ISHARES TRUST (Form: 485BPOS, Received: 09/19/2006 06:06:34)

As filed with the Securities and Exchange Commission on September 18, 2006

File Nos. 333-92935 and 811-09729

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT


		*UNDER* *THE SECURITIES ACT OF 1933*		x
		Post-Effective Amendment No. 53		x
		and/or
		REGISTRATION STATEMENT *UNDER* *THE INVESTMENT COMPANY ACT OF 1940*		x
		Amendment No. 53		x

(Check appropriate box or boxes)

iShares ^{^®} Trust

(Exact Name of Registrant as Specified in Charter)

c/o Investors Bank & Trust Company

200 Clarendon Street

Boston, MA 02116

(Address of Principal Executive Office) (Zip Code)

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

The Corporation Trust Company

1209 Orange Street

Wilmington, DE 19801

(Name and Address of Agent for Service)

With Copies to:


MARGERY K. NEALE, ESQ.		ADAM MIZOCK, ESQ.
WILLKIE FARR & GALLAGHER LLP		BARCLAYS GLOBAL INVESTORS, N.A.
787 SEVENTH AVENUE		45 FREMONT STREET
NEW YORK, N.Y. 10019-6099		SAN FRANCISCO, CA 94105

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

Immediately upon filing pursuant to paragraph (b)

On September 21, 2006 pursuant to paragraph (b)

60 days after filing pursuant to paragraph (a)(1)

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

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

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

If appropriate, check the following box:

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

LOGO

PROSPECTUS | SEPTEMBER 2 1 , 2006

iSHARES S&P SERIES

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

iShares ^{^®}

iShares Trust

iShares Trust (the “Trust”) currently consists of over 90 separate investment portfolios called “Funds.” Each Fund described in this Prospectus seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of a particular equity market index compiled by Standard & Poor’s (a division of The McGraw-Hill Companies, Inc.) (the “Index Provider”). This Prospectus relates to the following Funds:

iShares S&P 100 Index Fund

iShares S&P 500 Index Fund

iShares S&P 500 Growth Index Fund

iShares S&P 500 Value Index Fund

iShares S&P MidCap 400 Index Fund

iShares S&P MidCap 400 Growth Index Fund

iShares S&P MidCap 400 Value Index Fund

iShares S&P SmallCap 600 Index Fund

iShares S&P SmallCap 600 Growth Index Fund

iShares S&P SmallCap 600 Value Index Fund

iShares S&P 1500 Index Fund

iShares S&P U.S. Preferred Stock Index Fund

iShares S&P Global 100 Index Fund

iShares S&P Global Consumer Discretionary Sector Index Fund

iShares S&P Global Consumer Staples Sector Index Fund

iShares S&P Global Energy Sector Index Fund

iShares S&P Global Financials Sector Index Fund

iShares S&P Global Healthcare Sector Index Fund

iShares S&P Global Industrials Sector Index Fund

iShares S&P Global Materials Sector Index Fund

iShares S&P Global Technology Sector Index Fund

iShares S&P Global Telecommunications Sector Index Fund

iShares S&P Global Utilities Sector Index Fund

iShares S&P Europe 350 Index Fund

iShares S&P Latin America 40 Index Fund

iShares S&P/TOPIX 150 Index Fund

Barclays Global Fund Advisors (“BGFA”) is the investment adviser to each Fund. The Trust is a registered investment company. The shares of each Fund are listed on the American Stock Exchange (“AMEX”), Chicago Board Options Exchange (“CBOE”), or the New York Stock Exchange (“NYSE”) and trade at market prices on national securities exchanges, such as the AMEX, CBOE, and the NYSE. Market prices for a Fund’s shares may be different from its net asset value per share (“NAV”). Each Fund has its own CUSIP number and exchange trading symbol.

Each Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof (“Creation Units”). These transactions are usually in exchange for a basket of securities and an amount of cash. As a practical matter, only institutions or large investors purchase or redeem Creation Units.

Except when aggregated in Creation Units, shares of each Fund are not redeemable securities.

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.

Prospectus dated September 21, 2006

“Standard & Poor’s ^® ,” “S&P ^® ,” “S&P500 ^® ,” “Standard & Poor’s 500,” “S&P 500 Index,” “S&P MidCap 400 Index,” “S&P SmallCap 600 Index,” “S&P 500/Citigroup Growth Index,” “Standard & Poor’s 500/Citigroup Growth Index,” “S&P 500/Citigroup Value Index,” “Standard & Poor’s 500/Citigroup Value Index,” “S&P MidCap 400/Citigroup Growth Index,” “S&P MidCap 400/Citigroup Value Index,” “S&P SmallCap 600/Citigroup Growth Index,” “S&P SmallCap 600/Citigroup Value Index,” “S&P Composite 1500 Index,” “S&P U.S. Preferred Stock Index,” “S&P 100 Index ^® ,” “S&P Global 100 Index,” “S&P Global Consumer Discretionary Sector Index,” “S&P Global Consumer Staples Sector Index,” “S&P Global Energy Sector Index,” “S&P Global Financials Sector Index,” “S&P Global Healthcare Sector Index ^® ,” “S&P Global Industrials Sector Index,” “S&P Global Information Technology Sector Index,” “S&P Global Materials Sector Index” “S&P Global Telecommunications Sector Index,” “S&P Global Utilities Sector Index” “S&P Europe 350 Index,” “S&P Latin America 40 Index” and “S&P/TOPIX 150 Index” are trademarks of The McGraw-Hill Companies, Inc. and Citigroup, Inc. and have been licensed for use for certain purposes by BGI. The Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representations regarding the advisability of investing in the Funds.

Table of Contents


Details on Investing	Overview	1
in the Funds	Introduction	1
	Investment Objective of the Funds	1

	Principal Investment Strategies of the Funds	1
	Representative Sampling	2
	Correlation	2
	Industry Concentration Policy	2

Details on the Risks of	Principal Risk Factors Common to All Funds	2
Investing in the Funds	Market Risk	2
	Asset Class Risk	3
	Passive Investments Risk	3
	Concentration Risk	3
	Derivatives Risk	3
	Tracking Error Risk	3
	Management Risk	3
	Market Trading Risks	3
	Lack of Governmental Insurance or Guarantee	4
	Foreign Investment Risks	4

	Portfolio Holdings Information	5

Details on Each Fund	Description of the iShares S&P Index Funds	6
	iShares S&P 100 Index Fund	6
	iShares S&P 500 Index Fund	9
	iShares S&P 500 Growth Index Fund	12
	iShares S&P 500 Value Index Fund	15
	iShares S&P MidCap 400 Index Fund	18
	iShares S&P MidCap 400 Growth Index Fund	21
	iShares S&P MidCap 400 Value Index Fund	24
	iShares S&P SmallCap 600 Index Fund	27
	iShares S&P SmallCap 600 Growth Index Fund	30
	iShares S&P SmallCap 600 Value Index Fund	33
	iShares S&P 1500 Index Fund	36
	iShares S&P U.S. Preferred Stock Index Fund	39
	iShares S&P Global 100 Index Fund	42
	iShares S&P Global Consumer Discretionary Sector Index Fund	45
	iShares S&P Global Consumer Staples Sector Index Fund	47
	iShares S&P Global Energy Sector Index Fund	49
	iShares S&P Global Financials Sector Index Fund	52
	iShares S&P Global Healthcare Sector Index Fund	55
	iShares S&P Global Industrials Sector Index Fund	58
	iShares S&P Global Materials Sector Index Fund	60
	iShares S&P Global Technology Sector Index Fund	62
	iShares S&P Global Telecommunications Sector Index Fund	65
	iShares S&P Global Utilities Sector Index Fund	68
	iShares S&P Europe 350 Index Fund	70
	iShares S&P Latin America 40 Index Fund	74
	iShares S&P/TOPIX 150 Index Fund	78

page i


Details on Management	Management	82
and Operations	Investment Adviser	82
	Portfolio Managers	83
	Administrator, Custodian and Transfer Agent	83

Details on Buying and	Shareholder Information	83
Selling Shares of the Funds	Buying and Selling Shares	83
Selling Shares of the Funds	Book Entry	84
	Share Prices	84
	Determination of Net Asset Value	85
	Dividends and Distributions	85
	Taxes	85
	Taxes on Distributions	86
	Taxes When Shares are Sold	86
	Creations and Redemptions	87
	Transaction Fees	87
	Householding	88

	Distribution	88

	Financial Highlights	89

	Index Provider	100

	Disclaimers	101

	Supplemental Information	103
	Premium/Discount Information	103
	Total Return Information	106

i Shares

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Overview

Introduction

This Prospectus provides the information you need to make an informed decision about investing in the iShares ^® Funds. It contains important facts about the Trust as a whole and each Fund in particular.

An index is a group of securities that an Index Provider selects as representative of a market, market segment or specific industry sector. The Index Provider determines the relative weightings of the securities in the index and publishes information regarding the market value of the index.

Each Fund is an “index fund” that seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of a particular index (its “Underlying Index”) developed by Standard & Poor’s, which provides financial, economic and investment information and analytical services to the financial community.

BGFA, the investment adviser to each Fund, is a subsidiary of Barclays Global Investors, N.A. (“BGI”). BGFA and its affiliates are not affiliated with the Index Provider.

The Principal Investment Strategies and the Principal Risk Factors Common to All Funds sections discuss the principal strategies and risks applicable to the Funds, while the Description of the iShares S&P Index Funds section provides important information about each Fund, including a brief description of each Fund’s Underlying Index and principal risks specific to that Fund.

Investment Objective of the Funds

Each Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of its Underlying Index.

Principal Investment Strategies of the Funds

BGFA uses a “passive” or indexing approach to try to achieve each Fund’s investment objective. Unlike many investment companies, the Funds do not try to “beat” the indices they track and do not seek temporary defensive positions when markets decline or appear overvalued.

Indexing may eliminate some of the risks of active management, such as poor security selection. Indexing may also help increase after-tax performance by keeping portfolio turnover low in comparison to actively managed investment companies.

Each Fund, except the iShares S&P U.S. Preferred Stock Index Fund, will invest at least 90% of its assets in the securities of its Underlying Index or in American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) or European Depositary Receipts (“EDRs”) (collectively “Depositary Receipts”) representing securities in the Underlying Index. A Fund may invest the remainder of its assets in securities not included in its Underlying Index, but which BGFA believes will help the Fund track its Underlying Index. For example, a Fund may invest in securities not included in its Underlying Index in order to reflect various corporate actions (such as mergers) and other changes in its Underlying Index (such as reconstitutions, additions and deletions). A Fund also may invest its other assets 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 BGFA.

The iShares S&P U.S. Preferred Stock Index Fund will invest at least 90% of its assets in the securities of its Underlying Index. The Fund may invest the remainder of its assets in securities not included in its

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

iShares Overview

page 1

Underlying Index, but which BGFA believes will help the Fund track the Underlying Index. For example, the Fund may invest in securities not included in its Underlying Index in order to reflect various corporate actions (such as mergers) and other changes in its Underlying Index (such as reconstitutions, additions and deletions). The Fund also may invest its other assets in futures contracts, options on futures contracts, options, and swaps related to the Underlying Index, as well as cash and cash equivalents, including shares of money market funds affiliated with BGFA.

BGFA uses a representative sampling indexing strategy, as described below. The Description of the iShares S&P Index Funds section describes the indexing strategy of each Fund.

Representative Sampling

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

Correlation

An index is a theoretical financial calculation, while a Fund is an actual investment portfolio. The performance of a Fund and its Underlying Index may vary somewhat due to transaction costs, foreign currency valuations, asset valuations, market impact, corporate actions (such as mergers and spin-offs) and timing variances.

BGFA expects that, over time, the correlation between each Fund’s performance and that of its Underlying Index, before fees and expenses, will be 95% or better. A correlation percentage of 100% would indicate perfect correlation. Any correlation percentage that is less than 100% is called “tracking error.” A Fund using a representative sampling indexing strategy can be expected to have a greater tracking error than a Fund using a replication indexing strategy. “Replication” is an indexing strategy in which a Fund invests in substantially all of the securities in its Underlying Index in approximately the same proportions as in the Underlying Index.

Industry Concentration Policy

A Fund will not concentrate its investments ( i.e. , hold 25% or more of its total assets) in a particular industry or group of industries, except that a Fund will concentrate its investments to approximately the same extent that its Underlying Index is so concentrated. 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.

Principal Risk Factors Common to All Funds

Each Fund is subject to the principal risks described below. Additional principal risks associated with a Fund are discussed under the description of that Fund in the Description of the iShares S&P Index Funds section. Some or all of these risks may adversely affect a Fund’s NAV, trading price, yield, total return and/or its ability to meet its objectives.

Market Risk

Each Fund’s NAV will react to securities markets movements. You could lose money over short periods due to fluctuation in a Fund’s NAV in response to market movements, and over longer periods during market downturns.

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Asset Class Risk

The returns from the types of securities in which a Fund invests may underperform returns from the various general securities markets or different asset classes. The stocks in the Underlying Indices may underperform fixed-income investments and stock market investments that track other markets, segments and sectors. Different types of securities tend to go through cycles of out-performance and underperformance in comparison to the general securities markets.

Passive Investments Risk

The Funds are not actively managed. Each Fund may be affected by a general decline in the U.S. or foreign market segments relating to its Underlying Index. Each Fund invests in the securities included in, or representative of, its Underlying Index regardless of their investment merit. BGFA does not attempt to take defensive positions in declining markets.

Concentration Risk

If the Underlying Index of a Fund concentrates in a particular industry, group of industries or sector, that Fund may be adversely affected by the performance of those securities and may be subject to price volatility. In addition, a Fund that concentrates in a single industry or group of industries may be more susceptible to any single economic, market, political or regulatory occurrence affecting that industry or group of industries.

Derivatives Risk

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. Each Fund may invest in stock index future contracts and other derivatives. Compared to conventional securities, derivatives can be more sensitive to changes in interest rates or to sudden fluctuations in market prices and thus a Fund’s losses may be greater if it invests in derivatives than if it invests only in conventional securities.

Tracking Error Risk

Imperfect correlation between a Fund’s securities and those in its Underlying Index, rounding of prices, changes to the Underlying Indices and regulatory policies may cause a Fund’s performance to diverge from the performance of its Underlying Index. This is called “tracking error.” Tracking error may also result because the Fund incurs fees and expenses while its Underlying Index does not incur such expenses.

Management Risk

Each Fund does not fully replicate its Underlying Index and may hold securities not included in its Underlying Index, therefore, each Fund is subject to management risk. This is the risk that BGFA’s investment strategy, the implementation of which is subject to a number of constraints, may not produce the intended results.

Market Trading Risks

Absence of Prior Active Market

Although shares of the Funds described in this Prospectus are listed for trading on national securities exchanges and certain foreign exchanges, there can be no assurance that an active trading market for such shares will develop or be maintained.

Lack of Market Liquidity

Secondary market trading in Fund shares may be halted by a national securities exchange because of market conditions or for other reasons. In addition, trading in Fund shares is subject

iShares Principal Risk Factors Common to All Funds

page 3

to trading halts caused by extraordinary market volatility pursuant to “circuit breaker” rules. There can be no assurance that the requirements necessary to maintain the listing of the shares of any Fund will continue to be met or will remain unchanged.

Shares of the Funds May Trade at Prices Other Than NAV

Shares of the Funds may trade at, above or below their NAV. The per share NAV of each Fund will fluctuate with changes in the market value of such Fund’s holdings. The trading prices of a Fund’s shares will fluctuate in accordance with changes in its NAV as well as market supply and demand. However, given that shares can be created and redeemed only in Creation Units at NAV (unlike shares of many closed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, their NAVs), BGFA believes that large discounts or premiums to the NAV of a Fund’s shares should not be sustained. While the creation/redemption feature is designed to make it likely that a Fund’s shares normally will trade close to the Fund’s NAV, disruptions to creations and redemptions may result in trading prices that differ significantly from NAV.

Lack of Governmental Insurance or Guarantee

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

Foreign Investment Risks

Investments in the following Funds generally involve certain risks and considerations not typically associated with investing in a fund that invests in the securities of U.S. issuers: the iShares S&P Global 100 Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumers Staples Sector Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Global Financials Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Telecommunications Sector Index Fund, iShares S&P Global Utilities Sector Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Latin America 40 Index Fund and iShares S&P/TOPIX 150 Index Fund (collectively, the “S&P Global Funds”). Each S&P Global Fund may be subject to risks similar to those of investing in a portfolio of equity securities traded on exchanges in the securities markets of the Fund’s component countries, including market fluctuations caused by factors such as economic and political developments, changes in interest rates and perceived trends in stock prices. As a result of investing in foreign securities, each S&P Global Fund may be subject to the risks listed and described below. These risks may decrease the value of your investment.

Less liquid and less efficient securities markets;

Greater price volatility;

Exchange rate fluctuations and exchange controls;

Less publicly available information about issuers;

Imposition of withholding or other taxes;

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

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

Difficulties in enforcing contractual obligations;

Lesser levels of regulation of the securities markets;

Different accounting, disclosure and reporting requirements;

More substantial government involvement in the economy;

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Higher rates of inflation; and

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

Because each S&P Global Fund’s NAV is determined on the basis of U.S. dollars, you may lose money on your investment in any of the S&P Global Funds if the local currency value of a foreign market depreciates against the U.S. dollar, even if the local currency value of the S&P Global Funds’ holdings goes up.

Since foreign exchanges are open on days when the S&P Global Funds do not price their shares, the value of the securities in the S&P Global Funds’ portfolios may change on days when shareholders will not be able to purchase or sell the S&P Global Funds’ shares.

Portfolio Holdings Information

A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ combined Statement of Additional Information (“SAI”). The top holdings of each Fund can be found at www.iShares.com. Fund fact sheets provide information regarding each Fund’s top holdings and may be requested by calling 1-800-iShares.

iShares Principal Risk Factors Common to All Funds

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Description of the iShares S&P Index Funds

iShares S&P 100 Index Fund

Cusip: 464287101

Trading Symbol: OEF

Underlying Index: Standard & Poor’s 100 Index

Investment Objective

The iShares S&P 100 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s 100 Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the large capitalization sector of the U.S. equity market. It is a subset of the Standard & Poor’s 500 Index and consists of blue chip stocks from diverse industries in the Standard & Poor’s 500 Index. As of the close of business on May 31, 2006, the Index represented approximately 43% of the market capitalization of listed U.S. equities. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risk listed below.

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

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Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 2.72%. The best calendar return during the period shown above was 14.73% in the 2nd quarter of 2003; the worst was –16.56% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	1.00%	–2.13%	–3.26%
Return After Taxes on Distributions ²	0.70%	–2.49%	–3.63%
Return After Taxes on Distributions and Sale of Fund Shares ²	1.00%	–1.94%	–2.89%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	1.17%	–1.93%	–3.09%

Inception date: 10/23/2000.

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

iShares S&P 100 Index Fund

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Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.

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


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.20%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.20%

Expressed as a percentage of average net assets.

The Trust’s Investment Advisory Agreement provides that BGFA will pay all operating expenses of the Trust, except interest expense and taxes (both expected to be de minimis ), any brokerage expenses, future distribution fees or expenses, and extraordinary expenses.

Example

This Example is intended to help you compare the cost of owning shares of the Fund with the cost of investing in other funds.

The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 Year	3 Years	5 Years	10 Years
$20	$64	$113	$255

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $2,913,500. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,913,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $6,966 if the Creation Unit is redeemed after one year, $19,770 if the Creation Unit is redeemed after three years, $33,833 if the Creation Unit is redeemed after five years, and $75,341 if the Creation Unit is redeemed after ten years.

See the Transaction Fees section at the end of this Prospectus. If a Creation Unit is purchased or redeemed outside the usual process through the National Securities Clearing Corporation or for cash, a variable fee will be charged up to four times the standard creation or redemption transaction fee.

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iShares S&P 500 Index Fund

Cusip: 464287200

Trading Symbol: IVV

Underlying Index: Standard & Poor’s 500 Index

Investment Objective

The iShares S&P 500 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s 500 Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of the large-capitalization sector of the U.S. equity market. As of the close of business on May 31, 2006, the Index included approximately 78% of the market capitalization of all publicly traded U.S. equity securities. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risk listed below.

The stocks in the Index may underperform fixed-income investments and stock market investments that track other markets, segments or sectors.

iShares S&P 500 Index Fund

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Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 2.67%. The best calendar quarter return during the period shown above was 15.34% in the 2nd quarter of 2003; the worst was –17.26% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	4.82%	0.45%	–1.16%
Return After Taxes on Distributions ²	4.55%	0.08%	–1.54%
Return After Taxes on Distributions and Sale of Fund Shares ²	3.49%	0.22%	–1.16%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	4.91%	0.54%	–1.08%

Inception date: 5/15/2000.

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

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Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.09%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.09%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$10	$30	$53	$121

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $6,377,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $6,377,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $7,174 if the Creation Unit is redeemed after one year, $20,444 if the Creation Unit is redeemed after three years, $35,049 if the Creation Unit is redeemed after five years, and $78,309 if the Creation Unit is redeemed after ten years.

iShares S&P 500 Index Fund

page 11

iShares S&P 500 Growth Index Fund*

Cusip: 464287309

Trading Symbol: IVW

Underlying Index: Standard & Poor’s 500/Citigroup Growth Index

Investment Objective

The iShares S&P 500 Growth Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s 500/Citigroup Growth Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the large capitalization growth sector of the U.S. equity market. It is a subset of the Standard & Poor’s 500 Index and consists of those companies exhibiting the strongest growth characteristics in the Standard & Poor’s 500 Index, representing approximately 49% of the market capitalization of the Standard & Poor’s 500 Index. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Growth stocks may lack the dividend yield that can cushion stock prices in market downturns.

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

On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/ Citigroup Growth Index.

i Shares

page 12

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was –1.01%. The best calendar quarter return during the period shown above was 12.97% in the 4th quarter of 2001; the worst was –17.43% in the 1st quarter of 2001.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	3.81%	–1.73%	–4.58%
Return After Taxes on Distributions ²	3.61%	–1.99%	–4.82%
Return After Taxes on Distributions and Sale of Fund Shares ²	2.73%	–1.56%	–3.92%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	4.00%	–1.55%	–4.41%

Inception date: 5/22/2000.

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

iShares S&P 500 Growth Index Fund

page 13

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.18%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.18%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$18	$58	$101	$230

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $2,931,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,931,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $6,402 if the Creation Unit is redeemed after one year, $18,000 if the Creation Unit is redeemed after three years, $30,742 if the Creation Unit is redeemed after five years, and $68,378 if the Creation Unit is redeemed after ten years.

i Shares

page 14

iShares S&P 500 Value Index Fund*

Cusip: 464287408

Trading Symbol: IVE

Underlying Index: Standard & Poor’s 500/Citigroup Value Index

Investment Objective

The iShares S&P 500 Value Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s 500/Citigroup Value Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the large capitalization value sector of the U.S. equity market. It is a subset of the Standard & Poor’s 500 Index and consists of those stocks exhibiting the strongest value characteristics in the Standard & Poor’s 500 Index, representing approximately 51% of the market capitalization of the Standard & Poor’s 500 Index. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risk listed below.

Value stocks may be undervalued for long periods of time and may not ever realize their potential full value.

On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/ Citigroup Value Index.

iShares S&P 500 Value Index Fund

page 15

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 6.43%. The best calendar quarter return during the period shown above was 18.76% in the 2nd quarter of 2003; the worst was –20.44% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	5.67%	2.26%	3.20%
Return After Taxes on Distributions ²	5.34%	1.82%	2.73%
Return After Taxes on Distributions and Sale of Fund Shares ²	4.10%	1.72%	2.51%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	5.82%	2.43%	3.37%

Inception date: 5/22/2000.

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

i Shares

page 16

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.18%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.18%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$18	$58	$101	$230

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,437,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,437,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $7,335 if the Creation Unit is redeemed after one year, $20,935 if the Creation Unit is redeemed after three years, $35,878 if the Creation Unit is redeemed after five years, and $80,012 if the Creation Unit is redeemed after ten years.

iShares S&P 500 Value Index Fund

page 17

iShares S&P MidCap 400 Index Fund

Cusip: 464287507

Trading Symbol: IJH

Underlying Index: Standard & Poor’s MidCap 400 Index

Investment Objective

The iShares S&P MidCap 400 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s MidCap 400 Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of the mid-capitalization sector of the U.S. equity market. As of the close of business on May 31, 2006, the Index included approximately 7% of the market capitalization of all U.S. equity securities. The stocks in the Index have a market capitalization between $1 billion and $4 billion (which may fluctuate depending on the overall level of the equity markets) and are selected for liquidity and industry group representation. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The Fund may be more volatile ( i.e., subject to more frequent changes in price) than a fund that invests primarily in large capitalization securities because:

Mid-capitalization stocks typically are more vulnerable than large capitalization stocks to adverse business or economic developments.

Mid-capitalization companies normally have less diverse product lines than large capitalization companies and thus are more susceptible to adverse developments concerning their products.

Mid-capitalization stocks may be thinly traded and thus may be difficult for the Fund to buy and sell.

i Shares

page 18

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 4.20%. The best calendar quarter return during the period shown above was 18.00% in the 4th quarter of 2001; the worst was –16.59% in the 3rd quarter of 2001.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	12.48%	8.44%	9.71%
Return After Taxes on Distributions ²	12.22%	8.18%	9.41%
Return After Taxes on Distributions and Sale of Fund Shares ²	8.30%	7.19%	8.31%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	12.56%	8.60%	9.89%

Inception date: 5/22/2000.

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

iShares S&P MidCap 400 Index Fund

page 19

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.20%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.20%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$20	$64	$113	$255

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,833,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,833,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $8,849 if the Creation Unit is redeemed after one year, $25,695 if the Creation Unit is redeemed after three years, $44,198 if the Creation Unit is redeemed after five years, and $98,807 if the Creation Unit is redeemed after ten years.

i Shares

page 20

iShares S&P MidCap 400 Growth Index Fund*

Cusip: 464287606

Trading Symbol: IJK

Underlying Index: Standard & Poor’s MidCap 400/Citigroup Growth Index

Investment Objective

The iShares S&P MidCap 400 Growth Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s MidCap 400/Citigroup Growth Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the mid-capitalization growth sector of the U.S. equity market. It is a subset of the Standard & Poor’s 400 Index and consists of those companies exhibiting the strongest growth characteristics within the Standard & Poor’s 400 Index, representing approximately 47% of the market capitalization of the Standard & Poor’s 400 Index. The Index consists of stocks from a broad range of industries. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The Fund may be more volatile ( i.e., subject to more frequent changes in price) than a fund that invests primarily in large capitalization securities because:

Mid-capitalization stocks typically are more vulnerable than large capitalization stocks to adverse business or economic developments.

Mid-capitalization companies normally have less diverse product lines than large capitalization companies and thus are more susceptible to adverse developments concerning their products.

Mid-capitalization stocks may be thinly traded and thus may be difficult for the Fund to buy and sell.

Growth stocks may lack the dividend yield that can cushion stock prices in market downturns.

On December 16, 2005, the name of the iShares S&P 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

iShares S&P MidCap 400 Growth Index Fund

page 21

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 1.59%. The best calendar quarter return during the period shown above was 21.81% in the 4th quarter of 2001; the worst was –20.21% in the 3rd quarter of 2001.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Year	Since Fund Inception ¹
Fund:
Return Before Taxes	13.32%	4.48%	2.45%
Return After Taxes on Distributions ²	13.18%	4.40%	2.34%
Return After Taxes on Distributions and Sale of Fund Shares ²	8.75%	3.82%	2.04%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	13.57%	4.75%	2.74%

Inception date: 7/24/2000.

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

i Shares

page 22

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.25%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.25%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$26	$80	$141	$318

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,839,500. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,839,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $10,825 if the Creation Unit is redeemed after one year, $31,899 if the Creation Unit is redeemed after three years, $55,021 if the Creation Unit is redeemed after five years, and $123,151 if the Creation Unit is redeemed after ten years.

iShares S&P MidCap 400 Growth Index Fund

page 23

iShares S&P MidCap 400 Value Index Fund*

Cusip: 464287705

Trading Symbol: IJJ

Underlying Index: Standard & Poor’s MidCap 400/Citigroup Value Index

Investment Objective

The iShares S&P MidCap 400 Value Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s MidCap 400/Citigroup Value Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the mid-capitalization value sector of the U.S. equity market. It is a subset of the Standard & Poor’s 400 Index and consists of those companies exhibiting the strongest value characteristics within the Standard & Poor’s 400 Index, representing approximately 53% of the market capitalization of the Standard & Poor’s MidCap 400 Index. The Index consists of stocks from a broad range of industries. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The Fund may be more volatile ( i.e., subject to more frequent changes in price) than a fund that invests primarily in large capitalization securities because:

Mid-capitalization stocks typically are more vulnerable than large capitalization stocks to adverse business or economic developments.

Mid-capitalization companies normally have less diverse product lines than large capitalization companies and thus are more susceptible to adverse developments concerning their products.

Mid-capitalization stocks may be thinly traded and thus may be difficult for the Fund to buy and sell.

Value stocks may be undervalued for long periods of time and may not ever realize their potential full value.

On December 16, 2005, the name of the iShares S&P 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

i Shares

page 24

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 6.73%. The best calendar quarter return during the period shown above was 19.10% in the 2nd quarter of 2003; the worst was –18.51% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	11.47%	12.14%	14.70%
Return After Taxes on Distributions ²	11.10%	11.73%	14.24%
Return After Taxes on Distributions and Sale of Fund Shares ²	7.72%	10.39%	12.70%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	11.48%	12.35%	14.92%

Inception date: 7/24/2000.

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

iShares S&P MidCap 400 Value Index Fund

page 25

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.25%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.25%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$26	$80	$141	$318

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,756,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,756,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $10,612 if the Creation Unit is redeemed after one year, $31,227 if the Creation Unit is redeemed after three years, $53,846 if the Creation Unit is redeemed after five years, and $120,494 if the Creation Unit is redeemed after ten years.

i Shares

page 26

iShares S&P SmallCap 600 Index Fund

Cusip: 464287804

Trading Symbol: IJR

Underlying Index: Standard & Poor’s SmallCap 600 Index

Investment Objective

The iShares S&P Small Cap 600 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s SmallCap 600 Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the small-capitalization sector of the U.S. equity market. As of the close of business on May 31, 2006, the Index included approximately 4% of the market capitalization of all U.S. equity securities. The stocks in the Index have a market capitalization between $300 million and $1 billion (which may fluctuate depending on the overall level of the equity markets) and are selected for liquidity and industry group representation. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The Fund may be more volatile ( i.e ., subject to more frequent changes in price) than a fund that invests primarily in large or mid-capitalization securities because:

Small capitalization companies may be less financially secure than larger, more established companies.

Small capitalization companies may depend on a small number of essential personnel and thus are more vulnerable to personnel loss.

Small capitalization companies normally have less diverse product lines than larger capitalization companies and thus are more susceptible to adverse developments concerning their products.

Small capitalization stocks may be thinly traded and thus may be difficult for the Fund to buy and sell.

iShares S&P SmallCap 600 Index Fund

page 27

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 7.60%. The best calendar quarter return during the period shown above was 20.62% in the 4th quarter of 2001; the worst was –18.63% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	7.50%	10.59%	11.70%
Return After Taxes on Distributions ²	7.29%	10.39%	11.42%
Return After Taxes on Distributions and Sale of Fund Shares ²	5.00%	9.13%	10.10%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	7.68%	10.76%	11.88%

Inception date: 5/22/2000.

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

i Shares

page 28

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.20%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.20%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$20	$64	$113	$255

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,109,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,109,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $7,366 if the Creation Unit is redeemed after one year, $21,030 if the Creation Unit is redeemed after three years, $36,037 if the Creation Unit is redeemed after five years, and $80,330 if the Creation Unit is redeemed after ten years.

iShares S&P SmallCap 600 Index Fund

page 29

iShares S&P SmallCap 600 Growth Index Fund*

Cusip: 464287887

Trading Symbol: IJT

Underlying Index: Standard & Poor’s SmallCap 600/Citigroup Growth Index

Investment Objective

The iShares S&P SmallCap 600 Growth Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s SmallCap 600/Citigroup Growth Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of the small capitalization growth sector of the U.S. equity market. It is a subset of the Standard & Poor’s 600 Index and consists of those companies exhibiting the strongest growth characteristics within the Standard & Poor’s 600 Index, representing approximately 48% of the market capitalization of the Standard & Poor’s SmallCap 600 Index. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The Fund may be more volatile ( i.e ., subject to more frequent changes in price) than a fund that invests primarily in large or mid-capitalization securities because:

Small capitalization companies may be less financially secure than larger, more established companies.

Small capitalization companies may depend on a small number of essential personnel and thus are more vulnerable to personnel losses.

Small capitalization companies normally have less diverse product lines than larger capitalization companies and thus are more susceptible to adverse developments concerning their products.

Small capitalization stocks may be thinly traded and thus may be difficult for the Fund to buy and sell.

Growth stocks may lack the dividend yield that can cushion stock prices in market downturns.

On December 16, 2005, the name of the iShares S&P 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

i Shares

page 30

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 5.53%. The best calendar quarter return during the period shown above was 20.28% in the 4th quarter of 2001; the worst was –17.28% in the 3rd quarter of 2001.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Year	Since Fund Inception ¹
Fund:
Return Before Taxes	8.98%	8.64%	6.82%
Return After Taxes on Distributions ²	8.87%	8.55%	6.68%
Return After Taxes on Distributions and Sale of Fund Shares ²	5.94%	7.47%	5.83%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	9.22%	8.88%	7.08%

Inception date: 7/24/2000.

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

iShares S&P SmallCap 600 Growth Index Fund

page 31

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.25%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.25%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$26	$80	$141	$318

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $6,165,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $6,165,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $16,777 if the Creation Unit is redeemed after one year, $50,616 if the Creation Unit is redeemed after three years, $87,745 if the Creation Unit is redeemed after five years, and $197,144 if the Creation Unit is redeemed after ten years.

i Shares

page 32

iShares S&P SmallCap 600 Value Index Fund*

Cusip: 464287879

Trading Symbol: IJS

Underlying Index: Standard & Poor’s SmallCap 600/Citigroup Value Index

Investment Objective

The iShares S&P SmallCap 600 Value Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s SmallCap 600/Citigroup Value Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of the small capitalization value sector of the U.S. equity market. It is a subset of the Standard & Poor’s 600 Index and consists of those companies exhibiting the strongest value characteristics in the Standard & Poor’s SmallCap 600 Index, representing approximately 52% of the market capitalization of the Standard & Poor’s SmallCap 600 Index. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The Fund may be more volatile ( i.e ., subject to more frequent changes in price) than a fund that invests primarily in large or mid-capitalization securities because:

Small capitalization companies may be less financially secure than larger, more established companies.

Small capitalization companies may depend on a small number of essential personnel and are thus more vulnerable to personnel losses.

Small capitalization companies normally have less diverse product lines than larger capitalization companies and thus are more susceptible to adverse developments concerning their products.

Small capitalization stocks may be thinly traded and thus may be difficult for the Fund to buy and sell.

Value stocks may be undervalued for long periods of time and may not ever realize their potential full value.

On December 16, 2005, the name of the iShares S&P 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

iShares S&P SmallCap 600 Value Index Fund

page 33

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 9.52%. The best calendar quarter return during the period shown above was 22.65% in the 2nd quarter of 2003; the worst was –22.54% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	5.93%	11.84%	13.38%
Return After Taxes on Distributions ²	5.71%	11.56%	13.06%
Return After Taxes on Distributions and Sale of Fund Shares ²	4.00%	10.21%	11.59%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	6.18%	12.13%	13.66%

Inception date: 7/24/2000.

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

i Shares

page 34

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.25%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.25%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$26	$80	$141	$318

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,481,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,481,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $9,908 if the Creation Unit is redeemed after one year, $29,013 if the Creation Unit is redeemed after three years, $49,977 if the Creation Unit is redeemed after five years, and $111,744 if the Creation Unit is redeemed after ten years.

iShares S&P SmallCap 600 Value Index Fund

page 35

iShares S&P 1500 Index Fund

Cusip: 464287150

Trading Symbol: ISI

Underlying Index: Standard & Poor’s Composite 1500 Index

Investment Objective

The iShares S&P 1500 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Composite 1500 Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index is comprised of the S&P 500, MidCap 400, and SmallCap 600 Indices, which together represent approximately 90% of the total U.S. equity market. The securities in the Index are weighted based on the total market value of their outstanding shares. Securities with higher total market values have a larger representation in the Index. The S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. As of May 31, 2006, the S&P 500 Index included 78% of the market capitalization of all U.S. equity securities. The S&P MidCap 400 Index measures the performance of the mid-capitalization sector of the U.S. equity market. The securities in the S&P MidCap 400 Index have a market capitalization of between $1 billion and $4 billion (which may fluctuate depending on the overall level of the equity markets) and are selected for liquidity and industry group representation. The S&P SmallCap 600 Index measures the performance of publicly-traded securities in the small-capitalization sector of the U.S. equity market. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The small and mid-capitalization stocks in the Index:

Are more vulnerable than large-capitalization stocks to adverse business or economic developments;

Are issued by companies that normally have less diverse product lines than large-capitalization companies and thus are more susceptible to adverse developments concerning their products; and

May be thinly traded and thus may be difficult for the Fund to buy and sell.

In addition, the small-capitalization stocks in the Index:

Are issued by companies that may be less financially secure than larger, more established companies; and

Are issued by companies that may depend on a small number of essential personnel and thus are more vulnerable to personnel loss.

i Shares

page 36

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 2.98%. The best calendar quarter return during the period shown above was 3.77% in the 3rd quarter of 2005; the worst was –2.04% in the 1st quarter of 2005.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Since Fund Inception ¹
Fund:
Return Before Taxes	5.46%	7.24%
Return After Taxes on Distributions ²	5.20%	6.95%
Return After Taxes on Distributions and Sale of Fund Shares ²	3.86%	6.13%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	5.66%	7.44%

Inception date: 1/20/2004

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

iShares S&P 1500 Index Fund

page 37

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.20%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.20%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$20	$64	$113	$255

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $5,689,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $5,689,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $12,651 if the Creation Unit is redeemed after one year, $37,658 if the Creation Unit is redeemed after three years, $65,123 if the Creation Unit is redeemed after five years, and $146,185 if the Creation Unit is redeemed after ten years.

i Shares

page 38

iShares S&P U.S. Preferred Stock Index Fund

Cusip: 464288687

Trading Symbol: PFF

Underlying Index: S&P U.S. Preferred Stock Index

Investment Objective

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P U.S. Preferred Stock Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of a selected group of preferred stocks listed on the NYSE, AMEX and the Nasdaq Stock Market, Inc. The Index does not seek to directly reflect the performance of the companies issuing the preferred stock. The Index includes preferred stocks with a market capitalization over $100 million that meet minimum price, liquidity, maturity and other requirements determined by the Index Provider. The Index excludes certain issues of preferred stock, such as those that are issued by special ventures (e.g., toll roads or dam operators) or structured products that are linked to indices or other stocks. In general, preferred stock is a class of equity security which pays a specified dividend that must be paid before any dividends can be paid to common stock holders, and which takes precedence over common stock in the event of the company’s liquidation. Although preferred stocks represent a partial ownership interest in a company, preferred stocks generally do not carry voting rights and have economic characteristics similar to fixed-income securities. Preferred stocks generally are issued with a fixed par value and pay dividends based on a percentage of that par value at a fixed or variable rate. Additionally, preferred stocks often have a liquidation value that generally equals the original purchase price of the preferred stock at the date of issuance. The Index may include many different categories of preferred stock, such as floating rate preferred stock, fixed rate preferred stock, perpetual preferred stock, convertible preferred stock, and various other traditional and hybrid issues of preferred stock.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Because many preferred stocks pay dividends at a fixed rate, their market price can be sensitive to changes in interest rates in a manner similar to bonds — that is, as interest rates rise, the value of the preferred stocks held by the Fund are likely to decline. To the extent that the Fund invests a substantial portion of its assets in fixed rate preferred stocks, rising interest rates may cause the value of the Fund’s investments to decline significantly.

Because many preferred stocks allow holders to convert the preferred stock into common stock of the issuer, their market price can be sensitive to changes in the value of the issuer’s common stock. To the extent that the Fund invests a substantial portion of its assets in convertible preferred stocks, declining common stock values may also cause the value of the Fund’s investments to decline.

There is a chance that the issuer of any of the Fund’s holdings will have its ability to pay dividends deteriorate or will default (fail to make scheduled dividend payments on the preferred stock or scheduled interest payments on other obligations of the issuer not held by the Fund), which would negatively affect the value of any such holding.

Preferred stocks are subject to market volatility and the prices of preferred stocks will fluctuate based on market demand. Preferred stocks often have call features which allow the issuer to redeem the security at its discretion. If a preferred stock is redeemed by the issuer, it will be removed from the

iShares S&P U.S. Preferred Stock Index Fund

page 39

Index. The redemption of preferred stocks having a higher than average yield may cause a decrease in the yield of the Index and the Fund. Because the Index is rebalanced annually, the removal of a large number of preferred stocks during the year due to maturity, redemption, conversion or other corporate action may cause the Index to be periodically concentrated in a smaller number of issuers or in issuers of a particular sector or industry.

Unlike debt securities, dividend payments on a preferred stock typically must be declared by the issuer’s board of directors. An issuer’s board of directors is generally not under any obligation to pay a dividend (even if such dividends have accrued), and may suspend payment of dividends on preferred stock at any time. In the event an issuer of preferred stock experiences economic difficulties, the issuer’s preferred stock may lose substantial value due to the reduced likelihood that the issuer’s board of directors will declare a dividend and the fact that the preferred stock may be subordinated to other securities of the same issuer.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its performance information.

i Shares

page 40

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year		3 Years
$49		$154

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The expected value of a Creation Unit as of September 1, 2006 was $2,500,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,500,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $13,269 if the Creation Unit is redeemed after one year and $39,495 if the Creation Unit is redeemed after three years.

iShares S&P U.S. Preferred Stock Index Fund

page 41

iShares S&P Global 100 Index Fund

Cusip: 464287572

Trading Symbol: IOO

Underlying Index: Standard & Poor’s Global 100 Index

Investment Objective

The iShares S&P Global 100 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Global 100 Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of 100 large cap global companies. These companies are highly liquid and represent some of the largest multinational businesses in the world. It is a subset of the Standard & Poor’s Global 1200 Index and contains 100 common stocks, screened for sector representation, liquidity and size. The market capitalization of constituent companies is adjusted to reflect only those shares that are available to foreign investors. The Fund uses a representative sampling strategy in seeking to track the Index.

As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Canada, Finland, France, Germany, Italy, Japan, South Korea, Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Since foreign exchanges are 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.

Because the Fund’s NAV is determined on the basis of U.S. dollars, you may lose money if you invest in the Fund if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the Fund’s holdings goes up.

i Shares

page 42

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 4.91%. The best calendar quarter return during the period shown above was 15.59% in the 2nd quarter of 2003; the worst was –18.56% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	4.67%	–0.64%	–1.40%
Return After Taxes on Distributions ²	4.32%	–0.98%	–1.73%
Return After Taxes on Distributions and Sale of Fund Shares ²	3.37%	–0.69%	–1.33%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	5.47%	–0.01%	–0.67%

Inception date: 12/5/2000.

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

iShares S&P Global 100 Index Fund

page 43

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.40%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.40%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$41	$128	$224	$505

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,000 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,302,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $2,000 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,302,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $17,504 if the Creation Unit is redeemed after one year, $46,403 if the Creation Unit is redeemed after three years, $78,022 if the Creation Unit is redeemed after five years, and $170,709 if the Creation Unit is redeemed after ten years.

i Shares

page 44

iShares S&P Global Consumer Discretionary Sector Index Fund

Cusip: 464288745

Trading Symbol: RXI

Underlying Index: S&P Global Consumer Discretionary Sector Index

Investment Objective

The iShares S&P Global Consumer Discretionary Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Global Consumer Discretionary Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the consumer discretionary sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include manufacturing and service companies. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Canada, Chilé, France, Germany, Hong Kong, Italy, Japan, Korea, Mexico, Netherlands, Singapore, Spain, Sweden, Switzerland, United Kingdom, and the United States. The Fund uses a Representative Sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Companies in the consumer discretionary sector may be adversely affected by changes in exchange rates.

Since the Fund attempts to track an index representing a single sector of the economy, the Fund is particularly susceptible to economic and other events affecting that sector, and the Fund may be more volatile than funds based on broader market segments.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its performance information.

iShares S&P Global Consumer Discretionary Sector Index Fund

page 45

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.

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


Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)		None
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year		3 Years
$49		$154

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,200 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 1, 2006 was $2,500,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $2,200 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,500,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $16,660 if the Creation Unit is redeemed after one year and $42,869 if the Creation Unit is redeemed after three years.

i Shares

page 46

iShares S&P Global Consumer Staples Sector Index Fund

Cusip: 464288737

Trading Symbol: KXI

Underlying Index: S&P Global Consumer Staples Sector Index

Investment Objective

The iShares S&P Global Consumer Staples Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Global Consumer Staples Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the consumer staples sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include manufacturers and distributors of food, producers of non-durable household goods, and food and drug retailing companies. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Brazil, Canada, Chilé, France, Germany, Japan, Korea, Mexico, Netherlands, Spain, Sweden, Switzerland, United Kingdom, and the United States. The Fund uses a Representative Sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Companies in the consumer staples sector may be adversely affected by changes in exchange rates.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its performance information.

iShares S&P Global Consumer Staples Sector Index Fund

page 47

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)		None
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year		3 Years
$49		$154

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,200 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 1, 2006 was $2,500,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $2,200 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,500,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $16,660 if the Creation Unit is redeemed after one year and $42,869 if the Creation Unit is redeemed after three years.

i Shares

page 48

iShares S&P Global Energy Sector Index Fund

Cusip: 464287341

Trading Symbol: IXC

Underlying Index: Standard & Poor’s Global Energy Sector Index

Investment Objective

The iShares S&P Global Energy Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Global Energy Sector Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the energy sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. The Fund will concentrate its investments in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. Because all of the securities included in the Index are issued by companies in the energy sector, the Fund will be concentrated in the energy industry. Component companies include oil equipment and services, oil exploration and production, and oil refineries. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Argentina, Australia, Austria, Brazil, Canada, France, Hong Kong, Italy, Japan, Norway, Spain, the United Kingdom and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Because the Index concentrates in a particular industry, group of industries or sector, the Fund may be adversely affected by the performance of those securities and may be subject to price volatility. In addition, the Fund may be more susceptible to any single economic, market, political or regulatory occurrence affecting that industry or group of industries.

The profitability of companies in the energy sector is related to worldwide energy prices, exploration, and production spending.

Companies in the energy sector may be adversely affected by changes in exchange rates.

Companies in the energy sector may be adversely affected by government regulation, world events and economic conditions.

Companies in the energy sector may be at risk for environmental damage claims.

Because the Fund’s NAV is determined on the basis of U.S. dollars, you may lose money if you invest in the Fund if the local currency value of a foreign market depreciates against the U.S. dollar, even if the local currency value of the Fund’s holdings goes up.

iShares S&P Global Energy Sector Index Fund

page 49

Performance Information

The bar chart and table that follow show how the Fund has performed in the past on a calendar year basis and provide an indication of the risks of investing in the Fund. Both assume that all dividends and distributions will be reinvested in the Fund. How the Fund has performed in the past (before and after taxes) does not necessarily indicate how it will perform in the future. Supplemental information about the Fund’s performance is shown under the heading Total Return Information in the Supplemental Information section at the end of this Prospectus.

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 13.43%. The best calendar quarter return during the period shown above was 18.43% in the 4th quarter of 2003; the worst was –17.74% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Since Fund Inception ¹
Fund:
Return Before Taxes	28.80%	18.17%
Return After Taxes on Distributions ²	28.57%	17.79%
Return After Taxes on Distributions and Sale of Fund Shares ²	19.02%	15.77%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	29.48%	18.21%

Inception date: 11/12/2001.

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

i Shares

page 50

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$49	$154	$269	$604

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $600 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $5,210,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $600 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $5,210,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $26,770 if the Creation Unit is redeemed after one year, $81,430 if the Creation Unit is redeemed after three years, $141,143 if the Creation Unit is redeemed after five years, and $315,705 if the Creation Unit is redeemed after ten years.

iShares S&P Global Energy Sector Index Fund

page 51

iShares S&P Global Financials Sector Index Fund

Cusip: 464287333

Trading Symbol: IXG

Underlying Index: Standard & Poor’s Global Financials Sector Index

Investment Objective

The iShares S&P Global Financials Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Global Financials Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the financial sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. The Fund will concentrate its investments in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. Because all of the securities included in the Index are issued by companies in the financials sector, the Fund will be concentrated in the financials industry. Component companies include major banks, diversified financial companies, insurance companies, real estate companies, savings and loan associations, and securities brokers. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, South Korea, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Companies in the financial sector are subject to extensive governmental regulation which may adversely affect the scope of their activities, the prices they can charge and the amount of capital they must maintain.

The profitability of companies in the financial sector may be adversely affected by increases in interest rates.

The profitability of companies in the financial sector may be adversely affected by loans losses, which usually increase in economic downturns.

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

i Shares

page 52

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

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 7.38%. The best calendar quarter return during the period shown above was 21.96% in the 2nd quarter of 2003; the worst was –21.18% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Since Fund Inception ¹
Fund:
Return Before Taxes	11.65%	10.87%
Return After Taxes on Distributions ²	11.34%	10.50%
Return After Taxes on Distributions and Sale of Fund Shares ²	7.89%	9.29%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	13.01%	11.83%

Inception date: 11/12/2001.

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

iShares S&P Global Financials Sector Index Fund

page 53

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$49	$154	$269	$604

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $4,200 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $3,927,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $4,200 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,927,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $27,657 if the Creation Unit is redeemed after one year, $68,823 if the Creation Unit is redeemed after three years, $113,794 if the Creation Unit is redeemed after five years, and $245,260 if the Creation Unit is redeemed after ten years.

i Shares

page 54

iShares S&P Global Healthcare Sector Index Fund

Cusip: 464287325

Trading Symbol: IXJ

Underlying Index: Standard & Poor’s Global Healthcare Sector Index

Investment Objective

The iShares S&P Global Healthcare Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Global Healthcare Sector Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be a part of the healthcare sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. The Fund will concentrate its investments in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. Because all of the securities included in the Index are issued by companies in the healthcare sector, the Fund will be concentrated in the healthcare industry. Component companies include health care providers, biotechnology companies and manufacturers of medical supplies, advanced medical devices and pharmaceuticals. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Canada, Denmark, France, Germany, Ireland, Japan, Switzerland, the United Kingdom and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Many companies in the healthcare sector are heavily dependent on patent protection. The expiration of patents may adversely affect the profitability of these companies.

Many companies in the healthcare sector are subject to extensive litigation based on product liability and similar claims.

Companies in the healthcare sector are subject to competitive forces that may make it difficult to raise prices and, in fact, may result in price discounting.

Many new products in the healthcare sector may be subject to regulatory approvals. The process of obtaining such approval may be long and costly.

Companies in the healthcare sector may be thinly capitalized.

Companies in the healthcare sector may be susceptible to product obsolescence.

iShares S&P Global Healthcare Sector Index Fund

page 55

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 1.61%. The best calendar quarter return during the period shown above was 10.98% in the 2nd quarter of 2003; the worst was –12.50% in the 2nd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Since Fund Inception ¹
Fund:
Return Before Taxes	7.80%	1.95%
Return After Taxes on Distributions ²	7.69%	1.81%
Return After Taxes on Distributions and Sale of Fund Shares ²	5.22%	1.62%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	8.67%	2.53%

Inception date: 11/13/2001.

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

i Shares

page 56

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$49	$154	$269	$604

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $700 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $2,632,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $700 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,632,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $14,318 if the Creation Unit is redeemed after one year, $41,933 if the Creation Unit is redeemed after three years, $72,100 if the Creation Unit is redeemed after five years, and $160,289 if the Creation Unit is redeemed after ten years.

iShares S&P Global Healthcare Sector Index Fund

page 57

iShares S&P Global Industrials Sector Index Fund

Cusip: 464288729

Trading Symbol: EXI

Underlying Index: S&P Global Industrials Sector Index

Investment Objective

The iShares S&P Global Industrials Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Global Industrials Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the industrials sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include manufacturers and distributors of capital goods, providers of commercial services and supplies, and transportation service providers. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Brazil, Canada, Chilé, Denmark, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The stock prices of companies in the industrials sector are affected by supply and demand both for their specific product or service and for 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 are at risk for environmental damage and product liability claims.

Companies in the industrials sector may be adversely affected by changes in exchange rates.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its performance information.

i Shares

page 58

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)		None
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year		3 Years
$49		$154

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,200 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 1, 2006 was $2,500,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $2,200 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,500,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $16,660 if the Creation Unit is redeemed after one year and $42,869 if the Creation Unit is redeemed after three years.

iShares S&P Global Industrials Sector Index Fund

page 59

iShares S&P Global Materials Sector Index Fund

Cusip: 464288695

Trading Symbol: MXI

Underlying Index: S&P Global Materials Sector Index

Investment Objective

The iShares S&P Global Materials Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Global Materials Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the materials sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include those companies engaged in a wide variety of commodity-related manufacturing. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Brazil, Canada, Chilé, Finland, France, Germany, Ireland, Japan, Korea, Luxembourg, Mexico, Netherlands, Portugal, Spain, Sweden, Switzerland, Taiwan, United Kingdom, and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Companies in the materials sector could be adversely affected by commodity price volatility, exchange rates, import controls and increased competition.

Production of materials often exceeds demand as a result of over-building or economic downturns, leading to poor investment returns.

Companies in the materials sector are at risk for environmental damage and product liability claims.

Companies in the materials sector may be adversely affected by depletion of resources, technical progress, labor relations, and government regulations.

Companies in the materials sector may be adversely affected by changes in exchange rates.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its performance information.

i Shares

page 60

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)		None
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year		3 Years
$49		$154

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,200 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 1, 2006 was $2,500,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $2,200 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,500,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $16,660 if the Creation Unit is redeemed after one year and $42,869 if the Creation Unit is redeemed after three years.

iShares S&P Global Materials Sector Index Fund

page 61

iShares S&P Global Technology Sector Index Fund

Cusip: 464287291

Trading Symbol: IXN

Underlying Index: Standard & Poor’s Global Information Technology Sector Index

Investment Objective

The iShares S&P Global Technology Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Global Information Technology Sector Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the information technology sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. The Fund will concentrate its investments in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. Because all of the securities included in the Index are issued by companies in the technology sector, the Fund will be concentrated in the technology industry. Component companies include those involved in the development and production of technology products, including computer hardware and software, telecommunications equipment, microcomputer components, integrated computer circuits and office equipment utilizing technology. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Canada, Finland, France, Germany, Italy, Japan, South Korea, Netherlands, Sweden, Taiwan, the United Kingdom and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Technology companies face intense competition, both domestically and internationally, which may have an adverse affect on profit margins.

The products of technology companies may face product obsolescence or relatively short product life cycles due to rapid technological developments and frequent new product introduction.

Technology companies may face dramatic and often 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.

i Shares

page 62

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was –3.92%. The best calendar quarter return during the period shown above was 20.20% in the 2nd quarter of 2003; the worst was –26.21% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Since Fund Inception ¹
Fund:
Return Before Taxes	3.90%	0.26%
Return After Taxes on Distributions ²	3.90%	0.21%
Return After Taxes on Distributions and Sale of Fund Shares ²	2.54%	0.22%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	4.93%	1.13%

Inception date: 11/12/2001.

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

iShares S&P Global Technology Sector Index Fund

page 63

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$49	$154	$269	$604

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,400 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $2,588,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,400 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,588,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $15,496 if the Creation Unit is redeemed after one year, and $42,636 if the Creation Unit is redeemed after three years, $72,285 if the Creation Unit is redeemed after five years, and $158,960 if the Creation Unit is redeemed after ten years.

i Shares

page 64

iShares S&P Global Telecommunications

Sector Index Fund

Cusip: 464287275

Trading Symbol: IXP

Underlying Index: Standard & Poor’s Global Telecommunications Sector Index

Investment Objective

The iShares S&P Global Telecommunications Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Global Telecommunications Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the telecommunications sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. The Fund will concentrate its investments in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. Because all of the securities included in the Index are issued by companies in the telecommunications sector, the Fund will be concentrated in the telecommunications industry. Component companies include diversified communication carriers and wireless communications companies. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Brazil, Canada, Chile, France, Germany, Greece, Hong Kong, Italy, Japan, Mexico, Netherlands, Norway, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

The domestic telecommunications market is characterized by increasing competition and regulation by the Federal Communications Commission and various state regulatory authorities.

Companies in the telecommunications sector may encounter distressed cash flows due to the need to commit substantial capital to meet increasing competition, particularly in formulating new products and services using new technology.

Technological innovations may make the products and services of telecommunications companies obsolete.

iShares S&P Global Telecommunications Sector Index Fund

page 65

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 8.05%. The best calendar quarter return during the period shown above was 28.20% in the 4th quarter of 2002; the worst was –19.85% in the 2nd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year		Since Fund Inception ¹
Fund:
Return Before Taxes	–6.27	%	0.53	%
Return After Taxes on Distributions ²	–6.67	%	0.19	%
Return After Taxes on Distributions and Sale of Fund Shares ²	–3.66	%	0.35	%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	–5.77	%	1.00	%

Inception date: 11/12/2001.

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

i Shares

page 66

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$49	$154	$269	$604

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $900 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $2,591,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $900 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,591,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $14,513 if the Creation Unit is redeemed after one year, $41,690 if the Creation Unit is redeemed after three years, $71,379 if the Creation Unit is redeemed after five years, and $158,171 if the Creation Unit is redeemed after ten years.

iShares S&P Global Telecommunications Sector Index Fund

page 67

iShares S&P Global Utilities Sector Index Fund

Cusip: 464288711

Trading Symbol: JXI

Underlying Index: S&P Global Utilities Sector Index

Investment Objective

The iShares S&P Global Utilities Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Global Utilities Sector Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index measures the performance of companies that Standard & Poor’s deems to be part of the Utilities sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include providers of electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Brazil, Canada, Chile, Finland, France, Germany, Hong Kong, Italy, Japan, Portugal, Spain, United Kingdom, and the United States. The Fund uses a Representative Sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

Companies in the utilities sector may be adversely affected by changes in exchange rates.

Utilities companies face intense competition, both domestically and internationally, which may have an adverse affect on profit margins.

The rates charged by regulated utility companies are subject to review and limitation by governmental regulatory commissions.

The value of regulated utility debt securities (and, to a lesser extent, equity securities) tends to have an inverse relationship to the movement of interest rates.

As deregulation allows utilities to diversify outside of their original geographic regions and their traditional lines of business, utilities may engage in riskier ventures.

Deregulation is subjecting utility companies to greater competition and may adversely affect profitability.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its performance information.

i Shares

page 68

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)		None
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.48%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.48%

Expressed as a percentage of average net assets.

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.


1 Year		3 Years
$49		$154

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,200 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 1, 2006 was $2,500,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $2,200 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,500,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $16,660 if the Creation Unit is redeemed after one year and $42,869 if the Creation Unit is redeemed after three years.

iShares S&P Global Utilities Sector Index Fund

page 69

iShares S&P Europe 350 Index Fund

Cusip: 464287861

Trading Symbol: IEV

Underlying Index: Standard & Poor’s Europe 350 Index

Investment Objective

The iShares S&P Europe 350 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Europe 350 Index (the “Index”).

Principal Investment Strategy

The Index measures the performance of the stocks of leading companies in the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The market capitalization of constituent companies is adjusted to reflect only those stocks that are available to foreign investors. The stocks in the Index are chosen for market size, liquidity, industry group representation and geographic diversity. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

An investment in the Fund involves risks similar to those of investing in a portfolio of equity securities traded on exchanges in the securities markets of the component European countries, including market fluctuations caused by factors such as economic and political developments, changes in interest rates and perceived trends in stock prices. Investing in the Fund generally involves certain risks and considerations not typically associated with investing in a fund that invests in the securities of U.S. issuers. The principal risk factors, which could decrease the value of your investment, are listed and described below:

Less liquid and less efficient securities markets;

Greater price volatility;

Exchange rate fluctuations and exchange controls;

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 and delays in attendant settlement procedures;

Difficulties in enforcing contractual obligations;

Lesser levels of regulation of the securities markets;

i Shares

page 70

Different accounting, disclosure and reporting requirements;

More substantial government involvement in the economy;

Higher rates of inflation; and

Greater social, economic and political uncertainty.

iShares S&P Europe 350 Index Fund

page 71

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 13.44%. The best calendar quarter return during the period shown above was 22.09% in the 2nd quarter of 2003; the worst was –22.88% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Five Years	Since Fund Inception ¹
Fund:
Return Before Taxes	9.16%	3.28%	2.03%
Return After Taxes on Distributions ²	8.65%	2.78%	1.55%
Return After Taxes on Distributions and Sale of Fund Shares ²	6.32%	2.56%	1.49%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	9.88%	4.05%	2.83%

Inception date: 7/25/2000.

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

i Shares

page 72

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.60%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.60%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$61	$192	$335	$750

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $12,000 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $4,529,000. An investor who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption transaction fee of $12,000 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $4,529,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $51,698 if the Creation Unit is redeemed after one year, $110,805 if the Creation Unit is redeemed after three years, $175,227 if the Creation Unit is redeemed after five years, and $362,782 if the Creation Unit is redeemed after ten years.

iShares S&P Europe 350 Index Fund

page 73

iShares S&P Latin America 40 Index Fund

Cusip: 464287390

Trading Symbol: ILF

Underlying Index: Standard & Poor’s Latin America 40 Index

Investment Objective

The iShares S&P Latin America 40 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s Latin America 40 Index (the “Index”).

Principal Investment Strategy

The Index is comprised of selected equities trading on the exchanges of four Latin American countries. The Index includes highly liquid securities from major economic sectors of the Mexican and South American equity markets. Companies from Mexico, Brazil, Argentina, and Chile are represented in the Index. The Fund uses a representative sampling strategy in seeking to track the Index. The Fund expects to invest in ADRs instead of directly holding stocks of companies from Argentina, Brazil, Chile and Mexico. ADRs are receipts, typically issued by a bank or trust company, that evidence ownership of underlying stocks issued by non-U.S. companies.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

An investment in the Fund involves risks similar to those of investing in a portfolio of equity securities traded on exchanges in the securities market of the component countries, including market fluctuations caused by factors such as economic and political developments, changes in interest rates and perceived trends in stock prices. Investing in the Fund generally involves certain risks and considerations not typically associated with investing in a fund that invests in the securities of U.S. issuers. The principal risk factors, which could decrease the value of your investment, are listed and described below:

Less liquid and less efficient securities markets;

Greater price volatility;

Exchange rate fluctuations and exchange controls;

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 and delays in attendant settlement procedures;

Difficulties in enforcing contractual obligations;

Lesser levels of regulation of the securities markets;

i Shares

page 74

Different accounting, disclosure and reporting requirements;

More substantial government involvement in the economy;

Higher rates of inflation; and

Greater social, economic and political uncertainty and the risk of naturalization or expropriation of assets and risk of war.

iShares S&P Latin America 40 Index Fund

page 75

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 10.84%. The best calendar quarter return during the period shown above was 29.40% in the 3rd quarter of 2005; the worst was –23.59% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year*	Since Fund Inception ¹
Fund:
Return Before Taxes	56.01%	31.76%
Return After Taxes on Distributions ²	55.74%	31.31%
Return After Taxes on Distributions and Sale of Fund Shares ²	36.88%	28.13%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	56.05%	32.20%

Inception date: 10/25/2001.

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

Certain sectors and markets performed exceptionally well based on market conditions during the one-year period. Investors should not expect that such exceptional results will be repeated in the future.

i Shares

page 76

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.50%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.50%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$51	$160	$280	$628

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $450 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $6,560,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $450 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $6,560,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $34,438 if the Creation Unit is redeemed after one year, $106,110 if the Creation Unit is redeemed after three years, $184,378 if the Creation Unit is redeemed after five years, and $413,025 if the Creation Unit is redeemed after ten years.

iShares S&P Latin America 40 Index Fund

page 77

iShares S&P/TOPIX 150 Index Fund

Cusip: 464287382

Trading Symbol: ITF

Underlying Index: Standard & Poor’s/TOPIX 150 Index

Investment Objective

The iShares S&P/TOPIX 150 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s/Tokyo Stock Price Index (“TOPIX”) 150 Index (the “Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index is comprised of approximately 70% of the market value of the Japanese equity market. The Index includes 150 highly liquid securities selected from each major sector of the Tokyo market. The Fund uses a representative sampling strategy in seeking to track the Index.

Principal Risks Specific to Fund

In addition to the risks listed in the section “Principal Risk Factors Common to All Funds,” the Fund is subject to the risks listed below.

An investment in the Fund involves risks similar to those of investing in a portfolio of equity securities traded on exchanges in the securities markets of the component countries, including market fluctuations caused by factors such as economic and political developments, changes in interest rates and perceived trends in stock prices. Investing in the Fund generally involves certain risks and considerations not typically associated with investing in a fund that invests in the securities of U.S. issuers. The principal risk factors, which could decrease the value of your investment, are listed and described below:

Less liquid and less efficient securities markets;

Greater price volatility;

Less publicly available information about issuers;

The imposition of restrictions on the expatriation of funds or other assets of the Fund;

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

Difficulties in enforcing contractual obligations;

Lesser levels of regulation of the securities markets;

Different accounting, disclosure and reporting requirements;

More substantial government involvement in the economy;

Higher rates of inflation; and

Greater social, economic and political uncertainty.

i Shares

page 78

iShares S&P/TOPIX 150 Index Fund

page 79

Performance Information

Year-By-Year Returns

(Years Ended December 31)

LOGO

The Fund’s total return for the six months ended June 30, 2006 was 3.26%. The best calendar quarter return during the period shown above was 20.61% in the 3rd quarter of 2003; the worst was –12.86% in the 3rd quarter of 2002.

