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iSHARES Inc, et al. – ‘485BPOS’ on 12/22/06

On:  Friday, 12/22/06, at 6:55pm ET   ·   As of:  12/26/06   ·   Effective:  1/1/07   ·   Accession #:  1193125-6-259345   ·   File #s:  33-97598, 811-09102

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/26/06  iSHARES Inc                       485BPOS     1/01/07   22:4.9M                                   RR Donnelley/FA
          → iShares MSCI Australia ETF ⇒ EWA
          → iShares MSCI Austria ETF ⇒ EWO
          → iShares MSCI Belgium ETF ⇒ EWK
          → iShares MSCI Brazil ETF ⇒ EWZ
          → iShares MSCI Canada ETF ⇒ EWC
          → iShares MSCI Emerging Markets ETF ⇒ EEM
          → iShares MSCI Eurozone ETF ⇒ EZU
          → iShares MSCI France ETF ⇒ EWQ
          → iShares MSCI Germany ETF ⇒ EWG
          → iShares MSCI Hong Kong ETF ⇒ EWH
          → iShares MSCI Italy ETF ⇒ EWI
          → iShares MSCI Japan ETF ⇒ EWJ
          → iShares MSCI Malaysia ETF ⇒ EWM
          → iShares MSCI Mexico ETF ⇒ EWW
          → iShares MSCI Netherlands ETF ⇒ EWN
          → iShares MSCI Pacific ex Japan ETF ⇒ EPP
          → iShares MSCI Singapore ETF ⇒ EWS
          → iShares MSCI South Africa ETF ⇒ EZA
          → iShares MSCI South Korea ETF ⇒ EWY
          → iShares MSCI Spain ETF ⇒ EWP
          → iShares MSCI Sweden ETF ⇒ EWD
          → iShares MSCI Switzerland ETF ⇒ EWL
          → iShares MSCI Taiwan ETF ⇒ EWT
          → iShares MSCI United Kingdom ETF ⇒ EWU

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Form 485BPOS for Ishares Inc.                       HTML   2.90M 
 2: EX-99.(A.1)  Articles of Restatement, Filed September 15,       HTML     65K 
                          2006.                                                  
 3: EX-99.(A.2)  Articles of Amendment, Filed December 20,2006.     HTML     14K 
 4: EX-99.(A.3)  Articles of Supplementary, Filed December 20,      HTML     34K 
                          2006.                                                  
 5: EX-99.(B.2)  Amended and Restated By-Laws, Dated December 8,    HTML     76K 
                          2006.                                                  
 6: EX-99.(D.1)  Investment Management Agreement Bet Registrant     HTML     32K 
                          and and Barclays Global Fund                           
 7: EX-99.(D.2)  Amended Schedule A to Investment Management        HTML     14K 
                          Agreement.                                             
 8: EX-99.(E.2)  Amended Exhibit A to Distribution Agreement.       HTML     11K 
 9: EX-99.(G.2)  Amended Schedule A to Custodian Agreement          HTML     11K 
10: EX-99.(G.3)  Amendment, Dated December 31, 2002, to the         HTML     17K 
                          Custodian Agreement.                                   
11: EX-99.(G.4)  Amendment Dated January 1, 2006, to the Custodian  HTML     50K 
                          Agreement.                                             
12: EX-99.(H.2)  Amended Exhibit A to Administration Agreement.     HTML     11K 
13: EX-99.(H.3)  Amendment, Dated January 1, 2006, to the           HTML     52K 
                          Administration Agreement.                              
14: EX-99.(H.5)  Amended Exhibit A to Transfer Agency and Service   HTML     11K 
                          Agreement Is Incorporated.                             
15: EX-99.(H.6)  Amendment, Dated May 21,2002, to the Transfer      HTML     29K 
                          Agency and Service Agreement.                          
16: EX-99.(H.7)  Amendment, Dated September 1, 2004, to the         HTML     14K 
                          Transfer Agency and Service Agreement                  
17: EX-99.(H.8)  Amendment, Dated January 1, 2006, to the Transfer  HTML     50K 
                          Agency and Service Agreement                           
18: EX-99.(I.1)  Legal Opinion and Consent of Venable, LLP.         HTML     23K 
19: EX-99.(J.)  Consent of Pricewaterhousecoopers, LLP.             HTML     11K 
20: EX-99.(Q.1)  Powers of Attorney Dated February 22, 2006         HTML     20K 
21: EX-99.(Q.2)  Power of Attorney Dated February 25, 2006 for      HTML     12K 
                          Charles A, Hurty.                                      
22: EX-99.(Q.3)  Power of Attorney Dated February 25, 2006 for Lee  HTML     12K 
                          T. Kranefuss.                                          

As filed with the Securities and Exchange Commission on December 22, 2006

File Nos. 33-97598 and 811-09102

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

and/or

(Check appropriate box or boxes)

iShares,^® Inc.

