ck0001710607-20220831
January
1, 2023
American
Century Investments
Prospectus
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American
Century®
Sustainable Equity ETF |
ESGA |
NYSE
Arca, Inc. |
This
fund is different from traditional ETFs.
Traditional
ETFs tell the public what assets they hold each day. This fund will not. This
may create additional risks for your investment. For example:
•You
may have to pay more money to trade the fund’s shares. This fund will provide
less information to traders, who tend to charge more for trades when they have
less information.
•The
price you pay to buy fund shares on an exchange may not match the value of the
fund’s portfolio. The same is true when you sell shares. These price differences
may be greater for this fund compared to other ETFs because it provides less
information to traders.
•These
additional risks may be even greater in bad or uncertain market
conditions.
•The
ETF will publish on its website each day a “Proxy Portfolio” designed to help
trading in shares of the ETF. While the Proxy Portfolio includes some of the
ETF’s holdings, it is not the ETF’s actual portfolio.
The
differences between this fund and other ETFs may also have advantages. By
keeping certain information about the fund secret, this fund may face less risk
that other traders can predict or copy its investment strategy. This may improve
the fund’s performance. If other traders are able to copy or predict the fund’s
investment strategy, however, this may hurt the fund’s performance.
For
additional information regarding the unique attributes and risks of the fund,
see Proxy
Portfolio Risk, Premium/Discount Risk, Trading Issues Risk, and AP Concentration
Risk in
the Principal
Risks section
and The
Proxy
Portfolio
section of the prospectus and the Statement of Additional
Information.
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The
Securities and Exchange Commission has
not approved or disapproved
these securities or
passed upon the adequacy of this prospectus.
Any
representation to the contrary is a criminal offense. |
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©2023
American Century Proprietary Holdings, Inc. All rights reserved.
The fund seeks long-term
capital growth.
The following table describes
the fees and expenses you may pay if you buy, hold, and sell shares of the fund.
You may pay other fees, such as brokerage commissions and other fees to
financial intermediaries, which are not reflected in the tables and examples
below.
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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
| Management
Fee |
0.39% |
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Other
Expenses |
0.00% |
| Total
Annual Fund Operating Expenses |
0.39% |
Example
The example below is
intended to help you compare the costs of investing in the fund with the costs
of investing in other funds. The example assumes that you invest
$10,000 in the fund for the time periods indicated and then redeem all of your
shares at the end of those periods, that you earn 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:
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| 1
year |
3
years |
5
years |
10
years |
| $40 |
$126 |
$219 |
$493 |
Portfolio
Turnover
The
fund pays 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
21%
of the average value of its portfolio.
The
fund will generally invest in large capitalization companies it believes show
sustainable business improvement using a proprietary multi-factor model that
combines fundamental measures of a stock’s value and growth potential with
environmental, social, and governance (ESG) metrics. The model assigns each
security a financial metrics score and an ESG score that are combined on an
equal basis to create an overall score.
To
measure value, the portfolio managers may use ratios of stock price-to-earnings
and stock price-to-cash flow. To measure growth, the managers may use the rate
of growth of a company’s earnings and cash flow and changes in its earnings
estimates. The model also considers price momentum. The team arrives at an ESG
score by evaluating multiple metrics of each ESG characteristic—environmental,
social, and governance. The portfolio managers utilize internal data and
research, as well as third party commercial data sources and scoring systems, to
evaluate each security’s ESG characteristics. To
the extent such information is available,
portfolio managers will consider, among others, a company’s carbon emission
profile,
energy and water usage, or waste generation
(environmental), a company’s employee turnover rates, digital
privacy,
or worker safety
(social), and a company’s corporate leadership, including board chair
independence and the independence of audit and compensation committees
or
shareholder rights such as say on pay (governance). If an ESG score is
unavailable or incomplete, a
security may still be selected for the portfolio if the portfolio managers
believe they can evaluate the security qualitatively, or if the financial
metrics and/or
remaining ESG data
merit investment. Qualitative
review of portfolio securities may include examination of registration
statements and other information provided by the company as well as engagement
with company management.
Final
scores for each security are evaluated on a sector-specific basis, and the fund
seeks to hold securities with the strongest scores in their respective sectors.
Using this process, the portfolio managers attempt to build a portfolio of
stocks that has sustainable competitive advantages, provides better returns
without taking on significant additional risk, and maintains a stronger ESG
profile than the S&P 500®
Index.
Under normal market conditions, the
fund will invest at least 80% of its assets in sustainable equity
securities. For this purpose, the advisor defines sustainable
securities as those to which the advisor’s proprietary model assigns an ESG
score that is in the top three quartiles of the ESG scores the model assigns to
all of the securities in the fund’s benchmark, the S&P 500®
Index. Any
assets held in cash or cash equivalents do not receive an ESG score and are not
considered sustainable for purposes of the fund’s 80% test.
The fund will invest principally in exchange-traded common stocks. The fund
defines large capitalization companies as companies with capitalizations in the
capitalization range of the S&P 500®
Index.
When
determining whether to sell a security, the portfolio managers consider among
other things, a security’s price, whether a security’s risk parameters outweigh
its return opportunities, general market conditions, and whether the security
meets their ESG criteria.
The
fund is an actively managed, nontransparent exchange-traded fund (ETF) that does
not seek to replicate the performance of a specified index. In lieu of
publishing its portfolio contents (Actual Portfolio) daily, the fund publishes a
proxy portfolio (Proxy Portfolio) each day and on its website. There is no
minimum overlap required between the Actual Portfolio and the Proxy
Portfolio.
•Proxy
Portfolio Risk — The
goal of the Proxy Portfolio is, during all market conditions, to track closely
the daily performance of the Actual Portfolio and
minimize intra-day misalignment between the performance of the Proxy
Portfolio and the performance of the Actual Portfolio. The Proxy Portfolio is
designed to reflect the economic exposures and the risk characteristics of the
Actual Portfolio on any given trading day.
◦The
Proxy Portfolio methodology is novel and not yet proven as an effective
arbitrage mechanism. The effectiveness of the Proxy Portfolio as an arbitrage
mechanism is contingent upon, among other things, the fund’s factor model
analysis creating a Proxy Portfolio that performs in a manner substantially
identical to the performance of the fund’s Actual Portfolio. While the Proxy
Portfolio may include some of the fund’s holdings, it is not the fund’s Actual
Portfolio. ETFs trading on the basis of a published Proxy Portfolio may exhibit
wider premiums and discounts, bid/ask spreads, and tracking error than other
ETFs using the same investment strategies that publish their portfolios on a
daily basis, especially during periods of market disruption or volatility.
Therefore, shares of the fund may cost investors more to trade than shares of a
traditional ETF.
◦Each
day the fund calculates the overlap between the holdings of the prior Business
Day’s Proxy Portfolio compared to the Actual Portfolio (Proxy Overlap) and the
difference, in percentage terms, between the Proxy Portfolio per share NAV and
that of the Actual Portfolio (Tracking Error). If the Tracking Error becomes
large, there is a risk that the performance of the Proxy Portfolio may deviate
from the performance of the Actual Portfolio.
◦The
fund’s Board of Trustees monitors its Tracking Error and bid/spread. If
deviations become too large, the Board will consider the continuing viability of
the fund, whether shareholders are being harmed, and what, if any, corrective
measures would be appropriate. See the Statement of Additional Information for
further discussion of the Board’s monitoring responsibilities.
◦Although
the fund seeks to benefit from keeping its portfolio information secret, market
participants may attempt to use the Proxy Portfolio to identify a fund’s trading
strategy, which if successful, could result in such market participants engaging
in certain predatory trading practices that may have the potential to harm the
fund and its shareholders.
