                       i






                                         PAGE
                                        -----
                                     
   Remuneration of Directors              24
   Control Persons and Principal          25
  Holders of Securities
Investment Advisory,                      28
Administrative and Distribution
  Services
   Investment Adviser                     28
   Portfolio Managers                     30
   Codes of Ethics                        33
   Administrator, Custodian and           33
  Transfer Agent
   Distributor                            34
   Index Provider                         35
Brokerage Transactions                    36
Additional Information Concerning         38
  the Company
   Capital Stock                          38
   Termination of the Company or a        39
  Fund
   DTC as Securities Depository           39
  for Shares of the Funds
Purchase and Issuance of Creation         40
  Units
   General                                40
   Fund Deposit                           41
   Role of the Authorized                 41
  Participant
   Purchase Order                         41
   Timing of Submission of                42
  Purchase Orders
   Acceptance of Order for                42
  Creation Unit
   Issuance of a Creation Unit            42
   Cash Purchase Method                   43
   Purchase Transaction Fee               43
   Redemption of Creation Units           44
   Redemption Transaction Fee             44
Regular Holidays                          47
Taxes                                     57
   Regulated Investment Company           57
  Qualifications
   Taxation of RICs                       57
   Taxation of Certain Derivatives        57
   Excise Tax                             58
   Net Capital Loss Carryforwards         58
   Funds Holding Foreign                  59
  Investments
   Federal Tax Treatment of               59
  Complex Securities
   Taxation of U.S. Shareholders          60
   Sales of Shares                        61


                                       ii






                                       PAGE
                                      -----
                                   
   Back-Up Withholding                  61
   Sections 351 and 362                 61
   Qualified Dividend Income            61
   Corporate Dividends Received         62
  Deduction
   Reporting                            62
   Other Taxes                          62
   Taxation of Non-U.S.                 62
  Shareholders
Financial Statements                    62
Miscellaneous Information               62
   Counsel                              62
   Independent Registered Public        63
  Accounting Firm
   Shareholder Communications to        63
  the Board


                                       iii




General Description of the Company and its Funds

The Company currently consists of more than 27 investment series or portfolios.
The Company was organized as a Maryland corporation on August 31, 1994 and is
authorized to have multiple series or portfolios. The Company is an open-end
management investment company registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940, as amended
(the "1940 Act"). The offering of the Company's shares is registered under the
Securities Act of 1933, as amended (the "1933 Act"). This SAI relates to the
following funds (each, a "Fund" and collectively, the "Funds"):

o  ISHARES MSCI AUSTRALIA INDEX FUND

o  ISHARES MSCI AUSTRIA INDEX FUND(1)

o  ISHARES MSCI BELGIUM INDEX FUND

o  ISHARES MSCI BRAZIL INDEX FUND

o  ISHARES MSCI CANADA INDEX FUND

o  ISHARES MSCI EMERGING MARKETS INDEX FUND

o  ISHARES MSCI EMU INDEX FUND

o  ISHARES MSCI FRANCE INDEX FUND

o  ISHARES MSCI GERMANY INDEX FUND

o  ISHARES MSCI HONG KONG INDEX FUND

o  ISHARES MSCI ITALY INDEX FUND

o  ISHARES MSCI JAPAN INDEX FUND

o  ISHARES MSCI MALAYSIA INDEX FUND

o  ISHARES MSCI MEXICO INDEX FUND

o  ISHARES MSCI NETHERLANDS INDEX FUND(2)

o  ISHARES MSCI PACIFIC EX-JAPAN INDEX FUND

o  ISHARES MSCI SINGAPORE INDEX FUND

o  ISHARES MSCI SOUTH AFRICA INDEX FUND

o  ISHARES MSCI SOUTH KOREA INDEX FUND

o  ISHARES MSCI SPAIN INDEX FUND

o  ISHARES MSCI SWEDEN INDEX FUND

o  ISHARES MSCI SWITZERLAND INDEX FUND

o  ISHARES MSCI TAIWAN INDEX FUND

o  ISHARES MSCI UNITED KINGDOM INDEX FUND
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1At a December 7, 2007 special shareholders meeting of the iShares MSCI
   Austria Index Fund, a proposal to change the Underlying Index of the Fund
   from the MSCI Austria Index to the MSCI Austria Investable Market Index
   was approved in response to MSCI's combination of its standard and small
   cap indexes to form investable market indexes. Shareholders of the Fund
   also approved a proposal to change the Fund's investment objective from a
   "fundamental" investment policy to a "non-fundamental" investment policy.
   As a result, the investment objective and underlying index of the Fund may
   be changed without shareholder approval.
2  At a December 7, 2007 special shareholders meeting of the iShares MSCI
   Netherlands Index Fund, a proposal to change the Underlying Index of the
   Fund from the MSCI Netherlands Index to the MSCI Netherlands Investable
   Market Index was approved in response to MSCI's combination of its standard
   and small cap indexes to form investable market indexes. Shareholders of
   the Fund also approved a proposal to change the Fund's investment objective
   from a "fundamental" investment policy to a "non-fundamental" investment
   policy. As a result, the investment objective and underlying index of the
   Fund may be changed without shareholder approval.

The investment objective of each Fund is to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of a specified benchmark index (each an "Underlying Index")
representing publicly traded equity securities of companies in a particular
country or region. Each Fund is managed by Barclays Global Fund Advisors
("BGFA" or the "Investment Adviser"), a subsidiary of BGI.

Each Fund offers and issues shares at their net asset value per share ("NAV")
only in aggregations of a specified number of shares (each, a "Creation Unit"),
generally in exchange for a basket of equity securities included in its
Underlying Index (the "Deposit

                                       1




Securities"), together with the deposit of a specified cash payment (the "Cash
Component"). Shares of the Funds are listed and traded on NYSE Arca, Inc.
("NYSE Arca") (the "Listing Exchange"), a national securities exchange. Shares
trade in the secondary market and elsewhere at market prices that may be at,
above or below NAV. Shares are redeemable only in Creation Units, and,
generally, in exchange for portfolio securities and a Cash Component. Creation
Units typically are a specified number of shares, generally 40,000 to 600,000
shares or multiples thereof, depending on the Fund.

The Company reserves the right to offer a "cash" option for creations and
redemptions of shares. Shares may be issued in advance of receipt of Deposit
Securities subject to various conditions including a requirement to maintain on
deposit with the Company cash at least equal to 110%, which BGFA may change
from time to time, of the market value of the missing Deposit Securities. See
the CREATION AND REDEMPTION OF CREATION UNITS section of this SAI. In each
instance of such cash creations or redemptions, transaction fees may be imposed
that will be higher that the transaction fees associated with in-kind creations
or redemptions. In all cases, such conditions and fees will be limited in
accordance with the requirements of the SEC applicable to management investment
companies offering redeemable securities.

Exchange Listing and Trading
A discussion of exchange listing and trading matters associated with an
investment in each Fund is contained in the SHAREHOLDER INFORMATION section of
the Fund's Prospectus. The discussion below supplements, and should be read in
conjunction with, that section of the applicable Prospectus.

Shares of each Fund are listed on and trade throughout the day on the Listing
Exchange and other secondary markets. Shares of the Funds may also be traded on
certain non-U.S. exchanges. There can be no assurance that the requirements of
the Listing Exchange necessary to maintain the listing of shares of any Fund
will continue to be met. The Listing Exchange may, but is not required to,
remove the shares of a Fund from listing if (i) following the initial 12-month
period beginning upon the commencement of trading of a Fund, there are fewer
than 50 beneficial holders of shares for 30 or more consecutive trading days,
(ii) the value of the Underlying Index on which a Fund is based is no longer
calculated or available, (iii) the "indicative optimized portfolio value"
("IOPV") of a Fund is no longer calculated or available or (iv) any other event
shall occur or condition shall exist that, in the opinion of the Listing
Exchange, makes further dealings on the Listing Exchange inadvisable. The
Listing Exchange will remove the shares of a Fund from listing and trading upon
termination of the Fund.

As in the case of other publicly traded securities, when you buy or sell shares
through a broker you will incur a brokerage commission determined by that
broker.

In order to provide additional information regarding the indicative value of
shares of the Funds, the Listing Exchange disseminates every 15 seconds through
the facilities of the Consolidated Tape Association an updated IOPV for the
Funds as calculated by an information provider or market data vendors. The
Company is not involved in or responsible for any aspect of the calculation or
dissemination of the IOPVs and makes no representation or warranty as to the
accuracy of the IOPVs.

An IOPV has an equity securities component and a Cash Component. The equity
securities values included in an IOPV are the values of the Deposit Securities
for a Fund. While the IOPV reflects the current market value of the Deposit
Securities required to be deposited in connection with the purchase of a
Creation Unit, it does not necessarily reflect the precise composition of the
current portfolio of securities held by the Fund at a particular point in time
because the current portfolio of the Fund may include securities that are not
part of the current Deposit Securities. Therefore a Fund's IOPV disseminated
during the Listing Exchange trading hours should not be viewed as a real time
update of the Fund's NAV, which is calculated only once a day.

The Cash Component included in an IOPV consists of estimated accrued dividend
and other income, less expenses. If applicable, each IOPV also reflects changes
in currency exchange rates between the U.S. Dollar and the applicable currency.

The Company reserves the right to adjust the share prices of Funds in the
future to maintain convenient trading ranges for investors. Any adjustments
would be accomplished through share splits or reverse share splits, which would
have no effect on the net assets of the applicable Fund.

                                       2




Investment Strategies and Risks
Each Fund seeks to achieve its investment objective by investing primarily in
securities issued by companies that comprise the relevant Underlying Index and
through transactions that provide substantially similar exposure to securities
in the Underlying Index. Each Fund operates as an index fund and will not be
actively managed. Adverse performance of a security in a Fund's portfolio will
ordinarily not result in the elimination of the security from a Fund's
portfolio.

Each Fund engages in representative sampling, which is investing in a sample of
securities selected by BGFA to have a collective investment profile similar to
the Underlying Index. Securities selected have aggregate investment
characteristics (based on market capitalization and industry weightings),
fundamental characteristics (such as return variability, earnings valuation and
yield) and liquidity measures similar to those of the relevant Underlying
Index. Funds that use representative sampling generally do not hold all of the
securities that are included in the relevant Underlying Index.

LACK OF DIVERSIFICATION OF THE FUNDS.  Each Fund is non-diversified. A
"non-diversified" classification means that a Fund is not limited by the 1940
Act with regard to the percentage of its assets that may be invested in the
securities of a single issuer. The securities of a particular issuer (or
securities of issuers in particular industries) may dominate the Underlying
Index of such a Fund and, consequently, the Fund's investment portfolio. This
may adversely affect the Fund's performance or subject the Fund's shares to
greater price volatility than that experienced by more diversified investment
companies.

Each Fund intends to maintain the required level of diversification and
otherwise conduct its operations so as to qualify as a Regulated Investment
Company ("RIC") for purposes of the U.S. Internal Revenue Code of 1986, as
amended (the "IRC"), and to relieve the Fund of any liability for U.S. federal
income tax to the extent that its earnings are distributed to shareholders.
Compliance with the diversification requirements of the IRC may limit the
investment flexibility of certain Funds and may make it less likely that such
Funds will meet their investment objectives.

LENDING PORTFOLIO SECURITIES. Each Fund may lend portfolio securities to
certain creditworthy borrowers, including borrowers affiliated with BGFA. The
borrowers provide collateral that is maintained in an amount at least equal to
the current market value of the securities loaned. No securities loan shall be
made on behalf of a Fund if, as a result, the aggregate value of all securities
loans of the particular Fund exceeds one-third of the value of such Fund's
total assets (including the value of the collateral received). A Fund may
terminate a loan at any time and obtain the return of the securities loaned.
Each Fund receives the value of any interest or cash or non-cash distributions
paid on the loaned securities.

With respect to loans that are collateralized by cash, the borrower will be
entitled to receive a fee based on the amount of cash collateral. The Funds are
compensated by the difference between the amount earned on the reinvestment of
cash collateral and the fee paid to the borrower. In the case of collateral
other than cash, a Fund is compensated by a fee paid by the borrower equal to a
percentage of the market value of the loaned securities. Any cash collateral
may be reinvested in certain short-term instruments either directly on behalf
of each lending Fund or through one or more joint accounts or money market
funds, including those managed by BGFA. Securities lending involves exposure to
certain risks, including operational risk (I.E., the risk of losses resulting
from problems in the settlement and accounting process), "gap" risk (I.E., the
risk of a mismatch between the return on cash collateral reinvestments and the
fees each Fund has agreed to pay a borrower), and credit, legal, counterparty
and market risk.

In the event a borrower does not return a Fund's securities as agreed, the Fund
may experience losses if the proceeds received from liquidating the collateral
does not at least equal the value of the loaned security at the time the
collateral is liquidated plus the transaction costs incurred in purchasing
replacement securities.

A Fund may pay a portion of the interest or fees earned from securities lending
to a borrower as described above and to a securities lending agent who
administers the lending program in accordance with guidelines approved by the
Company's Board of Directors (the "Board" or "Directors"). BGI acts as
securities lending agent for the Funds subject to the overall supervision of
BGFA. BGI receives a portion of the revenues generated by securities lending
activities as compensation for its services.

REPURCHASE AGREEMENTS.  Each Fund may enter into repurchase agreements with
certain counterparties. Repurchase agreements involve an agreement to purchase
financial instruments and to resell those instruments back to the same
counterparty at an agreed-upon date and price, which price reflects a rate of
interest unrelated to a coupon rate or maturity of the purchased instruments.
The value of the instruments purchased may be more or less than the price at
which the counterparty has agreed to repurchase them. As protection against the
risk that the counterparty will not fulfill its obligation, the instruments are
marked to market daily and are maintained at a value at least equal to the sale
price plus the accrued incremental amount. Delays or losses could result if the

                                       3




counterparty to the repurchase agreement defaults or becomes insolvent. The
Funds will engage in repurchase agreements only with counterparties whose
creditworthiness has been reviewed and found to be satisfactory by BGFA.

REVERSE REPURCHASE AGREEMENTS.  Each Fund may enter into reverse repurchase
agreements, which involve the sale of securities with an agreement to
repurchase the securities at an agreed-upon price, date and interest payment
and have the characteristics of borrowing. Generally the effect of such
transactions is that the Fund can recover all or most of the cash invested in
the portfolio securities involved during the term of the reverse repurchase
agreement, while in many cases the Fund is able to keep some of the interest
income associated with those securities. Such transactions are advantageous
only if the Fund has an opportunity to earn a rate of interest on the cash
derived from these transactions that is greater than the interest cost of
obtaining the same amount of cash. Opportunities to realize earnings from the
use of the proceeds equal to or greater than the interest required to be paid
may not always be available and each Fund intends to use the reverse repurchase
technique only when BGFA believes it will be advantageous to the Fund. The use
of reverse repurchase agreements may exaggerate any interim increase or
decrease in the value of each Fund's assets. The Fund's exposure to reverse
repurchase agreements will be covered by securities having a value equal to or
greater than such commitments. Each Fund maintains liquid assets in connection
with reverse repurchase agreements. Under the 1940 Act, reverse repurchase
agreements are considered borrowings.

CURRENCY TRANSACTIONS.  The Funds do not expect to engage in currency
transactions for the purpose of hedging against declines in the value of the
Funds' assets that are denominated in a foreign currency. A Fund may enter into
foreign currency forward and foreign currency futures contracts to facilitate
local securities settlements or to protect against currency exposure in
connection with its distributions to shareholders, but may not enter into such
contracts for speculative purposes.

A forward currency contract is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency futures contract is a contract involving an obligation to
deliver or acquire the specified amount of a specific currency, at a specified
price and at a specified future time. Futures contracts may be settled on a net
cash payment basis rather than by the sale and delivery of the underlying
currency.

Foreign exchange transactions involve a significant degree of risk and the
markets in which foreign exchange transactions are effected are highly
volatile, highly specialized and highly technical. Significant changes,
including changes in liquidity prices, can occur in such markets within very
short periods of time, often within minutes. Foreign exchange trading risks
include, but are not limited to, exchange rate risk, maturity gap, interest
rate risk, and potential interference by foreign governments through regulation
of local exchange markets, foreign investment or particular transactions in
foreign currency. If BGFA utilizes foreign exchange transactions at an
inappropriate time or judges market conditions, trends or correlations
incorrectly, foreign exchange transactions may not serve their intended purpose
of improving the correlation of a Fund's return with the performance of the
Underlying Index and may lower the Fund's return. The Fund could experience
losses if the value of its currency forwards, options and futures positions
were poorly correlated with its other investments or if it could not close out
its positions because of an illiquid market. In addition, each Fund could incur
transaction costs, including trading commissions, in connection with certain
foreign currency transactions.

SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS.  Each Fund may invest in
short-term instruments, including money market instruments, on an ongoing basis
to provide liquidity or for other reasons. Money market instruments are
generally short-term investments that may include but are not limited to: (i)
shares of money market funds (including those advised by BGFA or its
affiliates); (ii) obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities (including government-sponsored enterprises);
(iii) negotiable certificates of deposit ("CDs"), bankers' acceptances, fixed
time deposits and other obligations of U.S. and foreign banks (including
foreign branches) and similar institutions; (iv) commercial paper rated at the
date of purchase "Prime-1" by Moody's(Reg. TM) Investors Services, Inc.
("Moody's(Reg. TM)") or "A-1" by Standard & Poor's Rating Services, a division
of The McGraw-Hill Companies, Inc. ("S&P(Reg. TM)"), or if unrated, of
comparable quality as determined by BGFA; (v) non-convertible corporate debt
securities (E.G., bonds and debentures) with remaining maturities at the date
of purchase of not more than 397 days and that satisfy the rating requirements
set forth in Rule 2a-7 under the 1940 Act; (vi) repurchase agreements; and
(vii) short-term U.S. dollar-denominated obligations of foreign banks
(including U.S. branches) that, in the opinion of BGFA, are of a quality
comparable to obligations of U.S. banks which may be purchased by a Fund. Any
of these instruments may be purchased on a current or  forward-settled basis.
Time deposits are non-negotiable deposits maintained in banking institutions
for specified periods of time at stated interest rates. Bankers' acceptances
are time drafts drawn on commercial banks by borrowers, usually in connection
with international transactions.

                                       4




FOREIGN SECURITIES.  Each Fund may purchase publicly traded common stocks of
foreign corporations. To the extent a Fund invests in stocks of foreign
corporations, each Fund's investment in such stocks may be in the form of
American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and
European Depositary Receipts ("EDRs") (collectively, "Depositary Receipts").
Depositary Receipts are receipts, typically issued by a bank or trust company,
which evidence ownership of underlying securities issued by a foreign
corporation. For ADRs, the depository is typically a U.S. financial institution
and the underlying securities are issued by a foreign issuer. For other
Depositary Receipts, the depository may be a foreign or a U.S. entity, and the
underlying securities may have a foreign or a U.S. issuer. Depositary Receipts
will not necessarily be denominated in the same currency as their underlying
securities. Generally, ADRs, in registered form, are designed for use in the
U.S. securities markets, and EDRs, in bearer form, are designed for use in
European securities markets. GDRs are tradable both in the United States and in
Europe and are designed for use throughout the world. The Funds will not invest
in any unlisted Depository Receipt or any Depository Receipt that BGFA deems
illiquid or for which pricing information is not readily available. In general
Depository Receipts must be sponsored, however a Fund may invest in unsponsored
Depository Receipts under certain limited circumstances. The issuers of
unsponsored Depository Receipts are not obligated to disclose material
information in the United States. Therefore there may be less information
available regarding such issuers and there may be no correlation between
available information and the market value of the Depository Receipts.

To the extent a Fund invests in ADRs, such ADRs will be listed on a national
securities exchange, and to the extent a Fund invests in GDRs or EDRs, such
GDRs and EDRs will be listed on a foreign securities exchange. A Fund will not
invest in any unlisted Depository Receipt or any Depository Receipt that BGFA
deems to be illiquid or for which pricing information is not readily available.
In addition, all Depository Receipts generally must be sponsored, however a
Fund may invest in unsponsored Depository Receipts under certain limited
circumstances.

The issuers of unsponsored Depository Receipts are not obligated to disclose
material information in the United States, and, therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the Depository Receipts.

Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries, and potential restrictions of the
flow of international capital. Foreign companies may be subject to less
governmental regulation than U.S. companies. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.

SECURITIES OF INVESTMENT COMPANIES.  Each Fund may invest in the securities of
other investment companies (including money market funds) to the extent allowed
by law. Pursuant to the 1940 Act, a Fund's investment in investment companies
is limited to, subject to certain exceptions: (i) 3% of the total outstanding
voting stock of any one investment company; (ii) 5% of the Fund's total assets
with respect to any one investment company and (iii) 10% of the Fund's total
assets with respect to investment companies in the aggregate. To the extent
allowed by law or regulation, each Fund may invest its assets in securities of
investment companies that are money market funds, including those advised by
BGFA or its affiliates, in excess of the limits discussed above. 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 up to 10%
of its assets in shares of other iShares Funds that invest in securities in the
MSCI Emerging Markets Index. BGFA will not charge advisory fees on that portion
of the iShares MSCI Emerging Market Index Fund's assets invested in shares of
other iShares Funds. Other investment companies in which a Fund invests can be
expected to incur fees and expenses for operations, such as investment advisory
and administration fees, that would be in addition to those incurred by the
Fund.

ILLIQUID SECURITIES.  Each Fund may invest up to an aggregate amount of 15% of
its net assets in illiquid securities. Illiquid securities include securities
subject to contractual or other restrictions on resale and other instruments
that lack readily available markets.

FUTURES AND OPTIONS.  Each Fund may enter into U.S. or foreign futures
contracts, options and options on futures contracts. These futures contracts
and options will be used to simulate investment in the respective Underlying
Index, to facilitate trading or to reduce transaction costs. Each Fund will
enter into futures contracts and options only on futures contracts that are
traded on a U.S. or foreign exchange. No Fund will use futures or options for
speculative purposes. Each Fund intends to use futures and options in
accordance with Rule 4.5 of the Commodity Exchange Act (the "CEA"). The
Company, on behalf of each Fund, has filed a notice

                                       5




of eligibility for exclusion from the definition of the term "commodity pool
operator" in accordance with Rule 4.5 so that each Fund is not subject to
registration or regulation as a commodity pool operator under the CEA.

A call option gives a holder the right to purchase a specific security at a
specified price ("exercise price") within a specified period of time. A put
option gives a holder the right to sell a specific security at a specified
exercise price within a specified period of time. The initial purchaser of a
call option pays the "writer" a premium, which is paid at the time of purchase
and is retained by the writer whether or not such option is exercised. Each
Fund may purchase put options to hedge its portfolio against the risk of a
decline in the market value of securities held and may purchase call options to
hedge against an increase in the price of securities it is committed to
purchase. Each Fund may write put and call options along with a long position
in options to increase its ability to hedge against a change in the market
value of the securities it holds or is committed to purchase.

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific instrument or index at a
specified future time and at a specified price. Stock index contracts are based
on investments that reflect the market value of common stock of the firms
included in the investments. Each Fund may enter into futures contracts to
purchase security investments when BGFA anticipates purchasing the underlying
securities and believes prices will rise before the purchase will be made. To
the extent required by law, liquid assets committed to futures contracts will
be segregated.

OPTIONS ON FUTURES CONTRACTS.  An option on a futures contract, as contrasted
with the direct investment in such a contract, gives the purchaser the right,
in return for the premium paid, to assume a position in the underlying futures
contract at a specified exercise price at any time prior to the expiration date
of the option. Upon exercise of an option, the delivery of the futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account that
represents the amount by which the market price of the futures contract exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the futures contract. The potential for loss related to
the purchase of an option on a futures contract is limited to the premium paid
for the option plus transaction costs. Because the value of the option is fixed
at the point of sale, there are no daily cash payments by the purchaser to
reflect changes in the value of the underlying contract; however, the value of
the option changes daily and that change would be reflected in the NAV of each
Fund. The potential for loss related to writing call options is unlimited.

Each Fund may purchase and write put and call options on futures contracts that
are traded on a U.S. or foreign exchange as a hedge against changes in value of
its portfolio securities, or in anticipation of the purchase of securities, and
may enter into closing transactions with respect to such options to terminate
existing positions. There is no guarantee that such closing transactions can be
effected.

Upon entering into a futures contract, a Fund will be required to deposit with
the broker an amount of cash or cash equivalents known as "initial margin,"
which is in the nature of a performance bond or good faith deposit on the
contract and is returned to each Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Subsequent payments,
known as "variation margin," to and from the broker will be made daily as the
price of the index underlying the futures contract fluctuates, making the long
and short positions in the futures contract more or less valuable, a process
known as "marking-to-market." At any time prior to expiration of a futures
contract, each Fund may elect to close the position by taking an opposite
position, which will operate to terminate a Fund's existing position in the
contract.

SWAP AGREEMENTS.  Swap agreements are contracts between parties in which one
party agrees to make periodic payments to the other party based on the change
in market value or level of a specified rate, index or asset. In return, the
other party agrees to make periodic payments to the first party based on the
return of a different specified rate, index or asset. Swap agreements will
usually be done on a net basis, with each Fund receiving or paying only the net
amount of the two payments. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each swap is accrued on a
daily basis and an amount of liquid assets having an aggregate value at least
equal to the accrued excess will be maintained by each Fund.

The use of interest-rate and index swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio security transactions. These transactions generally do not
involve the delivery of securities or other underlying assets or principal.

TRACKING STOCKS.  A tracking stock is a separate class of common stock whose
value is linked to a specific business unit or operating division within a
larger company and which is designed to "track" the performance of such
business unit or division. The tracking stock may pay dividends to shareholders
independent of the parent company. The parent company, rather than the business
unit or division, generally is the issuer of tracking stock. However, holders
of the tracking stock may not have the same rights as holders of the company's
common stock.

                                       6




FUTURE DEVELOPMENTS. The Board may, in the future, authorize a Fund to invest
in securities contracts and investments other than those listed in this SAI and
in the Prospectuses, provided they are consistent with the Funds' investment
objective and do not violate any investment restrictions or policies.

General Considerations and Risks

A discussion of some of the risks associated with an investment in any Fund is
contained in the Prospectus applicable to such Fund.

An investment in the Funds should be made with an understanding that the value
of the Funds' portfolio securities may fluctuate in accordance with changes in
the financial condition of the issuers of the portfolio securities, the value
of preferred or common stocks in general and other factors that affect the
market.

Common stock values are subject to market fluctuations as long as the common
stock remains outstanding.

RISKS OF DERIVATIVES. A derivative is a financial contract, the value of which
depends on, or is derived from, the value of an underlying asset such as a
security or an index. The Funds may invest in stock index futures contracts and
other derivatives. Compared to conventional securities, derivatives can be more
sensitive to changes in interest rates or to sudden fluctuations in market
prices and thus a Fund's losses may be greater if it invests in derivatives
than if it invests only in conventional securities.

RISKS OF EQUITY SECURITIES.  An investment in a Fund should be made with an
understanding that the value of the Fund's portfolio securities may fluctuate
in accordance with changes in the financial condition of the issuers of the
portfolio securities, the value of preferred or common stocks in general and
other factors that affect the market. An investment in a Fund should also be
made with an understanding of the risks inherent in an investment in equity
securities, including the risk that the financial condition of issuers may
become impaired or that the general condition of the stock market may
deteriorate (either of which may cause a decrease in the value of the portfolio
securities and thus in the value of shares of a Fund). Common stocks are
susceptible to general stock market fluctuations and to volatile increases and
decreases in value as market confidence and perceptions of their issuers
change. These investor perceptions are based on various and unpredictable
factors, including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction and global or regional political, economic or banking crises.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders generally have rights to receive
payments from the issuer inferior to the rights of creditors or holders of debt
obligations or preferred stocks. Further, unlike debt securities which
typically have a stated principal amount payable at maturity (whose value,
however, is subject to market fluctuations prior to maturity), or preferred
stocks, which typically have a liquidation preference and which may have stated
optional or mandatory redemption provisions, common stocks have neither a fixed
principal amount nor a maturity. Common stock values are subject to market
fluctuations as long as the common stock remains outstanding.

RISKS OF FUTURES AND OPTIONS TRANSACTIONS.  There are several risks
accompanying the utilization of futures contracts and options on futures
contracts. First, a position in futures contracts and options on futures
contracts may be closed only on the exchange on which the contract was made (or
a linked exchange). While each Fund plans to utilize futures contracts only if
an active market exists for such contracts, there is no guarantee that a liquid
market will exist for the contract at a specified time. Furthermore, because,
by definition, futures contracts project price levels in the future and not
current levels of valuation, market circumstances may result in a discrepancy
between the price of the stock index future and the movement in the Underlying
Index. In the event of adverse price movements, a Fund would continue to be
required to make daily cash payments to maintain its required margin. In such
situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, a Fund may be required to deliver the
instruments underlying the future contracts it has sold.

The risk of loss in trading futures contracts or uncovered call options in some
strategies (E.G., selling uncovered stock index futures contracts) is
potentially unlimited. The Funds do not plan to use futures and options
contracts in this way. The risk of a futures position may still be large as
traditionally measured due to the low margin deposits required. In many cases,
a relatively small price movement in a futures contract may result in immediate
and substantial loss or gain to the investor relative to the size of a required
margin deposit. The Funds, however, intend to utilize futures and options
contracts in a manner designed to limit their risk exposure to levels
comparable to direct investment in the type of stocks in which they invest.

                                       7




Utilization of futures and options on futures by a Fund involves the risk of
imperfect or even negative correlation to the Underlying Index if the index
underlying the futures contract differs from the Underlying Index. There is
also the risk of loss by a Fund of margin deposits in the event of bankruptcy
of a broker with whom a Fund has an open position in the futures contract or
option. The purchase of put or call options will be based upon predictions by
BGFA as to anticipated trends, which predictions could prove to be incorrect.

Because the futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in the
futures market could result in price fluctuations. Certain financial futures
exchanges limit the amount of fluctuation permitted in futures contract prices
during a single trading day. The daily limit establishes the maximum amount by
which the price of a futures contract may vary either up or down from the
previous day's settlement price at the end of a trading session. Once the daily
limit has been reached in a particular type of contract, no trades may be made
on that day at a price beyond that limit. It is possible that futures contract
prices could move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions and subjecting each Fund to substantial losses. In the event of
adverse price movements, each Fund would be required to make daily cash
payments of variation margin.

