Reply to @wsanders: Not much of a correction? Maybe not in the open end high yield muni funds which are but 1% off their recent all time highs. But in HYD I would call a sudden 4.8% decline off all time highs and wiping out all the price gains since July a correction. Even more so since it's a plodding bond instrument. Again, one reason why I abhor ETFs. They can go to a discount to NAV like HYD in the blink of an eye and wipe out months and months of price gains. Maybe this is all unfounded worries about the taxation of munis and HYD will go right back to their highs. But in the meantime, I could never live with a 4.8% drawdown in any of my bond positions.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hyd&insttype=&freq=&show=&x=28&y=15

Hopefully, none of us here, will be severly stung when some bond types rotate away from capital appreciation; for whatever reasons.
One would also hope that active managers of some bond funds would be able to adjust for changes, regardless of maturity of holdings. These are the "steriod" tools that may be in place within a fund's prospectus for "adjusting" holdings.
I suspect, if a large negative run on bond pricing comes into place; some damage will be done, whether holding individual bonds or the best of managed bond funds.
The same aspects would also apply to various equity sectors.
Not unlike the period beginning in mid-2007 through Mar. 2009; if there are more sellers versus buyers, prices go down, period.
Regards,
Catch

For others who hold Pimco funds, there were some distributions today; so, you may find some large drops in NAV's from today. Ironically, Pimco doesn't have these posted yet; but you will find the amounts at M*.
Sample:
PTTRX Distribution today, 12-12-12
with the NAV indicating a -2.41%
Distribution
Date 12/12/2012
Distribution
NAV 11.36
Long-Term
Capital Gain 0.1137
Short-Term
Capital Gain 0.1548
Return of Capital 0.0000
Dividend
Income 0.0000
Distribution
Total 0.2685

Hi Catch,
I don’t plan to make any major changes in my portfolio with respect to its holdings or even with my asset allocation except to move ballast from the cash area to equity area and back to the cash area, form time-to-time, as market valuations change. I often reduce equities if I feel they have become overbought … and, likewise, I will increase my allocation to equities should I feel they become oversold. In short words, buy equities when they are towards their 52 week lows and sell some of them off as they near or approach 52 week highs.
I currently have a total of fifty investment positions within my taxable, 401k and IRA accounts combined. From a recent Xray analysis the asset allocation bubbles at about 15% cash, 25% fixed, 50% equity and 10% other & not classified. The portfolio’s yield is north of five percent on amount invested and has about 20% of its value comprised of unrealized capital gains. Certainly, if a major downdraft developed I’d book some of these gains … especially, in the tax deferred accounts, where the tax man does not knock until distributions are taken. Within both equities and fixed I am about two thirds domestic and one third foreign. Within fixed I am about 40% short, 40% intermediate and 20% long maturities.
I have already sold or reduced positions for tax selling reasons in the taxable account for this year. I feel I am well positioned in all my accounts as 2013 approaches. From a price to earning ratio I have the S&P 500 Index selling on blended earnings at about 14.3 and feel it has room to run. I believe we will see the Index reach 1500 sometime between now and the end of the first quarter next year. In addition, I believe we might even see 1600 sometime in 2013. So, with this, I favor equities over fixed.
I wish all “Good Investing,” a great Christmas … and, a prosperous New Year.
Skeeter

As Mark intimated, I will let the market tell me what to do. Being a believer in less is better I try to hold as few funds as possible. Having rolled out of my small position in ABTYX, that leaves me with PONDX, WHIYX, SUBFX, and ANGIX. MWCRX is something I have been in and would probably still be in were it not for the outperformance of PONDX. It's an excellent fund with an excellent management team and in the tight rising channel I like to place my capital.

