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N-2 - USD ($)
Apr. 30, 2025
Dec. 31, 2024
Dec. 31, 2023
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Cover [Abstract]            
Entity Central Index Key 0001723701          
Amendment Flag false          
Entity Inv Company Type N-2          
Securities Act File Number 333-221829          
Investment Company Act File Number 811-23314          
Document Type N-2          
Document Registration Statement true          
Pre-Effective Amendment false          
Post-Effective Amendment true          
Post-Effective Amendment Number 14          
Investment Company Act Registration true          
Investment Company Registration Amendment true          
Investment Company Registration Amendment Number 18          
Entity Registrant Name PIMCO Flexible Municipal Income Fund          
Entity Address, Address Line One 1633 Broadway          
Entity Address, City or Town New York          
Entity Address, State or Province NY          
Entity Address, Postal Zip Code 10019          
City Area Code 844          
Local Phone Number 337-4626          
Approximate Date of Commencement of Proposed Sale to Public As soon as practicable after the effective date of this Registration Statement.          
Dividend or Interest Reinvestment Plan Only false          
Delayed or Continuous Offering true          
Primary Shelf [Flag] false          
Effective Upon Filing, 462(e) false          
Additional Securities Effective, 413(b) false          
Effective when Declared, Section 8(c) false          
Effective upon Filing, 486(b) false          
Effective on Set Date, 486(b) true          
Effective on Date, 486(b) Apr. 30, 2025          
Effective after 60 Days, 486(a) false          
Effective on Set Date, 486(a) false          
New Effective Date for Previous Filing false          
Additional Securities. 462(b) false          
No Substantive Changes, 462(c) false          
Exhibits Only, 462(d) false          
Registered Closed-End Fund [Flag] true          
Business Development Company [Flag] false          
Interval Fund [Flag] true          
Primary Shelf Qualified [Flag] false          
Entity Well-known Seasoned Issuer No          
Entity Emerging Growth Company false          
New CEF or BDC Registrant [Flag] false          
Fee Table [Abstract]            
Shareholder Transaction Expenses [Table Text Block]
Shareholder Transaction Expenses (fees paid directly from
your investment):
 
 
Institutional
Class
Class A-1
Class A-2
Class A-3
Maximum Initial Sales Charge (Load)
Imposed on Purchases (as a percentage of
offering price)
None
(1)
None
(1)
3.00%
(2)
None
(1)
Maximum Early Withdrawal Charge (Load)
(as a percentage of the lower of the original
purchase price or repurchase price)
None
None
1.00%
None
Dividend Reinvestment Fees
None
None
None
None
1
While neither the Fund nor the Distributor impose an initial sales charge, if you buy
Institutional Class, Class A-1 or Class A-3 Common Shares through certain financial
firms, they may directly charge you transaction or other fees in such amount as they
may determine. Please consult your financial firm for additional information.
2
Although the Fund is permitted to charge a maximum sales charge of 3.00%, the Fund
has elected to currently charge a maximum sales charge of 2.00%. See “Purchasing
Shares - Reductions and Waivers of Initial Sales Charges and EWCs” and “Appendix B
- Financial Firm-Specific Sales Charge Waivers and Discounts” in this prospectus for
more information on sales charge waivers and discounts.
          
Other Transaction Expenses [Abstract]            
Annual Expenses [Table Text Block]
Annual Fund Operating Expenses (
as a percentage of Net
Assets Attributable to Common Shares
(reflecting leverage
attributable to Preferred Shares representing approximately
26.67% of the Fund’s total managed assets)):
 
 
Institutional
Class
Class A-1
Class A-2
Class A-3
Management Fees
(1)
1.02%
1.02%
1.02%
1.02%
Distribution and/or Service (12b-1) Fees
N/A
0.50%
0.50%
0.75%
Dividend and Other Costs on Preferred
Shares
(2)
(3)
1.73%
1.73%
1.73%
1.73%
Other Expenses
(4)
0.02%
0.02%
0.02%
0.02%
Acquired Fund Fees and Expenses
(Underlying Fund Expenses)
(5)
0.10%
0.10%
0.10%
0.10%
Total Annual Fund Operating Expenses
2.87%
3.37%
3.37%
3.62%
1
Management fees include fees payable to the Investment Manager for advisory
services and for supervisory, administrative and other services. The Fund pays for the
advisory, supervisory and administrative services it requires under what is essentially
an all-in fee structure (the “unified management fee”). Pursuant to an investment
management agreement, PIMCO is paid a Management Fee of 0.75% of the Fund’s
total managed assets. The Fund (and not PIMCO) is responsible for certain fees and
expenses, which are reflected in the table above, that are not covered by the unified
management fee under the investment management agreement. Please see
“Management of the Fund - Investment Management Agreement” for an explanation
of the unified management fee and definition of “total managed assets.”
Management Fees have been restated to reflect leverage attributable to Preferred
Shares issued by the Fund on April 16, 2025.
2
“Dividend and Other Costs on Preferred Shares” are borne by the Fund separately
from the management fees paid to PIMCO. Excluding such expenses, Total Annual
Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement are 1.14%,
1.64%, 1.64% and 1.89% for Institutional Class, Class A-1, Class A-2 and Class A-3
shares, respectively. Amounts shown for Dividend and Other Costs on Preferred Shares
include estimated costs attributable to additional Preferred Shares issued on April 16,
2025. Dividends and Other Costs on Preferred Shares is calculated and presented
equally across all share classes.
3
“Dividends and Other Costs on Preferred Shares” have been restated to reflect the
Fund’s outstanding Preferred Shares on April 16, 2025 which represented 26.67% of
the Fund’s total average managed assets, at an estimated annual dividend cost of
4.81%, (which is based on market conditions as of December 31, 2024), and including
the amortization of Preferred Share offering costs of $1,623,121 over the period until
such class of Preferred Shares’ next Early Term Redemption Date, as defined below. See
“Description of Capital Structure and Shares—Preferred Shares—Mandatory
Redemptions.” The actual dividend rate paid on the Preferred Shares will vary over
time in accordance with variations in market interest rates. See “Use of Leverage” and
“Description of Capital Structure.” Dividend and Other Costs on Preferred Shares are
borne directly by the Fund and reflected in the Fund’s financial statement; however, the
information presented in the table will differ from that presented in the Fund’s
Financial Highlights.
4
“Other Expenses” are based on estimated amounts for the current fiscal year.
5
Acquired Fund Fees and Expenses are based on the expense ratios of the other
investment companies in which the Fund invests, which may change substantially over
time and, therefore, significantly affect the Acquired Fund Fees and Expenses. Acquired
Fund Fees and Expenses are borne indirectly by the Fund, but they will not be reflected
in the Fund’s financial statements; and the information presented in the table will
differ from that presented in the Fund’s financial highlights.
          
Other Annual Expenses [Abstract]            
Expense Example [Table Text Block]
Example
As required by relevant SEC regulations, the following example
illustrates the expenses (including any applicable sales charge) that you
would pay on a $1,000 investment in the Common Shares, assuming a
5% annual return
(1)
:
If you redeem your shares at the end of each period:
 
 
1 Year
3 Years
5 Years
10 Years
Institutional Class
$29
$89
$151
$319
Class A-1
$34
$104
$176
$366
Class A-2
$73
$130
$200
$385
Class A-3
$36
$111
$187
$388
If you do not redeem your shares:
 
 
1 Year
3 Years
5 Years
10 Years
Class A-2
$63
$130
$200
$385
(1)
The example above should not be considered a representation of future expenses.
Actual expenses may be higher or lower than those shown. The example assumes that
the estimated Dividend and Other Costs on Preferred Shares and Other Expenses set
forth in the Annual Expenses table are accurate, that the Total Annual Fund Operating
Expenses (as described above) remain the same for all periods shown, and that all
dividends and distributions are reinvested at NAV. Actual expenses may be greater or
less than those assumed. Moreover, the Fund’s actual rate of return may be greater or
less than the hypothetical 5% annual return shown in the example. In addition to the
fees and expenses described above, you may also be required to pay transaction or
other fees on purchases of Institutional Class, Class A-1, Class A-2 or Class A-3
Common Shares of the Fund, which are not reflected in the example.
          
Purpose of Fee Table , Note [Text Block]
This table is intended to assist investors in understanding the various
costs and expenses directly or indirectly associated with investing in the
Fund. You may qualify for sales charge discounts on Class A-2 Common
Shares of the Fund if you and your family invest, or agree to invest in the
future, in a certain amount of Class A-1, Class A-2, Class A-3 and/or
Class A-4 common shares of the Fund (to the extent available) or other
eligible closed-end interval funds that are sponsored by PIMCO. More
information about these and other discounts is available in the “Plan of
Distribution—Share Classes” section on page
71
of this prospectus,
Appendix B to this prospectus (Financial Firm-Specific Sales Charge
Waivers and Discounts) or from your financial advisor.
          
Other Expenses, Note [Text Block] “Other Expenses” are based on estimated amounts for the current fiscal year.          
Management Fee not based on Net Assets, Note [Text Block]
Management fees include fees payable to the Investment Manager for advisory
services and for supervisory, administrative and other services. The Fund pays for the
advisory, supervisory and administrative services it requires under what is essentially
an all-in fee structure (the “unified management fee”). Pursuant to an investment
management agreement, PIMCO is paid a Management Fee of 0.75% of the Fund’s
total managed assets. The Fund (and not PIMCO) is responsible for certain fees and
expenses, which are reflected in the table above, that are not covered by the unified
management fee under the investment management agreement. Please see
“Management of the Fund - Investment Management Agreement” for an explanation
of the unified management fee and definition of “total managed assets.”
Management Fees have been restated to reflect leverage attributable to Preferred
Shares issued by the Fund on April 16, 2025.
          
Acquired Fund Fees and Expenses, Note [Text Block]
Acquired Fund Fees and Expenses are based on the expense ratios of the other
investment companies in which the Fund invests, which may change substantially over
time and, therefore, significantly affect the Acquired Fund Fees and Expenses. Acquired
Fund Fees and Expenses are borne indirectly by the Fund, but they will not be reflected
in the Fund’s financial statements; and the information presented in the table will
differ from that presented in the Fund’s financial highlights.
          
Financial Highlights [Abstract]            
Senior Securities [Table Text Block]
 
RVMTP
(4)
 
 
 
 
 
Selected Per Share Data for
the Year or Period Ended^:
Total Amount
Outstanding
Asset Coverage per
Preferred Share
(1)
Involuntary
Liquidating
Preference per
Preferred Share
(2)
Average
Market Value per
Preferred Share
(3)
12/31/2024
$
400,000,000
$
515,980
$
100,000
N/A
12/31/2023
400,000,000
437,250
100,000
N/A
12/31/2022
400,000,000
405,570
100,000
N/A
12/31/2021
175,000,000
887,020
100,000
N/A
12/31/2020
150,000,000
453,120
100,000
N/A
(1)
“Asset Coverage per Preferred Share” means the ratio that the value of the total assets of the Fund, less all liabilities and indebtedness not represented by RVMTP Shares, bears to the
aggregate of the involuntary liquidation preference of the RVMTP Shares, expressed as a dollar amount per RVMTP Share.
(2)
“Involuntary Liquidating Preference” means the amount to which a holder of an RVMTP Share would be entitled upon the involuntary liquidation of the Fund in preference to the
Common Shareholders, expressed as a dollar amount per Preferred Share.
(3)
The RVMTP Shares have no readily ascertainable market value. The liquidation value of the RVMTP Shares represents its liquidation preference, which approximates fair value of the
shares less any unamortized debt issuance costs. See Note 13, Preferred Shares, in the Notes to Financial Statements for more information.
(4)
Prior to December 6, 2021, certain RVMTP Shares were Variable Rate MuniFund Term Preferred Shares (“VMTP Shares”). See Note 13, Preferred Shares, in the Notes to Financial
Statements.
          
General Description of Registrant [Abstract]            
Investment Objectives and Practices [Text Block]
The Fund’s Investment Objectives and Strategies
Investment Objectives
The Fund seeks to provide high current income exempt from federal
income tax. Capital appreciation is a secondary objective. The types of
securities and instruments in which the Fund may invest are
summarized under “The Fund’s Investment Objectives and
Policies—Portfolio Management Strategies—Portfolio Contents and
Other Information.”
Portfolio Management Strategies
PIMCO serves as the Investment Manager of the Fund and manages the
Fund’s portfolio. See “Management of the Fund.” The portfolio
management strategies and techniques to be utilized by PIMCO are
described below.
Flexible Allocation Strategy.
The Fund seeks to achieve its
investment objectives by utilizing a flexible, multi-sector tax-efficient
approach to investing, under normal circumstances, primarily in
municipal bonds and other municipal securities that carry interest
payments that are exempt from federal income tax. The principal issuers
of these securities are state and local governments and their agencies
located in any of the fifty states, as well as in Puerto Rico and other
U.S. territories and possessions. To a lesser extent, the Fund also expects
to invest in a full range of preferred securities, with an emphasis on
preferred securities that, at the time of issuance, are eligible to pay
dividends that qualify for certain favorable federal income tax
treatment. With PIMCO’s macroeconomic analysis as the basis for
top-down investment decisions, the Fund seeks to offer investors an
actively-managed municipal bond portfolio that aims to capitalize on
what PIMCO believes are attractive opportunities across states and
sectors within the U.S. municipal market.
Investment selection strategies.
In selecting securities for the
Fund, PIMCO develops an outlook for interest rates and the economy,
analyzes credit and call risks, and uses other security selection
techniques. The proportion of the Fund’s assets committed to
investment in securities with particular characteristics (such as quality,
sector, interest rate or maturity) varies based on PIMCO’s outlook for the
U.S. economy.
PIMCO attempts to preserve and enhance the value of the Fund’s
holdings relative to the municipal bond market, generally, using
proprietary analytical models that test and evaluate the sensitivity of
those holdings to changes in interest rates and yield relationships. There
is no guarantee that PIMCO’s investment selection techniques will
produce the desired results. In selecting investments for the Fund,
PIMCO may use proprietary quantitative models that are developed and
maintained by PIMCO, and which are subject to change over time
without notice in PIMCO's discretion.
Credit quality.
The Fund may invest without limit in municipal bonds
and other securities of any credit quality, including without limitation, in
securities that are, at the time of purchase, rated below “investment
grade” by at least one of Moody’s, S&P or Fitch, or unrated but
determined by PIMCO to be of comparable quality). “Investment grade”
means a rating, in the case of Moody’s, of Baa3 or higher, or in the case
of S&P and Fitch, of BBB- or higher. Bonds of below investment grade
quality are regarded as having predominantly speculative characteristics
with respect to capacity to pay interest and repay principal and are
commonly referred to as “junk bonds.” Bonds in the lowest investment
grade category may also be considered to possess some speculative
characteristics by certain rating agencies. The Fund may also invest
without limit in investment grade securities. The Fund generally expects
to invest approximately 60% of its total assets in above investment
grade securities and approximately 40% of its total assets in below
investment grade securities, but may determine to allocate more heavily
or exclusively to either category at any time and from time to time based
on PIMCO’s economic outlook, market conditions, and other factors.
Independent credit analysis
. PIMCO relies primarily on its own
analysis of the credit quality and risks associated with individual
municipal bonds and other municipal securities considered for the Fund,
rather than relying exclusively on rating agencies or third-party research.
The Fund’s portfolio managers utilize this information in an attempt to
manage credit risk and to identify investments that are undervalued or
that offer attractive yields relative to PIMCO’s assessment of their credit
characteristics. This aspect of PIMCO’s capabilities will be particularly
important to the extent that the Fund invests in high yield municipal
bonds or other securities.
Duration management.
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. There is no limit on the maturity or duration of any
individual security in which the Fund may invest. Duration is a measure
used to determine the sensitivity of a security’s price to changes in
interest rates. The longer a security’s duration, the more sensitive it will
be to changes in interest rates. The portfolio managers focus on
municipal bonds with the potential to offer attractive current income,
typically looking for bonds that can provide consistently attractive
current yields or that are trading at competitive market prices. Capital
appreciation, if any, generally arises from decreases in interest rates or
improving credit fundamentals for a particular state, municipality or
issuer.
          
