iShares Trust Semi-Annual Reports Dated 10-31-2006

N-CSRS 1 dncsrs.htm ISHARES TRUST SEMI-ANNUAL REPORTS DATED 10-31-2006 iShares Trust Semi-Annual Reports Dated 10-31-2006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09729

iShares Trust

(Exact name of registrant as specified in charter)

c/o: Investors Bank & Trust Company

200 Clarendon Street; Boston, MA 02116

(Address of principal executive offices) (Zip code)

The Corporation Trust Company

1209 Orange Street

Wilmington, DE 19801

(Name and address of agent for service)

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

Date of fiscal year end: April 30, 2007

Date of reporting period: October 31, 2006

Item 1. Reports to Stockholders.

LOGO

Table of Contents


Fund Performance Overviews		1
Shareholder Expenses		10
Schedules of Investments		12
iShares Dow Jones U.S. Basic Materials Sector Index Fund		12
iShares Dow Jones U.S. Consumer Goods Sector Index Fund		19
iShares Dow Jones U.S. Consumer Services Sector Index Fund		27
iShares Dow Jones U.S. Financial Sector Index Fund		36
iShares Dow Jones U.S. Industrial Sector Index Fund		46
iShares Dow Jones U.S. Financial Services Index Fund		56
iShares Dow Jones U.S. Real Estate Index Fund		64
iShares KLD Select Social^SMIndex Fund		71
iShares Cohen & Steers Realty Majors Index Fund		76
Financial Statements		77
Financial Highlights		84
Notes to the Financial Statements		93
Board Review and Approval of Investment Advisory Contract		101
iShares Family of Funds		106

Fund Performance Overview

iSHARES^® DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Basic Materials Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Basic Materials Index (the “Index”). The Index measures the performance of the basic materials sector of the U.S. equity market, and includes companies in the following sectors: chemicals, forestry and paper, industrial metals and mining. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund declined 2.00%, while the Index declined 1.77%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
21.37%	21.48%	22.09%	12.16%	12.14%	12.83%	9.35%	9.36%	9.95%
Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
21.37%	21.48%	22.09%	77.48%	77.34%	82.87%	77.01%	77.17%	83.38%

Total returns for the periods since inception are calculated from the inception date of the Fund (6/12/00). “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 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 (6/19/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

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

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Chemicals	46.18	%
Mining	20.02
Iron & Steel	10.65
Forest Products & Paper	7.79
Coal	6.25
Agriculture	5.37
Household Products & Wares	1.38
Metal Fabricate & Hardware	1.33
Environmental Control	0.36
Energy—Alternate Sources	0.29
Biotechnology	0.14
Manufacturing	0.11
Short-Term and Other Net Assets	0.13

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Du Pont (E.I.) de Nemours and Co.	9.45	%
Dow Chemical Co. (The)	8.83
Alcoa Inc.	5.66
Monsanto Co.	5.37
Phelps Dodge Corp.	4.57
Praxair Inc.	4.39
Newmont Mining Corp.	4.22
Nucor Corp.	3.70
International Paper Co.	3.67
Weyerhaeuser Co.	3.51

TOTAL	53.37	%


FUND PERFORMANCE OVERVIEWS		1

Fund Performance Overview

iSHARES^® DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Consumer Goods Sector Index Fund (the “Fund”), seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Consumer Goods Index (the “Index”). The Index measures the performance of the consumer goods sector of the U.S. equity market and includes companies in the following sectors: automobiles and parts, beverages, food producers, household goods, leisure goods, personal goods and tobacco. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 8.43%, while the Index returned 8.70%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
13.22%	13.35%	13.83%	8.53%	8.53%	9.16%	7.28%	7.30%	7.97%
Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
13.22%	13.35%	13.83%	50.55%	50.58%	55.01%	56.71%	56.83%	63.27%

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 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 (6/16/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Beverages	20.96	%
Cosmetics & Personal Care	20.17
Agriculture	17.69
Food	10.90
Apparel	4.88
Household Products & Wares	4.19
Home Builders	3.86
Auto Manufacturers	2.31
Auto Parts & Equipment	2.20
Leisure Time	1.89
Software	1.82
Home Furnishings	1.24
Toys, Games & Hobbies	1.14
Hand & Machine Tools	1.00
Other Industries	5.58
Short-Term and Other Net Assets	0.17

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Procter & Gamble Co.	15.76	%
Altria Group Inc.	13.19
PepsiCo Inc.	8.25
Coca-Cola Co. (The)	7.88
Anheuser-Busch Companies Inc.	2.69
Colgate-Palmolive Co.	2.60
Kimberly-Clark Corp.	2.40
Archer-Daniels-Midland Co.	1.81
General Mills Inc.	1.56
Harley-Davidson Inc.	1.41

TOTAL	57.55	%


2		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Consumer Services Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Consumer Services Index (the “Index”). The Index measures the performance of the consumer services sector of the U.S. equity market, and includes companies in the following sectors: food and drug retailers, general retailers, media and travel and leisure. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 6.97%, while the Index returned 7.21%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
14.43%	14.54%	15.03%	6.90%	6.92%	7.48%	1.82%	1.83%	2.35%
Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
14.43%	14.54%	15.03%	39.63%	39.73%	43.40%	12.20%	12.29%	15.99%

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 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 (6/20/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Retail	47.17	%
Media	26.47
Lodging	4.77
Internet	4.41
Food	3.78
Commercial Services	3.44
Pharmaceuticals	2.53
Advertising	1.97
Airlines	1.84
Leisure Time	1.68
Entertainment	1.40
Software	0.53
Other Industries	0.24
Short-Term and Other Net Assets	(0.23	)

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Wal-Mart Stores Inc.	6.99	%
Time Warner Inc.	4.37
Home Depot Inc.	4.24
Walt Disney Co. (The)	3.38
McDonald’s Corp.	2.82
Comcast Corp. Class A	2.81
Lowe’s Companies Inc.	2.56
Target Corp.	2.52
Walgreen Co.	2.43
News Corp. Class A	2.13

TOTAL	34.25	%


FUND PERFORMANCE OVERVIEWS		3

Fund Performance Overview

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Financial Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Financials Index (the “Index”). The Index measures the performance of the financial sector of the U.S. equity market and includes companies in the following sectors: banks, non-life insurance, life insurance, real estate, and general finance. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 5.71%, while the Index returned 5.99%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
19.35%	19.39%	20.01%	11.26%	11.19%	11.91%	9.47%	9.47%	10.13%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
19.35%	19.39%	20.01%	70.48%	69.95%	75.51%	79.24%	79.19%	86.29%

Total returns for the periods since inception are calculated from the inception date of the Fund (5/22/00). “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 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 (5/31/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Diversified Financial Services	34.29	%
Banks	29.11
Insurance	21.25
Real Estate Investment Trusts	10.45
Savings & Loans	2.43
Real Estate	0.89
Commercial Services	0.64
Software	0.37
Forest Products & Paper	0.35
Energy - Alternate Sources	0.06
Short-Term and Other Net Assets	0.16

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Citigroup Inc.	7.72	%
Bank of America Corp.	7.61
JP Morgan Chase & Co.	5.10
American International Group Inc.	4.74
Wells Fargo & Co.	3.55
Wachovia Corp.	3.28
Merrill Lynch & Co. Inc.	2.48
Morgan Stanley	2.32
Goldman Sachs Group Inc. (The)	2.17
American Express Co.	1.93

TOTAL	40.90	%


4		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^{^®}DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Industrial Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Industrials Index (the “Index”). The Index measures the performance of the industrials sector of the U.S. equity market and includes companies in the following sectors: construction and materials, aerospace and defense, general industrials, electronic and electrical equipment, industrial engineering and industrial transportation and support services. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund declined 1.03%, while the Index declined 0.75%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
16.46%	16.44%	17.16%	8.60%	8.59%	8.94%	2.25%	2.25%	2.23%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
16.46%	16.44%	17.16%	51.04%	50.99%	53.44%	15.30%	15.27%	15.13%

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 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 (6/20/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Manufacturing	36.00	%
Aerospace & Defense	13.66
Transportation	12.05
Machinery	6.11
Commercial Services	5.68
Software	4.60
Electronics	4.50
Electrical Components & Equipment	2.80
Building Materials	2.05
Environmental Control	1.90
Engineering & Construction	1.55
Packaging & Containers	1.52
Auto Manufacturers	1.10
Other Industries	6.29
Short-Term and Other Net Assets	0.19

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
General Electric Co.	19.67	%
United Technologies Corp.	3.30
Tyco International Ltd.	3.21
Boeing Co. (The)	3.06
3M Co.	2.94
United Parcel Service Inc. Class B	2.69
Caterpillar Inc.	2.15
Emerson Electric Co.	1.87
FedEx Corp.	1.76
Honeywell International Inc.	1.71

TOTAL	42.36	%


FUND PERFORMANCE OVERVIEWS		5

Fund Performance Overview

iSHARES^{^®}DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Financial Services Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Financial Services Index (the “Index”). The Index measures the performance of the financial services sector of the U.S. equity market and is a subset of the Dow Jones U.S. Financials Index. The Index includes companies in the following sectors: banks and investment management/brokers. The Fund invests in a representative sample of the securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 4.86%, while the Index returned 5.11%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
20.42%	20.46%	21.10%	11.57%	11.54%	12.24%	8.64%	8.64%	9.29%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
20.42%	20.46%	21.10%	72.89%	72.65%	78.09%	69.84%	69.76%	76.43%

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Diversified Financial Services	51.08	%
Banks	43.38
Savings & Loans	3.63
Commercial Services	0.96
Software	0.55
Insurance	0.24
Short-Term and Other Net Assets	0.16

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Citigroup Inc.	11.50	%
Bank of America Corp.	11.33
JP Morgan Chase & Co.	7.60
Wells Fargo & Co.	5.28
Wachovia Corp.	4.89
Merrill Lynch & Co. Inc.	3.69
Morgan Stanley	3.45
Goldman Sachs Group Inc. (The)	3.23
American Express Co.	2.87
U.S. Bancorp	2.78

TOTAL	56.62	%


6		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^{^®}DOW JONES U.S. REAL ESTATE INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Real Estate Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Real Estate Index (the “Index”). The Index measures the performance of the real estate sector of the U.S. equity market and includes companies in the following sub-sectors: real estate holding and development and real estate investment trusts. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 17.91%, while the Index returned 17.23%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
36.36%	36.86%	36.78%	23.08%	23.11%	23.72%	20.49%	20.46%	21.08%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
36.36%	36.86%	36.78%	182.47%	182.74%	189.91%	228.97%	228.54%	239.46%

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Real Estate Investment Trusts	90.40	%
Real Estate	7.11
Forest Products & Paper	2.21
Diversified Financial Services	0.10
Short-Term and Other Net Assets	0.18

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Simon Property Group Inc.	5.71	%
Equity Residential	4.40
Equity Office Properties Trust	4.38
Vornado Realty Trust	4.24
ProLogis	4.23
Archstone-Smith Trust	3.59
Boston Properties Inc.	3.31
General Growth Properties Inc.	3.25
Public Storage Inc.	3.16
Host Hotels & Resorts Inc.	3.04

TOTAL	39.31	%


FUND PERFORMANCE OVERVIEWS		7

Fund Performance Overview

iSHARES^{^®}KLD SELECT SOCIAL^SMINDEX FUND

Performance as of October 31, 2006

The iShares KLD Select Social^SMIndex Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the KLD Select Social^SMIndex (the “Index”). The Index is designed to maximize exposure to large-capitalization companies that KLD determines to have positive social and environmental characteristics, while at the same time maintaining risk and return characteristics similar to the Russell 1000^{^®}Index. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 6.21%, while the Index returned 6.45%.

Average Annual Total Returns

Cumulative Total Returns

Year Ended 10/31/06

Inception to 10/31/06

NAV

MARKET

INDEX

NAV

MARKET

INDEX

NAV

MARKET

INDEX

15.31%

15.29%

16.05%

10.84%

10.82%

11.43%

19.99%

19.95%

21.11%

Total returns for the periods since inception are calculated from the inception date of the Fund (1/24/05). “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 period 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 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 (1/28/05), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Financial	22.44	%
Consumer Non-Cyclical	21.24
Technology	16.69
Communications	9.61
Industrial	8.80
Consumer Cyclical	8.77
Energy	5.44
Basic Materials	4.39
Utilities	2.54
Short-Term and Other Net Assets	0.08

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
American Express Co.	5.07	%
International Business Machines Corp.	5.01
Johnson & Johnson	4.99
Wells Fargo & Co.	3.72
Microsoft Corp.	3.48
General Mills Inc.	2.82
Nike Inc. Class B	1.94
3M Co.	1.93
St. Paul Travelers Companies Inc.	1.92
Intel Corp.	1.92

TOTAL	32.80	%


8		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^{^®}COHEN & STEERS REALTY MAJORS INDEX FUND

Performance as of October 31, 2006

The iShares Cohen & Steers Realty Majors Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cohen & Steers Realty Majors Index (the “Index”). The Index consists of selected Real Estate Investment Trusts (“REITs”). The objective of the Index is to represent relatively large and liquid REITs that may benefit from future consolidation and securitization of the U.S. real estate industry. The Fund invests in a representative sample of the securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 20.64%, while the Index returned 20.88%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
41.25%	40.97%	41.96%	25.80%	25.74%	26.47%	22.71%	22.68%	23.29%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
41.25%	40.97%	41.96%	215.02%	214.34%	223.55%	224.77%	224.26%	234.03%

Total returns for the periods since inception are calculated from the inception date of the Fund (1/29/01). “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 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 (2/2/01), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Real Estate Investment Trusts	99.92	%
Short-Term and Other Net Assets	0.08

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Simon Property Group Inc.	7.78	%
Vornado Realty Trust	7.13
Equity Residential	6.76
ProLogis	6.53
Equity Office Properties Trust	6.10
Archstone-Smith Trust	5.37
Boston Properties Inc.	5.23
Public Storage Inc.	5.05
General Growth Properties Inc.	4.92
Host Hotels & Resorts Inc.	4.61

TOTAL	59.48	%


FUND PERFORMANCE OVERVIEWS		9

Shareholder Expenses (Unaudited)

iSHARES^{^®}TRUST

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2006 to October 31, 2006.

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 Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period^a(5/1/06 to 10/31/06)
Dow Jones U.S. Basic Materials Sector
Actual	$	1,000.00	$	980.00	0.48	%	$	2.40
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Consumer Goods Sector
Actual		1,000.00		1,084.30	0.48			2.52
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Consumer Services Sector
Actual		1,000.00		1,069.70	0.48			2.50
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Financial Sector
Actual		1,000.00		1,057.10	0.48			2.49
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45


10		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited) (Continued)

iSHARES^{^®}TRUST


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period^a(5/1/06 to 10/31/06)
Dow Jones U.S. Industrial Sector
Actual	$	1,000.00	$	989.70	0.48	%	$	2.41
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Financial Services
Actual		1,000.00		1,048.60	0.48			2.48
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Real Estate
Actual		1,000.00		1,179.10	0.48			2.64
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
KLD Select Social^SM
Actual		1,000.00		1,062.10	0.50			2.60
Hypothetical (5% return before expenses)		1,000.00		1,022.68	0.50			2.55
Cohen & Steers Realty Majors
Actual		1,000.00		1,206.40	0.35			1.95
Hypothetical (5% return before expenses)		1,000.00		1,023.44	0.35			1.79

^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).


SHAREHOLDER EXPENSES		11

Schedule of Investments (Unaudited)

iSHARES^{^®}DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.87%
AGRICULTURE – 5.37%
Monsanto Co.	557,562	$	24,655,392

			24,655,392
BIOTECHNOLOGY – 0.14%
Cambrex Corp.	28,224		660,442

			660,442
CHEMICALS – 46.18%
Air Products & Chemicals Inc.	213,998		14,909,241
Airgas Inc.	68,336		2,583,784
Albemarle Corp.	39,438		2,564,653
Ashland Inc.	73,398		4,337,822
Cabot Corp.	58,853		2,327,636
Celanese Corp. Class A	112,239		2,313,246
Chemtura Corp.	248,614		2,133,108
Cytec Industries Inc.	39,536		2,189,899
Dow Chemical Co. (The)	994,242		40,555,131
Du Pont (E.I.) de Nemours and Co.	947,840		43,411,072
Eastman Chemical Co.	83,772		5,103,390
Ecolab Inc.	187,065		8,483,398
Ferro Corp.	44,156		870,756
FMC Corp.	37,889		2,597,291
Fuller (H.B.) Co.	60,580		1,501,778
Georgia Gulf Corp.	35,708		763,794
Hercules Inc.¹	116,634		2,122,739
Huntsman Corp.¹	93,874		1,621,204
International Flavors & Fragrances Inc.	85,853		3,647,035
Lubrizol Corp.	70,672		3,180,240
Lyondell Chemical Co.	231,116		5,932,748
MacDermid Inc.	26,733		894,219
Minerals Technologies Inc.	21,010		1,158,912
Mosaic Co. (The)^1,2	150,809		2,823,144
Olin Corp.	74,432		1,287,674
OM Group Inc.¹	30,187		1,720,659
PPG Industries Inc.	170,478		11,660,695
Praxair Inc.	334,631		20,161,518
Rohm & Haas Co.	148,025		7,670,655
RPM International Inc.	122,371		2,343,405
Schulman (A.) Inc.	30,359		734,991
Sensient Technologies Corp.	48,143		1,109,696
Sigma-Aldrich Corp.	59,242		4,449,667
Tronox Inc. Class B	23,104		302,200
Valspar Corp. (The)	97,835		2,621,000

			212,088,400
COAL – 6.25%
Alpha Natural Resources Inc.¹	54,122		861,081
Arch Coal Inc.	147,182		5,096,913
CONSOL Energy Inc.	189,472		6,705,414
Foundation Coal Holdings Inc.	46,930		1,722,800
International Coal Group Inc.¹	114,825		595,942
Massey Energy Co.	90,087		2,274,697
Peabody Energy Corp.	272,718		11,445,974

			28,702,821
ENERGY – ALTERNATE SOURCES – 0.29%
Aventine Renewable Energy Holdings Inc.¹	9,618		236,603
Headwaters Inc.^1,2	43,815		1,084,421

			1,321,024
ENVIRONMENTAL CONTROL – 0.36%
Aleris International Inc.¹	32,299		1,663,721

			1,663,721
FOREST PRODUCTS & PAPER – 7.79%
Bowater Inc.	57,888		1,210,438
Caraustar Industries Inc.¹	30,279		327,922
International Paper Co.	504,848		16,836,681
Neenah Paper Inc.	15,626		575,506
Wausau Paper Corp.	50,527		685,146
Weyerhaeuser Co.	253,608		16,126,933

			35,762,626
HOUSEHOLD PRODUCTS & WARES – 1.38%
Avery Dennison Corp.	100,779		6,363,186

			6,363,186
IRON & STEEL – 10.65%
AK Steel Holding Corp.¹	107,950		1,611,693
Allegheny Technologies Inc.	97,317		7,661,767
Carpenter Technology Corp.	23,269		2,489,550
Chaparral Steel Co.	44,484		1,850,089
Cleveland-Cliffs Inc.	43,313		1,831,707
Nucor Corp.	291,238		17,011,212


12		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Oregon Steel Mills Inc.¹		37,007	$	2,013,181
Reliance Steel & Aluminum Co.		64,268		2,207,606
Ryerson Inc.²		24,199		583,196
Steel Dynamics Inc.		50,794		3,053,227
United States Steel Corp.		126,932		8,580,603

				48,893,831
MANUFACTURING – 0.11%
Tredegar Corp.		29,131		508,045

				508,045
METAL FABRICATE & HARDWARE – 1.33%
Commercial Metals Co.		124,717		3,318,719
NS Group Inc.¹		22,758		1,487,463
Worthington Industries Inc.		74,652		1,289,987

				6,096,169
MINING – 20.02%
Alcoa Inc.		898,570		25,977,659
Coeur d’Alene Mines Corp.¹		286,691		1,404,786
Freeport-McMoRan Copper & Gold Inc.		194,185		11,744,309
Kaiser Aluminum Corp.¹		11,572		549,670
Meridian Gold Inc.¹		103,436		2,617,965
Newmont Mining Corp.		428,013		19,376,148
Phelps Dodge Corp.		209,086		20,988,053
RTI International Metals Inc.¹		24,070		1,475,972
Southern Copper Corp.²		75,432		3,875,696
Stillwater Mining Co.¹		46,788		502,971
Titanium Metals Corp.¹		82,647		2,436,434
USEC Inc.		89,351		997,157

				91,946,820

TOTAL COMMON STOCKS (Cost: $435,137,130)				458,662,477
SHORT-TERM INVESTMENTS – 1.77%
CERTIFICATES OF DEPOSIT³– 0.06%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	38,219		38,219
Societe Generale
5.33%, 12/08/06		54,598		54,598

Security	Principal		Value
Washington Mutual Bank
5.36%, 11/13/06	$	136,496	$	136,496
Wells Fargo Bank N.A.
4.78%, 12/05/06		43,679		43,679

				272,992
COMMERCIAL PAPER³– 0.27%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		81,509		80,070
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		81,898		81,898
ASAP Funding Ltd.
5.29%, 11/02/06⁴		13,650		13,648
Atlantis One Funding
5.30%, 11/14/06⁴		74,913		74,770
Beta Finance Inc.
5.27%, 01/25/07⁴		10,920		10,784
Bryant Park Funding LLC
5.28%, 12/14/06⁴		17,237		17,128
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		27,677		27,624
Cantabric Finance LLC
5.26%, 01/25/07⁴		21,839		21,568
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		62,788		62,696
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		40,949		39,940
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		32,759		32,642
Curzon Funding LLC
5.29%, 11/17/06⁴		54,598		54,470
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		62,906		62,145
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		54,598		54,558
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		49,685		48,959


SCHEDULES OF INVESTMENTS		13

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Galleon Capital Corp.
5.27%, 12/18/06⁴	$	7,634	$	7,581
General Electric Capital Services Inc.
5.22%, 12/11/06		5,460		5,428
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		32,213		31,579
HBOS Treasury Services PLC
5.27%, 12/15/06		10,920		10,849
Landale Funding LLC
5.31%, 11/15/06⁴		42,587		42,499
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		98,071		98,003
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		35,216		35,144
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		70,978		69,631
Nestle Capital Corp.
5.19%, 08/09/07		32,759		31,432
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		86,258		86,258
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		29,090		28,752
Sedna Finance Inc.
5.22%, 04/17/07⁴		31,121		30,368
Sydney Capital Corp.
5.27%, 12/08/06⁴		1,302		1,295
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		27,299		26,991
Tulip Funding Corp.
5.29%, 11/15/06⁴		28,796		28,737

				1,217,447
MEDIUM-TERM NOTES³– 0.05%
Bank of America N.A.
5.28%, 04/20/07		13,650		13,650
Cullinan Finance Corp.
5.71%, 06/28/07⁴		40,949		40,949

*Security*	Shares or Principal		*Value*
K2 USA LLC
5.39%, 06/04/07⁴	$	40,949	$	40,949
Marshall & Ilsley Bank
5.18%, 12/15/06		54,598		54,621
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		63,880		63,880
US Bank N.A.
2.85%, 11/15/06		10,920		10,912

				224,961
MONEY MARKET FUNDS – 0.30%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		1,398,453		1,398,453

				1,398,453
REPURCHASE AGREEMENTS³ – 0.29%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $109,213 (collateralized by non-U.S. Government debt securities, value $112,509, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	109,197		109,197
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $76,449 (collateralized by U.S. Government obligations, value $77,992, 5.50%, 10/1/21 to 10/1/36).		76,438		76,438
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $81,910 (collateralized by non-U.S. Government debt securities, value $90,118, 0.31% to 6.00%, 7/25/36 to 11/25/46).		81,898		81,898


14		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


Security	Principal		Value
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $5,461 (collateralized by non-U.S. Government debt securities, value $5,625, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	5,460	$	5,460
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $191,123 (collateralized by non-U.S. Government debt securities, value $200,715, 4.11% to 9.32%, 4/15/10 to 5/15/36).		191,095		191,095
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $60,067 (collateralized by non-U.S. Government debt securities, value $67,304, 0.00% to 10.00%, 5/27/33 to 10/31/36).		60,058		60,058
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $32,764 (collateralized by non-U.S. Government debt securities, value $36,241, 0.00% to 10.00%, 5/27/33 to 10/31/36).		32,759		32,759
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $109,213 (collateralized by non-U.S. Government debt securities, value $114,694, 0.00% to 9.00%, 5/1/17 to 9/25/46).		109,197		109,197
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $95,561 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $97,972, 0.00% to 7.32%, 11/2/06 to 3/25/45).		95,547		95,547
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $81,909 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $83,458, 0.00% to 7.32%, 11/2/06 to 3/25/45).		81,897		81,897
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $32,764 (collateralized by non-U.S. Government debt securities, value $34,408, 0.00% to 10.00%, 1/1/10).		32,759		32,759
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $27,303 (collateralized by non-U.S. Government debt securities, value $28,676, 5.26% to 5.35%, 7/1/24 to 6/1/46).		27,299		27,299
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $13,652 (collateralized by non-U.S. Government debt securities, value $14,339, 6.25% to 7.63%, 9/15/13 to 6/1/16).		13,650		13,650


SCHEDULES OF INVESTMENTS		15

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $109,213 (collateralized by non-U.S. Government debt securities, value $112,511, 3.50% to 10.13%, 5/15/07 to 7/1/26).	$	109,197	$	109,197
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $54,606 (collateralized by non-U.S. Government debt securities, value $60,188, 5.50% to 10.39%, 6/17/08 to 6/25/36).		54,598		54,598
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $73,719 (collateralized by non-U.S. Government debt securities, value $77,978, 0.00% to 10.00%, 11/1/06 to 10/31/36).		73,708		73,708
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $39,483 (collateralized by non-U.S. Government debt securities, value $41,001, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		38,219		38,219
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $141,977 (collateralized by non-U.S. Government debt securities, value $149,102, 3.86% to 8.17%, 11/18/08 to 7/15/45).		141,956		141,956

				1,334,932
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		5,642		5,642

				5,642
VARIABLE & FLOATING RATE NOTES³– 0.80%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		139,772		139,789
American Express Bank
5.29%, 02/28/07		54,598		54,598
American Express Centurion Bank
5.41%, 07/19/07		60,058		60,108
American Express Credit Corp.
5.42%, 07/05/07		16,380		16,387
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		9,851		9,851
ASIF Global Financing
5.51%, 05/03/07⁴		5,460		5,461
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		35,489		35,489
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		79,168		79,171
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		139,226		139,231
BMW US Capital LLC
5.32%, 10/15/07⁴		54,598		54,598
BNP Paribas
5.36%, 05/18/07⁴		101,007		101,007
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		39,857		39,857
CC USA Inc.
5.37%, 07/30/07⁴		27,299		27,302
Commodore CDO Ltd.
5.47%, 06/12/07⁴		13,650		13,650
Credit Agricole SA
5.34%, 07/23/07		54,598		54,598
Credit Suisse First Boston NY
5.38%, 04/24/07		27,299		27,300
Cullinan Finance Corp.
5.36%, 04/25/07⁴		13,650		13,650


16		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


Security	Principal		Value
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴	$	13,650	$	13,650
DEPFA Bank PLC
5.43%, 09/14/07		54,598		54,598
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		62,788		62,791
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		54,598		54,598
Fifth Third Bancorp
5.30%, 11/23/07⁴		109,197		109,197
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		54,598		54,596
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		57,328		57,339
Granite Master Issuer PLC
5.29%, 08/20/07⁴		191,095		191,095
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		43,679		43,684
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		81,898		81,908
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		54,598		54,598
Holmes Financing PLC
5.29%, 07/16/07⁴		95,547		95,547
JP Morgan Chase & Co.
5.29%, 08/02/07		40,949		40,949
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		40,949		40,947
Kestrel Funding LLC
5.30%, 07/11/07⁴		21,839		21,838
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		32,759		32,759
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		56,905		56,904
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		60,058		60,055
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		21,621		21,621
Marshall & Ilsley Bank
5.30%, 10/15/07		30,029		30,029
Master Funding LLC
5.35%, 04/25/07⁴		49,139		49,139
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		81,898		81,898
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		5,460		5,460
Monumental Global Funding II
5.38%, 12/27/06⁴		10,920		10,920
Mound Financing PLC
5.29%, 05/08/07⁴		51,323		51,323
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		196,554		196,553
National City Bank of Indiana
5.37%, 05/21/07		27,299		27,300
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		180,175		180,210
Newcastle Ltd.
5.34%, 04/24/07⁴		19,246		19,243
Northern Rock PLC
5.36%, 08/03/07⁴		65,518		65,519
Northlake CDO I
5.46%, 09/06/07⁴		16,380		16,380
Principal Life Global Funding I
5.82%, 02/08/07		24,569		24,600
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		79,168		79,166


SCHEDULES OF INVESTMENTS		17

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. BASIC MATERIALS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴	$	54,598	$	54,598
Strips III LLC
5.37%, 07/24/07⁴		12,550		12,550
SunTrust Bank
5.29%, 05/01/07		54,598		54,600
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		133,220		133,211
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		76,438		76,437
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		73,165		73,165
Wachovia Bank N.A.
5.36%, 05/22/07		109,197		109,197
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		40,949		40,968
Wells Fargo & Co.
5.33%, 11/15/07⁴		27,299		27,301
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		40,949		40,948
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		163,795		163,768
Wind Master Trust
5.31%, 07/25/07⁴		21,839		21,839

				3,667,043

TOTAL SHORT-TERM INVESTMENTS (Cost: $8,121,470)				8,121,470

TOTAL INVESTMENTS IN SECURITIES – 101.64% (Cost: $443,258,600)				466,783,947
Other Assets, Less Liabilities – (1.64)%				(7,550,027	)

NET ASSETS – 100.00%			$	459,233,920

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


18		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^{^®}DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.83%
AGRICULTURE – 17.69%
Altria Group Inc.	558,503	$	45,423,049
Archer-Daniels-Midland Co.	161,437		6,215,324
Bunge Ltd.¹	32,162		2,061,906
Loews Corp. - Carolina Group	29,100		1,682,562
Reynolds American Inc.	46,187		2,917,171
Universal Corp.	6,876		253,174
UST Inc.	43,626		2,336,609

			60,889,795
APPAREL – 4.88%
Carter’s Inc.²	13,539		382,206
Coach Inc.²	98,733		3,913,776
Hanesbrands Inc.²	25,398		599,393
Jones Apparel Group Inc.	30,228		1,009,615
Kellwood Co.	6,671		204,133
Liz Claiborne Inc.	28,209		1,189,574
Nike Inc. Class B	48,121		4,421,357
Phillips-Van Heusen Corp.	14,941		683,700
Polo Ralph Lauren Corp.	16,926		1,201,746
Quiksilver Inc.²	32,240		449,748
Stride Rite Corp.	9,606		141,688
Timberland Co. Class A²	13,760		396,976
VF Corp.	23,488		1,785,323
Wolverine World Wide Inc.	15,121		428,832

			16,808,067
AUTO MANUFACTURERS – 2.31%
Ford Motor Co.	480,865		3,981,562
General Motors Corp.	113,618		3,967,541

			7,949,103
AUTO PARTS & EQUIPMENT – 2.20%
American Axle & Manufacturing Holdings Inc.	11,635		218,156
ArvinMeritor Inc.	18,068		271,381
BorgWarner Inc.	15,485		890,388
CooperTire & Rubber Co.¹	16,828		180,564
GoodyearTire & Rubber Co. (The)²	41,947		643,048
Johnson Controls Inc.	52,473		4,278,648
Lear Corp.	18,029		544,656
Modine Manufacturing Co.	8,682		206,718
Superior Industries International Inc.¹	5,757		97,293
Visteon Corp.²	34,017		251,045

			7,581,897
BEVERAGES – 20.96%
Anheuser-Busch Companies Inc.	195,641		9,277,296
Brown-Forman Corp. Class B	12,132		875,809
Coca-Cola Co. (The)	580,794		27,134,696
Coca-Cola Enterprises Inc.	74,602		1,494,278
Constellation Brands Inc.²	53,755		1,477,725
Hansen Natural Corp.²	19,315		613,251
Molson Coors Brewing Co. Class B	19,699		1,402,175
Pepsi Bottling Group Inc.	35,439		1,120,581
PepsiAmericas Inc.	17,643		360,799
PepsiCo Inc.	447,893		28,414,332

			72,170,942
BIOTECHNOLOGY – 0.06%
Martek Biosciences Corp.²	8,442		200,244

			200,244
COMMERCIAL SERVICES – 0.15%
Weight Watchers International Inc.	12,145		529,522

			529,522
COSMETICS & PERSONAL CARE – 20.17%
Alberto-Culver Co.	22,356		1,135,908
Avon Products Inc.	121,622		3,698,525
Colgate-Palmolive Co.	139,749		8,939,744
Estee Lauder Companies Inc. (The) Class A	34,421		1,390,264
Procter & Gamble Co.	856,209		54,275,089

			69,439,530
DISTRIBUTION & WHOLESALE – 0.79%
Genuine Parts Co.	46,835		2,131,929
Pool Corp.	14,338		587,571

			2,719,500
ELECTRICAL COMPONENTS & EQUIPMENT – 0.33%
Energizer Holdings Inc.²	14,521		1,134,816

			1,134,816
ELECTRONICS – 0.67%
Garmin Ltd.¹	31,305		1,672,000
Gentex Corp.	39,708		631,754

			2,303,754


SCHEDULES OF INVESTMENTS		19

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
FOOD – 10.90%
Campbell Soup Co.	69,102	$	2,583,033
Chiquita Brands International Inc.	10,974		150,344
ConAgra Foods Inc.	140,135		3,664,530
Corn Products International Inc.	19,760		715,114
Dean Foods Co.²	36,250		1,518,513
Del Monte Foods Co.	53,067		572,593
Flowers Foods Inc.	15,058		409,126
General Mills Inc.	94,719		5,381,934
Hain Celestial Group Inc.²	10,158		286,760
Heinz (H.J.) Co.	84,821		3,576,053
Hershey Co. (The)	44,241		2,340,791
Hormel Foods Corp.	20,028		723,211
Kellogg Co.	67,485		3,395,170
Kraft Foods Inc.	56,008		1,926,675
McCormick & Co. Inc. NVS	29,868		1,117,063
Ralcorp Holdings Inc.²	7,233		357,672
Sara Lee Corp.	204,371		3,494,744
Smithfield Foods Inc.²	29,850		802,368
Smucker (J.M.) Co. (The)	15,328		751,072
Tootsie Roll Industries Inc.	6,192		196,782
TreeHouse Foods Inc.²	8,259		209,448
Tyson Foods Inc. Class A	64,651		934,207
Wrigley (William Jr.) Co.	46,582		2,419,935

			37,527,138
HAND & MACHINE TOOLS – 1.00%
Black & Decker Corp.	20,557		1,724,321
Snap-On Inc.	14,221		668,814
Stanley Works (The)	22,087		1,052,446

			3,445,581
HEALTH CARE - PRODUCTS – 0.04%
Oakley Inc.	6,867		127,589

			127,589
HOME BUILDERS – 3.86%
Beazer Homes USA Inc.	10,013		433,963
Centex Corp.	31,938		1,670,357
Champion Enterprises Inc.²	20,567		190,450
Fleetwood Enterprises Inc.²	17,183		122,687
Horton (D.R.) Inc.	73,620		1,724,917
Hovnanian Enterprises Inc. Class A²	9,239		285,023
KB Home	21,337		958,885
Lennar Corp. Class A	34,159		1,621,869
Lennar Corp. Class B	2,965		131,972
M.D.C. Holdings Inc.	9,431		470,230
Meritage Homes Corp.²	5,948		272,299
Monaco Coach Corp.	7,282		86,947
NVR Inc.²	1,398		784,977
Pulte Homes Inc.	57,523		1,782,638
Ryland Group Inc.	11,814		542,617
Standard-Pacific Corp.	17,414		421,941
Thor Industries Inc.	10,665		467,340
Toll Brothers Inc.²	31,645		914,857
WCI Communities Inc.^1,2	9,652		155,590
Winnebago Industries Inc.¹	7,990		265,987

			13,305,546
HOME FURNISHINGS – 1.24%
Ethan Allen Interiors Inc.	8,377		298,389
Furniture Brands International Inc.¹	12,143		225,860
Harman International Industries Inc.	16,887		1,728,384
La-Z-Boy Inc.¹	13,776		168,756
Whirlpool Corp.	21,130		1,836,831

			4,258,220
HOUSEHOLD PRODUCTS & WARES – 4.19%
ACCO Brands Corp.²	11,713		284,626
Blyth Inc.	7,914		189,303
Church & Dwight Co. Inc.	17,473		708,880
Clorox Co. (The)	40,631		2,623,137
Fossil Inc.²	13,065		285,340
Jarden Corp.²	13,813		496,992
Kimberly-Clark Corp.	124,329		8,270,365
Scotts Miracle-Gro Co. (The) Class A	12,339		610,287
Spectrum Brands Inc.²	10,266		99,786
Tupperware Brands Corp.	16,143		342,716
WD-40 Co.	4,231		143,812
Yankee Candle Co. Inc. (The)	10,762		364,294

			14,419,538
HOUSEWARES – 0.62%
Newell Rubbermaid Inc.	74,539		2,145,232

			2,145,232
INTERNET – 0.14%
NutriSystem Inc.^1,2	7,722		476,293

			476,293


20		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
LEISURE TIME – 1.89%
Brunswick Corp.		25,041	$	788,792
Callaway Golf Co.		18,288		245,608
Harley-Davidson Inc.		70,817		4,860,171
Nautilus Inc.¹		8,775		123,991
Polaris Industries Inc.		11,011		471,491

				6,490,053
MACHINERY – 0.10%
Briggs & Stratton Corp.		13,862		353,342

				353,342
MANUFACTURING – 0.96%
Eastman Kodak Co.¹		77,212		1,883,973
Lancaster Colony Corp.		6,914		280,363
Leggett & Platt Inc.		48,968		1,143,403

				3,307,739
OFFICE FURNISHINGS – 0.45%
Herman Miller Inc.		17,583		602,745
HNI Corp.		11,042		496,559
Interface Inc. Class A²		12,474		181,497
Steelcase Inc. Class A		16,753		277,597

				1,558,398
PHARMACEUTICALS – 0.25%
Herbalife Ltd.²		10,753		393,560
NBTY Inc.²		16,231		451,546

				845,106
RETAIL – 0.19%
Kenneth Cole Productions Inc. Class A		3,112		79,138
Nu Skin Enterprises Inc. Class A		14,436		276,016
Select Comfort Corp.²		14,281		305,328

				660,482
SOFTWARE – 1.82%
Activision Inc.²		75,408		1,162,791
Electronic Arts Inc.²		81,694		4,320,796
Take-Two Interactive Software Inc.^1,2		19,535		273,295
THQ Inc.²		17,450		524,722

				6,281,604
TEXTILES – 0.83%
Cintas Corp.		38,184		1,580,818
G&K Services Inc. Class A		5,726		218,218
Mohawk Industries Inc.²		14,756		1,072,761

				2,871,797

*Security*	Shares or Principal		*Value*
TOYS, GAMES & HOBBIES – 1.14%
Hasbro Inc.		39,650	$	1,027,728
JAKKS Pacific Inc.²		7,237		156,971
Marvel Entertainment Inc.²		17,040		431,964
Mattel Inc.		101,927		2,306,608

				3,923,271

TOTAL COMMON STOCKS (Cost: $330,025,449)				343,724,099
SHORT-TERM INVESTMENTS – 1.50%
CERTIFICATES OF DEPOSIT³– 0.06%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	27,874		27,874
Societe Generale
5.33%, 12/08/06		39,819		39,819
Washington Mutual Bank
5.36%, 11/13/06		99,549		99,549
Wells Fargo Bank N.A.
4.78%, 12/05/06		31,856		31,856

				199,098
COMMERCIAL PAPER³– 0.26%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		59,446		58,388
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		59,729		59,729
ASAP Funding Ltd.
5.29%, 11/02/06⁴		9,955		9,953
Atlantis One Funding
5.30%, 11/14/06⁴		54,635		54,531
Beta Finance Inc.
5.27%, 01/25/07⁴		7,964		7,865
Bryant Park Funding LLC
5.28%, 12/14/06⁴		12,571		12,492
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		20,185		20,147
Cantabric Finance LLC
5.26%, 01/25/07⁴		15,928		15,730
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		45,792		45,725


SCHEDULES OF INVESTMENTS		21

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴	$	29,865	$	29,128
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		23,892		23,807
Curzon Funding LLC
5.29%, 11/17/06⁴		39,819		39,726
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		45,878		45,323
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		39,819		39,790
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		36,236		35,706
Galleon Capital Corp.
5.27%, 12/18/06⁴		5,568		5,529
General Electric Capital Services Inc.
5.22%, 12/11/06		3,982		3,959
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		23,493		23,030
HBOS Treasury Services PLC
5.27%, 12/15/06		7,964		7,913
Landale Funding LLC
5.31%, 11/15/06⁴		31,059		30,995
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		71,524		71,474
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		25,684		25,631
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		51,765		50,783
Nestle Capital Corp.
5.19%, 08/09/07		23,892		22,924
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		62,909		62,910
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		21,216		20,969

*Security*	Shares or Principal		*Value*
Sedna Finance Inc.
5.22%, 04/17/07⁴	$	22,697	$	22,147
Sydney Capital Corp.
5.27%, 12/08/06⁴		950		945
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		19,910		19,685
Tulip Funding Corp.
5.29%, 11/15/06⁴		21,002		20,958

				887,892
MEDIUM-TERM NOTES³– 0.05%
Bank of America N.A.
5.28%, 04/20/07		9,955		9,955
Cullinan Finance Corp.
5.71%, 06/28/07⁴		29,865		29,865
K2 USA LLC
5.39%, 06/04/07⁴		29,865		29,865
Marshall & Ilsley Bank
5.18%, 12/15/06		39,819		39,836
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		46,589		46,589
US Bank N.A.
2.85%, 11/15/06		7,964		7,958

				164,068
MONEY MARKET FUNDS – 0.07%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		262,131		262,131

				262,131
REPURCHASE AGREEMENTS³ – 0.28%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $ 79,651 (collateralized by non-U.S. Government debt securities, value $82,055, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	79,639		79,639


22		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $55,755 (collateralized by U.S. Government obligations, value $56,881, 5.50%, 10/1/21 to 10/1/36).	$	55,747	$	55,747
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $59,738 (collateralized by non-U.S. Government debt securities, value $65,724, 0.31% to 6.00%, 7/25/36 to 11/25/46).		59,729		59,729
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $3,983 (collateralized by non-U.S. Government debt securities, value $4,103, 6.00% to 6.70%, 12/15/10 to 4/15/12).		3,982		3,982
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $139,389 (collateralized by non-U.S. Government debt securities, value $146,384, 4.11% to 9.32%, 4/15/10 to 5/15/36).		139,368		139,368
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $43,808 (collateralized by non-U.S. Government debt securities, value $49,086, 0.00% to 10.00%, 5/27/33 to 10/31/36).		43,801		43,801
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $23,896 (collateralized by non-U.S. Government debt securities, value $26,431, 0.00% to 10.00%, 5/27/33 to 10/31/36).		23,892		23,892
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $79,651 (collateralized by non-U.S. Government debt securities, value $83,648, 0.00% to 9.00%, 5/1/17 to 9/25/46).		79,639		79,639
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $69,694 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $71,453, 0.00% to 7.32%, 11/2/06 to 3/25/45).		69,684		69,684
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $59,738 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $60,867, 0.00% to 7.32%, 11/2/06 to 3/25/45).		59,729		59,729
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $23,896 (collateralized by non-U.S. Government debt securities, value $25,094, 0.00% to 10.00%, 1/1/10).		23,892		23,892
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $19,913 (collateralized by non-U.S. Government debt securities, value $20,914, 5.26% to 5.35%, 7/1/24 to 6/1/46).		19,910		19,910


SCHEDULES OF INVESTMENTS		23

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
JPMorgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $9,956 (collateralized by non-U.S. Government debt securities, value $ 10,458, 6.25% to 7.63%, 9/15/13 to 6/1/16).	$	9,955	$	9,955
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $79,651 (collateralized by non-U.S. Government debt securities, value $82,056, 3.50% to 10.13%, 5/15/07 to 7/1/26).		79,639		79,639
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $39,825 (collateralized by non-U.S. Government debt securities, value $43,896, 5.50% to 10.39%, 6/17/08 to 6/25/36).		39,819		39,819
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $53,764 (collateralized by non-U.S. Government debt securities, value $56,870, 0.00% to 10.00%, 11/1/06 to 10/31/36).		53,756		53,756
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $28,796 (collateralized by non-U.S. Government debt securities, value $29,903, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		27,874		27,874
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $103,545 (collateralized by non-U.S. Government debt securities, value $108,742, 3.86% to 8.17%, 11/18/08 to 7/15/45).		103,530		103,530

				973,585
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		4,115		4,115

				4,115
VARIABLE & FLOATING RATE NOTES³– 0.78%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		101,938		101,949
American Express Bank
5.29%, 02/28/07		39,819		39,820
American Express Centurion Bank
5.41%, 07/19/07		43,801		43,837
American Express Credit Corp.
5.42%, 07/05/07		11,946		11,951
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		7,184		7,184
ASIF Global Financing
5.51%, 05/03/07⁴		3,982		3,983
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		25,883		25,883
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		57,738		57,741
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		101,539		101,543
BMW US Capital LLC
5.32%, 10/15/07⁴		39,819		39,819
BNP Paribas
5.36%, 05/18/07⁴		73,666		73,666


24		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴	$	29,068	$	29,069
CC USA Inc.
5.37%, 07/30/07⁴		19,910		19,912
Commodore CDO Ltd.
5.47%, 06/12/07⁴		9,955		9,955
Credit Agricole SA
5.34%, 07/23/07		39,819		39,819
Credit Suisse First Boston NY
5.38%, 04/24/07		19,910		19,910
Cullinan Finance Corp.
5.36%, 04/25/07⁴		9,955		9,955
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		9,955		9,955
DEPFA Bank PLC
5.43%, 09/14/07		39,819		39,819
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		45,792		45,794
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		39,819		39,819
Fifth Third Bancorp
5.30%, 11/23/07⁴		79,639		79,639
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		39,819		39,817
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		41,810		41,819
Granite Master Issuer PLC
5.29%, 08/20/07⁴		139,368		139,368
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		31,856		31,860
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		59,729		59,736
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		39,819		39,819
Holmes Financing PLC
5.29%, 07/16/07⁴		69,684		69,684
JP Morgan Chase & Co.
5.29%, 08/02/07		29,865		29,865
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		29,865		29,864
Kestrel Funding LLC
5.30%, 07/11/07⁴		15,928		15,927
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		23,892		23,892
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		41,501		41,502
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		43,801		43,799
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		15,769		15,769
Marshall & Ilsley Bank
5.30%, 10/15/07		21,901		21,901
Master Funding LLC
5.35%, 04/25/07⁴		35,837		35,837
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		59,729		59,729
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		3,982		3,982
Monumental Global Funding II
5.38%, 12/27/06⁴		7,964		7,964
Mound Financing PLC
5.29%, 05/08/07⁴		37,430		37,430
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		143,350		143,349
National City Bank of Indiana
5.37%, 05/21/07		19,910		19,911
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		131,404		131,429
Newcastle Ltd.
5.34%, 04/24/07⁴		14,036		14,034
Northern Rock PLC
5.36%, 08/03/07⁴		47,783		47,784
Northlake CDO I
5.46%, 09/06/07⁴		11,946		11,946


SCHEDULES OF INVESTMENTS		25

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER GOODS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Principal Life Global Funding I
5.82%, 02/08/07	$	17,919	$	17,941
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		57,738		57,737
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		39,819		39,819
Strips III LLC
5.37%, 07/24/07⁴		9,153		9,153
SunTrust Bank
5.29%, 05/01/07		39,819		39,821
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		97,159		97,152
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		55,747		55,747
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		53,361		53,361
Wachovia Bank N.A.
5.36%, 05/22/07		79,639		79,639
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		29,865		29,879
Wells Fargo & Co.
5.33%, 11/15/07⁴		19,910		19,911
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		29,865		29,864
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		119,458		119,439
Wind Master Trust
5.31%, 07/25/07⁴		15,928		15,928

				2,674,430

TOTAL SHORT-TERM INVESTMENTS (Cost: $5,165,319)				5,165,319

TOTAL INVESTMENTS IN SECURITIES – 101.33% (Cost: $335,190,768)				348,889,418
Other Assets, Less Liabilities – (1.33)%				(4,582,138	)

NET ASSETS – 100.00%			$	344,307,280

NVS – Non-Voting Shares

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


26		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 100.23%
ADVERTISING – 1.97%
ADVO Inc.	4,285	$	125,808
Catalina Marketing Corp.	5,003		126,826
Donnelley (R.H.) Corp.	7,130		429,369
Getty Images Inc.¹	6,878		297,886
Harte-Hanks Inc.	7,588		191,597
Interpublic Group of Companies Inc.¹	61,899		675,318
Lamar Advertising Co.¹	12,479		719,789
Omnicom Group Inc.	24,032		2,438,046
ValueVision Media Inc. Class A¹	4,200		54,222

			5,058,861
AIRLINES – 1.84%
AirTran Holdings Inc.¹	12,277		122,402
Alaska Air Group Inc.¹	5,559		223,194
AMR Corp.¹	27,733		785,953
Continental Airlines Inc. Class B¹	12,412		457,755
JetBlue Airways Corp.^1,2	23,071		289,772
SkyWest Inc.	8,991		239,700
Southwest Airlines Co.	111,463		1,675,289
UAL Corp.¹	13,096		470,670
US Airways Group Inc.¹	8,980		447,743

			4,712,478
COMMERCIAL SERVICES – 3.44%
ADESA Inc.	12,391		311,510
Apollo Group Inc. Class A¹	19,994		738,978
ARAMARK Corp. Class B	17,162		573,726
Arbitron Inc.	4,180		175,560
Avis Budget Group Inc.	13,994		276,941
Block (H & R) Inc.	41,731		912,240
Career Education Corp.¹	13,440		299,443
Chemed Corp.	3,599		127,729
Corinthian Colleges Inc.¹	12,171		149,095
DeVry Inc.¹	8,663		210,944
ITT Educational Services Inc.¹	5,890		406,115
Laureate Education Inc.¹	6,664		351,326
Live Nation Inc.¹	8,589		182,602
McKesson Corp.	42,895		2,148,611
Pre-Paid Legal Services Inc.²	1,921		81,546
Rent-A-Center Inc.¹	10,351		297,695
Service Corp. International	42,581		388,339
ServiceMaster Co. (The)	40,920		463,624
Sotheby’s Holdings Inc. Class A	8,803		334,514
Stewart Enterprises Inc. Class A	12,639		78,109
Strayer Education Inc.	1,967		222,507
Valassis Communications Inc.¹	6,506		97,655

			8,828,809
COMPUTERS – 0.10%
FactSet Research Systems Inc.	5,272		268,345

			268,345
ENTERTAINMENT – 1.40%
Bally Technologies Inc.¹	6,583		130,673
DreamWorks Animation SKG Inc. Class A¹	6,192		163,778
International Game Technology Inc.	47,290		2,010,298
International Speedway Corp. Class A	4,285		222,434
Penn National Gaming Inc.¹	10,313		377,146
Pinnacle Entertainment Inc.¹	6,760		204,558
Scientific Games Corp. Class A¹	9,715		272,311
Six Flags Inc.^1,2	9,782		55,757
Warner Music Group Corp.	6,285		162,970

			3,599,925
FOOD – 3.78%
Kroger Co.	95,367		2,144,804
Performance Food Group Co.¹	5,073		147,472
Safeway Inc.	62,700		1,840,872
SUPERVALU Inc.	29,811		995,687
Sysco Corp.	87,319		3,054,419
United Natural Foods Inc.¹	5,272		183,993
Whole Foods Market Inc.	19,863		1,268,054
Wild Oats Markets Inc.^1,2	3,332		59,909

			9,695,210
HOUSEHOLD PRODUCTS & WARES – 0.07%
American Greetings Corp. Class A²	7,583		181,310

			181,310
INTERNET – 4.41%
Amazon.com Inc.¹	42,490		1,618,444
aQuantive Inc.¹	9,741		264,760


SCHEDULES OF INVESTMENTS		27

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
CNET Networks Inc.¹	18,805	$	168,117
Digitas Inc.¹	13,072		138,040
eBay Inc.¹	148,622		4,775,225
Expedia Inc.¹	37,190		604,338
IAC/InterActiveCorp¹	31,919		988,851
Liberty Media Holding Corp. - Liberty Interactive Group Series A¹	94,089		2,076,544
NetFlix Inc.^1,2	8,187		226,452
Priceline.com Inc.¹	4,596		185,173
ValueClick Inc.¹	14,243		267,768

			11,313,712
LEISURE TIME – 1.68%
Carnival Corp.	59,411		2,900,445
Multimedia Games Inc.¹	3,667		34,433
Royal Caribbean Cruises Ltd.	18,680		756,540
Sabre Holdings Corp.	18,477		469,685
WMS Industries Inc.¹	4,076		144,005

			4,305,108
LODGING – 4.77%
Aztar Corp.¹	5,081		272,189
Boyd Gaming Corp.	8,083		319,036
Choice Hotels International Inc.	5,064		212,283
Gaylord Entertainment Co.¹	5,569		259,181
Harrah’s Entertainment Inc.	26,117		1,941,277
Hilton Hotels Corp.	50,695		1,466,099
Las Vegas Sands Corp.¹	14,693		1,119,607
Marriott International Inc. Class A	50,018		2,089,252
MGM Mirage¹	17,292		743,902
Starwood Hotels & Resorts Worldwide Inc.	30,599		1,827,984
Station Casinos Inc.	6,136		370,001
Wyndham Worldwide Corp.¹	28,218		832,431
Wynn Resorts Ltd.¹	10,686		785,848

			12,239,090
MANUFACTURING – 0.07%
Matthews International Corp. Class A	4,601		176,770

			176,770
MEDIA – 26.47%
Belo Corp.	13,071		229,004
Cablevision Systems Corp.	31,590		877,886
CBS Corp. Class A	2,566		74,337
CBS Corp. Class B	93,121		2,694,922
Charter Communications Inc. Class A¹	64,329		147,957
Clear Channel Communications Inc.	64,528		2,248,801
Comcast Corp. Class A¹	177,219		7,207,497
Comcast Corp. Class A Special¹	101,101		4,092,568
Cox Radio Inc. Class A¹	5,048		85,008
CTC Media Inc.¹	5,131		124,529
Cumulus Media Inc. Class A¹	7,221		77,409
DIRECTV Group Inc. (The)¹	114,115		2,542,482
Discovery Holding Co. Class A¹	37,730		559,913
Dow Jones & Co. Inc.	7,322		256,929
EchoStar Communications Corp.¹	28,952		1,028,375
Emmis Communications Corp.¹	4,556		56,221
Entercom Communications Corp.	5,103		141,200
Gannett Co. Inc.	33,440		1,977,642
Gemstar-TV Guide International Inc.¹	34,496		120,046
Lee Enterprises Inc.	5,313		151,580
Liberty Global Inc. Class A¹	31,524		827,190
Liberty Global Inc. Class C¹	32,523		827,060
Liberty Media Holding Corp. - Liberty Capital Group Series A¹	18,834		1,677,356
McClatchy Co. (The) Class A	7,754		336,136
McGraw-Hill Companies Inc. (The)	49,677		3,187,773
Media General Inc. Class A	2,796		103,732
Meredith Corp.	5,679		298,147
New York Times Co. Class A²	20,236		489,104
News Corp. Class A	261,715		5,456,758
News Corp. Class B	73,361		1,594,868
Radio One Inc. Class D¹	10,034		68,131
Readers Digest Association Inc. (The)	13,760		197,869
Scholastic Corp.¹	4,597		144,438
Scripps (E.W.) Co. Class A	11,449		566,268


28		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Sinclair Broadcast Group Inc. Class A	6,227	$	56,168
Sirius Satellite Radio Inc.^1,2	179,596		687,853
Sun-Times Media Group Inc. Class A	7,520		43,616
Time Warner Inc.	559,697		11,199,537
Tribune Co.	23,020		767,257
Univision Communications Inc. Class A¹	33,417		1,171,600
Viacom Inc. Class A¹	2,566		99,843
Viacom Inc. Class B¹	86,603		3,370,589
Walt Disney Co. (The)	275,783		8,676,133
Washington Post Co. (The) Class B	862		649,172
Westwood One Inc.	9,605		75,976
Wiley (John) & Sons Inc. Class A	5,632		198,810
XM Satellite Radio Holdings Inc. Class A¹	37,723		439,850

			67,905,540
PHARMACEUTICALS – 2.53%
AmerisourceBergen Corp.	28,737		1,356,386
Andrx Corp.¹	10,293		253,105
Cardinal Health Inc.	58,763		3,846,038
Omnicare Inc.	17,076		646,839
VCA Antech Inc.¹	11,612		375,880

			6,478,248
RETAIL – 47.17%
Abercrombie & Fitch Co. Class A	12,291		942,105
Advance Auto Parts Inc.	15,060		527,401
Aeropostale Inc.¹	7,550		221,290
American Eagle Outfitters Inc.	18,284		837,407
AnnTaylor Stores Corp.¹	10,212		449,532
Applebee’s International Inc.	10,982		250,609
AutoNation Inc.¹	22,208		445,270
AutoZone Inc.¹	7,510		841,120
Barnes & Noble Inc.	7,484		309,164
Bed Bath & Beyond Inc.¹	39,638		1,597,015
Best Buy Co. Inc.	55,935		3,090,409
Big Lots Inc.¹	16,055		338,439
BJ’s Wholesale Club Inc.¹	9,329		267,276
Blockbuster Inc. Class A¹	14,459		56,679
Bob Evans Farms Inc.	5,154		174,772
Borders Group Inc.	9,180		189,016
Brinker International Inc.	12,161		564,635
CarMax Inc.¹	15,048		666,626
Casey’s General Store Inc.	7,123		172,875
Cato Corp. Class A	4,213		96,436
CBRL Group Inc.	4,072		178,802
CEC Entertainment Inc.¹	4,690		161,664
Charming Shoppes Inc.¹	17,210		254,708
Cheesecake Factory Inc. (The)¹	10,590		299,167
Chico’s FAS Inc.¹	24,866		595,043
Children’s Place Retail Stores Inc. (The)¹	3,337		234,224
Christopher & Banks Corp.	5,276		142,399
Circuit City Stores Inc.	24,979		673,933
Claire’s Stores Inc.	13,213		374,589
Coldwater Creek Inc.¹	8,393		255,903
Copart Inc.¹	9,223		266,821
Cost Plus Inc.¹	2,867		34,261
Costco Wholesale Corp.	66,404		3,544,646
CVS Corp.	113,957		3,575,971
Darden Restaurants Inc.	18,938		793,502
Dick’s Sporting Goods Inc.¹	4,682		232,976
Dillard’s Inc. Class A	9,392		283,357
Dollar General Corp.	44,038		617,853
DollarTree Stores Inc.¹	14,844		461,500
Dress Barn Inc.¹	6,130		133,144
Family Dollar Stores Inc.	20,289		597,511
Federated Department Stores Inc.	77,440		3,400,390
Foot Locker Inc.	22,063		511,641
Fred’s Inc.	4,831		63,189
GameStop Corp. Class A¹	5,752		293,697
GameStop Corp. Class B¹	3,357		167,011
Gap Inc. (The)	85,749		1,802,444
Genesco Inc.¹	3,141		118,007
Group 1 Automotive Inc.	2,938		168,377
Guitar Center Inc.¹	3,537		153,400
Home Depot Inc.	291,142		10,868,331
Hot Topic Inc.¹	6,029		60,953
IHOP Corp.	2,118		110,496
Jack in the Box Inc.¹	4,942		277,296
Kohl’s Corp.¹	42,739		3,017,373


SCHEDULES OF INVESTMENTS		29

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
Krispy Kreme Doughnuts Inc.^1,2		7,577	$	81,453
Limited Brands Inc.		47,155		1,389,658
Lone Star Steakhouse & Saloon Inc.		2,395		65,384
Longs Drug Stores Corp.		4,117		177,196
Lowe’s Companies Inc.		218,136		6,574,619
McDonald’s Corp.		172,636		7,236,901
Men’s Wearhouse Inc. (The)		6,637		264,484
Michaels Stores Inc.		18,595		817,994
99 Cents Only Stores¹		6,421		76,988
Nordstrom Inc.		31,071		1,471,212
Office Depot Inc.¹		39,901		1,675,443
OfficeMax Inc.		9,873		469,757
O’Reilly Automotive Inc.¹		15,775		509,375
OSI Restaurant Partners Inc.²		9,886		328,907
P.F. Chang’s China Bistro Inc.^1,2		3,697		154,609
Pacific Sunwear of California Inc.¹		10,263		180,834
Panera Bread Co. Class A¹		4,222		260,920
Pantry Inc. (The)¹		3,200		174,656
Papa John’s International Inc.¹		3,342		122,651
Payless ShoeSource Inc.¹		9,305		248,909
Penney (J.C.) Co. Inc.		28,752		2,163,013
Pep Boys - Manny, Moe & Jack Inc.		7,031		99,700
PetSmart Inc.		19,530		562,073
Pier 1 Imports Inc.		10,731		70,181
RadioShack Corp.		19,070		340,209
Regis Corp.		6,430		241,447
Rite Aid Corp.¹		74,444		348,398
Ross Stores Inc.		20,297		597,341
Ruby Tuesday Inc.²		7,937		220,252
Ryan’s Restaurant Group Inc.¹		5,479		88,815
Saks Inc.		16,904		326,923
Sears Holdings Corp.¹		13,730		2,395,473
Sonic Corp.¹		11,950		271,863
Staples Inc.		103,037		2,657,324
Starbucks Corp.¹		108,136		4,082,134
Stein Mart Inc.		3,498		57,262
Talbots Inc. (The)		3,108		87,148
Target Corp.		109,396		6,474,055
Tiffany & Co.		19,825		708,149
TJX Companies Inc.		64,641		1,871,357

*Security*	Shares or Principal		*Value*
Tractor Supply Co.¹		4,910	$	237,742
Triarc Companies Inc. Class B		4,689		78,728
Tuesday Morning Corp.		4,165		68,723
Urban Outfitters Inc.¹		16,567		289,923
Walgreen Co.		142,459		6,222,609
Wal-Mart Stores Inc.		363,742		17,925,206
Wendy’s International Inc.		16,424		568,270
Williams-Sonoma Inc.		13,001		442,164
Yum! Brands Inc.		38,424		2,284,691
Zale Corp.¹		6,972		201,072

				121,026,850
SOFTWARE – 0.53%
Avid Technology Inc.¹		5,922		213,903
Dun & Bradstreet Corp.¹		9,127		704,969
NAVTEQ Corp.^1,2		13,032		432,662

				1,351,534

TOTAL COMMON STOCKS (Cost: $259,256,639)				257,141,790
SHORT-TERM INVESTMENTS – 0.93%
CERTIFICATES OF DEPOSIT³– 0.03%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	11,003		11,003
Societe Generale
5.33%, 12/08/06		15,718		15,718
Washington Mutual Bank
5.36%, 11/13/06		39,295		39,295
Wells Fargo Bank N.A.
4.78%, 12/05/06		12,574		12,574

				78,590
COMMERCIAL PAPER³– 0.14%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		23,465		23,048
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		23,577		23,577
ASAP Funding Ltd.
5.29%, 11/02/06⁴		3,930		3,929


30		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Atlantis One Funding
5.30%, 11/14/06⁴	$	21,566	$	21,525
Beta Finance Inc.
5.27%, 01/25/07⁴		3,144		3,105
Bryant Park Funding LLC
5.28%, 12/14/06⁴		4,962		4,931
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		7,968		7,953
Cantabric Finance LLC
5.26%, 01/25/07⁴		6,287		6,209
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		18,076		18,049
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		11,789		11,498
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		9,431		9,397
Curzon Funding LLC
5.29%, 11/17/06⁴		15,718		15,681
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		18,110		17,890
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		15,718		15,706
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		14,303		14,095
Galleon Capital Corp.
5.27%, 12/18/06⁴		2,198		2,183
General Electric Capital Services Inc.
5.22%, 12/11/06		1,572		1,563
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		9,274		9,091
HBOS Treasury Services PLC
5.27%, 12/15/06		3,144		3,123
Landale Funding LLC
5.31%, 11/15/06⁴		12,260		12,235
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		28,233		28,213
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		10,138		10,117
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		20,433		20,046
Nestle Capital Corp.
5.19%, 08/09/07		9,431		9,049
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		24,832		24,833
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		8,375		8,277
Sedna Finance Inc.
5.22%, 04/17/07⁴		8,959		8,742
Sydney Capital Corp.
5.27%, 12/08/06⁴		375		373
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		7,859		7,770
Tulip Funding Corp.
5.29%, 11/15/06⁴		8,290		8,273

				350,481
MEDIUM-TERM NOTES³– 0.02%
Bank of America N.A.
5.28%, 04/20/07		3,930		3,930
Cullinan Finance Corp.
5.71%, 06/28/07⁴		11,789		11,789
K2 USA LLC
5.39%, 06/04/07⁴		11,789		11,789
Marshall & Ilsley Bank
5.18%, 12/15/06		15,718		15,725
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		18,390		18,390
US Bank N.A.
2.85%, 11/15/06		3,144		3,141

				64,764


SCHEDULES OF INVESTMENTS		31

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
MONEY MARKET FUNDS – 0.18%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		462,445	$	462,445

				462,445
REPURCHASE AGREEMENTS³ – 0.15%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $31,441 (collateralized by non-U.S. Government debt securities, value $32,390, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	31,436		31,436
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $22,008 (collateralized by U.S. Government obligations, value $22,453, 5.50%, 10/1/21 to 10/1/36).		22,005		22,005
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $23,581 (collateralized by non-U.S. Government debt securities, value $25,943, 0.31% to 6.00%, 7/25/36 to 11/25/46).		23,577		23,577
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,572 (collateralized by non-U.S. Government debt securities, value $1,619, 6.00% to 6.70%, 12/15/10 to 4/15/12).		1,572		1,572
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $55,022 (collateralized by non-U.S. Government debt securities, value $57,783, 4.11% to 9.32%, 4/15/10 to 5/15/36).		55,013		55,013

*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $17,293 (collateralized by non-U.S. Government debt securities, value $19,376, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	17,290	$	17,290
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $9,432 (collateralized by non-U.S. Government debt securities, value $10,433, 0.00% to 10.00%, 5/27/33 to 10/31/36).		9,431		9,431
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $31,441 (collateralized by non-U.S. Government debt securities, value $33,019, 0.00% to 9.00%, 5/1/17 to 9/25/46).		31,436		31,436
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $27,511 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $28,205, 0.00% to 7.32%, 11/2/06 to 3/25/45).		27,507		27,507
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $23,580 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $24,026, 0.00% to 7.32%, 11/2/06 to 3/25/45).		23,577		23,577


32		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $9,432 (collateralized by non-U.S. Government debt securities, value $9,906, 0.00% to 10.00%, 1/1/10).	$	9,431	$	9,431
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $7,860 (collateralized by non-U.S. Government debt securities, value $8,255, 5.26% to 5.35%, 7/1/24 to 6/1/46).		7,859		7,859
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $3,931 (collateralized by non-U.S. Government debt securities, value $4,128, 6.25% to 7.63%, 9/15/13 to 6/1/16).		3,930		3,930
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $31,441 (collateralized by non-U.S. Government debt securities, value $32,390, 3.50% to 10.13%, 5/15/07 to 7/1/26).		31,436		31,436
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $15,720 (collateralized by non-U.S. Government debt securities, value $17,327, 5.50% to 10.39%, 6/17/08 to 6/25/36).		15,718		15,718
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $21,222 (collateralized by non-U.S. Government debt securities, value $22,449, 0.00% to 10.00%, 11/1/06 to 10/31/36).		21,219		21,219
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $11,367 (collateralized by non-U.S. Government debt securities, value $11,804, 0.00% to 10.00%, 11/1/06 to 10/31/36)⁷.		11,003		11,003
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $40,873 (collateralized by non-U.S. Government debt securities, value $42,924, 3.86% to 8.17%, 11/18/08 to 7/15/45).		40,867		40,867

				384,307
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		1,624		1,624

				1,624
VARIABLE & FLOATING RATE NOTES³ – 0.41%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		40,238		40,244
American Express Bank
5.29%, 02/28/07		15,718		15,718
American Express Centurion Bank
5.41%, 07/19/07		17,290		17,304
American Express Credit Corp.
5.42%, 07/05/07		4,715		4,718


SCHEDULES OF INVESTMENTS		33

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴	$	2,836	$	2,836
ASIF Global Financing
5.51%, 05/03/07⁴		1,572		1,572
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		10,217		10,217
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		22,791		22,792
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		40,081		40,082
BMW US Capital LLC
5.32%, 10/15/07⁴		15,718		15,718
BNP Paribas
5.36%, 05/18/07⁴		29,078		29,078
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		11,474		11,474
CC USA Inc.
5.37%, 07/30/07⁴		7,859		7,860
Commodore CDO Ltd.
5.47%, 06/12/07⁴		3,930		3,930
Credit Agricole SA
5.34%, 07/23/07		15,718		15,718
Credit Suisse First Boston NY
5.38%, 04/24/07		7,859		7,859
Cullinan Finance Corp.
5.36%, 04/25/07⁴		3,930		3,930
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		3,930		3,930
DEPFA Bank PLC
5.43%, 09/14/07		15,718		15,718
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		18,076		18,076
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		15,718		15,718
Fifth Third Bancorp
5.30%, 11/23/07⁴		31,436		31,436
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		15,718		15,716
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		16,504		16,507
Granite Master Issuer PLC
5.29%, 08/20/07⁴		55,013		55,013
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		12,574		12,576
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		23,577		23,580
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		15,718		15,718
Holmes Financing PLC
5.29%, 07/16/07⁴		27,507		27,507
JP Morgan Chase & Co.
5.29%, 08/02/07		11,789		11,789
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		11,789		11,788
Kestrel Funding LLC
5.30%, 07/11/07⁴		6,287		6,287
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		9,431		9,431
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		16,382		16,382
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		17,290		17,289
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		6,224		6,224
Marshall & Ilsley Bank
5.30%, 10/15/07		8,645		8,645
Master Funding LLC
5.35%, 04/25/07⁴		14,146		14,146


34		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. CONSUMER SERVICES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴	$	23,577	$	23,577
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		1,572		1,572
Monumental Global Funding II
5.38%, 12/27/06⁴		3,144		3,144
Mound Financing PLC
5.29%, 05/08/07⁴		14,775		14,775
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		56,585		56,585
National City Bank of Indiana
5.37%, 05/21/07		7,859		7,859
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		51,870		51,880
Newcastle Ltd.
5.34%, 04/24/07⁴		5,541		5,540
Northern Rock PLC
5.36%, 08/03/07⁴		18,862		18,862
Northlake CDO I
5.46%, 09/06/07⁴		4,715		4,715
Principal Life Global Funding I
5.82%, 02/08/07		7,073		7,082
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		22,791		22,791
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		15,718		15,718
Strips III LLC
5.37%, 07/24/07⁴		3,613		3,613
SunTrust Bank
5.29%, 05/01/07		15,718		15,719
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		38,352		38,349
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		22,005		22,005
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		21,063		21,063
Wachovia Bank N.A.
5.36%, 05/22/07		31,436		31,436
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		11,789		11,794
Wells Fargo & Co.
5.33%, 11/15/07⁴		7,859		7,859
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		11,789		11,789
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		47,154		47,147
Wind Master Trust
5.31%, 07/25/07⁴		6,287		6,287

				1,055,687

TOTAL SHORT-TERM INVESTMENTS (Cost: $2,397,898)				2,397,898

TOTAL INVESTMENTS IN SECURITIES – 101.16% (Cost: $261,654,537)				259,539,688
Other Assets, Less Liabilities – (1.16)%				(2,984,451	)

NET ASSETS – 100.00%			$	256,555,237

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		35

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.84%
BANKS – 29.11%
AMCORE Financial Inc.	3,915	$	122,579
AmSouth Bancorp	56,714		1,713,897
Associated Bancorp	21,584		708,819
BancorpSouth Inc.	12,904		329,697
Bank of America Corp.	786,639		42,376,242
Bank of Hawaii Corp.	8,942		466,504
Bank of New York Co. Inc. (The)	131,472		4,518,693
BB&T Corp.	92,623		4,030,953
BOK Financial Corp.	3,827		196,708
Cathay General Bancorp	7,532		259,477
Chittenden Corp.	7,953		234,534
Citizens Banking Corp.	7,620		197,891
City National Corp.	6,999		465,853
Colonial BancGroup Inc. (The)	26,856		640,247
Comerica Inc.	28,132		1,637,001
Commerce Bancorp Inc.	31,335		1,094,218
Commerce Bancshares Inc.	11,572		572,930
Compass Bancshares Inc.	22,256		1,252,123
Cullen/Frost Bankers Inc.	9,538		516,578
East West Bancorp Inc.	10,003		365,210
F.N.B. Corp. (Pennsylvania)	10,443		176,800
Fifth Third Bancorp	81,215		3,236,418
First Horizon National Corp.	21,492		845,065
First Midwest Bancorp Inc.	8,630		328,199
FirstMerit Corp.	13,442		312,123
Fremont General Corp.	12,038		174,912
Fulton Financial Corp.	30,156		482,798
Greater Bay Bancorp	8,907		229,355
Hancock Holding Co.	4,679		240,033
Huntington Bancshares Inc.	39,229		957,580
International Bancshares Corp.	8,638		265,014
Investors Financial Services Corp.	11,090		436,059
KeyCorp	70,107		2,603,774
M&T Bank Corp.	13,816		1,682,927
Marshall & Ilsley Corp.	37,460		1,795,832
Mellon Financial Corp.	71,360		2,768,768
Mercantile Bankshares Corp.	21,562		972,015
National City Corp.	98,598		3,672,775
North Fork Bancorp Inc.	68,189		1,948,842
Northern Trust Corp.	33,484		1,966,180
Old National Bancorp	11,089		210,469
Pacific Capital Bancorp	8,065		248,079
Park National Corp.¹	2,026		205,416
PNC Financial Services Group	50,890		3,563,827
Popular Inc.	43,901		798,559
Provident Bankshares Corp.¹	5,787		209,142
Regions Financial Corp.	78,632		2,984,084
Republic Bancorp Inc.	13,331		178,369
Sky Financial Group Inc.	18,980		475,449
South Financial Group Inc. (The)	12,747		338,178
State Street Corp.	57,255		3,677,489
Sterling Bancshares Inc.	8,036		147,139
SunTrust Banks Inc.	62,274		4,919,023
Susquehanna Bancshares Inc.	8,882		221,961
SVB Financial Group^1,2	6,182		284,496
Synovus Financial Corp.	46,366		1,362,233
TCF Financial Corp.	21,584		561,832
TD Banknorth Inc.	17,666		522,560
Texas Regional Bancshares Inc. Class A	8,752		340,015
TrustCo Bank Corp. NY¹	13,209		145,959
Trustmark Corp.	8,708		275,695
U.S. Bancorp	306,926		10,386,376
UCBH Holdings Inc.	16,140		276,640
Umpqua Holdings Corp.	9,934		280,536
UnionBanCal Corp.	9,661		556,280
United Bancshares Inc.	7,250		276,877
Valley National Bancorp	20,020		521,721
Wachovia Corp.	329,546		18,289,803
Webster Financial Corp.	9,311		449,908
Wells Fargo & Co.	543,996		19,741,615
Westamerica Bancorp	5,383		268,343
Whitney Holding Corp.	11,354		370,822
Wilmington Trust Corp.	11,780		489,812
Wintrust Financial Corp.	4,446		214,564
Zions Bancorporation	18,209		1,464,004

			162,052,898
COMMERCIAL SERVICES – 0.64%
Equifax Inc.	22,108		840,767
Moody’s Corp.	41,285		2,737,195

			3,577,962


36		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
DIVERSIFIED FINANCIAL SERVICES – 34.29%
Affiliated Managers Group Inc.²	5,512	$	551,972
American Express Co.	185,487		10,723,003
AmeriCredit Corp.²	22,476		574,711
Ameriprise Financial Inc.	37,425		1,927,387
Bear Stearns Companies Inc. (The)	19,539		2,957,228
BlackRock Inc.	2,540		383,134
Capital One Financial Corp.	52,708		4,181,326
Chicago Mercantile Exchange Holdings Inc.	5,503		2,757,003
CIT Group Inc.	34,525		1,797,026
Citigroup Inc.	856,934		42,983,809
CompuCredit Corp.²	6,001		208,595
Countrywide Financial Corp.	104,885		3,998,216
E*TRADE Financial Corp.²	73,467		1,710,312
Eaton Vance Corp.	22,375		694,520
Edwards (A.G.) Inc.	13,206		753,402
Federal Home Loan Mortgage Corp.	119,013		8,210,707
Federal National Mortgage Association	166,780		9,883,383
Federated Investors Inc. Class B	17,304		593,354
First Marblehead Corp. (The)	5,468		368,817
Franklin Resources Inc.	29,515		3,363,529
Goldman Sachs Group Inc. (The)	63,616		12,073,681
IndyMac Bancorp Inc.	11,816		537,037
Investment Technology Group Inc.²	7,447		347,775
Janus Capital Group Inc.	36,175		726,394
Jefferies Group Inc.	17,928		515,071
JP Morgan Chase & Co.	598,957		28,414,520
Knight Capital Group Inc. Class A²	18,238		340,139
LaBranche & Co. Inc.^1,2	9,697		86,012
Lazard Ltd. Class A	6,566		278,398
Legg Mason Inc.	22,649		2,038,863
Lehman Brothers Holdings Inc.	93,295		7,262,083
Merrill Lynch & Co. Inc.	157,872		13,801,170
Morgan Stanley	168,876		12,907,193
Nasdaq Stock Market Inc. (The)²	16,870		602,765
National Financial Partners Corp.	5,865		231,081
Nuveen Investments Inc. Class A	13,422		661,705
NYSE Group Inc.^1,2	8,977		664,208
Piper Jaffray Companies²	3,649		252,328
Raymond James Financial Inc.	16,150		514,539
Rowe (T.) Price Group Inc.	45,572		2,156,011
Schwab (Charles) Corp. (The)	179,469		3,269,925
SLM Corp.	71,236		3,467,768
SWS Group Inc.	3,211		89,234
TD Ameritrade Holding Corp.	42,926		706,991
Waddell & Reed Financial Inc. Class A	14,471		369,010

			190,935,335
ENERGY – ALTERNATE SOURCES – 0.06%
Covanta Holding Corp.²	15,121		307,410

			307,410
FOREST PRODUCTS & PAPER – 0.35%
Plum Creek Timber Co. Inc.	31,139		1,119,136
Potlatch Corp.	6,682		271,289
Rayonier Inc.	13,233		542,421

			1,932,846
INSURANCE – 21.25%
ACE Ltd.	55,836		3,196,611
AFLAC Inc.	86,523		3,886,613
Alleghany Corp.²	887		271,200
Allstate Corp. (The)	110,437		6,776,414
Ambac Financial Group Inc.	18,104		1,511,503
American Financial Group Inc.	8,240		394,366
American International Group Inc.	392,965		26,395,459
American National Insurance Co.	2,735		317,260
AmerUs Group Co.	6,582		450,735
Aon Corp.	47,935		1,667,659
Arch Capital Group Ltd.²	7,183		461,795
Assurant Inc.	18,847		992,483
Assured Guaranty Ltd.	8,412		211,730
Axis Capital Holdings Ltd.	24,132		792,736
Berkley (W.R.) Corp.	30,743		1,133,187
Brown & Brown Inc.	19,467		569,604
Chubb Corp.	71,365		3,793,050
Cincinnati Financial Corp.	26,365		1,203,562
Commerce Group Inc.	10,610		314,056
Conseco Inc.²	26,341		535,776
Delphi Financial Group Inc. Class A	7,571		297,162
Endurance Specialty Holdings Ltd.	10,109		360,386
Erie Indemnity Co. Class A	8,898		450,684


SCHEDULES OF INVESTMENTS		37

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Everest Re Group Ltd.	11,105	$	1,101,394
Fidelity National Financial Inc.	29,584		659,731
First American Corp.	14,710		600,609
Gallagher (ArthurJ.) & Co.	16,761		466,794
Genworth Financial Inc. Class A	78,022		2,609,056
Hanover Insurance Group Inc. (The)	9,053		410,554
Hartford Financial Services Group Inc. (The)	52,434		4,570,672
HCC Insurance Holdings Inc.	19,027		640,449
Hilb, Rogal & Hobbs Co.	6,281		250,738
Horace Mann Educators Corp.	7,455		150,144
IPC Holdings Ltd.	10,883		326,925
Lincoln National Corp.	48,494		3,070,155
Loews Corp.	80,153		3,119,555
Markel Corp.²	1,661		663,569
Marsh & McLennan Companies Inc.	94,665		2,786,938
MBIA Inc.	23,167		1,436,817
Mercury General Corp.	4,578		237,003
MetLife Inc.	79,617		4,548,519
MGIC Investment Corp.	15,117		888,275
Montpelier Re Holdings Ltd.	17,655		313,376
Nationwide Financial Services Inc.	9,478		482,620
Ohio Casualty Corp.	10,802		296,299
Old Republic International Corp.	37,078		835,367
PartnerRe Ltd.	9,760		682,419
Philadelphia Consolidated Holding Corp.²	10,164		397,616
Phoenix Companies Inc.	19,398		307,264
Platinum Underwriters Holdings Ltd.	10,391		310,275
PMI Group Inc. (The)	15,159		646,531
Principal Financial Group Inc.	46,411		2,621,757
ProAssurance Corp.²	5,306		258,402
Progressive Corp. (The)	124,286		3,003,993
Protective Life Corp.	11,151		493,432
Prudential Financial Inc.	83,657		6,435,733
Radian Group Inc.	14,313		762,883
Reinsurance Group of America Inc.	5,190		292,716
RenaissanceRe Holdings Ltd.	10,966		596,550
RLI Corp.	4,100		222,261
SAFECO Corp.	20,188		1,174,740
Selective Insurance Group Inc.	4,815		266,029
St. Paul Travelers Companies Inc.	119,448		6,107,376
StanCorp Financial Group Inc.	9,289		424,414
Torchmark Corp.	17,179		1,059,601
Transatlantic Holdings Inc.	4,581		279,166
Unitrin Inc.	7,733		331,978
UnumProvident Corp.	58,835		1,163,756
White Mountains Insurance Group Ltd.	1,373		779,521
Willis Group Holdings Ltd.	20,981		797,907
XL Capital Ltd. Class A	30,882		2,178,725
Zenith National Insurance Corp.	6,404		297,914

			118,342,549
REAL ESTATE – 0.89%
Brookfield Properties Corp.	20,096		761,437
CB Richard Ellis Group Inc. Class A²	33,706		1,012,191
Forest City Enterprises Inc. Class A	9,872		541,973
Jones Lang LaSalle Inc.	6,147		565,524
Realogy Corp.²	42,900		1,105,962
St. Joe Co. (The)¹	12,623		678,865
Trammell Crow Co.²	5,917		288,454

			4,954,406
REAL ESTATE INVESTMENT TRUSTS – 10.45%
Alexandria Real Estate Equities Inc.	4,686		467,194
AMB Property Corp.	15,126		883,510
American Financial Realty Trust	22,176		258,794
American Home Mortgage Investment Corp.	7,933		271,071
Annaly Capital Management Inc.	33,291		436,778
Apartment Investment & Management Co. Class A	16,663		955,123
Archstone-Smith Trust	36,651		2,206,757
AvalonBay Communities Inc.	12,819		1,680,058
BioMed Realty Trust Inc.	11,107		357,979
Boston Properties Inc.	19,723		2,107,008
Brandywine Realty Trust	15,743		525,186
BRE Properties Inc. Class A	9,043		599,551
Camden Property Trust	9,677		781,127
CapitalSource Inc.	21,712		602,291


38		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
CBL & Associates Properties Inc.	11,179	$	488,858
Colonial Properties Trust	7,948		400,500
Corporate Office Properties Trust	7,457		356,370
Cousins Properties Inc.	7,156		255,970
Crescent Real Estate Equities Co.	16,780		365,804
Developers Diversified Realty Corp.	18,825		1,146,443
Duke Realty Corp.	23,211		929,833
Equity Inns Inc.	9,613		161,306
Equity Lifestyle Properties Inc.	3,853		189,837
Equity Office Properties Trust	60,349		2,564,833
Equity Residential	50,344		2,749,286
Essex Property Trust Inc.	3,998		532,853
Federal Realty Investment Trust	9,151		733,453
FelCor Lodging Trust Inc.	10,575		219,537
First Industrial Realty Trust Inc.	7,645		351,441
General Growth Properties Inc.	39,010		2,024,619
Glenborough Realty Trust Inc.	6,106		158,634
Health Care Property Investors Inc.	27,401		860,391
Health Care REIT Inc.¹	10,837		447,351
Healthcare Realty Trust Inc.	8,453		342,347
Highwoods Properties Inc.	9,295		355,069
Home Properties Inc.	5,963		376,683
Hospitality Properties Trust	11,929		578,079
Host Hotels & Resorts Inc.	90,092		2,077,522
HRPT Properties Trust	36,917		439,312
iStar Financial Inc.	19,394		898,524
Kilroy Realty Corp.	5,685		428,251
Kimco Realty Corp.	37,418		1,662,481
KKR Financial Corp.	14,038		376,640
LaSalle Hotel Properties	6,890		291,103
Lexington Corporate Properties Trust	9,240		196,812
Liberty Property Trust	15,393		741,943
Macerich Co. (The)	12,358		992,965
Mack-Cali Realty Corp.	10,682		565,078
Maguire Properties Inc.	6,281		268,576
Mid-America Apartment Communities Inc.	4,184		266,312
Nationwide Health Properties Inc.	13,804		396,727
New Century Financial Corp.	8,986		353,869
New Plan Excel Realty Trust Inc.	18,251		525,629
NovaStar Financial Inc.¹	5,704		182,072
Pennsylvania Real Estate Investment Trust	6,463		278,555
Post Properties Inc.	7,434		364,117
ProLogis	41,770		2,642,788
Public Storage Inc.	21,917		1,966,174
Realty Income Corp.	15,698		414,427
Reckson Associates Realty Corp.	14,327		632,107
Redwood Trust Inc.	4,207		231,259
Regency Centers Corp.	11,768		849,179
Saxon Capital Inc.	8,597		121,648
Simon Property Group Inc.	38,101		3,699,607
SL Green Realty Corp.	7,870		952,664
Strategic Hotels & Resorts Inc.	13,158		279,871
Sunstone Hotel Investors Inc.	10,384		305,913
Taubman Centers Inc.	9,123		427,869
Thornburg Mortgage Inc.	19,488		500,452
United Dominion Realty Trust Inc.	23,499		760,663
Ventas Inc.	17,969		700,432
Vornado Realty Trust	22,647		2,700,655
Washington Real Estate Investment Trust	7,828		329,950
Weingarten Realty Investors	14,243		662,300

			58,206,370
SAVINGS & LOANS – 2.43%
Anchor BanCorp Wisconsin Inc.	3,787		109,974
Astoria Financial Corp.	16,138		468,163
Dime Community Bancshares Inc.	6,149		85,779
Downey Financial Corp.	3,721		256,302
First Niagara Financial Group Inc.	19,760		282,963
FirstFed Financial Corp.²	2,838		175,303
Harbor Florida Bancshares Inc.	3,736		169,652
Hudson City Bancorp Inc.	91,768		1,259,975
MAF Bancorp Inc.	5,657		243,760
New York Community Bancorp Inc.	45,601		745,576
NewAlliance Bancshares Inc.	18,403		284,878
People’s Bank	10,382		422,547
PFF Bancorp Inc.	3,903		121,032
Provident Financial Services Inc.	11,370		208,526
Sovereign Bancorp Inc.	56,620		1,350,953
Washington Federal Inc.	14,986		348,275
Washington Mutual Inc.	165,739		7,010,760

			13,544,418


SCHEDULES OF INVESTMENTS		39

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares or* *Principal*		*Value*
SOFTWARE – 0.37%
MasterCard Inc. Class A		11,277	$	835,626
MoneyGram International Inc.		14,592		499,192
SEI Investments Co.		12,580		708,002

				2,042,820

TOTAL COMMON STOCKS (Cost: $ 498,549,874)				555,897,014
SHORT-TERM INVESTMENTS – 0.47%
CERTIFICATES OF DEPOSIT³– 0.02%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	11,216		11,216
Societe Generale
5.33%, 12/08/06		16,023		16,023
Washington Mutual Bank
5.36%, 11/13/06		40,057		40,057
Wells Fargo Bank N.A.
4.78%, 12/05/06		12,818		12,818

				80,114
COMMERCIAL PAPER³– 0.06%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		23,920		23,488
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		24,034		24,034
ASAP Funding Ltd.
5.29%, 11/02/06⁴		4,006		4,005
Atlantis One Funding
5.30%, 11/14/06⁴		21,985		21,942
Beta Finance Inc.
5.27%, 01/25/07⁴		3,205		3,165
Bryant Park Funding LLC
5.28%, 12/14/06⁴		5,058		5,026
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		8,122		8,107
Cantabric Finance LLC
5.26%, 01/25/07⁴		6,409		6,330
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		18,426		18,399

*Security*	*Principal*		*Value*
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		12,017		11,721
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		9,614		9,580
Curzon Funding LLC
5.29%, 11/17/06⁴		16,023		15,985
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		18,461		18,238
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		16,023		16,011
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		14,581		14,368
Galleon Capital Corp.
5.27%, 12/18/06⁴		2,240		2,225
General Electric Capital Services Inc.
5.22%, 12/11/06		1,602		1,593
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		9,453		9,267
HBOS Treasury Services PLC
5.27%, 12/15/06		3,205		3,184
Landale Funding LLC
5.31%, 11/15/06⁴		12,498		12,472
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		28,780		28,760
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		10,335		10,313
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		20,830		20,435
Nestle Capital Corp.
5.19%, 08/09/07		9,614		9,224
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		25,314		25,314


40		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴	$	8,537	$	8,438
Sedna Finance Inc.
5.22%, 04/17/07⁴		9,133		8,912
Sydney Capital Corp.
5.27%, 12/08/06⁴		382		380
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		8,011		7,921
Tulip Funding Corp.
5.29%, 11/15/06⁴		8,451		8,433

				357,270
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		4,006		4,006
Cullinan Finance Corp.
5.71%, 06/28/07⁴		12,017		12,017
K2 USA LLC
5.39%, 06/04/07⁴		12,017		12,017
Marshall & Ilsley Bank
5.18%, 12/15/06		16,023		16,029
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		18,747		18,747
US Bank N.A.
2.85%, 11/15/06		3,205		3,202

				66,018
MONEY MARKET FUNDS – 0.12%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		653,126		653,126

				653,126
REPURCHASE AGREEMENTS³– 0.07%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $32,051 (collateralized by non-U.S. Government debt securities, value $33,018, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	32,046		32,046

*Security*	*Principal*		*Value*
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $ 22,435 (collateralized by U.S. Government obligations, value $22,888, 5.50%, 10/1/21 to 10/1/36).	$	22,432	$	22,432
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $24,038 (collateralized by non-U.S. Government debt securities, value $26,446, 0.31% to 6.00%, 7/25/36 to 11/25/46).		24,034		24,034
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,602 (collateralized by non-U.S. Government debt securities, value $1,651, 6.00% to 6.70%, 12/15/10 to 4/15/12).		1,602		1,602
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $56,089 (collateralized by non-U.S. Government debt securities, value $58,903, 4.11% to 9.32%, 4/15/10 to 5/15/36).		56,080		56,080
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $17,628 (collateralized by non-U.S. Government debt securities, value $19,752, 0.00% to 10.00%, 5/27/33 to 10/31/36).		17,625		17,625


SCHEDULES OF INVESTMENTS		41

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $9,615 (collateralized by non-U.S. Government debt securities, value $10,635, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	9,614	$	9,614
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $32,051 (collateralized by non-U.S. Government debt securities, value $33,659, 0.00% to 9.00%, 5/1/17 to 9/25/46).		32,046		32,046
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $28,044 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $28,752, 0.00% to 7.32%, 11/2/06 to 3/25/45).		28,040		28,040
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $24,037 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $24,492, 0.00% to 7.32%, 11/2/06 to 3/25/45).		24,034		24,034
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $9,615 (collateralized by non-U.S. Government debt securities, value $10,098, 0.00% to 10.00%, 1/1/10).		9,614		9,614
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $8,012 (collateralized by non-U.S. Government debt securities, value $8,415, 5.26% to 5.35%, 7/1/24 to 6/1/46).		8,011		8,011
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $4,007 (collateralized by non-U.S. Government debt securities, value $4,208, 6.25% to 7.63%, 9/15/13 to 6/1/16).		4,006		4,006
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $32,051 (collateralized by non-U.S. Government debt securities, value $33,018, 3.50% to 10.13%, 5/15/07 to 7/1/26).		32,046		32,046
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $16,025 (collateralized by non-U.S. Government debt securities, value $17,663, 5.50% to 10.39%, 6/17/08 to 6/25/36).		16,023		16,023
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $21,634 (collateralized by non-U.S. Government debt securities, value $22,884, 0.00% to 10.00%, 11/1/06 to 10/31/36).		21,631		21,631


42		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $11,587 (collateralized by non-U.S. Government debt securities, value $12,032, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷	$	11,216	$	11,216
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $41,665 (collateralized by non-U.S. Government debt securities, value $43,756, 3.86% to 8.17%, 11/18/08 to 7/15/45).		41,659		41,659

				391,759
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		1,656		1,656

				1,656
VARIABLE & FLOATING RATE NOTES³– 0.19%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		41,018		41,022
American Express Bank
5.29%, 02/28/07		16,023		16,022
American Express Centurion Bank
5.41%, 07/19/07		17,625		17,640
American Express Credit Corp.
5.42%, 07/05/07		4,807		4,809
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		2,891		2,891
ASIF Global Financing
5.51%, 05/03/07⁴		1,602		1,603
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		10,415		10,415
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		23,233		23,234
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		40,858		40,860
BMW US Capital LLC
5.32%, 10/15/07⁴		16,023		16,023
BNP Paribas
5.36%, 05/18/07⁴		29,642		29,642
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		11,697		11,697
CC USA Inc.
5.37%, 07/30/07⁴		8,011		8,012
Commodore CDO Ltd.
5.47%, 06/12/07⁴		4,006		4,006
Credit Agricole SA
5.34%, 07/23/07		16,023		16,023
Credit Suisse First Boston NY
5.38%, 04/24/07		8,011		8,012
Cullinan Finance Corp.
5.36%, 04/25/07⁴		4,006		4,006
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		4,006		4,006
DEPFA Bank PLC
5.43%, 09/14/07		16,023		16,023
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		18,426		18,427
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		16,023		16,023
Fifth Third Bancorp
5.30%, 11/23/07⁴		32,046		32,046
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		16,023		16,021
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		16,824		16,827
Granite Master Issuer PLC
5.29%, 08/20/07⁴		56,080		56,080
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		12,818		12,820


SCHEDULES OF INVESTMENTS		43

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07	$	24,034	$	24,037
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		16,023		16,023
Holmes Financing PLC
5.29%, 07/16/07⁴		28,040		28,040
JP Morgan Chase & Co.
5.29%, 08/02/07		12,017		12,017
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		12,017		12,017
Kestrel Funding LLC
5.30%, 07/11/07⁴		6,409		6,409
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		9,614		9,614
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		16,700		16,700
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		17,625		17,624
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		6,345		6,345
Marshall & Ilsley Bank
5.30%, 10/15/07		8,813		8,813
Master Funding LLC
5.35%, 04/25/07⁴		14,420		14,420
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		24,034		24,034
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		1,602		1,602
Monumental Global Funding II
5.38%, 12/27/06⁴		3,205		3,205
Mound Financing PLC
5.29%, 05/08/07⁴		15,061		15,061
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		57,682		57,682
National City Bank of Indiana
5.37%, 05/21/07		8,011		8,012
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		52,875		52,886
Newcastle Ltd.
5.34%, 04/24/07⁴		5,648		5,647
Northern Rock PLC
5.36%, 08/03/07⁴		19,227		19,228
Northlake CDO I
5.46%, 09/06/07⁴		4,807		4,807
Principal Life Global Funding I
5.82%, 02/08/07		7,210		7,219
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		23,233		23,233
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		16,023		16,023
Strips III LLC
5.37%, 07/24/07⁴		3,683		3,683
SunTrust Bank
5.29%, 05/01/07		16,023		16,023
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		39,096		39,093
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		22,432		22,432
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		21,472		21,471
Wachovia Bank N.A.
5.36%, 05/22/07		32,046		32,046
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		12,017		12,023
Wells Fargo & Co.
5.33%, 11/15/07⁴		8,011		8,012
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		12,017		12,018


44		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴	$	48,068	$	48,059
Wind MasterTrust
5.31%, 07/25/07⁴		6,409		6,409

				1,076,157

TOTAL SHORT-TERM INVESTMENTS (Cost: $2,626,100)				2,626,100

TOTAL INVESTMENTS IN SECURITIES – 100.31% (Cost: $501,175,974)				558,523,114
Other Assets, Less Liabilities – (0.31)%				(1,711,376	)

NET ASSETS – 100.00%			$	556,811,738

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		45

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.81%
AEROSPACE & DEFENSE – 13.66%
AAR Corp.¹	5,324	$	138,637
Alliant Techsystems Inc.¹	5,529		426,894
Armor Holdings Inc.¹	5,065		260,645
BE Aerospace Inc.¹	11,325		286,296
Boeing Co. (The)	110,336		8,811,433
Curtiss-Wright Corp.	6,753		228,521
DRSTechnologies Inc.	6,278		277,613
Esterline Technologies Corp.¹	4,001		150,838
General Dynamics Corp.	51,927		3,692,010
Goodrich Corp.	19,380		854,464
Kaman Corp.	3,337		68,041
L-3 Communications Holdings Inc.	18,825		1,515,789
Lockheed Martin Corp.	52,602		4,572,692
Moog Inc. Class A¹	5,403		201,532
Northrop Grumman Corp.	49,784		3,305,160
Raytheon Co.	68,996		3,446,350
Rockwell Collins Inc.	27,055		1,571,354
United Technologies Corp.	144,798		9,516,125

			39,324,394
AUTO MANUFACTURERS – 1.10%
Navistar International Corp.¹	9,604		266,319
Oshkosh Truck Corp.	11,595		524,210
PACCAR Inc.	38,915		2,304,157
Wabash National Corp.	4,930		69,168

			3,163,854
BUILDING MATERIALS – 2.05%
American Standard Companies Inc.	25,888		1,146,579
Eagle Materials Inc.	7,949		291,728
ElkCorp	2,975		74,732
Florida Rock Industries Inc.	8,067		346,074
Genlyte Group Inc. (The)¹	3,662		282,926
Lennox International Inc.	10,530		283,889
Martin Marietta Materials Inc.	7,189		632,632
Masco Corp.	62,121		1,717,646
NCI Building Systems Inc.¹	2,851		170,632
Simpson Manufacturing Co. Inc.²	5,712		162,164
Texas Industries Inc.	3,653		226,851
USG Corp.¹	11,462		560,377

			5,896,230
CHEMICALS – 0.37%
Sherwin-Williams Co. (The)	18,074		1,070,523

			1,070,523
COMMERCIAL SERVICES – 5.68%
Accenture Ltd.	89,526		2,946,301
Administaff Inc.	3,358		115,683
Alliance Data Systems Corp.¹	10,131		615,154
Banta Corp.	3,747		165,917
BearingPoint Inc.¹	29,351		244,494
Bowne & Co. Inc.	5,328		83,277
ChoicePoint Inc.¹	13,005		473,252
Convergys Corp.¹	21,973		466,047
Corporate Executive Board Co. (The)	6,049		543,321
Corrections Corp. of America¹	9,221		421,307
Deluxe Corp.	7,926		179,682
Donnelley (R.R.) & Sons Co.	33,793		1,144,231
Forrester Research Inc.¹	1,974		62,043
FTI Consulting Inc.¹	6,641		188,671
Hewitt Associates Inc. Class A¹	15,064		377,052
Hudson Highland Group Inc.¹	3,890		45,474
Iron Mountain Inc.¹	18,773		814,185
Labor Ready Inc.¹	8,270		144,808
Manpower Inc.	13,706		928,856
Monster Worldwide Inc.¹	17,416		705,522
MPS Group Inc.¹	15,800		240,950
Navigant Consulting Inc.¹	7,593		135,231
NCO Group Inc.¹	4,749		128,033
PHH Corp.¹	8,133		224,471
Quanta Services Inc.¹	15,679		286,926
Resources Connection Inc.¹	7,517		217,542
Robert Half International Inc.	27,115		991,053
Spherion Corp.¹	9,505		68,911
TeleTech Holdings Inc.¹	5,908		114,674
United Rentals Inc.¹	10,240		242,586
Viad Corp.	3,376		124,743
Watson Wyatt Worldwide Inc.	6,234		281,465
Western Union Co.¹	118,752		2,618,482

			16,340,344


46		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMPUTERS – 0.58%
Affiliated Computer Services Inc. Class A¹	17,639	$	943,334
BISYS Group Inc. (The)¹	18,582		205,145
Ceridian Corp.¹	21,564		508,263

			1,656,742
DISTRIBUTION & WHOLESALE – 0.84%
Fastenal Co.	21,386		860,573
Grainger (W.W.) Inc.	12,292		894,612
Watsco Inc.	3,702		184,360
WESCO International Inc.¹	7,406		483,390

			2,422,935
ELECTRIC – 0.23%
MDU Resources Group Inc.	26,266		674,511

			674,511
ELECTRICAL COMPONENTS & EQUIPMENT – 2.80%
AMETEK Inc.	10,858		506,851
Belden CDT Inc.	6,882		249,128
C&D Technologies Inc.	4,135		20,510
Emerson Electric Co.	63,858		5,389,615
Energy Conversion Devices Inc.¹	5,974		219,783
General Cable Corp.¹	7,826		294,258
GrafTech International Ltd.¹	15,033		90,950
Hubbell Inc. Class B	8,192		405,668
Littelfuse Inc.¹	3,563		120,643
Molex Inc.	9,236		322,336
Molex Inc. Class A	12,377		365,740
Power-One Inc.¹	11,218		76,731

			8,062,213
ELECTRONICS – 4.50%
Agilent Technologies Inc.¹	66,853		2,379,967
Amphenol Corp. Class A	13,813		937,903
Arrow Electronics Inc.¹	18,707		558,404
Avnet Inc.¹	22,966		543,835
AVX Corp.	7,957		125,402
Benchmark Electronics Inc.¹	9,327		247,632
Brady Corp. Class A	6,859		253,783
Checkpoint Systems Inc.¹	5,777		105,199
Coherent Inc.¹	4,655		150,031
CTS Corp.	5,523		77,985
Dionex Corp.¹	3,104		168,858
Electro Scientific Industries Inc.¹	4,358		86,942
Flextronics International Ltd.¹	89,053		1,033,015
FLIR Systems Inc.¹	10,785		344,473
Itron Inc.¹	3,775		205,511
Jabil Circuit Inc.	28,255		811,201
KEMET Corp.¹	13,217		97,145
Methode Electronics Inc.	5,812		64,339
MettlerToledo International Inc.¹	6,592		452,541
National Instruments Corp.	8,240		256,923
Orbotech Ltd.¹	4,965		119,905
Park Electrochemical Corp.	2,865		88,013
PerkinElmer Inc.	19,154		409,129
Photon Dynamics Inc.¹	2,741		32,536
Plexus Corp.¹	6,808		149,231
Sanmina-SCI Corp.¹	83,947		331,591
Solectron Corp.¹	143,777		480,215
Symbol Technologies Inc.	38,486		574,596
Taser International Inc.^1,2	9,798		91,219
Technitrol Inc.	5,648		142,443
Tektronix Inc.	12,854		390,376
Thomas & Betts Corp.¹	9,628		496,131
Trimble Navigation Ltd.¹	8,526		394,072
Vishay Intertechnology Inc.¹	26,564		358,348

			12,958,894
ENERGY – ALTERNATE SOURCES – 0.02%
FuelCell Energy Inc.¹	6,731		44,559