•Premium/Discount
Risk — Publication
of the Proxy Portfolio is not the same level of transparency as the publication
of the full portfolio by a fully transparent active ETF. Although the Proxy
Portfolio is intended to provide investors with enough information to allow for
an effective arbitrage mechanism that will keep the market price of the fund at
or close to the underlying net asset value (NAV) per share of the fund, there is
a risk (which may increase during periods of market disruption or volatility)
that market prices will vary significantly from the underlying NAV of the fund.
This means the price paid to buy shares on an exchange may not match the value
of the fund’s portfolio. The same is true when shares are sold.
•Trading
Issues Risk — If
securities representing 10% or more of the fund’s Actual Portfolio do not have
readily available market quotations, the fund will promptly request that the
Exchange halt trading in the fund’s shares. Trading halts may have a
greater impact on this fund compared to other ETFs due to the fund’s
nontransparent structure. If the trading of a security held in the fund’s
Actual Portfolio is halted, or otherwise does not have readily available market
quotations, and the Advisor believes that the lack of any such readily available
market quotations may affect the reliability of the Proxy Portfolio as an
arbitrage vehicle, or otherwise determines it is in the best interest of the
fund, the Advisor promptly will disclose on the fund’s website the identity and
weighting of such security for so long as such security’s trading is halted or
otherwise does not have readily available market quotations and remains in the
Actual Portfolio.
•Authorized
Participant Concentration Risk — Only
an authorized participant may engage in creation or redemption transactions
directly with the fund. The fund may have a limited number of institutions that
act as authorized participants. To the extent that these institutions exit the
business or are unable to proceed with creation and/or redemption orders with
respect to the fund and no other authorized participant is able to step forward
to process creation and/or redemption orders, fund shares may trade at a
discount to net asset value (NAV) and possibly face trading halts and/or
delisting. This risk may be more pronounced in volatile markets, potentially
where there are significant redemptions in ETFs generally. The fact that the
fund is offering a novel and unique structure may affect the number of entities
willing to act as Authorized Participants. During times of market stress,
Authorized Participants may be more likely to step away from this type of ETF
than a traditional ETF.
•ESG
Risk — Because
the fund considers ESG metrics in addition to fundamental financial metrics when
selecting securities, its portfolio may perform differently than funds that do
not use ESG metrics. ESG considerations may prioritize long term rather than
short term returns. Furthermore, when analyzing ESG criteria for securities, if
the portfolio management team relies on the information and scoring models
published by third party sources, there is a risk that this information might be
incorrect or only
take
into account one of many ESG related components of portfolio companies.
Moreover, scores and ratings across third party providers may be inconsistent or
incomparable.
•Style
Risk — If
at any time the market is not favoring the fund’s investment process, the fund’s
gains may not be as big as, or its losses may be bigger than, those of other
equity funds using different investment styles.
•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 and/or 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. Thus, you may pay more (or less) than
NAV when you buy shares of the fund in the secondary market, and you may receive
less (or more) than NAV when you sell those shares in the secondary market. The
portfolio managers cannot predict whether shares will trade above (premium),
below (discount) or at NAV.
•Market
Risk — The
value of the fund’s shares will go up and down based on the performance of the
companies whose securities it owns and other factors generally affecting the
securities market. Market risks, including political, regulatory, economic and
social developments, can affect the value of the fund’s investments. Natural
disasters, public health emergencies, war,
terrorism and other unforeseeable events may lead to increased market volatility
and may have adverse long-term effects on world economies and markets
generally.
•Public
Health Emergency Risk — A
pandemic, caused by the infectious respiratory illness COVID-19, has
caused
market disruption and other economic impacts. Markets have experienced
volatility, reduced liquidity, and increased trading costs. The
pandemic
may continue to impact the fund and its underlying investments and could cause
increased premiums or discounts to the fund’s NAV.
•Large
Shareholder Risk — Certain
shareholders, including other funds advised by the advisor, may from time to
time own a substantial amount of the shares of the fund. In addition, a third
party investor, the advisor or an affiliate of the advisor, an authorized
participant, a market maker, or another entity may invest in the fund and hold
its investment for a limited period of time solely to facilitate commencement of
the fund or to facilitate the fund’s achieving a specified size or scale. There
can be no assurance that any large shareholder would not redeem its investment,
that the size of the fund would be maintained at such levels or that the fund
would continue to meet applicable listing requirements. Redemptions by large
shareholders could have a significant negative impact on the fund. In addition,
transactions by large shareholders may account for a large percentage of the
trading volume on the NYSE Arca, Inc. and may, therefore, have a material upward
or downward effect on the market price of the shares.
•Principal
Loss Risk — At
any given time your shares may be worth less than the price you paid for them.
In other words, it is possible to lose money by investing in the
fund.
An investment in the fund is not a
bank deposit, and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government
agency.
The following
bar chart and table provide some indication of the risks of investing in the
fund. The bar chart shows changes in the fund’s performance from year to year.
The table shows how the fund’s average annual returns for the periods shown
compared with those of a broad measure of market performance.
The fund’s past performance
(before and after taxes) is not necessarily an indication of how the fund will
perform in the future. For current performance information,
please visit americancenturyetfs.com.
Sales charges and account fees, if
applicable, are not reflected in the bar chart. If those charges were included,
returns would be less than those
shown.
Calendar Year Total
Returns
Highest Performance
Quarter (4Q
2021): 11.47% Lowest Performance Quarter
(3Q
2021): 0.82%
As
of September 30, 2022, the
most recent calendar quarter end, the fund’s year-to-date return was
-26.02%.
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Average
Annual Total Returns
For
the calendar year ended December 31, 2021 |
1
year |
Since
Inception |
Inception
Date |
| American
Century Sustainable Equity ETF Shares |
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| Return Before
Taxes |
28.92% |
34.33% |
07/13/2020 |
| Return After Taxes on
Distributions |
28.68% |
34.06% |
07/13/2020 |
| Return After Taxes on Distributions and
Sale of Fund Shares |
17.26% |
26.52% |
07/13/2020 |
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S&P
500 Index
(reflects no deduction for
fees, expenses or taxes) |
28.71% |
34.42% |
07/13/2020 |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates and do not reflect the impact of state and local taxes.
Actual after-tax returns
depend on an investor’s tax situation and may differ from those shown. After-tax
returns are not relevant to investors who hold their fund shares through
tax-deferred arrangements, such as 401(k) plans or
IRAs.
Investment
Advisor
American
Century Investment Management, Inc.
Portfolio
Managers
Justin
M. Brown,
CFA, Vice President and Portfolio Manager, has been a member of the team that
manages the fund since 2020.
Joseph
Reiland,
CFA, Vice President and Portfolio Manager, has been a member of the team that
manages the fund since 2020.
Robert
J. Bove, Portfolio
Manager, has been a member of the team that manages the fund since
2020.
Rene
P. Casis,
Vice President and ETF Portfolio Manager, has been a member of the team that
manages the fund since 2020.
The
fund is a nontransparent active ETF. Fund shares may only be bought and sold in
a secondary market through a broker-dealer at a market price. 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). An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase shares of the fund (bid) and the lowest price a seller is
willing to accept for shares of the fund (ask) when buying or selling shares in
the secondary market (bid-ask spread). Investors can find information on the
fund’s NAV, market price, premiums and discounts, and bid-ask spread at
americancenturyetfs.com.
Fund
distributions are generally taxable as ordinary income or capital gains, unless
you are investing through a tax-deferred account such as a 401(k) or individual
retirement account (in which case you may be taxed upon withdrawal of your
investment from such account).
If
you purchase the fund through a broker-dealer or other financial intermediary
(such as a bank), the advisor and its related companies may pay the intermediary
for the sale of fund shares and related services. 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.
What
are the fund’s investment objectives?
The
fund seeks long-term capital growth.
The
fund’s investment objective is a nonfundamental investment policy and may be
changed by the Board of Trustees without approval by shareholders upon 30 days’
notice.
