|
|
|
|
|
|
July 1, 2012
(as revised May 24, 2013)
|
2012 Summary Prospectus
iShares S&P Short Term National AMT-Free Municipal Bond Fund
SUB • NYSE ARCA
Before you invest, you may want to review the Fund’s prospectus, which contains more
information about the Fund and its risks. You can find the Fund’s prospectus (including amendments and supplements) and other information about the Fund, including the Fund’s statement of additional information and shareholder report,
online at http://us.ishares.com/prospectus. You can also get this information at no cost by calling 1-800-iShares (1-800-474-2737) or by sending an e-mail request to iSharesETFs@blackrock.com, or from your financial professional. The Fund’s
prospectus and statement of additional information, both dated July 1, 2012, as amended and supplemented from time to time, are incorporated by reference into (legally made a part of) this Summary Prospectus.
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.
iSHARES
®
S&P SHORT TERM NATIONAL AMT-FREE MUNICIPAL BOND FUND
|
|
|
|
|
Ticker: SUB
|
|
Stock Exchange: NYSE Arca
|
Investment Objective
The iShares S&P Short Term National AMT-Free Municipal Bond Fund (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the
S&P Short Term National AMT-Free Municipal Bond Index
TM
(the
“Underlying Index”).
Fees and Expenses
The following table describes the fees and expenses that you will incur if you own shares of the Fund. The investment advisory agreement between iShares Trust (the
“Trust”) and BlackRock Fund Advisors (“BFA”) (the “Investment Advisory Agreement”) provides that BFA will pay all operating expenses of the Fund, except interest expenses, taxes, brokerage expenses, future distribution
fees or expenses, and extraordinary expenses.
You may also incur usual and customary brokerage commissions when buying or selling shares of the Fund,
which are not reflected in the example that follows:
|
|
|
|
|
|
|
|
|
Annual Fund Operating Expenses
(ongoing expenses that
you pay each year as a
percentage of the value of your investments)
|
|
Management
Fees
|
|
Distribution and
Service (12b-1)
Fees
|
|
Other
Expenses
|
|
Total Annual
Fund
Operating
Expenses
|
|
0.25%
|
|
None
|
|
None
|
|
0.25%
|
Example.
This Example is intended to help you compare the cost of owning shares of the Fund with the cost of investing in
other funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
1 Year
|
|
3 Years
|
|
5 Years
|
|
10 Years
|
|
$26
|
|
$80
|
|
$141
|
|
$318
|
Portfolio Turnover.
The Fund may pay transaction costs, such as commissions, when it buys and sells securities (or
“turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in Annual Fund
Operating Expenses or in the Example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 19% of the average value of its portfolio.
S-1
Principal Investment Strategies
The Underlying Index measures the performance of the short-term investment-grade segment of the U.S. municipal bond market. As of April 30, 2012, there were 2,074 issues in the Underlying Index.
The Underlying Index includes municipal bonds from issuers that are primarily state or local governments or agencies (including the
Commonwealth of Puerto Rico and U.S. territories such as the U.S. Virgin Islands and Guam) such that the interest on each bond is exempt from U.S. federal income taxes and the federal alternative minimum tax (“AMT”). Each bond must have a
rating of at least BBB- by Standard & Poor’s Ratings Services, Baa3 by Moody’s
®
Investors Service, Inc.
(“Moody’s”), or BBB- by Fitch, Inc. (“Fitch”). A bond must be rated by at least one of the three rating agencies in order to qualify for the Underlying Index. For the avoidance of doubt, the lowest rating will be used in
determining if the bond is investment grade. Each bond must be denominated in U.S. dollars. Each bond in the Underlying Index must be a constituent of an offering where the original offering amount was at least $100 million. The bond must have a
minimum par amount of $25 million to be eligible for inclusion. To remain in the Underlying Index, a bond must maintain a minimum par amount greater than or equal to $25 million as of the next rebalancing date. In addition, each bond must have
a remaining term to maturity and/or pre-refunded or call date that is less than or equal to five years and greater than or equal to one calendar month to be included in the Underlying Index. The Underlying Index is a market-value weighted index, and
the securities in the Underlying Index are updated after the close on the last business day of each month.
BFA uses a “passive” or indexing
approach to try to achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to “beat” the index it tracks and does not seek temporary defensive positions when markets decline or appear
overvalued.
Indexing may eliminate the chance that the Fund will substantially outperform the Underlying Index but also may reduce some of the risks of
active management, such as poor security selection. Indexing seeks to achieve lower costs and better after-tax performance by keeping portfolio turnover low in comparison to actively managed investment companies.