(Exact Name of Registrant as Specified in Charter)

c/o Investors Bank & Trust Company

200 Clarendon Street

Boston, MA 02116

(Address of Principal Executive Office)(Zip Code)

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

The Corporation Trust Company

1209 Orange Street

Wilmington, DE 19801

(Name and Address of Agent for Service)

With Copies to:

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

If appropriate, check the following box:

iShares^®

iShares, Inc.

iShares, Inc. (the “Company”) currently consists of 24 separate investment portfolios, each a “Fund” and collectively, the “Funds.” Each Fund described in this Prospectus seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of a single stock market or all of the stock markets in a geographic region compiled by Morgan Stanley Capital International Inc. (“MSCI”) (the “Index Provider”). This Prospectus relates to the following Funds:

iShares MSCI Austria Index Fund

iShares MSCI Belgium Index Fund

iShares MSCI EMU Index Fund

iShares MSCI France Index Fund

iShares MSCI Germany Index Fund

iShares MSCI Italy Index Fund

iShares MSCI Netherlands Index Fund

iShares MSCI Spain Index Fund

iShares MSCI Sweden Index Fund

iShares MSCI Switzerland Index Fund

iShares MSCI United Kingdom Index Fund

Barclays Global Fund Advisors (“BGFA”) is the investment adviser to each Fund.

The Company is a registered investment company. The shares of each Fund are listed and traded at market prices on national securities exchanges, such as the New York Stock Exchange (“NYSE”), the American Stock Exchange (“AMEX”) or the NYSE Arca, Inc. (“NYSE Arca”). Market prices for a Fund’s shares may be different from its net asset value per share (“NAV”). Each Fund has its own CUSIP number and exchange trading symbol.

Each Fund issues and redeems shares at NAV only in blocks that range from 40,000 to 600,000 shares or multiples thereof, depending on the Fund (“Creation Units”). These transactions are usually in exchange for a basket of securities and an amount of cash. As a practical matter, only institutions or large investors purchase or redeem Creation Units.

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

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

Prospectus dated January 1, 2007

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

“MSCI Austria Index^SM”, “MSCI Belgium Index^SM”, “MSCI EMU Index^SM”, “MSCI France Index^SM”, “MSCI Germany Index^SM”, “MSCI Italy Index^SM”, “MSCI Netherlands Index^SM”, “MSCI Spain Index^SM”, “MSCI Sweden Index^SM”, “MSCI Switzerland Index^SM”, and “MSCI United Kingdom Index^SM” are servicemarks of Morgan Stanley Capital International and have been licensed for use for certain purposes by Barclays Global Investors, N.A. (“ BGI”). The Funds are not sponsored, endorsed, sold or promoted by MSCI, and MSCI makes no representations regarding the advisability of investing in shares of the Funds.

Table of Contents

page i

page ii

Overview

Introduction

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

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

Each Fund is an “index fund” that seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of a particular index (its “Underlying Index”) developed by:

MSCI, a leading provider of global indices and benchmark-related products and services to investors worldwide. Morgan Stanley, a global financial services firm and a market leader in securities, asset management, and credit services, is the majority shareholder of MSCI.

BGFA, the investment adviser to each Fund, is a subsidiary of BGI. BGFA and its affiliates are not affiliated with the Index Provider.

