Using rounded figures for back of the envelope calculations:
EDV:
2013 Price loss: 1 - 89.62/116 ~= 22¾% (Yahoo figures for 12/31/2012 and 12/30/2013)
2013 Yield: -18.86% - (22¾%) ~= 4%
Say that PSLDX had bonds of similar maturity, so it should have made 4% on the yield also.
It should have lost about 13½/25 as much on bond prices (shorter duration), or about 12¼%
It should have gained about 32¼% on the equity side.
(Per mid 2013 prospectus, the target duration for PSLDX was 13½ years ±2 years)
Thus it should have made: 32¼% + 4% - 12¼% ~= 24;%
It not only got crushed by its long bond holdings, but underperformed as well.
You are comparing a zero coupon bond fund with a coupon bond fund. That may be okay with a short term bond (or bond fund), but falls apart as maturities get longer. As Fidelity says:

Generally, bonds with long maturities and low coupons have the longest durations. These bonds are more sensitive to a change in market interest rates and thus are more volatile in a changing rate environment. Conversely, bonds with shorter maturity dates or higher coupons will have shorter durations

There are most definitely derivatives in play with PSLDX,
AFAIK, nearly all the "play" is simply to gain leverage. There's a whole lot of investment engineering one can do with derivatives, as PIMCO typically does with its funds. In contrast, here derivatives are used primarily to get market exposure without putting up much cash: "It does this by purchasing low-cost S&P 500 derivatives exposure." These derivative mimic the S&P. It can then use the cash that it would have invested in the equity market to invest in bonds. There's your 2x leverage. Nothing funky.
The marcom verbiage you're paraphrasing (with no quotes, no cites) says simply that when one mixes stocks and bonds, sometimes the bonds help, sometimes they hurt. I've posted on this too many times already to say much more than that. Other than to observe that one thing it omitted is that because this fund is leveraged roughly 2&frac14 x (100% stock exposure, 125% bond exposure) it could fall 2&frac14 times as fast as "the market" if both stocks and bonds fall. Which more than explains why :
it lost a ton of value in a few sessions, not explained by the market
From March 15 through March 23, PSLDX lost 21%, the S&P 500 lost 17%, and VWESX (an IG grade fund with a similar 14 year duration and similar 21-22 year maturity) lost 8%. Just adding the equity and bond losses together (forgetting about the extra 25% bond side leverage), one gets a loss of 25%. Impressive performance, actually.
Here's a chart showing these funds, plus PSTKX over this short period.
Equity, long bonds, leverage. Not much else going on here, no magic.

Yeah, since Feb 20 it looks chiefly like this aggressive 85% fund w LCG (???), and now is back to right where the somewhat similar VALIX is.
That is some mid-March trough for sure.
Longer-term it is all rock 'n' roll, and they sure did something yuge starting June 2019.
$1M min??
This is interesting, a little, from before mid-March: https://www.bogleheads.org/forum/viewtopic.php?t=305950

I’m not too concerned about 3 month performance. If this continues for a year I’ll reevaluate. They are up to 36% cash. If all that cash was invested at 4.5%, the fund would yield a little over 6%. I like them keeping dry powder in these volatile times. 36% seems quite large, but I fully expect them to use it opportunistically. As always, time will tell.

So many great suggestions. My thoughts, overall, are that the hands-on experience grandson will enjoy with his initial nest-egg will motivate him to engage in financial conversation and study on his own. Books? I get lots from folks around the holidays. Seldom do I ever read any of them, as I’d rather “set my own (reading) table“ so to speak. Plus, many loving relatives (nieces, nephews, etc.) don’t realize that 90% of my reading today is on tablet devices and most of the rest thru audiobooks. Because of my ancient and grizzled appearance, younger people who don’t know me very well must assume I still read paper books. Excuse the digression. But, often telling someone they should read a particular book (or do anything else) achieves the opposite effect..
@MikenM (and perhaps others) referenced technology as an inviting investment. Not a bad thought. However, tech is very diverse area. Some “hot” areas from the not too distant past like hand-held calculators, VHS players, Commodore computers and “cordless“ (land-line) phones are nearly extinct. My guess is in 30 years, when grandson turns 50, the really hot areas will be lunar and interplanetary mining (and related services), infrastructure for underwater habitat, and solar powered autos & trucks. So don’t get too wedded to any single technology. Truth be told - it’s hard to remember when “technology” in some form wasn’t in vogue. Likely, the horse-drawn plough underwent many “technological improvements” during its time. And, as broken arms and fingers testified, the advent of battery powered self-starting farm tractors and autos was a huge technological leap.