Although each Fund intends to enter into futures contracts only if there is an
active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time.

RISKS OF SWAP AGREEMENTS.  The risk of loss with respect to swaps generally is
limited to the net amount of payments that a Fund is contractually obligated to
make. Swap agreements are subject to the risk that the swap counterparty will
default on its obligations. If such a default occurs, a Fund will have
contractual remedies pursuant to the agreements related to the transaction.
However, such remedies may be subject to bankruptcy and insolvency laws which
could affect such Fund's rights as a creditor (E.G., a Fund may not receive the
net amount of payments that it contractually is entitled to receive).

RISKS OF INVESTING IN NON-U.S. EQUITY SECURITIES.  An investment in a Fund
involves risks similar to those of investing in a broad-based portfolio of
equity securities traded on exchanges in the country covered by the individual
Fund. These risks include market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in stock prices. Investing in securities issued by companies domiciled
in countries other than the domicile of the investor and denominated in
currencies other than an investor's local currency entails certain
considerations and risks not typically encountered by the investor in making
investments in the investor's home country and in that country's currency.
These considerations include favorable or unfavorable changes in interest
rates, currency exchange rates, exchange control regulation and the costs that
may be incurred in connection with conversions between various currencies.
Investing in a Fund whose portfolio contains non-U.S. issuers involves certain
risks and considerations not typically associated with investing in the
securities of U.S. issuers. These risks include generally less liquid and less
efficient securities markets, generally greater price volatility, less publicly
available information about issuers, the imposition of withholding or other
taxes, the imposition of restrictions on the expatriation of funds or other
assets of the Fund, higher transaction and custody costs, delays and risks
attendant in settlement procedures, difficulties in enforcing contractual
obligations, lower liquidity and significantly smaller market capitalization,
different accounting and disclosure standards, lower levels of regulation of
the securities markets, more substantial government interference with the
economy, higher rates of inflation, greater social, economic, and political
uncertainty and the risk of nationalization or expropriation of assets and risk
of war.

DIVIDEND RISK.  There is no guarantee that the issuers of the stocks held by a
Fund will declare dividends in the future or that if declared, they will either
remain at current levels or increase over time.

Proxy Voting Policy
The Company has adopted, as its proxy voting policies for each Fund, the proxy
voting guidelines of BGFA, the investment adviser to each Fund. The Company has
delegated to BGFA the responsibility for voting proxies on the portfolio
securities held by each Fund. The remainder of this section discusses each
Fund's proxy voting guidelines and BGFA's role in implementing such guidelines.

BGFA votes (or refrains from voting) proxies for each Fund in a manner that
BGFA, in the exercise of its independent business judgment, concludes is in the
best economic interests of such Fund. In some cases, BGFA may determine that it
is in the best economic interests of a Fund to refrain from exercising the
Fund's proxy voting rights (such as, for example, proxies on certain non-U.S.
securities that might impose costly or time-consuming in-person voting
requirements). With regard to the relationship between securities lending and
proxy voting, BGFA's approach is also driven by our clients' economic
interests. The evaluation of

                                       8




the economic desirability of recalling loans involves balancing the revenue
producing value of loans against the likely economic value of casting votes.
Based on our evaluation of this relationship, we believe that the likely
economic value of casting a vote generally is less than the securities lending
income, either because the votes will not have significant economic
consequences or because the outcome of the vote would not be affected by BGFA
recalling loaned securities in order to ensure they are voted. Periodically,
BGFA analyzes the process and benefits of voting proxies for securities on
loan, and will consider whether any modification of its proxy voting policies
or procedures are necessary in light of any regulatory changes. BGFA will
normally vote on specific proxy issues in accordance with its proxy voting
guidelines. BGFA's proxy voting guidelines provide detailed guidance as to how
to vote proxies on certain important or commonly raised issues. BGFA may, in
the exercise of its business judgment, conclude that the proxy voting
guidelines do not cover the specific matter upon which a proxy vote is
requested, or that an exception to the proxy voting guidelines would be in the
best economic interests of a Fund. BGFA votes (or refrains from voting) proxies
without regard to the relationship of the issuer of the proxy (or any
shareholder of such issuer) to a Fund, a Fund's affiliates (if any), BGFA or
BGFA's affiliates, or the Distributor or the Distributor's affiliates. When
voting proxies, BGFA attempts to encourage companies to follow practices that
enhance shareholder value and increase transparency and allow the market to
place a proper value on their assets. With respect to certain specific issues:

  o  Each Fund generally supports the board's nominees in the election of
     directors and generally supports proposals that strengthen the
     independence of boards of directors;

  o  Each Fund generally does not support proposals on social issues that lack
     a demonstrable economic benefit to the issuer and the Fund investing in
     such issuer; and

  o  Each Fund generally votes against anti-takeover proposals and proposals
     that would create additional barriers or costs to corporate transactions
     that are likely to deliver a premium to shareholders.

BGFA maintains institutional policies and procedures that are designed to
prevent any relationship between the issuer of the proxy (or any shareholder of
the issuer) and a Fund, a Fund's affiliates (if any), BGFA or BGFA's affiliates
or the Distributor or the Distributor's affiliates, from having undue influence
on BGFA's proxy voting activity. In certain instances, BGFA may determine to
engage an independent fiduciary to vote proxies as a further safeguard against
potential conflicts of interest or as otherwise required by applicable law. The
independent fiduciary may either vote such proxies or provide BGFA with
instructions as to how to vote such proxies. In the latter case, BGFA votes the
proxy in accordance with the independent fiduciary's determination.

Information with respect to how BGFA voted proxies relating to portfolio
securities during the 12-month period ended August 31, 2007 is available: (i)
without charge, upon request, by calling 1-800-iShares (1-800-474-2737) or
through the Fund's website at WWW.ISHARES.COM; and (ii) on the SEC's website at
WWW.SEC.GOV.

Portfolio Holdings Information

The Board has adopted a policy regarding the disclosure of the Funds' portfolio
holdings information that requires that such information be disclosed in a
manner that: (a) is consistent with applicable legal requirements and in the
best interests of each Fund's shareholders; (b) does not put the interests of
the Funds' Investment Adviser, the Funds' Distributor or any affiliated person
of BGFA or the Distributor above those of Fund shareholders; (c) does not
advantage any current or prospective Fund shareholders over any other current
or prospective Fund shareholders, except to the extent that certain Entities
(as described below) may receive portfolio holdings information not available
to other current or prospective Fund shareholders in connection with the
dissemination of information necessary for transactions in Creation Units, as
contemplated by the iShares Exemptive Orders and discussed below and (d) does
not provide selective access to portfolio holdings information except pursuant
to the procedures outlined below and to the extent appropriate confidentiality
arrangements limiting the use of such information are in effect. The "Entities"
referred to in sub-section (c) above are generally limited to National
Securities Clearing Corporation ("NSCC") members and subscribers to various
fee-based subscription services, including those large institutional investors
(known as "Authorized Participants") that have been authorized by the
Distributor to purchase and redeem large blocks of shares (known as Creation
Units) pursuant to legal requirements, including exemptive orders granted by
the SEC pursuant to which the Funds offer and redeem their shares ("iShares
Exemptive Orders") and other institutional market participants and entities
that provide information services.

Each business day, each Fund's portfolio holdings information is provided to
the Distributor or other agent for dissemination through the facilities of the
NSCC and/or other fee-based subscription services to NSCC members and
subscribers to those other fee-based subscription services, including
Authorized Participants, and to entities that publish and/or analyze such
information in

                                       9




connection with the process of purchasing or redeeming Creation Units or
trading shares of Funds in the secondary market. This information typically
reflects each Fund's anticipated holdings on the following business day.

Daily access to information concerning the Funds' portfolio holdings is
permitted (i) to certain personnel of those service providers that are involved
in portfolio management and providing administrative, operational, risk
management or other support to portfolio management, including affiliated
broker-dealers and Authorized Participants and (ii) to other personnel of BGFA
and the Funds' Distributor, administrator, custodian and fund accountant who
deal directly with or assist in, functions related to investment management,
distribution, administration, custody and fund accounting, as may be necessary
to conduct business in the ordinary course in a manner consistent with the
iShares Exemptive Orders, agreements with the Funds and the terms of the Funds'
current registration statements. In addition, each Fund discloses its portfolio
holdings and the percentages they represent of the Fund's net assets at least
monthly, but as often as each day the Fund is open for business, at
www.iShares.com. More information about this disclosure is available at
WWW.ISHARES.COM.

Portfolio holdings information made available in connection with the
creation/redemption process may be provided to other entities that provide
services to the Funds in the ordinary course of business after it has been
disseminated to the NSCC. From time to time, information concerning Fund
portfolio holdings other than portfolio holdings information made available in
connection with the creation/redemption process, as discussed above, may be
provided to other entities that provide services to the Funds including rating
or ranking organizations, in the ordinary course of business, no earlier than
one business day following the date of the information.

Each Fund discloses its complete portfolio holdings schedule in public filings
with the SEC within 70 days after the end of each fiscal quarter, and will
provide that information to shareholders as required by federal securities laws
and regulations thereunder. A Fund may, however, voluntarily disclose all or
part of its portfolio holdings other than in connection with the
creation/redemption process, as discussed above, in advance of required filings
with the SEC, provided that such information is made generally available to all
shareholders and other interested parties in a manner that is consistent with
the above policy for disclosure of portfolio holdings information. Such
information may be made available through a publicly-available website or other
means that make the information available to all likely interested parties in a
contemporaneous manner.

The Company's Chief Compliance Officer may authorize disclosure of portfolio
holdings information pursuant to the above policy and procedures.

The Company's Board reviews the policy and procedures for disclosure of
portfolio holdings information at least annually.

Construction and Maintenance of Underlying Indexes
A description of the MSCI Indexes and the Underlying Indexes is provided below.

The MSCI Indexes
The MSCI Indexes were founded in 1969 by Capital International S.A. as the
first international performance benchmarks constructed to facilitate accurate
comparison of world markets. Morgan Stanley acquired rights to the Indexes in
1986. In November 1998, Morgan Stanley transferred all rights to the MSCI
Indexes to MSCI Inc. a Delaware corporation of which Morgan Stanley is the
majority owner and The Capital Group of Companies, Inc. is the minority
shareholder. The MSCI single country standard equity indexes have covered the
world's developed markets since 1969, and in 1988, MSCI commenced coverage of
the emerging markets.


Local stock exchanges traditionally calculated their own indexes that were
generally not comparable with one another due to differences in the
representation of the local market, mathematical formulas, base dates and
methods of adjusting for capital changes. MSCI, however, applies the same
criteria and calculation methodology to all markets for all single country
standard equity indexes, developed and emerging.

MSCI has begun implementing enhancements to the methodology of its current
indexes, the MSCI Standard Indexes and the MSCI Small Cap Indexes. MSCI is
generally expanding the number of securities included in these indexes,
eliminating industry sector classifications in favor of market capitalization
size segmentation and eliminating overlapping market capitalization size
segmentation among its indexes. These enhancement are being phased in over two
stages: 50% of the transition was completed on

                                       10




November 30, 2007 and the remaining transition is expected to be completed on
May 30, 2008. MSCI has also combined its MSCI Standard Indexes and MSCI Small
Cap Indexes to form the MSCI Global Investable Market Indexes (the "MSCI
GIMI"). The MSCI Global Standard Indexes of the MSCI GIMI, which include the
MSCI Global Large Cap Indexes and MSCI Global Mid-Cap Indexes, are intended to
cover all investable large and mid-cap securities and include approximately 85%
of each market's free float-adjusted market capitalization. The MSCI Global
Small Cap Indexes of the MSCI GIMI are intended to cover all companies with a
market capitalization smaller than that of the companies in the MSCI Global
Standard Indexes and include an additional 14% coverage of each market's
free-float adjusted market capitalization.

MSCI STANDARD EQUITY INDEXES

WEIGHTING. All single-country MSCI equity indexes are free-float weighted,
I.E., companies are included in the indexes at the value of their free public
float (free float, multiplied by price). MSCI defines "free float" as total
shares excluding shares held by strategic investors and shares subject to
foreign ownership restrictions. MSCI's Standard indexes generally seek to
include 85% of the free float-adjusted market capitalization of a country's
stock market represented in each industry group, of each country.

REGIONAL WEIGHTS. Market capitalization weighting, combined with a consistent
target of 85% of free float-adjusted market capitalization, helps ensure that
each country's weight in regional and international indexes approximates its
weight in the total universe of developing and emerging markets.

SELECTION CRITERIA. MSCIs index construction process involves: (i) defining the
equity universe, (ii) adjusting the total market capitalization of all
securities in the universe for free float available to foreign investors, (iii)
classifying the universe of securities under the Global Industry Classification
Standard (the "GICS") and (iv) selecting securities for inclusion according to
MSCI's index construction rules and guidelines.

 (i)   Defining the Equity Universe. The current index construction process
   starts at the country level with the identification of all listed
   securities for that country. MSCI currently creates international equity
   country indexes for 48 countries. In general, companies and their
   respective securities are classified as belonging only to the country in
   which they are incorporated. This allows securities to be sorted distinctly
   by country. All listed equity securities and listed securities that exhibit
   characteristics of equity securities, except investment trusts, mutual
   funds and equity derivatives, are eligible for inclusion in the equity
   universe. Shares of non-domiciled companies generally are not eligible for
   inclusion in the equity universe.

(ii)   Adjusting the Total Market Capitalization of Securities in the Equity
  Universe for Free Float. After identifying the universe of securities, MSCI
  calculates the free float-adjusted market capitalization of each security in
  that universe using publicly available information. The process of free
  float adjusting market capitalization involves: (i) defining and estimating
  the free float available to foreign investors for each security using MSCI's
  definition of free float, (ii) assigning a free float- adjustment factor to
  each security, and (iii) calculating the free float adjusted market
  capitalization of each security.

(iii)   Classifying Securities Under the GICS. All securities in the equity
  universe are also assigned to an industry-based hierarchy, the GICS. This
  comprehensive classification scheme provides a universal approach to
  industries worldwide and forms the basis for achieving MSCI's objective of
  broad industry representation in its indexes.

(iv)   Selecting Securities for Index Inclusion. MSCI targets an 85% free
  float-adjusted market representation level within each industry group,
  within each country. The security selection process within each industry
  group is based on the careful analysis of: (i) each company's business
  activities and the diversification that its securities would bring to the
  index; (ii) the size (based on free float-adjusted market capitalization)
  and liquidity of the securities of the company and (iii) the estimated free
  float for the company and its individual share classes. MSCI targets for
  inclusion the most sizable and liquid securities in an industry group. MSCI
  generally does not consider securities with inadequate liquidity, or
  securities that do not have an estimated free float greater than 15% unless
  exclusion of the security of a large company would compromise the index's
  ability to fully and fairly represent the characteristics of the underlying
  market.

FREE FLOAT. MSCI defines the free float of a security as the proportion of
shares outstanding that are deemed to be available for purchase in the public
equity markets by international investors. In practice, limitations on free
float available to international investors include: (i) strategic and other
shareholdings not considered part of available free float and (ii) limits on
share ownership for foreigners.

Under MSCI's free float-adjustment methodology, a constituent's inclusion
factor is equal to its estimated free float rounded up to the closest 5% for
constituents with free float equal to or exceeding 15%. For example, a
constituent security with a free float of


                                       11




23.2% will be included in the index at 25% of its market capitalization. For
securities with a free float of less than 15% that are included on an
exceptional basis, the estimated free float is adjusted to the nearest 1%.

ADDITIONS AND DELETIONS. Potential additions to the indexes are analyzed with
respect to their industry group and sub-industry group in order to represent a
wide range of economic and business activities. In assessing deletions, it is
important that indexes represent the full investment cycle including both bull
and bear markets. Out-of-favor industries and their securities may exhibit
declining prices, declining market capitalization and/or declining liquidity
yet not be deleted because they remain representative of their industry group.

MSCI GLOBAL INVESTABLE MARKET INDEXES

WEIGHTING. All single-country indexes of the MSCI GIMI are free-float weighted,
I.E., companies are included in the indexes at the value of their free public
float (free float multiplied by security price). MSCI defines "free float" as
total shares excluding shares held by strategic investors and shares subject to
foreign ownership restrictions. Indexes of MSCI's GIMI generally seek to
include 99% of the free float-adjusted market capitalization of a single
country's stock market.

REGIONAL WEIGHTS. Market capitalization weighting, combined with a consistent
target of 99% of free float-adjusted market capitalization, helps ensure that
each country's weight in regional and international indexes approximates its
weight in the total universe of developing and emerging markets. A market is
equivalent to a single country except in the developed markets of Europe, where
all markets are aggregated into a single market for index construction
purposes. Individual country indexes of the European developed markets are
derived from the constituents of the MSCI GIMI Europe Index.

SELECTION CRITERIA. MSCI's index construction process involves (i) defining the
equity universe, (ii) determining the market investable equity universe for
each market, (iii) determining market capitalization size segments for each
market and (iv) applying index continuity rules for the standard index.

(i)   Defining the Equity Universe. MSCI begins with securities listed in
  countries in the MSCI Global Index Series. Of these countries, 23 are
  classified as developed markets and 25 as emerging markets. All listed
  equity securities and listed securities that exhibit characteristics of
  equity securities, except mutual funds, exchange traded funds, equity
  derivatives, limited partnerships and most investment trusts, are eligible
  for inclusion in the equity universe. Real estate investment trusts
  ("REITs") in some countries and certain income trusts in Canada are also
  eligible for inclusion. Each company and its securities (I.E., share
  classes) are classified in only one country, which allows for a distinctive
  sorting of each company by its respective country.

(ii)   Determining the Equity Universe in Each Market. The equity universe in
  any market is derived by applying investability screens to individual
  companies and securities in the equity universe of that market. Some
  investability requirements are applied at the individual security level and
  some at the overall company level, represented by the aggregation of
  individual securities of the company. As a result, the inclusion or
  exclusion of one security does not imply the automatic inclusion or
  exclusion of other securities of the same company.

(iii)   Determining Market Capitalization Size Segments for Each Market. In
  each market MSCI creates an Investable Market Index, Standard Index, Large
  Cap Index, Mid Cap Index and Small Cap Index. In order to create size
  components that can be meaningfully aggregated into composites, individual
  market size segments balance the following two objectives:

1.   Achieving global size integrity by ensuring that companies of comparable
  and relevant sizes are included in a given size segment across all markets
  in a composite index and

2.   Achieving consistent market coverage by ensuring that each market's size
  segment is represented in its proportional weight in the composite universe.

(iv)   Index Continuity Rules for the Standard Index. In order to achieve index
  continuity as well as provide some basic level of diversification within a
  market index, notwithstanding the effect of other index construction rules
  contained herein, a minimum number of five constituents will be maintained
  for a developing market Standard Index and a minimum number of three
  constituents will be maintained for an emerging market Standard Index.

FREE FLOAT. MSCI defines the free float of a security as the proportion of
shares outstanding that are deemed to be available for purchase in the public
equity markets by international investors. In practice, limitations on free
float available to international investors include: (i) strategic and other
shareholdings not considered part of available free float; and (ii) limits on
share ownership for foreigners.


                                       12




Under MSCI's free float-adjustment methodology, a constituent's inclusion
factor is equal to its estimated free float rounded up to the closest 5% for
constituents with free float equal to or exceeding 15%. For example, a
constituent security with a free float of 23.2% will be included in the index
at 25% of its market capitalization. For securities with a free float of less
than 15% that are included on an exceptional basis, the estimated free float is
adjusted to the nearest 1%.

Price and Exchange Rates
PRICES. The prices used to calculate all MSCI Indexes are the official exchange
closing prices or those figures accepted as such. MSCI reserves the right to
use an alternative pricing source on any given day.

EXCHANGE RATES. MSCI uses the foreign exchange rates published by WM Reuters at
4:00 p.m., London time. MSCI uses WM Reuters rates for all developed and
emerging markets. Exchange rates are taken daily at 4:00 p.m., London time by
the WM Company and are sourced whenever possible from multi-contributor quotes
on Reuters. Representative rates are selected for each currency based on a
number of "snapshots" of the latest contributed quotations taken from the
Reuters service at short intervals around 4:00 p.m. WM Reuters provides closing
bid and offer rates. MSCI uses these rates to calculate the mid-point to five
decimal places.

MSCI continues to monitor exchange rates independently and may, under
exceptional circumstances, elect to use an alternative exchange rate if the WM
Reuters rate is believed not to be representative for a given currency on a
particular day.

CHANGES TO THE INDEXES. The MSCI indexes are maintained with the objective of
reflecting, on a timely basis, the evolution of the underlying equity markets.
In maintaining the MSCI indexes, emphasis is also placed on continuity,
replicability and minimizing turnover in the indexes. Maintaining the MSCI
Indexes involves many aspects, including: (i) additions to, and deletions from,
the Indexes; (ii) changes in number of shares and (iii) changes in inclusion
factors as a result of updated free float estimates.

Index maintenance can be described by three broad categories of changes:

  o  Annual full country index reviews, conducted on a fixed annual timetable,
     that systematically re-assess the various dimensions of the equity
     universe for all countries;

  o  Quarterly index reviews, aimed at promptly reflecting other significant
     market events and

  o  Ongoing event-related changes, such as mergers and acquisitions, which
     generally are rapidly implemented in the indexes as they occur.

Potential changes in the status of countries (stand-alone, emerging and
developed) are normally implemented in one or more phases at the regular annual
full country index review and quarterly index review dates.

The annual full country index review for all the MSCI single country standard
international equity indexes is carried out once every 12 months and
implemented as of the close of the last business day of May. The implementation
of changes resulting from a quarterly index review occurs only on three dates
throughout the year: as of the close of the last business day of February,
August and November. Any single country indexes may be impacted at the
quarterly index review. MSCI index additions and deletions due to quarterly
index rebalancings are announced at least two weeks in advance.

MSCI AUSTRALIA INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 88
=======================================
INDEX DESCRIPTION. The MSCI Australia Index consists of stocks traded primarily
on the Australian Stock Exchange. As of December 31, 2007, the Underlying
Index's three largest industries were banks, materials and real estate.

MSCI AUSTRIA INVESTABLE MARKET INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 16
======================================
INDEX DESCRIPTION.  The MSCI Austria Investable Market Index consists of stocks
traded primarily on the Austrian Stock Exchange. As of December 31, 2007, the
Underlying Index's three largest industries were banks, energy and real estate.

MSCI BELGIUM INVESTABLE MARKET INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 22
=======================================
INDEX DESCRIPTION. The MSCI Belgium Investable Market Index consists of stocks
traded primarily on the Brussels Stock

                                       13




Exchange. As of December 31, 2007, the Underlying Index's three largest
industries were diversified financials, banks, and materials.

MSCI BRAZIL INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 68
=======================================
INDEX DESCRIPTION. The MSCI Brazil Index consists of stocks traded primarily on
the Bolsa de Valores de S-o Paulo. As of December 31, 2007, the Underlying
Index's three largest industries were materials, energy and banks.

MSCI CANADA INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 110
=======================================
INDEX DESCRIPTION. The MSCI Canada Index consists of stocks traded primarily on
the Toronto Stock Exchange. As of December 31, 2007, the Underlying Index's
three largest industries were energy, banks and materials.

MSCI EMERGING MARKETS INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 902
=======================================
INDEX DESCRIPTION.  The MSCI Emerging Markets Index is designed to measure
equity market performance in the global emerging markets. As of December 31,
2007, the Underlying Index consisted of the following 25 emerging market
country indexes: Argentina, Brazil, Chile, China, Colombia, Czech Republic,
Egypt, Hungary, India, Israel, Jordan, Malaysia, Mexico, Morocco, Pakistan,
Peru, Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand
and Turkey. As of December 31, 2007, the Underlying Index's three largest
industries were energy, banks and materials.

MSCI EMU INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 334
=======================================
INDEX DESCRIPTION. The MSCI EMU Index consists of stocks from the following 11
countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy,
the Netherlands, Portugal and Spain. As of December 31, 2007, the Underlying
Index's three largest industries were banks, utilities and capital goods.

MSCI FRANCE INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 75
=======================================
INDEX DESCRIPTION.  The MSCI France Index consists of stocks traded primarily
on the Paris Stock Exchange. As of December 31, 2007, the Underlying Index's
three largest industries were energy, banks and capital goods.

MSCI GERMANY INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 61
=======================================
INDEX DESCRIPTION. The MSCI Germany Index consists of stocks traded primarily
on the Frankfurt Stock Exchange. As of December 31, 2007, the Underlying
Index's three largest industries were utilities, materials and automobiles and
components.

MSCI HONG KONG INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 54
=======================================
INDEX DESCRIPTION.  The MSCI Hong Kong Index consists of stocks traded
primarily on the Stock Exchange of Hong Kong Limited (SEHK). As of December 31,
2007, the Underlying Index's three largest industries were real estate, banks
and diversified financials.

MSCI ITALY INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 40
=======================================
INDEX DESCRIPTION.  The MSCI Italy Index consists of stocks traded primarily on
the Milan Stock Exchange. As of December 31, 2007, the Underlying Index's three
largest industries were banks, energy and utilities.

MSCI JAPAN INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 398
=======================================
INDEX DESCRIPTION. The MSCI Japan Index consists of stocks traded primarily on
the Tokyo Stock Exchange. As of December 31, 2007, the Underlying Index's three
largest industries were capital goods, automobiles and components and
technology hardware and equipment.

MSCI MALAYSIA INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 56
=======================================
INDEX DESCRIPTION.  The MSCI Malaysia Index consists of stocks traded primarily
on the Kuala Lumpur Stock Exchange. As of

                                       14




December 31, 2007, the Underlying Index's three largest industries were banks,
capital goods and food, beverage and tobacco.

MSCI MEXICO INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 28
=======================================
INDEX DESCRIPTION.  The MSCI Mexico Index consists of stocks traded primarily
on the Mexican Stock Exchange. As of December 31, 2007, the Underlying Index's
three largest industries were telecommunication services, materials and food,
beverage and tobacco.

MSCI NETHERLANDS INVESTABLE MARKET INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 24
=======================================
INDEX DESCRIPTION.  The MSCI Netherlands Investable Market Index consists of
stocks traded primarily on the Amsterdam Stock Exchange. As of December 31,
2007, the Underlying Index's three largest industries were food, beverage and
tobacco, diversified financials and capital goods.

MSCI PACIFIC EX-JAPAN INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 189
========================================
INDEX DESCRIPTION.  The MSCI Pacific ex-Japan Index consists of stocks from the
following four countries: Australia, Hong Kong, New Zealand and Singapore. As
of December 31, 2007, the Underlying Index's three largest industries were
banks, real estate and materials.

MSCI SINGAPORE INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 37
=======================================
INDEX DESCRIPTION.  The MSCI Singapore Index consists of stocks traded
primarily on the Singapore Stock Exchange. As of December 31, 2007, the
Underlying Index's three largest industries were banks, real estate and capital
goods.

MSCI SOUTH AFRICA INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 51
=======================================
INDEX DESCRIPTION.  The MSCI South Africa Index consists of stocks traded
primarily on the Johannesburg Stock Exchange. As of December 31, 2007, the
Underlying Index's three largest industries were materials, telecommunication
services and energy.

MSCI SOUTH KOREA INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 113
========================================
INDEX DESCRIPTION. The MSCI South Korea Index consists of stocks traded
primarily on the South Korean Stock Exchange. As of December 31, 2007, the
Underlying Index's three largest industries were capital goods, semiconductors
and semiconductor equipment and materials.

MSCI SPAIN INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 33
=======================================
INDEX DESCRIPTION.  The MSCI Spain Index consists of stocks traded primarily on
the Madrid Stock Exchange. As of December 31, 2007, the Underlying Index's
three largest industries were banks, telecommunication services and utilities.

MSCI SWEDEN INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 49
=======================================
INDEX DESCRIPTION. The MSCI Sweden Index consists of stocks traded primarily on
the Stockholm Stock Exchange. As of December 31, 2007, the Underlying Index's
three largest industries were capital goods, banks and technology hardware and
equipment.

MSCI SWITZERLAND INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 39
=======================================
INDEX DESCRIPTION.  The MSCI Switzerland Index consists of stocks traded
primarily on the Zurich Stock Exchange. As of December 31 2007, the Underlying
Index's three largest industries were pharmaceuticals, biotechnology and life
sciences, food, beverage and tobacco and diversified financials.

MSCI TAIWAN INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 123
========================================
INDEX DESCRIPTION.  The MSCI Taiwan Index consists of stocks traded primarily
on the Taiwan Stock Exchange. As of December 31, 2007, the Underlying Index's
three largest industries were technology hardware and equipment, semiconductors
and

                                       15




semiconductor equipment and materials.

MSCI UNITED KINGDOM INDEX

NUMBER OF COMPONENTS: APPROXIMATELY 157
========================================
INDEX DESCRIPTION.  The MSCI United Kingdom Index consists of stocks traded
primarily on the London Stock Exchange. As of December 31, 2007, the Underlying
Index's three largest industries were energy, banks and materials.

Investment Limitations
The Board has adopted as fundamental policies the investment objectives of the
iShares MSCI Australia Index Fund, iShares MSCI Brazil 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 Japan Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Pacific
ex-Japan Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South
Korea Index Fund, iShares Spain Index Fund, iShares Switzerland Index Fund,
iShares Taiwan Index Fund, and iShares United Kingdom Index Fund. However, the
Board has adopted as non-fundamental policies the investment objectives of all
other Funds discussed in this SAI. Therefore, each of these Funds may change
its investment objective and its Underlying Index without a shareholder vote.
The Board has adopted as fundamental policies each Fund's investment
restrictions numbered one through nine below. The restrictions for each Fund
cannot be changed without the approval of the holders of a majority of that
Fund's outstanding voting securities. A vote of a majority of the outstanding
voting securities is defined in the 1940 Act as the lesser of (a) 67% or more
of the voting securities present at a fund meeting, if the holders of more than
50% of the outstanding voting securities are present or represented by proxy,
and (b) more than 50% of outstanding voting securities.