Howdy MoneyGrubber,
Fundalarm provided excellent points for consideration, relative to what type of bond fund, some diversification away from 90% equity exposure with a bond fund and looking forward as to what will be driving forces in the future to cause changes with interest rates moving higher.
You used PTTRX as a core bond fund example. I would expect this fund to continue to be able to manage interest rate swings; as well as many other broad based bond funds. Is this your core bond fund?
This discussion thread, in part; was based around this statement, " "If interest rates and inflation move quickly up". Quickly is relative to folks in their own time frame, eh?
Using the 10 year Treasury note as an example and that the current yield has been hanging out in the 1.6% range for many months; my view of quick for upward yield changes would currently be a .1% average weekly upward yield move for 6 to 8 weeks. If such upward yield moves, at a point in time in the future; could be maintained without some pull backs of consequence, I would have to assume a trend has begun. As noted previously, there should have already been other areas (upward equity prices for one) that would be showing strong positives, also which have suststained upward moves.
It is easy, among all of the other investment areas, with numerous talking and written opinions (from any source) and one's own convictions and knowledge towards their own portfolios; to try to find and then determine what to watch for clues that may affect one's portfolio.
As to watching, I do pay attention to the 10 year Treasury note yields. It is very easy to glance at this number at one of the tv business channels and be ho-hum about the yield number; but today this number is so small, that small changes are large percentage numbers that would not be ignored in the equity world. If one finds a sustained move from a current 1.6% to 1.7% yield in one week; the change is +6.25%. This number would be big talk in the equity world, eh? The following week finds a similar .1% upward yield move, with the 10 year now parked at 1.8%. The change is now at +12.5% in a two week period. After 8 weeks of similar moves, and now finding the 10 year yield at 2.3%; also finds the change equaling a 43.8% move reflected. Of course, bond prices would have moved downward during this same period. In theory, the downward pricing would have first been shown in plain jane Treasury issues, as well as etf's which follow these issues and closely related bonds. Likely, the best clues as to a fading bond market would be the actively managed bond funds; with pricing being reflected in the abilities and/or luck of management. IF broad based, active managed bond funds are able to manuver through the interest/yield rate increases with available adjustment tools, an investor being in the "right" bond fund should not suffer major losses. This does not mean that one should ignore their active managed bond fund for downward moves that are sustained. We all know a long list of active managed bond funds will always find funds at the bottom of the list; both during the good and bad times. Not unlike we individual investors, the professionals and highly trained/skilled will miss the boat from time to time.
Another aspect of considering when to sell a fund is "when did I buy it?" None of us ever want to give up what we've already earned. But, if you happened to buy PTTRX 4 years ago and "the bond bubble" started this week, you would have an easier decision and a bit of "wiggle room" about selling the fund; versus if you bought the fund the week before. You may also be dollar cost averaging via a retirement plan for many years into a PTTRX; so your cost during the growth of this fund has smoothed your investment. Worse case with any investment area/fund is to sell down in 25% chunks, if you are no longer happy with the fund or market conditions.
You noted a 20 year (long term) time frame prior to retirement, and assuming a traditional retirement age of 65. If you so desire, you have a 40 year long term horizon with your investments; assuming a 20 year post-retirement period. Although I am likely 20 years in front of you, our house hopefully, will continue to be long term investors, too; if I/we are able to average the longevity tables. Your advantage is that you should be able to continue to have cash flow into your house with employment, while we won't have this position and eventually will have cash flowing the other direction from our retirement accounts. Although employment provides for an ease of mind concerning investments, an investor of any age has to be mindful of preservation of investment capital in order to benefit from the greatest advantage an investor has; and this is the continued compounding of monies going forward, building upon what has been "retained" for compounding versus "I can make up a large investment loss with cash from employement". Yes, these are easy words to write; but less easy to deal with the reality.
At this point in time, I would not be concerned about a 10% portfolio holding in a broad based bond fund causing any damage to your overall portfolio return from a possible, future bond bubble; and such a fund will provide a cushion against your equity portfolio. You may also hold more bonds than you are aware of via equity funds positioned in these areas, too.
You may be assured that this house is watching for a "bond bubble" with this portfolio:
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX.LW Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
ACITX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
LSBDX Loomis Sayles
PONDX Pimco Income fund (steroid version)
PLDDX Pimco Low Duration (domestic/foreign)
All of these funds were positve on Dec. 10, Monday; with the exception of DPFFX, FBNDX and PLDDX, which were all "flat" for the day. The average gain was +.14%, ranging from .01% through .39%.
Are our bond funds expensive today? Well, surely more so versus 1,2 or 3 years ago. Would we buy any bond funds today? We (our house) will have to wait until 2013 to review this whole area. One always has to ask the question, regardless of investment sector involved. I have to ask the question today, as I look at one corporate bond fund, FBNDX with a current 30 day SEC yield of about 1.6% and compare this to an equity/dividend fund at Fidelity with a yield of 2.5%. Hmmm, perhaps it is time to rotate the bond fund; as if pricing does not continue upward from this point, I may expect only the 1.6% yield. Nope that ain't gonna work, eh? These are the questions in place at this house, but will have to be on hold until the new year to find what, if many investment sectors, may receive a face slap, pending actions in Washington and our being away from trading capabilities the last week of this year. Argh !!!
Prior to June, 2008; our house was also 90% equity. We will not likely find that positioning again, as we move into retirement; but do need to "find" the right mix going forward.
Any and all of these decisions come in a time of "an artifical and perverted" world of monetary involvement from central banks and global economies in flux worrying and concerned about growth and deflation, with the resulting investing circumstances perhaps being this house's "once in a lifetime" investing road course.
Lastly, your greatest investment asset; being you, is that you are thinking and considering the aspects of your house's investments. In my opinion, you are involved in, and part of an excellent community (MFO) from where you will obtain a wide range of opinons and thoughts from a vast group of thinkers, across a wide spectrum of topics, to help one another detail and rethink our investment portfolios, based in part; of where any of our house's are positioned related to one's investment risk and reward psychology. Heck, one may also obtain excellent guidance about the best wi-fi router for home use. A most excellent community, is this place.
Don't become discouraged about the one's (investments) that got away, or the should've, would've, could've investments that may have been missed. Also do not forget to pat yourself upon your back for investment work well done; as many others will not be aware of the amount of effort put forth to properly grow your hard earned monies.
Okay, I have blabbered enough to fill and fly a hot air ballon; and my chores list is staring at me, too.
Take care,
Catch