Risk Factors [Table Text Block]
Principal Risks of the Fund
The NAV of the Common Shares will fluctuate with and be affected by,
among other things, various principal risks of the Fund and its
investments which are summarized below.
AMT Bonds Risk
Investments by the Fund in “AMT Bonds,” which are municipal
securities that pay interest that is taxable under the federal alternative
minimum tax applicable to noncorporate taxpayers, may expose the
Fund to certain risks in addition to those typically associated with
municipal bonds. Interest or principal on AMT Bonds paid out of current
or anticipated revenues from a specific project or specific asset may be
adversely impacted by declines in revenue from the project or asset.
Declines in general business activity could also affect the economic
viability of facilities that are the sole source of revenue to support AMT
Bonds. In this regard, AMT Bonds may entail greater risks than general
obligation municipal bonds. For shareholders subject to the federal
alternative minimum tax, a portion of the Fund’s distributions may not
be exempt from gross federal income, which may give rise to alternative
minimum tax liability.
Interest Rate Risk
Interest rate risk is the risk that fixed income securities and other
instruments in the Fund’s portfolio will fluctuate in value because of a
change in interest rates. For example, as nominal interest rates rise, the
value of certain securities held by the Fund is likely to decrease. Interest
rate changes can be sudden and unpredictable, and the Fund may be
adversely affected as a result of movements in interest rates. The Fund
may not be able to hedge against changes in interest rates or may
choose not to do so for cost or other reasons. In addition, any hedges
may not work as intended.
Fixed income securities with longer durations tend to be more sensitive
to changes in interest rates, usually making them more volatile than
securities with shorter durations. The values of equity and other
non-fixed income securities may also decline due to fluctuations in
interest rates. Inflation-indexed bonds, including Treasury
Inflation-Protected Securities (“TIPS”), decline in value when real
interest rates rise. In certain interest rate environments, such as when
real interest rates are rising faster than nominal interest rates,
inflation-indexed bonds may experience greater losses than other fixed
income securities with similar durations.
Dividend-paying equity securities, particularly those whose market price
is closely related to their yield, may be more sensitive to changes in
interest rates. During periods of rising interest rates, the values of such
securities may decline and may result in losses to the Fund.
Variable and floating rate securities generally are less sensitive to
interest rate changes but may decline in value if their interest rates do
not rise as much, or as quickly, as interest rates in general. Conversely,
floating rate securities will not generally increase in value if interest
rates decline. Inverse floating rate securities may decrease in value if
interest rates increase. Inverse floating rate securities may also exhibit
greater price volatility than a fixed rate obligation with similar credit
quality. When a Fund holds variable or floating rate securities, a
decrease (or, in the case of inverse floating rate securities, an increase)
in market interest rates will adversely affect the income received from
such securities and the NAV of the Fund’s shares.
A wide variety of factors can cause interest rates or yields of
U.S. Treasury securities (or yields of other types of bonds) to rise,
including but not limited to central bank monetary policies, changing
inflation or real growth rates, general economic conditions, increasing
bond issuances or reduced market demand for low yielding investments.
Risks associated with changes in interest rates may be heightened
under certain market conditions, such as during times when the Federal
Reserve raises interest rates or when such rates remain elevated
following a period of historically low levels. Additionally, the U.S. and
other governments have increased, and are likely to continue increasing,
their debt issuances, which may also heighten these risks. There is the
risk that the income generated by investments may not keep pace with
inflation. Actions by governments and central banking authorities can
result in increases or decreases in interest rates. Periods of higher
inflation could cause such authorities to raise interest rates, which may
adversely affect a Fund and its investments. In addition, changes in
monetary policy may exacerbate the risks associated with changing
interest rates. Further, in market environments where interest rates are
rising, issuers may be less willing or able to make principal and interest
payments on fixed-income investments when due.
During periods of very low or negative interest rates, the Fund may be
unable to maintain positive returns. Very low or negative interest rates
may magnify interest rate risk. Changing interest rates, including rates
that fall below zero, may have unpredictable effects on markets, may
result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates.
Measures such as average duration may not accurately reflect the true
interest rate sensitivity of the Fund. This is especially the case if the Fund
consists of securities with widely varying durations. Therefore, if the
Fund has an average duration that suggests a certain level of interest
rate risk, the Fund may in fact be subject to greater interest rate risk
than the average would suggest. This risk is greater to the extent the
Fund uses leverage or derivatives in connection with the management
of the Fund.
Convexity is an additional measure used to understand a security’s or
Fund’s interest rate sensitivity. Convexity measures the rate of change of
duration in response to changes in interest rates. With respect to a
security’s price, a larger convexity (positive or negative) may imply more
dramatic price changes in response to changing interest rates. Convexity
may be positive or negative. Negative convexity implies that interest
rate increases result in increased duration, and vice versa, meaning
increased sensitivity in prices in response to changes in interest rates.
Thus, securities with negative convexity, which may include bonds with
traditional call features and certain mortgage-backed securities, may
experience greater losses in periods of rising interest rates. Accordingly,
if the Fund holds such securities, the Fund may be subject to a greater
risk of losses in periods of rising interest rates.
Municipal Bond Risk
Investing in the municipal bond market involves the risks of investing in
debt securities generally and certain other risks. The amount of public
information available about the municipal bonds in which the Fund may
invest is generally less than that for corporate equities or bonds, and the
investment performance of the Fund’s investment in municipal bonds
may therefore be more dependent on the analytical abilities of PIMCO
than its investments in taxable bonds. The secondary market for
municipal bonds, particularly below investment grade bonds in which
the Fund may invest, also tends to be less well developed or liquid than
many other securities markets, which may adversely affect the Fund’s
ability to sell municipal bonds at attractive prices or value municipal
bonds.
The ability of municipal issuers to make timely payments of interest and
principal may be diminished during general economic downturns, by
litigation, legislation or political events, or by the bankruptcy of the
issuer. Laws, referenda, ordinances or regulations enacted in the future
by Congress or state legislatures or the applicable governmental entity
could extend the time for payment of principal and/or interest, or
impose other constraints on enforcement of such obligations, or on the
ability of municipal issuers to levy taxes. Issuers of municipal securities
also might seek protection under the bankruptcy laws. In the event of
bankruptcy of such an issuer, the Fund could experience delays in
collecting principal and interest and the Fund may not, in all
circumstances, be able to collect all principal and interest to which it is
entitled. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, the Fund may take
possession of and manage the assets securing the issuer's obligations
on such securities, which may increase the Fund's operating expenses.
Adverse economic, business, legal or political developments might affect
all or a substantial portion of the Fund's municipal bonds in the same
manner. The Fund will be particularly subject to these risks to the extent
that it focuses its investments in municipal bonds in a particular state or
geographic region. Municipal securities may also have exposure to
potential risks resulting from climate change, including extreme
weather, flooding and fires. Climate risks, if materialized, can adversely
impact a municipal issuer’s financial plans in current or future years or
may impair a funding source municipal issuer’s revenue bonds. As a
result, the impact of climate risks could adversely impact the value of
the Fund’s municipal securities investments.
The Fund may invest in trust certificates issued in tender option bond
programs. In these programs, a trust typically issues two classes of
certificates and uses the proceeds to purchase municipal securities
having relatively long maturities and bearing interest at a fixed interest
rate substantially higher than prevailing short-term tax-exempt rates.
There is a risk that the Fund will not be considered the owner of a
tender option bond for federal income tax purposes, and thus will not
be entitled to treat such interest as exempt from federal income tax.
Certain tender option bonds may be less liquid or may become less
liquid as a result of, among other things, a credit rating downgrade, a
payment default or a disqualification from tax-exempt status. The Fund’s
investment in the securities issued by a tender option bond trust may
involve greater risk and volatility than an investment in a fixed rate
bond, and the value of such securities may decrease significantly when
market interest rates increase. Tender option bond trusts could be
terminated due to market, credit or other events beyond the Fund’s
control, which could require the Fund to dispose of portfolio investments
at inopportune times and prices. The Fund may use a tender option
bond program as a way of achieving leverage in its portfolio, in which
case the Fund will be subject to leverage risk. The use of tender option
bonds will impact the Fund's duration and cause the Fund to be subject
to increased duration and interest rate risk.
The Fund may invest in revenue bonds, which are typically issued to
fund a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. Because the principal security
for a revenue bond is generally the net revenues derived from a
particular facility or group of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source or annual
revenues, there is no guarantee that the particular project will generate
enough revenue to pay its obligations, in which case the Fund’s
performance may be adversely affected.
The Fund may invest in pre-refunded Municipal Bonds. Pre-refunded
Municipal Bonds are tax-exempt bonds that have been refunded to a
call date prior to the final maturity of principal, or, in the case of
pre-refunded Municipal Bonds commonly referred to as
“escrowed-to-maturity bonds,” to the final maturity of principal, and
remain outstanding in the municipal market. The payment of principal
and interest of the pre-refunded Municipal Bonds held by the Fund is
funded from securities in a designated escrow account that holds
U.S. Treasury securities or other obligations of the U.S. Government
(including its agencies and instrumentalities (“Agency Securities”)). As
the payment of principal and interest is generated from securities held
in an escrow account established by the municipality and an
independent escrow agent, the pledge of the municipality has been
fulfilled and the original pledge of revenue by the municipality is no
longer in place. Pre-refunded and/or escrowed to maturity Municipal
Bonds may bear an investment grade rating (for example, if re-rated by
a rating service or, if not re-rated, determined by PIMCO to be of
comparable quality) because they are backed by U.S. Treasury securities,
Agency Securities or other investment grade securities. For the
avoidance of any doubt, PIMCO’s determination of an issue’s credit
rating will generally be used for compliance with the Fund’s investment
parameters when an issue either loses its rating or is not re-rated upon
pre-refunding. The escrow account securities pledged to pay the
principal and interest of the pre-refunded municipal bond do not
guarantee the price movement of the bond before maturity. Issuers of
municipal bonds refund in advance of maturity the outstanding higher
cost debt and issue new, lower cost debt, placing the proceeds of the
lower cost issuance into an escrow account to pre-refund the older,
higher cost debt. Investment in pre-refunded municipal bonds held by
the Fund may subject the Fund to interest rate risk and market risk. In
addition, while a secondary market exists for pre-refunded municipal
bonds, if the Fund sells pre-refunded municipal bonds prior to maturity,
the price received may be more or less than the original cost, depending
on market conditions at the time of sale.
The Fund may invest in participations in lease obligations or installment
purchase contract obligations of municipal authorities or entities.
Although a municipal lease obligation does not constitute a general
obligation of the municipality for which the municipality's taxing power
is pledged, a municipal lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the
payments due under the municipal lease obligation. However, certain
municipal lease obligations contain “non-appropriation” clauses, which
provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis. In the case of a
“non-appropriation” lease, the Fund's ability to recover under the lease
in the event of non-appropriation or default will be limited solely to the
repossession of the leased property, without recourse to the general
credit of the lessee, and the disposition or re-leasing of the property
might prove difficult.
Municipal securities are also subject to interest rate, credit, and liquidity
risk.
Interest Rate Risk
. The value of municipal securities, similar to
other fixed income securities, will likely drop as interest rates rise in
the general market. Conversely, when rates decline, bond prices
generally rise.
Credit Risk.
The risk that a borrower may be unable to make
interest or principal payments when they are due. Funds that invest in
municipal securities rely on the ability of the issuer to service its debt.
This subjects the Fund to credit risk in that the municipal issuer may
be fiscally unstable or exposed to large liabilities that could impair its
ability to honor its financial obligations. Municipal issuers with
significant debt service requirements, in the near-to mid-term;
unrated issuers and those with less capital and liquidity to absorb
additional expenses may be most at risk. To the extent the Fund
invests in lower quality or high yield municipal securities, it may be
more sensitive to the adverse credit events in the municipal market.
The treatment of municipalities in bankruptcy is more uncertain, and
potentially more adverse to debt holders, than for corporate issues.
Liquidity Risk
. The risk that investors may have difficulty finding a
buyer when they seek to sell, and therefore, may be forced to sell at a
discount to the market value. Liquidity may sometimes be impaired in
the municipal market and because the Fund primarily invests in
municipal securities, it may find it difficult to purchase or sell such
securities at opportune times. The municipal securities market can be
susceptible to increases in volatility and decreases in liquidity.
Liquidity can decline unpredictably in response to a variety of factors,
including overall economic conditions or credit tightening. Increases
in volatility and decreases in liquidity also may be caused by a rise in
interest rates (or the expectation of a rise in interest rates). Liquidity
can be impaired due to interest rate concerns, credit events, or
general supply and demand imbalances. Depending on the particular
issuer and current economic conditions, municipal securities could be
deemed more volatile investments.
In addition to general municipal market risks, different municipal sectors
may face different risks. For instance, general obligation bonds are
secured by the full faith, credit, and taxing power of the municipality
issuing the obligation. As such, timely payment depends on the
municipality's ability to raise tax revenue and maintain a fiscally sound
budget. The timely payments may also be influenced by any unfunded
pension liabilities or other post-employee benefit plan liabilities.
Revenue bonds are secured by special tax revenues or other revenue
sources. If the specified revenues do not materialize, then the bonds
may not be repaid.
Private activity bonds are yet another type of municipal security.
Municipalities use private activity bonds to finance the development of
industrial facilities for use by private enterprise. Principal and interest
payments are to be made by the private enterprise benefiting from the
development, which means that the holder of the bond is exposed to
the risk that the private issuer may default on the bond.
Moral obligation bonds are usually issued by special purpose public
entities. If the public entity defaults, repayment becomes a “moral
obligation” instead of a legal one. The lack of a legally enforceable right
to payment in the event of default poses a special risk for a holder of
the bond because it has little or no ability to seek recourse in the event
of default.
In addition, a significant restructuring of federal income tax rates or
even serious discussion on the topic in Congress could cause municipal
bond prices to fall. The demand for municipal securities is strongly
influenced by the value of tax-exempt income to investors relative to
taxable income. Lower income tax rates potentially reduce the
advantage of owning municipal securities.
Similarly, changes to state or federal regulation tied to a specific sector,
such as the hospital sector, could have an impact on the revenue stream
for a given subset of the market.
Municipal notes are similar to general municipal debt obligations, but
they generally possess shorter terms. Municipal notes can be used to
provide interim financing and may not be repaid if anticipated revenues
are not realized.
Puerto Rico-Specific Risk
The Fund invests in Municipal Bonds issued by Puerto Rico or its
instrumentalities and may be affected by certain developments, such as
political, economic, environmental, social, regulatory or debt
restructuring developments that impact the ability or obligation of
Puerto Rico municipal issuers to pay interest or repay principal. Certain
issuers of Puerto Rico Municipal Bonds have experienced significant
financial difficulties and the continuation or reoccurrence of these
difficulties may impair their ability to pay principal or interest on their
obligations. Provisions of the Puerto Rico Constitution and
Commonwealth laws, including a federally appointed oversight board to
oversee the Commonwealth’s financial operations, which limit the
taxing and spending authority of Puerto Rico governmental entities may
impair the ability of Puerto Rico issuers to pay principal and/or interest
on their obligations. Puerto Rico’s economy has sizable concentrations
in certain industries, such as the manufacturing and service industries,
and may be sensitive to economic problems affecting those industries.
Future Puerto Rico-related developments, such as political and
economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation, debt
restructuring, tax base erosion and voter initiatives as well as
environmental events, natural disasters, pandemics, epidemics or social
unrest could have an adverse effect on the debt obligations of Puerto
Rico issuers.
Municipal Project-Specific Risk
The Fund may be more sensitive to adverse economic, business or
political developments if it invests a substantial portion of its assets in
the bonds of specific projects (such as those relating to education,
health care, housing, transportation and utilities), industrial
development bonds, or in general obligation bonds, particularly if there
is a large concentration from issuers in a single state. The value of
municipal securities can be affected by the political, economic, legal, and
legislative landscape of the particular issuer’s locality, municipal sector
events or actual or perceived changes in economic, social, or public
health conditions. In addition, a significant restructuring of federal
income tax rates or even serious discussion on the topic in Congress
could cause municipal bond prices to fall. The demand for municipal
securities is strongly influenced by the value of tax-exempt income to
investors. Lower income tax rates could reduce the advantage of owning
municipal securities. Similarly, changes to state or federal regulation tied
to a specific sector, such as the hospital sector, could have an impact on
the revenue stream for a given subset of the market.
Municipal Project Housing-Related Risk
The  Fund may invest in the bonds of projects focused on low-income,
affordable or other housing developments and businesses located in
low-income areas or invest in or originate loans that finance or are
generally related to such projects. There are significant risks associated
with the Fund’s investment in the bonds of these types of projects and
loans related to such projects. There may be federal, state and local
governmental regulatory restrictions on the operation, rental and
transfer of these projects, such as the requirement that the owners of
these affordable housing developments rent or sell certain residential
units to persons or families of low or moderate income and that the
amount of rent that may be charged for these units may be less than
market rates. These restrictions may adversely affect economic
performance relative to properties that are not subject to these
restrictions. There are also no assurances that a project owner will be
able to achieve and maintain sufficient rental income in order to pay all
operating expenses and maintenance and repair costs of such a project
and the debt service on the related bonds or loan on a timely basis. In
the event that a project owner is unable to pay all such costs, expenses
and debt service, a default on the related bonds or loan is likely to occur.
Moreover, as a result of economic, market and other factors, the risks of
the Fund’s investment in such municipal project housing-related
securities may be heightened due to the possibility of reduced tax or
other revenue available to issuers of municipal project housing-related
securities causing an increase of budgetary and financial pressure on
either the municipality or other issuers of municipal securities.
Loans and Other Indebtedness; Loan Acquisitions,
Participations and Assignments Risk
Loan interests may take the form of (i) direct interests acquired during a
primary distribution or other purchase of a loan, (ii) loans originated by
the Fund or (iii) assignments of, novations of or participations in all or a
portion of a loan acquired in secondary markets. In addition to credit
risk and interest rate risk, the Fund’s exposure to loan interests may be
subject to additional risks. For example, purchasers of loans and other
forms of direct indebtedness depend primarily upon the
creditworthiness of the borrower for payment of principal and interest.
Loans are subject to the risk that scheduled interest or principal
payments will not be made in a timely manner or at all, either of which
may adversely affect the value of the loan. If the Fund does not receive
scheduled interest or principal payments on such indebtedness, the
Fund’s share price and yield could be adversely affected. Loans that are
fully secured may offer the Fund more protection than an unsecured
loan in the event of non-payment of scheduled interest or principal if
the Fund is able to access and monetize the collateral. However, the
collateral underlying a loan, if any, may be unavailable or insufficient to
satisfy a borrower’s obligation. If the Fund becomes owner, whole or in
part, of any collateral after a loan is foreclosed, the Fund may incur costs
associated with owning and/or monetizing its ownership of the
collateral.
During periods of deteriorating economic conditions, such as recessions
or periods of rising unemployment, or changing interest rates (notably
increases), delinquencies and losses generally increase, sometimes
dramatically, with respect to obligations under such loans. An economic
downturn or individual corporate developments could adversely affect
the market for these instruments and reduce a Fund’s ability to sell
these instruments at an advantageous time or price. An economic
downturn could also lead to a higher non-payment rate and, a loan may
lose significant market value before a default occurs.
Investments in loans through a purchase of a loan, loan origination or a
direct assignment of a financial institution’s interests with respect to a
loan may involve additional risks to a Fund. For example, if a loan is
foreclosed, the Fund could become owner, in whole or in part, of any
collateral, which could include, among other assets, real estate or other
real or personal property, and would bear the costs and liabilities
associated with owning and holding or disposing of the collateral.
Moreover, the purchaser of an assignment typically succeeds to all the
rights and obligations under the loan agreement with the same rights
and obligations as the assigning lender. Assignments may, however, be
arranged through private negotiations between potential assignees and
potential assignors, and the rights and obligations acquired by the
purchaser of an assignment may differ from, and be more limited than,
those held by the assigning lender. The Fund may also invest in loans
that are not secured by collateral which typically present greater risks
than collateralized loans.
In connection with purchasing loan participations, the Fund generally
will have no right to enforce compliance by the borrower with the terms
of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any
collateral supporting the loan in which it has purchased the loan
participation. As a result, the Fund will be subject to the credit risk of
both the borrower and the lender that is selling the participation. In the
event of the insolvency of the lender selling a participation, the Fund
may be treated as a general creditor of the lender and may not benefit
from any set-off between the lender and the borrower. Certain loan
participations may be structured in a manner designed to prevent
purchasers of participations from being subject to the credit risk of the
lender, but even under such a structure, in the event of the lender’s
insolvency, the lender’s servicing of the participation may be delayed
and the assignability of the participation impaired.
The Fund may have difficulty disposing of loans and loan participations.
Because there may not be a liquid market for many such investments,
the Fund anticipates that such investments could be sold only to a
limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such investments
and the Fund’s ability to dispose of particular loans and loan
participations when that would be desirable, including in response to a
specific economic event such as a deterioration in the creditworthiness
of the borrower. The lack of a liquid secondary market for loans and loan
participations also may make it more difficult for the Fund to assign a
value to these securities for purposes of valuing the Fund’s portfolio.
Investments in loans may include participations in bridge loans, which
are loans taken out by borrowers for a short period (typically less than
one year) pending arrangement of more permanent financing through,
for example, the issuance of bonds, frequently high yield bonds issued
for the purpose of acquisitions.
Investments in loans may include acquisitions of, or participation in,
delayed draw and delayed funding loans and revolving credit facilities.
These commitments may have the effect of requiring the Fund to
increase its investment in a borrower at a time when it might not
otherwise decide to do so (including at a time when the company's
financial condition makes it unlikely that such amounts will be repaid).
Delayed draw and delayed funding loans and revolving credit facilities
may be subject to restrictions on transfer, and only limited opportunities
may exist to resell such instruments. As a result, the Fund may be unable
to sell such investments at an opportune time or may have to resell
them at less than fair market value. Further, the Fund may need to hold
liquid assets in order to provide funding for these types of
commitments, meaning the Fund may not be able to invest in other
attractive investments, or the Fund may need to liquidate existing assets
in order to provide such funding.
The Fund may invest in loans used to finance the cost of construction,
acquisition, development, and/or rehabilitation of a property including,
but not limited to, development of single-family for-sale homes,
multi-family rentals and/or commercial facilities. Such construction
lending may expose the Fund to increased risk of non-payment and loss
because the loan is not backed by a finished project. Such risk may
depend on the nature of the construction and the relevant counterparty
or counterparties, which may include, but not be limited to,
homebuilders, private developers and/or entities with limited capital.
Repayment of these types of loans may depend on the borrower’s ability
to secure permanent “take-out” financing, which requires the successful
completion of the project, or operation of the property with an income
stream sufficient to meet operating and loan expenses. In addition,
these types of loans are subject to the risk of errors in estimations of the
property’s value at completion of construction and the estimated cost of
construction, as well as the risk that the projects may not be completed
and have limited liquidity.
To the extent the Fund invests in loans, or originates loans, the Fund
may be subject to greater levels of credit risk, call risk, settlement risk,
risk of subordination to other creditors, insufficient or lack of protection
under federal securities laws and liquidity risk. These instruments are
considered predominantly speculative with respect to an issuer’s
continuing ability to make principal and interest payments and may be
more volatile than other types of securities. The Fund may also be
subject to greater levels of liquidity risk than funds that do not invest in
loans. In addition, the loans in which the Fund invests may not be listed
on any exchange and a secondary market for such loans may be
comparatively illiquid relative to markets for other more liquid fixed
income securities. Consequently, transactions in loans may involve
greater costs than transactions in more actively traded securities. In
connection with certain loan transactions, transaction costs that are
borne by the Fund may include the expenses of third parties that are
retained to assist with reviewing and conducting diligence, negotiating,
structuring and servicing a loan transaction, and/or providing other
services in connection therewith. Furthermore, the Fund may incur such
costs in connection with loan transactions that are pursued by the Fund
but not ultimately consummated (so-called “broken deal costs”).
Restrictions on transfers in loan agreements, a lack of publicly available
information, irregular trading activity and wide bid/ask spreads, among
other factors, may, in certain circumstances, make loans more difficult to
sell at an advantageous time or price than other types of securities or
instruments. These factors may result in the Fund being unable to realize
full value for the loans and/or may result in the Fund not receiving the
proceeds from a sale of a loan for an extended period after such sale,
each of which could result in losses to the Fund. Some loans may have
extended trade settlement periods, including settlement periods of
greater than seven days, which may result in cash not being
immediately available to the Fund. If an issuer of a loan prepays or
redeems the loan prior to maturity, the Fund may have to reinvest the
proceeds in other loans or similar instruments that may pay lower
interest rates. Because of the risks involved in investing in loans, an
investment in the Fund should be considered speculative.
The Fund’s investments in subordinated and unsecured loans generally
are subject to similar risks as those associated with investments in
secured loans. Subordinated or unsecured loans are lower in priority of
payment to secured loans and are subject to the additional risk that the
cash flow of the borrower and property securing the loan or debt, if any,
may be insufficient to meet scheduled payments after giving effect to
the senior secured obligations of the borrower. This risk is generally
higher for subordinated unsecured loans or debt, which are not backed
by a security interest in any specific collateral. Subordinated and
unsecured loans generally have greater price volatility than secured
loans and may be less liquid. There is also a possibility that originators
will not be able to sell participations in subordinated or unsecured
loans, which would create greater credit risk exposure for the holders of
such loans. Subordinate and unsecured loans share the same risks as
other below investment grade securities.
There may be less readily available information about most loans and
the underlying borrowers than is the case for many other types of
securities. Loans may be issued by borrowers that are not subject to SEC
reporting requirements and therefore may not be required to file reports
with the SEC or may file reports that are not required to comply with
SEC form requirements. In addition, such borrowers may be subject to a
less stringent liability disclosure regime than companies subject to SEC
reporting requirements. Loans may not be considered “securities,” and
purchasers, such as the Fund, therefore may not be entitled to rely on
the anti-fraud protections of the federal securities laws. Because there is
limited public information available regarding loan investments, the
Fund is particularly dependent on the analytical abilities of the Fund’s
portfolio managers.
Economic exposure to loan interests through the use of derivative
transactions may involve greater risks than if the Fund had invested in
the loan interest directly during a primary distribution, through direct
originations or through assignments of, novations of or participations in
a loan acquired in secondary markets since, in addition to the risks
described above, certain derivative transactions may be subject to
leverage risk and greater illiquidity risk, counterparty risk, valuation risk
and other risks.
Loan Origination Risk
The Fund may invest in and/or originate loans, including, without
limitation, to, on behalf of, authorized by, sponsored by, and/or in
connection with a project for which authority and responsibility lies with
one or more U.S. states or territories, cities in a U.S. state or territory, or
political subdivisions, agencies, authorities or instrumentalities of such
states, territories or cities, which may be in the form of, and without
limitation as to a loan's level of seniority within a capital structure,
whole loans, assignments, participations, secured and unsecured notes,
senior and second lien loans, mezzanine loans, bridge loans or similar
investments, including to borrowers that are unrated or have credit
ratings that are determined by one or more NRSROs and/or PIMCO to
be below investment grade. This may include loans to public or private
firms or individuals, such as in connection with housing development
projects. The loans the Fund invests in or originates may vary in maturity
and/or duration. The Fund is not limited in the amount, size or type of
loans it may invest in and/or originate, including with respect to a single
borrower or with respect to borrowers that are determined to be below
investment grade, other than pursuant to any applicable law. The Fund’s
investment in or origination of loans may also be limited by the
requirements the Fund intends to observe under Subchapter M of the
Code in order to qualify as a RIC. The loans acquired by the Fund may be
of the type that count towards the Fund’s 80% policy or they may be
loans that produce income that is subject to regular federal income tax.
The Fund may subsequently offer such investments for sale to third
parties; provided, that there is no assurance that the Fund will complete
the sale of such an investment. If the Fund is unable to sell, assign or
successfully close transactions for the loans that it originates, the Fund
will be forced to hold its interest in such loans for an indeterminate
period of time. This could result in the Fund’s investments having high
exposure to certain borrowers. The Fund will be responsible for the
expenses associated with originating a loan (whether or not
consummated). This may include significant legal and due diligence
expenses, which will be indirectly borne by the Fund and Common
Shareholders.
Bridge loans are generally made with the expectation that the borrower
will be able to obtain permanent financing in the near future. Any delay
in obtaining permanent financing subjects the bridge loan investor to
increased risk. A borrower’s use of bridge loans also involves the risk
that the borrower may be unable to locate permanent financing to
replace the bridge loan, which may impair the borrower’s perceived
creditworthiness.
Loan origination and servicing companies are routinely involved in legal
proceedings concerning matters that arise in the ordinary course of their
business. In addition, a number of participants in the loan origination
and servicing industry (including control persons of industry
participants) have been the subject of regulatory actions by state
regulators, including state attorneys general, and by the federal
government. Governmental investigations, examinations or regulatory
actions, or private lawsuits, including purported class action lawsuits,
may adversely affect such companies’ financial results. To the extent the
Fund engages in origination and/or servicing directly, or has a financial
interest in, or is otherwise affiliated with, an origination or servicing
company, the Fund will be subject to enhanced risks of litigation,
regulatory actions and other proceedings. As a result, the Fund may be
required to pay legal fees, settlement costs, damages, penalties or other
charges, any or all of which could materially adversely affect the Fund
and its holdings.
California State-Specific Risk
The Fund invests in municipal bonds issued by or on behalf of the State
of California and its political subdivisions, financing authorities and their
agencies, and therefore may be affected significantly by economic,
regulatory, social, environmental or public health developments
affecting the ability of California tax-exempt issuers to pay interest or
repay principal. Certain issuers of California municipal bonds have
experienced serious financial difficulties in the past and reoccurrence of
these difficulties may impair the ability of certain California issuers to
pay principal or interest on their obligations, particularly given large
budget deficits that have been identified and may continue. Provisions
of the California Constitution and State statutes that limit the taxing
and spending authority of California governmental entities may impair
the ability of California issuers to pay principal and/or interest on their
obligations. While California’s economy is broad, it does have major
concentrations in advanced technology, aerospace and defense-related
manufacturing, trade, entertainment, real estate and financial services,
and may be sensitive to economic problems affecting those industries,
and its government revenues tend to rely heavily on certain earners
(revenues therefore are likely to be more volatile and to be adversely
affected if the number of such earners (or their recognized income
within a particular period of time) decreases). Future California political
and economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation and
voter initiatives as well as environmental events or natural disasters,
including but not limited to an earthquake or a wildfire, pandemics,
epidemics or social unrest could create a major dislocation of the
California economy and significantly affect the ability of state and local
governments to raise money to pay principal and interest on their
municipal securities and have an adverse effect on the debt obligations
of California issuers.
New York State-Specific Risk
The Fund may invest in municipal bonds issued by or on behalf of the
State of New York and its political subdivisions, financing authorities
and their agencies, and therefore may be affected significantly by
political, economic or regulatory developments affecting the ability of
New York tax-exempt issuers to pay interest or repay principal. Certain
issuers of New York municipal bonds have experienced serious financial
difficulties in the past and reoccurrence of these difficulties may impair
the ability of certain New York issuers to pay principal or interest on
their obligations, particularly given large budget deficits that have been
identified and may continue. Provisions of the New York Constitution
and State statutes which limit the taxing and spending authority of
New York governmental entities may impair the ability of New York
issuers to pay principal and/or interest on their obligations. While
New York’s economy is broad, it does have major concentrations in
certain industries, such as financial services, and may be sensitive to
economic problems affecting those industries, and its government
revenues tend to rely heavily on certain earners (revenues therefore are
likely to be more volatile and to be adversely affected if the number of
such earners (or their recognized income within a particular period of
time) decreases). Future New York political and economic developments,
constitutional amendments, legislative measures, executive orders,
administrative regulations, litigation and voter initiatives as well as
environmental events, natural disasters, pandemics, epidemics or social
unrest could have an adverse effect on the debt obligations of New York
issuers to pay principal or interest on their obligations. The financial
health of New York City affects that of the State, and when New York
City experiences financial difficulty it may have an adverse effect on
New York municipal bonds held by the Fund. The growth rate of
New York has at times been somewhat slower than the nation overall.
The economic and financial condition of New York also may be affected
by various financial, social, economic, environmental, political and
geopolitical factors.
Insurance Risk
The Fund may purchase municipal securities that are secured by
insurance, bank credit agreements or escrow accounts. The credit quality
of the companies that provide such credit enhancements will affect the
value of those securities. If the insurer of a municipal security suffers a
downgrade in its credit rating or the market discounts the value of the
insurance provided by the insurer, the rating of the underlying municipal
security will be more relevant and the value of the municipal security
would more closely, if not entirely, reflect such rating. In such a case, the
value of insurance associated with a municipal security would decline
and may not add any value. The insurance feature of a municipal
security does not guarantee the full payment of principal and interest
through the life of an insured obligation, the market value of the insured
obligation or the net asset value of the common shares represented by
such insured obligation.
Inflation/Deflation Risk
Inflation risk is the risk that the value of assets or income from the
Fund’s investments will be worth less in the future as inflation decreases
the value of payments at future dates. As inflation increases, the real
value of the Fund’s portfolio could decline. Inflation rates may change
frequently and significantly as a result of various factors, including
unexpected shifts in the domestic or global economy or changes in fiscal
or monetary policies. Deflation risk is the risk that prices throughout the
economy decline over time. Deflation may have an adverse effect on the
creditworthiness of issuers and may make issuer default more likely,
which may result in a decline in the value of the Fund’s portfolio and
Common Shares.
Call Risk
Call risk refers to the possibility that an issuer may exercise its right to
redeem a fixed income security earlier than expected (a call). Issuers
may call outstanding securities prior to their maturity for a number of
reasons (
e.g.
, declining interest rates, changes in credit spreads and
improvements in the issuer’s credit quality). If an issuer calls a security in
which the Fund has invested, the Fund may not recoup the full amount
of its initial investment or may not realize the full anticipated earnings
from the investment and may be forced to reinvest in lower-yielding
securities, securities with greater credit risks or securities with other, less
favorable features.
Credit Risk
The Fund could experience losses if the issuer or guarantor of a fixed
income security (including a security purchased with securities lending
collateral), the counterparty to a derivatives contract, or the issuer or
guarantor of collateral, repurchase agreement or a loan of portfolio
securities is unable or unwilling, or is perceived (whether by market
participants, rating agencies, pricing services or otherwise) as unable or
unwilling, to make timely principal and/or interest payments or to
otherwise honor its financial obligations. The risk that such issuer,
guarantor or counterparty is less willing or able to do so is heightened
in market environments where interest rates are changing, notably
when rates are rising. Debt instruments backed by an issuer's taxing
authority may be subject to legal limits on the issuer's power to increase
taxes or otherwise to raise revenue or may be dependent on legislative
appropriation or government aid. Certain debt instruments are backed
only by revenues derived from a particular project or source, rather than
by an issuer's taxing authority, and thus may have a greater risk of
default. The downgrade of the credit rating of a security or of the issuer
of a security held by the Fund may decrease its value. Measures such as
average credit quality may not accurately reflect the true credit risk of
the Fund. This is especially the case if the Fund consists of securities
with widely varying credit ratings. Securities are subject to varying
degrees of credit risk, which are often reflected in credit ratings. This risk
is greater to the extent the Fund uses leverage or derivatives in
connection with the management of the Fund. Municipal bonds are
subject to the risk that litigation, legislation or other political events,
local business or economic conditions, or the bankruptcy of the issuer
could have a significant effect on an issuer’s ability to make payments of
principal and/or interest. Rising or high interest rates may deteriorate
the credit quality of an issuer or counterparty, particularly if an issuer or
counterparty faces challenges rolling or refinancing its obligations. The
Fund’s investments may be adversely affected if any of the issuers it is
invested in are subject to an actual or perceived (whether by market
participants, rating agencies, pricing services or otherwise) deterioration
to their credit quality.
Credit risk includes credit spread risk, which is the risk that credit
spreads (i.e., the difference in yield between securities that is due to
differences in their actual or perceived credit quality) may increase when
the market believes that investments generally have a greater risk of
default. Increasing credit spreads may reduce the market values of the
Fund's investments. Credit spreads often increase more for lower rated
and unrated securities than for investment grade securities. In addition,
when credit spreads increase, reductions in market value will generally
be greater for longer-maturity securities. Further, credit spread duration
(a measure of credit spread risk) can vary significantly from interest rate
duration (e.g., for floating rate debt securities, credit spread duration
typically will be higher than interest rate duration). The Fund may add
credit spread duration to its portfolio, for example through the use of
derivatives (e.g., credit default swaps), even while it has lower interest
rate duration. The credit spread duration of the Fund’s portfolio may
vary, in some cases significantly, from its interest rate duration. All
descriptions of duration in this prospectus refer to interest rate duration
unless otherwise noted.
Issuer Risk
The value of a security may decline for a number of reasons that directly
relate to the issuer, such as management performance, major litigation,
investigations or other controversies, changes in the issuer’s financial
condition or credit rating, changes in government regulations affecting
the issuer or its competitive environment and strategic initiatives such
as mergers, acquisitions or dispositions and the market response to any
such initiatives, financial leverage, reputation or reduced demand for the
issuer’s goods or services, as well as the historical and prospective
earnings of the issuer and the value of its assets. A change in the
financial condition of a single issuer may affect one or more other
issuers or securities markets as a whole. These risks can apply to the
Common Shares issued by the Fund and to the issuers of securities and
other instruments in which the Fund invests.
Liquidity Risk
To the extent consistent with the applicable liquidity requirements for
interval funds under Rule 23c-3 of the Act, the Fund may invest without
limit in illiquid investments. Liquidity risk exists when particular
investments are difficult to purchase or sell. Illiquid investments are
investments that the Fund reasonably expects cannot be sold or
disposed of in current market conditions in seven calendar days or less
without the sale or disposition significantly changing the market value
of the investment. Illiquid investments may become harder to value,
especially in changing markets. The Fund’s investments in illiquid
investments may reduce the returns of the Fund because it may be
unable to sell the illiquid investments at an advantageous time or price
or possibly require the Fund to dispose of other investments at
unfavorable times or prices in order to satisfy its obligations, which
could prevent the Fund from taking advantage of other investment
opportunities. Illiquidity can be caused by, among other things, a drop in
overall market trading volume, an inability to find a willing buyer, or
legal restrictions on the securities’ resale. Additionally, the market for
certain investments may become illiquid under adverse market or
economic conditions independent of any specific adverse changes in the
conditions of a particular issuer, such as during political events
(including periods of rapid interest rate changes). There can be no
assurance that an investment that is deemed to be liquid when
purchased will continue to be liquid while it is held by a fund and/or
when a fund wishes to dispose of it. Bond markets have consistently
grown over the past three decades while the capacity for traditional
dealer counterparties to engage in fixed income trading has not kept
pace and in some cases has decreased. As a result, dealer inventories of
corporate bonds, which provide a core indication of the ability of
financial intermediaries to “make markets,” are at or near historic lows
in relation to market size. Because market makers seek to provide
stability to a market through their intermediary services, the significant
reduction in dealer inventories could potentially lead to decreased
liquidity and increased volatility in the fixed income markets. Such issues
may be exacerbated during periods of economic uncertainty.
In such cases, the Fund, due to regulatory limitations on investments in
illiquid investments and the difficulty in purchasing and selling such
securities or instruments, may be unable to achieve its desired level of
exposure to a certain sector. To the extent that the Fund's principal
investment strategies involve securities of companies with smaller
market capitalizations, foreign (non-U.S.) securities, Rule 144A
securities, illiquid sectors of fixed income securities, derivatives or
securities with substantial market and/or credit risk, the Fund will tend
to have the greatest exposure to liquidity risk.
Further, fixed income securities with longer durations until maturity face
heightened levels of liquidity risk as compared to fixed income securities
with shorter durations until maturity. The risks associated with illiquid
instruments may be particularly acute in situations in which the Fund’s
operations require cash (such as in connection with repurchase offers)
and could result in the Fund borrowing to meet its short-term needs or
incurring losses on the sale of illiquid instruments. It may also be the
case that other market participants may be attempting to liquidate fixed
income holdings at the same time as the Fund, causing increased supply
in the market and contributing to liquidity risk and downward pricing
pressure.
Liquidity risk also refers to the risk that the Fund may be required to
hold additional cash or sell other investments in order to obtain cash to
close out derivatives or meet the liquidity demands that derivatives can
create to make payments of margin, collateral, or settlement payments
to counterparties. The Fund may have to sell a security at a
disadvantageous time or price to meet such obligations.
The actions of governments and regulators may have the effect of
reducing market liquidity, market resiliency and money supply.
Repurchase Offers Risk
As described under “Periodic Repurchase Offers” above, the Fund is an
“interval fund” and, in order to provide liquidity to shareholders, the
Fund, subject to applicable law, conducts quarterly repurchase offers of
the Fund’s outstanding Common Shares at NAV, subject to approval of
the Board. In each quarter, such repurchase offers will be for at least 5%
and not more than 25% of its outstanding Common Shares at NAV,
pursuant to Rule 23c-3 under the Act.
The Fund currently expects to conduct quarterly repurchase offers for
10% of its outstanding Common Shares under ordinary circumstances.
The Fund believes that these repurchase offers are generally beneficial
to the Fund’s shareholders, and repurchases generally will be funded
from available cash or sales of portfolio securities. However, repurchase
offers and the need to fund repurchase obligations may affect the ability
of the Fund to be fully invested or force the Fund to maintain a higher
percentage of its assets in liquid investments, which may harm the
Fund’s investment performance. Moreover, diminution in the size of the
Fund through repurchases may result in untimely sales of portfolio
securities (with associated imputed transaction costs, which may be
significant), and may limit the ability of the Fund to participate in new
investment opportunities or to achieve its investment objectives. The
Fund may accumulate cash by holding back (i.e., not reinvesting)
payments received in connection with the Fund’s investments. The Fund
believes that payments received in connection with the Fund’s
investments will generate sufficient cash to meet the maximum
potential amount of the Fund’s repurchase obligations. If at any time
cash and other liquid assets held by the Fund are not sufficient to meet
the Fund’s repurchase obligations, the Fund intends, if necessary, to sell
investments. To the extent the Fund employs investment leverage,
repurchases of Common Shares would compound the adverse effects of
leverage in a declining market. In addition, if the Fund borrows to
finance repurchases, interest on that borrowing will negatively affect
Common Shareholders who do not tender their Common Shares by
increasing the Fund’s expenses and reducing any net investment
income. If a repurchase offer is oversubscribed, the Fund may, but is not
required to, determine to increase the amount repurchased by up to 2%
of the Fund’s outstanding shares as of the date of the Repurchase
Request Deadline. In the event that the Fund determines not to
repurchase more than the repurchase offer amount, or if shareholders
tender more than the repurchase offer amount plus 2% of the Fund’s
outstanding shares as of the date of the Repurchase Request Deadline,
the Fund will repurchase the Common Shares tendered on a pro rata
basis, and shareholders will have to wait until the next repurchase offer
to make another repurchase request. As a result, shareholders may be
unable to liquidate all or a given percentage of their investment in the
Fund during a particular repurchase offer. Notwithstanding the
foregoing, the Fund may accept all Common Shares tendered for
repurchase by shareholders who own less than one hundred Common
Shares and who tender all of their Common Shares, before prorating
Common Shares tendered by other shareholders; provided that, if a
shareholder holds shares through a financial intermediary, such
intermediary may not be willing or able to arrange for this treatment on
such shareholder's behalf. Some shareholders, in anticipation of
proration, may tender more Common Shares than they wish to have
repurchased in a particular quarter, thereby increasing the likelihood
that proration will occur. A shareholder may be subject to market and
other risks, and the NAV of Common Shares tendered in a repurchase
offer may decline between the Repurchase Request Deadline and the
date on which the NAV for tendered Common Shares is determined. In
addition, the repurchase of Common Shares by the Fund may be a
taxable event to shareholders.
High Yield Securities Risk
To the extent that the Fund invests in high yield securities and unrated
securities of similar credit quality (commonly known as “high yield
securities” or “junk bonds”), the Fund may be subject to greater levels
of credit risk, call risk and liquidity risk than funds that do not invest in
such securities, which could have a negative effect on the NAV of the
Fund’s Common Shares or Common Share dividends. These securities
are considered predominantly speculative by rating agencies with
respect to an issuer’s continuing ability to make principal and interest
payments, and their value may be more volatile than other types of
securities. An economic downturn or individual issuer developments
could adversely affect the market for these securities and reduce the
Fund’s ability to sell these securities at an advantageous time or price.
An economic downturn could also lead to a higher non-payment rate
and, a high yield security may lose significant market value before a
default occurs. The Fund may purchase distressed securities that are in
default or the issuers of which are in bankruptcy, which involve
heightened risks.
High yield securities structured as zero-coupon bonds or pay-in-kind
securities tend to be especially volatile as they are particularly sensitive
to downward pricing pressures from rising interest rates or widening
spreads and may require the Fund to make taxable distributions of
imputed income without receiving the actual cash currency. Issuers of
high yield securities may have the right to “call” or redeem the issue
prior to maturity, which may result in the Fund having to reinvest the
proceeds in other high yield securities or similar instruments that may
pay lower interest rates. The Fund may also be subject to greater levels
of liquidity risk than funds that do not invest in high yield securities.
Consequently, transactions in high yield securities may involve greater
costs than transactions in more actively traded securities.
A lack of publicly-available information, irregular trading activity and
wide bid/ask spreads among other factors, may, in certain
circumstances, make high yield debt more difficult to sell at an
advantageous time or price than other types of securities or
instruments. These factors may result in the Fund being unable to realize
full value for these securities and/or may result in the Fund not receiving
the proceeds from a sale of a high yield security for an extended period
after such sale, each of which could result in losses to the Fund. Because
of the risks involved in investing in high yield securities, an investment in
the Fund should be considered speculative.
In general, lower rated debt securities carry a greater degree of risk that
the issuer will lose its ability to make interest and principal payments,
which could have a negative effect on a Fund. Securities of below
investment grade quality are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal and are commonly referred to as “high yield” securities
or “junk bonds.” High yield securities involve a greater risk of default,
and their prices are generally more volatile and sensitive to actual or
perceived negative developments. Debt securities in the lowest
investment grade category also may be considered to possess some
speculative characteristics by certain rating agencies. A Fund may
purchase stressed or distressed securities that are in default or the
issuers of which are in bankruptcy, which involve heightened risks. An
economic downturn could severely affect the ability of issuers
(particularly those that are highly leveraged) to service or repay their
debt obligations. Lower-rated securities are generally less liquid than
higher-rated securities, which may have an adverse effect on a Fund’s
ability to dispose of them. For example, during periods of deteriorating
economic conditions, such as recessions or periods of rising
unemployment, or changing interest rates (notably increases), high yield
securities are particularly susceptible to credit and default risk as
delinquencies and losses could increase, and such increases could be
sudden and significant. An economic downturn or individual issuer
developments could adversely affect the market for these investments
and reduce a Fund’s ability to sell these investments at an
advantageous time or price. These types of developments could cause
high yield securities to lose significant market value, including before a
default occurs only at prices lower than if such securities were widely
traded.
To the extent the Fund focuses on below investment grade debt
obligations, PIMCO’s capabilities in analyzing credit quality and
associated risks will be particularly important, and there can be no
assurance that PIMCO will be successful in this regard. Due to the risks
involved in investing in high yield securities, an investment in the Fund
should be considered speculative. See “The Fund’s Investment
Objectives and Strategies—Portfolio Contents—High Yield Securities”
for additional information.
The Fund’s credit quality policies apply only at the time a security is
purchased, and the Fund is not required to dispose of a security in the
event that a rating agency or PIMCO downgrades its assessment of the
credit characteristics of a particular issue. In determining whether to
retain or sell such a security, PIMCO may consider factors including, but
not limited to, PIMCO's assessment of the credit quality of the issuer of
such security, the price at which such security could be sold and the
rating, if any, assigned to such security by other rating agencies. Analysis
of creditworthiness may be more complex for issuers of high yield
securities than for issuers of higher quality debt securities.
Market Risk
The market price of securities owned by the Fund may go up or down,
sometimes rapidly or unpredictably. Securities may decline in value due
to factors affecting securities markets generally or particular industries
or companies represented in the securities markets. The value of a
security may decline due to general market conditions that are not
specifically related to a particular company, such as real or perceived
adverse economic conditions, changes in the general outlook for
corporate earnings, changes in inflation, interest or currency rates,
financial system instability, adverse changes to credit markets or
adverse investor sentiment generally. The value of a security may also
decline due to factors that affect a particular industry or industries, such
as labor shortages or increased production costs and competitive
conditions within an industry. During a general downturn in the
securities markets, multiple asset classes may decline in value
simultaneously even if the performance of those asset classes is not
otherwise historically correlated. Investments may also be negatively
impacted by market disruptions and by attempts by other market
participants to manipulate the prices of particular investments. Equity
securities generally have greater price volatility than fixed income
securities. Credit ratings downgrades may also negatively affect
securities held by the Fund. Even when markets perform well, there is no
assurance that the investments held by the Fund will increase in value
along with the broader market.
In addition, market risk includes the risk that geopolitical and other
events will disrupt the economy on a national or global level. For
instance, actual or threatened war or military conflict, terrorism, social
unrest, recessions, supply chain disruptions, market manipulation,
government defaults, government shutdowns, political changes,
diplomatic developments or the imposition of sanctions and other
similar measures, including the imposition of tariffs, or other
U.S. economic policies and any related public health emergencies (such
as the spread of infectious diseases, pandemics and epidemics) and
natural/environmental disasters can all negatively impact the securities
markets, which could cause the Fund to lose value. These events could
reduce consumer demand or economic output, result in market closures,
changes in interest rates, inflation/deflation, travel restrictions or
quarantines, and significantly adversely impact the economy.
As computing technology and data analytics advance, there has been a
trend towards machine driven and artificially intelligent trading systems,
particularly with respect to increasing levels of autonomy in trading
decision capabilities. Regulators of financial markets have become
increasingly focused on the potential impact of artificial intelligence on
investment activities and may issue regulations that affect the use of
artificial technology in trading activities. Any such regulations may not
have the effect on financial markets that regulators intend. Moreover,
advancements in artificial intelligence and other technologies may result
in the introduction of errors, defects or security vulnerabilities, which can
go undetected. The potential speed of such trading and other
technologies may exacerbate the impact of any such incidents,
particularly where such incidents are exploited by other artificially
intelligent systems designed to impair or prevent the intervention of a
human control.
The current contentious domestic political environment, as well as
political and diplomatic events within the United States and abroad, or
the U.S. government’s inability at times to agree on a long-term budget
and deficit reduction plan, has in the past resulted, and may in the
future result, in a government shutdown or otherwise adversely affect
the U.S. regulatory landscape, the general market environment and/or
investor sentiment, which could have an adverse impact on the Fund’s
investments and operations. Additional and/or prolonged U.S. federal
government shutdowns may affect investor and consumer confidence
and may adversely impact financial markets and the broader economy,
perhaps suddenly and to a significant degree. Governmental and
quasi-governmental authorities and regulators throughout the world
have previously responded to serious economic disruptions with a
variety of significant fiscal and monetary policy changes, including but
not limited to, direct capital infusions into companies, new monetary
programs and dramatically lower interest rates. An unexpected or
sudden reversal of these policies, or the ineffectiveness of these policies,
could increase volatility in securities markets, which could adversely
affect the Fund’s investments. Any market disruptions could also prevent
the Fund from executing advantageous investment decisions in a timely
manner. To the extent that a Fund has focused its investments on a
region enduring geopolitical market disruption will face higher risks of
loss, although the increasing interconnectivity between global
economies and financial markets can lead to events or conditions in one
country, region or financial market adversely impacting a different
country, region or financial market. Thus, investors should closely
monitor current market conditions to determine whether the Fund
meets their individual financial needs and tolerance for risk.
During inflationary price movements, fixed income securities markets
may experience heightened levels of interest rate, volatility and liquidity
risk. Interest rate increases in the future could cause the value of a fund
that invests in fixed income securities to decrease. Interest rate increases
and other market events have the potential to adversely impact real
estate values and real estate-related asset prices, which could, by
extension, adversely impact the value of other investments, such as
loans, securitized debt and other fixed income securities. Such an impact
could materialize in one real estate sector and not another, or in a
different manner in different real estate sectors. Examples of the current
risks faced by real estate-related assets include: tenant vacancy rates,
tenant turnover and tenant concentration have increased; owners of
real estate have faced headwinds, delinquencies and difficulties in
collecting rents and other payments (which increases the risk of owners
being unable to pay or otherwise defaulting on their own borrowings
and obligations); property values have declined; inflation, upkeep costs
and other expenses have increased; rents have declined for many
properties; and ownership of certain types of properties has become
more concentrated.
Exchanges and securities markets may close early, close late or issue
trading halts on specific securities or generally, which may result in,
among other things, the Fund being unable to buy or sell certain
securities or financial instruments at an advantageous time or accurately
price its portfolio investments.
Municipal Bond Market Risk.
The amount of public
information available about the municipal bonds in the Fund’s
portfolio is generally less than that for corporate equities or bonds,
and the investment performance of the Fund may therefore be
more dependent on the analytical abilities of PIMCO than would
be a stock fund or taxable bond fund. The secondary market for
municipal bonds, particularly below investment grade bonds in
which the Fund may invest, also tends to be less well-developed
and less liquid than many other securities markets, which may
adversely affect the Fund’s ability to sell municipal bonds at
attractive prices or value municipal bonds.
Management Risk
The Fund is subject to management risk because it is an actively
managed investment portfolio. PIMCO will apply investment techniques
and risk analysis in making investment decisions for the Fund. There can
be no guarantee that these decisions will produce the desired results or
that the due diligence conducted by PIMCO and individual portfolio
managers will expose all material risks associated with an investment.
Additionally, PIMCO and individual portfolio managers may not be able
to identify suitable investment opportunities and may face competition
from other investment managers when identifying and consummating
certain investments, or may determine that certain factors are more
significant than others. Certain securities or other instruments in which
the Fund seeks to invest may not be available in the quantities desired,
including in circumstances where other funds for which PIMCO acts as
investment adviser, including funds with names, investment objectives
and policies, and/or portfolio management teams, similar to the Fund,
are seeking to invest in the same or similar securities or instruments. In
addition, regulatory restrictions, actual or potential conflicts of interest
or other considerations may cause PIMCO to restrict or prohibit
participation in certain investments. In such circumstances, PIMCO or
the individual portfolio managers may determine to purchase other
securities or instruments as substitutes. Such substitute securities or
instruments may not perform as intended, which could result in losses
to the Fund. To the extent the Fund employs strategies targeting
perceived pricing inefficiencies, arbitrage strategies or similar strategies,
it is subject to the risk that the pricing or valuation of the securities and
instruments involved in such strategies may change unexpectedly, which
may result in reduced returns or losses to the Fund. The Fund is also
subject to the risk that deficiencies in the internal systems or controls of
PIMCO or another service provider will cause losses for the Fund or
hinder Fund operations. For example, trading delays or errors (both
human and systemic) could prevent the Fund from purchasing a security
expected to appreciate in value. Please refer to “Portfolio Managers -
Conflicts of Interest” in the SAI for further information. Additionally,
actual or potential conflicts of interest, legislative, regulatory, or tax
restrictions, policies or developments may affect the investment
techniques available to PIMCO and each individual portfolio manager in
connection with managing the Fund, may cause PIMCO to restrict or
prohibit participation in certain investments and may also adversely
affect the ability of the Fund to achieve its investment objectives. There
also can be no assurance that all of the personnel of PIMCO will
continue to be associated with PIMCO for any length of time. The loss of
the services of one or more key employees of PIMCO could have an
adverse impact on the Fund’s ability to realize its investment objectives.
In addition, the Fund may rely on various third-party sources to calculate
its NAV. As a result, the Fund is subject to certain operational risks
associated with reliance on service providers and service providers’ data
sources. In particular, errors or systems failures and other technological
issues may adversely impact the Fund’s calculations of its NAV, and such
NAV calculation issues may result in inaccurately calculated NAVs,
delays in NAV calculation and/or the inability to calculate NAVs over
extended periods. The Fund may be unable to recover any losses
associated with such failures.
Reinvestment Risk
Income from the Fund’s portfolio will decline if and when the Fund
invests the proceeds from matured, traded or called debt obligations at
market interest rates that are below the portfolio’s current earnings
rate
.
For instance, during periods of declining interest rates, an issuer of debt
obligations may exercise an option to redeem securities prior to
maturity, forcing the Fund to invest in lower-yielding securities. The Fund
also may choose to sell higher yielding portfolio securities and to
purchase lower yielding securities to achieve greater portfolio
diversification, because the portfolio managers believe the current
holdings are overvalued or for other investment-related reasons. A
decline in income received by the Fund from its investments is likely to
have a negative effect on dividend levels and the market price, NAV
and/or overall return of the Common Shares.
Leverage Risk
The Fund’s use of leverage (as described under “Use of Leverage” in the
body of this prospectus) creates the opportunity for increased Common
Share net income, but also creates special risks for Common
Shareholders (including an increased risk of loss). To the extent used,
there is no assurance that the Fund’s leveraging strategies will be
successful. Leverage is a speculative technique that may expose the
Fund to greater risk and increased costs. The Fund’s assets attributable
to any outstanding Preferred Shares or the net proceeds that the Fund
obtains from its use of tender option bonds, derivatives or other forms
of leverage, if any, will be invested in accordance with the Fund’s
investment objectives and policies as described in this prospectus.
Dividends payable with respect to any Preferred Shares outstanding and
interest expense payable by the Fund with respect to any tender option
bonds, derivatives and other forms of leverage will generally be based
on shorter-term interest rates that would be periodically reset. So long
as the Fund’s portfolio investments provide a higher rate of return (net
of applicable Fund expenses) than the dividend rate on any Preferred
Shares outstanding, including the Preferred Shareholder Gross-Up, and
the interest expenses and other costs to the Fund of such other
leverage, the investment of the proceeds thereof will generate more
income than will be needed to pay the costs of the leverage. If so, and
all other things being equal, the excess may be used to pay higher
dividends to Common Shareholders than if the Fund were not so
leveraged. If, however, shorter-term interest rates rise relative to the rate
of return on the Fund’s portfolio, the interest and other costs to the
Fund of leverage (including interest expenses on tender option bonds
and the dividend rate on any outstanding Preferred Shares, including
the Preferred Shareholder Gross-Up) could exceed the rate of return on
the debt obligations and other investments held by the Fund, thereby
reducing return to Common Shareholders. When the Fund reduces or
discontinues its use of leverage (“deleveraging”), which it may be
required to do at inopportune times, it may be required to sell portfolio
securities at inopportune times to repay leverage obligations, which
could result in realized losses and a decrease in the Fund's net asset
value. Deleveraging involves complex operational processes, including
the coordination of asset sales, repayment of debt, and potential
restructuring of the Fund's capital and may involve significant costs,
including transaction costs associated with the sale of portfolio
securities, prepayment penalties on borrowed funds, and, if applicable,
fees related to the redemption of preferred shares. Leveraging
transactions pursued by the Fund may increase its duration and
sensitivity to interest rate movements. The Fund may continue to use
leverage even if available financing rates are higher than anticipated
returns, including, for example, in cases where deleveraging, including
any expenses related thereto, might be viewed as detrimental to the
Fund’s portfolio. In addition, fees and expenses of any form of leverage
used by the Fund will be borne entirely by the Common Shareholders
(and not by Preferred Shareholders, if any) and will reduce the
investment return of the Common Shares. Therefore, there can be no
assurance that the Fund’s use of leverage will result in a higher yield on
the Common Shares, and it may result in losses. In addition, any
Preferred Shares issued by the Fund are expected to pay cumulative
dividends, which may tend to increase leverage risk.
Leverage creates several major types of risks for Common Shareholders,
including:
■
the likelihood of greater volatility of NAV of Common Shares, and
of the investment return to Common Shareholders, than a
comparable portfolio without leverage;
■
the possibility either that Common Share dividends will fall if the
interest and other costs of leverage rise, or that dividends paid on
Common Shares will fluctuate because such costs vary over time;
and
■
the effects of leverage in a declining market or a rising interest
rate environment, as leverage is likely to cause a greater decline in
the NAV of the Common Shares than if the Fund were not
leveraged.
In addition, the counterparties to the Fund’s leveraging transactions and
any Preferred Shareholders of the Fund will have complete priority of
payment over the Fund’s Common Shareholders.
Reverse repurchase agreements involve the risks that the interest
income earned on the investment of the proceeds will be less than the
interest expense and Fund expenses associated with the repurchase
agreement, that the market value of the securities sold by the Fund may
decline below the price at which the Fund is obligated to repurchase
such securities and that the securities may not be returned to the Fund.
There is no assurance that reverse repurchase agreements can be
successfully employed. Dollar roll/buy back transactions involve the risk
that the market value of the securities the Fund is required to purchase
may decline below the agreed upon purchase price of those securities.
Successful use of dollar rolls/buy backs may depend upon the
Investment Manager’s ability to correctly predict interest rates and
prepayments. There is no assurance that dollar rolls/buy backs can be
successfully employed. In connection with reverse repurchase
agreements and dollar rolls/buy backs, the Fund will also be subject to
counterparty risk with respect to the purchaser of the securities. If the
broker/dealer to whom the Fund sells securities becomes insolvent, the
Fund’s right to purchase or repurchase securities may be restricted.
The Fund may engage in total return swaps, reverse repurchases, loans
of portfolio securities, short sales and when-issued, delayed delivery and
forward commitment transactions, credit default swaps, basis swaps
and other swap agreements, purchases or sales of futures and forward
contracts (including foreign currency exchange contracts), call and put
options or other derivatives. The Fund’s use of such transactions gives
rise to associated leverage risks described above, and may adversely
affect the Fund’s income, distributions and total returns to Common
Shareholders. To the extent that any offsetting positions do not behave
in relation to one another as expected, the Fund may perform as if it is
leveraged through use of these derivative strategies.
Any total return swaps, reverse repurchases, loans of portfolio securities,
short sales and when-issued, delayed delivery and forward commitment
transactions, credit default swaps, basis swaps and other swap
agreements, purchases or sales of futures and forward contracts
(including foreign currency exchange contracts), call and put options or
other derivatives by the Fund or counterparties to the Fund’s other
leveraging transactions, if any, would have seniority over the Fund’s
Common Shares.
In addition to tender option bonds and any future issuance of Preferred
Shares, the Fund may engage in other transactions that may give rise to
a form of leverage including, among others loans of portfolio securities,
short sales and when-issued, delayed delivery and forward commitment
transactions, credit default swaps, reverse repurchases, or other
derivatives. The Fund’s use of such transactions gives rise to associated
leverage risks described above, and may adversely affect the Fund’s
income, distributions and total returns to Common Shareholders. The
Fund may offset derivatives positions against one another or against
other assets to manage effective market exposure resulting from
derivatives in its portfolio. To the extent that any offsetting positions do
not behave in relation to one another as expected, the Fund may
perform as if it is leveraged through use of these derivative strategies.
See “Use of Leverage.”
The Fund is required to satisfy certain regulatory and rating agency asset
coverage requirements in connection with its use of Preferred Shares.
Accordingly, any decline in the net asset value of the Fund’s investments
could result in the risk that the Fund will fail to meet its asset coverage
requirements for any such Preferred Shares or the risk of the Preferred
Shares being downgraded by a rating agency. The Fund’s current
investment income might not be sufficient to meet the dividend
requirements on preferred shares outstanding. In order to address these
types of events, the Fund might need to liquidate investments in order
to fund a redemption of some or all of Preferred Shares. Liquidations at
inopportune times or at times of adverse economic conditions may
result in a loss to the Fund. At other times, these liquidations may result
in gain at the Fund level and thus in additional taxable distributions to
Common Shareholders. See “Tax Matters” for more information. Any
Preferred Shares, total return swaps, reverse repurchases, tender option
bonds, loans of portfolio securities, short sales and when-issued,
delayed delivery and forward commitment transactions, credit default
swaps, reverse repurchases or other derivatives by the Fund or
counterparties to the Fund’s other leveraging transactions, if any, would
have, seniority over the Fund’s Common Shares.
When the Fund issues Preferred Shares, the Fund pays (and the
Common Shareholders bear) all costs and expenses relating to the
issuance and ongoing maintenance of Preferred Shares. In addition,
holders of any Preferred Shares issued by the Fund would have
complete priority over Common Shareholders in the distribution of the
Fund’s assets. Furthermore, Preferred Shareholders, voting separately as
a single class, have the right to elect two members of the Board at all
times and to elect a majority of the trustees in the event two full years’
dividends on the Preferred Shares are unpaid, and also have separate
class voting rights on certain matters. Accordingly, Preferred
Shareholders may have interests that differ from those of Common
Shareholders, and may at times have disproportionate influence over
the Fund’s affairs.
Because the fees received by the Investment Manager may increase
depending on the types of leverage utilized by the Fund, the Investment
Manager has a financial incentive for the Fund to use certain forms of
leverage, which may create a conflict of interest between the Investment
Manager, on the one hand, and the Common Shareholders, on the other
hand.
Derivatives Risk
The Fund may, but is not required to, utilize a variety of derivative
instruments (both long and short positions) for investment or risk
management purposes.
Derivatives or other similar instruments (referred to collectively as
“derivatives”) are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index.
For example, the Fund may use derivative instruments for purposes of
increasing liquidity, providing efficient portfolio management,
broadening investment opportunities (including taking short or negative
positions), implementing a tax or cash management strategy, gaining
exposure to a particular security or segment of the market, modifying
the effective duration of the Fund’s portfolio investments and/or
enhancing total return.
Investments in derivatives may take the form of buying and/or writing
(selling) derivatives, and/or the Fund may otherwise become an obligor
under a derivatives transaction. These transactions may produce
short-term capital gains in the form of premiums or other returns for the
Fund (which may support, constitute and/or increase the distributions
paid by, or the yield of, the Fund) but create the risk of losses that can
significantly exceed such current income or other returns. For example,
the premium received for writing a call option may be dwarfed by the
losses the Fund may incur if the call option is exercised, and derivative
transactions where the Fund is an obligor can produce an up-front
benefit, but the potential for leveraged losses. The distributions, or
distribution rates, paid by the Fund should not be viewed as the total
returns or overall performance of the Fund. These strategies may also
produce adverse tax consequences (for example, the Fund’s income and
gain-generating strategies may generate current income and gains
taxable as ordinary income) and limit the Fund’s opportunity to profit or
otherwise benefit from certain gains. The Fund may enter into opposing
derivative transactions, or otherwise take opposing positions. Such
transactions can generate distributable gains (which, as noted
elsewhere, may be taxed as ordinary income) and create the risk of
losses and NAV declines.
The use of derivatives involves risks different from, and possibly greater
than, the risks associated with investing directly in securities and other
traditional investments. Derivatives may increase market exposure and
are subject to a number of risks including leverage risk, liquidity risk
(which may be heightened for highly-customized derivatives), interest
rate risk, market risk, counterparty (including credit) risk, operational
risk (such as documentation issues, settlement issues and systems
failures), legal risk (such as insufficient documentation, insufficient
capacity or authority of a counterparty, and issues with the legality or
enforceability of a contract), management risk, risks arising from
changes in applicable regulatory requirements, risks arising from margin
requirements and risks arising from mispricing or valuation complexity
(including the risk of improper valuation), governmental risk, as well as
the risks associated with the underlying asset, reference rate or index, or
risks associated with sanctions. They also involve the risk that changes
in the value of a derivative instrument may not correlate perfectly with
the underlying asset, rate or index. By investing in a derivative
instrument, the Fund could lose more than the initial amount invested,
and derivatives may increase the volatility of the Fund, especially in
unusual or extreme market conditions. Certain derivatives have the
potential for unlimited loss, regardless of the size of the initial
investment. The Fund may utilize asset segregation and posting of
collateral for risk management or other purposes. The Fund may be
required to hold additional cash or sell other investments in order to
obtain cash to close out a position and changes in the value of a
derivative may also create margin delivery or settlement payment
obligations for the Fund. Also, suitable derivative transactions may not
be available in all circumstances and there can be no assurance that the
Fund will engage in these transactions to reduce exposure to other risks
when that would be beneficial or that, if used, such strategies will be
successful. The Fund’s use of derivatives may increase or accelerate the
amount of taxes payable by Common Shareholders.
Non-centrally-cleared Over-the-counter (“OTC”) derivatives are also
subject to the risk that a counterparty to the transaction will not fulfill
its contractual obligations to the other party, as many of the protections
afforded to centrally cleared derivative transactions might not be
available for non-centrally-cleared OTC derivatives. The primary credit
risk on derivatives that are exchange-traded or traded through a central
clearing counterparty resides with the Fund’s clearing broker, or the
clearinghouse itself.
Participation in the markets for derivative instruments involves
investment risks and transaction costs to which the Fund may not be
subject absent the use of these strategies. The skills needed to
successfully execute derivative strategies may be different from those
needed for other types of transactions. If the Fund incorrectly forecasts
the value and/or creditworthiness of securities, currencies, interest rates,
counterparties or other economic factors involved in a derivative
transaction, the Fund might have been in a better position if the Fund
had not entered into such derivative transaction. In evaluating the risks
and contractual obligations associated with particular derivative
instruments, it is important to consider that certain derivative
transactions may be modified or terminated only by mutual consent of
the Fund and its counterparty.
Therefore, it may not be possible for the Fund to modify, terminate, or
offset the Fund’s obligations or the Fund’s exposure to the risks
associated with a derivative transaction prior to its scheduled
termination or maturity date, which may create a possibility of increased
volatility and/or decreased liquidity to the Fund.
Because the markets for certain derivative instruments (including
markets located in foreign countries) are relatively new and still
developing, appropriate derivative transactions may not be available in
all circumstances for risk management or other purposes. Upon the
expiration of a particular contract, the Fund may wish to retain the
Fund’s position in the derivative instrument by entering into a similar
contract but may be unable to do so if the counterparty to the original
contract is unwilling to enter into the new contract and no other
appropriate counterparty can be found. When such markets are
unavailable, the Fund will be subject to increased liquidity and
investment risk.
The Fund may enter into opposite sides of interest rate swap and other
derivatives for the principal purpose of generating distributable gains on
the one side (characterized as ordinary income for tax purposes) that
are not part of the Fund’s duration or yield curve management
strategies (“paired swap transactions”), and with a substantial
possibility that the Fund will experience a corresponding capital loss
and decline in NAV with respect to the opposite side transaction (to the
extent it does not have corresponding offsetting capital gains).
Consequently, Common Shareholders may receive distributions and owe
tax on amounts that are effectively a taxable return of the shareholder’s
investment in the Fund, at a time when their investment in the Fund has
declined in value, which tax may be at ordinary income rates. The tax
treatment of certain derivatives in which the Fund invests may be
unclear and thus subject to recharacterization. Any recharacterization of
payments made or received by the Fund pursuant to derivatives
potentially could affect the amount, timing or character of Fund
distributions. In addition, the tax treatment of such investment
strategies may be changed by regulation or otherwise.
Although hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching
between the derivative and the underlying instrument, and there can be
no assurance that the Fund’s hedging transactions will be effective.
Derivatives used for hedging or risk management may not operate as
intended or may expose the Fund to additional risks. In addition,
derivatives used for hedging may partially protect the Fund from the
risks they were intended to hedge yet not fully mitigate the impact of
such risks. The regulation of the derivatives markets has increased over
time, and additional future regulation of the derivatives markets may
make derivatives more costly, may limit the availability or reduce the
liquidity of derivatives, or may otherwise adversely affect the value or
performance of derivatives. Any such adverse future developments could
impair the effectiveness or raise the costs of the Fund’s derivative
transactions, impede the employment of the Fund’s derivatives
strategies, or adversely affect the Fund’s performance and cause the
Fund to lose value.
Credit Default Swaps Risk
Credit default swap agreements may involve greater risks than if the
Fund had invested in the reference obligation directly since, in addition
to general market risks, credit default swaps are subject to leverage risk,
illiquidity risk, counterparty risk and credit risk. A buyer generally also
will lose its investment and recover nothing should no credit event occur
and the swap is held to its termination date. If a credit event were to
occur, the value of any deliverable obligation received by the seller (if
any), coupled with the upfront or periodic payments previously received,
may be less than the full notional value it pays to the buyer, resulting in
a loss of value to the seller. When the Fund acts as a seller of a credit
default swap, it is exposed to many of the same risks of leverage
described herein. As the seller, the Fund would receive a stream of
payments over the term of the swap agreement provided that no event
of default has occurred with respect to the referenced debt obligation
upon which the swap is based. The Fund would effectively add leverage
to its portfolio because, if a default occurs, the stream of payments may
stop and, in addition to its total net assets, the Fund would be subject to
investment exposure on the notional amount of the swap.
Although the Fund may seek to realize gains by selling credit default
swaps that increase in value, to realize gains on selling credit default
swaps, an active secondary market for such instruments must exist or
the Fund must otherwise be able to close out these transactions at
advantageous times. In addition to the risk of losses described above, if
no such secondary market exists or the Fund is otherwise unable to
close out these transactions at advantageous times, selling credit
default swaps may not be profitable for the Fund.
The market for credit default swaps has become more volatile as the
creditworthiness of certain counterparties has been questioned and/or
downgraded. The Fund will be subject to credit risk with respect to the
counterparties to the credit default swap contract (whether a clearing
corporation or another third party). If a counterparty’s credit becomes
significantly impaired, multiple requests for collateral posting in a short
period of time could increase the risk that the Fund may not receive
adequate collateral. The Fund may exit its obligations under a credit
default swap only by terminating the contract and paying applicable
breakage fees, or by entering into an offsetting credit default swap
position, which may cause the Fund to incur more losses.
Valuation Risk
Certain securities in which the Fund invests may be less liquid and more
difficult to value than other types of securities. Investments for which
market quotations are not readily available are valued at fair value as
determined in good faith pursuant to Rule 2a-5 under the Act. See
”How Fund Shares are Priced.“ Fair value pricing may require subjective
determinations about the value of a security or other asset. As a result,
there can be no assurance that fair value pricing will result in
adjustments to the prices of securities or other assets, or that fair value
pricing will reflect actual market value, and it is possible that the fair
value determined for a security or other asset will be materially different
from quoted or published prices, from the prices used by others for the
same security or other asset and/or from the value that actually could be
or is realized upon the sale of that security or other asset.
Counterparty Risk
The Fund will be subject to credit risk with respect to the counterparties
to the derivative contracts and other instruments entered into by the
Fund or held by special purpose or structured vehicles in which the Fund
invests. For example, if a bank at which the Fund or issuer has an
account fails, any cash or other assets in bank or custody accounts,
which may be substantial in size, could be temporarily inaccessible or
permanently lost by the Fund or issuer. In the event that the Fund enters
into a derivative transaction with a counterparty that subsequently
becomes insolvent or becomes the subject of a bankruptcy case, the
derivative transaction may be terminated in accordance with its terms
and the Fund’s ability to realize its rights under the derivative
instrument and its ability to distribute the proceeds could be adversely
affected. If a counterparty becomes bankrupt or otherwise fails to
perform its obligations under a derivative contract due to financial
difficulties, the Fund may experience significant delays in obtaining any
recovery (including recovery of any collateral it has provided to the
counterparty) in a dissolution, assignment for the benefit of creditors,
liquidation, winding-up, bankruptcy, or other analogous proceeding. In
addition, in the event of the insolvency of a counterparty to a derivative
transaction, the derivative transaction would typically be terminated at
its fair market value. If the Fund is owed this fair market value in the
termination of the derivative transaction and its claim is unsecured, the
Fund will be treated as a general creditor of such counterparty, and will
not have any claim with respect to any underlying security or asset. The
Fund may obtain only a limited recovery or may obtain no recovery in
such circumstances. Counterparty credit risk also includes the related
risk of having concentrated exposure to a single counterparty, which
may increase potential losses if the counterparty were to become
insolvent. While the Fund may seek to manage its counterparty risk by
transacting with a number of counterparties, concerns about the
solvency of, or a default by, one large market participant could lead to
significant impairment of liquidity and other adverse consequences for
other counterparties.
Confidential Information Access Risk
In managing the Fund (and other PIMCO clients), PIMCO may from time
to time have the opportunity to receive material, non-public information
(“Confidential Information”) about the issuers of certain investments,
including, without limitation, senior floating rate loans, other loans and
related investments being considered for acquisition by the Fund or held
in the Fund’s portfolio. For example, an issuer of privately placed loans
considered by the Fund may offer to provide PIMCO with financial
information and related documentation regarding the issuer that is not
publicly available. Pursuant to applicable policies and procedures,
PIMCO may (but is not required to) seek to avoid receipt of Confidential
Information about such issuers so as to avoid possible restrictions on its
ability to purchase and sell investments on behalf of the Fund and other
clients to which such Confidential Information relates. In such
circumstances, the Fund (and other PIMCO clients) may be
disadvantaged in comparison to other investors, including with respect
to the price the Fund pays or receives when it buys or sells an
investment. Further, PIMCO’s and the Fund’s abilities to assess the
desirability of proposed consents, waivers or amendments with respect
to certain investments may be compromised if they are not privy to
available Confidential Information. PIMCO may also determine to
receive such Confidential Information in certain circumstances under its
applicable policies and procedures. If PIMCO intentionally or
unintentionally comes into possession of Confidential Information, it
may be unable, potentially for a substantial period of time, to purchase
or sell investments to which such Confidential Information relates.
Private Placements Risk
A private placement involves the sale of securities that have not been
registered under the Securities Act, or relevant provisions of applicable
non-U.S. law, to certain institutional and qualified individual purchasers,
such as the Fund. In addition to the general risks to which all securities
are subject, securities received in a private placement generally are
subject to strict restrictions on resale, and there may be no liquid
secondary market or ready purchaser for such securities. See “Principal
Risks of the Fund—Liquidity Risk.” Therefore, the Fund may be unable
to dispose of such securities when it desires to do so, or at the most
favorable time or price. Private placements may also raise valuation
risks. See “Principal Risks of the Fund—Valuation Risk.” The Fund may
also have to bear the expense of registering the securities for resale and
the risk of substantial delays in effecting the registration. Additionally,
the purchase price and subsequent valuation of private placements
typically reflect a discount, which may be significant, from the market
price of comparable securities for which a more liquid market exists.
Privacy and Data Security Risk
The GLBA and other laws limit the disclosure of certain non-public
personal information about a consumer to non-affiliated third parties
and require financial institutions to disclose certain privacy policies and
practices with respect to information sharing with both affiliates and
non- affiliated third parties. Many states and a number of
non-U.S. jurisdictions have enacted privacy and data security laws
requiring safeguards on the privacy and security of consumers’
personally identifiable information. Other laws deal with obligations to
safeguard and dispose of private information in a manner designed to
avoid its dissemination. Privacy rules adopted by the U.S. Federal Trade
Commission and SEC implement the GLBA and other requirements and
govern the disclosure of consumer financial information by certain
financial institutions, ranging from banks to private investment funds.
U.S. platforms following certain models generally are required to have
privacy policies that conform to these GLBA and other requirements. In
addition, such platforms typically have policies and procedures intended
to maintain platform participants’ personal information securely and
dispose of it properly. The Fund generally does not intend to obtain or
hold borrowers’ non-public personal information, and the Fund has
implemented procedures reasonably designed to prevent the disclosure
of borrowers’ non-public personal information to the Fund. However,
service providers to the Fund or its direct or indirect fully-owned
subsidiaries, including their custodians and the platforms acting as loan
servicers for the Fund or its direct or indirect fully-owned subsidiaries,
may obtain, hold or process such information. The Fund cannot
guarantee the security of non-public personal information in the
possession of such a service provider and cannot guarantee that service
providers have been and will continue to comply with the GLBA, other
data security and privacy laws and any other related regulatory
requirements. Violations of the GLBA and other laws could subject the
Fund to litigation and/or fines, penalties or other regulatory action,
which, individually or in the aggregate, could have an adverse effect on
the Fund. The Fund may also face regulations related to privacy and
data security in the other jurisdictions in which the Fund invests.
Regulatory Changes Risk
Financial entities, such as investment companies and investment
advisers, are generally subject to extensive government regulation and
intervention. Government regulation and/or intervention may change
the way the Fund is regulated, affect the expenses incurred directly by
the Fund and the value of its investments, and limit and/or preclude the
Fund’s ability to achieve its investment objectives. Government
regulation may change frequently and may have significant adverse
consequences. The Fund and the Investment Manager have historically
been eligible for exemptions from certain regulations. However, there is
no assurance that the Fund and the Investment Manager will continue
to be eligible for such exemptions.
Moreover, government regulation may have unpredictable and
unintended effects. Legislative or regulatory actions to address
perceived liquidity or other issues in fixed income markets generally, or
in particular markets such as the municipal securities market, may alter
or impair the Fund’s ability to pursue its investment objectives or utilize
certain investment strategies and techniques.
While there continues to be uncertainty about the full impact of these
and other regulatory changes, it is the case that the Fund will be subject
to a more complex regulatory framework, and may incur additional
costs to comply with new requirements as well as to monitor for
compliance in the future. Actions by governmental entities may also
impact certain instruments in which the Fund invests and reduce market
liquidity and resiliency.
Other Investment Companies Risk
The Fund may invest up to 5% of its total assets in securities of other
investment companies (including those advised by PIMCO), including
closed-end funds, exchange-traded funds and other open-end funds,
that invest primarily in municipal bonds and other municipal securities
of the types in which the Fund may invest directly. When investing in an
investment company, the Fund will generally bear its ratable share of
that investment company’s expenses, and would remain subject to
payment of the Fund’s management fees and other expenses with
respect to assets so invested. Common Shareholders would therefore be
subject to duplicative expenses to the extent the Fund invests in other
investment companies. In addition, these other investment companies
may utilize leverage, in which case an investment would subject the
Fund to additional risks associated with leverage. Due to its own
financial interest or other business considerations, the Investment
Manager may choose to invest a portion of the Fund’s assets in
investment companies sponsored or managed by the Investment
Manager or its related parties in lieu of investments by the Fund directly
in portfolio securities, or may choose to invest in such investment
companies over investment companies sponsored or managed by
others. Participation in a cash sweep program where the Fund's
uninvested cash balance is used to purchase shares of affiliated or
unaffiliated money market funds or cash management pooled
investment vehicles at the end of each day subjects the Fund to the risks
associated with the underlying money market funds or cash
management pooled investment vehicles, including liquidity risk.
Applicable law may limit the Fund’s ability to invest in other investment
companies. See “Principal Risks of the Fund—Leverage Risk.”
Tax Risk
The Fund has elected to be treated as a RIC under Subchapter M of the
Code and intends each year to qualify and be eligible to be treated as
such, so that it generally will not be subject to U.S. federal income tax
on its net investment income or net short-term or long-term capital
gains that are timely distributed (or deemed distributed, as described
below) to shareholders. In order to qualify and be eligible for such
treatment, the Fund must meet certain asset diversification tests, derive
at least 90% of the sum of its gross income for such year from certain
types of qualifying income, and distribute to its shareholders at least
90% of its “investment company taxable income” as that term is
defined in the Code (which includes, among other things, dividends,
taxable interest and the excess of any net short-term capital gains over
net long-term capital losses, as reduced by certain deductible expenses)
and net tax-exempt income, for such year.
The Fund’s investment strategy will potentially be limited by its intention
to continue qualifying for treatment as a RIC, and can limit the Fund’s
ability to continue qualifying as such. The tax treatment of certain of the
Fund’s investments under one or more of the qualification or
distribution tests applicable to RICs is uncertain. An adverse
determination or future guidance by the IRS or a change in law might
affect the Fund’s ability to qualify or be eligible for treatment as a RIC.
Income and gains from certain of the Fund's activities may not
constitute qualifying income to a RIC for purposes of the 90% gross
income test. If the Fund were to treat income or gain from a particular
investment or activity as qualifying income and the income or gain were
later determined not to constitute qualifying income and, together with
any other nonqualifying income, caused the Fund's nonqualifying
income to exceed 10% of its gross income in any taxable year, the Fund
would fail to qualify as a RIC unless it is eligible to and does pay a tax at
the Fund level.
If, in any year, the Fund were to fail to qualify for treatment as a RIC
under the Code and were ineligible to or did not otherwise cure such
failure, the Fund would be subject to tax on its taxable income at
corporate rates and, when such income is distributed, shareholders
would be subject to further tax on such distributions to the extent of the
Fund’s current or accumulated earnings and profits.
To qualify to pay exempt-interest dividends, at least 50% of the value of
the total assets of the Fund must consist of obligations exempt from
federal income tax as of the close of each quarter of the Fund’s taxable
year. Fund distributions reported as exempt-interest dividends are not
generally taxable to Fund shareholders for regular U.S. federal income
tax purposes, but they may be subject to state and local taxes and/or
federal alternative minimum tax. If the proportion of taxable
investments held by the Fund exceeds 50% of the Fund’s total assets as
of the close of any quarter of the Fund’s taxable year, the Fund will not
for that taxable year satisfy the general eligibility test that otherwise
permits it to pay exempt-interest dividends.
The value of the Fund’s investments and its net asset value may be
adversely affected by changes in tax rates and policies. Because interest
income from municipal securities is normally not subject to regular
federal income taxation, the attractiveness of municipal securities in
relation to other investment alternatives is affected by changes in
federal income tax rates or changes in the tax-exempt status of interest
income from municipal securities. Any proposed or actual changes in
such rates or exempt status, therefore, can significantly affect the
demand for and supply, liquidity and marketability of municipal
securities. This could in turn affect the Fund’s net asset value and ability
to acquire and dispose of municipal securities at desirable yield and
price levels. Additionally, the Fund is not a suitable investment for
individual retirement accounts, for other tax-exempt or tax-deferred
accounts or for investors who are not sensitive to the federal income tax
consequences of their investments.
Potential Conflicts of Interest Risk—Allocation of Investment
Opportunities
The Investment Manager and its affiliates are involved worldwide with a
broad spectrum of financial services and asset management activities
and may engage in the ordinary course of business in activities in which
its interests or the interests of its clients may conflict with those of the
Fund. The Investment Manager may provide investment management
services to other funds and discretionary managed accounts that follow
an investment program similar to that of the Fund. Subject to the
requirements of the Act, the Investment Manager intends to engage in
such activities and may receive compensation from third parties for its
services. The results of the Fund’s investment activities may differ from
those of the Fund’s affiliates, or another account managed by the
Investment Manager or its affiliates, and it is possible that the Fund
could sustain losses during periods in which one or more of the Fund’s
affiliates and/or other accounts managed by the Investment Manager or
its affiliates, including proprietary accounts, achieve profits on their
trading.
Distribution Rate Risk
The Fund's distribution rate may be affected by numerous factors,
including but not limited to changes in realized and projected market
returns, fluctuations in market interest rates, 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’s
distribution rate or that the rate will be sustainable in the future. For
instance, during periods of low or declining interest rates, the Fund’s
distributable income and dividend levels may decline for many reasons.
For example, the Fund may have to deploy uninvested assets (whether
from sales of Fund shares, proceeds from matured, traded or called debt
obligations or other sources) in new, lower yielding instruments.
Additionally, payments from certain instruments that may be held by the
Fund (such as variable and floating rate securities) may be negatively
impacted by declining interest rates, which may also lead to a decline in
the Fund’s distributable income and dividend levels.
Securities Lending Risk
For the purpose of achieving income, the Fund may lend its portfolio
securities to brokers, dealers, and other financial institutions provided a
number of conditions are satisfied, including that the loan is fully
collateralized. Please see “Investment Objectives and Policies—Loans of
Portfolio Securities” in the Statement of Additional Information for more
details. When the Fund lends portfolio securities, its investment
performance will continue to reflect changes in the value of the
securities loaned, and the Fund will also receive a fee or interest on the
collateral. Securities lending involves the risk of loss of rights in the
collateral or delay in recovery of the collateral if the borrower fails to
return the security loaned or becomes insolvent. The Fund may pay
lending fees to a party arranging the loan. Cash collateral received by
the Fund in securities lending transactions may be invested in
short-term liquid fixed income instruments or in money market or
short-term mutual funds, or similar investment vehicles, including
affiliated money market or short-term mutual funds. The Fund bears the
risk of such investments.
Portfolio Turnover Risk
The Investment Manager manages the Fund without regard generally to
restrictions on portfolio turnover. The use of futures contracts and other
derivative instruments with relatively short maturities may tend to
exaggerate the portfolio turnover rate for the Fund. Trading in fixed
income securities does not generally involve the payment of brokerage
commissions, but does involve indirect transaction costs. The use of
futures contracts and other derivative instruments may involve the
payment of commissions to futures commission merchants or other
intermediaries. Higher portfolio turnover involves correspondingly
greater expenses to the Fund, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities
and reinvestments in other securities. The higher the rate of portfolio
turnover of the Fund, the higher these transaction costs borne by the
Fund generally will be. Such sales may result in realization of taxable
capital gains (including short-term capital gains, which are generally
taxed to shareholders at ordinary income tax rates when distributed net
of short-term capital losses and net long-term capital losses), and may
adversely impact the Fund’s after-tax returns. See “Tax Matters.”
Operational Risk
An investment in the Fund, like any fund, can involve operational risks
arising from factors such as processing errors, human errors, inadequate
or failed internal or external processes, failures in systems and
technology, changes in personnel and errors caused by third-party
service providers. The occurrence of any of these failures, errors or
breaches could result in a loss of information, regulatory scrutiny,
reputational damage or other events, any of which could have a
material adverse effect on the Fund. While the Fund seeks to minimize
such events through controls and oversight, there may still be failures
that could cause losses to the Fund.
Market Disruptions Risk
The Fund is subject to investment and operational risks associated with
financial, economic and other global market developments and
disruptions, including those arising from war, military conflicts, terrorism,
social unrest, recessions, supply chain disruptions, market manipulation,
government interventions, defaults and shutdowns, political changes or
diplomatic developments, public health emergencies (such as the spread
of infectious diseases, pandemics and epidemics), bank failures,
natural/environmental disasters, climate change and climate related
events which can all negatively impact the securities markets, interest
rates, auctions, secondary trading, ratings, credit risk, inflation, deflation
and other factors relating to the Fund’s investments or the Investment
Manager’s operations and the value of an investment in the Fund, its
distributions and its returns. These events can also impair the
technology and other operational systems upon which the Fund’s
service providers, including PIMCO as the Fund’s investment adviser,
rely, and could otherwise disrupt the Fund’s service providers’ ability to
fulfill their obligations to the Fund. Furthermore, events involving limited
liquidity, defaults, non-performance or other adverse developments that
affect financial institutions or the financial services industry generally, or
concerns or rumors about any events of these kinds or other similar
risks, have in the past and may in the future lead to market-wide
liquidity problems.
Geopolitical Conflicts Risk
The occurrence of geopolitical conflicts, war or terrorist activities could
have adverse impacts on markets in various and unpredictable ways. For
example, following Russia’s large-scale invasion of Ukraine in February
2022, Russia, and other countries, persons and entities that were
viewed as having provided material aid to Russia’s aggression against
Ukraine, became the subject of economic sanctions and import and
export controls imposed by countries throughout the world, including
the United States. Such measures have had and may continue to have
an adverse effect on the Russian, Belarusian and other securities and
economies. Additional examples include, but are not limited to,
heightened concerns of trade disputes, which could result in increased
tariffs, trade restrictions or other retaliatory countermeasures. The
extent, duration and impact of geopolitical conflicts and related market
impacts are difficult to ascertain, but could be significant and could
have significant adverse effects on regional and global economies and
the markets for certain securities and commodities, such as oil, natural
gas, steel and aluminum, as well as other sectors, and on the Fund’s
investments.
Cyber Security Risk
As the use of technology, including cloud-based technology, has
become more prevalent in the course of business, the Fund is potentially
more susceptible to operational and information security risks resulting
from breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional cyber events from outside threat actors or
internal resources that may, among other things, cause the Fund to lose
proprietary information, suffer data corruption and/or destruction, lose
operational capacity, result in the unauthorized release or other misuse
of confidential information, or otherwise disrupt normal business
operations. Geopolitical tensions can increase the scale and
sophistication of deliberate cybersecurity attacks, particularly those from
nation-states or from entities with nation-state backing, who may desire
to use cybersecurity attacks to cause damage or create leverage against
geopolitical rivals. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems (e.g., through
“hacking” or malicious software coding), and may come from multiple
sources, including outside attacks such as denial-of-service attacks (i.e.,
efforts to make network services unavailable to intended users) or cyber
extortion, including exfiltration of data held for ransom and/or
“ransomware” attacks that renders systems inoperable until ransom is
paid, or insider actions (e.g., intentionally or unintentionally harmful
acts of PIMCO personnel). In addition, cyber security breaches involving
the Fund’s third party service providers (including but not limited to
advisers, sub-advisers, administrators, transfer agents, custodians,
vendors, suppliers, distributors and other third parties), trading
counterparties or issuers in which the Fund invests can also subject the
Fund to many of the same risks associated with direct cyber security
breaches or extortion of company data. PIMCO’s use of cloud-based
service providers could heighten or change these risks. In addition,
work-from-home arrangements by the Fund, the Investment Manager or
their service providers could increase all of the above risks, create
additional data and information accessibility concerns, and make the
Fund, the Investment Manager or their service providers susceptible to
operational disruptions, any of which could adversely impact their
operations.
Cyber security failures or breaches may result in financial losses to the
Fund and its shareholders. For example, cyber security failures or
breaches involving trading counterparties or issuers in which the Fund
invests could adversely impact such counterparties or issuers and cause
the Fund’s investment to lose value. These failures or breaches may also
result in disruptions to business operations, potentially resulting in
financial losses; interference with the Fund’s ability to calculate its NAV,
process shareholder transactions or otherwise transact business with
shareholders; impediments to trading; violations of applicable privacy
and other laws; regulatory fines; penalties; third-party claims in
litigation; reputational damage; reimbursement or other compensation
costs; additional compliance and cyber security risk management costs
and other adverse consequences. In addition, substantial costs may be
incurred in order to prevent any cyber incidents in the future.
Like with operational risk in general, the Fund has established business
continuity plans and risk management systems designed to reduce the
risks associated with cyber security. However, there are inherent
limitations in these plans and systems, including that certain risks may
not have been identified, in large part because different or unknown
threats may emerge in the future. As such, there is no guarantee that
such efforts will succeed, especially because the Fund does not directly
control the cyber security systems of issuers in which the Fund may
invest, trading counterparties or third-party service providers to the
Fund. Such entities have experienced cyber attacks and other attempts
to gain unauthorized access to systems from time to time, and there is
no guarantee that efforts to prevent or mitigate the effects of such
attacks or other attempts to gain unauthorized access will be successful.
There is also a risk that cyber security breaches may not be detected. The
Fund and its shareholders may suffer losses as a result of a cyber
security breach related to the Fund, its service providers, trading
counterparties or the issuers in which the Fund invests.
Certain Affiliations
Certain broker-dealers may be considered to be affiliated persons of the
Fund and/or the Investment Manager due to their possible affiliations
with Allianz SE, the ultimate parent of the Investment Manager, or
another Allianz entity. Allianz Asset Management of America LP merged
with Allianz Asset Management of America LLC (“Allianz Asset
Management”), with the latter being the surviving entity, effective
January 1, 2023. Following the merger, Allianz Asset Management is
PIMCO’s managing member and direct parent entity. Absent an
exemption from the SEC or other regulatory relief, the Fund is generally
precluded from effecting certain principal transactions with affiliated
brokers, and its ability to purchase securities being underwritten by an
affiliated broker or a syndicate including an affiliated broker, or to utilize
affiliated brokers for agency transactions, is subject to restrictions. This
could limit the Fund’s ability to engage in securities transactions and
take advantage of market opportunities.
The 1940 Act imposes significant limits on co-investment with affiliates
of the Fund. The Fund has received exemptive relief from the SEC that,
to the extent a fund relies on such relief, permits it to (among other
things) co-invest alongside certain other persons in privately negotiated
investments, including certain affiliates of the Investment Manager and
certain public or private funds managed by the Investment Manager and
its affiliates, subject to certain terms and conditions. The exemptive relief
from the SEC with respect to co-investments imposes a number of
conditions on any co-investments made in reliance on such relief that
may limit or restrict a fund’s ability to participate in an investment or
require it to participate in an investment to a lesser extent, which could
negatively impact a fund’s ability to execute its desired investment
strategy and its returns. Subject to applicable law, the Fund may also
invest alongside other PIMCO managed funds and accounts, including
private funds and affiliates of the Investment Manager, without relying
on the exemptive relief. Pursuant to co-investment exemptive relief, to
the extent a fund relies on such relief, the fund will be able to invest in
opportunities in which PIMCO and/or its affiliates has an investment,
and PIMCO and/or its affiliates will be able to invest in opportunities in
which a fund has made an investment.
Anti-Takeover Provisions
The Fund’s Declaration includes provisions that could limit the ability of
other entities or persons to acquire control of the Fund or to convert the
Fund to open-end status. See “Anti-Takeover and Other Provisions in the
Declaration of Trust and Bylaws.”
          