Average Annual Total Returns

(for the periods ended December 31, 2005)


	One Year	Since Fund Inception ¹
Fund:
Return Before Taxes	24.25%	10.66%
Return After Taxes on Distributions ²	24.22%	10.56%
Return After Taxes on Distributions and Sale of Fund Shares ²	15.87%	9.22%
Index (Index returns do not reflect deductions for fees, expenses, or taxes)	26.44%	11.15%

Inception date: 10/23/2001.

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

i Shares

page 80

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers.


Shareholder Fees		None
(fees paid directly from your investment, but see the Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses
(expenses that are deducted from the Fund’s assets)*
Management Fees		0.50%
Distribution and Service (12b-1) Fees		None
Other Expenses**		None
Total Annual Fund Operating Expenses		0.50%

Expressed as a percentage of average net assets.

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.


1 Year	3 Years	5 Years	10 Years
$51	$160	$280	$628

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in blocks of 150,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $3,000 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of May 31, 2006 was $18,070,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $3,000 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $18,070,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $98,370 if the Creation Unit is redeemed after one year, $295,767 if the Creation Unit is redeemed after three years, $511,330 if the Creation Unit is redeemed after five years, and $1,141,063 if the Creation Unit is redeemed after ten years.

iShares S&P/TOPIX 150 Index Fund

page 81

Management

Investment Adviser

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

For the fiscal year ended March 31, 2006, BGFA received management fees from each Fund based on a percentage of the Fund’s average daily net assets, as shown in the following table:


Name of Fund	Management Fee
iShares S&P 100 Index Fund	0.20	%
iShares S&P 500 Index Fund	0.09	%
iShares S&P 500 Growth Index Fund	0.18	%
iShares S&P 500 Value Index Fund	0.18	%
iShares S&P MidCap 400 Index Fund	0.20	%
iShares S&P MidCap 400 Growth Index Fund	0.25	%
iShares S&P MidCap 400 Value Index Fund	0.25	%
iShares S&P SmallCap 600 Index Fund	0.20	%
iShares S&P SmallCap 600 Growth Index Fund	0.25	%
iShares S&P SmallCap 600 Value Index Fund	0.25	%
iShares S&P 1500 Index Fund	0.20	%
iShares S&P U.S. Preferred Stock Index Fund*	0.48	%
iShares S&P Global 100 Index Fund	0.40	%
iShares S&P Global Consumer Discretionary Sector Index Fund*	0.48	%
iShares S&P Global Consumer Staples Sector Index Fund*	0.48	%
iShares S&P Global Energy Sector Index Fund	0.48	%
iShares S&P Global Financials Sector Index Fund	0.48	%
iShares S&P Global Healthcare Sector Index Fund	0.48	%
iShares S&P Global Industrials Sector Index Fund*	0.48	%
iShares S&P Global Materials Sector Index Fund*	0.48	%
iShares S&P Global Technology Sector Index Fund	0.48	%
iShares S&P Global Telecommunications Sector Index Fund	0.48	%
iShares S&P Global Utilities Sector Index Fund*	0.48	%
iShares S&P Europe 350 Index Fund	0.60	%
iShares S&P Latin America 40 Index Fund	0.50	%
iShares S&P/TOPIX 150 Index Fund	0.50	%

Because the Funds have either not commenced operations or have been in operation for less than one full fiscal year as of the date of this prospectus, the percentages reflect the rate at which BGFA will be paid.

BGFA is located at 45 Fremont Street, San Francisco, CA 94105. It is a wholly-owned subsidiary of BGI, which in turn is a majority-owned subsidiary of Barclays Bank PLC. As of May 31, 2006, BGI and its affiliates, including BGFA, provided investment advisory services for assets in excess of $1.6 trillion. BGI, BGFA, Barclays Global Investor Services, Barclays Bank PLC and their affiliates deal, trade and invest for their own accounts in the types of securities in which the Funds may also invest.

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A discussion regarding the basis for the Trust’s Board of Trustees’ approval of the investment advisory agreement with BGFA during the six-month period ended March 31, 2006 is available in the Fund’s annual report for the fiscal year ended March 31, 2006. A discussion regarding the basis for the Board of Trustees’ approval of the investment advisory agreement for the six-month period ending September 30 will be available in each Fund’s semi-annual report for that period.

Portfolio Managers

Patrick O’Connor and S. Jane Leung (the “Portfolio Managers”) are primarily responsible for the day-to-day management of the Funds. 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, but each Portfolio Manager has appropriate limitations on his or her authority for risk management and compliance purposes.

Patrick O’Connor is an employee of BGFA and BGI and has been one of the Portfolio Managers primarily responsible for the day-to-day management of the iShares S&P 100 Index Fund, iShares S&P 500 Index Fund, iShares S&P 500 Growth Index Fund, iShares S&P 500 Value Index Fund, iShares MidCap 400 Index Fund, iShares S&P 400 Growth Index Fund, iShares S&P MidCap 400 Value Index Fund, iShares S&P SmallCap 600 Index Fund, iShares S&P SmallCap 600 Growth Index Fund, iShares S&P SmallCap 600 Value Index Fund, iShares S&P 1500 Index Fund, iShares S&P U.S. Preferred Stock Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund and iShares S&P Global Utilities Sector Index Fund (the “iShares S&P Index Funds”) since the Funds’ respective inception dates and the iShares S&P Global 100 Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Global Financials Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Telecommunications Sector Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Latin America 40 Index Fund and iShares S&P/TOPIX 150 Index Fund since February 2006. Mr. O’Connor has been a Portfolio Manager for BGFA and BGI since 1999.

S. Jane Leung is an employee of BGFA and BGI and has been one of the Portfolio Managers primarily responsible for the day-to-day management of the Funds since September 2006. Ms. Leung has been a Portfolio Manager for BGFA and BGI since 2001.

The Funds’ SAI provides additional information about the Portfolio Managers’ compensation, other accounts managed by the Portfolio Managers, and the Portfolio Managers’ ownership of shares in the Funds for which they are Portfolio Managers.

Administrator, Custodian and Transfer Agent

Investors Bank & Trust Company (“Investors Bank”) is the administrator, custodian and transfer agent for each Fund.

Shareholder Information

Additional shareholder information, including how to buy and sell shares of any Fund, is available free of charge by calling toll-free: 1-800-iShares or visiting our website at www.iShares.com.

Buying and Selling Shares

Shares of the Funds trade on national securities exchanges and elsewhere during the trading day. Shares can be bought and sold throughout the trading day like other shares of publicly-traded securities. There is no minimum investment. When buying or selling shares of the Funds through a broker, you will incur customary brokerage commissions and charges.

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Shares of the Funds may be acquired or redeemed directly from a Fund only in Creation Units or multiples thereof, as discussed in the Creations and Redemptions section. Once created, shares of the Funds generally trade in the secondary market in amounts less than a Creation Unit.

Shares of the Funds trade under the trading symbols listed for each Fund in the Description of the iShares S&P Index Funds section.

The Trust’s Board of Trustees 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 a 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 each Fund sells and redeems its shares directly through transactions that are in-kind and/or for cash, with a deadline for placing cash-related transactions no later than the close of the primary markets for the Fund’s portfolio securities. The Board of Trustees has not adopted a policy of monitoring for other frequent trading activity because shares of the Funds are listed and traded on national securities exchanges.

The iShares S&P 100 Index Fund is listed on the CBOE. The other Funds described in this Prospectus are listed on a national securities exchange, such as the NYSE or the AMEX. Each national securities exchange on which Fund 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.

Section 12(d)(1) of the Investment Company Act of 1940 restricts investments by registered investment companies in the securities of other investment companies, including shares of each Fund. Registered investment companies are permitted to invest in the Funds 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 Trust, including that such investment companies enter into an agreement with the Trust.

Book Entry

Shares of the Funds 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 each Fund and is recognized as the owner of all shares for all purposes.

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

Share Prices

The trading prices of shares in the secondary market may differ in varying degrees from their daily NAVs and can be affected by market forces such as supply and demand, economic conditions and other factors.

The approximate value of shares of each Fund is disseminated every fifteen seconds throughout the trading day by the national securities exchange on which the Fund is listed or by other information providers, or market data vendors. This approximate value should not be viewed as a “real-time” update of the NAV, because the approximate value may not be calculated in the same manner as the NAV, which is computed once a day as discussed below. The approximate value is generally determined by using current market quotations and/or price quotations obtained from broker-dealers that may trade in the portfolio securities held by the Funds. The Funds are not involved in, or responsible for, the calculation or dissemination of the approximate value and make no warranty as to its accuracy.

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Determination of Net Asset Value

Investors Bank calculates the NAV for each Fund generally once daily Monday through Friday generally as of the regularly scheduled close of business of the 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 Bond Market Association announces an early closing time. The NAV of each Fund is calculated by dividing the value of the net assets of such Fund ( i.e., the value of its total assets less total liabilities) by the total number of outstanding shares of the Fund, generally rounded to the nearest cent. In calculating a Fund’s NAV, a Fund’s investments are generally valued using market valuations. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Trustees. The frequency with which a Fund’s investments are valued using fair value pricing is primarily a function of the types of securities and other assets in which the Fund invests pursuant to its investment objective, strategies and limitations.

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

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

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

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

Dividends and Distributions

Each Fund pays out dividends to investors at least annually. Each Fund distributes its net capital gains, if any, to investors annually.

Taxes

As with any investment, you should consider how your investment in shares of the Funds 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 Funds.

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

A Fund makes distributions, and

You sell shares.

Taxes on Distributions

Distributions from a Fund’s net investment income (other than qualified dividend income), including distributions out of the Fund’s net short-term capital gains, if any, and distributions of income from securities lending, are taxable to you as ordinary income. Distributions by a Fund of net long-term capital gains in excess of net short-term capital losses (capital gain dividends) are taxable to you as long-term capital gains, regardless of how long you have held the Fund’s shares. Distributions by a Fund that qualify as qualified dividend income are taxable to you, if you are an individual, at long-term capital gain rates. 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. In order for a distribution by the Fund to be treated as qualified dividend income, the Fund must meet holding period and other requirements with respect to its dividend paying securities and you must meet holding period requirements and other requirements with respect to the Fund’s shares. In general, your distributions are subject to 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.

Dividends and interest received by a Fund with respect to foreign securities may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. Since more than 50% of the total assets of each of iShares S&P Europe 350 Index Fund, iShares S&P Global 100 Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Global Financials Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Telecommunications Sector Index Fund, iShares Latin America 40 Index Fund and iShares S&P/TOPIX 150 Index Fund will almost certainly consist of foreign securities, those Funds intend to “pass through” to you certain foreign income taxes (including withholding taxes) paid by those Funds. This means that you will be considered to have received as an additional dividend your share of such foreign taxes, but you may be entitled to either a corresponding tax deduction in calculating your taxable income, or, subject to certain limitations, a credit in calculating your federal income tax.

If you are neither a resident nor a citizen of the United States or if you are a foreign entity, the Fund’s ordinary income dividends (which include distributions of net short-term capital gains) will generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate applies, provided, however, that for taxable years of the Fund beginning on or before December 31, 2007, interest-related dividends and short-term capital gain dividends may not be subject to such U.S. withholding tax.

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

Taxes when Shares are Sold

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

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The foregoing discussion summarizes some of the consequences under current federal tax law of an investment in a 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 a Fund under all applicable tax laws.

Creations and Redemptions

The shares that trade in the secondary market are “created” at NAV by market makers, large investors and institutions only in block-size Creation Units of 50,000 shares or multiples thereof. Each “creator” enters into an authorized participant agreement with SEI Investments Distribution Co. (“SEI”), the Funds’ distributor, which is subject to acceptance by the transfer agent, and then deposits into the applicable Fund a portfolio of securities closely approximating the holdings of the Fund and a specified amount of cash in exchange for a specified number of Creation Units.

Similarly, shares can only be redeemed in a specified number of Creation Units principally in-kind for a portfolio of securities held by the Fund and a specified amount of cash. Except when aggregated in Creation Units, shares are not redeemable. 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.

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 in each case, must have executed an agreement with SEI 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 a Fund, a “distribution,” as such term is used in the Securities 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 Securities Act. Nonetheless, 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 Securities Act, would be unable to take advantage of the prospectus delivery exemption provided by section 4(3) of the Securities Act. For delivery of prospectuses to exchange members, the prospectus delivery mechanism of Rule 153 under the Securities Act is only available with respect to transactions on a national securities exchange.

Transaction Fees

Each Fund will impose a purchase transaction fee and a redemption transaction fee to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. Purchasers and redeemers of Creation Units for cash are required to pay an additional variable charge to compensate for brokerage and market impact expenses. The creation and redemption transaction fees for creations and redemptions in-kind for each Fund are discussed below. The standard creation transaction fee is charged to each purchaser on the day such purchaser creates a Creation Unit. The fee is a single charge and will be the amount indicated below regardless of the number of Creation Units purchased by an investor on the same day. BGFA may, from time to time, at its own expense, compensate purchasers of Creation Units who have purchased substantial amounts of Creation Units, and other financial institutions for administrative or marketing services. Similarly, the standard redemption transaction fee will be the amount indicated regardless of the number of Creation Units redeemed that day. The creation and redemption transaction fees for creations and redemptions through DTC for cash (when cash creations and redemptions are available or specified) will also be subject to an additional variable charge up to a

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maximum amount shown below under “Maximum Creation/Redemption Transaction Fee.” In addition, purchasers of shares in Creation Units are responsible for payment of the costs of transferring securities to the Fund. Redeemers of shares in Creation Units are responsible for the costs of transferring securities from the Fund. Investors who use the services of a broker or other such intermediary may pay fees for such services. The following table also shows, as of May 31, 2006, the approximate value of one Creation Unit per Fund, including the standard creation and redemption transaction fee.


Name of Fund	Approximate Value of a Creation Unit			Standard Creation/ Redemption Transaction Fee		Maximum Creation/ Redemption Transaction Fee
iShares S&P 100 Index Fund	$	2,913,500		$	500	$	2,000
iShares S&P 500 Index Fund	$	6,377,000		$	500	$	2,000
iShares S&P 500 Growth Index Fund	$	2,931,000		$	500	$	2,000
iShares S&P 500 Value Index Fund	$	3,437,000		$	500	$	2,000
iShares S&P MidCap 400 Index Fund	$	3,833,000		$	500	$	2,000
iShares S&P MidCap 400 Growth Index Fund	$	3,839,500		$	500	$	2,000
iShares S&P MidCap 400 Value Index Fund	$	3,756,000		$	500	$	2,000
iShares S&P SmallCap 600 Index Fund	$	3,109,000		$	500	$	2,000
iShares S&P SmallCap 600 Growth Index Fund	$	6,165,000		$	500	$	2,000
iShares S&P SmallCap 600 Value Index Fund	$	3,481,000		$	500	$	2,000
iShares S&P 1500 Index Fund	$	5,689,500		$	500	$	2,000
iShares S&P U.S. Preferred Stock Index Fund	$	2,500,000	⁺	$	500	$	2,000
iShares S&P Global 100 Index Fund	$	3,302,000		$	2,000	$	8,000
iShares S&P Global Consumer Discretionary Sector Index Fund	$	2,500,000	*	$	2,200	$	8,800
iShares S&P Global Consumer Staples Sector Index Fund	$	2,500,000	*	$	2,200	$	8,800
iShares S&P Global Energy Sector Index Fund	$	5,210,000		$	600	$	2,400
iShares S&P Global Financials Sector Index Fund	$	3,927,500		$	4,200	$	16,800
iShares S&P Global Healthcare Sector Index Fund	$	2,632,500		$	700	$	2,800
iShares S&P Global Industrials Sector Index Fund	$	2,500,000	*	$	2,200	$	8,800
iShares S&P Global Materials Sector Index Fund	$	2,500,000	*	$	2,200	$	8,800
iShares S&P Global Technology Sector Index Fund	$	2,588,000		$	1,400	$	5,600
iShares S&P Global Telecommunications Sector Index Fund	$	2,591,000		$	900	$	3,600
iShares S&P Global Utilities Sector Index Fund	$	2,500,000	*	$	2,200	$	8,800
iShares S&P Europe 350 Index Fund	$	4,529,000		$	12,000	$	48,000
iShares S&P Latin America 40 Index Fund	$	6,560,500		$	450	$	1,800
iShares S&P/TOPIX 150 Index Fund	$	18,070,500		$	3,000	$	12,000

⁺

Expected value of a creation unit upon commencement of operations.

Approximate value of a creation unit as of September 1, 2006.

Householding

Householding is an option available to certain 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. Householding is available through certain broker-dealers. If you are interested in enrolling in householding and receiving a single copy of prospectuses and other shareholder documents, please contact your broker-dealer. If you are currently enrolled in householding and wish to change your householding status, please contact your broker-dealer.

Distribution

SEI serves as the distributor of Creation Units for each Fund on an agency basis. SEI does not maintain a secondary market in shares of the Funds. SEI has no role in determining the policies of any Fund or the securities that are purchased or sold by any Fund. SEI’s principal address is One Freedom Valley Drive, Oaks, PA 19456.

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Financial Highlights

The financial highlights tables are intended to help investors understand each Fund’s financial performance for the past five years or, if shorter, the period of the Fund’s operations. Certain information reflects financial results for a single share of a Fund. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in a given Fund, assuming reinvestment of all dividends and distributions. This information has been audited by PricewaterhouseCoopers LLP, whose report is included, along with the Funds’ financial statements, in the Funds’ annual report (available upon request) .

Financial highlights for the iShares S&P U.S. Preferred Stock Index Fund are not presented as the Fund had not commenced operations as of the date of this Prospectus. Financial highlights for the iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund and iShares S&P Global Utilities Sector Index Fund are not presented as such Funds have not been in operation for a full fiscal year as of the date of this Prospectus.

(For a share outstanding throughout each period)


	iShares S&P 100 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	56.02		$	55.24		$	43.05		$	57.85		$	59.17

Income from investment operations:
Net investment income		1.12			1.20			0.89			0.66			0.61
Net realized and unrealized gain (loss)		2.57			0.89			12.21			(14.79	)		(1.34	)

Total from investment operations		3.69			2.09			13.10			(14.13	)		(0.73	)

Less distributions from:
Net investment income		(1.02	)		(1.31	)		(0.91	)		(0.67	)		(0.59	)

Total distributions		(1.02	)		(1.31	)		(0.91	)		(0.67	)		(0.59	)

Net asset value, end of year	$	58.69		$	56.02		$	55.24		$	43.05		$	57.85


Total return		6.65	%		3.81	%		30.55	%		(24.49	)%		(1.23	)%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	880,326		$	795,417		$	392,221		$	299,211		$	115,703
Ratio of expenses to average net assets		0.20	%		0.20	%		0.20	%		0.20	%		0.20	%
Ratio of net investment income to average net assets		1.96	%		2.41	%		1.68	%		1.63	%		1.12	%
Portfolio turnover rate ^a		12	%		6	%		5	%		4	%		13	%

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

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i Shares


	iShares S&P 500 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	117.89		$	112.92		$	85.04		$	115.00		$	116.24

Income from investment operations:
Net investment income		2.16			2.20			1.66			1.53			1.39
Net realized and unrealized gain (loss)		11.46			5.23			27.91			(29.97	)		(1.25	)

Total from investment operations		13.62			7.43			29.57			(28.44	)		0.14

Less distributions from:
Net investment income		(1.89	)		(2.46	)		(1.69	)		(1.52	)		(1.38	)
Return of capital		(0.03	)		–			–			–			–

Total distributions		(1.92	)		(2.46	)		(1.69	)		(1.52	)		(1.38	)

Net asset value, end of year	$	129.59		$	117.89		$	112.92		$	85.04		$	115.00


Total return		11.62	%		6.63	%		34.93	%		(24.80	)%		0.13	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	16,665,414		$	12,513,826		$	8,491,679		$	4,681,323		$	4,208,946
Ratio of expenses to average net assets		0.10	%		0.09	%		0.09	%		0.09	%		0.09	%
Ratio of net investment income to average net assets		1.78	%		2.02	%		1.66	%		1.67	%		1.27	%
Portfolio turnover rate ^a		7	%		6	%		3	%		5	%		3	%

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


	iShares S&P 500 Growth Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	56.55		$	55.47		$	44.38		$	58.82		$	56.61

Income from investment operations:
Net investment income		0.74			1.01			0.61			0.51			0.43
Net realized and unrealized gain (loss)		4.07			1.17			11.10			(14.44	)		2.19

Total from investment operations		4.81			2.18			11.71			(13.93	)		2.62

Less distributions from:
Net investment income		(0.66	)		(1.10	)		(0.62	)		(0.51	)		(0.41	)

Total distributions		(0.66	)		(1.10	)		(0.62	)		(0.51	)		(0.41	)

Net asset value, end of year	$	60.70		$	56.55		$	55.47		$	44.38		$	58.82


Total return		8.54	%		3.95	%		26.46	%		(23.72	)%		4.64	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	3,414,285		$	2,341,101		$	1,469,921		$	705,581		$	464,656
Ratio of expenses to average net assets		0.18	%		0.18	%		0.18	%		0.18	%		0.18	%
Ratio of net investment income to average net assets		1.28	%		1.93	%		1.22	%		1.19	%		0.82	%
Portfolio turnover rate ^a		12	%		22	%		14	%		17	%		28	%

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

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iShares Financial Highlights


	iShares S&P 500 Value Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	60.91		$	57.02		$	40.36		$	55.81		$	59.31

Income from investment operations:
Net investment income		1.36			1.11			0.91			0.85			0.83
Net realized and unrealized gain (loss)		7.48			4.04			16.68			(15.46	)		(3.49	)

Total from investment operations		8.84			5.15			17.59			(14.61	)		(2.66	)

Less distributions from:
Net investment income		(1.19	)		(1.26	)		(0.93	)		(0.84	)		(0.84	)

Total distributions		(1.19	)		(1.26	)		(0.93	)		(0.84	)		(0.84	)

Net asset value, end of year	$	68.56		$	60.91		$	57.02		$	40.36		$	55.81


Total return		14.63	%		9.10	%		43.80	%		(26.29	)%		(4.48	)%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	3,088,724		$	2,704,486		$	1,898,846		$	670,039		$	586,051
Ratio of expenses to average net assets		0.18	%		0.18	%		0.18	%		0.18	%		0.18	%
Ratio of net investment income to average net assets		2.12	%		1.95	%		1.91	%		2.01	%		1.56	%
Portfolio turnover rate ^a		7	%		5	%		5	%		22	%		17	%

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


	iShares S&P MidCap 400 Index Fund
	Year ended Mar. 31, 2006 ^a			Year ended Mar. 31, 2005 ^a			Year ended Mar. 31, 2004 ^a			Year ended Mar. 31, 2003 ^a			Year ended Mar. 31, 2002 ^a
Net asset value, beginning of year	$	65.84		$	60.37		$	40.97		$	54.07		$	45.89

Income from investment operations:
Net investment income		0.81			0.71			0.53			0.38			0.38
Net realized and unrealized gain (loss)		13.37			5.44			19.40			(13.11	)		8.18

Total from investment operations		14.18			6.15			19.93			(12.73	)		8.56

Less distributions from:
Net investment income		(0.81	)		(0.68	)		(0.53	)		(0.37	)		(0.38	)

Total distributions		(0.81	)		(0.68	)		(0.53	)		(0.37	)		(0.38	)

Net asset value, end of year	$	79.21		$	65.84		$	60.37		$	40.97		$	54.07


Total return		21.64	%		10.24	%		48.81	%		(23.59	)%		18.75	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	3,881,208		$	2,416,338		$	1,636,020		$	1,155,250		$	605,571
Ratio of expenses to average net assets		0.20	%		0.20	%		0.20	%		0.20	%		0.20	%
Ratio of net investment income to average net assets		1.19	%		1.21	%		1.02	%		0.98	%		0.87	%
Portfolio turnover rate ^b		9	%		10	%		11	%		12	%		14	%

Per share amounts were adjusted to reflect a two-for-one stock split effective June 9, 2005.

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

page 91

i Shares


	iShares S&P MidCap 400 Growth Index Fund
	Year ended Mar. 31, 2006 ^a			Year ended Mar. 31, 2005 ^a			Year ended Mar. 31, 2004 ^a			Year ended Mar. 31, 2003 ^a			Year ended Mar. 31, 2002 ^a
Net asset value, beginning of year	$	67.01		$	62.02		$	44.22		$	58.69		$	50.66

Income from investment operations:
Net investment income		0.44			0.33			0.24			0.14			0.07
Net realized and unrealized gain (loss)		13.32			5.03			17.80			(14.48	)		8.03

Total from investment operations		13.76			5.36			18.04			(14.34	)		8.10

Less distributions from:
Net investment income		(0.37	)		(0.37	)		(0.24	)		(0.13	)		(0.07	)

Total distributions		(0.37	)		(0.37	)		(0.24	)		(0.13	)		(0.07	)

Net asset value, end of year	$	80.40		$	67.01		$	62.02		$	44.22		$	58.69


Total return		20.58	%		8.67	%		40.86	%		(24.45	)%		16.03	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,990,019		$	1,112,261		$	669,822		$	309,516		$	252,359
Ratio of expenses to average net assets		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets		0.60	%		0.56	%		0.45	%		0.31	%		0.15	%
Portfolio turnover rate ^b		24	%		34	%		37	%		58	%		50	%

Per share amounts were adjusted to reflect a two-for-one stock split effective June 9, 2005.

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


	iShares S&P MidCap 400 Value Index Fund
	Year ended Mar. 31, 2006 ^a			Year ended Mar. 31, 2005 ^a			Year ended Mar. 31, 2004 ^a			Year ended Mar. 31, 2003 ^a			Year ended Mar. 31, 2002 ^a
Net asset value, beginning of year	$	63.68		$	57.85		$	37.45		$	49.42		$	41.08

Income from investment operations:
Net investment income		1.11			0.99			0.70			0.59			0.53
Net realized and unrealized gain (loss)		13.07			5.71			20.40			(11.98	)		8.34

Total from investment operations		14.18			6.70			21.10			(11.39	)		8.87

Less distributions from:
Net investment income		(1.13	)		(0.87	)		(0.70	)		(0.58	)		(0.53	)
Return of capital		(0.06	)		–			–			–			–

Total distributions		(1.19	)		(0.87	)		(0.70	)		(0.58	)		(0.53	)

Net asset value, end of year	$	76.67		$	63.68		$	57.85		$	37.45		$	49.42


Total return		22.43	%		11.64	%		56.59	%		(23.13	)%		21.79	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	2,637,379		$	1,852,990		$	1,133,907		$	546,783		$	454,683
Ratio of expenses to average net assets		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets		1.68	%		1.78	%		1.47	%		1.50	%		1.43	%
Portfolio turnover rate ^b		21	%		10	%		11	%		11	%		13	%

Per share amounts were adjusted to reflect a two-for-one stock split effective June 9, 2005.

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

page 92

iShares Financial Highlights


	iShares S&P SmallCap 600 Index Fund
	Year ended Mar. 31, 2006 ^a			Year ended Mar. 31, 2005 ^a			Year ended Mar. 31, 2004 ^a			Year ended Mar. 31, 2003 ^a			Year ended Mar. 31, 2002 ^a
Net asset value, beginning of year	$	53.03		$	47.42		$	30.56		$	40.98		$	33.83

Income from investment operations:
Net investment income		0.53			0.45			0.29			0.23			0.19
Net realized and unrealized gain (loss)		12.07			5.65			16.87			(10.42	)		7.15

Total from investment operations		12.60			6.10			17.16			(10.19	)		7.34

Less distributions from:
Net investment income		(0.43	)		(0.49	)		(0.29	)		(0.23	)		(0.19	)
Return of capital		(0.02	)		–			(0.01	)		–			–

Total distributions		(0.45	)		(0.49	)		(0.30	)		(0.23	)		(0.19	)

Net asset value, end of year	$	65.18		$	53.03		$	47.42		$	30.56		$	40.98


Total return		23.86	%		12.91	%		56.27	%		(24.91	)%		21.74	%

Ratios/Supplemental data:
Net assets, end of year (000s)	$	4,966,594		$	3,245,465		$	2,226,535		$	1,022,296		$	1,124,812
Ratio of expenses to average net assets		0.20	%		0.20	%		0.20	%		0.20	%		0.20	%
Ratio of net investment income to average net assets		0.93	%		0.95	%		0.73	%		0.70	%		0.60	%
Portfolio turnover rate ^b		16	%		14	%		11	%		17	%		16	%

Per share amounts were adjusted to reflect a three-for-one stock split effective June 9, 2005.

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


	iShares S&P SmallCap 600 Growth Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	105.38		$	93.62		$	62.55		$	79.78		$	67.91

Income from investment operations:
Net investment income		0.62			0.43			0.31			0.19			0.09
Net realized and unrealized gain (loss)		24.04			11.78			31.08			(17.25	)		11.87

Total from investment operations		24.66			12.21			31.39			(17.06	)		11.96

Less distributions from:
Net investment income		(0.54	)		(0.45	)		(0.32	)		(0.17	)		(0.09	)

Total distributions		(0.54	)		(0.45	)		(0.32	)		(0.17	)		(0.09	)

Net asset value, end of year	$	129.50		$	105.38		$	93.62		$	62.55		$	79.78


Total return		23.47	%		13.07	%		50.24	%		(21.39	)%		17.60	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,476,318		$	990,544		$	688,137		$	312,772		$	191,475
Ratio of expenses to average net assets		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets		0.53	%		0.45	%		0.39	%		0.34	%		0.14	%
Portfolio turnover rate ^a		30	%		45	%		37	%		57	%		49	%

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

page 93


	iShares S&P SmallCap 600 Value Index Fund
	Year .ended Mar. 31, 2006 ^a			Year ended Mar. 31, 2005 ^a			Year ended Mar. 31, 2004 ^a			Year ended Mar. 31, 2003 ^a			Year ended Mar. 31, 2002 ^a
Net asset value, beginning of year	$	59.34		$	53.44		$	33.31		$	47.18		$	37.94

Income from investment operations:
Net investment income		0.77			0.71			0.42			0.36			0.30
Net realized and unrealized gain (loss)		13.41			5.97			20.14			(13.88	)		9.24

Total from investment operations		14.18			6.68			20.56			(13.52	)		9.54

Less distributions from:
Net investment income		(0.61	)		(0.78	)		(0.41	)		(0.35	)		(0.30	)
Return of capital		(0.05	)		–			(0.02	)		–			–

Total distributions		(0.66	)		(0.78	)		(0.43	)		(0.35	)		(0.30	)

Net asset value, end of year	$	72.86		$	59.34		$	53.44		$	33.31		$	47.18


Total return		24.00	%		12.55	%		61.91	%		(28.75	)%		25.29	%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,861,528		$	1,572,405		$	1,020,634		$	482,948		$	457,610
Ratio of expenses to average net assets		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets		1.20	%		1.36	%		0.95	%		0.99	%		0.92	%
Portfolio turnover rate ^b		16	%		13	%		12	%		14	%		14	%

Per share amounts were adjusted to reflect a two-for-one stock split effective June 9, 2005.

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


	iShares S&P 1500 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Period from Jan. 20, 2004 ^a to Mar. 31, 2004
Net asset value, beginning of period	$	104.16		$	99.19		$	100.03

Income from investment operations:
Net investment income		1.73			1.78			0.29
Net realized and unrealized gain (loss)		11.58			5.18			(0.86	)

Total from investment operations		13.31			6.96			(0.57	)

Less distributions from:
Net investment income		(1.51	)		(1.99	)		(0.27	)
Return of capital		(0.01	)		–			–

Total distributions		(1.52	)		(1.99	)		(0.27	)

Net asset value, end of period	$	115.95		$	104.16		$	99.19


Total return		12.84	%		7.08	%		(0.57	)% ^b


Ratios/Supplemental data:
Net assets, end of period (000s)	$	133,342		$	72,915		$	59,516
Ratio of expenses to average net assets ^c		0.20	%		0.20	%		0.20	%
Ratio of net investment income to average net assets ^c		1.61	%		1.73	%		1.52	%
Portfolio turnover rate ^d		6	%		5	%		1	%

Commencement of operations.

Not annualized.

Annualized for periods of less than one year.

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

i Shares

page 94

iShares Financial Highlights


	iShares S&P Global 100 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	60.67		$	57.20		$	42.03		$	57.08		$	60.83

Income from investment operations:
Net investment income		1.22			1.04			0.66			0.59			0.65
Net realized and unrealized gain (loss)		5.07			3.46			15.16			(15.09	)		(3.87	)

Total from investment operations		6.29			4.50			15.82			(14.50	)		(3.22	)

Less distributions from:
Net investment income		(1.20	)		(1.03	)		(0.65	)		(0.55	)		(0.53	)

Total distributions		(1.20	)		(1.03	)		(0.65	)		(0.55	)		(0.53	)

Net asset value, end of year	$	65.76		$	60.67		$	57.20		$	42.03		$	57.08


Total return		10.44	%		7.85	%		37.68	%		(25.46	)%		(5.32	)%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	460,329		$	342,782		$	168,736		$	65,143		$	45,666
Ratio of expenses to average net assets		0.40	%		0.40	%		0.40	%		0.40	%		0.40	%
Ratio of net investment income to average net assets		2.05	%		2.24	%		1.63	%		1.60	%		1.08	%
Portfolio turnover rate ^a		6	%		4	%		4	%		5	%		4	%

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


	iShares S&P Global Energy Sector Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Nov. 12, 2001 ^a to Mar. 31, 2002
Net asset value, beginning of period	$	82.90		$	60.07		$	44.47		$	54.57		$	49.64

Income from investment operations:
Net investment income		1.37 ^b			1.32			0.68			0.88			0.22
Net realized and unrealized gain (loss)		18.37			22.78			15.54			(10.07	)		4.78

Total from investment operations		19.74			24.10			16.22			(9.19	)		5.00

Less distributions from:
Net investment income		(1.10	)		(1.27	)		(0.62	)		(0.91	)		(0.07	)

Total distributions		(1.10	)		(1.27	)		(0.62	)		(0.91	)		(0.07	)

Net asset value, end of period	$	101.54		$	82.90		$	60.07		$	44.47		$	54.57


Total return		23.91	%		40.40	%		36.55	%		(16.91	)%		10.10	% ^c


Ratios/Supplemental data:
Net assets, end of period (000s)	$	685,415		$	323,296		$	90,100		$	17,786		$	16,372
Ratio of expenses to average net assets ^d		0.65	%		0.65	%		0.65	%		0.65	%		0.65	%
Ratio of net investment income to average net assets ^d		1.46	%		2.00	%		1.92	%		1.89	%		1.17	%
Portfolio turnover rate ^e		5	%		5	%		4	%		9	%		5	%

Commencement of operations.

Based on average shares outstanding during the period.

Not annualized.

Annualized for periods of less than one year.

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

page 95

i Shares


	iShares S&P Global Financials Sector Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Nov. 12, 2001 ^a to Mar. 31, 2002
Net asset value, beginning of period	$	64.22		$	60.26		$	39.98		$	53.32		$	51.00

Income from investment operations:
Net investment income		1.52 ^b			0.86			1.38			0.56			0.29
Net realized and unrealized gain (loss)		14.29			4.00			20.21			(13.33	)		2.07

Total from investment operations		15.81			4.86			21.59			(12.77	)		2.36

Less distributions from:
Net investment income		(1.20	)		(0.90	)		(1.31	)		(0.57	)		(0.04	)

Total distributions		(1.20	)		(0.90	)		(1.31	)		(0.57	)		(0.04	)

Net asset value, end of period	$	78.83		$	64.22		$	60.26		$	39.98		$	53.32


Total return		24.73	%		8.02	%		54.23	%		(24.03	)%		4.64	% ^c


Ratios/Supplemental data:
Net assets, end of period (000s)	$	141,895		$	70,642		$	30,129		$	15,994		$	10,663
Ratio of expenses to average net assets ^d		0.65	%		0.65	%		0.65	%		0.65	%		0.65	%
Ratio of net investment income to average net assets ^d		2.17	%		2.11	%		2.14	%		2.04	%		1.44	%
Portfolio turnover rate ^e		7	%		5	%		8	%		8	%		2	%

Commencement of operations.

Based on average shares outstanding during the period.

Not annualized.

Annualized for periods of less than one year.

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


	iShares S&P Global Healthcare Sector Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Nov. 13, 2001 ^a to Mar. 31, 2002
Net asset value, beginning of period	$	48.13		$	46.66		$	39.81		$	49.06		$	49.53

Income from investment operations:
Net investment income		0.53 ^b			0.39			0.31			0.28			0.11
Net realized and unrealized gain (loss)		5.38			1.44			6.84			(9.28	)		(0.57	)

Total from investment operations		5.91			1.83			7.15			(9.00	)		(0.46	)

Less distributions from:
Net investment income		(0.37	)		(0.36	)		(0.30	)		(0.25	)		(0.01	)

Total distributions		(0.37	)		(0.36	)		(0.30	)		(0.25	)		(0.01	)

Net asset value, end of period	$	53.67		$	48.13		$	46.66		$	39.81		$	49.06


Total return		12.28	%		3.93	%		17.98	%		(18.36	)%		(0.92	)% ^c


Ratios/Supplemental data:
Net assets, end of period (000s)	$	488,414		$	228,613		$	130,656		$	25,874		$	17,172
Ratio of expenses to average net assets ^d		0.65	%		0.65	%		0.65	%		0.65	%		0.65	%
Ratio of net investment income to average net assets ^d		1.02	%		1.12	%		1.25	%		0.96	%		0.62	%
Portfolio turnover rate ^e		5	%		10	%		6	%		4	%		1	%

Commencement of operations.

Based on average shares outstanding during the period.

Not annualized.

Annualized for periods of less than one year.

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

page 96

iShares Financial Highlights


	iShares S&P Global Technology Sector Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Nov. 12, 2001 ^a to Mar. 31, 2002
Net asset value, beginning of period	$	47.65		$	50.99		$	33.46		$	51.91		$	53.19

Income from investment operations:
Net investment income (loss)		0.05			0.59			(0.04	)		(0.05	)		(0.19	)
Net realized and unrealized gain (loss)		8.06			(3.31	)		17.57			(18.40	)		(1.09	)

Total from investment operations		8.11			(2.72	)		17.53			(18.45	)		(1.28	)

Less distributions from:
Net investment income		(0.02	)		(0.57	)		–			–			–
Return of capital		–			(0.05	)		–			–			–

Total distributions		(0.02	)		(0.62	)		–			–			–

Net asset value, end of period	$	55.74		$	47.65		$	50.99		$	33.46		$	51.91


Total return		17.03	%		(5.40	)%		52.39	%		(35.54	)%		(2.40	)% ^b


Ratios/Supplemental data:
Net assets, end of period (000s)	$	108,695		$	42,887		$	28,045		$	6,692		$	7,786
Ratio of expenses to average net assets ^c		0.66	%		0.66	%		0.65	%		0.66	%		0.65	%
Ratio of net investment income (loss) to average net assets ^c		0.16	%		1.25	%		(0.14	)%		(0.16	)%		(0.44	)%
Portfolio turnover rate ^d		13	%		7	%		5	%		4	%		2	%

Commencement of operations.

Not annualized.

Annualized for periods of less than one year.

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


	iShares S&P Global Telecommunications Sector Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Nov. 12, 2001 ^a to Mar. 31, 2002
Net asset val u e, beginning of period	$	50.00		$	46.10		$	33.40		$	44.84		$	50.68

Income from investment operations:
Net investment income		1.37 ^b			0.75			0.62			0.65			0.11
Net realized and unrealized gain (loss)		0.84			3.82			12.73			(11.45	)		(5.93	)

Total from investment operations		2.21			4.57			13.35			(10.80	)		(5.82	)

Less distributions from:
Net investment income		(1.23	)		(0.67	)		(0.65	)		(0.64	)		(0.02	)

Total distributions		(1.23	)		(0.67	)		(0.65	)		(0.64	)		(0.02	)

Net asset value, end of period	$	50.98		$	50.00		$	46.10		$	33.40		$	44.84


Total return		4.55	%		9.84	%		40.06	%		(24.24	)%		(11.50	)% ^c


Ratios/Supplemental data:
Net assets, end of period (000s)	$	71,378		$	42,499		$	20,747		$	10,020		$	13,451
Ratio of expenses to average net assets ^d		0.65	%		0.65	%		0.65	%		0.65	%		0.65	%
Ratio of net investment income to average net assets ^d		2.72	%		2.24	%		1.54	%		1.78	%		0.61	%
Portfolio turnover rate ^e		11	%		13	%		7	%		9	%		2	%

Commencement of operations.

Based on average shares outstanding during the period.

Not annualized.

Annualized for periods of less than one year.

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

page 97

i Shares


	iShares S&P Europe 350 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Year ended Mar. 31, 2002
Net asset value, beginning of year	$	75.29		$	64.39		$	42.88		$	59.04		$	63.13

Income from investment operations:
Net investment income		1.92			1.36			1.13			1.18			0.83
Net realized and unrealized gain (loss)		13.18			10.89			21.49			(16.28	)		(4.08	)

Total from investment operations		15.10			12.25			22.62			(15.10	)		(3.25	)

Less distributions from:
Net investment income		(1.88	)		(1.35	)		(1.11	)		(1.06	)		(0.84	)

Total distributions		(1.88	)		(1.35	)		(1.11	)		(1.06	)		(0.84	)

Net asset value, end of year	$	88.51		$	75.29		$	64.39		$	42.88		$	59.04


Total return		20.30	%		19.04	%		52.85	%		(25.73	)%		(5.16	)%


Ratios/Supplemental data:
Net assets, end of year (000s)	$	1,575,443		$	1,182,054		$	772,664		$	375,187		$	569,757
Ratio of expenses to average net assets		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets		2.47	%		2.26	%		2.17	%		2.11	%		1.49	%
Portfolio turnover rate ^a		7	%		5	%		5	%		6	%		4	%

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


	iShares S&P Latin America 40 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Oct. 25, 2001 ^a to Mar. 31, 2002
Net asset value, beginning of period	$	81.84		$	62.19		$	35.58		$	52.49		$	41.51

Income from investment operations:
Net investment income		3.06 ^b			0.88			0.77			0.89			0.61
Net realized and unrealized gain (loss)		57.46			19.71			26.58			(16.88	)		10.64

Total from investment operations		60.52			20.59			27.35			(15.99	)		11.25

Less distributions from:
Net investment income		(1.69	)		(0.94	)		(0.74	)		(0.92	)		(0.27	)

Total distributions		(1.69	)		(0.94	)		(0.74	)		(0.92	)		(0.27	)

Net asset value, end of period	$	140.67		$	81.84		$	62.19		$	35.58		$	52.49


Total return		74.23	%		33.17	%		77.07	%		(30.54	)%		27.16	% ^c


Ratios/Supplemental data:
Net assets, end of period (000s)	$	1,554,429		$	335,564		$	83,960		$	8,895		$	7,873
Ratio of expenses to average net assets ^d		0.50	%		0.50	%		0.50	%		0.50	%		0.50	%
Ratio of net investment income to average net assets ^d		2.58	%		2.00	%		2.61	%		2.42	%		2.94	%
Portfolio turnover rate ^e		12	%		6	%		13	%		9	%		2	%

Commencement of operations.

Based on average shares outstanding during the period.

Not annualized.

Annualized for periods of less than one year.

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

page 98

iShares Financial Highlights


	iShares S&P/TOPIX 150 Index Fund
	Year ended Mar. 31, 2006			Year ended Mar. 31, 2005			Year ended Mar. 31, 2004			Year ended Mar. 31, 2003			Period from Oct. 23, 2001 ^a to Mar. 31, 2002
Net asset value, beginning of period	$	90.72		$	94.57		$	57.21		$	73.59		$	77.39

Income from investment operations:
Net investment income		0.90 ^b			0.43			0.44			0.60			0.10
Net realized and unrealized gain (loss)		33.25			(3.94	)		37.16			(16.28	)		(3.90	)

Total from investment operations		34.15			(3.51	)		37.60			(15.68	)		(3.80	)

Less distributions from:
Net investment income		(0.38	)		(0.34	)		(0.24	)		(0.70	)		–

Total distributions		(0.38	)		(0.34	)		(0.24	)		(0.70	)		–

Net asset value, end of period	$	124.49		$	90.72		$	94.57		$	57.21		$	73.59


Total return		37.67	%		(3.71	)%		65.79	%		(21.36	)%		(4.91	)% ^c


Ratios/Supplemental data:
Net assets, end of period (000s)	$	317,439		$	95,254		$	56,742		$	8,581		$	33,117
Ratio of expenses to average net assets ^d		0.50	%		0.50	%		0.50	%		0.50	%		0.50	%
Ratio of net investment income to average net assets ^d		0.85	%		0.67	%		1.00	%		0.26	%		0.32	%
Portfolio turnover rate ^e		7	%		4	%		4	%		4	%		5	%

Commencement of operations.

Based on average shares outstanding during the period.

Not annualized.

Annualized for periods of less than one year.

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

page 99

Index Provider

Standard & Poor’s (a division of The McGraw-Hill Companies, Inc.) is the Index Provider for its respective Underlying Indices. The Index Provider is not affiliated with the Trust, BGI, BGFA, Investors Bank, SEI or the listing exchanges.

Standard & Poor’s provides financial, economic and investment information and analytical services to the financial community. Standard & Poor’s calculates and maintains the Standard & Poor’s Global 1200 Index, which includes the Standard & Poor’s 500 for the U.S., the Standard & Poor’s Europe 350 for Continental Europe and the U.K., the Standard & Poor’s/TOPIX 150 for Japan, the Standard & Poor’s Asia Pacific 50, and the Standard & Poor’s Latin America 40. Sector indices in the S&P Global 100 Index include the Standard & Poor’s Global Energy Sector Index, the Standard & Poor’s Global Financials Sector Index, the Standard & Poor’s Global Healthcare Sector Index, the Standard & Poor’s Global Information Technology Sector Index, and the Standard & Poor’s Global Telecommunications Sector Index. Standard & Poor’s also publishes the Standard & Poor’s MidCap 400, Standard & Poor’s SmallCap 600, Standard & Poor’s Composite 1500 and Standard & Poor’s REIT Composite for the U.S. Standard & Poor’s calculates and maintains the S&P/Citigroup Global Equity Index Series, a set of comprehensive rules-based benchmarks covering developed and emerging countries around the world. Company additions to and deletions from a Standard & Poor’s equity index do not in any way reflect an opinion on the investment merits of the company.

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

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Disclaimers

The iShares S&P Index Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s. Standard & Poor’s makes no representation or warranty, express or implied, to the owners of shares of the Trust or to any member of the public regarding the advisability owning or trading in shares of the Trust. Standard & Poor’s only relationship to the Trust, BGI or BGFA is the licensing of certain trademarks, trade names and service marks of Standard & Poor’s and of the Standard & Poor’s Indices which are determined, composed, and calculated by Standard & Poor’s without regard to the Trust, BGI or BGFA. Standard & Poor’s has no obligation to take the needs of BGI, BGFA or the owners of shares into consideration in determining, composing or calculating the Standard & Poor’s Indices. Standard & Poor’s is not responsible for and has not participated in the determination or timing of, the prices, or quantities of shares to be listed or sale or in the determination or calculation of the equation by which shares are to be converted into cash. Standard & Poor’s has no obligation or liability in connection with the administration of the Trust, or the marketing or trading of shares. Standard & Poor’s does not guarantee the accuracy and/or the completeness of the Standard & Poor’s Indices or any data included therein and Standard & Poor’s shall have no liability for any errors, omissions, or interruptions therein. Standard & Poor’s makes no warranty, express or implied, as to results to be obtained by BGI, BGFA, owners of shares of the Trust, or any other person or entity from the use of the Standard & Poor’s Indices or any data included therein. Standard & Poor’s 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 Standard & Poor’s Indices or any data included therein. Without limiting any of the foregoing, in no event shall Standard & Poor’s have any liability for any lost profit or indirect, punitive, special or consequential damages, even if notified of the possibility of such damages. There are no third party beneficiaries of any agreements between Standard & Poor’s and BGI and BGFA.

Shares of the Trust are not sponsored, endorsed or promoted by the AMEX. The AMEX makes no representation or warranty, express or implied, to the owners of the shares of any Fund or any member of the public regarding the ability of a fund to track the total return performance of any Underlying Index or the ability of any Underlying Index identified herein to track stock market performance. The Underlying Indices identified herein are determined, composed and calculated by Standard & Poor’s without regard to any Fund. The AMEX is not responsible for, nor has it participated in, the determination of the compilation or the calculation of any Underlying Index, nor in the determination of the timing of, prices of, or quantities of the shares of any Fund to be issued, nor in the determination or calculation of the equation by which the shares are redeemable. The AMEX has no obligation or liability to owners of the shares of any Fund in connection with the administration, marketing or trading of the shares of the Fund.

The AMEX does not guarantee the accuracy and/or the completeness of any Underlying Index or any data included therein. The AMEX makes no warranty, express or implied, as to results to be obtained by the iShares Trust on behalf of its Funds as licensee, licensee’s customers and counterparties, owners of the shares, or any other person or entity from the use of the subject indices or any data included therein in connection with the rights licensed as described herein or for any other use. The AMEX makes no express or implied warranties, and hereby expressly disclaims all warranties of merchantability or fitness for a particular purpose with respect to any Underlying Index or any data included therein. Without limiting any of the foregoing, in no event shall the AMEX have any liability for any lost profits or indirect, punitive, special, or consequential damages even if notified of the possibility thereof.

Shares of the Trust are not sponsored, endorsed or promoted by the CBOE. The CBOE makes no representation or warranty, express or implied, to the owners of the iShares S&P 100 Index Fund or any member of the public regarding the ability of the Fund to track the total return performance of its Underlying Index or the ability of the Underlying Index to track stock market

iShares Disclaimers

page 101

performance. The Underlying Index of the iShares S&P 100 Index Fund herein is determined, composed and calculated by Standard & Poor’s, without regard to the iShares S&P 100 Index Fund. The CBOE is not responsible for, nor has it participated in, the determination of the compilation or the calculation of the Underlying Index of the iShares S&P 100 Index Fund, nor in the determination of the timing of, prices of, or quantities of the iShares S&P 100 Index Fund to be issued, nor in the determination or calculation of the equation by which the shares are redeemable. The CBOE has no obligation or liability to owners of the iShares S&P 100 Index Fund in connection with the administration, marketing or trading of the shares of the Fund.

The CBOE does not guarantee the accuracy and/or the completeness of the Underlying Index of the iShares S&P 100 Index Fund or any data included therein. The CBOE makes no warranty, express or implied, as to results to be obtained by the iShares Trust on behalf of its Fund as licensee, licensee’s customers and counterparties, owners of the iShares S&P 100 Index Fund, or any other person or entity from the use of the subject indices or any data included therein in connection with the rights licensed as described herein or for any other use. The CBOE 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 of the iShares S&P 100 Index Fund or any data included therein. Without limiting any of the foregoing, in no event shall the CBOE 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.

Shares of the Trust are not sponsored, endorsed or promoted by the NYSE. The NYSE makes no representation or warranty, express or implied, to the owners of the shares of any Fund or any member of the public regarding the ability of a Fund to track the total return performance of any Underlying Index or the ability of any Underlying Index identified herein to track stock market performance. The Standard & Poor’s Indices identified herein is determined, composed and calculated by Standard & Poor’s without regard to the shares of any Fund. The NYSE is not responsible for, nor has it participated in, the determination of the compilation or the calculation of the Standard & Poor’s Indices, nor in the determination of the timing of, prices of, or quantities of the shares of any Fund to be issued, nor in the determination or calculation of the equation by which the shares are redeemable. The NYSE has no obligation or liability to owners of the shares of any Fund in connection with the administration, marketing or trading of the shares of the Fund.

The NYSE does not guarantee the accuracy and/or the completeness of any Underlying Index or any data included therein. The NYSE makes no warranty, express or implied, as to results to be obtained by the iShares Trust on behalf of its Funds as licensee, licensee’s customers and counterparties, owners of the shares, or any other person or entity from the use of the subject indices or any data included therein in connection with the rights licensed as described herein or for any other use. The NYSE makes no express or implied warranties, and hereby expressly disclaims all warranties of merchantability or fitness for a particular purpose with respect to any Underlying Index or any data included therein. Without limiting any of the foregoing, in no event shall the NYSE 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.

BGFA does not guarantee the accuracy and/or the completeness of the Underlying Indices or any data included therein and BGFA shall have no liability for any errors, omissions, or interruptions therein.

BGFA makes no warranty, express or implied, as to results to be obtained by the Funds, to the owners of the shares of any Fund, or to any other person or entity, from the use of any Underlying Index or any data included therein. BGFA makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any Underlying Index or any data included therein. Without limiting any of the foregoing, in no event shall BGFA have any liability for any special, punitive, direct, indirect, or consequential damages (including lost profits), even if notified of the possibility of such damages.

i Shares

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Supplemental Information

I. Premium/Discount Information

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

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

The following information shows the frequency distributions of premiums and discounts for each of the iShares Funds included in this prospectus (except for the iShares S&P U.S. Preferred Stock Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund and iShares S&P Global Utilities Sector Index Fund). The information shown for each Fund is for each full calendar quarter of 2005 through June 30, 2006, the date of the most recent calendar quarter-end. Information for the iShares S&P U.S. Preferred Stock Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund and iShares S&P Global Utilities Sector Index Fund is not presented as the Funds had not commenced operations as of June 30, 2006.

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

iShares Supplemental Information

page 103


Fund	Premium/Discount Range	Number of Days	Percentage of Total Days
iShares S&P 100 Index Fund	Greater than 0.5%	3	0.80%
	Between 0.5% and -.05%	370	98.13%
	Less than -.05%	4	1.07%

iShares S&P 500 Index Fund	Greater than 0.5%	3	0.80%
	Between 0.5% and -.05%	373	98.93%
	Less than -.05%	1	0.27%

iShares S&P 500 Growth Index Fund	Greater than 0.5%	3	0.80%
	Between 0.5% and -.05%	373	98.93%
	Less than -.05%	1	0.27%

iShares S&P 500 Value Index Fund	Greater than 0.5%	2	0.53%
	Between 0.5% and -.05%	374	99.20%
	Less than -.05%	1	0.27%

iShares S&P MidCap 400 Index Fund	Greater than 0.5%	1	0.27%
	Between 0.5% and -.05%	376	99.73%
iShares S&P MidCap 400 Growth Index Fund	Greater than 0.5%	2	0.53%
	Between 0.5% and -.05%	375	99.47%

iShares S&P MidCap 400 Value Index Fund	Greater than 0.5%	2	0.53%
	Between 0.5% and -.05%	374	99.20%
	Less than -.05%	1	0.27%

iShares S&P SmallCap 600 Index Fund	Greater than 0.5%	5	1.33%
	Between 0.5% and -.05%	370	98.14%
	Less than -.05%	2	0.53%
iShares S&P SmallCap 600 Growth Index Fund	Greater than 0.5%	3	0.80%
	Between 0.5% and -.05%	371	98.40%
	Less than -.05%	3	0.80%
iShares S&P SmallCap 600 Value Index Fund	Greater than 0.5%	5	1.33%
	Between 0.5% and -.05%	370	98.14%
	Less than -.05%	2	0.53%

iShares S&P 1500 Index Fund	Greater than 0.5%	4	1.06%
	Between 0.5% and -.05%	372	98.67%
	Less than -.05%	1	0.27%

iShares S&P Global 100 Index Fund	Greater than 1.0%	2	0.53%
	Greater than 0.5% and Less than 1.0%	19	5.04%
	Between 0.5% and -.05%	351	93.10%
	Less than -.05%	5	1.33%
iShares S&P Global Energy Sector Index Fund	Greater than 0.5%	14	3.71%
	Between 0.5% and -.05%	361	95.76%
	Less than -.05%	2	0.53%
iShares S&P Global Financials Sector Index Fund	Greater than 1.0%	2	0.53%
	Greater than 0.5% and Less than 1.0%	37	9.81%
	Between 0.5% and -.05%	332	88.06%
	Less than -.05% and Greater than -1.0%	5	1.33%
	Less than -1.0%	1	0.27%

i Shares

page 104


Fund	Premium/Discount Range	Number of Days	Percentage of Total Days
iShares S&P Global Healthcare Sector Index Fund	Greater than 1.0%	3	0.80%
	Greater than 0.5% and Less than 1.0%	40	10.61%
	Between 0.5% and -.05%	333	88.32%
	Less than -.05%	1	0.27%
iShares S&P Global Telecommunications Sector Index Fund	Greater than 1.0%	1	27.00%
	Greater than 0.5% and Less than 1.0%	78	20.69%
	Between 0.5% and -.05%	291	77.17%
	Less than -.05%	7	1.87%

iShares S&P Europe 350 Index Fund	Greater than 1.5%	4	1.06%
	Greater than 1.0% and Less than 1.5%	8	2.12%
	Greater than 0.5% and Less than 1.0%	106	28.12%
	Between 0.5% and -.05%	240	63.66%
	Less than -.05% and Greater than -1.0%	18	4.77%
	Less than -1.0%	1	0.27%

iShares S&P Latin America 40 Index Fund	Greater than 1.0%	2	0.53%
	Greater than 0.5% and Less than 1.0%	49	13.00%
	Between 0.5% and -.05%	315	83.55%
	Less than -.05% and Greater than -1.0%	10	2.65%
	Less than -1.0%	1	0.27%

iShares S&P/TOPIX 150 Index Fund	Greater than 2.0%	1	0.27%
	Greater than 1.5% and Less than 2.0%	7	1.86%
	Greater than 1.0% and Less than 1.5%	31	8.22%
	Greater than 0.5% and Less than 1.0%	82	21.75%
	Between 0.5% and -.05%	218	57.82%
	Less than -.05% and Greater than -1.0%	32	8.49%
	Less than -1.0% and Greater than -1.5%	4	1.06%
	Less than -1.5%	2	0.53%

iShares Supplemental Information

page 105

II. Total Return Information

The tables below present information about the total return of each Fund’s Underlying Index and the total return of each Fund. The information presented for each Fund is for the applicable period ended March 31, 2006. Total Return information for the iShares S&P U.S. Preferred Stock Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares Global S&P Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund and iShares S&P Global Utilities Sector Index Fund is not present as the Funds had not commenced operations as of March 31, 2006.

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

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

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

iShares S&P 100 Index Fund

Performance as of 3/31/06


*Average Annual Total Returns*
*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
6.65%	6.75%	6.85%	1.51%	1.58%	1.70%	(2.48)%	(2.46)%	(2.30)%

*Cumulative Total Returns*
*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
6.65%	6.75%	6.85%	7.80%	8.13%	8.79%	(12.76)%	(12.65)%	(11.90)%

Total returns for the period since inception are calculated from the inception date of the Fund (10/23/00). The first day of secondary market trading in shares of the Fund was 10/27/00.

i Shares

page 106

iShares S&P 500 Index Funds

Performance as of 3/31/06


	*Average Annual Total Returns*
	*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*iShares Index Fund*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
S&P 500	11.62%	11.76%	11.73%	3.87%	3.80%	3.97%	(0.42)%	(0.41)%	(0.34)%
S&P 500 Growth	8.54%	8.59%	8.76%	2.63%	2.56%	2.82%	(3.97)%	(3.96)%	(3.80)%
S&P 500 Value	14.63%	14.57%	14.83%	4.83%	4.70%	5.02%	4.06%	4.07%	4.24%

	*Cumulative Total Returns*
	*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*iShares Index Fund*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
S&P 500	11.62%	11.76%	11.73%	20.93%	20.53%	21.49%	(2.42)%	(2.36)%	(1.98)%
S&P 500 Growth	8.54%	8.59%	8.76%	13.87%	13.48%	14.92%	(21.15)%	(21.11)%	(20.30)%
S&P 500 Value	14.63%	14.57%	14.83%	26.61%	25.83%	27.75%	26.28%	26.34%	27.52%

Total returns for the period since inception calculated from the inception date of each Fund (05/15/00, 05/22/00 and 05/22/00, respectively). The first day of secondary market trading in shares of each Fund was 5/19/00, 5/26/00 and 5/26/00, respectively.

iShares S&P MidCap 400 Index Funds

Performance as of 3/31/06


	*Average Annual Total Returns*
	*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*iShares Index Fund*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
S&P MidCap 400	21.64%	21.66%	21.62%	12.60%	12.63%	12.75%	10.67%	10.65%	10.83%
S&P MidCap 400 Growth	20.58%	20.73%	20.68%	10.10%	10.16%	10.35%	3.44%	3.45%	3.70%
S&P MidCap 400 Value	22.43%	22.39%	22.46%	14.92%	14.86%	15.12%	15.76%	15.73%	15.98%

	*Cumulative Total Returns*
	*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*iShares Index Fund*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
S&P MidCap 400	21.64%	21.66%	21.62%	81.03%	81.25%	82.21%	81.10%	80.91%	82.64%
S&P MidCap 400 Growth	20.58%	20.73%	20.68%	61.81%	62.23%	63.63%	21.23%	21.30%	22.97%
S&P MidCap 400 Value	22.43%	22.39%	22.46%	100.42%	99.94%	102.19%	129.92%	129.59%	132.44%

Total returns for the period since inception are calculated from the inception date of each Fund (5/22/00, 7/24/00 and 7/24/00, respectively). The first day of secondary market trading in shares of each Fund was 5/26/00, 7/28/00 and 7/28/00, respectively.

iShares Supplemental Information

page 107

iShares S&P SmallCap 600 Index Funds

Performance as of 3/31/06


	*Average Annual Total Returns*
	*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*iShares Index Fund*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
S&P SmallCap 600	23.86%	24.43%	24.07%	14.84%	14.85%	15.02%	13.49%	13.50%	13.66%
S&P SmallCap 600 Growth	23.47%	23.68%	23.74%	14.16%	14.23%	14.43%	8.53%	8.51%	8.80%
S&P SmallCap 600 Value	24.00%	24.34%	24.30%	15.07%	15.17%	15.38%	15.43%	15.40%	15.70%

	*Cumulative Total Returns*
	*Year Ended 3/31/06*			*Five Years Ended 3/31/ 06*			Inception to 3/31/06*
*iShares Index Fund*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
S&P SmallCap 600	23.86%	24.43%	24.07%	99.76%	99.79%	101.31%	109.95%	110.04%	111.81%
S&P SmallCap 600 Growth	23.47%	23.68%	23.74%	93.91%	94.52%	96.20%	59.31%	59.09%	61.56%
S&P SmallCap 600 Value	24.00%	24.34%	24.30%	101.71%	102.64%	104.48%	126.22%	125.87%	129.30%

Total returns for the period since inception are calculated from the inception date of each Fund (05/22/00, 07/24/00 and 07/24/00, respectively). The first day of secondary market trading in shares of each Fund was 5/26/00, 7/28/00 and 7/28/00, respectively.

iShares S&P 1500 Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

12.84%

12.94%

13.04%

8.71%

8.72%

8.93%

20.14%

20.17%

20.59%

Total returns for the period since inception is calculated from the inception date of the Fund (1/20/04). The first day of secondary market trading in shares of the Fund was 1/23/04.

iShares S&P Global 100 Index Fund

Performance as of 3/31/06


*Average Annual Total Returns*
*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
10.44%	10.69%	11.32%	2.96%	2.92%	3.62%	(0.52)%	(0.48)%	0.20%

*Cumulative Total Returns*
*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/ 06*
*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
10.44%	10.69%	11.32%	15.72%	15.49%	19.46%	(2.72)%	(2.51)%	1.08%

Total returns for the period since inception are calculated from the inception date of the Fund (12/05/00). The first day of secondary market trading in shares of the Fund was 12/08/00.

iShares S&P Global Energy Sector Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

23.91%

23.72%

24.46%

19.37%

19.44%

19.33%

117.33%

117.87%

116.85%

Total returns for the period since inception are calculated from the inception date of the Fund (11/12/01). The first day of secondary market trading in shares of the Fund was 11/16/01.

i Shares

page 108

iShares S&P Global Financials Sector Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

24.73%

25.67%

26.35%

12.13%

12.29%

13.08%

65.17%

66.23%

71.36%

Total returns for the period since inception are calculated from the inception date of the Fund (11/12/01). The first day of secondary market trading in shares of the Fund was 11/16/01.

iShares S&P Global Healthcare Sector Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

12.28%

12.18%

13.23%

2.49%

2.56%

3.06%

11.36%

11.70%

14.13%

Total returns for the period since inception are calculated from the inception date of the Fund (11/13/01). The first day of secondary market trading in shares of the Fund was 11/21/01.

iShares S&P Global Technology Sector Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

17.03%

18.38%

18.13%

1.37%

1.63%

2.24%

6.14%

7.35%

10.19%

Total returns for the period since inception are calculated from the inception date of the Fund (11/12/01). The first day of secondary market trading in shares of the Fund was 11/16/01.

iShares S&P Global Telecommunications Sector Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

4.55%

5.60%

5.18%

1.74%

1.94%

2.22%

7.86%

8.80%

10.11%

Total returns for the period since inception are calculated from the inception date of the Fund (11/12/01). The first day of secondary market trading in shares of the Fund was 11/16/01.

iShares S&P Europe 350 Index Fund

Performance as of 3/31/06


*Average Annual Total Returns*
*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
20.30%	20.52%	21.79%	9.04%	8.72%	9.89%	3.74%	3.78%	4.54%

*Cumulative Total Returns*
*Year Ended 3/31/06*			*Five Years Ended 3/31/06*			Inception to 3/31/06*
*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*	*NAV*	*Market*	*Index*
20.30%	20.52%	21.79%	54.17%	51.91%	60.25%	23.18%	23.50%	28.65%

Total returns for the period since inception are calculated from the inception date of the Fund (07/25/00). The first day of secondary market trading in shares of the Fund was 7/28/00.

iShares Supplemental Information

page 109

iShares S&P Latin America 40 Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

74.23%

74.52%

77.02%

33.74%

33.70%

34.40%

262.86%

262.33%

270.54%

Total returns for the period since inception are calculated from the inception date of the Fund (10/25/01). The first day of secondary market trading in shares of the Fund was 10/26/01.

iShares S&P/TOPIX 150 Index Fund

Performance as of 3/31/06

Average Annual Total Returns

Cumulative Total Returns

Year Ended 3/31/06

Inception to 3/31/06*

NAV

Market

Index

NAV

Market

Index

NAV

Market

Index

37.67%

38.74%

38.99%

11.85%

11.91%

12.46%

64.36%

64.77%

68.40%

Total returns for the period since inception are calculated from the inception date of the Fund (10/23/01). The first day of secondary market trading in shares of the Fund was 10/26/01.

i Shares

page 110

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

Additional information about a Fund’s investments is available in the Trust’s annual and semi-annual reports to shareholders. In the Trust’s annual report, you will find a discussion of the market conditions and investment strategies that significantly affected a Fund’s performance during its last fiscal year.

