N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09102

iShares, Inc.

(Exact name of registrant as specified in charter)

c/o: Investors Bank & Trust Company

200 Clarendon Street; Boston, MA 02116

(Address of principal executive offices) (Zip code)

Corporation Trust Incorporated

300 East Lombard Street; Baltimore, MD 21202

(Name and address of agent for service)

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

Date of fiscal year end: August 31, 2005

Date of reporting period: August 31, 2005

Item 1. Reports to Stockholders.

iShares®

2005 ANNUAL REPORT TO SHAREHOLDERS | AUGUST 31, 2005

iSHARES MSCI SERIES

iSHARES MSCI AUSTRIA INDEX FUND

iSHARES MSCI BELGIUM INDEX FUND

iSHARES MSCI EMU INDEX FUND

iSHARES MSCI FRANCE INDEX FUND

iSHARES MSCI GERMANY INDEX FUND

iSHARES MSCI ITALY INDEX FUND

iSHARES MSCI NETHERLANDS INDEX FUND

iSHARES MSCI SPAIN INDEX FUND

iSHARES MSCI SWEDEN INDEX FUND

iSHARES MSCI SWITZERLAND INDEX FUND

iSHARES MSCI UNITED KINGDOM INDEX FUND

Table of Contents

Management’s Discussion of Fund Performance	1
Shareholder Expenses	23
Schedules of Investments	25
iShares MSCI Austria Index Fund	25
iShares MSCI Belgium Index Fund	30
iShares MSCI EMU Index Fund	35
iShares MSCI France Index Fund	44
iShares MSCI Germany Index Fund	50
iShares MSCI Italy Index Fund	56
iShares MSCI Netherlands Index Fund	62
iShares MSCI Spain Index Fund	67
iShares MSCI Sweden Index Fund	73
iShares MSCI Switzerland Index Fund	79
iShares MSCI United Kingdom Index Fund	85
Financial Statements	93
Financial Highlights	101
Notes to the Financial Statements	112
Report of Independent Registered Public Accounting Firm	121
Tax Information (Unaudited)	122
Shareholder Meeting Results (Unaudited)	123
Board Review and Approval of Investment Advisory Contracts (Unaudited)	126
Supplemental Information (Unaudited)	129
Director Information (Unaudited)	135
iShares Family of Funds	138

Management’s Discussion of Fund Performance

iSHARES^® MSCI AUSTRIA INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
56.82%	56.49	%	61.52	%	29.43	%	29.29	%	29.98	%	11.46	%	11.56	%	12.64	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
56.82%	56.49	%	61.52	%	263.19	%	261.21	%	270.99	%	179.47	%	181.83	%	209.07	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

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

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 1

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	35.84	%
Energy	19.19
Communications	15.86
Basic Materials	11.87
Industrial	10.21
Utilities	6.30
Short-Term and Other Net Assets	0.73
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
OMV AG	19.19	%
Telekom Austria AG	15.86
Erste Bank der Oesterreichischen Sparkassen AG	14.41
Oesterreichische Elektrizitaetswirtschafts AG Class A	4.89
Bank Austria Creditanstalt	4.82
Immofinanz Immobilien Anlage AG	4.79
Meinl European Land Ltd.	4.76
CA Immobilien Anlagen AG	4.46
Voest-Alpine AG	4.39
Boehler-Uddeholm AG	4.13
TOTAL	81.70	%

The iShares MSCI Austria Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Austrian market, as measured by the MSCI Austria Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 56.82%, while the Index returned 61.52%.

Austria is sensitive to the economic health of the constituent markets of the European Monetary Union (“EMU”), because it relies on the EMU for the vast majority of its exports. Improving economic conditions in many EMU countries during the reporting period led to healthy demand for Austrian exports, contributing positively to market returns. In particular, improving economic conditions in Germany, Austria’s leading export market, translated into rising demand for Austrian goods. Rising oil prices during the reporting period also boosted returns for Austria’s energy sector.

All of the Fund’s ten largest holdings as of August 31, 2005 posted gains for the reporting period. The largest Fund holding, energy company OMV AG, was also the strongest performer with a triple-digit return. Utilities company Oesterreichische Elektrizitaetswirtschafts AG and steelmaker Boehler-Uddeholm AG delivered strong double-digit returns for the reporting period, as did bank Bank Austria Creditanstalt and steel maker Voest-Alpine AG. The most modest gain among the Fund’s ten largest holdings came from real estate company Meinl European Land Ltd.

2 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI BELGIUM INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
30.22%	29.79	%	31.24	%	10.32	%	10.33	%	7.98	%	8.61	%	8.66	%	8.82	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
30.22%	29.79	%	31.24	%	63.43	%	63.52	%	46.80	%	118.70	%	119.60	%	122.89	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 3

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI BELGIUM INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	51.75	%
Consumer Non-Cyclical	16.93
Basic Materials	7.94
Communications	6.93
Industrial	5.40
Diversified	4.85
Utilities	4.82
Consumer Cyclical	0.57
Short-Term and Other Net Assets	0.81
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Fortis	23.86	%
KBC Groupe	12.55
Dexia Group	12.11
Belgacom SA	4.87
InBev	4.85
Groupe Bruxelles Lambert SA	4.85
Solvay SA	4.82
Electrabel SA	4.82
UCB SA	4.81
Delhaize Group	3.37
TOTAL	80.91	%

The iShares MSCI Belgium Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Belgian market, as measured by the MSCI Belgium Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 30.22%, while the Index returned 31.24%.

The Belgian market delivered strong gains during the reporting period. Because more than 50% of its stock market is represented by financial companies, Belgium’s market performance is tied closely to the performance of the financial sector. During the reporting period, this relationship contributed positively to overall market performance as financial stocks generally performed well. Although economic activity remained generally sluggish, low interest rates provided an attractive environment for many financial stocks during the reporting period.

Within the Fund, the ten largest holdings as of August 31, 2005 accounted for approximately 81% of the net assets of the Fund. All of the ten largest Fund holdings posted gains for the reporting period. Financial company Groupe Bruxelles Lambert SA delivered the strongest returns among the ten largest holdings, followed closely by utilities company Electrabel SA. Diversified banks KBC Groupe and Dexia Group both performed well, as did chemical company Solvay SA. Among the ten largest Fund holdings, the weakest performer was retail food chain Delhaize Group, which posted a slight gain for the reporting period.

4 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI EMU INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
28.54%	28.47	%	28.75	%	0.79	%	0.92	%	1.10	%	(0.41	)%	(0.25	)%	(0.09	)%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
28.54%	28.47	%	28.75	%	3.99	%	4.69	%	5.64	%	(2.07	)%	(1.26	)%	(0.46	)%

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 5

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI EMU INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	29.61	%
Communications	14.89
Consumer Non-Cyclical	12.66
Industrial	9.80
Energy	8.96
Utilities	8.38
Consumer Cyclical	6.68
Basic Materials	5.09
Technology	2.85
Diversified	0.91
Short-Term and Other Net Assets	0.17
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Total SA (France)	4.88	%
Sanofi-Aventis (France)	2.91
ENI SpA (Italy)	2.51
Banco Santander Central Hispano SA (Spain)	2.35
Telefonica SA (Spain)	2.35
Nokia OYJ (Finland)	2.10
Siemens AG (Germany)	1.96
E.ON AG (Germany)	1.92
BNP Paribas SA (France)	1.87
Banco Bilbao Vizcaya Argentaria SA (Spain)	1.83
TOTAL	24.68	%

The iShares MSCI EMU Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the European Monetary Union (“EMU”) markets, as measured by the MSCI EMU Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 28.54%, while the Index returned 28.75%.

As the reporting period began, the economies of the EMU faced challenges on several fronts. The euro strengthened against the U.S. dollar, making goods in euro-based countries more costly to their trading partners. The price of oil escalated during the reporting period, reaching $70 per barrel and dampening economic growth. Unemployment levels rose, particularly in Germany, where the jobless rate topped 12%.

As the reporting period progressed, however, economic conditions appeared to improve. The euro declined against the U.S. dollar, providing a boost to European export markets. Unemployment rates appeared to be on the decline in Germany and other major EMU markets, and consumer confidence levels improved. Although oil prices remained on the rise, hemming in economic growth, the elevated prices did help oil and energy-related companies.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was positive for the reporting period. Not surprisingly, the two best performing companies were both oil companies. ENI SpA (Italy) and top Fund holding Total SA (France) both benefited from rising oil prices during the reporting period. Utility company E.ON AG (Germany) also performed well. Spanish banks Banco Santander Central Hispano SA and Banco Bilbao Vizcaya Argentaria SA both contributed positively to Fund performance. The most modest return among the Fund’s ten largest holdings came from industrial conglomerate Siemens AG (Germany).

6 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI FRANCE INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
26.13%	25.94	%	26.49	%	0.06	%	0.10	%	0.37	%	10.02	%	10.06	%	10.25	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
26.13%	25.94	%	26.49	%	0.28	%	0.50	%	1.88	%	147.07	%	148.07	%	152.13	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 7

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Consumer Non-Cyclical	21.45	%
Financial	18.15
Energy	16.92
Communications	12.64
Industrial	10.80
Consumer Cyclical	7.46
Utilities	3.95
Basic Materials	3.29
Technology	2.99
Diversified	2.16
Short-Term and Other Net Assets	0.19
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Total SA	16.38	%
Sanofi-Aventis	9.85
BNP Paribas SA	6.31
France Telecom	5.25
AXA	4.16
Societe Generale Class A	4.08
Vivendi Universal SA	3.67
Carrefour SA	2.86
Groupe Danone	2.72
Suez SA	2.60
TOTAL	57.88	%

The iShares MSCI France Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the French market, as measured by the MSCI France Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 26.13%, while the Index returned 26.49%.

For most of the reporting period, France struggled with sluggish economic growth and high unemployment levels, which reached 10.2% in April 2005. Rising oil prices, a strong euro, and poor business and consumer confidence levels all contributed to a relatively weak market environment. In the last three months of the reporting period, however, conditions appeared to improve on several fronts. The euro declined against the U.S. dollar, helping export levels. Economic momentum improved, and, in July, corporate earnings announcements from some French companies came in above expectations.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was largely positive for the reporting period. Utilities company Suez SA was the top performer among the Fund’s ten largest holdings. Integrated oil and gas company Total SA was also a strong performer, benefiting from rising oil prices during the reporting period. Packaged food company Group Danone performed well, as did insurance company AXA. Telecommunications company France Telecom, entertainment company Vivendi Universal SA, and the bank Societe Generale all contributed positively to Fund performance for the reporting period. Among the ten largest Fund holdings, the sole negative performance for the reporting period came from Carrefour SA, a retail chain.

8 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI GERMANY INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
28.89%	29.56	%	29.31	%	(0.45	)%	(0.33	)%	(0.27	)%	6.32	%	6.43	%	6.75	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
28.89%	29.56	%	29.31	%	(2.25	)%	(1.62	)%	(1.36	)%	78.74	%	80.46	%	85.75	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 9

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	24.85	%
Consumer Cyclical	15.48
Industrial	14.69
Utilities	13.77
Basic Materials	9.58
Communications	8.40
Consumer Non-Cyclical	7.13
Technology	6.04
Short-Term and Other Net Assets	0.06
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Siemens AG	9.33	%
E.ON AG	9.08
Deutsche Telekom AG	7.91
Allianz AG	7.14
DaimlerChrysler AG	7.02
Deutsche Bank AG	6.49
SAP AG	4.86
BASF AG	4.86
RWE AG	4.29
Bayer AG	3.63
TOTAL	64.61	%

The iShares MSCI Germany Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the German market, as measured by the MSCI Germany Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 28.89%, while the Index returned 29.31%.

For most of the reporting period, the German economy struggled with high unemployment rates, which reached 12.6% in February, the highest level since the 1930s. The rising price of oil during the reporting period had a dampening effect on the economy, increasing energy costs and weakening demand for automobiles, an important component of Germany’s economy. As the reporting period progressed, however, positive economic signs did emerge. Unemployment rates declined modestly during the final months of the reporting period, dipping to 11.4% by the end of August. In July, Germany’s market outpaced all of its developed European peers, apparently in anticipation of September’s general election, which many believed would bring about a regime change and improved economic conditions. Germany’s closely watched business climate index exceeded expectations in July, rising to 95.0 from 93.3 in June, encouraging already optimistic outlooks for business cycle-sensitive companies.

All of the Fund’s ten largest holdings as of August 31, 2005 posted gains for the reporting period. The strongest performer was chemical company Bayer AG. Utilities companies RWE AG and E.ON AG also performed well for the reporting period, as did insurance carrier Allianz AG. Deutsche Bank AG and DaimlerChrysler AG both contributed positively to Fund performance. Telecommunications company Deutsche Telekom AG delivered the weakest return among the Fund’s ten largest holdings, although it finished the reporting period with a gain.

10 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI ITALY INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
30.74%	30.50	%	30.53	%	5.04	%	5.05	%	4.65	%	11.85	%	11.90	%	11.69	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
30.74%	30.50	%	30.53	%	27.87	%	27.91	%	25.53	%	189.02	%	190.18	%	185.24	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 11

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI ITALY INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	39.32	%
Energy	20.46
Communications	17.76
Utilities	13.68
Consumer Cyclical	3.36
Consumer Non-Cyclical	3.25
Industrial	1.96
Short-Term and Other Net Assets	0.21
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
ENI SpA	20.46	%
Enel SpA	9.97
Telecom Italia SpA	9.13
UniCredito Italiano SpA	4.83
Assicurazioni Generali SpA	4.78
Riunione Adriatica di Sicurta SpA	4.57
Sanpaolo IMI SpA	4.47
Telecom Italia SpA RNC	4.30
Banca Intesa SpA	4.04
Mediaset SpA	2.80
TOTAL	69.35	%

The iShares MSCI Italy Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Italian market, as measured by the MSCI Italy Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 30.74%, while the Index returned 30.53%.

For much of the reporting period, Italy struggled with sluggish economic conditions and high unemployment rates. As its export market faced competition from some European neighbors as well as China, Italy’s economy slipped into recession during the first quarter of 2005. Rising oil prices had a dampening effect on economic growth as the price of oil reached $70 per barrel during the reporting period, but because one oil company represents more than 20% of the Index, higher oil prices also contributed positively to Fund returns. . During the last several months of the reporting period a weakening euro boosted Italy’s export market, and unemployment levels improved modestly.

The ten largest Fund holdings represented about 69% of the net assets of the Fund as of August 31, 2005. All of the Fund’s ten largest holdings had positive performance for the reporting period. The strongest returns came from the largest holding, oil company ENI SpA. Banks Banca Intesa SpA, Sanpaolo IMI SpA, and UniCredito Italiano SpA also performed well, as did the insurance company Assicurazioni Generali SpA. Among the ten largest holdings, the most modest gain for the reporting period came from Telecom Italia SpA, Italy’s telephone company.

12 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI NETHERLANDS INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
23.40%	24.00	%	23.66	%	(2.68	)%	(2.71	)%	(1.75	)%	5.16	%	5.22	%	6.42	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
23.40%	24.00	%	23.66	%	(12.70	)%	(12.82	)%	(8.44	)%	61.07	%	61.96	%	80.42	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 13

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI NETHERLANDS INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	37.37	%
Consumer Non-Cyclical	24.05
Communications	13.47
Industrial	13.42
Basic Materials	6.21
Technology	4.03
Consumer Cyclical	0.99
Short-Term and Other Net Assets	0.46
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
ING Groep NV	15.63	%
ABN AMRO Holding NV	11.89
Unilever NV CVA	10.96
Koninklijke Philips Electronics NV	9.69
Koninklijke KPN NV	5.05
AEGON NV	4.89
Koninklijke Ahold NV	4.53
Akzo Nobel NV	3.94
Reed Elsevier NV	3.80
TPG NV	3.73
TOTAL	74.11	%

The iShares MSCI Netherlands Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Dutch market, as measured by the MSCI Netherlands Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 23.40%, while the Index returned 23.66%.

Because The Netherlands relies heavily on its export trade for its livelihood, it is sensitive to the economic health of its trading partners. Many of its European trading partners struggled for much of the reporting period, hampering the Dutch export trade within Europe. High oil prices also had a negative effect on the economy. However, improving economic climates within Europe in the final months of the reporting period meant increased demand for Dutch products, and a declining euro helped make Dutch goods more affordable to trading partners outside Europe. Improving economic conditions in the U.S. during the reporting period, combined with the declining euro relative to the U.S. dollar, had a positive impact on the Netherlands’ export trade to the U.S., providing a boost to Dutch economic growth.

The ten largest Fund holdings accounted for approximately 74% of the net assets of the Fund as of August 31, 2005. Among the ten largest holdings, the best performer was retail food chain Koninklijke Ahold NV. Insurance giant AEGON NV also performed well for the reporting period. Telecommunications company Koninklijke KPN NV contributed positively to Fund performance, as did chemicals company Akzo Nobel NV. Publishing company Reed Elsevier NV posted the most modest gain among the ten largest holdings for the reporting period.

14 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SPAIN INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
31.85%	31.70	%	31.47	%	9.04	%	9.05	%	7.72	%	13.90	%	13.96	%	14.18	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
31.85%	31.70	%	31.47	%	54.11	%	54.23	%	45.07	%	243.28	%	244.95	%	251.65	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 15

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	38.44	%
Communications	21.22
Utilities	14.87
Consumer Non-Cyclical	8.53
Industrial	6.21
Energy	5.45
Consumer Cyclical	2.93
Basic Materials	1.43
Technology	0.85
Short-Term and Other Net Assets	0.07
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Telefonica SA	19.34	%
Banco Santander Central Hispano SA	17.30
Banco Bilbao Vizcaya Argentaria SA	12.16
Repsol YPF SA	4.99
Iberdrola SA	4.86
Endesa SA	4.85
Banco Popular Espanol SA	4.33
Altadis SA	3.63
Actividades de Construcciones y Servicios SA	2.71
Abertis Infraestructuras SA	2.31
TOTAL	76.48	%

The iShares MSCI Spain Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Spanish market, as measured by the MSCI Spain Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 31.85%, while the Index returned 31.47%.

For much of the reporting period, Spain struggled along with many of its European neighbors with sluggish economic conditions and high unemployment levels, which topped 10% during the reporting period. In the first several months of the reporting period, a strong euro dampened export demand from non euro-based countries, while high oil prices also weighed on economic growth. However, during the last several months of the reporting period, economic conditions improved somewhat. A weakening euro and improving economic climate in the U.S. helped export growth abroad, and improving conditions in neighboring European markets meant increased demand for Spanish exports within Europe. In addition, unemployment levels declined in the final three months of the reporting period, helping to boost domestic demand.

The ten largest Fund holdings represented approximately 76% of the net assets of the Fund as of August 31, 2005. Construction company Actividades de Construcciones y Servicios SA delivered the strongest gains among the Fund’s ten largest holdings, followed by Abertis Infraestructuras SA. Oil company Repsol YPF SA also posted strong gains, due largely to escalating oil prices during the reporting period. Tobacco company Altadis SA performed well. Both electric utility companies among the Fund’s ten largest holdings, Ibedrola SA and Endesa SA — contributed positively to Fund performance for the reporting period. Among the Fund’s ten largest holdings, the weakest performer was Banco Popular Espanol SA, although it posted a double-digit gain.

16 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SWEDEN INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
29.21%	29.64	%	29.32	%	(1.64	)%	(1.51	)%	(2.45	)%	10.20	%	10.29	%	11.44	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
29.21%	29.64	%	29.32	%	(7.91	)%	(7.32	)%	(11.68	)%	151.03	%	153.00	%	179.11	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 17

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Communications	29.67	%
Financial	22.21
Consumer Cyclical	17.72
Industrial	15.36
Consumer Non-Cyclical	8.56
Basic Materials	4.93
Energy	0.90
Technology	0.62
Short-Term and Other Net Assets	0.03
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Telefonaktiebolaget LM Ericsson Class B	22.48	%
Nordea AB	9.04
Hennes & Mauritz AB Class B	7.19
Svenska Handelsbanken AB Class A	4.78
Volvo AB Class B	4.12
TeliaSonera AB	4.10
Sandvik AB	3.96
Skandinaviska Enskilda Banken AB Class A	3.84
Svenska Cellulosa AB Class B	3.04
Electrolux AB Series B	2.82
TOTAL	65.37	%

The iShares MSCI Sweden Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swedish market, as measured by the MSCI Sweden Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 29.21%, while the Index returned 29.32%.

Compared with many of its European neighbors, Sweden’s market conditions were relatively healthy during the reporting period. Inflation remained low, its technology industry continued to grow, and the unemployment rate, although above the government’s target, was low by European standards. Sweden did see its economic growth slow during much of the reporting period, dipping to an annual rate of 1.4% in the first quarter of 2005. In response to the slower economic growth rate, Sweden’s central bank, the Riksbank lowered short-term interest rates by 0.50% to 1.50% in June. The move appeared to have a positive impact, with first quarter 2005 gross domestic product (“GDP”) growth of 1.8% and second quarter 2005 GDP of 2.3%.

The ten largest Fund holdings represented about 65% of the net assets of the Fund as of August 31, 2005. The Class B shares of retail clothing company Hennes & Mauritz AB delivered the strongest gains for the reporting period, followed by machinery company Sandvik AB and the Class A shares of bank Skandinaviska Enskilda Banken AB. The largest Fund holding, the Class B shares of wireless telephone company Telefonaktiebolaget LM Ericsson also posted strong returns for the reporting period. The sole negative performer for the reporting period among the Fund’s ten largest holdings was the Class B shares of Svenska Cellulosa AB.

18 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SWITZERLAND INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
21.54%	22.09	%	22.98	%	2.95	%	2.84	%	4.24	%	6.00	%	6.04	%	7.44	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
21.54%	22.09	%	22.98	%	15.62	%	15.03	%	23.09	%	73.63	%	74.23	%	97.39	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 19

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Consumer Non-Cyclical	47.78	%
Financial	26.30
Industrial	8.03
Basic Materials	7.80
Consumer Cyclical	6.33
Communications	2.62
Technology	0.85
Short-Term and Other Net Assets	0.29
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Novartis AG	14.78	%
Nestle SA Registered	12.76
Roche Holding AG Genusschein	11.30
UBS AG Registered	9.83
Credit Suisse Group	4.94
Zurich Financial Services AG	4.44
Swiss Reinsurance Co.	3.90
Holcim Ltd. Registered	3.55
Compagnie Financiere Richemont AG Class A	3.43
Syngenta AG	2.85
TOTAL	71.78	%

The iShares MSCI Switzerland Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swiss market, as measured by the MSCI Switzerland Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 21.54%, while the Index returned 22.98%.

Like many of its European neighbors, Switzerland struggled with sluggish economic conditions during the reporting period. Because it relies on countries in the euro zone for approximately 60% of its exports, Switzerland was negatively affected by a contraction in manufacturing in Europe. In the final months of the reporting period, however, Switzerland’s economy appeared to turn a corner and began to grow. As a result of a declining Swiss franc (which fell approximately 11% vs. the U.S. dollar in the first half of 2005), Switzerland’s exports became more affordable to its trading partners. In August, manufacturing levels rose to their highest levels for 2005. Its healthcare sector received a boost as one major pharmaceutical company reported increased earnings during the first half of 2005.

The ten largest Fund holdings accounted for almost 72% of the net assets of the Fund as of August 31, 2005. The best performer among the ten largest holdings was the Class A shares of the apparel company Compagnie Financiere Richemont AG. Pharmaceutical giant Roche Holding AG Genusschein also posted strong gains for the reporting period. Financial companies generally performed well also, with Credit Suisse Group and insurance company Zurich Financial Services AG both performing well. The Fund’s largest holding, healthcare company Novartis AG, posted the most modest gain of the ten largest holdings for the reporting period.

20 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
21.53%	20.73	%	22.38	%	2.59	%	2.58	%	3.42	%	8.17	%	8.22	%	8.86	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
21.53%	20.73	%	22.38	%	13.61	%	13.58	%	18.30	%	110.50	%	111.35	%	123.68	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 21

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Financial	23.93	%
Consumer Non-Cyclical	20.94
Energy	20.38
Communications	12.21
Consumer Cyclical	6.74
Basic Materials	5.42
Industrial	4.75
Utilities	4.11
Technology	0.59
Diversified	0.16
Short-Term and Other Net Assets	0.77
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
BP PLC	9.80	%
HSBC Holdings PLC	7.34
Vodafone Group PLC	7.07
GlaxoSmithKline PLC	5.73
Royal Dutch Shell PLC Class A	5.49
Royal Dutch Shell PLC Class B	3.80
Royal Bank of Scotland Group PLC	3.78
AstraZeneca PLC	3.02
Barclays PLC	2.62
HBOS PLC	2.49
TOTAL	51.14	%

The iShares MSCI United Kingdom Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the British market, as measured by the MSCI United Kingdom Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 21.53%, while the Index returned 22.38%.

The United Kingdom, which in recent years has enjoyed healthy economic growth, saw its economy lag during much of the reporting period. Its economy’s annual growth rate through the second quarter of 2005 was 1.7%, the lowest level in twelve years. In response, the United Kingdom’s central bank, the Bank of England cut its benchmark interest rate a quarter-point to 4.50% – the first cut in two years. Rising oil prices placed an additional strain on economic growth, topping $70 per barrel during the reporting period. However, high oil prices did benefit oil and energy-related companies. During the final months of the reporting period, the UK’s economy appeared to turn a corner toward recovery. Stronger retail sales (the largest increase since December 2003) and an apparent rebound in consumer confidence levels (which had declined to a six-month low in June) offered evidence that the economy might be recovering from its recent slowdown.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was mostly positive for the reporting period. The largest Fund holding, oil company BP PLC, performed well, due largely to rising oil prices during the reporting period. Financial company HBOS PLC also performed well. Wireless telecommunications company Vodafone Group PLC and pharmaceutical giant GlaxoSmithKline PLC also contributed positively to Fund performance. The only negative performance for the reporting period among the Fund’s ten largest holdings came from pharmaceutical company AstraZeneca PLC.

22 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses

iSHARES^®, INC.

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2005 to August 31, 2005.

ACTUAL EXPENSES

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

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

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

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

iShares MSCI Index Fund	Beginning Account Value (March 1, 2005)		Ending Account Value (August 31, 2005)		Annualized Expense Ratio		Expenses Paid During Perioda (March 1 to August 31, 2005)
Austria
Actual	$	1,000.00	$	1,100.00	0.57	%	$	3.02
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Belgium
Actual		1,000.00		992.70	0.57			2.86
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
EMU
Actual		1,000.00		1,013.00	0.59			2.99
Hypothetical (5% return before expenses)		1,000.00		1,022.23	0.59			3.01
France
Actual		1,000.00		1,031.20	0.57			2.92
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91

SHAREHOLDER EXPENSES 23

Shareholder Expenses (Continued)

iSHARES^®, INC.

iShares MSCI Index Fund	Beginning Account Value (March 1, 2005)		Ending Account Value (August 31, 2005)		Annualized Expense Ratio		Expenses Paid During Perioda (March 1 to August 31, 2005)
Germany
Actual	$	1,000.00	$	1,029.10	0.57	%	$	2.92
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Italy
Actual		1,000.00		998.50	0.57			2.87
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Netherlands
Actual		1,000.00		980.00	0.57			2.84
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Spain
Actual		1,000.00		998.30	0.57			2.87
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Sweden
Actual		1,000.00		1,020.30	0.57			2.90
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Switzerland
Actual		1,000.00		1,010.30	0.57			2.89
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
United Kingdom
Actual		1,000.00		1,007.50	0.57			2.88
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91

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

24 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2005

Security	Shares		Value
COMMON STOCKS – 99.27%
BANKS – 19.23%
Bank Austria Creditanstalt		84,212	$	9,497,197
Erste Bank der Oesterreichischen Sparkassen AG		513,412		28,382,318
				37,879,515
BUILDING MATERIALS – 1.84%
Wienerberger Baustoffindustrie AG		88,200		3,618,652
				3,618,652
CHEMICALS – 1.65%
Lenzing AG		14,250		3,242,017
				3,242,017
ELECTRIC – 6.30%
EVN AG		35,834		2,785,252
Oesterreichische Elektrizitaetswirtschafts AG Class A		28,416		9,628,014
				12,413,266
ENGINEERING & CONSTRUCTION – 2.51%
Flughafen Wien AG1		74,370		4,944,541
				4,944,541
ENVIRONMENTAL CONTROL – 0.83%
BWT AG1		38,384		1,641,844
				1,641,844
FOREST PRODUCTS & PAPER – 1.69%
Mayr-Melnhof Karton AG		23,828		3,327,568
				3,327,568
INSURANCE – 2.59%
Generali Holding Vienna AG		58,238		2,092,853
Wiener Staedtische Allgemeine Versicherung AG		55,566		3,010,282
				5,103,135
IRON & STEEL – 8.53%
Boehler-Uddeholm AG		52,836		8,141,389
Voest-Alpine AG1		105,968		8,652,260
				16,793,649
MACHINERY – 2.84%
Andritz AG		58,682		5,593,179
				5,593,179
Security	Shares or Principal		Value
MACHINERY – CONSTRUCTION & MINING – 0.44%
Palfinger AG		10,272	$	866,120
				866,120
MANUFACTURING – 1.75%
RHI AG1,2		108,632		3,446,907
				3,446,907
OIL & GAS – 19.19%
OMV AG		696,192		37,801,748
				37,801,748
REAL ESTATE – 14.02%
CA Immobilien Anlagen AG2		344,914		8,793,510
Immofinanz Immobilien Anlage AG 2		977,540		9,437,486
Meinl European Land Ltd.2		524,734		9,383,303
				27,614,299
TELECOMMUNICATIONS – 15.86%
Telekom Austria AG1		1,485,846		31,229,714
				31,229,714
TOTAL COMMON STOCKS (Cost: $152,704,134)				195,516,154
SHORT-TERM INVESTMENTS – 13.76%
CERTIFICATES OF DEPOSIT3 – 1.56%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	175,640		175,640
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		76,110		76,104
Credit Suisse First Boston
3.53%, 05/09/06		117,093		117,093
Danske Bank
3.50%, 10/17/05		117,093		117,089
Dexia Credit Local
3.61%, 08/30/06		58,547		58,535
First Tennessee Bank
3.52%, 09/15/05		199,058		199,058
Fortis Bank NY
3.83% - 3.84%, 01/25/06		175,640		175,641
HBOS Treasury Services PLC
3.39%, 12/14/05		70,256		70,256

SCHEDULES OF INVESTMENTS 25

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2005

Security	Principal		Value
HSBC Bank USA N.A.
3.72%, 08/03/06	$	58,547	$	58,566
Royal Bank of Scotland
3.61%, 06/27/06		58,547		58,539
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		181,494		181,462
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		415,680		415,690
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		93,674		93,674
US Bank N.A.
3.54%, 09/19/05		292,733		292,733
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		526,919		526,920
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		462,518		462,517
				3,079,517
COMMERCIAL PAPER3 – 3.15%
Alpine Securitization Corp.
3.52%, 09/09/05		234,186		234,003
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		247,066		245,749
Aspen Funding Corp.
3.49%, 09/01/05		117,093		117,093
Barton Capital Corp.
3.51%, 09/07/05		132,789		132,712
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		193,204		192,965
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		59,599		59,019
Cantabric Finance LLC
3.73%, 10/31/05		45,019		44,739
Charta LLC
3.54%, 09/20/05		81,965		81,812
Chesham Finance LLC
3.54%, 09/15/05		35,128		35,080
Dorada Finance Inc.
3.76%, 01/26/06		11,709		11,530
Edison Asset Securitization LLC
3.12%, 09/06/05		87,820		87,782
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		150,997		150,870
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		532,736		530,305
Gemini Securitization Corp.
3.49%, 09/06/05		187,852		187,761
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		380,552		379,817
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		87,820		87,672
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		181,494		179,551
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		134,657		134,657
HSBC PLC
3.88%, 02/03/06		35,128		34,541
Jupiter Securitization Corp.
3.51%, 09/21/05		66,377		66,247
Leafs LLC
3.61%, 01/20/06 - 02/21/064		122,937		122,937
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		161,405		161,164
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		286,878		286,502
New Center Asset Trust
3.60%, 09/01/05		409,826		409,826
Park Avenue Receivables Corp.
3.50%, 09/19/05		66,045		65,930

26 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2005

Security	Principal		Value
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05	$	158,548	$	158,305
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		117,093		114,944
Scaldis Capital LLC
3.52%, 09/07/05		234,186		234,049
Sedna Finance Inc.
3.92%, 02/21/06		29,273		28,722
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		344,254		344,163
Sydney Capital Corp.
3.49%, 09/01/05		72,340		72,340
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		245,895		245,436
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		250,891		250,805
Thunder Bay Funding Inc.
3.50%, 09/01/05		19,572		19,572
Tulip Funding Corp.
3.49%, 09/01/05		432,039		432,039
Windmill Funding Corp.
3.52%, 09/09/05		53,863		53,821
World Savings Bank
3.51%, 09/09/05		40,983		40,982
Yorktown Capital LLC
3.53%, 09/19/05		169,785		169,485
				6,204,927
MEDIUM-TERM NOTES3 – 0.05%
Dorada Finance Inc.
3.93%, 07/07/064		36,299		36,296
K2 USA LLC
3.94%, 07/07/064		70,256		70,253
				106,549
Security	Shares or Principal		Value
MONEY MARKET FUNDS – 0.27%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		468,372	$	468,372
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		2,373		2,373
BlackRock Temp Cash Money Market Fund 3.41%3,6		12,407		12,407
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		41,048		41,048
				524,200
REPURCHASE AGREEMENTS3 – 2.66%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $2,810,515 and an effective yield of 3.60%.7	$	2,810,234		2,810,234
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $2,166,438 and an effective yield of 3.60%.7		2,166,222		2,166,222
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $255,288 and an effective yield of 3.60%.7		255,263		255,263
				5,231,719
TIME DEPOSITS3 – 0.55%
Abbey National Treasury Services PLC
3.50%, 09/01/05		234,186		234,186
Chase Bank USA N.A.
3.58%, 09/01/05		644,012		644,012

SCHEDULES OF INVESTMENTS 27

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2005

Security	Principal		Value
JP Morgan Chase Bank N.A.
3.59%, 09/01/05	$	154,583	$	154,583
Natexis Banques Populaires
3.51%, 09/20/058		58,547		58,547
				1,091,328
VARIABLE & FLOATING RATE NOTES3 – 5.52%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		217,793		217,794
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		316,151		316,153
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		193,204		193,203
American Express Credit Corp.
3.65%, 10/26/05		234,186		234,204
ASIF Global Financing XXII
3.99%, 05/30/064		117,093		117,239
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		76,110		76,110
Bank of America N.A.
3.56%, 08/10/06		585,465		585,465
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		601,858		601,850
BMW US Capital LLC
3.54%, 07/14/064		117,093		117,093
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		398,116		398,100
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		314,980		314,966
Commodore CDO Ltd.
3.47%, 12/12/054		29,273		29,273
Credit Suisse First Boston
3.57%, 07/19/06		292,733		292,733
DEPFA Bank PLC
3.42%, 03/15/06		117,093		117,093
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		186,178		186,188
Eli Lilly Services Inc.
3.53%, 09/01/064		117,093		117,093
Fifth Third Bancorp
3.58%, 04/21/064		234,186		234,186
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		81,965		81,967
General Electric Capital Corp.
3.66%, 07/07/06		52,692		52,739
Hartford Life Global Funding Trust
3.56%, 08/15/06		117,093		117,093
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		351,279		351,279
HSBC Bank USA N.A.
3.70%, 05/04/06		40,983		41,005
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		456,663		456,667
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		456,663		456,713
Lothian Mortgages PLC
3.63%, 01/24/06		117,093		117,093
Marshall & Ilsley Bank
3.71%, 02/20/06		117,093		117,159
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		234,186		234,289
National City Bank (Ohio)
3.50%, 01/06/06		58,547		58,540
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		433,244		433,287
Nordea Bank AB
3.55%, 08/11/064		204,913		204,913
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		374,698		374,704

28 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRIA INDEX FUND

August 31, 2005

Security	Principal		Value
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064	$	450,808	$	450,808
Principal Life Income Funding Trusts
3.74%, 05/10/06		87,820		87,823
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		390,798		390,709
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		64,401		64,395
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		668,601		668,604
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		117,093		117,093
Strips III LLC
3.69%, 07/24/064,8		34,396		34,396
SunTrust Bank
3.63%, 04/28/06		175,640		175,640
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		284,536		284,518
Toyota Motor Credit Corp.
3.57%, 04/10/06		52,692		52,691
Unicredito Italiano SpA
3.34%, 06/14/06		152,221		152,179
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		281,883		281,884
Wells Fargo & Co.
3.56%, 09/15/064		58,547		58,552
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		468,372		468,351
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		247,066		247,060
Winston Funding Ltd.
3.71%, 10/23/054		83,604		83,604
				10,864,498
TOTAL SHORT-TERM INVESTMENTS (Cost: $27,102,738)				27,102,738
TOTAL INVESTMENTS IN SECURITIES – 113.03% (Cost: $179,806,872)				222,618,892
Other Assets, Less Liabilities – (13.03)%				(25,666,718	)
NET ASSETS – 100.00%			$	196,952,174

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 29

Schedule of Investments

iSHARES^® MSCI BELGIUM INDEX FUND

August 31, 2005

Security	Shares		Value
COMMON STOCKS – 99.19%
BANKS – 48.52%
Dexia Group1		261,826	$	5,686,638
Fortis1		394,072		11,205,095
KBC Groupe1		71,300		5,892,654
				22,784,387
BEVERAGES – 4.85%
InBev		58,590		2,279,881
				2,279,881
CHEMICALS – 4.82%
Solvay SA		20,894		2,265,145
				2,265,145
ELECTRIC – 4.82%
Electrabel SA1		4,464		2,262,999
				2,262,999
ELECTRICAL COMPONENTS & EQUIPMENT – 1.26%
Bekaert NV		7,134		589,596
				589,596
ELECTRONICS – 0.67%
Barco NV1		4,216		313,436
				313,436
FOOD – 6.09%
Colruyt NV		9,610		1,276,437
Delhaize Group		27,466		1,582,887
				2,859,324
HOLDING COMPANIES – DIVERSIFIED – 4.85%
Groupe Bruxelles Lambert SA1		23,870		2,276,598
				2,276,598
MANUFACTURING – 2.22%
AGFA-Gevaert NV1		39,804		1,040,250
				1,040,250
MINING – 3.12%
Umicore		15,438		1,466,701
				1,466,701
PHARMACEUTICALS – 5.99%
Omega Pharma SA1		9,611		552,589
UCB SA		39,804		2,259,179
				2,811,768
Security	Shares or Principal		Value
REAL ESTATE INVESTMENT TRUSTS – 3.23%
Cofinimmo		9,486	$	1,516,626
				1,516,626
RETAIL – 0.57%
SA D’Ieteren NV1		1,178		269,905
				269,905
TELECOMMUNICATIONS – 6.93%
Belgacom SA		65,224		2,287,753
Mobistar SA1		12,338		968,094
				3,255,847
TRANSPORTATION – 1.25%
Compagnie Maritime Belge SA		8,681		278,652
Euronav SA		9,486		309,392
				588,044
TOTAL COMMON STOCKS (Cost: $45,638,393)				46,580,507
SHORT-TERM INVESTMENTS – 39.36%
CERTIFICATES OF DEPOSIT2 – 4.47%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	119,754		119,754
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		51,894		51,889
Credit Suisse First Boston
3.53%, 05/09/06		79,836		79,836
Danske Bank
3.50%, 10/17/05		79,836		79,833
Dexia Credit Local
3.61%, 08/30/06		39,918		39,910
First Tennessee Bank
3.52%, 09/15/05		135,722		135,722
Fortis Bank NY
3.83% - 3.84%, 01/25/06		119,754		119,755
HBOS Treasury Services PLC
3.39%, 12/14/05		47,902		47,902
HSBC Bank USA N.A.
3.72%, 08/03/06		39,918		39,931

30 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI BELGIUM INDEX FUND

August 31, 2005

Security	Principal		Value
Royal Bank of Scotland
3.61%, 06/27/06	$	39,918	$	39,913
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		123,746		123,725
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		283,419		283,424
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		63,869		63,869
US Bank N.A.
3.54%, 09/19/05		199,591		199,591
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		359,263		359,263
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		315,353		315,352
				2,099,669
COMMERCIAL PAPER2 – 9.01%
Alpine Securitization Corp.
3.52%, 09/09/05		159,673		159,548
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		168,454		167,556
Aspen Funding Corp.
3.49%, 09/01/05		79,836		79,836
Barton Capital Corp.
3.51%, 09/07/05		90,538		90,485
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		131,730		131,567
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		40,636		40,240
Cantabric Finance LLC
3.73%, 10/31/05		30,695		30,504
Charta LLC
3.54%, 09/20/05		55,885		55,781
Chesham Finance LLC
3.54%, 09/15/05		23,951		23,918
Dorada Finance Inc.
3.76%, 01/26/06		7,984		7,861
Edison Asset Securitization LLC
3.12%, 09/06/05		59,877		59,851
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		102,953		102,865
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		363,229		361,572
Gemini Securitization Corp.
3.49%, 09/06/05		128,081		128,019
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		259,468		258,966
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		59,877		59,777
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		123,746		122,421
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		91,812		91,812
HSBC PLC
3.88%, 02/03/06		23,951		23,551
Jupiter Securitization Corp.
3.51%, 09/21/05		45,257		45,169
Leafs LLC
3.61%, 01/20/06 - 02/21/063		83,821		83,821
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		110,049		109,884
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		195,599		195,343
New Center Asset Trust
3.60%, 09/01/05		279,427		279,427
Park Avenue Receivables Corp.
3.50%, 09/19/05		45,031		44,952

SCHEDULES OF INVESTMENTS 31

Schedule of Investments (Continued)

iSHARES^® MSCI BELGIUM INDEX FUND

August 31, 2005

Security	Principal		Value
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05	$	108,101	$	107,935
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		79,836		78,371
Scaldis Capital LLC
3.52%, 09/07/05		159,673		159,579
Sedna Finance Inc.
3.92%, 02/21/06		19,959		19,583
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		234,719		234,657
Sydney Capital Corp.
3.49%, 09/01/05		49,323		49,323
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		167,656		167,343
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		171,062		171,003
Thunder Bay Funding Inc.
3.50%, 09/01/05		13,345		13,345
Tulip Funding Corp.
3.49%, 09/01/05		294,573		294,573
Windmill Funding Corp.
3.52%, 09/09/05		36,725		36,696
World Savings Bank
3.51%, 09/09/05		27,943		27,943
Yorktown Capital LLC
3.53%, 09/19/05		115,763		115,558
				4,230,635
MEDIUM-TERM NOTES2 – 0.16%
Dorada Finance Inc.
3.93%, 07/07/063		24,749		24,747
K2 USA LLC
3.94%, 07/07/063		47,902		47,900
				72,647
Security	Shares or Principal		Value
MONEY MARKET FUNDS – 0.76%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%2,4,5		319,345	$	319,345
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%4,5		2,642		2,642
BlackRock Temp Cash Money Market Fund 3.41%2,5		8,459		8,459
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%2,5		27,987		27,987
				358,433
REPURCHASE AGREEMENTS2 – 7.60%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,916,262 and an effective yield of 3.60%.6	$	1,916,070		1,916,070
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,477,118 and an effective yield of 3.60%.6		1,476,971		1,476,971
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $174,060 and an effective yield of 3.60%.6		174,043		174,043
				3,567,084
TIME DEPOSITS2 – 1.59%
Abbey National Treasury Services PLC
3.50%, 09/01/05		159,673		159,672
Chase Bank USA N.A.
3.58%, 09/01/05		439,099		439,099

32 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI BELGIUM INDEX FUND

August 31, 2005

Security	Principal		Value
JP Morgan Chase Bank N.A.
3.59%, 09/01/05	$	105,398	$	105,398
Natexis Banques Populaires
3.51%, 09/20/057		39,918		39,918
				744,087
VARIABLE & FLOATING RATE NOTES 2 – 15.77%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/063		148,495		148,496
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		215,558		215,558
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		131,730		131,729
American Express Credit Corp.
3.65%, 10/26/05		159,673		159,684
ASIF Global Financing XXII
3.99%, 05/30/063		79,836		79,936
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/063		51,894		51,894
Bank of America N.A.
3.56%, 08/10/06		399,181		399,181
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/063		410,358		410,352
BMW US Capital LLC
3.54%, 07/14/063		79,836		79,836
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		271,443		271,432
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/063		214,760		214,751
Commodore CDO Ltd.
3.47%, 12/12/053		19,959		19,959
Credit Suisse First Boston
3.57%, 07/19/06		199,591		199,591
DEPFA Bank PLC
3.42%, 03/15/06		79,836		79,836
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/063		126,940		126,946
Eli Lilly Services Inc.
3.53%, 09/01/063		79,836		79,836
Fifth Third Bancorp
3.58%, 04/21/063		159,673		159,672
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/063		55,885		55,887
General Electric Capital Corp.
3.66%, 07/07/06		35,926		35,959
Hartford Life Global Funding Trust
3.56%, 08/15/06		79,836		79,836
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/063		239,509		239,508
HSBC Bank USA N.A.
3.70%, 05/04/06		27,943		27,958
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/063		311,361		311,364
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/063		311,361		311,394
Lothian Mortgages PLC
3.63%, 01/24/06		79,836		79,836
Marshall & Ilsley Bank
3.71%, 02/20/06		79,836		79,881
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/063		159,673		159,742
National City Bank (Ohio)
3.50%, 01/06/06		39,918		39,914
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/063		295,394		295,423
Nordea Bank AB
3.55%, 08/11/063		139,713		139,713
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/063		255,476		255,480

SCHEDULES OF INVESTMENTS 33

Schedule of Investments (Continued)

iSHARES^® MSCI BELGIUM INDEX FUND

August 31, 2005

Security	Principal		Value
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/063	$	307,370	$	307,369
Principal Life Income Funding Trusts
3.74%, 05/10/06		59,877		59,879
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		266,453		266,392
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/063		43,910		43,907
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/063		455,865		455,880
Skandinaviska Enskilda Bank NY
3.58%, 07/18/063		79,836		79,836
Strips III LLC
3.69%, 07/24/063,7		23,452		23,452
SunTrust Bank
3.63%, 04/28/06		119,754		119,754
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/063		194,002		193,990
Toyota Motor Credit Corp.
3.57%, 04/10/06		35,926		35,926
Unicredito Italiano SpA
3.34%, 06/14/06		103,787		103,758
Wachovia Asset Securitization Inc.
3.63%, 09/25/053		192,193		192,193
Wells Fargo & Co.
3.56%, 09/15/063		39,918		39,922
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/063		319,345		319,331
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/063		168,454		168,450
Winston Funding Ltd.
3.71%, 10/23/053		57,003		57,003
				7,407,626
TOTAL SHORT-TERM INVESTMENTS (Cost: $18,480,181)				18,480,181
TOTAL INVESTMENTS IN SECURITIES – 138.55% (Cost: $64,118,574)				65,060,688
Other Assets, Less Liabilities – (38.55)%				(18,101,129	)
NET ASSETS – 100.00%			$	46,959,559

¹ All or a portion of this security represents a security on loan. See Note 5.

² All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

³ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁴ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁵ The rate quoted is the annualized seven-day yield of the fund at period end.

⁶ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁷ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

34 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 98.49%
AUSTRIA – 1.50%
Andritz AG	1,470	$	140,111
Bank Austria Creditanstalt	6,468		729,443
Boehler-Uddeholm AG	2,190		337,453
Erste Bank der Oesterreichischen Sparkassen AG	24,255		1,340,859
Flughafen Wien AG	294		19,547
Immofinanz Immobilien Anlage AG1	85,848		828,804
Mayr-Melnhof Karton AG	1,764		246,342
Meinl European Land Ltd.1	10,290		184,006
Oesterreichische Elektrizitaetswirtschafts AG Class A	1,323		448,264
OMV AG	30,576		1,660,212
RHI AG1,2	3,993		126,698
Telekom Austria AG	60,564		1,272,942
Voest-Alpine AG2	4,284		349,788
Wienerberger Baustoffindustrie AG	12,936		530,736
			8,215,205
BELGIUM – 4.12%
AGFA-Gevaert NV2	16,170		422,592
Barco NV2	2,499		185,787
Bekaert NV2	3,942		325,790
Belgacom SA	27,930		979,654
Cofinimmo	1,617		258,527
Colruyt NV	2,940		390,502
Compagnie Maritime Belge SA	3,180		102,075
Delhaize Group2	12,789		737,040
Dexia Group2	98,842		2,146,764
Electrabel SA2	4,704		2,384,665
Euronav SA	2,482		80,952
Fortis2	209,769		5,964,599
Groupe Bruxelles Lambert SA2	12,789		1,219,749
InBev	34,398		1,338,511
KBC Groupe2	32,634		2,697,067
Mobistar SA	5,010		393,107
Omega Pharma SA2	3,822		219,748
SA D’Ieteren NV	588		134,723
Solvay SA	11,466		1,243,044
UCB SA	16,023		909,427
Umicore	4,410		418,976
			22,553,299
FINLAND – 4.35%
Amer Group Ltd.2	11,025		201,353
Cargotec Corp.1	7,693		211,269
Elisa OYJ Class A2	23,798		431,410
Fortum OYJ	78,110		1,516,844
KCI Konecranes OYJ2	3,087		143,509
Kesko OYJ Class B	10,731		305,523
Kone OYJ1	7,203		471,721
Metso OYJ2	20,586		507,620
Neste Oil OYJ1,2	24,528		822,017
Nokia OYJ	736,716		11,488,716
Nokian Renkaat OYJ	20,286		430,615
Orion-Yhtyma OYJ Class B	15,184		319,700
Outokumpu OYJ2	24,990		368,193
Pohjola Group PLC Class D2	10,143		144,578
Rautaruukki OYJ	18,729		375,222
Sampo OYJ Class A	69,825		1,099,191
Stora Enso OYJ Class R	111,544		1,529,584
TietoEnator OYJ2	15,141		505,006
UPM-Kymmene OYJ2	96,285		1,918,341
Uponor OYJ2	15,582		333,445
Wartsila OYJ Class B	10,789		317,789
YIT-Yhtyma OYJ	9,996		378,519
			23,820,165
FRANCE – 29.44%
Accor SA2	37,632		1,978,543
Air France - KLM2	16,644		271,018
Alcatel SA Class A1,2	220,206		2,551,128
Alstom1	19,150		791,335
Arcelor2	92,022		2,014,484
Atos Origin SA1	11,826		895,923
Autoroutes du Sud de la France2	10,437		617,409
AXA2	252,252		6,682,400
BNP Paribas SA2	141,120		10,231,152
Bouygues SA2	33,516		1,490,090
Business Objects SA1,2	12,054		398,189
Cap Gemini SA1	22,491		737,707
Carrefour SA2	99,666		4,617,371
CNP Assurances2	5,880		403,880
Compagnie de Saint-Gobain2	55,125		3,339,605

SCHEDULES OF INVESTMENTS 35

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Shares	Value
Compagnie Generale des Etablissements Michelin Class B2	26,313	$	1,594,752
Credit Agricole SA2	105,412		2,800,244
Dassault Systemes SA2	10,290		501,524
Essilor International SA	17,199		1,337,876
Etablissements Economiques du Casino Guichard-Perrachon SA2	7,203		504,055
European Aeronautic Defense and Space Co.2	43,953		1,478,961
France Telecom2	283,678		8,516,195
Gecina SA	1,314		156,916
Groupe Danone	41,902		4,385,473
Hermes International2	1,022		215,559
Imerys SA2	6,468		475,292
Klepierre2	3,848		380,253
Lafarge SA2	31,017		2,862,877
Lagardere S.C.A.2	20,580		1,467,998
L’Air Liquide SA2	19,404		3,362,439
L’Oreal SA2	51,976		4,158,171
LVMH Moet Hennessy Louis Vuitton SA2	42,483		3,422,226
Neopost SA	5,145		475,201
PagesJaunes SA	20,433		528,725
Pernod Ricard SA2	12,848		2,223,217
PPR2	12,054		1,288,259
PSA Peugeot Citroen SA2	28,371		1,755,071
Publicis Groupe2	22,785		753,795
Renault SA2	32,928		2,905,624
Safran SA2	30,948		639,051
Sanofi-Aventis2	186,984		15,913,389
Schneider Electric SA2	40,572		3,180,964
SCOR	148,911		294,852
Societe BIC SA2	4,263		250,818
Societe des Autoroutes du Nord et de l’Est de la France1,2	4,704		288,971
Societe Des Autoroutes Paris-Rhin-Rhone	6,174		423,695
Societe Generale Class A2	61,320		6,602,531
Societe Television Francaise 12	20,306		543,919
Sodexho Alliance SA2	19,110		662,299
STMicroelectronics NV	113,484		1,859,050
Suez SA2	143,472		4,171,255
Technip-Coflexip SA2	14,259		814,567
Thales SA2	15,476		698,707
Thomson2	45,570		1,018,324
Total SA2	101,908		26,708,153
Unibail Holding2	7,644		1,091,453
Valeo SA2	13,369		547,185
Veolia Environnement2	52,773		2,145,040
Vinci SA2	26,572		2,352,929
Vivendi Universal SA	189,189		5,926,209
Zodiac SA2	7,203		401,827
			161,106,125
GERMANY – 20.41%
Adidas-Salomon AG2	7,350		1,307,097
Allianz AG2	64,824		8,363,026
ALTANA AG	12,495		708,264
BASF AG	95,550		6,673,516
Bayer AG	116,718		4,106,841
Bayerische Hypo-und Vereinsbank AG1	100,107		2,834,144
Beiersdorf AG2	2,824		329,944
Celesio AG	6,321		551,946
Commerzbank AG	85,410		2,214,275
Continental AG2	23,667		1,867,205
DaimlerChrysler AG2	161,914		8,303,718
Deutsche Bank AG2	87,892		7,590,359
Deutsche Boerse AG2	17,934		1,635,241
Deutsche Lufthansa AG2	35,332		470,597
Deutsche Post AG	106,434		2,675,552
Deutsche Telekom AG2	482,307		9,134,745
Douglas Holding AG	5,145		200,141
E.ON AG2	110,250		10,487,961
EPCOS AG1,2	9,702		119,320
Fresenius Medical Care AG2	6,615		597,956
Heidelberger Druckmaschinen AG	9,996		355,653
Hochtief AG2	10,290		419,645
Hypo Real Estate Holding AG	23,226		1,141,152
Infineon Technologies AG1	115,362		1,074,016
IVG Immobilien AG	11,907		252,020
KarstadtQuelle AG1,2	13,818		183,536
Linde AG2	14,994		1,107,160

36 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Shares	Value
MAN AG2	25,872	$	1,301,066
Merck KGaA2	8,760		751,451
METRO AG2	25,872		1,305,520
MLP AG2	11,922		229,171
Muenchener Rueckversicherungs- Gesellschaft AG2	32,634		3,644,251
Premiere AG1,2	7,644		235,024
Puma AG	2,793		753,976
RWE AG2	74,088		4,936,726
SAP AG2	39,102		6,617,128
Schering AG	29,400		1,856,692
Siemens AG2	141,708		10,725,166
Suedzucker AG2	11,907		248,945
ThyssenKrupp AG	66,738		1,273,026
TUI AG2	32,558		765,593
Volkswagen AG2	40,150		2,110,930
Wincor Nixdorf AG	2,499		230,966
			111,690,661
GREECE – 1.29%
Hellenic Telecommunications Organization SA ADR1	258,867		2,702,571
National Bank of Greece SA ADR	583,047		4,361,192
			7,063,763
IRELAND – 2.68%
Allied Irish Banks PLC	154,350		3,321,979
Bank of Ireland	174,489		2,746,820
C&C Group PLC	50,224		284,133
CRH PLC	97,314		2,635,389
DCC PLC	14,994		333,586
DEPFA Bank PLC	62,780		1,057,777
Eircom Group PLC	99,519		230,100
Elan Corp. PLC1	43,659		390,892
Fyffes PLC	57,477		179,548
Grafton Group PLC1	38,220		401,892
Greencore Group PLC	35,427		154,673
IAWS Group PLC	22,197		320,217
Independent News & Media PLC	107,751		323,343
Irish Life & Permanent PLC	49,833		920,532
Kerry Group PLC Class A	24,990		608,532
Kingspan Group PLC	21,903		273,684
Paddy Power PLC	16,644		311,138
Ryanair Holdings PLC1	21,760		174,218
			14,668,453
ITALY – 11.44%
Alleanza Assicurazioni SpA2	75,411		848,146
Arnoldo Mondadori Editore SpA2	19,110		194,013
Assicurazioni Generali SpA2	168,021		5,250,738
Autogrill SpA2	30,282		422,328
Autostrade SpA2	52,038		1,373,417
Banca Antonveneta SpA	16,206		499,071
Banca Fideuram SpA2	58,212		291,738
Banca Intesa SpA	582,855		2,799,199
Banca Monte dei Paschi di Siena SpA2	206,976		806,922
Banca Nazionale del Lavoro SpA1,2	197,538		638,938
Banca Popolare di Milano Scrl2	72,471		733,527
Banca Popolare di Verona e Novara Scrl2	68,943		1,235,384
Banche Popolari Unite Scrl2	59,241		1,204,335
Benetton Group SpA2	6,332		62,144
Bulgari SpA2	20,586		236,594
Capitalia SpA2	255,633		1,430,476
Edison SpA1,2	149,006		339,022
Enel SpA2	761,313		6,736,684
ENI SpA2	465,255		13,732,653
Fiat SpA1,2	91,096		801,046
Fineco SpA	28,371		264,307
Finmeccanica SpA	56,403		1,054,382
Gruppo Editoriale L’Espresso SpA2	30,135		171,410
Italcementi SpA2	15,729		254,184
Lottomatica SpA	9,928		374,235
Luxottica Group SpA2	24,255		557,821
Mediaset SpA2	145,530		1,793,380
Mediobanca SpA2	82,173		1,595,745
Mediolanum SpA2	50,646		325,449
Pirelli SpA2	498,330		491,829
Riunione Adriatica di Sicurta SpA2	52,773		1,090,368
Sanpaolo IMI SpA2	198,303		2,833,920
Seat Pagine Gialle SpA1,2	775,278		328,949
Snam Rete Gas SpA	144,354		795,351
Telecom Italia Media SpA1,2	167,170		91,592
Telecom Italia SpA2	1,849,552		5,800,412

SCHEDULES OF INVESTMENTS 37

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Shares	Value
Terna SpA Rights1	202,419	$	536,476
Tiscali SpA1,2	51,303		154,425
UniCredito Italiano SpA2	789,537		4,483,648
			62,634,258
NETHERLANDS – 10.23%
ABN AMRO Holding NV2	308,700		7,380,487
AEGON NV2	245,931		3,438,950
Akzo Nobel NV	47,922		1,956,704
ASML Holding NV1	85,701		1,431,324
Buhrmann NV	19,257		233,753
Corio NV	5,439		314,792
DSM NV2	12,556		969,757
Euronext NV2	15,288		615,200
Getronics NV	21,441		248,662
Hagemeyer NV1,2	90,699		246,517
Heineken NV	46,305		1,491,473
IHC Caland NV	4,526		361,253
ING Groep NV	331,632		9,600,968
Koninklijke Ahold NV1	274,596		2,431,526
Koninklijke KPN NV	370,146		3,487,016
Koninklijke Numico NV CVA1,2	26,607		1,099,807
Koninklijke Philips Electronics NV	231,378		6,072,515
Oce NV2	13,671		205,290
QIAGEN NV1,2	27,048		339,636
Randstad Holdings NV	7,008		265,459
Reed Elsevier NV2	114,807		1,598,332
Rodamco Europe NV	6,615		561,347
TPG NV	69,090		1,767,383
Unilever NV CVA	100,989		6,942,854
Vedior NV	28,518		411,755
VNU NV2	40,719		1,246,949
Wereldhave NV	3,087		324,035
Wolters Kluwer NV CVA	49,245		920,572
			55,964,316
PORTUGAL – 0.99%
Banco BPI SA Registered	70,851		304,105
Banco Comercial Portugues SA Class R2	358,722		961,760
Banco Espirito Santo SA2	28,077		453,731
Brisa-Auto Estradas de Portugal SA2	77,175		654,904
CIMPOR-Cimentos de Portugal SGPS SA2	55,334		313,042
Energias de Portugal SA	347,918		975,582
Jeronimo Martins SGPS SA	7,644		110,838
Portugal Telecom SGPS SA2	126,273		1,195,786
PT Multimedia Servicos de Telecomunicacoes e Multimedia SGPS SA2	18,396		178,732
Sonae SGPS SA	156,408		244,295
			5,392,775
SPAIN – 12.04%
Abertis Infraestructuras SA2	42,048		1,100,447
Acciona SA2	4,557		508,041
Acerinox SA	40,572		592,283
Actividades de Construcciones y Servicios SA2	42,483		1,271,709
Altadis SA	52,560		2,270,835
Antena 3 de Television SA2	12,642		248,764
Banco Bilbao Vizcaya Argentaria SA	605,052		10,008,457
Banco Popular Espanol SA2	158,613		1,935,096
Banco Santander Central Hispano SA2	1,058,208		12,884,227
Cintra Concesiones de Infraestructuras de Transporte SA1	40,278		525,081
Corporacion Mapfre SA2	20,729		340,594
Ebro Puleva SA	13,377		232,463
Endesa SA2	170,373		3,834,458
Fomento de Construcciones y Contratas SA	7,644		438,085
Gamesa Corporacion Tecnologica SA2	26,718		399,238
Gas Natural SDG SA2	33,369		988,216
Grupo Ferrovial SA2	11,172		861,491
Iberdrola SA2	145,383		3,729,753
Iberia Lineas Aereas de Espana SA2	79,233		214,378
Indra Sistemas SA2	19,992		403,475
Industria de Diseno Textil SA2	40,278		1,094,743
Inmobiliaria Colonial	5,548		316,256
Metrovacesa SA2	10,300		694,810
NH Hoteles SA2	22,922		345,335
Promotora de Informaciones SA	14,553		267,933
Repsol YPF SA2	167,727		4,946,572
Sacyr Vallehermoso SA2	18,342		468,753

38 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Sociedad General de Aguas de Barcelona SA Class B2		11,557	$	262,947
Sogecable SA1,2		7,154		249,257
Telefonica Publicidad e Informacion SA2		32,487		281,677
Telefonica SA2		782,040		12,868,776
Union Fenosa SA2		38,955		1,130,648
Zeltia SA2		30,076		206,768
				65,921,566
TOTAL COMMON STOCKS (Cost: $462,864,114)				539,030,586
PREFERRED STOCKS – 1.34%
GERMANY – 0.73%
Fresenius Medical Care AG2		4,851		375,799
Henkel KGaA2		10,437		985,030
Porsche AG 2		1,470		1,142,688
ProSiebenSat.1 Media AG		15,876		279,600
RWE AG2		7,154		413,522
Volkswagen AG2		19,551		774,002
				3,970,641
ITALY – 0.61%
Banca Intesa SpA RNC2		172,431		765,552
Telecom Italia SpA RNC2		988,134		2,588,497
				3,354,049
TOTAL PREFERRED STOCKS (Cost: $5,876,868)				7,324,690
SHORT-TERM INVESTMENTS – 35.31%
CERTIFICATES OF DEPOSIT3 – 4.01%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	1,252,384		1,252,384
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		542,700		542,658
Credit Suisse First Boston
3.53%, 05/09/06		834,923		834,923
Danske Bank
3.50%, 10/17/05		834,923		834,891
Security	Principal		Value
Dexia Credit Local
3.61%, 08/30/06	$	417,461	$	417,378
First Tennessee Bank
3.52%, 09/15/05		1,419,369		1,419,369
Fortis Bank NY
3.83% - 3.84%, 01/25/06		1,252,384		1,252,393
HBOS Treasury Services PLC
3.39%, 12/14/05		500,954		500,954
HSBC Bank USA N.A.
3.72%, 08/03/06		417,461		417,598
Royal Bank of Scotland
3.61%, 06/27/06		417,461		417,410
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		1,294,130		1,293,901
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		2,963,976		2,964,034
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		667,938		667,937
US Bank N.A.
3.54%, 09/19/05		2,087,307		2,087,307
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		3,757,152		3,757,152
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		3,297,945		3,297,943
				21,958,232
COMMERCIAL PAPER3 – 8.08%
Alpine Securitization Corp.
3.52%, 09/09/05		1,669,845		1,668,539
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		1,761,687		1,752,290
Aspen Funding Corp.
3.49%, 09/01/05		834,923		834,923
Barton Capital Corp.
3.51%, 09/07/05		946,844		946,290
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		1,377,623		1,375,926

SCHEDULES OF INVESTMENTS 39

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Principal		Value
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06	$	424,967	$	420,828
Cantabric Finance LLC
3.73%, 10/31/05		321,003		319,007
Charta LLC
3.54%, 09/20/05		584,446		583,354
Chesham Finance LLC
3.54%, 09/15/05		250,477		250,132
Dorada Finance Inc.
3.76%, 01/26/06		83,492		82,210
Edison Asset Securitization LLC
3.12%, 09/06/05		626,192		625,921
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		1,076,675		1,075,763
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		3,798,631		3,781,300
Gemini Securitization Corp.
3.49%, 09/06/05		1,339,467		1,338,817
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		2,713,499		2,708,252
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		626,192		625,144
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		1,294,130		1,280,274
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		960,161		960,161
HSBC PLC
3.88%, 02/03/06		250,477		246,292
Jupiter Securitization Corp.
3.51%, 09/21/05		473,293		472,370
Leafs LLC
3.61%, 01/20/06 - 02/21/064		876,592		876,591
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		1,150,883		1,149,164
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		2,045,561		2,042,887
New Center Asset Trust
3.60%, 09/01/05		2,922,230		2,922,230
Park Avenue Receivables Corp.
3.50%, 09/19/05		470,930		470,106
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		1,130,510		1,128,781
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		834,923		819,598
Scaldis Capital LLC
3.52%, 09/07/05		1,669,845		1,668,866
Sedna Finance Inc.
3.92%, 02/21/06		208,731		204,799
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		2,454,673		2,454,026
Sydney Capital Corp.
3.49%, 09/01/05		515,815		515,815
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		1,753,338		1,750,062
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		1,788,956		1,788,345
Thunder Bay Funding Inc.
3.50%, 09/01/05		139,557		139,557
Tulip Funding Corp.
3.49%, 09/01/05		3,080,623		3,080,623
Windmill Funding Corp.
3.52%, 09/09/05		384,064		383,764
World Savings Bank
3.51%, 09/09/05		292,223		292,222
Yorktown Capital LLC
3.53%, 09/19/05		1,210,638		1,208,501
				44,243,730

40 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
MEDIUM-TERM NOTES3 – 0.14%
Dorada Finance Inc.
3.93%, 07/07/064	$	258,826	$	258,804
K2 USA LLC
3.94%, 07/07/064		500,954		500,932
				759,736
MONEY MARKET FUNDS – 0.68%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		3,339,691		3,339,691
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		12,300		12,300
BlackRock Temp Cash Money Market Fund 3.41%3,6		88,466		88,466
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		292,687		292,687
				3,733,144
REPURCHASE AGREEMENTS3 – 6.82%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $20,040,150 and an effective yield of 3.60%.7	$	20,038,145		20,038,145
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $15,447,615 and an effective yield of 3.60%.7		15,446,070		15,446,070
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,820,314 and an effective yield of 3.60%.7		1,820,132		1,820,132
				37,304,347
Security	Principal		Value
TIME DEPOSITS3 – 1.42%
Abbey National Treasury Services PLC
3.50%, 09/01/05	$	1,669,845	$	1,669,845
Chase Bank USA N.A.
3.58%, 09/01/05		4,592,075		4,592,075
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		1,102,242		1,102,242
Natexis Banques Populaires
3.51%, 09/20/058		417,461		417,461
				7,781,623
VARIABLE & FLOATING RATE NOTES3 – 14.16%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		1,552,956		1,552,965
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		2,254,291		2,254,298
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		1,377,623		1,377,622
American Express Credit Corp.
3.65%, 10/26/05		1,669,845		1,669,971
ASIF Global Financing XXII
3.99%, 05/30/064		834,923		835,963
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		542,700		542,700
Bank of America N.A.
3.56%, 08/10/06		4,174,614		4,174,614
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		4,291,503		4,291,445
BMW US Capital LLC
3.54%, 07/14/064		834,923		834,923
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		2,838,737		2,838,619
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		2,245,942		2,245,848

SCHEDULES OF INVESTMENTS 41

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Principal		Value
Commodore CDO Ltd.
3.47%, 12/12/054	$	208,731	$	208,731
Credit Suisse First Boston
3.57%, 07/19/06		2,087,307		2,087,307
DEPFA Bank PLC
3.42%, 03/15/06		834,923		834,923
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		1,327,527		1,327,596
Eli Lilly Services Inc.
3.53%, 09/01/064		834,923		834,923
Fifth Third Bancorp
3.58%, 04/21/064		1,669,845		1,669,845
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		584,446		584,459
General Electric Capital Corp.
3.66%, 07/07/06		375,715		376,054
Hartford Life Global Funding Trust
3.56%, 08/15/06		834,923		834,923
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		2,504,768		2,504,769
HSBC Bank USA N.A.
3.70%, 05/04/06		292,223		292,382
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		3,256,199		3,256,226
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		3,256,199		3,256,549
Lothian Mortgages PLC
3.63%, 01/24/06		834,923		834,923
Marshall & Ilsley Bank
3.71%, 02/20/06		834,923		835,396
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		1,669,845		1,670,579
National City Bank (Ohio)
3.50%, 01/06/06		417,461		417,418
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		3,089,214		3,089,514
Nordea Bank AB
3.55%, 08/11/064		1,461,115		1,461,115
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		2,671,753		2,671,799
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		3,214,453		3,214,452
Principal Life Income Funding Trusts
3.74%, 05/10/06		626,192		626,215
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		2,786,555		2,785,919
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		459,208		459,170
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		4,767,409		4,767,438
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		834,923		834,923
Strips III LLC
3.69%, 07/24/064,8		245,258		245,258
SunTrust Bank
3.63%, 04/28/06		1,252,384		1,252,384
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		2,028,862		2,028,738
Toyota Motor Credit Corp.
3.57%, 04/10/06		375,715		375,712
Unicredito Italiano SpA
3.34%, 06/14/06		1,085,400		1,085,098
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		2,009,947		2,009,947
Wells Fargo & Co.
3.56%, 09/15/064		417,461		417,503
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		3,339,691		3,339,546

42 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMU INDEX FUND

August 31, 2005

Security	Principal		Value
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064	$	1,761,687	$	1,761,643
Winston Funding Ltd.
3.71%, 10/23/054		596,135		596,135
				77,468,480
TOTAL SHORT-TERM INVESTMENTS (Cost: $193,249,292)				193,249,292
TOTAL INVESTMENTS IN SECURITIES – 135.14% (Cost: $661,990,274)				739,604,568
Other Assets, Less Liabilities – (35.14)%				(192,320,391	)
NET ASSETS – 100.00%			$	547,284,177

ADR - American Depositary Receipts

¹ Non-income earning security.