Effects of Leverage [Text Block]
Effects of Leverage
The following table is furnished in response to requirements of the SEC.
It is designed to illustrate the effects of leverage through the use of
senior securities, as that term is defined under Section 18 of the Act, on
Common Share total return, assuming investment portfolio total returns
(consisting of income and changes in the value of investments held in
the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. The table below
assumes the Fund’s continued use of Preferred Shares representing
approximately 26.67% of the Fund’s total managed assets. The table
below also assumes that the Fund will pay dividends on Preferred
Shares at an estimated annual effective Preferred Share dividend rate of
4.81% (which is based on market conditions as of December 31, 2024),
and including the amortization of Preferred Share offering costs of
$1,623,121 over the period until such class of Preferred Shares' next
Early Term Redemption Date, as defined below. See “Description of
Capital Structure and Shares—Preferred Shares—Mandatory
Redemptions.” Based on such estimates, the annual return that the
Fund’s portfolio must experience (net of expenses) in order to cover the
costs of the Fund’s leverage would be 1.27%. The information below
does not reflect the Fund’s potential use of certain other forms of
economic leverage achieved through the use of other instruments or
transactions not considered to be senior securities under the Act, such
as certain derivative instruments.
These assumed investment portfolio returns are hypothetical figures and
are not necessarily indicative of the investment portfolio returns
experienced or expected to be experienced by the Fund. Your actual
returns may be greater or less than those appearing below. In addition,
actual borrowing expenses associated with the use of tender option
bonds or the issuance of Preferred Shares by the Fund may vary
frequently and may be significantly higher or lower than the rate used
for the example below.
 
