ck0001616668-20240430
PROSPECTUS
August 31,
2024
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PTLC
PTMC
PTEU |
Pacer
Trendpilot®
US Large Cap ETF
Pacer
Trendpilot®
US Mid Cap ETF
Pacer
Trendpilot®
European
Index ETF |
COWZ
CALF
GCOW
ICOW |
Pacer
US Cash Cows 100 ETF Pacer US Small Cap Cash Cows 100 ETF Pacer
Global Cash Cows Dividend ETF Pacer Developed Markets International
Cash Cows 100 ETF |
PAEU
PIEL
PWS |
Pacer
Autopilot Hedged European Index ETF Pacer International Export Leaders
ETF Pacer WealthShield ETF |
VIRS |
Pacer
BioThreat Strategy ETF |
each
of the above is listed on Cboe BZX Exchange,
Inc. |
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SZNG
SZNE
ROOM
RXRE
INDS
SRVR
PAD |
Pacer
CFRA-Stovall Global Seasonal Rotation ETF
Pacer
CFRA-Stovall Equal Weight Seasonal Rotation ETF
Pacer
Hotel & Lodging Real Estate ETF
Pacer
Healthcare Real Estate ETF
Pacer
Industrial Real Estate ETF
Pacer
Data & Infrastructure Real Estate ETF
Pacer
Apartments & Residential Real Estate
ETF |
AFTY
PTBD
PTIN
TRND
BUL
ALTL
PAMC |
Pacer
CSOP FTSE China A50 ETF
Pacer
Trendpilot®
US Bond ETF
Pacer
Trendpilot®
International ETF
Pacer
Trendpilot®
Fund of Funds ETF
Pacer
US Cash Cows Growth ETF
Pacer
Lunt Large Cap Alternator ETF
Pacer
Lunt MidCap Multi-Factor Alternator ETF |
PEXL
FLRT
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Pacer
US Export Leaders ETF Pacer Pacific Asset Floating Rate High Income
ETF
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PALC
TRFK
SHPP |
Pacer
Lunt Large Cap Multi-Factor Alternator ETF Pacer Data and Digital
Revolution ETF Pacer Industrials and Logistics ETF |
each
of the above is listed on the NYSE Arca,
Inc. |
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ECOW |
Pacer
Emerging Markets Cash Cows 100 ETF |
HERD |
Pacer
Cash Cows Fund of Funds ETF |
COWG |
Pacer
US Large Cap Cash Cows Growth Leaders ETF |
PTNQ |
Pacer
Trendpilot®
100 ETF |
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CAFG |
Pacer
US Small Cap Cash Cows Growth Leaders ETF |
each
of the above is listed on the Nasdaq Stock Market
LLC |
These
securities have not been approved or disapproved by the Securities and Exchange
Commission (“SEC”) or the Commodity Futures Trading Commission (“CFTC”) nor has
the SEC or the CFTC passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
The
Funds offered through this Prospectus are not money market funds and do not seek
to maintain a fixed or stable NAV of $1.00 per share.
INVESTMENT
PRODUCTS: ¨
ARE
NOT FDIC INSURED ¨
MAY
LOSE VALUE ¨
ARE
NOT BANK GUARANTEED
Table
of Contents
SUMMARY
SECTION
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Pacer
Trendpilot®
US Large Cap ETF |
Investment
Objective
The
Pacer
Trendpilot US Large Cap ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Trendpilot US Large Cap Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.60% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.60% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that operating
expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
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1 Year |
3
Years |
5
Years |
10
Years |
$61 |
$192 |
$335 |
$750 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
51% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
The
Index uses an objective, rules-based methodology to implement a systematic
trend-following strategy that directs exposure (i) 100% to the S&P
500®
Index (the “S&P 500”), (ii) 50% to the S&P 500 and 50% to 3-Month US
Treasury bills, or (iii) 100% to 3-Month US Treasury bills, depending on the
relative performance of the S&P 500 and its 200-business day historical
simple moving average (the “200-day moving average”). The calculation of the
200-day moving average for the S&P 500 is based on the total return
version of the S&P 500 and reflects the reinvestment of dividends paid
by the securities in the S&P 500. The Index is expected to be
predominantly invested in the components of the S&P 500 over most
short- and long-term periods and is only expected to invest in 3-Month US
Treasury bills from time to time in response to adverse market conditions as
defined by the “50/50 Indicator” and “T-Bill Indicator” below. The
S&P 500 consists of approximately 500 leading U.S.-listed companies
representing approximately 80% of the U.S. equity market
capitalization.
The
Index, and consequently the Fund, may stay in any of its three possible
positions for an extended period of time. As described below, the Index will
change its position based on the following indicators, and each change will
become effective at the close of business on the first business day after the
indicator for the change is triggered. The Index will be in a new position
effective on the second business day.
Equity
Indicator.
When the S&P 500 closes above its 200-day moving average for five
consecutive business days (the “Equity Indicator”), the exposure of the Index
will be 100% to the S&P 500, effective at the close of business on the first
business day following the date of the Equity Indicator. The Index will be in a
new position effective on the second business day.
Once
the Equity Indicator has been triggered, the exposure of the Index will next
change to either be 50% to the S&P 500
and
50% to 3-Month US Treasury bills if the 50/50 Indicator (described below) is
triggered or 100% to 3-Month US Treasury bills if both the 50/50 Indicator and
the T-Bill Indicator (described below) are triggered simultaneously, effective
at the close of business on the first business day following the date of the
indicator(s). The Index will be in a new position effective on the second
business day.
50/50
Indicator.
When the S&P 500 closes below its 200-day moving average for five
consecutive business days (the “50/50 Indicator”), the exposure of the Index
will be 50% to the S&P 500
and
50% to 3-Month US Treasury bills, effective at the close of business on the
first business day following the date of the 50/50 Indicator. The Index will be
in a new position effective on the second business day. Following the
effectiveness of the 50/50 Indicator, the exposure of the Index may be greater
than or less than 50% with respect to the S&P 500
and
3-Month US Treasury bills depending on their respective performance until either
the Equity Indicator or T-Bill Indicator (described below) is
triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Index will next
change to either be 100% to the S&P 500 if the Equity Indicator is triggered
or 100% to 3-Month US Treasury bills if the T-Bill Indicator (described below)
is triggered, effective at the close of business on the first business day
following the date of the indicator. The Index will be in a new position
effective on the second business day.
T-Bill
Indicator.
When the S&P 500’s 200-day moving average closes lower than its value from
five business days earlier (the “T-Bill Indicator”) and the 50/50 Indicator has
been triggered, the exposure of the Index will be 100% to 3-Month US Treasury
bills, effective at the close of business on the first business day following
the date of the T-Bill Indicator. The Index will be in a new position effective
on the second business day.
For
example, if today is Wednesday and the S&P 500’s 200-day moving average
closes lower than it did on the fifth preceding business day (Wednesday of the
preceding week), the T-Bill Indicator is triggered. Unlike the operation of the
Equity Indicator and 50/50 Indicator, the closing values on the days in between
today and the fifth preceding business day do not affect whether the T-Bill
Indicator has been triggered; rather, the T-Bill Indicator simply compares
today’s closing value to the closing value five business days earlier. However,
the Index will not move directly from 100% exposure to the S&P 500 to 100%
exposure to 3-Month US Treasury bills unless the 50/50 Indicator was
simultaneously triggered following the most recent triggering of the Equity
Indicator.
Once
the T-Bill Indicator has been triggered, the exposure of the Index will next
change to be 100% to the S&P 500 if the Equity Indicator is triggered,
effective at the close of business on the first business day following
the date of the indicator. The Index will be in a new position effective on the
second business day. Once the T-Bill Indicator has been triggered, the Index
will not return to its 50/50 position unless the Equity Indicator is first
triggered, followed by the 50/50 Indicator being triggered.
The
Index aims to mitigate, to some extent, the volatility of the S&P 500 by
tracking 3-Month US Treasury bills (instead of the S&P 500) when the S&P
500 is in a negative trend.
Special
Indicator.
In the event the S&P 500 closes 20% above or 20% below its 200-day moving
average, the Index will change exposures effective at the end of the following
business day to be 50% to the S&P 500 and 50% to 3-Month US Treasury bills.
This new exposure will continue until the Equity Indicator, 50/50 Indicator, or
T-Bill Indicator is triggered.
The
Fund’s Investment Strategy
Under normal
circumstances, at least 80% of the Fund’s total assets (exclusive of collateral
held from securities lending) will be invested in the component securities of
the Index. The Adviser expects that, over time, the correlation
between the Fund’s performance and that of the Index, before fees and expenses,
will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing in
the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Equity
Market Risk. The equity securities held in the Fund’s portfolio may experience
sudden, unpredictable drops in value or long periods of decline in value. This
may occur because of factors that affect securities markets generally or factors
affecting specific industries, sectors or companies in which the Fund invests.
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence in and
perceptions of their issuers change. The Fund’s NAV and market price may
fluctuate significantly in response to these and other factors. As a result, an
investor could lose money over short or long periods of time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Shares of
the Fund will be bought and sold in the secondary market at market
prices.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as Cboe BZX Exchange, Inc. (the “Exchange”), and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market
conditions,
the liquidity of shares of the Fund may begin to mirror the liquidity of the
Fund’s underlying portfolio holdings, which can be significantly less liquid
than shares of the Fund, and this could lead to differences between the market
price of the shares of the Fund and the underlying value of those
shares.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the Index
regardless of their investment merits. Other than in response to one of the
triggers set forth above in accordance with the Index methodology, the Fund does
not take defensive positions under any market conditions, including conditions
that are adverse to the performance of the Fund.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index.
▪Trend
Lag Risk. At least six consecutive trading days will elapse after the S&P
500 first drops below its historical 200-day simple moving average (or
conversely, first moves above such average) before the Index will switch from
tracking the S&P 500 to 3-Month US Treasury bills (or conversely, from
3-Month US Treasury bills to the S&P 500). As a result, if the S&P 500
is in an overall positive trend, the Index and consequently the Fund may be
adversely affected by a downward trend and/or volatility in the S&P 500 for
up to six consecutive trading days (or conversely, if the S&P 500 is in an
overall negative trend, the Index and consequently the Fund may not benefit from
an upward trend and/or volatility in the S&P 500 for up to six consecutive
trading days). Accordingly, the methodology employed by the Index does not
eliminate exposure to downward trends and/or volatility in the S&P 500 and
does not provide immediate exposure to upward trends and/or volatility in the
S&P 500.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 14.92%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 11.96% (quarter ended December 31, 2020)
and the Fund’s lowest return for a
calendar quarter was -19.33% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
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Year |
5
Years |
Since
Inception
(6/11/15) |
Pacer
Trendpilot US Large Cap ETF |
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Return Before
Taxes |
16.75% |
9.68% |
7.72% |
Return After
Taxes on Distributions |
16.36% |
9.35% |
7.43% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
10.08% |
7.59% |
6.15% |
Pacer
Trendpilot US Large Cap Index
(reflects no deduction for
fees, expenses, or taxes) |
17.43% |
10.32% |
8.37% |
S&P
500®
Index
(reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.06% |
S&P
1200 Index
(reflects no deduction for
fees, expenses, or taxes) |
23.38% |
13.07% |
9.38% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above and do not reflect the impact
of state and local taxes. In certain
cases, the figure representing “Return After Taxes on Distributions and Sale of
Fund Shares” may be higher than the other return figures for the same period. A
higher after-tax return results when a capital loss occurs upon redemption and
provides an assumed tax deduction that benefits the investor.
Actual after-tax returns depend on an investor’s tax situation and may differ
from those shown. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
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Pacer
Trendpilot®
US Mid Cap ETF |
Investment
Objective
The
Pacer
Trendpilot US Mid Cap ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Trendpilot US Mid Cap Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
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Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.60% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.60% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that operating
expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
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1 Year |
3
Years |
5
Years |
10
Years |
$61 |
$192 |
$335 |
$750 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
262% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
The
Index uses an objective, rules-based methodology to implement a systematic
trend-following strategy that directs exposure (i) 100% to the S&P MidCap
400®
Index (the “S&P MidCap 400”), (ii) 50% to the S&P MidCap 400 and 50% to
3-Month US Treasury bills, or (iii) 100% to 3-Month US Treasury bills, depending
on the relative performance of the S&P MidCap 400 and its 200-business day
historical simple moving average (the “200-day moving average”). The calculation
of the 200-day moving average for the S&P MidCap 400 is based on the total
return version of the S&P MidCap 400 and reflects the reinvestment of
dividends paid by the securities in the S&P MidCap 400. The Index is
expected to be predominantly invested in the components of the S&P MidCap
400 over most short- and long-term periods and is only expected to invest in
3-Month US Treasury bills from time to time in response to adverse market
conditions as defined by the “50/50 Indicator” and “T-Bill Indicator” below. The
S&P MidCap 400 measures the performance of mid-capitalization stocks in the
United States.
The
Index, and consequently the Fund, may stay in any of its three possible
positions for an extended period of time. As described below, the Index will
change its position based on the following indicators, and each change will
become
effective
at the close of business on the first business day after the indicator for the
change is triggered. The Index will be in a new position effective on the second
business day.
Equity
Indicator.
When the S&P MidCap 400 closes above its 200-day moving average for five
consecutive business days (the “Equity Indicator”), the exposure of the Index
will be 100% to the S&P MidCap 400, effective at the close of business on
the first business day following the date of the Equity Indicator. The Index
will be in a new position effective on the second business day.
Once
the Equity Indicator has been triggered, the exposure of the Index will next
change to either be 50% to the S&P MidCap 400
and
50% to 3-Month US Treasury bills if the 50/50 Indicator (described below) is
triggered or 100% to 3-Month US Treasury bills if both the 50/50 Indicator and
the T-Bill Indicator (described below) are triggered simultaneously, effective
at the close of business on the first business day following the date of the
indicator(s). The Index will be in a new position effective on the second
business day.
50/50
Indicator.
When the S&P MidCap 400 closes below its 200-day moving average for five
consecutive business days (the “50/50 Indicator”), the exposure of the Index
will be 50% to the S&P MidCap 400
and
50% to 3-Month US Treasury bills, effective at the close of business on the
first business day following the date of the 50/50 Indicator. The Index
will be in a new position effective on the second business day. Following the
effectiveness of the 50/50 Indicator, the exposure of the Index may be greater
than or less than 50% with respect to the S&P MidCap 400
and
3-Month US Treasury bills depending on their respective performance until either
the Equity Indicator or T-Bill Indicator (described below) is
triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Index will next
change to either be 100% to the S&P MidCap 400 if the Equity Indicator is
triggered or 100% to 3-Month US Treasury bills if the T-Bill Indicator
(described below) is triggered, effective at the close of business on the first
business day following the date of the indicator.
T-Bill
Indicator.
When the S&P MidCap 400’s 200-day moving average closes lower than its value
from five business days earlier (the “T-Bill Indicator”) and the 50/50 Indicator
has been triggered, the exposure of the Index will be 100% to 3-Month US
Treasury bills, effective at the close of business on the first business day
following the date of the T-Bill Indicator. The Index will be in a new position
effective on the second business day.
For
example, if today is Wednesday and the S&P MidCap 400’s 200-day moving
average closes lower than it did on the fifth preceding business day (Wednesday
of the preceding week), the T-Bill Indicator is triggered. Unlike the operation
of the Equity Indicator and 50/50 Indicator, the closing values on the days in
between today and the fifth preceding business day do not affect whether the
T-Bill Indicator has been triggered; rather, the T-Bill Indicator simply
compares today’s closing value to the closing value five business days earlier.