² All or a portion of this security represents a security on loan. See Note 5.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 43

Schedule of Investments

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.81%
ADVERTISING – 0.85%
PagesJaunes SA	11,120	$	287,742
Publicis Groupe	12,128		401,230
			688,972
AEROSPACE & DEFENSE – 1.90%
European Aeronautic Defense and Space Co.	21,744		731,657
Safran SA1	14,800		305,608
Thales SA1	6,992		315,673
Zodiac SA1	3,440		191,904
			1,544,842
AIRLINES – 0.22%
Air France - KLM1	11,024		179,506
			179,506
APPAREL – 0.21%
Hermes International1	816		172,110
			172,110
AUTO MANUFACTURERS – 2.86%
PSA Peugeot Citroen SA1	14,144		874,968
Renault SA1	16,464		1,452,812
			2,327,780
AUTO PARTS & EQUIPMENT – 1.27%
Compagnie Generale des Etablissements Michelin Class B1	12,832		777,709
Valeo SA1	6,221		254,622
			1,032,331
BANKS – 12.10%
BNP Paribas SA1	70,832		5,135,296
Credit Agricole SA1	52,384		1,391,568
Societe Generale Class A1	30,800		3,316,340
			9,843,204
BEVERAGES – 1.33%
Pernod Ricard SA1	6,240		1,079,769
			1,079,769
BUILDING MATERIALS – 4.00%
Compagnie de Saint-Gobain1	27,152		1,644,934
Imerys SA1	2,864		210,457
Lafarge SA1	15,184		1,401,487
			3,256,878
CHEMICALS – 2.06%
L’Air Liquide SA1	9,680		1,677,407
			1,677,407
COMMERCIAL SERVICES – 0.78%
Autoroutes du Sud de la France1	5,088		300,985
Societe des Autoroutes du Nord et de l’Est de la France2	2,032		124,828
Societe Des Autoroutes Paris-Rhin-Rhone1	3,008		206,426
			632,239
COMPUTERS – 0.99%
Atos Origin SA2	5,856		443,643
Cap Gemini SA1,2	11,024		361,588
			805,231
COSMETICS & PERSONAL CARE – 2.59%
L’Oreal SA1	26,352		2,108,206
			2,108,206
DIVERSIFIED FINANCIAL SERVICES – 0.37%
Euronext NV1	7,536		303,254
			303,254
ENGINEERING & CONSTRUCTION – 2.46%
Bouygues SA	17,840		793,150
Vinci SA1	13,616		1,205,686
			1,998,836
FOOD – 5.86%
Carrefour SA1	50,144		2,323,094
Etablissements Economiques du Casino Guichard-Perrachon SA1	3,312		231,769
Groupe Danone1	21,136		2,212,099
			4,766,962
FOOD SERVICE – 0.36%
Sodexho Alliance SA1	8,416		291,675
			291,675
HAND & MACHINE TOOLS – 1.94%
Schneider Electric SA1	20,096		1,575,585
			1,575,585
HEALTH CARE – PRODUCTS – 0.84%
Essilor International SA1	8,768		682,045
			682,045

44 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2005

Security	Shares		Value
HOLDING COMPANIES – DIVERSIFIED – 2.16%
LVMH Moet Hennessy Louis
Vuitton SA1		21,760	$	1,752,881
				1,752,881
HOME FURNISHINGS – 0.63%
Thomson1		23,024		514,503
				514,503
HOUSEHOLD PRODUCTS & WARES – 0.20%
Societe BIC SA1		2,736		160,975
				160,975
INSURANCE – 4.59%
AXA1		127,616		3,380,672
CNP Assurances1		3,040		208,809
SCOR		73,008		144,560
				3,734,041
IRON & STEEL – 1.23%
Arcelor1		45,792		1,002,448
				1,002,448
LODGING – 1.14%
Accor SA1		17,568		923,657
				923,657
MACHINERY – 0.50%
Alstom2		9,872		407,940
				407,940
MEDIA – 4.96%
Lagardere S.C.A.1		10,720		764,672
Societe Television Francaise 11		10,576		283,290
Vivendi Universal SA		95,360		2,987,083
				4,035,045
OFFICE & BUSINESS EQUIPMENT – 0.32%
Neopost SA		2,832		261,568
				261,568
OIL & GAS – 16.38%
Total SA1		50,816		13,317,910
				13,317,910
OIL & GAS SERVICES – 0.54%
Technip-Coflexip SA1		7,680		438,732
				438,732
Security	Shares or Principal		Value
PHARMACEUTICALS – 9.85%
Sanofi-Aventis1		94,112	$	8,009,460
				8,009,460
REAL ESTATE – 1.09%
Gecina SA		806		96,251
Klepierre1		2,064		203,961
Unibail Holding1		4,080		582,565
				882,777
RETAIL – 0.77%
PPR1		5,888		629,274
				629,274
SEMICONDUCTORS – 1.14%
STMicroelectronics NV1		56,656		928,116
				928,116
SOFTWARE – 0.54%
Business Objects SA1,2		6,016		198,731
Dassault Systemes SA1		4,992		243,305
				442,036
TELECOMMUNICATIONS – 6.83%
Alcatel SA Class A1,2		110,304		1,277,892
France Telecom1		142,320		4,272,537
				5,550,429
WATER – 3.95%
Suez SA		72,592		2,110,515
Veolia Environnement1		27,104		1,101,684
				3,212,199
TOTAL COMMON STOCKS (Cost: $73,426,410)				81,170,823
SHORT-TERM INVESTMENTS – 37.80%
CERTIFICATES OF DEPOSIT3 – 4.27%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	198,241		198,240
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		85,904		85,898
Credit Suisse First Boston
3.53%, 05/09/06		132,161		132,160

SCHEDULES OF INVESTMENTS 45

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2005

Security	Principal		Value
Danske Bank
3.50%, 10/17/05	$	132,161	$	132,156
Dexia Credit Local
3.61%, 08/30/06		66,080		66,067
First Tennessee Bank
3.52%, 09/15/05		224,673		224,673
Fortis Bank NY
3.83% - 3.84%, 01/25/06		198,241		198,242
HBOS Treasury Services PLC
3.39%, 12/14/05		79,296		79,296
HSBC Bank USA N.A.
3.72%, 08/03/06		66,080		66,102
Royal Bank of Scotland
3.61%, 06/27/06		66,080		66,072
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		204,849		204,813
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		469,170		469,180
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		105,728		105,728
US Bank N.A.
3.54%, 09/19/05		330,401		330,401
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		594,722		594,721
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		522,034		522,033
				3,475,782
COMMERCIAL PAPER3 – 8.61%
Alpine Securitization Corp.
3.52%, 09/09/05		264,321		264,114
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		278,859		277,372
Aspen Funding Corp.
3.49%, 09/01/05		132,161		132,160
Barton Capital Corp.
3.51%, 09/07/05		149,877		149,789
Blue Ridge Asset Funding Corp.
3.48% - 3.49%,
09/09/05 - 09/21/05		218,065		217,796
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		67,268		66,613
Cantabric Finance LLC
3.73%, 10/31/05		50,812		50,496
Charta LLC
3.54%, 09/20/05		92,512		92,340
Chesham Finance LLC
3.54%, 09/15/05		39,648		39,594
Dorada Finance Inc.
3.76%, 01/26/06		13,216		13,013
Edison Asset Securitization LLC
3.12%, 09/06/05		99,120		99,077
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		170,428		170,283
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		601,288		598,545
Gemini Securitization Corp.
3.49%, 09/06/05		212,025		211,922
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		429,522		428,691
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		99,120		98,955
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		204,849		202,656
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		151,985		151,984
HSBC PLC
3.88%, 02/03/06		39,648		38,986
Jupiter Securitization Corp.
3.51%, 09/21/05		74,918		74,772
Leafs LLC
3.61%, 01/20/06 - 02/21/064		138,756		138,756

46 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2005

Security	Principal		Value
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05	$	182,174	$	181,902
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		323,793		323,370
New Center Asset Trust
3.60%, 09/01/05		462,562		462,562
Park Avenue Receivables Corp.
3.50%, 09/19/05		74,544		74,413
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		178,949		178,675
Santander Central Hispano
Finance Inc.
3.91%, 02/17/06		132,161		129,735
Scaldis Capital LLC
3.52%, 09/07/05		264,321		264,166
Sedna Finance Inc.
3.92%, 02/21/06		33,040		32,418
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		388,552		388,450
Sydney Capital Corp.
3.49%, 09/01/05		81,649		81,649
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		277,537		277,019
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		283,175		283,078
Thunder Bay Funding Inc.
3.50%, 09/01/05		22,091		22,091
Tulip Funding Corp.
3.49%, 09/01/05		487,634		487,634
Windmill Funding Corp.
3.52%, 09/09/05		60,794		60,746
World Savings Bank
3.51%, 09/09/05		46,256		46,256
Yorktown Capital LLC
3.53%, 09/19/05		191,633		191,294
				7,003,372
Security	Shares or Principal		Value
MEDIUM-TERM NOTES3 – 0.15%
Dorada Finance Inc.
3.93%, 07/07/064	$	40,970	$	40,966
K2 USA LLC
3.94%, 07/07/064		79,296		79,293
				120,259
MONEY MARKET FUNDS – 0.91%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		528,642		528,642
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		150,406		150,406
BlackRock Temp Cash Money Market Fund 3.41%3,6		14,003		14,003
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		46,330		46,330
				739,381
REPURCHASE AGREEMENTS3 – 7.26%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $3,172,169 and an effective yield of 3.60%.7	$	3,171,852		3,171,852
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $2,445,214 and an effective yield of 3.60%.7		2,444,969		2,444,969
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $288,139 and an effective yield of 3.60%.7		288,110		288,110
				5,904,931

SCHEDULES OF INVESTMENTS 47

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2005

Security	Principal		Value
TIME DEPOSITS3 – 1.52%
Abbey National Treasury Services PLC
3.50%, 09/01/05	$	264,321	$	264,321
Chase Bank USA N.A.
3.58%, 09/01/05		726,883		726,883
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		174,475		174,475
Natexis Banques Populaires
3.51%, 09/20/058		66,080		66,080
				1,231,759
VARIABLE & FLOATING RATE NOTES3 – 15.08%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		245,819		245,820
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		356,833		356,834
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		218,065		218,065
American Express Credit Corp.
3.65%, 10/26/05		264,321		264,341
ASIF Global Financing XXII
3.99%, 05/30/064		132,161		132,325
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		85,904		85,904
Bank of America N.A.
3.56%, 08/10/06		660,803		660,803
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		679,305		679,295
BMW US Capital LLC
3.54%, 07/14/064		132,161		132,160
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		449,346		449,327
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		355,512		355,496
Commodore CDO Ltd.
3.47%, 12/12/054		33,040		33,040
Credit Suisse First Boston
3.57%, 07/19/06		330,401		330,401
DEPFA Bank PLC
3.42%, 03/15/06		132,161		132,160
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		210,135		210,146
Eli Lilly Services Inc.
3.53%, 09/01/064		132,161		132,160
Fifth Third Bancorp
3.58%, 04/21/064		264,321		264,321
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		92,512		92,514
General Electric Capital Corp.
3.66%, 07/07/06		59,472		59,526
Hartford Life Global Funding Trust
3.56%, 08/15/06		132,161		132,160
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		396,482		396,480
HSBC Bank USA N.A.
3.70%, 05/04/06		46,256		46,281
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		515,426		515,431
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		515,426		515,481
Lothian Mortgages PLC
3.63%, 01/24/06		132,161		132,160
Marshall & Ilsley Bank
3.71%, 02/20/06		132,161		132,235
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		264,321		264,437
National City Bank (Ohio)
3.50%, 01/06/06		66,080		66,073
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		488,994		489,041

48 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI FRANCE INDEX FUND

August 31, 2005

Security	Principal		Value
Nordea Bank AB
3.55%, 08/11/064	$	231,281	$	231,281
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		422,914		422,921
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		508,818		508,818
Principal Life Income Funding Trusts
3.74%, 05/10/06		99,120		99,124
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		441,086		440,985
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		72,688		72,683
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		754,636		754,649
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		132,161		132,160
Strips III LLC
3.69%, 07/24/064,8		38,822		38,822
SunTrust Bank
3.63%, 04/28/06		198,241		198,241
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		321,150		321,131
Toyota Motor Credit Corp.
3.57%, 04/10/06		59,472		59,472
Unicredito Italiano SpA
3.34%, 06/14/06		171,809		171,761
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		318,156		318,156
Wells Fargo & Co.
3.56%, 09/15/064		66,080		66,087
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		528,642		528,618
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		278,859		278,851
Winston Funding Ltd.
3.71%, 10/23/054		94,363		94,363
				12,262,540
TOTAL SHORT-TERM INVESTMENTS (Cost: $30,738,024)				30,738,024
TOTAL INVESTMENTS IN SECURITIES – 137.61% (Cost: $104,164,434)				111,908,847
Other Assets, Less Liabilities – (37.61)%				(30,583,055	)
NET ASSETS – 100.00%			$	81,325,792

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 49

Schedule of Investments

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 96.46%
AIRLINES – 0.49%
Deutsche Lufthansa AG1	114,730	$	1,528,120
			1,528,120
APPAREL – 1.95%
Adidas-Salomon AG1	21,835		3,883,056
Puma AG	8,360		2,256,799
			6,139,855
AUTO MANUFACTURERS – 8.84%
DaimlerChrysler AG1	430,760		22,091,417
Volkswagen AG1	109,075		5,734,737
			27,826,154
AUTO PARTS & EQUIPMENT – 1.64%
Continental AG1	65,340		5,154,991
			5,154,991
BANKS – 12.68%
Bayerische Hypo-und
Vereinsbank AG2	273,295		7,737,295
Commerzbank AG	222,475		5,767,717
DEPFA Bank PLC1	171,052		2,882,046
Deutsche Bank AG1	236,610		20,433,656
Hypo Real Estate Holding AG	62,700		3,080,608
			39,901,322
BIOTECHNOLOGY – 0.27%
QIAGEN NV1,2	67,595		848,775
			848,775
CHEMICALS – 8.48%
BASF AG1	218,955		15,292,514
Bayer AG1	324,445		11,415,925
			26,708,439
COMPUTERS – 0.25%
Wincor Nixdorf AG	8,635		798,075
			798,075
COSMETICS & PERSONAL CARE – 0.37%
Beiersdorf AG1	10,010		1,169,526
			1,169,526
DIVERSIFIED FINANCIAL SERVICES – 1.63%
Deutsche Boerse AG1	49,775		4,538,538
MLP AG1	31,515		605,799
			5,144,337
ELECTRIC – 13.37%
E.ON AG1	300,355		28,572,440
RWE AG1	202,785		13,512,228
			42,084,668
ELECTRONICS – 0.12%
EPCOS AG1,2	29,700		365,266
			365,266
ENGINEERING & CONSTRUCTION – 1.46%
Hochtief AG1	29,865		1,217,949
Linde AG1	45,870		3,387,050
			4,604,999
FOOD – 1.35%
METRO AG1	73,755		3,721,732
Suedzucker AG1	24,827		519,069
			4,240,801
HEALTH CARE – PRODUCTS – 0.50%
Fresenius Medical Care AG1	17,545		1,585,962
			1,585,962
INSURANCE – 10.29%
Allianz AG1	174,295		22,486,018
Muenchener
Rueckversicherungs-Gesellschaft AG1	88,715		9,906,838
			32,392,856
IRON & STEEL – 1.10%
ThyssenKrupp AG1	181,775		3,467,353
			3,467,353
LEISURE TIME – 0.60%
TUI AG1	79,750		1,875,300
			1,875,300
MACHINERY – DIVERSIFIED – 1.43%
Heidelberger Druckmaschinen AG1	27,335		972,567
MAN AG1	70,125		3,526,486
			4,499,053
MANUFACTURING – 9.33%
Siemens AG1	388,190		29,380,147
			29,380,147
MEDIA – 0.25%
Premiere AG1,2	25,080		771,116
			771,116

50 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2005

Security	Shares		Value
PHARMACEUTICALS – 3.41%
ALTANA AG1		34,650	$	1,964,093
Celesio AG 1		19,415		1,695,305
Merck KGaA1		22,660		1,943,821
Schering AG1		81,015		5,116,324
				10,719,543
REAL ESTATE – 0.25%
IVG Immobilien AG1		37,510		793,926
				793,926
RETAIL – 0.35%
Douglas Holding AG1		16,005		622,597
KarstadtQuelle AG1,2		36,355		482,881
				1,105,478
SEMICONDUCTORS – 0.93%
Infineon Technologies AG2		315,535		2,937,620
				2,937,620
SOFTWARE – 4.86%
SAP AG1		90,420		15,301,538
				15,301,538
TELECOMMUNICATIONS – 7.91%
Deutsche Telekom AG1		1,314,940		24,904,556
				24,904,556
TRANSPORTATION – 2.35%
Deutsche Post AG		294,855		7,412,104
				7,412,104
TOTAL COMMON STOCKS (Cost: $297,399,021)				303,661,880
PREFERRED STOCKS – 3.48%
AUTO MANUFACTURERS – 1.61%
Porsche AG 1		3,850		2,992,755
Volkswagen AG1		52,324		2,071,448
				5,064,203
ELECTRIC – 0.40%
RWE AG		21,945		1,268,486
				1,268,486
HEALTH CARE – PRODUCTS – 0.33%
Fresenius Medical Care AG1		13,420		1,039,624
				1,039,624
Security	Shares or Principal		Value
HOUSEHOLD PRODUCTS & WARES – 0.90%
Henkel KGaA1		29,977	$	2,829,190
				2,829,190
MEDIA – 0.24%
ProSiebenSat.1 Media AG1		42,460		747,783
				747,783
TOTAL PREFERRED STOCKS (Cost: $8,723,771)				10,949,286
SHORT-TERM INVESTMENTS – 17.68%
CERTIFICATES OF DEPOSIT3 – 2.01%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	360,488		360,489
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		156,212		156,200
Credit Suisse First Boston
3.53%, 05/09/06		240,326		240,326
Danske Bank
3.50%, 10/17/05		240,326		240,316
Dexia Credit Local
3.61%, 08/30/06		120,163		120,139
First Tennessee Bank
3.52%, 09/15/05		408,553		408,553
Fortis Bank NY
3.83% - 3.84%, 01/25/06		360,488		360,491
HBOS Treasury Services PLC
3.39%, 12/14/05		144,195		144,195
HSBC Bank USA N.A.
3.72%, 08/03/06		120,163		120,202
Royal Bank of Scotland
3.61%, 06/27/06		120,163		120,148
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		372,505		372,439
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		853,156		853,173

SCHEDULES OF INVESTMENTS 51

Schedule of Investments (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2005

Security	Principal		Value
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05	$	192,260	$	192,260
US Bank N.A.
3.54%, 09/19/05		600,814		600,814
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		1,081,465		1,081,466
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		949,286		949,285
				6,320,496
COMMERCIAL PAPER3 – 4.05%
Alpine Securitization Corp.
3.52%, 09/09/05		480,651		480,275
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		507,087		504,382
Aspen Funding Corp.
3.49%, 09/01/05		240,326		240,326
Barton Capital Corp.
3.51%, 09/07/05		272,541		272,382
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		396,537		396,049
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		122,323		121,132
Cantabric Finance LLC
3.73%, 10/31/05		92,398		91,824
Charta LLC
3.54%, 09/20/05		168,228		167,914
Chesham Finance LLC
3.54%, 09/15/05		72,098		71,998
Dorada Finance Inc.
3.76%, 01/26/06		24,033		23,664
Edison Asset Securitization LLC
3.12%, 09/06/05		180,244		180,166
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		309,912		309,650
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		1,093,404		1,088,415
Gemini Securitization Corp.
3.49%, 09/06/05		385,554		385,367
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		781,058		779,548
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		180,244		179,943
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		372,505		368,516
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		276,374		276,375
HSBC PLC
3.88%, 02/03/06		72,098		70,893
Jupiter Securitization Corp.
3.51%, 09/21/05		136,233		135,968
Leafs LLC
3.61%, 01/20/06 - 02/21/064		252,320		252,319
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		331,272		330,777
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		588,797		588,027
New Center Asset Trust
3.60%, 09/01/05		841,139		841,139
Park Avenue Receivables Corp.
3.50%, 09/19/05		135,553		135,316
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		325,408		324,910
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		240,326		235,914
Scaldis Capital LLC
3.52%, 09/07/05		480,651		480,369

52 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Sedna Finance Inc.
3.92%, 02/21/06	$	60,081	$	58,950
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		706,557		706,371
Sydney Capital Corp.
3.49%, 09/01/05		148,473		148,473
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		504,684		503,741
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		514,936		514,760
Thunder Bay Funding Inc.
3.50%, 09/01/05		40,170		40,170
Tulip Funding Corp.
3.49%, 09/01/05		886,731		886,731
Windmill Funding Corp.
3.52%, 09/09/05		110,550		110,463
World Savings Bank
3.51%, 09/09/05		84,114		84,114
Yorktown Capital LLC
3.53%, 09/19/05		348,472		347,857
				12,735,188
MEDIUM-TERM NOTES3 – 0.07%
Dorada Finance Inc.
3.93%, 07/07/064		74,501		74,495
K2 USA LLC
3.94%, 07/07/064		144,195		144,189
				218,684
MONEY MARKET FUNDS – 0.35%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		961,302		961,302
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		33,661		33,661
BlackRock Temp Cash Money Market Fund 3.41%3,6		25,464		25,464
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		84,248		84,248
				1,104,675
REPURCHASE AGREEMENTS3 – 3.41%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $5,768,389 and an effective yield of 3.60%.7	$	5,767,812		5,767,812
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $4,446,467 and an effective yield of 3.60%.7		4,446,022		4,446,022
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $523,962 and an effective yield of 3.60%.7		523,910		523,910
				10,737,744
TIME DEPOSITS3 – 0.71%
Abbey National Treasury Services PLC
3.50%, 09/01/05		480,651		480,651
Chase Bank USA N.A.
3.58%, 09/01/05		1,321,790		1,321,790
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		317,271		317,271
Natexis Banques Populaires
3.51%, 09/20/058		120,163		120,163
				2,239,875
VARIABLE & FLOATING RATE NOTES3 – 7.08%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		447,005		447,008
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		648,879		648,880

SCHEDULES OF INVESTMENTS 53

Schedule of Investments (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2005

Security	Principal		Value
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06	$	396,537	$	396,537
American Express Credit Corp.
3.65%, 10/26/05		480,651		480,687
ASIF Global Financing XXII
3.99%, 05/30/064		240,326		240,625
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		156,212		156,212
Bank of America N.A.
3.56%, 08/10/06		1,201,628		1,201,628
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		1,235,273		1,235,256
BMW US Capital LLC
3.54%, 07/14/064		240,326		240,326
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		817,107		817,072
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		646,476		646,449
Commodore CDO Ltd.
3.47%, 12/12/054		60,081		60,081
Credit Suisse First Boston
3.57%, 07/19/06		600,814		600,814
DEPFA Bank PLC
3.42%, 03/15/06		240,326		240,326
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		382,118		382,137
Eli Lilly Services Inc.
3.53%, 09/01/064		240,326		240,326
Fifth Third Bancorp
3.58%, 04/21/064		480,651		480,651
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		168,228		168,231
General Electric Capital Corp.
3.66%, 07/07/06		108,146		108,244
Hartford Life Global Funding Trust
3.56%, 08/15/06		240,326		240,326
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		720,977		720,978
HSBC Bank USA N.A.
3.70%, 05/04/06		84,114		84,160
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		937,269		937,278
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		937,269		937,371
Lothian Mortgages PLC
3.63%, 01/24/06		240,326		240,326
Marshall & Ilsley Bank
3.71%, 02/20/06		240,326		240,462
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		480,651		480,862
National City Bank (Ohio)
3.50%, 01/06/06		120,163		120,150
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		889,204		889,291
Nordea Bank AB
3.55%, 08/11/064		420,570		420,570
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		769,042		769,055
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		925,253		925,253
Principal Life Income Funding Trusts
3.74%, 05/10/06		180,244		180,251
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		802,086		801,904
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		132,179		132,169
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		1,372,259		1,372,255

54 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI GERMANY INDEX FUND

August 31, 2005

Security	Principal		Value
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064	$	240,326	$	240,326
Strips III LLC
3.69%, 07/24/064,8		70,596		70,596
SunTrust Bank
3.63%, 04/28/06		360,488		360,488
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		583,991		583,955
Toyota Motor Credit Corp.
3.57%, 04/10/06		108,146		108,146
Unicredito Italiano SpA
3.34%, 06/14/06		312,423		312,336
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		578,546		578,546
Wells Fargo & Co.
3.56%, 09/15/064		120,163		120,175
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		961,302		961,261
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		507,087		507,074
Winston Funding Ltd.
3.71%, 10/23/054		171,592		171,592
				22,298,646
TOTAL SHORT-TERM INVESTMENTS (Cost: $55,655,308)				55,655,308
TOTAL INVESTMENTS IN SECURITIES – 117.62% (Cost: $361,778,100)				370,266,474
Other Assets, Less Liabilities – (17.62)%				(55,473,043	)
NET ASSETS – 100.00%			$	314,793,431

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 55

Schedule of Investments

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 94.68%
AEROSPACE & DEFENSE – 1.55%
Finmeccanica SpA1	35,395	$	661,664
			661,664
APPAREL – 0.21%
Benetton Group SpA1	9,251		90,791
			90,791
AUTO MANUFACTURERS – 1.15%
Fiat SpA1,2	55,451		487,604
			487,604
AUTO PARTS & EQUIPMENT – 0.79%
Pirelli SpA1	340,945		336,497
			336,497
BANKS – 25.58%
Banca Antonveneta SpA1	25,641		789,626
Banca Intesa SpA1	357,423		1,716,547
Banca Monte dei Paschi di Siena SpA1	143,550		559,648
Banca Nazionale del Lavoro SpA1,2	163,812		529,851
Banca Popolare di Milano Scrl1	49,181		497,794
Banca Popolare di Verona e Novara Scrl1	46,519		833,570
Banche Popolari Unite Scrl1	47,300		961,582
Capitalia SpA1	166,694		932,789
Fineco SpA	10,681		99,505
Sanpaolo IMI SpA1	133,005		1,900,755
UniCredito Italiano SpA1	361,834		2,054,795
			10,876,462
BUILDING MATERIALS – 0.41%
Italcementi SpA1	10,747		173,674
			173,674
COMMERCIAL SERVICES – 2.29%
Autostrade SpA	36,982		976,050
			976,050
DIVERSIFIED FINANCIAL SERVICES – 3.09%
Banca Fideuram SpA1	38,533		193,113
Mediobanca SpA1	57,717		1,120,826
			1,313,939
ELECTRIC – 11.46%
Edison SpA1,2	98,978		225,197
Enel SpA1	479,303		4,241,242
Terna SpA Rights2	153,571		407,013
			4,873,452
ENTERTAINMENT – 0.31%
Lottomatica SpA	3,476		131,028
			131,028
GAS – 2.22%
Snam Rete Gas SpA1	171,160		943,045
			943,045
HEALTH CARE – PRODUCTS – 0.96%
Luxottica Group SpA1	17,798		409,322
			409,322
INSURANCE – 9.84%
Assicurazioni Generali SpA1	65,065		2,033,313
Mediolanum SpA1	32,659		209,866
Riunione Adriatica di Sicurta SpA1	94,039		1,942,985
			4,186,164
MEDIA – 4.13%
Arnoldo Mondadori Editore SpA1	15,246		154,784
Gruppo Editoriale L’Espresso SpA1	20,526		116,753
Mediaset SpA1	96,668		1,191,249
Seat Pagine Gialle SpA1,2	473,257		200,802
Telecom Italia Media SpA1,2	170,265		93,288
			1,756,876
OIL & GAS – 20.46%
ENI SpA1	294,767		8,700,461
			8,700,461
RETAIL – 0.90%
Autogrill SpA1	13,574		189,310
Bulgari SpA1	16,797		193,047
			382,357
TELECOMMUNICATIONS – 9.33%
Telecom Italia SpA1	1,238,116		3,882,877
Tiscali SpA1,2	27,951		84,134
			3,967,011
TOTAL COMMON STOCKS (Cost: $32,565,175)			40,266,397

56 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
PREFERRED STOCKS – 5.11%
BANKS – 0.81%
Banca Intesa SpA RNC1		77,022	$	341,959
				341,959
TELECOMMUNICATIONS – 4.30%
Telecom Italia SpA RNC1		698,523		1,829,837
				1,829,837
TOTAL PREFERRED STOCKS (Cost: $1,506,182)				2,171,796
SHORT-TERM INVESTMENTS – 44.43%
CERTIFICATES OF DEPOSIT3 – 5.05%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	122,422		122,422
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		53,050		53,046
Credit Suisse First Boston
3.53%, 05/09/06		81,615		81,615
Danske Bank
3.50%, 10/17/05		81,615		81,612
Dexia Credit Local
3.61%, 08/30/06		40,807		40,799
First Tennessee Bank
3.52%, 09/15/05		138,745		138,745
Fortis Bank NY
3.83% - 3.84%, 01/25/06		122,422		122,423
HBOS Treasury Services PLC
3.39%, 12/14/05		48,969		48,969
HSBC Bank USA N.A.
3.72%, 08/03/06		40,807		40,821
Royal Bank of Scotland
3.61%, 06/27/06		40,807		40,802
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		126,503		126,480
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		289,733		289,739
Security	Principal		Value
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05	$	65,292	$	65,291
US Bank N.A.
3.54%, 09/19/05		204,037		204,037
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		367,267		367,266
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		322,379		322,378
				2,146,445
COMMERCIAL PAPER3 – 10.17%
Alpine Securitization Corp.
3.52%, 09/09/05		163,230		163,102
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		172,207		171,289
Aspen Funding Corp.
3.49%, 09/01/05		81,615		81,615
Barton Capital Corp.
3.51%, 09/07/05		92,555		92,501
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		134,665		134,499
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		41,541		41,136
Cantabric Finance LLC
3.73%, 10/31/05		31,378		31,183
Charta LLC
3.54%, 09/20/05		57,130		57,024
Chesham Finance LLC
3.54%, 09/15/05		24,484		24,451
Dorada Finance Inc.
3.76%, 01/26/06		8,161		8,036
Edison Asset Securitization LLC
3.12%, 09/06/05		61,211		61,185
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		105,246		105,158

SCHEDULES OF INVESTMENTS 57

Schedule of Investments (Continued)

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2005

Security	Principal		Value
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05	$	371,321	$	369,626
Gemini Securitization Corp.
3.49%, 09/06/05		130,935		130,871
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		265,248		264,735
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		61,211		61,108
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		126,503		125,149
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		93,857		93,857
HSBC PLC
3.88%, 02/03/06		24,484		24,075
Jupiter Securitization Corp.
3.51%, 09/21/05		46,265		46,175
Leafs LLC
3.61%, 01/20/06 - 02/21/064		85,688		85,688
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		112,500		112,333
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		199,956		199,695
New Center Asset Trust
3.60%, 09/01/05		285,652		285,652
Park Avenue Receivables Corp.
3.50%, 09/19/05		46,034		45,953
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		110,509		110,340
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		81,615		80,117
Scaldis Capital LLC
3.52%, 09/07/05		163,230		163,134
Sedna Finance Inc.
3.92%, 02/21/06		20,404		20,019
Security	Shares or Principal		Value
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05	$	239,948	$	239,885
Sydney Capital Corp.
3.49%, 09/01/05		50,422		50,422
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		171,391		171,071
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		174,873		174,813
Thunder Bay Funding Inc.
3.50%, 09/01/05		13,642		13,642
Tulip Funding Corp.
3.49%, 09/01/05		301,135		301,135
Windmill Funding Corp.
3.52%, 09/09/05		37,543		37,513
World Savings Bank
3.51%, 09/09/05		28,565		28,565
Yorktown Capital LLC
3.53%, 09/19/05		118,342		118,133
				4,324,885
MEDIUM-TERM NOTES3 – 0.17%
Dorada Finance Inc.
3.93%, 07/07/064		25,301		25,298
K2 USA LLC
3.94%, 07/07/064		48,969		48,967
				74,265
MONEY MARKET FUNDS – 0.86%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		326,459		326,459
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		3,927		3,927
BlackRock Temp Cash Money Market Fund 3.41%3,6		8,648		8,648

58 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		28,611	$	28,611
				367,645
REPURCHASE AGREEMENTS3 – 8.58%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,958,953 and an effective yield of 3.60%.7	$	1,958,757		1,958,757
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,510,026 and an effective yield of 3.60%.7		1,509,875		1,509,875
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $177,938 and an effective yield of 3.60%.7		177,920		177,920
				3,646,552
TIME DEPOSITS3 – 1.79%
Abbey National Treasury Services PLC
3.50%, 09/01/05		163,230		163,230
Chase Bank USA N.A.
3.58%, 09/01/05		448,882		448,882
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		107,746		107,746
Natexis Banques Populaires
3.51%, 09/20/058		40,807		40,807
				760,665
VARIABLE & FLOATING RATE NOTES3 – 17.81%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		151,804		151,805
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		220,360		220,361
Security	Principal		Value
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06	$	134,665	$	134,665
American Express Credit Corp.
3.65%, 10/26/05		163,230		163,242
ASIF Global Financing XXII
3.99%, 05/30/064		81,615		81,717
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		53,050		53,050
Bank of America N.A.
3.56%, 08/10/06		408,074		408,074
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		419,500		419,495
BMW US Capital LLC
3.54%, 07/14/064		81,615		81,615
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		277,491		277,479
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		219,544		219,535
Commodore CDO Ltd.
3.47%, 12/12/054		20,404		20,404
Credit Suisse First Boston
3.57%, 07/19/06		204,037		204,037
DEPFA Bank PLC
3.42%, 03/15/06		81,615		81,615
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		129,768		129,774
Eli Lilly Services Inc.
3.53%, 09/01/064		81,615		81,615
Fifth Third Bancorp
3.58%, 04/21/064		163,230		163,230
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		57,130		57,132
General Electric Capital Corp.
3.66%, 07/07/06		36,727		36,760

SCHEDULES OF INVESTMENTS 59

.Schedule of Investments (Continued)

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2005

Security	Principal		Value
Hartford Life Global Funding Trust
3.56%, 08/15/06	$	81,615	$	81,615
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		244,845		244,845
HSBC Bank USA N.A.
3.70%, 05/04/06		28,565		28,581
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		318,298		318,300
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		318,298		318,333
Lothian Mortgages PLC
3.63%, 01/24/06		81,615		81,615
Marshall & Ilsley Bank
3.71%, 02/20/06		81,615		81,661
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		163,230		163,301
National City Bank (Ohio)
3.50%, 01/06/06		40,807		40,803
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		301,975		302,004
Nordea Bank AB
3.55%, 08/11/064		142,826		142,826
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		261,168		261,172
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		314,217		314,217
Principal Life Income Funding Trusts
3.74%, 05/10/06		61,211		61,213
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		272,390		272,328
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		44,888		44,884
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		466,021		466,024
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		81,615		81,615
Strips III LLC
3.69%, 07/24/064,8		23,974		23,974
SunTrust Bank
3.63%, 04/28/06		122,422		122,422
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		198,324		198,312
Toyota Motor Credit Corp.
3.57%, 04/10/06		36,727		36,726
Unicredito Italiano SpA
3.34%, 06/14/06		106,099		106,070
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		196,475		196,475
Wells Fargo & Co.
3.56%, 09/15/064		40,807		40,811
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		326,459		326,447
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		172,207		172,203
Winston Funding Ltd.
3.71%, 10/23/054		58,273		58,273
				7,572,655
TOTAL SHORT-TERM INVESTMENTS (Cost: $18,893,112)				18,893,112
TOTAL INVESTMENTS IN SECURITIES – 144.22% (Cost: $52,964,469)				61,331,305
Other Assets, Less Liabilities – (44.22)%				(18,805,263	)
NET ASSETS – 100.00%			$	42,526,042

60 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI ITALY INDEX FUND

August 31, 2005

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 61

Schedule of Investments

iSHARES^® MSCI NETHERLANDS INDEX FUND

August 31, 2005

Security	Shares		Value
COMMON STOCKS – 99.54%
BANKS – 11.89%
ABN AMRO Holding NV		318,250	$	7,608,811
				7,608,811
BEVERAGES – 3.37%
Heineken NV1		66,850		2,153,223
				2,153,223
CHEMICALS – 6.21%
Akzo Nobel NV		61,707		2,519,560
DSM NV1		18,827		1,454,095
				3,973,655
COMMERCIAL SERVICES – 3.17%
IHC Caland NV		13,600		1,085,515
Randstad Holdings NV		10,653		403,529
Vedior NV		37,185		536,893
				2,025,937
COMPUTERS – 0.48%
Getronics NV		26,599		308,482
				308,482
DISTRIBUTION & WHOLESALE – 0.99%
Buhrmann NV		25,996		315,556
Hagemeyer NV1,2		116,647		317,043
				632,599
ELECTRONICS – 9.69%
Koninklijke Philips Electronics NV		236,175		6,198,413
				6,198,413
FOOD – 17.51%
Koninklijke Ahold NV2		327,630		2,901,138
Koninklijke Numico NV CVA1,2		31,222		1,290,569
Unilever NV CVA		101,974		7,010,571
				11,202,278
INSURANCE – 20.51%
AEGON NV1		223,590		3,126,547
ING Groep NV1		345,312		9,997,013
				13,123,560
MEDIA – 8.43%
Reed Elsevier NV1		174,468		2,428,926
VNU NV1		58,089		1,778,875
Wolters Kluwer NV CVA		63,382		1,184,845
				5,392,646
Security	Shares or Principal		Value
OFFICE & BUSINESS EQUIPMENT – 0.89%
Oce NV1		37,944	$	569,785
				569,785
REAL ESTATE INVESTMENT TRUSTS – 4.97%
Corio NV		17,688		1,023,724
Rodamco Europe NV		14,807		1,256,517
Wereldhave NV		8,576		900,203
				3,180,444
SEMICONDUCTORS – 2.66%
ASML Holding NV2		101,840		1,700,867
				1,700,867
TELECOMMUNICATIONS – 5.04%
Koninklijke KPN NV		342,638		3,227,873
				3,227,873
TRANSPORTATION – 3.73%
TPG NV		93,197		2,384,061
				2,384,061
TOTAL COMMON STOCKS (Cost: $62,403,846)				63,682,634
SHORT-TERM INVESTMENTS – 15.87%
CERTIFICATES OF DEPOSIT3– 1.80%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	65,784		65,784
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		28,506		28,505
Credit Suisse First Boston
3.53%, 05/09/06		43,856		43,856
Danske Bank
3.50%, 10/17/05		43,856		43,854
Dexia Credit Local
3.61%, 08/30/06		21,928		21,924
First Tennessee Bank
3.52%, 09/15/05		74,555		74,555
Fortis Bank NY
3.83% - 3.84%, 01/25/06		65,784		65,784
HBOS Treasury Services PLC
3.39%, 12/14/05		26,314		26,314

62 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI NETHERLANDS INDEX FUND

August 31, 2005

Security	Principal		Value
HSBC Bank USA N.A.
3.72%, 08/03/06	$	21,928	$	21,935
Royal Bank of Scotland
3.61%, 06/27/06		21,928		21,925
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		67,977		67,964
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		155,688		155,692
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		35,085		35,085
US Bank N.A.
3.54%, 09/19/05		109,640		109,640
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		197,352		197,352
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		173,231		173,231
				1,153,400
COMMERCIAL PAPER3 – 3.63%
Alpine Securitization Corp.
3.52%, 09/09/05		87,712		87,643
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		92,536		92,042
Aspen Funding Corp.
3.49%, 09/01/05		43,856		43,856
Barton Capital Corp.
3.51%, 09/07/05		49,735		49,706
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		72,362		72,273
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		22,322		22,105
Cantabric Finance LLC
3.73%, 10/31/05		16,861		16,756
Charta LLC
3.54%, 09/20/05		30,699		30,642
Chesham Finance LLC
3.54%, 09/15/05		13,157		13,139
Dorada Finance Inc.
3.76%, 01/26/06		4,386		4,318
Edison Asset Securitization LLC
3.12%, 09/06/05		32,892		32,878
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		56,554		56,506
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		199,530		198,620
Gemini Securitization Corp.
3.49%, 09/06/05		70,358		70,324
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		142,532		142,256
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		32,892		32,837
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		67,977		67,249
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		50,434		50,434
HSBC PLC
3.88%, 02/03/06		13,157		12,937
Jupiter Securitization Corp.
3.51%, 09/21/05		24,861		24,812
Leafs LLC
3.61%, 01/20/06 - 02/21/064		46,045		46,045
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		60,452		60,362
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		107,447		107,306
New Center Asset Trust
3.60%, 09/01/05		153,496		153,496
Park Avenue Receivables Corp.
3.50%, 09/19/05		24,736		24,693

SCHEDULES OF INVESTMENTS 63

Schedule of Investments (Continued)

iSHARES^® MSCI NETHERLANDS INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05	$	59,382	$	59,291
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		43,856		43,051
Scaldis Capital LLC
3.52%, 09/07/05		87,712		87,660
Sedna Finance Inc.
3.92%, 02/21/06		10,964		10,757
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		128,936		128,902
Sydney Capital Corp.
3.49%, 09/01/05		27,094		27,094
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		92,097		91,925
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		93,968		93,936
Thunder Bay Funding Inc.
3.50%, 09/01/05		7,331		7,331
Tulip Funding Corp.
3.49%, 09/01/05		161,816		161,816
Windmill Funding Corp.
3.52%, 09/09/05		20,174		20,158
World Savings Bank
3.51%, 09/09/05		15,350		15,350
Yorktown Capital LLC
3.53%, 09/19/05		63,591		63,479
				2,323,985
MEDIUM-TERM NOTES3– 0.06%
Dorada Finance Inc.
3.93%, 07/07/064		13,595		13,594
K2 USA LLC
3.94%, 07/07/064		26,314		26,312
				39,906
MONEY MARKET FUNDS – 0.31%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		175,424		175,424
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		1,620		1,620
BlackRock Temp Cash Money Market Fund 3.41%3,6		4,647		4,647
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		15,374		15,374
				197,065
REPURCHASE AGREEMENTS3– 3.07%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,052,647 and an effective yield of 3.60%.7	$	1,052,542		1,052,542
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $811,415 and an effective yield of 3.60%.7		811,334		811,334
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $95,615 and an effective yield of 3.60%.7		95,606		95,606
				1,959,482
TIME DEPOSITS3– 0.64%
Abbey National Treasury Services PLC
3.50%, 09/01/05		87,712		87,712
Chase Bank USA N.A.
3.58%, 09/01/05		241,207		241,207
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		57,897		57,897
Natexis Banques Populaires
3.51%, 09/20/058		21,928		21,928
				408,744

64 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI NETHERLANDS INDEX FUND

August 31, 2005

Security	Principal		Value
VARIABLE & FLOATING RATE NOTES3 – 6.36%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064	$	81,572	$	81,572
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		118,411		118,412
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		72,362		72,362
American Express Credit Corp.
3.65%, 10/26/05		87,712		87,718
ASIF Global Financing XXII
3.99%, 05/30/064		43,856		43,911
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		28,506		28,506
Bank of America N.A.
3.56%, 08/10/06		219,279		219,279
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		225,419		225,416
BMW US Capital LLC
3.54%, 07/14/064		43,856		43,856
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		149,110		149,104
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		117,972		117,967
Commodore CDO Ltd.
3.47%, 12/12/054		10,964		10,964
Credit Suisse First Boston
3.57%, 07/19/06		109,640		109,640
DEPFA Bank PLC
3.42%, 03/15/06		43,856		43,856
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		69,731		69,734
Eli Lilly Services Inc.
3.53%, 09/01/064		43,856		43,856
Fifth Third Bancorp
3.58%, 04/21/064		87,712		87,712
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		30,699		30,699
General Electric Capital Corp.
3.66%, 07/07/06		19,735		19,753
Hartford Life Global Funding Trust
3.56%, 08/15/06		43,856		43,856
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		131,568		131,568
HSBC Bank USA N.A.
3.70%, 05/04/06		15,350		15,358
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		171,038		171,039
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		171,038		171,056
Lothian Mortgages PLC
3.63%, 01/24/06		43,856		43,856
Marshall & Ilsley Bank
3.71%, 02/20/06		43,856		43,881
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		87,712		87,750
National City Bank (Ohio)
3.50%, 01/06/06		21,928		21,926
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		162,267		162,282
Nordea Bank AB
3.55%, 08/11/064		76,748		76,748
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		140,339		140,342
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		168,845		168,845
Principal Life Income Funding Trusts
3.74%, 05/10/06		32,892		32,893
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		146,369		146,335

SCHEDULES OF INVESTMENTS 65

Schedule of Investments (Continued)

iSHARES^® MSCI NETHERLANDS INDEX FUND

August 31, 2005

Security	Principal		Value
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064	$	24,121	$	24,118
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		250,417		250,419
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		43,856		43,856
Strips III LLC
3.69%, 07/24/064,8		12,883		12,883
SunTrust Bank
3.63%, 04/28/06		65,784		65,784
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		106,570		106,564
Toyota Motor Credit Corp.
3.57%, 04/10/06		19,735		19,735
Unicredito Italiano SpA
3.34%, 06/14/06		57,013		56,997
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		105,576		105,576
Wells Fargo & Co.
3.56%, 09/15/064		21,928		21,930
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		175,424		175,416
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		92,536		92,533
Winston Funding Ltd.
3.71%, 10/23/054		31,313		31,313
				4,069,176
TOTAL SHORT-TERM INVESTMENTS (Cost: $10,151,758)				10,151,758
TOTAL INVESTMENTS IN SECURITIES – 115.41% (Cost: $72,555,604)				73,834,392
Other Assets, Less Liabilities – (15.41)%				(9,860,382	)
NET ASSETS – 100.00%			$	63,974,010

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

66 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.93%
ADVERTISING – 0.52%
Telefonica Publicidad e Informacion SA1	39,825	$	345,300
			345,300
AGRICULTURE – 3.63%
Altadis SA1	56,225		2,429,180
			2,429,180
AIRLINES – 0.36%
Iberia Lineas Aereas de Espana SA1	89,575		242,360
			242,360
BANKS – 34.78%
Banco Bilbao Vizcaya Argentaria SA	491,950		8,137,582
Banco Popular Espanol SA1	237,525		2,897,832
Banco Santander Central Hispano SA	951,025		11,579,219
Bankinter SA1	13,325		668,948
			23,283,581
BIOTECHNOLOGY – 0.36%
Zeltia SA1	35,175		241,823
			241,823
BUILDING MATERIALS – 0.13%
Uralita SA	15,750		85,035
			85,035
COMMERCIAL SERVICES – 2.82%
Abertis Infraestructuras SA1	59,113		1,547,059
Cintra Concesiones de Infraestructuras de Transporte SA2	25,925		337,969
			1,885,028
COMPUTERS – 0.85%
Indra Sistemas SA1	28,275		570,642
			570,642
ELECTRIC – 11.80%
Endesa SA1	144,300		3,247,653
Iberdrola SA1	126,750		3,251,730
Union Fenosa SA1	48,250		1,400,430
			7,899,813
ENERGY – ALTERNATE SOURCES – 0.46%
Gamesa Corporacion Tecnologica SA1	20,700		309,313
			309,313
ENGINEERING & CONSTRUCTION – 6.08%
Acciona SA1	5,850		652,193
Actividades de Construcciones y Servicios SA1	60,700		1,817,027
Fomento de Construcciones y Contratas SA	13,425		769,400
Grupo Ferrovial SA1	10,800		832,805
			4,071,425
FOOD – 0.96%
Ebro Puleva SA1	26,082		453,247
Viscofan SA	19,375		191,103
			644,350
FOREST PRODUCTS & PAPER – 0.37%
Grupo Empresarial ENCE SA	8,925		247,957
			247,957
GAS – 2.13%
Gas Natural SDG SA1	48,200		1,427,433
			1,427,433
INSURANCE – 1.12%
Corporacion Mapfre SA1	45,725		751,298
			751,298
IRON & STEEL – 1.06%
Acerinox SA	48,700		710,938
			710,938
LODGING – 0.57%
NH Hoteles SA1	25,575		385,304
			385,304
MEDIA – 1.36%
Antena 3 de Television SA1	11,600		228,260
Promotora de Informaciones SA	25,425		468,096
Sogecable SA1,2	6,172		215,043
			911,399
OIL & GAS – 4.99%
Repsol YPF SA1	113,275		3,340,684
			3,340,684
PHARMACEUTICALS – 0.76%
FAES FARMA SA1	26,275		507,658
			507,658

SCHEDULES OF INVESTMENTS 67

Schedule of Investments (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
REAL ESTATE – 2.54%
Inmobiliaria Colonial		5,500	$	313,520
Metrovacesa SA1		9,410		634,773
Sacyr Vallehermoso SA1		29,392		751,150
				1,699,443
RETAIL – 2.00%
Industria de Diseno Textil SA1		49,325		1,340,638
				1,340,638
TELECOMMUNICATIONS – 19.34%
Telefonica SA1		786,656		12,944,734
				12,944,734
WATER – 0.94%
Sociedad General de Aguas de Barcelona SA Class B1		27,550		626,824
				626,824
TOTAL COMMON STOCKS (Cost: $52,816,377)				66,902,160
SHORT-TERM INVESTMENTS – 19.32%
CERTIFICATES OF DEPOSIT3 – 2.19%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	83,778		83,778
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		36,304		36,302
Credit Suisse First Boston
3.53%, 05/09/06		55,852		55,852
Danske Bank
3.50%, 10/17/05		55,852		55,850
Dexia Credit Local
3.61%, 08/30/06		27,926		27,921
First Tennessee Bank
3.52%, 09/15/05		94,949		94,949
Fortis Bank NY
3.83% - 3.84%, 01/25/06		83,778		83,779
HBOS Treasury Services PLC
3.39%, 12/14/05		33,511		33,511
HSBC Bank USA N.A.
3.72%, 08/03/06		27,926		27,935
Security	Principal		Value
Royal Bank of Scotland
3.61%, 06/27/06	$	27,926	$	27,923
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		86,571		86,555
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		198,275		198,280
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		44,682		44,681
US Bank N.A.
3.54%, 09/19/05		139,631		139,631
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		251,335		251,335
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		220,616		220,616
				1,468,898
COMMERCIAL PAPER3 – 4.42%
Alpine Securitization Corp.
3.52%, 09/09/05		111,704		111,617
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		117,848		117,220
Aspen Funding Corp.
3.49%, 09/01/05		55,852		55,852
Barton Capital Corp.
3.51%, 09/07/05		63,339		63,302
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		92,156		92,043
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		28,428		28,152
Cantabric Finance LLC
3.73%, 10/31/05		21,474		21,340
Charta LLC
3.54%, 09/20/05		39,097		39,024
Chesham Finance LLC
3.54%, 09/15/05		16,756		16,733

68 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2005

Security	Principal		Value
Dorada Finance Inc.
3.76%, 01/26/06	$	5,585	$	5,499
Edison Asset Securitization LLC
3.12%, 09/06/05		41,889		41,871
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		72,024		71,963
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		254,110		252,951
Gemini Securitization Corp.
3.49%, 09/06/05		89,604		89,560
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		181,520		181,169
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		41,889		41,819
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		86,571		85,644
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		64,230		64,230
HSBC PLC
3.88%, 02/03/06		16,756		16,476
Jupiter Securitization Corp.
3.51%, 09/21/05		31,661		31,599
Leafs LLC
3.61%, 01/20/06 - 02/21/064		58,640		58,639
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		76,988		76,874
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		136,838		136,660
New Center Asset Trust
3.60%, 09/01/05		195,483		195,483
Park Avenue Receivables Corp.
3.50%, 09/19/05		31,503		31,448
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		75,626		75,510
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		55,852		54,827
Scaldis Capital LLC
3.52%, 09/07/05		111,704		111,639
Sedna Finance Inc.
3.92%, 02/21/06		13,963		13,700
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		164,206		164,162
Sydney Capital Corp.
3.49%, 09/01/05		34,506		34,506
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		117,290		117,071
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		119,672		119,631
Thunder Bay Funding Inc.
3.50%, 09/01/05		9,336		9,336
Tulip Funding Corp.
3.49%, 09/01/05		206,079		206,079
Windmill Funding Corp.
3.52%, 09/09/05		25,692		25,672
World Savings Bank
3.51%, 09/09/05		19,548		19,548
Yorktown Capital LLC
3.53%, 09/19/05		80,986		80,843
				2,959,692
MEDIUM-TERM NOTES3 – 0.08%
Dorada Finance Inc.
3.93%, 07/07/064		17,314		17,313
K2 USA LLC
3.94%, 07/07/064		33,511		33,510
				50,823

SCHEDULES OF INVESTMENTS 69

Schedule of Investments (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
MONEY MARKET FUNDS – 0.38%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		223,409	$	223,409
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		5,726		5,726
BlackRock Temp Cash Money Market Fund 3.41%3,6		5,918		5,918
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		19,579		19,579
				254,632
REPURCHASE AGREEMENTS3 – 3.73%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,340,588 and an effective yield of 3.60%.7	$	1,340,453		1,340,453
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,033,370 and an effective yield of 3.60%.7		1,033,266		1,033,266
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $121,770 and an effective yield of 3.60%.7		121,758		121,758
				2,495,477
TIME DEPOSITS3 – 0.78%
Abbey National Treasury Services PLC
3.50%, 09/01/05		111,704		111,704
Chase Bank USA N.A.
3.58%, 09/01/05		307,187		307,187
Security	Principal		Value
JP Morgan Chase Bank N.A.
3.59%, 09/01/05	$	73,735	$	73,735
Natexis Banques Populaires
3.51%, 09/20/058		27,926		27,926
				520,552
VARIABLE & FLOATING RATE NOTES3 – 7.74%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		103,885		103,890
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		150,801		150,801
American Express Centurion Bank
3.55% - 3.63%, 6/29/06 - 07/19/06		92,156		92,156
American Express Credit Corp.
3.65%, 10/26/05		111,704		111,713
ASIF Global Financing XXII
3.99%, 05/30/064		55,852		55,922
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		36,304		36,304
Bank of America N.A.
3.56%, 08/10/06		279,261		279,261
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		287,081		287,078
BMW US Capital LLC
3.54%, 07/14/064		55,852		55,852
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		189,898		189,889
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		150,243		150,236
Commodore CDO Ltd.
3.47%, 12/12/054		13,963		13,963
Credit Suisse First Boston
3.57%, 07/19/06		139,631		139,631
DEPFA Bank PLC
3.42%, 03/15/06		55,852		55,852

70 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2005

Security	Principal		Value
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064	$	88,805	$	88,810
Eli Lilly Services Inc.
3.53%, 09/01/064		55,852		55,852
Fifth Third Bancorp
3.58%, 04/21/064		111,704		111,704
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		39,097		39,098
General Electric Capital Corp.
3.66%, 07/07/06		25,134		25,156
Hartford Life Global Funding Trust
3.56%, 08/15/06		55,852		55,852
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		167,557		167,556
HSBC Bank USA N.A.
3.70%, 05/04/06		19,548		19,559
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		217,824		217,825
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		217,824		217,847
Lothian Mortgages PLC
3.63%, 01/24/06		55,852		55,852
Marshall & Ilsley Bank
3.71%, 02/20/06		55,852		55,884
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		111,704		111,753
National City Bank (Ohio)
3.50%, 01/06/06		27,926		27,923
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		206,653		206,673
Nordea Bank AB
3.55%, 08/11/064		97,741		97,741
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		178,727		178,730
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		215,031		215,031
Principal Life Income Funding Trusts
3.74%, 05/10/06		41,889		41,891
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		186,407		186,364
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		30,719		30,716
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		318,916		318,918
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		55,852		55,852
Strips III LLC
3.69%, 07/24/064,8		16,407		16,407
SunTrust Bank
3.63%, 04/28/06		83,778		83,778
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		135,721		135,713
Toyota Motor Credit Corp.
3.57%, 04/10/06		25,134		25,133
Unicredito Italiano SpA
3.34%, 06/14/06		72,608		72,588
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		134,456		134,456
Wells Fargo & Co.
3.56%, 09/15/064		27,926		27,929
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		223,409		223,399
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		117,848		117,845

SCHEDULES OF INVESTMENTS 71

Schedule of Investments (Continued)

iSHARES^® MSCI SPAIN INDEX FUND

August 31, 2005

Security	Principal		Value
Winston Funding Ltd.
3.71%, 10/23/054	$	39,879	$	39,878
				5,182,261
TOTAL SHORT-TERM INVESTMENTS (Cost: $12,932,335)				12,932,335
TOTAL INVESTMENTS IN SECURITIES – 119.25% (Cost: $65,748,712)				79,834,495
Other Assets, Less Liabilities – (19.25)%				(12,889,437	)
NET ASSETS – 100.00%			$	66,945,058

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

72 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.97%
AGRICULTURE – 1.83%
Swedish Match AB	89,110	$	1,126,497
			1,126,497
AIRLINES – 0.32%
SAS AB1,2	20,748		200,132
			200,132
AUTO MANUFACTURERS – 7.39%
Scania AB Class B	26,068		938,852
Volvo AB Class A2	26,030		1,072,879
Volvo AB Class B2	59,356		2,532,456
			4,544,187
BANKS – 17.66%
Nordea AB2	576,460		5,560,439
Skandinaviska Enskilda Banken AB Class A2	130,492		2,362,756
Svenska Handelsbanken AB Class A2	135,394		2,941,817
			10,865,012
COMMERCIAL SERVICES – 2.11%
Securitas AB Class B2	80,598		1,300,147
			1,300,147
COMPUTERS – 0.38%
WM-Data AB Class B2	85,120		236,508
			236,508
COSMETICS & PERSONAL CARE – 0.33%
Oriflame Cosmetics SA SDR	8,398		201,823
			201,823
DIVERSIFIED FINANCIAL SERVICES – 0.68%
D Carnegie AB	12,426		144,404
OM AB1,2	21,470		275,657
			420,061
ENGINEERING & CONSTRUCTION – 2.11%
Skanska AB Class B2	100,624		1,295,241
			1,295,241
FOOD – 0.33%
Axfood AB	8,018		200,610
			200,610
FOREST PRODUCTS & PAPER – 4.03%
Billerud AB2	14,820		183,446
Holmen AB Class B2	14,250		425,026
Svenska Cellulosa AB Class B2	52,744		1,868,347
			2,476,819
HAND & MACHINE TOOLS – 3.96%
Sandvik AB2	55,290		2,435,426
			2,435,426
HEALTH CARE – PRODUCTS – 3.35%
Elekta AB Class B1,2	7,866		353,216
Gambro AB Class A2	48,374		684,783
Gambro AB Class B2	26,296		372,246
Getinge AB Class B2	47,044		650,468
			2,060,713
HEALTH CARE – SERVICES – 0.61%
Capio AB1	20,634		374,968
			374,968
HOME FURNISHINGS – 2.82%
Electrolux AB Series B2	77,444		1,733,680
			1,733,680
INSURANCE – 2.46%
Skandia Forsakrings AB2	278,388		1,514,024
			1,514,024
IRON & STEEL – 0.90%
Svenskt Stal AB Class A2	13,908		380,943
Svenskt Stal AB Class B	6,764		174,134
			555,077
MACHINERY – 3.97%
Atlas Copco AB Class A2	91,390		1,570,513
Atlas Copco AB Class B2	57,000		870,693
			2,441,206
MANUFACTURING – 1.26%
Alfa Laval AB2	24,852		425,439
Trelleborg AB Class B2	20,862		350,266
			775,705
MEDIA – 1.58%
Eniro ABS2	43,206		483,610
Modern Times Group AB Class B1	13,756		490,901
			974,511
METAL FABRICATE & HARDWARE – 4.06%
Assa Abloy AB Class B2	80,674		1,078,281

SCHEDULES OF INVESTMENTS 73

Schedule of Investments (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Hoganas AB Class B2		7,144	$	179,683
SKF AB2		102,106		1,240,366
				2,498,330
OIL & GAS – 0.90%
Lundin Petroleum AB1		44,878		551,080
				551,080
REAL ESTATE – 1.41%
Castellum AB		10,868		381,399
Fabege AB2		21,166		372,094
Wihlborgs Fastigheter AB1,2		4,683		114,393
				867,886
RETAIL – 7.19%
Hennes & Mauritz AB Class B2		127,642		4,420,604
				4,420,604
SOFTWARE – 0.24%
Telelogic AB1		62,814		145,580
				145,580
TELECOMMUNICATIONS – 28.09%
Tele2 AB Class B2		85,044		923,911
Telefonaktiebolaget LM Ericsson Class B2		4,008,544		13,829,937
TeliaSonera AB2		508,060		2,522,253
				17,276,101
TOTAL COMMON STOCKS (Cost: $49,257,043)				61,491,928
SHORT-TERM INVESTMENTS – 32.49%
CERTIFICATES OF DEPOSIT3 – 3.69%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	129,480		129,480
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		56,108		56,103
Credit Suisse First Boston
3.53%, 05/09/06		86,320		86,320
Danske Bank
3.50%, 10/17/05		86,320		86,317
Dexia Credit Local
3.61%, 08/30/06		43,160		43,152
Security	Principal		Value
First Tennessee Bank
3.52%, 09/15/05	$	146,744	$	146,744
Fortis Bank NY
3.83% - 3.84%, 01/25/06		129,480		129,481
HBOS Treasury Services PLC
3.39%, 12/14/05		51,792		51,792
HSBC Bank USA N.A.
3.72%, 08/03/06		43,160		43,174
Royal Bank of Scotland
3.61%, 06/27/06		43,160		43,155
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		133,796		133,773
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		306,437		306,443
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		69,056		69,056
US Bank N.A.
3.54%, 09/19/05		215,801		215,801
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		388,441		388,441
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		340,965		340,964
				2,270,196
COMMERCIAL PAPER3 – 7.43%
Alpine Securitization Corp.
3.52%, 09/09/05		172,640		172,505
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		182,136		181,164
Aspen Funding Corp.
3.49%, 09/01/05		86,320		86,320
Barton Capital Corp.
3.51%, 09/07/05		97,891		97,834
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		142,428		142,253

74 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2005

Security	Principal		Value
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06	$	43,936	$	43,508
Cantabric Finance LLC
3.73%, 10/31/05		33,188		32,981
Charta LLC
3.54%, 09/20/05		60,424		60,311
Chesham Finance LLC
3.54%, 09/15/05		25,896		25,860
Dorada Finance Inc.
3.76%, 01/26/06		8,632		8,499
Edison Asset Securitization LLC
3.12%, 09/06/05		64,740		64,712
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		111,314		111,220
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		392,729		390,938
Gemini Securitization Corp.
3.49%, 09/06/05		138,484		138,416
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		280,541		279,998
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		64,740		64,632
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		133,796		132,364
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		99,268		99,268
HSBC PLC
3.88%, 02/03/06		25,896		25,463
Jupiter Securitization Corp.
3.51%, 09/21/05		48,932		48,837
Leafs LLC
3.61%, 01/20/06 - 02/21/064		90,628		90,628
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		118,986		118,809
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		211,485		211,208
New Center Asset Trust
3.60%, 09/01/05		302,121		302,121
Park Avenue Receivables Corp.
3.50%, 09/19/05		48,688		48,603
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		116,880		116,701
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		86,320		84,736
Scaldis Capital LLC
3.52%, 09/07/05		172,640		172,539
Sedna Finance Inc.
3.92%, 02/21/06		21,580		21,174
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		253,782		253,715
Sydney Capital Corp.
3.49%, 09/01/05		53,329		53,329
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		181,273		180,934
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		184,955		184,891
Thunder Bay Funding Inc.
3.50%, 09/01/05		14,428		14,428
Tulip Funding Corp.
3.49%, 09/01/05		318,497		318,497
Windmill Funding Corp.
3.52%, 09/09/05		39,707		39,676
World Savings Bank
3.51%, 09/09/05		30,212		30,212
Yorktown Capital LLC
3.53%, 09/19/05		125,164		124,943
				4,574,227

SCHEDULES OF INVESTMENTS 75

Schedule of Investments (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
MEDIUM-TERM NOTES3 – 0.13%
Dorada Finance Inc.
3.93%, 07/07/064	$	26,759	$	26,757
K2 USA LLC
3.94%, 07/07/064		51,792		51,790
				78,547
MONEY MARKET FUNDS – 0.64%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		345,281		345,281
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		7,174		7,174
BlackRock Temp Cash Money Market Fund 3.41%3,6		9,146		9,146
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%3,6		30,260		30,260
				391,861
REPURCHASE AGREEMENTS3 – 6.27%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $2,071,893 and an effective yield of 3.60%.7	$	2,071,685		2,071,685
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,597,084 and an effective yield of 3.60%.7		1,596,924		1,596,924
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $188,197 and an effective yield of 3.60%.7		188,178		188,178
				3,856,787
Security	Principal		Value
TIME DEPOSITS3 – 1.31%
Abbey National Treasury Services PLC
3.50%, 09/01/05	$	172,640	$	172,640
Chase Bank USA N.A.
3.58%, 09/01/05		474,761		474,761
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		113,958		113,958
Natexis Banques Populaires
3.51%, 09/20/058		43,160		43,160
				804,519
VARIABLE & FLOATING RATE NOTES3 – 13.02%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		160,556		160,571
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		233,065		233,065
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		142,428		142,428
American Express Credit Corp.
3.65%, 10/26/05		172,640		172,653
ASIF Global Financing XXII
3.99%, 05/30/064		86,320		86,428
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		56,108		56,108
Bank of America N.A.
3.56%, 08/10/06		431,601		431,601
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		443,686		443,680
BMW US Capital LLC
3.54%, 07/14/064		86,320		86,320
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		293,489		293,477
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		232,201		232,191
Commodore CDO Ltd.
3.47%, 12/12/054		21,580		21,580

76 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2005

Security	Principal		Value
Credit Suisse First Boston
3.57%, 07/19/06	$	215,801	$	215,801
DEPFA Bank PLC
3.42%, 03/15/06		86,320		86,320
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		137,249		137,256
Eli Lilly Services Inc.
3.53%, 09/01/064		86,320		86,320
Fifth Third Bancorp
3.58%, 04/21/064		172,640		172,640
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		60,424		60,426
General Electric Capital Corp.
3.66%, 07/07/06		38,844		38,879
Hartford Life Global Funding Trust
3.56%, 08/15/06		86,320		86,320
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		258,961		258,960
HSBC Bank USA N.A.
3.70%, 05/04/06		30,212		30,229
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		336,649		336,652
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		336,649		336,685
Lothian Mortgages PLC
3.63%, 01/24/06		86,320		86,320
Marshall & Ilsley Bank
3.71%, 02/20/06		86,320		86,369
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		172,640		172,716
National City Bank (Ohio)
3.50%, 01/06/06		43,160		43,156
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		319,385		319,416
Nordea Bank AB
3.55%, 08/11/064		151,060		151,060
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		276,225		276,229
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		332,333		332,332
Principal Life Income Funding Trusts
3.74%, 05/10/06		64,740		64,743
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		288,094		288,028
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		47,476		47,472
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		492,889		492,892
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		86,320		86,320
Strips III LLC
3.69%, 07/24/064,8		25,357		25,357
SunTrust Bank
3.63%, 04/28/06		129,480		129,480
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		209,758		209,744
Toyota Motor Credit Corp.
3.57%, 04/10/06		38,844		38,844
Unicredito Italiano SpA
3.34%, 06/14/06		112,216		112,185
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		207,803		207,802
Wells Fargo & Co.
3.56%, 09/15/064		43,160		43,164
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		345,281		345,267
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		182,136		182,131

SCHEDULES OF INVESTMENTS 77

Schedule of Investments (Continued)

iSHARES^® MSCI SWEDEN INDEX FUND

August 31, 2005

Security	Principal		Value
Winston Funding Ltd.
3.71%, 10/23/054	$	61,633	$	61,633
				8,009,250
TOTAL SHORT-TERM INVESTMENTS (Cost: $19,985,387)				19,985,387
TOTAL INVESTMENTS IN SECURITIES – 132.46% (Cost: $69,242,430)				81,477,315
Other Assets, Less Liabilities – (32.46)%				(19,964,809	)
NET ASSETS – 100.00%			$	61,512,506

SDR - Swedish Depositary Receipts

¹ Non-income earning security.

² All or a portion of this security represents a security on loan. See Note 5.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

78 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.71%
BANKS – 17.13%
Banque Cantonale Vaudoise	1,512	$	408,202
Credit Suisse Group	90,720		3,918,020
Julius Baer Holding AG	13,414		872,984
UBS AG Registered	95,669		7,799,785
Vontobel Holding AG Registered	21,900		590,810
			13,589,801
BUILDING MATERIALS – 3.83%
Geberit AG Registered	296		216,981
Holcim Ltd. Registered	43,689		2,818,981
			3,035,962
CHEMICALS – 7.80%
Ciba Specialty Chemicals AG Registered	19,948		1,210,243
Clariant AG Registered1	21,672		309,120
Givaudan SA Registered2	3,279		2,090,983
Lonza Group AG Registered	5,618		319,415
Syngenta AG1	21,297		2,257,555
			6,187,316
COMMERCIAL SERVICES – 1.90%
Adecco SA Registered	15,389		730,655
Societe Generale de Surveillance Holding SA	1,008		780,961
			1,511,616
COMPUTERS – 0.49%
Logitech International SA1	10,516		388,568
			388,568
ENGINEERING & CONSTRUCTION – 2.04%
ABB Ltd.1	225,720		1,621,446
			1,621,446
FOOD – 12.76%
Nestle SA Registered	36,180		10,119,878
			10,119,878
HAND & MACHINE TOOLS – 1.34%
Schindler Holding AG Participation Certificates	1,872		746,747
Schindler Holding AG Registered	792		316,561
			1,063,308
HEALTH CARE – PRODUCTS – 5.28%
Nobel Biocare Holding AG	5,306		1,155,265
Phonak Holding AG Registered	9,072		346,026
Straumann Holding AG Registered	1,927		439,086
Synthes Inc.	18,720		2,246,192
			4,186,569
INSURANCE – 8.34%
Swiss Reinsurance Co.	48,160		3,092,159
Zurich Financial Services AG1	20,006		3,524,439
			6,616,598
LEISURE TIME – 0.02%
Kuoni Reisen Holding AG Registered1	37		14,282
			14,282
MACHINERY – 0.43%
Rieter Holding AG	521		155,250
SIG Holding AG	731		183,556
			338,806
MANUFACTURING – 0.39%
Sulzer AG Registered	648		306,634
			306,634
PHARMACEUTICALS – 27.84%
Novartis AG	242,666		11,724,020
Roche Holding AG Genusschein	65,145		8,965,882
Serono SA	2,116		1,397,271
			22,087,173
REAL ESTATE – 0.83%
PSP Swiss Property AG1	14,616		655,626
			655,626
RETAIL – 6.31%
Compagnie Financiere Richemont AG Class A	72,000		2,720,489
Swatch Group (The) AG Class B2	7,821		1,081,373
Swatch Group (The) AG Registered	24,749		703,069
Valora Holding AG Registered1	2,715		503,757
			5,008,688
SEMICONDUCTORS – 0.36%
Micronas Semiconductor Holding AG1	1,995		83,941
Unaxis Holding AG Class R1,2	1,404		199,703
			283,644

SCHEDULES OF INVESTMENTS 79

Schedule of Investments (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
TELECOMMUNICATIONS – 2.62%
Kudelski SA Bearer1,2		2,988	$	120,617
Swisscom AG Registered		5,844		1,959,687
				2,080,304
TOTAL COMMON STOCKS (Cost: $68,166,061)				79,096,219
SHORT-TERM INVESTMENTS – 1.59%
CERTIFICATES OF DEPOSIT3 – 0.17%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	7,911		7,911
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		3,428		3,427
Credit Suisse First Boston
3.53%, 05/09/06		5,274		5,274
Danske Bank
3.50%, 10/17/05		5,274		5,274
Dexia Credit Local
3.61%, 08/30/06		2,637		2,636
First Tennessee Bank
3.52%, 09/15/05		8,966		8,966
Fortis Bank NY
3.83% - 3.84%, 01/25/06		7,911		7,911
HBOS Treasury Services PLC
3.39%, 12/14/05		3,164		3,164
HSBC Bank USA N.A.
3.72%, 08/03/06		2,637		2,638
Royal Bank of Scotland
3.61%, 06/27/06		2,637		2,637
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		8,175		8,173
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		18,723		18,723
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		4,219		4,220
Security	Principal		Value
US Bank N.A.
3.54%, 09/19/05	$	13,185	$	13,185
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		23,733		23,733
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		20,832		20,832
				138,704
COMMERCIAL PAPER3 – 0.35%
Alpine Securitization Corp.
3.52%, 09/09/05		10,548		10,540
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		11,128		11,069
Aspen Funding Corp.
3.49%, 09/01/05		5,274		5,274
Barton Capital Corp.
3.51%, 09/07/05		5,981		5,977
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		8,702		8,691
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		2,684		2,658
Cantabric Finance LLC
3.73%, 10/31/05		2,028		2,015
Charta LLC
3.54%, 09/20/05		3,692		3,685
Chesham Finance LLC
3.54%, 09/15/05		1,582		1,580
Dorada Finance Inc.
3.76%, 01/26/06		527		519
Edison Asset Securitization LLC
3.12%, 09/06/05		3,955		3,954
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		6,801		6,796
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		23,995		23,886

80 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2005

Security	Principal		Value
Gemini Securitization Corp.
3.49%, 09/06/05	$	8,461	$	8,457
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		17,140		17,107
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		3,955		3,949
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		8,175		8,087
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		6,065		6,065
HSBC PLC
3.88%, 02/03/06		1,582		1,556
Jupiter Securitization Corp.
3.51%, 09/21/05		2,990		2,984
Leafs LLC
3.61%, 01/20/06 - 02/21/064		5,537		5,537
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		7,270		7,259
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		12,921		12,905
New Center Asset Trust
3.60%, 09/01/05		18,459		18,459
Park Avenue Receivables Corp.
3.50%, 09/19/05		2,975		2,970
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		7,141		7,130
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		5,274		5,177
Scaldis Capital LLC
3.52%, 09/07/05		10,548		10,542
Sedna Finance Inc.
3.92%, 02/21/06		1,318		1,294
Security	Shares or Principal		Value
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05	$	15,506	$	15,501
Sydney Capital Corp.
3.49%, 09/01/05		3,258		3,258
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		11,075		11,055
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		11,300		11,296
Thunder Bay Funding Inc.
3.50%, 09/01/05		882		882
Tulip Funding Corp.
3.49%, 09/01/05		19,460		19,460
Windmill Funding Corp.
3.52%, 09/09/05		2,426		2,424
World Savings Bank
3.51%, 09/09/05		1,846		1,846
Yorktown Capital LLC
3.53%, 09/19/05		7,647		7,634
				279,478
MEDIUM-TERM NOTES3 – 0.01%
Dorada Finance Inc.
3.93%, 07/07/064		1,635		1,635
K2 USA LLC
3.94%, 07/07/064		3,164		3,164
				4,799
MONEY MARKET FUNDS – 0.08%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,6		21,096		21,096
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%5,6		41,664		41,664
BlackRock Temp Cash Money Market Fund 3.41%3,6		559		559

SCHEDULES OF INVESTMENTS 81

Schedule of Investments (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Short Term Investments Co.- Prime Money Market Portfolio, Institutional Shares 3.50%3,6		1,849	$	1,849
				65,168
REPURCHASE AGREEMENTS3 – 0.30%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $126,589 and an effective yield of 3.60%.7	$	126,576		126,576
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $97,579 and an effective yield of 3.60%.7		97,569		97,569
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $11,498 and an effective yield of 3.60%.7		11,497		11,497
				235,642
TIME DEPOSITS3 – 0.06%
Abbey National Treasury Services PLC
3.50%, 09/01/05		10,548		10,548
Chase Bank USA N.A.
3.58%, 09/01/05		29,007		29,007
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		6,963		6,963
Natexis Banques Populaires
3.51%, 09/20/058		2,637		2,637
				49,155
VARIABLE & FLOATING RATE NOTES3 – 0.62%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/064		9,810		9,810
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		14,240		14,239
Security	Principal		Value
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06	$	8,702	$	8,702
American Express Credit Corp.
3.65%, 10/26/05		10,548		10,549
ASIF Global Financing XXII
3.99%, 05/30/064		5,274		5,281
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		3,428		3,428
Bank of America N.A.
3.56%, 08/10/06		26,370		26,370
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/064		27,108		27,107
BMW US Capital LLC
3.54%, 07/14/064		5,274		5,274
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		17,932		17,931
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/064		14,187		14,185
Commodore CDO Ltd.
3.47%, 12/12/054		1,318		1,318
Credit Suisse First Boston
3.57%, 07/19/06		13,185		13,185
DEPFA Bank PLC
3.42%, 03/15/06		5,274		5,274
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/064		8,386		8,386
Eli Lilly Services Inc.
3.53%, 09/01/064		5,274		5,274
Fifth Third Bancorp
3.58%, 04/21/064		10,548		10,548
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/064		3,692		3,692
General Electric Capital Corp.
3.66%, 07/07/06		2,373		2,375

82 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2005

Security	Principal		Value
Hartford Life Global Funding Trust
3.56%, 08/15/06	$	5,274	$	5,274
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/064		15,822		15,822
HSBC Bank USA N.A.
3.70%, 05/04/06		1,846		1,847
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/064		20,569		20,569
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/064		20,569		20,571
Lothian Mortgages PLC
3.63%, 01/24/06		5,274		5,274
Marshall & Ilsley Bank
3.71%, 02/20/06		5,274		5,277
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/064		10,548		10,553
National City Bank (Ohio)
3.50%, 01/06/06		2,637		2,637
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/064		19,514		19,515
Nordea Bank AB
3.55%, 08/11/064		9,229		9,229
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/064		16,877		16,877
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/064		20,305		20,304
Principal Life Income Funding Trusts
3.74%, 05/10/06		3,955		3,956
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		17,602		17,598
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/064		2,901		2,901
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/064		30,114		30,117
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		5,274		5,274
Strips III LLC
3.69%, 07/24/064,8		1,549		1,549
SunTrust Bank
3.63%, 04/28/06		7,911		7,911
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/064		12,816		12,815
Toyota Motor Credit Corp.
3.57%, 04/10/06		2,373		2,373
Unicredito Italiano SpA
3.34%, 06/14/06		6,856		6,854
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		12,696		12,696
Wells Fargo & Co.
3.56%, 09/15/064		2,637		2,637
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/064		21,096		21,095
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/064		11,128		11,129
Winston Funding Ltd.
3.71%, 10/23/054		3,766		3,766
				489,348
TOTAL SHORT-TERM INVESTMENTS (Cost: $1,262,294)				1,262,294
TOTAL INVESTMENTS IN SECURITIES – 101.30% (Cost: $69,428,355)				80,358,513
Other Assets, Less Liabilities – (1.30)%				(1,034,345	)
NET ASSETS – 100.00%			$	79,324,168

SCHEDULES OF INVESTMENTS 83

Schedule of Investments (Continued)

iSHARES^® MSCI SWITZERLAND INDEX FUND

August 31, 2005

¹ Non-income earning security.