According to Instant Xray, about 8% of my equity allocation is invested in emerging markets with both my emerging market funds (DWGAX & NEWFX) being up better than +20% each over the past rolling 90 days. In addition, I have a good number of equity funds that are bettering the +20% mark as well. So, it is not just emerging markets that are (or have been) on the upward move as there are some others as well.
My three best 90 day leaders are AOFAX +25.43 ... SMCWX +24.43 ... and, FISCX +24.37.

I would do as I did with my two youngest kids. Set up a brokerage account, making it a Uniform Gift to Minors if the child is under 21. Try to explain that you are putting in some dough and that additional deposits should represent 50% of the child’s earnings, even if minimal. An adult child should be shown how to pay him/herself first. Invest the parent or grandparent contribution in a good growth fund (AKREX) and a dividend growth ETF (VIG). If only $1K is available, use ETFs for both positions, using QQQ (or similar) for the growth portion. Try to get the kid to see how the account works and how money can grow if it’s added systematically. At 21, the kid’s in charge and you hope you’ve been a good teacher. Offer advice when it’s sought.

Leuthold makes the case for looking at a tactical allocation to EM.

We’ve never shared the secular enthusiasm for EM equities professed by many of our peers, but we try not to let our bias blind us to tactical opportunities. Emerging Markets trade at a little more than half of the S&P 500’s normalized P/E (14.2x versus 27.0x), despite matching the mighty NASDAQ 100 over the last three months. We can’t think of any other major pocket of value with that type of momentum.

Over the past 3 months, Vanguard EM and the NASDAQ composite have both risen 21%.
Just food for thought.
David

It was yielding over 20%. Of course it’s going to go down. Even if it went down by half it would yielding about 10%. As AUM increases, yield will fall. This is happening as expected. It’s also actively managed by Tad Rivelle. They may be trimming their risk. Cash looks to be building.

In the last 4 days it looked like the following
As of Date Ticker Dividend Rate
7/23/2020 MWFSX 0.001582083
7/22/2020 MWFSX 0.001426187
7/21/2020 MWFSX 0.001684689
7/20/2020 MWFSX 0.001714354
If we use 0.0015 daily we get about 4.5% annually.
It is one of the worse performer for one month and 3 months in my list
Ticker..1 Mo...3 Months
MIAYX 3.03 9.85
AIHAX 2.62 2.95
JIPAX 2.6 7.57
ADVNX 2.56 4.91
BMSAX 2.43 8.44
JSTIX 2.41 6.35
PDIIX 2.32 7.89
PLSFX 2.28 9.09
FCDDX 2.25 8.12
STISX 2.23 8.2
JMUTX 2.22 9.38
ASIGX 2.17 6.79
PUCZX 2.1 8.67
FADMX 1.97 7.98
MXIIX 1.73 5.63
JMSIX 1.66 9.01
HSNYX 1.64 10.57
PTIAX 1.61 4.95
IOFIX 1.54 16.42
SEMMX 1.34 10.66
PIMIX 1.3 6.31
TSIIX 1.27 7.29
EIXIX 1.09 8.01
DHEAX 1.08 8.04
VCFAX 0.88 7.78
MWFSX 0.84 4.06
RCTIX 0.43 4.45

Yes, they opened back in early April. David wrote about it in his monthly commentary.
https://www.mutualfundobserver.com/2020/4/
International Stalwarts is closed to third party financial intermediaries effective June 10.
https://www.mutualfundobserver.com/discuss/discussion/56200/grandeur-peak-international-stalwarts-fund-to-close-to-new-investors-via-financial-intermediaries
I picked up GPMCX for a non-taxable account.