What
are the fund’s principal investment strategies?
The
fund generally invests in large capitalization companies, but may invest in
companies of any capitalization. The fund’s investment strategy utilizes a
proprietary multi-factor model in a three-step process. In the first step, the
portfolio managers rank stocks from most attractive to least attractive. This is
determined by using a quantitative model that combines fundamental measures of a
stock’s value and growth potential and environmental, social, and governance
(ESG) metrics. To measure value, the managers may use ratios of stock
price-to-earnings and stock price-to-cash flow, among others. To measure growth,
the managers may use the rate of growth of a company’s earnings and cash flow
and changes in its earnings estimates, as well as other factors. The model also
considers price momentum. The team arrives at an ESG score by evaluating
multiple metrics of each ESG characteristic—environmental, social, and
governance. The portfolio managers utilize internal data and research, as well
as third party commercial data sources and scoring systems, to evaluate each
security’s ESG characteristics. To
the extent such information is available,
portfolio managers will consider, among others, a company’s carbon emission
profile,
energy and water usage, or waste generation
(environmental), a company’s employee turnover rates, digital
privacy,
or worker safety
(social), and a company’s corporate leadership, including board chair
independence and the independence of audit and compensation committees
or
shareholder rights such as say on pay (governance). If an ESG score is
unavailable or incomplete, a
security may still be selected for the portfolio if the portfolio managers
believe they can evaluate the security qualitatively, or if the financial
metrics and/or
remaining ESG data
merit investment. The financial metrics score and ESG score are combined on an
equal basis to create an overall score. Qualitative
review of portfolio securities may include examination of registration
statements and other information provided by the company as well as engagement
with company management.
In
the second step, final scores for each security are evaluated on a
sector-specific basis, and the fund seeks to hold securities with the strongest
scores in their respective sectors. The portfolio managers build a portfolio of
stocks from the ranking described above that they believe will provide the
optimal balance between risk and expected return. Using this process, the
portfolio managers attempt to build a portfolio of stocks that has sustainable
competitive advantages, provides better returns without taking on significant
additional risk, and maintains a stronger ESG profile than the S&P
500®
Index.
Finally,
the portfolio managers validate the output of the multi-factor model using
additional fundamental analysis.
The
portfolio managers do not attempt to time the market. Under normal market
conditions, the fund will invest at least 80% of its assets in sustainable
equity securities. The fund may change this 80% policy only upon 60 days’ prior
written notice to shareholders. The fund will invest principally in
exchange-traded common stocks. For this purpose, the advisor defines sustainable
securities as those to which the advisor’s proprietary model assigns an ESG
score that is in the top three quartiles of the ESG scores the model assigns to
all of the securities in the fund’s benchmark, the S&P 500®
Index. Any
assets held in cash or cash equivalents do not receive an ESG score and are not
considered sustainable for purposes of the fund’s 80% test.
The fund generally defines large capitalization companies as those that are in
the capitalization range of the S&P 500®
Index.
When
determining whether to sell a security, the portfolio managers consider among
other things, a security’s price, whether a security’s risk parameters outweigh
its return opportunities, general market conditions, and whether the security
meets their ESG criteria.
Although
unlikely, the fund may take temporary defensive positions that are inconsistent
with the fund’s principal investment strategies in the event of exceptional
market or economic conditions. To the extent the fund assumes a defensive
position, it may not achieve its investment objective.
The
fund is an actively managed, nontransparent exchange-traded fund (ETF) that does
not seek to replicate the performance of a specified index. In lieu of
publishing its full portfolio contents (Actual Portfolio) daily, the fund
publishes a proxy portfolio (Proxy Portfolio). There is no minimum overlap
required between the Actual Portfolio and the Proxy Portfolio. For more
information see The
Proxy Portfolio
section, below. A description of the policies and procedures with respect to the
disclosure of the fund’s portfolio securities is available in the statement of
additional information.
What
are the principal risks of investing in the fund?
•Proxy
Portfolio Risk — The
goal of the Proxy Portfolio is, during all market conditions, to track closely
the daily performance of the Actual Portfolio and
minimize intra-day misalignment between the performance of the Proxy
Portfolio and the performance of the Actual Portfolio. The Proxy Portfolio is
designed to reflect the economic exposures and the risk characteristics of the
Actual Portfolio on any given trading day.
◦The
Proxy Portfolio methodology is novel and not yet proven as an effective
arbitrage mechanism. The effectiveness of the Proxy Portfolio as an arbitrage
mechanism is contingent upon, among other things, the fund’s factor model
analysis creating a proxy portfolio that performs in a manner substantially
identical to the performance of the fund’s actual portfolio. While the Proxy
Portfolio may include some of the fund’s holdings, it is not the fund’s Actual
Portfolio. ETFs trading on the basis of a published Proxy Portfolio may exhibit
wider premiums and discounts, bid/ask spreads, and tracking error than other
ETFs using the same investment strategies that publish their portfolios on a
daily basis, especially during periods of market disruption or volatility.
Therefore, shares of the fund may cost investors more to trade than shares of a
traditional ETF.
◦Each
day the fund calculates the overlap between the holdings of the prior Business
Day’s Proxy Portfolio compared to the Actual Portfolio (Proxy Overlap) and the
difference, in percentage terms, between the Proxy Portfolio per share NAV and
that of the Actual Portfolio (Tracking Error). If the Tracking Error becomes
large, there is a risk that the performance of the Proxy Portfolio may deviate
from the performance of the Actual Portfolio.
◦The
fund’s Board of Trustees monitors its Tracking Error and bid/spread. If
deviations become too large, the Board will consider the continuing viability of
the fund, whether shareholders are being harmed, and what, if any, corrective
measures would be appropriate. See the Statement of Additional Information for
further discussion of the Board’s monitoring responsibilities.
◦Although
the fund seeks to benefit from keeping its portfolio information secret, market
participants may attempt to use the Proxy Portfolio to identify a fund’s trading
strategy, which if successful, could result in such market participants engaging
in certain predatory trading practices that may have the potential to harm the
fund and its shareholders.
•Premium/Discount
Risk — Publication
of the Proxy Portfolio is not the same level of transparency as the publication
of the full portfolio by a fully transparent active ETF. Although the Proxy
Portfolio is intended to provide investors with enough information to allow for
an effective arbitrage mechanism that will keep the market price of the fund at
or close to the underlying net asset value (NAV) per share of the fund, there is
a risk (which may increase during periods of market disruption or volatility)
that market prices will vary significantly from the underlying NAV of the fund.
This means the price paid to buy shares on an exchange may not match the value
of the fund’s portfolio. The same is true when shares are sold.
•Trading
Issues Risk — If
securities representing 10% or more of the fund’s Actual Portfolio do not have
readily available market quotations, the fund will promptly request that the
Exchange halt trading in the fund’s shares. Trading halts may have a
greater impact on this fund compared to other ETFs due to the fund’s
nontransparent structure. If the trading of a security held in the fund’s
Actual Portfolio is halted, or otherwise does not have readily available market
quotations, and the Advisor believes that the lack of any such readily available
market quotations may affect the reliability of the Proxy Portfolio as an
arbitrage vehicle, or otherwise determines it is in the best interest of the
fund, the Advisor promptly will disclose on the fund’s website the identity and
weighting of such security for so long as such security’s trading is halted or
otherwise does not have readily available market quotations and remains in the
Actual Portfolio.
•Authorized
Participant Concentration Risk — Only
an authorized participant may engage in creation or redemption transactions
directly with the fund. The fund may have a limited number of institutions that
act as authorized participants, none of which are obligated to engage in
creation or redemption transactions. To the extent that these institutions exit
the business or are unable to proceed with creation and/or redemption orders
with respect to the fund and no other authorized participant is able to step
forward to process creation and/or redemption orders, fund shares may trade at a
discount to net asset value (NAV) and possibly face trading halts and/or
delisting. This risk may be more pronounced in volatile markets, potentially
where there are significant redemptions in ETFs generally. Authorized
participant concentration risks may be heightened in scenarios where authorized
participants have limited or diminished access to the capital required to post
collateral. The fact that the fund is offering a novel and unique structure may
affect the number of entities willing to act as Authorized Participants. During
times of market stress, Authorized Participants may be more likely to step away
from this type of ETF than a traditional ETF.