² All or a portion of this security represents a security on loan. See Note 5.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

84 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.23%
ADVERTISING – 0.60%
Aegis Group PLC	218,116	$	455,059
WPP Group PLC	226,920		2,338,568
			2,793,627
AEROSPACE & DEFENSE – 1.38%
BAE Systems PLC	608,840		3,583,483
Cobham PLC	219,480		546,723
Meggitt PLC	87,048		483,380
Rolls-Royce Group PLC1	297,972		1,808,722
			6,422,308
AGRICULTURE – 2.53%
British American Tobacco PLC	302,808		6,077,907
Gallaher Group PLC	122,140		1,856,253
Imperial Tobacco Group PLC	138,136		3,826,045
			11,760,205
AIRLINES – 0.12%
British Airways PLC1	108,252		539,796
			539,796
AUTO PARTS & EQUIPMENT– 0.15%
GKN PLC	135,904		702,737
TI Automotive Ltd. Class A1,2	52,283		—
			702,737
BANKS – 18.09%
Barclays PLC3	1,223,880		12,172,688
HBOS PLC	738,668		11,551,580
HSBC Holdings PLC	2,123,996		34,113,609
Lloyds TSB Group PLC	1,060,696		8,699,180
Royal Bank of Scotland Group PLC	602,640		17,569,665
			84,106,722
BEVERAGES – 2.61%
Diageo PLC	563,828		8,031,457
SABMiller PLC	167,276		2,943,859
Scottish & Newcastle PLC	141,360		1,167,611
			12,142,927
BUILDING MATERIALS – 0.80%
BPB PLC	92,752		1,220,282
Hanson PLC	136,028		1,415,319
Pilkington PLC	189,100		448,940
Travis Perkins PLC	22,692		639,535
			3,724,076
CHEMICALS – 0.80%
BOC Group PLC	93,124		1,753,601
Imperial Chemical Industries PLC	221,216		1,150,833
Johnson Matthey PLC	40,796		831,323
			3,735,757
COMMERCIAL SERVICES – 1.45%
Aggreko PLC	46,996		176,868
Brambles Industries PLC	133,920		796,650
Bunzl PLC	68,865		675,641
Capita Group PLC	122,636		803,415
Davis Service Group PLC	33,893		269,893
De La Rue PLC	31,920		207,823
Group 4 Securicor PLC1	219,852		609,927
Hays PLC	318,928		751,426
Intertek Group PLC	31,372		425,720
Rank Group PLC	120,032		613,109
Rentokil Initial PLC	335,916		978,742
Serco Group PLC	91,760		443,119
			6,752,333
COMPUTERS – 0.10%
LogicaCMG PLC	143,096		458,110
			458,110
DISTRIBUTION & WHOLESALE – 0.61%
Inchcape PLC	14,632		544,749
Wolseley PLC	112,468		2,281,711
			2,826,460
DIVERSIFIED FINANCIAL SERVICES – 1.11%
AMVESCAP PLC	141,236		932,253
Cattles PLC	62,744		328,388
Close Brothers Group PLC	23,808		340,846
ICAP PLC	95,356		544,092
London Stock Exchange PLC	49,957		509,450
Man Group PLC	54,560		1,614,220
Provident Financial PLC	46,996		541,803
Schroders PLC	23,560		369,288
			5,180,340
ELECTRIC – 2.59%
International Power PLC1	273,668		1,145,609

SCHEDULES OF INVESTMENTS 85

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Shares	Value
National Grid PLC	511,996	$	4,825,256
Scottish & Southern Energy PLC	163,060		2,891,658
Scottish Power PLC	353,896		3,192,046
			12,054,569
ELECTRONICS – 0.13%
Electrocomponents PLC	79,484		374,902
Premier Farnell PLC	77,376		244,930
			619,832
ENGINEERING & CONSTRUCTION – 0.67%
AMEC PLC	60,636		392,605
BAA PLC	204,848		2,252,946
Balfour Beatty PLC	81,716		486,839
			3,132,390
ENTERTAINMENT – 0.68%
EMI Group PLC	145,948		680,518
Hilton Group PLC	305,288		1,726,843
William Hill PLC	72,912		769,768
			3,177,129
FOOD – 4.26%
Cadbury Schweppes PLC	392,832		3,864,708
J Sainsbury PLC	253,084		1,289,309
Tate & Lyle PLC	89,900		744,581
Tesco PLC	1,475,600		8,658,481
Unilever PLC	522,040		5,234,451
			19,791,530
FOOD SERVICE – 0.39%
Compass Group PLC	401,884		1,801,600
			1,801,600
GAS – 0.69%
Centrica PLC	709,404		3,186,557
			3,186,557
HEALTH CARE – PRODUCTS – 0.40%
Smith & Nephew PLC	174,964		1,674,106
SSL International PLC	35,340		181,784
			1,855,890
HOLDING COMPANIES – DIVERSIFIED – 0.16%
Tomkins PLC	143,096		723,197
			723,197
HOME BUILDERS – 0.75%
Barratt Developments PLC	44,268		562,901
Bellway PLC	22,692		355,070
Berkeley Group Holdings (The) PLC1	21,452		334,703
Bovis Homes Group PLC	24,552		272,234
Persimmon PLC4	50,716		755,718
Taylor Woodrow PLC	111,476		641,083
Wimpey (George) PLC	74,772		551,709
			3,473,418
HOME FURNISHINGS – 0.06%
MFI Furniture Group PLC	124,000		257,588
			257,588
HOUSEHOLD PRODUCTS & WARES – 0.79%
Reckitt Benckiser PLC	118,172		3,647,156
			3,647,156
INSURANCE – 2.99%
Aviva PLC	446,896		4,923,059
Britannic Group PLC	38,812		437,679
Friends Provident PLC	361,088		1,128,393
Legal & General Group PLC	1,214,952		2,430,982
Prudential PLC	448,756		4,085,995
Royal & Sun Alliance Insurance Group PLC	539,772		900,423
			13,906,531
IRON & STEEL – 0.15%
Corus Group PLC1	820,260		700,757
			700,757
LEISURE TIME – 0.42%
Carnival PLC	31,744		1,640,287
First Choice Holidays PLC	88,908		323,809
			1,964,096
LODGING – 0.24%
InterContinental Hotels Group PLC	84,568		1,136,185
			1,136,185
MANUFACTURING – 0.75%
BBA Group PLC	89,528		493,528
Cookson Group PLC1	38,480		223,369
FKI PLC	120,652		230,019
IMI PLC	68,200		540,935
Invensys PLC1	1,120,113		297,150

86 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Shares	Value
Smiths Group PLC	104,904	$	1,712,226
			3,497,227
MEDIA – 2.89%
British Sky Broadcasting Group PLC	230,020		2,358,104
Daily Mail & General Trust PLC Class A	58,776		697,696
EMAP PLC	47,492		692,730
ITV PLC	763,344		1,599,443
Pearson PLC	149,668		1,798,158
Reed Elsevier PLC	242,792		2,270,703
Reuters Group PLC	267,716		1,753,866
Trinity Mirror PLC	57,660		642,967
United Business Media PLC	54,738		548,853
Yell Group	130,696		1,061,898
			13,424,418
MINING – 4.47%
Anglo American PLC	267,716		6,750,639
BHP Billiton PLC	465,496		6,898,675
Rio Tinto PLC	202,740		7,143,259
			20,792,573
OIL & GAS – 20.38%
BG Group PLC	667,244		5,994,358
BP PLC	4,008,548		45,564,510
Royal Dutch Shell PLC Class A	783,680		25,511,727
Royal Dutch Shell PLC Class B	522,536		17,677,772
			94,748,367
PACKAGING & CONTAINERS – 0.20%
Rexam PLC	102,176		924,816
			924,816
PHARMACEUTICALS – 8.90%
Alliance Unichem PLC	46,376		688,129
AstraZeneca PLC	308,388		14,032,676
GlaxoSmithKline PLC	1,106,576		26,649,210
			41,370,015
REAL ESTATE – 1.45%
British Land Co. PLC	96,596		1,535,797
Brixton PLC	52,948		355,445
Great Portland Estates PLC	28,768		189,630
Hammerson PLC	51,336		830,050
Land Securities Group PLC	87,296		2,227,918
Liberty International PLC	46,996		817,776
Slough Estates PLC	81,716		804,662
			6,761,278
RETAIL – 3.32%
Boots Group PLC	136,648		1,516,390
Dixons Group PLC	353,648		962,031
Enterprise Inns PLC	64,852		963,443
GUS PLC	190,464		3,117,287
HMV Group PLC	75,020		339,342
Kesa Electricals PLC	97,216		458,101
Kingfisher PLC	437,968		1,979,115
Marks & Spencer Group PLC	308,884		1,981,901
Mitchells & Butlers PLC	95,108		624,784
Next PLC	48,484		1,314,990
Punch Taverns PLC	48,856		676,599
Signet Group PLC	342,736		671,906
Whitbread PLC	47,368		847,252
			15,453,141
SEMICONDUCTORS – 0.12%
ARM Holdings PLC	259,284		536,286
			536,286
SOFTWARE – 0.37%
iSOFT Group PLC	43,028		353,276
Misys PLC	90,520		367,939
Sage Group PLC	237,956		977,925
			1,699,140
TELECOMMUNICATIONS – 8.72%
BT Group PLC	1,607,536		6,230,609
Cable & Wireless PLC	458,056		1,246,053
Marconi Corp. PLC1	39,680		201,253
Vodafone Group PLC	12,036,060		32,850,014
			40,527,929
TRANSPORTATION – 0.82%
Arriva PLC	37,200		378,354
Associated British Ports Holdings PLC	56,916		473,188
Exel PLC	55,304		999,643
FirstGroup PLC	72,664		409,059
National Express Group PLC	26,660		395,582

SCHEDULES OF INVESTMENTS 87

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Peninsular & Oriental Steam Navigation Co. (The)		144,088	$	821,504
Stagecoach Group PLC		160,323		311,417
				3,788,747
VENTURE CAPITAL – 0.29%
3i Group PLC		107,632		1,357,974
				1,357,974
WATER – 0.83%
Kelda Group PLC		69,688		849,161
Severn Trent PLC		64,356		1,126,223
United Utilities PLC		161,820		1,861,209
				3,836,593
TOTAL COMMON STOCKS (Cost: $420,168,015)				461,292,327
SHORT-TERM INVESTMENTS – 0.18%
CERTIFICATES OF DEPOSIT5 – 0.02%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	5,177		5,177
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		2,243		2,243
Credit Suisse First Boston
3.53%, 05/09/06		3,451		3,451
Danske Bank
3.50%, 10/17/05		3,451		3,451
Dexia Credit Local
3.61%, 08/30/06		1,726		1,725
First Tennessee Bank
3.52%, 09/15/05		5,867		5,867
Fortis Bank NY
3.83% - 3.84%, 01/25/06		5,177		5,177
HBOS Treasury Services PLC
3.39%, 12/14/05		2,071		2,071
HSBC Bank USA N.A.
3.72%, 08/03/06		1,726		1,726
Royal Bank of Scotland
3.61%, 06/27/06		1,726		1,725
Security	Principal		Value
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06	$	5,349	$	5,349
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		12,252		12,252
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		2,761		2,761
US Bank N.A.
3.54%, 09/19/05		8,628		8,628
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05		15,531		15,531
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		13,633		13,633
				90,767
COMMERCIAL PAPER5 – 0.04%
Alpine Securitization Corp.
3.52%, 09/09/05		6,903		6,897
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		7,282		7,243
Aspen Funding Corp.
3.49%, 09/01/05		3,451		3,451
Barton Capital Corp.
3.51%, 09/07/05		3,914		3,912
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		5,695		5,688
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		1,757		1,740
Cantabric Finance LLC
3.73%, 10/31/05		1,327		1,319
Charta LLC
3.54%, 09/20/05		2,416		2,411
Chesham Finance LLC
3.54%, 09/15/05		1,035		1,034
Dorada Finance Inc.
3.76%, 01/26/06		345		340

88 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Principal		Value
Edison Asset Securitization LLC
3.12%, 09/06/05	$	2,588	$	2,587
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		4,451		4,446
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		15,702		15,631
Gemini Securitization Corp.
3.49%, 09/06/05		5,537		5,534
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05		11,217		11,195
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		2,588		2,584
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		5,350		5,292
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		3,969		3,969
HSBC PLC
3.88%, 02/03/06		1,035		1,018
Jupiter Securitization Corp.
3.51%, 09/21/05		1,956		1,953
Leafs LLC
3.61%, 01/20/06 - 02/21/066		3,624		3,623
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		4,757		4,750
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		8,456		8,445
New Center Asset Trust
3.60%, 09/01/05		12,080		12,080
Park Avenue Receivables Corp.
3.50%, 09/19/05		1,947		1,943
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		4,673		4,666
Security	Shares or Principal		Value
Santander Central Hispano Finance Inc.
3.91%, 02/17/06	$	3,451	$	3,388
Scaldis Capital LLC
3.52%, 09/07/05		6,903		6,899
Sedna Finance Inc.
3.92%, 02/21/06		863		847
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05		10,147		10,144
Sydney Capital Corp.
3.49%, 09/01/05		2,132		2,132
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		7,248		7,234
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		7,395		7,392
Thunder Bay Funding Inc.
3.50%, 09/01/05		577		577
Tulip Funding Corp.
3.49%, 09/01/05		12,734		12,734
Windmill Funding Corp.
3.52%, 09/09/05		1,588		1,586
World Savings Bank
3.51%, 09/09/05		1,208		1,208
Yorktown Capital LLC
3.53%, 09/19/05		5,004		4,996
				182,888
MEDIUM-TERM NOTES5 – 0.00%
Dorada Finance Inc.
3.93%, 07/07/066		1,070		1,070
K2 USA LLC
3.94%, 07/07/066		2,071		2,071
				3,141
MONEY MARKET FUNDS – 0.01%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%3,5,7		13,805		13,805

SCHEDULES OF INVESTMENTS 89

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%3,7		28,399	$	28,399
BlackRock Temp Cash Money Market Fund 3.41%5,7		366		366
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%5,7		1,210		1,210
				43,780
REPURCHASE AGREEMENTS5 – 0.03%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $82,839 and an effective yield of 3.60%.8	$	82,831		82,831
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $63,855 and an effective yield of 3.60%.8		63,849		63,849
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $7,525 and an effective yield of 3.60%.8		7,524		7,524
				154,204
TIME DEPOSITS5 – 0.01%
Abbey National Treasury Services PLC
3.50%, 09/01/05		6,903		6,903
Chase Bank USA N.A.
3.58%, 09/01/05		18,982		18,982
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		4,556		4,556
Natexis Banques Populaires
3.51%, 09/20/059		1,726		1,726
				32,167
Security	Principal		Value
VARIABLE & FLOATING RATE NOTES5 – 0.07%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/066	$	6,419	$	6,420
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06		9,318		9,318
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		5,695		5,695
American Express Credit Corp.
3.65%, 10/26/05		6,903		6,903
ASIF Global Financing XXII
3.99%, 05/30/066		3,451		3,456
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/066		2,243		2,243
Bank of America N.A.
3.56%, 08/10/06		17,256		17,256
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/066		17,740		17,739
BMW US Capital LLC
3.54%, 07/14/066		3,451		3,451
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		11,734		11,734
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/066		9,284		9,284
Commodore CDO Ltd.
3.47%, 12/12/056		863		863
Credit Suisse First Boston
3.57%, 07/19/06		8,628		8,628
DEPFA Bank PLC
3.42%, 03/15/06		3,451		3,451
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/066		5,488		5,488

90 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

Security	Principal		Value
Eli Lilly Services Inc.
3.53%, 09/01/066	$	3,451	$	3,451
Fifth Third Bancorp
3.58%, 04/21/066		6,903		6,903
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/066		2,416		2,416
General Electric Capital Corp.
3.66%, 07/07/06		1,553		1,554
Hartford Life Global Funding Trust
3.56%, 08/15/06		3,451		3,451
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/066		10,354		10,353
HSBC Bank USA N.A.
3.70%, 05/04/06		1,208		1,209
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/066		13,460		13,460
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/066		13,460		13,462
Lothian Mortgages PLC
3.63%, 01/24/06		3,451		3,451
Marshall & Ilsley Bank
3.71%, 02/20/06		3,451		3,453
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/066		6,903		6,906
National City Bank (Ohio)
3.50%, 01/06/06		1,726		1,725
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/066		12,770		12,771
Nordea Bank AB
3.55%, 08/11/066		6,040		6,040
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/066		11,044		11,045
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/066		13,287		13,287
Principal Life Income Funding Trusts
3.74%, 05/10/06		2,588		2,589
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		11,519		11,516
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/066		1,898		1,898
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/066		19,707		19,709
Skandinaviska Enskilda Bank NY
3.58%, 07/18/066		3,451		3,451
Strips III LLC
3.69%, 07/24/066,9		1,014		1,014
SunTrust Bank
3.63%, 04/28/06		5,177		5,177
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/066		8,387		8,386
Toyota Motor Credit Corp.
3.57%, 04/10/06		1,553		1,553
Unicredito Italiano SpA
3.34%, 06/14/06		4,487		4,485
Wachovia Asset Securitization Inc.
3.63%, 09/25/056		8,308		8,309
Wells Fargo & Co.
3.56%, 09/15/066		1,726		1,726
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/066		13,805		13,804
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/066		7,282		7,282
Winston Funding Ltd.
3.71%, 10/23/056		2,464		2,464
				320,229

SCHEDULES OF INVESTMENTS 91

Schedule of Investments (Continued)

iSHARES^® MSCI UNITED KINGDOM INDEX FUND

August 31, 2005

	Value
TOTAL SHORT-TERM INVESTMENTS (Cost: $827,176)	$	827,176
TOTAL INVESTMENTS IN SECURITIES – 99.41% (Cost: $420,995,191)		462,119,503
Other Assets, Less Liabilities – 0.59%		2,730,826
NET ASSETS – 100.00%	$	464,850,329

¹ Non-income earning security.

² Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

³ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁴ All or a portion of this security represents a security on loan. See Note 5.

⁵ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁶ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁷ The rate quoted is the annualized seven-day yield of the fund at period end.

⁸ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁹ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

92 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities

iSHARES^®, INC.

August 31, 2005

	iShares MSCI
	Austria Index Fund			Belgium Index Fund			EMU Index Fund			France Index Fund			Germany Index Fund			Italy Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	179,336,127		$	63,796,587		$	658,638,283		$	103,485,386		$	360,783,137		$	52,634,083
Affiliated issuersa	$	470,745		$	321,987		$	3,351,991		$	679,048		$	994,963		$	330,386
Foreign currencies, at cost	$	92,921		$	6,385		$	983,521		$	75,356		$	192,929		$	49,100
Investments in securities, at value (including securities on loanb) (Note 1):
Unaffiliated issuers	$	222,148,147		$	64,738,701		$	736,252,577		$	111,229,799		$	369,271,511		$	61,000,919
Affiliated issuersa		470,745			321,987			3,351,991			679,048			994,963			330,386
Foreign currencies, at value		94,953			6,533			992,741			76,012			195,783			50,140
Receivables:
Investment securities sold		11,360,914			635,252			3,486,714			503,547			3,529,696			2,100,990
Dividends and interest		287,282			361,055			693,121			114,546			92,947			69,025
Total Assets		234,362,041			66,063,528			744,777,144			112,602,952			374,084,900			63,551,460
LIABILITIES
Payables:
Investment securities purchased		10,159,871			603,205			3,989,133			652,182			3,518,307			2,115,597
Collateral for securities on loan (Note 5)		27,100,365			18,477,539			193,236,992			30,587,618			55,621,647			18,889,185
Capital shares redeemed		51,736			—			—			—			—			—
Investment advisory fees (Note 2)		97,895			23,225			266,842			37,360			151,515			20,636
Total Liabilities		37,409,867			19,103,969			197,492,967			31,277,160			59,291,469			21,025,418
NET ASSETS	$	196,952,174		$	46,959,559		$	547,284,177		$	81,325,792		$	314,793,431		$	42,526,042
Net assets consist of:
Paid-in capital	$	157,473,250		$	46,981,952		$	480,455,249		$	79,767,840		$	342,004,155		$	39,068,310
Undistributed net investment income		1,903,837			1,784,303			10,321,106			1,092,730			2,547,987			1,061,531
Accumulated net realized loss		(5,298,777	)		(2,746,729	)		(21,115,935	)		(7,280,253	)		(38,246,530	)		(5,986,954	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		42,873,864			940,033			77,623,757			7,745,475			8,487,819			8,383,155
NET ASSETS	$	196,952,174		$	46,959,559		$	547,284,177		$	81,325,792		$	314,793,431		$	42,526,042
Shares outstanding		7,400,000			2,480,000			7,300,000			3,200,000			16,500,000			1,650,000
Net asset value per share	$	26.62		$	18.94		$	74.97		$	25.41		$	19.08		$	25.77

^a The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^b Securities on loan with market values of $25,800,814, $17,588,248, $183,688,759, $29,118,363, $52,953,681 and $17,914,520, respectively. See Note 5.

See notes to the financial statements.

FINANCIAL STATEMENTS 93

Statements of Assets and Liabilities (Continued)

iSHARES^®, INC.

August 31, 2005

	iShares MSCI
	Netherlands Index Fund			Spain Index Fund			Sweden Index Fund			Switzerland Index Fund			United Kingdom Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	72,378,560		$	65,519,577		$	68,889,975		$	69,365,595		$	409,817,923
Affiliated issuersa	$	177,044		$	229,135		$	352,455		$	62,760		$	11,177,268
Foreign currencies, at cost	$	114,188		$	82,569		$	41,581		$	61,243		$	860,032
Investments in securities, at value (including securities on loanb) (Note 1):
Unaffiliated issuers	$	73,657,348		$	79,605,360		$	81,124,860		$	80,295,753		$	449,904,611
Affiliated issuersa		177,044			229,135			352,455			62,760			12,214,892
Foreign currencies, at value		114,859			82,813			40,765			62,780			862,131
Receivables:
Investment securities sold		—			272,786			163,663			—			962,872
Dividends and interest		206,088			8,213			3,816			158,667			3,193,482
Total Assets		74,155,339			80,198,307			81,685,559			80,579,960			467,137,988
LIABILITIES
Payables:
Investment securities purchased		—			293,923			164,692			—			1,257,639
Collateral for securities on loan (Note 5)		10,150,138			12,926,609			19,978,213			1,220,630			798,777
Investment advisory fees (Note 2)		31,191			32,717			30,148			35,162			231,243
Total Liabilities		10,181,329			13,253,249			20,173,053			1,255,792			2,287,659
NET ASSETS	$	63,974,010		$	66,945,058		$	61,512,506		$	79,324,168		$	464,850,329
Net assets consist of:
Paid-in capital	$	69,971,517		$	55,853,019		$	55,272,237		$	74,634,396		$	447,365,743
Undistributed net investment income		1,453,405			1,109,161			1,228,454			771,673			13,056,804
Accumulated net realized loss		(8,731,080	)		(4,102,964	)		(7,222,280	)		(7,013,371	)		(36,703,887	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		1,280,168			14,085,842			12,234,095			10,931,470			41,131,669
NET ASSETS	$	63,974,010		$	66,945,058		$	61,512,506		$	79,324,168		$	464,850,329
Shares outstanding		3,350,000			1,875,000			2,850,000			4,500,000			24,800,000
Net asset value per share	$	19.10		$	35.70		$	21.58		$	17.63		$	18.74

^a The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^b Securities on loan with market values of $9,653,681, $12,291,309, $18,987,996, $1,162,382 and $755,718, respectively. See Note 5.

See notes to the financial statements.

94 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations

iSHARES^®, INC.

Year Ended August 31, 2005

	iShares MSCI
	Austria Index Fund			Belgium Index Fund			EMU Index Fund			France Index Fund			Germany Index Fund			Italy Index Fund
NET INVESTMENT INCOME
Dividendsa	$	2,815,125		$	2,264,979		$	13,910,631		$	1,529,281		$	3,383,768		$	1,328,186
Interest from affiliated issuersb		2,556			993			4,176			801			1,770			397
Securities lending incomec		37,314			51,426			594,149			73,467			174,555			50,871
Total investment income		2,854,995			2,317,398			14,508,956			1,603,549			3,560,093			1,379,454
EXPENSES
Investment advisory fees (Note 2)		891,196			298,236			2,700,971			360,949			966,395			211,190
Foreign taxes (Note 1)		—			—			48,825			—			—			—
Total expenses		891,196			298,236			2,749,796			360,949			966,395			211,190
Net investment income		1,963,799			2,019,162			11,759,160			1,242,600			2,593,698			1,168,264
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments		(1,835,744	)		(21,584	)		(4,414,579	)		(765,287	)		(4,751,457	)		(734,558	)
In-kind redemptions		24,342,828			7,017,381			16,417,287			5,873,067			—			—
Foreign currency transactions		(52,533	)		(52,351	)		(226,223	)		(35,873	)		(45,711	)		(30,240	)
Net realized gain (loss)		22,454,551			6,943,446			11,776,485			5,071,907			(4,797,168	)		(764,798	)
Net change in unrealized appreciation (depreciation) on:
Investments		30,867,737			1,061			76,330,376			9,119,174			40,529,403			7,986,384
Translation of assets and liabilities in foreign currencies		62,516			(5,283	)		28,867			17,022			5,347			2,299
Net change in unrealized appreciation (depreciation)		30,930,253			(4,222	)		76,359,243			9,136,196			40,534,750			7,988,683
Net realized and unrealized gain		53,384,804			6,939,224			88,135,728			14,208,103			35,737,582			7,223,885
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	55,348,603		$	8,958,386		$	99,894,888		$	15,450,703		$	38,331,280		$	8,392,149

^a Net of foreign withholding tax of $440,591, $244,984, $745,655, $83,554, $192,687 and $83,362, respectively.

^b The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^c Includes income earned from issuers of which the Funds’ investment adviser is an affiliate. See Note 2.

See notes to the financial statements.

FINANCIAL STATEMENTS 95

Statements of Operations (Continued)

iSHARES^®, INC.

Year Ended August 31, 2005

	iShares MSCI
	Netherlands Index Fund			Spain Index Fund		Sweden Index Fund			Switzerland Index Fund			United Kingdom Index Fund
NET INVESTMENT INCOME
Dividendsa	$	1,703,103		$	1,675,707	$	1,498,021		$	1,090,187		$	19,431,203
Dividends from affiliated issuersb		—			—		—			—			735,841
Interest from affiliated issuersb		561			674		366			1,061			3,132
Securities lending incomec		34,278			60,713		68,520			13,439			28,858
Total investment income		1,737,942			1,737,094		1,566,907			1,104,687			20,199,034
EXPENSES
Investment advisory fees (Note 2)		269,795			343,145		315,269			330,809			2,930,931
Foreign taxes (Note 1)		—			—		2,514			—			—
Total expenses		269,795			343,145		317,783			330,809			2,930,931
Net investment income		1,468,147			1,393,949		1,249,124			773,878			17,268,103
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments		(550,628	)		533,891		(160,581	)		264,654			(10,764,439	)
Investments in affiliated issuersb		—			—		—			—			1,809
In-kind redemptions		1,651,292			6,546,984		1,479,493			1,037,446			48,446,691
Foreign currency transactions		(12,085	)		9,467		(20,670	)		(2,203	)		(201,524	)
Net realized gain		1,088,579			7,090,342		1,298,242			1,299,897			37,482,537
Net change in unrealized appreciation (depreciation) on:
Investments		4,966,794			5,675,806		7,896,684			7,739,638			44,225,265
Translation of assets and liabilities in foreign currencies		1,342			435		(637	)		(8,175	)		49,489
Net change in unrealized appreciation (depreciation)		4,968,136			5,676,241		7,896,047			7,731,463			44,274,754
Net realized and unrealized gain		6,056,715			12,766,583		9,194,289			9,031,360			81,757,291
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	7,524,862		$	14,160,532	$	10,443,413		$	9,805,238		$	99,025,394

^a Net of foreign withholding tax of $102,137, $75,980, $112,122, $140,278 and $34,516, respectively.

^b The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^c Includes income earned from issuers of which the Funds’ investment adviser is an affiliate. See Note 2.

See notes to the financial statements.

96 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets

iSHARES^®, INC.

	iShares MSCI Austria Index Fund						iShares MSCI Belgium Index Fund						iShares MSCI EMU Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	1,963,799		$	498,538		$	2,019,162		$	525,871		$	11,759,160		$	6,589,669
Net realized gain		22,454,551			3,919,431			6,943,446			2,236,862			11,776,485			8,857,335
Net change in unrealized appreciation (depreciation)		30,930,253			8,637,559			(4,222	)		2,626,962			76,359,243			19,792,119
Net increase in net assets resulting from operations		55,348,603			13,055,528			8,958,386			5,389,695			99,894,888			35,239,123
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(642,119	)		(272,938	)		(821,720	)		(884,836	)		(7,926,598	)		(3,047,220	)
Total distributions to shareholders		(642,119	)		(272,938	)		(821,720	)		(884,836	)		(7,926,598	)		(3,047,220	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		143,898,493			32,913,587			45,733,499			19,364,816			174,100,562			175,480,082
Cost of shares redeemed		(59,573,023	)		(10,064,261	)		(31,723,211	)		(20,928,283	)		(45,390,429	)		(46,454,697	)
Net increase (decrease) in net assets from capital share transactions		84,325,470			22,849,326			14,010,288			(1,563,467	)		128,710,133			129,025,385
INCREASE IN NET ASSETS		139,031,954			35,631,916			22,146,954			2,941,392			220,678,423			161,217,288
NET ASSETS:
Beginning of year		57,920,220			22,288,304			24,812,605			21,871,213			326,605,754			165,388,466
End of year	$	196,952,174		$	57,920,220		$	46,959,559		$	24,812,605		$	547,284,177		$	326,605,754
Undistributed net investment income included in net assets at end of year	$	1,903,837		$	480,630		$	1,784,303		$	533,300		$	10,321,106		$	6,691,251
SHARES ISSUED AND REDEEMED:
Shares sold		6,600,000			2,100,000			2,560,000			1,360,000			2,450,000			2,950,000
Shares redeemed		(2,600,000	)		(800,000	)		(1,760,000	)		(1,640,000	)		(650,000	)		(750,000	)
Net increase (decrease) in shares outstanding		4,000,000			1,300,000			800,000			(280,000	)		1,800,000			2,200,000

See notes to the financial statements.

FINANCIAL STATEMENTS 97

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI France Index Fund						iShares MSCI Germany Index Fund						iShares MSCI Italy Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	1,242,600		$	698,891		$	2,593,698		$	1,574,590		$	1,168,264		$	777,612
Net realized gain (loss)		5,071,907			1,787,933			(4,797,168	)		9,845,575			(764,798	)		449,897
Net change in unrealized appreciation (depreciation)		9,136,196			8,599,182			40,534,750			9,717,674			7,988,683			4,880,596
Net increase in net assets resulting from operations		15,450,703			11,086,006			38,331,280			21,137,839			8,392,149			6,108,105
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(838,342	)		(794,879	)		(1,573,473	)		(1,804,102	)		(869,122	)		(824,876	)
Total distributions to shareholders		(838,342	)		(794,879	)		(1,573,473	)		(1,804,102	)		(869,122	)		(824,876	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		23,987,143			4,101,648			179,271,889			37,742,897			7,723,603			—
Cost of shares redeemed		(18,474,473	)		(7,267,190	)		—			(60,113,109	)		—			(8,001,044	)
Net increase (decrease) in net assets from capital share transactions		5,512,670			(3,165,542	)		179,271,889			(22,370,212	)		7,723,603			(8,001,044	)
INCREASE (DECREASE) IN NET ASSETS		20,125,031			7,125,585			216,029,696			(3,036,475	)		15,246,630			(2,717,815	)
NET ASSETS:
Beginning of year		61,200,761			54,075,176			98,763,735			101,800,210			27,279,412			29,997,227
End of year	$	81,325,792		$	61,200,761		$	314,793,431		$	98,763,735		$	42,526,042		$	27,279,412
Undistributed net investment income included in net assets at end of year	$	1,092,730		$	724,345		$	2,547,987		$	1,573,473		$	1,061,531		$	792,629
SHARES ISSUED AND REDEEMED:
Shares sold		1,000,000			200,000			9,900,000			2,400,000			300,000			—
Shares redeemed		(800,000	)		(400,000	)		—			(3,900,000	)		—			(450,000	)
Net increase (decrease) in shares outstanding		200,000			(200,000	)		9,900,000			(1,500,000	)		300,000			(450,000	)

See notes to the financial statements.

98 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Netherlands Index Fund						iShares MSCI Spain Index Fund						iShares MSCI Sweden Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	1,468,147		$	547,447		$	1,393,949		$	782,782		$	1,249,124		$	420,927
Net realized gain (loss)		1,088,579			(220,571	)		7,090,342			3,958,943			1,298,242			15,743
Net change in unrealized appreciation (depreciation)		4,968,136			1,720,975			5,676,241			5,008,839			7,896,047			5,562,688
Net increase in net assets resulting from operations		7,524,862			2,047,851			14,160,532			9,750,564			10,443,413			5,999,358
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(561,271	)		(480,580	)		(1,053,358	)		(464,559	)		(420,504	)		(332,115	)
Total distributions to shareholders		(561,271	)		(480,580	)		(1,053,358	)		(464,559	)		(420,504	)		(332,115	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		29,691,702			8,098,478			23,479,415			2,263,744			26,763,849			5,099,033
Cost of shares redeemed		(946,288	)		—			(15,097,858	)		(16,465,374	)		(3,032,449	)		—
Net increase (decrease) in net assets from capital share transactions		28,745,414			8,098,478			8,381,557			(14,201,630	)		23,731,400			5,099,033
INCREASE (DECREASE) IN NET ASSETS		35,709,005			9,665,749			21,488,731			(4,915,625	)		33,754,309			10,766,276
NET ASSETS:
Beginning of year		28,265,005			18,599,256			45,456,327			50,371,952			27,758,197			16,991,921
End of year	$	63,974,010		$	28,265,005		$	66,945,058		$	45,456,327		$	61,512,506		$	27,758,197
Undistributed net investment income included in net assets at end of year	$	1,453,405		$	558,614		$	1,109,161		$	759,103		$	1,228,454		$	420,504
SHARES ISSUED AND REDEEMED:
Shares sold		1,600,000			500,000			675,000			75,000			1,350,000			300,000
Shares redeemed		(50,000	)		—			(450,000	)		(675,000	)		(150,000	)		—
Net increase (decrease) in shares outstanding		1,550,000			500,000			225,000			(600,000	)		1,200,000			300,000

See notes to the financial statements.

FINANCIAL STATEMENTS 99

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Switzerland Index Fund						iShares MSCI United Kingdom Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	773,878		$	267,243		$	17,268,103		$	7,712,465
Net realized gain (loss)		1,299,897			(117,551	)		37,482,537			(2,229,963	)
Net change in unrealized appreciation (depreciation)		7,731,463			6,459,446			44,274,754			28,384,261
Net increase in net assets resulting from operations		9,805,238			6,609,138			99,025,394			33,866,763
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(269,799	)		(146,432	)		(10,962,863	)		(5,320,972	)
Total distributions to shareholders		(269,799	)		(146,432	)		(10,962,863	)		(5,320,972	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		31,861,760			3,722,134			96,935,420			281,527,046
Cost of shares redeemed		(3,993,200	)		(1,907,959	)		(173,017,720	)		(8,011,981	)
Net increase (decrease) in net assets from capital share transactions		27,868,560			1,814,175			(76,082,300	)		273,515,065
INCREASE IN NET ASSETS		37,403,999			8,276,881			11,980,231			302,060,856
NET ASSETS:
Beginning of year		41,920,169			33,643,288			452,870,098			150,809,242
End of year	$	79,324,168		$	41,920,169		$	464,850,329		$	452,870,098
Undistributed net investment income included in net assets at end of year	$	771,673		$	269,799		$	13,056,804		$	6,931,580
SHARES ISSUED AND REDEEMED:
Shares sold		1,875,000			250,000			5,600,000			17,800,000
Shares redeemed		(250,000	)		(125,000	)		(9,600,000	)		(600,000	)
Net increase (decrease) in shares outstanding		1,625,000			125,000			(4,000,000	)		17,200,000

See notes to the financial statements.

100 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI Austria Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	17.04		$	10.61		$	8.19		$	8.18		$	7.67
Income from investment operations:
Net investment incomea		0.29			0.21			0.09			0.13			0.13
Net realized and unrealized gain (loss)		9.38			6.39			2.43			(0.12	)		0.52
Total from investment operations		9.67			6.60			2.52			0.01			0.65
Less distributions from:
Net investment income		(0.09	)		(0.17	)		(0.10	)		—			(0.14	)
Return of capital		—			—			—			—			(0.00	)c
Total distributions		(0.09	)		(0.17	)		(0.10	)		—			(0.14	)
Net asset value, end of year	$	26.62		$	17.04		$	10.61		$	8.19		$	8.18
Total return		56.82	%		62.70	%		31.15	%		0.12	%		8.41	%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	196,952		$	57,920		$	22,288		$	14,740		$	11,447
Ratio of expenses to average net assets		0.57	%		0.77	%		0.84	%		0.84	%		0.84	%d
Ratio of net investment income to average net assets		1.26	%		1.37	%		0.98	%		1.57	%		1.69	%e
Portfolio turnover rateb		21	%		11	%		26	%		32	%		66	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

^d Ratio of expenses to average net assets prior to waived fees and reimbursed expenses for the year ended August 31, 2001 was 0.97%.

^e Ratio of net investment income to average net assets prior to waived fees and reimbursed expenses for the year ended August 31, 2001 was 1.55%.

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 101

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Belgium Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	14.77		$	11.16		$	10.43		$	11.81		$	13.23
Income from investment operations:
Net investment incomea		0.71			0.37			0.41			0.25			0.19
Net realized and unrealized gain (loss)		3.75			4.25			0.43			(1.56	)		(1.34	)
Total from investment operations		4.46			4.62			0.84			(1.31	)		(1.15	)
Less distributions from:
Net investment income		(0.29	)		(1.01	)		(0.11	)		(0.07	)		(0.27	)
Total distributions		(0.29	)		(1.01	)		(0.11	)		(0.07	)		(0.27	)
Net asset value, end of year	$	18.94		$	14.77		$	11.16		$	10.43		$	11.81
Total return		30.22	%		42.88	%		8.25	%		(11.10	)%		(8.72	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	46,960		$	24,813		$	21,871		$	10,427		$	9,918
Ratio of expenses to average net assets		0.57	%		0.78	%		0.84	%		0.84	%		0.84	%c
Ratio of net investment income to average net assets		3.89	%		2.79	%		4.10	%		2.26	%		1.60	%d
Portfolio turnover rateb		10	%		21	%		8	%		18	%		36	%

^a Based on average shares outstanding throughout each period.

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

^c Ratio of expenses to average net assets prior to waived fees and reimbursed expenses for the year ended August 31, 2001 was 0.87%.

^d Ratio of net investment income to average net assets prior to waived fees and reimbursed expenses for the year ended August 31, 2001 was 1.57%.

See notes to the financial statements.

102 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI EMU Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	59.38		$	50.12		$	46.02		$	56.74		$	76.02
Income from investment operations:
Net investment incomea		1.76			1.36			0.93			0.75			0.72
Net realized and unrealized gain (loss)		15.13			8.69			3.62			(11.47	)		(19.32	)
Total from investment operations		16.89			10.05			4.55			(10.72	)		(18.60	)
Less distributions from:
Net investment income		(1.30	)		(0.79	)		(0.45	)		—			(0.42	)
Return of capital		—			—			—			—			(0.26	)
Total distributions		(1.30	)		(0.79	)		(0.45	)		—			(0.68	)
Net asset value, end of year	$	74.97		$	59.38		$	50.12		$	46.02		$	56.74
Total return		28.54	%		20.07	%		10.05	%		(18.89	)%		(24.51	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	547,284		$	326,606		$	165,388		$	131,168		$	90,779
Ratio of expenses to average net assets		0.58	%		0.79	%		0.84	%		0.84	%		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.57	%		0.79	%		n/a			n/a			n/a
Ratio of net investment income to average net assets		2.50	%		2.29	%		2.08	%		1.44	%		1.13	%
Portfolio turnover rateb		8	%		11	%		7	%		3	%		24	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 103

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI France Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	20.40		$	16.90		$	15.52		$	19.53		$	26.41
Income from investment operations:
Net investment incomea		0.47			0.24			0.23			0.18			0.06
Net realized and unrealized gain (loss)		4.84			3.54			1.33			(4.19	)		(6.89	)
Total from investment operations		5.31			3.78			1.56			(4.01	)		(6.83	)
Less distributions from:
Net investment income		(0.30	)		(0.28	)		(0.18	)		—			(0.04	)
Net realized gain		—			—			—			—			(0.00	)c
Return of capital		—			—			—			—			(0.01	)
Total distributions		(0.30	)		(0.28	)		(0.18	)		—			(0.05	)
Net asset value, end of year	$	25.41		$	20.40		$	16.90		$	15.52		$	19.53
Total return		26.13	%		22.44	%		10.22	%		(20.53	)%		(25.86	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	81,326		$	61,201		$	54,075		$	49,674		$	58,602
Ratio of expenses to average net assets		0.57	%		0.79	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		1.98	%		1.23	%		1.56	%		1.00	%		0.28	%
Portfolio turnover rateb		7	%		9	%		9	%		3	%		14	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

104 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI Germany Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	14.96		$	12.57		$	12.07		$	15.19		$	20.46
Income from investment operations:
Net investment incomea		0.28			0.19			0.21			0.11			0.18
Net realized and unrealized gain (loss)		4.03			2.40			0.41			(3.23	)		(5.26	)
Total from investment operations		4.31			2.59			0.62			(3.12	)		(5.08	)
Less distributions from:
Net investment income		(0.19	)		(0.20	)		(0.12	)		—			(0.19	)
Return of capital		—			—			—			—			(0.00	)c
Total distributions		(0.19	)		(0.20	)		(0.12	)		—			(0.19	)
Net asset value, end of year	$	19.08		$	14.96		$	12.57		$	12.07		$	15.19
Total return		28.89	%		20.55	%		5.39	%		(20.54	)%		(24.87	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	314,793		$	98,764		$	101,800		$	94,160		$	118,525
Ratio of expenses to average net assets		0.57	%		0.80	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		1.54	%		1.27	%		1.98	%		0.77	%		0.99	%
Portfolio turnover rateb		9	%		9	%		11	%		9	%		20	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 105

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Italy Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	20.21		$	16.67		$	15.15		$	17.79		$	22.23
Income from investment operations:
Net investment incomea		0.78			0.56			0.43			0.37			0.24
Net realized and unrealized gain (loss)		5.42			3.59			1.47			(3.01	)		(4.37	)
Total from investment operations		6.20			4.15			1.90			(2.64	)		(4.13	)
Less distributions from:
Net investment income		(0.64	)		(0.61	)		(0.38	)		—			(0.24	)
Net realized gain		—			—			—			—			(0.07	)
Return of capital		—			—			—			—			(0.00	)c
Total distributions		(0.64	)		(0.61	)		(0.38	)		—			(0.31	)
Net asset value, end of year	$	25.77		$	20.21		$	16.67		$	15.15		$	17.79
Total return		30.74	%		25.09	%		12.79	%		(14.84	)%		(18.61	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	42,526		$	27,279		$	29,997		$	29,538		$	34,682
Ratio of expenses to average net assets		0.57	%		0.83	%		0.84	%		0.84	%		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		n/a			0.79	%		n/a			n/a			n/a
Ratio of net investment income to average net assets		3.18	%		2.85	%		2.84	%		2.34	%		1.16	%
Portfolio turnover rateb		18	%		9	%		22	%		10	%		20	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

106 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Netherlands Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	15.70		$	14.31		$	14.69		$	18.59		$	23.53
Income from investment operations:
Net investment incomea		0.57			0.39			0.30			0.25			0.28
Net realized and unrealized gain (loss)		3.09			1.37			(0.43	)		(4.11	)		(4.94	)
Total from investment operations		3.66			1.76			(0.13	)		(3.86	)		(4.66	)
Less distributions from:
Net investment income		(0.26	)		(0.37	)		(0.25	)		(0.04	)		(0.28	)
Total distributions		(0.26	)		(0.37	)		(0.25	)		(0.04	)		(0.28	)
Net asset value, end of year	$	19.10		$	15.70		$	14.31		$	14.69		$	18.59
Total return		23.40	%		12.28	%		(0.78	)%		(20.79	)%		(19.83	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	63,974		$	28,265		$	18,599		$	19,103		$	24,184
Ratio of expenses to average net assets		0.57	%		0.78	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		3.13	%		2.45	%		2.37	%		1.48	%		1.34	%
Portfolio turnover rateb		6	%		9	%		18	%		15	%		35	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 107

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Spain Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	27.55		$	22.39		$	17.95		$	21.33		$	24.19
Income from investment operations:
Net investment incomea		0.79			0.44			0.24			0.17			0.19
Net realized and unrealized gain (loss)		7.97			4.99			4.36			(3.55	)		(2.89	)
Total from investment operations		8.76			5.43			4.60			(3.38	)		(2.70	)
Less distributions from:
Net investment income		(0.61	)		(0.27	)		(0.16	)		—			(0.16	)
Return of capital		—			—			—			—			(0.00	)c
Total distributions		(0.61	)		(0.27	)		(0.16	)		—			(0.16	)
Net asset value, end of year	$	35.70		$	27.55		$	22.39		$	17.95		$	21.33
Total return		31.85	%		24.28	%		25.81	%		(15.85	)%		(11.17	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	66,945		$	45,456		$	50,372		$	18,850		$	27,198
Ratio of expenses to average net assets		0.57	%		0.80	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		2.33	%		1.64	%		1.22	%		0.85	%		0.82	%
Portfolio turnover rateb		8	%		6	%		17	%		14	%		26	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

108 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI Sweden Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	16.82		$	12.59		$	9.88		$	12.88		$	24.38
Income from investment operations:
Net investment incomea		0.46			0.28			0.25			0.12			0.07
Net realized and unrealized gain (loss)		4.45			4.20			2.58			(3.12	)		(11.52	)
Total from investment operations		4.91			4.48			2.83			(3.00	)		(11.45	)
Less distributions from:
Net investment income		(0.15	)		(0.25	)		(0.12	)		—			(0.05	)
Return of capital		—			—			—			—			(0.00	)c
Total distributions		(0.15	)		(0.25	)		(0.12	)		—			(0.05	)
Net asset value, end of year	$	21.58		$	16.82		$	12.59		$	9.88		$	12.88
Total return		29.21	%		35.81	%		29.04	%		(23.29	)%		(46.99	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	61,513		$	27,758		$	16,992		$	8,154		$	10,630
Ratio of expenses to average net assets		0.58	%		0.92	%		0.84	%		0.84	%		0.84	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.57	%		0.79	%		n/a			n/a			n/a
Ratio of net investment income to average net assets		2.28	%		1.74	%		2.44	%		0.98	%		0.40	%
Portfolio turnover rateb		6	%		9	%		12	%		31	%		43	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 109

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Switzerland Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	14.58		$	12.23		$	11.59		$	12.95		$	15.54
Income from investment operations:
Net investment incomea		0.22			0.09			0.05			0.03			0.04
Net realized and unrealized gain (loss)		2.92			2.31			0.62			(1.38	)		(2.54	)
Total from investment operations		3.14			2.40			0.67			(1.35	)		(2.50	)
Less distributions from:
Net investment income		(0.09	)		(0.05	)		(0.03	)		(0.01	)		(0.05	)
Net realized gain		—			—			—			—			(0.04	)
Total distributions		(0.09	)		(0.05	)		(0.03	)		(0.01	)		(0.09	)
Net asset value, end of year	$	17.63		$	14.58		$	12.23		$	11.59		$	12.95
Total return		21.54	%		19.56	%		5.89	%		(10.47	)%		(16.08	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	79,324		$	41,920		$	33,643		$	31,883		$	32,384
Ratio of expenses to average net assets		0.57	%		0.79	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		1.34	%		0.64	%		0.43	%		0.20	%		0.29	%
Portfolio turnover rateb		5	%		4	%		10	%		12	%		34	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

110 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI United Kingdom Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	15.72		$	13.00		$	12.77		$	15.11		$	18.35
Income from investment operations:
Net investment incomea		0.60			0.48			0.39			0.48			0.26
Net realized and unrealized gain (loss)		2.76			2.72			0.12			(2.60	)		(3.23	)
Total from investment operations		3.36			3.20			0.51			(2.12	)		(2.97	)
Less distributions from:
Net investment income		(0.34	)		(0.48	)		(0.28	)		(0.22	)		(0.25	)
Net realized gain		—			—			—			—			(0.02	)
Total distributions		(0.34	)		(0.48	)		(0.28	)		(0.22	)		(0.27	)
Net asset value, end of year	$	18.74		$	15.72		$	13.00		$	12.77		$	15.11
Total return		21.53	%		24.77	%		4.20	%		(14.19	)%		(16.20	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	464,850		$	452,870		$	150,809		$	120,067		$	117,883
Ratio of expenses to average net assets		0.57	%		0.77	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		3.39	%		3.11	%		3.23	%		3.39	%		1.57	%
Portfolio turnover rateb		11	%		6	%		6	%		14	%		30	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 111

Notes to the Financial Statements

iSHARES^®, INC .

1. SIGNIFICANT ACCOUNTING POLICIES

iShares, Inc. (the “Company”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation. As of August 31, 2005, the Company offered 24 investment portfolios or funds.

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

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

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

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

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

112 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC .

SECURITY VALUATION

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

SECURITY TRANSACTIONS AND INCOME RECOGNITION

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

FOREIGN CURRENCY TRANSLATION

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

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

FOREIGN TAXES

Italy and Greece may levy taxes on stock dividends at rates of 27.0% and 3.0%, respectively, based on par value of stock dividends received by the iShares MSCI Italy and iShares MSCI EMU Index Funds. These taxes are paid by the Funds receiving the stock dividends and, if any, are disclosed in their respective Statements of Operations.

During the year ended August 31, 2005, the iShares MSCI EMU Index Fund and iShares MSCI Sweden Index Fund paid foreign taxes on certain taxable corporate events (i.e., spin-offs and tender offers) by Swedish companies whose securities are held by the Funds. The foreign taxes paid by the Funds are disclosed in their respective Statements of Operations.

DISTRIBUTIONS TO SHAREHOLDERS

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

NOTES TO THE FINANCIAL STATEMENTS 113

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

As of August 31, 2005, the tax year-end of the Funds, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

iShares MSCI Index Fund	Undistributed Ordinary Income		Unrealized Appreciation		Capital and Other Losses			Net Distributable Earnings (Accumulated Losses)
Austria	$	2,357,719	$	41,942,462	$	(4,821,257	)	$	39,478,924
Belgium		2,145,588		406,558		(2,574,539	)		(22,393	)
EMU		11,061,377		66,025,825		(10,258,274	)		66,828,928
France		1,093,386		7,230,333		(6,765,767	)		1,557,952
Germany		2,745,191		433,894		(30,389,809	)		(27,210,724	)
Italy		1,062,571		8,141,272		(5,746,111	)		3,457,732
Netherlands		1,617,341		181,147		(7,795,995	)		(5,997,507	)
Spain		1,109,404		13,939,500		(3,956,865	)		11,092,039
Sweden		1,227,638		11,304,499		(6,291,868	)		6,240,269
Switzerland		773,209		10,295,706		(6,379,143	)		4,689,772
United Kingdom		13,081,964		33,685,294		(29,282,672	)		17,484,586

For the years ended August 31, 2005 and August 31, 2004, the tax characterization of distributions paid for each Fund was equal to the book characterization of distributions paid. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for all Funds.

FEDERAL INCOME TAXES

Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its net income and any net gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2005.

From November 1, 2004 to August 31, 2005, certain Funds incurred net realized capital losses. As permitted by tax regulations, these Funds have elected to defer these losses and treat them as arising in the year ending August 31, 2006, as follows:

iShares MSCI Index Fund	Deferred Net Realized Capital Losses
Austria	$	1,416,383
Belgium		23,978
EMU		548,433
France		320,104
Germany		358,629
Italy		491,584
Netherlands		403,525
Sweden		125,932
United Kingdom		7,096,922

114 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

The Funds had tax basis net capital loss carryforwards as of August 31, 2005, the tax year-end of the Funds, as follows:

iShares MSCI Index Fund	Expiring in 2008		Expiring in 2009		Expiring in 2010		Expiring in 2011		Expiring in 2012		Expiring in 2013		Total
Austria	$	548,653	$	336,553	$	1,291,324	$	370,948	$	855,364	$	—	$	3,402,842
Belgium		94,675		450,543		1,677,678		117,767		175,781		33,969		2,550,413
EMU		—		443		1,923,552		1,144,756		4,757,907		1,873,963		9,700,621
France		—		—		3,807,513		236,944		2,400,550		—		6,445,007
Germany		—		86,860		13,573,336		5,469,732		8,656,712		2,241,687		30,028,327
Italy		—		—		3,355,772		848,408		541,980		527,327		5,273,487
Netherlands		—		60,885		3,222,792		1,497,810		2,481,175		129,137		7,391,799
Spain		—		—		1,695,618		678,910		1,582,094		—		3,956,622
Sweden		—		89,443		3,350,244		1,577,551		1,149,514		—		6,166,752
Switzerland		—		—		2,855,879		1,018,305		2,149,171		354,252		6,377,607
United Kingdom		—		—		9,945,254		6,448,554		4,272,059		1,517,783		22,183,650

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

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

For the year ended August 31, 2005, the Funds reclassified certain amounts to paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset value per share.

As of August 31, 2005, the aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

iShares MSCI Index Fund	Tax Cost		Unrealized Appreciation		Unrealized Depreciation			Net Unrealized Appreciation
Austria	$	180,738,274	$	42,359,403	$	(478,785	)	$	41,880,618
Belgium		64,652,049		1,555,744		(1,147,105	)		408,639
EMU		673,588,206		73,844,099		(7,827,737	)		66,016,362
France		104,679,576		15,496,949		(8,267,678	)		7,229,271
Germany		369,832,025		21,640,259		(21,205,810	)		434,449
Italy		53,206,352		9,151,103		(1,026,150	)		8,124,953
Netherlands		73,654,625		1,552,472		(1,372,705	)		179,767
Spain		65,895,054		13,979,855		(40,414	)		13,939,441
Sweden		70,172,026		11,555,235		(249,946	)		11,305,289
Switzerland		70,064,119		11,867,950		(1,573,556	)		10,294,394
United Kingdom		428,441,566		43,222,092		(9,544,155	)		33,677,937

NOTES TO THE FINANCIAL STATEMENTS 115

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as an investment by the Fund, collateralized by securities, which are delivered to the Fund’s custodian, or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest. As of August 31, 2005, a portion of the cash collateral for securities on loan for the Funds was invested in repurchase agreements as disclosed in each Fund’s Schedule of Investments. For further information, see Note 5, below.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

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

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

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

Barclays Global Investors, N.A. (“BGI”) has a license agreement with MSCI for the use of the relevant MSCI indices. Under a sub-license agreement between BGI and the Funds, the fees for the use of such MSCI indices are paid directly by BGI to MSCI.

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

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital, Inc. (“BarCap”). Pursuant to the same exemptive order, BGI serves as securities lending agent for the Company. BarCap and BGI are affiliates of BGFA, the Funds’ investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2005, BGI earned securities lending agent fees as follows:

iShares MSCI Index Fund	Securities Lending Agent Fees
Austria	$	37,314
Belgium		51,426
EMU		594,149
France		73,467
Germany		174,555
Italy		50,871
Netherlands		34,278
Spain		60,713
Sweden		68,520
Switzerland		13,439
United Kingdom		28,858

116 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES ®, INC.

SEI Investments Distribution Co. (the “Distributor”) serves as each Fund’s underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Company. The Distributor does not currently receive a fee from the Funds for its distribution services. Prior to July 1, 2004, the Company had in effect a distribution plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Distributor was entitled to receive a distribution fee from each Fund, not to exceed 0.25% of the average daily net assets of such Fund, for distribution-related expenses and services. At the Board meeting held of March 16, 2004, the Directors voted to terminate the Plan, effective July 1, 2004.

As defined under Section 2(a)(3) of the 1940 Act, certain broker-dealers may be deemed to be an “affiliated person” of a Fund by virtue of being a DTC Participant that owned of record 5% or more of the outstanding shares of such Fund. The broker-dealers identified to be an “affiliated person” of a Fund did not execute any portfolio transactions with or on behalf of such Fund during the year ended August 31, 2005.

Pursuant to Rule 17a-7 under the 1940 Act, certain Funds executed cross trades for the year ended August 31, 2005. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. The Board reviewed all such transactions executed during the first ten months of the fiscal year and concluded that they were in compliance with the requirements and restrictions set by Rule 17a-7. The Board is scheduled at its next regularly scheduled meeting to review all such transactions executed during the last two months of the fiscal year.

Pursuant to an exemptive order issued by the SEC, each Fund may invest in the Institutional Shares of the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”) and Prime Money Market Fund (“PMMF”) of Barclays Global Investors Funds. The GMMF, IMMF and PMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio and Prime Money Market Master Portfolio (collectively, the “Master Portfolios”), respectively, which are managed by BGFA, the Funds’ investment adviser. The GMMF, IMMF and PMMF are open-end money market funds available to institutional and accredited investors, including other investment companies managed by BGFA. The GMMF, IMMF and PMMF seek a high level of income consistent with liquidity and the preservation of capital. While the GMMF, IMMF and PMMF do not directly charge an investment advisory fee, the Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF and PMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds from temporary cash investments or from investment of securities lending collateral are recorded as either interest from affiliated issuers or securities lending income, respectively, in the accompanying Statements of Operations.

The following table provides information about the investment by each Fund in shares of issuers of which BGFA is an affiliate, for the year ended August 31, 2005, including income earned from these affiliated issuers and net realized gains from sales of these affiliated issuers.

iShares MSCI Index Fund and Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Dividend And Interest Income		Net Realized Gain
Austria
IMMF	29	19,758	19,785	2	$	2,373	$	2,556	$	—
Belgium
IMMF	12	7,266	7,275	3		2,642		993		—
EMU
IMMF	193	33,491	33,672	12		12,300		4,176		—
France
IMMF	52	5,492	5,394	150		150,406		801		—

NOTES TO THE FINANCIAL STATEMENTS 117

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

iShares MSCI Index Fund and Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Dividend and Interest Income		Net Realized Gain
Germany
IMMF	69	12,876	12,911	34	$	33,661	$	1,770	$	—
Italy
IMMF	15	3,059	3,070	4		3,927		397		—
Netherlands
IMMF	15	3,796	3,809	2		1,620		561		—
Spain
IMMF	24	4,621	4,639	6		5,726		674		—
Sweden
IMMF	15	2,784	2,792	7		7,174		366		—
Switzerland
IMMF	22	8,491	8,471	42		41,664		1,061		—
United Kingdom
Barclays PLC	1,510	338	624	1,224		12,173		735,841		1,809
IMMF	283	23,584	23,839	28		28,399		3,132		—

During the year ended August 31, 2005, the Funds invested cash collateral from securities on loan in the GMMF, IMMF and PMMF. Due to the nature of the structure of the joint account used for the investment of the collateral for securities on loan, the information reported above for each Fund does not include the Fund’s holdings of the GMMF, IMMF and PMMF in connection with the investment of collateral for securities on loan.

As of August 31, 2005, certain directors and officers of the Company are also officers of BGI.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2005, were as follows:

iShares MSCI Index Fund	Purchases		Sales
Austria	$	31,580,662	$	34,430,495
Belgium		8,332,614		4,977,137
EMU		47,000,669		38,403,677
France		7,087,036		4,299,801
Germany		17,639,521		15,534,609
Italy		6,763,653		6,475,886
Netherlands		4,708,755		2,715,830
Spain		5,398,990		5,030,616
Sweden		4,078,768		3,261,991
Switzerland		3,529,477		2,820,278
United Kingdom		59,717,879		54,614,037

118 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

In-kind transactions (see Note 4) for the year ended August 31, 2005, were as follows:

iShares MSCI Index Fund	In-kind Purchases		In-kind Sales
Austria	$	142,486,434	$	55,346,450
Belgium		45,601,301		34,157,545
EMU		188,532,097		62,742,303
France		22,717,286		18,394,404
Germany		178,114,817		—
Italy		7,705,709		—
Netherlands		40,979,230		13,339,574
Spain		23,444,179		15,068,052
Sweden		26,757,602		3,028,466
Switzerland		30,850,070		3,310,623
United Kingdom		96,396,302		171,642,362

4. CAPITAL SHARE TRANSACTIONS

The Company has authorized 10.9 billion shares of $.001 par value capital stock. The number of shares authorized to each Fund are as follows:

iShares MSCI Index Fund	Authorized Shares
Austria	19,800,000
Belgium	136,200,000
EMU	500,000,000
France	340,200,000
Germany	382,200,000
Italy	63,600,000
Netherlands	255,000,000
Spain	127,800,000
Sweden	63,600,000
Switzerland	318,625,000
United Kingdom	943,200,000

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

The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind contribution of a designated portfolio of equity securities constituting a portfolio sampling representation of the corresponding MSCI Index and an amount of cash. A purchase transaction fee and a redemption transaction fee are charged to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.

NOTES TO THE FINANCIAL STATEMENTS 119

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

5. LOANS OF PORTFOLIO SECURITIES

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

As of August 31, 2005, the Funds had loaned securities which were collateralized by cash. Pursuant to an exemptive order issued by the SEC, the cash collateral received was invested in a joint account with other funds managed by BGFA. The joint account invests in securities with remaining maturities of 397 days or less, repurchase agreements and money market mutual funds, including money market funds managed by BGFA. Repurchase agreements held in the joint account are fully collateralized by U.S. Government securities. Income from the joint account is allocated daily to each Fund, based on each Fund’s portion of the total cash collateral received. The market value of the securities on loan as of August 31, 2005 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, which is disclosed in the Funds’ Statements of Operations, is presented net of rebates paid to, or fees paid by, borrowers.

120 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

iShares, Inc.

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Austria Index Fund, iShares MSCI Belgium Index Fund, iShares MSCI EMU Index Fund, iShares MSCI France Index Fund, iShares MSCI Germany Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Netherlands Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund, iShares MSCI Switzerland Index Fund and iShares MSCI United Kingdom Index Fund, each a portfolio of the iShares MSCI Series (the “Funds”) at August 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 18, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 121

Tax Information (Unaudited)

iSHARES^®, INC.

For the year ended August 31, 2005, the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”) as follows:

iShares MSCI Index Fund	Foreign Source Income Earned		Foreign Taxes Paid
Austria	$	3,255,716	$	433,818
Belgium		2,509,962		244,697
EMU		14,656,286		719,648
France		1,612,835		81,176
Germany		3,576,454		192,687
Italy		1,411,550		77,493
Netherlands		1,805,240		94,731
Spain		1,751,687		73,273
Sweden		1,610,143		105,535
Switzerland		1,230,465		133,685
United Kingdom		20,201,560		34,516

Under Section 854(b)(2) of the Code, the Funds hereby designate the following maximum amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Code for the year ended August 31, 2005:

iShares MSCI Index Fund	Qualified Dividend Income
Austria	$	2,798,966
Belgium		1,342,630
EMU		4,179,807
France		683,511
Germany		1,298,086
Italy		347,151
Netherlands		695,397
Spain		631,316
Sweden		722,110
Switzerland		906,896
United Kingdom		17,081,687

In January 2006, shareholders will receive Form 1099-DIV which will include their share of qualified dividends distributed during the calendar year 2005. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.

122 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Meeting Results (Unaudited)

iSHARES^®, INC.

A special meeting of shareholders of iShares, Inc. was scheduled on July 14, 2005 and subsequently adjourned until August 11, 2005. The proposals acted upon by shareholders at the special meeting and the results of the shareholder vote were as follows:

Proposal 1*

To elect the eight nominees specified below as Directors of the Company, each of whom will serve until his/her successor is duly elected or appointed and qualified.

Director	Votes For	Votes Withheld
Lee T. Kranefuss	514,380,779	13,203,425
John E. Martinez	514,431,297	13,152,907
Richard K. Lyons	514,795,814	12,788,388
George G.C. Parker	509,155,829	18,428,374
W. Allen Reed	514,418,913	13,165,293
Cecilia H. Herbert	514,381,937	13,202,268
Charles A. Hurty	514,442,567	13,141,638
John E. Kerrigan	514,830,983	12,753,220

Messrs. Kranefuss, Martinez, Lyons, Reed and Parker previously served as Directors of the Company and were re-elected. Ms. Herbert and Messrs. Hurty and Kerrigan were newly elected.

Proposal 2A

To approve a change to the Company’s fundamental investment policy to simplify and conform each Fund’s investment restriction regarding issuing senior securities. The shareholders of the iShares MSCI Germany Index Fund, iShares MSCI Netherlands Index Fund and iShares MSCI Switzerland Index Fund did not approve this proposal.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Austria	2,884,959	65,749	222,523	962,796
Belgium	1,482,566	43,740	74,902	405,883
EMU	2,734,892	98,272	103,919	1,075,723
France	828,162	178,236	7,055	200,710
Germany	2,368,605	181,068	79,215	2,566,569
Italy	622,042	14,930	5,521	185,045
Netherlands	838,057	76,143	17,348	636,422
Spain	683,738	55,673	28,147	175,573
Sweden	1,258,559	22,666	25,604	356,425
Switzerland	629,965	34,188	18,663	1,237,452
United Kingdom	9,639,753	2,284,284	94,975	1,614,899

SHAREHOLDER MEETING RESULTS 123

Shareholder Meeting Results (Unaudited) (Continued)

iSHARES^®, INC.

Proposal 2B

To approve a change to the Company’s fundamental investment policy to simplify and conform each Fund’s investment restriction regarding the making of loans. The shareholders of the iShares MSCI Germany Index Fund, iShares MSCI Netherlands Index Fund and iShares MSCI Switzerland Index Fund did not approve this proposal.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Austria	2,854,656	86,018	232,557	962,796
Belgium	1,477,907	49,352	73,948	405,884
EMU	2,730,274	103,167	103,642	1,075,723
France	827,194	179,954	6,305	200,710
Germany	2,367,398	187,739	73,750	2,566,570
Italy	621,869	15,103	5,521	185,045
Netherlands	837,912	76,288	17,348	636,422
Spain	683,239	56,041	28,277	175,574
Sweden	1,258,589	22,966	25,274	356,425
Switzerland	622,865	40,699	19,252	1,237,452
United Kingdom	9,628,318	2,294,895	95,799	1,614,899

Proposal 2C

This proposal did not apply to the Funds in this shareholder report.

Proposal 2D

This proposal did not apply to the Funds in this shareholder report.

Proposal 3

To approve a change in the classification of the investment objectives of certain Funds from fundamental to non-fundamental. The shareholders of the iShares MSCI Belgium Index Fund, iShares MSCI Italy Index Fund and iShares MSCI Sweden Index Fund approved this proposal. The proposal did not pass in the other Funds in this shareholder report.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Austria	2,724,589	214,575	234,066	962,797
Belgium	1,453,881	70,905	76,422	405,883
EMU	2,472,672	361,541	102,870	1,075,723
France	720,634	286,514	6,305	200,710
Germany	2,243,543	304,700	80,645	2,566,569
Italy	601,385	35,557	5,551	185,045
Netherlands	826,664	87,536	17,348	636,422
Spain	625,676	112,595	29,287	175,573
Sweden	1,183,848	95,027	27,954	356,425
Switzerland	572,355	92,009	18,452	1,237,452
United Kingdom	8,486,421	3,434,447	98,144	1,614,899

124 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Meeting Results (Unaudited) (Continued)

iSHARES^®, INC.

Proposal 4

This proposal did not apply to the Funds in this shareholder report.

* Denotes Company-wide proposal and voting results.

** Broker non-votes are proxies received by the Fund from brokers or nominees, who did not receive instructions from the beneficial owner or other persons entitled to vote, and who have no discretionary power to vote on a particular matter. Broker non-votes have the effect of a vote against the proposal.

SHAREHOLDER MEETING RESULTS 125

Board Review and Approval of Investment Advisory Contracts^*(Unaudited)

iSHARES^®, INC.

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors, including a majority of Directors who are not interested persons of the Company (as that term is defined in the 1940 Act), who are commonly referred to as the “Independent Directors,” is required annually to consider each Fund’s Investment Advisory Contract with BGFA (each, an “Advisory Contract”). Pursuant to Section 15(c), the Board of Directors (the “Board”) is required to request and evaluate, and BGFA is required to provide, such information as may be reasonably necessary to evaluate the terms of the Advisory Contracts. At a meeting held on June 14, 2005, the Board approved the selection of BGFA and the continuance of the Advisory Contracts, based on its review of qualitative and quantitative information provided by BGFA. With respect to the iShares MSCI Singapore Index Fund (the “Singapore Fund”), the Board approved the continuance of the current Advisory Contract for the Singapore Fund, pending shareholder approval of the new advisory contract for the Singapore Fund which was previously considered and approved by the Board on April 22, 2005. In selecting BGFA and approving the Advisory Contracts for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board reviewed the scope of services to be provided by BGFA under the Advisory Contracts and noted that there would be no differences between the scope of services required to be provided by BGFA for the past year and the scope of services required to be provided by BGFA for the upcoming year. In reviewing the scope of services provided to the Funds by BGFA, the Board reviewed and discussed BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including increasing the number of their employees, to the support of the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA provides information regarding portfolio management and compliance to the Board on a periodic basis in connection with regularly scheduled meetings of the Board. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board reviewed and considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Funds; therefore, no comparative performance information was available. However, the Board also noted that the Funds had met their investment objectives consistently since their relevant inception dates. Based on this review, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contracts were appropriate and continued to support the Board’s original selection of BGFA as investment adviser to the Funds.

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other funds registered under the 1940 Act objectively determined solely by Lipper, as comprising each Fund’s applicable peer group (the “Lipper Peer Group”). In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three- and five-year, and “latest quarter” periods ended March 31, 2005, as applicable, and a comparison of each Fund’s performance to that of the funds in its Lipper Peer Group for the same periods. Because there are relatively few exchange-traded funds other than the Funds and because few, if any, exchange-traded funds or index funds track indices similar to those tracked by the Funds, the Lipper Peer Groups included open-end, closed-end, and exchange-traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Peer Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Peer Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board noted that most of the Funds generally performed in line with the funds in their respective Lipper Peer Groups over relevant periods, however, certain

126 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^®, INC.

of the Funds may have underperformed or outperformed funds in their respective Lipper Peer Groups over relevant periods, but any such Funds also performed in line with their relevant benchmarks over such periods. The Board also noted that the investment advisory fees and overall expenses for the Funds were generally lower than or in line with the investment advisory fee rates and overall expenses of the Funds in their respective Lipper Peer Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of the Funds, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the Lipper Peer Groups, were satisfactory for the purposes of approving the continuance of the Advisory Contracts.

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

The Board reviewed information about the profitability of the Funds to BGFA based on the fees payable under the Advisory Contracts for the last calendar year. The Board analyzed the Funds’ expenses, including the investment advisory fees paid to BGFA. The Board also reviewed information regarding direct revenue received by BGFA and ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA (as discussed below). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Advisory Contracts and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ asset levels. The Board noted that the Advisory Contracts for most of the Funds provide for breakpoints in the investment advisory fee rates as a result of increases in the asset levels of such Funds on an aggregated basis with certain other Funds. The Board further noted that the Advisory Contract for the iShares MSCI Singapore Index Fund provides for breakpoints in its investment advisory fee rate based on increases in the asset levels of that particular Fund. The Board also noted that the Advisory Contracts for the iShares MSCI Pacific Ex-Japan Index Fund and the iShares MSCI Emerging Markets Index Fund do not provide for any breakpoints in the investment advisory fee rates as a result of increases in the asset levels of such Funds. However, the Board further noted that possible future economies of scale had been taken into consideration by fixing the investment advisory fees at rates at the lower end of the marketplace, effectively giving Fund shareholders, from inception, the benefits of the lower average fee shareholders would have received from a fee structure with declining breakpoints where the initial fee was higher. In addition, the Board noted that as of July 1, 2004, Fund shareholders were no longer paying distribution fees pursuant to the Funds’ distribution plan under Rule 12b-1 of the 1940 Act because such plan had been terminated as of that date, benefiting the Funds’ shareholders by lowering the Funds’ overall expenses. The Board also reviewed BGFA’s historic profitability as investment adviser to the Funds and noted that BGFA had not yet fully recovered losses it had experienced during earlier years when the Funds had not yet achieved reasonable economic scale. In light of this history, the Board determined that reductions in fee rates or additions of further breakpoints were not warranted at this juncture. Based on this review, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees at present reflects the sharing of economies of scale with the Funds’ shareholders.

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

The Board received and considered information regarding the Funds’ annual investment advisory fee rates under the Advisory Contracts in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts. The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any mutual funds, collective funds, separate accounts or other exchange-traded funds with substantially similar investment objectives and strategies as the

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS 127

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^®, INC.

Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the other funds registered under the 1940 Act, collective funds and separate accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contracts do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contracts are fair and reasonable.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

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

Based on the above analysis, the Board determined that the Advisory Contracts, including the investment advisory fee rates thereunder, are fair and reasonable in light of all relevant circumstances and concluded that it is in the best interest of the Funds and their shareholders to continue the Advisory Contracts.

* Denotes the Board’s approval of Investment Advisory Contracts for all series of the Company, including the Funds.

128 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited)

iSHARES^®, INC.

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

Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of a Fund on a given day, generally at the time 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 report. Except for the iShares MSCI EMU Index Fund, the information shown for each Fund is for the period from January 1, 2000 through June 30, 2005, the date of the most recent calendar quarter-end. The information shown for the iShares MSCI EMU Index Fund is for each full calendar quarter completed after the launch date of that Fund through June 30, 2005. The specific periods covered for each Fund are disclosed in the table for such Fund.

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

iShares MSCI Austria Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	5	0.36	%
Greater than 2.5% and Less than 3.0%	3	0.22
Greater than 2.0% and Less than 2.5%	3	0.22
Greater than 1.5% and Less than 2.0%	31	2.24
Greater than 1.0% and Less than 1.5%	82	5.94
Greater than 0.5% and Less than 1.0%	222	16.08
Between 0.5% and –0.5%	761	55.10
Less than –0.5% and Greater than –1.0%	180	13.03
Less than –1.0% and Greater than –1.5%	65	4.71
Less than –1.5% and Greater than –2.0%	17	1.23
Less than –2.0% and Greater than –2.5%	7	0.51
Less than –2.5%	5	0.36
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 129

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC .

iShares MSCI Belgium Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	13	0.94	%
Greater than 2.0% and Less than 2.5%	17	1.23
Greater than 1.5% and Less than 2.0%	35	2.53
Greater than 1.0% and Less than 1.5%	98	7.10
Greater than 0.5% and Less than 1.0%	224	16.22
Between 0.5% and –0.5%	700	50.69
Less than –0.5% and Greater than –1.0%	197	14.27
Less than –1.0% and Greater than –1.5%	64	4.63
Less than –1.5% and Greater than –2.0%	19	1.38
Less than –2.0% and Greater than –2.5%	10	0.72
Less than –2.5%	4	0.29
	1,381	100.00	%

iShares MSCI EMU Index Fund

Period Covered: October 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	7	0.59	%
Greater than 2.0% and Less than 2.5%	7	0.59
Greater than 1.5% and Less than 2.0%	25	2.10
Greater than 1.0% and Less than 1.5%	86	7.21
Greater than 0.5% and Less than 1.0%	309	25.92
Between 0.5% and –0.5%	639	53.60
Less than –0.5% and Greater than –1.0%	87	7.30
Less than –1.0% and Greater than –1.5%	23	1.93
Less than –1.5%	9	0.76
	1,192	100.00	%

130 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI France Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.0%	4	0.29	%
Greater than 1.5% and Less than 2.0%	8	0.58
Greater than 1.0% and Less than 1.5%	35	2.53
Greater than 0.5% and Less than 1.0%	135	9.78
Between 0.5% and –0.5%	1024	74.14
Less than –0.5% and Greater than –1.0%	136	9.85
Less than –1.0% and Greater than –1.5%	28	2.03
Less than –1.5% and Greater than –2.0%	4	0.29
Less than –2.0%	7	0.51
	1,381	100.00	%

iShares MSCI Germany Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.0%	6	0.43	%
Greater than 1.5% and Less than 2.0%	18	1.30
Greater than 1.0% and Less than 1.5%	51	3.69
Greater than 0.5% and Less than 1.0%	187	13.54
Between 0.5% and –0.5%	882	63.88
Less than –0.5% and Greater than –1.0%	157	11.37
Less than –1.0% and Greater than –1.5%	55	3.98
Less than –1.5% and Greater than –2.0%	13	0.94
Less than –2.0% and Greater than –2.5%	5	0.36
Less than –2.5%	7	0.51
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 131

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Italy Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.0%	6	0.43	%
Greater than 1.5% and Less than 2.0%	14	1.01
Greater than 1.0% and Less than 1.5%	28	2.03
Greater than 0.5% and Less than 1.0%	136	9.85
Between 0.5% and –0.5%	1019	73.79
Less than –0.5% and Greater than –1.0%	127	9.20
Less than –1.0% and Greater than –1.5%	29	2.10
Less than –1.5% and Greater than –2.0%	12	0.87
Less than –2.0%	10	0.72
	1,381	100.00	%

iShares MSCI Netherlands Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	11	0.80	%
Greater than 2.0% and Less than 2.5%	6	0.43
Greater than 1.5% and Less than 2.0%	17	1.23
Greater than 1.0% and Less than 1.5%	51	3.69
Greater than 0.5% and Less than 1.0%	243	17.60
Between 0.5% and –0.5%	845	61.19
Less than –0.5% and Greater than –1.0%	134	9.70
Less than –1.0% and Greater than –1.5%	53	3.84
Less than –1.5% and Greater than –2.0%	14	1.01
Less than –2.0%	7	0.51
	1,381	100.00	%

132 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Spain Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	4	0.29	%
Greater than 2.0% and Less than 3.0%	7	0.51
Greater than 1.5% and Less than 2.0%	9	0.65
Greater than 1.0% and Less than 1.5%	44	3.19
Greater than 0.5% and Less than 1.0%	173	12.53
Between 0.5% and –0.5%	935	67.69
Less than –0.5% and Greater than –1.0%	144	10.43
Less than –1.0% and Greater than –1.5%	47	3.40
Less than –1.5% and Greater than –2.0%	11	0.80
Less than –2.0%	7	0.51
	1,381	100.00	%

iShares MSCI Sweden Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 2.5%	14	1.01	%
Greater than 2.0% and Less than 2.5%	22	1.59
Greater than 1.5% and Less than 2.0%	31	2.24
Greater than 1.0% and Less than 1.5%	87	6.30
Greater than 0.5% and Less than 1.0%	249	18.03
Between 0.5% and –0.5%	730	52.87
Less than –0.5% and Greater than –1.0%	137	9.92
Less than –1.0% and Greater than –1.5%	65	4.71
Less than –1.5% and Greater than –2.0%	18	1.30
Less than –2.0% and Greater than –2.5%	15	1.09
Less than –2.5%	13	0.94
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 133

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Switzerland Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	2	0.14	%
Greater than 2.5% and Less than 3.0%	7	0.51
Greater than 2.0% and Less than 2.5%	9	0.65
Greater than 1.5% and Less than 2.0%	39	2.82
Greater than 1.0% and Less than 1.5%	111	8.04
Greater than 0.5% and Less than 1.0%	267	19.33
Between 0.5% and –0.5%	770	55.77
Less than –0.5% and Greater than –1.0%	114	8.25
Less than –1.0% and Greater than –1.5%	34	2.46
Less than –1.5% and Greater than –2.0%	20	1.45
Less than –2.0%	8	0.58
	1,381	100.00	%

iShares MSCI United Kingdom Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.5%	7	0.51	%
Greater than 2.5% and Less than 3.5%	8	0.58
Greater than 2.0% and Less than 2.5%	18	1.30
Greater than 1.5% and Less than 2.0%	78	5.65
Greater than 1.0% and Less than 1.5%	212	15.35
Greater than 0.5% and Less than 1.0%	344	24.91
Between 0.5% and –0.5%	619	44.82
Less than –0.5% and Greater than –1.0%	66	4.78
Less than –1.0% and Greater than –1.5%	15	1.09
Less than –1.5% and Greater than –2.5%	10	0.72
Less than –2.5%	4	0.29
	1,381	100.00	%

134 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director Information (Unaudited)

iSHARES^®, INC.

