485APOS

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 2010
                                               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. 112                  [X]

                                  AND/OR

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

                             AMENDMENT NO. 114                         [X]
                       (CHECK APPROPRIATE BOX OR BOXES)

                                 ISHARES, INC.
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                    C/O STATE STREET BANK AND TRUST COMPANY
                             200 CLARENDON STREET
                               BOSTON, MA 02116
               (ADDRESS OF PRINCIPAL EXECUTIVE 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.  JESSICA N. BENTLEY, ESQ.
WILLKIE FARR & GALLAGHER    WILLKIE FARR & GALLAGHER  BLACKROCK INSTITUTIONAL
LLP                         LLP                       TRUST COMPANY, N.A.
787 SEVENTH AVENUE          1875 K STREET, N.W.       400 HOWARD STREET
NEW YORK, N.Y. 10019-6099   WASHINGTON, D.C.          SAN FRANCISCO, CA 94105
                            20006-1238

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

[_]Immediately upon filing pursuant to
   paragraph (b)                         [_]On (date) pursuant to paragraph (b)

[_]60 days after filing pursuant to      [_]On (date) pursuant to paragraph
   paragraph (a)(1)                         (a)(1)

[X]75 days after filing pursuant to      [_]On (date) pursuant to paragraph
   paragraph (a)(2)                         (a)(2)

   If appropriate, check the following box:

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

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




THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES DESCRIBED HEREIN MAY NOT BE
SOLD UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE IN WHICH THE OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL.

                         2010 PROSPECTUS TO SHAREHOLDERS

           iSHARES(Reg. TM) MSCI EMERGING MARKETS SMALL CAP INDEX FUND
                              _____________, 2010

                                 ___ | _______

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.

















[GRAPHIC APPEARS HERE]








Table of Contents


                                                        
          Fund Overview..................................  S-1
          More Information About the Fund................    1
          A Further Discussion of Principal Risks........    2
          Portfolio Holdings Information.................    8
          Management.....................................    8
          Shareholder Information........................   11
          Distribution...................................   19
          Financial Highlights...........................   20
          Index Provider.................................   21
          Disclaimers....................................   21




"MSCI Emerging Markets Small Cap Index/SM/" is a servicemark of MSCI Inc. and
has been licensed for use for certain purposes by BlackRock Institutional Trust
Company, N.A. ("BTC"). iShares(Reg. TM) is a registered trademark of BTC. The
Fund is not sponsored, endorsed, sold, or promoted by MSCI Inc. nor does MSCI
Inc. make any representation regarding the advisability of investing in the
Fund. Prior to December 1, 2009, BlackRock Institutional Trust Company, N.A.
was known as Barclays Global Investors, N.A.


                                       i




                      [THIS PAGE INTENTIONALLY LEFT BLANK]




          iSHARES(Reg. TM) MSCI EMERGING MARKETS SMALL CAP INDEX FUND
                    Ticker: ___  Stock Exchange: _______


INVESTMENT OBJECTIVE

The iShares MSCI Emerging Markets Small Cap Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield
performance, before fees and expenses, of the MSCI Emerging Markets Small Cap
Index (the "Underlying Index").


FEES AND EXPENSES


The following table describes the fees and expenses that you will incur if you
own shares of the Fund. The iShares, Inc. (the "Company") Investment Advisory
Agreement provides that BlackRock Fund Advisors ("BFA") will pay all operating
expenses of the Fund, except interest expense, taxes, any brokerage expenses,
future distribution fees or expenses and extraordinary expenses. [Because the
Fund has been in operation for less than one full year, "Acquired Fund Fees and
Expenses" reflect an estimate of the Fund's pro rata shares of fees and
expenses anticipated to be incurred by investing in other investment companies.
Actual Acquired Fund Fees and Expenses may vary from this estimate based on
changes to the Underlying Index or investment strategy. The impact of Acquired
Fund Fees and Expenses is included in the total returns of the Fund. Acquired
Fund Fees and Expenses are not used to calculate the Fund's NAV.]

You will also incur usual and customary brokerage commissions when buying or
selling shares of the Fund, which are not reflected in the example that
follows:





                                       ANNUAL FUND OPERATING EXPENSES
                                (ONGOING EXPENSES THAT YOU PAY EACH YEAR AS A
                                PERCENTAGE OF THE VALUE OF YOUR INVESTMENTS)
-------------------------------------------------------------------------------------------------------------
                                                  DISTRIBUTION                                   TOTAL ANNUAL
                                                      AND                      [ACQUIRED FUND        FUND
                  MANAGEMENT                    SERVICE (12B-1)      OTHER          FEES          OPERATING
                     FEES                             FEES         EXPENSES     AND EXPENSES]      EXPENSES
---------------------------------------------  -----------------  ----------  ----------------  -------------
                                                                                    
   ____%                                             None         ________                          ____%


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
--------  ---------
       
  $___       $___


                                      S-1






PORTFOLIO TURNOVER. The Fund pays transaction costs, such as commissions, when
it buys and sells securities (or "turns over" its portfolio). A higher
portfolio turnover rate may indicate higher transaction costs and may result in
higher taxes when Fund shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, affect
the Fund's performance.


PRINCIPAL INVESTMENT STRATEGIES


The Underlying Index is designed to measure equity market performance in the
global emerging markets and targets 40% of the eligible small cap universe
within each industry group and each country represented by the MSCI Emerging
Markets Index. As of March 1, 2010, the Underlying Index consisted of the
following 22 emerging market country indexes: Brazil, Chile, China, Colombia,
the Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Malaysia, Mexico,
Morocco, Peru, the Philippines, Poland, Russia, South Africa, South Korea,
Taiwan, Thailand and Turkey. As of March 1, 2010, the Underlying Index's three
largest industries were consumer discretionary, financials and industrials.

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

Indexing may eliminate the chance that the Fund will substantially outperform
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.

BFA uses a representative sampling indexing strategy to manage the Fund.
"Representative sampling" is an indexing strategy that involves investing in a
representative sample of securities that collectively has an investment profile
similar to the Underlying Index. The securities selected are expected to have,
in the aggregate, investment characteristics (based on factors such as market
capitalization and industry weightings), fundamental characteristics (such as
return variability and yield) and liquidity measures similar to those of the
Underlying Index. The Fund may or may not hold all of the securities in the
Underlying Index.

The Fund generally invests at least 90% of its assets in the securities of its
Underlying Index or in depositary receipts ("DRs") representing securities in
its Underlying Index. The Fund may invest the remainder of its assets in
securities not included in its Underlying Index, but which BFA believes will
help the Fund track its Underlying Index, and in futures contracts, options on
futures contracts, options and swaps related to its Underlying Index, as well
as cash and cash equivalents, including shares of money market funds affiliated
with BFA.

The Underlying Index is sponsored by an organization (the "Index Provider")
that is independent of the Fund and BFA. The Index Provider determines the


                                      S-2




composition and 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").

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 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.


SUMMARY OF PRINCIPAL RISKS


As with any investment, you could lose all or part of your investment in the
Fund, and the Fund's performance could trail that of other investments. The
Fund is subject to the principal risks noted below, any of which may adversely
affect the Fund's net asset value ("NAV"), trading price, yield, total return
and ability to meet its investment objective.

ASSET CLASS RISK. Securities in the Underlying Index or in the Fund's portfolio
may underperform in comparison to the general securities markets or other asset
classes.

COMMODITY RISK. The Fund invests in economies that are susceptible to
fluctuations in certain commodity markets. Any negative changes in commodity
markets could have a great impact on those economies.

CONCENTRATION RISK. To the extent that the Fund's investments are concentrated
in a particular country, market, industry or asset class, the Fund will be
susceptible to loss due to adverse occurrences affecting that country, market,
industry or asset class.

CONSUMER DISCRETIONARY SECTOR RISK. The consumer discretionary sector may be
affected by changes in the domestic and international economy, exchange rates,
competition, consumer's disposable income and consumer preferences.

CURRENCY RISK. Because the Fund's NAV is determined in U.S. dollars, the Fund's
NAV could decline if the currency of the non-U.S. market in which the Fund
invests depreciates against the U.S. dollar.

CUSTODY RISK. Less developed markets are more likely to experience problems
with the clearing and settling of trades.

EMERGING MARKETS RISK. The Fund's investments in emerging markets may be
subject to a greater risk of loss than investments in developed markets.

EQUITY SECURITIES RISK. Equity securities are subject to volatile changes in
value and their values may be more volatile than other asset classes.

FINANCIALS SECTOR RISK. Performance of companies in the financials sector may
be adversely impacted by many factors, including extensive government
regulations, economic conditions, changes in interest rates, and decreased
liquidity in credit markets. This sector has recently experienced significant
losses and government intervention that may continue.

GEOGRAPHIC RISK. A natural disaster could occur in a geographic region in which
the Fund invests.

INDUSTRIALS SECTOR RISK. The industrials sector is affected by changes in the


                                      S-3




supply and demand for products and services, product obsolescence, claims for
environmental damage or product liability and general economic conditions,
among other factors.

ISSUER RISK. Fund performance depends on the performance of individual
companies in which the Fund invests. Changes to the financial condition of any
of those companies may cause the value of their securities to decline.

MANAGEMENT RISK. The Fund is subject to the risk that BFA's investment
management strategy may not produce the intended results.

MARKET RISK. The Fund's NAV could decline over short periods due to short-term
market movements and over longer periods during market downturns.

MARKET TRADING RISKS. The Fund faces numerous market trading risks, including
the potential lack of an active market for Fund shares, losses from trading in
secondary markets, and disruption in the creation/redemption process of the
Fund. ANY OF THESE FACTORS MAY LEAD TO THE FUND'S SHARES TRADING AT A PREMIUM
OR DISCOUNT TO NAV.

NON-DIVERSIFICATION RISK. The Fund may invest a large percentage of its assets
in securities issued by or representing a small number of issuers. As a result,
Fund performance may depend on the performance of a small number of issuers.

NON-U.S. SECURITIES RISK. Investments in the securities of non-U.S. issuers are
subject to the risks associated with investing in those non-U.S. markets, such
as heightened risks of inflation or nationalization. You may lose money due to
political, economic and geographic events affecting a non-U.S. issuer or
market. The Fund is specifically exposed to ASIAN ECONOMIC RISK, CENTRAL AND
SOUTH AMERICAN ECONOMIC RISK AND EUROPEAN ECONOMIC RISK.

PASSIVE INVESTMENT RISK. The Fund is not actively managed and BFA does not
attempt to take defensive positions in declining markets.

PRIVATIZATION RISK. Some countries in which the Fund invests has begun a
process of privatizing certain entities and industries; privatized entities may
lose money or be re-nationalized.

RELIANCE ON TRADING PARTNERS RISK. The Fund invests in economies that are
heavily dependent upon trading with key partners. Any reduction in this trading
may cause an adverse impact on the economies in which the Fund invests. The
Fund is particularly exposed to ASIAN, EUROPEAN AND U.S. TRADING PARTNERS RISK.


SECURITIES LENDING RISK. Securities lending involves the risk that the borrower
may fail to return the securities in a timely manner or at all. As a result,
the Fund may lose money and there may be a delay in recovering the loaned
securities. The Fund could also lose money if it does not recover the
securities and/or the value of the collateral falls, including the value of
investments made with cash collateral. These events could trigger adverse tax
consequences for the Fund.

SECURITY RISK. Some geographic areas in which the Fund invests have experienced
defense concerns. These situations may cause uncertainty in these markets and
may adversely affect their economies.


                                      S-4




SMALL-CAPITALIZATION COMPANIES RISK. Compared to mid- and large-capitalization
companies, small-capitalization companies may be less stable and their
securities may be more volatile and less liquid.

STRUCTURAL RISK. The economies in which the Fund invests may be subject to
considerable degrees of economic, political and social instability.

TECHNOLOGY SECTOR RISK. Technology companies face intense competition and
potentially rapid product obsolescence. They are also heavily dependent on
intellectual property rights, and may be adversely affected by loss or
impairment of those rights.

TRACKING ERROR RISK. The performance of the Fund may diverge from that of its
Underlying Index.

VALUATION RISK. 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.


PERFORMANCE INFORMATION


As of the date of the Fund's prospectus (the "Prospectus"), the Fund has been
in operation for less than one full calendar year and therefore does not report
its performance information.


MANAGEMENT


INVESTMENT ADVISER. BlackRock Fund Advisors.

PORTFOLIO MANAGERS. Diane Hsiung and Greg Savage, each a Portfolio Manager, are
primarily responsible for the day-to-day management of the Fund. Each Portfolio
Manager functions as a member of a portfolio manager team. Ms. Hsiung and Mr.
Savage have been Portfolio Managers of the Fund since 2010.

PURCHASE AND SALE OF FUND SHARES

The Fund is an exchange-traded fund (commonly referred to as an "ETF").
Individual Fund shares may only be purchased and sold on a national securities
exchange through a broker-dealer. The price of Fund shares is based on market
price, and because ETF shares trade at market prices rather than NAV, shares
may trade at a price greater than NAV (a premium) or less than NAV (a
discount). The Fund will only issue or redeem shares that have been aggregated
into blocks of __ shares or multiples thereof ("Creation Units") to authorized
participants who have entered into agreements with the Fund's distributor. The
Fund will issue or redeem Creation Units in return for a basket of assets that
the Fund specifies each day.


TAX INFORMATION


The Fund intends to make distributions that may be taxable to you as ordinary
income or capital gains, unless you are investing through a tax-deferred
arrangement such as a 401(k) plan or an individual retirement account ("IRA").


PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase the Fund through a broker-dealer or other financial
intermediary (such as a bank), BFA or other related companies may pay the
intermediary for marketing activities and presentations, educational training
programs, conferences, the development of technology platforms and reporting
systems or other services related to the sale or promotion of the


                                      S-5




Fund. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Fund
over another investment. Ask your salesperson or visit your financial
intermediary's Web site for more information.


                                      S-6




More Information About the Fund

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.

BFA* is the investment adviser to the Fund. Shares of the Fund are listed and
trade at market prices on ____________ (the "Listing Exchange"). The market
price for a share of the Fund may be different from the Fund's most recent NAV
per share.

ETFs are funds that trade like other publicly-traded securities. The Fund is
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, shares of the Fund may be purchased or redeemed directly
from the Fund at NAV solely by authorized participants. 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 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 due to transaction costs, non-U.S. currency valuation, 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 the use of representative sampling.
"Tracking error" is the difference between the performance (return) of the
Fund's portfolio and that of its Underlying Index. BFA expects that, over time,
the Fund's tracking error will not exceed 5%. Because the Fund uses a
representative sampling indexing strategy, it can be expected to have a larger
tracking error than if it 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.

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, BFA or any of its affiliates.

The Fund's investment objective and the Underlying Index may be changed without
shareholder approval.


-----------
* Prior to December 1, 2009, BFA was known as Barclays Global Fund Advisors.
                                       1




A Further Discussion of Principal Risks

The Fund is subject to the principal risks noted below, any of which may
adversely affect the Fund's NAV, trading price, yield, total return and ability
to meet its investment objective. You could lose all or part of your investment
in the Fund, and the Fund could underperform other investments.

ASIAN ECONOMIC RISK. Certain Asian economies have experienced over-extension of
credit, currency devaluations and restrictions, high unemployment, high
inflation, decreased exports and economic recessions. Economic events in any
one country can have a significant economic effect on the entire Asian region.

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.

CENTRAL AND SOUTH AMERICAN ECONOMIC RISK. The economies of certain Central and
South American countries, including Peru, have experienced high interest rates,
economic volatility, inflation, currency devaluations and high unemployment
rates. In addition, commodities (such as oil, gas and minerals) represent a
significant percentage of the region's exports and many economies in this
region are particularly sensitive to fluctuations in commodity prices. Adverse
economic events in one country may have a significant adverse effect on other
countries of this region.

COMMODITY EXPOSURE RISK. Economies and companies whose performance is reflected
in the Fund's portfolio or Underlying Index may be adversely affected by
changes or trends in commodity prices. Commodity prices may be influenced or
characterized by unpredictable factors, including, where applicable, high
volatility, changes in supply and demand relationships; weather; agriculture;
trade; pestilence; changes in interest rates and monetary and other
governmental policies, action and inaction. Securities of companies held by the
Fund that are dependent on a single commodity, or are concentrated in a single
commodity sector, may typically exhibit even higher volatility attributable to
commodity prices.

CONCENTRATION RISK. To the extent that the Fund's portfolio reflects its
Underlying Index's concentration in the securities of companies in a particular
market, industry, group of industries, country, region, group of countries,
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, country, region, group of
countries, sector or asset class.

CONSUMER DISCRETIONARY SECTOR RISK. The Fund invests in companies in the
consumer discretionary sector. The success of consumer product manufacturers
and retailers is tied closely to the performance of the domestic and
international economy, interest rates, exchange rates, competition, consumer
confidence, changes in demographics and consumer preferences. Companies in the
consumer discretionary sector depend heavily on disposable household income and
consumer spending.


                                       2




These companies may be subject to severe competition, which may have an adverse
impact on their profitability.

CURRENCY RISK. Because the Fund's NAV is determined on the basis of the U.S.
dollar, investors may lose money if the currency of a non-U.S. market in which
the Fund invests depreciates against the U.S. dollar, even if the local
currency value of the Fund's holdings in that market increases.

CUSTODY RISK. Custody risk refers to the risks inherent 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, and governments or
trade groups may compel local agents to hold securities in designated
depositories that are not subject to independent evaluation. Local agents are
held only to the standards of care of their local markets. The less developed a
country's securities market is, the greater the likelihood of custody problems.


EMERGING MARKETS RISK. Investments in emerging markets are subject to a greater
risk of loss than investments in developed markets. This is due to, among other
things, greater market volatility, lower trading volume, political and economic
instability, greater risk of a market shutdown and more governmental
limitations on foreign investments than typically found in developed markets.

EQUITY SECURITIES RISK. The Fund invests in equity securities, which are
subject to volatile changes in value that may be attributable to market
perception of a particular issuer or to general stock market fluctuations that
affect all issuers. Investments in equity securities may be more volatile than
investments in other asset classes.

EUROPEAN ECONOMIC RISK. The Economic and Monetary Union of the European Union
(the "EU") 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 or EU regulations on trade, changes in the exchange
rate of the euro and recessions among EU member countries may have a
significant adverse effect on the economies of other EU member countries and
some or all of the emerging markets economies.

FINANCIALS SECTOR RISK. Companies in the financials sector are subject to
extensive governmental regulation and often government intervention, which may
adversely affect the scope of their activities, the prices they can charge and
the amount of capital they must maintain. The financials sector may also be
adversely affected by increases in interest rates and loan losses, which
usually increase in economic downturns.

GEOGRAPHIC RISK. Some markets in which the Fund invests are located in parts of
the world that have historically been prone to natural disasters such as
earthquakes, volcanoes, droughts, floods and tsunamis or are economically
sensitive to environmental events. Any natural disaster could have a
significant adverse impact on the economies of these geographic areas.

INDUSTRIALS SECTOR RISK. The stock prices of companies in the industrials
sector are affected by supply and demand both for their specific product or
service and for


                                       3




industrial sector products in general. The products of manufacturing companies
may face product obsolescence due to rapid technological developments and
frequent new product introduction. Government regulation, world events and
economic conditions affect the performance of companies in the industrials
sector. Companies in the industrials sector may be adversely affected by
environmental damages and product liability claims.

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
at their own discretion, decide to reduce or eliminate dividends, which may
also cause their stock prices to decline.

MANAGEMENT RISK. The Fund will not fully replicate its Underlying Index and may
hold securities not included in its Underlying Index. As a result, the Fund is
subject to the risk that BFA's investment management strategy, the
implementation of which is subject to a number of constraints, may not produce
the intended results.

MARKET RISK. The Fund could lose money due 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 the issuer of the security 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
one or more stock exchanges, there can be no assurance that an active trading
market for such shares will develop or be maintained.

RISKS OF SECONDARY LISTINGS. The Fund's shares may be listed or traded on U.S.
and non-U.S. stock exchanges other than the U.S. stock exchange where the
Fund's primary listing is maintained. There can be no assurance that the Fund's
shares will continue to trade on any such stock exchange or in any market or
that the Fund's shares will continue to meet the requirements for listing or
trading on any exchange or in any market. The Fund's shares may be less
actively traded in certain markets than others, and investors are subject to
the execution and settlement risks and market standards of the market where
they or their broker direct their trades for execution. Certain information
available to investors who trade Fund shares on a U.S. stock exchange during
regular U.S. market hours may not be available to investors who trade in other
markets, which may result in secondary market prices in such markets being less
efficient.

SECONDARY MARKET TRADING RISKS. Shares of the Fund may trade in the secondary
market at times when the Fund does not accept orders to purchase or redeem
shares. At such times, shares may trade in the secondary market with more
significant


                                       4




premiums or discounts than might be experienced at times when the Fund accepts
purchase and redemption orders.

Secondary market trading in Fund shares may be halted by a stock exchange
because of market conditions or other reasons. In addition, trading in Fund
shares on a stock exchange or in any market may be subject to trading halts
caused by extraordinary market volatility pursuant to "circuit breaker" rules
on the exchange or market. There can be no assurance that the requirements
necessary to maintain the listing or trading of Fund shares 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), BFA 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, 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." This
means that the Fund may invest a large percentage of its assets in securities
issued by or representing a small number of issuers. As a result, the Fund may
be more susceptible to the risks associated with these particular issuers, or
to a single economic, political or regulatory occurrence affecting these
issuers.


                                       5




NON-U.S. SECURITIES RISKS. Investments in the securities of non-U.S. issuers
are subject to all of the risks of investing in the market of such issuers,
including market fluctuations caused by economic and political developments. As
a result of investing in non-U.S. securities, the Fund may be subject to
increased risk of loss caused by any of the factors listed below:

[]  Lower levels of liquidity and market efficiency;

[]  Greater securities price volatility;

[]  Exchange rate fluctuations and exchange controls;

[]  Less availability of public information about issuers;

[]  Limitations on foreign ownership of securities;

[]  Imposition of withholding or other taxes;

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

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

[]  Difficulties in enforcing contractual obligations;

[]  Lower levels of regulation of the securities market;

[]  Weaker accounting, disclosure and reporting requirements; and

[]  Legal principles relating to corporate governance, directors' fiduciary
    duties and liabilities and stockholders' rights in markets in which the
    Fund invests may differ and/or may not be as extensive or protective as
    those that apply in the United States.

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. BFA does not attempt to take
defensive positions in declining markets.

PRIVATIZATION RISK. Some countries in which the Fund invests have begun a
process of privatization of certain entities and industries. Historically,
investors in some recently privatized entities have suffered losses due to the
inability of the recently privatized company to adjust quickly to a competitive
environment or changing regulatory and legal standards or, in some cases, due
to re-nationalization of such privatized entities. There is no assurance that
such losses will not recur.

RELIANCE ON TRADING PARTNERS RISK. Economies in emerging market countries
generally are dependent heavily upon commodity prices and trade with certain
key trading partners. Reduction in spending on the products and services of
emerging market countries by any of their key trading partners, institution of
tariffs or other trade barriers or a slowdown in the economies of any of their
key trading partners may cause an adverse impact on the economies of the
emerging market countries included in the Underlying Index.

ASIAN TRADING PARTNERS RISK. Certain Asian economies have experienced over-
extension of credit, currency devaluations and restrictions, high unemployment,
high inflation, decreased exports and economic recessions. Economic events in
any one


                                       6




country can have a significant economic effect on the entire Asian region as
well as on major trading partners outside Asia and any adverse event in the
Asian Markets may have a significant adverse effect on certain frontier markets
in which the Fund invests.

EUROPEAN TRADING PARTNERS RISK. Certain economies in which the Fund invests
rely heavily on trade with European countries, which heightens the European
economic risk to which the Fund is exposed, as further described above under
"European Economic Risk."

U.S. TRADING PARTNERS RISK. The United States is a significant, and in some
cases the most significant, trading partner of or foreign investor in certain
emerging markets and the economies of these countries may be particularly
affected by adverse changes in the U.S. economy. Decreasing U.S. imports, new
trade regulations, changes in the U.S. dollar exchange rate or a recession in
the United States may have a material adverse effect on the economies of these
nations.

SECURITIES LENDING RISK. Securities lending involves the risk that the borrower
may fail to return the securities in a timely manner or at all. As a result,
the Fund may lose money and there may be a delay in recovering the loaned
securities. The Fund could also lose money if it does not recover the
securities and/or the value of the collateral falls, including the value of
investments made with cash collateral. These events could trigger adverse tax
consequences for the Fund.

SECURITY RISK. Some geographic areas in which the Fund invests have experienced
acts of terrorism or 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
adversely affect the performance of their economies.

SMALL-CAPITALIZATION COMPANIES RISK. Stock prices of small-capitalization
companies may be more volatile than those of larger companies and therefore the
Fund's share price may be more volatile than those of funds that invest a
larger percentage of their assets in stocks issued by larger-capitalization
companies. Stock prices of small-capitalization companies are generally more
vulnerable than those of large-capitalization companies to adverse business and
economic developments. The stocks of small-capitalization companies may be less
liquid, making it difficult for the Fund to buy and sell them. In addition,
small-capitalization companies are typically less stable financially than
large-capitalization companies and may depend on a small number of key
personnel, making them more vulnerable to loss of personnel. Small-
capitalization companies also generally have less diverse product lines than
large-capitalization companies and are more susceptible to adverse developments
related to their products.

STRUCTURAL RISKS. Certain countries in which the Fund invests have experienced
currency devaluations, substantial rates of inflation or economic recessions,
causing a negative effect on their economies and securities markets.

TECHNOLOGY SECTOR RISK. The Fund invests in technology companies, which face
intense competition, both domestically and internationally, which may have an
adverse affect on profit margins. Technology companies may have limited product



                                       7




lines, markets, financial resources or personnel. The products of technology
companies may face product obsolescence due to rapid technological developments
and frequent new product introduction, unpredictable changes in growth rates
and competition for the services of qualified personnel. Companies in the
technology sector are heavily dependent on patent and intellectual property
rights. The loss or impairment of these rights may adversely affect the
profitability of these companies.

TRACKING ERROR RISK. Imperfect correlation between the Fund's portfolio
securities and those in its Underlying Index, rounding of prices, changes to
the Underlying Index and regulatory requirements may cause tracking error, the
divergence of the Fund's performance from that of its Underlying Index. This
risk may be heightened during times of increased market volatility or other
unusual market conditions. Tracking error also may result because the Fund
incurs fees and expenses while its Underlying Index does not.

VALUATION RISK. Because non-U.S. 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).


Management

INVESTMENT ADVISER. As investment adviser, BFA has overall responsibility for
the general management and administration of the Company. BFA 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, BFA uses teams
of portfolio managers, investment strategists and other investment specialists.
This team approach brings together many disciplines and leverages BFA's
extensive resources.

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

For its investment advisory services to the Fund, BFA is entitled to receive a
management fee from the Fund 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 All Country Asia ex Japan Index Fund, iShares MSCI BRIC
Index Fund, iShares MSCI Emerging Markets Eastern Europe Index Fund, iShares
MSCI Emerging Markets Financials Sector Index Fund, iShares MSCI Emerging
Markets Index Fund and iShares MSCI Emerging Markets Materials Sector Index
Fund, which are offered


                                       8




in separate prospectuses) as follows: __% per annum of the aggregate net assets
less than or equal to $__ billion, plus __% per annum of the aggregate net
assets over $__ billion, up to and including $__ billion, plus __% per annum of
the aggregate net assets in excess of $__ billion.

As calculated on _____, 2010, for its investment advisory services to the Fund,
BFA is entitled to receive a management fee from the Fund, based on a
percentage of the Fund's average daily net assets, at an annual rate of __%.
Because the Fund has been in operation for less than one full fiscal year, this
percentage reflects the rate at which BFA will be paid.

