ck0001616668-20221031
PROSPECTUS
February 28,
2023
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PSCX |
Pacer
Swan SOS Conservative (January) ETF |
PSCW |
Pacer
Swan SOS Conservative (April) ETF |
PSCJ |
Pacer
Swan SOS Conservative (July) ETF |
PSCQ |
Pacer
Swan SOS Conservative (October) ETF |
PSMD |
Pacer
Swan SOS Moderate (January) ETF |
PSMR |
Pacer
Swan SOS Moderate (April) ETF |
PSMJ |
Pacer
Swan SOS Moderate (July) ETF |
PSMO |
Pacer
Swan SOS Moderate (October) ETF |
PSFD |
Pacer
Swan SOS Flex (January) ETF |
PSFM |
Pacer
Swan SOS Flex (April) ETF |
PSFJ |
Pacer
Swan SOS Flex (July) ETF |
PSFO |
Pacer
Swan SOS Flex (October) ETF |
PSFF |
Pacer
Swan SOS Fund of Funds ETF |
Listed
on Cboe BZX Exchange, Inc.
The
U.S. Securities and Exchange Commission (“SEC”) has not approved or disapproved
of these securities or passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
INVESTMENT
PRODUCTS: *ARE
NOT FDIC INSURED *MAY
LOSE VALUE *ARE
NOT BANK GUARANTEED
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The
following information describes some of the risks associated with each of
the funds listed on the cover of this Prospectus other than the Pacer Swan
SOS Fund of Funds ETF (each an “SOS Fund,” and collectively, the “SOS
Funds”). Additional information about these and other risks related to the
SOS Funds and information pertaining to the Pacer Swan SOS Fund of Funds
ETF can be found below in this Prospectus.
Each
SOS Fund uses a “structured outcome strategy” to seek to produce
pre-determined target investment outcomes based upon the performance of
the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). The pre-determined structured outcomes
sought by the SOS Funds, which include the buffer and cap discussed below,
are based upon the performance of the Underlying ETF over a one year
period referred to with respect to an SOS Fund as the initial “Investment
Period.” Following an SOS Fund’s initial Investment Period, each
subsequent Investment Period will be a one-year period. |
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An
SOS Fund will not terminate after the conclusion of the Investment Period.
After the conclusion of an Investment Period with respect to an SOS Fund,
another will begin. There
is no guarantee that the structured outcomes for an Investment Period will
be realized. |
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The
structured outcomes may only be realized if you are holding shares on the
first day of an Investment Period and continue to hold them on the last
day of that Investment Period. If
you purchase shares after an Investment Period has begun or sell shares
prior to an Investment Period’s conclusion, you may experience investment
returns very different from those that the SOS Fund seeks to
provide.
If the Investment Period has begun and the Fund has increased in value to
a level near to the Cap (as defined below), an investor purchasing at that
price has little or no ability to achieve gains but remains vulnerable to
downside risks. Similarly, if the Investment Period has begun and the SOS
Fund has decreased in value beyond the pre-determined buffer (as described
below), an investor purchasing shares at that price may not benefit from
the buffer. There is no guarantee that an SOS Fund will successfully
achieve its investment objective. |
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SOS
Fund shareholders are subject to an upside return cap (the “Cap”) that
represents the maximum percentage return an investor can achieve from an
investment in an SOS Fund for an Investment Period. Therefore, even though
the SOS Funds’ returns are based upon the Underlying ETF, if the
Underlying ETF experiences returns for an Investment Period in excess of
the Cap, you will not experience those excess gains. An SOS Fund’s Cap may
rise or fall from one Investment Period to the next. There is no guarantee
that an SOS Fund’s Cap will remain the same upon the conclusion of its
Investment Period. |
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Each
SOS Fund only seeks to provide shareholders that hold shares for an entire
Investment Period with a buffer against a pre-determined percentage of
Underlying ETF losses. You will bear all Underlying ETF losses beyond that
pre-determined percentage as described below. While each SOS Fund seeks to
limit losses for shareholders who hold shares for the entire Investment
Period, there is no guarantee it will successfully do so. |
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The
SOS Funds’ website,
www.https://www.paceretfs.com/products/structured-outcome-strategies,
provides important information (including Investment Period start and end
dates and each SOS Fund’s Cap and buffer), as well information relating to
the potential outcomes of an investment in an SOS Fund on a daily basis.
If you are contemplating purchasing shares, please visit the website.
Investors considering purchasing shares after an Investment Period has
begun or selling shares prior to the end of an Investment Period should
visit the website to fully understand potential investment
outcomes. |
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Although
each SOS Fund seeks to achieve its investment objective, there is no
guarantee that it will do so. The returns that an SOS Fund seeks to
provide do not include the costs associated with purchasing shares of that
SOS Fund and certain expenses incurred by the SOS Fund. The SOS Funds have
characteristics unlike many other traditional investment products and may
not be suitable for all investors. The table on the following page
provides considerations for determining whether an investment in an SOS
Fund is appropriate for you. |
Table
of Contents
SUMMARY
SECTION
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Pacer
Swan SOS Conservative (January)
ETF |
Investment Objective
The
Pacer Swan SOS Conservative (January) ETF (the “Fund”) seeks to provide
investors with returns that, before fees and expenses of the Fund, match those
of the SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 17.10% (before
fees and expenses of the Fund) and 16.35% (after fees and expenses of the Fund),
while providing a buffer against Underlying ETF losses between 5% and 30% over
the period from January 3, 2023 to December 29,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 19% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an approximate one-year period (the
“Investment Period”), subject to a buffer (the “Buffer”) against certain
Underlying ETF losses and a cap (the “Cap”) as set forth in the following
table:
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Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
January
3, 2023 |
December
29, 2023 |
5%
to 30% |
17.10% |
16.35% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 5%, the
strategy is intended for the Fund to experience such losses on a one-to-one
basis with the Underlying ETF, before fees and expenses of the Fund. For
example, if the Underlying ETF loses 4% over the Investment Period, the strategy
is designed for the Fund to lose 4%, before Fund fees and expenses.
•If
the Underlying ETF declines in value over the Investment Period by more than 5%
but less than or equal to 30%, the strategy is intended for the Fund to bear
only the first 5% of such losses (i.e.,
to buffer against Underlying ETF losses beyond 5% and up to 30%), before Fund
fees and expenses. For example, if the Underlying ETF loses 10%, 20%, or 30%
over the Investment Period, the strategy is intended for the Fund to lose 5%,
before Fund fees and expenses. As a result, the maximum effect of the Buffer is
to protect the Fund from losses of 25% if the Underlying ETF loses 30% over the
Investment Period (30% minus the first 5% of losses).
•If
the Underlying ETF has declined in value by more than 30% over the Investment
Period, the strategy is intended for the Fund to experience losses that are 25%
less than the those of the Underlying ETF. For example, if the Underlying ETF
loses 40% over the Investment Period, the strategy is designed for the Fund to
lose 15% (40% minus 25%), before Fund fees and expenses. An investor that
purchases Shares at a value reflecting losses of more than 30% from the
beginning of the Investment Period has the potential to lose his or her entire
investment and may not experience any benefit from the Buffer.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment
Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for that entire Investment Period.
Buffer
The
Fund seeks to provide a Buffer of Underlying ETF losses of between 5% and 30%
over each Investment Period. In other words, the Fund’s strategy seeks to
provide a buffer of 25% against Underlying ETF losses equal to or greater than
30%. The Fund will bear the first 5% of losses, and after the Underlying ETF has
decreased in value by more than 30%, the Fund will experience subsequent losses
on a one-to-one basis. The Buffer is before taking into account the fees and
expenses of the Fund charged to shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
30% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, an investor purchasing Shares at that
price may experience losses prior to gaining the protection offered by the
Buffer (because the Fund must first decrease in value to 5% less than its
Initial Fund Value for the Investment Period before subsequent losses will be
protected by the Buffer), which is not guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The Fund is classified as “non-diversified”
under the Investment Company Act of 1940, as amended (the “1940
Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the
Investment
Period, the value of that investor’s investment in Shares may not be buffered
against a decline in the value of the Underlying ETF and may not participate in
a gain in the value of the Underlying ETF up to the Cap for the investor’s
investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk.
The Fund invests in FLEX Options that reference an ETF, which subjects the Fund
to certain of the risks of owning shares of an ETFs, as well as the types of
instruments in which the Underlying ETF invests. The value of an ETF will
fluctuate over time based on fluctuations in the values of the securities held
by the ETF, which may be affected by changes in general economic conditions,
expectations for future growth and profits, interest rates and the supply and
demand for those securities. In addition, ETFs are subject to authorized
participant concentration risk, market maker risk, premium/discount risk,
tracking error risk and trading issues risk. Brokerage, tax and other expenses
may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund’s shares. An
ETF that tracks an index may not exactly match the performance of the index due
to cash drag, differences between the portfolio of the ETF and the components of
the index, expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 3.07% for the quarter ended March 31, 2021 and
the lowest quarterly return was
-6.90% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
|
|
|
|
|
| |
Pacer
Swan SOS Conservative (January) ETF |
1
Year |
Since
Inception
(12/22/2020) |
Return Before
Taxes |
-6.87% |
1.12% |
Return After Taxes on
Distributions |
-6.87% |
1.12% |
Return After Taxes on Distributions and
Sale of Shares |
-4.06% |
0.85% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
3.59% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Conservative (April)
ETF |
Investment Objective
The
Pacer Swan SOS Conservative (April) ETF (the “Fund”) seeks to provide investors
with returns that, before fees and expenses of the Fund, match those of the
SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 10.23% (before
fees and expenses of the Fund) and 9.48% (after fees and expenses of the Fund),
while providing a buffer against Underlying ETF losses between 5% and 30% over
the period from April 1, 2022 to March 31,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
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|
|
|
|
|
|
|
|
|
|
|
|
| |
Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
April
1, 2022 |
March
31, 2023 |
5%
to 30% |
10.23% |
9.48% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 5%, the
strategy is intended for the Fund to experience such losses on a one-to-one
basis with the Underlying ETF, before fees and expenses of the Fund. For
example, if the Underlying ETF loses 4% over the Investment Period, the strategy
is designed for the Fund to lose 4%, before Fund fees and expenses.
•If
the Underlying ETF declines in value over the Investment Period by more than 5%
but less than or equal to 30%, the strategy is intended for the Fund to bear
only the first 5% of such losses (i.e.,
to buffer against Underlying ETF losses beyond 5% and up to 30%), before Fund
fees and expenses. For example, if the Underlying ETF loses 10%, 20%, or 30%
over the Investment Period, the strategy is intended for the Fund to lose 5%,
before Fund fees and expenses. As a result, the maximum effect of the Buffer is
to protect the Fund from losses of 25% if the Underlying ETF loses 30% over the
Investment Period (30% minus the first 5% of losses).
•If
the Underlying ETF has declined in value by more than 30% over the Investment
Period, the strategy is intended for the Fund to experience losses that are 25%
less than the those of the Underlying ETF. For example, if the Underlying ETF
loses 40% over the Investment Period, the strategy is designed for the Fund to
lose 15% (40% minus 25%), before Fund fees and expenses. An investor that
purchases Shares at a value reflecting losses of more than 30% from the
beginning of the Investment Period has the potential to lose his or her entire
investment and may not experience any benefit from the Buffer.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment
Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for that entire Investment Period.
Buffer
The
Fund seeks to provide a Buffer of Underlying ETF losses of between 5% and 30%
over each Investment Period. In other words, the Fund’s strategy seeks to
provide a buffer of 25% against Underlying ETF losses equal to or greater than
30%. The Fund will bear the first 5% of losses, and after the Underlying ETF has
decreased in value by more than 30%, the Fund will experience subsequent losses
on a one-to-one basis. The Buffer is before taking into account the fees and
expenses of the Fund charged to shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
30% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, an investor purchasing Shares at that
price may experience losses prior to gaining the protection offered by the
Buffer (because the Fund must first decrease in value to 5% less than its
Initial Fund Value for the Investment Period before subsequent losses will be
protected by the Buffer), which is not guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The Fund is classified as “non-diversified”
under the Investment Company Act of 1940, as amended (the “1940
Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the
Investment
Period, the value of that investor’s investment in Shares may not be buffered
against a decline in the value of the Underlying ETF and may not participate in
a gain in the value of the Underlying ETF up to the Cap for the investor’s
investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk.
The Fund invests in FLEX Options that reference an ETF, which subjects the Fund
to certain of the risks of owning shares of an ETFs, as well as the types of
instruments in which the Underlying ETF invests. The value of an ETF will
fluctuate over time based on fluctuations in the values of the securities held
by the ETF, which may be affected by changes in general economic conditions,
expectations for future growth and profits, interest rates and the supply and
demand for those securities. In addition, ETFs are subject to authorized
participant concentration risk, market maker risk, premium/discount risk,
tracking error risk and trading issues risk. Brokerage, tax and other expenses
may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund’s shares. An
ETF that tracks an index may not exactly match the performance of the index due
to cash drag, differences between the portfolio of the ETF and the components of
the index, expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 3.05% for the quarter ended December 31, 2022
and the lowest quarterly return was
-8.15% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
|
|
|
|
|
| |
Pacer
Swan SOS Conservative (April) ETF |
1
Year |
Since
Inception
(3/31/2021) |
Return Before
Taxes |
-5.51% |
0.39% |
Return After Taxes on
Distributions |
-5.51% |
0.39% |
Return After Taxes on Distributions and
Sale of Shares |
-3.26% |
0.30% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-0.42% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
|
| |
Pacer Swan SOS Conservative (July)
ETF |
Investment Objective
The
Pacer Swan SOS Conservative (July) ETF (the “Fund”) seeks to provide investors
with returns that, before fees and expenses of the Fund, match those of the
SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 15.30% (before
fees and expenses of the Fund) and 14.55% (after fees and expenses of the Fund),
while providing a buffer against Underlying ETF losses between 5% and 30% over
the period from July 1, 2022 to June 30,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
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|
|
|
|
|
|
|
|
|
|
|
|
| |
Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
July
1, 2022 |
June
30, 2023 |
5%
to 30% |
15.30% |
14.55% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 5%, the
strategy is intended for the Fund to experience such losses on a one-to-one
basis with the Underlying ETF, before fees and expenses of the Fund. For
example, if the Underlying ETF loses 4% over the Investment Period, the strategy
is designed for the Fund to lose 4%, before Fund fees and expenses.
•If
the Underlying ETF declines in value over the Investment Period by more than 5%
but less than or equal to 30%, the strategy is intended for the Fund to bear
only the first 5% of such losses (i.e.,
to buffer against Underlying ETF losses beyond 5% and up to 30%), before Fund
fees and expenses. For example, if the Underlying ETF loses 10%, 20%, or 30%
over the Investment Period, the strategy is intended for the Fund to lose 5%,
before Fund fees and expenses. As a result, the maximum effect of the Buffer is
to protect the Fund from losses of 25% if the Underlying ETF loses 30% over the
Investment Period (30% minus the first 5% of losses).
•If
the Underlying ETF has declined in value by more than 30% over the Investment
Period, the strategy is intended for the Fund to experience losses that are 25%
less than the those of the Underlying ETF. For example, if the Underlying ETF
loses 40% over the Investment Period, the strategy is designed for the Fund to
lose 15% (40% minus 25%), before Fund fees and expenses. An investor that
purchases Shares at a value reflecting losses of more than 30% from the
beginning of the Investment Period has the potential to lose his or her entire
investment and may not experience any benefit from the Buffer.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment
Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for that entire Investment Period.
Buffer
The
Fund seeks to provide a Buffer of Underlying ETF losses of between 5% and 30%
over each Investment Period. In other words, the Fund’s strategy seeks to
provide a buffer of 25% against Underlying ETF losses equal to or greater than
30%. The Fund will bear the first 5% of losses, and after the Underlying ETF has
decreased in value by more than 30%, the Fund will experience subsequent losses
on a one-to-one basis. The Buffer is before taking into account the fees and
expenses of the Fund charged to shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
30% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, an investor purchasing Shares at that
price may experience losses prior to gaining the protection offered by the
Buffer (because the Fund must first decrease in value to 5% less than its
Initial Fund Value for the Investment Period before subsequent losses will be
protected by the Buffer), which is not guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The Fund is classified as “non-diversified”
under the Investment Company Act of 1940, as amended (the “1940
Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the
Investment
Period, the value of that investor’s investment in Shares may not be buffered
against a decline in the value of the Underlying ETF and may not participate in
a gain in the value of the Underlying ETF up to the Cap for the investor’s
investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk.