However, the Index will not move directly from 100% exposure to the S&P
MidCap 400 to 100% exposure to 3-Month US Treasury bills unless the 50/50
Indicator was first triggered following the most recent triggering of the Equity
Indicator.
Once
the T-Bill Indicator has been triggered, the exposure of the Index will next
change to be 100% to the S&P MidCap 400 if the Equity Indicator is
triggered, effective at the close of business on the first
business day following the date of the indicator. The Index will be in
a new position effective on the second business day. Once the T-Bill Indicator
has been triggered, the Index will not return to its 50/50 position unless the
Equity Indicator is simultaneously triggered, followed by the 50/50 Indicator
being triggered.
The
Index aims to mitigate, to some extent, the volatility of the S&P MidCap 400
by tracking 3-Month US Treasury bills (instead of the S&P MidCap 400) when
the S&P MidCap 400 is in a negative trend.
Special
Indicator.
In the event the S&P MidCap 400 closes 20% above or 20% below its 200-day
moving average, the Index will change exposures effective at the end of the
following business day to be 50% to the S&P MidCap 400 and 50% to 3-Month US
Treasury bills. This new exposure will continue until the Equity Indicator,
50/50 Indicator, or T-Bill Indicator is triggered.
The
Fund’s Investment Strategy
Under normal
circumstances, at least 80% of the Fund’s total assets (exclusive of collateral
held from securities lending) will be invested in the component securities of
the Index. The Adviser expects that, over time, the correlation
between the Fund’s performance and that of the Index, before fees and expenses,
will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing in
the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Shares of
the Fund will be bought and sold in the secondary market at market
prices.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as Cboe BZX Exchange, Inc. (the “Exchange”), and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market conditions, the liquidity of shares of the Fund may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪High
Portfolio Turnover Risk.
At times, the Fund may have a portfolio turnover rate substantially greater than
100%. A high portfolio turnover rate would result in correspondingly greater
transaction expenses, including brokerage commissions, dealer mark ups and other
transaction costs, on the sale of securities and on reinvestment in other
securities and may result in reduced performance and the distribution to
shareholders of additional capital gains for tax purposes. These factors may
negatively affect the Fund’s performance.
▪Mid-Capitalization
Investing Risk. The
Fund may invest in the securities of mid-capitalization companies. As a result,
the Fund’s performance may be adversely affected if securities of
mid-capitalization companies underperform securities of other capitalization
ranges or the market as a whole. Securities of smaller companies trade in
smaller volumes and are often more vulnerable to market volatility than
securities of larger companies.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the Index
regardless of their investment merits. Other than in response to one of the
triggers set forth above in accordance with the Index methodology, the Fund does
not take defensive positions under any market conditions, including conditions
that are adverse to the performance of the Fund.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index.
▪Trend
Lag Risk. At
least six consecutive trading days will elapse after the S&P MidCap 400
first drops below its historical 200-day simple moving average (or conversely,
first moves above such average) before the Index will switch from tracking the
S&P MidCap 400 to 3-Month US Treasury bills (or conversely, from 3-Month US
Treasury bills to the S&P MidCap 400). As a result, if the S&P MidCap
400 is in an overall positive trend, the Index and consequently the Fund may be
adversely affected by a downward trend and/or volatility in the S&P MidCap
400 for up to six consecutive trading days (or conversely, if the S&P MidCap
400 is in an overall negative trend, the Index and consequently the Fund may not
benefit from an upward trend and/or volatility in the S&P MidCap 400 for up
to six consecutive trading days). Accordingly, the methodology employed by the
Index does not eliminate exposure to downward trends and/or volatility in the
S&P MidCap 400 and does not provide immediate exposure to upward trends
and/or volatility in the S&P MidCap 400.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 6.00%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 20.16% (quarter ended December 31, 2020)
and the Fund’s lowest return for a
calendar quarter was -7.67% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
|
|
|
| |
| 1
Year |
5
Years |
Since
Inception
(6/11/15) |
Pacer
Trendpilot US Mid Cap ETF |
|
| |
Return Before
Taxes |
7.27% |
2.24% |
4.09% |
Return After
Taxes on Distributions |
6.60% |
1.94% |
3.85% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
4.46% |
1.64% |
3.17% |
Pacer
Trendpilot US Mid Cap Index
(reflects no deduction for
fees, expenses, or taxes) |
7.86% |
2.87% |
4.73% |
S&P
MidCap 400 Index
(reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
8.91% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
Trendpilot®
100 ETF |
Investment
Objective
The
Pacer
Trendpilot 100 ETF (the “Fund”) is an exchange traded fund
(“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer NASDAQ-100 Trendpilot Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.65% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.65% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$66 |
$208 |
$362 |
$810 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
20% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
The
Index uses an objective, rules-based methodology to implement a systematic
trend-following strategy that directs exposure (i) 100% to the
NASDAQ-100®
Index (the “NASDAQ-100”), (ii) 50% to the NASDAQ-100 and 50% to 3-Month US
Treasury bills, or (iii) 100% to 3-Month US Treasury bills, depending on the
relative performance of the NASDAQ-100 and its 200-business day historical
simple moving average (the “200-day moving average”). The calculation of the
200-day moving average for the NASDAQ-100 is based on the total return version
of the NASDAQ-100 and reflects the reinvestment of dividends paid by the
securities in the NASDAQ-100. The Index is expected to be predominantly invested
in the components of the NASDAQ-100 over most short- and long-term periods and
is only expected to invest in 3-Month US Treasury bills from time to time in
response to adverse market conditions as defined by the “50/50 Indicator” and
“T-Bill Indicator” below.
The
NASDAQ-100 Index includes approximately 100 of the largest non-financial
securities listed on The NASDAQ Stock Market based on market capitalization. The
NASDAQ-100 Index comprises securities of companies across major industry groups,
including computer, biotechnology, healthcare, telecommunications and
transportation. However, it does not contain securities of financial companies,
including investment companies. The NASDAQ-100 Index was developed
by
NASDAQ OMX. There is no minimum market capitalization requirement for inclusion
in the NASDAQ-100 Index. Inclusion is determined based on the top 100 largest
issuers based on market capitalization meeting all other eligibility
requirements. As of June 30, 2024, the range of market capitalizations of
companies in the NASDAQ-100 Index was approximately $10.4 billion to $3.3
trillion.
The
Index, and consequently the Fund, may stay in any of its three possible
positions for an extended period of time. As described below, the Index will
change its position based on the following indicators, and each change will
become effective on the second business day after the indicator for the change
is triggered. The Index will be in a new position effective at the close of
business on the first business day.
Equity
Indicator.
When the NASDAQ-100 closes above its 200-day moving average for five consecutive
business days (the “Equity Indicator”), the exposure of the Index will be 100%
to the NASDAQ-100, effective at the close of business on the first business day
following the date of the Equity Indicator. The Index will be in a new position
effective on the second business day.
Once
the Equity Indicator has been triggered, the exposure of the Index will next
change to either be 50% to the NASDAQ-100 and 50% to 3-Month US Treasury bills
if the 50/50 Indicator (described below) is triggered or 100% to 3-Month US
Treasury bills if both the 50/50 Indicator and the T-Bill Indicator (described
below) are triggered simultaneously, effective on the second business day
following the date of the indicator(s). The Index will be in a new position
effective at the close of business on the first business day.
50/50
Indicator.
When the NASDAQ-100 closes below its 200-day moving average for five consecutive
business days (the “50/50 Indicator”) and the 50/50 Indicator has been
triggered, the exposure of the Index will be 50% to the NASDAQ-100
and
50% to 3-Month US Treasury bills, effective at the close of business on the
first business day following the date of the 50/50 Indicator. The Index
will be in a new position effective on the second business day. Following the
effectiveness of the 50/50 Indicator, the exposure of the Index may be greater
than or less than 50% with respect to the NASDAQ-100
and
3-Month US Treasury bills depending on their respective performance until either
the Equity Indicator or T-Bill Indicator (described below) is
triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Index will next
change to either be 100% to the NASDAQ-100 if the Equity Indicator is triggered
or 100% to 3-Month US Treasury bills if the T-Bill Indicator (described below)
is triggered, effective at the close of business on the first business day
following the date of the indicator(s). The Index will be in a new position
effective on the second business day.
T-Bill
Indicator. When
the NASDAQ-100’s 200-day moving average closes lower than its value from five
business days earlier (the “T-Bill Indicator”), the exposure of the Index will
be 100% to 3-Month US Treasury bills, effective at the close of business on the
first business day following the date of the T-Bill Indicator. The Index will be
in a new position effective on the second business day.
For
example, if today is Wednesday and the NASDAQ-100’s 200-day moving average
closes lower than it did on the fifth preceding business day (Wednesday of the
preceding week), the T-Bill Indicator is triggered. Unlike the operation of the
Equity Indicator and 50/50 Indicator, the closing values on the days in between
today and the fifth preceding business day do not affect whether the T-Bill
Indicator has been triggered; rather, the T-Bill Indicator simply compares
today’s closing value to the closing value five business days earlier. However,
the Index will not move directly from 100% exposure to the NASDAQ-100 to 100%
exposure to 3-Month US Treasury bills unless the 50/50 Indicator was first
triggered following the most recent triggering of the Equity
Indicator.
Once
the T-Bill Indicator has been triggered, the exposure of the Index will next
change to be 100% to the NASDAQ-100 if the Equity Indicator is triggered,
effective at the close of business on the first business day following the
date of the indicator. The Index will be in a new position effective on the
second business day. Once the T-Bill Indicator has been triggered, the Index
will not return to its 50/50 position unless the Equity Indicator is
simultaneously triggered, followed by the 50/50 Indicator being
triggered.
The
Index aims to mitigate, to some extent, the volatility of the NASDAQ-100 by
tracking 3-Month US Treasury bills (instead of the NASDAQ-100) when the
NASDAQ-100 is in a negative trend.
Special
Indicator.
In the event the NASDAQ-100 closes 20% above or 20% below its 200-day moving
average, the Index will change exposures effective at the end of the following
business day to be 50% to the NASDAQ-100 and 50% to 3-Month US Treasury bills.
This new exposure will continue until the Equity Indicator, 50/50 Indicator, or
T-Bill Indicator is triggered.
The
Fund’s Investment Strategy
The Fund
attempts to invest all, or substantially all, of its assets in the component
securities that make up the Index. The Adviser expects that, over time, the
correlation between the Fund’s performance and that of the Index, before fees
and expenses, will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the Index.
The
Fund is considered to be non-diversified, which means that it may invest more of
its assets in the securities of a single issuer or a smaller number of issuers
than if it were a diversified fund.
Principal Risks of Investing in
the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Concentration
Risk.
If the Index concentrates in an industry or group of industries, the Fund’s
investments may be concentrated accordingly. In such event, the value of the
Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, an industry or group of industries in which the Fund is
concentrated may be out of favor and underperform other industries or groups of
industries.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Shares of
the Fund will be bought and sold in the secondary market at market
prices.
◦Trading. Although shares of the Fund are listed
for trading on a national securities exchange, such as The Nasdaq Stock Market
LLC (the “Exchange”), and may be traded on U.S. exchanges other than the
Exchange, there can be no assurance that shares of the Fund will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of shares of the Fund may begin to mirror the liquidity of the Fund’s
underlying portfolio holdings, which can be significantly less liquid than
shares of the Fund, and this could lead to differences between the market price
of the shares of the Fund and the underlying value of those
shares.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Non-Diversification
Risk. Although
the Fund intends to invest in a variety of securities and instruments, the Fund
is considered to be non-diversified, which means that it may invest more of its
assets in the securities of a single issuer or a smaller number of issuers than
if it were a diversified fund. As a result, the Fund may be more exposed to the
risks associated with and developments affecting an individual issuer or a
smaller number of issuers than a fund that invests more widely. This may
increase the Fund’s volatility and cause the performance of a relatively smaller
number of issuers to have a greater impact on the Fund’s
performance.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the Index
regardless of their investment merits. Other than in response to one of the
triggers set forth above in accordance with the Index methodology, the Fund does
not take defensive positions under any market conditions, including conditions
that are adverse to the performance of the Fund.
▪Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
◦Communications
Services Sector Risk. The
Fund is generally expected to invest significantly in companies in the
communications services sector, and therefore the performance of the Fund could
be negatively impacted by events affecting this sector. Communications services
companies are subject to extensive government regulation. The costs of complying
with governmental regulations, delays or failure to receive required regulatory
approvals, or the enactment of new adverse regulatory requirements may adversely
affect the business of the such
companies.
Companies in the communications services sector can also be significantly
affected by intense competition, including competition with alternative
technologies such as wireless communications (including with 5G and other
technologies), product compatibility, consumer preferences, rapid product
obsolescence, and research and development of new products. Technological
innovations may make the products and services of such companies
obsolete.
◦Consumer
Discretionary Sector Risk.
The
Fund may invest in companies in the consumer discretionary sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector.
The
success of consumer product manufacturers and retailers is tied closely to the
performance of domestic and international economies, interest rates, exchange
rates, competition, consumer confidence, changes in demographics and consumer
preferences. Companies in the consumer discretionary sector depend heavily on
disposable household income and consumer spending, and may be strongly affected
by social trends and marketing campaigns. These companies may be subject to
severe competition, which may have an adverse impact on their
profitability.
◦Information
Technology Sector Risk. Market
or economic factors impacting information technology companies and companies
that rely heavily on technological advances could have a significant effect on
the value of the Fund’s investments. The value of stocks of information
technology companies and companies that rely heavily on technology is
particularly vulnerable to rapid changes in technology product cycles, rapid
product obsolescence, government regulation and competition, both domestically
and internationally, including competition from foreign competitors with lower
production costs. Stocks of information technology companies and companies that
rely heavily on technology, especially those of smaller, less-seasoned
companies, tend to be more volatile than the overall market. Information
technology companies are heavily dependent on patent and intellectual property
rights, the loss or impairment of which may adversely affect
profitability.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In addition, when the Fund uses a representative sampling approach,
the Fund may not be as well correlated with the return of the Index as when the
Fund purchases all of the securities in the Index in the proportions in which
they are represented in the Index.