•ESG
Risk — Because
the fund considers ESG metrics in addition to fundamental financial metrics when
selecting securities, its portfolio may perform differently than funds that do
not use ESG metrics. ESG considerations may prioritize long term rather than
short term returns. Furthermore, when analyzing ESG criteria for securities, if
the portfolio management team relies on the information and scoring models
published by third party sources, there is a risk that this information might be
incorrect or only take into account one of many ESG related components of
portfolio companies. Moreover, scores and ratings across third party providers
may be inconsistent or incomparable.
•Style
Risk — Market
performance tends to be cyclical, and, in the various cycles, certain investment
styles may fall in and out of favor. If the market is not favoring the fund’s
investment process, the fund’s gains may not be as big as, or its losses may be
bigger than, those of other equity funds using different investment
styles.
•Market
Trading Risk — Although
shares of the fund are listed for trading on one or more stock exchanges, there
can be no assurance that an active trading market for such shares will develop
or be maintained. There are no obligations of market makers to make a market in
the fund’s shares or of an authorized participant to submit purchase or
redemption orders for Creation Units. Decisions by market makers or authorized
participants to reduce their role or step away from these activities in times of
market stress could inhibit the effectiveness of the arbitrage process in
maintaining the relationship between the underlying value of the
fund’s
portfolio securities and the fund’s market price. This reduced effectiveness
could result in fund shares trading at a premium or discount to its NAV and also
greater than normal intraday bid/ask spreads.
Shares
of the fund may trade in the secondary market at times when the fund does not
accept orders to purchase or redeem shares. At such times, shares may trade in
the secondary market with more significant premiums or discounts than might be
experienced at times when the fund accepts purchase and redemption orders. In
addition to the trading halts discussed above in the Trading Issues Risk,
secondary market trading in fund shares may be halted by a stock exchange
because of market conditions or other reasons, and may be subject to trading
halts caused by extraordinary market volatility pursuant to “circuit breaker”
rules on the stock exchange or market. There can be no assurance that the
requirements necessary to maintain the listing or trading of fund shares will
continue to be met or will remain unchanged. In addition, during a “flash
crash,” the market prices of the fund’s shares may decline suddenly and
significantly. Such a decline may not reflect the performance of the
portfolio securities held by the fund. Flash crashes may cause authorized
participants and other market makers to limit or cease trading in the fund’s
shares for temporary or longer periods. Shareholders could suffer
significant losses to the extent that they sell fund shares at these temporarily
low market prices.
Shares
of the fund may trade at prices other than NAV. Thus, you may pay more (or less)
than NAV when you buy shares of the fund in the secondary market, and you may
receive less (or more) than NAV when you sell those shares in the secondary
market. While the creation/redemption feature is designed to make it likely that
the fund’s shares normally will trade on stock exchanges at prices close to the
fund’s next calculated NAV, market prices are not expected to correlate exactly
with the fund’s NAV due to timing reasons as well as market supply and demand
factors. In addition, disruptions to creations and redemptions or extreme market
volatility may result in trading prices for shares of the fund that differ
significantly from its NAV. The portfolio managers cannot predict whether shares
will trade above (premium), below (discount) or at NAV.
When
buying or selling shares of the fund through a broker, you will likely incur a
brokerage commission or other charges determined by your broker. In addition,
you may incur the cost of the “spread,” that is, any difference between the bid
price and the ask price. The spread varies over time for shares of the fund
based on the fund’s trading volume and market liquidity, and is generally lower
if the fund has a lot of trading volume and market liquidity, and higher if the
fund has little trading volume and market liquidity. During times of market
stress, spreads may widen causing investors to pay more.
•Market
Risk — The
value of the fund’s shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence. Market risks,
including political, regulatory, economic and social developments, can affect
the value of the fund’s investments. Natural disasters, public health
emergencies, war,
terrorism and other unforeseeable events may lead to increased market volatility
and may have adverse long-term effects on world economies and markets
generally.
•Public
Health Emergency Risk — A
pandemic, caused by the infectious respiratory illness COVID-19, has
caused
travel restrictions, disruption of healthcare systems, prolonged quarantines,
cancellations, supply chain interruptions, lower consumer demand, layoffs,
credit downgrades, and defaults among other economic impacts. Certain markets
experienced temporary closures, extreme volatility, losses, reduced liquidity
and increased trading costs. The
pandemic
may continue to impact the fund and its underlying investments and could cause
increased premiums or discounts to the fund’s NAV.
•Large
Shareholder Risk — Certain
shareholders, including other funds advised by the advisor, may from time to
time own a substantial amount of the shares of the fund. In addition, a third
party investor, the advisor or an affiliate of the advisor, an authorized
participant, a market maker, or another entity may invest in the fund and hold
its investment for a limited period of time solely to facilitate commencement of
the fund or to facilitate the fund’s achieving a specified size or scale. There
can be no assurance that any large shareholder would not redeem its investment,
that the size of the fund would be maintained at such levels or that the fund
would continue to meet applicable listing requirements. Redemptions by large
shareholders could have a significant negative impact on the fund. In addition,
transactions by large shareholders may account for a large percentage of the
trading volume on the NYSE Arca, Inc. and may, therefore, have a material upward
or downward effect on the market price of the shares.
•Principal
Loss Risk — At
any given time your shares may be worth less than the price you paid for them.
In other words, it is possible to lose money by investing in the
fund.
Who
manages the fund?
The
Board of Trustees, investment advisor and fund management team play key roles in
the management of the fund.
The
Board of Trustees
The
Board of Trustees is responsible for overseeing the advisor’s management and
operations of the fund pursuant to the management agreement. In performing their
duties, Board members receive detailed information about the fund and its
advisor regularly throughout the year, and meet at least quarterly with
management of the advisor to review reports about fund operations. The trustees’
role is to provide oversight and not to provide day-to-day management. The
majority of the trustees are independent of the fund’s advisor. They are not
employees, directors or officers of, and have no financial interest in, the
advisor or any of its affiliated companies (other than as shareholders of
American Century Investments funds), and they do not have any other
affiliations, positions or relationships that would cause them to be considered
“interested persons” under the Investment Company Act of 1940 (Investment
Company Act).
The
Investment Advisor
The
fund’s investment advisor is American Century Investment Management, Inc. (the
advisor). The advisor has been managing investment companies since 1958 and is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The
advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For
the services it provides to the fund, the advisor receives a unified management
fee based on a percentage of the daily net assets of the fund. The amount of the
fee is calculated daily and paid monthly in arrears. The advisor pays all
expenses of managing and operating the fund, other than the management fee
payable to the advisor, brokerage and other transaction fees and expenses
relating to the acquisition and disposition of portfolio securities, acquired
fund fees and expenses, interest, taxes, litigation expenses, extraordinary
expenses, and expenses incurred in connection with the provision of shareholder
and distribution services under a plan adopted pursuant to Rule 12b-1 under the
Investment Company Act (if any). The advisor may pay unaffiliated third parties
who provide recordkeeping and administrative services that would otherwise be
performed by an affiliate of the advisor.
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Management
Fees Paid by the Fund to the Advisor As a Percentage of Average
Net Assets for the Fiscal Year Ended August 31, 2022 |
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Century Sustainable Equity ETF |
0.39% |
A
discussion regarding the basis for the Board of Trustees’ approval of the fund’s
investment advisory agreement with the advisor is available in the fund’s annual
report to shareholders for the period ended August 31, 2022.
