Flexible Municipal Income Fund

PMFLX

Updated November 30, 2020

Objective

The Fund seeks to provide high current income exempt from federal income tax with a secondary objective of capital appreciation.

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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

Monthly with Daily Accrual

SHARE CLASS INCEPTION

03/15/2019

CUSIP

72203E103

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Managers

David Hammer

Head of Municipal Bond Portfolio Management

View Profile for David Hammer

Rachel Betton

Portfolio Manager, Municipal Bonds

View Profile for Rachel Betton

Amit Arora

Portfolio Manager, Credit

View Profile for Amit Arora

Distributions

Historical Prices & Distributions

1 - Day Distribution Yield as of 11/30/2020 -
30 - Day SEC Yield2 as of 11/30/2020 -
30 - Day SEC Yield (Unsubsidized)2 as of 10/31/2020 2.13%
NAV Distribution Rate as of 11/30/2020 2.95%
Latest Distribution ($ Share)3 as of 11/30/2020 $0.027705370
Distribution (YTD) 4 as of 11/30/2020 $0.297669290

disclosures

1The distribution yield for monthly paying Funds is calculated by annualizing actual dividends distributed for the monthly period ended on the date shown and dividing by the net asset value on the last business day for the same period. The distribution yield for quarterly paying Funds is calculated by taking the average of the prior four quarterly distribution yields. The quarterly distribution yields are calculated by annualizing actual dividends distributed for the quarterly period ended on the most recent quarterly distribution date and dividing by the net asset value for the same date. The distribution yield for annual paying Funds is calculated by taking the annual distribution divided by the Fund’s net asset value on ex-date. The yield is annualized if the Fund incepted less than a year ago. The yield does not include long- or short-term capital gains distributions.
2The Subsidized yield includes contractual expense reimbursements and it would be lower without those reimbursements. The Unsubsidized 30 Day SEC yield excludes contractual expense reimbursements.
3Data does not include special cash dividends.
4Data is based on distributions since the most recent calendar year end and does not include special cash dividends.

Fees & Expenses

Effective as of 10/07/2020
Gross Expense Ratio 1.91%
Net Expense Ratio 1.35%
The Net Expense Ratio reflects a contractual fee waiver and/or expense reduction, which is in place through 05/02/2021 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 0.71%
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.
Management Fee (on Net Assets) 1.07%
Management Fee (on Total Managed Assets) 0.75%
PIMCO is paid a management fee of 0.75% on total managed assets for advisory, supervisory, administrative and other services, which is equivalent to 1.07% on the Fund's common share net assets. The Fund remains responsible for certain fees and expenses that are not covered by the management fee. Please see "Management of the Fund - Management Fee" in the prospectus for an explanation of the management fee and definition of "total managed assets".

Prices & Performance

Daily Statistics

All data as of 11/30/2020

NAV $11.26 One Day Return 0.10%
Daily Change $0.01 Daily YTD Return 7.77%

All data as of

All data as of

Performance quoted represents past performance and is not a guarantee or a reliable indicator of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than average annual returns shown. Performance quoted does not reflect any sales charges, if applicable, and performance would be lower if it did.

Differences in the Fund’s performance versus the index and related attribution information with respect to particular categories of securities or individual positions may be attributable, in part, to differences in the pricing methodologies used by the Fund and the index.

There is no assurance that any fund, including any fund that has experienced high or unusual performance for one or more periods, will experience similar levels of performance in the future. High performance is defined as a significant increase in either 1) a fund’s total return in excess of that of the fund’s benchmark between reporting periods or 2) a fund’s total return in excess of the fund’s historical returns between reporting periods. Unusual performance is defined as a significant change in a fund’s performance as compared to one or more previous reporting periods.

Calendar Year Returns %

All data as of

Growth of $10,000 (hypothetical)

Morningstar and Lipper

disclosures

Performance figures presented reflect the total return performance after fees and reflect changes in share price and reinvestment of dividend and capital gain distributions on the payable date. All periods longer than one year are annualized.
Daily YTD return is from the most recent calendar year end.
Growth of $10,000 is calculated at NAV and assumes that all dividend and capital gain distributions were reinvested. It does not take into account sales charges or the effect of taxes. Results are not indicative of future performance.
A rating is not a recommendation to buy, sell or hold a fund. © 2019 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.Past performance is not a guarantee or a reliable indicator of future results.
Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar, Inc.® 2017. All rights reserved. The information contained herein: (1) is proprietary to Morningstar (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Lipper Category returns and rankings are calculated by Lipper Inc., a Reuters Company, which is a nationally recognized organization that compares the performance of mutual funds with similar investment objectives. The Category returns represent the average performance of included funds, while rankings compare an individual fund's returns to those of the other funds in its category. Both are based on total return performance, with capital gains and dividends reinvested, with annual operating expenses deducted, but without including front- or back-end sales charges. Rankings begin with the actual share class inception. Rankings are relative to a peer group and do not necessarily mean that the fund had high total returns.

