ck0001710607-20220831
January
1, 2023
American
Century Investments
Prospectus
|
|
|
|
|
|
|
|
| |
|
| Ticker: |
Exchange: |
|
American
Century®
Focused Large Cap Value ETF |
FLV |
Cboe
BZX Exchange, Inc. |
This
ETF is different from traditional ETFs.
Traditional
ETFs tell the public what assets they hold each day. This ETF will not. This
may create additional risks for your investment. For
example:
• You
may have to pay more money to trade the ETF’s shares. This ETF will provide less
information to traders, who tend to charge more for trades when they have less
information.
•The
price you pay to buy ETF shares on an exchange may not match the value of the
ETF’s portfolio. The same is true when you sell shares. These price differences
may be greater for this ETF 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
differences between this ETF and other ETFs may also have advantages. By keeping
certain information about the ETF secret, this ETF may face less risk that other
traders can predict or copy its investment strategy. This may improve the ETF’s
performance. If other traders are able to copy or predict the ETF’s investment
strategy, however, this may hurt the ETF’s performance.
For
additional information regarding the unique attributes and risks of the
ETF,
see the Portfolio Transparency Risk, Trading Issues Risk, Early Close/Trading
Halt Risk, and
Authorized
Participant/ Authorized Participant Representative Concentration Risk
of
the Principal Risks section and Share Price section of the prospectus
below.
|
|
|
|
|
| |
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. |
|
©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.
|
|
|
|
|
| |
|
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
| Management
Fee |
0.42% |
|
Other
Expenses |
0.00% |
| Total
Annual Fund Operating Expenses |
0.42% |
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:
|
|
|
|
|
|
|
|
|
|
|
| |
| 1
year |
3
years |
5
years |
10
years |
| $43 |
$135 |
$236 |
$530 |
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
22%
of the average value of its portfolio.
Under normal market conditions, the
portfolio managers will invest at least 80% of the fund’s assets in securities
of large capitalization companies. For purposes of this 80%
test, the fund defines large capitalization companies as those with
capitalizations within the range of the Russell 1000®
Index.
Though market capitalization may change from time to time, as of September
30, 2022,
the total market capitalization range of the Russell 1000® Index
was approximately $271.14
million to $2.22
trillion.
In
selecting stocks for the fund, the portfolio managers look for companies whose
stock price may not reflect the company’s value, by looking for companies that
are temporarily out of favor in, or whose value is not yet recognized by, the
market. To identify these companies, the portfolio managers consider earnings,
cash flows and/or assets that may not be reflected accurately in the companies’
stock prices. The managers attempt to purchase the stocks of these undervalued
companies and hold each stock until the price has increased to, or is higher
than, a level the managers believe more accurately reflects the fair value of
the company. The portfolio managers use a variety of analytical research tools
and techniques to
help them buy or hold securities of companies that meet their investment
criteria and sell
the securities
of companies
that do not. In addition to fundamental financial metrics, the portfolio
managers may also consider
environmental, social, and/or
governance (ESG) data.
However, the portfolio managers may not consider ESG data with respect to every
investment decision and, even when such data is considered, they may conclude
that other attributes of an investment outweigh ESG considerations when making
decisions for the fund.
The fund normally invests in a relatively limited number of companies, generally
30-50.
The
fund will invest principally in U.S. exchange-listed common stocks and American
Depositary Receipts (ADRs). The fund uses ADRs to obtain exposure to foreign
securities. ADRs are issued by a U.S. financial institution (depositary) and
evidence ownership in a security or pool of securities issued by a foreign
issuer that have been deposited with the depositary. The fund may only invest in
exchange-traded ADRs that are registered with the Securities and Exchange
Commission and trade on a U.S. exchange contemporaneously with the fund’s
shares.
The
fund is an actively managed exchange-traded fund (ETF) that does not seek to
replicate the performance of a specified index. The portfolio managers may sell
stocks from the fund’s portfolio if they believe a stock no longer meets their
valuation criteria, a stock’s risk parameters outweigh its return opportunity,
more attractive alternatives are identified or specific events alter a stock’s
prospects.