BFA uses a representative sampling indexing strategy to manage the Fund. “Representative sampling” is an indexing strategy that involves investing in a
representative sample of securities that collectively has an investment profile similar to the Underlying Index. The securities selected are expected to have, in the aggregate, investment characteristics (based on factors such as market
capitalization and industry weightings), fundamental characteristics (such as return variability, duration, maturity or credit ratings and yield) and liquidity measures similar to those of the Underlying Index. The Fund may or may not hold all of
the securities in the Underlying Index.
The Fund generally invests at least 80% of its assets in securities of the Underlying Index. The Fund may at
times invest up to 20% of its assets in securities not included in the Underlying
S-2
Index, but which BFA believes will help the Fund track the Underlying Index, and in futures contracts, options on futures contracts, options and swaps, as well as cash and cash equivalents,
including shares of municipal money market funds advised by BFA or its affiliates, as well as in municipal bonds not included in the Underlying Index, but which BFA believes will help the Fund track the Underlying Index. The Fund will generally hold
municipal bond securities issued by state and local municipalities whose interest payments are exempt from U.S. federal income tax, the federal AMT and, effective beginning in 2013, a federal Medicare contribution tax of 3.8% on “net investment
income,” including dividends, interest and capital gains. In addition, the Fund intends to invest any cash assets in one or more affiliated municipal money market funds.
The Fund may lend securities representing up to one-third of the value of the Fund’s total assets (including the value of the collateral received).
The Underlying Index is sponsored by an organization (the “Index Provider”) that is independent of the Fund and BFA. The Index Provider determines the composition and relative weightings of the securities
in the Underlying Index and publishes information regarding the market value of the Underlying Index. The Fund’s Index Provider is Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies
(“S&P”).
Industry Concentration Policy.
The Fund will concentrate its investments (
i.e.
, hold 25% or more of its total
assets) in a particular industry or group of industries, to approximately the same extent that the Underlying Index is concentrated. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities),
repurchase agreements collateralized by U.S. government securities, and securities of state or municipal governments and their political subdivisions are not considered to be issued by members of any industry.
Summary of Principal Risks
As with any investment, you could
lose all or part of your investment in the Fund, and the Fund’s performance could trail that of other investments. The Fund is subject to the principal risks noted below, any of which may adversely affect the Fund’s net asset value per
share (“NAV”), trading price, yield, total return and ability to meet its investment objective.
Asset Class Risk
.
Securities in the Underlying Index or in the Fund’s portfolio may underperform in comparison to the general securities markets or other asset classes.
Call Risk
.
During periods of falling interest rates, an issuer of a callable bond held by the Fund may “call” or repay the security before its stated maturity, and the Fund may have
to reinvest the proceeds at lower interest rates, resulting in a decline in the Fund’s income.
Concentration Risk.
To the extent that
the Fund’s investments are concentrated in a particular region, market, industry or asset class, the Fund may be susceptible to loss due to adverse occurrences affecting that region, market, industry or asset class.
Credit Risk
.
The Fund is subject to the risk that debt issuers and other counterparties may not honor their
S-3
obligations or may have their debt downgraded by ratings agencies.
Extension Risk.
During periods of rising interest rates, certain obligations will be paid off substantially more slowly than originally anticipated and the value of those securities may fall sharply, resulting in a decline to the Fund’s income and
potentially in the value of the Fund’s investments.
Income Risk.
The Fund’s income may decline when interest rates fall. This
decline can occur because the Fund must invest in lower-yielding bonds as bonds in its portfolio mature, bonds in the Underlying Index are substituted or the Fund otherwise needs to purchase additional bonds.
Interest Rate Risk
.
An increase in interest rates may cause the value of fixed-income securities held by the Fund to decline.
Issuer Risk
.
Fund performance depends on the performance of individual securities to which the Fund has exposure. Changes to the financial
condition or credit rating of an issuer of those securities may cause the value of the securities to decline.
Liquidity Risk
.
Liquidity risk exists when particular investments are difficult to purchase or sell. This can reduce the Fund’s returns because the Fund may be unable to transact at advantageous times or prices. The Fund invests a significant portion of
its portfolio in municipal securities, which may be less liquid than taxable bonds.
Management Risk
.
As the Fund may not fully
replicate the Underlying Index, it is subject to the risk that BFA’s investment management strategy may not produce the intended results.
Market Risk
. The Fund could lose money over short periods due to short-term market movements and over longer periods during market downturns. The
recent financial crisis has caused a decrease in the value and liquidity of many securities, including certain municipal securities, and has adversely affected many issuers of municipal securities and may continue to do so.
Market Trading Risk
.
The Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses
from trading in secondary markets, periods of high volatility and disruption in the creation/redemption process of the Fund. ANY OF THESE FACTORS, AMONG OTHERS, MAY LEAD TO THE FUND’S SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV.
Municipal Securities Risk
.
