Mid Cap Growth Impact ETF
2022 Impact Report
Key Takeaways
We believe an asset manager can offer dedication to investment performance and an opportunity to impact the world positively.
In our view, companies with enduring growth backed by impactful thematic drivers have the potential to outperform as they may compound shareholder value over long periods.
As these companies attain their fundamental growth objectives, they also tend to create meaningful social change.
MID 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.
You may have to pay more money to trade the ETFs' shares. These ETFs 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 these ETFs compared to other ETFs because it provides less information to traders.
These additional risks may be even greater in bad or uncertain market conditions.
MID, ESGY and ESGA will publish on their 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 these ETFs and other ETFs may also have advantages. By keeping certain information about the ETFs secret, these ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETFs' performance. If other traders are able to copy or predict the ETFs' investment strategy, however, this may hurt the ETFs' performance.
For additional information regarding the unique attributes and risks of these ETFs, see the additional risk discussion at the end of this material.
Letter to Shareholders
We are pleased to share our second annual Mid Cap Growth Impact ETF Impact Report. The past year brought significant challenges to the planet. These challenges range from steep inflation to more evidence of climate change to a tragic war in Ukraine – each pushing disruption to economies and communities across the globe. The saying “May you live in interesting times” again showed us how difficult “interesting times” could be.
Thankfully, there was also good news with the COVID-19 pandemic seemingly coming under control and travel to see friends and loved ones resuming. Jobs remain plentiful, with many choices available for people who want to work or change careers. Through it all, we have seen that corporations’ sustainability, resilience and innovation can tackle our most pressing problems and positively impact the world.
Our investment philosophy has helped us chart a course through this turbulent environment: We invest in innovative businesses that we believe have strong balance sheets, are making a positive societal impact and may grow as a consequence of durable investment themes.
We believe our investment decisions can make the world a better place and offer compelling financial returns. These goals are not mutually exclusive. We believe change and challenge can bring wonderful purpose to human lives and often are the engine for growing businesses. We endeavor to add long-term outperformance by investing in innovative companies at the nexus of profit and purpose.
The U.N. Sustainable Development Goals (U.N. SDGs) guide our framework for assessing a company’s impact.* In this report, you will find examples highlighting unique businesses contributing to these goals.
We also seek companies committed to environmental, social and governance (ESG) risk management practices.
The confluence of ESG risk management practices and businesses supporting SDG goals provides fertile ground for creating the fundamental changes needed to support a more equitable, healthy and sustainable future.
Providing impactful investment solutions is innate to American Century Investments’ corporate DNA. By distributing more than 40% of our dividends to the Stowers Institute for Medical Research, we enable our clients to directly support breakthrough medical research and contribute to the global fight against gene-based diseases. These solutions are how our firm and clients become a powerful force for positive impact.
We will continue to seek and invest in innovative, disruptive companies that challenge the status quo, drive industry change and help lead us to a brighter future.
Authors
Developed by a global team of industry and government leaders and adopted by all 193 U.N. member states, the SDGs include 17 goals and 169 attendant targets aimed at solving some of the world’s most pressing problems by 2030. The goals include eradicating poverty, protecting environmental resources, and achieving gender and income equality.
Exchange Traded Funds (ETFs) are bought and sold through exchange trading at market price (not NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.
You should consider a fund's investment objectives, risks, and charges and expenses carefully before you invest. The fund's prospectus or summary prospectus, which can be obtained at AmericanCenturyETFs.com, contains this and other information about the fund, and should be read carefully before investing.
MID is classified as non-diversified. Because it is non-diversified, it may hold large positions in a small number of securities. To the extent it maintains such positions; a price change in any one of those securities may have a greater impact on the fund's share price than if it were diversified.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The fund is an actively managed ETF that does not seek to replicate the performance of a specified index.
Proxy Portfolio Risk: The goal of the Proxy Portfolio is to track closely the daily 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.
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).
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: 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.
Trading Issues Risk: Trading halts may have a greater impact on this fund compared to other ETFs due to the fund's nontransparent structure.
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. 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.
Many of American Century's investment strategies incorporate the consideration of environmental, social, and/or governance (ESG) factors into their investment processes in addition to traditional financial analysis. However, when doing so, the portfolio managers may not consider ESG factors with respect to every investment decision and, even when such factors are considered, they may conclude that other attributes of an investment outweigh ESG considerations when making decisions for the portfolio. The consideration of ESG factors may limit the investment opportunities available to a portfolio, and the portfolio may perform differently than those that do not incorporate 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.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
Exchange Traded Funds (ETFs): Foreside Fund Services, LLC - Distributor, not affiliated with American Century Investments Services, Inc.