			44,559
ENGINEERING & CONSTRUCTION – 1.55%
EMCOR Group Inc.¹	4,831		285,754
Fluor Corp.	13,545		1,062,334
FosterWheeler Ltd.¹	10,443		469,413
Granite Construction Inc.	4,996		260,292
Insituform Technologies Inc. Class A¹	4,077		95,279
Jacobs Engineering Group Inc.¹	9,125		689,302
McDermott International Inc.¹	16,590		741,573
Shaw Group Inc. (The)¹	11,756		312,239
URS Corp.¹	7,827		316,289
Washington Group International Inc.	4,253		240,805

			4,473,280


SCHEDULES OF INVESTMENTS		47

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
ENVIRONMENTAL CONTROL – 1.90%
Allied Waste Industries Inc.¹	34,989	$	425,116
Mine Safety Appliances Co.²	4,208		159,147
Republic Services Inc.	18,753		769,061
Stericycle Inc.¹	6,948		491,293
Tetra Tech Inc.¹	9,097		165,383
Waste Connections Inc.¹	7,025		285,847
Waste Management Inc.	84,527		3,168,072

			5,463,919
FOREST PRODUCTS & PAPER – 0.76%
Louisiana-Pacific Corp.	16,433		325,045
MeadWestvaco Corp.	28,298		778,761
Smurfit-Stone Container Corp.	40,289		429,481
Temple-Inland Inc.	16,846		664,406

			2,197,693
HAND & MACHINE TOOLS – 0.35%
Kennametal Inc.	6,039		372,667
Lincoln Electric Holdings Inc.	6,260		384,927
Regal-Beloit Corp.	4,823		238,497

			996,091
HOLDING COMPANIES – DIVERSIFIED – 0.11%
Walter Industries Inc.	6,523		303,254

			303,254
HOUSEHOLD PRODUCTS & WARES – 0.68%
Fortune Brands Inc.	23,185		1,784,086
Harland (John H.) Co.	4,297		175,704

			1,959,790
HOUSEWARES – 0.10%
Toro Co. (The)	6,878		296,854

			296,854
INTERNET – 0.36%
CheckFree Corp.¹	11,953		471,904
Emdeon Corp.¹	43,641		508,418
Stamps.com Inc.¹	3,372		54,121

			1,034,443
MACHINERY – 6.11%
AGCO Corp.¹	14,345		383,729
Albany International Corp. Class A	4,393		147,649
Astec Industries Inc.¹	2,321		74,017
Bucyrus International Inc. Class A	4,542		190,310
Caterpillar Inc.	102,009		6,192,966
Cognex Corp.	6,825		157,180
Cummins Inc.	7,295		926,319
Deere & Co.	36,315		3,091,496
Flowserve Corp.¹	8,768		464,704
Gardner Denver Inc.¹	8,135		276,509
Graco Inc.	10,933		445,629
IDEX Corp.	7,847		368,024
JLG Industries Inc.	15,850		438,252
Joy Global Inc.	19,224		751,851
Manitowoc Co. Inc. (The)	9,364		513,896
Nordson Corp.	4,793		220,718
Rockwell Automation Inc.	24,826		1,539,212
Terex Corp.¹	15,607		807,818
Wabtec Corp.	7,041		221,017
Zebra Technologies Corp. Class A¹	10,395		387,422

			17,598,718
MANUFACTURING – 36.00%
Actuant Corp. Class A	3,880		199,199
Acuity Brands Inc.	6,970		345,294
AptarGroup Inc.	5,023		275,813
Brink’s Co. (The)	7,034		369,215
Carlisle Companies Inc.	4,826		403,888
Ceradyne Inc.¹	3,883		160,174
CLARCOR Inc.	8,096		263,768
Cooper Industries Ltd.	15,822		1,415,278
Crane Co.	7,952		309,651
Danaher Corp.	37,470		2,689,222
Donaldson Co. Inc.	11,623		436,444
Dover Corp.	31,777		1,509,407
Eaton Corp.	23,341		1,690,589
ESCO Technologies Inc.¹	3,916		170,033
General Electric Co.	1,613,229		56,640,470
Harsco Corp.	6,521		532,309
Hexcel Corp.¹	14,416		233,395
Honeywell International Inc.	116,740		4,917,089
Illinois Tool Works Inc.	75,777		3,631,992
Ingersoll-Rand Co. Class A	50,554		1,855,837
ITT Industries Inc.	28,903		1,572,034
Jacuzzi Brands Inc.¹	12,118		150,142


48		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Pall Corp.	19,679	$	627,760
Parker Hannifin Corp.	18,671		1,561,456
Pentair Inc.	15,231		501,709
Roper Industries Inc.	13,522		647,028
SPX Corp.	8,975		516,242
Teleflex Inc.	5,640		350,808
Textron Inc.	16,847		1,531,898
3M Co.	107,519		8,476,798
Trinity Industries Inc.	11,673		420,928
Tyco International Ltd.	314,327		9,250,644

			103,656,514
METAL FABRICATE & HARDWARE – 0.82%
Kaydon Corp.	4,370		182,666
Mueller Industries Inc.	5,378		197,211
Precision Castparts Corp.	20,727		1,410,680
Quanex Corp.	5,784		193,822
Timken Co. (The)	12,997		390,560

			2,374,939
MINING – 0.38%
Vulcan Materials Co.	13,360		1,088,573

			1,088,573
PACKAGING & CONTAINERS – 1.52%
Ball Corp.	15,726		654,044
Bemis Co. Inc.	16,529		555,705
Chesapeake Corp.	2,973		46,111
Crown Holdings Inc.¹	25,947		504,410
Owens-Illinois Inc.¹	21,738		360,851
Packaging Corp. of America	12,443		285,816
Pactiv Corp.¹	22,303		687,825
Sealed Air Corp.	12,328		733,763
Sonoco Products Co.	15,501		549,975

			4,378,500
RETAIL – 0.16%
MSC Industrial Direct Co. Inc. Class A	7,361		301,212
World Fuel Services Corp.	4,001		172,123

			473,335
SEMICONDUCTORS – 0.03%
Veeco Instruments Inc.¹	4,135		77,283

			77,283
SOFTWARE – 4.60%
Acxiom Corp.	11,590		286,852
Automatic Data Processing Inc.	89,664		4,432,988
eFunds Corp.¹	7,137		176,998
Fidelity National Information Services Inc.	14,688		610,580
First Data Corp.	118,752		2,879,736
Fiserv Inc.¹	27,571		1,362,007
Global Payments Inc.	12,383		541,261
IMS Health Inc.	31,459		876,133
Paychex Inc.	52,556		2,074,911

			13,241,466
TELECOMMUNICATIONS – 0.39%
Aeroflex Inc.¹	11,505		124,254
Anaren Inc.¹	2,783		55,966
Anixter International Inc.¹	5,140		307,166
Black Box Corp.	2,687		119,813
CommScope Inc.¹	8,700		277,617
Newport Corp.¹	6,090		131,666
Powerwave Technologies Inc.¹	17,325		112,786

			1,129,268
TRANSPORTATION – 12.05%
Alexander & Baldwin Inc.	6,898		317,515
Arkansas Best Corp.	3,619		148,307
Burlington Northern Santa Fe Corp.	56,709		4,396,649
C.H. Robinson Worldwide Inc.	26,834		1,120,051
Con-way Inc.	7,440		350,945
CSX Corp.	68,450		2,441,611
EGL Inc.¹	4,812		163,560
Expeditors International Washington Inc.	33,322		1,579,796
FedEx Corp.	44,234		5,066,562
Forward Air Corp.	4,477		145,368
General Maritime Corp.	4,393		160,520
Genesee & Wyoming Inc. Class A¹	5,228		146,854
Hunt (J.B.) Transport Services Inc.	16,819		363,963
Kansas City Southern Industries Inc.¹	11,511		326,797
Kirby Corp.¹	7,753		271,588
Landstar System Inc.	9,189		426,737
Norfolk Southern Corp.	63,700		3,348,709
Old Dominion Freight Line Inc.¹	4,642		128,398
OMI Corp.	11,163		249,158


SCHEDULES OF INVESTMENTS		49

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Overseas Shipholding Group Inc.		4,679	$	292,671
Pacer International Inc.		5,276		161,920
Ryder System Inc.		9,581		504,440
Saia Inc.¹		2,356		63,141
Swift Transportation Co. Inc.¹		7,692		193,454
Union Pacific Corp.		41,611		3,771,205
United Parcel Service Inc. Class B		102,643		7,734,150
UTi Worldwide Inc.		11,963		309,244
Werner Enterprises Inc.		8,702		159,682
YRC Worldwide Inc.¹		9,103		352,650

				34,695,645
TRUCKING & LEASING – 0.11%
GATX Corp.		7,043		306,863

				306,863

TOTAL COMMON STOCKS (Cost: $259,577,602)				287,361,627
SHORT-TERM INVESTMENTS – 0.27%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	1,655		1,655
Societe Generale
5.33%, 12/08/06		2,365		2,365
Washington Mutual Bank
5.36%, 11/13/06		5,912		5,912
Wells Fargo Bank N.A.
4.78%, 12/05/06		1,892		1,892

				11,824
COMMERCIAL PAPER³– 0.02%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		3,530		3,467
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		3,547		3,547
ASAP Funding Ltd.
5.29%, 11/02/06⁴		591		591
Atlantis One Funding
5.30%, 11/14/06⁴		3,245		3,238
Beta Finance Inc.
5.27%, 01/25/07⁴		473		467

*Security*	*Principal*		*Value*
Bryant Park Funding LLC
5.28%, 12/14/06⁴	$	747	$	742
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		1,199		1,196
Cantabric Finance LLC
5.26%, 01/25/07⁴		946		934
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		2,719		2,715
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		1,774		1,730
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		1,419		1,414
Curzon Funding LLC
5.29%, 11/17/06⁴		2,365		2,359
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		2,725		2,691
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		2,365		2,363
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		2,152		2,121
Galleon Capital Corp.
5.27%, 12/18/06⁴		331		328
General Electric Capital Services Inc.
5.22%, 12/11/06		236		235
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		1,395		1,367
HBOS Treasury Services PLC
5.27%, 12/15/06		473		470
Landale Funding LLC
5.31%, 11/15/06⁴		1,844		1,841
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		4,248		4,245


50		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴	$	1,525	$	1,522
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		3,074		3,015
Nestle Capital Corp.
5.19%, 08/09/07		1,419		1,361
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		3,736		3,736
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		1,260		1,245
Sedna Finance Inc.
5.22%, 04/17/07⁴		1,348		1,315
Sydney Capital Corp.
5.27%, 12/08/06⁴		56		56
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		1,182		1,169
Tulip Funding Corp.
5.29%, 11/15/06⁴		1,247		1,245

				52,725
MEDIUM-TERM NOTES³– 0.00%
Bank of America N.A.
5.28%, 04/20/07		591		591
Cullinan Finance Corp.
5.71%, 06/28/07⁴		1,774		1,774
K2 USA LLC
5.39%, 06/04/07⁴		1,774		1,774
Marshall & Ilsley Bank
5.18%, 12/15/06		2,366		2,366
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		2,767		2,767
US Bank N.A.
2.85%, 11/15/06		473		473

				9,745


*Security*	Shares or Principal		*Value*
MONEY MARKET FUNDS – 0.16%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		472,076	$	472,076

				472,076
REPURCHASE AGREEMENTS³ – 0.02%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $4,730 (collateralized by non-U.S. Government debt securities, value $4,873, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	4,729		4,729
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $3,311 (collateralized by U.S. Government obligations, value $ 3,378, 5.50%, 10/1/21 to 10/1/36).		3,311		3,311
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $3,548 (collateralized by non-U.S. Government debt securities, value $3,903, 0.31% to 6.00%, 7/25/36 to 11/25/46).		3,547		3,547
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $236 (collateralized by non-U.S. Government debt securities, value $244, 6.00% to 6.70%, 12/15/10 to 4/15/12).		236		236


SCHEDULES OF INVESTMENT		51

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $8,278 (collateralized by non-U.S. Government debt securities, value $8,693, 4.11% to 9.32%, 4/15/10 to 5/15/36).	$	8,276	$	8,276
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $2,601 (collateralized by non-U.S. Government debt securities, value $2,915, 0.00% to 10.00%, 5/27/33 to 10/31/36).		2,601		2,601
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $1,419 (collateralized by non-U.S. Government debt securities, value $1,570, 0.00% to 10.00%, 5/27/33 to 10/31/36).		1,419		1,419
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $4,730 (collateralized by non-U.S. Government debt securities, value $4,968, 0.00% to 9.00%, 5/1/17 to 9/25/46).		4,729		4,729
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $4,139 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $4,243, 0.00% to 7.32%, 11/2/06 to 3/25/45).		4,138		4,138
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $3,547 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $3,614, 0.00% to 7.32%, 11/2/06 to 3/25/45).		3,547		3,547
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $1,419 (collateralized by non-U.S. Government debt securities, value $1,490, 0.00% to 10.00%, 1/1/10).		1,419		1,419
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,182 (collateralized by non-U.S. Government debt securities, value $1,242, 5.26% to 5.35%, 7/1/24 to 6/1/46).		1,182		1,182
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $591 (collateralized by non-U.S. Government debt securities, value $621, 6.25% to 7.63%, 9/15/13 to 6/1/16).		591		591
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $4,730 (collateralized by non-U.S. Government debt securities, value $4,873, 3.50% to 10.13%, 5/15/07 to 7/1/26).		4,729		4,729


52		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,365 (collateralized by non-U.S. Government debt securities, value $2,607, 5.50% to 10.39%, 6/17/08 to 6/25/36).	$	2,365	$	2,365
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $3,192 (collateralized by non-U.S. Government debt securities, value $3,377, 0.00% to 10.00%, 11/1/06 to 10/31/36).		3,192		3,192
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $1,710 (collateralized by non-U.S. Government debt securities, value $1,776, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		1,655		1,655
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $6,149 (collateralized by non-U.S. Government debt securities, value $6,458, 3.86% to 8.17%, 11/18/08 to 7/15/45).		6,148		6,148

				57,814
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		244		244

				244
VARIABLE & FLOATING RATE NOTES³– 0.06%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		6,059		6,059
American Express Bank
5.29%, 02/28/07		2,365		2,364
American Express Centurion Bank
5.41%, 07/19/07		2,601		2,603
American Express Credit Corp.
5.42%, 07/05/07		709		710
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		427		427
ASIF Global Financing
5.51%, 05/03/07⁴		236		237
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		1,537		1,537
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		3,429		3,429
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		6,030		6,029
BMW US Capital LLC
5.32%, 10/15/07⁴		2,365		2,365
BNP Paribas
5.36%, 05/18/07⁴		4,375		4,375
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		1,726		1,726
CC USA Inc.
5.37%, 07/30/07⁴		1,182		1,182
Commodore CDO Ltd.
5.47%, 06/12/07⁴		591		591
Credit Agricole SA
5.34%, 07/23/07		2,365		2,365
Credit Suisse First Boston NY
5.38%, 04/24/07		1,182		1,182
Cullinan Finance Corp.
5.36%, 04/25/07⁴		591		591
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		591		591
DEPFA Bank PLC
5.43%, 09/14/07		2,365		2,365


SCHEDULES OF INVESTMENTS		53

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴	$	2,719	$	2,720
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		2,365		2,365
Fifth Third Bancorp
5.30%, 11/23/07⁴		4,729		4,729
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		2,365		2,365
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		2,483		2,484
Granite Master Issuer PLC
5.29%, 08/20/07⁴		8,277		8,277
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		1,892		1,892
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		3,547		3,548
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		2,365		2,365
Holmes Financing PLC
5.29%, 07/16/07⁴		4,138		4,138
JP Morgan Chase & Co.
5.29%, 08/02/07		1,774		1,774
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		1,774		1,774
Kestrel Funding LLC
5.30%, 07/11/07⁴		946		946
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		1,419		1,419
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		2,465		2,465
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		2,601		2,601
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		936		936
Marshall & Ilsley Bank
5.30%, 10/15/07		1,301		1,301
Master Funding LLC
5.35%, 04/25/07⁴		2,128		2,128
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		3,547		3,547
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		236		236
Monumental Global Funding II
5.38%, 12/27/06⁴		473		473
Mound Financing PLC
5.29%, 05/08/07⁴		2,223		2,223
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		8,513		8,513
National City Bank of Indiana
5.37%, 05/21/07		1,182		1,182
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		7,804		7,805
Newcastle Ltd.
5.34%, 04/24/07⁴		834		833
Northern Rock PLC
5.36%, 08/03/07⁴		2,838		2,838
Northlake CDO I
5.46%, 09/06/07⁴		709		709
Principal Life Global Funding I
5.82%, 02/08/07		1,064		1,065
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		3,429		3,429
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		2,365		2,365
Strips III LLC
5.37%, 07/24/07⁴		544		544
SunTrust Bank
5.29%, 05/01/07		2,365		2,365


54		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. INDUSTRIAL SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴	$	5,770	$	5,770
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		3,311		3,311
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		3,169		3,169
Wachovia Bank N.A.
5.36%, 05/22/07		4,729		4,729
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		1,774		1,774
Wells Fargo & Co.
5.33%, 11/15/07⁴		1,182		1,182
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		1,774		1,774
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		7,094		7,094
Wind MasterTrust
5.31%, 07/25/07⁴		946		946

				158,831

TOTAL SHORT-TERM INVESTMENTS (Cost: $ 763,259)				763,259

TOTAL INVESTMENTS IN SECURITIES – 100.08% (Cost: $ 260,340,861)				288,124,886
Other Assets, Less Liabilities – (0.08)%				(229,270	)

NET ASSETS – 100.00%			$	287,895,616

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		55

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.84%
BANKS – 43.38%
AMCORE Financial Inc.	5,277	$	165,223
AmSouth Bancorp	71,799		2,169,766
Associated Bancorp	27,170		892,263
BancorpSouth Inc.	16,202		413,961
Bank of America Corp.	993,255		53,506,647
Bank of Hawaii Corp.	11,261		587,486
Bank of New York Co. Inc. (The)	166,091		5,708,548
BB&T Corp.	117,707		5,122,609
BOK Financial Corp.	4,990		256,486
Cathay General Bancorp	9,586		330,238
Chittenden Corp.	10,421		307,315
Citizens Banking Corp.	9,432		244,949
City National Corp.	8,818		586,926
Colonial BancGroup Inc. (The)	33,885		807,818
Comerica Inc.	35,573		2,069,993
Commerce Bancorp Inc.	39,859		1,391,876
Commerce Bancshares Inc.	14,618		723,737
Compass Bancshares Inc.	28,258		1,589,795
Cullen/Frost Bankers Inc.	12,044		652,303
East West Bancorp Inc.	12,566		458,785
F.N.B. Corp. (Pennsylvania)	13,616		230,519
Fifth Third Bancorp	105,593		4,207,881
First Horizon National Corp.	27,103		1,065,690
First Midwest Bancorp Inc.	10,862		413,082
FirstMerit Corp.	16,564		384,616
Fulton Financial Corp.	37,955		607,660
Greater Bay Bancorp	11,081		285,336
Hancock Holding Co.	6,048		310,262
Huntington Bancshares Inc.	49,556		1,209,662
International Bancshares Corp.	11,127		341,376
Investors Financial Services Corp.	14,227		559,406
KeyCorp	88,853		3,300,000
M&T Bank Corp.	17,553		2,138,131
Marshall & Ilsley Corp.	47,568		2,280,410
Mellon Financial Corp.	89,967		3,490,720
Mercantile Bankshares Corp.	27,522		1,240,692
National City Corp.	124,529		4,638,705
North Fork Bancorp Inc.	87,971		2,514,211
Northern Trust Corp.	42,497		2,495,424
Old National Bancorp	13,270		251,865
Pacific Capital Bancorp	10,299		316,797
Park National Corp.	2,486		252,056
PNC Financial Services Group	64,296		4,502,649
Popular Inc.	55,599		1,011,346
Provident Bankshares Corp.	7,399		267,400
Regions Financial Corp.	99,634		3,781,110
Republic Bancorp Inc.	16,843		225,359
Sky Financial Group Inc.	23,937		599,622
South Financial Group Inc. (The)	16,296		432,333
State Street Corp.	72,569		4,661,107
Sterling Bancshares Inc.	10,151		185,865
SunTrust Banks Inc.	78,660		6,213,353
Susquehanna Bancshares Inc.	11,458		286,335
SVB Financial Group^1,2	7,859		361,671
Synovus Financial Corp.	58,867		1,729,512
TCF Financial Corp.	27,587		718,090
TD Banknorth Inc.	22,145		655,049
Texas Regional Bancshares Inc. Class A	11,176		434,188
TrustCo Bank Corp. NY²	16,845		186,137
Trustmark Corp.	10,817		342,466
U.S. Bancorp	387,664		13,118,550
UCBH Holdings Inc.	20,803		356,563
Umpqua Holdings Corp.	12,651		357,264
UnionBanCal Corp.	12,198		702,361
United Bancshares Inc.	9,128		348,598
Valley National Bancorp	25,544		665,677
Wachovia Corp.	415,987		23,087,278
Webster Financial Corp.	11,659		563,363
Wells Fargo & Co.	687,069		24,933,734
Westamerica Bancorp	6,963		347,106
Whitney Holding Corp.	14,438		471,545
Wilmington Trust Corp.	15,038		625,280
Wintrust Financial Corp.	5,747		277,350
Zions Bancorporation	23,162		1,862,225

			204,831,711
COMMERCIAL SERVICES – 0.96%
Equifax Inc.	27,829		1,058,337
Moody’s Corp.	52,188		3,460,064

			4,518,401
DIVERSIFIED FINANCIAL SERVICES – 51.08%
Affiliated Managers Group Inc.¹	6,901		691,066


56		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
American Express Co.	234,213	$	13,539,854
AmeriCredit Corp.¹	28,421		726,725
Ameriprise Financial Inc.	47,142		2,427,813
Bear Stearns Companies Inc. (The)	24,763		3,747,880
BlackRock Inc.	3,187		480,727
Capital One Financial Corp.	66,618		5,284,806
Chicago Mercantile Exchange Holdings Inc.	6,977		3,495,477
CIT Group Inc.	43,459		2,262,041
Citigroup Inc.	1,082,001		54,273,170
CompuCredit Corp.^1,2	7,301		253,783
Countrywide Financial Corp.	132,503		5,051,014
E*TRADE Financial Corp.¹	92,907		2,162,875
Eaton Vance Corp.	27,858		864,712
Edwards (A.G.) Inc.	16,832		960,266
Federal Home Loan Mortgage Corp.	150,449		10,379,476
Federal National Mortgage Association	210,832		12,493,904
Federated Investors Inc. Class B	21,865		749,751
First Marblehead Corp. (The)	6,868		463,247
Franklin Resources Inc.	37,458		4,268,714
Goldman Sachs Group Inc. (The)	80,293		15,238,808
IndyMac Bancorp Inc.	14,340		651,753
Investment Technology Group Inc.¹	9,594		448,040
Janus Capital Group Inc.	45,357		910,769
Jefferies Group Inc.	22,734		653,148
JP Morgan Chase & Co.	756,235		35,875,788
Knight Capital Group Inc. Class A¹	23,222		433,090
LaBranche & Co. Inc.¹	13,219		117,253
Lazard Ltd. Class A	8,232		349,037
Legg Mason Inc.	28,634		2,577,633
Lehman Brothers Holdings Inc.	117,696		9,161,457
Merrill Lynch & Co. Inc.	199,410		17,432,422
Morgan Stanley	213,133		16,289,755
Nasdaq Stock Market Inc. (The)¹	21,174		756,547
National Financial Partners Corp.	7,344		289,354
Nuveen Investments Inc. Class A	17,273		851,559
NYSE Group Inc.^1,2	11,383		842,228
Piper Jaffray Companies¹	4,524		312,835
Raymond James Financial Inc.	20,725		660,298
Rowe (T.) Price Group Inc.	57,689		2,729,267
Schwab (Charles) Corp. (The)	227,619		4,147,218
SLM Corp.	90,024		4,382,368
SWS Group Inc.	4,213		117,079
TD Ameritrade Holding Corp.	53,839		886,728
Waddell & Reed Financial Inc. Class A	18,635		475,192

			241,166,927
INSURANCE – 0.24%
MGIC Investment Corp.	19,213		1,128,956

			1,128,956
SAVINGS & LOANS – 3.63%
Anchor BanCorp Wisconsin Inc.	4,740		137,650
Astoria Financial Corp.	20,446		593,138
Dime Community Bancshares Inc.	7,456		104,011
Downey Financial Corp.	4,687		322,841
First Niagara Financial Group Inc.	25,414		363,928
FirstFed Financial Corp.¹	3,751		231,699
Harbor Florida Bancshares Inc.	4,963		225,370
Hudson City Bancorp Inc.	115,939		1,591,842
MAF Bancorp Inc.	7,226		311,368
New York Community Bancorp Inc.	58,353		954,072
NewAlliance Bancshares Inc.	22,977		355,684
People’s Bank	13,115		533,780
PFF Bancorp Inc.	4,757		147,515
Provident Financial Services Inc.	13,937		255,605
Sovereign Bancorp Inc.	71,426		1,704,224
Washington Federal Inc.	19,101		443,907
Washington Mutual Inc.	209,292		8,853,052

			17,129,686
SOFTWARE – 0.55%
MasterCard Inc. Class A	14,349		1,063,261
MoneyGram International Inc.	18,675		638,872
SEI Investments Co.	15,697		883,427

			2,585,560

TOTAL COMMON STOCKS (Cost: $441,956,290)			471,361,241


SCHEDULES OF INVESTMENTS		57

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
SHORT-TERM INVESTMENTS – 0.34%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	5,243	$	5,243
Societe Generale
5.33%, 12/08/06		7,489		7,489
Washington Mutual Bank
5.36%, 11/13/06		18,724		18,724
Wells Fargo Bank N.A.
4.78%, 12/05/06		5,992		5,992

				37,448
COMMERCIAL PAPER³– 0.03%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		11,181		10,983
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		11,234		11,234
ASAP Funding Ltd.
5.29%, 11/02/06⁴		1,872		1,872
Atlantis One Funding
5.30%, 11/14/06⁴		10,276		10,256
Beta Finance Inc.
5.27%, 01/25/07⁴		1,498		1,479
Bryant Park Funding LLC
5.28%, 12/14/06⁴		2,364		2,350
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		3,797		3,789
Cantabric Finance LLC
5.26%, 01/25/07⁴		2,996		2,959
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		8,613		8,600
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		5,617		5,478
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		4,494		4,477
Curzon Funding LLC
5.29%, 11/17/06⁴		7,489		7,472
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		8,629		8,525
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		7,489		7,484
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		6,815		6,716
Galleon Capital Corp.
5.27%, 12/18/06⁴		1,047		1,040
General Electric Capital Services Inc.
5.22%, 12/11/06		749		745
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		4,419		4,332
HBOS Treasury Services PLC
5.27%, 12/15/06		1,498		1,488
Landale Funding LLC
5.31%, 11/15/06⁴		5,842		5,830
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		13,453		13,444
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		4,831		4,821
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		9,736		9,551
Nestle Capital Corp.
5.19%, 08/09/07		4,494		4,312
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		11,832		11,833
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		3,990		3,944
Sedna Finance Inc.
5.22%, 04/17/07⁴		4,269		4,166
Sydney Capital Corp.
5.27%, 12/08/06⁴		179		178


58		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴	$	3,745	$	3,702
Tulip Funding Corp.
5.29%, 11/15/06⁴		3,950		3,942

				167,002
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		1,872		1,872
Cullinan Finance Corp.
5.71%, 06/28/07⁴		5,617		5,617
K2 USA LLC
5.39%, 06/04/07⁴		5,617		5,617
Marshall & Ilsley Bank
5.18%, 12/15/06		7,489		7,493
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		8,763		8,762
US Bank N.A.
2.85%, 11/15/06		1,498		1,497

				30,858
MONEY MARKET FUNDS – 0.14%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		668,923		668,923

				668,923
REPURCHASE AGREEMENTS³– 0.04%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $14,981 (collateralized by non-U.S. Government debt securities, value $15,433, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	14,979		14,979
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $10,487 (collateralized by U.S. Government obligations, value $ 10,698, 5.50%, 10/1/21 to 10/1/36).		10,485		10,485

*Security*	*Principal*		*Value*
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $11,236 (collateralized by non-U.S. Government debt securities, value $12,362, 0.31% to 6.00%, 7/25/36 to 11/25/46).	$	11,234	$	11,234
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $749 (collateralized by non-U.S. Government debt securities, value $772, 6.00% to 6.70%, 12/15/10 to 4/15/12).		749		749
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $26,217 (collateralized by non-U.S. Government debt securities, value $27,533, 4.11% to 9.32%, 4/15/10 to 5/15/36).		26,213		26,213
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $8,239 (collateralized by non-U.S. Government debt securities, value $9,232, 0.00% to 10.00%, 5/27/33 to 10/31/36).		8,238		8,238
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $4,495 (collateralized by non-U.S. Government debt securities, value $4,971, 0.00% to 10.00%, 5/27/33 to 10/31/36).		4,494		4,494


SCHEDULES OF INVESTMENTS		59

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $14,981 (collateralized by non-U.S. Government debt securities, value $15,733, 0.00% to 9.00%, 5/1/17 to 9/25/46).	$	14,979	$	14,979
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $13,109 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $13,439, 0.00% to 7.32%, 11/2/06 to 3/25/45).		13,107		13,107
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $11,236 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $11,448, 0.00% to 7.32%, 11/2/06 to 3/25/45).		11,234		11,234
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $4,495 (collateralized by non-U.S. Government debt securities, value $4,720, 0.00% to 10.00%, 1/1/10).		4,494		4,494
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $3,746 (collateralized by non-U.S. Government debt securities, value $3,934, 5.26% to 5.35%, 7/1/24 to 6/1/46).		3,745		3,745
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $1,872 (collateralized by non-U.S. Government debt securities, value $1,967, 6.25% to 7.63%, 9/15/13 to 6/1/16).		1,872		1,872
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $14,981 (collateralized by non-U.S. Government debt securities, value $15,433, 3.50% to 10.13%, 5/15/07 to 7/1/26).		14,979		14,979
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $7,490 (collateralized by non-U.S. Government debt securities, value $8,256, 5.50% to 10.39%, 6/17/08 to 6/25/36).		7,489		7,489
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $10,113 (collateralized by non-U.S. Government debt securities, value $10,696, 0.00% to 10.00%, 11/1/06 to 10/31/36).		10,111		10,111
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $5,416 (collateralized by non-U.S. Government debt securities, value $5,624, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		5,243		5,243


60		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $19,476 (collateralized by non-U.S. Government debt securities, value $20,453, 3.86% to 8.17%, 11/18/08 to 7/15/45).	$	19,473	$	19,473

				183,118
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		774		774

				774
VARIABLE & FLOATING RATE NOTES³– 0.11%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		19,175		19,176
American Express Bank
5.29%, 02/28/07		7,489		7,490
American Express Centurion Bank
5.41%, 07/19/07		8,238		8,245
American Express Credit Corp.
5.42%, 07/05/07		2,247		2,248
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		1,351		1,351
ASIF Global Financing
5.51%, 05/03/07⁴		749		749
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		4,868		4,868
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		10,860		10,860
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		19,098		19,098
BMW US Capital LLC
5.32%, 10/15/07⁴		7,489		7,489
BNP Paribas
5.36%, 05/18/07⁴		13,855		13,855
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		5,467		5,467
CC USA Inc.
5.37%, 07/30/07⁴		3,745		3,745
Commodore CDO Ltd.
5.47%, 06/12/07⁴		1,872		1,872
Credit Agricole SA
5.34%, 07/23/07		7,489		7,489
Credit Suisse First Boston NY
5.38%, 04/24/07		3,745		3,745
Cullinan Finance Corp.
5.36%, 04/25/07⁴		1,872		1,872
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		1,872		1,872
DEPFA Bank PLC
5.43%, 09/14/07		7,489		7,489
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		8,613		8,613
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		7,489		7,489
Fifth Third Bancorp
5.30%, 11/23/07⁴		14,979		14,979
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		7,489		7,488
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		7,864		7,866
Granite Master Issuer PLC
5.29%, 08/20/07⁴		26,213		26,213
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		5,992		5,992
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		11,234		11,235


SCHEDULES OF INVESTMENTS		61

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
HBOS Treasury Services PLC
5.46%, 07/24/07⁴	$	7,489	$	7,489
Holmes Financing PLC
5.29%, 07/16/07⁴		13,107		13,107
JP Morgan Chase & Co.
5.29%, 08/02/07		5,617		5,617
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		5,617		5,617
Kestrel Funding LLC
5.30%, 07/11/07⁴		2,996		2,996
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		4,494		4,494
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		7,806		7,806
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		8,238		8,238
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		2,966		2,966
Marshall & Ilsley Bank
5.30%, 10/15/07		4,119		4,119
Master Funding LLC
5.35%, 04/25/07⁴		6,740		6,740
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		11,234		11,234
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		749		749
Monumental Global Funding II
5.38%, 12/27/06⁴		1,498		1,498
Mound Financing PLC
5.29%, 05/08/07⁴		7,040		7,040
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		26,962		26,962
National City Bank of Indiana
5.37%, 05/21/07		3,745		3,745
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		24,715		24,720
Newcastle Ltd.
5.34%, 04/24/07⁴		2,640		2,640
Northern Rock PLC
5.36%, 08/03/07⁴		8,987		8,987
Northlake CDO I
5.46%, 09/06/07⁴		2,247		2,247
Principal Life Global Funding I
5.82%, 02/08/07		3,370		3,374
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		10,860		10,859
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		7,489		7,489
Strips III LLC
5.37%, 07/24/07⁴		1,722		1,722
SunTrust Bank
5.29%, 05/01/07		7,489		7,490
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		18,274		18,273
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		10,485		10,485
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		10,036		10,036
Wachovia Bank N.A.
5.36%, 05/22/07		14,979		14,979
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		5,617		5,620
Wells Fargo & Co.
5.33%, 11/15/07⁴		3,745		3,745
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		5,617		5,617
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		22,468		22,466


62		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. FINANCIAL SERVICES INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Wind MasterTrust
5.31%, 07/25/07⁴	$	2,996	$	2,996

				503,017

TOTAL SHORT-TERM INVESTMENTS (Cost: $1,591,140)				1,591,140

TOTAL INVESTMENTS IN SECURITIES – 100.18% (Cost: $443,547,430)				472,952,381
Other Assets, Less Liabilities – (0.18)%				(844,735	)

NET ASSETS – 100.00%			$	472,107,646

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENT		63

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.82%
DIVERSIFIED FINANCIAL SERVICES – 0.10%
Friedman, Billings, Ramsey Group Inc. Class A	235,961	$	1,800,382

			1,800,382
FOREST PRODUCTS & PAPER – 2.21%
Plum Creek Timber Co. Inc.	961,118		34,542,581
Potlatch Corp.	85,933		3,488,880
Rayonier Inc.	63,010		2,582,780

			40,614,241
REAL ESTATE – 7.11%
Brookfield Properties Corp.	553,152		20,958,929
CB Richard Ellis Group Inc. Class A¹	941,371		28,269,371
Forest City Enterprises Inc. Class A	282,799		15,525,665
Jones Lang LaSalle Inc.	173,975		16,005,700
Realogy Corp.¹	1,173,527		30,253,526
St. Joe Co. (The)²	235,518		12,666,158
Trammell Crow Co.¹	138,649		6,759,139

			130,438,488
REAL ESTATE INVESTMENT TRUSTS – 90.40%
Alexandria Real Estate Equities Inc.	119,830		11,947,051
AMB Property Corp.	137,050		8,005,090
American Financial Realty Trust	449,092		5,240,904
American Home Mortgage Investment Corp.	277,328		9,476,298
Annaly Capital Management Inc.	610,476		8,009,445
Apartment Investment & Management Co. Class A	559,410		32,065,381
Archstone-Smith Trust	1,094,853		65,921,099
AvalonBay Communities Inc.	371,666		48,710,546
BioMed Realty Trust Inc.	124,626		4,016,696
Boston Properties Inc.	568,671		60,751,123
Brandywine Realty Trust	551,689		18,404,345
BRE Properties Inc. Class A	293,060		19,429,878
Camden Property Trust	281,831		22,749,398
CapitalSource Inc.	715,911		19,859,371
CBL & Associates Properties Inc.	361,672		15,815,917
Colonial Properties Trust	256,040		12,901,856
Corporate Office Properties Trust	226,565		10,827,541
Cousins Properties Inc.	243,368		8,705,273
Crescent Real Estate Equities Co.	642,824		14,013,563
Developers Diversified Realty Corp.	560,942		34,161,368
Duke Realty Corp.	706,089		28,285,925
Equity Inns Inc.	329,542		5,529,715
Equity Lifestyle Properties Inc.	4,758		234,427
Equity Office Properties Trust	1,889,560		80,306,300
Equity Residential	1,477,073		80,662,957
Essex Property Trust Inc.	123,247		16,426,360
Federal Realty Investment Trust	272,821		21,866,603
FelCor Lodging Trust Inc.	402,418		8,354,198
First Industrial Realty Trust Inc.	274,856		12,635,130
General Growth Properties Inc.	1,146,974		59,527,951
Glenborough Realty Trust Inc.	250,179		6,499,650
Health Care Property Investors Inc.	712,745		22,380,193
Health Care REIT Inc.²	350,551		14,470,745
Healthcare Realty Trust Inc.	287,684		11,651,202
Highwoods Properties Inc.	10,339		394,950
Home Properties Inc.	186,306		11,768,950
Hospitality Properties Trust	367,553		17,811,618
Host Hotels & Resorts Inc.	2,422,078		55,853,119
HRPT Properties Trust	1,297,096		15,435,442
Impac Mortgage Holdings Inc.	540,050		5,114,273
iStar Financial Inc.	580,419		26,890,812
Kilroy Realty Corp.	162,043		12,206,699
Kimco Realty Corp.	1,083,663		48,147,133
KKR Financial Corp.	447,426		12,004,440
LaSalle Hotel Properties	231,597		9,784,973
Lexington Corporate Properties Trust	388,320		8,271,216
Liberty Property Trust	429,490		20,701,418
Macerich Co. (The)	356,773		28,666,711
Mack-Cali Realty Corp.	337,585		17,858,246
Maguire Properties Inc.	259,679		11,103,874
Mills Corp.	138,082		2,522,758


64		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Nationwide Health Properties Inc.		449,211	$	12,910,324
New Century Financial Corp.		5,771		227,262
New Plan Excel Realty Trust Inc.		596,440		17,177,472
NovaStar Financial Inc.²		206,809		6,601,343
Pennsylvania Real Estate Investment Trust		237,212		10,223,837
Post Properties Inc.		249,699		12,230,257
ProLogis		1,225,255		77,521,884
Public Storage Inc.		645,959		57,948,982
Realty Income Corp.		535,245		14,130,468
Reckson Associates Realty Corp.		114,884		5,068,682
Redwood Trust Inc.		148,927		8,186,517
Regency Centers Corp.		95,750		6,909,320
Saxon Capital Inc.		176,120		2,492,098
Simon Property Group Inc.		1,079,176		104,787,990
SL Green Realty Corp.		218,490		26,448,215
Strategic Hotels & Resorts Inc.		120,311		2,559,015
Sunstone Hotel Investors Inc.		73,852		2,175,680
Taubman Centers Inc.		309,935		14,535,952
Thornburg Mortgage Inc.		554,516		14,239,971
United Dominion Realty Trust Inc.		773,960		25,053,085
Ventas Inc.		554,720		21,622,986
Vornado Realty Trust		651,494		77,690,660
Washington Real Estate Investment Trust		268,793		11,329,625
Weingarten Realty Investors		462,198		21,492,207

				1,657,943,963

TOTAL COMMON STOCKS (Cost: $1,767,951,014)				1,830,797,074
SHORT-TERM INVESTMENTS – 1.55%
CERTIFICATES OF DEPOSIT³ – 0.06%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	150,524		150,524
Societe Generale
5.33%, 12/08/06		215,034		215,034
Washington Mutual Bank
5.36%, 11/13/06		537,586		537,586
Wells Fargo Bank N.A.
4.78%, 12/05/06		172,028		172,028

				1,075,172
COMMERCIAL PAPER³– 0.26%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		321,023		315,338
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		322,552		322,552
ASAP Funding Ltd.
5.29%, 11/02/06⁴		53,759		53,751
Atlantis One Funding
5.30%, 11/14/06⁴		295,044		294,480
Beta Finance Inc.
5.27%, 01/25/07⁴		43,007		42,472
Bryant Park Funding LLC
5.28%, 12/14/06⁴		67,886		67,458
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		109,005		108,797
Cantabric Finance LLC
5.26%, 01/25/07⁴		86,014		84,946
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		247,290		246,928
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		161,276		157,301
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		129,021		128,560
Curzon Funding LLC
5.29%, 11/17/06⁴		215,034		214,529
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		247,752		244,755
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		215,034		214,876


SCHEDULES OF INVESTMENT		65

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴	$	195,681	$	192,825
Galleon Capital Corp.
5.27%, 12/18/06⁴		30,066		29,859
General Electric Capital Services Inc.
5.22%, 12/11/06		21,503		21,379
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		126,870		124,371
HBOS Treasury Services PLC
5.27%, 12/15/06		43,007		42,730
Landale Funding LLC
5.31%, 11/15/06⁴		167,727		167,381
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		386,249		385,980
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		138,697		138,412
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		279,545		274,241
Nestle Capital Corp.
5.19%, 08/09/07		129,021		123,794
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		339,724		339,724
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		114,570		113,237
Sedna Finance Inc.
5.22%, 04/17/07⁴		122,570		119,602
Sydney Capital Corp.
5.27%, 12/08/06⁴		5,129		5,101
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		107,517		106,303
Tulip Funding Corp.
5.29%, 11/15/06⁴		113,413		113,180

				4,794,862
MEDIUM-TERM NOTES³– 0.05%
Bank of America N.A.
5.28%, 04/20/07		53,759		53,759
Cullinan Finance Corp.
5.71%, 06/28/07⁴		161,276		161,276
K2 USA LLC
5.39%, 06/04/07⁴		161,276		161,276
Marshall & Ilsley Bank
5.18%, 12/15/06		215,034		215,124
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		251,590		251,590
US Bank N.A.
2.85%, 11/15/06		43,007		42,977

				886,002
MONEY MARKET FUNDS – 0.10%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		1,901,664		1,901,664

				1,901,664
REPURCHASE AGREEMENTS³– 0.29%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $430,133 (collateralized by non-U.S. Government debt securities, value $443,115, 4.70% to 8.75%, 7/30/10 to 11/15/25).		430,069		430,069
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $301,093 (collateralized by U.S. Government obligations, value $307,169, 5.50%, 10/1/21 to 10/1/36).		301,048		301,048


66		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $322,600 (collateralized by non-U.S. Government debt securities, value $354,926, 0.31% to 6.00%, 7/25/36 to 11/25/46).	$	322,552	$	322,552
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $21,506 (collateralized by non-U.S. Government debt securities, value $22,156, 6.00% to 6.70%, 12/15/10 to 4/15/12).		21,503		21,503
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $752,733 (collateralized by non-U.S. Government debt securities, value $790,509, 4.11% to 9.32%, 4/15/10 to 5/15/36).		752,621		752,621
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $236,574 (collateralized by non-U.S. Government debt securities, value $265,076, 0.00% to 10.00%, 5/27/33 to 10/31/36).		236,538		236,538
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $129,041 (collateralized by non-U.S. Government debt securities, value $142,733, 0.00% to 10.00%, 5/27/33 to 10/31/36).		129,021		129,021
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $430,133 (collateralized by non-U.S. Government debt securities, value $451,720, 0.00% to 9.00%, 5/1/17 to 9/25/46).		430,069		430,069
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $376,366 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $385,861, 0.00% to 7.32%, 11/2/06 to 3/25/45).		376,310		376,310
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $322,599 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $328,696, 0.00% to 7.32%, 11/2/06 to 3/25/45).		322,551		322,551
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $129,041 (collateralized by non-U.S. Government debt securities, value $135,516, 0.00% to 10.00%, 1/1/10).		129,021		129,021
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $107,533 (collateralized by non-U.S. Government debt securities, value $112,938, 5.26% to 5.35%, 7/1/24 to 6/1/46).		107,517		107,517


SCHEDULES OF INVESTMENT		67

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $53,767 (collateralized by non-U.S. Government debt securities, value $56,475, 6.25% to 7.63%, 9/15/13 to 6/1/16).	$	53,759	$	53,759
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $430,133 (collateralized by non-U.S. Government debt securities, value $443,122, 3.50% to 10.13%, 5/15/07 to 7/1/26).		430,069		430,069
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $215,066 (collateralized by non-U.S. Government debt securities, value $237,049, 5.50% to 10.39%, 6/17/08 to 6/25/36).		215,034		215,034
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $290,341 (collateralized by non-U.S. Government debt securities, value $307,113, 0.00% to 10.00%, 11/1/06 to 10/31/36).		290,297		290,297
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $155,500 (collateralized by non-U.S. Government debt securities, value $161,482, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		150,524		150,524
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $559,174 (collateralized by non-U.S. Government debt securities, value $587,235, 3.86% to 8.17%, 11/18/08 to 7/15/45).		559,090		559,090

				5,257,593
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		22,220		22,220

				22,220
VARIABLE & FLOATING RATE NOTES³– 0.79%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		550,495		550,559
American Express Bank
5.29%, 02/28/07		215,034		215,034
American Express Centurion Bank
5.41%, 07/19/07		236,538		236,733
American Express Credit Corp.
5.42%, 07/05/07		64,510		64,539
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		38,797		38,797
ASIF Global Financing
5.51%, 05/03/07⁴		21,503		21,509
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		139,772		139,772
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		311,800		311,810
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		548,338		548,360
BMW US Capital LLC
5.32%, 10/15/07⁴		215,034		215,034


68		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
BNP Paribas
5.36%, 05/18/07⁴	$	397,814	$	397,814
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		156,975		156,975
CC USA Inc.
5.37%, 07/30/07⁴		107,517		107,529
Commodore CDO Ltd.
5.47%, 06/12/07⁴		53,759		53,759
Credit Agricole SA
5.34%, 07/23/07		215,034		215,034
Credit Suisse First Boston NY
5.38%, 04/24/07		107,517		107,521
Cullinan Finance Corp.
5.36%, 04/25/07⁴		53,759		53,759
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		53,759		53,759
DEPFA Bank PLC
5.43%, 09/14/07		215,034		215,034
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		247,290		247,302
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		215,034		215,034
Fifth Third Bancorp
5.30%, 11/23/07⁴		430,069		430,069
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		215,034		215,020
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		225,786		225,829
Granite Master Issuer PLC
5.29%, 08/20/07⁴		752,621		752,621
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		172,028		172,048
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		322,552		322,592
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		215,034		215,034
Holmes Financing PLC
5.29%, 07/16/07⁴		376,310		376,310
JP Morgan Chase & Co.
5.29%, 08/02/07		161,276		161,276
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		161,276		161,270
Kestrel Funding LLC
5.30%, 07/11/07⁴		86,014		86,007
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		129,021		129,021
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		224,117		224,117
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		236,538		236,525
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		85,155		85,155
Marshall & Ilsley Bank
5.30%, 10/15/07		118,269		118,269
Master Funding LLC
5.35%, 04/25/07⁴		193,531		193,531
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		322,552		322,552
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		21,503		21,503
Monumental Global Funding II
5.38%, 12/27/06⁴		43,007		43,009
Mound Financing PLC
5.29%, 05/08/07⁴		202,132		202,132
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		774,124		774,116
National City Bank of Indiana
5.37%, 05/21/07		107,517		107,522


SCHEDULES OF INVESTMENTS		69

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REAL ESTATE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴	$	709,614	$	709,751
Newcastle Ltd.
5.34%, 04/24/07⁴		75,800		75,789
Northern Rock PLC
5.36%, 08/03/07⁴		258,041		258,046
Northlake CDO I
5.46%, 09/06/07⁴		64,510		64,510
Principal Life Global Funding I
5.82%, 02/08/07		96,766		96,888
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		311,800		311,794
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		215,034		215,034
Strips III LLC
5.37%, 07/24/07⁴		49,429		49,429
SunTrust Bank
5.29%, 05/01/07		215,034		215,041
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		524,684		524,646
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		301,048		301,048
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		288,160		288,160
Wachovia Bank N.A.
5.36%, 05/22/07		430,069		430,069
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		161,276		161,352
Wells Fargo & Co.
5.33%, 11/15/07⁴		107,517		107,523
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		161,276		161,276
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		645,103		644,996
Wind Master Trust
5.31%, 07/25/07⁴		86,014		86,014

				14,442,561

TOTAL SHORT-TERM INVESTMENTS (Cost: $28,380,074)				28,380,074

TOTAL INVESTMENTS IN SECURITIES – 101.37% (Cost: $1,796,331,088)				1,859,177,148
Other Assets, Less Liabilities – (1.37)%				(25,134,337	)

NET ASSETS – 100.00%			$	1,834,042,811

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


70		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® KLD SELECT SOCIAL^SMINDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.92%
ADVERTISING – 0.02%
Getty Images Inc.¹	309	$	13,383

			13,383
AEROSPACE & DEFENSE – 2.57%
Boeing Co. (The)	3,397		271,284
Northrop Grumman Corp.	2,743		182,108
Raytheon Co.	1,399		69,880
Rockwell Collins Inc.	19,309		1,121,467

			1,644,739
AIRLINES – 0.43%
Southwest Airlines Co.	18,356		275,891

			275,891
APPAREL – 1.94%
Nike Inc. Class B	13,477		1,238,267

			1,238,267
AUTO MANUFACTURERS – 0.09%
Ford Motor Co.	6,889		57,041

			57,041
AUTO PARTS & EQUIPMENT – 0.28%
Johnson Controls Inc.	2,208		180,040

			180,040
BANKS – 7.96%
Bank of America Corp.	16,320		879,158
Comerica Inc.	960		55,862
First Horizon National Corp.	6,162		242,290
Northern Trust Corp.	3,276		192,367
State Street Corp.	4,786		307,405
Synovus Financial Corp.	17,152		503,926
TD Banknorth Inc.	16,810		497,240
UnionBanCal Corp.	628		36,160
Wells Fargo & Co.	65,646		2,382,293

			5,096,701
BEVERAGES – 2.43%
Hansen Natural Corp.¹	1,015		32,226
Molson Coors Brewing Co. Class B	12,064		858,716
PepsiCo Inc.	10,456		663,329

			1,554,271
BIOTECHNOLOGY – 1.55%
Amgen Inc.¹	7,960		604,244
Celgene Corp.¹	661		35,324
Genentech Inc.¹	3,847		320,455
Vertex Pharmaceuticals Inc.¹	709		28,785

			988,808
BUILDING MATERIALS – 0.00%
USG Corp.¹	23		1,124

			1,124
CHEMICALS – 3.51%
Air Products & Chemicals Inc.	6,971		485,670
Ecolab Inc.	21,643		981,510
Praxair Inc.	8,680		522,970
Rohm & Haas Co.	4,972		257,649

			2,247,799
COAL – 0.08%
Peabody Energy Corp.	1,265		53,092

			53,092
COMMERCIAL SERVICES – 0.33%
Block (H & R) Inc.	463		10,121
Convergys Corp.¹	410		8,696
Manpower Inc.	1,540		104,366
Monster Worldwide Inc.¹	144		5,833
Moody’s Corp.	383		25,393
ServiceMaster Co. (The)	559		6,333
United Rentals Inc.¹	305		7,225
Weight Watchers International Inc.	956		41,682

			209,649
COMPUTERS – 7.10%
Apple Computer Inc.¹	1,630		132,160
Dell Inc.¹	11,469		279,041
Hewlett-Packard Co.	21,951		850,382
International Business Machines Corp.	34,765		3,209,852
Sun Microsystems Inc.¹	13,760		74,717

			4,546,152
COSMETICS & PERSONAL CARE – 1.82%
Avon Products Inc.	3,027		92,051
Procter & Gamble Co.	16,946		1,074,207

			1,166,258


SCHEDULES OF INVESTMENTS		71

Schedule of Investments (Unaudited) (Continued)

iSHARES^® KLD SELECT SOCIAL^SMINDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
DISTRIBUTION & WHOLESALE – 0.12%
Fastenal Co.	1,884	$	75,812

			75,812
DIVERSIFIED FINANCIAL SERVICES – 8.89%
American Express Co.	56,146		3,245,800
Federal Home Loan Mortgage Corp.	16,991		1,172,209
Federal National Mortgage Association	13,515		800,899
Goldman Sachs Group Inc. (The)	1,139		216,171
SLM Corp.	5,251		255,619

			5,690,698
ELECTRIC – 1.89%
Consolidated Edison Inc.	1,739		84,081
Mirant Corp.¹	1,616		47,785
Northeast Utilities	608		15,206
Progress Energy Inc.	21,557		991,622
TXU Corp.	1,088		68,685

			1,207,379
ELECTRONICS – 0.88%
Agilent Technologies Inc.¹	15,572		554,363
Sanmina-SCI Corp.¹	2,049		8,094

			562,457
FOOD – 3.62%
General Mills Inc.	31,835		1,808,865
Sysco Corp.	1,767		61,810
Whole Foods Market Inc.	7,025		448,476

			2,319,151
FOREST PRODUCTS & PAPER – 0.05%
International Paper Co.	912		30,415

			30,415
GAS – 0.65%
KeySpan Corp.	10,174		412,861

			412,861
HAND & MACHINE TOOLS – 0.10%
Lincoln Electric Holdings Inc.	1,086		66,778

			66,778
HEALTH CARE – PRODUCTS – 6.33%
Baxter International Inc.	14,142		650,108
Johnson & Johnson	47,337		3,190,514
Medtronic Inc.	2,026		98,626
Zimmer Holdings Inc.¹	1,549		111,543

			4,050,791
HEALTH CARE – SERVICES – 0.67%
Aetna Inc.	1,789		73,743
LifePoint Hospitals Inc.¹	673		23,891
Quest Diagnostics Inc.	4,864		241,935
UnitedHealth Group Inc.	625		30,487
WellPoint Inc.¹	787		60,064
			430,120
HOME BUILDERS – 0.06%
Horton (D.R.) Inc.	1,712		40,112

			40,112
HOME FURNISHINGS – 0.40%
Whirlpool Corp.	2,940		255,574

			255,574
INSURANCE – 4.36%
Ambac Financial Group Inc.	1,879		156,878
Cincinnati Financial Corp.	10,028		457,778
Hartford Financial Services Group Inc. (The)	2,088		182,011
Nationwide Financial Services Inc.	9,937		505,992
Principal Financial Group Inc.	1,657		93,604
Prudential Financial Inc.	1,853		142,551
St. Paul Travelers Companies Inc.	24,028		1,228,552
UnumProvident Corp.	1,289		25,496

			2,792,862
INTERNET – 1.35%
eBay Inc.¹	4,469		143,589
Expedia Inc.¹	722		11,732
Google Inc. Class A¹	756		360,151
Liberty Media Holding Corp. – Liberty Interactive Group Series A¹	145		3,200
NutriSystem Inc.¹	627		38,673
Symantec Corp.¹	15,483		307,183

			864,528


72		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® KLD SELECT SOCIAL^SMINDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
IRON & STEEL – 0.74%
Allegheny Technologies Inc.	828	$	65,188
Carpenter Technology Corp.	207		22,147
Nucor Corp.	4,040		235,976
Reliance Steel & Aluminum Co.	1,090		37,441
Steel Dynamics Inc.	533		32,039
United States Steel Corp.	1,218		82,337

			475,128
LEISURE TIME – 0.02%
Sabre Holdings Corp.	415		10,549

			10,549
LODGING – 0.44%
Harrah’s Entertainment Inc.	2,305		171,331
Las Vegas Sands Corp.¹	616		46,939
Marriott International Inc. Class A	137		5,722
Wynn Resorts Ltd.¹	796		58,538

			282,530
MACHINERY – 1.13%
Cummins Inc.	2,092		265,642
Deere & Co.	3,608		307,149
Graco Inc.	3,136		127,823
Terex Corp.¹	434		22,464

			723,078
MANUFACTURING – 2.80%
Eastman Kodak Co.	22,889		558,492
3M Co.	15,644		1,233,373

			1,791,865
MEDIA – 2.46%
Cablevision Systems Corp.	663		18,425
Comcast Corp. Class A¹	1,697		69,017
Liberty Global Inc. Class A¹	2,226		58,410
McGraw-Hill Companies Inc. (The)	7,484		480,248
New York Times Co. Class A	7,696		186,012
Sirius Satellite Radio Inc.¹	8,767		33,578
Univision Communications Inc. Class A¹	9,107		319,291
Washington Post Co. (The) Class B	540		406,674

			1,571,655
METAL FABRICATE & HARDWARE – 0.47%
Commercial Metals Co.	4,565		121,475
Timken Co. (The)	5,864		176,213

			297,688
MINING – 0.09%
Alcoa Inc.	1,839		53,165
Newmont Mining Corp.	145		6,564

			59,729
OIL & GAS – 4.57%
Apache Corp.	5,359		350,050
Cheniere Energy Inc.¹	256		6,738
Chesapeake Energy Corp.	12,386		401,802
Chevron Corp.	3,379		227,069
Denbury Resources Inc.¹	2,160		62,078
Devon Energy Corp.	3,574		238,886
ENSCO International Inc.	598		29,284
EOG Resources Inc.	1,876		124,810
Hess Corp.	877		37,185
Marathon Oil Corp.	1,945		168,048
Newfield Exploration Co.¹	3,278		133,710
Noble Energy Inc.	4,222		205,316
Occidental Petroleum Corp.	2,390		112,187
Pioneer Natural Resources Co.	4,253		173,225
Pride International Inc.¹	313		8,642
Quicksilver Resources Inc.¹	2,338		80,147
Range Resources Corp.	4,123		111,939
Southwestern Energy Co.¹	1,993		70,911
Sunoco Inc.	20		1,323
Unit Corp.¹	2,826		131,098
Valero Energy Corp.	3,513		183,835
XTO Energy Inc.	1,459		68,077

			2,926,360
OIL & GAS SERVICES – 0.79%
Baker Hughes Inc.	2,660		183,673
Global Industries Ltd.¹	516		8,566
Halliburton Co.	77		2,491
Helix Energy Solutions Group Inc.¹	471		15,213
Oceaneering International Inc.¹	902		32,463
Smith International Inc.	5,320		210,034


SCHEDULES OF INVESTMENTS		73

Schedule of Investments (Unaudited) (Continued)

iSHARES^® KLD SELECT SOCIAL^SMINDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Superior Energy Services Inc.¹	1,279	$	40,033
Tidewater Inc.	222		11,040

			503,513
PHARMACEUTICALS – 4.49%
Amylin Pharmaceuticals Inc.¹	1,030		45,279
Bristol-Myers Squibb Co.	46,095		1,140,851
Express Scripts Inc.¹	782		49,829
Medco Health Solutions Inc.¹	267		14,284
Merck & Co. Inc.	18,450		837,999
Omnicare Inc.	93		3,523
Pfizer Inc.	29,422		784,096

			2,875,861
REAL ESTATE – 0.03%
Jones Lang LaSalle Inc.	214		19,688

			19,688
REAL ESTATE INVESTMENT TRUSTS – 0.33%
Duke Realty Corp.	577		23,115
General Growth Properties Inc.	1,218		63,214
HRPT Properties Trust	1,119		13,316
ProLogis	1,765		111,672

			211,317
RETAIL – 4.99%
Bed Bath & Beyond Inc.¹	32		1,289
Best Buy Co. Inc.	4,742		261,995
Darden Restaurants Inc.	2,942		123,270
Dollar General Corp.	514		7,211
Gap Inc. (The)	47,034		988,655
McDonald’s Corp.	1,673		70,132
Nordstrom Inc.	2,972		140,724
Office Depot Inc.¹	7,681		322,525
PetSmart Inc.	47		1,353
Staples Inc.	24,093		621,358
Starbucks Corp.¹	11,817		446,092
Walgreen Co.	4,740		207,043
Wendy’s International Inc.	122		4,221

			3,195,868
SAVINGS & LOANS – 0.87%
Sovereign Bancorp Inc.	16,031		382,500
Washington Mutual Inc.	4,105		173,642

			556,142
SEMICONDUCTORS – 4.59%
Advanced Micro Devices Inc.¹	6,689		142,275
Applied Materials Inc.	15,613		271,510
Atmel Corp.¹	1,290		7,418
Intel Corp.	57,461		1,226,218
Lam Research Corp.¹	2,769		136,927
LSI Logic Corp.¹	1,387		13,939
Micron Technology Inc.¹	2,520		36,414
Rambus Inc.¹	253		4,190
Texas Instruments Inc.	36,182		1,091,973
Xilinx Inc.	213		5,434

			2,936,298
SOFTWARE – 5.00%
Adobe Systems Inc.¹	7,768		297,126
BEA Systems Inc.¹	17,618		286,645
Compuware Corp.¹	1,515		12,181
Microsoft Corp.	77,522		2,225,657
Novell Inc.¹	5,866		35,196
Red Hat Inc.¹	883		14,464
Salesforce.com Inc.¹	6,577		256,635
Total System Services Inc.	3,131		75,394

			3,203,298
TELECOMMUNICATIONS – 5.78%
American Tower Corp. Class A¹	3,247		116,957
BellSouth Corp.	9,073		409,192
Ciena Corp.¹	355		8,346
Cisco Systems Inc.¹	45,543		1,098,953
Corning Inc.¹	4,839		98,861
Crown Castle International Corp.¹	1,937		65,180
JDS Uniphase Corp.¹	504		7,323
Juniper Networks Inc.¹	283		4,873
Leap Wireless International Inc.¹	236		13,089
Level 3 Communications Inc.¹	1,136		6,009
Lucent Technologies Inc.¹	26,410		64,176
Motorola Inc.	31,557		727,704
NII Holdings Inc. Class B¹	319		20,745
QUALCOMM Inc.	6,615		240,720
Telephone & Data Systems Inc.	4,463		218,018
Tellabs Inc.¹	13,894		146,443


74		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® KLD SELECT SOCIAL^SMINDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
United States Cellular Corp.¹	2,718	$	172,348
Verizon Communications Inc.	7,538		278,906

			3,697,843
TRANSPORTATION – 0.85%
Ryder System Inc.	1,544		81,292
United Parcel Service Inc. Class B	6,141		462,724

			544,016

TOTAL COMMON STOCKS (Cost: $58,608,657)			63,955,179

SHORT-TERM INVESTMENTS – 0.16%
MONEY MARKET FUNDS – 0.16%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	103,183		103,183

			103,183

TOTAL SHORT-TERM INVESTMENTS (Cost: $103,183)			103,183

TOTAL INVESTMENTS IN SECURITIES – 100.08% (Cost: $58,711,840)			64,058,362
Other Assets, Less Liabilities – (0.08)%			(49,174	)

NET ASSETS – 100.00%		$	64,009,188

¹	Non-income earning security.

²	Affiliated 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.


SCHEDULES OF INVESTMENTS		75

Schedule of Investments (Unaudited)

iSHARES^® COHEN & STEERS REALTY MAJORS INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.92%
REAL ESTATE INVESTMENTTRUSTS – 99.92%
Alexandria Real Estate Equities Inc.	316,660	$	31,571,002
AMB Property Corp.	931,965		54,436,076
Archstone-Smith Trust	2,439,832		146,902,285
AvalonBay Communities Inc.	872,891		114,401,094
Boston Properties Inc.	1,337,473		142,882,241
Camden Property Trust	625,910		50,523,455
CBL & Associates Properties Inc.	545,992		23,876,230
Cousins Properties Inc.	701,618		25,096,876
Developers Diversified Realty Corp.	1,312,092		79,906,403
Duke Realty Corp.	1,595,507		63,916,010
Equity Office Properties Trust	3,925,962		166,853,385
Equity Residential	3,382,501		184,718,380
Essex Property Trust Inc.	285,140		38,003,459
Federal Realty Investment Trust	518,206		41,534,211
General Growth Properties Inc.	2,592,250		134,537,775
Health Care Property Investors Inc.	1,498,580		47,055,412
Host Hotels & Resorts Inc.	5,461,680		125,946,341
Kimco Realty Corp.	2,697,567		119,852,902
Liberty Property Trust	983,552		47,407,206
Macerich Co. (The)	813,833		65,391,481
ProLogis	2,819,984		178,420,388
Public Storage Inc.	1,537,007		137,884,898
Reckson Associates Realty Corp.	1,037,017		45,753,190
Regency Centers Corp.	855,091		61,703,367
Simon Property Group Inc.	2,189,998		212,648,806
SL Green Realty Corp.	514,131		62,235,557
United Dominion Realty Trust Inc.	1,353,614		43,816,485
Ventas Inc.	1,063,657		41,461,350
Vornado Realty Trust	1,634,132		194,870,241
Weingarten Realty Investors	1,018,306		47,351,229

			2,730,957,735

TOTAL COMMON STOCKS (Cost: $2,058,497,342)			2,730,957,735

SHORT-TERM INVESTMENTS – 0.11%
MONEY MARKET FUNDS – 0.11%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^1,2	2,884,911		2,884,911

			2,884,911

TOTAL SHORT-TERM INVESTMENTS (Cost: $2,884,911)			2,884,911

TOTAL INVESTMENTS IN SECURITIES – 100.03% (Cost: $2,061,382,253)			2,733,842,646
Other Assets, Less Liabilities – (0.03)%			(766,854	)

NET ASSETS – 100.00%		$	2,733,075,792

¹	Affiliated issuer. See Note 2.

²	The rate quoted is the annualized seven-day yield of the fund at period end.

See notes to the financial statements.


76		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities (Unaudited)

iSHARES^® TRUST

October 31, 2006


	*iShares Dow Jones U.S.*
	Basic Materials Sector Index Fund		Consumer Goods Sector Index Fund			Consumer Services Sector Index Fund			Financial Sector Index Fund			Industrial Sector Index Fund			Financial Services Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	441,860,147	$	334,928,637		$	261,192,092		$	500,522,848		$	259,868,785		$	442,878,507

Affiliated issuers^a	$	1,398,453	$	262,131		$	462,445		$	653,126		$	472,076		$	668,923

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	465,385,494	$	348,627,287		$	259,077,243		$	557,869,988		$	287,652,810		$	472,283,458
Affiliated issuers^a		1,398,453		262,131			462,445			653,126			472,076			668,923
Receivables:
Investment securities sold		—		—			—			1,248,233			—			814,659
Dividends and interest		368,735		464,463			44,734			436,232			179,417			554,248
Capital shares sold		—		—			—			243,744			—			306,613

Total Assets		467,152,682		349,353,881			259,584,422			560,451,323			288,304,303			474,627,901

LIABILITIES
Payables:
Investment securities purchased		1,011,890		—			991,584			1,466,999			—			797,209
Collateral for securities on loan (Note 5)		6,723,017		4,903,188			1,935,453			1,972,974			291,183			922,217
Capital shares redeemed		—		—			—			—			—			588,673
Investment advisory fees (Note 2)		183,855		143,413			102,148			199,612			117,504			212,156

Total Liabilities		7,918,762		5,046,601			3,029,185			3,639,585			408,687			2,520,255

NET ASSETS	$	459,233,920	$	344,307,280		$	256,555,237		$	556,811,738		$	287,895,616		$	472,107,646

Net assets consist of:
Paid-in capital	$	417,259,785	$	335,794,217		$	261,407,658		$	501,844,574		$	264,123,963		$	431,036,279
Undistributed net investment income		1,394,463		350,614			1,788			875,007			76,739			912,934
Undistributed net realized gain (accumulated net realized loss)		17,054,325		(5,536,201	)		(2,739,360	)		(3,254,983	)		(4,089,111	)		10,753,482
Net unrealized appreciation (depreciation)		23,525,347		13,698,650			(2,114,849	)		57,347,140			27,784,025			29,404,951

NET ASSETS	$	459,233,920	$	344,307,280		$	256,555,237		$	556,811,738		$	287,895,616		$	472,107,646

Shares outstanding		8,050,000		5,900,000			3,900,000			4,900,000			4,550,000			3,650,000

Net asset value per share	$	57.05	$	58.36		$	65.78		$	113.64		$	63.27		$	129.34

^a	See Note 2.

^b	Securities on loan with market values of $6,560,531, $4,778,919, $1,864,664, $1,920,281, $282,507 and $901,352, respectively. See Note 5.

See notes to the financial statements.


FINANCIAL STATEMENTS		77

Statements of Assets and Liabilities (Unaudited) (Continued)

iSHARES^® TRUST

October 31, 2006


	iShares Dow Jones U.S.			*iShares KLD*		iShares Cohen & Steers
	Real Estate Index Fund			Select Social^SM Index Fund		Realty Majors Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	1,794,429,424		$	58,608,657	$	2,058,497,342

Affiliated issuers^a	$	1,901,664		$	103,183	$	2,884,911

Investments in securities, at value (including securities on loan ^b) (Note 1):
Unaffiliated issuers	$	1,857,275,484		$	63,955,179	$	2,730,957,735
Affiliated issuers^a		1,901,664			103,183		2,884,911
Receivables:
Investment securities sold		735,345			–		–
Dividends and interest		1,225,901			86,185		17,023
Capital shares sold		152,386			–		23,896

Total Assets		1,861,290,780			64,144,547		2,733,883,565

LIABILITIES
Payables:
Investment securities purchased		104,805			108,573		–
Collateral for securities on loan (Note 5)		26,478,410			–		–
Capital shares redeemed		9,892			–		20,749
Investment advisory fees (Note 2)		654,862			26,786		787,024

Total Liabilities		27,247,969			135,359		807,773

NET ASSETS	$	1,834,042,811		$	64,009,188	$	2,733,075,792

Net assets consist of:
Paid-in capital	$	1,654,549,430		$	52,099,385	$	2,018,883,654
Undistributed (distributions in excess of) net investment income		(6,979,116	)		65,720		(5,248,517	)
Undistributed net realized gain		123,626,437			6,497,561		46,980,262
Net unrealized appreciation		62,846,060			5,346,522		672,460,393

NET ASSETS	$	1,834,042,811		$	64,009,188	$	2,733,075,792

Shares outstanding		22,300,000			1,100,000		27,900,000

Net asset value per share	$	82.24		$	58.19	$	97.96

^a	See Note 2.

^b	Securities on loan with market values of $25,625,552, $– and $–, respectively. See Note 5.

See notes to the financial statements.


78		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations (Unaudited)

iSHARES^® TRUST

Six months ended October 31, 2006


	*iShares Dow Jones U.S.*
	Basic Materials Sector Index Fund			Consumer Goods Sector Index Fund			Consumer Services Sector Index Fund			Financial Sector Index Fund			Industrial Sector Index Fund			Financial Services Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^a	$	6,717,238		$	3,851,381		$	995,236		$	5,119,856		$	2,414,202		$	3,556,671
Interest from affiliated issuers^b		13,471			7,004			4,994			12,296			6,332			9,091
Securities lending income		44,569			31,822			10,225			19,630			2,048			8,836

Total investment income		6,775,278			3,890,207			1,010,455			5,151,782			2,422,582			3,574,598

EXPENSES
Investment advisory fees (Note 2)		1,153,384			805,359			564,511			1,029,379			714,000			724,754

Total expenses		1,153,384			805,359			564,511			1,029,379			714,000			724,754

Net investment income		5,621,894			3,084,848			445,944			4,122,403			1,708,582			2,849,844

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(4,687,821	)		(913,382	)		(2,262,885	)		(574,375	)		(1,578,700	)		(692,177	)
In-kind redemptions		24,497,875			5,742,806			5,204,565			—			7,554,530			13,501,302

Net realized gain (loss)		19,810,054			4,829,424			2,941,680			(574,375	)		5,975,830			12,809,125

Net change in unrealized appreciation (depreciation)		(39,580,404	)		18,429,221			12,006,619			23,426,061			(13,183,079	)		12,154,889

Net realized and unrealized gain (loss)		(19,770,350	)		23,258,645			14,948,299			22,851,686			(7,207,249	)		24,964,014

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(14,148,456	)	$	26,343,493		$	15,394,243		$	26,974,089		$	(5,498,667	)	$	27,813,858

^a	Net of foreign withholding tax of $—, $—, $—, $2,328, $— and $1,232, respectively.

^b	See Note 2.

See notes to the financial statements.


FINANCIAL STATEMENTS		79

Statements of Operations (Unaudited) (Continued)

iSHARES^® TRUST

Six months ended October 31, 2006


	iShares Dow Jones U.S.			*iShares* *KLD*			*iShares* *Cohen & Steers*
	Real Estate Index Fund			Select Social^SMIndex Fund			Realty Majors Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^a	$	25,334,468		$	918,267		$	37,003,889
Interest from affiliated issuers^b		47,159			2,270			68,890
Securities lending income		423,494			—			645

Total investment income		25,805,121			920,537			37,073,424

EXPENSES
Investment advisory fees (Note 2)		3,413,228			241,003			4,004,308

Total expenses		3,413,228			241,003			4,004,308

Net investment income		22,391,893			679,534			33,069,116

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(9,940,670	)		(864,399	)		(5,160,302	)
In-kind redemptions		133,859,954			8,029,393			57,016,487

Net realized gain		123,919,284			7,164,994			51,856,185

Net change in unrealized appreciation (depreciation)		97,200,201			(4,525,416	)		361,835,322

Net realized and unrealized gain		221,119,485			2,639,578			413,691,507

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	243,511,378		$	3,319,112		$	446,760,623

^a	Net of foreign withholding tax of $29,209, $— and $—, respectively.

^b	See Note 2.

See notes to the financial statements.


80		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets

iSHARES^® TRUST


	*iShares Dow Jones U.S.* *Basic Materials Sector* *Index Fund*						*iShares Dow Jones U.S.* *Consumer Goods Sector* *Index Fund*						*iShares Dow Jones U.S.* *Consumer Services Sector* *Index Fund*
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	5,621,894		$	7,266,180		$	3,084,848		$	7,311,799		$	445,944		$	638,457
Net realized gain		19,810,054			19,223,386			4,829,424			24,188,349			2,941,680			10,653,860
Net change in unrealized appreciation (depreciation)		(39,580,404	)		70,140,071			18,429,221			(1,944,352	)		12,006,619			15,934,550

Net increase (decrease) in net assets resulting from operations		(14,148,456	)		96,629,637			26,343,493			29,555,796			15,394,243			27,226,867

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(4,676,673	)		(7,246,631	)		(3,084,109	)		(7,313,411	)		(444,156	)		(635,586	)
Return of capital		—			—			—			—			—			(15,882	)

Total distributions to shareholders		(4,676,673	)		(7,246,631	)		(3,084,109	)		(7,313,411	)		(444,156	)		(651,468	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		96,154,212			152,547,024			31,029,853			136,434,722			75,071,403			156,360,704
Cost of shares redeemed		(120,910,086	)		(151,969,377	)		(54,967,522	)		(234,795,591	)		(89,130,747	)		(178,483,492	)
Net increase (decrease) in net assets from capital share transactions		(24,755,874	)		577,647			(23,937,669	)		(98,360,869	)		(14,059,344	)		(22,122,788	)

INCREASE (DECREASE) IN NET ASSETS		(43,581,003	)		89,960,653			(678,285	)		(76,118,484	)		890,743			4,452,611
NET ASSETS
Beginning of period		502,814,923			412,854,270			344,985,565			421,104,049			255,664,494			251,211,883

End of period	$	459,233,920		$	502,814,923		$	344,307,280		$	344,985,565		$	256,555,237		$	255,664,494

Undistributed net investment income included in net assets at end of period	$	1,394,463		$	449,242		$	350,614		$	349,875		$	1,788		$	—

SHARES ISSUED AND REDEEMED
Shares sold		1,700,000			2,850,000			550,000			2,550,000			1,250,000			2,650,000
Shares redeemed		(2,200,000	)		(3,050,000	)		(1,000,000	)		(4,400,000	)		(1,500,000	)		(3,000,000	)

Net decrease in shares outstanding		(500,000	)		(200,000	)		(450,000	)		(1,850,000	)		(250,000	)		(350,000	)

See notes to the financial statements.


FINANCIAL STATEMENTS		81

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	iShares Dow Jones U.S. Financial Sector *Index Fund*						*iShares Dow Jones U.S.* *Industrial Sector* *Index Fund*						*iShares Dow Jones U.S.* *Financial Services* *Index Fund*
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	4,122,403		$	7,988,821		$	1,708,582		$	2,567,480		$	2,849,844		$	4,324,290
Net realized gain (loss)		(574,375	)		38,623,126			5,975,830			11,578,853			12,809,125			14,577,785
Net change in unrealized appreciation (depreciation)		23,426,061			22,926,096			(13,183,079	)		34,965,136			12,154,889			13,173,532

Net increase (decrease) in net assets resulting from operations		26,974,089			69,538,043			(5,498,667	)		49,111,469			27,813,858			32,075,607

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(4,221,671	)		(7,497,030	)		(1,631,843	)		(2,579,425	)		(2,523,801	)		(4,215,839	)

Total distributions to shareholders		(4,221,671	)		(7,497,030	)		(1,631,843	)		(2,579,425	)		(2,523,801	)		(4,215,839	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		137,822,510			201,531,038			47,568,087			68,232,422			324,918,052			327,087,046
Cost of shares redeemed		—			(167,241,850	)		(38,618,142	)		(65,526,418	)		(89,533,777	)		(285,158,247	)

Net increase in net assets from capital share transactions		137,822,510			34,289,188			8,949,945			2,706,004			235,384,275			41,928,799

INCREASE IN NET ASSETS		160,574,928			96,330,201			1,819,435			49,238,048			260,674,332			69,788,567
NET ASSETS
Beginning of period		396,236,810			299,906,609			286,076,181			236,838,133			211,433,314			141,644,747

End of period	$	556,811,738		$	396,236,810		$	287,895,616		$	286,076,181		$	472,107,646		$	211,433,314

Undistributed net investment income included in net assets at end of period	$	875,007		$	974,275		$	76,739		$	—		$	912,934		$	586,891

SHARES ISSUED AND REDEEMED
Shares sold		1,250,000			2,000,000			750,000			1,150,000			2,650,000			3,000,000
Shares redeemed		—			(1,650,000	)		(650,000	)		(1,150,000	)		(700,000	)		(2,650,000	)

Net increase in shares outstanding		1,250,000			350,000			100,000			—			1,950,000			350,000

See notes to the financial statements.


82		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	*iShares Dow Jones U.S.* *Real Estate* *Index Fund*						*iShares KLD* *Select Social^SM* *Index Fund*						*iShares Cohen & Steers* *Realty Majors* *Index Fund*
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006^a			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006^a
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	22,391,893		$	43,593,962		$	679,534		$	1,255,469		$	33,069,116		$	60,742,153
Net realized gain		123,919,284			195,916,618			7,164,994			1,267,157			51,856,185			180,290,785
Net change in unrealized appreciation (depreciation)		97,200,201			(13,506,368	)		(4,525,416	)		10,494,906			361,835,322			162,730,939

Net increase in net assets resulting from operations		243,511,378			226,004,212			3,319,112			13,017,532			446,760,623			403,763,877

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(27,543,589	)		(27,887,668	)		(758,173	)		(1,138,122	)		(36,484,050	)		(41,130,863	)
From net realized gain		—			(7,911,258	)		—			—			—			(149,937	)
Return of capital		—			(10,952,378	)		—			—			—			(23,729,232	)

Total distributions to shareholders		(27,543,589	)		(46,751,304	)		(758,173	)		(1,138,122	)		(36,484,050	)		(65,010,032	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		5,164,120,261			7,982,932,588			13,441,029			86,944,558			494,423,929			1,101,332,967
Cost of shares redeemed		(4,782,302,969	)		(7,662,711,155	)		(81,967,326	)		(10,518,191	)		(205,531,074	)		(704,260,687	)

Net increase (decrease) in net assets from capital share transactions		381,817,292			320,221,433			(68,526,297	)		76,426,367			288,892,855			397,072,280

INCREASE (DECREASE) IN NET ASSETS		597,785,081			499,474,341			(65,965,358	)		88,305,777			699,169,428			735,826,125
NET ASSETS
Beginning of period		1,236,257,730			736,783,389			129,974,546			41,668,769			2,033,906,364			1,298,080,239

End of period	$	1,834,042,811		$	1,236,257,730		$	64,009,188		$	129,974,546		$	2,733,075,792		$	2,033,906,364

Undistributed (distributions in excess of) net investment income included in net assets at end of period	$	(6,979,116	)	$	(1,827,420	)	$	65,720		$	144,359		$	(5,248,517	)	$	(1,833,583	)

SHARES ISSUED AND REDEEMED
Shares sold		69,600,000			120,200,000			250,000			1,700,000			5,650,000			14,650,000
Shares redeemed		(64,700,000	)		(115,200,000	)		(1,500,000	)		(200,000	)		(2,400,000	)		(9,500,000	)

Net increase (decrease) in shares outstanding		4,900,000			5,000,000			(1,250,000	)		1,500,000			3,250,000			5,150,000

^a	Share transactions were adjusted to reflect a two–for–one stock split effective June 9, 2005.

See notes to the financial statements.


FINANCIAL STATEMENTS		83

Financial Highlights

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Basic Materials Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	58.81		$	47.18		$	42.25		$	34.41		$	39.99		$	39.24

Income from investment operations:
Net investment income		0.65^a			0.94			0.72			0.66			0.70			0.55
Net realized and unrealized gain (loss)^b		(1.87	)		11.63			4.94			7.86			(5.62	)		0.73

Total from investment operations		(1.22	)		12.57			5.66			8.52			(4.92	)		1.28

Less distributions from:
Net investment income		(0.54	)		(0.94	)		(0.73	)		(0.68	)		(0.66	)		(0.53	)

Total distributions		(0.54	)		(0.94	)		(0.73	)		(0.68	)		(0.66	)		(0.53	)

Net asset value, end of period	$	57.05		$	58.81		$	47.18		$	42.25		$	34.41		$	39.99

Total return		(2.00	)%^c		26.99	%		13.41	%		24.85	%		(12.30	)%		3.38	%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	459,234		$	502,815		$	412,854		$	316,839		$	99,779		$	57,989
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		2.34	%		1.83	%		1.53	%		1.70	%		2.10	%		1.42	%
Portfolio turnover rate^e		3	%		6	%		6	%		7	%		6	%		9	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


84		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Consumer Goods Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	54.33		$	51.35		$	52.17		$	39.96		$	47.91		$	40.55

Income from investment operations:
Net investment income		0.51^a			0.91			0.76			0.65			0.69			0.49
Net realized and unrealized gain (loss)^b		4.04			2.97			(0.82	)		12.32			(8.04	)		7.41

Total from investment operations		4.55			3.88			(0.06	)		12.97			(7.35	)		7.90

Less distributions from:
Net investment income		(0.52	)		(0.90	)		(0.76	)		(0.76	)		(0.60	)		(0.54	)

Total distributions		(0.52	)		(0.90	)		(0.76	)		(0.76	)		(0.60	)		(0.54	)

Net asset value, end of period	$	58.36		$	54.33		$	51.35		$	52.17		$	39.96		$	47.91

Total return		8.43	%^c		7.59	%		(0.09	)%		32.73	%		(15.40	)%		19.65	%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	344,307		$	344,986		$	421,104		$	289,569		$	87,918		$	114,974
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		1.84	%		1.71	%		1.54	%		1.53	%		1.57	%		1.46	%
Portfolio turnover rate^e		3	%		6	%		9	%		5	%		28	%		8	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		85

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Consumer Services Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	61.61		$	55.82		$	55.54		$	45.54		$	55.05		$	59.88

Income from investment operations:
Net investment income		0.12^a			0.16			0.15			0.10			0.05			0.02
Net realized and unrealized gain (loss)^b		4.16			5.79			0.29			10.00			(9.50	)		(4.80	)

Total from investment operations		4.28			5.95			0.44			10.10			(9.45	)		(4.78	)

Less distributions from:
Net investment income		(0.11	)		(0.16	)		(0.15	)		(0.10	)		(0.05	)		—
Return of capital		–			(0.00	)^c		(0.01	)		(0.00	)^c		(0.01	)		(0.05	)

Total distributions		(0.11	)		(0.16	)		(0.16	)		(0.10	)		(0.06	)		(0.05	)

Net asset value, end of period	$	65.78		$	61.61		$	55.82		$	55.54		$	45.54		$	55.05

Total return		6.97	%^d		10.66	%		0.79	%		22.21	%		(17.17	)%		(7.98	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	256,555		$	255,664		$	251,212		$	219,387		$	129,776		$	129,362
Ratio of expenses to average net assets^e		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income (loss) to average net assets^e		0.38	%		0.26	%		0.25	%		0.19	%		0.11	%		(0.05	)%
Portfolio turnover rate^f		4	%		6	%		13	%		6	%		10	%		4	%

^a	Based on average shares outstanding throughout the period.

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

^c	Rounds to less than $0.01.

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


86		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	iShares Dow Jones U.S. Financial Sector Index Fund
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	108.56		$	90.88		$	87.48		$	72.29		$	81.20		$	81.78

Income from investment operations:
Net investment income		1.04^a			2.17			1.95			1.65			1.31			1.11
Net realized and unrealized gain (loss)^b		5.09			17.57			3.22			15.09			(8.94	)		(0.61	)

Total from investment operations		6.13			19.74			5.17			16.74			(7.63	)		0.50

Less distributions from:
Net investment income		(1.05	)		(2.06	)		(1.77	)		(1.55	)		(1.28	)		(1.08	)

Total distributions		(1.05	)		(2.06	)		(1.77	)		(1.55	)		(1.28	)		(1.08	)

Net asset value, end of period	$	113.64		$	108.56		$	90.88		$	87.48		$	72.29		$	81.20

Total return		5.71	%^c		21.96	%		5.89	%		23.29	%		(9.33	)%		0.66	%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	556,812		$	396,237		$	299,907		$	258,081		$	148,203		$	121,796
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		1.92	%		2.26	%		2.23	%		2.08	%		1.94	%		1.49	%
Portfolio turnover rate^e		3	%		6	%		7	%		7	%		28	%		4	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		87

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Industrial Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	64.29		$	53.22		$	48.43		$	38.60		$	45.75		$	53.99

Income from investment operations:
Net investment income		0.35^a			0.62			0.49			0.39			0.38			0.29
Net realized and unrealized gain (loss)^b		(1.03	)		11.07			4.79			9.84			(7.15	)		(8.23	)

Total from investment operations		(0.68	)		11.69			5.28			10.23			(6.77	)		(7.94	)

Less distributions from:
Net investment income		(0.34	)		(0.62	)		(0.49	)		(0.40	)		(0.38	)		(0.30	)
Return of capital		—			—			—			(0.00	)^c		—			—

Total distributions		(0.34	)		(0.62	)		(0.49	)		(0.40	)		(0.38	)		(0.30	)

Net asset value, end of period	$	63.27		$	64.29		$	53.22		$	48.43		$	38.60		$	45.75

Total return		(1.03	)%^d		22.07	%		10.90	%		26.56	%		(14.75	)%		(14.72	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	287,896		$	286,076		$	236,838		$	157,384		$	81,051		$	84,634
Ratio of expenses to average net assets^e		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^e		1.15	%		1.06	%		0.97	%		0.94	%		1.03	%		0.56	%
Portfolio turnover rate^f		3	%		7	%		5	%		3	%		12	%		27	%

^a	Based on average shares outstanding throughout the period.

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

^c	Rounds to less than $0.01.

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


88		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Financial Services Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	124.37		$	104.92		$	100.61		$	83.54		$	92.45		$	93.67

Income from investment operations:
Net investment income		1.17^a			2.57^a			2.22			2.12			1.41			1.22
Net realized and unrealized gain (loss)^b		4.78			19.39			4.25			16.93			(8.90	)		(1.26	)

Total from investment operations		5.95			21.96			6.47			19.05			(7.49	)		(0.04	)

Less distributions from:
Net investment income		(0.98	)		(2.51	)		(2.16	)		(1.98	)		(1.42	)		(1.18	)

Total distributions		(0.98	)		(2.51	)		(2.16	)		(1.98	)		(1.42	)		(1.18	)

Net asset value, end of period	$	129.34		$	124.37		$	104.92		$	100.61		$	83.54		$	92.45

Total return		4.86	%^c		21.21	%		6.44	%		22.91	%		(8.02	)%		0.00	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	472,108		$	211,433		$	141,645		$	110,671		$	116,957		$	60,092
Ratio of expenses to average net assets^e		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^e		1.89	%		2.29	%		2.20	%		2.08	%		1.90	%		1.46	%
Portfolio turnover rate^f		4	%		9	%		7	%		7	%		41	%		3	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^d	Rounds to less than 0.01%.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		89

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Real Estate Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006^a			Year ended Apr. 30, 2005^a			Year ended Apr. 30, 2004^a			Year ended Apr. 30, 2003^a			Year ended Apr. 30, 2002^a
Net asset value, beginning of period	$	71.05		$	59.42		$	46.57		$	39.84		$	42.76		$	38.61

Income from investment operations:
Net investment income^b		1.18			2.58			2.56^c			2.25^c			2.13^c			2.15^c
Net realized and unrealized gain (loss)^d		11.36			11.66			12.85^c			7.16^c			(2.61	)^c		4.48^c

Total from investment operations		12.54			14.24			15.41			9.41			(0.48	)		6.63

Less distributions from:
Net investment income		(1.35	)		(1.56	)		(1.77	)		(1.82	)		(1.99	)		(2.27	)
Net realized gain		—			(0.44	)		—			—			—			—
Return of capital		—			(0.61	)		(0.79	)		(0.86	)		(0.45	)		(0.21	)

Total distributions		(1.35	)		(2.61	)		(2.56	)		(2.68	)		(2.44	)		(2.48	)

Net asset value, end of period	$	82.24		$	71.05		$	59.42		$	46.57		$	39.84		$	42.76

Total return		17.91	%^e		24.42	%		33.62	%		23.66	%		(0.98	)%		17.83	%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	1,834,043		$	1,236,258		$	736,783		$	419,089		$	195,203		$	106,905
Ratio of expenses to average net assets^f		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^f		3.15	%		3.92	%		4.56	%^c		4.68	%^c		5.42	%^c		5.32	%^c
Portfolio turnover rate^g		7	%		19	%		16	%		20	%		21	%		10	%

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

^b	Based on average shares outstanding throughout each period.

^c	As restated. See Note 6.

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

^e	Not annualized.

^f	Annualized for periods of less than one year.

^g	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.


90		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares KLD Select Social^SMIndex Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jan. 24, 2005^ato Apr. 30, 2005
Net asset value, beginning of period	$	55.31		$	49.02		$	49.69

Income from investment operations:
Net investment income		0.39	^b		0.67			0.18
Net realized and unrealized gain (loss)^c		3.01			6.26			(0.71	)

Total from investment operations		3.40			6.93			(0.53	)

Less distributions from:
Net investment income		(0.52	)		(0.64	)		(0.14	)

Total distributions		(0.52	)		(0.64	)		(0.14	)

Net asset value, end of period	$	58.19		$	55.31		$	49.02

Total return		6.21	%^d		14.20	%		(1.07	)%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	64,009		$	129,975		$	41,669
Ratio of expenses to average net assets^e		0.50	%		0.50	%		0.50	%
Ratio of net investment income to average net assets^e		1.41	%		1.32	%		1.16	%
Portfolio turnover rate^f		29	%		46	%		3	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		91

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Cohen & Steers Realty Majors Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006^a			Year ended Apr. 30, 2005^a			Year ended Apr. 30, 2004^a			Year ended Apr. 30, 2003^a			Year ended Apr. 30, 2002^a
Net asset value, beginning of period	$	82.51		$	66.57		$	50.31		$	42.50		$	44.84		$	40.05

Income from investment operations:
Net investment income^b		1.27			2.68			2.67	^d		2.42	^d		2.26	^d		2.22	^d
Net realized and unrealized gain (loss)^c		15.56			16.13			16.45	^d		8.14	^d		(2.12	)^d		5.17	^d

Total from investment operations		16.83			18.81			19.12			10.56			0.14			7.39

Less distributions from:
Net investment income		(1.38	)		(1.82	)		(2.01	)		(1.94	)		(1.88	)		(2.39	)
Net realized gain		—			(0.00	)^e		—			—			—			—
Return of capital		—			(1.05	)		(0.85	)		(0.81	)		(0.60	)		(0.21	)

Total distributions		(1.38	)		(2.87	)		(2.86	)		(2.75	)		(2.48	)		(2.60	)

Net asset value, end of period	$	97.96		$	82.51		$	66.57		$	50.31		$	42.50		$	44.84

Total return		20.64	%^f		28.76	%		38.61	%		24.97	%		0.46	%		19.05	%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	2,733,076		$	2,033,906		$	1,298,080		$	724,446		$	267,732		$	89,684
Ratio of expenses to average net assets^g		0.35	%		0.35	%		0.35	%		0.35	%		0.35	%^h		0.35	%
Ratio of net investment income to average net assets^g		2.89	%		3.55	%		4.36	%^d		4.67	%^d		5.46	%^d,h		5.20	%^d
Portfolio turnover rateⁱ		6	%		18	%		28	%		15	%		13	%		15	%

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

^b	Based on average shares outstanding throughout each period.

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

^d	As restated. See Note 6.

^e	Rounds to less than $0.01.

^f	Not annualized.

^g	Annualized for periods of less than one year.

^h	Includes voluntary reimbursement from the investment adviser. If such reimbursement had not been made, the ratios of expenses to average net assets and net investment income to average net assets would have been 0.36% and 5.45%, respectively.

ⁱ	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.


92		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited)

iSHARES^® TRUST

iShares Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust was established as a Delaware statutory trust pursuant to an Agreement and Declaration of Trust dated December 16, 1999. As of October 31, 2006, the Trust offered 92 investment portfolios or funds.

These financial statements relate only to the iShares Dow Jones U.S. Basic Materials Sector, iShares Dow Jones U.S. Consumer Goods Sector, iShares Dow Jones U.S. Consumer Services Sector, iShares Dow Jones U.S. Financial Sector, iShares Dow Jones U.S. Industrial Sector, iShares Dow Jones U.S. Financial Services, iShares Dow Jones U.S. Real Estate, iShares KLD Select Social^SMand iShares Cohen & Steers Realty Majors 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 its underlying index. 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, except for the iShares KLD Select Social^SMIndex Fund, which is classified as a diversified fund. 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.

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

1.	*SIGNIFICANT ACCOUNTING POLICIES*

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

SECURITY VALUATION

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


NOTES TO THE FINANCIAL STATEMENTS		93

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

estimated by management. Such amounts are recorded as a reduction of the cost of investments or reclassified to capital gains. Realized gains and losses on investment transactions are determined using the specific identification method.

DISTRIBUTIONS TO SHAREHOLDERS

Distributions to shareholders from net investment income, if any, 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 cannot be automatically reinvested in additional shares of the Funds.

The tax character of current year distributions will be determined at the end of the current fiscal year.

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 six months ended October 31, 2006.

The Funds had tax basis net capital loss carryforwards as of April 30, 2006, the tax year-end of the Funds, as follows:


*iShares Index Fund*	Expiring 2009		Expiring 2010		Expiring 2011		Expiring 2012		Expiring 2013		Expiring 2014		*Total*
Dow Jones U.S. Basic Materials Sector	$	—	$	—	$	164,820	$	213,728	$	—	$	—	$	378,548
Dow Jones U.S. Consumer Goods Sector		12,169		410,794		786,981		439,017		331,603		6,571,402		8,551,966
Dow Jones U.S. Consumer Services Sector		—		214,348		640,467		434,021		590,495		2,292,509		4,171,840
Dow Jones U.S. Financial Sector		—		—		—		775,502		—		—		775,502
Dow Jones U.S. Industrial Sector		—		1,765,263		1,969,601		—		3,141,753		—		6,876,617
Dow Jones U.S. Financial Services		—		—		359,555		836,670		—		—		1,196,225
KLD Select Social^SM		—		—		—		—		—		228,408		228,408

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.

For the six months ended October 31, 2006, certain Funds realized net capital gains or losses resulting from in-kind redemptions of large blocks of shares or multiples thereof (“Creation Units”). Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gains or losses to paid-in-capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the six months ended October 31, 2006 are disclosed in the Funds’ Statements of Operations.


94		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

As of October 31, 2006, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:


*iShares Index Fund*	*Tax Cost*		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation (Depreciation)
Dow Jones U.S. Basic Materials Sector	$	445,963,221	$	47,135,850	$	(26,288,124	)	$	20,847,726
Dow Jones U.S. Consumer Goods Sector		336,151,631		31,729,537		(18,991,750	)		12,737,787
Dow Jones U.S. Consumer Services Sector		262,828,387		18,356,826		(21,645,525	)		(3,288,699	)
Dow Jones U.S. Financial Sector		503,485,679		60,830,404		(5,792,969	)		55,037,435
Dow Jones U.S. Industrial Sector		264,090,312		30,033,476		(5,998,902	)		24,034,574
Dow Jones U.S. Financial Services		444,907,559		30,073,192		(2,028,370	)		28,044,822
Dow Jones U.S. Real Estate		1,802,477,381		64,840,869		(8,141,102	)		56,699,767
KLD Select Social^SM		58,931,804		5,957,916		(831,358	)		5,126,558
Cohen & Steers Realty Majors		2,070,585,590		663,257,056		—			663,257,056

REPURCHASE AGREEMENTS

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

2.	*AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES*

Pursuant to an Investment Advisory Agreement with the Trust, 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 the Trust, 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 the average daily net assets of each Fund as follows:


*iShares Index Fund*	Investment Advisory Fee
Dow Jones U.S. Basic Materials Sector	0.48	%
Dow Jones U.S. Consumer Goods Sector	0.48
Dow Jones U.S. Consumer Services Sector	0.48
Dow Jones U.S. Financial Sector	0.48
Dow Jones U.S. Industrial Sector	0.48
Dow Jones U.S. Financial Services	0.48
Dow Jones U.S. Real Estate	0.48
KLD Select Social^SM	0.50
Cohen & Steers Realty Majors	0.35


NOTES TO THE FINANCIAL STATEMENTS		95

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^{^®}TRUST

Prior to May 1, 2006, BGFA was entitled to receive an annual investment advisory fee of 0.60% from each of the iShares Dow Jones U.S. Basic Materials Sector, iShares Dow Jones U.S. Consumer Goods Sector, iShares Dow Jones U.S. Consumer Services Sector, iShares Dow Jones U.S. Financial Sector, iShares Dow Jones U.S. Industrial Sector, iShares Dow Jones U.S. Financial Services and iShares Dow Jones U.S. Real Estate Index Funds.

Investors Bank & Trust Company (“Investors Bank”) serves as administrator, custodian and transfer agent for the Trust. 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 and expenses are Covered Expenses as defined above.

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

Pursuant to an exemptive order issued by the U.S. Securities and Exchange Commission (“SEC”), the Funds are permitted to lend portfolio securities to Barclays Capital Inc. (“BarCap”). Pursuant to the same exemptive order, Barclays Global Investors, N.A. (“BGI”) serves as securities lending agent for the Trust. 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 six months ended October 31, 2006, BGI earned securities lending agent fees as follows:


*iShares Index Fund*	*Securities Lending* *Agent Fees*
Dow Jones U.S. Basic Materials Sector	$	44,569
Dow Jones U.S. Consumer Goods Sector		31,822
Dow Jones U.S. Consumer Services Sector		10,225
Dow Jones U.S. Financial Sector		19,630
Dow Jones U.S. Industrial Sector		2,048
Dow Jones U.S. Financial Services		8,836
Dow Jones U.S. Real Estate		423,494
Cohen & Steers Realty Majors		645

Cross trades for the six months ended October 31, 2006, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter, for compliance with the requirements and restrictions set forth by Rule 17a-7.

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


96		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

The following table provides information about the direct investment by each Fund (exclusive of investments of securities lending collateral) in issuers of which BGFA is an affiliate, for the six months ended October 31, 2006.


*iShares Index Fund and Name of Affiliated Issuer*	*Number of* *Shares Held* *Beginning* *of Period* *(in 000s)*	*Gross* *Additions* *(in 000s)*	*Gross* *Reductions* *(in 000s)*	*Number of* Shares Held End of Period *(in 000s)*	*Value at End* *of Period*		*Interest* *Income*
Dow Jones U.S. Basic Materials Sector
IMMF	752	65,034	64,388	1,398	$	1,398,453	$	13,471
Dow Jones U.S. Consumer Goods Sector
IMMF	30	33,540	33,308	262		262,131		7,004
Dow Jones U.S. Consumer Services Sector
IMMF	476	24,163	24,177	462		462,445		4,994
Dow Jones U.S. Financial Sector
IMMF	378	59,267	58,992	653		653,126		12,296
Dow Jones U.S. Industrial Sector
IMMF	191	30,441	30,160	472		472,076		6,332
Dow Jones U.S. Financial Services
IMMF	111	42,995	42,437	669		668,923		9,091
Dow Jones U.S. Real Estate
IMMF	3,000	239,633	240,731	1,902		1,901,664		47,159
KLD Select Social^SM
IMMF	19	11,118	11,034	103		103,183		2,270
Cohen & Steers Realty Majors
IMMF	1,688	334,218	333,021	2,885		2,884,911		68,890

As of October 31, 2006, certain trustees and officers of the Trust are also officers of BGI and/or BGFA.


NOTES TO THE FINANCIAL STATEMENTS		97

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

3.	*INVESTMENT PORTFOLIO TRANSACTIONS*

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended October 31, 2006 were as follows:


*iShares Index Fund*	*Purchases*		*Sales*
Dow Jones U.S. Basic Materials Sector	$	19,629,888	$	16,405,606
Dow Jones U.S. Consumer Goods Sector		8,730,117		9,023,833
Dow Jones U.S. Consumer Services Sector		10,969,145		10,180,098
Dow Jones U.S. Financial Sector		13,673,254		13,578,881
Dow Jones U.S. Industrial Sector		9,328,340		9,573,780
Dow Jones U.S. Financial Services		12,863,052		12,422,571
Dow Jones U.S. Real Estate		101,635,144		98,133,903
KLD Select Social^SM		27,504,821		28,010,533
Cohen & Steers Realty Majors		162,689,221		129,230,881

In-kind transactions (see Note 4) for the six months ended October 31, 2006 were as follows:


*iShares Index Fund*	*In-kind Purchases*		*In-kind Sales*
Dow Jones U.S. Basic Materials Sector	$	93,316,138	$	120,643,575
Dow Jones U.S. Consumer Goods Sector		30,989,043		54,821,984
Dow Jones U.S. Consumer Services Sector		74,906,417		89,057,444
Dow Jones U.S. Financial Sector		137,330,944		–
Dow Jones U.S. Industrial Sector		47,500,358		38,574,429
Dow Jones U.S. Financial Services		322,445,056		87,488,735
Dow Jones U.S. Real Estate		5,127,224,178		4,754,618,374
KLD Select Social^SM		13,419,680		81,432,383
Cohen & Steers Realty Majors		455,338,714		203,482,171

4.	*CAPITAL SHARE TRANSACTIONS*

As of October 31, 2006, there were an unlimited number of no par value capital shares of beneficial interest authorized by the Trust. Capital shares are issued and redeemed by each Fund only in Creation Units or multiples thereof. 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 securities involved in the relevant Fund’s underlying index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee directly to Investors Bank, the administrator, to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.


98		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

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 October 31, 2006, 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 or non-U.S. Government debt securities. The market value of the securities on loan as of October31, 2006 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6.	*RESTATEMENT*

In preparing the 2006 financial statements of the iShares Dow Jones U.S. Real Estate Index Fund and iShares Cohen & Steers Realty Majors Index Fund, management determined that it had misclassified returns of capital on distributions received from REIT securities held in the fund portfolio in prior years by recording them as income rather than as an adjustment to the cost of the security. This misclassification had no impact on amounts previously reported for net asset value, distributions paid, total return, portfolio turn overrate, security valuation, or net change in net assets from operations. These financial statements have been restated to correct for the classification of amounts reported for the net investment income per share, net realized and unrealized gain (loss) on investments per share and the ratio of net investment income to average net assets for the years ended prior to April 30, 2006 in the Financial Highlights.