Also, a decent 5% or so cap gain in RYPNX (Opportunity) last week. They've only had LTCG distributions before at YE 2005-2008 and 2011 and never a substantial dividend.
In a high turnover fund like RYPNX I've always seen this as a sign of the managers doing their job, buying low and selling high, especially when CG distributions come in every good market year. Were they to miss a year, I'd suspect them of losses in high redemption years, for example Dodge & Cox hasn't paid a capital gain since 2008 and estimates they won't pay one this year, as investors bailed out when the fund tanked in 2008-09.

"transfer in-kind" from your current account should not cause the $75 fee. Purchasing additional shares might cost $5, which is nothing unless you're dealing with tiny amounts. Reinvest the dividends and capital gains which is also free and leads to increased positions.

Reply to @MaxBialystock:
1) MSPZX is Mass Mutual PIMCO Total Return fund. It is sub-advised by PIMCO similar to Harbor one, I believe
2) CCASX fund has an expense waiver, keeping expenses at 1.10% until Feb 2013.
"Conestoga Capital Advisors, LLC has contractually agreed to limit the Fund’s net annual operating expenses to 1.10% of the Fund’s average daily net assets until at least February 1, 2013 , subject to termination at any time at the option of the Fund."
Either their net expense ratio is wrong in the documentation or 0.17% is the wrapper fee etc. You still have to figure out if there is an explicit fee taken each month or there is a fee embedded in the fund expenses or her company pays for it indirectly.
My understanding is that 3-Year cliff is for vesting after the fund is purchased by employer monies. You said that they will not be matching anything in the first 2 years of employment. They will match 100% of contributed on year 3 but it will vest some time after that. Anyway, you need to clarify matching and vesting details with the employer. Check the documents you are sent. It should be there somewhere.