THE ISHARES MSCI AUSTRALIA INDEX FUND, ISHARES MSCI BRAZIL INDEX FUND, ISHARES
MSCI CANADA INDEX FUND, ISHARES MSCI GERMANY INDEX FUND, ISHARES MSCI HONG KONG
INDEX FUND, ISHARES MSCI MALAYSIA INDEX FUND, ISHARES MSCI NETHERLANDS 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, ISHARES SWITZERLAND INDEX FUND AND ISHARES TAIWAN INDEX FUND, WILL NOT:

1.   Lend any funds or other assets except through the purchase of all or a
  portion of an issue of securities or obligations of the type in which it is
  permitted to invest (including participation interests in such securities or
  obligations) and except that a Fund may lend its portfolio securities in an
  amount not to exceed 33 1/3% of the value of its total assets;

2.   Issue senior securities or borrow money, except borrowings from banks for
  temporary or emergency purposes in an amount up to 33 1/3% of the value of
  the Fund's total assets (including the amount borrowed), valued at the
  lesser of cost or market, less liabilities (not including the amount
  borrowed) valued at the time the borrowing is made, and the Fund will not
  purchase securities while borrowings in excess of 5% of the Fund's total
  assets are outstanding, provided, that for purposes of this restriction,
  short-term credits necessary for the clearance of transactions are not
  considered borrowings;

3.   Pledge, hypothecate, mortgage or otherwise encumber its assets, except to
  secure permitted borrowings. (The deposit of underlying securities and other
  assets in escrow and collateral arrangements with respect to initial or
  variation margin for currency transactions and futures contracts will not be
  deemed to be pledges of the Fund's assets);

4.   Purchase a security (other than obligations of the U.S. government, its
  agencies or instrumentalities) if as a result 25% or more of its total
  assets would be invested in a single issuer. (This restriction applies to
  each of the iShares MSCI Singapore Index Fund and iShares MSCI South Korea
  Index Fund only);

5.   Purchase, hold or deal in real estate, or oil, gas or mineral interests or
  leases, but a Fund may purchase and sell securities that are issued by
  companies that invest or deal in such assets;

6.   Act as an underwriter of securities of other issuers, except to the extent
  the Fund may be deemed an underwriter in connection with the sale of
  securities in its portfolio;

7.   Purchase securities on margin, except for such short-term credits as are
  necessary for the clearance of transactions, except that a Fund may make
  margin deposits in connection with transactions in currencies, options,
  futures and options on futures;

8.   Sell securities short; or

                                       16




9.   Invest in commodities or commodity contracts, except that a Fund may buy
and sell currencies and forward contracts with respect thereto, and may
transact in futures contracts on securities, stock indices and currencies and
options on such futures contracts and make margin deposits in connection with
such contracts.

THE ISHARES MSCI AUSTRIA INDEX FUND, ISHARES MSCI BELGIUM INDEX FUND, ISHARES
MSCI EMERGING MARKETS INDEX FUND, ISHARES MSCI EMU INDEX FUND, ISHARES MSCI
FRANCE INDEX FUND, ISHARES MSCI ITALY INDEX FUND, ISHARES MSCI JAPAN INDEX
FUND, ISHARES MSCI MEXICO INDEX FUND, ISHARES MSCI SPAIN INDEX FUND, ISHARES
MSCI SWEDEN INDEX FUND AND ISHARES MSCI UNITED KINGDOM INDEX FUND WILL NOT:

1.   Make loans, except as permitted under the 1940 Act, as amended, and as
  interpreted, modified or otherwise permitted by regulatory authority having
  jurisdiction, from time to time;

2.   Issue any senior security, except as permitted under the 1940 Act, as
  amended, and as interpreted, modified or otherwise permitted by regulatory
  authority having jurisdiction, from time to time;

3.   Pledge, hypothecate, mortgage or otherwise encumber its assets, except to
  secure permitted borrowings. (The deposit of underlying securities and other
  assets in escrow and collateral arrangements with respect to initial or
  variation margin for currency transactions and futures contracts will not be
  deemed to be pledges of the Fund's assets);

4.   Purchase, hold or deal in real estate, or oil, gas or mineral interests or
  leases, but a Fund may purchase and sell securities that are issued by
  companies that invest or deal in such assets;

5.   Act as an underwriter of securities of other issuers, except to the extent
  the Fund may be deemed an underwriter in connection with the sale of
  securities in its portfolio;

6.   Purchase securities on margin, except for such short-term credits as are
  necessary for the clearance of transactions, except that a Fund may make
  margin deposits in connection with transactions in currencies, options,
  futures and options on futures;

7.   Sell securities short; or

8.   Invest in commodities or commodity contracts, except that a Fund may buy
  and sell currencies and forward contracts with respect thereto, and may
  transact in futures contracts on securities, stock indices and currencies
  and options on such futures contracts and make margin deposits in connection
  with such contracts.

INDUSTRY CONCENTRATION. Each of the iShares MSCI Singapore Index Fund and
iShares MSCI South Korea Index Fund has the following concentration policy:
With respect to the two most heavily weighted industries or groups of
industries in its benchmark MSCI Index, a Fund will invest in securities
(consistent with its investment objective and other investment policies) so
that the weighting of each such industry or group of industries in the Fund
does not diverge by more than 10% from the respective weighting of such
industry or group of industries in its benchmark MSCI Index. An exception to
this policy is that if investment in the stock of a single issuer would account
for more than 25% of the Fund, the Fund will invest less than 25% of its net
assets in such stock and will reallocate the excess to stock(s) in the same
industry or group of industries, and/or to stock(s) in another industry or
group of industries, in its benchmark MSCI Index. Each Fund will evaluate these
industry weightings at least weekly, and at the time of evaluation will adjust
its portfolio composition to the extent necessary to maintain compliance with
the above policy. A Fund may not concentrate its investments except as
discussed above. The Board has adopted this policy as fundamental, which means
that it may not be changed with respect to a Fund without the approval of the
holders of a majority of that Fund's outstanding voting securities.

As of September 30, 2007, the following Fund was concentrated (that is,
invested 25% or more of its total assets) in the specified industry:



FUND                                   INDUSTRY OR INDUSTRIES
----------------------------------     -----------------------
                                    
iShares MSCI Singapore Index Fund      Banks


Each of the iShares MSCI Australia Index Fund, iShares MSCI Austria Index Fund,
iShares MSCI Belgium Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI
Canada Index Fund, iShares MSCI Emerging Markets 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

                                       17




Index Fund, iShares MSCI Netherlands Index Fund, iShares MSCI Pacific ex-Japan
Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI Spain Index
Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund,
iShares MSCI Taiwan Index Fund and iShares MSCI United Kingdom Index Fund will
not concentrate its investments (I.E., hold 25% or more of its total assets in
the stocks of a particular industry or group of industries), except that, to
the extent practicable, the Fund will concentrate to approximately the same
extent that its benchmark MSCI Index concentrates in the stocks of such
particular industry or group of industries, provided that the Fund will comply
with the diversification requirements applicable to RICs of the IRC, any
underlying Treasury regulations or any successor provision.

As of September 30, 2007, each of the following Funds was concentrated (that
is, held 25% or more of its total assets) in the specified industries:



FUND                                   INDUSTRY OR INDUSTRIES
----------------------------------     -----------------------
                                    
iShares MSCI Belgium Index Fund        Banks
iShares MSCI Hong Kong Index Fund      Real Estate
iShares MSCI Italy Index Fund          Banks
iShares MSCI Malaysia Index Fund       Banks
iShares MSCI Mexico Index Fund         Telecommunications
iShares MSCI Spain Index Fund          Banks


IN ADDITION TO THE INVESTMENT LIMITATIONS ADOPTED AS FUNDAMENTAL AS SET FORTH
ABOVE, EACH FUND OBSERVES THE FOLLOWING RESTRICTIONS, WHICH MAY BE CHANGED BY
THE BOARD WITHOUT A SHAREHOLDER VOTE. A FUND WILL NOT:

1.   Invest in the securities of a company for the purpose of exercising
  management or control, or in any event purchase and hold more than 10% of
  the securities of a single issuer, provided that the Company may vote the
  investment securities owned by each Fund in accordance with its views; or

2.   Hold illiquid assets in excess of 15% of its net assets. An illiquid asset
  is any asset which may not be sold or disposed of in the ordinary course of
  business within seven days at approximately the value at which the Fund has
  valued the investment.

FOR PURPOSES OF THE PERCENTAGE LIMITATION ON EACH FUND'S INVESTMENTS IN
ILLIQUID SECURITIES, FOREIGN EQUITY SECURITIES, THOUGH NOT REGISTERED UNDER THE
1933 ACT, ARE NOT DEEMED ILLIQUID WITH RESPECT TO EACH FUND IF THEY ARE
OTHERWISE READILY MARKETABLE. SUCH SECURITIES ORDINARILY ARE CONSIDERED TO BE
"READILY MARKETABLE" IF THEY ARE TRADED ON AN EXCHANGE OR OTHER ORGANIZED
MARKET AND ARE NOT LEGALLY RESTRICTED FROM SALE BY THE FUND. BGFA MONITORS THE
LIQUIDITY OF RESTRICTED SECURITIES IN EACH FUND'S PORTFOLIO. IN REACHING
LIQUIDITY DECISIONS, BGFA CONSIDERS THE FOLLOWING FACTORS:

1.   The frequency of trades and quotes for the security;

2.   The number of dealers wishing to purchase or sell the security and the
number of other potential purchasers;

3.   Dealer undertakings to make a market in the security and

4.   The nature of the security and the nature of the marketplace in which it
  trades (E.G., the time needed to dispose of the security, the method of
  soliciting offers and the mechanics of transfer).

If any percentage restriction described above is complied with to at the time
of investment, a later increase or decrease in percentage resulting from any
change in value or total or net assets will not constitute in a violation of
such restriction, except that certain percentage limitations will be observed
continuously in accordance with applicable law.

Each Fund has adopted a non-fundamental investment policy in accordance with
Rule 35d-1 under the 1940 Act to invest, under normal circumstances, at least
80% of the value of its net assets, plus the amount of any borrowings for
investment purposes, in securities, and in ADRs based on securities, in its
Underlying Index. Each Fund also has adopted a policy to provide its
shareholders with at least 60 days' prior written notice of any change in such
policy. If, subsequent to an investment, the 80% requirement is no longer met,
a Fund's future investments will be made in a manner that will bring the Fund
into compliance with this policy.

                                       18




Continuous Offering
The method by which Creation Units are created and traded may raise certain
issues under applicable securities laws. Because new Creation Units are issued
and sold by the Funds on an ongoing basis, at any point a "distribution," as
such term is used in the 1933 Act, may occur. Broker-dealers and other persons
are cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery requirement and liability provisions of the 1933 Act.

For example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent shares and sells such shares
directly to customers, or if it chooses to couple the creation of new shares
with an active selling effort involving solicitation of secondary market demand
for shares. A determination of whether one is an underwriter for purposes of
the 1933 Act must take into account all the facts and circumstances pertaining
to the activities of the broker-dealer or its client in the particular case and
the examples mentioned above should not be considered a complete description of
all the activities that could lead to a categorization as an underwriter.

Broker-dealer firms should also note that dealers who are not "underwriters"
but are effecting transactions in shares, whether or not participating in the
distribution of shares, generally are required to deliver a prospectus. This is
because the prospectus delivery exemption in Section 4(3) of the 1933 Act is
not available in respect of such transactions as a result of Section 24(d) of
the 1940 Act. Firms that incur a prospectus delivery obligation with respect to
shares of the Funds are reminded that, pursuant to Rule 153 under the 1933 Act,
a prospectus delivery obligation under Section 5(b)(2) of the 1933 Act owed to
an exchange member in connection with a sale on the Listing Exchange is
satisfied by the fact that the prospectus is available at the Listing Exchange
upon request. The prospectus delivery mechanism provided in Rule 153 is
available only with respect to transactions on an exchange.

Management
DIRECTORS AND OFFICERS.  The Board 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, Master Investment Portfolio ("MIP"), Barclays
Global Investors Funds ("BGIF") and Barclays Foundry Investment Trust ("BFIT"),
each an open-end management investment company registered under the 1940 Act,
are considered members of the same fund complex, as defined in Form N-1A under
the 1940 Act. Each Director also serves as a Trustee for iShares Trust and, as
a result, oversees a total of 147 Funds within the fund complex. In addition,
Lee T. Kranefuss serves as a Trustee for BGIF, MIP and, as a result, oversees
an additional 24 portfolios within the fund complex. The address of each
Trustee and officer, is c/o Barclays Global Investors, N.A. 45 Fremont Street,
San Francisco, CA 94105. The Board has designated George G.C. Parker as its
Lead Independent Director.

                                       19




                            DIRECTORS AND OFFICERS



                                                        PRINCIPAL OCCUPATION(S)                   OTHER DIRECTORSHIPS
 NAME (YEAR OF BIRTH)          POSITION                 DURING THE PAST 5 YEARS                     HELD BY DIRECTOR
---------------------- ------------------------ --------------------------------------- ---------------------------------------
                                                                               
INTERESTED DIRECTORS
Lee T. Kranefuss/1/    Director and             Chief Executive Officer, iShares        Trustee (since 2003) of iShares Trust;
(1961)                 Chairman (since          Intermediary Index and Market Group     Trustee (since 2001) of BGIF and
                       2003).                   of BGI (since 2005); Chief Executive    MIP; Director (since 2003) of BGI
                                                Officer of the Intermediary Investor    Cayman Prime Money Market Fund,
                                                and Exchange Traded Products            Ltd.
                                                Business of BGI (2003-2005); Director
                                                of Barclays Global Fund Advisors
                                                (since 2005); Director, President and
                                                Chief Executive Officer of Barclays
                                                Global Investors International, Inc.
                                                (since 2005); Director and Chairman
                                                of Barclays Global Investors Services
                                                (since 2005); Chief Executive Officer
                                                of the Individual Investor Business of
                                                BGI (1999-2003).
John E. Martinez/1/    Director (since 2003).   Co-Chief Executive Officer of Global    Trustee (since 2003) of iShares Trust;
(1962)                                          Index and Markets Group of BGI          Director (since 2005) of Real Estate
                                                (2001-2003); Chairman of Barclays       Equity Exchange; Chairman, Independent
                                                Global Investors Services (2000-2003);  Review Committee, Canadian iShares Funds
                                                Director, Barclays Global Investors     (since 2007).
                                                UK Holdings, Inc. (2000-2003).


-------
/1/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.

INDEPENDENT DIRECTORS



                                                         PRINCIPAL OCCUPATION(S)                    OTHER DIRECTORSHIPS
 NAME (YEAR OF BIRTH)          POSITION                  DURING THE PAST 5 YEARS                      HELD BY DIRECTOR
---------------------- ------------------------ ---------------------------------------- -----------------------------------------
                                                                                
George G.C. Parker     Director (since 2000);   Dean Witter Distinguished Professor of   Trustee (since 2002) of iShares Trust;
(1939)                 Lead Independent         Finance, Emeritus, Stanford              Director (since 1996) of Continental
                       Director (since 2006)    University: Graduate School of           Airlines, Inc.; Director (since 1995) of
                                                Business (since 1994).                   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     Director (since 2005).   Chair of Investment Committee (1994-     Trustee (since 2005) of iShares Trust.
(1949)                                          2005) Archdiocese of San Francisco;
                                                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
                                                2005) and Chair of Finance and
                                                Investment Committees (since 2006) of
                                                the Thacher School.


                                       20






                                                         PRINCIPAL OCCUPATION(S)                    OTHER DIRECTORSHIPS
 NAME (YEAR OF BIRTH)          POSITION                  DURING THE PAST 5 YEARS                      HELD BY DIRECTOR
---------------------- ------------------------ ----------------------------------------- ---------------------------------------
                                                                                 
Charles A. Hurty       Director (since 2005).   Retired; Partner, KPMG, LLP (1968-        Trustee (since 2005) of iShares Trust;
(1943)                                          2001).                                    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       Director (since 2005).   Chief Investment Officer, Santa Clara     Trustee (since 2005) of iShares Trust;
(1955)                                          University (since 2002); Managing         Member (since 2004) of Advisory
                                                Director, Merrill Lynch (1994-2002).      Council for Commonfund Distressed
                                                                                          Debt Partners II.
Robert H. Silver       Director (since March    President and Co-Founder of The           Trustee (since March 2007) of iShares
(1955)                 2007).                   Bravitas Group, Inc. (since 2006);        Trust; Director and Member (since
                                                Member, Non-Investor Advisory Board       2006) of the Audit and Compensation
                                                of Russia Partners II, LP (since 2006);   Committee of EPAM Systems, Inc.
                                                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 Chairman of the YMCA of Greater
                                                NYC (since 2001); Broadway Producer
                                                (since 2006).


OFFICERS



                                                             PRINCIPAL OCCUPATION(S)
 NAME (YEAR OF BIRTH)             POSITION                   DURING THE PAST 5 YEARS
----------------------     ---------------------     --------------------------------------
                                               
Michael A. Latham          President (since          Head of Americas iShares (since
(1965)                        2007)                  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 (1999-2003).
Geoffrey D. Flynn          Treasurer and Chief       Director (since 2007) of Mutual Fund
(1956)                     Financial Officer         Operations of BGI; President (2003-
                           (since 2007)              2007) of Van Kampen Investors
                                                     Services; Managing Director (2002-
                                                     2007) of Morgan Stanley; President
                                                     (2002-2007) of Morgan Stanley Trust,
                                                     FSB.


                                       21






                                                                 PRINCIPAL OCCUPATION(S)
  NAME (YEAR OF BIRTH)              POSITION                     DURING THE PAST 5 YEARS
-----------------------     -----------------------     -----------------------------------------
                                                  
Eilleen M. Clavere          Secretary                   Head (since 2006) of Legal
(1952)                      (since 2007)                Administration of Intermediary
                                                        Investors Business of BGI; Legal
                                                        Counsel and Vice President (2005-
                                                        2006) of Atlas Funds, Atlas Advisers,
                                                        Inc. and Atlas Securities, Inc.; Counsel
                                                        (2001-2005) of Kirkpatrick & Lockhart
                                                        LLP.
Ira P. Shapiro (1963)       Vice President and          Associate General Counsel (since
                            Chief Legal Officer         2004) of BGI; First Vice President
                            (since 2007)                (1993-2004) of Merrill Lynch
                                                        Investment Managers.
Amy Schioldager             Executive Vice              Head of U.S. Indexing, BGI (since
(1962)                      President (since            2006); Head of Domestic Equity
                            2007)                       Portfolio Management, BGI (2001-
                                                        2006).
H. Michael Williams         Executive Vice              Head (since 2006) of Global Index and
(1960)                      President (since            Markets Group of BGI; Global Head
                            2007)                       (2002-2006) of Securities Lending of
                                                        BGI.
Patrick O'Connor            Vice President (since       Head of iShares Portfolio
(1967)                      2007)                       Management, BGI (since 2006); Senior
                                                        Portfolio Manager, BGI (since 1999).
Lee Sterne (1965)           Vice President (since       Senior Portfolio Manager, BGI (since
                            2007)                       2004); Portfolio Manager, BGI (2001-
                                                        2004).
Matt Tucker (1972)          Vice President (since       Head of U.S. Fixed Income Investment
                            2007)                       Solutions, BGI (since 2005); Fixed
                                                        Income Investment Strategist, BGI
                                                        (2003-2005); Fixed Income Portfolio
                                                        Manager, BGI (1997-2003).


The following table sets forth, as of December 31, 2007, the dollar range of
equity securities beneficially owned by each Director in the Funds and in other
registered investment companies overseen by the Director within the same family
of investment companies as the Company:



                                                                                               AGGREGATE DOLLAR RANGE
                                                                                             OF EQUITY SECURITIES IN ALL
                                                                                                REGISTERED INVESTMENT
                                                                                                COMPANIES OVERSEEN BY
                                                                  DOLLAR RANGE OF EQUITY        DIRECTOR IN FAMILY OF
 NAME OF DIRECTOR                   FUND                          SECURITIES IN THE FUND        INVESTMENT COMPANIES
------------------   ------------------------------------------  ------------------------   ----------------------------
                                                                                   
Lee T. Kranefuss     iShares Lehman 1-3 Year Treasury Bond Fund  $50,001-$100,000           Over $100,000
                     iShares Russell 3000 Index Fund             Over $100,000
John E. Martinez     iShares MSCI EAFE Index Fund                Over $100,000              Over $100,000
                     iShares Russell 1000 Index Fund             Over $100,000


                                       22








                                                                                                   AGGREGATE DOLLAR RANGE
                                                                                                 OF EQUITY SECURITIES IN ALL
                                                                                                    REGISTERED INVESTMENT
                                                                                                    COMPANIES OVERSEEN BY
                                                                        DOLLAR RANGE OF EQUITY      DIRECTOR IN FAMILY OF
  NAME OF DIRECTOR                          FUND                        SECURITIES IN THE FUND      INVESTMENT COMPANIES
-------------------- ------------------------------------------------- ------------------------ ----------------------------
                                                                                       
                     iShares Russell 1000 Value Index Fund             Over $100,000
                     iShares Russell 2000 Index Fund                   Over $100,000
                     iShares S&P 500 Index Fund                        Over $100,000
George G.C. Parker   iShares Russell 2000 Index Fund                   $50,001-$100,000         Over $100,000
                     iShares Russell 2000 Value Index Fund             $50,001-$100,000
                     iShares S&P 100 Index Fund                        Over $100,000
                     iShares S&P 500 Value Index Fund                  Over $100,000
                     iShares S&P MidCap 400 Index Fund                 $ 10,001-$50,000
                     iShares S&P MidCap 400 Value Index Fund           Over $100,000
                     iShares S&P Small Cap 600 Index Fund              $ 10,001-$50,000
                     iShares Russell 1000 Value Index Fund             Over $100,000
                     iShares Dow Jones Select Dividend Index Fund      Over $100,000
                     iShares S&P 500 Index Fund                        Over $100,000
                     iShares MSCI Mexico Index Fund                    Over $100,000
                     iShares MSCI EAFE Index Fund                      Over $100,000
Cecilia H. Herbert   iShares FTSE/Xinhua China 25 Index Fund           Over $100,000            Over $100,000
                     iShares MSCI Emerging Markets Index Fund          $ 10,001-$50,000
                     iShares MSCI Hong Kong Index Fund                 $ 10,001-$50,000
                     iShares MSCI Japan Index Fund                     $ 10,001-$50,000
                     iShares Dow Jones U.S. Consumer Goods Sector      $ 10,001-$50,000
                     Index Fund
                     iShares Russell 1000 Index Fund                   $ 10,001-$50,000
                     iShares S&P Global Telecommunications Sector      $ 10,001-$50,000
                     Index Fund
                     iShares Dow Jones U.S. Technology Sector Index    $      1-$10,000
                     Fund
                     iShares S&P 500 Index Fund                        Over $100,000
Charles A. Hurty     iShares S&P 500 Index Fund                        $ 10,001-$50,000         Over $100,000
                     iShares FTSE/Xinhua China 25 Index Fund           $ 10,001-$50,000
                     iShares Dow Jones Financial Sector Index Fund     $ 10,001-$50,000
                     iShares Dow Jones U.S. Energy Sector Index Fund   $ 10,001-$50,000
                     iShares Dow Jones U.S. Technology Sector Index    $ 10,001-$50,000
                     Fund
                     iShares MSCI EAFE Index Fund                      $ 10,001-$50,000
                     iShares MSCI Japan Index Fund                     $ 10,001-$50,000


                                       23






                                                                                                  AGGREGATE DOLLAR RANGE
                                                                                                OF EQUITY SECURITIES IN ALL
                                                                                                   REGISTERED INVESTMENT
                                                                                                   COMPANIES OVERSEEN BY
                                                                       DOLLAR RANGE OF EQUITY      DIRECTOR IN FAMILY OF
 NAME OF DIRECTOR                         FUND                         SECURITIES IN THE FUND      INVESTMENT COMPANIES
------------------ -------------------------------------------------- ------------------------ ----------------------------
                                                                                      
                   iShares Dow Jones Select Dividend Index Fund       $10,001-$50,000
John E. Kerrigan   iShares MSCI Japan Index Fund                      Over $100,000            Over $100,000
                   iShares MSCI Pacific ex-Japan Index Fund           Over $100,000
                   iShares MSCI EAFE Index Fund                       Over $100,000
Robert H. Silver   iShares Dow Jones U.S. Broker-Dealers Index Fund   Over $100,000            Over $100,000
                   iShares MSCI EAFE Index Fund                       Over $100,000
                   iShares S&P 500 Index Fund                         Over $100,000
                   iShares Russell 2000 Index Fund                    Over $100,000


As of December 31, 2007, none of the Directors who are not interested persons
(as defined in the 1940 Act) of the Company ("Independent Directors") or their
immediate family members owned beneficially or of record any securities of BGFA
(the Funds' investment adviser), the Distributor or any person controlling,
controlled by or under control with BGFA or the Distributor.

COMMITTEES OF THE BOARD OF DIRECTORS.

Each Independent Director serves on the Audit Committee and the Nominating and
Governance Committee of the Board. The purposes of the Audit Committee are to
assist the Board (i) in its oversight of the Company's accounting and financial
reporting principles and policies and related controls and procedures
maintained by or on behalf of the Company; (ii) in its oversight of the
Company's financial statements and the independent audit thereof; (iii) in
selecting, evaluating and, where deemed appropriate, replacing the independent
accountants (or nominating the independent accountants to be proposed for
shareholder approval in any proxy statement); (iv) in evaluating the
independence of the independent accountants; (v) in complying with legal and
regulatory requirements that relate to the Company's accounting and financial
reporting, internal controls and independent audits; and (vi) to assume such
other responsibilities as may be delegated by the Board. The Audit Committee
met four times during the calendar year ended December 31, 2007.

The Nominating and Governance Committee nominates individuals for Independent
Director membership on the Board. The Nominating and Governance Committee
functions include, but are not limited to, the following: (i) reviewing the
qualifications of any person properly identified or nominated to serve as an
Independent Director; (ii) recommending to the Board and current Independent
Directors the nominee(s) for appointment as an Independent Director by the
Board and current Independent Directors and/or for election as Independent
Directors by shareholders to fill any vacancy for a position of Independent
Director(s) on the Board; (iii) recommending to the Board and current
Independent Directors the size and composition of the Board and Board
committees and whether they comply with applicable laws and regulations; (iv)
recommending a current Independent Director to the Board and current
Independent Directors to serve as Lead Independent Director; (v) periodic
review of the Board's retirement policy; and (vi) recommending an appropriate
level of compensation for the Independent Directors for their services as
Directors and members or chairpersons of committees of the Board. The
Nominating and Governance Committee is not required to consider nominees for
the Board who are recommended by shareholders. However, individual shareholder
nominees may be considered if the Nominating and Governance Committee deems it
appropriate. The Nominating and Governance Committee met four times during the
calendar year ended December 31, 2007.

REMUNERATION OF DIRECTORS.  The Company pays each Independent Director and John
Martinez, an Interested Director, an annual fee of $90,000 for meetings of the
Board attended by the Director; also the Company pays Charles Hurty an annual
fee of $20,000 for service as the chairperson of the Board's Audit Committee
and George G. C. Parker an annual fee of $25,000 for service as the Board's
Lead Independent Director. During the period January 1, 2007 through December
31, 2007, the Company paid each Independent Director and John Martinez, an
Interested Director, an annual fee of $75,000 for meetings of the Board
attended by the Director; the Company also paid Charles Hurty an annual fee of
$20,000 for service as the chairperson of the Board's Audit Committee and
George G. C. Parker an annual fee of $25,000 for service as the Board's Lead
Independent Director. The Company

                                       24




also reimburses each Director for travel and other out-of-pocket expenses
incurred by him/her in connection with attending Board and Committee meetings.

The table below sets forth the total compensation paid to each Interested
Director for the calendar year ended December 31, 2007:



                                                          PENSION OR
                                    AGGREGATE             RETIREMENT                                         TOTAL
                                  COMPENSATION       BENEFITS ACCRUED AS       ESTIMATED ANNUAL          COMPENSATION
                                    FROM THE           PART OF COMPANY           BENEFITS UPON          FROM THE FUNDS
 NAME OF INTERESTED DIRECTOR         COMPANY             EXPENSES/1/             RETIREMENT/1/        AND FUND COMPLEX/2/
----------------------------     --------------     ---------------------     ------------------     --------------------
                                                                                         
Lee T. Kranefuss/3/                  $     0            Not Applicable          Not Applicable             $      0
John E. Martinez                     $75,000            Not Applicable          Not Applicable             $150,000


-------
/1/No Director or officer is entitled to any pension or retirement benefits
from the Company.
/2/ Includes compensation for service on the Board of Trustees of iShares
Trust.
/3/Lee Kranefuss was not compensated by the Funds due to his employment with
BGI during the time period reflected in the table.

The table below sets forth the total compensation paid to each Independent
Director for the calendar year ended December 31, 2007:



                                 AGGREGATE              PENSION OR                                       TOTAL
                               COMPENSATION   RETIREMENT BENEFITS ACCRUED AS   ESTIMATED ANNUAL      COMPENSATION
                                 FROM THE             PART OF COMPANY            BENEFITS UPON      FROM THE FUNDS
 NAME OF INDEPENDENT DIRECTOR     COMPANY               EXPENSES/1/              RETIREMENT/1/    AND FUND COMPLEX/2/
----------------------------- -------------- -------------------------------- ------------------ --------------------
                                                                                     
Cecilia H. Herbert               $ 75,000             Not Applicable            Not Applicable         $150,000
Charles A. Hurty                 $ 95,000             Not Applicable            Not Applicable         $190,000
John E. Kerrigan                 $ 75,000             Not Applicable            Not Applicable         $150,000
George G.C. Parker               $100,000             Not Applicable            Not Applicable         $200,000
Robert H. Silver*                $ 56,250             Not Applicable            Not Applicable         $112,500


-------
*Appointed to serve as Independent Director of the Company effective March
9, 2007.

1No Director or officer is entitled to any pension or retirement benefits
from the Company.

/2/ Includes compensation for service on the Board of Trustees of iShares
Trust.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

The Directors and officers of the Company collectively owned less than 1% of
each of the Funds' outstanding shares as of January 31, 2008.