The amounts before and after the restatement for the iShares Dow Jones U.S. Real Estate Index Fund and iShares Cohen & Steers Realty Majors Index Fund are shown in the tables below:


*Financial Highlights*	Year Ended	As originally reported			*Restated*			As originally reported			*Restated*
Net investment income per share	2005	$	2.57		$	2.56		$	2.91		$	2.67
	2004		2.49			2.25			2.63			2.42
	2003		2.52			2.13			2.30			2.26
	2002		2.28			2.15			2.40			2.22
Net realized and unrealized gain (loss) per share	2005		12.84			12.85			16.21			16.45
	2004		6.92			7.16			7.93			8.14
	2003		(3.00	)		(2.61	)		(2.16	)		(2.12	)
	2002		4.35			4.48			4.99			5.17
Ratio of net investment income to average net assets	2005		5.35	%		4.56	%		4.97	%		4.36	%
	2004		5.58	%		4.68	%		5.28	%		4.67	%
	2003		6.40	%		5.42	%		6.17	%		5.46	%
	2002		5.97	%		5.32	%		5.80	%		5.20	%


NOTES TO THE FINANCIAL STATEMENTS		99

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

7.	RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Trust is currently evaluating the impact of applying the various provisions of FIN 48.


100		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contract (Unaudited)

iSHARES^® TRUST

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees (the “Board”), including a majority of Trustees who are not interested persons of the Trust (as that term is defined in the 1940 Act) (the “Independent Trustees”), is required annually to consider the Investment Advisory Contract between the Trust and BGFA (the “Advisory Contract”) on behalf of the Funds. As required by Section 15(c), the Board requested and BGFA provided such information as the Board deemed reasonably necessary to evaluate the terms of the Advisory Contract. At a meeting held on June 14-15, 2006, the Board approved the selection of BGFA and the continuance of the Advisory Contract, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contract for the Funds, the Board, including the Independent Trustees, advised by their independent counsel, considered the following factors, none of which was controlling, and made the following conclusions:

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

The Board determined that there would be no diminution in the scope of services required of BGFA under the Advisory Contract for the coming year as compared to the scope of services provided by BGFA over the past year. In reviewing the scope of these services, the Board considered BGFA’s investment philosophy and experience, noting that BGFA and its affiliates have committed significant resources over time, including over the past year, 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 reports to the Board about portfolio management and compliance matters on a periodic basis in connection with regularly scheduled meetings of the Board, and has made appropriate officers available as needed to provide further assistance with these matters. The Board also reviewed the background and experience of the persons responsible for the day-to-day management of the Funds. In addition to the above considerations, the Board 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 respective 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 Contract were appropriate and mitigated in favor of the Board’s approval of the Advisory Contract for the coming year.

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other registered funds objectively selected solely by Lipper as comprising each Fund’s applicable peer group (the “Lipper Peer Group”). The Board also reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three- and five-year, and “last quarter” periods ended March 31, 2006, 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 few, if any, exchange traded funds or index funds that track indices similar to those tracked by the Funds, the Lipper Peer Groups included mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper 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 of the Funds may have underperformed or out performed 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


BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT		101

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

iSHARES^® TRUST

Peer Groups. Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Peer Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.

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

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

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board noted that the Advisory Contract did not provide for any breakpoints in the Funds’ investment advisory fee rates as the assets of the Funds increase. However, the Board further noted that possible future economies of scale for the Funds 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 its recent consideration and approval of the reduction in the investment advisory fee rates for certain of the iShares Dow Jones series sector Funds at its meeting held on March 9, 2006. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had made a significant investment in the iShares funds and had incurred operating losses during earlier years when the iShares funds, including the Funds, had not yet reached scale. In light of this history, the Board determined that further reductions in fee rates or additions of breakpoints were not warranted at this juncture for the Funds. 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 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 considered the Funds’ annual investment advisory fee rates under the Advisory Contract in comparison to the investment advisory/management fee rates for other funds/accounts for which BGFA (or its affiliate, BGI) provides investment advisory/management services, including other funds registered under the 1940 Act, collective funds and separate accounts (together, the “Other Accounts”). The Board noted that comparative investment advisory/management fee information was not available, as BGFA and its affiliates do not manage any Other Accounts with substantially similar investment objectives and strategies as the Funds. However, the Board noted that BGFA provided the Board with general information regarding how the level of services provided to the Other Accounts differed from the level of services provided to the Funds. Based on this review, the Board determined that the investment advisory fee rates under the Advisory Contract do not constitute fees that are so disproportionately large as to bear no reasonable relationship to the services rendered and that could not have been the product of arm’s-length bargaining, and concluded that the investment advisory fee rates under the Advisory Contract are fair and reasonable.


102		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

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

iSHARES^® TRUST

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

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

Based on this analysis, the Board determined that the Advisory Contract, including the investment advisory fee rates 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 approve the Advisory Contract for the coming year.


BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT		103

Notes:


104		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes:


NOTES		105

The iShares^® Family of Funds

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

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares 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 Domestic Subsector Index Funds

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

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

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

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

iShares Dow Jones U.S. Insurance (IAK)

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

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

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

iShares Dow Jones U.S. Pharmaceuticals (IHE)

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

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Industrials Sector (EXI)

iShares S&P Global Materials Sector (MXI)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Specialty Index Funds

iShares KLD Select Social^SM(KLD)

iShares KLD 400 Social (DSI)

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, iBoxx, KLD Research & Analytics, Inc., Morgan Stanley Capital International, Morningstar, Inc., The Nasdaq Stock Market, Inc., New York Stock Exchange LLC, Frank Russell Company, or Standard & Poor’s. None of these companies make any representation regarding the advisability of investing in the iShares Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above. iBoxx is a registered trademark of International Index Company Limited. “Goldman Sachs^®” is a trademark 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 2006 Semi-Annual Report.

3710-iS-1106


106		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

LOGO

Table of Contents


Fund Performance Overviews		1
Shareholder Expenses		11
Schedules of Investments		13
iShares Dow Jones U.S. Aerospace & Defense Index Fund		13
iShares Dow Jones U.S. Broker-Dealers Index Fund		19
iShares Dow Jones U.S. Healthcare Providers Index Fund		25
iShares Dow Jones U.S. Home Construction Index Fund		31
iShares Dow Jones U.S. Insurance Index Fund		37
iShares Dow Jones U.S. Medical Devices Index Fund		39
iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund		40
iShares Dow Jones U.S. Oil Equipment & Services Index Fund		46
iShares Dow Jones U.S. Pharmaceuticals Index Fund		47
iShares Dow Jones U.S. Regional Banks Index Fund		48
Financial Statements		50
Financial Highlights		58
Notes to the Financial Statements		68
Board Review and Approval of Investment Advisory Contracts		75
iShares Family of Funds		78

Fund Performance Overview

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Aerospace & Defense Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Aerospace & Defense Index (the “Index”). The Index measures the performance of the aerospace and defense sector of the U.S. equity market. Aerospace companies include manufacturers, assemblers and distributors of aircraft and aircraft parts. Defense companies include producers of components and equipment for the defense industry, such as military aircraft, radar equipment, and weapons. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund returned 0.30%, while the Index returned 0.56%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
0.30%	0.24%	0.56%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Aerospace & Defense	86.01	%
Electronics	5.06
Metal Fabricate & Hardware	4.79
Manufacturing	2.52
Software	1.39
Short-Term and Other Net Assets	0.23

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
United Technologies Corp.	9.70	%
Boeing Co. (The)	9.35
Lockheed Martin Corp.	7.19
General Dynamics Corp.	6.44
Raytheon Co.	6.33
Northrop Grumman Corp.	5.93
Precision Castparts Corp.	4.79
Rockwell Collins Inc.	4.69
L-3 Communications Holdings Inc.	4.66
Goodrich Corp.	3.70

TOTAL	62.78	%


FUND PERFORMANCE OVERVIEWS		1

Fund Performance Overview

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Broker-Dealers Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Investment Services Index (the “Index”). The Index measures the performance of the investment services sector of the U.S. equity market, and includes companies providing a range of specialized financial services, including securities brokers and dealers, online brokers and securities or commodities exchanges. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund returned 7.75%, while the Index returned 7.92%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
7.75%	7.73%	7.92%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Diversified Financial Services	99.84	%
Short-Term and Other Net Assets	0.16

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Merrill Lynch & Co. Inc.	9.02	%
Goldman Sachs Group Inc. (The)	8.67
Morgan Stanley	8.46
Lehman Brothers Holdings Inc.	6.98
Schwab (Charles) Corp. (The)	5.31
Bear Stearns Companies Inc. (The)	5.21
Chicago Mercantile Exchange Holdings Inc.	4.98
Ameriprise Financial Inc.	4.44
Legg Mason Inc.	4.01
E*TRADE Financial Corp.	3.94

TOTAL	61.02	%


2		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Healthcare Providers Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Health Care Providers Index (the “Index”). The Index measures the performance of the healthcare provider sub-sector of the U.S. equity market, and includes companies that are health care providers, such as owners and operators of health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes, and rehabilitation and retirement centers. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund returned 2.64%, while the Index returned 2.93%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
2.64%	2.64%	2.93%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Health Care - Services	76.70	%
Pharmaceuticals	13.55
Insurance	4.19
Commercial Services	3.75
Software	0.54
Internet	0.26
Health Care - Products	0.24
Short-Term and Other Net Assets	0.77

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
UnitedHealth Group Inc.	13.39	%
WellPoint Inc.	10.59
Aetna Inc.	6.38
Caremark Rx Inc.	5.88
HCA Inc.	5.71
Medco Health Solutions Inc.	4.63
CIGNA Corp.	4.19
Humana Inc.	3.34
Laboratory Corp. of America Holdings	3.08
Coventry Health Care Inc.	2.72

TOTAL	59.91	%


FUND PERFORMANCE OVERVIEWS		3

Fund Performance Overview

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Home Construction Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Home Construction Index (the “Index”). The Index measures the performance of the home construction sector of the U.S. equity market, and includes companies that are constructors of residential homes, including manufacturers of mobile and prefabricated homes. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund declined 21.27%, while the Index declined 21.02%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
(21.27)%	(21.27)%	(21.02)%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Home Builders	100.23	%
Short-Term and Other Net Assets	(0.23	)

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Lennar Corp. Class A	5.97	%
Centex Corp.	5.71
Pulte Homes Inc.	5.68
Horton (D.R.) Inc.	5.60
Champion Enterprises Inc.	5.56
Toll Brothers Inc.	5.44
KB Home	5.38
M.D.C. Holdings Inc.	5.25
Beazer Homes USA Inc.	5.16
Hovnanian Enterprises Inc. Class A	4.82

TOTAL	54.57	%


4		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES U.S. INSURANCE INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Insurance Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Insurance Index (the “Index”). The Index measures the performance of the insurance sector of the U.S. equity market, and includes companies in the following sub-sectors: full line insurance, insurance brokers, property and casualty insurance, reinsurance, and life insurance. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund returned 4.29%, while the Index returned 4.54%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
4.29%	4.19%	4.54%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAVof the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Insurance	99.66	%
Energy - Alternate Sources	0.28
Short-Term and Other Net Assets	0.06

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
American International Group Inc.	24.05	%
Allstate Corp. (The)	6.17
Prudential Financial Inc.	5.89
St. Paul Travelers Companies Inc.	5.56
Hartford Financial Services Group Inc. (The)	4.17
MetLife Inc.	4.15
AFLAC Inc.	3.55
Chubb Corp.	3.46
ACE Ltd.	2.92
Loews Corp.	2.85

TOTAL	62.77	%


FUND PERFORMANCE OVERVIEWS		5

Fund Performance Overview

iSHARES^® DOW JONES U.S. MEDICAL DEVICES INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Medical Devices Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Medical Equipment Index (the “Index”). The Index measures the performance of the medical equipment sector of the U.S. equity market, and includes medical equipment companies such as manufacturers and distributors of medical devices such as magnetic resonance imaging (MRI) scanners, prosthetics, pacemakers, X-ray machines, and other non-disposable medical devices. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund declined 1.41%, while the Index declined 1.18%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
(1.41)%	(1.46)%	(1.18)%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Health Care - Products	82.60	%
Electronics	12.55
Biotechnology	3.88
Electrical Components & Equipment	0.95
Short-Term and Other Net Assets	0.02

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Medtronic Inc.	16.88	%
Boston Scientific Corp.	8.52
Zimmer Holdings Inc.	7.52
Stryker Corp.	6.43
St. Jude Medical Inc.	5.40
Biomet Inc.	4.46
Varian Medical Systems Inc.	3.77
Applera Corp. - Applied Biosystems Group	3.72
Thermo Electron Corp.	3.65
Waters Corp.	3.02

TOTAL	63.37	%


6		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Oil Exploration & Production Index (the “Index”). The Index measures the performance of the oil exploration and production sub-sector of the U.S. equity market, and includes companies that are engaged in the exploration for and extraction, production, refining, and supply of oil and gas products. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund declined 5.81%, while the Index declined 5.54%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
(5.81)%	(5.91)%	(5.54)%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Oil & Gas	98.70	%
Electric	1.12
Short-Term and Other Net Assets	0.18

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Occidental Petroleum Corp.	11.16	%
Valero Energy Corp.	9.32
Devon Energy Corp.	8.24
Anadarko Petroleum Corp.	6.48
Apache Corp.	6.48
XTO Energy Inc.	5.49
EOG Resources Inc.	4.87
Chesapeake Energy Corp.	4.36
Noble Energy Inc.	3.06
Southwestern Energy Co.	2.31

TOTAL	61.77	%


FUND PERFORMANCE OVERVIEWS		7

Fund Performance Overview

iSHARES^® DOW JONES U.S. OIL EQUIPMENT & SERVICES INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Oil Equipment & Services Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Oil Equipment & Services Index (the “Index”). The Index measures the performance of the oil equipment and services sector of the U.S. equity market, and includes companies that are suppliers of equipment or services to oil fields and offshore platforms, such as drilling, exploration, engineering, logistics, seismic information services and platform construction. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund declined 14.25%, while the Index declined 14.06%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
(14.25)%	(14.27)%	(14.06)%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAVof the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Oil & Gas Services	69.94	%
Oil & Gas	29.46
Transportation	0.49
Holding Companies - Diversified	0.13
Short-Term and Other Net Assets	(0.02	)

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Schlumberger Ltd.	21.94	%
Halliburton Co.	10.23
Transocean Inc.	7.15
Baker Hughes Inc.	7.12
Weatherford International Ltd.	4.56
GlobalSantaFe Corp.	3.99
National Oilwell Varco Inc.	3.37
Noble Corp.	3.12
Nabors Industries Ltd.	3.00
BJ Services Co.	2.93

TOTAL	67.41	%


8		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES U.S. PHARMACEUTICALS INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Pharmaceuticals Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Pharmaceuticals Index (the “Index”). The Index measures the performance of the pharmaceuticals sector of the U.S. equity market, and includes pharmaceutical companies such as manufacturers of prescription or over-the-counter drugs or vaccines, but excludes producers of vitamins. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund returned 7.45%, while the Index returned 7.74%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
7.45%	7.43%	7.74%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

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 (5/5/06), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Pharmaceuticals	90.63	%
Health Care - Products	8.34
Household Products & Wares	0.91
Short-Term and Other Net Assets	0.12

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Johnson & Johnson	8.34	%
Pfizer Inc.	7.72
Merck & Co. Inc.	6.84
Wyeth	5.63
Abbott Laboratories	5.60
Lilly (Eli) & Co.	5.14
Bristol-Myers Squibb Co.	4.86
Schering-Plough Corp.	4.34
Allergan Inc.	3.46
Forest Laboratories Inc.	3.24

TOTAL	55.17	%


FUND PERFORMANCE OVERVIEWS		9

Fund Performance Overview

iSHARES^® DOW JONES U.S. REGIONAL BANKS INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Regional Banks Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Regional Banks Index (the “Index”). The Index measures the performance of the regional bank sub-sector of the U.S. equity market, and is a subset of the Dow Jones U.S. Bank Index. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the period from May 1, 2006 (inception date of the Fund) through October 31, 2006, the Fund returned 2.99%, while the Index returned 3.29%.


Cumulative Total Returns
*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*
2.99%	2.97%	3.29%

“Cumulative total returns” represent the total change in value of an investment over the period indicated, and are calculated from an inception date of 5/1/06.

An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, an index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The returns shown in the table 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.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Banks	83.36	%
Savings & Loans	15.28
Diversified Financial Services	0.97
Internet	0.07
Short-Term and Other Net Assets	0.32

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
U.S. Bancorp	11.69	%
Washington Mutual Inc.	7.89
SunTrust Banks Inc.	5.53
Bank of New York Co. Inc. (The)	5.13
BB&T Corp.	4.56
National City Corp.	4.16
PNC Financial Services Group	4.01
Fifth Third Bancorp	3.68
Regions Financial Corp.	3.36
KeyCorp	2.96

TOTAL	52.97	%


10		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited)

iSHARES^® TRUST

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2006 to October 31, 2006.

ACTUAL EXPENSES

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period ^a(5/1/06 to 10/31/06)
Dow Jones U.S. Aerospace & Defense
Actual	$	1,000.00	$	1,003.00	0.48	%	$	2.41
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Broker-Dealers
Actual		1,000.00		1,077.50	0.48			2.50
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Healthcare Providers
Actual		1,000.00		1,026.40	0.48			2.44
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Home Construction
Actual		1,000.00		787.30	0.48			2.15
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43


SHAREHOLDER EXPENSES		11

Shareholder Expenses (Unaudited) (Continued)

iSHARES^® TRUST


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period ^a (5/1/06 to 10/31/06)
Dow Jones U.S. Insurance
Actual	$	1,000.00	$	1,042.90	0.48	%	$	2.46
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Medical Devices
Actual		1,000.00		985.90	0.48			2.39
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Oil & Gas Exploration & Production
Actual		1,000.00		941.90	0.48			2.34
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Oil Equipment & Services
Actual		1,000.00		857.50	0.48			2.24
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Pharmaceuticals
Actual		1,000.00		1,074.50	0.48			2.50
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43
Dow Jones U.S. Regional Banks
Actual		1,000.00		1,029.90	0.48			2.44
Hypothetical (5% return before expenses)		1,000.00		1,022.66	0.48			2.43

Expenses for the Funds, which commenced operations on May 1, 2006, 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 (183 days) and divided by the number of days in the year (365 days).


12		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
COMMON STOCKS – 99.77%
AEROSPACE & DEFENSE – 86.01%
AAR Corp.¹		57,705	$	1,502,638
Alliant Techsystems Inc.¹		28,389		2,191,915
Armor Holdings Inc.¹		36,061		1,855,699
BE Aerospace Inc.¹		83,342		2,106,886
Boeing Co. (The)		103,712		8,282,440
Curtiss-Wright Corp.		53,120		1,797,581
DRS Technologies Inc.		44,402		1,963,456
EDO Corp.		42,559		1,017,586
Esterline Technologies Corp.¹		41,030		1,546,831
GenCorp Inc.¹		86,918		1,138,626
General Dynamics Corp.		80,301		5,709,401
Goodrich Corp.		74,306		3,276,151
HEICO Corp. Class A		40,380		1,210,996
L-3 Communications Holdings Inc.		51,286		4,129,549
Lockheed Martin Corp.		73,338		6,375,272
Moog Inc. Class A¹		48,679		1,815,727
Northrop Grumman Corp.		79,174		5,256,362
Orbital Sciences Corp.¹		80,770		1,466,783
Raytheon Co.		112,287		5,608,736
Rockwell Collins Inc.		71,532		4,154,579
Sequa Corp. Class A¹		11,824		1,254,645
Teledyne Technologies Inc.¹		40,423		1,686,448
Triumph Group Inc.		28,865		1,389,850
United Industrial Corp.		19,539		879,450
United Technologies Corp.		130,822		8,597,622

				76,215,229
ELECTRONICS – 5.06%
Cubic Corp.		42,539		889,490
FLIR Systems Inc.¹		72,869		2,327,436
Taser International Inc.^1,2		135,701		1,263,376

				4,480,302
MANUFACTURING – 2.52%
Ceradyne Inc.^1,2		35,287		1,455,589
Hexcel Corp.¹		48,182		780,067

				2,235,656
METAL FABRICATE & HARDWARE – 4.79%
Precision Castparts Corp.		62,374		4,245,174

				4,245,174

*Security*	Shares or Principal		*Value*
SOFTWARE – 1.39%
ManTech International Corp. Class A¹		36,075	$	1,228,714

				1,228,714

TOTAL COMMON STOCKS (Cost: $86,293,604)				88,405,075
SHORT-TERM INVESTMENTS – 2.12%
CERTIFICATES OF DEPOSIT³ – 0.08%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	10,210		10,210
Societe Generale
5.33%, 12/08/06		14,586		14,586
Washington Mutual Bank
5.36%, 11/13/06		36,465		36,465
Wells Fargo Bank N.A.
4.78%, 12/05/06		11,669		11,669

				72,930
COMMERCIAL PAPER³– 0.37%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		21,775		21,388
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		21,879		21,879
ASAP Funding Ltd.
5.29%, 11/02/06⁴		3,646		3,646
Atlantis One Funding
5.30%, 11/14/06⁴		20,013		19,975
Beta Finance Inc.
5.27%, 01/25/07⁴		2,917		2,881
Bryant Park Funding LLC
5.28%, 12/14/06⁴		4,605		4,576
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		7,394		7,380
Cantabric Finance LLC
5.26%, 01/25/07⁴		5,834		5,762
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		16,774		16,749


SCHEDULES OF INVESTMENTS		13

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴	$	10,939	$	10,669
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		8,751		8,720
Curzon Funding LLC
5.29%, 11/17/06⁴		14,586		14,552
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		16,805		16,602
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		14,586		14,575
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		13,273		13,079
Galleon Capital Corp.
5.27%, 12/18/06⁴		2,039		2,025
General Electric Capital Services Inc.
5.22%, 12/11/06		1,459		1,450
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		8,606		8,437
HBOS Treasury Services PLC
5.27%, 12/15/06		2,917		2,898
Landale Funding LLC
5.31%, 11/15/06⁴		11,377		11,353
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		26,199		26,181
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		9,408		9,388
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		18,962		18,602
Nestle Capital Corp.
5.19%, 08/09/07		8,751		8,397
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		23,044		23,043
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		7,771		7,681

*Security*	Shares or Principal		*Value*
Sedna Finance Inc.
5.22%, 04/17/07⁴	$	8,314	$	8,113
Sydney Capital Corp.
5.27%, 12/08/06⁴		348		346
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		7,293		7,211
Tulip Funding Corp.
5.29%, 11/15/06⁴		7,693		7,677

				325,235
MEDIUM-TERM NOTES³ – 0.07%
Bank of America N.A.
5.28%, 04/20/07		3,646		3,646
Cullinan Finance Corp.
5.71%, 06/28/07⁴		10,939		10,939
K2 USA LLC
5.39%, 06/04/07⁴		10,939		10,939
Marshall & Ilsley Bank
5.18%, 12/15/06		14,586		14,592
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		17,065		17,065
US Bank N.A.
2.85%, 11/15/06		2,917		2,915

				60,096
MONEY MARKET FUNDS – 0.09%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		77,864		77,864

				77,864
REPURCHASE AGREEMENTS³ – 0.40%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $29,176 (collateralized by non-U.S. Government debt securities, value $30,057, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	29,172		29,172


14		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $20,423 (collateralized by U.S. Government obligations, value $20,835, 5.50%, 10/1/21 to 10/1/36).	$	20,420	$	20,420
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $21,882 (collateralized by non-U.S. Government debt securities, value $24,075, 0.31% to 6.00%, 7/25/36 to 11/25/46).		21,879		21,879
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,459 (collateralized by non-U.S. Government debt securities, value $1,503, 6.00% to 6.70%, 12/15/10 to 4/15/12).		1,459		1,459
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $51,058 (collateralized by non-U.S. Government debt securities, value $53,620, 4.11% to 9.32%, 4/15/10 to 5/15/36).		51,051		51,051
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $16,046 (collateralized by non-U.S. Government debt securities, value $17,980, 0.00% to 10.00%, 5/27/33 to 10/31/36).		16,044		16,044
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $8,752 (collateralized by non-U.S. Government debt securities, value $9,682, 0.00% to 10.00%, 5/27/33 to 10/31/36).		8,751		8,751
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $29,176 (collateralized by non-U.S. Government debt securities, value $30,640, 0.00% to 9.00%, 5/1/17 to 9/25/46).		29,172		29,172
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $25,529 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $26,173, 0.00% to 7.32%, 11/2/06 to 3/25/45).		25,525		25,525
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $21,882 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $22,296, 0.00% to 7.32%, 11/2/06 to 3/25/45).		21,879		21,879
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $8,752 (collateralized by non-U.S. Government debt securities, value $9,192, 0.00% to 10.00%, 1/1/10).		8,751		8,751


SCHEDULES OF INVESTMENTS		15

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $7,294 (collateralized by non-U.S. Government debt securities, value $7,661, 5.26% to 5.35%, 7/1/24 to 6/1/46).	$	7,293	$	7,293
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $3,647 (collateralized by non-U.S. Government debt securities, value $3,831, 6.25% to 7.63%, 9/15/13 to 6/1/16).		3,646		3,646
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $29,176 (collateralized by non-U.S. Government debt securities, value $30,057, 3.50% to 10.13%, 5/15/07 to 7/1/26).		29,172		29,172
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $14,588 (collateralized by non-U.S. Government debt securities, value $16,079, 5.50% to 10.39%, 6/17/08 to 6/25/36).		14,586		14,586
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $19,694 (collateralized by non-U.S. Government debt securities, value $20,832, 0.00% to 10.00%, 11/1/06 to 10/31/36).		19,691		19,691
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $10,548 (collateralized by non-U.S. Government debt securities, value $10,953, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		10,210		10,210
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $37,929 (collateralized by non-U.S. Government debt securities, value $39,832, 3.86% to 8.17%, 11/18/08 to 7/15/45).		37,923		37,923

				356,624
TIME DEPOSITS³ – 0.00%
SunTrust Bank
5.34%, 11/01/06		1,507		1,507

				1,507
VARIABLE & FLOATING RATE NOTES³ – 1.11%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		37,340		37,344
American Express Bank
5.29%, 02/28/07		14,586		14,586
American Express Centurion Bank
5.41%, 07/19/07		16,044		16,058
American Express Credit Corp.
5.42%, 07/05/07		4,376		4,378
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		2,632		2,632
ASIF Global Financing
5.51%, 05/03/07⁴		1,459		1,459
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		9,481		9,481
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		21,149		21,150
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		37,194		37,195
BMW US Capital LLC
5.32%, 10/15/07⁴		14,586		14,586
BNP Paribas
5.36%, 05/18/07⁴		26,984		26,984
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		10,648		10,648


16		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
CC USA Inc.
5.37%, 07/30/07⁴	$	7,293	$	7,294
Commodore CDO Ltd.
5.47%, 06/12/07⁴		3,646		3,646
Credit Agricole SA
5.34%, 07/23/07		14,586		14,586
Credit Suisse First Boston NY
5.38%, 04/24/07		7,293		7,293
Cullinan Finance Corp.
5.36%, 04/25/07⁴		3,646		3,646
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		3,646		3,646
DEPFA Bank PLC
5.43%, 09/14/07		14,586		14,586
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		16,774		16,774
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		14,586		14,586
Fifth Third Bancorp
5.30%, 11/23/07⁴		29,172		29,172
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		14,586		14,585
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		15,315		15,318
Granite Master Issuer PLC
5.29%, 08/20/07⁴		51,050		51,050
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		11,669		11,670
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		21,879		21,882
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		14,586		14,586
Holmes Financing PLC
5.29%, 07/16/07⁴		25,525		25,525
JP Morgan Chase & Co.
5.29%, 08/02/07		10,939		10,939
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		10,939		10,939
Kestrel Funding LLC
5.30%, 07/11/07⁴		5,834		5,834
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		8,751		8,751
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		15,202		15,202
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		16,044		16,043
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		5,776		5,776
Marshall & Ilsley Bank
5.30%, 10/15/07		8,022		8,022
Master Funding LLC
5.35%, 04/25/07⁴		13,127		13,127
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		21,879		21,879
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		1,459		1,459
Monumental Global Funding II
5.38%, 12/27/06⁴		2,917		2,917
Mound Financing PLC
5.29%, 05/08/07⁴		13,711		13,711
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		52,509		52,508
National City Bank of Indiana
5.37%, 05/21/07		7,293		7,293
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		48,133		48,143
Newcastle Ltd.
5.34%, 04/24/07⁴		5,142		5,141
Northern Rock PLC
5.36%, 08/03/07⁴		17,503		17,503
Northlake CDO I
5.46%, 09/06/07⁴		4,376		4,376


SCHEDULES OF INVESTMENTS		17

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. AEROSPACE & DEFENSE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Principal Life Global Funding I
5.82%, 02/08/07	$	6,564	$	6,572
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		21,149		21,149
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		14,586		14,586
Strips III LLC
5.37%, 07/24/07⁴		3,353		3,353
SunTrust Bank
5.29%, 05/01/07		14,586		14,586
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		35,589		35,588
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		20,420		20,420
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		19,546		19,546
Wachovia Bank N.A.
5.36%, 05/22/07		29,172		29,172
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		10,939		10,945
Wells Fargo & Co.
5.33%, 11/15/07⁴		7,293		7,293
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		10,939		10,940
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		43,757		43,750
Wind Master Trust
5.31%, 07/25/07⁴		5,834		5,834

				979,643

TOTAL SHORT-TERM INVESTMENTS (Cost: $1,873,899)				1,873,899

TOTAL INVESTMENTS IN SECURITIES – 101.89% (Cost: $88,167,503)				90,278,974
Other Assets, Less Liabilities – (1.89)%				(1,672,220	)

NET ASSETS – 100.00%			$	88,606,754

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


18		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
COMMON STOCKS – 99.84%
DIVERSIFIED FINANCIAL SERVICES – 99.84%
Ameriprise Financial Inc.		96,540	$	4,971,809
Bear Stearns Companies Inc. (The)		38,565		5,836,813
CBOT Holdings Inc. Class A¹		22,332		3,314,069
Chicago Mercantile Exchange Holdings Inc.		11,128		5,575,128
E*TRADE Financial Corp.¹		189,657		4,415,215
Edwards (A.G.) Inc.		61,372		3,501,273
GFI Group Inc.¹		34,286		1,977,274
Goldman Sachs Group Inc. (The)		51,198		9,716,868
IntercontinentalExchange Inc.¹		46,495		3,925,108
International Securities Exchange Holdings Inc.		52,991		2,721,088
Investment Technology Group Inc.¹		55,595		2,596,286
Jefferies Group Inc.		108,215		3,109,017
Knight Capital Group Inc. Class A¹		137,511		2,564,580
LaBranche & Co. Inc.^1,2		36,065		319,897
Legg Mason Inc.		49,880		4,490,198
Lehman Brothers Holdings Inc.		100,449		7,818,950
Merrill Lynch & Co. Inc.		115,580		10,104,004
Morgan Stanley		124,001		9,477,396
Nasdaq Stock Market Inc. (The)¹		99,330		3,549,061
NYSE Group Inc.^1,2		49,204		3,640,604
optionsXpress Holdings Inc.		63,594		1,976,501
Piper Jaffray Companies¹		34,611		2,393,351
Raymond James Financial Inc.		97,226		3,097,620
Schwab (Charles) Corp. (The)		326,768		5,953,713
TD Ameritrade Holding Corp.		192,335		3,167,757
TradeStation Group Inc.¹		104,718		1,638,837

				111,852,417

TOTAL COMMON STOCKS (Cost: $103,540,450)				111,852,417
SHORT-TERM INVESTMENTS – 2.78%
CERTIFICATES OF DEPOSIT³ – 0.11%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	16,728		16,728
Societe Generale
5.33%, 12/08/06		23,897		23,897

*Security*	*Principal*		*Value*
Washington Mutual Bank
5.36%, 11/13/06	$	59,742	$	59,742
Wells Fargo Bank N.A.
4.78%, 12/05/06		19,118		19,118

				119,485
COMMERCIAL PAPER³ – 0.47%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		35,675		35,046
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		35,845		35,845
ASAP Funding Ltd.
5.29%, 11/02/06⁴		5,974		5,973
Atlantis One Funding
5.30%, 11/14/06⁴		32,789		32,726
Beta Finance Inc.
5.27%, 01/25/07⁴		4,779		4,720
Bryant Park Funding LLC
5.28%, 12/14/06⁴		7,544		7,497
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		12,114		12,091
Cantabric Finance LLC
5.26%, 01/25/07⁴		9,559		9,440
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		27,481		27,441
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		17,923		17,481
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		14,338		14,287
Curzon Funding LLC
5.29%, 11/17/06⁴		23,897		23,841
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		27,533		27,200
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		23,897		23,879
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		21,746		21,429


SCHEDULES OF INVESTMENTS		19

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Galleon Capital Corp.
5.27%, 12/18/06⁴	$	3,341	$	3,318
General Electric Capital Services Inc.
5.22%, 12/11/06		2,390		2,376
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		14,099		13,821
HBOS Treasury Services PLC
5.27%, 12/15/06		4,779		4,749
Landale Funding LLC
5.31%, 11/15/06⁴		18,640		18,601
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		42,924		42,895
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		15,414		15,382
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		31,066		30,477
Nestle Capital Corp.
5.19%, 08/09/07		14,338		13,757
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		37,754		37,754
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		12,732		12,584
Sedna Finance Inc.
5.22%, 04/17/07⁴		13,621		13,291
Sydney Capital Corp.
5.27%, 12/08/06⁴		570		567
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		11,948		11,814
Tulip Funding Corp.
5.29%, 11/15/06⁴		12,604		12,578

				532,860
MEDIUM-TERM NOTES³ – 0.09%
Bank of America N.A.
5.28%, 04/20/07		5,974		5,974
Cullinan Finance Corp.
5.71%, 06/28/07⁴		17,923		17,923
K2 USA LLC
5.39%, 06/04/07⁴		17,923		17,923
Marshall & Ilsley Bank
5.18%, 12/15/06		23,897		23,907
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		27,959		27,959
US Bank N.A.
2.85%, 11/15/06		4,779		4,776

				98,462
MONEY MARKET FUNDS – 0.16%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		176,931		176,931

				176,931
REPURCHASE AGREEMENTS³ – 0.52%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $47,801 (collateralized by non-U.S. Government debt securities, value $49,244, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	47,794		47,794
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $33,461 (collateralized by U.S. Government obligations, value $34,136, 5.50%, 10/1/21 to 10/1/36).		33,456		33,456
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $35,850 (collateralized by non-U.S. Government debt securities, value $39,443, 0.31% to 6.00%, 7/25/36 to 11/25/46).		35,845		35,845


20		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,390 (collateralized by non-U.S. Government debt securities, value $2,462, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	2,390	$	2,390
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $83,651 (collateralized by non-U.S. Government debt securities, value $87,850, 4.11% to 9.32%, 4/15/10 to 5/15/36).		83,639		83,639
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $26,291 (collateralized by non-U.S. Government debt securities, value $29,458, 0.00% to 10.00%, 5/27/33 to 10/31/36).		26,287		26,287
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $14,340 (collateralized by non-U.S. Government debt securities, value $15,862, 0.00% to 10.00%, 5/27/33 to 10/31/36).		14,338		14,338
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $47,801 (collateralized by non-U.S. Government debt securities, value $50,200, 0.00% to 9.00%, 5/1/17 to 9/25/46).		47,794		47,794
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $41,826 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $42,881, 0.00% to 7.32%, 11/2/06 to 3/25/45)		41,820		41,820
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $35,851 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $36,529, 0.00% to 7.32%, 11/2/06 to 3/25/45).		35,845		35,845
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $14,340 (collateralized by non-U.S. Government debt securities, value $15,060, 0.00% to 10.00%, 1/1/10).		14,338		14,338
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $11,950 (collateralized by non-U.S. Government debt securities, value $12,551, 5.26% to 5.35%, 7/1/24 to 6/1/46).		11,948		11,948
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $5,975 (collateralized by non-U.S. Government debt securities, value $6,276, 6.25% to 7.63%, 9/15/13 to 6/1/16).		5,974		5,974

SCHEDULES OF INVESTMENTS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $47,801 (collateralized by non-U.S. Government debt securities, value $49,244, 3.50% to 10.13%, 5/15/07 to 7/1/26).	$	47,794	$	47,794
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $23,901 (collateralized by non-U.S. Government debt securities, value $26,343, 5.50% to 10.39%, 6/17/08 to 6/25/36).		23,897		23,897
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $32,266 (collateralized by non-U.S. Government debt securities, value $34,130, 0.00% to 10.00%, 11/1/06 to 10/31/36).		32,261		32,261
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $17,281 (collateralized by non-U.S. Government debt securities, value $17,946, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		16,728		16,728
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $62,141 (collateralized by non-U.S. Government debt securities, value $65,260, 3.86% to 8.17%, 11/18/08 to 7/15/45).		62,132		62,132

				584,280
TIME DEPOSITS³ – 0.00%
SunTrust Bank
5.34%, 11/01/06		2,469		2,469

				2,469
VARIABLE & FLOATING RATE NOTES³ – 1.43%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		61,176		61,182
American Express Bank
5.29%, 02/28/07		23,897		23,896
American Express Centurion Bank
5.41%, 07/19/07		26,287		26,308
American Express Credit Corp.
5.42%, 07/05/07		7,169		7,172
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		4,311		4,311
ASIF Global Financing
5.51%, 05/03/07⁴		2,390		2,390
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		15,533		15,533
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		34,651		34,652
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		60,937		60,939
BMW US Capital LLC
5.32%, 10/15/07⁴		23,897		23,897
BNP Paribas
5.36%, 05/18/07⁴		44,209		44,209
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		17,445		17,445
CC USA Inc.
5.37%, 07/30/07⁴		11,948		11,950
Commodore CDO Ltd.
5.47%, 06/12/07⁴		5,974		5,974
Credit Agricole SA
5.34%, 07/23/07		23,897		23,897
Credit Suisse First Boston NY
5.38%, 04/24/07		11,948		11,949
Cullinan Finance Corp.
5.36%, 04/25/07⁴		5,974		5,974


22		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴	$	5,974	$	5,974
DEPFA Bank PLC
5.43%, 09/14/07		23,897		23,897
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		27,481		27,483
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		23,897		23,897
Fifth Third Bancorp
5.30%, 11/23/07⁴		47,794		47,794
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		23,897		23,896
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		25,092		25,096
Granite Master Issuer PLC
5.29%, 08/20/07⁴		83,639		83,639
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		19,118		19,120
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		35,845		35,850
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		23,897		23,897
Holmes Financing PLC
5.29%, 07/16/07⁴		41,820		41,820
JP Morgan Chase & Co.
5.29%, 08/02/07		17,923		17,923
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		17,923		17,922
Kestrel Funding LLC
5.30%, 07/11/07⁴		9,559		9,558
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		14,338		14,338
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		24,906		24,907
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		26,287		26,285
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		9,463		9,463
Marshall & Ilsley Bank
5.30%, 10/15/07		13,143		13,143
Master Funding LLC
5.35%, 04/25/07⁴		21,507		21,507
Metropolitan Life Global Funding
I 5.33%, 08/06/07⁴		35,845		35,845
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07⁴^,⁷		2,390		2,390
Monumental Global Funding II
5.38%, 12/27/06⁴		4,779		4,780
Mound Financing PLC
5.29%, 05/08/07⁴		22,463		22,463
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		86,029		86,028
National City Bank of Indiana
5.37%, 05/21/07		11,948		11,949
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		78,860		78,876
Newcastle Ltd.
5.34%, 04/24/07⁴		8,424		8,422
Northern Rock PLC
5.36%, 08/03/07⁴		28,676		28,677
Northlake CDO I
5.46%, 09/06/07⁴		7,169		7,169
Principal Life Global Funding I
5.82%, 02/08/07		10,754		10,767
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		34,651		34,650
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		23,897		23,897
Strips III LLC
5.37%, 07/24/07⁴		5,493		5,493
SunTrust Bank
5.29%, 05/01/07		23,897		23,898


SCHEDULES OF INVESTMENTS		23

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. BROKER-DEALERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴	$	58,309	$	58,304
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		33,456		33,456
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		32,023		32,023
Wachovia Bank N.A.
5.36%, 05/22/07		47,794		47,794
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		17,923		17,931
Wells Fargo & Co.
5.33%, 11/15/07⁴		11,948		11,949
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		17,923		17,923
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		71,691		71,680
Wind Master Trust
5.31%, 07/25/07⁴		9,559		9,559

				1,605,010

TOTAL SHORT-TERM INVESTMENTS (Cost: $3,119,497)				3,119,497

TOTAL INVESTMENTS IN SECURITIES – 102.62% (Cost: $106,659,947)				114,971,914
Other Assets, Less Liabilities – (2.62)%				(2,939,039	)

NET ASSETS – 100.00%			$	112,032,875

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


24		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
COMMON STOCKS – 99.23%
COMMERCIAL SERVICES – 3.75%
Healthcare Services Group Inc.		18,782	$	510,495
HealthSpring Inc.¹		32,575		656,060
PAREXEL International Corp.¹		17,980		532,208
Pharmaceutical Product Development Inc.		49,103		1,554,110
PharmaNet Development Group Inc.¹		15,775		294,992
PRA International¹		15,569		459,285

				4,007,150
HEALTH CARE – PRODUCTS – 0.24%
LCA-Vision Inc.²		7,260		255,044

				255,044
HEALTH CARE – SERVICES – 76.70%
Aetna Inc.		165,384		6,817,128
Amedisys Inc.¹		11,901		482,824
AMERIGROUP Corp.¹		30,463		912,671
AmSurg Corp.¹		21,548		452,939
Apria Healthcare Group Inc.¹		29,020		675,876
Brookdale Senior Living Inc.		27,677		1,331,817
Centene Corp.¹		21,285		502,113
Community Health Systems Inc.¹		45,986		1,492,246
Covance Inc.¹		29,726		1,738,971
Coventry Health Care Inc.¹		61,901		2,906,252
DaVita Inc.¹		43,750		2,433,812
Genesis HealthCare Corp.¹		13,426		650,221
HCA Inc.		120,776		6,101,604
Health Management Associates Inc. Class A		107,065		2,109,180
Health Net Inc.¹		50,611		2,100,863
Healthways Inc.¹		10,252		434,172
Humana Inc.¹		59,557		3,573,420
Kindred Healthcare Inc.¹		22,315		602,505
Laboratory Corp. of America Holdings¹		48,157		3,298,273
LifePoint Hospitals Inc.¹		30,630		1,087,365
Lincare Holdings Inc.¹		45,683		1,533,121
Magellan Health Services Inc.¹		21,840		953,098
Manor Care Inc.		35,137		1,686,225
Matria Healthcare Inc.¹		15,698		442,684

*Security*	Shares or Principal		*Value*
Molina Healthcare Inc.¹		11,299	$	443,260
Odyssey Healthcare Inc.¹		26,678		353,484
Pediatrix Medical Group Inc.¹		26,539		1,192,397
Psychiatric Solutions Inc.¹		30,107		999,552
Quest Diagnostics Inc.		25,944		1,290,455
Sierra Health Services Inc.¹		28,323		969,780
Sunrise Senior Living Inc.¹		27,118		846,353
Tenet Healthcare Corp.¹		219,587		1,550,284
Triad Hospitals Inc.¹		41,790		1,547,484
United Surgical Partners International Inc.¹		14,124		350,558
UnitedHealth Group Inc.		293,359		14,310,052
Universal Health Services Inc. Class B		26,098		1,381,889
Wellcare Health Plans Inc.¹		19,163		1,125,826
WellPoint Inc.¹		148,285		11,317,111

				81,997,865
INSURANCE – 4.19%
CIGNA Corp.		38,266		4,476,357

				4,476,357
INTERNET – 0.26%
eResearch Technology Inc.¹		33,910		278,740

				278,740
PHARMACEUTICALS – 13.55%
Caremark Rx Inc.		127,706		6,286,966
Express Scripts Inc.¹		43,593		2,777,746
HealthExtras Inc.¹		20,428		470,457
Medco Health Solutions Inc.¹		92,650		4,956,775

				14,491,944
SOFTWARE – 0.54%
Per-Se Technologies Inc.¹		23,599		577,704

				577,704

TOTAL COMMON STOCKS (Cost: $109,338,522)				106,084,804

SHORT-TERM INVESTMENTS – 0.22%
CERTIFICATES OF DEPOSIT³ – 0.00%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	424		424


SCHEDULES OF INVESTMENTS		25

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Societe Generale
5.33%, 12/08/06	$	606	$	606
Washington Mutual Bank
5.36%, 11/13/06		1,515		1,515
Wells Fargo Bank N.A.
4.78%, 12/05/06		485		485

				3,030
COMMERCIAL PAPER³ – 0.01%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		905		896
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		909		909
ASAP Funding Ltd.
5.29%, 11/02/06⁴		152		152
Atlantis One Funding
5.30%, 11/14/06⁴		832		830
Beta Finance Inc.
5.27%, 01/25/07⁴		121		120
Bryant Park Funding LLC
5.28%, 12/14/06⁴		191		190
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		307		307
Cantabric Finance LLC
5.26%, 01/25/07⁴		242		239
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		697		696
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		455		443
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		364		362
Curzon Funding LLC
5.29%, 11/17/06⁴		606		605
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		698		690
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		606		606
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		552		544
Galleon Capital Corp.
5.27%, 12/18/06⁴		85		84
General Electric Capital Services Inc.
5.22%, 12/11/06		61		60
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		358		351
HBOS Treasury Services PLC
5.27%, 12/15/06		121		120
Landale Funding LLC
5.31%, 11/15/06⁴		473		472
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		1,089		1,088
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		391		390
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		788		773
Nestle Capital Corp.
5.19%, 08/09/07		364		349
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		958		957
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		323		320
Sedna Finance Inc.
5.22%, 04/17/07⁴		346		337
Sydney Capital Corp.
5.27%, 12/08/06⁴		14		14
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		303		300
Tulip Funding Corp.
5.29%, 11/15/06⁴		320		319

				13,523


26		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
MEDIUM-TERM NOTES³ – 0.00%
Bank of America N.A.
5.28%, 04/20/07	$	152	$	152
Cullinan Finance Corp.
5.71%, 06/28/07⁴		455		455
K2 USA LLC
5.39%, 06/04/07⁴		455		455
Marshall & Ilsley Bank
5.18%, 12/15/06		606		606
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		709		709
US Bank N.A.
2.85%, 11/15/06		121		121

				2,498
MONEY MARKET FUNDS – 0.15%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		161,767		161,767

				161,767
REPURCHASE AGREEMENTS³ – 0.02%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,212 (collateralized by non-U.S. Government debt securities, value $1,249, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	1,212		1,212
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $849 (collateralized by U.S. Government obligations, value $866, 5.50%, 10/1/21 to 10/1/36).		849		849
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $909 (collateralized by non-U.S. Government debt securities, value $1,001, 0.31% to 6.00%, 7/25/36 to 11/25/46).		909		909

*Security*	*Principal*		*Value*
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $61 (collateralized by non-U.S. Government debt securities, value $62, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	61	$	61
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,121 (collateralized by non-U.S. Government debt securities, value $2,228, 4.11% to 9.32%, 4/15/10 to 5/15/36).		2,121		2,121
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $667 (collateralized by non-U.S. Government debt securities, value $747, 0.00% to 10.00%, 5/27/33 to 10/31/36).		667		667
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $364 (collateralized by non-U.S. Government debt securities, value $402, 0.00% to 10.00%, 5/27/33 to 10/31/36).		364		364
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,212 (collateralized by non-U.S. Government debt securities, value $1,273, 0.00% to 9.00%, 5/1/17 to 9/25/46).		1,212		1,212


SCHEDULE OF INVESTMENTS		27

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,061 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $1,088, 0.00% to 7.32%, 11/2/06 to 3/25/45).	$	1,061	$	1,061
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $909 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $926, 0.00% to 7.32%, 11/2/06 to 3/25/45).		909		909
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $364 (collateralized by non-U.S. Government debt securities, value $382, 0.00% to 10.00%, 1/1/10).		364		364
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $303 (collateralized by non-U.S. Government debt securities, value $318, 5.26% to 5.35%, 7/1/24 to 6/1/46).		303		303
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $152 (collateralized by non-U.S. Government debt securities, value $159, 6.25% to 7.63%, 9/15/13 to 6/1/16).		152		152
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,212 (collateralized by non-U.S. Government debt securities, value $1,249, 3.50% to 10.13%, 5/15/07 to 7/1/26).		1,212		1,212
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $606 (collateralized by non-U.S. Government debt securities, value $668, 5.50% to 10.39%, 6/17/08 to 6/25/36).		606		606
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $818 (collateralized by non-U.S. Government debt securities, value $866, 0.00% to 10.00%, 11/1/06 to 10/31/36).		818		818
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $438 (collateralized by non-U.S. Government debt securities, value $455, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		424		424
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $1,576 (collateralized by non-U.S. Government debt securities, value $1,655, 3.86% to 8.17%, 11/18/08 to 7/15/45).		1,576		1,576

				14,820
TIME DEPOSITS³ – 0.00%
SunTrust Bank		63		63

5.34%, 11/01/06				63


28		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
VARIABLE & FLOATING RATE NOTES³ – 0.04%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴	$	1,552	$	1,552
American Express Bank
5.29%, 02/28/07		606		606
American Express Centurion Bank
5.41%, 07/19/07		667		667
American Express Credit Corp.
5.42%, 07/05/07		182		182
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		109		109
ASIF Global Financing
5.51%, 05/03/07⁴		61		61
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		394		394
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		879		879
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		1,546		1,546
BMW US Capital LLC
5.32%, 10/15/07⁴		606		606
BNP Paribas
5.36%, 05/18/07⁴		1,121		1,121
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		442		442
CC USA Inc.
5.37%, 07/30/07⁴		303		303
Commodore CDO Ltd.
5.47%, 06/12/07⁴		152		152
Credit Agricole SA
5.34%, 07/23/07		606		606
Credit Suisse First Boston NY
5.38%, 04/24/07		303		303
Cullinan Finance Corp.
5.36%, 04/25/07⁴		152		152
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		152		152
DEPFA Bank PLC
5.43%, 09/14/07		606		606
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		697		697
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		606		606
Fifth Third Bancorp
5.30%, 11/23/07⁴		1,212		1,212
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		606		606
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		636		637
Granite Master Issuer PLC
5.29%, 08/20/07⁴		2,122		2,122
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		485		485
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		909		909
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		606		606
Holmes Financing PLC
5.29%, 07/16/07⁴		1,061		1,061
JP Morgan Chase & Co.
5.29%, 08/02/07		455		455
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		455		454
Kestrel Funding LLC
5.30%, 07/11/07⁴		242		242
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		364		364
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		632		632
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		667		667


SCHEDULE OF INVESTMENTS		29

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE PROVIDERS INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴	$	240	$	240
Marshall & Ilsley Bank
5.30%, 10/15/07		333		333
Master Funding LLC
5.35%, 04/25/07⁴		546		546
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		909		909
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		61		61
Monumental Global Funding II
5.38%, 12/27/06⁴		121		121
Mound Financing PLC
5.29%, 05/08/07⁴		570		570
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		2,182		2,183
National City Bank of Indiana
5.37%, 05/21/07		303		303
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		2,000		2,001
Newcastle Ltd.
5.34%, 04/24/07⁴		214		214
Northern Rock PLC
5.36%, 08/03/07⁴		727		727
Northlake CDO I
5.46%, 09/06/07⁴		182		182
Principal Life Global Funding I
5.82%, 02/08/07		273		273
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		879		879
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		606		606
Strips III LLC
5.37%, 07/24/07⁴		139		139
SunTrust Bank
5.29%, 05/01/07		606		606
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		1,479		1,478
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		849		848
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		812		812
Wachovia Bank N.A.
5.36%, 05/22/07		1,212		1,212
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		455		455
Wells Fargo & Co.
5.33%, 11/15/07⁴		303		303
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		455		454
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		1,819		1,818
Wind Master Trust
5.31%, 07/25/07⁴		242		242

				40,709

TOTAL SHORT-TERM INVESTMENTS (Cost: $236,410)				236,410

TOTAL INVESTMENTS IN SECURITIES – 99.45% (Cost: $109,574,932)				106,321,214
Other Assets, Less Liabilities – 0.55%				586,186

NET ASSETS – 100.00%			$	106,907,400

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


30		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
COMMON STOCKS – 100.23%
HOME BUILDERS – 100.23%
Beazer Homes USA Inc.		83,318	$	3,611,002
Brookfield Homes Corp.¹		102,796		3,335,730
Centex Corp.		76,341		3,992,634
Champion Enterprises Inc.²		419,921		3,888,468
Horton (D.R.) Inc.		167,173		3,916,863
Hovnanian Enterprises Inc. Class A²		109,455		3,376,687
KB Home		83,719		3,762,332
Lennar Corp. Class A		88,069		4,181,516
Levitt Corp. Class A		206,095		2,652,443
M.D.C. Holdings Inc.		73,651		3,672,239
M/I Homes Inc.		86,815		3,118,395
Meritage Homes Corp.²		72,420		3,315,388
NVR Inc.²		5,975		3,354,962
Palm Harbor Homes Inc.^1,2		119,088		1,670,805
Pulte Homes Inc.		128,256		3,974,653
Ryland Group Inc.		72,919		3,349,170
Skyline Corp.		65,920		2,603,181
Standard-Pacific Corp.		137,035		3,320,358
Technical Olympic USA Inc.		221,001		2,453,111
Toll Brothers Inc.²		131,624		3,805,250
WCI Communities Inc.^1,2		172,159		2,775,203

				70,130,390

TOTAL COMMON STOCKS (Cost: $74,880,629)				70,130,390
SHORT-TERM INVESTMENTS – 8.97%
CERTIFICATES OF DEPOSIT³ – 0.36%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	35,462		35,462
Societe Generale
5.33%, 12/08/06		50,661		50,661
Washington Mutual Bank
5.36%, 11/13/06		126,652		126,652
Wells Fargo Bank N.A.
4.78%, 12/05/06		40,528		40,528

				253,303
COMMERCIAL PAPER³ – 1.61%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		75,631		74,297
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		75,991		75,991
ASAP Funding Ltd.
5.29%, 11/02/06⁴		12,665		12,663
Atlantis One Funding
5.30%, 11/14/06⁴		69,510		69,377
Beta Finance Inc.
5.27%, 01/25/07⁴		10,132		10,006
Bryant Park Funding LLC
5.28%, 12/14/06⁴		15,994		15,893
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		25,681		25,632
Cantabric Finance LLC
5.26%, 01/25/07⁴		20,264		20,013
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		58,260		58,174
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		37,995		37,059
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		30,396		30,287
Curzon Funding LLC
5.29%, 11/17/06⁴		50,661		50,542
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		58,369		57,663
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		50,661		50,623
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		46,101		45,428
Galleon Capital Corp.
5.27%, 12/18/06⁴		7,083		7,035
General Electric Capital Services Inc.
5.22%, 12/11/06		5,066		5,037


SCHEDULES OF INVESTMENTS		31

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴	$	29,890	$	29,301
HBOS Treasury Services PLC
5.27%, 12/15/06		10,132		10,067
Landale Funding LLC
5.31%, 11/15/06⁴		39,515		39,434
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		90,998		90,934
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		32,676		32,609
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		65,859		64,609
Nestle Capital Corp.
5.19%, 08/09/07		30,396		29,165
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		80,037		80,036
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		26,992		26,678
Sedna Finance Inc.
5.22%, 04/17/07⁴		28,877		28,177
Sydney Capital Corp.
5.27%, 12/08/06⁴		1,208		1,202
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		25,330		25,044
Tulip Funding Corp.
5.29%, 11/15/06⁴		26,719		26,664

				1,129,640
MEDIUM-TERM NOTES³ – 0.30%
Bank of America N.A.
5.28%, 04/20/07		12,665		12,665
Cullinan Finance Corp.
5.71%, 06/28/07⁴		37,995		37,995
K2 USA LLC
5.39%, 06/04/07⁴		37,995		37,995
Marshall & Ilsley Bank
5.18%, 12/15/06		50,661		50,682
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		59,273		59,273

*Security*	Shares or Principal		*Value*
US Bank N.A.
2.85%, 11/15/06	$	10,132	$	10,125

				208,735
MONEY MARKET FUNDS – 0.06%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		38,874		38,874

				38,874
REPURCHASE AGREEMENTS³ – 1.77%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $101,336 (collateralized by non-U.S. Government debt securities, value $104,395, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	101,321		101,321
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $70,936 (collateralized by U.S. Government obligations, value $72,367, 5.50%, 10/1/21 to 10/1/36).		70,925		70,925
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $76,002 (collateralized by non-U.S. Government debt securities, value $83,618, 0.31% to 6.00%, 7/25/36 to 11/25/46).		75,991		75,991
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $ 5,067 (collateralized by non-U.S. Government debt securities, value $5,220, 6.00% to 6.70%, 12/15/10 to 4/15/12).		5,066		5,066


32		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $177,338 (collateralized by non-U.S. Government debt securities, value $186,238, 4.11% to 9.32%, 4/15/10 to 5/15/36).	$	177,312	$	177,312
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $55,735 (collateralized by non-U.S. Government debt securities, value $62,450, 0.00% to 10.00%, 5/27/33 to 10/31/36).		55,727		55,727
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $30,401 (collateralized by non-U.S. Government debt securities, value $33,627, 0.00% to 10.00%, 5/27/33 to 10/31/36).		30,396		30,396
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $101,336 (collateralized by non-U.S. Government debt securities, value $106,422, 0.00% to 9.00%, 5/1/17 to 9/25/46).		101,321		101,321
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $88,669 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $90,906, 0.00% to 7.32%, 11/2/06 to 3/25/45).		88,656		88,656
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $76,003 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $77,438, 0.00% to 7.32%, 11/2/06 to 3/25/45).		75,991		75,991
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $30,401 (collateralized by non-U.S. Government debt securities, value $31,927, 0.00% to 10.00%, 1/1/10).		30,396		30,396
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $25,334 (collateralized by non-U.S. Government debt securities, value $26,607, 5.26% to 5.35%, 7/1/24 to 6/1/46).		25,330		25,330
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $12,667 (collateralized by non-U.S. Government debt securities, value $13,305, 6.25% to 7.63%, 9/15/13 to 6/1/16).		12,665		12,665
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $101,336 (collateralized by non-U.S. Government debt securities, value $104,396, 3.50% to 10.13%, 5/15/07 to 7/1/26).		101,321		101,321


SCHEDULES OF INVESTMENTS		33

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $ 50,669 (collateralized by non-U.S. Government debt securities, value $55,847, 5.50% to 10.39%, 6/17/08 to 6/25/36).	$	50,661	$	50,661
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $ 68,402 (collateralized by non-U.S. Government debt securities, value $72,354, 0.00% to 10.00%, 11/1/06 to 10/31/36).		68,392		68,392
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $ 36,634 (collateralized by non-U.S. Government debt securities, value $38,044, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		35,462		35,462
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $ 131,738 (collateralized by non-U.S. Government debt securities, value $138,349, 3.86% to 8.17%, 11/18/08 to 7/15/45).		131,718		131,718

				1,238,651
TIME DEPOSITS³– 0.01%
SunTrust Bank
5.34%, 11/01/06		5,235		5,235

				5,235
VARIABLE & FLOATING RATE NOTES³– 4.86%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		129,691		129,707
American Express Bank
5.29%, 02/28/07		50,661		50,660
American Express Centurion Bank
5.41%, 07/19/07		55,727		55,773
American Express Credit Corp.
5.42%, 07/05/07		15,198		15,205
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		9,140		9,140
ASIF Global Financing
5.51%, 05/03/07⁴		5,066		5,067
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		32,929		32,929
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		73,458		73,460
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		129,185		129,189
BMW US Capital LLC
5.32%, 10/15/07⁴		50,661		50,661
BNP Paribas
5.36%, 05/18/07⁴		93,722		93,722
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		36,982		36,982
CC USA Inc.
5.37%, 07/30/07⁴		25,330		25,333
Commodore CDO Ltd.
5.47%, 06/12/07⁴		12,665		12,665
Credit Agricole SA
5.34%, 07/23/07		50,661		50,661
Credit Suisse First Boston NY
5.38%, 04/24/07		25,330		25,331
Cullinan Finance Corp.
5.36%, 04/25/07⁴		12,665		12,665
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		12,665		12,665
DEPFA Bank PLC
5.43%, 09/14/07		50,661		50,661
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		58,260		58,263


34		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

October 31, 2006


Security	Principal		Value
Eli Lilly Services Inc.
5.31%, 10/01/07⁴	$	50,661	$	50,661
Fifth Third Bancorp
5.30%, 11/23/07⁴		101,321		101,321
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		50,661		50,658
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		53,194		53,203
Granite Master Issuer PLC
5.29%, 08/20/07⁴		177,312		177,312
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		40,528		40,533
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		75,991		76,001
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		50,661		50,661
Holmes Financing PLC
5.29%, 07/16/07⁴		88,656		88,656
JP Morgan Chase & Co.
5.29%, 08/02/07		37,995		37,995
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		37,995		37,994
Kestrel Funding LLC
5.30%, 07/11/07⁴		20,264		20,263
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		30,396		30,396
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		52,800		52,800
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		55,727		55,724
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		20,062		20,062
Marshall & Ilsley Bank
5.30%, 10/15/07		27,863		27,863
Master Funding LLC
5.35%, 04/25/07⁴		45,595		45,595
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		75,991		75,991
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		5,066		5,066
Monumental Global Funding II
5.38%, 12/27/06⁴		10,132		10,133
Mound Financing PLC
5.29%, 05/08/07⁴		47,621		47,621
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		182,378		182,375
National City Bank of Indiana
5.37%, 05/21/07		25,330		25,331
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		167,180		167,213
Newcastle Ltd.
5.34%, 04/24/07⁴		17,858		17,855
Northern Rock PLC
5.36%, 08/03/07⁴		60,793		60,794
Northlake CDO I
5.46%, 09/06/07⁴		15,198		15,198
Principal Life Global Funding I
5.82%, 02/08/07		22,797		22,826
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		73,458		73,457
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		50,661		50,661
Strips III LLC
5.37%, 07/24/07⁴		11,645		11,645
SunTrust Bank
5.29%, 05/01/07		50,661		50,662
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		123,612		123,603
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		70,925		70,925


SCHEDULES OF INVESTMENTS		35

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HOME CONSTRUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴	$	67,888	$	67,889
Wachovia Bank N.A.
5.36%, 05/22/07		101,321		101,321
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		37,995		38,014
Wells Fargo & Co.
5.33%, 11/15/07⁴		25,330		25,332
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		37,995		37,995
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		151,982		151,957
Wind Master Trust
5.31%, 07/25/07⁴		20,264		20,264

				3,402,565

TOTAL SHORT-TERM INVESTMENTS (Cost: $6,277,003)				6,277,003

TOTAL INVESTMENTS IN SECURITIES – 109.20% (Cost: $81,157,632)				76,407,393
Other Assets, Less Liabilities – (9.20)%				(6,436,707	)

NET ASSETS – 100.00%			$	69,970,686

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


36		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. INSURANCE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.94%
ENERGY – ALTERNATE SOURCES – 0.28%
Covanta Holding Corp.¹	1,778	$	36,147

			36,147
INSURANCE – 99.66%
ACE Ltd.	6,575		376,419
AFLAC Inc.	10,167		456,702
Alfa Corp.	750		13,852
Alleghany Corp.¹	104		31,798
Allstate Corp. (The)	12,946		794,367
Ambac Financial Group Inc.	2,128		177,667
American Equity Investment Life Holding Co.	1,064		13,577
American Financial Group Inc.	946		45,276
American International Group Inc.	46,082		3,095,328
American National Insurance Co.	318		36,888
AmerUs Group Co.	766		52,456
Arch Capital Group Ltd.¹	834		53,618
Argonaut Group Inc.¹	626		21,290
Aspen Insurance Holdings Ltd.	1,140		28,295
Assurant Inc.	2,197		115,694
Assured Guaranty Ltd.	969		24,390
Berkley (W.R.) Corp.	3,611		133,101
Brown & Brown Inc.	2,301		67,327
Chubb Corp.	8,386		445,716
Cincinnati Financial Corp.	3,087		140,922
CNA Financial Corp.¹	295		11,048
Commerce Group Inc.	1,224		36,230
Conseco Inc.¹	3,075		62,545
Delphi Financial Group Inc. Class A	850		33,362
Erie Indemnity Co. Class A	1,038		52,575
Fidelity National Financial Inc.	3,478		77,559
First American Corp.	1,720		70,228
Gallagher (Arthur J.) & Co.	1,934		53,862
Genworth Financial Inc. Class A	9,162		306,377
Hanover Insurance Group Inc. (The)	1,030		46,710
Hartford Financial Services Group Inc. (The)	6,152		536,270
HCC Insurance Holdings Inc.	2,253		75,836
Hilb, Rogal & Hobbs Co.	719		28,702
Horace Mann Educators Corp.	865		17,421
Infinity Property & Casualty Corp.	404		17,380
LandAmerica Financial Group Inc.	314		19,810
Lincoln National Corp.	5,682		359,727
Loews Corp.	9,416		366,471
Markel Corp.¹	197		78,701
MBIA Inc.	2,711		168,136
Mercury General Corp.	526		27,231
MetLife Inc.	9,348		534,051
Midland Co. (The)	268		12,526
National Western Life Insurance Co. Class A	49		11,753
Nationwide Financial Services Inc.	1,123		57,183
Navigators Group Inc. (The)¹	266		12,521
Ohio Casualty Corp.	1,239		33,986
Old Republic International Corp.	4,339		97,758
Philadelphia Consolidated Holding Corp.¹	1,209		47,296
Phoenix Companies Inc.	2,263		35,846
PMI Group Inc. (The)	1,754		74,808
Presidential Life Corp.	435		10,266
Principal Financial Group Inc.	5,446		307,645
ProAssurance Corp.¹	615		29,951
Progressive Corp. (The)	14,601		352,906
Protective Life Corp.	1,293		57,215
Prudential Financial Inc.	9,847		757,530
Radian Group Inc.	1,668		88,904
RLI Corp.	443		24,015
SAFECO Corp.	2,354		136,979
Safety Insurance Group Inc.	293		14,653
Selective Insurance Group Inc.	567		31,327
St. Paul Travelers Companies Inc.	14,001		715,871
StanCorp Financial Group Inc.	1,099		50,213
Stewart Information Services Corp.	344		12,749
Torchmark Corp.	2,002		123,483
21st Century Insurance Group	525		8,284
United Fire & Casualty Co.	444		15,709
Unitrin Inc.	896		38,465
Universal American Financial Corp.¹	756		14,054
UNUMProvident Corp.	6,932		137,115
USI Holdings Corp.¹	770		12,266
Wesco Financial Corp.	29		13,903


SCHEDULES OF INVESTMENTS		37

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. INSURANCE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
White Mountains Insurance Group Ltd.	161	$	91,408
XL Capital Ltd. Class A	3,632		256,238
Zenith National Insurance Corp.	746		34,704

			12,824,445

TOTAL COMMON STOCKS (Cost: $12,599,214)			12,860,592

SHORT-TERM INVESTMENTS – 0.08%
MONEY MARKET FUNDS – 0.08%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	10,637		10,637

			10,637

TOTAL SHORT-TERM INVESTMENTS (Cost: $10,637)			10,637

TOTAL INVESTMENTS IN SECURITIES – 100.02% (Cost: $12,609,851)			12,871,229
Other Assets, Less Liabilities – (0.02)%			(2,383	)

NET ASSETS – 100.00%		$	12,868,846

¹	Non-income earning security.

²	Affiliated 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.


38		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. MEDICAL DEVICES INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.98%
BIOTECHNOLOGY – 3.88%
Bio-Rad Laboratories Inc. Class A¹	4,640	$	340,669
Integra LifeSciences Holdings Corp.¹	5,644		208,433
Millipore Corp.¹	10,516		678,597

			1,227,699
ELECTRICAL COMPONENTS & EQUIPMENT – 0.95%
Intermagnetics General Corp.¹	11,000		300,850

			300,850
ELECTRONICS – 12.55%
Analogic Corp.	3,912		218,329
Applera Corp. - Applied Biosystems Group	31,558		1,177,113
Molecular Devices Corp.¹	5,560		111,978
Thermo Electron Corp.¹	26,998		1,157,404
Varian Inc.¹	7,566		354,770
Waters Corp.¹	19,224		957,355

			3,976,949
HEALTH CARE – PRODUCTS – 82.60%
Advanced Medical Optics Inc.¹	12,165		496,940
American Medical Systems Holdings Inc.¹	17,748		316,092
ArthroCare Corp.¹	6,671		269,575
Beckman Coulter Inc.	12,208		702,815
Biomet Inc.	37,314		1,411,962
Boston Scientific Corp.¹	169,610		2,698,495
Cepheid Inc.¹	17,483		143,535
Dade Behring Holdings Inc.	16,875		614,756
Datascope Corp.	4,138		148,430
DJO Inc.¹	6,263		251,960
Hillenbrand Industries Inc.	11,595		680,395
Immucor Inc.¹	16,452		452,924
Intuitive Surgical Inc.¹	7,121		706,261
Invacare Corp.	9,031		197,147
Kinetic Concepts Inc.¹	12,703		441,556
Kyphon Inc.¹	10,479		413,920
Medtronic Inc.	109,863		5,348,131
NuVasive Inc.¹	8,810		207,123
Palomar Medical Technologies Inc.¹	4,740		223,207
ResMed Inc.¹	15,299		673,003
Respironics Inc.¹	14,912		526,692
Sirona Dental Systems Inc.	5,404		199,948
SonoSite Inc.¹	5,045		143,783
St. Jude Medical Inc.¹	49,839		1,711,970
Steris Corp.	15,674		381,975
Stryker Corp.	38,937		2,036,016
Symmetry Medical Inc.¹	9,643		150,431
Thoratec Corp.¹	13,792		217,224
Varian Medical Systems Inc.¹	21,779		1,194,796
Ventana Medical Systems Inc.¹	8,270		334,025
Viasys Healthcare Inc.¹	8,877		254,326
Wright Medical Group Inc.¹	9,521		235,264
Zimmer Holdings Inc.¹	33,074		2,381,659

			26,166,336

TOTAL COMMON STOCKS (Cost: $31,678,034)			31,671,834

SHORT-TERM INVESTMENTS – 0.05%
MONEY MARKET FUNDS – 0.05%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	14,543		14,543

			14,543

TOTAL SHORT-TERM INVESTMENTS (Cost: $14,543)			14,543

TOTAL INVESTMENTS IN SECURITIES – 100.03% (Cost: $31,692,577)			31,686,377
Other Assets, Less Liabilities – (0.03)%			(9,701	)

NET ASSETS – 100.00%		$	31,676,676

¹	Non-income earning security.

²	Affiliated 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.


SCHEDULES OF INVESTMENTS		39

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
COMMON STOCKS – 99.82%
ELECTRIC – 1.12%
Dynegy Inc. Class A¹		96,692	$	587,887

				587,887
OIL & GAS – 98.70%
Anadarko Petroleum Corp.		73,437		3,408,946
Apache Corp.		52,177		3,408,202
Atlas America Inc.¹		5,821		279,466
ATP Oil & Gas Corp.¹		5,908		253,985
Aurora Oil & Gas Corp.¹		7,504		23,262
Berry Petroleum Co. Class A		10,303		307,545
Bill Barrett Corp.¹		8,697		248,125
BP Prudhoe Bay Royalty Trust²		5,698		412,250
Cabot Oil & Gas Corp.		11,336		599,788
Carrizo Oil & Gas Inc.¹		7,622		217,684
Cheniere Energy Inc.¹		4,320		113,702
Chesapeake Energy Corp.		70,658		2,292,146
Cimarex Energy Co.		17,681		636,870
CNX Gas Corp.¹		8,956		234,199
Comstock Resources Inc.¹		11,326		315,995
Delta Petroleum Corp.¹		14,471		371,905
Denbury Resources Inc.¹		26,448		760,116
Devon Energy Corp.		64,837		4,333,705
Encore Acquisition Co.¹		12,675		317,382
Energy Partners Ltd.¹		9,618		234,968
EOG Resources Inc.		38,443		2,557,613
EXCO Resources Inc.¹		23,230		336,370
Forest Oil Corp.¹		13,177		430,097
Frontier Oil Corp.		25,199		740,851
Gasco Energy Inc.^1,2		13,044		35,088
Giant Industries Inc.¹		4,081		330,479
Harvest Natural Resources Inc.¹		13,244		147,141
Holly Corp.		12,120		576,427
Houston Exploration Co.¹		7,110		385,078
Hugoton Royalty Trust		10,987		282,915
Mariner Energy Inc.¹		19,307		382,665
Meridian Resource Corp. (The)¹		31,539		105,971
Newfield Exploration Co.¹		26,556		1,083,219
Noble Energy Inc.		33,116		1,610,431
Occidental Petroleum Corp.		124,946		5,864,965
Penn Virginia Corp.		5,015		358,823

*Security*	Shares or Principal		*Value*
Petrohawk Energy Corp.¹		41,821	$	473,832
Pioneer Natural Resources Co.		25,852		1,052,952
Plains Exploration & Production Co.¹		17,204		727,557
Pogo Producing Co.		11,613		519,682
Quicksilver Resources Inc.^1,2		13,856		474,984
Range Resources Corp.		30,551		829,460
Rosetta Resources Inc.¹		14,236		257,387
Southwestern Energy Co.¹		34,051		1,211,535
St. Mary Land & Exploration Co.		12,909		481,377
Stone Energy Corp.¹		6,335		246,875
Sunoco Inc.		15,647		1,034,736
Swift Energy Co.¹		7,431		347,176
Tesoro Corp.		14,631		935,506
Ultra Petroleum Corp.¹		10,624		567,003
Valero Energy Corp.		93,628		4,899,553
W&T Offshore Inc.		3,128		105,633
Warren Resources Inc.¹		16,632		196,091
Western Refining Inc.		9,389		221,205
Whiting Petroleum Corp.¹		9,407		419,646
XTO Energy Inc.		61,888		2,887,694

				51,888,258

TOTAL COMMON STOCKS (Cost: $53,235,683)				52,476,145

SHORT-TERM INVESTMENTS – 0.60%
CERTIFICATES OF DEPOSIT³ – 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	792		792
Societe Generale		1,132		1,132
5.33%, 12/08/06
Washington Mutual Bank
5.36%, 11/13/06		2,829		2,829
Wells Fargo Bank N.A.
4.78%, 12/05/06		905		905

				5,658
COMMERCIAL PAPER³ – 0.05%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		1,690		1,648
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		1,698		1,698


40		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
ASAP Funding Ltd.
5.29%, 11/02/06⁴	$	283	$	283
Atlantis One Funding
5.30%, 11/14/06⁴		1,553		1,550
Beta Finance Inc.
5.27%, 01/25/07⁴		226		224
Bryant Park Funding LLC
5.28%, 12/14/06⁴		357		355
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		574		573
Cantabric Finance LLC
5.26%, 01/25/07⁴		453		447
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		1,302		1,300
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		849		828
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		679		677
Curzon Funding LLC
5.29%, 11/17/06⁴		1,132		1,129
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		1,304		1,288
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		1,132		1,131
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		1,030		1,015
Galleon Capital Corp.
5.27%, 12/18/06⁴		158		157
General Electric Capital Services Inc.
5.22%, 12/11/06		113		113
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		668		654
HBOS Treasury Services PLC
5.27%, 12/15/06		226		225
Landale Funding LLC
5.31%, 11/15/06⁴		883		881
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		2,033		2,032
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		730		728
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		1,471		1,444
Nestle Capital Corp.
5.19%, 08/09/07		679		652
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		1,788		1,788
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		603		596
Sedna Finance Inc.
5.22%, 04/17/07⁴		645		629
Sydney Capital Corp.
5.27%, 12/08/06⁴		27		27
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		566		560
Tulip Funding Corp.
5.29%, 11/15/06⁴		597		596

				25,228
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		283		283
Cullinan Finance Corp.
5.71%, 06/28/07⁴		849		849
K2 USA LLC
5.39%, 06/04/07⁴		849		849
Marshall & Ilsley Bank
5.18%, 12/15/06		1,132		1,132
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		1,324		1,324
US Bank N.A.
2.85%, 11/15/06		226		226

				4,663


SCHEDULES OF INVESTMENTS		41

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
MONEY MARKET FUNDS – 0.34%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		175,976	$	175,976

				175,976
REPURCHASE AGREEMENTS³ – 0.05%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,264 (collateralized by non-U.S. Government debt securities, value $2,332, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	2,264		2,264
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $1,585 (collateralized by U.S. Government obligations, value $1,617, 5.50%, 10/1/21 to 10/1/36).		1,584		1,584
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $1,698 (collateralized by non-U.S. Government debt securities, value $1,868, 0.31% to 6.00%, 7/25/36 to 11/25/46).		1,698		1,698
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $113 (collateralized by non-U.S. Government debt securities, value $117, 6.00% to 6.70%, 12/15/10 to 4/15/12).		113		113

*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $3,962 (collateralized by non-U.S. Government debt securities, value $4,161, 4.11% to 9.32%, 4/15/10 to 5/15/36).	$	3,962	$	3,962
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $1,245 (collateralized by non-U.S. Government debt securities, value $1,395, 0.00% to 10.00%, 5/27/33 to 10/31/36).		1,245		1,245
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $679 (collateralized by non-U.S. Government debt securities, value $751, 0.00% to 10.00%, 5/27/33 to 10/31/36).		679		679
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $2,264 (collateralized by non-U.S. Government debt securities, value $2,378, 0.00% to 9.00%, 5/1/17 to 9/25/46).		2,264		2,264
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,981 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $2,031, 0.00% to 7.32%, 11/2/06 to 3/25/45).		1,981		1,981


42		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,698 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $1,730, 0.00% to 7.32%, 11/2/06 to 3/25/45).	$	1,698	$	1,698
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $679 (collateralized by non-U.S. Government debt securities, value $713, 0.00% to 10.00%, 1/1/10).		679		679
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $566 (collateralized by non-U.S. Government debt securities, value $594, 5.26% to 5.35%, 7/1/24 to 6/1/46).		566		566
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $283 (collateralized by non-U.S. Government debt securities, value $297, 6.25% to 7.63%, 9/15/13 to 6/1/16).		283		283
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,264 (collateralized by non-U.S. Government debt securities, value $2,332, 3.50% to 10.13%, 5/15/07 to 7/1/26).		2,264		2,264
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,132 (collateralized by non-U.S. Government debt securities, value $1,248, 5.50% to 10.39%, 6/17/08 to 6/25/36).		1,132		1,132
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $1,528 (collateralized by non-U.S. Government debt securities, value $1,616, 0.00% to 10.00%, 11/1/06 to 10/31/36).		1,528		1,528
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $818 (collateralized by non-U.S. Government debt securities, value $850, 0.00% to 10.00%, 11/1/06 to 10/31/36).7		792		792
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $2,943 (collateralized by non-U.S. Government debt securities, value $3,091, 3.86% to 8.17%, 11/18/08 to 7/15/45).		2,943		2,943

				27,675
TIME DEPOSITS³ – 0.00%
SunTrust Bank
5.34%, 11/01/06		117		117

				117
VARIABLE & FLOATING RATE NOTES³ – 0.14%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		2,897		2,899
American Express Bank
5.29%, 02/28/07		1,132		1,132
American Express Centurion Bank
5.41%, 07/19/07		1,245		1,246


SCHEDULES OF INVESTMENTS		43

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
American Express Credit Corp.
5.42%, 07/05/07	$	340	$	340
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		204		204
ASIF Global Financing
5.51%, 05/03/07⁴		113		113
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		736		736
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		1,641		1,641
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		2,886		2,886
BMW US Capital LLC
5.32%, 10/15/07⁴		1,132		1,132
BNP Paribas
5.36%, 05/18/07⁴		2,094		2,094
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		826		826
CC USA Inc.
5.37%, 07/30/07⁴		566		566
Commodore CDO Ltd.
5.47%, 06/12/07⁴		283		283
Credit Agricole SA
5.34%, 07/23/07		1,132		1,132
Credit Suisse First Boston NY
5.38%, 04/24/07		566		566
Cullinan Finance Corp.
5.36%, 04/25/07⁴		283		283
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		283		283
DEPFA Bank PLC
5.43%, 09/14/07		1,132		1,132
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		1,302		1,302
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		1,132		1,132
Fifth Third Bancorp
5.30%, 11/23/07⁴		2,264		2,264
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		1,132		1,132
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		1,188		1,189
Granite Master Issuer PLC
5.29%, 08/20/07⁴		3,961		3,961
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		905		906
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		1,698		1,698
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		1,132		1,132
Holmes Financing PLC
5.29%, 07/16/07⁴		1,981		1,981
JP Morgan Chase & Co.
5.29%, 08/02/07		849		849
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		849		849
Kestrel Funding LLC
5.30%, 07/11/07⁴		453		453
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		679		679
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		1,180		1,180
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		1,245		1,245
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		448		448
Marshall & Ilsley Bank
5.30%, 10/15/07		622		622


44		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. OIL & GAS EXPLORATION & PRODUCTION INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Master Funding LLC
5.35%, 04/25/07⁴	$	1,019	$	1,019
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		1,698		1,698
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		113		113
Monumental Global Funding II
5.38%, 12/27/06⁴		226		226
Mound Financing PLC
5.29%, 05/08/07⁴		1,064		1,064
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		4,074		4,075
National City Bank of Indiana
5.37%, 05/21/07		566		566
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		3,735		3,736
Newcastle Ltd.
5.34%, 04/24/07⁴		399		399
Northern Rock PLC
5.36%, 08/03/07⁴		1,358		1,358
Northlake CDO I
5.46%, 09/06/07⁴		340		340
Principal Life Global Funding I
5.82%, 02/08/07		509		510
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		1,641		1,641
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		1,132		1,132
Strips III LLC
5.37%, 07/24/07⁴		260		260
SunTrust Bank
5.29%, 05/01/07		1,132		1,132
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		2,762		2,761
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		1,584		1,585
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		1,517		1,517
Wachovia Bank N.A.
5.36%, 05/22/07		2,264		2,264
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		849		849
Wells Fargo & Co.
5.33%, 11/15/07⁴		566		566
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		849		849
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		3,395		3,394
Wind Master Trust
5.31%, 07/25/07⁴		453		453

				76,023

TOTAL SHORT-TERM INVESTMENTS (Cost: $315,340)				315,340

TOTAL INVESTMENTS IN SECURITIES – 100.42% (Cost: $53,551,023)				52,791,485
Other Assets, Less Liabilities – (0.42)%				(221,025	)

NET ASSETS – 100.00%			$	52,570,460

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		45

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. OIL EQUIPMENT & SERVICES INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 100.02%
HOLDING COMPANIES – DIVERSIFIED – 0.13%
Resource America Inc. Class A	2,380	$	54,764

			54,764
OIL & GAS – 29.46%
Atwood Oceanics Inc.¹	3,951		182,536
Diamond Offshore Drilling Inc.	8,509		589,078
ENSCO International Inc.	21,012		1,028,958
GlobalSantaFe Corp.	31,991		1,660,333
Grey Wolf Inc.¹	28,502		199,514
Helmerich & Payne Inc.	13,744		329,169
Nabors Industries Ltd.¹	40,466		1,249,590
Noble Corp.	18,567		1,301,547
Parallel Petroleum Corp.¹	5,617		113,744
Parker Drilling Co.¹	16,370		134,070
Patterson-UTI Energy Inc.	23,295		540,444
Petroleum Development Corp.¹	2,428		112,052
Pioneer Drilling Co.¹	7,501		98,488
Pride International Inc.¹	22,873		631,524
Rowan Companies Inc.	15,413		514,486
TODCO¹	8,832		301,436
Transocean Inc.¹	41,039		2,976,969
Unit Corp.¹	6,651		308,540

			12,272,478
OIL & GAS SERVICES – 69.94%
Baker Hughes Inc.	42,918		2,963,488
BJ Services Co.	40,415		1,218,916
Cameron International Corp.¹	15,510		777,051
CARBO Ceramics Inc.	2,928		98,674
Complete Production Services Inc.¹	6,074		117,167
Dresser-Rand Group Inc.¹	7,544		163,629
Dril-Quip Inc.¹	3,507		138,106
FMC Technologies Inc.¹	9,713		587,151
Global Industries Ltd.¹	12,497		207,450
Grant Prideco Inc.¹	18,197		687,301
Halliburton Co.	131,706		4,260,689
Hanover Compressor Co.¹	12,656		234,389
Helix Energy Solutions Group Inc.¹	11,761		379,880
Hercules Offshore Inc.¹	3,157		112,452
Horizon Offshore Inc.	4,086		70,524
Hornbeck Offshore Services Inc.¹	3,498		126,243
Hydril Co. LP¹	2,892		173,665
Input/Output Inc.¹	10,613		118,972
Lone Star Technologies Inc.¹	4,457		215,184
Lufkin Industries Inc.	2,208		133,231
National Oilwell Varco Inc.¹	23,249		1,404,240
Newpark Resources Inc.¹	13,704		80,579
Oceaneering International Inc.¹	7,766		279,498
Oil States International Inc.¹	6,807		197,675
RPC Inc.	4,051		87,988
Schlumberger Ltd.	144,842		9,136,632
SEACOR Holdings Inc.¹	3,167		283,383
Smith International Inc.	28,847		1,138,880
Superior Energy Services Inc.¹	11,471		359,042
Tetra Technologies Inc.¹	10,354		268,169
Tidewater Inc.	8,063		400,973
Universal Compression Holdings Inc.¹	4,345		261,830
Veritas DGC Inc.¹	4,802		345,792
Weatherford International Ltd.¹	46,220		1,898,718
W-H Energy Services Inc.¹	4,327		202,633

			29,130,194
TRANSPORTATION – 0.49%
Bristow Group Inc.¹	3,319		110,191
GulfMark Offshore Inc.¹	2,756		95,165

			205,356

TOTAL COMMON STOCKS (Cost: $45,346,591)			41,662,792

SHORT-TERM INVESTMENTS – 0.01%
MONEY MARKET FUNDS – 0.01%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	3,680		3,680

			3,680

TOTAL SHORT-TERM INVESTMENTS (Cost: $3,680)			3,680

TOTAL INVESTMENTS IN SECURITIES – 100.03% (Cost: $45,350,271)			41,666,472
Other Assets, Less Liabilities – (0.03)%			(13,638	)

NET ASSETS – 100.00%		$	41,652,834

¹	Non-income earning security.

²	Affiliated 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.


46		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. PHARMACEUTICALS INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.88%
HEALTH CARE – PRODUCTS – 8.34%
Johnson & Johnson	69,235	$	4,666,439

			4,666,439
HOUSEHOLD PRODUCTS & WARES – 0.91%
Prestige Brands Holdings Inc.¹	43,385		511,943

			511,943
PHARMACEUTICALS – 90.63%
Abbott Laboratories	65,931		3,132,382
Abraxis BioScience Inc.¹	22,818		602,395
Adams Respiratory Therapeutics Inc.¹	16,799		724,037
Adolor Corp.¹	43,142		591,477
Alkermes Inc.¹	54,322		912,610
Allergan Inc.	16,771		1,937,050
Alpharma Inc. Class A	29,861		659,032
Barr Pharmaceuticals Inc.¹	24,604		1,288,511
Bristol-Myers Squibb Co.	109,868		2,719,233
Cephalon Inc.¹	19,456		1,365,422
Connetics Corp.¹	44,572		759,507
Endo Pharmaceuticals Holdings Inc.¹	39,558		1,128,985
Forest Laboratories Inc.¹	37,058		1,813,618
Hospira Inc.¹	37,616		1,367,342
King Pharmaceuticals Inc.¹	71,254		1,192,079
Kos Pharmaceuticals Inc.¹	14,677		730,181
K-V Pharmaceutical Co. Class A¹	28,872		644,423
Lilly (Eli) & Co.	51,304		2,873,537
Medicines Co. (The)¹	31,928		828,851
Medicis Pharmaceutical Corp. Class A	27,307		956,837
Merck & Co. Inc.	84,219		3,825,227
MGI Pharma Inc.¹	46,468		884,286
Mylan Laboratories Inc.	58,599		1,201,279
Noven Pharmaceuticals Inc.¹	23,010		511,052
Nuvelo Inc.¹	34,715		640,145
Par Pharmaceutical Companies Inc.¹	31,142		606,958
Perrigo Co.	48,518		867,987
Pfizer Inc.	162,129		4,320,738
Pharmion Corp.¹	28,832		704,942
Salix Pharmaceuticals Ltd.¹	42,303		563,899
Schering-Plough Corp.	109,800		2,430,972
Sciele Pharma Inc.¹	29,528		644,006
Sepracor Inc.¹	27,043		1,399,746
Theravance Inc.¹	27,604		868,422
Valeant Pharmaceuticals International	44,073		823,284
Watson Pharmaceuticals Inc.¹	38,738		1,042,440
Wyeth	61,780		3,152,633

			50,715,525

TOTAL COMMON STOCKS (Cost: $52,677,303)			55,893,907
SHORT-TERM INVESTMENTS – 0.07%
MONEY MARKET FUNDS – 0.07%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	36,855		36,855

			36,855

TOTAL SHORT-TERM INVESTMENTS (Cost: $36,855)			36,855

TOTAL INVESTMENTS IN SECURITIES – 99.95% (Cost: $52,714,158)			55,930,762
Other Assets, Less Liabilities – 0.05%			27,551

NET ASSETS – 100.00%		$	55,958,313

¹	Non-income earning security.

²	Affiliated 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.


SCHEDULES OF INVESTMENTS		47

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. REGIONAL BANKS INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.68%
BANKS – 83.36%
AMCORE Financial Inc.	761	$	23,827
AmSouth Bancorp	11,331		342,423
Associated Bancorp	4,368		143,445
BancorpSouth Inc.	2,680		68,474
Bank of Hawaii Corp.	116		6,052
Bank of New York Co. Inc. (The)	26,142		898,501
BB&T Corp.	18,377		799,767
Cathay General Bancorp	1,614		55,602
Chittenden Corp.	1,714		50,546
Citizens Banking Corp.	1,719		44,642
City National Corp.	1,482		98,642
Colonial BancGroup Inc. (The)	5,453		129,999
Comerica Inc.	5,741		334,069
Commerce Bancorp Inc.	6,379		222,755
Commerce Bancshares Inc.	2,377		117,685
Compass Bancshares Inc.	4,389		246,925
Cullen/Frost Bankers Inc.	1,952		105,720
East West Bancorp Inc.	1,928		70,391
Fifth Third Bancorp	16,176		644,614
First BanCorp (Puerto Rico)	2,973		29,433
First Horizon National Corp.	4,394		172,772
First Midwest Bancorp Inc.	1,828		69,519
FirstMerit Corp.	2,936		68,174
FNB Corp. (Pennsylvania)	2,357		39,904
Fulton Financial Corp.	6,234		99,806
Greater Bay Bancorp	1,874		48,255
Huntington Bancshares Inc.	7,876		192,253
KeyCorp	13,976		519,069
M&T Bank Corp.	2,729		332,419
Marshall & Ilsley Corp.	7,504		359,742
Mercantile Bankshares Corp.	4,434		199,885
National City Corp.	19,553		728,349
North Fork Bancorp Inc.	14,760		421,841
Northern Trust Corp.	6,710		394,011
Old National Bancorp	2,446		46,425
Pacific Capital Bancorp	114		3,507
Park National Corp.	433		43,902
PNC Financial Services Group	10,025		702,051
Popular Inc.	9,199		167,330
Provident Bankshares Corp.	1,244		44,958
Regions Financial Corp.	15,525		589,174
Republic Bancorp Inc.	2,871		38,414
Sky Financial Group Inc.	4,035		101,077
South Financial Group Inc. (The)	2,700		71,631
Sterling Bancshares Inc.	1,521		27,849
SunTrust Banks Inc.	12,272		969,365
Susquehanna Bancshares Inc.	1,963		49,055
SVB Financial Group¹	88		4,050
Synovus Financial Corp.	9,487		278,728
TCF Financial Corp.	4,659		121,274
TD Banknorth Inc.	3,688		109,091
Texas Regional Bancshares Inc. Class A	1,693		65,773
TrustCo Bank Corp. NY	3,254		35,957
Trustmark Corp.	1,810		57,305
U.S. Bancorp	60,534		2,048,472
UCBH Holdings Inc.	3,475		59,561
Umpqua Holdings Corp.	2,095		59,163
UnionBanCal Corp.	103		5,931
United Bancshares Inc.	1,478		56,445
Valley National Bancorp	4,136		107,784
W Holding Co. Inc.	423		2,407
Webster Financial Corp.	1,772		85,623
Westamerica Bancorp	1,198		59,720
Whitney Holding Corp.	2,214		72,309
Wilmington Trust Corp.	2,421		100,665
Wintrust Financial Corp.	963		46,474
Zions Bancorporation	3,662		294,425

			14,605,406
DIVERSIFIED FINANCIAL SERVICES – 0.97%
Doral Financial Corp.	361		1,661
IndyMac Bancorp Inc.	2,430		110,443
Lazard Ltd. Class A	1,379		58,470

			170,574
INTERNET – 0.07%
NetBank Inc.	2,308		12,255

			12,255
SAVINGS & LOANS – 15.28%
Anchor BanCorp Wisconsin Inc.	680		19,747
Astoria Financial Corp.	3,083		89,438
Dime Community Bancshares Inc.	1,110		15,484


48		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. REGIONAL BANKS INDEX FUND

October 31, 2006


Security	Shares	Value
Downey Financial Corp.	770	$	53,038
First Niagara Financial Group Inc.	3,735		53,485
FirstFed Financial Corp.¹	639		39,471
Harbor Florida Bancshares Inc.	737		33,467
Hudson City Bancorp Inc.	18,356		252,028
MAF Bancorp Inc.	1,045		45,029
New York Community Bancorp Inc.	9,107		148,899
NewAlliance Bancshares Inc.	3,812		59,010
People’s Bank	2,001		81,441
PFF Bancorp Inc.	722		22,389
Provident Financial Services Inc.	2,418		44,346
Sovereign Bancorp Inc.	11,305		269,737
Washington Federal Inc.	2,915		67,745
Washington Mutual Inc.	32,673		1,382,068

			2,676,822

TOTAL COMMON STOCKS (Cost: $17,308,993)			17,465,057

SHORT-TERM INVESTMENTS – 0.19%
MONEY MARKET FUNDS – 0.19%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	33,221		33,221

			33,221

TOTAL SHORT-TERM INVESTMENTS (Cost: $33,221)			33,221

TOTAL INVESTMENTS IN SECURITIES – 99.87% (Cost: $17,342,214)			17,498,278
Other Assets, Less Liabilities – 0.13%			22,555

NET ASSETS – 100.00%		$	17,520,833

¹	Non-income earning security.

²	Affiliated 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.


SCHEDULES OF INVESTMENTS		49

Statements of Assets and Liabilities (Unaudited)

iSHARES^® TRUST

October 31, 2006


	*iShares Dow Jones U.S.*
	Aerospace & Defense Index Fund		Broker-Dealers Index Fund			Healthcare Providers Index Fund			Home Construction Index Fund			Insurance Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	88,089,639	$	106,483,016		$	109,413,165		$	81,118,758		$	12,599,214

Affiliated issuers^a	$	77,864	$	176,931		$	161,767		$	38,874		$	10,637

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	90,201,110	$	114,794,983		$	106,159,447		$	76,368,519		$	12,860,592
Affiliated issuers^a		77,864		176,931			161,767			38,874			10,637
Receivables:
Investment securities sold		369,914		—			—			742,214			—
Dividends and interest		40,467		26,736			2,239			57,278			3,544
Capital shares sold		115,937		11,549			695,069			—			—

Total Assets		90,805,292		115,010,199			107,018,522			77,206,885			12,874,773

LIABILITIES
Payables:
Investment securities purchased		371,444		—			—			715,845			—
Collateral for securities on loan (Note 5)		1,796,035		2,942,566			74,643			6,238,129			—
Capital shares redeemed		—		—			—			251,386			—
Investment advisory fees (Note 2)		31,059		34,758			36,479			30,839			5,927

Total Liabilities		2,198,538		2,977,324			111,122			7,236,199			5,927

NET ASSETS	$	88,606,754	$	112,032,875		$	106,907,400		$	69,970,686		$	12,868,846

Net assets consist of:
Paid–in capital	$	85,731,018	$	105,643,701		$	108,090,337		$	73,201,638		$	12,046,484
Undistributed net investment income (accumulated net investment loss)		4,096		30,028			(67,554	)		35,210			4,453
Undistributed net realized gain (accumulated net realized loss)		760,169		(1,952,821	)		2,138,335			1,484,077			556,531
Net unrealized appreciation (depreciation)		2,111,471		8,311,967			(3,253,718	)		(4,750,239	)		261,378

NET ASSETS	$	88,606,754	$	112,032,875		$	106,907,400		$	69,970,686		$	12,868,846

Shares outstanding		1,750,000		2,150,000			2,100,000			1,800,000			250,000

Net asset value per share	$	50.63	$	52.11		$	50.91		$	38.87		$	51.48

^a	See Note 2.

^b	Securities on loan with market values of $1,740,851, $2,863,835, $73,047, $6,055,883 and $—, respectively. See Note 5.

See notes to the financial statements.


50		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities (Unaudited) (Continued)

iSHARES^® TRUST

October 31, 2006


	*iShares Dow Jones U.S.*
	Medical Devices Index Fund			Oil & Gas Exploration & Production Index Fund			Oil Equipment & Services Index Fund			Pharmaceuticals Index Fund			Regional Banks Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	31,678,034		$	53,375,047		$	45,346,591		$	52,677,303		$	17,308,993

Affiliated issuers^a	$	14,543		$	175,976		$	3,680		$	36,855		$	33,221

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	31,671,834		$	52,615,509		$	41,662,792		$	55,893,907		$	17,465,057
Affiliated issuers^a		14,543			175,976			3,680			36,855			33,221
Receivables:
Investment securities sold		—			196,400			—			—			—
Dividends and interest		1,716			9,004			1,495			50,367			54,817
Capital shares sold		292			—			—			—			—
Capital shares redeemed		—			—			1,917			—			—

Total Assets		31,688,385			52,996,889			41,669,884			55,981,129			17,553,095

LIABILITIES
Payables:
Investment securities purchased		—			269,744			—			—			25,061
Collateral for securities on loan (Note 5)		—			139,364			—			—			—
Capital shares sold		—			—			646			—			—
Investment advisory fees (Note 2)		11,709			17,321			16,404			22,816			7,201

Total Liabilities		11,709			426,429			17,050			22,816			32,262

NET ASSETS	$	31,676,676		$	52,570,460		$	41,652,834		$	55,958,313		$	17,520,833

Net assets consist of:
Paid-in capital	$	31,743,258		$	53,448,667		$	45,200,971		$	52,799,471		$	16,986,071
Undistributed net investment income (accumulated net investment loss)		(2,332	)		6,671			(12,311	)		27,617			79,432
Undistributed net realized gain (accumulated net realized loss)		(58,050	)		(125,340	)		147,973			(85,379	)		299,266
Net unrealized appreciation (depreciation)		(6,200	)		(759,538	)		(3,683,799	)		3,216,604			156,064

NET ASSETS	$	31,676,676		$	52,570,460		$	41,652,834		$	55,958,313		$	17,520,833

Shares outstanding		650,000			1,100,000			950,000			1,050,000			350,000

Net asset value per share	$	48.73		$	47.79		$	43.85		$	53.29		$	50.06

^a	See Note 2.

^b	Securities on loan with market values of $—, $135,095, $—, $— and $—, respectively. See Note 5.

See notes to the financial statements.


FINANCIAL STATEMENTS		51

Statements of Operations (Unaudited)

iSHARES^® TRUST

Period ended October 31, 2006


	*iShares Dow Jones U.S.*
	Aerospace & Defense Index Fund^a			Broker-Dealers Index Fund^a			Healthcare Providers Index Fund^a			Home Construction Index Fund^a			Insurance Index Fund^a
NET INVESTMENT INCOME
Dividends from unaffiliated issuers	$	267,721		$	193,560		$	48,057		$	182,243		$	151,617
Interest from affiliated issuers^b		1,547			1,418			646			1,028			425
Securities lending income		8,908			36,901			167			37,530			—

Total investment income		278,176			231,879			48,870			220,801			152,042

EXPENSES
Investment advisory fees (Note 2)		142,297			144,575			116,424			88,076			54,041

Total expenses		142,297			144,575			116,424			88,076			54,041

Net investment income (loss)		135,879			87,304			(67,554	)		132,725			98,001

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(398,147	)		(1,139,886	)		(546,599	)		(1,239,056	)		(102,270	)
In-kind redemptions		1,158,316			(812,935	)		2,684,934			2,723,133			658,801

Net realized gain (loss)		760,169			(1,952,821	)		2,138,335			1,484,077			556,531

Net change in unrealized appreciation (depreciation)		2,111,471			8,311,967			(3,253,718	)		(4,750,239	)		261,378

Net realized and unrealized gain (loss)		2,871,640			6,359,146			(1,115,383	)		(3,266,162	)		817,909

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	3,007,519		$	6,446,450		$	(1,182,937	)	$	(3,133,437	)	$	915,910

^a	For the period from May 1, 2006 (commencement of operations) to October 31, 2006.

^b	See Note 2.

See notes to the financial statements.


52		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations (Unaudited) (Continued)

iSHARES^® TRUST

Period ended October 31, 2006


	*iShares Dow Jones U.S.*
	Medical Devices Index Fund^a			Oil & Gas Exploration & Production Index Fund^a			Oil Equipment & Services Index Fund^a			Pharmaceuticals Index Fund^a			Regional Banks Index Fund^a
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^b	$	59,985		$	120,655		$	67,869		$	308,020		$	438,762
Interest from affiliated issuers^c		446			905			320			1,022			977
Securities lending income		255			800			97			—			—

Total investment income		60,686			122,360			68,286			309,042			439,739

EXPENSES
Investment advisory fees (Note 2)		62,728			77,732			70,521			99,049			65,924

Total expenses		62,728			77,732			70,521			99,049			65,924

Net investment income (loss)		(2,042	)		44,628			(2,235	)		209,993			373,815

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(59,926	)		(841,281	)		(414,155	)		(85,379	)		(89,014	)
In-kind redemptions		1,876			715,941			562,128			—			388,280

Net realized gain (loss)		(58,050	)		(125,340	)		147,973			(85,379	)		299,266

Net change in unrealized appreciation (depreciation)		(6,200	)		(759,538	)		(3,683,799	)		3,216,604			156,064

Net realized and unrealized gain (loss)		(64,250	)		(884,878	)		(3,535,826	)		3,131,225			455,330

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(66,292	)	$	(840,250	)	$	(3,538,061	)	$	3,341,218		$	829,145

^a	For the period from May 1, 2006 (commencement of operations) to October 31, 2006.

^b	Net of foreign withholding tax of $—, $—, $—, $— and $476, respectively.

^c	See Note 2.

See notes to the financial statements.


FINANCIAL STATEMENTS		53

Statements of Changes in Net Assets

iSHARES^® TRUST


	iShares Dow Jones U.S. Aerospace & Defense Index Fund			iShares Dow Jones U.S. Broker-Dealers *Index Fund*			iShares Dow Jones U.S. Healthcare Providers Index Fund
	Period from May 1, 2006^a to October 31, 2006 (Unaudited)			Period from May 1, 2006^a to October 31, 2006 (Unaudited)			Period from May 1, 2006^a to October 31, 2006 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)	$	135,879		$	87,304		$	(67,554	)
Net realized gain (loss)		760,169			(1,952,821	)		2,138,335
Net change in unrealized appreciation (depreciation)		2,111,471			8,311,967			(3,253,718	)

Net increase (decrease) in net assets resulting from operations		3,007,519			6,446,450			(1,182,937	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(131,783	)		(57,276	)		—

Total distributions to shareholders		(131,783	)		(57,276	)		—

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		100,456,647			203,086,515			141,929,239
Cost of shares redeemed		(14,725,629	)		(97,442,814	)		(33,838,902	)

Net increase in net assets from capital share transactions		85,731,018			105,643,701			108,090,337

INCREASE IN NET ASSETS		88,606,754			112,032,875			106,907,400
NET ASSETS
Beginning of period		—			—			—

End of period	$	88,606,754		$	112,032,875		$	106,907,400

Undistributed net investment income (accumulated net investment loss) included in net assets at end of period	$	4,096		$	30,028		$	(67,554	)

SHARES ISSUED AND REDEEMED
Shares sold		2,050,000			4,300,000			2,750,000
Shares redeemed		(300,000	)		(2,150,000	)		(650,000	)

Net increase in shares outstanding		1,750,000			2,150,000			2,100,000

^a	Commencement of operations.