If you have questions about the Funds or shares of the Trust or you wish to obtain the SAI, semi-annual or annual report free of charge, please:

Call:

1-800-iShares

(toll free) 1-800-474-2737

Monday through Friday

8:00 a.m. to 8:00 p.m. (Eastern time)

Email:

iSharesfunds@seic.com

Write:

iShares Trust

c/o SEI Investments Distribution Co.

One Freedom Valley Drive

Oaks, PA 19456

Information about a Fund (including its 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 Funds are available on the EDGAR Database on the SEC’s Internet site 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 the SEC’s Public Reference Section, Washington, D.C. 20549-0102.

No person is authorized to give any information or to make any representations about any 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

LOGO

BGI-F-028-09186

iShares ^{^®} Trust

Statement of Additional Information

Dated September 21, 2006

This combined Statement of Additional Information (“SAI”) is not a prospectus. It should be read in conjunction with the current prospectuses (each, a “Prospectus” and collectively, the “Prospectuses”) for the following Funds of iShares Trust (the “Trust”) as such Prospectuses may be revised or supplemented from time to time:

iShares Cohen & Steers Realty Majors Index Fund

iShares Dow Jones Select Dividend Index Fund

iShares Dow Jones Transportation Average Index Fund

iShares Dow Jones U.S. Aerospace & Defense Index Fund

iShares Dow Jones U.S. Basic Materials Sector Index Fund

iShares Dow Jones U.S. Broker-Dealers Index Fund

iShares Dow Jones U.S. Consumer Goods Sector Index Fund

iShares Dow Jones U.S. Consumer Services Sector Index Fund

iShares Dow Jones U.S. Energy Sector Index Fund

iShares Dow Jones U.S. Financial Sector Index Fund

iShares Dow Jones U.S. Financial Services Index Fund

iShares Dow Jones U.S. Healthcare Providers Index Fund

iShares Dow Jones U.S. Healthcare Sector Index Fund

iShares Dow Jones U.S. Home Construction Index Fund

iShares Dow Jones U.S. Industrial Sector Index Fund

iShares Dow Jones U.S. Insurance Index Fund

iShares Dow Jones U.S. Medical Devices Index Fund

iShares Dow Jones U.S. Oil Equipment & Services Index Fund

iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund

iShares Dow Jones U.S. Pharmaceuticals Index Fund

iShares Dow Jones U.S. Real Estate Index Fund

iShares Dow Jones U.S. Regional Banks Index Fund

iShares Dow Jones U.S. Technology Sector Index Fund

iShares Dow Jones U.S. Telecommunications Sector Index Fund

iShares Dow Jones U.S. Total Market Index Fund

iShares Dow Jones U.S. Utilities Sector Index Fund

iShares FTSE/Xinhua China 25 Index Fund

iShares Goldman Sachs Natural Resources Index Fund

iShares Goldman Sachs Networking Index Fund

iShares Goldman Sachs Semiconductor Index Fund

iShares Goldman Sachs Software Index Fund

iShares Goldman Sachs Technology Index Fund

iShares KLD Select Social ^SM Index Fund

iShares Morningstar Large Core Index Fund

iShares Morningstar Large Growth Index Fund

iShares Morningstar Large Value Index Fund

iShares Morningstar Mid Core Index Fund

iShares Morningstar Mid Growth Index Fund

iShares Morningstar Mid Value Index Fund

iShares Morningstar Small Core Index Fund

iShares Morningstar Small Growth Index Fund

iShares Morningstar Small Value Index Fund

iShares MSCI EAFE Growth Index Fund

iShares MSCI EAFE Index Fund

iShares MSCI EAFE Value Index Fund

iShares Nasdaq Biotechnology Index Fund

iShares NYSE 100 Index Fund

iShares NYSE Composite Index Fund

iShares Russell 1000 Growth Index Fund

iShares Russell 1000 Index Fund

iShares Russell 1000 Value Index Fund

iShares Russell 2000 Growth Index Fund

iShares Russell 2000 Index Fund

iShares Russell 2000 Value Index Fund

iShares Russell 3000 Growth Index Fund

iShares Russell 3000 Index Fund

iShares Russell 3000 Value Index Fund

iShares Russell Microcap™ Index Fund

iShares Russell Midcap Growth Index Fund

iShares Russell Midcap Index Fund

iShares Russell Midcap Value Index Fund

iShares S&P 100 Index Fund

iShares S&P 500 Growth Index Fund

iShares S&P 500 Index Fund

iShares S&P 500 Value Index Fund

iShares S&P 1500 Index Fund

iShares S&P U.S. Preferred Stock Index Fund

iShares S&P Europe 350 Index Fund

iShares S&P Global 100 Index Fund

iShares S&P Global Consumer Discretionary Sector Index Fund

iShares S&P Global Consumers Staples Sector Index Fund

iShares S&P Global Energy Sector Index Fund

iShares S&P Global Financials Sector Index Fund

iShares S&P Global Healthcare Sector Index Fund

iShares S&P Global Industrials Sector Index Fund

iShares S&P Global Materials Sector Index Fund

iShares S&P Global Technology Sector Index Fund

iShares S&P Global Telecommunications Sector Index Fund

iShares S&P Global Utilities Sector Index Fund

iShares S&P Latin America 40 Index Fund

iShares S&P MidCap 400 Growth Index Fund

iShares S&P MidCap 400 Index Fund

iShares S&P MidCap 400 Value Index Fund

iShares S&P SmallCap 600 Growth Index Fund

iShares S&P SmallCap 600 Index Fund

iShares S&P SmallCap 600 Value Index Fund

iShares S&P/TOPIX 150 Index Fund

The Prospectuses for the various iShares Funds included in this SAI are dated as follows: the iShares Goldman Sachs Series and iShares MSCI EAFE Series, dated December 1, 2005; the iShares Dow Jones Series, iShares KLD Select Social ^SM Index Fund and iShares Cohen & Steers Series, dated August 1, 2006; the iShares Nasdaq Biotechnology Index Fund, dated August 1, 2006; the iShares Russell Series, dated August 1, 2006; the iShares S&P Series, dated September 21, 2006; the iShares NYSE Series, dated December 1, 2005; the iShares Morningstar Series, dated August 1, 2006; and the iShares FTSE/Xinhua China 25 Index Fund, dated December 1, 2005 (as revised March 8, 2006). Capitalized terms used herein that are not defined have the same meaning as in the applicable Prospectus, unless otherwise noted. The Financial Statements and Notes contained in the Annual Reports of the Trust for the above listed Funds are incorporated by reference into and are deemed to be part of this SAI. A copy of each Prospectus and Annual Report may be obtained without charge by writing to the Trust’s distributor, SEI Investments Distribution Co. (“SEI” or the “Distributor”) at One Freedom Valley Drive, Oaks, PA 19456, calling 1-800-iShares or visiting www.iShares.com . ^{^®} iShares is a registered trademark of Barclays Global Investors, N.A.


		Page
General Description of the Trust and its Funds		1
Exchange Listing and Trading		3
Investment Strategies and Risks		4
Lack of Diversification of Certain Funds		4
Lending Portfolio Securities		5
Repurchase Agreements		5
Reverse Repurchase Agreements		5
Currency Transactions		6
Money Market Instruments		6
Securities of Investment Companies and REITs		6
Foreign Securities		6
Illiquid Securities		7
Short-Term Instruments and Temporary Investments		7
Futures and Options		7
Options on Futures Contracts		8
Swap Agreements		8
Tracking Stocks		8
Future Developments		8
General Considerations and Risks		8
Risks of Futures and Options Transactions		9
Risks of Swap Agreements		9
Risks of Investing in Non-U.S. Equity Securities		9
Proxy Voting Policy		10
Portfolio Holdings Information		12
Construction and Maintenance Standards for the Underlying Indices		13
The Cohen & Steers Realty Majors Index Generally		13
Cohen & Steers Realty Majors Index		13
The Dow Jones Indexes Generally		13
Dow Jones U.S. Basic Materials Index		14
Dow Jones U.S. Consumer Goods Index		14
Dow Jones U.S. Consumer Services Index		15
Dow Jones U.S. Financials Index		15
Dow Jones U.S. Financial Services Index		15
Dow Jones U.S. Health Care Index		15
Dow Jones U.S. Industrials Index		15
Dow Jones U.S. Oil & Gas Index		15
Dow Jones U.S. Real Estate Index		16
Dow Jones U.S. Select Aerospace & Defense Index		16
Dow Jones U.S. Select Dividend Index		16
Dow Jones U.S. Select Health Care Providers Index		16
Dow Jones U.S. Select Home Construction Index		16
Dow Jones U.S. Select Insurance Index		16
Dow Jones U.S. Select Investment Services Index		16
Dow Jones U.S. Select Medical Equipment Index		16
Dow Jones U.S. Select Oil Equipment & Services Index		17
Dow Jones U.S. Select Oil Exploration & Production Index		17
Dow Jones U.S. Select Pharmaceuticals Index		17
Dow Jones U.S. Select Regional Banks Index		17
Dow Jones U.S. Technology Index		17
Dow Jones U.S. Telecommunications Index		17
Dow Jones U.S. Total Market Index		17
Dow Jones Transportation Average Index		17
Dow Jones U.S. Utilities Index		18
The FTSE/Xinhua China 25 Index Generally		18
FTSE/Xinhua China 25 Index		19
The Goldman Sachs Indices Generally		20
Goldman Sachs Natural Resources Sector Index		20

iii


Goldman Sachs Technology Sector Index		20
The Goldman Sachs Technology Industry Subsector Investments Generally		21
Goldman Sachs Technology Industry Multimedia Networking Index		21
Goldman Sachs Technology Industry Semiconductor Index		22
Goldman Sachs Technology Industry Software Index		22
The KLD Select Social ^SM Index Generally		22
KLD Select Social ^SM Index		22
The Morningstar Indices Generally		23
Morningstar Large Core Index		23
Morningstar Large Growth Index		23
Morningstar Large Value Index		24
Morningstar Mid Core Index		24
Morningstar Mid Growth Index		24
Morningstar Mid Value Index		24
Morningstar Small Core Index		25
Morningstar Small Growth Index		25
Morningstar Small Value Index		25
The MSCI Indices Generally		25
MSCI Single Country Standard Equity Indices		26
MSCI EAFE ^® Index		28
MSCI EAFE ^® Growth Index		28
MSCI EAFE ^® Value Index		28
The NASDAQ Biotechnology Index Generally		29
NASDAQ Biotechnology Index		30
The NYSE Indices Generally		30
NYSE Composite Index		30
NYSE U.S. 100 Index		31
The Russell Indices Generally		31
Russell 3000 Index		32
Russell 3000 Growth Index		32
Russell 3000 Value Index		32
Russell 2000 Index		32
Russell 2000 Growth Index		32
Russell 2000 Value Index		33
Russell 1000 Index		33
Russell 1000 Growth Index		33
Russell 1000 Value Index		33
Russell Microcap ^TM Index		33
Russell Midcap Index		33
Russell Midcap Growth Index		33
Russell Midcap Value Index		33
The S&P Indices Generally		34
S&P 100 Index		35
S&P 500 Index		36
S&P 500/Citigroup Growth Index		36
S&P 500/Citigroup Value Index		36
S&P MidCap 400 Index		36
S&P MidCap 400/Citigroup Growth Index		36
S&P MidCap 400/Citigroup Value Index		37
S&P SmallCap 600 Index		37
S&P SmallCap 600/Citigroup Growth Index		37
S&P SmallCap 600/Citigroup Value Index		37
S&P Composite 1500 Index		37
S&P U.S. Preferred Stock Index		38
S&P Global 100 Index		38
S&P Global Consumer Discretionary Sector Index		38
S&P Global Consumer Staples Sector Index		38
S&P Global Energy Sector Index		38
S&P Global Financials Sector Index		38
S&P Global Healthcare Sector Index		38
S&P Global Industrials Sector Index		39
S&P Global Information Technology Sector Index		39


S&P Global Materials Index		39
S&P Global Telecommunications Sector Index		39
S&P Global Utilities Sector Index		39
S&P Europe 350 Index		39
S&P Latin America 40 Index		39
S&P/TOPIX 150 Index		39
Investment Limitations		40
Continuous Offering		41
Management		41
Trustees and Officers		43
Committees of the Board of Trustees		46
Remuneration of Trustees		46
Control Persons and Principal Holders of Securities		47
Investment Adviser		59
Portfolio Managers		61
Codes of Ethics		64
Administrator, Custodian and Transfer Agent		64
Distributor		67
Index Providers		70
Brokerage Transactions		70
Additional Information Concerning the Trust		78
Shares		78
Termination of the Trust or a Fund		78
DTC		78
Creation and Redemption of Creation Unit Aggregations		79
Creation		79
Fund Deposit		79
Procedures for Creation of Creation Unit Aggregations		80
Placement of Creation Orders for Domestic Funds Using the Clearing Process		81
Placement of Creation Orders for Domestic Funds Outside the Clearing Process		81
Placement of Creation Orders for Foreign Funds		82
Acceptance of Orders for Creation Unit Aggregations		82
Creation Transaction Fee		83
Redemption of Shares in Creation Units Aggregations		85
Redemption Transaction Fee		85
Placement of Redemption Orders for Domestic Funds Using the Clearing Process		87
Placement of Redemption Orders for Domestic Funds Outside the Clearing Process		87
Placement of Redemption Orders for Foreign Funds		87
Regular Holidays		89
Settlement Periods Greater than Seven Days for Year 2006		91
Taxes		92
Registered Investment Company Qualifications		92
Taxation of RICs		92
Excise Tax		92
Taxation of U.S. Shareholders		92
Back-Up Withholding		93
Section 351		93
Qualified Dividend Income		93
Corporate Dividends Received Deduction		94
Net Capital Loss Carryforwards		94
Funds Holding Foreign Investments		96
Federal Tax Treatment of Complex Securities		97
Sale of Shares		97
Other Taxes		98
Taxation of Non-U.S. Shareholders		98
Reporting		98
Determination of NAV		99
Dividends and Distributions		100
General Policies		100
Dividend Reinvestment Service		100
Financial Statements		100
Miscellaneous Information		100
Counsel		100
Independent Registered Public Accounting Firm		100

General Description of the Trust and its Funds

The Trust currently consists of over 90 investment portfolios. The Trust was organized as a Delaware statutory trust on December 16, 1999 and is authorized to have multiple series or portfolios. The Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The offering of the Trust’s shares is registered under the Securities Act of 1933, as amended (the “Securities Act”). This SAI relates to the following funds (each, a “Fund” and collectively, the “Funds”):

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iShares Cohen & Steers Realty Majors Index Fund

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iShares Dow Jones Select Dividend Index Fund

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iShares Dow Jones Transportation Average Index Fund

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iShares Dow Jones U.S. Aerospace & Defense Index Fund

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iShares Dow Jones U.S. Basic Materials Sector Index Fund

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iShares Dow Jones U.S. Broker-Dealers Index Fund

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iShares Dow Jones U.S. Consumer Goods Sector Index Fund

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iShares Dow Jones U.S. Consumer Services Sector Index Fund

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iShares Dow Jones U.S. Energy Sector Index Fund

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iShares Dow Jones U.S. Financial Sector Index Fund

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iShares Dow Jones U.S. Financial Services Index Fund

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iShares Dow Jones U.S. Healthcare Providers Index Fund

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iShares Dow Jones U.S. Healthcare Sector Index Fund

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iShares Dow Jones U.S. Home Construction Index Fund

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iShares Dow Jones U.S. Industrial Sector Index Fund

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iShares Dow Jones U.S. Insurance Index Fund

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iShares Dow Jones U.S. Medical Devices Index Fund

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iShares Dow Jones U.S. Oil Equipment & Services Index Fund

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i Shares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund

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iShares Dow Jones U.S. Pharmaceuticals Index Fund

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iShares Dow Jones U.S. Real Estate Index Fund

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iShares Dow Jones U.S. Regional Banks Index Fund

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iShares Dow Jones U.S. Technology Sector Index Fund

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iShares Dow Jones U.S. Telecommunications Sector Index Fund

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iShares Dow Jones U.S. Total Market Index Fund

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iShares Dow Jones U.S. Utilities Sector Index Fund

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iShares FTSE/Xinhua China 25 Index Fund

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iShares Goldman Sachs Natural Resources Index Fund

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iShares Goldman Sachs Networking Index Fund

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iShares Goldman Sachs Semiconductor Index Fund

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iShares Goldman Sachs Software Index Fund

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iShares Goldman Sachs Technology Index Fund

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iShares KLD Select Social ^SM Index Fund

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iShares Morningstar Large Core Index Fund

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iShares Morningstar Large Growth Index Fund

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iShares Morningstar Large Value Index Fund

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iShares Morningstar Mid Core Index Fund

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iShares Morningstar Mid Growth Index Fund

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iShares Morningstar Mid Value Index Fund

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iShares Morningstar Small Core Index Fund

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iShares Morningstar Small Growth Index Fund

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iShares Morningstar Small Value Index Fund

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iShares MSCI EAFE Growth Index Fund

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iShares MSCI EAFE Index Fund

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iShares MSCI EAFE Value Index Fund

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iShares Nasdaq Biotechnology Index Fund

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iShares NYSE 100 Index Fund

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iShares NYSE Composite Index Fund

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iShares Russell 1000 Growth Index Fund

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iShares Russell 1000 Index Fund

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iShares Russell 1000 Value Index Fund

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iShares Russell 2000 Growth Index Fund

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iShares Russell 2000 Index Fund

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iShares Russell 2000 Value Index Fund

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iShares Russell 3000 Growth Index Fund

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iShares Russell 3000 Index Fund

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iShares Russell 3000 Value Index Fund

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iShares Russell Microcap™ Index Fund

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iShares Russell Midcap Growth Index Fund

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iShares Russell Midcap Index Fund

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iShares Russell Midcap Value Index Fund

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iShares S&P 100 Index Fund

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iShares S&P 500 Growth Index Fund

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iShares S&P 500 Index Fund

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iShares S&P 500 Value Index Fund

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iShares S&P 1500 Index Fund

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iShares S&P U.S. Preferred Stock Index Fund

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iShares S&P Europe 350 Index Fund

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iShares S&P Global 100 Index Fund

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iShares S&P Global Consumer Discretionary Sector Index Fund

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iShares S&P Global Staples Sector Index Fund

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iShares S&P Global Energy Sector Index Fund

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iShares S&P Global Financials Sector Index Fund

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iShares S&P Global Healthcare Sector Index Fund

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iShares S&P Global Industrials Sector Index Fund

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iShares S&P Global Materials Sector Index Fund

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iShares S&P Global Technology Sector Index Fund

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iShares S&P Global Telecommunications Sector Index Fund

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iShares S&P Global Utilities Sector Index Fund

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iShares S&P Latin America 40 Index Fund

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iShares S&P MidCap 400 Growth Index Fund

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iShares S&P MidCap 400 Index Fund

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iShares S&P MidCap 400 Value Index Fund

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iShares S&P SmallCap 600 Growth Index Fund

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iShares S&P SmallCap 600 Index Fund

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iShares S&P SmallCap 600 Value Index Fund

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iShares S&P/TOPIX 150 Index Fund

The investment objective of each Fund is to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of a specified benchmark index (each an “Underlying Index”) representing publicly traded equity securities of companies in a particular broad market, market segment, market sector or group of industries. Each Fund is managed by Barclays Global Fund Advisors (“BGFA”), a subsidiary of Barclays Global Investors, N.A. (“BGI”). Each Fund offers and issues shares at their net asset value per share (“NAV”) only in aggregations of a specified number of shares (each, a “Creation Unit” or a “Creation Unit Aggregation”), 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”). The shares described in the applicable Prospectus and this SAI are listed and traded on national securities exchanges such as the American Stock Exchange (“AMEX”), the Chicago Board Options Exchange (“CBOE”) or the New York Stock Exchange, Inc. (“NYSE”). iShares Funds also may be listed on certain non-U.S. exchanges, such as the Singapore Exchange (“SGX”) and the German Stock Exchange (“DAX”). 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 Unit Aggregations,

and, generally, in exchange for portfolio securities and a Cash Component. Creation Units typically are a specified number of shares, generally 50,000 or multiples thereof.

The Trust reserves the right to offer a “cash” option for creations and redemptions of shares although it has no current intention of doing so. Shares may be issued in advance of receipt of Deposit Securities subject to various conditions including a requirement to maintain on deposit with the Trust cash at least equal to 105%, which BGFA may change from time to time, of the market value of the missing Deposit Securities. See the Creation and Redemption of Creation Unit Aggregations section of this SAI. In each instance of such cash creations or redemptions, transaction fees may be imposed that will be higher than the transaction fees associated with in-kind creations or redemptions. In all cases, such conditions and fees will be limited in accordance with the requirements of the Securities and Exchange Commission (the “SEC”) applicable to management investment companies offering redeemable securities.

On December 20, 2004, the name of the iShares Dow Jones U.S. Consumer Services Sector Index Fund was changed from the iShares Dow Jones U.S. Consumer Cyclical Sector Index Fund and the name of the iShares Dow Jones U.S. Consumer Goods Sector Index Fund was changed from the iShares Dow Jones U.S. Consumer Non-Cyclical Sector Index Fund in order to reflect certain methodology changes to the Funds’ underlying indexes.

Previously, the investment objective of the iShares Russell Microcap™ Index Fund was to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of the Russell MicrocapX™ Index. Russell Investment Group, however, has notified BGFA that it will cease calculating and disseminating the Russell MicrocapX™ Index as of the close of business on June 30, 2006. As a result, the Board of Trustees approved a change in the investment objective of the iShares Russell Microcap™ Index Fund effective July 1, 2006, such that the new investment objective of the Fund is to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of the Russell Microcap™ Index. A description of the Russell Microcap™ Index is set forth below in the section entitled “The Russell Indices Generally.”

Exchange Listing and Trading

A discussion of exchange listing and trading matters associated with an investment in each Fund is contained in the applicable Prospectus in the Shareholder Information section. The discussion below supplements, and should be read in conjunction with, that section of the applicable Prospectus.

Shares of each Fund are listed and traded throughout the day on the American Stock Exchange (“AMEX”), the Chicago Board Options Exchange (“CBOE”) or the New York Stock Exchange, Inc. (“NYSE”) and may be listed and traded on other national securities exchanges (each, a “Listing Exchange”) and other secondary markets. iShares Funds also may be listed on certain non-U.S. exchanges, such as the Singapore Exchange (“SGX”) and the German Stock Exchange (“DAX”). There can be no assurance that the requirements of a Listing Exchange necessary to maintain the listing of shares of any Fund will continue to be met. A Listing Exchange may, but is not required to, remove the shares of a Fund from listing if (i) following the initial 12-month period beginning upon the commencement of trading of a Fund, there are fewer than 50 beneficial owners of the shares of a Fund for 30 or more consecutive trading days; (ii) the value of the Underlying Index on which such Fund is based is no longer calculated or available; or (iii) such other event shall occur or condition shall exist that, in the opinion of the Listing Exchange, makes further dealings on the Listing Exchange inadvisable. A Listing Exchange will remove the shares of a Fund from listing and trading upon termination of such Fund.

As in the case of other publicly-traded securities, brokers’ commissions on transactions will be based on negotiated commission rates at customary levels.

The Trust reserves the right to adjust the share prices of iShares Funds 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 applicable Fund.

Investment Strategies and Risks

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

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

Lack of Diversification of Certain Funds . The following table sets forth the diversification status of each Fund.


Diversified Funds		Non-Diversified Funds
iShares Dow Jones Select Dividend Index Fund		iShares Cohen & Steers Realty Majors Index Fund
iShares Dow Jones U.S. Total Market Index Fund		iShares Dow Jones Transportation Average Index Fund
iShares KLD Select Social ^SM Index Fund		iShares Dow Jones U.S. Aerospace & Defense Index Fund
iShares Morningstar Mid Core Index Fund		iShares Dow Jones U.S. Basic Materials Sector Index Fund
iShares Morningstar Mid Growth Index Fund		iShares Dow Jones U.S. Broker-Dealers Index Fund
iShares Morningstar Mid Value Index Fund		iShares Dow Jones U.S. Consumer Goods Sector Index Fund
iShares Morningstar Small Core Index Fund		iShares Dow Jones U.S. Consumer Services Sector Index Fund
iShares Morningstar Small Growth Index Fund		iShares Dow Jones U.S. Energy Sector Index Fund
iShares Morningstar Small Value Index Fund		iShares Dow Jones U.S. Financial Sector Index Fund
iShares NYSE 100 Index Fund		iShares Dow Jones U.S. Financial Services Index Fund
iShares NYSE Composite Index Fund		iShares Dow Jones U.S. Healthcare Providers Index Fund
iShares Russell 1000 Index Fund		iShares Dow Jones U.S. Healthcare Sector Index Fund
iShares Russell 1000 Value Index Fund		iShares Dow Jones U.S. Home Construction Index Fund
iShares Russell 2000 Growth Index Fund		iShares Dow Jones U.S. Industrial Sector Index Fund
iShares Russell 2000 Index Fund		iShares Dow Jones U.S. Insurance Index Fund
iShares Russell 2000 Value Index Fund		iShares Dow Jones U.S. Medical Devices Index Fund
iShares Russell 3000 Growth Index Fund		iShares Dow Jones U.S. Oil Equipment & Services Index Fund
iShares Russell 3000 Index Fund		iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund
iShares Russell 3000 Value Index Fund		iShares Dow Jones U.S. Pharmaceuticals Index Fund
iShares Russell Microcap ^™ Index Fund		iShares Dow Jones U.S. Real Estate Index Fund
iShares Russell Midcap Growth Index Fund		iShares Dow Jones U.S. Regional Banks Index Fund
iShares Russell Midcap Index Fund		iShares Dow Jones U.S. Technology Sector Index Fund
iShares Russell Midcap Value Index Fund		iShares Dow Jones U.S. Telecommunications Sector Index Fund
iShares S&P 1500 Index Fund		iShares Dow Jones U.S. Utilities Sector Index Fund
iShares S&P 500 Index Fund		iShares FTSE/Xinhua China 25 Index Fund
iShares S&P 500 Value Index Fund		iShares Goldman Sachs Natural Resources Index Fund
iShares S&P Europe 350 Index Fund		iShares Goldman Sachs Networking Index Fund
iShares S&P MidCap 400 Growth Index Fund		iShares Goldman Sachs Semiconductor Index Fund
iShares S&P MidCap 400 Index Fund		iShares Goldman Sachs Software Index Fund
iShares S&P MidCap 400 Value Index Fund		iShares Goldman Sachs Technology Index Fund
iShares S&P SmallCap 600 Growth Index Fund		iShares Morningstar Large Core Index Fund
iShares S&P SmallCap 600 Index Fund		iShares Morningstar Large Growth Index Fund
iShares S&P SmallCap 600 Value Index Fund		iShares Morningstar Large Value Index Fund
		iShares MSCI EAFE Growth Index Fund
		iShares MSCI EAFE Index Fund
		iShares MSCI EAFE Value Index Fund
		iShares Nasdaq Biotechnology Index Fund
		iShares Russell 1000 Growth Index Fund
		iShares S&P 100 Index Fund
		iShares S&P 500 Growth Index Fund
		iShares S&P U.S. Preferred Stock Index Fund
		iShares S&P Global 100 Index Fund
		iShares S&P Global Consumer Discretionary Sector Index Fund
		iShares S&P Global Consumer Staples Sector Index Fund
		iShares S&P Global Energy Sector Index Fund
		iShares S&P Global Financials Sector Index Fund
		iShares S&P Global Healthcare Sector Index Fund
		iShares S&P Global Industrials Sector Index Fund
		iShares S&P Global Materials Sector Index Fund
		iShares S&P Global Technology Sector Index Fund
		iShares S&P Global Telecommunications Sector Index Fund
		iShares S&P Global Utilities Sector Index Fund
		iShares S&P Latin America 40 Index Fund
		iShares S&P/TOPIX 150 Index Fund

With respect to 75% of a Fund’s total assets, a diversified Fund 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 without regard to the concentration limits described above.

Each Fund may concentrate its investments in a particular industry or group of industries, as noted in the description of the Fund. The 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 its performance or subject the Fund’s shares to greater price volatility than that experienced by less concentrated investment companies.

Each Fund, (whether diversified or non-diversified), intends to maintain the required level of diversification and otherwise conduct its operations so as to qualify as a “regulated investment company” for purposes of the Internal Revenue Code (the “IRC”), and to relieve the Fund of any liability for federal income tax to the extent that its earnings are distributed to shareholders. Compliance with the diversification requirements of the IRC may limit the investment flexibility of certain Funds and may make it less likely that such Funds will meet their investment objectives.

Lending Portfolio Securities . Each Fund may lend portfolio securities to certain creditworthy borrowers, including borrowers affiliated with BGFA. The borrowers provide collateral that is maintained in an amount at least equal to the current market value of the securities loaned. A Fund may terminate a loan at any time and obtain the return of the securities loaned. Each Fund receives the value of any interest or cash or non-cash distributions paid on the loaned securities.

With respect to loans that are collateralized by cash, the borrower will be entitled to receive a fee based on the amount of cash collateral. The 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 each lending Fund or through one or more joint accounts or money market funds, including those managed by BGFA.

Securities lending involves exposure to certain risks, including operational risk (i.e., the risk of losses resulting from problems in the settlement and accounting process), “gap” risk (i.e., the risk of a mismatch between the return on cash collateral reinvestments and the fees the Fund has agreed to pay a borrower), and credit, legal, counterparty and market risk. In the event a borrower does not return a Fund’s securities as agreed, the Fund may experience losses if the proceeds received from liquidating the collateral does not at least equal the value of the loaned security at the time the collateral is liquidated plus the transaction costs incurred in purchasing replacement securities.

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

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

Reverse Repurchase Agreements . Each Fund may enter into reverse repurchase agreements, which involve the sale of securities with an agreement to repurchase the securities at an agreed-upon price, date and interest payment and have the characteristics of borrowing. The securities purchased with the funds obtained from the agreement and securities

collateralizing the agreement will have maturity dates no later than the repayment date. 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 only advantageous if the Fund has an opportunity to earn a greater rate of interest on the cash derived from these transactions than the interest cost of obtaining the same amount of cash. Opportunities to realize earnings from the use of the proceeds equal to or greater than the interest required to be paid may not always be available and each Fund intends to use the reverse repurchase technique only when BGFA believes it will be advantageous to the Fund. The use of reverse repurchase agreements may exaggerate any interim increase or decrease in the value of each Fund’s assets. The Fund’s exposure to reverse repurchase agreements will be covered by securities having a value equal to or greater than such commitments. The Fund segregates liquid assets in connection with reverse repurchase agreements. Under the 1940 Act, reverse repurchase agreements are considered borrowings.

Currency Transactions . No Fund expects 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 foreign currency. A Fund may enter into foreign currency forward and foreign currency futures contracts to facilitate local securities settlements or to protect against currency exposure in connection with its distributions to shareholders, but may not enter into such contracts for speculative purposes.

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

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

Money Market Instruments . Each Fund may invest a portion of its assets in high-quality money market instruments on an ongoing basis to provide liquidity or for other reasons. The instruments in which the Fund may invest include: (i) short-term obligations issued by the U.S. government; (ii) negotiable certificates of deposit (“CDs”), fixed time deposits and bankers’ acceptances of U.S. and foreign banks and similar institutions; (iii) commercial paper rated at the date of purchase “Prime-1” by Moody’s or “A-1+” or “A-1” by S&P or, if unrated, of comparable quality as determined by BGFA; and (iv) repurchase agreements. CDs are short-term negotiable obligations of commercial banks. Time deposits are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Banker’s acceptances are time drafts drawn on commercial banks by borrowers, usually in connection with international transactions.

To the extent allowed by law, each Fund may invest its assets in securities of money market funds, including those advised by BGFA or otherwise affiliated with BGFA.

Investment Companies and REITs . Each Fund may invest in the securities of other investment companies (including money market funds) and real estate investment trusts to the extent allowed by law. Under the 1940 Act, a Fund’s investment in investment companies is limited to, subject to certain exceptions: (i) 3% of the total outstanding voting stock of any one investment company; (ii) 5% of the Fund’s total assets with respect to any one investment company; and (iii) 10% of the Fund’s total assets with respect to investment companies in the aggregate. To the extent allowed by law or regulation, each Fund may invest its assets in securities of investment companies that are money market funds, including those advised by BGFA or otherwise affiliated with BGFA, in excess of the limits discussed above. Other investment companies in which a Fund invests can be expected to incur fees and expenses for operations, such as investment advisory and administration fees, that would be in addition to those incurred by the Fund.

Foreign Securities . Each Fund may purchase publicly traded common stocks of foreign corporations. To the extent a fund invests in stocks of foreign corporations, each Fund’s investment in such stocks may also be in the form of American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and European Depositary Receipts (“EDRs”) (collectively, “Depositary Receipts”). Depositary Receipts are receipts, typically issued by a bank or trust company, which

evidence ownership of underlying securities issued by a foreign corporation. For ADRs, the depository is typically a U.S. financial institution and the underlying securities are issued by a foreign issuer. For other Depositary Receipts, the depository may be a foreign or a U.S. entity, and the underlying securities may have a foreign or a U.S. issuer. Depositary Receipts will not necessarily be denominated in the same currency as their underlying securities. Generally, ADRs, in registered form, are designed for use in the U.S. securities markets, and EDRs, in bearer form, are designed for use in European securities markets. GDRs are tradable both in the United States and in Europe and are designed for use throughout the world.

To the extent a Fund invests in ADRs, such ADRs will be listed on a national securities exchange or the Nasdaq Stock Market, Inc. (“Nasdaq”), and to the extent a Fund invests in GDRs or EDRs, such GDRs and EDRs will be listed on a foreign exchange. A Fund will not invest in any unlisted Depositary Receipt or any Depositary Receipt that BGFA deems to be illiquid or for which pricing information is not readily available. In addition, all Depositary Receipts generally must be sponsored, however a 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, and, therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the Depositary Receipts.

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

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

Short-Term Instruments and Temporary Investments . Each Fund may invest in various money market instruments. Money market instruments are generally short-term investments that may include but are not limited to: (i) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities (including government-sponsored enterprises); (ii) negotiable certificates of deposit (“CDs”), bankers’ acceptances, fixed time deposits and other obligations of domestic banks (including foreign branches); (iii) commercial paper rated at the date of purchase “Prime-1” by Moody’s or “A-1” by S&P, or if unrated, of comparable quality as determined by BGFA; (iv) 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; (v) repurchase agreements; and (vi) short-term U.S. dollar-denominated obligations of foreign banks (including U.S. branches) that, in the opinion of BGFA, 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 a forward-settled basis. Money market instruments also include shares of money market mutual funds, including those managed by BGFA.

Futures and Options . Each Fund may enter into U.S. or foreign futures contracts, options and options on futures contracts. These futures contracts and options will be used to simulate full investment in the respective Underlying Index, to facilitate trading or to reduce transaction costs. Each Fund will only enter into futures contracts and options on futures contracts that are traded on a U.S. or foreign exchange. No Fund will use futures or options for speculative purposes. Each Fund intends to use futures and options in accordance with Rule 4.5 of the Commodity Exchange Act (“CEA”). The Trust, on behalf of each Fund, has filed a notice of eligibility for exclusion from the definition of the term “commodity pool operator” in accordance with Rule 4.5 so that each Fund is not subject to registration or regulation as a commodity pool operator under the CEA.

A call option gives a holder the right to purchase a specific security at a specified price (“exercise price”) within a specified period of time. A put option gives a holder the right to sell a specific security at a specified price within a specified period of time. The initial purchaser of a call option pays the “writer” a premium, which is paid at the time of purchase and is retained by the writer whether or not such option is exercised. Each Fund may purchase put options to hedge its portfolio against the risk of a decline in the market value of securities held and may purchase call options to hedge against an increase in the price of securities it is committed to purchase. Each Fund may write put and call options along with a long position in options to increase its ability to hedge against a change in the market value of the securities it holds or is committed to purchase. Futures contracts provide for the future sale by one party and purchase by another party of a specified amount of a specific instrument or index at a specified future time and at a specified price. Stock index contracts are based on investments that reflect the market value of common stock of the firms included in the investments. Each Fund may enter into futures contracts to purchase security investments when BGFA anticipates purchasing the underlying securities and believes prices will rise before the purchase will be made. Investments in futures contracts, and other investments that contain leverage, may require each Fund to segregate liquid assets in the amount of the Fund’s obligation under the contracts. Each Fund will segregate liquid assets of the Fund to the extent required by applicable law and interpretive positions issued by the SEC and its staff from time to time.

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

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

Upon entering into a futures contract, a Fund will be required to deposit with the broker an amount of cash or cash equivalents known as “initial margin”, which is in the nature of a performance bond or good faith deposit on the contract and is returned to each Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Subsequent payments, known as “variation margin”, to and from the broker will be made daily as the price of the index underlying the futures contract fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as “marking-to-market”. The Fund may also have asset segregation requirements. At any time prior to expiration of a futures contract, each Fund may elect to close the position by taking an opposite position, which will operate to terminate 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 done on a net basis, the Fund receiving or paying only the net amount of the two payments. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each swap is accrued on a daily basis and an amount of cash or liquid securities 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 Trust’s Board of Trustees (the “Board”) may, in the future, authorize each Fund to invest in securities contracts and investments other than those listed in this SAI and in the applicable Prospectus, provided they are consistent with the Fund’s investment objective and do not violate any investment restrictions or policies.

General Considerations and Risks . A discussion of some of the risks associated with an investment in a Fund is contained in the applicable Prospectus.

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

An investment in a Fund should also be made with an understanding of the risks inherent in an investment in equity securities, including the risk that the financial condition of issuers may become impaired or that the general condition of the stock market may deteriorate (either of which may cause a decrease in the value of the portfolio securities and thus in the value of shares of 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 risk than holders of preferred stocks and debt obligations because common stockholders, as owners of the issuer generally have inferior rights to receive payments from the issuer in comparison with the rights of creditors, or holders of debt obligations or preferred stocks. Further, unlike debt securities, which typically have a stated principal amount payable at maturity (whose value, however, is subject to market fluctuations prior thereto), or preferred stocks, which typically have a liquidation preference and which may have stated optional or mandatory redemption provisions, common stocks have neither a fixed principal amount nor a maturity. Common stock values are subject to market fluctuations as long as the common stock remains outstanding.

Although most of the securities in the Underlying Investments 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 a Fund’s shares will be adversely affected if trading markets for a 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 each Fund plans to utilize futures contracts only if an active market exists for such contracts, there is no guarantee that a liquid market will exist for the contract at a specified time. Furthermore, because, by definition, futures contracts project price levels in the future and not current levels of valuation, market circumstances may result in a discrepancy between the price of the stock index future and the movement in the Underlying Index. In the event of adverse price movements, a Fund would continue to be required to make daily cash payments to maintain its required margin. In such situations, if a Fund has insufficient cash, it may have to sell portfolio securities to meet daily margin requirements at a time when it may be disadvantageous to do so. In addition, a Fund may be required to deliver the instruments underlying the future contracts it has sold.

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

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

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

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

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

Risks of Investing in Non-U.S. Equity Securities . Certain iShares Funds ( e.g ., the iShares FTSE/Xinhua China 25 Index Fund, MSCI EAFE Index Fund, iShares MSCI EAFE Growth Index Fund, iShares MSCI EAFE Value Index Fund, NYSE

Composite Index Fund, S&P Global Index Funds, the S&P Latin America 40 Index Fund and S&P/TOPIX 150 Index Fund) invest a significant portion of their assets in non-U.S. equity securities. Investing in securities issued by companies domiciled in countries other than the domicile of the investor and denominated in currencies other than an investor’s local currency entails certain considerations and risks not typically encountered by the investor in making investments in the investor’s home country and in that country’s currency. These considerations include favorable or unfavorable changes in interest rates, currency exchange rates, exchange control regulation and the costs that may be incurred in connection with conversions between various currencies. Investing in a Fund whose portfolio contains non-U.S. issuers involves certain risks and considerations not typically associated with investing in the securities of U.S. issuers. These risks include generally less liquid and less efficient securities markets; generally greater price volatility; less publicly available information about issuers; the imposition of withholding or other taxes; the imposition of restrictions on the expatriation of funds or other assets of the Fund; higher transaction and custody costs; delays and risks attendant in settlement procedures; difficulties in enforcing contractual obligations; lesser liquidity and significantly smaller market capitalization of most non-U.S. securities markets; different accounting and disclosure standards; lesser levels of regulation of the securities markets; more substantial government interference with the economy; higher rates of inflation; greater social, economic, and political uncertainty; and the risk of nationalization or expropriation of assets and risk of war.

Proxy Voting Policy

All Funds (other than the iShares KLD Select Social ^SM Index Fund)

The Trust has adopted as its proxy voting policies for each Fund (except for the iShares KLD Select Social ^SM Index Fund) the proxy voting guidelines of BGFA, the investment adviser to each Fund. The Trust has delegated to BGFA the responsibility for voting proxies on the portfolio securities held by each Fund. The remainder of this section discusses each Fund’s proxy voting guidelines and BGFA’s role in implementing such guidelines.

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

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

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

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

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

The iShares KLD Select Social ^SM Index Fund

The Trust has adopted separate proxy voting guidelines for the iShares KLD Select Social ^SM Index Fund and has delegated Institutional Shareholder Services (“ISS”) the responsibility for voting proxies on the portfolio securities held by the Fund.

The Fund maintains proxy voting guidelines consistent with the principle that “socially responsible” shareholders are concerned not only with economic returns and sound corporate governance, but also with the ethical behavior of corporations and the social and environmental impact of their actions. With respect to social and environmental matters, the Fund’s proxy voting guidelines seek to reflect a broad consensus of the socially responsible investing community. The guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance, consistent with responsibilities to society as a whole. The Fund votes (or refrains from voting) proxies in a manner that that is consistent with these principles. In some cases, it may be in the best interest of shareholders of the Fund to refrain from exercising the Fund’s proxy voting rights. The Fund’s proxy voting guidelines provide detailed guidance as to how to vote proxies on certain important or commonly raised issues. ISS, as proxy voting agent for the Fund, will vote (or refrain from voting) on specific proxy issues in accordance with the Fund’s proxy voting guidelines. The guidelines permit ISS to consider certain proposals on a case-by-case basis and to vote on such proposals based on various factors, including an examination of the merits consideration of recent and company-specific information. The Fund 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), BGFA or BGFA’s affiliates, or SEI or SEI’s affiliates.

With respect to certain specific issues:

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The Fund votes on the election of directors on a case by case basis. The Fund generally opposes slates of director nominees that are not comprised of a majority of independent directors and withholds votes from non-independent directors who sit on key board committees;

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The Fund generally supports social, workforce and environmental proposals that promote “good corporate citizenship” while enhancing long term shareholder and stakeholder value and proposals that call for more detailed and comparable reporting of a company’s social, workforce and environmental performance; and

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The Fund generally votes against anti-takeover proposals and proposals that limit the ability of shareholders to act independently of management.

ISS seeks to apply the Fund’s proxy voting policies consistently across all proposals and issues votes strictly according to the Fund’s policy in order to minimize conflicts of interests. ISS also maintains policies and practices that are designed to neutralize and guard against any conflict of interest that could arise between the issuer of the proxy (or any shareholder of the issuer) and ISS or ISS’ affiliates. In certain instances, ISS may engage a qualified third party to perform a proxy analysis and issue a vote recommendation as a further safeguard to avoid the influence of a potential conflict of interest.

Information with respect to how BGFA or ISS, as applicable, voted Fund proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available: (i) without charge, upon request, by calling 1-800-iShares 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 Funds’ Board of Trustees has adopted a policy regarding the disclosure of the Funds’ portfolio holdings information that requires that such information be disclosed in a manner that: (a) is consistent with applicable legal requirements and in the best interests of each Fund’s respective shareholders; (b) does not put the interests of the Funds’ investment adviser (the “BGFA” or “Investment Adviser”), the Funds’ distributor (the “Distributor”), or any affiliated person of the Funds, the Investment Adviser or the Distributor, above those of Fund shareholders; (c) does not advantage any current or prospective Fund shareholders over any other current or prospective Fund shareholders, except to the extent that certain Entities (as described below) may receive portfolio holdings information not available to other current or prospective Fund shareholders in connection with the dissemination of information necessary for transactions in Creation Units, as contemplated by the iShares Exemptive Orders and discussed below; and (d) does not provide selective access to portfolio holdings information except pursuant to the procedures outlined below and to the extent appropriate confidentiality arrangements limiting the use of such information are in effect. The “Entities” referred to in sub-section (c) above are generally limited to National Securities Clearing Corporation (“NSCC”) members and subscribers to various fee-based subscription services, including those large institutional investors (known as “Authorized Participants”) that have been authorized by the Distributor to purchase and redeem large blocks of shares (known as “Creation Units”) pursuant to legal requirements, including exemptive orders granted by the SEC pursuant to which the Funds offer and redeem their shares (“iShares Exemptive Orders”), and other institutional market participants and entities that provide information services.

Each business day, Fund 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 Funds in the secondary market. This information typically reflects each Fund’s anticipated holdings on the following business day.

Daily access to information concerning the Funds’ portfolio holdings is permitted (i) to certain personnel of those service providers that are involved in portfolio management and providing administrative, operational, risk management, or other support to portfolio management, including affiliated broker-dealers and/or Authorized Participants, and (ii) to other personnel of the Investment Adviser and the Funds’ distributor, administrator, custodian and fund accountant, who deal directly with, or assist in, functions related to investment management, administration, custody and fund accounting, as may be necessary to conduct business in the ordinary course in a manner consistent with the iShares Exemptive Orders, agreements with the Funds, and the terms of the iShares Funds’ current registration statements.

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

Each Fund will disclose its complete portfolio holdings schedule in public filings with the SEC on a quarterly basis, based on the Fund’s fiscal year, within 60 days of the end of the quarter, and will provide that information to shareholders, as required by federal securities laws and regulations thereunder. A Fund, however, may voluntarily disclose all or part of its portfolio holdings other than in connection with the creation/redemption process, as discussed above, in advance of required filings with the SEC, provided that such information is made generally available to all shareholders and other interested parties in a manner that is consistent with the above policy for disclosure of portfolio holdings information. Such information may be made available through a publicly-available website or other means that make the information available to all likely interested parties in a contemporaneous manner.

The Funds’ Chief Compliance Officer may authorize disclosure of portfolio holdings information pursuant to the above policy and procedures.

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

Construction and Maintenance Standards for the Underlying Indices

Brief descriptions of the Underlying Indices on which the Funds are based and the equity markets in which the Funds invest are provided below.

The Cohen & Steers Realty Majors Index Generally

Component Selection Criteria . An investment committee determines the securities ( i.e. , the “components”) of the Index. The universe of Real Estate Investment Trusts (“REITs”) is first screened for market capitalization and liquidity requirements. To be eligible for inclusion, a REIT must have a minimum market capitalization of $500 million and a minimum of 600,000 shares traded per month. The investment committee determines the final 30 constituents based on a rigorous review process. Criteria for inclusion include: the quality of the portfolio of property, sector and geographic diversification, strong management, sound capital structure and a dominant position within a property sector.

After the final list of constituent REITs has been determined, constituent REITs are ranked according to their respective market capitalization. Each constituent REIT that has an index weight greater than 8% will have its weight adjusted downward until it equals 8%. The weight of the remaining constituent REITs will be increased proportionately until the aggregate of all weights equals 100%. As a result, constituents will be large and liquid without any one issue dominating the index.

Issue Changes . The Index will be rebalanced quarterly. The weighting for each constituent will be updated and adjustments will be made if any constituent has a weighting over 8%. The companies will be reviewed for size and liquidity. A REIT will be removed from the Index if its market capitalization has fallen below $400 million or if the monthly trading volume has fallen below 500,000 shares per month. In order to prevent excessive turnover, the size and liquidity requirements are not as stringent during rebalancings as they are for initial inclusion.

Between rebalancing dates, mergers or bankruptcy may result in a deletion or weighting increase. Weighting increases must be greater than 5% and will be adjusted downward if it results in the REIT’s weight becoming greater than 8%. In the case of a deletion, the investment committee will select a replacement company to ensure 30 constituents at all times.

Index Maintenance . Maintaining the Index includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to restructuring and spinoffs. The Index is a total return index and therefore reflects the reinvestment of dividends. The Index is calculated by the AMEX and distributed real time.

Index Availability . The Cohen & Steers Realty Majors Index is calculated and broadcast every 15 seconds over the Consolidated Tape Association’s Network B under the ticker “RMP”. This information is distributed by financial data vendors such as Bloomberg.

Cohen & Steers Realty Majors Index

Number of Components: approximately 30

Index Description . The Cohen & Steers Realty Majors Index consists of selected REITs. The objective of the Index is to represent relatively large and liquid REITs that may benefit from future consolidation and securitization of the U.S. real estate industry. Within the REIT market, the Index is diversified across property sectors that represent the current market. The Index is modified capitalization-weighted with constituent companies having a maximum index weight of 8%.

The Dow Jones Indexes Generally

Component Selection Criteria . Securities of companies listed on a U.S. exchange (such as the NYSE, the AMEX or the NASDAQ) are considered for inclusion in the indexes, with the following general rules and exceptions. Stocks must have a minimum trade history of 6 months on the rebalancing date to be eligible for inclusion. Foreign issues, including ADRs and GDRs, non-common equity issues such as preferred stocks, convertible notes, warrants, rights, closed-end funds, trust receipts, limited liabilities companies, royalty trusts, units, limited partnerships, over-the-counter bulletin boards and pink sheet stocks generally are not eligible for inclusion in the indexes.

Issue Changes . Each index (with the exception of the Dow Jones U.S. Select Dividend Index) is reviewed and rebalanced quarterly to maintain accurate representation of the market segment represented by the Index. The Dow Jones U.S. Select Dividend Index is reviewed and rebalanced annually. Securities that leave an index between reconstitution dates are not replaced. Thus, the number of securities in an index between rebalancing dates fluctuates according to corporate activity. When a stock is acquired, delisted, or moves to the pink sheets or OTC bulletin boards, the stock is deleted from the index. The only additions between rebalancing dates are as a result of spin-offs.

Index Maintenance . Maintaining the Dow Jones Indexes includes monitoring and completing the adjustments for additions and deletions to each Index, share changes, stock splits, stock dividends, and stock price adjustments due to restructuring and spin-offs. Generally each component security in an Index is limited to a maximum market capitalization of 25% of the index weight, and sum of the weights of all component securities greater than 5% of the index is limited to 50% of the index total. If components fail either rule, their market capitalization will be reduced to meet the set guidelines. The Dow Jones U.S. Select Dividend Index limits the weighting in the index of each component security to no greater than 5% of the Index.

Weighting . Each of the Dow Jones Indexes is a free-float adjusted market capitalization-weighted index, so the impact of a component’s price change is proportional to the issue’s free-float adjusted market value, which is the share price multiplied by the number of float-adjusted shares outstanding. Dow Jones 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 investors. In practice, limitations on free-float available to investors include: cross ownership (shares that are owned by other companies), ownership by governments (central or municipal) or their agencies, certain substantial levels of private ownership (by individuals, families or charitable trusts and foundations), and restricted shares. Under Dow Jones’ free-float-adjustment methodology, a company’s outstanding shares are adjusted if, and only if, an entity in any of the four qualified categories listed above owns 5% or more of the company. The company’s shares will not be adjusted if the block ownership is less than 5%. A constituent’s inclusion factor is equal to its estimated percentage of free-float shares outstanding. For example, a constituent security with a free-float of 67% will be included in the index at 67% of its market capitalization. However, a company’s outstanding shares are not adjusted by institutional investors’ holdings, which include, but are not limited to, the following categories: custodian nominees, trustee companies, mutual funds (open-end and closed-end funds), and other investment companies.

Index Availability . The Dow Jones Indexes are calculated continuously and are available from major data vendors.

Component Selection Criteria Applicable to Dow Jones Subsector Indexes. On a quarterly basis, Dow Jones conducts reviews of the float-adjusted market capitalizations and weightings of the securities in each Dow Jones Subsector Index. Other than the Dow Jones U.S. Select Home Construction Index, on the last business day of the month prior to the Quarterly Review, a security must have a $500 million float-adjusted market capitalization to be added to the Dow Jones Subsector Index; securities with a float-adjusted market capitalization below $250 million will be removed from the applicable Dow Jones Subsector Index. After the close of trading on the NYSE on the Wednesday prior to the quarterly review, each Dow Jones Subsector Index’s composition is adjusted to meet the following concentration limits:

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No single Index component may have a weight greater than 25% of the Dow Jones Subsector Index.

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The sum of the weights of the Index components that are individually greater than 5% may not be greater than 45% of the Dow Jones Subsector Index.

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The sum of the weights of the five largest Index components may not be greater then 65% of the Dow Jones Subsector Index.

Dow Jones U.S. Basic Materials Index

Number of Components: approximately 78

Index Description . The Dow Jones U.S. Basic Materials Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the Basic Materials industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Consumer Goods Index

Number of Components: approximately 149

Index Description . The Dow Jones U.S. Consumer Goods Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the consumer goods industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a

component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Consumer Services Index

Number of Components: approximately 249

Index Description . The Dow Jones U.S. Consumer Services Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the consumer services industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Financials Index

Number of Components: approximately 297

Index Description . The Dow Jones U.S. Financials Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the financial industry of the Dow Jones U.S. Total Market Index. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Financial Services Index

Number of Components: approximately 146

Index Description . The Dow Jones U.S. Financial Services Index is a subset of the Dow Jones U.S. Financials Index. The Index is capitalization-weighted and includes only companies in the real estate and general finance sectors of the Dow Jones U.S. Financials Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Health Care Index

Number of Components: approximately 163

Index Description . This Dow Jones U.S. Health Care Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the healthcare industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Industrials Index

Number of Components: approximately 251

Index Description . The Dow Jones U.S. Industrials Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the industrials industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Oil & Gas Index

Number of Components: approximately 90

Index Description . The Dow Jones U.S. Oil & Gas Index is a subset of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Real Estate Index

Number of Components: approximately 85

Index Description . The Dow Jones U.S. Real Estate Index is a subset of the Dow Jones U.S. Financials Index. The Index is capitalization-weighted and includes only companies in the Real Estate sector of the Dow Jones U.S. Financials Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Select Aerospace & Defense Index

Number of Components: approximately 32

Index Description. The Dow Jones U.S. Select Aerospace & Defense Index is a subset of the Dow Jones U.S. Industrial Goods & Services Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Dividend Index

Number of Components: approximately 100

Index Description . The Dow Jones U.S. Select Dividend Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. The Index is comprised of one hundred of the highest dividend-yielding securities (excluding REITs) in the Dow Jones U.S. Total Market Index, a broad-based index representative of the total market for U.S. equity securities. To be included in the Index, the securities (i) must have had a positive dividend-per-share growth rate for each of the last five years (i.e., paid higher dividends each year); (ii) must have an average five-year dividend payout ratio of 60% or less; and (iii) must have a minimum 3-month average trading volume of 200,000 shares a day. “Dividend payout ratio” reflects the percentage of a company’s earnings paid out as dividends. A ratio of 60% would mean that a company paid out approximately 60% of its earnings as dividends. A company with a lower dividend payout ratio has more earnings to support dividends, and adjustments or changes in the level of earnings are therefore less likely to significantly affect the level of dividends paid. Positive dividend growth rate is a measure of dividend consistency, since it provides some indication of a company’s ability to continue to pay dividends.

Dow Jones U.S. Select Health Care Providers Index

Number of Components: approximately 50

Index Description. The Dow Jones U.S. Select Health Care Providers Index is a subset of the Dow Jones U.S. Health Care Equipment and Services Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Home Construction Index

Number of Components: approximately 21

Index Description. The Dow Jones U.S. Select Home Construction Index is a subset of the Dow Jones U.S. Household Goods Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Insurance Index

Number of Components: approximately 76

Index Description. The Dow Jones U.S. Select Insurance Index is a subset of the Dow Jones U.S. Financials Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Investment Services Index

Number of Components: approximately 23

Index Description. The Dow Jones U.S. Select Investment Services Index is a subset of the Dow Jones U.S. General Financial Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Medical Equipment Index

Number of Components: approximately 46

Index Description. The Dow Jones U.S. Select Medical Equipment Index is a subset of the Dow Jones U.S. Health Care Equipment and Services Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Oil Equipment & Services Index

Number of Components: approximately 56

Index Description . The Dow Jones U.S. Select Oil Equipment & Services Index is a subset of the Dow Jones U.S. Oil & Gas Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Oil Exploration & Production Index

Number of Components: approximately 60

Index Description . The Dow Jones U.S. Select Oil Exploration & Production Index is a subset of the Dow Jones U.S. Oil & Gas Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Pharmaceuticals Index

Number of Components: approximately 40

Index Description. The Dow Jones U.S. Select Pharmaceuticals Index is a subset of the Dow Jones U.S. Pharmaceuticals and Biotechnology Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Select Regional Banks Index

Number of Components: approximately 87

Index Description. The Dow Jones U.S. Select Regional Banks Index is a subset of the Dow Jones U.S. Banks Index. The Index is a free-float adjusted market capitalization-weighted index.

Dow Jones U.S. Technology Index

Number of Components: approximately 236

Index Description. The Dow Jones U.S. Technology Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the technology industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Telecommunications Index

Number of Components: approximately 20

Index Description . The Dow Jones U.S. Telecommunications Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the telecommunications industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Total Market Index

Number of Components: approximately 1,604

Index Description . The Dow Jones U.S. Total Market Index serves as the underlying index in the Dow Jones U.S. Large-Cap Index, Dow Jones U.S. Mid-Cap Index, Dow Jones U.S. Small-Cap Index and the Dow Jones U.S. sector indices. The Index is a capitalization-weighted index, so the impact of a component’s price change is proportional to the issue’s total market value, which is the share price times the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. The Dow Jones U.S. Total Market Index represents 94% of the market capitalization of listed U.S. equities.

Dow Jones Transportation Average Index

Number of Components: approximately 20

Index Description . The Dow Jones Transportation Average Index measures the performance of companies from the Industrial Transportation, Airline and General Industrial Services industries of the U.S. equity market. Companies are selected for inclusion in the Index by the editors of The Wall Street Journal. The Index, for practical purposes, is a subset of the Dow Jones U.S. Total Market Index. The component stocks are weighted based on the price of the component securities,

with the highest priced securities generally having higher weighting in the Index. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Dow Jones U.S. Utilities Index

Number of Components: approximately 71

Index Description . The Dow Jones U.S. Utilities Index is a subset of the Dow Jones U.S. Total Market Index. The Index is capitalization-weighted and includes only companies in the utilities industry of the Dow Jones U.S. Total Market Index. The component stocks are weighted according to the total market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

The FTSE/Xinhua China 25 Index Generally

Component Selection Criteria . The FTSE/Xinhua China 25 Index is primarily rule-based, but is also monitored by a governing committee. The Secretary to the FTSE/Xinhua China 25 Index Committee is responsible for conducting the quarterly review of constituents for the FTSE/Xinhua China 25 Index and for recommending to the FTSE/Xinhua China 25 Index Committee any constituents to be inserted or deleted as part of the quarterly review. All eligible securities are ranked by their current full market capitalizations.

Eligibility . Each security included in the Index is a current constituent of the FTSE All-World Index. All classes of equity securities in issue are eligible for inclusion in the FTSE/Xinhua China 25 Index subject to conforming with free-float and liquidity restrictions. H shares and Red Chip shares are eligible for inclusion in the Index.

Float-Adjusted Market Capitalization . When calculating index weights, individual constituents’ shares held by governments, corporations, strategic partners, or other control groups are excluded from the company’s outstanding shares. Shares owned by other companies are also excluded regardless of whether they are index constituents.

In countries with regulated environments, where a foreign investment limit exists at the sector or company level, the constituent’s weight will reflect either the foreign investment limit or the percentage float, whichever is the more restrictive.

Liquidity . Stocks are screened to ensure there is sufficient liquidity to be traded. Factors in determining liquidity include the availability of current and reliable price information and the level of trading volume relative to shares outstanding. Value traded and float turnover are also analyzed on a monthly basis to ensure ample liquidity.

Index Maintenance and Issue Changes . The FTSE/Xinhua China 25 Index Committee is responsible for undertaking the review of the FTSE/Xinhua China 25 Index and for approving changes of constituents. The FTSE Global Classification Committee is responsible for the industry classification of constituents of the FTSE/Xinhua China 25 Index within the FTSE Global Classification System. The FTSE Global Classification Committee may approve changes to the FTSE Global Classification System and Management Rules. FTSE/Xinhua appoints the Chairman and Deputy Chairman of the FTSE/Xinhua China 25 Index Committee. The Chairman, or in his absence Deputy Chairman, will chair meetings of the Committee and will represent that Committee outside meetings. The Chairman and Deputy Chairman of the FTSE/Xinhua China 25 Index Committee are collectively responsible for approving constituent changes to the FTSE/Xinhua China 25 Index between meetings of the Committee on advice from the Secretary to the Committee and as permitted and as specified by the Ground Rules. Adjustments to reflect a major change in the amount or structure of a constituent company’s issued capital will be made before the start of the index calculation on the day on which the change takes effect. Adjustments to reflect less significant changes will be implemented before the start of the index calculation on the day following the announcement of the change. Adjustments generally are made before the start of the index calculations on the day concerned, unless market conditions prevent this.

Additions . A company will be inserted into the FTSE/Xinhua China 25 Index at the periodic review if it rises to the 15th position or above when the eligible companies are ranked by full market value before the application of any investibility weightings.

Deletions . A company in the FTSE/Xinhua China 25 Index will be deleted at the periodic review if it falls to the 36th position or below when the eligible companies are ranked by full market value before the application of any investibility weighting. Any deletion to the Index will simultaneously entail an addition to the Index in order to maintain 25 Index constituents at all times.

Revisions to the Float Adjustments . The FTSE/Xinhua China 25 Index is reviewed quarterly for changes in free float. These reviews will coincide with the quarterly reviews undertaken of the Index. Implementation of any changes will be after the close of the index calculation on the third Friday in January, April, July and October.

Quarterly Index Rebalancing . The quarterly review of the FTSE/Xinhua China 25 Index constituents takes place in January, April, July and October. Any constituent changes will be implemented on the next trading day following the third Friday of the same month of the review meeting. Details of the outcome of the review and the dates on which any changes are to be implemented will be published as soon as possible after the FTSE/Xinhua Index Committee meeting has concluded. Significant Index rebalancing may cause funds based on the Index to experience trading error.

Index Availability . The FTSE/Xinhua China 25 Index is calculated continuously during Hong Kong trading hours and is widely disseminated to major data vendors. The FTSE/Xinhua China 25 Index will not be calculated on Hong Kong public holidays.

Exchange Rates and Pricing . The FTSE/Xinhua China 25 Index uses Reuter’s real-time foreign exchange spot rates and Reuters real-time security prices. The FTSE/Xinhua China 25 Index is calculated in Hong Kong Dollars. Non Hong Kong Dollar denominated constituent prices are converted to Hong Kong Dollars in order to calculate the Index. The foreign exchange rates and security prices received form Reuters at the closing time of the Index are used to calculate the final index levels.

Inception Date . The inception date of the FTSE/Xinhua China 25 Index is March 16, 2001.

FTSE/Xinhua China 25 Index

Number of Components: 25

Index Description . The FTSE/Xinhua China 25 Index is designed to represent the performance of the largest companies in the China equity market that are available to international investors. The Index consists of 25 of the largest and most liquid Chinese companies. The securities in the Index are weighted based on the total market value of their shares. Securities with higher total market values generally have a higher representation in the Index. Index constituents are screened for liquidity and weightings are capped to avoid over-concentration in any one stock.

The FTSE/Xinhua China 25 Index consists of two types of shares: “Red Chip” shares and “H” shares.

“Red Chip” shares are incorporated in Hong Kong and trade on the Hong Kong Stock Exchange. They are quoted in Hong Kong Dollars. Red Chip companies are substantially owned directly or indirectly by the Chinese Government and have the majority of their business interested in mainland China. Like other securities trading on the Hong Kong exchange, there are no restrictions on who can trade “Red Chip” shares.

“H” shares are incorporated in China and nominated by the Central Government for listing and trading on the Hong Kong exchange. They are quoted and traded in Hong Kong and U.S. dollars. Like other securities trading on the Hong Kong exchange, there are no restrictions on who can trade “H” shares.

The Chinese Equity Markets

General Background . Mainland China’s economy has been gradually transitioning from a centrally planned economy to a more market based economy. While the government continues to play a dominant role in the economy, the economic influence of individual citizens has been steadily increasing. Private enterprise continues to grow in place of the large state-owned enterprises, and foreign investment continues to contribute to economic growth. In 2003, with its 1.3 billion people, but a GDP of just $5,000 per capita, China stood as the second largest economy in the world after the U.S. (measured on a purchasing power parity basis). Accession to the World Trade Organization in 2001 helps strengthen China’s ability to maintain strong growth rates, but challenges the hybrid system of strong political controls and growing market influences.

China’s chief industries include iron and steel, cement, chemical fertilizers, footwear, toys, food processing, automobiles, consumer electronics, telecommunications, coal, machine building, armaments, textiles and apparel, and petroleum. China’s main exports are machinery and equipment, textiles and clothing, footwear, toys and sporting goods, and mineral fuels. China’s main imports consists of machinery and equipment, mineral fuels, plastics, iron and steel, chemicals.

Reporting, Accounting and Auditing . The mainland China reporting, accounting and auditing standards differ from U.S. standards. In general, Chinese corporations do not provide all of the disclosures required by U.S. law and accounting practice, and such disclosure may be less timely and less frequent than that required of U.S. corporations.