BFA is located at 400 Howard Street, San Francisco, CA 94105. It is a
wholly-owned subsidiary of BTC, which in turn is indirectly wholly-owned by
BlackRock, Inc. ("BlackRock"). As of _____, 2010, BTC and its affiliates,
including BFA and BlackRock, provided investment advisory services for assets
in excess of $____ trillion. BFA, BTC, BlackRock Execution Services, BlackRock
and their affiliates deal, trade and invest for their own accounts in the types
of securities in which the Fund may also invest.

A discussion regarding the basis for the Company's Board of Directors' (the
"Board") approval of the Investment Advisory Agreement with BFA 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 BFA and BTC 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 BFA and BTC since
2009. Prior to her employment with BFA and BTC, Ms. Hsiung was a senior
portfolio manager from 2007 to 2009 for Barclays Global Fund Advisors ("BGFA")
and Barclays Global Investors, N.A. ("BGI") and a portfolio manager from 2002
to 2006 for BGFA and BGI. Ms. Hsiung has been a Portfolio Manager of the Fund
since 2010.

Greg Savage is an employee of BFA and BTC 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 BFA and BTC since
2009. Prior to his employment with BFA and BTC, Mr. Savage was a senior
portfolio manager from 2006 to 2009 for BGFA and BGI and a portfolio manager
from 2001 to 2006 for BGFA and BGI. Mr. Savage has been a Portfolio Manager of
the Fund since 2010.

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.


                                       9




CONFLICTS OF INTEREST. BFA wants you to know that there are certain entities
with which BFA has relationships that may give rise to conflicts of interest,
or the appearance of conflicts of interest. These entities include the
following: BFA's affiliates (including BlackRock and The PNC Financial Services
Group, Inc., and each of their affiliates, directors, partners, trustees,
managing members, officers and employees (collectively, the "Affiliates")) and
BlackRock's significant shareholders, Merrill Lynch & Co., Inc. and its
affiliates, including Bank of America Corporation (each, a "BAC Entity"), and
Barclays Bank PLC and its affiliates, including Barclays PLC (each, a "Barclays
Entity") (for convenience the Affiliates, BAC Entities and Barclays Entities
are collectively referred to in this section as the "Entities" and each
separately is referred to as an "Entity").

The activities of Entities in the management of, or their interest in, their
own accounts and other accounts they manage, may present conflicts of interest
that could disadvantage the Fund and its shareholders. The Entities provide
investment management services to other funds and discretionary managed
accounts that follow an investment program similar to that of the Fund. The
Entities are involved worldwide with a broad spectrum of financial services and
asset management activities and may engage in the ordinary course of business
in activities in which their interests or the interests of their clients may
conflict with those of the Fund. One or more of the Entities act or may act as
an investor, investment banker, research provider, investment manager,
financier, advisor, market maker, trader, prime broker, lender, agent and
principal, and have other direct and indirect interests, in securities,
currencies and other instruments in which the Fund directly and indirectly
invests. Thus, it is likely that the Fund will have multiple business
relationships with and will invest in, engage in transactions with, make voting
decisions with respect to, or obtain services from entities for which an Entity
performs or seeks to perform investment banking or other services.

One or more Entities may engage in proprietary trading and advise accounts and
funds that have investment objectives similar to those of the Fund and/or that
engage in and compete for transactions in the same types of securities,
currencies and other instruments as the Fund, including in securities issued by
other open-end and closed-end investment management companies, including
investment companies that are affiliated with the Fund and BFA, to the extent
permitted under the Investment Company Act of 1940, as amended (the "1940
Act"). The trading activities of these Entities are carried out without
reference to positions held directly or indirectly by the Fund and may result
in an Entity having positions that are adverse to those of the Fund.

No Entity is under any obligation to share any investment opportunity, idea or
strategy with the Fund. As a result, an Entity may compete with the Fund for
appropriate investment opportunities. As a result of this and several other
factors, the results of the Fund's investment activities may differ from those
of an Entity and of other accounts managed by an Entity, and it is possible
that the Fund could sustain losses during periods in which one or more Entities
and other accounts achieve profits on their trading for proprietary or other
accounts. The opposite result is also possible.


                                       10




The Fund may, from time to time, enter into transactions in which an Entity or
an Entity's other clients have an adverse interest. Furthermore, transactions
undertaken by Entity-advised clients may adversely impact the Fund.
Transactions by one or more Entity-advised clients or BFA may have the effect
of diluting or otherwise disadvantaging the values, prices or investment
strategies of the Fund.

An Entity may maintain securities indices as part of their product offerings.
Index based funds seek to track the performance of securities indices and may
use the name of the index in the fund name. Index providers, including the
Entities, may be paid licensing fees for use of their indices or index names.
Entities will not be obligated to license their indices to BlackRock, and
BlackRock cannot be assured that the terms of any index licensing agreement
with the Entities will be as favorable as those terms offered to other index
licensees.

The Fund's activities may be limited because of regulatory restrictions
applicable to one or more Entities, and/or their internal policies designed to
comply with such restrictions. In addition, the Fund may invest in securities
of companies with which an Entity has or is trying to develop investment
banking relationships or in which an Entity has significant debt or equity
investments. The Fund also may invest in securities of companies for which an
Entity provides or may some day provide research coverage. An Entity may have
business relationships with and purchase or distribute or sell services or
products from or to distributors, consultants or others who recommend the Fund
or who engage in transactions with or for the Fund, and may receive
compensation for such services. The Fund may also make brokerage and other
payments to Entities in connection with the Fund's portfolio investment
transactions.

Under a securities lending program approved by the Board, the Fund has retained
an Affiliate of BFA to serve as the securities lending agent for the Fund to
the extent that the Fund participates in the securities lending program. For
these services, the lending agent may receive a fee from the Fund, including a
fee based on the returns earned on the Fund's investment of the cash received
as collateral for the loaned securities. In addition, one or more Affiliates
may be among the entities to which the Fund may lend its portfolio securities
under the securities lending program.

The activities of Affiliates may give rise to other conflicts of interest that
could disadvantage the Fund and its shareholders. BFA has adopted policies and
procedures designed to address these potential conflicts of interest.


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 will be listed for trading 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


                                       11




that may apply to all securities transactions. When buying or selling shares of
the Fund through a broker, you will likely incur a brokerage commission or
other charges determined by your broker. In addition, you may incur the cost of
the "spread" - that is, any 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 "___".

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. Only an Authorized Participant (as
defined in the CREATIONS AND REDEMPTIONS section) may engage in creation or
redemption transactions directly with the Fund. Once created, shares of the
Fund generally trade in the secondary market in amounts less than a Creation
Unit.

The Board 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 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 _______.

Section 12(d)(1) of the 1940 Act 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
shares of the Fund.


                                       12




DTC participants include 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's shares are listed or by market data vendors or other information
providers. The IOPV is based on the current market value of the securities
and/or cash required to be 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 of 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.

The securities and other assets of the Fund are valued pursuant to the pricing
policy and procedures approved by the Board. The Fund utilizes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels. Inputs may be based on independent market
data ("observable inputs") or they may be internally developed ("unobservable
inputs"). The hierarchy gives the


                                       13




highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy are as follows:

o Level 1 - Inputs that reflect unadjusted quoted prices in active markets for
identical assets or liabilities that the Fund has the ability to access at the
measurement date;

o Level 2 - Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability either directly or indirectly, including
quoted prices for similar assets or liabilities in active markets, quoted
prices for identical or similar assets or liabilities in markets that are not
considered to be active, inputs other than quoted prices that are observable
for the asset or liability and inputs that are derived principally from or
corroborated by observable market data by correlation or other means; and

o Level 3 - Inputs that are unobservable for the asset or liability.

The availability of observable inputs can vary from security to security and is
affected by a wide variety of factors, including, for example, the type of
security, whether the security is new and not yet established in the
marketplace, the liquidity of markets and other characteristics particular to
the security. Inputs may include price information, volatility statistics,
specific and broad credit data, liquidity statistics and other factors. To the
extent that valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value requires more
judgment. Accordingly, the degree of judgment exercised in determining fair
value is greatest for instruments categorized in Level 3 of the fair value
hierarchy.

The level of a value determined for a financial instrument within the fair
value hierarchy is based on the lowest level of any input that is significant
to the fair value measurement in its entirety. The categorization of a value
determined for a financial instrument within the hierarchy is based upon the
pricing transparency of the instrument and does not necessarily correspond to
the Fund's perceived risk of that instrument.

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 Underlying Index, which, in turn, could result in a difference
between the Fund's performance and the performance of the Underlying Index.

The value of assets denominated in non-U.S. currencies is converted into U.S.
dollars using exchange rates deemed appropriate by BFA as investment adviser.
Use of a rate different from the rate used by the Index Provider may adversely
affect the Fund's ability to track the Underlying Index.


                                       14




DIVIDENDS AND DISTRIBUTIONS

GENERAL POLICIES. Dividends from net investment income, if any, are generally
declared and paid __________ by the Fund. Distributions of net realized
securities gains, if any, generally are declared and paid once a year, but the
Company may make distributions on a more frequent basis for the Fund. The
Company 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 or realized gains.

Dividends and other distributions on shares of the Fund are distributed on a
PRO RATA basis to beneficial owners of such shares. Dividend payments are made
through DTC participants and indirect 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 Fund 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 of income from
securities lending and distributions out of the Fund's net short-term capital
gains, if any, 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,
generally at a 15% tax rate (0% at certain income levels), 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.
The 15% and 0% tax rates expire for taxable years beginning after December 31,
2010.

Dividends will be qualified dividend income to you if they are attributable to
qualified dividend income received by the Fund. Generally, qualified dividend
income includes dividend income from taxable U.S. corporations and qualified
non-U.S. 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
non-U.S. corporation means any non-U.S.


                                       15




corporation that is eligible for benefits under a comprehensive income tax
treaty with the United States, which includes an exchange of information
program or 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.

Dividends received by the Fund from a 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.

For a dividend to be treated as qualified dividend income, the dividend must be
received with respect to a share of stock held without being hedged by the
Fund, and to a share of the Fund held without being hedged by you, for 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 non-U.S. 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 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 or other disposition of shares of the Fund.

Dividends and interest received by the Fund with respect to non-U.S. securities
may give rise to withholding and other taxes imposed by non-U.S. countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. If, as is expected, more than 50% of the total assets of
the Fund at the close of a year consist of non-U.S. stocks or securities, the
Fund may "pass through" to you certain non-U.S. income taxes (including
withholding taxes) paid by the Fund. This means that you would be considered to
have received as an additional dividend your share of such non-U.S. 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.


                                       16




For purposes of foreign tax credits for U.S. shareholders of the Fund, foreign
capital gains taxes may not produce associated foreign source income, limiting
the availability of such credits for U.S. persons.

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 Fund shares is generally treated as a long-term gain or loss if the
shares have been held for more than one year. Any capital gain or loss realized
upon a sale of Fund 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.

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. Prior to trading in the secondary market, shares of
the Fund are "created" at NAV by market makers, large investors and
institutions only in block-size Creation Units of __ 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"). Only an Authorized Participant may create or redeem
Creation Units directly with the Fund. A creation transaction, which is subject
to acceptance by the transfer agent, generally 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 ("Fund Securities") 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 Securities Act of 1933, as amended (the "1933
Act"). Further, an Authorized Participant that is not a "qualified
institutional buyer," as such term is


                                       17




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.

COSTS ASSOCIATED WITH CREATIONS AND REDEMPTIONS. Authorized Participants are
charged standard creation and redemption transaction fees to offset transfer
and other transaction costs associated with the issuance and redemption of
Creation Units. Purchasers and redeemers of Creation Units for cash also may be
responsible for certain brokerage and market impact expenses. Such expenses may
include costs associated with certain brokerage execution guarantees, as
further described in the Fund's SAI. The standard creation and redemption
transaction fees are set forth below. The standard creation transaction fee is
charged to each purchaser on the day such purchaser creates a Creation Unit.
The standard creation transaction fee is the same regardless of the number of
Creation Units purchased by an investor on the same day. Similarly, the
standard redemption transaction fee is the same regardless of the number of
Creation Units redeemed on the same day. Creations and redemptions through DTC
for cash (when cash creations and redemptions are available or specified) are
also subject to the expenses described herein. In addition, purchasers of
shares in Creation Units are responsible for payment of the costs of
transferring securities to the Fund and 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.


                                       18




The following table also shows, as of ___________, 2010, the approximate value
of one Creation Unit, including standard creation and redemption transaction
fees:






                                   STANDARD
  APPROXIMATE                     CREATION/
   VALUE OF A      CREATION       REDEMPTION
 CREATION UNIT    UNIT SIZE    TRANSACTION FEE
---------------  -----------  -----------------
                        
      $_______       __             $ ____


-----------


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.

In addition, BFA or its affiliates makes payments to broker-dealers, banks or
other financial intermediaries (together, "intermediaries") related to
marketing activities and presentations, educational training programs,
conferences, the development of technology platforms and reporting systems, or
their making shares of the Fund and certain other iShares funds available to
their customers. Such payments, which may be significant to the intermediary,
are not made by the Fund. Rather, such payments are made by BFA or its
affiliates from their own resources, which come directly or indirectly in part
from fees paid by the iShares funds complex. Payments of this type are
sometimes referred to as revenue-sharing payments. A financial intermediary may
make decisions about which investment options it recommends or makes available,
or the level of services provided, to its customers based on the
revenue-sharing payments it is eligible to receive. Therefore, such payments to
an intermediary create conflicts of interest between the intermediary and its
customers and may cause the intermediary to recommend the Fund or other iShares
funds over another investment. More information regarding these payments is
contained in the Fund's SAI. PLEASE CONTACT YOUR SALESPERSON OR OTHER
INVESTMENT PROFESSIONAL FOR MORE INFORMATION REGARDING ANY SUCH PAYMENTS HIS OR
HER FIRM MAY RECEIVE FROM BFA OR ITS AFFILIATES.

                                       19




Financial Highlights

Financial highlights for the Fund are not available because, as of the
effective date of this Prospectus, the Fund has not commenced operations, and
therefore has no financial highlights to report.

                                       20




Index Provider

MSCI is a leading provider of global indexes and benchmark related products and
services to investors worldwide. MSCI is not affiliated with the Company, BTC,
BFA, State Street, the Distributor or any of their respective affiliates.

BTC has entered into a license agreement with the Index Provider to use the
Underlying Index. BTC sublicenses rights in the Underlying Index to the Company
at no charge.


Disclaimers

THE FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI OR ANY AFFILIATE
OF MSCI. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, TO THE OWNERS OF THIS FUND OR ANY MEMBER OF THE PUBLIC
REGARDING ADVISABILITY OF INVESTING IN FUNDS GENERALLY OR IN THIS FUND
PARTICULARLY OR THE ABILITY OF THE UNDERLYING INDEX TO TRACK GENERAL STOCK
MARKET PERFORMANCE. MSCI IS THE LICENSOR OF CERTAIN TRADEMARKS, SERVICE MARKS
AND TRADE NAMES OF MSCI AND OF THE UNDERLYING INDEX WHICH IS DETERMINED,
COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THE COMPANY, BTC, BFA OR THE
FUND. MSCI HAS NO OBLIGATION TO TAKE THE NEEDS OF THE BTC, BFA OR THE OWNERS 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 TIMING OF, PRICES AT, OR QUANTITIES OF THE FUND TO BE
ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH THE FUND
IS REDEEMABLE FOR CASH. NEITHER MSCI NOR ANY OTHER PARTY HAS ANY OBLIGATION OR
LIABILITY TO OWNERS OF THE FUND IN CONNECTION WITH THE ADMINISTRATION,
MARKETING OR TRADING OF THE FUND.

ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE
CALCULATION OF THE INDEXES FROM SOURCES WHICH MSCI CONSIDERS RELIABLE, NEITHER
MSCI NOR ANY OTHER PARTY GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE
INDEXES OR ANY DATA INCLUDED THEREIN. NEITHER MSCI NOR ANY OTHER PARTY MAKES
ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE,
LICENSEE'S CUSTOMERS AND COUNTERPARTIES, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE INDEXES OR ANY DATA INCLUDED HEREUNDER OR
FOR ANY OTHER USE. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY EXPRESS OR
IMPLIED WARRANTIES, AND MSCI HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEXES
OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL MSCI OR ANY OTHER PARTY HAVE ANY LIABILITY FOR DIRECT, INDIRECT,
SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS)
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

SHARES OF THE FUND ARE NOT SPONSORED, ENDORSED OR PROMOTED BY _______. _______
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 TO TRACK STOCK MARKET PERFORMANCE. _______ 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,


                                       21




PRICES OF, OR QUANTITIES OF SHARES OF THE FUND TO BE ISSUED, NOR IN THE
DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH THE SHARES ARE
REDEEMABLE. _______ 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.

_______ DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. _______ 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 OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE SUBJECT
INDEX OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED AS
DESCRIBED HEREIN OR FOR ANY OTHER USE. _______ 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
_______ HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE,
CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.

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

BFA MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF SHARES OF THE FUND
OR TO ANY OTHER PERSON OR ENTITY, AS TO RESULTS TO BE OBTAINED BY THE FUND FROM
THE USE OF THE UNDERLYING INDEX OR ANY DATA INCLUDED THEREIN. BFA 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 BFA HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
DIRECT, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.


                                       22




[GRAPHIC APPEARS HERE]





Dear iShares Shareholder:

Electronic delivery is the easiest, most convenient way to receive reporting on
your iShares holdings. In addition, it's a way we can all care for our
environment. To that end, we are pleased to offer shareholder reports and
prospectuses online.


Once you have enrolled, you will no longer receive shareholder reports and

prospectuses in the mail. Instead, you will receive e-mail notifications

announcing that the shareholder report or prospectus has been posted on the

iShares website at www.iShares.com and is available to be viewed or downloaded.
                   ---------------



To sign up for electronic delivery, please follow these simple steps:


1.    Go to www.icsdelivery.com.
            -------------------


2.    From the main page, select the first letter of your brokerage firm's
      name.


3.    Select your brokerage institution from the list that follows. If your
      brokerage firm is not listed, electronic delivery may not be available.
      Please contact your brokerage firm or financial adviser.


4.    Fill out the appropriate information and provide the e-mail address where
      you would like your notifications sent.


Your information and e-mail address will be kept confidential and only used to

deliver documents to you. If at any time you are not satisfied, you can cancel

electronic delivery at www.icsdelivery.com and once again receive physical
                       -------------------
delivery of your materials. If you have any questions, please contact your
brokerage firm or financial adviser.




                             FOR MORE INFORMATION:



                                WWW.iSHARES.COM
                         1-800-iShares (1-800-474-2737)






Copies of the Prospectus, SAI and other information 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.

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



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

     E-mail:   iSharesETFs@blackrock.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. 20549-1520.

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

IS-P-___-_________


[GRAPHIC APPEARS HERE]




[GRAPHIC APPEARS HERE]







THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES DESCRIBED
HEREIN MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE IN WHICH THE OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL.



ISHARES(Reg. TM), INC.

Statement of Additional Information
Dated _____________, 2010

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





FUND                                                                TICKER    STOCK EXCHANGE
-----------------------------------------------------------------  --------  ---------------
                                                                       
iShares MSCI Emerging Markets Small Cap Index Fund (the "Fund")      ___         _______


The Prospectus for the Fund is dated __________, 2010. Capitalized terms used
herein that are not defined have the same meaning as in the Prospectus, unless
otherwise noted. The financial statements and notes contained in the Annual
Report of the Company for the above listed fund is incorporated by reference
into and are deemed to be part of this SAI. A copy of the Prospectus 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 BlackRock Institutional Trust
Company, N.A. ("BTC")*.
-------
*     Prior to December 1, 2009, BlackRock Institutional Trust Company, N.A.
      was known as Barclays Global Investors, N.A. ("BGI").




                               TABLE OF CONTENTS



                                                         PAGE
                                                        -----
                                                     
General Description of the Company and the Fund            1
Exchange Listing and Trading                               1
Investment Strategies and Risks                            2
   Diversification Status                                  2
   Lending Portfolio Securities                            2
   Repurchase Agreements                                   3
   Reverse Repurchase Agreements                           3
   Currency Transactions                                   4
   Securities of Investment Companies                      4
   Non-U.S. Securities                                     4
   Illiquid Securities                                     5
   Short-Term Instruments and Temporary Investments        5
   Futures and Options                                     5
   Options on Futures Contracts                            6
   Swap Agreements                                         6
   Tracking Stocks                                         6
   Future Developments                                     6
General Considerations and Risks                           7
   Risks of Derivatives                                    7
   Risks of Equity Securities                              7
   Risks of Futures and Options Transactions               7
   Securities Lending Risk                                 8
   Risks of Swap Agreements                                8
   Risks of Investing in Non-U.S. Equity Securities        8
   Dividend Risk                                           8
Proxy Voting Policy                                        8
Portfolio Holdings Information                             9
Construction and Maintenance of the Underlying Index      11
MSCI Indexes                                              11
   MSCI Emerging Markets Small Cap Index                  13
Investment Limitations                                    13
Continuous Offering                                       14
Management                                                15
   Directors and Officers                                 15
   Committees of the Board of Directors                   19
   Remuneration of Directors                              22


                                       i







                                                                  PAGE
                                                                 -----
                                                              
   Control Persons and Principal Holders of Securities             23
   Potential Conflicts of Interest                                 23
Investment Advisory, Administrative and Distribution Services      28
   Investment Adviser                                              28
   Portfolio Managers                                              29
   Codes of Ethics                                                 31
   Anti-Money Laundering Requirements                              31
   Administrator, Custodian and Transfer Agent                     31
   Distributor                                                     32
   Financial Intermediary Compensation                             32
Brokerage Transactions                                             33
Additional Information Concerning the Company                      34
   Capital Stock                                                   34
   Termination of the Company or the Fund                          35
   DTC as Securities Depository for Shares of the Fund             35
Creation and Redemption of Creation Units                          36
   General                                                         36
   Fund Deposit                                                    37
   Role of the Authorized Participant                              37
   Purchase Order                                                  38
   Acceptance of Order for Creation Unit                           38
   Issuance of a Creation Unit                                     38
   Cash Purchase Method                                            39
   Costs Associated with Creation Transactions                     39
   Redemption of Creation Units                                    39
   Costs Associated with Redemption Transactions                   40
   Taxation on Creation and Redemptions of Creation Units          42
   Regular Holidays                                                42
   Redemptions                                                     46
Taxes                                                              49
   Regulated Investment Company Qualifications                     49
   Taxation of RICs                                                49
   Excise Tax                                                      50
   Net Capital Loss Carryforwards                                  50
   Taxation of U.S. Shareholders                                   50
   Sales of Shares                                                 51
   Back-Up Withholding                                             51


                                       ii







                                                         PAGE
                                                        -----
                                                     
   Sections 351 and 362                                   51
   Taxation of Certain Derivatives                        52
   Qualified Dividend Income                              52
   Corporate Dividends Received Deduction                 53
   Excess Inclusion Income                                53
   Non-U.S. Investments                                   53
   Passive Foreign Investment Companies                   54
   Reporting                                              54
   Other Taxes                                            54
   Taxation of Non-U.S. Shareholders                      54
Financial Statements                                      56
Miscellaneous Information                                 56
   Counsel                                                56
   Independent Registered Public Accounting Firm          56
   Shareholder Communications to the Board                56


                                       iii




General Description of the Company and the Fund

The Company currently consists of more than ___ 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
solely to the Fund.


The investment objective of the Fund is to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of a specified benchmark index (the "Underlying Index") representing
publicly-traded equity securities of issuers in a particular broad market,
market segment, market sector or group of industries. The Fund is managed by
BlackRock Fund Advisors ("BFA" or the "Investment Adviser")*, a wholly-owned
subsidiary of BTC, which in turn is indirectly wholly-owned by BlackRock, Inc.


The Fund offers and issues shares at their net asset value per share ("NAV")
only in aggregations of a specified number of shares ("Creation Unit"),
generally in exchange for a basket of equity securities included in its
Underlying Index (the "Deposit Securities"), together with the deposit of a
specified cash payment (the "Cash Component"). Shares of the Fund are listed
and trade on __________ (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
______ or multiples thereof.


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
with the Company a cash deposit equal to at least 115%, which BFA may change
from time to time, of the market value of the omitted Deposit Securities. See
the CREATION AND REDEMPTION OF CREATION UNITS section of this SAI. Transaction
fees for cash creations or redemptions may be higher than the transaction fees
associated with in-kind creations or redemptions. In all cases, conditions and
fees will be limited in accordance with the requirements of SEC rules and
regulations 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 the 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 Prospectus.


Shares of the Fund are listed for trading and trade throughout the day on the
Listing Exchange and other secondary markets. Shares of the Fund may also be
listed 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 the Fund will continue to be met. The Listing Exchange may, but is
not required to, remove the shares of the Fund from listing if (i) following
the initial 12-month period beginning upon the commencement of trading of Fund
shares, there are fewer than 50 beneficial owners of shares of the Fund for 30
or more consecutive trading days, (ii) the value of the Underlying Index on
which the Fund is based is no longer calculated or available, (iii) the
"indicative optimized portfolio value" ("IOPV") of the 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 also remove shares
of the 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 Fund, the Listing Exchange or a market data vendor disseminates
information every 15 seconds through the facilities of the Consolidated Tape
Association or other widely disseminated means an updated IOPV for the Fund as
calculated by an information provider or market data


-------
* Prior to December 1, 2009, BlackRock Fund Advisors was known as Barclays
Global Fund Advisors ("BGFA").
                                       1




vendor. 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 the 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 a
part of the current Deposit Securities. Therefore, the 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 interest,
dividends 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 the Fund in the
future to maintain convenient trading ranges for investors. Any adjustments
would be accomplished through stock splits or reverse stock splits, which would
have no effect on the net assets of the Fund.



Investment Strategies and Risks

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


The Fund engages in representative sampling, which is investing in a sample of
securities selected by BFA to have a collective investment profile similar to
that of 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 Underlying Index. Funds
that use representative sampling generally do not hold all of the securities
that are in the Underlying Index.


DIVERSIFICATION STATUS. The Fund is classified as "non-diversified." A
non-diversified fund is a fund that 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.


The 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 "Internal Revenue Code") and to relieve the Fund of any liability
for U.S. federal income tax to the extent that its earnings are distributed to
shareholders, provided that the Fund satisfies a minimum distribution
requirement. Compliance with the diversification requirements of the Internal
Revenue Code may limit the investment flexibility of the Fund and may make it
less likely that the Fund will meet its investment objectives.


 With respect to 75% of its total assets, a "diversified" fund is limited by
the 1940 Act such that it does not invest more than 5% of its total assets in
securities of any one issuer and does not acquire more than 10% of the
outstanding voting securities of any one issuer (excluding cash and cash items,
government securities, and securities of other investment companies). The
remaining 25% of the fund's total assets may be invested in any manner.


LENDING PORTFOLIO SECURITIES.   The Fund may lend portfolio securities to
certain creditworthy borrowers, including borrowers affiliated with BFA. 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 the Fund if, as a result, the aggregate value of all
securities loans of the Fund exceeds one-third of the value of the Fund's total
assets (including the value of the collateral received). The Fund may terminate
a loan at any time and obtain the return of the securities loaned. The Fund
receives the value of any interest or cash or non-cash distributions paid on
the loaned securities.


                                       2




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 Fund is
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, the 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 the Fund or through one or more joint accounts or money market funds,
including those affiliated with BFA; such reinvestments are subject to
investment risk.


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 the Fund has agreed to pay
a borrower), and credit, legal, counterparty and market risk. In the event a
borrower does not return the 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.


The Fund pays 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 the "Directors"). To the extent
that the Fund engages in securities lending, BTC acts as securities lending
agent for the Fund subject to the overall supervision of BFA. BTC receives a
portion of the revenues generated by securities lending activities as
compensation for its services.