See notes to the financial statements.


54		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	iShares Dow Jones U.S. Home Construction Index Fund			iShares Dow Jones U.S. Insurance *Index Fund*
	Period from May 1, 2006^a to October 31, 2006 (Unaudited)			Period from May 1, 2006^a to October 31, 2006 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	132,725		$	98,001
Net realized gain		1,484,077			556,531
Net change in unrealized appreciation (depreciation)		(4,750,239	)		261,378

Net increase (decrease) in net assets resulting from operations		(3,133,437	)		915,910

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(97,515	)		(93,548	)

Total distributions to shareholders		(97,515	)		(93,548	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		115,044,822			27,532,803
Cost of shares redeemed		(41,843,184	)		(15,486,319	)

Net increase in net assets from capital share transactions		73,201,638			12,046,484

INCREASE IN NET ASSETS		69,970,686			12,868,846
NET ASSETS
Beginning of period		—			—

End of period	$	69,970,686		$	12,868,846

Undistributed net investment income included in net assets at end of period	$	35,210		$	4,453

SHARES ISSUED AND REDEEMED
Shares sold		2,900,000			550,000
Shares redeemed		(1,100,000	)		(300,000	)

Net increase in shares outstanding		1,800,000			250,000

^a	Commencement of operations.

See notes to the financial statements.


FINANCIAL STATEMENTS		55

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	iShares Dow Jones U.S. Medical *Devices* *Index Fund*			*iShares Dow Jones U.S.* *Oil & Gas* *Exploration & Production* *Index Fund*			*iShares Dow Jones U.S.* *Oil* Equipment & Services Index Fund
	Period from May 1, 2006^a to October 31, 2006 (Unaudited)			Period from May 1, 2006^a to October 31, 2006 (Unaudited)			Period from May 1, 2006^a to October 31, 2006 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)	$	(2,042	)	$	44,628		$	(2,235	)
Net realized gain (loss)		(58,050	)		(125,340	)		147,973
Net change in unrealized appreciation (depreciation)		(6,200	)		(759,538	)		(3,683,799	)

Net decrease in net assets resulting from operations		(66,292	)		(840,250	)		(3,538,061	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(290	)		(37,957	)		(10,076	)

Total distributions to shareholders		(290	)		(37,957	)		(10,076	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		34,026,919			58,463,198			53,692,297
Cost of shares redeemed		(2,283,661	)		(5,014,531	)		(8,491,326	)

Net increase in net assets from capital share transactions		31,743,258			53,448,667			45,200,971

INCREASE IN NET ASSETS		31,676,676			52,570,460			41,652,834
NET ASSETS
Beginning of period		—			—			—

End of period	$	31,676,676		$	52,570,460		$	41,652,834

Undistributed net investment income (accumulated net investment loss) included in net assets at end of period	$	(2,332	)	$	6,671		$	(12,311	)

SHARES ISSUED AND REDEEMED
Shares sold		700,000			1,200,000			1,150,000
Shares redeemed		(50,000	)		(100,000	)		(200,000	)

Net increase in shares outstanding		650,000			1,100,000			950,000

^a	Commencement of operations.

See notes to the financial statements.


56		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	iShares Dow Jones U.S. Pharmaceuticals *Index Fund*			iShares Dow Jones U.S. Regional Banks *Index Fund*
	Period from May 1, 2006^a to October 31, 2006 (Unaudited)			Period from May 1, 2006^a to October 31, 2006 (Unaudited)
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	209,993		$	373,815
Net realized gain (loss)		(85,379	)		299,266
Net change in unrealized appreciation (depreciation)		3,216,604			156,064

Net increase in net assets resulting from operations		3,341,218			829,145

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(182,376	)		(294,383	)

Total distributions to shareholders		(182,376	)		(294,383	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		52,799,471			39,265,767
Cost of shares redeemed		—			(22,279,696	)

Net increase in net assets from capital share transactions		52,799,471			16,986,071

INCREASE IN NET ASSETS		55,958,313			17,520,833
NET ASSETS
Beginning of period		—			—

End of period	$	55,958,313		$	17,520,833

Undistributed net investment income included in net assets at end of period	$	27,617		$	79,432

SHARES ISSUED AND REDEEMED
Shares sold		1,050,000			800,000
Shares redeemed		—			(450,000	)

Net increase in shares outstanding		1,050,000			350,000

^a	Commencement of operations.

See notes to the financial statements.


FINANCIAL STATEMENTS		57

Financial Highlights

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Aerospace & Defense Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.11^b
Net realized and unrealized gain^c		0.61

Total from investment operations		0.72

Less distributions from:
Net investment income		(0.09	)

Total distributions		(0.09	)

Net asset value, end of period	$	50.63

Total return		0.30	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	88,607
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		0.46	%
Portfolio turnover rate^f		9	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


58		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Broker-Dealers Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.07^b
Net realized and unrealized gain^c		2.09

Total from investment operations		2.16

Less distributions from:
Net investment income		(0.05	)

Total distributions		(0.05	)

Net asset value, end of period	$	52.11

Total return		7.75	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	112,033
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		0.29	%
Portfolio turnover rate^f		17	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		59

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Healthcare Providers Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment loss		(0.07	)^b
Net realized and unrealized gain^c		0.98

Total from investment operations		0.91

Net asset value, end of period	$	50.91

Total return		2.64	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	106,907
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment loss to average net assets^e		(0.28	)%
Portfolio turnover rate^f		13	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


60		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Home Construction Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.14^b
Net realized and unrealized loss^c		(11.17	)

Total from investment operations		(11.03	)

Less distributions from:
Net investment income		(0.10	)

Total distributions		(0.10	)

Net asset value, end of period	$	38.87

Total return		(21.27	)%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	69,971
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		0.72	%
Portfolio turnover rate^f		15	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		61

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Insurance Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.21^b
Net realized and unrealized gain^c		1.46

Total from investment operations		1.67

Less distributions from:
Net investment income		(0.19	)

Total distributions		(0.19	)

Net asset value, end of period	$	51.48

Total return		4.29	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	12,869
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		0.87	%
Portfolio turnover rate^f		11	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


62		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Medical Devices Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment loss		(0.00	)^b,c
Net realized and unrealized loss^d		(1.27	)

Total from investment operations		(1.27	)

Less distributions from:
Net investment income		(0.00	)^c

Total distributions		(0.00	)

Net asset value, end of period	$	48.73

Total return		(1.41	)%^e

Ratios/Supplemental data:
Net assets, end of period (000s)	$	31,677
Ratio of expenses to average net assets^f		0.48	%
Ratio of net investment loss to average net assets^f		(0.02	)%
Portfolio turnover rate^g		8	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

^c	Rounds to less than $0.01.

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

^e	Not annualized.

^f	Annualized for periods of less than one year.

^g	Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		63

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.07^b
Net realized and unrealized loss^c		(2.23	)

Total from investment operations		(2.16	)

Less distributions from:
Net investment income		(0.05	)

Total distributions		(0.05	)

Net asset value, end of period	$	47.79

Total return		(5.81	)%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	52,570
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		0.28	%
Portfolio turnover rate^f		17	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


64		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Oil Equipment & Services Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment loss		(0.00	)^b,c
Net realized and unrealized loss^d		(6.13	)

Total from investment operations		(6.13	)

Less distributions from:
Net investment income		(0.02	)

Total distributions		(0.02	)

Net asset value, end of period	$	43.85

Total return		(14.25	)%^e

Ratios/Supplemental data:
Net assets, end of period (000s)	$	41,653
Ratio of expenses to average net assets^f		0.48	%
Ratio of net investment loss to average net assets^f		(0.02	)%
Portfolio turnover rate^g		8	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

^c	Rounds to less than $0.01.

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

^e	Not annualized.

^f	Annualized for periods of less than one year.

^g	Portfolio turnover rate excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		65

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Pharmaceuticals Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.26^b
Net realized and unrealized gain^c		3.23

Total from investment operations		3.49

Less distributions from:
Net investment income		(0.20	)

Total distributions		(0.20	)

Net asset value, end of period	$	53.29

Total return		7.45	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	55,958
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		1.02	%
Portfolio turnover rate^f		8	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


66		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout the period)


	iShares Dow Jones U.S. Regional Banks Index Fund
	Period from May 1, 2006^a to Oct. 31, 2006 (Unaudited)
Net asset value, beginning of period	$	50.00

Income from investment operations:
Net investment income		0.67^b
Net realized and unrealized gain^c		0.13

Total from investment operations		0.80

Less distributions from:
Net investment income		(0.74	)

Total distributions		(0.74	)

Net asset value, end of period	$	50.06

Total return		2.99	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	17,521
Ratio of expenses to average net assets^e		0.48	%
Ratio of net investment income to average net assets^e		2.72	%
Portfolio turnover rate^f		6	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		67

Notes to the Financial Statements (Unaudited)

iSHARES^® TRUST

These financial statements relate only to the iShares Dow Jones U.S. Aerospace & Defense, iShares Dow Jones U.S. Broker-Dealers, iShares Dow Jones U.S. Healthcare Providers, iShares Dow Jones U.S. Home Construction, iShares Dow Jones U.S. Insurance, iShares Dow Jones U.S. Medical Devices, iShares Dow Jones U.S. Oil & Gas Exploration & Production, iShares Dow Jones U.S. Oil Equipment & Services, iShares Dow Jones U.S. Pharmaceuticals and iShares Dow Jones U.S. Regional Banks Index Funds (each, a “Fund,” collectively, the “Funds”). The Funds commenced operations on May 1, 2006.

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 its underlying index. 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.

1.	*SIGNIFICANT ACCOUNTING POLICIES*

SECURITY VALUATION

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.


68		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

DISTRIBUTIONS TO SHAREHOLDERS

The tax character of current year distributions will be determined at the end of the current fiscal year.

FEDERAL INCOME TAXES

For the period ended October 31, 2006, certain Funds realized net capital gains or losses resulting from in-kind redemptions of large blocks of shares or multiples thereof (“Creation Units”). Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gains or losses to paid-in-capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the period ended October 31, 2006 are disclosed in the Funds’ Statements of Operations.

As of October 31, 2006, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:


*iShares Index Fund*	*Tax Cost*		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation (Depreciation)
Dow Jones U.S. Aerospace & Defense	$	88,320,215	$	3,574,882	$	(1,616,123	)	$	1,958,759
Dow Jones U.S. Broker-Dealers		107,058,888		8,650,538		(737,512	)		7,913,026
Dow Jones U.S. Healthcare Providers		109,964,168		943,794		(4,586,748	)		(3,642,954	)
Dow Jones U.S. Home Construction		81,498,287		69,497		(5,160,391	)		(5,090,894	)
Dow Jones U.S. Insurance		12,613,544		421,824		(164,139	)		257,685
Dow Jones U.S. Medical Devices		31,696,325		1,622,287		(1,632,235	)		(9,948	)
Dow Jones U.S. Oil & Gas Exploration & Production		54,247,608		419,928		(1,876,051	)		(1,456,123	)
Dow Jones U.S. Oil Equipment & Services		45,673,015		222,356		(4,228,899	)		(4,006,543	)
Dow Jones U.S. Pharmaceuticals		52,749,015		4,173,816		(992,069	)		3,181,747
Dow Jones U.S. Regional Banks		17,357,365		435,044		(294,131	)		140,913


NOTES TO THE FINANCIAL STATEMENTS		69

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

REPURCHASE AGREEMENTS

2.	*AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES*

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


*iShares Index Fund*	Investment Advisory Fee
Dow Jones U.S. Aerospace & Defense	0.48	%
Dow Jones U.S. Broker-Dealers	0.48
Dow Jones U.S. Healthcare Providers	0.48
Dow Jones U.S. Home Construction	0.48
Dow Jones U.S. Insurance	0.48
Dow Jones U.S. Medical Devices	0.48
Dow Jones U.S. Oil & Gas Exploration & Production	0.48
Dow Jones U.S. Oil Equipment & Services	0.48
Dow Jones U.S. Pharmaceuticals	0.48
Dow Jones U.S. Regional Banks	0.48


70		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^{^®} TRUST

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 period ended October 31, 2006, BGI earned securities lending agent fees as follows:


*iShares Index Fund*	Securities Lending Agent Fees
Dow Jones U.S. Aerospace & Defense	$	8,908
Dow Jones U.S. Broker-Dealers		36,901
Dow Jones U.S. Healthcare Providers		167
Dow Jones U.S. Home Construction		37,530
Dow Jones U.S. Medical Devices		255
Dow Jones U.S. Oil & Gas Exploration & Production		800
Dow Jones U.S. Oil Equipment & Services		97

Cross trades for the period ended October 31, 2006, if any, were executed by the Funds pursuant to Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds to which BGFA (or an affiliate) serves as investment adviser. At its regularly scheduled quarterly meetings, the Board reviews such transactions as of the most recent calendar quarter, for compliance with the requirements and restrictions set forth by Rule 17a-7.


iShares Index Fund and Name of Affiliated Issuer	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Period (in 000s)	Value at End of Period		Interest Income
Dow Jones U.S. Aerospace & Defense IMMF	7,855	7,777	78	$	77,864	$	1,547
Dow Jones U.S. Broker-Dealers IMMF	6,910	6,733	177		176,931		1,418
Dow Jones U.S. Healthcare Providers IMMF	3,250	3,088	162		161,767		646


NOTES TO THE FINANCIAL STATEMENTS		71

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST


iShares Index Fund and Name of Affiliated Issuer	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Period (in 000s)	Value at End of Period		Interest Income
Dow Jones U.S. Home Construction IMMF	4,415	4,376	39	$	38,874	$	1,028
Dow Jones U.S. Insurance IMMF	2,020	2,009	11		10,637		425
Dow Jones U.S. Medical Devices IMMF	2,238	2,223	15		14,543		446
Dow Jones U.S. Oil & Gas Exploration & Production IMMF	4,350	4,174	176		175,976		905
Dow Jones U.S. Oil Equipment & Services IMMF	1,554	1,550	4		3,680		320
Dow Jones U.S. Pharmaceuticals IMMF	4,963	4,926	37		36,855		1,022
Dow Jones U.S. Regional Banks IMMF	4,493	4,460	33		33,221		977

As of October 31, 2006, certain trustees and officers of the Trust are also officers of BGI and/or BGFA.

3.	*INVESTMENT PORTFOLIO TRANSACTIONS*

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the period ended October 31, 2006 were as follows:


*iShares Index Fund*	*Purchases*		*Sales*
Dow Jones U.S. Aerospace & Defense	$	5,459,818	$	5,411,733
Dow Jones U.S. Broker-Dealers		11,910,810		11,870,564
Dow Jones U.S. Healthcare Providers		6,771,964		7,398,812
Dow Jones U.S. Home Construction		6,989,497		5,729,028
Dow Jones U.S. Insurance		2,190,815		2,197,919
Dow Jones U.S. Medical Devices		2,031,300		2,022,812
Dow Jones U.S. Oil & Gas Exploration & Production		5,627,848		5,475,504
Dow Jones U.S. Oil Equipment & Services		2,386,588		2,365,372
Dow Jones U.S. Pharmaceuticals		3,172,312		3,158,229
Dow Jones U.S. Regional Banks		1,536,397		1,601,266


72		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

In-kind transactions (see Note 4) for the period ended October 31, 2006 were as follows:


*iShares Index Fund*	*In-kind Purchases*		*In-kind Sales*
Dow Jones U.S. Aerospace & Defense	$	100,204,094	$	14,718,744
Dow Jones U.S. Broker-Dealers		202,798,266		97,345,241
Dow Jones U.S. Healthcare Providers		141,196,233		33,369,198
Dow Jones U.S. Home Construction		113,516,570		41,380,487
Dow Jones U.S. Insurance		27,517,002		15,467,215
Dow Jones U.S. Medical Devices		34,007,736		2,280,140
Dow Jones U.S. Oil & Gas Exploration & Production		58,251,440		5,042,761
Dow Jones U.S. Oil Equipment & Services		53,667,654		8,490,252
Dow Jones U.S. Pharmaceuticals		52,748,599		–
Dow Jones U.S. Regional Banks		39,230,148		22,155,552

4.	*CAPITAL SHARE TRANSACTIONS*

5.	*LOANS OF PORTFOLIO SECURITIES*

As of October 31, 2006, 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 or non-U.S. Government debt securities. The market value of the securities on loan as of October 31, 2006 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed


NOTES TO THE FINANCIAL STATEMENTS		73

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6.	*RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT*


74		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contracts (Unaudited)

iSHARES^® TRUST

Under Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”), the Trust’s Board of Trustees, including a majority of Trustees who are not “interested persons” of the Trust (as that term is defined in the 1940 Act), who are commonly referred to as the “Independent Trustees,” is required to consider each Fund’s entering into an Investment Advisory Contract with BGFA (each, an “Advisory Contract”). Pursuant to Section 15(c), the Board of Trustees (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 proposed Advisory Contracts. At a meeting held on March 9, 2006, the Board approved the selection of BGFA and the Advisory Contracts, based on its review of qualitative and quantitative information provided by BGFA. In selecting BGFA and approving the Advisory Contracts for the Funds, the Board, including the Independent Trustees, 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. In reviewing the scope of services to be 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 overtime, including increasing the number of their employees, to the support of the other iShares funds. The Board also considered BGFA’s compliance program and its compliance record with respect to the other iShares funds. In that regard, the Board noted that BGFA would provide information regarding portfolio management and compliance to the Board on a periodic basis in connection with regularly scheduled meetings of the Board, similar to the other iShares funds. The Board also reviewed the background and experience of the persons that will be 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. 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 supported the Board’s selection of BGFA as investment adviser to the Funds.

FUNDS’ EXPENSES

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”). Because there are few, if any, exchange traded funds or index funds that track indices similar to those tracked by the Funds, the Lipper Peer Groups included mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper 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 the investment advisory fee rates and overall expense components for the Funds were generally lower than 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 of each Fund, as proposed to be managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Peer Group, were satisfactory for the purposes of approving the Advisory Contracts.


BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACTS		75

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

iSHARES^® TRUST

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

The Board did not consider the profitability of the Funds to BGFA based on the fees payable under the Advisory Contracts or revenue to be received by BGFA or its affiliates in connection with services to be provided to the Funds since the proposed relationship had not yet commenced. However, the Board noted that it would consider and monitor these matters in the future.

ECONOMIES OF SCALE

The Board noted that the Advisory Contracts for the Funds do not provide for breakpoints in the investment advisory fee rates as a result of any increases in the asset levels of the 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 generally 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. Based on this review, the Board, recognizing its responsibility to consider this issue at least annually following an initial two-year period, concluded that the structure of the investment advisory fees at present reflects the sharing of potential 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 limited 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 registered under the 1940 Act for which BGFA provides investment advisory/management services. The Board noted that BGFA and its affiliates do not provide investment advisory/management services to mutual funds, collective funds, separate accounts or other exchange traded funds that have substantially similar investment objectives and strategies as the Funds. Accordingly, the Board noted that comparative investment advisory/management fee information for such mutual funds, collective funds, separate accounts or other exchange traded funds was not available.

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

The Board did not consider any ancillary revenue to be received by BGFA and/or its affiliates in connection with the services to be provided to the Funds by BGFA since the proposed relationship had not yet commenced. However, the Board noted that BGFA and its affiliates would 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 selecting brokers for 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 will be reported to the Board pursuant to Rule 17e-1 under the 1940 Act.

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 to be 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. 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 approve the Advisory Contracts.


76		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes:


NOTES		77

The iShares^® Family of Funds

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares 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 Domestic Subsector Index Funds

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

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

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

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

iShares Dow Jones U.S. Insurance (IAK)

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

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

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

iShares Dow Jones U.S. Pharmaceuticals (IHE)

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

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector(IXG)

iShares S&P Global Healthcare Sector(IXJ)

iShares S&P Global Industrials Sector(EXI)

iShares S&P Global Materials Sector(MXI)

iShares S&P Global Technology Sector(IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Specialty Index Funds

iShares KLD Select Social^SM (KLD)

iShares KLD 400 Social (DSI)

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)

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 2006 Semi-Annual Report.

3710-iS-1106


78		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

LOGO

Table of Contents


Fund Performance Overviews		1
Shareholder Expenses		9
Schedules of Investments		11
iShares Dow Jones U.S. Total Market Index Fund		11
iShares Dow Jones U.S. Energy Sector Index Fund		39
iShares Dow Jones U.S. Healthcare Sector Index Fund		46
iShares Dow Jones U.S. Technology Sector Index Fund		54
iShares Dow Jones U.S. Telecommunications Sector Index Fund		63
iShares Dow Jones U.S. Utilities Sector Index Fund		69
iShares Dow Jones Select Dividend Index Fund		76
iShares Dow Jones Transportation Average Index Fund		84
Financial Statements		90
Financial Highlights		97
Notes to the Financial Statements		105
Board Review and Approval of Investment Advisory Contract		112
iShares Family of Funds		118

Fund Performance Overview

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Total Market Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Total Market Index (the “Index”). The Index measures the performance of the U.S. equity broad market, and is comprised of all of the companies in the Dow Jones Large-Cap Index, Dow Jones Mid-Cap Index and Dow Jones Small-Cap Index. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 5.04%, while the Index returned 5.15%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
16.13%	16.31%	16.38%	7.98%	7.96%	8.19%	1.27%	1.26%	1.47%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
16.13%	16.31%	16.38%	46.81%	46.67%	48.25%	8.39%	8.33%	9.76%

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 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 (6/16/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Financial	21.54	%
Consumer Non-Cyclical	20.30
Communications	11.35
Industrial	11.06
Technology	10.63
Energy	9.27
Consumer Cyclical	9.20
Utilities	3.64
Basic Materials	2.81
Diversified	0.04
Short-Term and Other Net Assets	0.16

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Exxon Mobil Corp.	2.87	%
General Electric Co.	2.47
Microsoft Corp.	1.72
Citigroup Inc.	1.69
Bank of America Corp.	1.66
Procter & Gamble Co.	1.36
Johnson & Johnson	1.36
Pfizer Inc.	1.32
Altria Group Inc.	1.14
JP Morgan Chase & Co.	1.11

TOTAL	16.70	%


FUND PERFORMANCE OVERVIEWS		1

Fund Performance Overview

iSHARES^{^®}DOW JONES U.S. ENERGY SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Energy Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Oil & Gas Index (the “Index”). The Index measures the performance of the oil and gas sector of the U.S. equity market and includes companies in the following sectors: oil and gas producers, and oil equipment, services and distribution. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 0.19%, while the Index returned 1.00%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
17.66%	17.37%	18.68%	17.27%	17.19%	17.92%	12.00%	11.95%	12.62%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
17.66%	17.37%	18.68%	121.77%	121.04%	127.98%	106.26%	105.68%	113.72%

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 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 (6/16/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Oil & Gas	80.45	%
Oil & Gas Services	16.52
Pipelines	2.94
Electric	0.01
Short-Term and Other Net Assets	0.08

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Exxon Mobil Corp.	24.19	%
Chevron Corp.	17.27
Schlumberger Ltd.	6.34
ConocoPhillips	4.85
Occidental Petroleum Corp.	4.41
Devon Energy Corp.	2.95
Baker Hughes Inc.	2.70
Marathon Oil Corp.	2.56
Valero Energy Corp.	2.52
Halliburton Co.	2.47

TOTAL	70.26	%


2		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^{^®}DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Healthcare Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Healthcare Index (the “Index”). The Index measures the performance of the healthcare sector of the U.S. equity market and includes companies in the following sectors: healthcare equipment and services and pharmaceuticals and biotechnology. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 7.40%, while the Index returned 7.64%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
10.16%	10.32%	10.67%	2.44%	2.44%	3.01%	2.30%	2.31%	2.92%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
10.16%	10.32%	10.67%	12.81%	12.79%	16.00%	15.67%	15.74%	20.15%

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 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 (6/16/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Pharmaceuticals	42.73	%
Health Care – Products	27.32
Health Care – Services	14.07
Biotechnology	12.84
Electronics	1.79
Insurance	0.75
Commercial Services	0.25
Agriculture	0.08
Distribution & Wholesale	0.07
Internet	0.02
Short-Term and Other Net Assets	0.08

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Johnson & Johnson	11.48	%
Pfizer Inc.	11.19
Merck & Co. Inc.	5.67
Amgen Inc.	5.13
Abbott Laboratories	4.19
Wyeth	3.90
UnitedHealth Group Inc.	3.77
Medtronic Inc.	3.23
Lilly (Eli) & Co.	3.11
Bristol-Myers Squibb Co.	2.77

TOTAL	54.44	%


FUND PERFORMANCE OVERVIEWS		3

Fund Performance Overview

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Technology Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Technology Index (the “Index”). The Index measures the performance of the technology sector of the U.S. equity market and includes companies in the following sectors: software and computer services and technology hardware and equipment. The Fund invests in a representative sample of securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 2.69%, while the Index returned 2.91%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
11.49%	11.46%	12.08%	3.27%	3.27%	3.87%	(11.18)%	(11.19)%	(10.65)%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
11.49%	11.46%	12.08%	17.48%	17.47%	20.89%	(53.55)%	(53.59)%	(51.74)%

Total returns for the periods since inception are calculated from the inception date of the Fund (5/15/00). “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 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 (5/19/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Computers	26.39	%
Software	21.41
Semiconductors	20.51
Telecommunications	19.41
Internet	9.75
Office & Business Equipment	1.34
Distribution & Wholesale	0.54
Electrical Components & Equipment	0.27
Electronics	0.09
Entertainment	0.07
Machinery	0.06
Retail	0.05
Engineering & Construction	0.04
Home Furnishings	0.01
Short-Term and Other Net Assets	0.06

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Microsoft Corp.	12.41	%
Cisco Systems Inc.	7.24
International Business Machines Corp.	6.85
Intel Corp.	6.05
Hewlett-Packard Co.	5.27
Google Inc. Class A	5.09
Oracle Corp.	3.63
Apple Computer Inc.	3.35
QUALCOMM Inc.	2.93
Motorola Inc.	2.76

TOTAL	55.58	%


4		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Telecommunications Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Telecommunications Index (the “Index”). The Index measures the performance of the telecommunications sector of the U.S. equity market and includes companies in the following sectors: fixed-line telecommunications and mobile telecommunications. The Fund invests in a representative sample of the securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 13.35%, while the Index returned 16.49%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
28.28%	28.19%	33.29%	1.48%	1.45%	1.73%	(8.08)%	(8.09)%	(5.70)%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
28.28%	28.19%	33.29%	7.62%	7.47%	8.97%	(41.89)%	(41.94)%	(31.52)%

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 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 (5/26/00), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Telecommunications	97.56	%
Holding Companies - Diversified	2.37
Short-Term and Other Net Assets	0.07

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
AT&T Inc.	22.32	%
Verizon Communications Inc.	19.17
Sprint Nextel Corp.	8.01
BellSouth Corp.	4.86
Alltel Corp.	4.76
NII Holdings Inc. Class B	4.47
Qwest Communications International Inc.	4.16
CenturyTel Inc.	4.14
BCE Inc.	3.48
Citizens Communications Co.	2.93

TOTAL	78.30	%


FUND PERFORMANCE OVERVIEWS		5

Fund Performance Overview

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones U.S. Utilities Sector Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Utilities Index (the “Index”). The Index measures the performance of the utilities sector of the U.S. equity market and includes companies in the following sectors: electricity and gas, water and multi-utilities. The Fund invests in a representative sample of the securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 15.32%, while the Index returned 15.62%.


Average Annual Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
17.12%	17.05%	17.76%	9.73%	9.72%	10.39%	6.81%	6.80%	7.40%

Cumulative Total Returns
*Year Ended 10/31/06*			*Five Years Ended 10/31/06*			*Inception to 10/31/06*
*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*	*NAV*	*MARKET*	*INDEX*
17.12%	17.05%	17.76%	59.12%	59.00%	63.90%	52.37%	52.23%	57.77%

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Electric	85.89	%
Gas	9.56
Pipelines	3.45
Water	0.58
Environmental Control	0.33
Short-Term and Other Net Assets	0.19

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Exelon Corp.	7.52	%
Duke Energy Corp.	7.07
TXU Corp.	5.27
Dominion Resources Inc.	5.17
Southern Co. (The)	4.89
FirstEnergy Corp.	3.51
FPL Group Inc.	3.43
Entergy Corp.	3.22
American Electric Power Co. Inc.	2.95
Public Service Enterprise Group Inc.	2.77

TOTAL	45.80	%


6		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones Select Dividend Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Dividend Index (the “Index”). The Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. The Index is comprised of one hundred of the highest dividend-yielding securities (excluding real estate investment trusts) in the Dow Jones U.S. Total Market Index, a broad-based index representative of the total market for U.S. equity securities. The Fund invests in a representative sample of securities in the Index, which has a similar profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 9.16%, while the Index returned 8.71%.

Average Annual Total Returns

Cumulative Total Returns

Year Ended 10/31/06

Inception to 10/31/06

NAV

MARKET

INDEX

NAV

MARKET

INDEX

NAV

MARKET

INDEX

15.93%

15.85%

15.80%

14.40%

14.37%

14.73%

49.68%

49.56%

50.83%

Total returns for the periods since inception are calculated from the inception date of the Fund (11/3/03). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which 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 (11/7/03), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Financial	38.88	%
Utilities	21.83
Consumer Non-Cyclical	15.25
Basic Materials	6.82
Energy	5.36
Consumer Cyclical	4.72
Communications	4.23
Industrial	2.00
Technology	0.69
Short-Term and Other Net Assets	0.22

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Altria Group Inc.	3.91	%
Bank of America Corp.	3.15
Merck & Co. Inc.	2.60
PNC Financial Services Group	2.58
Pinnacle West Capital Corp.	2.58
DTE Energy Co.	2.55
FPL Group Inc.	2.53
FirstEnergy Corp.	2.52
AT&T Inc.	2.19
Kinder Morgan Inc.	2.13

TOTAL	26.74	%


FUND PERFORMANCE OVERVIEWS		7

Fund Performance Overview

iSHARES^{^®}DOW JONES TRANSPORTATION AVERAGE INDEX FUND

Performance as of October 31, 2006

The iShares Dow Jones Transportation Average Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Transportation Average Index (the “Index”). The Index measures the performance of the transportation sector of the U.S. equity market, and includes companies in the following primary groups: airlines, trucking, railroads, airfreight, transportation services and industrial services. The Fund invests in a representative sample of the securities in the Index, which has a similar investment profile as the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. For the six-month period ended October 31, 2006, the Fund returned 1.50%, while the Index returned 1.86%.

Average Annual Total Returns

Cumulative Total Returns

Year Ended 10/31/06

Inception to 10/31/06

NAV

MARKET

INDEX

NAV

MARKET

INDEX

NAV

MARKET

INDEX

24.23%

24.18%

25.16%

19.44%

19.41%

19.90%

72.57%

72.45%

74.57%

Total returns for the periods since inception are calculated from the inception date of the Fund (10/6/03). “Average annual total returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative total returns” represent the total change in value of an investment over the periods indicated.

The Fund’s per share net asset value or “NAV” is the value of one share of the Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of the Fund, and the market return is based on the market price per share of the Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which 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 (10/10/03), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in the Fund at Market Price and NAV, respectively.

PORTFOLIO ALLOCATION

As of 10/31/06


*Industry*	Percentage of Net Assets
Transportation	84.00	%
Airlines	10.64
Trucking & Leasing	4.42
Short-Term and Other Net Assets	0.94

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
FedEx Corp.	11.46	%
Union Pacific Corp.	8.90
Burlington Northern Santa Fe Corp.	7.47
United Parcel Service Inc. Class B	7.38
Overseas Shipholding Group Inc.	5.95
Norfolk Southern Corp.	4.83
Expeditors International Washington Inc.	4.78
Ryder System Inc.	4.72
Landstar System Inc.	4.66
CSX Corp.	4.61

TOTAL	64.76	%


8		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited)

iSHARES^® TRUST

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2006 to October 31, 2006.

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


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period ^a (5/1/06 to 10/31/06)
Dow Jones U.S. Total Market
Actual	$	1,000.00	$	1,050.40	0.20	%	$	1.03
Hypothetical (5% return before expenses)		1,000.00		1,024.20	0.20			1.02
Dow Jones U.S. Energy Sector
Actual		1,000.00		1,001.90	0.48			2.42
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Healthcare Sector
Actual		1,000.00		1,074.00	0.48			2.51
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Technology Sector
Actual		1,000.00		1,026.90	0.48			2.45
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45


SHAREHOLDER EXPENSES		9

Shareholder Expenses (Unaudited) (Continued)

iSHARES^® TRUST


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period ^a (5/1/06 to 10/31/06)
Dow Jones U.S. Telecommunications Sector
Actual	$	1,000.00	$	1,133.50	0.48	%	$	2.58
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones U.S. Utilities Sector
Actual		1,000.00		1,153.20	0.48			2.61
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45
Dow Jones Select Dividend
Actual		1,000.00		1,091.60	0.40			2.11
Hypothetical (5% return before expenses)		1,000.00		1,023.19	0.40			2.04
Dow Jones Transportation Average
Actual		1,000.00		1,015.00	0.48			2.44
Hypothetical (5% return before expenses)		1,000.00		1,022.79	0.48			2.45

^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).


10		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.84%
ADVERTISING – 0.24%
ADVO Inc.	1,147	$	33,673
Catalina Marketing Corp.	1,504		38,126
Donnelley (R.H.) Corp.	1,677		100,989
Getty Images Inc.¹	1,719		74,450
Harte-Hanks Inc.	1,929		48,707
Interpublic Group of Companies Inc.¹	15,239		166,257
Lamar Advertising Co.¹	2,964		170,964
Omnicom Group Inc.	6,227		631,729
ValueVision Media Inc. Class A¹	1,086		14,020

			1,278,915
AEROSPACE & DEFENSE – 1.71%
AAR Corp.¹	1,103		28,722
Alliant Techsystems Inc.¹	1,323		102,149
Armor Holdings Inc.¹	1,122		57,738
BE Aerospace Inc.¹	2,432		61,481
Boeing Co. (The)	25,303		2,020,698
Curtiss-Wright Corp.	1,608		54,415
DRS Technologies Inc.	1,336		59,078
Esterline Technologies Corp.¹	792		29,858
General Dynamics Corp.	11,855		842,890
Goodrich Corp.	4,242		187,030
Kaman Corp.	800		16,312
L-3 Communications Holdings Inc.	4,276		344,304
Lockheed Martin Corp.	12,127		1,054,200
Moog Inc. Class A¹	1,197		44,648
Northrop Grumman Corp.	11,559		767,402
Raytheon Co.	15,755		786,962
Rockwell Collins Inc.	6,051		351,442
United Technologies Corp.	33,085		2,174,346

			8,983,675
AGRICULTURE – 1.70%
Altria Group Inc.	73,347		5,965,312
Archer-Daniels-Midland Co.	21,105		812,543
Bunge Ltd.²	4,115		263,813
Delta & Pine Land Co.	1,260		51,043
Loews Corp. – Carolina Group	3,894		225,151
Monsanto Co.	18,983		839,428
Reynolds American Inc.	6,098		385,150
Universal Corp.	931		34,279
UST Inc.	5,848		313,219

			8,889,938
AIRLINES – 0.22%
AirTran Holdings Inc.¹	3,140		31,306
Alaska Air Group Inc.¹	1,247		50,067
AMR Corp.¹	6,780		192,145
Continental Airlines Inc. Class B¹	3,146		116,024
JetBlue Airways Corp.^1,2	5,680		71,341
SkyWest Inc.	2,146		57,212
Southwest Airlines Co.	27,284		410,079
UAL Corp.¹	3,038		109,186
US Airways Group Inc.¹	2,218		110,589

			1,147,949
APPAREL – 0.43%
Carter’s Inc.¹	1,563		44,123
Coach Inc.¹	13,425		532,167
Hanesbrands Inc.¹	3,485		82,246
Jones Apparel Group Inc.	4,331		144,655
Kellwood Co.	921		28,183
Liz Claiborne Inc.	3,799		160,204
Nike Inc. Class B	6,403		588,308
Phillips-Van Heusen Corp.	1,699		77,746
Polo Ralph Lauren Corp.	2,117		150,307
Quiksilver Inc.¹	4,320		60,264
Stride Rite Corp.	1,477		21,786
Timberland Co. Class A¹	1,861		53,690
VF Corp.	3,119		237,075
Wolverine World Wide Inc.	2,094		59,386

			2,240,140
AUTO MANUFACTURERS – 0.34%
Ford Motor Co.	63,409		525,027
General Motors Corp.	14,970		522,752
Navistar International Corp.¹	2,231		61,866
Oshkosh Truck Corp.	2,619		118,405
PACCAR Inc.	8,982		531,824
Wabash National Corp.	949		13,314

			1,773,188


SCHEDULES OF INVESTMENTS		11

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
AUTO PARTS & EQUIPMENT – 0.19%
American Axle & Manufacturing Holdings Inc.	1,478	$	27,712
ArvinMeritor Inc.	2,388		35,868
BorgWarner Inc.	2,050		117,875
CooperTire & Rubber Co.²	2,319		24,883
GoodyearTire & Rubber Co. (The)¹	5,875		90,064
Johnson Controls Inc.	6,753		550,640
Lear Corp.	2,454		74,135
Modine Manufacturing Co.	1,087		25,881
Superior Industries International Inc.²	778		13,148
Visteon Corp.¹	4,749		35,048

			995,254
BANKS – 6.35%
AMCORE Financial Inc.	894		27,991
AmSouth Bancorp	12,208		368,926
Associated Bancorp	4,432		145,547
BancorpSouth Inc.	2,641		67,478
Bank of America Corp.	161,703		8,710,941
Bank of Hawaii Corp.	1,870		97,558
Bank of New York Co. Inc. (The)	27,372		940,776
BB&T Corp.	19,115		831,885
BOK Financial Corp.	651		33,461
Cathay General Bancorp	1,487		51,227
Chittenden Corp.	1,550		45,710
Citizens Banking Corp.	1,431		37,163
City National Corp.	1,496		99,574
Colonial BancGroup Inc. (The)	5,458		130,119
Comerica Inc.	5,848		340,295
Commerce Bancorp Inc.	6,372		222,510
Commerce Bancshares Inc.	2,338		115,754
Compass Bancshares Inc.	4,371		245,912
Cullen/Frost Bankers Inc.	1,873		101,442
East West Bancorp Inc.	1,844		67,324
F.N.B. Corp. (Pennsylvania)	1,694		28,679
Fifth Third Bancorp	16,593		661,231
First BanCorp (Puerto Rico)	2,630		26,037
First Horizon National Corp.	4,319		169,823
First Midwest Bancorp Inc.	1,479		56,246
FirstMerit Corp.	2,704		62,787
Fremont General Corp.	2,362		34,320
Fulton Financial Corp.	5,925		94,859
Greater Bay Bancorp	1,834		47,225
Hancock Holding Co.	833		42,733
Huntington Bancshares Inc.	8,108		197,916
International Bancshares Corp.	1,562		47,922
Investors Financial Services Corp.	2,249		88,431
KeyCorp	14,368		533,628
M&T Bank Corp.	2,801		341,190
Marshall & Ilsley Corp.	7,483		358,735
Mellon Financial Corp.	14,768		572,998
Mercantile Bankshares Corp.	4,330		195,196
National City Corp.	20,034		746,266
North Fork Bancorp Inc.	15,539		444,105
Northern Trust Corp.	6,887		404,405
Old National Bancorp	2,486		47,184
Pacific Capital Bancorp	1,515		46,601
Park National Corp.²	410		41,570
PNC Financial Services Group	10,272		719,348
Popular Inc.	8,832		160,654
Provident Bankshares Corp.	1,238		44,741
Regions Financial Corp.	16,360		620,862
Republic Bancorp Inc.	2,435		32,580
Sky Financial Group Inc.	3,773		94,514
South Financial Group Inc. (The)	2,814		74,655
State Street Corp.	11,590		744,426
Sterling Bancshares Inc.	1,592		29,150
SunTrust Banks Inc.	12,820		1,012,652
Susquehanna Bancshares Inc.	1,752		43,782
SVB Financial Group^1,2	1,292		59,458
Synovus Financial Corp.	9,058		266,124
TCF Financial Corp.	4,559		118,671
TD Banknorth Inc.	4,164		123,171
Texas Regional Bancshares Inc. Class A	1,766		68,609
TrustCo Bank Corp. NY²	2,485		27,459
Trustmark Corp.	1,815		57,463
U.S. Bancorp	63,312		2,142,478
UCBH Holdings Inc.	3,088		52,928
Umpqua Holdings Corp.	1,715		48,432
UnionBanCal Corp.	1,987		114,411
United Bancshares Inc.	1,420		54,230


12		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Valley National Bancorp	4,018	$	104,709
W Holding Co. Inc.	4,519		25,713
Wachovia Corp.	67,848		3,765,564
Webster Financial Corp.	1,900		91,808
Wells Fargo & Co.	111,976		4,063,609
Westamerica Bancorp	1,140		56,829
Whitney Holding Corp.	2,117		69,141
Wilmington Trust Corp.	2,390		99,376
Wintrust Financial Corp.	755		36,436
Zions Bancorporation	3,707		298,043

			33,293,706
BEVERAGES – 1.81%
Anheuser-Busch Companies Inc.	25,990		1,232,446
Brown-Forman Corp. Class B	1,570		113,338
Coca-Cola Co. (The)	76,496		3,573,893
Coca-Cola Enterprises Inc.	9,785		195,994
Constellation Brands Inc.¹	6,826		187,647
Hansen Natural Corp.¹	2,082		66,103
Molson Coors Brewing Co. Class B	2,584		183,929
Pepsi Bottling Group Inc.	4,625		146,242
PepsiAmericas Inc.	2,273		46,483
PepsiCo Inc.	58,800		3,730,272

			9,476,347
BIOTECHNOLOGY – 1.52%
Affymetrix Inc.¹	2,360		60,180
Alexion Pharmaceuticals Inc.¹	1,161		43,375
Amgen Inc.¹	41,728		3,167,572
Applera Corp. - Celera Genomics Group¹	2,515		39,033
Biogen Idec Inc.¹	11,889		565,916
Bio-Rad Laboratories Inc. Class A¹	681		49,999
Cambrex Corp.	939		21,973
Celgene Corp.¹	12,292		656,884
Cell Genesys Inc.¹	1,267		5,549
Charles River Laboratories International Inc.¹	2,470		106,012
Enzo Biochem Inc.¹	877		12,541
Enzon Pharmaceuticals Inc.¹	1,571		13,448
Genentech Inc.¹	16,342		1,361,289
Genzyme Corp.¹	9,101		614,409
Human Genome Sciences Inc.¹	4,597		61,370
ICOS Corp.¹	2,060		65,343
Incyte Corp.¹	3,354		15,965
InterMune Inc.^1,2	1,036		22,896
Invitrogen Corp.¹	1,870		108,479
Martek Biosciences Corp.¹	1,108		26,282
MedImmune Inc.¹	8,826		282,785
Millennium Pharmaceuticals Inc.¹	10,746		125,728
Millipore Corp.¹	1,865		120,348
Myriad Genetics Inc.¹	1,432		38,506
NektarTherapeutics¹	3,125		45,094
PDL BioPharma Inc.¹	4,049		85,555
Regeneron Pharmaceuticals Inc.¹	1,714		34,366
Savient Pharmaceuticals Inc.¹	2,044		15,555
Telik Inc.^1,2	1,964		37,218
Vertex Pharmaceuticals Inc.¹	3,753		152,372

			7,956,042
BUILDING MATERIALS – 0.25%
American Standard Companies Inc.	6,090		269,726
Eagle Materials Inc.	1,762		64,665
ElkCorp	633		15,901
Florida Rock Industries Inc.	1,802		77,306
Genlyte Group Inc. (The)¹	736		56,863
Lennox International Inc.	2,275		61,334
Martin Marietta Materials Inc.	1,664		146,432
Masco Corp.	14,683		405,985
NCI Building Systems Inc.¹	479		28,668
Simpson Manufacturing Co. Inc.	1,188		33,727
Texas Industries Inc.	785		48,748
USG Corp.¹	2,550		124,669

			1,334,024
CHEMICALS – 1.43%
Air Products & Chemicals Inc.	7,365		513,120
Airgas Inc.	2,369		89,572
Albemarle Corp.	1,264		82,198
Ashland Inc.	2,561		151,355
Cabot Corp.	1,906		75,382
Celanese Corp. Class A	3,463		71,372
Chemtura Corp.	8,306		71,265
Cytec Industries Inc.	1,249		69,182
Dow Chemical Co. (The)	34,220		1,395,834
Du Pont (E.I.) de Nemours and Co.	32,616		1,493,813


SCHEDULES OF INVESTMENTS		13

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Eastman Chemical Co.	2,796	$	170,332
Ecolab Inc.	6,575		298,176
Ferro Corp.	1,552		30,605
FMC Corp.	1,233		84,522
Fuller (H.B.) Co.	1,928		47,795
Georgia Gulf Corp.	1,248		26,695
Hercules Inc.¹	3,635		66,157
Huntsman Corp.¹	3,437		59,357
International Flavors & Fragrances Inc.	3,094		131,433
Lubrizol Corp.	2,334		105,030
Lyondell Chemical Co.	7,764		199,302
MacDermid Inc.	923		30,874
Minerals Technologies Inc.	747		41,205
Mosaic Co. (The)¹	4,447		83,248
Olin Corp.	2,486		43,008
OM Group Inc.¹	959		54,663
PPG Industries Inc.	6,070		415,188
Praxair Inc.	11,475		691,369
Rohm & Haas Co.	5,104		264,489
RPM International Inc.	4,120		78,898
Schulman (A.) Inc.	1,133		27,430
Sensient Technologies Corp.	1,580		36,419
Sherwin-Williams Co. (The)	4,074		241,303
Sigma-Aldrich Corp.	2,043		153,450
Tronox Inc. Class B	1,221		15,971
Valspar Corp. (The)	3,418		91,568

			7,501,580
COAL – 0.18%
Alpha Natural Resources Inc.¹	1,450		23,070
Arch Coal Inc.	5,130		177,652
CONSOL Energy Inc.	6,414		226,991
Foundation Coal Holdings Inc.	1,152		42,290
International Coal Group Inc.¹	3,965		20,578
Massey Energy Co.	2,954		74,589
Peabody Energy Corp.	9,188		385,620

			950,790
COMMERCIAL SERVICES – 1.34%
Accenture Ltd.	20,079		660,800
ADESA Inc.	3,150		79,191
Administaff Inc.	868		29,903
Albany Molecular Research Inc.¹	789		9,397
Alliance Data Systems Corp.¹	2,518		152,893
Apollo Group Inc. Class A¹	5,104		188,644
ARAMARK Corp. Class B	4,280		143,080
Arbitron Inc.	1,101		46,242
Avis Budget Group Inc.	3,624		71,719
Banta Corp.	940		41,623
BearingPoint Inc.¹	6,546		54,528
Block (H & R) Inc.	10,439		228,197
Bowne & Co. Inc.	1,271		19,866
Career Education Corp.¹	3,498		77,935
Chemed Corp.	884		31,373
ChoicePoint Inc.¹	3,133		114,010
Convergys Corp.¹	5,073		107,598
Corinthian Colleges Inc.¹	3,190		39,078
Corporate Executive Board Co. (The)	1,495		134,281
Corrections Corp. of America¹	2,212		101,066
Deluxe Corp.	1,868		42,348
DeVry Inc.¹	2,199		53,546
Donnelley (R.R.) & Sons Co.	7,726		261,602
Equifax Inc.	4,797		182,430
Forrester Research Inc.¹	613		19,267
FTI Consulting Inc.¹	1,563		44,405
Hewitt Associates Inc. Class A¹	3,716		93,011
Hudson Highland Group Inc.¹	1,024		11,971
Iron Mountain Inc.¹	4,211		182,631
ITT Educational Services Inc.¹	1,575		108,596
Labor Ready Inc.¹	2,060		36,071
Laureate Education Inc.¹	1,559		82,190
Live Nation Inc.¹	2,190		46,559
Manpower Inc.	3,144		213,069
McKesson Corp.	10,496		525,745
MonsterWorldwide Inc.¹	3,841		155,599
Moody’s Corp.	8,737		579,263
MPS Group Inc.¹	3,645		55,586
Navigant Consulting Inc.¹	1,836		32,699
NCO Group Inc.¹	1,171		31,570
PAREXEL International Corp.¹	954		28,238
Pharmaceutical Product Development Inc.	3,761		119,036
PHH Corp.¹	1,800		49,680


14		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Pre-Paid Legal Services Inc.²	502	$	21,310
Quanta Services Inc.¹	3,401		62,238
Rent-A-Center Inc.¹	2,634		75,754
Resources Connection Inc.¹	1,879		54,378
Robert Half International Inc.	5,985		218,752
Service Corp. International	11,081		101,059
ServiceMaster Co. (The)	10,478		118,716
Sotheby’s Holdings Inc. Class A	2,184		82,992
Spherion Corp.¹	2,044		14,819
Stewart Enterprises Inc. Class A	3,323		20,536
Strayer Education Inc.	481		54,411
TeleTech Holdings Inc.¹	1,281		24,864
United Rentals Inc.¹	2,460		58,277
Valassis Communications Inc.¹	1,745		26,192
Viad Corp.	823		30,410
Watson Wyatt Worldwide Inc.	1,849		83,482
Weight Watchers International Inc.	1,643		71,635
Western Union Co.¹	26,927		593,740

			7,000,101
COMPUTERS – 3.74%
Affiliated Computer Services Inc. Class A¹	4,131		220,926
Agilysys Inc.	1,249		18,523
Apple Computer Inc.¹	30,011		2,433,292
BISYS Group Inc. (The)¹	4,277		47,218
Brocade Communications Systems Inc.¹	9,337		75,723
CACI International Inc. Class A¹	1,043		60,014
Cadence Design Systems Inc.¹	10,123		180,797
Ceridian Corp.¹	5,223		123,106
CIBER Inc.¹	2,040		13,974
Cognizant Technology Solutions Corp.¹	4,897		368,646
Computer Sciences Corp.¹	6,472		342,045
Dell Inc.¹	71,385		1,736,797
Diebold Inc.	2,542		111,035
DST Systems Inc.¹	2,104		130,006
Electronic Data Systems Corp.	18,361		465,084
Electronics For Imaging Inc.¹	1,897		44,845
EMC Corp.¹	82,730		1,013,443
FactSet Research Systems Inc.	1,298		66,068
Gateway Inc.¹	8,325		13,986
Henry (Jack) & Associates Inc.	2,675		58,288
Hewlett-Packard Co.	98,581		3,819,028
Hutchinson Technology Inc.¹	944		21,854
Imation Corp.	1,247		57,075
Intergraph Corp.¹	1,033		45,132
International Business Machines Corp.	53,986		4,984,527
Komag Inc.¹	937		35,840
Kronos Inc.¹	1,147		38,883
Lexmark International Inc.¹	3,994		253,978
McDATA Corp. Class A¹	4,432		25,129
Mentor Graphics Corp.¹	2,727		46,004
Mercury Computer Systems Inc.¹	783		9,647
MICROS Systems Inc.¹	1,282		63,690
msystems Ltd.¹	1,090		39,774
NCR Corp.¹	6,522		270,793
Network Appliance Inc.¹	12,892		470,558
Palm Inc.¹	3,286		50,440
Perot Systems Corp. Class A¹	3,140		46,315
Quantum Corp.¹	5,840		12,731
RadiSys Corp.¹	618		11,328
SanDisk Corp.¹	6,684		321,500
Seagate Technology	18,509		417,933
Silicon Storage Technology Inc.¹	2,999		12,566
SRA International Inc. Class A¹	1,126		36,088
Sun Microsystems Inc.¹	121,389		659,142
Synopsys Inc.¹	5,173		116,444
Unisys Corp.¹	11,678		76,374
Western Digital Corp.¹	7,824		143,023

			19,609,612
COSMETICS & PERSONAL CARE – 1.74%
Alberto-Culver Co.	2,843		144,453
Avon Products Inc.	16,246		494,041
Colgate-Palmolive Co.	18,248		1,167,325
Estee Lauder Companies Inc. (The) Class A	4,592		185,471
Procter & Gamble Co.	112,473		7,129,663

			9,120,953


SCHEDULES OF INVESTMENTS		15

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
DISTRIBUTION & WHOLESALE – 0.26%
Brightpoint Inc.¹	1,771	$	21,429
CDW Corp.	2,244		147,363
Fastenal Co.	4,944		198,947
Genuine Parts Co.	6,295		286,548
Grainger (W.W.) Inc.	2,886		210,043
Ingram Micro Inc. Class A¹	5,059		104,266
Owens & Minor Inc.	1,261		39,734
Pool Corp.	1,857		76,100
Tech Data Corp.¹	2,035		80,077
United Stationers Inc.¹	1,226		58,542
Watsco Inc.	791		39,392
WESCO International Inc.¹	1,623		105,933

			1,368,374
DIVERSIFIED FINANCIAL SERVICES – 7.48%
Affiliated Managers Group Inc.¹	1,201		120,268
American Express Co.	38,361		2,217,649
AmeriCredit Corp.¹	4,739		121,176
Ameriprise Financial Inc.	7,767		400,001
Bear Stearns Companies Inc. (The)	3,931		594,957
BlackRock Inc.	495		74,666
Capital One Financial Corp.	10,693		848,276
Chicago Mercantile Exchange Holdings Inc.	1,165		583,665
CIT Group Inc.	6,979		363,257
Citigroup Inc.	176,135		8,834,932
CompuCredit Corp.¹	1,355		47,100
Countrywide Financial Corp.	21,141		805,895
Doral Financial Corp.	3,291		15,139
E*TRADE Financial Corp.¹	14,618		340,307
Eaton Vance Corp.	4,537		140,828
Edwards (A.G.) Inc.	2,636		150,384
Federal Home Loan Mortgage Corp.	24,506		1,690,669
Federal National Mortgage Association	34,249		2,029,596
Federated Investors Inc. Class B	3,360		115,214
First Marblehead Corp. (The)	1,208		81,480
Franklin Resources Inc.	6,016		685,583
Friedman, Billings, Ramsey Group Inc. Class A	6,070		46,314
Goldman Sachs Group Inc. (The)	13,095		2,485,300
IndyMac Bancorp Inc.	2,218		100,808
Investment Technology Group Inc.¹	1,459		68,135
Janus Capital Group Inc.	8,028		161,202
Jefferies Group Inc.	3,534		101,532
JP Morgan Chase & Co.	122,932		5,831,894
Knight Capital Group Inc. Class A¹	3,831		71,448
LaBranche & Co. Inc.¹	1,885		16,720
Lazard Ltd. Class A	1,260		53,424
Legg Mason Inc.	4,652		418,773
Lehman Brothers Holdings Inc.	19,181		1,493,049
Merrill Lynch & Co. Inc.	32,352		2,828,212
Morgan Stanley	34,603		2,644,707
Nasdaq Stock Market Inc. (The)¹	3,458		123,554
National Financial Partners Corp.	1,070		42,158
Nuveen Investments Inc. Class A	2,672		131,730
NYSE Group Inc.^1,2	1,671		123,637
Piper Jaffray Companies¹	680		47,022
Raymond James Financial Inc.	3,226		102,780
Rowe (T.) Price Group Inc.	9,174		434,022
Schwab (Charles) Corp. (The)	37,314		679,861
SLM Corp.	14,714		716,278
SWS Group Inc.	635		17,647
TD Ameritrade Holding Corp.	9,620		158,441
Waddell & Reed Financial Inc. Class A	2,831		72,191

			39,231,881
ELECTRIC – 3.27%
AES Corp. (The)¹	23,464		515,973
Allegheny Energy Inc.¹	5,715		245,916
ALLETE Inc.	945		42,620
Alliant Energy Corp.	4,039		154,896
Ameren Corp.	7,163		387,518
American Electric Power Co. Inc.	13,917		576,581
Aquila Inc.¹	14,243		65,375
Avista Corp.	1,747		44,968
Black Hills Corp.	1,088		37,547
CenterPoint Energy Inc.	9,802		151,735
Cleco Corp.	1,726		44,358
CMS Energy Corp.¹	7,686		114,445
Consolidated Edison Inc.	8,799		425,432
Constellation Energy Group Inc.	6,324		394,618
Dominion Resources Inc.	12,367		1,001,603


16		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
DPL Inc.	4,477	$	128,579
DTE Energy Co.	6,190		281,212
Duke Energy Corp.	44,210		1,398,804
Duquesne Light Holdings Inc.	2,829		56,099
Dynegy Inc. Class A¹	13,428		81,642
Edison International	10,574		469,909
El Paso Electric Co.¹	1,459		34,082
Energy East Corp.	5,228		127,093
Entergy Corp.	7,327		628,876
Exelon Corp.	23,778		1,473,760
FirstEnergy Corp.	11,644		685,249
FPL Group Inc.	13,011		663,561
Great Plains Energy Inc.	2,615		85,092
Hawaiian Electric Industries Inc.	2,925		81,959
IDACORP Inc.	1,418		55,912
MDU Resources Group Inc.	5,829		149,689
Mirant Corp.¹	9,706		287,006
Northeast Utilities	5,222		130,602
NRG Energy Inc.¹	4,534		218,312
NSTAR	3,794		131,993
OGE Energy Corp.	3,132		120,833
Pepco Holdings Inc.	6,618		168,230
PG&E Corp.	12,335		532,132
Pinnacle West Capital Corp.	3,441		164,514
PNM Resources Inc.	2,289		64,458
PPL Corp.	13,612		469,886
Progress Energy Inc.	8,940		411,240
Public Service Enterprise Group Inc.	8,839		539,621
Puget Energy Inc.	4,282		102,254
Reliant Energy Inc.¹	10,398		131,847
SCANA Corp.	3,644		145,614
Sierra Pacific Resources Corp.¹	6,917		104,862
Southern Co. (The)	26,179		952,916
TECO Energy Inc.	6,957		114,721
TXU Corp.	16,153		1,019,739
UniSource Energy Corp.	1,219		43,372
Westar Energy Inc.	3,182		80,568
Wisconsin Energy Corp.	4,122		189,365
WPS Resources Corp.	1,391		74,015
Xcel Energy Inc.	14,212		313,659

			17,116,862
ELECTRICAL COMPONENTS & EQUIPMENT – 0.42%
American Power Conversion Corp.	6,546		197,886
AMETEK Inc.	2,489		116,187
Belden CDT Inc.	1,610		58,282
C&D Technologies Inc.	956		4,742
Emerson Electric Co.	14,589		1,231,312
Energizer Holdings Inc.¹	2,148		167,866
Energy Conversion Devices Inc.¹	1,277		46,981
General Cable Corp.¹	1,642		61,739
GrafTech International Ltd.¹	3,487		21,096
Hubbell Inc. Class B	1,941		96,118
Littelfuse Inc.¹	784		26,546
Molex Inc.	2,032		70,917
Molex Inc. Class A	2,903		85,784
Power-One Inc.¹	2,529		17,298

			2,202,754
ELECTRONICS – 0.84%
Agilent Technologies Inc.¹	15,082		536,919
Amphenol Corp. Class A	3,148		213,749
Applera Corp. – Applied Biosystems Group	6,642		247,747
Arrow Electronics Inc.¹	4,069		121,460
Avnet Inc.¹	5,202		123,183
AVX Corp.	1,982		31,236
Benchmark Electronics Inc.¹	2,111		56,047
Brady Corp. Class A	1,914		70,818
Checkpoint Systems Inc.¹	1,253		22,817
Coherent Inc.¹	1,100		35,453
CTS Corp.	1,101		15,546
Cymer Inc.¹	1,265		58,607
Dionex Corp.¹	791		43,030
Electro Scientific Industries Inc.¹	958		19,112
Fisher Scientific International Inc.¹	4,377		374,759
Flextronics International Ltd.¹	19,791		229,576
FLIR Systems Inc.¹	2,418		77,231
Garmin Ltd.	4,106		219,301
Gentex Corp.	5,374		85,500
Itron Inc.¹	691		37,618
Jabil Circuit Inc.	6,349		182,280
KEMET Corp.¹	3,168		23,285
Methode Electronics Inc.	1,285		14,225


SCHEDULES OF INVESTMENTS		17

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Mettler Toledo International Inc.¹	1,520	$	104,348
Molecular Devices Corp.¹	630		12,688
National Instruments Corp.	1,837		57,278
Orbotech Ltd.¹	1,111		26,831
Park Electrochemical Corp.	633		19,446
PerkinElmer Inc.	4,354		93,001
Photon Dynamics Inc.¹	632		7,502
Plexus Corp.¹	1,569		34,392
Sanmina-SCI Corp.¹	19,653		77,629
Solectron Corp.¹	32,846		109,706
Symbol Technologies Inc.	8,564		127,861
Taser International Inc.^1,2	1,868		17,391
Technitrol Inc.	1,265		31,903
Tektronix Inc.	2,946		89,470
Thermo Electron Corp.¹	5,667		242,944
Thomas & Betts Corp.¹	2,230		114,912
Trimble Navigation Ltd.¹	1,800		83,196
Varian Inc.¹	1,013		47,500
Vishay Intertechnology Inc.¹	6,147		82,923
Waters Corp.¹	3,890		193,722

			4,414,142
ENERGY – ALTERNATE SOURCES – 0.02%
Covanta Holding Corp.¹	4,001		81,340
FuelCell Energy Inc.¹	1,260		8,341
Headwaters Inc.¹	1,357		33,586

			123,267
ENGINEERING & CONSTRUCTION – 0.20%
Dycom Industries Inc.¹	1,273		29,674
EMCOR Group Inc.¹	1,195		70,684
Fluor Corp.	3,116		244,388
FosterWheeler Ltd.¹	2,289		102,891
Granite Construction Inc.	1,191		62,051
Insituform Technologies Inc. Class A¹	947		22,131
Jacobs Engineering Group Inc.¹	1,989		150,249
McDermott International Inc.¹	3,691		164,988
Shaw Group Inc. (The)¹	2,610		69,322
URS Corp.¹	1,691		68,333
Washington Group International Inc.	1,003		56,790

			1,041,501
ENTERTAINMENT – 0.18%
Bally Technologies Inc.¹	1,526		30,291
DreamWorks Animation SKG Inc. Class A¹	1,665		44,039
International Game Technology Inc.	12,019		510,928
International Speedway Corp. Class A	1,096		56,893
Macrovision Corp.¹	1,923		51,171
Penn National Gaming Inc.¹	2,535		92,705
Pinnacle Entertainment Inc.¹	1,756		53,137
Scientific Games Corp. Class A¹	2,438		68,337
Six Flags Inc.^1,2	2,874		16,382
Warner Music Group Corp.	1,381		35,809

			959,692
ENVIRONMENTAL CONTROL – 0.26%
Aleris International Inc.¹	1,393		71,753
Allied Waste Industries Inc.¹	7,196		87,431
Mine Safety Appliances Co.	967		36,572
Nalco Holding Co.¹	2,547		51,526
Republic Services Inc.	4,304		176,507
Stericycle Inc.¹	1,584		112,005
Tetra Tech Inc.¹	2,087		37,942
Waste Connections Inc.¹	1,767		71,899
Waste Management Inc.	19,465		729,548

			1,375,183
FOOD – 1.42%
Campbell Soup Co.	9,058		338,588
Chiquita Brands International Inc.	1,429		19,577
ConAgra Foods Inc.	18,204		476,035
Corn Products International Inc.	2,508		90,765
Dean Foods Co.¹	4,640		194,370
Del Monte Foods Co.	7,240		78,120
Flowers Foods Inc.	2,074		56,351
General Mills Inc.	12,535		712,239
Hain Celestial Group Inc.¹	1,417		40,002
Heinz (H.J.) Co.	11,493		484,545
Hershey Co. (The)	6,094		322,434
Hormel Foods Corp.	2,697		97,389
Kellogg Co.	8,565		430,905
Kraft Foods Inc.	7,778		267,563
Kroger Co.	24,620		553,704


18		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
McCormick & Co. Inc. NVS	3,953	$	147,842
Performance Food Group Co.¹	1,257		36,541
Ralcorp Holdings Inc.¹	1,104		54,593
Safeway Inc.	15,852		465,415
Sara Lee Corp.	27,881		476,765
Smithfield Foods Inc.¹	3,818		102,628
Smucker (J.M.) Co. (The)	2,041		100,009
SUPERVALU Inc.	7,081		236,505
Sysco Corp.	21,880		765,362
Tootsie Roll Industries Inc.	866		27,521
TreeHouse Foods Inc.¹	1,058		26,831
Tyson Foods Inc. Class A	8,541		123,417
United Natural Foods Inc.¹	1,483		51,757
Whole Foods Market Inc.	4,871		310,965
Wild Oats Markets Inc.¹	796		14,312
Wrigley (William Jr.) Co.	6,073		315,492

			7,418,542
FOREST PRODUCTS & PAPER – 0.41%
Bowater Inc.	2,051		42,886
Caraustar Industries Inc.¹	1,106		11,978
International Paper Co.	17,227		574,520
Louisiana-Pacific Corp.	3,817		75,500
MeadWestvaco Corp.	6,611		181,935
Neenah Paper Inc.	531		19,557
Plum Creek Timber Co. Inc.	6,600		237,204
Potlatch Corp.	1,571		63,783
Rayonier Inc.	2,618		107,312
Smurfit-Stone Container Corp.¹	9,051		96,484
Temple-Inland Inc.	3,970		156,577
Wausau Paper Corp.	1,541		20,896
Weyerhaeuser Co.	8,703		553,424

			2,142,056
GAS – 0.35%
AGL Resources Inc.	2,656		99,600
Atmos Energy Corp.	2,686		82,541
Energen Corp.	2,214		94,803
KeySpan Corp.	6,253		253,747
New Jersey Resources Corp.	916		47,504
Nicor Inc.	1,688		77,580
NiSource Inc.	9,469		220,344
Northwest Natural Gas Co.	950		39,302
Peoples Energy Corp.	1,265		55,268
Piedmont Natural Gas Co.	2,754		74,358
Sempra Energy	8,093		429,253
Southern Union Co.	3,781		104,658
Southwest Gas Corp.	1,281		45,962
UGI Corp.	3,646		96,619
Vectren Corp.	2,775		80,642
WGL Holdings Inc.	1,734		56,268

			1,858,449
HAND & MACHINE TOOLS – 0.13%
Black & Decker Corp.	2,888		242,245
Kennametal Inc.	1,301		80,285
Lincoln Electric Holdings Inc.	1,365		83,934
Regal-Beloit Corp.	1,165		57,609
Snap-On Inc.	1,874		88,134
Stanley Works (The)	3,051		145,380

			697,587
HEALTH CARE – PRODUCTS – 3.23%
Advanced Medical Optics Inc.¹	2,251		91,953
Alcon Inc.	2,788		295,751
American Medical Systems Holdings Inc.¹	2,372		42,245
ArthroCare Corp.^1,2	798		32,247
Bard (C.R.) Inc.	3,677		301,367
Bausch & Lomb Inc.	1,880		100,655
Baxter International Inc.	23,619		1,085,765
Beckman Coulter Inc.	2,223		127,978
Becton, Dickinson & Co.	8,235		576,697
Biomet Inc.	8,199		310,250
Biosite Inc.¹	557		25,583
Boston Scientific Corp.¹	47,364		753,561
Cooper Companies Inc.	1,548		89,211
Cyberonics Inc.¹	771		13,901
Cytyc Corp.¹	3,971		104,914
Dade Behring Holdings Inc.	3,221		117,341
Datascope Corp.	482		17,289
DENTSPLY International Inc.	5,066		158,464
Edwards Lifesciences Corp.¹	2,157		92,600
Gen-Probe Inc.¹	1,777		85,065
Haemonetics Corp.¹	948		43,229
Henry Schein Inc.¹	3,148		156,424


SCHEDULES OF INVESTMENTS		19

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Hillenbrand Industries Inc.	2,046	$	120,059
Hologic Inc.¹	1,611		77,570
IDEXX Laboratories Inc.¹	1,213		100,934
Immucor Inc.¹	2,488		68,495
Intuitive Surgical Inc.¹	1,264		125,364
Invacare Corp.	1,098		23,969
Johnson & Johnson	105,427		7,105,780
Kinetic Concepts Inc.¹	1,728		60,065
Kyphon Inc.¹	1,175		46,413
Medtronic Inc.	41,200		2,005,616
Mentor Corp.	1,412		66,082
Oakley Inc.	942		17,502
Patterson Companies Inc.¹	4,432		145,591
PolyMedica Corp.	919		38,184
PSS World Medical Inc.¹	2,465		49,596
ResMed Inc.¹	2,537		111,603
Respironics Inc.¹	2,463		86,993
St. Jude Medical Inc.¹	12,849		441,363
Steris Corp.	2,533		61,729
Stryker Corp.	9,842		514,638
TECHNE Corp.¹	1,298		72,532
Varian Medical Systems Inc.¹	4,642		254,660
Ventana Medical Systems Inc.¹	1,241		50,124
Viasys Healthcare Inc.¹	951		27,246
Zimmer Holdings Inc.¹	8,676		624,759

			16,919,357
HEALTH CARE – SERVICES – 1.67%
Aetna Inc.	19,795		815,950
AMERIGROUP Corp.¹	1,750		52,430
Apria Healthcare Group Inc.¹	1,760		40,990
Centene Corp.¹	1,559		36,777
Community Health Systems Inc.¹	3,068		99,557
Covance Inc.¹	2,207		129,110
Coventry Health Care Inc.¹	5,815		273,014
DaVita Inc.¹	3,507		195,094
HCA Inc.	13,975		706,017
Health Management Associates Inc. Class A	8,581		169,046
Health Net Inc.¹	3,964		164,546
Healthways Inc.¹	1,262		53,446
Humana Inc.¹	5,648		338,880
Laboratory Corp. of America Holdings¹	4,676		320,259
LifePoint Hospitals Inc.^1,2	1,779		63,155
Lincare Holdings Inc.¹	3,499		117,426
Magellan Health Services Inc.¹	1,666		72,704
Manor Care Inc.	2,808		134,756
Odyssey Healthcare Inc.¹	1,231		16,311
Pediatrix Medical Group Inc.¹	1,584		71,169
Psychiatric Solutions Inc.¹	1,912		63,478
Quest Diagnostics Inc.	5,537		275,410
Sierra Health Services Inc.¹	1,716		58,756
Sunrise Senior Living Inc.¹	1,262		39,387
Tenet Healthcare Corp.¹	16,723		118,064
Triad Hospitals Inc.¹	3,034		112,349
United Surgical Partners International Inc.¹	1,602		39,762
UnitedHealth Group Inc.	47,776		2,330,513
Universal Health Services Inc. Class B	1,884		99,758
Wellcare Health Plans Inc.¹	1,185		69,619
WellPoint Inc.¹	21,911		1,672,248

			8,749,981
HOLDING COMPANIES – DIVERSIFIED – 0.04%
Leucadia National Corp.	5,612		147,988
Walter Industries Inc.	1,459		67,829

			215,817
HOME BUILDERS – 0.34%
Beazer Homes USA Inc.	1,356		58,769
Centex Corp.	4,508		235,768
Champion Enterprises Inc.¹	2,512		23,261
Fleetwood Enterprises Inc.¹	2,025		14,459
Horton (D.R.) Inc.	9,663		226,404
Hovnanian Enterprises Inc. Class A¹	1,248		38,501
KB Home	2,696		121,158
Lennar Corp. Class A	4,358		206,918
Lennar Corp. Class B	336		14,955
M.D.C. Holdings Inc.	1,175		58,585
Meritage Homes Corp.¹	826		37,814
Monaco Coach Corp.	1,102		13,158
NVR Inc.¹	199		111,739
Pulte Homes Inc.	7,464		231,309


20		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Ryland Group Inc.	1,679	$	77,116
Standard-Pacific Corp.	2,358		57,134
Thor Industries Inc.	1,284		56,265
Toll Brothers Inc.¹	4,204		121,538
WCI Communities Inc.^1,2	1,249		20,134
Winnebago Industries Inc.²	1,267		42,178

			1,767,163
HOME FURNISHINGS – 0.10%
Audiovox Corp. Class A¹	631		8,279
Ethan Allen Interiors Inc.	1,009		35,941
Furniture Brands International Inc.²	1,462		27,193
Harman International Industries Inc.	2,122		217,187
La-Z-Boy Inc.²	1,866		22,859
Whirlpool Corp.	2,629		228,539

			539,998
HOUSEHOLD PRODUCTS & WARES – 0.50%
ACCO Brands Corp.¹	1,583		38,467
American Greetings Corp. Class A	2,217		53,008
Avery Dennison Corp.	3,468		218,970
Blyth Inc.	1,061		25,379
Church & Dwight Co. Inc.	2,141		86,860
Clorox Co. (The)	5,270		340,231
Fortune Brands Inc.	5,162		397,216
Fossil Inc.¹	1,930		42,151
Harland (John H.) Co.	1,100		44,979
Jarden Corp.¹	1,586		57,064
Kimberly-Clark Corp.	16,458		1,094,786
Scotts Miracle-Gro Co. (The) Class A	1,522		75,278
Spectrum Brands Inc.¹	1,143		11,110
Tupperware Brands Corp.	1,904		40,422
WD-40 Co.	618		21,006
Yankee Candle Co. Inc. (The)	1,617		54,735

			2,601,662
HOUSEWARES – 0.07%
Newell Rubbermaid Inc.	9,782		281,526
Toro Co. (The)	1,554		67,071

			348,597
INSURANCE – 4.72%
ACE Ltd.	11,268		645,093
AFLAC Inc.	17,723		796,117
Alleghany Corp.¹	129		39,442
Allstate Corp. (The)	22,877		1,403,733
Ambac Financial Group Inc.	3,718		310,416
American Financial Group Inc.	1,424		68,153
American International Group Inc.	80,705		5,420,955
American National Insurance Co.	575		66,700
AmerUs Group Co.	1,458		99,844
Aon Corp.	10,297		358,233
Arch Capital Group Ltd.¹	1,338		86,020
Assurant Inc.	4,103		216,064
Assured Guaranty Ltd.	1,624		40,876
Axis Capital Holdings Ltd.	4,149		136,295
Berkley (W.R.) Corp.	6,200		228,532
Brown & Brown Inc.	4,019		117,596
Chubb Corp.	14,588		775,352
CIGNA Corp.	3,809		445,577
Cincinnati Financial Corp.	5,468		249,614
Commerce Group Inc.	2,218		65,653
Conseco Inc.¹	5,539		112,663
Delphi Financial Group Inc. Class A	1,435		56,324
Endurance Specialty Holdings Ltd.	2,031		72,405
Erie Indemnity Co. Class A	1,729		87,574
Everest Re Group Ltd.	2,216		219,783
Fidelity National Financial Inc.	5,951		132,707
First American Corp.	2,881		117,633
Gallagher (Arthur J.) & Co.	3,319		92,434
Genworth Financial Inc. Class A	15,996		534,906
Hanover Insurance Group Inc. (The)	1,899		86,120
Hartford Financial Services Group Inc. (The)	10,747		936,816
HCC Insurance Holdings Inc.	3,971		133,664
Hilb, Rogal & Hobbs Co.	1,314		52,455
Horace Mann Educators Corp.	1,421		28,619
IPC Holdings Ltd.	2,105		63,234
Lincoln National Corp.	10,230		647,661
Loews Corp.	16,394		638,054
Markel Corp.¹	311		124,245
Marsh & McLennan Companies Inc.	19,082		561,774
MBIA Inc.	4,787		296,890
Mercury General Corp.	950		49,182
MetLife Inc.	16,661		951,843


SCHEDULES OF INVESTMENTS		21

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
MGIC Investment Corp.	3,377	$	198,433
Montpelier Re Holdings Ltd.	3,530		62,658
Nationwide Financial Services Inc.	2,076		105,710
Ohio Casualty Corp.	2,388		65,503
Old Republic International Corp.	7,641		172,152
PartnerRe Ltd.	1,882		131,589
Philadelphia Consolidated Holding Corp.¹	1,969		77,027
Phoenix Companies Inc.	3,609		57,167
Platinum Underwriters Holdings Ltd.	2,028		60,556
PMI Group Inc. (The)	3,402		145,095
Principal Financial Group Inc.	9,830		555,297
ProAssurance Corp.¹	928		45,194
Progressive Corp. (The)	25,220		609,567
Protective Life Corp.	2,313		102,350
Prudential Financial Inc.	17,364		1,335,813
Radian Group Inc.	3,060		163,098
Reinsurance Group of America Inc.	1,227		69,203
RenaissanceRe Holdings Ltd.	2,469		134,314
RLI Corp.	633		34,315
SAFECO Corp.	4,312		250,915
Selective Insurance Group Inc.	942		52,046
St. Paul Travelers Companies Inc.	24,394		1,247,265
StanCorp Financial Group Inc.	1,930		88,182
Torchmark Corp.	3,595		221,740
Transatlantic Holdings Inc.	971		59,173
Unitrin Inc.	1,588		68,173
UnumProvident Corp.	12,122		239,773
White Mountains Insurance Group Ltd.	277		157,267
Willis Group Holdings Ltd.	4,262		162,084
XL Capital Ltd. Class A	6,321		445,947
Zenith National Insurance Corp.	1,131		52,614

			24,737,471
INTERNET – 1.95%
Agile Software Corp.¹	1,586		10,690
Akamai Technologies Inc.¹	5,375		251,873
Amazon.com Inc.¹	10,537		401,354
aQuantive Inc.¹	2,329		63,302
Ariba Inc.¹	2,846		21,487
Avocent Corp.¹	1,752		64,316
Check Point Software Technologies Ltd.¹	6,345		131,468
CheckFree Corp.¹	2,619		103,398
CNET Networks Inc.¹	5,026		44,932
Digital River Inc.¹	1,132		65,486
Digitas Inc.¹	2,879		30,402
EarthLink Inc.¹	4,554		31,969
eBay Inc.¹	37,033		1,189,870
Emdeon Corp.¹	9,852		114,776
Equinix Inc.¹	1,142		78,113
eResearch Technology Inc.^1,2	1,569		12,897
Expedia Inc.¹	9,432		153,270
F5 Networks Inc.¹	1,377		91,144
Google Inc. Class A¹	7,729		3,682,018
IAC/InterActiveCorp¹	8,490		263,020
InfoSpace Inc.¹	936		18,917
Interwoven Inc.¹	1,457		18,533
j2 Global Communications Inc.¹	1,173		32,187
Liberty Media Holding Corp. – Liberty Interactive Group Series A¹	23,534		519,395
McAfee Inc.¹	5,866		169,703
NetBank Inc.	1,735		9,213
NetFlix Inc.^1,2	1,678		46,413
NutriSystem Inc.^1,2	862		53,168
Openwave Systems Inc.¹	3,244		27,996
Priceline.com Inc.¹	1,067		42,989
RealNetworks Inc.¹	3,960		43,481
Redback Networks Inc.¹	3,068		48,536
S1 Corp.¹	2,363		11,673
SonicWALL Inc.¹	1,907		20,024
Stamps.com Inc.¹	804		12,904
Symantec Corp.¹	35,709		708,467
TIBCO Software Inc.¹	7,057		65,277
United Online Inc.	2,235		30,217
ValueClick Inc.¹	3,261		61,307
VeriSign Inc.¹	9,012		186,368
Vignette Corp.¹	917		14,947
webMethods Inc.¹	1,745		13,122
Websense Inc.¹	1,494		40,891
Yahoo! Inc.¹	46,433		1,223,045

			10,224,558
IRON & STEEL – 0.32%
AK Steel Holding Corp.¹	3,799		56,719
Allegheny Technologies Inc.	3,244		255,400


22		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Carpenter Technology Corp.	831	$	88,909
Chaparral Steel Co.	1,570		65,296
Cleveland-Cliffs Inc.	1,496		63,266
Nucor Corp.	10,088		589,240
Oregon Steel Mills Inc.¹	1,197		65,117
Reliance Steel & Aluminum Co.	2,278		78,249
Ryerson Inc.	903		21,762
Steel Dynamics Inc.	1,726		103,750
United States Steel Corp.	4,170		281,892

			1,669,600
LEISURE TIME – 0.38%
Brunswick Corp.	3,445		108,518
Callaway Golf Co.	2,440		32,769
Carnival Corp.	15,074		735,913
Harley-Davidson Inc.	9,542		654,867
Multimedia Games Inc.¹	799		7,503
Nautilus Inc.²	1,074		15,176
Polaris Industries Inc.	1,511		64,701
Royal Caribbean Cruises Ltd.	4,708		190,674
Sabre Holdings Corp.	4,729		120,211
WMS Industries Inc.¹	1,000		35,330

			1,965,662
LODGING – 0.59%
Aztar Corp.¹	1,244		66,641
Boyd Gaming Corp.	1,600		63,152
Choice Hotels International Inc.	1,207		50,597
Gaylord Entertainment Co.¹	1,481		68,926
Harrah’s Entertainment Inc.	6,495		482,773
Hilton Hotels Corp.	12,821		370,783
Las Vegas Sands Corp.¹	3,555		270,891
Marriott International Inc. Class A	12,911		539,292
MGM Mirage¹	4,316		185,674
Starwood Hotels & Resorts Worldwide Inc.	7,688		459,281
Station Casinos Inc.	1,815		109,445
Wyndham Worldwide Corp.¹	7,249		213,846
Wynn Resorts Ltd.¹	2,938		216,061

			3,097,362
MACHINERY – 0.78%
AGCO Corp.¹	3,303		88,355
Albany International Corp. Class A	930		31,257
Astec Industries Inc.¹	474		15,116
Briggs & Stratton Corp.	1,724		43,945
Bucyrus International Inc. Class A	949		39,763
Caterpillar Inc.	23,441		1,423,103
Cognex Corp.	1,421		32,726
Cummins Inc.	1,673		212,438
Deere & Co.	8,363		711,942
Flowserve Corp.¹	1,904		100,912
Gardner Denver Inc.¹	1,720		58,463
Graco Inc.	2,409		98,191
IDEX Corp.	1,763		82,685
Intermec Inc.¹	1,767		39,934
JLG Industries Inc.	3,434		94,950
Joy Global Inc.	4,351		170,168
Manitowoc Co. Inc. (The)	2,132		117,004
Nordson Corp.	1,118		51,484
Presstek Inc.¹	1,123		6,906
Rockwell Automation Inc.	5,656		350,672
Terex Corp.¹	3,556		184,059
Wabtec Corp.	1,685		52,892
Zebra Technologies Corp. Class A¹	2,525		94,107

			4,101,072
MANUFACTURING – 4.62%
Actuant Corp. Class A	926		47,541
Acuity Brands Inc.	1,701		84,268
AptarGroup Inc.	1,084		59,522
Brink’s Co. (The)	1,856		97,421
Carlisle Companies Inc.	1,098		91,892
Ceradyne Inc.¹	820		33,825
CLARCOR Inc.	1,838		59,882
Cooper Industries Ltd.	3,531		315,848
Crane Co.	1,793		69,819
Danaher Corp.	8,787		630,643
Donaldson Co. Inc.	2,574		96,654
Dover Corp.	7,201		342,048
Eastman Kodak Co.²	10,264		250,442
Eaton Corp.	5,220		378,085
ESCO Technologies Inc.¹	816		35,431
General Electric Co.	368,599		12,941,511
Harsco Corp.	1,428		116,568
Hexcel Corp.¹	3,253		52,666


SCHEDULES OF INVESTMENTS		23

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Honeywell International Inc.	26,887	$	1,132,480
Illinois Tool Works Inc.	17,551		841,219
Ingersoll-Rand Co. Class A	11,723		430,351
ITT Industries Inc.	6,526		354,949
Jacuzzi Brands Inc.¹	2,821		34,952
Lancaster Colony Corp.	897		36,373
Leggett & Platt Inc.	6,831		159,504
Matthews International Corp. Class A	1,147		44,068
Pall Corp.	4,386		139,913
Parker Hannifin Corp.	4,255		355,846
Pentair Inc.	3,504		115,422
Roper Industries Inc.	2,926		140,009
SPX Corp.	2,363		135,920
Teleflex Inc.	1,245		77,439
Textron Inc.	3,922		356,627
3M Co.	24,475		1,929,609
Tredegar Corp.	943		16,446
Trinity Industries Inc.	2,690		97,001
Tyco International Ltd.	71,627		2,107,983

			24,210,177
MEDIA – 3.28%
Belo Corp.	3,474		60,864
Cablevision Systems Corp.	7,626		211,927
CBS Corp. Class A	635		18,396
CBS Corp. Class B	23,560		681,826
Charter Communications Inc. Class A¹	17,441		40,114
Clear Channel Communications Inc.	16,791		585,166
Comcast Corp. Class A¹	44,387		1,805,219
Comcast Corp. Class A Special¹	25,485		1,031,633
Cox Radio Inc. Class A¹	1,255		21,134
CTC Media Inc.¹	933		22,644
Cumulus Media Inc. Class A¹	1,897		20,336
DIRECTV Group Inc. (The)¹	29,384		654,676
Discovery Holding Co. Class A¹	9,548		141,692
Dow Jones & Co. Inc.	1,676		58,811
EchoStar Communications Corp.¹	7,613		270,414
Emmis Communications Corp.¹	1,287		15,882
Entercom Communications Corp.	1,420		39,291
Gannett Co. Inc.	8,736		516,647
Gemstar-TVGuide International Inc.¹	9,542		33,206
Lee Enterprises Inc.	1,258		35,891
Liberty Global Inc. Class A¹	8,020		210,445
Liberty Global Inc. Class C¹	8,213		208,857
Liberty Media Holding Corp. - Liberty Capital Group Series A¹	4,706		419,116
McClatchy Co. (The) Class A	2,003		86,830
McGraw-Hill Companies Inc. (The)	12,735		817,205
Media General Inc. Class A	782		29,012
Meredith Corp.	1,392		73,080
New YorkTimes Co. Class A²	5,085		122,904
News Corp. Class A	66,397		1,384,377
News Corp. Class B	19,062		414,408
Radio One Inc. Class D¹	2,524		17,138
Readers Digest Association Inc. (The)	3,675		52,847
Scholastic Corp.¹	893		28,058
Scripps (E.W.) Co. Class A	2,826		139,774
Sinclair Broadcast Group Inc. Class A	1,433		12,926
Sirius Satellite Radio Inc.^1,2	41,557		159,163
Sun-Times Media Group Inc. Class A	1,393		8,079
Time Warner Inc.	141,393		2,829,274
Tribune Co.	5,359		178,615
Univision Communications Inc. Class A¹	8,546		299,623
Viacom Inc. Class A¹	651		25,330
Viacom Inc. Class B¹	22,177		863,129
Walt Disney Co. (The)	69,783		2,195,373
Washington Post Co. (The) Class B	221		166,435
Westwood One Inc.	2,789		22,061
Wiley (John) & Sons Inc. Class A	1,371		48,396
XM Satellite Radio Holdings Inc. Class A¹	8,638		100,719

			17,178,943
METAL FABRICATE & HARDWARE – 0.14%
Commercial Metals Co.	4,242		112,880
Kaydon Corp.	1,060		44,308
Mueller Industries Inc.	1,147		42,060
NS Group Inc.¹	552		36,079
Precision Castparts Corp.	4,620		314,437
Quanex Corp.	1,428		47,852
Timken Co. (The)	3,005		90,300
Worthington Industries Inc.	2,620		45,274

			733,190


24		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
MINING – 0.65%
Alcoa Inc.	30,725	$	888,260
Coeur d’Alene Mines Corp.¹	9,196		45,060
Freeport-McMoRan Copper & Gold Inc.	6,691		404,672
Kaiser Aluminum Corp.¹	240		11,400
Meridian Gold Inc.¹	3,638		92,078
Newmont Mining Corp.	14,670		664,111
Phelps Dodge Corp.	7,142		716,914
RTI International Metals Inc.¹	862		52,858
Southern Copper Corp.²	2,672		137,287
Stillwater Mining Co.¹	1,426		15,330
Titanium Metals Corp.¹	2,726		80,362
USEC Inc.	2,659		29,674
Vulcan Materials Co.	3,191		260,003

			3,398,009
OFFICE & BUSINESS EQUIPMENT – 0.19%
IKON Office Solutions Inc.	3,114		46,430
Pitney Bowes Inc.	7,960		371,812
Xerox Corp.¹	33,028		561,476

			979,718
OFFICE FURNISHINGS – 0.04%
Herman Miller Inc.	2,471		84,706
HNI Corp.	1,617		72,716
Interface Inc. Class A¹	1,745		25,390
Steelcase Inc. Class A	2,051		33,985

			216,797
OIL & GAS – 7.25%
Anadarko Petroleum Corp.	16,080		746,434
Apache Corp.	11,593		757,255
Atwood Oceanics Inc.¹	996		46,015
Berry Petroleum Co. Class A	1,306		38,984
Cabot Oil & Gas Corp.	1,667		88,201
Cheniere Energy Inc.¹	1,830		48,166
Chesapeake Energy Corp.	14,023		454,906
Chevron Corp.	77,943		5,237,770
Cimarex Energy Co.	2,878		103,666
Comstock Resources Inc.¹	1,305		36,410
ConocoPhillips	54,510		3,283,682
Denbury Resources Inc.¹	4,062		116,742
Devon Energy Corp.	14,905		996,250
Diamond Offshore Drilling Inc.	2,168		150,091
Encore Acquisition Co.¹	1,529		38,286
ENSCO International Inc.	5,351		262,038
EOG Resources Inc.	8,527		567,301
Exxon Mobil Corp.	210,653		15,044,837
Forest Oil Corp.¹	1,821		59,437
Frontier Oil Corp.	4,008		117,835
GlobalSantaFe Corp.	8,553		443,901
Grey Wolf Inc.¹	6,722		47,054
Helmerich & Payne Inc.	3,436		82,292
Hess Corp.	8,934		378,802
Holly Corp.	1,846		87,796
Houston Exploration Co.¹	991		53,673
Marathon Oil Corp.	12,891		1,113,782
Mariner Energy Inc.¹	2,452		48,599
Murphy Oil Corp.	6,174		291,166
Nabors Industries Ltd.¹	11,050		341,224
Newfield Exploration Co.¹	4,393		179,190
Noble Corp.	4,670		327,367
Noble Energy Inc.	6,114		297,324
Occidental Petroleum Corp.	30,220		1,418,527
Parker Drilling Co.¹	3,632		29,746
Patterson-UTI Energy Inc.	6,208		144,026
Penn Virginia Corp.	914		65,397
Pioneer Natural Resources Co.	4,680		190,616
Plains Exploration & Production Co.¹	2,618		110,715
Pogo Producing Co.	1,879		84,085
Pride International Inc.¹	5,641		155,748
Quicksilver Resources Inc.¹	1,879		64,412
Range Resources Corp.	4,556		123,695
Rowan Companies Inc.	3,903		130,282
Southwestern Energy Co.¹	5,830		207,431
St. Mary Land & Exploration Co.	2,131		79,465
Stone Energy Corp.¹	945		36,827
Sunoco Inc.	4,758		314,647
Swift Energy Co.¹	898		41,955
Tesoro Corp.	2,338		149,492
TODCO¹	2,204		75,223
Transocean Inc.¹	11,376		825,215
Unit Corp.¹	1,424		66,059


SCHEDULES OF INVESTMENTS		25

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Valero Energy Corp.	21,803	$	1,140,951
Whiting Petroleum Corp.¹	1,171		52,238
XTO Energy Inc.	13,239		617,732

			38,010,960
OIL & GAS SERVICES – 1.45%
Baker Hughes Inc.	11,892		821,143
BJ Services Co.	11,166		336,767
Cameron International Corp.¹	4,000		200,400
Core Laboratories NV¹	914		66,621
FMC Technologies Inc.¹	2,482		150,037
Global Industries Ltd.¹	3,168		52,589
Grant Prideco Inc.¹	4,447		167,963
Halliburton Co.	36,150		1,169,453
Hanover Compressor Co.¹	3,147		58,282
Helix Energy Solutions Group Inc.¹	2,536		81,913
Hydril Co.¹	739		44,377
Input/Output Inc.^1,2	2,707		30,345
Lone StarTechnologies Inc.¹	1,131		54,605
National Oilwell Varco Inc.¹	6,056		365,782
Newpark Resources Inc.¹	2,536		14,912
Oceaneering International Inc.¹	1,946		70,037
Schlumberger Ltd.	41,751		2,633,653
SEACOR Holdings Inc.¹	734		65,678
Smith International Inc.	7,470		294,916
Superior Energy Services Inc.¹	2,707		84,729
Tetra Technologies Inc.¹	2,284		59,156
Tidewater Inc.	1,897		94,338
Universal Compression Holdings Inc.¹	941		56,705
Veritas DGC Inc.¹	1,110		79,931
Weatherford International Ltd.¹	12,275		504,257
W-H Energy Services Inc.¹	865		40,508

			7,599,097
PACKAGING & CONTAINERS – 0.19%
Ball Corp.	3,619		150,514
Bemis Co. Inc.	3,736		125,604
Chesapeake Corp.	664		10,299
Crown Holdings Inc.¹	5,826		113,257
Owens-Illinois Inc.¹	4,778		79,315
Packaging Corp. of America	2,673		61,399
Pactiv Corp.¹	5,247		161,817
Sealed Air Corp.	2,990		177,965
Sonoco Products Co.	3,460		122,761

			1,002,931
PHARMACEUTICALS – 5.37%
Abbott Laboratories	54,345		2,581,931
Abraxis BioScience Inc.¹	914		24,130
Alkermes Inc.¹	3,001		50,417
Allergan Inc.	5,344		617,232
Alpharma Inc. Class A	1,576		34,782
AmerisourceBergen Corp.	7,494		353,717
Amylin Pharmaceuticals Inc.¹	3,796		166,872
Andrx Corp.¹	2,656		65,311
Barr Pharmaceuticals Inc.¹	3,543		185,547
BioMarin Pharmaceutical Inc.¹	2,696		43,217
Bristol-Myers Squibb Co.	69,156		1,711,611
Cardinal Health Inc.	14,991		981,161
Caremark Rx Inc.	15,895		782,511
Cephalon Inc.¹	2,040		143,167
Cubist Pharmaceuticals Inc.¹	2,102		46,812
CVTherapeutics Inc.¹	1,379		17,858
Endo Pharmaceuticals Holdings Inc.¹	4,516		128,887
Express Scripts Inc.¹	4,323		275,462
Forest Laboratories Inc.¹	11,402		558,014
Gilead Sciences Inc.¹	16,129		1,111,288
Herbalife Ltd.¹	1,111		40,663
Hospira Inc.¹	5,726		208,140
ImClone Systems Inc.¹	2,407		75,315
King Pharmaceuticals Inc.¹	8,538		142,841
Lilly (Eli) & Co.	34,211		1,916,158
Medarex Inc.¹	4,074		52,636
Medco Health Solutions Inc.¹	10,668		570,738
Medicines Co. (The)¹	1,560		40,498
Medicis Pharmaceutical Corp. Class A	1,797		62,967
Merck & Co. Inc.	77,300		3,510,966
MGI Pharma Inc.¹	2,570		48,907
Mylan Laboratories Inc.	7,507		153,894
Nabi Biopharmaceuticals¹	1,778		11,699
NBTY Inc.¹	2,263		62,957
Neurocrine Biosciences Inc.¹	1,355		15,650


26		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Noven Pharmaceuticals Inc.¹	804	$	17,857
NPS Pharmaceuticals Inc.¹	1,400		6,608
Omnicare Inc.	4,254		161,142
Onyx Pharmaceuticals Inc.^1,2	1,523		28,602
OSI Pharmaceuticals Inc.¹	2,000		76,560
Par Pharmaceutical Companies Inc.¹	1,236		24,090
Perrigo Co.	3,143		56,228
Pfizer Inc.	259,694		6,920,845
Schering-Plough Corp.	51,962		1,150,439
Sepracor Inc.¹	3,643		188,562
Taro Pharmaceutical Industries Ltd.^1,2	940		9,814
United Therapeutics Inc.¹	771		46,144
Valeant Pharmaceuticals International	3,217		60,094
VCA Antech Inc.¹	2,969		96,107
Watson Pharmaceuticals Inc.¹	3,955		106,429
Wyeth	47,125		2,404,789

			28,148,266
PIPELINES – 0.37%
El Paso Corp.	24,376		333,951
Equitable Resources Inc.	3,946		159,892
Kinder Morgan Inc.	3,848		404,425
National Fuel Gas Co.	2,846		106,440
ONEOK Inc.	3,633		151,242
Questar Corp.	2,995		244,033
Williams Companies Inc.	21,737		531,035

			1,931,018
REAL ESTATE – 0.19%
Brookfield Properties Corp.	4,000		151,560
CB Richard Ellis Group Inc. Class A¹	6,730		202,102
Forest City Enterprises Inc. Class A	2,138		117,376
Jones Lang LaSalle Inc.	1,118		102,856
Realogy Corp.¹	9,062		233,618
St. Joe Co. (The)²	2,496		134,235
Trammell Crow Co.¹	1,060		51,675

			993,422
REAL ESTATE INVESTMENT TRUSTS – 2.26%
Alexandria Real Estate Equities Inc.	978		97,507
AMB Property Corp.	3,013		175,989
American Financial Realty Trust	4,792		55,923
American Home Mortgage Investment Corp.	1,461		49,922
Annaly Capital Management Inc.	6,206		81,423
Apartment Investment & Management Co. Class A	3,363		192,767
Archstone-Smith Trust	7,589		456,934
AvalonBay Communities Inc.	2,567		336,431
BioMed Realty Trust Inc.	2,686		86,570
Boston Properties Inc.	3,988		426,038
Brandywine Realty Trust	3,127		104,317
BRE Properties Inc. Class A	1,878		124,511
Camden Property Trust	1,986		160,310
CapitalSource Inc.	4,276		118,616
CBL & Associates Properties Inc.	2,118		92,620
Colonial Properties Trust	1,633		82,287
Corporate Office Properties Trust	1,455		69,534
Cousins Properties Inc.	1,426		51,008
Crescent Real Estate Equities Co.	3,437		74,927
Developers Diversified Realty Corp.	3,904		237,754
Duke Realty Corp.	5,171		207,150
Equity Inns Inc.	1,890		31,714
Equity Lifestyle Properties Inc.	651		32,075
Equity Office Properties Trust	12,435		528,488
Equity Residential	10,135		553,472
Essex Property Trust Inc.	836		111,422
Federal Realty Investment Trust	1,926		154,369
FelCor Lodging Trust Inc.	2,035		42,247
First Industrial Realty Trust Inc.	1,459		67,070
General Growth Properties Inc.	7,860		407,934
Glenborough Realty Trust Inc.	1,085		28,188
Health Care Property Investors Inc.	5,271		165,509
Health Care REIT Inc.²	2,101		86,729
Healthcare Realty Trust Inc.	1,729		70,025
Highwoods Properties Inc.	1,902		72,656
Home Properties Inc.	1,137		71,824
Hospitality Properties Trust	2,302		111,555
Host Hotels & Resorts Inc.	17,998		415,034
HRPT Properties Trust	7,401		88,072
Impac Mortgage Holdings Inc.	2,456		23,258
iStar Financial Inc.	3,915		181,382


SCHEDULES OF INVESTMENTS		27

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Kilroy Realty Corp.	1,056	$	79,548
Kimco Realty Corp.	7,997		355,310
KKR Financial Corp.	2,724		73,085
LaSalle Hotel Properties	1,331		56,235
Lexington Corporate Properties Trust	1,629		34,698
Liberty Property Trust	3,119		150,336
Macerich Co. (The)	2,419		194,367
Mack-Cali Realty Corp.	2,173		114,952
Maguire Properties Inc.	1,128		48,233
Mid-America Apartment Communities Inc.	762		48,501
Mills Corp.	2,106		38,477
Nationwide Health Properties Inc.	2,578		74,092
New Century Financial Corp.	1,881		74,074
New Plan Excel Realty Trust Inc.	3,638		104,774
NovaStar Financial Inc.²	1,019		32,526
Pennsylvania Real Estate Investment Trust	1,180		50,858
Post Properties Inc.	1,551		75,968
ProLogis	8,537		540,136
Public Storage Inc.	4,459		400,017
Realty Income Corp.	3,069		81,022
Reckson Associates Realty Corp.	2,964		130,772
Redwood Trust Inc.	836		45,955
Regency Centers Corp.	2,359		170,225
Saxon Capital Inc.	1,789		25,314
Simon Property Group Inc.	7,927		769,712
SL Green Realty Corp.	1,538		186,175
Strategic Hotels & Resorts Inc.	2,255		47,964
Sunstone Hotel Investors Inc.	2,685		79,100
Taubman Centers Inc.	1,809		84,842
Thornburg Mortgage Inc.	3,659		93,963
United Dominion Realty Trust Inc.	5,027		162,724
Ventas Inc.	3,759		146,526
Vornado Realty Trust	4,700		560,475
Washington Real Estate Investment Trust	1,531		64,532
Weingarten Realty Investors	2,906		135,129

			11,856,178
RETAIL – 5.89%
Abercrombie & Fitch Co. Class A	3,090		236,849
Advance Auto Parts Inc.	3,825		133,952
Aeropostale Inc.¹	1,905		55,836
American Eagle Outfitters Inc.	4,854		222,313
AnnTaylor Stores Corp.¹	2,594		114,188
Applebee’s International Inc.	2,862		65,311
AutoNation Inc.¹	5,105		102,355
AutoZone Inc.¹	1,989		222,768
Barnes & Noble Inc.	1,914		79,067
Bed Bath & Beyond Inc.¹	10,383		418,331
Best Buy Co. Inc.	14,041		775,765
Big Lots Inc.¹	4,178		88,072
BJ’s Wholesale Club Inc.¹	2,365		67,757
Blockbuster Inc. Class A^1,2	3,312		12,983
Bob Evans Farms Inc.	1,275		43,235
Borders Group Inc.	2,625		54,049
Brinker International Inc.	3,127		145,187
CarMax Inc.¹	3,848		170,466
Casey’s General Store Inc.	1,742		42,278
Cato Corp. Class A	939		21,494
CBRL Group Inc.	1,515		66,524
CEC Entertainment Inc.¹	1,283		44,225
Charming Shoppes Inc.¹	3,967		58,712
Cheesecake Factory Inc. (The)¹	2,780		78,535
Chico’s FAS Inc.¹	6,304		150,855
Children’s Place Retail Stores Inc. (The)¹	705		49,484
Christopher & Banks Corp.	1,255		33,872
Circuit City Stores Inc.	6,628		178,823
Claire’s Stores Inc.	3,181		90,181
Coldwater Creek Inc.¹	2,708		82,567
Copart Inc.¹	2,274		65,787
Cost Plus Inc.¹	780		9,321
Costco Wholesale Corp.	16,748		894,008
CVS Corp.	28,767		902,708
Darden Restaurants Inc.	4,921		206,190
Dick’s Sporting Goods Inc.¹	1,217		60,558
Dillard’s Inc. Class A	2,323		70,085
Dollar General Corp.	10,527		147,694
Dollar Tree Stores Inc.¹	3,897		121,158
Dress Barn Inc.¹	1,404		30,495
Family Dollar Stores Inc.	5,366		158,029
Federated Department Stores Inc.	19,459		854,445
Foot Locker Inc.	5,368		124,484


