|
|
|
|
|
|
July 1, 2012
(as revised May 24, 2013)
|
2012 Summary Prospectus
iShares S&P California AMT-Free Municipal Bond Fund
CMF • 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 CALIFORNIA AMT-FREE MUNICIPAL BOND FUND
|
|
|
|
|
Ticker: CMF
|
|
Stock Exchange: NYSE Arca
|
Investment Objective
The iShares S&P California 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
California 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 9% of the average value of its portfolio.
S-1
Principal Investment Strategies
The Underlying Index measures the performance of the investment grade segment of the California municipal bond market. As of April 30, 2012, there were 1,660 issues in the Underlying Index.
The Underlying Index is a subset of the S&P National AMT-Free Municipal Bond Index
TM
and is comprised of municipal bonds issued in the State of California. The Underlying Index includes municipal bonds from
issuers in the State of California that are California state or local governments or agencies whose interest payments are exempt from U.S. federal and California state 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 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, bonds 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
minimum term to maturity and/or pre-refunded or call date 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 the securities of the Underlying Index and generally invests
S-2
90% of its assets in the securities of the Underlying Index and in securities that provide substantially similar
exposure to the securities in the Underlying Index. The Fund may at times invest up to 20% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of 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 generally holds municipal bond securities issued by the State of California and its
municipalities whose interest payments are exempt from U.S. federal and California state 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 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.
California State Municipal Securities Risk.
California-specific risk is the risk that a fund that invests more than 25% of its assets in California municipal instruments will be more exposed to the negative political, economic and statutory factors within the State of California than
a fund that invests more widely.
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.
S-3
Concentration Risk.
To the extent that the Fund’s investments are concentrated in a particular
market, industry or asset class, the Fund may be susceptible to loss due to adverse occurrences affecting that market, industry or asset class.
Credit Risk
.
The Fund is subject to the risk that debt issuers and other counterparties may not honor their 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.
Non-Diversification
Risk
.
The Fund may invest a large percentage of its
S-4
assets in securities issued by or representing a small number of issuers. As a result, the Fund’s performance may
depend on the performance of a small number of issuers.
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 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 2.22%.
|
The best calendar quarter return during the periods shown above was 8.29% in the 3rd quarter of 2009; the worst was -5.66% 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: 10/4/2007)
|
|
|
|
|
|
|
|
|
|
Return Before Taxes
|
|
|
11.88%
|
|
|
|
5.40%
|
|
|
Return After Taxes on Distributions
1
|
|
|
11.88%
|
|
|
|
5.40%
|
|
|
Return After Taxes on Distributions and Sale of Fund Shares
1
|
|
|
9.13%
|
|
|
|
5.16%
|
|
|
S&P California AMT-Free Municipal Bond Index
TM
(Index returns do not reflect deductions for fees,
expenses, or taxes)
|
|
|
12.32%
|
|
|
|
5.38%
|
|
|
|
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]
For more information visit www.iShares.com or call 1-800-474-2737
Investment Company Act File No.: 811-09729
IS-SP-CMF-0513