Although the Company does not have information concerning the beneficial
ownership of shares held in the names of DTC participants, as of January 31,
2008, the name and percentage ownership of each DTC participant that owned of
record 5% or more of the outstanding shares of a Fund were as follows:




                                                                           PERCENTAGE
               FUND                                 NAME                  OF OWNERSHIP
---------------------------------- ------------------------------------- -------------
                                                                   
iShares MSCI Australia Index Fund  Citigroup Global Markets Inc.              12.73%
                                   National Financial Services LLC            10.02%
                                   Charles Schwab & Co., Inc.                  9.67%
iShares MSCI Austria Index Fund    A.G. Edwards & Sons, Inc.                  21.41%
                                   National Financial Services LLC             8.94%
                                   State Street Bank and Trust Company         8.45%
                                   Pershing LLC                                6.56%
                                   Charles Schwab & Co. Inc.                   6.06%


                                       25






                                                                                 PERCENTAGE
               FUND                                    NAME                     OF OWNERSHIP
---------------------------------- ------------------------------------------- -------------
                                                                         
                                   Citigroup Global Markets Inc.                    5.67%
iShares MSCI Belgium Index Fund    Citigroup Global Markets Inc.                   49.57%
                                   JPMorgan Chase Bank, National Association       11.14%
                                   Bear, Stearns Securities Corp.                   8.98%
iShares MSCI Brazil Index Fund     Brown Brothers Harriman & Co.                   11.86%
                                   Morgan Stanley & Co. Incorporated                9.03%
                                   National Financial Services LLC                  7.97%
                                   Charles Schwab & Co., Inc.                       5.84%
                                   Citibank, N.A.                                   5.56%
                                   The Bank of New York                             5.31%
iShares MSCI Canada Index Fund     Brown Brothers Harriman & Co.                   12.12%
                                   National Financial Services LLC                  8.44%
                                   Charles Schwab & Co., Inc.                       8.41%
                                   The Bank of New York                             7.02%
iShares MSCI Emerging Markets      Charles Schwab & Co., Inc.                       7.76%
  Index Fund
                                   Brown Brothers Harriman & Co.                    7.74%
                                   State Street Bank and Trust Company              7.39%
                                   Northern Trust Company                           5.80%
                                   National Financial Services LLC                  5.49%
iShares MSCI EMU Index Fund        Deutsche Bank Securities Inc./Cedear            27.02%
                                   Brown Brothers Harriman & Co.                   20.52%
                                   Charles Schwab & Co., Inc.                       8.18%
                                   National Financial Services LLC                  5.08%
iShares MSCI France Index Fund     A.G. Edwards & Sons, Inc.                       12.97%
                                   Brown Brothers Harriman & Co.                   11.53%
                                   Citibank, N.A.                                  10.13%
                                   BNP Paribas Securities Corp.                     8.27%
                                   Bear, Sterns Securities Corp.                    5.18%
iShares MSCI Germany Index Fund    Deutsche Bank Securities Inc./Cedear            14.90%
                                   Brown Brothers Harriman & Co.                   12.17%
                                   The Bank of New York                             7.86%
                                   Charles Schwab & Co., Inc.                       7.48%
                                   National Financial Services LLC                  6.45%
iShares MSCI Hong Kong Index Fund  Charles Schwab & Co., Inc.                       9.74%
                                   Brown Brothers Harriman & Co.                    8.69%
                                   Citibank, N.A.                                   7.42%
                                   National Financial Services LLC                  6.83%
                                   Deutsche Bank Securities Inc./Cedear             6.59%
                                   State Street Bank and Trust Company              6.20%


                                       26






                                                                                  PERCENTAGE
                FUND                                    NAME                     OF OWNERSHIP
----------------------------------- ------------------------------------------- -------------
                                                                          
iShares MSCI Italy Index Fund       Bear, Stearns Securities Corp.                   17.58%
                                    Citibank, N.A.                                   15.30%
                                    Brown Brothers Harriman & Co.                    12.83%
                                    Citigroup Global Markets Inc.                     7.16%
                                    Morgan Stanley & Co. Incorporated                 5.55%
iShares MSCI Japan Index Fund       Brown Brothers Harriman & Co.                     9.07%
                                    Charles Schwab & Co., Inc.                        7.99%
                                    The Bank of New York                              7.04%
                                    Merrill Lynch Safekeeping                         7.04%
                                    Goldman, Sachs & Co.                              6.00%
                                    JPMorgan Chase Bank, National Association         5.89%
iShares MSCI Malaysia Index Fund    The Bank of New York                             16.42%
                                    Brown Brothers Harriman & Co.                    12.48%
                                    National Financial Services LLC                   7.62%
                                    Citigroup Global Markets Inc                      6.40%
                                    Charles Schwab & Co., Inc.                        5.96%
iShares MSCI Mexico Index Fund      Brown Brothers Harriman & Co.                     8.57%
                                    Morgan Stanley & Co. Incorporated                 8.08%
                                    Citibank, N.A.                                    7.28%
                                    The Bank of New York                              7.25%
                                    BNY/Standard Bank London LTD                      5.84%
iShares MSCI Netherlands Index Fund A.G. Edwards & Sons, Inc.                        29.83%
                                    The Bank of New York                              6.10%
iShares MSCI Pacific ex-Japan       Brown Brothers Harriman & Co.                    11.68%
  Index Fund
                                    Charles Schwab & Co., Inc.                        9.09%
                                    National Financial Services LLC                   6.85%
                                    Citibank, N.A.                                    6.38%
                                    The Bank of New York                              5.44%
iShares MSCI Singapore Index Fund   Brown Brothers Harriman & Co.                    12.42%
                                    Charles Schwab & Co., Inc.                        9.85%
                                    National Financial Services LLC                   9.71%
                                    Citibank, N.A.                                    7.57%
                                    Pershing LLC                                      6.29%
iShares MSCI South Africa Index     State Street Bank and Trust Company              14.52%
  Fund
                                    A.G. Edwards & Sons, Inc.                        12.50%
                                    Brown Brothers Harriman & Co.                    10.19%
iShares MSCI South Korea Index Fund Brown Brothers Harriman & Co.                    11.80%
                                    Morgan Stanley & Co. Incorporated                10.15%
                                    The Bank of New York                              8.98%
                                    Citigroup Global Markets Inc.                     7.59%


                                       27






                                                                                         PERCENTAGE
                FUND                                       NAME                         OF OWNERSHIP
----------------------------------- -------------------------------------------------- -------------
                                                                                 
                                    State Street Bank and Trust Company                     6.04%
                                    National Financial Services LLC                         5.98%
                                    Bear, Stearns Securities Corp.                          5.30%
iShares MSCI Spain Index Fund       Citigroup Global Markets Inc.                          25.23%
                                    A.G. Edwards & Sons                                    11.78%
                                    The Bank of New York                                    9.71%
                                    Goldman, Sachs & Co.                                    5.47%
                                    Morgan Stanley & Co. Incorporated                       5.37%
                                    Brown Brothers Harriman & Co.                           5.26%
iShares MSCI Sweden Index Fund      Bear, Stearns Securities Corp.                         10.11%
                                    JP Morgan Chase Bank, National Association              9.65%
                                    Citibank, N.A.                                          8.50%
                                    National Financial Services LLC                         7.49%
                                    Charles Schwab & Co., Inc.                              6.69%
                                    Citigroup Global Markets Inc.                           6.61%
                                    Pershing LLC                                            5.56%
iShares MSCI Switzerland Index Fund Brown Brothers Harriman & Co.                          14.93%
                                    The Bank of New York                                   10.29%
                                    National Financial Services LLC                         7.31%
                                    Barclays Global Investors, N.A./Investors Bank &        6.15%
                                    Trust Company
                                    Merrill Lynch Safekeeping                               6.04%
                                    Charles Schwab & Co., Inc.                              5.57%
iShares MSCI Taiwan Index Fund      Brown Brothers Harriman & Co.                          16.92%
                                    The Bank of New York                                   15.03%
                                    JP Morgan Chase Bank, National Association              6.97%
                                    Morgan Stanley & Co. Incorporated                       6.65%
iShares MSCI United Kingdom Index   Deutsche Bank Securities Inc./Cedear                   14.11%
  Fund
                                    Citigroup Capital Markets Inc.                         13.15%
                                    Brown Brothers Harriman & Co.                          10.48%


Investment Advisory, Administrative and Distribution Services
INVESTMENT ADVISER.
 BGFA serves as investment adviser to each Fund pursuant to an Investment
Advisory Agreement between the Company and BGFA. BGFA is a California
corporation indirectly owned by Barclays Bank PLC, and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.

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 a management fee based on each
Fund's allocable portion of the aggregate of the average daily net assets of
each Fund and certain other iShares Funds (iShares MSCI Chile Index Fund, which
is offered in a separate SAI) as follows: 0.74% per year of the first $2.0
billion of aggregate average

                                       28




daily net assets, plus 0.69% per year of aggregate average daily net assets in
excess of $2.0 billion and up to $4.0 billion, plus 0.64% per year of aggregate
average daily net assets in excess of $4.0 billion and up to $8.0 billion, plus
0.57% per year of aggregate average daily net assets in excess of $8.0 billion.
For its investment advisory services to the iShares MSCI Pacific ex-Japan Index
Fund, BGFA is paid a management fee based on each Fund's allocable portion of
the aggregate of the average daily net assets of that Fund as follows: 0.50%
per year of the net assets of that Fund. For its investment advisory services
to the iShares MSCI Emerging Markets Index Fund, BGFA is paid a management fee
based on the Fund's allocable portion of the aggregate of the average daily net
assets of the Fund and certain other iShares Funds (iShares MSCI BRIC Index
Fund, which is offered in a separate SAI) as follows: 0.75% per year of the
first $14.0 billion of aggregate average daily net assets, plus 0.68% per year
of aggregate average daily net assets in excess of $14.0 billion and up to
$28.0 billion, plus 0.61% per year of aggregate average daily net assets in
excess of $28.0 billion. For its investment advisory services to the 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, BGFA is paid a
management fee based on each Fund's allocable portion of the aggregate of the
average daily net assets of each Fund and certain other iShares Funds (iShares
MSCI Japan Small Cap Index Fund, which is offered in a separate SAI) as
follows: 0.59% per year of the first $7.0 billion of aggregate average daily
net assets, plus 0.54% per year of aggregate average daily net assets in excess
of $7.0 billion and up to $11.0 billion, plus 0.49% per year of aggregate
average daily net assets in excess of $11.0 billion and up to $24.0 billion,
plus 0.44% per year of aggregate average daily net assets in excess of $24.0
billion.

Under the Investment Advisory Agreement, BGFA, subject to the supervision of
the Company's Board and in conformity with the stated investment policies of
each Fund, manages and administers the Company and the investment of each
Fund's assets. BGFA is responsible for placing purchase and sale orders and
providing continuous supervision of the investment portfolio of each Fund

Under the Investment Advisory Agreement, BGFA is responsible for all expenses
of the Funds, including the cost of transfer agency, custody, fund
administration, legal, audit and other services, except interest expense taxes,
brokerage expenses, distribution fees or expenses and extraordinary expenses.
For its investment management services to each Fund, BGFA is paid a management
fee at the annual rates (as a percentage of such Fund's average net assets)
listed below:



                                                                        MANAGEMENT        MANAGEMENT        MANAGEMENT
                                                                         FEES PAID         FEES PAID        FEES PAID
                                                                        FOR FISCAL        FOR FISCAL        FOR FISCAL
                                                           FUND         YEAR ENDED        YEAR ENDED        YEAR ENDED
                                        MANAGEMENT      INCEPTION       AUGUST 31,        AUGUST 31,        AUGUST 31,
FUND                                        FEE            DATE            2007              2006              2005
-----------------------------------    ------------    -----------    --------------    --------------    -------------
                                                                                           
iShares MSCI Australia Index Fund           0.51%       03/12/96       $  5,418,181      $ 2,886,094       $ 1,684,365
iShares MSCI Austria Index Fund             0.51%       03/12/96       $  2,601,711      $ 1,657,316       $   891,196
iShares MSCI Belgium Index Fund             0.51%       03/12/96       $  1,332,129      $   479,965       $   298,236
iShares MSCI Brazil Index Fund              0.68%       07/10/00       $ 21,514,644      $11,373,859       $ 2,897,738
iShares MSCI Canada Index Fund              0.52%       03/12/96       $  5,946,553      $ 4,487,238       $ 1,934,001
iShares MSCI Emerging Markets               0.74%       04/07/03       $114,234,720      $81,638,096       $31,573,428
  Index Fund
iShares MSCI EMU Index Fund                 0.51%       07/25/00       $ 12,839,319      $ 6,044,452       $ 2,700,971
iShares MSCI France Index Fund              0.51%       03/12/96       $  1,269,129      $   615,785       $   360,949
iShares MSCI Germany Index Fund             0.51%       03/12/96       $  6,219,398      $ 3,393,583       $   966,395
iShares MSCI Hong Kong Index Fund           0.52%       03/12/96       $  6,192,082      $ 4,007,032       $ 3,327,704
iShares MSCI Italy Index Fund               0.52%       03/12/96       $  1,055,455      $   454,018       $   211,190
iShares MSCI Japan Index Fund               0.52%       03/12/96       $ 70,930,669      $67,470,595       $36,714,546
iShares MSCI Malaysia Index Fund            0.51%       03/12/96       $  3,843,835      $ 2,225,756       $ 1,738,119
iShares MSCI Mexico Index Fund              0.51%       03/12/96       $  6,123,156      $ 2,439,770       $ 1,265,701
iShares MSCI Netherlands Index Fund         0.51%       03/12/96       $  1,140,068      $   475,006       $   269,795
iShares MSCI Pacific ex-Japan               0.50%       10/25/01       $ 14,285,783      $ 9,175,781       $ 5,536,961
  Index Fund
iShares MSCI Singapore Index Fund           0.51%       03/21/96       $  7,038,174      $ 2,583,523       $ 1,132,585
iShares MSCI South Africa Index             0.68%       02/03/03       $  2,554,012      $ 2,039,466       $   959,383
  Fund
iShares MSCI South Korea Index Fund         0.68%       05/09/00       $ 12,507,997      $10,213,486       $ 3,815,173
iShares MSCI Spain Index Fund               0.51%       03/12/96       $  2,757,796      $   564,200       $   343,145


                                       29






                                                                        MANAGEMENT        MANAGEMENT       MANAGEMENT
                                                                         FEES PAID         FEES PAID        FEES PAID
                                                                        FOR FISCAL        FOR FISCAL       FOR FISCAL
                                                           FUND         YEAR ENDED        YEAR ENDED       YEAR ENDED
                                        MANAGEMENT      INCEPTION       AUGUST 31,        AUGUST 31,       AUGUST 31,
FUND                                        FEE            DATE            2007              2006             2005
-----------------------------------    ------------    -----------    --------------    --------------    ------------
                                                                                           
iShares MSCI Sweden Index Fund              0.51%       03/12/96       $ 2,071,508       $   601,452       $  315,269
iShares MSCI Switzerland Index Fund         0.51%       03/12/96       $ 1,413,051       $   743,036       $  330,809
iShares MSCI Taiwan Index Fund              0.68%       06/20/00       $15,295,138       $11,442,524       $5,030,229
iShares MSCI United Kingdom Index           0.51%       03/12/96       $ 5,507,753       $ 3,483,995       $2,930,931
  Fund


The Investment Advisory Agreement with respect to each Fund continues in effect
for two years from its effective date, and thereafter is subject to annual
approval by (i) the Board or (ii) vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund, provided that in either
event such continuance also is approved by a majority of the Board who are not
interested persons (as defined in the 1940 Act) of the Fund, by a vote cast in
person at a meeting called for the purpose of voting on such approval.

The Investment Advisory Agreement with respect to each Fund are terminable
without penalty on 60 days' notice by the Board or by a vote of the holders of
a majority (as defined in the 1940 Act) of the applicable Fund's outstanding
voting securities. The Investment Advisory Agreement is also terminable upon 60
days' notice by BGFA and will terminate automatically in the event of its
assignment (as defined in the 1940 Act).

Current interpretations of federal banking laws and regulations (i) may
prohibit Barclays Bank PLC, BGI and BGFA from controlling or underwriting the
shares of the Company but (ii) do not prohibit Barclays Bank PLC or BGFA
generally from acting as an investment adviser, administrator, transfer agent
or custodian to the Funds or from purchasing iShares as agent for and upon the
order of a customer.

BGFA believes that it may perform advisory and related services for the Company
without violating applicable banking laws or regulations. However, the legal
requirements and interpretations about the permissible activities of banks and
their affiliates may change in the future. These changes could prevent BGFA
from continuing to perform services for the Company. If this happens, the Board
would consider selecting other qualified firms. Any new investment advisory
agreement would be subject to shareholder approval.

If current restrictions on bank activities with mutual funds were relaxed BGFA
or its affiliates would consider performing additional services for the
Company. BGFA cannot predict whether these changes will be enacted, or the
terms under which BGFA or its affiliates might offer to provide additional
services.

PORTFOLIO MANAGERS.  The individuals named as Portfolio Managers in a Fund's
prospectus were also primarily responsible for the day-to-day management of
certain types of other iShares Funds and certain other portfolios and/or
accounts in addition to the Funds, as indicated in the tables below as of
August 31, 2007:



DIANE HSIUNG
TYPES OF ACCOUNTS                           NUMBER              TOTAL ASSETS
----------------------------------     ----------------     -------------------
                                                      
Registered Investment Companies               24             $311,024,000,000
Other Pooled Investment Vehicles               1             $    235,000,000
Other Accounts                                 5             $  1,365,000,000
Accounts with Incentive-Based Fee             N/A                   N/A
  Arrangements




GREG SAVAGE
TYPES OF ACCOUNTS                      NUMBER          TOTAL ASSETS
---------------------------------     --------     -------------------
                                             
Registered Investment Companies         124         $311,024,000,000
Other Pooled Investment Vehicles          1         $    235,000,000
Other Accounts                            6         $  1,365,000,000


                                       30






GREG SAVAGE
TYPES OF ACCOUNTS                       NUMBER       TOTAL ASSETS
----------------------------------     --------     -------------
                                              
Accounts with Incentive-Based Fee        N/A             N/A
  Arrangements


Each of the portfolios or accounts for which the Portfolio Managers are
primarily responsible for the day-to-day management seeks to track the rate of
return, risk profile and other characteristics of independent third-party
indexes by either replicating the same combination of securities that compose
those indexes or through a representative sampling of the securities that
constitute those indexes based on objective criteria and data. The Portfolio
Managers are required to manage each portfolio or account to meet those
objectives. Pursuant to BGI and BGFA policy, investment opportunities are
allocated equitably among the Funds and other portfolios and accounts. For
example, under certain circumstances, an investment opportunity may be
restricted due to limited supply on the market, legal constraints or other
factors, in which event the investment opportunity will be allocated equitably
among those portfolios and accounts, including the Funds seeking such
investment opportunity. As a consequence, from time to time the Funds may
receive a smaller allocation of an investment opportunity than they would have
if the Portfolio Managers and BGFA and its affiliates did not manage other
portfolios or accounts.

Like the Funds, the other portfolios or accounts managed by the Portfolio
Managers generally pay an asset-based fee to BGFA or BGI, as applicable, for
its advisory services. One or more of those other portfolios or accounts,
however, may pay BGI an incentive-based fee in lieu of, or in addition to, an
asset-based fee for its advisory services. A portfolio or account with an
incentive-based fee would pay BGI a portion of that portfolio's or account's
gains, or would pay BGI more for its services than would otherwise be the case
if BGI meets or exceeds specified performance targets. By their very nature,
incentive-based fee arrangements could present an incentive for BGI to devote
greater resources, and allocate more investment opportunities, to the
portfolios or accounts that have those fee arrangements, relative to other
portfolios or accounts, in order to earn larger fees. Although BGI has an
obligation to allocate resources and opportunities equitably among portfolios
and accounts and intends to do so, shareholders of the Funds should be aware
that, as with any group of portfolios and accounts managed by an investment
adviser and/or its affiliates pursuant to varying fee arrangements, including
incentive-based fee arrangements, there is the potential for a
conflict-of-interest that may result in the Portfolio Manager's favoring those
portfolios or accounts with incentive-based fee arrangements.

The below table reflects, for each Portfolio Manager, the number of portfolios
or accounts of the types enumerated in the above table and the aggregate of
total assets in those portfolios or accounts with respect to which the
investment management fees for those portfolios or accounts are based on the
performance of those portfolios or accounts, as of August 31, 2007:



DIANE HSIUNG
                                            NUMBER OF OTHER
                                             ACCOUNTS WITH               AGGREGATE
TYPES OF ACCOUNTS                      PERFORMANCE FEES MANAGED       OF TOTAL ASSETS
---------------------------------     --------------------------     ----------------
                                                               
Registered Investment Companies                  N/A                       N/A
Other Pooled Investment Vehicles                 N/A                       N/A
Other Accounts                                   N/A                       N/A




GREG SAVAGE
                                            NUMBER OF OTHER
                                             ACCOUNTS WITH               AGGREGATE
TYPES OF ACCOUNTS                      PERFORMANCE FEES MANAGED       OF TOTAL ASSETS
---------------------------------     --------------------------     ----------------
                                                               
Registered Investment Companies                  N/A                       N/A
Other Pooled Investment Vehicles                 N/A                       N/A
Other Accounts                                   N/A                       N/A


As of August 31, 2007, with respect to all Funds and other portfolios and/or
accounts managed by the Portfolio Managers, on behalf of BGFA, the Portfolio
Managers receive a salary and are eligible to receive an annual bonus. Each
Portfolio Manager's salary is a fixed amount generally determined annually
based on a number of factors, including, but not limited to, the Portfolio
Manager's title, scope of responsibilities, experience and knowledge. The
Portfolio Manager's bonus is a discretionary amount determined annually based
on the overall profitability of the various BGI companies worldwide, the
performance of the Portfolio

                                       31




Manager's business unit, and an assessment of the Portfolio Manager's
individual performance. The Portfolio Manager's salary and annual bonus are
paid in cash. In addition, a Portfolio Manager may be paid a signing bonus or
other amounts in connection with initiation of employment with BGFA. If a
Portfolio Manager satisfied the requirements for being part of a "select group
of management or highly compensated employees (within the meaning of ERISA
Section 401(a))" as so specified under the terms of BGI's Compensation Deferral
Plan, the Portfolio Manager may elect to defer a portion of his or her bonus
under that Plan.

Portfolio Managers may be selected, on a fully discretionary basis, for awards
under BGI's Compensation Enhancement Plan ("CEP"). Under the CEP, these awards
are determined annually, and vest after two years. At the option of the CEP
administrators, the award may be "notionally invested" in funds managed by BGI,
which means that the final award amount may be increased or decreased according
to the performance of the BGI-managed funds over the two-year period. If the
award is not notionally invested, the original award amount is paid once
vested.

A Portfolio Manager may be granted options to purchase shares in Barclays
Global Investors UK Holdings Limited ("BGI UK Holdings"), a company organized
under the laws of England and Wales that directly or indirectly owns all of the
Barclays Global Investors companies worldwide, which options vest in three
equal installments over three years and are generally exercisable during
prescribed exercise windows. Shares purchased must generally be held 355 days
prior to sale. For such purposes, the value of BGI UK Holdings is based on its
fair value as determined by an independent public accounting firm.

As of August 31, 2007, the Portfolio Managers beneficially owned shares of the
Funds in the amounts reflected in the following tables:



DIANE HSIUNG
                                                                            DOLLAR RANGE
                                       --------------------------------------------------------------------------------------
                                                                  $10,001       $50,001      $100,001      $500,001      OVER
                                        NONE      $1 TO $10K      TO $50K      TO $100K      TO $500K       TO $1M       $1M
FUND                                   ------    ------------    ---------    ----------    ----------    ----------    -----
                                                                                                   
iShares MSCI Australia Index Fund         X
iShares MSCI Austria Index Fund                                      X
iShares MSCI Belgium Index Fund           X
iShares MSCI Brazil Index Fund            X
iShares MSCI Canada Index Fund            X
iShares MSCI Emerging Markets             X
  Index Fund
iShares MSCI EMU Index Fund               X
iShares MSCI France Index Fund            X
iShares MSCI Germany Index Fund           X
iShares MSCI Hong Kong Index Fund         X
iShares MSCI Italy Index Fund             X
iShares MSCI Japan Index Fund             X
iShares MSCI Malaysia Index Fund          X
iShares MSCI Mexico Index Fund            X
iShares MSCI Netherlands Index Fund       X
iShares MSCI Pacific ex-Japan             X
  Index Fund
iShares MSCI Singapore Index Fund         X
iShares MSCI South Africa Index           X
  Fund
iShares MSCI South Korea Index Fund                    X
iShares MSCI Spain Index Fund             X
iShares MSCI Sweden Index Fund            X
iShares MSCI Switzerland Index Fund       X
iShares MSCI Taiwan Index Fund            X
iShares MSCI United Kingdom Index         X
  Fund


                                       32






GREG SAVAGE
                                                                            DOLLAR RANGE
                                       --------------------------------------------------------------------------------------
                                                                  $10,001       $50,001      $100,001      $500,001      OVER
                                        NONE      $1 TO $10K      TO $50K      TO $100K      TO $500K       TO $1M       $1M
FUND                                   ------    ------------    ---------    ----------    ----------    ----------    -----
                                                                                                   
iShares MSCI Australia Index Fund         X
iShares MSCI Austria Index Fund           X
iShares MSCI Belgium Index Fund           X
iShares MSCI Brazil Index Fund            X
iShares MSCI Canada Index Fund                         X
iShares MSCI Emerging Markets                                        X
  Index Fund
iShares MSCI EMU Index Fund               X
iShares MSCI France Index Fund            X
iShares MSCI Germany Index Fund           X
iShares MSCI Hong Kong Index Fund         X
iShares MSCI Italy Index Fund             X
iShares MSCI Japan Index Fund             X
iShares MSCI Malaysia Index Fund          X
iShares MSCI Mexico Index Fund            X
iShares MSCI Netherlands Index Fund       X
iShares MSCI Pacific ex-Japan             X
  Index Fund
iShares MSCI Singapore Index Fund         X
iShares MSCI South Africa Index           X
  Fund
iShares MSCI South Korea Index Fund       X
iShares MSCI Spain Index Fund             X
iShares MSCI Sweden Index Fund            X
iShares MSCI Switzerland Index Fund       X
iShares MSCI Taiwan Index Fund            X
iShares MSCI United Kingdom Index         X
  Fund


CODES OF ETHICS.  The Company, BGFA and the Distributor have adopted Codes of
Ethics pursuant to Rule 17j-1 under the 1940 Act. The Codes of Ethics permit
personnel subject to the Codes of Ethics to invest in securities, subject to
certain limitations, including securities that may be purchased or held by the
Funds. The Codes of Ethics are on public file with, and are available from, the
SEC.

ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT.  State Street Bank and Trust
Company ("State Street") serves as administrator, custodian and transfer agent
for the Funds. State Street's principal address is 200 Clarendon Street,
Boston, MA 02116. Pursuant to an Administration Agreement with the Company,
State Street provides necessary administrative, legal, tax, accounting
services, and financial reporting for the maintenance and operations of the
Company and each Fund. In addition, State Street makes available the office
space, equipment, personnel and facilities required to provide such services.
Pursuant to a custodian agreement with the Company, State Street maintains in
separate accounts cash, securities and other assets of the Company and each
Fund, keeps all necessary accounts and records and provides other services.
State Street is required, upon the order of the Company, to deliver securities
held by State Street and to make payments for securities purchased by the
Company for each Fund. Also, pursuant to a delegation agreement with the Trust,
State Street is authorized to appoint certain foreign custodians or foreign
custody managers for Fund investments outside the United States. Pursuant to a
Transfer Agency and Service Agreement with the Company, State Street acts as a
transfer agent for each Fund's authorized and issued shares of beneficial
interest, and as dividend disbursing agent of the Company. As compensation for
these services, State Street receives certain out-of-pocket costs, transaction
fees and asset-based fees which are accrued daily and paid monthly by the
iShares MSCI Singapore Index Fund directly and by BGFA from its management fee
for all Funds other than iShares MSCI Singapore Index Fund.

                                       33




The following table sets forth the administration, transfer agency and
custodian expenses of each Fund for the periods noted below:



                                                             CUSTODY,               CUSTODY,               CUSTODY,
                                                          ADMINISTRATION,        ADMINISTRATION,       ADMINISTRATION,
                                                          TRANSFER AGENCY        TRANSFER AGENCY       TRANSFER AGENCY
                                                             EXPENSES               EXPENSES               EXPENSES
                                                            PAID DURING            PAID DURING           PAID DURING
                                            FUND            FISCAL YEAR            FISCAL YEAR           FISCAL YEAR
                                         INCEPTION       ENDED AUGUST 31,       ENDED AUGUST 31,       ENDED AUGUST 31,
FUND                                        DATE               2007                   2006                   2005
-----------------------------------     -----------     ------------------     ------------------     -----------------
                                                                                          
iShares MSCI Australia Index Fund        03/12/96           $  266,529             $  150,869             $  124,478
iShares MSCI Austria Index Fund          03/12/96           $  161,631             $  112,148             $   69,922
iShares MSCI Belgium Index Fund          03/12/96           $   60,170             $   27,553             $   23,452
iShares MSCI Brazil Index Fund           07/10/00           $5,102,401             $2,905,664             $  701,615
iShares MSCI Canada Index Fund           03/12/96           $  135,281             $  123,094             $   75,004
iShares MSCI Emerging Markets            04/07/03           $5,707,078             $4,669,932             $2,182,043
  Index Fund
iShares MSCI EMU Index Fund              07/25/00           $  508,751             $  273,106             $  174,024
iShares MSCI France Index Fund           03/12/96           $   72,818             $   53,830             $   35,604
iShares MSCI Germany Index Fund          03/12/96           $  168,144             $  103,850             $   43,872
iShares MSCI Hong Kong Index Fund        03/12/96           $  188,508             $  129,584             $  153,483
iShares MSCI Italy Index Fund            03/12/96           $   46,124             $   23,520             $   17,473
iShares MSCI Japan Index Fund            03/12/96           $1,047,176             $1,289,942             $1,065,863
iShares MSCI Malaysia Index Fund         03/12/96           $  577,302             $  324,031             $  272,377
iShares MSCI Mexico Index Fund           03/12/96           $  652,627             $  264,467             $  144,004
iShares MSCI Netherlands Index Fund      03/12/96           $   42,313             $   22,455             $   18,363
iShares MSCI Pacific ex-Japan            10/25/01           $  711,922             $  485,576             $  381,149
  Index Fund
iShares MSCI Singapore Index Fund        03/12/96           $  753,276             $  273,375             $  156,637
iShares MSCI South Africa Index          02/03/03           $  181,744             $  161,664             $   87,883
  Fund
iShares MSCI South Korea Index Fund      05/09/00           $1,485,700             $1,228,569             $  481,920
iShares MSCI Spain Index Fund            03/12/96           $  116,348             $   30,141             $   22,805
iShares MSCI Sweden Index Fund           03/12/96           $   94,767             $   39,219             $   27,529
iShares MSCI Switzerland Index Fund      03/12/96           $   63,264             $   38,265             $   22,281
iShares MSCI Taiwan Index Fund           06/20/00           $2,523,403             $1,880,480             $  833,718
iShares MSCI United Kingdom Index        03/12/96           $  105,612             $   84,541             $   96,550
  Fund


DISTRIBUTOR.  The Distributor's principal address is One Freedom Valley Drive,
Oaks, PA 19456. The Distributor has entered into a Distribution Agreement with
the Company pursuant to which it distributes shares of each Fund. The
Distribution Agreement will continue for two years from its effective date and
is renewable annually. Shares are continuously offered for sale by the Funds
through the Distributor only in Creation Units, as described in the applicable
Prospectus and below in the PURCHASE AND ISSUANCE OF CREATION UNITS section.
Shares in less than Creation Units are not distributed by the Distributor. The
Distributor will deliver the applicable Prospectus and, upon request, the SAI
to persons purchasing Creation Units and will maintain records of both orders
placed with it and confirmations of acceptance furnished by it. The Distributor
is a broker-dealer registered under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and a member of the Financial Industry Regulatory
Authority ("FINRA").