Portfolio Composition

All data as of unless otherwise stated

Call Structure Market Value %

0 - 5 Years 28.28
5 - 10 Years 40.03
10 - 15 Years 3.46
Non Callable 28.24

Sector Allocation
Market Value %

State/Local GO 11.44
Pre-Refunded 0.00
Education Rev. 5.33
Hospital Rev. 15.15
Housing Rev. 2.15
Ind Dev/Pollution Ctrl 19.70
Lease Rev. 1.49
Power Rev. 3.50
Resource Recovery 0.73
Special Tax 10.29
Transportation 10.39
Water & Sewer 3.09
Tobacco 1.62
Net Other Short Duration Instruments Muni 0.53
Other Muni 10.04
US Government Related5 -9.52
Mortgage 0.00
Invest. Grade Credit 0.97
High Yield Credit 0.16
Non-USD Developed 0.00
Emerging Markets6 0.00
Other7 6.27
Net Other Short Duration Instruments ex-Muni 6.65

Maturity %

0-1 yrs 20.59
1-3 yrs 7.54
3-5 yrs 11.10
5-10 yrs 26.15
10-20 yrs 25.10
20+ yrs 9.51
Effective Maturity (yrs) 8.25

Top States Market Value %

California 12.84
Illinois 12.67
New York 12.08
Other7 11.21
Ohio 5.42

disclosures

5May include nominal and inflation-protected Treasuries, Treasury futures and options, agencies, FDIC-guaranteed and government-guaranteed corporate securities, and interest rate swaps.
6Short duration emerging markets instruments includes an emerging market security or other instrument economically tied to an emerging market country by country of risk with an effective duration less than one year and rated investment grade or higher or if unrated, determined to be similar quality by PIMCO. Emerging Markets includes the value of short duration emerging markets instruments previously reported in another category.
7May include municipals, convertibles, preferreds, and yankee bonds.
Portfolio information in the charts is based on the fund's net assets. These percentages may differ from those used for the fund's compliance calculations, including the fund's prospectus, regulatory, and other investment limitations and policies, which may be based on total assets of the fund or other measurements, may include or exclude various categories of investments from those covered in the portfolio allocation categories shown in this report, and may be based on different classifications and measurements of the fund’s investments and other criteria.
References to specific sectors, securities or issuers are for illustrative purposes only. All holdings are subject to change daily. All share classes have the same portfolio but different expenses.

Assets & Leverage

All data as of 10/31/2020 unless otherwise stated

Assets (in millions)

Common Net Assets $429
Outstanding Preferred Shares $150
Total Managed Assets8 $602

Leverage

% of Total Managed Assets % of Common Net Assets
Total Effective Leverage 28.73 40.31
Preferred Shares9 24.89 34.92
Reverse Repurchase Agreements10 0.00 0.00
Floating Rate Notes Issued11 3.84 5.39
Credit Default Swaps12 0.00 0.00

disclosures

8Total Managed Assets include Net Assets Applicable to Common Shareholders ("Common Net Assets") + Preferred Shares + Reverse Repurchase Agreements + Credit Default Swaps + Floating Rate Notes Issued in Tender Option Bond ("TOB") transactions, as applicable. In TOB transactions, a fund sells a fixed rate municipal bond to a broker who places that bond in a Special Purpose Trust from which Floating Rate Notes and Inverse Floaters are issued.
9Preferred Shares (%) consists of Preferred Shares divided by Total Managed Assets.
10Reverse Repurchase Agreements (%) consists of Reverse Repurchase Agreements divided by Total Managed Assets.
11Floating Rate Notes Issued (%) consists of Floating Rate Notes Issued in transactions divided by Total Managed Assets. In TOB transactions, a fund sells a fixed rate municipal bond to a broker who places that bond in a Special Purpose Trust from which Floating Rate Notes and Inverse Floaters are issued.
12Credit Default Swaps (“CDS”) (%) consists of the aggregate notional amount of sell protection CDS plus the net market value of buy protection CDS, as applicable, divided by Total Managed Assets.
Past performance is no guarantee of future results. Investing in securities entails risk, including possible loss of principal. The use of leverage may cause a Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. The use of leverage may cause a Fund to be more volatile, which may increase the risk of investment loss.

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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 appropriate 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.
PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2020, PIMCO
PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019, is a company of PIMCO.
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