I respectfully disagree with some attributes ascribed above to PSLDX, while acknowledging that it has significantly outperformed funds that could nominally be called its peers.
While PIMCO dates its StocksPLUS strategy to 1986, this strategy is "used across [its] “PLUS” portfolios". The first PIMCO fund to use this strategy was PSTKX in 1993; PSLDX dates back only to 2007. MWATX, previously mentioned, started in 1998.
https://www.pimco.com/en-us/investments/mutual-funds/stocksplus-fund/inst
https://www.pimco.com/en-us/investments/mutual-funds/stocksplus-long-duration-fund/inst
The bond holdings in PSLDX strike me as less opaque than those of most PIMCO funds. It's in the name: long duration. No secret sauce. This fund, by mandate doesn't significantly alter its bond bets. Rather, this fund will soar (at least its bond portion will) as interest rates decline, and will crash as rates rise.
[Effective duration is calculated by starting with modified duration (a well-defined, mechanical calculation based on coupons and maturities). One or more models are then used to estimate the duration effects of all the oddities of the bonds.]
For this fund, effective duration = modified duration = 14.57 years (per M*). So there's very little going on outside of (long) vanilla bonds. Looking at the holdings, PIMCO appears to be tweaking around the edges with derivatives to adjust the bond portfolio attributes slightly.
The 2x strategy (or StocksPlus strategy) gets 100% exposure to stocks at minimal cost by buying swaps on the target stock index. It then uses the remaining cash (almost 100%) to invest in bonds. DSENX is 100.69% long in stocks, 91.32% long in bonds, and short in cash by a similar amount. That's the way it's supposed to work.
PSLDX goes further and adds even more leverage. You've still got the 100% stock exposure through swaps (M* says 102.31%). But the bond portfolio is leveraged: 127.69% per M*. So not only is this fund heavily exposed to interest rate risk (with its long bonds), but it is doubling down with leverage. Okay, it's just 1¼ x down; same idea.
Because the fund must hold long bonds, there's no secret sauce here, or none worth mentioning. Just very long bonds combined with extra leverage on the bond side.
FWIW M* classifies this fund as a hybrid (85%+ equity), while PSTKX, DSENX, and MWATX are classified as large cap blend funds. I suspect that's because the leverage on the bond side increases the bond exposure to the point that M* won't consider it a stock fund with just a bond kicker.
If one is confident that rates won't rise at all for some time and that the yield curve (whatever little curvature there is) won't begin to curve a little more, then going long makes sense. Otherwise, those scenarios will crush this fund, at least relative to the others or to a vanilla stock fund.
NTSX differs in several ways. Instead of 2x, it is 1.5x. Instead of 50/50 stock/bond exposure, it's 60/40. It does not have flexibility in allocating bond sectors; its only exposure is to Treasuries (via futures). Its target duration is 3-8 years, typically less than half of PSLDX, though I suspect more than that of the other funds. But it does actively manage duration.
Its blurb touts the ability of the 1.5x strategy (90/60) "to enhance returns" by investing the the extra 50% (1/3 of the portfolio) in "noncore assets such as long/short equities, risk parity, CTAs, or true alternatives." However, upon reading further, one finds that the fund itself "invests 90% of its net assets in the 500 largest U.S. stocks by market capitalization" and "60% notional exposure to U.S. Treasury futures (2-, 5-, 10-, 30-year ladder)."
That's not the same as the S&P 500 (which is not a compilation of the 500 largest US companies); nor does the prospectus even mention 500 companies. Rather "The Fund invests in a representative basket of U.S. equity securities of large-capitalization companies generally weighted by market capitalization." (Prospectus.) It invests directly in stocks rather than using swaps. That enables it to actively manage its equity side - another point of differentiation from the OEFs mentioned.
Over its short life it has done nicely. Much (not all) of its performance seems to be due to leveraging. If one takes VBIAX's annulized performance over the past 21 months (the lifetime of NSTX), calculates its monthly performance from that, leverages 50%, and compounds that, one gets an annualized performance of 10.45%, still measurably below NSTX's 11.23%.