The Distribution Agreement for each Fund provides that it may be terminated at
any time, without the payment of any penalty, on at least 60 days' prior
written notice to the other party following (i) the vote of a majority of the
Independent Directors, or (ii) the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the relevant Fund. The Distribution
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).

The Distributor may also enter into agreements with securities dealers
("Soliciting Dealers") who will solicit purchases of Creation Unit Aggregations
of Fund shares. Such Soliciting Dealers may also be Authorized Participants (as
defined below), Depository Trust Company ("DTC") participants (as defined
below) and/or Investor Services Organizations.

BGFA or BGI may, from time to time and from its own resources, pay, defray or
absorb costs relating to distribution, including payments out of its own
resources to the Distributor, or to otherwise promote the sale of shares.

                                       34




The following table sets forth the compensation paid by BGFA to the Distributor
for certain services, not primarily intended to result in the sale of Fund
shares, provided to each Fund during the periods noted below:



                                                         COMPENSATION       COMPENSATION       COMPENSATION
                                                          PAID DURING        PAID DURING       PAID DURING
                                                          FISCAL YEAR        FISCAL YEAR       FISCAL YEAR
                                            FUND             ENDED              ENDED             ENDED
                                         INCEPTION        AUGUST 31,         AUGUST 31,         AUGUST 31,
FUND                                        DATE             2007               2006               2005
-----------------------------------     -----------     --------------     --------------     -------------
                                                                                  
iShares MSCI Australia Index Fund        03/12/96           $50,592            $38,571           $37,659
iShares MSCI Austria Index Fund          03/12/96           $50,592            $38,571           $37,659
iShares MSCI Belgium Index Fund          03/12/96           $50,592            $38,571           $37,659
iShares MSCI Brazil Index Fund           07/10/00           $50,592            $38,571           $37,659
iShares MSCI Canada Index Fund           03/12/96           $50,592            $38,571           $37,659
iShares MSCI Emerging Markets            04/07/03           $50,592            $38,571           $37,659
  Index Fund
iShares MSCI EMU Index Fund              07/25/00           $50,592            $38,571           $37,659
iShares MSCI France Index Fund           03/12/96           $50,592            $38,571           $37,659
iShares MSCI Germany Index Fund          03/12/96           $50,592            $38,571           $37,659
iShares MSCI Hong Kong Index Fund        03/12/96           $50,592            $38,571           $37,659
iShares MSCI Italy Index Fund            03/12/96           $50,592            $38,571           $37,659
iShares MSCI Japan Index Fund            03/12/96           $50,592            $38,571           $37,659
iShares MSCI Malaysia Index Fund         03/12/96           $50,592            $38,571           $37,659
iShares MSCI Mexico Index Fund           03/12/96           $50,592            $38,571           $37,659
iShares MSCI Netherlands Index Fund      03/12/96           $50,592            $38,571           $37,659
iShares MSCI Pacific ex-Japan            10/25/01           $50,592            $38,571           $37,659
  Index Fund
iShares MSCI Singapore Index Fund        03/12/96           $50,592            $38,571           $37,659
iShares MSCI South Africa Index          02/03/03           $50,592            $38,571           $37,659
  Fund
iShares MSCI South Korea Index Fund      05/09/00           $50,592            $38,571           $37,659
iShares MSCI Spain Index Fund            03/12/96           $50,592            $38,571           $37,659
iShares MSCI Sweden Index Fund           03/12/96           $50,592            $38,571           $37,659
iShares MSCI Switzerland Index Fund      03/12/96           $50,592            $38,571           $37,659
iShares MSCI Taiwan Index Fund           06/20/00           $50,592            $38,571           $37,659
iShares MSCI United Kingdom Index        03/12/96           $50,592            $38,571           $37,659
  Fund


INDEX PROVIDER. Each Fund is based upon a particular index compiled by MSCI.
MSCI is not affiliated with the Funds or with BGI or BGI's affiliates. Each
Fund is entitled to use its Underlying Index pursuant to a sub-licensing
agreement with BGI, which in turn has a licensing agreement with MSCI. BGI has
provided the applicable sub-licenses to the Funds without charge.

                                       35




Brokerage Transactions
BGFA assumes general supervision over placing orders on behalf of each Fund for
the purchase and sale of portfolio securities. In selecting brokers or dealers
for any transaction in portfolio securities, BGFA's policy is to make such
selection based on factors deemed relevant, including but not limited to, the
breadth of the market in the security, the price of the security, the
reasonableness of the commission or mark-up or mark-down, if any, execution
capability, settlement capability, back office efficiency and the financial
condition of the broker or dealer, both for the specific transaction and on a
continuing basis. The overall reasonableness of brokerage commissions paid is
evaluated by BGFA based upon its knowledge of available information as to the
general level of commissions paid by other institutional investors for
comparable services. Brokers may also be selected because of their ability to
handle special or difficult executions, such as may be involved in large block
trades, less liquid securities, broad distributions, or other circumstances.
BGFA does not consider the provision or value of research, products or services
a broker or dealer may provide, if any, as a factor in the selection of a
broker or dealer or the determination of the reasonableness of commissions paid
in connection with portfolio transactions. The Company has adopted policies and
procedures that prohibit the consideration of sales of a Fund's shares as a
factor in the selection of a broker or a dealer to execute its portfolio
transactions.

The table below sets forth the brokerage commissions paid by each Fund for the
periods noted. Any differences in brokerage commissions paid by a Fund from
year to year are due to increases or decreases in that Fund's assets over those
periods:



                                                            COMMISSIONS            COMMISSIONS           COMMISSIONS
                                                            PAID DURING            PAID DURING           PAID DURING
                                            FUND            FISCAL YEAR            FISCAL YEAR           FISCAL YEAR
                                         INCEPTION       ENDED AUGUST 31,       ENDED AUGUST 31,       ENDED AUGUST 31,
FUND                                        DATE               2007                   2006                   2005
-----------------------------------     -----------     ------------------     ------------------     -----------------
                                                                                          
iShares MSCI Australia Index Fund        03/12/96           $  150,264             $   44,501              $ 50,149
iShares MSCI Austria Index Fund          03/12/96           $  224,572             $  114,016              $ 42,998
iShares MSCI Belgium Index Fund          03/12/96           $   72,646             $   31,534              $ 13,256
iShares MSCI Brazil Index Fund           07/10/00           $  626,251             $  408,983              $115,463
iShares MSCI Canada Index Fund           03/12/96           $  251,510             $  113,719              $ 52,554
iShares MSCI Emerging Markets            04/07/03           $2,129,900             $2,250,437              $893,470
  Index Fund
iShares MSCI EMU Index Fund              07/25/00           $  129,208             $   97,602              $ 24,066
iShares MSCI France Index Fund           03/12/96           $   13,158             $    9,883              $  2,487
iShares MSCI Germany Index Fund          03/12/96           $   52,232             $   27,122              $  7,753
iShares MSCI Hong Kong Index Fund        03/12/96           $   70,338             $   28,227              $ 23,840
iShares MSCI Italy Index Fund            03/12/96           $   33,919             $   13,882              $  4,837
iShares MSCI Japan Index Fund            03/12/96           $  249,884             $  287,796              $118,468
iShares MSCI Malaysia Index Fund         03/12/96           $  365,787             $   68,670              $ 41,354
iShares MSCI Mexico Index Fund           03/12/96           $  324,446             $  100,531              $ 41,173
iShares MSCI Netherlands Index Fund      03/12/96           $   33,790             $   20,106              $  4,875
iShares MSCI Pacific ex-Japan            10/25/01           $  489,046             $  174,011              $209,879
  Index Fund
iShares MSCI Singapore Index Fund        03/12/96           $  260,531             $   75,315              $ 33,920
iShares MSCI South Africa Index          02/03/03           $   92,616             $   47,934              $ 43,582
  Fund
iShares MSCI South Korea Index Fund      05/09/00           $  124,150             $  368,333              $ 66,985
iShares MSCI Spain Index Fund            03/12/96           $   82,292             $   11,832              $  7,477
iShares MSCI Sweden Index Fund           03/12/96           $   57,105             $   19,186              $  4,724
iShares MSCI Switzerland Index Fund      03/12/96           $   22,495             $   22,527              $  5,080
iShares MSCI Taiwan Index Fund           06/20/00           $  463,491             $  338,064              $100,258
iShares MSCI United Kingdom Index        03/12/96           $   77,455             $   37,167              $ 27,149
  Fund


The following table sets forth the names of the Funds' "regular broker
dealers," as defined under the 1940 Act, which derive more than 15% of their
gross revenues from securities-related activities and in which the Funds
invest, together with the market value of each investment as of the applicable
Fund's most recently completed fiscal year:

                                       36






                                  FISCAL                                       MARKET VALUE
FUND                             YEAR END  ISSUER                              OF INVESTMENT
------------------------------- ---------- ---------------------------------- --------------
                                                                     
MSCI EMU Index Fund               8/31     Deutsche Bank AG                    $40,321,971
                                           Societe Generale                     37,390,879
MSCI France Index Fund            8/31     Societe Generale                     19,260,227
MSCI Germany Index Fund           8/31     Deutsche Bank AG                     91,429,233
MSCI Switzerland Index Fund       8/31     UBS AG                               29,748,534
                                           Credit Suisse Group                  14,891,448
MSCI United Kingdom Index Fund    8/31     HSBC Holdings PLC                    76,978,886
                                           Royal Bank of Scotland Group PLC     39,823,099


The Company will not deal with affiliates in principal transactions unless
permitted by applicable SEC rule or regulation or by SEC exemptive order.

None of the Funds paid any brokerage commissions to Barclays Global Investor
Services, an affiliate of BGFA, and a subsidiary of BGI, during the fiscal year
ended August 31, 2007.

The Funds' purchase and sale orders for securities may be combined with those
of other investment companies, clients or accounts that BGFA manages or advises
and for which it has brokerage placement authority. If purchases or sales of
portfolio securities of the Funds and one or more other accounts managed or
advised by BGFA are considered at or about the same time, transactions in such
securities are allocated among the Fund and the other accounts in a manner
deemed equitable to all by BGFA. In some cases, this procedure could have a
detrimental effect on the price or volume of the security as far as the Funds
are concerned. However, in other cases, it is possible that the ability to
participate in volume transactions and to negotiate lower transaction costs
will be beneficial to the Fund. BGFA may deal, trade and invest for its own
account in the types of securities in which the Funds may invest. BGFA may,
from time to time, effect trades on behalf of and for the account of the Funds
with brokers or dealers that are affiliated with BGFA, in conformity with the
1940 Act and SEC rules and regulations. Under these provisions, any commissions
paid to affiliated brokers or dealers must be reasonable and fair compared to
the commissions charged by other brokers or dealers in comparable transactions.
The Funds will not deal with affiliates in principal transactions unless
permitted by applicable SEC rule or regulation or by SEC exemptive order.

Portfolio turnover may vary from period to period and high turnover rates are
likely to result in comparatively greater brokerage expenses. The portfolio
turnover rate for each Fund is expected to be under 50%. The overall
reasonableness of brokerage commissions is evaluated by BGFA based upon its
knowledge of available information as to the general level of commissions paid
by the other institutional investors for comparable services.

The table below sets forth the portfolio turnover rates of each Fund for the
periods noted:



                                          FISCAL YEAR           FISCAL YEAR
                                             ENDED                 ENDED
FUND                                    AUGUST 31, 2007       AUGUST 31, 2006
----------------------------------     -----------------     ----------------
                                                       
iShares MSCI Australia Index Fund              10%                   7%
iShares MSCI Austria Index Fund                21%                  32%
iShares MSCI Belgium Index Fund                12%                  10%
iShares MSCI Brazil Index Fund                 22%                  15%
iShares MSCI Canada Index Fund                  8%                  20%
iShares MSCI Emerging Markets                   5%                  12%
  Index Fund
iShares MSCI EMU Index Fund                     5%                   8%
iShares MSCI France Index Fund                  6%                  10%
iShares MSCI Germany Index Fund                 4%                  12%
iShares MSCI Hong Kong Index Fund               9%                  10%
iShares MSCI Italy Index Fund                  16%                  15%
iShares MSCI Japan Index Fund                   3%                   8%
iShares MSCI Malaysia Index Fund               87%                  60%


                                       37






                                           FISCAL YEAR           FISCAL YEAR
                                              ENDED                 ENDED
FUND                                     AUGUST 31, 2007       AUGUST 31, 2006
-----------------------------------     -----------------     ----------------
                                                        
iShares MSCI Mexico Index Fund                  14%                  12%
iShares MSCI Netherlands Index Fund              8%                  17%
iShares MSCI Pacific ex-Japan                   11%                   8%
  Index Fund
iShares MSCI Singapore Index Fund                8%                   6%
iShares MSCI South Africa Index                  8%                   7%
  Fund
iShares MSCI South Korea Index Fund             20%                  47%
iShares MSCI Spain Index Fund                   12%                   6%
iShares MSCI Sweden Index Fund                   7%                  14%
iShares MSCI Switzerland Index Fund              5%                  11%
iShares MSCI Taiwan Index Fund                  35%                  29%
iShares MSCI United Kingdom Index                8%                  10%
  Fund


Additional Information Concerning the Company

CAPITAL STOCK.  The Company currently is comprised of 27 series referred to as
funds. Each series issues shares of common stock, par value $0.001 per share.
The Company has authorized and/issued each Fund as separate series of capital
stock. The Company has authorized for issuance, but is not currently offering
for sale to the public, four additional series of shares of common stock. The
Board may designate additional series of common stock and classify shares of a
particular series into one or more classes of that series. The Amended and
Restated Articles of Incorporation confers upon the Board of Directors the
power to establish the number of shares which constitute a Creation Units or by
resolution, restrict the redemption right to Creation Units.


Each share issued by a Fund has a PRO RATA interest in the assets of that Fund.
The Company is currently authorized to issue

10.9 billion shares of common stock. The following number of shares is
currently authorized for each Fund: the iShares MSCI Australia Index Fund,
127.8 million shares; the iShares MSCI Austria Index Fund, 19.8 million shares;
the iShares MSCI Belgium Index Fund, 136.2 million shares; the iShares MSCI
Brazil Index Fund, 500 million shares; the iShares MSCI BRIC Index Fund, 500
million shares; the iShares MSCI Canada Index Fund, 340.2 million shares; the
iShares MSCI Chile Index Fund, 200 million shares; the iShares MSCI Emerging
Markets Index Fund, 500 million shares; the iShares MSCI EMU Index Fund, 500
million shares; the iShares MSCI France Index Fund, 340.2 million shares; the
iShares MSCI Germany Index Fund, 382.2 million shares; the iShares MSCI Hong
Kong Index Fund, 191.4 million shares; the iShares MSCI Italy Index Fund, 63.6
million shares; the iShares MSCI Japan Index Fund, 2,124.6 million shares; the
iShares MSCI Japan Small Cap Index Fund, 500 million shares; the iShares MSCI
Malaysia Index Fund, 127.8 million shares; the iShares MSCI Mexico Index Fund,
255 million shares; the iShares MSCI Netherlands Index Fund, 255 million
shares; the iShares MSCI Pacific ex-Japan Index Fund, 500 million shares; the
iShares MSCI Singapore Index Fund, 191.4 million shares; the iShares MSCI South
Africa Index Fund, 200 million shares; the iShares MSCI South Korea Index Fund,
200 million shares; the iShares MSCI Spain Index Fund, 127.8 million shares;
the iShares MSCI Sweden Index Fund, 63.6 million shares; the iShares MSCI
Switzerland Index Fund, 318.625 million shares; the iShares MSCI Taiwan Index
Fund, 200 million shares; and the iShares MSCI United Kingdom Index Fund, 943.2
million shares. Fractional shares will not be issued. Shares have no
preemptive, exchange, subscription or conversion rights and are freely
transferable. Each share is entitled to participate equally in dividends and
distributions declared by the Board with respect to the relevant Fund, and in
the net distributable assets of such Fund on liquidation. Shareholders are
entitled to require the Company to redeem Creation Units of their shares. The
Articles of Incorporation confers upon the Board the power, by resolution, to
alter the number of shares constituting a Creation Unit or to specify that
shares of common stock of the Company that may be individually redeemable.

Each share has one vote with respect to matters upon which a stockholder vote
is required consistent with the requirements of the 1940 Act and the rules
promulgated thereunder and the Maryland General Corporation Law. Stockholders
have no cumulative voting rights with respect to their shares. Shares of all
Funds vote together as a single class except that, if the matter being voted on
affects only a particular Fund or, if a matter affects a particular Fund
differently from other Funds, that Fund will vote separately on such matter.

Shareholders may make inquiries by writing to the Company, SEI Investments
Distribution Co., One Freedom Valley Drive, Oaks, PA 19456.

                                       38




Under Maryland law, the Company is not required to hold an annual meeting of
stockholders unless required to do so under the 1940 Act. The policy of the
Company is not to hold an annual meeting of stockholders unless required to do
so under the 1940 Act. All shares (regardless of the Fund) have noncumulative
voting rights for the Board. Under Maryland law, Directors of the Company may
be removed by vote of the stockholders.

Following the creation of the initial Creation Units of a Fund and immediately
prior to the commencement of trading in such Fund's shares, a holder of shares
may be a "control person" of the Fund, as defined in the 1940 Act. A Fund
cannot predict the length of time for which one or more stockholders may remain
a control person of the Fund.

Absent an applicable exemption or other relief from the SEC or its staff,
beneficial owners of more than 5% of the shares of a Fund may be subject to the
reporting provisions of Section 13 of the 1934 Act and the SEC's rules
promulgating thereunder. In addition, absent an applicable exemption or other
relief from the SEC staff, officers and Directors of a Fund and beneficial
owners of 10% of the shares of a Fund ("Insiders") may be subject to the
insider reporting, short-swing profit and short sale provisions of Section 16
of the 1934 Act and the SEC's rules promulgated thereunder. Beneficial owners
and Insiders should consult with their own legal counsel concerning their
obligations under Sections 13 and 16 of the 1934 Act.

TERMINATION OF THE COMPANY OR A FUND.  The Company or a Fund may be terminated
by a majority vote of the Board or the affirmative vote of a supermajority of
the holders of the Company or such Fund entitled to vote on termination.
Although the shares are not automatically redeemable upon the occurrence of any
specific event, the Company's organizational documents provide that the Board
will have the unrestricted power to alter the number of shares in a Creation
Unit. In the event of a termination of the Company or a Fund, the Board, in its
sole discretion, could determine to permit the shares to be redeemable in
aggregations smaller than Creation Units or to be individually redeemable. In
such circumstance, the Company may make redemptions in kind, for cash or for a
combination of cash or securities.

DTC AS SECURITIES DEPOSITORY FOR SHARES OF THE FUNDS.  Shares of each Fund are
represented by securities registered in the name of DTC or its nominee and
deposited with, or on behalf of, DTC.

DTC, a limited-purpose trust company, was created to hold securities of its
participants ("DTC Participants") and to facilitate the clearance and
settlement of securities transactions among the DTC Participants in such
securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities'
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC. More specifically, DTC is owned by
a number of its DTC Participants and by the NYSE, the AMEX and the FINRA.
Access to the DTC system is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a DTC Participant, either directly or indirectly ("Indirect
Participants").

Beneficial ownership of shares is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and
Indirect Participants. Ownership of beneficial interests in shares (owners of
such beneficial interests are referred to herein as "Beneficial Owners") is
shown on, and the transfer of ownership is effected only through, records
maintained by DTC (with respect to DTC Participants) and on the records of DTC
Participants (with respect to Indirect Participants and Beneficial Owners that
are not DTC Participants). Beneficial Owners will receive from or through the
DTC Participant a written confirmation relating to their purchase of shares.
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability of certain investors to acquire beneficial
interests in shares.

Conveyance of all notices, statements and other communications to Beneficial
Owners is effected as follows. Pursuant to the Depositary Agreement between the
Company and DTC, DTC is required to make available to the Company, upon request
and for a fee to be charged to the Company, a listing of the shares of each
Fund held by each DTC Participant. The Company shall inquire of each such DTC
Participant as to the number of Beneficial Owners holding shares, directly or
indirectly, through such DTC Participant. The Company shall provide each such
DTC Participant with copies of such notice, statement or other communication,
in such form, number and at such place as such DTC Participant may reasonably
request, in order that such notice, statement or communication may be
transmitted by such DTC Participant, directly or indirectly, to such Beneficial
Owners. In addition, the Company shall pay to each such DTC Participant a fair
and reasonable amount as reimbursement for the expenses attendant to such
transmittal, all subject to applicable statutory and regulatory requirements.

Share distributions shall be made to DTC or its nominee, Cede & Co., as the
registered holder of all shares of the Funds. DTC or its nominee, upon receipt
of any such distributions, shall credit immediately DTC Participants' accounts
with payments in amounts

                                       39




proportionate to their respective beneficial interests in shares of each Fund
as shown on the records of DTC or its nominee. Payments by DTC Participants to
Indirect Participants and Beneficial Owners of shares held through such DTC
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in a "street name," and will be the responsibility of such
DTC Participants.

The Company has no responsibility or liability for any aspect of the records
relating to or notices to Beneficial Owners, or payments made on account of
beneficial ownership interests in such shares, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests, or
for any other aspect of the relationship between DTC and the DTC Participants
or the relationship between such DTC Participants and the Indirect Participants
and Beneficial Owners owning through such DTC Participants. DTC may decide to
discontinue providing its service with respect to shares of the Funds at any
time by giving reasonable notice to the Company and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Company shall take action to find a replacement for DTC to
perform its functions at a comparable cost.

Purchase and Issuance of Creation Units
GENERAL.  The Company issues and sells shares of each Fund only in Creation
Units on a continuous basis through the Distributor, without a sales load, at
the Fund's NAV next determined after receipt, on any Business Day (as defined
herein), of an order in proper form. The following table sets forth the number
of iShares of a Fund that constitute a Creation Unit for such Fund and the
value of such Creation Unit as of September 30, 2007:



                                                              VALUE PER
                                           SHARES PER          CREATION
FUND                                     CREATION UNIT       UNIT ($U.S.)
-----------------------------------     ---------------     -------------
                                                      
iShares MSCI Australia Index Fund           200,000          $ 6,346,000
iShares MSCI Austria Index Fund             100,000          $ 3,765,000
iShares MSCI Belgium Index Fund              40,000          $ 1,058,800
iShares MSCI Brazil Index Fund               50,000          $ 3,700,500
iShares MSCI Canada Index Fund              100,000          $ 3,278,000
iShares MSCI Emerging Markets               150,000          $22,407,000
  Index Fund
iShares MSCI EMU Index Fund                  50,000          $ 6,043,000
iShares MSCI France Index Fund              200,000          $ 7,680,000
iShares MSCI Germany Index Fund             300,000          $10,368,000
iShares MSCI Hong Kong Index Fund            75,000          $ 1,581,000
iShares MSCI Italy Index Fund               150,000          $ 5,226,000
iShares MSCI Japan Index Fund               600,000          $ 8,634,000
iShares MSCI Malaysia Index Fund             75,000          $   892,500
iShares MSCI Mexico Index Fund              100,000          $ 5,827,000
iShares MSCI Netherlands Index Fund          50,000          $ 1,601,000
iShares MSCI Pacific ex-Japan               100,000          $16,588,000
  Index Fund
iShares MSCI Singapore Index Fund           100,000          $ 1,483,000
iShares MSCI South Africa Index              50,000          $ 6,642,000
  Fund
iShares MSCI South Korea Index Fund          50,000          $ 3,418,000
iShares MSCI Spain Index Fund                75,000          $ 4,560,750
iShares MSCI Sweden Index Fund               75,000          $ 2,772,000
iShares MSCI Switzerland Index Fund         125,000          $ 3,352,500
iShares MSCI Taiwan Index Fund              200,000          $ 3,390,000
iShares MSCI United Kingdom Index           200,000          $ 5,120,000
  Fund


The Board reserves the right to declare a split or a consolidation in the
number of shares outstanding of any Fund of the Company, and to make a
corresponding change in the number of shares constituting a Creation Unit, in
the event that the per share price in the secondary market rises (or declines)
to an amount that falls outside the range deemed desirable by the Board.

A "Business Day" with respect to each Fund is any day on which the Listing
Exchange is open for business. As of the date of this SAI, each Listing
Exchange observes the following holidays, as observed: New Year's Day, Dr.
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

                                       40




FUND DEPOSIT.  The consideration for purchase of Creation Units of a Fund
(except for the iShares MSCI Brazil Index Fund, iShares MSCI Malaysia Index
Fund, iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index Fund,
which are currently offered in their iShares Creation Units solely for cash)
generally consists of the in kind deposit of a designated portfolio of equity
securities (the "Deposit Securities"), an optimized representation of the
securities of a Fund's Underlying Index and the Cash Component computed as
described below. Together, the Deposit Securities and the Cash Component
constitute the "Fund Deposit," which represents the minimum initial and
subsequent investment amount for a Creation Unit of a Fund. The Cash Component
is an amount equal to the difference between the NAV of the shares (per
Creation Unit) and the "Deposit Amount," which is an amount equal to the market
value of the Deposit Securities and serves to compensate for any differences
between the NAV per Creation Unit and the Deposit Amount. Payment of any stamp
duty or other similar fees and expenses payable upon transfer of beneficial
ownership of the Deposit Securities shall be the sole responsibility of the
Authorized Participant that purchased the Creation Unit.

BGFA makes available through the National Securities Clearing Corporation
("NSCC") on each Business Day, prior to the opening of business on the Listing
Exchange, the list of names and the required number of shares of each Deposit
Security to be included in the current Fund Deposit (based on information at
the end of the previous Business Day) for each Fund. Such Fund Deposit is
applicable, subject to any adjustments as described below, purchases of
Creation Units of shares of a given Fund until such time as the next-announced
Fund Deposit is made available.

The identity and number of shares of the Deposit Securities pursuant to changes
in composition of the Fund's portfolio and changes as rebalancing adjustments
and corporate action events are reflected from time to time by BGFA with a view
to the investment objective of the Fund. The composition of the Deposit
Securities may also change in response to adjustments to the weighting or
composition of the component securities constituting the relevant Underlying
Index.

The Company reserves the right to permit or require the substitution of a "cash
in lieu" amount to be added to the Cash Component to replace any Deposit
Security that may not be available in sufficient quantity for delivery or that
may not be eligible for transfer through the systems of DTC of the Clearing
Process (discussed below). The Company also reserves the right to permit or
require a "cash in lieu" amount where the delivery of the Deposit Security by
the Authorized Participant (as described below) would be restricted under
applicable securities laws or where the delivery of the Deposit Security to the
Authorized Participant would result in the disposition of the Deposit Security
by the Authorized Participant becoming restricted under applicable securities
laws, or in certain other situations. The adjustments described above will
reflect changes, known to BGFA on the date of announcement to be in effect by
the time of delivery of the Fund Deposit, in the composition of the subject
index being tracked by the relevant Fund, or resulting from stock splits and
other corporate actions.

ROLE OF THE AUTHORIZED PARTICIPANT.  Creation Units of shares may be purchased
only by or through a DTC Participant that has entered into an Authorized
Participant Agreement with the Distributor (an "Authorized Participant"). Such
Authorized Participant will agree, pursuant to the terms of such Authorized
Participant Agreement and on behalf of itself or any investor on whose behalf
it will act, to certain conditions, including that such Authorized Participant
will make available in advance of each purchase of iShares an amount of cash
sufficient to pay the Cash Component, once the NAV of a Creation Unit is next
determined after receipt of the purchase order in proper form, together with
the transaction fee described below. The Authorized Participant may require the
investor to enter into an agreement with such Authorized Participant with
respect to certain matters, including payment of the Cash Component. Investors
who are not Authorized Participants must make appropriate arrangements with an
Authorized Participant. Investors should be aware that their particular broker
may not be a DTC Participant or may not have executed an Authorized Participant
Agreement and that orders to purchase Creation Units may have to be placed by
the investor's broker through an Authorized Participant. As a result, purchase
orders placed through an Authorized Participant may result in additional
charges to such investor. The Company does not expect to enter into an
Authorized Participant Agreement with more than a small number of DTC
Participants. A list of current Authorized Participants may be obtained from
the Distributor.