I would not get too excited about what "might" happen to PRPFX. Yes, the fund has benefitted from a long period of declining interest rates and a period of time when Treasuries have been very popular. The total bond allocation has dropped from about 35% in 2008 to 28% this year. The fund's average duration is between 3 and 4, which puts it in the low end of government bond funds. For example, VUSTX has a duration of more than 15. THAT could be a disaster in the making. I don't think PRPFX's Treasury holdings are any real danger, given Mr. Cuggino's working to reduce duration and total bond holdings. Yes, there is risk with PRPFX, but less risk than owning a portfolio of long-term bonds or a portfolio of growth stocks. The fund's ability to withstand tsunamis is pretty decent. But I would capture gains to keep the allocation percentage in check, just like any fund.

Dear Catch, concerning the distributions and the comments by msg: Most of the charts except those on M* show the price drop at the day of the distribution, so they show correctly the NAV, but they fail to show that the NAV changes in part the fund distributed some dividends and capital gains to your pocket. As a result, many charts except M* may give an impression that the money in a fund do not grow at all, whereas in some cases (such as IVWIX) these funds could have VERY large distributions.

Fairmark site is pretty useful for a lot of tax questions.
http://www.fairmark.com/capgain/capgain.htm
Here on this page:

Capital losses are used first to offset capital gains. If there are no capital gains, or if the capital losses are larger than the capital gains, you can deduct the capital loss against your other income — up to a limit of $3,000 in one year.

Basically, if you do not have enough capital gains to offset, the losses can offset your income. This is my experience while using tax software as well.
Here is another reference:
http://www.bankrate.com/finance/money-guides/capital-losses-can-help-cut-your-tax-bill-1.aspx

• Short-term losses counterbalance those expensive short-term gains. What's left at the end of Part I of Form 8949 is the net short-term capital gain or loss. If there were no gains, then obviously the net would equal the total loss.
  
• Long-term losses are applied to long-term gains. The result, at the end of Part II of Form 8949, is the net long-term capital gain or loss. Again, if you only have a loss, then the net is a negative number.
  
• Next, you combine the short-term and long-term results on Schedule D. At this point, a loss in one section can offset a gain in the other section. For example, if you have a net short-term loss of $1,000 and a net long-term gain of $1,200, then you'll pay tax on only $200.
  
• If there's still a loss, you can deduct up to $3,000 from other income.
  
• If you had a really bad year and ended up with a net loss of more than $3,000, you can carry forward the leftover portion to next year's taxes. The unused loss can be applied to next year's gains as well as up to $3,000 of earned income. A big loss can be used as a deduction indefinitely -- another important reason to keep good records.
  

1. your calculations are correct. and your assumption is correct. maximum tax rate on qualified dividends is 15% in 2012. (scheduled to expire dec 31st and move to ordinary tax rates if no deal passes.)
2. "qualified dividends" is different from "capital gains". the latter could be long-term (also taxed at 15% in 2012 and scheduled to increase to 23.8% in 2013, if no deal is reached); or short-term (always has been and will be at your ordinary tax rate.) These capital gains, whether long or short term, could be offset by capital losses -- dollar for dollar. If your losses exceed your gains in any calendar year, you can ofset up to $3000 against ordinary income and carry over the rest.
two more things, i am not a tax advisor and this is not advice. also, whatever is vanguard's estimate is indeed just an estimate. the final numbers will be reported in tax form next year.

Here is the link for estimated dividend income.
https://personal.vanguard.com/us/insights/article/estimated-yearend-distributions-12072012
In the chart lets look at VGELX for which I have a few questions.
1. Vanguard indictaes the estimated dividend income is $2.25 per share. Lets assume one has 500 shares. That means the estimated dividend income is $1,125. In the column next to estimated dividend is a column "Estimated QDI" and in the case of VGELX, the number is 82%. Does that mean that 82% of $1,125 or $922.50 is the qualified dividend? Also, is the $922.50 taxed at15% for all except one in a 10% or 15% tax bracket (in that case the tax is 0)?
2. Can a qualified gain ($922.50) be offset by a short-term or long-term capital gain carry forward loss? My guess is no, because regardless that it is "qualified", it is still Income, which can't be offset by a capital loss.
Thanks for your thoughts.
Mona