REPURCHASE AGREEMENTS.  The Fund may enter into repurchase agreements. A
repurchase agreement is an instrument under which the purchaser (I.E., the
Fund) acquires the security and the seller agrees, at the time of the sale, to
repurchase the security at a mutually agreed upon time and price, thereby
determining the yield during the purchaser's holding period. Repurchase
agreements may be construed to be collateralized loans by the purchaser to the
seller secured by the securities transferred to the purchaser. If a repurchase
agreement is construed to be a collateralized loan, the underlying securities
will not be considered to be owned by the Fund but only to constitute
collateral for the seller's obligation to pay the repurchase price, and, in the
event of a default by the seller, the Fund may suffer time delays and incur
costs or losses in connection with the disposition of the collateral.


In any repurchase transaction, the collateral for a repurchase agreement may
include: (i) cash items; (ii) obligations issued by the U.S. government or its
agencies or instrumentalities; or (iii) obligations that, at the time the
repurchase agreement is entered into, are rated in the highest rating category
generally by at least two nationally recognized statistical rating
organizations ("NRSRO"), or, if unrated, determined to be of comparable quality
by BFA. Collateral, however, is not limited to the foregoing and may include
for example obligations rated below the highest category by NRSROs. Collateral
for a repurchase agreement may also include securities that the Fund could not
hold directly without the repurchase obligation. Irrespective of the type of
collateral underlying the repurchase agreement, in the case of a repurchase
agreement entered into by a non-money market fund, the repurchase obligation of
a seller must be of comparable credit quality to securities which are rated in
one of the two highest rating categories by any NRSRO.


Repurchase agreements pose certain risks for a fund that utilizes them. Such
risks are not unique to the Fund, but are inherent in repurchase agreements.
The Fund seeks to minimize such risks, but because of the inherent legal
uncertainties involved in repurchase agreements, such risks cannot be
eliminated. Lower quality collateral and collateral with longer maturities may
be subject to greater price fluctuations than higher quality collateral and
collateral with shorter maturities. If the repurchase agreement counterparty
were to default, lower quality collateral may be more difficult to liquidate
than higher quality collateral. Should the counterparty default and the amount
of collateral not be sufficient to cover the counterparty's repurchase
obligation, the Fund would retain the status of an unsecured creditor of the
counterparty (I.E., the position the Fund would normally be in if it were to
hold, pursuant to its investment policies, other unsecured debt securities of
the defaulting counterparty) with respect to the amount of the shortfall. As an
unsecured creditor, the Fund would be at risk of losing some or all of the
principal and income involved in the transaction.


REVERSE REPURCHASE AGREEMENTS.  The 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


                                       3




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 the Fund intends to use the
reverse repurchase technique only when BFA 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 the Fund's assets. The Fund's exposure to
reverse repurchase agreements will be covered by assets having a value equal to
or greater than such commitments. The Fund maintains liquid assets in
connection with reverse repurchase agreements. Under the 1940 Act, reverse
repurchase agreements are considered borrowings.


CURRENCY TRANSACTIONS.  The Fund does not expect to engage in currency
transactions for the purpose of hedging against declines in the value of the
Fund's assets that are denominated in a non-U.S. currency. The Fund may enter
into non-U.S. currency forward and non-U.S. 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. Currency futures contracts may be settled
on a net cash payment basis rather than by the sale and delivery of the
underlying currency. To the extent required by law, liquid assets committed to
futures contracts will be maintained.


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 and 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, counterparty risk,
maturity gap, interest rate risk, and potential interference by foreign
governments through regulation of local exchange markets, foreign investment or
particular transactions in non-U.S. currency. If BFA 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 the 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,
the Fund could incur transaction costs, including trading commissions, in
connection with certain non-U.S. currency transactions.


SECURITIES OF INVESTMENT COMPANIES.  The 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, the 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, the Fund may invest its assets in the securities
of investment companies that are money market funds, including those advised by
or otherwise affiliated with BFA, in excess of the limits discussed above.
Other investment companies in which the 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.


NON-U.S. SECURITIES.  The Fund intends to purchase publicly-traded common
stocks of non-U.S. issuers. To the extent the Fund invests in stocks of
non-U.S. issuers, the 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 issuer,
which evidence ownership of underlying securities issued by a non-U.S. issuer.
For ADRs, the depository is typically a U.S. financial institution and the
underlying securities are issued by a non-U.S. issuer. For other forms of
Depositary Receipts, the depository may be a non-U.S. or a U.S. entity, and the
underlying securities may be issued by a non-U.S. or a U.S. issuer. Depositary
Receipts are not necessarily denominated in the same currency as their
underlying securities. Generally, ADRs, issued in registered form, are designed
for use in the U.S. securities markets, and EDRs, issued 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 Fund will not invest in any unlisted Depositary Receipt or any Depositary
Receipt that BFA deems illiquid at the time of purchase or for which pricing
information is not readily available. In general, Depositary Receipts must be
sponsored but the


                                       4




Fund may invest in unsponsored Depositary Receipts under certain limited
circumstances. The issuers of unsponsored Depositary 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
Depositary Receipts.


Investing in the securities of non-U.S. issuers involves special risks and
considerations not typically associated with investing in U.S. issuers. 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 non-U.S. countries, and potential restrictions on
the flow of international capital. Non-U.S. issuers may be subject to less
governmental regulation than U.S. issuers. Moreover, individual non-U.S.
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.


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


SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS.  The 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 BFA or otherwise
affiliated with BFA); (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 non-U.S.
banks (including non-U.S. branches) and similar institutions; (iv) commercial
paper rated, at the date of purchase, "Prime-1" by Moody's(Reg. TM) Investors
Service, Inc. or "A-1" by Standard & Poor's(Reg. TM), a division of The
McGraw-Hill Companies, Inc. ("S&P(Reg. TM)"), or if unrated, of comparable
quality as determined by BFA; (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 non-U.S. banks (including U.S. branches)
that, in the opinion of BFA, are of comparable quality to obligations of U.S.
banks which may be purchased by the 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.


FUTURES AND OPTIONS.  The Fund may enter into futures contracts and options.
These futures contracts and options will be used to simulate investment in the
Underlying Index, to facilitate trading or to reduce transaction costs. The
Fund may enter into futures contracts and options that are traded on a U.S. or
non-U.S. exchange. The Fund will not use futures or options for speculative
purposes. The Fund intends to use futures and options in accordance with Rule
4.5 of the Commodity Exchange Act ("CEA"). The Company, on behalf of the Fund,
has claimed an exclusion from the definition of the term "commodity pool
operator" in accordance with Rule 4.5 so that the Fund is not subject to
registration or regulation as a
commodity pool operator under the CEA.


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. The Fund may enter into futures contracts to
purchase securities indexes when BFA 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 maintained.


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. The 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. The
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. Investments in futures
contracts and other investments that contain leverage may require the Fund to
maintain


                                       5




liquid assets. Generally, the Fund maintains an amount of liquid assets equal
to its obligations relative to the position involved, adjusted daily on a
marked-to-market basis. With respect to futures contracts that are
contractually required to "cash-settle," the Fund maintains liquid assets in an
amount at least equal to the Fund's daily marked-to-market obligation (I.E.,
the Fund's daily net liability, if any), rather than the contracts' notional
value (I.E., the value of the underlying asset). By maintaining assets equal to
its net obligation under cash-settled futures contracts, the Fund may employ
leverage to a greater extent than if the Fund set aside assets equal to the
futures contracts' full notional value. The Fund bases its asset maintenance
policies on methods permitted by the staff of the SEC and may modify these
policies in the future to comply with any changes in the guidance articulated
from time to time by the SEC or its staff.


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 the
Fund. The potential for loss related to writing call options is unlimited. The
potential for loss related to writing put options is limited to the agreed upon
price per share, also known as the strike price, less the premium received from
writing the put.


The Fund may purchase and write put and call options on futures contracts that
are traded on an 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, the 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 the 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 the
expiration of a futures contract, the Fund may elect to close the position by
taking an opposite position, which will operate to terminate the 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 performed on a net basis, with the Fund receiving or paying only the
net amount of the two payments. The net amount of the excess, if any, of the
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 the 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.


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


                                       6




General Considerations and Risks

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

An investment in the 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 stocks in general, and other factors that affect the market.


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 Fund 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 the 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 the Fund should 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 the 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 risks than holders of preferred stocks and debt obligations because common
stockholders generally have rights to receive payments from stock issuers
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 (the value of which, 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.


Although most of the securities in the Underlying Index are listed on a
national securities exchange, the principal trading market for some may be in
the over-the-counter market. The existence of a liquid trading market for
certain securities may depend on whether dealers will make a market in such
securities. There can be no assurance that a market will be made or maintained
or that any such market will be or remain liquid. The price at which securities
may be sold and the value of the Fund's shares will be adversely affected if
trading markets for the Fund's portfolio securities are limited or absent, or
if bid/ask spreads are wide.


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 the 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, the Fund would continue to be
required to make daily cash payments to maintain its required margin. In such
situations, if the 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, the 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 Fund does 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 Fund, however, intends to utilize futures and options
contracts in a manner designed to limit its risk exposure to levels comparable
to a direct investment in the types of stocks in which it invests.


Utilization of futures and options on futures by the 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


                                       7




by the Fund of margin deposits in the event of bankruptcy of a broker with whom
the Fund has an open position in the futures contract or option. The purchase
of put or call options will be based upon predictions by BFA as to anticipated
trends, which predictions could prove to be incorrect.


Because the futures market generally 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 the Fund to substantial losses.
In the event of adverse price movements, the Fund would be required to make
daily cash payments of variation margin.


SECURITIES LENDING RISK.  The Fund may engage in securities lending. Securities
lending involves the risk that the borrower may fail to return the securities
in a timely manner or at all. As a result, the Fund may lose money and there
may be a delay in recovering the loaned securities. The Fund could also lose
money if it does not recover the securities and/or the value of the collateral
falls, including the value of investments made with cash collateral. These
events could trigger adverse tax consequences for the Fund.


RISKS OF SWAP AGREEMENTS.  The risk of loss with respect to swaps generally is
limited to the net amount of payments that the 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, the 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 the Fund's rights as a creditor (E.G., the 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 the Fund
involves risks similar to those of investing in broad-based portfolios of
equity securities traded on non-U.S. exchanges. 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 issuers 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 its home country and in that country's
currency. These considerations include favorable or unfavorable changes in
interest rates, currency exchange rates, exchange control regulations and the
costs that may be incurred in connection with conversions between various
currencies. Investing in the Fund also involves certain risks and
considerations not typically associated with investing in a fund whose
portfolio contains exclusively 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; the risk of
nationalization or expropriation of assets; and the risk of war.


DIVIDEND RISK.  There is no guarantee that the issuer of the stocks held by the
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 the Fund, the proxy
voting guidelines of BFA, the investment adviser to the Fund. The Company has
delegated to BFA the responsibility for voting proxies on the portfolio
securities held by the Fund. The remainder of this section discusses the Fund's
proxy voting guidelines and BFA's role in implementing such guidelines.


BFA votes (or refrains from voting) proxies for the Fund in a manner that BFA,
in the exercise of its independent business judgment, concludes is in the best
economic interests of the Fund. In some cases, BFA may determine that it is in
the best economic interests of the Fund to refrain from exercising the Fund's
proxy voting rights (such as, for example, proxies on


                                       8




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, BFA's approach is also driven by our
clients' economic interests. The evaluation of 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 BFA recalling loaned securities in order to
ensure they are voted. Periodically, BFA 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. BFA will normally vote on specific proxy issues in
accordance with its proxy voting guidelines. BFA's proxy voting guidelines
provide detailed guidance as to how to vote proxies on certain important or
commonly raised issues. BFA 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 the Fund. BFA votes (or
refrains from voting) proxies without regard to the relationship of the issuer
of the proxy (or any shareholder of such issuer) to the Fund, the Fund's
affiliates (if any), BFA or BFA's affiliates, or the Distributor or the
Distributor's affiliates. When voting proxies, BFA attempts to encourage
issuers 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  The 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  The 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  The 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.


BFA 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 the Fund, the Fund's affiliates (if any), BFA or BFA's
affiliates (if any) or the Distributor or the Distributor's affiliates, from
having undue influence on BFA's proxy voting activity. In certain instances,
BFA 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 BFA with instructions as to how to vote such proxies. In the
latter case, BFA votes the proxy in accordance with the independent fiduciary's
determination.


Information with respect to how BFA voted proxies relating to the Fund's
portfolio securities during the 12-month period ended June 30 will be
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 Fund's portfolio
holdings information that requires that such information be disclosed in a
manner that: (i) is consistent with applicable legal requirements and in the
best interests of the Fund's shareholders; (ii) does not put the interests of
BFA, the Distributor or any affiliated person of BFA or the Distributor, above
those of Fund shareholders; (iii) 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 as discussed below and (iv) 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 (iii)
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 pursuant to legal requirements, including
exemptive orders granted by the SEC pursuant to which the Fund offers and
redeems its shares ("iShares Exemptive Orders") and other institutional market
participants and entities that provide information services.


                                       9




Each business day, the Fund's portfolio holdings information will be 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/or
subscribers to those other fee-based subscription services, including
Authorized Participants, and to entities that publish and/or analyze such
information in connection with the process of purchasing or redeeming Creation
Units or trading shares of the Fund in the secondary market. This information
typically reflects the Fund's anticipated holdings on the following business
day.


Daily access to information concerning the Fund's 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 the
Investment Adviser and the 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 Fund and the terms of
the Fund's current registration statement. In addition, the Fund discloses its
portfolio holdings and the percentages they represent of the Fund's net assets
at least monthly, and 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 Fund in the ordinary course of business after it has been
disseminated to the NSCC. From time to time, information concerning 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 Fund, including rating or ranking
organizations, in the ordinary course of business, no earlier than one business
day following the date of the information.


The Fund will disclose 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. The 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
contemporaneously.


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


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

                                       10




Construction and Maintenance of the Underlying Index

A description of the Underlying Index is provided below.

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 equity markets. The MSCI single country standard equity
indexes have covered the world's developed markets since 1969 and in 1987 MSCI
commenced coverage of emerging markets.


Local stock exchanges traditionally calculated their own indexes which 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
calculation methodology to all markets for all single country standard equity
indexes, developed and emerging.


MSCI's Global Investable Market Indexes (the "MSCI GIMI") provide exhaustive
coverage and non-overlapping market segmentation by market capitalization size.


o  MSCI Global Standard Indexes cover all investable large and mid cap
  securities by including approximately 85% of each market's free
  float-adjusted market capitalization.

o  MSCI Global Small Cap Indexes provide coverage to all companies with a
  market capitalization below that of the companies in the enhanced MSCI
  Global Standard Indexes, and targeting up to 99% coverage (by the two groups
  of indexes combined) of the free-float adjusted market capitalization in
  each market.


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 weights determined according to
the value of their free public float (free float multiplied by security price).
Indexes of the MSCI 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.


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 22 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.
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.


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.


                                       11




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:

o  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

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


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 developed 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.


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 currently 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 up to 15
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  Semi-Annual Index Reviews (SAIRs), conducted on a fixed semi-annual
  timetable that systematically re-assess the various dimensions of the equity
  universe for all countries;

o  Quarterly Index Reviews (QIRs), aimed at promptly reflecting other
  significant market events; and

o  Ongoing event-related changes, such as mergers and acquisitions, which
  generally are 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
semi-annual index review and quarterly index review dates.


The MSCI conducts semi-annual index reviews for all the MSCI single country
international equity indexes as of the close of the last business day of
November and May. During the semi-annual reviews MSCI updates country indexes
based on a fully


                                       12




refreshed equity universe. MSCI also conducts two quarterly index reviews on
two dates throughout the year: as of the close of the last business day of
February and August. During the quarterly index review MSCI updates country
indexes to reflect changes in each country market that were not reflected at
the time of their occurrence, and that are significant enough to be included
before the next semi-annual review. Any single country indexes may be impacted
at the quarterly index review. MSCI Index additions and deletions due to
quarterly index rebalancing are generally announced at least two weeks in
advance.


MSCI EMERGING MARKETS SMALL CAP INDEX


NUMBER OF COMPONENTS: APPROXIMATELY __
--------------------------------------


INDEX DESCRIPTION. The MSCI Emerging Markets Small Cap Index targets 40% of the
eligible small cap universe within each industry group and each country
represented by the MSCI Emerging Markets Index. The MSCI Emerging Markets Index
is designed to measure broad based equity market performance in the global
emerging markets. As of March 1, 2010, the Underlying Index consisted of the
following 22 emerging market country indices: Brazil, Chile, China, Colombia,
the Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Malaysia, Mexico,
Morocco, Peru, the Philippines, Poland, Russia, South Africa, South Korea,
Taiwan, Thailand, and Turkey. MSCI defines the small cap universe as all listed
securities that have a market capitalization in the range of $200-$1,500
million USD.


ADDITIONAL INFORMATION. "MSCI," "Morgan Stanley Capital International" and
"MSCI Index" are service marks of Morgan Stanley Capital International and have
been licensed for use by BTC. The Fund is not sponsored, endorsed, sold or
promoted by Morgan Stanley Capital International. Nor does Morgan Stanley
Capital International make any representation regarding the advisability of
investing in the Fund.



Investment Limitations

The Board has adopted as a non-fundamental policy the investment objective of
the Fund. Therefore, the Fund may change its investment objective and its
Underlying Index without a shareholder vote. The Board has adopted as
fundamental policies the Fund's investment restrictions numbered one through
six below. The restrictions for the Fund cannot be changed without the approval
of the holders of a majority of the 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 of the fund.


THE FUND WILL NOT:

1.   Concentrate its investments (I.E., invest 25% or more of its total assets
      in the securities of a particular industry or group of industries),
      except that the Fund will concentrate to approximately the same extent
      that its Underlying Index concentrates in the securities of such
      particular industry or group of industries. For purposes of this
      limitation, securities of the U.S. government (including its agencies and
      instrumentalities), repurchase agreements collateralized by U.S.
      government securities, and securities of state or municipal governments
      and their political subdivisions are not considered to be issued by
      members of any industry.

2.   Borrow money, except that (i) the Fund may borrow from banks for temporary
      or emergency (not leveraging) purposes, including the meeting of
      redemption requests which might otherwise require the untimely
      disposition of securities, and (ii) the Fund may, to the extent
      consistent with its investment policies, enter into repurchase
      agreements, reverse repurchase agreements, forward roll transactions and
      similar investment strategies and techniques. To the extent that it
      engages in transactions described in (i) and (ii), the Fund will be
      limited so that no more than 33 1/3% of the value of its total assets
      (including the amount borrowed) is derived from such transactions. Any
      borrowings which come to exceed this amount will be reduced in accordance
      with applicable law.

3.   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.

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

5.   Purchase or sell real estate unless acquired as a result of ownership of
      securities or other instruments (but this restriction shall not prevent
      the Fund from investing in securities of companies engaged in the real
      estate business or


                                       13




  securities or other instruments backed by real estate or mortgages), or
  commodities or commodity contracts (but this restriction shall not prevent
  the Fund from trading in futures contracts and options on futures contracts,
  including options on currencies to the extent consistent with the Fund's
  investment objective and policies).

6.   Engage in the business of underwriting securities issued by other persons,
      except to the extent that the Fund may technically be deemed to be an
      underwriter under the 1933 Act, in disposing of portfolio securities.


In addition to the investment restrictions adopted as fundamental policies set
forth above, the Fund, has adopted a non-fundamental policy not to invest in
the securities of a company for the purpose of exercising management or control
or purchase or otherwise acquire any illiquid security, except as permitted
under the 1940 Act, which currently permits up to 15% of the Fund's net assets
to be invested in illiquid securities (calculated at the time of investment).


BFA monitors the liquidity of restricted securities in the Fund's portfolio. In
reaching liquidity decisions, BFA considers the following factors:

      o  The frequency of trades and quotes for the security;

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

      o  Dealer undertakings to make a market in the security; and

      o  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 at the time of
an investment, a later increase or decrease in percentage resulting from a
change in values of assets will not constitute a violation of such restriction.



The 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 Depositary Receipts based on securities
in its Underlying Index. The 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,
the Fund's future investments will be made in a manner that will bring the Fund
into compliance with this policy.



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 Fund 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 that 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 Fund 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.


                                       14




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 BFA and other service providers. Each Director serves until
he or she resigns, is removed, dies, retires or becomes incapacitated. The
President, Chief Compliance Officer, Treasurer and Secretary shall each hold
office until their successors are chosen and qualified and all other officers
shall hold office until he or she resigns or is removed.


The Company, iShares Trust, Master Investment Portfolio ("MIP") and BlackRock
Funds III*, 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 ___ funds within the fund complex.
With the exception of Robert S. Kapito, the address of each Director and
officer is c/o BlackRock, Inc., 400 Howard Street, San Francisco, CA 94105. The
address of Mr. Kapito is c/o BlackRock, Inc., Park Avenue Plaza, 55 East 52nd
Street, New York, NY 10055. The Board has designated George G.C. Parker as its
Lead Independent Director.


-------
*     Prior to December 1, 2009, BlackRock Funds III was known as Barclays
      Global Investors Funds.


INTERESTED DIRECTOR





                                            PRINCIPAL OCCUPATION(S)                  OTHER DIRECTORSHIPS
      NAME (AGE)         POSITION           DURING THE PAST 5 YEARS                    HELD BY DIRECTOR
--------------------- -------------- ------------------------------------- ---------------------------------------
                                                                  
Robert S. Kapito/1/   Director       President and Director, BlackRock,    Trustee of iShares Trust (since 2009);
(53)                  (since 2009)   Inc. (since 2006 and 2007,            Director of BlackRock, Inc. (since
                                     respectively); Vice Chairman of       2007).
                                     BlackRock, Inc. and Head of
                                     BlackRock's Portfolio Management
                                     Group (since its formation in 1998)
                                     and BlackRock's predecessor entities
                                     (since 1988); Trustee, University of
                                     Pennsylvania (since 2009); Chairman,
                                     Hope & Heroes Children's Cancer
                                     Fund (since 2002); President of the
                                     Board of Directors, Periwinkle
                                     Theatre for Youth (since 1983).



                                       15







                                              PRINCIPAL OCCUPATION(S)                  OTHER DIRECTORSHIPS
      NAME (AGE)          POSITION            DURING THE PAST 5 YEARS                    HELD BY DIRECTOR
--------------------- --------------- -------------------------------------- ---------------------------------------
                                                                    
Lee T. Kranefuss/2/   Director and    Global Chief Executive Officer,        Trustee of iShares Trust (since 2003).

(48)                  Chairman        iShares/Intermediary Groups of BTC
                      (since 2003).   (since 2009); Director, President and
                                      Chief Executive Officer of BlackRock
                                      Asset Management International,
                                      Inc.(since 2009); Global Chief
                                      Executive Officer,
                                      iShares/Intermediary Groups of BGI
                                      (2008-2009); Director, President and
                                      Chief Executive Officer of Barclays
                                      Global Investors International, Inc.
                                      (2005-2009); Director and Chairman
                                      of Barclays Global Investors Services
                                      (2005-2009); Chief Executive Officer,
                                      iShares Intermediary Index and
                                      Market Group of BGI (2005-2008);
                                      Chief Executive Officer of the
                                      Intermediary Investor and Exchange
                                      Traded Products Business of BGI
                                      (2003-2005).


-------
/1/ Robert S. Kapito is deemed to be an "interested person" (as defined in the
      1940 Act) of the Company due to his affiliations with BlackRock, Inc.
/2/ Lee T. Kranefuss is deemed to be an "interested person" (as defined in the
      1940 Act) of the Company due to his affiliations with BFA, BTC and
      BlackRock Execution Services, an affiliate of BFA and BTC.


INDEPENDENT DIRECTORS






                                              PRINCIPAL OCCUPATION(S)                  OTHER DIRECTORSHIPS
     NAME (AGE)           POSITION            DURING THE PAST 5 YEARS                    HELD BY DIRECTOR
-------------------- ----------------- ------------------------------------- ---------------------------------------
                                                                    
George G.C. Parker   Director (since   Dean Witter Distinguished Professor   Trustee of iShares Trust (since 2000);
(71)                 2002); Lead       of Finance, Emeritus, Stanford        Lead Independent Trustee of iShares
                     Independent       University: Graduate School of        Trust (since 2006); Director of
                     Director          Business (since 1994).                Continental Airlines, Inc. (since
                     (since 2006).                                           1996); Director of Community First
                                                                             Financial Group (since 1995);
                                                                             Director of Tejon Ranch Company
                                                                             (since 1999); Director of Threshold
                                                                             Pharmaceuticals (since 2004);
                                                                             Director of NETGEAR, Inc. (since
                                                                             2007).

John E. Martinez     Director          Director of Real Estate Equity        Trustee of iShares Trust (since 2003);
(48)                 (since 2003).     Exchange (since 2005).                Chairman, Independent Review
                                                                             Committee, Canadian iShares Funds
                                                                             (since 2007).



                                       16







                                             PRINCIPAL OCCUPATION(S)                   OTHER DIRECTORSHIPS
     NAME (AGE)          POSITION            DURING THE PAST 5 YEARS                     HELD BY DIRECTOR
-------------------- --------------- --------------------------------------- ---------------------------------------
                                                                    
Cecilia H. Herbert   Director        Director (since 1998) and President     Trustee of iShares Trust (since 2005);
(61)                 (since 2005).   (since 2007) of the Board of            Advisory Board Member of Forward
                                     Directors, Catholic Charities CYO;      Funds (2009); Director, Forward
                                     Trustee of Pacific Select Funds         Funds (34 portfolios) (since 2009).
                                     (2004-2005); Trustee (since 2005)
                                     and Chair of the Finance and
                                     Investment Committees (since 2006)
                                     of the Thacher School; Chair of
                                     Investment Committee, Archdiocese
                                     of San Francisco (1994-2005).

Charles A. Hurty     Director        Retired; Partner, KPMG LLP (1968-       Trustee of iShares Trust (since 2005);
(66)                 (since 2005).   2001).                                  Director of GMAM Absolute Return
                                                                             Strategy Fund (1 portfolio)(since
                                                                             2002); Director of Citigroup
                                                                             Alternative Investments Multi-
                                                                             Adviser Hedge Fund Portfolios LLC (1
                                                                             portfolio)(since 2002); Director of
                                                                             CSFB Alternative Investments Fund
                                                                             (6 portfolios)(since 2005).

John E. Kerrigan     Director        Chief Investment Officer, Santa Clara   Trustee of iShares Trust (since 2005).
(54)                 (since 2005).   University (since 2002).

Robert H. Silver     Director        President and Co-Founder of The         Trustee of iShares Trust (since 2007).
(54)                 (since 2007).   Bravitas Group, Inc. (since 2006);
                                     Member, Non-Investor Advisory
                                     Board of Russia Partners II, LP (since
                                     2006); President and Chief Operating
                                     Officer (2003-2005) and Director
                                     (1999-2005) of UBS Financial
                                     Services, Inc.; President and Chief
                                     Executive Officer of UBS Services
                                     USA, LLC (1999-2005); Managing
                                     Director, UBS America, Inc. (2000-
                                     2005); Director and Vice Chairman of
                                     the YMCA of Greater NYC (since
                                     2001); Broadway Producer (since
                                     2006); Co-Founder and Vice
                                     President of Parentgiving Inc. (since
                                     2008); Director and Member of the
                                     Audit and Compensation Committee
                                     of EPAM Systems, Inc. (2006-2009).

Darrell Duffie       Director        Professor, Stanford University:         Trustee of iShares Trust (since 2008);
(55)                 (since 2008).   Graduate School of Business (since      Director of Moody's Corporation
                                     1984).                                  (since 2008).



                                       17




                                   OFFICERS





                                                     PRINCIPAL OCCUPATION(S)
     NAME (AGE)              POSITION                DURING THE PAST 5 YEARS
--------------------  ---------------------  ---------------------------------------
                                       
Michael A. Latham     President              Managing Director, BTC (since 2009);
(44)                  (since 2007).          Head of Americas iShares, BGI (2007-
                                             2009); Director and Chief Financial
                                             Officer of Barclays Global Investors
                                             International, Inc. (2005-2009); Chief
                                             Operating Officer of the Intermediary
                                             Investor and Exchange Traded
                                             Products Business of BGI (2003-
                                             2007).