The Fund invests in FLEX Options that reference an ETF, which subjects the Fund
to certain of the risks of owning shares of an ETFs, as well as the types of
instruments in which the Underlying ETF invests. The value of an ETF will
fluctuate over time based on fluctuations in the values of the securities held
by the ETF, which may be affected by changes in general economic conditions,
expectations for future growth and profits, interest rates and the supply and
demand for those securities. In addition, ETFs are subject to authorized
participant concentration risk, market maker risk, premium/discount risk,
tracking error risk and trading issues risk. Brokerage, tax and other expenses
may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund’s shares. An
ETF that tracks an index may not exactly match the performance of the index due
to cash drag, differences between the portfolio of the ETF and the components of
the index, expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 4.60% for the quarter ended December 31, 2022
and the lowest quarterly return was
-8.29% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
|
|
|
|
|
| |
Pacer
Swan SOS Conservative (July) ETF |
1
Year |
Since
Inception
(6/30/2021) |
Return Before
Taxes |
-7.35% |
-2.89% |
Return After Taxes on
Distributions |
-7.35% |
-2.89% |
Return After Taxes on Distributions and
Sale of Shares |
-4.35% |
-2.20% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-5.77% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
|
| |
Pacer Swan SOS Conservative (October)
ETF |
Investment Objective
The
Pacer Swan SOS Conservative (October) ETF (the “Fund”) seeks to provide
investors with returns that, before fees and expenses of the Fund, match those
of the SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 18.44% (before
fees and expenses of the Fund) and 17.69% (after fees and expenses of the Fund),
while providing a buffer against Underlying ETF losses between 5% and 30% over
the period from October 1, 2022 to September 30,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
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|
|
|
|
|
|
|
|
|
|
|
|
| |
Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
October
1, 2022 |
September
30, 2023 |
5%
to 30% |
18.44% |
17.69% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 5%, the
strategy is intended for the Fund to experience such losses on a one-to-one
basis with the Underlying ETF, before fees and expenses of the Fund. For
example, if the Underlying ETF loses 4% over the Investment Period, the strategy
is designed for the Fund to lose 4%, before Fund fees and expenses.
•If
the Underlying ETF declines in value over the Investment Period by more than 5%
but less than or equal to 30%, the strategy is intended for the Fund to bear
only the first 5% of such losses (i.e.,
to buffer against Underlying ETF losses beyond 5% and up to 30%), before Fund
fees and expenses. For example, if the Underlying ETF loses 10%, 20%, or 30%
over the Investment Period, the strategy is intended for the Fund to lose 5%,
before Fund fees and expenses. As a result, the maximum effect of the Buffer is
to protect the Fund from losses of 25% if the Underlying ETF loses 30% over the
Investment Period (30% minus the first 5% of losses).
•If
the Underlying ETF has declined in value by more than 30% over the Investment
Period, the strategy is intended for the Fund to experience losses that are 25%
less than the those of the Underlying ETF. For example, if the Underlying ETF
loses 40% over the Investment Period, the strategy is designed for the Fund to
lose 15% (40% minus 25%), before Fund fees and expenses. An investor that
purchases Shares at a value reflecting losses of more than 30% from the
beginning of the Investment Period has the potential to lose his or her entire
investment and may not experience any benefit from the Buffer.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment
Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for that entire Investment Period.
Buffer
The
Fund seeks to provide a Buffer of Underlying ETF losses of between 5% and 30%
over each Investment Period. In other words, the Fund’s strategy seeks to
provide a buffer of 25% against Underlying ETF losses equal to or greater than
30%. The Fund will bear the first 5% of losses, and after the Underlying ETF has
decreased in value by more than 30%, the Fund will experience subsequent losses
on a one-to-one basis. The Buffer is before taking into account the fees and
expenses of the Fund charged to shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
30% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, an investor purchasing Shares at that
price may experience losses prior to gaining the protection offered by the
Buffer (because the Fund must first decrease in value to 5% less than its
Initial Fund Value for the Investment Period before subsequent losses will be
protected by the Buffer), which is not guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The Fund is classified as “non-diversified”
under the Investment Company Act of 1940, as amended (the “1940
Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the
Investment
Period, the value of that investor’s investment in Shares may not be buffered
against a decline in the value of the Underlying ETF and may not participate in
a gain in the value of the Underlying ETF up to the Cap for the investor’s
investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk.
The Fund invests in FLEX Options that reference an ETF, which subjects the Fund
to certain of the risks of owning shares of an ETFs, as well as the types of
instruments in which the Underlying ETF invests. The value of an ETF will
fluctuate over time based on fluctuations in the values of the securities held
by the ETF, which may be affected by changes in general economic conditions,
expectations for future growth and profits, interest rates and the supply and
demand for those securities. In addition, ETFs are subject to authorized
participant concentration risk, market maker risk, premium/discount risk,
tracking error risk and trading issues risk. Brokerage, tax and other expenses
may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund’s shares. An
ETF that tracks an index may not exactly match the performance of the index due
to cash drag, differences between the portfolio of the ETF and the components of
the index, expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 3.99% for the quarter ended December 31, 2022
and the lowest quarterly return was
-6.96% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
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Pacer
Swan SOS Conservative (October) ETF |
1
Year |
Since
Inception
(9/30/2021) |
Return Before
Taxes |
-4.81% |
-1.74% |
Return After Taxes on
Distributions |
-4.81% |
-1.74% |
Return After Taxes on Distributions and
Sale of Shares |
-2.85% |
-1.32% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-7.32% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Moderate (January)
ETF |
Investment Objective
The
Pacer Swan SOS Moderate (January) ETF (the “Fund”) seeks to provide investors
with returns that, before fees and expenses of the Fund, match those of the
SPDR®
S&P 500®
ETF Trust (“the Underlying ETF”) up to a predetermined upside cap of 18.25%
(before fees and expenses of the Fund) and 17.50% (after fees and expenses of
the Fund), while providing a buffer against the first 15% of Underlying ETF
losses, over the period from January 3, 2023 to December 29,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 48% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an approximate one-year period (the
“Investment Period”), subject to a buffer (the “Buffer”) against certain
Underlying ETF losses and a cap (the “Cap”) as set forth in the following
table:
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| |
Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
January
3, 2023 |
December
29, 2023 |
15% |
18.25% |
17.50% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 15%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 10% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period, the strategy is
designed to protect the Fund from the first 15% of Underlying ETF losses, while
experiencing losses greater than 15% on a one-to-one basis with the Underlying
ETF, before fees and expenses of the Fund. For example, if the Underlying ETF
loses 20% over the Investment Period, the strategy is designed for the Fund to
have losses of 5% (20% less the Buffer of 15%), before Fund fees and
expenses.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a Buffer on the first 15% loss of the Underlying ETF over
each Investment Period. After the Underlying ETF has decreased in price by more
than 15%, the Fund is expected to experience subsequent losses on a one-to-one
basis (e.g.,
if the Underlying ETF loses 20%, the Fund loses 5%). The Buffer is before taking
into account the fees and expenses of the Fund charged to
shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by at least 15% since the first day of
the Investment Period (the “Initial Fund Value”), an investor purchasing Shares
at that price will have increased gains available prior to reaching the
Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the
Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism,
spread
of infectious diseases or other public health issues, recessions, or other
events could have a significant negative impact on the Fund and its investments.
Such events may affect certain geographic regions, countries, sectors, and
industries more significantly than others. Such events could adversely affect
the prices and liquidity of the Fund’s portfolio securities or other instruments
and could result in disruptions in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 7.42% for the quarter ended December 31, 2022
and the lowest quarterly return was
-7.61% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
|
|
|
|
|
| |
Pacer
Swan SOS Moderate (January) ETF |
1
Year |
Since
Inception
(12/22/2020) |
Return Before
Taxes |
-3.98% |
3.69% |
Return After Taxes on
Distributions |
-3.98% |
3.59% |
Return After Taxes on Distributions and
Sale of Shares |
-2.36% |
2.78% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
3.59% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
|
| |
Pacer Swan SOS Moderate (April)
ETF |
Investment Objective
The
Pacer Swan SOS Moderate (April) ETF (the “Fund”) seeks to provide investors with
returns that, before fees and expenses of the Fund, match those of the
SPDR®
S&P 500®
ETF Trust (“the Underlying ETF”) up to a predetermined upside cap of 11.31%
(before fees and expenses of the Fund) and 10.56% (after fees and expenses of
the Fund), while providing a buffer against the first 15% of Underlying ETF
losses, over the period from April 1, 2022 to March 31,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
|
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Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
April
1, 2022 |
March
31, 2023 |
15% |
11.31% |
10.56% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 15%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 10% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period, the strategy is
designed to protect the Fund from the first 15% of Underlying ETF losses, while
experiencing losses greater than 15% on a one-to-one basis with the Underlying
ETF, before fees and expenses of the Fund. For example, if the Underlying ETF
loses 20% over the Investment Period, the strategy is designed for the Fund to
have losses of 5% (20% less the Buffer of 15%), before Fund fees and
expenses.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a Buffer on the first 15% loss of the Underlying ETF over
each Investment Period. After the Underlying ETF has decreased in price by more
than 15%, the Fund is expected to experience subsequent losses on a one-to-one
basis (e.g.,
if the Underlying ETF loses 20%, the Fund loses 5%). The Buffer is before taking
into account the fees and expenses of the Fund charged to
shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by at least 15% since the first day of
the Investment Period (the “Initial Fund Value”), an investor purchasing Shares
at that price will have increased gains available prior to reaching the
Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the
Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism,
spread
of infectious diseases or other public health issues, recessions, or other
events could have a significant negative impact on the Fund and its investments.
Such events may affect certain geographic regions, countries, sectors, and
industries more significantly than others. Such events could adversely affect
the prices and liquidity of the Fund’s portfolio securities or other instruments
and could result in disruptions in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 5.82% for the quarter ended December 31, 2022
and the lowest quarterly return was
-8.39% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
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Pacer
Swan SOS Moderate (April) ETF |
1
Year |
Since
Inception
3/31/2021) |
Return Before
Taxes |
-3.85% |
2.10% |
Return After Taxes on
Distributions |
-3.85% |
2.10% |
Return After Taxes on Distributions and
Sale of Shares |
-2.28% |
1.60% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-0.42% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Moderate (July)
ETF |
Investment Objective
The
Pacer Swan SOS Moderate (July) ETF (the “Fund”) seeks to provide investors with
returns that, before fees and expenses of the Fund, match those of the
SPDR®
S&P 500®
ETF Trust (“the Underlying ETF”) up to a predetermined upside cap of 17.10%
(before fees and expenses of the Fund) and 16.35% (after fees and expenses of
the Fund), while providing a buffer against the first 15% of Underlying ETF
losses, over the period from July 1, 2022 to June 30,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
July
1, 2022 |
June
30, 2023 |
15% |
17.10% |
16.35% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 15%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 10% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period, the strategy is
designed to protect the Fund from the first 15% of Underlying ETF losses, while
experiencing losses greater than 15% on a one-to-one basis with the Underlying
ETF, before fees and expenses of the Fund. For example, if the Underlying ETF
loses 20% over the Investment Period, the strategy is designed for the Fund to
have losses of 5% (20% less the Buffer of 15%), before Fund fees and
expenses.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a Buffer on the first 15% loss of the Underlying ETF over
each Investment Period. After the Underlying ETF has decreased in price by more
than 15%, the Fund is expected to experience subsequent losses on a one-to-one
basis (e.g.,
if the Underlying ETF loses 20%, the Fund loses 5%). The Buffer is before taking
into account the fees and expenses of the Fund charged to
shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by at least 15% since the first day of
the Investment Period (the “Initial Fund Value”), an investor purchasing Shares
at that price will have increased gains available prior to reaching the
Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the
Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism,
spread
of infectious diseases or other public health issues, recessions, or other
events could have a significant negative impact on the Fund and its investments.
Such events may affect certain geographic regions, countries, sectors, and
industries more significantly than others. Such events could adversely affect
the prices and liquidity of the Fund’s portfolio securities or other instruments
and could result in disruptions in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 5.60% for the quarter ended December 31, 2022
and the lowest quarterly return was
-4.28% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
|
|
|
|
|
| |
Pacer
Swan SOS Moderate (July) ETF |
1
Year |
Since
Inception
(6/30/2021) |
Return Before
Taxes |
-2.23% |
1.08% |
Return After Taxes on
Distributions |
-2.23% |
1.07% |
Return After Taxes on Distributions and
Sale of Shares |
-1.32% |
0.82% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-5.77% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Moderate (October)
ETF |
Investment Objective
The
Pacer Swan SOS Moderate (October) ETF (the “Fund”) seeks to provide investors
with returns that, before fees and expenses of the Fund, match those of the
SPDR®
S&P 500®
ETF Trust (“the Underlying ETF”) up to a predetermined upside cap of 20.60%
(before fees and expenses of the Fund) and 19.85% (after fees and expenses of
the Fund), while providing a buffer against the first 15% of Underlying ETF
losses, over the period from October 1, 2022 to September 30,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses |
0.75% |
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an approximate one-year period (the
“Investment Period”), subject to a buffer (the “Buffer”) against certain
Underlying ETF losses and a cap (the “Cap”) as set forth in the following
table:
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Investment
Period Start |
Investment
Period End |
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
October
1, 2022 |
September
30, 2023 |
15% |
20.60% |
19.85% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 15%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 10% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period, the strategy is
designed to protect the Fund from the first 15% of Underlying ETF losses, while
experiencing losses greater than 15% on a one-to-one basis with the Underlying
ETF, before fees and expenses of the Fund. For example, if the Underlying ETF
loses 20% over the Investment Period, the strategy is designed for the Fund to
have losses of 5% (20% less the Buffer of 15%), before Fund fees and
expenses.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a Buffer on the first 15% loss of the Underlying ETF over
each Investment Period. After the Underlying ETF has decreased in price by more
than 15%, the Fund is expected to experience subsequent losses on a one-to-one
basis (e.g.,
if the Underlying ETF loses 20%, the Fund loses 5%). The Buffer is before taking
into account the fees and expenses of the Fund charged to
shareholders.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by at least 15% since the first day of
the Investment Period (the “Initial Fund Value”), an investor purchasing Shares
at that price will have increased gains available prior to reaching the
Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the
Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism,
spread
of infectious diseases or other public health issues, recessions, or other
events could have a significant negative impact on the Fund and its investments.
Such events may affect certain geographic regions, countries, sectors, and
industries more significantly than others. Such events could adversely affect
the prices and liquidity of the Fund’s portfolio securities or other instruments
and could result in disruptions in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 4.91% for the quarter ended December 31, 2022
and the lowest quarterly return was
-6.63% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
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Pacer
Swan SOS Moderate (October) ETF |
1
Year |
Since
Inception
(9/30/2021) |
Return Before
Taxes |
-1.35% |
1.54% |
Return After Taxes on
Distributions |
-1.35% |
1.54% |
Return After Taxes on Distributions and
Sale of Shares |
-0.80% |
1.17% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-7.32% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Flex (January)
ETF |
Investment Objective
The
Pacer Swan SOS Flex (January) ETF (the “Fund”) seeks to provide investors with
returns that match those of the SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 21.90% (before
fees and expenses of the Fund) and 21.15% (after fees and expenses of the Fund),
while providing a buffer against the first 20% of Underlying ETF losses with the
benefits of such buffer declining from 20% to 0% for Underlying ETF losses
between 20% and 40%, over the period from January 3, 2023 to
December 29, 2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 226% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
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Investment
Period Start |
Investment
Period End |
Full Buffer |
Fading
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
January
3, 2023 |
December
29, 2023 |
20% |
20%
to 40% |
21.90% |
21.15% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 20%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 15% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period by more than 20%
(the maximum Buffer amount) but less than or equal to 40%, the strategy is
intended for the losses of the Fund, before fees and expenses, to approach (and
ultimately match) the returns of the Underlying ETF as the Underlying ETF’s
losses approach (or reach) 40%. In other words, the Fund is intended to incur
losses for an Investment Period that grow more quickly than the Underlying ETF’s
losses as the Underlying ETF’s losses grow from 20% to 40%.
•If
the Underlying ETF declines in value by more than 40% over the Investment
Period, the strategy is intended for the Fund to experience losses on a
one-to-one basis with the Underlying ETF, before fees and expenses of the
Fund.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a two-zone Buffer strategy. In the first zone, the Fund
seeks to provide a full Buffer on the first 20% loss of the Underlying ETF over
each Investment Period. In the second zone, the benefit of the Fund’s Buffer
declines from 20% to 0% for Underlying ETF losses between 20% and 40%, at which
point both the Fund and the Underlying ETF will have lost 40%. As a result, the
benefits of the Buffer decrease from a maximum benefit of 20% (when Underlying
ETF losses are 20%) to 0% (when Underlying ETF losses reach 40%) in this second
zone. For Underlying ETF losses greater than 40%, the Fund will experience the
losses of the Underlying ETF on a one-to-one basis (e.g.,
if the Underlying ETF loses 45%, the Fund loses 45%). The Buffer is before
taking into account the fees and expenses charged to shareholders. An investor
could lose their entire investment.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
20% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited
to no gain potential for the remainder of the Investment Period. However, the
investor will remain vulnerable to significant downside risk because the
investor will bear the losses between the price at which it purchased its Shares
and the Initial Fund Value for the Investment Period before subsequent losses
will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 11.04% for the quarter ended December 31, 2022
and the lowest quarterly return was
-9.32% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
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Pacer
Swan SOS Flex (January) ETF |
1
Year |
Since
Inception
(12/22/2020) |
Return Before
Taxes |
-2.85% |
7.67% |
Return After Taxes on
Distributions |
-2.85% |
7.67% |
Return After Taxes on Distributions and
Sale of Shares |
-1.69% |
5.89% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
3.59% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Flex (April)
ETF |
Investment Objective
The
Pacer Swan SOS Flex (April) ETF (the “Fund”) seeks to provide investors with
returns that match those of the SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 14.88% (before
fees and expenses of the Fund) and 14.13% (after fees and expenses of the Fund),
while providing a buffer against the first 20% of Underlying ETF losses with the
benefits of such buffer declining from 20% to 0% for Underlying ETF losses
between 20% and 40%, over the period from April 1, 2022 to March 31,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.02%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
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Investment
Period Start |
Investment
Period End |
Full Buffer |
Fading
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
April
1, 2022 |
March
31, 2023 |
20% |
20%
to 40% |
14.88% |
14.13% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 20%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 15% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period by more than 20%
(the maximum Buffer amount) but less than or equal to 40%, the strategy is
intended for the losses of the Fund, before fees and expenses, to approach (and
ultimately match) the returns of the Underlying ETF as the Underlying ETF’s
losses approach (or reach) 40%. In other words, the Fund is intended to incur
losses for an Investment Period that grow more quickly than the Underlying ETF’s
losses as the Underlying ETF’s losses grow from 20% to 40%.