▪Trend
Lag Risk. At
least six consecutive trading days will elapse after the NASDAQ-100 first drops
below its historical 200-day simple moving average (or conversely, first moves
above such average) before the Index will switch from tracking the
NASDAQ-100
to
3-Month US Treasury bills (or conversely, from 3-Month US Treasury bills to the
NASDAQ-100). As a result, if the NASDAQ-100 is in an overall positive trend, the
Index and consequently the Fund may be adversely affected by a downward trend
and/or volatility in the NASDAQ-100 for up to six consecutive trading days (or
conversely, if the NASDAQ-100 is in an overall negative trend, the Index and
consequently the Fund may not benefit from an upward trend and/or volatility in
the NASDAQ-100 for up to six consecutive trading days). Accordingly, the
methodology employed by the Index does not eliminate exposure to downward trends
and/or volatility in the NASDAQ-100 and does not provide immediate exposure to
upward trends and/or volatility in the NASDAQ-100.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 10.17%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 23.12% (quarter ended June 30, 2020) and
the Fund’s lowest return for a
calendar quarter was -14.07% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
|
|
|
| |
| 1
Year |
5
Years |
Since
Inception
(6/11/15) |
Pacer
Trendpilot 100 ETF |
|
| |
Return
Before Taxes |
34.85% |
15.50% |
12.41% |
Return
After Taxes on Distributions |
34.16% |
15.30% |
12.25% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
20.73% |
12.45% |
10.22% |
Pacer
NASDAQ-100 Trendpilot Index
(reflects no deduction for
fees, expenses, or taxes) |
35.90% |
16.13% |
13.08% |
NASDAQ-100
Index
(reflects no deduction for
fees, expenses, or taxes) |
55.13% |
22.66% |
17.87% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
Trendpilot®
European Index ETF |
Investment
Objective
The
Pacer
Trendpilot European Index ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Trendpilot European Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.65% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.65% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$66 |
$208 |
$362 |
$810 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
111% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
The
Index uses an objective, rules-based methodology to implement a systematic
trend-following strategy that directs exposure (i) 100% to the FTSE Eurozone
Index, (ii) 50% to the FTSE Eurozone Index and 50% to 3-Month US Treasury bills,
or (iii) 100% to 3-Month US Treasury bills, depending on the relative
performance of the FTSE Eurozone Index and its 200-business day historical
simple moving average (the “200-day moving average”). The calculation of the
200-day moving average for the FTSE Eurozone Index is based on the total return
version of the FTSE Eurozone Index and reflects the reinvestment of dividends
paid by the securities in the FTSE Eurozone Index. The Index is expected to be
predominantly invested in the components of the FTSE Eurozone Index over most
short- and long-term periods and is only expected to invest in 3-Month US
Treasury bills from time to time in response to adverse market conditions as
defined by the “50/50 Indicator” and “T-Bill Indicator” below.
The
FTSE Eurozone Index is a rules-based, float-adjusted, market
capitalization-weighted index comprised of large- and mid-capitalization stocks
providing coverage of the developed markets in the euro zone, including
primarily France, Germany, Spain, the Netherlands, and Italy. The FTSE Eurozone
Index is a subset of the FTSE Global Equity Index Series, which targets coverage
of over 99% of investable market capitalization globally.
The
Index, and consequently the Fund, may stay in any of its three possible
positions for an extended period of time. As described below, the Index will
change its position based on the following indicators, and each change will
become effective at the close of business on the first business day after the
indicator for the change is triggered. The Index will be in a new position
effective on the second business day.
Equity
Indicator.
When the FTSE Eurozone Index closes above its 200-day moving average for five
consecutive business days (the “Equity Indicator”), the exposure of the Index
will be 100% to the FTSE Eurozone Index, effective at the close of business on
the first business day following the date of the Equity Indicator. The Index
will be in a new position effective on the second business day.
Once
the Equity Indicator has been triggered, the exposure of the Index will next
change to either be 50% to the FTSE Eurozone Index and 50% to 3-Month US
Treasury bills if the 50/50 Indicator (described below) is triggered or 100% to
3-Month US Treasury bills if both the 50/50 Indicator and the T-Bill Indicator
(described below) are triggered simultaneously, effective at the close of
business on the first business day following the date of the indicator(s). The
Index will be in a new position effective on the second business
day.
50/50
Indicator.
When the FTSE Eurozone Index closes below its 200-day moving average for five
consecutive business days (the “50/50 Indicator”), the exposure of the Index
will be 50% to the FTSE Eurozone Index and 50% to 3-Month US Treasury bills,
effective at the close of business on the first business following the date of
the 50/50 Indicator. The Index will be in a new position effective on the second
business day. Following the effectiveness of the 50/50 Indicator, the exposure
of the Index may be greater than or less than 50% with respect to the FTSE
Eurozone Index and 3-Month US Treasury bills depending on their respective
performance until either the Equity Indicator or T-Bill Indicator (described
below) is triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Index will next
change to either be 100% to the FTSE Eurozone Index if the Equity Indicator is
triggered or 100% to 3-Month US Treasury bills if the T-Bill Indicator
(described below) is triggered, effective at the close of business on the first
business following the date of the indicator. The Index will be in a new
position effective on the second business day.
T-Bill
Indicator.
When the FTSE Eurozone Index’s 200-day moving average closes lower than its
value from five business days earlier (the “T-Bill Indicator”) and the 50/50
Indicator has been triggered, the exposure of the Index will be 100% to 3-Month
US Treasury bills, effective at the close of business on the first business day
following the date of the T-Bill Indicator. The Index will be in a new position
effective on the second business day.
For
example, if today is Wednesday and the FTSE Eurozone Index’s 200-day moving
average closes lower than it did on the fifth preceding business day (Wednesday
of the preceding week), the T-Bill Indicator is triggered. Unlike the operation
of the Equity Indicator and 50/50 Indicator, the closing values on the days in
between today and the fifth preceding business day do not affect whether the
T-Bill Indicator has been triggered; rather, the T-Bill Indicator simply
compares today’s closing value to the closing value five business days earlier.
However, the Index will not move directly from 100% exposure to the FTSE
Eurozone Index to 100% exposure to 3-Month US Treasury bills unless the 50/50
Indicator was simultaneously triggered following the most recent triggering of
the Equity Indicator.
Once
the T-Bill Indicator has been triggered, the exposure of the Index will next
change to be 100% to the FTSE Eurozone Index if the Equity Indicator is
triggered, effective at the close of business on the first
business following the date of the indicator. Once the T-Bill Indicator has
been triggered, the Index will not return to its 50/50 position unless the
Equity Indicator is first triggered, followed by the 50/50 Indicator being
triggered. The Index will be in a new position effective on the second business
day.
The
Index aims to mitigate, to some extent, the volatility of the FTSE Eurozone
Index by tracking 3-Month US Treasury bills (instead of the FTSE Eurozone Index)
when the FTSE Eurozone Index is in a negative trend.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Index and investments that have economic characteristics that
are substantially identical to the economic characteristics of such component
securities (e.g., depositary receipts). The Adviser expects that,
over time, the correlation between the Fund’s performance and that of the Index,
before fees and expenses, will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Currency
Exchange Rate Risk. The
Fund’s assets may include investments denominated in non-U.S. currencies, such
as the euro, or in securities or other assets that provide exposure to such
currencies. Changes in currency exchange rates and the relative value of
non-U.S. currencies will affect the value of the Fund’s investment and the value
of your Fund shares. Currency exchange rates can be very volatile and can change
quickly and unpredictably. As a result, the value of an investment in the Fund
may change quickly and without warning and you may lose
money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund trade on foreign exchanges that are closed when the
Fund’s primary listing exchange is open, the Fund is likely to experience
premiums and discounts greater than those of domestic
ETFs.
◦Trading. Although shares of the Fund are listed
for trading on a national securities exchange, such as Cboe BZX Exchange,
Inc. (the “Exchange”), and may be traded on U.S. exchanges other than the
Exchange, there can be no assurance that shares of the Fund will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of shares of the Fund may begin to mirror the liquidity of the Fund’s
underlying portfolio holdings, which can be significantly less liquid than
shares of the Fund, and this could lead to differences between the market price
of the shares of the Fund and the underlying value of those
shares.
▪European
Investment Risk.
The Fund is more exposed to the economic and political risks of Europe and of
the European countries in which it invests than funds whose investments are more
geographically diversified. Adverse economic and political events in Europe may
cause the Fund’s investments to decline in value. The economies and markets of
European countries are often closely connected and interdependent, and events in
one country in Europe can have an adverse impact on other European countries.
The Fund makes investments in securities of issuers that are domiciled in, or
have significant operations in, member countries of the European Union (the
“EU”) that are subject to economic and monetary controls that can adversely
affect the Fund’s investments. The European financial markets have experienced
volatility and adverse trends in recent years and these events have adversely
affected the exchange rate of the euro and may continue to significantly affect
other European countries. Decreasing imports or exports, changes in governmental
or EU regulations on trade, changes in the exchange rate of the euro, the
default or threat of default by an EU member country on its sovereign debt,
and/or an economic recession in an EU member country may have a significant
adverse effect on the economies of EU member countries and their trading
partners, including some or all of the European countries in which the Fund
invests.
The
risks of investing in the United Kingdom (UK) have been heightened as a result
of Brexit, the formal steps taken by the United Kingdom to exit the EU, which
has resulted in increased volatility and triggered political, economic, and
legal uncertainty. Although the UK has formally left the EU, uncertainty remains
as to the long-term consequences of Brexit and issuers in the UK may experience
lower growth as a result.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments. Foreign securities held by the Fund may trade on
markets that are closed when U.S. markets are open, which may lead to a
difference in the value of the Fund and the underlying foreign
securities.
▪Geographic
Concentration Risk. To
the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region. The Index’s,
and therefore the Fund’s, heavy equity exposure to two countries (France and
Germany) subjects the Fund to a higher degree of country risk than that of more
geographically diversified international funds.
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪High
Portfolio Turnover Risk.
At times, the Fund may have a portfolio turnover rate substantially greater than
100%. A high portfolio turnover rate would result in correspondingly greater
transaction expenses, including brokerage commissions, dealer mark ups and other
transaction costs, on the sale of securities and on reinvestment in other
securities and may result in reduced performance and the distribution to
shareholders of additional capital gains for tax purposes. These factors may
negatively affect the Fund’s performance.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Mid-Capitalization
Investing Risk. The
Fund may invest in the securities of mid-capitalization companies. As a result,
the Fund’s performance may be adversely affected if securities of
mid-capitalization companies underperform securities of other capitalization
ranges or the market as a whole. Securities of smaller companies trade in
smaller volumes and are often more vulnerable to market volatility than
securities of larger companies.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the Index
regardless of their investment merits. Other than in response to one of the
triggers set forth above in accordance with the Index methodology, the Fund does
not take defensive positions under any market conditions, including conditions
that are adverse to the performance of the Fund.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index. To the extent the Fund calculates its NAV based on
fair value prices and the value of the Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the Index may be adversely affected.
▪Trend
Lag Risk. At
least six consecutive trading days will elapse after the FTSE Eurozone Index
first drops below its historical 200-day simple moving average (or conversely,
first moves above such average) before the Index will switch from tracking the
FTSE Eurozone Index to 3-Month US Treasury bills (or conversely, from 3-Month US
Treasury bills to the FTSE Eurozone Index). As a result, if the FTSE Eurozone
Index is in an overall positive trend, the Index and consequently the Fund may
be adversely affected by a downward trend and/or volatility in the FTSE Eurozone
Index for up to six consecutive trading days (or conversely, if the FTSE
Eurozone Index is in an overall negative trend, the Index and consequently the
Fund may not benefit from an upward trend and/or volatility in the FTSE Eurozone
Index for up to six consecutive trading days). Accordingly, the methodology
employed by the Index does not eliminate exposure to downward trends and/or
volatility in the FTSE Eurozone Index or provide immediate exposure to upward
trends and/or volatility in the FTSE Eurozone
Index.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 4.68%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 13.13% (quarter ended March 31, 2023) and
the Fund’s lowest return for a
calendar quarter was -13.49% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
|
|
|
| |
| 1
Year |
5
Years |
Since
Inception
(12/14/15) |
Pacer
Trendpilot European Index ETF |
|
| |
Return Before
Taxes |
12.09% |
1.54% |
1.29% |
Return
After Taxes on Distributions |
11.72% |
1.34% |
1.15% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
8.00% |
1.39% |
1.17% |
Pacer
Trendpilot European Index
(reflects no deduction for
fees, expenses, or taxes) |
13.92% |
2.94% |
2.68% |
FTSE
Eurozone Index
(reflects no deduction for
fees, expenses, or taxes) |
24.00% |
9.58% |
7.59% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
Trendpilot®
International ETF |
Investment
Objective
The
Pacer
Trendpilot International ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Trendpilot International Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.65% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses1 |
0.03% |
Total
Annual Fund Operating Expenses |
0.68% |
1
Acquired Fund Fees
and Expenses (“AFFE”) are the indirect costs of investing in other investment
companies. Total Annual Fund Operating Expenses do not correlate to the expense
ratios in the Fund’s Financial Highlights because the Financial Highlights
include only the direct operating expenses incurred by the Fund and exclude
AFFE.
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$69 |
$218 |
$379 |
$847 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
58% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group, an affiliate of Pacer Advisors, Inc., the Fund’s investment
adviser (the “Adviser”).
The
Index
The
Index uses an objective, rules-based methodology to implement a systematic
trend-following strategy that directs exposure (i) 100% to the S&P Developed
Ex-U.S. LargeCap Index, (ii) 50% to the S&P Developed Ex-U.S. LargeCap Index
and 50% to 3-Month US Treasury bills, or (iii) 100% to 3-Month US Treasury
bills, depending on the relative performance of the S&P Developed Ex-U.S.
LargeCap Index and its 200-business day historical simple moving average (the
“200-day moving average”). The calculation of the 200-day moving average for the
S&P Developed Ex-U.S. LargeCap Index is based on the total return version of
the S&P Developed Ex-U.S. LargeCap Local Currency Index and reflects the
reinvestment of dividends paid by the securities in the S&P Developed
Ex-U.S. LargeCap Index. The Index is expected to be predominantly invested in
the components of the S&P Developed Ex-U.S. LargeCap Index over most short-
and long-term periods and is only expected to invest in 3-Month US Treasury
bills from time to time in response to adverse market conditions as defined by
the “50/50 Indicator” and “T-Bill Indicator” below.
The
S&P Developed Ex-U.S. LargeCap Index is a rules-based, float-adjusted,
market capitalization-weighted index comprised of large-capitalization stocks
providing coverage of the developed markets excluding the United States. The
S&P Developed Ex-U.S. LargeCap Index is a subset of the S&P Global BMI,
a comprehensive, rules-based index measuring global stock market performance.
The
Index, and consequently the Fund, may stay in any of its three possible
positions for an extended period of time. As described below, the Index will
change its position based on the following indicators, and each change will
become effective on the second business day after the indicator for the change
is triggered.
As
of June 30, 2024, the Index was entirely invested in the S&P Developed
Ex-U.S. LargeCap Index constituents.
Equity
Indicator.
When the S&P Developed Ex-U.S. LargeCap Index closes above its 200-day
moving average for five consecutive business days (the “Equity Indicator”), the
exposure of the Index will be 100% to the S&P Developed Ex-U.S. LargeCap
Index, effective on the second business day following the date of the Equity
Indicator.
Once
the Equity Indicator has been triggered, the exposure of the Index will next
change to either be 50% to the S&P Developed Ex-U.S. LargeCap Index and 50%
to 3-Month US Treasury bills if the 50/50 Indicator (described below) is
triggered or 100% to 3-Month US Treasury bills if both the 50/50 Indicator and
the T-Bill Indicator (described below) are triggered simultaneously, effective
on the second business day following the date of the indicator(s).
50/50
Indicator.
When the S&P Developed Ex-U.S. LargeCap Index closes below its 200-day
moving average for five consecutive business days (the “50/50 Indicator”), the
exposure of the Index will be 50% to the S&P Developed Ex-U.S. LargeCap
Index and 50% to 3-Month US Treasury bills, effective on the second business day
following the date of the 50/50 Indicator. Following the effectiveness of the
50/50 Indicator, the exposure of the Index may be greater than or less than 50%
with respect to the S&P Developed Ex-U.S. LargeCap Index and 3-Month US
Treasury bills depending on their respective performance until either the Equity
Indicator or T-Bill Indicator (described below) is triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Index will next
change to either be 100% to the S&P Developed Ex-U.S. LargeCap Index if the
Equity Indicator is triggered or 100% to 3-Month US Treasury bills if the T-Bill
Indicator (described below) is triggered, effective on the second business day
following the date of the indicator.