Geoffrey D. Flynn     Executive Vice         Managing Director, BTC (since 2009);
(53)                  President and Chief    Chief Operating Officer, U.S. iShares,
                      Operating Officer      BGI (2007-2009); President, Van
                      (since 2008).          Kampen Investors Services (2003-
                                             2007); Managing Director, Morgan
                                             Stanley (2002-2007); President,
                                             Morgan Stanley Trust, FSB (2002-
                                             2007).

Jack Gee              Treasurer and Chief    Managing Director, BTC (since 2009);
(50)                  Financial Officer      Senior Director of Fund
                      (since 2008).          Administration of Intermediary
                                             Investor Business of BGI (2009);
                                             Director of Fund Administration of
                                             Intermediary Investor Business of BGI
                                             (2004-2009).

Eilleen M. Clavere    Secretary              Director, BTC (since 2009); Director
(57)                  (since 2007).          of Legal Administration of
                                             Intermediary Investor Business of BGI
                                             (2006-2009); Legal Counsel and Vice
                                             President of Atlas Funds, Atlas
                                             Advisers, Inc. and Atlas Securities,
                                             Inc. (2005-2006); Counsel of
                                             Kirkpatrick & Lockhart LLP (2001-
                                             2005).

Ira P. Shapiro        Vice President and     Managing Director, BTC (since 2009);
(47)                  Chief Legal Officer    Associate General Counsel, BGI
                      (since 2007).          (2004-2009).

Amy Schioldager       Executive Vice         Managing Director, BTC (since 2009);
(47)                  President              Global Head of Index Equity, BGI
                      (since 2007).          (2008-2009); Global Head of U.S.
                                             Indexing, BGI (2006-2008); Head of
                                             Domestic Equity Portfolio
                                             Management, BGI (2001-2006).

Patrick O'Connor      Vice President         Managing Director, BTC (since 2009);
(42)                  (since 2007).          Head of iShares Portfolio
                                             Management, BGI (2006-2009);
                                             Senior Portfolio Manager, BGI (1999-
                                             2006).



                                       18







                                        PRINCIPAL OCCUPATION(S)
  NAME (AGE)       POSITION             DURING THE PAST 5 YEARS
-------------  ----------------  -------------------------------------
                           
Lee Sterne     Vice President    Managing Director, BTC (since 2009);
(44)           (since 2007).     Head of U.S. Fixed Income Index and
                                 iShares, BGI (2007-2009); Senior
                                 Portfolio Manager, BGI (2004-2007).

Matt Tucker    Vice President    Managing Director, BTC (since 2009);
(37)           (since 2007).     Director of Fixed Income Investment
                                 Strategy, BGI (2009); Head of U.S.
                                 Fixed Income Investment Solutions,
                                 BGI (2005-2008); Fixed Income
                                 Investment Strategist, BGI (2003-
                                 2005).



COMMITTEES OF THE BOARD OF DIRECTORS. Each Director who is not an interested
person (as defined in the 1940 Act) of the Company ("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 fiscal year ended
August 31, 2009.


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, members or chairpersons of committees of the Board, Lead Independent
Director, Chairperson of the Board and any other positions as the Nominating
and Governance Committee considers appropriate. The Nominating and Governance
Committee does not consider Board nomination(s) recommended by shareholders
(acting solely in their capacity as a shareholder and not in any other
capacity). The Nominating and Governance Committee is comprised of all members
of the Board that are Independent Directors. The Nominating and Governance
Committee met three times during the fiscal year ended August 31, 2009.


The following table sets forth, as of December 31, 2009, the dollar range of
equity securities beneficially owned by each Director in the Fund and in other
registered investment companies overseen by the Director within the same family
of investment companies as the Company. If a fund is not listed below, the
Director did not own any securities in that fund as of the date indicated
above:





                                                                                                 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
------------------  ----------------------------------------------  ------------------------  ----------------------------
                                                                                     
Robert Kapito       None                                            None                      None

Lee T. Kranefuss    iShares Barclays 1-3 Year Treasury Bond Fund    $50,001-$100,000          Over $100,000



                                       19







                                                                                                      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 3000 Index Fund                    $50,001-$100,000

John E. Martinez      iShares Barclays 7-10 Year Treasury Bond Fund      Over $100,000             Over $100,000

                      iShares Barclays Short Treasury Bond Fund          Over $100,000

                      iShares Barclays TIPS Bond Fund                    Over $100,000

                      iShares MSCI All Country Asia ex Japan Index       Over $100,000
                      Fund

                      iShares MSCI EAFE Index Fund                       Over $100,000

                      iShares Russell 1000 Index Fund                    Over $100,000

                      iShares Russell 1000 Value Index Fund              Over $100,000

                      iShares S&P 500 Index Fund                         Over $100,000

                      iShares S&P Global Consumer Staples Sector         Over $100,000
                      Index Fund

George G.C. Parker    iShares Barclays 1-3 Year Treasury Bond Fund       $1-$10,000                Over $100,000

                      iShares Barclays Aggregate Bond Fund               $ 10,001-$50,000

                      iShares Dow Jones Select Dividend Index Fund       Over $100,000

                      iShares iBoxx $ Investment Grade Corporate Bond    Over $100,000
                      Fund

                      iShares MSCI EAFE Index Fund                       Over $100,000

                      iShares Russell 2000 Index Fund                    $50,001-$100,000

                      iShares S&P 100 Index Fund                         Over $100,000

                      iShares S&P 500 Growth Index Fund                  $ 10,001-$50,000

                      iShares S&P 500 Index Fund                         Over $100,000

                      iShares S&P California AMT-Free Municipal Bond     Over $100,000
                      Fund

                      iShares S&P Global 100 Index Fund                  $ 10,001-$50,000

Cecilia H. Herbert    iShares Barclays 1-3 Year Treasury Bond fund       $ 10,001-$50,000          Over $100,000

                      iShares Barclays Aggregate Bond Fund               $ 10,001-$50,000

                      iShares Barclays TIPS Bond Fund                    $ 10,001-$50,000

                      iShares FTSE/Xinhua China 25 Index Fund            Over $100,000

                      iShares iBoxx $ High Yield Corporate Bond Fund     $ 10,001-$50,000

                      iShares MSCI EAFE Index Fund                       $ 10,001-$50,000

                      iShares MSCI Emerging Markets Index Fund           $50,001-$100,000

                      iShares MSCI Pacific ex-Japan Index Fund           $ 10,001-$50,000

                      iShares Russell 1000 Growth Index Fund             $ 10,001-$50,000

                      iShares S&P 500 Index Fund                         $50,001-$100,000



                                       20







                                                                                                     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 S&P MidCap 400 Index Fund                   $ 10,001-$50,000

Charles A. Hurty    iShares Dow Jones Financial Sector Index Fund       $ 1-$10,000               Over $100,000

                    iShares Dow Jones Select Dividend Index Fund        $ 1-$10,000

                    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 FTSE/Xinhua China 25 Index Fund             $ 10,001-$50,000

                    iShares MSCI EAFE Index Fund                        $ 10,001-$50,000

                    iShares MSCI Japan Index Fund                       $ 10,001-$50,000

                    iShares S&P 500 Index Fund                          $ 10,001-$50,000

                    iShares S&P Global Energy Sector Fund               $ 1-$10,000

John E. Kerrigan    iShares MSCI ACWI ex US Index Fund                  Over $100,000             Over $100,000

                    iShares S&P Short Term National AMT-Free            Over $100,000
                    Municipal Bond Fund

Robert H. Silver    iShares Barclays 1-3 Year Credit Bond Fund          Over $100,000             Over $100,000

                    iShares Barclays 1-3 Year Treasury Bond Fund        Over $100,000

                    iShares Barclays Aggregate Bond Fund                $ 10,001-$50,000

                    iShares Dow Jones U.S. Broker-Dealers Index Fund    Over $100,000

                    iShares Dow Jones U.S. Financial Services Index     $50,001-$100,000
                    Fund

                    iShares Dow Jones U.S. Regional Banks Index         $50,001-$100,000
                    Fund

                    iShares iBoxx $ Investment Grade Corporate Bond     Over $100,000
                    Fund

                    iShares MSCI ACWI ex US Index Fund                  Over $100,000

                    iShares MSCI BRIC Index Fund                        $ 10,001-$50,000

                    iShares MSCI EAFE Index Fund                        Over $100,000

                    iShares Russell 1000 Growth Index Fund              $50,001-$100,000

                    iShares Russell 1000 Value Index Fund               $50,001-$100,000

                    iShares Russell 2000 Growth Index Fund              $ 10,001-$50,000

                    iShares Russell 2000 Value Index Fund               $ 10,001-$50,000

                    iShares Russell 3000 Index Fund                     $50,001-$100,000

                    iShares S&P 500 Index Fund                          Over $100,000

                    iShares S&P Europe 350 Index Fund                   $ 10,001-$50,000

                    iShares S&P U.S. Preferred Stock Index Fund         Over $100,000



                                       21







                                                                                                 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 S&P/Citigroup International Treasury    $1-$10,000
                    Bond Fund

Darrell Duffie      None                                            None                      None



As of December 31, 2009, none of the Directors who were not interested persons
(as defined in the 1940 Act) of the Company or their immediate family members
owned beneficially or of record any securities of BFA (the Fund's investment
adviser), the Distributor or any person controlling, controlled by or under
common control with BFA or the Distributor.


REMUNERATION OF DIRECTORS.  For the calendar year ended December 31, 2009, the
Company paid each Independent Director $127,500 for meetings of the Board
attended by the Director; also the Company 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. For the calendar year ended December 31, 2009, John
Martinez, John Kerrigan and Cecilia Herbert were also each entitled to $17,500
for his or her service on a committee of the Board that considered matters
relating to securities lending, and $5,878 for his or her service as a director
of a subsidiary of iShares Trust. The Company also reimburses each Director for
travel and other out-of-pocket expenses incurred by him/her in connection with
attending such meetings.


The table below sets forth the total compensation paid to each Interested
Director for the calendar year ended December 31, 2009:





                                                         PENSION OR
                                      AGGREGATE          RETIREMENT                                   TOTAL
                                    COMPENSATION    BENEFITS ACCRUED AS    ESTIMATED ANNUAL       COMPENSATION
                                      FROM THE        PART OF COMPANY        BENEFITS UPON        FROM THE FUND
 NAME OF INTERESTED DIRECTOR1, 2       COMPANY          EXPENSES/3/          RETIREMENT/3/     AND FUND COMPLEX/4/
---------------------------------  --------------  ---------------------  ------------------  --------------------
                                                                                  
Robert S. Kapito                         $0            Not Applicable       Not Applicable             $0
Lee T. Kranefuss                         $0            Not Applicable       Not Applicable             $0


-------
/1/ Compensation is not shown for Robert S. Kapito because he was appointed to
      serve as Director of the Company effective December 1, 2009.
/2/ Robert S. Kapito and Lee T. Kranefuss were not compensated by the Company
      due to their employment with BTC during the time period reflected in the
      table.
/3/ No Director or Officer is entitled to any pension or retirement benefits
      from the Company.
/4/ Includes compensation for service on the Board of Trustees of
      iShares Trust.


The table below sets forth the total compensation paid to each Independent
Director for the calendar year ended December 31, 2009:





                                   AGGREGATE               PENSION OR                                         TOTAL
                                 COMPENSATION    RETIREMENT BENEFITS ACCRUED AS    ESTIMATED ANNUAL       COMPENSATION
                                   FROM THE              PART OF COMPANY             BENEFITS UPON        FROM THE FUND
 NAME OF INDEPENDENT DIRECTOR       COMPANY                EXPENSES/1/               RETIREMENT/1/     AND FUND COMPLEX/2/
------------------------------  --------------  --------------------------------  ------------------  --------------------
                                                                                          
George G.C. Parker                 $152,500              Not Applicable             Not Applicable          $305,000
John E. Kerrigan                    150,878              Not Applicable             Not Applicable           295,878
Charles A. Hurty                    147,500              Not Applicable             Not Applicable           295,000
Cecilia H. Herbert                  150,878              Not Applicable             Not Applicable           295,878
Robert H. Silver                    127,500              Not Applicable             Not Applicable           255,000
Darrell Duffie                      127,500              Not Applicable             Not Applicable           255,000
John E. Martinez                    150,878              Not Applicable             Not Applicable           295,878


-------
/1/ No Director or Officer is entitled to any pension or retirement benefits
      from the Company.

                                       22




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


CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.  Ownership information is
not provided for the Fund as it had not commenced operations as of the date of
this SAI.


POTENTIAL CONFLICTS OF INTEREST


Bank of America Corporation ("BAC"), through its subsidiary Merrill Lynch and
Co., Inc. ("Merrill Lynch"), Barclays PLC ("Barclays") and The PNC Financial
Services Group, Inc. ("PNC"), each has a significant economic interest in
BlackRock, Inc., the parent of BFA, the Fund's investment adviser. PNC is
considered to be an affiliate of BlackRock, Inc., under the Investment Company
Act. Certain activities of BlackRock Advisors, LLC, BlackRock, Inc. and their
affiliates (collectively, "BlackRock") and PNC and its affiliates
(collectively, "PNC" and together with BlackRock, "Affiliates"), and those of
BAC, Merrill Lynch and their affiliates (collectively, the "BAC Entities") and
Barclays and its affiliates (collectively, the "Barclays Entities")(BAC
Entities and Barclays Entities, collectively, the "BAC/Barclays Entities"),
with respect to the Fund and/or other accounts managed by BlackRock, PNC or
BAC/Barclays Entities, may give rise to actual or perceived conflicts of
interest such as those described below.


BlackRock is one of the world's largest asset management firms. BAC is a
national banking corporation, which, through its affiliates and subsidiaries,
including Merrill Lynch, provides a full range of financial services. Merrill
Lynch is a full service investment banking, broker-dealer, asset management and
financial services organization. PNC is a diversified financial services
organization spanning the retail, business and corporate markets. Barclays is a
major global financial services provider engaged in a range of activities
including retail and commercial banking, credit cards, investment banking, and
wealth management. BlackRock and PNC are affiliates of one another under the
1940 Act. BlackRock, BAC, Merrill Lynch, PNC, Barclays and their respective
affiliates (including, for these purposes, their directors, partners, trustees,
managing members, officers and employees), including the entities and personnel
who may be involved in the investment activities and business operations of the
Fund, are engaged worldwide in businesses, including equity, fixed income, cash
management and alternative investments, and have interests other than that of
managing the Fund. These are considerations of which investors in the Fund
should be aware, and which may cause conflicts of interest that could
disadvantage the Fund and its shareholders. These activities and interests
include potential multiple advisory, transactional, financial and other
interests in securities and other instruments, and companies that may be
purchased or sold by the Fund.


BlackRock and its Affiliates, as well as the BAC/Barclays Entities, have
proprietary interests in, and may manage or advise with respect to, accounts or
funds (including separate accounts and other funds and collective investment
vehicles) that have investment objectives similar to those of the Fund and/or
that engage in transactions in the same types of securities, currencies and
instruments as the Fund. One or more Affiliates and BAC/Barclays Entities are
also major participants in the global currency, equities, swap and fixed income
markets, in each case both on a proprietary basis and for the accounts of
customers. As such, one or more Affiliates or BAC/Barclays Entities are or may
be actively engaged in transactions in the same securities, currencies, and
instruments in which the Fund invests. Such activities could affect the prices
and availability of the securities, currencies, and instruments in which the
Fund invests, which could have an adverse impact on the Fund's performance.
Such transactions, particularly in respect of most proprietary accounts or
customer accounts, will be executed independently of the Fund's transactions
and thus at prices or rates that may be more or less favorable than those
obtained by the Fund. When BlackRock and its Affiliates or the BAC/Barclays
Entities seek to purchase or sell the same assets for their managed accounts,
including the Fund, the assets actually purchased or sold may be allocated
among the accounts on a basis determined in their good faith discretion to be
equitable. In some cases, this system may adversely affect the size or price of
the assets purchased or sold for the Fund. In addition, transactions in
investments by one or more other accounts managed by BlackRock or its
Affiliates or a BAC/Barclays Entity may have the effect of diluting or
otherwise disadvantaging the values, prices or investment strategies of the
Fund, particularly, but not limited to, with respect to small capitalization,
emerging market or less liquid strategies. This may occur when investment
decisions regarding the Fund are based on research or other information that is
also used to support decisions for other accounts. When BlackRock or its
Affiliates or a BAC/Barclays Entity implements a portfolio decision or strategy
on behalf of another account ahead of, or contemporaneously with, similar
decisions or strategies for the Fund, market impact, liquidity constraints, or
other factors could result in the Fund receiving less favorable trading results
and the costs of implementing such decisions or strategies could be increased
or the Fund could otherwise be disadvantaged. BlackRock or it Affiliates or a
BAC/Barclays Entity may, in certain cases, elect to implement internal policies
and procedures designed to limit such consequences, which may cause the Fund to
be unable to engage in certain activities, including purchasing or disposing of
securities, when it might otherwise be desirable for it to do so.


                                       23




Conflicts may also arise because portfolio decisions regarding the Fund may
benefit other accounts managed by BlackRock or its Affiliates or a BAC/Barclays
Entity. For example, the sale of a long position or establishment of a short
position by the Fund may impair the price of the same security sold short by
(and therefore benefit) one or more Affiliates or BAC/Barclays Entities or
their other accounts, and the purchase of a security or covering of a short
position in a security by the Fund may increase the price of the same security
held by (and therefore benefit) one or more Affiliates or BAC/Barclays Entities
or their other accounts.


BlackRock and its Affiliates or a BAC/Barclays Entity and their clients may
pursue or enforce rights with respect to an issuer in which the Fund has
invested, and those activities may have an adverse effect on the Fund. As a
result, prices, availability, liquidity and terms of the Fund's investments may
be negatively impacted by the activities of BlackRock or its Affiliates or a
BAC/Barclays Entity or their clients, and transactions for the Fund may be
impaired or effected at prices or terms that may be less favorable than would
otherwise have been the case.


The results of the Fund's investment activities may differ significantly from
the results achieved by BlackRock and its Affiliates or the BAC/Barclays
Entities for their proprietary accounts or other accounts (including investment
companies or collective investment vehicles) managed or advised by them. It is
possible that one or more Affiliate- or BAC/Barclays Entity-managed accounts
and such other accounts will achieve investment results that are substantially
more or less favorable than the results achieved by the Fund. Moreover, it is
possible that the Fund will sustain losses during periods in which one or more
Affiliates or BAC/Barclays Entity-managed accounts achieve significant profits
on their trading for proprietary or other accounts. The opposite result is also
possible. The investment activities of one or more Affiliates or BAC/Barclays
Entities for their proprietary accounts and accounts under their management may
also limit the investment opportunities for the Fund in certain emerging and
other markets in which limitations are imposed upon the amount of investment,
in the aggregate or in individual issuers, by affiliated foreign investors.


From time to time, the Fund's activities may also be restricted because of
regulatory restrictions applicable to one or more Affiliates or BAC/Barclays
Entities, and/or their internal policies designed to comply with such
restrictions. As a result, there may be periods, for example, when BlackRock,
and/or one or more Affiliates or BAC/Barclays Entities, will not initiate or
recommend certain types of transactions in certain securities or instruments
with respect to which BlackRock and/or one or more Affiliates or BAC/Barclays
Entities are performing services or when position limits have been reached.


In connection with its management of the Fund, BlackRock may have access to
certain fundamental analysis and proprietary technical models developed by one
or more Affiliates or BAC/Barclays Entities. BlackRock will not be under any
obligation, however, to effect transactions on behalf of the Fund in accordance
with such analysis and models. In addition, neither BlackRock nor any of its
Affiliates, nor any BAC/Barclays Entity, will have any obligation to make
available any information regarding their proprietary activities or strategies,
or the activities or strategies used for other accounts managed by them, for
the benefit of the management of the Fund and it is not anticipated that
BlackRock will have access to such information for
the purpose of managing the Fund. The proprietary activities or portfolio
strategies of BlackRock and its Affiliates and the BAC/Barclays Entities, or
the activities or strategies used for accounts managed by them or other
customer accounts could conflict with the transactions and strategies employed
by BlackRock in managing the Fund.


In addition, certain principals and certain employees of BlackRock are also
principals or employees of BlackRock or another Affiliate. As a result, the
performance by these principals and employees of their obligations to such
other entities may be a consideration of which investors in the Fund should be
aware.


BlackRock may enter into transactions and invest in securities, instruments and
currencies on behalf of the Fund in which customers of BlackRock or its
Affiliates or a BAC/Barclays Entity, or, to the extent permitted by the SEC,
BlackRock or another Affiliate or a BAC/Barclays Entity, serves as the
counterparty, principal or issuer. In such cases, such party's interests in the
transaction will be adverse to the interests of the Fund, and such party may
have no incentive to assure that the Fund obtains the best possible prices or
terms in connection with the transactions. In addition, the purchase, holding
and sale of such investments by the Fund may enhance the profitability of
BlackRock or its Affiliates or a BAC/Barclays Entity. One or more Affiliates or
BAC/Barclays Entities may also create, write or issue derivatives for their
customers, the underlying securities, currencies or instruments of which may be
those in which the Fund invests or which may be based on the performance of the
Fund. The Fund may, subject to applicable law, purchase investments that are
the subject of an underwriting or other distribution by one or more Affiliates
or BAC/Barclays Entities and may also enter into transactions with other
clients of an Affiliate or BAC/Barclays Entity where such other clients have
interests adverse to those of the Fund.


                                       24




At times, these activities may cause departments of BlackRock or its Affiliates
or a BAC/Barclays Entity to give advice to clients that may cause these clients
to take actions adverse to the interests of the Fund. To the extent affiliated
transactions are permitted, the Fund will deal with BlackRock and its
Affiliates or BAC/Barclays Entities on an arms-length basis. BlackRock or its
Affiliates or a BAC/Barclays Entity may also have an ownership interest in
certain trading or information systems used by the Fund. The Fund's use of such
trading or information systems may enhance the profitability of BlackRock and
its Affiliates or BAC/Barclays Entities.


One or more Affiliates or one of the BAC/Barclays Entities may act as broker,
dealer, agent, lender or adviser or in other commercial capacities for the
Fund. It is anticipated that the commissions, mark-ups, mark-downs, financial
advisory fees, underwriting and placement fees, sales fees, financing and
commitment fees, brokerage fees, other fees, compensation or profits, rates,
terms and conditions charged by an Affiliate or BAC/Barclays Entity will be in
its view commercially reasonable, although each Affiliate or BAC/Barclays
Entity, including its sales personnel, will have an interest in obtaining fees
and other amounts that are favorable to the Affiliate or BAC/Barclays Entity
and such sales personnel.


Subject to applicable law, the Affiliates and BAC/Barclays Entities (and their
personnel and other distributors) will be entitled to retain fees and other
amounts that they receive in connection with their service to the Fund as
broker, dealer, agent, lender, adviser or in other commercial capacities and no
accounting to the Fund or its shareholders will be required, and no fees or
other compensation payable by the Fund or its shareholders will be reduced by
reason of receipt by an Affiliate or BAC/Barclays Entity of any such fees or
other amounts.


When an Affiliate or BAC/Barclays Entity acts as broker, dealer, agent, adviser
or in other commercial capacities in relation to the Fund, the Affiliate or
BAC/Barclays Entity may take commercial steps in its own interests, which may
have an adverse effect on the Fund. The Fund will be required to establish
business relationships with its counterparties based on the Fund's own credit
standing. Neither BlackRock nor any of the Affiliates, nor any BAC/Barclays
Entity, will have any obligation to allow their credit to be used in connection
with the Fund's establishment of its business relationships, nor is it expected
that the Fund's counterparties will rely on the credit of BlackRock or any of
the Affiliates or BAC/Barclays Entities in evaluating the Fund's
creditworthiness.


Purchases and sales of securities for the Fund may be bunched or aggregated
with orders for other BlackRock client accounts. BlackRock and its Affiliates
and the BAC/Barclays Entities, however, are not required to bunch or aggregate
orders if portfolio management decisions for different accounts are made
separately, or if they determine that bunching or aggregating is not
practicable, required or with cases involving client direction.


Prevailing trading activity frequently may make impossible the receipt of the
same price or execution on the entire volume of securities purchased or sold.
When this occurs, the various prices may be averaged, and the Fund will be
charged or credited with the average price. Thus, the effect of the aggregation
may operate on some occasions to the disadvantage of the Fund. In addition,
under certain circumstances, the Fund will not be charged the same commission
or commission equivalent rates in connection with a bunched or aggregated
order.


BlackRock may select brokers (including, without limitation, Affiliates or
BAC/Barclays Entities) that furnish BlackRock, the Fund, other BlackRock client
accounts or other Affiliates or BAC/Barclays Entities or personnel, directly or
through correspondent relationships, with research or other appropriate
services which provide, in BlackRock's view, appropriate assistance to
BlackRock in the investment decision-making process (including with respect to
futures, fixed-price offerings and over-the-counter transactions). Such
research or other services may include, to the extent permitted by law,
research reports on companies, industries and securities; economic and
financial data; financial publications; proxy analysis; trade industry
seminars; computer data bases; research-oriented software and other services
and products. Research or other services obtained in this manner may be used in
servicing any or all of the Fund and other BlackRock client accounts, including
in connection with BlackRock client accounts other than those that pay
commissions to the broker relating to the research or other service
arrangements. Such products and services may disproportionately benefit other
BlackRock client accounts relative to the Fund based on the amount of brokerage
commissions paid by the Fund and such other BlackRock client accounts. For
example, research or other services that are paid for through one client's
commissions may not be used in managing that client's account. In addition,
other BlackRock client accounts may receive the benefit, including
disproportionate benefits, of economies of scale or price discounts in
connection with products and services that may be provided to the Fund and to
such other BlackRock client accounts. To the extent that BlackRock uses soft
dollars, it will not have to pay for those products and services itself.


                                       25




BlackRock may receive research that is bundled with the trade execution,
clearing, and/or settlement services provided by a particular broker-dealer. To
the extent that BlackRock receives research on this basis, many of the same
conflicts related to traditional soft dollars may exist. For example, the
research effectively will be paid by client commissions that also will be used
to pay for the execution, clearing, and settlement services provided by the
broker-dealer and will not be paid by BlackRock.


BlackRock may endeavor to execute trades through brokers who, pursuant to such
arrangements, provide research or other services in order to ensure the
continued receipt of research or other services BlackRock believes are useful
in its investment decision-making process. BlackRock may from time to time
choose not to engage in the above described arrangements to varying degrees.
BlackRock may also into commission sharing arrangements under which BlackRock
may execute transactions through a broker-dealer, including, where permitted,
an Affiliate or BAC/Barclays Entity, and request that the broker-dealer
allocate a portion of the commissions or commission credits to another firm
that provides research to BlackRock. To the extent that BlackRock engages in
commission sharing arrangements, many of the same conflicts related to
traditional soft dollars may exist.


BlackRock may utilize certain electronic crossing networks ("ECNs") in
executing client securities transactions for certain types of securities. These
ECNs may charge fees for their services, including access fees and transaction
fees. The transaction fees, which are similar to commissions or
markups/markdowns, will generally be charged to clients and, like commissions
and markups/markdowns, would generally be included in the cost of the
securities purchased. Access fees may be paid by BlackRock even though incurred
in connection with executing transactions on behalf of clients, including the
Fund. In certain circumstances, ECNs may offer volume discounts that will
reduce the access fees typically paid by BlackRock. This would have the effect
of reducing the access fees paid by BlackRock. BlackRock will only utilize ECNs
consistent with its obligation to seek to obtain best execution in client
transactions.