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

iShares, Inc., iShares Trust, Barclays Global Investors Funds and Master Investment Portfolio are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 101 portfolios within the fund complex. In addition, Lee T. Kranefuss and Richard K. Lyons each serves as a Trustee for Barclays Global Investors Funds and Master Investment Portfolio and oversees 126 portfolios within the fund complex.

Unless otherwise noted in the tables below, the address for each Director is 45 Fremont Street, San Francisco, California 94105. Additional information about the Funds’ Directors may be found in the Funds’ Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.

Interested Directors and Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
*Lee T. Kranefuss, 1961	Director, Chairman and President (since June 18, 2003).	Chief Executive Officer of Intermediary Investor and Exchange Traded Products Business of BGI (since 2003); Chief Executive Officer of the Individual Investor Business of BGI (1997-2003).	Trustee (since 2003) of iShares Trust; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.; Director (since 2003) of iShares PLC and EETF PLC (Dublin).
*John E. Martinez, 1961	Director (since December 5, 2003).	Co-CEO of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); CEO of Capital Markets Group of BGI (1996-2001).	Trustee (since 2003) of iShares Trust; Director (since 2005) of Real Estate Equity Exchange; Director (since 2003) of Larkin Street Youth Services; Director (2000-2002) of Barclays Global Investors UK Holdings.

* Lee T. Kranefuss and John E. Martinez are considered to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser, and BGFA affiliates.

DIRECTOR INFORMATION 135

Director Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Richard K. Lyons, 1961	Director (since February 28, 2002)	Acting Dean (2004-2005) and Sylvan Coleman Professor of Finance (since 1993) University of California, Berkeley: Haas School of Business; Consultant for IMF World Bank, Federal Reserve Bank and Citibank N.A. (since 2000).	Trustee (since 2000) of iShares Trust; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.; Trustee and Chairman (since 1995) of Matthews Asian Funds (oversees 6 portfolios).
George G. C. Parker, 1939	Director (since February 28, 2002)	Dean Witter Distinguished Professor of Finance (since 1994); Senior Associate Dean for Academic Affairs, Director of MBA Program, Stanford University: Graduate School of Business (1993-2001).	Trustee (since 2000) of iShares Trust; Director (since 1998) of Affinity Group Holdings; Director (since 1985) of Bailard, Biehl and Kaiser, Inc.; Director (since 1978) of California Casualty Group of Insurance Companies; Director (since 1996) of Continental Airlines, Inc.; Director (since 1996) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2003) of First Republic Bank; Director (since 2000) of Converium Re-Insurance; Director (since 2004) of Threshold Pharmaceuticals.
W. Allen Reed, 1947	Director (since December 16, 1996)	President and Chief Executive Officer of General Motors Investment Management Corporation (since 1994); Chief Executive Officer of General Motors Trust Bank (since 2003); Chief Executive Officer of General Motors Trust Company (since 1999).	Trustee (since 2002) of iShares Trust; Director (since 1994) of General Motors Investment Management Corporation; Director and Chairman (since 2003) of General Motors Trust Bank; Director and Chairman (since 1999) of General Motors Trust Company; Director (since 2002) of GMAM ARS Fund I; Director (since 1994) of General Motors Acceptance Corporation; Director (since 1994) of GMAC Insurance Holdings, Inc.; Director (since 1995) of Global Emerging Markets Fund; Director (since 2000) of Temple Inland Industries; Member (since 2004) of Board of Executives of New York Stock Exchange; Member (since 1995) of New York State Retirement System Advisory Board; Member (since 2004) of the Auburn University Foundation Fund Investment Committee.

136 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Cecilia H. Herbert, 1949	Director (since August 11, 2005).	Member of Finance Council, Archdiocese of San Francisco (since 1991); Chair of Investment Committee, Archdiocese of San Francisco (since 1994).	Trustee (since 2005) of iShares Trust; Trustee (since 2004) of Pacific Select Funds (31 portfolios); Trustee (1992-2003) of the Montgomery Funds (20 portfolios); Trustee (since 2005) of the Thatcher School; Director (since 1998) of Catholic Charities CYO; Trustee (1998-2000) of the Groton School; Director (since 2005) of Women’s Forum West (professional association).
Charles A. Hurty, 1944	Director (since August 11, 2005).	Partner, KPMG LLP (1968-2001).	Trustee (since 2005) of iShares Trust; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (2 portfolios); Director (since 2005) of CSFB Alternative Investments Fund (15 portfolios).
John E. Kerrigan, 1956	Director (since August 11, 2005).	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Trustee (since 2005) of iShares Trust; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.

Officer

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael A. Latham, 1965	Secretary, Treasurer and Principal Financial Officer (since February 28, 2002).	Chief Operating Officer of the Intermediary Investor 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.

DIRECTOR INFORMATION 137

The iShares^® Family of Funds

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

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500/BARRA Growth (IVW)

iShares S&P 500/BARRA Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400/BARRA Growth (IJK)

iShares S&P MidCap 400/BARRA Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600/BARRA Growth (IJT)

iShares S&P SmallCap 600/BARRA Value (IJS)

iShares Domestic Sector Index Funds

iShares Cohen & Steers Realty Majors (ICF)

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

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

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

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

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

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

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

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

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

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

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

iShares Dow Jones Transportation Average (IYT)

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

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

iShares Goldman Sachs Natural Resources (IGE)

iShares Goldman Sachs Networking (IGN)

iShares Goldman Sachs Semiconductor (IGW)

iShares Goldman Sachs Software (IGV)

iShares Goldman Sachs Technology (IGM)

iShares Nasdaq Biotechnology (IBB)

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT)

iShares GS $ InvesTop™ Corporate (LQD)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Specialty Index Funds

iShares KLD Select Social^SM (KLD)

iShares Dow Jones Select Dividend (DVY)

iShares International Index Funds

iShares MSCI EAFE (EFA)

iShares MSCI EAFE Growth (EFG)

iShares MSCI EAFE Value (EFV)

iShares MSCI Emerging Markets (EEM)

iShares MSCI EMU (EZU)

iShares MSCI Pacific ex-Japan (EPP)

iShares S&P Europe 350 (IEV)

iShares S&P Latin America 40 (ILF)

iShares Morningstar Index Funds

iShares Morningstar Large Core (JKD)

iShares Morningstar Large Growth (JKE)

iShares Morningstar Large Value (JKF)

iShares Morningstar Mid Core (JKG)

iShares Morningstar Mid Growth (JKH)

iShares Morningstar Mid Value (JKI)

iShares Morningstar Small Core (JKJ)

iShares Morningstar Small Growth (JKK)

iShares Morningstar Small Value (JKL)

iShares NYSE Index Funds

iShares NYSE Composite (NYC)

iShares NYSE 100 (NY)

iShares^® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Goldman, Sachs & Co. or Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., FTSE/Xinhua Index Limited, KLD Research & Analytics, Inc., Morgan Stanley Capital International, Morningstar, Inc., The Nasdaq Stock Market, Inc., New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. “GS $ InvesTop™” and “Goldman Sachs^®” are trademarks of Goldman, Sachs & Co.

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

This advertising section does not constitute part of the 2005 Annual Report.

2117-is-0805

138 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

The iShares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an adviser to the iShares Funds. Barclays Global Investors Services (BGIS) assists in the marketing of the iShares Funds. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., a wholly owned subsidiary of Barclays Bank PLC, none of which is affiliated with SEI.

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Morgan Stanley Capital International, Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds.

©2005 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.

Investing involves risk, including possible loss of principal.

A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, 2005 is available without charge, upon request, by calling toll-free 1 800 474 2737; on the Funds’ website at www.iShares.com; and on the Securities and Exchange Commission’s web-site at www.sec.gov.

The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarter of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1 800 SEC 0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website at www.iShares.com.

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

2005 annual report to shareholders | august 31 , 2005 iSHARES MSCI SERIES

iShares msci australia index fund

iShares msci brazil index fund

iShares msci canada index fund

iShares msci emerging markets index fund

iShares msci hong kong index fund

iShares msci malaysia index fund

iShares msci mexico index fund

iShares msci pacific ex-japan index fund

iShares msci singapore index fund

iShares msci south africa index fund

iShares msci south korea index fund

iShares msci taiwan index fund

Table of Contents

Management’s Discussion of Fund Performance	1
Shareholder Expenses	25
Schedules of Investments	27
iShares MSCI Australia Index Fund	27
iShares MSCI Brazil Index Fund	34
iShares MSCI Canada Index Fund	40
iShares MSCI Emerging Markets Index Fund	43
iShares MSCI Hong Kong Index Fund	52
iShares MSCI Malaysia Index Fund	58
iShares MSCI Mexico Index Fund	61
iShares MSCI Pacific ex-Japan Index Fund	66
iShares MSCI Singapore Index Fund	73
iShares MSCI South Africa Index Fund	79
iShares MSCI South Korea Index Fund	81
iShares MSCI Taiwan Index Fund	88
Financial Statements	91
Financial Highlights	99
Notes to the Financial Statements	111
Report of Independent Registered Public Accounting Firm	120
Tax Information (Unaudited)	121
Shareholder Meeting Results (Unaudited)	122
Board Review and Approval of Investment Advisory Contracts (Unaudited)	125
Supplemental Information (Unaudited)	131
Director Information (Unaudited)	138
iShares Family of Funds	142

Management’s Discussion of Fund Performance

iSHARES^® MSCI AUSTRALIA INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05						Five Years Ended 8/31/05						Inception to 8/31/05
NAV		MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
39.58	%	41.19	%	38.98	%	15.82	%	15.89	%	15.29	%	9.58	%	9.68	%	9.78	%
Cumulative Total Returns
Year Ended 8/31/05						Five Years Ended 8/31/05						Inception to 8/31/05
NAV		MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
39.58	%	41.19	%	38.98	%	108.40	%	109.01	%	103.69	%	137.88	%	139.90	%	142.09	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

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

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 1

PORTFOLIO ALLOCATION As of 8/31/ 05
Sector	% of Net Assets
Financial	49.11	%
Basic Materials	16.62
Consumer Non-Cyclical	9.34
Industrial	9.17
Consumer Cyclical	4.62
Energy	4.49
Communications	3.43
Utilities	1.37
Diversified	0.68
Technology	0.38
Short-Term and Other Net Assets	0.79
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
BHP Billiton Ltd.	10.88	%
National Australia Bank Ltd.	7.24
Commonwealth Bank of Australia	7.10
Australia & New Zealand Banking Group Ltd.	5.99
Westpac Banking Corp. Ltd.	5.27
Westfield Group	3.76
Woolworths Ltd.	2.56
Woodside Petroleum Ltd.	2.28
Wesfarmers Ltd.	2.20
Rio Tinto Ltd.	2.12
TOTAL	49.40	%

The iShares MSCI Australia Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Australian market, as measured by the MSCI Australia Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 39.58%, while the Index returned 38.98%.

The Australian market delivered solid gains for the reporting period. Australia’s economy continued to appear healthy during the reporting period: with annualized gross domestic product growth for the second quarter of 2005 of 2.60%, the economy is now in its 14^th year of uninterrupted expansion, the longest expansion in Australia since 1945. Inflation remained low, and export trade continued to grow for most of the reporting period, due in part to strong demand from China. Previous concerns surrounding a housing bubble appeared to lessen during the reporting period, as the housing market began to cool moderately.

As economic expansion continued during the reporting period, concerns were raised about supply constraints, and their impact on further expansion. With capacity utilization in the manufacturing industry at its highest level in 15 years, congested ports and railways creating a bottleneck for export trade, and a shortage of skilled labor, Australia’s export growth showed signs of slowing toward the end of the reporting period, although the ratio of exports to imports remained at their highest levels since the 1970s.

All of the Fund’s ten largest holdings as of August 31, 2005 posted double-digit gains for the reporting period. Oil exploration and production company Woodside Petroleum Ltd. had the strongest returns among the Fund’s ten largest holdings, due largely to escalating oil prices during the reporting period. Two metals and mining companies performed well: BHP Billiton Ltd., the largest Fund holding at almost 11% of the Fund’s net assets, delivered strong returns, as did Rio Tinto Ltd. Conglomerate Wesfarmers Ltd. also contributed positively to Fund performance for the reporting period. The most modest gain among the Fund’s ten largest holdings came from real estate investment trust Westfield Group.

2 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI BRAZIL INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05						Five Years Ended 8/31/05						Inception to 8/31/05
NAV		MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
69.72	%	68.54	%	74.70	%	10.24	%	9.74	%	12.98	%	9.29	%	9.22	%	11.91	%
Cumulative Total Returns
Year Ended 8/31/05						Five Years Ended 8/31/05						Inception to 8/31/05
NAV		MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
69.72	%	68.54	%	74.70	%	62.78	%	59.14	%	84.10	%	57.95	%	57.44	%	78.52	%

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

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 3

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Basic Materials	29.19	%
Energy	24.30
Financial	16.07
Consumer Non-Cyclical	9.18
Communications	8.79
Utilities	6.63
Industrial	3.58
Consumer Cyclical	1.47
Diversified	0.17
Short-Term and Other Net Assets	0.62
TOTAL	100.00	%

TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Petroleo Brasileiro SA Preferred	13.32	%
Petroleo Brasileiro SA	10.98
Companhia Vale do Rio Doce Class A Preferred	8.59
Companhia Vale do Rio Doce ADR	8.00
Banco Itau Holding Financeira SA Preferred	7.43
Banco Bradesco SA Preferred	4.82
Companhia de Bebidas das Americas Preferred	4.57
Unibanco Uniao de Bancos Brasileiros SA	3.82
Tele Norte Leste Participacoes SA Preferred	2.90
Companhia Energetica de Minas Gerais Preferred	2.73
TOTAL	67.16	%

The iShares MSCI Brazil Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Brazilian market, as measured by the MSCI Brazil Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 69.72%, while the Index returned 74.70%.

The Brazilian market posted strong gains for the reporting period, fueled largely by rising oil prices, a strengthening currency, and rising interest rates. Oil prices escalated during the reporting period, reaching $70 per barrel. The increase benefited the Brazilian market whose largest company, oil company Petroleo Brasileiro SA, represented more than 28% of the Index as of August 31, 2005. The Brazilian currency, the real, climbed during the reporting period, reaching a three-year-high by May and becoming the best performing currency against the U.S. dollar among the 60 currencies tracked by Bloomberg. The Brazilian central bank increased its benchmark lending rate during the course of the reporting period, reaching 19.75% by May, in an effort to curtail inflation. The result was an inflow of foreign investment from investors seeking to capitalize on its high interest rates, benefiting the banking industry.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was largely positive for the reporting period. The preferred shares of diversified bank Banco Bradesco SA posted the strongest gains among the Fund’s ten largest holdings. The preferred shares of diversified bank Banco Itau Holding Financeira SA also delivered strong returns for the reporting period. Oil company Petroleo Brasileiro SA, whose preferred and common shares were the two largest Fund holdings, performed well, as did bank Unibanco Uniao de Bancos Brasileiros SA. The sole negative performer among the ten largest Fund holdings was the preferred shares of the telecommunications company Tele Norte Leste Participacoes SA.

4 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI CANADA INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
43.35%	43.23	%	43.69	%	4.93	%	5.04	%	3.78	%	12.80	%	12.87	%	13.43	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
43.35%	43.23	%	43.69	%	27.22	%	27.87	%	20.39	%	212.94	%	214.94	%	230.15	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

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

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 5

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Financial	32.10	%
Energy	27.73
Basic Materials	15.36
Communications	6.91
Industrial	5.55
Consumer Cyclical	4.12
Consumer Non-Cyclical	3.00
Technology	2.95
Diversified	1.62
Utilities	0.43
Short-Term and Other Net Assets	0.23
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Royal Bank of Canada	6.01	%
EnCana Corp.	5.98
Manulife Financial Corp.	5.62
Bank of Nova Scotia	4.73
Suncor Energy Inc.	3.70
Canadian Natural Resources Ltd.	3.59
Bank of Montreal	3.36
Sun Life Financial Inc.	3.00
Petro-Canada	2.81
Canadian Imperial Bank of Commerce	2.78
TOTAL	41.58	%

The iShares MSCI Canada Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Canadian market, as measured by the MSCI Canada Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 43.35%, while the Index returned 43.69%.

The Canadian market posted strong gains for the reporting period. Canada’s market strength was driven largely by two factors – rising oil prices and improving economic conditions in the U.S. Oil companies represent a relatively large part of the Canadian economy, accounting for more than 20% of the Index. During the course of the reporting period, oil prices escalated, reaching $70 per barrel by the end of the reporting period and boosting returns for oil companies. Canada’s exports to the U.S. also are important to its economy, representing approximately 85% of all of its exports. As the U.S. economy improved during the reporting period and the U.S. dollar strengthened, its demand for Canadian exports grew, also providing a boost to the Canadian economy and market.

All of the Fund’s ten largest holdings as of August 31, 2005 had positive returns for the reporting period. Two oil and gas exploration companies, Canadian Natural Resources Ltd. and EnCana Corp., were the strongest performers for the reporting period, each posting triple-digit gains. Integrated oil and gas company Suncor Energy Inc. also logged strong gains, as did integrated oil and gas company Petro-Canada. The largest Fund holding, Royal Bank of Canada, also contributed positively to Fund performance. The most modest returns among the Fund’s ten largest holdings came from Bank of Montreal.

6 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns											Cumulative Total Returns
Year Ended 8/31/05					Inception to 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
46.17%	47.06	%	41.83	%	42.68	%	42.85	%	40.27	%	134.91	%	135.58	%	125.27	%

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

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 7

PORTFOLIO ALLOCATION
As of 8/31/05
Sector	% of Net Assets
Financial	18.73	%
Communications	16.06
Energy	13.70
Basic Materials	12.30
Industrial	11.17
Technology	10.28
Consumer Non-Cyclical	5.25
Utilities	4.60
Consumer Cyclical	4.52
Diversified	2.31
Exchange-Traded Funds	0.58
Short-Term and Other Net Assets	0.50
TOTAL	100.00	%
TOP TEN FUND HOLDINGS
As of 8/31/05
Security	% of Net Assets
Samsung Electronics Co. Ltd. GDR (South Korea)	5.99	%
Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)	3.44
Kookmin Bank ADR (South Korea)	2.96
POSCO ADR (South Korea)	2.87
United Microelectronics Corp. ADR (Taiwan)	2.25
LUKOIL ADR (Russia)	2.18
Korea Electric Power Corp. ADR (South Korea)	2.04
AU Optronics Corp. ADR (Taiwan)	1.97
China Mobile Ltd. (Hong Kong)	1.76
Chunghwa Telecom Co. Ltd. ADR (Taiwan)	1.74
TOTAL	27.20	%

The iShares MSCI Emerging Markets Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Emerging Markets Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 46.17%, while the Index returned 41.83%.

Emerging markets, as represented by the Index, posted healthy gains for the reporting period. Rising oil prices, improving economic conditions in the U.S. and export demand from China were key drivers to performance in most emerging markets during the reporting period.

The South African market delivered strong gains for the reporting period, benefiting from economic growth. Annualized gross domestic product growth for the second quarter of 2005 was 5.0%, up from 3.5% in the first quarter of 2005. Slowing consumer inflation and low interest rates helped boost both consumer and business spending during the reporting period. Declining unemployment rates also contributed to a rise in consumer spending. While the escalating price of oil generally had a dampening effect on global economic growth, it appeared to help South African oil producers and suppliers. The South African currency, the rand, declined during the reporting period, helping companies in the precious metals and mining sectors since they pay their costs in rand but sell their metal in U.S. dollars.

The South Korean market posted strong gains for the reporting period. South Korea’s economic livelihood relies heavily on its export trade. Early in the reporting period, the won, South Korea’s currency, appreciated, making South Korean goods more expensive to its trading partners. As the reporting period progressed, however, the won began to depreciate, providing a boost to exports. Improved economic conditions in the U.S. and demand from some of its Asian neighbors also contributed to increased export trade. In July, export levels rose 12.35% over June, the largest increase in four months, reflecting higher export levels for cars, computer chips and ships.

The Taiwanese market delivered moderate gains for the reporting period, although its index returns lagged other Asian markets. Taiwan’s two leading trading partners are China and the U.S., and its export growth to both partners was somewhat volatile during the reporting period. However, U.S. economic conditions improved as the reporting period progressed, ultimately boosting demand for Taiwanese exports. China’s investments in steelmaking facilities declined 14% in the first quarter of 2005, contributing to a decline in Taiwan’s steel industry. Electronics exports to China, on the other hand, remained healthy.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was mostly positive for the reporting period. The best performer among the ten largest Fund holdings was integrated oil and gas company LUKOIL (Russia). Korea Electric Power Corp. (South Korea), also posted strong gains for the reporting period. Wireless telephone company China Mobile Ltd. (Hong Kong) and Kookmin Bank (South Korea) also performed well. The sole negative performer among the Fund’s ten largest holdings was semiconductor company United Microelectronics Corp. (Taiwan), which posted a modest decline for the reporting period.

8 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI HONG KONG INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
21.96%	22.17	%	22.59	%	1.41	%	1.15	%	2.39	%	2.85	%	2.90	%	4.81	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
21.96%	22.17	%	22.59	%	7.25	%	5.88	%	12.53	%	30.49	%	31.17	%	56.05	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 9

PORTFOLIO ALLOCATION
As of 8/31/05
Sector	% of Net Assets
Financial	41.56	%
Diversified	20.66
Utilities	14.56
Consumer Cyclical	10.20
Industrial	7.24
Communications	4.06
Technology	0.81
Basic Materials	0.72
Short-Term and Other Net Assets	0.19
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Hutchison Whampoa Ltd.	13.15	%
Cheung Kong Holdings Ltd.	10.01
Sun Hung Kai Properties Ltd.	8.30
CLP Holdings Ltd.	6.27
Hang Seng Bank Ltd.	6.23
Swire Pacific Ltd. Class A	4.87
BOC Hong Kong Holdings Ltd.	4.44
Hong Kong & China Gas Co. Ltd.	4.32
Esprit Holdings Ltd.	4.15
Hongkong Electric Holdings Ltd.	3.96
TOTAL	65.70	%

The iShares MSCI Hong Kong Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Hong Kong market, as measured by the MSCI Hong Kong Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 21.96%, while the Index returned 22.59%.

The Hong Kong market delivered solid gains for the reporting period. Hong Kong’s economy continued to expand during the reporting period, and was on track for gross domestic product (“GDP”) growth of 4.6% in 2005, a more moderate rate than the 8.1% GDP growth rate in 2004. Contributing to Hong Kong’s economic growth was a strong real estate market, which benefited both Index and Fund performance for the reporting period. Healthy tourism levels also contributed to market returns, as did export trade. With mainland China serving as both its main export partner and its leading source of tourists, Hong Kong’s economy is sensitive to China’s economic well being. During the reporting period, this relationship benefited Hong Kong, as China provided demand in the forms of both exports and tourism.

The Fund’s ten largest holdings accounted for approximately 66% of the net assets of the Fund as of August 31, 2005. The strongest performer for the reporting period was retail clothing company Esprit Holdings Ltd. Real estate development companies also delivered gains for the reporting period: both Swire Pacific Ltd. and Cheung Kong Holdings Ltd. performed well. The largest Fund holding at more than 13% of the Fund’s net assets, Hutchison Whampoa Ltd., also contributed positively to Fund returns. The most modest gains came from electric utility CLP Holdings Ltd., which posted a slight gain for the reporting period.

10 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI MALAYSIA INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
12.39%	15.10	%	13.02	%	5.39	%	5.48	%	6.57	%	(4.31	)%	(4.34	)%	(3.17	)%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
12.39%	15.10	%	13.02	%	30.02	%	30.57	%	37.49	%	(34.12	)%	(34.29	)%	(26.32	)%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. In the case of the Malaysia Fund, which has a NAV determined prior to the opening of the regular trading day on the stock exchange on which it is listed, the market return will use the midpoint of the bid/ask spread as of the opening of regular trading on the exchange. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 11

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Financial	29.92	%
Consumer Cyclical	14.86
Industrial	13.46
Consumer Non-Cyclical	13.22
Communications	12.04
Utilities	8.96
Diversified	4.48
Energy	1.78
Technology	0.66
Basic Materials	0.49
Short-Term and Other Net Assets	0.13
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Malayan Banking Bhd	10.43	%
Commerce Asset Holdings Bhd	5.76
Tenaga Nasional Bhd	4.81
Telekom Malaysia Bhd	4.81
Malaysia International Shipping Corp. Bhd	4.55
Maxis Communications Bhd	4.49
Genting Bhd	4.04
Sime Darby Bhd	3.96
Public Bank Bhd	3.86
IOI Corp. Bhd	3.78
TOTAL	50.49	%

The iShares MSCI Malaysia Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Malaysian market, as measured by the MSCI Malaysia Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 12.39%, while the Index returned 13.02%.

The Malaysian market posted moderate gains for the reporting period. Malaysia’s economy remained healthy during the reporting period. For the second quarter of 2005, gross domestic product growth was 4.1%, slowing from 7.1% in the fourth quarter of 2004. Because exporting plays an important role in Malaysia’s economy, the country was negatively affected by higher oil prices during the reporting period. High oil prices had a dampening effect on global economic growth, weighing on export demand.

Malaysia competes with China for much of its export trade with Europe and other Asian countries. Shortly after China had announced changes to its foreign currency policy, the central bank of Malaysia, Bank Negara, announced a change in its currency peg to allow the ringgit to fluctuate against an undisclosed but “trade-weighted” currency basket. Malaysia had imposed capital controls to halt a slide in the ringgit during a financial crisis in 1998. These currency controls had resulted in the ringgit, like the renminbi (China’s currency), widely being viewed as undervalued.

Tourism, another important industry for Malaysia, also rebounded during the reporting period as economic conditions in Asia, particularly China, translated into increased tourism for Malaysia.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was mostly positive for the reporting period. The strongest performer was Malaysia International Shipping Corp. Bhd Agriculture company IOI Corp. Bhd also performed well for the reporting period. Casinos and gaming company Genting Bhd posted healthy gains as well. The sole negative performance among the Fund’s ten largest holdings came from telecommunications company Telekom Malaysia Bhd, which posted a slight decline for the reporting period.

12 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI MEXICO INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
51.77%	52.20	%	54.08	%	13.48	%	13.66	%	14.61	%	14.22	%	14.30	%	16.14	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
51.77%	52.20	%	54.08	%	88.21	%	89.72	%	97.74	%	252.37	%	254.70	%	313.11	%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

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

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 13

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Communications	46.41	%
Industrial	15.25
Consumer Cyclical	10.91
Consumer Non-Cyclical	10.37
Basic Materials	5.86
Diversified	5.79
Financial	5.33
Short-Term and Other Net Assets	0.08
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
America Movil SA de CV Series L	23.52	%
Cemex SA de CV Series CPO	13.72
Telefonos de Mexico SA de CV Series L	12.79
Fomento Economico Mexicano SA de CV Class UBD	4.93
Wal-Mart de Mexico SA de CV Series V	4.84
Grupo Televisa SA Series CPO	4.72
Grupo Financiero Banorte SA de CV Series O	4.06
Grupo Carso SA de CV Series A1	3.29
Kimberly-Clark de Mexico SA de CV Class A	2.97
Grupo Modelo SA de CV Series C	2.75
TOTAL	77.59	%

The iShares MSCI Mexico Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Mexican market, as measured by the MSCI Mexico Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 51.77%, while the Index returned 54.08%.

The Mexican market delivered strong gains for the reporting period. Because Mexico relies on the U.S. for roughly 80% of its exports, its economic well-being is closely linked to that of the U.S. During the reporting period, the relationship benefited the Mexican economy, as economic conditions in the U.S. improved, boosting demand for Mexican exports. Oil accounts for approximately 15% of Mexico’s export earnings, which also benefited the Mexican economy during the reporting period. Oil prices escalated during the reporting period, reaching $70 per barrel, boosting returns for oil companies.

All of the Fund’s ten largest holdings as of August 31, 2005 posted double-digit gains for the reporting period. The diversified bank Grupo Financiero Banorte SA de CV logged the strongest gains. Top Fund holding America Movil SA de CV, the wireless telephone carrier, also performed well for the reporting period. The construction materials company Cemex SA de CV and the soft drink maker Fomento Economico Mexicano SA de CV contributed positively to Fund performance. The most modest gains, albeit double-digit gains, among the Fund’s ten largest holdings came from the telephone company Telefonos de Mexico SA de CV.

14 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns											Cumulative Total Returns
Year Ended 8/31/05					Inception to 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
33.27%	34.82	%	33.13	%	21.35	%	21.71	%	21.30	%	110.71	%	113.16	%	110.29	%

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 15

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Financial	46.21	%
Basic Materials	11.49
Industrial	8.74
Consumer Non-Cyclical	6.71
Communications	6.26
Consumer Cyclical	6.07
Diversified	5.55
Utilities	4.29
Energy	2.95
Technology	0.93
Short-Term and Other Net Assets	0.80
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
BHP Billiton Ltd. (Australia)	7.09	%
National Australia Bank Ltd. (Australia)	4.73
Commonwealth Bank of Australia (Australia)	4.62
Australia & New Zealand Banking Group Ltd. (Australia)	3.91
Westpac Banking Corp. Ltd. (Australia)	3.44
Hutchison Whampoa Ltd. (Hong Kong)	2.73
Westfield Group (Australia)	2.43
Cheung Kong Holdings Ltd. (Hong Kong)	2.11
Sun Hung Kai Properties Ltd. (Hong Kong)	1.76
Woolworths Ltd. (Australia)	1.68
TOTAL	34.50	%

The iShares MSCI Pacific ex-Japan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Australia, Hong Kong, New Zealand and Singapore markets, as measured by the MSCI Pacific Free ex-Japan Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 33.27%, while the Index returned 33.13%.

The markets comprising the Index – Australia, Hong Kong, New Zealand and Singapore, all posted gains for the reporting period.

The Australian market delivered solid gains for the reporting period. Australia’s economy continued to appear healthy during the reporting period: with annualized gross domestic product growth for the second quarter of 2005 of 2.60%, the economy is now in its 14^th year of uninterrupted expansion, the longest expansion in Australia since 1945. Inflation remained low, and export trade continued to grow for most of the reporting period, due in part to strong demand from China.

Contributing to Hong Kong’s economic growth was a strong real estate market, which benefited Fund performance for the reporting period. Healthy tourism levels also contributed to market returns, as did export trade. With mainland China serving as both its main export partner and its leading source of tourists, Hong Kong’s economy is sensitive to China’s economic well being. During the reporting period, this relationship benefited Hong Kong, as China provided demand in the forms of both exports and tourism.

Because Singapore depends so heavily on exports, it is sensitive to the economic health of both the United States and its Asian neighbors. During the reporting period, improved conditions in the U.S. benefited Singapore’s economic growth, as did continued demand of exports to China. In July 2005, annualized gross domestic product growth was reported at 14% for the second quarter of 2005.

All of the Fund’s ten largest holdings as of August 31, 2005 posted gains for the reporting period. The strongest performance came from the largest holding, mining company BHP Billiton Ltd. (Australia). Retail chain Woolworths Ltd. (Australia) also performed well for the reporting period. Real estate development company Cheung Kong Holdings Ltd. (Hong Kong) and industrial conglomerate Hutchison Whampoa Ltd. (Hong Kong) also contributed positively to Fund performance, as did Commonwealth Bank of Australia (Australia). The most modest returns for the reporting period among the Fund’s ten largest holdings came from real estate development company Sun Hung Kai Properties Ltd. (Hong Kong).

16 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SINGAPORE INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
24.06%	24.21	%	22.19	%	2.69	%	2.60	%	2.34	%	(2.84	)%	(2.77	)%	(2.44	)%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
24.06%	24.21	%	22.19	%	14.18	%	13.68	%	12.29	%	(23.86	)%	(23.40	)%	(20.87	)%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 17

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Financial	48.97	%
Communications	17.27
Industrial	14.28
Diversified	5.69
Consumer Cyclical	5.49
Consumer Non-Cyclical	4.55
Technology	2.37
Energy	0.42
Short-Term and Other Net Assets	0.96
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Singapore Telecommunications Ltd.	12.41	%
United Overseas Bank Ltd.	11.93
DBS Group Holdings Ltd.	11.91
Oversea-Chinese Banking Corp.	10.50
Singapore Press Holdings Ltd.	4.49
Keppel Corp. Ltd.	4.43
Singapore Airlines Ltd.	3.91
City Developments Ltd.	3.25
Singapore Technologies Engineering Ltd.	2.78
Fraser & Neave Ltd.	2.55
TOTAL	68.16	%

The iShares MSCI Singapore Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Singaporean market, as measured by the MSCI Singapore Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 24.06%, while the Index returned 22.19%.

Singapore’s market posted solid gains for the reporting period. The Singaporean economy appeared to improve during the course of the reporting period. Because it depends so heavily on exports, Singapore is sensitive to the economic health of both the United States and its Asian neighbors. During the reporting period, improved conditions in the U.S. benefited Singapore’s economic growth, as did continued demand for exports to China. In July 2005, annualized gross domestic product growth was reported at 14% for the second quarter 2005.

The Fund’s ten largest holdings accounted for about 68% of the Fund’s net assets as of August 31, 2005. Industrial conglomerate Keppel Corp. Ltd. was the strongest performer by far among the ten largest Fund holdings. City Developments Ltd., which operates hotels and resorts, also performed well for the reporting period. Aerospace firm Singapore Technologies Engineering Ltd. contributed positively to Fund performance, as did Singapore Telecommunications Ltd. Banking company DBS Group Holdings Ltd., had the smallest gain among the ten largest holdings.

18 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns											Cumulative Total Returns
Year Ended 8/31/05					Inception to 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
40.62%	42.19	%	42.25	%	36.58	%	37.61	%	38.15	%	123.19	%	127.54	%	130.21	%

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

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 19

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Financial	30.39	%
Basic Materials	15.75
Communications	13.15
Energy	13.01
Consumer Cyclical	9.58
Diversified	7.99
Industrial	5.05
Consumer Non-Cyclical	4.92
Short-Term and Other Net Assets	0.16
TOTAL	100.00	%

TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Sasol Ltd.	13.01	%
Standard Bank Group Ltd.	9.00
Old Mutual PLC	6.77
MTN Group Ltd.	6.51
Impala Platinum Holdings Ltd.	4.74
FirstRand Ltd.	4.49
Sanlam Ltd.	3.74
Telkom South Africa Ltd.	3.35
AngloGold Ashanti Ltd.	3.31
Naspers Ltd.	3.28
TOTAL	58.20	%

The iShares MSCI South Africa Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the South African market, as measured by the MSCI South Africa Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 40.62%, while the Index returned 42.25%.

The South African market delivered strong gains for the reporting period, benefiting from economic growth. Annualized gross domestic product growth for the second quarter of 2005 was 5.0%, up from 3.5% in the first quarter of 2005. Slowing consumer inflation and low interest rates helped boost both consumer and business spending during the reporting period. Declining unemployment rates also contributed to a rise in consumer spending. While the escalating price of oil generally had a dampening effect on global economic growth, it helped South African oil producers and suppliers. The South African currency, the rand, declined during the reporting period, helping companies in the precious metals and mining sectors since they pay their costs in rand but sell their metal in U.S. dollars.

Among the Fund’s ten largest holdings as of August 31, 2005, returns were mostly positive for the reporting period. Broadcasting and cable television company Naspers Ltd. was the strongest performer for the reporting period. Top Fund holding Sasol Ltd., an oil and gas exploration and production company, also delivered strong gains. Telkom South Africa Ltd. and Standard Bank Group Ltd. both contributed positively to Fund performance for the reporting period, as did wireless telecommunications company MTN Group Ltd. The only negative performer among the Fund’s ten largest holdings was AngloGold Ashanti Ltd.

20 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI SOUTH KOREA INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
44.29%	42.65	%	45.83	%	14.33	%	13.07	%	15.45	%	11.02	%	10.80	%	11.62	%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
44.29%	42.65	%	45.83	%	95.38%		84.83	%	105.12	%	74.26%		72.48	%	79.43	%

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

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 21

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Industrial	40.08	%
Financial	17.01
Consumer Cyclical	14.66
Basic Materials	8.96
Communications	6.77
Consumer Non-Cyclical	5.22
Energy	3.68
Utilities	3.51
Short-Term and Other Net Assets	0.11
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Samsung Electronics Co. Ltd.	23.31	%
Kookmin Bank	7.00
POSCO	6.39
Hyundai Motor Co. Ltd.	4.93
Korea Electric Power Corp.	3.51
Shinhan Financial Group Ltd.	3.03
LG Electronics Inc.	2.89
SK Telecom Co. Ltd.	2.61
Shinsegae Department Store Co. Ltd.	2.24
SK Corp.	2.24
TOTAL	58.15	%

The iShares MSCI South Korea Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the South Korean market, as measured by the MSCI Korea Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 44.29%, while the Index returned 45.83%.

The South Korean market posted robust gains for the reporting period. South Korea’s economic livelihood relies heavily on its export trade, which overcame challenges on several fronts in the first few months of the reporting period before ultimately contributing to the healthy market returns. Early in the reporting period, the won, South Korea’s currency, appreciated, making South Korean goods more expensive to its trading partners. Escalating oil prices also threatened export growth, as it had a dampening effect on global economic growth. As the reporting period progressed, however, conditions improved considerably for South Korea’s export trade. The won began to depreciate, making South Korean goods less expensive to its export partners. Improved economic conditions in the U.S. and demand from some of its Asian neighbors also contributed to increased export trade. In July, export levels rose 12.35% over June, the largest increase in four months, reflecting higher export levels for cars, computer chips and ships.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was positive for the reporting period. The strongest performer among the Fund’s ten largest holdings was electric utility company Korea Electric Power Corp. Financial company Shinhan Financial Group Ltd. also delivered strong gains for the reporting period. Automobile manufacturer Hyundai Motor Co. Ltd. contributed positively to Fund performance, as did Kookmin Bank. Among the ten largest Fund holdings, SK Telecom Co. Ltd. posted the smallest return for the reporting period.

22 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Management’s Discussion of Fund Performance

iSHARES^® MSCI TAIWAN INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05						Five Years Ended 8/31/05						Inception to 8/31/05
NAV		MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
9.28	%	10.15	%	10.10	%	(6.59	)%	(7.07	)%	(5.66	)%	(8.64	)%	(8.74	)%	(7.78	)%
Cumulative Total Returns
Year Ended 8/31/05						Five Years Ended 8/31/05						Inception to 8/31/05
NAV		MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
9.28	%	10.15	%	10.10	%	(28.87	)%	(30.68	)%	(25.28	)%	(37.48	)%	(37.84	)%	(34.36	)%

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

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

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 23

PORTFOLIO ALLOCATION As of 8/31/05
Sector	% of Net Assets
Technology	34.80	%
Industrial	22.45
Financial	21.04
Basic Materials	11.42
Communications	4.89
Consumer Cyclical	3.87
Consumer Non-Cyclical	0.75
Short-Term and Other Net Assets	0.78
TOTAL	100.00	%
TOP TEN FUND HOLDINGS As of 8/31/05
Security	% of Net Assets
Taiwan Semiconductor Manufacturing Co. Ltd.	14.54	%
Hon Hai Precision Industry Co. Ltd.	6.24
United Microelectronics Corp.	4.56
Cathay Financial Holding Co. Ltd.	4.21
AU Optronics Corp.	3.31
Chunghwa Telecom Co. Ltd.	3.22
China Steel Corp.	3.13
MediaTek Inc.	2.92
Formosa Plastic Co.	2.83
Nan Ya Plastic Corp.	2.74
TOTAL	47.70	%

The iShares MSCI Taiwan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Taiwanese market, as measured by the MSCI Taiwan Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 9.28%, while the Index returned 10.10%.

The Taiwanese market delivered moderate gains for the reporting period, although its index lagged other Asian markets. Taiwan’s two leading trading partners are China and the U.S., and export growth to both partners was somewhat volatile during the reporting period. For much of the reporting period, rising oil prices weighed on economic growth, having a negative effect on export demand. However, U.S. economic conditions improved as the reporting period progressed, ultimately boosting demand for Taiwanese exports. China’s investments in steelmaking facilities declined 14% in the first quarter of 2005, contributing to a decline in Taiwan’s steel industry, although electronics exports to China remained healthy.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was mixed for the reporting period. Electronics manufacturer Hon Hai Precision Industry Co. Ltd. logged the strongest gains among the Fund’s ten largest holdings. Semiconductor companies MediaTek Inc. and Taiwan Semiconductor Manufacturing Co. Ltd. also performed well for the reporting period, as did electronic equipment manufacturer AU Optronics Corp. On the negative side, Nan Ya Plastic Corp. posted a decline for the reporting period, as did China Steel Corp. and United Microelectronics Corp.

24 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses

iSHARES^®, INC.

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2005 to August 31, 2005.

ACTUAL EXPENSES

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

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

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

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

iShares MSCI Index Fund	Beginning Account Value (March 1, 2005)		Ending Account Value (August 31, 2005)		Annualized Expense Ratio		Expenses Paid During Period a (March 1 to August 31, 2005)
Australia
Actual	$	1,000.00	$	1,028.70	0.57	%	$	2.91
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Brazil
Actual		1,000.00		1,119.60	0.74			3.95
Hypothetical (5% return before expenses)		1,000.00		1,021.48	0.74			3.77
Canada
Actual		1,000.00		1,157.40	0.57			3.10
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Emerging Markets
Actual		1,000.00		1,061.80	0.78			4.05
Hypothetical (5% return before expenses)		1,000.00		1,021.27	0.78			3.97

SHAREHOLDER EXPENSES 25

Shareholder Expenses (Continued)

iSHARES^®, INC.

iShares MSCI Index Fund	Beginning Account Value (March 1, 2005)		Ending Account Value (August 31, 2005)		Annualized Expense Ratio		Expenses Paid During Period a (March 1 to August 31, 2005)
Hong Kong
Actual	$	1,000.00	$	1,089.60	0.57	%	$	3.00
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Malaysia
Actual		1,000.00		1,011.30	0.57			2.89
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Mexico
Actual		1,000.00		1,086.00	0.57			3.00
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
Pacific ex-Japan
Actual		1,000.00		1,042.70	0.50			2.57
Hypothetical (5% return before expenses)		1,000.00		1,022.68	0.50			2.55
Singapore
Actual		1,000.00		1,064.40	0.57			2.97
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91
South Africa
Actual		1,000.00		1,027.50	0.74			3.78
Hypothetical (5% return before expenses)		1,000.00		1,021.48	0.74			3.77
South Korea
Actual		1,000.00		1,016.70	0.74			3.76
Hypothetical (5% return before expenses)		1,000.00		1,021.48	0.74			3.77
Taiwan
Actual		1,000.00		939.90	1.21			5.92
Hypothetical (5% return before expenses)		1,000.00		1,019.11	1.21			6.16

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

26 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.21%
AIRLINES – 0.44%
Qantas Airways Ltd.	679,528	$	1,638,472
			1,638,472
APPAREL – 0.26%
Billabong International Ltd.	97,566		949,063
			949,063
BANKS – 27.20%
Australia & New Zealand Banking Group Ltd.	1,329,766		22,134,599
Commonwealth Bank of Australia1	933,745		26,231,708
National Australia Bank Ltd.1	1,137,159		26,744,281
Suncorp-Metway Ltd.	398,243		5,893,063
Westpac Banking Corp. Ltd.	1,313,505		19,476,259
			100,479,910
BEVERAGES – 2.72%
Coca-Cola Amatil Ltd.	380,265		2,467,896
Foster’s Group Ltd.	1,459,248		6,302,656
Lion Nathan Ltd.	213,918		1,291,903
			10,062,455
BIOTECHNOLOGY – 0.56%
Sonic Healthcare Ltd.	180,588		2,075,425
			2,075,425
BUILDING MATERIALS – 3.58%
Boral Ltd.	422,180		2,302,295
CSR Ltd.	662,055		1,332,771
James Hardie Industries NV	335,623		2,173,130
Rinker Group Ltd.	686,295		7,407,886
			13,216,082
COMMERCIAL SERVICES – 1.28%
Brambles Industries Ltd.1	707,101		4,716,514
			4,716,514
COMPUTERS – 0.38%
Computershare Ltd.	281,083		1,410,385
			1,410,385
DIVERSIFIED FINANCIAL SERVICES – 3.72%
Australian Stock Exchange Ltd.1	74,841		1,492,557
Babcock & Brown Ltd.1	109,181		1,521,310
Challenger Financial Services Group Ltd.2	293,607		789,544
Macquarie Bank Ltd.	163,620		7,757,648
Perpetual Trustees Australia Ltd.	28,684		1,317,106
SFE Corp. Ltd.	97,667		849,539
			13,727,704
ENGINEERING & CONSTRUCTION – 0.86%
Downer EDI Ltd.	202,101		918,439
Leighton Holdings Ltd.1	99,384		1,111,573
Multiplex Group	457,025		1,153,469
			3,183,481
ENTERTAINMENT – 2.09%
Aristocrat Leisure Ltd.1	225,331		2,120,795
TABCORP Holdings Ltd.	381,881		4,733,024
UNiTAB Ltd.	87,365		867,552
			7,721,371
FOOD – 2.56%
Woolworths Ltd.1	774,367		9,452,069
			9,452,069
FOREST PRODUCTS & PAPER – 0.22%
PaperlinX Ltd.1	325,422		794,432
			794,432
GAS – 1.37%
Alinta Ltd.1	183,618		1,517,171
Australian Gas Light Co. Ltd.	333,098		3,550,431
			5,067,602
HEALTH CARE – PRODUCTS – 0.34%
Cochlear Ltd.1	39,592		1,249,060
			1,249,060
HEALTH CARE – SERVICES – 0.23%
DCA Group Ltd.1	292,294		860,662
			860,662
HOLDING COMPANIES – DIVERSIFIED – 0.68%
Patrick Corp. Ltd. 1	477,023		2,522,543
			2,522,543
HOUSEHOLD PRODUCTS & WARES – 0.21%
Pacific Brands Ltd.1	367,741		762,391
			762,391

SCHEDULES OF INVESTMENTS 27

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

Security	Shares	Value
INSURANCE – 5.91%
AMP Ltd.	1,356,228	$	7,508,045
AXA Asia Pacific Holdings Ltd.	634,179		2,348,472
Insurance Australia Group Ltd.	1,162,308		4,723,296
QBE Insurance Group Ltd.	562,772		7,228,618
			21,808,431
INVESTMENT COMPANIES – 1.85%
Macquarie Airports	453,995		1,087,849
Macquarie Communications Infrastructure Group	242,400		1,145,275
Macquarie Infrastructure Group	1,578,731		4,613,010
			6,846,134
IRON & STEEL – 1.25%
BHP Steel Ltd.1	521,059		3,647,787
OneSteel Ltd.1	409,656		984,682
			4,632,469
MANUFACTURING – 3.35%
Ansell Ltd.	105,848		848,347
Futuris Corp. Ltd.	387,133		581,590
Orica Ltd.	198,667		2,838,330
Wesfarmers Ltd.1	274,417		8,121,456
			12,389,723
MEDIA – 1.13%
APN News & Media Ltd.1	213,918		817,884
John Fairfax Holdings Ltd.	673,569		2,200,888
Publishing & Broadcasting Ltd.	94,839		1,148,362
			4,167,134
MINING – 15.15%
Alumina Ltd.	848,400		3,791,790
BHP Billiton Ltd.1	2,613,880		40,171,491
Iluka Resources Ltd.	169,579		1,082,724
Newcrest Mining Ltd.	241,087		3,076,762
Rio Tinto Ltd.1	207,151		7,828,310
			55,951,077
OIL & GAS – 4.49%
Caltex Australia Ltd.	98,172		1,275,735
Origin Energy Ltd.	576,508		3,139,569
Santos Ltd.	430,462		3,744,295
Woodside Petroleum Ltd.	340,269		8,419,235
			16,578,834
PACKAGING & CONTAINERS – 0.86%
Amcor Ltd.	639,532		3,170,537
			3,170,537
PHARMACEUTICALS – 1.44%
CSL Ltd.	138,269		3,559,308
Mayne Group Ltd.	464,297		1,743,783
			5,303,091
REAL ESTATE – 10.43%
Centro Properties Group	567,822		2,537,791
Commonwealth Property Office Fund	974,549		929,681
DB RREEF Trust	1,896,174		1,944,185
Gandel Retail Trust	1,104,637		1,468,654
GPT Group	1,323,908		3,888,313
ING Industrial Fund	508,939		856,329
Investa Property Group1	1,090,901		1,688,026
Lend Lease Corp Ltd.1	261,287		2,586,782
Macquarie Goodman Group	867,893		2,783,689
Mirvac Group	623,877		1,790,148
Stockland Trust Group	944,047		4,183,813
Westfield Group	1,060,702		13,879,321
			38,536,732
RETAIL – 1.83%
Coles Myer Ltd.	805,677		5,985,273
Harvey Norman Holdings Ltd.1	385,719		767,792
			6,753,065
TELECOMMUNICATIONS – 2.30%
Telstra Corp. Ltd.1	1,542,371		5,422,023
Transurban Group1	571,862		3,071,312
			8,493,335
TRANSPORTATION – 0.52%
Toll Holdings Ltd.1	180,487		1,908,865
			1,908,865
TOTAL COMMON STOCKS (Cost: $322,276,512)			366,429,048

28 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

Security	Principal		Value
SHORT-TERM INVESTMENTS – 21.35%
CERTIFICATES OF DEPOSIT3 – 2.42%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	510,329	$	510,330
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		221,143		221,126
Credit Suisse First Boston
3.53%, 05/09/06		340,220		340,220
Danske Bank
3.50%, 10/17/05		340,220		340,207
Dexia Credit Local
3.61%, 08/30/06		170,110		170,076
First Tennessee Bank
3.52%, 09/15/05		578,373		578,373
Fortis Bank NY
3.83% – 3.84%, 01/25/06		510,329		510,333
HBOS Treasury Services PLC
3.39%, 12/14/05		204,132		204,132
HSBC Bank USA N.A.
3.72%, 08/03/06		170,110		170,165
Royal Bank of Scotland
3.61%, 06/27/06		170,110		170,089
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		527,340		527,247
Toronto–Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		1,207,780		1,207,804
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05		272,176		272,175
US Bank N.A.
3.54%, 09/19/05		850,549		850,549
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		1,530,988		1,530,989
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		1,343,867		1,343,867
				8,947,682
COMMERCIAL PAPER3 – 4.88%
Alpine Securitization Corp.
3.52%, 09/09/05		680,439		679,907
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		717,863		714,020
Aspen Funding Corp.
3.49%, 09/01/05		340,220		340,220
Barton Capital Corp.
3.51%, 09/07/05		385,826		385,600
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		561,362		560,671
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		173,168		171,481
Cantabric Finance LLC
3.73%, 10/31/05		130,804		129,991
Charta LLC
3.54%, 09/20/05		238,154		237,709
Chesham Finance LLC
3.54%, 09/15/05		102,066		101,925
Dorada Finance Inc.
3.76%, 01/26/06		34,022		33,500
Edison Asset Securitization LLC
3.12%, 09/06/05		255,165		255,054
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		438,730		438,359
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05		1,547,890		1,540,827
Gemini Securitization Corp.
3.49%, 09/06/05		545,814		545,550
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		1,105,714		1,103,576
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		255,165		254,738

SCHEDULES OF INVESTMENTS 29

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

Security	Principal		Value
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06	$	527,340	$	521,694
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		391,253		391,253
HSBC PLC
3.88%, 02/03/06		102,066		100,361
Jupiter Securitization Corp.
3.51%, 09/21/05		192,860		192,484
Leafs LLC
3.61%, 01/20/06 – 02/21/064		357,199		357,199
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		468,969		468,269
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		833,538		832,449
New Center Asset Trust
3.60%, 09/01/05		1,190,769		1,190,769
Park Avenue Receivables Corp.
3.50%, 09/19/05		191,897		191,562
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		460,668		459,963
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		340,220		333,975
Scaldis Capital LLC
3.52%, 09/07/05		680,439		680,040
Sedna Finance Inc.
3.92%, 02/21/06		85,055		83,453
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		1,000,246		999,982
Sydney Capital Corp.
3.49%, 09/01/05		210,188		210,188
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		714,461		713,126
Security	Shares or Principal		Value
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05	$	728,975	$	728,726
Thunder Bay Funding Inc.
3.50%, 09/01/05		56,868		56,868
Tulip Funding Corp.
3.49%, 09/01/05		1,255,312		1,255,312
Windmill Funding Corp.
3.52%, 09/09/05		156,501		156,379
World Savings Bank
3.51%, 09/09/05		119,078		119,078
Yorktown Capital LLC
3.53%, 09/19/05		493,318		492,448
				18,028,706
MEDIUM-TERM NOTES3 – 0.08%
Dorada Finance Inc.
3.93%, 07/07/064		105,468		105,459
K2 USA LLC
3.94%, 07/07/064		204,132		204,123
				309,582
MONEY MARKET FUNDS – 0.44%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3,5,6		1,360,878		1,360,878
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%5,6		108,353		108,353
BlackRock Temp Cash Money Market Fund
3.41%3,6		36,049		36,049
Short Term Investments Co. – Prime Money Market Portfolio, Institutional Shares
3.50%3,6		119,266		119,266
				1,624,546

30 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

Security	Principal		Value
REPURCHASE AGREEMENTS3 – 4.12%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $8,166,087 and an effective yield of 3.60%.7	$	8,165,270	$	8,165,270
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $6,294,692 and an effective yield of 3.60%.7		6,294,062		6,294,062
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $741,753 and an effective yield of 3.60%.7		741,679		741,679
				15,201,011
TIME DEPOSITS3 – 0.86%
Abbey National Treasury Services PLC
3.50%, 09/01/05		680,439		680,439
Chase Bank USA N.A.
3.58%, 09/01/05		1,871,208		1,871,208
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		449,149		449,149
Natexis Banques Populaires
3.51%, 09/20/058		170,110		170,110
				3,170,906
VARIABLE & FLOATING RATE NOTES3 – 8.55%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/064		632,808		632,811
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06		918,593		918,596
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		561,362		561,362
American Express Credit Corp.
3.65%, 10/26/05		680,439		680,490
ASIF Global Financing XXII
3.99%, 05/30/064		340,220		340,644
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		221,143		221,143
Bank of America N.A.
3.56%, 08/10/06		1,701,098		1,701,098
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/064		1,748,729		1,748,706
BMW US Capital LLC
3.54%, 07/14/064		340,220		340,220
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		1,156,747		1,156,698
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/064		915,191		915,153
Commodore CDO Ltd.
3.47%, 12/12/054		85,055		85,055
Credit Suisse First Boston
3.57%, 07/19/06		850,549		850,549
DEPFA Bank PLC
3.42%, 03/15/06		340,220		340,220
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/064		540,949		540,977
Eli Lilly Services Inc.
3.53%, 09/01/064		340,220		340,220
Fifth Third Bancorp
3.58%, 04/21/064		680,439		680,439
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/064		238,154		238,159
General Electric Capital Corp.
3.66%, 07/07/06		153,099		153,237
Hartford Life Global Funding Trust
3.56%, 08/15/06		340,220		340,220

SCHEDULES OF INVESTMENTS 31

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

Security	Principal		Value
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/064	$	1,020,659	$	1,020,660
HSBC Bank USA N.A.
3.70%, 05/04/06		119,077		119,142
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/064		1,326,856		1,326,868
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/064		1,326,856		1,327,000
Lothian Mortgages PLC
3.63%, 01/24/06		340,220		340,220
Marshall & Ilsley Bank
3.71%, 02/20/06		340,220		340,412
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/064		680,439		680,738
National City Bank (Ohio)
3.50%, 01/06/06		170,110		170,092
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/064		1,258,812		1,258,935
Nordea Bank AB
3.55%, 08/11/064		595,384		595,384
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/064		1,088,703		1,088,722
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/064		1,309,845		1,309,845
Principal Life Income Funding Trusts
3.74%, 05/10/06		255,165		255,174
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		1,135,483		1,135,224
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/064		187,121		187,106
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/064		1,942,654		1,942,664
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		340,220		340,220
Strips III LLC
3.69%, 07/24/064,8		99,939		99,939
SunTrust Bank
3.63%, 04/28/06		510,329		510,329
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/064		826,734		826,683
Toyota Motor Credit Corp.
3.57%, 04/10/06		153,099		153,097
Unicredito Italiano SpA
3.34%, 06/14/06		442,285		442,163
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		819,026		819,026
Wells Fargo & Co.
3.56%, 09/15/064		170,110		170,127
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/064		1,360,878		1,360,819
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/064		717,863		717,845
Winston Funding Ltd.
3.71%, 10/23/054		242,917		242,917
				31,567,348
TOTAL SHORT-TERM INVESTMENTS (Cost: $78,849,781)				78,849,781
TOTAL INVESTMENTS IN SECURITIES – 120.56% (Cost: $401,126,293)				445,278,829
Other Assets, Less Liabilities – (20.56)%				(75,923,561	)
NET ASSETS – 100.00%			$	369,355,268

32 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI AUSTRALIA INDEX FUND

August 31, 2005

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 33

Schedule of Investments

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 33.12%
AGRICULTURE – 0.80%
Souza Cruz SA	392,000	$	4,392,530
			4,392,530
BANKS – 3.82%
Unibanco Uniao de Bancos Brasileiros SA	2,352,010		21,114,181
			21,114,181
CHEMICALS – 1.34%
Braskem SA Class A	745,036		7,409,250
			7,409,250
COMMERCIAL SERVICES – 0.85%
Cia de Concessoes Rodoviarias	196,000		4,675,382
			4,675,382
COSMETICS & PERSONAL CARE – 0.72%
Natura Cosmeticos SA	117,600		3,993,209
			3,993,209
ELECTRIC – 1.18%
Centrais Eletricas Brasileiras SA	470,400,000		6,508,930
			6,508,930
HEALTH CARE - SERVICES – 0.43%
Diagnosticos da America SA1	196,000		2,354,329
			2,354,329
HOLDING COMPANIES - DIVERSIFIED – 0.04%
Contax Participacoes SA1	340,138		248,318
			248,318
IRON & STEEL – 2.23%
Companhia Siderurgica Nacional SA	627,284		12,335,343
			12,335,343
MINING – 8.00%
Companhia Vale do Rio Doce ADR2	1,284,584		44,176,844
			44,176,844
OIL & GAS – 10.98%
Petroleo Brasileiro SA	960,900		60,647,636
			60,647,636
TELECOMMUNICATIONS – 1.93%
Brasil Telecom Participacoes SA	313,600,000		4,218,158
Tele Norte Leste Participacoes SA	316,138		6,420,714
			10,638,872
WATER – 0.80%
Companhia de Saneamento Basico do Estado de Sao Paulo	70,560,000		4,432,162
			4,432,162
TOTAL COMMON STOCKS (Cost: $108,656,294)			182,926,986
PREFERRED STOCKS – 66.26%
AEROSPACE & DEFENSE – 2.37%
Embraer-Empresa Brasileira de Aeronautica SA	1,450,443		13,113,088
			13,113,088
AIRLINES – 0.60%
Gol Linhas Aereas Inteligentes SA	196,000		3,323,514
			3,323,514
BANKS – 12.25%
Banco Bradesco SA	627,284		26,624,958
Banco Itau Holding Financeira SA	196,037		41,021,325
			67,646,283
BEVERAGES – 4.57%
Companhia de Bebidas das Americas	78,400,000		25,257,046
			25,257,046
BUILDING MATERIALS – 0.55%
Duratex SA	319,110		3,006,894
			3,006,894
ELECTRIC – 4.42%
Centrais Eletricas Brasileiras SA Class B	313,600,000		4,179,557
Companhia Energetica de Minas Gerais	431,200,000		15,071,867
Companhia Paranaense de Energia Class B	588,000,000		3,376,755
Eletropaulo Metropolitana Eletricidade de Sao Paulo SA1	47,040,000		1,796,944
			24,425,123

34 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2005

Security	Shares		Value
FOOD – 1.81%
Companhia Brasileira de Distribuicao Grupo Pao de Acucar		162,172,000	$	3,882,216
Sadia SA		2,744,000		6,126,248
				10,008,464
FOREST PRODUCTS & PAPER – 2.91%
Aracruz Celulose SA Class B		2,038,400		7,440,679
Klabin SA		2,352,000		4,532,292
Votorantim Celulose e Papel SA		352,800		4,080,560
				16,053,531
GAS – 0.23%
Cia de Gas de Sao Paulo Class A		11,760,000		1,247,928
				1,247,928
HOLDING COMPANIES – DIVERSIFIED – 0.13%
Contax Participacoes SA1		1,058,439		709,819
				709,819
IRON & STEEL – 4.38%
Companhia Siderurgica de Tubarao		78,400,000		4,459,083
Gerdau SA		823,216		9,975,729
Usinas Siderurgicas de Minas Gerais SA Class A		470,400		9,755,409
				24,190,221
MACHINERY – 0.66%
Weg SA		1,136,800		3,623,671
				3,623,671
MINING – 10.33%
Caemi Mineracao e Metalurgica SA		8,232,000		9,643,599
Companhia Vale do Rio Doce Class A		1,578,000		47,420,374
				57,063,973
OIL & GAS – 13.32%
Petroleo Brasileiro SA		1,332,800		73,541,596
				73,541,596
RETAIL – 0.65%
Lojas Americanas SA		196,000,000		3,602,208
				3,602,208
Security	Shares or Principal		Value
TELECOMMUNICATIONS – 6.86%
Brasil Telecom Participacoes SA		940,800,000	$	6,868,320
Celular CRT Participacoes SA Class A		41,460		888,680
Embratel Participacoes SA1		1,764,000,000		3,556,453
Tele Centro Oeste Celular Participacoes SA		272,412		2,636,245
Tele Norte Leste Participacoes SA		1,058,439		15,988,898
Telemig Celular Participacoes SA		862,400,000		1,361,686
Telesp Celular Participacoes SA1		857,697		3,556,749
TIM Participacoes SA		1,920,800,000		3,008,376
				37,865,407
TEXTILES – 0.22%
Companhia de Tecidos Norte de Minas		17,132,400		1,236,209
				1,236,209
TOTAL PREFERRED STOCKS (Cost: $223,510,240)				365,914,975
SHORT- TERM INVESTMENTS – 2.21%
CERTIFICATES OF DEPOSIT3 – 0.23%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	71,908		71,907
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		31,160		31,157
Credit Suisse First Boston
3.53%, 05/09/06		47,938		47,938
Danske Bank
3.50%, 10/17/05		47,938		47,937
Dexia Credit Local
3.61%, 08/30/06		23,969		23,964
First Tennessee Bank
3.52%, 09/15/05		81,495		81,495
Fortis Bank NY
3.83% - 3.84%, 01/25/06		71,908		71,908
HBOS Treasury Services PLC
3.39%, 12/14/05		28,763		28,763

SCHEDULES OF INVESTMENTS 35

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2005

Security	Principal		Value
HSBC Bank USA N.A.
3.72%, 08/03/06	$	23,969	$	23,977
Royal Bank of Scotland
3.61%, 06/27/06		23,969		23,966
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		74,304		74,292
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		170,181		170,185
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05		38,351		38,351
US Bank N.A.
3.54%, 09/19/05		119,846		119,846
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		215,723		215,722
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		189,357		189,357
				1,260,765
COMMERCIAL PAPER3 – 0.46%
Alpine Securitization Corp.
3.52%, 09/09/05		95,877		95,800
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		101,150		100,610
Aspen Funding Corp.
3.49%, 09/01/05		47,938		47,938
Barton Capital Corp.
3.51%, 09/07/05		54,365		54,333
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		79,098		79,001
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		24,400		24,163
Cantabric Finance LLC
3.73%, 10/31/05		18,431		18,316
Charta LLC
3.54%, 09/20/05		33,557		33,494
Chesham Finance LLC
3.54%, 09/15/05		14,382		14,362
Dorada Finance Inc.
3.76%, 01/26/06		4,794		4,720
Edison Asset Securitization LLC
3.12%, 09/06/05		35,954		35,938
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		61,819		61,766
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05		218,104		217,110
Gemini Securitization Corp.
3.49%, 09/06/05		76,908		76,870
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		155,800		155,499
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		35,954		35,894
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		74,304		73,509
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		55,129		55,129
HSBC PLC
3.88%, 02/03/06		14,382		14,141
Jupiter Securitization Corp.
3.51%, 09/21/05		27,175		27,122
Leafs LLC
3.61%, 01/20/06 – 02/21/064		50,331		50,330
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		66,080		65,981
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		117,449		117,296
New Center Asset Trust
3.60%, 09/01/05		167,784		167,784

36 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2005

Security	Principal		Value
Park Avenue Receivables Corp.
3.50%, 09/19/05	$	27,039	$	26,992
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		64,910		64,810
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		47,938		47,058
Scaldis Capital LLC
3.52%, 09/07/05		95,877		95,820
Sedna Finance Inc.
3.92%, 02/21/06		11,985		11,759
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		140,939		140,902
Sydney Capital Corp.
3.49%, 09/01/05		29,616		29,616
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		100,671		100,482
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05		102,716		102,681
Thunder Bay Funding Inc.
3.50%, 09/01/05		8,013		8,013
Tulip Funding Corp.
3.49%, 09/01/05		176,879		176,879
Windmill Funding Corp.
3.52%, 09/09/05		22,052		22,034
World Savings Bank
3.51%, 09/09/05		16,778		16,778
Yorktown Capital LLC
3.53%, 09/19/05		69,511		69,388
				2,540,318
MEDIUM-TERM NOTES3 – 0.01%
Dorada Finance Inc.
3.93%, 07/07/064		14,861		14,860
K2 USA LLC
3.94%, 07/07/064		28,763		28,762
				43,622
Security	Shares or Principal		Value
MONEY MARKET FUNDS – 0.24%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3, 5 ,6		191,754	$	191,754
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%5, 6		1,112,414		1,112,414
BlackRock Temp Cash Mo ney Market Fund
3.41%3, 6		5,079		5,079
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares
3.50%3, 6		16,805		16,805
				1,326,052
REPURCHASE AGREEMENTS3 – 0.39%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $1,150,636 and an effective yield of 3.60%.7	$	1,150,522		1,150,522
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $886,949 and an effective yield of 3.60%.7		886,860		886,860
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $104,516 and an effective yield of 3.60%.7		104,506		104,506
				2,141,888
TIME DEPOSITS3 – 0.08%
Abbey National Treasury Services PLC
3.50%, 09/01/05		95,877		95,877

SCHEDULES OF INVESTMENTS 37

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2005

Security	Principal		Value
Chase Bank USA N.A.
3.58%, 09/01/05	$	263,661	$	263,661
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		63,287		63,287
Natexis Banques Populaires
3.51%, 09/20/058		23,969		23,969
				446,794
VARIABLE & FLOATING RATE NOTES3 – 0.80%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/064		89,165		89,166
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06		129,434		129,435
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		79,098		79,098
American Express Credit Corp.
3.65%, 10/26/05		95,877		95,884
ASIF Global Financing XXII
3.99%, 05/30/064		47,938		47,998
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		31,160		31,160
Bank of America N.A.
3.56%, 08/10/06		239,692		239,692
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/064		246,403		246,400
BMW US Capital LLC
3.54%, 07/14/064		47,938		47,938
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		162,990		162,984
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/064		128,954		128,949
Commodore CDO Ltd.
3.47%, 12/12/054		11,985		11,985
Credit Suisse First Boston
3.57%, 07/19/06		119,846		119,846
DEPFA Bank PLC
3.42%, 03/15/06		47,938		47,938
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/064		76,222		76,226
Eli Lilly Services Inc.
3.53%, 09/01/064		47,938		47,938
Fifth Third Bancorp
3.58%, 04/21/064		95,877		95,877
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/064		33,557		33,558
General Electric Capital Corp.
3.66%, 07/07/06		21,572		21,592
Hartford Life Global Funding Trust
3.56%, 08/15/06		47,938		47,938
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/064		143,815		143,814
HSBC Bank USA N.A.
3.70%, 05/04/06		16,778		16,788
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/064		186,960		186,961
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/064		186,960		186,979
Lothian Mortgages PLC
3.63%, 01/24/06		47,938		47,938
Marshall & Ilsley Bank
3.71%, 02/20/06		47,938		47,966
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/064		95,877		95,919
National City Bank (Ohio)
3.50%, 01/06/06		23,969		23,967

38 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI BRAZIL INDEX FUND

August 31, 2005

Security	Principal		Value
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/064	$	177,372	$	177,389
Nordea Bank AB
3.55%, 08/11/064		83,892		83,892
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/064		153,403		153,406
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/064		184,563		184,563
Principal Life Income Funding Trusts
3.74%, 05/10/06		35,954		35,955
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		159,994		159,958
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/064		26,366		26,364
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/064		273,728		273,730
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		47,938		47,938
Strips III LLC
3.69%, 07/24/064,8		14,082		14,082
SunTrust Bank
3.63%, 04/28/06		71,908		71,908
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/064		116,490		116,484
Toyota Motor Credit Corp.
3.57%, 04/10/06		21,572		21,572
Unicredito Italiano SpA
3.34%, 06/14/06		62,320		62,303
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		115,404		115,405
Wells Fargo & Co.
3.56%, 09/15/064		23,969		23,972
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/064		191,753		191,746
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/064		101,150		101,146
Winston Funding Ltd.
3.71%, 10/23/054		34,228		34,228
				4,447,975
TOTAL SHORT-TERM INVESTMENTS (Cost: $12,207,414)				12,207,414
TOTAL INVESTMENTS IN SECURITIES – 101.59% (Cost: $344,373,948)				561,049,375
Other Assets, Less Liabilities – (1.59)%				(8,763,937	)
NET ASSETS – 100.00%			$	552,285,438

ADR – American Depositary Receipts

¹ Non-income earning security.

² All or a portion of this security represents a security on loan. See Note 5.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULE OF INVESTMENTS 39

Schedule of Investments

iSHARES^® MSCI CANADA INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.77%
AEROSPACE & DEFENSE – 0.23%
CAE Inc.	138,897	$	970,327
			970,327
APPAREL – 0.26%
Gildan Activewear Inc.1	32,367		1,088,344
			1,088,344
AUTO PARTS & EQUIPMENT – 1.04%
Magna International Inc. Class A	59,790		4,378,192
			4,378,192
BANKS – 18.03%
Bank of Montreal	290,007		14,125,667
Bank of Nova Scotia	577,640		19,885,090
Canadian Imperial Bank of Commerce	198,308		11,683,831
National Bank of Canada	99,622		4,811,304
Royal Bank of Canada	371,565		25,253,660
			75,759,552
BEVERAGES – 0.19%
Cott Corp.1	32,008		813,064
			813,064
CHEMICALS – 2.71%
Agrium Inc.	81,144		1,748,410
Methanex Corp.	64,584		975,745
NOVA Chemicals Corp.	50,182		1,602,056
Potash Corp. of Saskatchewan Inc.	64,377		7,060,284
			11,386,495
COMMERCIAL SERVICES – 0.21%
Quebecor World Inc.	45,212		873,721
			873,721
COMPUTERS – 2.01%
CGI Group Inc.1	166,851		1,189,486
Research In Motion Ltd.1	92,910		7,254,659
			8,444,145
DIVERSIFIED FINANCIAL SERVICES – 1.16%
C.I. Fund Management Inc.	81,668		1,396,075
IGM Financial Inc.	70,794		2,481,752
TSX Group Inc.	31,048		986,240
			4,864,067
ELECTRIC – 0.43%
TransAlta Corp.	99,411		1,821,545
			1,821,545
ELECTRONICS – 0.31%
Celestica Inc.1	108,675		1,300,697
			1,300,697
ENGINEERING & CONSTRUCTION – 0.41%
SNC-Lavalin Group Inc.	30,222		1,731,005
			1,731,005
ENTERTAINMENT – 0.16%
Intrawest Corp.	26,496		689,329
			689,329
FOOD – 1.66%
George Weston Ltd.	26,452		2,358,883
Loblaw Companies Ltd.	67,810		3,959,816
Saputo Inc.	21,321		647,472
			6,966,171
FOREST PRODUCTS & PAPER – 0.51%
Abitibi-Consolidated Inc.	229,770		986,303
Canfor Corp.1	51,750		574,952
Domtar Inc.	86,767		585,701
			2,146,956
HAND & MACHINE TOOLS – 0.36%
Finning International Inc.	45,954		1,492,992
			1,492,992
HEALTH CARE - SERVICES – 0.33%
MDS Inc.	87,334		1,403,989
			1,403,989
HOLDING COMPANIES - DIVERSIFIED – 1.62%
Brascan Corp. Class A	137,655		5,445,489
Onex Corp.	80,666		1,370,799
			6,816,288
INSURANCE – 12.10%
Fairfax Financial Holdings Ltd.	8,901		1,481,577
Great-West Lifeco Inc.	158,346		3,819,709
Manulife Financial Corp.	464,508		23,622,232
Power Corp. of Canada	192,096		5,154,466
Power Financial Corp.	148,551		4,167,330
Sun Life Financial Inc.	341,964		12,606,702
			50,852,016

40 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI CANADA INDEX FUND

August 31, 2005

Security	Shares	Value
IRON & STEEL – 0.92%
Algoma Steel Inc.	21,321	$	385,827
Dofasco Inc.	47,938		1,702,705
IPSCO Inc.	27,901		1,784,762
			3,873,294
LODGING – 0.52%
Fairmont Hotels & Resorts Inc.	39,951		1,247,859
Four Seasons Hotels Inc.	15,738		928,040
			2,175,899
MANUFACTURING – 0.51%
Bombardier Inc. Class B	815,292		2,161,577
			2,161,577
MEDIA – 2.80%
Rogers Communications Inc. Class B	112,421		4,166,229
Shaw Communications Inc. Class B	113,700		2,396,303
Thomson Corp.	140,064		5,190,656
			11,753,188
MINING – 11.22%
Aber Diamond Corp.	25,668		869,787
Agnico-Eagle Mines Ltd.	49,266		638,580
Alcan Inc.	214,452		7,053,938
Barrick Gold Corp.	294,768		7,718,401
Cameco Corp.	100,395		5,056,508
Glamis Gold Ltd.1	78,149		1,481,943
Goldcorp Inc.	189,392		3,411,320
Inco Ltd.	109,503		4,612,011
Ivanhoe Mines Ltd.1	127,008		924,686
Kinross Gold Corp.1	197,064		1,235,693
Meridian Gold Inc.1	55,062		1,027,923
Noranda Inc.	173,347		4,032,751
Novelis Inc.	43,966		1,013,945
Placer Dome Inc.	256,059		3,719,871
Teck Cominco Ltd. Class B	112,346		4,372,426
			47,169,783
OIL & GAS – 24.56%
Canadian Natural Resources Ltd.	306,772		15,097,179
EnCana Corp.	513,360		25,151,659
Husky Energy Inc.	76,176		3,923,888
Imperial Oil Ltd.	71,644		7,260,279
Nexen Inc.	151,731		6,573,180
Petro-Canada	292,588		11,820,742
Precision Drilling Corp. Class A1	70,392		3,298,310
Shell Canada Ltd.	124,200		4,024,661
Suncor Energy Inc.	262,476		15,541,778
Talisman Energy Inc.	215,487		10,510,455
			103,202,131
PHARMACEUTICALS – 0.61%
Angiotech Pharmaceuticals Inc.1	50,094		675,032
Biovail Corp.1	78,660		1,407,551
QLT Corp.1	55,683		496,793
			2,579,376
PIPELINES – 3.17%
Enbridge Inc.	190,026		5,601,137
TransCanada Corp.	278,622		7,738,849
			13,339,986
REAL ESTATE – 0.81%
Brookfield Properties Corp.	85,775		2,476,292
MI Developments Inc. Class A	28,425		936,893
			3,413,185
RETAIL – 2.14%
Canadian Tire Corp. Class A	49,343		2,475,249
Hudson’s Bay Co.	41,413		476,837
Jean Coutu Group Inc. Class A	73,538		1,299,805
RONA Inc.1	58,742		1,191,551
Shoppers Drug Mart Corp.	101,591		3,564,792
			9,008,234
SEMICONDUCTORS – 0.42%
ATI Technologies Inc.1	146,142		1,772,499
			1,772,499
SOFTWARE – 0.52%
Cognos Inc.1	51,957		1,866,009
Open Text Corp.1	27,945		324,822
			2,190,831
TELECOMMUNICATIONS – 4.11%
Aliant Inc.	12,277		279,826
BCE Inc.	184,023		4,812,385
Nortel Networks Corp.1	2,461,437		7,478,990
TELUS Corp.	35,397		1,340,683
TELUS Corp. NVS	90,873		3,346,262
			17,258,146

SCHEDULES OF INVESTMENTS 41

Schedule of Investments (Continued)

iSHARES^® MSCI CANADA INDEX FUND

August 31, 2005

Security	Shares	Value
TRANSPORTATION – 3.73%
Canadian National Railway Co.	163,999	$	10,812,256
Canadian Pacific Railway Ltd.	95,896		3,617,590
CP Ships Ltd.	54,333		1,229,707
			15,659,553
TOTAL COMMON STOCKS (Cost: $301,023,010)			419,356,577
SHORT-TERM INVESTMENTS – 0.01%
MONEY MARKET FUNDS – 0.01%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%2, 3	39,013		39,013
			39,013
TOTAL SHORT-TERM INVESTMENTS (Cost: $39,013)			39,013
TOTAL INVESTMENTS IN SECURITIES – 99.78% (Cost: $301,062,023)			419,395,590
Other Assets, Less Liabilities – 0.22%			905,185
NET ASSETS – 100.00%		$	420,300,775

NVS – Non-Voting Shares

¹ Non-income earning security.