T-Bill
Indicator.
When
the S&P Developed Ex-U.S. LargeCap Index’s 200-day moving average closes
lower than its value from five business days earlier (the “T-Bill Indicator”),
the exposure of the Index will be 100% to 3-Month US Treasury bills, effective
on the second business day following the date of the T-Bill
Indicator.
For
example, if today is Wednesday and the S&P Developed Ex-U.S. LargeCap
Index’s 200-day moving average closes lower than it did on the fifth preceding
business day (Wednesday of the preceding week), the T-Bill Indicator is
triggered. Unlike the operation of the Equity Indicator and 50/50 Indicator, the
closing values on the days in between today and the fifth preceding business day
do not affect whether the T-Bill Indicator has been triggered; rather, the
T-Bill Indicator simply compares today’s closing value to the closing value five
business days earlier. However, the Index will not move directly from 100%
exposure to the S&P Developed Ex-U.S. LargeCap Index to 100% exposure to
3-Month US Treasury bills unless the 50/50 Indicator was simultaneously
triggered following the most recent triggering of the Equity
Indicator.
Once
the T-Bill Indicator has been triggered, the exposure of the Index will next
change to be 100% to the S&P Developed Ex-U.S. LargeCap Index if the Equity
Indicator is triggered, effective on the second business day following
the date of the indicator. Once the T-Bill Indicator has been triggered, the
Index will not return to its 50/50 position unless the Equity Indicator is first
triggered, followed by the 50/50 Indicator being triggered.
The
Index aims to mitigate, to some extent, the volatility of the S&P Developed
Ex-U.S. LargeCap Index by tracking 3-Month US Treasury bills (instead of the
S&P Developed Ex-U.S. LargeCap Index) when the S&P Developed Ex-U.S.
LargeCap Index is in a negative trend.
Special
Indicator. In
the event the S&P Developed Ex-U.S. LargeCap Index closes 20% above or 20%
below its 200-day moving average, the Index will change exposures effective at
the end of the following business day to be 50% to the S&P Developed Ex-U.S.
LargeCap Index and 50% to 3-Month US Treasury bills. This new exposure will
continue until the Equity Indicator, 50/50 Indicator, or T-Bill Indicator is
triggered.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Index and investments that have economic characteristics that
are substantially identical to the economic characteristics of such component
securities (e.g., depositary receipts). The Adviser expects that,
over time, the correlation between the Fund’s performance and that of the Index,
before fees and expenses, will be 95% or better. The Fund’s assets may include
investments denominated in non-U.S. currencies.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
At times, the Fund may have a portfolio turnover rate substantially
greater than 100%.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Currency
Exchange Rate Risk. The
Fund’s assets may include investments denominated in non-U.S. currencies, such
as the euro, or in securities or other assets that provide exposure to such
currencies. Changes in currency exchange rates and the relative value of
non-U.S. currencies will affect the value of the Fund’s investment and the value
of your Fund shares. Currency exchange rates can be very volatile and can change
quickly and unpredictably. As a result, the value of an investment in the Fund
may change quickly and without warning and you may lose
money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund. Due to the costs of buying or selling shares of the Fund, including
brokerage commissions imposed by brokers and bid/ask spreads, frequent trading
of shares of the Fund may significantly reduce investment results and an
investment in shares of the Fund may not be advisable for investors who
anticipate regularly making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium)
or
less than the NAV intra-day (discount). This risk is heightened in times of
market volatility, periods of steep market declines, and periods when there is
limited trading activity for shares in the secondary market, in which case such
premiums or discounts may be significant. Because securities held by the Fund
trade on foreign exchanges that are closed when the Fund’s primary listing
exchange is open, the Fund is likely to experience premiums and discounts
greater than those of domestic ETFs.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as NYSE Arca, Inc. (the “Exchange”), and may be traded on U.S.
exchanges other than the Exchange, there can be no assurance that shares of the
Fund will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of shares of the Fund may begin to mirror the
liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments. Foreign securities held by the Fund may trade on
markets that are closed when U.S. markets are open, which may lead to a
difference in the value of the Fund and the underlying foreign
securities.
▪Geographic
Concentration Risk. To
the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region.
◦Risks
Related to Investing in Japan. The Japanese economy may be subject to considerable degrees of
economic, political and social instability, which could have a negative impact
on Japanese securities. Japan’s economic growth rate has remained relatively low
for an extended period of time and it may remain low in the future. In addition,
Japan is subject to the risk of natural disasters, such as earthquakes,
volcanoes, typhoons and tsunamis. Additionally, decreasing U.S. imports, new
trade regulations, changes in the U.S. dollar exchange rates, a recession in the
United States or continued increases in foreclosure rates may have an adverse
impact on the economy of Japan. Japan also has few natural resources, and any
fluctuation or shortage in the commodity markets could have a negative impact on
Japanese securities.
◦Risks
Related to Investing in Western Europe. Most
developed countries in Western Europe are members of the European Union (“EU”),
and many are also members of the European Monetary Union (EMU), which requires
compliance with restrictions on inflation rates, deficits, and debt levels.
Unemployment in certain European nations is historically high and several
countries face significant debt problems. These conditions can significantly
affect every country in Europe. The euro is the official currency of the EU.
Funds that invest in Europe may have significant exposure to the euro and events
affecting the euro. Recent market events affecting several of the EU member
countries have adversely affected the sovereign debt issued by those countries,
and ultimately may lead to a decline in the value of the euro. A significant
decline in the value of the euro may produce unpredictable effects on trade and
commerce generally and could lead to increased volatility in financial markets
worldwide.
The
UK’s departure from the EU (referred to as “Brexit”) continues to cause
significant uncertainty and may adversely impact the financial results and
operations of various European companies and economies. The effects of Brexit
will largely depend on any agreements the UK makes to retain access to EU
markets. Brexit may result in legal and tax uncertainty and divergent national
laws and regulations as the UK determines which EU laws to replace or replicate.
The UK may be less stable than it has been in recent years and investments in
the UK may be more volatile. Additionally, Brexit could lead to global economic
uncertainty and result in significant volatility in
the global stock markets and currency
exchange rate fluctuations. Any of these effects of Brexit, and other
consequences that are difficult to predict at this time, could adversely affect
the value of the Fund’s investments..
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪High
Portfolio Turnover Risk.
At times, the Fund may have a portfolio turnover rate substantially greater than
100%. A high portfolio turnover rate would result in correspondingly greater
transaction expenses, including brokerage commissions, dealer mark ups and other
transaction costs, on the sale of securities and on reinvestment in other
securities and may result in reduced performance and the distribution to
shareholders of additional capital gains for tax purposes. These factors may
negatively affect the Fund’s performance.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Mid-Capitalization
Investing Risk. The
Fund may invest in the securities of mid-capitalization companies. As a result,
the Fund’s performance may be adversely affected if securities of
mid-capitalization companies underperform securities of other capitalization
ranges or the market as a whole. Securities of smaller companies trade in
smaller volumes and are often more vulnerable to market volatility than
securities of larger companies.
▪Other
Investment Companies Risk.
The Fund will incur higher and duplicative expenses when it invests in other
investment companies such as ETFs. There is also the risk that the Fund may
suffer losses due to the investment practices of the underlying funds. When the
Fund invests in other investment companies, the Fund will be subject to
substantially the same risks as those associated with the direct ownership of
securities held by such investment companies. Investments in ETFs are also
subject to the “ETF Risks” described above.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index. To the extent the Fund calculates its NAV based on
fair value prices and the value of the Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the Index may be adversely affected.
▪Trend
Lag Risk. At
least six consecutive trading days will elapse after the S&P Developed
Ex-U.S. LargeCap Index first drops below its historical 200-day simple moving
average (or conversely, first moves above such average) before the Index will
switch from tracking the S&P Developed Ex-U.S. LargeCap Index to 3-Month US
Treasury bills (or conversely, from 3-Month US Treasury bills to the S&P
Developed Ex-U.S. LargeCap Index ). As a result, if the S&P Developed
Ex-U.S. LargeCap Index is in an overall positive trend, the Index and
consequently the Fund may be adversely affected by a downward trend and/or
volatility in the S&P Developed Ex-U.S. LargeCap Index for up to six
consecutive trading days (or conversely, if the S&P Developed Ex-U.S.
LargeCap Index is in an overall negative trend, the Index and consequently the
Fund may not benefit from an upward trend and/or volatility in the S&P
Developed Ex-U.S. LargeCap Index for up to six consecutive trading days).
Accordingly, the methodology employed by the Index does not eliminate exposure
to downward trends and/or volatility in the S&P Developed Ex-U.S. LargeCap
Index or provide immediate exposure to upward trends and/or volatility in the
S&P Developed Ex-U.S. LargeCap Index.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year and since inception periods compared with those
of the Index and 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. Updated performance
information is available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 5.37%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 16.55% (quarter ended December 31, 2020)
and the Fund’s lowest return for a
calendar quarter was -12.13% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
| |
| 1
Year |
Since
Inception
(5/2/2019) |
Pacer
Trendpilot International ETF |
| |
Return
Before Taxes |
14.34% |
3.54% |
Return
After Taxes on Distributions |
14.01% |
3.31% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
9.12% |
2.85% |
Pacer
Trendpilot International Index
(reflects no deduction for
fees, expenses, or taxes) |
15.81% |
4.43% |
S&P
Developed Ex-US Large Cap Index
(reflects no deduction for
fees, expenses, or taxes) |
19.15% |
7.21% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. (the “Adviser”) serves as investment adviser to the
Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
Trendpilot®
US Bond ETF |
Investment
Objective
The
Pacer
Trendpilot US Bond ETF (the “Fund”) is an exchange traded fund
(“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Trendpilot US Bond Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.60% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.60% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$61 |
$192 |
$335 |
$750 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
131% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
The
Index uses an objective, rules-based methodology to implement a systematic
trend-following strategy that directs exposure to one of the following
positions: (i) 100% to the iBoxx®
USD Liquid High Yield Index, (ii) 50% to the iBoxx USD Liquid High Yield Index
and 50% to the iBoxx®
USD Treasuries 7-10 Year Index or (iii) 100% to iBoxx USD Treasuries 7-10 Year
Index, depending on the “Risk Ratio,” described below.
The
iBoxx USD Liquid High Yield Index is designed to track the performance of U.S.
dollar-denominated, high-yield corporate bonds issued in the U.S. The iBoxx USD
Treasuries 7-10 Year Index is designed to measure the performance of U.S.
Treasury bonds maturing in 7 to 10 years. The Index uses a “Risk Ratio” to
signal a change in the position of the Index. The Risk Ratio is calculated by
dividing the value of the iBoxx USD Liquid High Yield Index by the value of the
iBoxx USD Treasuries 7-10 Year Index.
The
Index, and consequently the Fund, may stay in any of its three possible
positions for an extended period of time. As described below, the Index will
change its position based on the following indicators, and each change will
become
effective
by the close of business on the sixth business day after the indicator for the
change is triggered. The Index will be in a new position effective on the
seventh business day.
High
Yield Indicator.
When the Risk Ratio closes above its 100-day historical simple moving average
(the “100-day moving average”) for five consecutive business days (the “High
Yield Indicator”), the exposure of the Index will be 100% to the iBoxx USD
Liquid High Yield Index, effective by the close of business on the sixth
business day following the date of the High Yield Indicator. The Index will be
in a new position effective on the seventh business day.
Once
the High Yield Indicator has been triggered, the exposure of the Index will next
change to either be 50% to the iBoxx USD Liquid High Yield Index and 50% iBoxx
USD Treasuries 7-10 Year Index if the 50/50 Indicator (described below) is
triggered or 100% to iBoxx USD Treasuries 7-10 Year Index if both the 50/50
Indicator and the Treasury Bond (“T-Bond”) Indicator (described below) are
triggered simultaneously, effective by the close of business on the sixth
business day following the date of the High Yield Indicator. The Index will be
in a new position effective on the seventh business day.
50/50
Indicator.
When the Risk Ratio closes below its 100-day moving average for five consecutive
business days (the “50/50 Indicator”), the exposure of the Index will be 50% to
the iBoxx USD Liquid High Yield Index and 50% iBoxx USD Treasuries 7-10 Year
Index, effective by the close of business on the sixth business day following
the date of the 50/50 Indicator. The Index will be in a new position effective
on the seventh business day. Following the effectiveness of the 50/50 Indicator,
the exposure of the Index may be greater than or less than 50% with respect to
the iBoxx USD Liquid High Yield Index and iBoxx USD Treasuries 7-10 Year Index
depending on their respective performance until either the High Yield Indicator
or T-Bond Indicator (described below) is triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Index will next
change to either be 100% to the iBoxx USD Liquid High Yield Index if the High
Yield Indicator is triggered or 100% to iBoxx USD Treasuries 7-10 Year Index if
the T-Bond Indicator (described below) is triggered, effective by the close of
business on the sixth business day following the date of the 50/50 Indicator.
The Index will be in a new position effective on the seventh business day.
T-Bond
Indicator.
When the Risk Ratio’s 100-day moving average closes lower than its value from
five business days earlier (the “T-Bond Indicator”), the exposure of the Index
will be 100% to iBoxx USD Treasuries 7-10 Year Index, effective by the close of
business on the sixth business day following the date of the T-Bond Indicator.
The Index will be in a new position effective on the seventh business day.
For
example, if today is Wednesday and the Risk Ratio 100-day moving average closes
lower than it did on the fifth preceding business day (Wednesday of the
preceding week), the T-Bond Indicator is triggered. Unlike the operation of the
High Yield Indicator and 50/50 Indicator, the closing values on the days in
between today and the fifth preceding business day do not affect whether the
T-Bond Indicator has been triggered; rather, the T-Bond Indicator simply
compares today’s closing value to the closing value five business days earlier.
However, the Index will not move directly from 100% exposure to the iBoxx USD
Liquid High Yield Index to 100% exposure to iBoxx USD Treasuries 7-10 Year Index
unless the 50/50 Indicator was simultaneously triggered following the most
recent triggering of the High Yield Indicator.
Once
the T-Bond Indicator has been triggered, the exposure of the Index will next
change to be 100% to the iBoxx USD Liquid High Yield Index if the High Yield
Indicator is triggered, effective by the close of business on the sixth
business day following the date of the indicator. The Index will be in
a new position effective on the seventh business day. Once the T-Bond Indicator
has been triggered, the Index will not return to its 50/50 position unless the
High Yield Indicator is first triggered, followed by the 50/50 Indicator being
triggered.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s net assets, plus borrowings for
investment purposes, will be invested in bonds denominated in U.S.
dollars. The Adviser expects that, over time, the correlation
between the Fund’s performance and that of the Index, before fees and expenses,
will be 95% or better.
The
Fund will generally use a “representative sampling” strategy, meaning it may
invest in a sample of the securities in the Index whose risk, return and other
characteristics closely resemble the risk, return and other characteristics of
the Index as a whole. However, the Fund may use a “replication” strategy to
achieve its investment objective, meaning it will invest in all of the component
securities of the Index in the same approximate proportion as in the Index, when
the Fund’s
sub-adviser
believes it is in the best interests of the Fund (e.g., when replicating the
Index does not involve practical difficulties or substantial costs).