28		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Fred’s Inc.²	1,089	$	14,244
GameStop Corp. Class A¹	1,300		66,378
GameStop Corp. Class B¹	919		45,720
Gap Inc. (The)	22,351		469,818
Genesco Inc.¹	778		29,229
Group 1 Automotive Inc.	632		36,220
Guitar Center Inc.¹	974		42,242
Home Depot Inc.	73,156		2,730,913
Hot Topic Inc.¹	1,585		16,024
IHOP Corp.	775		40,432
Insight Enterprises Inc.¹	1,582		33,997
Jack in the Box Inc.¹	1,299		72,887
Kenneth Cole Productions Inc. Class A	321		8,163
Kohl’s Corp.¹	10,854		766,292
Krispy Kreme Doughnuts Inc.^1,2	2,163		23,252
Limited Brands Inc.	12,116		357,059
Lone Star Steakhouse & Saloon Inc.	642		17,527
Longs Drug Stores Corp.	1,060		45,622
Lowe’s Companies Inc.	55,340		1,667,948
McDonald’s Corp.	43,777		1,835,132
Men’s Wearhouse Inc. (The)	1,725		68,741
Michaels Stores Inc.	4,752		209,040
MSC Industrial Direct Co. Inc. Class A	1,568		64,163
99 Cents Only Stores¹	1,760		21,102
Nordstrom Inc.	8,097		383,393
Nu Skin Enterprises Inc. Class A	1,911		36,538
Office Depot Inc.¹	10,433		438,082
OfficeMax Inc.	2,323		110,528
O’Reilly Automotive Inc.¹	3,988		128,773
OSI Restaurant Partners Inc.	2,367		78,750
P.F. Chang’s China Bistro Inc.^1,2	997		41,695
Pacific Sunwear of California Inc.¹	2,739		48,261
Panera Bread Co. Class A¹	990		61,182
Pantry Inc. (The)¹	616		33,621
Papa John’s International Inc.¹	711		26,094
Payless ShoeSource Inc.¹	2,385		63,799
Penney (J.C.) Co. Inc.	7,299		549,104
Pep Boys—Manny, Moe & Jack Inc.	1,533		21,738
PetSmart Inc.	5,065		145,771
Pier 1 Imports Inc.	2,629		17,194
RadioShack Corp.	4,863		86,756
Regis Corp.	1,600		60,080
Rite Aid Corp.¹	18,034		84,399
Ross Stores Inc.	5,249		154,478
Ruby Tuesday Inc.²	1,916		53,169
Ryan’s Restaurant Group Inc.¹	1,661		26,925
Saks Inc.	4,405		85,193
Sears Holdings Corp.¹	3,504		611,343
Select Comfort Corp.¹	1,453		31,065
Sonic Corp.¹	3,170		72,118
Staples Inc.	25,766		664,505
Starbucks Corp.¹	27,073		1,022,006
Stein Mart Inc.	955		15,633
Talbots Inc. (The)	768		21,535
Target Corp.	27,771		1,643,488
Tiffany & Co.	4,911		175,421
TJX Companies Inc.	16,788		486,013
Tractor Supply Co.¹	1,232		59,653
Triarc Companies Inc. Class B	978		16,421
Tuesday Morning Corp.	1,164		19,206
Urban Outfitters Inc.¹	4,058		71,015
Walgreen Co.	35,856		1,566,190
Wal-Mart Stores Inc.	91,284		4,498,476
Wendy’s International Inc.	4,108		142,137
Williams-Sonoma Inc.	3,338		113,525
World Fuel Services Corp.	827		35,578
Yum! Brands Inc.	9,950		591,627
Zale Corp.¹	1,930		55,661

			30,881,280
SAVINGS & LOANS – 0.54%
Anchor BanCorp Wisconsin Inc.	788		22,884
Astoria Financial Corp.	3,586		104,030
Dime Community Bancshares Inc.	1,142		15,931
Downey Financial Corp.	788		54,277
First Niagara Financial Group Inc.	4,145		59,356
FirstFed Financial Corp.¹	623		38,483
Harbor Florida Bancshares Inc.	774		35,147
Hudson City Bancorp Inc.	19,995		274,531
MAF Bancorp Inc.	1,249		53,819
New York Community Bancorp Inc.	8,896		145,450
NewAlliance Bancshares Inc.	3,737		57,849


SCHEDULES OF INVESTMENTS		29

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
People’s Bank	2,139	$	87,057
PFF Bancorp Inc.	662		20,529
Provident Financial Services Inc.	2,465		45,208
Sovereign Bancorp Inc.	12,323		294,027
Washington Federal Inc.	3,150		73,206
Washington Mutual Inc.	34,343		1,452,709

			2,834,493
SEMICONDUCTORS – 2.85%
Actel Corp.¹	936		15,341
Advanced Micro Devices Inc.¹	18,466		392,772
Agere Systems Inc.¹	6,303		107,025
Altera Corp.¹	12,661		233,469
Amkor Technology Inc.¹	3,912		27,032
Analog Devices Inc.	12,969		412,674
Applied Materials Inc.	56,263		978,414
Applied Micro Circuits Corp.¹	11,050		33,703
Asyst Technologies Inc.¹	1,282		9,525
Atmel Corp.¹	15,947		91,695
ATMI Inc.¹	1,279		40,532
Axcelis Technologies Inc.¹	3,626		25,019
Broadcom Corp. Class A¹	16,094		487,165
Brooks Automation Inc.¹	2,641		37,502
Cabot Microelectronics Corp.¹	942		26,894
Cirrus Logic Inc.¹	2,688		18,977
Cohu Inc.	631		12,481
Conexant Systems Inc.¹	16,797		32,418
Credence Systems Corp.¹	3,027		9,747
Cree Inc.¹	2,688		59,109
Cypress Semiconductor Corp.¹	4,836		81,196
DSP Group Inc.¹	949		20,612
Emulex Corp.¹	3,003		56,456
Exar Corp.¹	1,425		18,482
Fairchild Semiconductor International Inc. Class A¹	4,213		67,871
FormFactor Inc.¹	1,913		73,038
Freescale Semiconductor Inc. Class A¹	4,944		194,645
Freescale Semiconductor Inc. Class B¹	9,518		374,343
Integrated Device Technology Inc.¹	7,254		114,976
Intel Corp.	205,864		4,393,138
International Rectifier Corp.¹	2,435		87,587
Intersil Corp. Class A	5,611		131,578
KLA-Tencor Corp.	6,958		342,125
Kopin Corp.¹	2,382		8,504
Kulicke & Soffa Industries Inc.¹	1,727		15,508
Lam Research Corp.¹	4,870		240,822
Lattice Semiconductor Corp.¹	3,635		22,573
Linear Technology Corp.	10,925		339,986
LSI Logic Corp.¹	13,419		134,861
LTX Corp.¹	2,408		11,245
Marvell Technology Group Ltd.¹	15,786		288,568
Maxim Integrated Products Inc.	11,533		346,105
MEMC Electronic Materials Inc.¹	5,654		200,717
Micrel Inc.¹	2,386		26,628
Microchip Technology Inc.	7,459		245,625
Micron Technology Inc.¹	24,976		360,903
Microsemi Corp.¹	2,244		43,982
Mindspeed Technologies Inc.¹	3,126		5,470
National Semiconductor Corp.	11,957		290,436
Novellus Systems Inc.¹	4,902		135,540
NVIDIA Corp.¹	12,997		453,205
OmniVision Technologies Inc.¹	1,844		30,278
Photronics Inc.¹	1,513		21,167
PMC-Sierra Inc.¹	7,438		49,314
QLogic Corp.¹	5,453		112,223
Rambus Inc.¹	3,377		55,923
Semtech Corp.¹	2,569		33,474
Silicon Image Inc.¹	2,669		31,574
Silicon Laboratories Inc.¹	1,739		56,744
SiRF Technology Holdings Inc.¹	1,337		37,596
Skyworks Solutions Inc.¹	5,464		36,226
Teradyne Inc.¹	6,959		97,565
Tessera Technologies Inc.¹	1,411		49,258
Texas Instruments Inc.	54,685		1,650,393
Transmeta Corp.¹	8,390		9,900
TriQuint Semiconductor Inc.¹	4,419		19,886
Ultratech Inc.¹	907		12,961
Varian Semiconductor Equipment Associates Inc.¹	2,204		80,424
Veeco Instruments Inc.¹	948		17,718
Xilinx Inc.	12,305		313,901
Zoran Corp.¹	1,763		24,541

			14,919,285


30		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
SOFTWARE – 3.85%
Activision Inc.¹	9,741	$	150,206
Actuate Corp.¹	2,209		11,531
Acxiom Corp.	2,522		62,420
Adobe Systems Inc.¹	20,922		800,267
Advent Software Inc.¹	853		31,578
ANSYS Inc.¹	1,209		55,614
Autodesk Inc.¹	8,117		298,300
Automatic Data Processing Inc.	20,350		1,006,104
Avid Technology Inc.¹	1,513		54,650
BEA Systems Inc.¹	14,831		241,300
BMC Software Inc.¹	7,527		228,143
Borland Software Corp.¹	2,850		15,732
CA Inc.	16,528		409,233
Cerner Corp.¹	2,136		103,190
Citrix Systems Inc.¹	6,228		183,913
Compuware Corp.¹	11,872		95,451
CSG Systems International Inc.¹	1,846		49,805
Dendrite International Inc.¹	1,409		14,724
Dun & Bradstreet Corp.¹	2,437		188,234
eFunds Corp.¹	1,693		41,986
Electronic Arts Inc.¹	10,632		562,326
Fair Isaac Corp.	2,408		88,205
Fidelity National Information Services Inc.	3,235		134,479
First Data Corp.	26,927		652,980
Fiserv Inc.¹	6,527		322,434
Global Payments Inc.	2,806		122,650
Hyperion Solutions Corp.¹	2,052		76,745
IMS Health Inc.	7,616		212,106
Informatica Corp.¹	3,146		38,979
Inter-Tel Inc.	771		15,952
Intuit Inc.¹	11,597		409,374
JDA Software Group Inc.¹	1,147		16,872
Keane Inc.¹	1,991		23,076
MasterCard Inc. Class A	2,219		164,428
Microsoft Corp.	313,979		9,014,337
MoneyGram International Inc.	2,932		100,304
NAVTEQ Corp.¹	3,106		103,119
Novell Inc.¹	13,419		80,514
Nuance Communications Inc.¹	3,991		46,056
Oracle Corp.¹	143,241		2,645,661
Packeteer Inc.¹	1,103		12,365
Parametric Technology Corp.¹	3,915		76,499
Paychex Inc.	11,892		469,496
Progress Software Corp.¹	1,215		34,980
Quest Software Inc.¹	1,883		27,737
Red Hat Inc.¹	5,995		98,198
Salesforce.com Inc.¹	2,825		110,232
SEI Investments Co.	2,477		139,406
Sybase Inc.¹	3,220		78,407
Take-Two Interactive Software Inc.^1,2	2,495		34,905
THQ Inc.¹	2,122		63,809
Transaction Systems Architects Inc. Class A¹	1,225		41,295
Trident Microsystems Inc.¹	2,716		57,416
VeriFone Holdings Inc.¹	956		27,925
Wind River Systems Inc.¹	2,542		27,911

			20,173,559
TELECOMMUNICATIONS – 5.88%
Adaptec Inc.¹	3,807		17,246
ADC Telecommunications Inc.¹	4,110		58,814
ADTRAN Inc.	2,224		51,463
Aeroflex Inc.¹	2,363		25,520
Alltel Corp.	13,649		727,628
Amdocs Ltd.¹	6,650		257,754
American Tower Corp. Class A¹	14,560		524,451
Anaren Inc.¹	749		15,062
Andrew Corp.¹	5,553		51,421
Anixter International Inc.¹	1,218		72,788
Arris Group Inc.¹	3,730		49,982
AT&T Inc.	137,769		4,718,588
Avaya Inc.¹	16,399		210,071
BellSouth Corp.	64,722		2,918,962
Black Box Corp.	647		28,850
C-COR Inc.¹	1,795		17,932
CenturyTel Inc.	4,231		170,255
Ciena Corp.¹	2,852		67,050
Cincinnati Bell Inc.¹	8,846		41,488
Cisco Systems Inc.¹	217,972		5,259,664
Citizens Communications Co.	11,841		173,589


SCHEDULES OF INVESTMENTS		31

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
CommScope Inc.¹	2,041	$	65,128
Comverse Technology Inc.¹	7,004		152,477
Corning Inc.¹	54,447		1,112,352
Crown Castle International Corp.¹	7,663		257,860
Dobson Communications Corp. Class A¹	4,002		31,056
Embarq Corp.	5,199		251,372
Extreme Networks Inc.¹	4,252		16,158
Finisar Corp.¹	8,999		31,317
Foundry Networks Inc.¹	4,039		51,134
Harmonic Inc.¹	2,201		17,850
Harris Corp.	4,754		202,520
IDT Corp. Class B¹	1,720		22,343
InterDigital Communications Corp.¹	1,899		67,908
JDS Uniphase Corp.¹	7,174		104,238
Juniper Networks Inc.¹	19,433		334,636
Leap Wireless International Inc.¹	1,458		80,861
Level 3 Communications Inc.¹	33,781		178,701
Lucent Technologies Inc.¹	156,123		379,379
Motorola Inc.	87,259		2,012,193
MRV Communications Inc.^1,2	2,993		10,236
Newport Corp.¹	1,417		30,636
NII Holdings Inc. Class B¹	4,843		314,940
NTL Inc.	9,067		245,081
Plantronics Inc.	1,745		36,837
Polycom Inc.¹	3,365		92,201
Powerwave Technologies Inc.¹	4,086		26,600
QUALCOMM Inc.	58,819		2,140,423
Qwest Communications International Inc.¹	53,788		464,190
RF Micro Devices Inc.¹	6,979		50,947
SBA Communications Corp.¹	3,205		85,606
Sonus Networks Inc.¹	8,799		46,019
Sprint Nextel Corp.	101,664		1,900,100
Stratex Networks Inc.¹	2,840		13,263
Sycamore Networks Inc.¹	6,954		26,078
Tekelec¹	2,182		32,185
Telephone & Data Systems Inc.	1,786		87,246
Telephone & Data Systems Inc. Special	1,786		83,049
Tellabs Inc.¹	14,315		150,880
3Com Corp.¹	13,600		66,096
UTStarcom Inc.¹	3,692		39,763
Verizon Communications Inc.	102,888		3,806,856
Windstream Corp.	16,350		224,322

			30,801,615
TEXTILES – 0.07%
Cintas Corp.	5,062		209,567
G&K Services Inc. Class A	751		28,621
Mohawk Industries Inc.¹	1,888		137,258

			375,446
TOYS, GAMES & HOBBIES – 0.10%
Hasbro Inc.	5,650		146,448
JAKKS Pacific Inc.¹	798		17,309
Marvel Entertainment Inc.¹	2,830		71,741
Mattel Inc.	13,818		312,701

			548,199
TRANSPORTATION – 1.51%
Alexander & Baldwin Inc.	1,547		71,208
Arkansas Best Corp.	795		32,579
Bristow Group Inc.¹	811		26,925
Burlington Northern Santa Fe Corp.	13,076		1,013,782
C.H. Robinson Worldwide Inc.	6,014		251,024
Con-way Inc.	1,863		87,878
CSX Corp.	15,524		553,741
EGL Inc.¹	1,197		40,686
Expeditors International Washington Inc.	7,552		358,040
FedEx Corp.	10,022		1,147,920
Forward Air Corp.	977		31,723
General Maritime Corp.	1,274		46,552
Genesee & Wyoming Inc. Class A¹	1,001		28,118
Hunt (J.B.) Transport Services Inc.	4,525		97,921
Kansas City Southern Industries Inc.¹	2,698		76,596
Kirby Corp.¹	1,622		56,819
Landstar System Inc.	2,164		100,496
Norfolk Southern Corp.	14,557		765,261
Old Dominion Freight Line Inc.¹	678		18,753
OMI Corp.	2,487		55,510
Overseas Shipholding Group Inc.	1,014		63,426


32		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Pacer International Inc.		999	$	30,659
Ryder System Inc.		2,200		115,830
Saia Inc.¹		484		12,971
Swift Transportation Co. Inc.¹		1,718		43,208
Union Pacific Corp.		9,430		854,641
United Parcel Service Inc. Class B		23,370		1,760,930
UTi Worldwide Inc.		2,746		70,984
Werner Enterprises Inc.		2,160		39,636
YRC Worldwide Inc.¹		2,108		81,664

				7,935,481
TRUCKING & LEASING – 0.01%
GATX Corp.		1,528		66,575

				66,575
WATER – 0.02%
Aqua America Inc.		4,561		110,604

				110,604

TOTAL COMMON STOCKS (Cost: $410,207,766)				523,346,047
SHORT-TERM INVESTMENTS – 0.49%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	10,128		10,128
Societe Generale
5.33%, 12/08/06		14,473		14,473
Washington Mutual Bank
5.36%, 11/13/06		36,182		36,182
Wells Fargo Bank N.A.
4.78%, 12/05/06		11,578		11,578

				72,361
COMMERCIAL PAPER³– 0.06%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		21,606		21,223
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		21,709		21,709
ASAP Funding Ltd.
5.29%, 11/02/06⁴		3,618		3,618

*Security*	*Principal*		*Value*
Atlantis One Funding
5.30%, 11/14/06⁴	$	19,858	$	19,820
Beta Finance Inc.
5.27%, 01/25/07⁴		2,895		2,859
Bryant Park Funding LLC
5.28%, 12/14/06⁴		4,569		4,540
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		7,336		7,322
Cantabric Finance LLC
5.26%, 01/25/07⁴		5,789		5,717
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		16,643		16,619
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		10,854		10,587
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		8,684		8,652
Curzon Funding LLC
5.29%, 11/17/06⁴		14,473		14,439
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		16,675		16,473
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		14,473		14,462
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		13,170		12,977
Galleon Capital Corp.
5.27%, 12/18/06⁴		2,024		2,010
General Electric Capital Services Inc.
5.22%, 12/11/06		1,447		1,439
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		8,539		8,371
HBOS Treasury Services PLC
5.27%, 12/15/06		2,895		2,876
Landale Funding LLC
5.31%, 11/15/06⁴		11,289		11,265


SCHEDULES OF INVESTMENTS		33

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴	$	25,996	$	25,978
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		9,335		9,316
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		18,814		18,458
Nestle Capital Corp.
5.19%, 08/09/07		8,684		8,332
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		22,865		22,865
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		7,711		7,621
Sedna Finance Inc.
5.22%, 04/17/07⁴		8,249		8,050
Sydney Capital Corp.
5.27%, 12/08/06⁴		345		343
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		7,236		7,155
Tulip Funding Corp.
5.29%, 11/15/06⁴		7,633		7,617

				322,713
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		3,618		3,618
Cullinan Finance Corp.
5.71%, 06/28/07⁴		10,854		10,854
K2 USA LLC
5.39%, 06/04/07⁴		10,854		10,854
Marshall & Ilsley Bank
5.18%, 12/15/06		14,473		14,479
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		16,933		16,933
US Bank N.A.
2.85%, 11/15/06		2,895		2,892

				59,630

*Security*	Shares or Principal		*Value*
MONEY MARKET FUNDS – 0.15%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		783,263	$	783,263

				783,263
REPURCHASE AGREEMENTS³ – 0.07%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $28,949 (collateralized by non-U.S. Government debt securities, value $29,823, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	28,945		28,945
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $20,265 (collateralized by U.S. Government obligations, value $20,674, 5.50%, 10/1/21 to 10/1/36).		20,262		20,262
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $21,712 (collateralized by non-U.S. Government debt securities, value $23,888, 0.31% to 6.00%, 7/25/36 to 11/25/46).		21,709		21,709
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,447 (collateralized by non-U.S. Government debt securities, value $1,491, 6.00% to 6.70%, 12/15/10 to 4/15/12).		1,447		1,447


34		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $50,661 (collateralized by non-U.S. Government debt securities, value $53,204, 4.11% to 9.32%, 4/15/10 to 5/15/36).	$	50,654	$	50,654
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $15,922 (collateralized by non-U.S. Government debt securities, value $17,841, 0.00% to 10.00%, 5/27/33 to 10/31/36).		15,920		15,920
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $8,685 (collateralized by non-U.S. Government debt securities, value $9,606, 0.00% to 10.00%, 5/27/33 to 10/31/36).		8,684		8,684
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $28,949 (collateralized by non-U.S. Government debt securities, value $30,402, 0.00% to 9.00%, 5/1/17 to 9/25/46).		28,945		28,945
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $25,331 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $25,970, 0.00% to 7.32%, 11/2/06 to 3/25/45).		25,327		25,327
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $21,712 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $22,123, 0.00% to 7.32%, 11/2/06 to 3/25/45).		21,709		21,709
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $8,685 (collateralized by non-U.S. Government debt securities, value $9,121, 0.00% to 10.00%, 1/1/10).		8,684		8,684
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $7,237 (collateralized by non-U.S. Government debt securities, value $7,601, 5.26% to 5.35%, 7/1/24 to 6/1/46).		7,236		7,236
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $3,619 (collateralized by non-U.S. Government debt securities, value $3,801, 6.25% to 7.63%, 9/15/13 to 6/1/16).		3,618		3,618
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $28,949 (collateralized by non-U.S. Government debt securities, value $29,824, 3.50% to 10.13%, 5/15/07 to 7/1/26).		28,945		28,945


SCHEDULES OF INVESTMENTS		35

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $14,475 (collateralized by non-U.S. Government debt securities, value $15,954, 5.50% to 10.39%, 6/17/08 to 6/25/36).	$	14,473	$	14,473
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $19,541 (collateralized by non-U.S. Government debt securities, value $20,670, 0.00% to 10.00%, 11/1/06 to 10/31/36).		19,538		19,538
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $10,466 (collateralized by non-U.S. Government debt securities, value $10,868, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		10,131		10,131
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $37,635 (collateralized by non-U.S. Government debt securities, value $39,523, 3.86% to 8.17%, 11/18/08 to 7/15/45).		37,629		37,629

				353,856
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		1,495		1,495

				1,495
VARIABLE & FLOATING RATE NOTES³– 0.19%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		37,050		37,053
American Express Bank
5.29%, 02/28/07		14,473		14,472
American Express Centurion Bank
5.41%, 07/19/07		15,920		15,933
American Express Credit Corp.
5.42%, 07/05/07		4,342		4,344
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		2,611		2,611
ASIF Global Financing
5.51%, 05/03/07⁴		1,447		1,448
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		9,407		9,407
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		20,985		20,986
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		36,905		36,906
BMW US Capital LLC
5.32%, 10/15/07⁴		14,473		14,473
BNP Paribas
5.36%, 05/18/07⁴		26,774		26,774
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		10,565		10,565
CC USA Inc.
5.37%, 07/30/07⁴		7,236		7,237
Commodore CDO Ltd.
5.47%, 06/12/07⁴		3,618		3,618
Credit Agricole SA
5.34%, 07/23/07		14,473		14,473
Credit Suisse First Boston NY
5.38%, 04/24/07		7,236		7,237
Cullinan Finance Corp.
5.36%, 04/25/07⁴		3,618		3,618
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		3,618		3,618
DEPFA Bank PLC
5.43%, 09/14/07		14,473		14,473


36		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴	$	16,643	$	16,644
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		14,473		14,473
Fifth Third Bancorp
5.30%, 11/23/07⁴		28,945		28,945
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		14,473		14,471
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		15,196		15,200
Granite Master Issuer PLC
5.29%, 08/20/07⁴		50,654		50,654
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		11,578		11,579
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		21,709		21,712
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		14,473		14,473
Holmes Financing PLC
5.29%, 07/16/07⁴		25,327		25,327
JP Morgan Chase & Co.
5.29%, 08/02/07		10,854		10,854
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		10,854		10,854
Kestrel Funding LLC
5.30%, 07/11/07⁴		5,789		5,789
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		8,684		8,684
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		15,084		15,084
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		15,920		15,919
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		5,731		5,731
Marshall & Ilsley Bank
5.30%, 10/15/07		7,960		7,960
Master Funding LLC
5.35%, 04/25/07⁴		13,025		13,025
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		21,709		21,709
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		1,447		1,447
Monumental Global Funding II
5.38%, 12/27/06⁴		2,895		2,895
Mound Financing PLC
5.29%, 05/08/07⁴		13,604		13,604
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		52,101		52,101
National City Bank of Indiana
5.37%, 05/21/07		7,236		7,237
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		47,760		47,770
Newcastle Ltd.
5.34%, 04/24/07⁴		5,102		5,101
Northern Rock PLC
5.36%, 08/03/07⁴		17,367		17,367
Northlake CDO I
5.46%, 09/06/07⁴		4,342		4,342
Principal Life Global Funding I
5.82%, 02/08/07		6,513		6,521
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		20,985		20,985
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		14,473		14,473
Strips III LLC
5.37%, 07/24/07⁴		3,327		3,327
SunTrust Bank
5.29%, 05/01/07		14,473		14,473
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		35,313		35,311


SCHEDULES OF INVESTMENTS		37

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TOTAL MARKET INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴	$	20,262	$	20,262
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		19,394		19,394
Wachovia Bank N.A.
5.36%, 05/22/07		28,945		28,945
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		10,854		10,860
Wells Fargo & Co.
5.33%, 11/15/07⁴		7,236		7,237
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		10,854		10,855
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		43,418		43,410
Wind Master Trust
5.31%, 07/25/07⁴		5,789		5,789

				972,039

TOTAL SHORT-TERM INVESTMENTS (Cost: $2,565,357)				2,565,357

TOTAL INVESTMENTS IN SECURITIES – 100.33% (Cost: $412,773,123)				525,911,404
Other Assets, Less Liabilities – (0.33)%				(1,748,225	)

NET ASSETS – 100.00%			$	524,163,179

NVS – Non-Voting Shares

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


38		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.92%
ELECTRIC – 0.01%
OGE Energy Corp.	2,968	$	114,505

			114,505
OIL & GAS – 80.45%
Anadarko Petroleum Corp.	415,758		19,299,485
Apache Corp.	274,693		17,942,947
Atwood Oceanics Inc.¹	1,499		69,254
Cabot Oil & Gas Corp.	43,675		2,310,844
Cheniere Energy Inc.^1,2	44,846		1,180,347
Chesapeake Energy Corp.	203,918		6,615,100
Chevron Corp.	2,107,881		141,649,603
Cimarex Energy Co.	25,089		903,706
ConocoPhillips	659,742		39,742,858
Denbury Resources Inc.¹	47,439		1,363,397
Devon Energy Corp.	361,920		24,190,733
Diamond Offshore Drilling Inc.	64,177		4,442,974
ENSCO International Inc.	87,955		4,307,156
EOG Resources Inc.	230,298		15,321,726
Exxon Mobil Corp.	2,778,056		198,408,760
Forest Oil Corp.¹	24,518		800,268
GlobalSantaFe Corp.	127,375		6,610,762
Helmerich & Payne Inc.	90,810		2,174,899
Hess Corp.	235,397		9,980,833
Holly Corp.	2,126		101,113
Houston Exploration Co.¹	14,079		762,519
Marathon Oil Corp.	242,735		20,972,304
Mariner Energy Inc.¹	63,802		1,264,556
Murphy Oil Corp.	186,030		8,773,175
Nabors Industries Ltd.¹	227,726		7,032,179
Newfield Exploration Co.¹	84,924		3,464,050
Noble Corp.	96,231		6,745,793
Noble Energy Inc.	115,162		5,600,328
Occidental Petroleum Corp.	770,078		36,147,461
Patterson-UTI Energy Inc.	93,083		2,159,526
Penn Virginia Corp.	4,679		334,782
Pioneer Natural Resources Co.	116,374		4,739,913
Plains Exploration & Production Co.¹	23,742		1,004,049
Pride International Inc.¹	51,017		1,408,579
Quicksilver Resources Inc.^1,2	28,708		984,110
Range Resources Corp.	64,687		1,756,252
Rowan Companies Inc.	39,430		1,316,173
Southwestern Energy Co.¹	91,498		3,255,499
Stone Energy Corp.¹	18,218		709,955
Sunoco Inc.	99,890		6,605,726
Tesoro Corp.	15,121		966,837
TODCO¹	31,157		1,063,388
Transocean Inc.¹	227,046		16,469,917
Unit Corp.¹	7,882		365,646
Valero Energy Corp.	394,861		20,663,076
Whiting Petroleum Corp.¹	1,707		76,149
XTO Energy Inc.	165,498		7,722,137

			659,780,844
OIL & GAS SERVICES – 16.52%
Baker Hughes Inc.	320,862		22,155,521
BJ Services Co.	222,516		6,711,083
Cameron International Corp.¹	68,339		3,423,784
Core Laboratories NV¹	9,297		677,658
FMC Technologies Inc.¹	16,772		1,013,867
Global Industries Ltd.¹	1,274		21,148
Grant Prideco Inc.¹	74,541		2,815,414
Halliburton Co.	625,950		20,249,483
Hanover Compressor Co.^1,2	42,733		791,415
Hydril Co.¹	1,218		73,141
Lone StarTechnologies Inc.¹	18,852		910,175
National Oilwell Varco Inc.¹	99,720		6,023,088
Oceaneering International Inc.¹	6,562		236,166
Schlumberger Ltd.	823,702		51,959,122
SEACOR Holdings Inc.¹	6,325		565,961
Smith International Inc.	135,573		5,352,422
Superior Energy Services Inc.¹	18,524		579,801
Tetra Technologies Inc.¹	17,392		450,453
Tidewater Inc.	31,867		1,584,746
Universal Compression Holdings Inc.¹	1,631		98,284
Veritas DGC Inc.¹	20,170		1,452,442
Weatherford International Ltd.¹	202,260		8,308,841

			135,454,015
PIPELINES – 2.94%
El Paso Corp.	238,762		3,271,039
Kinder Morgan Inc.	99,279		10,434,223
Williams Companies Inc.	425,006		10,382,897

			24,088,159

TOTAL COMMON STOCKS (Cost: $753,921,492)			819,437,523


SCHEDULES OF INVESTMENTS		39

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
SHORT-TERM INVESTMENTS – 0.33%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	11,063	$	11,063
Societe Generale
5.33%, 12/08/06		15,812		15,812
Washington Mutual Bank
5.36%, 11/13/06		39,529		39,529
Wells Fargo Bank N.A.
4.78%, 12/05/06		12,649		12,649

				79,053
COMMERCIAL PAPER³– 0.04%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		23,605		23,187
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		23,717		23,717
ASAP Funding Ltd.
5.29%, 11/02/06⁴		3,953		3,952
Atlantis One Funding
5.30%, 11/14/06⁴		21,695		21,653
Beta Finance Inc.
5.27%, 01/25/07⁴		3,162		3,123
Bryant Park Funding LLC
5.28%, 12/14/06⁴		4,992		4,960
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		8,015		8,000
Cantabric Finance LLC
5.26%, 01/25/07⁴		6,325		6,246
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		18,183		18,157
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		11,859		11,567
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		9,487		9,453
Curzon Funding LLC
5.29%, 11/17/06⁴		15,812		15,774
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		18,217		17,997
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		15,812		15,800
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		14,388		14,178
Galleon Capital Corp.
5.27%, 12/18/06⁴		2,211		2,196
General Electric Capital Services Inc.
5.22%, 12/11/06		1,581		1,572
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		9,329		9,145
HBOS Treasury Services PLC
5.27%, 12/15/06		3,162		3,142
Landale Funding LLC
5.31%, 11/15/06⁴		12,333		12,308
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		28,401		28,381
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		10,198		10,177
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		20,555		20,165
Nestle Capital Corp.
5.19%, 08/09/07		9,487		9,103
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		24,980		24,980
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		8,424		8,326
Sedna Finance Inc.
5.22%, 04/17/07⁴		9,013		8,794
Sydney Capital Corp.
5.27%, 12/08/06⁴		377		375
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		7,906		7,816
Tulip Funding Corp.
5.29%, 11/15/06⁴		8,339		8,322

				352,566
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		3,953		3,953


40		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Cullinan Finance Corp.
5.71%, 06/28/07⁴	$	11,859	$	11,859
K2 USA LLC
5.39%, 06/04/07⁴		11,859		11,859
Marshall & Ilsley Bank
5.18%, 12/15/06		15,812		15,818
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		18,499		18,499
US Bank N.A.
2.85%, 11/15/06		3,162		3,160

				65,148
MONEY MARKET FUNDS – 0.09%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		752,913		752,913

				752,913
REPURCHASE AGREEMENTS³– 0.05%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $31,628 (collateralized by non-U.S. Government debt securities, value $32,582, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	31,623		31,623
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $22,139 (collateralized by U.S. Government obligations, value $22,586, 5.50%, 10/1/21 to 10/1/36).		22,136		22,136
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $23,721 (collateralized by non-U.S. Government debt securities, value $26,098, 0.31% to 6.00%, 7/25/36 to 11/25/46).		23,717		23,717

*Security*	*Principal*		*Value*
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,581 (collateralized by non-U.S. Government debt securities, value $1,629, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	1,581	$	1,581
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $55,349 (collateralized by non-U.S. Government debt securities, value $58,126, 4.11% to 9.32%, 4/15/10 to 5/15/36).		55,340		55,340
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $17,396 (collateralized by non-U.S. Government debt securities, value $19,491, 0.00% to 10.00%, 5/27/33 to 10/31/36).		17,393		17,393
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $9,488 (collateralized by non-U.S. Government debt securities, value $10,495, 0.00% to 10.00%, 5/27/33 to 10/31/36).		9,487		9,487
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $31,628 (collateralized by non-U.S. Government debt securities, value $33,215, 0.00% to 9.00%, 5/1/17 to 9/25/46).		31,623		31,623


SCHEDULES OF INVESTMENTS		41

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $27,674 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $28,372, 0.00% to 7.32%, 11/2/06 to 3/25/45).	$	27,670	$	27,670
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $23,721 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $24,169, 0.00% to 7.32%, 11/2/06 to 3/25/45).		23,718		23,718
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $9,488 (collateralized by non-U.S. Government debt securities, value $9,964, 0.00% to 10.00%, 1/1/10).		9,487		9,487
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $7,907 (collateralized by non-U.S. Government debt securities, value $8,304, 5.26% to 5.35%, 7/1/24 to 6/1/46).		7,906		7,906
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $3,954 (collateralized by non-U.S. Government debt securities, value $4,153, 6.25% to 7.63%, 9/15/13 to 6/1/16).		3,953		3,953
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $31,628 (collateralized by non-U.S. Government debt securities, value $32,583, 3.50% to 10.13%, 5/15/07 to 7/1/26).		31,623		31,623
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $15,814 (collateralized by non-U.S. Government debt securities, value $17,430, 5.50% to 10.39%, 6/17/08 to 6/25/36).		15,812		15,812
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $21,349 (collateralized by non-U.S. Government debt securities, value $22,582, 0.00% to 10.00%, 11/1/06 to 10/31/36).		21,346		21,346
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $11,434 (collateralized by non-U.S. Government debt securities, value $11,874, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		11,068		11,068
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $41,116 (collateralized by non-U.S. Government debt securities, value $43,179, 3.86% to 8.17%, 11/18/08 to 7/15/45).		41,110		41,110

				386,593


42		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06	$	1,634	$	1,634

				1,634
VARIABLE & FLOATING RATE NOTES³– 0.13%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		40,477		40,482
American Express Bank
5.29%, 02/28/07		15,812		15,812
American Express Centurion Bank
5.41%, 07/19/07		17,393		17,407
American Express Credit Corp.
5.42%, 07/05/07		4,743		4,746
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		2,853		2,853
ASIF Global Financing
5.51%, 05/03/07⁴		1,581		1,582
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		10,277		10,277
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		22,927		22,927
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		40,319		40,321
BMW US Capital LLC
5.32%, 10/15/07⁴		15,812		15,812
BNP Paribas
5.36%, 05/18/07⁴		29,251		29,251
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		11,542		11,542
CC USA Inc.
5.37%, 07/30/07⁴		7,906		7,907
Commodore CDO Ltd.
5.47%, 06/12/07⁴		3,953		3,953
Credit Agricole SA
5.34%, 07/23/07		15,812		15,812
Credit Suisse First Boston NY
5.38%, 04/24/07		7,906		7,906
Cullinan Finance Corp.
5.36%, 04/25/07⁴		3,953		3,953
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		3,953		3,953
DEPFA Bank PLC
5.43%, 09/14/07		15,812		15,812
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		18,183		18,184
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		15,812		15,812
Fifth Third Bancorp
5.30%, 11/23/07⁴		31,623		31,623
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		15,811		15,811
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		16,602		16,605
Granite Master Issuer PLC
5.29%, 08/20/07⁴		55,340		55,340
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		12,649		12,651
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		23,717		23,721
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		15,812		15,812
Holmes Financing PLC
5.29%, 07/16/07⁴		27,670		27,670
JP Morgan Chase & Co.
5.29%, 08/02/07		11,859		11,859
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		11,859		11,858
Kestrel Funding LLC
5.30%, 07/11/07⁴		6,325		6,324
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		9,487		9,487


SCHEDULES OF INVESTMENTS		43

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴	$	16,479	$	16,480
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		17,393		17,392
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		6,261		6,261
Marshall & Ilsley Bank
5.30%, 10/15/07		8,696		8,696
Master Funding LLC
5.35%, 04/25/07⁴		14,230		14,230
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		23,717		23,717
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		1,581		1,581
Monumental Global Funding II
5.38%, 12/27/06⁴		3,162		3,162
Mound Financing PLC
5.29%, 05/08/07⁴		14,863		14,863
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		56,921		56,921
National City Bank of Indiana
5.37%, 05/21/07		7,906		7,906
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		52,178		52,189
Newcastle Ltd.
5.34%, 04/24/07⁴		5,574		5,573
Northern Rock PLC
5.36%, 08/03/07⁴		18,974		18,974
Northlake CDO I
5.46%, 09/06/07⁴		4,743		4,743
Principal Life Global Funding I
5.82%, 02/08/07		7,115		7,124
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		22,927		22,927
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		15,812		15,812
Strips III LLC
5.37%, 07/24/07⁴		3,634		3,634
SunTrust Bank
5.29%, 05/01/07		15,812		15,812
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		38,580		38,577
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		22,136		22,137
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		21,188		21,188
Wachovia Bank N.A.
5.36%, 05/22/07		31,623		31,623
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		11,859		11,864
Wells Fargo & Co.
5.33%, 11/15/07⁴		7,906		7,906
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		11,859		11,859
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		47,435		47,426
Wind Master Trust
5.31%, 07/25/07⁴		6,325		6,325

				1,061,967

TOTAL SHORT-TERM INVESTMENTS (Cost: $2,699,874)				2,699,874

TOTAL INVESTMENTS IN SECURITIES – 100.25% (Cost: $756,621,366)				822,137,397
Other Assets, Less Liabilities – (0.25)%				(2,017,491	)

NET ASSETS – 100.00%			$	820,119,906

¹	Non-income earning security.


44		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. ENERGY SECTOR INDEX FUND

October 31, 2006

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		45

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.92%
AGRICULTURE – 0.08%
Delta & Pine Land Co.	27,318	$	1,106,652

			1,106,652
BIOTECHNOLOGY – 12.84%
Affymetrix Inc.¹	49,824		1,270,512
Alexion Pharmaceuticals Inc.¹	23,399		874,187
Amgen Inc.¹	894,852		67,928,215
Applera Corp. - Celera Genomics Group¹	57,625		894,340
Biogen Idec Inc.¹	259,818		12,367,337
Bio-Rad Laboratories Inc. Class A¹	13,411		984,636
Celgene Corp.¹	266,321		14,232,194
Cell Genesys Inc.¹	35,360		154,877
Charles River Laboratories International Inc.¹	52,941		2,272,228
Enzo Biochem Inc.¹	25,585		365,866
Enzon Pharmaceuticals Inc.¹	36,428		311,824
Genentech Inc.¹	352,132		29,332,596
Genzyme Corp.¹	196,540		13,268,415
Human Genome Sciences Inc.¹	100,741		1,344,892
ICOS Corp.¹	45,570		1,445,480
Incyte Corp.¹	69,352		330,116
InterMune Inc.^1,2	20,033		442,729
Invitrogen Corp.¹	39,650		2,300,097
MedImmune Inc.¹	177,432		5,684,921
Millennium Pharmaceuticals Inc.¹	241,686		2,827,726
Millipore Corp.¹	39,437		2,544,870
Myriad Genetics Inc.¹	28,355		762,466
NektarTherapeutics^1,2	65,503		945,208
PDL BioPharma Inc.¹	84,976		1,795,543
Regeneron Pharmaceuticals Inc.¹	36,539		732,607
Savient Pharmaceuticals Inc.¹	45,649		347,389
Telik Inc.^1,2	40,037		758,701
Vertex Pharmaceuticals Inc.¹	84,768		3,441,581

			169,961,553
COMMERCIAL SERVICES – 0.25%
Albany Molecular Research Inc.¹	15,776		187,892
PAREXEL International Corp.¹	20,685		612,276
Pharmaceutical Product Development Inc.	78,196		2,474,903

			3,275,071
DISTRIBUTION & WHOLESALE – 0.07%
Owens & Minor Inc.	29,327		924,094

			924,094
ELECTRONICS – 1.79%
Applera Corp. - Applied Biosystems Group	138,478		5,165,229
FisherScientific International Inc.¹	94,452		8,086,980
Molecular Devices Corp.¹	13,073		263,290
Thermo Electron Corp.¹	120,714		5,175,009
Varian Inc.¹	23,665		1,109,652
Waters Corp.¹	79,792		3,973,642

			23,773,802
HEALTH CARE – PRODUCTS – 27.32%
Advanced Medical Optics Inc.¹	45,992		1,878,773
Alcon Inc.	59,583		6,320,565
American Medical Systems Holdings Inc.¹	50,815		905,015
ArthroCare Corp.^1,2	18,840		761,324
Bard (C.R.) Inc.	79,151		6,487,216
Bausch & Lomb Inc.	39,737		2,127,519
Baxter International Inc.	500,086		22,988,953
Beckman Coulter Inc.	47,164		2,715,232
Becton, Dickinson & Co.	175,134		12,264,634
Biomet Inc.	173,750		6,574,700
Biosite Inc.¹	12,684		582,576
Boston Scientific Corp.¹	1,028,979		16,371,056
Cooper Companies Inc.	33,508		1,931,066
Cyberonics Inc.¹	17,479		315,146
Cytyc Corp.¹	85,909		2,269,716
Dade Behring Holdings Inc.	66,589		2,425,837
Datascope Corp.	9,394		336,963
DENTSPLY International Inc.	110,043		3,442,145
Edwards Lifesciences Corp.¹	45,230		1,941,724
Gen-Probe Inc.¹	38,393		1,837,873
Haemonetics Corp.¹	19,359		882,770
Henry Schein Inc.¹	67,930		3,375,442
Hillenbrand Industries Inc.	44,531		2,613,079
Hologic Inc.¹	39,915		1,921,907
IDEXX Laboratories Inc.¹	24,130		2,007,857
Immucor Inc.¹	49,752		1,369,673
Intuitive Surgical Inc.¹	27,275		2,705,135
Invacare Corp.	23,964		523,134


46		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Johnson & Johnson	2,255,621	$	152,028,855
Kinetic Concepts Inc.¹	39,360		1,368,154
Kyphon Inc.¹	32,411		1,280,235
Medtronic Inc.	877,381		42,710,907
Mentor Corp.	31,642		1,480,846
Patterson Companies Inc.¹	96,537		3,171,240
PolyMedica Corp.	18,069		750,767
PSS World Medical Inc.¹	49,304		991,997
ResMed Inc.¹	56,166		2,470,742
Respironics Inc.¹	54,296		1,917,735
St. Jude Medical Inc.¹	268,753		9,231,666
Steris Corp.	51,435		1,253,471
Stryker Corp.	211,323		11,050,080
TECHNE Corp.¹	27,529		1,538,321
Varian Medical Systems Inc.¹	98,709		5,415,176
Ventana Medical Systems Inc.¹	24,764		1,000,218
Viasys Healthcare Inc.¹	23,076		661,127
Zimmer Holdings Inc.¹	187,928		13,532,695

			361,731,262
HEALTH CARE – SERVICES – 14.07%
Aetna Inc.	416,574		17,171,180
AMERIGROUP Corp.¹	38,557		1,155,168
Apria Healthcare Group Inc.¹	30,223		703,894
Centene Corp.¹	32,644		770,072
Community Health Systems Inc.¹	72,962		2,367,617
Covance Inc.¹	47,741		2,792,849
Coventry Health Care Inc.¹	122,317		5,742,783
DaVita Inc.¹	79,073		4,398,831
HCA Inc.	293,073		14,806,048
Health Management Associates Inc. Class A	182,889		3,602,913
Health Net Inc.¹	87,090		3,615,106
Healthways Inc.¹	26,338		1,115,414
Humana Inc.¹	123,843		7,430,580
Laboratory Corp. of America Holdings¹	94,921		6,501,139
LifePoint Hospitals Inc.¹	39,525		1,403,137
Lincare Holdings Inc.¹	72,402		2,429,811
Magellan Health Services Inc.¹	27,121		1,183,560
Manor Care Inc.	53,456		2,565,353
Odyssey Healthcare Inc.¹	26,516		351,337
Pediatrix Medical Group Inc.¹	36,220		1,627,365
Psychiatric Solutions Inc.¹	39,351		1,306,453
Quest Diagnostics Inc.	116,226		5,781,081
Sierra Health Services Inc.¹	38,910		1,332,278
Sunrise Senior Living Inc.¹	31,843		993,820
Tenet Healthcare Corp.¹	352,624		2,489,525
Triad Hospitals Inc.¹	67,498		2,499,451
United Surgical Partners International Inc.¹	32,392		803,969
UnitedHealth Group Inc.	1,022,422		49,873,745
Universal Health Services Inc. Class B	39,048		2,067,592
Wellcare Health Plans Inc.¹	25,520		1,499,300
WellPoint Inc.¹	470,626		35,918,176

			186,299,547
INSURANCE – 0.75%
CIGNA Corp.	84,504		9,885,278

			9,885,278
INTERNET – 0.02%
eResearch Technology Inc.^1,2	29,540		242,819

			242,819
PHARMACEUTICALS – 42.73%
Abbott Laboratories	1,167,752		55,479,898
Abraxis BioScience Inc.¹	17,381		458,858
Alkermes Inc.¹	76,305		1,281,924
Allergan Inc.	116,756		13,485,318
Alpharma Inc. Class A	31,577		696,904
Amylin Pharmaceuticals Inc.^1,2	86,356		3,796,210
Barr Pharmaceuticals Inc.¹	76,750		4,019,398
BioMarin Pharmaceutical Inc.¹	64,511		1,034,111
Bristol-Myers Squibb Co.	1,483,711		36,721,847
Caremark Rx Inc.	336,346		16,558,314
Cephalon Inc.¹	44,984		3,156,977
Cubist Pharmaceuticals Inc.¹	40,418		900,109
CVTherapeutics Inc.¹	41,076		531,934
Endo Pharmaceuticals Holdings Inc.¹	98,419		2,808,878
Express Scripts Inc.¹	88,900		5,664,708
Forest Laboratories Inc.¹	240,894		11,789,352
Gilead Sciences Inc.¹	344,988		23,769,673
Hospira Inc.¹	119,116		4,329,867
ImClone Systems Inc.¹	51,252		1,603,675
King Pharmaceuticals Inc.¹	182,916		3,060,185


SCHEDULES OF INVESTMENTS		47

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Lilly (Eli) & Co.		734,133	$	41,118,789
Medarex Inc.¹		88,688		1,145,849
Medco Health Solutions Inc.¹		223,690		11,967,415
Medicines Co. (The)¹		36,175		939,103
Medicis Pharmaceutical Corp. Class A		41,782		1,464,041
Merck & Co. Inc.		1,651,319		75,002,909
MGI Pharma Inc.¹		59,915		1,140,182
Mylan Laboratories Inc.		157,145		3,221,473
Nabi Biopharmaceuticals¹		48,460		318,867
Neurocrine Biosciences Inc.¹		27,813		321,240
Noven Pharmaceuticals Inc.¹		17,478		388,186
NPS Pharmaceuticals Inc.¹		32,916		155,364
Onyx Pharmaceuticals Inc.¹		29,607		556,019
OSI Pharmaceuticals Inc.¹		44,103		1,688,263
Par Pharmaceutical Companies Inc.¹		24,918		485,652
Perrigo Co.		68,956		1,233,623
Pfizer Inc.		5,558,148		148,124,644
Schering-Plough Corp.		1,120,348		24,804,505
Sepracor Inc.¹		83,520		4,322,995
Taro Pharmaceutical Industries Ltd.^1,2		17,574		183,473
United Therapeutics Inc.¹		17,233		1,031,395
Valeant Pharmaceuticals International		70,628		1,319,331
Watson Pharmaceuticals Inc.¹		72,678		1,955,765
Wyeth		1,012,683		51,677,214

				565,714,437

TOTAL COMMON STOCKS (Cost: $1,311,146,243)				1,322,914,515
SHORT-TERM INVESTMENTS – 0.30%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	18,111		18,111
Societe Generale
5.33%, 12/08/06		25,874		25,874
Washington Mutual Bank
5.36%, 11/13/06		64,684		64,684

*Security*	*Principal*		*Value*
Wells Fargo Bank N.A.
4.78%, 12/05/06	$	20,699	$	20,699

				129,368
COMMERCIAL PAPER³– 0.04%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		38,627		37,943
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		38,811		38,811
ASAP Funding Ltd.
5.29%, 11/02/06⁴		6,468		6,467
Atlantis One Funding
5.30%, 11/14/06⁴		35,501		35,433
Beta Finance Inc.
5.27%, 01/25/07⁴		5,175		5,110
Bryant Park Funding LLC
5.28%, 12/14/06⁴		8,168		8,117
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		13,116		13,091
Cantabric Finance LLC
5.26%, 01/25/07⁴		10,349		10,221
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		29,755		29,712
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		19,405		18,927
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		15,524		15,468
Curzon Funding LLC
5.29%, 11/17/06⁴		25,874		25,813
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		29,810		29,450
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		25,874		25,855
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		23,545		23,202
Galleon Capital Corp.
5.27%, 12/18/06⁴		3,618		3,593


48		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
General Electric Capital Services Inc.
5.22%, 12/11/06	$	2,587	$	2,572
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		15,265		14,965
HBOS Treasury Services PLC
5.27%, 12/15/06		5,175		5,141
Landale Funding LLC
5.31%, 11/15/06⁴		20,182		20,140
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		46,475		46,442
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		16,689		16,654
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		33,636		32,997
Nestle Capital Corp.
5.19%, 08/09/07		15,524		14,895
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		40,877		40,877
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		13,786		13,625
Sedna Finance Inc.
5.22%, 04/17/07⁴		14,748		14,391
Sydney Capital Corp.
5.27%, 12/08/06⁴		617		614
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		12,937		12,791
Tulip Funding Corp.
5.29%, 11/15/06⁴		13,646		13,618

				576,935
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		6,468		6,468
Cullinan Finance Corp.
5.71%, 06/28/07⁴		19,405		19,405

*Security*	Shares or Principal		*Value*
K2 USA LLC
5.39%, 06/04/07⁴	$	19,405	$	19,405
Marshall & llsley Bank
5.18%, 12/15/06		25,874		25,884
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		30,272		30,272
US Bank N.A.
2.85%, 11/15/06		5,175		5,171

				106,605
MONEY MARKET FUNDS – 0.06%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		832,542		832,542

				832,542
REPURCHASE AGREEMENTS³– 0.05%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $51,755 (collateralized by non-U.S. Government debt securities, value $53,317, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	51,747		51,747
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $36,228 (collateralized by U.S. Government obligations, value $36,960, 5.50%, 10/1/21 to 10/1/36).		36,223		36,223
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $38,817 (collateralized by non-U.S. Government debt securities, value $42,706, 0.31% to 6.00%, 7/25/36 to 11/25/46).		38,811		38,811


SCHEDULES OF INVESTMENTS		49

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,587 (collateralized by non-U.S. Government debt securities, value $2,666, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	2,587	$	2,587
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $90,572 (collateralized by non-U.S. Government debt securities, value $95,117, 4.11% to 9.32%, 4/15/10 to 5/15/36).		90,558		90,558
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $28,465 (collateralized by non-U.S. Government debt securities, value $31,895 0.00% to 10.00%, 5/27/33 to 10/31/36).		28,461		28,461
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $15,526 (collateralized by non-U.S. Government debt securities, value $17,174, 0.00% to 10.00%, 5/27/33 to 10/31/36).		15,524		15,524
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $51,755 (collateralized by non-U.S. Government debt securities, value $54,353, 0.00% to 9.00%, 5/1/17 to 9/25/46).		51,747		51,747
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $45,286 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $46,428, 0.00% to 7.32%, 11/2/06 to 3/25/45).		45,279		45,279
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $38,817 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $39,550, 0.00% to 7.32%, 11/2/06 to 3/25/45).		38,811		38,811
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $15,526 (collateralized by non-U.S. Government debt securities, value $16,306, 0.00% to 10.00%, 1/1/10).		15,524		15,524
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $12,939 (collateralized by non-U.S. Government debt securities, value $13,589, 5.26% to 5.35%, 7/1/24 to 6/1/46).		12,937		12,937
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $6,469 (collateralized by non-U.S. Government debt securities, value $6,795, 6.25% to 7.63%, 9/15/13 to 6/1/16).		6,468		6,468


50		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $51,755 (collateralized by non-U.S. Government debt securities, value $53,318, 3.50% to 10.13%, 5/15/07 to 7/1/26).	$	51,747	$	51,747
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $25,878 (collateralized by non-U.S. Government debt securities, value $28,523, 5.50% to 10.39%, 6/17/08 to 6/25/36).		25,874		25,874
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $34,935 (collateralized by non-U.S. Government debt securities, value $36,953, 0.00% to 10.00%, 11/1/06 to 10/31/36).		34,930		34,930
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $18,711 (collateralized by non-U.S. Government debt securities, value $19,430, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		18,112		18,112
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $67,282 (collateralized by non-U.S. Government debt securities, value $70,658, 3.86% to 8.17%, 11/18/08 to 7/15/45).		67,272		67,272

				632,612
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		2,674		2,674

				2,674
VARIABLE & FLOATING RATE NOTES³– 0.13%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		66,237		66,244
American Express Bank
5.29%, 02/28/07		25,874		25,874
American Express Centurion Bank
5.41%, 07/19/07		28,461		28,485
American Express Credit Corp.
5.42%, 07/05/07		7,762		7,766
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		4,668		4,668
ASIF Global Financing
5.51%, 05/03/07⁴		2,587		2,588
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		16,818		16,818
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		35,517		35,519
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		65,978		65,980
BMW US Capital LLC
5.32%, 10/15/07⁴		25,874		25,874
BNP Paribas
5.36%, 05/18/07⁴		47,866		47,866
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		18,888		18,888
CC USA Inc.
5.37%, 07/30/07⁴		12,937		12,938
Commodore CDO Ltd.
5.47%, 06/12/07⁴		6,468		6,468
Credit Agricole SA
5.34%, 07/23/07		25,874		25,874


SCHEDULES OF INVESTMENTS		51

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Credit Suisse First Boston NY
5.38%, 04/24/07	$	12,937	$	12,937
Cullinan Finance Corp.
5.36%, 04/25/07⁴		6,468		6,468
DaimlerChryslerAuto Trust Series
2006-C Class A1 5.33%, 10/08/07⁴		6,468		6,468
DEPFA Bank PLC
5.43%, 09/14/07		25,874		25,874
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		29,761		29,762
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		25,874		25,874
Fifth Third Bancorp
5.30%, 11/23/07⁴		51,747		51,747
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		25,874		25,872
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		27,167		27,172
Granite Master Issuer PLC
5.29%, 08/20/07⁴		90,558		90,558
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		20,699		20,701
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		38,811		38,816
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		25,874		25,874
Holmes Financing PLC
5.29%, 07/16/07⁴		45,279		45,279
JP Morgan Chase & Co.
5.29%, 08/02/07		19,405		19,405
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		19,405		19,405
Kestrel Funding LLC
5.30%, 07/11/07⁴		10,349		10,349
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		15,524		15,524
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		26,967		26,967
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		28,461		28,460
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		10,246		10,246
Marshall & Ilsley Bank
5.30%, 10/15/07		14,231		14,231
Master Funding LLC
5.35%, 04/25/07⁴		23,286		23,286
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		38,811		38,811
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		2,587		2,587
Monumental Global Funding II
5.38%, 12/27/06⁴		5,175		5,175
Mound Financing PLC
5.29%, 05/08/07⁴		24,321		24,321
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		93,145		93,143
National City Bank of Indiana
5.37%, 05/21/07		12,937		12,937
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		85,383		85,400
Newcastle Ltd.
5.34%, 04/24/07⁴		9,120		9,119
Northern Rock PLC
5.36%, 08/03/07⁴		31,048		31,049
Northlake CDO I
5.46%, 09/06/07⁴		7,762		7,762
Principal Life Global Funding I
5.82%, 02/08/07		11,643		11,658
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		37,517		37,517


52		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. HEALTHCARE SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴	$	25,874	$	25,874
Strips III LLC
5.37%, 07/24/07⁴		5,947		5,947
SunTrust Bank
5.29%, 05/01/07		25,874		25,874
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		63,132		63,127
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		36,223		36,223
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		34,672		34,672
Wachovia Bank N.A.
5.36%, 05/22/07		51,747		51,747
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		19,405		19,414
Wells Fargo & Co.
5.33%, 11/15/07⁴		12,937		12,938
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		19,405		19,406
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		77,621		77,609
Wind MasterTrust
5.31%, 07/25/07⁴		10,349		10,349

				1,737,784

TOTAL SHORT-TERM INVESTMENTS (Cost: $4,018,520)				4,018,520

TOTAL INVESTMENTS IN SECURITIES – 100.22% (Cost: $1,315,164,763)				1,326,933,035
Other Assets, Less Liabilities – (0.22)%				(2,942,307	)

NET ASSETS – 100.00%			$	1,323,990,728

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		53

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.94%
COMPUTERS – 26.39%
Agilysys Inc.	9,618	$	142,635
Apple Computer Inc.¹	267,313		21,673,738
Brocade Communications Systems Inc.¹	85,570		693,973
CACI International Inc. Class A¹	9,462		544,443
Cadence Design Systems Inc.¹	88,958		1,588,790
CIBER Inc.¹	16,803		115,101
Cognizant Technology Solutions Corp.¹	44,124		3,321,655
Computer Sciences Corp.¹	55,258		2,920,385
Dell Inc.¹	632,479		15,388,214
Diebold Inc.	22,089		964,848
DST Systems Inc.¹	17,935		1,108,204
Electronic Data Systems Corp.	163,813		4,149,383
Electronics For Imaging Inc.¹	17,205		406,726
EMC Corp.¹	727,769		8,915,170
Gateway Inc.¹	72,353		121,553
Henry (Jack) & Associates Inc.	26,110		568,937
Hewlett-Packard Co.	879,188		34,059,743
Hutchinson Technology Inc.¹	8,310		192,376
Imation Corp.	10,769		492,897
Intergraph Corp.¹	8,845		386,438
International Business Machines Corp.	479,807		44,300,580
Komag Inc.¹	9,210		352,283
Kronos Inc.¹	9,966		337,847
Lexmark International Inc.¹	33,676		2,141,457
McDATA Corp. Class A¹	36,933		209,410
Mentor Graphics Corp.¹	24,803		418,427
Mercury Computer Systems Inc.¹	6,559		80,807
MICROS Systems Inc.¹	11,864		589,404
msystems Ltd.¹	10,356		377,890
NCR Corp.¹	58,021		2,409,032
Network Appliance Inc.¹	118,423		4,322,440
Palm Inc.¹	28,861		443,016
Perot Systems Corp. Class A¹	26,385		389,179
Quantum Corp.¹	61,312		133,660
RadiSys Corp.¹	6,393		117,184
SanDisk Corp.¹	60,933		2,930,877
Seagate Technology	167,834		3,789,692
Silicon Storage Technology Inc.¹	28,759		120,500
SRA International Inc. Class A¹	12,300		394,215
Sun Microsystems Inc.¹	1,105,429		6,002,479
Synopsys Inc.¹	45,498		1,024,160
Unisys Corp.¹	106,198		694,535
Western Digital Corp.¹	68,188		1,246,477

			170,580,760
DISTRIBUTION & WHOLESALE – 0.54%
Brightpoint Inc.¹	14,232		172,207
CDW Corp.	18,731		1,230,065
Ingram Micro Inc. Class A¹	44,143		909,787
Tech Data Corp.¹	17,734		697,833
United Stationers Inc.¹	10,157		484,997

			3,494,889
ELECTRICAL COMPONENTS & EQUIPMENT – 0.27%
American Power Conversion Corp.	57,358		1,733,932

			1,733,932
ELECTRONICS – 0.09%
Cymer Inc.¹	12,000		555,960

			555,960
ENGINEERING & CONSTRUCTION – 0.04%
Dycom Industries Inc.¹	12,695		295,920

			295,920
ENTERTAINMENT – 0.07%
Macrovision Corp.¹	15,984		425,334

			425,334
HOME FURNISHINGS – 0.01%
Audiovox Corp. Class A¹	5,870		77,014

			77,014
INTERNET – 9.75%
Agile Software Corp.¹	15,485		104,369
Akamai Technologies Inc.^1,2	48,091		2,253,544
Ariba Inc.¹	22,626		170,826
Avocent Corp.¹	15,411		565,738
Check Point Software Technologies Ltd.¹	56,421		1,169,043
Digital River Inc.¹	12,206		706,117
EarthLink Inc.¹	40,419		283,741


54		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Equinix Inc.¹	7,380	$	504,792
F5 Networks Inc.¹	12,646		837,039
Google Inc. Class A¹	69,016		32,878,532
InfoSpace Inc.¹	9,334		188,640
Interwoven Inc.¹	12,102		153,937
j2 Global Communications Inc.¹	14,781		405,591
McAfee Inc.¹	49,294		1,426,075
Openwave Systems Inc.¹	28,894		249,355
RealNetworks Inc.¹	35,577		390,635
Redback Networks Inc.¹	17,003		268,987
S1 Corp.¹	22,011		108,734
SonicWALL Inc.¹	19,062		200,151
Symantec Corp.¹	313,681		6,223,431
TIBCO Software Inc.¹	64,578		597,347
United Online Inc.	19,922		269,345
VeriSign Inc.¹	78,466		1,622,677
Vignette Corp.¹	9,213		150,172
webMethods Inc.¹	16,588		124,742
Websense Inc.¹	14,658		401,189
Yahoo! Inc.¹	409,186		10,777,959

			63,032,708
MACHINERY – 0.06%
Intermec Inc.¹	15,075		340,695
Presstek Inc.¹	8,830		54,305

			395,000
OFFICE & BUSINESS EQUIPMENT – 1.34%
IKON Office Solutions Inc.	30,666		457,230
Pitney Bowes Inc.	70,287		3,283,106
Xerox Corp.¹	287,993		4,895,881

			8,636,217
RETAIL – 0.05%
Insight Enterprises Inc.¹	15,132		325,187

			325,187
SEMICONDUCTORS – 20.51%
Actel Corp.¹	8,005		131,202
Advanced Micro Devices Inc.¹	168,855		3,591,546
Agere Systems Inc.¹	55,808		947,620
Altera Corp.¹	114,300		2,107,692
Amkor Technology Inc.¹	33,714		232,964
Analog Devices Inc.	115,230		3,666,619
Applied Materials Inc.	494,935		8,606,920
Applied Micro Circuits Corp.¹	95,670		291,794
Asyst Technologies Inc.¹	14,662		108,939
Atmel Corp.¹	140,541		808,111
ATMI Inc.¹	11,596		367,477
Axcelis Technologies Inc.¹	31,117		214,707
Broadcom Corp. Class A¹	147,520		4,465,430
Brooks Automation Inc.¹	23,514		333,899
Cabot Microelectronics Corp.¹	7,742		221,034
Cirrus Logic Inc.¹	23,797		168,007
Cohu Inc.	6,259		123,803
Conexant Systems Inc.¹	157,457		303,892
Credence Systems Corp.¹	27,919		89,899
Cree Inc.¹	23,788		523,098
Cypress Semiconductor Corp.^1,2	43,264		726,403
DSP Group Inc.¹	8,984		195,132
Emulex Corp.¹	25,811		485,247
Exar Corp.¹	10,780		139,817
Fairchild Semiconductor International Inc. Class A¹	37,490		603,964
FormFactor Inc.¹	12,737		486,299
Freescale Semiconductor Inc. Class A¹	44,160		1,738,579
Freescale Semiconductor Inc. Class B¹	85,069		3,345,764
Integrated Device Technology Inc.¹	62,852		996,204
Intel Corp.	1,833,576		39,128,512
International Rectifier Corp.¹	22,164		797,239
Intersil Corp. Class A	46,075		1,080,459
KLA-Tencor Corp.	62,872		3,091,416
Kopin Corp.¹	21,424		76,484
Kulicke & Soffa Industries Inc.¹	16,761		150,514
Lam Research Corp.¹	43,758		2,163,833
Lattice Semiconductor Corp.¹	33,739		209,519
Linear Technology Corp.	96,479		3,002,426
LSI Logic Corp.¹	124,031		1,246,512
LTX Corp.¹	19,512		91,121
Marvell Technology Group Ltd.¹	143,369		2,620,785
Maxim Integrated Products Inc.	101,389		3,042,684
MEMC Electronic Materials Inc.¹	54,312		1,928,076
Micrel Inc.¹	19,654		219,339
Microchip Technology Inc.	66,278		2,182,535
Micron Technology Inc.¹	226,398		3,271,451


SCHEDULES OF INVESTMENTS		55

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Microsemi Corp.¹	20,330	$	398,468
Mindspeed Technologies Inc.¹	33,444		58,527
National Semiconductor Corp.	104,313		2,533,763
Novellus Systems Inc.¹	41,377		1,144,074
NVIDIA Corp.¹	111,680		3,894,282
OmniVision Technologies Inc.^1,2	17,133		281,324
Photronics Inc.¹	12,193		170,580
PMC-Sierra Inc.¹	64,937		430,532
QLogic Corp.¹	50,637		1,042,109
Rambus Inc.¹	30,976		512,963
Semtech Corp.¹	22,897		298,348
Silicon Image Inc.¹	25,289		299,169
Silicon Laboratories Inc.¹	16,143		526,746
SiRF Technology Holdings Inc.^1,2	13,775		387,353
Skyworks Solutions Inc.¹	49,902		330,850
Teradyne Inc.¹	61,568		863,183
Tessera Technologies Inc.¹	14,055		490,660
Texas Instruments Inc.	483,534		14,593,056
Transmeta Corp.¹	64,451		76,052
TriQuint Semiconductor Inc.¹	45,522		204,849
Ultratech Inc.¹	6,792		97,058
Varian Semiconductor Equipment Associates Inc.¹	17,984		656,236
Xilinx Inc.	108,834		2,776,355
Zoran Corp.¹	15,042		209,385

			132,600,889
SOFTWARE – 21.41%
Actuate Corp.¹	19,639		102,516
Adobe Systems Inc.¹	183,875		7,033,219
Advent Software Inc.¹	7,197		266,433
ANSYS Inc.¹	10,108		464,968
Autodesk Inc.¹	72,497		2,664,265
BEA Systems Inc.¹	125,045		2,034,482
BMC Software Inc.¹	66,510		2,015,918
Borland Software Corp.¹	23,534		129,908
CA Inc.	145,135		3,593,543
Cerner Corp.¹	19,124		923,880
Citrix Systems Inc.¹	56,475		1,667,707
Compuware Corp.¹	115,449		928,210
CSG Systems International Inc.¹	14,806		399,466
Dendrite International Inc.¹	11,879		124,136
Fair Isaac Corp.	21,102		772,966
Hyperion Solutions Corp.¹	18,638		697,061
Informatica Corp.¹	27,208		337,107
Inter-Tel Inc.	6,292		130,181
Intuit Inc.¹	100,361		3,542,743
JDA Software Group Inc.¹	9,184		135,097
Keane Inc.¹	16,327		189,230
Microsoft Corp.	2,795,297		80,252,977
Novell Inc.¹	113,259		679,554
Nuance Communications Inc.¹	43,490		501,875
Oracle Corp.¹	1,268,949		23,437,488
Packeteer Inc.¹	10,671		119,622
Parametric Technology Corp.¹	34,798		679,953
Progress Software Corp.¹	12,068		347,438
Quest Software Inc.¹	16,836		247,994
Red Hat Inc.¹	59,299		971,318
Salesforce.com Inc.¹	25,523		995,907
Sybase Inc.¹	28,120		684,722
Transaction Systems Architects Inc. Class A¹	11,643		392,486
Trident Microsystems Inc.¹	17,287		365,447
VeriFone Holdings Inc.¹	11,182		326,626
Wind River Systems Inc.¹	25,127		275,894

			138,432,337
TELECOMMUNICATIONS – 19.41%
Adaptec Inc.¹	35,331		160,049
ADC Telecommunications Inc.¹	36,295		519,381
ADTRAN Inc.	21,140		489,180
Amdocs Ltd.¹	59,032		2,288,080
American Tower Corp. Class A¹	133,194		4,797,648
Andrew Corp.¹	49,956		462,593
Arris Group Inc.¹	33,332		446,649
Avaya Inc.¹	147,537		1,889,949
C-COR Inc.¹	15,090		150,749
Ciena Corp.¹	26,034		612,059
Cisco Systems Inc.¹	1,938,835		46,784,089
Comverse Technology Inc.¹	63,126		1,374,253
Corning Inc.¹	487,464		9,958,890
Crown Castle International Corp.¹	65,099		2,190,581
Extreme Networks Inc.¹	34,244		130,127
Finisar Corp.¹	80,135		278,870
Foundry Networks Inc.¹	39,367		498,386
Harmonic Inc.¹	22,337		181,153


56		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares or* *Principal*		*Value*
Harris Corp.		41,876	$	1,783,918
InterDigital Communications Corp.¹		17,215		615,608
JDS Uniphase Corp.¹		66,029		959,401
Juniper Networks Inc.¹		176,634		3,041,637
Lucent Technologies Inc.¹		1,397,086		3,394,919
Motorola Inc.		772,403		17,811,613
MRV Communications Inc.^1,2		35,488		121,369
Plantronics Inc.		14,964		315,890
Polycom Inc.¹		27,933		765,364
QUALCOMM Inc.		520,697		18,948,164
RF Micro Devices Inc.¹		59,282		432,759
SBA Communications Corp.¹		27,721		740,428
Sonus Networks Inc.¹		79,443		415,487
Stratex Networks Inc.¹		25,174		117,563
Sycamore Networks Inc.¹		58,136		218,010
Tekelec¹		20,379		300,590
Tellabs Inc.¹		128,811		1,357,668
3Com Corp.¹		121,554		590,752
UTStarcom Inc.¹		31,861		343,143

				125,486,969

TOTAL COMMON STOCKS (Cost: $621,271,897)				646,073,116
SHORT-TERM INVESTMENTS – 0.48%
CERTIFICATES OF DEPOSIT³– 0.02%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	17,573		17,573
Societe Generale
5.33%, 12/08/06		25,093		25,093
Washington Mutual Bank
5.36%, 11/13/06		62,733		62,733
Wells Fargo Bank N.A.
4.78%, 12/05/06		20,074		20,074

				125,473
COMMERCIAL PAPER³– 0.09%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		37,461		36,797
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		37,640		37,640

*Security*	*Principal*		*Value*
ASAP Funding Ltd.
5.29%, 11/02/06⁴	$	6,273	$	6,272
Atlantis One Funding
5.30%, 11/14/06⁴		34,430		34,364
Beta Finance Inc.
5.27%, 01/25/07⁴		5,019		4,956
Bryant Park Funding LLC
5.28%, 12/14/06⁴		7,922		7,872
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		12,720		12,696
Cantabric Finance LLC
5.26%, 01/25/07⁴		10,037		9,913
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		28,857		28,815
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		18,820		18,356
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		15,056		15,002
Curzon Funding LLC
5.29%, 11/17/06⁴		25,093		25,034
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		28,911		28,561
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		25,093		25,075
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		22,835		22,501
Galleon Capital Corp.
5.27%, 12/18/06⁴		3,509		3,484
General Electric Capital Services Inc.
5.22%, 12/11/06		2,509		2,495
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		14,805		14,513
HBOS Treasury Services PLC
5.27%, 12/15/06		5,019		4,986
Landale Funding LLC
5.31%, 11/15/06⁴		19,573		19,532


SCHEDULES OF INVESTMENTS		57

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴	$	45,073	$	45,042
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		16,185		16,152
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		32,621		32,002
Nestle Capital Corp.
5.19%, 08/09/07		15,056		14,446
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		39,644		39,643
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		13,370		13,214
Sedna Finance Inc.
5.22%, 04/17/07⁴		14,303		13,957
Sydney Capital Corp.
5.27%, 12/08/06⁴		598		595
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		12,547		12,405
Tulip Funding Corp.
5.29%, 11/15/06⁴		13,235		13,207

				559,527
MEDIUM-TERM NOTES³– 0.02%
Bank of America N.A.
5.28%, 04/20/07		6,273		6,273
Cullinan Finance Corp.
5.71%, 06/28/07⁴		18,820		18,820
K2 USA LLC
5.39%, 06/04/07⁴		18,820		18,820
Marshall & Ilsley Bank
5.18%, 12/15/06		25,093		25,104
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		29,359		29,359
US Bank N.A.
2.85%, 11/15/06		5,019		5,015

				103,391
REPURCHASE AGREEMENTS³– 0.09%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $50,193 (collateralized by non-U.S. Government debt securities, value $51,709, 4.70% to 8.75%, 7/30/10 to 11/15/25).		50,186		50,186
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $35,135 (collateralized by U.S. Government obligations, value $35,845, 5.50%, 10/1/21 to 10/1/36).		35,130		35,130
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $37,646 (collateralized by non-U.S. Government debt securities, value $41,418, 0.31% to 6.00%, 7/25/36 to 11/25/46).		37,640		37,640
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,509 (collateralized by non-U.S. Government debt securities, value $2,585, 6.00% to 6.70%, 12/15/10 to 4/15/12).		2,509		2,509
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $87,839 (collateralized by non-U.S. Government debt securities, value $92,247, 4.11% to 9.32%, 4/15/10 to 5/15/36).		87,826		87,826


58		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $27,606 (collateralized by non-U.S. Government debt securities, value $30,933, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	27,602	$	27,602
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $15,058 (collateralized by non-U.S. Government debt securities, value $16,656, 0.00% to 10.00%, 5/27/33 to 10/31/36).		15,056		15,056
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $50,193 (collateralized by non-U.S. Government debt securities, value $52,713, 0.00% to 9.00%, 5/1/17 to 9/25/46).		50,186		50,186
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $43,920 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $45,027, 0.00% to 7.32%, 11/2/06 to 3/25/45).		43,913		43,913
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $37,646 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $38,356, 0.00% to 7.32%, 11/2/06 to 3/25/45).		37,640		37,640
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $15,058 (collateralized by non-U.S. Government debt securities, value $15,814, 0.00% to 10.00%, 1/1/10).		15,056		15,056
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $12,549 (collateralized by non-U.S. Government debt securities, value $13,179, 5.26% to 5.35%, 7/1/24 to 6/1/46).		12,547		12,547
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $6,274 (collateralized by non-U.S. Government debt securities, value $6,590, 6.25% to 7.63%, 9/15/13 to 6/1/16).		6,273		6,273
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $50,193 (collateralized by non-U.S. Government debt securities, value $51,709, 3.50% to 10.13%, 5/15/07 to 7/1/26).		50,186		50,186
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $25,097 (collateralized by non-U.S. Government debt securities, value $27,662, 5.50% to 10.39%, 6/17/08 to 6/25/36).		25,093		25,093


SCHEDULES OF INVESTMENTS		59

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $33,881 (collateralized by non-U.S. Government debt securities, value $35,838, 0.00% to 10.00%, 11/1/06 to 10/31/36).	$	33,876	$	33,876
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $18,146 (collateralized by non-U.S. Government debt securities, value $18,844, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁵		17,565		17,565
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $65,252 (collateralized by non-U.S. Government debt securities, value $68,527, 3.86% to 8.17%, 11/18/08 to 7/15/45).		65,242		65,242

				613,526
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		2,593		2,593

				2,593
VARIABLE & FLOATING RATE NOTES³– 0.26%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		64,238		64,245
American Express Bank
5.29%, 02/28/07		25,093		25,093
American Express Centurion Bank
5.41%, 07/19/07		27,602		27,625
American Express Credit Corp.
5.42%, 07/05/07		7,528		7,531
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		4,527		4,527
ASIF Global Financing
5.51%, 05/03/07⁴		2,509		2,510
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		16,311		16,311
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		36,385		36,386
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		63,987		63,990
BMW US Capital LLC
5.32%, 10/15/07⁴		25,093		25,093
BNP Paribas
5.36%, 05/18/07⁴		46,422		46,422
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		18,318		18,317
CC USA Inc.
5.37%, 07/30/07⁴		12,547		12,548
Commodore CDO Ltd.
5.47%, 06/12/07⁴		6,273		6,273
Credit Agricole SA
5.34%, 07/23/07		25,093		25,093
Credit Suisse First Boston NY
5.38%, 04/24/07		12,547		12,547
Cullinan Finance Corp.
5.36%, 04/25/07⁴		6,273		6,273
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		6,273		6,273
DEPFA Bank PLC
5.43%, 09/14/07		25,093		25,093
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		28,857		28,859
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		25,093		25,093
Fifth Third Bancorp
5.30%, 11/23/07⁴		50,186		50,186
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		25,093		25,092


60		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07	$	26,348	$	26,353
Granite Master Issuer PLC
5.29%, 08/20/07⁴		87,826		87,826
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		20,074		20,077
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		37,640		37,644
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		25,093		25,093
Holmes Financing PLC
5.29%, 07/16/07⁴		43,913		43,913
JP Morgan Chase & Co.
5.29%, 08/02/07		18,820		18,820
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		18,820		18,820
Kestrel Funding LLC
5.30%, 07/11/07⁴		10,037		10,036
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		15,056		15,056
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		26,153		26,153
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		27,602		27,601
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		9,937		9,937
Marshall & Ilsley Bank
5.30%, 10/15/07		13,801		13,801
Master Funding LLC
5.35%, 04/25/07⁴		22,584		22,584
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		37,640		37,640
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,5		2,509		2,509
Monumental Global Funding II
5.38%, 12/27/06⁴		5,019		5,019
Mound Financing PLC
5.29%, 05/08/07⁴		23,588		23,588
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		90,335		90,334
National City Bank of Indiana
5.37%, 05/21/07		12,547		12,547
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		82,807		82,823
Newcastle Ltd.
5.34%, 04/24/07⁴		8,845		8,844
Northern Rock PLC
5.36%, 08/03/07⁴		30,112		30,112
Northlake CDO I
5.46%, 09/06/07⁴		7,528		7,528
Principal Life Global Funding I
5.82%, 02/08/07		11,292		11,306
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		36,385		36,384
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		25,093		25,093
Strips III LLC
5.37%, 07/24/07⁴		5,768		5,768
SunTrust Bank
5.29%, 05/01/07		25,093		25,094
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		61,227		61,222
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		35,130		35,130
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		33,626		33,626
Wachovia Bank N.A.
5.36%, 05/22/07		50,186		50,186
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		18,820		18,829


SCHEDULES OF INVESTMENTS		61

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TECHNOLOGY SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Wells Fargo & Co.
5.33%, 11/15/07⁴	$	12,547	$	12,547
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		18,820		18,819
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		75,279		75,267
Wind MasterTrust
5.31%, 07/25/07⁴		10,037		10,037

				1,685,346

TOTAL SHORT-TERM INVESTMENTS (Cost: $3,089,856)				3,089,856

TOTAL INVESTMENTS IN SECURITIES – 100.42% (Cost: $624,361,753)				649,162,972
Other Assets, Less Liabilities – (0.42)%				(2,707,926	)

NET ASSETS – 100.00%			$	646,455,046

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


62		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
COMMON STOCKS – 99.93%
HOLDING COMPANIES – DIVERSIFIED – 2.37%
Leucadia National Corp.		759,114	$	20,017,836

				20,017,836
TELECOMMUNICATIONS – 97.56%
Alltel Corp.		754,120		40,202,137
American Tower Corp. Class A¹		272,607		9,819,304
AT&T Inc.		5,508,050		188,650,713
BCE Inc.		1,040,319		29,420,221
BellSouth Corp.		910,831		41,078,478
CenturyTel Inc.		870,307		35,021,154
Cincinnati Bell Inc.¹		1,565,167		7,340,633
Citizens Communications Co.		1,689,881		24,773,655
Crown Castle International Corp.^1,2		191,608		6,447,609
Dobson Communications Corp. Class A¹		271,420		2,106,219
Embarq Corp.		457,322		22,111,519
IDT Corp.¹		157,135		2,027,042
IDT Corp. Class B^1,2		508,241		6,602,051
Leap Wireless International Inc.¹		132,803		7,365,254
Level 3 Communications Inc.^1,2		1,480,807		7,833,469
NII Holdings Inc. Class B^1,2		581,238		37,797,907
NTL Inc.		750,196		20,277,798
Qwest Communications International Inc.^1,2		4,070,735		35,130,443
Sprint Nextel Corp.		3,621,935		67,693,965
Telephone & Data Systems Inc.		424,785		20,750,747
Telephone & Data Systems Inc. Special		408,195		18,981,068
United States Cellular Corp.¹		340,392		21,584,257
Verizon Communications Inc.		4,378,987		162,022,519
Windstream Corp.		692,459		9,500,538

				824,538,700

TOTAL COMMON STOCKS (Cost: $772,227,729)				844,556,536
SHORT-TERM INVESTMENTS – 9.22%
CERTIFICATES OF DEPOSIT³– 0.37%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	434,717		434,717

*Security*	*Principal*		*Value*
Societe Generale
5.33%, 12/08/06	$	621,025	$	621,025
Washington Mutual Bank
5.36%, 11/13/06		1,552,562		1,552,562
Wells Fargo Bank N.A.
4.78%, 12/05/06		496,820		496,820

				3,105,124
COMMERCIAL PAPER³– 1.64%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		927,121		910,712
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		931,537		931,537
ASAP Funding Ltd.
5.29%, 11/02/06⁴		155,256		155,233
Atlantis One Funding
5.30%, 11/14/06⁴		852,095		850,465
Beta Finance Inc.
5.27%, 01/25/07⁴		124,205		122,661
Bryant Park Funding LLC
5.28%, 12/14/06⁴		196,057		194,821
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		314,810		314,207
Cantabric Finance LLC
5.26%, 01/25/07⁴		248,410		245,325
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		714,178		713,136
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		465,768		454,288
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		372,615		371,285
Curzon Funding LLC
5.29%, 11/17/06⁴		621,025		619,565
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		715,514		706,859
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		621,025		620,568


SCHEDULES OF INVESTMENTS		63

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴	$	565,132	$	556,882
Galleon Capital Corp.
5.27%, 12/18/06⁴		86,832		86,234
General Electric Capital Services Inc.
5.22%, 12/11/06		62,102		61,742
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		366,405		359,188
HBOS Treasury Services PLC
5.27%, 12/15/06		124,205		123,406
Landale Funding LLC
5.31%, 11/15/06⁴		484,399		483,400
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		1,115,497		1,114,720
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		400,561		399,737
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		807,332		792,015
Nestle Capital Corp.
5.19%, 08/09/07		372,615		357,520
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		981,132		981,132
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		330,882		327,033
Sedna Finance Inc.
5.22%, 04/17/07⁴		353,984		345,412
Sydney Capital Corp.
5.27%, 12/08/06⁴		14,811		14,731
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		310,512		307,006
Tulip Funding Corp.
5.29%, 11/15/06⁴		327,541		326,867

				13,847,687
MEDIUM-TERM NOTES³– 0.30%
Bank of America N.A.
5.28%, 04/20/07		155,256		155,256

*Security*	Shares or Principal		*Value*
Cullinan Finance Corp.
5.71%, 06/28/07⁴	$	465,768	$	465,768
K2 USA LLC
5.39%, 06/04/07⁴		465,768		465,768
Marshall& Ilsley Bank
5.18%, 12/15/06		621,025		621,282
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		726,599		726,599
US Bank N.A.
2.85%, 11/15/06		124,205		124,117

				2,558,790
MONEY MARKET FUNDS – 0.17%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		1,420,428		1,420,428

				1,420,428
REPURCHASE AGREEMENTS³– 1.80%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,242,234 (collateralized by non-U.S. Government debt securities, value $1,279,728, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	1,242,049		1,242,049
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $869,565 (collateralized by U.S. Government obligations, value $887,112, 5.50%, 10/1/21 to 10/1/36).		869,434		869,434
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $931,676 (collateralized by non-U.S. Government debt securities, value $1,025,034, 0.31% to 6.00%, 7/25/36 to 11/25/46).		931,537		931,537


64		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $62,111 (collateralized by non-U.S. Government debt securities, value $63,986, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	62,102	$	62,102
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,173,910 (collateralized by non-U.S. Government debt securities, value $2,283,009, 4.11% to 9.32%, 4/15/10 to 5/15/36).		2,173,586		2,173,586
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $683,230 (collateralized by non-U.S. Government debt securities, value $765,547, 0.00% to 10.00%, 5/27/33 to 10/31/36).		683,127		683,127
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $372,672 (collateralized by non-U.S. Government debt securities, value $412,217, 0.00% to 10.00%, 5/27/33 to 10/31/36).		372,615		372,615
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,242,234 (collateralized by non-U.S. Government debt securities, value $1,304,577, 0.00% to 9.00%, 5/1/17 to 9/25/46).		1,242,049		1,242,049
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,086,955 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $1,114,377, 0.00% to 7.32%, 11/2/06 to 3/25/45).		1,086,793		1,086,793
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $931,675 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $949,284, 0.00% to 7.32%, 11/2/06 to 3/25/45).		931,537		931,537
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $372,672 (collateralized by non-U.S. Government debt securities, value $391,373, 0.00% to 10.00%, 1/1/10).		372,615		372,615
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $310,558 (collateralized by non-U.S. Government debt securities, value $326,168, 5.26% to 5.35%, 7/1/24 to 6/1/46).		310,512		310,512
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $155,279 (collateralized by non-U.S. Government debt 6.25% to 7.63%, 9/15/13 to 6/1/16).		155,256		155,256


SCHEDULES OF INVESTMENTS		65

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,242,234 (collateralized by non-U.S. Government debt securities, value $1,279,746, 3.50% to 10.13%, 5/15/07 to 7/1/26).	$	1,242,049	$	1,242,049
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $621,117 (collateralized by non-U.S. Government debt securities, value $684,602, 5.50% to 10.39%, 6/17/08 to 6/25/36).		621,025		621,025
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $838,510 (collateralized by non-U.S. Government debt securities, value $886,949, 0.00% to 10.00%, 11/1/06 to 10/31/36).		838,383		838,383
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $449,089 (collateralized by non-U.S. Government debt 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		434,717		434,717
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $1,614,905 (collateralized by non-U.S. Government debt securities, value $1,695,950, 3.86% to 8.17%, 11/18/08 to 7/15/45).		1,614,664		1,614,664

				15,184,050
TIME DEPOSITS³– 0.01%
SunTrust Bank
5.34%, 11/01/06		64,170		64,170

				64,170
VARIABLE & FLOATING RATE NOTES³– 4.93%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		1,589,823		1,590,005
American Express Bank
5.29%, 02/28/07		621,025		621,023
American Express Centurion Bank
5.41%, 07/19/07		683,127		683,691
American Express Credit Corp.
5.42%, 07/05/07		186,307		186,391
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		112,045		112,045
ASIF Global Financing
5.51%, 05/03/07⁴		62,102		62,120
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		403,666		403,666
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		900,486		900,516
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		1,583,613		1,583,677
BMW US Capital LLC
5.32%, 10/15/07⁴		621,025		621,025
BNP Paribas
5.36%, 05/18/07⁴		1,148,896		1,148,896
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		453,348		453,348
CC USA Inc.
5.37%, 07/30/07⁴		310,512		310,545
Commodore CDO Ltd.
5.47%, 06/12/07⁴		155,256		155,256
Credit Agricole SA
5.34%, 07/23/07		621,025		621,025


66		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Credit Suisse First Boston NY
5.38%, 04/24/07	$	310,512	$	310,522
Cullinan Finance Corp.
5.36%, 04/25/07⁴		155,256		155,256
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		155,256		155,256
DEPFA Bank PLC
5.43%, 09/14/07		621,025		621,025
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		714,178		714,214
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		621,025		621,025
Fifth Third Bancorp
5.30%, 11/23/07⁴		1,242,049		1,242,049
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		621,025		620,986
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		652,076		652,199
Granite Master Issuer PLC
5.29%, 08/20/07⁴		2,173,586		2,173,586
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		496,820		496,879
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		931,537		931,654
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		621,025		621,025
Holmes Financing PLC
5.29%, 07/16/07⁴		1,086,793		1,086,793
JP Morgan Chase & Co.
5.29%, 08/02/07		465,768		465,768
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		465,768		465,753
Kestrel Funding LLC
5.30%, 07/11/07⁴		248,410		248,392
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		372,615		372,615
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		647,255		647,255
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		683,127		683,091
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		245,928		245,928
Marshall & Ilsley Bank
5.30%, 10/15/07		341,564		341,564
Master Funding LLC
5.35%, 04/25/07⁴		558,922		558,922
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		931,537		931,537
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		62,102		62,102
Monumental Global Funding II
5.38%, 12/27/06⁴		124,205		124,211
Mound Financing PLC
5.29%, 05/08/07⁴		583,763		583,763
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		2,235,689		2,235,665
National City Bank of Indiana
5.37%, 05/21/07		310,512		310,527
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		2,049,381		2,049,780
Newcastle Ltd.
5.34%, 04/24/07⁴		218,911		218,880
Northern Rock PLC
5.36%, 08/03/07⁴		745,230		745,244
Northlake CDO I
5.46%, 09/06/07⁴		186,307		186,307
Principal Life Global Funding I
5.82%, 02/08/07		279,461		279,814
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		900,486		900,470


SCHEDULES OF INVESTMENTS		67

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. TELECOMMUNICATIONS SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴	$	621,025	$	621,025
Strips III LLC
5.37%, 07/24/07⁴		142,751		142,751
SunTrust Bank
5.29%, 05/01/07		621,025		621,043
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		1,515,300		1,515,194
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		869,434		869,435
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		832,213		832,212
Wachovia Bank N.A.
5.36%, 05/22/07		1,242,049		1,242,049
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		465,768		465,990
Wells Fargo & Co.
5.33%, 11/15/07⁴		310,512		310,530
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		465,768		465,767
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		1,863,074		1,862,764
Wind Master Trust
5.31%, 07/25/07⁴		248,410		248,410

				41,710,456

TOTAL SHORT-TERM INVESTMENTS (Cost: $77,890,705)				77,890,705

TOTAL INVESTMENTS IN SECURITIES – 109.15% (Cost: $850,118,434)				922,447,241
Other Assets, Less Liabilities – (9.15)%				(77,325,815	)

NET ASSETS – 100.00%			$	845,121,426

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


68		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.81%
ELECTRIC – 85.89%
AES Corp. (The)¹	911,302	$	20,039,531
Allegheny Energy Inc.¹	225,048		9,683,815
ALLETE Inc.	35,122		1,584,002
Alliant Energy Corp.	163,277		6,261,673
Ameren Corp.	283,772		15,352,065
American Electric Power Co. Inc.	546,918		22,658,813
Aquila Inc.¹	519,650		2,385,193
Avista Corp.	67,471		1,736,704
Black Hills Corp.	46,172		1,593,396
CenterPoint Energy Inc.	381,770		5,909,800
Cleco Corp.	78,444		2,016,011
CMS Energy Corp.¹	307,118		4,572,987
Consolidated Edison Inc.	340,956		16,485,223
Constellation Energy Group Inc.	247,940		15,471,456
Dominion Resources Inc.	490,207		39,701,865
DPL Inc.	158,653		4,556,514
DTE Energy Co.	246,901		11,216,712
Duke Energy Corp.	1,715,486		54,277,977
Duquesne Light Holdings Inc.	110,514		2,191,493
Edison International	415,728		18,474,952
El Paso Electric Co.¹	67,322		1,572,642
Energy East Corp.	204,653		4,975,114
Entergy Corp.	288,247		24,740,240
Exelon Corp.	931,612		57,741,312
FirstEnergy Corp.	458,225		26,966,541
FPL Group Inc.	516,458		26,339,358
Great Plains Energy Inc.	110,488		3,595,280
Hawaiian Electric Industries Inc.²	111,776		3,131,964
IDACORP Inc.	59,558		2,348,372
Mirant Corp.¹	356,843		10,551,848
Northeast Utilities	213,370		5,336,384
NRG Energy Inc.¹	189,318		9,115,662
NSTAR	148,250		5,157,617
Pepco Holdings Inc.	261,759		6,653,914
PG&E Corp.	479,724		20,695,293
Pinnacle West Capital Corp.	137,745		6,585,588
PNM Resources Inc.	86,877		2,446,456
PPL Corp.	528,018		18,227,181
Progress Energy Inc.	349,604		16,081,784
Public Service Enterprise Group Inc.	348,929		21,302,115
Puget Energy Inc.	159,726		3,814,257
Reliant Energy Inc.¹	423,267		5,367,026
SCANA Corp.	144,573		5,777,137
Sierra Pacific Resources Corp.¹	279,208		4,232,793
Southern Co. (The)	1,032,000		37,564,800
TECO Energy Inc.	289,493		4,773,740
TXU Corp.	640,984		40,465,320
UniSource Energy Corp.	48,840		1,737,727
Westar Energy Inc.	120,755		3,057,517
Wisconsin Energy Corp.	162,490		7,464,791
WPS Resources Corp.	59,811		3,182,543
Xcel Energy Inc.	556,585		12,283,831

			659,456,329
ENVIRONMENTAL CONTROL – 0.33%
Nalco Holding Co.¹	126,432		2,557,719

			2,557,719
GAS – 9.56%
AGL Resources Inc.	108,347		4,063,013
Atmos Energy Corp.	111,736		3,433,647
Energen Corp.	91,753		3,928,863
KeySpan Corp.	242,088		9,823,931
New Jersey Resources Corp.	38,974		2,021,192
Nicor Inc.²	61,306		2,817,624
NiSource Inc.	375,821		8,745,355
Northwest Natural Gas Co.	38,454		1,590,842
Peoples Energy Corp.	53,302		2,328,764
Piedmont Natural Gas Co.²	98,350		2,655,450
Sempra Energy	318,204		16,877,540
Southern Union Co.	145,406		4,024,838
Southwest Gas Corp.	55,586		1,994,426
UGI Corp.	145,942		3,867,463
Vectren Corp.	105,677		3,070,974
WGL Holdings Inc.	67,721		2,197,546

			73,441,468
PIPELINES – 3.45%
Equitable Resources Inc.	157,942		6,399,810
National Fuel Gas Co.	111,125		4,156,075
ONEOK Inc.	152,169		6,334,795
Questar Corp.	117,614		9,583,189

			26,473,869


SCHEDULES OF INVESTMENTS		69

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
WATER – 0.58%
Aqua America Inc.²		183,177	$	4,442,042

				4,442,042

TOTAL COMMON STOCKS (Cost: $652,364,830)				766,371,427
SHORT-TERM INVESTMENTS – 1.18%
CERTIFICATES OF DEPOSIT³ – 0.04%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	46,483		46,483
Societe Generale
5.33%, 12/08/06		66,405		66,405
Washington Mutual Bank
5.36%, 11/13/06		166,012		166,012
Wells Fargo Bank N.A.
4.78%, 12/05/06		53,124		53,124

				332,024
COMMERCIAL PAPER³– 0.19%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		99,135		97,384
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		99,607		99,607
ASAP Funding Ltd.
5.29%, 11/02/06⁴		16,601		16,599
Atlantis One Funding
5.30%, 11/14/06⁴		91,113		90,938
Beta Finance Inc.
5.27%, 01/25/07⁴		13,281		13,116
Bryant Park Funding LLC
5.28%, 12/14/06⁴		20,964		20,832
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		33,662		33,597
Cantabric Finance LLC
5.26%, 01/25/07⁴		26,562		26,232
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		76,366		76,254
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		49,804		48,576

*Security*	*Principal*		*Value*
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴	$	39,843	$	39,700
Curzon Funding LLC
5.29%, 11/17/06⁴		66,405		66,249
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		76,508		75,583
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		66,405		66,356
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		60,428		59,546
Galleon Capital Corp.
5.27%, 12/18/06⁴		9,285		9,221
General Electric Capital Services Inc.
5.22%, 12/11/06		6,640		6,602
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		39,179		38,407
HBOS Treasury Services PLC
5.27%, 12/15/06		13,281		13,195
Landale Funding LLC
5.31%, 11/15/06⁴		51,796		51,689
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		119,278		119,194
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		42,831		42,743
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		86,326		84,688
Nestle Capital Corp.
5.19%, 08/09/07		39,843		38,229
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		104,910		104,910
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		35,380		34,969


70		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Sedna Finance Inc.
5.22%, 04/17/07⁴	$	37,851	$	36,934
Sydney Capital Corp.
5.27%, 12/08/06⁴		1,584		1,575
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		33,202		32,827
Tulip Funding Corp.
5.29%, 11/15/06⁴		35,023		34,951

				1,480,703
MEDIUM-TERM NOTES³– 0.04%
Bank of America N.A.
5.28%, 04/20/07		16,601		16,601
Cullinan Finance Corp.
5.71%, 06/28/07⁴		49,804		49,804
K2 USA LLC
5.39%, 06/04/07⁴		49,804		49,804
Marshall & Ilsley Bank
5.18%, 12/15/06		66,405		66,432
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		77,694		77,694
US Bank N.A.
2.85%, 11/15/06		13,281		13,272

				273,607
MONEY MARKET FUNDS – 0.12%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		889,918		889,918

				889,918
REPURCHASE AGREEMENTS³– 0.21%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $132,830 (collateralized by non-U.S. Government debt securities, value $136,838, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	132,810		132,810


*Security*	*Principal*		*Value*
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $92,981 (collateralized by U.S. Government obligations, value $94,857, 5.50%, 10/1/21 to 10/1/36).	$	92,967	$	92,967
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $99,622 (collateralized by non-U.S. Government debt securities, value $109,605, 0.31% to 6.00%, 7/25/36 to 11/25/46).		99,607		99,607
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $6,641 (collateralized by non-U.S. Government debt securities, value $6,842, 6.00% to 6.70%, 12/15/10 to 4/15/12).		6,640		6,640
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $232,452 (collateralized by non-U.S. Government debt securities, value $244,117, 4.11% to 9.32%, 4/15/10 to 5/15/36).		232,417		232,417
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $73,056 (collateralized by non-U.S. Government debt securities, value $81,858, 0.00% to 10.00%, 5/27/33 to 10/31/36).		73,045		73,045


SCHEDULES OF INVESTMENTS		71

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $39,849 (collateralized by non-U.S. Government debt securities, value $44,077, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	39,843	$	39,843
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $132,830 (collateralized by non-U.S. Government debt securities, value $139,496, 0.00% to 9.00%, 5/1/17 to 9/25/46).		132,810		132,810
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $116,225 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $119,158, 0.00% to 7.32%, 11/2/06 to 3/25/45).		116,208		116,208
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $99,622 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $101,505, 0.00% to 7.32%, 11/2/06 to 3/25/45).		99,607		99,607
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $39,849 (collateralized by non-U.S. Government debt securities, value $41,849, 0.00% to 10.00%, 1/1/10).		39,843		39,843
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $33,207 (collateralized by non-U.S. Government debt securities, value $34,876, 5.26% to 5.35%, 7/1/24 to 6/1/46).		33,202		33,202
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $16,603 (collateralized by non-U.S. Government debt securities, value $17,440, 6.25% to 7.63%, 9/15/13 to 6/1/16).		16,601		16,601
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $132,830 (collateralized by non-U.S. Government debt securities, value $136,840, 3.50% to 10.13%, 5/15/07 to 7/1/26).		132,810		132,810
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $66,415 (collateralized by non-U.S. Government debt securities, value $73,203, 5.50% to 10.39%, 6/17/08 to 6/25/36).		66,405		66,405
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $89,660 (collateralized by non-U.S. Government debt securities, value $94,840, 0.00% to 10.00%, 11/1/06 to 10/31/36).		89,646		89,646


72		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $48,020 (collateralized by non-U.S. Government debt securities, value $49,867, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷	$	46,483	$	46,483
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $172,678 (collateralized by non-U.S. Government debt securities, value $181,344, 3.86% to 8.17%, 11/18/08 to 7/15/45).		172,652		172,652

				1,623,596
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		6,862		6,862

				6,862
VARIABLE & FLOATING RATE NOTES³– 0.58%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		169,996		170,016
American Express Bank
5.29%, 02/28/07		66,405		66,404
American Express Centurion Bank
5.41%, 07/19/07		73,045		73,106
American Express Credit Corp.
5.42%, 07/05/07		19,921		19,930
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		11,981		11,981
ASIF Global Financing
5.51%, 05/03/07⁴		6,640		6,642
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		43,163		43,163
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		96,287		96,290
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		169,332		169,339
BMW US Capital LLC
5.32%, 10/15/07⁴		66,405		66,405
BNP Paribas
5.36%, 05/18/07⁴		122,849		122,849
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		48,475		48,475
CC USA Inc.
5.37%, 07/30/07⁴		33,202		33,206
Commodore CDO Ltd.
5.47%, 06/12/07⁴		16,601		16,601
Credit Agricole SA
5.34%, 07/23/07		66,405		66,405
Credit Suisse First Boston NY
5.38%, 04/24/07		33,202		33,203
Cullinan Finance Corp.
5.36%, 04/25/07⁴		16,601		16,601
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		16,601		16,601
DEPFA Bank PLC
5.43%, 09/14/07		66,405		66,405
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		76,366		76,369
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		66,405		66,405
Fifth Third Bancorp
5.30%, 11/23/07⁴		132,810		132,810
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		66,405		66,400
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		69,725		69,738


SCHEDULES OF INVESTMENTS		73

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Granite Master Issuer PLC
5.29%, 08/20/07⁴	$	232,417	$	232,417
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		53,124		53,130
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		99,607		99,620
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		66,405		66,405
Holmes Financing PLC
5.29%, 07/16/07⁴		116,208		116,208
JP Morgan Chase & Co.
5.29%, 08/02/07		49,804		49,804
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		49,804		49,802
Kestrel Funding LLC
5.30%, 07/11/07⁴		26,562		26,560
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		39,843		39,843
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		69,210		69,210
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		73,045		73,042
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		26,297		26,297
Marshall & Ilsley Bank
5.30%, 10/15/07		36,523		36,523
Master Funding LLC
5.35%, 04/25/07⁴		59,764		59,764
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		99,607		99,607
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		6,640		6,640
Monumental Global Funding II
5.38%, 12/27/06⁴		13,281		13,282
Mound Financing PLC
5.29%, 05/08/07⁴		62,421		62,421
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		239,057		239,056
National City Bank of Indiana
5.37%, 05/21/07		33,202		33,204
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		219,136		219,178
Newcastle Ltd.
5.34%, 04/24/07⁴		23,408		23,404
Northern Rock PLC
5.36%, 08/03/07⁴		79,686		79,687
Northlake CDO I
5.46%, 09/06/07⁴		19,921		19,921
Principal Life Global Funding I
5.82%, 02/08/07		29,882		29,920
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		96,287		96,285
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		66,405		66,405
Strips III LLC
5.37%, 07/24/07⁴		15,264		15,264
SunTrust Bank
5.29%, 05/01/07		66,405		66,407
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		162,028		162,016
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		92,967		92,967
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		88,987		88,986
Wachovia Bank N.A.
5.36%, 05/22/07		132,810		132,810
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		49,804		49,827
Wells Fargo & Co.
5.33%, 11/15/07⁴		33,202		33,204


74		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES U.S. UTILITIES SECTOR INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴	$	49,804	$	49,803
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		199,214		199,181
Wind MasterTrust
5.31%, 07/25/07⁴		26,562		26,562

				4,460,006

TOTAL SHORT-TERM INVESTMENTS (Cost: $9,066,716 )				9,066,716

TOTAL INVESTMENTS IN SECURITIES – 100.99% (Cost: $661,431,546)				775,438,143
Other Assets, Less Liabilities – (0.99)%				(7,634,722	)

NET ASSETS – 100.00%			$	767,803,421

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		75

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.78%
AGRICULTURE – 4.77%
Altria Group Inc.	3,480,708	$	283,085,981
Universal Corp.¹	1,445,269		53,214,805
UST Inc.	164,691		8,820,850

			345,121,636
AUTO MANUFACTURERS – 1.92%
General Motors Corp.	3,970,135		138,637,114