The granddaddy of them all in this space is PSLDX. IMHO among the greatest mutual funds of all time. You can get it for $25K at vanguard, but it's no free lunch. After holding for a few years with enormous gains there was a point in the past few months where virtually all of those gains were wiped out (brought tears to my eyes). Whatever derivatives were in the secret sauce were crushed to oblivion. But it came back hard and now up 17% YTD. This is a great strategy but would never put more than I could afford to lose in any opaque derivative-driven fund. For an ETF along the same lines but not as extreme check out NTSX. I'm long this as well as Dseex (a fine long term hold for sure).

I just looked. Gosh, DSENX is only off 3.5% YTD. Not bad at all. And it’s made good $$ for holders over the years. It’s hard (possibly counterproductive) to try to figure out why some funds excel and some lag over relatively brief periods. Many had their lights knocked out during the early March thru early April period. Like a dazed boxer, some are still struggling to their feet.
I don’t follow HY much. But seems to me it had a rough stretch. To the extent Gundlach is invested in some non-investment grade paper, that might have pulled his fund down relative to similar funds.

fwiw, for the last 4m and shorter, as with the last 4y+ and longer, DSEEX has outperformed FXAIX nontrivially.
So it arguably remains a good option for buy-hold. It has been doing its 'black box bond' thing for coming up on 7y.
I would not recommend, to a holder, bailing out, nor switching to it from FXAIX either, necessarily. It is v hard to sustain an edge, as we all know.
Yes, if you look at M* risk measures for 5y, you see its SD, return, and bear ranks are all higher than FXAIX and its Sharpe and Sortino both slightly lower.
The bond sauce is spicy. Just compare DSEEX w/ CAPE for 3m vs ytd.
https://quotes.morningstar.com/chart/fund/chart.action?t=dseex

@hank - linking tip. The time (or date) stamp under your name at the top of your posts is actually a link directly to your comment.
Here's the LINK to your March 2017 comment.

Pended is a great CU. Anybody can join and they do it fairly. We refinanced several times over the years and found each time hundreds of dollars "mistakes" that had to be fixed because I was going to walk away hours before closing.
Penfed didn't have these mistakes.
Penfed was our last home debtor. In 2012, they offer a 5 years loan at 1.99% with zero fees. We use it to pay the previous mortgage + our kids tuition and how we finished paying our debt years earlier.

“Generally, Fidelity funds have a $0 min.”
@msf - Does that mean that if I send $10.00 (ten-dollars) to Fidelity I can open 10 accounts in the amount of $1 each in 10 different funds? If so, I’m just crazy enough to do it!

Yup. I just entered an order for $1 of FLPSX, and the system took it. I immediately cancelled the order. Have fun!
P.S. The better paying (if you can call it that) MMFs have higher mins.

Yes “better paying” is perfect. :)
How does one pay the $10 house fee? Most casinos accept credit cards. Would Fidelity take a $10 debit from one of my bank cards? Playing a gold fund (or 2 or 3 at a time) would be a lot of fun. Where else can you pocket a 15-20% gain in a few days? And, if in a Roth the winnings would be a tax-free.
Hate to be so inquisitive. But I’ve never invested outside my direct accounts at a few old-fashioned houses. To my knowledge, no one has ever characterized T. Rowe or D&C as “fun” or “exciting.”

FYI
FZROX Life +6.00% vs its proprietary index +5.96%

Not sure where you get your fake numbers @msf

See this
http://quotes.morningstar.com/chart/fund/chart.action?t=fzrox
click Maximum
Fido index is included, then add FSKAX

FYI
FZROX Life +6.00% vs its proprietary index +5.96%

Not sure where you get your fake numbers @msf

FYI
FZROX Life +6.00% vs its proprietary index +5.96%

FSKAX has outperformed FZROX over the latter's lifetime, YTD, and over the latter's lifetime excluding YTD (just in case one figured that this year skewed the lifetime numbers).
The two funds follow different indexes: FZROX follows a Fidelity proprietary index; FSKAX follows a DJ index. The main difference though seems to be that FZROX has more difficulty tracking its benchmark.
Over its lifetime (since 8/2/18), it has returned almost 70 basis points less, cumulatively, than its benchmark. Give or take, that's about a 35 basis point tracking error per year. Over the same period of time, FSKAX beat its respective benchmark by a basis point.
There's the marketing hype of 100% lower expenses (0% vs 1.5 basis points). Then there's the reality of money in one's pocket.
Done.