BlackRock has adopted policies and procedures designed to prevent conflicts of
interest from influencing proxy voting decisions that it makes on behalf of
advisory clients, including the Fund, and to help ensure that such decisions
are made in accordance with BlackRock's fiduciary obligations to its clients.
Nevertheless, notwithstanding such proxy voting policies and procedures, actual
proxy voting decisions of BlackRock may have the effect of favoring the
interests of other clients or businesses of other divisions or units of
BlackRock and/or its Affiliates or a BAC/Barclays Entity, provided that
BlackRock believes such voting decisions to be in accordance with its fiduciary
obligations. For a more detailed discussion of these policies and procedures,
see "Proxy Voting Policies and Procedures."


It is also possible that, from time to time, BlackRock or its Affiliates or a
BAC/Barclays Entity may, although they are not required to, purchase and hold
shares of the Fund. Increasing the Fund's assets may enhance investment
flexibility and diversification and may contribute to economies of scale that
tend to reduce the Fund's expense ratio. BlackRock and its Affiliates or
BAC/Barclays Entities reserve the right to redeem at any time some or all of
the shares of the Fund acquired for their own accounts. A large redemption of
shares of the Fund by BlackRock or its Affiliates or by a BAC/Barclays Entity
could significantly reduce the asset size of the Fund, which might have an
adverse effect on the Fund's investment flexibility, portfolio diversification
and expense ratio. BlackRock will consider the effect of redemptions on the
Fund and other shareholders in deciding whether to redeem its shares.


It is possible that the Fund may invest in securities of companies with which
an Affiliate or a BAC/Barclays Entity has or is trying to develop investment
banking relationships as well as securities of entities in which BlackRock or
its Affiliates or a BAC/Barclays Entity has significant debt or equity
investments or in which an Affiliate or BAC/Barclays Entity makes a market. The
Fund also may invest in securities of companies to which an Affiliate or a
BAC/Barclays Entity provides or may some day provide research coverage. Such
investments could cause conflicts between the interests of the Fund and the
interests of other clients of BlackRock or its Affiliates or a BAC/Barclays
Entity. In making investment decisions for the Fund, BlackRock is not permitted
to obtain or use material non-public information acquired by any division,
department or Affiliate of BlackRock or of a BAC/Barclays Entity in the course
of these activities. In addition, from time to time, the activities of an
Affiliate or a BAC/Barclays Entity may limit the Fund's flexibility in
purchases and sales of securities. When an Affiliate is engaged in an
underwriting or other distribution of securities of an entity, BlackRock may be
prohibited from purchasing or recommending the purchase of certain securities
of that entity for the Fund.


BlackRock and its Affiliates and the BAC/Barclays Entities, their personnel and
other financial service providers may have interests in promoting sales of the
Fund. With respect to BlackRock and its Affiliates and BAC/Barclays Entities
and their personnel, the remuneration and profitability relating to services to
and sales of the Fund or other products may be greater


                                       26




than remuneration and profitability relating to services to and sales of
certain funds or other products that might be provided or offered. BlackRock
and its Affiliates or BAC/Barclays Entities and their sales personnel may
directly or indirectly receive a portion of the fees and commissions charged to
the Fund or its shareholders. BlackRock and its advisory or other personnel may
also benefit from increased amounts of assets under management. Fees and
commissions may also be higher than for other products or services, and the
remuneration and profitability to BlackRock or its Affiliates or a BAC/Barclays
Entity and such personnel resulting from transactions on behalf of or
management of the Fund may be greater than the remuneration and profitability
resulting from other funds or products.


BlackRock and its Affiliates or a BAC/Barclays Entity and their personnel may
receive greater compensation or greater profit in connection with an account
for which BlackRock serves as an adviser than with an account advised by an
unaffiliated investment adviser. Differentials in compensation may be related
to the fact that BlackRock may pay a portion of its advisory fee to its
Affiliate or to a BAC/Barclays Entity, or relate to compensation arrangements,
including for portfolio management, brokerage transactions or account
servicing. Any differential in compensation may create a financial incentive on
the part of BlackRock or its Affiliates or BAC/Barclays Entities and their
personnel to recommend BlackRock over unaffiliated investment advisers or to
effect transactions differently in one account over another.


BlackRock and its Affiliates or a BAC/Barclays Entity may provide valuation
assistance to certain clients with respect to certain securities or other
investments and the valuation recommendations made for their clients' accounts
may differ from the valuations for the same securities or investments assigned
by the Fund's pricing vendors, especially if such valuations are based on
broker-dealer quotes or other data sources unavailable to the Fund's pricing
vendors. While BlackRock will generally communicate its valuation information
or determinations to the Fund's pricing vendors and/or fund accountants, there
may be instances where the Fund's pricing vendors or fund accountants assign a
different valuation to a security or other investment than the valuation for
such security or investment determined or recommended by BlackRock.


As disclosed in more detail in "Determination of Net Asset Value" section in
the Fund's Prospectus, when 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 procedures adopted by the
Fund's Board. As a result, the Fund's sale or redemption of its shares at net
asset value, at a time when a holding or holdings are valued by BlackRock
(pursuant to Board-adopted procedures) at fair value, may have the effect of
diluting or increasing the economic interest of existing shareholders.


To the extent permitted by applicable law, the Fund may invest all or some of
its short term cash investments in any money market fund or similarly-managed
private fund advised or managed by BlackRock. In connection with any such
investments, the Fund, to the extent permitted by the 1940 Act, may pay its
share of expenses of a money market fund in which it invests, which may result
in the Fund bearing some additional expenses.


BlackRock and its Affiliates or a BAC/Barclays Entity and their directors,
officers and employees, may buy and sell securities or other investments for
their own accounts, and may have conflicts of interest with respect to
investments made on behalf of the Fund. As a result of differing trading and
investment strategies or constraints, positions may be taken by directors,
officers, employees and Affiliates of BlackRock or by BAC/Barclays Entities
that are the same, different from or made at different times than positions
taken for the Fund. To lessen the possibility that the Fund will be adversely
affected by this personal trading, the Fund, BFA, the Distributor and BlackRock
each has adopted a Code of Ethics in compliance with Section 17(j) of the 1940
Act that restricts securities trading in the personal accounts of investment
professionals and others who normally come into possession of information
regarding the Fund's portfolio transactions. Each Code of Ethics can be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at (202) 551-8090. Each Code of Ethics is also available on the
EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies may
be obtained, after paying a duplicating fee, by e-mail at publicinfo@sec.gov or
by writing the SEC's Public Reference Section, Washington, DC 20549-1520.


BlackRock and its Affiliates will not purchase securities or other property
from, or sell securities or other property to, the Fund, except that the Fund
may in accordance with rules adopted under the 1940 Act engage in transactions
with accounts that are affiliated with the Fund as a result of common officers,
directors, or investment advisers or pursuant to exemptive orders granted to
the Fund and/or BlackRock by the SEC. These transactions would be affected in
circumstances in which BlackRock determined that it would be appropriate for
the Fund to purchase and another client of BlackRock to sell, or the Fund to
sell and another client of BlackRock to purchase, the same security or
instrument on the same day. From time to time, the activities of the Fund may
be restricted because of regulatory requirements applicable to BlackRock or its
Affiliates or a BAC/Barclays Entity and/or BlackRock's internal policies
designed to comply with, limit the applicability of, or otherwise


                                       27




relate to such requirements. A client not advised by BlackRock would not be
subject to some of those considerations. There may be periods when BlackRock
may not initiate or recommend certain types of transactions, or may otherwise
restrict or limit their advice in certain securities or instruments issued by
or related to companies for which an Affiliate or a BAC/Barclays Entity is
performing investment banking, market making or other services or has
proprietary positions. For example, when an Affiliate is engaged in an
underwriting or other distribution of securities of, or advisory services for,
a company, the Fund may be prohibited from or limited in purchasing or selling
securities of that company. Similar situations could arise if personnel of
BlackRock or its Affiliates or a BAC/Barclays Entity serve as directors of
companies the securities of which the Fund wish to purchase or sell. However,
if permitted by applicable law, the Fund may purchase securities or instruments
that are issued by such companies or are the subject of an underwriting,
distribution, or advisory assignment by an Affiliate or a BAC/Barclays Entity,
or in cases in which personnel of BlackRock or its Affiliates or of
BAC/Barclays Entities are directors or officers of the issuer.


The investment activities of one or more Affiliates or BAC/Barclays Entities
for their proprietary accounts and for client accounts may also limit the
investment strategies and rights of the Fund. For example, in regulated
industries, in certain emerging or international markets, in corporate and
regulatory ownership definitions, and in certain futures and derivative
transactions, there may be limits on the aggregate amount of investment by
affiliated investors that may not be exceeded without the grant of a license or
other regulatory or corporate consent or, if exceeded, may cause BlackRock, the
Fund or other client accounts to suffer disadvantages or business restrictions.



If certain aggregate ownership thresholds are reached or certain transactions
undertaken, the ability of BlackRock on behalf of clients (including the Fund)
to purchase or dispose of investments, or exercise rights or undertake business
transactions, may be restricted by regulation or otherwise impaired. As a
result, BlackRock, on behalf of clients (including the Fund), may limit
purchases, sell existing investments, or otherwise restrict or limit the
exercise of rights (including voting rights) when BlackRock, in its sole
discretion, deems it appropriate.


BlackRock and its Affiliates and BAC/Barclays Entities may maintain securities
indices as part of their product offerings. Index  based funds seek to track
the performance of securities indices and may use the name of the index in the
fund name. Index providers, including BlackRock and its Affiliates and
BAC/Barclays Entities may be paid licensing fees for use of their index or
index name. BlackRock and its Affiliates and BAC/Barclays Entities will not be
obligated to license their indices to BlackRock, and BlackRock cannot be
assured that the terms of any index licensing agreement with BlackRock and its
Affiliates and BAC/Barclays Entities will be as favorable as those terms
offered to other index licensees.


BlackRock and its Affiliates and BAC/Barclays Entities may serve as Authorized
Participants in the creation and redemption of
exchange traded funds. As described in greater detail in the Creations and
Redemptions section of the prospectus, BlackRock and its Affiliates and
BAC/Barclays Entities may therefore be deemed to be participants in a
distribution of iShares funds that could render them statutory underwriters.


Present and future activities of BlackRock and its Affiliates and BAC/Barclays
Entities, including BlackRock Advisors, LLC, in addition to those described in
this section, may give rise to additional conflicts of interest.



Investment Advisory, Administrative and Distribution Services

INVESTMENT ADVISER.  BFA serves as investment adviser to the Fund pursuant to
an Investment Advisory Agreement between the Company, on behalf of the Fund,
and BFA. BFA is a California corporation indirectly owned by BlackRock, Inc.,
and is registered as an investment adviser under the Investment Advisers Act of
1940, as amended. Under the Investment Advisory Agreement, BFA, subject to the
supervision of the Board and in conformity with the stated investment policies
of the Fund, manages and administers the Company and the investment of the
Fund's assets. BFA is responsible for placing purchase and sale orders and
providing continuous supervision of the investment portfolio of the Fund.


For its investment advisory services to the Fund, BFA is entitled to receive a
management fee from the Fund 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 All Country Asia ex Japan Index Fund, iShares MSCI BRIC
Index Fund, iShares MSCI Emerging Markets Eastern Europe Index Fund, iShares
MSCI Emerging Markets Financials Sector Index Fund, iShares MSCI Emerging
Markets Index Fund and iShares MSCI Emerging Markets Materials Sector Index
Fund, which are offered in separate prospectuses) as follows: __% per


                                       28




annum of the aggregate net assets less than or equal to $__ billion, plus __%
per annum of the aggregate net assets over $__ billion, up to and including $__
billion, plus __% per annum of the aggregate net assets in excess of $__
billion.


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


Under the Investment Advisory Agreement, BFA is responsible for all expenses of
the Fund, 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 advisory services to the Fund, BFA is entitled to receive a
management fee from the Fund, based on a percentage of the Fund's average daily
net assets, at an annual rate of __%. Because the Fund has been in operation
for less than one full fiscal year, this percentage reflects the rate at which
BFA will be paid.


The Investment Advisory Agreement with respect to the Fund continues in effect
for two years from its effective date, and thereafter is subject to annual
approval by (i) the Board or (ii) the 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 the Fund is terminable
without penalty, on 60 days' notice, by the Board or by a vote of the holders
of a majority of the Fund's outstanding voting securities (as defined in the
1940 Act). The Investment Advisory Agreement is also terminable upon 60 days'
notice by BFA and will terminate automatically in the event of its assignment
(as defined in the 1940 Act).


Current interpretations of U.S. federal banking laws and regulations (i) may
prohibit BlackRock, Inc., BTC and BFA from controlling or underwriting the
shares of the Fund, but (ii) do not prohibit BlackRock, Inc. or BFA generally
from acting as an investment adviser, administrator, transfer agent or
custodian to the Fund or from purchasing shares as agent for and upon the order
of a customer.


BFA 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 BFA 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, BFA,
or its affiliates, would consider performing additional services for the
Company. BFA cannot predict whether these changes will be enacted, or the terms
under which BFA, or its affiliates, might offer to provide additional services.



PORTFOLIO MANAGERS.  The individuals named as Portfolio Managers in the Fund's
Prospectus were also primarily responsible for the day-to-day management of
other iShares funds and certain other types of portfolios and/or accounts as
indicated in the tables below as of ______, 2010:





DIANE HSIUNG
TYPES OF ACCOUNTS                                  NUMBER    TOTAL ASSETS
------------------------------------------------  --------  -------------
                                                      
Registered Investment Companies
Other Pooled Investment Vehicles
Other Accounts
Accounts with Incentive-Based Fee Arrangements





GREG SAVAGE
TYPES OF ACCOUNTS                   NUMBER    TOTAL ASSETS
---------------------------------  --------  -------------
                                       
Registered Investment Companies


                                       29







GREG SAVAGE
TYPES OF ACCOUNTS                                  NUMBER    TOTAL ASSETS
------------------------------------------------  --------  -------------
                                                      
Other Pooled Investment Vehicles
Other Accounts
Accounts with Incentive-Based Fee 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
constitute those indexes or through a representative sampling of the securities
that constitute those indexes based on objective criteria and data. Pursuant to
BTC and BFA policy, investment opportunities are allocated equitably among the
Fund 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 Fund seeking such investment opportunity. As a
consequence, from time to time the Fund may receive a smaller allocation of an
investment opportunity than it would have if the Portfolio Managers and BFA and
its affiliates did not manage other portfolios or accounts.


Like the Fund, the other portfolios or accounts for which the Portfolio
Managers are primarily responsible for the day-to-day portfolio management
generally pay an asset-based fee to BFA or BTC, as applicable, for its advisory
services. One or more of those other portfolios or accounts, however, may pay
BTC 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 BTC a portion of that portfolio's or account's gains, or would pay
BTC more for its services than would otherwise be the case if BTC meets or
exceeds specified performance targets. By their nature, incentive-based fee
arrangements could present an incentive for BTC 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 BTC has an obligation to allocate resources and
opportunities equitably among portfolios and accounts and intends to do so,
shareholders of the Fund 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
Managers' favoring those portfolios or accounts with incentive-based fee
arrangements.


The table below shows, for each Portfolio Manager, the number of portfolios or
accounts of the types set forth in the above table and the aggregate of total
assets in those portfolios or accounts with respect to which the investment
management fees are based on the performance of those portfolios or accounts as
of ______, 2010:





DIANE HSIUNG
                                            NUMBER OF OTHER
                                             ACCOUNTS WITH
                                        PERFORMANCE-BASED FEES          AGGREGATE
                                     MANAGED BY PORTFOLIO MANAGER    OF TOTAL ASSETS
                                    ------------------------------  ----------------
                                                              
Registered Investment Companies
Other Pooled Investment Vehicles
Other Accounts





GREG SAVAGE
                                            NUMBER OF OTHER
                                             ACCOUNTS WITH
                                        PERFORMANCE-BASED FEES          AGGREGATE
                                     MANAGED BY PORTFOLIO MANAGER    OF TOTAL ASSETS
                                    ------------------------------  ----------------
                                                              
Registered Investment Companies
Other Pooled Investment Vehicles
Other Accounts


The discussion below describes the Portfolio Managers' compensation as of
______, 2010.


PORTFOLIO MANAGER COMPENSATION OVERVIEW

                                       30




BASE COMPENSATION. Generally, portfolio managers receive base compensation
based on their seniority and/or their position with the firm. Senior portfolio
managers who perform additional management functions within the portfolio
management group or within BlackRock may receive additional compensation for
serving in these other capacities.


DISCRETIONARY INCENTIVE COMPENSATION. Discretionary incentive compensation is a
function of several components: the performance of BlackRock, Inc., the
performance of the portfolio manager's group within BlackRock, the investment
performance, including risk-adjusted returns, of the firm's assets under
management or supervision by that portfolio manager relative to predetermined
benchmarks, and the individual's seniority, role within the portfolio
management team, teamwork and contribution to the overall performance of these
portfolios and BlackRock.


DISTRIBUTION OF DISCRETIONARY INCENTIVE COMPENSATION. Discretionary incentive
compensation is distributed to portfolio managers in a combination of cash and
BlackRock, Inc. restricted stock units which vest ratably over a number of
years. The BlackRock, Inc. restricted stock units, if properly vested, will be
settled in BlackRock, Inc. common stock. Typically, the cash bonus, when
combined with base salary, represents more than 60% of total compensation for
the portfolio managers. Paying a portion of annual bonuses in stock puts
compensation earned by a portfolio manager for a given year "at risk" based on
BlackRock's ability to sustain and improve its performance over future periods.



From time to time, long-term incentive equity awards are granted to certain key
employees to aid in retention, align their interests with long-term shareholder
interests and motivate performance. Equity awards are generally granted in the
form of BlackRock, Inc. restricted stock units that, once vested, settle in
BlackRock, Inc. common stock.


As of ______, 2010, Diane Hsiung and Greg Savage did not beneficially own
shares of the Fund.


CODES OF ETHICS.  The Company, BFA and the Distributor have adopted Codes of
Ethics pursuant to Rule 17j-1 of 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
Fund. The Codes of Ethics are on public file with, and are available from, the
SEC.


ANTI-MONEY LAUNDERING REQUIREMENTS.  The Fund is subject to the USA PATRIOT Act
(the "Patriot Act"). The Patriot Act is intended to prevent the use of the U.S.
financial system in furtherance of money laundering, terrorism or other illicit
activities. Pursuant to requirements under the Patriot Act, the Fund may
request information from Authorized Participants to enable it to form a
reasonable belief that it knows the true identity of its Authorized
Participants. This information will be used to verify the identity of
Authorized Participants or, in some cases, the status of financial
professionals; it will be used only for compliance with the requirements of the
Patriot Act.


The Fund reserves the right to reject purchase orders from persons who have not
submitted information sufficient to allow the Fund to verify their identity.
The Fund also reserves the right to redeem any amounts in the Fund from persons
whose identity it is unable to verify on a timely basis. It is the Fund's
policy to cooperate fully with appropriate regulators in any investigations
conducted with respect to potential money laundering, terrorism or other
illicit activities.


ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT.  State Street Bank and Trust
Company ("State Street") serves as administrator, custodian and transfer agent
for the Fund. 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 and accounting and
financial reporting services for the maintenance and operations of the Company
and the 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 the 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 the
Fund. Also, pursuant to a Delegation Agreement with the Company, 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 the 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 BFA from its
management fee.


                                       31




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 the 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 Fund
through the Distributor only in Creation Units, as described in the Prospectus
and below in the CREATION AND REDEMPTION OF CREATION UNITS section of this SAI.
Shares in less than Creation Units are not distributed by the Distributor. The
Distributor will deliver the 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,
Inc. ("FINRA").


The Distribution Agreement for the 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 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 Units of Fund
shares. Such Soliciting Dealers may also be Authorized Participants (as defined
below), Depository Trust Company ("DTC") participants and/or investor services
organizations.


BFA or BTC 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.


FINANCIAL INTERMEDIARY COMPENSATION.  BFA and/or BTC and/or their respective
subsidiaries ("BFA Entities") pay certain broker-dealers, banks and other
financial intermediaries ("Intermediaries") for certain activities related to
the Fund, other iShares funds or exchange traded products in general
("Payments"). BFA Entities make Payments from their own assets and not from the
assets of the Fund. Although a portion of BFA Entities' revenue comes directly
or indirectly in part from fees paid by the Fund and other iShares funds,
Payments do not increase the price paid by investors for the purchase of shares
of, or the cost of owning, the Fund or other iShares funds. BFA Entities make
Payments for Intermediaries' participating in activities that are designed to
make registered representatives, other professionals and individual investors
more knowledgeable about exchange traded products, including the Fund or for
other activities, such as participation in marketing activities and
presentations, educational training programs, conferences, the development of
technology platforms and reporting systems ("Education Costs"). BFA Entities
also make Payments to Intermediaries for certain printing, publishing and
mailing costs associated with the Fund or materials relating to exchange traded
products in general ("Publishing Costs"). In addition, BFA Entities make
Payments to Intermediaries that make shares of the Fund and certain other
iShares funds available to their clients or for otherwise promoting the Fund
and other iShares funds; Payments of this type are sometimes referred to as
revenue-sharing payments.


Payments to an Intermediary may be significant to the Intermediary, and amounts
that Intermediaries pay to your salesperson or other investment professional
may also be significant for your salesperson or other investment professional.
Because an Intermediary may make decisions about which investment options it
will recommend or make available to its clients or what services to provide for
various products based on payments it receives or is eligible to receive,
Payments create conflicts of interest between the Intermediary and its clients
and these financial incentives may cause the Intermediary to recommend the Fund
and other iShares funds over other investments. The same conflict of interest
exists with respect to your salesperson or other investment professional if he
or she receives similar payments from his or her Intermediary firm.


As of February 2, 2010, BFA Entities had arrangements to make Payments other
than Education Costs or Publishing Costs only to Fidelity Brokerage Services
LLC ("FBS") and Merrill Lynch, Pierce, Fenner & Smith, Inc. ("ML"). Pursuant to
BFA Entities' arrangement with FBS, FBS has agreed to promote iShares funds to
FBS's customers and not to charge certain of its customers any commissions when
those customers purchase or sell shares of certain iShares funds online (the
"Co-Branded Marketing Program"). BFA Entities have agreed to facilitate the
Co-Branded Marketing Program by making payments to FBS during the term of the
agreement in a fixed amount. Upon termination of the agreement the BFA Entities
will make additional payments to FBS based upon a number of criteria, including
the overall success of the Co-Branded Marketing program and the level of
services provided by FBS during the wind-down period. Pursuant to BFA Entities'
arrangement with ML, BFA Entities have agreed to reimburse ML for a portion of
certain fee waivers that ML may be required to implement with respect to
accounts that hold "plan assets" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), as a consequence of a
technical ERISA affiliate relationship between BFA and ML.


                                       32




Any additions, modifications, or deletions to Intermediaries listed above that
have occurred since the date noted above are not included in the list. Further,
BFA Entities make Education Costs and Publishing Costs Payments to other
Intermediaries that are not listed above. BFA Entities may determine to make
Payments based on any number of metrics. For example, BFA Entities may make
Payments at year-end or other intervals in a fixed amount, an amount based upon
an Intermediary's services at defined levels or an amount based on the
Intermediary's net sales of one or more iShares funds in a year or other
period, any of which arrangements may include an agreed-upon minimum or maximum
payment, or any combination of the foregoing. As of the date of this SAI, BFA
anticipates that the Payments paid by BFA Entities in connection with the Fund,
iShares funds and exchange traded products in general will be immaterial to BFA
Entities in the aggregate for the next year. PLEASE CONTACT YOUR SALESPERSON OR
OTHER INVESTMENT PROFESSIONAL FOR MORE INFORMATION REGARDING ANY PAYMENTS HIS
OR HER INTERMEDIARY FIRM MAY RECEIVE. ANY PAYMENTS MADE BY THE BFA ENTITIES TO
AN INTERMEDIARY MAY CREATE THE INCENTIVE FOR AN INTERMEDIARY TO ENCOURAGE
CUSTOMERS TO BUY SHARES OF ISHARES FUNDS.



Brokerage Transactions

BFA assumes general supervision over placing orders on behalf of the Fund for
the purchase and sale of portfolio securities. In selecting brokers or dealers
for any transaction in portfolio securities, BFA'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 BFA 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.
BFA 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 the Fund's shares as a
factor in the selection of a broker or a dealer to execute its portfolio
transactions.


The Fund's purchase and sale orders for securities may be combined with those
of other investment companies, clients or accounts that BFA manages or advises
and for which it has brokerage placement authority. If purchases or sales of
portfolio securities of the Fund and one or more other accounts managed or
advised by BFA 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 BFA. In some cases, this procedure could have a
detrimental effect on the price or volume of the security as far as the Fund is
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. BFA may deal, trade and invest for its own
account in the types of securities in which the Fund may invest. BFA may, from
time to time, effect trades on behalf of and for the account of the Fund with
brokers or dealers that are affiliated with BFA, 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
Fund 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 year to year, as well as within a year. High
turnover rates may result in comparatively greater brokerage expenses.


Creation or redemption baskets transactions consisting substantially of cash may
require the Fund to contemporaneously transact with broker-dealers for purchases
and sales of Deposit  Securities (as defined below under "Fund Deposit") or Fund
Securities (as defined below under "Redemption of Creation Units"), as
applicable, at guaranteed  price  levels in order to reduce  transaction  costs
the Fund would otherwise incur as a consequence of settling  creation or
redemption baskets in cash rather than in kind.


Concurrently  with the Fund's receipt of an order to purchase or redeem creation
or redemption baskets  consisting  substantially of cash, the Fund will enter an
order with a broker to purchase or sell, as applicable,  the Deposit  Securities
or Fund  Securities. The terms of such order will typically  require the broker
to  guarantee  that the Fund  will  achieve  execution  of Fund Securities its
order in  market transactions  at a price  at  least  as  favorable  to the
Fund  as the  Fund's valuation of the Deposit Securities/Fund  Securities for
purposes of calculating NAV for the  creation or  redemption  transaction
giving rise to the order (the "Execution  Performance  Guarantee").   Such
orders  may  be  placed  with  the purchasing or redeeming Authorized
Participant (as defined below under "Role of the


                                       33




Authorized  Participant")  in its capacity as a  broker-dealer,  its  affiliated
broker-dealer or another broker-dealer.


To ensure that an Execution Performance Guarantee will be honored on brokerage
orders arising from creation transactions, a broker is required to deposit an
amount with the Fund (the "Execution Performance Deposit"). If the broker
achieves executions in market transactions at a price equal to or more
favorable than the Fund's valuation of the Deposit Securities, the Fund
receives the benefit of the favorable executions and returns to the broker the
Execution Performance Deposit. If, however, the broker is unable to achieve
executions in market transactions at a price at least equal to the Fund's
valuation of the securities, the Fund retains all or a portion of the Execution
Performance Deposit equal to the amount of the execution shortfall (including
brokerage costs). The amount of Execution Performance Deposit is a percentage
of the total value of the transaction equal to the percentage indicated in the
table below.


To ensure that an Execution  Performance Guarantee will be honored for brokerage
orders  arising from  redemption  transactions,  a broker agrees to pay up to an
agreed  shortfall  amount (the "Execution  Performance  Offset").  If the broker
achieves executions in market transactions at a price equal to or more favorable
than the Fund's valuation of the Fund Securities,  the Fund receives the benefit
of the  favorable  executions  and the  broker is not  called  upon to honor the
Execution  Performance  Offset.  If,  however,  the  broker is unable to achieve
executions  in  market  transactions  at a price  at least  equal to the  Fund's
valuation  of the  securities,  the Fund will be entitled to all or a portion of
the Execution  Performance Offset equal to the amount of the execution shortfall
(including  brokerage costs).  The amount of Execution  Performance  Offset is a
percentage  of the  total  value  of the  transaction  equal  to the  percentage
indicated in the table below.