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

Investment Objective of the Funds

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

Principal Investment Strategies of the Funds

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

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

Each Fund, except as otherwise described below, will normally invest at least 95% of its assets in the securities of its Underlying Index and in American Depositary Receipts (“ADRs”) based on the securities in its Underlying Index. Each Fund, except those listed below, will at all times invest at least 90% of its assets in the securities of its Underlying Index and ADRs. In order to provide a Fund additional flexibility to comply with the requirements of the U.S. Internal Revenue Code and other regulatory requirements and to manage future corporate actions and index changes in the smaller markets, each of the iShares MSCI Austria Index Fund, iShares MSCI Belgium Index Fund, iShares MSCI Italy Index Fund, iShares MSCI Netherlands Index Fund, iShares MSCI Spain Index Fund, iShares MSCI Sweden Index Fund and iShares MSCI Switzerland Index Fund will at all times invest at least 80% of its assets in the securities of its Underlying Index and ADRs based on securities of its Underlying Index, and at least 90% of its assets in the securities of its Underlying Index or in securities included in the relevant market, but not in its Underlying Index, or in ADRs based on the securities in its Underlying Index.

iShares Overview

page 1

Each Fund also may invest its other assets in futures contracts, options on futures contracts, other types of options, and swaps related to its Underlying Index, as well as cash and cash equivalents, including shares of money market funds affiliated with BGFA.

BGFA uses a representative sampling indexing strategy to manage the Funds. The Description of the iShares MSCI Index Funds section describes the indexing strategy of each Fund.

Representative Sampling

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

Correlation

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

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

Industry Concentration Policy

Each of the Funds will not concentrate its investments (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except that, to the extent practicable, a Fund will concentrate to approximately the same extent that its Underlying Index concentrates in the stocks of such particular industry or group of industries.

page 2

Principal Risk Factors Common to All Funds

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

Asset Class Risk

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

Concentration Risk

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

Currency Risk

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

Derivatives Risk

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

Foreign Security Risk

Each Fund invests entirely within the equity markets of a single country or region. These markets are subject to special risks associated with foreign investment including, but not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets; less publicly available information about issuers; the imposition of taxes; higher transaction and custody costs; settlement delays and risk of loss; difficulties in enforcing contracts; less liquidity and smaller market capitalizations; lesser regulation of securities markets; different accounting and disclosure standards; governmental interference; higher inflation; social, economic and political uncertainties; the risk of expropriation of assets; and the risk of war.

Lack of Governmental Insurance or Guarantee

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

Management Risk

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

iShares Principal Risk Factors Common to All Funds

page 3

Market Risk

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

Market Trading Risks

Absence of Prior Active Market

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

Lack of Market Liquidity

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

Shares of the Funds May Trade at Prices Other Than NAV

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

Since foreign exchanges may be open on days when the Funds do not price their shares, the value of the securities in a Fund’s portfolio may change on days when shareholders will not be able to purchase or sell the Fund’s shares.

Non-Diversification Risk

Each Fund is classified as “non-diversified.” This means that each Fund may invest most of its assets in securities issued by or representing a small number of companies. As a result, each Fund may be more susceptible to the risks associated with these particular companies, or to a single economic, political or regulatory occurrence affecting these companies.

Passive Investment Risk

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

Tracking Error Risk

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

page 4

Portfolio Holdings Information

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

iShares Portfolio Holdings Information

page 5

Description of the iShares MSCI Index Funds

iShares MSCI Austria Index Fund

CUSIP: 464286202

Trading Symbol: EWO

Underlying Index: MSCI Austria Index

Investment Objective

The iShares MSCI Austria Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Austrian market, as represented by the MSCI Austria Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Vienna Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Erste Bank der Oesterreichischen Sparkassen AG, Telekom Austria AG and OMV AG and its three largest industries were banks, real estate and telecommunication services. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

Reliance on Exports Risk. The Austrian economy is dependent on the economies of Europe, mainly Eastern Europe, as key trading partners. Reduction in spending on Austrian products and services or changes in any of these economies may cause an impact on the Austrian economy:

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will

page 6

converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

iShares MSCI Austria Index Fund

page 7

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 100,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $600 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $3,161,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $600 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,161,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $18,647 if the Creation Unit is redeemed after one year, $55,909 if the Creation Unit is redeemed after three years, $96,570 if the Creation Unit is redeemed after five years, and $215,191 if the Creation Unit is redeemed after ten years.

page 8

iShares MSCI Belgium Index Fund

CUSIP: 464286301

Trading Symbol: EWK

Underlying Index: MSCI Belgium Index

Investment Objective

The iShares MSCI Belgium Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Belgian market, as represented by the MSCI Belgium Index (the “Underlying Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Brussels Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Fortis, KBC Groep NV, and Dexia and its three largest industries were diversified financials, banks and materials. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU Member States have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU Member States.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

iShares MSCI Belgium Index Fund

page 9

Lack of Natural Resources Risk. Except for its coal, which is no longer economical to exploit, Belgium has virtually no natural resources. Belgium is reliant on imports for its commodity needs. Any fluctuations or shortages in the commodity markets would have a great impact on Belgian economy.