PURCHASE ORDER.  To initiate an order for a Creation Unit, an Authorized
Participant must submit to the Distributor an irrevocable order to purchase
shares of a Fund. The Distributor will notify BGFA and the Custodian of such
order. The Custodian will then provide such information to the appropriate
subcustodian. For each Fund, the Custodian shall cause the subcustodian to
maintain an account into which the Authorized Participant shall deliver, on
behalf of itself or the party on whose behalf it is acting, the securities
included in the designated Fund Deposit (or the cash value of all or a part of
such securities, in the case of a permitted or required cash purchase or "cash
in lieu" amount), with any appropriate adjustments as advised by the Company.
Deposit Securities must be delivered to an account maintained at the applicable
local subcustodian. Those placing orders to purchase Creation Units through an
Authorized Participant should allow sufficient time to permit proper submission
of the purchase order to the Distributor by the cut-off time on such Business
Day.

                                       41




The Authorized Participant must also make available on or before the
contractual settlement date, by means satisfactory to the Company, immediately
available or same day funds estimated by the Company to be sufficient to pay
the Cash Component next determined after acceptance of the purchase order,
together with the applicable purchase transaction fee. Any excess funds will be
returned following settlement of the issue of the Creation Unit. Those placing
orders should ascertain the applicable deadline for cash transfers by
contacting the operations department of the broker or depositary institution
effectuating the transfer of the Cash Component. This deadline is likely to be
significantly earlier than the closing time of the regular trading session on
the applicable Listing Exchange.

Investors should be aware that an Authorized Participant may require orders for
purchases of shares placed with it to be in the particular form required by the
individual Authorized Participant.

TIMING OF SUBMISSION OF PURCHASE ORDERS.  For most Funds, an Authorized
Participant must submit an irrevocable purchase before 4:00 p.m., Eastern time
on any Business Day in order to receive that day's NAV. An Authorized
Participant must submit an irrevocable order to purchase shares of the iShares
MSCI Malaysia Index Fund, iShares MSCI South Korea Index Fund and iShares MSCI
Taiwan Index Fund by 11:59 p.m., Eastern time on any Business Day in order to
receive the next Business Day's NAV. Orders to purchase shares of the iShares
MSCI Malaysia Index Fund, iShares MSCI South Korea Index Fund or iShares MSCI
Taiwan Index Fund that are submitted on the Business Day immediately preceding
a holiday or a day (other than a weekend) when the equity markets in the
relevant foreign market are closed will not be accepted. An Authorized
Participant must submit an irrevocable order to purchase shares of the iShares
MSCI Brazil Index Fund before 3:00 p.m., Eastern time on any Business Day in
order to receive that day's NAV. In addition, orders to purchase shares of the
MSCI Brazil Index Fund will not be accepted on any day when the Brazilian
markets are closed. An Authorized Participant must submit an irrevocable
request to redeem shares of the iShares MSCI Emerging Markets Index Fund by
5:00 p.m., Eastern time (or by one hour after the close of the Listing
Exchange, if earlier) on any Business Day in order to receive the next Business
Day's NAV. Orders to redeem shares of the Fund that are submitted on the
Business Day immediately preceding a holiday or day (other than a weekend) when
the equity markets in Brazil, Malaysia, South Korea and Taiwan are closed will
not be accepted. The Distributor in its discretion may permit the submission of
such orders and requests by or through an Authorized Participant at any time
(including on days on which the Listing Exchange is not open for business) via
communication through the facilities of the Distributor's proprietary website
maintained for this purpose. Purchase orders and redemption requests, if
accepted by the Company, will be processed based on the NAV next determined
after such acceptance in accordance with the Company's standard cut-off times
as provided in the Authorized Participant Agreement and disclosed in this SAI.

ACCEPTANCE OF ORDER FOR CREATION UNIT.  Subject to the conditions that (i) an
irrevocable purchase order has been submitted by the Authorized Participant
(either on its own or another investor's behalf) and (ii) arrangements
satisfactory to the Company are in place for payment of the Cash Component and
any other cash amounts which may be due, the Company will accept the order,
subject to its right (and the right of the Distributor and BGFA) to reject any
order until acceptance.

Once the Company has accepted an order, upon next determination of the NAV of
the shares, the Company will confirm the issuance of a Creation Unit, against
receipt of payment, at such NAV. The Distributor will then transmit a
confirmation of acceptance to the Authorized Participant that placed the order.

The Company reserves the absolute right to reject or revoke a creation order
transmitted to it by the Distributor in respect of any Fund if (i) the order is
not in proper form, (ii) the investor(s) upon obtaining the shares ordered,
would own 80% or more of the currently outstanding shares of any Fund; (iii)
the Deposit Securities delivered do not conform to the identity and number of
shares specified by BGFA, as described above; (iv) acceptance of the Deposit
Securities would have certain adverse tax consequences to the Fund; (v)
acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful;
(vi) acceptance of the Fund Deposit would, in the discretion of the Company or
BGFA, have an adverse effect on the Company or the rights of beneficial owners
or (vii) circumstances outside the control of the Company, the Distributor and
BGFA make it impracticable to process purchase orders. The Company shall notify
a prospective purchaser of a Creation Unit and/or the Authorized Participant
acting on behalf of such purchaser of its rejection of such order. The Company,
State Street, the subcustodian and the Distributor are under no duty, however,
to give notification of any defects or irregularities in the delivery of
Portfolio Deposits nor shall any of them incur any liability for failure to
give such notification.

ISSUANCE OF A CREATION UNIT.  Except as provided herein, a Creation Unit will
not be issued until the transfer of good title to the Company of the Deposit
Securities and the payment of the Cash Component have been completed. When the
subcustodian has confirmed to the Custodian that the securities included in the
Fund Deposit (or the cash value thereof) have been delivered to the account of
the relevant subcustodian or subcustodians, the Distributor and the Adviser
shall be notified of such delivery and the

                                       42




Company will issue and cause the delivery of the Creation Unit. Creation Units
typically are issued on a "T+3 basis" (I.E., three Business Days after trade
date). However, as discussed in Appendix A, each Fund reserves the right to
settle Creation Unit transactions on a basis other than T+3 in order to
accommodate foreign market holiday schedules, to account for different
treatment among foreign and U.S. markets of dividend record dates and
ex-dividend dates (I.E., the last day the holder of a security can sell the
security and still receive dividends payable on the security) and in certain
other circumstances.

To the extent contemplated by an Authorized Participant's agreement with the
Distributor, the Company will issue Creation Units to such Authorized
Participant notwithstanding the fact that the corresponding Portfolio Deposits
have not been received in part or in whole, in reliance on the undertaking of
the Authorized Participant to deliver the missing Deposit Securities as soon as
possible, which undertaking shall be secured by such Authorized Participant's
delivery and maintenance of collateral having a value at least equal to 110%,
which BGFA may change from time to time, of the value of the missing Deposit
Securities in accordance with the Company's then-effective procedures. The only
collateral that is acceptable to the Company is cash in U.S. Dollars or an
irrevocable letter of credit in form, and drawn on a bank, that is satisfactory
to the Company. The cash collateral posted by the Authorized Participant may be
invested at the risk of the Authorized Participant, and income, if any, on
invested cash collateral will be paid to that Authorized Participant.
Information concerning the Company's current procedures for collateralization
of missing Deposit Securities is available from the Distributor. The Authorized
Participant Agreement will permit the Company to buy the missing Deposit
Securities at any time and will subject the Authorized Participant to liability
for any shortfall between the cost to the Company of purchasing such securities
and the cash collateral or the amount that may be drawn under any letter of
credit.

In certain cases, Authorized Participants may create and redeem Creation Units
on the same trade date and in these instances, the Company reserves the right
to settle these transactions on a net basis. All questions as to the number of
shares of each security in the Deposit Securities and the validity, form,
eligibility and acceptance for deposit of any securities to be delivered shall
be determined by the Company and the Company's determination shall be final and
binding.

CASH PURCHASE METHOD.  Although the Company does not ordinarily permit cash
purchases of Creation Units of iShares funds, when Creation Units are available
or specified for a Fund (Creation Units of the iShares MSCI Brazil Index Fund,
iShares MSCI Malaysia Index Fund, iShares MSCI South Korea Index Fund and
iShares MSCI Taiwan Index Fund are currently offered only for cash and Creation
Units of the iShares MSCI Emerging Markets Index Fund are currently offered
partially for cash), they will be effected in essentially the same manner as
in-kind purchases thereof. In the case of a cash purchase, the investor must
pay the cash equivalent of the Deposit Securities it would otherwise be
required to provide through an in-kind purchase, plus the same Cash Component
required to be paid by an in-kind purchaser. In addition, to offset the
Company's brokerage and other transaction costs associated with using the cash
to purchase the requisite Deposit Securities, the investor will be required to
pay a fixed purchase transaction fee, plus an additional variable charge for
cash purchases, which is expressed as a percentage of the value of the Deposit
Securities.

PURCHASE TRANSACTION FEE.  A purchase transaction fee payable to the Company is
imposed to compensate the Company for the transfer and other transaction costs
of a Fund associated with the issuance of Creation Units. Purchasers of
Creation Units for cash are required to pay an additional variable charge to
compensate the relevant Fund for brokerage and market impact expenses relating
to investing in portfolios securities. When the Company permits an in-kind
purchaser to substitute cash in lieu of depositing a portion of the Deposit
Securities, the purchaser will be assessed the additional variable charge for
cash purchases on the "cash in lieu" portion of its investment. Purchasers of
Creation Units are responsible for the costs of transferring the securities
constituting the Deposit Securities to the account of the Company. The
following table sets forth standard maximum creation transaction fees:
Investors are also responsible for payment of the costs of transferring the
Deposit Securities to the Company.



                                                             MAXIMUM ADDITIONAL
                                          IN-KIND AND        VARIABLE CHARGE FOR
FUND                                    CASH PURCHASES         CASH PURCHASES*
----------------------------------     ----------------     --------------------
                                                      
iShares MSCI Australia Index Fund           $2,400                   0.60%
iShares MSCI Austria Index Fund             $  600                   0.67%
iShares MSCI Belgium Index Fund             $  700                   0.30%
iShares MSCI Brazil Index Fund              $2,400                      **
iShares MSCI Canada Index Fund              $1,900                   0.30%
iShares MSCI Emerging Markets               $7,700                      **
  Index Fund
iShares MSCI EMU Index Fund                 $8,000                   1.05%


                                       43






                                                              MAXIMUM ADDITIONAL
                                           IN-KIND AND        VARIABLE CHARGE FOR
FUND                                     CASH PURCHASES         CASH PURCHASES*
-----------------------------------     ----------------     --------------------
                                                       
iShares MSCI France Index Fund               $2,900                   0.25%
iShares MSCI Germany Index Fund              $1,500                   0.25%
iShares MSCI Hong Kong Index Fund            $2,000                   0.60%
iShares MSCI Italy Index Fund                $1,400                   0.30%
iShares MSCI Japan Index Fund                $5,000                   0.15%
iShares MSCI Malaysia Index Fund             $5,000                      **
iShares MSCI Mexico Index Fund               $1,400                   0.50%
iShares MSCI Netherlands Index Fund          $1,000                   0.25%
iShares MSCI Pacific ex-Japan                $6,000                   1.80%
  Index Fund
iShares MSCI Singapore Index Fund            $2,000                   1.60%
iShares MSCI South Africa Index              $1,200                   0.75%
  Fund
iShares MSCI South Korea Index Fund          $4,000                      **
iShares MSCI Spain Index Fund                $1,500                   0.25%
iShares MSCI Sweden Index Fund               $1,300                   0.30%
iShares MSCI Switzerland Index Fund          $1,500                   0.40%
iShares MSCI Taiwan Index Fund               $4,500                      **
iShares MSCI United Kingdom Index            $3,500                   0.25%
  Fund


-------

*As a percentage of the value of the amount invested.

** The maximum additional variable charge for cash purchases will be a
percentage of the value of the Deposit Securities, which will not exceed 3.00%.

REDEMPTION OF CREATION UNITS.  Shares of a Fund may be redeemed only in
Creation Units at their NAV next determined after receipt of a redemption
request in proper form by the Distributor and only on a Business Day. The
Company will not redeem shares in amounts less than Creation Units. Beneficial
owners also may sell shares in the secondary market but must accumulate enough
iShares to constitute a Creation Unit in order to have such shares redeemed by
the Company. There can be no assurance, however, that there will be sufficient
liquidity in the public trading market at any time to permit assembly of a
Creation Unit of iShares. Investors should expect to incur brokerage and other
costs in connection with assembling a sufficient number of iShares to
constitute a redeemable Creation Unit.

With respect to each Fund (other than the iShares MSCI Brazil Index Fund,
iShares MSCI Malaysia Index Fund, iShares MSCI South Korea Index Fund and
iShares MSCI Taiwan Index Fund, which currently redeem Creation Units of
iShares solely for cash) BGFA makes available through the NSCC, prior to the
opening of business on the Listing Exchange on each Business Day, the identity
and number of shares that will be applicable (subject to possible amendment or
correction) to redemption requests received in proper form (as defined below)
on that day ("Fund Securities"). Fund Securities received on redemption may not
be identical to Deposit Securities that are applicable to creations of Creation
Units.

Unless cash redemptions are available or specified for a Fund, the redemption
proceeds for a Creation Unit generally consist of Fund Securities plus cash in
an amount equal to the difference between the NAV of the shares being redeemed,
as next determined after a receipt of a request in proper form, and the value
of the Fund Securities, less the redemption transaction fee described below.
Notwithstanding the foregoing, a resident Australian or New Zealand holder is
entitled only to receive cash upon its redemption of Creation Units.

REDEMPTION TRANSACTION FEE.  A redemption transaction fee payable to the
Company is imposed to offset transfer and other transaction costs that may be
incurred by the relevant Fund, including market impact expenses relating to
disposing of portfolio securities. The redemption transaction fee for
redemptions in kind and for cash and the additional variable charge for cash
redemptions (when cash redemptions are available or specified) are set forth in
the table below. Investors will also bear the costs of transferring the Fund
Securities from the Company to their account or on their order. Investors who
use the services of a broker or other such intermediary may be charged a fee
for such services.

                                       44






                                                                MAXIMUM ADDITIONAL
                                            IN-KIND AND         VARIABLE CHARGE FOR
FUND                                     CASH REDEMPTIONS        CASH REDEMPTIONS*
-----------------------------------     ------------------     --------------------
                                                         
iShares MSCI Australia Index Fund             $2,400                    0.60%
iShares MSCI Austria Index Fund               $  600                    0.67%
iShares MSCI Belgium Index Fund               $  700                    0.30%
iShares MSCI Brazil Index Fund                $2,400                       **
iShares MSCI Canada Index Fund                $1,900                    0.30%
iShares MSCI Emerging Markets                 $7,700                       **
  Index Fund
iShares MSCI EMU Index Fund                   $8,000                    1.05%
iShares MSCI France Index Fund                $2,900                    0.25%
iShares MSCI Germany Index Fund               $1,500                    0.25%
iShares MSCI Hong Kong Index Fund             $2,000                    0.60%
iShares MSCI Italy Index Fund                 $1,400                    0.30%
iShares MSCI Japan Index Fund                 $5,000                    0.40%
iShares MSCI Malaysia Index Fund              $5,000                       **
iShares MSCI Mexico Index Fund                $1,400                    0.50%
iShares MSCI Netherlands Index Fund           $1,000                    0.25%
iShares MSCI Pacific ex-Japan                 $6,000                    1.50%
  Index Fund
iShares MSCI Singapore Index Fund             $2,000                    1.30%
iShares MSCI South Africa Index               $1,200                    0.75%
  Fund
iShares MSCI South Korea Index Fund           $4,000                       **
iShares MSCI Spain Index Fund                 $1,500                    0.45%
iShares MSCI Sweden Index Fund                $1,300                    0.30%
iShares MSCI Switzerland Index Fund           $1,500                    0.40%
iShares MSCI Taiwan Index Fund                $4,500                       **
iShares MSCI United Kingdom Index             $3,500                    0.75%
  Fund


-------

*As a percentage of the value of the amount invested.

** The maximum additional variable charge for cash redemptions will be a
percentage of the value of the Deposit Securities, which will not exceed 2.00%.

Redemption requests for Creation Units of any Fund must be submitted to the
Distributor by or through an Authorized Participant. For most Funds, an
Authorized Participant must submit an irrevocable redemption request before
4:00 p.m., Eastern time on any Business Day in order to receive that day's NAV.
An Authorized Participant must submit an irrevocable request to redeem shares
of the iShares MSCI Malaysia Index Fund, iShares MSCI South Korea Index Fund
and iShares MSCI Taiwan Index Fund by 11:59 p.m., Eastern time on any Business
Day in order to receive the next Business Day's NAV. Orders to redeem shares of
the iShares MSCI Malaysia Index Fund, iShares MSCI South Korea Index Fund or
iShares MSCI Taiwan Index Fund that are submitted the Business Day immediately
preceding a holiday or a day (other than a weekend) that the equity markets in
the relevant foreign market are closed will not be accepted. An Authorized
Participant must submit an irrevocable request to redeem shares of the iShares
MSCI Brazil Index Fund before 3:00 p.m., Eastern time in order to receive that
day's NAV. In addition, orders to redeem shares of the MSCI Brazil Index Fund
will not be accepted on any day when the Brazilian markets are closed. An
Authorized Participant must submit an irrevocable request to redeem shares of
the iShares MSCI Emerging Markets Index Fund by 5:00 p.m., Eastern time (or by
one hour after the close of the Listing Exchange, if earlier) on any Business
Day in order to receive the next Business Day's NAV. Orders to redeem shares of
the Fund that are submitted on the Business Day immediately preceding a holiday
or day (other than a weekend) when the equity markets in Brazil, Malaysia,
South Korea and Taiwan are closed will not be accepted. Investors other than
through Authorized Participants are responsible for making arrangements for a
redemption request to be made through an Authorized Participant. The
Distributor will provide a list of current Authorized Participants upon
request.

The Authorized Participant must transmit the request for redemption in the form
required by the Company to the Distributor in accordance with procedures set
forth in the Authorized Participant Agreement. Investors should be aware that
their particular broker may not have executed an Authorized Participant
Agreement and that, therefore, requests to redeem Creation Units may have to be
placed by the investor's broker through an Authorized Participant who has
executed an Authorized Participant Agreement. At any time only a limited number
of broker-dealers that have executed an Authorized Participant Agreement.
Investors making a redemption request should be aware that such request must be
in the form specified by such Authorized

                                       45




Participant. Investors making a request to redeem Creation Units should allow
sufficient time to permit proper submission of the request by an Authorized
Participant and transfer of the shares to the Company's Transfer Agent; such
investors should allow for the additional time that may be required to effect
redemptions through their banks, brokers or other financial intermediaries if
such intermediaries are not Authorized Participants.

A redemption request is considered to be in "proper form" if (i) an Authorized
Participant has transferred or caused to be transferred to the Company's
Transfer Agent the Creation Unit being redeemed through the book-entry system
of DTC so as to be effective by the Listing Exchange closing time on any
Business Day, (ii) a request in form satisfactory to the Company is received by
the Distributor from the Authorized Participant on behalf of itself or another
redeeming investor within the time periods specified above and (iii) all other
procedures set forth in the Participant Agreement are properly followed. If the
Transfer Agent does not receive the investor's shares through DTC's facilities
by 10:00 a.m., Eastern time, on the Business Day next following the day that
the redemption request is received, the redemption request shall be rejected.
Investors should be aware that the deadline for such transfers of shares
through the DTC system may be significantly earlier than the close of business
on the Listing Exchange. Those making redemption requests should ascertain the
deadline applicable to transfers of shares through the DTC system by contacting
the operations department of the broker or depositary institution effecting the
transfer of the shares.

Upon receiving a redemption request, the Distributor shall notify the Company
and the Company's Transfer Agent of such redemption request. The tender of an
investor's shares for redemption and the distribution of the cash redemption
payment in respect of Creation Units redeemed will be made through DTC and the
relevant Authorized Participant to the beneficial owner thereof as recorded on
the book-entry system of DTC or the DTC Participant through which such investor
holds, as the case may be, or by such other means specified by the Authorized
Participant submitting the redemption request.

A redeeming Beneficial Owner or Authorized Participant acting on behalf of such
Beneficial Owner must maintain appropriate security arrangements with a
qualified broker-dealer, bank or other custody providers in each jurisdiction
in which any of the Portfolio Securities are customarily traded, to which
account such Portfolio Securities will be delivered.

Deliveries of redemption proceeds by the Funds generally will be made within
three Business Days (I.E., "T+3"). However, as discussed in Appendix A, each
Fund reserves the right to settle redemption transactions and deliver
redemption proceeds on another basis to accommodate foreign market holiday
schedules, to account for different treatment among foreign and U.S. markets of
dividend record dates and dividend ex-dates (I.E., the last date the holder of
a security can sell the security and still receive dividends payable on the
security sold) and in certain other circumstances. Appendix A hereto identifies
the instances, if any, where more than seven days would be needed to deliver
redemption proceeds. Pursuant to an order of the SEC, the Company will make
delivery of in-kind redemption proceeds within the number of days stated in
Appendix A to be the maximum number of days necessary to deliver redemption
proceeds.

If neither the redeeming Beneficial Owner nor the Authorized Participant acting
on behalf of such redeeming Beneficial Owner has appropriate arrangements to
take delivery of Fund Securities in the applicable foreign jurisdiction and it
is not possible to make other such arrangements, or if it is not possible to
effect deliveries of Fund Securities in such jurisdiction, the Company may in
its discretion exercise its option to redeem such shares in cash, and the
redeeming Beneficial Owner will be required to receive its redemption proceeds
in cash. In such case, the investor will receive a cash payment equal to the
net asset value of its shares based on the NAV of shares of the relevant Fund
next determined after the redemption request is received in proper form (minus
a redemption transaction fee and additional variable charge for cash
redemptions specified above, to offset the Company's brokerage and other
transaction costs associated with the disposition of Portfolio Securities of
the Fund). Redemptions of shares for Fund Securities will be subject to
compliance with applicable U.S. federal and state securities laws and each Fund
(whether or not it otherwise permits cash redemptions) reserves the right to
redeem Creation Units for cash to the extent that the Fund could not lawfully
deliver specific Fund Securities upon redemptions or could not do so without
first registering the Fund Securities under such laws.

Although the Company does not ordinarily permit cash redemptions of Creation
Units (except that, as noted above, Creation Units of the iShares iShares MSCI
Brazil Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI South Korea
Index Fund and iShares MSCI Taiwan Index Fund may be redeemed only for cash,
and resident Australian and New Zealand holders may redeem solely for cash), in
the event that cash redemptions are permitted or required by the Company
proceeds will be paid to the Authorized Participant redeeming shares on behalf
of the redeeming investor as soon as practicable after the date of redemption
(within seven calendar days thereafter, except for the instances listed in
Appendix A hereto where more than seven calendar days would be needed).

                                       46




To the extent contemplated by an Authorized Participant's agreement with the
Distributor, in the event an Authorized Participant has submitted a redemption
request in proper form but is unable to transfer all or part of the Creation
Unit to be redeemed to the Company, at or prior to 10:00 a.m., Eastern time, on
the Listing Exchange business day after the date of submission of such
redemption request, the Distributor will accept the redemption request in
reliance on the undertaking by the Authorized Participant to deliver the
missing shares as soon as possible. Such undertaking shall be secured by the
Authorized Participant's delivery and maintenance of collateral consisting of
cash, in U.S. dollars in immediately available funds, having a value at least
equal to 110%, which BGFA may change from time to time, of the value of the
missing iShares. Such cash collateral must be delivered no later than 2:00
p.m., Eastern time on the contractual settlement date and shall be held by
State Street and marked to market daily. The fees of State Street and any
subcustodians in respect of the delivery, maintenance and redelivery of the
cash collateral shall be payable by the Authorized Participant. The cash
collateral posted by the Authorized Participant may be invested at the risk of
the Authorized Participant, and income, if any, on invested cash collateral
will be paid to that Authorized Participant. The Authorized Participant
Agreement permits the Company to acquire Fund Securities and the Cash Component
underlying such shares at any time and subjects the Authorized Participant to
liability for any shortfall between the cost to the Company of purchasing such
shares, Fund Securities or Cash Component and the value of the cash collateral.

Because the Portfolio Securities of a Fund may trade on exchange(s) on days
that the Listing Exchange is closed or are otherwise not Business Days for such
Fund, shareholders may not be able to redeem their shares of such Fund, or
purchase or sell shares of such Fund on the Listing Exchange on days when the
NAV of such Fund could be significantly affected by events in the relevant
foreign markets.

The right of redemption may be suspended or the date of payment postponed with
respect to any Fund (i) for any period during which the NYSE is closed (other
than customary weekend and holiday closings), (ii) for any period during which
trading on the NYSE is suspended or restricted, (iii) for any period during
which an emergency exists as a result of which disposal of the shares of the
Fund's portfolio securities or determination of its net asset value is not
reasonably practicable or (iv) in such other circumstance as is permitted by
the SEC.

Regular Holidays

Each Fund generally intends to effect deliveries of Creation Units and
Portfolio Securities. Each Fund may effect deliveries of Creation Units on a
basis other than T + 3 in order to accommodate local holiday schedules, to
account for different treatment among foreign and U.S. markets of dividend
record dates and ex-dividend dates, or under certain other circumstances. The
ability of the Trust to effect in-kind creations and redemptions within three
Business Days of receipt of an order in good form is subject, among other
things, to the condition that, within the time period from the date of the
order to the date of delivery of the securities, there are no days that are
holidays in the applicable foreign market. For every occurrence of one or more
intervening holidays in the applicable foreign market that are not holidays
observed in the U.S. Equity market, the redemption settlement cycle will be
extended by the number of such intervening holidays. In addition to holidays,
other unforeseeable closings in a foreign market due to emergencies may also
prevent the Company from delivering securities within normal settlement period.


The securities delivery cycles currently practicable for transferring Portfolio
Securities to redeeming investors, coupled with foreign market holiday
schedules, will require a delivery process longer than seven calendar days for
each Fund, in certain circumstances. The holidays applicable to each Fund
during such periods are listed below, as are instances where more than seven
days will be needed to deliver redemption proceeds. Although certain holidays
may occur on different dates in subsequent years, the number of days required
to deliver redemption proceeds in any given year is not expected to exceed the
maximum number of days listed below for each Fund. The proclamation of new
holidays, the treatment by market participants of certain days as "informal
holidays" (E.G., days on which no or limited securities transactions occur, as
a result of substantially shortened trading hours), the elimination of existing
holidays, or changes in local securities delivery practices, could affect the
information set forth herein at some time in the future.

                       ISHARES MSCI AUSTRALIA INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Australian holidays in the calendar
                            year 2008 are as follows:

            
Jan 2    Apr 17   Oct 2
Jan 26   Apr 25   Nov 7
Mar 13   Jun 12   Dec 25



                                       47




           
Apr 14   Aug 7   Dec 26



REDEMPTION. The Company is not aware of a redemption request over any
Australian holiday that would result in a settlement period exceeding 7
calendar days during the calendar year 2008.