•If
the Underlying ETF declines in value by more than 40% over the Investment
Period, the strategy is intended for the Fund to experience losses on a
one-to-one basis with the Underlying ETF, before fees and expenses of the
Fund.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a two-zone Buffer strategy. In the first zone, the Fund
seeks to provide a full Buffer on the first 20% loss of the Underlying ETF over
each Investment Period. In the second zone, the benefit of the Fund’s Buffer
declines from 20% to 0% for Underlying ETF losses between 20% and 40%, at which
point both the Fund and the Underlying ETF will have lost 40%. As a result, the
benefits of the Buffer decrease from a maximum benefit of 20% (when Underlying
ETF losses are 20%) to 0% (when Underlying ETF losses reach 40%) in this second
zone. For Underlying ETF losses greater than 40%, the Fund will experience the
losses of the Underlying ETF on a one-to-one basis (e.g.,
if the Underlying ETF loses 45%, the Fund loses 45%). The Buffer is before
taking into account the fees and expenses charged to shareholders. An investor
could lose their entire investment.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
20% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited
to no gain potential for the remainder of the Investment Period. However, the
investor will remain vulnerable to significant downside risk because the
investor will bear the losses between the price at which it purchased its Shares
and the Initial Fund Value for the Investment Period before subsequent losses
will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 8.14% for the quarter ended December 31, 2022
and the lowest quarterly return was
-10.99% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
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| |
Pacer
Swan SOS Flex (April) ETF |
1
Year |
Since
Inception
(3/31/2021) |
Return Before
Taxes |
-4.97% |
3.79% |
Return After Taxes on
Distributions |
-4.97% |
3.79% |
Return After Taxes on Distributions and
Sale of Shares |
-2.94% |
2.89% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-0.42% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Flex (July)
ETF |
Investment Objective
The
Pacer Swan SOS Flex (July) ETF (the “Fund”) seeks to provide investors with
returns that match those of the SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 22.28% (before
fees and expenses of the Fund) and 21.53% (after fees and expenses of the Fund),
while providing a buffer against the first 20% of Underlying ETF losses with the
benefits of such buffer declining from 20% to 0% for Underlying ETF losses
between 20% and 40%, over the period from July 1, 2022 to June 30,
2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an approximate one-year period (the
“Investment Period”), subject to a buffer (the “Buffer”) against certain
Underlying ETF losses and a cap (the “Cap”) as set forth in the following
table:
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Investment
Period Start |
Investment
Period End |
Full Buffer |
Fading
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
July
1, 2022 |
June
30, 2023 |
20% |
20%
to 40% |
22.28% |
21.53% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 20%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 15% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period by more than 20%
(the maximum Buffer amount) but less than or equal to 40%, the strategy is
intended for the losses of the Fund, before fees and expenses, to approach (and
ultimately match) the returns of the Underlying ETF as the Underlying ETF’s
losses approach (or reach) 40%. In other words, the Fund is intended to incur
losses for an Investment Period that grow more quickly than the Underlying ETF’s
losses as the Underlying ETF’s losses grow from 20% to 40%.
•If
the Underlying ETF declines in value by more than 40% over the Investment
Period, the strategy is intended for the Fund to experience losses on a
one-to-one basis with the Underlying ETF, before fees and expenses of the
Fund.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment
Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment Period.
Buffer
The
Fund seeks to provide a two-zone Buffer strategy. In the first zone, the Fund
seeks to provide a full Buffer on the first 20% loss of the Underlying ETF over
each Investment Period. In the second zone, the benefit of the Fund’s Buffer
declines from 20% to 0% for Underlying ETF losses between 20% and 40%, at which
point both the Fund and the Underlying ETF will have lost 40%. As a result, the
benefits of the Buffer decrease from a maximum benefit of 20% (when Underlying
ETF losses are 20%) to 0% (when Underlying ETF losses reach 40%) in this second
zone. For Underlying ETF losses greater than 40%, the Fund will experience the
losses of the Underlying ETF on a one-to-one basis (e.g.,
if the Underlying ETF loses 45%, the Fund loses 45%). The Buffer is before
taking into account the fees and expenses charged to shareholders. An investor
could lose their entire investment.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
20% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess
gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited to no gain potential for the remainder of the Investment Period.
However, the investor will remain vulnerable to significant downside risk
because the investor will bear the losses between the price at which it
purchased its Shares and the Initial Fund Value for the Investment Period before
subsequent losses will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk.
The Fund invests in FLEX Options that reference an ETF, which subjects the Fund
to certain of the risks of owning shares of an ETFs, as well as the types of
instruments in which the Underlying ETF invests. The value of an ETF will
fluctuate over time based on fluctuations in the values of the securities held
by
the ETF, which may be affected by changes
in general economic conditions, expectations for future growth and profits,
interest rates and the supply and demand for those securities. In addition, ETFs
are subject to authorized participant concentration risk, market maker risk,
premium/discount risk, tracking error risk and trading issues risk. Brokerage,
tax and other expenses may negatively impact the performance of the Underlying
ETF and, in turn, the value of the Fund’s shares. An ETF that tracks an index
may not exactly match the performance of the index due to cash drag, differences
between the portfolio of the ETF and the components of the index, expenses, and
other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 6.25% for the quarter ended December 31, 2022
and the lowest quarterly return was
-5.54% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
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Pacer
Swan SOS Flex (July) ETF |
1
Year |
Since
Inception
(6/30/2021) |
Return Before
Taxes |
-3.66% |
1.37% |
Return After Taxes on
Distributions |
-3.66% |
1.37% |
Return After Taxes on Distributions and
Sale of Shares |
-2.17% |
1.05% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-5.77% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
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Pacer Swan SOS Flex (October)
ETF |
Investment Objective
The
Pacer Swan SOS Flex (October) ETF (the “Fund”) seeks to provide investors with
returns that match those of the SPDR®
S&P 500®
ETF
Trust (the “Underlying ETF”) up to a predetermined upside cap of 26.30% (before
fees and expenses of the Fund) and 25.55% (after fees and expenses of the Fund),
while providing a buffer against the first 20% of Underlying ETF losses with the
benefits of such buffer declining from 20% to 0% for Underlying ETF losses
between 20% and 40%, over the period from October 1, 2022 to
September 30, 2023.
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 |
0.75% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Total
Annual Fund Operating Expenses1 |
0.75% |
1
Total Annual Fund
Operating Expenses do not correlate to the expense ratios in the Fund’s
Financial Highlights because the Financial Highlights include non-recurring
proxy expense incurred at October 31, 2022 of 0.01%.
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 |
$77 |
$240 |
$417 |
$930 |
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. This rate excludes the value
of securities, including options, whose expiration dates at the time of
acquisition were one year or less. For the fiscal year ended October 31,
2022, the Fund’s portfolio turnover rate was 0% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively managed exchange-traded fund (“ETF”) that, under normal
market conditions, invests substantially all of its assets in FLexible
EXchange®
Options
(“FLEX Options”) that reference the market price of the SPDR®
S&P 500®
ETF Trust (the “Underlying ETF”). Due to the unique mechanics of the Fund’s
strategy, the return an investor can expect to receive from an investment in the
Fund has characteristics that are distinct from many other investment
vehicles.
It is important that an investor understand these characteristics before making
an investment in the Fund.
The
Fund uses FLEX Options to employ a “structured outcome strategy.” Structured
outcome strategies seek to produce pre-determined target investment outcomes
based upon the performance of an underlying security or index. The
pre-determined outcomes sought by the Fund are intended to reflect the
performance of the Underlying ETF over an
approximate
one-year period (the “Investment Period”), subject to a buffer (the “Buffer”)
against certain Underlying ETF losses and a cap (the “Cap”) as set forth in the
following table:
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Investment
Period Start |
Investment
Period End |
Full Buffer |
Fading
Buffer |
Cap
(before Fund fees and expenses) |
Cap
(after Fund fees and expenses) |
October
1, 2022 |
September
30, 2023 |
20% |
20%
to 40% |
26.30% |
25.55% |
In
general, the structured outcomes the Fund seeks for investors that hold Fund
shares for an entire Investment Period are as follows, though there can be no
guarantee these results will be achieved:
•If
the Underlying ETF appreciates over the Investment Period, the strategy is
intended to provide upside participation that matches the returns of the
Underlying ETF, up to the Cap that is determined at the start of the Investment
Period.
•If
the Underlying ETF declines in value over the Investment Period by up to 20%,
the strategy is designed to provide a flat return for the Fund (i.e.,
neither a gain nor a loss), before fees and expenses of the Fund. For example,
if the Underlying ETF loses 15% over the Investment Period, the strategy is
designed for the Fund to have a flat return of 0%, before fees and expenses of
the Fund.
•If
the Underlying ETF declines in value over the Investment Period by more than 20%
(the maximum Buffer amount) but less than or equal to 40%, the strategy is
intended for the losses of the Fund, before fees and expenses, to approach (and
ultimately match) the returns of the Underlying ETF as the Underlying ETF’s
losses approach (or reach) 40%. In other words, the Fund is intended to incur
losses for an Investment Period that grow more quickly than the Underlying ETF’s
losses as the Underlying ETF’s losses grow from 20% to 40%.
•If
the Underlying ETF declines in value by more than 40% over the Investment
Period, the strategy is intended for the Fund to experience losses on a
one-to-one basis with the Underlying ETF, before fees and expenses of the
Fund.
The
following charts illustrate the hypothetical returns that the FLEX Options seek
to provide with respect to the performance of the Underlying ETF in certain
illustrative scenarios over the course of the Investment Period. These charts do
not take into account payment by the Fund of fees and expenses. There
is no guarantee that the Fund will be successful in providing these investment
outcomes for any Investment Period.
Investors
purchasing Shares during an Investment Period will experience different results.
The Fund’s website, www.paceretfs.com/products/structured-outcome-strategies,
provides information relating to the possible outcomes for an investor of an
investment in the Fund on a daily basis, including the Fund’s position relative
to the Cap and Buffer. Before purchasing Shares, an investor should visit the
Fund’s website to review this information and understand the possible outcomes
of an investment in Shares on a particular day.
Subsequent
Investment Periods will begin on the day the prior Investment Period ends and
will end on the approximate one-year anniversary of that new Investment Period.
On the first day of each new Investment Period, the Fund resets by investing in
a new set of FLEX Options that will provide a new Cap for the new Investment
Period. This means that the Cap will change for each Investment Period based
upon prevailing market conditions at the beginning of each Investment Period.
The
Cap and Buffer, and the Fund’s position relative to each, should be considered
before investing in the Fund. The
Fund will be perpetually offered and not terminate after the current or any
subsequent Investment Period.
Purchases
During an Investment Period
An
investor that purchases Shares other than on the first day of an Investment
Period and/or sells Shares prior to the end of an Investment Period may
experience results that are very different from the outcomes sought by the Fund
for that Investment Period.
Both
the Cap and Buffer are fixed levels that are calculated in relation to the
Underlying ETF’s market price and the Fund’s net asset value (“NAV”) at the
start of an Investment Period. While the Cap and Buffer reference the
performance of the Underlying ETF over the Investment Period, the Fund expects
its NAV to experience the same general price movement, Cap, and Buffer as a
percentage gain or loss by the Underlying ETF over the Investment Period, before
fees and expenses of the Fund.
Because
the Underlying ETF’s market price and the Fund’s NAV change over the Investment
Period, an investor acquiring Shares after the start of the Investment Period
will likely have a different return potential than an investor who purchased
Shares at the start of the Investment Period. This
is because, while the Cap and Buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Shares at market value during the Investment Period likely purchased Shares at a
price that is different from the Fund’s NAV at the start of the Investment
Period (i.e.,
the NAV that the Cap and Buffer reference). In addition, the price of the
Underlying ETF during the Investment Period is likely to be different from the
price of the Underlying ETF at the start of the Investment Period. To
achieve the structured outcomes sought by the Fund for an Investment Period, an
investor must hold Shares for the entire Investment
Period.
Buffer
The
Fund seeks to provide a two-zone Buffer strategy. In the first zone, the Fund
seeks to provide a full Buffer on the first 20% loss of the Underlying ETF over
each Investment Period. In the second zone, the benefit of the Fund’s Buffer
declines from 20% to 0% for Underlying ETF losses between 20% and 40%, at which
point both the Fund and the Underlying ETF will have lost 40%. As a result, the
benefits of the Buffer decrease from a maximum benefit of 20% (when Underlying
ETF losses are 20%) to 0% (when Underlying ETF losses reach 40%) in this second
zone. For Underlying ETF losses greater than 40%, the Fund will experience the
losses of the Underlying ETF on a one-to-one basis (e.g.,
if the Underlying ETF loses 45%, the Fund loses 45%). The Buffer is before
taking into account the fees and expenses charged to shareholders. An investor
could lose their entire investment.
If
an investor is considering purchasing Shares during the Investment Period and
the Fund has already decreased in value by an amount equal to or greater than
20% from the value of the Fund on the first day of the Investment Period (the
“Initial Fund Value”), an investor purchasing Shares at that price will have
increased gains available prior to reaching the Cap
but
may
not benefit from the Buffer
that the Fund seeks to offer for the remainder of the Investment Period. The Cap
and Buffer relative to the Initial Fund Value, however, will not change over the
Investment Period.
Conversely,
if an investor is considering purchasing Shares during the Investment Period and
the Fund has already increased in value, then a shareholder may experience
losses prior to gaining the protection offered by the Buffer, which is not
guaranteed.
Cap
The
returns of the Fund are subject to the Cap set forth in the above table for the
Investment Period. Unlike other investment products, the potential returns an
investor can receive from the Fund are subject to a pre-determined upside return
Cap that represents the maximum percentage return an investor can achieve from
an investment in the Fund for an entire Investment Period. In the event the
Underlying ETF experiences gains over an Investment Period, the Fund seeks to
provide investment returns that match the percentage increase of the Underlying
ETF, but any percentage gains over the amount of the Cap will not be experienced
by the Fund. This
means that, if the Underlying ETF experiences gains for an Investment Period in
excess of the Cap for that Investment Period, the Fund will not benefit from
those excess gains.
Therefore,
regardless of the performance of the Underlying ETF, the Cap is the maximum
return an investor can achieve from an investment in the Fund for that
Investment Period.
The
Cap is set on the first day of each Investment Period. The defined Cap
applicable to an Investment Period will vary based on prevailing market
conditions at the time, including then-current interest rate levels, Underlying
ETF volatility, and the relationship of puts and calls on the underlying FLEX
Options. Following the close of business on the last day of the Investment
Period, the Fund will supplement its prospectus by filing and mailing to
shareholders a notice disclosing the Fund’s Cap for the next Investment Period
if such Cap is lower than the Cap for the prior Investment Period. The
information will also be available on the Fund’s website at
www.paceretfs.com/products/structured-outcome-strategies.
The
Cap is determined prior to taking into account annual operating expenses of the
Fund, which are disclosed above under “Fees and Expenses of the Fund,” as well
as brokerage commissions, trading fees, taxes, and any extraordinary expenses
incurred by the Fund. Such extraordinary expenses (incurred outside of the
ordinary operation of the Fund) may include, for example, unexpected litigation,
regulatory, or tax expenses.
The
Cap level is a result of the design of the Fund’s principal investment strategy.
To provide the Buffer, the Fund purchases a series of put and call FLEX Options
on the first day of an Investment Period. As the purchaser of these FLEX
Options, the Fund is obligated to pay a premium to the seller of those FLEX
Options. The portfolio manager will calculate the amount of premiums that the
Fund will owe on the put options acquired and sold to provide the Buffer and
will then go into the market and sell call options with terms that entitle the
Fund to receive premiums such that the net amount of premiums paid per unit of
the Underlying ETF is approximately equal to the price per unit of shares of the
Underlying ETF. The Cap is the strike price of those sold FLEX
Options.
