With deepest apologies for discussing music related topics on a mutual fund discussion board but what Prince copyrighted material are we talking about here? Name the song.

"Party Like It's 1999."

Apologies to all. I just watched the film again. I couldn't help myself. Great ensemble cast, including Kevin Costner's body, but not his face. http://www.imdb.com/title/tt0085244/trivia "The Big Chill." All of them went to school together at U-Michigan. TV football scenes from their Saturday together show Bo Schembechler . "Go Blue!"
"The name of the American higher educational institution in the USA that the seven friends had attended during the 1960s was the University of Michigan in Ann Arbor, Michigan, USA. This campus that the characters in the picture attended, Michigan University, was the same tertiary educational institution that director and co-screenwriter Lawrence Kasdan had studied at." ("Tertiary?" His third academic degree?) "Whatever happened to that land we were all going to buy up by Saginaw?" ..."None of us had any money."

"Nepotism, I should think, is in play, here"
Nah, nepotism entails favor by a relative or friend. No such second person here - Hussman himself is the president and primary shareholder of the management company (according to M*). In theory, fund boards are supposed to be independent of the management company, but that's almost never how things work.
An offbeat clue as to what may have piqued Hank's interest: before Hussman put himself in charge of the fund, he was a professor at Univ. of Michigan and Michigan Business School. (Again from M*)
One has to be careful with figures for funds that make heavy use of derivatives. This is a market neutral fund (formerly a long-short fund), which IMHO automatically makes cash figures suspect. It's a matter of interpretation.
According to the annual report, the fund had net assets of $580M, it was long $587M in equities, but these were 99% hedged with various options (that according to the report, behave like shorts).
It also held $261M in "real" cash, while the value of the call options it wrote was negative $282M. Throw in a few other small items, and you get a net portfolio size of $580M.
In round numbers, the stocks represent 100% of the value of the fund, the cash 50% of the value of the fund, and the written options -50%. If you want to say that means 50% of the (net) assets are cash, fine. That seems to be what M* and Lipper are doing. Then the 50% equities comes from the 100% stock minus the 50% options.
Or you could say the $261M of cash represents 1/4 of the stuff it's managing (counting the magnitudes or absolute values of its holdings). Or you might completely disregard the cash, as it appears to be there to cover the options; it doesn't seem to be typical cash "sitting on the sidelines".
It takes a lot of work to figure out what the numbers really mean, and I've only spent a couple of minutes here. Not enough to get my head wrapped around it.

49% cash??? Yer kidding.
FWIW: Vanguard Balanced, VBINX, since inception in 1992 -- +8.08% annualized, .22% ER.
James Golden Balanced, GLRBX, since 1991 -- +7.06%, .97 ER.

Hi Catch - Geez, I really need to edit/fact-check these stats for awhile before I can confirm or deny your answer. (We strive for accuracy here.) So, your prize will be delayed for an indefinite period. :)
Thanks, however, for participating in the game.
You may now direct your (obvious) intelligence to the questions of (1) Why anyone would own this fund and (2) How the same manager could remain in place for 16 years. (Each correct answer increases your prize amount by 10%.)
---
Edit: Anyone have easy access to how some of the broader indexes performed since 2000?
(S&P / Mixed bonds / 60-40 Balanced?) That would be very interesting. I'd imagine even a good short-term bond fund like Price's (PRWBX) would have bested 1.49%.

Manager has lasted 16 years, on such performance??? Nepotism, I should think, is in play, here.
My two biggest holdings carry both stocks and bonds, but I don't ever remember either of them holding up to FORTY percent bonds. I recognize a 60/40 mix is the classic recipe for later-life and retirement stability. PRWCX and MAPOX. Totally fabulous in every way. Except that it's not possible to have sex with them. ...
...I just looked at PRWBX, but my Interm. Term bond funds have a leg-up in terms of performance--- even though bonds have been crucified since the election. I understand that a short-term bond fund is there in order to cover a DIFFERENT base than a standard Core bond fund. My bond funds: DLFNX, PRSNX, PREMX. Add the two balanced funds, and my stuff does indeed approach that 40% figure, at 39%. (39 bonds, 44 domestic equity, 8 foreign equity, 7 cash and 2 convertibles or shorts. I don't engage in shorts. It's the Fund Manager's own play.
Happy Saturday. Thanks to those on this message board and its creators and contributors!