                        ISHARES MSCI AUSTRIA INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Austrian holidays in the calendar
                            year 2008 are as follows:

                  
Jan 6    May 25   Oct 26   Dec 26
Apr 14   Jun 5    Nov 1    Dec 29
Apr 17   Jun 15   Dec 8
May 1    Aug 15   Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Austrian
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                        ISHARES MSCI BELGIUM INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Belgian holidays in the calendar
                            year 2008 are as follows:

 
Apr 14
Apr 17
May 1
Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Belgian
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                         ISHARES MSCI BRAZIL INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Brazilian holidays in the calendar
                             year 2008 are as follows:

                  
Jan 25   Apr 21   Oct 12   Dec 29
Feb 27   May 1    Nov 2
Feb 28   Jun 15   Nov 15
Apr 14   Sep 7    Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Brazilian
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                         ISHARES MSCI CANADA INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Canadian holidays in the calendar
                            year 2008 are as follows:

            
Jan 2    Aug 7    Dec 25
Apr 14   Sep 4    Dec 26
May 22   Oct 9
Jul 3    Nov 13



REDEMPTION. The Company is not aware of a redemption request over any Canadian
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                    ISHARES MSCI EMERGING MARKETS INDEX FUND

REGULAR HOLIDAYS. The dates of the regular holidays in the calendar year 2008
in Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Egypt,
Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco,
Peru, Philippines, Poland,

                                       48




Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela are as follows:

                          
                   ARGENTINA
---------
Apr 13   Jun 19    Dec 8
Apr 14   Aug 21    Dec 25
May 1    Oct 16
May 25   Nov 6
                    MALAYSIA
---------
Jan 2    Feb 1     Aug 31    Dec 25
Jan 10   Feb 2     Oct 23
Jan 30   Apr 11    Oct 24
Jan 31   May 1     Oct 25
                     BRAZIL
---------
Jan 25   Apr 21    Oct 12    Dec 29
Feb 27   May 1     Nov 2
Feb 28   Jun 15    Nov 15
Apr 14   Sep 7     Dec 25
                     MEXICO
---------
Mar 21   Nov 20
Apr 13   Dec 1
Apr 14   Dec 12
May 1    Dec 25
                     CHILE
---------
Apr 14   Aug 15    Nov 1
May 1    Sep 18    Dec 8
Jun 12   Sep 19    Dec 25
Jun 26   Oct 9
                    MOROCCO
---------
Jan 11   Apr 12    Oct 24
Jan 12   May 1     Oct 25
Jan 31   Aug 14    Nov 6
Apr 11   Aug 21
                     CHINA
---------
Jan 2    Jan 31
Jan 26   Feb 1-3
Jan 27   May 1-5
Jan 30
                      PERU
---------
Apr 13   Jul 28    Dec 25
Apr 14   Aug 30
May 1    Nov 1
Jun 29   Dec 8



                          
                    COLOMBIA
---------
Jan 9    May 1     July 3    Oct 16   Dec 25
Mar 20   May 29    July 20   Nov 6    Dec 29
Apr 13   Jun 19    Aug 7     Nov 13
Apr 14   Jun 26    Aug 21    Dec 8
                  PHILIPPINES
---------
Apr 13   Oct 24    Dec 25
Apr 14   Nov 1
May 1    Nov 2
Jun 12   Nov 30
               THE CZECH REPUBLIC
----------------------------------------------
Apr 17   July 6    Dec 26
May 1    Sept 28
May 8    Nov 17
July 5   Dec 25
                     POLAND
---------
Apr 14   Jun 15    Dec 26
Apr 17   Aug 15
May 1    Nov 1
May 3    Dec 25
                     EGYPT
---------
Jan 1    Jan 31    Apr 25    Oct 25
Jan 9    Apr 10    May 1     Oct 26
Jan 10   Apr 23    July 23   Dec 31
Jan 11   Apr 24    Oct 24
                     RUSSIA
---------
Jan 2    Mar 8     May 9     Dec 11
Jan 3    May 1     Jun 12    Dec 12
Jan 9    May 2     Nov 6
Feb 23   May 8     Nov 7
                    HUNGARY
---------
Mar 15   Oct 23
Apr 17   Nov 1
May 1    Dec 25
Jun 5    Dec 26
                  SOUTH AFRICA
----------------------------------------------
Jan 2    Apr 27    Sep 25
Mar 21   May 1     Dec 25
Apr 14   Jun 16    Dec 26
Apr 17   Aug 9



                                       49




                         
                     INDIA
---------
Jan 26   Oct 2
Apr 14   Dec 25
May 1
Aug 15
                    TAIWAN
---------
Jan 26   Feb 1    May 1
Jan 27   Feb 2    May 31
Jan 30   Feb 28   Oct 6
Jan 31   Apr 5    Oct 10
                   INDONESIA
---------
Jan 10   Apr 14   Oct 23    Dec 25
Jan 30   May 25   Oct 24    Dec 26
Mar 30   Aug 17   Oct 25
Apr 10   Aug 21   Oct 26
                   THAILAND
---------
Jan 2    Apr 13   May 5     Oct 23
Feb 13   Apr 14   May 15    Dec 5
Apr 6    Apr 15   Jul 10    Dec 11
Apr 6    May 1    Aug 14
                    ISRAEL
---------
Mar 14   Apr 19   Aug 3
Apr 12   May 2    Sept 24
Apr 13   May 3    Oct 1
Apr 18   Jun 1    Oct 2



                         
                    TURKEY
---------
Jan 9    Jan 13   Oct 24
Jan 10   May 19   Oct 25
Jan 11   Aug 30
Jan 12   Oct 23
                    JORDAN
---------
Jan 1    Jan 12   May 25    Oct 25   Dec 31
Jan 8    Jan 30   Aug 22    Oct 26
Jan 9    Jan 31   Oct 22    Nov 14
Jan 10   Apr 11   Oct 23    Dec 25
Jan 11   May 1    Oct 24    Dec 28
                   VENEZUELA
---------
Jan 9    Apr 14   Jun 19    Aug 14   Dec 25
Feb 27   Apr 19   Jun 26    Oct 12
Feb 28   May 1    Jul 5     Oct 30
Apr 13   May 29   Jul 24    Dec 11



            
Jan 30   Jun 1    Oct 3
Mar 1    Jun 6    Oct 5
May 1    Jul 17   Dec 25
May 5    Aug 15



REDEMPTION. The longest redemption cycle for the iShares MSCI Emerging Markets
Index Fund is a function of the longest redemption cycles among the countries
whose stocks comprise this Fund. In the calendar year 2007, the dates of the
regular holidays affecting the following securities markets present the
worst-case redemption cycle for the iShares MSCI Emerging Markets Index Fund as
follows:



                                     REDEMPTION
                   REDEMPTION        SETTLEMENT       SETTLEMENT
                  REQUEST DATE         DATE(R)          PERIOD
                 --------------     ------------     -----------
                                            
  China          1/23/2006          2/6/2006         14
                 1/24/2006          2/7/2006         14
                 1/25/2006          2/8/2006         14
                 4/26/2006          5/8/2006         12
                 4/27/2006          5/9/2006         12
                 4/28/2006          5/10/2006        12

  Indonesia      10/18/2006         10/29/2006       11
                 10/19/2006         10/30/2006       11


                                       50






                                                  REDEMPTION
                                REDEMPTION        SETTLEMENT       SETTLEMENT
                               REQUEST DATE         DATE(R)          PERIOD
                              --------------     ------------     -----------
                                                         
                              10/22/2006         10/31/2006       9

  Jordan                      1/5/2006           1/13/2006        8
                              1/6/2006           1/16/2006        10
                              10/19/2006         10/27/2006       8
                              10/20/2006         10/30/2006       10

  Malaysia                    1/25/2006          5/3/2006         9
                              1/26/2006          5/6/2006         11
                              1/27/2006          5/7/2006         11

  Turkey                      1/5/2006           1/16/2006        11
                              1/6/2006           1/17/2006        11

  South Africa                4/7/2006           4/18/2006        11
                              4/10/2006          4/19/2006        9
                              4/11/2006          4/20/2006        9
                              4/12/2006          4/21/2006        9
                              4/13/2006          4/24/2006        11
                              12/18/2006         12/27/2006       9
                              12/19/2006         12/28/2006       9
                              12/20/2006         12/31/2006       11
                              12/21/2006         1/2/2007         12
                              12/24/2006         1/3/2007         12


In the calendar year 2008, 12 calendar days would be the maximum number of
calendar days necessary to satisfy a redemption request made on the iShares
MSCI Emerging Markets Index Fund.

                          ISHARES MSCI EMU INDEX FUND

REGULAR HOLIDAYS. The dates in the calendar year 2008 on which the regular
Austrian, Belgian, Finnish, French, German, Greek, Irish, Italian, Dutch,
Portuguese and Spanish holidays affecting the relevant securities markets fall
are as follows:

                  
               AUSTRIA
---------
Jan 6    May 25   Oct 26   Dec 26
Apr 14   Jun 5    Nov 1    Dec 29
Apr 17   Jun 15   Dec 8
May 1    Aug 15   Dec 25
               GREECE
---------
Jan 6    Apr 21   Aug 15
Mar 6    Apr 24   Dec 25
Apr 14   May 1    Dec 26
Apr 17   Jun 12



                  
               BELGIUM
---------
Apr 14
Apr 17
May 1
Dec 25
                ITALY
---------
Apr 14   Dec 25
Apr 17   Dec 26
May 1
Aug 15



                                       51




            
           FINLAND
---------
Jan 6    May 25   Dec 26
Apr 14   Jun 23
Apr 17   Dec 6
May 1    Dec 25
         NETHERLANDS
---------
Apr 14   Dec 26
Apr 17
May 1
Dec 25
           FRANCE
---------
Apr 14   Dec 26
Apr 17
May 1
Dec 25



            
          PORTUGAL
---------
Apr 14   Dec 26
Apr 17
May 1
Dec 25
           GERMANY
---------
Apr 14   Dec 26
Apr 17
May 1
Dec 25
            SPAIN
---------
Jan 6    Aug 15   Dec 8
Apr 14   Oct 12   Dec 25
Apr 17   Nov 1    Dec 26
May 1    Dec 6



REDEMPTION. The longest redemption cycle for the iShares MSCI EMU Index Fund is
a function of the longest redemption cycles among the countries whose stocks
comprise this Index Fund. The Company is not aware of a redemption request over
any holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                         ISHARES MSCI FRANCE INDEX FUND

REGULAR HOLIDAYS. The dates of the regular French holidays in the calendar year
2008 are as follows:

      
Apr 14   Dec 26
Apr 17
May 1
Dec 25



REDEMPTION. The Company is not aware of a redemption request over any French
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                        ISHARES MSCI GERMANY INDEX FUND

REGULAR HOLIDAYS. The dates of the regular German holidays in the calendar year
                            2008 are as follows:

      
Apr 14   Dec 26
Apr 17
May 1
Dec 25



REDEMPTION. The Company is not aware of a redemption request over any German
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                       ISHARES MSCI HONG KONG INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Hong Kong holidays in the calendar
                           year 2008 are as follows:

                  
Jan 2    Apr 14   May 31   Dec 26
Jan 30   Apr 17   Oct 2
Jan 31   May 1    Oct 30



                                       52




          
Apr 5   May 5   Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Hong Kong
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                         ISHARES MSCI ITALY INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Italian holidays in the calendar
                             year 2008 are as follows:

      
Apr 14   Dec 25
Apr 17   Dec 26
May 1
Aug 15



REDEMPTION. The Company is not aware of a redemption request over any Italian
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                         ISHARES MSCI JAPAN INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Japanese holidays in the calendar
                             year 2008 are as follows:

            
Jan 2    May 3    Sep 18
Jan 3    May 4    Oct 9
Jan 9    May 5    Nov 3
Mar 21   Jul 17   Nov 23



REDEMPTION. A redemption request over the following dates would result in a
settlement period exceeding 7 calendar days (examples are based on the day
particular holidays fall in the calendar year 2007):

                               
  Redemption        Redemption       Settlement Period
  Request Date      Settlement
                    Date(R)
  4/28/2006         5/8/2006         10
  5/1/2006          5/9/2006         8
  5/2/2006          5/10/2006        8



In the calendar year 2008, 11 calendar days would be the maximum number of
calendar days necessary to satisfy a redemption request made on the iShares
MSCI Japan Index Fund.

                        ISHARES MSCI MALAYSIA INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Malaysian holidays in the calendar
                            year 2008 are as follows:

                  
Jan 2    Feb 1    Aug 31   Dec 25
Jan 10   Feb 2    Oct 23
Jan 30   Apr 11   Oct 24
Jan 31   May 1    Oct 25



REDEMPTION. A redemption request over the following dates would result in a
settlement period exceeding 7 calendar days (examples are based on the day
particular holidays fall in the calendar year 2003):

                               
  Redemption        Redemption       Settlement Period
  Request Date      Settlement
                    Date(R)
  1/25/2006         5/3/2006         9



                                       53




                          
  1/26/2006      5/6/2006       11
  1/27/2006      5/7/2006       11



In the calendar year 2008, 10 calendar days would be the maximum number of
calendar days necessary to satisfy a redemption request made on the iShares
MSCI Malaysia Index Fund.

                         ISHARES MSCI MEXICO INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Mexican holidays in the calendar
                            year 2008 are as follows:

      
Mar 21   Nov 20
Apr 13   Dec 1
Apr 14   Dec 12
May 1    Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Mexican
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                      ISHARES MSCI NETHERLANDS INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Netherlands holidays in the calendar
                           year 2008 are as follows:



      
Apr 14   Dec 26
Apr 17
May 1
Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Dutch
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                    ISHARES MSCI PACIFIC EX-JAPAN INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Australian, Hong Kong, New Zealand
and Singaporean holidays in the calendar year 2007 are as follows:

                  
              AUSTRALIA
---------
Jan 2    Apr 17   Oct 2
Jan 26   Apr 25   Nov 7
Mar 13   Jun 12   Dec 25
Apr 14   Aug 7    Dec 26
             NEW ZEALAND
-----------------------------------
Jan 2    Apr 17   Dec 25
Jan 3    Apr 25   Dec 26
Feb 6    Jun 5
Apr 14   Oct 23



                  
              HONG KONG
-----------------------------------
Jan 2    Apr 14   May 31   Dec 26
Jan 30   Apr 17   Oct 2
Jan 31   May 1    Oct 30
Apr 5    May 5    Dec 25
              SINGAPORE
---------
Jan 2    Apr 14   Dec 25
Jan 10   May 1
Jan 30   Aug 9
Jan 31   Oct 24



REDEMPTION. The Company is not aware of a redemption request over any
Australian, Hong Kong, New Zealand or Singaporean holiday that would result in
a settlement period exceeding 7 calendar days during the calendar year 2008.

                       ISHARES MSCI SINGAPORE INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Singaporean holidays in the calendar
                            year 2008 are as follows:

           
Jan 2   Apr 14   Dec 25



                                       54




      
Jan 10   May 1
Jan 30   Aug 9
Jan 31   Oct 24



REDEMPTION. The Company is not aware of a redemption request over any
Singaporean holiday that would result in a settlement period exceeding 7
calendar days during the calendar year 2008.

                      ISHARES MSCI SOUTH AFRICA INDEX FUND

REGULAR HOLIDAYS. The dates of the regular South African holidays in the
                           calendar year 2008 are as follows:

            
Jan 2    Apr 27   Sep 25
Mar 21   May 1    Dec 25
Apr 14   Jun 16   Dec 26
Apr 17   Aug 9



REDEMPTION. A redemption request over the following dates would result in a
settlement period exceeding 7 calendar days (examples are based on the day
particular holidays fall in the calendar year 2004):

                                     
  Redemption Request      Redemption       Settlement Period
  Date                    Settlement
                          Date(R)
  4/7/2006                4/18/2006        11
  4/10/2006               4/19/2006        9
  4/11/2006               4/20/2006        9
  4/12/2006               4/21/2006        9
  4/13/2006               4/24/2006        11
  12/18/2006              12/27/2006       9
  12/19/2006              12/28/2006       9
  12/20/2006              12/31/2006       11
  12/21/2006              1/2/2007         12
  12/24/2006              1/3/2007         12



In the calendar year 2008, 12 calendar days would be the maximum number of
calendar days necessary to satisfy a redemption request made on the iShares
MSCI South Africa Index Fund.

                      ISHARES MSCI SOUTH KOREA INDEX FUND

REGULAR HOLIDAYS. The dates of the regular South Korean holidays in the
                           calendar year 2008 are as follows:

            
Jan 30   Jun 1    Oct 3
Mar 1    Jun 6    Oct 5
May 1    Jul 17   Dec 25
May 5    Aug 15



REDEMPTION. The Company is not aware of a redemption request over any South
Korean holiday that would result in a settlement period exceeding 7 calendar
days during the calendar year 2008.

                         ISHARES MSCI SPAIN INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Spanish holidays in the calendar
                             year 2008 are as follows:

            
Jan 6    Aug 15   Dec 8
Apr 14   Oct 12   Dec 25
Apr 17   Nov 1    Dec 26



                                       55




     
May 1   Dec 6



REDEMPTION. The Company is not aware of a redemption request over any Spanish
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                         ISHARES MSCI SWEDEN INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Swedish holidays in the calendar
                            year 2008 are as follows:

            
Jan 6    May 25   Dec 26
Apr 14   Jun 5
Apr 17   Jun 23
May 1    Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Swedish
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                      ISHARES MSCI SWITZERLAND INDEX FUND

REGULAR HOLIDAYS. The dates of the regular Swiss holidays in the calendar year
                           2008 are as follows:

            
Jan 2    May 25   Dec 26
Apr 14   Jun 5
Apr 17   Aug 1
May 1    Dec 25



REDEMPTION. The Company is not aware of a redemption request over any Swiss
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.


                         ISHARES MSCI TAIWAN INDEX FUND


REGULAR HOLIDAYS. The dates of the regular Taiwanese holidays in the calendar
                            year 2008 are as follows:



            
Jan 26   Feb 1    May 1
Jan 27   Feb 2    May 31
Jan 30   Feb 28   Oct 6
Jan 31   Apr 5    Oct 10



REDEMPTION. The Company is not aware of a redemption request over any Taiwanese
holiday that would result in a settlement period exceeding 7 calendar days
during the calendar year 2008.

                     ISHARES MSCI UNITED KINGDOM INDEX FUND


REGULAR HOLIDAYS. The dates of the regular United Kingdom holidays in the
                         calendar year 2008 are as follows:

      
Jan 2    May 29
Apr 14   Aug 28
Apr 17   Dec 25
May 1    Dec 26



REDEMPTION. The Company is not aware of a redemption request over any United
Kingdom holiday that would result in a settlement period exceeding 7 calendar
days during the calendar year 2008.

                                       56




Taxes
REGULATED INVESTMENT COMPANY QUALIFICATIONS. Each Fund intends to qualify for
and to elect treatment as a separate RIC under Subchapter M of the IRC. To
qualify for treatment as a RIC, each Fund must annually distribute at least 90%
of its investment company taxable income (which includes dividends, interest
and net short-term capital gains) and meet several other requirements. Among
such other requirements are the following: (i) at least 90% of each Fund's
annual gross income must be derived from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities or foreign currencies, or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies, and net income derived from
an interest in a qualified publicly traded partnership; and (ii) at the close
of each quarter of the Fund's taxable year, (a) at least 50% of the market
value of each Fund's total assets must be represented by cash and cash items,
U.S. government securities, securities of other RICs and other securities, with
such other securities limited for purposes of this calculation in respect of
any one issuer to an amount not greater than 5% of the value of the Fund's
assets and not greater than 10% of the outstanding voting securities of such
issuer, and (b) not more than 25% of the value of its total assets may be
invested in the securities of any one issuer, or of two or more issuers of
which 20% or more of the voting securities are held by the Fund and that are
engaged in the same or similar trades or businesses or related trades or
businesses (other than U.S. government securities or the securities of other
RIC) or the securities of one or more qualified publicly traded partnerships.
 A Fund's investments in partnerships, including in qualified publicly traded
partnerships, may result in that Fund being subject to state, local, or foreign
income, franchise or withholding tax liabilities.

TAXATION OF RICS. As a RIC, a Fund will not be subject to U.S. federal income
tax on the portion of its taxable investment income and capital gains that it
distributes to its shareholders, provided that it satisfies the minimum
distribution requirement. To satisfy the minimum distribution requirement, a
Fund must distribute to its shareholders at least the sum of (i) 90% of its
"investment company taxable income" (I.E., income other than its net realized
long-term capital gain over its net realized short-term capital loss), plus or
minus certain adjustments, and (ii) 90% of its net tax-exempt income for the
taxable year. A Fund will be subject to income tax at regular corporation rates
on any taxable income or gains that it does not distribute to its shareholders.
If a Fund fails to qualify for any taxable year as a RIC, all of its taxable
income will be subject to tax at regular corporate income tax rates without any
deduction for distributions to shareholders, and such distributions generally
will be taxable to shareholders as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. In such event,
distributions to individuals should be eligible to be treated as qualified
dividend income and distributions to corporate shareholders generally should be
eligible for the dividends-received deduction. Although each Fund intends to
distribute substantially all of its net investment income and its capital gains
for each taxable year, each Fund will be subject to U.S. federal income
taxation to the extent any such income or gains are not distributed. If a Fund
fails to qualify as a RIC in any year, it must pay out its earnings and profits
accumulated in that year in order to qualify again as a RIC. If a Fund fails to
qualify as a RIC for a period greater than two taxable years, the Fund may be
required to recognize any net built-in gains with respect to certain of its
assets (I.E., the excess of the aggregate gains, including items of income,
over aggregate losses that would have been realized with respect to such assets
if the Fund had been liquidated) if it qualifies as a RIC in a subsequent year.

TAXATION OF CERTAIN DERIVATIVES.   A Fund's transactions in zero coupon
securities, foreign currencies, forward contracts, options and futures
contracts (including options and futures contracts on foreign currencies), to
the extent permitted, will be subject to special provisions of the Code
(including provisions relating to "hedging transactions" and "straddles") that,
among other things, may affect the character of gains and losses realized by
the Fund (I.E., may affect whether gains or losses are ordinary or capital),
accelerate recognition of income to the Fund and defer Fund losses. These rules
could therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) will require the Fund to mark-to-market
certain types of the positions in its portfolio (I.E., treat them as if they
were closed out at the end of each year) and (b) may cause the Fund to
recognize income without receiving cash with which to pay dividends or make
distributions in amounts necessary to satisfy the distribution requirements for
avoiding income and excise taxes. Each Fund will monitor its transactions, will
make the appropriate tax elections and will make the appropriate entries in its
books and records when it acquires any foreign currency, forward contract,
futures contract or hedged investment in order to mitigate the effect of these
rules and prevent disqualification of the Fund as a RIC.

A Fund's investment in so-called "section 1256 contracts," such as regulated
futures contracts, most foreign currency forward contracts traded in the
interbank market and options on most stock indices, are subject to special tax
rules. All section 1256 contracts held by the Fund at the end of its taxable
year are required to be marked to their market value, and any unrealized gain
or loss on those positions will be included in the Fund's income as if each
position had been sold for its fair market value at the end of the taxable
year. The resulting gain or loss will be combined with any gain or loss
realized by the Fund from positions in

                                       57




section 1256 contracts closed during the taxable year. Provided such positions
were held as capital assets and were not part of a "hedging transaction" nor
part of a "straddle," 60% of the resulting net gain or loss will be treated as
long-term capital gain or loss, and 40% of such net gain or loss will be
treated as short-term capital gain or loss, regardless of the period of time
the positions were actually held by the Fund.

As a result of entering into swap contracts, a Fund may make or receive
periodic net payments. A Fund may also make or receive a payment when a swap is
terminated prior to maturity through an assignment of the swap or other closing
transaction. Periodic net payments will generally constitute ordinary income or
deductions, while termination of a swap will generally result in capital gain
or loss (which will be a long-term capital gain or loss if the Fund has been a
party to the swap for more than one year). The tax treatment of many types of
credit default swaps is uncertain.

EXCISE TAX. A Fund will be subject to a 4% excise tax on certain undistributed
income if it does not distribute to its shareholders in each calendar year at
least 98% of its ordinary income for the calendar year plus 98% of its capital
gain net income for the twelve months ended October 31 of such year. Each Fund
intends to declare and distribute dividends and distributions in the amounts
and at the times necessary to avoid the application of this 4% excise tax.

NET CAPITAL LOSS CARRYFORWARDS.  Net capital loss carryforwards may be applied
against any net realized capital gains in each succeeding year, or until their
respective expiration dates, whichever occurs first.  The following Funds had
tax basis net capital loss carryforwards as of August 31, 2007, the tax
year-end for the Funds listed:



                             EXPIRING      EXPIRING      EXPIRING      EXPIRING
FUND                           2008          2009          2010          2011
-------------------------- ------------ ------------- ------------- -------------
                                                        
iShares MSCI Australia      $  71,019    $1,971,994    $ 3,625,203   $   650,082
 Index Fund
iShares MSCI Austria          491,457       336,553      1,291,324       370,948
 Index Fund
iShares MSCI Belgium                -        59,876      1,677,678       117,767
 Index Fund
iShares MSCI Brazil                 -                                          -
 Index Fund
iShares MSCI Canada                 -             -              -             -
 Index Fund
iShares MSCI Emerging               -             -              -             -
 Markets Index Fund
iShares MSCI EMU                    -             -              -             -
 Index Fund
iShares MSCI France                 -             -      2,436,748       236,944
 Index Fund
iShares MSCI Germany                -             -      8,697,227     5,469,732
 Index Fund
iShares MSCI Hong                   -             -      4,971,970     2,870,602
 Kong Index Fund
iShares MSCI Italy Index            -             -      2,648,775       848,408
 Fund
iShares MSCI Japan                  -     2,959,030     62,572,173     3,621,148
 Index Fund
iShares MSCI Malaysia               -             -      9,819,029     2,898,105
 Index Fund
iShares MSCI Mexico                 -             -         47,326     2,329,290
 Index Fund
iShares MSCI                        -        60,885      3,222,792     1,497,810
 Netherlands Index
 Fund
iShares MSCI Pacific                -             -              -             -
 ex-Japan Index Fund
iShares MSCI Singapore              -             -      1,934,119     4,428,316
 Index Fund
iShares MSCI South                  -             -              -             -
 Africa Index Fund


                              EXPIRING      EXPIRING       EXPIRING       EXPIRING
FUND                            2012          2013           2014           2015           TOTAL
-------------------------- ------------- -------------- -------------- -------------- ---------------
                                                                       
iShares MSCI Australia      $   596,240   $    384,424   $          -   $      7,066   $   7,306,028
 Index Fund
iShares MSCI Austria            855,364              -              -      9,795,917      13,141,563
 Index Fund
iShares MSCI Belgium            175,781         33,969              -              -       2,065,071
 Index Fund
iShares MSCI Brazil                                  -
 Index Fund
iShares MSCI Canada                   -      2,931,648              -      5,363,291       8,294,939
 Index Fund
iShares MSCI Emerging           840,778     20,296,564     11,239,258     29,973,301      62,349,901
 Markets Index Fund
iShares MSCI EMU              2,876,857      1,873,963              -              -       4,750,820
 Index Fund
iShares MSCI France           2,400,550              -              -        158,472       5,232,714
 Index Fund
iShares MSCI Germany          8,656,712      2,241,687              -      4,227,713      29,293,071
 Index Fund
iShares MSCI Hong             2,330,414        468,716        425,440      2,899,247      13,966,389
 Kong Index Fund
iShares MSCI Italy Index        541,980        527,327              -              -       4,566,490
 Fund
iShares MSCI Japan            5,594,562      8,733,802     68,122,871     27,817,841     179,421,427
 Index Fund
iShares MSCI Malaysia           775,477      6,820,474      1,543,708      3,424,287      25,281,080
 Index Fund
iShares MSCI Mexico           3,136,171         12,912        632,766              -       6,158,465
 Index Fund
iShares MSCI                  2,241,687        129,137        403,525        260,715       8,056,039
 Netherlands Index
 Fund
iShares MSCI Pacific                  -              -              -              -               -
 ex-Japan Index Fund
iShares MSCI Singapore        4,256,421      2,558,348              -              -      13,177,204
 Index Fund
iShares MSCI South              527,613              -        260,738      1,607,845       2,396,196
 Africa Index Fund


                                       58






                       EXPIRING  EXPIRING    EXPIRING     EXPIRING
FUND                     2008      2009        2010         2011
--------------------- --------- ---------- ------------ ------------
                                            
iShares MSCI South        -      556,540       666,642     504,041
 Korea Index Fund
iShares MSCI Spain        -            -       163,675     678,910
 Index Fund
IShares MSCI Sweden       -            -       713,472   1,577,551
 Index Fund
iShares MSCI              -            -     2,247,442   1,018,305
 Switzerland Index
 Fund
iShares MSCI Taiwan       -            -    12,532,361   8,689,663
 Index Fund
iShares MSCI United       -            -       856,798   6,448,554
 Kingdom Index Fund


                        EXPIRING    EXPIRING     EXPIRING     EXPIRING
FUND                      2012        2013         2014         2015         TOTAL
--------------------- ----------- ------------ ------------ ------------ -------------
                                                          
iShares MSCI South    3,363,449    11,590,303    3,172,573   38,097,223    57,950,771
 Korea Index Fund
iShares MSCI Spain    1,582,094             -            -            -     2,424,679
 Index Fund
IShares MSCI Sweden   1,149,514             -      107,613            -     3,548,150
 Index Fund
iShares MSCI          2,149,171       354,252            -            -     5,769,170
 Switzerland Index
 Fund
iShares MSCI Taiwan   9,129,874    12,022,719   14,435,986   64,999,586   121,810,189
 Index Fund
iShares MSCI United   4,272,059     1,517,783    7,063,063            -    20,158,257
 Kingdom Index Fund


FUNDS HOLDING FOREIGN INVESTMENTS.  Each Fund may be subject to foreign income
taxes withheld at the source. Each Fund that is permitted to do so will elect
to "pass through" to its investors the amount of foreign income taxes paid by
the Fund provided that the investor held the shares of the Fund, and the Fund
held the security, on the dividend settlement date and for at least fifteen
additional days immediately before and/or thereafter, with the result that each
investor will (i) include in gross income, even though not actually received,
the investor's PRO RATA share of the Fund's foreign income taxes, and (ii)
either deduct (in calculating U.S. taxable income) or credit (in calculating
U.S. federal income tax) the investor's PRO RATA share of the Fund's foreign
income taxes. A foreign person who invests in a Fund that elects to "pass
through" its foreign taxes may be treated as receiving additional dividend
income subject to U.S. withholding tax. A foreign tax credit may not exceed the
investor's U.S. federal income tax otherwise payable with respect to the
investor's foreign source income. For this purpose, each shareholder must treat
as foreign source gross income (i) his proportionate share of foreign taxes
paid by the Fund and (ii) the portion of any dividend paid by the Fund that
represents income derived from foreign sources; the Fund's gain from the sale
of securities will generally be treated as U.S. source income. Certain
limitations will be imposed to the extent to which the foreign tax credit may
be claimed.

If any Fund owns shares in certain foreign investment entities, referred to as
"passive foreign investment companies," the Fund will be subject to one of the
following special tax regimes: (i) the Fund is liable for U.S. federal income
tax, and an additional charge in the nature of interest, on a portion of any
"excess distribution" from such foreign entity or any gain from the disposition
of such shares, even if the entire distribution or gain is paid out by the Fund
as a dividend to its shareholders; (ii) if the Fund were able and elected to
treat a passive foreign investment company as a "qualified electing fund," the
Fund would be required each year to include in income, and distribute to
shareholders in accordance with the distribution requirements set forth above,
the Fund's PRO RATA share of the ordinary earnings and net capital gains of the
passive foreign investment company, whether or not such earnings or gains are
distributed to the Fund; or (iii) the Fund may be entitled to mark-to-market
annually the shares of the passive foreign investment company, and, in such
event, would be required to distribute to shareholders any such mark-to-market
gains in accordance with the distribution requirements set forth above.

FEDERAL TAX TREATMENT OF COMPLEX SECURITIES.  Funds may invest in complex
securities. These investments may be subject to numerous special and complex
tax rules. These rules could affect whether gains and losses recognized by a
Fund are treated as ordinary income or capital gain, accelerate the recognition
of income to a Fund and/or defer a Fund's ability to recognize losses. In turn,
these rules may affect the amount, timing or character of the income
distributed to you by the Fund.

Each Fund is required, for federal income tax purposes, to mark-to-market and
recognize as income for each taxable year its net unrealized gains and losses
on certain futures and options contracts (referred to as "Section 1256
contracts") as of the end of the year as well as those actually realized during
the year. Gain or loss from futures and options contracts on broad-based
investments required to be marked-to-market will be 60% long-term and 40%
short-term capital gain or loss. Application of this rule may alter the timing
and character of distributions to shareholders. A Fund may be required to defer
the recognition of losses on futures contracts, option contracts and swaps to
the extent of any unrecognized gains on offsetting positions held by the Fund.

It is anticipated that any net gain realized from the closing out of futures or
options contracts will be considered qualifying income for purposes of the 90%
requirement for a Fund to qualify as a RIC.