The
Cap, and the Fund’s position relative to it on any given day, should be
considered before investing in the Fund. If
an investor purchases Shares during an Investment Period, and the Fund has
already increased in value above its Initial Fund Value for that Investment
Period to a level near to the Cap, an investor purchasing Shares will have
limited
to no gain potential for the remainder of the Investment Period. However, the
investor will remain vulnerable to significant downside risk because the
investor will bear the losses between the price at which it purchased its Shares
and the Initial Fund Value for the Investment Period before subsequent losses
will be protected by the Buffer.
General
Information about FLEX Options
FLEX
Options are exchange-traded options contracts with uniquely customizable terms
like exercise price, style, and expiration date. The Underlying ETF is an
exchange-traded unit investment trust that seeks to provide investment results
that, before expenses, correspond generally to the price and yield performance
of the S&P 500®
Index. The Underlying ETF uses a full replication strategy, meaning it invests
in all of the component securities of the S&P 500®
Index in the same approximate proportions as in the S&P 500®
Index. See
“Additional Information About the Funds—The Underlying ETF” below for more
information.
The
FLEX Options that the Fund will hold that reference the Underlying ETF will give
the Fund the right to receive or deliver shares of the Underlying ETF on the
option expiration date at a strike price, depending on whether the option is a
put or call option and whether the Fund purchases or sells the option. The FLEX
Options held by the Fund are European-style options, which are exercisable at
the strike price only on the FLEX Option expiration date.
The
Fund will generally, under normal conditions, hold four kinds of FLEX Options
for each Investment Period. The Fund will purchase a call option (giving the
Fund the right to receive shares of the Underlying ETF) and a put option (giving
the Fund the right to deliver shares of the Underlying ETF), while
simultaneously selling (i.e.,
writing) a call option (giving the Fund the obligation to deliver shares of the
Underlying ETF) and a put option (giving the Fund the obligation to receive
shares of the Underlying ETF). The Fund intends to structure the FLEX Options so
that any amount owed by the Fund on the written FLEX Options will be covered by
payouts at expiration from the purchased FLEX Options. As a result, the FLEX
Options will be fully covered and no additional collateral will be necessary
during the life of the Fund. The Fund receives premiums in exchange for the
written FLEX Options and pays premiums in exchange for the purchased FLEX
Options. Each of the FLEX Options purchased and sold throughout the Investment
Period will have the same terms, such as strike price and expiration date, as
the FLEX Options purchased and sold on the first day of the Investment
Period.
On
the FLEX Options’ expiration date, the Fund intends to sell the FLEX Options
prior to their expiration and use the resulting proceeds to purchase new FLEX
Options for the next Investment Period.
The
Fund is classified as “non-diversified” under the Investment Company Act of
1940, as amended (the “1940 Act”).
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.
•Buffered
Loss Risk.
There can be no guarantee that the Fund will be successful in its strategy to
buffer against Underlying ETF losses. Despite
the intended Buffer, a shareholder could lose their entire
investment.
The Fund’s strategy seeks to deliver returns that match the Underlying ETF (up
to the Cap), while limiting downside losses, if Shares are bought on the day on
which the Fund enters into the FLEX Options and held until those FLEX Options
expire at the end of each Investment Period. In the event an investor purchases
Shares after the date on which the FLEX Options were entered into or sells
Shares prior to the expiration of the FLEX Options, the Buffer that the Fund
seeks to provide may not be available and the investor may not get the full
benefit of the Buffer. The Fund might not achieve its objective in certain
circumstances. The Fund does not provide principal protection and an investor
may experience significant losses on its investment, including loss of its
entire investment.
•Cap
Change Risk.
A new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the Cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
•Capped
Upside Risk.
The Fund’s strategy seeks to provide returns that match those of the Underlying
ETF for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying ETF experiences gains during an Investment Period, the Fund will not
participate in those gains beyond the Cap. In the event an investor purchases
Shares after the first day of an Investment Period and the Fund has risen in
value to a level near to the Cap, there may be little or no ability for that
investor to experience an investment gain on their Shares.
•Counterparty
Risk.
Fund transactions involving a counterparty are subject to the risk that the
counterparty will not fulfill its obligation to the Fund. Counterparty risk may
arise because of the counterparty’s financial condition (i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed. The OCC acts
as guarantor and central counterparty with respect to FLEX Options. As a result,
the ability of the Fund to meet its objective depends on the OCC being able to
meet its obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, the Fund could suffer
significant losses.
•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.
◦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.
◦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.
•FLEX
Options Correlation Risk. The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying ETF. Factors that may influence the value of the FLEX Options, other
than changes in the value of the Underlying ETF, may include interest rate
changes, changing supply and demand, decreased liquidity of the FLEX Options,
and changing volatility levels of the Underlying ETF.
•FLEX
Options Liquidity Risk.
The FLEX Options are listed on an exchange; however, no one can guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. In a less liquid market for the FLEX Options,
liquidating the FLEX Options may require the payment of a premium (for written
FLEX Options) or acceptance of a discounted price (for purchased FLEX Options)
and may take longer to complete. A less liquid trading market may adversely
impact the value of the FLEX Options and Fund shares and result in the Fund
being unable to achieve its investment objective. The trading in FLEX Options
may be less deep and liquid than the market for certain other securities. FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, the liquidation of a large number of options may
more significantly impact the price. A less liquid trading market may adversely
impact the value of the FLEX Options and the value of your
investment.
•FLEX
Options Valuation Risk.
The value of the FLEX Options will be determined based upon market quotations or
using other recognized pricing methods. The value of the FLEX Options prior to
the expiration date may vary because of related factors other than the value of
the Underlying ETF. During periods of reduced market liquidity or in the absence
of readily available market quotations for the holdings of the Fund, the ability
of the Fund to value the FLEX Options becomes more difficult and the judgment of
the Fund’s investment adviser or sub-adviser (employing the fair value
procedures adopted by the Board of Trustees of the Trust) may play a greater
role in the valuation of the Fund’s holdings due to reduced availability of
reliable objective pricing data.
•Investment
Period Risk.
The Fund’s investment strategy is designed to deliver returns that match the
Underlying ETF if Shares are bought on the day on which the Fund enters into the
FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
Shares may not be buffered against a decline in the value of the Underlying ETF
and may not participate in a gain in the value of the Underlying ETF up to the
Cap for the investor’s investment period.
•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.
▪Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on the Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of the
Fund’s portfolio securities or other instruments and could result in disruptions
in the trading markets.
•Non-Diversification
Risk. 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.
•Special
Tax Risk.
The Fund intends to qualify as a “regulated Investment company” (“RIC”),
however, the federal income tax treatment of certain aspects of the proposed
operations of the Fund are not entirely clear. This includes the tax aspects of
the Fund’s options strategy, its hedging strategy, the possible application of
the “straddle” rules, and various loss limitation provisions of the Internal
Revenue Code of 1986, as amended. If, in any year, the Fund fails to qualify as
a regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short-term or long-term capital gains or losses
depending on the holding period.
In
the event that a shareholder purchases Shares shortly before a distribution by
the Fund, the entire distribution may be taxable to the shareholder even though
a portion of the distribution effectively represents a return of the purchase
price.
•Underlying
ETF Risk. The Fund invests in FLEX Options that
reference an ETF, which subjects the Fund to certain of the risks of owning
shares of an ETFs, as well as the types of instruments in which the Underlying
ETF invests. The value of an ETF will fluctuate over time based on fluctuations
in the values of the securities held by the ETF, which may be affected by
changes in general economic conditions, expectations for future growth and
profits, interest rates and the supply and demand for those securities. In
addition, ETFs are subject to authorized participant concentration risk, market
maker risk, premium/discount risk, tracking error risk and trading issues risk.
Brokerage, tax and other expenses may negatively impact the performance of the
Underlying ETF and, in turn, the value of the Fund’s shares. An ETF that tracks
an index may not exactly match the performance of the index due to cash drag,
differences between the portfolio of the ETF and the components of the index,
expenses, and other factors.
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 6.05% for the quarter ended December 31, 2022
and the lowest quarterly return was
-8.38% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
|
|
|
|
|
|
|
| |
Pacer
Swan SOS Flex (October) ETF |
1
Year |
Since
Inception
(9-30-2021) |
Return Before
Taxes |
-0.40% |
4.04% |
Return After Taxes on
Distributions |
-0.40% |
4.04% |
Return After Taxes on Distributions and
Sale of Shares |
-0.24% |
3.08% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
-7.32% |
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 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 Fund 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
Swan
Global Management, LLC (“Swan” or the “Sub-Adviser”) serves as investment
sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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
individual retirement account (“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 sales person to recommend the Fund
over another investment. Ask your sales person or visit your financial
intermediary’s website for more information.
|
| |
Pacer Swan SOS Fund of Funds
ETF |
Investment Objective
The Pacer Swan SOS Fund of
Funds ETF (the “Fund”) seeks capital appreciation with downside
protection.
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 |
0.18% |
Distribution
and/or Service (12b-1) Fees |
None |
Other
Expenses |
0.00% |
Acquired
Fund Fees and Expenses1 |
0.75% |
Total
Annual Fund Operating Expenses |
0.93% |
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 |
$95 |
$296 |
$515 |
$1,143 |
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
October 31, 2022, the Fund’s portfolio turnover rate was 11% of the average value of its
portfolio.
Principal Investment Strategies of the
Fund
The
Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve
its investment objective by investing in a portfolio of other ETFs also managed
by the Fund’s investment adviser, Pacer Advisors, Inc. (the “Adviser”), that
seek exposure to U.S. equity securities, while limiting downside risk (the
“Underlying ETFs”). Certain Underlying ETFs may also be sub-advised by the
Fund’s investment sub-adviser, Swan Global Management, LLC (“Swan” or the
“Sub-Adviser”).
Underlying
ETFs generally invest in equity securities or options on equity securities
(including other ETFs) to obtain their long exposure to the U.S. equity market.
Additionally, the Underlying ETFs may invest in cash or short-term U.S. Treasury
securities or utilize options on equity securities (including other ETFs) to
hedge their exposure to U.S. equities. The Fund may also invest directly in
equity securities, options on equity securities (including other ETFs) or
indices, cash, or cash equivalents.
While
the Fund is not limited in the types of strategies the Underlying ETFs may
utilize, the Fund is expected to primarily utilize “trend-following strategy”
and “structured outcome strategy” styles of Underlying
ETFs.
Trend-Following
Strategies
Underlying
ETFs that use a trend-following strategy generally use an objective, rules-based
methodology to implement a systematic strategy that directs exposure (i) 100% to
the equity index (e.g.,
the S&P 500®
Index), (ii) a portion (e.g.,
50%) to the equity index and the balance to short-term U.S. Treasury bills, or
(iii) 100% to short-term U.S. Treasury bills, depending on the relative
performance of the equity index to its historical averages (e.g.,
as compared to its 200-day moving average). Trend-following strategies rely on
one or more “triggers” to change the allocation of their exposure among equity
securities and short-term U.S. Treasury bills. Such triggers may be based on the
performance of an equity index to its historical values, the relative
performance of multiple equity indexes, or the relative performance of indexes
representing different asset classes (e.g.,
equities versus bonds). Additionally, such triggers may be effective on a
delayed basis (i.e., the triggering condition must exist for a certain period of
time) or may be effective immediately. While such trend-following strategies
seek to reduce exposure to equity securities during market downturns, their
specific triggers and the timing of such triggers may or may not be successful
in such objective.
Structured
Outcome Strategies
Underlying
ETFs that use a structured outcome strategy generally seek to produce
pre-determined target investment outcomes for a specific period of time based
upon the performance of an underlying security (such as an ETF) or index (a
“reference asset”) through the use of a combination of call and put options on
such reference asset. The pre-determined outcomes sought by such Underlying ETFs
may include a buffer against certain reference asset losses and a cap based on
the performance of the reference asset over a fixed period of time (e.g.,
one year). Investments in such strategies reflect an investment in a portfolio
of options linked to a reference asset that, when bought at inception of the
strategy and held to the expiration of the options (an “Investment Period”),
seeks to target returns that buffer against downside losses due to a decline in
the reference asset, while providing participation up to a maximum capped gain
in the reference asset.
The
structure of the structured outcomes that such Underlying ETFs seek for
investors (such as the Fund) that hold Underlying ETF shares for an entire
Investment Period may vary significantly based on the amount, structure, and
timing of their buffer and cap, though there can be no guarantee these results
will be achieved. For example, such outcomes may be structured as
follows:
•If
the reference asset appreciates over the Investment Period, the combination of
options held by the Underlying ETF provides upside participation that is
intended to match that of the reference asset, up to the cap that is determined
at the start of the Investment Period.
•If
the reference asset decreases over the Investment Period, the combination of
options held by the Underlying ETF provides a payoff at expiration that is
intended to compensate for losses experienced by the reference asset (if any),
in an amount not to exceed the Underlying ETF’s buffer (e.g.,
15%) before fees and expenses.
•If
the reference asset has decreased in value by more than the buffer amount over
the Investment Period, the Underlying ETF will experience all subsequent losses
greater than the buffer amount on a one-to-one basis with the reference
asset.
Importantly,
if the Fund purchases shares of such an Underlying ETF other than on the first
day of an Investment Period and/or sells such shares prior to the end of an
Investment Period, the Fund may experience results that are very different from
the outcomes sought by the Underlying ETF for that Investment Period. This is
because, while the cap and buffer for the Investment Period are fixed levels
that remain constant throughout the Investment Period, an investor purchasing
Underlying ETF shares at market value during the Investment Period likely
purchased such shares at a price that is different from the Underlying ETF’s net
asset value at the start of the Investment Period (i.e.,
the net asset value that the cap and buffer reference).
Structured
outcome strategy Underlying ETFs generally invest substantially all of their
assets in FLexible EXchange®
Options
(“FLEX Options”). FLEX Options are exchange-traded options contracts with
uniquely customizable terms like reference asset, exercise price, style, and
expiration date. FLEX Options are guaranteed for settlement by the Options
Clearing Corporation (“OCC”). The OCC guarantees performance by each of the
counterparties to the FLEX Options, becoming the “buyer for every seller and the
seller for every buyer,” protecting clearing members and options traders
from
counterparty risk. Although guaranteed for settlement by the OCC, FLEX Options
are still subject to counterparty risk with the OCC and subject to the risk that
the OCC may fail to perform the settlement of the FLEX Options due to bankruptcy
or other adverse reasons.
The
FLEX Options that an Underlying ETF will hold will give the Underlying ETF the
right to receive or deliver shares of the reference asset on the option
expiration date at a strike price, depending on whether the option is a put or
call option and whether the Underlying ETF purchases or sells the option. The
FLEX Options held by the Underlying ETFs are European-style options, which are
exercisable at the strike price only on the FLEX Option expiration
date.
The
Sub-Adviser generally seeks a mix of Underlying ETF allocations to incorporate
multiple methods for mitigating downside risk. Additionally, the Sub-Adviser may
purchase or sell structured outcome Underlying ETFs when it believes that that a
different Underlying ETF provides greater downside protection or upside
opportunity for a similar or lesser cost. The Sub-Adviser may also choose to use
trend-following or structured outcome strategies for the Fund directly, rather
than investing in an Underlying ETF. Under normal circumstances, at least 80% of
the Fund’s net assets (plus borrowings for investment purposes) will be invested
in Underlying ETFs.
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.
•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.
◦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.
•Fixed
Income Risk.
The Fund’s investments may expose the Fund to risks related to fixed income
securities. Fixed income securities will fluctuate with changes in interest
rates. Typically, a rise in interest rates causes a decline in the value of
fixed income securities owned by a fund. On the other hand, if rates fall, the
value of the fixed income securities generally increases. The current period of
historically low rates and the effect of potential government fiscal policy
initiatives and resulting market reaction to those initiatives may increase the
risk of rising interest rates. In general, the market price of fixed income
securities with longer maturities will increase or decrease more in response to
changes in interest rates than shorter-term securities. The value of direct or
indirect investments in fixed income securities may be affected by the inability
of issuers to repay principal and interest or illiquidity in debt securities
markets.
•Government
Obligations Risk.
The Fund may invest, directly or indirectly, 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.
Large-capitalization companies may 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.
•Limited
Operating History.
The Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in the Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
•Management
Risk. The
Fund is subject to management risk because it is an actively managed portfolio.
In managing the Fund’s investment portfolio, the portfolio manager will apply
investment techniques and risk analyses that may not produce the desired result.
There can be no guarantee that the Fund will meet its investment
objective.
•Market
Risk. Market
risk is the risk that a particular security, or shares of the Fund in general,
may fall in value. Securities are subject to market fluctuations caused by such
factors as economic, political, regulatory or market developments, changes in
interest rates and perceived trends in securities prices. Shares of the Fund
could decline in value or underperform other investments.
•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.
•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.
•The
following risks related to the Fund’s investment in structured outcome strategy
Underlying ETFs are also applicable to the Fund:
◦Buffered
Loss Risk.