•Portfolio
Transparency Risk — Unlike
traditional ETFs, the fund does not tell the public what assets it holds each
day. Instead, the fund provides a verified intraday indicative value (VIIV),
calculated and disseminated every second throughout the trading day. The VIIV is
intended to provide investors with enough information to allow for an effective
arbitrage mechanism that will keep the market price of the fund’s shares trading
at or close to the underlying net asset value (NAV) per share of the fund. There
is, however, 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. Similarly, because the fund’s shares trade on the basis of a
published VIIV, they may trade at a wider bid/ask spread than shares of 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, some market participants may attempt to use the VIIV to identify the
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. The fund’s website will contain
a historical comparison of each business day’s final VIIV to that business day’s
NAV and the specific methodology for calculating the VIIV.
•Trading
Issues Risk — Trading
in fund shares on the Listing Exchange may be halted in certain
circumstances. If at any time the securities representing 10% or more of
the fund’s portfolio become subject to a trading halt or otherwise do not have a
readily available market quotations, the fund’s advisor will request the Listing
Exchange to halt trading of the fund. There may be other instances that require
a trading halt specific to the VIIV. If there is a discrepancy of sufficient
magnitude in the fund’s VIIV calculation, the fund’s advisor will request the
Listing Exchange to halt trading. This “circuit breaker” is designed to prevent
the VIIV from reflecting outlier prices. For more information see “The Verified
Indicative Intraday Value” section below.
•Early
Close/Trading Halt Risk — An
exchange or market may close early or issue trading halts on portfolio
securities. In times of market volatility, if trading is halted in some of the
securities that the fund holds, there may be a disconnect between the market
price of those securities and the market price of the fund. If at any time the
securities representing 10% or more of the fund’s portfolio become subject to a
trading halt or otherwise do not have readily available market quotations, the
fund’s advisor will request the Cboe BZX Exchange, Inc. (Listing Exchange) to
halt trading on the fund, meaning that investors would not be able to trade
their shares. During any such trading halt, the VIIV would continue to be
calculated and disseminated. Trading halts may have a greater impact on the fund
than traditional ETFs because of its lack of transparency. Additionally, the
fund’s advisor monitors the bid and ask quotations for the securities the fund
holds, and, if it determines that such a security does not have readily
available market quotations (such as during an extended trading halt), it will
post that fact and the name and weighting of that security in the fund’s VIIV
calculation on the fund’s web site. This information should permit market
participants to calculate the effect of that security on the VIIV calculation,
determine their own fair value of the disclosed portfolio security, and better
judge the accuracy of that day’s VIIV for the fund. An extended trading halt in
a portfolio security could exacerbate discrepancies between the VIIV and the
fund’s NAV.
•Authorized
Participant/Authorized Participant Representative Concentration Risk
— The
creation and redemption process for the fund occurs through a confidential
brokerage account (Confidential Account) with an agent, called an AP
Representative, on behalf of an Authorized Participant. Each day, the AP
Representative will be given the names and quantities of the securities to be
deposited, in the case of a creation, or redeemed, in the case of a redemption
(Creation Basket), allowing the AP Representative to buy and sell positions in
the portfolio securities to permit creations or redemptions on the Authorized
Participant’s behalf, without disclosing the information to the Authorized
Participant. The fund may have a limited number of institutions that act as
Authorized Participants and AP Representatives, 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 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 and AP Representatives. During times
of market stress, Authorized Participants may be more likely to step away from
this type of ETF than a traditional ETF.
•Style
Risk — If
the market does not consider the individual stocks purchased by the fund to be
undervalued, the value of the fund’s shares may decline, even if stock prices
generally are rising.
•Focused
Portfolio Risk — Investing
in a limited number of companies carries more risk because changes in the value
of a single company may have a more significant effect, either negative or
positive on the fund’s value.
•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.
•ESG
Integration Risk — When
the portfolio managers consider ESG data in addition to fundamental financial
metrics to help them make an investment decision for the fund, the fund may
perform differently than funds for which ESG data is not considered.
Additionally, despite their consideration of ESG data, the portfolio managers
may nonetheless invest in companies with weak, or exclude companies with strong,
ESG characteristics if they conclude that other attributes of an investment
outweigh ESG considerations. ESG data used by the portfolio managers often lacks
standardization, consistency, and transparency, and for certain companies such
data may not be available, complete, or accurate.
•Depositary
Receipts Risk — Investment
in depositary receipts does not eliminate all the risks inherent in investing in
securities of non-U.S. issuers. The market value of depositary receipts is
dependent upon the market value of the underlying securities and fluctuations in
the relative value of the currencies in which the depositary receipts and the
underlying securities are quoted.
•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.