² The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

³ The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to the financial statements.

42 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 97.35%
ARGENTINA – 1.14%
Petrobras Energia Participaciones SA ADR1, 2	1,220,951	$	18,070,075
Tenaris SA ADR2	537,303		61,510,447
			79,580,522
BRAZIL – 8.51%
Aracruz Celulose SA ADR2	397,764		14,586,006
Banco Bradesco SA ADR2	2,098,896		89,370,992
Banco Itau Holding Financiera SA ADR2	848,328		88,887,808
Brasil Telecom Participacoes SA ADR	478,764		17,450,948
Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR2	582,952		14,002,507
Companhia Vale do Rio Doce ADR2	2,803,320		96,406,175
Companhia Vale do Rio Doce Sponsored ADR	3,534,100		106,023,000
Contax Participacoes SA ADR1, 9	1,977,328		1,287,241
Empresa Brasileira de Aeronautica SA ADR2	818,234		29,341,871
Petroleo Brasileiro SA ADR2	1,639,056		102,539,343
Tele Norte Leste Participacoes SA ADR2	1,977,328		29,739,013
Votorantim Celulose e Papel ADR	552,278		6,406,425
			596,041,329
CHILE – 2.66%
Banco Santander Chile SA ADR	1,186,692		45,011,228
Compania de Telecomunicaciones de Chile SA ADR	2,064,808		23,848,532
Enersis SA Chile ADR	3,617,960		38,712,172
LAN Airlines SA Sponsored ADR	47,321		1,490,611
Sociedad Quimica y Minera de Chile SA ADR2	646,940		76,985,860
			186,048,403
CHINA – 4.82%
Aluminum Corp. of China Ltd. Class H2	7,188,000		3,953,694
Angang New Steel Co. Ltd. Class H2	10,782,000		5,410,318
AviChina Industry & Technology Co.1, 2	7,188,000		434,675
Bank of Communications Co. Ltd. Class H1, 2	28,259,000		12,453,063
Beijing Capital International Airport Co. Ltd. Class H	9,588,000		3,947,633
China Eastern Airlines Corp. Ltd. Class H2	34,742,000		5,453,477
China Life Insurance Co. Ltd. Class H1, 2	36,539,000		28,207,639
China Petroleum and Chemical Corp. Class H	98,236,000		42,974,261
China Shipping Development Co. Ltd. Class H2	10,800,000		8,476,419
China Southern Airlines Co. Ltd.1, 2	20,372,000		5,701,009
China Telecom Corp. Ltd. Class H	67,088,000		24,816,556
Cofco International Ltd.	3,600,000		1,540,114
Cosco Pacific Ltd.2	3,600,000		7,110,002
Datang International Power Generation Co. Ltd. Class H2	4,800,000		3,582,020
Guangshen Railway Co. Ltd. Class H2	38,406,363		12,106,765
Huadian Power International Corp. Ltd.	20,400,000		5,643,226
Huaneng Power International Inc. Class H2	14,400,000		10,190,231
Jiangsu Expressway Co. Ltd. Class H2	3,600,000		1,875,929
Jiangxi Copper Co. Ltd.2	11,998,000		5,827,531
Maanshan Iron & Steel Co. Ltd. Class H2	13,178,000		4,366,019
PetroChina Co. Ltd. Class H2	111,414,000		90,310,687
Ping An Insurance (Group) Co. of China Ltd. Class H	6,888,500		11,787,865
Qingling Motors Co. Ltd.2	7,188,474		1,211,621
Semiconductor Manufacturing International Corp.1, 2	17,970,000		3,583,757
Shanghai Forte Land Co. Class H2	3,594,000		1,063,567
Sinopec Shanghai Petrochemical Co. Ltd. Class H	14,400,000		5,095,116

SCHEDULES OF INVESTMENTS 43

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Shares	Value
Sinotrans Ltd.2	14,376,000	$	5,040,381
Travelsky Technology Ltd. Class H2	1,200,000		1,042,182
Tsingtao Brewery Co. Ltd. Class H2	2,400,000		2,655,636
Weichai Power Co. Ltd. Class H	599,000		1,475,891
Yanzhou Coal Mining Co. Ltd. Class H2	14,376,800		10,636,259
Zhejiang Expressway Co. Ltd. Class H2	14,400,000		9,727,038
			337,700,581
CZECH REPUBLIC – 2.74%
CEZ AS	3,243,386		85,775,744
Komercni Banka AS	171,519		23,757,889
Philip Morris CR AS	66,489		55,013,932
Unipetrol AS1	3,295,000		26,891,896
			191,439,461
HONG KONG – 4.25%
Air China Ltd.1,2	17,970,000		5,433,439
Beijing Enterprises Holdings Ltd.	2,400,000		3,365,864
Brilliance China Automotive Holdings Ltd.2	25,158,000		4,272,764
Chaoda Modern Agriculture	1,198,000		462,420
China Everbright Pacific Ltd.2	13,406,000		5,347,117
China Mengniu Dairy Co. Ltd.	2,396,000		1,865,095
China Merchants Holdings International Co. Ltd.2	4,792,000		10,142,419
China Mobile Ltd.2	28,452,500		123,003,802
China Overseas Land & Investment Ltd.2	19,168,000		4,710,522
China Resources Enterprises Ltd.2	8,400,000		13,347,658
China Resources Land Ltd.2	19,200,000		4,792,496
China Resources Power Holdings Co.	3,594,000		2,057,770
China Travel International Investment Hong Kong Ltd.2	42,216,951		13,036,377
Citic Pacific Ltd.	6,600,000		18,384,874
CNOOC Ltd.2	80,266,000		57,316,997
Denway Motors Ltd.	22,762,000		8,346,687
Guangdong Investment Ltd.	8,390,110		2,617,811
Lenovo Group Ltd.2	25,158,000		10,358,215
Shanghai Industrial Holdings Ltd.	2,400,000		4,554,724
Shenzhen Investment Ltd.	6,000,000		826,026
TCL International Holdings Ltd.2	7,188,000		1,313,274
TPV Technology Ltd.2	2,396,000		1,587,643
			297,143,994
HUNGARY – 2.94%
BorsodChem Rt	542,095		6,875,820
Gedeon Richter Rt	295,484		46,863,093
MATAV Rt	2,397,872		12,069,091
Mol Magyar Olaj-es Gazipari Rt	456,718		49,952,409
OTP Bank Rt	2,286,489		90,341,512
			206,101,925
INDIA – 5.46%
HDFC Bank Ltd. ADR	1,518,465		72,719,289
ICICI Bank Ltd. ADR2	2,232,166		52,188,041
Infosys Technologies Ltd. ADR2	1,205,982		85,371,466
Mahanagar Telephone Nigam Ltd. ADR2	3,589,383		25,125,681
Satyam Computer Services Ltd. ADR	1,757,494		48,102,611
Videsh Sanchar Nigam Ltd. ADR2	3,769,647		64,800,232
Wipro Ltd. ADR2	1,705,533		33,803,664
			382,110,984
INDONESIA – 2.16%
PT Aneka Tambang Tbk	41,630,955		9,094,141
PT Astra International Inc. Tbk	16,502,730		16,262,399
PT Bank Central Asia Tbk	30,000,000		9,975,728
PT Bank Danamon Indonesia Tbk	9,295,487		4,061,135
PT Bank Mandiri Tbk	31,500,000		4,189,806
PT Bank Pan Indonesia Tbk	121,959,418		4,913,898
PT Bank Rakyat Indonesia Tbk	27,585,061		6,896,265
PT Bumi Resources Tbk	87,154,500		6,600,050
PT Gudang Garam Tbk	6,000,987		6,408,821
PT Indosat Tbk	12,878,500		6,626,801
PT Kalbe Farma Tbk	182,197,156		15,035,687
PT Matahari Putra Prima Tbk	52,508,694		4,078,345
PT Perusahaan Gas Negara Tbk	16,786,500		5,826,382
PT Ramayana Lestari Sentosa Tbk	60,009,870		4,777,485
PT Semen Gresik (Persero) Tbk	315,500		480,908
PT Telekomunikasi Indonesia Tbk	81,763,686		40,881,843
PT Tempo Scan Pacific Tbk	650,376		378,860
PT United Tractors Tbk	11,744,271		4,418,355
			150,906,909

44 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Shares	Value
ISRAEL – 4.42%
Alvarion Ltd.1, 2	658,900	$	5,679,718
AudioCodes Ltd.1, 2	513,952		5,062,427
Bank Hapoalim Ltd.	6,957,552		25,653,072
Bank Leumi Le-Israel	9,109,148		26,917,158
Check Point Software Technologies Ltd.1	969,781		21,878,259
Clal Industries and Investments Ltd.	326,455		1,508,903
Clal Insurance Co. Ltd.	59,301		1,145,285
ECI Telecom Ltd.1	294,109		2,252,875
Elbit Systems Ltd.	458,834		11,018,694
Elite Industries Ltd.	134,775		1,094,011
Given Imaging Ltd.1, 2	119,201		2,838,176
Israel Chemicals Ltd.	4,899,221		18,128,657
Israel Corp. Ltd. (The)	6,589		2,178,050
Israel Discount Bank Class A1	10,442,416		14,659,335
Koor Industries Ltd.1	194,133		11,036,438
Lipman Electronic Engineering Ltd.1	100,033		3,194,054
Makhteshim-Agan Industries Ltd.	2,106,208		11,806,562
M-Systems Flash Disk Pioneers Ltd.1	507,353		13,399,193
NICE Systems Ltd.1	60,000		2,568,168
Orbotech Ltd.1, 2	460,631		11,372,979
Supersol Ltd.	1,177,178		2,933,372
Syneron Medical Ltd.1, 2	59,900		2,211,508
Teva Pharmaceutical Industries Ltd.	2,925,736		94,325,509
United Mizrahi Bank Ltd.1	3,277,900		16,769,895
			309,632,298
MEXICO – 7.31%
Alfa SA de CV Class A	2,575,700		15,568,072
America Movil SA de CV Series L	110,695,200		120,912,904
Cemex SA de CV Series CPO	14,016,600		66,479,028
Consorcio Ara SA de CV	4,200,000		14,007,769
Controladora Comercial Mexicana SA de CV	6,708,800		9,282,616
Corporacion GEO SA de CV Series B1	3,054,900		8,448,160
Fomento Economico Mexicano SA de CV Class UBD	3,660,000		24,958,546
Grupo Carso SA de CV Series A1	540,741		1,095,285
Grupo Financiero Banorte SA de CV Series O	1,801,114		14,742,748
Grupo Mexico SA de CV Series B	8,100,000		14,211,709
Grupo Modelo SA de CV Series C	7,874,198		25,329,690
Grupo Televisa SA Series CPO	12,399,300		38,773,616
Industrias Penoles SA de CV Series CP	540,988		2,100,006
Kimberly-Clark de Mexico SA de CV Class A	4,432,600		14,504,753
Telefonos de Mexico SA de CV Series L	89,192,094		85,133,409
TV Azteca SA de CV Series CPO1	7,487,500		4,321,309
Wal-Mart de Mexico SA de CV Series V	11,980,000		51,811,395
			511,681,015
PERU – 0.29%
Companhia de Minas Buenaventura SA ADR	807,528		20,034,770
			20,034,770
PHILIPPINE ISLANDS – 1.41%
Ayala Corp.	1,814,970		9,509,211
Ayala Land Inc. Class B	17,371,000		2,498,980
Bank of the Philippine Islands	11,860,200		11,269,349
Equitable PCI Bank	7,128,100		6,519,797
Filinvest Land Inc.1	149,151,000		3,549,637
Globe Telecom Inc.	347,420		4,442,632
Jollibee Foods Corp.	25,936,700		15,201,334
Manila Electric Co. Class B1	6,648,900		2,686,484
Megaworld Corp.1	102,429,000		2,474,086
Metropolitan Bank & Trust Co.	40		20
Petron Corp.	120,399,000		6,949,592
Philippine Long Distance Telephone Co.	748,750		21,143,993
SM Investments Corp.	1,144,090		4,185,819
SM Prime Holdings Inc.	67,088,000		8,459,725
			98,890,659
RUSSIA – 4.93%
JSC MMC Norilsk Nickel ADR2	403,726		29,189,390
LUKOIL ADR2	3,129,176		152,390,871
Mobile Telesystems OJSC ADR2	539,100		19,946,700
Rostelecom ADR2	435,578		5,880,303
Surgutneftegaz ADR2	2,206,721		105,039,920
Tatneft ADR2	162,388		8,070,684
Vimpel-Communications Sponsored ADR1	599,000		24,696,770
			345,214,638

SCHEDULES OF INVESTMENTS 45

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Shares	Value
SOUTH AFRICA – 12.40%
African Bank Investments Ltd.2	5,830,761	$	18,415,596
Alexander Forbes Ltd.1	5,794,267		12,359,018
Anglo Platinum Ltd.	325,976		15,701,096
AngloGold Ashanti Ltd.2	660,140		23,194,606
Anglovaal Industries Ltd.	2,415,568		5,470,851
Barloworld Ltd.	1,265,292		19,932,117
Bidvest Group Ltd.	1,494,699		20,265,061
Consol Ltd.1	2,415,568		4,571,533
Edgars Consolidated Stores Ltd.	2,533,770		12,499,052
FirstRand Ltd.	15,830,983		37,327,957
Foschini Ltd.	5,014,259		36,636,200
Gold Fields Ltd.	1,973,751		22,565,377
Impala Platinum Holdings Ltd.	283,376		29,452,835
Imperial Holdings Ltd.1	1,440,477		26,915,093
Investec Ltd.	525,352		16,584,315
JD Group Ltd.	1,703,644		19,556,599
Liberty Group Ltd.2	944,284		9,448,113
Mittal Steel South Africa Ltd.	2,151,208		16,067,986
MTN Group Ltd.2	6,251,212		44,995,073
Nampak Ltd.	4,616,568		11,028,659
Naspers Ltd.	2,346,384		37,854,296
Nedbank Group Ltd.	1,888,049		25,741,596
Network Healthcare Holdings Ltd.1	10,364,042		9,839,281
New Africa Capital Ltd.	5,306,708		9,590,337
Old Mutual PLC	21,062,820		53,192,900
Pick’n Pay Stores Ltd.	2,745,830		11,206,687
Reunert Ltd.	950,613		6,193,495
Sanlam Ltd.	16,328,864		33,613,183
Sappi Ltd.	1,164,492		12,310,767
Sasol Ltd.	3,350,806		111,755,909
Shoprite Holdings Ltd.	6,981,346		17,381,888
SPAR Group Ltd. (The)1	963,316		4,266,361
Standard Bank Group Ltd.	5,337,319		57,542,763
Steinhoff International Holdings Ltd.	1,006,919		2,577,278
Telkom South Africa Ltd.	725,540		14,350,079
Tiger Brands Ltd.	963,316		19,374,212
Tongaat-Hulett Group Ltd.	871,734		8,776,300
Truworths International Ltd.2	5,353,266		15,778,117
Woolworths Holdings Ltd.	7,781,773		13,942,585
			868,275,171
SOUTH KOREA – 16.25%
Kookmin Bank ADR1,2	4,083,982		206,976,208
Korea Electric Power Corp. ADR2	8,884,967		142,603,720
KT Corp. ADR	3,751,566		76,344,368
LG.Philips LCD Co. Ltd. ADR1	886,520		20,168,330
POSCO ADR2	3,851,570		201,244,533
Samsung Electronics Co. Ltd. GDR	1,598,731		419,267,205
SK Telecom Co. Ltd. ADR2	3,351,539		71,253,719
			1,137,858,083
TAIWAN – 11.14%
AU Optronics Corp. ADR2	9,323,189		137,889,965
Chunghwa Telecom Co. Ltd. ADR2	6,324,242		121,741,659
Siliconware Precision Industries Co. ADR2	26,306,239		121,534,824
Taiwan Semiconductor Manufacturing Co. Ltd. ADR	29,273,037		240,917,094
United Microelectronics Corp. ADR2	46,290,617		157,851,004
			779,934,546
THAILAND – 2.93%
Advanced Info Service PCL	4,620,000		11,296,938
Bangkok Bank PCL	5,637,800		15,150,606
Bangkok Expressway PCL	11,160,000		7,092,362
Banpu PCL	1,800,000		6,798,208
Charoen Pokphand Foods PCL	28,000		3,491
Electricity Generating PCL	2,457,900		4,611,724
Kasikornbank PCL	8,580,000		13,086,552
Kiatnakin Finance PCL	4,495,600		3,129,125
Krung Thai Bank PCL	10,256,400		2,396,181
National Finance PCL	10,794,500		3,266,705
National Petrochemical PCL	2,400,000		7,030,626
PTT Exploration & Production PCL	1,920,000		22,498,002
PTT PCL	8,146,400		48,123,026
Ratchaburi Electricity Generating Holding PCL	19,778,800		18,675,057
Shin Corp. PCL	7,080,000		6,513,497
Siam Cement PCL	1,800,000		10,458,782
Siam City Cement PCL	360,000		2,457,814
Siam Makro PCL	8,100,000		11,668,079
Thai Union Frozen Products PCL	7,200,000		5,229,391
Tisco Bank PCL	4,615,100		3,100,570
United Broadcasting Corp. PCL1	5,096,800		2,566,601
			205,153,337

46 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Shares		Value
TURKEY – 1.59%
Adana Cimento TAS Class A		1,725,923	$	7,649,342
Akbank TAS		3,824,924		22,650,388
Akcansa Cimento AS		313,300		1,423,560
Arcelik AS		566,187		3,352,839
Dogan Yayin Holding AS1		1,624,191		4,379,569
Eregli Demir ve Celik Fabrikalari TAS		1,047,576		5,696,317
Hurriyet Gazetecilik ve Matbaacilik AS		1,295,371		3,415,727
Tofas Turk Otomobil Fabrik		4,199,652		6,663,135
Trakya Cam Sanayii AS		708,130		2,716,476
Tupras-Turkiye Petrol Rafinerileri AS		516,440		7,924,517
Turk Hava Yollari Anonim Ortakligi1		2,005,503		11,278,620
Turk Sise ve Cam Fabrikalari AS		1,946,151		6,755,355
Turkiye Garanti Bankasi AS1		4,456,780		12,615,094
Vestel Elektronik Sanayi ve Ticaret AS1		1,070,666		3,939,732
Yapi ve Kredi Bankasi AS1		2,523,284		10,901,339
				111,362,010
TOTAL COMMON STOCKS (Cost: $5,749,604,641)				6,815,110,635
PREFERRED STOCKS – 1.57%
BRAZIL – 1.57%
Petroleo Brasileiro SA ADR2		1,992,590		109,572,524
				109,572,524
TOTAL PREFERRED STOCKS (Cost: $69,964,200)				109,572,524
EXCHANGE-TRADED FUNDS – 0.58%
iShares MSCI Malaysia Index Fund2,3		1,179,722		8,564,782
iShares MSCI South Korea Index Fund2,3		401,643		14,097,669
iShares MSCI Taiwan Index Fund3		1,516,180		17,815,115
TOTAL EXCHANGE-TRADED FUNDS (Cost: $35,176,115)				40,477,566
Security	Principal		Value
SHORT-TERM INVESTMENTS – 12.98%
CERTIFICATES OF DEPOSIT4 – 1.47%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	5,865,282	$	5,865,282
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		2,541,622		2,541,428
Credit Suisse First Boston
3.53%, 05/09/06		3,910,188		3,910,188
Danske Bank
3.50%, 10/17/05		3,910,188		3,910,041
Dexia Credit Local
3.61%, 08/30/06		1,955,094		1,954,705
First Tennessee Bank
3.52%, 09/15/05		6,647,319		6,647,319
Fortis Bank NY
3.83% – 3.84%, 01/25/06		5,865,282		5,865,321
HBOS Treasury Services PLC
3.39%, 12/14/05		2,346,113		2,346,113
HSBC Bank USA N.A.
3.72%, 08/03/06		1,955,094		1,955,733
Royal Bank of Scotland
3.61%, 06/27/06		1,955,094		1,954,855
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		6,060,791		6,059,718
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		13,881,167		13,881,444
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05		3,128,150		3,128,143
US Bank N.A.
3.54%, 09/19/05		9,775,470		9,775,470
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		17,595,846		17,595,846
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		15,445,242		15,445,236
				102,836,842

SCHEDULES OF INVESTMENTS 47

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Principal		Value
COMMERCIAL PAPER4 – 2.96%
Alpine Securitization Corp.
3.52%, 09/09/05	$	7,820,376	$	7,814,258
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		8,250,496		8,206,490
Aspen Funding Corp.
3.49%, 09/01/05		3,910,188		3,910,188
Barton Capital Corp.
3.51%, 09/07/05		4,434,349		4,431,754
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		6,451,810		6,443,863
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		1,990,247		1,970,858
Cantabric Finance LLC
3.73%, 10/31/05		1,503,350		1,494,004
Charta LLC
3.54%, 09/20/05		2,737,132		2,732,018
Chesham Finance LLC
3.54%, 09/15/05		1,173,056		1,171,441
Dorada Finance Inc.
3.76%, 01/26/06		391,019		385,015
Edison Asset Securitization LLC
3.12%, 09/06/05		2,932,641		2,931,370
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		5,042,383		5,038,112
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05		17,790,104		17,708,937
Gemini Securitization Corp.
3.49%, 09/06/05		6,273,114		6,270,074
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		12,708,111		12,683,538
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		2,932,641		2,927,735
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		6,060,791		5,995,899
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		4,496,716		4,496,716
HSBC PLC
3.88%, 02/03/06		1,173,056		1,153,460
Jupiter Securitization Corp.
3.51%, 09/21/05		2,216,568		2,212,246
Leafs LLC
3.61%, 01/20/06 – 02/21/065		4,105,335		4,105,336
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		5,389,920		5,381,872
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		9,579,960		9,567,439
New Center Asset Trust
3.60%, 09/01/05		13,685,658		13,685,658
Park Avenue Receivables Corp.
3.50%, 09/19/05		2,205,502		2,201,643
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		5,294,512		5,286,410
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		3,910,188		3,838,415
Scaldis Capital LLC
3.52%, 09/07/05		7,820,376		7,815,788
Sedna Finance Inc.
3.92%, 02/21/06		977,547		959,132
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		11,495,952		11,492,922
Sydney Capital Corp.
3.49%, 09/01/05		2,415,714		2,415,714
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		8,211,395		8,196,053

48 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05	$	8,378,203	$	8,375,344
Thunder Bay Funding Inc.
3.50%, 09/01/05		653,588		653,588
Tulip Funding Corp.
3.49%, 09/01/05		14,427,459		14,427,459
Windmill Funding Corp.
3.52%, 09/09/05		1,798,686		1,797,279
World Savings Bank
3.51%, 09/09/05		1,368,566		1,368,563
Yorktown Capital LLC
3.53%, 09/19/05		5,669,772		5,659,765
				207,206,356
MEDIUM–TERM NOTES4 – 0.05%
Dorada Finance Inc.
3.93%, 07/07/065		1,212,158		1,212,056
K2 USA LLC
3.94%, 07/07/065		2,346,113		2,346,013
				3,558,069
MONEY MARKET FUNDS – 0.31%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3, 4, 6		15,640,751		15,640,751
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%3, 6		4,035,314		4,035,314
BlackRock Temp Cash Money Market Fund
3.41%4, 6		414,313		414,313
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares
3.50%4, 6		1,370,740		1,370,740
				21,461,118
Security	Principal		Value
REPURCHASE AGREEMENTS4– 2.49%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $93,853,894 and an effective yield of 3.60%.7	$	93,844,510	$	93,844,510
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $72,345,710 and an effective yield of 3.60%.7		72,338,476		72,338,476
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $8,525,062 and an effective yield of 3.60%.7		8,524,210		8,524,210
				174,707,196
TIME DEPOSITS4 – 0.52%
Abbey National Treasury Services PLC
3.50%, 09/01/05		7,820,376		7,820,376
Chase Bank USA N.A.
3.58%, 09/01/05		21,506,033		21,506,033
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		5,162,124		5,162,124
Natexis Banques Populaires
3.51%, 09/20/058		1,955,094		1,955,094
				36,443,627
VARIABLE & FLOATING RATE NOTES4 – 5.18%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/065		7,272,949		7,272,989
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06		10,557,507		10,557,540
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		6,451,810		6,451,810

SCHEDULES OF INVESTMENTS 49

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Principal		Value
American Express Credit Corp.
3.65%, 10/26/05	$	7,820,376	$	7,820,963
ASIF Global Financing XXII
3.99%, 05/30/065		3,910,188		3,915,062
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/065		2,541,622		2,541,622
Bank of America N.A.
3.56%, 08/10/06		19,550,940		19,550,940
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/065		20,098,366		20,098,094
BMW US Capital LLC
3.54%, 07/14/065		3,910,188		3,910,188
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		13,294,639		13,294,083
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/065		10,518,405		10,517,965
Commodore CDO Ltd.
3.47%, 12/12/055		977,547		977,547
Credit Suisse First Boston
3.57%, 07/19/06		9,775,470		9,775,470
DEPFA Bank PLC
3.42%, 03/15/06		3,910,188		3,910,188
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/065		6,217,199		6,217,522
Eli Lilly Services Inc.
3.53%, 09/01/065		3,910,188		3,910,188
Fifth Third Bancorp
3.58%, 04/21/065		7,820,376		7,820,376
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/065		2,737,132		2,737,193
General Electric Capital Corp.
3.66%, 07/07/06		1,759,585		1,761,172
Hartford Life Global Funding Trust
3.56%, 08/15/06		3,910,188		3,910,188
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/065		11,730,564		11,730,564
HSBC Bank USA N.A.
3.70%, 05/04/06		1,368,566		1,369,312
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/065		15,249,733		15,249,859
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/065		15,249,733		15,251,375
Lothian Mortgages PLC
3.63%, 01/24/06		3,910,188		3,910,188
Marshall & Ilsley Bank
3.71%, 02/20/06		3,910,188		3,912,403
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/065		7,820,376		7,823,813
National City Bank (Ohio)
3.50%, 01/06/06		1,955,094		1,954,889
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/065		14,467,695		14,469,100
Nordea Bank AB
3.55%, 08/11/065		6,842,829		6,842,829
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/065		12,512,601		12,512,822
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/065		15,054,223		15,054,224
Principal Life Income Funding Trusts
3.74%, 05/10/06		2,932,641		2,932,750
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		13,050,252		13,047,273
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/065		2,150,603		2,150,429
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/065		22,327,173		22,327,282
Skandinaviska Enskilda Bank NY
3.58%, 07/18/065		3,910,188		3,910,188
Strips III LLC
3.69%, 07/24/065, 8		1,148,617		1,148,617

50 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI EMERGING MARKETS INDEX FUND

August 31, 2005

Security	Principal		Value
SunTrust Bank
3.63%, 04/28/06	$	5,865,282	$	5,865,282
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/065		9,501,757		9,501,175
Toyota Motor Credit Corp.
3.57%, 04/10/06		1,759,585		1,759,569
Unicredito Italiano SpA
3.34%, 06/14/06		5,083,244		5,081,832
Wachovia Asset Securitization Inc.
3.63%, 09/25/055		9,413,171		9,413,171
Wells Fargo & Co.
3.56%, 09/15/065		1,955,094		1,955,288
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/065		15,640,752		15,640,074
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/065		8,250,496		8,250,286
Winston Funding Ltd.
3.71%, 10/23/055		2,791,874		2,791,874
				362,807,568
TOTAL SHORT- TERM INVESTMENTS (Cost: $909,020,776)				909,020,776
TOTAL INVESTMENTS IN SECURITIES – 112.47% (Cost: $6,763,765,732)				7,874,181,501
Other Assets, Less Liabilities – (12.47)%				(873,323,451	)
NET ASSETS – 100.00%			$	7,000,858,050

ADR – American Depositary Receipts

GDR – Global Depositary Receipts

¹ Non-income earning security.

² All or a portion of this security represents a security on loan. See Note 5.

³ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁴ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁵ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

⁹ Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 51

Schedule of Investments

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.81%
AIRLINES – 1.14%
Cathay Pacific Airways Ltd.	3,924,000	$	7,270,266
			7,270,266
APPAREL – 0.93%
Yue Yuen Industrial Holdings Ltd.1	1,962,000		5,932,335
			5,932,335
BANKS – 13.88%
Bank of East Asia Ltd.	5,362,900		15,663,340
BOC Hong Kong Holdings Ltd.	14,061,000		28,313,227
Hang Seng Bank Ltd.1	2,943,000		39,759,269
Wing Hang Bank Ltd.	654,000		4,808,978
			88,544,814
CHEMICALS – 0.72%
Kingboard Chemical Holdings Co. Ltd.	1,962,000		4,607,026
			4,607,026
DISTRIBUTION & WHOLESALE – 6.23%
Esprit Holdings Ltd.	3,597,000		26,495,661
Li & Fung Ltd.	6,540,000		13,253,090
			39,748,751
DIVERSIFIED FINANCIAL SERVICES – 1.89%
Hong Kong Exchanges & Clearing Ltd.	3,924,000		12,066,623
			12,066,623
ELECTRIC – 10.24%
CLP Holdings Ltd.	6,867,200		40,025,496
Hongkong Electric Holdings Ltd.	5,232,000		25,277,639
			65,303,135
ELECTRICAL COMPONENTS & EQUIPMENT – 0.80%
Johnson Electric Holdings Ltd.	5,559,000		5,114,010
			5,114,010
ENGINEERING & CONSTRUCTION – 2.66%
Cheung Kong Infrastructure Holdings Ltd.	1,962,000		6,172,153
New World Development Co. Ltd.	8,502,800		10,830,686
			17,002,839
GAS – 4.32%
Hong Kong & China Gas Co. Ltd.	13,734,663		27,567,757
			27,567,757
HAND & MACHINE TOOLS – 1.42%
Techtronic Industries Co. Ltd.	3,597,000		9,071,004
			9,071,004
HOLDING COMPANIES - DIVERSIFIED – 20.66%
Hutchison Whampoa Ltd.1	8,502,800		83,910,470
Swire Pacific Ltd. Class A	3,270,000		31,071,132
Wharf Holdings Ltd. (The)	4,578,000		16,816,698
			131,798,300
LODGING – 1.07%
Shangri-La Asia Ltd.1	3,924,000		6,815,875
			6,815,875
MEDIA – 1.30%
SCMP Group Ltd.	2,616,000		1,060,247
Television Broadcasts Ltd.	1,308,000		7,245,022
			8,305,269
REAL ESTATE – 25.79%
Cheung Kong Holdings Ltd.	5,886,000		63,842,026
Hang Lung Properties Ltd.	7,194,000		11,199,912
Henderson Land
Development Co. Ltd.	2,616,000		13,025,894
Hopewell Holdings Ltd.	2,616,000		6,714,899
Hysan Development Co. Ltd.	2,616,000		6,529,776
Kerry Properties Ltd.1	1,635,000		4,438,733
Sino Land Co. Ltd.1	5,232,000		5,822,945
Sun Hung Kai Properties Ltd.	5,232,000		52,945,041
			164,519,226
RETAIL – 0.55%
Giordano International Ltd. 1	5,232,000		3,500,499
			3,500,499
SEMICONDUCTORS – 0.81%
ASM Pacific Technology Ltd.1	654,000		3,201,778
Solomon Systech International Ltd.	6,540,000		1,956,408
			5,158,186
TELECOMMUNICATIONS – 2.76%
Hutchinson Telecommunications International Ltd.1, 2	5,886,000		7,043,070
PCCW Ltd.1	14,388,576		9,441,627
SmarTone Telecommunications Holdings Ltd.	983,000		1,144,619
			17,629,316

52 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
TEXTILES – 0.28%
Texwinca Holdings Ltd.		2,616,000	$	1,783,908
				1,783,908
TRANSPORTATION – 2.36%
MTR Corp. Ltd.		4,578,083		9,277,331
Orient Overseas International Ltd.		1,445,200		5,755,028
				15,032,359
TOTAL COMMON STOCKS (Cost: $549,357,828)				636,771,498
SHORT-TERM INVESTMENTS – 16.34%
CERTIFICATES OF DEPOSIT3– 1.86%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	675,696		675,696
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		292,802		292,780
Credit Suisse First Boston
3.53%, 05/09/06		450,464		450,464
Danske Bank
3.50%, 10/17/05		450,464		450,447
Dexia Credit Local
3.61%, 08/30/06		225,232		225,187
First Tennessee Bank
3.52%, 09/15/05		765,789		765,789
Fortis Bank NY
3.83% – 3.84%, 01/25/06		675,696		675,700
HBOS Treasury Services PLC
3.39%, 12/14/05		270,278		270,278
HSBC Bank USA N.A.
3.72%, 08/03/06		225,232		225,306
Royal Bank of Scotland
3.61%, 06/27/06		225,232		225,204
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		698,219		698,095
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		1,599,147		1,599,179
Security	Principal		Value
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05	$	360,371	$	360,370
US Bank N.A.
3.54%, 09/19/05		1,126,160		1,126,160
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		2,027,088		2,027,088
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		1,779,333		1,779,332
				11,847,075
COMMERCIAL PAPER3 – 3.74%
Alpine Securitization Corp.
3.52%, 09/09/05		900,928		900,223
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		950,479		945,408
Aspen Funding Corp.
3.49%, 09/01/05		450,464		450,464
Barton Capital Corp.
3.51%, 09/07/05		510,849		510,550
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		743,266		742,351
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		229,282		227,048
Cantabric Finance LLC
3.73%, 10/31/05		173,190		172,113
Charta LLC
3.54%, 09/20/05		315,325		314,736
Chesham Finance LLC
3.54%, 09/15/05		135,139		134,953
Dorada Finance Inc.
3.76%, 01/26/06		45,046		44,355
Edison Asset Securitization LLC
3.12%, 09/06/05		337,848		337,702
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		580,896		580,403

SCHEDULES OF INVESTMENTS 53

Schedule of Investments (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2005

Security	Principal		Value
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05	$	2,049,467	$	2,040,117
Gemini Securitization Corp.
3.49%, 09/06/05		722,679		722,329
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		1,464,008		1,461,177
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		337,848		337,283
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		698,219		690,743
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		518,034		518,034
HSBC PLC
3.88%, 02/03/06		135,139		132,882
Jupiter Securitization Corp.
3.51%, 09/21/05		255,355		254,857
Leafs LLC
3.61%, 01/20/06 – 02/21/064		472,945		472,945
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		620,933		620,006
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		1,103,637		1,102,194
New Center Asset Trust
3.60%, 09/01/05		1,576,624		1,576,624
Park Avenue Receivables Corp.
3.50%, 09/19/05		254,080		253,635
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		609,942		609,008
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		450,464		442,196
Scaldis Capital LLC
3.52%, 09/07/05		900,928		900,399
Sedna Finance Inc.
3.92%, 02/21/06		112,616		110,495
Security	Shares or Principal		Value
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05	$	1,324,364	$	1,324,015
Sydney Capital Corp.
3.49%, 09/01/05		278,297		278,297
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		945,974		944,207
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05		965,191		964,861
Thunder Bay Funding Inc.
3.50%, 09/01/05		75,295		75,295
Tulip Funding Corp.
3.49%, 09/01/05		1,662,082		1,662,082
Windmill Funding Corp.
3.52%, 09/09/05		207,213		207,051
World Savings Bank
3.51%, 09/09/05		157,662		157,662
Yorktown Capital LLC
3.53%, 09/19/05		653,173		652,020
				23,870,720
MEDIUM-TERM NOTES3 – 0.06%
Dorada Finance Inc.
3.93%, 07/07/064		139,644		139,632
K2 USA LLC
3.94%, 07/07/064		270,278		270,267
				409,899
MONEY MARKET FUNDS – 0.32%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3, 5, 6		1,801,856		1,801,856
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%5, 6		22,977		22,977
BlackRock Temp Cash Money Market Fund 3.41%3, 6		47,730		47,730
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares
3.50%3, 6		157,913		157,913
				2,030,476

54 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2005

Security	Principal		Value
REPURCHASE AGREEMENTS3 – 3.15%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $10,812,217 and an effective yield of 3.60%.7	$	10,811,136	$	10,811,136
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $8,334,417 and an effective yield of 3.60%.7		8,333,584		8,333,584
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $982,110 and an effective yield of 3.60%.7		982,012		982,012
				20,126,732
TIME DEPOSITS3 – 0.66%
Abbey National Treasury Services PLC
3.50%, 09/01/05		900,928		900,928
Chase Bank USA N.A.
3.58%, 09/01/05		2,477,552		2,477,552
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		594,690		594,690
Natexis Banques Populaires
3.51%, 09/20/058		225,232		225,232
				4,198,402
VARIABLE & FLOATING RATE NOTES3 – 6.55%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/064		837,863		837,868
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06		1,216,253		1,216,257
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		743,266		743,266
American Express Credit Corp.
3.65%, 10/26/05		900,928		900,996
ASIF Global Financing XXII
3.99%, 05/30/064		450,464		451,025
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		292,802		292,802
Bank of America N.A.
3.56%, 08/10/06		2,252,320		2,252,320
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/064		2,315,385		2,315,354
BMW US Capital LLC
3.54%, 07/14/064		450,464		450,464
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		1,531,578		1,531,514
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/064		1,211,748		1,211,699
Commodore CDO Ltd.
3.47%, 12/12/054		112,616		112,616
Credit Suisse First Boston
3.57%, 07/19/06		1,126,160		1,126,160
DEPFA Bank PLC
3.42%, 03/15/06		450,464		450,464
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/064		716,238		716,275
Eli Lilly Services Inc.
3.53%, 09/01/064		450,464		450,464
Fifth Third Bancorp
3.58%, 04/21/064		900,928		900,928
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/064		315,325		315,331
General Electric Capital Corp.
3.66%, 07/07/06		202,709		202,892
Hartford Life Global Funding Trust
3.56%, 08/15/06		450,464		450,464

SCHEDULES OF INVESTMENTS 55

Schedule of Investments (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2005

Security	Principal		Value
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/064	$	1,351,392	$	1,351,392
HSBC Bank USA N.A.
3.70%, 05/04/06		157,662		157,748
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/064		1,756,810		1,756,824
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/064		1,756,810		1,757,000
Lothian Mortgages PLC
3.63%, 01/24/06		450,464		450,464
Marshall & Ilsley Bank
3.71%, 02/20/06		450,464		450,719
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/064		900,928		901,324
National City Bank (Ohio)
3.50%, 01/06/06		225,232		225,208
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/064		1,666,717		1,666,878
Nordea Bank AB
3.55%, 08/11/064		788,312		788,312
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/064		1,441,485		1,441,510
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/064		1,734,286		1,734,286
Principal Life Income
Funding Trusts
3.74%, 05/10/06		337,848		337,861
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		1,503,424		1,503,080
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/064		247,755		247,735
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/064		2,572,149		2,572,164
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		450,464		450,464
Strips III LLC
3.69%, 07/24/064,8		132,324		132,324
SunTrust Bank
3.63%, 04/28/06		675,696		675,696
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/064		1,094,627		1,094,560
Toyota Motor Credit Corp.
3.57%, 04/10/06		202,709		202,707
Unicredito Italiano SpA
3.34%, 06/14/06		585,603		585,440
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		1,084,422		1,084,422
Wells Fargo & Co.
3.56%, 09/15/064		225,232		225,254
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/064		1,801,856		1,801,778
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/064		950,479		950,454
Winston Funding Ltd.
3.71%, 10/23/054		321,631		321,631
				41,796,394
TOTAL SHORT-TERM INVESTMENTS (Cost: $104,279,698)				104,279,698
TOTAL INVESTMENTS IN SECURITIES – 116.15% (Cost: $653,637,526)				741,051,196
Other Assets, Less Liabilities – (16.15)%				(103,066,358	)
NET ASSETS – 100.00%			$	637,984,838

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

56 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI HONG KONG INDEX FUND

August 31, 2005

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 57

Schedule of Investments

iSHARES^® MSCI MALAYSIA INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.87%
AGRICULTURE – 8.59%
British American Tobacco (Malaysia) Bhd	1,006,600	$	10,207,436
Golden Hope Plantations Bhd	3,379,300		3,171,453
Highlands & Lowlands Bhd	1,222,300		1,412,839
IOI Corp. Bhd	4,889,200		14,646,861
Kuala Lumpur Kepong Bhd	2,013,200		3,842,800
			33,281,389
AIRLINES – 1.01%
Airasia Bhd1	5,608,200		2,304,535
Malaysian Airline System Bhd	2,013,200		1,622,515
			3,927,050
AUTO MANUFACTURERS – 2.23%
DRB-Hicom Bhd	3,163,600		1,341,930
Oriental Holdings Bhd	1,222,300		1,354,511
Proton Holdings Bhd	2,013,200		4,723,441
Tan Chong Motor Holdings Bhd	2,660,300		1,206,021
			8,625,903
AUTO PARTS & EQUIPMENT – 0.66%
UMW Holdings Bhd	1,797,500		2,549,477
			2,549,477
BANKS – 24.70%
AMMB Holdings Bhd	10,209,800		6,929,239
CIMB Bhd	1,495,777		2,438,767
Commerce Asset Holdings Bhd	15,170,900		22,321,976
Hong Leong Bank Bhd	3,810,700		5,505,916
Malayan Banking Bhd	13,373,400		40,418,017
Public Bank Bhd	8,124,700		14,969,954
RHB Capital Bhd	5,104,900		3,139,811
			95,723,680
BEVERAGES – 0.42%
Guinness Anchor Bhd	1,078,500		1,629,759
			1,629,759
BUILDING MATERIALS – 1.70%
Malayan Cement Bhd	9,275,100		1,512,245
OYL Industries Bhd	5,536,530		4,638,238
WTK Holdings Bhd	503,300		453,664
			6,604,147
CHEMICALS – 0.49%
Malaysian Oxygen Bhd	575,200		1,906,151
			1,906,151
COMMERCIAL SERVICES – 2.19%
PLUS Expressways Bhd	9,994,100		8,478,558
			8,478,558
DIVERSIFIED FINANCIAL SERVICES – 1.60%
Bursa Malaysia Bhd	2,372,700		2,679,667
Hong Leong Credit Bhd	1,653,700		1,876,415
OSK Holdings Bhd	2,300,833		634,376
TA Enterprise Bhd	5,320,600		1,008,544
			6,199,002
ELECTRIC – 7.12%
Malakoff Bhd	4,314,000		8,920,785
Tenaga Nasional Bhd	6,399,100		18,661,214
			27,581,999
ELECTRONICS – 0.16%
Hong Leong Industries Bhd	719,000		632,842
Hume Industries Bhd	667		866
			633,708
ENGINEERING & CONSTRUCTION – 5.93%
Gamuda Bhd	4,457,800		5,058,161
IJM Corp. Bhd	2,660,300		3,385,323
Malaysia Airports Holdings Bhd	2,228,900		1,193,631
Malaysian Resources Corp. Bhd1	4,601,600		609,968
MMC Corp. Bhd	2,228,900		1,299,995
Road Builder (Malaysia) Holdings Bhd	3,091,700		1,639,290
Transmile Group Bhd	934,700		2,651,456
YTL Corp. Bhd	4,889,288		7,129,131
			22,966,955
ENTERTAINMENT – 6.78%
Berjaya Sports Toto Bhd	4,817,300		5,823,671
Magnum Corp. Bhd	6,902,400		3,733,005
Resorts World Bhd	3,954,500		10,798,343
Tanjong PLC	1,653,700		5,918,598
			26,273,617
ENVIRONMENTAL CONTROL – 0.19%
Puncak Niaga Holding Bhd	1,078,500		743,399
			743,399

58 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI MALAYSIA INDEX FUND

August 31, 2005

Security	Shares	Value
FOOD – 2.02%
Nestle (Malaysia) Bhd	575,200	$	3,781,803
PPB Group Bhd	3,738,866		4,063,985
			7,845,788
GAS – 1.84%
Petronas Gas Bhd	3,163,600		7,129,003
			7,129,003
HOLDING COMPANIES – DIVERSIFIED – 4.48%
Mulpha International Bhd1	5,967,700		909,710
Multi-Purpose Holdings Bhd1	4,601,600		1,134,541
Sime Darby Bhd	9,562,700		15,337,841
			17,382,092
INSURANCE – 0.63%
Kurnia Asia Bhd1	4,817,300		1,494,231
MAA Holdings Bhd	790,900		964,512
			2,458,743
LODGING – 4.04%
Genting Bhd	3,091,700		15,655,215
			15,655,215
MEDIA – 2.75%
Astro All Asia Networks PLC	3,882,600		5,661,267
Media Prima Bhd1	3,235,500		1,355,273
New Straits Times Press Bhd	934,700		758,267
Star Publications (Malaysia) Bhd	1,509,900		2,882,100
			10,656,907
METAL FABRICATE & HARDWARE – 0.05%
KrisAssets Holdings Bhd1,2	282,362		192,878
			192,878
OIL & GAS – 1.37%
Petronas Dagangan Bhd	2,013,200		1,996,121
Shell Refining Co.	1,222,300		3,305,265
			5,301,386
OIL & GAS SERVICES – 0.41%
Scomi Group Bhd	4,385,900		1,569,715
			1,569,715
REAL ESTATE – 2.99%
Bandar Raya Developments Bhd	1,725,600		695,364
IGB Corp. Bhd	5,823,900		1,945,417
IOI Properties Bhd	647,150		1,363,956
Island & Peninsular Bhd	1,182,610		489,096
KLCC Property Holdings Bhd	3,738,800		2,091,428
MK Land Holdings Bhd	2,876,000		747,211
SP Setia Bhd	3,738,800		4,242,329
			11,574,801
RETAIL – 0.14%
Edaran Otomobil Nasional Bhd	575,200		530,672
			530,672
SEMICONDUCTORS – 0.66%
Malaysian Pacific Industries Bhd	647,100		1,801,312
Unisem (Malaysia) Bhd	1,941,300		756,551
			2,557,863
TELECOMMUNICATIONS – 9.29%
Maxis Communications Bhd	6,902,400		17,384,093
Telekom Malaysia Bhd	6,758,600		18,634,528
			36,018,621
TRANSPORTATION – 5.43%
Malaysia International Shipping Corp. Bhd	3,738,800		17,643,330
Malaysian Bulk Carriers Bhd	1,941,300		1,173,426
POS Malaysia & Services Holdings Bhd	2,444,600		2,242,396
			21,059,152
TOTAL COMMON STOCKS (Cost: $321,999,685)			387,057,630
SHORT-TERM INVESTMENTS – 0.10%
MONEY MARKET FUNDS – 0.10%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%3,4	401,056		401,056
			401,056
TOTAL SHORT-TERM INVESTMENTS (Cost: $401,056)			401,056
TOTAL INVESTMENTS IN SECURITIES – 99.97% (Cost: $322,400,741)			387,458,686
Other Assets, Less Liabilities – 0.03%			116,294
NET ASSETS – 100.00%		$	387,574,980

¹ Non-income earning security.

SCHEDULES OF INVESTMENTS 59

Schedule of Investments (Continued)

iSHARES^® MSCI MALAYSIA INDEX FUND

August 31, 2005

² Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

³ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁴ The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to the financial statements.

60 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2005

Security	Shares		Value
COMMON STOCKS – 99.92%
BEVERAGES – 8.80%
Coca-Cola Femsa SA de CV ADR1		105,600	$	2,851,200
Fomento Economico Mexicano SA de CV Class UBD		1,848,000		12,602,020
Grupo Modelo SA de CV Series C		2,183,450		7,023,713
				22,476,933
BUILDING MATERIALS – 13.72%
Cemex SA de CV Series CPO		7,392,000		35,059,356
				35,059,356
DIVERSIFIED FINANCIAL SERVICES – 4.06%
Grupo Financiero Banorte SA de CV Series O		1,267,200		10,372,475
				10,372,475
ENGINEERING & CONSTRUCTION – 1.53%
Grupo Aeroportuario del Sureste SA de CV ADR		105,600		3,917,760
				3,917,760
FOOD – 1.57%
Grupo Bimbo SA Series A		1,311,200		4,014,125
				4,014,125
FOREST PRODUCTS & PAPER – 2.97%
Kimberly-Clark de Mexico SA de CV Class A		2,323,200		7,602,184
				7,602,184
HOLDING COMPANIES - DIVERSIFIED – 5.79%
Alfa SA de CV Class A		1,056,000		6,382,686
Grupo Carso SA de CV Series A1		4,153,600		8,413,230
				14,795,916
HOME BUILDERS – 2.71%
Corporacion GEO SA de CV Series B2		1,381,600		3,820,740
Urbi Desarrollos Urbanos SA de CV2		510,400		3,100,071
				6,920,811
HOUSEWARES – 0.55%
Vitro SA de CV Series A		1,226,369		1,405,356
				1,405,356
MEDIA – 5.93%
Grupo Televisa SA Series CPO		3,854,400		12,053,021
TV Azteca SA de CV Series CPO2		5,376,800		3,103,148
				15,156,169
Security	Shares or Principal		Value
MINING – 2.89%
Grupo Mexico SA de CV Series B		3,432,000	$	6,021,554
Industrias Penoles SA de CV Series CP		352,000		1,366,393
				7,387,947
REAL ESTATE – 1.27%
Consorcio Ara SA de CV		976,846		3,257,960
				3,257,960
RETAIL – 7.65%
Controladora Comercial Mexicana SA de CV		1,812,800		2,508,277
Grupo Sanborns SA Series B12		884,443		1,554,238
Organizacion Soriana SA de CV Series B2		797,456		3,107,364
Wal-Mart de Mexico SA de CV Series V		2,860,000		12,368,997
				19,538,876
TELECOMMUNICATIONS – 40.48%
America Movil SA de CV Series L		55,017,600		60,095,991
America Telecom SA de CV Series A12		1,797,088		6,183,100
Carso Global Telecom SA de CV Class A12		2,687,779		4,487,089
Telefonos de Mexico SA de CV Series L		34,242,214		32,684,023
				103,450,203
TOTAL COMMON STOCKS (Cost: $220,599,061)				255,356,071
SHORT-TERM INVESTMENTS – 1.06%
CERTIFICATES OF DEPOSIT3 – 0.12%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	17,437		17,436
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		7,556		7,555
Credit Suisse First Boston
3.53%, 05/09/06		11,624		11,624

SCHEDULES OF INVESTMENTS 61

Schedule of Investments (Continued)

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2005

Security	Principal		Value
Danske Bank
3.50%, 10/17/05	$	11,624	$	11,624
Dexia Credit Local
3.61%, 08/30/06		5,812		5,811
First Tennessee Bank
3.52%, 09/15/05		19,762		19,762
Fortis Bank NY
3.83% – 3.84%, 01/25/06		17,437		17,436
HBOS Treasury Services PLC
3.39%, 12/14/05		6,975		6,975
HSBC Bank USA N.A.
3.72%, 08/03/06		5,812		5,814
Royal Bank of Scotland
3.61%, 06/27/06		5,812		5,812
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		18,018		18,015
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		41,267		41,268
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05		9,300		9,300
US Bank N.A.
3.54%, 09/19/05		29,061		29,061
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		52,310		52,309
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		45,917		45,917
				305,719
COMMERCIAL PAPER3 – 0.24%
Alpine Securitization Corp.
3.52%, 09/09/05		23,249		23,232
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		24,528		24,397
Aspen Funding Corp.
3.49%, 09/01/05		11,624		11,624
Barton Capital Corp.
3.51%, 09/07/05		13,183		13,175
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		19,180		19,156
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		5,917		5,859
Cantabric Finance LLC
3.73%, 10/31/05		4,469		4,441
Charta LLC
3.54%, 09/20/05		8,137		8,122
Chesham Finance LLC
3.54%, 09/15/05		3,487		3,483
Dorada Finance Inc.
3.76%, 01/26/06		1,162		1,145
Edison Asset Securitization LLC
3.12%, 09/06/05		8,718		8,715
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		14,990		14,978
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05		52,888		52,645
Gemini Securitization Corp.
3.49%, 09/06/05		18,649		18,640
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		37,779		37,706
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		8,718		8,704
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		18,018		17,825
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		13,368		13,368
HSBC PLC
3.88%, 02/03/06		3,487		3,429
Jupiter Securitization Corp.
3.51%, 09/21/05		6,590		6,577
Leafs LLC
3.61%, 01/20/06 – 02/21/064		12,205		12,205

62 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2005

Security	Principal		Value
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05	$	16,024	$	16,000
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		28,480		28,443
New Center Asset Trust
3.60%, 09/01/05		40,686		40,686
Park Avenue Receivables Corp.
3.50%, 09/19/05		6,557		6,545
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		15,740		15,716
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		11,624		11,411
Scaldis Capital LLC
3.52%, 09/07/05		23,249		23,235
Sedna Finance Inc.
3.92%, 02/21/06		2,906		2,851
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		34,176		34,166
Sydney Capital Corp.
3.49%, 09/01/05		7,182		7,182
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		24,411		24,366
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05		24,907		24,899
Thunder Bay Funding Inc.
3.50%, 09/01/05		1,943		1,943
Tulip Funding Corp.
3.49%, 09/01/05		42,891		42,891
Windmill Funding Corp.
3.52%, 09/09/05		5,347		5,343
World Savings Bank
3.51%, 09/09/05		4,069		4,069
Yorktown Capital LLC
3.53%, 09/19/05		16,855		16,826
				615,998
Security	Shares or Principal		Value
MEDIUM-TERM NOTES3 – 0.01%
Dorada Finance Inc.
3.93%, 07/07/064	$	3,604	$	3,603
K2 USA LLC
3.94%, 07/07/064		6,975		6,974
				10,577
MONEY MARKET FUNDS – 0.03%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3, 5, 6		46,498		46,498
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%5, 6		17,275		17,275
BlackRock Temp Cash Money Market Fund
3.41%3, 6		1,232		1,232
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares
3.50%3, 6		4,075		4,075
				69,080
REPURCHASE AGREEMENTS3 – 0.20%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $279,015 and an effective yield of 3.60%.7	$	278,988		278,988
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $215,074 and an effective yield of 3.60%.7		215,053		215,053
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $25,344 and an effective yield of 3.60%.7		25,341		25,341
				519,382

SCHEDULES OF INVESTMENTS 63

Schedule of Investments (Continued)

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2005

Security	Principal		Value
TIME DEPOSITS3 – 0.04%
Abbey National Treasury Services PLC
3.50%, 09/01/05	$	23,249	$	23,249
Chase Bank USA N.A.
3.58%, 09/01/05		63,935		63,935
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		15,346		15,346
Natexis Banques Populaires
3.51%, 09/20/058		5,812		5,812
				108,342
VARIABLE & FLOATING RATE NOTES3 – 0.42%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/064		21,621		21,621
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06		31,386		31,386
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		19,180		19,181
American Express Credit Corp.
3.65%, 10/26/05		23,249		23,251
ASIF Global Financing XXII
3.99%, 05/30/064		11,624		11,639
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		7,556		7,556
Bank of America N.A.
3.56%, 08/10/06		58,122		58,122
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/064		59,750		59,749
BMW US Capital LLC
3.54%, 07/14/064		11,624		11,624
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		39,523		39,521
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/064		31,270		31,269
Commodore CDO Ltd.
3.47%, 12/12/054		2,906		2,906
Credit Suisse First Boston
3.57%, 07/19/06		29,061		29,061
DEPFA Bank PLC
3.42%, 03/15/06		11,624		11,624
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/064		18,483		18,484
Eli Lilly Services Inc.
3.53%, 09/01/064		11,624		11,624
Fifth Third Bancorp
3.58%, 04/21/064		23,249		23,249
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/064		8,137		8,138
General Electric Capital Corp.
3.66%, 07/07/06		5,231		5,236
Hartford Life Global Funding Trust
3.56%, 08/15/06		11,624		11,624
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/064		34,873		34,872
HSBC Bank USA N.A.
3.70%, 05/04/06		4,069		4,071
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/064		45,335		45,336
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/064		45,335		45,340
Lothian Mortgages PLC
3.63%, 01/24/06		11,624		11,624
Marshall & Ilsley Bank
3.71%, 02/20/06		11,624		11,631
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/064		23,249		23,259
National City Bank (Ohio)
3.50%, 01/06/06		5,812		5,812

64 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI MEXICO INDEX FUND

August 31, 2005

Security	Principal		Value
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/064	$	43,011	$	43,014
Nordea Bank AB
3.55%, 08/11/064		20,343		20,343
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/064		37,198		37,199
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/064		44,754		44,754
Principal Life Income Funding Trusts
3.74%, 05/10/06		8,718		8,719
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		38,797		38,788
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/064		6,393		6,393
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/064		66,376		66,376
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		11,624		11,624
Strips III LLC
3.69%, 07/24/064,8		3,415		3,415
SunTrust Bank
3.63%, 04/28/06		17,437		17,437
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/064		28,247		28,246
Toyota Motor Credit Corp.
3.57%, 04/10/06		5,231		5,231
Unicredito Italiano SpA
3.34%, 06/14/06		15,112		15,108
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		27,984		27,984
Wells Fargo & Co.
3.56%, 09/15/064		5,812		5,813
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/064		46,498		46,496
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/064		24,528		24,527
Winston Funding Ltd.
3.71%, 10/23/054		8,300		8,300
				1,078,577
TOTAL SHORT-TERM INVESTMENTS (Cost: $2,707,675)				2,707,675
TOTAL INVESTMENTS IN SECURITIES – 100.98% (Cost: $223,306,736)				258,063,746
Other Assets, Less Liabilities – (0.98)%				(2,506,297	)
NET ASSETS – 100.00%			$	255,557,449

ADR – American Depositary Receipts

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 65

Schedule of Investments

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.20%
AUSTRALIA – 64.67%
Alinta Ltd.1	457,704	$	3,781,848
Alumina Ltd.1	2,456,844		10,980,477
Amcor Ltd.	333,216		1,651,948
AMP Ltd.	3,685,968		20,405,429
Ansell Ltd.1	308,256		2,470,601
APN News & Media Ltd.1	627,432		2,398,894
Aristocrat Leisure Ltd.1	619,008		5,826,047
Australia & New Zealand Banking Group Ltd.	3,579,108		59,575,985
Australian Gas Light Co. Ltd.	899,340		9,585,902
Australian Stock Exchange Ltd.1	202,644		4,041,336
AXA Asia Pacific Holdings Ltd.1	1,722,240		6,377,747
Babcock & Brown Ltd.1	296,712		4,134,335
BHP Billiton Ltd.1	7,019,688		107,882,279
BHP Steel Ltd.1	1,445,028		10,116,234
Billabong International Ltd.	250,692		2,438,579
Boral Ltd.1	1,282,944		6,996,341
Brambles Industries Ltd.1	1,935,648		12,911,183
Caltex Australia Ltd.	257,712		3,348,940
Centro Properties Group	1,521,156		6,798,567
Challenger Financial Services Group Ltd.2	802,776		2,158,759
Coca-Cola Amatil Ltd.	1,045,044		6,782,269
Cochlear Ltd.	104,988		3,312,193
Coles Myer Ltd.1	2,269,332		16,858,580
Commonwealth Bank of Australia	2,505,672		70,391,868
Commonwealth Property Office Fund	3,463,044		3,303,607
Computershare Ltd.1	805,116		4,039,816
CSL Ltd.	388,440		9,999,188
CSR Ltd.	1,921,764		3,868,668
DB RREEF Trust	5,158,296		5,288,903
DCA Group Ltd.1	845,208		2,488,722
Downer EDI Ltd.	561,132		2,550,040
Foster’s Group Ltd.	3,884,556		16,777,834
Futuris Corp. Ltd.	1,100,736		1,653,636
Gandel Retail Trust	3,305,016		4,394,136
GPT Group	3,711,240		10,899,899
Harvey Norman Holdings Ltd.1	804,905		1,602,202
Iluka Resources Ltd.	473,148		3,020,944
ING Industrial Fund1	1,629,264		2,741,360
Insurance Australia Group Ltd.	3,177,564		12,912,735
Investa Property Group1	3,450,252		5,338,813
James Hardie Industries NV	916,968		5,937,288
John Fairfax Holdings Ltd.	1,914,432		6,255,411
Leighton Holdings Ltd.1	262,236		2,933,011
Lend Lease Corp Ltd.	709,020		7,019,409
Lion Nathan Ltd.1	609,804		3,682,756
Macquarie Airports	100,152		239,981
Macquarie Bank Ltd.	435,084		20,628,458
Macquarie Communications Infrastructure Group1	629,304		2,973,294
Macquarie Goodman Group	2,231,112		7,156,092
Macquarie Infrastructure Group	4,213,404		12,311,455
Mayne Group Ltd.	1,272,336		4,778,576
Mirvac Group	1,868,568		5,361,656
Multiplex Group	1,443,624		3,643,511
National Australia Bank Ltd.	3,061,968		72,012,914
Newcrest Mining Ltd.	652,704		8,329,834
OneSteel Ltd.1	1,311,804		3,153,157
Orica Ltd.1	560,664		8,010,135
Origin Energy Ltd.1	1,585,272		8,633,134
Pacific Brands Ltd.1	1,218,828		2,526,843
PaperlinX Ltd.1	1,388,712		3,390,176
Patrick Corp. Ltd.1	1,409,772		7,455,010
Perpetual Trustees Australia Ltd.	75,816		3,481,304
Publishing & Broadcasting Ltd.	260,988		3,160,183
Qantas Airways Ltd.	58,656		141,431
QBE Insurance Group Ltd.1	1,521,000		19,536,735
Rinker Group Ltd.1	1,818,960		19,633,901
Rio Tinto Ltd.1	575,796		21,759,536
Santos Ltd.	1,137,552		9,894,788
SFE Corp. Ltd.1	251,784		2,190,097
Sonic Healthcare Ltd.	482,820		5,548,855
Stockland Trust Group	2,638,896		11,695,020
Suncorp-Metway Ltd.	1,047,228		15,496,519
TABCORP Holdings Ltd.	1,079,988		13,385,344
Telstra Corp. Ltd.1	4,254,120		14,954,857
Toll Holdings Ltd.1	496,392		5,249,937
Transurban Group1	1,531,140		8,223,328

66 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
UNiTAB Ltd.	221,988	$	2,204,386
Wesfarmers Ltd.1	739,284		21,879,339
Westfield Group1	2,825,160		36,967,312
Westpac Banking Corp. Ltd.	3,529,188		52,329,744
Woodside Petroleum Ltd.1	909,324		22,499,296
Woolworths Ltd.1	2,090,244		25,513,910
			984,284,767
HONG KONG – 21.55%
ASM Pacific Technology Ltd.1	468,000		2,291,181
Bank of East Asia Ltd.	2,839,200		8,292,408
BOC Hong Kong Holdings Ltd.1	7,254,000		14,606,653
Cathay Pacific Airways Ltd.1	2,496,000		4,624,512
Cheung Kong Holdings Ltd.	2,964,000		32,148,787
Cheung Kong Infrastructure Holdings Ltd.	936,000		2,944,514
CLP Holdings Ltd.	3,510,000		20,458,046
Esprit Holdings Ltd.1	1,872,000		13,789,235
Giordano International Ltd.1	2,808,000		1,878,708
Hang Lung Properties Ltd.	3,588,736		5,587,090
Hang Seng Bank Ltd.	1,482,000		20,021,487
Henderson Land Development Co. Ltd.	1,404,000		6,990,961
Hong Kong & China Gas Co. Ltd.	7,020,836		14,091,988
Hong Kong Exchanges & Clearing Ltd.1	2,184,000		6,715,979
Hongkong Electric Holdings Ltd.	2,730,000		13,189,594
Hopewell Holdings Ltd.	1,248,000		3,203,438
Hutchinson Telecommunications International Ltd.2	2,808,000		3,359,997
Hutchison Whampoa Ltd.	4,212,000		41,566,414
Hysan Development Co. Ltd.	1,248,000		3,115,122
Johnson Electric Holdings Ltd.	546,000		502,293
Kerry Properties Ltd.1	936,000		2,541,073
Kingboard Chemical Holdings Co. Ltd.	1,248,000		2,930,463
Li & Fung Ltd.	3,432,000		6,954,832
MTR Corp. Ltd.	2,652,000		5,374,189
New World Development Co. Ltd.	4,368,941		5,565,064
Noble Group Ltd.1	1,872,000		1,599,858
Orient Overseas International Ltd.1	468,200		1,864,451
PCCW Ltd.1	7,332,845		4,811,733
SCMP Group Ltd.1	1,872,000		758,709
Shangri-La Asia Ltd.1	2,184,000		3,793,545
Sino Land Co. Ltd.1	2,808,000		3,125,158
SmarTone Telecommunications Holdings Ltd.	624,000		726,594
Solomon Systech International Ltd.	8,112,000		2,426,664
Sun Hung Kai Properties Ltd.	2,652,000		26,836,821
Swire Pacific Ltd. Class A	1,794,000		17,046,364
Techtronic Industries Co. Ltd.1	1,872,000		4,720,856
Television Broadcasts Ltd.	624,000		3,456,341
Texwinca Holdings Ltd.	624,000		425,519
Wharf Holdings Ltd. (The)	2,340,000		8,595,691
Wing Hang Bank Ltd.	312,000		2,294,191
Yue Yuen Industrial Holdings Ltd.1	936,000		2,830,105
			328,056,628
NEW ZEALAND – 2.73%
Auckland International Airport Ltd.	2,030,496		2,924,304
Carter Holt Harvey Ltd.1	1,874,028		3,295,846
Contact Energy Ltd.1	561,132		2,878,991
Fisher & Paykel Appliances Holdings Ltd.1	391,618		930,066
Fisher & Paykel Healthcare Corp. Ltd.1	950,196		2,315,863
Fletcher Building Ltd.1	914,472		4,634,881
Kiwi Income Property Trust	1,424,436		1,144,084
NGC Holdings Ltd.	321,204		962,999
Sky City Entertainment Group Ltd.1	807,144		2,699,325
Sky Network Television Ltd. New2	381,576		1,574,651
Telecom Corp. of New Zealand Ltd.1	3,780,972		15,917,106
Tower Ltd.1, 2	612,144		898,559
Vector Ltd.2	123,412		279,423
Warehouse Group Ltd. (The)	77,296		202,305
Waste Management NZ Ltd.	202,956		892,345
			41,550,748
SINGAPORE – 10.25%
Allgreen Properties Ltd.	936,000		699,938
Ascendas Real Estate Investment Trust1	1,716,000		2,281,278
Capitaland Ltd.1	2,028,000		3,514,502
CapitaMall Trust Management Ltd.	1,248,000		1,785,026
Chartered Semiconductor Manufacturing Ltd.1, 2	2,496,000		1,629,485

SCHEDULES OF INVESTMENTS 67

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
City Developments Ltd.		936,000	$	4,721,802
ComfortDelGro Corp. Ltd.		3,432,000		2,933,072
COSCO Corp. Singapore Ltd.1		780,000		1,087,866
Creative Technology Ltd.1		195,000		1,608,653
Datacraft Asia Ltd.2		624,000		592,800
DBS Group Holdings Ltd.		2,184,000		20,220,422
Fraser & Neave Ltd.		312,830		3,100,544
Haw Par Corp. Ltd.		312,397		936,292
Jardine Cycle & Carriage Ltd.		156,000		1,036,945
Keppel Corp. Ltd.1		1,092,000		7,517,849
Keppel Land Ltd.1		780,000		1,592,451
Neptune Orient Lines Ltd.		1,092,000		2,099,813
Olam International Ltd.2		1,248,000		799,929
Oversea-Chinese Banking Corp.		4,849,600		17,988,664
Overseas Union Enterprise Ltd.		156,000		874,922
Parkway Holdings Ltd.		1,404,000		1,666,518
SembCorp Industries Ltd.		1,803,240		3,007,273
SembCorp Marine Ltd.		1,092,000		1,814,653
Singapore Airlines Ltd.1		1,404,000		9,832,458
Singapore Exchange Ltd.		1,404,000		1,941,494
Singapore Land Ltd.1		312,000		990,653
Singapore Petroleum Co. Ltd.		156,000		504,585
Singapore Post Ltd.		3,120,000		1,888,721
Singapore Press Holdings Ltd.		3,120,517		8,371,012
Singapore Technologies Engineering Ltd.		2,496,000		3,851,509
Singapore Telecommunications Ltd.1		13,416,871		20,543,949
SMRT Corp. Ltd.		1,248,000		799,929
STATS ChipPAC Ltd.1,2		3,276,000		2,022,042
United Overseas Bank Ltd.		2,340,000		19,720,467
United Overseas Land Ltd.1		1,008,000		1,393,893
Wing Tai Holdings Ltd.		936,333		683,515
				156,054,924
TOTAL COMMON STOCKS (Cost: $1,221,573,781)				1,509,947,067
SHORT-TERM INVESTMENTS – 21.16%
CERTIFICATES OF DEPOSIT3 – 2.40%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	2,082,106		2,082,106
Security	Principal		Value
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06	$	902,246	$	902,177
Credit Suisse First Boston
3.53%, 05/09/06		1,388,071		1,388,071
Danske Bank
3.50%, 10/17/05		1,388,071		1,388,018
Dexia Credit Local
3.61%, 08/30/06		694,035		693,897
First Tennessee Bank
3.52%, 09/15/05		2,359,720		2,359,720
Fortis Bank NY
3.83% – 3.84%, 01/25/06		2,082,106		2,082,120
HBOS Treasury Services PLC
3.39%, 12/14/05		832,842		832,842
HSBC Bank USA N.A.
3.72%, 08/03/06		694,035		694,262
Royal Bank of Scotland
3.61%, 06/27/06		694,035		693,950
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		2,151,509		2,151,128
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		4,927,650		4,927,749
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05		1,110,456		1,110,454
US Bank N.A.
3.54%, 09/19/05		3,470,176		3,470,176
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		6,246,317		6,246,317
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		5,482,879		5,482,876
				36,505,863
COMMERCIAL PAPER3 – 4.83%
Alpine Securitization Corp.
3.52%, 09/09/05		2,776,141		2,773,969
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		2,928,829		2,913,207

68 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Principal		Value
Aspen Funding Corp.
3.49%, 09/01/05	$	1,388,071	$	1,388,071
Barton Capital Corp.
3.51%, 09/07/05		1,574,141		1,573,220
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		2,290,316		2,287,495
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		706,514		699,631
Cantabric Finance LLC
3.73%, 10/31/05		533,671		530,354
Charta LLC
3.54%, 09/20/05		971,649		969,834
Chesham Finance LLC
3.54%, 09/15/05		416,421		415,848
Dorada Finance Inc.
3.76%, 01/26/06		138,807		136,676
Edison Asset Securitization LLC
3.12%, 09/06/05		1,041,053		1,040,602
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		1,789,986		1,788,470
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05		6,315,277		6,286,463
Gemini Securitization Corp.
3.49%, 09/06/05		2,226,882		2,225,802
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		4,511,229		4,502,506
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		1,041,053		1,039,311
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		2,151,509		2,128,473
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		1,596,281		1,596,281
HSBC PLC
3.88%, 02/03/06		416,421		409,465
Jupiter Securitization Corp.
3.51%, 09/21/05		786,856		785,321
Leafs LLC
3.61%, 01/20/06 – 02/21/064		1,457,345		1,457,345
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		1,913,358		1,910,501
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		3,400,773		3,396,328
New Center Asset Trust
3.60%, 09/01/05		4,858,247		4,858,247
Park Avenue Receivables Corp.
3.50%, 09/19/05		782,927		781,557
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		1,879,489		1,876,614
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		1,388,071		1,362,592
Scaldis Capital LLC
3.52%, 09/07/05		2,776,141		2,774,512
Sedna Finance Inc.
3.92%, 02/21/06		347,018		340,481
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		4,080,927		4,079,852
Sydney Capital Corp.
3.49%, 09/01/05		857,550		857,550
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		2,914,948		2,909,502
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05		2,974,163		2,973,148
Thunder Bay Funding Inc.
3.50%, 09/01/05		232,016		232,016
Tulip Funding Corp.
3.49%, 09/01/05		5,121,578		5,121,578
Windmill Funding Corp.
3.52%, 09/09/05		638,512		638,013

SCHEDULES OF INVESTMENTS 69

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
World Savings Bank
3.51%, 09/09/05	$	485,825	$	485,824
Yorktown Capital LLC
3.53%, 09/19/05		2,012,702		2,009,150
				73,555,809
MEDIUM-TERM NOTES3 – 0.08%
Dorada Finance Inc.
3.93%, 07/07/064		430,302		430,265
K2 USA LLC
3.94%, 07/07/064		832,842		832,807
				1,263,072
MONEY MARKET FUNDS – 0.46%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3, 5, 6		5,552,282		5,552,282
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%5, 6		815,709		815,709
BlackRock Temp Cash Money Market Fund
3.41%3, 6		147,076		147,076
Short Term Investments Co. – Prime Money Market Portfolio, Institutional Shares
3.50%3, 6		486,597		486,597
				7,001,664
REPURCHASE AGREEMENTS3 – 4.08%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $33,317,024 and an effective yield of 3.60%.7	$	33,313,693		33,313,693
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $25,681,873 and an effective yield of 3.60%.7		25,679,304		25,679,304

Security	Principal		Value
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $3,026,296 and an effective yield of 3.60%.7	$	3,025,994	$	3,025,994
				62,018,991
TIME DEPOSITS3 – 0.85%
Abbey National Treasury Services PLC
3.50%, 09/01/05		2,776,141		2,776,141
Chase Bank USA N.A.
3.58%, 09/01/05		7,634,388		7,634,388
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		1,832,493		1,832,493
Natexis Banques Populaires
3.51%, 09/20/058		694,035		694,035
				12,937,057
VARIABLE & FLOATING RATE NOTES3 – 8.46%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/064		2,581,811		2,581,826
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06		3,747,790		3,747,803
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		2,290,316		2,290,316
American Express Credit Corp.
3.65%, 10/26/05		2,776,141		2,776,350
ASIF Global Financing XXII
3.99%, 05/30/064		1,388,071		1,389,801
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		902,246		902,246
Bank of America N.A.
3.56%, 08/10/06		6,940,353		6,940,353
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/064		7,134,682		7,134,586
BMW US Capital LLC
3.54%, 07/14/064		1,388,071		1,388,071

70 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Principal		Value
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05	$	4,719,440	$	4,719,242
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/064		3,733,910		3,733,752
Commodore CDO Ltd.
3.47%, 12/12/054		347,018		347,018
Credit Suisse First Boston
3.57%, 07/19/06		3,470,176		3,470,176
DEPFA Bank PLC
3.42%, 03/15/06		1,388,071		1,388,071
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/064		2,207,032		2,207,146
Eli Lilly Services Inc.
3.53%, 09/01/064		1,388,071		1,388,071
Fifth Third Bancorp
3.58%, 04/21/064		2,776,141		2,776,141
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/064		971,649		971,671
General Electric Capital Corp.
3.66%, 07/07/06		624,632		625,195
Hartford Life Global Funding Trust
3.56%, 08/15/06		1,388,071		1,388,071
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/064		4,164,212		4,164,213
HSBC Bank USA N.A.
3.70%, 05/04/06		485,825		486,090
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/064		5,413,475		5,413,521
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/064		5,413,475		5,414,057
Lothian Mortgages PLC
3.63%, 01/24/06		1,388,071		1,388,071
Marshall & Ilsley Bank
3.71%, 02/20/06		1,388,071		1,388,857
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/064	$	2,776,141	$	2,777,361
National City Bank (Ohio)
3.50%, 01/06/06		694,035		693,962
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/064		5,135,861		5,136,359
Nordea Bank AB
3.55%, 08/11/064		2,429,123		2,429,123
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/064		4,441,826		4,441,904
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/064		5,344,072		5,344,071
Principal Life Income Funding Trusts
3.74%, 05/10/06		1,041,053		1,041,092
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		4,632,685		4,631,627
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/064		763,439		763,377
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/064		7,925,883		7,925,921
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		1,388,071		1,388,071
Strips III LLC
3.69%, 07/24/064,8		407,745		407,745
SunTrust Bank
3.63%, 04/28/06		2,082,106		2,082,106
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/064		3,373,011		3,372,805
Toyota Motor Credit Corp.
3.57%, 04/10/06		624,632		624,626
Unicredito Italiano SpA
3.34%, 06/14/06		1,804,492		1,803,990
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		3,341,565		3,341,565