			138,637,114
BANKS – 26.62%
AmSouth Bancorp	3,815,354		115,299,998
Associated Bancorp	2,226,280		73,111,035
Bank of America Corp.	4,230,269		227,884,591
Bank of Hawaii Corp.	370,554		19,331,802
BB&T Corp.	1,152,545		50,158,758
Citizens Banking Corp.¹	2,261,765		58,738,037
Colonial BancGroup Inc. (The)	15,297		364,680
Comerica Inc.	2,526,305		147,005,688
Compass Bancshares Inc.	174,453		9,814,726
F.N.B. Corp. (Pennsylvania)	2,464,488		41,723,782
Fifth Third Bancorp	965,768		38,485,855
First Horizon National Corp.	2,330,998		91,654,841
FirstMerit Corp.	3,500,153		81,273,553
Fulton Financial Corp.	50,360		806,264
Huntington Bancshares Inc.	2,271,315		55,442,799
KeyCorp	3,651,900		135,631,566
National City Corp.	3,309,924		123,294,669
PNC Financial Services Group	2,665,137		186,639,544
Provident Bankshares Corp.	1,277,890		46,182,945
Regions Financial Corp.	2,390,612		90,723,725
Republic Bancorp Inc.	646,891		8,655,402
Sky Financial Group Inc.	2,078,997		52,078,875
SunTrust Banks Inc.	411,087		32,471,762
TCF Financial Corp.	283,750		7,386,012
TrustCo Bank Corp. NY	1,026,074		11,338,118
U.S. Bancorp	1,028,618		34,808,433
Wachovia Corp.	1,190,337		66,063,703
Wells Fargo & Co.	1,914,992		69,495,060
Whitney Holding Corp.	1,487,468		48,580,705

			1,924,446,928
BEVERAGES – 0.30%
Coca-Cola Co. (The)	462,414		21,603,982

			21,603,982
CHEMICALS – 6.25%
Dow Chemical Co. (The)	1,465,649		59,783,823
Eastman Chemical Co.	1,841,956		112,211,960
Lubrizol Corp.	1,447,749		65,148,705
Lyondell Chemical Co.	2,339,838		60,063,641
Olin Corp.	260,617		4,508,674
PPG Industries Inc.	1,595,009		109,098,616
RPM International Inc.	1,931,682		36,991,710
Sensient Technologies Corp.	159,572		3,678,135

			451,485,264
COMMERCIAL SERVICES – 1.57%
Deluxe Corp.	2,253,645		51,090,132
Donnelley (R.R.) & Sons Co.	1,840,528		62,320,278

			113,410,410
DISTRIBUTION & WHOLESALE – 1.38%
Genuine Parts Co.	2,194,757		99,905,339

			99,905,339
DIVERSIFIED FINANCIAL SERVICES – 3.33%
Citigroup Inc.	1,949,530		97,788,425
IndyMac Bancorp Inc.	310,937		14,132,087
JP Morgan Chase & Co.	2,202,436		104,483,564
Waddell & Reed Financial Inc. Class A	955,620		24,368,310

			240,772,386
ELECTRIC – 17.55%
Black Hills Corp.	1,107,167		38,208,333
CenterPoint Energy Inc.	1,268,930		19,643,036
Consolidated Edison Inc.	286,060		13,831,001
DPL Inc.	50,360		1,446,339
DTE Energy Co.	4,063,274		184,594,538
Duke Energy Corp.	413,497		13,083,045
Duquesne Light Holdings Inc.	3,000,760		59,505,071
Energy East Corp.	4,107,655		99,857,093
Entergy Corp.	511,459		43,898,526
Exelon Corp.	415,904		25,777,730
FirstEnergy Corp.	3,093,327		182,042,294
FPL Group Inc.	3,584,250		182,796,750


76		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Great Plains Energy Inc.	447,374	$	14,557,550
MDU Resources Group Inc.	108,813		2,794,318
Northeast Utilities	323,438		8,089,184
OGE Energy Corp.	483,555		18,655,552
Pinnacle West Capital Corp.	3,892,452		186,098,130
PNM Resources Inc.	515,454		14,515,185
PPL Corp.	2,826,197		97,560,320
Progress Energy Inc.	240,618		11,068,428
SCANA Corp.	1,260,932		50,386,843
UniSource Energy Corp.	6,528		232,266

			1,268,641,532
ELECTRICAL COMPONENTS & EQUIPMENT – 0.69%
Emerson Electric Co.	588,755		49,690,922

			49,690,922
ENVIRONMENTAL CONTROL – 0.41%
Waste Management Inc.	784,247		29,393,578

			29,393,578
FOOD – 1.32%
ConAgra Foods Inc.	641,455		16,774,048
General Mills Inc.	746,132		42,395,220
Sara Lee Corp.	2,138,273		36,564,468

			95,733,736
FOREST PRODUCTS & PAPER – 0.57%
MeadWestvaco Corp.	1,489,422		40,988,893

			40,988,893
GAS – 4.28%
AGL Resources Inc.	1,088,112		40,804,200
Atmos Energy Corp.	488,628		15,015,538
KeySpan Corp.	318,818		12,937,634
Nicor Inc.¹	2,448,301		112,523,914
NiSource Inc.	4,311,125		100,319,879
Vectren Corp.	476,927		13,859,499
WGL Holdings Inc.	423,660		13,747,767

			309,208,431
HOME FURNISHINGS – 1.33%
La-Z-Boy Inc.²	1,633,124		20,005,769
Whirlpool Corp.	877,848		76,311,327

			96,317,096
HOUSEHOLD PRODUCTS & WARES – 1.53%
Avery Dennison Corp.	801,699		50,619,275
Kimberly-Clark Corp.	905,293		60,220,090

			110,839,365
INSURANCE – 4.45%
Cincinnati Financial Corp.	57,140		2,608,441
Fidelity National Title Group Inc. Class A	555,007		12,215,704
Gallagher (ArthurJ.) & Co.	1,607,545		44,770,128
Lincoln National Corp.	2,153,414		136,332,640
Unitrin Inc.	2,922,534		125,464,385

			321,391,298
INTERNET – 0.17%
United Online Inc.	915,191		12,373,382

			12,373,382
OFFICE & BUSINESS EQUIPMENT – 0.69%
Pitney Bowes Inc.	1,066,748		49,827,799

			49,827,799
OIL & GAS – 2.71%
Chevron Corp.	1,589,070		106,785,504
Marathon Oil Corp.	1,033,907		89,329,565

			196,115,069
PACKAGING & CONTAINERS – 0.90%
Sonoco Products Co.	1,838,500		65,229,980

			65,229,980
PHARMACEUTICALS – 5.76%
Abbott Laboratories	851,591		40,459,088
Bristol-Myers Squibb Co.	4,661,754		115,378,412
Lilly (Eli) & Co.	786,261		44,038,479
Merck & Co. Inc.	4,133,152		187,727,764
Pfizer Inc.	1,085,773		28,935,850

			416,539,593
PIPELINES – 2.65%
Kinder Morgan Inc.	1,466,584		154,137,978
ONEOK Inc.	894,529		37,239,242

			191,377,220
RETAIL – 0.09%
Pier 1 Imports Inc.	975,429		6,379,306

			6,379,306
SAVINGS & LOANS – 4.48%
Astoria Financial Corp.	603,564		17,509,392


SCHEDULES OF INVESTMENTS		77

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
New York Community
Bancorp Inc.		3,402,240	$	55,626,624
People’s Bank		2,581,471		105,065,870
Washington Federal Inc.		1,840,736		42,778,705
Washington Mutual Inc.		2,429,710		102,776,733

				323,757,324
TELECOMMUNICATIONS – 4.06%
AT&T Inc.		4,635,844		158,777,657
BellSouth Corp.		2,832,339		127,738,489
Verizon Communications Inc.		194,471		7,195,427

				293,711,573

TOTAL COMMON STOCKS (Cost: $6,446,379,306)				7,212,899,156
SHORT-TERM INVESTMENTS – 0.54%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	85,718		85,718
Societe Generale
5.33%, 12/08/06		122,454		122,454
Washington Mutual Bank
5.36%, 11/13/06		306,136		306,136
Wells Fargo Bank N.A.
4.78%, 12/05/06		97,964		97,964

				612,272
COMMERCIAL PAPER³– 0.04%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		182,811		179,578
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		183,682		183,682
ASAP Funding Ltd.
5.29%, 11/02/06⁴		30,614		30,609
Atlantis One Funding
5.30%, 11/14/06⁴		168,017		167,696
Beta Finance Inc.
5.27%, 01/25/07⁴		24,491		24,186
Bryant Park Funding LLC
5.28%, 12/14/06⁴		38,659		38,415


*Security*	*Principal*		*Value*
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴	$	62,075	$	61,956
Cantabric Finance LLC
5.26%, 01/25/07⁴		48,982		48,373
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		140,823		140,617
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		91,841		89,577
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		73,473		73,210
Curzon Funding LLC
5.29%, 11/17/06⁴		122,454		122,166
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		141,086		139,379
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		122,454		122,364
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		111,433		109,806
Galleon Capital Corp.
5.27%, 12/18/06⁴		17,122		17,004
General Electric Capital Services Inc.
5.22%, 12/11/06		12,245		12,174
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		72,248		70,826
HBOS Treasury Services PLC
5.27%, 12/15/06		24,491		24,333
Landale Funding LLC
5.31%, 11/15/06⁴		95,514		95,317
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		219,955		219,802
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		78,983		78,821


78		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07	$	159,191	$	156,170
Nestle Capital Corp.
5.19%, 08/09/07		73,473		70,496
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		193,461		193,461
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		65,244		64,484
Sedna Finance Inc.
5.22%, 04/17/07⁴		69,799		68,109
Sydney Capital Corp.
5.27%, 12/08/06⁴		2,921		2,905
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		61,227		60,536
Tulip Funding Corp.
5.29%, 11/15/06⁴		64,585		64,452

				2,730,504
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		30,614		30,614
Cullinan Finance Corp.
5.71%, 06/28/07⁴		91,841		91,841
K2 USA LLC
5.39%, 06/04/07⁴		91,841		91,841
Marshall & Ilsley Bank
5.18%, 12/15/06		122,454		122,505
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		143,272		143,272
US Bank N.A.
2.85%, 11/15/06		24,491		24,474

				504,547
MONEY MARKET FUNDS – 0.33%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^1,5		23,621,261		23,621,261

				23,621,261

*Security*	*Principal*		*Value*
REPURCHASE AGREEMENTS³– 0.04%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $244,945 (collateralized by non-U.S. Government debt securities, value $252,338, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	244,909	$	244,909
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $171,462 (collateralized by U.S. Government obligations, value $174,922, 5.50%, 10/1/21 to 10/1/36).		171,436		171,436
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $183,709 (collateralized by non-U.S. Government debt securities, value $202,118, 0.31% to 6.00%, 7/25/36 to 11/25/46).		183,682		183,682
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $12,247 (collateralized by non-U.S. Government debt securities, value $12,617, 6.00% to 6.70%, 12/15/10 to 4/15/12).		12,245		12,245
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $428,654 (collateralized by non-U.S. Government debt securities, value $450,167, 4.11% to 9.32%, 4/15/10 to 5/15/36).		428,591		428,591


SCHEDULES OF INVESTMENTS		79

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


Security	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $134,720 (collateralized by non-U.S. Government debt securities, value $150,951, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	134,700	$	134,700
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $73,484 (collateralized by non-U.S. Government debt securities, value $81,282, 0.00% to 10.00%, 5/27/33 to 10/31/36).		73,473		73,473
Goldman Sachs& Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $244,945 (collateralized by non-U.S. Government debt securities, value $257,238, 0.00% to 9.00%, 5/1/17 to 9/25/46).		244,909		244,909
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $214,327 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $219,734, 0.00% to 7.32%, 11/2/06 to 3/25/45).		214,295		214,295
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $183,708 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $187,181, 0.00% to 7.32%, 11/2/06 to 3/25/45).		183,681		183,681
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $73,484 (collateralized by non-U.S. Government debt securities, value $77,171, 0.00% to 10.00%, 1/1/10).		73,473		73,473
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $61,236 (collateralized by non-U.S. Government debt securities, value $64,314, 5.26% to 5.35%, 7/1/24 to 6/1/46).		61,227		61,227
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $30,619 (collateralized by non-U.S. Government debt securities, value $32,161, 6.25% to 7.63%, 9/15/13 to 6/1/16).		30,614		30,614
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $244,945 (collateralized by non-U.S. Government debt securities, value $252,342, 3.50% to 10.13%, 5/15/07 to 7/1/26).		244,909		244,909
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $122,472 (collateralized by non-U.S. Government debt securities, value $134,991, 5.50% to 10.39%, 6/17/08 to 6/25/36).		122,454		122,454


80		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $165,338 (collateralized by non-U.S. Government debt securities, value $174,890, 0.00% to 10.00%, 11/1/06 to 10/31/36).	$	165,313	$	165,313
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $88,552 (collateralized by non-U.S. Government debt securities, value $91,958, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁶		85,718		85,718
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $318,429 (collateralized by non-U.S. Government debt securities, value $334,409, 3.86% to 8.17%, 11/18/08 to 7/15/45).		318,381		318,381

				2,994,010
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		12,653		12,653

				12,653
VARIABLE & FLOATING RATE NOTES³– 0.11%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		313,483		313,520
American Express Bank
5.29%, 02/28/07		122,454		122,454
American Express Centurion Bank
5.41%, 07/19/07		134,700		134,811
American Express Credit Corp.
5.42%, 07/05/07		36,736		36,753
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		22,093		22,093
ASIF Global Financing
5.51%, 05/03/07⁴		12,245		12,249
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		79,595		79,595
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		177,559		177,565
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		312,259		312,271
BMW US Capital LLC
5.32%, 10/15/07⁴		122,454		122,454
BNP Paribas
5.36%, 05/18/07⁴		226,541		226,541
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		89,392		89,391
CC USA Inc.
5.37%, 07/30/07⁴		61,227		61,234
Commodore CDO Ltd.
5.47%, 06/12/07⁴		30,614		30,614
Credit Agricole SA
5.34%, 07/23/07		122,454		122,454
Credit Suisse First Boston NY
5.38%, 04/24/07		61,227		61,229
Cullinan Finance Corp.
5.36%, 04/25/07⁴		30,614		30,614
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		30,614		30,614
DEPFA Bank PLC
5.43%, 09/14/07		122,454		122,454
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		140,823		140,830
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		122,454		122,454


SCHEDULES OF INVESTMENTS		81

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Fifth Third Bancorp
5.30%, 11/23/07⁴	$	244,909	$	244,909
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		122,454		122,446
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		128,577		128,602
Granite Master Issuer PLC
5.29%, 08/20/07⁴		428,590		428,590
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		97,964		97,975
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		183,682		183,704
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		122,454		122,454
Holmes Financing PLC
5.29%, 07/16/07⁴		214,295		214,295
JP Morgan Chase & Co.
5.29%, 08/02/07		91,841		91,841
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		91,841		91,838
Kestrel Funding LLC
5.30%, 07/11/07⁴		48,982		48,978
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		73,473		73,473
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		127,626		127,627
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		134,700		134,693
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		48,492		48,492
Marshall & Ilsley Bank
5.30%, 10/15/07		67,350		67,350
Master Funding LLC
5.35%, 04/25/07⁴		110,209		110,209
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		183,682		183,682
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,6		12,245		12,245
Monumental Global Funding II
5.38%, 12/27/06⁴		24,491		24,492
Mound Financing PLC
5.29%, 05/08/07⁴		115,107		115,107
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		440,836		440,832
National City Bank of Indiana
5.37%, 05/21/07		61,227		61,230
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		404,099		404,178
Newcastle Ltd.
5.34%, 04/24/07⁴		43,165		43,159
Northern Rock PLC
5.36%, 08/03/07⁴		146,945		146,948
Northlake CDO I
5.46%, 09/06/07⁴		36,736		36,736
Principal Life Global Funding I
5.82%, 02/08/07		55,104		55,174
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		177,559		177,555
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		122,454		122,454
Strips III LLC
5.37%, 07/24/07⁴		28,148		28,148
SunTrust Bank
5.29%, 05/01/07		122,454		122,458
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		298,789		298,767
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		171,436		171,436


82		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES SELECT DIVIDEND INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴	$	164,097	$	164,096
Wachovia Bank N.A.
5.36%, 05/22/07		244,909		244,909
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		91,841		91,884
Wells Fargo & Co.
5.33%, 11/15/07⁴		61,227		61,231
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		91,841		91,840
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		367,363		367,303
Wind MasterTrust
5.31%, 07/25/07⁴		48,982		48,982

				8,224,516

TOTAL SHORT-TERM INVESTMENTS (Cost: $38,699,763)				38,699,763

TOTAL INVESTMENTS IN SECURITIES – 100.32% (Cost: $6,485,079,069)				7,251,598,919
Other Assets, Less Liabilities – (0.32)%				(22,863,178	)

NET ASSETS – 100.00%			$	7,228,735,741

¹	Affiliated issuer. See Note 2.

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

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

⁶	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		83

Schedule of Investments (Unaudited)

iSHARES^® DOW JONES TRANSPORTATION AVERAGE INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
COMMON STOCKS – 99.06%
AIRLINES – 10.64%
Alaska Air Group Inc.¹		190,656	$	7,654,838
AMR Corp. ¹		364,615		10,333,189
Continental Airlines Inc. Class B¹		363,299		13,398,467
JetBlue Airways Corp.^1,2		59,860		751,842
SkyWest Inc.		70,605		1,882,329
Southwest Airlines Co.		376,127		5,653,189

				39,673,854
TRANSPORTATION – 84.00%
Alexander & Baldwin Inc.		368,553		16,964,495
Burlington Northern Santa Fe Corp.		359,472		27,869,864
C.H. Robinson Worldwide Inc.		367,640		15,345,294
Con-way Inc.		352,661		16,635,019
CSX Corp.		482,127		17,197,470
Expeditors International Washington Inc.		375,614		17,807,860
FedEx Corp.		373,197		42,745,984
Hunt (J.B.) Transport Services Inc.		388,445		8,405,950
Landstar System Inc.		373,895		17,363,684
Norfolk Southern Corp.		342,816		18,021,837
Overseas Shipholding Group Inc.		354,858		22,196,368
Ryder System Inc.		334,196		17,595,419
Union Pacific Corp.		366,156		33,184,718
United Parcel Service Inc. Class B		365,124		27,512,093
YRC Worldwide Inc.¹		372,931		14,447,347

				313,293,402
TRUCKING & LEASING – 4.42%
GATX Corp.		378,601		16,495,646

				16,495,646

TOTAL COMMON STOCKS (Cost: $380,282,564)				369,462,902
SHORT-TERM INVESTMENTS – 0.23%
CERTIFICATES OF DEPOSIT³– 0.01%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	3,521		3,521
Societe Generale
5.33%, 12/08/06		5,029		5,029

*Security*	*Principal*		*Value*
Washington Mutual Bank
5.36%, 11/13/06	$	12,573	$	12,573
Wells Fargo Bank N.A.
4.78%, 12/05/06		4,023		4,023

				25,146
COMMERCIAL PAPER³– 0.03%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		7,508		7,380
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		7,544		7,544
ASAP Funding Ltd.
5.29%, 11/02/06⁴		1,257		1,257
Atlantis One Funding
5.30%, 11/14/06⁴		6,901		6,887
Beta Finance Inc.
5.27%, 01/25/07⁴		1,006		993
Bryant Park Funding LLC
5.28%, 12/14/06⁴		1,588		1,578
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		2,549		2,545
Cantabric Finance LLC
5.26%, 01/25/07⁴		2,012		1,987
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		5,784		5,776
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		3,772		3,679
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		3,018		3,007
Curzon Funding LLC
5.29%, 11/17/06⁴		5,029		5,018
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		5,795		5,725
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		5,029		5,026
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		4,577		4,509


84		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES TRANSPORTATION AVERAGE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Galleon Capital Corp.
5.27%, 12/18/06⁴	$	703	$	698
General Electric Capital Services Inc.
5.22%, 12/11/06		503		500
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		2,967		2,909
HBOS Treasury Services PLC
5.27%, 12/15/06		1,006		999
Landale Funding LLC
5.31%, 11/15/06⁴		3,923		3,915
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		9,034		9,028
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		3,244		3,237
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		6,538		6,414
Nestle Capital Corp.
5.19%, 08/09/07		3,018		2,895
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		7,946		7,946
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		2,680		2,648
Sedna Finance Inc.
5.22%, 04/17/07⁴		2,867		2,797
Sydney Capital Corp.
5.27%, 12/08/06⁴		120		119
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		2,515		2,486
Tulip Funding Corp.
5.29%, 11/15/06⁴		2,653		2,647

				112,149
MEDIUM-TERM NOTES³– 0.01%
Bank of America N.A.
5.28%, 04/20/07		1,257		1,257
Cullinan Finance Corp.
5.71%, 06/28/07⁴		3,772		3,772

*Security*	Shares or Principal		*Value*
K2 USA LLC
5.39%, 06/04/07⁴	$	3,772	$	3,772
Marshall & Ilsley Bank
5.18%, 12/15/06		5,029		5,031
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		5,884		5,884
US Bank N.A.
2.85%, 11/15/06		1,006		1,005

				20,721
MONEY MARKET FUNDS – 0.06%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		225,994		225,994

				225,994
REPURCHASE AGREEMENTS³– 0.03%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $10,060 (collateralized by non-U.S. Government debt securities, value $10,364, 4.70% to 8.75%, 7/30/10 to 11/15/25).		10,059		10,059
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $7,042 (collateralized by U.S. Government obligations, value $7,184, 5.50%, 10/1/21 to 10/1/36).		7,041		7,041
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $7,545 (collateralized by non-U.S. Government debt securities, value $8,301, 0.31% to 6.00%, 7/25/36 to 11/25/46).		7,544		7,544


SCHEDULES OF INVESTMENTS		85

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES TRANSPORTATION AVERAGE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $503 (collateralized by non-U.S. Government debt securities, value $518, 6.00% to 6.70%, 12/15/10 to 4/15/12).	$	503	$	503
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $17,605 (collateralized by non-U.S. Government debt securities, value $18,489, 4.11% to 9.32%, 4/15/10 to 5/15/36).		17,603		17,603
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $5,533 (collateralized by non-U.S. Government debt securities, value $6,200, 0.00% to 10.00%, 5/27/33 to 10/31/36).		5,532		5,532
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $3,018 (collateralized by non-U.S. Government debt securities, value $3,338, 0.00% to 10.00%, 5/27/33 to 10/31/36).		3,018		3,018
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $10,060 (collateralized by non-U.S. Government debt securities, value $10,565, 0.00% to 9.00%, 5/1/17 to 9/25/46).		10,059		10,059
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $8,802 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $9,025, 0.00% to 7.32%, 11/2/06 to 3/25/45).		8,801		8,801
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $7,545 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $7,688, 0.00% to 7.32%, 11/2/06 to 3/25/45).		7,544		7,544
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $3,018 (collateralized by non-U.S. Government debt securities, value $3,170, 0.00% to 10.00%, 1/1/10).		3,018		3,018
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,515 (collateralized by non-U.S. Government debt securities, value $2,641, 5.26% to 5.35%, 7/1/24 to 6/1/46).		2,515		2,515
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $1,257 (collateralized by non-U.S. Government debt securities, value $1,321, 6.25% to 7.63%, 9/15/13 to 6/1/16).		1,257		1,257


86		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES TRANSPORTATION AVERAGE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $10,060 (collateralized by non-U.S. Government debt securities, value $10,364, 3.50% to 10.13%, 5/15/07 to 7/1/26).	$	10,059	$	10,059
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $5,030 (collateralized by non-U.S. Government debt securities, value $5,544, 5.50% to 10.39%, 6/17/08 to 6/25/36).		5,029		5,029
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $6,791 (collateralized by non-U.S. Government debt securities, value $7,183, 0.00% to 10.00%, 11/1/06 to 10/31/36).		6,790		6,790
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $3,637 (collateralized by non-U.S. Government debt securities, value $3,777, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		3,521		3,521
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $13,078 (collateralized by non-U.S. Government debt securities, value $13,735, 3.86% to 8.17%, 11/18/08 to 7/15/45).		13,076		13,076

				122,969
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		520		520

				520
VARIABLE & FLOATING RATE NOTES³– 0.09%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		12,875		12,876
American Express Bank
5.29%, 02/28/07		5,029		5,030
American Express Centurion Bank
5.41%, 07/19/07		5,532		5,537
American Express Credit Corp.
5.42%, 07/05/07		1,509		1,509
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		907		907
ASIF Global Financing
5.51%, 05/03/07⁴		503		503
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		3,269		3,269
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		7,293		7,293
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		12,825		12,826
BMW US Capital LLC
5.32%, 10/15/07⁴		5,029		5,029
BNP Paribas
5.36%, 05/18/07⁴		9,304		9,304
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		3,671		3,671
CC USA Inc.
5.37%, 07/30/07⁴		2,515		2,515
Commodore CDO Ltd.
5.47%, 06/12/07⁴		1,257		1,257
Credit Agricole SA
5.34%, 07/23/07		5,029		5,029


SCHEDULES OF INVESTMENTS		87

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES TRANSPORTATION AVERAGE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Credit Suisse First Boston NY
5.38%, 04/24/07	$	2,515	$	2,515
Cullinan Finance Corp.
5.36%, 04/25/07⁴		1,257		1,257
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		1,257		1,257
DEPFA Bank PLC
5.43%, 09/14/07		5,029		5,029
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		5,784		5,784
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		5,029		5,029
Fifth Third Bancorp
5.30%, 11/23/07⁴		10,059		10,059
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		5,029		5,028
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		5,281		5,282
Granite Master Issuer PLC
5.29%, 08/20/07⁴		17,603		17,603
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		4,023		4,024
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		7,544		7,545
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		5,029		5,029
Holmes Financing PLC
5.29%, 07/16/07⁴		8,801		8,801
JP Morgan Chase & Co.
5.29%, 08/02/07		3,772		3,772
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		3,772		3,772
Kestrel Funding LLC
5.30%, 07/11/07⁴		2,012		2,012
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		3,018		3,018
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		5,242		5,242
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		5,532		5,532
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		1,992		1,992
Marshall & Ilsley Bank
5.30%, 10/15/07		2,766		2,766
Master Funding LLC
5.35%, 04/25/07⁴		4,526		4,526
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		7,544		7,544
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		503		503
Monumental Global Funding II
5.38%, 12/27/06⁴		1,006		1,006
Mound Financing PLC
5.29%, 05/08/07⁴		4,728		4,728
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		18,106		18,106
National City Bank of Indiana
5.37%, 05/21/07		2,515		2,515
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		16,597		16,599
Newcastle Ltd.
5.34%, 04/24/07⁴		1,773		1,773
Northern Rock PLC
5.36%, 08/03/07⁴		6,035		6,035
Northlake CDO I
5.46%, 09/06/07⁴		1,509		1,509
Principal Life Global Funding I
5.82%, 02/08/07		2,263		2,266
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		7,293		7,292


88		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® DOW JONES TRANSPORTATION AVERAGE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴	$	5,029	$	5,029
Strips III LLC
5.37%, 07/24/07⁴		1,156		1,156
SunTrust Bank
5.29%, 05/01/07		5,029		5,030
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		12,272		12,271
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		7,041		7,041
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		6,740		6,739
Wachovia Bank N.A.
5.36%, 05/22/07		10,059		10,059
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		3,772		3,774
Wells Fargo & Co.
5.33%, 11/15/07⁴		2,515		2,515
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		3,772		3,772
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		15,088		15,086
Wind Master Trust
5.31%, 07/25/07⁴		2,012		2,012

				337,789

TOTAL SHORT-TERM INVESTMENTS (Cost: $845,288)				845,288

TOTAL INVESTMENTS IN SECURITIES – 99.29% (Cost: $381,127,852)				370,308,190
Other Assets, Less Liabilities – 0.71%				2,635,715

NET ASSETS – 100.00%			$	372,943,905

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		89

Statements of Assets and Liabilities (Unaudited)

iSHARES^® TRUST

October 31, 2006


	*iShares Dow Jones U.S.*
	Total Market Index Fund			Energy Sector Index Fund		Healthcare Sector Index Fund			Technology Sector Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	411,989,860		$	755,868,453	$	1,314,332,221		$	624,361,753

Affiliated issuers^a	$	783,263		$	752,913	$	832,542		$	—

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	525,128,141		$	821,384,484	$	1,326,100,493		$	649,162,972
Affiliated issuers^a		783,263			752,913		832,542			—
Receivables:
Investment securities sold		189,102			9,070,827		—			785,160
Dividends and interest		417,326			429,906		779,985			39,783
Capital shares sold		—			—		—			4,320

Total Assets		526,517,832			831,638,130		1,327,713,020			649,992,235

LIABILITIES
Payables:
Investment securities purchased		485,068			9,241,030		—			—
Collateral for securities on loan (Note 5)		1,782,094			1,946,961		3,185,978			3,089,856
Due to bank		—			—		—			177,289
Investment advisory fees (Note 2)		87,491			330,233		536,314			270,044

Total Liabilities		2,354,653			11,518,224		3,722,292			3,537,189

NET ASSETS	$	524,163,179		$	820,119,906	$	1,323,990,728		$	646,455,046

Net assets consist of:
Paid-in capital	$	419,393,476		$	684,316,583	$	1,324,804,810		$	672,740,558
Undistributed (distributions in excess of) net investment income		675,749			100,374		281,771			(270,239	)
Undistributed net realized gain (accumulated net realized loss)		(9,044,327	)		70,186,918		(12,864,125	)		(50,816,492	)
Net unrealized appreciation		113,138,281			65,516,031		11,768,272			24,801,219

NET ASSETS	$	524,163,179		$	820,119,906	$	1,323,990,728		$	646,455,046

Shares outstanding		7,850,000			8,500,000		20,050,000			12,150,000

Net asset value per share	$	66.77		$	96.48	$	66.03		$	53.21

^a	See Note 2.

^b	Securities on loan with market values of $1,732,813, $1,906,206, $3,093,669 and $3,017,970, respectively. See Note 5.

See notes to the financial statements.


90		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities (Unaudited) (Continued)

iSHARES^® TRUST

October 31, 2006


	*iShares Dow Jones U.S.*					*iShares Dow Jones*
	Telecommunications Sector Index Fund			Utilities Sector Index Fund		Select Dividend Index Fund			Transportation Average Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	848,698,006		$	660,541,628	$	6,233,811,037		$	380,901,858

Affiliated issuers^a	$	1,420,428		$	889,918	$	251,268,032		$	225,994

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	921,026,813		$	774,548,225	$	7,003,500,902		$	370,082,196
Affiliated issuers^a		1,420,428			889,918		248,098,017			225,994
Receivables:
Investment securities sold		1,122,331			—		—			3,395,015
Dividends and interest		4,214,825			852,396		19,076,917			4,962
Capital shares sold		3,117			—		580,268			9,470

Total Assets		927,787,514			776,290,539		7,271,256,104			373,717,637

LIABILITIES
Payables:
Investment securities purchased		5,806,034			—		25,055,780			—
Collateral for securities on loan (Note 5)		76,470,277			8,176,798		15,078,502			619,294
Capital shares redeemed		34,325			—		—			—
Investment advisory fees (Note 2)		355,452			310,320		2,386,081			154,438

Total Liabilities		82,666,088			8,487,118		42,520,363			773,732

NET ASSETS	$	845,121,426		$	767,803,421	$	7,228,735,741		$	372,943,905

Net assets consist of:
Paid-in capital	$	773,169,532		$	628,333,689	$	6,495,231,255		$	369,717,090
Undistributed (distributions in excess of) net investment income		3,901,027			61,106		15,161,330			(185,907	)
Undistributed net realized gain (accumulated net realized loss)		(4,277,940	)		25,402,029		(48,176,694	)		14,232,384
Net unrealized appreciation (depreciation)		72,328,807			114,006,597		766,519,850			(10,819,662	)

NET ASSETS	$	845,121,426		$	767,803,421	$	7,228,735,741		$	372,943,905

Shares outstanding		29,500,000			8,800,000		105,200,000			4,400,000

Net asset value per share	$	28.65		$	87.25	$	68.71		$	84.76

^a	See Note 2.

^b	Securities on loan with market values of $74,719,905, $7,887,746, $14,600,332 and $598,810, respectively. See Note 5.

See notes to the financial statements.


FINANCIAL STATEMENTS		91

Statements of Operations (Unaudited)

iSHARES^® TRUST

Six months ended October 31, 2006


	*iShares Dow Jones U.S.*
	Total Market Index Fund			Energy Sector Index Fund			Healthcare Sector Index Fund			Technology Sector Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^a	$	4,270,680		$	7,738,068		$	8,887,737		$	1,710,311
Interest from affiliated issuers^b		13,673			15,805			21,191			9,853
Securities lending income		13,365			2,373			15,603			3,455

Total investment income		4,297,718			7,756,246			8,924,531			1,723,619

EXPENSES
Investment advisory fees (Note 2)		498,703			2,195,562			2,882,106			1,308,080

Total expenses		498,703			2,195,562			2,882,106			1,308,080

Net investment income		3,799,015			5,560,684			6,042,425			415,539

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(129,731	)		(1,698,330	)		(7,824,420	)		(4,767,389	)
In-kind redemptions		7,538,597			75,996,507			12,001,607			22,234,513

Net realized gain		7,408,866			74,298,177			4,177,187			17,467,124

Net change in unrealized appreciation (depreciation)		13,361,840			(89,417,881	)		73,330,345			2,541,356

Net realized and unrealized gain (loss)		20,770,706			(15,119,704	)		77,507,532			20,008,480

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	24,569,721		$	(9,559,020	)	$	83,549,957		$	20,424,019

^a	Net of foreign withholding tax of $1,178, $—, $11,652 and $—, respectively.

^b	See Note 2.

See notes to the financial statements.


92		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations (Unaudited) (Continued)

iSHARES^® TRUST

Six months ended October 31, 2006


	*iShares Dow Jones U.S.*						*iShares Dow Jones*
	Telecommunications Sector Index Fund			Utilities Sector Index Fund			Select Dividend Index Fund			Transportation Average Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^a	$	12,161,019		$	11,204,022		$	116,691,237		$	1,717,300
Dividends from affiliated issuers^b		—			—			4,002,852			—
Interest from affiliated issuers^b		16,954			22,908			347,464			7,459
Securities lending income		9,289			5,498			1,072,465			45,942

Total investment income		12,187,262			11,232,428			122,114,018			1,770,701

EXPENSES
Investment advisory fees (Note 2)		1,716,169			1,697,887			12,996,803			884,250

Total expenses		1,716,169			1,697,887			12,996,803			884,250

Net investment income		10,471,093			9,534,541			109,117,215			886,451

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(176,803	)		(2,504,544	)		(2,436,020	)		(4,089,802	)
Investments in affiliated issuers^b		—			—			(190,456	)		—
In-kind redemptions		30,391,986			54,819,325			16,524,704			20,250,562

Net realized gain		30,215,183			52,314,781			13,898,228			16,160,760

Net change in unrealized appreciation (depreciation)		58,769,182			37,056,822			463,128,228			(22,192,242	)

Net realized and unrealized gain (loss)		88,984,365			89,371,603			477,026,456			(6,031,482	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	99,455,458		$	98,906,144		$	586,143,671		$	(5,145,031	)

^a	Net of foreign withholding tax of $85,508, $—, $— and $—, respectively.

^b	See Note 2.

See notes to the financial statements.


FINANCIAL STATEMENTS		93

Statements of Changes in Net Assets

iSHARES^® TRUST


	iShares Dow Jones U.S. Total Market Index Fund						iShares Dow Jones U.S. Energy Sector Index Fund						iShares Dow Jones U.S. Healthcare Sector Index Fund
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	3,799,015		$	7,704,403		$	5,560,684		$	8,088,786		$	6,042,425		$	9,686,368
Net realized gain		7,408,866			17,936,138			74,298,177			219,582,951			4,177,187			108,183,659
Net change in unrealized appreciation (depreciation)		13,361,840			49,413,263			(89,417,881	)		13,862,223			73,330,345			(87,402,172	)

Net increase (decrease) in net assets resulting from operations		24,569,721			75,053,804			(9,559,020	)		241,533,960			83,549,957			30,467,855

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(3,777,026	)		(7,463,774	)		(5,460,310	)		(8,149,230	)		(5,959,398	)		(9,608,950	)

Total distributions to shareholders		(3,777,026	)		(7,463,774	)		(5,460,310	)		(8,149,230	)		(5,959,398	)		(9,608,950	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		12,674,569			67,643,728			115,088,316			534,196,649			163,372,924			516,653,049
Cost of shares redeemed		(18,605,495	)		(40,834,224	)		(234,645,900	)		(451,657,423	)		(94,002,031	)		(529,765,459	)

Net increase (decrease) in net assets from capital share transactions		(5,930,926	)		26,809,504			(119,557,584	)		82,539,226			69,370,893			(13,112,410	)

INCREASE (DECREASE) IN NET ASSETS		14,861,769			94,399,534			(134,576,914	)		315,923,956			146,961,452			7,746,495
NET ASSETS
Beginning of period		509,301,410			414,901,876			954,696,820			638,772,864			1,177,029,276			1,169,282,781

End of period	$	524,163,179		$	509,301,410		$	820,119,906		$	954,696,820		$	1,323,990,728		$	1,177,029,276

Undistributed net investment income included in net assets at end of period	$	675,749		$	653,760		$	100,374		$	—		$	281,771		$	198,744

SHARES ISSUED AND REDEEMED
Shares sold		200,000			1,100,000			1,200,000			6,000,000			2,550,000			8,250,000
Shares redeemed		(300,000	)		(650,000	)		(2,550,000	)		(5,200,000	)		(1,550,000	)		(8,550,000	)

Net increase (decrease) in shares outstanding		(100,000	)		450,000			(1,350,000	)		800,000			1,000,000			(300,000	)

See notes to the financial statements.


94		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	iShares Dow Jones U.S. Technology Sector Index Fund						iShares Dow Jones U.S. Telecommunications Sector Index Fund						iShares Dow Jones U.S. Utilities Index Fund
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)	$	415,539		$	(177,518	)	$	10,471,093		$	17,878,732		$	9,534,541		$	20,472,064
Net realized gain		17,467,124			6,139,003			30,215,183			23,133,159			52,314,781			80,705,430
Net change in unrealized appreciation (depreciation)		2,541,356			72,486,878			58,769,182			22,706,578			37,056,822			(50,321,452	)

Net increase in net assets resulting from operations		20,424,019			78,448,363			99,455,458			63,718,469			98,906,144			50,856,042

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(704,381	)		—			(9,132,096	)		(17,137,093	)		(10,196,959	)		(20,282,959	)
Return of capital		—			(322,925	)		—			—			—			—

Total distributions to shareholders		(704,381	)		(322,925	)		(9,132,096	)		(17,137,093	)		(10,196,959	)		(20,282,959	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		148,605,206			170,770,247			373,511,116			535,187,249			194,663,530			263,163,008
Cost of shares redeemed		(79,734,250	)		(86,036,156	)		(165,988,343	)		(347,871,389	)		(191,050,497	)		(264,122,931	)

Net increase (decrease) in net assets from capital share transactions		68,870,956			84,734,091			207,522,773			187,315,860			3,613,033			(959,923	)

INCREASE IN NET ASSETS		88,590,594			162,859,529			297,846,135			233,897,236			92,322,218			29,613,160
NET ASSETS
Beginning of period		557,864,452			395,004,923			547,275,291			313,378,055			675,481,203			645,868,043

End of period	$	646,455,046		$	557,864,452		$	845,121,426		$	547,275,291		$	767,803,421		$	675,481,203

Undistributed (distributions in excess of) net investment income included in net assets at end of period	$	(270,239	)	$	18,603		$	3,901,027		$	2,562,030		$	61,106		$	723,524

SHARES ISSUED AND REDEEMED
Shares sold		2,950,000			3,400,000			14,150,000			22,300,000			2,400,000			3,400,000
Shares redeemed		(1,550,000	)		(1,850,000	)		(6,050,000	)		(14,550,000	)		(2,400,000	)		(3,450,000	)

Net increase (decrease) in shares outstanding		1,400,000			1,550,000			8,100,000			7,750,000			—			(50,000	)

See notes to the financial statements.


FINANCIAL STATEMENTS		95

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	iShares Dow Jones Select Dividend Index Fund						iShares Dow Jones Transportation Average Index Fund
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	109,117,215		$	234,073,262		$	886,451		$	713,202
Net realized gain		13,898,228			281,768,340			16,160,760			31,846,390
Net change in unrealized appreciation (depreciation)		463,128,228			175,388,430			(22,192,242	)		20,156,318

Net increase (decrease) in net assets resulting from operations		586,143,671			691,230,032			(5,145,031	)		52,715,910

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(112,841,823	)		(218,655,259	)		(1,072,358	)		(713,202	)
Return of capital		—			—			—			(161,077	)

Total distributions to shareholders		(112,841,823	)		(218,655,259	)		(1,072,358	)		(874,279	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		647,145,781			1,297,046,414			738,665,303			563,541,364
Cost of shares redeemed		(149,415,430	)		(1,883,397,405	)		(652,628,830	)		(430,097,915	)

Net increase (decrease) in net assets from capital share transactions		497,730,351			(586,350,991	)		86,036,473			133,443,449

INCREASE (DECREASE) IN NET ASSETS		971,032,199			(113,776,218	)		79,819,084			185,285,080
NET ASSETS
Beginning of period		6,257,703,542			6,371,479,760			293,124,821			107,839,741

End of period	$	7,228,735,741		$	6,257,703,542		$	372,943,905		$	293,124,821

Undistributed (distributions in excess of) net investment income included in net assets at end of period	$	15,161,330		$	18,885,938		$	(185,907	)	$	—

SHARES ISSUED AND REDEEMED
Shares sold		9,850,000			20,950,000			9,000,000			7,700,000
Shares redeemed		(2,350,000	)		(30,150,000	)		(8,100,000	)		(5,950,000	)

Net increase (decrease) in shares outstanding		7,500,000			(9,200,000	)		900,000			1,750,000

See notes to the financial statements.


96		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Total Market Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	64.06		$	55.32		$	52.57		$	42.83		$	50.47		$	57.93

Income from investment operations:
Net investment income		0.48^a			0.98			0.99			0.70			0.63			0.57
Net realized and unrealized gain (loss)^b		2.71			8.71			2.72			9.74			(7.66	)		(7.46	)

Total from investment operations		3.19			9.69			3.71			10.44			(7.03	)		(6.89	)

Less distributions from:
Net investment income		(0.48	)		(0.95	)		(0.96	)		(0.70	)		(0.61	)		(0.57	)

Total distributions		(0.48	)		(0.95	)		(0.96	)		(0.70	)		(0.61	)		(0.57	)

Net asset value, end of period	$	66.77		$	64.06		$	55.32		$	52.57		$	42.83		$	50.47

Total return		5.04	%^c		17.63	%		7.05	%		24.50	%		(13.89	)%		(11.93	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	524,163		$	509,301		$	414,902		$	381,157		$	175,596		$	121,140
Ratio of expenses to average net assets^d		0.20	%		0.20	%		0.20	%		0.20	%		0.20	%		0.20	%
Ratio of net investment income to average net assets^d		1.52	%		1.63	%		1.81	%		1.49	%		1.57	%		1.15	%
Portfolio turnover rate^e		2	%		5	%		6	%		5	%		14	%		5	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		97

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Energy Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	96.92		$	70.58		$	53.21		$	39.19		$	48.74		$	57.01

Income from investment operations:
Net investment income		0.58^a			0.85			0.73			0.70			0.71			0.63
Net realized and unrealized gain (loss)^b		(0.45	)		26.35			17.40			14.04			(9.56	)		(8.26	)

Total from investment operations		0.13			27.20			18.13			14.74			(8.85	)		(7.63	)

Less distributions from:
Net investment income		(0.57	)		(0.86	)		(0.76	)		(0.70	)		(0.70	)		(0.64	)
Return of capital		—			—			—			(0.02	)		—			—

Total distributions		(0.57	)		(0.86	)		(0.76	)		(0.72	)		(0.70	)		(0.64	)

Net asset value, end of period	$	96.48		$	96.92		$	70.58		$	53.21		$	39.19		$	48.74

Total return		0.19	%^c		38.69	%		34.26	%		37.90	%		(18.22	)%		(13.34	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	820,120		$	954,697		$	638,773		$	348,524		$	111,684		$	104,797
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		1.22	%		1.00	%		1.16	%		1.42	%		1.79	%		1.32	%
Portfolio turnover rate^e		3	%		2	%		3	%		2	%		9	%		18	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


98		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Healthcare Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	61.79		$	60.43		$	58.99		$	50.80		$	56.92		$	61.87

Income from investment operations:
Net investment income		0.32^a			0.46			0.42			0.40			0.39			0.26
Net realized and unrealized gain (loss)^b		4.23			1.36			1.44			8.19			(6.13	)		(4.94	)

Total from investment operations		4.55			1.82			1.86			8.59			(5.74	)		(4.68	)

Less distributions from:
Net investment income		(0.31	)		(0.46	)		(0.42	)		(0.40	)		(0.38	)		(0.27	)

Total distributions		(0.31	)		(0.46	)		(0.42	)		(0.40	)		(0.38	)		(0.27	)

Net asset value, end of period	$	66.03		$	61.79		$	60.43		$	58.99		$	50.80		$	56.92

Total return		7.40	%^c		2.99	%		3.18	%		16.96	%		(10.06	)%		(7.60	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	1,323,991		$	1,177,029		$	1,169,283		$	651,797		$	378,489		$	236,233
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		1.01	%		0.75	%		0.74	%		0.71	%		0.80	%		0.45	%
Portfolio turnover rate^e		2	%		4	%		4	%		4	%		9	%		3	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		99

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Technology Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	51.89		$	42.94		$	44.49		$	35.34		$	43.41		$	63.42

Income from investment operations:
Net investment income (loss)		0.04^a			(0.01	)		0.72			(0.10	)		(0.05	)		(0.16	)
Net realized and unrealized gain (loss)^b		1.34			9.00			(1.53	)		9.25			(8.02	)		(19.85	)

Total from investment operations		1.38			8.99			(0.81	)		9.15			(8.07	)		(20.01	)

Less distributions from:
Net investment income		(0.06	)		—			(0.71	)		—			—			—
Return of capital		—			(0.04	)		(0.03	)		—			—			—

Total distributions		(0.06	)		(0.04	)		(0.74	)		—			—			—

Net asset value, end of period	$	53.21		$	51.89		$	42.94		$	44.49		$	35.34		$	43.41

Total return		2.69	%^c		20.94	%		(2.01	)%		25.89	%		(18.59	)%		(31.55	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	646,455		$	557,864		$	395,005		$	322,536		$	231,501		$	141,073
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income (loss) to average net assets^d		0.15	%		(0.04	)%		1.78	%		(0.22	)%		(0.22	)%		(0.41	)%
Portfolio turnover rate^e		2	%		7	%		9	%		5	%		15	%		8	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


100		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Telecommunications Sector Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	25.57		$	22.96		$	21.58		$	18.43		$	22.38		$	38.35

Income from investment operations:
Net investment income		0.39	^a		0.87	^a		0.64			0.45			0.34			0.29
Net realized and unrealized gain (loss)^b		3.00			2.55			1.35			3.15			(3.98	)		(15.98	)

Total from investment operations		3.39			3.42			1.99			3.60			(3.64	)		(15.69	)

Less distributions from:
Net investment income		(0.31	)		(0.81	)		(0.61	)		(0.45	)		(0.31	)		(0.28	)

Total distributions		(0.31	)		(0.81	)		(0.61	)		(0.45	)		(0.31	)		(0.28	)

Net asset value, end of period	$	28.65		$	25.57		$	22.96		$	21.58		$	18.43		$	22.38

Total return		13.35	%^c		15.24	%		9.26	%		19.71	%		(16.22	)%		(41.12	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	845,121		$	547,275		$	313,378		$	215,757		$	126,245		$	51,463
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		2.93	%		3.63	%		2.97	%		2.27	%		2.27	%		1.05	%
Portfolio turnover rate^e		6	%		25	%		10	%		22	%		23	%		43	%

^a	Based on average shares outstanding throughout each period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		101

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones U.S. Utilities Sector Index Fund*
	Six months Ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Year ended Apr. 30, 2004			Year ended Apr. 30, 2003			Year ended Apr. 30, 2002
Net asset value, beginning of period	$	76.76		$	72.98		$	57.58		$	49.11		$	65.75		$	85.95

Income from investment operations:
Net investment income		1.11	^a		2.20			1.99			1.87			2.04			1.89
Net realized and unrealized gain (loss)^b		10.54			3.76			15.41			8.47			(16.61	)		(20.25	)

Total from investment operations		11.65			5.96			17.40			10.34			(14.57	)		(18.36	)

Less distributions from:
Net investment income		(1.16	)		(2.18	)		(2.00	)		(1.87	)		(2.07	)		(1.84	)

Total distributions		(1.16	)		(2.18	)		(2.00	)		(1.87	)		(2.07	)		(1.84	)

Net asset value, end of period	$	87.25		$	76.76		$	72.98		$	57.58		$	49.11		$	65.75

Total return		15.32	%^c		8.16	%		30.71	%		21.28	%		(22.16	)%		(21.38	)%

Ratios/Supplemental data:
Net assets, end of period (000s)	$	767,803		$	675,481		$	645,868		$	440,490		$	329,055		$	180,818
Ratio of expenses to average net assets^d		0.48	%		0.60	%		0.60	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^d		2.70	%		2.82	%		3.10	%		3.41	%		4.15	%		2.89	%
Portfolio turnover rate^e		4	%		5	%		7	%		7	%		15	%		8	%

^a	Based on average shares outstanding throughout the period.

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

^c	Not annualized.

^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.

See notes to the financial statements.


102		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones Select Dividend Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Period from Nov. 3, 2003^a to Apr. 30, 2004
Net asset value, beginning of period	$	64.05		$	59.60		$	53.64		$	50.51

Income from investment operations:
Net investment income		1.10^b			2.12			1.92			0.76
Net realized and unrealized gain^c		4.69			4.29			5.94			3.12

Total from investment operations		5.79			6.41			7.86			3.88

Less distributions from:
Net investment income		(1.13	)		(1.96	)		(1.90	)		(0.75	)

Total distributions		(1.13	)		(1.96	)		(1.90	)		(0.75	)

Net asset value, end of period	$	68.71		$	64.05		$	59.60		$	53.64

Total return		9.16	%^d		10.88	%		14.81	%		7.70	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	7,228,736		$	6,257,704		$	6,371,480		$	1,939,177
Ratio of expenses to average net assets^e		0.40	%		0.40	%		0.40	%		0.40	%
Ratio of net investment income to average net assets^e		3.36	%		3.35	%		3.39	%		3.43	%
Portfolio turnover rate^f		2	%		14	%		20	%		2	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		103

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Dow Jones Transportation Average Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Year ended Apr. 30, 2005			Period from Oct. 6, 2003^a to Apr. 30, 2004
Net asset value, beginning of period	$	83.75		$	61.62		$	51.90		$	50.22

Income from investment operations:
Net investment income		0.20	^b		0.32			0.34			0.39
Net realized and unrealized gain^c		1.05			22.18			9.74			1.72

Total from investment operations		1.25			22.50			10.08			2.11

Less distributions from:
Net investment income		(0.24	)		(0.30	)		(0.33	)		(0.32	)
Return of capital		—			(0.07	)		(0.03	)		(0.11	)

Total distributions		(0.24	)		(0.37	)		(0.36	)		(0.43	)

Net asset value, end of period	$	84.76		$	83.75		$	61.62		$	51.90

Total return		1.50	%^d		36.65	%		19.42	%		4.19	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	372,944		$	293,125		$	107,840		$	23,354
Ratio of expenses to average net assets^e		0.48	%		0.60	%		0.60	%		0.60	%
Ratio of net investment income to average net assets^e		0.48	%		0.39	%		0.54	%		0.43	%
Portfolio turnover rate^f		5	%		10	%		5	%		4	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


104		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited)

iSHARES^® TRUST

These financial statements relate only to the iShares Dow Jones U.S. Total Market, iShares Dow Jones U.S. Energy Sector, iShares Dow Jones U.S. Healthcare Sector, iShares Dow Jones U.S. Technology Sector, iShares Dow Jones U.S. Telecommunications Sector, iShares Dow Jones U.S. Utilities Sector, iShares Dow Jones Select Dividend and iShares Dow Jones Transportation Average 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 its underlying index. 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, except for the iShares Dow Jones U.S. Total Market and iShares Dow Jones Select Dividend Index Funds, which are classified as diversified funds. 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.

1.	*SIGNIFICANT ACCOUNTING POLICIES*

SECURITY VALUATION

SECURITY TRANSACTIONS AND INCOME RECOGNITION


NOTES TO THE FINANCIAL STATEMENTS		105

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

DISTRIBUTIONS TO SHAREHOLDERS

The tax character of current year distributions will be determined at the end of the current fiscal year.

FEDERAL INCOME TAXES

The Funds had tax basis net capital loss carryforwards as of April 30, 2006, the tax year-end of the Funds, as follows:


*iShares Index Fund*	Expiring 2010		*Expiring* *2011*		Expiring 2012		Expiring 2013		*Expiring* *2014*		*Total*
Dow Jones U.S. Total Market	$	1,633,292	$	2,507,100	$	728,202	$	1,282,114	$	—	$	6,150,708
Dow Jones U.S. Energy Sector		—		2,929,194		124,959		—		—		3,054,153
Dow Jones U.S. Healthcare Sector		—		—		799,884		—		519,297		1,319,181
Dow Jones U.S. Technology Sector		3,803,426		10,610,555		1,952,962		2,052,426		3,556,590		21,975,959
Dow Jones U.S. Telecommunications Sector		9,769,390		12,363,187		998,718		376,854		—		23,508,149
Dow Jones U.S. Utilities Sector		—		4,938,451		8,539,740		1,702,578		—		15,180,769
Dow Jones Select Dividend		—		—		—		842,993		30,488,444		31,331,437
Dow Jones Transportation Average		—		—		—		206,601		1,535,209		1,741,810

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.

For the six months ended October 31, 2006, the Funds realized net capital gains or losses resulting from in-kind redemptions of large blocks of shares or multiples thereof (“Creation Units”). Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gains or losses to paid-in-capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset values per share. The net realized in-kind gains or losses for the six months ended October 31, 2006 are disclosed in the Funds’ Statements of Operations.


106		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

As of October 31, 2006, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:


*iShares Index Fund*	*Tax* *Cost*		Gross Unrealized Appreciation		*Gross* Unrealized Depreciation			Net Unrealized Appreciation (Depreciation)
Dow Jones U.S. Total Market	$	423,069,143	$	118,062,019	$	(15,219,758	)	$	102,842,261
Dow Jones U.S. Energy Sector		758,194,107		75,064,697		(11,121,407	)		63,943,290
Dow Jones U.S. Healthcare Sector		1,332,266,035		75,182,424		(80,515,424	)		(5,333,000	)
Dow Jones U.S. Technology Sector		663,992,384		31,232,565		(46,061,977	)		(14,829,412	)
Dow Jones U.S. Telecommunications Sector		854,332,454		80,122,326		(12,007,539	)		68,114,787
Dow Jones U.S. Utilities Sector		668,737,830		107,157,344		(457,031	)		106,700,313
Dow Jones Select Dividend		6,506,181,796		895,330,596		(149,913,473	)		745,417,123
Dow Jones Transportation Average		383,363,994		4,227,504		(17,283,308	)		(13,055,804	)

REPURCHASE AGREEMENTS

2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

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


*iShares Index Fund*	Investment Advisory Fee
Dow Jones U.S. Total Market	0.20	%
Dow Jones U.S. Energy Sector	0.48
Dow Jones U.S. Healthcare Sector	0.48
Dow Jones U.S. Technology Sector	0.48
Dow Jones U.S. Telecommunications Sector	0.48
Dow Jones U.S. Utilities Sector	0.48
Dow Jones Select Dividend	0.40
Dow Jones Transportation Average	0.48


NOTES TO THE FINANCIAL STATEMENTS		107

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

Prior to May 1, 2006, BGFA was entitled to receive an annual investment advisory fee of 0.60% from each of the iShares Dow Jones U.S. Energy Sector, iShares Dow Jones U.S. Healthcare Sector, iShares Dow Jones U.S. Technology Sector, iShares Dow Jones U.S. Telecommunications Sector, iShares Dow Jones U.S. Utilities Sector and iShares Dow Jones Transportation Average Index Funds.


*iShares Index Fund*	Securities Lending Agent Fees
Dow Jones U.S. Total Market	$	13,365
Dow Jones U.S. Energy Sector		2,373
Dow Jones U.S. Healthcare Sector		15,603
Dow Jones U.S. Technology Sector		3,455
Dow Jones U.S. Telecommunications Sector		9,289
Dow Jones U.S. Utilities Sector		5,498
Dow Jones Select Dividend		1,072,465
Dow Jones Transportation Average		45,942


108		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST


*iShares Index Fund and* *Name of Affiliated Issuer*	*Number of* *Shares Held* *Beginning* *of Period* *(in 000s)*	*Gross* *Additions* *(in 000s)*	*Gross* *Reductions* *(in 000s)*	*Number of* *Shares Held* *End of* *Period* *(in 000s)*	*Value at* *End of* *Period*		*Dividend* *and* *Interest* *Income*		*Net* *Realized* *Gain* *(Loss)*
Dow Jones U.S. Total Market
IMMF	442	66,109	65,768	783	$	783,263	$	13,673	$	—
Dow Jones U.S. Energy Sector
IMMF	743	77,532	77,522	753		752,913		15,805		—
Dow Jones U.S. Healthcare Sector
IMMF	392	104,032	103,591	833		832,542		21,191		—
Dow Jones U.S. Technology Sector
IMMF	196	48,436	48,632	—		—		9,853		—
Dow Jones U.S. Telecommunications Sector
IMMF	515	78,505	77,600	1,420		1,420,428		16,954		—
Dow Jones U.S. Utilities Sector
IMMF	779	109,532	109,421	890		889,918		22,908		—
Dow Jones Select Dividend
IMMF	—	1,698,725	1,675,104	23,621		23,621,261		347,464		—
Citizens Banking Corp.	2,122	206	66	2,262		58,738,037		650,880		(330,506	)
Nicor Inc.	2,294	225	71	2,448		112,523,914		2,167,501		411,238
Universal Corp.	1,354	133	42	1,445		53,214,805		1,184,471		(271,188	)
Dow Jones Transportation Average
IMMF	14	36,886	36,674	226		225,994		7,459		—

As of October 31, 2006, certain trustees and officers of the Trust are also officers of BGI and/or BGFA.

3. INVESTMENT PORTFOLIO TRANSACTIONS

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended October 31, 2006 were as follows:


iShares Index Fund	Purchases		Sales
Dow Jones U.S. Total Market	$	9,509,887	$	9,460,673
Dow Jones U.S. Energy Sector		23,837,682		24,128,372
Dow Jones U.S. Healthcare Sector		24,570,689		24,809,306


NOTES TO THE FINANCIAL STATEMENTS		109

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST


iShares Index Fund	Purchases		Sales
Dow Jones U.S. Technology Sector	$	12,506,053	$	13,119,861
Dow Jones U.S. Telecommunications Sector		40,965,906		40,450,331
Dow Jones U.S. Utilities Sector		26,433,457		27,700,984
Dow Jones Select Dividend		166,498,445		121,552,242
Dow Jones Transportation Average		17,454,804		21,378,312

In-kind transactions (see Note 4) for the six months ended October 31, 2006 were as follows:


*iShares Index Fund*	In-kind Purchases		*In-kind* *Sales*
Dow Jones U.S. Total Market	$	12,643,253	$	18,512,112
Dow Jones U.S. Energy Sector		115,022,749		234,458,094
Dow Jones U.S. Healthcare Sector		163,171,125		93,926,274
Dow Jones U.S. Technology Sector		148,383,812		79,624,997
Dow Jones U.S. Telecommunications Sector		372,790,051		164,932,536
Dow Jones U.S. Utilities Sector		194,078,710		190,350,464
Dow Jones Select Dividend		592,604,581		143,906,484
Dow Jones Transportation Average		737,714,877		651,541,261

4. CAPITAL SHARE TRANSACTIONS

5. LOANS OF PORTFOLIO SECURITIES

As of October 31, 2006, 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 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.


110		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

Repurchase agreements held in the joint account are fully collateralized by U.S. Government securities or non-U.S. Government debt securities. The market value of the securities on loan as of October 31, 2006 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT


NOTES TO THE FINANCIAL STATEMENTS		111

Board Review and Approval of Investment Advisory Contract (Unaudited)

iSHARES^® TRUST

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other registered funds objectively selected solely by Lipper as comprising each Fund’s applicable peer group (the “Lipper Peer Group”). In addition, the Board also reviewed statistical information prepared by Lipper regarding the performance of each Fund for the one-, three- and five-year, and “last quarter” periods ended March 31, 2006, 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 few, if any, exchange traded funds or index funds that track indices similar to those tracked by the Funds, the Lipper Peer Groups included mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper 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 of the Funds may have under performed or out performed 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.


112		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

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

iSHARES^® TRUST

Based on this review, the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Peer Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.

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

ECONOMIES OF SCALE

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


BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT		113

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

iSHARES^® TRUST

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

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


114		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes:


NOTES		115

Notes:


116		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes:


NOTES		117

The iShares^® Family of Funds

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares 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 Domestic Subsector Index Funds

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

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

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

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

iShares Dow Jones U.S. Insurance (IAK)

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

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

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

iShares Dow Jones U.S. Pharmaceuticals (IHE)

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

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Industrials Sector (EXI)

iShares S&P Global Materials Sector (MXI)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Specialty Index Funds

iShares KLD Select Social^SM(KLD)

iShares KLD 400 Social (DSI)

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)

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 2006 Semi-Annual Report.

3710-iS-1106


118		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

LOGO

Table of Contents


Fund Performance Overviews		1
Shareholder Expenses		7
Schedules of Investments		9
iShares Morningstar Large Core Index Fund		9
iShares Morningstar Large Growth Index Fund		12
iShares Morningstar Large Value Index Fund		15
iShares Morningstar Mid Core Index Fund		17
iShares Morningstar Mid Growth Index Fund		28
iShares Morningstar Mid Value Index Fund		38
iShares Morningstar Small Core Index Fund		48
iShares Morningstar Small Growth Index Fund		60
iShares Morningstar Small Value Index Fund		71
Financial Statements		82
Financial Highlights		89
Notes to the Financial Statements		98
Board Review and Approval of Investment Advisory Contract		105
iShares Family of Funds		110

Fund Performance Overview

iSHARES^® MORNINGSTAR LARGE CORE INDEX FUND

iSHARES^® MORNINGSTAR LARGE GROWTH INDEX FUND

iSHARES^® MORNINGSTAR LARGE VALUE INDEX FUND

Performance as of October 31, 2006


	Average Annual Total Returns												Cumulative Total Returns
	*Year Ended 10/31/06*						*Inception to 10/31/06*						*Inception to 10/31/06*
*iSHARES INDEX FUND*	*NAV*		*MARKET*		*INDEX*		*NAV*		*MARKET*		*INDEX*		*NAV*		*MARKET*		*INDEX*
Morningstar Large Core	16.70	%	16.53	%	16.96	%	10.84	%	10.81	%	11.11	%	27.29	%	27.22	%	27.96	%
Morningstar Large Growth	6.44	%	6.62	%	6.73	%	2.80	%	2.78	%	3.05	%	6.69	%	6.64	%	7.29	%
Morningstar Large Value	23.11	%	23.04	%	23.47	%	16.04	%	16.01	%	16.36	%	41.74	%	41.67	%	42.57	%

Total returns for the periods since inception are calculated from the inception date of each Fund (6/28/04). “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 period indicated.

Each Fund’s per share net asset value or “NAV” is the value of one share of such Fund as calculated in accordance with the standard formula for valuing mutual fund shares. The NAV return is based on the NAV of each Fund, and the market return is based on the market price per share of each Fund. The price used to calculate market return (“Market Price”) is determined by using the midpoint between the highest bid and the lowest offer on the stock exchange on which shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated. Since shares of each Fund did not trade in the secondary market until several days after each Fund’s inception, for the period from inception to the first day of secondary market trading in shares of each Fund (7/2/04), the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested in each Fund at Market Price and NAV, respectively.

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

The iShares Morningstar Large Core Index Fund (the “Core Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Large Core Index (the “Core Index”). The Core Index measures the performance of stocks issued by large-capitalization companies that have exhibited average “growth” and “value” characteristics as determined by Morningstar’s proprietary index methodology. The Core Fund invests in a representative sample of securities in the Core Index, which has a similar investment profile as the Core Index. Due to the use of representative sampling, the Core Fund may or may not hold all of the securities that are included in the Core Index. For the six-month period ended October 31, 2006 (the “reporting period”), the Core Fund returned 7.27%, while the Core Index returned 7.40%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Consumer Non-Cyclical	23.87	%
Industrial	21.84
Financial	18.84
Technology	13.65
Consumer Cyclical	9.84
Communications	6.73
Basic Materials	2.02
Energy	1.66
Utilities	1.33
Short-Term and Other Net Assets	0.22

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
General Electric Co.	9.00	%
Microsoft Corp.	6.28
Procter & Gamble Co.	4.96
Johnson & Johnson	4.94
American International Group Inc.	3.78
International Business Machines Corp.	3.47
Wal-Mart Stores Inc.	3.14
Wells Fargo & Co.	2.82
Hewlett-Packard Co.	2.66
Coca-Cola Co. (The)	2.48

TOTAL	43.53	%


FUND PERFORMANCE OVERVIEWS		1

Fund Performance Overview (Continued)

iSHARES^® MORNINGSTAR LARGE CORE INDEX FUND

iSHARES^® MORNINGSTAR LARGE GROWTH INDEX FUND

iSHARES^® MORNINGSTAR LARGE VALUE INDEX FUND

The iShares Morningstar Large Growth Index Fund (the “Growth Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Large Growth Index (the “Growth Index”). The Growth Index measures the performance of stocks issued by large-capitalization companies that have exhibited above-average “growth” characteristics as determined by Morningstar’s proprietary index methodology. The Growth Fund invests in a representative sample of securities in the Growth Index, which has a similar investment profile as the Growth Index. Due to the use of representative sampling, the Growth Fund may or may not hold all of the securities that are included in the Growth Index. For the reporting period, the Growth Fund returned 1.73%, while the Growth Index returned 1.88%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Consumer Non-Cyclical	23.28	%
Communications	21.82
Technology	20.31
Consumer Cyclical	12.79
Energy	8.48
Industrial	7.05
Financial	4.17
Basic Materials	1.55
Utilities	0.45
Short-Term and Other Net Assets	0.10

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Cisco Systems Inc.	4.64	%
Intel Corp.	3.88
PepsiCo Inc.	3.29
Google Inc. Class A	3.27
Amgen Inc.	2.80
Schlumberger Ltd.	2.32
Oracle Corp.	2.32
Apple Computer Inc.	2.15
UnitedHealth Group Inc.	2.05
Walt Disney Co. (The)	1.93

TOTAL	28.65	%

The iShares Morningstar Large Value Index Fund (the “Value Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Large Value Index (the “Value Index”). The Value Index measures the performance of stocks issued by large-capitalization companies that have exhibited “value” characteristics as determined by Morningstar’s proprietary index methodology. The Value Fund invests in a representative sample of securities in the Value Index, which has a similar investment profile as the Value Index. Due to the use of representative sampling, the Value Fund may or may not hold all of the securities that are included in the Value Index. For the reporting period, the Value Fund returned 9.76%, while the Value Index returned 9.89%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Financial	39.96	%
Energy	18.61
Consumer Non-Cyclical	17.62
Communications	10.11
Utilities	7.72
Basic Materials	3.44
Consumer Cyclical	1.60
Industrial	0.53
Short-Term and Other Net Assets	0.41

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Exxon Mobil Corp.	10.76	%
Citigroup Inc.	6.33
Bank of America Corp.	6.21
Pfizer Inc.	4.97
Altria Group Inc.	4.29
JP Morgan Chase & Co.	4.20
Chevron Corp.	3.76
AT&T Inc.	3.39
Verizon Communications Inc.	2.74
Wachovia Corp.	2.68

TOTAL	49.33	%


2		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

Performance as of October 31, 2006


	Average Annual Total Returns												Cumulative Total Returns
	*Year Ended 10/31/06*						*Inception to 10/31/06*						*Inception to 10/31/06*
*iSHARES INDEX FUND*	*NAV*		*MARKET*		*INDEX*		*NAV*		*MARKET*		*INDEX*		*NAV*		*MARKET*		*INDEX*
Morningstar Mid Core	18.35	%	18.38	%	18.78	%	14.34	%	14.32	%	14.68	%	36.93	%	36.87	%	37.78	%
Morningstar Mid Growth	13.49	%	14.58	%	13.78	%	15.03	%	15.50	%	15.40	%	38.87	%	40.22	%	39.81	%
Morningstar Mid Value	18.25	%	18.50	%	18.62	%	16.98	%	17.06	%	17.22	%	44.47	%	44.70	%	45.04	%

The iShares Morningstar Mid Core Index Fund (the “Core Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Mid Core Index (the “Core Index”). The Core Index measures the performance of stocks issued by mid-capitalization companies that have exhibited average “growth” and “value” characteristics as determined by Morningstar’s proprietary index methodology. The Core Fund invests in a representative sample of securities in the Core Index, which has a similar investment profile as the Core Index. Due to the use of representative sampling, the Core Fund may or may not hold all of the securities that are included in the Core Index. For the six-month period ended October 31, 2006 (the “reporting period”), the Core Fund returned 2.68%, while the Core Index returned 2.89%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Industrial	22.29	%
Financial	20.41
Consumer Non-Cyclical	15.92
Consumer Cyclical	15.53
Technology	9.54
Communications	7.18
Basic Materials	3.88
Energy	3.39
Utilities	1.08
Diversified	0.43
Short-Term and Other Net Assets	0.35

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Archstone-Smith Trust	1.28	%
Boston Properties Inc.	1.22
Public Storage Inc.	1.14
Fisher Scientific International Inc.	1.06
Nordstrom Inc.	1.03
ITT Industries Inc.	1.01
Rockwell Collins Inc.	1.01
Parker Hannifin Corp.	1.00
E*TRADE Financial Corp.	1.00
L-3 Communications Holdings Inc.	0.99

TOTAL	10.74	%


FUND PERFORMANCE OVERVIEWS		3

Fund Performance Overview (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

The iShares Morningstar Mid Growth Index Fund (the “Growth Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Mid Growth Index (the “Growth Index”). The Growth Index measures the performance of stocks issued by mid-capitalization companies that have exhibited above-average “growth” characteristics as determined by Morningstar’s proprietary index methodology. The Growth Fund invests in a representative sample of securities in the Growth Index, which has a similar investment profile as the Growth Index. Due to the use of representative sampling, the Growth Fund may or may not hold all of the securities that are included in the Growth Index. For the reporting period, the Growth Fund declined 3.71%, while the Growth Index declined 3.50%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Consumer Non-Cyclical	21.83	%
Technology	18.25
Communications	12.95
Industrial	11.92
Consumer Cyclical	11.04
Energy	10.99
Financial	9.11
Basic Materials	2.21
Utilities	1.44
Diversified	0.21
Short-Term and Other Net Assets	0.05

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Rowe (T.) Price Group Inc.	1.32	%
NVIDIA Corp.	1.30
Liberty Media Holding Corp. - Liberty Capital Group Series A	1.26
Intuit Inc.	1.17
Cognizant Technology Solutions Corp.	1.12
Hilton Hotels Corp.	1.10
Expeditors International Washington Inc.	1.07
KLA-Tencor Corp.	1.04
Noble Corp.	1.02
Precision Castparts Corp.	0.97

TOTAL	11.37	%

The iShares Morningstar Mid Value Index Fund (the “Value Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Mid Value Index (the “Value Index”). The Value Index measures the performance of stocks issued by mid-capitalization companies that have exhibited “value” characteristics as determined by Morningstar’s proprietary index methodology. The Value Fund invests in a representative sample of securities in the Value Index, which has a similar investment profile as the Value Index. Due to the use of representative sampling, the Value Fund may or may not hold all of the securities that are included in the Value Index. For the reporting period, the Value Fund returned 4.42%, while the Value Index returned 4.63%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Financial	35.59	%
Utilities	14.23
Consumer Cyclical	13.47
Consumer Non-Cyclical	9.90
Industrial	7.36
Basic Materials	6.96
Energy	5.29
Communications	3.81
Technology	3.18
Short-Term and Other Net Assets	0.21

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Host Hotels & Resorts Inc.	1.24	%
Constellation Energy Group Inc.	1.15
CIT Group Inc.	1.07
Pitney Bowes Inc.	1.07
AmSouth Bancorp	1.02
Limited Brands Inc.	1.02
El Paso Corp.	0.98
Comerica Inc.	0.98
Computer Sciences Corp.	0.93
Xcel Energy Inc.	0.91

TOTAL	10.37	%


4		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Fund Performance Overview

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

Performance as of October 31, 2006


	Average Annual Total Returns												Cumulative Total Returns
	*Year Ended 10/31/06*						*Inception to 10/31/06*						*Inception to 10/31/06*
*iSHARES INDEX FUND*	*NAV*		*MARKET*		*INDEX*		*NAV*		*MARKET*		*INDEX*		*NAV*		*MARKET*		*INDEX*
Morningstar Small Core	23.22	%	23.38	%	23.60	%	16.47	%	16.46	%	16.83	%	42.99	%	42.94	%	43.92	%
Morningstar Small Growth	14.18	%	14.30	%	14.57	%	9.11	%	9.08	%	9.44	%	22.68	%	22.60	%	23.50	%
Morningstar Small Value	19.61	%	19.76	%	20.03	%	15.42	%	15.41	%	15.84	%	39.98	%	39.95	%	41.06	%

The iShares Morningstar Small Core Index Fund (the “Core Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Small Core Index (the “Core Index”). The Core Index measures the performance of stocks issued by small-capitalization companies that have exhibited average “growth” and “value” characteristics as determined by Morningstar’s proprietary index methodology. The Core Fund invests in a representative sample of securities in the Core Index, which has a similar investment profile as the Core Index. Due to the use of representative sampling, the Core Fund may or may not hold all of the securities that are included in the Core Index. For the six-month period ended October 31, 2006 (the “reporting period”), the Core Fund returned 1.70%, while the Core Index returned 1.85%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Consumer Non-Cyclical	19.98	%
Industrial	19.25
Financial	18.17
Consumer Cyclical	15.82
Technology	9.81
Energy	7.04
Communications	5.35
Basic Materials	3.52
Utilities	1.02
Short-Term and Other Net Assets	0.04

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Corrections Corp. of America	0.77	%
Phillips-Van Heusen Corp.	0.70
Veritas DGC Inc.	0.67
Big Lots Inc.	0.67
Brocade Communications Systems Inc.	0.61
Home Properties Inc.	0.61
Parametric Technology Corp.	0.60
Hercules Inc.	0.58
Highwoods Properties Inc.	0.57
Texas Regional Bancshares Inc. Class A	0.55

TOTAL	6.33	%


FUND PERFORMANCE OVERVIEWS		5

Fund Performance Overview (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

The iShares Morningstar Small Growth Index Fund (the “Growth Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Small Growth Index (the “Growth Index”). The Growth Index measures the performance of stocks issued by small-capitalization companies that have exhibited above-average “growth” characteristics as determined by Morningstar’s proprietary index methodology. The Growth Fund invests in a representative sample of securities in the Growth Index, which has a similar investment profile as the Growth Index. Due to the use of representative sampling, the Growth Fund may or may not hold all of the securities that are included in the Growth Index. For the reporting period, the Growth Fund declined 4.88%, while the Growth Index declined 4.72%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Consumer Non-Cyclical	29.56	%
Technology	14.08
Communications	13.93
Consumer Cyclical	13.48
Industrial	12.62
Energy	8.26
Financial	6.62
Basic Materials	1.24
Utilities	0.12
Short-Term and Other Net Assets	0.09

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Sotheby’s Holdings Inc. Class A	0.75	%
Polycom Inc.	0.74
Digital River Inc.	0.70
Myogen Inc.	0.68
FLIR Systems Inc.	0.68
OSI Pharmaceuticals Inc.	0.67
Kansas City Southern Industries Inc.	0.66
Varian Semiconductor Equipment Associates Inc.	0.65
BioMed Realty Trust Inc.	0.64
Corporate Office Properties Trust	0.62

TOTAL	6.79	%

The iShares Morningstar Small Value Index Fund (the “Value Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Small Value Index (the “Value Index”). The Value Index measures the performance of stocks issued by small-capitalization companies that have exhibited “value” characteristics as determined by Morningstar’s proprietary index methodology. The Value Fund invests in a representative sample of securities in the Value Index, which has a similar investment profile as the Value Index. Due to the use of representative sampling, the Value Fund may or may not hold all of the securities that are included in the Value Index. For the reporting period, the Value Fund returned 4.06%, while the Value Index returned 4.25%.

PORTFOLIO ALLOCATION

As of 10/31/06


*Sector*	Percentage of Net Assets
Financial	35.87	%
Consumer Cyclical	15.40
Consumer Non-Cyclical	10.43
Industrial	9.19
Utilities	9.08
Communications	8.03
Basic Materials	7.91
Technology	2.11
Energy	1.84
Short-Term and Other Net Assets	0.14

TOTAL	100.00	%

TEN LARGEST FUND HOLDINGS

As of 10/31/06


*Security*	Percentage of Net Assets
Windstream Corp.	2.01	%
Nationwide Health Properties Inc.	0.72
Acuity Brands Inc.	0.68
KKR Financial Corp.	0.67
Post Properties Inc.	0.66
First Industrial Realty Trust Inc.	0.64
Nicor Inc.	0.63
Lear Corp.	0.63
Rent-A-Center Inc.	0.63
Jack in the Box Inc.	0.62

TOTAL	7.89	%


6		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Shareholder Expenses (Unaudited)

iSHARES^® TRUST

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2006 to October 31, 2006.

ACTUAL EXPENSES

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period ^a(5/1/06 to 10/31/06)
Morningstar Large Core
Actual	$	1,000.00	$	1,072.70	0.20	%	$	1.04
Hypothetical (5% return before expenses)		1,000.00		1,024.20	0.20			1.02
Morningstar Large Growth
Actual		1,000.00		1,017.30	0.25			1.27
Hypothetical (5% return before expenses)		1,000.00		1,023.95	0.25			1.28
Morningstar Large Value
Actual		1,000.00		1,097.60	0.25			1.32
Hypothetical (5% return before expenses)		1,000.00		1,023.95	0.25			1.28
Morningstar Mid Core
Actual		1,000.00		1,026.80	0.25			1.28
Hypothetical (5% return before expenses)		1,000.00		1,023.95	0.25			1.28


SHAREHOLDER EXPENSES		7

Shareholder Expenses (Unaudited) (Continued)

iSHARES^® TRUST


*iShares Index Fund*	Beginning Account Value (5/1/06)		Ending Account Value (10/31/06)		Annualized Expense Ratio		Expenses Paid During Period ^a(5/1/06 to 10/31/06)
Morningstar Mid Growth
Actual	$	1,000.00	$	962.90	0.30	%	$	1.48
Hypothetical (5% return before expenses)		1,000.00		1,023.69	0.30			1.53
Morningstar Mid Value
Actual		1,000.00		1,044.20	0.30			1.55
Hypothetical (5% return before expenses)		1,000.00		1,023.69	0.30			1.53
Morningstar Small Core
Actual		1,000.00		1,017.00	0.25			1.27
Hypothetical (5% return before expenses)		1,000.00		1,023.95	0.25			1.28
Morningstar Small Growth
Actual		1,000.00		951.20	0.30			1.48
Hypothetical (5% return before expenses)		1,000.00		1,023.69	0.30			1.53
Morningstar Small Value
Actual		1,000.00		1,040.60	0.30			1.54
Hypothetical (5% return before expenses)		1,000.00		1,023.69	0.30			1.53

^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).


8		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR LARGE CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.78%
ADVERTISING – 0.43%
Omnicom Group Inc.	5,455	$	553,410

			553,410
AEROSPACE & DEFENSE – 3.90%
General Dynamics Corp.	10,738		763,472
Lockheed Martin Corp.	10,778		936,932
Northrop Grumman Corp.	10,215		678,174
Raytheon Co.	14,276		713,086
United Technologies Corp.	29,771		1,956,550

			5,048,214
AGRICULTURE – 0.57%
Archer-Daniels-Midland Co.	19,131		736,543

			736,543
AUTO MANUFACTURERS – 0.36%
PACCAR Inc.	7,955		471,016

			471,016
AUTO PARTS & EQUIPMENT – 0.39%
Johnson Controls Inc.	6,180		503,917

			503,917
BANKS – 4.81%
M&T Bank Corp.	2,555		311,225
Marshall & Ilsley Corp.	6,928		332,128
Mellon Financial Corp.	13,229		513,285
North Fork Bancorp Inc.	12,944		369,939
Northern Trust Corp.	6,191		363,535
State Street Corp.	10,635		683,086
Wells Fargo & Co.	100,724		3,655,274

			6,228,472
BEVERAGES – 2.48%
Coca-Cola Co. (The)	68,753		3,212,140

			3,212,140
BUILDING MATERIALS – 0.27%
Masco Corp.	12,637		349,413

			349,413
CHEMICALS – 1.40%
Air Products & Chemicals Inc.	6,610		460,519
Du Pont (E.I.) de Nemours and Co.	29,378		1,345,512

			1,806,031
COMMERCIAL SERVICES – 0.89%
Accenture Ltd.	18,445		607,025
Avis Budget Group Inc.	3,183		62,992
McKesson Corp.	9,727		487,225

			1,157,242
COMPUTERS – 6.60%
Hewlett-Packard Co.	89,044		3,449,565
International Business Machines Corp.	48,576		4,485,022
Sun Microsystems Inc.¹	111,851		607,351

			8,541,938
COSMETICS & PERSONAL CARE – 6.12%
Avon Products Inc.	14,336		435,958
Colgate-Palmolive Co.	16,548		1,058,576
Procter & Gamble Co.	101,337		6,423,752

			7,918,286
DIVERSIFIED FINANCIAL SERVICES – 6.28%
American Express Co.	34,376		1,987,277
Goldman Sachs Group Inc. (The)	11,780		2,235,726
Lehman Brothers Holdings Inc.	17,270		1,344,297
Merrill Lynch & Co. Inc.	29,250		2,557,035

			8,124,335
ELECTRIC – 1.03%
Exelon Corp.	21,415		1,327,302

			1,327,302
ELECTRICAL COMPONENTS & EQUIPMENT – 0.86%
Emerson Electric Co.	13,122		1,107,497

			1,107,497
ENVIRONMENTAL CONTROL – 0.50%
Waste Management Inc.	17,275		647,467

			647,467
FOOD – 1.29%
Campbell Soup Co.	8,126		303,750
Hershey Co. (The)	5,201		275,185
Kellogg Co.	7,942		399,562
Sysco Corp.	19,822		693,374

			1,671,871


SCHEDULES OF INVESTMENTS		9

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR LARGE CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
GAS – 0.30%
Sempra Energy	7,287	$	386,502

			386,502
HEALTH CARE – PRODUCTS – 5.69%
Baxter International Inc.	21,026		966,565
Johnson & Johnson	94,906		6,396,664

			7,363,229
HEALTH CARE – SERVICES – 1.04%
Aetna Inc.	17,502		721,432
HCA Inc.	12,369		624,882

			1,346,314
HOUSEHOLD PRODUCTS & WARES – 0.29%
Fortune Brands Inc.	4,798		369,206

			369,206
INSURANCE – 6.46%
AFLAC Inc.	16,065		721,640
American International Group Inc.	72,753		4,886,819
Marsh & McLennan Companies Inc.	17,384		511,785
Principal Financial Group Inc.	8,569		484,063
Progressive Corp. (The)	23,080		557,844
Prudential Financial Inc.	15,491		1,191,723

			8,353,874
LEISURE TIME – 0.45%
Harley-Davidson Inc.	8,386		575,531

			575,531
MACHINERY – 0.98%
Caterpillar Inc.	20,939		1,271,207

			1,271,207
MANUFACTURING – 14.20%
Cooper Industries Ltd.	3,282		293,575
Eaton Corp.	4,781		346,288
General Electric Co.	331,855		11,651,429
Honeywell International Inc.	23,926		1,007,763
Illinois Tool Works Inc.	15,573		746,414
Ingersoll-Rand Co. Class A	10,234		375,690
Textron Inc.	3,393		308,525
3M Co.	22,107		1,742,916
Tyco International Ltd.	64,618		1,901,708

			18,374,308
MEDIA – 3.59%
Clear Channel Communications Inc.	14,595		508,636
News Corp. Class A	59,384		1,238,156
News Corp. Class B	16,588		360,623
Time Warner Inc.	126,877		2,538,809

			4,646,224
MINING – 0.62%
Alcoa Inc.	27,864		805,548

			805,548
OFFICE & BUSINESS EQUIPMENT – 0.38%
Xerox Corp.¹	28,742		488,614

			488,614
OIL & GAS – 1.38%
Anadarko Petroleum Corp.	14,655		680,285
Apache Corp.	10,486		684,946
Chesapeake Energy Corp.	12,778		414,518

			1,779,749
PHARMACEUTICALS – 5.50%
Abbott Laboratories	49,118		2,333,596
Cardinal Health Inc.	13,343		873,299
Lilly (Eli) & Co.	30,874		1,729,253
Wyeth	42,595		2,173,623

			7,109,771
PIPELINES – 0.28%
Kinder Morgan Inc.	3,461		363,751

			363,751
REAL ESTATE INVESTMENT TRUSTS – 1.29%
Equity Office Properties Trust	11,138		473,365
Equity Residential	9,268		506,125
Simon Property Group Inc.	7,058		685,332

			1,664,822
RETAIL – 8.64%
Costco Wholesale Corp.	15,084		805,184
Federated Department Stores Inc.	17,591		772,421
Home Depot Inc.	65,985		2,463,220
McDonald’s Corp.	39,158		1,641,503
Penney (J.C.) Co. Inc.	6,500		488,995
TJX Companies Inc.	14,569		421,773


10		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR LARGE CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Wal-Mart Stores Inc.	82,439	$	4,062,594
Yum! Brands Inc.	8,701		517,361

			11,173,051
SEMICONDUCTORS – 0.39%
Freescale Semiconductor Inc. Class A¹	4,318		170,000
Freescale Semiconductor Inc. Class B¹	8,588		337,766

			507,766
SOFTWARE – 6.28%
Microsoft Corp.	283,003		8,125,016

			8,125,016
TELECOMMUNICATIONS – 2.71%
Motorola Inc.	78,222		1,803,799
Sprint Nextel Corp.	90,999		1,700,771

			3,504,570
TRANSPORTATION – 1.13%
Norfolk Southern Corp.	13,179		692,820
Union Pacific Corp.	8,549		774,796

			1,467,616

TOTAL COMMON STOCKS (Cost: $118,904,711)			129,081,763

SHORT-TERM INVESTMENTS – 0.16%
MONEY MARKET FUNDS – 0.16%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	208,440		208,440

			208,440

TOTAL SHORT-TERM INVESTMENTS (Cost: $208,440)			208,440

TOTAL INVESTMENTS IN SECURITIES – 99.94% (Cost: $119,113,151)			129,290,203
Other Assets, Less Liabilities – 0.06%			81,114

NET ASSETS – 100.00%		$	129,371,317

¹	Non-income earning security.

²	Affiliated 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.


SCHEDULES OF INVESTMENTS		11

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR LARGE GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.90%
AEROSPACE & DEFENSE – 1.77%
Boeing Co. (The)	51,480	$	4,111,193

			4,111,193
AGRICULTURE – 0.75%
Monsanto Co.	39,239		1,735,149

			1,735,149
AIRLINES – 0.37%
Southwest Airlines Co.	57,057		857,567

			857,567
APPAREL – 0.97%
Coach Inc.¹	26,563		1,052,957
Nike Inc. Class B	12,933		1,188,284

			2,241,241
BEVERAGES – 3.29%
PepsiCo Inc.	120,463		7,642,173

			7,642,173
BIOTECHNOLOGY – 5.65%
Amgen Inc.¹	85,518		6,491,671
Biogen Idec Inc.¹	24,816		1,181,242
Celgene Corp.¹	25,439		1,359,460
Genentech Inc.¹	33,619		2,800,463
Genzyme Corp.¹	18,722		1,263,922

			13,096,758
CHEMICALS – 0.61%
Praxair Inc.	23,578		1,420,574

			1,420,574
COAL – 0.35%
Peabody Energy Corp.	19,246		807,755

			807,755
COMMERCIAL SERVICES – 0.50%
Moody’s Corp.	17,385		1,152,625

			1,152,625
COMPUTERS – 6.07%
Apple Computer Inc.¹	61,544		4,989,988
Dell Inc.¹	145,621		3,542,959
Electronic Data Systems Corp.	37,862		959,044
EMC Corp.¹	166,667		2,041,671
Network Appliance Inc.¹	27,149		990,938
SanDisk Corp.¹	14,145		680,374
Seagate Technology¹	38,844		877,098

			14,082,072
DIVERSIFIED FINANCIAL SERVICES – 2.83%
Chicago Mercantile Exchange
Holdings Inc.	2,318		1,161,318
Franklin Resources Inc.	12,405		1,413,674
Legg Mason Inc.	9,521		857,080
Schwab (Charles) Corp. (The)	75,366		1,373,169
SLM Corp.	29,931		1,457,041
TD Ameritrade Holding Corp.	17,746		292,277

			6,554,559
ELECTRIC – 0.45%
AES Corp. (The)¹	47,605		1,046,834

			1,046,834
ELECTRONICS – 0.47%
Agilent Technologies Inc.¹	30,897		1,099,933

			1,099,933
ENTERTAINMENT – 0.45%
International Game Technology Inc.	24,418		1,038,009

			1,038,009
FOOD – 0.28%
Wrigley (William Jr.) Co.	12,478		648,232

			648,232
HEALTH CARE – PRODUCTS – 4.59%
Alcon Inc.	5,733		608,157
Becton, Dickinson & Co.	16,679		1,168,030
Boston Scientific Corp.¹	98,483		1,566,865
Medtronic Inc.	83,811		4,079,919
St. Jude Medical Inc.¹	25,603		879,463
Stryker Corp.	20,260		1,059,395
Zimmer Holdings Inc.¹	17,901		1,289,051

			10,650,880
HEALTH CARE – SERVICES – 3.77%
Quest Diagnostics Inc.	11,117		552,960
UnitedHealth Group Inc.	97,686		4,765,123
WellPoint Inc.¹	44,946		3,430,279

			8,748,362


12		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR LARGE GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
INTERNET – 6.83%
Amazon.com Inc.¹	21,995	$	837,790
eBay Inc.¹	76,567		2,460,098
Google Inc. Class A¹	15,898		7,573,648
Liberty Media Holding Corp.–Liberty Interactive Group Series A¹	48,619		1,073,021
Symantec Corp.¹	71,626		1,421,060
Yahoo! Inc.¹	93,925		2,473,984

			15,839,601
LEISURE TIME – 0.64%
Carnival Corp.	30,595		1,493,648

			1,493,648
LODGING – 1.71%
Harrah’s Entertainment Inc.	13,491		1,002,786
Las Vegas Sands Corp.¹	7,559		575,996
Marriott International Inc. Class A	25,611		1,069,771
MGM Mirage¹	8,847		380,598
Starwood Hotels & Resorts Worldwide Inc.	15,815		944,788

			3,973,939
MACHINERY – 0.31%
Rockwell Automation Inc.	11,440		709,280

			709,280
MANUFACTURING – 0.54%
Danaher Corp.	17,467		1,253,607

			1,253,607
MEDIA – 6.70%
Comcast Corp. Class A¹	91,287		3,712,642
Comcast Corp. Class A Special¹	52,017		2,105,648
DIRECTV Group Inc. (The)¹	58,475		1,302,823
EchoStar Communications Corp.¹	14,871		528,218
McGraw-Hill Companies Inc. (The)	25,516		1,637,362
Viacom Inc. Class A¹	1,323		51,478
Viacom Inc. Class B¹	44,625		1,736,805
Walt Disney Co. (The)	142,061		4,469,239

			15,544,215
MINING – 0.94%
Freeport-McMoRan Copper & Gold Inc.	13,700		828,576
Newmont Mining Corp.	30,088		1,362,084

			2,190,660
OIL & GAS – 2.55%
Diamond Offshore Drilling Inc.	4,393		304,127
EOG Resources Inc.	17,522		1,165,739
GlobalSantaFe Corp.	17,319		898,856
Nabors Industries Ltd.¹	21,590		666,699
Transocean Inc.¹	22,846		1,657,249
XTO Energy Inc.	26,402		1,231,917

			5,924,587
OIL & GAS SERVICES – 5.13%
Baker Hughes Inc.	23,851		1,646,912
BJ Services Co.	21,595		651,305
Halliburton Co.	74,375		2,406,031
National Oilwell Varco Inc.¹	12,555		758,322
Schlumberger Ltd.	85,518		5,394,475
Weatherford International Ltd.¹	25,220		1,036,038

			11,893,083
PHARMACEUTICALS – 4.45%
Allergan Inc.	11,149		1,287,709
Caremark Rx Inc.	32,082		1,579,397
Express Scripts Inc.¹	8,407		535,694
Forest Laboratories Inc.¹	23,244		1,137,561
Gilead Sciences Inc.¹	33,129		2,282,588
Medco Health Solutions Inc.¹	21,311		1,140,138
Schering-Plough Corp.	106,963		2,368,161

			10,331,248
PIPELINES – 0.45%
Williams Companies Inc.	43,181		1,054,912

			1,054,912
REAL ESTATE INVESTMENT TRUSTS – 1.34%
General Growth Properties Inc.	16,463		854,430
ProLogis	17,596		1,113,299
Vornado Realty Trust	9,539		1,137,526

			3,105,255
RETAIL – 8.65%
Bed Bath & Beyond Inc.¹	20,506		826,187


SCHEDULES OF INVESTMENTS		13

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR LARGE GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Best Buy Co. Inc.	28,816	$	1,592,084
CVS Corp.	58,739		1,843,230
Kohl’s Corp.¹	22,020		1,554,612
Lowe’s Companies Inc.	112,320		3,385,325
Office Depot Inc.¹	20,576		863,986
Staples Inc.	53,030		1,367,644
Starbucks Corp.¹	55,723		2,103,543
Target Corp.	56,360		3,335,385
Walgreen Co.	73,396		3,205,937

			20,077,933
SEMICONDUCTORS – 8.49%
Advanced Micro Devices Inc.¹	35,153		747,704
Analog Devices Inc.	26,247		835,180
Applied Materials Inc.	113,393		1,971,904
Broadcom Corp. Class A¹	33,795		1,022,975
Intel Corp.	421,835		9,001,959
LinearTechnology Corp.	22,080		687,130
Marvell Technology Group Ltd.¹	33,514		612,636
Maxim Integrated Products Inc.	23,330		700,133
Micron Technology Inc.¹	52,488		758,452
Texas Instruments Inc.	111,143		3,354,296

			19,692,369
SOFTWARE – 5.75%
Adobe Systems Inc.¹	41,997		1,606,385
Automatic Data Processing Inc.	41,811		2,067,136
CA Inc.	32,979		816,560
Electronic Arts Inc.¹	22,005		1,163,844
First Data Corp.	55,151		1,337,412
Oracle Corp.¹	291,996		5,393,166
Paychex Inc.	24,469		966,036

			13,350,539
TELECOMMUNICATIONS – 8.29%
American Tower Corp. Class A¹	30,533		1,099,799
Cisco Systems Inc.¹	446,071		10,763,693
Corning Inc.¹	12,212		2,292,491
Juniper Networks Inc.¹	41,037		706,657
QUALCOMM Inc.	119,798		4,359,449

			19,222,089
TRANSPORTATION – 3.96%
Burlington Northern Santa Fe Corp.	26,441		2,049,971
CSX Corp.	32,177		1,147,754
FedEx Corp.	20,675		2,368,114
United Parcel Service Inc. Class B	47,978		3,615,142

			9,180,981

TOTAL COMMON STOCKS (Cost: $222,689,753)			231,771,862

SHORT-TERM INVESTMENTS – 0.11%
MONEY MARKET FUNDS – 0.11%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	252,386		252,386

			252,386

TOTAL SHORT-TERM INVESTMENTS (Cost: $252,386)			252,386

TOTAL INVESTMENTS IN SECURITIES – 100.01% (Cost: $222,942,139)			232,024,248
Other Assets, Less Liabilities – (0.01)%			(16,961	)

NET ASSETS – 100.00%		$	232,007,287

¹	Non-income earning security.

²	Affiliated 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.


14		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR LARGE VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.59%
AGRICULTURE – 4.59%
Altria Group Inc.	210,157	$	17,092,069
Reynolds American Inc.	19,109		1,206,924

			18,298,993
AUTO MANUFACTURERS – 0.81%
Ford Motor Co.	194,471		1,610,220
General Motors Corp.	46,132		1,610,929

			3,221,149
BANKS – 14.96%
Bank of America Corp.	459,744		24,766,409
Bank of New York Co. Inc. (The)	80,107		2,753,278
BB&T Corp.	54,752		2,382,807
Fifth Third Bancorp	50,430		2,009,635
KeyCorp	44,212		1,642,034
National City Corp.	60,742		2,262,639
PNC Financial Services Group	31,407		2,199,432
Regions Financial Corp.	49,047		1,861,334
SunTrust Banks Inc.	37,349		2,950,197
U.S. Bancorp	180,613		6,111,944
Wachovia Corp.	192,553		10,686,692

			59,626,401
BEVERAGES – 0.90%
Anheuser-Busch Companies Inc.	75,543		3,582,249

			3,582,249
CHEMICALS – 1.56%
Dow Chemical Co. (The)	100,229		4,088,341
PPG Industries Inc.	18,388		1,257,739
Rohm & Haas Co.	16,729		866,897

			6,212,977
DIVERSIFIED FINANCIAL SERVICES – 17.20%
Ameriprise Financial Inc.	24,245		1,248,617
Bear Stearns Companies Inc. (The)	12,396		1,876,135
Capital One Financial Corp.	32,289		2,561,486
Citigroup Inc.	502,748		25,217,840
Countrywide Financial Corp.	64,466		2,457,444
Federal Home Loan Mortgage Corp.	71,308		4,919,539
Federal National Mortgage Association	99,552		5,899,452
JP Morgan Chase & Co.	352,582		16,726,490
Morgan Stanley	100,255		7,662,490

			68,569,493
ELECTRIC – 7.72%
Ameren Corp.	22,827		1,234,941
American Electric Power Co. Inc.	42,614		1,765,498
Consolidated Edison Inc.	27,252		1,317,634
Dominion Resources Inc.	37,066		3,001,975
Duke Energy Corp.	128,265		4,058,305
Edison International	32,948		1,464,209
Entergy Corp.	22,359		1,919,073
FirstEnergy Corp.	35,267		2,075,463
FPL Group Inc.	39,998		2,039,898
PG&E Corp.	37,604		1,622,237
PPL Corp.	41,846		1,444,524
Progress Energy Inc.	27,985		1,287,310
Public Service Enterprise Group Inc.	27,250		1,663,612
Southern Co. (The)	78,209		2,846,808
TXU Corp.	48,398		3,055,366

			30,796,853
FOOD – 2.60%
ConAgra Foods Inc.	56,983		1,490,105
General Mills Inc.	36,650		2,082,453
Heinz (H.J.) Co.	34,381		1,449,503
Kraft Foods Inc.	24,069		827,974
Kroger Co.	73,718		1,657,918
Safeway Inc.	49,109		1,441,840
Sara Lee Corp.	83,728		1,431,749

			10,381,542
FOREST PRODUCTS & PAPER – 0.87%
International Paper Co.	52,725		1,758,379
Weyerhaeuser Co.	26,621		1,692,829

			3,451,208
HOUSEHOLD PRODUCTS & WARES – 0.78%
Kimberly-Clark Corp.	46,794		3,112,737

			3,112,737
INSURANCE – 6.76%
ACE Ltd.	32,989		1,888,620
Allstate Corp. (The)	66,389		4,073,629
AON Corp.	31,237		1,086,735


SCHEDULES OF INVESTMENTS		15

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR LARGE VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Chubb Corp.	43,968	$	2,336,899
CIGNA Corp.	12,174		1,424,115
Genworth Financial Inc. Class A	48,991		1,638,259
Hartford Financial Services Group Inc. (The)	31,969		2,786,738
Lincoln National Corp.	30,153		1,908,986
Loews Corp.	50,000		1,946,000
MetLife Inc.	48,667		2,780,346
St. Paul Travelers Companies Inc.	72,173		3,690,205
XL Capital Ltd. Class A	19,736		1,392,375

			26,952,907
IRON & STEEL – 0.46%
Nucor Corp.	31,214		1,823,210

			1,823,210
MACHINERY – 0.53%
Deere & Co.	25,018		2,129,782

			2,129,782
MEDIA – 0.94%
CBS Corp. Class A	6,070		175,848
CBS Corp. Class B	70,800		2,048,952
Gannett Co. Inc.	26,029		1,539,355

			3,764,155
MINING – 0.55%
Phelps Dodge Corp.	21,700		2,178,246

			2,178,246
OIL & GAS – 18.61%
Chevron Corp.	223,306		15,006,163
ConocoPhillips	41,340		2,490,322
Devon Energy Corp.	44,060		2,944,970
Exxon Mobil Corp.	600,732		42,904,279
Marathon Oil Corp.	38,603		3,335,299
Occidental Petroleum Corp.	88,471		4,152,829
Valero Energy Corp.	64,523		3,376,489

			74,210,351
PHARMACEUTICALS – 8.75%
Bristol-Myers Squibb Co.	201,696		4,991,976
Merck & Co. Inc.	221,994		10,082,967
Pfizer Inc.	743,565		19,816,007

			34,890,950
RETAIL – 0.79%
Gap Inc. (The)	67,155		1,411,598
Sears Holdings Corp.¹	9,967		1,738,942

			3,150,540
SAVINGS & LOANS – 1.04%
Washington Mutual Inc.	98,333		4,159,486

			4,159,486
TELECOMMUNICATIONS – 9.17%
Alltel Corp.	41,161		2,194,293
AT&T Inc.	394,876		13,524,503
BellSouth Corp.	185,886		8,383,459
Qwest Communications International Inc.¹	176,893		1,526,587
Verizon Communications Inc.	295,254		10,924,398

			36,553,240

TOTAL COMMON STOCKS (Cost: $365,519,290)			397,066,469
SHORT-TERM INVESTMENTS – 0.26%
MONEY MARKET FUNDS – 0.26%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^2,3	1,044,645		1,044,645

			1,044,645

TOTAL SHORT-TERM INVESTMENTS (Cost: $1,044,645)			1,044,645

TOTAL INVESTMENTS IN SECURITIES – 99.85% (Cost: $366,563,935)			398,111,114
Other Assets, Less Liabilities – 0.15%			589,500

NET ASSETS – 100.00%		$	398,700,614

¹	Non-income earning security.

²	Affiliated 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.