 EXECUTION PERFORMANCE   EXECUTION PERFORMANCE
        DEPOSIT                 OFFSET
----------------------  ----------------------
                     
        [5%]                     [5%]


Additional Information Concerning the Company

CAPITAL STOCK.  The Company currently is comprised of __ series referred to as
funds. Each series issues shares of common stock, par value $0.001 per share.
The Company has authorized and issued the following funds as separate series of
capital stock: the iShares MSCI Australia Index Fund, the iShares MSCI Austria
Index Fund, the iShares MSCI Belgium Index Fund, the iShares MSCI Brazil Index
Fund, the iShares MSCI BRIC Index Fund, the iShares MSCI Canada Index Fund, the
iShares MSCI Chile Index Fund, the iShares MSCI Emerging Markets Eastern Europe
Index Fund, the iShares MSCI Emerging Markets Index Fund, the iShares MSCI
Emerging Markets Small Cap Index Fund, the iShares MSCI EMU Index Fund, the
iShares MSCI France Index Fund, the iShares MSCI Germany Index Fund, the
iShares MSCI Hong Kong Index Fund, the iShares MSCI Israel Capped Investable
Market Index, the iShares MSCI Italy Index Fund, the iShares MSCI Japan Index
Fund, the iShares MSCI Japan Small Cap Index Fund, the iShares MSCI Malaysia
Index Fund, the iShares MSCI Mexico Index Fund, the iShares MSCI Netherlands
Index Fund, the iShares MSCI Pacific ex-Japan Index Fund, the iShares MSCI
Singapore Index Fund, the iShares MSCI South Africa Index Fund, the iShares
MSCI South Korea Index Fund, the iShares MSCI Spain Index Fund, the iShares
MSCI Sweden Index Fund, the iShares MSCI Switzerland Index Fund, the iShares
MSCI Taiwan Index Fund, the iShares MSCI Thailand Investable Market Index Fund,
the iShares MSCI Turkey Investable Market Index Fund and the iShares MSCI
United Kingdom Index Fund. The Company has authorized for issuance, but is not
currently offering for sale to the public, eight 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 the
power to establish the number of shares which constitute a Creation Unit 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 18.35 billion shares of common
stock. The following number of shares is currently authorized for each of the
funds: the iShares MSCI Australia Index Fund, 627.8 million shares; the iShares
MSCI Austria Investable Market Index Fund, 100 million shares; the iShares MSCI
Belgium Investable Market 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 Investable Market Index Fund, 200 million shares; the
iShares MSCI Emerging Markets Index Fund, 2 billion shares; the iShares MSCI
Emerging Markets Eastern Europe Index Fund, 200 million shares; the iShares
MSCI Emerging Markets Small Cap Index Fund, 500 million shares; the iShares
MSCI EMU Index Fund, 1 billion 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, 250 million shares; the iShares
MSCI Israel Capped Investable Market Index Fund, 500 million; the


                                       34




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, 300 million
shares; the iShares MSCI Mexico Investable Market Index Fund, 255 million
shares; the iShares MSCI Netherlands Investable Market Index Fund, 255 million
shares; the iShares MSCI Pacific ex-Japan Index Fund, 1 billion shares; the
iShares MSCI Singapore Index Fund, 300 million shares; the iShares MSCI South
Africa Index Fund, 400 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, 900 million shares; the iShares MSCI Thailand Investable Market Index
Fund, 200 million; the iShares MSCI Turkey Investable Market Index Fund, 200
million; and the iShares MSCI United Kingdom Index Fund, 934.2 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 confer
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 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.


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. Under Maryland law, Directors of the Company may be
removed by vote of the stockholders.


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


Shareholders may make inquiries by writing to iShares, Inc., c/o SEI
Investments Distribution Co., One Freedom Valley Drive, Oaks, PA 19456.


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
promulgated thereunder. In addition, absent an applicable exemption or other
relief from the SEC staff, officers and directors of the fund and beneficial
owners of 10% of the shares of the 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 THE FUND. The Company or the 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 the Fund entitled to vote on
termination. Although the shares are not automatically redeemable upon the
occurrence of any specific event, the 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 the 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 FUND.  Shares of the 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 New York Stock Exchange ("NYSE"),
the NYSE Amex Equities and FINRA. Access to


                                       35




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 the 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 Company. DTC or its nominee, upon
receipt of any such distributions, shall credit immediately DTC Participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in shares of the 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 Company 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.



Creation and Redemption of Creation Units

GENERAL. The Company issues and sells shares of the 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 shares of the Fund that constitute a Creation Unit for the Fund and the
value of such Creation Unit as of _________:





                  VALUE PER
   SHARES PER      CREATION
 CREATION UNIT    UNIT (US$)
---------------  -----------
              
     ______        _______


The Board reserves the right to declare a split or a consolidation in the
number of shares outstanding of the 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.


                                       36




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


FUND DEPOSIT.  The consideration for purchase of Creation Units of the Fund
generally consists of cash and the in kind deposit of a designated portfolio of
equity securities (I.E., the "Deposit Securities"), which constitutes an
optimized representation of the securities of the 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 the Fund. For
the iShares MSCI Emerging Markets Small Cap Index Fund, the portfolio of
securities required for purchase of a Creation Unit may be different than the
portfolio of securities the Fund will deliver upon redemption of Fund shares
("Fund Securities"). The Deposit Securities and Fund Securities, as the case
may be, in connection with a purchase or redemption of a Creation Unit, will
correspond PRO RATA, to the extent practicable, to the securities held by the
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 purchasing the Creation Unit. The Fund
currently offers Creation Units partially for cash.


BFA makes available through the 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 the Fund.
Such Fund Deposit is applicable, subject to any adjustments as described below,
in order to effect purchases of Creation Units of shares of the 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 BFA 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 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 BFA 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 Fund, or resulting from stock splits and other
corporate actions.


ROLE OF THE AUTHORIZED PARTICIPANT.  Creation Units 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 shares 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.


                                       37




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 the Fund no later than 11:59 p.m., Eastern time, on any Business Day
to receive the next day's NAV. The Distributor will notify BFA and the
Custodian of such order. The Custodian will then provide such information to
the appropriate subcustodian. 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.


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 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 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.


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 BFA) 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 the 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 the Fund; (iii)
the Deposit Securities delivered do not conform to the identity and number of
shares specified by BFA, 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
BFA, 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
BFA 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 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
the REGULAR HOLIDAYS section, the Fund reserves the right to settle Creation
Unit transactions on a basis other than T+3 in order to accommodate non-U.S.
market holiday schedules, to account for different treatment among non-U.S. 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


                                       38




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 115%, which BFA 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 or require a representation from
the Authorized Participants that the creation and redemption transactions are
for separate beneficial owners. 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 the Fund 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, and may be responsible for costs
associated with certain brokerage execution guarantees as described in the
Brokerage Transactions section of this SAI.


COSTS ASSOCIATED WITH CREATION TRANSACTIONS.  A standard creation transaction
fee is imposed to offset the transfer and other transaction costs associated
with the issuance of Creation Units. The standard creation transaction fee will
be the same regardless of the number of Creation Units purchased by a purchaser
on the same day. Purchasers of Creation Units for cash also may be responsible
for certain brokerage and market impact expenses as further described in the
Brokerage Transactions section of this SAI. Investors will also bear the costs
of transferring the Deposit Securities to the Company. Investors who use the
services of a broker or other such intermediary may be charged a fee for such
services.


The following table sets forth the Fund's standard maximum creation  transaction
fees:




 STANDARD CREATION
  TRANSACTION FEE
------------------
       $______



REDEMPTION OF CREATION UNITS.  Shares of the 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
shares 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. Investors should expect to incur brokerage and other costs in
connection with assembling a sufficient number of shares to constitute a
redeemable Creation Unit.


BFA 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.


                                       39




Unless cash redemptions are available or specified for the 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.The
Fund currently redeems shares partially for cash.


COSTS ASSOCIATED WITH REDEMPTION TRANSACTIONS.  A redemption transaction fee is
imposed to offset transfer and other transaction costs that may be incurred by
the Fund. The standard redemption transaction fee will be the same regardless
of the number of Creation Units redeemed by an investor on the same day. The
redeeming investor also may be responsible for costs associated with certain
brokerage execution guarantees if the redemption proceeds are paid in whole or
in part in cash, as described in the Brokerage Transactions section of this
SAI. 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.


The following table sets forth the Fund's standard redemption transaction fees:


 STANDARD REDEMPTION
   TRANSACTION FEE
--------------------

      $______


Redemption requests for Creation Units of the Fund must be submitted to the
Distributor by or through an Authorized Participant no later than 4:00 p.m.,
Eastern time on any Business Day in order to receive that day's NAV. 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 in effect. At any time, only a
limited number of broker-dealers will have an Authorized Participant Agreement.
Investors making a redemption request should be aware that such request must be
in the form specified by such Authorized 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.


                                       40




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 Fund generally will be made within
three Business Days (I.E., "T+3"). However, as discussed in the REGULAR
HOLIDAYS section, the Fund reserves the right to settle redemption transactions
and deliver redemption proceeds on another basis to accommodate non-U.S. market
holiday schedules, to account for different treatment among non-U.S. 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. The REGULAR HOLIDAYS
section 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 the REGULAR HOLIDAYS section 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 non-U.S. 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 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 the 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, 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 REGULAR HOLIDAYS section hereto where more than seven calendar days
would be needed).


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 115%, which BFA may change from time to time, of the value of the
missing shares. Such cash collateral must be delivered no later than 10:00
a.m., Eastern time on the day after the date of submission of such redemption
request 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 the Fund may trade on exchange(s) on days
that the Listing Exchange is closed or are otherwise not Business Days for the
Fund, shareholders may not be able to redeem their shares of the Fund, or
purchase or sell shares of the Fund on the Listing Exchange on days when the
NAV of the Fund could be significantly affected by events in the relevant
non-U.S. markets.


The right of redemption may be suspended or the date of payment postponed with
respect to the 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


                                       41




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.


TAXATION ON CREATION AND REDEMPTIONS OF CREATION UNITS.  An Authorized
Participant generally will recognize either gain or loss upon the exchange of
Deposit Securities for Creation Units. This gain or loss is calculated by
taking the market value of the Creation Units purchased over the Authorized
Participant's aggregate basis in the Deposit Securities exchanged therefor.
However, the U.S. Internal Revenue Service (the "IRS") may apply the wash sales
rules to determine that any loss realized upon the exchange of Deposit
Securities for Creation Units as capital assets is not currently deductible.
Authorized Participants should consult their own tax advisors.


Current federal tax laws dictate that capital gain or loss realized from the
redemption of Creation Units will generally create long-term capital gain or
loss if the Authorized Participant holds the Creation Units as capital assets
for more than one year, or short-term capital gain or loss if the Creation
Units were held for one year or less, if the Creation Units are held as capital
assets.


REGULAR HOLIDAYS. For every occurrence of one or more intervening holidays in
the applicable non-U.S. 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 non-U.S. 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 non-U.S. market holiday
schedules, will require a delivery process longer than seven calendar days, in
certain circumstances. The holidays applicable to the 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 the 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.


The dates in calendar years 2010 and 2011 in which the regular holidays
affecting the relevant securities markets of the following countries (please
note these holiday schedules are subject to potential changes in the relevant
securities markets):


2010


                              
                        BRAZIL
--------------------------------------------------
January 1     April 2    September 7   December 24
January 20    April 21   October 12    December 31
January 25    April 23   November 2
February 15   June 3     November 15
February 16   July 9     November 30




                   
                  CHILE
------------------------------------
January 1   July 16      December 31
April 2     October 11
May 21      November 1
June 28     December 8




                              
                         CHINA
---------------------------------------------------
January 1     April 2   July 1         September 29
January 18    April 5   July 5         September 30
February 15   April 6   September 6    October 1
February 16   May 3     September 22   October 11
February 17   May 21    September 23   November 11
February 18   May 31    September 27   November 25
February 19   June 16   September 28   December 27



                                       42





                           
                     COLOMBIA
-----------------------------------------------
January 1    April 2   July 5       November 1
January 11   May 17    July 20      November 15
March 22     June 7    August 16    December 8
April 1      June 14   October 18   December 31




                     
            THE CZECH REPUBLIC
--------------------------------------
January 1   September 28   December 31
April 5     October 28
July 5      November 17
July 6      December 24




                     
                   EGYPT
--------------------------------------
January 7   July 1         November 16
April 4     September 12   November 17
April 5     October 6      December 7
April 25    November 15




         
          HUNGARY
-----------------------
January 1   August 20
March 15    November 1
April 5     December 24
May 24




                               
                         INDIA
---------------------------------------------------
January 26    March 24   May 27         October 2
February 12   April 1    July 1         November 5
February 27   April 2    August 19      November 18
March 1       April 14   September 11   December 17
March 16      May 1      September 30   December 25




                                  
                         INDONESIA
-------------------------------------------------------
January 1     May 13        September 7    September 13
February 26   May 28        September 8    November 17
March 16      August 17     September 9    December 7
April 2       September 6   September 10   December 31




                               
                         ISRAEL
----------------------------------------------------
February 28   April 19   September 8    September 23
March 29      April 20   September 9    September 29
March 30      May 18     September 10   September 30
April 4       May 19     September 17
April 5       July 20    September 22




                                  
                        MALAYSIA
-----------------------------------------------------
January 1     February 26   August 31      December 7
February 1    May 28        September 10
February 15   May 31        November 5
February 16   June 1        November 17




          
            MEXICO
-------------------------
January 1    April 2
February 1   September 16
March 15     November 2
April 1      November 15




          
           MOROCCO
------------------------
January 1    January 10
January 11   November 17
July 30      November 18
August 20    December 7




                  
                 PERU
----------------------------------
January 1   July 28     November 1
April 1     July 29     December 8
April 2     August 30
June 29     October 8




                                
                    THE PHILIPPINES
----------------------------------------------------
January 1     April 12    August 30      December 24
February 25   May 10      September 10   December 30
April 1       June 14     November 1     December 31
April 2       August 23   November 29




         
           POLAND
-----------------------
January 1   June 3
April 2     November 1
April 5     November 11
May 3       December 24




                           
                      RUSSIA
----------------------------------------------
January 1   January 7     March 8   November 4
January 4   January 8     May 3
January 5   February 22   May 10
January 6   February 23   June 14



                                       43





                     
               SOUTH AFRICA
--------------------------------------
January 1   April 27       December 16
March 22    June 16        December 27
April 2     August 9
April 5     September 24




                       
                 SOUTH KOREA
-----------------------------------------
January 1     May 21         September 23
February 15   June 2         December 31
March 1       September 21
May 5         September 22




                      
                   TAIWAN
----------------------------------------
January 1     February 16   April 5
February 11   February 17   June 16
February 12   February 18   September 22
February 15   February 19




                          
                     THAILAND
----------------------------------------------
January 1   April 14   May 27      October 25
March 1     April 15   July 1      December 6
April 6     May 3      July 26     December 10
April 13    May 5      August 12   December 31




                                
                         TURKEY
----------------------------------------------------
January 1   September 8    October 29    November 18
April 23    September 9    November 15   November 19
May 19      September 10   November 16
August 30   October 28     November 17




2011



                     
                  BRAZIL
--------------------------------------
January 20   April 21      October 12
January 25   April 22      November 2
March 7      June 23       November 15
March 8      September 7   December 30




         
            CHILE
------------------------
April 22    September 19
June 20     October 10
June 27     November 1
August 15   December 8




                                
                         CHINA
----------------------------------------------------
January 3    February 7    May 5         October 5
January 17   February 8    May 6         October 6
January 31   February 9    May 30        October 7
February 1   February 21   July 4        October 10
February 2   May 2         September 5   November 11
February 3   May 3         October 3     November 24
February 4   May 4         October 4     December 26




                            
                      COLOMBIA
------------------------------------------------
January 10   June 6    August 15     December 8
March 21     June 27   October 17    December 30
April 21     July 4    November 7
April 22     July 20   November 14



                                       44





            
      THE CZECH REPUBLIC
--------------------------
April 25       October 28
July 5         November 17
July 6         December 26
September 28   December 30




                      
                   EGYPT
--------------------------------------
February 15   August 31     November 7
April 24      September 1
April 25      October 6
May 1         November 6




        
          HUNGARY
----------------------
March 14   October 31
March 15   November 1
April 25   December 26
June 13




                               
                         INDIA
---------------------------------------------------
January 26    April 14   August 15      October 6
February 16   April 16   August 19      October 26
March 2       April 22   August 23      October 28
April 1       May 17     August 31      November 7
April 4       June 30    September 1    November 10
April 12      July 1     September 30   December 6




                               
                       INDONESIA
---------------------------------------------------
February 3    June 2      August 31     December 26
February 14   June 27     September 1   December 30
April 4       August 17   September 2
April 22      August 29   November 7
May 17        August 30   November 28




                            
                      ISRAEL
-----------------------------------------------
March 20   May 8      September 28   October 13
April 18   May 9      September 29   October 19
April 19   June 7     September 30   October 20
April 24   June 8     October 7
April 25   August 9   October 12




                                
                        MALAYSIA
----------------------------------------------------
January 1    February 15   June 4        October 26
February 1   May 2         August 29     November 7
February 2   May 17        August 30     November 28
February 3   May 30        August 31     December 26
February 4   May 31        September 1




          
            MEXICO
-------------------------
February 7   September 16
March 21     November 2
April 21     November 21
April 22     December 12




           
           MOROCCO
-------------------------
January 11    September 1
February 16   November 7
February 17   November 8
August 31     November 18




        
           PERU
---------------------
April 21   July 29
April 22   August 30
June 29    November 1
July 28    December 8




                      
              THE PHILIPPINES
---------------------------------------
February 25   August 31     December 30
April 21      November 1
April 22      November 2
August 30     November 30




        
          POLAND
----------------------
April 22   August 15
April 25   November 1
May 3      November 11
June 23    December 26



                                       45





                           
                      RUSSIA
----------------------------------------------
January 3   January 7     March 8   June 13
January 4   January 10    May 2     November 4
January 5   February 23   May 9
January 6   March 7       May 10




                   
              SOUTH AFRICA
------------------------------------
March 21   May 2         December 26
April 22   June 16
April 25   August 9
April 27   December 16




                             
                     SOUTH KOREA
-------------------------------------------------
February 2   April 5   August 15      December 30
February 3   May 5     September 12
February 4   May 10    September 13
March 1      June 6    October 3




                     
                   TAIWAN
---------------------------------------
January 31   February 4    May 2
February 1   February 7    June 6
February 2   February 28   September 12
February 3   April 5       October 10




                            
                      THAILAND
------------------------------------------------
January 3     April 14   May 17      October 24
February 17   April 15   July 1      December 5
April 6       May 2      July 18     December 12
April 13      May 5      August 12




                    
                 TURKEY
------------------------------------
May 19      September 1   November 8
August 29   September 2   November 9
August 30   October 28
August 31   November 7



REDEMPTIONS. The longest redemption cycle for the Fund is a function of the
longest redemption cycle among the countries whose stocks compromise the Fund.
In the calendar year 2010 and 2011, the dates of regular holidays affecting the
following securities markets present the worst-case redemption cycle* for the
Fund as follows:







                         2010
------------------------------------------------------
                                             NUMBER OF
                     TRADE     SETTLEMENT     DAYS TO
     COUNTRY         DATE         DATE        SETTLE
----------------  ----------  ------------  ----------
                                   
  China           02/10/10    02/22/10      12
                  02/11/10    02/23/10      12
                  02/12/10    02/24/10      12
                  03/29/10    04/07/10      9
                  03/30/10    04/08/10      9
                  04/01/10    04/09/10      8
                  09/20/10    10/04/10      14
                  09/21/10    10/05/10      14
                  09/24/10    10/06/10      12
  Egypt           11/10/10    11/18/10      8
                  11/11/10    11/21/10      10
                  11/14/10    11/22/10      8
  Indonesia       09/01/10    09/14/10      13
                  09/02/10    09/15/10      13
                  09/03/10    09/16/10      13
  Malaysia        05/25/10    06/02/10      8
                  05/26/10    06/03/10      8
                  05/27/10    06/04/10      8
  South Africa    03/15/10    03/23/10      8
                  03/16/10    03/24/10      8
                  03/17/10    03/25/10      8
                  03/18/10    03/26/10      8
                  03/19/10    03/29/10      10


                                       46







                        2010
-----------------------------------------------------
                                            NUMBER OF
                    TRADE     SETTLEMENT     DAYS TO
    COUNTRY         DATE         DATE        SETTLE
---------------  ----------  ------------  ----------
                                  
                 03/26/10    04/06/10      11
                 03/29/10    04/07/10      9
                 03/30/10    04/08/10      9
                 03/31/10    04/09/10      9
                 04/01/10    04/12/10      11
                 04/20/10    04/28/10      8
                 04/21/10    04/29/10      8
                 04/22/10    04/30/10      8
                 04/26/10    04/04/10      8
                 06/09/10    06/17/10      8
                 06/10/10    06/18/10      8
                 06/11/10    06/21/10      10
                 06/12/10    06/22/10      8
                 06/13/10    06/23/10      8
                 08/02/10    08/10/10      8
                 08/03/10    08/11/10      8
                 08/04/10    08/12/10      8
                 08/05/10    08/13/10      8
                 08/06/10    08/16/10      10
                 09/17/11    09/27/11      10
                 09/20/11    09/28/11      8
                 09/21/11    09/29/11      8
                 09/22/11    09/30/11      8
                 09/23/11    10/01/11      8
                 12/09/11    12/17/11      8
                 12/10/11    12/20/11      10
                 12/13/11    12/21/11      8
                 12/14/11    12/22/11      8
                 12/15/11    12/23/11      8
                 12/20/11    12/28/11      8
                 12/21/11    12/29/11      8
                 12/22/11    12/30/11      8
                 12/23/11    12/31/11      8
                 12/24/11    01/03/12      11
  South Korea    09/16/10    09/24/10      8
                 09/17/10    09/27/10      10
                 09/20/10    09/28/10      8
  Taiwan         02/10/10    02/22/10      12
  Thailand       04/08/10    04/16/10      8
                 04/09/10    04/19/10      10
                 04/12/10    04/20/10      8
  Turkey         11/11/10    11/22/10      11
                 11/12/10    11/23/10      11





                     2011
-----------------------------------------------
                                      NUMBER OF
              TRADE     SETTLEMENT     DAYS TO
 COUNTRY      DATE         DATE        SETTLE
---------  ----------  ------------  ----------
                            
  China    01/26/11    02/10/11      15
           01/27/11    02/11/11      15


                                       47







                         2011
------------------------------------------------------
                                             NUMBER OF
                     TRADE     SETTLEMENT     DAYS TO
     COUNTRY         DATE         DATE        SETTLE
----------------  ----------  ------------  ----------
                                   
                  01/28/11    02/14/11      17
                  04/27/11    05/09/11      12
                  04/28/11    05/10/11      12
                  04/29/11    05/11/11      12
                  09/28/11    10/11/11      13
                  09/29/11    10/12/11      13
                  09/30/11    10/13/11      13
  Indonesia       08/24/11    09/05/11      12
                  08/25/11    09/06/11      12
                  08/26/11    09/07/11      12
  Malaysia        01/27/11    02/07/11      11
                  01/28/11    02/08/11      11
                  01/31/11    02/09/11      9
                  08/24/11    09/02/11      9
                  08/25/11    09/05/11      11
                  08/26/11    09/06/11      11
  Russia          12/28/11    01/10/12      13
                  12/29/11    01/11/12      13
                  12/30/11    01/10/12      13
  South Africa    03/14/11    03/22/11      8
                  03/15/11    03/23/11      8
                  03/16/11    03/24/11      8
                  03/17/11    03/25/11      8
                  03/18/11    03/28/11      10
                  04/15/11    04/26/11      11
                  04/18/11    04/28/11      10
                  04/19/11    04/29/11      10
                  04/20/11    05/03/11      13
                  04/21/11    05/04/11      13
                  04/26/11    05/05/11      9
                  04/28/11    05/06/11      8
                  04/29/11    05/09/11      10
                  06/09/11    06/17/11      8
                  06/10/11    06/20/11      10
                  06/13/11    06/21/11      8
                  06/14/11    06/22/11      8
                  06/15/11    06/23/11      8
                  08/02/11    08/10/11      8
                  08/03/11    8/11/2011     8
                  08/04/11    08/12/11      8
                  08/05/11    08/15/11      10
                  08/08/11    08/16/11      8
                  12/09/11    12/19/11      10
                  12/12/11    12/20/11      8
                  12/13/11    12/21/11      8
                  12/14/11    12/22/11      8
                  12/15/11    12/23/11      8
                  12/19/11    12/27/11      8
                  12/20/11    12/28/11      8
                  12/21/11    12/29/11      8


                                       48







                        2011
-----------------------------------------------------
                                            NUMBER OF
                    TRADE     SETTLEMENT     DAYS TO
    COUNTRY         DATE         DATE        SETTLE
---------------  ----------  ------------  ----------
                                  
                 12/22/11    12/30/11      8
                 12/23/11    01/03/12      11
  South Korea    01/28/11    02/07/11      10
  Taiwan         01/27/11    02/08/11      12
                 01/28/11    02/09/11      12
  Thailand       04/08/11    04/18/11      10
                 04/11/11    04/19/11      8
                 04/12/11    04/20/11      8
  Turkey         08/25/11    09/05/11      11
                 08/26/11    09/06/11      11


-------
*     These worst-case redemption cycles are based on information regarding
      regular holidays, which may be out of date. Based on changes in holidays,
      longer (worse) redemption cycles are possible.




Taxes

REGULATED INVESTMENT COMPANY QUALIFICATIONS.  The Fund intends to qualify for
treatment as a separate RIC under Subchapter M of the Internal Revenue Code. To
qualify for treatment as a RIC, the 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 the 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 non-U.S. currencies, other income (including, but not limited
to, 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 interests in qualified publicly-traded partnerships (I.E.,
partnerships that are traded on an established securities market or tradable on
a secondary market, other than partnerships that derive 90% of their income
from interest, dividends, capital gains and other traditionally permitted
mutual fund income); and (ii) at the close of each quarter of the Fund's
taxable year, (a) at least 50% of the market value of the 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 the Fund's total assets may be invested in the
securities (other than U.S. government securities or the securities of other
RICs) of any one issuer, of two or more issuers of which 20% or more of the
voting stock is held by the Fund and that are engaged in the same or similar
trades or businesses or related trades or businesses or the securities of one
or more qualified publicly-traded partnerships.


Although in general the passive loss rules of the Internal Revenue Code do not
apply to RICs, such rules do apply to a RIC with respect to items attributable
to an interest in a qualified publicly-traded partnership. The Fund's
investments in partnerships, including in qualified publicly-traded
partnerships, may result in the Fund being subject to state, local, or non-U.S.
income, franchise or withholding tax liabilities.


TAXATION OF RICS.  As a RIC, the 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 a minimum
distribution requirement. To satisfy the minimum distribution requirement, the
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. The 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 the Fund fails to qualify for any taxable year as a RIC or
fails to meet the distribution requirement, 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


                                       49




treated as qualified dividend income and distributions to corporate
shareholders generally should be eligible for the dividends received deduction.
Although the Fund intends to distribute substantially all of its net investment
income and its capital gains for each taxable year, the Fund will be subject to
U.S. federal income taxation to the extent any such income or gains are not
distributed. If the 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 the 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.


EXCISE TAX.  The 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 12 months ended October 31 of such
year. For this purpose, however, any ordinary income or capital gain net income
retained by the Fund that is subject to corporate income tax will be considered
to have been distributed by year-end. In addition, the minimum amounts that
must be distributed in any year to avoid the excise tax will be increased or
decreased to reflect any underdistribution or overdistribution, as the case may
be, from the previous year. The 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.


TAXATION OF U.S. SHAREHOLDERS.  Dividends and other distributions by the Fund
are generally treated under the Internal Revenue Code as received by the
shareholders at the time the dividend or distribution is made. However, any
dividend or distribution declared by the 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.