SCHEDULES OF INVESTMENTS 71

Schedule of Investments (Continued)

iSHARES^® MSCI PACIFIC EX-JAPAN INDEX FUND

August 31, 2005

Security	Principal		Value
Wells Fargo & Co.
3.56%, 09/15/064	$	694,035	$	694,104
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/064		5,552,282		5,552,043
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/064		2,928,829		2,928,755
Winston Funding Ltd.
3.71%, 10/23/054		991,082		991,082
				128,792,404
TOTAL SHORT-TERM INVESTMENTS (Cost: $322,074,860)				322,074,860
TOTAL INVESTMENTS IN SECURITIES – 120.36% (Cost: $1,543,648,641)				1,832,021,927
Other Assets, Less Liabilities – (20.36)%				(309,914,450	)
NET ASSETS – 100.00%			$	1,522,107,477

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

72 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.04%
AIRLINES – 3.91%
Singapore Airlines Ltd.	1,907,000	$	13,355,055
			13,355,055
BANKS – 34.35%
DBS Group Holdings Ltd.	4,390,000		40,644,530
Oversea-Chinese Banking Corp.	9,658,000		35,824,505
United Overseas Bank Ltd.	4,829,000		40,696,638
			117,165,673
BEVERAGES – 2.55%
Fraser & Neave Ltd.	878,000		8,702,098
			8,702,098
COMPUTERS – 0.58%
Creative Technology Ltd.1	241,450		1,991,843
			1,991,843
DISTRIBUTION & WHOLESALE – 0.86%
Jardine Cycle & Carriage Ltd.1	439,000		2,918,069
			2,918,069
DIVERSIFIED FINANCIAL SERVICES – 1.78%
Singapore Exchange Ltd.	4,390,000		6,070,625
			6,070,625
ELECTRONICS – 2.34%
Venture Corp. Ltd.	878,000		7,972,581
			7,972,581
ENGINEERING & CONSTRUCTION – 4.79%
SembCorp Industries Ltd.	4,103,000		6,842,595
Singapore Technologies Engineering Ltd.	6,146,000		9,483,723
			16,326,318
FOOD – 1.08%
Olam International Ltd.2	2,634,000		1,688,311
Want Want Holdings Ltd.	1,756,000		2,001,840
			3,690,151
HEALTH CARE - SERVICES – 0.92%
Parkway Holdings Ltd.	2,634,000		3,126,502
			3,126,502
HOLDING COMPANIES - DIVERSIFIED – 5.69%
Haw Par Corp. Ltd.	439,000		1,315,736
Keppel Corp. Ltd.1	2,195,000		15,111,428
Noble Group Ltd.1	3,512,000		3,001,442
			19,428,606
LODGING – 0.72%
Overseas Union Enterprise Ltd.	439,000		2,462,121
			2,462,121
MEDIA – 4.49%
Singapore Press Holdings Ltd.1	5,707,000		15,309,439
			15,309,439
OIL & GAS – 0.42%
Singapore Petroleum Co. Ltd.1	439,000		1,419,953
			1,419,953
REAL ESTATE – 9.43%
Allgreen Properties Ltd.	2,634,000		1,969,697
Capitaland Ltd.1	4,837,000		8,382,468
City Developments Ltd.	2,195,000		11,073,029
Keppel Land Ltd.	1,756,000		3,585,056
Singapore Land Ltd.1	878,000		2,787,798
United Overseas Land Ltd.1	2,233,000		3,087,860
Wing Tai Holdings Ltd.	1,756,000		1,281,866
			32,167,774
REAL ESTATE INVESTMENT TRUSTS – 3.41%
Ascendas Real Estate Investment Trust	3,512,000		4,668,910
CapitaMall Trust Management Ltd.1	3,073,000		4,395,341
Suntec1	3,762,000		2,567,613
			11,631,864
SEMICONDUCTORS – 1.79%
Chartered Semiconductor Manufacturing Ltd.1, 2	4,390,000		2,865,960
STATS ChipPAC Ltd.1, 2	5,268,000		3,251,562
			6,117,522
SHIPBUILDING – 1.28%
SembCorp Marine Ltd.	2,634,000		4,377,103
			4,377,103
TELECOMMUNICATIONS – 12.78%
Datacraft Asia Ltd.1, 2	1,317,000		1,251,150
Singapore Telecommunications Ltd.	27,657,650		42,349,469
			43,600,619

SCHEDULES OF INVESTMENTS 73

Schedule of Investments (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
TRANSPORTATION – 5.87%
ComfortDelGro Corp. Ltd.		7,902,000	$	6,753,245
COSCO Corp. Singapore Ltd.1		1,317,000		1,836,820
Neptune Orient Lines Ltd.		2,195,000		4,220,778
SembCorp Logistics Ltd.		1,317,660		1,259,048
Singapore Post Ltd.		6,146,000		3,720,538
SMRT Corp. Ltd.		3,512,000		2,251,082
				20,041,511
TOTAL COMMON STOCKS (Cost: $294,029,440)				337,875,427
SHORT-TERM INVESTMENTS – 12.98%
CERTIFICATES OF DEPOSIT3 – 1.47%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	286,624		286,623
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		124,204		124,194
Credit Suisse First Boston
3.53%, 05/09/06		191,082		191,082
Danske Bank
3.50%, 10/17/05		191,082		191,075
Dexia Credit Local
3.61%, 08/30/06		95,541		95,522
First Tennessee Bank
3.52%, 09/15/05		324,840		324,840
Fortis Bank NY
3.83% – 3.84%, 01/25/06		286,624		286,625
HBOS Treasury Services PLC
3.39%, 12/14/05		114,649		114,649
HSBC Bank USA N.A.
3.72%, 08/03/06		95,541		95,572
Royal Bank of Scotland
3.61%, 06/27/06		95,541		95,530
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		296,178		296,126
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06		678,343		678,356
Security	Principal		Value
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05	$	152,866	$	152,866
US Bank N.A.
3.54%, 09/19/05		477,706		477,706
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		859,871		859,870
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		754,776		754,776
				5,025,412
COMMERCIAL PAPER3 – 2.97%
Alpine Securitization Corp.
3.52%, 09/09/05		382,165		381,866
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		403,184		401,033
Aspen Funding Corp.
3.49%, 09/01/05		191,082		191,082
Barton Capital Corp.
3.51%, 09/07/05		216,697		216,570
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		315,286		314,897
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		97,259		96,312
Cantabric Finance LLC
3.73%, 10/31/05		73,465		73,009
Charta LLC
3.54%, 09/20/05		133,758		133,508
Chesham Finance LLC
3.54%, 09/15/05		57,325		57,246
Dorada Finance Inc.
3.76%, 01/26/06		19,108		18,815
Edison Asset Securitization LLC
3.12%, 09/06/05		143,312		143,250
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05		246,410		246,201

74 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2005

Security	Principal		Value
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05	$	869,364	$	865,397
Gemini Securitization Corp.
3.49%, 09/06/05		306,554		306,405
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		621,018		619,817
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		143,312		143,072
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		296,178		293,006
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		219,745		219,745
HSBC PLC
3.88%, 02/03/06		57,325		56,367
Jupiter Securitization Corp.
3.51%, 09/21/05		108,319		108,108
Leafs LLC
3.61%, 01/20/06 – 02/21/064		200,619		200,618
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		263,394		263,001
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		468,152		467,540
New Center Asset Trust
3.60%, 09/01/05		668,789		668,789
Park Avenue Receivables Corp.
3.50%, 09/19/05		107,778		107,590
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		258,731		258,335
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		191,082		187,575
Scaldis Capital LLC
3.52%, 09/07/05		382,165		381,941
Security	Shares or Principal		Value
Sedna Finance Inc.
3.92%, 02/21/06	$	47,771	$	46,871
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		561,782		561,634
Sydney Capital Corp.
3.49%, 09/01/05		118,051		118,051
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		401,273		400,523
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05		409,425		409,285
Thunder Bay Funding Inc.
3.50%, 09/01/05		31,939		31,939
Tulip Funding Corp.
3.49%, 09/01/05		705,039		705,039
Windmill Funding Corp.
3.52%, 09/09/05		87,898		87,829
World Savings Bank
3.51%, 09/09/05		66,879		66,879
Yorktown Capital LLC
3.53%, 09/19/05		277,070		276,581
				10,125,726
MEDIUM-TERM NOTES3 – 0.05%
Dorada Finance Inc.
3.93%, 07/07/064		59,236		59,231
K2 USA LLC
3.94%, 07/07/064		114,649		114,645
				173,876
MONEY MARKET FUNDS – 0.27%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%3, 5, 6		764,330		764,330
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%5, 6		51,875		51,875

SCHEDULES OF INVESTMENTS 75

Schedule of Investments (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
BlackRock Temp Cash Money Market Fund
3.41%3, 6		20,247	$	20,247
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares
3.50%3, 6		66,985		66,985
				903,437
REPURCHASE AGREEMENTS3 – 2.50%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $4,586,438 and an effective yield of 3.60%.7	$	4,585,980		4,585,980
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $3,535,379 and an effective yield of 3.60%.7		3,535,026		3,535,026
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $416,601 and an effective yield of 3.60%.7		416,560		416,560
				8,537,566
TIME DEPOSITS3 – 0.52%
Abbey National Treasury Services PLC
3.50%, 09/01/05		382,165		382,165
Chase Bank USA N.A.
3.58%, 09/01/05		1,050,954		1,050,954
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		252,262		252,262
Natexis Banques Populaires
3.51%, 09/20/058		95,541		95,541
				1,780,922
VARIABLE & FLOATING RATE NOTES3 – 5.20%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/064		355,413		355,421
Security	Principal		Value
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06	$	515,923	$	515,925
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		315,286		315,286
American Express Credit Corp.
3.65%, 10/26/05		382,165		382,194
ASIF Global Financing XXII
3.99%, 05/30/064		191,082		191,321
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/064		124,204		124,204
Bank of America N.A.
3.56%, 08/10/06		955,412		955,412
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/064		982,164		982,151
BMW US Capital LLC
3.54%, 07/14/064		191,082		191,082
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		649,680		649,653
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/064		514,012		513,990
Commodore CDO Ltd.
3.47%, 12/12/054		47,771		47,771
Credit Suisse First Boston
3.57%, 07/19/06		477,706		477,706
DEPFA Bank PLC
3.42%, 03/15/06		191,082		191,082
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/064		303,821		303,837
Eli Lilly Services Inc.
3.53%, 09/01/064		191,082		191,082
Fifth Third Bancorp
3.58%, 04/21/064		382,165		382,165

76 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2005

Security	Principal		Value
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/064	$	133,758	$	133,760
General Electric Capital Corp.
3.66%, 07/07/06		85,987		86,065
Hartford Life Global Funding Trust
3.56%, 08/15/06		191,082		191,082
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/064		573,247		573,246
HSBC Bank USA N.A.
3.70%, 05/04/06		66,879		66,915
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/064		745,222		745,227
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/064		745,222		745,301
Lothian Mortgages PLC
3.63%, 01/24/06		191,082		191,082
Marshall & Ilsley Bank
3.71%, 02/20/06		191,082		191,191
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/064		382,165		382,333
National City Bank (Ohio)
3.50%, 01/06/06		95,541		95,531
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/064		707,005		707,073
Nordea Bank AB
3.55%, 08/11/064		334,394		334,394
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/064		611,464		611,475
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/064		735,667		735,668
Principal Life Income Funding Trusts
3.74%, 05/10/06		143,312		143,317
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		637,738		637,592
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/064		105,095		105,087
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/064		1,091,081		1,091,086
Skandinaviska Enskilda Bank NY
3.58%, 07/18/064		191,082		191,082
Strips III LLC
3.69%, 07/24/064, 8		56,130		56,130
SunTrust Bank
3.63%, 04/28/06		286,624		286,624
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/064		464,330		464,303
Toyota Motor Credit Corp.
3.57%, 04/10/06		85,987		85,986
Unicredito Italiano SpA
3.34%, 06/14/06		248,407		248,338
Wachovia Asset Securitization Inc.
3.63%, 09/25/054		460,001		460,001
Wells Fargo & Co.
3.56%, 09/15/064		95,541		95,551
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/064		764,330		764,297
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/064		403,184		403,174
Winston Funding Ltd.
3.71%, 10/23/054		136,433		136,433
				17,729,626
TOTAL SHORT-TERM INVESTMENTS (Cost: $44,276,565)				44,276,565
TOTAL INVESTMENTS IN SECURITIES – 112.02% (Cost: $338,306,005)				382,151,992
Other Assets, Less Liabilities – (12.02)%				(41,015,156	)
NET ASSETS – 100.00%			$	341,136,836

¹ All or a portion of this security represents a security on loan. See Note 5.

SCHEDULES OF INVESTMENTS 77

Schedule of Investments (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

August 31, 2005

² Non-income earning security.

³ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁴ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁵ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁶ The rate quoted is the annualized seven-day yield of the fund at period end.

⁷ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁸ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

78 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.84%
BANKS – 15.36%
FirstRand Ltd.	2,920,743	$	6,886,835
Nedbank Group Ltd.	210,086		2,864,305
Standard Bank Group Ltd.	1,282,346		13,825,243
			23,576,383
BUILDING MATERIALS – 0.42%
Pretoria Portland Cement Co. Ltd.	15,947		641,947
			641,947
DIVERSIFIED FINANCIAL SERVICES – 2.19%
African Bank Investments Ltd.	470,936		1,487,383
Alexander Forbes Ltd.1	373,737		797,171
Investec Ltd.	34,299		1,082,751
			3,367,305
ELECTRONICS – 0.85%
Reunert Ltd.	199,467		1,299,580
			1,299,580
ENGINEERING & CONSTRUCTION – 1.26%
Aveng Ltd.	408,850		821,328
Murray & Roberts Holdings Ltd.	452,288		1,121,880
			1,943,208
FOOD – 3.50%
Shoprite Holdings Ltd.	425,389		1,059,117
SPAR Group Ltd. (The)1	177,341		785,413
Tiger Brands Ltd.	175,528		3,530,219
			5,374,749
FOREST PRODUCTS & PAPER – 0.15%
Sappi Ltd.	21,418		226,427
			226,427
HEALTH CARE - PRODUCTS – 0.65%
Aspen Pharmacare Holdings Ltd.	213,255		991,776
			991,776
HEALTH CARE - SERVICES – 0.77%
Network Healthcare Holdings Ltd.1	1,251,821		1,188,438
			1,188,438
HOLDING COMPANIES - DIVERSIFIED – 7.99%
Anglovaal Industries Ltd.	362,563		821,143
Barloworld Ltd.	232,841		3,667,939
Bidvest Group Ltd.	267,029		3,620,367
Imperial Holdings Ltd.1	191,956		3,586,669
Tongaat-Hulett Group Ltd.	56,314		566,949
			12,263,067
HOME FURNISHINGS – 1.47%
Steinhoff International Holdings Ltd.	884,115		2,262,952
			2,262,952
INSURANCE – 12.28%
Liberty Group Ltd.	156,954		1,570,416
New Africa Capital Ltd.	635,623		1,148,704
Old Mutual PLC	4,114,918		10,391,981
Sanlam Ltd.	2,786,803		5,736,671
			18,847,772
IRON & STEEL – 0.68%
Mittal Steel South Africa Ltd.	140,009		1,045,767
			1,045,767
MEDIA – 3.28%
Naspers Ltd.	312,502		5,041,606
			5,041,606
MINING – 14.92%
Anglo Platinum Ltd.	75,776		3,649,858
AngloGold Ashanti Ltd.	144,818		5,088,309
Gold Fields Ltd.	408,924		4,675,121
Harmony Gold Mining Co. Ltd.1	182,447		1,338,692
Impala Platinum Holdings Ltd.	69,967		7,272,057
Kumba Resources Ltd.	70,115		881,006
			22,905,043
OIL & GAS – 13.01%
Sasol Ltd.	598,808		19,971,413
			19,971,413
PACKAGING & CONTAINERS – 1.58%
Consol Ltd.1	333,555		631,262
Nampak Ltd.	751,063		1,794,237
			2,425,499
REAL ESTATE – 0.56%
Allan Gray Property Trust	1,135,012		857,457
			857,457
RETAIL – 8.11%
Edgars Consolidated Stores Ltd.	503,570		2,484,104
Ellerine Holdings Ltd.	114,737		1,085,716

SCHEDULES OF INVESTMENTS 79

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH AFRICA INDEX FUND

August 31, 2005

Security	Shares	Value
Foschini Ltd.	212,380	$	1,551,734
JD Group Ltd.	173,530		1,991,999
Massmart Holdings Ltd.	200,688		1,486,543
Pick’n Pay Stores Ltd.	235,061		959,366
Truworths International Ltd.	479,187		1,412,347
Woolworths Holdings Ltd.	828,874		1,485,092
			12,456,901
TELECOMMUNICATIONS – 9.87%
MTN Group Ltd.	1,389,387		10,000,552
Telkom South Africa Ltd.	260,332		5,148,971
			15,149,523
TRANSPORTATION – 0.94%
Grindrod Ltd.	70,189		599,934
Super Group Ltd.	453,805		844,760
			1,444,694
TOTAL COMMON STOCKS (Cost: $101,282,645)			153,281,507
SHORT-TERM INVESTMENTS – 0.00%
MONEY MARKET FUNDS – 0.00%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%2, 3	5,136		5,136
			5,136
TOTAL SHORT-TERM INVESTMENTS (Cost: $5,136)
			5,136
TOTAL INVESTMENTS IN SECURITIES – 99.84% (Cost: $101,287,781)			153,286,643
Other Assets, Less Liabilities – 0.16%			243,516
NET ASSETS – 100.00%		$	153,530,159

¹ Non-income earning security.

² The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

³ The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to the financial statements.

80 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 98.19%
ADVERTISING – 0.41%
Cheil Communications Inc.	16,080	$	2,874,464
			2,874,464
AEROSPACE & DEFENSE – 0.20%
Hanjin Heavy Industries & Construction Co. Ltd.1	84,420		1,415,789
			1,415,789
AGRICULTURE – 2.01%
KT&G Corp.	317,580		14,009,536
			14,009,536
AIRLINES – 0.29%
Korean Air Co. Ltd.	120,600		2,039,942
			2,039,942
AUTO MANUFACTURERS – 6.08%
Hyundai Motor Co. Ltd.	506,520		34,417,073
Kia Motors Corp.	546,720		8,039,227
			42,456,300
AUTO PARTS & EQUIPMENT – 2.38%
Hankook Tire Co. Ltd.	337,680		4,008,023
Hyundai Mobis Co.	176,886		12,597,071
			16,605,094
BANKS – 9.70%
Daegu Bank	287,640		2,999,418
Hana Bank	373,863		11,228,466
Kookmin Bank	980,889		48,926,611
Korea Exchange Bank1, 2	337,680		3,521,219
Pusan Bank	112,560		1,078,542
			67,754,256
BEVERAGES – 0.35%
Hite Brewery Co. Ltd.	24,120		2,434,022
			2,434,022
CHEMICALS – 2.36%
Hanwha Chemical Corp.1	136,680		1,582,887
Honam Petrochemical Corp.1	44,220		2,294,935
KCC Corp.	20,100		4,307,833
LG Chem Ltd.	140,700		5,719,952
LG Petrochemical Co. Ltd.	84,420		2,089,202
Samsung Fine Chemicals Co. Ltd.	20,100		459,760
			16,454,569
COMMERCIAL SERVICES – 0.73%
S1 Corp.	116,580		5,137,139
			5,137,139
COMPUTERS – 0.00%
Trigem Computer Inc.2, 3	7		—
			—
COSMETICS & PERSONAL CARE – 0.62%
Amorepacific Corp.1	16,080		4,311,697
			4,311,697
DISTRIBUTION & WHOLESALE – 1.10%
Hyosung Corp.	5		58
LG International Corp.	108,540		1,350,882
Samsung Corp.	438,180		6,358,979
			7,709,919
DIVERSIFIED FINANCIAL SERVICES – 5.60%
Daewoo Securities Co. Ltd.1, 2	253,260		2,604,404
Daishin Securities Co. Ltd.	104,520		1,401,301
Hyundai Securities Co. Ltd.1, 2	381,900		3,461,141
Korea Investment Holdings Co. Ltd.	92,465		2,003,927
Samsung Securities Co.1	168,840		5,143,900
Shinhan Financial Group Ltd.	723,600		21,141,221
Woori Investment & Securities Co.	325,620		3,332,872
			39,088,766
ELECTRIC – 3.51%
Korea Electric Power Corp.	783,900		24,485,103
			24,485,103
ELECTRICAL COMPONENTS & EQUIPMENT – 26.41%
LG Electronics Inc.1	337,686		20,218,969
LS Cable Ltd.	60,300		1,466,209
Samsung Electronics Co. Ltd.	311,400		162,807,881
			184,493,059
ELECTRONICS – 5.47%
Daeduck Electronics Co. Ltd.1	438,181		3,962,790
LG.Philips LCD Co. Ltd.2	277,380		12,636,052
Samsung Electro-Mechanics Co. Ltd.1	369,840		8,815,024
Samsung SDI Co. Ltd.	136,680		12,781,320
			38,195,186

SCHEDULES OF INVESTMENTS 81

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

Security	Shares	Value
ENGINEERING & CONSTRUCTION – 2.08%
Daelim Industrial Co. Ltd.	80,400	$	4,752,138
Daewoo Engineering & Construction Co. Ltd.1	373,860		3,014,594
GS Engineering & Construction Corp.	92,460		3,385,609
Hyundai Engineering & Construction Co. Inc.1, 2	112,560		3,375,177
			14,527,518
FOOD – 0.96%
Cheil Jedang Corp.	56,280		3,575,308
Nong Shim Co. Ltd.	12,062		3,164,753
			6,740,061
HOLDING COMPANIES – DIVERSIFIED – 0.00%
GS Holdings Corp.	2		44
LG Corp.	3		69
			113
HOME BUILDERS – 0.58%
Hyundai Development Co.	152,760		4,066,749
			4,066,749
HOUSEHOLD PRODUCTS & WARES – 0.27%
LG Household & Health Care Ltd.	36,180		1,867,243
			1,867,243
INSURANCE – 1.71%
Samsung Fire & Marine Insurance Co. Ltd.	124,620		11,917,049
			11,917,049
INTERNET – 1.48%
Daum Communications Corp.2	40,204		1,002,685
NCsoft Corp.2	48,244		3,305,908
NHN Corp.1, 2	44,222		6,018,102
			10,326,695
IRON & STEEL – 6.56%
Dongkuk Steel Mill Co. Ltd.	72,360		1,168,331
POSCO	217,080		44,646,920
			45,815,251
LODGING – 0.78%
Kangwon Land Inc.	349,742		5,462,093
			5,462,093
MACHINERY – DIVERSIFIED – 0.26%
Doosan Infracore Co. Ltd.1	209,040		1,802,104
			1,802,104
MANUFACTURING – 0.37%
Cheil Industries Inc.	128,640		2,621,017
			2,621,017
MINING – 0.04%
Poongsan Corp.	28,140		302,901
			302,901
OIL & GAS – 3.68%
SK Corp.	317,580		15,657,716
S-Oil Corp.1	136,680		10,062,170
			25,719,886
PHARMACEUTICALS – 0.28%
Dong-A Pharmaceutical Co. Ltd.	9		397
YuHan Corp.	16,088		1,932,725
			1,933,122
RETAIL – 2.73%
Hyundai Department Store Co. Ltd.1	52,260		3,415,358
Shinsegae Department Store Co. Ltd.	44,220		15,660,807
			19,076,165
SHIPBUILDING – 3.83%
Daewoo Shipbuilding & Marine
Engineering Co. Ltd.1	313,560		6,027,102
Hyundai Heavy Industries Co. Ltd.1	160,800		10,632,427
Hyundai Mipo Dockyard	40,200		2,797,194
Samsung Heavy Industries Co. Ltd.1	578,880		7,315,975
			26,772,698
TELECOMMUNICATIONS – 4.88%
KT Corp.	269,340		10,095,396
KT Corp. ADR	241,200		4,821,588
SK Telecom Co. Ltd.	100,380		18,233,369
SK Telecom Co. Ltd. ADR	44,622		937,062
			34,087,415
TRANSPORTATION – 0.48%
Hanjin Shipping Co. Ltd.	148,740		3,330,747
			3,330,747
TOTAL COMMON STOCKS (Cost: $470,291,758)			685,833,668

82 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
PREFERRED STOCKS – 1.70%
AUTO MANUFACTURERS – 0.72%
Hyundai Motor Co. Ltd.		112,560	$	5,030,312
				5,030,312
ELECTRICAL COMPONENTS & EQUIPMENT – 0.98%
LG Electronics Inc.		148,740		5,367,791
Samsung Electronics Co. Ltd.		4,020		1,433,369
				6,801,160
TOTAL PREFERRED STOCKS (Cost: $9,498,192)				11,831,472
SHORT-TERM INVESTMENTS – 6.53%
CERTIFICATES OF DEPOSIT4 – 0.72%
Banco Bilbao Vizcaya Argentaria SA
3.18% – 3.83%, 09/14/05 – 01/25/06	$	286,495		286,495
Bank of Nova Scotia
3.45% – 3.56%, 09/26/05 – 01/03/06		124,148		124,139
Credit Suisse First Boston
3.53%, 05/09/06		190,997		190,997
Danske Bank
3.50%, 10/17/05		190,997		190,990
Dexia Credit Local
3.61%, 08/30/06		95,498		95,479
First Tennessee Bank
3.52%, 09/15/05		324,695		324,695
Fortis Bank NY
3.83% – 3.84%, 01/25/06		286,495		286,497
HBOS Treasury Services PLC
3.39%, 12/14/05		114,598		114,598
HSBC Bank USA N.A.
3.72%, 08/03/06		95,498		95,530
Royal Bank of Scotland
3.61%, 06/27/06		95,498		95,487
Societe Generale
3.51% – 3.60%, 03/30/06 – 06/13/06		296,045		295,993
Security	Principal		Value
Toronto-Dominion Bank
2.66% – 3.94%, 09/14/05 – 07/10/06	$	678,039	$	678,052
UBS AG
2.67% – 3.40%, 11/09/05 – 12/15/05		152,797		152,797
US Bank N.A.
3.54%, 09/19/05		477,492		477,492
Washington Mutual Bank
3.50% – 3.55%, 09/15/05 – 09/19/05		859,486		859,485
Wells Fargo Bank N.A.
3.50%, 09/06/05 – 09/20/05		754,437		754,438
				5,023,164
COMMERCIAL PAPER4 – 1.45%
Alpine Securitization Corp.
3.52%, 09/09/05		381,994		381,695
Amstel Funding Corp.
3.49% – 3.91%, 09/15/05 – 02/15/06		403,003		400,853
Aspen Funding Corp.
3.49%, 09/01/05		190,997		190,997
Barton Capital Corp.
3.51%, 09/07/05		216,600		216,473
Blue Ridge Asset Funding Corp.
3.48% – 3.49%, 09/09/05 – 09/21/05		315,145		314,757
Bryant Park Funding LLC
3.51% – 3.92%, 09/06/05 – 02/22/06		97,215		96,268
Cantabric Finance LLC
3.73%, 10/31/05		73,433		72,976
Charta LLC
3.54%, 09/20/05		133,698		133,448
Chesham Finance LLC
3.54%, 09/15/05		57,299		57,220
Dorada Finance Inc.
3.76%, 01/26/06		19,100		18,806
Edison Asset Securitization LLC
3.12%, 09/06/05		143,248		143,186

SCHEDULES OF INVESTMENTs 83

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

Security	Principal		Value
Fairway Finance LLC
3.15% – 3.56%, 09/15/05 – 10/20/05	$	246,300	$	246,091
Ford Credit Floorplan Motown
3.47% – 3.72%, 09/09/05 – 11/08/05		868,974		865,009
Gemini Securitization Corp.
3.49%, 09/06/05		306,416		306,268
Georgetown Funding Co. LLC
3.49% – 3.53%, 09/20/05 – 09/21/05		620,740		619,540
Giro Funding Corp.
3.53% – 3.56%, 09/16/05 – 09/22/05		143,248		143,008
Grampian Funding LLC
3.13% – 3.84%, 09/09/05 – 01/31/06		296,045		292,875
Greenwich Capital Holdings Inc.
3.48% – 3.53%, 09/02/05 – 02/10/06		219,646		219,646
HSBC PLC
3.88%, 02/03/06		57,299		56,342
Jupiter Securitization Corp.
3.51%, 09/21/05		108,270		108,059
Leafs LLC
3.61%, 01/20/06 – 02/21/065		200,529		200,529
Lockhart Funding LLC
3.47% – 3.55%, 09/16/05 – 09/19/05		263,276		262,883
Mortgage Interest Networking Trust
3.47% – 3.51%, 09/01/05 – 09/21/05		467,942		467,330
New Center Asset Trust
3.60%, 09/01/05		668,489		668,489
Park Avenue Receivables Corp.
3.50%, 09/19/05		107,730		107,541
Park Granada LLC
3.48% – 3.51%, 09/15/05 – 09/20/05		258,615		258,220
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		190,997		187,491
Security	Shares or Principal		Value
Scaldis Capital LLC
3.52%, 09/07/05	$	381,994	$	381,769
Sedna Finance Inc.
3.92%, 02/21/06		47,749		46,850
Solitaire Funding Ltd.
3.49% – 3.52%, 09/02/05 – 09/06/05		561,531		561,382
Sydney Capital Corp.
3.49%, 09/01/05		117,998		117,998
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		401,093		400,344
Three Pillars Funding Corp.
3.49% – 3.52%, 09/01/05 – 09/07/05		409,241		409,101
Thunder Bay Funding Inc.
3.50%, 09/01/05		31,925		31,925
Tulip Funding Corp.
3.49%, 09/01/05		704,723		704,723
Windmill Funding Corp.
3.52%, 09/09/05		87,859		87,790
World Savings Bank
3.51%, 09/09/05		66,849		66,849
Yorktown Capital LLC
3.53%, 09/19/05		276,945		276,457
				10,121,188
MEDIUM-TERM NOTES4 – 0.03%
Dorada Finance Inc.
3.93%, 07/07/065		59,209		59,204
K2 USA LLC
3.94%, 07/07/065		114,598		114,593
				173,797
MONEY MARKET FUNDS – 0.32%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares
3.63%4, 6, 7		763,987		763,987
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%6,7		1,393,487		1,393,487

84 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
BlackRock Temp Cash Money Market Fund
3.41%4, 7		20,238	$	20,238
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares
3.50%4, 7		66,955		66,955
				2,244,667
REPURCHASE AGREEMENTS4 – 1.22%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $4,584,382 and an effective yield of 3.60%.8	$	4,583,923		4,583,923
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $3,533,794 and an effective yield of 3.60%.8		3,533,441		3,533,441
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $416,415 and an effective yield of 3.60%.8		416,373		416,373
				8,533,737
TIME DEPOSITS4 – 0.25%
Abbey National Treasury Services PLC
3.50%, 09/01/05		381,994		381,994
Chase Bank USA N.A.
3.58%, 09/01/05		1,050,482		1,050,482
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		252,149		252,149
Natexis Banques Populaires
3.51%, 09/20/059		95,498		95,498
				1,780,123
VARIABLE & FLOATING RATE NOTES4 – 2.54%
Allstate Life Global Funding II
3.58% – 3.66%, 07/08/06 – 07/27/065		355,254		355,256
Security	Principal		Value
American Express Bank
3.55% – 3.63%, 10/17/05 – 07/19/06	$	515,691	$	515,693
American Express Centurion Bank
3.55% – 3.63%, 06/29/06 – 07/19/06		315,145		315,145
American Express Credit Corp.
3.65%, 10/26/05		381,994		382,022
ASIF Global Financing XXII
3.99%, 05/30/065		190,997		191,235
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/065		124,148		124,148
Bank of America N.A.
3.56%, 08/10/06		954,984		954,984
Beta Finance Inc.
3.51% – 3.72%, 09/23/05 – 06/09/065		981,724		981,711
BMW US Capital LLC
3.54%, 07/14/065		190,997		190,997
Canadian Imperial Bank of Commerce
3.50% – 3.61%, 09/13/05 – 12/14/05		649,389		649,362
CC USA Inc.
3.52% – 3.59%, 03/23/06 – 07/14/065		513,781		513,760
Commodore CDO Ltd.
3.47%, 12/12/055		47,749		47,749
Credit Suisse First Boston
3.57%, 07/19/06		477,492		477,492
DEPFA Bank PLC
3.42%, 03/15/06		190,997		190,997
Dorada Finance Inc.
3.59% – 3.62%, 03/27/06 – 06/26/065		303,685		303,700
Eli Lilly Services Inc.
3.53%, 09/01/065		190,997		190,997
Fifth Third Bancorp
3.58%, 04/21/065		381,994		381,994

SCHEDULES OF INVESTMENTS 85

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

Security	Principal		Value
Five Finance Inc.
3.60% – 3.63%, 02/27/06 – 06/26/065	$	133,698	$	133,701
General Electric Capital Corp.
3.66%, 07/07/06		85,949		86,026
Hartford Life Global Funding Trust
3.56%, 08/15/06		190,997		190,997
HBOS Treasury Services PLC
3.51% – 3.57%, 01/10/06 – 04/24/065		572,990		572,991
HSBC Bank USA N.A.
3.70%, 05/04/06		66,849		66,885
K2 USA LLC
3.47% – 3.58%, 09/12/05 – 06/02/065		744,887		744,894
Links Finance LLC
3.52% – 3.71%, 11/16/05 – 03/15/065		744,887		744,967
Lothian Mortgages PLC
3.63%, 01/24/06		190,997		190,997
Marshall & Ilsley Bank
3.71%, 02/20/06		190,997		191,105
Metropolitan Life Global Funding I
3.55% – 4.01%, 08/28/06 – 09/06/065		381,994		382,161
National City Bank (Ohio)
3.50%, 01/06/06		95,498		95,488
Nationwide Building Society
3.51% – 3.62%, 01/13/06 – 07/07/065		706,688		706,756
Nordea Bank AB
3.55%, 08/11/065		334,244		334,244
Northern Rock PLC
3.54% – 3.61%, 10/25/05 – 08/03/065		611,190		611,201
Permanent Financing PLC
3.53% – 3.54%, 09/12/05 – 06/12/065		735,338		735,338
Principal Life Income Funding Trusts
3.74%, 05/10/06		143,248		143,253
Royal Bank of Scotland
3.47% – 3.61%, 04/05/06 – 08/30/06		637,452		637,306
Sedna Finance Inc.
3.54%, 01/10/06 – 01/17/065		105,048		105,040
Sigma Finance Inc.
3.50% – 3.72%, 09/15/05 – 08/15/065		1,090,592		1,090,597
Skandinaviska Enskilda Bank NY
3.58%, 07/18/065		190,997		190,997
Strips III LLC
3.69%, 07/24/065, 9		56,105		56,105
SunTrust Bank
3.63%, 04/28/06		286,495		286,495
Tango Finance Corp.
3.54% – 3.60%, 09/15/05 – 06/21/065		464,122		464,093
Toyota Motor Credit Corp.
3.57%, 04/10/06		85,949		85,948
Unicredito Italiano SpA
3.34%, 06/14/06		248,296		248,227
Wachovia Asset Securitization Inc.
3.63%, 09/25/055		459,795		459,795
Wells Fargo & Co.
3.56%, 09/15/065		95,498		95,508
WhistleJacket Capital LLC
3.52% – 3.62%, 09/15/05 – 07/28/065		763,987		763,953
White Pine Finance LLC
3.47% – 3.61%, 11/01/05 – 06/20/065		403,003		402,993
Winston Funding Ltd.
3.71%, 10/23/055		136,372		136,372
				17,721,675
TOTAL SHORT-TERM INVESTMENTS (Cost: $45,598,351)				45,598,351
TOTAL INVESTMENTS IN SECURITIES – 106.42% (Cost: $525,388,301)				743,263,491
Other Assets, Less Liabilities – (6.42)%				(44,808,206	)
NET ASSETS – 100.00%				$698,455,285

86 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI SOUTH KOREA INDEX FUND

August 31, 2005

ADR - American Depositary Receipts

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

⁴ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁵ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁶ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁷ The rate quoted is the annualized seven-day yield of the fund at period end.

⁸ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁹ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULES OF INVESTMENTS 87

Schedule of Investments

iSHARES^® MSCI TAIWAN INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.22%
AIRLINES – 0.40%
China Airlines	2,946,319	$	1,416,932
EVA Airways Corp.	3,941,557		1,588,658
			3,005,590
APPAREL – 0.48%
Pou Chen Corp.	5,725,243		3,627,444
			3,627,444
AUTO MANUFACTURERS – 0.52%
China Motor Co. Ltd.	1,314,423		1,206,058
Yulon Motor Co. Ltd.	2,664,447		2,676,651
			3,882,709
AUTO PARTS & EQUIPMENT– 0.20%
Cheng Shin Rubber Industry Co. Ltd.	1,491,102		1,504,761
			1,504,761
BANKS – 10.41%
Chang Hwa Commercial Bank Ltd.	13,010,446		6,773,377
Chinatrust Financial Holding Co. Ltd.	16,858,255		15,700,054
E.Sun Financial Holding Co. Ltd.	8,040,253		5,695,691
First Financial Holding Co. Ltd.	15,026,602		11,011,861
Hua Nan Financial Holdings Co. Ltd.	11,136,965		7,481,320
International Bank of Taipei	5,204,756		3,265,885
Mega Financial Holding Co. Ltd.1	29,923,136		19,826,933
Taishin Financial Holdings Co. Ltd.	13,420,439		8,605,472
			78,360,593
BUILDING MATERIALS – 1.02%
Asia Cement Corp.	4,217,649		2,324,536
Taiwan Cement Corp.1	5,204,513		3,226,004
Taiwan Glass Industrial Corp.	2,602,341		2,105,711
			7,656,251
CHEMICALS – 8.10%
Eternal Chemical Co. Ltd.	1,432,010		846,088
Formosa Chemicals & Fibre Co.	8,591,401		13,300,276
Formosa Plastic Co.	14,311,497		21,325,223
Nan Ya Plastic Corp.	16,913,085		20,631,382
Oriental Union Chemical Corp.	1,648,382		1,132,476
Taiwan Fertilizer Co. Ltd.	2,602,000		3,082,675
Taiwan Styrene Monomer Corp.	1,379,696		619,283
			60,937,403
COMMERCIAL SERVICES – 0.23%
Taiwan Secom Co. Ltd.	1,301,486		1,760,483
			1,760,483
COMPUTERS – 9.46%
Acer Inc.	6,898,533		13,059,818
Advantech Co. Ltd.	1,366,730		3,221,727
Benq Corp.	6,505,019		6,058,109
CMC Magnetics Corp.1	9,107,400		3,392,680
Compal Electronics Inc.	10,825,214		10,775,633
Foxconn Technology Co. Ltd.	1,301,100		4,926,302
High Tech Computer Corp.	390,000		4,275,115
Inventec Co. Ltd.	3,903,620		1,728,320
Lite-On Technology Corp.	6,636,011		6,858,900
Mitac International	2,706,407		3,181,578
Quanta Computer Inc.	6,505,381		10,349,018
Ritek Corp.1	7,806,389		2,633,911
Systex Corp.	2,678,887		720,641
			71,181,752
DIVERSIFIED FINANCIAL SERVICES – 3.73%
Fubon Financial Holding Co. Ltd.	13,010,000		11,758,656
Fuhwa Financial Holdings Co. Ltd.	6,834,803		2,546,095
Polaris Securities Co. Ltd.	4,146,317		1,683,848
SinoPac Holdings Co.	11,709,641		5,613,477
Waterland Financial Holdings	5,204,000		1,851,194
Yuanta Core Pacific Securities Co. Ltd.	7,959,644		4,581,352
			28,034,622
ELECTRICAL COMPONENTS & EQUIPMENT – 1.86%
Delta Electronics Inc.	3,903,414		6,328,894
Pacific Electric Wire & Cable Co. Ltd.1, 2	986		—
Phoenixtec Power Co. Ltd.	1,303,438		1,213,889
Tatung Co. Ltd.1	13,010,120		3,801,736
Walsin Lihwa Corp.	9,107,069		2,672,334
			14,016,853
ELECTRONICS – 17.87%
Asustek Computer Inc.	7,159,688		17,380,006
AU Optronics Corp.	16,913,716		24,944,503
Chi Mei Optoelectronics Corp.	10,398,428		13,002,004
Chunghwa Picture Tubes Ltd.	19,515,105		6,018,399

88 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI TAIWAN INDEX FUND

August 31, 2005

Security	Shares	Value
Compeq Manufacturing Co. Ltd.1	2,602,200	$	1,056,771
Elitegroup Computer Systems Co. Ltd.1	1,338,215		780,455
Gigabyte Technology Co. Ltd.	1,367,017		1,293,970
HannStar Display Corp.1	16,138,218		4,060,425
Hon Hai Precision Industry Co. Ltd.1	9,107,773		46,998,890
Micro-Star International Co. Ltd.	1,417,396		813,650
Optimax Technology Corp.	1,493,157		2,603,336
Quanta Display Inc.	9,602,541		3,225,281
Synnex Technology International Corp.	2,862,679		3,400,251
Wintek Corp.	2,602,359		3,758,522
Ya Hsin Industrial Co. Ltd.	2,862,270		2,735,544
Yageo Corp.1	7,806,100		2,443,131
			134,515,138
FOOD – 0.52%
Uni-President Enterprises Co.	10,408,637		3,893,307
			3,893,307
FOREST PRODUCTS & PAPER – 0.19%
Yuen Foong Yu Paper Manufacturing Co. Ltd.	4,119,322		1,446,480
			1,446,480
HAND & MACHINE TOOLS – 0.16%
Shihlin Electric & Engineering Corp.	1,301,080		1,160,047
			1,160,047
HOME FURNISHINGS – 0.43%
Nien Made Enterprise Co. Ltd.	1,301,733		1,510,408
Teco Electric and Machinery Co. Ltd.1	6,505,092		1,690,331
			3,200,739
INSURANCE – 5.04%
Cathay Financial Holding Co. Ltd.	16,914,055		31,658,979
Shin Kong Financial Holding Co. Ltd.	6,928,837		6,272,978
			37,931,957
INVESTMENT COMPANIES– 1.64%
China Development Financial Holding Co.1	33,826,338		12,342,740
			12,342,740
IRON & STEEL – 3.13%
China Steel Corp.	27,321,742		23,567,610
			23,567,610
LEISURE TIME – 0.28%
Giant Manufacturing Co. Ltd.	1,301,914		2,126,791
			2,126,791
MANUFACTURING – 0.21%
Premier Image Technology Corp.	1,379,262		1,600,365
			1,600,365
METAL FABRICATE& HARDWARE – 0.16%
Yieh Phui Enterprise	2,917,078		1,215,820
			1,215,820
MULTIPLE UTILITIES – 0.24%
Fu Sheng Industrial Co. Ltd.	1,570,320		1,826,845
			1,826,845
OFFICE & BUSINESS EQUIPMENT– 0.22%
Kinpo Electronics Inc.	3,903,119		1,674,468
			1,674,468
REAL ESTATE – 0.22%
Cathay Real Estate Development Co. Ltd.1	3,903,493		1,644,831
			1,644,831
RETAIL – 0.31%
President Chain Store Corp.	1,301,640		2,348,914
			2,348,914
SEMICONDUCTORS – 25.12%
Advanced Semiconductor Engineering Inc.1	10,408,727		7,135,143
Macronix International Co. Ltd.1	16,913,200		1,998,598
MediaTek Inc.	2,602,239		22,009,777
Realtek Semiconductor Corp.	2,733,003		2,737,176
Siliconware Precision Industries Co. Ltd.	7,028,151		6,277,051
Taiwan Semiconductor Manufacturing Co. Ltd.	66,351,475		109,403,959
United Microelectronics Corp.	57,397,640		34,350,954
Via Technologies Inc.1	2,736,861		1,596,154
Winbond Electronics Corp.1	11,709,280		3,561,051
			189,069,863

SCHEDULES OF INVESTMENTS 89

Schedule of Investments (Continued)

iSHARES^® MSCI TAIWAN INDEX FUND

August 31, 2005

Security	Shares	Value
TELECOMMUNICATIONS – 4.89%
Accton Technology Corp.1	2,602,259	$	969,390
Chunghwa Telecom Co. Ltd.	13,010,000		24,232,366
D-Link Corp.	1,474,638		1,429,611
Taiwan Cellular Corp.	7,806,920		7,246,729
Zyxel Communications Corp.	1,484,071		2,922,827
			36,800,923
TEXTILES – 1.01%
Far Eastern Textile Ltd.	8,431,351		5,444,979
Formosa Taffeta Co. Ltd.	2,655,152		1,183,671
Nien Hsing Textile Co. Ltd.	1,301,800		987,778
			7,616,428
TRANSPORTATION – 1.17%
Evergreen Marine Corp. Ltd.	2,959,194		2,028,516
U-Ming Marine Transport Corp.	1,562,800		1,813,325
Wan Hai Lines Ltd.	2,880,177		2,312,936
Yang Ming Marine Transport Corp.	3,903,667		2,669,989
			8,824,766
TOTAL COMMON STOCKS (Cost: $689,149,249)			746,776,493
SHORT-TERM INVESTMENTS – 0.01%
MONEY MARKET FUNDS – 0.01%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares
3.56%3, 4	69,521		69,521
			69,521
TOTAL SHORT-TERM INVESTMENTS (Cost: $69,521)			69,521
TOTAL INVESTMENTS IN SECURITIES – 99.23% (Cost: $689,218,770)			746,846,014
Other Assets, Less Liabilities – 0.77%			5,794,357
NET ASSETS – 100.00%		$	752,640,371

¹ Non-income earning security.

² Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

³ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁴ The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to the financial statements.

90 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities

iSHARES^®, INC.

August 31, 2005

	iShares MSCI
	Australia Index Fund			Brazil Index Fund			Canada Index Fund			Emerging Markets Index Fund			Hong Kong Index Fund			Malaysia Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	399,657,062		$	343,069,780		$	301,023,010		$	6,708,913,552		$	651,812,693		$	321,999,685
Affiliated issuersa	$	1,469,231		$	1,304,168		$	39,013		$	54,852,180		$	1,824,833		$	401,056
Foreign currencies, at cost	$	912,978		$	—		$	813,486		$	10,569,408		$	181,467		$	1,000,507
Investments in securities, at value (including securities on loanb) (Note 1):
Unaffiliated issuers	$	443,809,598		$	559,745,207		$	419,356,577		$	7,814,027,870		$	739,226,363		$	387,057,630
Affiliated issuersa		1,469,231			1,304,168			39,013			60,153,631			1,824,833			401,056
Foreign currencies, at value		901,720			—			832,166			10,546,310			181,505			997,644
Receivables:
Investment securities sold		331,087			40,649,951			1,371,469			—			3,084,223			487,943
Dividends and interest		2,676,931			3,476,197			436,864			24,788,353			1,075,252			361,244
Capital shares sold		—			—			60,684			1,466,305			—			—
Total Assets		449,188,567			605,175,523			422,096,773			7,910,982,469			745,392,176			389,305,517
LIABILITIES
Payables:
Investment securities purchased		914,793			281,818			1,611,194			—			2,839,784			1,539,127
Collateral for securities on loan (Note 5)		78,741,428			11,095,000			—			904,985,462			104,256,721			—
Capital shares redeemed		—			41,148,885			—			—			—			—
Foreign taxes		—			—			—			600,471			—			—
Investment advisory fees (Note 2)		177,078			364,382			184,804			4,538,486			310,833			191,410
Total Liabilities		79,833,299			52,890,085			1,795,998			910,124,419			107,407,338			1,730,537
NET ASSETS	$	369,355,268		$	552,285,438		$	420,300,775		$	7,000,858,050		$	637,984,838		$	387,574,980
Net assets consist of:
Paid-in capital	$	327,788,846		$	378,079,398		$	315,386,634		$	5,848,297,589		$	556,013,398		$	358,301,472
Undistributed net investment income		8,105,304			12,063,040			1,859,540			79,495,049			10,655,366			5,217,709
Accumulated net realized loss		(10,646,560	)		(54,582,584	)		(15,300,159	)		(37,326,384	)		(16,097,496	)		(40,999,692	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		44,107,678			216,725,584			118,354,760			1,110,391,796			87,413,570			65,055,491
NET ASSETS	$	369,355,268		$	552,285,438		$	420,300,775		$	7,000,858,050		$	637,984,838		$	387,574,980
Shares outstanding		20,200,000			19,600,000			20,700,000			89,850,000	c		49,050,000			53,925,000
Net asset value per share	$	18.28		$	28.18		$	20.30		$	77.92	c	$	13.01		$	7.19

^a The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^b Securities on loan with market values of $74,708,591, $10,765,320, $–, $882,820,182, $98,619,315 and $–, respectively. See Note 5.

^c Shares outstanding and net asset value per share reflect a three-for-one stock split effective June 9, 2005. See Note 4.

See notes to the financial statements.

FINANCIAL STATEMENTS 91

Statements of Assets and Liabilities (Continued)

iSHARES^®, INC.

August 31, 2005

	iShares MSCI
	Mexico Index Fund			Pacific ex-Japan Index Fund			Singapore Index Fund			South Africa Index Fund			South Korea Index Fund			Taiwan Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	223,242,963		$	1,537,280,650		$	337,489,800		$	101,282,645		$	523,230,827		$	689,149,249
Affiliated issuersa	$	63,773		$	6,367,991		$	816,205		$	5,136		$	2,157,474		$	69,521
Foreign currencies, at cost	$	164,175		$	3,727,616		$	2,554,064		$	441,020		$	—		$	6,581,218
Investments in securities, at value (including securities on loanb) (Note 1):
Unaffiliated issuers	$	257,999,973		$	1,825,653,936		$	381,335,787		$	153,281,507		$	741,106,017		$	746,776,493
Affiliated issuersa		63,773			6,367,991			816,205			5,136			2,157,474			69,521
Foreign currencies, at value		164,175			3,710,603			2,539,306			444,012			—			6,470,956
Receivables:
Investment securities sold		—			17,132,280			—			1,280,091			5,513,745			3,202,171
Dividends and interest		150,283			9,255,929			1,615,956			10,495			47,428			6,493,025
Total Assets		258,378,204			1,862,120,739			386,307,254			155,021,241			748,824,664			763,012,166
LIABILITIES
Payables:
Investment securities purchased		—			18,103,634			672,212			1,395,785			5,718,744			9,136,885
Collateral for securities on loan (Note 5)		2,690,400			321,259,151			44,224,690			—			44,204,864			—
Foreign taxes		—			—			—			—			—			736,059
Investment advisory fees (Note 2)		130,355			650,477			113,912			95,297			445,771			498,851
Accrued expenses		—			—			159,604			—			—			—
Total Liabilities		2,820,755			340,013,262			45,170,418			1,491,082			50,369,379			10,371,795
NET ASSETS	$	255,557,449		$	1,522,107,477		$	341,136,836		$	153,530,159		$	698,455,285		$	752,640,371
Net assets consist of:
Paid-in capital	$	226,067,262		$	1,215,439,654		$	306,448,882		$	101,505,362		$	504,854,603		$	761,836,274
Undistributed net investment income		2,951,033			28,176,254			9,519,613			2,645,723			7,841,332			15,854,994
Accumulated net realized loss		(8,219,201	)		(9,735,753	)		(18,643,227	)		(2,622,823	)		(32,115,840	)		(82,413,169	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		34,758,355			288,227,322			43,811,568			52,001,897			217,875,190			57,362,272
NET ASSETS	$	255,557,449		$	1,522,107,477		$	341,136,836		$	153,530,159		$	698,455,285		$	752,640,371
Shares outstanding		8,800,000			15,600,000			43,900,000			1,850,000			20,100,000			65,050,000
Net asset value per share	$	29.04		$	97.57		$	7.77		$	82.99		$	34.75		$	11.57

^a The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^b Securities on loan with market values of $2,636,000, $304,569,077, $41,666,346, $–, $42,058,693 and $–, respectively. See Note 5.

See notes to the financial statements.

92 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations

iSHARES^®, INC.

Year Ended August 31, 2005

	iShares MSCI
	Australia Index Fund			Brazil Index Fund		Canada Index Fund			Emerging Markets Index Fund			Hong Kong Index Fund			Malaysia Index Fund
NET INVESTMENT INCOME
Dividendsa	$	13,738,461		$	18,313,043	$	5,300,340		$	129,986,882		$	18,981,595		$	10,348,455
Dividends from affiliated issuersb		—			—		—			280,317			—			—
Interest from affiliated issuersb		3,048			35,374		2,360			184,172			4,452			11,255
Securities lending incomec		67,101			3,632		–			4,057,604			239,418			–
Total investment income		13,808,610			18,352,049		5,302,700			134,508,975			19,225,465			10,359,710
EXPENSES
Investment advisory fees (Note 2)		1,684,365			2,897,738		1,934,001			31,817,245			3,327,704			1,738,119
Foreign taxes (Note 1)		—			—		—			1,184,593			—			—
Total expenses		1,684,365			2,897,738		1,934,001			33,001,838			3,327,704			1,738,119
Less investment advisory fees waived		—			—		—			(243,817	)		—			—
Net expenses		1,684,365			2,897,738		1,934,001			32,758,021			3,327,704			1,738,119
Net investment income		12,124,245			15,454,311		3,368,699			101,750,954			15,897,761			8,621,591
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments		(199,484	)		5,649,655		(1,629,132	)		(12,338,990	)		(736,482	)		(5,784,171	)
Investments in affiliated issuersb		—			—		—			239,464			—			—
In-kind redemptions		41,445,765			—		67,552,987			284,269,646			42,539,450			—
Foreign currency transactions		111,908			117,728		68,698			(1,212,714	)		19,225			(2,341	)
Net realized gain (loss)		41,358,189			5,767,383		65,992,553			270,957,406			41,822,193			(5,786,512	)
Net change in unrealized appreciation (depreciation) on:
Investments		25,449,285			178,459,016		56,833,544			1,082,273,860			51,243,067			24,394,919
Translation of assets and liabilities in foreign currencies		(38,989	)		40,739		18,912			51,380			(47	)		(2,454	)
Net change in unrealized appreciation (depreciation)		25,410,296			178,499,755		56,852,456			1,082,325,240			51,243,020			24,392,465
Net realized and unrealized gain		66,768,485			184,267,138		122,845,009			1,353,282,646			93,065,213			18,605,953
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	78,892,730		$	199,721,449	$	126,213,708		$	1,455,033,600		$	108,962,974		$	27,227,544

^a Net of foreign withholding tax of $466,092, $2,173,162, $935,573, $12,828,063, $– and $–, respectively.

^b The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^c Includes income earned from issuers of which the Funds’ investment adviser is an affiliate. See Note 2.

See notes to the financial statements.

FINANCIAL STATEMENTS 93

Statements of Operations (Continued)

iSHARES^®, INC.

Year Ended August 31, 2005

	iShares MSCI
	Mexico Index Fund			Pacific ex-Japan Index Fund			Singapore Index Fund			South Africa Index Fund			South Korea Index Fund			Taiwan Index Fund
NET INVESTMENT INCOME
Dividendsa	$	4,994,170		$	50,466,415		$	13,889,369		$	4,354,376		$	11,150,702		$	22,938,413
Interest from affiliated issuersb		2,247			10,294			3,420			1,014			26,042			6,503
Securities lending incomec		4,502			342,351			126,439			—			334,612			—
Total investment income		5,000,919			50,819,060			14,019,228			4,355,390			11,511,356			22,944,916
EXPENSES (Note 2)
Investment advisory fees		1,265,701			5,536,961			1,132,585			959,383			3,815,173			5,030,229
Custodian fees and expenses		—			—			151,215			—			—			—
Directors’ fees		—			—			1,136			—			—			—
Professional fees		—			—			24,387			—			—			—
Federal and state registration fees		—			—			15,691			—			—			—
Insurance		—			—			48,305			—			—			—
Printing		—			—			22,550			—			—			—
AMEX listing fee		—			—			253			—			—			—
Foreign taxes (Note 1)		—			—			—			—			15			1,972,213
Total expenses		1,265,701			5,536,961			1,396,122			959,383			3,815,188			7,002,442
Net investment income		3,735,218			45,282,099			12,623,106			3,396,007			7,696,168			15,942,474
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments		(1,206,762	)		(2,107,551	)		948,126			(1,786,597	)		(9,419,038	)		(22,338,603	)
In-kind redemptions		38,932,114			—			8,430,114			13,110,939			—			—
Foreign currency transactions		28,638			372,735			(17,604	)		(41,657	)		188,130			(87,480	)
Net realized gain (loss)		37,753,990			(1,734,816	)		9,360,636			11,282,685			(9,230,908	)		(22,426,083	)
Net change in unrealized appreciation (depreciation) on:
Investments		42,545,724			222,483,428			23,711,211			25,742,186			167,580,084			48,531,114
Translation of assets and liabilities in foreign currencies		2,201			(135,276	)		(34,741	)		12,878			—			(254,962	)
Net change in unrealized appreciation (depreciation)		42,547,925			222,348,152			23,676,470			25,755,064			167,580,084			48,276,152
Net realized and unrealized gain		80,301,915			220,613,336			33,037,106			37,037,749			158,349,176			25,850,069
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	84,037,133		$	265,895,435		$	45,660,212		$	40,433,756		$	166,045,344		$	41,792,543

^a Net of foreign withholding tax of $–, $1,287,900, $–, $–, $2,179,802 and $5,667,907, respectively.

^b The Funds’ investment adviser is an affiliate of the issuers. See Note 2.

^c Includes income earned from issuers of which the Funds’ investment adviser is an affiliate. See Note 2.

See notes to the financial statements.

94 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets

iSHARES^®, INC.

	iShares MSCI Australia Index Fund						iShares MSCI Brazil Index Fund						iShares MSCI Canada Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	12,124,245		$	5,265,617		$	15,454,311		$	8,655,485		$	3,368,699		$	2,839,492
Net realized gain		41,358,189			9,686,425			5,767,383			45,107,732			65,992,553			93,207,203
Net change in unrealized appreciation (depreciation)		25,410,296			7,651,309			178,499,755			23,024,278			56,852,456			(24,881,737	)
Net increase in net assets resulting from operations		78,892,730			22,603,351			199,721,449			76,787,495			126,213,708			71,164,958
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(9,320,851	)		(4,470,639	)		(8,052,116	)		(5,717,313	)		(3,453,495	)		(4,394,348	)
Total distributions to shareholders		(9,320,851	)		(4,470,639	)		(8,052,116	)		(5,717,313	)		(3,453,495	)		(4,394,348	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		231,751,585			106,224,512			274,248,148			265,754,092			141,711,605			98,535,887
Cost of shares redeemed		(110,966,622	)		(32,899,563	)		(123,135,627	)		(230,355,301	)		(169,468,858	)		(343,415,496	)
Net increase (decrease) in net assets from capital share transactions		120,784,963			73,324,949			151,112,521			35,398,791			(27,757,253	)		(244,879,609	)
INCREASE (DECREASE) IN NET ASSETS		190,356,842			91,457,661			342,781,854			106,468,973			95,002,960			(178,108,999	)
NET ASSETS:
Beginning of year		178,998,426			87,540,765			209,503,584			103,034,611			325,297,815			503,406,814
End of year	$	369,355,268		$	178,998,426		$	552,285,438		$	209,503,584		$	420,300,775		$	325,297,815
Undistributed net investment income included in net assets at end of year	$	8,105,304		$	3,368,610		$	12,063,040		$	4,543,117		$	1,859,540		$	1,875,638
SHARES ISSUED AND REDEEMED:
Shares sold		13,800,000			8,000,000			12,300,000			18,600,000			7,900,000			7,200,000
Shares redeemed		(6,800,000	)		(2,600,000	)		(5,050,000	)		(14,700,000	)		(9,900,000	)		(25,600,000	)
Net increase (decrease) in shares outstanding		7,000,000			5,400,000			7,250,000			3,900,000			(2,000,000	)		(18,400,000	)

See notes to the financial statements.

FINANCIAL STATEMENTS 95

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC.

	iShares MSCI Emerging Markets Index Fund						iShares MSCI Hong Kong Index Fund						iShares MSCI Malaysia Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004a			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	101,750,954		$	28,887,584		$	15,897,761		$	11,714,811		$	8,621,591		$	3,951,040
Net realized gain (loss)		270,957,406			34,568,649			41,822,193			23,540,083			(5,786,512	)		(8,032,612	)
Net change in unrealized appreciation (depreciation)		1,082,325,240			(1,740,338	)		51,243,020			25,672,069			24,392,465			10,040,748
Net increase in net assets resulting from operations		1,455,033,600			61,715,895			108,962,974			60,926,963			27,227,544			5,959,176
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(45,604,575	)		(4,998,228	)		(14,195,028	)		(6,211,899	)		(6,156,574	)		(2,163,298	)
Total distributions to shareholders		(45,604,575	)		(4,998,228	)		(14,195,028	)		(6,211,899	)		(6,156,574	)		(2,163,298	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		4,407,630,562			1,833,607,273			251,633,472			262,371,854			155,029,612			180,819,437
Cost of shares redeemed		(774,797,887	)		(229,574,799	)		(158,339,373	)		(117,791,065	)		(12,743,715	)		(60,126,782	)
Net increase in net assets from capital share transactions		3,632,832,675			1,604,032,474			93,294,099			144,580,789			142,285,897			120,692,655
INCREASE IN NET ASSETS		5,042,261,700			1,660,750,141			188,062,045			199,295,853			163,356,867			124,488,533
NET ASSETS:
Beginning of year		1,958,596,350			297,846,209			449,922,793			250,626,940			224,218,113			99,729,580
End of year	$	7,000,858,050		$	1,958,596,350		$	637,984,838		$	449,922,793		$	387,574,980		$	224,218,113
Undistributed net investment income included in net assets at end of year	$	79,495,049		$	24,561,384		$	10,655,366		$	8,931,316		$	5,217,709		$	2,754,991
SHARES ISSUED AND REDEEMED:
Shares sold		64,200,000			34,050,000			21,225,000			25,650,000			21,525,000			26,925,000
Shares redeemed		(10,650,000	)		(4,350,000	)		(13,425,000	)		(12,150,000	)		(1,875,000	)		(9,300,000	)
Net increase in shares outstanding		53,550,000			29,700,000			7,800,000			13,500,000			19,650,000			17,625,000

^a Share transactions were adjusted to reflect a three-for-one stock split effective June 9, 2005. See Note 4.

See notes to the financial statements.

96 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC .

	iShares MSCI Mexico Index Fund						iShares MSCI Pacific ex-Japan Index Fund						iShares MSCI Singapore Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	3,735,218		$	1,426,138		$	45,282,099		$	19,602,876		$	12,623,106		$	5,623,277
Net realized gain (loss)		37,753,990			10,436,818			(1,734,816	)		12,895,227			9,360,636			264,490
Net change in unrealized appreciation (depreciation)		42,547,925			(644,904	)		222,348,152			43,117,628			23,676,470			23,413,442
Net increase in net assets resulting from operations		84,037,133			11,218,052			265,895,435			75,615,731			45,660,212			29,301,209
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(2,048,280	)		(788,654	)		(31,933,222	)		(9,962,572	)		(7,420,067	)		(3,170,833	)
Total distributions to shareholders		(2,048,280	)		(788,654	)		(31,933,222	)		(9,962,572	)		(7,420,067	)		(3,170,833	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		229,047,163			228,974,858			636,895,214			424,290,639			156,094,475			49,430,368
Cost of shares redeemed		(185,101,346	)		(169,936,912	)		—			(61,991,273	)		(23,244,294	)		(13,716,664	)
Net increase in net assets from capital share transactions		43,945,817			59,037,946			636,895,214			362,299,366			132,850,181			35,713,704
INCREASE IN NET ASSETS		125,934,670			69,467,344			870,857,427			427,952,525			171,090,326			61,844,080
NET ASSETS:
Beginning of year		129,622,779			60,155,435			651,250,050			223,297,525			170,046,510			108,202,430
End of year	$	255,557,449		$	129,622,779		$	1,522,107,477		$	651,250,050		$	341,136,836		$	170,046,510
Undistributed net investment income included in net assets at end of year	$	2,951,033		$	1,235,457		$	28,176,254		$	14,410,596		$	9,519,613		$	4,042,788
SHARES ISSUED AND REDEEMED:
Shares sold		9,500,000			12,300,000			7,000,000			5,900,000			21,000,000			8,200,000
Shares redeemed		(7,400,000	)		(9,600,000	)		—			(900,000	)		(3,200,000	)		(2,200,000	)
Net increase in shares outstanding		2,100,000			2,700,000			7,000,000			5,000,000			17,800,000			6,000,000

See notes to the financial statements.

FINANCIAL STATEMENTS 97

Statements of Changes in Net Assets (Continued)

iSHARES^®, INC .

	iShares MSCI South Africa Index Fund						iShares MSCI South Korea Index Fund						iShares MSCI Taiwan Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004			For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	3,396,007		$	1,953,405		$	7,696,168		$	2,173,679		$	15,942,474		$	4,688,145
Net realized gain (loss)		11,282,685			7,316,450			(9,230,908	)		(14,302,124	)		(22,426,083	)		(20,194,826	)
Net change in unrealized appreciation (depreciation)		25,755,064			13,784,731			167,580,084			4,228,087			48,276,152			(8,427,465	)
Net increase (decrease) in net assets resulting from operations		40,433,756			23,054,586			166,045,344			(7,900,358	)		41,792,543			(23,934,146	)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(2,053,497	)		(2,182,948	)		(1,677,739	)		(1,814,739	)		(4,632,113	)		(637,002	)
Total distributions to shareholders		(2,053,497	)		(2,182,948	)		(1,677,739	)		(1,814,739	)		(4,632,113	)		(637,002	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		37,191,402			14,747,859			331,095,006			213,845,316			391,736,531			223,498,562
Cost of shares redeemed		(14,923,708	)		(24,651,115	)		(112,471,028	)		(43,152,032	)		(66,484,667	)		(43,426,617	)
Net increase (decrease) in net assets from capital share transactions		22,267,694			(9,903,256	)		218,623,978			170,693,284			325,251,864			180,071,945
INCREASE IN NET ASSETS		60,647,953			10,968,382			382,991,583			160,978,187			362,412,294			155,500,797
NET ASSETS:
Beginning of year		92,882,206			81,913,824			315,463,702			154,485,515			390,228,077			234,727,280
End of year	$	153,530,159		$	92,882,206		$	698,455,285		$	315,463,702		$	752,640,371		$	390,228,077
Undistributed net investment income included in net assets at end of year	$	2,645,723		$	1,344,870		$	7,841,332		$	1,634,773		$	15,854,994		$	4,632,113
SHARES ISSUED AND REDEEMED:
Shares sold		500,000			250,000			10,700,000			8,150,000			34,150,000			18,800,000
Shares redeemed		(200,000	)		(450,000	)		(3,650,000	)		(1,800,000	)		(5,700,000	)		(3,950,000	)
Net increase (decrease) in shares outstanding		300,000			(200,000	)		7,050,000			6,350,000			28,450,000			14,850,000

See notes to the financial statements.

98 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI Australia Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	13.56		$	11.22		$	9.36		$	9.24		$	9.93
Income from investment operations:
Net investment incomea		0.70			0.45			0.32			0.23			0.24
Net realized and unrealized gain (loss)		4.60			2.32			1.81			(0.07	)		(0.71	)
Total from investment operations		5.30			2.77			2.13			0.16			(0.47	)
Less distributions from:
Net investment income		(0.58	)		(0.43	)		(0.27	)		(0.04	)		(0.20	)
Return of capital		—			—			—			—			(0.02	)
Total distributions		(0.58	)		(0.43	)		(0.27	)		(0.04	)		(0.22	)
Net asset value, end of year	$	18.28		$	13.56		$	11.22		$	9.36		$	9.24
Total return		39.58	%		24.95	%		23.33	%		1.74	%		(4.77	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	369,355		$	178,998		$	87,541		$	76,731		$	57,312
Ratio of expenses to average net assets		0.57	%		0.79	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		4.13	%		3.37	%		3.21	%		2.47	%		2.54	%
Portfolio turnover rateb		17	%		9	%		8	%		5	%		23	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 99

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Brazil Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	16.96		$	12.19		$	8.30		$	11.20		$	19.25
Income from investment operations:
Net investment incomea		0.89			0.55			0.32			0.38			0.68
Net realized and unrealized gain (loss)		10.79			4.49			3.68			(3.28	)		(8.09	)
Total from investment operations		11.68			5.04			4.00			(2.90	)		(7.41	)
Less distributions from:
Net investment income		(0.46	)		(0.27	)		(0.11	)		—			(0.56	)
Return of capital		—			—			—			—			(0.08	)
Total distributions		(0.46	)		(0.27	)		(0.11	)		—			(0.64	)
Net asset value, end of year	$	28.18		$	16.96		$	12.19		$	8.30		$	11.20
Total return		69.72	%		41.42	%		48.85	%		(25.89	)%		(38.52	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	552,285		$	209,504		$	103,035		$	83,788		$	14,004
Ratio of expenses to average net assets		0.74	%		0.96	%		0.99	%		0.99	%		0.99	%
Ratio of net investment income to average net assets		3.94	%		3.59	%		3.59	%		3.50	%		4.44	%
Portfolio turnover rateb		48	%		106	%		85	%		103	%		43	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

100 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Canada Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	14.33		$	12.25		$	9.49		$	10.70		$	16.94
Income from investment operations:
Net investment incomea		0.17			0.11			0.10			0.07			0.05
Net realized and unrealized gain (loss)		6.00			2.17			2.69			(1.27	)		(5.92	)
Total from investment operations		6.17			2.28			2.79			(1.20	)		(5.87	)
Less distributions from:
Net investment income		(0.20	)		(0.20	)		(0.03	)		(0.01	)		(0.02	)
Net realized gain		—			—			—			—			(0.31	)
Return of capital		—			—			—			—			(0.04	)
Total distributions		(0.20	)		(0.20	)		(0.03	)		(0.01	)		(0.37	)
Net asset value, end of year	$	20.30		$	14.33		$	12.25		$	9.49		$	10.70
Total return		43.35	%		18.70	%		29.47	%		(11.23	)%		(34.95	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	420,301		$	325,298		$	503,407		$	66,420		$	28,889
Ratio of expenses to average net assets		0.57	%		0.70	%c		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		1.00	%		0.81	%d		0.98	%		0.70	%		0.44	%
Portfolio turnover rateb		9	%		10	%		10	%		5	%		63	%

^a Based on average shares outstanding throughout each period.

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

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

^d Ratio of net investment income to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 0.71%.

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 101

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Emerging Markets Index Fund
	Year ended Aug. 31, 2005b			Year ended Aug. 31, 2004b			Period from Apr. 7, 2003a to Aug. 31, 2003b
Net asset value, beginning of period	$	53.96		$	45.13		$	33.75
Income from investment operations:
Net investment incomec		1.65			1.13			0.26
Net realized and unrealized gain		24.72			7.97			11.12
Total from investment operations		26.37			9.10			11.38
Less distributions from:
Net investment income		(2.41	)		(0.27	)		—
Total distributions		(2.41	)		(0.27	)		—
Net asset value, end of period	$	77.92		$	53.96		$	45.13
Total return		46.17	%		20.21	%		33.72	%f
Ratios/Supplemental data:
Net assets, end of period (000s)	$	7,000,858		$	1,958,596		$	297,846
Ratio of expenses to average net assets prior to waived feesd		0.78	%		0.77	%		0.78	%
Ratio of expenses to average net assets after waived feesd		0.77	%		0.76	%		0.78	%
Ratio of expenses to average net assets after waived fees and exclusive of foreign taxesd		0.74	%		0.74	%		0.72	%
Ratio of net investment income to average net assetsd		2.40	%		2.10	%		1.58	%
Portfolio turnover ratee		9	%		8	%		10	%

^a Commencement of operations.

^b Per share amounts were adjusted to reflect a three-for-one stock split effective June 9, 2005. See Note 4.

^c Based on average shares outstanding throughout each period.

^d Annualized for periods of less than one year.

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

^f Not annualized.

See notes to the financial statements.

102 2005 iSHARES ANNUAL REPORT TO SHAREHOLDER

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Hong Kong Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	10.91		$	9.03		$	7.99		$	8.93		$	13.24
Income from investment operations:
Net investment incomea		0.33			0.28			0.23			0.23			0.23
Net realized and unrealized gain (loss)		2.04			1.75			0.95			(1.11	)		(4.30	)
Total from investment operations		2.37			2.03			1.18			(0.88	)		(4.07	)
Less distributions from:
Net investment income		(0.27	)		(0.15	)		(0.14	)		(0.06	)		(0.23	)
Return of capital		—			—			—			—			(0.01	)
Total distributions		(0.27	)		(0.15	)		(0.14	)		(0.06	)		(0.24	)
Net asset value, end of year	$	13.01		$	10.91		$	9.03		$	7.99		$	8.93
Total return		21.96	%		22.69	%		15.14	%		(9.94	)%		(30.88	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	637,985		$	449,923		$	250,627		$	99,502		$	52,946
Ratio of expenses to average net assets		0.57	%		0.80	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		2.75	%		2.78	%		3.06	%		2.56	%		2.11	%
Portfolio turnover rateb		6	%		5	%		10	%		15	%		43	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 103

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Malaysia Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	6.54		$	5.99		$	5.68		$	5.11		$	5.96
Income from investment operations:
Net investment incomea		0.20			0.13			0.10			0.08			0.06
Net realized and unrealized gain (loss)		0.61			0.52			0.30			0.52			(0.85	)
Total from investment operations		0.81			0.65			0.40			0.60			(0.79	)
Less distributions from:
Net investment income		(0.16	)		(0.10	)		(0.09	)		(0.03	)		(0.06	)
Return of capital		—			—			—			—			(0.00	)c
Total distributions		(0.16	)		(0.10	)		(0.09	)		(0.03	)		(0.06	)
Net asset value, end of year	$	7.19		$	6.54		$	5.99		$	5.68		$	5.11
Total return		12.39	%		11.01	%		7.39	%		11.82	%		(13.22	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	387,575		$	224,218		$	99,730		$	93,262		$	80,877
Ratio of expenses to average net assets		0.57	%		0.79	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		2.85	%		1.97	%		1.91	%		1.53	%		1.19	%
Portfolio turnover rateb		15	%		39	%		35	%		37	%		37	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

104 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Mexico Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	19.35		$	15.04		$	13.65		$	15.35		$	16.72
Income from investment operations:
Net investment incomea		0.42			0.26			0.19			0.32			0.17
Net realized and unrealized gain (loss)		9.55			4.26			1.72			(1.95	)		(1.36	)
Total from investment operations		9.97			4.52			1.91			(1.63	)		(1.19	)
Less distributions from:
Net investment income		(0.28	)		(0.21	)		(0.52	)		(0.07	)		(0.15	)
Net realized gain		—			—			—			—			(0.03	)
Total distributions		(0.28	)		(0.21	)		(0.52	)		(0.07	)		(0.18	)
Net asset value, end of year	$	29.04		$	19.35		$	15.04		$	13.65		$	15.35
Total return		51.77	%		30.28	%		14.60	%		(10.67	)%		(7.02	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	255,557		$	129,623		$	60,155		$	70,994		$	46,056
Ratio of expenses to average net assets		0.57	%		0.78	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		1.70	%		1.40	%		1.43	%		2.05	%		1.12	%
Portfolio turnover rateb		9	%		12	%		13	%		8	%		34	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 105

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Pacific ex-Japan Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Period from Oct. 25, 2001a to Aug. 31, 2002
Net asset value, beginning of period	$	75.73		$	62.03		$	52.51		$	50.03
Income from investment operations:
Net investment incomeb		3.70			2.68			1.87			1.35
Net realized and unrealized gain		21.15			12.53			8.53			1.40
Total from investment operations		24.85			15.21			10.40			2.75
Less distributions from:
Net investment income		(3.01	)		(1.51	)		(0.88	)		(0.27	)
Total distributions		(3.01	)		(1.51	)		(0.88	)		(0.27	)
Net asset value, end of period	$	97.57		$	75.73		$	62.03		$	52.51
Total return		33.27	%		24.74	%		20.15	%		5.51	%e
Ratios/Supplemental data:
Net assets, end of period (000s)	$	1,522,107		$	651,250		$	223,298		$	105,029
Ratio of expenses to average net assetsc		0.50	%		0.50	%		0.50	%		0.50	%
Ratio of net investment income to average net assetsc		4.09	%		3.68	%		3.47	%		2.87	%
Portfolio turnover rated		16	%		8	%		8	%		5	%

^a Commencement of operations.