There can be no guarantee that the Underlying ETF will be successful in its
strategy to buffer against reference asset losses. Despite
the intended buffer, a shareholder (such as the Fund) could lose its entire
investment.
The Underlying ETF’s strategy seeks to deliver returns that match the reference
asset (up to the cap), while limiting downside losses, if shares are bought on
the day on which the Underlying ETF enters into the options and held until those
options expire at the end of each Investment Period. In the event the Fund
purchases Underlying ETF shares after the date on which the options were entered
into or sells shares prior to the expiration of the options, the buffer that the
Underlying ETF seeks to provide may not be available and the Fund may not get
the full benefit of the buffer. The Underlying ETF might not achieve its
objective in certain circumstances. The Underlying ETF does not provide
principal protection and the Fund may experience significant losses on its
investment, including loss of its entire investment.
◦Cap
Change Risk.
At the beginning of each Investment Period of the respective Underlying ETF a
new cap is established and is dependent on prevailing market conditions. As a
result, the cap may rise or fall from one Investment Period to the next and is
unlikely to remain the same for consecutive Investment Periods.
◦Capped
Upside Risk.
The Underlying ETF’s strategy seeks to provide returns that match those of the
reference asset for Underlying ETF shares purchased on the first day of an
Investment Period and held for the entire Investment Period, subject to a
pre-determined upside cap. If an investor (such as the Fund) does not hold its
shares for an entire Investment Period, the returns realized by that investor
may not match those the Underlying ETF seeks to achieve. If the Underlying ETF
experiences gains during an Investment Period, the Underlying ETF will not
participate in those gains beyond the cap. In the event the Fund purchases
shares after the first day of an Investment Period and the Underlying ETF has
risen in value to a level near to the cap, there may be little or no ability for
that investor to experience an investment gain on their shares.
◦Counterparty
Risk.
Underlying ETF transactions involving a counterparty are subject to the risk
that the counterparty will not fulfill its obligation to the Underlying ETF.
Counterparty risk may arise because of the counterparty’s financial condition
(i.e.,
financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty’s
inability to fulfill its obligation may result in significant financial loss to
a Underlying ETF and, in turn, the Fund. An Underlying ETF may be unable to
recover its investment from the counterparty or may obtain a limited recovery,
and/or recovery may be delayed. The OCC acts as guarantor and central
counterparty with respect to the FLEX Options. As a result, the ability of an
Underlying ETF to meet its objective depends on the OCC being able to meet its
obligations. In the unlikely event that the OCC becomes insolvent or is
otherwise unable to meet its settlement obligations, an Underlying ETF and, in
turn, the Fund could suffer significant losses.
◦FLEX
Options Risk. The
FLEX Options held by Underlying ETFs will be exercisable at the strike price
only on their expiration date. Prior to the expiration date, the value of the
FLEX Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
reference asset. Factors that may influence the value of the FLEX Options, other
than gains or losses in the reference asset, may include interest rate changes,
changing supply and demand, decreased liquidity of the FLEX Options and changing
volatility levels of the reference asset.
FLEX
Options are listed on an exchange; however, it is not guaranteed that a liquid
secondary trading market will exist. In the event that trading in the FLEX
Options is limited or absent, the value of the Underlying ETF’s FLEX Options may
decrease. A less liquid trading market may adversely impact the value of the
FLEX Options and result in an Underlying ETF being unable to achieve its
investment objective.
◦Investment
Period Risk.
The Underlying ETFs’ investment strategy is designed to deliver returns that
match the reference asset if Underlying ETF shares are bought on the day on
which the Underlying ETF enters into the FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases
Underlying ETF shares after the first day of an Investment Period or sells
shares prior to the expiration of the Investment Period, the value of that
investor’s investment in Underlying ETF shares may not be buffered against a
decline in the value of the reference asset and may not participate in a gain in
the value of the reference asset up to the cap for the investor’s investment
period.
The
following risk related to the Fund’s investment in trend-following strategy
Underlying ETFs are also applicable to the Fund:
▪Trend
Lag Risk. To
the extent an Underlying ETF’s trigger requires a condition to exist for a
certain time period to become effective, the Underlying ETF may be adversely
affected by a downward trend and/or volatility in the applicable equity index
for such period of time (or conversely, may not benefit from an upward trend
and/or volatility in such equity index for such period of time). Accordingly,
the methodology employed by the Underlying ETF does not eliminate exposure to
downward trends and/or volatility in the equity index and does not provide
immediate exposure to upward trends and/or volatility in the equity
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 compare 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
During the period of time shown
in the bar chart, the Fund’s highest quarterly return
was 5.88% for the quarter ended December 31, 2022
and the lowest quarterly return was
-7.80% for the quarter ended June 30,
2022.
Average
Annual Total Returns
For
the Period Ended December 31, 2022
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Pacer
Swan SOS Fund of Funds ETF |
1
Year |
Since
Inception
(12/29/2020) |
Return Before
Taxes |
-4.03% |
3.85% |
Return After Taxes on
Distributions |
-4.04% |
3.84% |
Return After Taxes on Distributions and
Sale of Shares |
-2.39% |
2.94% |
S&P
500®
Index (reflects no deduction for
fees, expenses, or taxes) |
-18.11% |
3.06% |
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 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 Fund 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.
Investment
Sub-Adviser
Swan
Global Management, LLC serves as investment sub-adviser to the Fund.
Portfolio
Manager
Chris
Hausman, CMT, CAIA, Senior Portfolio Manager and Managing Director-Risk of the
Sub-Adviser, has served as the Fund’s portfolio manager since its inception. Mr.
Hausman is responsible for the day-to-day management of the Fund.
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 sales
person
to recommend the Fund over another investment. Ask your sales person or visit
your financial intermediary’s website for more information.
INVESTOR
SUITABILITY CONSIDERATIONS
The
following information pertains to each fund listed on the cover of this
Prospectus, other than the Pacer Swan SOS Fund of Funds ETF (each, an “SOS
Fund,” and collectively, the “SOS Funds”). The SOS Funds have characteristics
unlike many other traditional investment products and may not be suitable for
all investors. The table below provides considerations for determining whether
an investment in an SOS Fund is appropriate for you.
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should only consider this investment if: |
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| • |
you
fully understand the risks inherent in an investment in an SOS
Fund; |
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you
desire to invest in a product with a return that depends upon the
performance of the Underlying ETF over the Investment Period; |
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you
are willing to hold shares for the duration of the Investment Period to
achieve the structured outcomes that an SOS Fund seeks to
provide; |
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you
fully understand that investments made when an SOS Fund is at or near to
its Cap may have limited to no upside; |
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you
seek the protection of a specified buffer amount against Underlying ETF
losses for an investment held for the duration of an entire Investment
Period and understand that there is no guarantee that an SOS Fund will be
successful in its attempt to provide protection through the
buffer; |
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you
are willing to forgo any gains in excess of a Cap; |
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you
understand that an SOS Fund’s investments do not provide for dividends to
the SOS Fund; |
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you
fully understand that investments made after the Investment Period has
begun may not fully benefit from the buffer; |
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you
are willing to accept the risk of losing your entire investment;
and |
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you
have visited the SOS Funds’ website and understand the investment outcomes
available to you based upon the time of your purchase. |
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ADDITIONAL
INFORMATION ABOUT THE FUNDS
Additional
Information About Each Fund
Investment
Objective.
Each Fund’s investment objective has been adopted as a non-fundamental
investment policy and may be changed without a vote of shareholders upon written
notice to shareholders.
The
Underlying ETF
Each
Fund, other than the Pacer Swan SOS Fund of Funds ETF, invests substantially all
of its assets in FLEX Options that reference the SPDR®
S&P 500®
ETF Trust (for purposes of this section, the “Underlying Asset”). The Underlying
Asset is an exchange-traded unit investment trust that uses a full replication
strategy, meaning it invests entirely in the S&P 500®
Index.
According to its prospectus filed with the SEC, the investment objective of the
Underlying Asset is to seek to provide investment results that, before expenses,
correspond generally to the price and yield performance of the S&P
500®
Index.
The
Underlying Asset seeks to achieve its investment objective by holding a
portfolio of the common stocks that are included in the S&P 500®
Index with the weight of each stock in its portfolio substantially corresponding
to the weight of such stock in the Index. Although the Underlying Asset may fail
to own certain of the securities listed in S&P 500®
Index at any particular time, it generally will be substantially invested in
such securities, which should result in a close correspondence between the
performance of the S&P 500®
Index
and the performance of Underlying Asset. The Underlying Asset does not hold or
trade futures or swaps and is not a commodity pool.
You
can find the Underlying Asset’s prospectus and other information about the
Underlying Asset, including its principal risks, as well as, the statement of
additional information and most recent reports to shareholders, online at
https://us.spdrs.com/en/etf/spdr-sp-500-etf-SPY. You are encouraged to review
the prospectus of the Underlying Asset before investing in the Fund.
General
Information about FLEX Options
Each
Fund, other than the Pacer Swan SOS Fund of Funds ETF, invests substantially all
of its assets in FLEX Options. For each Investment Period, the applicable Fund
will invest in both purchased and written put and call FLEX Options that
reference the Underlying ETF. FLEX Options are customizable exchange-traded
option contracts guaranteed for settlement by the Options Clearing Corporation
(“OCC”). The OCC guarantees performance by each of the counterparties to the
FLEX Options, becoming the “buyer for every seller and the seller for every
buyer,” protecting clearing members and options traders from counterparty risk.
The OCC may make adjustments to FLEX Options for certain significant events, as
more fully described in the Funds’ Statement of Additional Information. Although
guaranteed for settlement by the OCC, FLEX Options are still subject to
counterparty risk with the OCC and subject to the risk that the OCC may fail to
perform the settlement of the FLEX Options due to bankruptcy or other adverse
reasons.
The
OCC and securities exchanges on which the FLEX Options are listed do not charge
ongoing fees to writers or purchasers of the FLEX Options during their life for
continuing to hold the option contracts, but may charge transaction fees.
Additional
Information about the Principal Risks of Investing in the Funds
This
section provides additional information regarding the principal risks described
under “Principal Risks of Investing in the Fund” in each of the Fund Summaries.
Unless otherwise indicated below, the following risks apply to the Funds’ direct
investments, as well as to the Pacer Swan SOS Fund of Funds ETF (the “Fund of
Funds”) through its investments in the other Funds. Each of the factors below
could have a negative impact on a Fund’s performance and trading prices. As in
each Fund Summary above, the principal risks below are presented in alphabetical
order to facilitate finding particular risks and comparing them with other
funds. Each risk described below is considered a “principal risk” of investing
in the applicable Fund, regardless of the order in which it
appears.
Buffered
Loss Risk (each
Fund other than the Fund of Funds).
There
can be no guarantee that a strategy to buffer against Underlying Asset losses
will be successful. Despite the intended Buffer, a shareholder could lose their
entire investment. Each Fund’s strategy seeks to deliver returns that match the
Underlying Asset (up to the Cap), while limiting downside losses, if Shares are
bought on the day on which a Fund enters into the FLEX Options and held until
those FLEX Options expire at the end of each Investment Period. In the event an
investor purchases Shares after the date on which the FLEX Options were entered
into or sells Shares prior to the expiration of the FLEX Options, the Buffer
that the Fund seeks to provide may not be available and the investor may not get
the full benefit of the Buffer. A Fund might not achieve its objective in
certain circumstances. The Funds do not provide principal protection and an
investor may experience significant losses on its investment, including loss of
its entire investment.
Cap
Change Risk (each
Fund other than the Fund of Funds).
A
new Cap is established at the beginning of each Investment Period and is
dependent on prevailing market conditions. As a result, the cap may rise or fall
from one Investment Period to the next and is unlikely to remain the same for
consecutive Investment Periods.
Capped
Upside Risk (each
Fund other than the Fund of Funds).
Each
Fund’s strategy seeks to provide returns that match those of the Underlying
Asset for Shares purchased on the first day of an Investment Period and held for
the entire Investment Period, subject to a pre-determined upside Cap. If an
investor does not hold its Shares for an entire Investment Period, the returns
realized by that investor may not match those the Fund seeks to achieve. If the
Underlying Asset experiences gains during an Investment Period, the Fund will
not participate in those gains beyond the Cap. A new Cap is established at the
beginning of each Investment Period and is dependent on prevailing market
conditions. The Cap may rise or fall from one Investment Period to the next. In
the event an investor purchases Shares after the first day of an Investment
Period and the Fund has risen in value to a level near to the Cap, there may be
little or no ability for that investor to experience an investment gain on their
Shares. The return of the Fund may represent a return that is worse than the
performance of the Underlying Asset, including as a result of its’ returns being
subject to a Cap.
Counterparty
Risk (each
Fund other than the Fund of Funds).
If
a Fund enters into an investment or transaction that depends on the performance
of another party, the Fund becomes subject to the credit risk of that
counterparty. The Fund's ability to profit from these types of investments and
transactions depends on the willingness and ability of the counterparty to
perform its obligations. If a counterparty fails to meet its contractual
obligations, a Fund may be unable to terminate or realize any gain on the
investment or transaction, resulting in a loss to the Fund. A Fund may
experience significant delays in obtaining any recovery in an insolvency,
bankruptcy, or other reorganization proceeding involving a counterparty
(including recovery of any collateral posted by it) and may obtain only a
limited recovery or may obtain no recovery in such circumstances. If the Fund
holds collateral posted by its counterparty, it may be delayed or prevented from
realizing on the collateral in the event of a bankruptcy or insolvency
proceeding relating to the counterparty. Under applicable law or contractual
provisions, including if the Fund enters into an investment or transaction with
a financial institution and such financial institution (or an affiliate of the
financial institution) experiences financial difficulties, then the Fund may in
certain situations be prevented or delayed from exercising its rights to
terminate the investment or transaction, or to realize on any collateral and may
result in the suspension of payment and delivery obligations of the parties
under such investment or transactions or in another institution being
substituted for that financial institution without the consent of the Fund.
Further, the Fund may be subject to “bail-in” risk under applicable law whereby,
if required by the financial institution's authority, the financial
institution's liabilities could be written down, eliminated or converted into
equity or an alternative instrument of ownership. A bail-in of a financial
institution may result in a reduction in value of some or all of securities and,
if the Fund holds such securities or has entered into a transaction with such a
financial security when a bail-in occurs, the Fund may also be similarly
impacted.
Downside
Risk (each
Fund other than the Fund of Funds) Each
Fund’s strategy seeks to provide returns that match those of an Underlying Asset
for Shares purchased on the first day of an Investment Period and held for the
entire Investment Period while limiting, or providing a Buffer against, downside
losses. Despite the intended Buffer, a shareholder could lose their entire
investment. In the event an investor purchases Fund shares after the first day
of an Investment Period, the buffer such Fund seeks to provide may not be
available. A Fund might not achieve its objective in certain circumstances.
ETF
Risks. Each
Fund is an ETF and, as a result of an ETF’s structure, is exposed to the
following risks:
◦APs,
Market Makers, and Liquidity Providers Concentration Risk. The
Fund may have 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 a 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 (each Fund other than the Fund of Funds). To
the extent the Fund’s investment strategy requires 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.
◦Costs
of Buying or Selling Shares of a Fund. Investors
buying or selling shares of a Fund in the secondary market will pay brokerage
commissions or other charges imposed by brokers, as determined by that broker.
Brokerage commissions are often a fixed amount and may be a significant
proportional cost for investors seeking to buy or sell relatively small amounts
of shares of a Fund. In addition, secondary market investors will also incur the
cost of the difference between the price at which an investor is willing to buy
shares of a Fund (the “bid” price) and the price at which an investor is willing
to sell shares of a Fund (the “ask” price). This difference in bid and ask
prices is often referred to as the “spread” or “bid/ask spread.” The bid/ask
spread varies over time for shares of a Fund based on trading volume and market
liquidity, and is generally lower if shares of a Fund have more trading volume
and market liquidity and higher if shares of a Fund have little trading volume
and market liquidity. Further, a relatively small investor base in the Fund,
asset swings in the Fund and/or increased market volatility may cause increased
bid/ask spreads. Due to the costs of buying or selling shares of a Fund,
including bid/ask spreads, frequent trading of shares of a Fund may
significantly reduce investment results and an investment in shares of a Fund
may not be advisable for investors who anticipate regularly making small
investments.
◦Shares
of a Fund May Trade at Prices Other Than NAV.
As with all ETFs, shares of a Fund may be bought and sold in the secondary
market at market prices. Although it is expected that the market price of the
shares of a Fund will approximate a Fund’s NAV, there may be times when the
market price and the NAV vary significantly, including due to supply and demand
of a Fund’s Shares and/or during periods of market volatility. Thus, you may pay
more (or less) than NAV intra-day when you buy Shares in the secondary market,
and you may receive more (or less) than NAV when you sell those Shares in the
secondary market. 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.