Howdy,
A thank you to all who post the links, start and participate in the many fine commentaries woven into the message threads.
For those who don't know; I ramble away about this and that, at least once each week. The perspectives and investments are based, not upon a formal economic studies background; but from the "School of Hard Knocks & Studies". Of which, this house is still enrolled.
NOTE: This portfolio is designed for retirement, capital preservation and to stay ahead of inflation creep. This is not a buy and hold portfolio, and is subject to change on any given day; based upon perceptions of market directions. All assets in this portfolio are in tax-sheltered accounts; and any fund distributions are reinvested in the funds. Gains or losses are computed from actual account values.
While looking around.....An old children's holiday song lyric goes....."All I want for Christmas is my two front teeth, my two front teeth, my two front teeth....." Perhaps all an investor could want for each and every Christmas, is an average annual return of +8%. The math is simple, but the chore is less so, eh? Going for a net of +2.7% annually could look this way, in the most simple math terms.
--- +8% gross investment return
--- let us throw out 2% of this assuming a fed. taxable bracket of 25% (more for high tax states)
--- we're now at +6%
--- a further reduction of 3.3% for the old inflation hidden tax thingy (3.3 perhaps being a high end average)
--- = a net of +2.7%
Can one live with this return? All answers will be different. One needs to generate a +.031872510% return for each of the average 251 trading days/year to arrive at a 8% return. Well, just a little fun looking at investments from the simple side of life. This house's schedule is already loaded to the maximum through the new year period; and so this report may not be posted in any fullness for the next several weeks. And horror of horrors; we will be traveling upon the highways on the Mayan flip day of December, 21, 2012. We will be "stuck" with our portfolio; regardless of events, as the last week of the year will find us without access to a secure online connection, if any connection at all.
NOTE: for the below sector rotations. Some of the variances in % terms may be beyond normal values, as some numbers will be adjusted for distributions at this time of the year, and reflected in week ending numbers.
The data/numbers below have been updated.
As to sector rotations below (Fidelity funds); for the past week: (Note: any given fund in any of these sectors will have varying degrees of performance based upon where the manager(s) choose to be invested and will not directly reflect upon your particular fund holdings from other vendors.) Sidenote: The average weekly return of 200 combined Fidelity retail funds across all sectors (week avg = - .07%, YTD +12.65%).
--- U.S. equity - 5.36% through + 1.6%, week avg. = - .41% YTD = + 15.05%
--- Int'l equity - 7.21% through + 2.0%, week avg. = - .95% YTD = + 15.61%
--- Select eq. sectors - 3.8% through + 1.4%, week avg. = - .04% YTD = + 15.0%
--- U.S./Int'l bonds - .15% through + .51%, week avg. = + .09% YTD = + 4.2%
--- HY bonds - .20% through + .74%, week avg. = + .33% YTD = + 12.92%
A Decent Overview, M* 1 Month through 5 Year, Multiple Indexes
You may consider our portfolio to be quite boring, but you may be assured that it moves and bends each and every day; from forces beyond our control.
I have added a few blips related to our portfolio and market observations at the below SELLs/BUYs and Portfolio Thoughts.
SELLs/BUYs THIS PAST WEEK: = NONE.