Premiums and discounts may be larger for this fund than other ETFs because of
its unique structure and lack of transparency. The portfolio managers cannot
predict whether shares will trade above (premium), below (discount) or at
NAV.
For
at least the first three years after launch of the fund, the Board of
Trustees (board) will promptly meet if, for 30 or more days in any quarter or 15
days in a row, the absolute difference between either the market closing price
or the bid/ask price, on one hand, and NAV, on the other, exceeds 1.00% or the
bid/ask spread exceeds 1.00%. In such a circumstance, the board will
consider the continuing viability of the fund, whether shareholders are being
harmed, and what, if any, action would be appropriate to among other things,
narrow the premium/discount or spread, as applicable. The board will then
decide whether to take any such action. Potential actions may include, but are
not limited to, changing lead market makers, listing the fund on a different
exchange, changing the size of Creation Units, changing the fund’s investment
objective or strategy, and liquidating the fund.
•Price
Volatility Risk — The
value of the fund’s shares may fluctuate significantly in the short term. The
fund’s nontransparent structure may exacerbate this risk, particularly in
volatile markets.
•Large-Cap Stock Risk
— Larger
companies are sometimes unable to attain the high growth rates of smaller
companies, especially during extended periods of economic
expansion.
•Large
Shareholder Risk — Certain
shareholders, including other funds advised by the adviser, may from time to
time own a substantial amount of the shares of the fund. In addition, a third
party investor, the adviser or an affiliate of the adviser, 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
or that the size of the fund would be maintained at such levels. 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 Listing Exchange 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 (1Q
2021): 6.93% Lowest Performance Quarter
(3Q
2021): -0.99%
As
of September 30, 2022, the
most recent calendar quarter end, the fund’s year-to-date return was
-11.97%.
|
|
|
|
|
|
|
|
|
|
|
| |
|
Average
Annual Total Returns
For
the calendar year ended December 31, 2021 |
1
year |
Since
Inception |
Inception
Date |
| American
Century Focused Large Cap Value ETF Shares |
|
| |
| Return Before
Taxes |
17.26% |
31.09% |
03/31/2020 |
| Return After Taxes on
Distributions |
15.81% |
30.00% |
03/31/2020 |
| Return After Taxes on Distributions and
Sale of Fund Shares |
10.67% |
23.97% |
03/31/2020 |
|
Russell
1000®
Value Index
(reflects no deduction for
fees, expenses or taxes) |
25.16% |
37.86% |
03/31/2020 |
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
Kevin
Toney,
CFA, Chief Investment Officer – Global Value Equity, Senior Vice President and
Senior Portfolio Manager, has been a member of the team that manages the fund
since 2020.
Michael
Liss,
CFA, CPA, Vice President and Senior Portfolio Manager, has been a member of the
team that manages the fund since 2020.
Brian
Woglom,
CFA, Vice President and Senior Portfolio Manager, has been a member of the team
that manages the fund since 2020.
Adam
Krenn,
CFA, Portfolio Manager, has been a member of the team that manages the fund
since 2020.
Philip
Sundell,
CFA, Vice
President and
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?
Under
normal market conditions, the portfolio managers will invest at least 80% of the
fund’s assets in securities of large capitalization companies. For purposes of
this 80% test, the fund defines large capitalization companies as those with
capitalizations within the range of the Russell 1000®
Index. Though market capitalization may change from time to time, as of
September 30, 2022,
the total market capitalization range of the Russell 1000® Index
was approximately $271.14
million to $2.22
trillion.
The
portfolio managers look for stocks of companies that they believe are
undervalued at the time of purchase. The managers use a value investment
strategy that looks for companies that are temporarily out of favor in the
market. Companies may be undervalued due to market declines, poor economic
conditions, actual or anticipated bad news regarding the issuer or its industry,
or because they have been overlooked by the market. To identify these companies,
the portfolio managers look for companies with earnings, cash flows and/or
assets that may not be reflected accurately in the companies’ stock prices or
may be outside the companies’ historical ranges. The managers also may consider
whether the companies’ securities have a favorable income-paying history and
whether income payments are expected to continue or increase. The managers
attempt to purchase the stocks of these undervalued companies and hold each
stock until it has returned to favor in the market and the price has increased
to, or is higher than, a level the managers believe more accurately reflects the
fair value of the company. The portfolio managers use a variety of analytical
research tools and techniques to
help them buy or hold securities of companies that meet their investment
criteria and sell
the securities
of companies
that do not. In addition to fundamental financial metrics, the portfolio
managers may also consider
environmental, social, and/or
governance (ESG) data. However, the portfolio managers may not consider ESG data
with respect to every investment decision and, even when such data
is considered, they may conclude that other attributes of an investment outweigh
ESG considerations when making decisions for the fund.