The Goldman Sachs Indices Generally

Component Selection Criteria. The starting universe for eligible securities (i.e., “components”) of the Goldman Sachs Sector Index are companies classified by the Goldman Sachs Investment research department as belonging to a Goldman Sachs Sector Index industry or sector. These decisions are based on the Goldman Sachs Investment Research Sector and Industry Classified System as supplemented by the Bloomberg Classification, Standard Industrial Classification and Russell Industry Classification. The stock of each constituent company must trade on either the NYSE, the AMEX or on the Nasdaq. Foreign companies with common shares listed on such exchanges are also eligible for inclusion in a Goldman Sachs Sector Index. Certain ADRs that have been a traditional part of the portfolios of U.S. institutional investors are also eligible. Limited Partnerships, and closed-end funds are excluded. The total market capitalization of a stock eligible for inclusion must be equal or greater than the market capitalization limit as of the most recent rebalancing. Companies with float (i.e., holdings in excess of 10% by an individual, corporation or family trust) below 20% are not eligible. The annualized turnover of company shares on the relevant exchange(s) must be 30% or more to further ensure adequate liquidity.

The index is initially capitalization weighted, based on the following formula: number of outstanding shares of a constituent multiplied by its share price as of the index’s inception or rebalancing date. Weights are then modified so that none exceeds a predetermined limit. If the combined weight of all the constituents with an index weight greater than 5% in a sector index exceeds 50%, the largest stocks in the sector will be capped using a sliding scale until the combined weight is less than 50%.

Issue Changes. The Goldman Sachs Sector Indices are rebalanced semiannually on the third Friday of June and December. The total market capitalization for stocks to be added to the index must be equal to or greater than the capitalization limit at inception of the index or as of the most recent semiannual rebalancing date. A company’s total market capitalization shall be based on the number of its outstanding shares and its closing price on its primary exchange as of inception or the rebalancing date. The market capitalization limit for each index will be determined at index inception and will be periodically revised to reflect changes in market levels. Index constituents with capitalization below 50% of the limit as of a rebalancing date or that fail to meet certain float and share turnover requirements shall be removed after the close on the effective date of the rebalancing. Changes to a company’s shares outstanding that are greater than 5% will be applied to the index when they are effective on a best-efforts basis. Changes that are less than 5% will be applied to the index at the next regularly scheduled rebalancing.

Index Maintenance. Each index is adjusted to reflect company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to restructurings and spin-offs. For changes of 5% or more in a company’s number of shares outstanding that result from a merger, acquisition or spin-off, the index is adjusted upon the close of the consummation of such transaction on a best-efforts basis. For share changes of 5% or more that result from the issuance or repurchase of common shares, the index is adjusted upon the confirmation of such issuance or repurchase on a best-efforts basis. If a constituent company spins off a company, the parent and the spin-off will each remain in the index as long as they each satisfy the component selection criteria described above, except with respect to the 30% turnover requirement. In the event that a constituent company files for bankruptcy, its stock will be removed from the index effective the close of that date.

Index Availability. The Goldman Sachs Investments are calculated continuously and are available from major data vendors.

Goldman Sachs Natural Resources Sector Index

Number of Components: approximately 124

Index Description. The Goldman Sachs Natural Resources Sector Index is a modified capitalization-weighted index: the constituent stocks are weighted according to the total market value of their outstanding shares, except that no constituent is weighted in excess of a predetermined limit and the combined weight of the nine largest constituents cannot exceed 45% at rebalancing. In this way, the impact of a component’s price change on the Index is generally proportional to the issue’s total market value, but no one stock will dominate the index. The Index value is calculated by summing up the weight-adjusted market capitalizations for all constituent stocks and dividing that sum by a predetermined base value. The value of the Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Goldman Sachs Technology Sector Index

Number of Components: approximately 231

Index Description. The Goldman Sachs Technology Sector Index is a modified capitalization-weighted index. In a modified capitalization index, the weightings of large issuers is capped in order to reduce the impact of a small number of large capitalization stocks. The constituent stocks in this index are weighted according to the total market value of their outstanding shares, except that no constituent is weighted in excess of a predetermined limit and stocks with a weight greater

than 5% in the index cannot exceed 50% of the index. In this way, the impact of a component’s price change on the Index is generally proportional to the issue’s total market value. The Index value is calculated by summing up the weight-adjusted market capitalizations for all constituent stocks and dividing that sum by a predetermined base value. The index was introduced in July 1998 with a base value of 100 as of April 30, 1998 and a capitalization weighting limit of 7.5% as of the most recent rebalancing date. The value of the Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

The Goldman Sachs Technology Industry Subsector Investments Generally

Component Selection Criteria. The starting universe for eligible constituents of the Goldman Sachs Subsector investments are companies classified by the Goldman Sachs Investment Research department as belonging to a Goldman Sachs Investment Research Sector Industry Classification System. These decisions are based on the Goldman Sachs Investment Research Sector and Industry Classified System as supplemented by the Bloomberg Classification, Standard Industrial Classification and Russell Industry Classification. The stock of each constituent company must trade on either the NYSE, the AMEX or on Nasdaq. Foreign companies with common shares listed on such exchanges are also eligible for inclusion in a Goldman Sachs Technology Investments. Limited Partnerships and closed-end funds are excluded. The total market capitalization of a stock eligible for inclusion must be equal or greater than the market capitalization limit as of the most recent rebalancing. Companies with float below 20% are not eligible. A company’s float shall reflect all adjustments to a company’s actual shares outstanding to account for holding in excess of 10% by an individual, corporation or family trust. The annualized turnover of company shares on the relevant exchange(s) must be 30% or more to further ensure adequate liquidity.

Each index is initially capitalization weighted, based on the following formula: number of outstanding shares of a constituent multiplied by its share price as of the index’s inception or rebalancing date. Weights are then modified so that none exceeds a predetermined limit of 8.5%.

Issue Changes. The Goldman Sachs Technology Industry Sector Investments are rebalanced semiannually on the third Friday of June and December. The total market capitalization for stocks to be added to the index must be equal to or greater than the capitalization limit at inception of the index or as of the most recent semiannual rebalancing date. A company’s total market capitalization shall be based on the number of its outstanding shares and its closing price on its primary exchange as of inception or the rebalancing date. The market capitalization limit for each index will be determined at index inception and will be periodically revised to reflect changes in market levels. Index constituents with capitalization below 50% of the limit, less than 10% float or less than 15% annualized share turnover as of a rebalancing date shall be removed after the close on the effective date of the rebalancing. Changes to a company’s shares outstanding that are greater than 5% will be applied to the index when they are effective on a best-efforts basis. Changes that are less than 5% will be applied to the index at next regularly scheduled rebalancing.

Index Maintenance. Each index is adjusted to reflect company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to restructurings and spin-offs. For changes of 5% or more in a company’s number of shares outstanding that result from a merger, acquisition or spin-off, the index is adjusted upon the close of the consummation of such transaction on a best-efforts basis. For share changes of 5% or more that result from the issuance or repurchase or common shares, the index is adjusted upon the confirmation of such issuance or repurchase on a best-efforts basis. If a constituent company spins off a company, the parent and the spin-off will each remain in the index as long as they each satisfy the component selection criteria described above, except with respect to the 30% turnover requirement. In the event that a constituent company files for bankruptcy, its stock will be removed from the index effective at the close of that date.

Index Availability. The Goldman Sachs Technology Industry Sector Investments are calculated continuously and are available from major data vendors.

Goldman Sachs Technology Industry Multimedia Networking Index

Number of Components: approximately 32

Index Description. The Goldman Sachs Technology Industry Multimedia Networking Index is designed to minimize turnover by; semi-annual rebalancing, open number of companies, high level for entry, low level for removal, and bias toward leaving a stock in unless there is a strong argument for removal. Additionally, to reflect mutual fund restrictions on stock weights, constituents are modified-cap weighted such that each stock is no more than 8.5% of the index at the time of rebalancing. The index was introduced in April 1996 with a base value of 100. The stocks are selected from a universe of technology stocks as categorized by the GSTI ^{^®} .

Goldman Sachs Technology Industry Semiconductor Index

Number of Components: approximately 54

Index Description. The Goldman Sachs Technology Industry Semiconductor Index is designed to minimize turnover by; semi-annual rebalancing, open number of companies, high level for entry, low level for removal, and bias toward leaving a stock in unless there is a strong argument for removal. Additionally, to reflect mutual fund restrictions on stock weights, constituents are modified-cap weighted such that each stock is no more than 8.5% of the index at the time of rebalancing. The index was introduced in April 1996 with a base value of 100. The stocks are selected from a universe of technology stocks as categorized by the GSTI ^{^®} .

Goldman Sachs Technology Industry Software Index

Number of Components: approximately 44

Index Description. The Goldman Sachs Technology Industry Software Index is designed to minimize turnover by; semi-annual rebalancing, open number of companies, high level for entry, low level for removal, and bias toward leaving a stock in unless there is a strong argument for removal. Additionally, to reflect index mutual fund restrictions on stock weights, constituents are modified-cap weighted such that each stock is no more than 8.5% of the index at the time of rebalancing. The index was introduced in April 1996 with a base value of 100. The stocks are selected from a universe of technology stocks as categorized by the GSTI ^{^®} .

The KLD Select Social ^SM Index Generally

KLD Select Social ^SM Index

Number of Components: approximately 220

Component Selection Criteria and Index Description. The KLD Select Social ^SM Index is designed to maximize exposure to large capitalization companies that KLD determines have positive social and environmental characteristics, while at the same time maintaining risk and return characteristics similar to the Russell 1000 ^{^®} Index. The KLD Select Social ^SM Index consists of approximately 200 to 300 companies drawn from the universe of companies included in the Russell 1000 ^{^®} Index and the S&P 500 ^{^®} Index. KLD evaluates each eligible company’s social and environmental performance using standardized criteria and assigns a “score” to each company. The selection process is designed so that companies with relatively higher scores are expected to have a higher representation in the Index than they do in the Russell 1000 ^{^®} Index. Companies with relatively lower scores are expected to have a lower representation in the Index than they do in the Russell 1000 ^{^®} Index. Exceptions may result from the constraint on tracking error. Companies that KLD determines are in the tobacco industry are excluded from the KLD Select Social ^SM Index. The Fund uses a Representative sampling strategy to try to track the Index.

The Russell 1000 ^{^®} Index measures the performance of the large capitalization sector of the U.S. equity market. The Russell 1000 ^{^®} Index includes approximately 92% of the market capitalization of all publicly traded U.S. equity securities. The Russell 1000 ^{^®} Index is a capitalization-weighted index of the approximately 1,000 largest companies in the Russell 3000 Index. As of the close of business on May 31, 2006, the Russell 1000 ^{^®} Index represented approximately 91% of the total market capitalization of the Russell 3000 Index.

The S&P 500 ^{^®} Index measures the performance of the large-capitalization sector of the U.S. equity market. As of the close of business on May 31, 2006, the Index included approximately 78% of the market capitalization of all publicly traded U.S. equity securities.

Issue Changes. General oversight responsibility for the KLD Select Social ^SM Index, including overall policy guidelines and methodology, is handled by KLD Research & Analytics, Inc. Announcements of Index changes will generally be made two (2) business days in advance of the anticipated effective date, although, for exceptional corporate events, announcements may be made earlier.

Index Maintenance. Maintaining the KLD Select Social ^SM Index includes monitoring and completing the adjustments for company additions and deletions, share changes of more than 10%, stock splits, stock dividends, and stock price adjustments due to restructurings, spin-offs and other corporate actions. Companies may be removed from the KLD Select Social ^SM Index as a result of mergers, acquisitions, bankruptcies, or other restructurings and are removed from the Index as close as possible to the actual date on which the event occurred.

The Index will be rebalanced on the Monday following the third Friday in September, December and March. The rebalancing reflects changes due to float factors and the social and environmental scores assigned to companies by KLD. The Index will be reconstituted annually on June 30 to reflect changes to the universe as well as changes in market conditions, corporate actions and changes in the social and environmental scores of companies.

Index Availability. The KLD Select Social ^SM Index is calculated continuously and is available from major data vendors.

The Morningstar Indices Generally

Component Selection Criteria. The Morningstar Index family is based on the same methodology as the well-known Morningstar Style Box ^™ . The Morningstar Indices are governed by transparent, objective rules for security selection, exclusion, rebalancing, and adjustments for corporate actions. Morningstar makes no subjective determinations related to index composition. To be eligible for inclusion in any of the Morningstar Indices, a stock must be listed on the NYSE, the AMEX, or NASDAQ, domiciled in the U.S. or have its primary stock market activities carried out in the U.S., have sufficient historical fundamental data available so that Morningstar can classify investment style, and be in the top 75% of companies in the investable universe based on its liquidity score. A security’s liquidity score is based on its average monthly trading volume in U.S. dollars. ADRs, American Depositary Shares, fixed-dividend shares, convertible notes, warrants, rights, tracking stocks, limited partnerships and holding companies are not eligible for inclusion in the Morningstar Indexes.

Morningstar uses a dynamic percentage-based approach to divide its U.S. Market Index into three cap categories. By defining each as a percentage of the market cap of the investable universe, the definitions remain stable regardless of overall large market movements. Large Cap stocks are defined as stocks that form the largest 70% of investable market cap. Mid Cap stocks are defined as the next 20% of investable market cap (70th to 90th percentile). Small Cap stocks are defined as the next 7% of investable market cap (90th to 97th percentile).

Issue Changes. Securities are added or deleted from each index based on rules outlined for security selection, exclusion, rebalancing, and adjustments for corporate actions as set forth in the Morningstar Index Rulebook. Morningstar makes no subjective determinations related to index composition.

Index Maintenance. The Morningstar Indexes are reconstituted twice annually, on the Monday following the third Friday of June and the Monday following the third Friday of December. If the Monday is a holiday, reconstitution occurs on the Tuesday immediately following. Reconstitution is carried out after the day’s closing index values have been determined.

Index Availability. Morningstar Indices are calculated continuously and are available from major data vendors.

Morningstar Large Core Index

Number of Components: approximately 98

Index Description. The Index measures the performance of stocks issued by large-capitalization companies that have exhibited average “growth” and “value” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or the NASDAQ. The Morningstar index methodology defines “large-capitalization” stocks as those stocks that form the top 70% of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). All large capitalization stocks are then designated as “core”, “growth” or “value” based on their style orientations. Stocks of companies with, for example, relatively higher average historical and forecasted earnings, sales, equity and cash flow growth would be designated as “growth” securities. Stocks of companies with, for example, relatively low valuations based on price-to-book ratios, price-to-earnings ratios and other factors, are designated as “value” securities. Stocks that are not designated as “growth” or “value” securities are designated as “core” securities. Stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

Morningstar Large Growth Index

Number of Components: approximately 105

Index Description. The Index measures the performance of stocks issued by large-capitalization companies that have exhibited above-average “growth” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or NASDAQ. The Morningstar index methodology defines “large-capitalization” stocks as those stocks that form the top 70% of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. The stocks included in the Index are designated as “growth” because they are issued by companies that typically have higher than average historical and forecasted earnings, sales, equity and cash flow growth. Stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

Morningstar Large Value Index

Number of Components: approximately 93

Index Description. The Index measures the performance of stocks issued by large-capitalization companies that have exhibited “value” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or NASDAQ. The Morningstar index methodology defines “large-capitalization” stocks as those stocks that form the top 70% of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. The stocks included in the Index are designated as “value” because they are issued by companies that typically have relatively low valuations based on price-to-earnings, price-to-book value, price-to-sales, price-to-cash flow and dividend yields. The stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

Morningstar Mid Core Index

Number of Components: approximately 250

Index Description. The Index measures the performance of stocks issued by mid-capitalization companies that have exhibited average “growth” and “value” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or the NASDAQ. The Morningstar index methodology defines “mid-capitalization” stocks as those stocks that form the 20% of market capitalization between the 70 ^th and 90 ^th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. Stocks of companies with, for example, relatively higher average historical and forecasted earnings, sales, equity and cash flow growth would be designated as “growth” securities. Stocks of companies with, for example, relatively low valuations based on price-to-book ratios, price-to-earnings ratios and other factors, are designated as “value” securities. Stocks that are not designated as “growth” or “value” securities are designated as “core” securities. Stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

Morningstar Mid Growth Index

Number of Components: approximately 235

Index Description. The Index measures the performance of stocks issued by mid-capitalization companies that have exhibited above-average “growth” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or NASDAQ. The Morningstar index methodology defines “mid-capitalization” stocks as those stocks that form the 20% of market capitalization between the 70 ^th and 90 ^th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. The stocks included in the Index are designated as “growth” because they are issued by companies that typically have higher than average historical and forecasted earnings, sales, equity and cash flow growth. Stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try and track the Index.

Morningstar Mid Value Index

Number of Components: approximately 224

Index Description. The Index measures the performance of stocks issued by mid-capitalization companies that have exhibited “value” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or NASDAQ. The Morningstar index methodology defines “mid-capitalization” stocks as those stocks that form the 20% of market capitalization between the 70 ^th and 90 ^th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. The stocks included in the Index are designated as “value” because they are issued by companies that typically have relatively low valuations based on price-to-earnings, price-to-book value, price-to-sales, price-to-cash flow and dividend yields. The stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

Morningstar Small Core Index

Number of Components: approximately 374

Index Description. The Index measures the performance of stocks issued by small-capitalization companies that have exhibited average “growth” and “value” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or the NASDAQ. The Morningstar index methodology defines “small-capitalization” stocks as those stocks that form the 7% of market capitalization between the 90 ^th and 97 ^th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. Stocks of companies with, for example, relatively higher average historical and forecasted earnings, sales, equity and cash flow growth would be designated as “growth” securities. Stocks of companies with, for example, relatively low valuations based on price-to-book ratios, price-to-earnings ratios and other factors, are designated as “value” securities. Stocks that are not designated as “growth” or “value” securities are designated as “core” securities. Stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

Morningstar Small Growth Index

Number of Components: approximately 360

Index Description. The Index measures the performance of stocks issued by small-capitalization companies that have exhibited above-average “growth” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or NASDAQ. The Morningstar index methodology defines “small-capitalization” stocks as those stocks that form the 7% of market capitalization between the 90 ^th and 97 ^th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. The stocks included in the Index are designated as “growth” because they are issued by companies that typically have higher than average historical and forecasted earnings, sales, equity and cash flow growth. Stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try and track the Index.

Morningstar Small Value Index

Number of Components: approximately 324

Index Description. The Index measures the performance of stocks issued by small-capitalization companies that have exhibited “value” characteristics as determined by Morningstar’s proprietary index methodology. Index constituents are drawn from the pool of liquid, U.S.-domiciled stocks that trade publicly on the NYSE, the AMEX or NASDAQ. The Morningstar index methodology defines “small capitalization” stocks as those stocks that form the 7% of market capitalization between the 90 ^th and 97 ^th percentile of the market capitalization of the stocks eligible to be included in the Morningstar US Market Index (a diversified broad market index that represents approximately 97% of the market capitalization of publicly-traded US stocks). Stocks are then designated as “core”, “growth” or “value” based on their style orientations. The stocks included in the Index are designated as “value” because they are issued by companies that typically have relatively low valuations based on price-to-earnings, price-to-book value, price-to-sales, price-to-cash flow and dividend yields. The stocks in the Index are weighted according to the total number of shares that are publicly owned and available for trading. The Fund uses a Representative Sampling strategy to try to track the Index.

The MSCI Indices Generally

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

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

MSCI single country standard equity indices are notable for the depth and breadth of their coverage. MSCI’s single country standard equity indices generally seek to have 85% of the free float-adjusted market capitalization of a country’s stock market reflected in the MSCI Index for that country. The MSCI single country standard equity indices seek to balance the inclusiveness of an “all share” index against the replicability of a “blue chip” index.

The MSCI value and growth indices are subsets of the MSCI single country standard equity indices and seek to target approximately 50% of the market capitalization represented by the underlying standard equity index for each country.

MSCI Single Country Standard Equity Indices

Weighting. Effective May 31, 2002, all single-country MSCI equity indices are free-float weighted, i.e., companies are included in the indices at the value of their free public float (free float, multiplied by price). MSCI defines “free float” as total shares excluding shares held by strategic investors such as governments, corporations, controlling shareholders and management, and shares subject to foreign ownership restrictions. MSCI’s single country standard equity indices generally seek to have 85% of the free float-adjusted market capitalization of a country’s stock market represented within each industry group, within each country.

Regional Weights. Market capitalization weighting, combined with a consistent target of 85% of free float-adjusted market capitalization, helps ensure that each country’s weight in regional and international indices approximates its weight in the total universe of developing and emerging markets. Maintaining consistent policies among MSCI developed and emerging market indices is critical to the calculation of certain combined developed and emerging market indices published by MSCI.

Selection Criteria. To construct relevant and accurate equity indices for the global institutional investor, MSCI undertakes an index construction process that involves: (i) defining the equity universe; (ii) adjusting the total market capitalization of all securities in the universe for free float available to foreign investors; (iii) classifying the universe of securities under the Global Industry Classification Standard (the “GICS”); and (iv) selecting securities for inclusion according to MSCI’s index construction rules and guidelines.

Defining the Universe. The index construction process starts at the country level, with the identification of all listed securities for that country. Currently, MSCI creates equity indices for 50 global country markets. MSCI classifies each company and its securities in only one country. This allows securities to be sorted distinctly by their respective countries. In general, companies and their respective securities are classified as belonging to the country in which they are incorporated. All listed equity securities, or listed securities that exhibit characteristics of equity securities, except investment trusts, mutual funds and equity derivatives, are eligible for inclusion in the universe. Shares of non-domiciled companies generally are not eligible for inclusion in the universe.

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

Classifying Securities Under the GICS. In addition to the free float-adjustment of market capitalization, all securities in the universe are assigned to an industry-based hierarchy that describes their business activities. To this end, MSCI has designed, in conjunction with Standard & Poor’s, the GICS. This comprehensive classification scheme provides a universal approach to industries worldwide and forms the basis for achieving MSCI’s objective of reflecting broad and fair industry representation in its indices.

Selecting Securities for Index Inclusion. In order to ensure a broad and fair representation in the indices of the diversity of business activities in the universe, MSCI follows a “bottom-up” approach to index construction, building indices up to the industry group level. The bottom-up approach to index construction requires a thorough analysis and understanding of the characteristics of the universe. This analysis drives the individual security selection decisions, which aim to reflect the overall features of the universe in the country index. MSCI targets an 85% free float-adjusted market representation level within each industry group, within each country. The security selection process within each industry group is based on the careful analysis of: (i) each company’s business activities and the diversification that its securities would bring to the index; (ii) the size (based on free float-adjusted market capitalization) and liquidity of the securities of the company; and (iii) the estimated free float for the company and its individual share classes. MSCI targets for inclusion the most sizable and liquid securities in an industry group. MSCI generally does not consider securities with inadequate liquidity, and/or securities that do not have an estimated free float greater than 15 %. Exceptions to this general rule are made only in significant cases, where exclusion of a security of a large company would compromise the index’s ability to fully and fairly represent the characteristics of the underlying market.

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

Under MSCI’s free float-adjustment methodology, a constituent’s inclusion factor is equal to its estimated free float rounded-up to the closest 5% for constituents with free float equal to or exceeding 15%. For example, a constituent security with a free float of 23.2% will be included in the index at 25% of its market capitalization. For securities with an 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 the MSCI Indices are the official exchange closing prices or those figures accepted as such. MSCI reserves the right to use an alternative pricing source on any given day.

Exchange Rates. MSCI uses the FX rates published by WM Reuters at 4:00 p.m. London time. MSCI uses WM Reuters rates for all developed and emerging markets. Exchange rates are taken daily at 4:00 p.m. London time by the WM Company and are sourced whenever possible from multi-contributor quotes on Reuters. Representative rates are selected for each currency based on a number of “snapshots” of the latest contributed quotations taken from the Reuters service at short intervals around 4:00 p.m. WM Reuters provides closing bid and offer rates. MSCI uses these rates to calculate the mid-point to 5 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 Indices. The MSCI Indices are maintained with the objective of reflecting, on a timely basis, the evolution of the underlying equity markets. In maintaining the MSCI Indices, emphasis is also placed on continuity, replicability and minimizing turnover in the Indices. Maintaining the MSCI Indices involves many aspects, including: (i) additions to, and deletions from, the Indices; (ii) and changes in number of shares; and (iii) changes in Foreign Inclusion Factors (“FIFs”) as a result of updated free float estimates.

Potential additions are analyzed not only with respect to their industry group, but also with respect to their industry or sub-industry group, in order to represent a wide range of economic and business activities. All additions are considered in the context of MSCI’s methodology, including the index constituent eligibility rules and guidelines.

In assessing deletions, it is important to emphasize that indices must represent the full-investment cycle, including both bull and bear markets. Out-of-favor industries and their securities may exhibit declining prices, declining market capitalization, and/or declining liquidity, and yet are not deleted because they continue to be good representatives of their industry group. As a general policy, changes in number of shares are coordinated with changes in FIFs to accurately reflect the investability of the underlying securities. In addition, MSCI continuously strives to improve the quality of its free float estimates and the related FIFs. Additional shareholder information may come from better disclosure by companies or more stringent disclosure requirements by a country’s authorities. It may also come from MSCI’s ongoing examination of new information sources for the purpose of further enhancing free float estimates and better understanding shareholder structures. When MSCI identifies useful additional sources of information, it seeks to incorporate them into its free float analysis.

Overall, index maintenance can be described by three broad categories of implementation of changes:

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

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

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

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

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

MSCI EAFE Growth and Value. The objective of MSCI’s Growth and Value Index design is to divide constituents of the underlying MSCI Country Indices into a growth index and value index, each representing approximately 50% of the free float-adjusted market capitalization of the underlying index.

MSCI defines the value and growth characteristics for index construction using different attributes for value and growth. Value characteristics are evaluated based on the following three variables: book value to price ratio, 12-months forward earnings to price ratio and dividend yield. Growth characteristics are evaluated based on the following five variables: long-term forward earnings per share (“EPS”) growth rate, short-term forward EPS growth rate and current internal growth rate, long-term historical EPS growth trend, long-term historical sales per share growth trend.

MSCI constructs and maintains its growth and value indices by allocating securities and their free float-adjusted market capitalizations to the appropriate growth and value indices, during the semi-annual style index reviews of May and November. MSCI’s construction of the growth and value indices for each country index involves the following steps: (i) determining the values of the variables used to specify growth and value characteristics for each security, (ii) calculating the z-scores of each variable for each security, (iii) aggregating the style scores for each security to determine the security’s overall style characteristics, (iv) assigning initial style inclusion factors for each security and (v) representing the 50% free float-adjusted market capitalization target by allocating securities to the growth and value indices after applying buffer rules.

MSCI EAFE ^® Index

Number of Components: approximately 1,130

Index Description. The MSCI EAFE ^® Index is commonly used as a measure of international stock performance. Constituents of the Index include securities from Europe, Australasia (Australia and Asia) and the Far East.

Calculation Methodology. The iShares MSCI EAFE Index Fund utilizes the MSCI EAFE Index calculated with net dividends reinvested. “Net dividends” means dividends after reduction for taxes withheld at the rate applicable to holders of the underlying stock that are resident in Luxembourg. With respect to the iShares MSCI EAFE Index Fund, such withholding rates may differ from that applicable to United States residents.

The Index is calculated on a real-time basis and disseminated at regular intervals throughout the day.

MSCI EAFE ^® Growth Index

Number of Components: approximately 673

Index Description. The MSCI EAFE ^® Growth Index is a subset of the MSCI EAFE Index and constituents of the Index include securities from Europe, Australasia (Australia and Asia), and the Far East. The Index generally represents approximately 50% of the free float-adjusted market capitalization of the MSCI EAFE Index and consists of those securities classified by MSCI as most representing the growth style. Securities classified as growth style generally tend to have higher forecasted growth rates, lower book value to price ratios, lower forward earnings to price ratios and lower dividend yields than securities representing the value style. MSCI uses a specialized framework to attribute both growth and value style characteristics to each security within the MSCI EAFE Index. Each security is evaluated based on certain value factors and growth factors, which are then used to calculate a growth score and value score. Based upon these two scores, MSCI determines the extent to which each security is assigned to the growth or value style. It is possible for a single security to have representation in both the growth and value style indices, however, no more than 100% of a security’s float-adjusted market capitalization will be included within the combined style framework. The Fund uses a Representative Sampling strategy to try to track the Index.

MSCI EAFE ^® Value Index

Number of Components: approximately 578

Index Description. The MSCI EAFE ^® Value Index is a subset of the MSCI EAFE Index and constituents of the Index include securities from Europe, Australasia (Australia and Asia), and the Far East. The Index generally represents approximately 50% of the free float-adjusted market capitalization of the MSCI EAFE Index and consists of those securities classified by MSCI as most representing the value style. Securities classified as value style generally tend to have higher book value to price ratios, higher forward earnings to price ratios, higher dividend yields and lower forecasted growth rates than securities representing the growth style. MSCI uses a specialized framework to attribute both value and growth style characteristics to each security within the MSCI EAFE Index. Each security is evaluated based on certain value factors and growth factors, which are then used to calculate a growth score and value score. Based upon these two scores, MSCI determines the extent to which each security is assigned to the value or growth style. It is possible for a single security to have representation in both the value and growth style indices, however, no more than 100% of a security’s float-adjusted

market capitalization will be included within the combined style framework. The Fund uses a Representative Sampling strategy to try to track the Index.

The NASDAQ Biotechnology Index Generally

Component Selection Criteria . To be eligible for inclusion in the Index, the security’s U.S. listing must be exclusively on the NASDAQ Stock Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing) and meet the following criteria:

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the issuer of the security must be classified according to the Industry Classification Benchmark classification system as either biotechnology or pharmaceuticals;

•

the security must be listed on the NASDAQ Stock Market;

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the security must have a market capitalization of at least $200 million;

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the security must have an average daily trading volume of at least 100,000 shares;

•

the security must have “seasoned” on The NASDAQ Stock Market or another recognized market for at least 6 months (generally a company is considered to be seasoned by NASDAQ if it has been listed on a market for at least six months; in the case of spin-offs, the operating history of the spin-off will be considered);

•

the security may not be issued by an issuer currently in bankruptcy proceedings; and

•

the issuer of the security may not have entered into a definitive agreement or other arrangement which would result in the security no longer being index eligible within the next six months; and the issuer of the security may not have annual financial statements with an audit opinion which the auditor or the company have indicated cannot be currently relied upon.

Issue Changes . The Index will be subject to reexamination on a quarterly basis. The weights of Index components will be rebalanced if one or more of the following are not met: (1) the weight of the single largest component is greater than 24%; or (2) the collective weight of those Index securities whose individual current weights are in excess of 4.5%, when added together, exceed 48.0% of the Index. In addition, NASDAQ may conduct a special rebalancing if it is determined necessary to maintain the integrity of the Index. If either one or both of these weight distribution requirements are not met upon quarterly review, a weight rebalancing will be performed in accordance with the following plan. First, relating to weight distribution requirement (1) above, if the current weight of the single largest Index security exceeds 24.0%, then the weights of all large stocks will be scaled down proportionately towards the average weight by enough for the adjusted weight of the single largest Index security to be set to 20.0%. Second, relating to weight distribution requirement (2) above, for those Index securities whose individual current weights or adjusted weights in accordance with the preceding step are in excess of 4.5%, if their “collective weight” exceeds 48.0%, then the weights of all large stocks will be scaled down proportionately towards the average weight by just enough for the “collective weight”, so adjusted, to be set to 40.0%.

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

Index Maintenance . NASDAQ monitors securities in the Index every day with respect to changes in total shares outstanding arising from secondary offerings, stock repurchases, conversions or other corporate actions. NASDAQ has adopted the following weight adjustment procedures with respect to such changes. Changes in total shares outstanding arising from stock splits, stock dividends, or spin-offs are generally made to the Index on the evening prior to the effective date of such corporate action. If the change in total shares outstanding arising from other corporate actions is greater than or equal to 5.0%, the change will be made as soon as practicable, normally within ten (10) days of such action. Otherwise, if the change in total shares outstanding is less than 5%, all such changes are accumulated and made effective at one time on a quarterly basis after the close of trading on the third Friday in each of March, June, September and December. In either case, the Index share weights for such Index securities are adjusted by the same percentage amount by which the total shares outstanding have changed in such Index securities. Ordinarily, whenever there is a change in Index share weights or a change in a component security included in the Index, NASDAQ adjusts the divisor to assure that there is no discontinuity in the value of the Index, which might otherwise be caused by any such change.

Index Availability. The NASDAQ Biotechnology Index is calculated continuously and widely disseminated to major data vendors.

NASDAQ Biotechnology Index

Number of Components: 164

Index Description. The NASDAQ Biotechnology Index is modified market-value weighted, and is subject to rebalancing to ensure that the relative weightings of the index components meet requirements for a diversified portfolio. The market value, the last sale price multiplied by index share weights, is calculated throughout the trading day, and is related to the total value of the Index. On November 1, 1993, the Index began with a base of 200.00.

The NYSE Indices Generally

Component Selection Criteria. The NYSE Indices track the performance of specified NYSE-listed securities. The Indices are maintained according to a rules-based methodology. The Indices are capitalization-weighted, adjusted for free-float shares and calculated on a price and total return basis. The Indices are weighted by float-adjusted market capitalization, rather than full market capitalization, in order to better reflect the actual number of shares available to investors. The Indices are published every business day, and real-time updates are disseminated to financial data vendors whenever the NYSE is open.

Issue Changes. The weightings of securities ( i.e ., “components”) in each Index is reviewed quarterly based on market-capitalization and free-float data (with the exception of the NYSE Composite, NYSE Energy, NYSE Financial and NYSE Health Care Indices, each of which is rebalanced on an on going basis). All index-component companies must meet the substantive listing requirements of the NYSE; components that fail to meet such requirements are dropped from the Indexes. Quarterly reviews are implemented during March, June, September, and December. Changes in index composition and related weight may also be necessary on an ongoing basis to reflect extraordinary events such as delistings, bankruptcies, mergers or takeovers involving index components and changes of more than 10% in the number of outstanding shares of an Index.

Index Maintenance. Index maintenance includes monitoring and implementing the adjustments for component additions and deletions, share changes, stock splits, stock dividends, corporate restructurings, spin-offs, or other corporate actions. Some corporate actions, such as stock splits and stock dividends, require simple changes in the common shares outstanding and the stock prices of the component companies in the Index. Other corporate actions, such as share issuances, change the aggregate free-float adjusted market capitalization of the Indices and require additional adjustments. Corporate actions will be implemented after the close of trading on the day prior to the ex-date of such corporate actions. Whenever possible, changes to the Indexes’ components will be announced at least two business days prior to their implementation date.

If trading in a security is suspended while the NYSE is open, the last traded price for that security on the NYSE is used for all subsequent index computations until trading resumes. If trading is suspended before the opening of the NYSE on a given day, the security’s adjusted closing price from the previous day is used to calculate the Index. Until a particular security opens, its adjusted closing price from the previous day is used in the Index computation.

Index Availability. The NYSE Indices are calculated continuously and are available from major data vendors.

NYSE Composite Index

Number of Components: approximately 2,030

Index Overview and Description. The NYSE Composite Index is weighted using free-float market capitalization, and calculated on both price ( i.e. , real time) and total return ( i.e. , end of trading day) basis. The Index is fully transparent and rule-based. The Index is calculated and maintained by Dow Jones Indexes pursuant to a contractual agreement with the NYSE.

Methodology. Only common stocks, ADRs, REITs and tracking stocks listed on the NYSE are eligible for inclusion in the Index. Multiple classes of shares of the same issuer are eligible to be included in the Index. Preferred stocks, closed-end funds, exchange- traded funds, trust units, shares of beneficial interest, shares in limited partnerships, and derivative securities (such as warrants and rights) are not eligible for inclusion in the Index.

Calculation and Dissemination. The Index is calculated whenever the NYSE is open using the latest traded price on the NYSE for each security in the Index. Following the determination of the previous day’s closing Index value, the Index values for the current day are updated and disseminated following the opening of NYSE trading on a real-time basis beginning when the first traded price of any of the Index components are received.

Weighting. The Index is weighted by float-adjusted market capitalization, rather than full market capitalization, to reflect the actual number of shares available to investors. Shares held by governments, corporations, strategic partners of the issuer and control groups are excluded from an issuer’s available float when determining Index weightings.

NYSE U.S. 100 Index

Number of Components: 100

Index Overview and Description. The NYSE U.S. 100 Index is weighted using free-float market capitalization and is calculated on both price ( i.e. , real-time) and total return ( i.e ., end of trading day) basis. The Index is fully transparent and rule-based. The Index is calculated and maintained by Dow Jones Indexes pursuant to a contractual agreement with NYSE.

Methodology. Only common stocks and other securities that have the characteristics of common equities of U.S. companies listed on the NYSE are eligible for inclusion in the Index. Fixed-dividend shares and securities such as convertible notes, warrants, rights, mutual funds, unit investment trusts, closed-end fund shares, shares in limited partnerships and tracking stocks are not eligible for inclusion in the Index. Companies that have less than 100,000 shares in average daily trading volume for the preceding three months are ineligible for inclusion in the Index. If a company has multiple share classes, only the class of shares that has the highest average daily trading volume during the preceding three months is included in the Index.

Calculation and Dissemination. The Index is calculated whenever the NYSE is open using the latest traded price on the NYSE for each security in the Index. Following the determination of the previous day’s closing Index value, the Index values for the current day are updated and disseminated following the opening of NYSE trading on a real-time basis, beginning when the first traded price of any of the Index components are received.

Weighting. The Index is weighted by float-adjusted market capitalization, rather than full market capitalization, to reflect the actual number of shares available to investors. Shares held by governments, corporations, strategic partners of the issuer and other control groups are excluded from a company’s available float when determining Index weightings.

Index Maintenance. The Index is rebalanced quarterly, with an “80-120” buffer applied to limit turnover. When the eligible universe is ranked by market capitalization, all stocks (components and new components) in the top 80 are automatically included in the Index while all stocks ranked below 120, including prior components, are automatically excluded. The remaining components are selected from stocks falling between 80 and 120, starting with the highest ranked prior components. If all prior components in this group have been added to the Index and spaces are still left, new components are added, starting with the largest capitalization stocks. Initial public offerings (“IPOs”) and new listings are eligible for inclusion at the quarterly rebalancing following their sale or listing, provided that their market capitalization and trading volumes have met the threshold for inclusion for at least five trading days. However, if an IPO company or new listing would be in the top 25% of the Index’s market capitalization, it may be included between reviews, provided that a minimum notification period of two business days is observed.

In addition to the scheduled quarterly rebalancing, the Index is rebalanced on an ongoing basis to accommodate extraordinary events, such as delistings, bankruptcies, mergers and acquisitions and changes of more than 10% in the number of outstanding shares of an Index component.

The Russell Indices Generally

Component Selection Criteria . The securities in the Russell Indices (sometimes referred to as the “components”) are reconstituted annually after the close on the last Friday in June to reflect changes in the marketplace. The starting universe for the Russell 3000 ^® Index, all U.S. exchange and NASDAQ listed companies, is ranked by decreasing total market capitalization. The Russell 2000 ^® Index and the Russell 1000 ^® Index are subsets of the Russell 3000 ^® Index. All U.S. incorporated companies listed on a U.S. exchange are considered for inclusion with the following rules and exceptions. Stocks must trade at or above $1.00 on May 31 to be eligible for inclusion. Although only one class of security is allowed into the Russell Indices, all common classes are combined to determine total market capitalization and available float. Tracking stocks are considered individually for membership. Also excluded are preferred and convertible preferred stock, participating preferred stock, redeemable shares, warrants and rights, trust receipts, royalty trusts, limited liability companies, OTC bulletin boards and pink sheet stocks, mutual funds, limited partnerships, and foreign stocks. After component selection, stocks are weighted by their available market capitalization.

For all Russell Indices, component companies are adjusted for available float—weighted according to the market value of their available outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is the share price times the number of shares available. Each Russell Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

Issue Changes . Securities that leave the Russell Indices between reconstitution dates are not replaced. Thus, the number of securities in the investments over the year will fluctuate according to corporate activity. When a stock is acquired, delisted, reincorporated outside of the U.S. or moves to the pink sheets or OTC bulletin boards, the stock is deleted from the relevant

Indices. When acquisitions or mergers take place, the stock’s capitalization moves to the acquiring stock, hence, mergers have no effect on Index total capitalization if the acquiring stock is part of the Index. The only additions between reconstitution dates are as a result of spin-offs and initial public offerings.

Index Maintenance . Maintaining the Russell Indices includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to restructuring and spin-offs and quarterly initial public offerings. In addition, significant float adjustments due to outstanding share capital changes actions are made month-end. The divisor is adjusted for all changes in company market value to leave the value of the investments unaffected. All divisor adjustments are made after the close of trading and after the calculation of the closing value of the Russell Indices.

Index Availability. The Russell Indices are calculated continuously and are available from major data vendors.

Russell 3000 ^® Index

Number of Components: approximately 2,942

Index Description . The Russell 3000 Index measures the performance of the U.S. equity broad market. It serves as the underlying index for Russell 3000 Growth and Value series and the Russell 1000 and Russell 2000 Indices, as well as each respective Growth and Value series. It is a capitalization-weighted index of the 3000 largest companies incorporated in the U.S. and its territories. The Russell 3000 Index represents approximately 98 % of the market capitalization of listed U.S. equities and is a leading benchmark of the broad U.S. equity market.

Russell 3000 ^® Growth Index

Number of Components: approximately 1,988

Index Description . The Russell 3000 Growth Index measures the growth sector of the broad U.S. equity market. It is a subset of the Russell 3000 Index. It is a capitalization-weighted Index consisting of those companies within the Russell 3000 that have higher price-to-book ratios and higher forecasted growth and represents approximately 49% of the total market capitalization of the Russell 3000 Index. The Index represents approximately 47% of the market capitalization of listed U.S. equities.

Russell 3000 ^® Value Index

Number of Components: approximately 1,947

Index Description . The Russell 3000 Value Index measures the value sector of the broad U.S. equity market. It is a subset of the Russell 3000 Index. It is a capitalization-weighted Index consisting of those companies within the Russell 3000 Index that have lower price-to-book ratios and lower forecasted growth and represents approximately 51% of the total market capitalization of the Russell 3000 Index. The Index represents approximately 48% of the market capitalization of listed U.S. equities.

Russell 2000 ^® Index

Number of Components: approximately 1,981

Index Description . The Russell 2000 Index measures the small-capitalization sector of the U.S. equity market. It is a subset of the Russell 3000 Index and serves as the underlying Index for the Russell 2000 Growth and Value index series. It is a capitalization-weighted Index consisting of the 2000 smallest companies in the Russell 3000 Index. The Index represents approximately 8% of the market capitalization of listed U.S. equities and is a leading benchmark of the U.S. small cap equity market.

Russell 2000 ^® Growth Index

Number of Components: approximately 1,357

Index Description . The Russell 2000 Growth Index measures the small-capitalization growth sector of the U.S. equity market. It is a subset of the Russell 2000 Index. It is a capitalization-weighted Index consisting of those companies within the Russell 2000 Index that have higher price-to-book ratios and higher forecasted growth and represents approximately 50% of the total market capitalization of the Russell 2000 Index. The Russell 2000 Growth Index represents approximately 4% of the market capitalization of listed U.S. equities and is a leading benchmark of the U.S. small cap growth equity market.

Russell 2000 ^® Value Index

Number of Components: approximately 1,316

Index Description . The Russell 2000 Value Index measures the small-capitalization value sector of the U.S. equity market. It is a subset of the Russell 2000 Index. It is a capitalization-weighted Index consisting of those companies within the Russell 2000 Index that have lower price-to-book ratios and lower forecasted growth and represents approximately 50% of the total market capitalization of the Russell 2000 Index. The Index represents approximately 4% of the market capitalization of listed U.S. equities and is a leading benchmark of the U.S. small cap value equity market.

Russell 1000 ^® Index

Number of Components: approximately 961

Index Description . The Russell 1000 Index measures the performance of the large-capitalization sector of the U.S. equity market. It is a subset of the Russell 3000 Index and serves as the underlying Index for the Russell 1000 Growth and Value Indices, and the Russell Top 200 and MidCap series. It is a capitalization-weighted Index consisting of the 1000 largest companies in the Russell 3000. The Index represents approximately 90% of the market capitalization of listed U.S. equities and is a leading benchmark of the large cap U.S. market.

Russell 1000 ^® Growth Index

Number of Components: approximately 631

Index Description . The Russell 1000 Growth Index measures the large-capitalization growth sector of the U.S. equity market. It is a subset of the Russell 1000 Index. It is a capitalization-weighted Index consisting of those companies within the Russell 1000 Index that have higher price-to-book ratios and higher forecasted growth and represents approximately 49% of the total market capitalization of the Russell 1000 Index. The Index represents approximately 43% of the market capitalization of listed U.S. equities and is a leading benchmark of the large cap growth U.S. market.

Russell 1000 ^® Value Index

Number of Components: approximately 631

Index Description . The Russell 1000 Value Index measures the large-capitalization value sector of the U.S. equity market. It is a subset of the Russell 1000 Index. It is a capitalization-weighted index consisting of those companies within the Russell 1000 Index that have lower price-to-book ratios and lower forecasted growth and represents approximately 51% of the total market capitalization of the Russell 1000 Index. The Index represents approximately 44% of the market capitalization of listed U.S. equities and is a leading benchmark of the large cap value U.S. market.

Russell Microcap ^™ Index

Number of Components: approximately 2,000

Index Description . The Russell Microcap ^™ Index measures the microcap sector of the U.S. equity market. The Russell Microcap ^™ Index consists of approximately the 1,000 smallest companies in the Russell 3000 Index plus the next smallest 1,000 companies in the equity universe as determined by Russell. The Index is a capitalization-weighted index and includes companies ranging in total market capitalization from approximately $67 million to $612 million, though these amounts may change from time to time. The Index represents approximately 3% of the market capitalization of listed U.S. equity securities.

Russell Midcap ^® Index

Number of Components: approximately 761

Index Description . The Russell Midcap Index is a capitalization-weighted index consisting of approximately the 800 smallest companies in the Russell 1000 Index. The Index represents approximately 26% of the market capitalization of listed U.S. equities and is a widely used benchmark of the U.S. mid cap equity market.

Russell Midcap ^® Growth Index

Number of Components: approximately 489

Index Description . The Russell Midcap Growth Index is a capitalization-weighted index that measures the performance of the mid-capitalization growth sector of the U.S. equity market. It is a subset of the Russell Midcap Index, representing approximately 48% of the total market capitalization of the Russell Midcap Index. The Index measures the performance of those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth.

Russell Midcap ^® Value Index

Number of Components: approximately 504

Index Description . The Russell Midcap Value Index is a capitalization-weighted index that measures the performance of the mid-capitalization value sector of the U.S. equity market. It is a subset of the Russell Midcap Index, representing

approximately 52% of the total market capitalization of the Russell Midcap Index. The Index measures the performance of those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth.

The S&P Indices Generally

Component Selection Criteria for Domestic Indices (excluding the S&P U.S. Preferred Stock Index ). The S&P U.S. Index Committee is responsible for the overall management of the S&P Indices. Companies ( i.e. , the “components”) selected for the indices represent a broad range of industry segments within the U.S. economy. The starting universe, all publicly traded U.S. companies, is screened to eliminate ADRs, mutual funds, limited partnerships and royalty trusts. The following criteria are then analyzed to determine a company’s eligibility for inclusion in the indices: (i) ownership of a company’s outstanding common stock, in order to screen out closely held companies; (ii) trading volume of a company’s stock, in order to ensure ample liquidity and efficient share pricing; and (iii) the financial and operating condition of a company.

Component Selection Criteria for International Indices . Stocks are eligible for the S&P global indices if they meet criteria for size, liquidity, profitability, and sector and market representation. Each of the S&P global indices is balanced across country and sector weights in the region/market. The S&P global indices begin with an eligible investable universe of stocks covering approximately 95% of each country’s total market capitalization. Stocks with relatively small market capitalization or insufficient liquidity are excluded by S&P. To identify a candidate pool for index constituent selection, all stocks are carefully examined using a set of general criteria. The specific securities are then screened for industry sector classification; thus, the eligible securities are ranked according to Global Industry Classification Standards (“GICS”). Then, the index components, now determined, are weighted on the basis of S&P’s free float, market capitalization methodology. Generally, S&P observes a prospective constituent’s liquidity over a period of at least 6 months before consideration for inclusion. However, it is recognized that there may be extraordinary situations when companies should be added immediately (e.g., certain privatizations). When a particular company dominates its home market, it may be excluded from the Index if analysis of the sectors reveals that its securities are not as liquid as those of similar companies in other countries. The S&P global indices may include ADRs and GDRs.

With respect to the non-U.S. components of the S&P global sector indices, the eligible universe of index components that are considered for inclusion are from the following S&P Indexes: (1) the S&P/Toronto Stock Exchange (“TSX”) 60 Index, which represents the liquid, large-cap stocks of the publicly listed companies in the Canadian equities market; (2) the S&P Tokyo Stock Price (“TOPIX”) 150 Index which represents the liquid, large-cap stocks of the publicly listed companies in the Japanese equities market; (3) the S&P/ Australia Stock Exchange (“ASX”) 50 Index, which represents the liquid, large-cap stocks in the Australian equities market; (4) the S&P Asia 50 Index, which represents the liquid, large-cap stocks of four major equities markets in Asia (Hong Kong, Korea, Taiwan and Singapore); (5) the S&P Latin America 40 Index, which represents the liquid, large-cap stocks from major sectors of the Mexico, Brazil, Argentina and Chile equity markets; and (6) the S&P Europe 350 Index, which represents the liquid, large-cap stocks of the publicly listed companies in the region, covering approximately 70% of the region’s market capitalization.

Issue Changes . General oversight responsibility for the S&P Indices, including overall policy guidelines and methodology, is handled by the S&P Global Index Committee. Maintenance of component investments, including additions and deletions to these investments, is the responsibility of separate regional index committees composed of S&P staff specialized in the various regional equity markets and, in some cases with the assistance of local stock exchanges. Public announcements of index changes as the result of committee decisions will generally be made two business days in advance of the anticipated effective date whenever possible, although for exceptional corporate events announcements may be made earlier.

Index Maintenance . Maintaining the S&P Indices includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to restructuring and spin-offs.

A company will be removed from the S&P Indices as a result of mergers/acquisitions, bankruptcy, or restructuring. A company is removed from the relevant index as close as possible to the actual date on which the event occurred. A company can be removed from an index because it no longer meets current criteria for inclusion and/or is no longer representative of its industry group. All replacement companies are selected based on the above component section criteria.

When calculating index weights, individual constituents’ shares held by governments, corporations, strategic partners, or other control groups are excluded from the company’s shares outstanding. Shares owned by other companies are also excluded regardless of whether they are index constituents.

Once a year, the float adjustments will be reviewed and potentially changed based on such review. Each company’s financial statements will be used to update the major shareholders’ ownership. However, during the course of the year, S&P also monitors each company’s Investable Weight Factor (IWF) which is S&P’s term for the mathematical float factor used to calculate the float adjustment. If a change in IWF is caused by a major corporate action ( i.e. , privatization, merger, takeover, or share offering) and the change equal to or greater than 5%, a float adjustment will be implemented as soon as reasonably possible.

Changes in the number of shares outstanding driven by corporate events such as stock dividends, splits, and rights issues will be adjusted on the ex-date. Share changes of 5% or greater are implemented when they occur. Share changes of less than 5% are only updated on a quarterly basis on the Friday near the end of the calendar quarter. Implementation of new additions, deletions, and changes to the float adjustment, due to corporate actions, will be made available at the close of the third Friday in March, June, September and December. Generally, index changes due to rebalancing are announced two days before the effective date by way of a news release posted on www.spglobal.com.

Index Availability . The S&P Indices are calculated continuously and are available from major data vendors.

S&P 100 Index

Number of Components: 100

Index Description . The S&P 100 Index is a capitalization-weighted index representing stocks from a broad range of industries, chosen for market size, liquidity and industry group representation. The Index is a widely tracked index for blue-chip stocks. The S&P 100 serves as the basis for the S&P 100 options contract which trades on the CBOE. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price

change is proportional to the issue’s total float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

S&P 500 Index

Number of Components: 500

Index Description . The S&P 500 Index serves as the underlying index for the S&P 500/Citigroup Growth and Value Index series. It is a capitalization-weighted index from a broad range of industries chosen for market size, liquidity and industry group representation. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

S&P 500/Citigroup Growth Index*

Number of Components: approximately 303

Index Description . The S&P 500/Citigroup Growth Index is a capitalization-weighted index representing stocks from a broad range of industries. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

*	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

S&P 500/Citigroup Value Index*

Number of Components: approximately 351

Index Description . The S&P 500/Citigroup Value Index is a capitalization-weighted index representing stocks from a broad range of industries. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

*	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

S&P MidCap 400 Index

Number of Components: 400

Index Description . The S&P MidCap 400 Index serves as the underlying index for the S&P 400/Citigroup Growth and Value Index series. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. The Index is a benchmark for performance measurement of the mid-capitalization segment of the U.S. equity market.

S&P MidCap 400/Citigroup Growth Index*

Number of Components: approximately 235

Index Description . The S&P MidCap 400/Citigroup Growth Index is a capitalization-weighted index representing stocks from a broad range of industries. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s total market value, which is

the share price multiplied by the number of shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

*	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

S&P MidCap 400/Citigroup Value Index*

Number of Components: approximately 302

Index Description . The S&P MidCap 400/Citigroup Value Index is a capitalization-weighted index representing stocks from a broad range of industries. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

*	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

S&P SmallCap 600 Index

Number of Components: 600

Index Description . The S&P SmallCap 600 Index serves as the underlying index for the S&P 600/Citigroup Growth and Value Index series. It is a capitalization-weighted index from a broad range of industries chosen for market size, liquidity and industry group representation. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

S&P SmallCap 600/Citigroup Growth Index*

Number of Components: approximately 356

Index Description . The S&P SmallCap 600/Citigroup Growth Index is a capitalization-weighted index representing stocks from a broad range of industries. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

*	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

S&P SmallCap 600/Citigroup Value Index*

Number of Components: approximately 459

Index Description . The S&P SmallCap 600/Citigroup Value Index is a capitalization-weighted index representing stocks from a broad range of industries. The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The impact of a component’s price change is proportional to the issue’s float-adjusted market value, which is the share price multiplied by the number of publicly available shares outstanding. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

*	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

S&P Composite 1500 Index

Number of Components: approximately 1,500

Index Description . The S&P Composite 1500 Index is comprised of the S&P 500, MidCap 400, and SmallCap 600 Indices, which together represent approximately 90% of the total U.S. equity market. The securities in the Index are weighted based on the total float-adjusted market value of their outstanding shares. Securities with higher total market values have a larger

+representation in the Index. The S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. As of May 31, 2006, the S&P 500 Index included 78% of the market capitalization of all publicly-traded U.S. equity securities. The S&P MidCap 400 Index measures the performance of the mid-capitalization sector of the U.S. equity market. The securities in the S&P MidCap 400 Index have a market capitalization of between $1 billion and $4 billion (which may fluctuate depending on the overall level of the equity markets) and are selected for liquidity and industry group representation. The S&P SmallCap 600 Index measures the performance of publicly-traded securities in the small-capitalization sector of the U.S. equity market.

S&P U.S. Preferred Stock Index

Number of Components: approximately 44

Index Description. The S&P U.S. Preferred Stock Index measures the performance of a selected group of preferred stocks listed on the NYSE, the AMEX and the Nasdaq. The S&P U.S. Preferred Stock Index may include preferred stocks that are issued by U.S. entities or U.S. affiliates of non-U.S. entities. The preferred stocks included in the S&P U.S. Preferred Stock Index are selected by S&P using the methodology described below. In general terms, the S&P U.S. Preferred Stock Index includes preferred stocks with a market capitalization of over $100 million that meet minimum price, trading volume, issuance type, exchange listing, maturity and other requirements determined by S&P. S&P excludes (i) preferred stocks that are structured products and brand-name products issued by financial institutions that are packaged securities linked to indices, baskets of stocks or another company’s stock, (ii) preferred stocks that are issued by special ventures such as (but not limited to) toll roads or dam operators, (iii) ADRs and other forms of depositary receipts and (iv) preferred stocks that have a mandatory conversion or scheduled maturity within the next 12 months (i.e., before the next rebalancing). After excluding the securities listed above, S&P removes preferred stocks that (i) trade at $1.00 or less per share at the time the Underlying Index is constituted or rebalanced (ii) have an outstanding market capitalization of less than $100 million, (iii) have a 12-month average monthly trading volume of less than 300,000 shares (or an equivalent volume on a pro-rated basis for securities with a trading history shorter than 12 months), or (iv) have a trading volume of less than $18 million during the previous month. In addition, S&P removes preferred stocks for which S&P cannot determine an indicated dividend. The reference date for all of the preceding criteria is the last trading day in August of each year. S&P also limits the exposure to any single issuer to the three most liquid issues of that company’s preferred stock. For purposes of this limitation, S&P defines a single issuer to include companies that are under common control or are guaranteed by the same entity which is also affiliated with such companies. The S&P U.S. Preferred Stock Index is calculated with a modified capitalization weighted scheme, with modifications being made to the Index with respect to less liquid components or to prevent single stock concentration (specifically, no single index component may have a weight of more than 10%).

The S&P U.S. Preferred Stock Index is reconstituted annually after the close of the NYSE on the third Friday of September.

It is possible that the preferred stocks constituting the S&P U.S. Preferred Stock Index may change prior to the next rebalancing date, due to conversion or redemption of the preferred stock or for other reasons. In such an event, S&P will generally remove the stock on the first date of the redemption or conversion period and adjust the S&P U.S. Preferred Stock Index’s value accordingly. S&P will make an announcement one to five business days before a preferred stock is removed from the S&P U.S. Preferred Stock Index.

S&P Global 100 Index

Number of Components: 101

Index Description . The S&P Global 100 Index is designed to measure the performance of 100 large transnational companies that are of major importance in the global markets. A global company is defined as a corporation that has production facilities and/or other fixed assets in at least one foreign country, and makes its major management decisions in a global context. The degree to which sales are executed outside the home country is a factor in determining a company’s global reach. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The composition of the Index is derived from the S&P Global 1200 Index and only includes transnational corporations under the above definition which had a minimum adjusted market capitalization of US$5 billion. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Canada, Finland, France, Germany, Italy, Japan, South Korea, Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States.

S&P Global Consumer Discretionary Sector Index

Number of Components: approximately 187

Index Description. The S&P Global Consumer Discretionary Sector Index measures the performance of companies that Standard & Poor’s deems to be part of the consumer discretionary sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include manufacturing and service companies. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Canada, Chilé, France, Germany, Hong Kong, Italy, Japan, Korea, Mexico, Netherlands, Singapore, Spain, Sweden, Switzerland, United Kingdom, and the United States.

S&P Global Consumer Staples Sector Index

Number of Components: approximately 97

Index Description. The S&P Global Consumer Staples Sector Index measures the performance of companies that Standard & Poor’s deems to be part of the consumer staples sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include manufacturers and distributors of food, producers of non-durable household goods, and food and drug retailing companies. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Brazil, Canada, Chilé, France, Germany, Japan, Korea, Mexico, Netherlands, Spain, Sweden, Switzerland, United Kingdom, and the United States.

S&P Global Energy Sector Index

Number of Components: approximately 60

Index Description . The S&P Global Energy Sector Index is designed to measure the performance of companies that S&P deems to be part of the energy sector of the economy and that S&P believes are important to global markets. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The Index is a subset of the S&P Global 1200 Index. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Argentina, Australia, Austria, Brazil, Canada, France, Hong Kong, Italy, Japan Norway, Spain, the United Kingdom and the United States.

S&P Global Financials Sector Index

Number of Components: approximately 239

Index Description . The S&P Global Financials Sector Index is designed to measure the performance of companies that S&P deems to be part of the financial sector of the economy and that S&P believes are important to global markets. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The Index is a subset of the S&P Global 1200 Index. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, South Korea, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States.

S&P Global Healthcare Sector Index

Number of Components: approximately 81

Index Description . The S&P Global Healthcare Sector Index is designed to measure the performance of companies that S&P deems to be part of the healthcare sector of the economy and that S&P believes are important to global markets. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The Index is a subset of the S&P Global 1200 Index. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. As of the close of business on May 31, 2006, the Index is comprised of stocks of companies in the following countries: Australia, Belgium, Canada, Denmark, France, Germany, Ireland, Japan, Switzerland, the United Kingdom and the United States.

S&P Global Industrials Sector Index

Number of Components: approximately 171

Index Description . The S&P Global Industrials Sector Index measures the performance of companies that Standard & Poor’s deems to be part of the industrials sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include manufacturers and distributors of capital goods, providers of commercial services and supplies, and transportation service providers. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Brazil, Canada, Chilé, Denmark, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, and the United States.

S&P Global Materials Sector Index

Number of Components: approximately 118

Index Description. The S&P Global Materials Sector Index measures the performance of companies that Standard & Poor’s deems to be part of the materials sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include Component companies include those companies engaged in a wide variety of commodity-related manufacturing. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Brazil, Canada, Chilé, Finland, France, Germany, Ireland, Japan, Korea, Luxembourg, Mexico, Netherlands, Portugal, Spain, Sweden, Switzerland, Taiwan, United Kingdom, and the United States.

S&P Global Information Technology Sector Index

Number of Components: approximately 125

Index Description . The S&P Global Information Technology Sector Index is designed to measure the performance of companies S&P deems to be part of the technology sector of the economy and that S&P believes are important to global markets. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The Index is a subset of the S&P Global 1200 Index. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Canada, Finland, France, Germany, Italy, Japan, South Korea, Netherlands, Sweden, Taiwan, the United Kingdom and the United States.

S&P Global Telecommunications Sector Index

Number of Components: approximately 40

Index Description . The S&P Global Telecommunications Sector Index is designed to measure the performance of companies that S&P deems to be part of the telecommunications sector of the economy and that S&P believes are important to global markets. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The Index is a subset of the S&P Global 1200 Index. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events. As of the close of business on May 31, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Belgium, Brazil, Canada, Chile, France, Germany, Greece, Hong Kong, Italy, Japan, South Korea, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States.

S&P Global Utilities Sector Index

Number of Components: approximately 70

Index Description. The S&P Global Utilities Sector Index measures the performance of companies that Standard & Poor’s deems to be part of the Utilities sector of the economy and that Standard & Poor’s believes are important to global markets. It is a subset of the Standard & Poor’s Global 1200 Index. Component companies include providers of electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power. As of the close of business on June 30, 2006, the Index was comprised of stocks of companies in the following countries: Australia, Brazil, Canada, Chile, Finland, France, Germany, Hong Kong, Italy, Japan, Portugal, Spain, United Kingdom, and the United States.

S&P Europe 350 Index

Number of Components: 350

Index Description . The S&P Europe 350 Index is a capitalization-weighted index of 350 stocks providing geographic and economic diversity over S&P’s ten market sectors, each chosen for market size, liquidity and industry group representation. The market capitalization of index constituent companies is adjusted for all strategic holdings, including private, corporate, and government holdings. The Index is adjusted to reflect changes in capitalization resulting from mergers, acquisitions, stock rights, substitutions and other capital events.

S&P Latin America 40 Index

Number of Components: 40

Index Description . The S&P Latin America 40 Index is constructed with the addition of a float-adjustment factor. The size of its region mirrors its regional investable equity universe sector weights, based on adjusted market capitalization.

S&P/TOPIX 150 Index

Number of Components: 150

Index Description . The S&P/TOPIX 150 Index is constructed with the addition of a float-adjustment factor.

Investment Limitations

The Board has adopted as fundamental investment policies the investment objectives of the iShares Goldman Sachs Natural Resources Index Fund, iShares Russell 1000 Index Fund, iShares Russell Midcap Index Fund, iShares Russell Midcap Growth Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Midcap 400 Index Fund, iShares S&P SmallCap 600 Growth Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Latin America 40 Index Fund, iShares Goldman Sachs Networking Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares Dow Jones U.S. Total Market Index Fund, and iShares S&P 500 Index Fund. The investment objective of each of these Funds cannot be changed without the approval of the holders of a majority of such Fund’s outstanding voting securities. However, the Board has adopted as non-fundamental policies the investment objectives of all other Funds discussed in this SAI. Therefore, each of these Funds may change its investment objective and its Underlying Index without a shareholder vote. The Board has adopted as fundamental policies each Fund’s investment restrictions numbered one through six below. The restrictions for each Fund cannot be changed without the approval of the holders of a majority of that Fund’s outstanding voting securities. A vote of a majority of the outstanding voting securities is defined in the 1940 Act as the lesser of (a) 67% or more of the voting securities present at a fund meeting, if the holders of more than 50% of the outstanding voting securities are present or represented by proxy, or (b) more than 50% of outstanding voting securities.

The iShares S&P Global Energy Sector Index Fund, iShares S&P Latin America 40 Index Fund, iShares Goldman Sachs Networking Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares Dow Jones U.S. Total Market Index Fund, iShares NYSE 100 Index Fund, iShares FTSE/Xinhua China 25 Index Fund, iShares Dow Jones Select Dividend Index Fund, and iShares S&P 500 Index Fund will not:

Concentrate its investments ( i.e. , hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except that a Fund will concentrate to approximately the same extent that its Underlying Index concentrates in the stocks 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.

Borrow money, except that (i) each 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) each 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), each 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 “senior securities” as defined in the 1940 Act and the rules, regulations and orders thereunder, except as permitted under the 1940 Act and the rules, regulations and orders thereunder.

Make loans. This restriction does not apply to: (i) the purchase of debt obligations in which each Fund may invest consistent with its investment objectives and policies; (ii) repurchase agreements and reverse repurchase agreements; and (iii) loans of its portfolio securities, to the fullest extent permitted under the 1940 Act.

Purchase or sell real estate, real estate mortgages, commodities or commodity contracts, but this restriction shall not prevent each Fund from trading in futures contracts and options on futures contracts (including options on currencies to the extent consistent with each Fund’s investment objective and policies).