^b Based on average shares outstanding throughout each period.

^c Annualized for periods of less than one year.

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

^e Not annualized.

See notes to the financial statements.

106 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI Singapore Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	6.52		$	5.38		$	5.01		$	5.34		$	7.58
Income from investment operations:
Net investment incomea		0.38			0.22			0.12			0.07			0.07
Net realized and unrealized gain (loss)		1.15			1.04			0.33			(0.36	)		(2.16	)
Total from investment operations		1.53			1.26			0.45			(0.29	)		(2.09	)
Less distributions from:
Net investment income		(0.28	)		(0.12	)		(0.08	)		(0.04	)		(0.07	)
Net realized gain		—			—			—			—			(0.06	)
Return of capital		—			—			—			—			(0.02	)
Total distributions		(0.28	)		(0.12	)		(0.08	)		(0.04	)		(0.15	)
Net asset value, end of year	$	7.77		$	6.52		$	5.38		$	5.01		$	5.34
Total return		24.06	%		23.47	%		9.30	%		(5.42	)%		(27.89	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	341,137		$	170,047		$	108,202		$	88,126		$	73,704
Ratio of expenses to average net assets		0.57	%		0.79	%		0.84	%		0.84	%		0.84	%
Ratio of net investment income to average net assets		5.19	%		3.50	%		2.67	%		1.44	%		1.15	%
Portfolio turnover rateb		8	%		9	%		14	%		9	%		32	%

^a Based on average shares outstanding throughout each period.

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

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 107

Financial Highlights (Continued)

iSHARES^®, INC .

(For a share outstanding throughout each period)

	iShares MSCI South Africa Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Period from Feb. 3, 2003a to Aug. 31, 2003
Net asset value, beginning of period	$	59.92		$	46.81		$	38.72
Income from investment operations:
Net investment incomeb		1.92			1.23			0.89
Net realized and unrealized gain		22.36			13.24			7.20
Total from investment operations		24.28			14.47			8.09
Less distributions from:
Net investment income		(1.21	)		(1.36	)		—
Total distributions		(1.21	)		(1.36	)		—
Net asset value, end of period	$	82.99		$	59.92		$	46.81
Total return		40.62	%		31.30	%		20.89	%e
Ratios/Supplemental data:
Net assets, end of period (000s)	$	153,530		$	92,882		$	81,914
Ratio of expenses to average net assetsc		0.74	%		0.95	%		0.99	%
Ratio of net investment income to average net assetsc		2.62	%		2.23	%		3.86	%
Portfolio turnover rated		32	%		13	%		17	%

^a Commencement of operations.

^b Based on average shares outstanding throughout each period.

^c Annualized for periods of less than one year.

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

^e Not annualized.

See notes to the financial statements.

108 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI South Korea Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	24.17		$	23.06		$	21.17		$	13.25		$	18.16
Income from investment operations:
Net investment income (loss)a		0.46			0.22			0.19			(0.00	)c		0.09
Net realized and unrealized gain (loss)		10.22			1.13			1.70			7.92			(4.90	)
Total from investment operations		10.68			1.35			1.89			7.92			(4.81	)
Less distributions from:
Net investment income		(0.10	)		(0.24	)		—			—			(0.03	)
Return of capital		—			—			—			—			(0.07	)
Total distributions		(0.10	)		(0.24	)		—			—			(0.10	)
Net asset value, end of year	$	34.75		$	24.17		$	23.06		$	21.17		$	13.25
Total return		44.29	%		5.83	%		8.93	%		59.77	%		(26.49	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	698,455		$	315,464		$	154,486		$	96,336		$	37,767
Ratio of expenses to average net assets		0.74	%		0.94	%		0.99	%		1.00	%		1.01	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.74	%		0.94	%		0.99	%		0.99	%		0.99	%
Ratio of net investment income (loss) to average net assets		1.49	%		0.87	%		0.98	%		(0.01	)%		0.64	%
Portfolio turnover rateb		30	%		29	%		39	%		25	%		39	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 109

Financial Highlights (Continued)

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Taiwan Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	10.66		$	10.79		$	8.82		$	9.01		$	16.41
Income from investment operations:
Net investment income (loss)a		0.27			0.14			0.04			(0.03	)		(0.03	)
Net realized and unrealized gain (loss)		0.72			(0.25	)		1.93			(0.16	)		(7.37	)
Total from investment operations		0.99			(0.11	)		1.97			(0.19	)		(7.40	)
Less distributions from:
Net investment income		(0.08	)		(0.02	)		—			—			—
Total distributions		(0.08	)		(0.02	)		—			—			—
Net asset value, end of year	$	11.57		$	10.66		$	10.79		$	8.82		$	9.01
Total return		9.28	%		(1.10	)%		22.45	%		(2.11	)%		(45.09	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	752,640		$	390,228		$	234,727		$	142,043		$	110,786
Ratio of expenses to average net assets		1.03	%		1.19	%c		1.31	%		1.33	%		1.60	%
Ratio of expenses to average net assets exclusive of foreign taxes		0.74	%		0.92	%		0.99	%		0.99	%		0.99	%
Ratio of net investment income (loss) to average net assets		2.34	%		1.23	%d		0.43	%		(0.28	)%		(0.23	)%
Portfolio turnover rateb		20	%		19	%		15	%		11	%		30	%

^a Based on average shares outstanding throughout each period.

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

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

^d Ratio of net investment income to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 1.21%.

See notes to the financial statements.

110 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements

iSHARES^®, INC.

1. SIGNIFICANT ACCOUNTING POLICIES

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation. As of August 31, 2005, the Company offered 24 investment portfolios or funds.

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

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

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

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

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

SECURITY VALUATION

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

NOTES TO THE FINANCIAL STATEMENTS 111

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

SECURITY TRANSACTIONS, INCOME RECOGNITION AND EXPENSES

Security transactions are accounted for on trade date. Dividend income is recognized on the ex-dividend date, net of any foreign taxes withheld at source, and interest income is accrued daily. Realized gains and losses on investment transactions are determined using the specific identification method. Common expenses incurred by the Company prior to December 28, 2001 were allocated to the Funds based on the ratio of average net assets of each Fund to the combined net assets of all funds offered by the Company, or other appropriate method. Other expenses, directly related to a specific fund, were charged to that fund. The expenses for the iShares MSCI Singapore Index Fund are still allocated to that Fund using this methodology. Additional details of the current expense structure may be found in Note 2.

FOREIGN CURRENCY TRANSLATION

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

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

FOREIGN TAXES

South Korea and Taiwan may levy taxes on stock dividends at rates of 16.50% and up to 20.00%, respectively, based on the par value of stock dividends received by the iShares MSCI Emerging Markets, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds. These taxes are paid by the Funds receiving the stock dividends and, if any, are disclosed in their respective Statements of Operations.

DISTRIBUTIONS TO SHAREHOLDERS

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

112 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

As of August 31, 2005, the tax year-end of the Funds, the components of distributable earnings (accumulated losses) on a tax basis were as follows:

iShares MSCI Index Fund	Undistributed Ordinary Income		Unrealized Appreciation		Capital and Other Losses			Net Distributable Earnings (Accumulated Losses)
Australia	$	11,268,062	$	38,826,948	$	(8,528,588	)	$	41,566,422
Brazil		12,063,040		210,228,016		(48,085,016	)		174,206,040
Canada		1,878,220		112,549,843		(9,513,922	)		104,914,141
Emerging Markets		79,503,041		1,102,098,554		(29,041,134	)		1,152,560,461
Hong Kong		10,703,450		86,296,050		(15,028,060	)		81,971,440
Malaysia		5,762,951		54,044,489		(30,533,932	)		29,273,508
Mexico		2,951,033		34,454,888		(7,915,734	)		29,490,187
Pacific ex-Japan		45,202,556		266,202,916		(4,737,649	)		306,667,823
Singapore		11,794,507		38,947,298		(16,053,851	)		34,687,954
South Africa		2,755,624		50,894,781		(1,625,608	)		52,024,797
South Korea		7,841,332		205,923,480		(20,164,130	)		193,600,682
Taiwan		15,854,994		31,951,250		(57,002,147	)		(9,195,903	)

For the years ended August 31, 2005 and August 31, 2004, the tax characterization of distributions paid for each Fund was equal to the book characterization of distributions paid. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for all Funds.

FEDERAL INCOME TAXES

Each Fund is treated as a separate entity for federal income tax purposes. It is the policy of each Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its net income and any net gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2005.

From November 1, 2004 to August 31, 2005, certain Funds incurred net realized capital losses. As permitted by tax regulations, these Funds have elected to defer those losses and treat them as arising in the year ending August 31, 2006 as follows:

iShares MSCI Index Fund	Deferred Net Realized Capital
Australia	$	6,029
Canada		443,818
Emerging Markets		7,895,800
Hong Kong		300,651
Malaysia		1,566,514
Mexico		1,118,329
South Africa		1,095,003
South Korea		3,483,155
Taiwan		14,627,530

NOTES TO THE FINANCIAL STATEMENTS 113

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

The Funds had tax basis net capital loss carryforwards as of August 31, 2005, the tax year-end of the Funds, as follows:

iShares MSCI Index Fund	Expiring 2007		Expiring 2008		Expiring 2009		Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Total
Australia	$	674,889	$	630,985	$	1,971,994	$	3,625,203	$	650,082	$	596,240	$	384,424	$	8,533,817
Brazil		—		—		—		—		48,085,016		—		—		48,085,016
Canada		—		—		—		780,114		21,276		2,463,817		5,786,217		9,051,424
Emerging Markets		—		—		—		—		—		840,778		20,296,564		21,137,342
Hong Kong		4,085,707		—		—		4,971,970		2,870,602		2,330,414		468,716		14,727,409
Malaysia		8,654,333		—		—		9,819,029		2,898,105		775,477		6,820,474		28,967,418
Mexico		—		—		—		1,319,032		2,329,290		3,136,170		12,913		6,797,405
Pacific ex-Japan		—		—		—		—		329,461		2,563,114		1,853,572		4,746,147
Singapore		—		—		—		4,810,766		4,428,316		4,256,421		2,558,348		16,053,851
South Africa		—		—		—		—		—		527,613		—		527,613
South Korea		—		—		556,540		666,642		504,041		3,363,449		11,590,303		16,680,975
Taiwan		—		—		—		12,532,361		8,689,663		9,129,874		12,022,719		42,374,617

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

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

For the year ended August 31, 2005, each Fund reclassified certain amounts of paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset values per share.

As of August 31, 2005, the aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

iShares MSCI Index Fund	Tax Cost		Unrealized Appreciation		Unrealized Depreciation			Net Unrealized Appreciation
Australia	$	406,407,023	$	41,692,480	$	(2,820,674	)	$	38,871,806
Brazil		350,871,516		211,218,787		(1,040,928	)		210,177,859
Canada		306,866,940		117,536,571		(5,007,921	)		112,528,650
Emerging Markets		6,772,058,974		1,183,653,484		(81,530,957	)		1,102,122,527
Hong Kong		654,755,046		93,488,358		(7,192,208	)		86,296,150
Malaysia		333,411,743		61,713,416		(7,666,473	)		54,046,943
Mexico		223,610,203		35,292,883		(839,340	)		34,453,543
Pacific ex-Japan		1,565,673,047		267,005,012		(656,132	)		266,348,880
Singapore		343,170,275		42,608,701		(3,626,984	)		38,981,717
South Africa		102,394,897		51,934,874		(1,043,128	)		50,891,746
South Korea		537,340,011		208,283,898		(2,360,418	)		205,923,480
Taiwan		714,629,792		62,541,168		(30,324,946	)		32,216,222

114 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as an investment by the Fund, collateralized by securities, which are delivered to the Fund’s custodian, or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest. As of August 31, 2005, a portion of the cash collateral for securities on loan for certain Funds was invested in repurchase agreements as disclosed in each Fund’s Schedule of Investments. For further information, see Note 5, below.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

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

Prior to December 28, 2001 and pursuant to the prior investment advisory agreement, the investment advisory fee earned by and paid to BGFA with respect to each Fund was reduced by the aggregate of such Fund’s fees and expenses (subject to the exceptions in the prior sentence). BGFA also agreed to reimburse each Fund to the extent that the expenses of any Fund (subject to the same exceptions) exceeded the investment advisory fee as stated in the investment advisory fee tables below. These fee reduction and reimbursement provisions applied to the iShares MSCI Singapore Index Fund through August 31, 2005. Pursuant to a new investment advisory contract effective September 1, 2005, BGFA will be responsible for the Covered Expenses of the Fund and these provisions will no longer apply.

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

Investment Advisory Fees	Aggregate Net Assets
0.59%	First $7 billion
0.54	Over $7 billion, up to and including $11 billion
0.49	Over $11 billion

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

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

NOTES TO THE FINANCIAL STATEMENTS 115

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

For its investment advisory services to the iShares MSCI Pacific ex-Japan Index Fund, BGFA is entitled to an annual investment advisory fee based on the average daily net assets of the Fund of 0.50%. For its investment advisory services to the iShares MSCI Emerging Markets Index Fund, BGFA is entitled to an annual investment advisory fee based on the average daily net assets of the Fund excluding any investments in other iShares Funds, of 0.75%. BGFA voluntarily waives its advisory fees for the iShares MSCI Emerging Markets Index Fund in an amount equal to the investment advisory fees payable on the amount of the Fund’s investment in other iShares Funds.

Barclays Global Investors, N.A. (“BGI”) has a license agreement with MSCI for the use of the relevant MSCI indices. Under a sub-license agreement between BGI and the Funds, the fees for the use of such MSCI indices are paid directly by BGI to MSCI.

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

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital, Inc. (“BarCap”). Pursuant to the same exemptive order, BGI serves as securities lending agent for the Company. BarCap and BGI are affiliates of BGFA, the Funds’ investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2005, BGI earned securities lending agent fees as follows:

iShares MSCI Index Fund	Securities Lending Agent Fees
Australia	$	67,101
Brazil		3,632
Emerging Markets		4,057,604
Hong Kong		239,418
Mexico		4,502
Pacific ex-Japan		342,351
Singapore		126,439
South Korea		334,612

SEI Investments Distribution Co. (the “Distributor”) serves as each Fund’s underwriter and distributor of the shares of each Fund, pursuant to a Distribution Agreement with the Company. The Distributor does not currently receive a fee from the Funds for its distribution services. Prior to July 1, 2004, the Company had in effect a distribution plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Distributor was entitled to receive a distribution fee from each Fund, not to exceed 0.25% of the average daily net assets of such Fund, for distribution-related expenses and services. At the Board meeting held on March 16, 2004, the Directors voted to terminate the Plan, effective July 1, 2004.

Pursuant to Rule 17a-7 under the 1940 Act, certain Funds executed cross trades for the year ended August 31, 2005. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. The Board reviewed all such transactions executed during the first ten months of the fiscal year and concluded that they were in compliance with the requirements and restrictions set by Rule 17a-7. The Board is scheduled at its next regularly scheduled meeting to review all such transactions executed during the last two months of the fiscal year.

Pursuant to an exemptive order issued by the SEC, each Fund may invest in the Institutional Shares of the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”) and Prime Money Market Fund (“PMMF”) of Barclays Global Investors Funds. The GMMF, IMMF and PMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio and Prime Money Market Master Portfolio (collectively, the “Master Portfolios”), respectively, which are managed by BGFA, the Funds’ investment adviser. The GMMF, IMMF and PMMF are open-end money market funds available to institutional and accredited investors, including other investment companies managed by BGFA. The GMMF, IMMF and PMMF seek a high level

116 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

of income consistent with liquidity and the preservation of capital. While the GMMF, IMMF and PMMF do not directly charge an investment advisory fee, the Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF and PMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Funds from temporary cash investments or from investment of securities lending collateral are recorded as either interest from affiliated issuers or securities lending income, respectively, in the accompanying Statements of Operations.

The iShares MSCI Emerging Markets Index Fund, in order to improve its portfolio liquidity and its ability to track the MSCI Emerging Markets Index, may invest in shares of other iShares Funds that invest in securities in the Fund’s benchmark index. As of August 31, 2005, the iShares MSCI Emerging Markets Index Fund held shares of the iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds.

The following table provides information about the investment by each Fund in shares of issuers of which BGFA is an affiliate for the year ended August 31, 2005, including income earned from these affiliated issuers and net realized gains (losses) from sales of these affiliated issuers.

iShares MSCI Index Fund and Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Dividend and Interest Income		Net Realized Gain (Loss)
Australia
IMMF	120	27,391	27,403	108	$	108,353	$	3,048	$	—
Brazil
IMMF	981	245,799	245,668	1,112		1,112,414		35,374		—
Canada
IMMF	199	13,891	14,051	39		39,013		2,360		—
Emerging Markets
IMMF	5,432	1,207,134	1,208,531	4,035		4,035,314		184,172		—
iShares MSCI Malaysia Index Fund	851	578	249	1,180		8,564,782		143,660		861
iShares MSCI South Korea Index Fund	299	198	95	402		14,097,669		37,162		364,716
iShares MSCI Taiwan Index Fund	965	785	234	1,516		17,815,115		99,495		(126,113	)
Hong Kong
IMMF	213	37,744	37,934	23		22,977		4,452		—
Malaysia
IMMF	394	66,384	66,377	401		401,056		11,255		—
Mexico
IMMF	85	16,944	17,012	17		17,275		2,247		—
Pacific ex-Japan
IMMF	308	90,651	90,143	816		815,709		10,294		—
Singapore
IMMF	87	26,455	26,490	52		51,875		3,420		—
South Africa
IMMF	58	7,129	7,182	5		5,136		1,014		—

NOTES TO THE FINANCIAL STATEMENTS 117

Notes to the Financial Statements (Continued)

iSHARES^®, INC .

iShares MSCI Index Fund and Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Dividend and Interest Income		Net Realized Gain (Loss)
South Korea
IMMF	721	198,209	197,537	1,393	$	1,393,487	$	26,042	$	—
Taiwan
IMMF	366	40,107	40,403	70		69,521		6,503		—

During the year ended August 31, 2005, certain Funds invested cash collateral from securities on loan in the GMMF, IMMF and PMMF. Due to the nature of the structure of the joint account used for the investment of the collateral for securities on loan, the information reported above for each Fund does not include the Fund’s holdings of the GMMF, IMMF and PMMF in connection with the investment of collateral for securities on loan.

As of August 31, 2005, certain directors and officers of the Company are also officers of BGI.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2005, were as follows:

iShares MSCI Index Fund	Purchases		Sales
Australia	$	51,754,172	$	49,412,736
Brazil		343,882,089		186,862,192
Canada		30,642,476		32,810,205
Emerging Markets		441,525,010		363,312,994
Hong Kong		38,846,556		37,227,571
Malaysia		188,985,203		44,375,401
Mexico		25,022,603		19,440,839
Pacific ex-Japan		188,696,014		176,418,031
Singapore		23,885,903		19,237,847
South Africa		42,198,272		41,552,415
South Korea		377,512,363		152,639,430
Taiwan		465,850,984		132,799,867

In-kind transactions (see Note 4) for the year ended August 31, 2005, were as follows:

iShares MSCI Index Fund	In-kind Purchases		In-kind Sales
Australia	$	230,365,963	$	110,374,999
Canada		141,016,263		166,747,813
Emerging Markets		4,371,169,461		786,631,588
Hong Kong		250,835,018		157,383,889
Mexico		224,737,659		184,770,891
Pacific ex-Japan		631,098,400		—
Singapore		154,683,108		23,032,458
South Africa		59,374,940		36,386,964

118 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC .

4. CAPITAL SHARE TRANSACTIONS

The Company has authorized 10.9 billion shares of $.001 par value capital stock. The number of shares authorized to each Fund are as follows:

iShares MSCI Index Fund	Authorized Shares
Australia	127,800,000
Brazil	500,000,000
Canada	340,200,000
Emerging Markets	500,000,000
Hong Kong	191,400,000
Malaysia	127,800,000
Mexico	255,000,000
Pacific ex-Japan	500,000,000
Singapore	191,400,000
South Africa	200,000,000
South Korea	200,000,000
Taiwan	200,000,000

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

The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind contribution of a designated portfolio of equity securities constituting a portfolio sampling representation of the corresponding MSCI Index and an amount of cash (except for the iShares MSCI Brazil, iShares MSCI Malaysia, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds which are offered in Creation Units solely for cash in U.S. dollars). A purchase transaction fee and a redemption transaction fee are charged to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units, including Creation Units for cash.

The Board authorized a three-for-one stock split for the iShares MSCI Emerging Markets Index Fund, effective June 9, 2005, for the shareholders of record on June 6, 2005. The impact of the stock split was to increase the number of shares outstanding by a factor of three, while decreasing the net asset value per share by a factor of three, resulting in no effect to the net assets of the Fund. The financial statements for the Fund have been adjusted to reflect the stock split.

5. LOANS OF PORTFOLIO SECURITIES

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

As of August 31, 2005, certain Funds had loaned securities which were collateralized by cash. Pursuant to an exemptive order issued by the SEC, the cash collateral received was invested in a joint account with other investment funds managed by BGFA. The joint account invests in securities with remaining maturities of 397 days or less, repurchase agreements and money market mutual funds, including money market funds managed by BGFA. Repurchase agreements held in the joint account are fully collateralized by U.S. Government securities. Income from the joint account is allocated daily to each Fund, based on each Fund’s portion of the total cash collateral received. The market value of the securities on loan as of August 31, 2005 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, which is disclosed in the Funds’ Statements of Operations, is presented net of rebates paid to, or fees paid by, borrowers.

NOTES TO THE FINANCIAL STATEMENTS 119

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

iShares, Inc.

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Australia Index Fund, iShares MSCI Brazil Index Fund, iShares MSCI Canada Index Fund, iShares MSCI Emerging Markets Index Fund, iShares MSCI Hong Kong Index Fund, iShares MSCI Malaysia Index Fund, iShares MSCI Mexico Index Fund, iShares MSCI Pacific ex-Japan Index Fund, iShares MSCI Singapore Index Fund, iShares MSCI South Africa Index Fund, iShares MSCI South Korea Index Fund and iShares MSCI Taiwan Index Fund, each a portfolio of the iShares MSCI Series (the “Funds”), at August 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 18, 2005

120 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Tax Information (Unaudited)

iSHARES^®, INC.

For the year ended August 31, 2005, certain of the Funds earned foreign source income and paid foreign taxes which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”) as follows:

iShares MSCI Index Fund	Foreign Source Income Earned		Foreign Taxes Paid
Australia	$	14,204,553	$	464,895
Brazil		20,486,205		2,129,744
Canada		6,235,912		933,651
Emerging Markets		143,095,262		13,211,637
Pacific ex-Japan		51,754,315		1,115,308
South Korea		13,330,505		2,179,818
Taiwan		28,606,320		7,549,658

Under Section 854(b)(2) of the Code, the Funds hereby designate the following maximum amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Code for the year ended August 31, 2005:

iShares MSCI Index Fund	Qualified Dividend Income
Australia	$	8,182,188
Brazil		401,159
Canada		4,389,728
Emerging Markets		83,424,023
Mexico		3,763,856
Pacific ex-Japan		23,867,947
South Africa		3,464,251
South Korea		10,064,116

In January 2006, shareholders will receive Form 1099-DIV which will include their share of qualified dividends distributed during the calendar year 2005. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.

TAX INFORMATION 121

Shareholder Meeting Results (Unaudited)

iSHARES^®, INC.

A special meeting of shareholders of iShares, Inc. was scheduled on July 14, 2005 and subsequently adjourned until August 11, 2005. The proposals acted upon by shareholders at the special meeting and the results of the shareholder vote were as follows:

Proposal 1 *

To elect the eight nominees specified below as Directors of the Company, each of whom will serve until his/her successor is duly elected or appointed and qualified.

Director	Votes For	Votes Withheld
Lee T. Kranefuss	514,380,779	13,203,425
John E. Martinez	514,431,297	13,152,907
Richard K. Lyons	514,795,814	12,788,388
George G.C. Parker	509,155,829	18,428,374
W. Allen Reed	514,418,913	13,165,293
Cecilia H. Herbert	514,381,937	13,202,268
Charles A. Hurty	514,442,567	13,141,638
John E. Kerrigan	514,830,983	12,753,220

Messrs. Kranefuss, Martinez, Lyons, Reed and Parker previously served as Directors of the Company and were re-elected. Ms. Herbert and Messrs. Hurty and Kerrigan were newly elected.

Proposal 2A

To approve a change to the Company’s fundamental investment policy to simplify and conform each Fund’s investment restriction regarding issuing senior securities. Shareholders of the iShares MSCI Emerging Markets Index Fund and iShares MSCI Mexico Index Fund approved this proposal. The proposal did not pass in the other Funds in this shareholder report.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Australia	6,443,201	540,021	442,423	3,797,755
Brazil	3,540,411	197,421	110,082	5,562,843
Canada	3,498,988	429,360	134,351	5,507,998
Emerging Markets	8,183,122	182,334	115,171	3,328,764
Hong Kong	12,628,551	321,277	469,240	12,725,643
Malaysia	8,593,546	2,278,801	173,640	11,596,325
Mexico	3,717,861	90,403	154,071	1,332,048
Pacific ex-Japan	3,601,359	76,920	97,534	3,443,585
Singapore	6,938,677	234,463	226,731	12,861,936
South Africa	316,330	33,665	8,397	567,359
South Korea	4,464,564	123,099	130,498	4,326,297
Taiwan	18,847,196	290,848	108,205	14,713,998

122 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Meeting Results (Unaudited) (Continued)

iSHARES^®, INC.

Proposal 2B

To approve a change to the Company’s fundamental investment policy to simplify and conform each Fund’s investment restriction regarding the making of loans. Shareholders of the iShares MSCI Emerging Markets Index Fund and iShares MSCI Mexico Index Fund approved this proposal. The proposal did not pass in the other Funds in this shareholder report.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Australia	6,334,361	640,358	450,926	3,797,755
Brazil	3,530,579	208,837	108,498	5,562,843
Canada	3,464,553	464,210	133,936	5,507,998
Emerging Markets	8,078,172	282,605	119,851	3,328,763
Hong Kong	12,513,170	431,897	474,001	12,725,643
Malaysia	8,559,872	2,311,199	174,916	11,596,325
Mexico	3,709,723	96,717	155,895	1,332,048
Pacific ex-Japan	3,595,297	84,003	96,512	3,443,586
Singapore	6,896,196	273,033	230,643	12,861,935
South Africa	315,971	34,024	8,397	567,359
South Korea	4,452,275	132,235	133,651	4,326,297
Taiwan	18,792,739	320,354	133,155	14,713,999

Proposal 2C

To approve a change to certain Funds’ fundamental investment policy with respect to industry concentration. The shareholders of the iShares MSCI Singapore Index Fund and iShares MSCI South Korea Index Fund did not approve this proposal.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Mexico	3,718,245	88,058	156,032	1,332,048
Singapore	6,940,982	234,581	224,308	12,861,936
South Korea	4,469,596	118,142	130,423	4,326,297

Proposal 2D

To approve a change to certain Funds’ fundamental investment policy to permit each Fund to invest 25% or more of its total assets in a single issuer. The shareholders of the iShares MSCI Singapore Index Fund and iShares MSCI South Korea Index Fund did not approve this proposal.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Mexico	3,715,336	91,427	155,572	1,332,048
Singapore	6,923,531	250,218	226,122	12,861,936
South Korea	4,461,733	122,330	134,098	4,326,297

SHAREHOLDER MEETING RESULTS 123

Shareholder Meeting Results (Unaudited) (Continued)

iSHARES^®, INC.

Proposal 3

To approve a change in the classification of the investment objectives of certain Funds from fundamental to non-fundamental. The shareholders of the iShares MSCI Mexico Index Fund approved this proposal. The proposal did not pass in the other Funds in this shareholder report.

iShares MSCI Index Fund	Votes For	Votes Against	Votes Abstaining	Broker Non-Votes**
Australia	6,071,241	906,466	447,938	3,797,755
Brazil	3,370,902	363,205	113,806	5,562,844
Canada	2,820,453	1,108,063	134,183	5,507,998
Hong Kong	11,696,365	1,243,883	478,820	12,725,643
Malaysia	8,039,945	2,824,062	181,980	11,596,325
Mexico	3,636,325	170,323	155,687	1,332,048
Pacific ex-Japan	3,083,503	594,257	98,053	3,443,585
Singapore	6,438,453	712,576	248,843	12,861,935
South Korea	4,242,053	340,064	136,045	4,326,296
Taiwan	14,916,892	4,193,901	135,455	14,713,999

Proposal 4

To approve a new advisory agreement for the iShares MSCI Singapore Index Fund with Barclays Global Fund Advisors in order to effect a change to the fee structure. The shareholders approved this proposal.

Votes For	Votes Against	Votes Abstaining
19,933,795	114,776	213,236

* Denotes Company-wide proposal and voting results.

** Broker non-votes are proxies received by the Fund from brokers or nominees, who did not receive instructions from the beneficial owner or other persons entitled to vote, and who have no discretionary power to vote on a particular matter. Broker non-votes have the effect of a vote against the proposal.

124 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts (Unaudited)

iSHARES^® MSCI SINGAPORE INDEX FUND

At a meeting held on April 22, 2005, the Board approved the Proposed Advisory Agreement, subject to approval by the iShares MSCI Singapore Index Fund’s shareholders, based on the Board’s review of the qualitative and quantitative information provided by BGFA. In approving the Proposed Advisory Agreement, the Board, including the Independent Directors, who are advised by independent counsel, considered various factors, none of which was controlling, and made the following conclusions.

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board reviewed the scope of services to be provided by BGFA under the Proposed Advisory Agreement and noted that there were no differences between the level or type of service provided by BGFA under the Current Advisory Agreement and the level or type of service proposed to be provided by BGFA under the Proposed Advisory Agreement. In reviewing the scope of services provided to the Fund by BGFA, the Board reviewed and discussed BGFA’s investment philosophy and experience. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Fund. In addition to the above considerations, the Board reviewed and considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board noted that BGFA does not provide investment advisory services to any other fund or account seeking to track the same index as the Fund and, therefore, no comparative performance information was available for additional consideration. The Board noted, however, that during BGFA’s term as investment adviser, the Fund had met its investment objective of seeking investment results that correspond generally to the price and yield performance, before fees and expenses, of the Fund’s underlying index. Based on this review, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Fund under the Proposed Advisory Agreement are appropriate and continue to support the Board’s original selection of BGFA as investment adviser to the Fund.

FUND EXPENSES AND PERFORMANCE OF THE FUND AND BGFA

The Board reviewed statistical information regarding the expense ratio components, contractual advisory fees, actual advisory fees, and actual total expenses of the Fund in comparison with the same information for other funds registered under the 1940 Act objectively determined solely by Lipper Inc. (“Lipper”), an independent provider of investment company data, as the Fund’s applicable peer group (the “Lipper Peer Group”). The Lipper Peer Group included retail no-load or institutional pure index funds with differing investment objective classifications (e.g., regional index funds, funds that hold American Depositary Receipts rather than portfolio securities traded on foreign exchanges) and other attributes (e.g., all-inclusive management fees, “at cost” service providers) as well as other exchange-traded funds, including exchange-traded funds organized as unit investment trusts rather than as managed investment companies like the Fund. In addition, the Board reviewed statistical information regarding the performance of the Fund for the most recent quarter, and the one-, three- and five-year periods, ended March 31, 2005 and a comparison of the Fund’s performance to that of the funds in the Lipper Peer Group. In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to prepare this information. The Board noted that the funds in the Lipper Peer Group did not include a Singapore index fund or any other single-country index fund and, therefore, the statistical information did not provide meaningful direct comparisons. The Board noted that the Fund generally tracked its underlying index over the periods reflected. The Board also discussed that the advisory fee for the Fund for the most recent fiscal year was the highest of the advisory fees of the funds in the Lipper Peer Group, and that the Fund’s actual total expenses equaled the highest actual total expenses of the funds in the Lipper Peer Group, but noted that many of the funds in the Lipper Peer Group had either dissimilar fee structures or had substantial fee waivers and significantly larger asset bases, as well as differing investment objective classifications and other attributes (as discussed above), and therefore did not provide meaningful direct comparisons. The Board also considered that, because the Fund’s investment objective is to seek investment results that correspond generally to the performance, before fees and expenses, of a single-country index, with limited investor demand, the Fund is likely not to achieve consistent asset levels that would result in lower fees under the Current Advisory Agreement. The Board considered, however, that under the Proposed Advisory Agreement, because the Fund’s investment advisory fee rates will be applied to the aggregate assets of the Fund and other series of the Company, the Fund would be charged lower fees by BGFA. The Board also noted that, although not included in the Lipper Peer Group, the other single-country series of the Company provided a meaningful direct comparison to the Fund and the investment advisory

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS 125

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

fee rate for the Fund under the Proposed Advisory Agreement, and that the investment advisory fee rate under the Proposed Advisory Agreement would be the same as the investment advisory fee rates for most of the other single-country series of the Company. Based on this review, the Board concluded that the expense levels and the historical performance of the Fund, as managed by BGFA, as compared to the expense levels and performance of the funds in the Lipper Peer Group were satisfactory for the purposes of approving the Proposed Advisory Agreement.

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

The Board reviewed information about the profitability of the Fund to BGFA based on the fees payable under the Current Advisory Agreement for the last calendar year, which amounts are not expected to increase under the Proposed Advisory Agreement. The Board analyzed the Fund’s expenses, including its investment advisory fees paid to BGFA. The Board also reviewed information regarding direct revenue received by BGFA and ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Fund by BGFA (as discussed in detail below). The Board discussed the differences in fee structure between the Current Advisory Agreement and the Proposed Advisory Agreement and how the proposed new fee structure, under which BGFA will be responsible for paying all expenses of the Fund other than the Excluded Expenses, would change the presentation, but not the amount, of the Fund’s profitability to BGFA going forward, should the Fund’s shareholders vote to approve the Proposed Advisory Agreement. The Board also discussed BGFA’s profit margin as reflected in the Fund’s profitability analysis and as compared to the profit margin currently achieved by BGFA in managing other iShares Funds. Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Proposed Advisory Agreement and from other relationships between the Fund and BGFA and/or its affiliates, if any, were likely to be within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Fund’s profitability analysis, the Board received information regarding economies of scale or other efficiencies that may result from increases in the Fund’s asset level in light of the investment advisory fee rates and breakpoints under the Current Advisory Agreement and that may result from increases in the asset levels of the Fund and the other series of the Company that would be included in the aggregate assets against which the same investment advisory fee rates and breakpoints would be applied under the Proposed Advisory Agreement. The Board noted that the Fund’s asset levels are not likely to increase sufficiently to reach the breakpoints under the Current Advisory Agreement. In contrast, under the Proposed Advisory Agreement the Fund would achieve an immediate and likely ongoing benefit from the application of those same investment advisory fee breakpoints to aggregate assets of the Fund and certain other series of the Company, in calculating the Fund’s investment advisory fee. Based on this review, the Board concluded that the proposed new fee structure in the Proposed Advisory Agreement reflects a more favorable sharing of economies of scale for the benefit of the Fund’s shareholders and provides the potential to experience further sharing of economies of scale as the Fund or other series of the Company grow in size.

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

The Board also received and considered information regarding the Fund’s maximum investment advisory fee rate under the Proposed Advisory Agreement in comparison to the investment management fee rates for other funds/accounts with substantially similar investment objectives and strategies for which BGI, BGFA’s affiliate, provides investment management services. The Board noted that comparative investment management fee information was available only with respect to certain collective funds, as BGFA and its affiliates do not manage any mutual funds, separate accounts or other exchange-traded funds with substantially similar investment objectives and strategies as the Fund. The Board further noted that BGFA had provided the Board with information regarding how the level of services provided to a collective fund differed from an exchange-traded open-end investment company such as the Fund, and with information regarding the marketing and pricing of collective funds that indicated such products were not typically offered on a stand-alone investment basis but only as a part of an allocation among many single-country index collective funds that were each priced on an aggregate client relationship level. The Board analyzed the level of the investment advisory/management fees in relation to the nature and extent of services provided to the Fund in comparison with the nature and extent of

126 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^® MSCI SINGAPORE INDEX FUND

services provided to the collective funds, including, among other factors, the level of complexity in managing the Fund and the collective funds under differing regulatory requirements and the various client guidelines or other requirements, the nature and extent of the shareholder support services provided to the Fund and its shareholders in comparison with the nature and extent of the services provided to collective funds and their clients, and in relation to the Fund’s and the collective funds’ fee structures and asset levels. The Board noted that the investment management fee rates for the collective funds were lower than the maximum investment advisory fee rate under the Proposed Advisory Agreement, but that the differences appeared to be fully attributable to, among other things, the externalization of certain expenses by the collective funds including custody and administration expenses and, based on the estimates provided by BGFA, the costs of the regulatory requirements and additional shareholder services applicable to the Fund as an open-end investment company rather than a collective fund. The Board also noted that the investment advisory fee rate under the Proposed Advisory Agreement was the same as the investment advisory fee rates for most of the other single-country series of the Company. Based on this review, the Board determined that the investment advisory fee rates under the Proposed Advisory Agreement do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining and concluded that the investment advisory fee rates under the Proposed Advisory Agreement are fair and reasonable.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

The Board reviewed any ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Fund by BGFA, such as the payment of securities lending revenue to BGI, the Company’s securities lending agent, and the payment of advisory fees and/or administration fees to BGFA and BGI in connection with the Fund’s investments in other funds for which BGFA provides investment advisory services and/or BGI provides administration services. The Board concluded that any such ancillary benefits that will likely continue under the Proposed Advisory Agreement would not be disadvantageous to the Fund’s shareholders.

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS 127

Board Review and Approval of Investment Advisory Contracts* (Unaudited)

iSHARES^®, INC .

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors, including a majority of Directors who are not interested persons of the Company (as that term is defined in the 1940 Act), who are commonly referred to as the “Independent Directors,” is required annually to consider each Fund’s Investment Advisory Contract with BGFA (each, an “Advisory Contract”). Pursuant to Section 15(c), the Board of Directors (the “Board”) is required to request and evaluate, and BGFA is required to provide, such information as may be reasonably necessary to evaluate the terms of the Advisory Contracts. At a meeting held on June 14, 2005, the Board approved the selection of BGFA and the continuance of the Advisory Contracts, based on its review of qualitative and quantitative information provided by BGFA. With respect to the iShares MSCI Singapore Index Fund (the “Singapore Fund”), the Board approved the continuance of the current Advisory Contract for the Singapore Fund, pending shareholder approval of the new advisory contract for the Singapore Fund which was previously considered and approved by the Board on April 22, 2005. In selecting BGFA and approving the Advisory Contracts for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board reviewed the scope of services to be provided by BGFA under the Advisory Contracts and noted that there would be no differences between the scope of services required to be provided by BGFA for the past year and the scope of services required to be provided by BGFA for the upcoming year. In reviewing the scope of services provided to the Funds by BGFA, the Board reviewed and discussed BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including increasing the number of their employees, to the support of the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA provides information regarding portfolio management and compliance to the Board on a periodic basis in connection with regularly scheduled meetings of the Board. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board reviewed and considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Funds; therefore, no comparative performance information was available. However, the Board also noted that the Funds had met their investment objectives consistently since their relevant inception dates. Based on this review, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contracts were appropriate and continued to support the Board’s original selection of BGFA as investment adviser to the Funds.

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other funds registered under the 1940 Act objectively determined solely by Lipper, as comprising each Fund’s applicable peer group (the “Lipper Peer Group”). In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three- and five-year, and “latest quarter” periods ended March 31, 2005, as applicable, and a comparison of each Fund’s performance to that of the funds in its Lipper Peer Group for the same periods. Because there are relatively few exchange-traded funds other than the Funds and because few, if any, exchange-traded funds or index funds track indices similar to those tracked by the Funds, the Lipper Peer Groups included open-end, closed-end, and exchange-traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Peer Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Peer Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board noted that most of the Funds generally performed in line with the funds in their respective Lipper Peer Groups over relevant periods, however, certain

128 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^®, INC .

of the Funds may have underperformed or outperformed funds in their respective Lipper Peer Groups over relevant periods, but any such Funds also performed in line with their relevant benchmarks over such periods. The Board also noted that the investment advisory fees and overall expenses for the Funds were generally lower than or in line with the investment advisory fee rates and overall expenses of the Funds in their respective Lipper Peer Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of the Funds, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the Lipper Peer Groups, were satisfactory for the purposes of approving the continuance of the Advisory Contracts.

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

The Board reviewed information about the profitability of the Funds to BGFA based on the fees payable under the Advisory Contracts for the last calendar year. The Board analyzed the Funds’ expenses, including the investment advisory fees paid to BGFA. The Board also reviewed information regarding direct revenue received by BGFA and ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA (as discussed below). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Advisory Contracts and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ asset levels. The Board noted that the Advisory Contracts for most of the Funds provide for breakpoints in the investment advisory fee rates as a result of increases in the asset levels of such Funds on an aggregated basis with certain other Funds. The Board further noted that the Advisory Contract for the iShares MSCI Singapore Index Fund provides for breakpoints in its investment advisory fee rate based on increases in the asset levels of that particular Fund. The Board also noted that the Advisory Contracts for the iShares MSCI Pacific Ex-Japan Index Fund and the iShares MSCI Emerging Markets Index Fund do not provide for any breakpoints in the investment advisory fee rates as a result of increases in the asset levels of such Funds. However, the Board further noted that possible future economies of scale had been taken into consideration by fixing the investment advisory fees at rates at the lower end of the marketplace, effectively giving Fund shareholders, from inception, the benefits of the lower average fee shareholders would have received from a fee structure with declining breakpoints where the initial fee was higher. In addition, the Board noted that as of July 1, 2004, Fund shareholders were no longer paying distribution fees pursuant to the Funds’ distribution plan under Rule 12b-1 of the 1940 Act because such plan had been terminated as of that date, benefiting the Funds’ shareholders by lowering the Funds’ overall expenses. The Board also reviewed BGFA’s historic profitability as investment adviser to the Funds and noted that BGFA had not yet fully recovered losses it had experienced during earlier years when the Funds had not yet achieved reasonable economic scale. In light of this history, the Board determined that reductions in fee rates or additions of further breakpoints were not warranted at this juncture. Based on this review, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees at present reflects the sharing of economies of scale with the Funds’ shareholders.

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

The Board received and considered information regarding the Funds’ annual investment advisory fee rates under the Advisory Contracts in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts. The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any mutual funds, collective funds, separate accounts or other exchange-traded funds with substantially similar investment objectives and strategies as the

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS 129

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^®, INC .

Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the other funds registered under the 1940 Act, collective funds and separate accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contracts do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contracts are fair and reasonable.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

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

Based on the above analysis, the Board determined that the Advisory Contracts, including the investment advisory fee rates thereunder, are fair and reasonable in light of all relevant circumstances and concluded that it is in the best interest of the Funds and their shareholders to continue the Advisory Contracts.

* Denotes the Board’s approval of Investment Advisory Contracts for all series of the Company, including the Funds.

130 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited)

iSHARES^®, INC.

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

Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of a Fund on a given day, generally at the time 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 report. Except as noted below, the information shown for each Fund is for the period from January 1, 2000 through June 30, 2005, the date of the most recent calendar quarter-end. The information shown for the iShares MSCI Brazil, iShares MSCI Emerging Markets, iShares MSCI Pacific ex-Japan, iShares MSCI South Africa, iShares MSCI South Korea and iShares MSCI Taiwan Index Funds is for each full calendar quarter completed after the inception date of each Fund through June 30, 2005. The specific periods covered for each Fund are disclosed in the table for such Fund.

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

iShares MSCI Australia Index Fund

Period Covered: January 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 2.5%	10	0.72	%
Greater than 2.0% and Less than 2.5%	12	0.87
Greater than 1.5% and Less than 2.0%	44	3.19
Greater than 1.0% and Less than 1.5%	134	9.70
Greater than 0.5% and Less than 1.0%	320	23.17
Between 0.5% and – 0.5%	676	48.94
Less than – 0.5% and Greater than – 1.0%	110	7.97
Less than – 1.0% and Greater than – 1.5%	41	2.97
Less than – 1.5% and Greater than – 2.0%	19	1.38
Less than – 2.0% and Greater than – 2.5%	7	0.51
Less than – 2.5%	8	0.58
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 131

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Brazil Index Fund

Period Covered: October 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 3.0%	7	0.59	%
Greater than 2.5% and Less than 3.0%	14	1.17
Greater than 2.0% and Less than 2.5%	24	2.01
Greater than 1.5% and Less than 2.0%	37	3.10
Greater than 1.0% and Less than 1.5%	91	7.63
Greater than 0.5% and Less than 1.0%	173	14.51
Between 0.5% and – 0.5%	577	48.43
Less than – 0.5% and Greater than – 1.0%	126	10.57
Less than – 1.0% and Greater than – 1.5%	41	3.44
Less than – 1.5% and Greater than – 2.0%	37	3.10
Less than – 2.0% and Greater than – 2.5%	25	2.10
Less than – 2.5% and Greater than – 3.0%	11	0.92
Less than – 3.0% and Greater than – 3.5%	8	0.67
Less than – 3.5% and Greater than – 4.0%	7	0.59
Less than – 4.0% and Greater than – 4.5%	6	0.50
Less than – 4.5%	8	0.67
	1,192	100.00	%

iShares MSCI Canada Index Fund

Period Covered: January 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 3.0%	6	0.43	%
Greater than 2.5% and Less than 3.0%	17	1.23
Greater than 2.0% and Less than 2.5%	25	1.81
Greater than 1.5% and Less than 2.0%	51	3.69
Greater than 1.0% and Less than 1.5%	108	7.82
Greater than 0.5% and Less than 1.0%	236	17.09
Between 0.5% and – 0.5%	805	58.29
Less than – 0.5% and Greater than – 1.0%	95	6.88
Less than – 1.0% and Greater than – 1.5%	23	1.67
Less than – 1.5% and Greater than – 2.0%	8	0.58
Less than – 2.0%	7	0.51
	1,381	100.00	%

132 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Emerging Markets Index Fund

Period Covered: July 1, 2003 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 1.5%	13	2.58	%
Greater than 1.0% and Less than 1.5%	31	6.15
Greater than 0.5% and Less than 1.0%	150	29.76
Between 0.5% and – 0.5%	259	51.39
Less than – 0.5% and Greater than – 1.0%	34	6.75
Less than – 1.0% and Greater than – 1.5%	11	2.18
Less than – 1.5%	6	1.19
	504	100.00	%

iShares MSCI Hong Kong Index Fund

Period Covered: January 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 4.0%	7	0.51	%
Greater than 3.5% and Less than 4.0%	5	0.36
Greater than 3.0% and Less than 3.5%	5	0.36
Greater than 2.5% and Less than 3.0%	8	0.58
Greater than 2.0% and Less than 2.5%	23	1.67
Greater than 1.5% and Less than 2.0%	59	4.27
Greater than 1.0% and Less than 1.5%	126	9.12
Greater than 0.5% and Less than 1.0%	239	17.31
Between 0.5% and – 0.5%	509	36.86
Less than – 0.5% and Greater than – 1.0%	163	11.80
Less than – 1.0% and Greater than – 1.5%	97	7.02
Less than – 1.5% and Greater than – 2.0%	70	5.07
Less than – 2.0% and Greater than – 2.5%	28	2.03
Less than – 2.5% and Greater than – 3.0%	19	1.38
Less than – 3.0% and Greater than – 3.5%	10	0.72
Less than – 3.5% and Greater than – 4.5%	7	0.51
Less than – 4.5%	6	0.43
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 133

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Malaysia Index Fund

Period Covered: January 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 6.0%	16	1.16	%
Greater than 5.5% and Less than 6.0%	1	0.07
Greater than 5.0% and Less than 5.5%	1	0.07
Greater than 4.0% and Less than 5.0%	4	0.29
Greater than 3.5% and Less than 4.0%	4	0.29
Greater than 3.0% and Less than 3.5%	6	0.43
Greater than 2.5% and Less than 3.0%	13	0.94
Greater than 2.0% and Less than 2.5%	37	2.68
Greater than 1.5% and Less than 2.0%	71	5.14
Greater than 1.0% and Less than 1.5%	116	8.40
Greater than 0.5% and Less than 1.0%	150	10.86
Between 0.5% and – 0.5%	307	22.24
Less than – 0.5% and Greater than – 1.0%	122	8.83
Less than – 1.0% and Greater than – 1.5%	134	9.70
Less than – 1.5% and Greater than – 2.0%	95	6.88
Less than – 2.0% and Greater than – 2.5%	87	6.30
Less than – 2.5% and Greater than – 3.0%	63	4.56
Less than – 3.0% and Greater than – 3.5%	47	3.40
Less than – 3.5% and Greater than – 4.0%	27	1.96
Less than – 4.0% and Greater than – 4.5%	27	1.96
Less than – 4.5% and Greater than – 5.0%	14	1.01
Less than – 5.0% and Greater than – 5.5%	3	0.22
Less than – 5.5% and Greater than – 6.0%	8	0.58
Less than – 6.0%	28	2.03
	1,381	100.00	%

iShares MSCI Mexico Index Fund

Period Covered: January 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 2.5%	4	0.29	%
Greater than 2.0% and Less than 2.5%	10	0.72
Greater than 1.5% and Less than 2.0%	37	2.68
Greater than 1.0% and Less than 1.5%	96	6.95
Greater than 0.5% and Less than 1.0%	207	14.99
Between 0.5% and – 0.5%	715	51.78
Less than – 0.5% and Greater than – 1.0%	190	13.76
Less than – 1.0% and Greater than – 1.5%	89	6.44
Less than – 1.5% and Greater than – 2.0%	22	1.59
Less than – 2.0% and Greater than – 2.5%	7	0.51
Less than – 2.5%	4	0.29
	1,381	100.00	%

134 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Pacific ex-Japan Index Fund

Period Covered: January 1, 2002 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 3.0%	4	0.45	%
Greater than 2.5% and Less than 3.0%	6	0.68
Greater than 2.0% and Less than 2.5%	10	1.14
Greater than 1.5% and Less than 2.0%	58	6.59
Greater than 1.0% and Less than 1.5%	177	20.11
Greater than 0.5% and Less than 1.0%	225	25.57
Between 0.5% and – 0.5%	358	40.68
Less than – 0.5% and Greater than – 1.0%	32	3.64
Less than – 1.0% and Greater than – 1.5%	8	0.91
Less than – 1.5%	2	0.23
	880	100.00	%

iShares MSCI Singapore Index Fund

Period Covered: January 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 3.0%	7	0.51	%
Greater than 2.5% and Less than 3.0%	6	0.43
Greater than 2.0% and Less than 2.5%	25	1.81
Greater than 1.5% and Less than 2.0%	63	4.56
Greater than 1.0% and Less than 1.5%	158	11.44
Greater than 0.5% and Less than 1.0%	154	11.15
Between 0.5% and – 0.5%	405	29.33
Less than – 0.5% and Greater than – 1.0%	168	12.17
Less than – 1.0% and Greater than – 1.5%	138	9.99
Less than – 1.5% and Greater than – 2.0%	79	5.72
Less than – 2.0% and Greater than – 2.5%	68	4.92
Less than – 2.5% and Greater than – 3.0%	40	2.90
Less than – 3.0% and Greater than – 3.5%	26	1.88
Less than – 3.5% and Greater than – 4.0%	21	1.52
Less than – 4.0% and Greater than – 4.5%	9	0.65
Less than – 4.5% and Greater than – 5.0%	7	0.51
Less than – 5.0%	7	0.51
	1,381	100.00	%

SUPPLEMENTAL INFORMATION 135

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI South Africa Index Fund

Period Covered: April 1, 2003 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 2.0%	3	0.53	%
Greater than 1.5% and Less than 2.0%	6	1.06
Greater than 1.0% and Less than 1.5%	38	6.70
Greater than 0.5% and Less than 1.0%	112	19.75
Between 0.5% and – 0.5%	351	61.91
Less than – 0.5% and Greater than – 1.0%	36	6.35
Less than – 1.0% and Greater than – 1.5%	13	2.29
Less than – 1.5% and Greater than – 2.0%	5	0.88
Less than – 2.0%	3	0.53
	567	100.00	%

iShares MSCI South Korea Index Fund

Period Covered: July 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 4.5%	10	0.80	%
Greater than 4.0% and Less than 4.5%	3	0.24
Greater than 3.5% and Less than 4.0%	8	0.64
Greater than 3.0% and Less than 3.5%	8	0.64
Greater than 2.5% and Less than 3.0%	19	1.51
Greater than 2.0% and Less than 2.5%	46	3.66
Greater than 1.5% and Less than 2.0%	88	7.01
Greater than 1.0% and Less than 1.5%	136	10.84
Greater than 0.5% and Less than 1.0%	210	16.73
Between 0.5% and – 0.5%	414	32.99
Less than – 0.5% and Greater than – 1.0%	125	9.96
Less than – 1.0% and Greater than – 1.5%	78	6.22
Less than – 1.5% and Greater than – 2.0%	47	3.74
Less than – 2.0% and Greater than – 2.5%	28	2.23
Less than – 2.5% and Greater than – 3.0%	13	1.03
Less than – 3.0% and Greater than – 3.5%	12	0.96
Less than – 3.5%	10	0.80
	1,255	100.00	%

136 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Supplemental Information (Unaudited) (Continued)

iSHARES^®, INC.

iShares MSCI Taiwan Index Fund

Period Covered: July 1, 2000 through June 30, 2005

	Number of Days	Percentage of Total Days
Greater than 6.0%	8	0.64	%
Greater than 5.0% and Less than 6.0%	5	0.40
Greater than 4.5% and Less than 5.0%	9	0.72
Greater than 4.0% and Less than 4.5%	4	0.32
Greater than 3.5% and Less than 4.0%	19	1.51
Greater than 3.0% and Less than 3.5%	27	2.15
Greater than 2.5% and Less than 3.0%	43	3.43
Greater than 2.0% and Less than 2.5%	59	4.70
Greater than 1.5% and Less than 2.0%	125	9.96
Greater than 1.0% and Less than 1.5%	152	12.11
Greater than 0.5% and Less than 1.0%	185	14.74
Between 0.5% and – 0.5%	303	24.14
Less than – 0.5% and Greater than – 1.0%	108	8.61
Less than – 1.0% and Greater than – 1.5%	85	6.77
Less than – 1.5% and Greater than – 2.0%	56	4.46
Less than – 2.0% and Greater than – 2.5%	18	1.43
Less than – 2.5% and Greater than – 3.0%	25	1.99
Less than – 3.0% and Greater than – 3.5%	12	0.96
Less than – 3.5% and Greater than – 4.5%	5	0.40
Less than – 4.5%	7	0.56
	1,255	100.00	%

SUPPLEMENTAL INFORMATION 137

Director Information (Unaudited)

iSHARES^®, INC.

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

iShares, Inc., iShares Trust, Barclays Global Investors Funds and Master Investment Portfolio are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 101 portfolios within the fund complex. In addition, Lee T. Kranefuss and Richard K. Lyons each serves as a Trustee for Barclays Global Investors Funds and Master Investment Portfolio and oversees 126 portfolios within the fund complex.

Unless otherwise noted in the tables below, the address for each Director is 45 Fremont Street, San Francisco, California 94105. Additional information about the Funds’ Directors may be found in the Funds’ Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.

Interested Directors and Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
*Lee T. Kranefuss, 1961	Director, Chairman and President (since June 18, 2003).	Chief Executive Officer of Intermediary Investor and Exchange Traded Products Business of BGI (since 2003); Chief Executive Officer of the Individual Investor Business of BGI (1997-2003).	Trustee (since 2003) of iShares Trust; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.; Director (since 2003) of iShares PLC and EETF PLC (Dublin).
*John E. Martinez, 1961	Director (since December 5, 2003).	Co-CEO of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); CEO of Capital Markets Group of BGI (1996-2001).	Trustee (since 2003) of iShares Trust; Director (since 2005) of Real Estate Equity Exchange; Director (since 2003) of Larkin Street Youth Services; Director (2000-2002) of Barclays Global Investors UK Holdings.

* Lee T. Kranefuss and John E. Martinez are considered to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser, and BGFA affiliates.

138 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Richard K. Lyons, 1961	Director (since February 28, 2002).	Acting Dean (2004-2005) and Sylvan Coleman Professor of Finance (since 1993) University of California, Berkeley: Haas School of Business; Consultant for IMF World Bank, Federal Reserve Bank and Citibank N.A. (since 2000).	Trustee (since 2000) of iShares Trust; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.; Trustee and Chairman (since 1995) of Matthews Asian Funds (oversees 6 portfolios).
George G. C. Parker, 1939	Director (since February 28, 2002).	Dean Witter Distinguished Professor of Finance (since 1994); Senior Associate Dean for Academic Affairs, Director of MBA Program, Stanford University: Graduate School of Business (1993-2001).	Trustee (since 2000) of iShares Trust; Director (since 1998) of Affinity Group Holdings; Director (since 1985) of Bailard, Biehl and Kaiser, Inc.; Director (since 1978) of California Casualty Group of Insurance Companies; Director (since 1996) of Continental Airlines, Inc.; Director (since 1996) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2003) of First Republic Bank; Director (since 2000) of Converium Re-Insurance; Director (since 2004) of Threshold Pharmaceuticals.
W. Allen Reed, 1947	Director (since December 16, 1996).	President and Chief Executive Officer of General Motors Investment Management Corporation (since 1994); Chief Executive Officer of General Motors Trust Bank (since 2003); Chief Executive Officer of General Motors Trust Company (since 1999).	Trustee (since 2002) of iShares Trust; Director (since 1994) of General Motors Investment Management Corporation; Director and Chairman (since 2003) of General Motors Trust Bank; Director and Chairman (since 1999) of General Motors Trust Company; Director (since 2002) of GMAM ARS Fund I; Director (since 1994) of General Motors Acceptance Corporation; Director (since 1994) of GMAC Insurance Holdings, Inc.; Director (since 1995) of Global Emerging Markets Fund; Director (since 2000) of Temple Inland Industries; Member (since 2004) of Board of Executives of New York Stock Exchange; Member (since 1995) of New York State Retirement System Advisory Board; Member (since 2004) of the Auburn University Foundation Fund Investment Committee.

DIRECTOR INFORMATION 139

Director Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Cecilia H. Herbert, 1949	Director (since August 11, 2005).	Member of Finance Council, Archdiocese of San Francisco (since 1991); Chair of Investment Committee, Archdiocese of San Francisco (since 1994).	Trustee (since 2005) of iShares Trust; Trustee (since 2004) of Pacific Select Funds (31 portfolios); Trustee (1992-2003) of the Montgomery Funds (20 portfolios); Trustee (since 2005) of the Thatcher School; Director (since 1998) of Catholic Charities CYO; Trustee (1998-2000) of the Groton School; Director (since 2005) of Women’s Forum West (professional association).
Charles A. Hurty, 1944	Director (since August 11, 2005).	Partner, KPMG LLP (1968-2001).	Trustee (since 2005) of iShares Trust; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (2 portfolios); Director (since 2005) of CSFB Alternative Investments Fund (15 portfolios).
John E. Kerrigan, 1956	Director (since August 11, 2005).	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Trustee (since 2005) of iShares Trust; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.
Officer
Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael A. Latham, 1965	Secretary, Treasurer and Principal Financial Officer (since February 28, 2002).	Chief Operating Officer of the Intermediary Investor 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.

140 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes:

NOTES 141

The iShares^® Family of Funds

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

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500/BARRA Growth (IVW)

iShares S&P 500/BARRA Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400/BARRA Growth (IJK)

iShares S&P MidCap 400/BARRA Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600/BARRA Growth (IJT)

iShares S&P SmallCap 600/BARRA Value (IJS)

iShares Domestic Sector Index Funds

iShares Cohen & Steers Realty Majors (ICF)

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

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

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

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

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

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

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

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

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

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

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

iShares Dow Jones Transportation Average (IYT)

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

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

iShares Goldman Sachs Natural Resources (IGE)

iShares Goldman Sachs Networking (IGN)

iShares Goldman Sachs Semiconductor (IGW)

iShares Goldman Sachs Software (IGV)

iShares Goldman Sachs Technology (IGM)

iShares Nasdaq Biotechnology (IBB)

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT)

iShares GS $ InvesTop™ Corporate (LQD)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Specialty Index Funds

iShares KLD Select Social^SM (KLD)

iShares Dow Jones Select Dividend (DVY)

iShares International Index Funds

iShares MSCI EAFE (EFA)

iShares MSCI EAFE Growth (EFG)

iShares MSCI EAFE Value (EFV)

iShares MSCI Emerging Markets (EEM)

iShares MSCI EMU (EZU)

iShares MSCI Pacific ex-Japan (EPP)

iShares S&P Europe 350 (IEV)

iShares S&P Latin America 40 (ILF)

iShares Morningstar Index Funds

iShares Morningstar Large Core (JKD)

iShares Morningstar Large Growth (JKE)

iShares Morningstar Large Value (JKF)

iShares Morningstar Mid Core (JKG)

iShares Morningstar Mid Growth (JKH)

iShares Morningstar Mid Value (JKI)

iShares Morningstar Small Core (JKJ)

iShares Morningstar Small Growth (JKK)

iShares Morningstar Small Value (JKL)

iShares NYSE Index Funds

iShares NYSE Composite (NYC)

iShares NYSE 100 (NY)

iShares^® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Goldman, Sachs & Co. or Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., FTSE/Xinhua Index Limited, KLD Research & Analytics, Inc., Morgan Stanley Capital International, Morningstar, Inc., The Nasdaq Stock Market, Inc., New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. “GS $ InvesTop™” and “Goldman Sachs^®” are trademarks of Goldman, Sachs & Co.

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

This advertising section does not constitute part of the 2005 Annual Report.

2117-iS-0805

142 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

The iShares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an adviser to the iShares Funds. Barclays Global Investors Services (BGIS) assists in the marketing of the iShares Funds. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., a wholly owned subsidiary of Barclays Bank PLC, none of which is affiliated with SEI.

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Morgan Stanley Capital International, Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds.

©2005 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.

Investing involves risk, including possible loss of principal.

A description of the policies that the Funds use to determine how to vote proxies relating to portfolio securities and information about how the Funds voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, 2005 is available without charge, upon request, by calling toll-free 1 800 474 2737; on the Funds’ website at www.iShares.com; and on the Securities and Exchange Commission’s web-site at www.sec.gov.

The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarter of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling

1 800 SEC 0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website at www.iShares.com.

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

BARCLAYS GLOBAL INVESTORS

BARCLAYS

iShares®

2005 ANNUAL REPORT TO SHAREHOLDERS | AUGUST 31, 2005

iSHARES MSCI SERIES

iSHARES MSCI JAPAN INDEX FUND

Table of Contents

Management’s Discussion of Fund Performance	1
Shareholder Expenses	3
Schedule of Investments	4
Financial Statements	15
Financial Highlights	17
Notes to the Financial Statements	18
Report of Independent Registered Public Accounting Firm	23
Tax Information (Unaudited)	24
Shareholder Meeting Results (Unaudited)	25
Board Review and Approval of Investment Advisory Contracts (Unaudited)	27
Supplemental Information (Unaudited)	30
Director Information (Unaudited)	31
iShares Family of Funds	34

Management’s Discussion of Fund Performance

iSHARES^® MSCI JAPAN INDEX FUND

Performance as of August 31, 2005

Average Annual Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
11.58%	12.50	%	12.32	%	(4.40	)%	(4.23	)%	(3.98	)%	(2.58	)%	(2.43	)%	(1.84	)%
Cumulative Total Returns
Year Ended 8/31/05					Five Years Ended 8/31/05						Inception to 8/31/05
NAV	MARKET		INDEX		NAV		MARKET		INDEX		NAV		MARKET		INDEX
11.58%	12.50	%	12.32	%	(20.14	)%	(19.43	)%	(18.38	)%	(21.96	)%	(20.77	)%	(16.15	)%

Total returns for the periods since inception are calculated from the inception date of the Fund (3/12/96). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of the Fund are listed for trading, as of the time that the Fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until several days after the Fund’s inception, for the period from inception to the first day of secondary market trading in shares of the Fund (3/18/96), the NAV of the Fund is used as a proxy for secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

GROWTH OF $10,000 INVESTMENT

SINCE INCEPTION AT NET ASSET VALUE

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

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE 1

Management’s Discussion of Fund Performance (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

PORTFOLIO ALLOCATION

As of 8/31/05

Sector	% of Net Assets
Consumer Cyclical	24.89	%
Industrial	20.59
Financial	19.76
Consumer Non-Cyclical	11.07
Basic Materials	7.55
Communications	5.43
Utilities	4.94
Technology	4.70
Energy	1.03
Short-Term and Other Net Assets	0.04
TOTAL	100.00	%

TOP TEN FUND HOLDINGS

As of 8/31/05

Security	% of Net Assets
Toyota Motor Corp.	5.46	%
Mitsubishi Tokyo Financial Group Inc.	2.31
Takeda Pharmaceutical Co. Ltd.	2.20
Mizuho Financial Group Inc.	2.18
Honda Motor Co. Ltd.	2.02
Canon Inc.	1.75
Sumitomo Mitsui Financial Group Inc.	1.72
Matsushita Electric Industrial Co. Ltd.	1.58
Sony Corp.	1.56
Tokyo Electric Power Co. Inc. (The)	1.34
TOTAL	22.12	%

The iShares MSCI Japan Index Fund (the “Fund”) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Japanese market, as measured by the MSCI Japan Index (the “Index”). The Fund invests in a representative sample of securities in the Index, which have a similar investment profile as the Index. For the twelve months ended August 31, 2005 (the “reporting period”), the Fund returned 11.58%, while the Index returned 12.32%.

Japan’s market delivered moderate gains for the reporting period. During the first half of the reporting period, Japan’s export-driven economy slowed. A strengthening yen made Japanese exports more expensive to its trading partners, dampening Japan’s export trade. Slower export growth, in turn, led to a decline in industrial production. Fourth quarter gross domestic product (“GDP”) growth for the fourth quarter 2004 was 0.1% lower than GDP growth for the third quarter. The economic slowdown became evident in the early months of 2005 as consumers and businesses reduced their spending levels. Consumer spending levels fell 4.1% in February as the unemployment level rose for the first time in six months.

As the reporting period progressed, however, economic conditions appeared to be recovering, following positive news on both the consumer and the business front. Unemployment levels declined to a seven-year low by July as wages increased, helping to drive household spending and retail sales. Industrial production reversed direction, climbing 1.2% in August 2005, compared with a decline of 0.03% in August 2004. In July, optimism about further growth was supported by the most recent Tankan survey, which was positive for the first time in three quarters.

Among the Fund’s ten largest holdings as of August 31, 2005, performance was mostly positive for the reporting period. The two strongest performers were both banks. Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. both delivered healthy gains for the reporting period. Consumer electronics company Matsushita Electrical Industrial Co. Ltd. also performed well, and Takeda Pharmaceutical Co. Ltd. contributed positively to Fund performance for the reporting period. The sole negative performance among the Fund’s ten largest holdings came from consumer electronics giant Sony Corp., which posted a modest decline for the reporting period.

2 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses

iSHARES^® MSCI JAPAN INDEX FUND

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from March 1, 2005 to August 31, 2005.

