Flexible Municipal Income Fund

PMFAX

Updated October 18, 2019

Objective

The Fund seeks to provide high current income exempt from federal income tax.

Overview

Fund Overview

PIMCO Flexible Municipal Income Fund seeks to provide high current income exempt from federal income tax, with capital appreciation as a secondary objective. The fund seeks to opportunistically exploit structural illiquidity in the municipal market and utilizes a flexible, multi-sector tax-efficient approach across the municipal credit spectrum. Its interval fund structure, which offers periodic repurchases rather than providing daily liquidity, gives the fund the flexibility to play offense to try to capitalize on dislocations in periods of municipal market stress by executing investment strategies that may be less liquid and more suited to longer holding periods.

The fund will invest, under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of municipal bonds and other municipal securities, the interest from which is exempt from federal income tax, in the opinion of bond counsel for the issuer at the time of issuance (or on the basis of other authority believed by PIMCO to be reliable).It also has the flexibility to invest the balance of its assets (i.e., not towards the 80% policy noted above) in securities and assets that produce taxable income, such as preferred securities that, at the time of issuance, are eligible to pay dividends that qualify for certain favorable federal income tax treatment. The fund may also invest up to 5% of its total assets in municipal closed-end funds that invest primarily in municipal bonds of the types in which it may invest directly. The fund does not target a specific duration or maturity for the municipal bonds and other securities in which it invests, and the fund’s average portfolio duration, as calculated by PIMCO, may vary significantly depending on market conditions and other factors. (See the fund’s prospectus for more detailed portfolio information.)

The fund is an interval fund and as such offers limited expected share repurchases. The fund has adopted a fundamental investment policy to make quarterly offers to repurchase between 5% and 25% of its outstanding common shares at net asset value, reduced by any applicable repurchase fee. Subject to applicable law and approval of the Board of Trustees, for each quarterly repurchase offer, the fund currently expects to offer to repurchase 10% of the fund’s outstanding common shares at net asset value. Even though the fund will make periodic repurchase offers for its outstanding common shares, as more fully described in the funds’ prospectus, investors should consider common shares of the fund to be an illiquid investment.

DIVIDEND FREQUENCY

Quarterly with Daily Accrual

SHARE CLASS INCEPTION

09/10/2019

CUSIP

72203E202

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Understanding Interval Funds

A type of closed-end fund that offers to repurchase at periodic intervals a limited percentage of outstanding shares, interval funds offer a number of potential benefits to investors.

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Managers

David Hammer

Head of Municipal Bond Portfolio Management

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Rachel Betton

Portfolio Manager, Municipal Bonds

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Amit Arora

Portfolio Manager, Credit

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Fees & Expenses

Effective as of 08/27/2019
Gross Expense Ratio 2.95%
Net Expense Ratio 2.76%
The Net Expense Ratio reflects a contractual fee waiver and/or expense reduction, which is in place through 05/02/2020 and renews automatically for a full year unless terminated by PIMCO in accordance with the terms of the agreement. See the Fund's prospectus for more information.
Adjusted Expense Ratio 1.88%
The Adjusted Expense Ratio is the same as the Net Expense Ratio, but also excludes certain investment expenses, such as interest expense from borrowings and repurchase agreements and dividend expense from investments on short sales, incurred directly by the Fund or indirectly through the Fund’s investments in underlying PIMCO Funds (if applicable), none of which are paid to PIMCO.

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Disclosures

Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. This and other information are contained in the fund’s prospectus and summary prospectus, if available, which may be obtained by contacting your investment professional or PIMCO representative.  Please read them carefully before you invest or send money.

The fund is an unlisted closed-end “interval fund.” Limited liquidity is provided to shareholders only through the fund’s quarterly offers to repurchase between 5% to 25% of its outstanding shares at net asset value (subject to applicable law and approval of the Board of Trustees, the Fund currently expects to offer to repurchase 10% of outstanding shares per quarter). There is no secondary market for the fund’s shares and none is expected to develop. Investors should consider shares of the fund to be an illiquid investment.


It is important to note that differences exist between the fund’s daily internal accounting records, the fund’s financial statements prepared in accordance with U.S. GAAP, and recordkeeping practices under income tax regulations. It is possible that the fund may not issue a Section 19 Notice in situations where the fund’s financial statements prepared later and in accordance with U.S. GAAP or the final tax character of those distributions might later report that the sources of those distributions included capital gains and/or a return of capital. Please see the fund’s most recent shareholder report for more details.


The fund’s distribution rate may be affected by numerous factors, including changes in realized and projected market returns, fund performance, and other factors. There can be no assurance that a change in market conditions or other factors will not result in a change in the fund distribution rate at a future time.

A word about risk: Investing in municipal bonds involves the risks of investing in debt securities generally and certain other risks. Investors will, at times, incur a tax liability. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. An investment in municipal closed-end funds will be subject to market risk, leverage risk, and various other risks depending upon the underlying assets owned by a fund. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. The use of leverage may cause a portfolio to liquidate positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause a portfolio to be more volatile than if the portfolio had not been leveraged.


An investment in an interval fund is not suitable for all investors. Unlike typical closed-end funds an interval fund’s shares are not typically listed on a stock exchange. Although interval funds provide limited liquidity to investors by offering to repurchase a limited amount of shares on a periodic basis, investors should consider shares of the Fund to be an illiquid investment. Investments in interval funds are therefore subject to liquidity risk as an investor may not be able to sell the shares at an advantageous time or price. The Fund anticipates that no secondary market will develop for its shares. There is no guarantee that an investor will be able to tender all of their requested Fund shares in a periodic repurchase offer.

Investments made by a Fund and the results achieved by a Fund are not expected to be the same as those made by any other PIMCO-advised Fund, including those with a similar name, investment objective or policies. A new or smaller Fund’s performance may not represent how the Fund is expected to or may perform in the long-term. New Funds have limited operating histories for investors to evaluate and new and smaller Funds may not attract sufficient assets to achieve investment and trading efficiencies. A Fund may be forced to sell a comparatively large portion of its portfolio to meet significant shareholder redemptions for cash, or hold a comparatively large portion of its portfolio in cash due to significant share purchases for cash, in each case when the Fund otherwise would not seek to do so, which may adversely affect performance.
This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019, is a company of PIMCO.