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

All Funds (other than the iShares S&P Global Energy Sector Index Fund, iShares S&P Latin America 40 Index Fund, iShares Goldman Sachs Networking Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares Dow Jones U.S. Total Market Index Fund, iShares NYSE 100 Index Fund, iShares FTSE/Xinhua China 25 Index Fund, iShares Dow Jones Select Dividend Index Fund, iShares S&P U.S. Preferred Stock Index Fund and iShares S&P 500 Index Fund) will not:

Concentrate its investments ( i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except that a Fund will concentrate to approximately the same extent that its Underlying Index concentrates in the stocks 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.

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 amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.

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

The iShares S&P U.S. Preferred Stock Index Fund will not:

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 a 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.

Borrow money, except that (i) each 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) each 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), each 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.

Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this restriction shall not prevent each Fund from investing in securities of companies engaged in the real estate business or securities or other instruments backed by real estate or mortgages), or commodities or commodity contracts (but this restriction shall not prevent each Fund from trading in futures contracts and options on futures contracts, including options on currencies to the extent consistent with each Fund’s investment objective and policies).

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

In addition to the investment restrictions adopted as fundamental policies, set forth above, each Fund will not 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 each Fund’s net assets to be invested in illiquid securities.

For purposes of the percentage limitation on each Fund’s investments in illiquid securities, foreign equity securities, though not registered under the Securities Act, are not deemed illiquid with respect to each Fund if they are otherwise readily marketable. Such securities ordinarily are considered to be “readily marketable” if they are traded on an exchange or another organized market and are not legally restricted from sale by the Fund. BGFA monitors the liquidity of restricted securities in each Fund’s portfolio. In reaching liquidity decisions, BGFA considers the following factors:

•

The frequency of trades and quotes for the security;

•

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

•

Dealer undertakings to make a market in the security; and

•

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.

Each Fund (other than the iShares Morningstar Index Funds) 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 in the Fund’s Underlying Index and in ADRs based on securities in the Underlying Index. Each Fund also has adopted a policy to provide its shareholders with at least 60 days’ prior written notice of any change in such policy. If, subsequent to an investment, the 80% requirement is no longer met, a Fund’s future investments will be made in a manner that will bring the Fund into compliance with this policy.

Each of the iShares Morningstar Index Funds 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 in the Fund’s Underlying Index. Each Morningstar 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 not longer met, a Morningstar 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 Unit Aggregations of shares are created and traded may raise certain issues under applicable securities laws. Because new Creation Unit Aggregations of shares are issued and sold by the Funds on an ongoing basis, at any point a “distribution”, as such term is used in the Securities Act, may occur. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus delivery requirement and liability provisions of the Securities Act.

For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Unit Aggregations 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 a supply 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 Securities 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 Securities Act is not available in respect of such transactions as a result of Section 24(d) of the 1940 Act. Firms that incur a prospectus delivery obligation with respect to shares of the Funds are reminded that, pursuant to Rule 153 under the Securities Act, a prospectus delivery obligation under Section 5(b)(2) of the Securities 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 only available with respect to transactions on an exchange.

Management

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

iShares Trust, iShares, Inc., Master Investment Portfolio, and Barclays Global Investors Funds, each an open-end management investment company registered under the 1940 Act, are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Trustee also serves as a Director for iShares, Inc. and, as a result, oversees a total of 117 Funds within the fund complex. In addition, Lee T. Kranefuss and Richard K. Lyons each serve as a Trustee for Barclays Global Investors Funds and Master Investment Portfolio and, as a result, oversees an additional 25 portfolios within the fund complex. The address of each Trustee and Officer is c/o Barclays Global Investors, N.A. 45 Fremont Street, San Francisco, CA 94105. The Board has designated George G.C. Parker as its Lead Trustee.

Trustees and Officers


Name (Year of Birth)	Position	Principal Occupation(s) During the Past 5 Years	Other Directorships Held by Trustee/Officer
Interested Trustees

*Lee T. Kranefuss (1961)	Trustee, Chairman, and President (since 2003)	Chief Executive Officer of Intermediary Investors and Exchange Traded Products Business of BGI (since 2003); Chief Executive Officer of the Individual Investor Business of BGI (1999-2003) and Chief Executive Officer, Global Index and Markets Group of BGI (2005-present).	Director (since 2003) of iShares, Inc.; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund; Director (since 2003) of iShares PLC and EETF PLC (Dublin).

*John E. Martinez (1962)	Trustee (since 2003)	Co-Chief Executive Officer of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); Chief Executive Officer of Capital Markets Group of BGI (1996-2001).	Director (since 2005) of Real Estate Equity Exchange; Director (since 2003) of iShares, Inc.; Director (since 2003) of Larkin Street Youth Services.

*	Lee Kranefuss and John Martinez are deemed to be “interested persons” (as defined in the 1940 Act) of the Trust due to their affiliations with BGFA, the Funds’ investment adviser, BGI, the parent company of BGFA, and Barclays Global Investors Services, an affiliate of BGFA and BGI.


Name (Year of Birth)	Position	Principal Occupation(s) During the Past 5 Years	Other Directorships Held by Trustee/Officer
Independent Trustees

Richard K. Lyons (1961)	Trustee (since 2000)	Executive Associate Dean (since 2005) and Sylvan Coleman Chair in Finance (since 2004); Acting Dean (2004-2005) and Professor (since 1993), University of California, Berkeley: Haas School of Business; Consultant for IMF World Bank, Federal Reserve Bank, and Citibank N.A. (since 2000).	Director (since 2003) of the BGI Cayman Prime Money Market Fund, Ltd.; Trustee (since 2001) of Master Investment Portfolio and Barclays Global Investors Funds; Director (since 2002) of iShares, Inc.; Trustee (since 1995) and Chairman of Matthews Asian Funds (oversees 8 portfolios).

George G.C. Parker (1939)	Trustee (since 2000)	Dean Witter Distinguished Professor of Finance (since 1994); Formerly Senior Associate Dean for Academic Affairs, Director of MBA Program, Stanford University: Graduate School of Business (1993-2001).	Director (since 2002) of iShares, Inc.; Director (since 1996) of Continental Airlines, Inc.; Director (since 1995) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2003) of First Republic Bank; Director (since 2004) of Threshold Pharmaceuticals.

Cecilia H. Herbert (1949)	Trustee (since 2005)	Member of Finance Council, Archdiocese of San Francisco (since 1991); Chair of Investment Committee, Archdiocese of San Francisco (1994-2005).	Director (since 2005) of iShares, Inc.; Trustee (2004 -2005) of Pacific Select Funds; Trustee (1992-2003) of the Montgomery Funds; Trustee (since 2005) of the Thacher School; Director (since 1998) of Catholic Charities CYO; Director (since 2005) of Women’s Forum West (professional association).


Charles A. Hurty (1943)	Trustee (since 2005)	Partner, KPMG, LLP (1968-2001).	Director (since 2005) of iShares, Inc.; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (2 portfolios); Director (since 2005) of CSFB Alternative Investments Fund (15 portfolios).

John E. Kerrigan (1955)	Trustee (since 2005)	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Director (since 2005) of iShares, Inc.; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.

Officer

Michael Latham (1965)	Secretary, Treasurer and Principal Financial Officer (since 2002)	Chief Operating Officer of the Intermediary Investors and Exchange Traded Products Business of BGI (since 2003), Director of Mutual Fund Delivery in the U.S. Individual Investor Business of BGI (2000-2003); Head of Operations, BGI Europe (1997 - 2000).	None.

The following table sets forth, as of December 31, 2005, the dollar range of equity securities beneficially owned by each Trustee in the Funds and in other registered investment companies overseen by the Trustee within the same family of investment companies as the Trust.


NAME OF TRUSTEE	NAME OF INDEX FUND	DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND	AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES OVERSEEN BY TRUSTEE IN FAMILY OF INVESTMENT COMPANIES
Richard K. Lyons	iShares Lehman 1-3 Year Treasury Bond iShares S&P 500 LifePath 2030 Portfolio	$50,001-$100,000 $10,001 - $50,000 $10,001 - $50,000	Over $100,000

Lee T. Kranefuss	iShares Lehman 1-3 Year Treasury Bond iShares Russell 3000 iShares GS $ InvesTop ^™ Corporate Bond iShares Dow Jones Select Dividend	$50,001-$100,000 Over $100,000 $10,001 - $50,000 $10,001 - $50,000	Over $100,000

John E. Martinez	iShares MSCI EAFE iShares Russell 1000 iShares Russell 1000 Value iShares S&P 500	Over $100,000 Over $100,000 Over $100,000 Over $100,000	Over $100,000

George G.C. Parker	iShares Dow Jones Select Dividend iShares FTSE/Xinhua China 25 iShares GS $ InvesTop™ Corporate Bond iShares Lehman 1-3 Year Treasury Bond iShares MSCI EAFE iShares MSCI Emerging Markets iShares MSCI Mexico iShares Russell 1000 Value iShares Russell 2000 iShares Russell 2000 Value iShares S&P 100 iShares S&P 500 iShares S&P 500 Growth iShares S&P 500 Value iShares S&P Midcap 400 iShares S&P Midcap 400 Value iShares S&P Global 100	Over $100,000 $50,001 - $100,000 Over $100,000 $10,001 - $50,000 Over $100,000 Over $100,000 $50,001 - $100,000 Over $100,000 $50,001 - $100,000 Over $100,000 Over $100,000 Over $100,000 $10,001 - $50,000 $50,001 - $100,000 Over $100,000 Over $100,000 $10,001 - $50,000	Over $100,000

W. Allen Reed*	None	Not Applicable	Not Applicable

Cecilia H. Herbert	iShares MSCI Hong Kong iShares MSCI Japan iShares Dow Jones Consumer Goods Sector iShares Dow Jones U.S. Healthcare iShares Dow Jones Select Dividend iShares S&P 500 Index iShares FTSE/Xinhua China 25	$10,001 - $50,000 $10,001 - $50,000 $10,001 - $50,000 $50,001 - $100,000 $10,001 - $50,000 Over $100,000 $50,001 - $100,000	Over $100,000

Charles A. Hurty	iShares S&P 500 Index iShares FTSE/Xinhua China 25 iShares Dow Jones Financial Sector iShares Dow Jones U.S. Energy Sector iShares Dow Jones U.S. Technology Sector iShares MSCI EAFE iShares MSCI Japan	$10,001 - $50,000 $10,001 - $50,000 $10,001 - $50,000 $10,001 - $50,000 $10,001 - $50,000 $10,001 - $50,000 $10,001 - $50,000	Over $100,000

John E. Kerrigan	iShares Russell 1000	Over $100,000	Over $100,000

*	Served as Trustee through June 30, 2006.

As of December 31, 2005, none of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust (“Independent Trustees”) or their immediate family members owned beneficially or of record any securities of BGFA (the Fund’s investment adviser), SEI (the Fund’s distributor) or any person controlling, controlled by or under control with BGFA or SEI.

Committees of the Board of Trustees. Each Independent Trustee serves on the Audit and Nominating Committees of the Board of Trustees. The purposes of the Audit Committee are to assist the Board of Trustees (1) in its oversight of the Trust’s accounting and financial reporting principles and policies and related controls and procedures maintained by or on behalf of the Trust; (2) in its oversight of the Trust’s financial statements and the independent audit thereof; (3) 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); and (4) in evaluating the independence of the independent accountants. The Audit Committee of the Trust met four times during the calendar year ended December 31, 2005.

The Nominating Committee nominates individuals for Independent Trustee membership on the Board of Trustees. The Nominating Committee evaluates candidates’ qualifications for board membership, including their independence from the Funds’ investment adviser and other principal service providers and the potential effects of any other relationship that might impair the independence of a candidate. In addition, the Nominating Committee periodically reviews the composition of the Board of Trustees to determine whether it may be appropriate to add individuals with different backgrounds or skills from those already on the Board of Trustees. The Nominating Committee considers nominees recommended by shareholders if such nominees are submitted in accordance with Rule 14a-8 of the Securities Exchange Act of 1934 (the “1934 Act”), in conjunction with a shareholder meeting to consider the election of Trustees. The Nominating Committee met one time during the calendar year ended December 31, 2005.

Remuneration of Trustees. Effective January 1, 2006, the Trust pays each Independent Trustee and John Martinez, an interested Trustee, an annual fee of $60,000 for meetings of the Board attended by the Trustee; also the Trust pays Charles Hurty an annual fee of $12,500 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 Trustee. During the period April 1, 2005 through January 1, 2006, the Trust paid each Independent Trustee and John Martinez, an Interested Trustee, an annual fee of $45,000 for meetings of the Board attended by each Trustee; also the Trust paid each Independent Trustee who served as a chairperson of a Board committee an annual fee of $2,500. Prior to April 1, 2005, the Trust paid each Independent Trustee and John Martinez, an Interested Trustee, an annual fee of $32,500 for meetings of the Board attended by each Trustee. The Trust also reimburses each Trustee 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 Trustee for the calendar year ended December 31, 2005.


Name of Interested Trustee	Aggregate Compensation from the Trust		Pension or Retirement Benefits Accrued As Part of Trust Expenses*	Estimated Annual Benefits Upon Retirement*	Total Compensation From the Funds and Fund Complex**
Lee T. Kranefuss***	$	0	Not Applicable	Not Applicable	$	0
John E. Martinez	$	41,875	Not Applicable	Not Applicable	$	83,750

*	No Trustee or Officer is entitled to any pension or retirement benefits from the Trust.

**	Includes compensation for service on the Board of Directors of iShares, Inc.

***	Lee T. Kranefuss was not compensated by the Funds due to his employment with BGI during the time period reflected in the table.

The table below sets forth the total compensation paid to each Independent Trustee for the calendar year ended December 31, 2005.


Name of Independent Trustee	Aggregate Compensation from the Trust		Pension or Retirement Benefits Accrued As Part of Trust Expenses*	Estimated Annual Benefits Upon Retirement*	Total Compensation From the Funds and Fund Complex**
John B. Carroll***	$	8,125	Not Applicable	Not Applicable	$	16,250
Richard K. Lyons	$	41,875	Not Applicable	Not Applicable	$	108,750	****
George G.C. Parker	$	43,750	Not Applicable	Not Applicable	$	87,500
W. Allen Reed†	$	43,750	Not Applicable	Not Applicable	$	87,500
Cecilia H. Herbert ¹	$	22,500	Not Applicable	Not Applicable	$	45,000
Charles A. Hurty ¹	$	22,500	Not Applicable	Not Applicable	$	45,000
John E. Kerrigan ¹	$	22,500	Not Applicable	Not Applicable	$	45,000

¹	Cecilia H. Herbert, Charles A. Hurty and John E. Kerrigan were elected to serve as Independent Trustees of the Trust effective August 11, 2005.

*	No Trustee or Officer is entitled to any pension or retirement benefits from the Trust.

**	Includes compensation for service on the Board of Directors of iShares, Inc.

***	Served as Trustee through March 1, 2005.

****	Includes compensation as Trustee for Barclays Global Investors Funds and Master Investment Portfolio, investment companies with 27 funds also advised by BGFA and/or for which BGFA provides administration services.

†	Served as Trustee through June 30, 2006.

Trustees and officers of the Trust collectively owned less than 1% of each of the Fund’s outstanding shares as June 30, 2006.

Control Persons and Principal Holders of Securities. Although the Trust does not have information concerning the beneficial ownership of shares held in the names of DTC participants, as of August 31, 2006, the name and percentage ownership of each DTC participant that owned of record 5% or more of the outstanding shares of a Fund is set forth in the table below. Ownership information is not provided for the iShares S&P U.S. Preferred Stock Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Utilities Sector Index Fund and iShares S&P Global Materials Sector Index Fund as these Funds had not commenced operations as of August 31, 2006.


Name of Fund	Percentage of Ownership
iShares Dow Jones Select Dividend Index Fund
Pershing	6.06	%
Salomon Smith Barney Inc.	7.20	%
Merrill Lynch Safekeeping	8.69	%
National Financial Services Corporation	10.50	%
Charles Schwab & Co., Inc.	15.40	%
iShares MSCI EAFE Index Fund
National Financial Services Corporation	5.27	%
The Bank of New York	5.75	%
The Northern Trust Company	7.66	%
Charles Schwab & Co., Inc.	8.61	%
iShares MSCI EAFE Growth Index Fund
Salomon Smith Barney Inc.	5.34	%
Dean Witter Reynolds, Inc	5.68	%
Merrill Lynch Safekeeping.	5.95	%
Charles Schwab & Co., Inc.	7.08	%
The Bank of New York	9.92	%
Mellon Trust of New England	13.35	%
Brown Brothers Harriman & Co.	15.42	%


Name of Fund	Percentage of Ownership
iShares MSCI EAFE Value Index Fund
Merrill Lynch Safekeeping	5.08	%
Bear, Stearns Securities Corp.	5.19	%
Pershing.	5.61	%
Salomon Smith Barney Inc.	6.99	%
Mellon Trust of New England	7.62	%
Charles Schwab & Co., Inc.	7.64	%
National Financial Services Corporation	10.08	%
The Bank of New York	12.60	%
iShares FTSE/Xinhua China 25 Index Fund
UBS PaineWebber Incorporated	5.26	%
Chase Manhattan Bank	5.48	%
Salomon Smith Barney Inc.	5.84	%
Merrill Lynch Safekeeping	6.33	%
National Financial Services Corporation	9.29	%
Charles Schwab & Co., Inc.	10.36	%
iShares Dow Jones U.S. Broker-Dealers Index Fund
Dain Rauscher Incorporated	6.89	%
Merrill Lynch Safekeeping	7.20	%
UBS PaineWebber Incorporated	7.26	%
Dean Witter Reynolds, Inc	7.28	%
Wachovia First Clearing Corporation	10.37	%
Salomon Smith Barney Inc.	31.93	%
iShares Dow Jones U.S. Insurance Index Fund
Timber Hill LLC	13.14	%
Spear, Leeds & Kellogg	24.29	%
Interactive Brokers L.L.C.	44.36	%
iShares Dow Jones U.S. Regional Banks Index Fund
UBS PaineWebber Incorporated	6.49	%
Charles Schwab & Co., Inc.	10.32	%
Timber Hill LLC	22.66	%
Spear, Leeds & Kellogg	36.37	%
iShares NASDAQ Biotechnology Index Fund
National Financial Services Corporation	6.48	%
Charles Schwab & Co., Inc.	8.13	%
Salomon Smith Barney Inc.	9.76	%
iShares Cohen and Steers Realty Majors Index Fund
Barclays Global Investors, N.A.	5.20	%
Merrill Lynch Safekeeping	6.59	%
Pershing	6.73	%
National Financial Services Corporation	10.46	%
Charles Schwab & Co., Inc.	11.83	%
iShares Dow Jones U.S. Utilities Sector Index Fund
Wachovia First Clearing Corporation	5.63	%
National Financial Services Corporation	8.47	%
Charles Schwab & Co., Inc.	9.46	%
Salomon Smith Barney Inc.	10.01	%
A G Edwards	10.71	%
Merrill Lynch Safekeeping	12.36	%
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund
Salomon Smith Barney Inc.	5.04	%
UBS PaineWebber Incorporated	5.26	%
National Financial Services Corporation	7.55	%
Pershing	10.18	%
Merrill Lynch Safekeeping	14.99	%
Spear, Leeds & Kellogg	16.49	%
Charles Schwab & Co., Inc.	16.96	%


iShares S&P Europe 350 Index Fund
Wachovia First Clearing Corporation	5.29	%
Salomon Smith Barney Inc.	5.46	%
Canadian Depository for Securities Ltd.	5.84	%
Dean Witter Reynolds, Inc.	6.15	%
Brown Brothers Harriman & Co.	7.52	%
National Financial Services Corporation	8.07	%
Charles Schwab & Co., Inc.	8.79	%
iShares Dow Jones U.S. Oil Equipment & Services Index Fund
Dean Witter Reynolds, Inc.	5.89	%
Pershing	6.28	%
National Financial Services Corporation	8.06	%
Barclays Global Investors, N.A.	12.50	%
Merrill Lynch Safekeeping	14.96	%
Charles Schwab & Co., Inc.	16.65	%


iShares Goldman Sachs Natural Resources Index Fund
Salomon Smith Barney Inc.	6.26	%
Pershing	7.35	%
National Financial Services Corporation	10.98	%
Charles Schwab & Co., Inc.	14.54	%
iShares Goldman Sachs Technology Index Fund
National Financial Services Corporation	5.99	%
Barclays Global Investors, N.A.	6.19	%
Chase Manhattan Bank	6.94	%
Charles Schwab & Co., Inc.	7.29	%
Wachovia First Clearing Corporation	9.27	%
Salomon Smith Barney Inc.	14.36	%
iShares Goldman Sachs Networking Index Fund
National Financial Services Corporation	5.11	%
Charles Schwab & Co., Inc.	7.10	%
Brown Brothers Harriman & Co.	8.05	%
Salomon Smith Barney Inc.	14.19	%
The Bank of New York	14.51	%
iShares Goldman Sachs Software Index Fund
Wachovia First Clearing Corporation	5.89	%
Salomon Smith Barney Inc.	8.18	%
Brown Brothers Harriman & Co.	9.76	%
Charles Schwab & Co., Inc.	12.41	%
Barclays Global Investors, N.A.	17.86	%
iShares Goldman Sachs Semiconductor Index Fund
Wachovia First Clearing Corporation	5.65	%
National Financial Services Corporation	5.83	%
Morgan Stanley & Co. Incorporated	6.42	%
Salomon Smith Barney Inc.	12.52	%
Charles Schwab & Co., Inc.	13.68	%
iShares Dow Jones U.S. Pharmaceuticals Index Fund
Dain Rauscher Incorporated	7.38	%
Salomon Smith Barney Inc.	11.58	%
Charles Schwab & Co., Inc.	18.87	%
Merrill Lynch Safekeeping	32.51	%
iShares Dow Jones U.S. Healthcare Providers Index Fund
Raymond, James & Associates, Inc.	5.37	%
Charles Schwab & Co., Inc.	6.29	%
Salomon Smith Barney Inc.	6.48	%
Lehman Brothers, Inc.	10.93	%
National Financial Services Corporation	17.16	%
Merrill Lynch Safekeeping	20.37	%
iShares Dow Jones U.S. Medical Devices Index Fund
Dean Witter Reynolds, Inc.	11.16	%
Charles Schwab & Co., Inc.	14.21	%
Merrill Lynch Safekeeping	30.86	%
iShares S&P MidCap 400 Index Fund
Pershing	5.21	%
National Financial Services Corporation	10.74	%
Charles Schwab & Co., Inc.	15.74	%


	Percentage of Ownership
iShares S&P MidCap 400 Value Index Fund
Pershing	5.14	%
Wachovia First Clearing Corporation	5.79	%
Merrill Lynch Safekeeping	5.83	%
Dean Witter Reynolds, Inc.	6.32	%
National Financial Services Corporation	11.17	%
A G Edwards	11.19	%
Charles Schwab & Co., Inc.	11.27	%
iShares S&P MidCap 400 Growth Index Fund
Salomon Smith Barney Inc.	5.41	%
Wachovia First Clearing Corporation	5.45	%
Merrill Lynch Safekeeping	5.91	%
National Financial Services Corporation	6.68	%
Dean Witter Reynolds, Inc.	7.44	%
State Street Bank and Trust Company	8.20	%
Charles Schwab & Co., Inc.	9.18	%
A G Edwards	16.00	%
iShares S&P SmallCap 600 Index Fund
Deutsche Bank A.G., New York Branch	5.52	%
State Street Bank and Trust Company	5.54	%
The Bank of New York	5.64	%
National Financial Services Corporation	7.35	%
Charles Schwab & Co., Inc.	12.14	%
iShares S&P SmallCap 600 Value Index Fund
Salomon Smith Barney Inc.	5.72	%
Wachovia First Clearing Corporation	5.92	%
Dean Witter Reynolds, Inc.	6.27	%
Pershing	7.69	%
Merrill Lynch Safekeeping	8.41	%
National Financial Services Corporation	11.40	%
Charles Schwab & Co., Inc.	13.87	%
iShares S&P SmallCap 600 Growth Index Fund
The Bank of New York	5.41	%
Pershing	5.43	%
Salomon Smith Barney Inc.	6.41	%
Dean Witter Reynolds, Inc.	7.31	%
Merrill Lynch Safekeeping	9.14	%
National Financial Services Corporation	9.18	%
Charles Schwab & Co., Inc.	12.08	%
iShares S&P Latin America 40 Index Fund
Salomon Smith Barney Inc.	5.44	%
Brown Brothers Harriman & Co.	6.36	%
Charles Schwab & Co., Inc.	11.07	%
National Financial Services Corporation	11.44	%
iShares S&P Global 100 Index Fund
National Financial Services Corporation	5.99	%
Pershing	6.53	%
Charles Schwab & Co., Inc.	8.67	%
Mellon Trust of New England	29.79	%


iShares S&P 1500 Index Fund
Northern Trust Company	5.89	%
Robert W. Baird & Co. Incorporated	6.56	%
Bank of America, National Association	9.80	%
National Financial Services Corporation	9.81	%
US Bank (Firstar Bank), N.A.	10.59	%
Charles Schwab & Co., Inc.	16.03	%
iShares Dow Jones U.S. Aerospace & Defense Index Fund
Wachovia First Clearing Corporation	5.64	%
Merrill Lynch Safekeeping	17.09	%
Morgan Stanley & Co. Incorporated	18.17	%
Salomon Smith Barney Inc.	20.97	%
iShares Dow Jones U.S. Home Construction Index Fund
National Financial Services Corporation	7.19	%
Merrill Lynch Safekeeping	9.76	%
Morgan Stanley & Co. Incorporated	10.35	%
The Bank of New York	10.62	%
Charles Schwab & Co., Inc.	12.08	%
Timber Hill LLC	25.79	%
iShares S&P/TOPIX 150 Index Fund
Brown Brothers Harriman & Co.	5.59	%
Chase Manhattan Bank	8.05	%
Charles Schwab & Co., Inc.	9.24	%
Merrill Lynch, Pierce, Fenner & Smith Incorporated	9.37	%
Merrill Lynch Safekeeping	10.00	%
National Financial Services Corporation	10.15	%
iShares S&P 500 Value Index Fund
Pershing	7.47	%
Dean Witter Reynolds, Inc.	7.86	%
Merrill Lynch Safekeeping	8.46	%
National Financial Services Corporation	11.04	%
Charles Schwab & Co., Inc.	15.34	%
iShares S&P 500 Index Fund
Deutsche Bank A.G., New York Branch - CEDEAR	5.02	%
Charles Schwab & Co., Inc.	11.77	%
Morgan Stanley & Co. Incorporated	16.14	%
iShares S&P 500 Growth Index Fund
Pershing	6.19	%
Dean Witter Reynolds, Inc.	8.15	%
National Financial Services Corporation	8.54	%
Merrill Lynch Safekeeping	8.68	%
Charles Schwab & Co., Inc.	14.69	%
iShares Russell 1000 Index Fund
National Financial Services Corporation	13.44	%
Charles Schwab & Co., Inc.	25.29	%


iShares Russell Microcap ^™ Index Fund
Pershing	5.83	%
Wells Fargo Bank Minnesota, National Association	6.75	%
Morgan Stanley & Co. Incorporated	7.94	%
National Financial Services Corporation	12.62	%
Charles Schwab & Co., Inc.	14.86	%
iShares Russell 1000 Value Index Fund
Brown Brothers Harriman & Co.
Barclays Global Investors, N.A.	5.00	%
Merrill Lynch Safekeeping	6.79	%
Salomon Smith Barney Inc.	6.96	%
National Financial Services Corporation	7.63	%
Pershing	10.57	%
Charles Schwab & Co., Inc.	10.87	%
iShares Russell 1000 Growth Index Fund
Chase Manhattan Bank	5.41	%
Merrill Lynch Safekeeping	6.83	%
National Financial Services Corporation	7.00	%
Charles Schwab & Co., Inc.	10.98	%
Salomon Smith Barney Inc.	11.02	%
iShares Russell 2000 Index Fund
National Financial Services Corporation	5.83	%
Charles Schwab & Co., Inc.	9.02	%
Barclays Global Investors, N.A.	12.95	%
iShares Russell 2000 Value Index Fund
Merrill Lynch Safekeeping	6.52	%
State Street Bank and Trust Company	6.79	%
National Financial Services Corporation	9.65	%
Charles Schwab & Co., Inc.	11.20	%
iShares Russell 2000 Growth Index Fund
The Bank of New York	5.19	%
Salomon Smith Barney Inc.	5.89	%
National Financial Services Corporation	6.60	%
Northern Trust Company	6.79	%
Charles Schwab & Co., Inc.	7.34	%
iShares Russell MidCap Growth Index Fund
Merrill Lynch Safekeeping	5.04	%
Northern Trust Company	5.39	%
Salomon Smith Barney Inc.	6.59	%
Charles Schwab & Co., Inc.	6.74	%
Wachovia First Clearing Corporation	6.93	%
National Financial Services Corporation	9.04	%
iShares Russell MidCap Index Fund
Mellon Trust of New England	5.40	%
Salomon Smith Barney Inc.	6.08	%
Pershing	6.13	%
National Financial Services Corporation	7.28	%
Charles Schwab & Co., Inc.	10.53	%


iShares Russell MidCap Value Index Fund
Merrill Lynch Safekeeping	5.42	%
Pershing	8.05	%
Charles Schwab & Co., Inc.	9.73	%
National Financial Services Corporation	10.11	%
iShares Russell 3000 Index Fund
Salomon Smith Barney Inc.	8.30	%
Northern Trust Company	11.16	%
National Financial Services Corporation	12.45	%
Charles Schwab & Co., Inc.	16.26	%
iShares Russell 3000 Value Index Fund
Merrill Lynch Safekeeping	6.54	%
The Bank of New York	7.44	%
Pershing	7.95	%
SEI Trust Company	7.96	%
Charles Schwab & Co., Inc.	11.84	%
National Financial Services Corporation	12.25	%
iShares Russell 3000 Growth Index Fund
Merrill Lynch Safekeeping	6.25	%
Pershing	8.60	%
National Financial Services Corporation	8.67	%
Salomon Smith Barney Inc.	9.63	%
Northern Trust Company	10.10	%
Charles Schwab & Co., Inc.	17.61	%
iShares S&P Global Energy Sector Index Fund
Wachovia First Clearing Corporation	5.47	%
Merrill Lynch Safekeeping	5.75	%
Pershing	6.06	%
Charles Schwab & Co., Inc.	8.53	%
National Financial Services Corporation	9.71	%
Brown Brothers Harriman & Co.	20.24	%
iShares S&P Global Financials Sector Index Fund
Pershing	5.73	%
UBS PaineWebber Incorporated	6.83	%
Merrill Lynch Safekeeping	7.78	%
National Financial Services Corporation	7.84	%
Charles Schwab & Co., Inc.	11.57	%
Salomon Smith Barney Inc.	13.32	%
iShares S&P Global Healthcare Sector Index Fund
Pershing	5.19	%
Brown Brothers Harriman & Co.	5.46	%
Wachovia First Clearing Corporation	6.19	%
National Financial Services Corporation	6.47	%
Merrill Lynch Safekeeping	7.15	%
Chase Manhattan Bank	7.32	%
Charles Schwab & Co., Inc.	9.03	%
Salomon Smith Barney Inc.	9.79	%


iShares S&P Global Technology Sector Index Fund
UBS PaineWebber Incorporated	5.67	%
National Financial Services Corporation	6.21	%
US Bank (Firstar Bank), N.A.	6.95	%
Merrill Lynch Safekeeping	7.57	%
Brown Brothers Harriman & Co.	7.63	%
The Bank of New York	7.81	%
Salomon Smith Barney Inc.	8.72	%
Charles Schwab & Co., Inc.	9.59	%
iShares S&P Global Telecommunications Sector Index Fund
Pershing	5.16	%
Brown Brothers Harriman & Co.	5.20	%
Comerica Bank	5.42	%
UBS PaineWebber Incorporated	6.24	%
National Financial Services Corporation	7.25	%
Merrill Lynch Safekeeping	9.57	%
Salomon Smith Barney Inc.	10.66	%
Charles Schwab & Co., Inc.	11.22	%
iShares Dow Jones U.S. Consumer Services Index Fund
National Financial Services Corporation	6.18	%
Dean Witter Reynolds, Inc.	6.90	%
Charles Schwab & Co., Inc.	7.59	%
UBS PaineWebber Incorporated	8.23	%
Merrill Lynch Safekeeping	8.41	%
Wachovia First Clearing Corporation	8.50	%
Salomon Smith Barney Inc.	25.31	%
iShares Dow Jones U.S. Energy Sector Index Fund
UBS PaineWebber Incorporated	5.24	%
Pershing	6.26	%
Wachovia First Clearing Corporation	6.55	%
Charles Schwab & Co., Inc.	8.40	%
National Financial Services Corporation	9.28	%
Merrill Lynch Safekeeping	9.71	%
Salomon Smith Barney Inc.	10.58	%
iShares Dow Jones U.S. Financial Sector Index Fund
UBS PaineWebber Incorporated	7.10	%
Charles Schwab & Co., Inc.	7.78	%
Merrill Lynch Safekeeping	7.79	%
Wachovia First Clearing Corporation	8.46	%
Dean Witter Reynolds, Inc.	8.68	%
National Financial Services Corporation	8.79	%
Salomon Smith Barney Inc.	17.74	%
iShares Dow Jones U.S. Financial Services Index Fund
UBS PaineWebber Incorporated	5.26	%
Merrill Lynch Safekeeping	5.53	%
Brown Brothers Harriman & Co.	5.71	%
Charles Schwab & Co., Inc.	7.42	%
Wachovia First Clearing Corporation	8.21	%
National Financial Services Corporation	8.75	%
Salomon Smith Barney Inc.	18.96	%


iShares Dow Jones U.S. Healthcare Sector Index Fund
Brown Brothers Harriman & Co.	5.30	%
Dean Witter Reynolds, Inc.	5.32	%
Salomon Smith Barney Inc.	6.19	%
National Financial Services Corporation	7.16	%
Merrill Lynch Safekeeping	7.50	%
Charles Schwab & Co., Inc.	8.75	%
A G Edwards	16.92	%
iShares Dow Jones U.S. Industrial Sector Index Fund
National Financial Services Corporation	6.48	%
Dean Witter Reynolds, Inc.	6.66	%
UBS PaineWebber Incorporated	6.99	%
Charles Schwab & Co., Inc.	7.19	%
Salomon Smith Barney Inc.	11.62	%
Merrill Lynch Safekeeping	13.36	%
iShares Dow Jones U.S. Consumer Goods Sector Index Fund
State Street Bank and Trust Company.	5.05	%
Dean Witter Reynolds, Inc.	5.12	%
National Financial Services Corporation	5.98	%
UBS PaineWebber Incorporated	6.81	%
Salomon Smith Barney Inc.	9.66	%
Charles Schwab & Co., Inc.	10.74	%
Merrill Lynch Safekeeping	11.74	%
iShares Dow Jones U.S. Basic Materials Sector Index Fund
Wachovia First Clearing Corporation	5.58	%
Merrill Lynch Safekeeping	6.40	%
Pershing	7.93	%
National Financial Services Corporation	8.58	%
Charles Schwab & Co., Inc.	11.49	%
Salomon Smith Barney Inc.	13.29	%
iShares Dow Jones U.S. Real Estate Index Fund
Salomon Smith Barney Inc.	6.48	%
Barclays Global Investors, N.A.	7.09	%
National Financial Services Corporation	7.91	%
Charles Schwab & Co., Inc.	8.18	%
iShares Dow Jones Transportation Average Index Fund
Wachovia First Clearing Corporation	5.07	%
Timber Hill LLC	5.18	%
Goldman, Sachs & Co.	5.31	%
Spear, Leeds & Kellogg	5.31	%
Merrill Lynch Safekeeping	6.36	%
National Financial Services Corporation	6.43	%
Banc of America Securities LLC, Montgomery Division	6.74	%
Salomon Smith Barney Inc.	11.67	%
iShares Dow Jones U.S. Technology Sector Index Fund
National Financial Services Corporation	5.12	%
Wachovia First Clearing Corporation	5.49	%
UBS PaineWebber Incorporated	5.52	%
The Bank of New York	5.55	%
Salomon Smith Barney Inc.	8.88	%
Dean Witter Reynolds, Inc.	9.89	%
Charles Schwab & Co., Inc.	10.01	%
Merrill Lynch Safekeeping	11.48	%


iShares Dow Jones U.S. Total Market Index Fund
American Enterprise Investment	6.25	%
National Investor Services Corp.	6.31	%
Merrill Lynch Safekeeping	7.35	%
Pershing	7.57	%
National Financial Services Corporation	16.23	%
Charles Schwab & Co., Inc.	16.80	%
iShares Dow Jones U.S. Telecommunications Sector Index Fund
Salomon Smith Barney Inc.	6.35	%
SEI Trust Company	7.48	%
Merrill Lynch Safekeeping	12.20	%
The Bank of New York	12.98	%
A G Edwards	14.57	%
iShares Morningstar Large Core Index Fund
Timber Hill LLC	5.18	%
Charles Schwab & Co., Inc.	5.61	%
Salomon Smith Barney Inc.	5.93	%
Merrill Lynch Safekeeping	7.74	%
First National Bank of Omaha	8.20	%
Pershing	9.23	%
American Enterprise Investment	10.23	%
National Financial Services Corporation	13.47	%
iShares Morningstar Large Growth Index Fund
American Enterprise Investment	5.58	%
Salomon Smith Barney Inc.	6.45	%
Merrill Lynch Safekeeping	6.95	%
The Bank of New York	8.54	%
Pershing	10.63	%
National Financial Services Corporation	11.06	%
Charles Schwab & Co., Inc.	15.18	%
iShares Morningstar Large Value Index Fund
Barclays Global Investors, N.A.	5.88	%
Merrill Lynch Safekeeping	6.42	%
Pershing	6.87	%
Charles Schwab & Co., Inc.	7.81	%
National Investor Services Corp.	8.35	%
Salomon Smith Barney Inc.	10.76	%
National Financial Services Corporation	14.66	%
iShares Morningstar Mid Core Index Fund
Wachovia First Clearing Corporation	5.43	%
Salomon Smith Barney Inc.	6.54	%
American Enterprise Investment	6.90	%
Dain Rauscher Incorporated	7.90	%
Pershing	8.09	%
Charles Schwab & Co., Inc.	8.24	%
National Financial Services Corporation	8.58	%
Merrill Lynch Safekeeping	11.99	%


iShares Morningstar Mid Growth Index Fund
Charles Schwab & Co., Inc.	6.98	%
National Financial Services Corporation	9.65	%
Wachovia First Clearing Corporation	41.42	%
iShares Morningstar Mid Value Index Fund
Timber Hill LLC	5.60	%
State Street Bank & Trust	6.17	%
Merrill Lynch Safekeeping	6.26	%
American Enterprise Investment	6.42	%
Salomon Smith Barney Inc.	7.31	%
National Financial Services Corporation	8.84	%
Pershing	9.17	%
Charles Schwab & Co., Inc.	10.12	%
Wachovia First Clearing Corporation	10.65	%
iShares Morningstar Small Core Index Fund
Salomon Smith Barney Inc.	5.68	%
Wachovia First Clearing Corporation	5.86	%
Dain Rauscher Incorporated	6.64	%
American Enterprise Investment	7.27	%
Merrill Lynch Safekeeping	7.76	%
National Financial Services Corporation	9.99	%
Charles Schwab & Co., Inc.	11.89	%
Pershing	14.59	%
iShares Morningstar Small Growth Index Fund
National Investor Services Corp.	5.18	%
Merrill Lynch, Pierce, Fenner & Smith Incorporated	5.92	%
Salomon Smith Barney Inc.	7.18	%
Pershing	7.52	%
American Enterprise Investment	8.45	%
National Financial Services Corporation	13.10	%
Charles Schwab & Co., Inc.	16.79	%
iShares Morningstar Small Value Index Fund
American Enterprise Investment	6.41	%
Wachovia First Clearing Corporation	7.64	%
Pershing	8.62	%
Charles Schwab & Co., Inc.	9.45	%
Merrill Lynch Safekeeping	10.34	%
National Financial Services Corporation	13.31	%
iShares KLD Select Social ^SM Index Fund
Charles Schwab & Co., Inc.	8.33	%
Goldman, Sachs & Co.	45.58	%
iShares NYSE 100 Index Fund
Wachovia First Clearing Corporation	86.26	%
iShares NYSE Composite Index Fund
Pershing	5.91	%
National Financial Services Corporation	7.59	%
Brown Brothers Harriman & Co.	15.28	%
Charles Schwab & Co., Inc.	20.53	%
Lehman Brothers, Inc.	25.96	%
iShares S&P 100 Index Fund
Salomon Smith Barney Inc.	5.02	%
Charles Schwab & Co., Inc.	7.88	%
Goldman, Sachs & Co.	13.08	%
Mellon Trust of New England	18.81	%

Investment Adviser. BGFA serves as investment adviser to each Fund pursuant to an Investment Advisory Agreement between the Trust and BGFA. BGFA is a California corporation indirectly owned by Barclays Bank PLC and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Under the Investment Advisory Agreement, BGFA, subject to the supervision of the Board and in conformity with the stated investment policies of each Fund, manages and administers the Trust and the investment of each Fund’s assets. BGFA is responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of each Fund.

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


Fund	Management Fee		Fund Inception Date	Fiscal Year End	Management Fees Paid for Fiscal Year Ended 2006			Management Fees Paid for Fiscal Year Ended 2005		Management Fees Paid for Fiscal Year Ended 2004
iShares Cohen & Steers Realty Majors Index Fund	0.35	%	01/29/01	4/30	$	5,991,329		$	3,715,531	$	1,875,786
iShares Dow Jones Select Dividend Index Fund	0.40	%	11/03/03	4/30		27,966,383			16,102,974		1,843,588	^#
iShares Dow Jones Transportation Average Index Fund	0.48	%	10/06/03	4/30		1,087,487			496,584		69,614	^#
iShares Dow Jones U.S. Aerospace & Defense Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Basic Materials Sector Index Fund	0.48	%	06/12/00	4/30		2,383,861			2,162,553		1,431,135
iShares Dow Jones U.S. Broker-Dealers Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Consumer Goods Sector Index Fund	0.48	%	06/12/00	4/30		2,561,674			2,101,520		887,525
iShares Dow Jones U.S. Consumer Services Sector Index Fund	0.48	%	06/12/00	4/30		1,465,524			1,223,613		936,060
iShares Dow Jones U.S. Energy Sector Index Fund	0.48	%	06/12/00	4/30		4,864,971			2,915,019		1,157,936
iShares Dow Jones U.S. Financial Sector Index Fund	0.48	%	05/22/00	4/30		2,124,027			1,636,988		1,249,444
iShares Dow Jones U.S. Financial Services Index Fund	0.48	%	06/12/00	4/30		1,132,161			741,206		628,792
iShares Dow Jones U.S. Healthcare Providers Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Healthcare Sector Index Fund	0.48	%	06/12/00	4/30		7,782,684			4,805,393		2,862,501
iShares Dow Jones U.S. Home Construction Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Industrial Sector Index Fund	0.48	%	06/12/00	4/30		1,456,507			1,344,384		816,820
iShares Dow Jones U.S. Insurance Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Medical Devices Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Oil Equipment & Services Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Pharmaceuticals Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Real Estate Index Fund	0.48	%	06/12/00	4/30		6,678,636			4,764,324		2,080,140
iShares Dow Jones U.S. Regional Banks Index Fund ⁺	0.48	%	05/1/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Technology Sector Index Fund	0.48	%	05/15/00	4/30		2,839,363			2,273,897		2,027,928
iShares Dow Jones U.S. Telecommunications Sector Index Fund	0.48	%	05/22/00	4/30		2,958,708			1,858,698		954,203
iShares Dow Jones U.S. Total Market Index Fund	0.20	%	06/12/00	4/30		946,372			806,782		583,220
iShares Dow Jones U.S. Utilities Sector Index Fund	0.48	%	06/12/00	4/30		4,352,060			3,178,855		2,675,439
iShares FTSE/Xinhua China 25 Index Fund	0.74	%	10/05/04	7/31		12,563,116	**		4,010,649		N/A
iShares Goldman Sachs Natural Resources Index Fund	0.48	%	10/22/01	7/31		5,323,157	**		2,358,153		738,702
iShares Goldman Sachs Networking Index Fund	0.48	%	07/10/01	7/31		1,158,422	**		755,164		619,535
iShares Goldman Sachs Semiconductor Index Fund	0.48	%	07/10/01	7/31		1,978,565	**		1,387,611		890,736
iShares Goldman Sachs Software Index Fund	0.48	%	07/10/01	7/31		837,332	**		716,661		648,960
iShares Goldman Sachs Technology Index Fund	0.48	%	03/13/01	7/31		1,338,105	**		988,419		731,811
iShares KLD Select Social ^SM Index Fund	0.50	%	01/24/05	4/30		474,451			34,773		N/A


Fund	Management Fee		Fund Inception Date	Fiscal Year End	Management Fees Paid for Fiscal Year Ended 2006		Management Fees Paid for Fiscal Year Ended 2005	Management Fees Paid for Fiscal Year Ended 2004
iShares Morningstar Large Core Index Fund	0.20	%	06/28/04	4/30	158,253		57,122	12,118	*
iShares Morningstar Large Growth Index Fund	0.25	%	06/28/04	4/30	296,961		63,800	14,578	*
iShares Morningstar Large Value Index Fund	0.25	%	06/28/04	4/30	247,373		71,808	15,586	*
iShares Morningstar Mid Core Index Fund	0.25	%	06/28/04	4/30	222,426		64,589	6,228	*
iShares Morningstar Mid Growth Index Fund	0.30	%	06/28/04	4/30	294,315		57,063	6,464	*
iShares Morningstar Mid Value Index Fund	0.30	%	06/28/04	4/30	213,646		49,215	7,712	*
iShares Morningstar Small Core Index Fund	0.25	%	06/28/04	4/30	137,364		64,908	18,705	*
iShares Morningstar Small Growth Index Fund	0.30	%	06/28/04	4/30	121,908		43,729	8,325	*
iShares Morningstar Small Value Index Fund	0.30	%	06/28/04	4/30	169,885		50,132	9,167	*
iShares MSCI EAFE Growth Index Fund	0.40	%	08/01/05	7/31	400,963	**	N/A	N/A
iShares MSCI EAFE Index Fund	0.35	%	08/14/01	7/31	75,575,012	**	46,995,227	20,603,858
iShares MSCI EAFE Value Index Fund	0.40	%	08/01/05	7/31	520,313	**	N/A	N/A
iShares Nasdaq Biotechnology Index Fund	0.48	%	02/05/01	3/31	7,769,619		6,122,499	3,555,679
iShares NYSE 100 Index Fund	0.20	%	03/29/04	7/31	75,727	**	57,086	19,356	^#
iShares NYSE Composite Index Fund	0.25	%	03/30/04	7/31	73,060	**	29,128	10,729	^#
iShares Russell 1000 Growth Index Fund	0.20	%	05/22/00	3/31	8,840,582		4,850,893	2,452,127
iShares Russell 1000 Index Fund	0.15	%	05/15/00	3/31	3,495,318		2,675,116	2,447,487
iShares Russell 1000 Value Index Fund	0.20	%	05/22/00	3/31	10,905,088		7,432,460	3,698,281
iShares Russell 2000 Growth Index Fund	0.25	%	07/24/00	3/31	5,719,225		4,473,542	3,065,713
iShares Russell 2000 Index Fund	0.20	%	05/22/00	3/31	14,996,305		11,911,328	7,225,737
iShares Russell 2000 Value Index Fund	0.25	%	07/24/00	3/31	7,268,551		5,722,265	3,052,040
iShares Russell 3000 Growth Index Fund	0.25	%	07/24/00	3/31	453,625		293,501	217,413
iShares Russell 3000 Index Fund	0.20	%	05/22/00	3/31	3,985,670		3,229,699	2,365,642
iShares Russell 3000 Value Index Fund	0.25	%	07/24/00	3/31	1,061,219		685,284	352,437
iShares Russell Microcap™ Index Fund	0.60	%	08/12/05	3/31	377,476		N/A	N/A
iShares Russell Midcap Growth Index Fund	0.25	%	07/17/01	3/31	2,812,605		1,623,765	698,777
iShares Russell Midcap Index Fund	0.20	%	07/17/01	3/31	3,117,428		1,757,868	711,664
iShares Russell Midcap Value Index Fund	0.25	%	07/17/01	3/31	4,144,509		1,865,502	518,082
iShares S&P 100 Index Fund	0.20	%	10/23/00	3/31	1,503,867		1,158,279	807,961
iShares S&P 500 Growth Index Fund ¹	0.18	%	05/22/00	3/31	5,353,434		3,386,176	1,970,255
iShares S&P 500 Index Fund	0.09	%	05/15/00	3/31	13,128,784		9,710,593	6,461,077
iShares S&P 500 Value Index Fund ²	0.18	%	05/22/00	3/31	5,353,021		4,401,512	2,230,484
iShares S&P 1500 Index Fund	0.20	%	01/20/04	3/31	241,389		120,521	23,232	^#
iShares S&P U.S. Preferred Stock Index Fund ⁺	0.48	%	09/18/06	3/31	N/A		N/A	N/A
iShares S&P Europe 350 Index Fund	0.60	%	07/25/00	3/31	7,555,788		5,481,763	3,299,161
iShares S&P Global 100 Index Fund	0.40	%	12/05/00	3/31	1,475,948		921,838	412,967
iShares S&P Global Consumer Discretionary Sector Index Fund ⁺	0.48	%	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Consumer Staples Sector Index Fund ⁺	0.48	%	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Energy Sector Index Fund	0.48	%	11/12/01	3/31	3,363,017		1,541,106	241,568
iShares S&P Global Financials Sector Index Fund	0.48	%	11/12/01	3/31	603,553		281,138	137,379
iShares S&P Global Healthcare Sector Index Fund	0.48	%	11/13/01	3/31	2,635,027		1,066,853	322,900
iShares S&P Global Industries Index Fund ⁺	0.48	%	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Materials Index Fund ⁺	0.48	%	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Technology Sector Index Fund	0.48	%	11/12/01	3/31	430,798		195,919	102,307
iShares S&P Global Telecommunications Sector Index Fund	0.48	%	11/12/01	3/31	340,189		177,985	98,156
iShares S&P Global Utilities Sector Index Fund ⁺	0.48	%	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Latin America 40 Index Fund	0.50	%	10/25/01	3/31	4,292,113		757,549	203,852
iShares S&P MidCap 400 Growth Index Fund ³	0.25	%	07/24/00	3/31	3,756,882		2,298,624	1,236,192
iShares S&P MidCap 400 Index Fund	0.20	%	05/22/00	3/31	6,076,818		4,014,624	2,583,387
iShares S&P MidCap 400 Value Index Fund ⁴	0.25	%	07/24/00	3/31	5,665,081		3,679,449	2,060,880
iShares S&P SmallCap 600 Growth Index Fund ⁵	0.25	%	07/24/00	3/31	2,963,374		2,049,460	1,258,284
iShares S&P SmallCap 600 Index Fund	0.20	%	05/22/00	3/31	7,798,985		5,842,139	3,409,196
iShares S&P SmallCap 600 Value Index Fund ⁶	0.25	%	07/24/00	3/31	4,095,013		3,278,167	1,813,291
iShares S&P/TOPIX 150 Index Fund	0.50	%	10/23/01	3/31	819,772		435,002	119,832

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

*	Fees shown are from fund inception to September 30, 2004 and are not audited.

**	Fees shown are for the period from August 1, 2005 to June 30, 2006 and are not audited.

#	Fees shown are from fund inception to 2004 fiscal year end.

⁺	Fund had not commenced operations as of the periods covered by this table.

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

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

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

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

Portfolio Managers. As of September 1, 2006, S. Jane Leung joined Patrick O’Connor as Portfolio Managers of the Funds. They are primarily responsible for the day-to-day management of certain Funds and Certain types of other portfolios and/or accounts as indicated in the tables below.

Patrick O’Connor (as of July 31, 2006)


Types of Accounts	Number	Total Assets
Registered Investment Companies	113	$	189,983,600,000
Other Pooled Investment Vehicles	1	$	148,500,000
Other Accounts	6	$	80,000
Accounts with Incentive-Based Fee Arrangements	N/A		N/A

S. Jane Leung (as of July 31, 2006)


Types of Accounts	Number	Total Assets
Registered Investment Companies	113	$	189,983,600,000
Other Pooled Investment Vehicles	1	$	148,500,000
Other Accounts	5	$	100,000
Accounts with Incentive-Based Fee Arrangements	N/A		N/A

Each of the portfolios or accounts for which the Portfolio Managers are primarily responsible for the day-to-day management seeks to track the rate of return, risk profile and other characteristics of independent third-party indexes by either replicating the same combination of securities that compose those indexes or through a representative sampling of the securities that compose those indexes based on objective criteria and data. The Portfolio Managers are required to manage each portfolio or account to meet those objectives. Pursuant to BGI and BGFA policy, investment opportunities are allocated equitably among the S&P Index Funds, S&P Global Index Funds, Russell Index Funds, Dow Jones Index Funds, Goldman Sachs Index Funds, MSCI Index Funds, Morningstar Index Funds, NYSE Index Funds, Cohen & Steers Index Fund, KLD Select Social ^SM Index Fund, FTSE/Xinhua China 25 Index Fund, and Nasdaq Index 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 S&P Index Funds, S&P Global Index Funds, Russell Index Funds, Dow Jones Index Funds, Goldman Sachs Index Funds, MSCI Index Funds, Morningstar Index Funds, NYSE Index Funds, Cohen & Steers Index Fund, KLD Select Social ^SM Index Fund, FTSE/Xinhua China 25 Index Fund and Nasdaq Index Fund seeking such investment opportunity. As a consequence, from time to time the S&P Index Funds, S&P Global Index Funds, Russell Index Funds, Dow Jones Index Funds, Goldman Sachs Index Funds, Morningstar Index Funds, NYSE Index Funds, Cohen & Steers Index Fund, and Nasdaq Index Fund may receive a smaller allocation of an investment opportunity than they would have if the Portfolio Managers and BGFA and its affiliates did not manage other portfolios or accounts.

Like the S&P Index Funds, S&P Global Index Funds, Russell Index Funds, Dow Jones Index Funds, Goldman Sachs Index Funds, MSCI Index Funds, Morningstar Index Funds, NYSE Index Funds, Cohen & Steers Index Fund, KLD Select Social ^SM Index Fund, FTSE/Xinhua China 25 Index Fund and Nasdaq Index Fund, the other portfolios or accounts managed by the Portfolio Managers generally pay an asset-based fee to BGFA or BGI, as applicable, for its advisory services. One or more of those other portfolios or accounts, however, may pay BGI an incentive-based fee in lieu of, or in addition to, an asset-based fee for its advisory services. A portfolio or account with an incentive-based fee would pay BGI a portion of that portfolio’s or account’s gains, or would pay BGI more for its services than would otherwise be the case if BGI meets or exceeds specified performance targets. By their very nature, incentive-based fee arrangements could present an incentive for BGI to devote greater resources, and allocate more investment opportunities, to the portfolios or accounts that have those fee arrangements, relative to other portfolios or accounts, in order to earn larger fees. Although BGI has an obligation to allocate resources and opportunities equitably among portfolios and accounts and intends to do so, shareholders of the S&P Index Funds, S&P Global Index Funds, Russell Index Funds, Dow Jones Index Funds, Goldman Sachs Index Funds, MSCI Index Funds, Morningstar Index Funds, NYSE Index Funds, Cohen & Steers Index Fund, KLD Select Social ^SM Index Fund, FTSE/Xinhua China 25 Index Fund and Nasdaq Index 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 Manager’s favoring those portfolios or accounts with incentive-based fee arrangements.

As of July 31, 2006, with respect to all iShares Funds and other portfolios and/or accounts managed by the Portfolio Managers, on behalf of BGFA, the Portfolio Managers receive a salary and are eligible to receive an annual bonus. Each Portfolio Manager’s salary is a fixed amount generally determined annually based on a number of factors, including, but not limited to, the Portfolio Manager’s title, scope of responsibilities, experience and knowledge. The Portfolio Manager’s bonus is a discretionary amount determined annually based on the overall profitability of the various BGI companies worldwide, the performance of the Portfolio Manager’s business unit, and an assessment of the Portfolio Manager’s individual performance. The Portfolio Manager’s salary and annual bonus are paid in cash. In addition, a Portfolio Manager may be paid a signing bonus or other amounts in connection with initiation of employment with BGFA. If a Portfolio Manager satisfied the requirements for being part of a “select group of management or highly compensated employees (within the meaning of ERISA section 401(a))” as so specified under the terms of BGI’s Compensation Deferral Plan, the Portfolio Manager may elect to defer a portion of his or her bonus under that Plan.

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

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

As of July 31, 2006, Mr. O’Connor beneficially owned shares of the Funds for which he is primarily responsible for the day-to-day management in the amounts reflected in the following tables:

Patrick O’Connor

Dollar Range

Name of iShares Index Fund

None

$1 to $10k

$10,001 to

$50k

$50,001 to

$100k

$100,001 to

$500k

$500,001 to
$1m

over
$1m

iShares Cohen & Steers Realty Majors

iShares Dow Jones Select Dividend

iShares Dow Jones Transportation Average

iShares Dow Jones U.S. Aerospace & Defense

iShares Dow Jones U.S. Basic Materials Sector

iShares Dow Jones U.S. Broker-Dealers

iShares Dow Jones U.S. Consumer Goods Sector

iShares Dow Jones U.S. Consumer Services Sector

iShares Dow Jones U.S. Energy Sector

iShares Dow Jones U.S. Financial Sector

iShares Dow Jones U.S. Financial Services

iShares Dow Jones U.S. Healthcare Providers

iShares Dow Jones U.S. Healthcare Sector

iShares Dow Jones U.S. Home Construction

iShares Dow Jones U.S. Industrial Sector

iShares Dow Jones U.S. Insurance

iShares Dow Jones U.S. Medical Devices

iShares Dow Jones U.S. Oil Equipment & Services

iShares Dow Jones U.S. Oil & Gas Exploration & Production

iShares Dow Jones U.S. Pharmaceuticals

iShares Dow Jones U.S. Real Estate

iShares Dow Jones U.S. Regional Banks

iShares Dow Jones U.S. Technology Sector

iShares Dow Jones U.S. Telecommunications Sector

iShares Dow Jones U.S. Total Market

iShares Dow Jones U.S. Utilities Sector

iShares FTSE/Xinhua China 25

iShares Goldman Sachs Natural Resources

iShares Goldman Sachs Networking

iShares Goldman Sachs Semiconductor

iShares Goldman Sachs Software

iShares Goldman Sachs Technology

iShares KLD Select Social ^SM

iShares MSCI EAFE Growth

iShares MSCI EAFE

iShares MSCI EAFE Value

iShares Morningstar Large Core

iShares Morningstar Large Growth

iShares Morningstar Large Value

iShares Morningstar Mid Core

iShares Morningstar Mid Growth

iShares Morningstar Mid Value

iShares Morningstar Small Core

iShares Morningstar Small Growth

iShares Morningstar Small Value

iShares Nasdaq Biotechnology

iShares NYSE 100

iShares NYSE Composite

iShares Russell 1000

iShares Russell 1000 Growth

iShares Russell 1000 Value

iShares Russell 2000

iShares Russell 2000 Growth

iShares Russell 2000 Value

iShares Russell 3000

iShares Russell 3000 Growth

iShares Russell 3000 Value

iShares Russell Microcap™

iShares Russell Midcap

iShares Russell Midcap Growth

iShares Russell Midcap Value

iShares S&P 100

iShares S&P 1500

iShares S&P U.S. Preferred Stock

iShares S&P MidCap 400

iShares S&P MidCap 400 Growth

iShares S&P MidCap 400 Value

iShares S&P 500

iShares S&P 500 Growth

iShares S&P 500 Value

iShares S&P SmallCap 600

iShares S&P SmallCap 600 Growth

iShares S&P SmallCap 600 Value

iShares S&P Europe 350

iShares S&P Global 100

iShares S&P Global Consumer Discretionary Sector

iShares S&P Global Consumer Staples Sector

iShares S&P Global Energy Sector

iShares S&P Global Financials Sector

iShares S&P Global Healthcare Sector

iShares S&P Global Industrials Sector

iShares S&P Global Materials Sector

iShares S&P Global Technology Sector

iShares S&P Global Utilities Sector

iShares S&P Latin America 40

iShares S&P Telecommunications Sector

iShares S&P/TOPIX 150

As of July 31, 2006, Ms. Leung beneficially owned shares of the Funds for which she is primarily responsible for the day-to-day management in the amounts reflected in the following tables:

S. Jane Leung

Dollar Range

Name of iShares Index Fund

None

$1 to $10k

$10,001 to

$50k

$50,001 to

$100k

$100,001 to

$500k

$500,001 to
$1m

over
$1m

iShares Cohen & Steers Realty Majors

iShares Dow Jones Select Dividend

iShares Dow Jones Transportation Average

iShares Dow Jones U.S. Aerospace & Defense

iShares Dow Jones U.S. Basic Materials Sector

iShares Dow Jones U.S. Broker-Dealers

iShares Dow Jones U.S. Consumer Goods Sector

iShares Dow Jones U.S. Consumer Services Sector

iShares Dow Jones U.S. Energy Sector

iShares Dow Jones U.S. Financial Sector

iShares Dow Jones U.S. Financial Services

iShares Dow Jones U.S. Healthcare Providers

iShares Dow Jones U.S. Healthcare Sector

iShares Dow Jones U.S. Home Construction

iShares Dow Jones U.S. Industrial Sector

iShares Dow Jones U.S. Insurance

iShares Dow Jones U.S. Medical Devices

iShares Dow Jones U.S. Oil Equipment & Services

iShares Dow Jones U.S. Oil & Gas Exploration & Production

iShares Dow Jones U.S. Pharmaceuticals

iShares Dow Jones U.S. Real Estate

iShares Dow Jones U.S. Regional Banks

iShares Dow Jones U.S. Technology Sector

iShares Dow Jones U.S. Telecommunications Sector

iShares Dow Jones U.S. Total Market

iShares Dow Jones U.S. Utilities Sector

iShares FTSE/Xinhua China 25

iShares Goldman Sachs Natural Resources

iShares Goldman Sachs Networking

iShares Goldman Sachs Semiconductor

iShares Goldman Sachs Software

iShares Goldman Sachs Technology

iShares KLD Select SocialSM

iShares MSCI EAFE Growth

iShares MSCI EAFE

iShares MSCI EAFE Value

iShares Morningstar Large Core

iShares Morningstar Large Growth

iShares Morningstar Large Value

iShares Morningstar Mid Core

iShares Morningstar Mid Growth

iShares Morningstar Mid Value

iShares Morningstar Small Core

iShares Morningstar Small Growth

iShares Morningstar Small Value

iShares Nasdaq Biotechnology

iShares NYSE 100

iShares NYSE Composite

iShares Russell 1000

iShares Russell 1000 Growth

iShares Russell 1000 Value

iShares Russell 2000

iShares Russell 2000 Growth

iShares Russell 2000 Value

iShares Russell 3000

iShares Russell 3000 Growth

iShares Russell 3000 Value

iShares Russell Microcap™

iShares Russell Midcap

iShares Russell Midcap Growth

iShares Russell Midcap Value

iShares S&P 100

iShares S&P 1500

iShares S&P U.S. Preferred Stock

iShares S&P MidCap 400

iShares S&P MidCap 400 Growth

iShares S&P MidCap 400 Value

iShares S&P 500

iShares S&P 500 Growth

iShares S&P 500 Value

iShares S&P SmallCap 600

iShares S&P SmallCap 600 Growth

iShares S&P SmallCap 600 Value

iShares S&P Europe 350

iShares S&P Global 100

iShares S&P Global Consumer Discretionary Sector

iShares S&P Global Consumer Staples Sector

iShares S&P Global Energy Sector

iShares S&P Global Financials Sector

iShares S&P Global Healthcare Sector

iShares S&P Global Industrials Sector

iShares S&P Global Materials Sector

iShares S&P Global Technology Sector

iShares S&P Global Utilities Sector

iShares S&P Latin America 40

iShares S&P Telecommunications Sector

iShares S&P/TOPIX 150

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

Administrator, Custodian and Transfer Agent. Investors Bank & Trust Company (“Investors Bank”) serves as administrator, custodian and transfer agent for the Funds. Investors Bank’s principal address is 200 Clarendon Street, Boston, MA 02116. Under the Administration Agreement with the Trust, Investors Bank provides necessary administrative, legal, tax, accounting services, and financial reporting for the maintenance and operations of the Trust and each Fund. In addition, Investors Bank makes available the office space, equipment, personnel and facilities required to provide such services. Under the Custodian Agreement with the Trust, Investors Bank maintains in separate accounts cash, securities and other assets of the Trust and each Fund, keeps all necessary accounts and records, and provides other services. Investors Bank is required, upon the order of the Trust, to deliver securities held by Investors Bank and to make payments for securities purchased by the Trust for each Fund. Also, under a Delegation Agreement, Investors Bank 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 Trust, Investors Bank acts as a transfer agent for each Fund’s authorized and issued shares of beneficial interest, and as dividend disbursing agent of the Trust. As compensation for the foregoing services, Investors Bank receives certain out-of-pocket costs, transaction fees and asset-based fees which are accrued daily and paid monthly by BGFA from its management fee. The following table sets forth the administration, transfer agency and custodian expenses of each Fund for the periods noted.