ACTUAL EXPENSES

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

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

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

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

	Beginning Account Value (March 1, 2005)		Ending Account Value (August 31, 2005)		Annualized Expense Ratio		Expenses Paid During Perioda (March 1 to August 31, 2005)
Actual	$	1,000.00	$	1,016.70	0.57	%	$	2.90
Hypothetical (5% return before expenses)		1,000.00		1,022.33	0.57			2.91

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

SHAREHOLDER EXPENSES 3

Schedule of Investments

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
COMMON STOCKS – 99.96%
ADVERTISING – 0.34%
Asatsu-DK Inc.1	109,900	$	3,213,884
Dentsu Inc.1	5,495		14,388,312
Hakuhodo DY Holdings Inc.	109,900		7,396,878
			24,999,074
AGRICULTURE – 0.65%
Japan Tobacco Inc.	3,297		47,466,595
			47,466,595
AIRLINES – 0.18%
All Nippon Airways Co. Ltd.1	2,198,000		7,159,545
Japan Airlines System Corp.1	2,198,000		6,150,880
			13,310,425
APPAREL – 0.36%
Gunze Ltd.	1,099,000		5,349,881
Onward Kashiyama Co. Ltd.	1,099,000		16,366,086
World Co. Ltd.	108,300		4,570,360
			26,286,327
AUTO MANUFACTURERS – 8.70%
Hino Motors Ltd.1	1,099,000		6,971,656
Honda Motor Co. Ltd.	2,747,600		146,360,660
Nissan Motors Co. Ltd.1	7,802,900		81,163,921
Toyota Motor Corp.	9,781,100		396,049,400
			630,545,637
AUTO PARTS & EQUIPMENT– 1.76%
Aisin Seiki Co. Ltd.	879,200		22,230,189
Bridgestone Corp.1	2,198,000		43,115,491
Denso Corp.	1,978,200		49,750,925
NOK Corp.1	329,700		8,810,987
Toyoda Gosei Co. Ltd.1	219,800		3,648,995
			127,556,587
BANKS – 10.60%
Bank of Fukuoka Ltd.1	2,198,000		13,903,757
Bank of Yokohama Ltd. (The)1	4,396,000		28,044,846
Chiba Bank Ltd. (The)1	2,198,000		15,604,643
Gunma Bank Ltd.	1,099,000		6,467,323
Joyo Bank Ltd.	3,297,000		17,948,306
Kokuhoku Financial Group Inc.	3,297,000		9,849,319
Mitsubishi Tokyo Financial Group Inc.1	16,485		167,616,413
Mitsui Trust Holdings Inc.1	2,198,000		24,425,518
Mizuho Financial Group Inc.	28,574		157,865,983
Nishi-Nippon City Bank Ltd. (The)1	2,198,000		9,255,986
Resona Holdings Inc.2	15,386		32,672,839
77 Bank Ltd. (The)	1,099,000		7,446,318
Shinsei Bank Ltd.	3,297,000		20,202,969
Shizuoka Bank Ltd. (The)	2,198,000		19,935,970
Sumitomo Mitsui Financial Group Inc.1	15,385		124,868,584
Sumitomo Trust & Banking Co. Ltd. (The)	4,396,000		30,339,065
UFJ Holdings Inc.2	13,188		81,879,876
			768,327,715
BEVERAGES – 0.95%
Asahi Breweries Ltd.	1,099,000		13,478,535
Coca-Cola West Japan Co. Ltd.	219,800		4,964,215
Ito En Ltd.1	109,900		5,547,658
Kirin Brewery Co. Ltd.1	3,297,000		32,929,950
Sapporo Breweries Ltd.1	1,099,000		5,013,659
Takara Holdings Inc.1	1,099,000		7,100,211
			69,034,228
BUILDING MATERIALS – 1.38%
Asahi Glass Co. Ltd.1	3,297,000		33,641,949
Daikin Industries Ltd.	769,300		20,455,136
JS Group Corp.1	989,100		16,642,974
Matsushita Electric Works Ltd.	1,099,000		10,264,651
Nippon Sheet Glass Co. Ltd.1	1,099,000		4,736,770
Sumitomo Osaka Cement Co. Ltd.	1,099,000		3,075,440
Taiheiyo Cement Corp.1	3,297,000		11,065,650
			99,882,570
CHEMICALS – 3.93%
Asahi Kasei Corp.1	4,396,000		20,450,191
Daicel Chemical Industries Ltd.	1,099,000		6,536,545
Dainippon Ink & Chemical Inc.	2,198,000		6,843,101
Denki Kagaku Kogyo Kabushiki Kaisha1	2,198,000		8,563,764
Ishihara Sangyo Kaisha Ltd.1	1,099,000		2,234,885
JSR Corp.	879,200		19,619,526
Kaneka Corp.	1,099,000		13,122,536
Mitsubishi Chemical Corp.	6,594,000		21,003,968
Mitsubishi Gas Chemical Co. Inc.	1,099,000		7,110,101

4 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
Mitsui Chemicals Inc.1	2,198,000	$	12,875,314
Nippon Kayaku Co. Ltd.1	1,099,000		7,911,099
Nissan Chemical Industries Ltd.1	1,099,000		13,330,202
Nitto Denko Corp.1	549,500		34,759,392
Shin-Etsu Chemical Co. Ltd.	1,318,700		52,921,240
Showa Denko K.K.1	3,297,000		9,849,318
Sumitomo Chemical Co. Ltd.	4,396,000		24,287,074
Taiyo Nippon Sanso Corp.1	1,099,000		6,487,101
Tosoh Corp.1	2,198,000		8,781,320
Ube Industries Ltd.1	3,297,000		7,950,654
			284,637,331
COMMERCIAL SERVICES – 1.04%
Benesse Corp.1	219,800		7,317,767
Dai Nippon Printing Co. Ltd.	2,198,000		34,848,392
Kamigumi Co. Ltd.	1,099,000		8,316,543
TIS Inc.1	109,900		3,263,328
Toppan Printing Co. Ltd.	2,198,000		21,775,300
			75,521,330
COMPUTERS – 1.27%
CSK Corp.	219,800		9,473,541
Fujitsu Ltd.	6,594,000		38,922,608
Meitec Corp.1	109,900		3,421,550
NET One Systems Co. Ltd.1	3,297		7,920,988
TDK Corp.	439,600		32,435,506
			92,174,193
COSMETICS & PERSONAL CARE – 0.96%
Aderans Co. Ltd.1	109,900		2,541,441
Kao Corp.1	2,198,000		51,916,588
Shiseido Co. Ltd.1	1,099,000		15,377,199
			69,835,228
DISTRIBUTION & WHOLESALE – 2.77%
Itochu Corp.	5,495,000		32,682,728
Marubeni Corp.	5,495,000		22,744,410
Mitsubishi Corp.1	4,176,200		68,278,719
Mitsui & Co. Ltd.1	4,396,000		46,003,041
Sumitomo Corp.	3,297,000		31,001,620
			200,710,518
DIVERSIFIED FINANCIAL SERVICES – 4.27%
ACOM Co. Ltd.	252,770		16,512,442
Aeon Credit Service Co. Ltd.1	109,990		7,185,202
AIFUL Corp.	274,750		20,964,413
Credit Saison Co. Ltd.	549,500		21,359,967
Daiwa Securities Group Inc.1	4,396,000		29,627,066
Nikko Cordial Corp.1,3	5,490,000		26,972,061
Nomura Holdings Inc.	6,264,300		84,831,705
ORIX Corp.	329,700		54,200,918
Promise Co. Ltd.	329,700		22,249,966
Takefuji Corp.1	362,670		25,225,528
			309,129,268
ELECTRIC – 4.15%
Chubu Electric Power Co. Inc.1	2,198,000		53,399,919
Electric Power Development Co. Ltd.1	549,500		16,860,530
Kansai Electric Power Co. Inc. (The)1	2,747,500		58,220,745
Kyushu Electric Power Co. Inc.1	1,648,500		37,231,610
Tohoku Electric Power Co. Inc.1	1,758,400		37,973,276
Tokyo Electric Power Co. Inc. (The)1	3,956,400		96,831,853
			300,517,933
ELECTRICAL COMPONENTS & EQUIPMENT – 3.87%
Casio Computer Co. Ltd.1	1,099,000		15,387,088
Fujikura Ltd.	1,099,000		6,259,657
Furukawa Electric Co. Ltd.1,2	2,198,000		10,264,651
Hitachi Cable Ltd.	1,099,000		4,598,326
Hitachi Ltd.1	10,990,000		66,749,899
Mitsubishi Electric Corp.	6,594,000		35,184,613
SANYO Electric Co. Ltd.1	5,495,000		14,388,311
Sharp Corp.	3,297,000		49,454,259
Stanley Electric Co. Ltd.1	769,300		12,196,937
Sumitomo Electric Industries Ltd.	2,198,000		26,858,182
Toshiba Corp.	9,891,000		38,803,941
			280,145,864
ELECTRONICS – 4.78%
Advantest Corp.1	219,900		17,095,749
Fanuc Ltd.	549,500		41,137,715
Hirose Electric Co. Ltd.	109,900		12,459,981
IBIDEN Co. Ltd.1	439,600		14,951,977
Keyence Corp.	109,920		25,656,407
Kyocera Corp.	549,500		37,874,387
Mabuchi Motor Co. Ltd.1	109,900		5,646,547

SCHEDULE OF INVESTMENTS 5

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
Minebea Co. Ltd.1	1,099,000	$	4,529,104
Murata Manufacturing Co. Ltd.	769,300		39,941,162
NEC Corp.	6,594,000		34,947,280
NGK Insulators Ltd.	1,099,000		11,718,316
Nippon Electric Glass Co. Ltd.	1,099,000		19,520,637
Omron Corp.	879,200		19,382,193
Secom Co. Ltd.	1,099,000		50,037,702
Yokogawa Electric Corp.1	879,200		11,494,827
			346,393,984
ENGINEERING & CONSTRUCTION – 1.12%
JGC Corp.1	1,099,000		14,764,089
Kajima Corp.1	3,297,000		13,142,314
Nishimatsu Construction Co. Ltd.1	1,099,000		4,182,994
Obayashi Corp.	2,198,000		13,508,202
Okumura Corp.	1,099,000		6,773,878
Shimizu Corp.1	2,198,000		11,708,427
Taisei Corp.1	3,297,000		11,925,982
Toda Corp.	1,099,000		5,003,770
			81,009,656
ENTERTAINMENT – 0.34%
Oriental Land Co. Ltd.1	219,800		13,033,536
Toho Co. Ltd.1	769,300		11,691,616
			24,725,152
FOOD – 1.23%
Ajinomoto Co. Inc.	2,198,000		22,981,743
Ariake Japan Co. Ltd.1	116,630		2,964,680
Katokichi Co. Ltd.	677,400		4,583,658
Kikkoman Corp.1	1,099,000		10,719,539
Meiji Dairies Corp.1	1,099,000		6,081,657
Meiji Seika Kaisha Ltd.1	1,099,000		5,488,325
Nichirei Corp.	1,099,000		4,449,993
Nippon Meat Packers Inc.	1,099,000		11,738,093
Nisshin Seifun Group Inc.	1,099,000		11,846,871
Nissin Food Products Co. Ltd.	329,700		8,529,154
			89,383,713
FOREST PRODUCTS & PAPER – 0.41%
Nippon Paper Group Inc.	3,297		12,400,648
OJI Paper Co. Ltd.1	3,297,000		17,176,974
			29,577,622
GAS – 0.79%
Osaka Gas Co. Ltd.1	7,693,000		24,504,630
Tokyo Gas Co. Ltd.1	8,792,000		32,672,839
			57,177,469
HAND & MACHINE TOOLS – 0.96%
Fuji Electric Holdings Co. Ltd.	2,198,000		8,108,876
Nidec Corp.1	219,800		24,741,963
SMC Corp.	219,800		27,016,403
THK Co. Ltd.1	439,600		9,908,651
			69,775,893
HEALTH CARE - PRODUCTS – 1.05%
Hoya Corp.	439,600		56,999,469
Terumo Corp.	659,400		18,808,638
			75,808,107
HOME BUILDERS – 0.89%
Daiwa House Industry Co. Ltd.	2,198,000		26,462,627
Sekisui Chemical Co. Ltd.	2,198,000		14,141,090
Sekisui House Ltd.1	2,198,000		24,029,964
			64,633,681
HOME FURNISHINGS – 3.48%
Matsushita Electric Industrial Co. Ltd.	6,594,015		114,216,753
Pioneer Corp.1	879,200		13,512,157
Sony Corp.	3,406,800		113,422,054
Yamaha Corp.	659,400		11,302,983
			252,453,947
HOUSEWARES – 0.12%
Toto Ltd.1	1,099,000		8,692,320
			8,692,320
INSURANCE – 2.88%
Millea Holdings Inc.	5,495		80,099,879
Mitsui Sumitomo Insurance Co. Ltd.	4,396,000		44,539,488
Sompo Japan Insurance Inc.	3,297,000		37,557,943
T&D Holdings Inc.	824,250		46,799,096
			208,996,406
INTERNET – 1.65%
Index Corp.1	2,198		3,144,662
Index Corp. When Issued2	2,194		3,059,972
Rakuten Inc.1	14,287		11,300,016
SBI Holdings Inc.1	20,881		7,684,644

6 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
Softbank Corp.1	879,200	$	44,381,266
Trend Micro Inc.1	549,500		18,986,638
Yahoo! Japan Corp.1	13,188		30,853,287
			119,410,485
IRON & STEEL – 2.59%
JFE Holdings Inc.1	1,868,350		53,796,914
Kobe Steel Ltd.1	8,792,000		20,647,969
Nippon Steel Corp.	21,980,000		63,684,348
Nisshin Steel Co. Ltd.1	3,297,000		9,433,986
Sumitomo Metal Industries Ltd.1	14,287,000		32,524,506
Tokyo Steel Manufacturing Co. Ltd.1	549,500		7,876,488
			187,964,211
LEISURE TIME – 0.85%
Namco Ltd.1	439,600		7,203,056
Sankyo Co. Ltd.	219,800		10,719,539
Sega Sammy Holdings Inc.	220,600		16,078,283
Shimano Inc.	329,700		9,048,320
Yamaha Motor Co. Ltd.	989,100		18,467,472
			61,516,670
MACHINERY - CONSTRUCTION & MINING – 0.50%
Komatsu Ltd.	3,297,000		36,341,611
			36,341,611
MACHINERY - DIVERSIFIED– 1.01%
Amada Co. Ltd.1	1,099,000		8,435,210
Ebara Corp.1	1,099,000		4,182,994
Kubota Corp.	3,297,000		20,380,969
Sumitomo Heavy Industries Ltd.1	2,198,000		12,222,648
Toyota Industries Corp.1	989,100		27,678,958
			72,900,779
MANUFACTURING – 2.10%
Fuji Photo Film Co. Ltd.	1,648,500		52,806,587
Ishikawajima-Harima Heavy Industries Co. Ltd.1,2	4,396,000		7,040,878
Kawasaki Heavy Industries Ltd.1	5,495,000		11,718,316
Konica Minolta Holdings Inc.	1,648,500		15,738,143
Mitsubishi Heavy Industries Ltd.	10,990,000		30,754,398
Nikon Corp.1	1,099,000		12,835,758
Olympus Corp.1	1,099,000		21,557,745
			152,451,825
MEDIA – 0.04%
Fuji Television Network Inc.	1,154		2,606,325
			2,606,325
METAL FABRICATE & HARDWARE – 0.26%
NSK Ltd.	2,198,000		11,827,093
NTN Corp.1	1,099,000		6,694,767
			18,521,860
MINING – 0.62%
Dowa Mining Co. Ltd.1	1,099,000		7,822,099
Mitsubishi Materials Corp.	3,297,000		9,493,319
Mitsui Mining & Smelting Co. Ltd.	2,198,000		10,798,650
Sumitomo Metal Mining Co. Ltd.1	2,198,000		16,534,197
			44,648,265
OFFICE & BUSINESS EQUIPMENT – 2.36%
Canon Inc.	2,527,700		126,686,363
Ricoh Co. Ltd.	2,198,000		33,879,282
Seiko Epson Corp.	329,700		10,205,318
			170,770,963
OIL & GAS – 1.03%
Nippon Mining Holdings Inc.	2,747,500		18,393,305
Nippon Oil Corp.	4,396,500		35,089,715
Teikoku Oil Co. Ltd.1	1,099,000		9,196,653
TonenGeneral Sekiyu K.K.1	1,099,000		11,985,315
			74,664,988
PACKAGING & CONTAINERS – 0.16%
Toyo Seikan Kaisha Ltd.1	769,300		11,490,872
			11,490,872
PHARMACEUTICALS – 5.19%
Astellas Pharma Inc.	1,868,330		66,068,627
Chugai Pharmaceutical Co. Ltd.	1,099,000		20,568,858
Daiichi Pharmaceutical Co. Ltd.1	879,200		20,410,636
Eisai Co. Ltd.	879,200		33,147,505
Kyowa Hakko Kogyo Co. Ltd.	1,099,000		8,059,432
Sankyo Co. Ltd.1	1,099,000		22,151,078
Shionogi & Co. Ltd.	1,099,000		14,180,645
Taisho Pharmaceutical Co. Ltd.	1,099,000		21,804,967
Takeda Pharmaceutical Co. Ltd.	2,967,300		159,398,758
Tanabe Seiyaku Co. Ltd.	1,099,000		10,531,651
			376,322,157

SCHEDULE OF INVESTMENTS 7

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares	Value
REAL ESTATE – 1.79%
Daito Trust Construction Co. Ltd.	329,700	$	13,705,979
Leopalace21 Corp.	439,600		8,168,210
Mitsubishi Estate Co. Ltd.	3,297,000		39,159,941
Mitsui Fudosan Co. Ltd.1	3,297,000		42,126,603
Sumitomo Realty & Development Co. Ltd.	1,099,000		13,982,868
Tokyu Land Corp.1	2,198,000		12,242,426
			129,386,027
REAL ESTATE INVESTMENT TRUSTS – 0.13%
Japan Real Estate Investment Corp.	1,099		9,295,541
			9,295,541
RETAIL – 3.88%
Aeon Co. Ltd.	2,307,900		42,779,268
Aoyama Trading Co. Ltd.	219,800		5,933,325
Autobacs Seven Co. Ltd.1	109,900		4,212,660
Citizen Watch Co. Ltd.1	1,099,000		8,781,320
Daimaru Inc. (The)1	1,099,000		11,085,427
FamilyMart Co. Ltd.1	219,800		6,763,990
Fast Retailing Co. Ltd.1	219,800		16,672,641
Isetan Co. Ltd.1	879,200		13,314,380
Ito-Yokado Co. Ltd.1,3	1,316,400		46,669,510
Lawson Inc.1	219,800		8,168,210
Marui Co. Ltd.1	1,099,000		17,888,973
Mitsukoshi Ltd.1	1,099,000		5,379,548
Seven-Eleven Japan Co. Ltd.1,3	1,206,700		35,505,547
Shimachu Co. Ltd.1	219,800		5,537,769
Takashimaya Co. Ltd.1	1,099,000		12,103,981
UNY Co. Ltd.1	1,099,000		12,875,313
USS Co. Ltd.1	98,910		6,888,589
Yamada Denki Co. Ltd.1	329,700		21,003,968
			281,564,419
SEMICONDUCTORS – 0.97%
Rohm Co. Ltd.	439,600		39,753,273
Tokyo Electron Ltd.	549,552		30,856,206
			70,609,479
SHIPBUILDING – 0.09%
Mitsui Engineering & Shipbuilding Co. Ltd.1	3,297,000		6,793,656
			6,793,656
SOFTWARE – 0.10%
Konami Corp.1	329,700		7,490,822
			7,490,822
TELECOMMUNICATIONS – 3.40%
Hikari Tsushin Inc.1	109,900		7,693,544
KDDI Corp.	8,792		46,121,708
Nippon Telegraph & Telephone Corp.1	17,584		75,946,552
NTT Data Corp.1	5,495		18,788,860
NTT DoCoMo Inc.	57,151		91,021,974
Oki Electric Industry Co. Ltd.1	2,198,000		7,021,101
			246,593,739
TEXTILES – 0.97%
Kuraray Co. Ltd.	1,099,000		9,631,763
Mitsubishi Rayon Co. Ltd.	2,198,000		9,532,875
Nisshinbo Industries Inc.	1,099,000		8,751,654
Teijin Ltd.1	3,297,000		17,414,307
Toray Industries Inc.	4,396,000		19,975,525
Toyobo Co. Ltd.	2,198,000		5,082,881
			70,389,005
TOYS, GAMES & HOBBIES – 0.59%
Bandai Co. Ltd.1	329,799		8,131,095
Nintendo Co. Ltd.	330,400		34,486,345
			42,617,440
TRANSPORTATION – 4.36%
Central Japan Railway Co.1	5,495		41,829,937
East Japan Railway Co.	12,089		64,722,680
Kawasaki Kisen Kaisha Ltd.1	2,198,000		14,299,312
Keihin Electric Express Railway Co. Ltd.1	2,198,000		13,567,535
Keio Corp.	2,198,000		11,965,538
Kintetsu Corp.1	5,495,000		17,651,640
Mitsui O.S.K. Lines Ltd.1	4,396,000		31,960,840
Nippon Express Co. Ltd.	3,297,000		14,625,645
Nippon Yusen Kabushiki Kaisha1	4,396,000		27,491,069
Seino Transportation Co. Ltd.	1,099,000		9,809,763
Tobu Railway Co. Ltd.1	3,297,000		12,578,648
Tokyu Corp.1	3,297,000		15,396,977
West Japan Railway Co.	6,594		23,495,964
Yamato Transport Co. Ltd.	1,099,000		16,415,531
			315,811,079

8 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
VENTURE CAPITAL – 0.09%
JAFCO Co. Ltd.1		109,900	$	6,566,213
				6,566,213
TOTAL COMMON STOCKS (Cost: $6,396,655,944)				7,245,437,204
SHORT-TERM INVESTMENTS – 21.82%
CERTIFICATES OF DEPOSIT4 – 2.48%
Banco Bilbao Vizcaya Argentaria SA
3.18% - 3.83%, 09/14/05 - 01/25/06	$	10,245,682		10,245,681
Bank of Nova Scotia
3.45% - 3.56%, 09/26/05 - 01/03/06		4,439,795		4,439,457
Credit Suisse First Boston
3.53%, 05/09/06		6,830,454		6,830,454
Danske Bank
3.50%, 10/17/05		6,830,454		6,830,198
Dexia Credit Local
3.61%, 08/30/06		3,415,227		3,414,548
First Tennessee Bank
3.52%, 09/15/05		11,611,772		11,611,772
Fortis Bank NY
3.83% - 3.84%, 01/25/06		10,245,682		10,245,749
HBOS Treasury Services PLC
3.39%, 12/14/05		4,098,273		4,098,273
HSBC Bank USA N.A.
3.72%, 08/03/06		3,415,227		3,416,344
Royal Bank of Scotland
3.61%, 06/27/06		3,415,227		3,414,809
Societe Generale
3.51% - 3.60%, 03/30/06 - 06/13/06		10,587,204		10,585,331
Toronto-Dominion Bank
2.66% - 3.94%, 09/14/05 - 07/10/06		24,248,113		24,248,598
UBS AG
2.67% - 3.40%, 11/09/05 - 12/15/05		5,464,363		5,464,352
US Bank N.A.
3.54%, 09/19/05		17,076,136		17,076,136
Security	Principal		Value
Washington Mutual Bank
3.50% - 3.55%, 09/15/05 - 09/19/05	$	30,737,045	$	30,737,044
Wells Fargo Bank N.A.
3.50%, 09/06/05 - 09/20/05		26,980,295		26,980,283
				179,639,029
COMMERCIAL PAPER4 – 4.99%
Alpine Securitization Corp.
3.52%, 09/09/05		13,660,909		13,650,223
Amstel Funding Corp.
3.49% - 3.91%, 09/15/05 - 02/15/06		14,412,259		14,335,388
Aspen Funding Corp.
3.49%, 09/01/05		6,830,454		6,830,454
Barton Capital Corp.
3.51%, 09/07/05		7,746,077		7,741,545
Blue Ridge Asset Funding Corp.
3.48% - 3.49%, 09/09/05 - 09/21/05		11,270,250		11,256,369
Bryant Park Funding LLC
3.51% - 3.92%, 09/06/05 - 02/22/06		3,476,633		3,442,765
Cantabric Finance LLC
3.73%, 10/31/05		2,626,105		2,609,779
Charta LLC
3.54%, 09/20/05		4,781,318		4,772,385
Chesham Finance LLC
3.54%, 09/15/05		2,049,136		2,046,315
Dorada Finance Inc.
3.76%, 01/26/06		683,045		672,558
Edison Asset Securitization LLC
3.12%, 09/06/05		5,122,841		5,120,621
Fairway Finance LLC
3.15% - 3.56%, 09/15/05 - 10/20/05		8,808,212		8,800,751
Ford Credit Floorplan Motown
3.47% - 3.72%, 09/09/05 - 11/08/05		31,076,382		30,934,598
Gemini Securitization Corp.
3.49%, 09/06/05		10,958,098		10,952,786

SCHEDULE OF INVESTMENTS 9

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Principal		Value
Georgetown Funding Co. LLC
3.49% - 3.53%, 09/20/05 - 09/21/05	$	22,198,977	$	22,156,053
Giro Funding Corp.
3.53% - 3.56%, 09/16/05 - 09/22/05		5,122,841		5,114,271
Grampian Funding LLC
3.13% - 3.84%, 09/09/05 - 01/31/06		10,587,204		10,473,847
Greenwich Capital Holdings Inc.
3.48% - 3.53%, 09/02/05 - 02/10/06		7,855,023		7,855,022
HSBC PLC
3.88%, 02/03/06		2,049,136		2,014,904
Jupiter Securitization Corp.
3.51%, 09/21/05		3,871,980		3,864,429
Leafs LLC
3.61%, 01/20/06 - 02/21/065		7,171,344		7,171,345
Lockhart Funding LLC
3.47% - 3.55%, 09/16/05 - 09/19/05		9,415,303		9,401,245
Mortgage Interest Networking Trust
3.47% - 3.51%, 09/01/05 - 09/21/05		16,734,613		16,712,739
New Center Asset Trust
3.60%, 09/01/05		23,906,590		23,906,590
Park Avenue Receivables Corp.
3.50%, 09/19/05		3,852,649		3,845,907
Park Granada LLC
3.48% - 3.51%, 09/15/05 - 09/20/05		9,248,640		9,234,488
Santander Central Hispano Finance Inc.
3.91%, 02/17/06		6,830,454		6,705,080
Scaldis Capital LLC
3.52%, 09/07/05		13,660,909		13,652,894
Sedna Finance Inc.
3.92%, 02/21/06		1,707,614		1,675,446
Security	Shares or Principal		Value
Solitaire Funding Ltd.
3.49% - 3.52%, 09/02/05 - 09/06/05	$	20,081,536	$	20,076,243
Sydney Capital Corp.
3.49%, 09/01/05		4,219,855		4,219,855
Thames Asset Global Securitization No. 1 Inc.
3.54%, 09/20/05		14,343,954		14,317,155
Three Pillars Funding Corp.
3.49% - 3.52%, 09/01/05 - 09/07/05		14,635,341		14,630,347
Thunder Bay Funding Inc.
3.50%, 09/01/05		1,141,710		1,141,710
Tulip Funding Corp.
3.49%, 09/01/05		25,202,396		25,202,396
Windmill Funding Corp.
3.52%, 09/09/05		3,142,009		3,139,551
World Savings Bank
3.51%, 09/09/05		2,390,659		2,390,654
Yorktown Capital LLC
3.53%, 09/19/05		9,904,159		9,886,678
				361,955,386
MEDIUM-TERM NOTES4 – 0.09%
Dorada Finance Inc.
3.93%, 07/07/065		2,117,441		2,117,262
K2 USA LLC
3.94%, 07/07/065		4,098,273		4,098,099
				6,215,361
MONEY MARKET FUNDS – 0.43%
Barclays Global Investors Funds Government Money Market Fund, Institutional Shares 3.63%4,6,7		27,321,817		27,321,817
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 3.56%6,7		694,161		694,161
BlackRock Temp Cash Money Market Fund 3.41%4,7		723,737		723,737

10 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Shares or Principal		Value
Short Term Investments Co. - Prime Money Market Portfolio, Institutional Shares 3.50%4,7		2,394,457	$	2,394,457
				31,134,172
REPURCHASE AGREEMENTS4 – 4.21%
Bank of America N.A. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $163,947,298 and an effective yield of 3.60%.8	$	163,930,905		163,930,905
Goldman Sachs Group Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $126,376,042 and an effective yield of 3.60%.8		126,363,406		126,363,406
Merrill Lynch Government Securities Inc. Repurchase Agreement, dated 8/31/05, due 9/1/05, with a maturity value of $14,891,880 and an effective yield of 3.60%.8		14,890,391		14,890,391
				305,184,702
TIME DEPOSITS4 – 0.88%
Abbey National Treasury Services PLC
3.50%, 09/01/05		13,660,909		13,660,909
Chase Bank USA N.A.
3.58%, 09/01/05		37,567,499		37,567,499
JP Morgan Chase Bank N.A.
3.59%, 09/01/05		9,017,381		9,017,381
Natexis Banques Populaires
3.51%, 09/20/059		3,415,227		3,415,227
				63,661,016
VARIABLE & FLOATING RATE NOTES4 – 8.74%
Allstate Life Global Funding II
3.58% - 3.66%, 07/08/06 - 07/27/065		12,704,645		12,704,714
Security	Principal		Value
American Express Bank
3.55% - 3.63%, 10/17/05 - 07/19/06	$	18,442,227	$	18,442,284
American Express Centurion Bank
3.55% - 3.63%, 06/29/06 - 07/19/06		11,270,250		11,270,250
American Express Credit Corp.
3.65%, 10/26/05		13,660,909		13,661,935
ASIF Global Financing XXII
3.99%, 05/30/065		6,830,454		6,838,968
Australia & New Zealand Banking Group Ltd.
3.60%, 06/23/065		4,439,795		4,439,795
Bank of America N.A.
3.56%, 08/10/06		34,152,272		34,152,272
Beta Finance Inc.
3.51% - 3.72%, 09/23/05 - 06/09/065		35,108,535		35,108,063
BMW US Capital LLC
3.54%, 07/14/065		6,830,454		6,830,454
Canadian Imperial Bank of Commerce
3.50% - 3.61%, 09/13/05 - 12/14/05		23,223,545		23,222,576
CC USA Inc.
3.52% - 3.59%, 03/23/06 - 07/14/065		18,373,922		18,373,154
Commodore CDO Ltd.
3.47%, 12/12/055		1,707,614		1,707,614
Credit Suisse First Boston
3.57%, 07/19/06		17,076,136		17,076,136
DEPFA Bank PLC
3.42%, 03/15/06		6,830,454		6,830,454
Dorada Finance Inc.
3.59% - 3.62%, 03/27/06 - 06/26/065		10,860,422		10,860,987
Eli Lilly Services Inc.
3.53%, 09/01/065		6,830,454		6,830,454
Fifth Third Bancorp
3.58%, 04/21/065		13,660,909		13,660,909

SCHEDULE OF INVESTMENTS 11

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

Security	Principal		Value
Five Finance Inc.
3.60% - 3.63%, 02/27/06 - 06/26/065	$	4,781,318	$	4,781,425
General Electric Capital Corp.
3.66%, 07/07/06		3,073,704		3,076,478
Hartford Life Global Funding Trust
3.56%, 08/15/06		6,830,454		6,830,454
HBOS Treasury Services PLC
3.51% - 3.57%, 01/10/06 - 04/24/065		20,491,363		20,491,362
HSBC Bank USA N.A.
3.70%, 05/04/06		2,390,659		2,391,963
K2 USA LLC
3.47% - 3.58%, 09/12/05 - 06/02/065		26,638,772		26,638,994
Links Finance LLC
3.52% - 3.71%, 11/16/05 - 03/15/065		26,638,772		26,641,640
Lothian Mortgages PLC
3.63%, 01/24/06		6,830,454		6,830,454
Marshall & Ilsley Bank
3.71%, 02/20/06		6,830,454		6,834,323
Metropolitan Life Global Funding I
3.55% - 4.01%, 08/28/06 - 09/06/065		13,660,909		13,666,913
National City Bank (Ohio)
3.50%, 01/06/06		3,415,227		3,414,868
Nationwide Building Society
3.51% - 3.62%, 01/13/06 - 07/07/065		25,272,681		25,275,133
Nordea Bank AB
3.55%, 08/11/065		11,953,295		11,953,295
Northern Rock PLC
3.54% - 3.61%, 10/25/05 - 08/03/065		21,857,454		21,857,839
Permanent Financing PLC
3.53% - 3.54%, 09/12/05 - 06/12/065		26,297,249		26,297,250
Principal Life Income Funding Trusts
3.74%, 05/10/06		5,122,841		5,123,031
Royal Bank of Scotland
3.47% - 3.61%, 04/05/06 - 08/30/06		22,796,641		22,791,438
Sedna Finance Inc.
3.54%, 01/10/06 - 01/17/065		3,756,750		3,756,445
Sigma Finance Inc.
3.50% - 3.72%, 09/15/05 - 08/15/065		39,001,894		39,002,084
Skandinaviska Enskilda Bank NY
3.58%, 07/18/065		6,830,454		6,830,454
Strips III LLC
3.69%, 07/24/065,9		2,006,445		2,006,445
SunTrust Bank
3.63%, 04/28/06		10,245,682		10,245,682
Tango Finance Corp.
3.54% - 3.60%, 09/15/05 - 06/21/065		16,598,004		16,596,987
Toyota Motor Credit Corp.
3.57%, 04/10/06		3,073,704		3,073,677
Unicredito Italiano SpA
3.34%, 06/14/06		8,879,591		8,877,124
Wachovia Asset Securitization Inc.
3.63%, 09/25/055		16,443,260		16,443,260
Wells Fargo & Co.
3.56%, 09/15/065		3,415,227		3,415,566
WhistleJacket Capital LLC
3.52% - 3.62%, 09/15/05 - 07/28/065		27,321,817		27,320,632
White Pine Finance LLC
3.47% - 3.61%, 11/01/05 - 06/20/065		14,412,259		14,411,890
Winston Funding Ltd.
3.71%, 10/23/055		4,876,944		4,876,944
				633,765,069
TOTAL SHORT-TERM INVESTMENTS (Cost: $1,581,554,735)				1,581,554,735

12 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Continued)

iSHARES^® MSCI JAPAN INDEX FUND

August 31, 2005

	Value
TOTAL INVESTMENTS IN SECURITIES – 121.78% (Cost: $7,978,210,679)	$	8,826,991,939
Other Assets, Less Liabilities – (21.78)%		(1,578,884,543	)
NET ASSETS – 100.00%	$	7,248,107,396

¹ All or a portion of this security represents a security on loan. See Note 5.

² Non-income earning security.

³ Security valued at fair value in accordance with procedures approved by the Board of Directors. See Note 1.

⁴ All or a portion of this security (these securities) represent(s) an investment of securities lending collateral. See Note 5.

⁵ This security or a portion of these securities is exempt from registration pursuant to Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

⁶ The Fund’s investment adviser is an affiliate of the issuer. See Note 2.

⁷ The rate quoted is the annualized seven-day yield of the fund at period end.

⁸ Repurchase agreements held as collateral for securities on loan are fully collateralized by U.S. Government securities, with interest rates ranging from 3.35% to 8.50% and maturity dates ranging from 11/1/07 to 8/1/35.

⁹ The investment adviser has determined that this security or a portion of these securities is “illiquid,” in that it cannot be sold within seven (7) days for approximately the value at which it is carried in the Fund.

See notes to the financial statements.

SCHEDULE OF INVESTMENTS 13

Statement of Assets and Liabilities

iSHARES^®, INC.

August 31, 2005

	iShares MSCI Japan Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	7,950,194,701
Affiliated issuersa	$	28,015,978
Foreign currency, at cost	$	3,144,948
Investments in securities, at value (including securities on loanb) (Note 1):
Unaffiliated issuers	$	8,798,975,961
Affiliated issuersa		28,015,978
Foreign currency, at value		3,145,497
Receivables:
Investment securities sold		16,541,197
Dividends and interest		2,349,255
Capital shares sold		204,180
Total Assets		8,849,232,068
LIABILITIES
Payables:
Investment securities purchased		16,970,257
Collateral for securities on loan (Note 5)		1,580,860,574
Investment advisory fees (Note 2)		3,293,841
Total Liabilities		1,601,124,672
NET ASSETS	$	7,248,107,396
Net assets consist of:
Paid-in capital	$	6,570,259,033
Undistributed net investment income		21,558,909
Accumulated net realized loss		(192,457,628	)
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies		848,747,082
NET ASSETS	$	7,248,107,396
Shares outstanding		659,400,000
Net asset value per share	$	10.99

^a The Fund’s invesment adviser is an affiliate of the issuers. See Note 2.

^b Securities on loan with market value of $1,501,410,347. See Note 5.

See notes to the financial statements.

14 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Statement of Operations

iSHARES^®, INC.

Year Ended August 31, 2005

	iShares MSCI Japan Index Fund
NET INVESTMENT INCOME
Dividendsa	$	72,440,203
Interest from affiliated issuersb		36,740
Securities lending incomec		1,906,190
Total investment income		74,383,133
EXPENSES (NOTE 2)
Investment advisory fees		36,714,546
Total expenses		36,714,546
Net investment income		37,668,587
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments		(73,911,977	)
In-kind redemptions		137,863,746
Foreign currency transactions		(287,807	)
Net realized gain		63,663,962
Net change in unrealized appreciation (depreciation) on:
Investments		584,175,072
Translation of assets and liabilities in foreign currencies		(16,875	)
Net change in unrealized appreciation (depreciation)		584,158,197
Net realized and unrealized gain		647,822,159
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	685,490,746

^a Net of foreign withholding tax of $3,157,040.

^b The Fund’s investment adviser is an affiliate of the issuers. See Note 2.

^c Includes income earned from issuers of which the Fund’s investment adviser is an affiliate. See Note 2.

See notes to the financial statements.

FINANCIAL STATEMENTS 15

Statements of Changes in Net Assets

iSHARES^®, INC.

	iShares MSCI Japan Index Fund
	For the year ended August 31, 2005			For the year ended August 31, 2004
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	37,668,587		$	10,691,336
Net realized gain		63,663,962			35,554,240
Net change in unrealized appreciation (depreciation)		584,158,197			309,251,117
Net increase in net assets resulting from operations		685,490,746			355,496,693
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(26,096,423	)		(474,213	)
Total distributions to shareholders		(26,096,423	)		(474,213	)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		1,159,930,120			4,011,503,336
Cost of shares redeemed		(434,548,691	)		(230,049,073	)
Net increase in net assets from capital share transactions		725,381,429			3,781,454,263
INCREASE IN NET ASSETS		1,384,775,752			4,136,476,743
NET ASSETS:
Beginning of year		5,863,331,644			1,726,854,901
End of year	$	7,248,107,396		$	5,863,331,644
Undistributed net investment income included in net assets at end of year	$	21,558,909		$	9,816,919
SHARES ISSUED AND REDEEMED:
Shares sold		109,200,000			408,600,000
Shares redeemed		(42,600,000	)		(24,000,000	)
Net increase in shares outstanding		66,600,000			384,600,000

See notes to the financial statements.

16 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

iSHARES^®, INC.

(For a share outstanding throughout each period)

	iShares MSCI Japan Index Fund
	Year ended Aug. 31, 2005			Year ended Aug. 31, 2004			Year ended Aug. 31, 2003			Year ended Aug. 31, 2002			Year ended Aug. 31, 2001
Net asset value, beginning of year	$	9.89		$	8.29		$	7.77		$	9.07		$	13.82
Income from investment operations:
Net investment income (loss)a		0.06			0.03			0.00c			(0.01	)		(0.01	)
Net realized and unrealized gain (loss)		1.08			1.57			0.52			(1.29	)		(4.74	)
Total from investment operations		1.14			1.60			0.52			(1.30	)		(4.75	)
Less distributions from:
Net investment income		(0.04	)		(0.00	)c		—			—			—
Total distributions		(0.04	)		(0.00	)c		—			—			—
Net asset value, end of year	$	10.99		$	9.89		$	8.29		$	7.77		$	9.07
Total return		11.58	%		19.32	%		6.69	%		(14.33	)%		(34.37	)%
Ratios/Supplemental data:
Net assets, end of year (000s)	$	7,248,107		$	5,863,332		$	1,726,855		$	666,376		$	527,899
Ratio of expenses to average net assets		0.57	%		0.64	%d		0.84	%		0.84	%		0.84	%
Ratio of net investment income (loss) to average net assets		0.59	%		0.28	%e		0.03	%		(0.12	)%		(0.11	)%
Portfolio turnover rateb		6	%		5	%		2	%		2	%		21	%

^a Based on average shares outstanding throughout each period.

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

^c Rounds to less than $0.01.

^d Ratio of expenses to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 0.78%.

^e Ratio of net investment income to average net assets prior to voluntary reimbursed distribution fees for the year ended August 31, 2004 was 0.14%.

See notes to the financial statements.

FINANCIAL HIGHLIGHTS 17

Notes to the Financial Statements

iSHARES^®, INC.

1. SIGNIFICANT ACCOUNTING POLICIES

iShares, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company was incorporated under the laws of the State of Maryland on September 1, 1994 pursuant to amended and restated Articles of Incorporation. As of August 31, 2005, the Company offered 24 investment portfolios or funds.

These financial statements relate only to the iShares MSCI Japan Index Fund (the “Fund”).

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

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

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

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

SECURITY VALUATION

The securities and other assets of the Fund are generally valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service, or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of other funds that are not traded on an exchange, a market valuation means such fund’s published net asset value per share. The investment adviser may use various pricing services or discontinue the use of any pricing service. A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation. In the event that current market valuations are not readily available or such valuations do not reflect current market values, the affected investments will be valued using fair value pricing pursuant to the pricing policy and procedures approved by the Board of Directors of the Company (the “Board”).

18 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

SECURITY TRANSACTIONS AND INCOME RECOGNITION

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

FOREIGN CURRENCY TRANSLATION

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

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

DISTRIBUTIONS TO SHAREHOLDERS

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

As of August 31, 2005, the tax year-end of the Fund, the components of distributable earnings (accumulated losses) on a tax basis consisted of undistributed ordinary income of $29,121,833, unrealized appreciation of $798,412,174 and capital and other losses of $149,685,644, for net distributable earnings of $677,848,363.

For the years ended August 31, 2005 and August 31, 2004, the tax characterization of distributions paid for the Fund was equal to the book characterization of distributions paid. The total distributions and distributions per share are disclosed in the accompanying Statements of Changes in Net Assets and the Financial Highlights for the Fund.

FEDERAL INCOME TAXES

The Fund is treated as an entity separate from the Company’s other funds for federal income tax purposes. It is the policy of the Fund to qualify as a regulated investment company by complying with the provisions applicable to regulated investment companies, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, and to annually distribute substantially all of its net income and any net gains (taking into account any capital loss carryforwards) sufficient to relieve it from all, or substantially all, federal income and excise taxes. Accordingly, no provision for federal income taxes was required for the year ended August 31, 2005.

From November 1, 2004 to August 31, 2005, the Fund incurred net realized capital losses and net foreign currency losses of $66,204,379. As permitted by tax regulations, the Fund has elected to defer those losses and treat them as arising in the year ending August 31, 2006.

As of August 31, 2005, the tax year-end of the Fund, the Fund had tax basis net capital loss carryforwards of $2,959,030, $62,572,173, $3,621,148, $5,594,562 and $8,733,802 expiring in 2009, 2010, 2011, 2012 and 2013, respectively. Such losses may be applied against any net realized taxable gains in each succeeding year or until their respective expiration date, whichever occurs first.

NOTES TO THE FINANCIAL STATEMENTS 19

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

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

For the year ended August 31, 2005, the Fund reclassified certain amounts of paid-in-capital from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. These reclassifications have no effect on net assets or net asset value per share.

As of August 31, 2005, the cost of investments for federal income tax purposes was $8,028,545,587. Net unrealized appreciation aggregated $798,446,352, of which $1,004,957,713 represented gross unrealized appreciation on securities and $206,511,361 represented gross unrealized depreciation on securities.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with banks and securities dealers. These transactions involve the purchase of securities with a simultaneous commitment to resell the securities to the bank or the dealer at an agreed-upon date and price. A repurchase agreement is accounted for as an investment by the Fund, collateralized by securities, which are delivered to the Fund’s custodian, or to an agent bank under a tri-party agreement. The securities are marked-to-market daily and additional securities are acquired as needed, to ensure that their value equals or exceeds the repurchase price plus accrued interest. As of August 31, 2005, a portion of the cash collateral for securities on loan for the Fund was invested in repurchase agreements as disclosed in the Fund’s Schedule of Investments. For further information, see Note 5, below.

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

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

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

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

Barclays Global Investors, N.A. (“BGI”) has a license agreement with MSCI for the use of the MSCI Japan Index. Under a sub-license agreement between BGI and the Fund, the fee for the use of the MSCI Japan Index is paid directly by BGI to MSCI.

20 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

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

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Fund is permitted to lend portfolio securities to Barclays Capital, Inc. (“BarCap”). Pursuant to the same exemptive order, BGI serves as securities lending agent for the Company. BarCap and BGI are affiliates of BGFA, the Fund’s investment adviser. As securities lending agent, BGI receives, as fees, a share of the income earned on investment of the cash collateral received for the loan of securities. For the year ended August 31, 2005, BGI earned securities lending agent fees of $1,906,190.

SEI Investments Distribution Co. (the “Distributor”) serves as the Fund’s underwriter and distributor of the shares of the Fund, pursuant to a Distribution Agreement with the Company. The Distributor does not currently receive a fee from the Fund for its distribution services. Prior to July 1, 2004, the Company had in effect a distribution plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Distributor was entitled to receive a distribution fee from the Fund, not to exceed 0.25% of the average daily net assets of the Fund, for distribution-related expenses and services. At the Board meeting held on March 16, 2004, the Directors voted to terminate the Plan, effective July 1, 2004.

Pursuant to Rule 17a-7 under the 1940 Act, the Fund executed cross trades for the year ended August 31, 2005. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. The Board reviewed all such transactions executed during the first ten months of the fiscal year ended August 31, 2005 and concluded that they were in compliance with the requirements and restrictions set forth by Rule 17a-7. The Board is scheduled at its next regularly scheduled meeting to review all such transactions executed during the last two months of the fiscal year.

Pursuant to an exemptive order issued by the SEC, the Fund may invest in the Institutional Shares of the Government Money Market Fund (“GMMF”), Institutional Money Market Fund (“IMMF”) and Prime Money Market Fund (“PMMF”) of Barclays Global Investors Funds. The GMMF, IMMF and PMMF are feeder funds in a master/feeder fund structure that invest substantially all of their assets in the Government Money Market Master Portfolio, Money Market Master Portfolio and Prime Money Market Master Portfolio (collectively, the “Master Portfolios”), respectively, which are managed by BGFA, the Fund’s investment adviser. The GMMF, IMMF and PMMF are open-end money market funds available to institutional and accredited investors, including other investment companies managed by BGFA. The GMMF, IMMF and PMMF seek a high level of income consistent with liquidity and the preservation of capital. While the GMMF, IMMF and PMMF do not directly charge an investment advisory fee, the Master Portfolios in which they invest do charge an investment advisory fee. Income distributions from the GMMF, IMMF and PMMF are declared daily and paid monthly from net investment income. Income distributions earned by the Fund from temporary cash investments or from investment of securities lending collateral are recorded as either interest from affiliated issuers or securities lending income, respectively, in the accompanying Statement of Operations.

The following table provides information about the investment by the Fund in shares of issuers of which BGFA is an affiliate for the year ended August 31, 2005, including income earned from these affiliated issuers.

Name of Affiliated Issuer	Number of Shares Held Beginning of Year (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Year (in 000s)	Value at End of Year		Interest Income
IMMF	3,155	234,923	237,384	694	$	694,161	$	36,740

NOTES TO THE FINANCIAL STATEMENTS 21

Notes to the Financial Statements (Continued)

iSHARES^®, INC.

During the year ended August 31, 2005, the Fund invested cash collateral from securities on loan in the GMMF, IMMF and PMMF. Due to the nature of the structure of the joint account used for the investment of the collateral for securities on loan, the information reported above for the Fund does not include the Fund’s holdings of the GMMF, IMMF and PMMF in connection with the investment of collateral for securities on loan.

As of August 31, 2005, certain directors and officers of the Company are also officers of BGI.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the year ended August 31, 2005, aggregated $419,110,953 and $405,253,216, respectively.

In-kind purchases and sales (see Note 4) for the year ended August 31, 2005, aggregated $1,155,122,016 and $430,395,093, respectively.

4. CAPITAL SHARE TRANSACTIONS

The Company has authorized 10.9 billion shares of $.001 par value capital stock. As of August 31, 2005, 2,124,600,000 shares were authorized to the Fund.

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

The consideration for the purchase of Creation Units of the Fund generally consists of the in-kind deposit of a designated portfolio of equity securities constituting a portfolio sampling representation of the MSCI Japan Index and an amount of cash. A purchase transaction fee and a redemption transaction fee are charged to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.

5. LOANS OF PORTFOLIO SECURITIES

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

As of August 31, 2005, the Fund had loaned securities which were collateralized by cash. Pursuant to an exemptive order issued by the SEC, the cash collateral received was invested in a joint account with other investment funds managed by BGFA. The joint account invests in securities with remaining maturities of 397 days or less, repurchase agreements and money market mutual funds, including money market funds managed by BGFA. Repurchase agreements held in the joint account are fully collateralized by U.S. Government securities. Income from the joint account is allocated daily to the Fund, based on the Fund’s portion of the total cash collateral received. The market value of the securities on loan as of August 31, 2005 and the value of the related collateral are disclosed in the Statement of Assets and Liabilities. Securities lending income, which is disclosed in the Fund’s Statement of Operations, is presented net of rebates paid to, or fees paid by, borrowers.

22 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

iShares, Inc.

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the iShares MSCI Japan Index Fund, a portfolio of the iShares MSCI Series (the “Fund”) at August 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

October 18, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 23

Tax Information (Unaudited)

iSHARES^®, INC.

For the year ended August 31, 2005, the iShares MSCI Japan Index Fund earned foreign source income of $75,597,244 and paid foreign taxes of $3,143,784 which it intends to pass through to its shareholders pursuant to Section 853 of the Internal Revenue Code (the “Code”).

Under Section 854(b)(2) of the Code, the Fund hereby designates the maximum amount of $43,802,876 as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Code for the year ended August 31, 2005.

In January 2006, shareholders will receive Form 1099-DIV which will include their share of qualified dividends distributed during the calendar year 2005. Shareholders are advised to check with their tax advisers for information on the treatment of these amounts on their income tax returns.

24 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Shareholder Meeting Results (Unaudited)

iSHARES^®, INC.

A special meeting of shareholders of iShares, Inc. was scheduled on July 14, 2005 and subsequently adjourned until August 11, 2005. All proposals were approved by the shareholders except as noted below. The proposals acted upon by shareholders at the special meeting and the results of the shareholder vote were as follows:

Proposal 1*

To elect the eight nominees specified below as Directors of the Company, each of whom will serve until his/her successor is duly elected or appointed and qualified.

Director	Votes For	Votes Withheld
Lee T. Kranefuss	514,380,779	13,203,425
John E. Martinez	514,431,297	13,152,907
Richard K. Lyons	514,795,814	12,788,388
George G.C. Parker	509,155,829	18,428,374
W. Allen Reed	514,418,913	13,165,293
Cecilia H. Herbert	514,381,937	13,202,268
Charles A. Hurty	514,442,567	13,141,638
John E. Kerrigan	514,830,983	12,753,220

Messrs. Kranefuss, Martinez, Lyons, Reed and Parker previously served as Directors of the Company and were re-elected. Ms. Herbert and Messrs. Hurty and Kerrigan were newly elected.

Proposal 2A

To approve a change to the Company’s fundamental investment policy to simplify and conform the Fund’s investment restriction regarding issuing senior securities.

Votes For	Votes     Against	Votes     Abstaining	Broker     Non-Votes**
228,253,406	6,247,816	2,102,848	86,351,206

Proposal 2B

To approve a change to the Company’s fundamental investment policy to simplify and conform the Fund’s investment restriction regarding the making of loans.

Votes For	Votes     Against	Votes     Abstaining	Broker     Non-Votes**
227,119,660	6,799,093	2,685,316	86,351,207

Proposal 2C

This proposal did not apply to the Fund.

Proposal 2D

This proposal did not apply to the Fund.

SHAREHOLDER MEETING RESULTS 25

Shareholder Meeting Results (Unaudited) (Continued)

iSHARES^®, INC.

Proposal 3

To approve a change in the classification of the investment objectives of the Fund from fundamental to non-fundamental. The shareholders of the Fund did not approve this proposal.

Votes For	Votes     Against	Votes     Abstaining	Broker     Non-Votes**
214,218,625	19,731,770	2,653,675	86,351,206

Proposal 4

This proposal did not apply to the Fund.

* Denotes Company-wide proposal and voting results.

** Broker non-votes are proxies received by the Fund from brokers or nominees, who did not receive instructions from the beneficial owner or other persons entitled to vote, and who have no discretionary power to vote on a particular matter. Broker non-votes have the effect of a vote against the proposal.

26 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts^* (Unaudited)

iSHARES^®, INC.

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Company’s Board of Directors, including a majority of Directors who are not interested persons of the Company (as that term is defined in the 1940 Act), who are commonly referred to as the “Independent Directors,” is required annually to consider each Fund’s Investment Advisory Contract with BGFA (each, an “Advisory Contract”). Pursuant to Section 15(c), the Board of Directors (the “Board”) is required to request and evaluate, and BGFA is required to provide, such information as may be reasonably necessary to evaluate the terms of the Advisory Contracts. At a meeting held on June 14, 2005, the Board approved the selection of BGFA and the continuance of the Advisory Contracts, based on its review of qualitative and quantitative information provided by BGFA. With respect to the iShares MSCI Singapore Index Fund (the “Singapore Fund”), the Board approved the continuance of the current Advisory Contract for the Singapore Fund, pending shareholder approval of the new advisory contract for the Singapore Fund which was previously considered and approved by the Board on April 22, 2005. In selecting BGFA and approving the Advisory Contracts for the Funds, the Board, including the Independent Directors, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board reviewed the scope of services to be provided by BGFA under the Advisory Contracts and noted that there would be no differences between the scope of services required to be provided by BGFA for the past year and the scope of services required to be provided by BGFA for the upcoming year. In reviewing the scope of services provided to the Funds by BGFA, the Board reviewed and discussed BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including increasing the number of their employees, to the support of the Funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the Funds. In that regard, the Board noted that BGFA provides information regarding portfolio management and compliance to the Board on a periodic basis in connection with regularly scheduled meetings of the Board. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board reviewed and considered BGFA’s investment processes and strategies, and matters related to BGFA’s portfolio transaction policies and procedures. The Board further noted that BGFA does not serve as investment adviser for any other series of registered investment companies with substantially similar investment objectives and strategies as the Funds; therefore, no comparative performance information was available. However, the Board also noted that the Funds had met their investment objectives consistently since their relevant inception dates. Based on this review, the Board concluded that the nature, extent and quality of services to be provided by BGFA to the Funds under the Advisory Contracts were appropriate and continued to support the Board’s original selection of BGFA as investment adviser to the Funds.

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other funds registered under the 1940 Act objectively determined solely by Lipper, as comprising each Fund’s applicable peer group (the “Lipper Peer Group”). In addition, the Board reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three- and five-year, and “latest quarter” periods ended March 31, 2005, as applicable, and a comparison of each Fund’s performance to that of the funds in its Lipper Peer Group for the same periods. Because there are relatively few exchange-traded funds other than the Funds and because few, if any, exchange-traded funds or index funds track indices similar to those tracked by the Funds, the Lipper Peer Groups included open-end, closed-end, and exchange-traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper Peer Groups and to prepare this information. The Board further noted that due to the limitations in providing comparable funds in the various Lipper Peer Groups, the statistical information may or may not provide meaningful direct comparisons to the Funds. The Board noted that most of the Funds generally performed in line with the funds in their respective Lipper Peer Groups over relevant periods, however, certain

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS 27

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^®, INC.

of the Funds may have underperformed or outperformed funds in their respective Lipper Peer Groups over relevant periods, but any such Funds also performed in line with their relevant benchmarks over such periods. The Board also noted that the investment advisory fees and overall expenses for the Funds were generally lower than or in line with the investment advisory fee rates and overall expenses of the Funds in their respective Lipper Peer Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of the Funds, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the Lipper Peer Groups, were satisfactory for the purposes of approving the continuance of the Advisory Contracts.

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

The Board reviewed information about the profitability of the Funds to BGFA based on the fees payable under the Advisory Contracts for the last calendar year. The Board analyzed the Funds’ expenses, including the investment advisory fees paid to BGFA. The Board also reviewed information regarding direct revenue received by BGFA and ancillary revenue received by BGFA and/or its affiliates in connection with the services provided to the Funds by BGFA (as discussed below). The Board also discussed BGFA’s profit margin as reflected in the Funds’ profitability analysis and reviewed information regarding economies of scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by BGFA and its affiliates under the Advisory Contracts and from other relationships between the Funds and BGFA and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ asset levels. The Board noted that the Advisory Contracts for most of the Funds provide for breakpoints in the investment advisory fee rates as a result of increases in the asset levels of such Funds on an aggregated basis with certain other Funds. The Board further noted that the Advisory Contract for the iShares MSCI Singapore Index Fund provides for breakpoints in its investment advisory fee rate based on increases in the asset levels of that particular Fund. The Board also noted that the Advisory Contracts for the iShares MSCI Pacific Ex-Japan Index Fund and the iShares MSCI Emerging Markets Index Fund do not provide for any breakpoints in the investment advisory fee rates as a result of increases in the asset levels of such Funds. However, the Board further noted that possible future economies of scale had been taken into consideration by fixing the investment advisory fees at rates at the lower end of the marketplace, effectively giving Fund shareholders, from inception, the benefits of the lower average fee shareholders would have received from a fee structure with declining breakpoints where the initial fee was higher. In addition, the Board noted that as of July 1, 2004, Fund shareholders were no longer paying distribution fees pursuant to the Funds’ distribution plan under Rule 12b-1 of the 1940 Act because such plan had been terminated as of that date, benefiting the Funds’ shareholders by lowering the Funds’ overall expenses. The Board also reviewed BGFA’s historic profitability as investment adviser to the Funds and noted that BGFA had not yet fully recovered losses it had experienced during earlier years when the Funds had not yet achieved reasonable economic scale. In light of this history, the Board determined that reductions in fee rates or additions of further breakpoints were not warranted at this juncture. Based on this review, the Board, recognizing its responsibility to consider this issue at least annually, concluded that the structure of the investment advisory fees at present reflects the sharing of economies of scale with the Funds’ shareholders.

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

The Board received and considered information regarding the Funds’ annual investment advisory fee rates under the Advisory Contracts in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA or BGI, an affiliate of BGFA, provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts. The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any mutual funds, collective funds, separate accounts or other exchange-traded funds with substantially similar investment objectives and strategies as the

28 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts (Unaudited) (Continued)

iSHARES^®, INC.

Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the other funds registered under the 1940 Act, collective funds and separate accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contracts do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contracts are fair and reasonable.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

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

Based on the above analysis, the Board determined that the Advisory Contracts, including the investment advisory fee rates thereunder, are fair and reasonable in light of all relevant circumstances and concluded that it is in the best interest of the Funds and their shareholders to continue the Advisory Contracts.

* Denotes the Board’s approval of Investment Advisory Contracts for all series of the Company, including the Fund.

BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS 29

Supplemental Information (Unaudited)

iSHARES^®, INC.

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

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

The following information shows the frequency distributions of premiums and discounts for the Fund, for the period from January 1, 2000 through June 30, 2005, the date of the most recent calendar quarter-end.

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

iShares MSCI Japan Index Fund

Period Covered: January 1, 2000 through June 30, 2005

Premium/Discount Range	Number of Days	Percentage of Total Days
Greater than 3.0%	6	0.43	%
Greater than 2.5% and Less than 3.0%	9	0.65
Greater than 2.0% and Less than 2.5%	21	1.52
Greater than 1.5% and Less than 2.0%	47	3.40
Greater than 1.0% and Less than 1.5%	136	9.85
Greater than 0.5% and Less than 1.0%	249	18.03
Between 0.5% and –0.5%	603	43.67
Less than –0.5% and Greater than –1.0%	177	12.82
Less than –1.0% and Greater than –1.5%	76	5.50
Less than –1.5% and Greater than –2.0%	40	2.90
Less than –2.0% and Greater than –2.5%	8	0.58
Less than –2.5%	9	0.65
	1,381	100.00	%

30 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director Information (Unaudited)

iSHARES^®, INC.

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

iShares, Inc., iShares Trust, Barclays Global Investors Funds and Master Investment Portfolio are considered to be members of the same fund complex, as defined in Form N-1A under the 1940 Act. Each Director of iShares, Inc. also serves as a Trustee for iShares Trust and oversees 101 portfolios within the fund complex. In addition, Lee T. Kranefuss and Richard K. Lyons each serves as a Trustee for Barclays Global Investors Funds and Master Investment Portfolio and oversees 126 portfolios within the fund complex.

Unless otherwise noted in the tables below, the address for each Director is 45 Fremont Street, San Francisco, California 94105. Additional information about the Funds’ Directors may be found in the Funds’ Statement of Additional Information, which is available without charge, upon request, by calling toll-free 1-800-474-2737.

Interested Directors and Officers

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
*Lee T. Kranefuss, 1961	Director, Chairman and President (since June 18, 2003).	Chief Executive Officer of Intermediary Investor and Exchange Traded Products Business of BGI (since 2003); Chief Executive Officer of the Individual Investor Business of BGI (1997-2003).	Trustee (since 2003) of iShares Trust; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.; Director (since 2003) of iShares PLC and EETF PLC (Dublin).
*John E. Martinez, 1961	Director (since December 5, 2003).	Co-CEO of Global Index and Markets Group of BGI (2001-2003); Chairman of Barclays Global Investors Services (2000-2003); CEO of Capital Markets Group of BGI (1996-2001).	Trustee (since 2003) of iShares Trust; Director (since 2005) of Real Estate Equity Exchange; Director (since 2003) of Larkin Street Youth Services; Director (2000-2002) of Barclays Global Investors UK Holdings.

* Lee T. Kranefuss and John E. Martinez are considered to be “interested persons” (as defined in the 1940 Act) of the Company due to their affiliations with BGFA, the Funds’ investment adviser, and BGFA affiliates.

DIRECTOR INFORMATION 31

Director Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Richard K. Lyons, 1961	Director (since February 28, 2002).	Acting Dean (2004-2005) and Sylvan Coleman Professor of Finance (since 1993) University of California, Berkeley: Haas School of Business; Consultant for IMF World Bank, Federal Reserve Bank and Citibank N.A. (since 2000).	Trustee (since 2000) of iShares Trust; Trustee (since 2001) of Barclays Global Investors Funds and Master Investment Portfolio; Director (since 2003) of BGI Cayman Prime Money Market Fund, Ltd.; Trustee and Chairman (since 1995) of Matthews Asian Funds (oversees 6 portfolios).
George G. C. Parker, 1939	Director (since February 28, 2002).	Dean Witter Distinguished Professor of Finance (since 1994); Senior Associate Dean for Academic Affairs, Director of MBA Program, Stanford University: Graduate School of Business (1993-2001).	Trustee (since 2000) of iShares Trust; Director (since 1998) of Affinity Group Holdings; Director (since 1985) of Bailard, Biehl and Kaiser, Inc.; Director (since 1978) of California Casualty Group of Insurance Companies; Director (since 1996) of Continental Airlines, Inc.; Director (since 1996) of Community First Financial Group; Director (since 1999) of Tejon Ranch Company; Director (since 2003) of First Republic Bank; Director (since 2000) of Converium Re-Insurance; Director (since 2004) of Threshold Pharmaceuticals.
W. Allen Reed, 1947	Director (since December 16, 1996).	President and Chief Executive Officer of General Motors Investment Management Corporation (since 1994); Chief Executive Officer of General Motors Trust Bank (since 2003); Chief Executive Officer of General Motors Trust Company (since 1999).	Trustee (since 2002) of iShares Trust; Director (since 1994) of General Motors Investment Management Corporation; Director and Chairman (since 2003) of General Motors Trust Bank; Director and Chairman (since 1999) of General Motors Trust Company; Director (since 2002) of GMAM ARS Fund I; Director (since 1994) of General Motors Acceptance Corporation; Director (since 1994) of GMAC Insurance Holdings, Inc.; Director (since 1995) of Global Emerging Markets Fund; Director (since 2000) of Temple Inland Industries; Member (since 2004) of Board of Executives of New York Stock Exchange; Member (since 1995) of New York State Retirement System Advisory Board; Member (since 2004) of the Auburn University Foundation Fund Investment Committee.

32 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

Director Information (Unaudited) (Continued)

iSHARES^®, INC.

Independent Directors (Continued)

Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Cecilia H. Herbert, 1949	Director (since August 11, 2005).	Member of Finance Council, Archdiocese of San Francisco (since 1991); Chair of Investment Committee, Archdiocese of San Francisco (since 1994).	Trustee (since 2005) of iShares Trust; Trustee (since 2004) of Pacific Select Funds (31 portfolios); Trustee (1992-2003) of the Montgomery Funds (20 portfolios); Trustee (since 2005) of the Thatcher School; Director (since 1998) of Catholic Charities CYO; Trustee (1998-2000) of the Groton School; Director (since 2005) of Women’s Forum West (professional association).
Charles A. Hurty, 1944	Director (since August 11, 2005).	Partner, KPMG LLP (1968-2001).	Trustee (since 2005) of iShares Trust; Director (since 2002) of GMAM Absolute Return Strategy Fund (1 portfolio); Director (since 2002) of Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC (2 portfolios); Director (since 2005) of CSFB Alternative Investments Fund (15 portfolios).
John E. Kerrigan, 1956	Director (since August 11, 2005).	Chief Investment Officer, Santa Clara University (since 2002); Managing Director, Merrill Lynch (1994-2002).	Trustee (since 2005) of iShares Trust; Member (since 2004) of Advisory Council for Commonfund Distressed Debt Partners II.
Officer
Name, Year of Birth	Position(s), Length of Service	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael A. Latham, 1965	Secretary, Treasurer and Principal Financial Officer (since February 28, 2002).	Chief Operating Officer of the Intermediary Investor 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.

DIRECTOR INFORMATION 33

The iShares^® Family of Funds

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

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI )

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500/BARRA Growth (IVW)

iShares S&P 500/BARRA Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400/BARRA Growth (IJK)

iShares S&P MidCap 400/BARRA Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600/BARRA Growth (IJT)

iShares S&P SmallCap 600/BARRA Value (IJS)

iShares Domestic Sector Index Funds

iShares Cohen & Steers Realty Majors (ICF)

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

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

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

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

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

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

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

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

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

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

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

iShares Dow Jones Transportation Average (IYT)

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

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

iShares Goldman Sachs Natural Resources (IGE)

iShares Goldman Sachs Networking (IGN)

iShares Goldman Sachs Semiconductor (IGW)

iShares Goldman Sachs Software (IGV)

iShares Goldman Sachs Technology (IGM)

iShares Nasdaq Biotechnology (IBB)

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG )

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT )

iShares GS $ InvesTop™ Corporate (LQD)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Specialty Index Funds

iShares KLD Select Social^SM (KLD)

iShares Dow Jones Select Dividend (DVY)

iShares International Index Funds

iShares MSCI EAFE (EFA)

iShares MSCI EAFE Growth (EFG )

iShares MSCI EAFE Value (EFV )

iShares MSCI Emerging Markets (EEM)

iShares MSCI EMU (EZU)

iShares MSCI Pacific ex-Japan (EPP)

iShares S&P Europe 350 (IEV)

iShares S&P Latin America 40 (ILF)

iShares Morningstar Index Funds

iShares Morningstar Large Core (JKD)

iShares Morningstar Large Growth (JKE)

iShares Morningstar Large Value (JKF)

iShares Morningstar Mid Core (JKG)

iShares Morningstar Mid Growth (JKH)

iShares Morningstar Mid Value (JKI)

iShares Morningstar Small Core (JKJ)

iShares Morningstar Small Growth (JKK)

iShares Morningstar Small Value (JKL)

iShares NYSE Index Funds

iShares NYSE Composite (NYC)

iShares NYSE 100 (NY)

iShares^® is a registered trademark of Barclays Global Investors, N.A. The iShares Funds are not sponsored, endorsed or issued by Goldman, Sachs & Co. or Lehman Brothers, nor are they sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., FTSE/Xinhua Index Limited, KLD Research & Analytics, Inc., Morgan Stanley Capital International, Morningstar, Inc., The Nasdaq Stock Market, Inc., New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. “GS $ InvesTop™” and “Goldman Sachs^®” are trademarks of Goldman, Sachs & Co.

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

This advertising section does not constitute part of the 2005 Annual Report.

2117-iS-0805

34 2005 iSHARES ANNUAL REPORT TO SHAREHOLDERS

The iShares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as an adviser to the iShares Funds. Barclays Global Investors Services (BGIS) assists in the marketing of the iShares Funds. BGFA and BGIS are subsidiaries of Barclays Global Investors, N.A., a wholly owned subsidiary of Barclays Bank PLC, none of which is affiliated with SEI.

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Morgan Stanley Capital International, Inc., nor does this company make any representation regarding the advisability of investing in the iShares Funds.

©2005 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners.

Investing involves risk, including possible loss of principal.

A description of the policies that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, 2005 is available without charge, upon request, by calling toll-free 1 800 474 2737; on the Fund’s website at www.iShares.com; and on the Securities and Exchange Commission’s website at www.sec.gov.

The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarter of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s website at www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1 800 SEC 0330. The Funds also disclose their complete schedules of portfolio holdings on a daily and monthly basis on the Funds’ website at www.iShares.com.

This report is intended for the Funds’ shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current prospectus.

BGI-F-005-09051

Item 2. Code of Ethics.

As of August 31, 2005, iShares, Inc. (the “Registrant”) had adopted a code of ethics that applies to persons appointed by the Registrant’s Board of Directors as the Chief Executive Officer and President, Chief Financial Officer, Treasurer and/or Chief Accounting Officer, and any persons performing similar functions. For the fiscal year ended August 31, 2005, there were no amendments to any provision of this code of ethics, nor were there any waivers granted from any provision of this code of ethics. A copy of this code of ethics is filed with this Form N-CSR under Item 12(a)(1).

Item 3. Audit Committee Financial Expert.

The Registrant’s Board of Directors has determined that the Registrant has more than one audit committee financial expert, as that term is defined under Item 3(b) and 3(c), serving on its audit committee. The audit committee financial experts serving on the Registrant’s audit committee are Richard K. Lyons, George G.C. Parker and W. Allen Reed, all of whom are independent, as that term is defined under Item 3(a)(2). Richard K. Lyons holds a PhD in Economics and qualifies as an audit committee financial expert through his many years of university-level (graduate) teaching of accounting and finance-related subjects, his many years of research in the same subjects (including mutual funds), and his extensive experience serving as independent director and as a member of various mutual fund audit committees.

Item 4. Principal Accountant Fees and Services.

(a) Audit Fees – The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Funds’ annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years, were $324,000 for the fiscal year ended August 31, 2004 and $348,000 for the fiscal year ended August 31, 2005.

(b) Audit-Related Fees – There were no fees billed for the fiscal years ended August 31, 2004 and August 31, 2005 for assurance and related services by the principal accountant that were reasonably related to the performance of the audit of the Funds’ financial statements and are not reported under (a) of this Item.

(c) Tax Fees – The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for the review of the Funds’ tax returns and excise tax calculations, were $158,880 for the fiscal year ended August 31, 2004 and $166,800 for the fiscal year ended August 31, 2005.

(d) All Other Fees – There were no other fees billed for the fiscal years ended August 31, 2004 and August 31, 2005 for products and services provided by the principal accountant, other than the services reported in (a) through (c) of this Item.

(e) (1) The Registrant’s audit committee charter, as amended in June 2004, provides that the audit committee is responsible for the approval, prior to appointment, of the engagement of the principal accountant to annually audit and provide their opinion on the Registrant’s financial statements. The audit committee must also approve, prior to appointment, the engagement of the principal accountant to provide non-audit services to the Registrant or to any entity controlling, controlled by or under common control with the Registrant’s investment adviser (“Adviser Affiliate”) that provides services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant.

(2) There were no services described in (b) through (d) above (including services required by the audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) None of the hours expended on the principal accountant’s engagement to audit the Funds’ financial statements for the fiscal year ended August 31, 2005 were attributable to work performed by persons other than the principal accountant’s full-time, permanent employees.

(g) The aggregate non-audit fees billed by the Registrant’s principal accountant for services rendered to the Funds, and rendered to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant for the last two fiscal years, were $992,543 for the year ended August 31, 2004 and $705,969 for the year ended August 31, 2005.

(h) The Registrant’s audit committee has considered whether the provision of non-audit services rendered to the Registrant’s investment adviser and any Adviser Affiliate that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, if any, are compatible with maintaining the principal accountant’s independence, and has determined that the provision of these services do not compromise the principal accountant’s independence.

Item 5. Audit Committee of Listed Registrants.

The Registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant’s audit committee members are Richard K. Lyons, George G.C. Parker and W. Allen Reed.

Item 6. Schedule of Investments.

The Funds’ full schedules of investments are included as part of the reports to shareholders filed under Item 1 of this Form.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to the Registrant.

Item 10. Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.

Item 11. Controls and Procedures.

(a) The President and Principal Financial Officer have concluded that, based on their evaluation as of a date within 90 days of the filing date of this report, the disclosure controls and procedures of the Registrant (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are reasonably designed to achieve the purposes described in the attached certification, Section 4 (a).

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Code of Ethics for Senior Officers that is the subject of Item 2 is attached.

(a) (2) Section 302 Certifications are attached.

(a) (3) Not applicable to the Registrant.

(b) Section 906 Certifications are attached.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

iShares, Inc.
By:	/s/ Lee T. Kranefuss
	Lee T. Kranefuss, President
Date: November 4, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ Lee T. Kranefuss
	Lee T. Kranefuss, President
Date: November 4, 2005
By:	/s/ Michael A. Latham
	Michael A. Latham, Principal Financial Officer
Date: November 4, 2005

EX-99.CODE ETHIC

Ex-99.Code Ethic

N-CSR Exhibit for Item 12(a)(1): CODE OF ETHICS

iShares Trust and iShares, Inc.

CODE OF ETHICS FOR SENIOR OFFICERS

INTRODUCTION

Section 406 of the Sarbanes-Oxley Act of 2002 directed the Securities and Exchange Commission (the “SEC”) to adopt rules requiring companies to disclose whether or not they have adopted a code of ethics for senior financial officers, and if not, why not. The SEC has adopted rules requiring registered investment companies to make such disclosures. These rules extend coverage to chief executive officers as well as senior financial officers, and require disclosure of waivers or substantive changes in any code. This Code of Ethics (this “Code”) addresses these new requirements, and is different in nature and scope from the code of ethics that was previously adopted as required under Section 17(j) of the Investment Company Act of 1940 (the “1940 Act”) and Rule 17j-1 thereunder, which focuses on personal trading activities.

POLICY STATEMENT

It is the policy of iShares Trust and iShares, Inc. (collectively the “Funds” or each individually a “Fund”) to conduct its affairs in accordance with all applicable laws and governmental rules and regulations. This Code has been adopted by the Funds’ Board of Trustees and Board of Directors (together, the “Board”) and applies to the persons appointed by the Board as Chief Executive Officer, President, Chief Financial Officer, Treasurer and/or Chief Accounting Officer, and any persons performing similar functions, all as identified in Exhibit A, as modified from time to time (“Covered Officers”). Each Covered Officer is personally responsible for adhering to the standards and restrictions imposed by applicable laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters. This Code is designed to promote:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund;

• compliance with applicable governmental laws, rules and regulations;

• prompt internal reporting to the appropriate person of violations of this Code; and

• accountability for adherence to this Code.

This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide Covered Officers. In this regard, each Covered Officer must:

• act with integrity, including being honest and candid while still maintaining the confidentiality of information where required by law or the Fund’s policies;

• observe both the form and spirit of laws and governmental rules and regulations, and accounting standards;

• adhere to high standards of business ethics; and

• place the interests of the Fund and its shareholders before the Covered Officer’s own personal interests.

All activities of Covered Officers should be guided by and adhere to these fiduciary standards. Covered Officers should not hesitate to use available resources whenever it is desirable to seek clarification. Covered Officers are encouraged to consult with the Fund’s chief legal officer or, if none, legal counsel to the Fund’s investment adviser (“Adviser”) (“Legal Counsel”), or other appropriate resources, when in doubt about the best course of action in a particular situation.

CONFLICTS OF INTEREST

Covered Officers should handle ethically actual and apparent conflicts of interest. A “conflict of interest” occurs when an individual’s personal interests actually or potentially interfere with the interests of the Fund or its shareholders. A conflict of interest can arise when a Covered Officer takes actions or has interests that may make it difficult to perform his duties as a Fund officer objectively and effectively. Service to the Fund should never be subordinated to either a direct or indirect personal gain or advantage.

Certain conflicts of interests arise out of the relationships between Covered Officers and the Fund that already are subject to conflict of interest provisions in the 1940 Act and the Investment Advisers Act. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as “affiliated persons” of the Fund. The Funds’ and the Adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Actual or apparent conflicts may arise from, or as a result of, the contractual relationship between the Fund and the Adviser, administrator or other service provider of which the Covered Officers are also officers or employees (the “Employer”). It is recognized by the Board that the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on the Employer and the Fund. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Employer, and is consistent with the Board’s understanding of the performance by the Covered Officers of their duties as officers of the Fund. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of other investment companies advised or serviced by the Employer and the codes of those investment companies will apply to the Covered Officers acting in those distinct capacities. Nonetheless, each Covered Officer recognizes that, as an Officer of the Fund, he or she has a duty to act in the best interests of the Fund and its shareholders.

If a Covered Officer believes that his or her responsibilities as an officer or employee of the Employer are likely to materially compromise his or her objectivity or ability to perform the duties of his role as an officer of the Fund, he or she should consult with Legal Counsel, the Fund’s outside counsel, or counsel to the Directors who are not “interested persons” of the Fund as defined in the 1940 Act (“Independent Directors”), as appropriate. Under appropriate circumstances, a Covered Officer should also consider whether to present the matter to the Board or an appropriate committee thereof.

In addition, each Covered Officer must:

• avoid conflicts of interest wherever possible;

• not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

• not engage in personal, business or professional relationships or dealings which would impair his or her independence of judgment or adversely affect the performance of his or her duties in the best interests of the Fund and its shareholders; and

• not cause the Fund to take action, or fail to take action, for the personal benefit of the Covered Officer rather than the benefit the Fund.

ACCURACY OF REPORTS, RECORDS AND ACCOUNTS

All Covered Officers are responsible for the accuracy of the records and reports that they are responsible for maintaining. Each Covered Officer shall seek to obtain additional resources if he believes that existing resources are inadequate to enable the Fund to provide full, fair and accurate financial information and other disclosure to regulators and Fund shareholders. Accurate information is essential to the Fund’s ability to meet legal and regulatory obligations. The books and records of the Fund shall meet the highest standards and accurately reflect the true nature of the transactions they record. The Covered Officers must not create false or misleading documents or accounting, financial or electronic records for any purpose, and must not direct any other person to do so. If a Covered Officer becomes aware that information filed with the SEC or made available to the public contains any false or misleading information or omits to disclose necessary information, he shall promptly report it to Legal Counsel for a determination as to what, if any, corrective action is necessary or appropriate.

No undisclosed or unrecorded account or fund shall be established for any purpose. No false or misleading entries shall be made in the Fund’s books or records for any reason. No disbursement of Fund assets shall be made without adequate supporting documentation or for any purpose other than as described in the Fund’s documents or contracts.

FUNDS DISCLOSURE CONTROLS AND PROCEDURES

Each Covered Officer is required to be familiar, and comply, with the Fund’s disclosure controls and procedures. In addition, each Covered Officer having direct or supervisory authority regarding SEC filings or the Fund’s other public communications should, to the extent appropriate within his area of responsibility, consult with other Fund officers and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure.

Each Covered Officer must:

• familiarize him- or herself with the disclosure requirements applicable to the Fund as well as the business and financial operations of the Fund;

• ensure that reasonable steps are taken within his or her areas of responsibility to promote full, fair, accurate, timely and understable disclosure in all regulatory filings, as well as when communicating with the Fund’s shareholders or the general public, in accordance with applicable law;

• consistent with his or her responsibilities, exercise appropriate supervision over and assist relevant Fund service providers in developing financial information and other disclosure that complies with relevant law and presents information in a clear, comprehensible and complete manner; and

• not knowingly misrepresent, conceal or omit required disclosures of, or cause others to do the same, facts about the Fund, whether to persons within or outside the Fund, including to outside counsel, independent auditors and governmental regulators.

CONFIDENTIAL INFORMATION

Covered Officers who have access to confidential information are not permitted to use or share that information for their personal benefit or for any other purpose except the conduct of the Fund’s business. Covered Officers should maintain the confidentiality of information entrusted to them by the Fund or its shareholders, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information, including information that might be of use to competitors, or harmful to the Fund or its shareholders if disclosed.

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly by the Fund. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board and its counsel.

COMPLIANCE, REPORTING AND RECORDKEEPING

Compliance

Any Covered Officer who violates the provisions of this Code will be subject to disciplinary action and appropriate sanctions, up to and including termination. Sanctions shall be imposed by the Audit Committee, subject to review by the full Board, in their sole discretion. Depending on the nature and severity of the violation, the Fund may refer such violation to appropriate authorities for civil action or criminal prosecution.

All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by the law or this Code, such reports and records shall not be disclosed to anyone other than the Fund’s Adviser, the Directors, the Fund’s outside counsel or counsel to the Independent Directors.

Reporting

Each Covered Officer shall:

• upon receipt of the Code or upon becoming a Covered Officer, sign and submit an Initial Acknowledgement (form attached) confirming that he has received, read and understands the Code;

• annually, sign and submit an Annual Acknowledgement (form attached) confirming that he has complied with the requirements of the Code;

• not retaliate against any Covered Officer or other person for making reports of violations in good faith; and

• notify Legal Counsel, the Fund’s outside counsel or counsel to the Independent Directors, as appropriate, of any actual or potential violation of this Code. Failure to do so is itself a violation of this Code. The Fund will not retaliate against any Covered Officer for making reports of violations in good faith, but will not be precluded from taking appropriate disciplinary action for the violations themselves.

Except as described otherwise below, Legal Counsel is authorized to apply this Code to situations presented to it and has the authority to interpret this Code in any particular situation. Legal Counsel shall take all action it considers appropriate to investigate any actual or potential violations reported to it, and Legal Counsel is authorized and encouraged to consult, as appropriate, with the chair of the Audit Committee, the Fund’s outside counsel or counsel to the Independent Directors. The Fund’s Audit Committee is responsible for granting waivers from the terms and provisions of this Code, as it deems appropriate.

Recordkeeping

The Fund will maintain and preserve for a period of not less than six (6) years from the date such action is taken, the first two (2) years in an easily accessible place, a copy of the information or materials supplied to the Board: (i) that provided the basis for any amendment or waiver to this Code, and (ii) relating to any violation of the Code and sanctions imposed for such violation, together with a written record of the approval or action taken by the Audit Committee and/or Board.

EXHIBIT A

“Covered Officers” covered by this Code of Ethics for Senior Officers:

1. Lee T. Kranefuss, President

2. Michael A. Latham, Principal Financial Officer

Current as of: November 4, 2005

Form of

INITIAL ACKNOWLEDGEMENT

I acknowledge that I have received and read a copy of the Code of Ethics for Senior Officers (the “Code”) and that I understand it. I further acknowledge that I am responsible for understanding and complying with the policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code.

I also acknowledge my responsibility to report any violation of the Code to Legal Counsel, as defined in the Code.

I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also understand that, consistent with applicable law, the Fund has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.

Covered Officer Name and Title:
	(please print)

Signature Date

Form of

ANNUAL ACKNOWLEDGEMENT

I acknowledge that I have received and read a copy of the Code of Ethics for Senior Officers (the “Code”) and that I understand it. I further acknowledge that I am responsible for understanding and complying with the policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code.

I also acknowledge that I have fully complied with the terms and provisions of the Code during the period of time since the most recent Initial or Annual Acknowledgement provided by me.

I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also understand that, consistent with applicable law, the Fund has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.

Covered Officer Name and Title:
	(please print)

Signature Date

EX-99.CERT

EX-99.CERT

N-CSR Exhibit for Item 12(a)(2): SECTION 302 CERTIFICATIONS

I, Lee T. Kranefuss, certify that:

1. I have reviewed this report on Form N-CSR of iShares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 4, 2005	/s/ Lee T. Kranefuss	President
	Lee T. Kranefuss [Signature]	[Title]

EX-99.CERT

N-CSR Exhibit for Item 12(a)(2): SECTION 302 CERTIFICATIONS

I, Michael A. Latham, certify that:

1. I have reviewed this report on Form N-CSR of iShares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 4, 2005	/s/ Michael A. Latham	Principal Financial Officer
	Michael A. Latham [Signature]	[Title]

EX-99.906

Ex.99.906 CERT

N-CSR Exhibit for Item 12(b): CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Lee T. Kranefuss, President, and Michael A. Latham, Principal Financial Officer, of iShares, Inc. (the “Registrant”), each certify that:

1. The Registrant’s periodic report on Form N-CSR for the period ended August 31, 2005 (the “Form N-CSR”) fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: November 4, 2005	/s/ Lee T. Kranefuss	President
	Lee T. Kranefuss [Signature]	[Title]
Date: November 4, 2005	/s/ Michael A. Latham	Principal Financial Officer
	Michael A. Latham [Signature]	[Title]