The
Fund Management Team
The
advisor uses teams of portfolio managers and analysts to manage funds. The teams
meet regularly to review portfolio holdings and discuss purchase and sale
activity. Team members buy and sell securities for a fund as they see fit,
guided by the fund’s investment objective and strategy. Within the universe of
securities selected by the Portfolio Managers, and keeping with the fund’s
investment objective and strategy and portfolio risk, the ETF Portfolio Manager
adjusts the portfolio for tax efficiency and other ETF-specific
considerations.
The
individuals on the investment team who are jointly and primarily responsible for
the day-to-day management of the fund are identified below.
Justin
M. Brown
Mr.
Brown, Vice President and Portfolio Manager, has been a member of the team that
manages the fund since 2020. He joined American Century Investments in 2000
as an investment analyst and became a portfolio manager in 2006. He has
a bachelor’s degree in business administration and finance from Texas
Christian University. He is a CFA charterholder.
Joseph
Reiland
Mr.
Reiland, Vice President and Portfolio Manager, has been a member of the team
that manages the fund since 2020. He joined American Century Investments in
2000 as an investment analyst and became a portfolio manager in 2005. He has
a bachelor’s degree in business administration from Washington University.
He is a CFA charterholder.
Robert
J. Bove
Mr.
Bove, Portfolio Manager, has been a member of the team that manages the fund
since 2020. He joined American Century Investments in 2005 as an investment
analyst and became a portfolio manager in 2016. He has a bachelor’s degree
in accounting from Villanova University and an MBA in finance from New York
University, Leonard N. Stern School of Business.
Rene
P. Casis
Mr.
Casis, Vice President and ETF Portfolio Manager, has been a member of the team
that manages the fund since 2020. He joined American Century in 2018, prior to
that he was a Partner at 55 Institutional, LLC from 2016 to 2017. From 2009 to
2016, he served in roles as US iShares Smart Beta Investment Strategist, US
iShares Product Strategist and Senior Portfolio Manager in Beta Strategies for
BlackRock Inc. He has a bachelor’s degree in economics from the University of
California, Santa Barbara.
The
statement of additional information provides additional information about the
accounts managed by the portfolio managers, the structure of their compensation,
and their ownership of fund securities.
Fund
Performance
American
Century Sustainable Equity ETF has the same management team and similar
investment policies as another fund in the American Century Investments family
of funds, the Sustainable Equity Fund, and they are managed with substantially
the same investment objective and strategies. Notwithstanding these general
similarities, American Century Sustainable Equity ETF and Sustainable Equity
Fund are separate funds that have different investment performance. Differences
in fees and expenses of the funds, cash flows into the two funds, the size of
their portfolios, and specific investments held by the two funds cause
performance to differ.
Fundamental
Investment Policies
Shareholders
must approve any change to the fundamental investment policies contained in the
statement of additional information. The Board of Trustees and/or the advisor
may change any other policies, including the fund’s investment objective, or
investment strategies described in this prospectus or otherwise used in the
operation of the fund at any time, subject to applicable notice
provisions.
Buying
and Selling Shares
Shares
of the fund may be acquired or redeemed directly from the fund only in Creation
Units or multiples thereof, as discussed below. Only an authorized participant
may engage in creation and redemption transactions directly with the fund. Once
created, shares of the fund generally trade in the secondary market in amounts
less than a Creation Unit.
Shares
of the fund are listed on a national securities exchange for trading during the
trading day. Shares can be bought and sold throughout the trading day like
shares of other publicly traded companies. American Century ETF Trust (the
trust) does not impose any minimum investment for shares of the fund purchased
on an exchange. Shares of the fund trade under the following ticker symbol:
ESGA.
Buying
or selling fund shares on an exchange involves two types of costs that may apply
to all securities transactions. When buying or selling shares of the fund
through a broker, you will likely incur a brokerage commission or other charges
determined by your broker. The commission is frequently a fixed amount and may
be a significant proportional cost for investors seeking to buy or sell small
amounts of shares. In addition, you may incur the cost of the “spread,” that is,
any difference between the bid price and the ask price. The spread varies over
time for shares of the fund based on the fund’s trading volume and market
liquidity, and is generally lower if the fund has a lot of trading volume and
market liquidity, and higher if the fund has little trading volume and market
liquidity. This fund may trade at a wider bid/ask spread than ETFs that publish
their portfolios on a daily basis, especially during periods of market
volatility.
The
fund’s primary listing exchange is NYSE Arca, Inc. (the Listing Exchange), which
is open for trading Monday through Friday and is closed on weekends and the
following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’
Day, Good Friday, Memorial Day, Juneteenth National Independence Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Book
Entry
Shares
of the fund are held in book-entry form, which means that no share certificates
are issued. The Depository Trust Company (DTC) or its nominee is the record
owner of all outstanding shares of the fund and is recognized as the owner of
all shares for all purposes.
Investors
owning shares of the fund are beneficial owners as shown on the records of DTC
or its participants. DTC serves as the securities depository for shares of the
fund. DTC participants include securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
shares, you are not entitled to receive physical delivery of stock certificates
or to have shares registered in your name, and you are not considered a
registered owner of shares. Therefore, to exercise any right as an owner of
shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other securities that you
hold in book-entry or “street name” form.
Frequent
Trading Practices
The
Board of Trustees has not adopted a policy of monitoring for frequent purchases
and redemptions of fund shares (frequent trading). The Board of Trustees
believes that a frequent trading policy is unnecessary because fund shares are
listed for trading on a national securities exchange. Therefore, it is unlikely
that a shareholder could take advantage of a potential arbitrage opportunity
presented by a lag between a change in the value of the fund’s portfolio
securities after the close of the primary markets for the fund’s portfolio
securities and the reflection of that change in the fund’s NAV (market timing),
because the fund generally sells and redeems its shares directly through
transactions that are in-kind and/or for cash, subject to the conditions
described below under Creations and Redemptions.
Investments
by Other Investment Companies
Section
12(d)(1) of the Investment Company Act restricts investments by investment
companies in the securities of other investment companies. Registered investment
companies are permitted to invest in the fund beyond the limits set forth in
Section 12(d)(1), subject to certain terms and conditions set forth in SEC
rules. In order for an unaffiliated registered investment company to invest in
shares of the fund beyond the limitations of Section 12(d)(1) pursuant to Rule
12d1-4, the registered investment company must enter into an agreement with the
trust.
Creations
and Redemptions
Prior
to trading in the secondary market, shares of the fund are “created” at NAV by
market makers, large investors and institutions only in block-size units called
“Creation Units.” All orders to purchase Creation Units must be placed by or
through an authorized participant that has entered into an authorized
participant agreement (AP Agreement) with Foreside Fund Services, LLC (the
distributor). Only an authorized participant may create or redeem Creation Units
directly with the fund.
A
creation transaction, which is subject to acceptance by the trust, generally
takes place when an authorized participant deposits into the fund a designated
portfolio of securities and/or cash (which may include cash in lieu of certain
securities) in exchange for a
specified
number of Creation Units. Similarly, shares can be redeemed only in Creation
Units, generally for a designated portfolio of securities and/or cash (which may
include cash in lieu of certain securities). Except when aggregated in Creation
Units, shares are not redeemable by the fund.
The
prices at which creations and redemptions occur are based on the next
calculation of NAV after a creation or redemption order is received in a proper
form under the AP Agreement. The portfolio of securities required for purchase
of a Creation Unit is generally the same as the portfolio of securities the fund
will deliver upon redemption of fund shares, except under certain circumstances.
As a result of any system failure or other interruption, creation or redemption
orders either may not be executed according to the fund’s instructions or may
not be executed at all, or the fund may not be able to place or change such
orders.