Fund

Fund
Inception
Date

Fiscal

Year
End

Custody,
Administration,
Transfer Agency
Expenses

Paid During
Fiscal Year
Ended 2006

Custody,
Administration,
Transfer Agency
Expenses

Paid During
Fiscal Year
Ended 2005

Custody,
Administration,
Transfer Agency
Expenses

Paid During
Fiscal Year
Ended 2004

iShares Cohen & Steers Realty Majors Index Fund

01/29/01

4/30

132,407

123,900

124,903

iShares Dow Jones Select Dividend Index Fund

11/03/03

4/30

629,705

435,559

92,285

iShares Dow Jones Transportation Average Index Fund

10/06/03

4/30

14,615

9,120

5,897

iShares Dow Jones U.S. Aerospace & Defense Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Basic Materials Sector Index Fund

06/12/00

4/30

35,287

45,815

59,717

iShares Dow Jones U.S. Broker-Dealers Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Consumer Goods Sector Index Fund

06/12/00

4/30

38,400

45,173

40,324

iShares Dow Jones U.S. Consumer Services Sector Index Fund

06/12/00

4/30

25,810

29,951

43,230

iShares Dow Jones U.S. Energy Sector Index Fund

06/12/00

4/30

63,203

55,663

47,617

iShares Dow Jones U.S. Financial Sector Index Fund

05/22/00

4/30

33,545

38,478

57,022

iShares Dow Jones U.S. Financial Services Index Fund

06/12/00

4/30

20,228

19,492

32,208

iShares Dow Jones U.S. Healthcare Providers Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Healthcare Sector Index Fund

06/12/00

4/30

105,853

95,188

114,538

iShares Dow Jones U.S. Home Construction Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Industrial Sector Index Fund

06/12/00

4/30

23,629

29,047

35,692

iShares Dow Jones U.S. Insurance Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Medical Devices Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Oil Equipment & Services Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Pharmaceuticals Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Real Estate Index Fund

06/12/00

4/30

89,357

100,021

87,813

iShares Dow Jones U.S. Regional Banks Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Technology Sector Index Fund

05/15/00

4/30

40,735

48,115

84,370

iShares Dow Jones U.S. Telecommunications Sector Index Fund

05/22/00

4/30

38,449

36,216

49,087

iShares Dow Jones U.S. Total Market Index Fund

06/12/00

4/30

48,785

57,857

83,229

iShares Dow Jones U.S. Utilities Sector Index Fund

06/12/00

4/30

62,195

65,589

97,455

iShares FTSE/Xinhua China 25 Index Fund

10/05/04

7/31

412,063

137,608

N/A

iShares Goldman Sachs Natural Resources Index Fund

10/22/01

7/31

85,904

48,133

35,084

iShares Goldman Sachs Networking Index Fund

07/10/01

7/31

18,345

15,450

29,324

iShares Goldman Sachs Semiconductor Index Fund

07/10/01

7/31

30,886

27,028

41,708


iShares Goldman Sachs Software Index Fund	07/10/01	7/31	15,262	*	15,547	32,493
iShares Goldman Sachs Technology Index Fund	03/13/01	7/31	23,237	*	22,507	34,892
iShares KLD Select Social ^SM Index Fund	01/24/05	4/30	15,277		2,464	N/A
iShares Morningstar Large Core Index Fund	06/28/04	4/30	11,375		5,942	1,592	**
iShares Morningstar Large Growth Index Fund	06/28/04	4/30	13,442		5,406	1,276	**
iShares Morningstar Large Value Index Fund	06/28/04	4/30	13,062		5,954	1,662	**
iShares Morningstar Mid Core Index Fund	06/28/04	4/30	18,821		8,586	2,130	**
iShares Morningstar Mid Growth Index Fund	06/28/04	4/30	24,138		6,996	1,116	**
iShares Morningstar Mid Value Index Fund	06/28/04	4/30	22,807		7,379	2,254	**
iShares Morningstar Small Core Index Fund	06/28/04	4/30	21,926		9,815	3,078	**
iShares Morningstar Small Growth Index Fund	06/28/04	4/30	19,388		8,388	3,448	**
iShares Morningstar Small Value Index Fund	06/28/04	4/30	23,473		8,542	2,442	**
iShares MSCI EAFE Growth Index Fund	08/01/05	7/31	70,328	*	N/A	N/A
iShares MSCI EAFE Index Fund	08/14/01	7/31	3,718,212	*	3,204,676	2,663,253
iShares MSCI EAFE Value Index Fund	08/01/05	7/31	82,554	*	N/A	N/A
iShares Nasdaq Biotechnology Index Fund	02/05/01	3/31	135,612		136,878	178,897
iShares NYSE 100 Index Fund	03/29/04	7/31	7,266	*	6,587	4,643	#
iShares NYSE Composite Index Fund	03/30/04	7/31	6,868	*	5,337	2,675	#
iShares Russell 1000 Growth Index Fund	05/22/00	3/31	358,192		295,350	295,029
iShares Russell 1000 Index Fund	05/15/00	3/31	204,281		237,355	393,644
iShares Russell 1000 Value Index Fund	05/22/00	3/31	450,740		455,716	442,996
iShares Russell 2000 Growth Index Fund	07/24/00	3/31	217,158		249,738	321,197
iShares Russell 2000 Index Fund	05/22/00	3/31	681,244		801,858	906,206
iShares Russell 2000 Value Index Fund	07/24/00	3/31	287,819		322,746	312,434
iShares Russell 3000 Growth Index Fund	07/24/00	3/31	30,701		29,027	39,057
iShares Russell 3000 Index Fund	05/22/00	3/31	189,584		218,595	295,617
iShares Russell 3000 Value Index Fund	07/24/00	3/31	59,284		51,540	55,703
iShares Russell Microcap ^™ Index Fund	08/12/05	3/31	18,339		N/A	N/A
iShares Russell Midcap Growth Index Fund	07/17/01	3/31	114,152		90,756	76,223
iShares Russell Midcap Index Fund	07/17/01	3/31	168,817		124,705	98,290
iShares Russell Midcap Value Index Fund	07/17/01	3/31	165,484		104,797	62,873
iShares S&P 100 Index Fund	10/23/00	3/31	70,051		75,422	105,784
iShares S&P 1500 Index Fund	01/20/04	3/31	22,414		23,387	4,935	#
iShares S&P U.S. Preferred Stock Index Fund ⁺	09/18/06	3/31	N/A		N/A	N/A
iShares S&P 500 Growth Index Fund ¹	05/22/00	3/31	249,175		235,319	264,229
iShares S&P 500 Index Fund	05/15/00	3/31	1,120,312		1,254,592	1,606,064
iShares S&P 500 Value Index Fund ²	05/22/00	3/31	260,119		308,993	297,644
iShares S&P Europe 350 Index Fund	07/25/00	3/31	282,470		279,210	305,954
iShares S&P Global 100 Index Fund	12/05/00	3/31	53,565		49,086	46,093
iShares S&P Global Consumer Discretionary Sector Index Fund ⁺	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Consumer Staples Sector Index Fund ⁺	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Energy Sector Index Fund	11/12/01	3/31	62,641		50,899	20,526
iShares S&P Global Financials Sector Index Fund	11/12/01	3/31	20,342		16,460	20,877
iShares S&P Global Healthcare Sector Index Fund	11/13/01	3/31	50,932		33,133	25,049
iShares S&P Global Industrials Sector Index Fund ⁺	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Materials Sector Index Fund ⁺	09/11/06	3/31	N/A		N/A	N/A
iShares S&P Global Technology Sector Index Fund	11/12/01	3/31	10,310		8,865	11,855
iShares S&P Global Telecommunications Sector Index Fund	11/12/01	3/31	15,397		11,792	15,900
iShares S&P Global Utilities Sector Index Fund ⁺	09/11/06	3/31	N/A		N/A	N/A
iShares S&P MidCap 400 Growth Index Fund ³	07/24/00	3/31	164,830		125,819	132,618
iShares S&P MidCap 400 Index Fund	05/22/00	3/31	293,591		266,785	324,263
iShares S&P MidCap 400 Value Index Fund ⁴	07/24/00	3/31	222,755		193,784	211,476
iShares S&P SmallCap 600 Growth Index Fund ⁵	07/24/00	3/31	132,847		126,622	138,347
iShares S&P SmallCap 600 Index Fund	05/22/00	3/31	375,366		379,745	428,264
iShares S&P SmallCap 600 Value Index Fund ⁶	07/24/00	3/31	184,316		185,131	195,507
iShares S&P/TOPIX 150 Index Fund	10/23/01	3/31	25,661		22,972	18,873

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

*	Fees shown are for the period from August 1, 2005 to June 30, 2006 and are not audited.

**	Fees shown are from fund inception to September 30, 2004 and are not audited.

#	Fees shown are from fund inception to 2004 fiscal year end.

⁺	Fund had not commenced operations as of the periods covered by this table.

Distributor. SEI is the distributor of shares of the Trust. Its principal address is One Freedom Valley Drive, Oaks, PA 19456. The Distributor has entered into a Distribution Agreement with the Trust pursuant to which it distributes shares of each Fund. The Distribution Agreement will continue for two years from its effective date and is renewable annually. Shares are continuously offered for sale by the Funds through the Distributor only in Creation Unit Aggregations, as described in the applicable Prospectus and below in the Creation and Redemption of Creation Units Aggregations section. Shares in less than Creation Unit Aggregations are not distributed by the Distributor. The Distributor will deliver the applicable Prospectus and, upon request, the SAI to persons purchasing Creation Unit Aggregations 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 1934 Act and a member of the National Association of Securities Dealers, Inc. (“NASD”).

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

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

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

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


Fund	Fund Inception Date	Fiscal Year End	Compensation Paid During Fiscal Year Ended 2006		Compensation Paid During Fiscal Year Ended 2005		Compensation Paid During Fiscal Year Ended 2004
iShares Cohen & Steers Realty Majors Index Fund	01/29/01	4/30	$	38,592.68	$	34,903.66	$	25,552.92
iShares Dow Jones Select Dividend Index Fund	11/03/03	4/30	$	38,592.68	$	34,903.66	$	12,776.46	#
iShares Dow Jones Transportation Average Index Fund	10/06/03	4/30	$	38,592.68	$	34,903.66	$	14,905.87	#
iShares Dow Jones U.S. Aerospace & Defense Index Fund ⁺	05/01/06	4/30		N/A		N/A		N/A
iShares Dow Jones U.S. Basic Materials Sector Index Fund	06/12/00	4/30	$	38,592.68	$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Broker-Dealers Index Fund ⁺	05/01/06	4/30		N/A		N/A		N/A
iShares Dow Jones U.S. Consumer Services Sector Index Fund	06/12/00	4/30	$	38,592.68	$	34,903.66	$	25,552.92


Fund	Fund Inception Date	Fiscal Year End	Compensation Paid During Fiscal Year Ended 2006			Compensation Paid During Fiscal Year Ended 2005		Compensation Paid During Fiscal Year Ended 2004
iShares Dow Jones U.S. Consumer Goods Sector Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Energy Sector Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Financial Sector Index Fund	05/22/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Financial Services Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Healthcare Providers Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Healthcare Sector Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Home Construction Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Industrial Sector Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Insurance Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Medical Devices Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Oil Equipment & Services Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Pharmaceuticals Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Real Estate Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Regional Banks Index Fund ⁺	05/01/06	4/30		N/A			N/A		N/A
iShares Dow Jones U.S. Technology Sector Index Fund	05/15/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Telecommunications Sector Index Fund	05/22/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Total Market Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares Dow Jones U.S. Utilities Sector Index Fund	06/12/00	4/30	$	38,592.68		$	34,903.66	$	25,552.92
iShares FTSE/Xinhua China 25 Index Fund	10/05/04	7/31	$	34,485.91	*	$	31,860.15	$	N/A
iShares Goldman Sachs Natural Resources Index Fund	10/22/01	7/31	$	34,485.91	*	$	37,068.48	$	25,552.92
iShares Goldman Sachs Networking Index Fund	07/10/01	7/31	$	34,485.91	*	$	37,068.48	$	25,552.92
iShares Goldman Sachs Technology Index Fund	03/13/01	7/31	$	34,485.91	*	$	37,068.48	$	25,552.92
iShares Goldman Sachs Semiconductor Index Fund	07/10/01	7/31	$	34,485.91	*	$	37,068.48	$	25,552.92
iShares Goldman Sachs Software Index Fund	07/10/01	7/31	$	34,485.91	*	$	37,068.48	$	25,552.92
iShares KLD Select SocialSM Index Fund	01/24/05	4/30	$	38,592.68		$	9,873.74		N/A
iShares Morningstar Large Core Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Large Growth Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Large Value Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Mid Core Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Mid Growth Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Mid Value Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Small Core Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Small Growth Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**
iShares Morningstar Small Value Index Fund	06/28/04	4/30	$	38,592.68		$	30,919.86	$	6,388.23	**


Fund	Fund Inception Date	Fiscal Year End	Compensation Paid During Fiscal Year Ended 2006			Compensation Paid During Fiscal Year Ended 2005		Compensation Paid During Fiscal Year Ended 2004
iShares MSCI EAFE Growth Index Fund	08/01/05	7/31	$	34,485.91	*		N/A		N/A
iShares MSCI EAFE Index Fund	08/14/01	7/31	$	34,485.91	*	$	37,068.48	$	25,552.92
iShares MSCI EAFE Value Index Fund	08/01/05	7/31	$	34,485.91	*		N/A		N/A
iShares Nasdaq Biotechnology Index Fund	02/05/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares NYSE 100 Index Fund	03/29/04	7/31	$	34,485.91	*	$	37,068.48	$	10,647.05	#
iShares NYSE Composite Index Fund	03/30/04	7/31	$	34,485.91	*	$	37,068.48	$	10,647.05	#
iShares Russell 1000 Growth Index Fund	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 1000 Index Fund	05/15/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 1000 Value Index Fund	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 2000 Growth Index Fund	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 2000 Index Fund	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 2000 Value Index Fund	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 3000 Index Fund	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 3000 Growth Index Fund	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell 3000 Value Index Fund	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell Microcap ^™ Index Fund	08/12/05	3/31	$	38,720.50			N/A		N/A
iShares Russell Midcap Growth Index Fund	07/17/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell Midcap Index Fund	07/17/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares Russell Midcap Value Index Fund	07/17/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P 100 Index Fund	10/23/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P 500 Growth Index Fund ¹	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P 500 Index Fund	05/15/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P 500 Value Index Fund ²	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P 1500 Index Fund	01/20/04	3/31	$	38,720.50		$	33,702.28	$	4,258.82	#
iShares S&P U.S. Preferred Stock Index Fund ⁺	09/18/06	3/31		N/A			N/A		N/A
iShares S&P Europe 350 Index Fund	07/25/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global 100 Index Fund	12/05/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global Consumer Discretionary Sector Index Fund ⁺	09/11/06	3/31		N/A			N/A		N/A
iShares S&P Global Consumer Staples Sector Index Fund ⁺	09/11/06	3/31		N/A			N/A		N/A
iShares S&P Global Energy Sector Index Fund	11/12/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global Financials Sector Index Fund	11/12/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global Healthcare Sector Index Fund	11/13/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global Industrials Sector Index Fund ⁺	09/11/06	3/31		N/A			N/A		N/A
iShares S&P Global Materials Sector Index Fund ⁺	09/11/06	3/31		N/A			N/A		N/A
iShares S&P Global Technology Sector Index Fund	11/12/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global Telecommunications Sector Index Fund	11/12/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P Global Utilities Sector Index Fund ⁺	09/11/06	3/31		N/A			N/A		N/A
iShares S&P Latin America 40 Index Fund	10/25/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P MidCap 400 Growth Index Fund ³	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P MidCap 400 Index Fund	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P MidCap 400 Value Index Fund ⁴	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P SmallCap 600 Growth Index Fund ⁵	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P SmallCap 600 Index Fund	05/22/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P SmallCap 600 Value Index Fund ⁶	07/24/00	3/31	$	38,720.50		$	33,702.28	$	25,552.92
iShares S&P/TOPIX 150 Index Fund	10/23/01	3/31	$	38,720.50		$	33,702.28	$	25,552.92

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

*	Fees shown are for the period from August 1, 2005 to June 30, 2006 and are not audited.

**	Fees shown are from fund inception to September 30, 2004 and are not audited.

#	Fees shown are from fund inception to 2004 fiscal year end.

⁺	Fund had not commenced operations as of the periods covered by this table.

Index Providers. Each Fund is based upon a particular index compiled by one of the following Index Providers: Standard & Poor’s (a division of the McGraw-Hill Companies), Frank Russell Company, Dow Jones & Company, Cohen & Steers, NASDAQ, Goldman Sachs, MSCI, NYSE, Morningstar, KLD Research & Analytics, Inc. and FTSE/Xinhua Limited. Dow Jones maintains and calculates the NYSE Indices for the NYSE and the Morningstar Indices for Morningstar pursuant to contractual agreements. None of the Index Providers is affiliated with the Funds or with BGI or its affiliates. BGI has provided to the iShares Funds other than the iShares FTSE/Xinhua China 25 Index Fund, the applicable sub-licenses without charge. BGI has entered into a license agreement with FXI to use the FTSE/Xinhua China 25 Index, which includes rights for the Trust to use the FTSE/Xinhua China 25 Index in connection with the iShares FTSE/Xinhua China 25 Index Fund. The iShares FTSE/Xinhua China 25 Index Fund is not required to pay any license fees for its use of the Underlying Index for the purpose of the exchange-traded Fund. Each of the other Funds are entitled to use its Underlying Index pursuant to a sub-licensing agreement with BGI, which in turn has a licensing agreement with the relevant Index Provider.

Brokerage Transactions

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

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

Fund

Inception

Date

Fiscal
Year

End

Commissions

Paid During

Fiscal Year

Ended 2006

Commissions

Paid During

Fiscal Year

Ended 2005

Commissions

Paid During

Fiscal Year

Ended 2004

iShares Cohen & Steers Realty Majors Index Fund

01/29/01

4/30

325,881

388,191

119,242

iShares Dow Jones Select Dividend Index Fund

11/03/03

4/30

1,083,270

1,064,545

28,637

iShares Dow Jones Transportation Average Index Fund

10/06/03

4/30

20,296

6,694

1,243

iShares Dow Jones U.S. Aerospace & Defense Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Basic Materials Sector Index Fund

06/12/00

4/30

18,197

16,902

19,664

iShares Dow Jones U.S. Broker-Dealers Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Consumer Goods Sector Index Fund

06/12/00

4/30

18,371

33,335

6,084

iShares Dow Jones U.S. Consumer Services Sector Index Fund

06/12/00

4/30

11,686

25,143

9,852

iShares Dow Jones U.S. Energy Sector Index Fund

06/12/00

4/30

10,953

8,735

4,260

iShares Dow Jones U.S. Financial Sector Index Fund

05/22/00

4/30

13,680

10,576

11,552

iShares Dow Jones U.S. Financial Services Index Fund

06/12/00

4/30

9,635

4,576

5,371

iShares Dow Jones U.S. Healthcare Providers Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Healthcare Sector Index Fund

06/12/00

4/30

48,753

17,418

16,320

iShares Dow Jones U.S. Home Construction Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Industrial Sector Index Fund

06/12/00

4/30

10,572

5,168

3,943

iShares Dow Jones U.S. Insurance Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Medical Devices Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Oil Equipment & Services Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Pharmaceuticals Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Real Estate Index Fund

06/12/00

4/30

175,829

127,331

100,687

iShares Dow Jones U.S. Regional Banks Index Fund ⁺

05/01/06

4/30

N/A

iShares Dow Jones U.S. Technology Sector Index Fund

05/15/00

4/30

25,906

38,889

23,769

iShares Dow Jones U.S. Telecommunications Sector Index Fund

05/22/00

4/30

174,008

37,706

87,529

iShares Dow Jones U.S. Total Market Index Fund

06/12/00

4/30

17,475

18,463

14,701

iShares Dow Jones U.S. Utilities Sector Index Fund

06/12/00

4/30

35,305

41,377

55,741

iShares FTSE/Xinhua China 25 Index Fund

10/05/04

7/31

724,942

102,210

N/A

iShares Goldman Sachs Networking Index Fund

07/10/01

7/31

134,597

78,887

35,218

iShares Goldman Sachs Semiconductor Index Fund

07/10/01

7/31

17,512

49,482

4,979

iShares Goldman Sachs Software Index Fund

07/10/01

7/31

25,738

20,378

17,225

iShares Goldman Sachs Technology Index Fund

03/13/01

7/31

8,711

16,136

5,428

Fund

Inception

Date

Fiscal
Year

End

Commissions

Paid During

Fiscal Year

Ended 2006

Commissions

Paid During

Fiscal Year

Ended 2005

Commissions

Paid During

Fiscal Year

Ended 2004

iShares Goldman Sachs Natural Resources Index Fund

10/22/01

7/31

62,707

29,670

7,850

iShares KLD Select Social ^SM Index Fund

01/24/05

4/30

39,833

1,436

N/A

iShares Morningstar Large Core Index Fund

06/28/04

4/30

5,289

1,420

361

iShares Morningstar Large Growth Index Fund

06/28/04

4/30

14,194

5,484

300

iShares Morningstar Large Value Index Fund

06/28/04

4/30

9,167

981

354

iShares Morningstar Mid Core Index Fund

06/28/04

4/30

15,308

2,715

673

iShares Morningstar Mid Growth Index Fund

06/28/04

4/30

15,672

3,024

166

iShares Morningstar Mid Value Index Fund

06/28/04

4/30

11,971

1,945

717

iShares Morningstar Small Core Index Fund

06/28/04

4/30

32,676

10,269

1,491

iShares Morningstar Small Growth Index Fund

06/28/04

4/30

19,130

9,640

1,105

iShares Morningstar Small Value Index Fund

06/28/04

4/30

15,750

5,036

680

iShares MSCI EAFE Index Fund

08/14/01

7/31

1,392,523

898,731

275,262

iShares MSCI EAFE Growth Index Fund

08/01/05

7/31

8,848

N/A

iShares MSCI EAFE Value Index Fund

08/01/05

7/31

15,782

N/A

iShares Nasdaq Biotechnology Index Fund

02/05/01

3/31

420,511

448,994

47,385

iShares NYSE Composite Index Fund

03/30/04

7/31

1,486

930

iShares NYSE 100 Index Fund

03/29/04

7/31

3,790

1,934

544

iShares Russell 3000 Index Fund

05/22/00

3/31

59,870

48,513

25,842

iShares Russell 3000 Growth Index Fund

07/24/00

3/31

7,547

5,284

3,006

iShares Russell 3000 Value Index Fund

07/24/00

3/31

19,644

18,480

6,744

iShares Russell 2000 Index Fund

05/22/00

3/31

874,193

971,521

457,584

iShares Russell 2000 Growth Index Fund

07/24/00

3/31

269,270

341,258

184,816

iShares Russell 2000 Value Index Fund

07/24/00

3/31

383,689

434,253

145,381

iShares Russell 1000 Index Fund

05/15/00

3/31

67,038

40,669

29,596

iShares Russell 1000 Growth Index Fund

05/22/00

3/31

139,196

87,806

26,748

iShares Russell 1000 Value Index Fund

05/22/00

3/31

262,546

251,135

65,213

iShares Russell Microcap ^™ Index Fund

08/12/05

3/31

54,053

N/A

iShares Russell Midcap Index Fund

07/17/01

3/31

107,722

122,995

16,283

iShares Russell Midcap Growth Index Fund

07/17/01

3/31

54,935

100,817

12,436

iShares Russell Midcap Value Index Fund

07/17/01

3/31

143,065

145,138

11,828

iShares S&P 100 Index Fund

10/23/00

3/31

44,577

18,869

15,094

iShares S&P 500 Index Fund

05/15/00

3/31

218,544

300,591

127,890

iShares S&P 500 Growth Index Fund ¹

05/22/00

3/31

113,888

214,827

53,014

iShares S&P 500 Value Index Fund ²

05/22/00

3/31

81,870

63,988

38,197

iShares S&P MidCap 400 Index Fund

05/22/00

3/31

130,284

87,514

74,089

iShares S&P MidCap 400 Growth Index Fund ³

07/24/00

3/31

155,913

172,134

42,172

iShares S&P MidCap 400 Value Index Fund ⁴

07/24/00

3/31

305,536

93,850

67,229

iShares S&P SmallCap 600 Index Fund

05/22/00

3/31

260,818

185,551

117,477

iShares S&P SmallCap 600 Growth Index Fund ⁵

07/24/00

3/31

180,655

249,433

39,167

iShares S&P SmallCap 600 Value Index Fund ⁶

07/24/00

3/31

137,267

117,161

72,410

iShares S&P 1500 Index Fund

01/20/04

3/31

1,716

2,196

333

iShares S&P U.S. Preferred Stock Index Fund ⁺

09/18/06

3/31

N/A

iShares S&P Global 100 Index Fund

12/05/00

3/31

33,758

20,951

5,976

iShares S&P Global Consumer Discretionary Sector Index Fund ⁺

09/11/06

3/31

N/A

iShares S&P Global Consumer Staples Sector Index Fund ⁺

09/11/06

3/31

N/A

iShares S&P Global Energy Sector Index Fund

11/12/01

3/31

35,317

20,180

2,863

iShares S&P Global Financials Sector Index Fund

11/12/01

3/31

8,153

3,688

2,086

iShares S&P Global Healthcare Sector Index Fund

11/13/01

3/31

33,597

18,828

5,159

iShares S&P Global Industrials Sector Index Fund ⁺

09/11/06

3/31

N/A

iShares S&P Global Materials Sector Index Fund ⁺

09/11/06

3/31

N/A

iShares S&P Global Technology Sector Index Fund

11/12/01

3/31

18,372

9,002

2,189

iShares S&P Global Telecommunications Sector Index Fund

11/12/01

3/31

11,680

4,443

1,835

iShares S&P Global Utilities Sector Index Fund ⁺

09/11/06

3/31

N/A

iShares S&P Europe 350 Index Fund

07/25/00

3/31

113,424

48,152

29,635

iShares S&P Latin America 40 Index Fund

10/25/01

3/31

282,563

72,609

19,474

iShares S&P/TOPIX 150 Index Fund

10/23/01

3/31

12,548

3,695

1,007

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

*	Fees shown are from fund inception to September 30, 2004 and are not audited.

**	Fees shown are for the period from August 1, 2005 to June 30, 2006 and are not audited.

#	Fees shown are from fund inception to 2004 fiscal year end.

⁺	Fund had not commenced operations as of the periods covered by this table.

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


Fund	Fiscal Year End	Issuer	Market Value of Investment
iShares S&P 100 Index Fund	3/31	Bank of America Corp.	29,345,475
		Merrill Lynch & Co., Inc.	10,033,945
		The Goldman Sachs Group, Inc.	9,493,883
		Morgan Stanley	9,358,233
		Lehman Brothers Holdings, Inc.	5,422,766
iShares S&P 500 Index Fund	3/31	Citigroup, Inc.	333,962,244
		Bank of America Corp.	299,654,748
		Merrill Lynch & Co., Inc	102,461,562
		The Goldman Sachs Group, Inc.	96,949,326
		Morgan Stanley	95,561,281
		Lehman Brothers Holdings, Inc.	55,365,974
		UBS AG	424,380
iShares S&P 500 Growth Index Fund	3/31	Bank of America Corp.	28,056,420
		Lehman Brothers Holdings, Inc.	8,564,992
iShares S&P 500 Value Index Fund	3/31	Citigroup, Inc.	124,718,750
		Bank of America Corp.	86,168,101
		Merrill Lynch & Co., Inc.	38,264,522
		The Goldman Sachs Group, Inc.	36,206,120
		Morgan Stanley	35,687,539
		Lehman Brothers Holdings, Inc	12,819,666
		UBS AG	199,127
iShares S&P SmallCap 600 Index Fund	3/31	UBS AG	5,978,382
iShares S&P SmallCap 600 Value Index Fund	3/31	UBS AG	2,150,832
iShares S&P Global 100 Index Fund	3/31	Citigroup, Inc.	13,660,805
		HSBC Holdings PLC	10,770,161
		JP Morgan Chase & Co.	8,336,328
		Credit Suisse Group	4,020,073
		Morgan Stanley	3,913,686
iShares S&P Global Financials Sector Index Fund	3/31	Citigroup, Inc.	5,553,115
		JP Morgan Chase & Co.	3,420,809
		The Goldman Sachs Group, Inc.	1,633,012
		Merrill Lynch & Co., Inc.	1,610,800
		Credit Suisse Group	1,533,472
		Lehman Brothers Holdings, Inc.	910,539


Fund	Fiscal Year End	Issuer	Market Value of Investment
iShares S&P Europe 350 Index Fund	3/31	HSBC Holdings PLC	41,056,635
		UBS AG	25,794,780
		Credit Suisse Group	15,024,843
		Deutsche Bank AG	12,993,332
iShares S&P Latin America 40 Index Fund	3/31	UBS AG	1,462,996
		Societe Generale	731,498
iShares S&P/TOPIX 150 Index Fund	3/31	Nomura Holdings, Inc.	6,051,360
		UBS AG	7,812
iShares S&P 1500 Index Fund	3/31	Citigroup, Inc.	2,325,038
		Bank of America Corp.	2,086,187
		Merrill Lynch & Co., Inc.	713,329
		The Goldman Sachs Group, Inc.	708,988
		Morgan Stanley & Co., Inc.	665,264
		Lehman Brothers Holdings, Inc.	385,462
		UBS AG	6,895
iShares Nasdaq Biotechnology Index Fund	3/31	UBS AG	3,202,901
iShares Russell 3000 Index Fund	3/31	Citigroup, Inc.	37,049,054
		Bank of America Corp.	31,976,458
		Merrill Lynch & Co., Inc.	11,194,238
		Morgan Stanley	10,378,178
		The Goldman Sachs Group, Inc.	9,261,111
		Lehman Brothers Holdings, Inc.	6,028,057
		UBS AG	542,896
iShares Russell 3000 Growth Index Fund	3/31	The Goldman Sachs Group, Inc.	269,343
		Morgan Stanley	211,201
		UBS AG	37,305
iShares Russell 3000 Value Index Fund	3/31	Citigroup, Inc.	14,994,014
		Bank of America Corp.	12,941,329
		Merrill Lynch & Co., Inc.	4,531,378
		Morgan Stanley	3,789,554
		The Goldman Sachs Group, Inc.	3,248,601
		Lehman Brothers Holdings, Inc.	2,440,678
		UBS AG	78,901
iShares Russell 2000 Index Fund	3/31	UBS AG	9,164,180
iShares Russell 2000 Growth Index Fund	3/31	UBS AG	6,221,723
iShares Russell 2000 Value Index Fund	3/31	UBS AG	4,281,081
iShares Russell 1000 Index Fund	3/31	Citigroup, Inc.	47,593,293
		Bank of America Corp.	41,077,581
		Merrill Lynch & Co., Inc.	14,383,151
		Morgan Stanley	13,334,801
		The Goldman Sachs Group, Inc.	11,900,079
		Lehman Brothers Holdings, Inc.	7,747,097
		UBS AG	221,471
iShares Russell 1000 Growth Index Fund	3/31	The Goldman Sachs Group, Inc.	7,733,890
		Morgan Stanley	6,009,173
		UBS AG	235,113
iShares Russell 1000 Value Index Fund	3/31	Citigroup, Inc.	229,108,574
		Bank of America Corp.	197,739,917
		Merrill Lynch & Co., Inc.	69,223,582
		Morgan Stanley	57,887,625
		The Goldman Sachs Group, Inc.	49,102,582
		Lehman Brothers Holdings, Inc.	37,275,588
		UBS AG	660,812
iShares Russell Microcap ^TM Index Fund	3/31	UBS AG	230,099
		Thomas Weisel Partners Group, Inc.	2,519
iShares Russell Midcap Index Fund	3/31	UBS AG	379,967
iShares Russell Midcap Growth Index Fund	3/31	UBS AG	224,984
iShares Russell Midcap Value Index Fund	3/31	UBS AG	610,069


Fund	Fiscal Year End	Issuer	Market Value of Investment
iShares Dow Jones U.S. Financial Sector Index Fund	4/30	Citigroup, Inc.	32,435,732
		Bank of America Corp.	29,910,017
		Merrill Lynch & Co., Inc.	8,968,100
		Morgan Stanley	8,083,282
		The Goldman Sachs Group, Inc.	7,695,202
		Lehman Brothers Holdings, Inc.	5,244,905
iShares Dow Jones U.S. Financial Services Index Fund	4/30	Citigroup, Inc.	25,104,470
		Bank of America Corp.	23,149,551
		Merrill Lynch & Co., Inc.	6,941,033
		Morgan Stanley	6,256,133
		The Goldman Sachs Group, Inc.	5,955,575
		Lehman Brothers Holdings, Inc.	4,058,982
iShares Dow Jones U.S. Total Market Index Fund	4/30	Citigroup, Inc.	9,009,282
		Bank of America Corp.	8,307,786
		Merrill Lynch & Co., Inc.	2,488,364
		Morgan Stanley	2,243,105
		The Goldman Sachs Group, Inc.	2,140,352
		Lehman Brothers Holdings, Inc.	1,456,633
iShares Dow Jones Select Dividend Index Fund	4/30	Bank of America Corp.	198,100,781
		Citigroup, Inc.	91,349,109
iShares Morningstar Large Core Index Fund	4/30	The Goldman Sachs Group, Inc.	1,477,233
		Lehman Brothers Holdings, Inc.	1,006,810
iShares Morningstar Large Value Index Fund	4/30	Citigroup, Inc.	9,774,715
		Bank of America Corp.	9,013,505
		Merrill Lynch & Co., Inc.	2,702,197
		Morgan Stanley	2,435,298
iShares Morningstar Small Core Index Fund	4/30	Investment Technology Group Inc.	528,257
iShares KLD Select Social Index Fund	4/30	Bank of America Corp.	15,875
iShares FTSE/Xinhua China 25 Index Fund	7/31	Chase Bank USA, N.A.	9,193,402
		UBS AG	980,626
iShares Goldman Sachs Natural Resources Index Fund	7/31	UBS AG	199,729
iShares MSCI EAFE Index Fund	7/31	Chase Bank USA, N.A.	128,237,755
		Credit Suisse Group	98,647,703
		Deutsche Bank AG	81,804,589
		Nomura Holdings, Inc.	38,999,277
		UBS AG	13,678,635
iShares NYSE 100 Index Fund	7/31	Citigroup, Inc.	1,166,974
		Bank of America Corp.	910,499
		Morgan Stanley	271,139
		Merrill Lynch & Co., Inc.	259,572
		The Goldman Sachs Group, Inc.	228,932
		Lehman Brothers Holdings, Inc.	150,546
iShares NYSE Composite Index Fund	7/31	Citigroup, Inc.	183,526
		Bank of America Corp.	142,310
		Wachovia Corp.	65,292
		Morgan Stanley	43,289
		Credit Suisse Group	41,230
		Merrill Lynch & Co., Inc.	40,911
		Deutsche Bank AG	38,319
		The Goldman Sachs Group, Inc.	35,576
		Lehman Brothers Holdings, Inc.	23,023

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

Portfolio turnover may vary from year to year, as well as within a year. High turnover rates may result in comparatively greater brokerage expenses.

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


Name of Fund	Fiscal Year ended 3/31/2006		Fiscal Year ended 3/31/2005
iShares Nasdaq Biotechnology Index Fund	15	%	14	%
iShares Russell 1000 Growth Index Fund	18	%	14	%
iShares Russell 1000 Index Fund	7	%	5	%
iShares Russell 1000 Value Index Fund	7	%	15	%
iShares Russell 2000 Growth Index Fund	38	%	22	%
iShares Russell 2000 Index Fund	20	%	17	%
iShares Russell 2000 Value Index Fund	14	%	23	%
iShares Russell 3000 Growth Index Fund	20	%	16	%
iShares Russell 3000 Index Fund	5	%	5	%
iShares Russell 3000 Value Index Fund	7	%	16	%
iShares Russell Microcap ^™ Index Fund	6	%	N/A
iShares Russell Midcap Growth Index Fund	14	%	27	%
iShares Russell Midcap Index Fund	9	%	15	%
iShares Russell Midcap Value Index Fund	11	%	20	%
iShares S&P 100 Index Fund	12	%	6	%
iShares S&P 1500 Index Fund	6	%	5	%
iShares S&P U.S. Preferred Stock Index Fund ⁺	N/A		N/A
iShares S&P 500 Growth Index Fund ¹	12	%	22	%
iShares S&P 500 Index Fund	7	%	6	%
iShares S&P 500 Value Index Fund ²	7	%	5	%
iShares S&P Europe 350 Index Fund	7	%	5	%
iShares S&P Global 100 Index Fund	6	%	4	%
iShares S&P Global Consumer Discretionary Sector Index Fund ⁺	N/A		N/A
iShares S&P Global Consumer Staples Sector Index Fund ⁺	N/A		N/A
iShares S&P Global Energy Sector Index Fund	5	%	5	%
iShares S&P Global Financial Sector Index Fund	7	%	5	%
iShares S&P Global Healthcare Sector Index Fund	5	%	10	%
iShares S&P Global Industrials Sector Index Fund ⁺	N/A		N/A
iShares S&P Global Materials Sector Index Fund ⁺	N/A		N/A
iShares S&P Global Technology Sector Index Fund	13	%	7	%
iShares S&P Global Telecommunications Sector Index Fund	11	%	13	%
iShares S&P Global Utilities Sector Index Fund ⁺	N/A		N/A
iShares S&P Latin America 40 Index Fund	12	%	6	%
iShares S&P MidCap 400 Growth Index Fund ³	24	%	34	%
iShares S&P MidCap 400 Index Fund	9	%	10	%
iShares S&P MidCap 400 Value Index Fund ⁴	21	%	10	%
iShares S&P SmallCap 600 Growth Index Fund ⁵	30	%	45	%
iShares S&P SmallCap 600 Index Fund	16	%	14	%
iShares S&P SmallCap 600 Value Index Fund ⁶	16	%	13	%
iShares S&P/TOPIX 150 Index Fund	7	%	4	%

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

⁺	Fund had not commenced operations as of the periods covered by this table.


Name of Fund	Fiscal Year ended 4/30/2006		Fiscal Year ended 4/30/2005
iShares Cohen & Steers Realty Majors Index Fund	18	%	28	%
iShares Dow Jones Select Dividend Index Fund	14	%	20	%
iShares Dow Jones Transportation Average Index Fund	10	%	5	%
iShares Dow Jones U.S. Aerospace & Defense Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Basic Materials Sector Index Fund	6	%	6	%
iShares Dow Jones U.S. Broker-Dealers Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Consumer Services Sector Index Fund	6	%	13	%
iShares Dow Jones U.S. Consumer Goods Sector Index Fund	6	%	9	%
iShares Dow Jones U.S. Energy Sector Index Fund	2	%	3	%
iShares Dow Jones U.S. Financial Sector Index Fund	6	%	7	%
iShares Dow Jones U.S. Financial Services Index Fund	9	%	7	%
iShares Dow Jones U.S. Healthcare Providers Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Healthcare Sector Index Fund	4	%	4	%
iShares Dow Jones U.S. Home Construction Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Industrial Sector Index Fund	7	%	5	%
iShares Dow Jones U.S. Insurance Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Medical Devices Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Oil Equipment & Services Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Pharmaceuticals Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Real Estate Index Fund	19	%	16	%
iShares Dow Jones U.S. Regional Banks Index Fund ⁺	N/A		N/A
iShares Dow Jones U.S. Technology Sector Index Fund	7	%	9	%
iShares Dow Jones U.S. Telecommunications Sector Index Fund	25	%	10	%
iShares Dow Jones U.S. Total Market Index Fund	5	%	6	%
iShares Dow Jones U.S. Utilities Sector Index Fund	5	%	7	%
iShares KLD Select Social ^SM Index Fund	46	%	3	%
iShares Morningstar Large Core Index Fund	15	%	4	%
iShares Morningstar Large Growth Index Fund	24	%	19	%
iShares Morningstar Large Value Index Fund	17	%	2	%
iShares Morningstar Mid Core Index Fund	19	%	3	%
iShares Morningstar Mid Growth Index Fund	21	%	11	%
iShares Morningstar Mid Value Index Fund	18	%	7	%
iShares Morningstar Small Core Index Fund	45	%	16	%
iShares Morningstar Small Growth Index Fund	38	%	26	%
iShares Morningstar Small Value Index Fund	17	%	10	%


Name of Fund	Fiscal Year ended 7/31/2005		Fiscal Year ended 3/31/2004
iShares FTSE/Xinhua China 25 Index Fund	13	%	N/A
iShares Goldman Sachs Natural Resources Index Fund	8	%	7	%
iShares Goldman Sachs Networking Index Fund	16	%	12	%
iShares Goldman Sachs Semiconductor Index Fund	10	%	6	%
iShares Goldman Sachs Software Index Fund	13	%	11	%
iShares Goldman Sachs Technology Index Fund	7	%	5	%
iShares MSCI EAFE Index Fund	8	%	7	%
iShares MSCI EAFE Growth Index Fund	N/A		N/A
iShares MSCI EAFE Value Index Fund	N/A		N/A
iShares NYSE Composite Index Fund	5	%	1	%
iShares NYSE 100 Index Fund	7	%	3	%

⁺	Fund had not commenced operations as of the periods covered by this table.

Additional Information Concerning the Trust

Shares . The Trust was established as a Delaware statutory trust on December 16, 1999. The Trust currently is comprised of over 90 Funds. The Trust issues shares of beneficial interests in each Fund. The Board may designate additional Funds. The Trust is currently registered with the SEC as an open-end management investment company.

Each share issued by a Fund has a pro rata interest in the assets of that Fund. 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.

Each share has one vote with respect to matters upon which a shareholder vote is required consistent with the requirements of the 1940 Act and the rules promulgated thereunder. Shares of all Funds vote together as a single class except that, if the matter being voted on affects only a particular Fund, and, if a matter affects a particular Fund differently from other Funds, shareholders of that Fund will vote separately on such matter.

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

Following the creation of the initial Creation Unit Aggregation(s) of shares of a Fund and immediately prior to the commencement of trading in such Fund’s shares, a holder of shares may be a “control person” of the Fund, as defined in the 1940 Act. A Fund cannot predict the length of time for which one or more shareholders may remain a control person of the Fund.

Shareholders may make inquiries by writing to the Trust, c/o the Distributor, SEI Investments Distribution Co., at 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 Trustees of a fund and beneficial owners of 10% of the shares of a fund (“Insiders”) may be subject to the insider reporting, short-swing profit and short sale provisions of Section 16 of the 1934 Act and the SEC’s rules promulgated thereunder. Beneficial owners and insiders should consult with their own legal counsel concerning their obligations under Sections 13 and 16 of the 1934 Act.

Termination of the Trust or a Fund . The Trust or a Fund may be terminated by a majority vote of the Board or the affirmative vote of a super majority of the holders of the Trust or such Fund entitled to vote on termination. Although the shares are not automatically redeemable upon the occurrence of any specific event, the Trust’s organizational documents provide that the Board will have the unrestricted power to alter the number of shares in a Creation Unit Aggregation. In the event of a termination of the Trust or a Fund, the Board, in its sole discretion, could determine to permit the shares to be redeemable in aggregations smaller than Creation Unit Aggregations or to be individually redeemable. In such circumstance, the Trust may make redemptions in-kind, for cash, or for a combination of cash or securities.

DTC Acts as Securities Depository for the Shares of the Trust . Shares of each Fund are represented by securities registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC.

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

Beneficial ownership of shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in shares (owners of such beneficial interests are referred to herein as “Beneficial Owners”) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase of shares.

Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to the Depositary Agreement between the Trust and DTC, DTC is required to make available to the Trust upon request and for a fee

to be charged to the Trust a listing of the shares of each Fund held by each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding shares, directly or indirectly, through such DTC Participant. The Trust 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 Trust 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 Trust. 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 each Fund as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a “street name”, and will be the responsibility of such DTC Participants.

The Trust 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 Trust at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action to find a replacement for DTC to perform its functions at a comparable cost.

Creation and Redemption of Creation Unit Aggregations

Creation . The Trust issues and sells shares of each Fund only in Creation Unit Aggregations on a continuous basis through the Distributor, without a sales load, at the NAV next determined after receipt, on any Business Day (as defined below), of an order in proper form.

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

Fund Deposit . The consideration for purchase of Creation Unit Aggregations of a Fund generally consists of the in-kind deposit of a designated portfolio of equity securities, the Deposit Securities which constitutes a substantial replication, or a portfolio sampling representation, of the stocks involved in the relevant Fund’s Underlying Index and an amount of 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 Aggregation of any Fund.

The Cash Component is sometimes also referred to as the “Balancing Amount.” The Cash Component serves the function of compensating for any differences between the NAV per Creation Unit Aggregation and the Deposit Amount (as defined below). The Cash Component is an amount equal to the difference between the NAV of the shares (per Creation Unit Aggregation) and the “Deposit Amount”, which is an amount equal to the market value of the Deposit Securities. If the Cash Component is a positive number ( i.e. , the NAV per Creation Unit Aggregation exceeds the Deposit Amount), the creator will deliver the Cash Component. If the Cash Component is a negative number ( i.e. , the NAV per Creation Unit Aggregation is less than the Deposit Amount), the creator will receive the Cash Component. Computation of the Cash Component excludes any stamp duty or other similar fees and expenses payable upon transfer of beneficial ownership of the Deposit Securities, which shall be the sole responsibility of the Authorized Participant.

BGFA, through the NSCC, makes available on each Business Day, prior to the opening of business on the applicable Listing Exchange (currently 9:30 a.m., Eastern time), the list of the names and the required number of shares of each Deposit Security to be included in the current Fund Deposit (based on information at the end of the previous Business Day) for each Fund.

Such Deposit Securities are applicable, subject to any adjustments as described below, in order to effect creations of Creation Unit Aggregations of a given Fund until such time as the next-announced composition of the Deposit Securities is made available.

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

In addition, the Trust reserves the right to permit or require the substitution of an amount of cash ( i.e., 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 or the Clearing Process (discussed below). The Trust 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 the 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 the securities laws, or in certain other situations. The adjustments described above will reflect changes known to BGFA on the date of announcement to be in effect by the time of delivery of the Fund Deposit, in the composition of the Underlying Index being tracked by the relevant Fund or resulting from certain corporate actions.

Procedures for Creation of Creation Unit Aggregations . To be eligible to place orders with the Distributor and to create a Creation Unit Aggregation of a Fund, an entity must be: (i) a “Participating Party”, i.e. , a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the NSCC (the “Clearing Process”), a clearing agency that is registered with the SEC; or (ii) a DTC Participant (see the Book Entry Only System section), and, in each case, must have executed an agreement with the Distributor with respect to creations and redemptions of Creation Unit Aggregations (“Participant Agreement”) (discussed below). A Participating Party and DTC Participant are collectively referred to as an “Authorized Participant”. Investors should contact the Distributor for the names of Authorized Participants that have signed a Participant Agreement. All shares of a Fund, however created, will be entered on the records of DTC in the name of Cede & Co. for the account of a DTC Participant.

All orders to create shares must be placed for one or more Creation Unit Aggregations. Each Fund, except the iShares FTSE/Xinhua China 25 Index Fund, iShares S&P 350 Europe Index Fund, iShares S&P Global 100 Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Global Financial Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Telecommunications Sector Index Fund, iShares S&P Global Utilities Sector Index Fund, iShares S&P Latin America 40 Index Fund, iShares S&P/TOPIX 150 Index Fund, iShares MSCI EAFE Index Fund, iShares MSCI EAFE Growth Index Fund and iShares MSCI EAFE Value Index Fund, is hereinafter referred to as a “Domestic Fund” and each of the iShares FTSE/Xinhua China 25 Index Fund, iShares S&P Europe 350 Index Fund, the iShares S&P Global 100 Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Global Financials Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Telecommunications Sector Index Fund, iShares S&P Latin America 40 Index Fund, iShares S&P/TOPIX 150 Index Fund, iShares MSCI EAFE Index Fund, iShares MSCI EAFE Growth Index Fund and iShares MSCI EAFE Value Index Fund, is hereinafter referred to as a “Foreign Fund”. Orders to create Creation Unit Aggregations of the Foreign Funds cannot be placed through the Clearing Process. All orders to create Creation Unit Aggregations, whether through the Clearing Process (through a Participating Party) or outside the Clearing Process (through a DTC Participant), must be received by the Distributor no later than the closing time of the regular trading session on the applicable Listing Exchange (“Closing Time”) (ordinarily 4:00 p.m., Eastern time) in each case on the date such order is placed in order for creation of Creation Unit Aggregations to be effected based on the NAV of shares of the applicable Fund as next determined on such date after receipt of the order in proper form. The date on which an order to create Creation Unit Aggregations (or an order to redeem Creation Unit Aggregations, as discussed below) is placed is referred to as the “Transmittal Date”. Orders must be transmitted by an Authorized Participant by telephone or other transmission method acceptable to the Distributor pursuant to procedures set forth in the Participant Agreement, as described below. Economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the Distributor or an Authorized Participant.

All orders to create Creation Unit Aggregations shall be placed with an Authorized Participant, as applicable, in the form required by such Authorized Participant. In addition, the Authorized Participant may request the investor to make certain representations or enter into agreements with respect to the order, e.g. , to provide for payments of cash, when required. Investors should be aware that their particular broker may not have executed a Participant Agreement and, therefore, orders to create Creation Unit Aggregations of a Fund have to be placed by the investor’s broker through an Authorized Participant that has executed a Participant Agreement. In such cases, there may be additional charges to such investor. At any given time, there may be only a limited number of broker-dealers that have executed a Participant Agreement and only a small number of such Authorized Participants may have international capabilities.

Those placing orders for Creation Unit Aggregations of Domestic Funds through the Clearing Process should afford sufficient time to permit proper submission of the order to the Distributor prior to the Closing Time on the Transmittal Date. Orders for Creation Unit Aggregations of Domestic Funds that are effected outside the Clearing Process are likely to require transmittal by the DTC Participant earlier on the Transmittal Date than orders effected using the Clearing Process. Those persons placing orders outside the Clearing Process should ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such transfer of Deposit Securities and Cash Component.

Those placing orders for Creation Unit Aggregations of Foreign Funds should ascertain the applicable deadline for cash transfers by contacting the operations department of the broker or depositary institution making the transfer of the Cash Component. This deadline is likely to be significantly earlier than the closing time of the regular trading session on the applicable Listing Exchange. Investors should be aware that the Authorized Participant may require orders for Creation Units placed with it to be in the form required by the individual Authorized Participant, which form may not be the same as the form of purchase order specified by the Trust that the Authorized Participant must deliver to the Distributor.

Placement of Creation Orders for Domestic Funds Using the Clearing Process . The Clearing Process is the process of creating or redeeming Creation Unit Aggregations. Fund Deposits made through the Clearing Process must be delivered through a Participating Party that has executed a Participant Agreement. The Participant Agreement authorizes the Distributor to transmit through Investors Bank to NSCC, on behalf of the Participating Party, such trade instructions as are necessary to effect the Participating Party’s creation order. Pursuant to such trade instructions to NSCC, the Participating Party agrees to deliver the requisite Deposit Securities and the Cash Component to the Trust, together with such additional information as may be required by the Distributor. An order to create Creation Unit Aggregations through the Clearing Process is deemed received by the Distributor on the Transmittal Date if: (i) such order is received by the Distributor not later than the Closing Time on such Transmittal Date; and (ii) all other procedures set forth in the Participant Agreement are properly followed.

Placement of Creation Orders for Domestic Funds Outside the Clearing Process. Fund Deposits made outside the Clearing Process must be delivered through a DTC Participant that has executed a Participant Agreement. A DTC participant who wishes to place an order creating Creation Unit Aggregations to be effected outside the Clearing Process does not need to be a Participating Party, but such orders must state that the DTC Participant is not using the Clearing Process and that the creation of Creation Unit Aggregations will instead be effected through a transfer of securities and cash directly through DTC. The Fund Deposit transfer must be ordered by the DTC Participant on the Transmittal Date in a timely fashion so as to ensure the delivery of the requisite number of Deposit Securities through DTC to the account of the Fund by no later than 2:00 p.m., Eastern time, on the “Settlement Date”. The Settlement Date is typically the third Business Day following the Transmittal Date. However, the Settlement Date for certain Funds ( e.g., the iShares FTSE/Xinhua China 25 Index Fund) is typically the second Business Day following the Transmittal Date and each Fund reserves the right to settle transactions on a basis other than T+3. In certain cases Authorized Participants will create and redeem Creation Unit Aggregations of the same Fund on the same trade date. In these instances, the Trust reserves the right to settle these transactions on a net basis.

All questions as to the number of Deposit Securities to be delivered, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities, will be determined by the Trust, whose determination shall be final and binding. The amount of cash equal to the Cash Component must be transferred directly to Investors Bank through the Federal Reserve Bank wire transfer system in a timely manner so as to be received by Investors Bank no later than 2:00 p.m., Eastern time, on the Settlement Date. An order to create Creation Unit Aggregations outside the Clearing Process is deemed received by the Distributor on the Transmittal Date if: (i) such order is received by the Distributor not later than the Closing Time on such Transmittal Date; and (ii) all other procedures set forth in the Participant Agreement are properly followed. However, if Investors Bank does not receive both the required Deposit Securities and the Cash Component by 2:00 p.m. on the Settlement Date, such order may be canceled. Upon written notice to the Distributor, such canceled order may be resubmitted the following Business Day using a Fund Deposit as newly constituted to reflect the then current NAV of the Fund. The delivery of Creation Unit Aggregations so created generally will occur no later than the Settlement Date.

An additional charge of up to three (3) times the normal transaction fee (for a total charge of up to four (4) times the normal transaction fee) may be imposed with respect to transactions effected outside the Clearing Process (through a DTC participant) and in the limited circumstances in which any cash can be used in lieu of Deposit Securities to create Creation Units. This charge is subject to a limit not to exceed 10/100 of 1% (10 basis points) of the value of one Creation Unit at the time of creation.

Creation Unit Aggregations of Domestic Funds may be created in advance of receipt by the Trust of all or a portion of the applicable Deposit Securities as described below. In these circumstances, the initial deposit will have a value greater than the

NAV of the shares on the date the order is placed in proper form since, in addition to available Deposit Securities, cash must be deposited in an amount equal to the sum of (i) the Cash Component, plus (ii) at least 105%, which BGFA may change from time to time, of the market value of the undelivered Deposit Securities (the “Additional Cash Deposit”) with the Fund pending delivery of any missing Deposit Securities.

If an Authorized Participant determines to post an additional cash deposit as collateral for any undelivered Deposit Securities, such Authorized Participant must deposit with Investors Bank the appropriate amount of federal funds by 2:00 p.m., Eastern time, on the date of requested settlement. If the Authorized Participant does not place its purchase order by the closing time or Investors Bank does not receive federal funds in the appropriate amount by such time, then the order may be deemed to be rejected and the Authorized Participant shall be liable to the Fund for losses, if any, resulting therefrom. An additional amount of cash shall be required to be deposited with Investors Bank, pending delivery of the missing Deposit Securities to the extent necessary to maintain the Additional Cash Deposit with the Trust in an amount at least equal to 105%, which BGFA may change from time to time, of the daily marked to market value of the missing Deposit Securities. To the extent that missing Deposit Securities are not received by 2:00 p.m., Eastern time, on the Settlement Date or in the event a marked-to-market payment is not made within one Business Day following notification by the Distributor that such a payment is required, the Trust may use the cash on deposit to purchase the missing Deposit Securities. Authorized Participants will be liable to the Trust for the costs incurred by the Trust in connection with any such purchases. These costs will be deemed to include the amount by which the actual purchase price of the Deposit Securities exceeds the market value of such Deposit Securities on the transmittal date plus the brokerage and related transaction costs associated with such purchases. The Trust will return any unused portion of the Additional Cash Deposit once all of the missing Deposit Securities have been properly received by Investors Bank or purchased by the Trust and deposited into the Trust. In addition, a transaction fee, as listed below, will be charged in all cases. The delivery of Creation Unit Aggregations so created generally will occur no later than the Settlement Date.

Placement of Creation Orders for Foreign Funds . Fund Deposits in connection with the Foreign Funds will not be made either through the Clearing Process or through DTC. For each Fund, Investors Bank shall cause the sub-custodian of the Funds 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 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 Trust. Deposit Securities must be delivered to an account maintained at the applicable local sub-custodian(s). Orders to purchase Creation Unit Aggregations must be received by the Distributor from an Authorized Participant on its own or another investor’s behalf by the closing time of the regular trading session on the applicable Listing Exchange on the relevant Business Day. However, when a relevant local market is closed due to local market holidays, the local market settlement process will not commence until the end of the local holiday period. Settlement must occur by 2:00 p.m., Eastern time, on the contractual settlement date.

The Authorized Participant must also make available no later than 2:00 p.m., Eastern time, on the contractual settlement date, by means satisfactory to the Trust, immediately-available or same-day funds estimated by the Trust 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 Aggregation.

To the extent contemplated by the applicable Participant Agreement, Creation Unit Aggregations of Foreign Funds will be issued to such Authorized Participant notwithstanding the fact that the corresponding Fund Deposits have not been received in part or in whole, in reliance on the undertaking of the Authorized Participant to deliver the missing Deposit Securities as soon as possible, which undertaking shall be secured by such Authorized Participant’s delivery and maintenance of collateral consisting of cash in the form of U.S. dollars in immediately available funds having a value (marked to market daily) at least equal to 110%, which BGFA may change from time to time of the value of the missing Deposit Securities. Such cash collateral must be delivered no later than 2:00 p.m., Eastern time, on the contractual settlement date. The Participant Agreement will permit the Fund 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 Trust of purchasing such securities and the value of the collateral.

Acceptance of Orders for Creation Unit Aggregations . The Trust reserves the absolute right to reject or revoke acceptance of a creation order transmitted to it by the Distributor in respect of any Fund if: (i) the order is not in proper form; (ii) the investor(s), upon obtaining the shares ordered, would own 80% or more of the currently outstanding shares of any Fund; (iii) the Deposit Securities delivered are not as disseminated through the facilities of the NSCC for that date by BGFA, as described above; (iv) acceptance of the Deposit Securities would have certain adverse tax consequences to the Fund; (v) acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; (vi) acceptance of the Fund Deposit would otherwise, in the discretion of the Trust or BGFA, have an adverse effect on the Trust or the rights of beneficial owners; or (vii) in the event that circumstances outside the control of the Trust, Investors Bank, the Distributor or BGFA make it for all practical purposes impossible to process creation orders. Examples of such circumstances include acts of God; public service

or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, BGFA, the Distributor, DTC, NSCC, Investors Bank or sub-custodian or any other participant in the creation process, and similar extraordinary events. The Distributor shall notify a prospective creator of a Creation Unit and/or the Authorized Participant acting on behalf of the creator of a Creation Unit Aggregation of its rejection of the order of such person. The Trust, Investors Bank, a sub-custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits nor shall any of them incur any liability for the failure to give any such notification.

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 Trust, and the Trust’s determination shall be final and binding.

Creation Transaction Fee. A purchase transaction fee is imposed for the transfer and other transaction costs of a Fund associated with the issuance of Creation Units of shares. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by a purchaser on the same day. Purchasers of Creation Units of shares for cash are required to pay an additional variable charge to compensate for brokerage and market impact expenses. Where the Trust permits an in-kind purchaser to substitute cash in lieu of depositing a portion of the Deposit Securities, the purchaser will be assessed the additional variable charge for cash purchases on the “cash in lieu” portion of its investment. Investors will also bear the costs of transferring the Deposit Securities to the Trust. 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 standard and maximum creation transaction fee for each of the Funds.


Name of Fund	Standard Creation Transaction Fee*		Maximum Creation Transaction Fee*
iShares Cohen & Steers Realty Majors Index Fund	$	250	$	1,000
iShares Dow Jones Select Dividend Index Fund	$	250	$	1,000
iShares Dow Jones Transportation Average Index Fund	$	200	$	800
iShares Dow Jones U.S. Aerospace & Defense Index Fund	$	200	$	800
iShares Dow Jones U.S. Basic Materials Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Broker-Dealers Index Fund	$	200	$	800
iShares Dow Jones U.S. Consumer Goods Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Consumer Services Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Energy Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Financial Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Financial Services Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Healthcare Providers Index Fund	$	400	$	1,600
iShares Dow Jones U.S. Healthcare Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Home Construction Index Fund	$	200	$	800
iShares Dow Jones U.S. Industrial Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Insurance Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Medical Devices Index Fund	$	400	$	1,600
iShares Dow Jones U.S. Oil Equipment & Services Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Pharmaceuticals Index Fund	$	300	$	1,200
iShares Dow Jones U.S. Real Estate Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Regional Banks Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Technology Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Telecommunications Sector Index Fund	$	250	$	1,000
iShares Dow Jones U.S. Total Market Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Utilities Sector Index Fund	$	500	$	2,000
iShares FTSE/Xinhua China 25 Index Fund	$	1,300	$	5,200
iShares Goldman Sachs Natural Resources Index Fund	$	500	$	2,000
iShares Goldman Sachs Networking Index Fund	$	200	$	800
iShares Goldman Sachs Semiconductor Index Fund	$	250	$	1,000
iShares Goldman Sachs Software Index Fund	$	250	$	1,000
iShares Goldman Sachs Technology Index Fund	$	500	$	2,000
iShares KLD Select Social ^SM Index Fund	$	500	$	2,000
iShares Morningstar Large Core Index Fund	$	300	$	1,200
iShares Morningstar Large Growth Index Fund	$	300	$	1,200
iShares Morningstar Large Value Index Fund	$	300	$	1,200
iShares Morningstar Mid Core Index Fund	$	500	$	2,000
iShares Morningstar Mid Growth Index Fund	$	500	$	2,000
iShares Morningstar Mid Value Index Fund	$	500	$	2,000
iShares Morningstar Small Core Index Fund	$	500	$	2,000
iShares Morningstar Small Growth Index Fund	$	500	$	2,000


Name of Fund	Standard Creation Transaction Fee*		Maximum Creation Transaction Fee*
iShares Morningstar Small Value Index Fund	$	500	$	2,000
iShares MSCI EAFE Index Fund	$	15,000	$	60,000
iShares MSCI EAFE Growth Index Fund	$	12,800	$	51,200
iShares MSCI EAFE Value Index Fund	$	13,200	$	52,800
iShares Nasdaq Biotechnology Index Fund	$	350	$	1,400
iShares NYSE Composite Index Fund	$	500	$	2,000
iShares NYSE 100 Index Fund	$	500	$	2,000
iShares Russell 3000 Index Fund	$	500	$	2,000
iShares Russell 3000 Growth Index Fund	$	500	$	2,000
iShares Russell 3000 Value Index Fund	$	500	$	2,000
iShares Russell 2000 Index Fund	$	500	$	2,000
iShares Russell 2000 Growth Index Fund	$	500	$	2,000
iShares Russell 2000 Value Index Fund	$	500	$	2,000
iShares Russell 1000 Index Fund	$	500	$	2,000
iShares Russell 1000 Growth Index Fund	$	500	$	2,000
iShares Russell 1000 Value Index Fund	$	500	$	2,000
iShares Russell Microcap™ Index Fund	$	500	$	2,000
iShares Russell Midcap Index Fund	$	500	$	2,000
iShares Russell Midcap Growth Index Fund	$	500	$	2,000
iShares Russell Midcap Value Index Fund	$	500	$	2,000
iShares S&P 100 Index Fund	$	500	$	2,000
iShares S&P 500 Index Fund	$	500	$	2,000
iShares S&P 500 Growth Index Fund ¹	$	500	$	2,000
iShares S&P 500 Value Index Fund ²	$	500	$	2,000
iShares S&P MidCap 400 Index Fund	$	500	$	2,000
iShares S&P MidCap 400 Growth Index Fund ³	$	500	$	2,000
iShares S&P MidCap 400 Value Index Fund ⁴	$	500	$	2,000
iShares S&P SmallCap 600 Index Fund	$	500	$	2,000
iShares S&P SmallCap 600 Growth Index Fund ⁵	$	500	$	2,000
iShares S&P SmallCap 600 Value Index Fund ⁶	$	500	$	2,000
iShares S&P 1500 Index Fund	$	500	$	2,000
iShares S&P U.S. Preferred Stock Index Fund	$	500	$	2,000
iShares S&P Global 100 Index Fund	$	2,000	$	8,000
iShares S&P Global Consumer Discretionary Sector Index Fund	$	2,200	$	8,800
iShares S&P Global Consumer Staples Sector Index Fund	$	2,200	$	8,800
iShares S&P Global Energy Sector Index Fund	$	600	$	2,400
iShares S&P Global Financials Sector Index Fund	$	4,200	$	16,800
iShares S&P Global Healthcare Sector Index Fund	$	700	$	2,800
iShares S&P Global Industrials Index Fund	$	2,200	$	8,800
iShares S&P Global Materials Index Fund	$	2,200	$	8,800
iShares S&P Global Technology Sector Index Fund	$	1,400	$	5,600
iShares S&P Global Telecommunications Sector Index Fund	$	900	$	3,600
iShares S&P Global Utilities Sector Index Fund	$	2,200	$	8,800
iShares S&P Global Energy Sector Index Fund	$	600	$	2,400
iShares S&P Europe 350 Index Fund	$	12,000	$	48,000
iShares S&P Latin America 40 Index Fund	$	450	$	1,800
iShares S&P/TOPIX 150 Index Fund	$	3,000	$	12,000

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

*	If a Creation Unit is purchased outside the usual process through the NSCC or for cash, a variable fee will be charged up to four times the standard creation or redemption transaction fee.

Redemption of Shares in Creation Units Aggregations. Shares may be redeemed only in Creation Unit Aggregations at their NAV next determined after receipt of a redemption request in proper form by the Fund through Investors Bank and only on a Business Day. A Fund will not redeem shares in amounts less than Creation Unit Aggregations. Beneficial Owners must accumulate enough shares in the secondary market to constitute a Creation Unit Aggregation in order to have such shares redeemed by the Trust. 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 Aggregation. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of shares to constitute a redeemable Creation Unit Aggregation.

With respect to each Fund, BGFA, through the NSCC for Domestic Funds, and through the Distributor, makes available immediately prior to the opening of business on the applicable Listing Exchange (currently 9:30 a.m., Eastern time) on each Business Day, the identity of the Fund securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as described 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 Unit Aggregations.

Unless cash redemptions are available or specified for a Fund, the redemption proceeds for a Creation Unit Aggregation generally consist of Fund Securities — as announced on the Business Day of the request for redemption received in proper form — 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 (the “Cash Redemption Amount”), less a redemption transaction fee as listed below. In the event that the Fund Securities have a value greater then the NAV of the shares, a compensating cash payment equal to the difference is required to be made by or through an Authorized Participant by the redeeming shareholder.