The Fund generally may invest up to 20% of its total assets
(exclusive of any collateral held from securities lending) in securities or
other investments not included in the Index, but which the Fund’s sub-adviser
believes will help the Fund track the Index. For example, the Fund may invest in
securities that are not components of the Index to reflect various corporate
actions and other changes to the Index (such as reconstitutions, additions, and
deletions).
Principal Investment
Risks
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk. The
Index relies directly or indirectly on various sources of information to assess
the criteria of issuers included in the Index, including information that may be
based on assumptions and estimates. Neither the Fund, the Index Provider, or the
Adviser can offer assurances that the Index’s calculation methodology or sources
of information will provide an accurate assessment of included issuers or a
correct valuation of securities, nor can they guarantee the availability or
timeliness of the production of the Index.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their functions.
◦Cash
Redemption Risk. The
Fund’s investment strategy may require it to redeem Shares for cash or to
otherwise include cash as part of its redemption proceeds. The Fund may be
required to sell or unwind portfolio investments to obtain the cash needed to
distribute redemption proceeds. This may cause the Fund to recognize a capital
gain that it might not have recognized if it had made a redemption in-kind. As a
result, the Fund may pay out higher annual capital gain distributions than if
the in-kind redemption process was used. ETF shares can only be redeemed in
creation units by APs. Individual shareholders may only purchase and sell ETF
shares on a secondary market.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Shares of
the Fund will be bought and sold in the secondary market at market
prices.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as NYSE Arca, Inc. (the “Exchange”), and may be traded on U.S.
exchanges other than the Exchange, there can be no assurance
that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market conditions, the liquidity of shares of the Fund may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those
shares.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
◦Call
Risk.
During periods of falling interest rates, an issuer of a callable bond held by
the Fund may “call” or repay the security prior to its stated maturity, and the
Fund may have to reinvest the proceeds at lower interest rates, resulting in a
decline in the Fund’s income.
◦Credit
Risk.
Credit risk refers to the possibility that the issuer of a security will not be
able to make payments of interest and principal when due. Changes in an issuer’s
credit rating or the market’s perception of an issuer’s creditworthiness may
also affect the value of an investment in that
issuer.
◦Event
Risk.
Event risk is the risk that corporate issuers may undergo restructurings, such
as mergers, leveraged buyouts, takeovers, or similar events financed by
increased debt. As a result of the added debt, the credit quality and market
value of a company’s bonds and/or other debt securities may decline
significantly.
◦Extension
Risk.
When interest rates rise, certain obligations will be paid off by the obligor
more slowly than anticipated, causing the value of these securities to
fall.
◦Interest
Rate Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. Changes in
government intervention may have adverse effects on investments, volatility, and
illiquidity in debt markets.
◦Prepayment
Risk.
When interest rates fall, certain obligations will be paid off by the obligor
more quickly than originally anticipated, and the proceeds may have to be
invested in securities with lower
yields.
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪High
Yield Risk. High
yield debt obligations (commonly known as “junk bonds”) are speculative
investments and entail greater risk of loss of principal than securities and
loans that are investment grade rated because of their greater exposure to
credit risk. The high yield market at times is subject to substantial volatility
and high yield debt obligations may be less liquid than higher quality
securities. As a result, the value of the Fund may be subject to greater
volatility than other funds, and the Fund may be exposed to greater tracking
risk (described below) than other funds.
▪Management
Risk. To
the extent the Fund uses a representative sampling strategy to obtain exposure
to the Index, the Fund’s ability to track the performance of the Index will be
contingent on the ability of the Fund’s sub-adviser to identify a subset of
Index components whose risk, return and other characteristics closely resemble
the risk, return and other characteristics of the Index as a
whole.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Tracking
Risk.
The Fund’s return may not track the return of the Index for a number of reasons.
For example, the Fund incurs a number of operating expenses not applicable to
the Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index. In addition, when the Fund uses a representative sampling
approach, the Fund may not be as well correlated with the return of the Index as
when the Fund purchases all of the securities in the Index in the proportions in
which they are represented in the Index. Additionally, to the extent the high
yield market experiences greater volatility or reduced liquidity, the Fund may
not be able to acquire or dispose of the high yield securities in the Index at
exactly the same time and price reflected in a reconstitution of the Index, and
consequently, the Index’s exposure to the iBoxx USD Liquid High Yield Index may
result in a greater difference between the returns of the Fund and those of the
Index.
▪Trend
Lag Risk. At least six consecutive trading days will elapse after the Risk
Ratio first drops below its historical 100-day simple moving average (or
conversely, first moves above such average) before the Index will switch from
tracking the iBoxx USD Liquid High Yield Index to the iBoxx USD Treasuries 7-10
Year Index (or conversely, from the iBoxx USD Treasuries 7-10 Year Index to the
iBoxx USD Liquid High Yield Index). As a result, if the iBoxx USD Liquid High
Yield Index is in an overall positive trend, the Index and consequently the Fund
may be adversely affected by a downward trend and/or volatility in the iBoxx USD
Liquid High Yield Index for up to six consecutive trading days (or conversely,
if the iBoxx USD Liquid High Yield Index is in an overall negative trend, the
Index and consequently the Fund may not benefit from an upward trend and/or
volatility in the iBoxx USD Liquid High Yield Index for up to six consecutive
trading days). Accordingly, the methodology employed by the Index does not
eliminate exposure to downward trends and/or volatility in the iBoxx USD Liquid
High Yield Index and does not provide immediate exposure to upward trends and/or
volatility in the iBoxx USD Liquid High Yield Index.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year and since inception periods compared with those
of the Index and 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. Updated performance
information is available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 1.73%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 7.09% (quarter ended December 31, 2023)
and the Fund’s lowest return for a
calendar quarter was -10.65% (quarter ended June 30,
2022).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
| |
| 1
Year |
Since
Inception
(10/22/2019) |
Pacer
Trendpilot US Bond ETF |
| |
Return
Before Taxes |
9.10% |
-0.36% |
Return
After Taxes on Distributions |
6.16% |
-2.12% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
5.29% |
-0.99% |
Pacer
Trendpilot US Bond Index
(reflects no deduction for
fees, expenses, or taxes) |
9.61% |
1.41% |
iBoxx
USD Liquid High Yield Index
(reflects no deduction for
fees, expenses, or taxes) |
12.89% |
2.89% |
S&P
U.S. High Yield Corporate Bond Index1
(reflects no deduction for
fees, expenses, or taxes) |
12.91% |
3.36% |
1
Effective
January 31, 2023, the iBoxx USD Liquid High Yield Index has replaced the S&P
U.S. High Yield Corporate Bond Index as the Fund’s primary benchmark as the
iBoxx USD Liquid High Yield Index is more closely aligned with the Fund’s
principal investment strategies and portfolio holdings.
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. (the “Adviser”) serves as investment adviser to the Fund.
Investment
Sub-Adviser
Vident
Advisory, LLC d/b/a Vident Asset Management (“VA” or the “Sub-Adviser”) serves
as investment sub-adviser to the Fund.
Portfolio
Managers
Jim
Iredale, CFA, Senior Portfolio Manager – Fixed Income, and Jeff Kernagis, CFA,
Portfolio Manager of VA, have primary responsibility for the day-to-day
management of the Fund. Mr. Iredale has been a portfolio manager of the Fund
since the Fund’s inception and Mr. Kernagis has been a portfolio manager of the
Fund since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser, the Sub-Adviser, and their related companies may pay the
intermediary for activities related to the marketing and promotion of the Fund.
These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your salesperson to recommend the Fund
over another investment. Ask your salesperson or visit your financial
intermediary’s website for more information.
|
| |
Pacer
Trendpilot®
Fund of Funds ETF |
Investment
Objective
The
Pacer
Trendpilot Fund of Funds ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Trendpilot Fund of Funds Index (the “Index” or the “Fund
of Funds Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.15% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses1 |
0.62% |
Total
Annual Fund Operating Expenses |
0.77% |
1
Acquired Fund Fees
and Expenses (“AFFE”) are the indirect costs of investing in other investment
companies. Total Annual Fund Operating Expenses do not correlate to the expense
ratios in the Fund’s Financial Highlights because the Financial Highlights
include only the direct operating expenses incurred by the Fund and exclude
AFFE.
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$79 |
$246 |
$428 |
$954 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
6% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group, an affiliate of Pacer Advisors, Inc., the Fund’s investment
adviser (the “Adviser”).
The
Index
The
Fund of Funds Index uses an objective, rules-based approach to construct a
portfolio that, as of each quarterly rebalance, is composed of the ETFs listed
in the following table, each advised by the Adviser (collectively, the
“Trendpilot ETFs”). Each of the Trendpilot ETFs is an index-based ETF that seeks
to track the total return performance, before fees and expenses, of the
underlying index listed in the following table (collectively, the “Trendpilot
Indexes”).
Each
Trendpilot Index other than the Pacer Trendpilot US Bond Index (collectively,
the “Trendpilot Equity Indexes”) uses an objective, rules-based methodology to
implement a systematic trend-following strategy that directs exposure (i) 100%
to the “Underlying Component” specified in the table below, (ii) 50% to the
applicable Underlying Component and 50% to 3-Month US Treasury bills, or (iii)
100% to 3-Month US Treasury bills, depending on the relative performance of the
Underlying Component and its 200-business day historical simple moving average
(the “200-day moving average”). The
calculation
of the 200-day moving average for each Underlying Component is based on the
total return version of such Underlying Component and reflects the reinvestment
of dividends paid by the securities in such Underlying Component.
The
Pacer Trendpilot US Bond Index (the “Trendpilot Bond Index”) uses an objective,
rules-based methodology to implement a systematic trend-following strategy that
directs exposure to one of the following positions: (i) 100% to the iBoxx USD
Liquid High Yield Index, (ii) 50% to the iBoxx USD Liquid High Yield Index and
50% to the iBoxx USD Treasuries 7-10 Year Index or (iii) 100% to iBoxx USD
Treasuries 7-10 Year Index, depending on the value of the iBoxx USD Liquid High
Yield Index divided by the value of the iBoxx USD Treasuries 7-10 Year Index
(the “Risk Ratio”).
|
|
|
|
|
|
|
|
|
|
| |
Weight |
Trendpilot
ETF |
Trendpilot
Index |
Equity
Component |
20% |
Pacer
Trendpilot®
US
Large Cap ETF |
Pacer
Trendpilot US Large Cap Index |
S&P
500®
Index |
20% |
Pacer
Trendpilot®
US Mid Cap ETF |
Pacer
Trendpilot US Mid Cap Index |
S&P
MidCap 400®
Index |
20% |
Pacer
Trendpilot®
100 ETF |
Pacer
NASDAQ-100 Trendpilot Index |
NASDAQ-100®
Index |
20% |
Pacer
Trendpilot®
International ETF |
Pacer
Trendpilot International Index |
S&P
Developed Ex-U.S. LargeCap Index |
20% |
Pacer
Trendpilot®
US Bond ETF |
Pacer
Trendpilot US Bond Index |
iBoxx
USD Liquid High Yield Index |
The
Trendpilot Indexes
Each
Trendpilot Equity Index uses a systematic trend following strategy that directs
the Trendpilot Equity Index’s exposure to either the applicable Underlying
Component, 50% to the applicable Underlying Component and 50% to 3-Month US
Treasury bills, or 100% to 3-Month US Treasury bills and may stay in any of its
three possible positions for an extended period of time. The Trendpilot Bond
Index uses a systematic trend following strategy that directs the Trendpilot
Bond Index’s exposure to either the applicable Underlying Component, 50% to the
applicable Underlying Component and 50% to the iBoxx USD Treasuries 7-10 Year
Index, or 100% to the iBoxx USD Treasuries 7-10 Year Index and may stay in any
of its three possible positions for an extended period of time. As described
below, each Trendpilot Index will change its position based on the following
indicators, and each change will become effective on the second business day
after the indicator for the change is triggered.
Underlying
Component Indicator.
When the applicable Underlying Component for the Trendpilot Equity Indexes
closes above its 200-day moving average for five consecutive business days (the
“Underlying Component Indicator” for such indexes), the exposure of the
applicable Trendpilot Index will be 100% to the Underlying Component, effective
on the second business following the date of the Underlying Component
Indicator.
Once
the Underlying Component Indicator has been triggered, the exposure of the
applicable Trendpilot Equity Index will next change to either be 50% to the
Underlying Component and 50% to 3-Month US Treasury bills if the 50/50 Indicator
(described below) is triggered or 100% to 3-Month US Treasury bills if both the
50/50 Indicator and the Treasury Indicator (described below) are triggered
simultaneously, effective on the second business day following the date of the
indicator(s).
With
respect to the Trendpilot Bond Index, when the Risk Ratio closes above its
100-day historical simple moving average (the “100-day moving average”) for five
consecutive business days (the “Underlying Component Indicator” for such index),
the exposure of the Trendpilot Bond Index will be 100% to the iBoxx USD Liquid
High Yield Index, effective by the close of business on the sixth business day
following the date of the Underlying Component Indicator.
Once
the Underlying Component Indicator has been triggered, the exposure of the
Trendpilot Bond Index will next change to either be 50% to the iBoxx USD Liquid
High Yield Index and 50% iBoxx USD Treasuries 7-10 Year Index if the 50/50
Indicator (described below) is triggered or 100% to iBoxx USD Treasuries 7-10
Year Index if both the 50/50 Indicator and the Treasury Indicator (described
below) are triggered simultaneously, effective by the close of business on the
sixth business day following the date of the Underlying Component
Indicator.
50/50
Indicator.
With respect to each Trendpilot Equity Index, when the applicable Underlying
Component closes below its 200-day moving average for five consecutive business
days (the “50/50 Indicator” for such index), the exposure of the Trendpilot
Equity Index will be 50% to the Underlying Component and 50% to 3-Month US
Treasury bills, effective on the second business day following the date of the
50/50 Indicator (“50/50 Exposure”). Following the effectiveness of the 50/50
Indicator, the exposure of the Trendpilot Equity Index may be greater than or
less than 50% with respect to the
Underlying
Component and 3-Month US Treasury bills depending on their respective
performance until either the Underlying Component Indicator or Treasury
Indicator (described below) is triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Trendpilot Equity
Index will next change to either be 100% to the Underlying Component if the
Underlying Component Indicator is triggered or 100% to 3-Month US Treasury bills
if the Treasury Indicator (described below) is triggered, effective on the
second business day following the date of the indicator.
With
respect to each Trendpilot Bond Index, when the Risk Ratio closes below its
100-day moving average for five consecutive business days (the “50/50
Indicator”), the exposure of the Trendpilot Bond Index will be 50% to the iBoxx
USD Liquid High Yield Index and 50% iBoxx USD Treasuries 7-10 Year Index,
effective by the close of business on the sixth business day following the date
of the 50/50 Indicator. Following the effectiveness of the 50/50 Indicator, the
exposure of the Trendpilot Bond Index may be greater than or less than 50% with
respect to the iBoxx USD Liquid High Yield Index and iBoxx USD Treasuries 7-10
Year Index depending on their respective performance until either the Underlying
Component Indicator or Treasury Indicator (described below) is
triggered.
Once
the 50/50 Indicator has been triggered, the exposure of the Trendpilot Bond
Index will next change to either be 100% to the iBoxx USD Liquid High Yield
Index if the Underlying Component Indicator is triggered or 100% to iBoxx USD
Treasuries 7-10 Year Index if the Treasury Indicator (described below) is
triggered, effective by the close of business on the sixth business day
following the date of the 50/50 Indicator.