The fund normally invests in a relatively limited number of companies, generally
30-50.
The
fund will invest principally in U.S. exchange-listed common stocks and American
Depositary Receipts (ADRs). The fund uses ADRs to obtain exposure to foreign
securities. ADRs are issued by a U.S. financial institution (depositary) and
evidence ownership in a security or pool of securities issued by a foreign
issuer that have been deposited with the depositary. The fund may only invest in
exchange-traded ADRs that are registered with the Securities and Exchange
Commission and trade on a U.S. exchange contemporaneously with the fund’s
shares.
The
portfolio managers may sell stocks from the fund’s portfolio if they
believe:
•a
stock no longer meets their valuation criteria;
•a
stock’s risk parameters outweigh its return opportunity;
•more
attractive alternatives are identified; or
•specific
events alter a stock’s prospects.
The
portfolio managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally.
In
the event of exceptional market or economic conditions, the fund may take
temporary defensive positions that are inconsistent with the fund’s principal
investment strategies. To the extent the fund assumes a defensive position, it
may not achieve its investment objective.
Unlike
other actively-managed ETFs, the fund does not disclose its portfolio holdings
each day, but instead publishes a verified intraday indicative value (VIIV),
calculated each second of the trading day. 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?
•Portfolio
Transparency Risk — Unlike
traditional ETFs, the fund does not tell the public what assets it holds each
day. Instead, the fund provides a VIIV, calculated and disseminated every second
throughout the trading day. The VIIV is intended to provide investors with
enough information to allow for an effective arbitrage mechanism that will keep
the market price of the fund’s shares trading at or close to the underlying NAV
per share of the fund. There is, however, 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. Similarly, because the fund’s
shares trade on the basis of a published VIIV, they may trade at a wider bid/ask
spread than shares of 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, some market participants may attempt to use
the VIIV to identify the 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. The fund’s website will contain a historical
comparison of each business day’s final VIIV to that business day’s NAV and the
specific methodology for calculating the VIIV.
•Trading
Issues Risk — Trading
in fund shares on the Listing Exchange may be halted in certain
circumstances. If at any time the securities representing 10% or more of
the fund’s portfolio become subject to a trading halt or otherwise do not have a
readily available market quotations, the fund’s advisor will request the Listing
Exchange to halt trading of the fund. There may be other instances that require
a trading halt specific to the VIIV. If there is a discrepancy of sufficient
magnitude in the fund’s VIIV calculation, the fund’s advisor will request the
Listing Exchange to halt trading. This “circuit breaker” is designed to prevent
the VIIV from reflecting outlier prices. For more information see “The Verified
Indicative Intraday Value” section below.
•Early
Close/Trading Halt Risk — An
exchange or market may close early or issue trading halts on portfolio
securities. In times of market volatility, if trading is halted in some of the
securities that the fund holds, there may be a disconnect between the market
price of those securities and the market price of the fund. Additionally, if at
any time the securities representing 10% or more of the fund’s portfolio become
subject to a trading halt or otherwise do not have readily available market
quotations, the fund’s advisor will request the Listing Exchange to halt trading
on the fund, meaning that investors would not be able to trade their shares.
During any such trading halt, the VIIV would continue to be calculated and
disseminated. Trading halts may have a greater impact on the fund than
traditional ETFs because of its lack of transparency. Additionally, the fund’s
advisor monitors the bid and ask quotations for the securities the fund holds,
and, if it determines that a security does not have readily available market
quotations (such as during an extended trading halt), it will post that fact and
the name and weighting of that security in the fund’s VIIV calculation on the
fund’s web site. This information should permit market participants to
calculate the effect of that security on the VIIV calculation, determine their
own fair value of the disclosed portfolio security, and better judge the
accuracy of that day’s VIIV for the fund.