16		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.65%
ADVERTISING – 0.92%
Donnelley (R.H.) Corp.	5,903	$	355,479
Harte-Hanks Inc.	6,176		155,944
Interpublic Group of Companies Inc.¹	51,138		557,916

			1,069,339
AEROSPACE & DEFENSE – 3.18%
Alliant Techsystems Inc.¹	4,105		316,947
Armor Holdings Inc.¹	3,802		195,651
BE Aerospace Inc.¹	8,897		224,916
Goodrich Corp.	14,243		627,974
L-3 Communications Holdings Inc.	14,247		1,147,168
Rockwell Collins Inc.	20,006		1,161,948

			3,674,604
AIRLINES – 0.34%
UAL Corp.¹	10,779		387,397

			387,397
APPAREL – 0.59%
Polo Ralph Lauren Corp.	7,252		514,892
Timberland Co. Class A¹	5,916		170,677

			685,569
AUTO MANUFACTURERS – 0.18%
Navistar International Corp.¹	7,669		212,661

			212,661
BANKS – 1.72%
BOK Financial Corp.	2,544		130,762
Cathay General Bancorp	5,042		173,697
City National Corp.	4,625		307,840
Cullen/Frost Bankers Inc.	6,414		347,382
First Citizens BancShares Inc. Class A	609		114,370
Synovus Financial Corp.	31,196		916,538

			1,990,589
BEVERAGES – 0.88%
Brown-Forman Corp. Class B	5,277		380,947
Constellation Brands Inc.¹	23,105		635,156

			1,016,103
BIOTECHNOLOGY – 0.60%
Charles River Laboratories International Inc.¹	7,963		341,772
Invitrogen Corp.¹	6,130		355,601

			697,373
BUILDING MATERIALS – 1.11%
American Standard Companies Inc.	19,287		854,221
USG Corp.¹	8,799		430,183

			1,284,404
CHEMICALS – 1.98%
Airgas Inc.	7,692		290,835
Albemarle Corp.	4,381		284,896
Cytec Industries Inc.	4,380		242,608
Huntsman Corp.¹	10,375		179,176
Sherwin-Williams Co. (The)	13,325		789,240
Sigma-Aldrich Corp.	6,686		502,185

			2,288,940
COMMERCIAL SERVICES – 2.39%
ARAMARK Corp. Class B	14,316		478,584
Convergys Corp.¹	16,307		345,871
Equifax Inc.	14,683		558,394
Hewitt Associates Inc. Class A¹	11,607		290,523
Interactive Data Corp.¹	4,081		93,210
Manpower Inc.	10,115		685,494
Service Corp. International	34,476		314,421

			2,766,497
COMPUTERS – 3.69%
Affiliated Computer Services Inc. Class A¹	12,959		693,047
Cadence Design Systems Inc.¹	32,885		587,326
Ceridian Corp.¹	16,189		381,575
Diebold Inc.	7,656		334,414
DST Systems Inc.¹	6,445		398,237
NCR Corp.¹	21,036		873,415
Palm Inc.¹	10,894		167,223
Synopsys Inc.¹	16,383		368,781
Western Digital Corp.¹	25,639		468,681

			4,272,699


SCHEDULES OF INVESTMENTS		17

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COSMETICS & PERSONAL CARE – 0.94%
Alberto-Culver Co.	9,624	$	488,995
Estee Lauder Companies Inc. (The) Class A	14,710		594,137

			1,083,132
DISTRIBUTION & WHOLESALE – 0.98%
CDW Corp.	7,079		464,878
Grainger (W.W.) Inc.	9,176		667,829

			1,132,707
DIVERSIFIED FINANCIAL SERVICES – 3.22%
CompuCredit Corp.^1,2	3,704		128,751
E*TRADE Financial Corp.¹	49,468		1,151,615
Federated Investors Inc. Class B	11,550		396,049
Janus Capital Group Inc.	23,993		481,779
Jefferies Group Inc.	11,998		344,703
Nelnet Inc. Class A¹	2,513		73,983
Nuveen Investments Inc. Class A	9,186		452,870
Raymond James Financial Inc.	10,948		348,803
Student Loan Corp. (The)	460		95,220
Waddell & Reed Financial Inc. Class A	9,735		248,242

			3,722,015
ELECTRIC – 0.76%
Mirant Corp.¹	29,710		878,525

			878,525
ELECTRICAL COMPONENTS & EQUIPMENT – 0.80%
American Power Conversion Corp.	20,728		626,607
Hubbell Inc. Class B	6,002		297,219

			923,826
ELECTRONICS – 3.95%
Applera Corp.-Applied Biosystems Group	21,205		790,947
Avnet Inc.¹	17,052		403,791
AVX Corp.	5,965		94,008
Fisher Scientific International Inc.¹	14,359		1,229,418
Gentex Corp.	16,867		268,354
MettlerToledo International Inc.¹	4,697		322,449
PerkinElmer Inc.	14,428		308,182
Sanmina-SCI Corp.¹	61,136		241,487
Solectron Corp.¹	106,515		355,760
Tektronix Inc.	9,608		291,795
Vishay Intertechnology Inc.¹	19,464		262,569

			4,568,760
ENGINEERING & CONSTRUCTION – 1.93%
Fluor Corp.	10,038		787,280
Foster Wheeler Ltd.¹	7,982		358,791
Jacobs Engineering Group Inc.¹	6,828		515,787
McDermott International Inc.¹	12,672		566,438

			2,228,296
ENTERTAINMENT – 0.39%
International Speedway Corp. Class A	3,569		185,267
Regal Entertainment Group Class A	6,148		127,448
Warner Music Group Corp.	5,261		136,418

			449,133
ENVIRONMENTAL CONTROL – 0.96%
Allied Waste Industries Inc.¹	27,492		334,028
Nalco Holding Co.¹	10,752		217,513
Republic Services Inc.	13,494		553,389

			1,104,930
FOOD – 0.76%
McCormick & Co. Inc. NVS	12,778		477,897
Seaboard Corp.	42		59,304
Smithfield Foods Inc.¹	12,903		346,833

			884,034
FOREST PRODUCTS & PAPER – 0.50%
MeadWestvaco Corp.	20,922		575,773

			575,773
HAND & MACHINE TOOLS – 0.63%
Lincoln Electric Holdings Inc.	4,568		280,886
Stanley Works (The)	9,432		449,435

			730,321
HEALTH CARE-PRODUCTS – 1.10%
Bausch & Lomb Inc.	6,262		335,267
Beckman Coulter Inc.	7,208		414,965
DENTSPLY International Inc.	16,711		522,720

			1,272,952
HEALTH CARE-SERVICES – 4.79%
Community Health Systems Inc.¹	10,997		356,853
Coventry Health Care Inc.¹	18,756		880,594
Health Management Associates Inc. Class A	27,886		549,354
Health Net Inc.¹	13,270		550,838
Humana Inc.¹	18,808		1,128,480


18		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Laboratory Corp. of America Holdings¹	14,448	$	989,544
Lincare Holdings Inc.¹	10,905		365,972
Manor Care Inc.	8,560		410,794
Universal Health Services Inc. Class B	5,883		311,505

			5,543,934
HOLDING COMPANIES - DIVERSIFIED – 0.43%
Leucadia National Corp.	18,729		493,884

			493,884
HOME BUILDERS – 3.35%
Beazer Homes USA Inc.	4,244		183,935
Centex Corp.	13,710		717,033
Horton (D.R.) Inc.	31,595		740,271
Hovnanian Enterprises Inc. Class A¹	3,962		122,228
NVR Inc.¹	611		343,077
Pulte Homes Inc.	24,678		764,771
Ryland Group Inc.	5,016		230,385
Standard-Pacific Corp.	7,417		179,714
Thor Industries Inc.	4,475		196,095
Toll Brothers Inc.¹	13,625		393,899

			3,871,408
HOUSEHOLD PRODUCTS & WARES – 2.26%
Avery Dennison Corp.	11,300		713,482
Church & Dwight Co. Inc.	7,426		301,273
Clorox Co. (The)	17,451		1,126,637
Jarden Corp.¹	5,959		214,405
Scotts Miracle-Gro Co. (The) Class A	5,223		258,330

			2,614,127
HOUSEWARES – 0.18%
Toro Co. (The)	4,845		209,110

			209,110
INSURANCE – 1.53%
Arch Capital Group Ltd.¹	4,845		311,485
Gallagher (ArthurJ.) & Co.	11,249		313,285
HCC Insurance Holdings Inc.	12,861		432,901
Markel Corp.¹	1,123		448,639
Philadelphia Consolidated Holding Corp.¹	6,800		266,016

			1,772,326
INTERNET – 1.94%
Check Point Software Technologies Ltd.¹	20,032		415,063
Expedia Inc.¹	30,318		492,668
IAC/InterActiveCorp¹	25,683		795,659
McAfee Inc.¹	18,494		535,031

			2,238,421
IRON & STEEL – 0.45%
CarpenterTechnology Corp.	2,618		280,100
Reliance Steel & Aluminum Co.	7,111		244,263

			524,363
LEISURE TIME – 0.17%
Polaris Industries Inc.	4,652		199,199

			199,199
LODGING – 0.59%
Wyndham Worldwide Corp.¹	23,162		683,279

			683,279
MACHINERY – 1.90%
AGCO Corp.¹	10,367		277,317
Cummins Inc.	5,402		685,946
Flowserve Corp.¹	6,561		347,733
IDEX Corp.	6,082		285,246
Terex Corp.¹	11,642		602,590

			2,198,832
MANUFACTURING – 5.43%
AptarGroup Inc.	3,730		204,814
Brink’s Co. (The)	5,164		271,058
Carlisle Companies Inc.	3,576		299,275
Donaldson Co. Inc.	8,441		316,960
Dover Corp.	23,550		1,118,625
Harsco Corp.	4,836		394,763
Hexcel Corp.¹	10,611		171,792
ITT Industries Inc.	21,372		1,162,423
Pall Corp.	14,459		461,242
Parker Hannifin Corp.	13,846		1,157,941
Pentair Inc.	11,829		389,647
Trinity Industries Inc.	9,063		326,812

			6,275,352


SCHEDULES OF INVESTMENTS		19

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
MEDIA – 1.62%
Cablevision Systems Corp.	26,004	$	722,651
Dow Jones & Co. Inc.	5,974		209,628
Meredith Corp.	4,631		243,128
Washington Post Co. (The) Class B	711		535,454
Wiley (John) & Sons Inc. Class A	4,614		162,874

			1,873,735
MINING – 0.95%
Meridian Gold Inc.¹	11,582		293,140
Vulcan Materials Co.	9,955		811,133

			1,104,273
OFFICE FURNISHINGS – 0.18%
HNI Corp.	4,685		210,684

			210,684
OIL & GAS – 1.80%
Holly Corp.	5,515		262,293
Newfield Exploration Co.¹	15,151		618,009
Pioneer Natural Resources Co.	14,456		588,793
Plains Exploration & Production Co.¹	8,933		377,777
St. Mary Land & Exploration Co.	6,297		234,815

			2,081,687
OIL & GAS SERVICES – 0.44%
Hanover Compressor Co.¹	9,979		184,811
Tidewater Inc.	6,470		321,753

			506,564
PACKAGING & CONTAINERS – 1.35%
Ball Corp.	12,076		502,241
Pactiv Corp.¹	16,026		494,242
Sealed Air Corp.	9,453		562,643

			1,559,126
PHARMACEUTICALS – 2.20%
AmerisourceBergen Corp.	23,345		1,101,884
Hospira Inc.¹	18,078		657,135
King Pharmaceuticals Inc.¹	27,768		464,559
Watson Pharmaceuticals Inc.¹	11,931		321,063

			2,544,641
PIPELINES – 1.15%
Equitable Resources Inc.	13,199		534,823
Questar Corp.	9,792		797,852

			1,332,675
REAL ESTATE INVESTMENT TRUSTS – 13.62%
Alexandria Real Estate Equities Inc.	3,056		304,683
AMB Property Corp.	10,153		593,037
Archstone-Smith Trust	24,548		1,478,035
AvalonBay Communities Inc.	8,607		1,128,033
Boston Properties Inc.	13,227		1,413,040
BRE Properties Inc. Class A	6,026		399,524
Camden Property Trust	6,538		527,747
CBL & Associates Properties Inc.	7,484		327,275
Colonial Properties Trust	5,278		265,958
Developers Diversified Realty Corp.	12,684		772,456
Duke Realty Corp.	15,621		625,777
Essex Property Trust Inc.	2,676		356,657
Federal Realty Investment Trust	6,159		493,644
Hospitality Properties Trust	7,999		387,632
Kilroy Realty Corp.	3,721		280,303
Kimco Realty Corp.	25,071		1,113,891
Macerich Co. (The)	8,275		664,896
Mills Corp.	6,502		118,792
Public Storage Inc.	14,699		1,318,647
Realty Income Corp.	10,234		270,178
Regency Centers Corp.	7,870		567,899
SL Green Realty Corp.	5,304		642,049
Taubman Centers Inc.	6,063		284,355
United Dominion Realty Trust Inc.	15,586		504,519
Ventas Inc.	12,058		470,021
Weingarten Realty Investors	9,637		448,121

			15,757,169
RETAIL – 7.60%
American Eagle Outfitters Inc.	14,834		679,397
AnnTaylor Stores Corp.¹	8,499		374,126
AutoZone Inc.¹	6,224		697,088
Barnes & Noble Inc.	6,106		252,239
Brinker International Inc.	9,624		446,842
Circuit City Stores Inc.	20,183		544,537
Claire’s Stores Inc.	10,987		311,481
Darden Restaurants Inc.	15,499		649,408
Dollar General Corp.	36,183		507,647
DollarTree Stores Inc.¹	12,284		381,910
Michaels Stores Inc.	15,338		674,719
Nordstrom Inc.	25,235		1,194,877
OSI Restaurant Partners Inc.	8,070		268,489
Ross Stores Inc.	16,671		490,628


20		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
Saks Inc.		13,781	$	266,525
Tiffany & Co.		16,305		582,415
Wendy’s International Inc.		13,664		472,774

				8,795,102
SAVINGS & LOANS – 0.32%
Capitol Federal Financial		2,442		92,552
People’s Bank		6,822		277,655

				370,207
SEMICONDUCTORS – 2.47%
Agere Systems Inc.¹		19,774		335,763
AmkorTechnology Inc.¹		11,858		81,939
Fairchild Semiconductor International Inc. Class A¹		13,961		224,912
International Rectifier Corp.¹		8,218		295,601
LSI Logic Corp.¹		46,515		467,476
National Semiconductor Corp.		37,588		913,013
ON Semiconductor Corp.¹		21,655		134,694
Spansion Inc. Class A¹		5,118		72,983
Teradyne Inc.¹		23,151		324,577

				2,850,958
SOFTWARE – 3.38%
Acxiom Corp.		7,615		188,471
BMC Software Inc.¹		23,667		717,347
Compuware Corp.¹		43,550		350,142
Fair Isaac Corp.		7,498		274,652
Fidelity National Information Services Inc.		10,879		452,240
Fiserv Inc.¹		20,360		1,005,784
MoneyGram International Inc.		9,784		334,711
Novell Inc.¹		38,944		233,664
Sybase Inc.¹		10,305		250,927
Total System Services Inc.		4,319		104,002

				3,911,940
TELECOMMUNICATIONS – 2.70%
ADC Telecommunications Inc.¹		13,305		190,395
ADTRAN Inc.		7,471		172,879
Anixter International Inc.¹		3,894		232,705
Avaya Inc.¹		53,482		685,104
Ciena Corp.¹		9,644		226,730
SBA Communications Corp.¹		10,156		271,267
Telephone & Data Systems Inc.		5,873		286,896
Telephone & Data Systems Inc. Special		5,891		273,932
Tellabs Inc. ¹		47,636		502,083
Time WarnerTelecom Inc. Class A¹		13,819		275,551

				3,117,542
TEXTILES – 0.98%
Cintas Corp.		16,298		674,737
Mohawk Industries Inc.¹		6,339		460,845

				1,135,582
TRANSPORTATION – 0.78%
Alexander & Baldwin Inc.		4,947		227,710
Con-way Inc.		5,509		259,860
Hunt (J.B.) Transport Services Inc.		12,454		269,505
Swift Transportation Co. Inc.¹		5,685		142,978

				900,053
TRUCKING & LEASING – 0.27%
AMERCO¹		884		81,080
GATX Corp.		5,180		225,693

				306,773
WATER – 0.32%
Aqua America Inc.		15,383		373,038

				373,038

TOTAL COMMON STOCKS (Cost: $106,495,468)				115,256,563

SHORT-TERM INVESTMENTS – 0.18%
CERTIFICATES OF DEPOSIT³– 0.00%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	555		555
Societe Generale
5.33%, 12/08/06		793		793
Washington Mutual Bank
5.36%, 11/13/06		1,983		1,983
Wells Fargo Bank N.A.
4.78%, 12/05/06		634		634

				3,965


SCHEDULES OF INVESTMENTS		21

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
COMMERCIAL PAPER³– 0.01%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴	$	1,184	$	1,166
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		1,190		1,190
ASAP Funding Ltd.
5.29%, 11/02/06⁴		198		198
Atlantis One Funding
5.30%, 11/14/06⁴		1,088		1,086
Beta Finance Inc.
5.27%, 01/25/07⁴		159		157
Bryant Park Funding LLC
5.28%, 12/14/06⁴		250		249
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		402		401
Cantabric Finance LLC
5.26%, 01/25/07⁴		317		313
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		912		911
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		595		581
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		476		474
Curzon Funding LLC
5.29%, 11/17/06⁴		793		791
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		914		903
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		793		793
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		722		711
Galleon Capital Corp.
5.27%, 12/18/06⁴		111		110
General Electric Capital Services Inc.
5.22%, 12/11/06		79		79
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		468		459
HBOSTreasury Services PLC
5.27%, 12/15/06		159		158
Landale Funding LLC
5.31%, 11/15/06⁴		619		617
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		1,425		1,423
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		512		510
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		1,031		1,012
Nestle Capital Corp.
5.19%, 08/09/07		476		457
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		1,253		1,253
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		423		418
Sedna Finance Inc.
5.22%, 04/17/07⁴		452		441
Sydney Capital Corp.
5.27%, 12/08/06⁴		19		19
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		397		392
Tulip Funding Corp.
5.29%, 11/15/06⁴		418		417

				17,689
MEDIUM-TERM NOTES³– 0.00%
Bank of America N.A.
5.28%, 04/20/07		198		198
Cullinan Finance Corp.
5.71%, 06/28/07⁴		595		595
K2 USA LLC
5.39%, 06/04/07⁴		595		595
Marshall & Ilsley Bank
5.18%, 12/15/06		793		793


22		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴	$	928	$	928
US Bank N.A.
2.85%, 11/15/06		159		159

				3,268
MONEY MARKET FUNDS – 0.10%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		113,044		113,044

				113,044
REPURCHASE AGREEMENTS³– 0.02%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,586 (collateralized by non-U.S. Government debt securities, value $1,634, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	1,586		1,586
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $1,110 (collateralized by U.S. Government obligations, value $1,133, 5.50%, 10/1/21 to 10/1/36).		1,110		1,110
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $1,190 (collateralized by non-U.S. Government debt securities, value $1,309, 0.31% to 6.00%, 7/25/36 to 11/25/46).		1,190		1,190
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $79 (collateralized by non-U.S. Government debt securities, value $82, 6.00% to 6.70%, 12/15/10 to 4/15/12).		79		79
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,776 (collateralized by non-U.S. Government debt securities, value $2,916, 4.11% to 9.32%, 4/15/10 to 5/15/36).		2,776		2,776
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $872 (collateralized by non-U.S. Government debt securities, value $978, 0.00% to 10.00%, 5/27/33 to 10/31/36).		872		872
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $476 (collateralized by non-U.S. Government debt securities, value $526, 0.00% to 10.00%, 5/27/33 to 10/31/36).		476		476


SCHEDULES OF INVESTMENTS		23

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,586 (collateralized by non-U.S. Government debt securities, value $1,666, 0.00% to 9.00%, 5/1/17 to 9/25/46).	$	1,586	$	1,586
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $1,388 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $1,423, 0.00% to 7.32%, 11/2/06 to 3/25/45).		1,388		1,388
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,190 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $1,213, 0.00% to 7.32%, 11/2/06 to 3/25/45).		1,190		1,190
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $476 (collateralized by non-U.S. Government debt securities, value $500, 0.00% to 10.00%, 1/1/10).		476		476
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $397 (collateralized by non-U.S. Government debt securities, value $417, 5.26% to 5.35%, 7/1/24 to 6/1/46).		397		397
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $198 (collateralized by non-U.S. Government debt securities, value $208, 6.25% to 7.63%, 9/15/13 to 6/1/16).		198		198
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,586 (collateralized by non-U.S. Government debt securities, value $1,634, 3.50% to 10.13%, 5/15/07 to 7/1/26).		1,586		1,586
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $793 (collateralized by non-U.S. Government debt securities, value $874, 5.50% to 10.39%, 6/17/08 to 6/25/36).		793		793
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $1,071 (collateralized by non-U.S. Government debt securities, value $1,133, 0.00% to 10.00%, 11/1/06 to 10/31/36).		1,071		1,071
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $573 (collateralized by non-U.S. Government debt securities, value $596, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		555		555


24		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $2,062 (collateralized by non-U.S. Government debt securities, value $2,166, 3.86% to 8.17%, 11/18/08 to 7/15/45).	$	2,062	$	2,062

				19,391
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		82		82

				82
VARIABLE & FLOATING RATE NOTES³– 0.5%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		2,030		2,030
American Express Bank
5.29%, 02/28/07		793		794
American Express Centurion Bank
5.41%, 07/19/07		872		873
American Express Credit Corp.
5.42%, 07/05/07		238		238
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		143		143
ASIF Global Financing
5.51%, 05/03/07⁴		79		79
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		516		516
Bank of Ireland
5.30% - 5.32%,
08/14/07 - 08/20/07⁴		1,150		1,150
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		2,022		2,022
BMW US Capital LLC
5.32%, 10/15/07⁴		793		793
BNP Paribas
5.36%, 05/18/07⁴		1,467		1,467
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		579		578
CC USA Inc.
5.37%, 07/30/07⁴		397		397
Commodore CDO Ltd.
5.47%, 06/12/07⁴		198		198
Credit Agricole SA
5.34%, 07/23/07		793		793
Credit Suisse First Boston NY
5.38%, 04/24/07		397		397
Cullinan Finance Corp.
5.36%, 04/25/07⁴		198		198
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		198		198
DEPFA Bank PLC
5.43%, 09/14/07		793		793
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		912		912
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		793		793
Fifth Third Bancorp
5.30%, 11/23/07⁴		1,586		1,586
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		793		793
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		833		833
Granite Master Issuer PLC
5.29%, 08/20/07⁴		2,776		2,776
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		634		635
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		1,190		1,190


SCHEDULES OF INVESTMENTS		25

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
HBOS Treasury Services PLC
5.46%, 07/24/07⁴	$	793	$	793
Holmes Financing PLC
5.29%, 07/16/07⁴		1,388		1,388
JP Morgan Chase & Co.
5.29%, 08/02/07		595		595
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		595		595
Kestrel Funding LLC
5.30%, 07/11/07⁴		317		317
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		476		476
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		827		827
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		872		872
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		314		314
Marshall & Ilsley Bank
5.30%, 10/15/07		436		436
Master Funding LLC
5.35%, 04/25/07⁴		714		714
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		1,190		1,190
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		79		79
Monumental Global Funding II
5.38%, 12/27/06⁴		159		159
Mound Financing PLC
5.29%, 05/08/07⁴		746		746
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		2,855		2,855
National City Bank of Indiana
5.37%, 05/21/07		397		397
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		2,617		2,617
Newcastle Ltd.
5.34%, 04/24/07⁴		280		280
Northern Rock PLC
5.36%, 08/03/07⁴		952		952
Northlake CDO I
5.46%, 09/06/07⁴		238		238
Principal Life Global Funding I
5.82%, 02/08/07		357		357
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		1,150		1,150
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		793		793
Strips III LLC
5.37%, 07/24/07⁴		182		182
SunTrust Bank
5.29%, 05/01/07		793		793
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		1,935		1,935
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		1,110		1,110
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		1,063		1,063
Wachovia Bank N.A.
5.36%, 05/22/07		1,586		1,586
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		595		595
Wells Fargo & Co.
5.33%, 11/15/07⁴		397		397
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		595		595
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		2,379		2,378
Wind MasterTrust
5.31%, 07/25/07⁴		317		317

				53,266

TOTAL SHORT-TERM INVESTMENTS (Cost: $210,705)				210,705


26		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID CORE INDEX FUND

October 31, 2006


	Value
TOTAL INVESTMENTS IN SECURITIES – 99.83% (Cost: $106,706,173)	$	115,467,268
Other Assets, Less Liabilities – 0.17%		200,052

NET ASSETS – 100.00%	$	115,667,320

NVS – Non-Voting Shares

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		27

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.95%
ADVERTISING – 0.85%
Clear Channel Outdoor Holdings Inc. Class A¹	6,838	$	167,873
Getty Images Inc.¹	9,541		413,221
Lamar Advertising Co.¹	17,224		993,480

			1,574,574
AEROSPACE & DEFENSE – 0.19%
DRS Technologies Inc.	7,777		343,899

			343,899
AIRLINES – 0.22%
JetBlue Airways Corp.^1,2	31,832		399,810

			399,810
APPAREL – 0.15%
Carter’s Inc.¹	9,925		280,183

			280,183
AUTO MANUFACTURERS – 0.35%
Oshkosh Truck Corp.	14,314		647,136

			647,136
BANKS – 1.34%
Commerce Bancorp Inc.	35,890		1,253,279
East West Bancorp Inc.	11,170		407,817
Investors Financial Services Corp.	12,686		498,814
SVB Financial Group^1,2	6,741		310,221

			2,470,131
BEVERAGES – 0.24%
Hansen Natural Corp.¹	14,054		446,214

			446,214
BIOTECHNOLOGY – 2.48%
Affymetrix Inc.¹	13,169		335,809
MedImmune Inc.¹	46,908		1,502,932
Millennium Pharmaceuticals Inc.¹	60,939		712,986
Millipore Corp.¹	10,345		667,563
PDL BioPharma Inc.¹	22,338		472,002
Vertex Pharmaceuticals Inc.¹	21,825		886,095

			4,577,387
BUILDING MATERIALS – 0.96%
Eagle Materials Inc.	9,818		360,321
Florida Rock Industries Inc.	9,939		426,383
Martin Marietta Materials Inc.	8,851		778,888
Simpson Manufacturing Co. Inc.²	7,338		208,326

			1,773,918
CHEMICALS – 1.17%
Ecolab Inc.	35,697		1,618,859
Mosaic Co. (The)¹	28,602		535,429

			2,154,288
COAL – 1.62%
Arch Coal Inc.	27,949		967,874
CONSOL Energy Inc.	35,983		1,273,438
Foundation Coal Holdings Inc.	8,863		325,361
Massey Energy Co.	17,098		431,724

			2,998,397
COMMERCIAL SERVICES – 4.75%
Alliance Data Systems Corp.¹	13,115		796,343
Apollo Group Inc. Class A¹	27,659		1,022,277
Career Education Corp.¹	18,486		411,868
ChoicePoint Inc.¹	16,825		612,262
Corporate Executive Board Co. (The)	7,815		701,943
Iron Mountain Inc.¹	23,366		1,013,383
ITT Educational Services Inc.¹	8,264		569,803
Laureate Education Inc.¹	9,250		487,660
MonsterWorldwide Inc.¹	22,444		909,206
Pharmaceutical Product Development Inc.	20,034		634,076
Robert Half International Inc.	33,775		1,234,476
Weight Watchers International Inc.	8,766		382,198

			8,775,495
COMPUTERS – 1.84%
CACI International Inc. Class A¹	5,965		343,226
Cognizant Technology Solutions Corp.¹	27,471		2,068,017
FactSet Research Systems Inc.	7,325		372,842
Henry (Jack) & Associates Inc.	16,727		364,481
SRA International Inc. Class A¹	8,052		258,067

			3,406,633
DISTRIBUTION & WHOLESALE – 1.16%
Fastenal Co.	27,478		1,105,715
Pool Corp.	10,312		422,586
WESCO International Inc.¹	9,443		616,345

			2,144,646


28		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
DIVERSIFIED FINANCIAL SERVICES – 4.41%
Affiliated Managers Group Inc.¹	6,114	$	612,256
BlackRock Inc.	2,875		433,665
CBOT Holdings Inc. Class A¹	3,915		580,986
Eaton Vance Corp.	24,913		773,300
First Marblehead Corp. (The)	6,069		409,354
Greenhill & Co. Inc.	2,333		158,504
IntercontinentalExchange Inc.¹	8,994		759,273
Investment Technology Group Inc.¹	8,432		393,774
Nasdaq Stock Market Inc. (The)¹	18,977		678,048
NYSE Group Inc.^1,2	10,172		752,626
optionsXpress Holdings Inc.	5,252		163,232
Rowe (T.) Price Group Inc.	51,683		2,445,123

			8,160,141
ELECTRIC – 1.44%
Allegheny Energy Inc.¹	31,760		1,366,633
NRG Energy Inc.¹	26,844		1,292,539

			2,659,172
ELECTRICAL COMPONENTS & EQUIPMENT – 0.80%
AMETEK Inc.	13,799		644,137
Molex Inc.	11,187		390,426
Molex Inc. Class A	14,974		442,482

			1,477,045
ELECTRONICS – 4.37%
Amphenol Corp. Class A	17,467		1,186,009
Dolby Laboratories Inc. Class A¹	6,723		133,048
Garmin Ltd.	22,559		1,204,876
Jabil Circuit Inc.	36,236		1,040,336
National Instruments Corp.	10,301		321,185
Symbol Technologies Inc.	49,538		739,602
Thermo Electron Corp.¹	30,886		1,324,083
Thomas & Betts Corp.¹	12,108		623,925
Trimble Navigation Ltd.¹	10,616		490,672
Waters Corp.¹	20,302		1,011,040

			8,074,776
ENERGY-ALTERNATE SOURCES – 0.25%
Covanta Holding Corp.¹	17,262		350,936
SunPower Corp. Class A^1,2	3,174		106,805

			457,741
ENTERTAINMENT – 0.61%
DreamWorks Animation SKG Inc. Class A¹	8,677		229,507
Penn National Gaming Inc.¹	14,517		530,887
Scientific Games Corp. Class A¹	13,318		373,304

			1,133,698
ENVIRONMENTAL CONTROL – 0.33%
Stericycle Inc.¹	8,613		609,025

			609,025
FOOD – 0.95%
Whole Foods Market Inc.	27,639		1,764,474

			1,764,474
HEALTH CARE-PRODUCTS – 7.36%
Advanced Medical Optics Inc.¹	11,580		473,043
Bard (C.R.) Inc.	20,507		1,680,754
Biomet Inc.	44,717		1,692,091
Cooper Companies Inc.	8,690		500,805
Cytyc Corp.¹	21,965		580,315
Dade Behring Holdings Inc.	16,841		613,518
Edwards Lifesciences Corp.¹	11,400		489,402
Gen-Probe Inc.¹	10,064		481,764
Henry Schein Inc.¹	17,230		856,159
Hologic Inc.¹	10,288		495,367
IDEXX Laboratories Inc.¹	6,080		505,917
Intuitive Surgical Inc.¹	7,134		707,550
Kinetic Concepts Inc.¹	10,380		360,809
Mentor Corp.	8,158		381,794
Patterson Companies Inc.¹	25,228		828,740
ResMed Inc.¹	14,720		647,533
Respironics Inc.¹	14,067		496,846
TECHNE Corp.¹	7,281		406,862
Varian Medical Systems Inc.¹	25,648		1,407,049

			13,606,318
HEALTH CARE-SERVICES – 1.68%
Brookdale Senior Living Inc.	10,005		481,441
Covance Inc.¹	12,448		728,208
DaVita Inc.¹	20,160		1,121,501
Pediatrix Medical Group Inc.¹	9,447		424,454
Sierra Health Services Inc.¹	9,994		342,195

			3,097,799


SCHEDULES OF INVESTMENTS		29

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
HOLDING COMPANIES - DIVERSIFIED – 0.21%
Walter Industries Inc.	8,511	$	395,676

			395,676
HOME FURNISHINGS – 0.67%
Harman International Industries Inc.	12,167		1,245,292

			1,245,292
INSURANCE – 0.35%
Brown & Brown Inc.	22,125		647,377

			647,377
INTERNET – 2.46%
Akamai Technologies Inc.^1,2	30,209		1,415,594
CheckFree Corp.¹	14,765		582,922
Emdeon Corp.¹	54,355		633,236
F5 Networks Inc.¹	7,916		523,960
NutriSystem Inc.¹	5,574		343,804
VeriSign Inc.¹	47,854		989,621
WebMD Health Corp. Class A^1,2	1,554		56,659

			4,545,796
IRON & STEEL – 0.79%
Allegheny Technologies Inc.	18,516		1,457,765

			1,457,765
LODGING – 2.37%
Boyd Gaming Corp.	11,106		438,354
Choice Hotels International Inc.	6,958		291,679
Hilton Hotels Corp.	70,745		2,045,945
Station Casinos Inc.	8,620		519,786
Wynn Resorts Ltd.¹	14,775		1,086,553

			4,382,317
MACHINERY – 1.74%
Graco Inc.	13,475		549,241
JLG Industries Inc.	20,597		569,507
Joy Global Inc.	23,948		936,606
Manitowoc Co. Inc. (The)	11,894		652,743
Zebra Technologies Corp. Class A¹	13,733		511,829

			3,219,926
MANUFACTURING – 0.44%
Roper Industries Inc.	16,954		811,249

			811,249
MEDIA – 5.07%
Discovery Holding Co. Class A¹	52,318		776,399
Liberty Global Inc. Class A¹	44,021		1,155,111
Liberty Global Inc. Class C¹	44,244		1,125,125
Liberty Media Holding Corp. - Liberty Capital Group Series A¹	26,218		2,334,975
Scripps (E.W.) Co. Class A	15,851		783,990
Sirius Satellite Radio Inc.^1,2	248,187		950,556
Univision Communications Inc. Class A¹	46,586		1,633,305
XM Satellite Radio Holdings Inc. Class A¹	52,355		610,459

			9,369,920
METAL FABRICATE & HARDWARE – 0.97%
Precision Castparts Corp.	26,487		1,802,705

			1,802,705
MINING – 0.25%
Titanium Metals Corp.¹	15,690		462,541

			462,541
OFFICE FURNISHINGS – 0.35%
Herman Miller Inc.	12,742		436,796
Steelcase Inc. Class A	12,552		207,987

			644,783
OIL & GAS – 5.67%
Cheniere Energy Inc.^1,2	10,086		265,464
CNX Gas Corp.¹	5,453		142,596
Denbury Resources Inc.¹	23,235		667,774
ENSCO International Inc.	30,086		1,473,311
Helmerich & Payne Inc.	18,661		446,931
Noble Corp.	26,850		1,882,185
Patterson-UTI Energy Inc.	32,416		752,051
Pride International Inc.¹	31,964		882,526
Quicksilver Resources Inc.¹	10,702		366,865
Range Resources Corp.	26,931		731,177
Rowan Companies Inc.	21,351		712,696
Southwestern Energy Co.¹	32,614		1,160,406
TODCO¹	12,008		409,833
Unit Corp.¹	9,031		418,948
W&T Offshore Inc.	5,200		175,604

			10,488,367


30		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
OIL & GAS SERVICES – 3.45%
Cameron International Corp.¹	21,784	$	1,091,378
Dresser-Rand Group Inc.¹	9,956		215,946
FMC Technologies Inc.¹	13,493		815,652
Grant Prideco Inc.¹	25,559		965,363
Helix Energy Solutions Group Inc.¹	16,122		520,741
Oil States International Inc.¹	9,043		262,609
SEACOR Holdings Inc.¹	4,270		382,080
Smith International Inc.	41,589		1,641,934
Superior Energy Services Inc.¹	15,546		486,590

			6,382,293
PHARMACEUTICALS – 4.37%
Abraxis BioScience Inc.¹	4,558		120,331
Alkermes Inc.¹	19,702		330,994
Amylin Pharmaceuticals Inc.¹	21,987		966,549
Barr Pharmaceuticals Inc.¹	19,568		1,024,776
Cephalon Inc.¹	11,770		826,019
Endo Pharmaceuticals Holdings Inc.¹	25,739		734,591
ImClone Systems Inc.¹	13,174		412,214
Kos Pharmaceuticals Inc.¹	4,363		217,059
Mylan Laboratories Inc.	41,040		841,320
Neurocrine Biosciences Inc.¹	7,392		85,378
Omnicare Inc.	23,650		895,862
Sepracor Inc.¹	21,230		1,098,865
VCA Antech Inc.¹	15,990		517,596

			8,071,554
REAL ESTATE – 1.75%
CB Richard Ellis Group Inc. Class A¹	38,734		1,163,182
Forest City Enterprises Inc. Class A	11,457		628,989
Jones Lang LaSalle Inc.	7,103		653,476
St. Joe Co. (The)²	14,556		782,822

			3,228,469
REAL ESTATE INVESTMENT TRUSTS – 0.49%
CapitalSource Inc.	24,420		677,411
Global Signal Inc.	4,159		225,834

			903,245
RETAIL – 5.16%
Abercrombie & Fitch Co. Class A	17,079		1,309,105
Advance Auto Parts Inc.	20,689		724,529
CarMax Inc.¹	20,782		920,643
Cheesecake Factory Inc. (The)¹	14,637		413,495
Chico’s FAS Inc.¹	34,276		820,225
Coldwater Creek Inc.¹	11,620		354,294
Copart Inc.¹	13,051		377,565
GameStop Corp. Class A¹	7,990		407,969
GameStop Corp. Class B¹	4,750		236,312
MSC Industrial Direct Co. Inc. Class A	9,510		389,149
O’Reilly Automotive Inc.¹	21,948		708,701
Panera Bread Co. Class A¹	5,848		361,406
PetSmart Inc.	27,343		786,932
Sonic Corp.¹	16,918		384,885
Tractor Supply Co.¹	6,745		326,593
Urban Outfitters Inc.¹	22,939		401,432
Williams-Sonoma Inc.	18,186		618,506

			9,541,741
SAVINGS & LOANS – 0.77%
Hudson City Bancorp Inc.	103,670		1,423,389

			1,423,389
SEMICONDUCTORS – 8.41%
Altera Corp.¹	71,039		1,309,959
Cree Inc.¹	15,042		330,774
Cypress Semiconductor Corp.¹	27,267		457,813
Integrated Device Technology Inc.¹	39,137		620,321
Intersil Corp. Class A	27,668		648,815
KLA-Tencor Corp.	39,062		1,920,679
Lam Research Corp.¹	27,556		1,362,644
MEMC Electronic Materials Inc.¹	33,292		1,181,866
Microchip Technology Inc.	41,760		1,375,157
Novellus Systems Inc.¹	24,840		686,826
NVIDIA Corp.¹	68,924		2,403,380
PMC-Sierra Inc.¹	40,800		270,504
QLogic Corp.¹	31,105		640,141
Rambus Inc.¹	18,805		311,411
Silicon Laboratories Inc.¹	10,124		330,346
Xilinx Inc.	66,550		1,697,690

			15,548,326
SOFTWARE – 8.00%
Activision Inc.¹	54,723		843,829


SCHEDULES OF INVESTMENTS		31

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Autodesk Inc.¹	45,277	$	1,663,930
BEA Systems Inc.¹	76,047		1,237,285
Cerner Corp.¹	12,053		582,280
Citrix Systems Inc.¹	35,558		1,050,028
Dun & Bradstreet Corp.¹	12,264		947,271
Global Payments Inc.	15,540		679,253
Hyperion Solutions Corp.¹	11,381		425,649
IMS Health Inc.	38,985		1,085,732
Intuit Inc.¹	61,329		2,164,914
MasterCard Inc. Class A	12,748		944,627
NAVTEQ Corp.^1,2	18,079		600,223
Nuance Communications Inc.¹	27,354		315,665
Red Hat Inc.¹	37,218		609,631
Salesforce.com Inc.¹	16,169		630,914
SEI Investments Co.	14,032		789,721
VeriFone Holdings Inc.¹	7,395		216,008

			14,786,960
TELECOMMUNICATIONS – 4.57%
Amdocs Ltd.¹	37,073		1,436,949
Comverse Technology Inc.¹	39,296		855,474
Crown Castle International Corp.¹	39,510		1,329,512
Foundry Networks Inc.¹	24,744		313,259
Harris Corp.	26,075		1,110,795
JDS Uniphase Corp.¹	41,114		597,386
Leap Wireless International Inc.¹	8,655		480,006
NeuStar Inc. Class A¹	12,410		362,620
NII Holdings Inc. Class B¹	27,303		1,775,514
United States Cellular Corp.¹	3,056		193,781

			8,455,296
TRANSPORTATION – 2.12%
C.H. Robinson Worldwide Inc.	34,030		1,420,412
Expeditors International Washington Inc.	41,715		1,977,708
Landstar System Inc.	11,249		522,404

			3,920,524

TOTAL COMMON STOCKS (Cost: $181,475,827)			184,768,411

SHORT-TERM INVESTMENTS – 2.80%
CERTIFICATES OF DEPOSIT³– 0.11%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	28,831		28,831
Societe Generale
5.33%, 12/08/06	41,187		41,187
Washington Mutual Bank
5.36%, 11/13/06	102,967		102,967
Wells Fargo Bank N.A.
4.78%, 12/05/06	32,949		32,949

			205,934
COMMERCIAL PAPER³– 0.50%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴	61,487		60,392
Amsterdam Funding Corp.
5.33%, 11/01/06⁴	61,780		61,780
ASAP Funding Ltd.
5.29%, 11/02/06⁴	10,297		10,295
Atlantis One Funding
5.30%, 11/14/06⁴	56,512		56,403
Beta Finance Inc.
5.27%, 01/25/07⁴	8,237		8,135
Bryant Park Funding LLC
5.28%, 12/14/06⁴	13,003		12,921
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴	20,878		20,838
Cantabric Finance LLC
5.26%, 01/25/07⁴	16,475		16,270
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴	47,365		47,295
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴	30,890		30,129
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴	24,712		24,624
Curzon Funding LLC
5.29%, 11/17/06⁴	41,187		41,090


32		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴	$	47,453	$	46,879
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		41,187		41,156
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		37,480		36,933
Galleon Capital Corp.
5.27%, 12/18/06⁴		5,759		5,719
General Electric Capital Services Inc.
5.22%, 12/11/06		4,119		4,095
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		24,300		23,821
HBOS Treasury Services PLC
5.27%, 12/15/06		8,237		8,184
Landale Funding LLC
5.31%, 11/15/06⁴		32,126		32,059
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		73,981		73,929
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		26,565		26,511
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		53,543		52,527
Nestle Capital Corp.
5.19%, 08/09/07		24,712		23,711
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		65,069		65,070
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		21,944		21,689
Sedna Finance Inc.
5.22%, 04/17/07⁴		23,476		22,908
Sydney Capital Corp.
5.27%, 12/08/06⁴		982		977
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		20,593		20,361
Tulip Funding Corp.
5.29%, 11/15/06 ⁴		21,723		21,678

				918,379
MEDIUM-TERM NOTES³– 0.09%
Bank of America N.A.
5.28%, 04/20/07		10,297		10,297
Cullinan Finance Corp.
5.71%, 06/28/07⁴		30,890		30,890
K2 USA LLC
5.39%, 06/04/07⁴		30,890		30,890
Marshall & Ilsley Bank
5.18%, 12/15/06		41,187		41,204
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		48,189		48,188
US Bank N.A.
2.85%, 11/15/06		8,237		8,232

				169,701
MONEY MARKET FUNDS – 0.06%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		115,913		115,913

				115,913
REPURCHASE AGREEMENTS³ – 0.54%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $82,386 (collateralized by non-U.S. Government debt securities, value $84,872, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	82,374		82,374


SCHEDULES OF INVESTMENTS		33

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $57,671 (collateralized by U.S. Government obligations, value $58,834, 5.50%, 10/1/21 to 10/1/36).	$	57,662	$	57,662
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $61,789 (collateralized by non-U.S. Government debt securities, value $67,981, 0.31% to 6.00%, 7/25/36 to 11/25/46).		61,780		61,780
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $4,120 (collateralized by non-U.S. Government debt securities, value $4,244, 6.00% to 6.70%, 12/15/10 to 4/15/12).		4,119		4,119
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $144,175 (collateralized by non-U.S. Government debt securities, value $151,411, 4.11% to 9.32%, 4/15/10 to 5/15/36).		144,154		144,154
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $45,312 (collateralized by non-U.S. Government debt securities, value $50,772, 0.00% to 10.00%, 5/27/33 to 10/31/36).		45,305		45,305
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $24,716 (collateralized by non-U.S. Government debt securities, value $27,339, 0.00% to 10.00%, 5/27/33 to 10/31/36).		24,712		24,712
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $82,386 (collateralized by non-U.S. Government debt securities, value $86,520, 0.00% to 9.00%, 5/1/17 to 9/25/46).		82,374		82,374
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $72,088 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $73,906, 0.00% to 7.32%, 11/2/06 to 3/25/45).		72,077		72,077
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $61,789 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $62,957, 0.00% to 7.32%, 11/2/06 to 3/25/45).		61,780		61,780
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $24,716 (collateralized by non-U.S. Government debt securities, value $25,956, 0.00% to 10.00%, 1/1/10).		24,712		24,712


34		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $20,596 (collateralized by non-U.S. Government debt securities, value $21,632, 5.26% to 5.35%, 7/1/24 to 6/1/46).	$	20,593	$	20,593
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $10,299 (collateralized by non-U.S. Government debt securities, value $10,817, 6.25% to 7.63%, 9/15/13 to 6/1/16).		10,297		10,297
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $82,386 (collateralized by non-U.S. Government debt securities, value $84,874, 3.50% to 10.13%, 5/15/07 to 7/1/26).		82,374		82,374
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $41,193 (collateralized by non-U.S. Government debt securities, value $45,403, 5.50% to 10.39%, 6/17/08 to 6/25/36).		41,187		41,187
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $55,610 (collateralized by non-U.S. Government debt securities, value $58,823, 0.00% to 10.00%, 11/1/06 to 10/31/36).		55,602		55,602
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $29,784 (collateralized by non-U.S. Government debt securities, value $30,930, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		28,831		28,831
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $107,102 (collateralized by non-U.S. Government debt securities, value $112,477, 3.86% to 8.17%, 11/18/08 to 7/15/45).		107,086		107,086

				1,007,019
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		4,256		4,256

				4,256
VARIABLE & FLOATING RATE NOTES³– 1.50%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		105,438		105,451
American Express Bank
5.29%, 02/28/07		41,187		41,186
American Express Centurion Bank
5.41%, 07/19/07		45,305		45,343
American Express Credit Corp.
5.42%, 07/05/07		12,356		12,362
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		7,431		7,431
ASIF Global Financing
5.51%, 05/03/07⁴		4,119		4,120
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		26,771		26,771


SCHEDULES OF INVESTMENTS		35

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴	$	59,721	$	59,723
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		105,026		105,031
BMW US Capital LLC
5.32%, 10/15/07⁴		41,187		41,187
BNP Paribas
5.36%, 05/18/07⁴		76,196		76,196
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		30,066		30,067
CC USA Inc.
5.37%, 07/30/07⁴		20,593		20,596
Commodore CDO Ltd.
5.47%, 06/12/07⁴		10,297		10,297
Credit Agricole SA
5.34%, 07/23/07		41,187		41,187
Credit Suisse First Boston NY
5.38%, 04/24/07		20,593		20,594
Cullinan Finance Corp.
5.36%, 04/25/07⁴		10,297		10,297
DaimlerChrysler Auto Trust
Series 2006-C Class A1
5.33%, 10/08/07⁴		10,297		10,297
DEPFA Bank PLC
5.43%, 09/14/07		41,187		41,187
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		47,365		47,367
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		41,187		41,187
Fifth Third Bancorp
5.30%, 11/23/07⁴		82,374		82,374
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		41,187		41,184
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		43,246		43,254
Granite Master Issuer PLC
5.29%, 08/20/07⁴		144,154		144,154
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		32,949		32,954
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		61,780		61,788
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		41,187		41,187
Holmes Financing PLC
5.29%, 07/16/07⁴		72,077		72,077
JP Morgan Chase & Co.
5.29%, 08/02/07		30,890		30,890
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		30,890		30,889
Kestrel Funding LLC
5.30%, 07/11/07⁴		16,475		16,474
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		24,712		24,712
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		42,926		42,927
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		45,305		45,303
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		16,310		16,310
Marshall & Ilsley Bank
5.30%, 10/15/07		22,653		22,653
Master Funding LLC
5.35%, 04/25/07⁴		37,068		37,068
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		61,780		61,780
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		4,119		4,119
Monumental Global Funding II
5.38%, 12/27/06⁴		8,237		8,238
Mound Financing PLC
5.29%, 05/08/07⁴		38,716		38,716


36		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴	$	148,272	$	148,271
National City Bank of Indiana
5.37%, 05/21/07		20,593		20,594
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		135,916		135,943
Newcastle Ltd.
5.34%, 04/24/07⁴		14,518		14,516
Northern Rock PLC
5.36%, 08/03/07⁴		49,424		49,425
Northlake CDO I
5.46%, 09/06/07⁴		12,356		12,356
Principal Life Global Funding I
5.82%, 02/08/07		18,534		18,557
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		59,721		59,720
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		41,187		41,187
Strips III LLC
5.37%, 07/24/07⁴		9,467		9,467
SunTrust Bank
5.29%, 05/01/07		41,187		41,188
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		100,496		100,488
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		57,662		57,662
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		55,193		55,193
Wachovia Bank N.A.
5.36%, 05/22/07		82,374		82,374
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		30,890		30,905
Wells Fargo & Co.
5.33%, 11/15/07⁴		20,593		20,595
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		30,890		30,890
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		123,560		123,541
Wind MasterTrust
5.31%, 07/25/07⁴		16,475		16,475

				2,766,275

TOTAL SHORT-TERM INVESTMENTS (Cost: $5,187,477)				5,187,477

TOTAL INVESTMENTS IN SECURITIES – 102.75% (Cost: $186,663,304)				189,955,888
Other Assets, Less Liabilities – (2.75)%				(5,092,146	)

NET ASSETS – 100.00%			$	184,863,742

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		37

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.79%
AGRICULTURE – 2.33%
Bunge Ltd.¹	17,748	$	1,137,824
Loews Corp. - Carolina Group	16,064		928,820
UST Inc.	24,053		1,288,279

			3,354,923
AIRLINES – 1.24%
AMR Corp.²	29,170		826,678
Continental Airlines Inc. Class B²	13,269		489,361
US Airways Group Inc.²	9,591		478,207

			1,794,246
APPAREL – 1.52%
Jones Apparel Group Inc.	16,673		556,878
Liz Claiborne Inc.	15,442		651,189
VF Corp.	12,954		984,634

			2,192,701
AUTO PARTS & EQUIPMENT – 0.67%
BorgWarner Inc.	8,459		486,392
Goodyear Tire & Rubber Co. (The)²	23,295		357,112
TRW Automotive Holdings Corp.²	5,006		128,404

			971,908
BANKS – 10.51%
AmSouth Bancorp	48,824		1,475,461
Associated Bancorp	18,368		603,205
BancorpSouth Inc.	11,016		281,459
Bank of Hawaii Corp.	7,547		393,727
Colonial BancGroup Inc. (The)	22,857		544,911
Comerica Inc.	24,186		1,407,383
Commerce Bancshares Inc.	9,916		490,941
Compass Bancshares Inc.	19,199		1,080,136
First Horizon National Corp.	18,320		720,342
FirstMerit Corp.	11,090		257,510
Fulton Financial Corp.	25,718		411,745
Huntington Bancshares Inc.	33,529		818,443
International Bancshares Corp.	7,387		226,633
Mercantile Bankshares Corp.	18,597		838,353
Popular Inc.	37,945		690,220
Sky Financial Group Inc.	16,145		404,432
South Financial Group Inc. (The)	11,048		293,103
TCF Financial Corp.	18,549		482,830
TD Banknorth Inc.	14,860		439,559
UnionBanCal Corp.	8,150		469,277
Valley National Bancorp	17,332		451,672
Webster Financial Corp.	7,797		376,751
Whitney Holding Corp.	9,744		318,239
Wilmington Trust Corp.	10,119		420,748
Zions Bancorporation	15,743		1,265,737

			15,162,817
BEVERAGES – 1.67%
Coca-Cola Enterprises Inc.	41,192		825,076
Molson Coors Brewing Co. Class B	10,885		774,794
Pepsi Bottling Group Inc.	19,572		618,867
PepsiAmericas Inc.	9,575		195,809

			2,414,546
BUILDING MATERIALS – 0.19%
Lennox International Inc.	9,927		267,632

			267,632
CHEMICALS – 3.70%
Ashland Inc.	10,542		623,032
Cabot Corp.	8,413		332,734
Celanese Corp. Class A	16,088		331,574
Chemtura Corp.	35,651		305,886
Eastman Chemical Co.	12,087		736,340
FMC Corp.	5,438		372,775
International Flavors & Fragrances Inc.	12,392		526,412
Lubrizol Corp.	10,130		455,850
Lyondell Chemical Co.	33,296		854,708
RPM International Inc.	17,544		335,968
Valspar Corp. (The)	14,009		375,301
Westlake Chemical Corp.	2,832		89,350

			5,339,930
COMMERCIAL SERVICES – 2.15%
ADESA Inc.	12,624		317,367
Block (H & R) Inc.	44,392		970,409
Donnelley (R.R.) & Sons Co.	32,037		1,084,773
ServiceMaster Co. (The)	43,338		491,020
United Rentals Inc.²	9,935		235,360

			3,098,929
COMPUTERS – 1.85%
Computer Sciences Corp.²	25,360		1,340,276


38		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Lexmark International Inc.²	15,659	$	995,756
Unisys Corp.²	50,820		332,363

			2,668,395
DISTRIBUTION & WHOLESALE – 1.34%
Genuine Parts Co.	25,704		1,170,046
Ingram Micro Inc. Class A²	21,125		435,386
Tech Data Corp.²	8,249		324,598

			1,930,030
DIVERSIFIED FINANCIAL SERVICES – 2.18%
AmeriCredit Corp.²	19,351		494,805
CIT Group Inc.	29,689		1,545,312
Edwards (A.G.) Inc.	11,360		648,088
IndyMac Bancorp Inc.	10,185		462,908

			3,151,113
ELECTRIC – 11.00%
Alliant Energy Corp.	17,437		668,709
CenterPoint Energy Inc.	40,769		631,104
CMS Energy Corp.²	32,788		488,213
Constellation Energy Group Inc.	26,524		1,655,098
DPL Inc.	16,937		486,431
DTE Energy Co.	26,433		1,200,851
Dynegy Inc. Class A²	58,635		356,501
Energy East Corp.	21,851		531,198
Great Plains Energy Inc.	11,791		383,679
Hawaiian Electric Industries Inc.	11,925		334,138
MDU Resources Group Inc.	24,674		633,628
Northeast Utilities	22,783		569,803
NSTAR	15,828		550,656
OGE Energy Corp.	13,348		514,966
Pepco Holdings Inc.	27,961		710,769
Pinnacle West Capital Corp.	14,712		703,381
Portland General Electric Co.	4,013		103,415
Puget Energy Inc.	17,046		407,058
Reliant Energy Inc.²	45,197		573,098
SCANA Corp.	15,442		617,062
Sierra Pacific Resources Corp.²	29,805		451,844
TECO Energy Inc.	30,907		509,656
Westar Energy Inc.	12,880		326,122
Wisconsin Energy Corp.	17,399		799,310
WPS Resources Corp.	6,379		339,427
Xcel Energy Inc.	59,589		1,315,129

			15,861,246
ELECTRICAL COMPONENTS & EQUIPMENT – 0.43%
Energizer Holdings Inc.²	7,984		623,950

			623,950
ELECTRONICS – 0.37%
Arrow Electronics Inc.²	17,977		536,613

			536,613
ENGINEERING & CONSTRUCTION – 0.42%
Shaw Group Inc. (The)²	11,220		298,003
URS Corp.²	7,586		306,550

			604,553
FOOD – 2.73%
Corn Products International Inc.	10,982		397,439
Dean Foods Co.²	20,018		838,554
Del Monte Foods Co.	29,567		319,028
Hormel Foods Corp.	11,021		397,968
Smucker (J.M.) Co. (The)	8,477		415,373
SUPERVALU Inc.	31,464		1,050,898
Tyson Foods Inc. Class A	35,664		515,345

			3,934,605
FOREST PRODUCTS & PAPER – 1.92%
Louisiana-Pacific Corp.	15,691		310,368
Plum Creek Timber Co. Inc.	26,647		957,693
Rayonier Inc.	11,231		460,359
Smurfit-Stone Container Corp.²	37,656		401,413
Temple-Inland Inc.	16,134		636,325

			2,766,158
GAS – 3.23%
AGL Resources Inc.	11,563		433,612
Atmos Energy Corp.	11,923		366,394
Energen Corp.	9,793		419,336
KeySpan Corp.	25,924		1,051,996
NiSource Inc.	40,241		936,408
Piedmont Natural Gas Co.	10,488		283,176
Southern Union Co.	15,518		429,538
UGI Corp.	15,574		412,711
Vectren Corp.	11,271		327,535

			4,660,706
HAND & MACHINE TOOLS – 1.16%
Black & Decker Corp.	11,276		945,831


SCHEDULES OF INVESTMENTS		39

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Kennametal Inc.	5,874	$	362,485
Snap-On Inc.	7,806		367,116

			1,675,432
HEALTH CARE-PRODUCTS – 0.35%
Hillenbrand Industries Inc.	8,649		507,523

			507,523
HEALTH CARE-SERVICES – 0.67%
Tenet Healthcare Corp.²	69,480		490,529
Triad Hospitals Inc.²	12,978		480,575

			971,104
HOME BUILDERS – 1.21%
KB Home	11,739		527,551
Lennar Corp. Class A	18,748		890,155
Lennar Corp. Class B	1,645		73,219
M.D.C. Holdings Inc.	5,145		256,530

			1,747,455
HOME FURNISHINGS – 0.70%
Whirlpool Corp.	11,594		1,007,866

			1,007,866
HOUSEWARES – 0.82%
Newell Rubbermaid Inc.	40,915		1,177,534

			1,177,534
INSURANCE – 14.68%
Ambac Financial Group Inc.	15,636		1,305,450
American Financial Group Inc.	6,861		328,367
AmerUs Group Co.	5,664		387,871
Assurant Inc.	16,147		850,301
Axis Capital Holdings Ltd.	20,692		679,732
Berkley (W.R.) Corp.	26,541		978,301
Cincinnati Financial Corp.	22,676		1,035,159
CNA Financial Corp.²	2,155		80,705
Commerce Group Inc.	9,051		267,910
Conseco Inc.²	22,674		461,189
Endurance Specialty Holdings Ltd.	8,774		312,793
Erie Indemnity Co. Class A	7,654		387,675
Everest Re Group Ltd.	9,652		957,285
Fidelity National Financial Inc.	25,793		575,184
Fidelity National Title Group Inc. Class A	31,614		695,814
First American Corp.	12,674		517,479
Hanover Insurance Group Inc. (The)	7,559		342,801
MBIA Inc.	19,922		1,235,562
Mercury General Corp.	3,906		202,214
MGIC Investment Corp.	13,006		764,233
Nationwide Financial Services Inc.	7,937		404,152
Ohio Casualty Corp.	9,113		249,970
Old Republic International Corp.	31,805		716,567
PartnerRe Ltd.	8,415		588,377
PMI Group Inc. (The)	12,834		547,370
Protective Life Corp.	9,531		421,747
Radian Group Inc.	12,260		653,458
Reinsurance Group of America Inc.	4,293		242,125
RenaissanceRe Holdings Ltd.	9,297		505,757
SAFECO Corp.	17,299		1,006,629
StanCorp Financial Group Inc.	8,096		369,906
Torchmark Corp.	14,712		907,436
Transatlantic Holdings Inc.	3,908		238,154
Unitrin Inc.	6,619		284,154
UnumProvident Corp.	50,924		1,007,277
White Mountains Insurance Group Ltd.	1,178		668,809

			21,177,913
IRON & STEEL – 1.34%
Cleveland-Cliffs Inc.	6,182		261,437
Steel Dynamics Inc.	7,280		437,601
United States Steel Corp.	18,295		1,236,742

			1,935,780
LEISURE TIME – 1.20%
Brunswick Corp.	13,757		433,345
Royal Caribbean Cruises Ltd.	19,674		796,797
Sabre Holdings Corp.	19,468		494,877

			1,725,019
MANUFACTURING – 1.94%
Crane Co.	7,829		304,861
Eastman Kodak Co.¹	42,611		1,039,708
Leggett & Platt Inc.	27,060		631,851
SPX Corp.	8,582		493,637
Teleflex Inc.	5,359		333,330

			2,803,387
MEDIA – 1.40%
Belo Corp.	13,360		234,067
Hearst-Argyle Television Inc.	3,963		99,868


40		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
McClatchy Co. (The) Class A	8,150	$	353,302
New York Times Co. Class A	21,427		517,891
Tribune Co.	24,254		808,386

			2,013,514
METAL FABRICATE & HARDWARE – 0.59%
Commercial Metals Co.	17,851		475,015
Timken Co. (The)	12,542		376,887

			851,902
OFFICE & BUSINESS EQUIPMENT – 1.07%
Pitney Bowes Inc.	32,990		1,540,963

			1,540,963
OIL & GAS – 3.53%
Cabot Oil & Gas Corp.	7,213		381,640
Cimarex Energy Co.	12,260		441,605
Forest Oil Corp.²	8,060		263,078
Frontier Oil Corp.	16,681		490,421
Murphy Oil Corp.	26,295		1,240,072
Noble Energy Inc.	26,249		1,276,489
Pogo Producing Co.	7,827		350,258
Tesoro Corp.	10,124		647,329

			5,090,892
PACKAGING & CONTAINERS – 1.50%
Bemis Co. Inc.	15,621		525,178
Crown Holdings Inc.²	24,756		481,257
Owens-Illinois Inc.²	21,170		351,422
Packaging Corp. of America	12,168		279,499
Sonoco Products Co.	14,707		521,804

			2,159,160
PIPELINES – 1.76%
El Paso Corp.	103,410		1,416,717
National Fuel Gas Co.	11,862		443,639
ONEOK Inc.	16,250		676,488

			2,536,844
REAL ESTATE INVESTMENT TRUSTS – 6.34%
Annaly Capital Management Inc.	28,677		376,242
Apartment Investment & Management Co. Class A	14,442		827,815
Brandywine Realty Trust	13,426		447,891
Crescent Real Estate Equities Co.	14,232		310,258
Health Care Property Investors Inc.	23,472		737,021
Health Care REIT Inc.¹	9,301		383,945
Healthcare Realty Trust Inc.	7,083		286,862
Host Hotels & Resorts Inc.	77,399		1,784,821
HRPT Properties Trust	31,127		370,411
iStar Financial Inc.	16,810		778,807
Liberty Property Trust	13,357		643,807
Mack-Cali Realty Corp.	9,245		489,061
New Century Financial Corp.	7,552		297,398
New Plan Excel Realty Trust Inc.	15,464		445,363
Reckson Associates Realty Corp.	12,249		540,426
Thornburg Mortgage Inc.	16,803		431,501

			9,151,629
RETAIL – 3.50%
AutoNation Inc.²	23,556		472,298
BJ’s Wholesale Club Inc.²	9,885		283,205
Dillard’s Inc. Class A	9,675		291,895
Family Dollar Stores Inc.	21,220		624,929
Foot Locker Inc.	23,220		538,472
Limited Brands Inc.	50,027		1,474,296
OfficeMax Inc.	10,457		497,544
RadioShack Corp.	19,921		355,391
Rite Aid Corp.²	77,952		364,815
United Auto Group Inc.	6,082		139,764

			5,042,609
SAVINGS & LOANS – 1.88%
Astoria Financial Corp.	13,557		393,289
Downey Financial Corp.	3,078		212,013
New York Community Bancorp Inc.	39,697		649,046
Sovereign Bancorp Inc.	48,537		1,158,093
Washington Federal Inc.	12,846		298,541

			2,710,982
SEMICONDUCTORS – 0.26%
Atmel Corp.²	66,544		382,628

			382,628
TELECOMMUNICATIONS – 2.41%
CenturyTel Inc.	16,122		648,749
Citizens Communications Co.	47,599		697,801
Embarq Corp.	22,056		1,066,408
Level 3 Communications Inc.²	147,424		779,873
3Com Corp.²	58,473		284,179

			3,477,010


SCHEDULES OF INVESTMENTS		41

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
TOYS, GAMES & HOBBIES – 1.27%
Hasbro Inc.		21,795	$	564,926
Mattel Inc.		56,187		1,271,512

				1,836,438
TRANSPORTATION – 0.76%
Overseas Shipholding Group Inc.		4,415		276,158
Ryder System Inc.		9,197		484,222
YRC Worldwide Inc.²		8,596		333,009

				1,093,389

TOTAL COMMON STOCKS (Cost: $135,676,846)				143,951,974
SHORT-TERM INVESTMENTS – 0.75%
CERTIFICATES OF DEPOSIT³– 0.03%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	6,152		6,152
Societe Generale
5.33%, 12/08/06		8,789		8,789
Washington Mutual Bank
5.36%, 11/13/06		21,973		21,973
Wells Fargo Bank N.A.
4.78%, 12/05/06		7,031		7,031

				43,945
COMMERCIAL PAPER³– 0.14%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		13,121		12,892
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		13,184		13,184
ASAP Funding Ltd.
5.29%, 11/02/06⁴		2,197		2,197
Atlantis One Funding
5.30%, 11/14/06⁴		12,059		12,036
Beta Finance Inc.
5.27%, 01/25/07⁴		1,758		1,736
Bryant Park Funding LLC
5.28%, 12/14/06⁴		2,775		2,757
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		4,455		4,447

Security	Principal		Value
Cantabric Finance LLC
5.26%, 01/25/07⁴	$	3,516	$	3,472
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		10,107		10,093
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		6,592		6,429
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		5,273		5,255
Curzon Funding LLC
5.29%, 11/17/06⁴		8,789		8,768
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		10,126		10,004
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		8,789		8,783
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		7,998		7,881
Galleon Capital Corp.
5.27%, 12/18/06⁴		1,229		1,220
General Electric Capital Services Inc.
5.22%, 12/11/06		879		874
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		5,186		5,084
HBOS Treasury Services PLC
5.27%, 12/15/06		1,758		1,746
Landale Funding LLC
5.31%, 11/15/06⁴		6,855		6,841
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		15,787		15,776
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		5,669		5,657
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		11,426		11,209
Nestle Capital Corp.
5.19%, 08/09/07		5,273		5,060


42		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴	$	13,885	$	13,885
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		4,683		4,628
Sedna Finance Inc.
5.22%, 04/17/07⁴		5,010		4,888
Sydney Capital Corp.
5.27%, 12/08/06⁴		210		208
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		4,395		4,345
Tulip Funding Corp.
5.29%, 11/15/06⁴		4,636		4,626

				195,981
MEDIUM-TERM NOTES³– 0.02%
Bank of America N.A.
5.28%, 04/20/07		2,197		2,197
Cullinan Finance Corp.
5.71%, 06/28/07⁴		6,592		6,592
K2 USA LLC
5.39%, 06/04/07⁴		6,592		6,592
Marshall & Ilsley Bank
5.18%, 12/15/06		8,789		8,793
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		10,283		10,283
US Bank N.A.
2.85%, 11/15/06		1,758		1,757

				36,214
REPURCHASE AGREEMENTS³– 0.15%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $17,581 (collateralized by non-U.S. Government debt securities, value $18,111, 4.70% to 8.75%, 7/30/10 to 11/15/25).		17,578		17,578
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $12,307 (collateralized by U.S. Government obligations, value $12,555, 5.50%, 10/1/21 to 10/1/36).		12,305		12,305
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $13,186 (collateralized by non-U.S. Government debt securities, value $14,507, 0.31% to 6.00%, 7/25/36 to 11/25/46).		13,184		13,184
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $879 (collateralized by non-U.S. Government debt securities, value $906, 6.00% to 6.70%, 12/15/10 to 4/15/12).		879		879
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $30,767 (collateralized by non-U.S. Government debt securities, value $32,310, 4.11% to 9.32%, 4/15/10 to 5/15/36).		30,762		30,762
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $9,669 (collateralized by non-U.S. Government debt securities, value $10,834, 0.00% to 10.00%, 5/27/33 to 10/31/36).		9,668		9,668


SCHEDULES OF INVESTMENTS		43

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $5,274 (collateralized by non-U.S. Government debt securities, value $5,834, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	5,273	$	5,273
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $17,581 (collateralized by non-U.S. Government debt securities, value $18,463, 0.00% to 9.00%, 5/1/17 to 9/25/46).		17,578		17,578
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $15,383 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $15,771, 0.00% to 7.32%, 11/2/06 to 3/25/45).		15,381		15,381
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $13,186 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $13,435, 0.00% to 7.32%, 11/2/06 to 3/25/45).		13,184		13,184
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $5,274 (collateralized by non-U.S. Government debt securities, value $5,539, 0.00% to 10.00%, 1/1/10).		5,273		5,273
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $4,396 (collateralized by non-U.S. Government debt securities, value $4,616, 5.26% to 5.35%, 7/1/24 to 6/1/46).		4,395		4,395
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $2,197 (collateralized by non-U.S. Government debt securities, value $2,308, 6.25% to 7.63%, 9/15/13 to 6/1/16).		2,197		2,197
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $17,581 (collateralized by non-U.S. Government debt securities, value $18,112, 3.50% to 10.13%, 5/15/07 to 7/1/26).		17,578		17,578
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $8,790 (collateralized by non-U.S. Government debt securities, value $9,689, 5.50% to 10.39%, 6/17/08 to 6/25/36).		8,789		8,789
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $11,867 (collateralized by non-U.S. Government debt securities, value $12,553, 0.00% to 10.00%, 11/1/06 to 10/31/36).		11,865		11,865


44		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $6,355 (collateralized by non-U.S. Government debt securities, value $6,600, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁵	$	6,152	$	6,152
Wachovia Capital Repurchase Agreement, 5. 38%, due 11/1/06, maturity value $22,855 (collateralized by non-U.S. Government debt securities, value $24,002, 3.86% to 8.17%, 11/18/08 to 7/15/45).		22,852		22,852

				214,893
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		908		908

				908
VARIABLE & FLOATING RATE NOTES³– 0.41%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		22,500		22,502
American Express Bank
5.29%, 02/28/07		8,789		8,789
American Express Centurion Bank
5.41%, 07/19/07		9,668		9,676
American Express Credit Corp.
5.42%, 07/05/07		2,637		2,638
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		1,586		1,586
ASIF Global Financing
5.51%, 05/03/07⁴		879		879
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		5,713		5,713
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		12,744		12,744
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		22,412		22,413
BMW US Capital LLC
5.32%, 10/15/07⁴		8,789		8,789
BNP Paribas
5.36%, 05/18/07⁴		16,260		16,260
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		6,416		6,416
CC USA Inc.
5.37%, 07/30/07⁴		4,395		4,395
Commodore CDO Ltd.
5.47%, 06/12/07⁴		2,197		2,197
Credit Agricole SA
5.34%, 07/23/07		8,789		8,789
Credit Suisse First Boston NY
5.38%, 04/24/07		4,395		4,395
Cullinan Finance Corp.
5.36%, 04/25/07⁴		2,197		2,197
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		2,197		2,197
DEPFA Bank PLC
5.43%, 09/14/07		8,789		8,789
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		10,107		10,108
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		8,789		8,789
Fifth Third Bancorp
5.30%, 11/23/07⁴		17,578		17,578
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		8,789		8,788
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		9,229		9,230


SCHEDULES OF INVESTMENTS		45

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Granite Master Issuer PLC
5.29%, 08/20/07⁴	$	30,762	$	30,762
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		7,031		7,032
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		13,184		13,185
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		8,789		8,789
Holmes Financing PLC
5.29%, 07/16/07⁴		15,381		15,381
JP Morgan Chase & Co.
5.29%, 08/02/07		6,592		6,592
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		6,592		6,591
Kestrel Funding LLC
5.30%, 07/11/07⁴		3,516		3,515
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		5,273		5,273
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		9,160		9,160
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		9,668		9,668
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		3,481		3,480
Marshall & Ilsley Bank
5.30%, 10/15/07		4,834		4,834
Master Funding LLC
5.35%, 04/25/07⁴		7,910		7,910
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		13,184		13,184
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,5		879		879
Monumental Global Funding II
5.38%, 12/27/06⁴		1,758		1,758
Mound Financing PLC
5.29%, 05/08/07⁴		8,262		8,262
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		31,641		31,640
National City Bank of Indiana
5.37%, 05/21/07		4,395		4,395
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		29,004		29,009
Newcastle Ltd.
5.34%, 04/24/07⁴		3,098		3,098
Northern Rock PLC
5.36%, 08/03/07⁴		10,547		10,547
Northlake CDO I
5.46%, 09/06/07⁴		2,637		2,637
Principal Life Global Funding I
5.82%, 02/08/07		3,955		3,960
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		12,744		12,744
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		8,789		8,789
Strips III LLC
5.37%, 07/24/07⁴		2,020		2,020
SunTrust Bank
5.29%, 05/01/07		8,789		8,789
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		21,445		21,445
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		12,305		12,305
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		11,778		11,778
Wachovia Bank N.A.
5.36%, 05/22/07		17,578		17,578
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		6,592		6,595
Wells Fargo & Co.
5.33%, 11/15/07⁴		4,395		4,395


46		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR MID VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴	$	6,592	$	6,591
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		26,367		26,362
Wind MasterTrust
5.31%, 07/25/07⁴		3,516		3,516

				590,305

TOTAL SHORT-TERM INVESTMENTS (Cost: $1,082,246)				1,082,246

TOTAL INVESTMENTS IN SECURITIES – 100.54% (Cost: $136,759,092)				145,034,220
Other Assets, Less Liabilities – (0.54)%				(779,411	)

NET ASSETS – 100.00%			$	144,254,809

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		47

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.96%
ADVERTISING – 0.26%
ADVO Inc.	10,655	$	312,831

			312,831
AEROSPACE & DEFENSE – 2.72%
Curtiss-Wright Corp.	14,741		498,835
EDO Corp.	5,471		130,812
Esterline Technologies Corp.¹	8,626		325,200
GenCorp Inc.¹	15,312		200,587
K&F Industries Holdings Inc.¹	6,208		120,684
Kaman Corp.	7,567		154,291
Moog Inc. Class A¹	12,665		472,404
Orbital Sciences Corp.¹	20,184		366,541
Sequa Corp. Class A¹	1,683		178,583
Teledyne Technologies Inc.¹	10,865		453,288
Triumph Group Inc.	5,499		264,777
United Industrial Corp.	3,155		142,007

			3,308,009
AGRICULTURE – 0.72%
Andersons Inc.	5,811		208,905
Delta & Pine Land Co.	12,168		492,926
Vector Group Ltd.	10,066		172,531

			874,362
AIRLINES – 1.07%
Alaska Air Group Inc.¹	13,277		533,072
Republic Airways Holdings Inc.¹	11,198		200,108
SkyWest Inc.	21,587		575,509

			1,308,689
APPAREL – 2.56%
Columbia Sportswear Co.¹	4,602		256,976
K-Swiss Inc. Class A	8,811		311,205
Phillips-Van Heusen Corp.	18,686		855,071
Quiksilver Inc.¹	41,065		572,857
Skechers U.S.A. Inc. Class A¹	8,275		247,340
Warnaco Group Inc. (The)¹	15,898		337,674
Wolverine World Wide Inc.	18,837		534,217

			3,115,340
BANKS – 5.96%
Bank Mutual Corp.	20,418		247,466
Bank of the Ozarks Inc.	4,235		132,683
Boston Private Financial Holdings Inc.	12,340		341,078
Capitol Bancorp Ltd.	4,957		232,582
CVB Financial Corp.	20,697		300,727
First Community Bancorp	8,878		474,707
First Republic Bank	10,309		401,432
Fremont General Corp.	22,965		333,681
Frontier Financial Corp.	15,184		440,488
Glacier Bancorp Inc.	11,282		393,967
Hancock Holding Co.	9,145		469,138
Hanmi Financial Corp.	16,612		354,998
Prosperity Bancshares Inc.	11,084		384,504
Sterling Bancshares Inc.	15,536		284,464
Sterling Financial Corp. (Washington)	12,477		414,985
Texas Regional Bancshares Inc. Class A	17,076		663,403
UCBH Holdings Inc.	31,967		547,914
United Community Banks Inc.	13,419		421,893
Wintrust Financial Corp.	8,665		418,173

			7,258,283
BIOTECHNOLOGY – 2.06%
Alexion Pharmaceuticals Inc.¹	10,654		398,033
Bio-Rad Laboratories Inc. Class A¹	6,089		447,054
Cambrex Corp.	8,953		209,500
Exelixis Inc.¹	31,333		303,930
Myriad Genetics Inc.¹	13,359		359,224
NektarTherapeutics¹	30,245		436,435
Regeneron Pharmaceuticals Inc.¹	17,563		352,138

			2,506,314
BUILDING MATERIALS – 1.71%
Comfort Systems USA Inc.	13,016		151,116
ElkCorp	6,545		164,410
Genlyte Group Inc. (The)¹	8,487		655,706
Goodman Global Inc.¹	10,694		171,853
Interline Brands Inc.¹	10,070		241,076
NCI Building Systems Inc.¹	6,898		412,845
Universal Forest Products Inc.	6,414		291,067

			2,088,073
CHEMICALS – 1.31%
Arch Chemicals Inc.	8,149		272,666
Hercules Inc.¹	38,461		699,990


48		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
NewMarket Corp.	5,064	$	325,615
Spartech Corp.	10,882		298,167

			1,596,438
COAL – 0.23%
Alpha Natural Resources Inc.¹	17,859		284,137

			284,137
COMMERCIAL SERVICES – 7.38%
Advance America Cash Advance Centers Inc.	21,025		315,165
AMN Healthcare Services Inc.¹	10,904		275,762
Arbitron Inc.	9,913		416,346
BearingPoint Inc.¹	62,727		522,516
CBIZ Inc.¹	18,326		129,015
CDI Corp.	4,283		101,250
Cenveo Inc.¹	14,315		284,010
Consolidated Graphics Inc.¹	3,977		247,250
Corrections Corp. of America¹	20,385		931,391
Cross Country Healthcare Inc.¹	8,571		165,935
Escala Group Inc.^1,2	2,433		12,311
FTI Consulting Inc.¹	13,599		386,348
Gevity HR Inc.	8,811		199,129
Heidrick & Struggles International Inc.¹	6,150		251,350
Jackson Hewitt Tax Service Inc.	11,673		403,886
Kelly Services Inc. Class A	6,496		186,955
Korn/Ferry International¹	14,597		322,740
Live Nation Inc.¹	19,696		418,737
MAXIMUS Inc.	7,193		200,757
McGrath RentCorp	7,812		210,924
MPS Group Inc.¹	34,669		528,702
PAREXEL International Corp.¹	9,221		272,942
PRA International¹	6,688		197,296
Quanta Services Inc.¹	34,359		628,770
Rollins Inc.	11,865		256,759
Source Interlink Companies Inc.^1,2	11,230		101,519
Spherion Corp.¹	19,492		141,317
Steiner Leisure Ltd.¹	5,468		249,560
Viad Corp.	7,027		259,648
Wright Express Corp.¹	13,636		373,217

			8,991,507
COMPUTERS – 2.86%
BISYS Group Inc. (The)¹	40,466		446,745
Brocade Communications Systems Inc.¹	92,369		749,113
Covansys Corp.¹	6,085		142,389
Electronics For Imaging Inc.¹	19,232		454,644
Hutchinson Technology Inc.¹	8,786		203,396
Komag Inc.¹	10,385		397,226
Manhattan Associates Inc.¹	9,230		272,562
Mentor Graphics Corp.¹	27,189		458,678
MTS Systems Corp.	6,123		203,835
Syntel Inc.	6,353		159,143

			3,487,731
COSMETICS & PERSONAL CARE – 0.30%
Chattem Inc.¹	5,044		213,966
Elizabeth Arden Inc.¹	8,635		150,594

			364,560
DISTRIBUTION & WHOLESALE – 0.33%
Watsco Inc.	8,137		405,223

			405,223
DIVERSIFIED FINANCIAL SERVICES – 1.59%
Accredited Home Lenders Holding Co.^1,2	7,767		237,670
Advanta Corp. Class B	5,868		230,260
Asset Acceptance Capital Corp.¹	5,114		91,080
Financial Federal Corp.	9,192		252,964
Knight Capital Group Inc. Class A¹	35,391		660,042
Ocwen Financial Corp.¹	12,155		190,226
World Acceptance Corp.¹	5,581		278,994

			1,941,236
ELECTRIC – 1.02%
El Paso Electric Co.¹	16,306		380,908
ITC Holdings Corp.	9,011		320,071
NorthWestern Corp.	12,052		426,400
Pike Electric Corp.¹	6,013		110,940

			1,238,319
ELECTRICAL COMPONENTS & EQUIPMENT – 1.71%
Advanced Energy Industries Inc.¹	11,843		186,172
Belden CDT Inc.	14,655		530,511
EnerSys¹	6,950		122,528


SCHEDULES OF INVESTMENTS		49

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
General Cable Corp.¹	17,311	$	650,894
Greatbatch Inc.¹	7,343		165,144
Littelfuse Inc.¹	7,482		253,341
Power-One Inc.¹	25,037		171,253

			2,079,843
ELECTRONICS – 3.21%
Benchmark Electronics Inc.¹	21,746		577,356
Brady Corp. Class A	15,774		583,638
Checkpoint Systems Inc.¹	13,144		239,352
Cubic Corp.	5,504		115,089
KEMET Corp.¹	29,004		213,179
Orbotech Ltd.¹	11,201		270,504
Paxar Corp.¹	12,736		254,975
Plexus Corp.¹	15,699		344,122
Rofin-Sinar Technologies Inc.¹	5,195		319,908
Technitrol Inc.	13,664		344,606
TTM Technologies Inc.¹	12,732		154,694
Varian Inc.¹	10,465		490,704

			3,908,127
ENERGY - ALTERNATE SOURCES – 0.29%
Headwaters Inc.¹	14,287		353,603

			353,603
ENGINEERING & CONSTRUCTION – 1.29%
Dycom Industries Inc.¹	13,639		317,925
Granite Construction Inc.	11,662		607,590
InfraSource Services Inc.¹	13,558		265,330
Insituform Technologies Inc. Class A¹	9,074		212,059
Perini Corp.¹	6,820		168,590

			1,571,494
ENTERTAINMENT – 0.14%
Isle of Capri Casinos Inc.¹	6,821		171,207

			171,207
ENVIRONMENTAL CONTROL – 1.27%
Clean Harbors Inc.¹	5,095		218,015
Mine Safety Appliances Co.	9,299		351,688
Tetra Tech Inc.¹	19,344		351,674
Waste Connections Inc.¹	15,371		625,446

			1,546,823
FOOD – 1.40%
Flowers Foods Inc.	18,999		516,203
Hain Celestial Group Inc.¹	13,002		367,046
J&J Snack Foods Corp.	4,710		157,361
Performance Food Group Co.¹	10,938		317,968
Pilgrim’s Pride Corp.	13,983		349,295

			1,707,873
FOREST PRODUCTS & PAPER – 0.16%
Deltic Timber Corp.	3,862		196,614

			196,614
HAND & MACHINE TOOLS – 0.68%
Baldor Electric Co.	9,774		313,550
Regal-Beloit Corp.	10,351		511,857

			825,407
HEALTH CARE-PRODUCTS – 1.76%
Arrow International Inc.	7,588		271,271
Oakley Inc.	8,780		163,132
Orthofix International NV¹	5,051		224,972
PolyMedica Corp.	7,910		328,660
Steris Corp.	22,234		541,843
Vital Sign Inc.	2,771		156,174
West Pharmaceutical Services Inc.	10,884		457,563

			2,143,615
HEALTH CARE-SERVICES – 2.65%
Amedisys Inc.¹	5,449		221,066
AMERIGROUP Corp.¹	17,534		525,319
Centene Corp.¹	14,635		345,240
Genesis HealthCare Corp.¹	6,611		320,171
LifePoint Hospitals Inc.¹	18,208		646,384
Magellan Health Services Inc.¹	12,556		547,944
Odyssey Healthcare Inc.¹	11,800		156,350
Sunrise Senior Living Inc.¹	14,764		460,784

			3,223,258
HOME BUILDERS – 0.47%
Champion Enterprises Inc.¹	25,823		239,121
Winnebago Industries Inc.²	9,999		332,867

			571,988
HOME FURNISHINGS – 0.63%
American Woodmark Corp.	3,576		132,276
Sealy Corp.	14,860		209,080


50		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Tempur-Pedic International Inc.^1,2	21,399	$	422,416

			763,772
HOUSEHOLD PRODUCTS & WARES – 1.42%
Central Garden & Pet Co.¹	7,504		374,975
Fossil Inc.¹	16,177		353,306
Playtex Products Inc.¹	19,689		274,465
Prestige Brands Holdings Inc.¹	12,032		141,978
Spectrum Brands Inc.¹	13,349		129,752
Yankee Candle Co. Inc. (The)	13,455		455,452

			1,729,928
INSURANCE – 1.36%
Bristol West Holdings Inc.	5,986		83,325
First Acceptance Corp.¹	5,833		62,646
Hilb, Rogal & Hobbs Co.	12,068		481,755
Universal American Financial Corp.¹	12,935		240,462
USI Holdings Corp.¹	13,025		207,488
Zenith National Insurance Corp.	12,586		585,501

			1,661,177
INTERNET – 1.47%
Ariba Inc.¹	25,567		193,031
Avocent Corp.¹	16,714		613,571
Covad Communications Group Inc.¹	99,055		131,743
Priceline.com Inc.¹	11,329		456,445
RealNetworks Inc.¹	35,725		392,260

			1,787,050
IRON & STEEL – 1.15%
AK Steel Holding Corp.¹	35,294		526,939
Chaparral Steel Co.	14,460		601,391
Schnitzer Steel Industries Inc. Class A	7,607		265,941

			1,394,271
LEISURE TIME – 0.38%
Callaway Golf Co.	23,145		310,837
Nautilus Inc.²	11,027		155,812

			466,649
LODGING – 1.23%
Ameristar Casinos Inc.	7,846		193,090
Aztar Corp.¹	12,378		663,089
Gaylord Entertainment Co.¹	13,651		635,318

			1,491,497
MACHINERY – 1.04%
Albany International Corp. Class A	8,805		295,936
Applied Industrial Technologies Inc.	13,680		393,163
Nordson Corp.	10,369		477,492
Sauer-Danfoss Inc.	3,554		94,252

			1,260,843
MANUFACTURING – 1.50%
Barnes Group Inc.	14,139		283,487
Blount International Inc.¹	12,734		139,437
CLARCOR Inc.	17,368		565,849
Matthews International Corp. Class A	10,898		418,701
Myers Industries Inc.	9,182		166,378
Smith (A.O.) Corp.	7,047		247,773

			1,821,625
MEDIA – 0.53%
Gemstar-TV Guide International Inc.¹	84,430		293,816
Martha Stewart Living Omnimedia Inc. Class A	8,007		169,748
Radio One Inc. Class A¹	2,473		17,039
Radio One Inc. Class D¹	24,308		165,051

			645,654
METAL FABRICATE & HARDWARE – 1.36%
Kaydon Corp.	9,533		398,479
NS Group Inc.¹	7,483		489,089
Quanex Corp.	12,650		423,902
Valmont Industries Inc.	6,179		344,788

			1,656,258
MINING – 0.90%
AMCOL International Corp.	8,478		223,056
Coeur d’Alene Mines Corp.¹	93,668		458,973
Hecla Mining Co.¹	39,617		257,907
Stillwater Mining Co.¹	14,794		159,036

			1,098,972
OFFICE & BUSINESS EQUIPMENT – 0.31%
Global Imaging Systems Inc.¹	17,543		381,911

			381,911
OFFICE FURNISHINGS – 0.43%
Interface Inc. Class A¹	16,160		235,128


SCHEDULES OF INVESTMENTS		51

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Knoll Inc.	14,674	$	290,545

			525,673
OIL & GAS – 4.26%
Alon USA Energy Inc.	3,655		102,596
Berry Petroleum Co. Class A	13,245		395,363
Comstock Resources Inc.¹	14,503		404,634
Encore Acquisition Co.¹	16,869		422,400
Energy Partners Ltd.¹	11,933		291,523
Giant Industries Inc.¹	4,932		399,393
Grey Wolf Inc.¹	65,704		459,928
Mariner Energy Inc.¹	27,028		535,695
Parker Drilling Co.¹	36,940		302,539
Penn Virginia Corp.	6,269		448,547
Petrohawk Energy Corp.¹	56,406		639,080
Petroleum Development Corp.¹	5,462		252,071
Rosetta Resources Inc.¹	17,216		311,265
Western Refining Inc.	9,477		223,278

			5,188,312
OIL & GAS SERVICES – 2.26%
Lone Star Technologies Inc.¹	10,306		497,574
Newpark Resources Inc.¹	30,045		176,665
Oceaneering International Inc.¹	18,106		651,635
Universal Compression Holdings Inc.¹	10,051		605,673
Veritas DGC Inc.¹	11,314		814,721

			2,746,268
PHARMACEUTICALS – 2.29%
Alpharma Inc. Class A	14,474		319,441
Andrx Corp.¹	24,525		603,070
CV Therapeutics Inc.¹	18,564		240,404
Isis Pharmaceuticals Inc.¹	24,248		208,048
NBTY Inc.¹	20,569		572,230
Nuvelo Inc.¹	16,658		307,174
Par Pharmaceutical Companies Inc.¹	11,743		228,871
ViroPharma Inc.¹	23,314		310,776

			2,790,014
REAL ESTATE – 0.49%
Trammell Crow Co.¹	12,123		590,996

			590,996
REAL ESTATE INVESTMENT TRUSTS – 6.38%
Acadia Realty Trust	9,414		240,528
American Financial Realty Trust	43,263		504,879
EastGroup Properties Inc.	7,517		400,130
Equity Inns Inc.	18,434		309,323
Equity Lifestyle Properties Inc.	7,341		361,691
Glimcher Realty Trust	12,402		319,476
Highland Hospitality Corp.	18,962		262,055
Highwoods Properties Inc.	18,073		690,389
Home Properties Inc.	11,709		739,658
Innkeepers USA Trust	14,420		247,303
Lexington Corporate Properties Trust	17,927		381,845
Longview Fibre Co.	22,224		468,037
Pennsylvania Real Estate Investment Trust	12,450		536,595
Saul Centers Inc.	3,819		185,603
Strategic Hotels & Resorts Inc.	24,528		521,711
Sunstone Hotel Investors Inc.	19,452		573,056
Tanger Factory Outlet Centers Inc.	10,418		388,591
Washington Real Estate Investment Trust	15,129		637,687

			7,768,557
RETAIL – 7.80%
Applebee’s International Inc.	25,194		574,927
Big Lots Inc.¹	38,492		811,411
Cabela’s Inc. Class A^1,2	14,826		349,894
Casey’s General Store Inc.	16,896		410,066
Cash America International Inc.	9,872		408,010
CEC Entertainment Inc.¹	11,290		389,166
Charming Shoppes Inc.¹	41,472		613,786
CKE Restaurants Inc.	18,684		365,085
Conn’s Inc.^1,2	3,993		95,912
CSK Auto Corp.¹	14,872		232,003
Fred’s Inc.	12,755		166,835
Genesco Inc.¹	7,890		296,427
Hot Topic Inc.¹	14,840		150,032
Longs Drug Stores Corp.	10,133		436,124
Men’s Wearhouse Inc. (The)	16,270		648,360
New York & Co. Inc.¹	7,765		100,945
99 Cents Only Stores¹	16,379		196,384
Pacific Sunwear of California Inc.¹	24,329		428,677
Pantry Inc. (The)¹	7,675		418,902
Papa John’s International Inc.¹	7,774		285,306


52		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Rare Hospitality International Inc.¹	11,512	$	362,743
Retail Ventures Inc.¹	8,799		150,639
Ruby Tuesday Inc.²	19,581		543,373
School Specialty Inc.¹	7,054		276,235
Steak n Shake Co. (The)¹	8,751		162,681
Stein Mart Inc.	9,318		152,536
Tween Brands Inc.¹	11,156		466,544

			9,493,003
SAVINGS & LOANS – 2.39%
BankUnited Financial Corp. Class A	12,253		330,463
Brookline Bancorp Inc.	21,386		285,075
Fidelity Bankshares Inc.	7,951		315,496
First Niagara Financial Group Inc.	37,468		536,542
Harbor Florida Bancshares Inc.	7,496		340,393
KNBT Bancorp Inc.	8,984		153,716
Northwest Bancorp Inc.	6,899		184,548
Provident Financial Services Inc.	20,916		383,599
Provident New York Bancorp	14,301		202,216
TierOne Corp.	5,484		175,378

			2,907,426
SEMICONDUCTORS – 3.53%
AMIS Holdings Inc.¹	15,921		152,682
Applied Micro Circuits Corp.¹	100,639		306,949
Brooks Automation Inc.¹	25,166		357,357
Cabot Microelectronics Corp.¹	8,262		235,880
Cirrus Logic Inc.¹	26,306		185,720
Conexant Systems Inc.¹	163,752		316,041
Credence Systems Corp.¹	30,529		98,303
DSP Group Inc.¹	10,237		222,348
Emulex Corp.¹	28,457		534,992
Entegris Inc.¹	42,112		472,076
Lattice Semiconductor Corp.¹	35,766		222,107
MKS Instruments Inc.¹	12,755		276,146
Photronics Inc.¹	13,089		183,115
Skyworks Solutions Inc.¹	54,162		359,094
TriQuint Semiconductor Inc.¹	47,054		211,743
Veeco Instruments Inc.¹	8,827		164,977

			4,299,530
SOFTWARE – 3.11%
American Reprographics Co.¹	8,683		308,247
Avid Technology Inc.¹	14,258		514,999
CSG Systems International Inc.¹	16,226		437,777
eFunds Corp.¹	15,671		388,641
infoUSA Inc.	12,100		132,979
Keane Inc.¹	17,283		200,310
Lawson Software Inc.¹	47,532		362,194
ManTech International Corp. Class A¹	6,137		209,026
Midway Games Inc.^1,2	3,689		31,578
Parametric Technology Corp.¹	37,613		734,958
Progress Software Corp.¹	13,909		400,440
Schawk Inc.	3,586		67,596

			3,788,745
TELECOMMUNICATIONS – 3.09%
Andrew Corp.¹	53,724		497,484
Arris Group Inc.¹	36,038		482,909
Broadwing Corp.¹	22,168		332,077
Centennial Communications Corp.	7,824		40,372
Dobson Communications Corp. Class A¹	50,795		394,169
Extreme Networks Inc.¹	35,867		136,295
General Communication Inc. Class A¹	15,487		203,035
Powerwave Technologies Inc.¹	38,324		249,489
RF Micro Devices Inc.¹	64,668		472,076
SafeNet Inc.¹	8,701		186,201
Sycamore Networks Inc.¹	63,856		239,460
Syniverse Holdings Inc.¹	9,506		140,214
UTStarcom Inc.¹	35,854		386,148

			3,759,929
TOYS, GAMES & HOBBIES – 0.78%
LeapFrog Enterprises Inc.¹	10,568		101,876
Marvel Entertainment Inc.¹	21,030		533,111
RC2 Corp.¹	7,068		319,332

			954,319
TRANSPORTATION – 2.50%
American Commercial Lines Inc.¹	8,057		516,857
Florida East Coast Industries Inc.	6,960		415,860
GulfMark Offshore Inc.¹	6,079		209,908
Heartland Express Inc.	20,331		332,005
Hub Group Inc. Class A¹	13,903		377,605
Old Dominion Freight Line Inc.¹	11,107		307,220
OMI Corp.	22,576		503,896
Pacer International Inc.	12,594		386,510

			3,049,861


SCHEDULES OF INVESTMENTS		53

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
TRUCKING & LEASING – 0.26%
Greenbrier Companies Inc. (The)		4,708	$	176,550
TAL International Group Inc.		5,833		135,209

				311,759

TOTAL COMMON STOCKS (Cost: $113,279,979)				121,714,903
SHORT-TERM INVESTMENTS – 1.08%
CERTIFICATES OF DEPOSIT³– 0.04%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	6,855		6,855
Societe Generale
5.33%, 12/08/06		9,794		9,794
Washington Mutual Bank
5.36%, 11/13/06		24,484		24,484
Wells Fargo Bank N.A.
4.78%, 12/05/06		7,835		7,835

				48,968
COMMERCIAL PAPER³– 0.18%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		14,621		14,361
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		14,690		14,690
ASAP Funding Ltd.
5.29%, 11/02/06⁴		2,448		2,448
Atlantis One Funding
5.30%, 11/14/06⁴		13,437		13,412
Beta Finance Inc.
5.27%, 01/25/07⁴		1,959		1,934
Bryant Park Funding LLC
5.28%, 12/14/06⁴		3,092		3,072
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		4,965		4,955
Cantabric Finance LLC
5.26%, 01/25/07⁴		3,917		3,869
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		11,263		11,246
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		7,345		7,164
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		5,876		5,855
Curzon Funding LLC
5.29%, 11/17/06⁴		9,794		9,770
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		11,284		11,147
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		9,794		9,786
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		8,912		8,782
Galleon Capital Corp.
5.27%, 12/18/06⁴		1,369		1,360
General Electric Capital Services Inc.
5.22%, 12/11/06		979		974
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		5,778		5,664
HBOS Treasury Services PLC
5.27%, 12/15/06		1,959		1,946
Landale Funding LLC
5.31%, 11/15/06⁴		7,639		7,623
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		17,591		17,579
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		6,317		6,304
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		12,732		12,490
Nestle Capital Corp.
5.19%, 08/09/07		5,876		5,638
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		15,472		15,472
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		5,218		5,158


54		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	Shares or Principal		*Value*
Sedna Finance Inc.
5.22%, 04/17/07⁴	$	5,582	$	5,447
Sydney Capital Corp.
5.27%, 12/08/06⁴		234		232
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		4,897		4,841
Tulip Funding Corp.
5.29%, 11/15/06⁴		5,165		5,155

				218,374
MEDIUM-TERM NOTES³– 0.03%
Bank of America N.A.
5.28%, 04/20/07		2,448		2,448
Cullinan Finance Corp.
5.71%, 06/28/07⁴		7,345		7,345
K2 USA LLC
5.39%, 06/04/07⁴		7,345		7,345
Marshall & Ilsley Bank
5.18%, 12/15/06		9,794		9,798
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		11,458		11,459
US Bank N.A.
2.85%, 11/15/06		1,959		1,957

				40,352
MONEY MARKET FUNDS – 0.09%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		105,097		105,097

				105,097
REPURCHASE AGREEMENTS³– 0.20%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $19,590 (collateralized by non-U.S. Government debt securities, value $20,181, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	19,587		19,587
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $13,713 (collateralized by U.S. Government obligations, value $13,990, 5.50%, 10/1/21 to 10/1/36).		13,711		13,711
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $14,692 (collateralized by non-U.S. Government debt securities, value $16,165, 0.31% to 6.00%, 7/25/36 to 11/25/46).		14,690		14,690
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $979 (collateralized by non-U.S. Government debt securities, value $1,009, 6.00% to 6.70%, 12/15/10 to 4/15/12).		979		979
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $34,282 (collateralized by non-U.S. Government debt securities, value $36,003, 4.11% to 9.32%, 4/15/10 to 5/15/36).		34,277		34,277
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $10,775 (collateralized by non-U.S. Government debt securities, value $12,073, 0.00% to 10.00%, 5/27/33 to 10/31/36).		10,773		10,773


SCHEDULES OF INVESTMENTS		55

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $5,877 (collateralized by non-U.S. Government debt securities, value $6,501, 0.00% to 10.00%, 5/27/33 to 10/31/36).	$	5,876	$	5,876
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $19,590 (collateralized by non-U.S. Government debt securities, value $20,573, 0.00% to 9.00%, 5/1/17 to 9/25/46).		19,587		19,587
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $17,142 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $17,574, 0.00% to 7.32%, 11/2/06 to 3/25/45).		17,139		17,139
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $14,693 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $14,970, 0.00% to 7.32%, 11/2/06 to 3/25/45).		14,691		14,691
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $5,877 (collateralized by non-U.S. Government debt securities, value $6,172, 0.00% to 10.00%, 1/1/10).		5,876		5,876
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $4,898 (collateralized by non-U.S. Government debt securities, value $5,144, 5.26% to 5.35%, 7/1/24 to 6/1/46).		4,897		4,897
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $2,448 (collateralized by non-U.S. Government debt securities, value $2,572, 6.25% to 7.63%, 9/15/13 to 6/1/16).		2,448		2,448
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $19,590 (collateralized by non-U.S. Government debt securities, value $20,182, 3.50% to 10.13%, 5/15/07 to 7/1/26).		19,587		19,587
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $9,795 (collateralized by non-U.S. Government debt securities, value $10,796, 5.50% to 10.39%, 6/17/08 to 6/25/36).		9,794		9,794
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $13,223 (collateralized by non-U.S. Government debt securities, value $13,987, 0.00% to 10.00%, 11/1/06 to 10/31/36).		13,221		13,221


56		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $7,082 (collateralized by non-U.S. Government debt securities, value $7,355, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷	$	6,855	$	6,855
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $25,467 (collateralized by non-U.S. Government debt securities, value $26,745, 3.86% to 8.17%, 11/18/08 to 7/15/45).		25,463		25,463

				239,451
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		1,012		1,012

				1,012
VARIABLE & FLOATING RATE NOTES³– 0.54%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		25,073		25,076
American Express Bank
5.29%, 02/28/07		9,794		9,794
American Express Centurion Bank
5.41%, 07/19/07		10,773		10,782
American Express Credit Corp.
5.42%, 07/05/07		2,938		2,939
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		1,767		1,767
ASIF Global Financing
5.51%, 05/03/07⁴		979		980
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		6,366		6,366
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		14,201		14,201
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		24,973		24,974
BMW US Capital LLC
5.32%, 10/15/07⁴		9,794		9,794
BNP Paribas
5.36%, 05/18/07⁴		18,118		18,118
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		7,149		7,148
CC USA Inc.
5.37%, 07/30/07⁴		4,897		4,897
Commodore CDO Ltd.
5.47%, 06/12/07⁴		2,448		2,448
Credit Agricole SA
5.34%, 07/23/07		9,794		9,794
Credit Suisse First Boston NY
5.38%, 04/24/07		4,897		4,897
Cullinan Finance Corp.
5.36%, 04/25/07⁴		2,448		2,448
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		2,448		2,448
DEPFA Bank PLC
5.43%, 09/14/07		9,794		9,794
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		11,263		11,263
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		9,794		9,794
Fifth Third Bancorp
5.30%, 11/23/07⁴		19,587		19,587
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		9,794		9,793
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		10,283		10,285


SCHEDULES OF INVESTMENTS		57

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Granite Master Issuer PLC
5.29%, 08/20/07⁴	$	34,277	$	34,277
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		7,835		7,835
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		14,690		14,693
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		9,794		9,794
Holmes Financing PLC
5.29%, 07/16/07⁴		17,139		17,139
JP Morgan Chase & Co.
5.29%, 08/02/07		7,345		7,345
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		7,345		7,345
Kestrel Funding LLC
5.30%, 07/11/07⁴		3,917		3,917
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		5,876		5,876
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		10,207		10,207
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		10,773		10,772
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		3,878		3,878
Marshall & Ilsley Bank
5.30%, 10/15/07		5,386		5,386
Master Funding LLC
5.35%, 04/25/07⁴		8,814		8,814
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		14,690		14,690
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		979		979
Monumental Global Funding II
5.38%, 12/27/06⁴		1,959		1,959
Mound Financing PLC
5.29%, 05/08/07⁴		9,206		9,206
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		35,257		35,256
National City Bank of Indiana
5.37%, 05/21/07		4,897		4,897
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		32,319		32,326
Newcastle Ltd.
5.34%, 04/24/07⁴		3,452		3,452
Northern Rock PLC
5.36%, 08/03/07⁴		11,752		11,752
Northlake CDO I
5.46%, 09/06/07⁴		2,938		2,938
Principal Life Global Funding I
5.82%, 02/08/07		4,407		4,413
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		14,201		14,201
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		9,794		9,794
Strips III LLC
5.37%, 07/24/07⁴		2,251		2,251
SunTrust Bank
5.29%, 05/01/07		9,794		9,794
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		23,896		23,894
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		13,711		13,711
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		13,124		13,124
Wachovia Bank N.A.
5.36%, 05/22/07		19,587		19,587
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		7,345		7,349
Wells Fargo & Co.
5.33%, 11/15/07⁴		4,897		4,897


58		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL CORE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴	$	7,345	$	7,345
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		29,381		29,377
Wind Master Trust
5.31%, 07/25/07⁴		3,917		3,917

				657,774

TOTAL SHORT-TERM INVESTMENTS (Cost: $1,311,028)				1,311,028

TOTAL INVESTMENTS IN SECURITIES – 101.04% (Cost: $114,591,007)				123,025,931
Other Assets, Less Liabilities – (1.04)%				(1,264,741	)

NET ASSETS – 100.00%			$	121,761,190

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		59

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.91%
ADVERTISING – 0.36%
inVentiv Health Inc.¹	5,520	$	157,872
Marchex Inc. Class B^1,2	4,778		67,752

			225,624
AEROSPACE & DEFENSE – 0.47%
AAR Corp.¹	6,902		179,728
Argon ST Inc.¹	2,611		61,672
HEICO Corp.	1,307		47,418

			288,818
AGRICULTURE – 0.15%
Tejon Ranch Co.¹	1,902		92,247

			92,247
AIRLINES – 0.28%
AirTran Holdings Inc.¹	17,202		171,504

			171,504
APPAREL – 2.04%
Crocs Inc.^1,2	6,957		275,636
Guess? Inc.¹	5,997		341,529
Gymboree Corp.¹	6,286		292,048
Iconix Brand Group Inc.¹	6,346		118,289
Steven Madden Ltd.	3,594		155,045
Volcom Inc.¹	2,583		84,619