Treasury
Indicator. With
respect to each Trendpilot Equity Index, when the applicable Underlying
Component’s 200-day moving average closes lower than its value from five
business days earlier (the “Treasury Indicator” for such index), the exposure of
the Trendpilot Equity Index will be 100% to 3-Month US Treasury bills, effective
on the second business day following the date of the Treasury
Indicator.
For
example, if today is Wednesday and the applicable Underlying Component’s 200-day
moving average closes lower than it did on the fifth preceding business day
(Wednesday of the preceding week), the Treasury Indicator is triggered. Unlike
the operation of the Underlying Component Indicator and 50/50 Indicator, the
closing values on the days in between today and the fifth preceding business day
do not affect whether the Treasury Indicator has been triggered; rather, the
Treasury Indicator simply compares today’s closing value to the closing value
five business days earlier. However, the Trendpilot Equity Index will not move
directly from 100% exposure to the Underlying Component to 100% exposure to
3-Month US Treasury bills unless the 50/50 Indicator was simultaneously
triggered following the most recent triggering of the Underlying Component
Indicator.
With
respect to the Trendpilot Bond Index, when the Risk Ratio’s 100-day moving
average closes lower than its value from five business days earlier (the
“Treasury Indicator” for such index), the exposure of the Trendpilot Bond Index
will be 100% to iBoxx USD Treasuries 7-10 Year Index, effective by the close of
business on the sixth business day following the date of the Treasury
Indicator.
For
example, if today is Wednesday and the Risk Ratio 100-day moving average closes
lower than it did on the fifth preceding business day (Wednesday of the
preceding week), the Treasury Indicator is triggered. Unlike the operation of
the Underlying Component Indicator and 50/50 Indicator, the closing values on
the days in between today and the fifth preceding business day do not affect
whether the Treasury Indicator has been triggered; rather, the Treasury
Indicator simply compares today’s closing value to the closing value five
business days earlier. However, the Trendpilot Bond Index will not move directly
from 100% exposure to the iBoxx USD Liquid High Yield Index to 100% exposure to
iBoxx USD Treasuries 7-10 Year Index unless the 50/50 Indicator was
simultaneously triggered following the most recent triggering of the Underlying
Component Indicator.
Once
the Treasury Indicator has been triggered, the exposure of the Trendpilot Index
will next change to be 100% to the Underlying Component if the Underlying
Component Indicator is triggered, effective on the second business day following
the date of the indicator. Once the Treasury Indicator has been triggered, the
Trendpilot Index will not return to its 50/50 position unless the Underlying
Component Indicator is first triggered, followed by the 50/50 Indicator being
triggered.
Each
Trendpilot Index aims to mitigate, to some extent, the volatility of the
Underlying Component by tracking 3-Month US Treasury bills or the iBoxx USD
Treasuries 7-10 Year Index (instead of the Underlying Component), as applicable,
when
the applicable Underlying Component is in a negative trend. Because the
Underlying Component Indicator, 50/50 Indicator, and Treasury Indicator
(collectively, the “Exposure Indicators”) for each Trendpilot Index operate
independent of the Exposure Indicators for each other Trendpilot Index, the Fund
of Funds Index may reflect Underlying Component exposure for each Trendpilot
ETF, a mix of Underlying Component exposures and 3-Month US Treasury bills, or
entirely 3-Month US Treasury bills for short or long periods of time. When the
50/50 Indicator or Treasury Indicator has been triggered for a particular
Trendpilot ETF, the Fund of Funds Index will have reduced or no exposure,
respectively, to the applicable Trendpilot ETF’s Underlying
Component.
Special
Indicator.
For each Trendpilot Equity Index, in the event the Underlying Component closes
20% above or 20% below its 200-day simple moving average, the Trendpilot Equity
Index will change exposures effective at the end of the following business day
to its 50/50 Exposure. This new exposure (the “Special Exposure”) will continue
until the applicable Underlying Component Indicator, 50/50 Indicator, or
Treasury Indicator is triggered.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Fund of Funds Index (i.e., the Trendpilot ETFs). The Adviser expects that,
over time, the correlation between the Fund’s performance and that of the Fund
of Funds Index, before fees and expenses, will be 95% or
better.
The Fund will generally use a “replication” strategy to achieve its
investment objective, meaning it will invest in all of the component securities
of the Index in the same approximate proportion as in the
Index.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Currency
Exchange Rate Risk. The
Fund’s assets may include exposure to investments denominated in non-U.S.
currencies or in securities or other assets that provide exposure to such
currencies. Changes in currency exchange rates and the relative value of
non-U.S. currencies will affect the value of the Fund’s investment and the value
of your Fund shares. Currency exchange rates can be very volatile and can change
quickly and unpredictably. As a result, the value of an investment in the Fund
may change quickly and without warning and you may lose
money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform
these
services, or (ii) market makers and/or liquidity providers exit the
business or significantly reduce their business activities and no other entities
step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund trade on foreign exchanges that are closed when the
Fund’s primary listing exchange is open, the Fund is likely to experience
premiums and discounts greater than those of domestic
ETFs.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as NYSE Arca, Inc. (the “Exchange”), and may be traded on U.S.
exchanges other than the Exchange, there can be no assurance that shares of the
Fund will trade with any volume, or at all, on any stock exchange. In stressed
market conditions, the liquidity of shares of the Fund may begin to mirror the
liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪Fixed
Income Risk.
Generally, the value of fixed income securities will change inversely with
changes in interest rates. As interest rates rise, the market value of fixed
income securities tends to decrease. Conversely, as interest rates fall, the
market value of fixed income securities tends to increase. This risk will be
greater for long-term securities than for short-term securities. In recent
periods, governmental financial regulators, including the U.S. Federal Reserve,
have taken steps to increase interest rates. Changes in government intervention
may have adverse effects on investments, volatility, and the liquidity of debt
markets.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments. Foreign securities held by the Fund may trade on
markets that are closed when U.S. markets are open, which may lead to a
difference in the value of the Fund and the underlying foreign
securities.
▪Government
Obligations Risk.
The Fund may invest in securities issued by the U.S. government. There can be no
guarantee that the United States will be able to meet its payment obligations
with respect to such securities. Additionally, market prices and yields of
securities supported by the full faith and credit of the U.S. government may
decline or be negative for short or long periods of
time.
▪High
Yield Risk.
High yield securities (or “junk bonds”) entail greater risk of loss of principal
because of their greater exposure to credit risk. High yield debt obligations
are speculative investments and may also be less liquid than higher quality
securities, and may cause income and principal losses for the Fund. The market
for high yield securities is generally thinner and less active than the market
for higher quality securities. If there is a “flight to safety,” the market’s
perception of “high yield” securities may turn negative, and these types of
securities may become classified as “high risk.” Consequently, high yield
securities and loans entail greater risk of loss of principal than securities
and loans that are investment grade rated. Investment in or exposure to high
yield (lower rated) debt instruments (also known as “junk bonds”) may involve
greater levels of interest rate, credit, liquidity and valuation risk than for
higher rated instruments. High yield debt instruments may be sensitive to
economic changes, political changes, or adverse developments specific to a
company.
▪Large-Capitalization
Investing Risk. The Fund may invest in the securities of large-capitalization
companies. As a result, the Fund’s performance may be adversely affected if
securities of large-capitalization companies underperform securities of
smaller-capitalization companies or the market as a whole. The securities of
large-capitalization companies may be relatively mature compared to smaller
companies and therefore subject to slower growth during times of economic
expansion.
▪Mid-Capitalization
Investing Risk. The Fund may invest in the securities of mid-capitalization
companies. As a result, the Fund’s performance may be adversely affected if
securities of mid-capitalization companies underperform securities of other
capitalization ranges or the market as a whole. Securities of smaller companies
trade in smaller volumes and are often more vulnerable to market volatility than
securities of larger companies.
▪Other
Investment Companies Risk.
The Fund primarily invests in other ETFs and will incur higher and duplicative
expenses as a result of such investments. There is also the risk that the Fund
may suffer losses due to the investment practices of the underlying funds. When
the Fund invests in other investment companies, the Fund will be subject to
substantially the same risks as those associated with the direct ownership of
securities held by such investment companies. Investments in ETFs are also
subject to the “ETF Risks” described above.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index. To the extent the Fund calculates its NAV based on
fair value prices and the value of the Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the Index may be adversely affected.
▪Trend
Lag Risk. At
least six consecutive trading days will elapse after the applicable Equity
Component first drops below its historical 200-day simple moving average (or
conversely, first moves above such average) before a Trendpilot Index will
switch from tracking the Equity Component to 3-Month US Treasury bills (or
conversely, from 3-Month US Treasury bills to the Equity Component). As a
result, if the Equity Component is in an overall positive trend, the Trendpilot
Index and consequently the Fund of Funds Index and the Fund may be adversely
affected by a downward trend and/or volatility in the Equity Component for up to
six consecutive trading days (or conversely, if the Equity Component is in an
overall negative trend, the Trendpilot Index and consequently the Fund of Funds
Index and the Fund may not benefit from an upward trend and/or volatility in the
Equity Component for up to six consecutive trading days). Accordingly, the
methodology employed by each Trendpilot Index does not eliminate exposure to
downward trends and/or volatility in the Equity Component and does not provide
immediate exposure to upward trends and/or volatility in the Equity
Component.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year and since inception periods compared with those
of the Index and 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. Updated performance
information is available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 7.50%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 12.48% (quarter ended December 31, 2020)
and the Fund’s lowest return for a
calendar quarter was -13.36% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
| |
| 1
Year |
Since
Inception
(5/3/2019) |
Pacer
Trendpilot Fund of Funds ETF |
| |
Return
Before Taxes |
16.40% |
4.90% |
Return
After Taxes on Distributions |
15.45% |
4.43% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
9.92% |
3.68% |
Pacer
Trendpilot Fund of Funds Index
(reflects no deduction for
fees, expenses, or taxes) |
16.97% |
5.96% |
S&P
1200 Index
(reflects no deduction for
fees, expenses, or taxes) |
23.38% |
10.43% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. (the “Adviser”) serves as investment adviser to the
Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
US Cash Cows 100 ETF |
Investment
Objective
The
Pacer US
Cash Cows 100 ETF (the “Fund”) is an exchange traded fund
(“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer US Cash Cows 100 Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.49% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.49% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$50 |
$157 |
$274 |
$616 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
77% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
|
|
|
|
|
|
|
| |
The
Index uses an objective, rules-based methodology to provide exposure to
large and mid-capitalization U.S. companies with high free cash flow
yields. Companies with high free cash flow yields are commonly referred to
as “cash cows”. |
|
Free
Cash Flow (FCF): A
company’s cash flow from operations minus capital
expenditures.
Enterprise
Value (EV): A
company’s market capitalization plus its debt and minus its cash and cash
equivalents.
Free
Cash Flow Yield:
FCF / EV |
The
initial index universe is derived from the component companies of the
Russell 1000®
Index. The initial universe of companies is screened based on their
average projected free cash flows and earnings (if available) over each of
the next two fiscal years. Companies with no forward year estimates
available for free cash flows or earnings will remain in the Index
universe. Companies with negative average projected free cash flows or
earnings are removed from the Index universe. Additionally, financial
companies, other than real estate investment trusts (“REITs”), are
excluded from the Index universe. |
|
The
remaining companies are ranked by their free cash flow yield for the trailing
twelve month period. The equity securities of the 100 companies with the highest
free cash flow yield are included in the Index.
At
the time of each rebalance of the Index, the companies included in the Index are
weighted in proportion to their trailing twelve month free cash flow, and
weightings are capped at 2% of the weight of the Index for any individual
company. The Index is reconstituted and rebalanced quarterly as of the close of
business on the 3rd
Friday of March, June, September, and December based on data as of the
1st
Friday of the applicable rebalance month.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Index.
The Adviser expects that, over time, the correlation between the Fund’s
performance and that of the Index, before fees and expenses, will be 95% or
better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Concentration
Risk.
If the Index concentrates in an industry or group of industries, the Fund’s
investments may be concentrated accordingly. In such event, the value of the
Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, an industry or group of industries in which the Fund is
concentrated may be out of favor and underperform other industries or groups of
industries.
▪Equity
Market Risk. The equity securities held in the Fund’s portfolio may experience
sudden, unpredictable drops in value or long periods of decline in value. This
may occur because of factors that affect securities markets generally or factors
affecting specific industries, sectors or companies in which the Fund invests.
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence in and
perceptions of their issuers change. The Fund’s NAV and market price may
fluctuate significantly in response to these and other factors. As a result, an
investor could lose money over short or long periods of time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The Fund has a limited number of financial institutions that may act
as APs. In addition, there may be a limited number of market makers and/or
liquidity providers in the marketplace. To the extent either of the following
events occur, shares of the Fund may trade at a material discount to NAV and
possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Shares of
the Fund will be bought and sold in the secondary market at market
prices.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as Cboe BZX Exchange, Inc. (the “Exchange”), and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market conditions, the liquidity of shares of the Fund may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪High
Portfolio Turnover Risk.
At times, the Fund may have a portfolio turnover rate substantially greater than
100%. A high portfolio turnover rate would result in correspondingly greater
transaction expenses, including brokerage commissions, dealer mark ups and other
transaction costs, on the sale of securities and on reinvestment in other
securities and may result in reduced performance and the distribution to
shareholders of additional capital gains for tax purposes. These factors may
negatively affect the Fund’s performance.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Mid-Capitalization
Investing Risk. The
Fund may invest in the securities of mid-capitalization companies. As a result,
the Fund’s performance may be adversely affected if securities of
mid-capitalization companies underperform securities of other capitalization
ranges or the market as a whole. Securities of smaller companies trade in
smaller volumes and are often more vulnerable to market volatility than
securities of larger companies.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
◦Consumer
Discretionary Sector Risk.
The
Fund may invest in companies in the consumer discretionary sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector.
The success of consumer product
manufacturers and retailers is tied closely to the performance of domestic and
international economies, interest rates, exchange rates, competition, consumer
confidence, changes in demographics and consumer preferences. Companies in the
consumer discretionary sector depend heavily on disposable household income and
consumer spending, and may be strongly affected by social trends and marketing
campaigns. These companies may be subject to severe competition, which may have
an adverse impact on their profitability.
◦Energy
Sector Risk. The
Fund may invest in companies in the energy sector, and therefore the performance
of the Fund could be negatively impacted by events affecting this
sector. The profitability of companies in the energy sector is related to
worldwide energy prices, exploration, and production spending. The value of
securities issued by companies in the energy sector may decline for many
reasons, including, among others, changes in energy
prices,
government regulations, energy conservation efforts, natural disasters, and
potential civil liabilities. Such companies are also subject to risks changes in
economic conditions, as well as market and political risks of the countries
where energy companies are located or do
business.
◦Health
Care Sector Risk. The
Fund may invest in companies in the health care sector, and therefore the
performance of the Fund could be negatively impacted by events affecting this
sector. Companies in the health care sector are subject to extensive government
regulation and their profitability can be significantly affected by restrictions
on government reimbursement for medical expenses, rising costs of medical
products and services, pricing pressure (including price discounting), limited
product lines and an increased emphasis on the delivery of healthcare through
outpatient services.