◦Trading. Although
shares of a Fund are listed for trading on its applicable Exchange and may be
listed or traded on U.S. and non-U.S. stock exchanges other than its applicable
Exchange, there can be no assurance that an active trading market for such
shares of the Fund will develop or be maintained. Trading in shares of a Fund
may be halted due to market conditions or for reasons that, in the view of its
applicable Exchange, make trading in shares of such Fund inadvisable. In
addition, trading in shares of a Fund on its applicable Exchange is subject to
trading halts caused by extraordinary market volatility pursuant each Exchange’s
“circuit breaker” rules, which temporarily halt trading on such Exchange when a
decline in the S&P 500 Index during a single day reaches certain thresholds
(e.g.,
7%, 13%, and 20%). Additional rules applicable to each Exchange may halt trading
in shares of a Fund when extraordinary volatility causes sudden, significant
swings in the market price of shares of such Fund. There can be no assurance
that shares of a Fund will trade with any volume, or at all, on any stock
exchange. In stressed market conditions, the liquidity of shares of a Fund may
begin to mirror the liquidity of a Fund’s underlying portfolio holdings, which
can be significantly less liquid than shares of such Fund.
FLEX
Options Correlation Risk. The
FLEX Options held by a Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying Asset. Factors that may influence the value of the FLEX Options
include interest rate changes and implied volatility levels of the Underlying
Asset, among others.
FLEX
Options Liquidity Risk. The
FLEX Options are listed on an exchange; however, there is no guarantee that a
liquid secondary trading market will exist for the FLEX Options. In the event
that trading in the FLEX Options is limited or absent, the value of the Fund’s
FLEX Options may decrease. Trading in the FLEX Options may be less deep and
liquid than certain other securities such as standardized options. The FLEX
Options may be less liquid than certain non-customized options. In a less liquid
market for the FLEX Options, liquidating the FLEX Options may require the
payment of a premium (for written FLEX Options) or acceptance of a discounted
price (for purchased FLEX Options) and may take longer to complete. In a less
liquid market for the FLEX Options, the liquidation of a large number of
options
may more significantly impact the price. A less liquid trading market may
adversely impact the value of the FLEX Options and a Fund’s shares and result in
such Fund being unable to achieve its investment objective.
FLEX
Options Risk. The
OCC may be unable or unwilling to perform its obligations under the FLEX Options
contracts. Additionally, FLEX Options may be less liquid than other
exchange-traded options. The value of the FLEX Options prior to their expiration
date may vary because of factors other than fluctuations in the value of the
Underlying Asset, such as an increase in interest rates, a change in the actual
and perceived volatility of the stock market and the Underlying Asset and the
remaining time to expiration. Additionally, the value of the FLEX Options does
not increase or decrease at the same rate as the Underlying Asset or its
underlying securities.
FLEX
Options Valuation Risk (each
Fund other than the Fund of Funds).
The
FLEX Options held by the Fund will be exercisable at the strike price only on
their expiration date. Prior to the expiration date, the value of the FLEX
Options will be determined based upon market quotations or using other
recognized pricing methods. The value of the FLEX Options prior to the
expiration date may vary because of related factors other than the value of the
Underlying Asset. Factors that may influence the value of the FLEX Options
include interest rate changes and implied volatility levels of the Underlying
Asset, among others. During periods of reduced market liquidity or in the
absence of readily available market quotations for the holdings of the Fund, the
ability of that Fund to value the FLEX Options becomes more difficult and the
judgment of the Fund’s investment adviser (employing the fair value procedures
adopted by the Board of Trustees of the Trust) may play a greater role in the
valuation of the Fund’s holdings due to reduced availability of reliable
objective pricing data. Consequently, while such determinations may be made in
good faith, it may nevertheless be more difficult for the Fund to accurately
assign a daily value. Under those circumstances, the value of the FLEX Options
will require more reliance on the investment adviser’s or sub-adviser’s judgment
than that required for securities for which there is an active trading market.
This creates a risk of mispricing or improper valuation of the FLEX Options
which could impact the value paid for shares of the Fund.
High
Portfolio Turnover Risk (Fund
of Funds only).
The
Fund has an investment strategy that may frequently involve buying and selling
portfolio securities. High portfolio turnover may result in a Fund paying higher
levels of transaction costs, including brokerage commissions, dealer mark-ups
and other costs and may generate greater tax liabilities for shareholders.
Portfolio turnover risk may cause the Fund’s performance to be less than
expected.
Investment
Period Risk (each
Fund other than the Fund of Funds).
Each
Fund’s investment strategy is designed to deliver returns that match the
Underlying Asset if Shares are bought on the day on which the Fund enters into
the FLEX Options (i.e.,
the first day of an Investment Period) and held until those FLEX Options expire
at the end of the Investment Period. In the event an investor purchases Shares
after the first day of an Investment Period or sells Shares prior to the
expiration of the Investment Period, the value of that investor’s investment in
such Shares may not be buffered against a decline in the value of the Underlying
Asset and may not participate in a gain in the value of the Underlying Asset up
to the cap for the investor’s investment period.
Large-Capitalization
Investing Risk. 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. Large-capitalization companies may also be unable to respond
quickly to new competitive challenges, such as changes in technology and
consumer tastes.
Limited
Operating History.
Each Fund is a recently organized management investment company with limited
operating history. As a result, prospective investors have a limited track
record on which to base their investment decision. An investment in a Fund may
therefore involve greater uncertainty than an investment in a fund with a more
established record of performance.
Management
Risk. The
Funds are subject to management risk because they are an actively managed
portfolios. In managing a Fund’s investment portfolio, the portfolio manager
will apply investment techniques and risk analyses that may not produce the
desired result. There can be no guarantee that a Fund will meet its investment
objective(s), meet relevant benchmarks or perform as well as other funds with
similar objectives.
Market
Risk. Market
risk is the risk that a particular security, or Shares in general, may fall in
value. Securities are subject to market fluctuations caused by such factors as
economic, political, regulatory or market developments, changes in interest
rates, and perceived trends in securities prices. Shares could decline in value
or underperform other investments. In addition, local, regional, or global
events such as war, acts of terrorism, spread of infectious diseases or other
public health issues, recessions, or other events could have a significant
negative impact on a Fund and its investments. Such events may affect certain
geographic regions, countries, sectors, and industries more significantly than
others. Such events could adversely affect the prices and liquidity of a Fund’s
portfolio securities or other instruments and could result in disruptions in the
trading markets.
Beginning
in the first quarter of 2020, financial markets in the United States and around
the world experienced extreme and in many cases unprecedented volatility and
severe losses due to the global pandemic caused by COVID-19, a novel
coronavirus. The pandemic has resulted in a wide range of social and economic
disruptions, including closed borders, voluntary or compelled quarantines of
large populations, stressed healthcare systems, reduced or prohibited domestic
or international travel, supply chain disruptions, and so-called “stay-at-home”
orders throughout much of the United States and many other countries. The
fall-out from these disruptions has included the rapid closure of businesses
deemed “non-essential” by federal, state, or local governments and rapidly
increasing unemployment, as well as greatly reduced liquidity for certain
instruments at times. Some sectors of the economy and individual issuers have
experienced particularly large losses. Such disruptions may continue for an
extended period of time or reoccur in the future to a similar or greater extent.
It is unknown how long circumstances related to the pandemic will persist,
whether they will reoccur in the future, whether efforts to support the economy
and financial markets will be successful, and what additional implications may
follow from the pandemic. The impact of these events and other epidemics or
pandemics in the future could adversely affect Fund performance.
Non-Diversification
Risk. Each
Fund is considered to be non-diversified. This means that a Fund may invest more
of its assets in the securities of a single issuer or a smaller number of
issuers than if it was 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 a Fund’s volatility and cause the performance of a relatively
smaller number of issuers to have a greater impact on the Fund’s
performance.
Options
Risk. The
Funds may utilize options. The use of options involves investment strategies and
risks different from those associated with ordinary portfolio securities
transactions and depends on the ability of the Fund’s portfolio manager to
forecast market movements correctly. The prices of options are influenced by,
among other things, actual and anticipated changes in the value of the
underlying instrument, or in interest or currency exchange rates, including the
anticipated volatility, which in turn are affected by fiscal and monetary
policies and by national and international political and economic events. As a
seller (writer) of a put option, the seller will tend to lose money if the value
of the reference index or security falls below the strike price. As the seller
(writer) of a call option, the seller will tend to lose money if the value of
the reference index or security rises above the strike price. As the buyer of a
put or call option, the buyer risks losing the entire premium invested in the
option if the buyer does not exercise the option. The effective use of options
also depends on the Fund’s ability to terminate option positions at times deemed
desirable to do so. There is no assurance that the Fund will be able to effect
closing transactions at any particular time or at an acceptable price. In
addition, there may at times be an imperfect correlation between the movement in
values of options and their underlying securities and there may at times not be
a liquid secondary market for certain options. Options may also involve the use
of leverage, which could result in greater price volatility than other
markets.
Other
Investment Companies Risk. A
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 listed above.
Special
Tax Risk (each
Fund other than the Fund of Funds).
Each
Fund intends to qualify as a “regulated Investment company”; however, the
federal income tax treatment of certain aspects of the proposed operations of
the Funds are not entirely clear. This includes the tax aspects of the Funds’
options strategy, the hedging strategy, the possible application of the
“straddle” rules, and various loss limitation provisions of the Internal Revenue
Code of 1986, as amended. If, in any year, a Fund fails to qualify as a
regulated investment company under the applicable tax laws, the Fund would be
taxed as an ordinary corporation. Certain options on an ETF may not qualify as
“Section 1256 contracts” under Section 1256 of the Code, and disposition of such
options will likely result in short term or long term capital gains or losses
depending on the holding period. In the event that a shareholder purchases
shares of a Fund shortly before a distribution by such Fund, the entire
distribution may be taxable to the shareholder even though a portion of the
distribution effectively represents a return of the purchase price.
Underlying
ETF Risk. Each
Fund invests, directly or indirectly, in FLEX Options that reference an ETF,
which subjects the Fund to certain of the risks of owning shares of an ETFs, as
well as the types of instruments in which the Underlying Asset invests. The
value of an ETF will fluctuate over time based on fluctuations in the values of
the securities held by the ETF, which may be affected by changes in general
economic conditions, expectations for future growth and profits, interest rates
and the supply and demand for those securities. In addition, ETFs are subject to
authorized participant concentration risk, market maker risk, premium/discount
risk, tracking error risk and trading issues risk. Brokerage, tax and other
expenses may negatively impact the performance of the Underlying ETF and, in
turn, the value of the Fund’s shares. An ETF that tracks an index may not
exactly match the performance of the index due to cash drag, differences between
the portfolio of the ETF and the components of the index, expenses, and other
factors.
Additional
Information about the Principal Risks of Investing in the Pacer Swan SOS Fund of
Funds ETF
This
section provides additional information regarding the principal risks described
under “Principal Risks of Investing in the Fund” in the Pacer Swan SOS Fund of
Funds ETF summary.
Fixed
Income Risk. The
value of direct or indirect investments in fixed income securities will
fluctuate with changes in interest rates. Typically, a rise in interest rates
causes a decline in the value of fixed income securities. On the other hand, if
rates fall, the value of the fixed income securities generally increases. In
general, the market price of fixed income securities with longer maturities will
increase or decrease more in response to changes in interest rates than
shorter-term securities. Due to recent events in the fixed income markets,
including the potential impact of the Federal Reserve Board ending its
quantitative easing program and raising the federal funds rate, the Fund may be
subject to heightened interest rate risk as a result of a rise or increased
volatility in interest rates. The value of direct or indirect investments in
fixed income securities may be affected by the inability of issuers to repay
principal and interest or illiquidity in debt securities 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 before its stated maturity, and the
Fund may have to reinvest the proceeds in securities with lower yields, which
would result in a decline in the Fund’s income, or in securities with greater
risks or with other less favorable features.
◦Credit
Risk.
Credit risk refers to the possibility that the issuer of a security will not be
able to make principal and interest payments 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 the Underlying Investment’s investment in that issuer.
The degree of credit risk depends on both the financial condition of the issuer
and the terms of the obligation.
◦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.
Rising interest rates tend to extend the duration of securities, making them
more sensitive to future changes in interest rates. The value of longer-term
securities generally changes more in response to changes in interest rates than
the value of shorter-term securities. As a result, in a period of rising
interest rates, securities may exhibit additional volatility and may lose
value.
◦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. An Underlying
Investment may take steps to attempt to reduce the exposure of its portfolio to
interest rate changes; however, there can be no guarantee that the Fund will
take such actions or that the Fund will be successful in reducing the impact of
interest rate changes on the portfolio. 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 Fund may have to invest the
proceeds in securities with lower yields. In periods of falling interest rates,
the rate of prepayments tends to increase (as does price fluctuation) as
borrowers are motivated to pay off debt and refinance at new lower rates. During
such periods, reinvestment of the prepayment proceeds by the management team
will generally be at lower rates of return than the return on the assets that
were prepaid. Prepayment reduces the yield to maturity and the average life of
the security
Government
Obligations Risk. The
Fund may invest in securities issued by the U.S. government. The total public
debt of the United States as a percentage of gross domestic product has grown
rapidly since the beginning of the 2008-2009 financial downturn. Although high
debt levels do not necessarily indicate or cause economic problems, they may
create certain systemic risks if sound debt management practices are not
implemented. A high national debt can raise concerns that the U.S. government
will not be able to make principal or interest payments when they are due. This
increase has also necessitated the need for the U.S. Congress to negotiate
adjustments to the statutory debt limit to increase the cap on the amount the
U.S. government is permitted to borrow to meet its existing obligations and
finance current budget deficits. In August 2011, S&P lowered its long-term
sovereign credit rating on the U.S. In explaining the downgrade at that time,
S&P cited, among other reasons, controversy over raising the statutory debt
limit and growth in public spending. On August 2, 2019, following passage by
Congress, the President of the United States signed the Bipartisan Budget Act of
2019, which suspends the statutory debt limit through July 31, 2021. Any
controversy or ongoing uncertainty regarding the statutory debt limit
negotiations may impact the U.S. long-term sovereign credit rating and may cause
market uncertainty. As a result, market prices and yields of securities
supported by the full faith and credit of the U.S. government may be adversely
affected.
Trend
Lag Risk. To
the extent an Underlying ETF’s trigger requires a condition to exist for a
certain time period to become effective, the Underlying ETF may be adversely
affected by a downward trend and/or volatility in the applicable equity index
for such period of time (or conversely, may not benefit from an upward trend
and/or volatility in such equity index for such period of time). Accordingly,
the methodology employed by the Underlying ETF does not eliminate exposure to
downward trends and/or volatility in the equity index and does not provide
immediate exposure to upward trends and/or volatility in the equity
index.
ADDITIONAL
NON-PRINCIPAL RISK INFORMATION
Cash
Equivalents and Short-Term Investments.
Normally, a Fund invests substantially all of its assets to meet its investment
objective. A Fund may invest the remainder of its assets in securities with
maturities of less than one year or cash equivalents, or each may hold cash. The
percentage of a Fund invested in such holdings varies and depends on several
factors, including market conditions. With respect to the Pacer Swan SOS Fund of
Funds ETF, for temporary defensive purposes and during periods of high cash
inflows or outflows, the Fund may depart from its principal investment
strategies and invest part or all of its assets in these securities, or it may
hold cash. During such periods, the Fund may not be able to achieve its
investment objective. The Fund may adopt a temporary defensive strategy when the
portfolio manager believes securities in which the Fund normally invests have
elevated risks due to political or economic factors and in other extraordinary
circumstances. For more information on eligible short-term investments, see the
SAI.
Absence
of a Prior Active Market.
Although the Funds’ Shares are approved for listing on a national securities
exchange, there can be no assurance that an active trading market will develop
and be maintained for Fund Shares. There can be no assurance that a Fund will
grow to or maintain an economically viable size, in which case such Fund may
experience greater tracking error to its Index (excluding the Fund of Funds ETF)
than it otherwise would at higher asset levels or the Fund may ultimately
liquidate.
Risk
of Investing in the United States. Certain
changes in the U.S. economy, such as when the U.S. economy weakens or when its
financial markets decline, may have an adverse effect on the securities to which
the Funds have exposure. A decrease in imports or exports, changes in trade
regulations, and/or an economic recession in the United States may have a
material adverse effect on the U.S. economy and the securities listed on U.S.
exchanges. Proposed and adopted policy and legislative changes in the United
States are changing many aspects of financial and other regulation and may have
a significant effect on the U.S. markets generally, as well as on the value of
certain securities. In addition, a continued rise in the U.S. public debt level
or the imposition of U.S. austerity measures may adversely affect U.S. economic
growth and the securities to which the Fund has exposure. The United States has
developed increasingly strained relations with a number of foreign countries. If
relations with certain countries continue to worsen, it could adversely affect
U.S. issuers as well as non-U.S. issuers that rely on the United States for
trade. The United States has also experienced increased internal unrest and
discord. If this trend were to continue, it may have an adverse impact on the
U.S. economy and the issuers in which the Fund invests.
PORTFOLIO
HOLDINGS INFORMATION
Information
about each Fund’s daily portfolio holdings is available at www.PacerETFs.com. A
summarized description of each Fund’s policies and procedures with respect to
the disclosure of each Fund’s portfolio holdings is available in the Funds’
Statement of Additional Information (“SAI”).