Assumed Portfolio Total Return (net
of expenses)
(10.00)%
(5.00)%
0.00%
5.00%
10.00%
Common Shares Total Return
(15.37)%
(8.55)%
(1.74)
%
5.08%
11.90%
Common Shares Total Return is composed of two elements — the
distributions paid by the Fund to Common Shareholders (the amount of
which is largely determined by the net investment income of the Fund
after paying dividend payments on any Preferred Shares issued by the
Fund and expenses on any forms of leverage outstanding) and gains or
losses on the value of the securities and other instruments the Fund
owns. As required by SEC rules, the table assumes that the Fund is more
likely to suffer capital losses than to enjoy capital appreciation. For
example, to assume a total return of 0%, the Fund must assume that
the income it receives on its investments is entirely offset by losses in
the value of those investments. This table reflects hypothetical
performance of the Fund’s portfolio and not the actual performance of
the Fund’s Common Shares, the value of which is determined by market
forces and other factors.
Should the Fund elect to add additional leverage, any benefits of such
leverage cannot be fully achieved until the proceeds resulting from the
use of such leverage have been received by the Fund and invested in
accordance with the Fund’s investment objectives and policies. As noted
above, the Fund’s willingness to use leverage, and the extent to which
leverage is used at any time, will depend on many factors, including,
among other things, PIMCO’s assessment of the yield curve
environment, interest rate trends, market conditions and other factors.
          
Effects of Leverage [Table Text Block]
Assumed Portfolio Total Return (net
of expenses)
(10.00)%
(5.00)%
0.00%
5.00%
10.00%
Common Shares Total Return
(15.37)%
(8.55)%
(1.74)
%
5.08%
11.90%
          
Return at Minus Ten [Percent] (15.37%)          
Return at Minus Five [Percent] (8.55%)          
Return at Zero [Percent] (1.74%)          
Return at Plus Five [Percent] 5.08%          
Return at Plus Ten [Percent] 11.90%          
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Capital Stock [Table Text Block]
Description of Capital Structure and Shares
The following is a brief description of the capital structure of the Fund.
This description does not purport to be complete and is subject to and
qualified in its entirety by reference to the Declaration and the Fund’s
Bylaws, as amended and restated through the date hereof (the
“Bylaws”). The Declaration and Bylaws are each exhibits to the
registration statement of which this prospectus is a part.
The Fund is an unincorporated voluntary association with transferable
shares of beneficial interest (commonly referred to as a “Massachusetts
business trust”) established under the laws of The Commonwealth of
Massachusetts by the Declaration. The Declaration provides that the
Trustees of the Fund may authorize separate classes of shares of
beneficial interest. Preferred Shares (such as the RVMTP Shares) may be
issued in one or more series, with such par value and with such rights as
determined by the Board, by action of the Board without the approval of
the Common Shareholders.
The following table shows, for each class of authorized securities of the
Fund, the amount of (i) shares authorized and (ii) shares outstanding,
each as of April 16, 2025:
 
(1)
(2)
(3)
(4)
Title of Class
Amount
Authorized
Amount Held by
the Fund for
its Account
Amount
Outstanding
Exclusive of
Amount Shown
Under
Institutional Class Common Shares
Unlimited
0
79,713,821
Class A-1 Common Shares
Unlimited
0
48,689,523
Class A-2 Common Shares
Unlimited
0
7,359,597
Class A-3 Common Shares
Unlimited
0
28,738,388
Series 2049-A RVMTP Shares
Unlimited
0
500
Series 2050-B RVMTP Shares
Unlimited
0
1,000
Series 2051-A RVMTP Shares
Unlimited
0
500
Series 2052-A RVMTP Shares
Unlimited
0
1,000
Series 2052-B RVMTP Shares
Unlimited
0
1,000
Series 2055-A RVMTP Shares
Unlimited
0
1,500
Common Shares
The Declaration authorizes the issuance of an unlimited number of
Common Shares. The Common Shares will be issued with a par value of
$0.00001 per share. The Fund currently has four separate classes of
Common Shares: Institutional Class, Class A-1, Class A-2 and Class A-3.
An investment in any share class of the Fund represents an investment
in the same assets of the Fund. However, the ongoing fees and expenses
for each share class may be different. The fees and expenses for the
Fund are set forth in “Summary of Fund Expenses” above. Certain share
class details are set forth in “Plan of Distribution” above.
Common Shareholders will be entitled to the payment of dividends and
other distributions when, as and if declared by the Board after payment
of preferential amounts payable to holders of Preferred Shares
. All
Common Shares have equal rights to the payment of dividends and the
distribution of assets upon liquidation after payment of the preferential
amounts payable to holders of Preferred Shares. Common Shares will,
when issued, be fully paid and, subject to matters discussed in
“Anti-Takeover and Other Provisions in the Declaration of Trust and
Bylaws,” non-assessable, and will have no pre-emptive or conversion
rights or rights to cumulative voting. Upon liquidation of the Fund, after
paying or adequately providing for the payment of all liabilities of the
Fund and the liquidation preference with respect to any outstanding
Preferred Shares, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining assets of the Fund among the
Fund’s Common Shareholders.
The Fund does not intend to hold annual meetings of shareholders. If
the Fund does hold a meeting of shareholders, Common Shares of the
Fund entitle their holders to one vote for each Common Share held;
however, separate votes are taken by each class of Common Shares on
matters affecting an individual class of Common Shares. Each fractional
share shall be entitled to a proportionate fractional vote, except as
otherwise provided by the Declaration, Bylaws, or required by applicable
law. So long as any Preferred Shares are outstanding, holders of
Preferred Shares will be able to elect two Trustees and vote as a
separate class on certain matters.
The Fund will send unaudited reports at least semiannually and audited
financial statements annually to all of its Common Shareholders.
The Common Shares are not, and are not expected to be, listed for
trading on any national securities exchange nor is there expected to be
any secondary trading market in the Common Shares.
Preferred Shares
The Declaration authorizes the issuance of an unlimited number of
preferred shares. Preferred shares may be issued in one or more classes
or series, with such par value and rights as determined by the Board, by
action of the Board without the approval of the Common Shareholders.
On November 18, 2019, the Fund issued 250 RVMTP Shares in a single
series, Series 2049-A. On April 20, 2020, the Fund issued 250 RVMTP
shares in a single series, Series 2050-A, which were exchanged, on
May 9, 2022, for shares of Series 2049-A RVMTP Shares on a
one-for-one basis. On October 1, 2020, the Fund issued 750 RVMTP
shares in a single series, Series 2050-B and subsequently issued an
additional 250 Series 2050-B RVMTP shares on November 1, 2022. On
June 17, 2019, the Fund issued 250 Variable Rate MuniFund Term
Preferred Shares, Series 2022 (the “VMTP Shares”), which were
redesignated, effective December 6, 2021, as RVMTP Shares of a single
series, Series 2051-A. Concurrent with such redesignation, on
December 6, 2021, the Fund issued an additional 250 Series 2051-A
RVMTP Shares. On January 24, 2022, the Fund issued 1,000 RVMTP
Shares in a single series, Series 2052-A. On April 8, 2022, the Fund
issued 1,000 shares in a single series, Series 2052-B. On April 16, 2025,
the Fund issued 1,500 shares in a single series, Series 2055-A. The
RVMTP Shares have a par value of $0.00001 per share and liquidation
preference of $100,000 per share. The RVMTP Shares have various
rights that were approved by the Board without the approval of
Common Shareholders, which are specified in the Fund’s Bylaws.
Certain rights, terms and conditions of the RVMTP Shares are
summarized below:
Distribution Preference.
 
Any Preferred Shares, including, without
limitation, the RVMTP Shares, have complete priority over the Common
Shares as to distribution of assets.
RVMTP Share Dividends.
 
The dividend rates paid on the RVMTP
Shares are determined over the course of the a seven-day period, which
generally commences each Thursday and ends the following Wednesday
(the “Rate Period”). The dividends per share for RVMTP Shares for a
given Rate Period are dependent on the RVMTP Share dividend rate (the
“RVMTP Share Dividend Rate”) for that Rate Period. The RVMTP Share
Dividend Rate for Series 2049-A, Series 2051-A, Series 2052-B and
Series 2055-A is equal to the greater of (i) the sum of a specified “Index
Rate”
(1)
plus an “Applicable Spread”
(2)
for the Rate Period plus the
“Failed Remarketing Spread”
(3)
, if any, and (ii) the sum of (a) the
product of the Index Rate multiplied by the “Applicable Multiplier”
(4)
for
such Rate Period plus (b) 1.00% plus (c) the Failed Remarketing Spread,
if any. The RVMTP Share Dividend Rate for Series 2050-B is equal to (i)
the sum of the Index Rate plus (ii) the Applicable Spread (including the
Spread Adjustment
(5)
, if applicable) plus (iii) the Failed Remarketing
Spread, if any. The RVMTP Share Dividend Rate for Series 2052-A is
equal to the greater of (i) the sum of the Index Rate plus an “Applicable
Spread”
(2)
for the Rate Period plus the Failed Remarketing Spread
(3)
, if
applicable, and (ii) the sum of (a) the product of the Index Rate
multiplied by the “Applicable Multiplier”
(4)
for such Rate Period plus (b)
0.92% plus (c) the Failed Remarketing Spread, if applicable. The
dividend per RVMTP Share for the Rate Period is then determined as
described in the table below.
(6)
 
Dividend
Rate
 
Rate Period Fraction
 
RVMTP
Shares
Liquidation
Preference
 
Dividend
 
 
Number of days in the Rate
Period (or a part thereof)
 
 
 
 
Dividend Rate
X
Divided by
X
100,000
=
Dividends per
RVMTP Share
 
 
Total number of days in the
year
 
 
 
 
(1)
The Index Rate is determined by reference to a weekly, high-grade index comprised of
seven-day, tax-exempt variable rate demand notes, generally the Securities Industry
and Financial Markets Association Municipal Swap Index.
(2)
For each series of RVMTP Shares, the Applicable Spread for a Rate Period is a
percentage per annum that is based on the long term rating most recently assigned by
the applicable ratings agency to such series of the RVMTP Shares, and for Series
2050-B, it is also based on the “Spread Adjustment.”
(3)
With respect to Series 2049-A, Series 2051-A, Series 2052-B, Series 2055-A and Series
2050-B, the Failed Remarketing Spread with respect to a series of RVMTP Shares
means (i) for so long as two or more Failed Remarketings have not occurred, 0%, and
(ii) following the second occurrence of a Failed Remarketing, 0.15% (for Series
2049-A, Series 2051-A, Series 2052-B and Series 2055-A) or 0.25% (for Series
2050-B), in each case multiplied by the number of Failed Remarketings that have
occurred after the first Failed Remarketing. With respect to Series 2052-A, a Failed
Remarketing Spread means (a) in the case of a Failed Special Terms Period
Remarketing (as defined below): (i) for so long as two or more Failed Special Terms
Period Remarketings have not occurred, 0.05%, and (ii) following the second
occurrence of a Failed Special Terms Period Remarketing, 0.10% multiplied by the
number of Failed Special Terms Period Remarketings that have occurred after the first
Failed Special Terms Period Remarketing, and (b) in the case of a Failed Early Term
Redemption Date Remarketing (as defined below): (i) 0.75% for the first 59 days
following the applicable Early Term Redemption Date, (ii) 1.00% for the 60th to the
89th day following such Early Term Redemption Date, (iii) 1.25% for the 90th to the
119th day following such Early Term Redemption Date, (iv) 1.50% for the 120th to the
149th day following such Early Term Redemption Date, and (v) 1.75% for the 150th
day following such Early Term Redemption Date to the date of the associated
mandatory redemption of the Series 2052-A RVMTP Shares. With respect to Series
2049-A, Series 2051-A, Series 2052-B, Series 2055-A and Series 2050-B, a “Failed
Remarketing,” with respect to a series of RVMTP Shares, will occur if any RVMTP
Shares in such series subject to a Mandatory Tender Event due to the Fund designating
a Special Terms Period have not been either retained by the holders or successfully
remarketed by the Mandatory Tender Date (each as defined below). With respect to
Series 2052-A, a “Failed Special Terms Period Remarketing” will occur if any RVMTP
Shares subject to a Mandatory Tender Event due to the Fund designating a Special
Terms Period have not been either retained by the holders or successfully remarketed
by the Mandatory Tender Date. In addition, with respect to Series 2052-A, a “Failed
Early Term Redemption Date Remarketing” will occur if any RVMTP Shares subject to a
Mandatory Tender Event have not been either retained by the holders or successfully
remarketed by the Early Term Redemption Date.
(4)
For each series of RVMTP Shares other than Series 2050-B, the Applicable Multiplier
for a Rate Period is a percentage that is based on the long term rating most recently
assigned by the applicable ratings agency to such series of the RVMTP Shares.
(5)
The “Spread Adjustment” means, (i) for the period from the date of original issuance of
the applicable series of RVMTP Shares to and including the date that is six months
prior to the then current RVMTP Early Term Redemption Date (as defined below)
(“Rate Period Termination Date”), 0%, and (ii) for the period after the Rate Period
Termination Date, 2.00%.
(6)
For each series of RVMTP Shares, an increased RVMTP Share Dividend Rate could be
triggered by the Fund’s failure to comply with certain requirements relating to such
series of the RVMTP Shares, certain actions taken by the applicable ratings agency or
certain determinations regarding the tax status of such series of the RVMTP Shares
made by a court or other applicable governmental authority. The RVMTP Share
Dividend Rate will in no event exceed 15% per year.
RVMTP Special Terms Period.
 
The Fund, at its option, may designate
special terms applicable to all of the outstanding RVMTP Shares in a
series for a certain period (a “Special Terms Period”) pursuant to a
notice of special terms. Such special terms may differ from those
provided in the current governing documents of the RVMTP Shares and
may include, without limitation, changes to the RVMTP Dividend Rate,
dividend payment dates, redemption provisions (including, without
limitation, the RVMTP Term Redemption Date or the RVMTP Early Term
Redemption Date), required Effective Leverage Ratio, and the Preferred
Shareholder Gross-Up (each as defined below); provided that such
special terms do not affect the parity ranking of the RVMTP Shares to
any other class or series of Preferred Shares then outstanding with
respect to dividends or distribution of assets upon dissolution,
liquidation, or winding up of the affairs of the Fund. No Special Terms
Period with respect to a series of RVMTP Shares will become effective
unless certain conditions are satisfied, including that all of the RVMTP
Shares in such series are remarketed (except with respect to any RVMTP
Shares whose holders have elected to retain their RVMTP Shares for the
Special Terms Period). A Special Terms Period will not become effective
before the 12-month anniversary (for Series 2049-A, Series 2051-A,
Series 2052-B, Series 2052-A and Series 2055-A) or 24-month
anniversary (for Series 2050-B) of the date of original issue of the
applicable series of RVMTP Shares.
Preferred Shareholder Gross-Up.
 
As noted above, RVMTP Shares
each pay dividend distributions at stated rates, which rates are based
generally on the assumption that such dividend distributions consist
entirely of “exempt-interest dividends” (as defined above under
“Distributions”). The terms of the RVMTP Shares provide further that, in
the event less than the entire amount of any particular dividend
distribution paid pursuant to the stated rate were to consist of
“exempt-interest dividends” (i.e., if a portion of any particular dividend
were to derive from ordinary income or capital gain, including
short-term capital gain taxable as ordinary income when distributed),
the amount of such dividend would increase by an amount (the
“Preferred Shareholder Gross-Up”) such that the after-tax amount of
such dividend, as increased by the Preferred Shareholder Gross-Up,
would equal the total amount the holder of such RVMTP Shares, as
applicable, would have received if the dividend at the stated rate had
consisted entirely of “exempt-interest dividends.” The Preferred
Shareholder Gross-Up is calculated (i) without consideration being given
to the time value of money, (ii) assuming that no holder of RVMTP
Shares, as applicable, is subject to the federal alternative minimum tax,
and (iii) assuming that the portion of any dividend distribution
(including the amount of the Preferred Shareholder Gross-Up) that is
not an exempt interest dividend would be taxable (x), in the hands of
the initial purchaser of the RVMTP Shares, as applicable, (or certain of
its affiliates), at the maximum marginal regular federal corporate
income tax rate, and (y) in the case of any other holder, at the greater of
(a) the maximum marginal regular federal individual income tax rate
(taking into account the 3.8% Medicare contribution tax on net
investment income) applicable to ordinary income or net capital gain, as
applicable, or (b) the maximum marginal regular federal corporate
income tax rate applicable to ordinary income or net capital gain, as
applicable, in each case disregarding the effect of any state or local
taxes. Any Preferred Shareholder Gross-Up will reduce the amount that
would otherwise be distributable to Common
Shareholders
.
Liquidation Preference.
 