Creations
and redemptions must be made through a firm that is either a broker-dealer or
other participant in the Continuous Net Settlement System of the National
Securities Clearing Corporation or a DTC participant and, in either case, has
executed an AP Agreement with the distributor. Information about the procedures
regarding creations and redemptions of Creation Units (including the cut-off
times for receipt of creation and redemption orders) is included in the fund’s
statement of additional information (SAI).
Because
new shares may be created and issued on an ongoing basis, at any point during
the life of the fund a “distribution,” as such term is used in the Securities
Act of 1933 (Securities Act), may be occurring. Broker-dealers and other persons
are cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner that could render them statutory underwriters and subject to the
prospectus delivery and liability provisions of the Securities Act. Any
determination of whether one is an underwriter must take into account all the
relevant facts and circumstances of each particular case.
Broker-dealers
should also note that dealers who are not “underwriters” but are participating
in a distribution (as contrasted to ordinary secondary transactions), and thus
dealing with shares that are part of an “unsold allotment” within the meaning of
Section 4(a)(3)(C) of the Securities Act, would be unable to take advantage of
the prospectus delivery exemption provided by Section 4(a)(3) of the Securities
Act. For delivery of prospectuses to exchange members, the prospectus delivery
mechanism of Rule 153 under the Securities Act is available only with respect to
transactions on a national securities exchange.
In
addition, certain affiliates of the fund and the advisor may purchase and resell
fund shares pursuant to this prospectus.
The
Proxy Portfolio
Unlike
traditional ETFs, this fund does not disclose its portfolio holdings (Actual
Portfolio) daily. The fund instead posts a Proxy Portfolio on its website each
day, including the following information for each portfolio holding in the Proxy
Portfolio: (1) ticker symbol; (2) CUSIP or other identifier;
(3) description of holding; (4) quantity of each security or other
asset held; and (5) percentage weight of the holding in the Proxy
Portfolio. The Proxy Portfolio is designed to reflect the economic exposures and
risk characteristics of the fund’s actual holdings on each trading day, but it
is not the same as the fund’s Actual Portfolio. The fund will disclose its
Actual Portfolio quarterly with a 60-day lag via periodic filings with the
Securities and Exchange Commission. The Proxy Portfolio disclosures will enable
arbitrageurs and market participants to use the component securities and their
weightings in the Proxy Portfolio to calculate intraday values that approximate
the value of the securities in the Actual Portfolio and, based thereon, assess
whether the market price of the shares is higher or lower than the approximate
contemporaneous value of the Actual Portfolio and engage in arbitrage and
hedging activities. These activities should ensure that fund market prices
remain close to the fund’s NAV per share. At the end of each trading day, the
fund will calculate the percentage weight overlap between the Proxy Portfolio
and the Actual Portfolio (Proxy Overlap) and the standard deviation over the
past three months of the daily proxy spread (i.e., the difference, in percentage
terms, between the Proxy Portfolio per share NAV and that of the Actual
Portfolio at the end of the trading day) (Tracking Error) and publish such
information before the opening of trading each Business Day. The Proxy Overlap
and Tracking Error will provide additional information to the market making
community. In particular, they will help market participants evaluate the risk
that the performance of the Proxy Portfolio may deviate from the performance of
the portfolio holdings of the fund. The fund’s Board of Trustees monitors its
Tracking Error and bid/spread. If deviations become too large, the Board will
consider the continuing viability of the fund, whether shareholders are being
harmed, and what, if any, corrective measures would be appropriate. See the
Statement of Additional Information (SAI) for further discussion of the Board’s
monitoring responsibilities.
The
Proxy Portfolio is designed to recreate the daily performance of the Actual
Portfolio. This is achieved by performing a “Factor Model” analysis of the
Actual Portfolio. The Factor Model is comprised of three sets of factors or
analytical metrics: market-based factors, fundamental factors, and
industry/sector factors. The fund uses a “Model Universe” to generate its Proxy
Portfolio. The Model Universe is comprised of securities that the fund can
purchase and will be a financial index or stated portfolio of securities from
which fund investments will be selected. The results of the Factor Model
analysis are then applied to the Model Universe. The daily rebalanced Proxy
Portfolio is then generated as a result of this Model Universe analysis with the
Proxy Portfolio being a small sub-set of the Model Universe. The
Factor Model is applied to both the Actual Portfolio and the Model Universe to
construct the fund’s Proxy Portfolio that performs in a manner substantially
identical to the performance of its Actual Portfolio. The Proxy Portfolio
will only include investments the fund is permitted to hold. The fund’s SAI
contains more information on the Proxy Portfolio and its
construction.
Share
Price
The
price of fund shares is based on market price. The trading prices of the fund’s
shares in the secondary market generally differ from the fund’s daily NAV and
are affected by market forces such as supply and demand, economic conditions and
other factors. Although the Proxy Portfolio is intended to provide investors
with enough information to allow for an effective arbitrage mechanism that will
keep the market price of the fund at or close to the underlying NAV per share of
the fund, there is a risk (which may increase during periods of market
disruption or volatility) that market prices will vary significantly from the
underlying NAV of the fund. ETFs trading on the basis of a published Proxy
Portfolio may trade at a wider bid/ask spread than ETFs that publish their
portfolios on a daily basis, especially during periods of market disruption or
volatility, and therefore, may cost investors more to trade. Although the fund
seeks to benefit from keeping its portfolio information secret, market
participants may attempt to use the Proxy Portfolio to identify a fund’s trading
strategy, which if successful, could result in such market participants engaging
in certain predatory trading practices that may have the potential to harm the
fund and its shareholders.
Because
the shares are traded in the secondary market, a broker may charge a commission
to execute a transaction in shares, and an investor also may incur the cost of
the spread between the price at which a dealer will buy shares and the somewhat
higher price at which a dealer will sell shares.
Calculation
of NAV
American
Century Investments will price the fund shares purchased or redeemed by
authorized participants based on the net
asset value
(NAV) next determined after an order is received in good order by the fund’s
transfer agent. We determine the NAV of the fund as of the close of regular
trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on
each day the NYSE is open. On days when the NYSE is closed (including certain
U.S. national holidays), we do not calculate the NAV.
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The
net
asset value,
or NAV, of the fund is the current value of the fund’s assets, minus any
liabilities, divided by the number of shares of the fund
outstanding. |
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The
value of the securities and other assets and liabilities held by the fund are
determined by the advisor, as the valuation designee, pursuant to its valuation
policies and procedures. The fund’s Board of Trustees oversees the valuation
designee and at least annually
reviews
its valuation policies and procedures. Valuations are determined in accordance
with applicable federal securities laws and accounting principles generally
accepted in the United States.
Portfolio
securities for which market quotations are readily available are valued at their
market price. Equity securities and other equity instruments for which market
quotations are readily available are valued at the last reported official
closing price or sale price as of the time the NAV is determined.
If
the valuation
designee
determines that the market price for a portfolio security is not readily
available or is
believed by the valuation designee to be unreliable,
such security is valued at
fair value
as determined in good faith by the valuation
designee, in accordance with its policies and procedures. Circumstances that may
cause the fund to determine
that market quotations are not available or reliable include, but are not
limited to:
•when
there is a significant event subsequent to the market quotation;
•trading
in a security has been halted during the trading day; or
•trading
in a security is insufficient or did not take place due to a closure or
holiday.
If
such circumstances occur, the valuation
designee
will fair value the security if the fair valuation would materially impact the
fund’s NAV. While fair value determinations involve judgments that are
inherently subjective, these determinations are made in good faith in accordance
with the
valuation designee’s valuation policies and
procedures.
The
effect of using fair value determinations is that the fund’s NAV will be based,
to some degree, on security valuations that the valuation
designee reasonably
believes are fair rather than being solely determined by the market.