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

page 10

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 40,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $700 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $943,200. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $700 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $943,200 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $6,603 if the Creation Unit is redeemed after one year, $17,715 if the Creation Unit is redeemed after three years, $29,841 if the Creation Unit is redeemed after five years, and $65,217 if the Creation Unit is redeemed after ten years.

iShares MSCI Belgium Index Fund

page 11

iShares MSCI EMU Index Fund

CUSIP: 464286608

Trading Symbol: EZU

Underlying Index: MSCI EMU Index

Investment Objective

The iShares MSCI EMU Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the EMU markets, as represented by the MSCI EMU Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks from issuers in the following eleven countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain. As of September 30, 2006, the Underlying Index’s three largest stocks were Total SA, Banco Santander Central Hispano SA and Sanofi-Aventis and its three largest industries were banks, utilities and capital goods. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

Reliance on Exports Risk. The economies of the EMU are dependent on the economies of Europe, both as key trading partners and as fellow members maintaining the euro. Reduction in trading activity between EMU member states may cause on adverse impact on the EMU and each nation’s individual economies:

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

page 12

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

It is anticipated that additional countries may join the EMU over time. Also, it is possible that those countries may withdraw from the EMU or that the EMU may be abandoned at some future time. If the EMU were to be abandoned, the Board of Directors would propose a change in the investment objective of the Fund or cause its liquidation.

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

iShares MSCI EMU Index Fund

page 13

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $8,000 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $4,691,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $8,000 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $4,691,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $41,855 if the Creation Unit is redeemed after one year, $97,075 if the Creation Unit is redeemed after three years, $157,332 if the Creation Unit is redeemed after five years, and $333,120 if the Creation Unit is redeemed after ten years.

page 14

iShares MSCI France Index Fund

CUSIP: 464286707

Trading Symbol: EWQ

Underlying Index: MSCI France Index

Investment Objective

The iShares MSCI France Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the French market, as represented by the MSCI France Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Paris Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Total SA, Sanofi-Aventis and BNP Paribas and its three largest industries were banks, energy and capital goods. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

Reliance on Exports Risk. France is the second-largest trading nation in Western Europe (after Germany). The destination of 70% of its exports is other European Union member states. The French economy is dependent on the economies of Europe as they are key trading partners. Reduction in spending on French products and services or changes in any of these economies may cause an impact in the French economy:

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

iShares MSCI France Index Fund

page 15

Reliance on Agriculture Risk. France is one of the world’s largest agricultural producers. It accounts for about one-third of all agricultural land within the European Union. The economy is sensitive to the fluctuations in agriculture markets, and susceptible to problems such as droughts, labor issues and crop failures.

Structural Risks. There are risks for social unrest, heavy governmental control, excessive governmental spending and heavy regulation of labor and industry.

page 16

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

iShares MSCI France Index Fund

page 17

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 200,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $2,900 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $6,284,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $2,900 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $6,284,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $40,474 if the Creation Unit is redeemed after one year, $114,531 if the Creation Unit is redeemed after three years, $195,342 if the Creation Unit is redeemed after five years, and $431,093 if the Creation Unit is redeemed after ten years.

page 18

iShares MSCI Germany Index Fund

CUSIP: 464286806

Trading Symbol: EWG

Underlying Index: MSCI Germany Index

Investment Objective

The iShares MSCI Germany Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the German market, as represented by the MSCI Germany Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Frankfurt Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Siemens AG Registered, E. ON AG and Allianz AG Registered and its three largest industries were utilities, materials and insurance. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

Reliance on Exports Risk. Germany is the largest trading nation in Western Europe and heavily export oriented. Exports account for more than one-third of national output and are a key element in German macroeconomic expansion. The German economy is dependent on the economies of Europe as they are key trading partners. Reduction in spending on German products and services or changes in any of these economies may cause an impact in the German economy:

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

iShares MSCI Germany Index Fund

page 19

Structural Risks. There are risks for social unrest, governmental control, and heavy regulation of labor and industry.