•Authorized
Participant/Authorized Participant Representative Concentration Risk
— The
creation and redemption process for the fund occurs through a confidential
brokerage account (Confidential Account) with an agent, called an AP
Representative, on behalf of an Authorized Participant. Each day, the AP
Representative will be given the Creation Basket, allowing the AP Representative
to buy and sell positions in the portfolio securities to permit creations or
redemptions on the Authorized Participant’s behalf, without disclosing the
information to the Authorized Participant. The fund may have a limited number of
institutions that act as Authorized Participants and AP Representatives, 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 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 and AP
Representatives. During times of market stress, Authorized Participants may be
more likely to step away from this type of ETF than a traditional
ETF.
•Style
Risk — If
the market does not consider the individual stocks purchased by the fund to be
undervalued, the value of the fund’s shares may not rise as high as other funds
and may in fact decline, even if stock prices generally are
increasing.
•Focused
Portfolio Risk — Investing
in a limited number of companies carries more risk because changes in the value
of a single company may have a more significant effect, either negative or
positive on the fund’s value.
•Market
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 a fund’s
style, the fund’s gains may not be as big as, or its losses may be bigger than,
other equity funds using different investment styles. 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.
•ESG
Integration Risk — When
the portfolio managers consider ESG data in addition to fundamental financial
metrics to help them make an investment decision for the fund, the fund may
perform differently than funds for which ESG data is not considered.
Additionally, despite their consideration of ESG data, the portfolio managers
may nonetheless invest in companies with weak, or exclude companies with strong,
ESG characteristics if they conclude that other attributes of an investment
outweigh ESG considerations. ESG data used by the portfolio managers often lacks
standardization, consistency, and transparency, and for certain companies such
data may not be available, complete, or accurate.
•Depositary
Receipts Risk — Investment
in depositary receipts does not eliminate all the risks inherent in investing in
securities of non-U.S. issuers. The market value of depositary receipts is
dependent upon the market value of the underlying securities and fluctuations in
the relative value of the currencies in which the depositary receipts and the
underlying securities are quoted.
•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. For at
least the first three years after launch of the fund, the board will
promptly meet if, for 30 or more days in any quarter or 15 days in a row, the
absolute difference between either the market closing price or the bid/ask
price, on one hand, and NAV, on the other, exceeds 1.00% or the bid/ask spread
exceeds 1.00%. In such a circumstance, the board will consider the
continuing viability of the fund, whether shareholders are being harmed, and
what, if any, action would be appropriate to among other things, narrow the
premium/discount or spread, as applicable. The board will then decide
whether to take any such action. Potential actions may include, but are not
limited to, changing lead market makers, listing the fund on a different
exchange, changing the size of Creation Units, changing the fund’s investment
objective or strategy, and liquidating the fund.
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.
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. Premiums and discounts
may be larger for this fund than other ETFs because of its unique structure and
lack of transparency.
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.
•Price
Volatility 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. The fund’s
nontransparent structure may exacerbate this risk, particularly in volatile
markets.
•Large-Cap Stock Risk
— Larger
companies are sometimes unable to attain the high growth rates of smaller
companies, especially during extended periods of economic
expansion.
•Large
Shareholder Risk — Certain
shareholders, including other funds advised by the adviser, may from time to
time own a substantial amount of the shares of the fund. In addition, a third
party investor, the adviser or an affiliate of the adviser, 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
or that the size of the fund would be maintained at such levels. 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 Listing Exchange 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.
|
|
|
|
|
| |
Management
Fees Paid by the Fund to the Advisor As a Percentage of Average
Net Assets for the Fiscal Year Ended August 31, 2022 |
|
| American
Century Focused Large Cap Value ETF |
0.42% |
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 fiscal year 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. Ultimate
responsibility for portfolio construction and strategy implementation, taking
into account the team’s analysis and insights, rests with the Operational Lead
Portfolio Manager.
Within the universe of securities selected by the other
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.
Kevin
Toney (Portfolio Manager)
Mr.
Toney, Chief Investment Officer – Global Value Equity, Senior Vice President and
Senior Portfolio Manager, has been a member of the team that manages the fund
since 2020. He joined American Century Investments in 1999 and became a
portfolio manager in 2006. He has a bachelor’s degree in commerce from the
University of Virginia and an MBA from The Wharton School at the University of
Pennsylvania. He is a CFA charterholder.
Michael
Liss (Portfolio Manager)
Mr.
Liss, Vice President and Senior Portfolio Manager, has been a member of the team
that manages the fund since 2020. He joined American Century Investments in 1998
and became a portfolio manager in 2004. He has a bachelor’s degree in accounting
and finance from Albright College and an MBA in finance from Indiana University.