Equity
securities with no current day last sale or official close price may be priced
at the mean of the bid and ask market quotations obtained from a listing
exchange or an independent broker who is an established market maker in the
security. The valuation designee may use third party pricing services to assist
in the determination of fair value.
With
respect to any portion of the fund’s assets that are invested in mutual
funds,
the fund’s NAV will be calculated based upon the NAVs of such mutual
funds.
These
mutual funds
are required to explain the circumstances under which they will use fair value
pricing and the effects of using fair value pricing in their prospectuses.
The
fund’s website, which is publicly accessible at no charge, contains, on a per
share basis, the prior business day’s NAV and market closing price or bid/ask
price of the shares, a calculation of the premium or discount of the market
closing price or bid/ask price against such NAV, and any other relevant
information about premiums and discounts. The website will also disclose the
fund’s median bid/ask spread information for the most recent thirty-day period
on a rolling basis, as required by Rule 6c-11(c)(1)(v)(A-C).
Distributions
Federal
tax laws require the fund to make distributions to its shareholders in order to
qualify as a regulated investment company. Qualification as a regulated
investment company means the fund should not be subject to state or federal
income tax on amounts distributed. The distributions generally consist of
dividends and interest received by the fund, as well as capital
gains
realized by the fund on the sale of its investment securities.
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Capital
gains
are
increases in the values of capital assets, such as stocks or bonds, from
the time the assets are purchased. |
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The
fund generally expects to pay distributions of substantially all of its income,
if any, quarterly. Distributions from realized capital gains, if any, are paid
annually. It may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions.
Although
dividends generally will be treated as distributed when paid, any dividend
declared by a fund in October, November, or December and payable to shareholders
of record in such a month that is paid during the following January will be
treated for U.S. federal income tax purposes as received by shareholders on
December 31 of the calendar year in which it was declared.
Dividend
payments are made through DTC participants and indirect participants to
beneficial owners then of record with proceeds received from the fund.
Distributions may be automatically reinvested in whole fund shares only if you
purchased the shares through a broker that makes such option
available.
Some
of the tax consequences of owning shares of the fund will vary depending on
whether you own them through a taxable or tax-deferred account. Distributions by
the fund of dividend and interest income, capital gains and other income it has
generated through its investment activities will generally be taxable to
shareholders who hold shares in a taxable account. Tax consequences also may
result when investors sell fund shares.
Tax-Deferred
Accounts
If
you purchase fund shares through a tax-deferred account, such as an IRA or
employer-sponsored retirement plan, income and capital gains distributions
usually will not be subject to current taxation but will accumulate in your
account under the plan on a tax-deferred basis. Likewise, moving from one fund
to another fund within a plan or tax-deferred account generally will not cause
you to be taxed. For information about the tax consequences of making purchases
or withdrawals through a tax-deferred account, please consult your plan
administrator, your summary plan description or a tax advisor.
Taxable
Accounts
If
you own fund shares through a taxable account, you may be taxed on your
investments if the fund makes distributions or if you sell your fund
shares.
Taxability
of Distributions
Fund
distributions may consist of income, such as dividends and interest earned by
the fund from its investments, or capital gains generated by the fund from the
sale of investment securities. Distributions of income are taxed as ordinary
income, unless they are designated as qualified
dividend income
and you meet a minimum required holding period with respect to your shares of
the fund, in which case distributions of income are taxed at the same rates as
long-term capital gains.
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Qualified
dividend income
is
a dividend received by a fund from the stock of a domestic or qualifying
foreign corporation, provided that the fund has held the stock for a
required holding period and the stock was not on loan at the time of the
dividend. |
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The
tax character of any distributions from capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund or whether you reinvest your distributions or take
them in cash. Short-term (one year or less) capital gains are taxable as
ordinary income. Gains on securities held for more than one year are taxed at
the lower rates applicable to long-term capital gains.
If
a fund’s distributions exceed current and accumulated earnings and profits, such
excess will generally be considered a return of capital. A return of capital
distribution is generally not subject to tax, but will reduce your cost basis in
the fund and result in higher realized capital gains (or lower realized capital
losses) upon the sale of fund shares.
You
will receive information regarding the tax character of fund distributions for
each calendar year in an annual tax mailing.
If
you meet specified income levels, you will also be subject to a 3.8% Medicare
contribution tax which is imposed on net investment income, including interest,
dividends and capital gains. Distributions also may be subject to state and
local taxes. Because everyone’s tax situation is unique, you may want to consult
your tax professional about federal, state and local tax
consequences.
Taxes
on Transactions
Your
sales of fund shares are subject to capital gains tax. Short-term capital gains
are gains on fund shares you held for 12 months or less. Long-term capital gains
are gains on fund shares you held for more than 12 months. If your shares
decrease in value, their sale will result in a long-term or short-term capital
loss. However, you should note that loss realized upon the sale of shares held
for six months or less will be treated as a long-term capital loss to the extent
of any distribution of long-term capital gain to you with respect to those
shares. If a loss is realized on the sale of fund shares, the reinvestment in
additional fund shares within 30 days before or after the sale may be subject to
the wash sale rules of the Internal Revenue Code. This may result in a
postponement of the recognition of such loss for federal income tax
purposes.
If
you have not certified that your Social Security number or tax identification
number is correct and that you are not subject to withholding, you may be
subject to backup withholding at the applicable federal withholding tax rate on
taxable dividends, capital gains distributions and proceeds from the sale of
fund shares.
Taxes
on Creations and Redemptions of Creation Units
An
Authorized Participant who exchanges securities for Creation Units generally
will recognize a gain or a loss equal to the difference between the market value
of the Creation Units at the time and the sum of the exchanger’s aggregate basis
in the securities surrendered plus the amount of cash paid for such Creation
Units. A person who redeems Creation Units will generally recognize a gain or
loss equal to the difference between the exchanger’s basis in the Creation Units
and the sum of the aggregate market value of any securities received plus the
amount of any cash received for such Creation Units. The IRS, however, may
assert that a loss realized upon an exchange of securities for Creation Units
cannot be deducted currently under the rules governing “wash sales,” or on the
basis that there has been no significant change in economic
position.
Any
capital gain or loss realized upon the creation of Creation Units will generally
be treated as long-term capital gain or loss if the securities exchanged for
such Creation Units have been held for more than one year. Any capital gain or
loss realized upon the redemption of Creation Units will generally be treated as
long-term capital gain or loss if the shares comprising the Creation Units have
been held for more than one year. Otherwise, such capital gains or losses will
generally be treated as short-term capital gain or loss. Any loss upon a
redemption of Creation Units held for six months or less will be treated as a
long-term capital loss to the extent of any amounts treated as distributions to
the applicable Authorized Participant of long-term capital gain with respect to
the Creation Units (including any amounts credited to the Authorized Participant
as undistributed capital gains).
If
a fund redeems Creation Units in cash, it may recognize more capital gains than
it will if it redeems Creation Units in-kind.
Buying
a Dividend
Purchasing
fund shares in a taxable account shortly before a distribution is sometimes
known as buying a dividend. In taxable accounts, you must pay income taxes on
the distribution whether you reinvest the distribution or take it in cash. In
addition, you will have to pay taxes on the distribution whether the value of
your investment decreased, increased or remained the same after you bought the
fund shares.
The
risk in buying a dividend is that a fund’s portfolio may build up taxable income
and gains throughout the period covered by a distribution, as income is earned
and securities are sold at a profit. The fund distributes the income and gains
to you, after subtracting any losses, even if you did not own the shares when
the income was earned or the gains occurred.
If
you buy a dividend, you incur the full tax liability of the distribution period,
but you may not enjoy the full benefit of the income earned or the gains
realized in the fund’s portfolio.