The 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 the 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 IRS.


Recently enacted legislation imposed a 3.8% excise tax on net investment
income, including dividends and capital gains, of individuals with annual
income of $200,000 or more ($250,000 if married and filing jointly). beginning
in 2013.


Distributions of net realized long-term capital gains, if any, that the 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 the 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 discussion 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


                                       50




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 the 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 shares of the Fund, and as a
capital gain thereafter (if the shareholder holds 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 the Fund that are attributable to dividends received by the 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 purchased at
that time may reflect the amount of the forthcoming distribution, such dividend
or distribution may nevertheless be taxable to them. If the Fund is the holder
of record of any security on the record date for any dividends payable with
respect to such security, 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
security became ex-dividend with respect to such dividends (I.E., the date on
which a buyer of the security would not be entitled to receive the declared,
but unpaid, dividends); or (b) the date the Fund acquired such security.
Accordingly, in order to satisfy its income distribution requirements, the 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.


In certain situations, the Fund may, for a taxable year, defer all or a portion
of its capital losses and currency losses realized after October until the next
taxable year in computing its investment company taxable income and net capital
gain, which will defer the recognition of such realized losses. Such deferrals
and other rules regarding gains and losses realized after October may affect
the tax character of shareholder distributions.


SALES OF SHARES.  Upon the sale or exchange of shares of the Fund, a
shareholder will realize a taxable gain or loss equal to the difference between
the amount realized and the shareholder's basis in shares of the Fund. A
redemption of shares by the 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 the 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 shareholders from immediately deducting the sales
charge by shifting their investments within a family of mutual funds.


BACK-UP WITHHOLDING.  In certain cases, the 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: (i) has failed to provide a correct taxpayer identification number; (ii)
is subject to back-up withholding by the IRS; (iii) has failed to certify to
the Fund that such shareholder is not subject to back-up withholding; or (iv)
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 the 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 the Fund and if, pursuant to Sections 351 and 362 of
the Internal Revenue Code, the Fund would have a basis in the securities
different from the market value of such securities on the date of deposit. If
the 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


                                       51




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 the 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.


TAXATION OF CERTAIN DERIVATIVES.  The Fund's transactions in zero coupon
securities, non-U.S. currencies, forward contracts, options and futures
contracts (including options and futures contracts on non-U.S. currencies), to
the extent permitted, will be subject to special provisions of the Internal
Revenue 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. The 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 zero
coupon security, non-U.S. currency, forward contract, option, futures contract
or hedged investment in order to mitigate the effect of these rules and prevent
disqualification of the Fund as a RIC.


The Fund's investment in so-called "Section 1256 contracts," such as regulated
futures contracts, most non-U.S. currency forward contracts traded in the
interbank market and options on most security indexes, 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 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, the Fund may make or receive
periodic net payments. The 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). With respect to
certain types of swaps, the Fund may be required to currently recognize income
or loss with respect to future payments on such swaps or may elect under
certain circumstances to mark such swaps to market annually for tax purposes as
ordinary income or loss. The tax treatment of many types of credit default
swaps is uncertain.


QUALIFIED DIVIDEND INCOME.  Distributions by the Fund of investment company
taxable income (including any short-term capital gains), 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%
(0% for individuals in lower tax brackets) to the extent the 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 U.S. corporations (but generally not from
U.S. REITs) and certain non-U.S. corporations (E.G., non-U.S. corporations that
are not "passive foreign investment companies" and which are incorporated in a
possession of the U.S. or in certain countries with a comprehensive tax treaty
with the U.S., or the stock of which is readily tradable on an established
securities market in the U.S.). Under current IRS guidance, the United States
has appropriate comprehensive income tax treaties with the following countries:
Australia, Austria, Bangladesh, Barbados, Belgium, Canada, China, Cyprus, the
Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece,
Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan,
Kazakhstan, Latvia, Lithuania, Luxembourg, Mexico, Morocco, the Netherlands,
New Zealand, Norway, Pakistan, the Philippines, Poland, Portugal, Romania,
Russia, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sri Lanka,
Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine,
the United Kingdom and Venezuela.


A dividend from the Fund 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 61 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 or the Fund fails to satisfy those holding period
requirements with respect to the securities it holds that paid the dividends
distributed to the shareholder (or, in the case of certain preferred stocks,
the holding requirement of 91 days during the 181-day period beginning on the
date


                                       52




that is 90 days before the date on which the stock becomes ex-dividend with
respect to such dividend); (ii) the Fund or 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 dividend as investment income under
Section 163(d)(4)(B) of the Internal Revenue Code. Dividends received by the
Fund from a REIT or another RIC may be treated as qualified dividend income
only to the extent the dividend distributions are attributable to qualified
dividend income received by such REIT or other 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. 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.
Distributions by the Fund of its net short-term capital gains will be taxable
as ordinary income. Capital gain distributions consisting of the Fund's net
capital gains will be taxable as long-term capital gains.


If you lend your Fund shares pursuant to securities lending arrangements you
may lose the ability to use non-U.S. tax credits passed through by the Fund or
to treat Fund dividends (paid while the shares are held by the borrower) as
qualified dividends. Consult your financial intermediary or tax advisor. If you
enter into a short sale with respect to shares of the Fund, substitute payments
made to the lender of such shares may not be deductible. Consult your financial
intermediary or tax advisor.


CORPORATE DIVIDENDS RECEIVED  DEDUCTION.  Dividends paid by the Fund that are
attributable  to  dividends  received  by the Fund  from U.S.  corporations  may
qualify for the federal dividends received deduction for corporations.  A 46-day
minimum  holding  period  during the 90-day  period that begins 45 days prior to
ex-dividend  date (or  91-day  minimum  holding  period  during  the 180  period
beginning 90 days prior to ex-dividend  date for certain  preference  dividends)
during which risk of loss may not be diminished  is required for the  applicable
shares,  at both the Fund and shareholder  level,  for a dividend to be eligible
for the dividends  received  deduction.  Restrictions may apply if indebtedness,
including a short sale, is attributable to the investment.


EXCESS INCLUSION INCOME.  Under current law, the Fund will block unrelated
business taxable income from being realized by its tax-exempt shareholders.
Notwithstanding the foregoing, a tax-exempt shareholder could realize unrelated
business taxable income by virtue of its investment in the Fund if shares in
the Fund constitute debt-financed property in the hands of the tax-exempt
shareholder within the meaning of Section 514(b) of the Internal Revenue Code.
Certain types of income received by the Fund from REITs, real estate mortgage
investment conduits, taxable mortgage pools or other investments may cause the
Fund to designate some or all of its distributions as "excess inclusion
income." To Fund shareholders, such excess inclusion income may (i) constitute
taxable income, as "unrelated business taxable income" for those shareholders
who would otherwise be tax-exempt such as individual retirement accounts,
401(k) accounts, Keogh plans, pension plans and certain charitable entities;
(ii) not be offset by otherwise allowable deductions for tax purposes; (iii)
not be eligible for reduced U.S. withholding for non-U.S. shareholders even
from tax treaty countries; and (iv) cause the Fund to be subject to tax if
certain "disqualified organizations," as defined by the Internal Revenue Code,
are Fund shareholders. If a charitable remainder annuity trust or a charitable
remainder unitrust (each as defined in Section 664 of the Internal Revenue
Code) has UBTI for a taxable year, a 100% excise tax on the UBTI is imposed on
the trust.


NON-U.S. INVESTMENTS.  Under Section 988 of the Internal Revenue Code, gains or
losses attributable to fluctuations in exchange rates between the time the Fund
accrues income or receivables or expenses or other liabilities denominated in a
non-U.S. currency and the time the Fund actually collects such income or pays
such liabilities are generally treated as ordinary income or ordinary loss. In
general, gains (and losses) realized on debt instruments will be treated as
Section 988 gain (or loss) to the extent attributable to changes in exchange
rates between the U.S. dollar and the currencies in which the instruments are
denominated. Similarly, gain or losses on non-U.S. currency, non-U.S. currency
forward contracts and certain non-U.S. currency options or futures contracts
denominated in non-U.S currency, to the extent attributable to fluctuations in
exchange rates between the acquisition and disposition dates, are also treated
as ordinary income or loss unless the Fund were to elect otherwise.


The Fund may be subject to non-U.S. income taxes withheld at the source. The
Fund, if permitted to do so, may elect to "pass through" to its investors the
amount of non-U.S. income taxes paid by the Fund provided that the Fund held
the security on the dividend settlement date and for at least 15 additional
days immediately before and/or thereafter, with the result that each investor
with respect to shares of the Fund held for a minimum 16-day holding period at
the time of deemed distribution will (i) include in gross income, even though
not actually received, the investor's PRO RATA share of the Fund's non-U.S.
income taxes, and (ii) either deduct (in calculating U.S. taxable income, but
only for investors who itemize their deductions on their personal tax returns)
or credit (in calculating U.S. federal income tax) the investor's PRO RATA
share of the


                                       53




Fund's non-U.S. income taxes. A non-U.S. person invested in the Fund in a year
that the Fund elects to "pass through" its non-U.S. taxes may be treated as
receiving additional dividend income subject to U.S. withholding tax. A
non-U.S. tax credit may not exceed the investor's U.S. federal income tax
otherwise payable with respect to the investor's non-U.S. source income. For
this purpose, shareholders must treat as non-U.S. source gross income (i) their
proportionate shares of non-U.S. taxes paid by the Fund and (ii) the portion of
any dividend paid by the Fund that represents income derived from non-U.S.
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 non-U.S. tax credit may be claimed.


PASSIVE FOREIGN INVESTMENT COMPANIES.  If the Fund purchases shares in "passive
foreign investment companies" ("PFICs"), it may be subject to U.S. federal
income tax on a portion of any "excess distribution" or gain from the
disposition of such shares even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on the Fund in respect of deferred taxes arising from
such distributions or gains.


If the Fund were to invest in a PFIC and elect to treat the PFIC as a
"qualified electing fund" under the Internal Revenue Code, in lieu of the
foregoing requirements, the Fund might be required to include in income each
year a portion of the ordinary earnings and net capital gains of the qualified
electing fund, even if not distributed to the Fund, and such amounts would be
subject to the 90% and excise tax distribution requirements described above. In
order to make this election, the Fund would be required to obtain certain
annual information from the PFICs in which it invests, which may be difficult
or impossible to obtain.


Alternatively, the Fund may make a mark-to-market election that would result in
the Fund being treated as if it had sold and repurchased its PFIC stock at the
end of each year. In such case, the Fund would report any such gains as
ordinary income and would deduct any such losses as ordinary losses to the
extent of previously recognized gains. The election must be made separately for
each PFIC owned by the Fund and, once made, would be effective for all
subsequent taxable years, unless revoked with the consent of the IRS. By making
the election, the Fund could potentially ameliorate the adverse tax
consequences with respect to its ownership of shares in a PFIC, but in any
particular year may be required to recognize income in excess of the
distributions it receives from PFICs and its proceeds from dispositions of PFIC
stock. The Fund may have to distribute this "phantom" income and gain to
satisfy the 90% distribution requirement and to avoid imposition of the 4%
excise tax.


The Fund will make the appropriate tax elections, if possible, and take any
additional steps that are necessary to mitigate the effects of these rules.


REPORTING.  If a shareholder recognizes a loss with respect to the 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 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 RIC 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 non-U.S. taxes depending on each
shareholder's particular situation.


TAXATION OF NON-U.S. SHAREHOLDERS.  Dividends paid by the 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. Dividends paid by the Fund
from net-tax exempt income or long-term capital gains are generally not subject
to such withholding tax. 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 back-up withholding at the appropriate rate.


                                       54




In general, U.S. 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 the Fund.


For non-U.S. shareholders of the Fund, a distribution attributable to the
Fund's sale or exchange of U.S. real property or of a REIT or other U.S. real
property holding corporation will be treated as real property gain subject to
35% withholding tax if 50% or more of the value of the Fund's assets is
invested in REITs and other U.S. real property holding corporations and if the
non-U.S. shareholder has held more than 5% of a class of stock at any time
during the one-year period ending on the date of the distribution. In addition,
non-U.S. shareholders may be subject to certain tax filing requirements if 50%
or more of the Fund's assets are invested in REITs and other U.S. real property
holding corporations. After December 31, 2009, distributions by the Fund that
are attributable to gain received from the sale or exchange of U.S. real
property or an interest in a U.S. real property holding corporation will only
be subject to withholding and taxed to the shareholder as income effectively
connected to a U.S. trade or business if the distributions are attributable to
distributions from a REIT to the Fund.


Disposition of Fund shares by non-U.S. shareholders on or before December 31,
2009, will be subject to withholding tax and treated as income effectively
connected to a U.S. trade or business 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 Fund is not domestically controlled, and the non-U.S. shareholder owns more
than 5% of the outstanding shares of the Fund at any time during the five-year
period ending on the date of disposition. After December 31, 2009, such
dispositions will be subject to withholding and treated as income effectively
connected to a U.S. trade or business even if the Fund is domestically
controlled.


The rules laid out in the previous two paragraphs, other than the withholding
rules, will apply notwithstanding the Fund's participation in a wash sale
transaction or its payment of a substitute dividend.


Provided that 50% or more of the value of the Fund's stock is held by U.S.
shareholders, distributions of U.S. real property interests (including
securities in a U.S. real property holding corporation, unless such corporation
is regularly traded on an established securities market and the Fund has held
5% or less of the outstanding shares of the corporation during the five-year
period ending on the date of distribution) occurring on or before December 31,
2009, in redemption of a non-U.S. shareholder's shares of the Fund will cause
the Fund to recognize gain. If the Fund is required to recognize gain, the
amount of gain recognized will equal to the fair market value of such interests
over the Fund's adjusted bases to the extent of the greatest non-U.S. ownership
percentage of the Fund during the five-year period ending on the date of
redemption for redemptions.


For taxable years beginning before January 1, 2010, properly-designated
dividends are generally exempt from U.S. federal withholding tax where they (i)
are paid in respect of the Fund's "qualified net interest income" (generally,
the Fund's U.S. source interest income, other than certain contingent interest
and interest from obligations of a corporation or partnership in which the Fund
is at least a 10% shareholder, reduced by expenses that are allocable to such
income) or (ii) are paid in respect of the Fund's "qualified short-term capital
gains" (generally, the excess of the Fund's net short-term capital gain over
the Fund's long-term capital loss for such taxable year). However, depending on
its circumstances, the Fund may designate all, some or none of its potentially
eligible dividends as such qualified net interest income or as qualified
short-term capital gains and/or treat such dividends, in whole or in part, as
ineligible for this exemption from withholding. In order to qualify for this
exemption from withholding, a non-U.S. shareholder will need to comply with
applicable certification requirements relating to its non-U.S. status
(including, in general, furnishing an IRS Form W-8BEN or substitute Form). In
the case of shares held through an intermediary, the intermediary may withhold
even if the Fund designates the payment as qualified net interest income or
qualified short-term capital gain. Non-U.S. shareholders should contact their
intermediaries with respect to the application of these rules to their
accounts. Shares of the Fund held by a non-U.S. shareholder at death will be
considered situated within the United States and subject to the U.S. estate tax
for decedents dying after December 31, 2010. It is unclear at the current time
whether these provisions will be extended into the future.


For taxable years beginning before January 1, 2010, distributions that the Fund
designates as "short-term capital gains dividends" or "long-term capital gains
dividends" may not be treated as such to a recipient non-U.S. shareholder if
the distribution is attributable to gain received from the sale or exchange of
U.S. real property or an interest in a U.S. real property holding corporation
and the non-U.S. shareholder has not owned more than 5% of the outstanding
shares of the Fund at any time during the one-year period ending on the date of
distribution. Such distributions will be subject to 30% withholding by the Fund
and will be treated as ordinary dividends to the non-U.S. shareholder.


                                       55




Shares of the Fund held by a non-U.S. shareholder at death will be considered
situated within the United States and subject to the U.S. estate tax, if
applicable.


The foregoing discussion is a summary of certain material U.S. federal income
tax considerations 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
non-U.S tax laws. Finally, the foregoing discussion is based on applicable
provisions of the Internal Revenue Code, 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

Financial statements for the Fund are not available because, as of the date of
this SAI, the Fund has no financial information to report.



Miscellaneous Information

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

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. ________________________, serves
as the Company's independent registered public accounting firm, audits the
Fund's financial statements, and may perform other services.


SHAREHOLDER COMMUNICATIONS TO THE BOARD.  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 BlackRock Institutional Trust Company, N.A. - Mutual Fund
Administration, 400 Howard Street, San Francisco, CA 94105. Shareholder
communications to the Board should include the following information: (i) the
name and address of the shareholder; (ii) the number of shares owned by the
shareholder; (iii) the Fund(s) of which the shareholder owns share; and (iv) 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.


                                       56




IS-SAI-___-_____



                                 ISHARES, INC.
                  FILES NOS. FILE NOS. 33-97598 AND 811-09102
                                    PART C

                               OTHER INFORMATION

ITEM 28.EXHIBITS                                             PEA # 112



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 26, 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.

     (a.4)     Articles Supplementary, filed July 18, 2007, are incorporated herein by
               reference to Post-Effective Amendment No. 35 to the Registration
               Statement, filed on July 19, 2007.

     (a.5)     Articles of Amendment, filed March 5, 2008, are incorporated herein by
               reference to Post-Effective Amendment No. 55 to the Registration
               Statement, filed on March 26, 2008 ("PEA No. 55").

     (a.6)     Articles Supplementary, filed March 5, 2008, are incorporated herein by
               reference to PEA No. 55.

     (a.7)     Articles Supplementary, dated June 19, 2008 are incorporated herein by
               reference to Post Effective Amendment No. 79, filed on December 23, 2008
               ("PEA No. 79").

     (a.8)     Articles Supplementary, dated February 24, 2009 are incorporated herein by
               reference to Post Effective Amendment No. 100, filed on September 28, 2009
               ("PEA No. 100").

     (a.9)     Articles Supplementary, dated December 10, 2009, are incorporated herein
               by reference to Post Effective Amendment No. 105, filed on December 23,
               2009 ("PEA No. 105").

     (b.1)     Amended and Restated By-Laws to be filed by amendment.

     (c.)      None

     (d.1)     Investment Advisory Agreement, dated December 1, 2009, between Registrant
               and BlackRock Fund Advisors ("BFA") is incorporated herein by reference to
               PEA No. 105.

     (d.2)     Schedule A to Investment Advisory Agreement between Registrant and BFA is
               incorporated herein by reference to Post Effective Amendment No. 107,
               filed on January 29, 2010 ("PEA No. 107").

     (d.3)     Fee Waiver Agreement, dated June 17, 2009, between Registrant and Barclays
               Global Fund Advisors/1/ for iShares MSCI Emerging Markets Index Fund is
               incorporated herein by reference to PEA No. 100.

     (d.4)     Interim Investment Advisory Agreement, dated December 1, 2009, between
               Registrant and BFA is incorporated herein by reference to PEA No. 105.

     (d.5)     Schedule A to Interim Investment Advisory Agreement with BFA is
               incorporated herein by reference to PEA No. 105.

     (e.1)     Distribution Agreement between Registrant and SEI Investments Distribution
               Co., ("SEI") 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)     Exhibit A to Distribution Agreement is incorporated herein by reference to
               Post-Effective Amendment No. 102 filed on October 30, 2009 ("PEA No. 102").




    
(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/2/")/ 2/, 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)  Amendment, dated December 31, 2002, to the Custodian Agreement is
       incorporated herein by reference to exhibit (g.3) to PEA No. 31.

(g.3)  Amendment, dated January 1, 2006, to the Custodian Agreement is
       incorporated herein by reference to exhibit (g.4) to PEA No. 31.

(g.4)  Appendix A to Custodian Agreement is incorporated herein by reference to
       PEA No. 102.

(h.1)  Administration Agreement between Registrant and IBT/2/, dated May 21,
       2002, is incorporated herein by reference to exhibit (h.3) of PEA No. 26.

(h.2)  Amendment, dated January 1, 2006, to the Administration Agreement is
       incorporated herein by reference to exhibit (h.3) to PEA No. 31.

(h.3)  Amendment, dated January 1, 2007, to the Administration Agreement is
       incorporated herein by reference to exhibit (h.4) to PEA No. 32.

(h.4)  Appendix A to Administration Agreement is incorporated herein by reference
       to PEA No. 102.

(h.5)  Transfer Agency and Service Agreement between Registrant and IBT/2/, dated
       May 21, 2002, is incorporated herein by reference to exhibit (h.7) of PEA
       No. 26.

(h.6)  Amendment, dated May 21, 2002, to the Transfer Agency and Service
       Agreement is incorporated herein by reference to PEA No. 31.

(h.7)  Amendment, dated September 1, 2004, to the Transfer Agency and Service
       Agreement is incorporated herein by reference to PEA No. 31.

(h.8)  Amendment, dated January 1, 2006, to the Transfer Agency and Service
       Agreement is incorporated herein by reference to PEA No. 31.

(h.9)  Appendix A to Transfer Agency and Service Agreement is incorporated herein
       by reference to PEA No. 102.

(h.10) Sub-License Agreement between Registrant and BlackRock Institutional Trust
       Company, N.A. ("BTC")/3/ with respect to the use of the MSCI Indexes,
       dated May 8, 2000, is incorporated herein by reference to exhibit (h.4) to
       PEA No. 18.

(h.11) Amendment to the Sub-License Agreement between Registrant and BTC/3/ with
       respect to the use of the MSCI Indexes is incorporated herein by reference
       to PEA No. 79.

(h.12) Amended and Restated Securities Lending Agency Agreement, dated November
       2, 2009, among the Registrant, iShares Trust and Barclays Global
       Investors, N.A./3/ is incorporated herein by reference to PEA No. 105.

(h.13) Schedule A to Amended and Restated Securities Lending Agency Agreement is
       incorporated herein by reference to PEA No. 107.

(h.14) Form of Master Securities Loan Agreement (including forms of Annexes,
       Schedule and Appendix thereto) is incorporated herein by reference to PEA
       No. 107.

(i.)   Legal Opinion and Consent of Venable LLP is filed herein.

(j.)   Consent of PricewaterhouseCoopers LLP to be filed by amendment.

(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, 1996.

(l.2) Letter of Representations among the Registrant, The 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.)  Not applicable.

(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 BFA/1/ is incorporated herein by reference to PEA No. 30.

(q.1) Powers of Attorney, each dated February 23, 2009, for Michael A. Latham,
      Lee T. Kranefuss, John E. Martinez, George G.C. Parker, Cecilia H.
      Herbert, John E. Kerrigan, Charles A. Hurty, Robert H. Silver and Darrell
      Duffie are incorporated herein by reference to PEA No. 100.

(q.2) Power of Attorney, dated December 8, 2009, for Robert S. Kapito is
      incorporated herein by reference to PEA No. 105.



ITEM 29.PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

ITEM 30.INDEMNIFICATION.

   It is the Fund's policy to indemnify officers, directors, employees and
other agents to the maximum extent permitted by Section 2-418 of the Maryland
General Corporation Law, Article EIGHTH of the Fund's Articles of Restatement,
and Article VI of the Fund's By-Laws (each set forth below).

SECTION 2-418 OF THE MARYLAND GENERAL CORPORATION LAW READS AS FOLLOWS:

    (a)(1) In this section the following words have the meanings indicated.

       (2) "Corporation" includes any domestic or foreign predecessor entity of
       a corporation in a merger, consolidation, or other transaction in which
       the predecessor's existence ceased upon consummation of the transaction.

       (3) "Director" means any person who is or was a director of a
       corporation and any person who, while a director of a corporation, is or
       was serving at the request of the corporation as a director, officer,
       partner, trustee, employee, or agent of another foreign or domestic
       corporation, partnership, joint venture, trust, limited liability
       company, other enterprise, or employee benefit plan.

       (4) "Expenses" include attorney's fees.

       (5) "Official capacity" means the following:

          (i) When used with respect to a director, the office of director in
          the corporation; and

          (ii) When used with respect to a person other than a director as
          contemplated in subsection (j) of this section, the elective or
          appointive office in the corporation held by the officer, or the
          employment or agency relationship undertaken by the employee or agent
          in behalf of the corporation.



          (iii) "Official capacity" does not include service for any other
          foreign or domestic corporation or any partnership, joint venture,
          trust, other enterprise, or employee benefit plan.

       (6) "Party" includes a person who was, is, or is threatened to be made a
       named defendant or respondent in a proceeding.

       (7) "Proceeding" means any threatened, pending or completed action, suit
       or proceeding, whether civil, criminal, administrative, or investigative.

   (b) (1) A corporation may indemnify any director made a party to any
   proceeding by reason of service in that capacity unless it is established
   that:

          (i) The act or omission of the director was material to the matter
          giving rise to the proceeding; and

              1. Was committed in bad faith; or

              2. Was the result of active and deliberate dishonesty; or

          (ii) The director actually received an improper personal benefit in
          money, property, or services; or

          (iii) In the case of any criminal proceeding, the director had
          reasonable cause to believe that the act or omission was unlawful.

       (2)(i) Indemnification may be against judgments, penalties, fines,
       settlements, and reasonable expenses actually incurred by the director
       in connection with the proceeding.

          (ii) However, if the proceeding was one by or in the right of the
          corporation, indemnification may not be made in respect of any
          proceeding in which the director shall have been adjudged to be
          liable to the corporation.

       (3)(i) The termination of any proceeding by judgment, order, or
       settlement does not create a presumption that the director did not meet
       the requisite standard of conduct set forth in this subsection.

          (ii) The termination of any proceeding by conviction, or a plea of
          nolo contendere or its equivalent, or an entry of an order of
          probation prior to judgment, creates a rebuttable presumption that
          the director did not meet that standard of conduct.

       (4) A corporation may not indemnify a director or advance expenses under
       this section for a proceeding brought by that director against the
       corporation, except:

          (i) For a proceeding brought to enforce indemnification under this
          section; or

          (ii) If the charter or bylaws of the corporation, a resolution of the
          board of directors of the corporation, or an agreement approved by
          the board of directors of the corporation to which the corporation is
          a party expressly provide otherwise.

   (c) A director may not be indemnified under subsection (b) of this section
   in respect of any proceeding charging improper personal benefit to the
   director, whether or not involving action in the director's official
   capacity, in which the director was adjudged to be liable on the basis that
   personal benefit was improperly received.

   (d) Unless limited by the charter:

       (1) A director who has been successful, on the merits or otherwise, in
       the defense of any proceeding referred to in subsection (b) of this
       section, or in the defense of any claim, issue, or matter in the
       proceeding, shall be indemnified against reasonable expenses incurred by
       the director in connection with the proceeding, claim, issue, or matter
       in which the director has been successful.

       (2) A court of appropriate jurisdiction, upon application of a director
       and such notice as the court shall require, may order indemnification in
       the following circumstances:

          (i) If it determines a director is entitled to reimbursement under
          paragraph (1) of this subsection, the court shall order
          indemnification, in which case the director shall be entitled to
          recover the expenses of securing such reimbursement; or

          (ii) If it determines that the director is fairly and reasonably
          entitled to indemnification in view of all the relevant
          circumstances, whether or not the director has met the standards of
          conduct set forth in subsection (b) of this section or has been
          adjudged liable under the circumstances described in subsection
          (c) of this section, the court may order such indemnification as the
          court shall deem proper. However, indemnification with respect to any
          proceeding by or in the right of the corporation or in which
          liability shall have been adjudged in the circumstances described in
          subsection (c) of this section shall be limited to expenses.



       (3) A court of appropriate jurisdiction may be the same court in which
       the proceeding involving the director's liability took place.

   (e)(1) Indemnification under subsection (b) of this section may not be made
   by the corporation unless authorized for a specific proceeding after a
   determination has been made that indemnification of the director is
   permissible in the circumstances because the director has met the standard
   of conduct set forth in subsection (b) of this section.