In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Fund, holders
of RVMTP Shares are entitled to receive a preferential liquidating
distribution (equal to the original purchase price per share of $100,000
plus accumulated and unpaid dividends thereon, whether or not earned
or declared) before any distribution of assets is made to Common
Shareholders.
Voting Rights.
 
Under the Act, Preferred Shares (including, without
limitation, the RVMTP Shares) are required to be voting shares and to
have equal voting rights with Common Shares. Except as otherwise
indicated in this prospectus or the Statement of Additional Information,
and except as otherwise required by applicable law, Preferred Shares
vote together with Common Shareholders as a single class.
In addition, holders of Preferred Shares, including RVMTP Shares, voting
as a separate class, are entitled to elect two of the Fund’s trustees. The
remaining trustees are elected by Common Shareholders and Preferred
Shareholders, voting together as a single class. In the unlikely event that
two full years of accrued dividends are unpaid on the Preferred Shares,
the holders of all outstanding Preferred Shares voting as a separate
class, are entitled to elect a majority of the Fund’s trustees until all
dividends in arrears with respect to the Preferred Shares have been paid
or declared and set apart for payment. In order for the Fund to take
certain actions or enter into certain transactions, a separate class vote of
Preferred Shareholders is required, in addition to the single class vote of
the holders of Preferred Shares and Common Shares.
1940 Act Asset Coverage.
In accordance with the Fund’s
governing documents and the Act, the Fund is required to maintain
certain asset coverage with respect to all outstanding senior securities
of the Fund which are stocks for purposes of the Act, including the
RVMTP Shares.
Under the Act, the Fund is not permitted to issue preferred shares
unless, immediately after such issuance, the value of the Fund’s total net
assets (as defined below) is at least 200% of the liquidation value of
any outstanding preferred shares and the newly issued preferred shares
plus the aggregate amount of any senior securities of the Fund
representing indebtedness (i.e., such liquidation value plus the
aggregate amount of senior securities representing indebtedness may
not exceed 50% of the Fund’s total net assets). In addition, the Fund is
not permitted to declare or pay common share dividends unless
immediately thereafter the Fund has a minimum asset coverage ratio of
200% with respect to all outstanding senior securities of the Fund
which are stocks for purposes of the Act after deducting the amount of
such common share dividends.
In addition, under the terms of the Series 2050-B RVMTP Shares, the
Fund must maintain an “asset coverage,” as defined for purposes of
Section 18(h) of the Act, of at least 225% with respect to all
outstanding preferred shares, including all previously issued outstanding
preferred shares (or such other asset coverage as may in the future be
specified in or under the Act or by rule, regulation or order of the SEC as
the minimum asset coverage for senior securities which are shares of
stock of a closed-end investment company).
Additional Investment Limitations.
 
Under the terms of purchase
agreements between the Fund and the initial investor in the RVMTP
Shares, the Fund is subject to various investment limitations. These
investment limitations are in addition to, and may be more restrictive
than, those to which the Fund is subject in accordance with its
investment objectives and policies as described herein and in the
Statement of Additional Information.
Effective Leverage Ratio Requirement.
 
In accordance with the
Bylaws, without the prior written consent of the holders of RVMTP
Shares, the Fund’s Effective Leverage Ratio may not exceed 42.5%, or
45% for Series 2050-B (or 43.5%, or 46% for Series 2050-B, solely by
reason of fluctuations in the market value of the Fund’s portfolio
securities) as of the close of business on any business day. If the Fund
fails to comply with any additional requirements relating to the
calculation of the Effective Leverage Ratio requirement applicable to the
RVMTP Shares and, in any such case, such failure is not cured as of the
close of business on the date that is ten business days following the
business day on which such non-compliance is first determined (the
“Effective Leverage Ratio Cure Date”), the Fund shall cause the
Effective Leverage Ratio to not exceed 42.5%, or 45% for Series
2050-B (or 43.5%, or 46% for Series 2050-B solely by reason of
fluctuations in the market value of the Fund’s portfolio securities), by (i)
not later than the close of business on the business day next following
the Effective Leverage Ratio Cure Date, engaging in transactions
involving or relating to any floating rate securities not owned by the
Fund and/or any inverse floating rate securities owned by the Fund,
including the purchase, sale or retirement thereof, (ii) to the extent
permitted by law, not later than the close of business on the second
business day next following the Effective Leverage Ratio Cure Date,
causing a notice of redemption to be issued for the redemption of a
sufficient number of Preferred Shares, in accordance with the terms of
the Preferred Shares, or (iii) engaging in any combination, in the Fund’s
discretion, of the actions contemplated by clauses (i) and (ii).
Issuance of Additional Preferred Shares.
 
So long as any RVMTP
Shares are outstanding, the Fund may, without the vote or consent of
the holders thereof, authorize, establish and create and issue and sell
shares of one or more series of Preferred Shares ranking on a parity with
RVMTP Shares as to the payment of dividends and the distribution of
assets upon dissolution, liquidation or the winding up of the affairs of
the Fund, in addition to then outstanding series of RVMTP Shares,
including additional series of RVMTP Shares, and authorize, issue and
sell additional shares of any such Series of Preferred Shares then
outstanding or so established or created, including additional series of
RVMTP Shares, in each case in accordance with applicable law, provided
that the Fund shall, immediately after giving effect to the issuance of
such Preferred Shares and to its receipt and application of the proceeds
thereof, including to the redemption of Preferred Shares with such
proceeds, have “asset coverage,” as defined for the purposes of
Section 18(h) of the Act, of at least 250% and an effective leverage
ratio not exceeding 40% (calculated according to the terms of the
section below entitled “Preferred Shares—Calculation of Effective
Leverage Ratio”).
Calculation of Effective Leverage Ratio.
 
For purposes of
determining whether the effective leverage requirement discussed
above is satisfied, the “Effective Leverage Ratio” on any date shall
mean the quotient of: (i) The sum of (A) the aggregate liquidation
preference of the Fund’s “senior securities” (as that term is defined in
the Act) that are stock for purposes of the Act, excluding, without
duplication, (1) any such senior securities for which the Fund has issued
a notice of redemption and either has delivered deposit securities or
sufficient securities or funds, (as applicable in accordance with the terms
of such senior securities) to the paying agent for such senior securities
or otherwise has adequate deposit securities or sufficient securities or
funds on hand for the purpose of such redemption (as applicable in
accordance with the terms of such senior securities) and (2) any such
senior securities that are to be redeemed with net proceeds from the
sale of the RVMTP Shares, for which the Fund has delivered deposit
securities or sufficient securities or funds (as applicable in accordance
with the terms of such senior securities) to the paying agent for such
senior securities or otherwise has adequate deposit securities or
sufficient securities or funds on hand (as applicable in accordance with
the terms of such senior securities) for the purpose of such redemption;
(B) the aggregate principal amount of the Fund’s “senior securities
representing indebtedness” (as that term is defined in the Act giving
effect to any interpretations thereof by the SEC or its staff); (C) the
aggregate principal amount of floating rate securities corresponding to
any associated residual floating rate securities not owned by the Fund
(less the aggregate principal amount of any such floating rate securities
owned by the Fund and corresponding to the associated residual
floating rate securities owned by the Fund); and, with respect to Series
2050-B, (D) the aggregate amount of the purchase price component
payable for a repurchase under reverse repurchase agreements entered
into by the Fund; divided by (ii) the sum of (A) the market value of the
Fund’s total assets (including amounts attributable to senior securities,
but excluding any assets consisting of deposit securities or funds
referred to in clauses (A)(1) and (A)(2) above), less the amount of the
Fund’s accrued liabilities (other than liabilities for the aggregate
principal amount of “senior securities representing indebtedness” (as
that term is defined in the Act, giving effect to any interpretations
thereof by the SEC or its staff), including floating rate securities), (B) the
aggregate principal amount of floating rate securities not owned by the
Fund that correspond to the associated inverse floating rate securities
owned by the Fund; and, with respect to Series 2050-B, and (C) the
aggregate amount of the purchase price component payable for a
repurchase under reverse repurchase agreements entered into by the
Fund.
Ratings Agency Guidelines.
 
The Fund has obtained ratings for the
RVMTP Shares from Fitch. For so long as Fitch is rating the RVMTP
Shares, the Fund has agreed to adhere to separate guidelines and asset
coverage requirements specific to Fitch (“Fitch Preferred Shares Asset
Coverage”) as described in Fitch’s published Closed-End Funds and
Market Value Structures Rating Criteria (“Fitch Rating Criteria”). These
guidelines may be changed by Fitch, in its sole discretion, from time to
time. These guidelines impose asset coverage or portfolio composition
requirements that may be more stringent than those imposed on the
Fund by the Act.
Satisfaction of Fitch Preferred Shares Asset Coverage for each series of
RVMTP Shares requires that the Fund satisfy both a “Fitch Total
Overcollateralization Test” (“Fitch Total OC”) and a “Fitch Net Over
Collateralization Test” (“Fitch Net OC”, and together with Fitch Total
OC, the “Fitch OC Tests”), in each case to be consistent with the
then-current rating of the applicable series of RVMTP Shares assigned
by Fitch using the calculations set forth in the Fitch Rating Criteria,
including information therein relating to diversification guidelines as
applied to the Fund.
The Fund has agreed that it will adhere to the Fitch OC Tests as
described above as of the close of business on the last business day of
each month for so long as Fitch is rating the RVMTP Shares. If the Fund
fails to adhere to the Fitch OC Tests as described in the preceding
sentence, the Fund will cure such failure (including, without limitation,
by causing a notice of redemption to be issued for the redemption of a
sufficient number of the Fund’s Preferred Shares) within ten days
following the business day on which such failure is first determined.
Fitch may change its rating methodologies for evaluating and providing
ratings for shares of closed-end funds at any time and in its sole
discretion, perhaps substantially. Such a change could adversely affect
the ratings assigned to the Fund’s Preferred Shares, the dividend rates
paid thereon, and the expenses borne by the Fund’s Common
Shareholders. For instance, on December 4, 2020, Fitch published
ratings criteria relating to closed-end fund obligations, including
preferred shares, which effectively result in a rating cap of “AA” for debt
and preferred stock issued by closed-end funds and a rating cap of “A”
for (i) debt and preferred shares issued by closed-end funds exposed to
corporate debt, emerging market debt, below-investment-grade and
unrated debt, structured securities and equity, (ii) and closed-end funds
with material exposure to “BBB” category rated assets. The revised Fitch
ratings criteria effectively capped the credit rating of the Fund’s
Preferred Shares at “AA”. Following the close of business on April 30,
2021, Fitch downgraded its rating of the Fund’s Preferred Shares from
“AAA” to “AA” (except for the Series 2050-B RVMTP Shares, which
maintained a “AA” rating) pursuant to the revised ratings criteria and
related new rating cap. It is possible for the Fund’s Preferred Shares to
be further downgraded in the future, which may result in an increase to
the dividend rates paid by the Fund on its Preferred Shares and, thereby,
the expenses borne by the Fund’s Common Shareholders.
Mandatory Redemptions.
 
The RVMTP Shares are subject to a
mandatory term redemption date of November 18, 2049 (for Series
2049-A), October 1, 2050 (for Series 2050-B), December 6, 2051 (for
Series 2051-A), January 24, 2052 (for Series 2052-A), April 8, 2052 (for
Series 2052-B) and April 16, 2055 (for Series 2055-A), subject to the
Fund’s right to extend the term with the consent of the holders of the
RVMTP Shares (the “RVMTP Share Term Redemption Date”). There is no
assurance that the term of the RVMTP Shares will be extended.
In addition, with respect to each series of RVMTP Shares, a “Mandatory
Tender Event” will occur on each date that is (i) 20 business days before
such series' RVMTP Early Term Redemption Date (as defined in the table
below), (ii) the date the Fund delivers a notice designating a Special
Terms Period, and (iii) 20 business days before the end of a Special
Terms Period (provided that no subsequent Terms Period is designated).
If any RVMTP Shares subject to a Mandatory Tender Event upon an
RVMTP Early Term Redemption Date or upon the end of a Special Terms
Period have not been either retained by the holders or remarketed by
the Mandatory Tender Date, the Fund will redeem such RVMTP Shares
on the RVMTP Early Term Redemption Date.
(1)
1
With respect to the Mandatory Tender Events described in clauses (i), (ii) and (iii)
above, the corresponding “Mandatory Tender Date” means, respectively: (i) the date
that is an RVMTP Early Term Redemption Date of such series of RVMTP Shares, or the
date that is 180 calendar days following the Early Redemption Date (for Series
2052-A), (ii) the date on which the related Special Terms Period becomes effective, and
(iii) the last day of the related Special Terms Period (subject, in each case, to the
holders’ election to retain their RVMTP Shares).
The RVMTP Early Term Redemption Date applicable to each series of
RVMTP Shares as of the date of this prospectus can be found in the
table below:
 
Series
Early Term Redemption Date
Series 2049-A RVMTP Shares
May 9, 2030 and every 5-year anniversary
thereafter
Series 2050-B RVMTP Shares
May 1, 2026 and every 42-month anniversary
thereafter
Series 2051-A RVMTP Shares
December 6, 2029 and every 5-year anniversary
thereafter
Series 2052-A RVMTP Shares
January 24, 2028
Series 2052-B RVMTP Shares
April 8, 2030 and every 5-year anniversary
thereafter
Series 2055-A RVMTP Shares
April 16, 2028 and every 3-year anniversary
thereafter
The RVMTP Shares are also subject to mandatory redemption by the
Fund, in whole or in part, in certain circumstances, such as the failure by
the Fund to comply with asset coverage and/or effective leverage ratio
requirements described above (and the failure to cure any such failure
within the applicable cure period) or certain actions taken by the
applicable ratings agency.
Term Redemption and Early Term Redemption Liquidity
Account.
 
At least six months prior to the RVMTP Share Term
Redemption Date, and (for each series of RVMTP Shares except for
Series 2052-A) at least six months prior to each RVMTP Early Term
Redemption Date (each, a “Redemption Date”), the Fund will maintain
segregated assets of a minimum credit rating quality with a market
value equal to at least 110% of the redemption price of all outstanding
RVMTP Shares to be redeemed until the redemption of all such
outstanding RVMTP Shares, as applicable. The Fund will include certain
liquid and/or highly rated assets in an amount equal to 20% of such
segregated assets with five months remaining to the Redemption Date,
which amount will increase monthly by 20% and reach 100% with one
month remaining to the Redemption Date.
Optional Redemption.
 
The Fund may redeem, in whole or from time
to time in part, the outstanding RVMTP Shares at a redemption price
per share equal to (i) the liquidation preference of the RVMTP Shares
($100,000 per share) plus (ii) an amount equal to all unpaid dividends
and other distributions on such RVMTP Shares, as applicable,
accumulated from and including the date of issuance to (but excluding)
the date of redemption (whether or not earned or declared by the Fund,
but without interest thereon) plus (iii) any applicable optional
redemption premium.
(2)
2
If the Fund redeems (a) Series 2049-A RVMTP Shares prior to May 8, 2026, (b) Series
2051-A RVMTP Shares prior to December 8, 2025, (c) Series 2052-B RVMTP Shares
prior to April 7, 2026 or (d) Series 2055-A RVMTP Shares prior to April 16, 2026 (each
such date, an “Optional Redemption Premium Cutoff Date”), the applicable optional
redemption premium will be equal to the product of (i) either (A) 1.34% (with respect
to Series 2049-A RVMTP Shares and Series 2052-B Shares), (B) 1.35% (with respect to
Series 2051-A RVMTP Shares) or (C) 1.13% (with respect to Series 2055-A RVMTP
Shares) and (ii) the liquidation preference of such RVMTP Shares and (iii) a fraction, the
numerator of which is the number of calendar days from and including from and
including the date of redemption to and excluding the Optional Redemption Premium
Cutoff Date and the denominator of which is the actual number of calendar days from
and including (a) November 8, 2024 (with respect to Series 2049-A RVMTP Shares),
(b) June 6, 2024 (with respect to Series 2051-A RVMTP Shares), (c) October 7, 2024
(with respect to Series 2052-B RVMTP Shares) or (d) April 16, 2025 (with respect to
Series 2055-A RVMTP Shares) to and excluding the Optional Redemption Premium
Cutoff Date. If the optional redemption date for such Series 2049-A RVMTP Share,
Series 2051-A RVMTP Share, Series 2052-B RVMTP Share or Series 2055-A RVMTP
Share occurs on or after the Optional Redemption Premium Cutoff Date, then the
applicable optional redemption premium will be zero. If fewer than all of the
outstanding RVMTP Shares of a Series are to be redeemed, the shares of such Series to
be redeemed shall be selected either (A) pro rata among the holders of such Series, (B)
by lot, or (C) in such other manner as the Board may determine to be fair and
equitable.
RVMTP Mandatory Tender.
 
Upon the occurrence of a Mandatory
Tender Event with respect to a series of RVMTP Shares, all RVMTP
Shares in such series will be subject to mandatory tender (subject to the
holders’ election to retain their RVMTP Shares) and the Fund will issue
or cause to be issued a notice of mandatory tender to the holders of
such RVMTP Shares for remarketing on the Mandatory Tender Date.
Common Share Repurchases.
 
With respect to the Series 2050-B
RVMTP Shares, in the event that the Fund notifies JPMorgan Chase
Bank, N.A. (“JPMorgan”) that it will repurchase its common shares
more frequently than quarterly or repurchase more than 12% of its
issued and outstanding Common Shares in connection with a single
repurchase offer, the Fund must redeem all of the RVMTP Shares held by
JPMorgan by the date of such common share repurchase if JPMorgan
requests such redemption in writing to the Fund within five (5) business
days after receiving such notice.
With respect to the Series 2052-A RVMTP Shares, in the event that (a)
the Fund repurchase its common shares in an amount that, together
with any other such repurchases in the same calendar quarter, will total
more than 12% of the Fund's issued and outstanding Common Shares
(measured on the date of such repurchase) and (b) upon effecting such
repurchase, the Fund is not in compliance with the Effective Leverage
Ratio requirements described above, the Fund must redeem all of the
RVMTP Shares held by Wells Fargo Municipal Capital Strategies, LLC
(“Wells Fargo”) on or before the date that is five (5) business days
following such common share repurchase, unless Wells Fargo agreed to
waive such redemption.
          
Security Dividends [Text Block]
Common Shareholders will be entitled to the payment of dividends and
other distributions when, as and if declared by the Board after payment
of preferential amounts payable to holders of Preferred Shares
          
Security Voting Rights [Text Block]
Voting Rights.
 
Under the Act, Preferred Shares (including, without
limitation, the RVMTP Shares) are required to be voting shares and to
have equal voting rights with Common Shares. Except as otherwise
indicated in this prospectus or the Statement of Additional Information,
and except as otherwise required by applicable law, Preferred Shares
vote together with Common Shareholders as a single class.
In addition, holders of Preferred Shares, including RVMTP Shares, voting
as a separate class, are entitled to elect two of the Fund’s trustees. The
remaining trustees are elected by Common Shareholders and Preferred
Shareholders, voting together as a single class. In the unlikely event that
two full years of accrued dividends are unpaid on the Preferred Shares,
the holders of all outstanding Preferred Shares voting as a separate
class, are entitled to elect a majority of the Fund’s trustees until all
dividends in arrears with respect to the Preferred Shares have been paid
or declared and set apart for payment. In order for the Fund to take
certain actions or enter into certain transactions, a separate class vote of
Preferred Shareholders is required, in addition to the single class vote of
the holders of Preferred Shares and Common Shares.
          
Security Liquidation Rights [Text Block]
Liquidation Preference.
 
In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Fund, holders
of RVMTP Shares are entitled to receive a preferential liquidating
distribution (equal to the original purchase price per share of $100,000
plus accumulated and unpaid dividends thereon, whether or not earned
or declared) before any distribution of assets is made to Common
Shareholders.
          
Outstanding Securities [Table Text Block]
The following table shows, for each class of authorized securities of the
Fund, the amount of (i) shares authorized and (ii) shares outstanding,
each as of April 16, 2025:
 
(1)
(2)
(3)
(4)
Title of Class
Amount
Authorized
Amount Held by
the Fund for
its Account
Amount
Outstanding
Exclusive of
Amount Shown
Under
Institutional Class Common Shares
Unlimited
0
79,713,821
Class A-1 Common Shares
Unlimited
0
48,689,523
Class A-2 Common Shares
Unlimited
0
7,359,597
Class A-3 Common Shares
Unlimited
0
28,738,388
Series 2049-A RVMTP Shares
Unlimited
0
500
Series 2050-B RVMTP Shares
Unlimited
0
1,000
Series 2051-A RVMTP Shares
Unlimited
0
500
Series 2052-A RVMTP Shares
Unlimited
0
1,000
Series 2052-B RVMTP Shares
Unlimited
0
1,000
Series 2055-A RVMTP Shares
Unlimited
0
1,500
          
AMT Bonds Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
AMT Bonds Risk
Investments by the Fund in “AMT Bonds,” which are municipal
securities that pay interest that is taxable under the federal alternative
minimum tax applicable to noncorporate taxpayers, may expose the
Fund to certain risks in addition to those typically associated with
municipal bonds. Interest or principal on AMT Bonds paid out of current
or anticipated revenues from a specific project or specific asset may be
adversely impacted by declines in revenue from the project or asset.
Declines in general business activity could also affect the economic
viability of facilities that are the sole source of revenue to support AMT
Bonds. In this regard, AMT Bonds may entail greater risks than general
obligation municipal bonds. For shareholders subject to the federal
alternative minimum tax, a portion of the Fund’s distributions may not
be exempt from gross federal income, which may give rise to alternative
minimum tax liability.
          
Municipal Bond Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Municipal Bond Risk
Investing in the municipal bond market involves the risks of investing in
debt securities generally and certain other risks. The amount of public
information available about the municipal bonds in which the Fund may
invest is generally less than that for corporate equities or bonds, and the
investment performance of the Fund’s investment in municipal bonds
may therefore be more dependent on the analytical abilities of PIMCO
than its investments in taxable bonds. The secondary market for
municipal bonds, particularly below investment grade bonds in which
the Fund may invest, also tends to be less well developed or liquid than
many other securities markets, which may adversely affect the Fund’s
ability to sell municipal bonds at attractive prices or value municipal
bonds.
The ability of municipal issuers to make timely payments of interest and
principal may be diminished during general economic downturns, by
litigation, legislation or political events, or by the bankruptcy of the
issuer. Laws, referenda, ordinances or regulations enacted in the future
by Congress or state legislatures or the applicable governmental entity
could extend the time for payment of principal and/or interest, or
impose other constraints on enforcement of such obligations, or on the
ability of municipal issuers to levy taxes. Issuers of municipal securities
also might seek protection under the bankruptcy laws. In the event of
bankruptcy of such an issuer, the Fund could experience delays in
collecting principal and interest and the Fund may not, in all
circumstances, be able to collect all principal and interest to which it is
entitled. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, the Fund may take
possession of and manage the assets securing the issuer's obligations
on such securities, which may increase the Fund's operating expenses.
Adverse economic, business, legal or political developments might affect
all or a substantial portion of the Fund's municipal bonds in the same
manner. The Fund will be particularly subject to these risks to the extent
that it focuses its investments in municipal bonds in a particular state or
geographic region. Municipal securities may also have exposure to
potential risks resulting from climate change, including extreme
weather, flooding and fires. Climate risks, if materialized, can adversely
impact a municipal issuer’s financial plans in current or future years or
may impair a funding source municipal issuer’s revenue bonds. As a
result, the impact of climate risks could adversely impact the value of
the Fund’s municipal securities investments.
The Fund may invest in trust certificates issued in tender option bond
programs. In these programs, a trust typically issues two classes of
certificates and uses the proceeds to purchase municipal securities
having relatively long maturities and bearing interest at a fixed interest
rate substantially higher than prevailing short-term tax-exempt rates.
There is a risk that the Fund will not be considered the owner of a
tender option bond for federal income tax purposes, and thus will not
be entitled to treat such interest as exempt from federal income tax.
Certain tender option bonds may be less liquid or may become less
liquid as a result of, among other things, a credit rating downgrade, a
payment default or a disqualification from tax-exempt status. The Fund’s
investment in the securities issued by a tender option bond trust may
involve greater risk and volatility than an investment in a fixed rate
bond, and the value of such securities may decrease significantly when
market interest rates increase. Tender option bond trusts could be
terminated due to market, credit or other events beyond the Fund’s
control, which could require the Fund to dispose of portfolio investments
at inopportune times and prices. The Fund may use a tender option
bond program as a way of achieving leverage in its portfolio, in which
case the Fund will be subject to leverage risk. The use of tender option
bonds will impact the Fund's duration and cause the Fund to be subject
to increased duration and interest rate risk.
The Fund may invest in revenue bonds, which are typically issued to
fund a wide variety of capital projects including electric, gas, water and
sewer systems; highways, bridges and tunnels; port and airport facilities;
colleges and universities; and hospitals. Because the principal security
for a revenue bond is generally the net revenues derived from a
particular facility or group of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source or annual
revenues, there is no guarantee that the particular project will generate
enough revenue to pay its obligations, in which case the Fund’s
performance may be adversely affected.
The Fund may invest in pre-refunded Municipal Bonds. Pre-refunded
Municipal Bonds are tax-exempt bonds that have been refunded to a
call date prior to the final maturity of principal, or, in the case of
pre-refunded Municipal Bonds commonly referred to as
“escrowed-to-maturity bonds,” to the final maturity of principal, and
remain outstanding in the municipal market. The payment of principal
and interest of the pre-refunded Municipal Bonds held by the Fund is
funded from securities in a designated escrow account that holds
U.S. Treasury securities or other obligations of the U.S. Government
(including its agencies and instrumentalities (“Agency Securities”)). As
the payment of principal and interest is generated from securities held
in an escrow account established by the municipality and an
independent escrow agent, the pledge of the municipality has been
fulfilled and the original pledge of revenue by the municipality is no
longer in place. Pre-refunded and/or escrowed to maturity Municipal
Bonds may bear an investment grade rating (for example, if re-rated by
a rating service or, if not re-rated, determined by PIMCO to be of
comparable quality) because they are backed by U.S. Treasury securities,
Agency Securities or other investment grade securities. For the
avoidance of any doubt, PIMCO’s determination of an issue’s credit
rating will generally be used for compliance with the Fund’s investment
parameters when an issue either loses its rating or is not re-rated upon
pre-refunding. The escrow account securities pledged to pay the
principal and interest of the pre-refunded municipal bond do not
guarantee the price movement of the bond before maturity. Issuers of
municipal bonds refund in advance of maturity the outstanding higher
cost debt and issue new, lower cost debt, placing the proceeds of the
lower cost issuance into an escrow account to pre-refund the older,
higher cost debt. Investment in pre-refunded municipal bonds held by
the Fund may subject the Fund to interest rate risk and market risk. In
addition, while a secondary market exists for pre-refunded municipal
bonds, if the Fund sells pre-refunded municipal bonds prior to maturity,
the price received may be more or less than the original cost, depending
on market conditions at the time of sale.
The Fund may invest in participations in lease obligations or installment
purchase contract obligations of municipal authorities or entities.
Although a municipal lease obligation does not constitute a general
obligation of the municipality for which the municipality's taxing power
is pledged, a municipal lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and make the
payments due under the municipal lease obligation. However, certain
municipal lease obligations contain “non-appropriation” clauses, which
provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis. In the case of a
“non-appropriation” lease, the Fund's ability to recover under the lease
in the event of non-appropriation or default will be limited solely to the
repossession of the leased property, without recourse to the general
credit of the lessee, and the disposition or re-leasing of the property
might prove difficult.
Municipal securities are also subject to interest rate, credit, and liquidity
risk.
Interest Rate Risk
. The value of municipal securities, similar to
other fixed income securities, will likely drop as interest rates rise in
the general market. Conversely, when rates decline, bond prices
generally rise.
Credit Risk.
The risk that a borrower may be unable to make
interest or principal payments when they are due. Funds that invest in
municipal securities rely on the ability of the issuer to service its debt.
This subjects the Fund to credit risk in that the municipal issuer may
be fiscally unstable or exposed to large liabilities that could impair its
ability to honor its financial obligations. Municipal issuers with
significant debt service requirements, in the near-to mid-term;
unrated issuers and those with less capital and liquidity to absorb
additional expenses may be most at risk. To the extent the Fund
invests in lower quality or high yield municipal securities, it may be
more sensitive to the adverse credit events in the municipal market.
The treatment of municipalities in bankruptcy is more uncertain, and
potentially more adverse to debt holders, than for corporate issues.
Liquidity Risk
. The risk that investors may have difficulty finding a
buyer when they seek to sell, and therefore, may be forced to sell at a
discount to the market value. Liquidity may sometimes be impaired in
the municipal market and because the Fund primarily invests in
municipal securities, it may find it difficult to purchase or sell such
securities at opportune times. The municipal securities market can be
susceptible to increases in volatility and decreases in liquidity.
Liquidity can decline unpredictably in response to a variety of factors,
including overall economic conditions or credit tightening. Increases
in volatility and decreases in liquidity also may be caused by a rise in
interest rates (or the expectation of a rise in interest rates). Liquidity
can be impaired due to interest rate concerns, credit events, or
general supply and demand imbalances. Depending on the particular
issuer and current economic conditions, municipal securities could be
deemed more volatile investments.
In addition to general municipal market risks, different municipal sectors
may face different risks. For instance, general obligation bonds are
secured by the full faith, credit, and taxing power of the municipality
issuing the obligation. As such, timely payment depends on the
municipality's ability to raise tax revenue and maintain a fiscally sound
budget. The timely payments may also be influenced by any unfunded
pension liabilities or other post-employee benefit plan liabilities.
Revenue bonds are secured by special tax revenues or other revenue
sources. If the specified revenues do not materialize, then the bonds
may not be repaid.
Private activity bonds are yet another type of municipal security.
Municipalities use private activity bonds to finance the development of
industrial facilities for use by private enterprise. Principal and interest
payments are to be made by the private enterprise benefiting from the
development, which means that the holder of the bond is exposed to
the risk that the private issuer may default on the bond.
Moral obligation bonds are usually issued by special purpose public
entities. If the public entity defaults, repayment becomes a “moral
obligation” instead of a legal one. The lack of a legally enforceable right
to payment in the event of default poses a special risk for a holder of
the bond because it has little or no ability to seek recourse in the event
of default.
In addition, a significant restructuring of federal income tax rates or
even serious discussion on the topic in Congress could cause municipal
bond prices to fall. The demand for municipal securities is strongly
influenced by the value of tax-exempt income to investors relative to
taxable income. Lower income tax rates potentially reduce the
advantage of owning municipal securities.
Similarly, changes to state or federal regulation tied to a specific sector,
such as the hospital sector, could have an impact on the revenue stream
for a given subset of the market.
Municipal notes are similar to general municipal debt obligations, but
they generally possess shorter terms. Municipal notes can be used to
provide interim financing and may not be repaid if anticipated revenues
are not realized.
          
Puerto RicoSpecific Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Puerto Rico-Specific Risk
The Fund invests in Municipal Bonds issued by Puerto Rico or its
instrumentalities and may be affected by certain developments, such as
political, economic, environmental, social, regulatory or debt
restructuring developments that impact the ability or obligation of
Puerto Rico municipal issuers to pay interest or repay principal. Certain
issuers of Puerto Rico Municipal Bonds have experienced significant
financial difficulties and the continuation or reoccurrence of these
difficulties may impair their ability to pay principal or interest on their
obligations. Provisions of the Puerto Rico Constitution and
Commonwealth laws, including a federally appointed oversight board to
oversee the Commonwealth’s financial operations, which limit the
taxing and spending authority of Puerto Rico governmental entities may
impair the ability of Puerto Rico issuers to pay principal and/or interest
on their obligations. Puerto Rico’s economy has sizable concentrations
in certain industries, such as the manufacturing and service industries,
and may be sensitive to economic problems affecting those industries.
Future Puerto Rico-related developments, such as political and
economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation, debt
restructuring, tax base erosion and voter initiatives as well as
environmental events, natural disasters, pandemics, epidemics or social
unrest could have an adverse effect on the debt obligations of Puerto
Rico issuers.
          