Premium/Discount
Information
The
fund’s website will include on a daily basis, per share, the prior Business
Day’s NAV and the closing price or bid/ask price, and a calculation of the
premium/discount of the closing price or bid/ask price against such NAV. In
addition, the fund will provide any other information on its website regarding
premiums/discounts that ETFs registered under the Investment
Company
Act may be required to provide. The website also will include the Proxy
Portfolio, the Proxy Overlap and Tracking Error and bid/ask spread information.
In addition, the fund will post a table showing the number of days the fund’s
shares traded at a premium or a discount and a line graph showing the fund share
premiums or discounts during the most recently completed calendar year and most
recently completed calendar quarters since that year (or the life of the fund,
if shorter). If the fund’s premium or discount is greater than 2% for more than
seven consecutive trading days, the website will contain disclosure to that
effect along with a discussion of the factors that are reasonably believed to
have materially contributed to the premium or discount.
Service,
Distribution and Administrative Fees
Investment
Company Act Rule 12b-1 permits investment companies that adopt a written plan to
pay certain expenses associated with the distribution of their shares out of
fund assets. The Board of Trustees has adopted a 12b-1 plan that allows the fund
to pay annual fees not to exceed 0.25% to the distributor for distribution and
individual shareholder services. However, the Board of Trustees has determined
not to authorize payment of a 12b-1 plan fee at this time.
Because
these fees may be used to pay for services that are not related to prospective
sales of the fund, to the extent that a fee is authorized, the fund will
continue to make payments under its plan even if it is closed to new investors.
Because these fees are paid out of the fund’s assets on an ongoing basis, to the
extent that a fee is authorized, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.
The
advisor or its affiliates may make payments to intermediaries for various
additional services, other expenses and/or the intermediaries’ distribution of
the fund out of their profits or other available sources. Such payments may be
made for one or more of the following: (1) distribution, which may include
expenses incurred by intermediaries for their sales activities with respect to
the fund, such as preparing, printing and distributing sales literature and
advertising materials and compensating registered representatives or other
employees of such financial intermediaries for their sales activities, as well
as the opportunity for the fund to be made available by such intermediaries; (2)
shareholder services, such as providing individual and custom investment
advisory services to clients of the financial intermediaries; and (3) marketing
and promotional services, including business planning assistance, educating
personnel about the fund, and sponsorship of sales meetings, which may include
covering costs of providing speakers, meals and other entertainment. The advisor
may pay partnership and/or sponsorship fees to support seminars, conferences,
and other programs designed to educate intermediaries about the fund and may
cover the expenses associated with attendance at such meetings, including travel
costs. The advisor and its affiliates may also pay fees related to obtaining
data regarding intermediary or financial advisor activities to assist American
Century with sales reporting, business intelligence and training and education
opportunities. These payments and activities are intended to provide an
incentive to intermediaries to sell the fund by educating them about the fund
and helping defray the costs associated with offering the fund. These payments
may create a conflict of interest by influencing the intermediary to recommend
the fund over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information. The amount of any payments
described in this paragraph is determined by the advisor or its affiliates, and
all such amounts are paid out of their available assets, and not paid by you or
the fund. As a result, the total expense ratio of the fund will not be affected
by any such payments.
Actively
Managed Solution (AMS) is a service mark of NYSE Group, Inc. or its affiliates
(NYSE) and has been licensed for use by American Century Investment Management,
Inc. (Licensee) in connection with American Century Sustainable Equity ETF (the
Fund). Neither Licensee nor the Fund is sponsored, endorsed, sold or
promoted by NYSE. NYSE makes no representations or warranties regarding
Licensee or the Fund or the ability of the AMSSM
to track the intra-day performance of any fund. NYSE MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO AMSSM
OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Understanding
the Financial Highlights
The
table on the next page itemizes what contributed to the changes in share price
during the most recently ended fiscal year. It also shows the changes in share
price for this period in comparison to changes over the last five fiscal years
(or a shorter period if the fund is not five years old).
On
a per-share basis, the table includes as appropriate
•share
price at the beginning of the period
•investment
income and capital gains or losses
•distributions
of income and capital gains paid to investors
•share
price at the end of the period
The
table also includes some key statistics for the period as
appropriate
•Total
Return — the
overall percentage of return of the fund, assuming the reinvestment of all
distributions
•Expense
Ratio — the
operating expenses of the fund as a percentage of average net
assets
•Net
Income Ratio — the
net investment income of the fund as a percentage of average net
assets
•Portfolio
Turnover — the
percentage of the fund’s investment portfolio that is replaced during the
period
The
Financial Highlights have been audited by Deloitte & Touche LLP, independent
registered public accounting firm. The Report of Independent Registered Public
Accounting Firm and the financial statements are included in the fund’s annual
report, which is available upon request.
American
Century Sustainable Equity ETF
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| For
a Share Outstanding Throughout the Years Ended August 31 (except as
noted) |
| Per-Share
Data |
Ratios
and Supplemental Data |
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| Income
From Investment Operations: |
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| Ratio
to Average Net Assets of: |
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| Net
Asset
Value, Beginning
of Period |
Net
Investment
Income
(Loss)(1) |
Net
Realized
and
Unrealized
Gain (Loss) |
Total
From
Investment
Operations |
Distributions
From Net Investment Income |
Net
Asset Value, End of Period |
Total
Return(2) |
Operating
Expenses |
Net
Investment
Income
(Loss) |
Portfolio
Turnover
Rate(3) |
Net
Assets,
End of
Period
(in thousands) |
| 2022 |
$57.20 |
0.50 |
(8.49) |
(7.99) |
(0.47) |
$48.74 |
(14.03)% |
0.39% |
0.93% |
21% |
$104,800 |
|
| 2021 |
$44.16 |
0.45 |
13.01 |
13.46 |
(0.42) |
$57.20 |
30.65% |
0.39% |
0.91% |
22% |
$150,436 |
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2020(4) |
$39.59 |
0.06 |
4.51 |
4.57 |
— |
$44.16 |
11.56% |
0.39%(5) |
1.13%(5) |
10% |
$84,794 |
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| Notes
to Financial Highlights |
(1)Computed
using average shares outstanding throughout the period.
(2)Total
returns are calculated based on the net asset value of the last business day.
Total returns for periods less than one year are not annualized.
(3)Excludes
securities received or delivered in kind.
(4)July
13, 2020 (fund inception) through August 31, 2020.
(5)Annualized.
Notes
Notes
Where
to Find More Information
Annual
and Semiannual Reports
Additional
information about the fund’s investments is available in the fund’s annual and
semiannual reports to shareholders. In the fund’s annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the fund’s performance during its last fiscal year. This prospectus
incorporates by reference the Report of Independent Registered Public Accounting
Firm and the financial statements included in the fund’s annual
report
to shareholders dated August 31, 2022.
Statement
of Additional Information (SAI)
The
SAI contains a more detailed legal description of the fund’s operations,
investment restrictions, policies and practices. The SAI
is incorporated by reference into this prospectus. This means that it is legally
part of this prospectus, even if you don’t request a copy.
You
may obtain a free copy of the SAI, annual reports and semiannual reports, and
you may ask questions about the fund or your accounts, online at
americancenturyetfs.com, by contacting American Century Investments at the
addresses or telephone numbers listed below or by contacting your financial
intermediary.
The
Securities and Exchange Commission (SEC)
Reports
and other information about the fund are available on the EDGAR database on the
SEC’s website at sec.gov, and copies of this information may be obtained, after
paying a duplicating fee, by electronic request at the following email address:
[email protected].
This
prospectus shall not constitute an offer to sell securities of the fund in any
state, territory, or other jurisdiction where the fund’s shares have not been
registered or qualified for sale, unless such registration or qualification is
not required, or under any circumstances in which such offer or solicitation
would be unlawful.
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American
Century Investments
americancenturyetfs.com |
Financial
Professionals
P.O. Box 419385
Kansas City, Missouri
64141-6385
833-ACI-ETFS |
Investment
Company Act File No. 811-23305
CL-PRS-96284
2301