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

Redemption Transaction Fee. A redemption transaction fee is imposed to offset transfer and other transaction costs that may be incurred by the relevant Fund. The fee is a single charge and will be the same regardless of the number of Creation Units redeemed by an investor on the same day. The redemption transaction fees for redemptions in kind and for cash and the additional variable charge for cash redemptions (when cash redemptions are available or specified) are listed below. Investors will also bear the costs of transferring the Fund Securities from the Trust 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 standard and maximum redemption transaction fee for each of the Funds.


Name of Fund	Standard Redemption Transaction Fee*		Maximum Redemption Transaction Fee*
iShares Cohen & Steers Realty Majors Index Fund	$	250	$	1,000
iShares Dow Jones Select Dividend Index Fund	$	250	$	1,000
iShares Dow Jones Transportation Average Index Fund	$	200	$	800
iShares Dow Jones U.S. Aerospace & Defense Index Fund	$	200	$	800
iShares Dow Jones U.S. Basic Materials Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Broker-Dealers Index Fund	$	200	$	800
iShares Dow Jones U.S. Consumer Goods Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Consumer Services Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Energy Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Financial Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Financial Services Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Healthcare Providers Index Fund	$	400	$	1,600
iShares Dow Jones U.S. Healthcare Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Home Construction Index Fund	$	200	$	800


iShares Dow Jones U.S. Industrial Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Insurance Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Medical Devices Index Fund	$	400	$	1,600
iShares Dow Jones U.S. Oil Equipment & Services Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Pharmaceuticals Index Fund	$	300	$	1,200
iShares Dow Jones U.S. Real Estate Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Regional Banks Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Technology Sector Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Telecommunications Sector Index Fund	$	250	$	1,000
iShares Dow Jones U.S. Total Market Index Fund	$	500	$	2,000
iShares Dow Jones U.S. Utilities Sector Index Fund	$	500	$	2,000
iShares FTSE/Xinhua China 25 Index Fund	$	1,300	$	5,200
iShares Goldman Sachs Natural Resources Index Fund	$	500	$	2,000
iShares Goldman Sachs Networking Index Fund	$	200	$	800
iShares Goldman Sachs Semiconductor Index Fund	$	250	$	1,000
iShares Goldman Sachs Software Index Fund	$	250	$	1,000
iShares Goldman Sachs Technology Index Fund	$	500	$	2,000
iShares KLD Select Social ^SM Index Fund	$	500	$	2,000
iShares Morningstar Large Core Index Fund	$	300	$	1,200
iShares Morningstar Large Growth Index Fund	$	300	$	1,200
iShares Morningstar Large Value Index Fund	$	300	$	1,200
iShares Morningstar Mid Core Index Fund	$	500	$	2,000
iShares Morningstar Mid Growth Index Fund	$	500	$	2,000
iShares Morningstar Mid Value Index Fund	$	500	$	2,000
iShares Morningstar Small Core Index Fund	$	500	$	2,000
iShares Morningstar Small Growth Index Fund	$	500	$	2,000
iShares Morningstar Small Value Index Fund	$	500	$	2,000
iShares MSCI EAFE Growth Index Fund	$	12,800	$	51,200
iShares MSCI EAFE Index Fund	$	15,000	$	60,000
iShares MSCI EAFE Value Index Fund	$	13,200	$	52,800
iShares Nasdaq Biotechnology Index Fund	$	350	$	1,400
iShares NYSE 100 Index Fund	$	500	$	2,000
iShares NYSE Composite Index Fund	$	500	$	2,000
iShares Russell 1000 Growth Index Fund	$	500	$	2,000
iShares Russell 1000 Index Fund	$	500	$	2,000
iShares Russell 1000 Value Index Fund	$	500	$	2,000
iShares Russell 2000 Growth Index Fund	$	500	$	2,000
iShares Russell 2000 Index Fund	$	500	$	2,000
iShares Russell 2000 Value Index Fund	$	500	$	2,000
iShares Russell 3000 Growth Index Fund	$	500	$	2,000
iShares Russell 3000 Index Fund	$	500	$	2,000
iShares Russell 3000 Value Index Fund	$	500	$	2,000
iShares Russell Microcap™ Index Fund	$	500	$	2,000
iShares Russell Midcap Growth Index Fund	$	500	$	2,000
iShares Russell Midcap Index Fund	$	500	$	2,000
iShares Russell Midcap Value Index Fund	$	500	$	2,000
iShares S&P 100 Index Fund	$	500	$	2,000
iShares S&P 1500 Index Fund	$	500	$	2,000
iShares S&P U.S. Preferred Stock Index Fund	$	500	$	2,000
iShares S&P 500 Growth Index Fund ¹	$	500	$	2,000
iShares S&P 500 Index Fund	$	500	$	2,000
iShares S&P 500 Value Index Fund ²	$	500	$	2,000
iShares S&P Europe 350 Index Fund	$	12,000	$	48,000
iShares S&P Global 100 Index Fund	$	2,000	$	8,000
iShares S&P Global Consumer Discretionary Sector Index Fund	$	2,200	$	8,800
iShares S&P Global Consumer Staples Sector Index Fund	$	2,200	$	8,800
iShares S&P Global Energy Sector Index Fund	$	600	$	2,400
iShares S&P Global Financials Sector Index Fund	$	4,200	$	16,800
iShares S&P Global Healthcare Sector Index Fund	$	700	$	2,800
iShares S&P Global Industrials Index Fund	$	2,200	$	8,800
iShares S&P Global Materials Index Fund	$	2,200	$	8,800
iShares S&P Global Technology Sector Index Fund	$	1,400	$	5,600
iShares S&P Global Telecommunications Sector Index Fund	$	900	$	3,600
iShares S&P Global Utilities Sector Index Fund	$	2,200	$	8,800
iShares S&P Latin America 40 Index Fund	$	450	$	1,800
iShares S&P MidCap 400 Growth Index Fund ³	$	500	$	2,000
iShares S&P MidCap 400 Index Fund	$	500	$	2,000
iShares S&P MidCap 400 Value Index Fund ⁴	$	500	$	2,000
iShares S&P SmallCap 600 Growth Index Fund ⁵	$	500	$	2,000
iShares S&P SmallCap 600 Index Fund	$	500	$	2,000
iShares S&P SmallCap 600 Value Index Fund ⁶	$	500	$	2,000
iShares S&P/TOPIX 150 Index Fund	$	3,000	$	12,000

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

*	If a Creation Unit is redeemed outside the usual process through the NSCC or for cash, a variable fee will be charged up to four times the standard creation or redemption transaction fee.

Placement of Redemption Orders for Domestic Funds Using the Clearing Process. Orders to redeem Creation Unit Aggregations of Domestic Funds through the Clearing Process must be delivered through a Participating Party that has executed the Participant Agreement. An order to redeem Creation Unit Aggregations using the Clearing Process is deemed received by the Trust on the Transmittal Date if (i) such order is received by Investors Bank not later than the Closing Time on such Transmittal Date, and (ii) all other procedures set forth in the Participant Agreement are properly followed. Such order will be effected based on the NAV of the Fund as next determined. An order to redeem Creation Unit Aggregations using the Clearing Process made in proper form but received by the Trust after the Closing Time, will be deemed received on the next Business Day immediately following the Transmittal Date and will be effected at the NAV next determined on such Business Day. The requisite Fund Securities and the Cash Redemption Amount will be transferred by the third NSCC Business Day following the date on which such request for redemption is deemed received.

Placement of Redemption Orders for Domestic Funds Outside the Clearing Process. Orders to redeem Creation Unit Aggregations of Domestic Funds outside the Clearing Process must be delivered through a DTC Participant that has executed the Participant Agreement. A DTC Participant who wishes to place an order for redemption of Creation Unit Aggregations to be effected outside the Clearing Process does not need to be a Participating Party, but such orders must state that the DTC Participant is not using the Clearing Process and that redemption of Creation Unit Aggregations will instead be effected through transfer of shares directly through DTC. An order to redeem Creation Unit Aggregations outside the Clearing Process is deemed received by the Trust on the Transmittal Date if: (i) such order is received by Investors Bank not later than the Closing Time on such Transmittal Date; (ii) such order is accompanied or followed by the requisite number of shares of the Fund specified in such order, which delivery must be made through DTC to Investors Bank no later than 11:00 a.m., Eastern time, on the contracted settlement date; and (iii) all other procedures set forth in the Participant Agreement are properly followed. After the Trust has deemed an order for redemption outside the Clearing Process received, the Trust will initiate procedures to transfer the requisite Fund Securities which are expected to be delivered within three Business Days and the Cash Redemption Amount to the Authorized Participant on behalf of the redeeming Beneficial Owner by the Settlement Date. In certain cases Authorized Participants will redeem and create Creation Unit Aggregations of the same Fund on the same trade date. In these instances, the Trust reserves the right to settle these transactions on a net basis.

Placement of Redemption Orders for Foreign Funds. Orders to redeem Creation Unit Aggregations of Foreign Funds must be delivered through an Authorized Participant that has executed a Participant Agreement. Investors other than Authorized Participants are responsible for making arrangements for a redemption request to be made through an Authorized Participant. An order to redeem Creation Unit Aggregations of Foreign Funds is deemed received by the Trust on the Transmittal Date if: (i) such order is received by Investors Bank not later than the Closing Time on the Transmittal Date; (ii) such order is accompanied or followed by the requisite number of shares of the Fund specified in such order, which delivery must be made through DTC to Investors Bank no later than 10:00 a.m., Eastern time, on the next Business Day following the Transmittal Date; and (iii) all other procedures set forth in the Participant Agreement are properly followed.

Deliveries of Fund Securities to redeeming investors generally will be made within three Business Days. Due to the schedule of holidays in certain countries, however, the delivery of in-kind redemption proceeds for Foreign Funds may take longer than three Business Days after the day on which the redemption request is received in proper form. In such cases, the local market settlement procedures will not commence until the end of the local holiday periods. See below for a list of the local holidays in the foreign countries relevant to the Foreign Funds.

In connection with taking delivery of shares of Fund Securities upon redemption of shares of Foreign Funds, a redeeming Beneficial Owner, or Authorized Participant action on behalf of such Beneficial Owner must maintain appropriate security arrangements with a qualified broker-dealer, bank or other custody provider in each jurisdiction in which any of the Fund Securities are customarily traded, to which account such Fund Securities will be delivered.

To the extent contemplated by an Authorized Participant’s agreement, in the event the Authorized Participant has submitted a redemption request in proper form but is unable to transfer all or part of the Creation Unit Aggregation to be redeemed to the Fund’s Transfer Agent, the Distributor will nonetheless 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 having a value (marked to market daily) at least equal to 110%, which BGFA may change from time to time, of the value of the missing shares.

The current procedures for collateralization of missing shares require, among other things, that any cash collateral shall be in the form of U.S. dollars in immediately-available funds and shall be held by Investors Bank and marked to market daily, and that the fees of Investors Bank and any sub-custodians in respect of the delivery, maintenance and redelivery of the cash collateral shall be payable by the Authorized Participant. The Authorized Participant’s agreement will permit the Trust, on behalf of the affected Fund, to purchase the missing shares or acquire the Deposit Securities and the Cash Component underlying such shares at any time and will subject the Authorized Participant to liability for any shortfall between the cost to the Trust of purchasing such shares, Deposit Securities or Cash Component and the value of the collateral.

The calculation of the value of the Fund Securities and the Cash Redemption Amount to be delivered upon redemption will be made by Investors Bank according to the procedures set forth under Determination of NAV computed on the Business Day on which a redemption order is deemed received by the Trust. Therefore, if a redemption order in proper form is submitted to Investors Bank by a DTC Participant not later than Closing Time on the Transmittal Date, and the requisite number of shares of the relevant Fund are delivered to Investors Bank prior to the DTC Cut-Off-Time, then the value of the Fund Securities and the Cash Redemption Amount to be delivered will be determined by Investors Bank on such Transmittal Date. If, however, a redemption order is submitted to Investors Bank by a DTC Participant not later than the Closing Time on the Transmittal Date but either (i) the requisite number of shares of the relevant Fund are not delivered by the DTC Cut-Off-Time, as described above, on such Transmittal Date, or (ii) the redemption order is not submitted in proper form, then the redemption order will not be deemed received as of the Transmittal Date. In such case, the value of the Fund Securities and the Cash Redemption Amount to be delivered will be computed on the Business Day that such order is deemed received by the Trust, i.e. , the Business Day on which the shares of the relevant Fund are delivered through DTC to Investors Bank by the DTC Cut-Off-Time on such Business Day pursuant to a properly submitted redemption order.

If it is not possible to effect deliveries of the Fund Securities, the Trust 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 addition, an investor may request a redemption in cash that the Fund may, in its sole discretion, permit. In either case, the investor will receive a cash payment equal to the NAV of its shares based on the NAV of shares of the relevant Fund next determined after the redemption request is received in proper form (minus a redemption transaction fee and additional charge for requested cash redemptions specified above, to offset the Trust’s brokerage and other transaction costs associated with the disposition of Fund Securities). A Fund may also, in its sole discretion, upon request of a shareholder, provide such redeemer a portfolio of securities that differs from the exact composition of the Fund Securities but does not differ in NAV.

Redemptions of shares for Fund Securities will be subject to compliance with applicable federal and state securities laws and each Fund (whether or not it otherwise permits cash redemptions) reserves the right to redeem Creation Unit Aggregations for cash to the extent that the Trust could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Fund Securities under such laws. An Authorized Participant or an investor for which it is acting subject to a legal restriction with respect to a particular stock included in the Fund Securities applicable to the redemption of a Creation Unit Aggregation may be paid an equivalent amount of cash. The Authorized Participant may request the redeeming Beneficial Owner of the shares to complete an order form or to enter into agreements with respect to such matters as compensating cash payment.

Because the Portfolio Securities of a Foreign Fund may trade on the relevant exchange(s) on days that the Listing Exchange for the Foreign Fund is closed or are otherwise not Business Days for such Foreign Fund, stockholders may not be able to redeem their shares of such Foreign Fund, or to purchase and sell shares of such Foreign Fund on the Listing Exchange for

the Foreign Fund, on days when the NAV of such Foreign Fund could be significantly affected by events in the relevant foreign markets.

Regular Holidays . Each Fund (except the iShares FTSE/Xinhua China 25 Index Fund) generally intends to effect deliveries of Creation Units and Portfolio Securities on a basis of “T” plus three Business Days ( i.e. , days on which the national securities exchange is open). The iShares FTSE/Xinhua China 25 Index Fund generally intends to effect delivery of Creation Units and Portfolio Securities on a basis of “T” plus two business days, because the normal settlement cycle for local securities trading in Hong Kong is T plus two business days. Each Fund may effect deliveries of Creation Units and Portfolio Securities on a basis other than T plus three or T plus two in order to accommodate local holiday schedules, to account for different treatment among foreign and U.S. markets of dividend record dates and ex-dividend dates, or under certain other circumstances. The ability of the Trust to effect in-kind creations and redemptions within three Business Days (or two business days in the case of the iShares FTSE/Xinhua China 25 Index Fund) of receipt of an order in good form is subject, among other things, to the condition that, within the time period from the date of the order to the date of delivery of the securities, there are no days that are holidays in the applicable foreign market. For every occurrence of one or more intervening holidays in the applicable foreign market that are not holidays observed in the U.S. equity market, the redemption settlement cycle will be extended by the number of such intervening holidays. In addition to holidays, other unforeseeable closings in a foreign market due to emergencies may also prevent the Trust from delivering securities within normal settlement period.

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

The dates in calendar year 2006 in which the regular holidays affecting the relevant securities markets of the below listed countries are as follows:


Argentina
Apr 13	Jun 19	Dec 8
Apr 14	Aug 21	Dec 25
May 1	Oct 16
May 25	Nov 6

Australia
Jan 2	Apr 17	Oct 2
Jan 26	Apr 25	Nov 7
Mar 13	Jun12	Dec 25
Apr 14	Aug 7	Dec 26

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

Belgium
Apr 14
Apr 17
May 1
Dec 25

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

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

Chile
Apr 14	Aug 15	Nov 1
May 1	Sep 18	Dec 8
Jun 12	Sep 19	Dec 25
Jun 26	Oct 9

China
Jan 2	Jan 31
Jan 26	Feb 1-3
Jan 27	May 1-5
Jan 30

Denmark
Apr 13	May 25
Apr 14	Jun 5
Apr 17	Dec 25
May 12	Dec 26

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


France
Apr 14	Dec 26
Apr 17
May 1
Dec 25

Germany
Apr 14	Dec 26
Apr 17
May 1
Dec 25

Hong Kong
Jan 2	Apr 14	May 31	Dec 26
Jan 30	Apr 17	Oct 2
Jan 31	May 1	Oct 30
Apr 5	May 5	Dec 25

Ireland
Apr 14	Dec 25
Apr 17	Dec 26
May 1
Jun 5

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

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

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

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

Netherlands
Apr 14	Dec 26
Apr 17
May 1
Dec 25

Norway
Apr 13	May 17	Dec 26
Apr 14	May 25
Apr 17	Jun 5
May 1	Dec 25

Portugal
Apr 14	Dec 26
Apr 17
May 1
Dec 25

Singapore
Jan 2	Apr 14	Dec 25
Jan 10	May 1
Jan 30	Aug 9
Jan 31	Oct 24

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

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

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

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

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

Greece
Jan 6	Apr 21	Aug 15
Mar 6	Apr 24	Dec 25
Apr 14	May 1	Dec 26
Apr 17	Jun 12


Indonesia
Jan 10	Apr 14	Oct 23	Dec 25
Jan 30	May 25	Oct 24	Dec 26
Mar 30	Aug 17	Oct 25
Apr 10	Aug 21	Oct 26

New Zealand
Jan 2	Apr 17	Dec 25
Jan 3	Apr 25	Dec 26
Feb 6	Jun 5
Apr 14	Oct 23

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

Philippines
Apr 13	Oct 24	Dec 25
Apr 14	Nov 1
May 1	Nov 2
Jun 12	Nov 30

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

Thailand
Jan 2	Apr 13	May 5	Oct 23
Feb 13	Apr 14	May 15	Dec 5
Apr 6	Apr 15	Jul 10	Dec 11
Apr 6	May 1	Aug 14

United States
Jan 2	May 29	Nov 23
Jan 16	Jul 4	Dec 25
Feb 20	Sep 4
Apr 14	Oct 9

Venezuela
Jan 9	Apr 19	Jun 26	Oct 12
Feb 27	May 1	Jul 5	Oct 30
Feb 28	May 29	Jul 24	Dec 11
Apr 13, 14	Jun 19	Aug 14	Dec 25

Settlement Periods Greater than Seven Days for Year 2006


China	1/23/2006	2/6/2006	14
	1/24/2006	2/7/2006	14
	1/25/2006	2/8/2006	14
	4/26/2006	5/8/2006	12
	4/27/2006	5/9/2006	12
	4/28/2006	5/10/2006	12

Denmark	4/10/2006	4/18/2006	8
	4/11/2006	4/19/2006	8
	4/12/2006	4/20/2006	8

Indonesia	10/18/2006	10/29/2006	11
	10/19/2006	10/30/2006	11
	10/22/2006	10/31/2006	9

Japan	4/28/2006	5/8/2006	10
	5/1/2006	5/9/2006	8
	5/2/2006	5/10/2006	8

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

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

Taiwan	1/25/2006	2/3/2006	9

Taxes

Registered Investment Company Qualifications. Each Fund intends to qualify for and to elect treatment as a separate Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify for treatment as a RIC, each Fund must annually distribute at least 90% of its investment company taxable income (which includes dividends, interest and net short-term capital gains) and meet several other requirements. Among such other requirements are the following: (i) at least 90% of each Fund’s annual gross income must be derived from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies, or other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies, and net income derived from an interest in a qualified publicly traded partnership ( i.e ., a partnership that is traded on an established securities market or tradable on a secondary market, other than a partnership that derives 90% of its income from interest, dividends, capital gains and other traditional permitted mutual fund income); and (ii) at the close of each quarter of the company’s taxable year, (a) at least 50% of the market value of each Fund’s total assets must be represented by cash and cash items, U.S. government securities, securities of other RICs and other securities, with such other securities limited for purposes of this calculation in respect of any one issuer to an amount not greater than 5% of the value of each 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 of any one issuer, of two or more issuers that are controlled by each Fund (within the meaning of Section 851(c)(2) of the Code), and that are engaged in the same or similar trades or businesses or related trades or businesses (other than U.S. government securities or the securities of other regulated investment companies) or the securities of one or more qualified publicly traded partnerships.

A Fund’s investments in partnerships, including in qualified publicly traded partnerships, may result in that Fund’s being subject to state, local or foreign income, franchise or withholding tax liabilities.

Taxation of RICs. As a RIC, a Fund will not be subject to U.S. federal income tax on the portion of its taxable investment income and capital gains that it distributes to its shareholders. If a Fund fails to qualify for any taxable year as a RIC, all of its taxable income will be subject to tax at regular corporate income tax rates without any deduction for distributions to shareholders, and such distributions generally will be taxable to shareholders as ordinary dividends to the extent of each Fund’s current and accumulated earnings and profits. In such event, distributions to individuals should qualify as qualified dividend income and distributions to corporate shareholders generally should be eligible for the dividends-received deduction. Although each Fund intends to distribute substantially all of its net investment income and its capital gains for each taxable year, each Fund will be subject to federal income taxation to the extent any such income or gains are not distributed. If each Fund’s distributions exceed its taxable income and capital gains realized during a taxable year, 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.

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

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

Each Fund intends to distribute annually to its shareholders substantially all of its investment company taxable income, and any net realized long-term capital gains in excess of net realized short-term capital losses (including any capital loss carryovers). However, if a Fund retains for investment an amount equal to all or a portion of its net long-term capital gains in excess of its net short-term capital losses (including any capital loss carryovers), it will be subject to a corporate tax (currently at a maximum rate of 35%) on the amount retained. In that event, the Fund will designate such retained amounts as undistributed capital gains in a notice to its shareholders who (a) will be required to include in income for U.S. federal income tax purposes, as long-term capital gains, their proportionate shares of the undistributed amount, (b) will be entitled to credit their proportionate shares of the 35% tax paid by the Fund on the undistributed amount against their U.S. federal

income tax liabilities, if any, and to claim refunds to the extent their credits exceed their liabilities, if any, and (c) will be entitled to increase their tax basis, for U.S. federal income tax purposes, in their shares by an amount equal to 65% of the amount of undistributed capital gains included in the shareholder’s income. Organizations or persons not subject to U.S. federal income tax on such capital gains will be entitled to a refund of their pro rata share of such taxes paid by the Fund upon filing appropriate returns or claims for refund with the Internal Revenue Service.

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

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

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

Investors considering buying shares just prior to a dividend or capital gain distribution should be aware that, although the price of shares just purchased at that time may reflect the amount of the forthcoming distribution, such dividend or distribution may nevertheless be taxable to them. If a Fund is the holder of record of any stock on the record date for any dividends payable with respect to such stock, such dividends will be included in the Fund’s gross income not as of the date received but as of the later of (a) the date such stock became ex-dividend with respect to such dividends ( i.e., the date on which a buyer of the stock would not be entitled to receive the declared, but unpaid, dividends) or (b) the date a Fund acquired such stock. Accordingly, in order to satisfy its income distribution requirements, a Fund may be required to pay dividends based on anticipated earnings, and shareholders may receive dividends in an earlier year than would otherwise be the case.

Back-Up Withholding. In certain cases, a Fund will be required to withhold at the applicable withholding rate, and remit to the U.S. Treasury such amounts withheld from any distributions paid to a shareholder who: (1) has failed to provide a correct taxpayer identification number, (2) is subject to backup withholding by the Internal Revenue Service; (3) has failed to certify to a Fund that such shareholder is not subject to backup withholding; or (4) has not certified that such shareholder is a U.S. person (including a U.S. resident alien).

Section 351. The Trust on behalf of each Fund has the right to reject an order for a purchase of shares of the Fund if the purchaser (or group of purchasers) would, upon obtaining the shares so ordered, own 80% or more of the outstanding shares of a given Fund and if, pursuant to Sections 351 and 362 of the Code, that 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 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 Trust will exercise the right of rejection except in a case where the Trust determines that accepting the order could result in material adverse tax consequences to the Fund or its shareholders. The Trust also has the right to require information necessary to determine beneficial share ownership for purposes of the 80% determination.

Qualified Dividend Income. Distributions by each Fund of investment company taxable income (excluding 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% (5% for individuals in lower tax brackets) to the extent each Fund receives qualified dividend income on the securities it holds and the Fund designates the distribution as qualified dividend income. Qualified dividend income is, in general, dividend income from taxable domestic corporations and certain foreign corporations (e.g., foreign corporations incorporated in a possession of the United States or in certain countries with a comprehensive tax treaty with the United States, or the stock of which is readily tradable on an established securities market

in the United States). A dividend will not be treated as qualified dividend income to the extent that (i) the shareholder has not held the shares on which the dividend was paid for more than 60 days during the 121-day period that begins on the date that is 60 days before the date on which the shares become ex dividend with respect to such dividend (and each Fund also satisfies those holding period requirements with respect to the securities it holds that paid the dividends distributed to the shareholder), (ii) the shareholder is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to substantially similar or related property, or (iii) the shareholder elects to treat such dividend as investment income under section 163(d)(4)(B) of the Code. 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 each Fund of its net short-term capital gains will be taxable as ordinary income. Capital gain distributions consisting of each Fund’s net capital gains will be taxable as long-term capital gains.

Corporate Dividends Received Deduction. A Fund’s dividends that are paid to its corporate shareholders and are attributable to qualifying dividends it received from U.S. domestic corporations may be eligible, in the hands of such shareholders, for the corporate dividends received deduction, subject to certain holding period requirements and debt financing limitations.

Excess Inclusion Income. Certain types of income received by the Funds from real estate investment trusts (“REITs”), real estate mortgage investment conduits (“REMICs”), 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 (1) constitute taxable income as “unrelated business taxable income” (“UBTI”) 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; (2) as UBTI cause a charitable remainder trust to lose its tax-exempt status; (3) not be offset against net operating losses for tax purposes; (4) not be eligible for reduced US withholding for non-US shareholders even from tax treaty countries; and (5) cause the Fund to be subject to tax if certain “disqualified organizations” as defined by the Code are Fund shareholders.

Net Capital Loss Carryforwards. Net capital loss carryforwards may be applied against any net realized capital gains in each succeeding year, or until their respective expiration dates, whichever occurs first. The following Funds had tax basis net capital loss carryforwards as of March 31, 2006, the tax year-end for the Funds listed.


iShares Index Fund	Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Expiring 2014		Total
Nasdaq Biotechnology	$	2,280,865	$	29,163,198	$	11,433,188	$	39,449,891	$	24,158,638	$	106,485,780
Russell 1000		11,319,502		9,766,316		5,661,012		—		3,598,844		30,345,674
Russell 1000 Growth		20,107,067		68,492,707		23,134,640		16,440,477		77,003,119		205,178,010
Russell 1000 Value		—		—		6,460,764		—		9,887,276		16,348,040
Russell 2000		47,692,929		112,740,686		58,221,050		40,463,538		98,709,133		357,827,336
Russell 2000 Growth		14,797,300		71,115,684		4,816,733		24,718,345		39,934,293		155,382,355
Russell 2000 Value		—		6,918,898		43,266,719		—		11,969,163		62,154,780
Russell 3000		21,789,321		14,801,082		8,033,947		95,540		4,021,565		48,741,455
Russell 3000 Growth		4,176,050		6,607,675		2,294,465		911,779		2,202,547		16,192,516
Russell 3000 Value		—		342,926		144,266		—		311,757		798,949
Russell Microcap ^™		—		—		—		—		83,822		83,822
Russell Midcap		—		564,856		1,554,124		—		—		2,118,980
Russell Midcap Growth		—		5,147,396		2,148,153		—		17,189,431		24,484,980
Russell Midcap Value		—		—		1,606,781		—		—		1,606,781
S&P 100		2,233,710		3,096,882		741,460		—		360,546		6,432,598
S&P 1500		—		—		—		102,096		378,804		480,900
S&P 500		11,431,172		109,148,380		24,267,905		—		41,594,450		186,441,907
S&P 500 Growth ¹		9,841,895		24,099,560		22,385,792		2,989,823		40,360,646		99,677,716
S&P 500 Value ²		—		21,344,270		21,337,049		—		—		42,681,319
S&P Europe 350		—		34,838		8,843,656		—		—		8,878,494
S&P Global 100		329,587		1,022,865		1,200,075		670,309		3,134,228		6,357,064
S&P Global Energy Sector		—		37,853		113,031		43,806		408,088		602,778
S&P Global Financials Sector		—		148,034		105,686		20,625		374,711		649,056
S&P Global Healthcare Sector		—		147,652		235,701		483,846		2,328,014		3,195,213
S&P Global Technology Sector		—		114,472		244,568		111,285		401,105		871,430
S&P Global Telecommunications Sector		—		386,368		231,569		—		—		617,937
S&P Latin America 40		—		29,834		187,237		95,728		1,028,989		1,341,788
S&P MidCap 400		—		—		6,216,850		—		—		6,216,850
S&P MidCap 400 Growth ³		—		22,936,562		27,402,832		7,127,634		—		57,467,028
S&P MidCap 400 Value ⁴		1,442,036		4,082,966		21,364,144		1,843,451		3,470,622		32,203,219
S&P SmallCap 600		—		22,518,424		5,484,940		—		1,541,664		29,545,028
S&P SmallCap 600 Growth ⁵		4,230,989		8,134,573		21,742,657		2,751,799		6,860,246		43,720,264
S&P SmallCap 600 Value ⁶		4,241,868		12,218,694		15,717,553		3,277,415		297,422		35,752,952
S&P/TOPIX 150		—		276,198		17,138		175,929		134,303		603,568

¹	On December 16, 2005, the name of the iShares S&P 500 Growth Index Fund was changed from the iShares S&P 500/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Growth Index to the S&P 500/Citigroup Growth Index.

²	On December 16, 2005, the name of the iShares S&P 500 Value Index Fund was changed from the iShares S&P 500/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 500/BARRA Value Index to the S&P 500/Citigroup Value Index.

³	On December 16, 2005, the name of the iShares S&P MidCap 400 Growth Index Fund was changed from the iShares S&P 400/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Growth Index to the S&P 400/Citigroup Growth Index.

⁴	On December 16, 2005, the name of the iShares S&P MidCap 400 Value Index Fund was changed from the iShares S&P 400/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 400/BARRA Value Index to the S&P 400/Citigroup Value Index.

⁵	On December 16, 2005, the name of the iShares S&P SmallCap 600 Growth Index Fund was changed from the iShares S&P 600/BARRA Growth Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Growth Index to the S&P 600/Citigroup Growth Index.

⁶	On December 16, 2005, the name of the iShares S&P SmallCap 600 Value Index Fund was changed from the iShares S&P 600/BARRA Value Index Fund. Also on this date, the name of the Fund’s corresponding index was changed from the S&P 600/BARRA Value Index to the S&P 600/Citigroup Value Index.

The following Funds had tax basis net capital loss carryforwards as of April 30, 2006, the tax year-end for the Funds listed:


iShares Index Fund	Expiring 2009		Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Expiring 2014		Total
Dow Jones U.S. Basic Materials Sector	$	—	$	—	$	164,820	$	213,728	$	—	$	—	$	378,548
Dow Jones U.S. Consumer Goods Sector		12,169		410,794		786,981		439,017		331,603		6,571,402		8,551,966
Dow Jones U.S. Consumer Services Sector		—		214,348		640,467		434,021		590,495		2,292,509		4,171,840
Dow Jones U.S. Financial Sector		—		—		—		775,502		—		—		775,502
Dow Jones U.S. Industrial Sector		—		1,765,263		1,969,601		—		3,141,753		—		6,876,617
Dow Jones U.S. Financial Services		—		—		359,555		836,670		—		—		1,196,225
Dow Jones U.S. Real Estate		—		—		—		—		—		—		—
KLD Select Social ^SM		—		—		—		—		—		228,408		228,408
Dow Jones U.S. Total Market		—		1,633,292		2,507,100		728,202		1,282,114		—		6,150,708
Dow Jones U.S. Energy Sector		—		—		2,929,194		124,959		—		—		3,054,153
Dow Jones U.S. Healthcare Sector		—		—		—		799,884		—		519,297		1,319,181
Dow Jones U.S. Technology Sector		—		3,803,426		10,610,555		1,952,962		2,052,426		3,556,590		21,975,959
Dow Jones U.S. Telecommunications Sector		—		9,769,390		12,363,187		998,718		376,854		—		23,508,149
Dow Jones U.S. Utilities Sector		—		—		4,938,451		8,539,740		1,702,578		—		15,180,769
Dow Jones Select Dividend		—		—		—		—		842,993		30,488,444		31,331,437
Dow Jones Transportation Average		—		—		—		—		206,601		1,535,209		1,741,810
Morningstar Large Core		—		—		—		—		39,699		86,938		126,637
Morningstar Large Growth		—		—		—		—		54,115		754,949		809,064
Morningstar Large Value		—		—		—		—		18,851		35,116		53,967
Morningstar Mid Core		—		—		—		—		20,026		126,713		146,739
Morningstar Mid Growth		—		—		—		—		14,863		105,739		120,602
Morningstar Mid Value		—		—		—		—		9,742		204,827		214,569
Morningstar Small Core		—		—		—		—		12,494		40,013		52,507
Morningstar Small Growth		—		—		—		—		37,247		166,146		203,393
Morningstar Small Value		—		—		—		—		18,678		142,621		161,299

The Funds had tax basis net capital loss carryforwards at July 31, 2005, the tax year-end of the Funds, as follows:


iShares Index Fund	Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Total
Goldman Sachs Natural Resources		—	$	256,427	$	187,450		—	$	443,877
Goldman Sachs Networking	$	130,370		5,798,354		3,242,309	$	981,871		10,152,904
Goldman Sachs Semiconductor		175,882		472,453		510,075		2,373		1,160,783
Goldman Sachs Software		—		797,714		761,567		—		1,559,281
Goldman Sachs Technology		638,692		1,579,887		2,523,700		143,622		4,885,901
MSCI EAFE		55,269		37,219,384		35,720,616		150,352		73,145,621
NYSE 100		—		—		25,021		—		25,021
NYSE Composite		—		—		—		27,439		27,439

Funds Holding Foreign Investments. Each Fund, but in particular the iShares FTSE/Xinhua China 25 Index Fund, iShares S&P Europe 350 Index Fund, iShares S&P Global 100 Index Fund, iShares S&P Latin America 40 Index Fund, iShares S&P/TOPIX 150 Index Fund, iShares S&P Global Energy Sector Index Fund, iShares S&P Global Financials Sector Index Fund, iShares S&P Global Healthcare Sector Index Fund, iShares S&P Global Technology Sector Index Fund, iShares S&P Global Telecommunications Sector Index Fund, iShares S&P Global Consumer Discretionary Sector Index Fund, iShares S&P Global Consumer Staples Sector Index Fund, iShares Global S&P Industrials Sector Index Fund, iShares S&P Global Materials Sector Index Fund, iShares S&P Global Utilities Sector Index Fund, iShares MSCI EAFE Index Fund, iShares MSCI EAFE Growth Index Fund and iShares MSCI EAFE Value Index Fund, may be subject to foreign income taxes withheld at the source. Dividends or other income (including, in some cases, capital gains), if any, received by the Fund from investments in foreign securities may be subject to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes in some cases. The Fund will not be eligible to elect to treat any foreign taxes it pays as paid by its shareholders, who therefore will not be entitled to credits or deductions for such taxes on their own tax returns. Foreign taxes paid by the Fund will reduce the return from the Fund’s investments.

Under Section 988 of the 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 foreign currency and the time the Fund actually collects such income or pays such liabilities are generally treated as ordinary income or ordinary loss. Similarly, gains or losses on foreign currency, foreign currency forward contracts, certain foreign currency options or futures contracts and the disposition of debt securities denominated in foreign 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.

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

mark-to-market annually the shares of the passive foreign investment company, and, in such event, would be required to distribute to shareholders any such mark-to-market gains in accordance with the distribution requirements set forth above.

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

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

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

It is anticipated that any net gain realized from the closing out of futures or options contracts will be considered qualifying income for purposes of the 90% requirement for a Fund to qualify as a RIC. Each Fund intends to distribute to shareholders annually any net capital gains that have been recognized for federal income tax purposes (including unrealized gains at the end of the Fund’s fiscal year) on futures or options transactions. Such distributions are combined with distributions of capital gains realized on a Fund’s other investments and shareholders are advised on the nature of the distributions.

Each Fund may be required to treat amounts as taxable income or gain, subject to the distribution requirements referred to above, even though no corresponding amounts of cash are received concurrently, as a result of (1) mark-to-market, constructive sale or rules applicable to PFICs (as defined above) or partnerships or trusts in which the Fund invests or to certain options, futures or forward contracts, or “appreciated financial positions” or (2) the inability to obtain cash distributions or other amounts due to currency controls or restrictions on repatriation imposed by a foreign country with respect to the Fund’s investments (including through depositary receipts) in issuers in such country or (3) tax rules applicable to debt obligations acquired with “original issue discount,” including zero-coupon or deferred payment bonds and pay-in-kind debt obligations, or to market discount if an election is made with respect to such market discount. The Fund may therefore be required to obtain cash to be used to satisfy these distribution requirements by selling securities at times that it might not otherwise be desirable to do so or borrowing the necessary cash, thereby incurring interest expenses.

In general, gain or loss on a short sale is recognized when the Fund closes the sale by delivering the borrowed property to the lender, not when the borrowed property is sold. Gain or loss from a short sale is generally considered as capital gain or loss to the extent that the property used to close the short sale constitutes a capital asset in the Fund’s hands. Except with respect to certain situations where the property used by the Fund to close a short sale has a long-term holding period on the date of the short sale, special rules would generally treat the gains on short sales as short-term capital gains. These rules may also terminate the running of the holding period of “substantially identical property” held by the Fund. Moreover, a loss on a short sale will be treated as a long-term capital loss if, on the date of the short sale, “substantially identical property” has been held by the Fund for more than one year. In general, the Fund will not be permitted to deduct payments made to reimburse the lender of securities for dividends paid on borrowed stock if the short sale is closed on or before the 45th day after the short sale is entered.

Sales of Shares. Upon the sale or exchange of his shares, a shareholder will realize a taxable gain or loss equal to the difference between the amount realized and his basis in his shares. A redemption of shares by a Fund will be treated as a sale for this purpose. Such gain or loss will be treated as capital gain or loss if the shares are capital assets in the shareholder’s hands, and will be long-term capital gain or loss if the shares are held for more than one year and short-term capital gain or loss if the shares are held for one year or less. Any loss realized on a sale or exchange will be disallowed to the extent the shares disposed of are replaced, including replacement through the reinvesting of dividends and capital gains distributions in a 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 a Fund share held by the shareholder for six months or less will be treated for U.S. federal income tax purposes as a long-term capital loss to the extent of any distributions or deemed distributions of long-term capital gains received by the shareholder with respect to such share. If a shareholder incurs a sales charge in acquiring shares of a Fund, disposes of those shares within 90 days and then acquires shares in a mutual fund for which the otherwise applicable sales charge is reduced by reason of a reinvestment right ( e.g., an exchange privilege), the original sales charge will not be taken into account in computing gain/loss on the original shares to the extent the subsequent sales charge is reduced. Instead, the disregarded

portion of the original sales charge will be added to the tax basis of the newly acquired shares. Furthermore, the same rule also applies to a disposition of the newly acquired shares made within 90 days of the second acquisition. This provision prevents a shareholder from immediately deducting the sales charge by shifting his or her investment within a family of mutual funds.

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

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

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

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

For taxable years beginning before January 1, 2008, properly-designated dividends are generally exempt from United States federal withholding tax where they (i) are paid in respect of a Fund’s “qualified net interest income” (generally, a 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 a Fund’s “qualified short-term capital gains” (generally, the excess of a Fund’s net short-term capital gain over the Fund’s long-term capital loss for such taxable year). However, depending on its circumstances, a 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 a 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.

Foreign shareholders of a Fund must treat a distribution attributable to a Fund’s sale of a real estate investment trust or other U.S. real property holding company as real property gain if 50% or more of the value of the Fund’s assets are invested in real estate investment trusts and other U.S. real property holding corporations and if the foreign 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. After December 31, 2007, a distribution from a Fund will be treated as attributable to a U.S. real property interest only if such distribution is attributable to a distribution received by the Fund from a real estate investment trust. Restrictions apply regarding wash sales and substitute payment transactions.

Reporting. If a shareholder recognizes a loss with respect to a Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the Internal Revenue Service a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases exempted from this reporting requirement, but under current guidance, shareholders of a regulated investment company are not exempted. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances. Under recently enacted legislation, certain tax-exempt entities and their managers may be subject to excise tax if they are parties to certain reportable transactions.

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

Determination of NAV

The NAV for each Fund is calculated by deducting all of a Fund’s liabilities (including accrued expenses) from the total value of its assets (including the securities held by the Fund plus any cash or other assets, including interest and dividends accrued but not yet received) and dividing the result by the number of shares outstanding, and generally rounded to the nearest cent, although each Fund reserves the right to calculate its NAV to more than two decimal places. The NAV for each Fund will generally be determined once daily Monday through Friday as of the regularly scheduled close of business of the 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 Bond Market Association announces an early closing time.

In calculating a Fund’s NAV, the Fund’s investments are generally valued using market valuations. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Trustees. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service, or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service, or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of other funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. BGFA may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation.

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

Dividends and Distributions

General Policies. Dividends from net investment income, if any, are declared and paid at least annually by each Fund. Distributions of net realized securities gains, if any, generally are declared and paid once a year, but the Trust may make distributions on a more frequent basis for certain Funds. The Trust reserves the right to declare special distributions if, in its reasonable discretion, such action is necessary or advisable to preserve the status of each Fund as a RIC or to avoid imposition of income or excise taxes on undistributed income.

Dividends and other distributions on shares are distributed on a pro rata basis to Beneficial Owners of such shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Funds.

Dividend Reinvestment Service. No dividend reinvestment service is provided by the Trust. Broker-dealers may make available the DTC book-entry Dividend Reinvestment Service for use by Beneficial Owners of Funds 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 same Fund purchased in the secondary market.

Financial Statements

Each of the Fund’s audited Financial Statements, including the Financial Highlights, appearing in the Annual Report to Shareholders and the report therein of PricewaterhouseCoopers LLP, a registered public accounting firm, are hereby incorporated by reference in this Statement of Additional Information. The Annual Report to Shareholders is delivered with this Statement of Additional Information to shareholders requesting this Statement of Additional Information. Financial statements for each of the iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund, iShares Dow Jones U.S. Oil Equipment & Services Index Fund, iShares Dow Jones U.S. Pharmaceuticals Index Fund, iShares Dow Jones U.S. Healthcare Providers Index Fund, iShares Dow Jones U.S. Medical Devices Index Fund, iShares Dow Jones U.S. Broker-Dealers Index Fund, iShares Dow Jones U.S. Insurance Index Fund, iShares Dow Jones U.S. Regional Banks Index Fund, iShares Dow Jones U.S. Aerospace & Defense Index Fund and the iShares Dow Jones U.S. Home Construction Index Fund are not available because, as of the date of this SAI, each Fund had no financial information to report.

Miscellaneous Information

Counsel. Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019 is counsel to the Trust.

Independent Registered Public Accounting Firm. PricewaterhouseCoopers LLP, located at Three Embarcadero Center, San Francisco, CA 94111, serves as the independent registered public accounting firm of the Trust, audits the Funds’ financial statements and may perform other services.

BGI-F-042-10018

100

iShares Trust

File Nos. 333-92935 and 811-09729

Part C

Other Information


Item 23. Exhibits:		PEA # 53


Exhibit Number		Description
(a)		Agreement and Declaration of Trust, dated September 13, 2006, is filed herein.

(a.1)		Restated Certificate of Trust, dated September 13, 2006, is filed herein.

(b)		Amended and Restated By-Laws are incorporated herein by reference to Post-Effective Amendment No. 38, filed June 29, 2005 (Accession No. 0001193125-05-134869).

(c)		Not applicable.

(d.1)		Investment Advisory Agreement between the Trust and Barclays Global Fund Advisors (“BGFA”) is incorporated herein by reference to Post-Effective Amendment No. 2, filed May 2, 2000 (Accession No. 0001193125-05-134869) (“PEA No. 2”).

(d.2)		Schedule A to the Investment Advisory Agreement between the Trust and BGFA, as amended, to be filed by amendment.

(e.1)		Distribution Agreement between the Trust and SEI Investments Distribution Company (“SEI”) is incorporated herein by reference to PEA No. 2.

(e.2)		Exhibit A to the Distribution Agreement between the Trust and SEI, as amended, to be filed by amendment.

(f)		Not applicable.

(g.1)		Custodian Agreement between the Trust and Investors Bank & Trust Company (“IBT”) is incorporated herein by reference to PEA No. 2.

(g.2)		Amendment, dated December 31, 2002, to the Custodian Agreement is incorporated herein by reference to Post-Effective Amendment No. 45, filed June 28, 2006 (Accession No. 0001193125-06-138226) (“PEA No. 45”).

(g.3)		Amendment, dated May 21, 2002, to the Custodian Agreement is incorporated herein by reference to PEA No. 45.

(g.4)		Amendment, dated January 1, 2006, to the Custodian Agreement is incorporated herein by reference to PEA No. 45.

(g.5)		Appendix A to the Custodian Agreement between the Trust and IBT, as amended, to be filed by amendment.

(h.1)		Securities Lending Agency Agreement between Barclays Global Investors, N.A. (“BGI”) and the Trust is incorporated herein by reference to Exhibit (g.3) of Post-Effective Amendment No. 21, filed June 27, 2003 (Accession No. 0001193125-03-014224).



(h.2)		Appendix A to Securities Lending Agency Agreement between BGI and the Trust, as amended, to be filed by amendment.

(h.3)		Delegation Agreement between the Trust and IBT is incorporated herein by reference to Exhibit (g.3) to PEA No. 2.

(h.4)		Administration Agreement between the Trust and IBT is incorporated herein by reference to Exhibit (h.1) to PEA No. 2.

(h.5)		Appendix A to the Administration Agreement between the Trust and IBT, as amended, to be filed by amendment.

(h.6)		Amendment, dated May 21, 2002, to the Administration Agreement is incorporated herein by reference to PEA No. 45.

(h.7)		Amendment, dated January 1, 2006, to the Administration Agreement is incorporated herein by reference to PEA No. 45.

(h.8)		Transfer Agency and Service Agreement between the Trust and IBT is incorporated herein by reference to Exhibit (h.2) to PEA No. 2.

(h.9)		Appendix A to the Transfer Agency and Service Agreement between the Trust and IBT, as amended, to be filed by amendment.

(h.10)		Amendment, dated May 21, 2002, to the Transfer Agency Agreement is incorporated herein by reference to PEA No. 45.

(h.11)		Amendment, dated August 18, 2004, to the Transfer Agency Agreement is incorporated herein by reference to PEA No. 45.

(h.12)		Amendment, dated January 1, 2006, to the Transfer Agency Agreement is incorporated herein by reference to PEA No. 45.

(h.13)		Sublicense Agreement between BGI and the Trust for iShares S&P Funds is incorporated herein by reference to Exhibit (h.31) to PEA No. 2.

(h.14)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares S&P Funds, as amended, is incorporated herein by reference to Exhibit (h.6) to Post-Effective Amendment No. 37, filed June 6, 2005 (Accession No. 0001193125-05-120767) (“PEA No. 37”).

(h.15)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares S&P Funds, as amended, is filed herein.

(h.16)		Sublicense Agreement between BGI and the Trust for iShares Dow Jones Funds is incorporated herein by reference to Exhibit (h.7) to PEA No. 37.

(h.17)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares Dow Jones Funds is incorporated herein by reference to Exhibit (h.8) to Post-Effective Amendment No. 43, filed April 17, 2006 (Accession No. 0001193125-06-081002) (“PEA No. 43”).

(h.18)		Sublicense Agreement between BGI and the Trust for iShares Russell Funds is incorporated herein by reference to Exhibit (h.8) to PEA No. 37.

(h.19)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares Russell Funds to be filed by amendment.



(h.20)		Sublicense Agreement between BGI and the Trust for iShares MSCI EAFE Index Fund is incorporated herein by reference to Exhibit (h.9) to Post-Effective Amendment No. 10, filed June 1, 2001 (Accession No. 00001021408-01-501621).

(h.21)		Sublicense Agreement between BGI and the Trust for iShares Nasdaq Biotechnology Index Fund is incorporated herein by reference to Exhibit (h.10) to Post-Effective Amendment No. 13, filed July 31, 2001 (Accession No. 00001021408-01-504274).

(h.22)		Sublicense Agreement between BGI and the Trust for iShares Goldman Sachs Funds is incorporated herein by reference to Exhibit (h.11) PEA No. 37.

(h.23)		Sublicense Agreement between BGI and the Trust for iShares Lehman Brothers 1-3 year Treasury Index Fund, iShares Lehman Brothers 7-10 year Treasury Index Fund, iShares Lehman Brothers 20+ year Treasury Index Fund, iShares Lehman Brothers Treasury Index Fund, iShares Lehman Brothers Government/Credit Index Fund and iShares U.S. Credit Index Fund is incorporated herein by reference to Exhibit (h.12) to PEA No. 16.

(h.24)		Sublicense Agreement between BGI and the Trust for iShares GS $ InvesTop Corporate Bond Fund is incorporated herein by reference to Exhibit (h.13) to PEA No. 16.

(h.25)		Sublicense Agreement between BGI and the Trust for iShares S&P ADR International Index Fund and KLD Nasdaq Social Index Fund to be filed by amendment.

(h.26)		Sublicense Agreement between BGI and the Trust for iShares Cohen & Steers Realty Majors Index Fund is incorporated herein by reference to Exhibit (h.15) to PEA No. 37.

(h.27)		Sublicense Agreement between BGI and the Trust for iShares Dow Jones Transportation Average Index Fund and iShares Dow Jones Select Dividend Index Fund is incorporated herein by reference to Exhibit (h.17) to PEA No. 37.

(h.28)		Sublicense Agreement between BGI and the Trust for iShares NYSE 100 Index Fund and iShares NYSE Composite Index Fund is incorporated herein by reference to Exhibit (h.19) to PEA No. 37.

(h.29)		Sublicense Agreement between BGI and the Trust for iShares FTSE/Xinhua China 25 Index Fund is incorporated herein by reference to Exhibit (h.20) to PEA No. 37.

(h.30)		Sublicense Agreement between BGI and the Trust for iShares Morningstar Funds is incorporated herein by reference to Exhibit (h.21) to PEA No. 37.

(h.31)		Sublicense Agreement between BGI and the Trust for iShares KLD Select Social Index Fund is incorporated herein by reference to Exhibit (h.22) to PEA No. 37.

(h.32)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares Lehman Brothers Funds is incorporated herein by reference to Exhibit (h.21) to Post-Effective Amendment No. 39, filed July 28, 2005 (Accession No. 0001193125-05-151478) (“PEA No. 39”).

(h.33)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares MSCI EAFE Funds is incorporated herein by reference to Exhibit (h.22) to Post-Effective Amendment No. 40, filed August 24, 2005 (Accession No. 0001193125-05-173934).

(i.1)		Legal Opinion and Consent of Willkie Farr & Gallagher LLP, dated September 18, 2006, is filed herein.

(i.2)		Legal Opinion and Consent of Richards, Layton & Finger, P.A., dated September 18, 2006, is filed herein.



(j)		Consent of PricewaterhouseCoopers LLC, dated September 18, 2006, is filed herein.

(k)		Not applicable.

(l.1)		Subscription Agreement between the Trust and SEI is incorporated herein by reference to PEA No. 2.

(l.2)		Letter of Representations between the Trust and Depository Trust Company is incorporated herein by reference to PEA No. 2.

(l.3)		Amendment of Letter of Representations between the Trust and Depository Trust Company for iShares S&P Global 100 Index Fund and iShares Cohen & Steers Realty Majors Index Fund is incorporated herein by reference to Post-Effective Amendment No. 11, filed July 2, 2001 (Accession No. 0000928385-01-501258).

(m)		Not applicable.

(n)		Not applicable.

(o)		Not applicable.

(p.1)		iShares Trust Code of Ethics is incorporated herein by reference to Post-Effective Amendment No. 41, filed November 23, 2005 (Accession No. 0001193125-05-231896).

(p.2)		BGI Code of Ethics is incorporated herein by reference to PEA No. 39.

(p.3)		Code of Ethics for SEI is incorporated herein by reference to PEA No. 45.

(q.1)		Power of Attorney, dated February 21, 2006, for Richard K. Lyons is incorporated herein by reference to PEA No. 43.

(q.2)		Powers of Attorney, dated February 22, 2006, for Cecilia H. Herbert, John E. Kerrigan, John E. Martinez and George G.C. Parker are incorporated herein by reference to PEA No. 43.

(q.3)		Power of Attorney, dated February 25, 2006, for Charles A. Hurty is incorporated herein by reference to PEA No. 43.

(q.4)		Power of Attorney, dated August 25, 2006, for Lee T. Kranefuss is filed herein.

Item 24. Persons Controlled By or Under Common Control with Registrant (as of August 31, 2006):


iShares Dow Jones U.S. Broker-Dealers Index Fund
Salomon Smith Barney Inc.	31.93	%
iShares Dow Jones U.S. Regional Banks Index Fund
Spear, Leads & Kellogg	36.37	%
iShares Dow Jones U.S. Insurance Index Fund
Interactive Brokers LLC	44.36	%
iShares Dow Jones U.S. Pharmaceuticals Index Fund
Merrill Lynch, Pierce, Fenner & Smith, Inc.	32.51	%
iShares Dow Jones U.S. Medical Devices Index Fund
Merrill Lynch, Pierce, Fenner & Smith, Inc.	30.86	%
iShares S&P Global 100 Index Fund
Mellon Trust New England	29.79	%


iShares Russell 1000 Index Fund
Charles Schwab & Co., Inc.	25.29	%
iShares Dow Jones U.S. Home Construction Index Fund
Timber Hill LLC	25.79	%
iShares Dow Jones U.S. Consumer Services Sector Index Fund
Salomon Smith Barney Inc.	25.31	%
iShares Morningstar Mid Growth Index Fund
Wachovia First Clearing Corporation	41.42	%
iShares KLD Select Social Index Fund
Goldman Sachs & Co.	45.58	%
iShares NYSE 100 Index Fund
Wachovia First Clearing Corporation	86.26	%
iShares NYSE Composite Index Fund
Lehman Brothers	25.96	%

Item 25. Indemnification:

The Trust is organized as a Delaware statutory trust and is operated pursuant to an Agreement and Declaration of Trust, (the “Declaration of Trust”), that permits the Trust to indemnify its trustees and officers under certain circumstances. Such indemnification, however, is subject to the limitations imposed by the Securities Act of 1933, as amended (the “Act”), and the Investment Company Act of 1940, as amended. The Declaration of Trust provides that officers and trustees of the Trust shall be indemnified by the Trust against liabilities and expenses incurred or paid in connection with any claim, action, suit, or proceedings against them by reason of the fact that they each serve as an officer or trustee of the Trust or as an officer or trustee of another entity at the request of the entity. This indemnification is subject to the following conditions:

(a) no trustee or officer of the Trust is indemnified against any liability to the Trust or its security holders that was the result of any willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office; and

(b) officers and trustees of the Trust are indemnified only for actions taken in good faith that the officers and trustees believed were in or not opposed to the best interests of the Trust.

The Declaration of Trust provides that if indemnification is not ordered by a court, indemnification may be authorized upon determination by shareholders, or by a majority vote of a quorum of the trustees who were not parties to the proceedings or, if this quorum is not obtainable, if directed by a quorum of disinterested trustees, or by independent legal counsel in a written opinion, that the persons to be indemnified have met the applicable standard. The Administration Agreement provides that IBT shall indemnify and hold the Fund, its Board of Trustees, officers and employees and its agents harmless from and against any and all Claims to the extent any such Claim arises out of the negligent acts or omissions, bad faith, willful misconduct or material breach of the Administrative Agreement by IBT, its officers, directors or employees or any of its agents or subcustodians in connection with the activities undertaken pursuant to the Administrative Agreement, provided that IBT’s indemnification obligation with respect to the acts or omissions of its subcustodians shall not exceed the indemnification provided by the applicable subcustodian to IBT.

The Custodian Agreement provides that IBT shall indemnify and hold the Fund, its Board of Trustees, officers and employees and its agents harmless from and against any and all Claims to the extent any such Claim arises out of the negligent acts or omissions, bad faith, willful misconduct or material breach of the Custodian Agreement by IBT, its officers, directors or employees or any of its agents or subcustodians in connection with the activities undertaken pursuant to the Custodian Agreement, provided that IBT’s indemnification obligation with respect to the acts or omissions of its subcustodians shall not exceed the indemnification provided by the applicable subcustodian to IBT.

The Distribution Agreement provides that the SEI agrees to indemnify, defend and hold the Fund, its several officers and Board members, and any person who controls the Fund 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 counsel fees incurred in connection therewith)

which the Fund, its officers or Board members, or any such controlling person, may incur under the 1933 Act, the 1940 Act, or under common law or otherwise, but only to the extent that such liability or expense incurred by the Fund, its officers or Board members, or such controlling person resulting from such claims or demands, (a) shall arise out of or be based upon any information, statements or representations made or provided SEI in any sales literature or advertisements, or any Disqualifying Conduct by SEI in connection with the offering and sale of any Shares, (b) shall arise out of or be based upon any untrue, or alleged untrue, statement of a material fact contained in information furnished in writing by SEI to the Fund specifically for use in the Fund’s registration statement and used in the answers to any of the items of the registration statement or in the corresponding statements made in the prospectus or statement of additional information, or shall arise out of or be based upon any omission, or alleged omission, to state a material fact in connection with such information furnished in writing by SEI to the Fund and required to be stated in such answers or necessary to make such information not misleading, (c) arising out of SEI’s breach of any obligation, representation or warranty pursuant to this Agreement, or (d) SEI’s failure to comply in any material respect with applicable securities laws.

The Authorized Participant Agreement provides that the Participant agrees to indemnify and hold harmless the Fund and its respective subsidiaries, affiliates, 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 Participant of any provision of the Authorized Participant Agreement that relates to the Participant; (ii) any failure on the part of the Participant to perform any of its obligations set forth in the Authorized Participant Agreement; (iii) any failure by the Participant to comply with applicable laws, including rules and regulations of self-regulatory organizations; or (iv) actions of such Indemnified Party in reliance upon any instructions issued in accordance with Annex II, III or IV (as each may be amended from time to time) of the Authorized Participant Agreement reasonably believed by the distributor and/or the transfer agent to be genuine and to have been given by the Participant.

The Securities Lending Agency Agreement provides that BGI shall indemnify and hold harmless each client, Lender, its Board of Trustees and its agents and Barclays Global Fund Advisors from any and all loss, liability, costs, damages, actions, and claims (“Loss”) to the extent that any such Loss arises out of the material breach of this Agreement by or negligent acts or omissions or willful misconduct of BGI, its officers, directors or employees or any of its agents or subcustodians in connection with the securities lending activities undertaken pursuant to this Agreement, provided that BGI’s indemnification obligation with respect to the acts or omissions of its subcustodians shall not exceed the indemnification provided by the applicable subcustodian to BGI.

Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Trust pursuant to foregoing provisions, or otherwise, the Trust has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for Fund 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 Trust 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 of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 26. (a) Business and Other Connections of the Investment Adviser:

The Trust is advised by BGFA, a wholly-owned subsidiary of BGI, 45 Fremont Street, San Francisco, CA 94105. BGFA’s business is that of a registered investment adviser to certain open-end, management investment companies and various other institutional investors.

The directors and officers of BGFA consist primarily of persons who during the past two years have been active in the investment management business. Each of the directors and executive officers of BGFA will also have substantial responsibilities as directors and/or officers of BGI. To the knowledge of the Registrant, except as set forth below, none of the directors or executive officers of BGFA is or has been at any time during the past two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature.


Name and Position		Principal Business(es) During the Last Two Fiscal Years
Blake Grossman Chairman		Director and Chairman of the Board of Directors of BGFA and Chief Executive Officer and Director of BGI 45 Fremont Street, San Francisco, CA 94105

Frank Ryan Officer		Chief Financial Officer of BGFA and Chief Financial Officer and Cashier of BGI 45 Fremont Street, San Francisco, CA 94105

Rohit Bhagat Director		Director and Chief Operating Officer of BGFA and BGI 45 Fremont Street, San Francisco, CA 94105

Item 27. Principal Underwriters:

(i)

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 acts as distributor for:


SEI Daily Income Trust		July 15, 1982
SEI Liquid Asset Trust		November 29, 1982
SEI Tax Exempt Trust		December 3, 1982
SEI Index Funds		July 10, 1985
SEI Institutional Managed Trust		January 22, 1987
SEI Institutional International Trust		August 30, 1988
The Advisors’ Inner Circle Fund		November 14, 1991
The Advisors’ Inner Circle Fund II		January 28, 1993
Bishop Street Funds		January 27, 1995
SEI Asset Allocation Trust		April 1, 1996
SEI Institutional Investments Trust		June 14, 1996
HighMark Funds		February 15, 1997
Oak Associates Funds		February 27, 1998
CNI Charter Funds		April 1, 1999
iShares Inc.		January 28, 2000
Johnson Family Funds, Inc.		November 1, 2000
Causeway Capital Management Trust		September 20, 2001
The Japan Fund, Inc.		October 7, 2002
Barclays Global Investors Funds		March 31, 2003
The Arbitrage Funds		May 17, 2005
The Turner Funds		January 1, 2006

SEI provides numerous financial services to investment managers, pension plan sponsors, and bank trust departments. These services include portfolio evaluation, performance measurement and consulting services (“Funds Evaluation”) and automated execution, clearing and settlement of securities transactions (“MarketLink”).

(b) Furnish the information required by the following table with respect to each director, officer or partner of each principal underwriter named in the answer to Item 20 of Part B. Unless otherwise noted, the business address of each director or officer is One Freedom Valley Drive, Oaks, PA 19456.


Name	Position and Office with Underwriter	Positions and Offices with Registrant
William M. Doran	Director	—
Edward D. Loughlin	Director	—
Wayne M. Withrow	Director	—
Kevin Barr	President & Chief Executive Officer	—
Maxine Chou	Chief Financial Officer & Treasurer	—
Mark Greco	Chief Operations Officer	—
John Munch	General Counsel & Secretary	—
Karen LaTourette	Chief Compliance Officer, Anti-Money Laundering Officer & Assistant Secretary	—
Mark J. Held	Senior Vice President	—
Lori L. White	Vice President & Assistant Secretary	—
Robert Silvestri	Vice President	—
John Coary	Vice President	—
Michael Farrell	Vice President	—
Al DelPizzo	Vice President	—
Mark McManus	Vice President	—

Item 28. Location of Accounts and Records:

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

(b) BGFA maintains all Records relating to its services as advisor at 45 Fremont Street, San Francisco, CA, 94105.

I SEI Investments Distribution Company maintains all Records relating to its services as distributor at One Freedom Valley Drive, Oaks, PA 19456.

(d) IBT maintains all Records relating to its services as transfer agent, fund accountant and custodian at 200 Clarendon Street, Boston, MA 02116.

Item 29. Management Services:

Not applicable.

Item 30. Undertakings:

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all the requirements for the effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933, as amended, and has duly caused this Post-Effective Amendment No. 53 to the Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of San Francisco and the State of California on the 18 ^th day of September, 2006.


By:
		Lee T. Kranefuss*
		President

		Date: September 18, 2006

Pursuant to the requirements of the Securities Act of 1933, as amended, this Post-Effective Amendment No. 53 to the Registration Statement has been signed below by the following persons in the capacity and on the dates indicated.


By:
		Lee T. Kranefuss*
		Trustee and President

		Date: September 18, 2006


		Richard K. Lyons*
		Trustee

		Date: September 18, 2006


		John E. Martinez*
		Trustee

		Date: September 18, 2006


		George G. C. Parker*
		Trustee

		Date: September 18, 2006


		Cecilia H. Herbert*
		Trustee

		Date: September 18, 2006


		Charles A. Hurty*
		Trustee

		Date: September 18, 2006



		John E. Kerrigan*
		Trustee

		Date: September 18, 2006

		/s/ Michael Latham
		Michael Latham
		Secretary, Treasurer and Principal Financial Officer

		Date: September 18, 2006

*By:		/s/ Michael Latham
		Michael Latham
		Attorney in fact

		Date: September 18, 2006

Power of Attorney, dated August 25, 2006, for Lee T. Kranefuss is filed herein as exhibit (q.4). Power of Attorney, dated February 21, 2006, for Richard K. Lyons is incorporated herein by reference to Post-Effective Amendment No. 43, filed April 17, 2006 (Accession No. 0001193125-06-081002) (“PEA No. 43”). Powers of Attorney, dated February 22, 2006, for Cecilia H. Herbert, John E. Kerrigan, John E. Martinez and George G.C. Parker are incorporated herein by reference to PEA No. 43. Power of Attorney, dated February 25, 2006, for Charles A. Hurty is incorporated herein by reference to PEA No. 43.

Exhibit Index


(a)		Agreement and Declaration of Trust, dated September 13, 2006.

(a.1)		Restated Certificate of Trust, dated September 13, 2006.

(h.15)		Exhibit A to the Sublicense Agreement between BGI and the Trust for iShares S&P Funds, as amended.

(i.1)		Legal Opinion and Consent of Willkie Farr & Gallagher LLP, dated September 18, 2006.

(i.2)		Legal Opinion and Consent of Richards, Layton & Finger, P.A., dated September 18, 2006.

(j)		Consent of PricewaterhouseCoopers LLC, dated September 18, 2006.

(q.4)		Power of Attorney, dated August 25, 2006 for Lee T. Kranefuss.