Municipal Project Specific Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Municipal Project-Specific Risk
The Fund may be more sensitive to adverse economic, business or
political developments if it invests a substantial portion of its assets in
the bonds of specific projects (such as those relating to education,
health care, housing, transportation and utilities), industrial
development bonds, or in general obligation bonds, particularly if there
is a large concentration from issuers in a single state. The value of
municipal securities can be affected by the political, economic, legal, and
legislative landscape of the particular issuer’s locality, municipal sector
events or actual or perceived changes in economic, social, or public
health conditions. In addition, a significant restructuring of federal
income tax rates or even serious discussion on the topic in Congress
could cause municipal bond prices to fall. The demand for municipal
securities is strongly influenced by the value of tax-exempt income to
investors. Lower income tax rates could reduce the advantage of owning
municipal securities. Similarly, changes to state or federal regulation tied
to a specific sector, such as the hospital sector, could have an impact on
the revenue stream for a given subset of the market.
          
Municipal Project Housing Related Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Municipal Project Housing-Related Risk
The  Fund may invest in the bonds of projects focused on low-income,
affordable or other housing developments and businesses located in
low-income areas or invest in or originate loans that finance or are
generally related to such projects. There are significant risks associated
with the Fund’s investment in the bonds of these types of projects and
loans related to such projects. There may be federal, state and local
governmental regulatory restrictions on the operation, rental and
transfer of these projects, such as the requirement that the owners of
these affordable housing developments rent or sell certain residential
units to persons or families of low or moderate income and that the
amount of rent that may be charged for these units may be less than
market rates. These restrictions may adversely affect economic
performance relative to properties that are not subject to these
restrictions. There are also no assurances that a project owner will be
able to achieve and maintain sufficient rental income in order to pay all
operating expenses and maintenance and repair costs of such a project
and the debt service on the related bonds or loan on a timely basis. In
the event that a project owner is unable to pay all such costs, expenses
and debt service, a default on the related bonds or loan is likely to occur.
Moreover, as a result of economic, market and other factors, the risks of
the Fund’s investment in such municipal project housing-related
securities may be heightened due to the possibility of reduced tax or
other revenue available to issuers of municipal project housing-related
securities causing an increase of budgetary and financial pressure on
either the municipality or other issuers of municipal securities.
          
Loans and Other Indebtedness Loan Acquisitions Participations and Assignments Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Loans and Other Indebtedness; Loan Acquisitions,
Participations and Assignments Risk
Loan interests may take the form of (i) direct interests acquired during a
primary distribution or other purchase of a loan, (ii) loans originated by
the Fund or (iii) assignments of, novations of or participations in all or a
portion of a loan acquired in secondary markets. In addition to credit
risk and interest rate risk, the Fund’s exposure to loan interests may be
subject to additional risks. For example, purchasers of loans and other
forms of direct indebtedness depend primarily upon the
creditworthiness of the borrower for payment of principal and interest.
Loans are subject to the risk that scheduled interest or principal
payments will not be made in a timely manner or at all, either of which
may adversely affect the value of the loan. If the Fund does not receive
scheduled interest or principal payments on such indebtedness, the
Fund’s share price and yield could be adversely affected. Loans that are
fully secured may offer the Fund more protection than an unsecured
loan in the event of non-payment of scheduled interest or principal if
the Fund is able to access and monetize the collateral. However, the
collateral underlying a loan, if any, may be unavailable or insufficient to
satisfy a borrower’s obligation. If the Fund becomes owner, whole or in
part, of any collateral after a loan is foreclosed, the Fund may incur costs
associated with owning and/or monetizing its ownership of the
collateral.
During periods of deteriorating economic conditions, such as recessions
or periods of rising unemployment, or changing interest rates (notably
increases), delinquencies and losses generally increase, sometimes
dramatically, with respect to obligations under such loans. An economic
downturn or individual corporate developments could adversely affect
the market for these instruments and reduce a Fund’s ability to sell
these instruments at an advantageous time or price. An economic
downturn could also lead to a higher non-payment rate and, a loan may
lose significant market value before a default occurs.
Investments in loans through a purchase of a loan, loan origination or a
direct assignment of a financial institution’s interests with respect to a
loan may involve additional risks to a Fund. For example, if a loan is
foreclosed, the Fund could become owner, in whole or in part, of any
collateral, which could include, among other assets, real estate or other
real or personal property, and would bear the costs and liabilities
associated with owning and holding or disposing of the collateral.
Moreover, the purchaser of an assignment typically succeeds to all the
rights and obligations under the loan agreement with the same rights
and obligations as the assigning lender. Assignments may, however, be
arranged through private negotiations between potential assignees and
potential assignors, and the rights and obligations acquired by the
purchaser of an assignment may differ from, and be more limited than,
those held by the assigning lender. The Fund may also invest in loans
that are not secured by collateral which typically present greater risks
than collateralized loans.
In connection with purchasing loan participations, the Fund generally
will have no right to enforce compliance by the borrower with the terms
of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any
collateral supporting the loan in which it has purchased the loan
participation. As a result, the Fund will be subject to the credit risk of
both the borrower and the lender that is selling the participation. In the
event of the insolvency of the lender selling a participation, the Fund
may be treated as a general creditor of the lender and may not benefit
from any set-off between the lender and the borrower. Certain loan
participations may be structured in a manner designed to prevent
purchasers of participations from being subject to the credit risk of the
lender, but even under such a structure, in the event of the lender’s
insolvency, the lender’s servicing of the participation may be delayed
and the assignability of the participation impaired.
The Fund may have difficulty disposing of loans and loan participations.
Because there may not be a liquid market for many such investments,
the Fund anticipates that such investments could be sold only to a
limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such investments
and the Fund’s ability to dispose of particular loans and loan
participations when that would be desirable, including in response to a
specific economic event such as a deterioration in the creditworthiness
of the borrower. The lack of a liquid secondary market for loans and loan
participations also may make it more difficult for the Fund to assign a
value to these securities for purposes of valuing the Fund’s portfolio.
Investments in loans may include participations in bridge loans, which
are loans taken out by borrowers for a short period (typically less than
one year) pending arrangement of more permanent financing through,
for example, the issuance of bonds, frequently high yield bonds issued
for the purpose of acquisitions.
Investments in loans may include acquisitions of, or participation in,
delayed draw and delayed funding loans and revolving credit facilities.
These commitments may have the effect of requiring the Fund to
increase its investment in a borrower at a time when it might not
otherwise decide to do so (including at a time when the company's
financial condition makes it unlikely that such amounts will be repaid).
Delayed draw and delayed funding loans and revolving credit facilities
may be subject to restrictions on transfer, and only limited opportunities
may exist to resell such instruments. As a result, the Fund may be unable
to sell such investments at an opportune time or may have to resell
them at less than fair market value. Further, the Fund may need to hold
liquid assets in order to provide funding for these types of
commitments, meaning the Fund may not be able to invest in other
attractive investments, or the Fund may need to liquidate existing assets
in order to provide such funding.
The Fund may invest in loans used to finance the cost of construction,
acquisition, development, and/or rehabilitation of a property including,
but not limited to, development of single-family for-sale homes,
multi-family rentals and/or commercial facilities. Such construction
lending may expose the Fund to increased risk of non-payment and loss
because the loan is not backed by a finished project. Such risk may
depend on the nature of the construction and the relevant counterparty
or counterparties, which may include, but not be limited to,
homebuilders, private developers and/or entities with limited capital.
Repayment of these types of loans may depend on the borrower’s ability
to secure permanent “take-out” financing, which requires the successful
completion of the project, or operation of the property with an income
stream sufficient to meet operating and loan expenses. In addition,
these types of loans are subject to the risk of errors in estimations of the
property’s value at completion of construction and the estimated cost of
construction, as well as the risk that the projects may not be completed
and have limited liquidity.
To the extent the Fund invests in loans, or originates loans, the Fund
may be subject to greater levels of credit risk, call risk, settlement risk,
risk of subordination to other creditors, insufficient or lack of protection
under federal securities laws and liquidity risk. These instruments are
considered predominantly speculative with respect to an issuer’s
continuing ability to make principal and interest payments and may be
more volatile than other types of securities. The Fund may also be
subject to greater levels of liquidity risk than funds that do not invest in
loans. In addition, the loans in which the Fund invests may not be listed
on any exchange and a secondary market for such loans may be
comparatively illiquid relative to markets for other more liquid fixed
income securities. Consequently, transactions in loans may involve
greater costs than transactions in more actively traded securities. In
connection with certain loan transactions, transaction costs that are
borne by the Fund may include the expenses of third parties that are
retained to assist with reviewing and conducting diligence, negotiating,
structuring and servicing a loan transaction, and/or providing other
services in connection therewith. Furthermore, the Fund may incur such
costs in connection with loan transactions that are pursued by the Fund
but not ultimately consummated (so-called “broken deal costs”).
Restrictions on transfers in loan agreements, a lack of publicly available
information, irregular trading activity and wide bid/ask spreads, among
other factors, may, in certain circumstances, make loans more difficult to
sell at an advantageous time or price than other types of securities or
instruments. These factors may result in the Fund being unable to realize
full value for the loans and/or may result in the Fund not receiving the
proceeds from a sale of a loan for an extended period after such sale,
each of which could result in losses to the Fund. Some loans may have
extended trade settlement periods, including settlement periods of
greater than seven days, which may result in cash not being
immediately available to the Fund. If an issuer of a loan prepays or
redeems the loan prior to maturity, the Fund may have to reinvest the
proceeds in other loans or similar instruments that may pay lower
interest rates. Because of the risks involved in investing in loans, an
investment in the Fund should be considered speculative.
The Fund’s investments in subordinated and unsecured loans generally
are subject to similar risks as those associated with investments in
secured loans. Subordinated or unsecured loans are lower in priority of
payment to secured loans and are subject to the additional risk that the
cash flow of the borrower and property securing the loan or debt, if any,
may be insufficient to meet scheduled payments after giving effect to
the senior secured obligations of the borrower. This risk is generally
higher for subordinated unsecured loans or debt, which are not backed
by a security interest in any specific collateral. Subordinated and
unsecured loans generally have greater price volatility than secured
loans and may be less liquid. There is also a possibility that originators
will not be able to sell participations in subordinated or unsecured
loans, which would create greater credit risk exposure for the holders of
such loans. Subordinate and unsecured loans share the same risks as
other below investment grade securities.
There may be less readily available information about most loans and
the underlying borrowers than is the case for many other types of
securities. Loans may be issued by borrowers that are not subject to SEC
reporting requirements and therefore may not be required to file reports
with the SEC or may file reports that are not required to comply with
SEC form requirements. In addition, such borrowers may be subject to a
less stringent liability disclosure regime than companies subject to SEC
reporting requirements. Loans may not be considered “securities,” and
purchasers, such as the Fund, therefore may not be entitled to rely on
the anti-fraud protections of the federal securities laws. Because there is
limited public information available regarding loan investments, the
Fund is particularly dependent on the analytical abilities of the Fund’s
portfolio managers.
Economic exposure to loan interests through the use of derivative
transactions may involve greater risks than if the Fund had invested in
the loan interest directly during a primary distribution, through direct
originations or through assignments of, novations of or participations in
a loan acquired in secondary markets since, in addition to the risks
described above, certain derivative transactions may be subject to
leverage risk and greater illiquidity risk, counterparty risk, valuation risk
and other risks.
          
Loan Origination Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Loan Origination Risk
The Fund may invest in and/or originate loans, including, without
limitation, to, on behalf of, authorized by, sponsored by, and/or in
connection with a project for which authority and responsibility lies with
one or more U.S. states or territories, cities in a U.S. state or territory, or
political subdivisions, agencies, authorities or instrumentalities of such
states, territories or cities, which may be in the form of, and without
limitation as to a loan's level of seniority within a capital structure,
whole loans, assignments, participations, secured and unsecured notes,
senior and second lien loans, mezzanine loans, bridge loans or similar
investments, including to borrowers that are unrated or have credit
ratings that are determined by one or more NRSROs and/or PIMCO to
be below investment grade. This may include loans to public or private
firms or individuals, such as in connection with housing development
projects. The loans the Fund invests in or originates may vary in maturity
and/or duration. The Fund is not limited in the amount, size or type of
loans it may invest in and/or originate, including with respect to a single
borrower or with respect to borrowers that are determined to be below
investment grade, other than pursuant to any applicable law. The Fund’s
investment in or origination of loans may also be limited by the
requirements the Fund intends to observe under Subchapter M of the
Code in order to qualify as a RIC. The loans acquired by the Fund may be
of the type that count towards the Fund’s 80% policy or they may be
loans that produce income that is subject to regular federal income tax.
The Fund may subsequently offer such investments for sale to third
parties; provided, that there is no assurance that the Fund will complete
the sale of such an investment. If the Fund is unable to sell, assign or
successfully close transactions for the loans that it originates, the Fund
will be forced to hold its interest in such loans for an indeterminate
period of time. This could result in the Fund’s investments having high
exposure to certain borrowers. The Fund will be responsible for the
expenses associated with originating a loan (whether or not
consummated). This may include significant legal and due diligence
expenses, which will be indirectly borne by the Fund and Common
Shareholders.
Bridge loans are generally made with the expectation that the borrower
will be able to obtain permanent financing in the near future. Any delay
in obtaining permanent financing subjects the bridge loan investor to
increased risk. A borrower’s use of bridge loans also involves the risk
that the borrower may be unable to locate permanent financing to
replace the bridge loan, which may impair the borrower’s perceived
creditworthiness.
Loan origination and servicing companies are routinely involved in legal
proceedings concerning matters that arise in the ordinary course of their
business. In addition, a number of participants in the loan origination
and servicing industry (including control persons of industry
participants) have been the subject of regulatory actions by state
regulators, including state attorneys general, and by the federal
government. Governmental investigations, examinations or regulatory
actions, or private lawsuits, including purported class action lawsuits,
may adversely affect such companies’ financial results. To the extent the
Fund engages in origination and/or servicing directly, or has a financial
interest in, or is otherwise affiliated with, an origination or servicing
company, the Fund will be subject to enhanced risks of litigation,
regulatory actions and other proceedings. As a result, the Fund may be
required to pay legal fees, settlement costs, damages, penalties or other
charges, any or all of which could materially adversely affect the Fund
and its holdings.
          
California State Specific Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
California State-Specific Risk
The Fund invests in municipal bonds issued by or on behalf of the State
of California and its political subdivisions, financing authorities and their
agencies, and therefore may be affected significantly by economic,
regulatory, social, environmental or public health developments
affecting the ability of California tax-exempt issuers to pay interest or
repay principal. Certain issuers of California municipal bonds have
experienced serious financial difficulties in the past and reoccurrence of
these difficulties may impair the ability of certain California issuers to
pay principal or interest on their obligations, particularly given large
budget deficits that have been identified and may continue. Provisions
of the California Constitution and State statutes that limit the taxing
and spending authority of California governmental entities may impair
the ability of California issuers to pay principal and/or interest on their
obligations. While California’s economy is broad, it does have major
concentrations in advanced technology, aerospace and defense-related
manufacturing, trade, entertainment, real estate and financial services,
and may be sensitive to economic problems affecting those industries,
and its government revenues tend to rely heavily on certain earners
(revenues therefore are likely to be more volatile and to be adversely
affected if the number of such earners (or their recognized income
within a particular period of time) decreases). Future California political
and economic developments, constitutional amendments, legislative
measures, executive orders, administrative regulations, litigation and
voter initiatives as well as environmental events or natural disasters,
including but not limited to an earthquake or a wildfire, pandemics,
epidemics or social unrest could create a major dislocation of the
California economy and significantly affect the ability of state and local
governments to raise money to pay principal and interest on their
municipal securities and have an adverse effect on the debt obligations
of California issuers.
          
New York State Specific Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
New York State-Specific Risk
The Fund may invest in municipal bonds issued by or on behalf of the
State of New York and its political subdivisions, financing authorities
and their agencies, and therefore may be affected significantly by
political, economic or regulatory developments affecting the ability of
New York tax-exempt issuers to pay interest or repay principal. Certain
issuers of New York municipal bonds have experienced serious financial
difficulties in the past and reoccurrence of these difficulties may impair
the ability of certain New York issuers to pay principal or interest on
their obligations, particularly given large budget deficits that have been
identified and may continue. Provisions of the New York Constitution
and State statutes which limit the taxing and spending authority of
New York governmental entities may impair the ability of New York
issuers to pay principal and/or interest on their obligations. While
New York’s economy is broad, it does have major concentrations in
certain industries, such as financial services, and may be sensitive to
economic problems affecting those industries, and its government
revenues tend to rely heavily on certain earners (revenues therefore are
likely to be more volatile and to be adversely affected if the number of
such earners (or their recognized income within a particular period of
time) decreases). Future New York political and economic developments,
constitutional amendments, legislative measures, executive orders,
administrative regulations, litigation and voter initiatives as well as
environmental events, natural disasters, pandemics, epidemics or social
unrest could have an adverse effect on the debt obligations of New York
issuers to pay principal or interest on their obligations. The financial
health of New York City affects that of the State, and when New York
City experiences financial difficulty it may have an adverse effect on
New York municipal bonds held by the Fund. The growth rate of
New York has at times been somewhat slower than the nation overall.
The economic and financial condition of New York also may be affected
by various financial, social, economic, environmental, political and
geopolitical factors.
          
Insurance Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Insurance Risk
The Fund may purchase municipal securities that are secured by
insurance, bank credit agreements or escrow accounts. The credit quality
of the companies that provide such credit enhancements will affect the
value of those securities. If the insurer of a municipal security suffers a
downgrade in its credit rating or the market discounts the value of the
insurance provided by the insurer, the rating of the underlying municipal
security will be more relevant and the value of the municipal security
would more closely, if not entirely, reflect such rating. In such a case, the
value of insurance associated with a municipal security would decline
and may not add any value. The insurance feature of a municipal
security does not guarantee the full payment of principal and interest
through the life of an insured obligation, the market value of the insured
obligation or the net asset value of the common shares represented by
such insured obligation.
          
Inflation Deflation Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Inflation/Deflation Risk
Inflation risk is the risk that the value of assets or income from the
Fund’s investments will be worth less in the future as inflation decreases
the value of payments at future dates. As inflation increases, the real
value of the Fund’s portfolio could decline. Inflation rates may change
frequently and significantly as a result of various factors, including
unexpected shifts in the domestic or global economy or changes in fiscal
or monetary policies. Deflation risk is the risk that prices throughout the
economy decline over time. Deflation may have an adverse effect on the
creditworthiness of issuers and may make issuer default more likely,
which may result in a decline in the value of the Fund’s portfolio and
Common Shares.
          
Call Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Call Risk
Call risk refers to the possibility that an issuer may exercise its right to
redeem a fixed income security earlier than expected (a call). Issuers
may call outstanding securities prior to their maturity for a number of
reasons (
e.g.
, declining interest rates, changes in credit spreads and
improvements in the issuer’s credit quality). If an issuer calls a security in
which the Fund has invested, the Fund may not recoup the full amount
of its initial investment or may not realize the full anticipated earnings
from the investment and may be forced to reinvest in lower-yielding
securities, securities with greater credit risks or securities with other, less
favorable features.
          
Credit Risks [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Credit Risk
The Fund could experience losses if the issuer or guarantor of a fixed
income security (including a security purchased with securities lending
collateral), the counterparty to a derivatives contract, or the issuer or
guarantor of collateral, repurchase agreement or a loan of portfolio
securities is unable or unwilling, or is perceived (whether by market
participants, rating agencies, pricing services or otherwise) as unable or
unwilling, to make timely principal and/or interest payments or to
otherwise honor its financial obligations. The risk that such issuer,
guarantor or counterparty is less willing or able to do so is heightened
in market environments where interest rates are changing, notably
when rates are rising. Debt instruments backed by an issuer's taxing
authority may be subject to legal limits on the issuer's power to increase
taxes or otherwise to raise revenue or may be dependent on legislative
appropriation or government aid. Certain debt instruments are backed
only by revenues derived from a particular project or source, rather than
by an issuer's taxing authority, and thus may have a greater risk of
default. The downgrade of the credit rating of a security or of the issuer
of a security held by the Fund may decrease its value. Measures such as
average credit quality may not accurately reflect the true credit risk of
the Fund. This is especially the case if the Fund consists of securities
with widely varying credit ratings. Securities are subject to varying
degrees of credit risk, which are often reflected in credit ratings. This risk
is greater to the extent the Fund uses leverage or derivatives in
connection with the management of the Fund. Municipal bonds are
subject to the risk that litigation, legislation or other political events,
local business or economic conditions, or the bankruptcy of the issuer
could have a significant effect on an issuer’s ability to make payments of
principal and/or interest. Rising or high interest rates may deteriorate
the credit quality of an issuer or counterparty, particularly if an issuer or
counterparty faces challenges rolling or refinancing its obligations. The
Fund’s investments may be adversely affected if any of the issuers it is
invested in are subject to an actual or perceived (whether by market
participants, rating agencies, pricing services or otherwise) deterioration
to their credit quality.
Credit risk includes credit spread risk, which is the risk that credit
spreads (i.e., the difference in yield between securities that is due to
differences in their actual or perceived credit quality) may increase when
the market believes that investments generally have a greater risk of
default. Increasing credit spreads may reduce the market values of the
Fund's investments. Credit spreads often increase more for lower rated
and unrated securities than for investment grade securities. In addition,
when credit spreads increase, reductions in market value will generally
be greater for longer-maturity securities. Further, credit spread duration
(a measure of credit spread risk) can vary significantly from interest rate
duration (e.g., for floating rate debt securities, credit spread duration
typically will be higher than interest rate duration). The Fund may add
credit spread duration to its portfolio, for example through the use of
derivatives (e.g., credit default swaps), even while it has lower interest
rate duration. The credit spread duration of the Fund’s portfolio may
vary, in some cases significantly, from its interest rate duration. All
descriptions of duration in this prospectus refer to interest rate duration
unless otherwise noted.
          
Issuer Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Issuer Risk
The value of a security may decline for a number of reasons that directly
relate to the issuer, such as management performance, major litigation,
investigations or other controversies, changes in the issuer’s financial
condition or credit rating, changes in government regulations affecting
the issuer or its competitive environment and strategic initiatives such
as mergers, acquisitions or dispositions and the market response to any
such initiatives, financial leverage, reputation or reduced demand for the
issuer’s goods or services, as well as the historical and prospective
earnings of the issuer and the value of its assets. A change in the
financial condition of a single issuer may affect one or more other
issuers or securities markets as a whole. These risks can apply to the
Common Shares issued by the Fund and to the issuers of securities and
other instruments in which the Fund invests.
          
Liquidity Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Liquidity Risk
To the extent consistent with the applicable liquidity requirements for
interval funds under Rule 23c-3 of the Act, the Fund may invest without
limit in illiquid investments. Liquidity risk exists when particular
investments are difficult to purchase or sell. Illiquid investments are
investments that the Fund reasonably expects cannot be sold or
disposed of in current market conditions in seven calendar days or less
without the sale or disposition significantly changing the market value
of the investment. Illiquid investments may become harder to value,
especially in changing markets. The Fund’s investments in illiquid
investments may reduce the returns of the Fund because it may be
unable to sell the illiquid investments at an advantageous time or price
or possibly require the Fund to dispose of other investments at
unfavorable times or prices in order to satisfy its obligations, which
could prevent the Fund from taking advantage of other investment
opportunities. Illiquidity can be caused by, among other things, a drop in
overall market trading volume, an inability to find a willing buyer, or
legal restrictions on the securities’ resale. Additionally, the market for
certain investments may become illiquid under adverse market or
economic conditions independent of any specific adverse changes in the
conditions of a particular issuer, such as during political events
(including periods of rapid interest rate changes). There can be no
assurance that an investment that is deemed to be liquid when
purchased will continue to be liquid while it is held by a fund and/or
when a fund wishes to dispose of it. Bond markets have consistently
grown over the past three decades while the capacity for traditional
dealer counterparties to engage in fixed income trading has not kept
pace and in some cases has decreased. As a result, dealer inventories of
corporate bonds, which provide a core indication of the ability of
financial intermediaries to “make markets,” are at or near historic lows
in relation to market size. Because market makers seek to provide
stability to a market through their intermediary services, the significant
reduction in dealer inventories could potentially lead to decreased
liquidity and increased volatility in the fixed income markets. Such issues
may be exacerbated during periods of economic uncertainty.
In such cases, the Fund, due to regulatory limitations on investments in
illiquid investments and the difficulty in purchasing and selling such
securities or instruments, may be unable to achieve its desired level of
exposure to a certain sector. To the extent that the Fund's principal
investment strategies involve securities of companies with smaller
market capitalizations, foreign (non-U.S.) securities, Rule 144A
securities, illiquid sectors of fixed income securities, derivatives or
securities with substantial market and/or credit risk, the Fund will tend
to have the greatest exposure to liquidity risk.
Further, fixed income securities with longer durations until maturity face
heightened levels of liquidity risk as compared to fixed income securities
with shorter durations until maturity. The risks associated with illiquid
instruments may be particularly acute in situations in which the Fund’s
operations require cash (such as in connection with repurchase offers)
and could result in the Fund borrowing to meet its short-term needs or
incurring losses on the sale of illiquid instruments. It may also be the
case that other market participants may be attempting to liquidate fixed
income holdings at the same time as the Fund, causing increased supply
in the market and contributing to liquidity risk and downward pricing
pressure.
Liquidity risk also refers to the risk that the Fund may be required to
hold additional cash or sell other investments in order to obtain cash to
close out derivatives or meet the liquidity demands that derivatives can
create to make payments of margin, collateral, or settlement payments
to counterparties. The Fund may have to sell a security at a
disadvantageous time or price to meet such obligations.
The actions of governments and regulators may have the effect of
reducing market liquidity, market resiliency and money supply.
          
Repurchase Offers Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Repurchase Offers Risk
As described under “Periodic Repurchase Offers” above, the Fund is an
“interval fund” and, in order to provide liquidity to shareholders, the
Fund, subject to applicable law, conducts quarterly repurchase offers of
the Fund’s outstanding Common Shares at NAV, subject to approval of
the Board. In each quarter, such repurchase offers will be for at least 5%
and not more than 25% of its outstanding Common Shares at NAV,
pursuant to Rule 23c-3 under the Act.
The Fund currently expects to conduct quarterly repurchase offers for
10% of its outstanding Common Shares under ordinary circumstances.
The Fund believes that these repurchase offers are generally beneficial
to the Fund’s shareholders, and repurchases generally will be funded
from available cash or sales of portfolio securities. However, repurchase
offers and the need to fund repurchase obligations may affect the ability
of the Fund to be fully invested or force the Fund to maintain a higher
percentage of its assets in liquid investments, which may harm the
Fund’s investment performance. Moreover, diminution in the size of the
Fund through repurchases may result in untimely sales of portfolio
securities (with associated imputed transaction costs, which may be
significant), and may limit the ability of the Fund to participate in new
investment opportunities or to achieve its investment objectives. The
Fund may accumulate cash by holding back (i.e., not reinvesting)
payments received in connection with the Fund’s investments. The Fund
believes that payments received in connection with the Fund’s
investments will generate sufficient cash to meet the maximum
potential amount of the Fund’s repurchase obligations. If at any time
cash and other liquid assets held by the Fund are not sufficient to meet
the Fund’s repurchase obligations, the Fund intends, if necessary, to sell
investments. To the extent the Fund employs investment leverage,
repurchases of Common Shares would compound the adverse effects of
leverage in a declining market. In addition, if the Fund borrows to
finance repurchases, interest on that borrowing will negatively affect
Common Shareholders who do not tender their Common Shares by
increasing the Fund’s expenses and reducing any net investment
income. If a repurchase offer is oversubscribed, the Fund may, but is not
required to, determine to increase the amount repurchased by up to 2%
of the Fund’s outstanding shares as of the date of the Repurchase
Request Deadline. In the event that the Fund determines not to
repurchase more than the repurchase offer amount, or if shareholders
tender more than the repurchase offer amount plus 2% of the Fund’s
outstanding shares as of the date of the Repurchase Request Deadline,
the Fund will repurchase the Common Shares tendered on a pro rata
basis, and shareholders will have to wait until the next repurchase offer
to make another repurchase request. As a result, shareholders may be
unable to liquidate all or a given percentage of their investment in the
Fund during a particular repurchase offer. Notwithstanding the
foregoing, the Fund may accept all Common Shares tendered for
repurchase by shareholders who own less than one hundred Common
Shares and who tender all of their Common Shares, before prorating
Common Shares tendered by other shareholders; provided that, if a
shareholder holds shares through a financial intermediary, such
intermediary may not be willing or able to arrange for this treatment on
such shareholder's behalf. Some shareholders, in anticipation of
proration, may tender more Common Shares than they wish to have
repurchased in a particular quarter, thereby increasing the likelihood
that proration will occur. A shareholder may be subject to market and
other risks, and the NAV of Common Shares tendered in a repurchase
offer may decline between the Repurchase Request Deadline and the
date on which the NAV for tendered Common Shares is determined. In
addition, the repurchase of Common Shares by the Fund may be a
taxable event to shareholders.
          
High Yield Securities Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
High Yield Securities Risk
To the extent that the Fund invests in high yield securities and unrated
securities of similar credit quality (commonly known as “high yield
securities” or “junk bonds”), the Fund may be subject to greater levels
of credit risk, call risk and liquidity risk than funds that do not invest in
such securities, which could have a negative effect on the NAV of the
Fund’s Common Shares or Common Share dividends. These securities
are considered predominantly speculative by rating agencies with
respect to an issuer’s continuing ability to make principal and interest
payments, and their value may be more volatile than other types of
securities. An economic downturn or individual issuer developments
could adversely affect the market for these securities and reduce the
Fund’s ability to sell these securities at an advantageous time or price.
An economic downturn could also lead to a higher non-payment rate
and, a high yield security may lose significant market value before a
default occurs. The Fund may purchase distressed securities that are in
default or the issuers of which are in bankruptcy, which involve
heightened risks.
High yield securities structured as zero-coupon bonds or pay-in-kind
securities tend to be especially volatile as they are particularly sensitive
to downward pricing pressures from rising interest rates or widening
spreads and may require the Fund to make taxable distributions of
imputed income without receiving the actual cash currency. Issuers of
high yield securities may have the right to “call” or redeem the issue
prior to maturity, which may result in the Fund having to reinvest the
proceeds in other high yield securities or similar instruments that may
pay lower interest rates. The Fund may also be subject to greater levels
of liquidity risk than funds that do not invest in high yield securities.
Consequently, transactions in high yield securities may involve greater
costs than transactions in more actively traded securities.
A lack of publicly-available information, irregular trading activity and
wide bid/ask spreads among other factors, may, in certain
circumstances, make high yield debt more difficult to sell at an
advantageous time or price than other types of securities or
instruments. These factors may result in the Fund being unable to realize
full value for these securities and/or may result in the Fund not receiving
the proceeds from a sale of a high yield security for an extended period
after such sale, each of which could result in losses to the Fund. Because
of the risks involved in investing in high yield securities, an investment in
the Fund should be considered speculative.
In general, lower rated debt securities carry a greater degree of risk that
the issuer will lose its ability to make interest and principal payments,
which could have a negative effect on a Fund. Securities of below
investment grade quality are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and
repay principal and are commonly referred to as “high yield” securities
or “junk bonds.” High yield securities involve a greater risk of default,
and their prices are generally more volatile and sensitive to actual or
perceived negative developments. Debt securities in the lowest
investment grade category also may be considered to possess some
speculative characteristics by certain rating agencies. A Fund may
purchase stressed or distressed securities that are in default or the
issuers of which are in bankruptcy, which involve heightened risks. An
economic downturn could severely affect the ability of issuers
(particularly those that are highly leveraged) to service or repay their
debt obligations. Lower-rated securities are generally less liquid than
higher-rated securities, which may have an adverse effect on a Fund’s
ability to dispose of them. For example, during periods of deteriorating
economic conditions, such as recessions or periods of rising
unemployment, or changing interest rates (notably increases), high yield
securities are particularly susceptible to credit and default risk as
delinquencies and losses could increase, and such increases could be
sudden and significant. An economic downturn or individual issuer
developments could adversely affect the market for these investments
and reduce a Fund’s ability to sell these investments at an
advantageous time or price. These types of developments could cause
high yield securities to lose significant market value, including before a
default occurs only at prices lower than if such securities were widely
traded.
To the extent the Fund focuses on below investment grade debt
obligations, PIMCO’s capabilities in analyzing credit quality and
associated risks will be particularly important, and there can be no
assurance that PIMCO will be successful in this regard. Due to the risks
involved in investing in high yield securities, an investment in the Fund
should be considered speculative. See “The Fund’s Investment
Objectives and Strategies—Portfolio Contents—High Yield Securities”
for additional information.
The Fund’s credit quality policies apply only at the time a security is
purchased, and the Fund is not required to dispose of a security in the
event that a rating agency or PIMCO downgrades its assessment of the
credit characteristics of a particular issue. In determining whether to
retain or sell such a security, PIMCO may consider factors including, but
not limited to, PIMCO's assessment of the credit quality of the issuer of
such security, the price at which such security could be sold and the
rating, if any, assigned to such security by other rating agencies. Analysis
of creditworthiness may be more complex for issuers of high yield
securities than for issuers of higher quality debt securities.
          