He is a CFA charterholder and a CPA.
Brian
Woglom (Operational
Lead
Portfolio Manager)
Mr.
Woglom, Vice President and Senior 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. He became a senior investment analyst in 2008 and
a portfolio manager in 2012. He has a bachelor’s degree from Amherst College and
an MBA from the Ross School of Business, University of Michigan. He is a CFA
charterholder.
Adam
Krenn (Portfolio Manager)
Mr.
Krenn, Portfolio Manager, has been a member of the team that manages the fund
since 2020. He joined American Century Investments in 2011 as an investment
analyst. He became a senior analyst in 2012 and a portfolio manager in 2020. He
has a bachelor’s degree from the University of Notre Dame. He is a CFA
charterholder.
Philip
Sundell (Portfolio Manager)
Mr.
Sundell, Vice
President and
Portfolio Manager, has been a member of the team that manages the fund since
2020. He joined American Century Investments in 1997, became a senior analyst in
2007 and became a portfolio manager in 2017. He has a bachelor’s degree from
Missouri State University and an MBA from Texas Christian University. He is a
CFA charterholder.
Rene
P. Casis (ETF Portfolio Manager)
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 as a portfolio
manager in 2018. Prior to joining American Century, 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.
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:
FLV.
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.
The
fund’s primary listing exchange is Cboe BZX Exchange, Inc. (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
A
primary difference for the fund, compared to traditional ETFs, is that each
Authorized Participant will establish and maintain a Confidential Account with
an agent (an AP Representative), for the benefit of the Authorized Participant,
to engage in in-kind creation and redemption activity. Each day, the
fund’s custodian will transmit the fund’s Creation Basket to each AP
Representative. Pursuant to a contract (Confidential Account Agreement), the AP
Representative is prohibited from disclosing the Creation Basket and cannot use
the identity or weighting of the securities in the Creation Basket for any
purpose other than executing creations and redemptions. The Confidential
Account will enable Authorized Participants to transact in the underlying
securities of the Creation Basket through their AP Representatives, enabling
them to engage in in-kind creation or redemption activity without knowing the
identity or weighting of those securities. 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).
The
issuance and redemption of shares operates in a manner substantially identical
to that of traditional ETFs. Fund shares are issued and redeemed in Creation
Units of 5,000 shares or multiples thereof. The fund offers and sells
Creation Units through the distributor on a continuous basis at the NAV next
determined after receipt of an order in proper form. The fund’s NAV will be
determined as of the scheduled closing time of the regular trading session on
the New York Stock Exchange (ordinarily 4:00 p.m. ET) on each business
day.
To
keep costs low and permit the fund to be as fully invested as possible, shares
are generally purchased and redeemed in Creation Units on an in-kind basis. In a
creation, the Authorized Participant enters into an irrevocable creation order
with the fund and directs the AP Representative to purchase the necessary
Deposit Instruments. The AP Representative then purchases such securities in the
Confidential Account and delivers them in-kind to the fund. In a redemption, the
Authorized Participant enters into an irrevocable redemption order with the fund
and then the fund instructs its Custodian to deliver the Redemption Instruments
to the appropriate Confidential Account. In purchasing or selling such
securities, the AP Representative uses methods, such as breaking the transaction
into multiple transactions and transacting in multiple marketplaces, to avoid
revealing the composition of the Creation Basket.
Except
in limited circumstances where the purchase or redemption will include cash,
purchasers, through the AP Representative, purchase Creation Units by making an
in-kind deposit of specified instruments (Deposit Instruments), and the AP
Representative, acting on behalf of an Authorized Participant that is redeeming
shares, receives an in-kind transfer of specified instruments (Redemption
Instruments). The names and quantities of the instruments that constitute the
Deposit Instruments and the names and quantities of the instruments that
constitute the Redemption Instruments correspond pro rata to the
positions in the fund’s portfolio (including cash positions) and thus will be
identical.
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.
Affiliated
persons or second-tier affiliates or the fund, may deposit securities into and
receive securities from the fund in connection with the redemption of Creation
Units. In addition, certain affiliates of the fund and the advisor may purchase
and resell fund shares in the secondary market pursuant to this prospectus.
Share
Price
The
secondary market price of shares trading on the Listing Exchange is based on a
current bid/ask market. The secondary market price of the fund’s shares
generally differs from the fund’s daily NAV and, like the price of all traded
securities, is affected by market forces such as supply and demand, economic
conditions and other factors such as the current VIIV (described
below).