			1,267,166
AUTO MANUFACTURERS – 0.09%
A.S.V. Inc.^1,2	3,862		56,424

			56,424
AUTO PARTS & EQUIPMENT – 0.19%
Keystone Automotive Industries Inc.¹	3,090		118,841

			118,841
BANKS – 1.05%
Centennial Bank Holdings Inc.¹	11,175		107,280
PrivateBancorp Inc.	3,772		154,916
Signature Bank¹	5,548		168,271
Texas Capital Bancshares Inc.¹	4,894		98,076
Western Alliance Bancorp¹	3,682		125,114

			653,657
BIOTECHNOLOGY – 4.05%
Arena Pharmaceuticals Inc.¹	8,944		136,396
Digene Corp.¹	3,769		174,995
Human Genome Sciences Inc.¹	25,048		334,391
ICOS Corp.¹	11,447		363,099
Illumina Inc.¹	8,281		364,033
Integra LifeSciences Holdings Corp.^1,2	3,753		138,598
Keryx Biopharmaceuticals Inc.¹	7,452		104,626
LifeCell Corp.¹	6,342		148,593
Martek Biosciences Corp.¹	6,070		143,980
Myogen Inc.¹	8,116		424,467
Telik Inc.¹	9,822		186,127

			2,519,305
BUILDING MATERIALS – 0.16%
Drew Industries Inc.¹	3,568		96,871

			96,871
CHEMICALS – 0.35%
American Vanguard Corp.	3,883		61,429
Symyx Technologies Inc.¹	6,386		156,776

			218,205
COAL – 0.25%
International Coal Group Inc.¹	22,819		118,431
James River Coal Co.^1,2	3,152		36,752

			155,183
COMMERCIAL SERVICES – 7.92%
Aaron Rents Inc.	8,538		212,425
Administaff Inc.	4,755		163,810
Advisory Board Co. (The)¹	3,291		181,729
Bankrate Inc.¹	2,403		76,776
Bright Horizons Family Solutions Inc.¹	4,935		189,603
Chemed Corp.	4,976		176,598
Coinstar Inc.¹	5,264		159,920
Corinthian Colleges Inc.¹	16,306		199,748
CoStar Group Inc.¹	3,551		168,140
CRA International Inc.¹	2,209		112,283
DeVry Inc.¹	11,587		282,143
Euronet Worldwide Inc.¹	6,019		178,885
First Advantage Corp. Class A¹	1,514		31,506
Gartner Inc.¹	12,923		240,368
Global Cash Access Inc.¹	8,688		138,574
H&E Equipment Services Inc.¹	3,021		81,053
Healthcare Services Group Inc.	4,635		125,979


60		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
HealthSpring Inc.¹	8,502	$	171,230
Heartland Payment Systems Inc.²	3,003		80,240
Huron Consulting Group Inc.¹	2,753		110,010
Labor Ready Inc.¹	10,249		179,460
Morningstar Inc.¹	1,911		78,198
Navigant Consulting Inc.¹	9,898		176,283
Resources Connection Inc.¹	9,119		263,904
Sotheby’s Holdings Inc. Class A	12,198		463,524
Strayer Education Inc.	2,718		307,460
TeleTech Holdings Inc.¹	6,730		130,629
Universal Technical Institute Inc.¹	4,424		88,391
VistaPrint Ltd.¹	4,790		149,831

			4,918,700
COMPUTERS – 2.98%
IHS Inc. Class A¹	2,853		98,628
Intergraph Corp.¹	5,556		242,742
Kanbay International Inc.¹	6,021		170,996
Kronos Inc.¹	6,003		203,502
MICROS Systems Inc.¹	7,458		370,513
msystems Ltd.¹	6,266		228,646
Rackable Systems Inc.¹	5,239		162,461
Sykes Enterprises Inc.¹	4,663		94,612
Synaptics Inc.¹	4,733		134,228
TALX Corp.	6,054		147,233

			1,853,561
DISTRIBUTION & WHOLESALE – 1.04%
Beacon Roofing Supply Inc.¹	8,212		162,598
Brightpoint Inc.¹	9,518		115,168
LKQ Corp.¹	9,354		216,452
ScanSource Inc.¹	4,858		152,493

			646,711
DIVERSIFIED FINANCIAL SERVICES – 1.38%
Calamos Asset Management Inc. Class A	4,354		127,224
Cohen & Steers Inc.	2,025		70,632
GFI Group Inc.¹	2,936		169,319
National Financial Partners Corp.	6,317		248,890
Portfolio Recovery Associates Inc.¹	3,006		140,140
TradeStation Group Inc.¹	6,599		103,274

			859,479
ELECTRIC – 0.12%
Ormat Technologies Inc.	1,909		73,306

			73,306
ELECTRICAL COMPONENTS & EQUIPMENT – 1.17%
Encore Wire Corp.^1,2	3,156		84,833
Energy Conversion Devices Inc.¹	7,392		271,952
Intermagnetics General Corp.¹	8,106		221,699
Medis Technologies Ltd.^1,2	3,818		102,742
Vicor Corp.	3,838		45,672

			726,898
ELECTRONICS – 4.26%
American Science & Engineering Inc.^1,2	1,732		91,155
Analogic Corp.	2,640		147,338
Cogent Inc.¹	7,648		87,952
Coherent Inc.¹	5,836		188,094
Cymer Inc.¹	7,449		345,112
Daktronics Inc.	6,852		162,461
Dionex Corp.¹	3,791		206,230
Electro Scientific Industries Inc.¹	5,489		109,506
FEI Co.¹	4,747		108,516
FLIR Systems Inc.¹	13,262		423,588
II-VI Inc.¹	4,658		114,028
Ionatron Inc.^1,2	4,750		20,947
Itron Inc.¹	4,826		262,727
Multi-Fineline Electronix Inc.^1,2	1,669		40,306
Rogers Corp.¹	3,299		230,831
Taser International Inc.^1,2	11,737		109,271

			2,648,062
ENERGY - ALTERNATE SOURCES – 0.34%
Evergreen Solar Inc.^1,2	12,647		110,029
Pacific Ethanol Inc.^1,2	6,082		101,873

			211,902
ENTERTAINMENT – 1.81%
Bally Technologies Inc.¹	8,980		178,253
Macrovision Corp.¹	9,745		259,314
Pinnacle Entertainment Inc.¹	9,237		279,512
Shuffle Master Inc.^1,2	6,626		185,395
Vail Resorts Inc.¹	5,804		224,325

			1,126,799


SCHEDULES OF INVESTMENTS		61

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
FOOD – 0.41%
United Natural Foods Inc.¹	7,322	$	255,538

			255,538
HAND & MACHINE TOOLS – 0.27%
Franklin Electric Co. Inc.	3,129		168,778

			168,778
HEALTH CARE-PRODUCTS – 7.10%
American Medical Systems Holdings Inc.¹	13,204		235,163
ArthroCare Corp.¹	4,924		198,979
Aspect Medical Systems Inc.¹	3,162		56,505
Biosite Inc.¹	3,293		151,247
Cyberonics Inc.¹	4,128		74,428
DJO Inc.¹	4,302		173,069
ev3 Inc.¹	3,666		62,835
FoxHollow Technologies Inc.^1,2	3,586		125,546
Haemonetics Corp.¹	5,097		232,423
ICU Medical Inc.¹	2,498		105,540
Immucor Inc.¹	13,031		358,743
IntraLase Corp.¹	4,144		81,471
Inverness Medical Innovations Inc.¹	5,391		203,187
Kyphon Inc.¹	8,516		336,382
LCA-Vision Inc.	3,929		138,026
Meridian Bioscience Inc.	4,249		97,939
NuVasive Inc.¹	5,509		129,517
Palomar Medical Technologies Inc.¹	3,041		143,201
PSS World Medical Inc.¹	12,834		258,220
Sirona Dental Systems Inc.	3,334		123,358
SonoSite Inc.¹	3,058		87,153
SurModics Inc.^1,2	3,083		107,597
Symmetry Medical Inc.¹	5,648		88,109
Syneron Medical Ltd.¹	2,715		69,857
Thoratec Corp.¹	9,141		143,971
Ventana Medical Systems Inc.¹	6,463		261,041
Viasys Healthcare Inc.¹	6,104		174,880
Visicu Inc.¹	3,440		33,506
Wright Medical Group Inc.¹	6,431		158,910

			4,410,803
HEALTH CARE-SERVICES – 2.66%
AmSurg Corp.¹	5,582		117,334
Healthways Inc.¹	6,659		282,009
Matria Healthcare Inc.¹	3,960		111,672
Molina Healthcare Inc.¹	2,654		104,116
NightHawk Radiology Holdings Inc.¹	2,324		47,293
Psychiatric Solutions Inc.¹	10,014		332,465
Radiation Therapy Services Inc.¹	2,162		64,341
United Surgical Partners International Inc.¹	8,408		208,687
Wellcare Health Plans Inc.¹	6,555		385,106

			1,653,023
HOME BUILDERS – 0.32%
Fleetwood Enterprises Inc.¹	12,024		85,851
Williams Scotsman International Inc.¹	4,741		111,556

			197,407
HOME FURNISHINGS – 0.15%
TiVo Inc.¹	15,039		96,099

			96,099
INTERNET – 7.59%
aQuantive Inc.¹	13,077		355,433
Blue Nile Inc.^1,2	2,743		104,810
CMGI Inc.¹	87,424		122,394
CNET Networks Inc.¹	26,063		233,003
DealerTrack Holdings Inc.¹	5,623		143,330
Digital Insight Corp.¹	6,091		187,481
Digital River Inc.¹	7,568		437,809
Digitas Inc.¹	17,113		180,713
eResearch Technology Inc.^1,2	7,278		59,825
GSI Commerce Inc.¹	3,331		60,058
InfoSpace Inc.¹	5,869		118,612
j2 Global Communications Inc.¹	9,405		258,073
Jupitermedia Corp.¹	4,205		36,962
NetFlix Inc.^1,2	11,260		311,452
Openwave Systems Inc.¹	17,866		154,184
Opsware Inc.¹	17,329		157,521
Redback Networks Inc.¹	11,206		177,279
Sapient Corp.¹	15,396		83,908
Stamps.com Inc.¹	4,103		65,853
TIBCO Software Inc.¹	40,368		373,404
Travelzoo Inc.¹	513		16,708
TriZetto Group Inc. (The)¹	8,155		139,369
ValueClick Inc.¹	19,692		370,210
WebEx Communications Inc.¹	8,463		325,402


62		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Websense Inc.¹	8,932	$	244,469

			4,718,262
LEISURE TIME – 0.92%
Ambassadors Group Inc.	3,079		84,334
Life Time Fitness Inc.¹	5,764		297,019
WMS Industries Inc.¹	5,336		188,521

			569,874
LODGING – 0.08%
Morgans Hotel Group Co.¹	3,978		51,714

			51,714
MACHINERY – 2.42%
Astec Industries Inc.¹	3,095		98,700
Bucyrus International Inc. Class A	5,972		250,227
Cognex Corp.	8,071		185,875
Gardner Denver Inc.¹	10,059		341,905
Intermec Inc.¹	9,334		210,948
Middleby Corp. (The)¹	1,391		125,343
Wabtec Corp.	9,181		288,192

			1,501,190
MANUFACTURING – 1.34%
Actuant Corp. Class A	5,131		263,426
American Railcar Industries Inc.	1,712		52,901
Ceradyne Inc.¹	4,713		194,411
ESCO Technologies Inc.¹	4,811		208,894
Raven Industries Inc.	3,423		109,844

			829,476
MEDIA – 0.43%
CKX Inc.¹	8,536		116,943
Cumulus Media Inc. Class A¹	6,850		73,432
Entravision Communications Corp.¹	10,636		78,068

			268,443
MINING – 0.89%
Apex Silver Mines Ltd.¹	10,340		163,372
Royal Gold Inc.²	4,109		120,969
RTI International Metals Inc.¹	4,358		267,233

			551,574
OIL & GAS – 3.31%
Atlas America Inc.¹	3,431		164,722
ATP Oil & Gas Corp.¹	3,688		158,547
Atwood Oceanics Inc.¹	5,055		233,541
Bill Barrett Corp.¹	5,322		151,837
Bois d’Arc Energy Inc.¹	3,509		56,425
Bronco Drilling Co. Inc.¹	2,566		43,725
Carrizo Oil & Gas Inc.¹	4,092		116,867
Crosstex Energy Inc.	1,841		176,699
Delta Petroleum Corp.¹	10,015		257,385
EXCO Resources Inc.¹	15,952		230,985
Goodrich Petroleum Corp.¹	2,589		88,570
Parallel Petroleum Corp.¹	7,092		143,613
Pioneer Drilling Co.¹	9,383		123,199
Warren Resources Inc.¹	9,345		110,178

			2,056,293
OIL & GAS SERVICES – 4.36%
Basic Energy Services Inc.¹	2,951		72,122
CARBO Ceramics Inc.	3,688		124,286
Complete Production Services Inc.¹	5,661		109,201
Core Laboratories NV¹	4,866		354,683
Dril-Quip Inc.¹	4,434		174,611
Global Industries Ltd.¹	16,156		268,190
Hercules Offshore Inc.¹	3,958		140,984
Hornbeck Offshore Services Inc.¹	4,407		159,049
Hydril Co.¹	3,865		232,093
Input/Output Inc.¹	13,318		149,295
Lufkin Industries Inc.	2,793		168,530
RPC Inc.	5,033		109,317
SuperiorWell Services Inc.¹	1,241		29,958
Tetra Technologies Inc.¹	13,714		355,193
W-H Energy Services Inc.¹	5,576		261,124

			2,708,636
PHARMACEUTICALS – 7.27%
Adams Respiratory Therapeutics Inc.¹	4,477		192,959
Adolor Corp.¹	8,690		119,140
BioMarin Pharmaceutical Inc.¹	16,157		258,997
Cubist Pharmaceuticals Inc.¹	10,279		228,913
HealthExtras Inc.¹	5,578		128,461
Idenix Pharmaceuticals Inc.¹	3,841		32,687
K-V Pharmaceutical Co. Class A¹	7,009		156,441
MannKind Corp.¹	6,304		127,656
Medarex Inc.¹	23,473		303,271
Medicines Co. (The)¹	9,413		244,361


SCHEDULES OF INVESTMENTS		63

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Medicis Pharmaceutical Corp. Class A	10,317	$	361,508
MGI Pharma Inc.¹	15,121		287,753
Onyx Pharmaceuticals Inc.¹	7,830		147,047
OSI Pharmaceuticals Inc.¹	10,938		418,707
Pharmion Corp.¹	5,113		125,013
Salix Pharmaceuticals Ltd.¹	8,799		117,291
Sciele Pharma Inc.¹	5,665		123,554
Tanox Inc.¹	4,665		62,651
Theravance Inc.¹	8,872		279,113
United Therapeutics Inc.¹	4,461		266,991
USANA Health Sciences Inc.^1,2	1,915		86,022
Valeant Pharmaceuticals International	17,827		333,008
Zymogenetics Inc.¹	7,113		114,164

			4,515,708
REAL ESTATE INVESTMENT TRUSTS – 3.59%
BioMed Realty Trust Inc.	12,312		396,816
Corporate Office Properties Trust	8,107		387,434
Digital Realty Trust Inc.	8,363		279,241
Extra Space Storage Inc.	9,802		180,749
Franklin Street Properties Corp.	12,107		248,799
LaSalle Hotel Properties	7,697		325,198
Spirit Finance Corp.	18,332		218,334
U-Store-It Trust	8,924		195,971

			2,232,542
RETAIL – 6.21%
Aeropostale Inc.¹	10,489		307,433
Bebe Stores Inc.	4,312		107,067
Build-A-BearWorkshop Inc.^1,2	2,887		84,243
California Pizza Kitchen Inc.¹	3,750		121,012
Children’s Place Retail Stores Inc. (The)¹	4,561		320,137
Chipotle Mexican Grill Inc. Class A^1,2	2,526		151,307
Christopher & Banks Corp.	7,082		191,143
Citi Trends Inc.^1,2	1,310		51,404
Dick’s Sporting Goods Inc.¹	6,536		325,231
Dress Barn Inc.¹	8,612		187,053
DSW Inc. Class A¹	3,061		105,911
First Cash Financial Services Inc.¹	5,476		118,336
Guitar Center Inc.¹	4,925		213,597
Hibbet Sporting Goods Inc.¹	6,759		197,633
Jos. A. Bank Clothiers Inc.¹	3,406		101,124
P.F. Chang’s China Bistro Inc.^1,2	4,993		208,807
Red Robin Gourmet Burgers Inc.¹	2,461		118,719
Select Comfort Corp.¹	10,190		217,862
Texas Roadhouse Inc. Class A¹	10,323		149,167
Under Armour Inc. Class A¹	5,298		245,562
World Fuel Services Corp.	5,356		230,415
Zumiez Inc.¹	3,230		106,138

			3,859,301
SAVINGS & LOANS – 0.60%
Kearny Financial Corp.	4,131		66,096
NewAlliance Bancshares Inc.	19,769		306,024

			372,120
SEMICONDUCTORS – 4.83%
ATMI Inc.¹	6,905		218,819
Diodes Inc.¹	3,722		163,917
Exar Corp.¹	6,815		88,391
FormFactor Inc.¹	8,154		311,320
Genesis Microchip Inc.¹	6,887		70,592
Hittite Microwave Corp.¹	2,498		85,656
Micrel Inc.¹	11,493		128,262
Microsemi Corp.¹	12,462		244,255
NetLogic Microsystems Inc.¹	3,237		64,190
OmniVision Technologies Inc.¹	10,325		169,536
Semtech Corp.¹	13,789		179,671
Silicon Image Inc.¹	15,425		182,478
SiRFTechnology Holdings Inc.¹	8,911		250,577
Tessera Technologies Inc.¹	8,880		310,001
Varian Semiconductor Equipment Associates Inc.¹	11,009		401,718
Zoran Corp.¹	9,278		129,150

			2,998,533
SOFTWARE – 6.27%
Advent Software Inc.¹	3,898		144,304
Allscripts Healthcare Solutions Inc.¹	8,375		197,566
Altiris Inc.¹	4,579		103,073
ANSYS Inc.¹	6,155		283,130
Blackbaud Inc.	8,248		206,200
Blackboard Inc.¹	4,567		126,552
Dendrite International Inc.¹	7,088		74,070
Eclipsys Corp.¹	8,940		189,439


64		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
Epicor Software Corp.¹		8,772	$	123,071
Informatica Corp.¹		16,377		202,911
MicroStrategy Inc. Class A¹		1,813		216,382
Per-Se Technologies Inc.¹		6,407		156,843
Quality Systems Inc.		3,199		135,766
Quest Software Inc.¹		10,435		153,708
SPSS Inc.¹		3,661		101,300
Take-Two Interactive Software Inc.^1,2		13,734		192,139
THQ Inc.¹		12,253		368,448
Transaction Systems Architects Inc. Class A¹		7,036		237,184
Trident Microsystems Inc.¹		10,810		228,523
Ultimate Software Group Inc.¹		3,847		95,175
Verint Systems Inc.¹		2,392		78,314
Wind River Systems Inc.¹		15,255		167,500
Witness Systems Inc.¹		6,322		112,152

				3,893,750
STORAGE & WAREHOUSING – 0.35%
Mobile Mini Inc.¹		6,674		214,703

				214,703
TELECOMMUNICATIONS – 5.55%
Aeroflex Inc.¹		14,091		152,183
Atheros Communications Inc.¹		9,846		213,954
CommScope Inc.¹		11,183		356,850
Comtech Telecommunications Corp.¹		4,314		153,794
FiberTower Corp.^1,2		5,684		41,209
Finisar Corp.¹		47,057		163,758
InterDigital Communications Corp.¹		10,461		374,085
iPCS Inc.¹		2,113		113,996
Ixia¹		6,845		62,632
NETGEAR Inc.¹		6,263		167,848
Newport Corp.¹		7,203		155,729
Plantronics Inc.		8,970		189,357
Polycom Inc.¹		16,722		458,183
RCN Corp.¹		6,971		201,322
Sonus Networks Inc.¹		47,794		249,963
Stratex Networks Inc.¹		15,470		72,245
Tekelec¹		12,621		186,160
Viasat Inc.¹		5,043		136,867

				3,450,135

*Security*	Shares or Principal		*Value*
TRANSPORTATION – 2.53%
EGL Inc.¹		6,155	$	209,208
Forward Air Corp.		5,972		193,911
Genesee & Wyoming Inc. Class A¹		7,093		199,242
Kansas City Southern Industries Inc.¹		14,500		411,655
Kirby Corp. ¹		9,985		349,775
Knight Transportation Inc.²		10,620		193,496
SIRVA Inc.¹		4,952		16,540

				1,573,827

TOTAL COMMON STOCKS (Cost: $61,563,519)				62,076,992

SHORT-TERM INVESTMENTS – 4.14%
CERTIFICATES OF DEPOSIT³– 0.16%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	14,312		14,312
Societe Generale
5.33%, 12/08/06		20,446		20,446
Washington Mutual Bank
5.36%, 11/13/06		51,114		51,114
Wells Fargo Bank N.A.
4.78%, 12/05/06		16,357		16,357

				102,229
COMMERCIAL PAPER³– 0.73%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		30,523		29,987
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		30,669		30,669
ASAP Funding Ltd.
5.29%, 11/02/06⁴		5,111		5,111
Atlantis One Funding
5.30%, 11/14/06⁴		28,053		27,999
Beta Finance Inc.
5.27%, 01/25/07⁴		4,089		4,038
Bryant Park Funding LLC
5.28%, 12/14/06⁴		6,455		6,414
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		10,364		10,344


SCHEDULES OF INVESTMENTS		65

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Cantabric Finance LLC
5.26%, 01/25/07⁴	$	8,178	$	8,077
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		23,513		23,479
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		15,334		14,956
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		12,267		12,223
Curzon Funding LLC
5.29%, 11/17/06⁴		20,446		20,398
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		23,557		23,272
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		20,446		20,431
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		18,606		18,334
Galleon Capital Corp.
5.27%, 12/18/06⁴		2,859		2,839
General Electric Capital Services Inc.
5.22%, 12/11/06		2,045		2,033
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		12,063		11,825
HBOS Treasury Services PLC
5.27%, 12/15/06		4,089		4,063
Landale Funding LLC
5.31%, 11/15/06⁴		15,948		15,915
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		36,725		36,699
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		13,187		13,160
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		26,579		26,075
Nestle Capital Corp.
5.19%, 08/09/07		12,267		11,770

*Security*	Shares or Principal		*Value*
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴	$	32,301	$	32,301
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		10,893		10,766
Sedna Finance Inc.
5.22%, 04/17/07⁴		11,654		11,372
Sydney Capital Corp.
5.27%, 12/08/06⁴		488		485
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		10,223		10,107
Tulip Funding Corp.
5.29%, 11/15/06⁴		10,783		10,761

				455,903
MEDIUM-TERM NOTES³– 0.14%
Bank of America N.A.
5.28%, 04/20/07		5,111		5,111
Cullinan Finance Corp.
5.71%, 06/28/07⁴		15,334		15,334
K2 USA LLC
5.39%, 06/04/07⁴		15,334		15,334
Marshall & Ilsley Bank
5.18%, 12/15/06		20,446		20,454
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		23,921		23,921
US Bank N.A.
2.85%, 11/15/06		4,089		4,086

				84,240
MONEY MARKET FUNDS – 0.10%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		59,099		59,099

				59,099


66		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
REPURCHASE AGREEMENTS³- 0.80%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $40,897 (collateralized by non-U.S. Government debt securities, value $42,132, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	40,891	$	40,891
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $28,628 (collateralized by U.S. Government obligations, value $29,206, 5.50%, 10/1/21 to 10/1/36).		28,624		28,624
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $30,674 (collateralized by non-U.S. Government debt securities, value $33,747, 0.31% to 6.00%, 7/25/36 to 11/25/46).		30,669		30,669
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $2,045 (collateralized by non-U.S. Government debt securities, value $2,107, 6.00% to 6.70%, 12/15/10 to 4/15/12).		2,045		2,045
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $71,571 (collateralized by non-U.S. Government debt securities, value $75,162, 4.11% to 9.32%, 4/15/10 to 5/15/36).		71,560		71,560
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $22,493 (collateralized by non-U.S. Government debt securities, value $25,204, 0.00% to 10.00%, 5/27/33 to 10/31/36).		22,490		22,490
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $12,269 (collateralized by non-U.S. Government debt securities, value $13,571, 0.00% to 10.00%, 5/27/33 to 10/31/36).		12,267		12,267
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $40,897 (collateralized by non-U.S. Government debt securities, value $42,950, 0.00% to 9.00%, 5/1/17 to 9/25/46).		40,891		40,891
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $35,785 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $36,688, 0.00% to 7.32%, 11/2/06 to 3/25/45).		35,780		35,780


SCHEDULES OF INVESTMENTS		67

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $30,674 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $31,253, 0.00% to 7.32%, 11/2/06 to 3/25/45).	$	30,669	$	30,669
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $12,269 (collateralized by non-U.S. Government debt securities, value $12,885, 0.00% to 10.00%, 1/1/10).		12,267		12,267
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $10,225 (collateralized by non-U.S. Government debt securities, value $10,738, 5.26% to 5.35%, 7/1/24 to 6/1/46).		10,223		10,223
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $5,112 (collateralized by non-U.S. Government debt securities, value $5,370, 6.25% to 7.63%, 9/15/13 to 6/1/16).		5,111		5,111
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $40,897 (collateralized by non-U.S. Government debt securities, value $42,132, 3.50% to 10.13%, 5/15/07 to 7/1/26).		40,891		40,891
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $20,449 (collateralized by non-U.S. Government debt securities, value $22,539, 5.50% to 10.39%, 6/17/08 to 6/25/36).		20,446		20,446
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $27,606 (collateralized by non-U.S. Government debt securities, value $29,201, 0.00% to 10.00%, 11/1/06 to 10/31/36).		27,602		27,602
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $14,785 (collateralized by non-U.S. Government debt securities, value $15,354, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		14,312		14,312
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $53,167 (collateralized by non-U.S. Government debt securities, value $55,835, 3.86% to 8.17%, 11/18/08 to 7/15/45).		53,159		53,159

				499,897
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		2,113		2,113

				2,113
VARIABLE & FLOATING RATE NOTES³– 2.21%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴		52,341		52,347


68		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^{^®}MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
American Express Bank
5.29%, 02/28/07	$	20,446	$	20,446
American Express Centurion Bank
5.41%, 07/19/07		22,490		22,509
American Express Credit Corp.
5.42%, 07/05/07		6,134		6,136
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		3,689		3,689
ASIF Global Financing
5.51%, 05/03/07⁴		2,045		2,045
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		13,290		13,290
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		29,646		29,647
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		52,137		52,138
BMW US Capital LLC
5.32%, 10/15/07⁴		20,446		20,446
BNP Paribas
5.36%, 05/18/07⁴		37,825		37,825
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		14,925		14,926
CC USA Inc.
5.37%, 07/30/07⁴		10,223		10,224
Commodore CDO Ltd.
5.47%, 06/12/07⁴		5,111		5,111
Credit Agricole SA
5.34%, 07/23/07		20,446		20,446
Credit Suisse First Boston NY
5.38%, 04/24/07		10,223		10,223
Cullinan Finance Corp.
5.36%, 04/25/07⁴		5,111		5,111
DaimlerChrysler Auto Trust Series 2006-C Class A1
5.33%, 10/08/07⁴		5,111		5,111
DEPFA Bank PLC
5.43%, 09/14/07		20,446		20,446
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		23,513		23,514
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		20,446		20,446
Fifth Third Bancorp
5.30%, 11/23/07⁴		40,891		40,891
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		20,446		20,444
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		21,468		21,472
Granite Master Issuer PLC
5.29%, 08/20/07⁴		71,560		71,560
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		16,357		16,359
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		30,669		30,673
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		20,446		20,446
Holmes Financing PLC
5.29%, 07/16/07⁴		35,780		35,780
JP Morgan Chase & Co.
5.29%, 08/02/07		15,334		15,334
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		15,334		15,334
Kestrel Funding LLC
5.30%, 07/11/07⁴		8,178		8,178
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		12,267		12,267
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴		21,309		21,310
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		22,490		22,489
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		8,097		8,097


SCHEDULES OF INVESTMENTS		69

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL GROWTH INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Marshall & Ilsley Bank
5.30%, 10/15/07	$	11,245	$	11,245
Master Funding LLC
5.35%, 04/25/07⁴		18,401		18,401
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		30,669		30,669
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		2,045		2,045
Monumental Global Funding II
5.38%, 12/27/06⁴		4,089		4,089
Mound Financing PLC
5.29%, 05/08/07⁴		19,219		19,219
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		73,605		73,603
National City Bank of Indiana
5.37%, 05/21/07		10,223		10,223
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		67,471		67,484
Newcastle Ltd.
5.34%, 04/24/07⁴		7,207		7,206
Northern Rock PLC
5.36%, 08/03/07⁴		24,535		24,535
Northlake CDO I
5.46%, 09/06/07⁴		6,134		6,134
Principal Life Global Funding I
5.82%, 02/08/07		9,201		9,212
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		29,646		29,646
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		20,446		20,446
Strips III LLC
5.37%, 07/24/07⁴		4,700		4,700
SunTrust Bank
5.29%, 05/01/07		20,446		20,446
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		49,888		49,884
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		28,624		28,624
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		27,399		27,398
Wachovia Bank N.A.
5.36%, 05/22/07		40,891		40,891
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		15,334		15,342
Wells Fargo & Co.
5.33%, 11/15/07⁴		10,223		10,223
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		15,334		15,335
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		61,337		61,327
Wind Master Trust
5.31%, 07/25/07⁴		8,178		8,178

				1,373,215

TOTAL SHORT-TERM INVESTMENTS (Cost: $2,576,696)				2,576,696

TOTAL INVESTMENTS IN SECURITIES – 104.05% (Cost: $64,140,215)				64,653,688
Other Assets, Less Liabilities – (4.05)%				(2,519,083	)

NET ASSETS – 100.00%			$	62,134,605

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


70		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
COMMON STOCKS – 99.86%
ADVERTISING – 0.29%
Catalina Marketing Corp.	9,993	$	253,323

			253,323
AGRICULTURE – 0.29%
Universal Corp.	6,990		257,372

			257,372
APPAREL – 0.48%
Kellwood Co.	6,546		200,308
Oxford Industries Inc.	4,191		221,201

			421,509
AUTO MANUFACTURERS – 0.13%
Wabash National Corp.	8,450		118,553

			118,553
AUTO PARTS & EQUIPMENT – 2.34%
American Axle & Manufacturing Holdings Inc.	12,096		226,800
ArvinMeritor Inc.	18,286		274,656
Bandag Inc.	1,775		77,905
CooperTire & Rubber Co.	16,793		180,189
Lear Corp.	18,390		555,562
Modine Manufacturing Co.	8,560		203,814
Tenneco Inc.¹	12,510		283,977
Visteon Corp.¹	35,046		258,639

			2,061,542
BANKS – 12.76%
Alabama National Bancorp	4,691		318,284
AMCORE Financial Inc.	6,279		196,595
BancFirst Corp.	1,991		99,052
Central Pacific Financial Corp.	8,337		306,718
Chemical Financial Corp.	6,375		190,676
Chittenden Corp.	12,590		371,279
Citizens Banking Corp.	11,843		307,563
City Holding Co.	4,809		188,513
Community Bank System Inc.	8,188		203,472
Community Banks Inc.	6,553		176,079
Corus Bankshares Inc.	9,217		189,225
F.N.B. Corp. (Pennsylvania)	16,487		279,125
First BanCorp (Puerto Rico)	20,499		202,940
First Charter Corp.	8,454		210,420
First Commonwealth Financial Corp.	18,360		245,473
First Financial Bancorp	10,833		175,928
First Financial Bankshares Inc.	4,867		195,021
First Midwest Bancorp Inc.	13,711		521,429
Greater Bay Bancorp	13,822		355,916
Harleysville National Corp.	7,917		169,107
Independent Bank Corp. (Michigan)	5,898		140,962
Irwin Financial Corp.	6,684		148,184
MB Financial Inc.	9,512		343,003
Mid-State Bancshares	6,127		183,749
National Penn Bancshares Inc.	11,974		245,347
NBT Bancorp Inc.	9,430		234,335
Old National Bancorp	16,563		314,366
Pacific Capital Bancorp	12,861		395,604
Park National Corp.	3,101		314,410
Provident Bankshares Corp.	9,038		326,633
R&G Financial Corp. Class B	8,088		62,278
Republic Bancorp Inc.	20,463		273,795
S&T Bancorp Inc.	7,006		237,153
Sterling Financial Corp. (Pennsylvania)	6,945		160,291
Susquehanna Bancshares Inc.	14,232		355,658
TrustCo Bank Corp. NY²	20,345		224,812
Trustmark Corp.	13,470		426,460
UMB Financial Corp.	8,178		293,263
Umpqua Holdings Corp.	15,664		442,351
United Bancshares Inc.	10,956		418,410
W Holding Co. Inc.	36,271		206,382
WesBanco Inc.	5,350		175,212
Westamerica Bancorp	8,539		425,669

			11,251,142
BIOTECHNOLOGY – 0.37%
Applera Corp. - Celera Genomics Group¹	21,075		327,084

			327,084
BUILDING MATERIALS – 0.54%
Builders FirstSource Inc.¹	4,590		72,614
Texas Industries Inc.	6,556		407,128

			479,742
CHEMICALS – 4.82%
CF Industries Holdings Inc.	13,583		269,215
Ferro Corp.	11,683		230,389


SCHEDULES OF INVESTMENTS		71

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Fuller (H.B.) Co.	16,314	$	404,424
Georgia Gulf Corp.	9,340		199,783
Grace (W.R.) & Co.¹	15,619		209,295
MacDermid Inc.	7,045		235,655
Minerals Technologies Inc.	5,498		303,270
NL Industries Inc.	2,051		22,766
Olin Corp.	19,757		341,796
OM Group Inc.¹	8,026		457,482
PolyOne Corp.¹	25,372		208,050
Rockwood Holdings Inc.¹	9,829		229,114
Schulman (A.) Inc.	7,894		191,114
Sensient Technologies Corp.	12,689		292,481
Terra Industries Inc.¹	25,521		237,090
Tronox Inc. Class A	5,046		66,103
Tronox Inc. Class B	6,276		82,090
UAP Holding Corp.	10,655		266,695

			4,246,812
COMMERCIAL SERVICES – 4.10%
ABM Industries Inc.	12,066		239,631
Alderwoods Group Inc.¹	11,136		221,495
Banta Corp.	6,565		290,698
Coinmach Service Corp. Class A	7,971		79,710
Deluxe Corp.	14,046		318,423
DollarThrifty Automotive Group Inc.¹	6,205		249,193
NCO Group Inc.¹	8,125		219,050
PHH Corp.¹	14,584		402,518
Pre-Paid Legal Services Inc.²	3,706		157,320
Rent-A-Center Inc.¹	19,169		551,300
Stewart Enterprises Inc. Class A	26,243		162,182
Valassis Communications Inc.¹	13,028		195,550
Watson Wyatt Worldwide Inc.	11,712		528,797

			3,615,867
COMPUTERS – 1.44%
Gateway Inc.¹	69,263		116,362
Imation Corp.	9,555		437,332
McDATA Corp. Class A¹	32,660		185,182
McDATA Corp. Class B¹	10,668		59,741
Perot Systems Corp. Class A¹	23,544		347,274
Quantum Corp.¹	57,729		125,849

			1,271,740
COSMETICS & PERSONAL CARE – 0.07%
Revlon Inc. Class A¹	45,269		60,208

			60,208
DISTRIBUTION & WHOLESALE – 1.10%
Building Materials Holding Corp.	7,917		206,317
Owens & Minor Inc.	10,979		345,948
United Stationers Inc.¹	8,647		412,894

			965,159
DIVERSIFIED FINANCIAL SERVICES – 1.25%
Doral Financial Corp.²	25,473		117,176
Friedman, Billings, Ramsey Group Inc. Class A	40,677		310,366
GAMCO Investors Inc. Class A	1,474		58,370
LaBranche & Co. Inc.¹	15,650		138,816
Piper Jaffray Companies¹	5,716		395,261
Stewart (W.P.) & Co. Ltd.	6,215		85,767

			1,105,756
ELECTRIC – 5.23%
ALLETE Inc.	6,900		311,190
Aquila Inc.¹	102,203		469,112
Avista Corp.	13,254		341,158
Black Hills Corp.	9,070		313,006
CH Energy Group Inc.	4,315		224,466
Cleco Corp.	15,472		397,630
Duquesne Light Holdings Inc.	21,737		431,045
Empire District Electric Co. (The)	8,038		190,822
IDACORP Inc.	11,713		461,844
MGE Energy Inc.	5,550		189,810
OtterTail Corp.	7,145		213,921
PNM Resources Inc.	17,096		481,423
UIL Holdings Corp.	6,116		243,111
UniSource Energy Corp.	9,600		341,568

			4,610,106
ELECTRICAL COMPONENTS & EQUIPMENT – 0.19%
GrafTech International Ltd.¹	27,659		167,337

			167,337
ELECTRONICS – 0.79%
Park Electrochemical Corp.	5,015		154,061
Watts Water Technologies Inc. Class A	6,833		254,324
Woodward Governor Co.	8,020		286,394

			694,779


72		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
ENERGY - ALTERNATE SOURCES – 0.10%
FuelCell Energy Inc.¹	13,278	$	87,900

			87,900
ENGINEERING & CONSTRUCTION – 1.09%
EMCOR Group Inc.¹	8,645		511,352
Washington Group International Inc.	7,938		449,450

			960,802
ENTERTAINMENT – 0.35%
Magna Entertainment Corp. Class A^1,2	9,939		52,180
Six Flags Inc.^1,2	20,565		117,221
Speedway Motorsports Inc.	3,782		142,468

			311,869
ENVIRONMENTAL CONTROL – 0.73%
Aleris International Inc.¹	8,574		441,647
Metal Management Inc.	7,354		202,088

			643,735
FOOD – 2.54%
Chiquita Brands International Inc.	11,515		157,756
Fresh Del Monte Produce Inc.	7,769		121,119
Gold Kist Inc.¹	13,881		274,983
Great Atlantic & Pacific Tea Co.	4,795		132,678
Lance Inc.	8,429		164,534
Premium Standard Farms Inc.	5,330		102,549
Ralcorp Holdings Inc.¹	7,301		361,034
Ruddick Corp.	9,767		275,429
Sanderson Farms Inc.	4,796		127,238
Tootsie Roll Industries Inc.	6,293		199,992
TreeHouse Foods Inc.¹	8,511		215,839
Weis Markets Inc.	2,654		107,752

			2,240,903
FOREST PRODUCTS & PAPER – 1.23%
Bowater Inc.	15,223		318,313
Glatfelter Co.	11,093		162,402
Potlatch Corp.	10,576		429,386
Wausau Paper Corp.	13,108		177,744

			1,087,845
GAS – 3.40%
Laclede Group Inc. (The)	5,465		194,718
New Jersey Resources Corp.	7,690		398,803
Nicor Inc.	12,171		559,379
Northwest Natural Gas Co.	7,553		312,468
Peoples Energy Corp.	10,595		462,896
South Jersey Industries Inc.	7,939		245,553
Southwest Gas Corp.	10,963		393,352
WGL Holdings Inc.	13,315		432,072

			2,999,241
HEALTH CARE - PRODUCTS – 0.40%
CONMED Corp.¹	7,690		170,641
Invacare Corp.	8,349		182,259

			352,900
HEALTH CARE - SERVICES – 0.59%
Apria Healthcare Group Inc.¹	11,600		270,164
Kindred Healthcare Inc.¹	9,169		247,563

			517,727
HOME BUILDERS – 0.81%
Brookfield Homes Corp.²	3,340		108,383
M/I Homes Inc.	3,379		121,374
Meritage Homes Corp.¹	5,985		273,993
Technical Olympic USA Inc.	5,243		58,197
WCI Communities Inc.^1,2	9,626		155,171

			717,118
HOME FURNISHINGS – 0.81%
Ethan Allen Interiors Inc.	8,636		307,614
Furniture Brands International Inc.²	12,254		227,924
La-Z-Boy Inc.²	14,184		173,754

			709,292
HOUSEHOLD PRODUCTS & WARES– 1.58%
American Greetings Corp. Class A	14,613		349,397
Blyth Inc.	8,186		195,809
Harland (John H.) Co.	7,413		303,118
Helen of Troy Ltd.¹	7,686		189,152
Tupperware Brands Corp.	16,603		352,482

			1,389,958
INSURANCE – 8.21%
Alfa Corp.	10,138		187,249
American Equity Investment Life Holding Co.	14,403		183,782
Argonaut Group Inc.¹	8,549		290,751
Assured Guaranty Ltd.	13,261		333,779
CNA Surety Corp.¹	4,305		87,564


SCHEDULES OF INVESTMENTS		73

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
Delphi Financial Group Inc. Class A	11,825	$	464,131
FBL Financial Group Inc. Class A	3,514		124,220
Harleysville Group Inc.	3,742		135,011
Horace Mann Educators Corp.	11,708		235,799
Infinity Property & Casualty Corp.	5,550		238,761
IPC Holdings Ltd.	17,563		527,593
LandAmerica Financial Group Inc.	4,270		269,394
Max Re Capital Ltd.	12,310		286,577
Navigators Group Inc. (The)¹	3,648		171,711
Odyssey Re Holdings Corp.²	4,940		175,123
Phoenix Companies Inc.	30,831		488,363
Platinum Underwriters Holdings Ltd.	16,205		483,881
Presidential Life Corp.	5,895		139,122
ProAssurance Corp.¹	8,403		409,226
RLI Corp.	6,076		329,380
Safety Insurance Group Inc.	3,989		199,490
Scottish Re Group Ltd.	12,674		144,864
Selective Insurance Group Inc.	7,531		416,088
State Auto Financial Corp.	3,882		124,729
Stewart Information Services Corp.	4,677		173,330
Triad Guaranty Inc.¹	3,356		172,868
21st Century Insurance Group	7,090		111,880
United America Indemnity Ltd. Class A¹	5,491		126,073
United Fire & Casualty Co.	5,956		210,723

			7,241,462
INTERNET – 1.04%
EarthLink Inc.¹	31,371		220,224
Equinix Inc.¹	6,681		456,980
United Online Inc.	17,783		240,426

			917,630
IRON & STEEL – 0.96%
Gibraltar Industries Inc.	7,623		160,922
Oregon Steel Mills Inc.¹	9,755		530,672
Ryerson Inc.	6,521		157,156

			848,750
LEISURE TIME – 0.20%
K2 Inc.¹	12,772		174,466

			174,466
LODGING – 0.35%
Marcus Corp.	5,866		146,591
Trump Entertainment Resorts Inc.¹	7,862		159,834

			306,425
MACHINERY – 0.84%
Briggs & Stratton Corp.	14,109		359,638
Cascade Corp.	2,986		152,883
NACCO Industries Inc.	1,490		224,394

			736,915
MANUFACTURING – 2.30%
Acuity Brands Inc.	12,151		601,961
EnPro Industries Inc.¹	5,773		184,736
Federal Signal Corp.	13,177		201,081
FreightCar America Inc.	3,431		182,426
Griffon Corp.¹	7,372		181,277
Jacuzzi Brands Inc.¹	21,114		261,602
Lancaster Colony Corp.	7,080		287,094
Tredegar Corp.	7,533		131,376

			2,031,553
MEDIA – 2.72%
Citadel Broadcasting Corp.	9,731		99,645
Cox Radio Inc. Class A¹	9,279		156,258
Entercom Communications Corp.	8,717		241,199
Journal Communications Inc. Class A	12,624		147,701
Lee Enterprises Inc.	10,604		302,532
Media General Inc. Class A	5,755		213,511
Mediacom Communications Corp.¹	15,266		127,471
Readers Digest Association Inc. (The)	26,384		379,402
Scholastic Corp.¹	9,190		288,750
Sinclair Broadcast Group Inc. Class A	12,974		117,025
Sun-Times Media Group Inc. Class A	13,996		81,177
Westwood One Inc.	18,788		148,613
World Wrestling Entertainment Inc.	5,507		91,802

			2,395,086
METAL FABRICATE & HARDWARE – 0.81%
Mueller Industries Inc.	10,031		367,837
Worthington Industries Inc.	19,777		341,747

			709,584
MINING – 0.90%
Century Aluminum Co.¹	6,631		258,079
Compass Minerals International Inc.	8,753		270,905
USEC Inc.	23,801		265,619

			794,603


74		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*	*Value*
OFFICE & BUSINESS EQUIPMENT– 0.44%
IKON Office Solutions Inc.	26,087	$	388,957

			388,957
OIL & GAS – 1.74%
Houston Exploration Co.¹	7,961		431,168
Stone Energy Corp.¹	7,171		279,454
Swift Energy Co.¹	7,968		372,265
Whiting Petroleum Corp.¹	10,163		453,371

			1,536,258
PACKAGING & CONTAINERS –0.75%
Graphic Packaging Corp.¹	27,429		106,973
Greif Inc. Class A	3,166		296,686
Silgan Holdings Inc.	6,223		257,446

			661,105
PHARMACEUTICALS – 0.49%
Perrigo Co.	24,254		433,904

			433,904
REAL ESTATE INVESTMENT TRUSTS – 12.00%
American Home Mortgage Investment Corp.	12,351		422,034
Anthracite Capital Inc.	15,586		223,192
Cousins Properties Inc.	11,051		395,294
Deerfield Triarc Capital Corp.	11,179		166,120
Entertainment Properties Trust	7,239		398,145
Equity One Inc.	10,630		267,026
FelCor Lodging Trust Inc.	16,767		348,083
Fieldstone Investment Corp.	13,370		108,698
First Industrial Realty Trust Inc.	12,279		564,466
Getty Realty Corp.	5,288		169,216
Glenborough Realty Trust Inc.	8,865		230,313
Impac Mortgage Holdings Inc.	19,290		182,676
Inland Real Estate Corp.	16,735		312,777
KKR Financial Corp.	22,005		590,394
Maguire Properties Inc.	9,912		423,837
MFA Mortgage Investments Inc.	21,687		171,761
Mid-America Apartment Communities Inc.	6,581		418,881
National Health Investors Inc.	6,864		220,609
National Retail Properties Inc.	15,846		356,060
Nationwide Health Properties Inc.	22,096		635,039
Newcastle Investment Corp.	12,041		357,256
NovaStar Financial Inc.²	8,923		284,822
Omega Healthcare Investors Inc.	15,877		268,004
Parkway Properties Inc.	3,851		190,008
Post Properties Inc.	11,832		579,531
PS Business Parks Inc.	4,417		290,859
RAIT Investment Trust	7,699		231,432
Redwood Trust Inc.	6,708		368,739
Saxon Capital Inc.	13,648		193,119
Senior Housing Properties Trust	19,660		450,804
Sovran Self Storage Inc.	4,839		285,404
Sun Communities Inc.	4,602		161,024
Trustreet Properties Inc.	18,488		313,741

			10,579,364
RETAIL – 8.23%
Asbury Automotive Group Inc.	6,400		153,600
Blockbuster Inc. Class A¹	29,256		114,684
Blockbuster Inc. Class B¹	16,840		59,950
Bob Evans Farms Inc.	9,974		338,218
Borders Group Inc.	17,719		364,834
Brown Shoe Co. Inc.	7,760		302,330
Buckle Inc. (The)	2,761		109,280
Cato Corp. Class A	8,390		192,047
CBRL Group Inc.	8,460		371,479
Domino’s Pizza Inc.	10,744		292,022
Finish Line Inc. (The) Class A	11,646		150,932
Group 1 Automotive Inc.	5,873		336,582
IHOP Corp.	4,365		227,722
Insight Enterprises Inc.¹	13,145		282,486
Jack in the Box Inc.¹	9,783		548,924
Kenneth Cole Productions Inc. Class A	3,317		84,351
Landry’s Restaurants Inc.	4,725		138,443
Lithia Motors Inc. Class A	4,305		109,778
Lone Star Steakhouse & Saloon Inc.	4,699		128,283
Nu Skin Enterprises Inc. Class A	14,613		279,401
Payless ShoeSource Inc.¹	18,439		493,243
Pep Boys-Manny, Moe & Jack Inc.	14,014		198,719
Pier 1 Imports Inc.	21,744		142,206
Regis Corp.	12,446		467,347
Sonic Automotive Inc.	8,181		215,160
Stage Stores Inc.	7,286		236,139


SCHEDULES OF INVESTMENTS		75

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Shares*		*Value*
Talbots Inc. (The)		6,108	$	171,268
Triarc Companies Inc. Class A		4,246		77,659
Triarc Companies Inc. Class B		9,278		155,778
Tuesday Morning Corp.		8,196		135,234
Zale Corp.¹		13,109		378,064

				7,256,163
SAVINGS & LOANS – 1.65%
Anchor BanCorp Wisconsin Inc.		5,628		163,437
BankAtlantic Bancorp Inc. Class A		13,080		171,348
Dime Community Bancshares Inc.		9,234		128,814
FirstFed Financial Corp.¹		4,545		280,745
Flagstar Bancorp Inc.		10,660		160,220
MAF Bancorp Inc.		8,529		367,515
PFF Bancorp Inc.		5,933		183,982

				1,456,061
SOFTWARE – 0.23%
Inter-Tel Inc.		5,651		116,919
SYNNEX Corp.¹		3,679		82,594

				199,513
TELECOMMUNICATIONS – 3.98%
Adaptec Inc.¹		31,753		143,841
Black Box Corp.		4,805		214,255
Cincinnati Bell Inc.¹		67,144		314,905
Commonwealth Telephone Enterprises Inc.		5,472		229,058
IDT Corp.¹		3,731		48,130
IDT Corp. Class B^1,2		13,469		174,962
Iowa Telecommunications Services Inc.		7,750		154,535
MasTec Inc.¹		11,750		128,663
Premiere Global Services Inc.¹		18,043		150,118
USA Mobility Inc.		6,746		171,213
Windstream Corp.		129,399		1,775,354

				3,505,034
TEXTILES – 0.41%
G&K Services Inc. Class A		5,824		221,953
UniFirst Corp.		3,750		135,188

				357,141
TOYS, GAMES & HOBBIES – 0.19%
JAKKS Pacific Inc.¹		7,539		163,521

				163,521

*Security*	Shares or Principal		*Value*
TRANSPORTATION – 1.15%
Arkansas Best Corp.		6,263	$	256,658
Bristow Group Inc.¹		6,050		200,860
General Maritime Corp.		7,536		275,365
Werner Enterprises Inc.		15,105		277,177

				1,010,060
WATER – 0.45%
American States Water Co.		4,565		191,730
California Water Service Group		5,252		204,303

				396,033

TOTAL COMMON STOCKS (Cost: $83,711,265)				88,026,909

SHORT-TERM INVESTMENTS – 1.53%
CERTIFICATES OF DEPOSIT³– 0.06%
Credit Suisse First Boston NY
5.28% - 5.43%, 04/23/07 - 08/21/07	$	7,303		7,303
Societe Generale
5.33%, 12/08/06		10,433		10,433
Washington Mutual Bank
5.36%, 11/13/06		26,082		26,082
Wells Fargo Bank N.A.
4.78%, 12/05/06		8,346		8,346

				52,164
COMMERCIAL PAPER³– 0.26%
Amstel Funding Corp.
5.20% - 5.27%, 11/21/06 - 04/17/07⁴		15,575		15,296
Amsterdam Funding Corp.
5.33%, 11/01/06⁴		15,649		15,649
ASAP Funding Ltd.
5.29%, 11/02/06⁴		2,608		2,608
Atlantis One Funding
5.30%, 11/14/06⁴		14,315		14,287
Beta Finance Inc.
5.27%, 01/25/07⁴		2,087		2,061
Bryant Park Funding LLC
5.28%, 12/14/06⁴		3,294		3,273
Cancara Asset Securitisation Ltd.
5.30%, 11/14/06⁴		5,289		5,278


76		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Cantabric Finance LLC
5.26%, 01/25/07⁴	$	4,173	$	4,121
Charta LLC
5.27% - 5.30%, 11/06/06 - 12/14/06⁴		11,998		11,980
Cheyne Finance LLC
5.24%, 04/12/07 - 04/23/07⁴		7,825		7,632
Concord Minutemen Capital Co. LLC
5.27% - 5.29%, 11/16/06 - 01/11/07⁴		6,260		6,237
Curzon Funding LLC
5.29%, 11/17/06⁴		10,433		10,408
Edison Asset Securitization LLC
5.21% - 5.22%, 12/11/06 - 04/11/07⁴		12,020		11,875
Falcon Asset Securitization Corp.
5.30%, 11/06/06⁴		10,433		10,425
Five Finance Inc.
5.19% - 5.22%, 12/01/06 - 04/20/07⁴		9,494		9,355
Galleon Capital Corp.
5.27%, 12/18/06⁴		1,459		1,449
General Electric Capital Services Inc.
5.22%, 12/11/06		1,043		1,037
Grampian Funding LLC
5.23% - 5.30%, 11/16/06 - 04/23/07⁴		6,155		6,034
HBOS Treasury Services PLC
5.27%, 12/15/06		2,087		2,073
Landale Funding LLC
5.31%, 11/15/06⁴		8,138		8,121
Lexington Parker Capital Co. LLC
5.19% - 5.32%, 11/15/06 - 01/10/07⁴		18,740		18,727
Mont Blanc Capital Corp.
5.29%, 11/15/06⁴		6,729		6,715
Nationwide Building Society
5.21% - 5.27%, 12/15/06 - 04/13/07		13,563		13,305

*Security*	Shares or Principal		*Value*
Nestle Capital Corp.
5.19%, 08/09/07	$	6,260	$	6,006
Park Granada LLC
5.35% - 5.36%, 11/01/06⁴		16,482		16,482
Polonius Inc.
5.26% - 5.27%, 12/15/06 - 02/20/07⁴		5,559		5,494
Sedna Finance Inc.
5.22%, 04/17/07⁴		5,947		5,803
Sydney Capital Corp.
5.27%, 12/08/06⁴		249		247
Thornburg Mortgage Capital Resources
5.28%, 01/17/07⁴		5,216		5,158
Tulip Funding Corp.
5.29%, 11/15/06⁴		5,502		5,491

				232,627
MEDIUM-TERM NOTES³– 0.05%
Bank of America N.A.
5.28%, 04/20/07		2,608		2,608
Cullinan Finance Corp.
5.71%, 06/28/07⁴		7,825		7,825
K2 USA LLC
5.39%, 06/04/07⁴		7,825		7,825
Marshall & Ilsley Bank
5.18%, 12/15/06		10,433		10,437
Sigma Finance Inc.
5.13% - 5.51%, 03/30/07 - 06/18/07⁴		12,206		12,206
US Bank N.A.
2.85%, 11/15/06		2,087		2,085

				42,986
MONEY MARKET FUNDS – 0.07%
Barclays Global Investors Funds Institutional Money Market Fund, Institutional Shares 5.29%^5,6		65,220		65,220

				65,220


SCHEDULES OF INVESTMENTS		77

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
REPURCHASE AGREEMENTS³– 0.29%
Banc of America Securities LLC Repurchase Agreement, 5.36%, due 11/1/06, maturity value $20,869 (collateralized by non-U.S. Government debt securities, value $21,499, 4.70% to 8.75%, 7/30/10 to 11/15/25).	$	20,866	$	20,866
Banc of America Securities LLC Repurchase Agreement, 5.40%, due 11/1/06, maturity value $14,608 (collateralized by U.S. Government obligations, value $14,903, 5.50%, 10/1/21 to 10/1/36).		14,606		14,606
Bear Stearns Companies Inc. (The) Repurchase Agreement, 5.37%, due 11/1/06, maturity value $15,651 (collateralized by non-U.S. Government debt securities, value $17,220, 0.31% to 6.00%, 7/25/36 to 11/25/46).		15,649		15,649
BNP Securities Corp. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $1,043 (collateralized by non-U.S. Government debt securities, value $1,075, 6.00% to 6.70%, 12/15/10 to 4/15/12).		1,043		1,043
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $36,520 (collateralized by non-U.S. Government debt securities, value $38,353, 4.11% to 9.32%, 4/15/10 to 5/15/36).		36,515		36,515
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.42%, due 11/1/06, maturity value $11,478 (collateralized by non-U.S. Government debt securities, value $12,861, 0.00% to 10.00%, 5/27/33 to 10/31/36).		11,476		11,476
Citigroup Global Markets Holdings Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $6,261 (collateralized by non-U.S. Government debt securities, value $6,925, 0.00% to 10.00%, 5/27/33 to 10/31/36).		6,260		6,260
Goldman Sachs & Co. Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $20,869 (collateralized by non-U.S. Government debt securities, value $21,916, 0.00% to 9.00%, 5/1/17 to 9/25/46).		20,866		20,866
Goldman Sachs Group Inc. Repurchase Agreement, 5.35%, due 11/1/06, maturity value $18,260 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $18,721, 0.00% to 7.32%, 11/2/06 to 3/25/45).		18,257		18,257


78		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Goldman Sachs Group Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $15,652 (collateralized by U.S. Government obligations and non-U.S. Government debt securities, value $15,947, 0.00% to 7.32%, 11/2/06 to 3/25/45).	$	15,649	$	15,649
Goldman Sachs Group Inc. Repurchase Agreement, 5.46%, due 11/1/06, maturity value $6,261 (collateralized by non-U.S. Government debt securities, value $6,575, 0.00% to 10.00%, 1/1/10).		6,260		6,260
HSBC Securities Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $5,217 (collateralized by non-U.S. Government debt securities, value $5,479, 5.26% to 5.35%, 7/1/24 to 6/1/46).		5,216		5,216
JP Morgan Securities Inc. Repurchase Agreement, 5.41%, due 11/1/06, maturity value $2,608 (collateralized by non-U.S. Government debt securities, value $2,740, 6.25% to 7.63%, 9/15/13 to 6/1/16).		2,608		2,608
Merrill Lynch & Co. Inc. Repurchase Agreement, 5.36%, due 11/1/06, maturity value $20,869 (collateralized by non-U.S. Government debt securities, value $21,499, 3.50% to 10.13%, 5/15/07 to 7/1/26).		20,866		20,866
Morgan Stanley Repurchase Agreement, 5.36%, due 11/1/06, maturity value $10,435 (collateralized by non-U.S. Government debt securities, value $11,501, 5.50% to 10.39%, 6/17/08 to 6/25/36).		10,433		10,433
Morgan Stanley Repurchase Agreement, 5.46%, due 11/1/06, maturity value $14,086 (collateralized by non-U.S. Government debt securities, value $14,900, 0.00% to 10.00%, 11/1/06 to 10/31/36).		14,084		14,084
Morgan Stanley Repurchase Agreement, 5.51%, due 6/4/07, maturity value $7,544 (collateralized by non-U.S. Government debt securities, value $7,835, 0.00% to 10.00%, 11/1/06 to 10/31/36).⁷		7,303		7,303
Wachovia Capital Repurchase Agreement, 5.38%, due 11/1/06, maturity value $27,129 (collateralized by non-U.S. Government debt securities, value $28,491, 3.86% to 8.17%, 11/18/08 to 7/15/45).		27,125		27,125

				255,082
TIME DEPOSITS³– 0.00%
SunTrust Bank
5.34%, 11/01/06		1,078		1,078

				1,078


SCHEDULES OF INVESTMENTS		79

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
VARIABLE & FLOATING RATE NOTES³– 0.80%
Allstate Life Global Funding II
5.30% - 5.38%, 10/15/07 - 11/08/07⁴	$	26,708	$	26,712
American Express Bank
5.29%, 02/28/07		10,433		10,432
American Express Centurion Bank
5.41%, 07/19/07		11,476		11,486
American Express Credit Corp.
5.42%, 07/05/07		3,130		3,131
AmeriCredit Automobile Receivables Trust
5.35%, 10/09/07⁴		1,882		1,882
ASIF Global Financing
5.51%, 05/03/07⁴		1,043		1,044
Australia & New Zealand Banking Group Ltd.
5.32%, 11/23/07⁴		6,781		6,781
Bank of Ireland
5.30% - 5.32%, 08/14/07 - 08/20/07⁴		15,128		15,128
Beta Finance Inc.
5.29% - 5.41%, 04/25/07 - 07/25/07⁴		26,604		26,605
BMW US Capital LLC
5.32%, 10/15/07⁴		10,433		10,433
BNP Paribas
5.36%, 05/18/07⁴		19,301		19,301
Carlyle Loan Investment Ltd.
5.37%, 04/13/07 - 07/15/07⁴		7,616		7,616
CC USA Inc.
5.37%, 07/30/07⁴		5,216		5,217
Commodore CDO Ltd.
5.47%, 06/12/07⁴		2,608		2,608
Credit Agricole SA
5.34%, 07/23/07		10,433		10,433
Credit Suisse First Boston NY
5.38%, 04/24/07		5,216		5,217
Cullinan Finance Corp.
5.36%, 04/25/07⁴		2,608		2,608
DaimlerChrysler Auto Trust Series 2006-C
Class A1 5.33%, 10/08/07⁴		2,608		2,608
DEPFA Bank PLC
5.43%, 09/14/07		10,433		10,433
Dorada Finance Inc.
5.34% - 5.41%, 06/27/07 - 07/17/07⁴		11,998		11,999
Eli Lilly Services Inc.
5.31%, 10/01/07⁴		10,433		10,433
Fifth Third Bancorp
5.30%, 11/23/07⁴		20,866		20,866
Five Finance Inc.
5.32% - 5.37%, 12/01/06 - 07/13/07⁴		10,433		10,433
General Electric Capital Corp.
5.28% - 5.45%, 07/09/07 - 11/23/07		10,954		10,957
Granite Master Issuer PLC
5.29%, 08/20/07⁴		36,515		36,515
Harrier Finance Funding LLC
5.33% - 5.41%, 07/25/07 - 08/15/07⁴		8,346		8,347
Hartford Life Global Funding Trusts
5.34% - 5.41%, 07/13/07 - 10/15/07		15,649		15,651
HBOS Treasury Services PLC
5.46%, 07/24/07⁴		10,433		10,433
Holmes Financing PLC
5.29%, 07/16/07⁴		18,257		18,257
JP Morgan Chase & Co.
5.29%, 08/02/07		7,825		7,825
K2 USA LLC
5.20% - 5.33%, 04/02/07 - 06/28/07⁴		7,825		7,824
Kestrel Funding LLC
5.30%, 07/11/07⁴		4,173		4,173
Kommunalkredit Austria AG
5.32%, 11/09/07⁴		6,260		6,260


80		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Schedule of Investments (Unaudited) (Continued)

iSHARES^® MORNINGSTAR SMALL VALUE INDEX FUND

October 31, 2006


*Security*	*Principal*		*Value*
Leafs LLC
5.32%, 01/22/07 - 02/20/07⁴	$	10,873	$	10,874
Links Finance LLC
5.28% - 5.35%, 05/10/07 - 05/16/07⁴		11,476		11,476
Lothian Mortgages Master Issuer PLC
5.29%, 04/24/07⁴		4,131		4,131
Marshall & Ilsley Bank
5.30%, 10/15/07		5,738		5,738
Master Funding LLC
5.35%, 04/25/07⁴		9,390		9,390
Metropolitan Life Global Funding I
5.33%, 08/06/07⁴		15,649		15,649
Metropolitan Life Insurance Funding Agreement
5.45%, 08/01/07^4,7		1,043		1,043
Monumental Global Funding II
5.38%, 12/27/06⁴		2,087		2,087
Mound Financing PLC
5.29%, 05/08/07⁴		9,807		9,807
Natexis Banques Populaires
5.31% - 5.38%, 02/05/07 - 11/09/07⁴		37,558		37,559
National City Bank of Indiana
5.37%, 05/21/07		5,216		5,217
Nationwide Building Society
5.35% - 5.49%, 07/20/07 - 10/26/07⁴		34,428		34,436
Newcastle Ltd.
5.34%, 04/24/07⁴		3,678		3,677
Northern Rock PLC
5.36%, 08/03/07⁴		12,519		12,520
Northlake CDO I
5.46%, 09/06/07⁴		3,130		3,130
Principal Life Global Funding I
5.82%, 02/08/07		4,695		4,701
Sedna Finance Inc.
5.36% - 5.37%, 05/25/07 - 08/21/07⁴		15,128		15,128
Skandinaviska Enskilda Bank NY
5.32%, 11/16/07⁴		10,433		10,433
Strips III LLC
5.37%, 07/24/07⁴		2,398		2,398
SunTrust Bank
5.29%, 05/01/07		10,433		10,433
Tango Finance Corp.
5.27% - 5.35%, 04/25/07 - 07/16/07⁴		25,456		25,454
Union Hamilton Special Funding LLC
5.36% - 5.39%, 12/21/06 - 03/28/07⁴		14,606		14,606
Wachovia Asset Securitization Inc.
5.31%, 11/27/06⁴		13,981		13,981
Wachovia Bank N.A.
5.36%, 05/22/07		20,866		20,866
Wal-Mart Stores Inc.
5.50%, 07/16/07⁴		7,825		7,828
Wells Fargo & Co.
5.33%, 11/15/07⁴		5,216		5,217
WhistleJacket Capital Ltd.
5.28% - 5.35%, 04/18/07 - 06/13/07⁴		7,825		7,825
White Pine Finance LLC
5.28% - 5.35%, 05/22/07 - 08/20/07⁴		31,299		31,293
Wind MasterTrust
5.31%, 07/25/07⁴		4,173		4,173

				700,718

TOTAL SHORT-TERM INVESTMENTS (Cost: $1,349,875)				1,349,875

TOTAL INVESTMENTS IN SECURITIES – 101.39% (Cost: $85,061,140)				89,376,784
Other Assets, Less Liabilities – (1.39)%				(1,221,655	)

NET ASSETS – 100.00%			$	88,155,129

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 may be resold to qualified institutional buyers under Rule 144A or pursuant to Section 4(2) of the Securities Act of 1933.

⁵	Affiliated issuer. See Note 2.

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

⁷	The investment adviser has determined that this security or a portion of these securities is illiquid.

See notes to the financial statements.


SCHEDULES OF INVESTMENTS		81

Statements of Assets and Liabilities (Unaudited)

iSHARES^® TRUST

October 31, 2006


	*iShares Morningstar*
	Large Core Index Fund		Large Growth Index Fund			Large Value Index Fund		Mid Core Index Fund		Mid Growth Index Fund		Mid Value Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	118,904,711	$	222,689,753		$	365,519,290	$	106,593,129	$	186,547,391	$	136,759,092

Affiliated issuers^a	$	208,440	$	252,386		$	1,044,645	$	113,044	$	115,913	$	—

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	129,081,763	$	231,771,862		$	397,066,469	$	115,354,224	$	189,839,975	$	145,034,220
Affiliated issuers^a		208,440		252,386			1,044,645		113,044		115,913		—
Receivables:
Investment securities sold		56		—			—		331,602		—		364,160
Dividends and interest		101,783		31,052			586,480		37,549		23,075		113,710
Capital shares sold		—		—			82,796		—		1,559		16,997

Total Assets		129,392,042		232,055,300			398,780,390		115,836,419		189,980,522		145,529,087

LIABILITIES
Payables:
Investment securities purchased		—		—			—		47,262		—		—
Collateral for securities on loan (Note 5)		—		—			—		97,661		5,071,564		1,082,246
Due to bank		—		—			—		—		—		158,554
Investment advisory fees (Note 2)		20,725		48,013			79,776		24,176		45,216		33,478

Total Liabilities		20,725		48,013			79,776		169,099		5,116,780		1,274,278

NET ASSETS	$	129,371,317	$	232,007,287		$	398,700,614	$	115,667,320	$	184,863,742	$	144,254,809

Net assets consist of:
Paid-in capital	$	119,061,631	$	224,048,800		$	361,019,115	$	104,492,648	$	176,899,933	$	134,052,466
Undistributed net investment income		98,868		19,363			793,438		77,053		1,349		297,482
Undistributed net realized gain (accumulated net realized loss)		33,766		(1,142,985	)		5,340,882		2,336,524		4,669,876		1,629,733
Net unrealized appreciation		10,177,052		9,082,109			31,547,179		8,761,095		3,292,584		8,275,128

NET ASSETS	$	129,371,317	$	232,007,287		$	398,700,614	$	115,667,320	$	184,863,742	$	144,254,809

Shares outstanding		1,750,000		3,700,000			4,950,000		1,450,000		2,250,000		1,750,000

Net asset value per share	$	73.93	$	62.70		$	80.55	$	79.77	$	82.16	$	82.43

^a	See Note 2.

^b	Securities on loan with market values of $ - , $ - , $ - , $94,524, $4,932,651 and $1,049,868, respectively. See Note 5.

See notes to the financial statements.


82		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Assets and Liabilities (Unaudited) (Continued)

iSHARES^® TRUST

October 31, 2006


	*iShares Morningstar*
	Small Core Index Fund		Small Growth Index Fund			Small Value Index Fund
ASSETS
Investments, at cost:
Unaffiliated issuers	$	114,485,910	$	64,081,116		$	84,995,920

Affiliated issuers^a	$	105,097	$	59,099		$	65,220

Investments in securities, at value (including securities on loan^b) (Note 1):
Unaffiliated issuers	$	122,920,834	$	64,594,589		$	89,311,564
Affiliated issuers^a		105,097		59,099			65,220
Receivables:
Dividends and interest		35,376		12,637			85,130

Total Assets		123,061,307		64,666,325			89,461,914

LIABILITIES
Payables:
Investment securities purchased		69,716		—			—
Collateral for securities on loan (Note 5)		1,205,931		2,517,597			1,284,655
Investment advisory fees (Note 2)		24,470		14,123			22,130

Total Liabilities		1,300,117		2,531,720			1,306,785

NET ASSETS	$	121,761,190	$	62,134,605		$	88,155,129

Net assets consist of:
Paid-in capital	$	112,014,635	$	61,582,071		$	81,844,744
Undistributed net investment income (accumulated net investment loss)		67,983		(20,019	)		122,396
Undistributed net realized gain		1,243,648		59,080			1,872,345
Net unrealized appreciation		8,434,924		513,473			4,315,644

NET ASSETS	$	121,761,190	$	62,134,605		$	88,155,129

Shares outstanding		1,450,000		850,000			1,100,000

Net asset value per share	$	83.97	$	73.10		$	80.14

^a	See Note 2.

^b	Securities on loan with market values of $1,168,864, $2,449,644 and $1,243,158, respectively. See Note 5.

See notes to the financial statements.


FINANCIAL STATEMENTS		83

Statements of Operations (Unaudited)

iSHARES^® TRUST

Six months ended October 31, 2006


	*iShares Morningstar*
	Large Core Index Fund			Large Growth Index Fund			Large Value Index Fund			Mid Core Index Fund			Mid Growth Index Fund			Mid Value Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^a	$	835,772		$	728,167		$	3,560,233		$	628,229		$	359,103		$	1,418,335
Interest from affiliated issuers^b		2,873			5,582			10,730			2,255			2,415			3,833
Securities lending income		—			18			2,540			986			31,143			2,345

Total investment income		838,645			733,767			3,573,503			631,470			392,661			1,424,513

EXPENSES
Investment advisory fees (Note 2)		100,179			257,008			314,431			132,146			273,338			168,220

Total expenses		100,179			257,008			314,431			132,146			273,338			168,220

Net investment income		738,466			476,759			3,259,072			499,324			119,323			1,256,293

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(1,323,113	)		(3,092,480	)		(1,025,610	)		(2,327,678	)		(143,749	)		(1,466,190	)
In-kind redemptions		2,534,217			4,762,752			7,429,070			5,692,545			6,008,835			3,789,321

Net realized gain		1,211,104			1,670,272			6,403,460			3,364,867			5,865,086			2,323,131

Net change in unrealized appreciation (depreciation)		5,902,878			2,553,070			17,408,407			(1,495,702	)		(17,051,694	)		2,066,858

Net realized and unrealized gain (loss)		7,113,982			4,223,342			23,811,867			1,869,165			(11,186,608	)		4,389,989

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	7,852,448		$	4,700,101		$	27,070,939		$	2,368,489		$	(11,067,285	)	$	5,646,282

^a	Net of foreign withholding tax of $–, $1,034, $–, $–, $– and $956, respectively.

^b	See Note 2.

See notes to the financial statements.


84		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Operations (Unaudited) (Continued)

iSHARES^® TRUST

Six months ended October 31, 2006


	*iShares Morningstar*
	Small Core Index Fund			Small Growth Index Fund			Small Value Index Fund
NET INVESTMENT INCOME
Dividends from unaffiliated issuers^a	$	493,853		$	45,717		$	976,979
Interest from affiliated issuers^b		2,256			789			2,958
Securities lending income		13,473			17,963			28,998

Total investment income		509,582			64,469			1,008,935

EXPENSES
Investment advisory fees (Note 2)		124,030			84,856			124,880

Total expenses		124,030			84,856			124,880

Net investment income (loss)		385,552			(20,387	)		884,055

NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments in unaffiliated issuers		(2,515,575	)		(2,637,485	)		(1,015,160	)
In-kind redemptions		5,048,611			3,785,287			4,079,887

Net realized gain		2,533,036			1,147,802			3,064,727

Net change in unrealized appreciation (depreciation)		(570,579	)		(6,447,946	)		(1,125,457	)

Net realized and unrealized gain (loss)		1,962,457			(5,300,144	)		1,939,270

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	2,348,009		$	(5,320,531	)	$	2,823,325

^a	Net of foreign withholding tax of $–, $– and $633, respectively.

^b	See Note 2.

See notes to the financial statements.


FINANCIAL STATEMENTS		85

Statements of Changes in Net Assets

iSHARES^® TRUST


	*iShares Morningstar* *Large Core* *Index Fund*						*iShares Morningstar* *Large Growth* *Index Fund*						*iShares Morningstar* *Large Value* *Index Fund*
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	738,466		$	1,248,287		$	476,759		$	524,446		$	3,259,072		$	2,860,067
Net realized gain (loss)		1,211,104			3,245,432			1,670,272			(813,623	)		6,403,460			333,858
Net change in unrealized appreciation (depreciation)		5,902,878			4,437,437			2,553,070			8,996,166			17,408,407			13,483,764

Net increase in net assets resulting from operations		7,852,448			8,931,156			4,700,101			8,706,989			27,070,939			16,677,689

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(713,730	)		(1,212,625	)		(496,642	)		(485,200	)		(2,878,073	)		(2,598,764	)

Total distributions to shareholders		(713,730	)		(1,212,625	)		(496,642	)		(485,200	)		(2,878,073	)		(2,598,764	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		68,878,024			58,922,177			58,881,721			149,330,036			273,127,755			86,064,600
Cost of shares redeemed		(33,394,924	)		(33,171,061	)		(34,985,201	)		(3,129,909	)		(47,181,364	)		(6,905,289	)

Net increase in net assets from capital share transactions		35,483,100			25,751,116			23,896,520			146,200,127			225,946,391			79,159,311

INCREASE IN NET ASSETS		42,621,818			33,469,647			28,099,979			154,421,916			250,139,257			93,238,236
NET ASSETS
Beginning of period		86,749,499			53,279,852			203,907,308			49,485,392			148,561,357			55,323,121

End of period	$	129,371,317		$	86,749,499		$	232,007,287		$	203,907,308		$	398,700,614		$	148,561,357

Undistributed net investment income included in net assets at end of period	$	98,868		$	74,132		$	19,363		$	39,246		$	793,438		$	412,439

SHARES ISSUED AND REDEEMED
Shares sold		1,000,000			900,000			1,000,000			2,450,000			3,600,000			1,250,000
Shares redeemed		(500,000	)		(500,000	)		(600,000	)		(50,000	)		(650,000	)		(100,000	)

Net increase in shares outstanding		500,000			400,000			400,000			2,400,000			2,950,000			1,150,000

See notes to the financial statements.


86		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	*iShares Morningstar* *Mid Core Index Fund*						*iShares Morningstar* *Mid Growth Index Fund*						*iShares Morningstar* *Mid Value Index Fund*
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	499,324		$	1,119,174		$	119,323		$	230,160		$	1,256,293		$	1,726,307
Net realized gain		3,364,867			6,518,967			5,865,086			5,846,946			2,323,131			5,669,390
Net change in unrealized appreciation (depreciation)		(1,495,702	)		11,564,151			(17,051,694	)		21,252,827			2,066,858			5,846,572

Net increase (decrease) in net assets resulting from operations		2,368,489			19,202,292			(11,067,285	)		27,329,933			5,646,282			13,242,269

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(435,695	)		(1,070,270	)		(132,299	)		(213,813	)		(982,038	)		(1,659,613	)
Return of capital		–			(31,900	)		–			–			–			–

Total distributions to shareholders		(435,695	)		(1,102,170	)		(132,299	)		(213,813	)		(982,038	)		(1,659,613	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		51,822,485			46,595,740			48,572,602			179,138,978			78,054,920			84,671,134
Cost of shares redeemed		(43,407,149	)		(22,429,723	)		(57,423,315	)		(32,629,920	)		(37,999,205	)		(30,135,701	)

Net increase (decrease) in net assets from capital share transactions		8,415,336			24,166,017			(8,850,713	)		146,509,058			40,055,715			54,535,433

INCREASE (DECREASE) IN NET ASSETS		10,348,130			42,266,139			(20,050,297	)		173,625,178			44,719,959			66,118,089
NET ASSETS
Beginning of period		105,319,190			63,053,051			204,914,039			31,288,861			99,534,850			33,416,761

End of period	$	115,667,320		$	105,319,190		$	184,863,742		$	204,914,039		$	144,254,809		$	99,534,850

Undistributed net investment income included in net assets at end of period	$	77,053		$	13,424		$	1,349		$	14,325		$	297,482		$	23,227

SHARES ISSUED AND REDEEMED
Shares sold		700,000			650,000			600,000			2,350,000			1,000,000			1,150,000
Shares redeemed		(600,000	)		(300,000	)		(750,000	)		(450,000	)		(500,000	)		(400,000	)

Net increase (decrease) in shares outstanding		100,000			350,000			(150,000	)		1,900,000			500,000			750,000

See notes to the financial statements.


FINANCIAL STATEMENTS		87

Statements of Changes in Net Assets (Continued)

iSHARES^® TRUST


	*iShares Morningstar* *Small Core* *Index Fund*						*iShares Morningstar* *Small Growth* *Index Fund*						*iShares Morningstar* *Small Value* *Index Fund*
	Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006			Six months ended October 31, 2006 (Unaudited)			Year ended April 30, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)	$	385,552		$	569,687		$	(20,387	)	$	3,956		$	884,055		$	1,222,527
Net realized gain		2,533,036			3,268,617			1,147,802			2,580,051			3,064,727			3,595,165
Net change in unrealized appreciation (depreciation)		(570,579	)		12,102,641			(6,447,946	)		10,090,049			(1,125,457	)		8,140,190

Net increase (decrease) in net assets resulting from operations		2,348,009			15,940,945			(5,320,531	)		12,674,056			2,823,325			12,957,882

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(357,454	)		(507,324	)		—			—			(809,131	)		(1,124,068	)
Return of capital		—			—			—			(3,533	)		—			—

Total distributions to shareholders		(357,454	)		(507,324	)		—			(3,533	)		(809,131	)		(1,124,068	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold		66,337,992			57,006,282			18,777,032			52,928,060			40,792,646			50,130,716
Cost of shares redeemed		(37,724,009	)		(18,603,701	)		(28,175,351	)		(14,125,154	)		(36,316,003	)		(14,601,643	)

Net increase (decrease) in net assets from capital share transactions		28,613,983			38,402,581			(9,398,319	)		38,802,906			4,476,643			35,529,073

INCREASE (DECREASE) IN NET ASSETS		30,604,538			53,836,202			(14,718,850	)		51,473,429			6,490,837			47,362,887
NET ASSETS
Beginning of period		91,156,652			37,320,450			76,853,455			25,380,026			81,664,292			34,301,405

End of period	$	121,761,190		$	91,156,652		$	62,134,605		$	76,853,455		$	88,155,129		$	81,664,292

Undistributed net investment income (accumulated net investment loss) included in net assets at end of period	$	67,983		$	39,885		$	(20,019	)	$	368		$	122,396		$	47,472

SHARES ISSUED AND REDEEMED
Shares sold		850,000			750,000			250,000			750,000			550,000			700,000
Shares redeemed		(500,000	)		(250,000	)		(400,000	)		(200,000	)		(500,000	)		(200,000	)

Net increase (decrease) in shares outstanding		350,000			500,000			(150,000	)		550,000			50,000			500,000

See notes to the financial statements.


88		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Large Core Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^a to Apr. 30, 2005
Net asset value, beginning of period	$	69.40		$	62.68		$	59.92

Income from investment operations:
Net investment income		0.51	^b		0.98			0.65
Net realized and unrealized gain^c		4.50			6.71			2.71

Total from investment operations		5.01			7.69			3.36

Less distributions from:
Net investment income		(0.48	)		(0.97	)		(0.60	)

Total distributions		(0.48	)		(0.97	)		(0.60	)

Net asset value, end of period	$	73.93		$	69.40		$	62.68

Total return		7.27	%^d		12.35	%		5.62	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	129,371		$	86,749		$	53,280
Ratio of expenses to average net assets^e		0.20	%		0.20	%		0.20	%
Ratio of net investment income to average net assets^e		1.47	%		1.58	%		1.33	%
Portfolio turnover rate^f		28	%		15	%		4	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		89

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Large Growth Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	61.79		$	54.98		$	59.96

Income from investment operations:
Net investment income		0.14^b			0.24			0.80
Net realized and unrealized gain (loss)^c		0.92			6.80			(4.98	)

Total from investment operations		1.06			7.04			(4.18	)

Less distributions from:
Net investment income		(0.15	)		(0.23	)		(0.80	)
Return of capital		—			—			(0.00	)^d

Total distributions		(0.15	)		(0.23	)		(0.80	)

Net asset value, end of period	$	62.70		$	61.79		$	54.98

Total return		1.73	%^e		12.81	%		(7.04	)%^e

Ratios/Supplemental data:
Net assets, end of period (000s)	$	232,007		$	203,907		$	49,485
Ratio of expenses to average net assets^f		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets^f		0.46	%		0.44	%		1.48	%
Portfolio turnover rate^g		17	%		24	%		19	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Rounds to less than $0.01.

^e	Not annualized.

^f	Annualized for periods of less than one year.

^g	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.


90		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Large Value Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	74.28		$	65.09		$	60.13

Income from investment operations:
Net investment income		1.00^b			1.79			1.41
Net realized and unrealized gain^c		6.17			9.17			4.77

Total from investment operations		7.17			10.96			6.18

Less distributions from:
Net investment income		(0.90	)		(1.77	)		(1.22	)

Total distributions		(0.90	)		(1.77	)		(1.22	)

Net asset value, end of period	$	80.55		$	74.28		$	65.09

Total return		9.76	%^d		17.05	%		10.33	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	398,701		$	148,561		$	55,323
Ratio of expenses to average net assets^e		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets^e		2.59	%		2.89	%		2.85	%
Portfolio turnover rate^f		10	%		17	%		2	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		91

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Mid Core Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	78.01		$	63.05		$	59.61

Income from investment operations:
Net investment income		0.36^b			0.91			0.46
Net realized and unrealized gain^c		1.71			14.96			3.39

Total from investment operations		2.07			15.87			3.85

Less distributions from:
Net investment income		(0.31	)		(0.88	)		(0.41	)
Return of capital		—			(0.03	)		—

Total distributions		(0.31	)		(0.91	)		(0.41	)

Net asset value, end of period	$	79.77		$	78.01		$	63.05

Total return		2.68	%^d		25.26	%		6.46	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	115,667		$	105,319		$	63,053
Ratio of expenses to average net assets^e		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets^e		0.94	%		1.26	%		1.12	%
Portfolio turnover rate^f		32	%		19	%		3	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


92		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Mid Growth Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	85.38		$	62.58		$	59.33

Income from investment operations:
Net investment income		0.05^b			0.13			0.04
Net realized and unrealized gain (loss)^c		(3.21	)		22.80			3.24

Total from investment operations		(3.16	)		22.93			3.28

Less distributions from:
Net investment income		(0.06	)		(0.13	)		(0.03	)

Total distributions		(0.06	)		(0.13	)		(0.03	)

Net asset value, end of period	$	82.16		$	85.38		$	62.58

Total return		(3.71	)%^d		36.67	%		5.52	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	184,864		$	204,914		$	31,289
Ratio of expenses to average net assets^e		0.30	%		0.30	%		0.30	%
Ratio of net investment income to average net assets^e		0.13	%		0.23	%		0.09	%
Portfolio turnover rate^f		27	%		21	%		11	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		93

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Mid Value Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	79.63		$	66.83		$	59.91

Income from investment operations:
Net investment income		0.89^b			1.81^b			1.23
Net realized and unrealized gain^c		2.59			12.79			6.73

Total from investment operations		3.48			14.60			7.96

Less distributions from:
Net investment income		(0.68	)		(1.80	)		(1.04	)

Total distributions		(0.68	)		(1.80	)		(1.04	)

Net asset value, end of period	$	82.43		$	79.63		$	66.83

Total return		4.42	%^d		22.07	%		13.33	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	144,255		$	99,535		$	33,417
Ratio of expenses to average net assets^e		0.30	%		0.30	%		0.30	%
Ratio of net investment income to average net assets^e		2.24	%		2.42	%		2.52	%
Portfolio turnover rate^f		28	%		18	%		7	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout each period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


94		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Small Core Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	82.87		$	62.20		$	59.83

Income from investment operations:
Net investment income		0.31^b			0.73			0.43
Net realized and unrealized gain^c		1.08			20.62			2.32

Total from investment operations		1.39			21.35			2.75

Less distributions from:
Net investment income		(0.29	)		(0.68	)		(0.35	)
Return of capital		—			—			(0.03	)

Total distributions		(0.29	)		(0.68	)		(0.38	)

Net asset value, end of period	$	83.97		$	82.87		$	62.20

Total return		1.70	%^d		34.47	%		4.56	%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	121,761		$	91,157		$	37,320
Ratio of expenses to average net assets^e		0.25	%		0.25	%		0.25	%
Ratio of net investment income to average net assets^e		0.78	%		1.04	%		0.82	%
Portfolio turnover rate^f		39	%		45	%		16	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


FINANCIAL HIGHLIGHTS		95

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Small Growth Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^ato Apr. 30, 2005
Net asset value, beginning of period	$	76.85		$	56.40		$	59.59

Income from investment operations:
Net investment income (loss)		(0.03	)^b		0.01			(0.04	)
Net realized and unrealized gain (loss)^c		(3.72	)		20.45			(3.15	)

Total from investment operations		(3.75	)		20.46			(3.19	)

Less distributions from:
Return of capital		—			(0.01	)		—

Total distributions		—			(0.01	)		—

Net asset value, end of period	$	73.10		$	76.85		$	56.40

Total return		(4.88	)%^d		36.27	%		(5.36	)%^d

Ratios/Supplemental data:
Net assets, end of period (000s)	$	62,135		$	76,853		$	25,380
Ratio of expenses to average net assets^e		0.30	%		0.30	%		0.30	%
Ratio of net investment income (loss) to average net assets^e		(0.07	)%		0.01	%		(0.11	)%
Portfolio turnover rate^f		31	%		38	%		26	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout the period.

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

^d	Not annualized.

^e	Annualized for periods of less than one year.

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

See notes to the financial statements.


96		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Financial Highlights (Continued)

iSHARES^® TRUST

(For a share outstanding throughout each period)


	*iShares Morningstar Small Value Index Fund*
	Six months ended Oct. 31, 2006 (Unaudited)			Year ended Apr. 30, 2006			Period from Jun. 28, 2004^a to Apr. 30, 2005
Net asset value, beginning of period	$	77.78		$	62.37		$	59.97

Income from investment operations:
Net investment income^b		0.81			1.55			1.07^c
Net realized and unrealized gain^d		2.30			15.31			2.39^c

Total from investment operations		3.11			16.86			3.46

Less distributions from:
Net investment income		(0.75	)		(1.45	)		(1.06	)

Total distributions		(0.75	)		(1.45	)		(1.06	)

Net asset value, end of period	$	80.14		$	77.78		$	62.37

Total return		4.06	%^e		27.24	%		5.72	%^e

Ratios/Supplemental data:
Net assets, end of period (000s)	$	88,155		$	81,664		$	34,301
Ratio of expenses to average net assets^f		0.30	%		0.30	%		0.30	%
Ratio of net investment income to average net assets^f		2.12	%		2.16	%		1.98	%^c
Portfolio turnover rate^g		31	%		17	%		10	%

^a	Commencement of operations.

^b	Based on average shares outstanding throughout each period.

^c	As restated. See Note 6.

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

^e	Not annualized.

^f	Annualized for periods of less than one year.

^g	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		97

Notes to the Financial Statements (Unaudited)

iSHARES^® TRUST

These financial statements relate only to the iShares Morningstar Large Core, iShares Morningstar Large Growth, iShares Morningstar Large Value, iShares Morningstar Mid Core, iShares Morningstar Mid Growth, iShares Morningstar Mid Value, iShares Morningstar Small Core, iShares Morningstar Small Growth and iShares Morningstar Small Value 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 its underlying index. The investment adviser uses a “passive” or index approach to achieve each Fund’s investment objective. Each of the Funds is classified as a diversified fund under the 1940 Act, except for the iShares Morningstar Large Core, iShares Morningstar Large Growth and iShares Morningstar Large Value Index Funds, which are classified as non-diversified funds. 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.

1.	*SIGNIFICANT ACCOUNTING POLICIES*

SECURITY VALUATION

SECURITY TRANSACTIONS AND INCOME RECOGNITION


98		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

DISTRIBUTIONS TO SHAREHOLDERS

The tax character of current year distributions will be determined at the end of the current fiscal year.

FEDERAL INCOME TAXES

The Funds had tax basis net capital loss carryforwards as of April 30, 2006, the tax year-end of the Funds, as follows:


*iShares Index Fund*	Expiring 2013		Expiring 2014		*Total*
Morningstar Large Core	$	39,699	$	86,938	$	126,637
Morningstar Large Growth		54,115		754,949		809,064
Morningstar Large Value		18,851		35,116		53,967
Morningstar Mid Core		20,026		126,713		146,739
Morningstar Mid Growth		14,863		105,739		120,602
Morningstar Mid Value		9,742		204,827		214,569
Morningstar Small Core		12,494		40,013		52,507
Morningstar Small Growth		37,247		166,146		203,393
Morningstar Small Value		18,678		142,621		161,299

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.


NOTES TO THE FINANCIAL STATEMENTS		99

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

As of October 31, 2006, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:


*iShares Index Fund*	*Tax Cost*		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation
Morningstar Large Core	$	120,142,416	$	9,803,994	$	(656,207	)	$	9,147,787
Morningstar Large Growth		224,488,294		17,885,593		(10,349,639	)		7,535,954
Morningstar Large Value		367,841,323		30,934,724		(664,933	)		30,269,791
Morningstar Mid Core		107,686,606		10,955,755		(3,175,093	)		7,780,662
Morningstar Mid Growth		187,469,041		14,556,511		(12,069,664	)		2,486,847
Morningstar Mid Value		137,889,203		9,116,653		(1,971,636	)		7,145,017
Morningstar Small Core		115,242,568		11,270,333		(3,486,970	)		7,783,363
Morningstar Small Growth		64,356,240		4,810,399		(4,512,951	)		297,448
Morningstar Small Value		85,980,081		7,303,856		(3,907,153	)		3,396,703

REPURCHASE AGREEMENTS

2.	*AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES*

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


*iShares Index Fund*	Investment Advisory Fee
Morningstar Large Core	0.20	%
Morningstar Large Growth	0.25
Morningstar Large Value	0.25
Morningstar Mid Core	0.25
Morningstar Mid Growth	0.30
Morningstar Mid Value	0.30
Morningstar Small Core	0.25
Morningstar Small Growth	0.30
Morningstar Small Value	0.30


100		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST


*iShares Index Fund*	Securities Lending Agent Fees
Morningstar Large Growth	$	18
Morningstar Large Value		2,540
Morningstar Mid Core		986
Morningstar Mid Growth		31,143
Morningstar Mid Value		2,345
Morningstar Small Core		13,473
Morningstar Small Growth		17,963
Morningstar Small Value		28,998


NOTES TO THE FINANCIAL STATEMENTS		101

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST


*iShares Index Fund and Name of Affiliated Issuer*	Number of Shares Held Beginning of Period (in 000s)	Gross Additions (in 000s)	Gross Reductions (in 000s)	Number of Shares Held End of Period (in 000s)	Value at End of Period		Interest Income
Morningstar Large Core
IMMF	47	13,855	13,694	208	$	208,440	$	2,873
Morningstar Large Growth
IMMF	148	27,330	27,226	252		252,386		5,582
Morningstar Large Value
IMMF	167	52,076	51,198	1,045		1,044,645		10,730
Morningstar Mid Core
IMMF	123	11,312	11,322	113		113,044		2,255
Morningstar Mid Growth
IMMF	570	11,536	11,990	116		115,913		2,415
Morningstar Mid Value
IMMF	70	18,896	18,966	—		—		3,833
Morningstar Small Core
IMMF	102	11,988	11,985	105		105,097		2,256
Morningstar Small Growth
IMMF	35	4,232	4,208	59		59,099		789
Morningstar Small Value
IMMF	113	13,498	13,546	65		65,220		2,958

As of October 31, 2006, certain trustees and officers of the Trust are also officers of BGI and/or BGFA.


102		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

3.	*INVESTMENT PORTFOLIO TRANSACTIONS*

Purchases and sales of investments (excluding in-kind transactions and short-term investments) for the six months ended October 31, 2006 were as follows:


*iShares Index Fund*	*Purchases*		*Sales*
Morningstar Large Core	$	28,087,669	$	27,853,035
Morningstar Large Growth		35,795,092		35,898,213
Morningstar Large Value		25,855,285		27,381,630
Morningstar Mid Core		33,616,037		33,823,322
Morningstar Mid Growth		48,650,592		48,706,776
Morningstar Mid Value		31,574,356		31,080,408
Morningstar Small Core		39,029,603		39,059,170
Morningstar Small Growth		17,596,972		17,659,893
Morningstar Small Value		25,660,703		25,791,322

In-kind transactions (see Note 4) for the six months ended October 31, 2006 were as follows:


*iShares Index Fund*	In-kind Purchases		*In-kind Sales*
Morningstar Large Core	$	68,716,208	$	33,620,046
Morningstar Large Growth		58,808,596		34,938,921
Morningstar Large Value		272,198,525		45,761,098
Morningstar Mid Core		51,739,617		43,324,559
Morningstar Mid Growth		48,533,054		57,395,789
Morningstar Mid Value		77,857,607		38,176,703
Morningstar Small Core		66,253,986		37,626,827
Morningstar Small Growth		18,751,200		28,169,236
Morningstar Small Value		40,694,553		36,178,967

4.	*CAPITAL SHARE TRANSACTIONS*


NOTES TO THE FINANCIAL STATEMENTS		103

Notes to the Financial Statements (Unaudited) (Continued)

iSHARES^® TRUST

5.	*LOANS OF PORTFOLIO SECURITIES*

As of October 31, 2006, 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 or non-U.S. Government debt securities. The market value of the securities on loan as of October 31, 2006 and the value of the related collateral are disclosed in the Statements of Assets and Liabilities. Securities lending income, as disclosed in the Funds’ Statements of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to BGI as securities lending agent.

6.	*RESTATEMENT*

In preparing the 2006 financial statements of the iShares Morningstar Small Value Index Fund, management determined that it had misclassified returns of capital on distributions received from REIT securities held in the fund portfolio in the prior period by recording them as income rather than as an adjustment to the cost of the security. This misclassification had no impact on amounts previously reported for net asset value, distributions paid, total return, portfolio turn over rate, security valuation, or net change in net assets from operations. These financial statements have been restated to correct for the classification of amounts reported for the net investment income per share, net realized and unrealized gain on investments per share and the ratio of net investment income to average net assets for the period ended April 30, 2005 in the Financial Highlights.

The amounts before and after the restatement for the iShares Morningstar Small Value Index Fund are shown in the table below:


Financial Highlights Period ended April 30, 2005	As originally reported			*Restated*
Net investment income per share	$	1.19		$	1.07
Net realized and unrealized gain per share		2.27			2.39
Ratio of net investment income to average net assets		2.22	%		1.98	%

7.	*RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT*

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Trust is currently evaluating the impact of applying the various provisions of FIN 48.


104		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Board Review and Approval of Investment Advisory Contract (Unaudited)

iSHARES^® TRUST

NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY BGFA

FUNDS’ EXPENSES AND PERFORMANCE OF THE FUNDS

The Board reviewed statistical information prepared by Lipper Inc. (“Lipper”), an independent provider of investment company data, regarding the expense ratio components, including advisory fees, waivers/reimbursements, and gross and net total expenses of each Fund in comparison with the same information for other registered funds objectively selected 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-year and “last quarter” periods ended March 31, 2006, 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 few, if any, exchange traded funds or index funds that track indices similar to those tracked by the Funds, the Lipper Peer Groups included mutual funds, closed-end funds, exchange traded funds, and funds with differing investment objective classifications, investment focuses and other characteristics (e.g., actively managed funds and funds sponsored by “at cost” service providers). In support of its review of the statistical information, the Board was provided with a detailed description of the methodology used by Lipper to determine the applicable Lipper 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 of the Funds may have underperformed or outperformed funds in their respective Lipper Peer Groups over relevant periods, but that 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 the investment advisory fee rates and overall expenses of the funds in their respective Lipper Peer Groups. Based on this review,


BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT		105

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

iSHARES^® TRUST

the Board concluded that the investment advisory fees and expense levels and the historical performance of each Fund, as managed by BGFA, as compared to the investment advisory fees and expense levels and performance of the funds in the relevant Lipper Peer Group, were satisfactory for the purposes of approving the Advisory Contract for the coming year.

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

ECONOMIES OF SCALE

In connection with its review of the Funds’ profitability analysis, the Board reviewed information regarding economies of scale or other efficiencies that may result from increases in the Funds’ assets. The Board noted that the Advisory Contract did not provide for any breakpoints in the Funds’ investment advisory fee rates as the assets of the Funds increase. However, the Board further noted that possible future economies of scale for the Funds had been taken into consideration by fixing the investment advisory fees at rates at the lower end of the marketplace, effectively giving Fund shareholders, from inception, the benefits of the lower average fee shareholders would have received from a fee structure with declining breakpoints where the initial fee was higher. The Board also reviewed BGFA’s historic profitability as investment adviser to the iShares fund complex and noted that BGFA had made a significant investment in the iShares funds and had incurred operating losses during earlier years when the iShares funds, including the Funds, had not yet reached scale. In light of this history, the Board determined that reductions in fee rates or additions of breakpoints were not warranted at this juncture for the Funds. 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 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


106		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

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

iSHARES^® TRUST

OTHER BENEFITS TO BGFA AND/OR ITS AFFILIATES

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


BOARD REVIEW AND APPROVAL OF INVESTMENT ADVISORY CONTRACT		107

Notes:


108		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

Notes:


NOTES		109

The iShares^® Family of Funds

iShares S&P Domestic Index Funds

iShares S&P 1500 (ISI)

iShares S&P 100 (OEF)

iShares S&P 500 (IVV)

iShares S&P 500 Growth (IVW)

iShares S&P 500 Value (IVE)

iShares S&P MidCap 400 (IJH)

iShares S&P MidCap 400 Growth (IJK)

iShares S&P MidCap 400 Value (IJJ)

iShares S&P SmallCap 600 (IJR)

iShares S&P SmallCap 600 Growth (IJT)

iShares S&P SmallCap 600 Value (IJS)

iShares 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 Domestic Subsector Index Funds

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

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

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

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

iShares Dow Jones U.S. Insurance (IAK)

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

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

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

iShares Dow Jones U.S. Pharmaceuticals (IHE)

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

iShares Global Index Funds

iShares S&P Global 100 (IOO)

iShares S&P Global Consumer Discretionary Sector (RXI)

iShares S&P Global Consumer Staples Sector (KXI)

iShares S&P Global Energy Sector (IXC)

iShares S&P Global Financials Sector (IXG)

iShares S&P Global Healthcare Sector (IXJ)

iShares S&P Global Industrials Sector (EXI)

iShares S&P Global Materials Sector (MXI)

iShares S&P Global Technology Sector (IXN)

iShares S&P Global Telecommunications Sector (IXP)

iShares S&P Global Utilities Sector (JXI)

iShares Russell Index Funds

iShares Russell 3000 (IWV)

iShares Russell 3000 Growth (IWZ)

iShares Russell 3000 Value (IWW)

iShares Russell 1000 (IWB)

iShares Russell 1000 Growth (IWF)

iShares Russell 1000 Value (IWD)

iShares Russell Midcap (IWR)

iShares Russell Midcap Growth (IWP)

iShares Russell Midcap Value (IWS)

iShares Russell 2000 (IWM)

iShares Russell 2000 Growth (IWO)

iShares Russell 2000 Value (IWN)

iShares Russell Microcap™ (IWC)

iShares International Country Index Funds

iShares FTSE/Xinhua China 25 (FXI)

iShares MSCI Australia (EWA)

iShares MSCI Austria (EWO)

iShares MSCI Belgium (EWK)

iShares MSCI Brazil (EWZ)

iShares MSCI Canada (EWC)

iShares MSCI France (EWQ)

iShares MSCI Germany (EWG)

iShares MSCI Hong Kong (EWH)

iShares MSCI Italy (EWI)

iShares MSCI Japan (EWJ)

iShares MSCI Malaysia (EWM)

iShares MSCI Mexico (EWW)

iShares MSCI Netherlands (EWN)

iShares MSCI Singapore (EWS)

iShares MSCI South Africa (EZA)

iShares MSCI South Korea (EWY)

iShares MSCI Spain (EWP)

iShares MSCI Sweden (EWD)

iShares MSCI Switzerland (EWL)

iShares MSCI Taiwan (EWT)

iShares MSCI United Kingdom (EWU)

iShares S&P/TOPIX 150 (ITF)

iShares Bond Funds

iShares Lehman Aggregate (AGG)

iShares Lehman TIPS (TIP)

iShares Lehman 1-3 Year Treasury (SHY)

iShares Lehman 7-10 Year Treasury (IEF)

iShares Lehman 20+ Year Treasury (TLT)

iShares iBoxx $ Investment Grade Corporate (LQD)

iShares Specialty Index Funds

iShares KLD Select Social^SM(KLD)

iShares KLD 400 Social (DSI)

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)

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 2006 Semi-Annual Report.

3710-iS-1106


110		2006 iSHARES SEMI-ANNUAL REPORT TO SHAREHOLDERS

LOGO

Item 2. Code of Ethics.

Not applicable to this semi-annual filing.

Item 3. Audit Committee Financial Expert.

Not applicable to this semi-annual filing.

Item 4. Principal Accountant Fees and Services.

Not applicable to this semi-annual filing.

Item 5. Audit Committee of Listed Registrants.

Not applicable to this semi-annual filing.

Item 6. Schedule of Investments.

The Funds’ full schedules of investments are included as part of the report 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.

The Nominating and Governance Committee of Registrant’s Board of Trustees (the “Nominating and Governance Committee”) is charged with identifying nominees to serve as Board members and recommending such nominees to the Board. The Board believes that shareholders as a group are best served by the efficient allocation of Registrant and Board resources. As such, the Board is not required to consider any person nominated by any shareholder of the Registrant (acting solely in the capacity as shareholder and not in any other capacity) to serve as an independent Trustee, although the Nominating and Governance Committee may consider any such person if the Nominating and Governance Committee of the Board deems it appropriate after considering all circumstances the Nominating and Governance Committee’s members deem relevant.

Item 11. Controls and Procedures.

(a) The Principal Executive Officer 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 Section 4(a) of the attached certification.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Not applicable to this semi-annual filing.

(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 Trust

		By:		/s/ Lee T. Kranefuss
				Lee T. Kranefuss, President and Principal Executive Officer
		Date:		December 21, 2006

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.


		iShares Trust

		By:		/s/ Lee T. Kranefuss
				Lee T. Kranefuss, President and Principal Executive Officer
		Date:		December 21, 2006

		iShares Trust

		By:		/s/ Michael A. Latham
				Michael A. Latham, Principal Financial Officer
		Date:		December 21, 2006