Market Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Market Risk
The market price of securities owned by the Fund may go up or down,
sometimes rapidly or unpredictably. Securities may decline in value due
to factors affecting securities markets generally or particular industries
or companies represented in the securities markets. The value of a
security may decline due to general market conditions that are not
specifically related to a particular company, such as real or perceived
adverse economic conditions, changes in the general outlook for
corporate earnings, changes in inflation, interest or currency rates,
financial system instability, adverse changes to credit markets or
adverse investor sentiment generally. The value of a security may also
decline due to factors that affect a particular industry or industries, such
as labor shortages or increased production costs and competitive
conditions within an industry. During a general downturn in the
securities markets, multiple asset classes may decline in value
simultaneously even if the performance of those asset classes is not
otherwise historically correlated. Investments may also be negatively
impacted by market disruptions and by attempts by other market
participants to manipulate the prices of particular investments. Equity
securities generally have greater price volatility than fixed income
securities. Credit ratings downgrades may also negatively affect
securities held by the Fund. Even when markets perform well, there is no
assurance that the investments held by the Fund will increase in value
along with the broader market.
In addition, market risk includes the risk that geopolitical and other
events will disrupt the economy on a national or global level. For
instance, actual or threatened war or military conflict, terrorism, social
unrest, recessions, supply chain disruptions, market manipulation,
government defaults, government shutdowns, political changes,
diplomatic developments or the imposition of sanctions and other
similar measures, including the imposition of tariffs, or other
U.S. economic policies and any related public health emergencies (such
as the spread of infectious diseases, pandemics and epidemics) and
natural/environmental disasters can all negatively impact the securities
markets, which could cause the Fund to lose value. These events could
reduce consumer demand or economic output, result in market closures,
changes in interest rates, inflation/deflation, travel restrictions or
quarantines, and significantly adversely impact the economy.
As computing technology and data analytics advance, there has been a
trend towards machine driven and artificially intelligent trading systems,
particularly with respect to increasing levels of autonomy in trading
decision capabilities. Regulators of financial markets have become
increasingly focused on the potential impact of artificial intelligence on
investment activities and may issue regulations that affect the use of
artificial technology in trading activities. Any such regulations may not
have the effect on financial markets that regulators intend. Moreover,
advancements in artificial intelligence and other technologies may result
in the introduction of errors, defects or security vulnerabilities, which can
go undetected. The potential speed of such trading and other
technologies may exacerbate the impact of any such incidents,
particularly where such incidents are exploited by other artificially
intelligent systems designed to impair or prevent the intervention of a
human control.
The current contentious domestic political environment, as well as
political and diplomatic events within the United States and abroad, or
the U.S. government’s inability at times to agree on a long-term budget
and deficit reduction plan, has in the past resulted, and may in the
future result, in a government shutdown or otherwise adversely affect
the U.S. regulatory landscape, the general market environment and/or
investor sentiment, which could have an adverse impact on the Fund’s
investments and operations. Additional and/or prolonged U.S. federal
government shutdowns may affect investor and consumer confidence
and may adversely impact financial markets and the broader economy,
perhaps suddenly and to a significant degree. Governmental and
quasi-governmental authorities and regulators throughout the world
have previously responded to serious economic disruptions with a
variety of significant fiscal and monetary policy changes, including but
not limited to, direct capital infusions into companies, new monetary
programs and dramatically lower interest rates. An unexpected or
sudden reversal of these policies, or the ineffectiveness of these policies,
could increase volatility in securities markets, which could adversely
affect the Fund’s investments. Any market disruptions could also prevent
the Fund from executing advantageous investment decisions in a timely
manner. To the extent that a Fund has focused its investments on a
region enduring geopolitical market disruption will face higher risks of
loss, although the increasing interconnectivity between global
economies and financial markets can lead to events or conditions in one
country, region or financial market adversely impacting a different
country, region or financial market. Thus, investors should closely
monitor current market conditions to determine whether the Fund
meets their individual financial needs and tolerance for risk.
During inflationary price movements, fixed income securities markets
may experience heightened levels of interest rate, volatility and liquidity
risk. Interest rate increases in the future could cause the value of a fund
that invests in fixed income securities to decrease. Interest rate increases
and other market events have the potential to adversely impact real
estate values and real estate-related asset prices, which could, by
extension, adversely impact the value of other investments, such as
loans, securitized debt and other fixed income securities. Such an impact
could materialize in one real estate sector and not another, or in a
different manner in different real estate sectors. Examples of the current
risks faced by real estate-related assets include: tenant vacancy rates,
tenant turnover and tenant concentration have increased; owners of
real estate have faced headwinds, delinquencies and difficulties in
collecting rents and other payments (which increases the risk of owners
being unable to pay or otherwise defaulting on their own borrowings
and obligations); property values have declined; inflation, upkeep costs
and other expenses have increased; rents have declined for many
properties; and ownership of certain types of properties has become
more concentrated.
Exchanges and securities markets may close early, close late or issue
trading halts on specific securities or generally, which may result in,
among other things, the Fund being unable to buy or sell certain
securities or financial instruments at an advantageous time or accurately
price its portfolio investments.
Municipal Bond Market Risk.
The amount of public
information available about the municipal bonds in the Fund’s
portfolio is generally less than that for corporate equities or bonds,
and the investment performance of the Fund may therefore be
more dependent on the analytical abilities of PIMCO than would
be a stock fund or taxable bond fund. The secondary market for
municipal bonds, particularly below investment grade bonds in
which the Fund may invest, also tends to be less well-developed
and less liquid than many other securities markets, which may
adversely affect the Fund’s ability to sell municipal bonds at
attractive prices or value municipal bonds.
          
Management Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Management Risk
The Fund is subject to management risk because it is an actively
managed investment portfolio. PIMCO will apply investment techniques
and risk analysis in making investment decisions for the Fund. There can
be no guarantee that these decisions will produce the desired results or
that the due diligence conducted by PIMCO and individual portfolio
managers will expose all material risks associated with an investment.
Additionally, PIMCO and individual portfolio managers may not be able
to identify suitable investment opportunities and may face competition
from other investment managers when identifying and consummating
certain investments, or may determine that certain factors are more
significant than others. Certain securities or other instruments in which
the Fund seeks to invest may not be available in the quantities desired,
including in circumstances where other funds for which PIMCO acts as
investment adviser, including funds with names, investment objectives
and policies, and/or portfolio management teams, similar to the Fund,
are seeking to invest in the same or similar securities or instruments. In
addition, regulatory restrictions, actual or potential conflicts of interest
or other considerations may cause PIMCO to restrict or prohibit
participation in certain investments. In such circumstances, PIMCO or
the individual portfolio managers may determine to purchase other
securities or instruments as substitutes. Such substitute securities or
instruments may not perform as intended, which could result in losses
to the Fund. To the extent the Fund employs strategies targeting
perceived pricing inefficiencies, arbitrage strategies or similar strategies,
it is subject to the risk that the pricing or valuation of the securities and
instruments involved in such strategies may change unexpectedly, which
may result in reduced returns or losses to the Fund. The Fund is also
subject to the risk that deficiencies in the internal systems or controls of
PIMCO or another service provider will cause losses for the Fund or
hinder Fund operations. For example, trading delays or errors (both
human and systemic) could prevent the Fund from purchasing a security
expected to appreciate in value. Please refer to “Portfolio Managers -
Conflicts of Interest” in the SAI for further information. Additionally,
actual or potential conflicts of interest, legislative, regulatory, or tax
restrictions, policies or developments may affect the investment
techniques available to PIMCO and each individual portfolio manager in
connection with managing the Fund, may cause PIMCO to restrict or
prohibit participation in certain investments and may also adversely
affect the ability of the Fund to achieve its investment objectives. There
also can be no assurance that all of the personnel of PIMCO will
continue to be associated with PIMCO for any length of time. The loss of
the services of one or more key employees of PIMCO could have an
adverse impact on the Fund’s ability to realize its investment objectives.
In addition, the Fund may rely on various third-party sources to calculate
its NAV. As a result, the Fund is subject to certain operational risks
associated with reliance on service providers and service providers’ data
sources. In particular, errors or systems failures and other technological
issues may adversely impact the Fund’s calculations of its NAV, and such
NAV calculation issues may result in inaccurately calculated NAVs,
delays in NAV calculation and/or the inability to calculate NAVs over
extended periods. The Fund may be unable to recover any losses
associated with such failures.
          
Reinvestment Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Reinvestment Risk
Income from the Fund’s portfolio will decline if and when the Fund
invests the proceeds from matured, traded or called debt obligations at
market interest rates that are below the portfolio’s current earnings
rate
.
For instance, during periods of declining interest rates, an issuer of debt
obligations may exercise an option to redeem securities prior to
maturity, forcing the Fund to invest in lower-yielding securities. The Fund
also may choose to sell higher yielding portfolio securities and to
purchase lower yielding securities to achieve greater portfolio
diversification, because the portfolio managers believe the current
holdings are overvalued or for other investment-related reasons. A
decline in income received by the Fund from its investments is likely to
have a negative effect on dividend levels and the market price, NAV
and/or overall return of the Common Shares.
          
Leverage Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Leverage Risk
The Fund’s use of leverage (as described under “Use of Leverage” in the
body of this prospectus) creates the opportunity for increased Common
Share net income, but also creates special risks for Common
Shareholders (including an increased risk of loss). To the extent used,
there is no assurance that the Fund’s leveraging strategies will be
successful. Leverage is a speculative technique that may expose the
Fund to greater risk and increased costs. The Fund’s assets attributable
to any outstanding Preferred Shares or the net proceeds that the Fund
obtains from its use of tender option bonds, derivatives or other forms
of leverage, if any, will be invested in accordance with the Fund’s
investment objectives and policies as described in this prospectus.
Dividends payable with respect to any Preferred Shares outstanding and
interest expense payable by the Fund with respect to any tender option
bonds, derivatives and other forms of leverage will generally be based
on shorter-term interest rates that would be periodically reset. So long
as the Fund’s portfolio investments provide a higher rate of return (net
of applicable Fund expenses) than the dividend rate on any Preferred
Shares outstanding, including the Preferred Shareholder Gross-Up, and
the interest expenses and other costs to the Fund of such other
leverage, the investment of the proceeds thereof will generate more
income than will be needed to pay the costs of the leverage. If so, and
all other things being equal, the excess may be used to pay higher
dividends to Common Shareholders than if the Fund were not so
leveraged. If, however, shorter-term interest rates rise relative to the rate
of return on the Fund’s portfolio, the interest and other costs to the
Fund of leverage (including interest expenses on tender option bonds
and the dividend rate on any outstanding Preferred Shares, including
the Preferred Shareholder Gross-Up) could exceed the rate of return on
the debt obligations and other investments held by the Fund, thereby
reducing return to Common Shareholders. When the Fund reduces or
discontinues its use of leverage (“deleveraging”), which it may be
required to do at inopportune times, it may be required to sell portfolio
securities at inopportune times to repay leverage obligations, which
could result in realized losses and a decrease in the Fund's net asset
value. Deleveraging involves complex operational processes, including
the coordination of asset sales, repayment of debt, and potential
restructuring of the Fund's capital and may involve significant costs,
including transaction costs associated with the sale of portfolio
securities, prepayment penalties on borrowed funds, and, if applicable,
fees related to the redemption of preferred shares. Leveraging
transactions pursued by the Fund may increase its duration and
sensitivity to interest rate movements. The Fund may continue to use
leverage even if available financing rates are higher than anticipated
returns, including, for example, in cases where deleveraging, including
any expenses related thereto, might be viewed as detrimental to the
Fund’s portfolio. In addition, fees and expenses of any form of leverage
used by the Fund will be borne entirely by the Common Shareholders
(and not by Preferred Shareholders, if any) and will reduce the
investment return of the Common Shares. Therefore, there can be no
assurance that the Fund’s use of leverage will result in a higher yield on
the Common Shares, and it may result in losses. In addition, any
Preferred Shares issued by the Fund are expected to pay cumulative
dividends, which may tend to increase leverage risk.
Leverage creates several major types of risks for Common Shareholders,
including:
■
the likelihood of greater volatility of NAV of Common Shares, and
of the investment return to Common Shareholders, than a
comparable portfolio without leverage;
■
the possibility either that Common Share dividends will fall if the
interest and other costs of leverage rise, or that dividends paid on
Common Shares will fluctuate because such costs vary over time;
and
■
the effects of leverage in a declining market or a rising interest
rate environment, as leverage is likely to cause a greater decline in
the NAV of the Common Shares than if the Fund were not
leveraged.
In addition, the counterparties to the Fund’s leveraging transactions and
any Preferred Shareholders of the Fund will have complete priority of
payment over the Fund’s Common Shareholders.
Reverse repurchase agreements involve the risks that the interest
income earned on the investment of the proceeds will be less than the
interest expense and Fund expenses associated with the repurchase
agreement, that the market value of the securities sold by the Fund may
decline below the price at which the Fund is obligated to repurchase
such securities and that the securities may not be returned to the Fund.
There is no assurance that reverse repurchase agreements can be
successfully employed. Dollar roll/buy back transactions involve the risk
that the market value of the securities the Fund is required to purchase
may decline below the agreed upon purchase price of those securities.
Successful use of dollar rolls/buy backs may depend upon the
Investment Manager’s ability to correctly predict interest rates and
prepayments. There is no assurance that dollar rolls/buy backs can be
successfully employed. In connection with reverse repurchase
agreements and dollar rolls/buy backs, the Fund will also be subject to
counterparty risk with respect to the purchaser of the securities. If the
broker/dealer to whom the Fund sells securities becomes insolvent, the
Fund’s right to purchase or repurchase securities may be restricted.
The Fund may engage in total return swaps, reverse repurchases, loans
of portfolio securities, short sales and when-issued, delayed delivery and
forward commitment transactions, credit default swaps, basis swaps
and other swap agreements, purchases or sales of futures and forward
contracts (including foreign currency exchange contracts), call and put
options or other derivatives. The Fund’s use of such transactions gives
rise to associated leverage risks described above, and may adversely
affect the Fund’s income, distributions and total returns to Common
Shareholders. To the extent that any offsetting positions do not behave
in relation to one another as expected, the Fund may perform as if it is
leveraged through use of these derivative strategies.
Any total return swaps, reverse repurchases, loans of portfolio securities,
short sales and when-issued, delayed delivery and forward commitment
transactions, credit default swaps, basis swaps and other swap
agreements, purchases or sales of futures and forward contracts
(including foreign currency exchange contracts), call and put options or
other derivatives by the Fund or counterparties to the Fund’s other
leveraging transactions, if any, would have seniority over the Fund’s
Common Shares.
In addition to tender option bonds and any future issuance of Preferred
Shares, the Fund may engage in other transactions that may give rise to
a form of leverage including, among others loans of portfolio securities,
short sales and when-issued, delayed delivery and forward commitment
transactions, credit default swaps, reverse repurchases, or other
derivatives. The Fund’s use of such transactions gives rise to associated
leverage risks described above, and may adversely affect the Fund’s
income, distributions and total returns to Common Shareholders. The
Fund may offset derivatives positions against one another or against
other assets to manage effective market exposure resulting from
derivatives in its portfolio. To the extent that any offsetting positions do
not behave in relation to one another as expected, the Fund may
perform as if it is leveraged through use of these derivative strategies.
See “Use of Leverage.”
The Fund is required to satisfy certain regulatory and rating agency asset
coverage requirements in connection with its use of Preferred Shares.
Accordingly, any decline in the net asset value of the Fund’s investments
could result in the risk that the Fund will fail to meet its asset coverage
requirements for any such Preferred Shares or the risk of the Preferred
Shares being downgraded by a rating agency. The Fund’s current
investment income might not be sufficient to meet the dividend
requirements on preferred shares outstanding. In order to address these
types of events, the Fund might need to liquidate investments in order
to fund a redemption of some or all of Preferred Shares. Liquidations at
inopportune times or at times of adverse economic conditions may
result in a loss to the Fund. At other times, these liquidations may result
in gain at the Fund level and thus in additional taxable distributions to
Common Shareholders. See “Tax Matters” for more information. Any
Preferred Shares, total return swaps, reverse repurchases, tender option
bonds, loans of portfolio securities, short sales and when-issued,
delayed delivery and forward commitment transactions, credit default
swaps, reverse repurchases or other derivatives by the Fund or
counterparties to the Fund’s other leveraging transactions, if any, would
have, seniority over the Fund’s Common Shares.
When the Fund issues Preferred Shares, the Fund pays (and the
Common Shareholders bear) all costs and expenses relating to the
issuance and ongoing maintenance of Preferred Shares. In addition,
holders of any Preferred Shares issued by the Fund would have
complete priority over Common Shareholders in the distribution of the
Fund’s assets. Furthermore, Preferred Shareholders, voting separately as
a single class, have the right to elect two members of the Board at all
times and to elect a majority of the trustees in the event two full years’
dividends on the Preferred Shares are unpaid, and also have separate
class voting rights on certain matters. Accordingly, Preferred
Shareholders may have interests that differ from those of Common
Shareholders, and may at times have disproportionate influence over
the Fund’s affairs.
Because the fees received by the Investment Manager may increase
depending on the types of leverage utilized by the Fund, the Investment
Manager has a financial incentive for the Fund to use certain forms of
leverage, which may create a conflict of interest between the Investment
Manager, on the one hand, and the Common Shareholders, on the other
hand.
          
Derivatives Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Derivatives Risk
The Fund may, but is not required to, utilize a variety of derivative
instruments (both long and short positions) for investment or risk
management purposes.
Derivatives or other similar instruments (referred to collectively as
“derivatives”) are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index.
For example, the Fund may use derivative instruments for purposes of
increasing liquidity, providing efficient portfolio management,
broadening investment opportunities (including taking short or negative
positions), implementing a tax or cash management strategy, gaining
exposure to a particular security or segment of the market, modifying
the effective duration of the Fund’s portfolio investments and/or
enhancing total return.
Investments in derivatives may take the form of buying and/or writing
(selling) derivatives, and/or the Fund may otherwise become an obligor
under a derivatives transaction. These transactions may produce
short-term capital gains in the form of premiums or other returns for the
Fund (which may support, constitute and/or increase the distributions
paid by, or the yield of, the Fund) but create the risk of losses that can
significantly exceed such current income or other returns. For example,
the premium received for writing a call option may be dwarfed by the
losses the Fund may incur if the call option is exercised, and derivative
transactions where the Fund is an obligor can produce an up-front
benefit, but the potential for leveraged losses. The distributions, or
distribution rates, paid by the Fund should not be viewed as the total
returns or overall performance of the Fund. These strategies may also
produce adverse tax consequences (for example, the Fund’s income and
gain-generating strategies may generate current income and gains
taxable as ordinary income) and limit the Fund’s opportunity to profit or
otherwise benefit from certain gains. The Fund may enter into opposing
derivative transactions, or otherwise take opposing positions. Such
transactions can generate distributable gains (which, as noted
elsewhere, may be taxed as ordinary income) and create the risk of
losses and NAV declines.
The use of derivatives involves risks different from, and possibly greater
than, the risks associated with investing directly in securities and other
traditional investments. Derivatives may increase market exposure and
are subject to a number of risks including leverage risk, liquidity risk
(which may be heightened for highly-customized derivatives), interest
rate risk, market risk, counterparty (including credit) risk, operational
risk (such as documentation issues, settlement issues and systems
failures), legal risk (such as insufficient documentation, insufficient
capacity or authority of a counterparty, and issues with the legality or
enforceability of a contract), management risk, risks arising from
changes in applicable regulatory requirements, risks arising from margin
requirements and risks arising from mispricing or valuation complexity
(including the risk of improper valuation), governmental risk, as well as
the risks associated with the underlying asset, reference rate or index, or
risks associated with sanctions. They also involve the risk that changes
in the value of a derivative instrument may not correlate perfectly with
the underlying asset, rate or index. By investing in a derivative
instrument, the Fund could lose more than the initial amount invested,
and derivatives may increase the volatility of the Fund, especially in
unusual or extreme market conditions. Certain derivatives have the
potential for unlimited loss, regardless of the size of the initial
investment. The Fund may utilize asset segregation and posting of
collateral for risk management or other purposes. The Fund may be
required to hold additional cash or sell other investments in order to
obtain cash to close out a position and changes in the value of a
derivative may also create margin delivery or settlement payment
obligations for the Fund. Also, suitable derivative transactions may not
be available in all circumstances and there can be no assurance that the
Fund will engage in these transactions to reduce exposure to other risks
when that would be beneficial or that, if used, such strategies will be
successful. The Fund’s use of derivatives may increase or accelerate the
amount of taxes payable by Common Shareholders.
Non-centrally-cleared Over-the-counter (“OTC”) derivatives are also
subject to the risk that a counterparty to the transaction will not fulfill
its contractual obligations to the other party, as many of the protections
afforded to centrally cleared derivative transactions might not be
available for non-centrally-cleared OTC derivatives. The primary credit
risk on derivatives that are exchange-traded or traded through a central
clearing counterparty resides with the Fund’s clearing broker, or the
clearinghouse itself.
Participation in the markets for derivative instruments involves
investment risks and transaction costs to which the Fund may not be
subject absent the use of these strategies. The skills needed to
successfully execute derivative strategies may be different from those
needed for other types of transactions. If the Fund incorrectly forecasts
the value and/or creditworthiness of securities, currencies, interest rates,
counterparties or other economic factors involved in a derivative
transaction, the Fund might have been in a better position if the Fund
had not entered into such derivative transaction. In evaluating the risks
and contractual obligations associated with particular derivative
instruments, it is important to consider that certain derivative
transactions may be modified or terminated only by mutual consent of
the Fund and its counterparty.
Therefore, it may not be possible for the Fund to modify, terminate, or
offset the Fund’s obligations or the Fund’s exposure to the risks
associated with a derivative transaction prior to its scheduled
termination or maturity date, which may create a possibility of increased
volatility and/or decreased liquidity to the Fund.
Because the markets for certain derivative instruments (including
markets located in foreign countries) are relatively new and still
developing, appropriate derivative transactions may not be available in
all circumstances for risk management or other purposes. Upon the
expiration of a particular contract, the Fund may wish to retain the
Fund’s position in the derivative instrument by entering into a similar
contract but may be unable to do so if the counterparty to the original
contract is unwilling to enter into the new contract and no other
appropriate counterparty can be found. When such markets are
unavailable, the Fund will be subject to increased liquidity and
investment risk.
The Fund may enter into opposite sides of interest rate swap and other
derivatives for the principal purpose of generating distributable gains on
the one side (characterized as ordinary income for tax purposes) that
are not part of the Fund’s duration or yield curve management
strategies (“paired swap transactions”), and with a substantial
possibility that the Fund will experience a corresponding capital loss
and decline in NAV with respect to the opposite side transaction (to the
extent it does not have corresponding offsetting capital gains).
Consequently, Common Shareholders may receive distributions and owe
tax on amounts that are effectively a taxable return of the shareholder’s
investment in the Fund, at a time when their investment in the Fund has
declined in value, which tax may be at ordinary income rates. The tax
treatment of certain derivatives in which the Fund invests may be
unclear and thus subject to recharacterization. Any recharacterization of
payments made or received by the Fund pursuant to derivatives
potentially could affect the amount, timing or character of Fund
distributions. In addition, the tax treatment of such investment
strategies may be changed by regulation or otherwise.
Although hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedges are sometimes subject to imperfect matching
between the derivative and the underlying instrument, and there can be
no assurance that the Fund’s hedging transactions will be effective.
Derivatives used for hedging or risk management may not operate as
intended or may expose the Fund to additional risks. In addition,
derivatives used for hedging may partially protect the Fund from the
risks they were intended to hedge yet not fully mitigate the impact of
such risks. The regulation of the derivatives markets has increased over
time, and additional future regulation of the derivatives markets may
make derivatives more costly, may limit the availability or reduce the
liquidity of derivatives, or may otherwise adversely affect the value or
performance of derivatives. Any such adverse future developments could
impair the effectiveness or raise the costs of the Fund’s derivative
transactions, impede the employment of the Fund’s derivatives
strategies, or adversely affect the Fund’s performance and cause the
Fund to lose value.
          
Credit Default Swaps Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Credit Default Swaps Risk
Credit default swap agreements may involve greater risks than if the
Fund had invested in the reference obligation directly since, in addition
to general market risks, credit default swaps are subject to leverage risk,
illiquidity risk, counterparty risk and credit risk. A buyer generally also
will lose its investment and recover nothing should no credit event occur
and the swap is held to its termination date. If a credit event were to
occur, the value of any deliverable obligation received by the seller (if
any), coupled with the upfront or periodic payments previously received,
may be less than the full notional value it pays to the buyer, resulting in
a loss of value to the seller. When the Fund acts as a seller of a credit
default swap, it is exposed to many of the same risks of leverage
described herein. As the seller, the Fund would receive a stream of
payments over the term of the swap agreement provided that no event
of default has occurred with respect to the referenced debt obligation
upon which the swap is based. The Fund would effectively add leverage
to its portfolio because, if a default occurs, the stream of payments may
stop and, in addition to its total net assets, the Fund would be subject to
investment exposure on the notional amount of the swap.
Although the Fund may seek to realize gains by selling credit default
swaps that increase in value, to realize gains on selling credit default
swaps, an active secondary market for such instruments must exist or
the Fund must otherwise be able to close out these transactions at
advantageous times. In addition to the risk of losses described above, if
no such secondary market exists or the Fund is otherwise unable to
close out these transactions at advantageous times, selling credit
default swaps may not be profitable for the Fund.
The market for credit default swaps has become more volatile as the
creditworthiness of certain counterparties has been questioned and/or
downgraded. The Fund will be subject to credit risk with respect to the
counterparties to the credit default swap contract (whether a clearing
corporation or another third party). If a counterparty’s credit becomes
significantly impaired, multiple requests for collateral posting in a short
period of time could increase the risk that the Fund may not receive
adequate collateral. The Fund may exit its obligations under a credit
default swap only by terminating the contract and paying applicable
breakage fees, or by entering into an offsetting credit default swap
position, which may cause the Fund to incur more losses.
          
Valuation Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Valuation Risk
Certain securities in which the Fund invests may be less liquid and more
difficult to value than other types of securities. Investments for which
market quotations are not readily available are valued at fair value as
determined in good faith pursuant to Rule 2a-5 under the Act. See
”How Fund Shares are Priced.“ Fair value pricing may require subjective
determinations about the value of a security or other asset. As a result,
there can be no assurance that fair value pricing will result in
adjustments to the prices of securities or other assets, or that fair value
pricing will reflect actual market value, and it is possible that the fair
value determined for a security or other asset will be materially different
from quoted or published prices, from the prices used by others for the
same security or other asset and/or from the value that actually could be
or is realized upon the sale of that security or other asset.
          
Counterparty Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Counterparty Risk
The Fund will be subject to credit risk with respect to the counterparties
to the derivative contracts and other instruments entered into by the
Fund or held by special purpose or structured vehicles in which the Fund
invests. For example, if a bank at which the Fund or issuer has an
account fails, any cash or other assets in bank or custody accounts,
which may be substantial in size, could be temporarily inaccessible or
permanently lost by the Fund or issuer. In the event that the Fund enters
into a derivative transaction with a counterparty that subsequently
becomes insolvent or becomes the subject of a bankruptcy case, the
derivative transaction may be terminated in accordance with its terms
and the Fund’s ability to realize its rights under the derivative
instrument and its ability to distribute the proceeds could be adversely
affected. If a counterparty becomes bankrupt or otherwise fails to
perform its obligations under a derivative contract due to financial
difficulties, the Fund may experience significant delays in obtaining any
recovery (including recovery of any collateral it has provided to the
counterparty) in a dissolution, assignment for the benefit of creditors,
liquidation, winding-up, bankruptcy, or other analogous proceeding. In
addition, in the event of the insolvency of a counterparty to a derivative
transaction, the derivative transaction would typically be terminated at
its fair market value. If the Fund is owed this fair market value in the
termination of the derivative transaction and its claim is unsecured, the
Fund will be treated as a general creditor of such counterparty, and will
not have any claim with respect to any underlying security or asset. The
Fund may obtain only a limited recovery or may obtain no recovery in
such circumstances. Counterparty credit risk also includes the related
risk of having concentrated exposure to a single counterparty, which
may increase potential losses if the counterparty were to become
insolvent. While the Fund may seek to manage its counterparty risk by
transacting with a number of counterparties, concerns about the
solvency of, or a default by, one large market participant could lead to
significant impairment of liquidity and other adverse consequences for
other counterparties.
          
Confidential Information Access Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Confidential Information Access Risk
In managing the Fund (and other PIMCO clients), PIMCO may from time
to time have the opportunity to receive material, non-public information
(“Confidential Information”) about the issuers of certain investments,
including, without limitation, senior floating rate loans, other loans and
related investments being considered for acquisition by the Fund or held
in the Fund’s portfolio. For example, an issuer of privately placed loans
considered by the Fund may offer to provide PIMCO with financial
information and related documentation regarding the issuer that is not
publicly available. Pursuant to applicable policies and procedures,
PIMCO may (but is not required to) seek to avoid receipt of Confidential
Information about such issuers so as to avoid possible restrictions on its
ability to purchase and sell investments on behalf of the Fund and other
clients to which such Confidential Information relates. In such
circumstances, the Fund (and other PIMCO clients) may be
disadvantaged in comparison to other investors, including with respect
to the price the Fund pays or receives when it buys or sells an
investment. Further, PIMCO’s and the Fund’s abilities to assess the
desirability of proposed consents, waivers or amendments with respect
to certain investments may be compromised if they are not privy to
available Confidential Information. PIMCO may also determine to
receive such Confidential Information in certain circumstances under its
applicable policies and procedures. If PIMCO intentionally or
unintentionally comes into possession of Confidential Information, it
may be unable, potentially for a substantial period of time, to purchase
or sell investments to which such Confidential Information relates.
          
Private Placements Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Private Placements Risk
A private placement involves the sale of securities that have not been
registered under the Securities Act, or relevant provisions of applicable
non-U.S. law, to certain institutional and qualified individual purchasers,
such as the Fund. In addition to the general risks to which all securities
are subject, securities received in a private placement generally are
subject to strict restrictions on resale, and there may be no liquid
secondary market or ready purchaser for such securities. See “Principal
Risks of the Fund—Liquidity Risk.” Therefore, the Fund may be unable
to dispose of such securities when it desires to do so, or at the most
favorable time or price. Private placements may also raise valuation
risks. See “Principal Risks of the Fund—Valuation Risk.” The Fund may
also have to bear the expense of registering the securities for resale and
the risk of substantial delays in effecting the registration. Additionally,
the purchase price and subsequent valuation of private placements
typically reflect a discount, which may be significant, from the market
price of comparable securities for which a more liquid market exists.
          
Privacy and Data Security Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Privacy and Data Security Risk
The GLBA and other laws limit the disclosure of certain non-public
personal information about a consumer to non-affiliated third parties
and require financial institutions to disclose certain privacy policies and
practices with respect to information sharing with both affiliates and
non- affiliated third parties. Many states and a number of
non-U.S. jurisdictions have enacted privacy and data security laws
requiring safeguards on the privacy and security of consumers’
personally identifiable information. Other laws deal with obligations to
safeguard and dispose of private information in a manner designed to
avoid its dissemination. Privacy rules adopted by the U.S. Federal Trade
Commission and SEC implement the GLBA and other requirements and
govern the disclosure of consumer financial information by certain
financial institutions, ranging from banks to private investment funds.
U.S. platforms following certain models generally are required to have
privacy policies that conform to these GLBA and other requirements. In
addition, such platforms typically have policies and procedures intended
to maintain platform participants’ personal information securely and
dispose of it properly. The Fund generally does not intend to obtain or
hold borrowers’ non-public personal information, and the Fund has
implemented procedures reasonably designed to prevent the disclosure
of borrowers’ non-public personal information to the Fund. However,
service providers to the Fund or its direct or indirect fully-owned
subsidiaries, including their custodians and the platforms acting as loan
servicers for the Fund or its direct or indirect fully-owned subsidiaries,
may obtain, hold or process such information. The Fund cannot
guarantee the security of non-public personal information in the
possession of such a service provider and cannot guarantee that service
providers have been and will continue to comply with the GLBA, other
data security and privacy laws and any other related regulatory
requirements. Violations of the GLBA and other laws could subject the
Fund to litigation and/or fines, penalties or other regulatory action,
which, individually or in the aggregate, could have an adverse effect on
the Fund. The Fund may also face regulations related to privacy and
data security in the other jurisdictions in which the Fund invests.
          
