The Cash Cows ETF Series

Cash Cows Index Strategy

• Free cash flow is the cash remaining after a company has paid expenses, interest, taxes, and long-term investments. It can be used to buy back stock, pay dividends, or participate in mergers and acquisitions.
• The ability to generate a high free cash flow yield indicates a company is producing more cash than it needs to run the business and can invest in growth opportunities.
• Watch to learn more about how Pacer Cash Cows Index ETFs work.

Free Cash Flow Yield Comparison

as of 12/31/2019

1. High-Quality Emerging Markets Companies
Unique focus on emerging markets companies with high free cash flow yield.

2. Trading at a Discount
Exposure to opportunities in the market where high quality stocks are trading at a discount.

3. Long-Term Capital Appreciation
Using free cash flow yield to measure the sustainability of a company may produce potentially higher returns and more attractive upside/downside capture over time.

Definitions
Free Cash Flow (FCF): A company’s cash flow from operations minus capital expenditures (expenses, interest, taxes, and long-term investments)
Enterprise Value (EV): A company’s market capitalization adjusted to eliminate any capital structure bias (i.e. by adding debt and subtracting cash or cash equivalents)
Free Cash Flow Yield: FCF/EV. Measures a company’s total free cash flow relative to its enterprise value. This is an internal statistic and does not constitute investor yield.
Upside/Downside capture: Upside/downside capture ratio show you whether a given fund has outperformed--gained more or lost less than--a broad market benchmark during periods of market strength and weakness

Pacer Emerging Markets Cash Cows 100 Index Strategy Overview

An objective rules-based methodology that uses a quality screen to select top companies in the index universe.
All data as of December 2019 semi-annual rebalance.

(1)The individual components of the index are weighted by their total market capitalization. Market capitalization is determined by multiplying each company’s market price by their total outstanding shares. Companies are ranked in descending order based on their market cap in dollars.
(2)Screened based on average projected free cash flows and earnings (if available) over each of the next two fiscal years. Companies with negative average projected free cash flows or earnings are removed from the Index universe. Financial companies, other than real estate investment trusts (“REITs”), companies with a market capitalization of less than $2 billion, and companies whose average daily trading value (“ADTV”) for the prior 90 days does not exceed $5 million are excluded from the Index universe.
(3)The three-year dividend growth is a weighted average of each company’s three-year dividends per share growth rate. The growth rate is determined by measuring the change between each company’s most recent trailing twelve-month dividends per share versus their trailing twelve-month dividend per share three years ago.
(4)Remaining 100 companies are weighted by their trailing twelve-month free cash flow. The Index is limited to a maximum of twenty companies from any country or any sector. Free cash flow weighting is calculated as a company’s operating cash flow minus capital expenditures. Companies are ranked in descending order based on their free cash flow in dollars.
P/E ratio a fundamental measure commonly used to determine if an investment is valued appropriately. Each holding’s P/E is the latest closing price divided by the latest fiscal year’s earnings per share. Negative P/E ratios are excluded from this calculation.