MANAGEMENT
The
Funds are series of Pacer Funds Trust (the “Trust”), a Delaware statutory trust,
which is overseen by a board of trustees.
Investment
Adviser
The
Adviser has overall responsibility for the general management and administration
of the Trust and each of its separate investment portfolios. The Adviser is a
registered investment adviser with offices located at 500 Chesterfield Parkway,
Malvern, Pennsylvania 19355. The Adviser has managed ETFs since 2015. The
Adviser also arranges for sub-advisory, transfer agency, custody, fund
administration, securities lending, and all other related services necessary for
each Fund to operate. For its services, the Adviser receives a fee from each
Fund, calculated daily and paid monthly, based on a percentage of each Fund’s
average daily net assets, as shown in the following table:
|
|
|
|
| |
Name
of Fund |
Management Fee |
Pacer
Swan SOS Conservative (January) ETF |
0.75% |
Pacer
Swan SOS Conservative (April) ETF |
0.75% |
Pacer
Swan SOS Conservative (July) ETF |
0.75% |
Pacer
Swan SOS Conservative (October) ETF |
0.75% |
Pacer
Swan SOS Moderate (January) ETF |
0.75% |
Pacer
Swan SOS Moderate (April) ETF |
0.75% |
Pacer
Swan SOS Moderate (July) ETF |
0.75% |
Pacer
Swan SOS Moderate (October) ETF |
0.75% |
Pacer
Swan SOS Flex (January) ETF |
0.75% |
Pacer
Swan SOS Flex (April) ETF |
0.75% |
Pacer
Swan SOS Flex (July) ETF |
0.75% |
Pacer
Swan SOS Flex (October) ETF |
0.75% |
Pacer
Swan SOS Fund of Funds ETF |
0.18% |
Under
the Investment Advisory Agreement between the Adviser and the Trust, on behalf
of the Funds (the “Investment Advisory Agreement”), the Adviser has agreed to
pay all expenses of each Fund, except for: the fee paid to the Adviser pursuant
to the Investment Advisory Agreement, interest charges on any borrowings, taxes,
brokerage commissions and other expenses incurred in placing orders for the
purchase and sale of securities and other investment instruments, acquired fund
fees and expenses, accrued deferred tax liability, extraordinary expenses, and
any distribution (12b-1) fees and expenses. The Adviser, in turn, compensates
the sub-adviser from the management fee it receives.
The
basis for the Board of Trustees’ approval of the Investment Advisory Agreement
for each Fund is available in the Funds’ Annual
Report
dated October 31, 2022.
Sub-Adviser
The
Adviser has retained Swan to serve as sub-adviser for the Funds. Swan is
responsible for the day-to-day management of each Fund. Swan, a registered
investment adviser, is located at 20 Ridge Top Palmas Del Mar, Humacao, PR
00791. Swan was established in 2014 for the purpose of managing mutual funds,
and other funds or accounts. As of October 31, 2022, it had approximately
$2.4 billion in assets under management. For its services, the Adviser pays Swan
the following percentages of net profits as a sub-advisory fee for each Fund:
30% on assets up to $250 million; 40% on assets between $250 million and $500
million; and 50% on assets of more than $500 million. Net profits for each Fund
are determined as the management fees of the Fund, less (i) 0.10% of the Fund’s
average net assets and (ii) the expenses related to operating the
Fund.
The
basis for the Board of Trustees’ approval of the Sub-Advisory Agreement is
available in the Funds’ Annual
Report
dated October 31, 2022.
Portfolio
Manager
Each
Fund is managed on a day to day basis by Chris Hausman as the Portfolio Manager
of the Sub-Adviser (the “Portfolio Manager”).
Chris
Hausman serves as a Portfolio Manager of the Sub-Adviser, with responsibility
for risk management and assisting in the daily operations and trading for all
Defined Risk Strategy investments and positions. Prior to joining the
Sub-Adviser in 2015, Mr. Hausman served in various roles at Saliba Portfolio
Management, including Senior Portfolio Manager, Chief Portfolio Strategist and
Director of Trading Operations. Mr. Hausman is a graduate of University of
Pennsylvania’s Wharton School of Business with a BS in Economics, and is also a
Chartered Market Technician (CMT) and a Chartered Alternative Investment Analyst
(CAIA).
The
SAI provides additional information about the Portfolio Manager’s compensation
structure, other accounts managed by the Portfolio Manager, and the Portfolio
Manager’s ownership of Shares of each Fund.
ADDITIONAL
INFORMATION ON BUYING AND SELLING FUND SHARES
Most
investors will buy and sell Shares of the Funds through brokers. Shares of each
Fund trade on the Exchange and elsewhere during the trading day and can be
bought and sold throughout the trading day like other shares of publicly traded
securities.
When
buying or selling Shares through a broker, most investors will incur customary
brokerage commissions and charges. Shares of each Fund trade under the trading
symbol listed on the cover of this Prospectus. Only APs who have entered into
agreements with the Funds’ distributor may acquire Shares directly from a Fund,
and only APs may tender their Shares for redemption directly to each Fund, at
NAV in Creation Units. Once created, Shares trade in the secondary market in
amounts less than a Creation Unit.
Share
Trading Prices
Transactions
in each Fund’s Shares will be priced at NAV only if you purchase Shares directly
from each Fund in Creation Units. As with other types of securities, the trading
prices of Shares in the secondary market can be affected by market forces such
as supply and demand, economic conditions and other factors. The price you pay
or receive when you buy or sell your Shares in the secondary market may be more
or less than the NAV of such Shares.
The
approximate value of Shares of each Fund is disseminated every 15 seconds
throughout the trading day by the Exchange or by other information providers.
This approximate value should not be viewed as a real-time update of each Fund’s
NAV, because (i) the approximate value may not be calculated in the same manner
as the NAV, which is computed once a day, generally at the end of the business
day; (ii) the calculation of NAV may be subject to fair valuation at different
prices than those used in the calculations of the approximate value; (iii)
unlike the calculation of NAV, the approximate value does not take into account
Fund expenses; and (iv) the approximate value is based on the published basket
of portfolio securities and/or a designated amount of U.S. cash and not on the
Fund’s actual holdings. The approximate value is not related to the price at
which a Fund’s Shares are trading on the Exchange and is different from the
Fund’s NAV. The approximate value calculations are based on local market prices
and may not reflect events that occur subsequent to the local market’s close,
which could affect premiums and discounts between the approximate value and the
market price of a Fund’s Shares. The Funds, the Adviser, the Sub-Adviser, the
Funds’ distributor, the Funds’ administrator and their affiliates are not
involved in, or responsible for, the calculation or dissemination of the
approximate value, and the Funds, the Adviser, the Sub-Adviser, the Funds’
distributor, the Funds’ administrator and their affiliates do not make any
warranty as to the accuracy of the approximate value.
Determination
of Net Asset Value
The
NAV of each Fund’s Shares is calculated each day the New York Stock Exchange
(“NYSE”) is open for trading as of the close of regular trading on the NYSE,
generally 4:00 p.m. Eastern Time (the “NAV Calculation Time”). If the NYSE
closes before 4:00 p.m. Eastern Time, as it occasionally does, the NAV
Calculation Time will be the time the NYSE closes. Each Fund’s NAV per share is
calculated by dividing the Fund’s net assets by the number of Fund Shares
outstanding.
In
calculating its NAV, each Fund generally values its assets on the basis of
market quotations, last sale prices, or estimates of value furnished by a
pricing service or brokers who make markets in such instruments. Debt
obligations with maturities of 60 days or less are valued at amortized
cost.
Fair
Value Pricing
The
Board has adopted procedures and methodologies to fair value Fund securities
whose market prices are not “readily available” or are deemed to be unreliable.
For example, such circumstances may arise when: (i) a security has been
de-listed or has had its trading halted or suspended; (ii) a security’s primary
pricing source is unable or unwilling to provide a price; (iii) a security’s
primary trading market is closed during regular market hours; or (iv) a
security’s value is materially affected by events occurring after the close of
the security’s primary trading market. Generally, when fair valuing a security,
the Adviser and Sub-Adviser will take into account all reasonably available
information that may be relevant to a particular valuation including, but not
limited to, fundamental analytical data regarding the issuer, information
relating to the issuer’s business, recent trades or offers of the security,
general and/or specific market conditions and the specific facts giving rise to
the need to fair value the security. The Adviser and the Sub-Adviser make
fair
value determinations in good faith and in accordance with the fair value
methodologies included in the Board-adopted valuation procedures. Due to the
subjective and variable nature of fair value pricing, there can be no assurance
that the Adviser or Sub-Adviser will be able to obtain the fair value assigned
to the security upon the sale of such security.
Dividends
and Distributions
The
Funds expect to pay out dividends, if any, at least annually. Nonetheless, each
Fund may make more frequent dividend payments. Each Fund expects to distribute
its net realized capital gains to investors annually. Each Fund occasionally may
be required to make supplemental distributions at some other time during the
year. Distributions in cash may be reinvested automatically in additional whole
Shares only if the broker through whom you purchased Shares makes such option
available. Your broker is responsible for distributing the income and capital
gain distributions to you.
Book
Entry
Shares
of each Fund are held in book-entry form, which means that no stock certificates
are issued. The Depository Trust Company (“DTC”) or its nominee is the record
owner of all outstanding Shares of each Fund.
Investors
owning Shares of each Fund are beneficial owners as shown on the records of DTC
or its participants. DTC serves as the securities depository for all Shares of
each Fund. Participants include DTC, securities brokers and dealers, banks,
trust companies, clearing corporations, and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any right as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any securities that you hold in
book-entry or “street name” form. Your broker will provide you with account
statements, confirmations of your purchases and sales, and tax
information.
Delivery
of Shareholder Documents – Householding
Householding
is an option available to certain investors of each Fund. Householding is a
method of delivery, based on the preference of the individual investor, in which
a single copy of certain shareholder documents can be delivered to investors who
share the same address, even if their accounts are registered under different
names. Householding for each Fund is available through certain broker-dealers.
If you are interested in enrolling in householding and receiving a single copy
of prospectuses and other shareholder documents, please contact your
broker-dealer. If you are currently enrolled in householding and wish to change
your householding status, please contact your broker-dealer.
Financial
reports will be published semi-annually. The Funds have discontinued mailing
paper copies of the Funds’ financial reports as permitted by new regulations
adopted by the SEC, unless you specifically request paper copies from the Funds.
The reports will remain available to you on the Funds’ website
(www.PacerETFs.com) and you will be notified by mail each time a report is
posted and provided with a link to access the report. Annual reports will
include audited financial statements. For any shareholder that requests paper
copies only one copy of each report will be mailed to each taxpayer
identification number even though the investor may have more than one account in
a Fund.
Frequent
Purchases and Redemptions of Fund Shares
Each
Fund imposes no restrictions on the frequency of purchases and redemptions of
Fund Shares. In determining not to impose such restrictions, the Board evaluated
the risks of market timing activities by Fund shareholders. Purchases and
redemptions by APs, who are the only parties that may purchase or redeem Shares
directly with a Fund, are an essential part of the ETF process and help keep
Fund share trading prices in line with NAV. As such, each Fund accommodates
frequent purchases and redemptions by APs. However, the Board has also
determined that frequent purchases and redemptions for cash may increase
tracking error and portfolio transaction costs and may lead to the realization
of capital gains. To minimize these potential consequences of frequent purchases
and redemptions, each Fund imposes transaction fees on purchases and redemptions
of Creation Units to cover the custodial and other costs incurred by the Fund in
effective trades. In addition, each Fund and the Adviser reserve the right to
reject any purchase order at any time.
Investments
by Registered Investment Companies
Section 12(d)(1)
of the 1940 Act restricts investments by registered investment companies in the
securities of other investment companies, including shares of each Fund.
Registered investment companies are permitted to invest in each Fund beyond the
limits set forth in section 12(d)(1), subject to certain terms and conditions
set forth in Rule 12d1-4 under the 1940 Act, including that such investment
companies enter into an agreement with the applicable Fund.
ADDITIONAL
TAX INFORMATION
The
following discussion is a summary of some important U.S. federal income tax
considerations generally applicable to investments in the Funds. Your investment
in the Funds may have other tax implications. Please consult your tax advisor
about the tax consequences of an investment in Shares, including the possible
application of foreign, state, and local tax laws.
The
Funds intend to qualify each year for treatment as a regulated investment
company (“RIC”). If it meets certain minimum distribution requirements, a RIC is
not subject to tax at the fund level on income and gains from investments that
are timely distributed to shareholders. However, a Fund’s failure to qualify as
a RIC or to meet minimum distribution requirements would result (if certain
relief provisions were not available) in fund-level taxation and, consequently,
a reduction in income available for distribution to shareholders.
Unless
you are a tax-exempt entity or your investment in Fund Shares is made through a
tax advantaged retirement account, such as an IRA, you need to be aware of the
possible tax consequences when:
•A
Fund makes distributions;
•You
sell Fund Shares; and
•You
purchase or redeem Creation Units (institutional investors only).
Taxes
on Distributions
Tax
reform legislation commonly known as the Tax Cuts and Jobs Act (the “Tax Act”)
was enacted on December 22, 2017. The Tax Act made significant changes to the
U.S. federal income tax rules for individuals and corporations, generally
effective for taxable years beginning after December 31, 2017. The application
of certain provisions of the Tax Act is uncertain, and the changes in the act
may have indirect effects on the Funds, its investments and its shareholders
that cannot be predicted. For federal income tax purposes, distributions of
investment income are generally taxable as ordinary income or “qualified
dividend income.” Taxes on distributions of capital gains (if any) depend on how
long a Fund owned the assets that generated them, rather than how long a
shareholder has owned his or her Fund Shares. Sales of assets held by a Fund for
more than one year generally result in long-term capital gains and losses, and
sales of assets held by a Fund for one year or less generally result in
short-term capital gains and losses. Distributions of a Fund’s net capital gain
(the excess of net long-term capital gains over net short-term capital losses)
that are properly reported by the Fund as capital gain dividends (“Capital Gain
Dividends”) are taxable as long-term capital gains. For noncorporate
shareholders, long-term capital gains are generally subject to tax at reduced
rates and currently set at a maximum rate of 20%. Distributions of short-term
capital gain are generally taxable as ordinary income. Distributions of
investment income reported by the Fund as derived from “qualified dividend
income” will be taxed at long term capital gain rates for non-corporate
shareholders.
U.S.
individuals with income exceeding specified thresholds are subject to a 3.8%
Medicare contribution tax on all or a portion of their “net investment income,”
which includes interest, dividends, and certain capital gains (generally
including capital gain distributions and capital gains realized on the sale or
exchange of Fund Shares).
In
general, your distributions are subject to federal income tax for the year in
which they are paid. Certain distributions paid in January, however, may be
treated as paid on December 31 of the prior year. Distributions are
generally taxable even if they are paid from income or gains earned by the Funds
before your investment (and thus were included in the Fund Shares’ NAV when you
purchased your Fund Shares).
A
Fund may include a payment of cash in addition to, or in place of, the delivery
of a basket of securities upon the redemption of Creation Units. The Funds may
sell portfolio securities to obtain the cash needed to distribute redemption
proceeds. This may cause the Funds to recognize investment income and/or capital
gains or losses that it might not have recognized if it had completely satisfied
the redemption in-kind. As a result, the Funds may be less tax efficient if it
includes such a cash payment in the proceeds paid upon the redemption of
Creation Units.
Nonresident
aliens, foreign corporations and other foreign shareholders in the Funds will
generally be exempt from U.S. federal income tax on Capital Gain Dividends. The
exemption may not apply, however, if the investment in a Fund is connected to a
trade or business for the foreign shareholder in the United States or if the
foreign shareholder is present in the United States for 183 days or more in a
year and certain other conditions are met.
Distributions
(other than Capital Gain Dividends) paid to individual shareholders that are
neither citizens nor residents of the U.S. or to foreign entities will generally
be subject to a U.S. withholding tax at the rate of 30%, unless a lower treaty
rate applies. The Funds may, under certain circumstances, report all or a
portion of a dividend as an “interest-related dividend” or a “short-term capital
gain dividend,” which would generally be exempt from this 30% U.S. withholding
tax, provided certain other requirements are met. Short-term capital gain
dividends received by a nonresident alien individual who is present in the U.S.
for a period or periods aggregating 183 days or more during the taxable year are
not exempt from this 30% withholding tax. Gains realized by foreign shareholders
from the sale or other disposition of Shares of a Fund generally are not subject
to U.S. taxation, unless the recipient is an individual who is physically
present in the U.S. for 183 days or more per year.
The
Funds (or a financial intermediary, such as a broker, through which shareholders
own Fund Shares) generally are required to withhold and to remit to the US
Treasury a percentage of the taxable distributions and the sale or redemption
proceeds paid to any shareholder who fails to properly furnish a correct
taxpayer identification number, who has under-reported dividend or interest
income, or who fails to certify that he, she or it is not subject to such
withholding.