I suppose it is possible that Gund's secret bond sauce may suffer and the fund may just track CAPE. Not sure.
But while it did slump last Jan, like everything else (still less than SP500), it was flat prior, through the last rate mini-hike, from mid-Oct '15 onward until last early Jan slump.
Still outperformed SP500 at every interval.
So it may be largely unreactive.
I am wondering how PONDX will do. But then I trust that smarties like Gundlach and Ivascyn know what they are doing and that this next hike is baked in or planned for....

@ Chip: Video should have been included in commentary.
Regards,
Ted
1999: Prince:

Nope.
It struck us as "fair use" of the material. Here's the test of 17 US Code 107, which establishes the fair use standard:

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.
In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include - (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

It's a protected purpose (paragraph 1), noncommercial, non-profit/educational, it appropriates just a portion and does not impair the estate's economic interests (paragraph 2).
David

Yes,
But isn't the educational aspect related to a teacher-pupil relationship; not a newsletter?
Then there is the is the 'limited' aspect.
http://ogc.harvard.edu/pages/copyright-and-fair-use
How much of the copyrighted work is being copied? How long is the portion copied and what percentage of the work does it represent? (The smaller the portion, the more likely the copying will qualify as fair use. Generally, a strong showing on the other factors will be needed to justify copying more than one chapter of a book, or one article from a periodical or newspaper, or one short story, short essay or short poem, or other similarly small parts of a work.)
Is the amount copied limited to that which is necessary for the educational purpose to which it is being put? (You should copy no more than is necessary for the educational purpose.)
It appears to me you used more then needed for educational purposes and the educational relationship is questionable.

Hi Catch - Geez, I really need to edit/fact-check these stats for awhile before I can confirm or deny your answer. (We strive for accuracy here.) So, your prize will be delayed for an indefinite period. :)
Thanks, however, for participating in the game.
You may now direct your (obvious) intelligence to the questions of (1) Why anyone would own this fund and (2) How the same manager could remain in place for 16 years. (Each correct answer increases your prize amount by 10%.)
---
Edit: Anyone have easy access to how some of the broader indexes performed since 2000?
(S&P / Mixed bonds / 60-40 Balanced?) That would be very interesting. I'd imagine even a good short-term bond fund like Price's (PRWBX) would have bested 1.49%.

Goal: "... long-term capital appreciation, with added emphasis on the protection of capital during unfavorable market conditions."
Inception: July, 2000
No-load
Manager Tenure: 16 years
(From Lipper):
ER: 1.13%
AUM: $528.5M
Current Holdings: 52% Stock, 49% Cash
Annualized Performance (mostly negative)
YTD: -9.54%
4-Weeks: -5.24%
1-Year: -7.90%
3-Years: -9.13%
5-Years: -9.60%
10-Years: -4.94%
From Inception (16 years): +1.49%

@ibartman & MFO Members: For what it's worth, here is the Reuters article dated 12/1/16.
Regards,
Ted
http://www.reuters.com/article/us-pimco-sec-idUSKBN13Q5WZ

As originally posted by Ted -of course!- on Dec 2 2016: http://www.mutualfundobserver.com/discuss/discussion/30451/john-waggoner-pimco-settles-with-sec-for-nearly-20-million
Pacific Management Investment Co (Pimco) will pay $20 million to settle charges it misled investors about the performance of a top exchange-traded fund it manages, U.S. regulators said on Thursday...
The SEC said Pimco overstated the E.T.F.'s value and provided "misleading" reasons for the fund's early success, which was premised on buying small pieces or "odd lots" of mortgaged-backed securities that sell at a discount to larger units.