Portfolio Thoughts:
Our holdings had a + .49 % move this past week. As to the bond world. High yield active funds generally were ahead of their ETF cousins, with our holdings mix ranging from +.81% through +1.1% for the week. Our lowest return weekly performer was PLDDX at +.13% for the week. Other holdings: LSBDX at +.66%, PONDX at +.75% and FNMIX at +.51%. The well performing cousin of PTTRX (+.22%) performed a bit less with BOND at +.14% for the week. Many bond sectors were strong performers through Thursday, while retreating on Friday. Even the unloved and lowly respected TIPs related funds of ACITX and FINPX are working hard to return 8% for the year. Not too bad for funds with negative yields, eh? 'Course the yield and pricing is reflected from the current demand. Not bond benchmarks; but broad U.S. equity measures were at, for the week: SP-500 at +.13%, VTI at +.22% while the NASDAQ and related fund sectors were down about 1% from the "Apple" affect and its losses for the week. Some U.S. equity funds hold fairly large positions in Apple stock. One such fund, FCNTX recently held a 13% position. The Latin American sector could be a fund area to watch, going forward, as this area has been weak YTD. There continues to be a wide range of weekly returns between select equity(s) sectors and particular global country sectors. A lot of hot money is still traveling and looking for the best "play". We'll continue to watch; but do not have plans at this time, to enter into equity areas.
Still plodding along, and we will retain the below write from previous weeks; as what we are watching, still applies.
--- commodity pricing, especially the energy and base materials areas; copper and related.
--- the $US broad basket value, and in particular against the Euro and Aussie dollar (EU zone and China/Asia uncertainties).
--- price directions of U.S. treasury's, German bunds, U.K. gilts, Japanese bonds; and continued monitoring of Spanish/Italian bond pricing/yield.
--- what we are watching to help understand the money flows: SHY, IEF, TLT, TIPZ, STPZ, LTPZ, LQD, EMB, HYG, IWM, IYT & VWO; all of which offer insights reflected from the big traders as to the quality/risk, or lack of quality/risk; in various equity/bond sectors.
The Funds Boat is at anchor, riding in the small waves, watching the weather and behind the breakwater barrier. To the high praise of MFO and the members, it is very difficult to find a topic to note here that has not been placed into the discussion boards. Excellence, as usual.
I have retained the following links for those who may choose to do their own holdings comparison against the fund types noted.
The first two links to Bloomberg are for their list of balanced/flexible funds; although I don't always agree with the placement of fund styles in their categories.
Bloomberg Balanced
Bloomberg Flexible
These next two links are for conservative and moderate fund leaders YTD, per MSN.
Conservative Allocation
Moderate Allocation
A reflection upon the links above. We attempt to establish a "benchmark" for our portfolio to help us "see" how our funds are performing. Aside from viewing many funds within the balanced/flexible funds rankings (the above links), a quick and dirty group of 5 funds (below) we watch for psuedo benchmarking are the following:
***Note: these week/YTD's per M*
VWINX .... + .41% week, YTD = + 9.85%
PRPFX .... - .24% week, YTD = + 6.7%
SIRRX ..... + .42% week, YTD = + 7.02%
TRRFX .... + .49% week, YTD = + 10.2%
VTENX ... + .57% week, YTD = + 9.36%
Such are the numerous battles with investments attempting to capture a decent return and minimize the risk.
We live and invest in interesting times, eh? Hey, I probably forgot something; and hopefully the words make some sense. Comments and questions always welcomed.
Good fortune to you, yours and the investments.
Take care,
Catch
---Below is what M* x-ray has attempted to sort for our portfolio, as of Nov. 1, 2012 ---
From what I find, M* has a difficult time sorting out the holdings with bond funds.
U.S./Foreign Stocks 1.9%
Bonds 93.9% ***
Other 4.2%
Not Classified 0.00%
Avg yield = 3.99%
Avg expense = .57%
***about 18% of the bond total are high yield category (equity related cousins)
---This % listing is kinda generic, by fund "name"; which doesn't always imply the holdings, eh?
-Investment grade bond funds 28.2%
-Diversified bond funds 22.4%
-HY/HI bond funds 14.5%
-Total bond funds 32.4%
-Foreign EM/debt bond funds .6%
-U.S./Int'l equity/speciality funds 1.9%
This is our current list: (NOTE: I have added a speciality grouping below for a few of fund types)
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX.LW Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
ACITX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
LSBDX Loomis Sayles
PONDX Pimco Income fund (steroid version)
PLDDX Pimco Low Duration (domestic/foreign)
---Speciality Funds (sectors or mixed allocation)
FRIFX Fidelity Real Estate Income (bond/equity mix)
---Equity-Domestic/Foreign
NONE outright, with the exception of equities held inside some of the above funds.