A
U.S. withholding tax at a 30% rate will be imposed on dividends effective July
1, 2014 (and proceeds of sales in respect of Fund Shares (including certain
capital gain dividends) received by Fund shareholders beginning after December
31, 2018) for shareholders who own their Shares through foreign accounts or
foreign intermediaries if certain disclosure requirements related to U.S.
accounts or ownership are not satisfied. The Funds will not pay any additional
amounts in respect to any amounts withheld.
To
the extent a Fund invests in foreign securities, it may be subject to foreign
withholding taxes with respect to dividends or interest the Fund received from
sources in foreign countries. If more than 50% of the total assets of a Fund
consists of foreign securities, such Fund will be eligible to elect to treat
some of those taxes as a distribution to shareholders, which would allow
shareholders to offset some of their U.S. federal income tax. The Funds (or its
administrative agent) will notify you if it makes such an election and provide
you with the information necessary to reflect foreign taxes paid on your income
tax return.
Taxes
When Fund Shares Are Sold
Any
capital gain or loss realized upon a sale of Fund Shares is generally treated as
a long-term gain or loss if the Shares have been held for more than one year.
Any capital gain or loss realized upon a sale of Fund Shares held for one year
or less is generally treated as a short-term gain or loss, except that any
capital loss on a sale of Shares held for six months or less is treated as
long-term capital loss to the extent that Capital Gain Dividends were paid with
respect to such Shares. The ability to deduct capital losses may be limited
depending on your circumstances.
A
foreign shareholder will generally not be subject to U.S. tax on gains realized
on sales or exchange of Fund Shares unless the investment in a Fund is connected
to a trade or business of the investor in the United States or if the
shareholder is present in the United States for 183 days or more in a year and
certain other conditions are met. All foreign shareholders should consult their
own tax advisors regarding the tax consequences in their country of residence of
an investment in a Fund.
Creation
and Redemption Units
An
Authorized Participant who exchanges securities for Creation Units generally
will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time and the
sum of the exchanger’s aggregate basis in the securities surrendered plus the
amount of cash paid for such Creation Units. A person who redeems Creation Units
will generally recognize a gain or loss equal to the difference between the
exchanger’s basis in the Creation Units and the sum of the aggregate market
value of any securities received plus the amount of any cash received for such
Creation Units. The Internal Revenue Service, however, may assert that a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing “wash sales,” or on the basis that there has
been no significant change in economic position.
Any
capital gain or loss realized upon the creation of Creation Units will generally
be treated as long-term capital gain or loss if the securities exchanged for
such Creation Units have been held for more than one year. Any capital gain or
loss realized upon the redemption of Creation Units will generally be treated as
long-term capital gain or loss if the Shares comprising the Creation Units have
been held for more than one year. Otherwise, such capital gains or losses will
be treated as short-term capital gains or losses. Persons purchasing or
redeeming Creation Units should consult their own tax advisors with respect to
the tax treatment of any creation or redemption transaction.
The
Funds have the right to reject an order for Creation Units if the purchaser (or
group of purchasers) would, upon obtaining the Shares so ordered, own 80% or
more of the outstanding Shares of the Fund and if, pursuant to section 351 of
the Internal Revenue Code, the Fund would have a basis in the deposit securities
different from the market value of such securities on the date of deposit. The
Funds also have the right to require information necessary to determine
beneficial Share ownership for purposes of the 80% determination.
The
foregoing discussion summarizes some of the possible consequences under current
federal tax law of an investment in the Funds. It is not a substitute for
personal tax advice. You also may be subject to state and local tax on Fund
distributions and sales of Shares. Consult your personal tax advisor about the
potential tax consequences of an investment in Shares under all applicable tax
laws. For more information, please see the section entitled “Federal Income
Taxes” in the SAI.
State
and Local Taxes
Shareholders
may also be subject to state and local taxes on income and gain attributable to
your ownership of Fund Shares. State income taxes may not apply, however, to the
portions of a Fund’s distributions, if any, that are attributable to interest
earned by a Fund on U.S. government securities. You should consult your tax
professional regarding the tax status of distributions in your state and
locality.
DISTRIBUTION
The
Distributor, Pacer Financial, Inc., is a broker-dealer registered with the U.S.
Securities and Exchange Commission. The Distributor distributes Creation Units
for each Fund on an agency basis and does not maintain a secondary market in
Shares. The Distributor has no role in determining the policies of each Fund or
the securities that are purchased or sold by each Fund. The Distributor’s
principal address is 500 Chesterfield Parkway, Malvern, Pennsylvania 19355. The
Distributor is an affiliate of the Adviser.
The
Board has adopted a Distribution and Service Plan (the “Plan”) pursuant to Rule
12b-1 under the 1940 Act. In accordance with the Plan, each Fund is authorized
to pay an amount up to 0.25% of its average daily net assets each year for
certain distribution-related activities and shareholder services.
No
Rule 12b-1 fees are currently paid by the Funds, and there are no plans to
impose these fees. However, in the event Rule 12b-1 fees are charged in the
future, because the fees are paid out of a Fund’s assets, over time these fees
will increase the cost of your investment and may cost you more than certain
other types of sales charges.
PREMIUM/DISCOUNT
INFORMATION
Information
regarding how often Shares of each Fund traded on the Exchange at a price above
(i.e.,
at a premium) or below (i.e.,
at a discount) the NAV of the fund will be available in the future on the Funds’
website at www.PacerETFs.com.
ADDITIONAL
NOTICES
Shares
of each Fund are not sponsored, endorsed, or promoted by the Exchange. The
Exchange makes no representation or warranty, express or implied, to the owners
of the shares of the Funds or any member of the public regarding the ability of
the Funds to track stock market performance. The Exchange is not responsible
for, nor has it participated in, the determination of the timing of, prices of,
or quantities of the shares of each Fund to be issued, nor in the determination
or calculation of the equation by which the Shares are redeemable. The Exchange
has no obligation or liability to owners of the shares of each Fund in
connection with the administration, marketing, or trading of the shares of each
Fund.
FINANCIAL
HIGHLIGHTS
The
financial highlights tables are intended to help you understand each Fund’s
financial performance for the period of each Fund’s operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the applicable Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Sanville
& Company, the Funds’ independent registered public accounting firm, whose
report, along with the Funds’ financial statements, is included in the Funds’
Annual
Report,
which is available upon request.
Pacer
Swan SOS Conservative (January) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
22.19 |
|
| $ |
20.56 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.16) |
|
| (0.14) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(1.14) |
|
| 1.77 |
| |
Total
from Investment Operations |
(1.30) |
|
| 1.63 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
20.89 |
|
| $ |
22.19 |
| |
Total
Return |
-5.85 |
% |
| 7.94 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
15,670 |
|
| $ |
2,774 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
19 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on December 22, 2020. The information presented is from
December 22, 2020 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Conservative (April) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
21.73 |
|
| $ |
20.61 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.16) |
|
| (0.09) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.82) |
|
| 1.21 |
| |
Total
from Investment Operations |
(0.98) |
|
| 1.12 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
20.75 |
|
| $ |
21.73 |
| |
Total
Return |
-4.52 |
% |
| 5.45 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
16,081 |
|
| $ |
2,717 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on March 31, 2021. The information presented is from March
31, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Conservative (July) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
20.94 |
|
| $ |
20.48 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.15) |
|
| (0.05) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(1.29) |
|
| 0.51 |
| |
Total
from Investment Operations |
(1.44) |
|
| 0.46 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
19.50 |
|
| $ |
20.94 |
| |
Total
Return |
-6.88 |
% |
| 2.22 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
6,336 |
|
| $ |
3,664 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.76 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.76 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on June 30, 2021. The information presented is from June
30, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Conservative (October) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
20.86 |
|
| $ |
20.51 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.15) |
|
| (0.01) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.82) |
|
| 0.36 |
| |
Total
from Investment Operations |
(0.97) |
|
| 0.35 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
19.89 |
|
| $ |
20.86 |
| |
Total
Return |
-4.67 |
% |
| 1.71 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
4,971 |
|
| $ |
2,607 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on September 30, 2021. The information presented is from
September 30, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Moderate (January) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
22.66 |
|
| $ |
20.56 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.16) |
|
| (0.14) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.89) |
|
| 2.24 |
| |
Total
from Investment Operations |
(1.05) |
|
| 2.10 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
LESS
DISTRIBUTIONS: |
|
|
| |
Distributions
From: |
|
|
| |
Net
Investment Income |
(0.11) |
|
| — |
| |
Total
Distributions |
(0.11) |
|
| — |
| |
Net
Asset Value, End of Period |
$ |
21.50 |
|
| $ |
22.66 |
| |
Total
Return |
-4.65 |
% |
| 10.20 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
20,425 |
|
| $ |
2,832 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.75 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
48 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on December 22, 2020. The information presented is from
December 22, 2020 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Moderate (April) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
21.98 |
|
| $ |
20.61 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.16) |
|
| (0.10) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.70) |
|
| 1.47 |
| |
Total
from Investment Operations |
(0.86) |
|
| 1.37 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
21.12 |
|
| $ |
21.98 |
| |
Total
Return |
-3.92 |
% |
| 6.67 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
17,954 |
|
| $ |
5,496 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on March 31, 2021. The information presented is from March
31, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Moderate (July) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
21.02 |
|
| $ |
20.48 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.15) |
|
| (0.05) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.22) |
|
| 0.59 |
| |
Total
from Investment Operations |
(0.37) |
|
| 0.54 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
LESS
DISTRIBUTIONS: |
|
|
| |
Distributions
From: |
|
|
| |
Net
Investment Income |
(0.00 |
) |
(g) |
— |
| |
Total
Distributions |
(0.00 |
) |
(g) |
— |
| |
Net
Asset Value, End of Period |
$ |
20.65 |
|
| $ |
21.02 |
| |
Total
Return |
-1.74 |
% |
| 2.63 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
33,556 |
|
| $ |
17,866 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on June 30, 2021. The information presented is from June
30, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Moderate (October) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
20.97 |
|
| $ |
20.51 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.15) |
|
| (0.01) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.14) |
|
| 0.47 |
| |
Total
from Investment Operations |
(0.29) |
|
| 0.46 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
20.68 |
|
| $ |
20.97 |
| |
Total
Return |
-1.40 |
% |
| 2.24 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
23,261 |
|
| $ |
8,912 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.75 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.74 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on September 30, 2021. The information presented is from
September 30, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Flex (January) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
23.82 |
|
| $ |
20.56 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.17) |
|
| (0.15) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.73) |
|
| 3.41 |
| |
Total
from Investment Operations |
(0.90) |
|
| 3.26 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.01 |
|
| — |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
22.93 |
|
| $ |
23.82 |
| |
Total
Return |
-3.74 |
% |
| 15.85 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
17,196 |
|
| $ |
3,573 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.76 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
226 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on December 22, 2020. The information presented is from
December 22, 2020 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
Pacer
Swan SOS Flex (April) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
22.75 |
|
| $ |
20.61 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.17) |
|
| (0.10) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(1.00) |
|
| 2.24 |
| |
Total
from Investment Operations |
(1.17) |
|
| 2.14 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
21.58 |
|
| $ |
22.75 |
| |
Total
Return |
-5.15 |
% |
| 10.37 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
12,406 |
|
| $ |
7,962 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.77 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.76 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on March 31, 2021. The information presented is from March
31, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Flex (July) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
21.31 |
|
| $ |
20.48 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.16) |
|
| (0.05) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.37) |
|
| 0.88 |
| |
Total
from Investment Operations |
(0.53) |
|
| 0.83 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
20.78 |
|
| $ |
21.31 |
| |
Total
Return |
-2.49 |
% |
| 4.05 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
12,468 |
|
| $ |
5,327 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.76 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.76 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on June 30, 2021. The information presented is from June
30, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Flex (October) ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
21.26 |
|
| $ |
20.51 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.16) |
|
| (0.01) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
0.22 |
|
| 0.76 |
| |
Total
from Investment Operations |
0.06 |
|
| 0.75 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.00 |
|
(g) |
— |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
21.32 |
|
| $ |
21.26 |
| |
Total
Return |
0.31 |
% |
| 3.64 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
10,662 |
|
| $ |
3,720 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets |
0.76 |
% |
| 0.75 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.75 |
% |
| -0.75 |
% |
(e) |
Portfolio
Turnover Rate (d) |
0 |
% |
| 0 |
% |
(f) |
(a)Fund
commenced operations on September 30, 2021. The information presented is from
September 30, 2021 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)Represents
less than $0.005.
Pacer
Swan SOS Fund of Funds ETF
FINANCIAL
HIGHLIGHTS
For
a capital share outstanding throughout the year/period
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For
the Year Ended October 31, 2022 |
|
For
the
Period
Ended
October
31,
2021
(a) |
|
Net
Asset Value, Beginning of Period |
$ |
22.49 |
|
| $ |
20.26 |
| |
|
|
|
| |
INCOME
(LOSS) FROM INVESTMENT OPERATIONS: |
|
|
| |
Net
Investment Income (Loss) (b) |
(0.03) |
|
| (0.03) |
| |
Net
Realized and Unrealized Gain (Loss) on Investments (c) |
(0.96) |
|
| 2.26 |
| |
Total
from Investment Operations |
(0.99) |
|
| 2.23 |
| |
|
|
|
| |
CAPITAL
SHARE TRANSACTIONS: |
|
|
| |
Transaction
Fees |
0.06 |
|
| — |
| |
|
|
|
| |
Net
Asset Value, End of Period |
$ |
21.56 |
|
| $ |
22.49 |
| |
Total
Return |
-4.12 |
% |
| 11.01 |
% |
(f) |
|
|
|
| |
SUPPLEMENTAL
DATA: |
|
|
| |
Net
Assets at End of Period (000’s) |
$ |
118,060 |
|
| $ |
38,234 |
| |
|
|
|
| |
RATIOS
TO AVERAGE NET ASSETS: |
|
|
| |
Expenses
to Average Net Assets (g) |
0.18 |
% |
| 0.18 |
% |
(e) |
Net
Investment Income (Loss) to Average Net Assets |
-0.13 |
% |
| -0.18 |
% |
(e) |
Portfolio
Turnover Rate (d) |
11 |
% |
| 69 |
% |
(f) |
(a)Fund
commenced operations on December 29, 2020. The information presented is from
December 29, 2020 to October 31, 2021.
(b)Calculated
based on average shares outstanding during the period.
(c)Realized
and unrealized gains and losses per share are balancing amounts necessary to
reconcile to the change in net asset value for the period and may reconcile with
aggregate gains and losses in the statement of operations due to share
transactions for the period.
(d)Excludes
the impact of in-kind transactions.
(e)Annualized.
(f)Not
annualized.
(g)The
expense ratios exclude the impact of fees/expenses paid by each underlying
fund.
|
|
|
|
|
|
|
|
|
|
| |
Adviser |
Pacer
Advisors, Inc.
500
Chesterfield Parkway
Malvern,
Pennsylvania 19355 |
Distributor |
Pacer
Financial, Inc.
500
Chesterfield Parkway,
Malvern,
Pennsylvania 19355 |
Sub-Adviser |
Swan
Global Management, LLC
20
Ridge Top Palmas Del Mar
Humacao,
PR 00791 |
Fund
Accountant, Administrator and Transfer Agent |
U.S.
Bank Global Fund Services
615
East Michigan Street Milwaukee, Wisconsin 53202 |
Custodian |
U.S.
Bank National Association
1555
N. Rivercenter Drive
Milwaukee,
Wisconsin 53212 |
Legal
Counsel |
Practus
LLP
11300
Tomahawk Creek Parkway
Suite
310
Leawood,
Kansas 66211 |
Independent
Registered Public Accounting Firm |
Sanville
& Company
1514
Old York Road
Abington,
PA 19001 |
| |
The
Trust’s current SAI provides additional detailed information about each Fund. A
current SAI dated February 28, 2023, as supplemented from time to time, is on
file with the SEC and is herein incorporated by reference into this
Prospectus.
Additional
information about each Fund’s investments is available in the Funds’ annual and
semi-annual reports to shareholders. In the annual report you will find a
discussion of the market conditions and investment strategies that significantly
affected each Fund’s performance.
To
make shareholder inquiries, for more detailed information on each Fund, or to
request the SAI or annual or semi-annual shareholder reports (once available)
free of charge, please:
|
|
|
|
|
|
|
|
|
|
| |
Call: |
1-800-617-0004 Monday
through Friday 8:00 a.m. – 5:00 p.m. (Central time) |
Write: |
Pacer
Funds Trust, (Name of Fund) c/o U.S. Bank Global Fund Services,
LLC P.O. Box 701 Milwaukee, Wisconsin 53202 |
Visit: |
www.PacerETFs.com |
| |
Shareholder
reports and other information about the Funds are also available:
•Free
of charge from the SEC’s EDGAR database on the SEC’s website at
http://www.sec.gov; or
No
person is authorized to give any information or to make any representations
about each Fund and its Shares not contained in this Prospectus and you should
not rely on any other information. Read and keep this Prospectus for future
reference.
(The
Trust’s SEC Investment Company Act file number is 811-23024)