Exhibit (a)

iSHARES TRUST

AGREEMENT AND DECLARATION OF TRUST

DATED September 13, 2006

amending and restating that certain

Agreement and Declaration of Trust,

Dated December 16, 1999

iSHARES TRUST

Dated September 13, 2006

This AGREEMENT AND DECLARATION OF TRUST (hereinafter “Trust Instrument”) is made September 13, 2006 by the trustees party hereto (together with all other persons from time to time duly elected, qualified and serving as Trustees in accordance with Article III hereof, the “Trustees”) and amends and restates that certain Agreement and Declaration of Trust, dated December 16, 1999 (the “Original Declaration”).

WHEREAS, the Trustees desire to continue the statutory trust formed pursuant to the Original Declaration for the investment and reinvestment of funds contributed thereto;

WHEREAS, pursuant to Section 11.08 of the Original Declaration, the Trustees desire to amend and restate the Original Declaration as set forth herein and have determined that shareholder vote is not required to effect such amendment and restatement;

NOW, THEREFORE, the Trustees declare that all money and property contributed to the trust hereunder shall be held and managed in trust under this Trust Instrument as herein set forth below.

ARTICLE I.

NAME AND DEFINITIONS

Section 1.01. Name. The name of the trust created hereby is the “iShares Trust.”

Section 1.02. Definitions. Wherever used herein, unless otherwise required by the context or specifically provided:

(a) The term “By-Laws” means the By-Laws referred to in Article IV, Section 4.01(e) hereof, as from time to time amended;

(b) The term “Commission” has the meaning given it in the 1940 Act (as defined below). The terms “Affiliated Person,” “Assignment,” “Interested Person,” and “Principal Underwriter” shall have the meanings given them in the 1940 Act, as modified by or interpreted by any applicable order or orders of the Commission or any rules or regulations adopted by or interpretive releases of the Commission thereunder;

(c) The term “Delaware Act” refers to Chapter 38 of Title 12 of the Delaware Code entitled “Treatment of Delaware Statutory Trusts,” as it may be amended from time to time;

(d) The term “Net Asset Value” means the net asset value of each Series (as defined below) of the Trust (as defined below) determined in the manner provided in Article IX, Section 9.03 hereof;

(e) The term “Outstanding Shares” means those Shares (as defined below) shown from time to time in the books of the Trust or its Transfer Agent as then issued and outstanding, but shall not include Shares which have been redeemed or repurchased by the Trust and which are at the time held in the treasury of the Trust;

(f) The term “Series” means a series of Shares of the Trust established in accordance with the provisions of Article H, Section 2.06 hereof;

(g) The term “Shareholder” means a record owner of Outstanding Shares of the Trust;

(h) The term “Shares” means the equal proportionate transferable units of beneficial interest into which the beneficial interest of each Series of the Trust or class thereof shall be divided and may include fractions of Shares as well as whole Shares;

(i) The term “Trust” refers to the iShares Trust and all Series of the iShares Trust, and reference to the Trust, when applicable to one or more Series of the Trust, shall refer to any such Series;

(j) The term “Trustee” or “Trustees” means the person or persons who has or have signed this Trust Instrument, so long as he, she or they shall continue in office in accordance with the terms hereof, and all other persons who may from time to time be duly qualified and serving as Trustees in accordance with the provisions of Article III hereof and reference herein to a Trustee or to the Trustees shall refer to the individual Trustees in their capacity as Trustees hereunder;

(k) The term “Trust Property” means any and all property, real or personal, tangible or intangible, which is owned or held by or for the account of one or more of the Trust or any Series, or the Trustees on behalf of the Trust or any Series.

(l) The term “1940 Act” refers to the Investment Company Act of 1940, as amended from time to time.

ARTICLE II.

BENEFICIAL INTEREST

Section 2.01. Shares of Beneficial Ownership Interest. The beneficial interest in the Trust shall be divided into such transferable Shares of one or more separate and distinct Series or classes of a Series as the Trustees shall from time to time create and establish. The number of Shares of each Series, and class thereof, authorized hereunder is unlimited. Each Share shall have no par value. All Shares issued hereunder, including without limitation Shares issued in connection with a dividend in Shares or a split or reverse split of Shares, shall be fully paid and nonassessable.

Section 2.02. Issuance of Shares. The Trustees in their discretion may, from time to time, without vote of the Shareholders, issue Shares, in addition to the then issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of

consideration, subject to applicable law, including cash or securities, at such time or times and on such terms as the Trustees may deem appropriate, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with, the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares and Shares held in the treasury. The Trustees from time to time may divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or integral multiples thereof.

Section 2.03. Ownership and Transfer of Shares. The Trust or a transfer agent for the Trust shall maintain a register containing the names and addresses of the Shareholders of each Series and class thereof, the number of Shares of each Series and class held by such Shareholders, and a record of all Share transfers. The register shall be conclusive as to the identity of Shareholders of record and the number of Shares held by them from time to time. The Trustees may authorize the issuance of certificates representing Shares and adopt rules governing their use. The Trustees may make rules governing the transfer of Shares, whether or not represented by certificates. Except as otherwise provided by the Trustees, Shares shall be transferable on the books of the Trust only by the record holder thereof or by his duly authorized agent upon delivery to the Trustees or the Trust’s transfer agent of a duly executed instrument of transfer, together with a Share certificate if one is outstanding, and such evidence or the genuineness of each such execution and authorization and of such other matters as may be required by the Trustees. Upon such delivery, and subject to any further requirements specified by the Trustees or contained in the By-laws, the transfer shall be recorded on the books of the Trust. Until a transfer is so recorded, the Shareholder of record of Shares shall be deemed to be the holder of such Shares for all purposes hereunder and neither the Trustees nor the Trust, nor any transfer agent or registrar or any officer, employee or agent of the Trust, shall be affected by any notice of a proposed transfer.

Section 2.04. Treasury Shares. Shares held in the treasury shall, until reissued pursuant to Section 2.02 hereof, not confer any voting rights on the Trustees, nor shall such Shares be entitled to any dividends or other distributions declared with respect to the Shares.

Section 2.05. Establishment of Series. The Trust created hereby shall consist of one or more Series and separate and distinct records shall be maintained by the Trust of each Series and the assets associated with any such Series shall be held and accounted for separately from the assets of the Trust or any other Series. The Trustees shall have full power and authority, in their sole discretion, and without obtaining any prior authorization or vote of the Shareholders of any Series of the Trust, to establish and designate and to change in any manner such Series of Shares or any classes of initial or additional Series and to fix such preferences, voting powers, rights and privileges of such Series or classes thereof as the Trustees may from time to time determine, to divide and combine the Shares or any Series or classes thereof into a greater or lesser number, to classify or reclassify any issued Shares or any Series or classes thereof into one or more Series or classes of Shares, to abolish any one or more Series or classes of Shares or to take such other action with respect to the Shares as the Trustees may deem desirable. The establishment and designation of any Series shall be effective upon the adoption of a resolution by a majority of the Trustees setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series. A Series may issue any number of Shares and need not issue shares.

All references to Shares in this Trust Instrument shall be deemed to be Shares of any or all Series, or classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Series of the Trust, and each class thereof, except as the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal beneficial interest in the net assets of such Series. Each holder of Shares of a Series shall be entitled to receive his pro rata share of distributions of income and capital gains, if any, made with respect to such Series. Upon redemption of his Shares, such Shareholder shall be paid solely out of the funds and property of such Series of the Trust.

Section 2.06. Investment in the Trust. The Trustees shall accept investments in any Series of the Trust from such persons and on such terms as they may from time to time authorize. At the Trustees’ discretion, such investments, subject to applicable law, may be in the form of cash or securities in which the affected Series is authorized to invest, valued as provided in Article IX, Section 9.03 hereof. Investments in a Series shall be credited to each Shareholder’s account in the form of full or fractional Shares at the Net Asset Value per Share next determined after the investment is received; provided, however, that the Trustees may, in their sole discretion, (a) fix the Net Asset Value per Share of the initial capital contribution or (b) impose a sales charge upon investments in the Trust in such manner and at such time as determined by the Trustees. The Trustees shall have the right to refuse to accept investments in any Series at any time without any cause or reason therefor whatsoever.

Section 2.07. Assets and Liabilities of Series. All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Series and may be referred to herein as “assets belonging to” that Series. The assets belonging to a particular Series shall belong to that Series for all purposes, and to no other Series, subject only to the rights of creditors of that Series. In addition, any assets, income, earnings, profits or funds, or payments and proceeds with respect thereto, which are not readily identifiable as belonging to any particular Series shall be allocated by the Trustees between and among one or more of the Series in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes, and such assets, income, earnings, profits or funds, or payments and proceeds with respect thereto shall be assets belonging to that Series. The assets belonging to a particular Series shall be so recorded upon the books of the Trust, and shall be held by the Trustees in trust for the benefit of the holders of Shares of that Series. The assets belonging to each particular Series shall be charged with the liabilities of that Series and all expenses, costs, charges, and reserves attributable to that Series. Any general liabilities, expenses, costs, charges, or reserves of the Trust which are not readily identifiable as belonging to a particular Series shall be allocated and charged by the Trustees between or among any one or more of the Series in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes.

Without limitation of the foregoing provisions of this Section 2.07, but subject to the right of the Trustees in their discretion to allocate general liabilities, expenses, costs, charges, or reserves as herein provided, the debts, liabilities, obligations, and expenses incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable against the assets of such Series only, and not enforceable against the assets of the Trust generally or any other Series thereof, and, unless otherwise provided in this Trust Instrument, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally or any other Series thereof shall be enforceable against the assets of such Series. Notice of this contractual limitation on inter-Series liabilities shall be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant to the Delaware Act, and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on liabilities among Series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each Series. Any person extending credit to, contracting with or having any claim against any Series may look only to the assets of that Series to satisfy or enforce any debt, liability, obligation or expense incurred, contracted for or otherwise existing with respect to that Series. No Shareholder or former Shareholder of any Series shall have a claim on or any right to any assets allocated or belonging to any other Series.

Section 2.08. No Preemptive Rights. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or the Trustees, whether of the same or other Series.

Section 2.09. Personal Liability of Shareholders. Each Shareholder of the Trust and of each Series shall not be personally liable for debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or by or on behalf of any Series. The Trustees shall have no power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust or to a Series shall include a recitation limiting the obligation represented thereby to the Trust or to one or more Series and its or their assets (but the omission of such a recitation shall not operate to bind any Shareholder or Trustee of the Trust). Shareholders shall have the same limitation of personal liability as is extended to shareholders of a private corporation for profit incorporated in the State of Delaware. Every written obligation of the Trust or any Series shall contain a statement to the effect that such obligation may only be enforced against the assets of the appropriate Series or all Series; however, the omission of such statement shall not operate to bind or create personal liability for any Shareholder or Trustee.

Section 2.10. Assent to Trust Instrument. Every Shareholder, by virtue of having purchased a Share shall become a Shareholder and shall be held to have expressly assented and agreed to be bound by the terms hereof.

ARTICLE III.

THE TRUSTEES

Section 3.01. Management of the Trust. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Trust Instrument. The Trustees shall have power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all states of the United States of America, in the District of Columbia, in any and all commonwealths, territories, dependencies, colonies, or possessions of the United States of America, and in any foreign jurisdiction and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Trust Instrument, the presumption shall be in favor of a grant of power to the Trustees.

The enumeration of any specific power in this Trust Instrument shall not be construed as limiting the aforesaid power. The powers of the Trustees may be exercised without order of or resort to any court.

Except for the Trustees named herein or appointed to fill vacancies pursuant to Section 3.04 of this Article III, the Trustees shall be elected by the Shareholders owning of record a plurality of the Shares voting at a meeting of Shareholders. Such a meeting shall be held on a date fixed by the Trustees. In the event that less than a majority of the Trustees holding office have been elected by Shareholders, the Trustees then in office will call a Shareholders’ meeting for the election of Trustees.

Section 3.02. Initial Trustees. The initial Trustees shall be the persons named herein. On a date fixed by the Trustees, the Shareholders shall elect additional Trustees subject to Section 3.06 of this Article III.

Section 3.03. Term of Office of Trustees. The Trustees shall hold office during the lifetime of this Trust, and until its termination as herein provided, except that: (a) any Trustee may resign his trust by written instrument signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) any Trustee may be removed at any time by a vote of at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (c) any Trustee who requests in writing to be retired or who has died, becomes physically or mentally incapacitated by reason of disease or otherwise, or is otherwise unable to serve, may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; and (d) a Trustee may be removed at any meeting of the Shareholders of the Trust by a vote of Shareholders owning at least two-thirds of the outstanding Shares.

Section 3.04. Vacancies and Appointment of Trustees. In case of the declination to serve, death, resignation, retirement, removal, physical or mental incapacity by reason of disease or

otherwise, or a Trustee is otherwise unable to serve, or an increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled, the other Trustees shall have all the powers hereunder and the certificate of the other Trustees of such vacancy shall be conclusive. In the case of an existing vacancy, the remaining Trustees shall fill such vacancy by appointing such other person as they in their discretion shall see fit consistent with the limitations under the 1940 Act. Such appointment shall be evidenced by a written instrument signed by a majority of the Trustees in office or by resolution of the Trustees, duly adopted, which shall be recorded in the minutes of a meeting of the Trustees, whereupon the appointment shall take effect.

An appointment of a Trustee may be made by the Trustees then in office in anticipation of a vacancy to occur by reason of retirement, resignation or increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at or after the effective date of said retirement, resignation or increase in number of Trustees. As soon as any Trustee appointed pursuant to this Section 3.04 shall have accepted this trust, the trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he or she shall be deemed a Trustee hereunder. The power to appoint a Trustee pursuant to this Section 3.04 is subject to the provisions of Section 16(a) of the 1940 Act.

Section 3.05. Limitation on Delegation. No Trustee is empowered to delegate any duty required to be performed solely by a Trustee under the 1940 Act.

Section 3.06. Number of Trustees. The number of Trustees shall be set initially at one (1), and thereafter shall be such number as shall be fixed from time to time by a majority of the Trustees, provided, however, that the number of Trustees shall in no event be more than fifteen (15) or less than three (3).

Section 3.07. Effect of Death, Resignation, Etc., of a Trustee. The declination to serve, death, resignation, retirement, removal, incapacity, or inability of the Trustees, or any one of them, shall not operate to terminate the Trust or to revoke any existing agency created pursuant to the terms of this Trust Instrument.

Section 3.08. Ownership of Assets of the Trust. The assets of the Trust and of each Series shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title in and beneficial ownership of all of the assets of the Trust and the right to conduct any business shall at all times be considered as vested in the Trustees on behalf of the Trust, except that the Trustees may cause legal title to any Trust Property to be held by, or in the name of, the Trust, or in the name of any person as nominee. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or of any Series or any right of partition or possession thereof, but each Shareholder shall have, except as otherwise provided for herein, a proportionate undivided beneficial interest in the Trust or Series. The Shares shall be personal property giving only the rights specifically set forth in this Trust Instrument. The Trust, or at the determination of the Trustees one or more of the Trustees or a nominee acting for and on behalf of the Trust, shall be deemed to hold legal title and beneficial ownership of any income earned on securities of the Trust issued by any business entities formed, organized, or existing under the laws of any

jurisdiction, including the laws of any foreign country. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee, he or she shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Trust Property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence.

Section 3.09. Compensation. The Trustees as such shall be entitled to reasonable compensation from the Trust, and they may periodically fix the amount of such compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust.

ARTICLE IV.

POWERS OF THE TRUSTEES

Section 4.01. Powers. The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. The Trustees shall not in any way be bound or limited by present or future laws or customs in regard to trust investments, but shall have full authority and power to make any and all investments which they, in their sole discretion, shall deem proper to accomplish the purpose of this Trust without recourse to any court or other authority. Subject to any applicable limitation in this Trust Instrument or the By-Laws of the Trust, the Trustees shall have power and authority;

(a) To invest and reinvest cash and other property, and to hold cash or other property uninvested, without in any event being bound or limited by any present or future law or custom in regard to investments by trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all the assets of the Trust;

(b) To operate as and carry on the business of an investment company, and exercise all the powers necessary and appropriate to the conduct of such operations;

(c) To borrow money and in this connection issue notes or other evidence of indebtedness; to secure borrowings by mortgaging, pledging or otherwise subjecting as security the Trust Property; to endorse, guarantee, or undertake the performance of an obligation or engagement of any other Person and to lend Trust Property;

(d) To provide for the distribution of interests of the Trust either through a principal underwriter in the manner hereinafter provided for or by the Trust itself, or both, or otherwise pursuant to a plan of distribution of any kind;

(e) To adopt By-Laws not inconsistent with this Trust Instrument providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve that right to the Shareholders; such By-Laws shall be deemed incorporated and included in this Trust Instrument;

(f) To elect and remove such officers and appoint and terminate such agents as they consider appropriate;

(g) To employ one or more banks, trust companies or companies that are members of a national securities exchange or such other entities as the Commission may permit as custodians of any assets of the Trust subject to any conditions set forth in this Trust Instrument or in the By-laws;

(h) To retain one or more transfer agents and shareholder servicing agents, or both;

(i) To set record dates in the manner provided herein or in the By-Laws;

(j) To delegate such authority as they consider desirable to any officers of the Trust and to any investment advisor, manager, custodian, underwriter or other agent or independent contractor;

(k) To sell or exchange any or all of the assets of the Trust, subject to the provisions of Article XI, Section 11.04(b) hereof;

(l) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver powers of attorney to such person or persons as the Trustee shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper;

(m) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities;

(n) To hold any security or property in a form not indicating any trust, whether in bearer, book entry, unregistered or other negotiable form; or either in the name of the Trust or in the name of a custodian or a nominee or nominees, subject in either case to proper safeguards according to the usual practice of Delaware statutory trusts or investment companies;

(o) To establish separate and distinct Series with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article II hereof and to establish classes of such Series having relative rights, powers and duties as they may provide consistent with applicable law;

(p) Subject to the provisions of Section 3804 of the Delaware Act, to allocate assets, liabilities and expenses of the Trust to a particular Series or to apportion the same between or among two or more Series, provided that any liabilities or expenses incurred by a particular Series shall be payable solely out of the assets belonging to that Series as provided for in Article II hereof;

(q) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security held in the Trust;

(r) To compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes;

(s) To make distributions of income and of capital gains to Shareholders in the manner hereinafter provided;

(t) To establish, from time to time, a minimum investment for Shareholders in the Trust or in one or more Series or class, and to require the redemption of the Shares of any Shareholders whose investment is less than such minimum upon giving notice to such Shareholder;

(u) To establish one or more committees, to delegate any of the powers of the Trustees to said committees and to adopt a committee charter providing for such responsibilities, membership (including Trustees, officers or other agents of the Trust therein) and any other characteristics of said committees as the Trustees may deem proper. Notwithstanding the provisions of this Article IV, and in addition to such provisions or any other provision of this Trust Instrument or of the By-Laws, the Trustees may by resolution appoint a committee consisting of less than the whole number of Trustees then in office, which committee may be empowered to act for and bind the Trustees and the Trust, as if the acts of such committee were the acts of all the Trustees then in office, with respect to the institution, prosecution, dismissal, settlement, review or investigation of any action, suit or proceeding which shall be pending or threatened to be brought before any court, administrative agency or other adjudicatory body;

(v) To interpret the investment policies, practices, or limitations of any Series;

(w) To establish a registered office and have a registered agent in the state of Delaware;

(x) In general to carry on any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable, or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power hereinbefore set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant to or growing out of or connected with the aforesaid business or purposes, objects or powers.

The foregoing clauses shall be construed both as objects and power, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Trustees. Any action by one or more of the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust or the applicable Series, and not an action in an individual capacity.

The Trustees shall not be limited to investing in obligations maturing before the possible termination of the Trust.

No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order.

Section 4.02. Issuance and Repurchase of Shares. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, and otherwise deal in Shares and, subject to the provisions set forth in Article II and Article IX, to apply to any such repurchase, redemption, retirement, cancellation, or acquisition of Shares any funds or property of the Trust, or the particular Series of the Trust, with respect to which such Shares are issued.

Section 4.03. Trustees and Officers as Shareholders. Any Trustee, officer, or agent of the Trust may acquire, own, and dispose of Shares to the same extent as if he or she were not a Trustee, officer, or agent; and the Trustees may issue and sell or cause to be issued and sold Shares to and buy such Shares from any such person or any firm or company in which he or she is interested, subject only to the general limitations herein contained as to the sale and purchase of such Shares; and all subject to any restrictions which may be contained in the By-Laws.

Section 4.04. Action by the Trustees. The Trustees shall act by majority vote at a meeting duly called or by written consent of a majority of the Trustees without a meeting or by telephone meeting provided a quorum of Trustees participate in any such telephone meeting, unless the 1940 Act requires that a particular action be taken only at a meeting at which the Trustees are present in person. At any meeting of the Trustees, three (3) of the Trustees shall constitute a quorum. Meetings of the Trustees may be called orally or in writing by the Chairman or by any two (2) other Trustees. Notice of the time, date and place of all meetings of the Trustees shall be given by the party calling the meeting to each Trustee by telephone, telefax, or telegram sent to his home or business address at least twenty-four (24) hours in advance of the meeting or by written notice mailed to his home or business address at least seventy-two (72) hours in advance of the meeting. Notice need not be given to any Trustee who attends the meeting without objecting to the lack of notice or who executes a written waiver of notice with respect to the meeting. Any meeting conducted by telephone shall be deemed to take place at the principal office of the Trust, as determined by the By-Laws or by the Trustees. Subject to the requirements of the 1940 Act, the Trustees by majority vote may delegate to any one or more of their number their authority to approve particular matters or take particular actions on behalf of the Trust. Written consents or waivers of the Trustees may be executed in one or more counterparts. Execution of a written consent or waiver and delivery thereof to the Trust may be accomplished by telefax.

Section 4.05. Chairman of the Trustees. The Trustees shall appoint one of their number to be Chairman of the Board of Trustees. The Chairman shall preside at all meetings of the Trustees, shall be responsible for the execution of policies established by the Trustees and the administration of the Trust, and may be (but is not required to be) the chief executive, financial, and/or accounting officer of the Trust.

Section 4.06. Principal Transactions. Except to the extent prohibited by applicable law, the Trustees, on behalf of the Trust, may, in a manner consistent with applicable legal requirements, buy any securities from or sell any securities to, or lend any assets of the Trust to, any Trustees or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with any investment advisor, distributor or transfer agent for the Trust or with any interested Person of such person; and the Trust may employ any such person, or firm or company in which such person is an Interested Person, as broker, legal counsel, registrar, investment advisor, distributor, transfer agent, dividend disbursing agent, or custodian, or in any other capacity upon customary terms.

ARTICLE V.

EXPENSES OF THE TRUST

Section 5.01. Payment of Expenses By The Trust. Subject to the provisions of Article II, Section 2.07 hereof, the Trust or a particular Series shall pay, or shall reimburse the Trustees from the assets belonging to all Series or the appropriate Series for their expenses (or the expenses of a Class of such Series) and disbursements, including, without limitation, fees and expenses of Trustees, interest expense, taxes, fees and commissions of every kind, expenses of pricing Trust portfolio securities, expenses of issue, repurchase and redemption of shares, including expenses attributable to a program of periodic repurchases or redemptions, expenses of registering and qualifying the Trust and its Shares under Federal and State laws and regulations or under the laws of any foreign jurisdiction, charges of third parties, including investment advisors, managers, custodians, transfer agents, portfolio accounting and/or pricing agents, and registrars, expenses of preparing and setting up in type prospectuses and statements of additional information and other related Trust documents, expenses of printing and distributing prospectuses sent to existing Shareholders, auditing and legal expenses, reports to Shareholders, expenses of meetings of Shareholders and proxy solicitations therefor, insurance expenses, association membership dues and for such non-recurring items as may arise, including litigation to which the Trust (or a Trustee acting as such) is a party, and for all losses and liabilities by them incurred in administering the Trust, and for the payment of such expenses, disbursements, losses and liabilities the Trustees shall have a lien on the assets belonging to the appropriate Series, on the assets of each such Series, prior to any rights or interests of the Shareholders thereto. This section shall not preclude the Trust from directly paying any of the aforementioned fees and expenses.

ARTICLE VI.

CONTRACTS WITH SERVICE PROVIDERS

Section 6.01. Investment Advisor. The Trustees may in their discretion, from time to time, enter into an investment advisory or management contract or contracts with respect to the Trust or any Series; provided, however, that the initial approval and entering into of such contract or contracts shall be subject to a “majority shareholder vote,” as defined by the 1940 Act. Notwithstanding any other provision of this Trust Instrument, the Trustees may authorize any investment advisor (subject to such general or specific instructions as the Trustees from time to time may adopt) to effect purchases, sales or exchanges of portfolio securities, other investment instruments of the Trust, or other Trust Property on behalf of the Trustees, or may authorize any officer, agent, or Trustee to effect such purchases, sales, or exchanges pursuant to recommendations of the investment advisor (and all without further action by the Trustees). Any such purchases, sales, and exchanges shall be deemed to have been authorized by all of the Trustees.

The Trustees may authorize, subject to applicable requirements of the 1940 Act, including those relating to Shareholder approval, the investment advisor to employ, from time to time, one or more sub-advisors to perform such of the acts and services of the investment advisor, and upon such terms and conditions, as may be agreed upon between the investment advisor and sub-advisor. Any reference in this Trust Instrument to the investment advisor shall be deemed to include such sub-advisors, unless the context otherwise requires.

Section 6.02. Principal Underwriter. The Trustees may in their discretion from time to time enter into an exclusive or non-exclusive underwriting contract or contracts providing for the sale of Shares, whereby the Trust may either agree to sell Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions, if any, as may be prescribed in the By-Laws, and such further terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article VI, or of the By-Laws; and such contract may also provide for the repurchase or sale of Shares by such other party as principal or as agent of the Trust.

Section 6.03. Transfer Agent. The Trustees may in their discretion from time to time enter into one or more transfer agency and shareholder service contracts whereby the other party or parties shall undertake to furnish the Trustees with transfer agency and shareholder services. The contract or contracts shall be on such terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Trust Instrument or of the By-Laws.

Section 6.04. Administration Agreement. The Trustees may in their discretion from time to time enter into an administration agreement or, if the Trustees establish multiple Series or classes, separate administration agreements with respect to each Series or class, whereby the other party to such agreement shall undertake to manage the business affairs of the Trust or of a Series or class thereof of the Trust and furnish the Trust or a Series or a class thereof with office facilities, and shall be responsible for the ordinary clerical, bookkeeping and recordkeeping services at such office facilities, and other facilities and services, if any, and all upon such terms and conditions as the Trustees may in their discretion determine.

Section 6.05. Service Agreement. The Trustees may in their discretion from time to time enter into service agreements with respect to one or more Series or Classes of Shares whereby the other parties to such Service Agreements will provide administration and/or support services pursuant to administration plans and service plans, and all upon such terms and conditions as the Trustees in their discretion may determine.

Section 6.06. Parties to Contract. Any contract of the character described in Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of this Article VI or any contract of the character described in Article VIII hereof may be entered into with any corporation, firm, partnership, trust, or association, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered void or voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be disqualified from voting on or executing the same in his capacity as Shareholder and/or Trustee, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom,

provided that the contract when entered into was not inconsistent with the provisions of this Article VI or Article VIII hereof or of the By-Laws. The same person (including a firm, corporation, partnership, trust or association) may be the other party to contracts entered into pursuant to Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of this Article VI or pursuant to Article VIII hereof, and any individual may be financially interested or otherwise affiliated with persons who are parties to any or all of the contracts mentioned in this Section 6.06.

Section 6.07. Provisions and Amendments. Any contract entered into pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with and subject to the requirements of Section 15 of the 1940 Act or other applicable Act of Congress hereafter enacted with respect to its continuance in effect, its termination, and the method of authorization and approval of such contract or renewal thereof, and no amendment to any contract, entered into pursuant to Section 6.01 of this Article VI shall be effective unless assented to in a manner consistent with the requirements of said Section 15, as modified by any applicable rule, regulation or order of the Commission.

ARTICLE VII.

SHAREHOLDERS’ VOTING POWERS AND MEETINGS

Section 7.01. Voting Powers. The Shareholders shall have power to vote only (i) for the election of Trustees as provided in Article III, Section 3.01 and 3.02 hereof, (ii) for the removal of Trustees as provided in Article III, Section 3.03(d) hereof, (iii) with respect to any investment advisory or management contract as provided in Article VI, Sections 6.01 and 6.07 hereof, and (iv) with respect to such additional matters relating to the Trust as may be required by law, by this Trust Instrument, or the By-Laws or any registration of the Trust with the Commission or any State, or as the Trustees may consider necessary or desirable.

On any matter submitted to a vote of the Shareholders, all Shares shall be voted separately by individual Series, except: (i) when required by the 1940 Act, Shares shall be voted in the aggregate and not by individual Series; and (ii) when the Trustees have determined that the matter affects the interests of more than one Series, then the Shareholders of all such affected Series shall be entitled to vote thereon. The Trustees also may determine that a matter affects only the interests of one (1) or more classes of a Series, in which case any such matter shall be voted on by such class or classes. Each whole share shall be entitled to one (1) vote as to any matter on which it is entitled to vote, and each fractional Share shall be entitled to a proportionate fractional vote. There shall be no cumulative voting in the election of Trustees.

Shares may be voted in person or by proxy or in any manner provided for in the By-Laws. A proxy may be given in writing. The By-Laws may provide that proxies may also, or may instead, be given by any electronic or telecommunications device or in any other manner. Notwithstanding anything else herein or in the By-Laws, in the event a proposal by anyone other than the officers or Trustees of the Trust is submitted to a vote of the Shareholders of one or more Series or of the Trust, or in the event of any proxy contest or proxy solicitation or proposal in opposition to any proposal by the officers or Trustees of the Trust, Shares may be voted only in person or by written proxy. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required or permitted by law, this Trust Instrument or any

of the By-Laws of the Trust to be taken by Shareholders. Meetings of shareholders shall be called and notice thereof and record dates therefor shall be given and set as provided in the By-Laws.

Section 7.02. Quorum and Required Vote. One-third of Shares entitled to vote in person or by proxy shall be a quorum for the transaction of business at a Shareholders’ meeting, except that where any provision of law or of this Trust Instrument permits or requests that holders of any Series shall vote as a Series (or that holders of a class shall vote as a class), then one-third of the aggregate number of Shares of that Series (or that class) entitled to vote shall be necessary to constitute a quorum for the transactions of business by that Series (or that class). Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by law or by any provision of this Trust Instrument of the By-Laws, a majority of the Shares voted in person or by proxy shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Trust Instrument permits or requires that the holders of any Series shall vote as a Series (or that the holders of any class shall vote as a class), then a majority of the Shares present in person or by proxy of that Series or, if required by law, subject to a “majority shareholder vote”, as defined by the 1940 Act, of that Series (or class), voted on the matter in person or by proxy shall decide matter insofar as that Series (or class) is concerned. Shareholders may act by unanimous written consent. Actions taken by Series (or class) may be consented to unanimously in writing by Shareholders of that Series.

ARTICLE VIII.

CUSTODIAN

Section 8.01. Appointment and Duties. The Trustees at all times shall employ a bank, a company that is a member of a national securities exchange, or a trust company, each having capital, surplus and undivided profits of at least two million dollars ($2,000,000), or any other entity satisfying the requirements of the 1940 Act, as custodian with authority as its agent, but subject to such restrictions, limitations, and other requirements, if any, as may be contained in the By-Laws of the Trust:

(1) to hold the securities and other assets of the Trust and deliver the same upon written order or oral order confirmed in writing;

(2) to receive and receipt for any moneys due to the Trust and deposit the same in its own banking department or elsewhere as the Trustees may direct; and

(3) to disburse such funds upon orders or vouchers; and the Trust also may employ such custodian as its agent:

(4) to keep the books and accounts of the Trust or of any Series or class and furnish clerical and accounting services; and

(5) to compute, if authorized to do so by the Trustees, the Net Asset Value of any Series, or class thereof, in accordance with the provisions hereof; all upon such basis of compensation as may be agreed upon between the Trustees and the custodian.

The Trustees also may authorize the custodian to employ one or more sub-custodians from time to time to perform such of the acts and services of the custodian, and upon such terms and conditions, as may be agreed upon between the custodian and such sub-custodian and approved by the Trustees, provided that in every case such sub-custodian shall be a bank, a company that is a member of a national securities exchange, a trust company or any other entity satisfying the requirements of the 1940 Act.

Section 8.02. Central Certificate System. Subject to such rules, regulations, and orders as the Commission may adopt, the Trustees may direct the custodian to deposit all or any part of the securities owned by the Trust in a system for the central handling of securities established by a national securities exchange or a national securities association registered with the Commission under the Securities Exchange Act of 1934, as amended, or such other person as may be permitted by the Commission, or otherwise in accordance with the 1940 Act, pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as fungible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to withdrawal only upon the order of the Trust or its custodians, sub-custodians or other agents.

ARTICLE IX.

DISTRIBUTIONS AND REDEMPTIONS

Section 9.01. Distributions.

(a) The Trustees from time to time may declare and pay dividends or other distributions with respect to any Series. No dividend or distribution, including, without limitation, any distribution paid upon termination of the Trust or of any Series (or class) with respect to, nor any redemption or repurchase of, the Shares of any Series (or class) shall be effected by the Trust other than from the assets held with respect to such Series, nor shall any Shareholder of any particular Series otherwise have any right or claim against the assets held with respect to any other Series except to the extent that such Shareholder has such a right or claim hereunder as a Shareholder of such other Series. The Trustees shall have full discretion to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders. The amount of such dividends or distributions and the payment of them and whether they are in cash or any other Trust Property shall be wholly in the discretion of the Trustees.

(b) Dividends and other distributions may be paid or made to the Shareholders of record at the time of declaring a dividend or other distribution or among the Shareholders of record at such other date or time or dates or times as the Trustees shall determine, which dividends or distributions, at the election of the Trustees, may be paid pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine. The Trustees may adopt and offer to Shareholders such dividend reinvestment plans, cash dividend payout plans, or related plans as the Trustees shall deem appropriate.

(c) Anything in this Trust Instrument to the contrary notwithstanding, the Trustees at any time may declare and distribute a stock dividend pro rata among the Shareholders of a particular Series, or class thereof, as of the record date of that Series fixed as provided in paragraph (b) of this Section 9.01.

Section 9.02. Redemptions. The Trustees may specify conditions, prices, and places of redemption, may specify binding requirements for the proper form or forms of requests for redemption and may specify the amount of any deferred sales charge to be withheld from redemption proceeds. Payment of the redemption price may be wholly or partly in securities or other assets at the value of such securities or assets used in such determination of Net Asset Value, or may be in cash. Upon redemption, Shares may be reissued from time to time. The Trustees may require Shareholders to redeem Shares for any reason under terms set by the Trustees, including, but not limited to, the failure of a Shareholder to supply a taxpayer identification number if required to ‘do so, or to have the minimum investment required, or to pay when due for the purchase of Shares issued to him. To the extent permitted by law, the Trustees may retain the proceeds of any redemption of Shares required by them for payment of amounts due and owing by a Shareholder to the Trust or any Series or class or any governmental authority. Notwithstanding the foregoing, the Trustees may postpone payment of the redemption price and may suspend the right of the Shareholders to require any Series or class to redeem Shares during any period of time when and to the extent permissible under the 1940 Act. All authorized Shares shall be subject to redemption and redeemable in accordance with and pursuant to procedures or methods prescribed or approved by the Trustees. The Shares of any Series, if so determined by the Trustees, shall be redeemable only in aggregations of such number of Shares and on such days as may be determined by or determined pursuant to procedures or methods prescribed by or approved by the Trustees from time to time with respect to such Series. The number of Shares comprising an aggregation for purposes of redemption or repurchase shall be referred to as a “Creation Unit.” The Trustees shall have the unrestricted power to alter the number of shares constituting a Creation Unit by resolution adopted by the Trustees, at any time including prior to the time the Trust commences operations. Each holder of a Creation Unit aggregation of shares of a Series, upon request to the Trust in accordance with procedures established by the Trustees, shall be entitled to require the Trust to redeem all or any number of such holder’s Shares standing in the name of such holder on the books of the Trust, but in the case of the Shares of any Series as to which the Trustees have determined that such Shares shall be redeemable only in Creation Unit aggregations, only in such Creation Unit aggregations of shares of such Series as the Trustees may determine from time to time in accordance with this Article IX, at a redemption price per share equal to an amount determined by the Trustees in accordance with applicable laws.

Section 9.03. Determination of Net Asset Value and Valuation of Portfolio Assets. The term “Net Asset Value” of any Series shall mean that amount by which the assets of that Series exceed its liabilities, all as determined by or under the direction of the Trustees. Such value shall be determined separately for each Series and shall be determined on such days and at such times as the Trustees may determine. The Trustees may delegate any of their powers and duties under this Section 9.03 with respect to valuation of assets and liabilities. The resulting amount, which

shall represent the total Net Asset Value of the particular Series, shall be divided by the total number of shares of that Series outstanding at the time and the quotient so obtained shall be the Net Asset Value per Share of that Series. At any time the trustees may cause the Net Asset Value per Share last determined to be determined again in similar manner and may fix the time when such redetermined value shall become effective. If, for any reason, the net income of any Series, determined at any time, is a negative amount, the Trustees shall have the power with respect to that Series: (i) to offset each Shareholder’s pro rata share of such negative amount from the accrued dividend account of such Shareholder; or (ii) to reduce the number of Outstanding Shares of such Series by reducing the number of Shares in the account of each Shareholder by a pro rata portion of the number of full and fractional Shares which represents the amount of such excess negative net income; or (iii) to cause to be recorded on the books of such Series an asset account in the amount of such negative net income (provided that the same shall thereupon become the property of such Series with respect to such Series and shall not be paid to any Shareholder), which account may be reduced by the amount, of dividends declared thereafter upon the Outstanding Shares of such Series on the day such negative net income is experienced, until such asset account is reduced to zero; or (iv) to combine the methods described in clauses (i) and (ii) and (iii) of the sentence; or (v) to take any other action they deem appropriate, in order to cause (or in order to assist in causing) the Net Asset Value per Share of such Series to remain at a constant amount per Outstanding Share immediately after each such determination and declaration. The Trustees also shall have the power not to declare a dividend out of net income for the purpose of causing the Net Asset Value per share to be increased. The Trustees shall not be required to adopt, but at any time may adopt, discontinue, or amend the practice of maintaining the Net Asset value per Share of the Series at a constant amount. In the event that any Series are divided into classes, the provisions of this Section 9.03, to the extent applicable as determined in the discretion of the Trustees and consistent with applicable law, may be equally applied to each such class.

Section 9.04. Suspension of the Right of Redemption. The Trustees may declare a suspension of the right of redemption or postpone the date of payment as permitted under the 1940 Act. Such suspension shall take effect at such time as the Trustees shall specify but not later than the close of business on the business day next following the declaration of suspension, and thereafter there shall be no right of redemption or payment until the Trustees shall declare the suspension at an end. In the case of a suspension of the right of redemption, a Shareholder may either withdraw his request for redemption or receive payment based on the Net Asset Value per Share next determined after the termination of the suspension.

ARTICLE X.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 10.01. Limitation of Liability. All persons contracting with or having any claim against the Trust or a particular Series shall look only to the assets of all Series or such particular Series for payment under such contract or claim; and neither the Trustees nor, when acting in such capacity, any of the Trust’s officers, employees or agents, whether past, present or future, shall be personally liable therefor. Every written instrument or obligation on behalf of the Trust or any Series shall contain a statement to the foregoing effect, but the absence of such statement shall not operate to make any Trustee or officer of the Trust liable thereunder. Provided they

have exercised reasonable care and have acted under the reasonable belief that their actions are in the best interest of the Trust, the Trustees and officers of the Trust shall not be responsible or liable for any act or omission or for neglect or wrongdoing of them or any officer, agent, employee, investment adviser or independent contractor of the Trust, but nothing contained in this Declaration or in the Delaware Act shall protect any Trustee or officer of the Trust against liability to the Trust or to Shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.

Section 10.02. Indemnification.

(a) Subject to the exceptions and limitations contained in paragraph (b) below:

(i) every Person who is, or has been, a Trustee or officer of the Trust (hereinafter referred to as a “Covered Person”) shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit, or proceeding in which he or she becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof; and

(ii) the words “claim,” “action,” “suit,” or “proceeding” shall apply to all claims, actions, suits, or proceedings (civil, criminal, or other, including appeals), actual or threatened, while in office or thereafter, and the words “liability” and “expenses” shall include, without limitation, attorney’s fees, costs, judgments, amounts paid in settlement, fines, penalties, and other liabilities.

(b) No indemnification shall be provided hereunder to a Covered Person:

(i) who shall have been adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office or (B) not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or

(ii) in the event of a settlement, unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office:

(A)

by the court or other body approving the settlement;

(B)

by at least a majority of those Trustees who neither are Interested Persons of the Trust nor are parties to the matter based upon a review of readily-available facts (as opposed to a full trial-type inquiry); or

(C)

by written opinion of independent legal counsel based upon

a review of readily-available facts (as opposed to a full trial-type inquiry); provided, however, that any Shareholder, by appropriate legal proceedings, may challenge any such determination by the Trustees or by independent counsel.

(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person and shall inure to the benefit of the heirs, executors, and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel, other than Covered Persons, and other persons may be entitled by contract or otherwise under law.

(d) To the maximum extent permitted by applicable law, expenses in connection with the preparation and presentation of a defense to any claim, action, suit, or proceeding of the character described in paragraph (a) of this Section 10.02 may be paid by the Trust or Series from time to time prior to final disposition thereof upon receipt of any undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the Trust or Series if it ultimately is determined that he or she is not entitled to indemnification under this Section 10.02; provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking; (b) the Trust is insured against losses arising out of any such advance payments, or (c) either a majority of the Trustees who are neither Interested Persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily-available facts (as opposed to a trial-type inquiry or full investigation), that there is a reason to believe that such Covered Person will be found entitled to indemnification under this Section 10.02.

Section 10.03. Shareholders. In case any Shareholder or former Shareholder of any Series shall be held to be personally liable solely by reason of his being or having been a Shareholder of such Series and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators, or other legal representatives, or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets belonging to the applicable Series to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust, on behalf of the affected Series, shall assume, upon request by the Shareholder, the defense of any claim made against the Shareholder for any act or obligation of the Series and satisfy any judgment thereon from the assets of the Series.

Section 10.04. No Bond Required of Trustees. No Trustee shall be obligated to give any bond or other security for the performance of any of his duties hereunder.

Section 10.05. No Duty of Investigation; Notice in Trust Instruments, Etc. No purchaser, lender, transfer agent or other Person dealing with the Trustees or any officer, employee or agent of the Trust or a Series thereof shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the

Trustees or of said officer, employee or agent. Every obligation, contract, instrument, certificate, Share, other security of the Trust or a Series thereof or undertaking, and every other act or thing whatsoever executed in connection with the Trust shall be conclusively presumed to have been executed or done by the executors thereof only in their capacity as Trustees under this Declaration or in their capacity as officers, employees or agents of the Trust or a Series thereof. Every written obligation, contract, instrument, certificate, Share, other security of the Trust or a Series thereof or undertaking made or issued by the Trustees may recite that the same is executed or made by them not individually, but as Trustees under the Declaration, and that the obligations of the Trust or a Series thereof under any such instrument are not binding upon any of the Trustees or Shareholders individually, but bind only the Trust Property or the Trust Property of the applicable Series, and may contain any further recital which they may deem appropriate, but the omission of such recital shall not operate to bind the Trustees individually. The Trustees shall at all times maintain insurance for the protection of the Trust Property or the Trust Property of the applicable Series, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable.

Section 10.06. Reliance on Experts, Etc. Each Trustee, officer or employee of the Trust or a Series thereof shall, in the performance of his duties, powers and discretions hereunder be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust or a Series thereof, upon an opinion of counsel, or upon reports made to the Trust or a Series thereof by any of its officers or employees or by the Investment Adviser, the Administrator, the Distributor, Transfer Agent, selected dealers, accountants, appraisers or other experts or consultants selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee.

ARTICLE XI.

MISCELLANEOUS

Section 11.01. Trust Not a Partnership. It is hereby expressly declared that a trust and not a partnership is created hereby. No Trustee hereunder shall have any power to bind personally either the Trust’s officers or any Shareholder. All persons extending credit to, contracting with, or having any claim against the Trust or the Trustees shall look only to the assets of the appropriate Series or (If the Trustees shall have yet to have established the Series) the Trust for payment under such credit, contract, or claim; and neither the Shareholders nor the Trustees, nor any of their agents, whether past, present, or future, shall be personally liable therefore. Nothing in this Trust Instrument shall protect a Trustee against any liability to which the Trustee otherwise would be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the office of Trustee hereunder.

Section 11.02. Trustee Action. The exercise by the Trustees of their powers and discretions hereunder in good faith and with reasonable care under the circumstances then prevailing shall be binding upon everyone interested. Subject to the provisions of Article X hereof and to Section 11.01 of this Article XI, the Trustees shall not be liable for errors of judgment or mistakes of fact or law.

Section 11.03. Establishment of Record Dates. For the purpose of determining the Shareholders of any Series (or class) who are entitled to receive payment of any dividend or of any other distribution, the Trustees may from time to time fix a date, which shall be before the date for the payment of such dividend or such other payment, as the record date for determining the Shareholders of such Series (or class) having the right to receive such dividend or distribution. Without fixing a record date, the Trustees may for distribution purposes close the register or transfer books for one or more Series (or classes) any time prior to the payment of a distribution. Nothing in this Section shall be construed as precluding the Trustees from setting different record dates for different Series (or classes). The Trustees may fix in advance a date, to be determined by the Trustees and no longer than that permitted by applicable law, before the date of any Shareholders’ meeting, or the date for the payment of any dividends or other distributions, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares shall go into effect as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of such dividend or other distribution, or to receive any such allotment of rights, or to exercise such rights in respect of any such change, conversion or exchange of Shares.

Section 11.04. Termination of Trust.

(a) This Trust shall continue without limitation of time but subject to the provisions of paragraph (b) of this Section 11.04.

(b) The Trustees, subject to a majority shareholder vote of each Series affected by the matter, or, if applicable, to a majority shareholder vote of the Trust, and subject to a vote of a majority of the Trustees, may:

(i) sell and convey all or substantially all of the assets of the Trust or any affected Series to another trust, partnership, association, or corporation, or to a separate series of shares thereof, organized under the laws of any state, which trust, partnership, association, or corporation is an open-end management investment company as defined in the 1940 Act, or is a series thereof, for adequate consideration which may include the assumption of all outstanding obligations, taxes, and other liabilities, accrued or contingent, of the Trust or any affected Series, and which may include shares of beneficial interest, stock, or other ownership interests of such trust, partnership, association, or corporation or of a series thereof; or

(ii) at any time, sell and convert into money all of the assets of the Trust or any affected series.

Upon making reasonable provision, in the determination of the Trustees, for the payment of all such liabilities in either (i) or (ii) of this Section 11.04(b), by such assumption or otherwise, the Trustees shall distribute the remaining proceeds or assets (as the case may be) of each Series (or class) ratably among the holders of Shares of that Series then outstanding.

(c) The Trustees may take any of the actions specified in this Section 11.04(b)(i) and (ii) above without obtaining the approval of shareholders if a majority of the Trustees determines that the continuation of the Trust or Series (or class) is not in the best

interests of the Trust, such Series (or class), or their respective Shareholders as a result of factors or events adversely affecting the ability of the Trust or such Series (or class) to conduct its business and operations in an economically viable manner. Such factors and events may include the inability of the Trust or a Series (or class) to maintain its assets at an appropriate size, changes in laws or regulations governing the Trust or the Series (or class) or affecting assets of the type in which the Trust or Series (or class) invests, or economic developments or trends having a significant adverse impact on the business or operations of the Trust or such Series (or class).

(d) Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in paragraph (b) of this Section 11.04, the Trust or any affected Series shall terminate and the Trustees and the Trust shall be discharged of any and all further liabilities and duties hereunder and the right, title, and interest of all parties with respect to the Trust or Series shall be canceled and discharged.

Upon termination of the Trust, following completion of winding up of the Trust’s business, the Trustees shall cause a certificate of cancellation of the Trust’s certificate of trust to be filed in accordance with the Delaware Act, which certificate of cancellation may be signed by any one Trustee.

Section 11.05. Reorganization. Notwithstanding anything else herein, the Trustees, in order to change the form of organization of the Trust, may, without prior Shareholder approval, (i) cause the Trust to merge or consolidate with or into one (1) or more trusts, partnerships, associations, or corporations so long as the surviving or resulting entity is an open-end management investment company under the 1940 Act, or is a series thereof, that will succeed to or assume the Trust’s registration under that Act and which is formed, organized, or existing under the laws of a state, commonwealth, territory, possession, or colony of the United States or (ii) cause the Trust to incorporate under the laws of State of Delaware. Any agreement of merger or consolidation or certificate of merger may be signed by a majority of Trustees and facsimile signature conveyed by electronic or telecommunication means shall be valid.

Pursuant to and in accordance with the provisions of Section 3815(f) of the Delaware Act, and notwithstanding anything to the contrary contained in this Trust Instrument, an agreement of merger or consolidation approved by the Trustees in accordance with this Section 11.05 may effect any amendment to the Trust Instrument or effect the adoption of a new trust instrument of the Trust if the Trust is the surviving or resulting trust in the merger or consolidation.

Section 11.06. Filing of Copies; References; Headings. The original or a copy of this Trust Instrument and the original or a copy of each amendment hereof or Trust Instrument supplemental hereto shall be kept at the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer or Trustee of the Trust as to whether or not any such amendments or supplements have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer or Trustee of the Trust to be a copy of this Trust Instrument or of any such amendment or supplemental Trust Instrument, and references to this Trust Instrument, and all expressions such as or similar to “herein,” “hereof,” and

“hereunder” shall be deemed to refer to this Trust Instrument as amended or affected by any such supplemental Trust Instrument. All expressions such as or similar to “his,” “he,” and “him” shall be deemed to include the feminine and neuter, as well as masculine, genders. Headings are placed herein for convenience of reference only and, in case of any conflict, the text of this Trust Instrument, rather than the headings, shall control. This Trust Instrument may be executed in any number of counterparts each of which shall be deemed an original.

Section 11.07. Applicable Law. The trust set forth in this instrument is made in the State of Delaware, and the Trust and this Trust Instrument, and the rights and obligations of the Trustees and Shareholders hereunder, are to be governed by and construed and administered according to the Delaware Act and the laws of said State; provided, however, that there shall not be applicable to the trust, the Trust, the Trustee or this Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the Delaware Act) pertaining to trusts which relate to or regulate (i) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (ii) affirmative requirements to post bonds for trustees, officers, agents, or employees of a trust, (iii) the necessity for obtaining court or other governmental approval concerning the acquisition, holding, or disposition of real or personal property, (iv) fees or other sums payable to trustees, officers, agents, or employees of a trust, (v) the allocation of receipts and expenditures to income and principal, (vi) restrictions or limitations on the permissible nature, amount, or concentration of trust investments or requirements relating to the titling, storage, or other manner of holding of trust assets, or (vii) the establishment of fiduciary or other standards or responsibilities or limitations on the acts or powers of trustees, which are inconsistent with the limitations or liabilities or authorities and powers of the Trustees set forth or referenced in this Trust Instrument. The Trust shall be of the type commonly called a “Delaware statutory trust,” and, without limiting the provisions hereof, the Trust may exercise all powers or privileges afforded to trusts or actions that may be engaged in by trusts under the Delaware Act, and the absence of a specific reference herein to any such power, privilege, or action shall not imply that the Trust may not exercise such power or privilege or take such actions.

Section 11.08. Amendments. Except as specifically provided herein, the Trustees, without shareholder vote, may amend or otherwise supplement this Trust Instrument by making an amendment, a Trust Instrument supplemental hereto, or an amended and restated trust instrument. Shareholders shall have the right to vote (i) on any amendment which would affect their right to vote granted in Section 7.01 of the Article VII hereof, (ii) on any amendment to this Section 11.08, (iii) on any amendment as may be required by law or by the Trust’s registration statement filed with the Commission, and (iv) on any amendment submitted to the Shareholders by the Trustees. Any amendment required or permitted to be submitted to Shareholders which, as the Trustees determine, shall affect the Shareholders of one or more Series shall be authorized by vote of the Shareholders of each Series affected and no vote of Shareholders of a Series not affected shall be required. Notwithstanding anything else herein, any amendment to Article X hereof shall not limit the rights to indemnification or insurance provided therein with respect to action or omission of Covered Persons prior to such amendment.

Section 11.09. Derivative Actions. In addition to the requirements set forth in Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on behalf of the Trust only if the following conditions are met:

(a) Shareholders eligible to bring such derivative action under the Delaware Act who hold at least 10% of the Outstanding Shares of the Trust, or 10% of the Outstanding Shares of the Series or class to which such action relates, shall join in the request for the Trustees to commence such action; and

(b) The Trustees must be afforded a reasonable amount of time to consider such shareholder request and to investigate the basis of such claim. The Trustees shall be entitled to retain counsel or other advisers in considering the merits of the request and shall require an undertaking by the Shareholders making such request to reimburse the Trust for the expense of any such advisers in the event that the Trustees determine not to bring such action.

Section 11.10. Fiscal Year. The fiscal year of the Trust shall end on a specified date as set forth in the By-Laws, provided, however, that the Trustees, without Shareholder approval, may change the fiscal year of the Trust.

Section 11.11. Provisions in Conflict With Law. The provisions of this Trust Instrument are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, with the regulated investment company provisions of the Internal Revenue Code or with other applicable laws and regulations, the conflicting provision shall be deemed- never to have constituted a part of this Trust Instrument; provided, however, that such determination shall not affect any of the remaining provisions of this Trust Instrument or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Trust Instrument shall be held invalid or improper, unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provisions in any other jurisdiction or any other provision of this Trust Instrument in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have executed this instrument this 13th day of September, 2006.

/s/ Lee T. Kranefuss

Lee T. Kranefuss

as Trustee and not individually

/s/ John E. Martinez

John E. Martinez

as Trustee and not individually

/s/ Richard K. Lyons

Richard K. Lyons

as Trustee and not individually

/s/ George G. C. Parker

George G.C. Parker

as Trustee and not individually

/s/ Cecilia H. Herbert

Cecilia H. Herbert

as Trustee and not individually

/s/ Charles A. Hurty

Charles A. Hurty

as Trustee and not individually

/s/ John E. Kerrigan

John E. Kerrigan

as Trustee and not individually

Exhibit (a.1)

RESTATED CERTIFICATE OF TRUST

ISHARES TRUST

THIS Restated Certificate of Trust, dated as of September 13, 2006, of iShares Trust (the “Trust”), is being duly executed and filed by the undersigned, as trustee, to amend and restate the Certificate of Trust of the Trust as filed in the office of the Secretary of State of the State of Delaware (the “Secretary of State”) on December 16, 1999, under the Delaware Statutory Trust Act (12 Del.C. §3801 et seq .) (the “Act”). The Certificate of Trust is hereby amended and restated in its entirety to read as follows:

1. Name . The name of the statutory trust formed hereby is iShares Trust.

2. Registered Office; Registered Agent . The business address of the Trust’s registered office in the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801. The name of the Trust’s registered agent at such address is The Corporation Trust Company.

3. Investment Company . The Trust is a registered investment company under the Investment Company Act of 1940, as amended.

4. Series . Pursuant to Section 3806(b)(2) of the Act, the Trust shall issue one or more series of beneficial interests having the rights and preferences set forth in the governing instrument of the Trust, as the same may be amended from time to time (each, a “Series”).

5. Notice of Limitation of Liabilities of each Series . Pursuant to Section 3804(a) of the Act, there shall be a limitation on liabilities of each Series such that (a) the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable against the assets of such Series only, and not against the assets of the Trust generally or any other Series thereof, and (b) unless otherwise provided in the Trust’s Agreement and Declaration of Trust, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally or any other Series thereof shall be enforceable against the assets of such Series.

6. Effective Date . This Restated Certificate of Trust shall be effective upon filing.

IN WITNESS WHEREOF, the undersigned has duly executed this Restated Certificate of Trust in accordance with Section 3811(a) of the Act.


		Lee T. Kranefuss, as trustee

By:		/s/ Lee T. Kranefuss
Name:		Lee T. Kranefuss
Title:		Interested Trustee

Exhibit (h.15)

AMENDMENT TO SUBLICENSE AGREEMENT

This Amendment to the Sublicense Agreement dated April 25, 2000 (the “Agreement”) between Barclays Global Investors, N.A. (“BGI”), a national banking association, and iShares Trust (“iShares”), a Delaware statutory trust, is effective as of April 1, 2006.

WHEREAS, pursuant to Section 7 of the Agreement the parties may amend the Agreement from time to time; and

NOW THEREFORE, Exhibit A is hereby deleted in its entirety and amended to read as attached.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to the License Agreement to be executed as of the date first set forth above.


BARCLAYS GLOBAL INVESTORS, N.A.

By:		/s/ Michael Latham
Name:		Michael Latham
Title:		Managing Director

By:		/s/ Raman Suri
Name:		Raman Suri
Title:		Principal

ISHARES TRUST

By:		/s/ Stephanie Allen
Name:		Stephanie Allen
Title:		Assistant Secretary

Exhibit A

iShares S&P 100 Index Fund

iShares S&P 500 Index Fund

iShares S&P 500/BARRA Growth Index Fund

iShares S&P 500/BARRA Value Index Fund

iShares S&P MidCap 400 Index Fund

iShares S&P MidCap 400/BARRA Growth Index Fund

iShares S&P MidCap 400/BARRA Value Index Fund

iShares S&P SmallCap 600 Index Fund

iShares S&P SmallCap 600/BARRA Growth Index Fund

iShares S&P SmallCap 600/BARRA Value Index Fund

iShares S&P Europe 350 Index Fund

iShares S&P/TSE 60 Index Fund

iShares S&P Global 100 Index Fund

iShares S&P Global Energy Sector Index Fund

iShares S&P Global Financials Sector Index Fund

iShares S&P Global Healthcare Sector Index Fund

iShares S&P Global Technology Sector Index Fund

iShares S&P Global Telecommunications Sector Index Fund

iShares S&P Latin America 40 Index Fund

iShares S&P/TOPIX 150 Index Fund

iShares S&P 1500 Index Fund

iShares S&P Global Consumer Discretionary Sector Index Fund

iShares S&P Global Consumer Staples Sector Index Fund

iShares S&P Global Industrials Sector Index Fund

iShares S&P Global Information Technology Sector Index Fund

iShares S&P Global Materials Sector Index Fund

iShares S&P U.S. Preferred Stock Index Fund

Exhibit (i.1)

787 Seventh Avenue

New York, NY 10019-6099

Tel: 212 728 8000

Fax: 212 728 8111

September 18, 2006

iShares Trust

c/o Barclays Global Fund Advisors

45 Fremont Street

San Francisco, CA 94105

Dear Ladies and Gentlemen:

You have requested us, as counsel to the iShares S&P U.S. Preferred Stock Index Fund (the “Fund”), a series of iShares Trust, a statutory trust organized under the laws of the State of Delaware (the “Trust”), to furnish you with this opinion in connection with the Trust’s filing of Post-Effective Amendment No. 53 (the “Amendment”) to its Registration Statement on Form N-1A (Securities Act File No. 333-92935 and Investment Company Act File No. 811-09729) (as amended, the “Registration Statement”).

We have examined copies of the Restated Certificate of Trust, Agreement and Declaration of Trust (together with the Restated Certificate of Trust, the “Trust Instrument”) and By-Laws of the Trust, each as amended to date, the Fund’s prospectus and statement of additional information (the “Statement of Additional Information”) included in its Registration Statement, certain resolutions adopted by the Fund’s Board of Trustees (the “Board”), or a certificate of the officers of the Trust with respect to such resolutions, resolutions of the sole shareholder of the Fund, and other records, documents and papers that we have deemed necessary for the purpose of this opinion. We have also examined such statutes and authorities as we have deemed necessary to form a basis for the opinion hereinafter expressed.

In our examination of this material, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all copies submitted to us. As to various questions of fact material to our opinion, we have relied upon statements and certificates of officers and representatives of the Fund and others.

Based upon the foregoing, we are of the opinion that the shares of beneficial interest of the Fund (the “Shares”) have been duly authorized and, when and if duly sold, issued and paid for in accordance with the laws of applicable jurisdictions and the terms of the Trust Instrument, the By-Laws and the Registration Statement, will be validly issued, fully paid and nonassessable beneficial interests in the Fund assuming (i) that at the time of sale such Shares are sold in accordance with the resolutions authorizing the issuance of such Shares; and (ii) that the resolutions of the Board

September 18, 2006

Page 2

authorizing the issuance of the Shares that are in effect on the date hereof have not been modified or withdrawn and are in full force and effect on the date of issuance.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, to the reference to us in the Statement of Additional Information and to the filing of this opinion as an exhibit to any application made by or on behalf of the Fund or any distributor or dealer in connection with the registration or qualification of the Fund or the Shares under the securities laws of any state or other jurisdiction.

We are members of the Bar of the State of New York only and do not opine as to the laws of any jurisdiction other than the laws of the State of New York and the federal laws of the United States, and the opinions set forth above are, accordingly, limited to the laws of those jurisdictions. As to matters governed by the State of Delaware, we have relied solely upon the opinion of Richards, Layton & Finger, P.A., which is attached hereto, and our opinion is subject to the assumptions and limitations set forth therein.


Very truly yours,

WILLKIE FARR & GALLAGHER LLP

By:		/s/ Willkie Farr & Gallagher LLP

		A Member of the Firm

Exhibit (i.2)

[LETTERHEAD OF RICHARDS, LAYTON & FINGER, P.A.]

September 18, 2006

iShares Trust

c/o Barclays Global Fund Advisors

45 Fremont Street

San Francisco, CA 94105

Re:

iShares S&P U.S. Preferred Stock Index Fund

Ladies and Gentlemen:

We have acted as special Delaware counsel for iShares Trust, a Delaware statutory trust (the “Trust”), in connection with the matters set forth herein. At your request, this opinion is being furnished to you.

For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following:

(a)

The Certificate of Trust of the Trust, as filed with the office of the Secretary of State of the State of Delaware (the “Secretary of State”) on December 16, 1999, as amended and restated by the Restated Certificate of Trust of the Trust (the “Certificate of Trust”), as filed with the office of the Secretary of State of the State of Delaware on September 15, 2006;

(b)

The Agreement and Declaration of Trust, dated December 16, 1999, made by the trustee named therein, as amended and restated by the Agreement and Declaration of Trust (the “Trust Instrument”), dated September 13, 2006, made by the trustee named therein;

(c)

Post-Effective Amendment No. 46, filed with the Securities and Exchange Commission on July 5, 2006, and Post-Effective Amendment No. 53, filed with the Securities and Exchange Commission on September 18, 2006 (together, the “Amendment”), to the Trust’s Registration Statement on Form N-1A (File Nos. 333-92935 and 811-09729), filed with the Securities and Exchange Commission on December 16, 1999 (as amended by the Amendment, the “Registration Statement”);

iShares Trust

September 18, 2006

Page 2

(d)

The Amended and Restated By-Laws of the Trust in effect on the date hereof as approved by the Board of Trustees of the Trust (the “Board”) on April 22, 2005;

(e)

Copies of certain resolutions (the “Resolutions”) adopted by the Board at meetings held on June 14 and 15, 2006, and September 13, 2006, with respect to the creation of certain series of the Trust and the issuance of certain shares of beneficial interest in such series (each, a “Share,” and collectively, the “Shares”) in the Trust;

(f)

A certificate of an Assistant Secretary of the Trust with respect to certain matters, dated September 18, 2006; and

(g)

A Certificate of Good Standing for the Trust, dated September 15, 2006, obtained from the Secretary of State.

Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Instrument.

For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraphs (a) through (g) above. In particular, we have not reviewed any document (other than the documents listed in paragraphs (a) through (g) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects.

With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures.

For purposes of this opinion, we have assumed (i) that the Trust Instrument constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Trust Instrument, the By-laws and the Certificate of Trust are in full force and effect and will not be amended, (ii) except to the extent provided in paragraph 1 below, the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties (other than the Trust) to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the payment by each Person to whom a Share is to be issued by

iShares Trust

September 18, 2006

Page 3

the Trust (collectively, the “Shareholders”) for such Share, in accordance with the Trust Instrument and the Resolutions and as contemplated by the Registration Statement, and (vii) that the Shares are issued and sold to the Shareholders in accordance with the Trust Instrument and the Resolutions and as contemplated by the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents.

This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect.

Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that:

1. The Trust has been duly created and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. § 3801, et . seq .

2. The Shares of the Trust have been duly authorized and, when issued, will be validly issued, fully paid and nonassessable beneficial interests in the Trust.

We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

/s/ Richards, Layton & Finger, P.A.

RJF

Exhibit (j)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Post-Effective Amendment No. 53 to the registration statement on Form N-1A (“Registration Statement”) of our reports dated May 18, 2006, relating to the financial statements and financial highlights which appear in the March 31, 2006 Annual Reports to Shareholders of the iShares S&P Index Funds, which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings “Financial Highlights”, “Independent Registered Public Accounting Firm” and “Financial Statements” in such Registration Statement.

PricewaterhouseCoopers LLP

San Francisco, California

September 18, 2006

Exhibit (q.4)

POWER OF ATTORNEY

WITH RESPECT TO

iSHARES TRUST and iSHARES, INC.

Know all men by these presents that Lee T. Kranefuss, a Trustee of iShares Trust (the “Trust”) and a Director of iShares, Inc. (the “Company”) (together, the “Companies”), whose name and signature appears below, constitutes and appoints Michael Latham, Margery K. Neale, Joel H. Goldberg and Barry P. Barbash, as his attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Companies of which he is now or is on the date of such filing a Trustee of the Trust or Director of the Company, (ii) any application, notice or other filings with the Securities and Exchange Commission, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Companies to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

August 25, 2006


		/s/ Lee T. Kranefuss
Name:		Lee T. Kranefuss