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

page 20

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 300,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $7,209,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $7,209,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $42,788 if the Creation Unit is redeemed after one year, $127,768 if the Creation Unit is redeemed after three years, $220,497 if the Creation Unit is redeemed after five years, and $491,020 if the Creation Unit is redeemed after ten years.

iShares MSCI Germany Index Fund

page 21

iShares MSCI Italy Index Fund

CUSIP: 464286855

Trading Symbol: EWI

Underlying Index: MSCI Italy Index

Investment Objective

The iShares MSCI Italy Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Italian market, as represented by the MSCI Italy Index (the “Underlying Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Milan Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were ENI SpA, Unicredito Italiano SpA and Enel SpA and its three largest industries were banks, energy and utilities. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

Structural Risks. Italy faces problems of inadequate infrastructure, corruption, excessive governmental spending and frequent government turnovers. These issues can affect investments in Italy.

page 22

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

iShares MSCI Italy Index Fund

page 23

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 150,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,400 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $4,564,500. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,400 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $4,564,500 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $27,990 if the Creation Unit is redeemed after one year, $81,791 if the Creation Unit is redeemed after three years, $140,498 if the Creation Unit is redeemed after five years, and $311,767 if the Creation Unit is redeemed after ten years.

page 24

iShares MSCI Netherlands Index Fund

CUSIP: 464286814

Trading Symbol: EWN

Underlying Index: MSCI Netherlands Index

Investment Objective

The iShares MSCI Netherlands Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Dutch market, as represented by the MSCI Netherlands Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Amsterdam Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were ING Groep NV, ABN AMRO Holding NV and Koninklijke Philips Electronics NV and its three largest industries were diversified financials, food beverage & tobacco and banks. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

iShares MSCI Netherlands Index Fund

page 25

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

Structural Risk (Labor Risk). The Dutch economy has been susceptible to high unemployment and a heavy reliance on trade as part of its gross domestic product. Many firms have had to deal with the loss of competitiveness in recent times due to increasing labor costs and competition within the European Union.

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

page 26

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,000 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $1,247,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,000 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $1,247,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $8,878 if the Creation Unit is redeemed after one year, $23,569 if the Creation Unit is redeemed after three years, $39,600 if the Creation Unit is redeemed after five years, and $86,367 if the Creation Unit is redeemed after ten years.

iShares MSCI Netherlands Index Fund

page 27

iShares MSCI Spain Index Fund

CUSIP: 464286764

Trading Symbol: EWP

Underlying Index: MSCI Spain Index

Investment Objective

The iShares MSCI Spain Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Spanish market, as represented by the MSCI Spain Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Madrid Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Banco Santander Central Hispano SA, Banco Bilbao Vizcaya Argentaria SA, and Telefonica SA and its three largest industries were banks, utilities and telecommunication services. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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

Euro Elimination Risk. Most developed countries in Western Europe are members of the European Union and many are also members of the EMU. EMU member states have adopted a single currency, the euro, which would replace their respective national currency. The EMU requires compliance with restrictions on inflation rates, deficits, and debt levels, and the tight fiscal and monetary controls necessary to join the EMU, each of which may significantly affect every country in Europe. The elimination of various currencies have affected the economic environment and behavior of investors, particularly in European markets, and the long-term impact of those changes on currency values or on the business or financial condition of European countries and issuers remains uncertain. In addition, the introduction of the euro presents other unique uncertainties, including the fluctuation of the euro relative to non-euro currencies; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union will have an impact on the euro. Also, it is possible that the euro could be abandoned in the future by countries that have already adopted its use. The elimination of the euro may cause decreased trading activity throughout the European Union and could severely impact the economies of the EMU member states.

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

Structural Risks. Spain faces problems of labor, political, and economic risks. These issues can affect investments in Spain.

page 28

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

iShares MSCI Spain Index Fund

page 29

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 75,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $3,521,250. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $3,521,250 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $22,430 if the Creation Unit is redeemed after one year, $63,930 if the Creation Unit is redeemed after three years, $109,214 if the Creation Unit is redeemed after five years, and $241,322 if the Creation Unit is redeemed after ten years.

page 30

iShares MSCI Sweden Index Fund

CUSIP: 464286756

Trading Symbol: EWD

Underlying Index: MSCI Sweden Index

Investment Objective

The iShares MSCI Sweden Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swedish market, as represented by the MSCI Sweden Index (the “Underlying Index”). The Fund’s investment objective may be changed without shareholder approval.