It turns out that RSEIX (Royce Special Equity, Institutional Class) had a LTG distribution last year (2011) of $1.0775 on a reinvestment share price of $19.35, or about 5.57%. That compares with this year's LTG distribution of $1.0981 on a reinvestment price of $20.62, or about 5.33%. So this year is not a one-off, due to a one-time event of money managers expecting cap gains tax increases in 2013.
There is further evidence of the possible cap gains tax increase being a nonevent (as far as RSEIX is concerned). Fundalarm is correct that Royce Special Equity has had negligible distributions in some years. 2010, 2009 - no cap gains, 8-9c in income. But it's varied year by year.
2008 - 69c LTG + 5c STG + 23c income on $13.13 share price (5.26% on LTG, let alone STG and income)
2007 - $2.14 LTG + 18c STG + 14c income on $18.65 share price (11.3% on LTG)
In addition, 2010 had similar uncertainty about cap gains tax rates going up, and that was one of the years with miniscule distributions. Same manager (Dreifus), so the difference is not because the fund had different managers who took a different approach to cap gains.
What I think we're seeing here, and I'm as susceptible to it as anyone else, is confirmation bias. The tendency to see facts that confirm our hypothesis (e.g. that for most of the immediately preceding few years there were almost no cap gains, "confirming" a change in pattern), and ignoring facts that contradict our hypothesis (see above).
The risk of selective use of facts (albeit unintentional) is why I feel it is so important to look at raw numbers, discount anecdotal information, and challenge one's own assumptions. I can get off my soapbox now - not picking on fundalarm here, I really believe that we all do this to some degree, and this is just my anecdotal example used as "proof". :-)

Third Quarter Report 2012
http://www.oakmark.com/reports/2012_q3/12-15943-1_enh_C6-1.pdf
As of June 30, 2012, Oakmark Equity and Income Fund Holdings:
Common Stock 70.1%. Fixed Income 22.4%. Short Term Investments 6.4%. Approximate cash on hand 1.1%
Re Above: Fixed Income (22.4%) With the exception of less than 1% invested in Norwegian government notes, this consists of U.S. government debt obligations. Of these TIPS comprise just under 15% of the total. The TIPS also have the longest dated maturities, some extending out to 2020. The remainder are mostly Treasury issues with substantially shorter maturities - most 3 years or less.
Re Above: Short Term investments (6.4%) These appear to be about evenly split between a repurchase agreement involving Federal Home Loan Bank short duration securities and Canadian government short term bonds. Less than 1% consists of commercial paper.
Re Above: We can infer the fund does not hold any junk bonds.
In his commentary, Clyde McGreggor, Portfolio Manager notes the fund's "... low fixed income duration of 1.7 years." If this sounds at variance with the stated maturities above, it's because maturity and duration are two different animals.
Link: The difference between bond duration and maturity
http://moneycation.blogspot.com/2011/02/difference-between-duration-and.html

i have held rseix for years, the fund had negligible distibutions, if any. it is pretty much buy and hold with very low turnover. Today though it distributed a fairly large amount of dividends and long-term capital gains (mostly the latter). So the investment manager specifically now realized all those gains incurred over the years. another example how upcoming higher taxes change behavior of individuals, corporations and, in this case, money managers. fwiw.

Brown Capital Management:
http://www.browncapital.com/distributions.html
Sequoia Fund (on first page):
http://www.sequoiafund.com/Reports/Quarterly/Sep12.pdf

"if I buy a US Treasury Bond Index fund...", the fund is marked to market every day and you and other investors can redeem at each day's NAV, which means you can loose a small (or large) fortune should interest rates rise. If a fund is called something like Long Duration Treasury Fund, how nimble do you think the manager could be? He can't buy equities or high yield even if he sees the interest rate freight train coming. the 2% coupons will not protect against a huge loss of capital. And don't forget that as soon as it starts plunging, the investors will want their money back, which means, even if you're very patient and prudent, the fund manager will be selling long bonds before maturity at firesale prices to pay other investors and the fund's value will go down. Never confuse a bond with a bond fund.