Regulatory Changes Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Regulatory Changes Risk
Financial entities, such as investment companies and investment
advisers, are generally subject to extensive government regulation and
intervention. Government regulation and/or intervention may change
the way the Fund is regulated, affect the expenses incurred directly by
the Fund and the value of its investments, and limit and/or preclude the
Fund’s ability to achieve its investment objectives. Government
regulation may change frequently and may have significant adverse
consequences. The Fund and the Investment Manager have historically
been eligible for exemptions from certain regulations. However, there is
no assurance that the Fund and the Investment Manager will continue
to be eligible for such exemptions.
Moreover, government regulation may have unpredictable and
unintended effects. Legislative or regulatory actions to address
perceived liquidity or other issues in fixed income markets generally, or
in particular markets such as the municipal securities market, may alter
or impair the Fund’s ability to pursue its investment objectives or utilize
certain investment strategies and techniques.
While there continues to be uncertainty about the full impact of these
and other regulatory changes, it is the case that the Fund will be subject
to a more complex regulatory framework, and may incur additional
costs to comply with new requirements as well as to monitor for
compliance in the future. Actions by governmental entities may also
impact certain instruments in which the Fund invests and reduce market
liquidity and resiliency.
          
Other Investment Companies Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Other Investment Companies Risk
The Fund may invest up to 5% of its total assets in securities of other
investment companies (including those advised by PIMCO), including
closed-end funds, exchange-traded funds and other open-end funds,
that invest primarily in municipal bonds and other municipal securities
of the types in which the Fund may invest directly. When investing in an
investment company, the Fund will generally bear its ratable share of
that investment company’s expenses, and would remain subject to
payment of the Fund’s management fees and other expenses with
respect to assets so invested. Common Shareholders would therefore be
subject to duplicative expenses to the extent the Fund invests in other
investment companies. In addition, these other investment companies
may utilize leverage, in which case an investment would subject the
Fund to additional risks associated with leverage. Due to its own
financial interest or other business considerations, the Investment
Manager may choose to invest a portion of the Fund’s assets in
investment companies sponsored or managed by the Investment
Manager or its related parties in lieu of investments by the Fund directly
in portfolio securities, or may choose to invest in such investment
companies over investment companies sponsored or managed by
others. Participation in a cash sweep program where the Fund's
uninvested cash balance is used to purchase shares of affiliated or
unaffiliated money market funds or cash management pooled
investment vehicles at the end of each day subjects the Fund to the risks
associated with the underlying money market funds or cash
management pooled investment vehicles, including liquidity risk.
Applicable law may limit the Fund’s ability to invest in other investment
companies. See “Principal Risks of the Fund—Leverage Risk.”
          
Tax Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Tax Risk
The Fund has elected to be treated as a RIC under Subchapter M of the
Code and intends each year to qualify and be eligible to be treated as
such, so that it generally will not be subject to U.S. federal income tax
on its net investment income or net short-term or long-term capital
gains that are timely distributed (or deemed distributed, as described
below) to shareholders. In order to qualify and be eligible for such
treatment, the Fund must meet certain asset diversification tests, derive
at least 90% of the sum of its gross income for such year from certain
types of qualifying income, and distribute to its shareholders at least
90% of its “investment company taxable income” as that term is
defined in the Code (which includes, among other things, dividends,
taxable interest and the excess of any net short-term capital gains over
net long-term capital losses, as reduced by certain deductible expenses)
and net tax-exempt income, for such year.
The Fund’s investment strategy will potentially be limited by its intention
to continue qualifying for treatment as a RIC, and can limit the Fund’s
ability to continue qualifying as such. The tax treatment of certain of the
Fund’s investments under one or more of the qualification or
distribution tests applicable to RICs is uncertain. An adverse
determination or future guidance by the IRS or a change in law might
affect the Fund’s ability to qualify or be eligible for treatment as a RIC.
Income and gains from certain of the Fund's activities may not
constitute qualifying income to a RIC for purposes of the 90% gross
income test. If the Fund were to treat income or gain from a particular
investment or activity as qualifying income and the income or gain were
later determined not to constitute qualifying income and, together with
any other nonqualifying income, caused the Fund's nonqualifying
income to exceed 10% of its gross income in any taxable year, the Fund
would fail to qualify as a RIC unless it is eligible to and does pay a tax at
the Fund level.
If, in any year, the Fund were to fail to qualify for treatment as a RIC
under the Code and were ineligible to or did not otherwise cure such
failure, the Fund would be subject to tax on its taxable income at
corporate rates and, when such income is distributed, shareholders
would be subject to further tax on such distributions to the extent of the
Fund’s current or accumulated earnings and profits.
To qualify to pay exempt-interest dividends, at least 50% of the value of
the total assets of the Fund must consist of obligations exempt from
federal income tax as of the close of each quarter of the Fund’s taxable
year. Fund distributions reported as exempt-interest dividends are not
generally taxable to Fund shareholders for regular U.S. federal income
tax purposes, but they may be subject to state and local taxes and/or
federal alternative minimum tax. If the proportion of taxable
investments held by the Fund exceeds 50% of the Fund’s total assets as
of the close of any quarter of the Fund’s taxable year, the Fund will not
for that taxable year satisfy the general eligibility test that otherwise
permits it to pay exempt-interest dividends.
The value of the Fund’s investments and its net asset value may be
adversely affected by changes in tax rates and policies. Because interest
income from municipal securities is normally not subject to regular
federal income taxation, the attractiveness of municipal securities in
relation to other investment alternatives is affected by changes in
federal income tax rates or changes in the tax-exempt status of interest
income from municipal securities. Any proposed or actual changes in
such rates or exempt status, therefore, can significantly affect the
demand for and supply, liquidity and marketability of municipal
securities. This could in turn affect the Fund’s net asset value and ability
to acquire and dispose of municipal securities at desirable yield and
price levels. Additionally, the Fund is not a suitable investment for
individual retirement accounts, for other tax-exempt or tax-deferred
accounts or for investors who are not sensitive to the federal income tax
consequences of their investments.
          
Potential Conflicts of Interest Risk Allocation of Investment Opportunities [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Potential Conflicts of Interest Risk—Allocation of Investment
Opportunities
The Investment Manager and its affiliates are involved worldwide with a
broad spectrum of financial services and asset management activities
and may engage in the ordinary course of business in activities in which
its interests or the interests of its clients may conflict with those of the
Fund. The Investment Manager may provide investment management
services to other funds and discretionary managed accounts that follow
an investment program similar to that of the Fund. Subject to the
requirements of the Act, the Investment Manager intends to engage in
such activities and may receive compensation from third parties for its
services. The results of the Fund’s investment activities may differ from
those of the Fund’s affiliates, or another account managed by the
Investment Manager or its affiliates, and it is possible that the Fund
could sustain losses during periods in which one or more of the Fund’s
affiliates and/or other accounts managed by the Investment Manager or
its affiliates, including proprietary accounts, achieve profits on their
trading.
          
Distribution Rate Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Distribution Rate Risk
The Fund's distribution rate may be affected by numerous factors,
including but not limited to changes in realized and projected market
returns, fluctuations in market interest rates, 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’s
distribution rate or that the rate will be sustainable in the future. For
instance, during periods of low or declining interest rates, the Fund’s
distributable income and dividend levels may decline for many reasons.
For example, the Fund may have to deploy uninvested assets (whether
from sales of Fund shares, proceeds from matured, traded or called debt
obligations or other sources) in new, lower yielding instruments.
Additionally, payments from certain instruments that may be held by the
Fund (such as variable and floating rate securities) may be negatively
impacted by declining interest rates, which may also lead to a decline in
the Fund’s distributable income and dividend levels.
          
Securities Lending Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Securities Lending Risk
For the purpose of achieving income, the Fund may lend its portfolio
securities to brokers, dealers, and other financial institutions provided a
number of conditions are satisfied, including that the loan is fully
collateralized. Please see “Investment Objectives and Policies—Loans of
Portfolio Securities” in the Statement of Additional Information for more
details. When the Fund lends portfolio securities, its investment
performance will continue to reflect changes in the value of the
securities loaned, and the Fund will also receive a fee or interest on the
collateral. Securities lending involves the risk of loss of rights in the
collateral or delay in recovery of the collateral if the borrower fails to
return the security loaned or becomes insolvent. The Fund may pay
lending fees to a party arranging the loan. Cash collateral received by
the Fund in securities lending transactions may be invested in
short-term liquid fixed income instruments or in money market or
short-term mutual funds, or similar investment vehicles, including
affiliated money market or short-term mutual funds. The Fund bears the
risk of such investments.
          
Portfolio Turnover Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Portfolio Turnover Risk
The Investment Manager manages the Fund without regard generally to
restrictions on portfolio turnover. The use of futures contracts and other
derivative instruments with relatively short maturities may tend to
exaggerate the portfolio turnover rate for the Fund. Trading in fixed
income securities does not generally involve the payment of brokerage
commissions, but does involve indirect transaction costs. The use of
futures contracts and other derivative instruments may involve the
payment of commissions to futures commission merchants or other
intermediaries. Higher portfolio turnover involves correspondingly
greater expenses to the Fund, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities
and reinvestments in other securities. The higher the rate of portfolio
turnover of the Fund, the higher these transaction costs borne by the
Fund generally will be. Such sales may result in realization of taxable
capital gains (including short-term capital gains, which are generally
taxed to shareholders at ordinary income tax rates when distributed net
of short-term capital losses and net long-term capital losses), and may
adversely impact the Fund’s after-tax returns. See “Tax Matters.”
          
Operational Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Operational Risk
An investment in the Fund, like any fund, can involve operational risks
arising from factors such as processing errors, human errors, inadequate
or failed internal or external processes, failures in systems and
technology, changes in personnel and errors caused by third-party
service providers. The occurrence of any of these failures, errors or
breaches could result in a loss of information, regulatory scrutiny,
reputational damage or other events, any of which could have a
material adverse effect on the Fund. While the Fund seeks to minimize
such events through controls and oversight, there may still be failures
that could cause losses to the Fund.
          
Market Disruptions Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Market Disruptions Risk
The Fund is subject to investment and operational risks associated with
financial, economic and other global market developments and
disruptions, including those arising from war, military conflicts, terrorism,
social unrest, recessions, supply chain disruptions, market manipulation,
government interventions, defaults and shutdowns, political changes or
diplomatic developments, public health emergencies (such as the spread
of infectious diseases, pandemics and epidemics), bank failures,
natural/environmental disasters, climate change and climate related
events which can all negatively impact the securities markets, interest
rates, auctions, secondary trading, ratings, credit risk, inflation, deflation
and other factors relating to the Fund’s investments or the Investment
Manager’s operations and the value of an investment in the Fund, its
distributions and its returns. These events can also impair the
technology and other operational systems upon which the Fund’s
service providers, including PIMCO as the Fund’s investment adviser,
rely, and could otherwise disrupt the Fund’s service providers’ ability to
fulfill their obligations to the Fund. Furthermore, events involving limited
liquidity, defaults, non-performance or other adverse developments that
affect financial institutions or the financial services industry generally, or
concerns or rumors about any events of these kinds or other similar
risks, have in the past and may in the future lead to market-wide
liquidity problems.
          
Geopolitical Conflicts Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Geopolitical Conflicts Risk
The occurrence of geopolitical conflicts, war or terrorist activities could
have adverse impacts on markets in various and unpredictable ways. For
example, following Russia’s large-scale invasion of Ukraine in February
2022, Russia, and other countries, persons and entities that were
viewed as having provided material aid to Russia’s aggression against
Ukraine, became the subject of economic sanctions and import and
export controls imposed by countries throughout the world, including
the United States. Such measures have had and may continue to have
an adverse effect on the Russian, Belarusian and other securities and
economies. Additional examples include, but are not limited to,
heightened concerns of trade disputes, which could result in increased
tariffs, trade restrictions or other retaliatory countermeasures. The
extent, duration and impact of geopolitical conflicts and related market
impacts are difficult to ascertain, but could be significant and could
have significant adverse effects on regional and global economies and
the markets for certain securities and commodities, such as oil, natural
gas, steel and aluminum, as well as other sectors, and on the Fund’s
investments.
          
Cyber Security Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Cyber Security Risk
As the use of technology, including cloud-based technology, has
become more prevalent in the course of business, the Fund is potentially
more susceptible to operational and information security risks resulting
from breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional cyber events from outside threat actors or
internal resources that may, among other things, cause the Fund to lose
proprietary information, suffer data corruption and/or destruction, lose
operational capacity, result in the unauthorized release or other misuse
of confidential information, or otherwise disrupt normal business
operations. Geopolitical tensions can increase the scale and
sophistication of deliberate cybersecurity attacks, particularly those from
nation-states or from entities with nation-state backing, who may desire
to use cybersecurity attacks to cause damage or create leverage against
geopolitical rivals. Cyber security breaches may involve unauthorized
access to the Fund’s digital information systems (e.g., through
“hacking” or malicious software coding), and may come from multiple
sources, including outside attacks such as denial-of-service attacks (i.e.,
efforts to make network services unavailable to intended users) or cyber
extortion, including exfiltration of data held for ransom and/or
“ransomware” attacks that renders systems inoperable until ransom is
paid, or insider actions (e.g., intentionally or unintentionally harmful
acts of PIMCO personnel). In addition, cyber security breaches involving
the Fund’s third party service providers (including but not limited to
advisers, sub-advisers, administrators, transfer agents, custodians,
vendors, suppliers, distributors and other third parties), trading
counterparties or issuers in which the Fund invests can also subject the
Fund to many of the same risks associated with direct cyber security
breaches or extortion of company data. PIMCO’s use of cloud-based
service providers could heighten or change these risks. In addition,
work-from-home arrangements by the Fund, the Investment Manager or
their service providers could increase all of the above risks, create
additional data and information accessibility concerns, and make the
Fund, the Investment Manager or their service providers susceptible to
operational disruptions, any of which could adversely impact their
operations.
Cyber security failures or breaches may result in financial losses to the
Fund and its shareholders. For example, cyber security failures or
breaches involving trading counterparties or issuers in which the Fund
invests could adversely impact such counterparties or issuers and cause
the Fund’s investment to lose value. These failures or breaches may also
result in disruptions to business operations, potentially resulting in
financial losses; interference with the Fund’s ability to calculate its NAV,
process shareholder transactions or otherwise transact business with
shareholders; impediments to trading; violations of applicable privacy
and other laws; regulatory fines; penalties; third-party claims in
litigation; reputational damage; reimbursement or other compensation
costs; additional compliance and cyber security risk management costs
and other adverse consequences. In addition, substantial costs may be
incurred in order to prevent any cyber incidents in the future.
Like with operational risk in general, the Fund has established business
continuity plans and risk management systems designed to reduce the
risks associated with cyber security. However, there are inherent
limitations in these plans and systems, including that certain risks may
not have been identified, in large part because different or unknown
threats may emerge in the future. As such, there is no guarantee that
such efforts will succeed, especially because the Fund does not directly
control the cyber security systems of issuers in which the Fund may
invest, trading counterparties or third-party service providers to the
Fund. Such entities have experienced cyber attacks and other attempts
to gain unauthorized access to systems from time to time, and there is
no guarantee that efforts to prevent or mitigate the effects of such
attacks or other attempts to gain unauthorized access will be successful.
There is also a risk that cyber security breaches may not be detected. The
Fund and its shareholders may suffer losses as a result of a cyber
security breach related to the Fund, its service providers, trading
counterparties or the issuers in which the Fund invests.
          
Certain Affiliations [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Certain Affiliations
Certain broker-dealers may be considered to be affiliated persons of the
Fund and/or the Investment Manager due to their possible affiliations
with Allianz SE, the ultimate parent of the Investment Manager, or
another Allianz entity. Allianz Asset Management of America LP merged
with Allianz Asset Management of America LLC (“Allianz Asset
Management”), with the latter being the surviving entity, effective
January 1, 2023. Following the merger, Allianz Asset Management is
PIMCO’s managing member and direct parent entity. Absent an
exemption from the SEC or other regulatory relief, the Fund is generally
precluded from effecting certain principal transactions with affiliated
brokers, and its ability to purchase securities being underwritten by an
affiliated broker or a syndicate including an affiliated broker, or to utilize
affiliated brokers for agency transactions, is subject to restrictions. This
could limit the Fund’s ability to engage in securities transactions and
take advantage of market opportunities.
The 1940 Act imposes significant limits on co-investment with affiliates
of the Fund. The Fund has received exemptive relief from the SEC that,
to the extent a fund relies on such relief, permits it to (among other
things) co-invest alongside certain other persons in privately negotiated
investments, including certain affiliates of the Investment Manager and
certain public or private funds managed by the Investment Manager and
its affiliates, subject to certain terms and conditions. The exemptive relief
from the SEC with respect to co-investments imposes a number of
conditions on any co-investments made in reliance on such relief that
may limit or restrict a fund’s ability to participate in an investment or
require it to participate in an investment to a lesser extent, which could
negatively impact a fund’s ability to execute its desired investment
strategy and its returns. Subject to applicable law, the Fund may also
invest alongside other PIMCO managed funds and accounts, including
private funds and affiliates of the Investment Manager, without relying
on the exemptive relief. Pursuant to co-investment exemptive relief, to
the extent a fund relies on such relief, the fund will be able to invest in
opportunities in which PIMCO and/or its affiliates has an investment,
and PIMCO and/or its affiliates will be able to invest in opportunities in
which a fund has made an investment.
          
Anti Takeover Provisions [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Anti-Takeover Provisions
The Fund’s Declaration includes provisions that could limit the ability of
other entities or persons to acquire control of the Fund or to convert the
Fund to open-end status. See “Anti-Takeover and Other Provisions in the
Declaration of Trust and Bylaws.”
          
Interest Rate Risk [Member]            
General Description of Registrant [Abstract]            
Risk [Text Block]
Interest Rate Risk
Interest rate risk is the risk that fixed income securities and other
instruments in the Fund’s portfolio will fluctuate in value because of a
change in interest rates. For example, as nominal interest rates rise, the
value of certain securities held by the Fund is likely to decrease. Interest
rate changes can be sudden and unpredictable, and the Fund may be
adversely affected as a result of movements in interest rates. The Fund
may not be able to hedge against changes in interest rates or may
choose not to do so for cost or other reasons. In addition, any hedges
may not work as intended.
Fixed income securities with longer durations tend to be more sensitive
to changes in interest rates, usually making them more volatile than
securities with shorter durations. The values of equity and other
non-fixed income securities may also decline due to fluctuations in
interest rates. Inflation-indexed bonds, including Treasury
Inflation-Protected Securities (“TIPS”), decline in value when real
interest rates rise. In certain interest rate environments, such as when
real interest rates are rising faster than nominal interest rates,
inflation-indexed bonds may experience greater losses than other fixed
income securities with similar durations.
Dividend-paying equity securities, particularly those whose market price
is closely related to their yield, may be more sensitive to changes in
interest rates. During periods of rising interest rates, the values of such
securities may decline and may result in losses to the Fund.
Variable and floating rate securities generally are less sensitive to
interest rate changes but may decline in value if their interest rates do
not rise as much, or as quickly, as interest rates in general. Conversely,
floating rate securities will not generally increase in value if interest
rates decline. Inverse floating rate securities may decrease in value if
interest rates increase. Inverse floating rate securities may also exhibit
greater price volatility than a fixed rate obligation with similar credit
quality. When a Fund holds variable or floating rate securities, a
decrease (or, in the case of inverse floating rate securities, an increase)
in market interest rates will adversely affect the income received from
such securities and the NAV of the Fund’s shares.
A wide variety of factors can cause interest rates or yields of
U.S. Treasury securities (or yields of other types of bonds) to rise,
including but not limited to central bank monetary policies, changing
inflation or real growth rates, general economic conditions, increasing
bond issuances or reduced market demand for low yielding investments.
Risks associated with changes in interest rates may be heightened
under certain market conditions, such as during times when the Federal
Reserve raises interest rates or when such rates remain elevated
following a period of historically low levels. Additionally, the U.S. and
other governments have increased, and are likely to continue increasing,
their debt issuances, which may also heighten these risks. There is the
risk that the income generated by investments may not keep pace with
inflation. Actions by governments and central banking authorities can
result in increases or decreases in interest rates. Periods of higher
inflation could cause such authorities to raise interest rates, which may
adversely affect a Fund and its investments. In addition, changes in
monetary policy may exacerbate the risks associated with changing
interest rates. Further, in market environments where interest rates are
rising, issuers may be less willing or able to make principal and interest
payments on fixed-income investments when due.
During periods of very low or negative interest rates, the Fund may be
unable to maintain positive returns. Very low or negative interest rates
may magnify interest rate risk. Changing interest rates, including rates
that fall below zero, may have unpredictable effects on markets, may
result in heightened market volatility and may detract from Fund
performance to the extent the Fund is exposed to such interest rates.
Measures such as average duration may not accurately reflect the true
interest rate sensitivity of the Fund. This is especially the case if the Fund
consists of securities with widely varying durations. Therefore, if the
Fund has an average duration that suggests a certain level of interest
rate risk, the Fund may in fact be subject to greater interest rate risk
than the average would suggest. This risk is greater to the extent the
Fund uses leverage or derivatives in connection with the management
of the Fund.
Convexity is an additional measure used to understand a security’s or
Fund’s interest rate sensitivity. Convexity measures the rate of change of
duration in response to changes in interest rates. With respect to a
security’s price, a larger convexity (positive or negative) may imply more
dramatic price changes in response to changing interest rates. Convexity
may be positive or negative. Negative convexity implies that interest
rate increases result in increased duration, and vice versa, meaning
increased sensitivity in prices in response to changes in interest rates.
Thus, securities with negative convexity, which may include bonds with
traditional call features and certain mortgage-backed securities, may
experience greater losses in periods of rising interest rates. Accordingly,
if the Fund holds such securities, the Fund may be subject to a greater
risk of losses in periods of rising interest rates.
          
Business Contact [Member]            
Cover [Abstract]            
Entity Address, Address Line One 650 Newport Center Drive          
Entity Address, City or Town Newport Beach          
Entity Address, State or Province CA          
Entity Address, Postal Zip Code 92660          
Contact Personnel Name Ryan G. Leshaw          
Common Shares [Member]            
Other Annual Expenses [Abstract]            
Basis of Transaction Fees, Note [Text Block]
as a percentage of Net
Assets Attributable to Common Shares
          
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Security Title [Text Block] Common Shares          
Preferred Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Security Title [Text Block] Preferred Shares          
Institutional Class [Member]            
Fee Table [Abstract]            
Sales Load [Percent] [1] 0.00%          
Dividend Reinvestment and Cash Purchase Fees $ 0          
Other Transaction Expenses [Abstract]            
Other Transaction Expense 1 [Percent] 0.00%          
Management Fees [Percent] [2] 1.02%          
Dividend Expenses on Preferred Shares [Percent] [3],[4] 1.73%          
Distribution/Servicing Fees [Percent]          
Acquired Fund Fees and Expenses [Percent] [5] 0.10%          
Other Annual Expenses [Abstract]            
Other Annual Expenses [Percent] [6] 0.02%          
Total Annual Expenses [Percent] 2.87%          
Institutional Class [Member] | Common Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Institutional Class Common Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 79,713,821          
Institutional Class [Member] | Redeem Shares [Member]            
Other Annual Expenses [Abstract]            
Expense Example, Year 01 [7] $ 29          
Expense Example, Years 1 to 3 [7] 89          
Expense Example, Years 1 to 5 [7] 151          
Expense Example, Years 1 to 10 [7] $ 319          
Class A1 [Member]            
Fee Table [Abstract]            
Sales Load [Percent] [1] 0.00%          
Dividend Reinvestment and Cash Purchase Fees $ 0          
Other Transaction Expenses [Abstract]            
Other Transaction Expense 1 [Percent] 0.00%          
Management Fees [Percent] [2] 1.02%          
Dividend Expenses on Preferred Shares [Percent] [3],[4] 1.73%          
Distribution/Servicing Fees [Percent] 0.50%          
Acquired Fund Fees and Expenses [Percent] [5] 0.10%          
Other Annual Expenses [Abstract]            
Other Annual Expenses [Percent] [6] 0.02%          
Total Annual Expenses [Percent] 3.37%          
Class A1 [Member] | Common Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Class A-1 Common Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 48,689,523          
Class A1 [Member] | Redeem Shares [Member]            
Other Annual Expenses [Abstract]            
Expense Example, Year 01 [7] $ 34          
Expense Example, Years 1 to 3 [7] 104          
Expense Example, Years 1 to 5 [7] 176          
Expense Example, Years 1 to 10 [7] $ 366          
Class A2 [Member]            
Fee Table [Abstract]            
Sales Load [Percent] [8] 3.00%          
Dividend Reinvestment and Cash Purchase Fees $ 0          
Other Transaction Expenses [Abstract]            
Other Transaction Expense 1 [Percent] 1.00%          
Management Fees [Percent] [2] 1.02%          
Dividend Expenses on Preferred Shares [Percent] [3],[4] 1.73%          
Distribution/Servicing Fees [Percent] 0.50%          
Acquired Fund Fees and Expenses [Percent] [5] 0.10%          
Other Annual Expenses [Abstract]            
Other Annual Expenses [Percent] [6] 0.02%          
Total Annual Expenses [Percent] 3.37%          
Class A2 [Member] | Common Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Class A-2 Common Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 7,359,597          
Class A2 [Member] | Redeem Shares [Member]            
Other Annual Expenses [Abstract]            
Expense Example, Year 01 [7] $ 73          
Expense Example, Years 1 to 3 [7] 130          
Expense Example, Years 1 to 5 [7] 200          
Expense Example, Years 1 to 10 [7] 385          
Class A2 [Member] | Not Redeem Shares [Member]            
Other Annual Expenses [Abstract]            
Expense Example, Year 01 [7] 63          
Expense Example, Years 1 to 3 [7] 130          
Expense Example, Years 1 to 5 [7] 200          
Expense Example, Years 1 to 10 [7] $ 385          
Class A3 [Member]            
Fee Table [Abstract]            
Sales Load [Percent] [1] 0.00%          
Dividend Reinvestment and Cash Purchase Fees $ 0          
Other Transaction Expenses [Abstract]            
Other Transaction Expense 1 [Percent] 0.00%          
Management Fees [Percent] [2] 1.02%          
Dividend Expenses on Preferred Shares [Percent] [3],[4] 1.73%          
Distribution/Servicing Fees [Percent] 0.75%          
Acquired Fund Fees and Expenses [Percent] [5] 0.10%          
Other Annual Expenses [Abstract]            
Other Annual Expenses [Percent] [6] 0.02%          
Total Annual Expenses [Percent] 3.62%          
Class A3 [Member] | Common Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Class A-3 Common Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 28,738,388          
Class A3 [Member] | Redeem Shares [Member]            
Other Annual Expenses [Abstract]            
Expense Example, Year 01 [7] $ 36          
Expense Example, Years 1 to 3 [7] 111          
Expense Example, Years 1 to 5 [7] 187          
Expense Example, Years 1 to 10 [7] $ 388          
Series 2049 A R V M T P Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Series 2049-A RVMTP Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 500          
Series 2050 B R V M T P Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Series 2050-B RVMTP Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 1,000          
Series 2051 A R V M T P Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Series 2051-A RVMTP Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 500          
Series 2052 A R V M T P Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Series 2052-A RVMTP Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 1,000          
Series 2052 B R V M T P Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Series 2052-B RVMTP Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 1,000          
Series 2055 A R V M T P Shares [Member]            
Capital Stock, Long-Term Debt, and Other Securities [Abstract]            
Outstanding Security, Title [Text Block] Series 2055-A RVMTP Shares          
Outstanding Security, Held [Shares] 0          
Outstanding Security, Not Held [Shares] 1,500          
R V M T P [Member]            
Financial Highlights [Abstract]            
Senior Securities Amount [9]   $ 400,000,000 $ 400,000,000 $ 400,000,000 $ 175,000,000 $ 150,000,000
Senior Securities Coverage per Unit [9],[10]   $ 515,980 $ 437,250 $ 405,570 $ 887,020 $ 453,120
Preferred Stock Liquidating Preference [9],[11]   100,000 100,000 100,000 100,000 100,000
Senior Securities Average Market Value per Unit [9],[12]  
[1] While neither the Fund nor the Distributor impose an initial sales charge, if you buy Institutional Class, Class A-1 or Class A-3 Common Shares through certain financial firms, they may directly charge you transaction or other fees in such amount as they may determine. Please consult your financial firm for additional information.
[2] Management fees include fees payable to the Investment Manager for advisory services and for supervisory, administrative and other services. The Fund pays for the advisory, supervisory and administrative services it requires under what is essentially an all-in fee structure (the “unified management fee”). Pursuant to an investment management agreement, PIMCO is paid a Management Fee of 0.75% of the Fund’s total managed assets. The Fund (and not PIMCO) is responsible for certain fees and expenses, which are reflected in the table above, that are not covered by the unified management fee under the investment management agreement. Please see “Management of the Fund - Investment Management Agreement” for an explanation of the unified management fee and definition of “total managed assets.”Management Fees have been restated to reflect leverage attributable to Preferred Shares issued by the Fund on April 16, 2025.
[3] “Dividend and Other Costs on Preferred Shares” are borne by the Fund separately from the management fees paid to PIMCO. Excluding such expenses, Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement are 1.14%, 1.64%, 1.64% and 1.89% for Institutional Class, Class A-1, Class A-2 and Class A-3 shares, respectively. Amounts shown for Dividend and Other Costs on Preferred Shares include estimated costs attributable to additional Preferred Shares issued on April 16, 2025. Dividends and Other Costs on Preferred Shares is calculated and presented equally across all share classes.
[4] “Dividends and Other Costs on Preferred Shares” have been restated to reflect the Fund’s outstanding Preferred Shares on April 16, 2025 which represented 26.67% of the Fund’s total average managed assets, at an estimated annual dividend cost of 4.81%, (which is based on market conditions as of December 31, 2024), and including the amortization of Preferred Share offering costs of $1,623,121 over the period until such class of Preferred Shares’ next Early Term Redemption Date, as defined below. See “Description of Capital Structure and Shares—Preferred Shares—Mandatory Redemptions.” The actual dividend rate paid on the Preferred Shares will vary over time in accordance with variations in market interest rates. See “Use of Leverage” and “Description of Capital Structure.” Dividend and Other Costs on Preferred Shares are borne directly by the Fund and reflected in the Fund’s financial statement; however, the information presented in the table will differ from that presented in the Fund’s Financial Highlights.
[5] Acquired Fund Fees and Expenses are based on the expense ratios of the other investment companies in which the Fund invests, which may change substantially over time and, therefore, significantly affect the Acquired Fund Fees and Expenses. Acquired Fund Fees and Expenses are borne indirectly by the Fund, but they will not be reflected in the Fund’s financial statements; and the information presented in the table will differ from that presented in the Fund’s financial highlights.
[6] “Other Expenses” are based on estimated amounts for the current fiscal year.
[7] The example above should not be considered a representation of future expenses. Actual expenses may be higher or lower than those shown. The example assumes that the estimated Dividend and Other Costs on Preferred Shares and Other Expenses set forth in the Annual Expenses table are accurate, that the Total Annual Fund Operating Expenses (as described above) remain the same for all periods shown, and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than those assumed. Moreover, the Fund’s actual rate of return may be greater or less than the hypothetical 5% annual return shown in the example. In addition to the fees and expenses described above, you may also be required to pay transaction or other fees on purchases of Institutional Class, Class A-1, Class A-2 or Class A-3 Common Shares of the Fund, which are not reflected in the example.
[8] Although the Fund is permitted to charge a maximum sales charge of 3.00%, the Fund has elected to currently charge a maximum sales charge of 2.00%. See “Purchasing Shares - Reductions and Waivers of Initial Sales Charges and EWCs” and “Appendix B - Financial Firm-Specific Sales Charge Waivers and Discounts” in this prospectus for more information on sales charge waivers and discounts.
[9] Prior to December 6, 2021, certain RVMTP Shares were Variable Rate MuniFund Term Preferred Shares (“VMTP Shares”). See Note 13, Preferred Shares, in the Notes to Financial Statements.
[10] “Asset Coverage per Preferred Share” means the ratio that the value of the total assets of the Fund, less all liabilities and indebtedness not represented by RVMTP Shares, bears to the aggregate of the involuntary liquidation preference of the RVMTP Shares, expressed as a dollar amount per RVMTP Share.
[11] “Involuntary Liquidating Preference” means the amount to which a holder of an RVMTP Share would be entitled upon the involuntary liquidation of the Fund in preference to the Common Shareholders, expressed as a dollar amount per Preferred Share.
[12] The RVMTP Shares have no readily ascertainable market value. The liquidation value of the RVMTP Shares represents its liquidation preference, which approximates fair value of the shares less any unamortized debt issuance costs. See Note 13, Preferred Shares, in the Notes to Financial Statements for more information.