                                       59




As a result of entering into swap contracts, a Fund may make or receive
periodic net payments. A Fund may also make or receive a payment when a swap is
terminated prior to maturity through an assignment of the swap or other closing
transaction. Periodic net payments will generally constitute ordinary income or
deductions, while termination of a swap will generally result in capital gain
or loss (which will be a long-term capital gain or loss if the Fund has been a
party to the swap for more than one year). Estimated income or loss from
non-periodic contingent payments may be recognized on a current basis. The tax
treatments of many types of credit default swaps are uncertain.

Each Fund intends to distribute to shareholders annually any net capital gains
that have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year) on futures or options transactions.
Such distributions are combined with distributions of capital gains realized on
a Fund's other investments and shareholders are advised on the nature of the
distributions.

TAXATION OF U.S. SHAREHOLDERS.  Dividends and other distributions by a Fund are
generally treated under the IRC as received by the shareholders at the time the
dividend or distribution is made. However, any dividend or distribution
declared by a Fund in October, November or December of any calendar year and
payable to shareholders of record on a specified date in such a month shall be
deemed to have been received by each shareholder on December 31 of such
calendar year and to have been paid by the Fund not later than such December
31, provided such dividend is actually paid by the Fund during January of the
following calendar year.

Each Fund intends to distribute annually to its shareholders substantially all
of its investment company taxable income, and any net realized long-term
capital gains in excess of net realized short-term capital losses (including
any capital loss carryovers). However, if a Fund retains for investment an
amount equal to all or a portion of its net long-term capital gains in excess
of its net short-term capital losses (including any capital loss carryovers),
it will be subject to a corporate tax (currently at a maximum rate of 35%) on
the amount retained. In that event, the Fund will designate such retained
amounts as undistributed capital gains in a notice to its shareholders who (a)
will be required to include in income for U.S. federal income tax purposes, as
long-term capital gains, their proportionate shares of the undistributed
amount, (b) will be entitled to credit their proportionate shares of the 35%
tax paid by the Fund on the undistributed amount against their U.S. federal
income tax liabilities, if any, and to claim refunds to the extent their
credits exceed their liabilities, if any, and (c) will be entitled to increase
their tax basis, for U.S. federal income tax purposes, in their shares by an
amount equal to 65% of the amount of undistributed capital gains included in
the shareholder's income. Organizations or persons not subject to U.S. federal
income tax on such capital gains will be entitled to a refund of their PRO RATA
share of such taxes paid by the Fund upon filing appropriate returns or claims
for refund with the Internal Revenue Service (the "IRS").

Distributions of net realized long-term capital gains, if any, that a Fund
designates as capital gains dividends are taxable as long-term capital gains,
whether paid in cash or in shares and regardless of how long a shareholder has
held shares of the Fund. All other dividends of a Fund (including dividends
from short-term capital gains) from its current and accumulated earnings and
profits ("regular dividends") are generally subject to tax as ordinary income,
subject to the discussions of qualified dividend income below.

If an individual receives a regular dividend qualifying for the long-term
capital gains rates and such dividend constitutes an "extraordinary dividend,"
and the individual subsequently recognizes a loss on the sale or exchange of
stock in respect of which the extraordinary dividend was paid, then the loss
will be long-term capital loss to the extent of such extraordinary dividend. An
"extraordinary dividend" on common stock for this purpose is generally a
dividend (i) in an amount greater than or equal to 10% of the taxpayer's tax
basis (or trading value) in a share of stock, aggregating dividends with
ex-dividend dates within an 85-day period or (ii) in an amount greater than 20%
of the taxpayer's tax basis (or trading value) in a share of stock, aggregating
dividends with ex-dividend dates within a 365-day period.

Distributions in excess of a Fund's current and accumulated earnings and
profits will, as to each shareholder, be treated as a tax-free return of
capital to the extent of a shareholder's basis in the shares of the Fund, and
as a capital gain thereafter (if the shareholder holds such shares of the Fund
as capital assets). Shareholders receiving dividends or distributions in the
form of additional shares should be treated for U.S. federal income tax
purposes as receiving a distribution in an amount equal to the amount of money
that the shareholders receiving cash dividends or distributions will receive,
and should have a cost basis in the shares received equal to such amount.
Dividends paid by a Fund that are attributable to dividends received by a Fund
from domestic corporations may qualify for the federal dividends-received
deduction for corporations.

Investors considering buying shares just prior to a dividend or capital gain
distribution should be aware that, although the price of shares just purchased
at that time may reflect the amount of the forthcoming distribution, such
dividend or distribution may

                                       60




nevertheless be taxable to them. If a Fund is the holder of record of any stock
on the record date for any dividends payable with respect to such stock, such
dividends will be included in the Fund's gross income not as of the date
received but as of the later of (a) the date such stock became ex-dividend with
respect to such dividends (I.E., the date on which a buyer of the stock would
not be entitled to receive the declared, but unpaid, dividends) or (b) the date
a Fund acquired such stock. Accordingly, in order to satisfy its income
distribution requirements, a Fund may be required to pay dividends based on
anticipated earnings, and shareholders may receive dividends in an earlier year
than would otherwise be the case.

SALES OF SHARES.  Upon the sale or exchange of his shares, a shareholder will
realize a taxable gain or loss equal to the difference between the amount
realized and his basis in his shares. A redemption of shares by a Fund will be
treated as a sale for this purpose. Such gain or loss will be treated as
capital gain or loss if the shares are capital assets in the shareholder's
hands, and will be long-term capital gain or loss if the shares are held for
more than one year and short-term capital gain or loss if the shares are held
for one year or less. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced, including
replacement through the reinvesting of dividends and capital gains
distributions in the Fund, within a 61-day period beginning 30 days before and
ending 30 days after the disposition of the shares. In such a case, the basis
of the shares acquired will be increased to reflect the disallowed loss. Any
loss realized by a shareholder on the sale of the Fund share held by the
shareholder for six months or less will be treated for U.S. federal income tax
purposes as a long-term capital loss to the extent of any distributions or
deemed distributions of long-term capital gains received by the shareholder
with respect to such share.

If a shareholder incurs a sales charge in acquiring shares of a Fund, disposes
of those shares within 90 days and then acquires shares in a mutual fund for
which the otherwise applicable sales charge is reduced by reason of a
reinvestment right (E.G., an exchange privilege), the original sales charge
will not be taken into account in computing gain/loss on the original shares to
the extent the subsequent sales charge is reduced. Instead, the disregarded
portion of the original sales charge will be added to the tax basis of the
newly acquired shares. Furthermore, the same rule also applies to a disposition
of the newly acquired shares made within 90 days of the second acquisition.
This provision prevents a shareholder from immediately deducting the sales
charge by shifting his or her investment within a family of mutual funds.

BACK-UP WITHHOLDING.  In certain cases, a Fund will be required to withhold at
the applicable withholding rate, currently 28%, and remit to the U.S. Treasury
such amounts withheld from any distributions paid to a shareholder who: (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
back-up withholding by the IRS; (3) has failed to certify to a Fund that such
shareholder is not subject to back-up withholding; or (4) has not certified
that such shareholder is a U.S. person (including a U.S. resident alien).
Back-up withholding is not an additional tax and any amount withheld may be
credited against a shareholder's U.S. federal income tax liability.

SECTIONS 351 AND 362.  The Company on behalf of each Fund has the right to
reject an order for a purchase of shares of the Fund if the purchaser (or group
of purchasers) would, upon obtaining the shares so ordered, own 80% or more of
the outstanding shares of a given Fund and if, pursuant to Sections 351 and 362
of the IRC, that Fund would have a basis in the securities different from the
market value of such securities on the date of deposit. If a Fund's basis in
such securities on the date of deposit was less than market value on such date,
the Fund, upon disposition of the securities, would recognize more taxable gain
or less taxable loss than if its basis in the securities had been equal to
market value. It is not anticipated that the Company will exercise the right of
rejection except in a case where the Company determines that accepting the
order could result in material adverse tax consequences to a Fund or its
shareholders. The Company also has the right to require information necessary
to determine beneficial share ownership for purposes of the 80% determination.

QUALIFIED DIVIDEND INCOME.  Distributions by each Fund of investment company
taxable income, whether received in cash or shares, will be taxable either as
ordinary income or as qualified dividend income, eligible for the reduced
maximum rate to individuals of 15% (5% for individuals in lower tax brackets)
to the extent each Fund receives qualified dividend income on the securities it
holds and the Fund designates the distribution as qualified dividend income.
Qualified dividend income is, in general, dividend income from taxable domestic
corporations and certain foreign corporations (E.G., foreign corporations
incorporated in a possession of the United States or in certain countries with
a comprehensive tax treaty with the United States, or the stock of which is
readily tradable on an established securities market in the United States).
Substitute dividend payments received with respect to securities lent out are
not qualified dividend income. A dividend will not be treated as qualified
dividend income to the extent that (i) the shareholder has not held the shares
on which the dividend was paid for more than 60 days during the 121-day period
that begins on the date that is 60 days before the date on which the shares
become ex dividend with respect to such dividend (and each Fund also satisfies
those holding period requirements with respect to the securities it holds that
paid the dividends distributed to the shareholder), (ii) the shareholder is
under an obligation (whether pursuant to a short sale or otherwise) to make
related payments with respect to substantially similar or related property, or
(iii) the shareholder elects to treat such

                                       61




dividend as investment income under Section 163(d)(4)(B) of the IRC. Absent
further legislation, the maximum 15% rate on qualified dividend income will not
apply to dividends received in taxable years beginning after December 31, 2010.
Capital gain distributions consisting of each Fund's net capital gains will be
taxable as long-term capital gains.

CORPORATE DIVIDENDS RECEIVED DEDUCTION.  The Funds do not expect dividends that
are paid to its corporate shareholders to be eligible, in the hands of such
shareholders, for the corporate dividends received deduction.

REPORTING.  If a shareholder recognizes a loss with respect to a Fund's shares
of $2 million or more for an individual shareholder or $10 million or more for
a corporate shareholder, the shareholder must file with the Internal Revenue
Service ("IRS") a disclosure statement on Form 8886. Direct shareholders of
portfolio securities are in many cases exempted from this reporting
requirement, but under current guidance, shareholders of a regulated investment
company are not exempted. The fact that a loss is reportable under these
regulations does not affect the legal determination of whether the taxpayer's
treatment of the loss is proper. Shareholders should consult their tax advisors
to determine the applicability of these regulations in light of their
individual circumstances.

OTHER TAXES.  Dividends, distributions and redemption proceeds may also be
subject to additional state, local and foreign taxes depending on each
shareholder's particular situation.

TAXATION OF NON-U.S. SHAREHOLDERS.  Dividends paid by a Fund to non-U.S.
shareholders are generally subject to withholding tax at a 30% rate or a
reduced rate specified by an applicable income tax treaty to the extent derived
from investment income and short-term capital gains. In order to obtain a
reduced rate of withholding, a non-U.S. shareholder will be required to provide
an IRS Form W-8BEN certifying its entitlement to benefits under a treaty. The
withholding tax does not apply to regular dividends paid to a non-U.S.
shareholder who provides a Form W-8ECI, certifying that the dividends are
effectively connected with the non-U.S. shareholder's conduct of a trade or
business within the United States. Instead, the effectively connected dividends
will be subject to regular U.S. income tax as if the non-U.S. shareholder were
a U.S. shareholder. A non-U.S. corporation receiving effectively connected
dividends may also be subject to additional "branch profits tax" imposed at a
rate of 30% (or lower treaty rate). A non-U.S. shareholder who fails to provide
an IRS Form W-8BEN or other applicable form may be subject to backup
withholding at the appropriate rate.

In general, United States federal withholding tax will not apply to any gain or
income realized by a non-U.S. shareholder in respect of any distributions of
net long-term capital gains over net short-term capital losses, exempt-interest
dividends, or upon the sale or other disposition of shares of a Fund.

A distribution from a Fund to foreign shareholders who have held more than 5%
of the Fund at any time during the one-year period ending on the date of
distribution is treated as real property gain subject to 35% withholding tax
and treated as income effectively connected to a U.S. trade or business with
certain tax filing requirements applicable, if such distribution is
attributable to a distribution of real property gain received by the Fund from
a REIT and if 50% or more of the value of the Fund's assets are invested in
REITs and other U.S. real property holding corporations.

The foregoing discussion is a summary only and is not intended as a substitute
for careful tax planning. Purchasers of shares should consult their own tax
advisers as to the tax consequences of investing in such shares, including
under state, local and foreign tax laws. Finally, the foregoing discussion is
based on applicable provisions of the IRC, regulations, judicial authority and
administrative interpretations in effect on the date of this SAI. Changes in
applicable authority could materially affect the conclusions discussed above,
and such changes often occur.

Financial Statements
Each Fund's audited Financial Statements, including the Financial Highlights,
appearing in the Annual Report to Shareholders and the report therein of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
are hereby incorporated by reference in this SAI. The applicable Annual Report
to Shareholders is delivered with this SAI to shareholders requesting this SAI.

Miscellaneous Information
COUNSEL. Willkie Farr & Gallagher LLP, located at 787 Seventh Avenue, New York,
NY 10019, is counsel to the Company.

                                       62




INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. PricewaterhouseCoopers LLP,
located at Three Embarcadero Center, San Francisco, CA 94111, serves as the
independent registered public accounting firm of the Company, audits the Funds'
financial statements and may perform other services.

SHAREHOLDER COMMUNICATIONS TO THE BOARD.  Shareholders may make inquiries by
writing to the Company, c/o the Distributor, One Freedom Valley Drive, Oaks, PA
19456.   The Board has established a process for shareholders to communicate
with the Board. Shareholders may contact the Board by mail. Correspondence
should be addressed to iShares Board of Directors, c/o Barclays Global
Investors, N.A. - Mutual Fund Administration, 45 Fremont Street, San Francisco,
CA 94105. Shareholders' communications to the Board should include the
following information: (a) the name and address of the shareholder; (b) the
number of shares owned by the shareholder; (c) the Fund(s) of which the
shareholder owns shares; and (d) if these shares are owned indirectly through a
broker, financial intermediary or other record owner, the name of the broker,
financial intermediary or other record owner. All correspondence received as
set forth above shall be reviewed by the Secretary of the Company and reported
to the Board.

                                       63




                                  iShares, Inc.
                   Files Nos. File Nos. 33-97598 and 811-09102

                                     Part C

                                Other Information

Item 23. Exhibits                                                       PEA # 53

Exhibit
Number    Description
-------   ----------------------------------------------------------------------
(a.1)     Articles of Restatement, filed September 15, 2006, are incorporated
          herein by reference to Post-Effective Amendment No. 31 to the
          Registration Statement, filed on December 22, 2006 ("PEA No. 31").

(a.2)     Articles of Amendment, filed December 20, 2006, are incorporated
          herein by reference to PEA No. 31.

(a.3)     Articles Supplementary, filed December 20, 2006, are incorporated
          herein by reference to PEA No. 31.

(b.1)     Amended and Restated By-Laws is incorporated herein by reference to
          Post-Effective Amendment No. 32 to the Registration Statement, filed
          on April 16, 2007 ("PEA No. 32").

(c.)      None.

(d.1)     Investment Management Agreement between Registrant and Barclays Global
          Fund Advisors ("BGFA") is incorporated herein by reference to PEA No.
          31.

(d.2)     Amended Schedule A to Investment Management Agreement is incorporated
          herein by reference to Post-Effective Amendment No. 47 to the
          Registration Statement, filed on December 28, 2007 ("PEA No. 47").

(e.1)     Distribution Agreement between Registrant and SEI Investments
          Distribution Co., dated March 27, 2000, is incorporated herein by
          reference to Post-Effective Amendment No.18 to the Registration
          Statement, filed on December 29, 2000 ("PEA No. 18").

(e.2)     Amended Exhibit A to Distribution Agreement is to be filed by
          amendment.

(e.3)     Form of Authorized Participant Agreement is incorporated herein by
          reference to Post-Effective Amendment No. 27 to the Registration
          Statement, filed on December 30, 2003.

(e.4)     Form of Sales and Investor Services Agreement incorporated herein by
          reference to PEA No. 18.

(f.)      None.

(g.1)     Custodian Agreement between Registrant and Investors Bank & Trust
          Company ("IBT(1)"), dated May 21, 2002, is incorporated herein by
          reference to exhibit (g.3) of Post-Effective Amendment No. 26 to the
          Registration Statement, filed on December 30, 2002 ("PEA No. 26").

(g.2)     Appendix A to Custodian Agreement is to be filed by amendment.

(g.3)     Amendment, dated December 31, 2002, to the Custodian Agreement is
          incorporated herein by reference to PEA No. 31.

(g.4)     Amendment, dated January 1, 2006, to the Custodian Agreement is
          incorporated herein by reference to PEA No. 31.

(h.1)     Administration Agreement between Registrant and IBT(1), dated May 21,
          2002, is incorporated herein by reference to exhibit (h.3) of PEA
          No. 26.

(h.2)     Appendix A to Administration Agreement is to be filed by amendment.

(h.3)     Amendment, dated January 1, 2006, to the Administration Agreement is
          incorporated herein by reference to PEA No. 31.

(h.4)     Amendment, dated January 1, 2007, to the Administration Agreement is
          incorporated herein by reference to PEA No. 32.

(h.5)     Transfer Agency and Service Agreement between Registrant and IBT(1),
          dated May 21, 2002, is incorporated herein by reference to exhibit
          (h.7) of PEA No. 26.

(h.6)     Appendix A to Transfer Agency and Service Agreement is to be filed by
          amendment.

(h.7)     Amendment, dated May 21, 2002, to the Transfer Agency and Service
          Agreement is incorporated herein by reference to PEA No. 31.

(h.8)     Amendment, dated September 1, 2004, to the Transfer Agency and Service
          Agreement is incorporated herein by reference to PEA No. 31.

(h.9)     Amendment, dated January 1, 2006, to the Transfer Agency and Service
          Agreement is incorporated herein by reference to PEA No. 31.

(h.10)    Sub-License Agreement between Registrant and Barclays Global Investors
          with respect to the use of the MSCI Indexes, dated May 8, 2000, is
          incorporated herein by reference to PEA No.




          18.

(h.11)    Sub-License Agreement between Registrant and Barclays Global Investors
          with respect to the use of the MSCI Indexes to be filed by amendment.

(h.12)    Securities Lending Agency Agreement, dated April 2, 2007, between
          Registrant and iShares Trust and Barclay's Global Investors is
          incorporated herein by reference to PEA No. 32.

(h.13)    Appendix A to Securities Lending Agency Agreement between BGI and the
          Registrant to be filed by amendment.

(i.)      Legal Opinion and Consent of Venable LLP is incorporated herein by
          reference to PEA No. 47.

(j.)      Consent of PricewaterhouseCoopers LLP is filed herein.

(k.)      None.

(l.1)     Subscription Agreement between the Registrant and Funds Distributor,
          Inc. is incorporated herein by reference to Pre-Effective Amendment
          No. 3 to the Registration Statement, filed on March 6, 1999.

(l.2)     Letter of Representations among the Registrant, Depository Trust
          Company ("DTC") and Morgan Stanley Trust Company Exhibit is
          incorporated herein by reference to Pre-Effective Amendment No. 2 to
          the Registration Statement, filed on March 1, 1996, to the Company's
          initial registration statement on Form N-1A filed on September 29,
          1995.

(l.3)     Letter of Representations between the Registrant and DTC, dated May 5,
          2000, is incorporated herein by reference to PEA No. 18.

(l.4)     Letter of Representations between the Registrant and DTC dated October
          15, 2001 is incorporated herein by reference to Post-Effective
          Amendment No. 21 to the Registration Statement, filed on October 22,
          2001.

(m.)      Amended Plan of Distribution pursuant to Rule 12b-1 is incorporated
          herein by reference to Post-Effective Amendment No. 24 to the
          Registration Statement filed on September 19, 2002.

(n.)      None.

(o.)      Not applicable.

(p.1)     Code of Ethics of the Registrant is incorporated herein by reference
          to Post-Effective Amendment No. 30 to the Registration Statement,
          filed on December 22, 2005 ("PEA No. 30").

(p.2)     Code of Ethics of BGFA is incorporated herein by reference to PEA No.
          30.

(q.)      Powers of Attorney, each dated September 18, 2007, for Michael A.
          Latham, Lee T. Kranefuss, John E. Martinez, George G.C. Parker,
          Cecilia H. Herbert, John E. Kerrigan, Charles A. Hurty, and Robert H.
          Silver are incorporated by reference to Post-Effective Amendment No.
          42 to the Registration Statement, filed November 9, 2007 ("PEA No.
          42).

Item 24. Persons Controlled By or Under Common Control with Registrant.

iShares MSCI Belgium Index Fund

Citigroup Global Markets Inc...........................................   44.70%

iShares MSCI EMU Index Fund

Deutsche Bank Securities Inc./Cedear...................................   31.81%

iShares Netherlands Index Fund

A.G. Edwards & Sons, Inc...............................................   25.83%

iShares Spain Index Fund

Citigroup Global Markets Inc...........................................   26.46%

iShares MSCI South Africa Index  Fund

State Street Bank and Trust Company....................................   28.25%

Item 25. Indemnification.

     Incorporated herein by reference to Post-Effective Amendment No. 7 to the
Registration Statement, filed on January 15, 1997.

Item 26. Business and Other Connections of Investment Adviser.




     The Fund is advised by BGFA, a wholly owned subsidiary of Barclays Global
Investors, N.A. ("BGI"), 45 Fremont Street, San Francisco, CA 94105. BGFA's
business is that of a registered investment adviser to certain open-end,
management investment companies and various other institutional investors.

     The directors and officers of BGFA consist primarily of persons who during
the past two years have been active in the investment management business. Each
of the directors and executive officers of BGFA will also have substantial
responsibilities as directors and/or officers of BGI. To the knowledge of the
Registrant, except as set forth below, none of the directors or executive
officers of BGFA is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.

Name and Position   Principal Business(es) During the Last Two Fiscal Years
-----------------   ------------------------------------------------------------
Blake Grossman      Director and Chairman of the Board of Directors of BGFA and
Chairman            Chief Executive Officer and Director of BGI
                    45 Fremont Street, San Francisco, CA 94105

Frank Ryan          Chief Financial Officer of BGFA and Chief Financial Officer
Officer             and Cashier of BGI
                    45 Fremont Street, San Francisco, CA 94105

Rohit Bhagat        Director and Chief Operating Officer of BGFA and BGI
Director            45 Fremont Street, San Francisco, CA 94105

Item 27. Principal Underwriters:

(a)  Furnish the name of each investment company (other than the Registrant) for
     which each principal underwriter currently distributing the securities of
     the Registrant also acts as a principal underwriter, distributor or
     investment adviser.

Registrant's distributor, SEI Investments Distribution Co. ("SEI") acts as
distributor for:

SEI Daily Income Trust                                 July 15, 1982
SEI Liquid Asset Trust                                 November 29, 1982
SEI Tax Exempt Trust                                   December 3, 1982
SEI Index Funds                                        July 10, 1985
SEI Institutional Managed Trust                        January 22, 1987
SEI Institutional International Trust                  August 30, 1988
The Advisors' Inner Circle Fund                        November 14, 1991
The Advisors' Inner Circle Fund II                     January 28, 1993
Bishop Street Funds                                    January 27, 1995
SEI Asset Allocation Trust                             April 1, 1996
SEI Institutional Investments Trust                    June 14, 1996
Oak Associates Funds                                   February 27, 1998
CNI Charter Funds                                      April 1, 1999
iShares Trust                                          April 25, 2000
Optique Funds, Inc.                                    November 1, 2000
Causeway Capital Management Trust                      September 20, 2001
Barclays Global Investors Funds                        March 31, 2003
SEI Opportunity Fund, LP                               October 1, 2003
The Arbitrage Funds                                    May 17, 2005
The Turner Funds                                       January 1, 2006
ProShares Trust                                        November 14, 2005
Community Reinvestment Act Qualified Investment Fund   January 8, 2007
Accessor Funds                                         March 1, 2007
SEI Alpha Strategy Portfolios, LP                      June 29, 2007
TD Asset Management USA Funds                          July 25, 2007
SEI Structured Credit Fund, LP                         July 31, 2007

SEI provides numerous financial services to investment managers, pension plan
sponsors, and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds Evaluation")
and automated execution, clearing and settlement of securities transactions
("MarketLink").




(b)  Furnish the information required by the following table with respect to
     each director, officer or partner of each principal underwriter named in
     the answer to Item 20 of Part B. Unless otherwise noted, the business
     address of each director or officer is One Freedom Valley Drive, Oaks, PA
     19456.



                     Position and Office                               Positions and Offices
Name                 with Underwriter                                     with Registrant
----                 ----------------                                  ---------------------
                                                                          
William M. Doran     Director                                                   --
Edward D. Loughlin   Director                                                   --
Wayne M. Withrow     Director                                                   --
Kevin Barr           President & Chief Executive Officer                        --
Maxine Chou          Chief Financial Officer & Treasurer                        --
Thomas Rodman        Chief Operations Officer                                   --
John Munch           General Counsel & Secretary                                --
Karen LaTourette     Chief Compliance Officer, Anti-Money Laundering
                     Officer & Assistant Secretary                              --
Mark J. Held         Senior Vice President                                      --
Lori L. White        Vice President & Assistant Secretary                       --
Robert Silvestri     Vice President                                             --
John Coary           Vice President & Assistant Secretary                       --
Michael Farrell      Vice President                                             --
Mark McManus         Vice President                                             --
John Cronin          Vice President                                             --


(c) Not applicable.

Item 28. Location of Accounts and Records

(a) The Fund maintains accounts, books and other documents required by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder
(collectively, the "Records") at the offices of IBT/1/, 200 Clarendon Street,
Boston, MA 02116.

(b) BGFA maintains all Records relating to its services as advisor at 45 Fremont
Street, San Francisco, CA, 94105.

(c) SEI maintains all Records relating to its services as distributor at One
Freedom Valley Drive, Oaks, PA 19456.

(d) IBT(1) maintains all Records relating to its services as transfer agent,
fund accountant and custodian at 200 Clarendon Street, Boston, MA 02116.

Item 29. Management Services.

Not applicable.

Item 30. Undertakings.

(a) The Company hereby undertakes to call a meeting of the shareholders for the
purpose of voting upon the question of removal of any Director when requested in
writing to do so by the holders of at least 10% of the Company's outstanding
shares of common stock and, in connection with such meeting to comply with the
provisions of Section 16(c) of the 1940 Act relating to shareholder
communications.

(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

----------
/1/  On July 2, 2007, State Street Corporation acquired Investors Financial
     Services Corporation, the parent company of IBT which provides
     administrative, custodial and transfer agency services for the Funds.




                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 53 to the Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City of San Francisco and
the State of California on the 22nd day of February, 2008.


                                        By:
                                            ------------------------------------
                                            Michael A. Latham*
                                            President

                                            Date: February 22, 2008

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 53 to the Registration Statement has been signed
below by the following persons in the capacity and on the dates indicated.


                                        By:
                                            ------------------------------------
                                            Lee T. Kranefuss*
                                            Director

                                            Date: February 22, 2008


                                            ------------------------------------
                                            John E. Martinez*
                                            Director

                                            Date: February 22, 2008


                                            ------------------------------------
                                            George G. C. Parker*
                                            Director

                                            Date: February 22, 2008


                                            ------------------------------------
                                            Cecilia H. Herbert*
                                            Director

                                            Date: February 22, 2008


                                            ------------------------------------
                                            Charles A. Hurty*
                                            Director

                                            Date: February 22, 2008


                                            ------------------------------------
                                            John E. Kerrigan*
                                            Director

                                            Date: February 22, 2008





                                            ------------------------------------
                                            Robert H. Silver*
                                            Director

                                            Date: February 22, 2008


                                            ------------------------------------
                                            Michael Latham*
                                            President

                                            Date: February 22, 2008


                                            /s/ Geoffrey D. Flynn
                                            ------------------------------------
                                            Geoffrey D. Flynn
                                            Treasurer

                                            Date: February 22, 2008


                                        *By: /s/ Geoffrey D. Flynn
                                             -----------------------------------
                                             Geoffrey D. Flynn
                                             Attorney in fact

                                             Date: February 22, 2008

*    Powers of Attorney, each dated September 18, 2007, for Michael A. Latham,
     Lee T. Kranefuss, John E. Martinez, George G.C. Parker, Cecilia H. Herbert,
     Charles A. Hurty, John E. Kerrigan, and Robert H. Silver are incorporated
     by reference to Post-Effective Amendment No. 42.




Exhibit Index

(j)  Consent of PricewaterhouseCoopers LLP

EX-99.(J)

                                                                     Exhibit (j)

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form N-1A of our
report dated October 23, 2007, relating to the financial statements and
financial highlights of the August 31, 2007 iShares MSCI funds ("the Funds"),
which appear in such Registration Statement. We also consent to the references
to us under the headings "Financial Statements", "Independent Registered Public
Accounting Firm" and "Financial Highlights" in such Registration Statement.

PricewaterhouseCoopers LLP
San Francisco, California
February 13, 2008

CORRESP

[WILLKIE FARR & GALLAGHER LLP LOGO]

                                                    1875 K Street
                                                    Washington, DC 20006-1238
                                                    Tel: 202 303 1000
                                                    Fax: 202 303 2000

February 22, 2008

VIA EDGAR

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re:iShares, Inc.
   File Nos. 33-97598, 811-09102
   Post-Effective Amendment No. 53

Ladies and Gentlemen:

On behalf of iShares, Inc. (the "Company"), we hereby transmit for filing under
the Securities Act of 1933 and the Investment Company Act of 1940,
Post-Effective Amendment No. 53 to the Company's Registration Statement on Form
N-1A. This Amendment relates to the iShares MSCI Austria Index Fund and the
iShares MSCI Netherlands Index Fund and is being filed for the purpose of
updating performance and trustee information.

This amendment is being filed under Rule 485(a) and will become effective
automatically 60 days after filing. However, as we discussed in our telephone
conversation yesterday, the Company is submitting, concurrent with this
amendment, a request for acceleration of the effective date of this amendment
(and Post-Effective Amendment No. 52) to February 25, 2008.

If you have any questions, please call me at (202) 303-1203.

Sincerely,

/s/ Anthony A. Vertuno
--------------------------
Anthony A. Vertuno

cc:Kevin Smith, Esq.
   Elliot Gluck, Esq.

   NEW YORK  WASHINGTON, DC  PARIS  LONDON  MILAN  ROME  FRANKFURT  BRUSSELS