▪Style
Risk. The
Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may
fall out of favor with investors and underperform the market. Also, a company
may reduce or eliminate its dividend, which may have a negative impact on the
Fund’s performance.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 5.81%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 21.60% (quarter ended March 31, 2021) and
the Fund’s lowest return for a
calendar quarter was -27.76% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
|
|
|
| |
| 1
Year |
5
Years |
Since
Inception
(12/16/16) |
Pacer
US Cash Cows 100 ETF |
|
| |
Return Before
Taxes |
14.78% |
17.65% |
13.32% |
Return
After Taxes on Distributions |
14.22% |
17.03% |
12.75% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
9.09% |
14.18% |
10.74% |
Pacer
US Cash Cows 100 Index
(reflects no deduction for
fees, expenses, or taxes) |
15.39% |
18.15% |
13.79% |
Russell
1000®
Index
(reflects no deduction for
fees, expenses, or taxes) |
26.53% |
15.52% |
13.01% |
Russell
1000®
Value Index
(reflects no deduction for
fees, expenses, or taxes) |
11.46% |
10.91% |
8.17% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
US Small Cap Cash Cows 100 ETF |
Investment
Objective
The
Pacer US
Small Cap Cash Cows 100 ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer US Small Cap Cash Cows Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.59% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.59% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$60 |
$189 |
$329 |
$738 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
108% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
|
|
|
|
|
|
|
| |
The
Index uses an objective, rules-based methodology to provide exposure to
small-capitalization U.S. companies with high free cash flow yields.
Companies with high free cash flow yields are commonly referred to as
“cash cows”. |
|
Free
Cash Flow (FCF): A
company’s cash flow from operations minus capital
expenditures.
Enterprise
Value (EV): A
company’s market capitalization plus its debt and minus its cash and cash
equivalents.
Free
Cash Flow Yield:
FCF / EV |
The
initial Index universe is derived from the component companies of the
S&P Small Cap 600®
Index.
The initial universe of companies is screened based on their average
projected free cash flows and earnings (if available) over each of the
next two fiscal years. Companies for which information on their projected
free cash flows or earnings is not available will remain in the Index
universe. Companies with negative average projected free cash flows or
earnings are removed from the Index universe. Additionally, financial
companies, other than real estate investment trusts (“REITs”), are
excluded from the Index universe. |
|
The
remaining companies are ranked by their free cash flow yield for the trailing
twelve month period. The equity securities of the 100 companies with the highest
free cash flow yield are included in the Index.
At
the time of each rebalance of the Index, the companies included in the Index are
weighted in proportion to their trailing twelve month free cash flow, and
weightings are capped at 2% of the weight of the Index for any individual
company. Weight above the 2% limitation is redistributed among the other Index
constituents in proportion to their weights. As of June 30, 2024, the companies
included in the Index had a market capitalization of $425 million to $6.5
billion. The Index is reconstituted and rebalanced quarterly as of the close of
business on the 3nd
Friday of March, June, September, and December based on data as of the
2nd
Friday of the applicable rebalance month.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Index.
The Adviser expects that, over time, the correlation between the Fund’s
performance and that of the Index, before fees and expenses, will be 95% or
better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Concentration
Risk. If the Index concentrates in an industry or group of industries, the
Fund’s investments may be concentrated accordingly. In such event, the value of
the Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, an industry or group of industries in which the Fund is
concentrated may be out of favor and underperform other industries or groups of
industries.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market makers and/or liquidity
providers in the marketplace. To the extent either of the following events
occur, shares of the Fund may trade at a material discount to NAV and possibly
face delisting: (i) APs exit the business or otherwise become unable to
process creation and/or redemption orders and no other APs step forward to
perform these services, or (ii) market makers and/or liquidity providers
exit the business or significantly reduce their business activities and no other
entities step forward to perform their
functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Shares of
the Fund will be bought and sold in the secondary market at market
prices.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as Cboe BZX Exchange, Inc. (the “Exchange”), and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market conditions, the liquidity of shares of the Fund may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪High
Portfolio Turnover Risk. At times, the Fund may have a portfolio turnover rate substantially
greater than 100%. A high portfolio turnover rate would result in
correspondingly greater transaction expenses, including brokerage commissions,
dealer mark ups and other transaction costs, on the sale of securities and on
reinvestment in other securities and may result in reduced performance and the
distribution to shareholders of additional capital gains for tax purposes. These
factors may negatively affect the Fund’s performance.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
◦Consumer
Discretionary Sector Risk.
The
Fund may invest in companies in the consumer discretionary sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector.
The
success of consumer product manufacturers and retailers is tied closely to the
performance of domestic and international economies, interest rates, exchange
rates, competition, consumer confidence, changes in demographics and consumer
preferences. Companies in the consumer discretionary sector depend heavily on
disposable household income and consumer spending, and may be strongly affected
by social trends and marketing campaigns. These companies may be subject to
severe competition, which may have an adverse impact on their
profitability.
◦Health
Care Sector Risk. The
Fund may invest in companies in the health care sector, and therefore the
performance of the Fund could be negatively impacted by events affecting this
sector. Companies in the health care sector are subject to extensive government
regulation and their profitability can be significantly affected by restrictions
on government reimbursement for medical expenses, rising costs of medical
products and services, pricing pressure (including price discounting), limited
product lines and an increased emphasis on the delivery of healthcare through
outpatient services.
◦Industrials
Sector Risk.
The Fund may invest in companies in the industrials sector, and therefore the
performance of the Fund could be negatively impacted by events affecting this
sector. The industrials sector may be affected by
changes in the supply of and demand for products and services,
product obsolescence, claims for environmental damage or product liability and
general economic conditions, among other factors.
◦Information
Technology Sector Risk.The
Fund may invest in companies in the information technology sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector. Market or economic factors impacting information technology
companies and companies that rely heavily on technological advances could have a
significant effect on the value of the Fund’s investments. The value of stocks
of information technology companies and companies that rely heavily on
technology is particularly vulnerable to rapid changes in technology product
cycles, rapid product obsolescence, government regulation and competition, both
domestically and internationally, including competition from foreign competitors
with lower production costs. Stocks of information technology companies and
companies that rely heavily on technology, especially those of smaller,
less-seasoned companies, tend to be more volatile than the overall market.
Information technology companies are heavily dependent on patent and
intellectual property rights, the loss or impairment of which may adversely
affect profitability.
▪Small-Capitalization
Companies Risk. The equity securities of small-capitalization companies have
historically been subject to greater investment risk than securities of larger
companies. The prices of equity securities of small-capitalization companies
tend to be more volatile and less liquid than the prices of equity securities of
larger companies.
▪Style
Risk. The
Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may
fall out of favor with investors and underperform the market. Also, a company
may reduce or eliminate its dividend, which may have a negative impact on the
Fund’s performance.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total Return
as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was -8.89%. During the period of
time shown in the bar chart, the Fund’s highest
return for a calendar quarter was 35.33% (quarter ended June 30, 2020) and
the Fund’s lowest return for a
calendar quarter was -35.46% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
|
|
|
| |
| 1
Year |
5
Years |
Since
Inception
(6/16/17) |
Pacer
US Small Cap Cash Cows 100 ETF |
|
| |
Return Before
Taxes |
35.54% |
17.37% |
12.20% |
Return
After Taxes on Distributions |
35.10% |
16.97% |
11.83% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
21.27% |
14.01% |
9.80% |
Pacer
US Small Cap Cash Cows Index
(reflects no deduction for
fees, expenses, or taxes) |
35.66% |
17.81% |
12.56% |
S&P
SmallCap 600®
Index
(reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.53% |
S&P
SmallCap 600®
Value Index
(reflects no deduction for
fees, expenses, or taxes) |
14.89% |
11.31% |
8.04% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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. In certain cases, the figure
representing “Return After Taxes on Distributions and Sale of Fund Shares” may
be higher than the other return figures for the same period. A higher after-tax
return results when a capital loss occurs upon redemption and provides an
assumed tax deduction that benefits the investor. After-tax returns shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
Global Cash Cows Dividend ETF |
Investment
Objective
The
Pacer
Global Cash Cows Dividend ETF (the “Fund”) is an exchange traded
fund (“ETF”) that seeks to track the total return performance, before fees and
expenses, of the Pacer Global Cash Cows Dividend Index (the
“Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.60% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.60% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that operating
expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would
be:
|
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|
|
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| |
1 Year |
3
Years |
5
Years |
10
Years |
$61 |
$192 |
$335 |
$750 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
65% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
|
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|
|
|
|
|
| |
The
Index uses an objective, rules-based methodology to provide exposure to
global companies with high dividend yields backed by a high free cash flow
yield. |
|
Free
Cash Flow (FCF): A
company’s cash flow from operations minus capital
expenditures.
Enterprise
Value (EV): A
company’s market capitalization plus its debt and minus its cash and cash
equivalents.
Free
Cash Flow Yield:
FCF / EV |
The
initial index universe is derived from the component companies of the FTSE
All-World Developed Large Cap Index. The initial universe of companies is
screened based on their average projected free cash flows and earnings (if
available) over each of the next two fiscal years. Companies with negative
average projected free cash flows or earnings are removed from the Index
universe. Additionally, financial companies, other than real estate
investment trusts (“REITs”), are excluded from the Index
universe. |
|
The
remaining companies are ranked by their free cash flow yield for the trailing
twelve month period. The 300 companies with the highest free cash flow yield are
then ranked by their dividend yield. The equity securities of the 100 companies
with the highest dividend yield are included in the Index.
At
the time of each rebalance of the Index, the companies included in the Index are
weighted based on the aggregate amount of dividends distributed by each company
for the trailing twelve month period, and weightings are capped at 2% of the
weight of the Index for any individual company. The Index is reconstituted and
rebalanced semi-annually as of the close of business on the 3rd
Friday of June and December based on data as of the 1st
Friday of the applicable rebalance month.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Index and investments that have economic characteristics that
are substantially identical to the economic characteristics of such component
securities (e.g., depositary receipts). The Adviser expects that,
over time, the correlation between the Fund’s performance and that of the Index,
before fees and expenses, will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Concentration
Risk.
If the Index concentrates in an industry or group of industries, the Fund’s
investments may be concentrated accordingly. In such event, the value of the
Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, an industry or group of industries in which the Fund is
concentrated may be out of favor and underperform other industries or groups of
industries.
▪Currency
Exchange Rate Risk. The
Fund’s assets may include investments denominated in non-U.S. currencies, such
as the euro, or in securities or other assets that provide exposure to such
currencies. Changes in currency exchange rates and the relative value of
non-U.S. currencies will affect the value of the Fund’s investment and the value
of your Fund shares. Currency exchange rates can be very volatile and can change
quickly and unpredictably. As a result, the value of an investment in the Fund
may change quickly and without warning and you may lose
money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The
Fund has a limited number of financial institutions that may act as APs. In
addition, there may be a limited number of market
makers
and/or liquidity providers in the marketplace. To the extent either of the
following events occur, shares of the Fund may trade at a material discount to
NAV and possibly face delisting: (i) APs exit the business or otherwise
become unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their
functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund trade on foreign exchanges that are closed when the
Fund’s primary listing exchange is open, the Fund is likely to experience
premiums and discounts greater than those of domestic
ETFs.
◦Trading.
Although shares of the Fund are listed for trading on a national securities
exchange, such as Cboe BZX Exchange, Inc. (the “Exchange”), and may be
traded on U.S. exchanges other than the Exchange, there can be no assurance that
shares of the Fund will trade with any volume, or at all, on any stock exchange.
In stressed market conditions, the liquidity of shares of the Fund may begin to
mirror the liquidity of the Fund’s underlying portfolio holdings, which can be
significantly less liquid than shares of the Fund, and this could lead to
differences between the market price of the shares of the Fund and the
underlying value of those shares.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments. Foreign securities held by the Fund may trade on
markets that are closed when U.S. markets are open, which may lead to a
difference in the value of the Fund and the underlying foreign
securities.
▪Geographic
Concentration Risk. To
the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or
region.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Passive
Investment Risk. The Fund is not actively managed and the Adviser would not sell a
security due to current or projected underperformance of a security, industry or
sector, unless that security is removed from the Index or the selling of shares
of that security is otherwise required upon a reconstitution of the Index in
accordance with the Index methodology. The Fund invests in securities included
in the Index, regardless of their investment merits. The Fund does not take
defensive positions under any market conditions, including conditions that are
adverse to the performance of the Fund.
▪Style
Risk. The
Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may
fall out of favor with investors and underperform the market. Also, a company
may reduce or eliminate its dividend, which may have a negative impact on the
Fund’s performance.
▪Tracking
Risk. The
Fund’s return may not track the return of the Index for a number of reasons. For
example, the Fund incurs a number of operating expenses not applicable to the
Index, and incurs costs in buying and selling securities, especially when
rebalancing the Fund’s securities holdings to reflect changes in the composition
of the Index.
In
addition, when the Fund uses a representative sampling approach, the Fund may
not be as well correlated with the return of the Index as when the Fund
purchases all of the securities in the Index in the proportions in which they
are represented in the Index. To the extent the Fund calculates its NAV based on
fair value prices and the value of the Index is based on securities’ closing
prices on local foreign markets (i.e.,
the value of the Index is not based on fair value prices), the Fund’s ability to
track the Index may be adversely affected.
Fund
Performance
The following
information provides some indication of the risks of investing in the
Fund. The bar chart shows the Fund’s performance (based on NAV)
for calendar years ended December 31. The table shows how the Fund’s average
annual returns for the one year, five year, and since inception periods compared
with those of the Index and 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. Updated performance information is
available on the Fund’s website at www.PacerETFs.com
or by calling the Fund toll-free at 1-800-617-0004.
Calendar Year Total
Return as of December 31
For
the year-to-date period ended
June 30,
2024, the Fund’s total return was 1.49%. During the period of time shown
in the bar chart, the Fund’s highest return for a
calendar quarter was 20.08% (quarter ended December 31, 2022)
and the Fund’s lowest return for a
calendar quarter was -27.03% (quarter ended March 31,
2020).
Average
Annual Total Returns
(for
the periods ended December 31, 2023)
|
|
|
|
|
|
|
|
|
|
| |
| 1
Year |
5
Years |
Since
Inception
(2/22/16) |
Pacer
Global Cash Cows Dividend ETF |
|
| |
Return
Before Taxes |
13.69% |
9.14% |
8.43% |
Return
After Taxes on Distributions |
12.58% |
8.16% |
7.59% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
9.37% |
7.26% |
6.79% |
Pacer
Global Cash Cows Dividend Index
(reflects no deduction for
fees, expenses, or taxes) |
15.06% |
10.12% |
9.39% |
FTSE
All-World Developed Large-Cap Index
(reflects no deduction for
fees, expenses, or taxes) |
26.11% |
13.66% |
12.30% |
MSCI
World Value Index
(reflects no deduction for
fees, expenses, or taxes) |
11.51% |
8.87% |
8.52% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates during the period covered by the table above 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 shown are
not relevant to investors who hold their Shares through tax-deferred
arrangements such as an individual retirement account (“IRA”) or other
tax-advantaged accounts.
Management
Investment
Adviser
Pacer
Advisors, Inc. serves as investment adviser to the Fund.
Portfolio
Managers
The
Fund employs a rules-based, passive investment strategy. The Adviser uses a
committee approach to managing the Fund. Bruce Kavanaugh, Vice President of the
Adviser, and Danke Wang, CFA, FRM, Portfolio Manager for the Adviser, are
jointly and primarily responsible for the day-to-day management of the Fund. Mr.
Kavanaugh has served as a portfolio manager since the Fund’s inception and Mr.
Wang has served as a portfolio manager since June 2022.