Principal Investment Strategy

The Index consists of stocks traded primarily on the Stockholm Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Telefonaktiebolaget LM Ericsson Class B, Nordea Bank AB and Hennes & Mauritz AB Class B and its three largest industries were capital goods, banks and technology hardware & equipment. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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

Risk of Uncertainty of European Union. In May and June 2005, voters in France and the Netherlands, respectively, rejected ratification of the European Constitution causing some other countries to postpone moves toward ratification. These or other events, including political and economic developments, could cause market disruptions, and could adversely affect the value of securities held by the Fund.

Structural Risk (Labor Risk). Sweden’s previous efforts to comply with the EMU restrictions have resulted in reduced government spending and interim higher unemployment. In addition, Sweden has an extensive social welfare system. The Swedish workforce is over eighty (80) percent unionized. These conditions may impact the Swedish economy through increased production costs and higher governmental spending. This higher spending and large scale unionization may stifle Swedish economic growth or cause prolonged periods of recession.

Commodity Exposure Risk. The Swedish economy is dependent on the export of natural resources and natural resource products. There is a risk that any changes in these sectors could have an adverse impact on the Swedish economy.

iShares MSCI Sweden Index Fund

page 31

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

page 32

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 75,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,300 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2005 was $2,031,000. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,300 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,031,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $13,805 if the Creation Unit is redeemed after one year, $37,736 if the Creation Unit is redeemed after three years, $63,849 if the Creation Unit is redeemed after five years, and $140,031 if the Creation Unit is redeemed after ten years.

iShares MSCI Sweden Index Fund

page 33

iShares MSCI Switzerland Index Fund

CUSIP: 464286749

Trading Symbol: EWL

Underlying Index: MSCI Switzerland Index

Investment Objective

The iShares MSCI Switzerland Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Swiss market, as represented by the MSCI Switzerland Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the Zurich Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were Nestle SA Registered, Novartis AG and UBS AG Registered and its three largest industries were pharmaceuticals biotechnology & life sciences, diversified financials and food beverage & tobacco. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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

Lack of Natural Resources Risk. Switzerland has a dearth of natural resources. The country is dependent upon imports for raw materials and to expand the range of goods and services available in the country. Switzerland is reliant on imports for its commodity needs. Any fluctuations or shortages in the commodity markets would have a great impact on Swiss economy.

Structural Risk (Bankruptcy Risk). The Swiss economy has been experiencing a near record amount of bankruptcies. It appears that the increase in bankruptcies is due in part to restructuring and will continue to increase. These bankruptcies may affect investment in the Swiss economy and the rights of investors to reclaim assets.

page 34

Performance Information

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

Year-By-Year Returns

(Years Ended December 31)

Average Annual Total Returns

(for the periods ended December 31, 2005)

iShares MSCI Switzerland Index Fund

page 35

Fees and Expenses

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

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

Example

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

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

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 125,000 shares or multiples thereof. As a practical matter, only institutions or large investors purchase or redeem these Creation Units. A standard creation transaction fee of $1,500 is charged to each purchaser of Creation Units. The fee is a single charge and will be the same regardless of the number of Creation Units purchased by an investor on the same day. The approximate value of a Creation Unit as of September 30, 2006 was $2,856,250. An investor who holds Creation Units and wishes to redeem them at NAV would also pay a standard redemption transaction fee of $1,500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day.* Investors who hold Creation Units will also pay the annual fund operating expenses described in the table above. Assuming an investment in a Creation Unit of $2,856,250 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $18,759 if the Creation Unit is redeemed after one year, $52,418 if the Creation Unit is redeemed after three years, $89,146 if the Creation Unit is redeemed after five years, and $196,295 if the Creation Unit is redeemed after ten years.

page 36

iShares MSCI United Kingdom Index Fund

CUSIP: 464286699

Trading Symbol: EWU

Underlying Index: MSCI United Kingdom Index

Investment Objective

The iShares MSCI United Kingdom Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the British market, as represented by the MSCI United Kingdom Index (the “Underlying Index”).

Principal Investment Strategy

The Underlying Index consists of stocks traded primarily on the London Stock Exchange. As of September 30, 2006, the Underlying Index’s three largest stocks were BP PLC, HSBC Holdings PLC and GlaxoSmithKline PLC and its three largest industries were banks, energy and pharmaceuticals biotechnology & life sciences. The Fund uses a representative sampling strategy in seeking to track the Underlying Index.

Principal Risks Specific to Fund

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

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