       (2) Such determination shall be made:

          (i) By the board of directors by a majority vote of a quorum
          consisting of directors not, at the time, parties to the proceeding,
          or, if such a quorum cannot be obtained, then by a majority vote of a
          committee of the board consisting solely of one or more directors
          not, at the time, parties to such proceeding and who were duly
          designated to act in the matter by a majority vote of the full board
          in which the designated directors who are parties may participate;

          (ii) By special legal counsel selected by the board of directors or a
          committee of the board by vote as set forth in subparagraph (i) of
          this paragraph, or, if the requisite quorum of the full board cannot
          be obtained herefore and the committee cannot be established, by a
          majority vote of the full board in which directors who are parties
          may participate; or

          (iii) By the stockholders.

       (3) Authorization of indemnification and determination as to
       reasonableness of expenses shall be made in the same manner as the
       determination that indemnification is permissible. However, if the
       determination that indemnification is permissible is made by special
       legal counsel, authorization of indemnification and determination as to
       reasonableness of expenses shall be made in the manner specified in
       paragraph (2)(ii) of this subsection for selection of such counsel.

       (4) Shares held by directors who are parties to the proceeding may not
       be voted on the subject matter under this subsection.

   (f)(1) Reasonable expenses incurred by a director who is a party to a
   proceeding may be paid or reimbursed by the corporation in advance of the
   final disposition of the proceeding upon receipt by the corporation of:

          (i) A written affirmation by the director of the director's good
          faith belief that the standard of conduct necessary for
          indemnification by the corporation as authorized in this section has
          been met; and

          (ii) A written undertaking by or on behalf of the director to repay
          the amount if it shall ultimately be determined that the standard of
          conduct has not been met.

       (2) The undertaking required by paragraph (1)(ii) of this subsection
       shall be an unlimited general obligation of the director but need not be
       secured and may be accepted without reference to financial ability to
       make the repayment.

       (3) Payments under this subsection shall be made as provided by the
       charter, bylaws, or contract or as specified in subsection (e)(2) of
       this section.

   (g) The indemnification and advancement of expenses provided or authorized
   by this section may not be deemed exclusive of any other rights, by
   indemnification or otherwise, to which a director may be entitled under the
   charter, the bylaws, a resolution of stockholders or directors, an agreement
   or otherwise, both as to action in an official capacity and as to action in
   another capacity while holding such office.

   (h) This section does not limit the corporation's power to pay or reimburse
   expenses incurred by a director in connection with an appearance as a
   witness in a proceeding at a time when the director has not been made a
   named defendant or respondent in the proceeding.

   (i) For purposes of this section:

       (1) The corporation shall be deemed to have requested a director to
       serve an employee benefit plan where the performance of the director's
       duties to the corporation also imposes duties on, or otherwise involves
       services by, the director to the plan or participants or beneficiaries
       of the plan;

       (2) Excise taxes assessed on a director with respect to an employee
       benefit plan pursuant to applicable law shall be deemed fines; and

       (3) Action taken or omitted by the director with respect to an employee
       benefit plan in the performance of the director's duties for a purpose
       reasonably believed by the director to be in the interest of the
       participants and beneficiaries of the plan shall be deemed to be for a
       purpose which is not opposed to the best interests of the corporation.



   (j) Unless limited by the charter:

       (1) An officer of the corporation shall be indemnified as and to the
       extent provided in subsection (d) of this section for a director and
       shall be entitled, to the same extent as a director, to seek
       indemnification pursuant to the provisions of subsection (d) of this
       section;

       (2) A corporation may indemnify and advance expenses to an officer,
       employee, or agent of the corporation to the same extent that it may
       indemnify directors under this section; and

       (3) A corporation, in addition, may indemnify and advance expenses to an
       officer, employee, or agent who is not a director to such further
       extent, consistent with law, as may be provided by its charter, bylaws,
       general or specific action of its board of directors, or contract.

   (k)(1) A corporation may purchase and maintain insurance on behalf of any
   person who is or was a director, officer, employee, or agent of the
   corporation, or who, while a director, officer, employee, or agent of the
   corporation, is or was serving at the request of the corporation as a
   director, officer, partner, trustee, employee, or agent of another foreign
   or domestic corporation, partnership, joint venture, trust, other
   enterprise, or employee benefit plan against any liability asserted against
   and incurred by such person in any such capacity or arising out of such
   person's position, whether or not the corporation would have the power to
   indemnify against liability under the provisions of this section.

       (2) A corporation may provide similar protection, including a trust
       fund, letter of credit, or surety bond, not inconsistent with this
       section.

       (3) The insurance or similar protection may be provided by a subsidiary
       or an affiliate of the corporation.

   (l) Any indemnification of, or advance of expenses to, a director in
   accordance with this section, if arising out of a proceeding by or in the
   right of the corporation, shall be reported in writing to the stockholders
   with the notice of the next stockholders' meeting or prior to the meeting.

ARTICLE EIGHTH OF THE FUND'S ARTICLES OF RESTATEMENT PROVIDES AS FOLLOWS:

   The Corporation shall indemnify to the fullest extent permitted by law
(including the Investment Company Act of 1940, as amended (the "1940 Act")) any
person made or threatened to be made a party to any action, suit or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that such person or such person's testator or intestate is or was a director,
officer or employee of the Corporation or serves or served at the request of
the Corporation any other enterprise as director, officer or employee. To the
fullest extent permitted by law (including the 1940 Act), expenses incurred by
any such person in defending any such action, suit or proceeding shall be paid
or reimbursed by the Corporation promptly upon receipt by it of an undertaking
of such person to repay such expenses if it shall ultimately be determined that
such person is not entitled to be indemnified by the Corporation. The rights
provided to any person by this Article EIGHTH shall be enforceable against the
Corporation by such person who shall be presumed to have relied upon it in
serving or continuing to serve as a director, officer or employee as provided
above. No amendment of this Article EIGHTH shall impair the rights of any
person arising at any time with respect to events occurring prior to such
amendment. For purposes of this Article EIGHTH, the term "Corporation" shall
include any predecessor of the Corporation and any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term "other enterprise" shall include any
corporation, partnership, joint venture, trust or employee benefit plan;
service "at the request of the Corporation" shall include service as a
director, officer or employee of the corporation which imposes duties on, or
involves services by, such director, officer or employee with respect to an
employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan shall be deemed
to be indemnifiable expenses; and action by a person with respect to any
employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation.

   Nothing in Article SEVENTH or in this Article EIGHTH protects or purports to
protect any director or officer against any liability to the Corporation or its
security holders to which he or she would otherwise be subject by reason of
willful malfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.

ARTICLE VI OF THE FUND'S AMENDED AND RESTATED BY-LAWS PROVIDES AS FOLLOWS:

   SECTION 1. Insurance. Subject to the provisions of the 1940 Act, the
Corporation, directly, through third parties or through affiliates of the
Corporation, may purchase, or provide through a trust fund, letter of credit or



surety bond insurance on behalf of any person who is or was a Director,
officer, employee or agent of the Corporation, or who, while a Director,
officer, employee or agent of the Corporation, is or was serving at the request
of the Corporation as a Director, officer, employee, partner, trustee or agent
of another foreign or domestic corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against and incurred by such
person in any such capacity or arising out of such person's position, whether
or not the Corporation would have the power to indemnify such person against
such liability.

   SECTION 2. Indemnification and Advance of Expenses. To the maximum extent
permitted by Maryland law, in effect from time to time, the Corporation shall
indemnify and, without requiring a preliminary determination of the ultimate
entitlement to indemnification, shall pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any individual who is a
present or former director or officer of the Corporation and who is made, or
threatened to be made, a party to the proceeding by reason of his or her
service in any such capacity or (b) any individual who, while a director or
officer of the Corporation and at the request of the Corporation, serves or has
served as a director or officer of any other enterprise and who is made, or
threatened to be made, a party to the proceeding by reason of his or her
service in any such capacity. The Corporation may, with the approval of its
Board of Directors or any duly authorized committee thereof, provide such
indemnification and advance for expenses to a person who served a predecessor
of the Corporation in any of the capacities described in (a) or (b) above and
to any employee or agent of the Corporation or a predecessor of the
Corporation. Any indemnification or advance of expenses made pursuant to this
Article shall be subject to applicable requirements of the 1940 Act. The
indemnification and payment of expenses provided in these Bylaws shall not be
deemed exclusive of or limit in any way other rights to which any person
seeking indemnification or payment of expenses may be or may become entitled
under any bylaw, regulation, insurance, agreement or otherwise.

   Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or charter of the Corporation
inconsistent with this Article, shall apply to or affect in any respect the
applicability of the preceding paragraph with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.

SECURITIES ACT OF 1933

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "1933 Act") may be permitted to directors, officers and
controlling persons of the Fund pursuant to the foregoing provisions, or
otherwise, the Fund has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Fund of expenses incurred or
paid by a director, officer or controlling person of the Fund 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 Fund 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 1933 Act and will be governed by the final
adjudication of such issue.

SECTION 1.9 OF THE DISTRIBUTION AGREEMENT BETWEEN REGISTRANT AND SEI
INVESTMENTS DISTRIBUTION CO. PROVIDES AS FOLLOWS:

   The Fund authorizes you and any dealers with whom you have entered into
dealer agreements to use any prospectus in the form most recently furnished by
the Fund in connection with the sale of Shares in Creation Units. The Fund
agrees to indemnify, defend and hold you, your several officers and directors,
and any person who controls you within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling persons, may incur under the 1933 Act, the 1940 Act or common law
or otherwise, (a) arising out of or on the basis of any untrue statement, or
alleged untrue statement, of a material fact required to be stated in either
any registration statement or any prospectus or any statement of additional
information, or (b) arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated in any registration
statement, any prospectus or any statement of additional information or
necessary to make the statements in any of them not misleading, (c) arising out
of breach of any obligation, representation or warranty pursuant to this
Agreement by the Fund, or (d) the Fund's failure to comply with applicable
securities laws, except that the Fund's agreement to indemnify you, your
officers or directors, and any such controlling person will not be



deemed to cover any such claim, demand, liability or expense to the extent that
it arises out of or is based upon any such untrue statement, alleged untrue
statement, omission or alleged omission made in any registration statement, any
prospectus or any statement of additional information in reliance upon
information furnished by you, your officers, directors or any such controlling
person to the Fund or its representatives for use in the preparation thereof,
and except that the Fund's agreement to indemnify you and the Fund's
representations and warranties set out in paragraph 1.8 of this Agreement will
not be deemed to cover any liability to the Funds or their shareholders to
which you would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or by reason of
your reckless disregard of your obligations and duties under this Agreement
("Disqualifying Conduct"). The Fund's agreement to indemnity you, your officers
and directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any action brought against you,
your officers or directors, or any such controlling person, such notification
to be given by letter, by facsimile or by telegram addressed to the Fund at its
address set forth above within a reasonable period of time after the summons or
other first legal process shall have been served. The failure so to notify the
Fund of any such action shall not relieve the Fund from any liability which the
Fund may have to the person against whom such action is brought by reason of
any such untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of the Fund's indemnity agreement contained in this
paragraph 1.9. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Fund and
approved by you. In the event the Fund elects to assume the defense of any such
suit and retain counsel of good standing approved by you, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to assume
the defense of any such suit, the Fund will reimburse you, your officers and
directors, or the controlling person or persons named as defendant or
defendants in such suit, for the reasonable fees and expenses of any counsel
retained by you or them. The Fund's indemnification agreement contained in this
paragraph 1.9 and the Fund's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of you, your officers and directors, or any
controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit
of your several officers and directors, and their respective estates, and to
the benefit of any controlling persons or other affiliates, and their
successors. The Fund agrees promptly to notify you of the commencement of any
litigation or proceedings against the Fund or any of its officers or Board
members in connection with the issue and sale of Shares.

IN CERTAIN CIRCUMSTANCES, AN AUTHORIZED PARTICIPANT MAY BE DEEMED AN AFFILIATE
OF THE FUND. SECTION 10 OF THE AUTHORIZED PARTICIPANT AGREEMENT PROVIDES
INDEMNIFICATION OF AUTHORIZED PARTICIPANTS AS FOLLOWS:

(b) The Distributor hereby agrees to indemnify and hold harmless the
Participant, its respective subsidiaries, affiliated persons, directors,
officers, employees and agents, and each person, if any, who controls such
persons within the meaning of Section 15 of the 1933 Act (each an "Indemnified
Party") from and against any loss, liability, cost and expense (including
attorneys' fees) incurred by such Indemnified Party as a result of (i) any
breach by the Distributor of any provision of this Agreement that relates to
the Distributor; (ii) any failure on the part of the Distributor to perform any
of its obligations set forth in this Agreement; (iii) any failure by the
Distributor to comply with applicable laws, including rules and regulations of
self-regulatory organizations; or (iv) actions of such Indemnified Party in
reliance upon any representations made in accordance with the iShares
Procedures Handbook reasonably believed by the Participant to be genuine and to
have been given by the Distributor.

(c)The Participant shall not be liable to the Distributor for any damages
arising out of (i) mistakes or errors in data provided in connection with
purchase or redemption transactions except for data provided by the
Participant, or (ii) mistakes or errors by or out of interruptions or delays of
communications with the Distributor or any Indemnified Party who is a service
provider to the Fund. The Participant shall not be liable for any action,
representation, or solicitation made by the wholesalers of the Fund.

ITEM 31.BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

   The Fund is advised by BFA, a wholly-owned subsidiary of BTC, 400 Howard
Street, San Francisco, CA 94105. BFA'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 BFA 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 BFA will also have substantial
responsibilities as directors and/or officers of BTC. To the knowledge of the
Registrant, except as set



forth below, none of the directors or executive officers of BFA 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 BFA and
Chairman           Chief Executive Officer and Director of BTC
                   400 Howard Street, San Francisco, CA 94105

Anthony Spinale    Chief Financial Officer of BFA and
Officer            Chief Financial Officer and Cashier of BTC
                   400 Howard Street, San Francisco, CA 94105

Rohit Bhagat       Director and Chief Operating Officer of BFA and BTC
Director           400 Howard Street, San Francisco, CA 94105

ITEM 32. 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 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
BlackRock Funds III                                   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
SEI Alpha Strategy Portfolios, LP                     June 29, 2007
TD Asset Management USA Funds                         July 25, 2007
SEI Structured Credit Fund, LP                        July 31, 2007
Wilshire Mutual Funds, Inc.                           July 12, 2008
Wilshire Variable Insurance Trust                     July 12, 2008
Forward Funds                                         August 14, 2008
Global X Funds                                        October 24, 2008
Faith Shares Trust                                    August 7, 2009
Schwab Strategic Trust                                October 12, 2009



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 25 of Part B. Unless otherwise noted, the business address of
   each director or officer is One Freedom Valley Drive, Oaks, PA 19456.



                                                                       POSITIONS AND OFFICES
NAME                POSITION AND OFFICE 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, Chief Operations Officer
                    & Treasurer                                                 --
John Munch          General Counsel & Secretary                                 --
Karen LaTourette    Chief Compliance Officer & Asst. Secretary,
                    Anti-Money Laundering Officer                               --
Mark J. Held        Senior Vice President                                       --
Lori L. White       Vice President & Assistant Secretary                        --
Robert Silvestri    Vice President                                              --
John Coary          Vice President & Assistant Secretary                        --
John Cronin         Vice President                                              --


(c)Not applicable.

ITEM 33.LOCATION OF ACCOUNTS AND RECORDS

(a) The Company maintains accounts, books and other documents required by
Section 31(a) of the 1940 Act and the rules thereunder (collectively, the
"Records") at the offices of State Street Bank and Trust Company ("State
Street"), 200 Clarendon Street, Boston, MA 02116.

(b) BFA maintains all Records relating to its services as investment adviser at
400 Howard 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) State Street maintains all Records relating to its services as transfer
agent, fund accountant and custodian at 200 Clarendon Street, Boston, MA 02116.

ITEM 34.MANAGEMENT SERVICES.

Not applicable.

ITEM 35. UNDERTAKINGS.

Not applicable.
--------
/1/  Prior to December 1, 2009, BFA was known as Barclays Global Fund Advisors.
/2/  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 Trust.
/3/  Prior to December 1, 2009, BTC was known as Barclays Global Investors, N.A.



                                  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. 112 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 26th day of April 2010.

                                             By:
                                                  ------------------------------
                                                  Michael A. Latham*
                                                  President
                                                  Date: April 26, 2010

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 112 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: April 26, 2010

                                                  ------------------------------
                                                  John E. Martinez*
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  George G. C. Parker*
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  Cecilia H. Herbert*
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  Charles A. Hurty*
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  John E. Kerrigan*
                                                  Director

                                                  Date: April 26, 2010




                                                  ------------------------------
                                                  Robert H. Silver*
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  J. Darrell Duffie*
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  Robert S. Kapito**
                                                  Director

                                                  Date: April 26, 2010

                                                  ------------------------------
                                                  Michael Latham*
                                                  President

                                                  Date: April 26, 2010

                                                  /s/ Jack Gee
                                                  ------------------------------
                                                  Jack Gee
                                                  Treasurer

                                                  Date: April 26, 2010

                                         *,**By:  /s/ Jack Gee
                                                  ------------------------------
                                                  Jack Gee
                                                  Attorney in fact

                                                  Date: April 26, 2010
--------
*  Powers of Attorney, each dated February 23, 2009, for Michael A. Latham, Lee
   T. Kranefuss, John E. Martinez, George G.C. Parker, Cecilia H. Herbert,
   Charles A. Hurty, John E. Kerrigan, Robert H. Silver and Darrell Duffie are
   incorporated herein by reference to PEA No. 100, filed September 28, 2009.
** Power of Attorney, dated December 8, 2009, for Robert S. Kapito is
   incorporated herein by reference to PEA No. 105.



Exhibit Index

(i)  Legal Opinion and Consent of Venable LLP

EX-99.(I)

                                                                 EXHIBIT 99.(1)

                          [LETTERHEAD OF VENABLE LLP]

                                April 26, 2010

iShares, Inc.
45 Fremont Street
San Francisco, California 94105

    Re:Registration Statement on Form N-1A:
       1933 Act File No. 033-97598
       1940 Act File No. 811-09102

Ladies and Gentlemen:

   We have served as Maryland counsel to iShares, Inc., a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company (the "Company"), in
connection with certain matters of Maryland law arising out of the registration
and issuance of an indefinite number of shares (the "Shares") of Common Stock,
par value $.001 per share (the "Common Stock"), classified and designated as
iShares MSCI Emerging Markets Small Cap Index Fund, covered by Post-Effective
Amendment No. 112 (the "Post-Effective Amendment") to the above-referenced
Registration Statement (the "Registration Statement"), filed by the Company
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act.

   In connection with our representation of the Company, and as a basis for the
opinion hereinafter set forth, we have examined originals, or copies certified
or otherwise identified to our satisfaction, of the following documents
(hereinafter collectively referred to as the "Documents"):

   1. The Post-Effective Amendment, substantially in the form transmitted to
the Commission under the 1933 Act and 1940 Act;

   2. The charter of the Company (the "Charter"), certified by the State
Department of Assessments and Taxation of Maryland (the "SDAT");

   3. The Amended and Restated Bylaws of the Company, certified as of the date
hereof by an officer of the Company;

   4. A certificate of the SDAT as to the good standing of the Company, dated
as of a recent date;

   5. Resolutions adopted by the Board of Directors of the Company (the
"Resolutions") relating to the authorization of the sale and issuance of the
Shares at net asset value in a continuous public offering, certified as of the
date hereof by an officer of the Company;



iShares, Inc.
April 26, 2010
Page 2


   6. A certificate executed by an officer of the Company, dated as of the date
hereof; and

   7. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth below, subject to the assumptions,
limitations and qualifications stated herein.

   In expressing the opinion set forth below, we have assumed the following:

   1. Each individual executing any of the Documents, whether on behalf of such
individual or another person, is legally competent to do so.

   2. Each individual executing any of the Documents on behalf of a party
(other than the Company) is duly authorized to do so.

   3. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth therein
are legal, valid and binding and are enforceable in accordance with all stated
terms.

   4. All Documents submitted to us as originals are authentic. The form and
content of all Documents submitted to us as unexecuted drafts do not differ in
any respect relevant to this opinion from the form and content of such
Documents as executed and delivered. All Documents submitted to us as certified
or photostatic copies conform to the original documents. All signatures on all
Documents are genuine. All public records reviewed or relied upon by us or on
our behalf are true and complete. All representations, warranties, statements
and information contained in the Documents are true and complete. There has
been no oral or written modification of or amendment to any of the Documents,
and there has been no waiver of any provision of any of the Documents, by
action or omission of the parties or otherwise.

   5. Upon any issuance of Shares, the total number of shares of each series of
Common Stock issued and outstanding will not exceed the total number of shares
of each series of Common Stock that the Company is then authorized to issue
under the Charter.

   Based upon the foregoing, and subject to the assumptions, limitations and
qualifications stated herein, it is our opinion that:



iShares, Inc.
April 26, 2010
Page 3


   1. The Company is a corporation duly incorporated and existing under and by
virtue of the laws of the State of Maryland and is in good standing with the
SDAT.

   2. The issuance of the Shares has been duly authorized and, when and if
issued and delivered against payment of net asset value therefor in accordance
with the Resolutions and the Registration Statement, the Shares will be validly
issued, fully paid and nonassessable.

   The foregoing opinion is limited to the laws of the State of Maryland and we
do not express any opinion herein concerning any other law. We express no
opinion as to the applicability or effect of federal or state securities laws,
including the securities laws of the State of Maryland, or the 1940 Act.

   The opinion expressed herein is limited to the matters specifically set
forth herein and no other opinion shall be inferred beyond the matters
expressly stated. We assume no obligation to supplement this opinion if any
applicable law changes after the date hereof or if we become aware of any fact
that might change the opinion expressed herein after the date hereof.

   This opinion is being furnished to you solely for submission to the
Commission as an exhibit to the Registration Statement. We hereby consent to
the filing of this opinion as an exhibit to the Registration Statement. In
giving this consent, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the 1933 Act.

                                          Very truly yours,

                                          /s/ Venable LLP

68699/229521

CORRESP

[LOGO] WILLKIE FARR & GALLAGHER LLP                1875 K Street, NW
                                                   Washington, DC 20006-1238
                                                   Tel: 202 303 1000
                                                   Fax: 202 303 2000

April 26, 2010

VIA EDGAR

Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

    Re:iShares, Inc.
       (Securities Act File No. 033-97598;
       Investment Company Act File No. 811-09102)
       Post-Effective Amendment No. 112

Ladies and Gentlemen:

On behalf of the iShares, Inc. (the "Corporation"), we hereby transmit for
filing with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, Post-Effective Amendment No. 107 (the "Amendment") to the
Corporation's Registration Statement on Form N-1A (the "Registration
Statement"). The Amendment is being filed pursuant to Rule 485(a)(2) under the
1933 Act and for the sole purpose of adding a new fund to the Corporation:
iShares MSCI Emerging Markets Small Cap Index Fund (the "Fund"). The filing
will become automatically effective 75 days after the filing.

The following information is provided to assist the Staff of the Commission in
its review of the Amendment to the Registration Statement.

(1) Investment Objective and Policies

The Fund seeks investment results that correspond generally to the price and
yield performance, before fees and expenses, of the of the MSCI Emerging
Markets Small Cap Index (the "Underlying Index"). The Underlying Index is
designed to measure equity market performance in the global emerging markets
and targets 40% of the eligible small cap universe within each industry group
and each country represented by the MSCI Emerging Markets Index. As of March 1,
2010, the Underlying Index consisted of the following 22 emerging market
country indexes: Brazil, Chile, China, Colombia, the Czech Republic, Egypt,
Hungary, India, Indonesia, Israel, Malaysia, Mexico, Morocco, Peru, the
Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand and
Turkey. As of March 1, 2010, the Underlying Index's three largest industries
were consumer discretionary, financials and industrials.

NEW YORK   WASHINGTON, DC   PARIS   LONDON   MILAN   ROME   FRANKFURT   BRUSSELS



(2)Other Changes from Recent Filings

The Fund's description of its investment strategy (i.e., the Fund tracks a
specific benchmark) and risk factors are specific to this Fund. The portfolio
managers are specific to this Fund.

In the Prospectus, under the headings "Creations and Redemptions" and "Costs
Associated with Creations and Redemptions," and the Statement of Additional
Information, under the headings "Brokerage Transactions," "Creation and
Redemption of Creation Units - Costs Associated with Creation Transactions" and
"Creation and Redemption of Creation Units - Costs Associated with Redemption
Transactions," disclosure was revised to reflect the deletion of a reference to
the variable charge on certain creations and redemptions of creation units for
cash and instead indicate that certain expenses relating to cash transactions
may be borne in connection with brokerage transactions.

The Amendment follows the general format used by previous Corporation and
iShares Trust (the "Trust") filings prepared in accordance with the revised
Form N-1A, for example, Post-Effective Amendment No. 372 to the Trust filed
pursuant to Rule 485(a)(2) on January 22, 2010.

(3) Prior Filings with Similar Disclosure

Much of the disclosure in the Amendment is substantially similar to that in
previous filings submitted by the Corporation and the Trust and reviewed by the
Staff. In particular, we invite your attention to Post-Effective Amendment
No. 372 to the Trust, filed pursuant to Rule 485(a) on January 22, 2010,
relating to the iShares MSCI Poland Investable Market Index Fund.

The disclosures applicable to the Fund and the Corporation included in the
Amendment that are substantially similar to those in the referenced prior
filing relate to descriptions of shares, the investment manager and other
attributes under the headings "Introduction," "Portfolio Holdings Information,"
"Management - Investment Adviser," "Management - Administrator, Custodian and
Transfer Agent," "Shareholder Information - Buying and Selling Shares,"
"Shareholder Information - Book Entry," "Shareholder Information - Share
Prices," "Shareholder Information - Dividends and Distributions," "Shareholder
Information - Taxes," "Shareholder Information - Taxes on Distribution,"
"Shareholder Information - Taxes When Shares Are Sold," "Shareholder
Information - Householding," and "Distribution," included in the Prospectus,
and under the headings "Proxy Voting," "Portfolio Holdings Information,"
"Continuous Offering," "Investment Advisory, Administrative and Distribution
Services - Investment Adviser," "Investment Advisory, Administrative and
Distribution Services - Codes of Ethics," "Investment Advisory, Administrative
and Distribution Services - Administrator, Custodian and Transfer Agent,"
"Investment Advisory, Administrative and Distribution Services - Distributor"
"Additional Information Concerning the Corporation - Termination of the
Corporation or the Fund," "Additional Information Concerning the Corporation -
DTC as Securities Depository for Shares of the Fund," and "Miscellaneous
Information" included in the Statement of Additional Information.

Please be advised that the new corporate governance required by the Proxy
Disclosure Enhancements rule is not included in the Amendment, but the required
disclosure will be included in an amendment filed prior to the effectiveness of
the Amendment. The Corporation is in the process of finalizing a uniform model
of disclosure to address the requirements of the new rule across all its
series. We will notify the Staff when the governance disclosure has been
finalized, and it will be available to the Staff for review prior to its
inclusion in a filing.

                                 *  *  *  *  *

                                     - 2 -



The operations of the Fund, the description of the shares offered and the other
information that is typically common in a fund complex do not appear to raise
novel issues or problem areas that warrant particular attention of the Staff in
reviewing the Registration Statement. CONSEQUENTLY, ON BEHALF OF THE
CORPORATION, WE REQUEST THAT THE REGISTRATION STATEMENT BE GIVEN SELECTIVE
REVIEW BY THE STAFF./1/

If you have any questions or comments, please call the undersigned at
(202) 303-1151.

Sincerely,

/s/ David N. Solander
--------------------------
David N. Solander

cc:Jessica Bentley, Esq.
   Benjamin J. Haskin, Esq.
--------
/1/  See Inv. Co. Act. Rel. No. 13768 (Feb. 15, 1984).

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