Buying
and Selling Fund Shares
The
Fund is an ETF. This means that individual Shares of the Fund may only be
purchased and sold in the secondary market through brokers at market prices,
rather than NAV. Because Shares trade at market prices rather than NAV, Shares
may trade at a price greater than NAV (premium) or less than NAV
(discount).
The
Fund generally issues and redeems shares at NAV only in large blocks of shares
known as “Creation Units,” which only institutions or large investors may
purchase or redeem. The Fund generally issues and redeems Creation Units in
exchange for a portfolio of securities (the “Deposit Securities”) and/or a
designated amount of U.S. cash that the Fund specifies each day.
Investors
may incur costs attributable to the difference between the highest price a buyer
is willing to pay to purchase Shares (bid) and the lowest price a seller is
willing to accept for Shares (ask) when buying or selling Shares in the
secondary market (the “bid-ask spread”). Recent information about the Fund,
including its net asset value, market price, premiums and discounts, and bid-ask
spreads is available on the Fund’s website at www.PacerETFs.com.
Tax
Information
Fund
distributions are generally taxable as ordinary income, qualified dividend
income, or capital gains (or a combination), unless your investment is in an IRA
or other tax-advantaged retirement account. Distributions may be taxable upon
withdrawal from tax-deferred accounts.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase the Fund through a broker or other financial intermediary (such as
a bank), the Adviser and its related companies may pay the intermediary for
activities related to the marketing and promotion of the Fund. These payments
may create a conflict of interest by influencing the broker-dealer or other
intermediary and your salesperson to recommend the Fund over another investment.
Ask your salesperson or visit your financial intermediary’s website for more
information.
|
| |
Pacer
Developed Markets International Cash Cows 100
ETF |
Investment
Objective
The
Pacer
Developed Markets International Cash Cows 100 ETF (the “Fund”)
is an exchange traded fund (“ETF”) that seeks to track the total return
performance, before fees and expenses, of the Pacer Developed Markets
International Cash Cows 100 Index (the “Index”).
Fees and Expenses of the
Fund
The
following table describes the fees and expenses you may pay if you buy, hold,
and sell shares of the Fund (“Shares”). You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and Example
below.
|
|
|
|
| |
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.65% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.65% |
Example
The following example is intended to help retail investors compare
the cost of investing in the Fund with the cost of investing in other funds. It
illustrates the hypothetical expenses that such investors would incur over
various periods if they were to invest $10,000 in the Fund for the time periods
indicated and then redeem all of the Shares at the end of those periods. This
example assumes that the Fund provides a return of 5% a year and that 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 |
$66 |
$208 |
$362 |
$810 |
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.
For the fiscal year ended April 30, 2024, the Fund’s portfolio turnover rate was
67% of the average
value of its portfolio.
Principal Investment
Strategies of the Fund
The
Fund employs a “passive management” (or indexing) investment approach designed
to track the total return performance, before fees and expenses, of the Index.
The Index is based on a proprietary methodology developed and maintained by
Index Design Group (the “Index Provider”), an affiliate of Pacer Advisors, Inc.,
the Fund’s investment adviser (the “Adviser”).
The
Index
|
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|
|
|
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|
| |
The
Index uses an objective, rules-based methodology to provide exposure to
large and mid-capitalization non-U.S. companies in developed markets with
high free cash flow yields. Companies with high free cash flow yields are
commonly referred to as “cash cows”. |
|
Free
Cash Flow (FCF): A
company’s cash flow from operations minus capital
expenditures.
Enterprise
Value (EV): A
company’s market capitalization plus its debt and minus its cash and cash
equivalents.
Free
Cash Flow Yield:
FCF / EV |
The
initial index universe is derived from the component companies of the FTSE
Developed ex US Index. The initial universe of companies is screened based
on their average projected free cash flows and earnings (if available)
over each of the next two fiscal years. Companies with no forward year
estimates available for free cash flows or earnings will remain in the
Index universe. Companies with negative average projected free cash flows
or earnings are removed from the Index universe. Additionally, financial
companies, other than real estate investment trusts (“REITs”), and
companies with a market capitalization of less than $3 billion are
excluded from the Index universe. |
|
The
remaining companies are ranked by their average daily trading value (“ADTV”) for
the prior three months. The 500 companies with the highest ADTV are then ranked
by their free cash flow yield for the trailing twelve month period. The equity
securities of the 100 companies with the highest free cash flow yield are
included in the Index.
At
the time of each rebalance of the Index, the companies included in the Index are
weighted in proportion to their trailing twelve month free cash flow, and
weightings are capped at 2% of the weight of the Index for any individual
company. As of June 30, 2024, the Index did not have significant exposure to
companies in any countries, and the companies included in the Index had a market
capitalization of $1 billion to $241.3 billion. The Index is reconstituted and
rebalanced semi-annually as of the close of business on the 3rd
Friday of June and December based on data as of the 1st
Friday of the applicable rebalance month.
The
Fund’s Investment Strategy
Under
normal circumstances, at least 80% of the Fund’s total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of the Index and investments that have economic characteristics that
are substantially identical to the economic characteristics of such component
securities (e.g., depositary receipts). The Adviser expects that,
over time, the correlation between the Fund’s performance and that of the Index,
before fees and expenses, will be 95% or better.
The
Fund will generally use a “replication” strategy to achieve its investment
objective, meaning it will invest in all of the component securities of the
Index in the same approximate proportion as in the
Index.
Principal Risks of Investing
in the Fund
You can lose
money on your investment in the Fund. The Fund is subject to the
risks summarized below. Some or all of these risks may adversely affect the
Fund’s net asset value per share (“NAV”), trading price, yield, total return
and/or ability to meet its objectives. For more information about the risks of
investing in the Fund, see the section in the Fund’s prospectus entitled
“Additional Information about the Principal Risks of Investing in the Funds.”
The principal risks are presented in alphabetical order to facilitate finding
particular risks and comparing them with other funds. Each risk summarized below
is considered a “principal risk” of investing in the Fund, regardless of the
order in which it appears.
▪Calculation
Methodology Risk.
The Index relies directly or indirectly on various sources of information to
assess the criteria of issuers included in the Index, including information that
may be based on assumptions and estimates. Neither the Fund, the Index Provider,
or the Adviser can offer assurances that the Index’s calculation methodology or
sources of information will provide an accurate assessment of included
components or a correct valuation of securities, nor can they guarantee the
availability or timeliness of the production of the
Index.
▪Concentration
Risk.
If the Index concentrates in an industry or group of industries, the Fund’s
investments may be concentrated accordingly. In such event, the value of the
Fund’s shares may rise and fall more than the value of shares of a fund that
invests in securities of companies in a broader range of industries. In
addition, at times, an industry or group of industries in which the Fund is
concentrated may be out of favor and underperform other industries or groups of
industries.
▪Currency
Exchange Rate Risk. The Fund’s assets may include investments denominated in non-U.S.
currencies, such as the euro, or in securities or other assets that provide
exposure to such currencies. Changes in currency exchange rates and the relative
value of non-U.S. currencies will affect the value of the Fund’s investment and
the value of your Fund shares. Currency exchange rates can be very volatile and
can change quickly and unpredictably. As a result, the value of an investment in
the Fund may change quickly and without warning and you may lose
money.
▪Equity
Market Risk. The
equity securities held in the Fund’s portfolio may experience sudden,
unpredictable drops in value or long periods of decline in value. This may occur
because of factors that affect securities markets generally or factors affecting
specific industries, sectors or companies in which the Fund invests. Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence in and perceptions of
their issuers change. The Fund’s NAV and market price may fluctuate
significantly in response to these and other factors. As a result, an investor
could lose money over short or long periods of
time.
▪ETF
Risks.
The Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦Authorized
Participants (“APs”), Market Makers, and Liquidity Providers Concentration
Risk.
The Fund has a limited number of financial institutions that may act
as APs. In addition, there may be a limited number of market makers and/or
liquidity providers in the marketplace. To the extent either of the following
events occur, shares of the Fund may trade at a material discount to NAV and
possibly face delisting: (i) APs exit the business or otherwise become
unable to process creation and/or redemption orders and no other APs step
forward to perform these services, or (ii) market makers and/or liquidity
providers exit the business or significantly reduce their business activities
and no other entities step forward to perform their functions.
◦Costs
of Buying or Selling Shares of the Fund.
Due to the costs of buying or selling shares of the Fund, including brokerage
commissions imposed by brokers and bid/ask spreads, frequent trading of shares
of the Fund may significantly reduce investment results and an investment in
shares of the Fund may not be advisable for investors who anticipate regularly
making small investments.
◦Shares
of the Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of the Fund may be bought and sold in the secondary
market at market prices. The price of shares of the Fund, like the price of all
traded securities, will be subject to factors such as supply and demand, as well
as the current value of the Fund’s portfolio holdings. Although it is expected
that the market price of the shares of the Fund will approximate the Fund’s NAV,
there may be times when the market price of the shares is more than the NAV
intra-day (premium) or less than the NAV intra-day (discount). This risk is
heightened in times of market volatility, periods of steep market declines, and
periods when there is limited trading activity for shares in the secondary
market, in which case such premiums or discounts may be significant. Because
securities held by the Fund trade on foreign exchanges that are closed when the
Fund’s primary listing exchange is open, the Fund is likely to experience
premiums and discounts greater than those of domestic
ETFs.
◦Trading. Although shares of the Fund are listed
for trading on a national securities exchange, such as Cboe BZX Exchange,
Inc. (the “Exchange”), and may be traded on U.S. exchanges other than the
Exchange, there can be no assurance that shares of the Fund will trade with any
volume, or at all, on any stock exchange. In stressed market conditions, the
liquidity of shares of the Fund may begin to mirror the liquidity of the Fund’s
underlying portfolio holdings, which can be significantly less liquid than
shares of the Fund, and this could lead to differences between the market price
of the shares of the Fund and the underlying value of those
shares.
▪Foreign
Securities Risk. Investments
in non-U.S. securities involve certain risks that may not be present with
investments in U.S. securities. For example, investments in non-U.S. securities
may be subject to risk of loss due to foreign currency fluctuations or to
political or economic instability. Investments in non-U.S. securities also may
be subject to withholding or other taxes and may be subject to additional
trading, settlement, custodial, and operational risks. These and other factors
can make investments in the Fund more volatile and potentially less liquid than
other types of investments. Foreign securities held by the Fund may trade on
markets that are closed when U.S. markets are open, which may lead to a
difference in the value of the Fund and the underlying foreign
securities.
▪Geographic
Concentration Risk. To
the extent the Fund invests a significant portion of its assets in the
securities of companies of a single country or region, it is more likely to be
impacted by events or conditions affecting that country or region. Because the
Index constituents are a subset of those of the FTSE Developed ex US Index, the
geographic concentrations of the Index, and consequently the Fund, may be
different than those of the broader FTSE Developed ex US
Index.
◦Risks
Related to Investing in Europe.
The Fund is more exposed to the economic and political risks of Europe and of
the European countries in which it invests than funds whose investments are more
geographically diversified. Adverse economic and political events in Europe may
cause the Fund’s investments to decline in value. The economies and markets of
European countries are often closely connected and interdependent, and events in
one country in Europe can have an adverse impact on other European countries.
The Fund makes investments in securities of issuers that are domiciled in, or
have significant operations in, member countries of the European Union (the
“EU”) that are subject to economic and monetary controls that can adversely
affect the Fund’s investments. The European financial markets have experienced
volatility and adverse trends in recent years and these events have adversely
affected the exchange rate of the euro and may continue to significantly affect
other European countries. Decreasing imports or exports, changes in governmental
or EU regulations on trade, changes
in
the exchange rate of the euro, the default or threat of default by an EU member
country on its sovereign debt, and/or an economic recession in an EU member
country may have a significant adverse effect on the economies of EU member
countries and their trading partners, including some or all of the European
countries in which the Fund invests.
The
risks of investing in the United Kingdom (UK) have been heightened as a result
of Brexit, the formal steps taken by the United Kingdom to exit the EU, which
has resulted in increased volatility and triggered political, economic, and
legal uncertainty. Although the UK has formally left the EU, uncertainty remains
as to the long-term consequences of Brexit and issuers in the UK may experience
lower growth as a result.
◦Risks
Related to Investing in Japan. A significant portion of the
Fund’s assets may be invested in Japanese securities. To the extent the Fund
invests in Japanese securities, it will be subject to risks related to investing
in Japan. The Japanese economy may be subject to considerable degrees of
economic, political and social instability, which could have a negative impact
on Japanese securities. Since the year 2000, Japan’s economic growth rate has
remained relatively low and it may remain low in the future. In addition, Japan
is subject to the risk of natural disasters, such as earthquakes, volcanoes,
typhoons and tsunamis. Additionally, decreasing U.S. imports, new trade
regulations, changes in the U.S. dollar exchange rates, a recession in the
United States or continued increases in foreclosure rates may have an adverse
impact on the economy of Japan. Japan also has few natural resources, and any
fluctuation or shortage in the commodity markets could have a negative impact on
Japanese securities.
▪High
Portfolio Turnover Risk.
At times, the Fund may have a portfolio turnover rate substantially greater than
100%. A high portfolio turnover rate would result in correspondingly greater
transaction expenses, including brokerage commissions, dealer mark ups and other
transaction costs, on the sale of securities and on reinvestment in other
securities and may result in reduced performance and the distribution to
shareholders of additional capital gains for tax purposes. These factors may
negatively affect the Fund’s performance.
▪Large-Capitalization
Investing Risk. The
Fund may invest in the securities of large-capitalization companies. As a
result, the Fund’s performance may be adversely affected if securities of
large-capitalization companies underperform securities of smaller-capitalization
companies or the market as a whole. The securities of large-capitalization
companies may be relatively mature compared to smaller companies and therefore
subject to slower growth during times of economic
expansion.
▪Mid-Capitalization
Investing Risk. The
Fund may invest in the securities of mid-capitalization companies. As a result,
the Fund’s performance may be adversely affected if securities of
mid-capitalization companies underperform securities of other capitalization
ranges or the market as a whole. Securities of smaller companies trade in
smaller volumes and are often more vulnerable to market volatility than
securities of larger companies.
▪Passive
Investment Risk. The
Fund is not actively managed and the Adviser would not sell a security due to
current or projected underperformance of a security, industry or sector, unless
that security is removed from the Index or the selling of shares of that
security is otherwise required upon a reconstitution of the Index in accordance
with the Index methodology. The Fund invests in securities included in the
Index, regardless of their investment merits. The Fund does not take defensive
positions under any market conditions, including conditions that are adverse to
the performance of the Fund.
▪Sector
Risk. To
the extent the Fund invests more heavily in particular sectors of the economy,
its performance will be especially sensitive to developments that significantly
affect those sectors.
◦Consumer
Discretionary Sector Risk.
The
Fund may invest in companies in the consumer discretionary sector, and therefore
the performance of the Fund could be negatively impacted by events affecting
this sector.
The
success of consumer product manufacturers and retailers is tied closely to the
performance of domestic and international economies, interest rates, exchange
rates, competition, consumer confidence, changes in demographics and consumer
preferences. Companies in the consumer discretionary sector depend heavily on
disposable household income and consumer spending, and may be strongly affected
by social trends and marketing campaigns. These companies may be subject to
severe competition, which may have an adverse impact on their
profitability.
◦Industrials
Sector Risk.
The Fund may invest in companies in the industrials sector, and therefore the
performance of the Fund could be negatively impacted by events affecting thi