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.
The
Verified Intraday Indicative Value
Information
regarding the intraday value of shares of the fund, also known as the VIIV, is
calculated and disseminated every second throughout each trading day by the
Listing Exchange or by market data vendors or other information providers. It is
available on websites that publish updated market quotations during the trading
day by searching for the fund’s ticker plus the extension .IV, though some
websites require their own unique extensions. For example, the VIIV can be found
on Yahoo Finance (https://finance.yahoo.com) by typing “^FLV-IV” in the search
box labeled “Quote Lookup.” The VIIV is based on the current market value of the
securities in a fund’s portfolio that day. The VIIV is intended to provide
investors and other market participants with a highly correlated per share value
of the underlying portfolio that can be compared to the current market price. To
calculate the VIIV, the fund employs two separate calculation engines to provide
two independently calculated sources of intraday indicative values (calculation
engines). The fund then uses a pricing verification agent to continuously
compare the data from both the calculations engines on a real time basis. If
during the process of real time price verification, the indicative values from
the calculation engines differ by more than 25 basis points for 60 consecutive
seconds, the pricing verification agent will alert the advisor and the advisor
will request that the Listing Exchange halt trading of the fund’s shares until
the two indicative values come back into line. The specific methodology for
calculating the fund’s VIIV, which will be overseen by the fund’s board, is
available on the fund’s website.
Although
the VIIV 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 VIIV 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 not disclosing its portfolio information
daily, market participants may attempt to use the VIIV 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.
If
at any time 10% or more of the securities in the fund’s portfolio become subject
to a trading halt or otherwise do not have readily available market quotations,
the advisor will ask the Listing Exchange to halt trading of the fund. Trading
halts may have a greater impact on this fund compared to other ETFs because it
is less transparent.
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.
|
|
|
|
|
|
|
|
| |
|
|
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. |
|
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.
|
|
|
|
|
|
|
|
| |
|
|
Capital
gains
are
increases in the values of capital assets, such as stocks or bonds, from
the time the assets are purchased. |
|
The
fund generally expects to pay distributions from net 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.
|
|
|
|
|
|
|
|
| |
|
|
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. |
|
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 additional quantitative information that is updated
on a daily basis, including, a calculation of the premium or discount of the
market closing price or bid/ask price against such NAV. 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 also may 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 by 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.
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 Focused Large Cap Value ETF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| For
a Share Outstanding Throughout the Years Ended August 31 (except as
noted) |
| Per-Share
Data |
|
|
|
|
|
|
|
|
|
| Ratios
and Supplemental Data |
|
|
|
| Income
From Investment Operations: |
Distributions
From: |
|
|
| Ratio
to Average Net Assets of: |
| |
|
| Net
Asset
Value,
Beginning
of Period |
Net
Investments
Income
(Loss)(1) |
Net
Realized
and
Unrealized
Gain
(Loss) |
Total
From
Investment
Operations |
Net
Investment
Income |
Net
Realized
Gains |
Total
Distributions |
Other
Capital(1) |
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 |
$62.15 |
1.24 |
(3.89) |
(2.65) |
(1.23) |
(1.34) |
(2.57) |
0.00(4) |
$56.93 |
(4.41)% |
0.42% |
2.06% |
22% |
$213,769 |
|
| 2021 |
$48.95 |
1.14 |
13.01 |
14.15 |
(0.95) |
— |
(0.95) |
0.00(4) |
$62.15 |
29.19% |
0.42% |
2.00% |
36% |
$264,123 |
|
|
2020(5) |
$40.00 |
0.41 |
8.59 |
9.00 |
(0.06) |
— |
(0.06) |
0.01 |
$48.95 |
22.53% |
0.42%(6) |
2.10%(6) |
73% |
$82,723 |
|
|
|
| |
| 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)Per-share
amount was less than $0.005.
(5)March
31, 2020 (fund inception) through August 31, 2020.
(6)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:
publicinfo@sec.gov.
The
fund utilizes the ActiveShares®
methodology licensed from Precidian Investments, LLC (Precidian). Precidian’s
products and services are protected by domestic and international intellectual
property protections, including, without limitation, the following issued
patents and pending patent applications: 7813987, 8285624, 7925562, 13011746,
14528658, 14208966, 16196560.
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.
|
|
| |
|
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-95868
2301