Municipal securities can be significantly affected by political or economic changes as well as uncertainties in the
municipal market related to taxation, legislative changes or the rights of municipal security holders. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the
inability to collect revenues for the project or from the assets.
Passive Investment Risk
.
The Fund is not actively managed and BFA
does not attempt to take defensive positions under any market conditions, including declining markets.
Securities Lending Risk.
The Fund
may engage in securities lending. Securities lending involves the risk that the Fund may lose money because the borrower of the Fund’s loaned securities fails to
S-4
return the securities in a timely manner or at all. The Fund could also lose money in the event of a decline in the value of the collateral provided for loaned securities or a decline in the
value of any investments made with cash collateral. These events could also trigger adverse tax consequences for the Fund.
Tax Risk
.
There is no guarantee that the Fund’s income will be exempt from U.S. federal income taxes, the federal AMT or the federal Medicare contribution tax of 3.8% on “net investment income” (effective beginning in 2013).
Tracking Error Risk
.
The performance of the Fund may diverge from that of the Underlying Index. Because the Fund employs a representative
sampling strategy, the Fund may experience tracking error to a greater extent than a fund that seeks to replicate an index.
Performance Information
The bar chart and table that follow show how the Fund has performed 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. Past performance (before and after taxes) does not necessarily indicate how the Fund 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 of the Fund’s prospectus (the “Prospectus”).
Year by Year Returns
1
(Years Ended December 31)
|
|
1
|
The Fund’s total return for the three months ended March 31, 2012 was 0.37%.
|
The best calendar quarter return during the periods shown above was 1.67% in the 1st quarter of 2009; the worst was -0.79% in the
4th quarter of 2010.
Updated performance information is available at www.iShares.com or by calling 1-800-iShares (1-800-474-2737) (toll free).
S-5
Average Annual Total Returns
(for the periods ended December 31, 2011)
|
|
|
|
|
|
|
|
|
|
|
|
|
One Year
|
|
|
Since Fund
Inception
|
|
|
(Inception Date: 11/5/2008)
|
|
|
|
|
|
|
|
|
|
Return Before Taxes
|
|
|
2.80%
|
|
|
|
3.17%
|
|
|
Return After Taxes on Distributions
1
|
|
|
2.34%
|
|
|
|
3.03%
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares
1
|
|
|
1.82%
|
|
|
|
2.77%
|
|
|
S&P Short Term National AMT-Free Municipal Bond Index
TM
(Index returns do not reflect deductions for
fees, expenses, or taxes)
|
|
|
3.08%
|
|
|
|
3.50%
|
|
|
|
1
|
After-tax returns in the table above are calculated using the historical highest individual U.S. federal marginal income tax rates and do not reflect the impact
of state or local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to tax-exempt investors or investors who hold shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts (“IRAs”). Fund returns after taxes on distributions and sale of Fund shares are calculated assuming that an investor has sufficient capital gains of the same character
from other investments to offset any capital losses from the sale of Fund shares. As a result, Fund returns after taxes on distributions and sale of Fund shares may exceed Fund returns before taxes and/or returns after taxes on distributions.
|
Management
Investment Adviser.
BlackRock Fund Advisors.
Portfolio
Managers.
James Mauro and Scott Radell (the “Portfolio Managers”) are primarily responsible for the day-to-day management of the Fund. Each Portfolio Manager supervises a portfolio management team. Mr. Mauro and Mr. Radell
have been Portfolio Managers of the Fund since 2011 and 2010, respectively.
Purchase and Sale of Fund Shares
The Fund is an exchange-traded fund (commonly referred to as an “ETF”). Individual Fund shares may only be purchased and sold on a national securities
exchange through a broker-dealer. The price of Fund shares is based on market price, and because ETF shares trade at market prices rather than NAV, shares may trade at a price greater than NAV (a premium) or less than NAV (a discount). The Fund will
only issue or redeem shares that have been aggregated into blocks of 50,000 shares or multiples thereof (“Creation Units”) to authorized participants who have entered into agreements with the Fund’s distributor. The Fund
generally will issue or redeem Creation Units in return for a designated portfolio of securities (and an amount of cash) that the Fund specifies each day.
Tax Information
The Fund intends to make distributions
primarily from net tax exempt income, although distributions of taxable capital gains may also occur. The Fund is generally not an appropriate investment for a 401(k) plan or an IRA. Please consult your personal tax adviser.
S-6
Payments to Broker-Dealers and other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), BFA or other related companies may pay the intermediary
for marketing activities and presentations, educational training programs, conferences, the development of technology platforms and reporting systems or other services related to the sale or promotion of the Fund. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
S-7
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
For more information visit www.iShares.com or call 1-800-474-2737
Investment Company Act
File No.: 811-09729
IS-SP-SUB-0513