Hi guys,
I like what both Edmond and kevindow have written above and, for me, it makes sense. My portfolio has been valuation flat since election time mostly due to my sector orientation. And, I agree that by historical standards the S&P 500 Index is more expensive today over it's historical standard.
Below is my SWAG (Scientific Wild Ass Guess) Forecast ... and, what I am doing.
One of the things I have done to help me find value is to use a blended approach to valuation. I combine the TTM P/E Ratio and the Forward Estimate P/E Ratio and divide by two and then apply the Rule of Twenty as being plenty. This takes into account what stocks have done over the past twelve months plus allows for their outlook.
With this, I have determined, by my measuring stick, that the Index is presently, as of Friday's market close, overvalued by about six percent. In review of some S&P earnings data, earnings are project to grow by about 13% for the Index over the next six months. Fundamentally this is indeed bullish.
By applying my forecast in earnings against todays valuation, the Index is currently selling at somewhat its fair value looking out six months ... I plan no major allocation adjustments based upon this outlook.
Still, with the favorable comments from Edmond & kevindow, I am not backing the truck up either and loading equities as my Portfolio Equity Weighting Matrix Barometer calls for a weighting of 50% in stocks in today's market spectrum. My November Instant Xray analysis reflects a 50% position in stocks and this is about where I should be positioned based upon my risk tolerance and need analysis.
With anticipated yearend capital gains distributions usualy paid in December, I estimate I'll need to do a little equity buying come January to restore the current 50% bubble. Since, I am positioned about where I need to be I plan no changes within my portfolio until January arrives.
I wish all ... "Good Investing."
Skeet

FYI: We live in exciting times, don’t you think? November, punctuated as it was by wrenching changes in financial market expectations, was thrilling indeed. Equities, gold, the US dollar and domestic interest rates – pick one – they all jumped or dived substantially following Election Night.
Not that it was just the election that had investors electrified. Take interest rates, for example. Rates for the long government bond bottomed back in July at 2.11 percent. Yields had already risen more than 50 basis points by the time ballots were counted on Election Night. And now? Well now we’re at 3.12 percent.
Regards,
Ted
http://www.wealthmanagement.com/print/72426

FYI: {Click On Article Title At Top Of Google Search) (This is a follow-up article)
Academic studies have found that women are better investors than men. Yet women run just 2% of the mutual fund industry's assets.
Regards,
Ted
https://www.google.com/#q=+Worrisome+Dearth+of+Women+in+the+Fund+Industry+Barron's
M* Research Paper:
http://corporate1.morningstar.com/ResearchArticle.aspx?documentId=782040

Nope.
It struck us as "fair use" of the material. Here's the test of 17 US Code 107, which establishes the fair use standard:

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.
In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include - (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

It's a protected purpose (paragraph 1), noncommercial, non-profit/educational, it appropriates just a portion and does not impair the estate's economic interests (paragraph 2).
David

+1 @kevindow. I've learned my lesson

AF has had F-2 shares with no 12b-1 fees since 2008. You're referring to F-3 shares.
http://mutualfundobserver.com/discuss/discussion/29858/american-funds-files-for-new-share-class-to-cut-fund-expense-ratios-f-3-shares
Great marketing (agree 100% with BobC on this aspect of AF). Don't think it will significantly affect TCO (total cost of ownership) - I expect it simply to shift costs.
As stated by AF's head of distribution in the article linked to in that other MFO thread:
"This doesn't mean that all of a sudden there will be a significant decline in what's charged to the investor ..."

I read somewhere that AF are planning to come out with F shares without the 12B fee in January. We'll see. I would be interested in investing in these shares of Income Fund of America and/or Capital Income Builder since I am near retirement, and would like to develop an income stream. The ERs are pretty low for being actively managed. I already own a good chunk of Wellesley, and am looking at other funds for income.

Over the past 4 weeks FAIRX is up nearly 29%! Morningstar rates FAIRX a one star for every time period (could be some kind of record for a fund that's been around more than 10 years).
Looks like FAAFX has made it YTD gains in the past 4 weeks also.