-2.83% is total return:

Morningstar's calculation of total return is determined by taking the change in price, reinvesting, if applicable, all income and capital gains distributions during the period

In short, it is unaffected by distributions, special or otherwise.

Howdy msf,
First, I very much appreciate your efforts; as well as the input from everyone, to help define this topic for me and whomever else is taking a read.
Perhaps my wording of "insurance" was not properly used; although you note that an option may be defined in a similar fashion.
I will relate the below to the U.S. market place; but the thoughts may apply to any global sector, in which one may be invested.
---Portfolio shifts: In the most simple form, when one has a need to adjust their portfolio, for whatever their own reasons; portions of the portfolio are reduced or sold in full; with this money needing to find a new home.
An example could be that one is satisfied with a mix of 30% VTI and 70% BND for their near or retirement holdings. But, the market mood is changing (recent actions) and "I" decide that a reduction or total sale of VTI is prudent. I can move the money to BND, cash only MM or perhaps (based upon what I think I see) move half of VTI to BND and the other half to something like SDS or an inverse index fund. The thought being to keep most of the money relatively safe from big price swings with BND while drawing a yield; and also take advantage of the equity market moving down and gaining a positive return from SDS or an inverse fund directed towards a sector of the U.S. equity area. The portfolio now has two positive holdings
Another example could be one choosing to maintain current equity or equity like (HY bonds) holdings, but also buy SDS or similar with cash on the sidelines as a potential "offset" for losses in the equity holdings and potential gains with SDS.
I will note that I understand that this is a form of market timing to some degree and that a reversal of market directions to the positive direction would result in SDS or an inverse index fund now moving to the negative side of things.
The original thread was started to help discover what some may be doing with these type of investment vehicles, inverse tools, when the equity market is moving down.
Tony recently noted this in his post: "Tony November 22, In my IRA, I recently sold some RYMXX and bought some RYCWX, RYWYX, RYVNX, RYIRX, and RYTPX. I did this based on charts of technical indicators, overlays, and market indicators."
Tony's move was with MM monies and he did not indicate that he was also still maintaining any equity positions.
Lastly, with respect to market/sector timing. Our house is not buy and hold; and this places us into being market timers in a most moderate sense. Anyone, in my opinion who periodically shifts money for their own good reasons, is in effect; a market timer. We may move monies among funds no more that 5 times in a year; but we attempt to do this for reasons of trends we think we understand and/or to adjust risk/reward in one direction or another.
Hopefully, this write offers some clarification.
Regards,
Catch

The income from junk funds sounds good, but you have to reinvest 2% per year just to keep a stable nav. So if the fund yields 7% you are really receiving 5%. This has to be compared with dividend paying equities where it is possible to get ~5% yield with the possibility of dividend increases and capital appreciation. Same rule applies, you have to live off distributions and avoid selling assets.

http://www.sec.gov/Archives/edgar/data/916006/000119312511312700/d256598d497.htm
Bridgeway Funds, Inc.
Large-Cap Value Fund (BRLVX)
Supplement dated November 15, 2011 to the Prospectus
and Statement of Additional Information (“SAI”) dated October 31, 2011
At a meeting of the Board of Directors (the “Board”) of Bridgeway Funds, Inc. (the “Company”) held on November 11, 2011, the Board approved the merger of the Bridgeway Large-Cap Value Fund (the “Bridgeway Fund”) into the American Beacon Bridgeway Large Cap Value Fund (the “New Fund”), a newly created series of American Beacon Funds (the “Trust”). The Board determined that the proposed merger would be in the best interests of the Bridgeway Fund and its shareholders. The Board also approved an Agreement and Plan of Reorganization and Termination (the “Plan”) between the Company, on behalf of the Bridgeway Fund, and the Trust, on behalf of the New Fund for the merger. The proposed Plan contemplates that the New Fund will acquire all of the assets and assume all of the liabilities of the Bridgeway Fund in exchange for Institutional Class shares of the New Fund. The Bridgeway Fund will then distribute those Institutional Class shares to its shareholders in exchange for the shareholders’ current Bridgeway Fund shares. The effect of the merger will be that the Bridgeway Fund shareholders would become shareholders of the New Fund.
The merger will shift management oversight responsibility for the Bridgeway Fund from Bridgeway Capital Management, Inc., the Bridgeway Fund’s current investment adviser (“Bridgeway”), to American Beacon Advisors, Inc., the New Fund’s investment manager. However, the New Fund’s Board of Trustees has approved the hiring of Bridgeway as the sub-adviser to the New Fund and the same portfolio managers that have been managing the Bridgeway Fund will continue to be responsible for the day-to-day portfolio management of the New Fund once the merger is completed.
The proposed merger of the Bridgeway Fund into the New Fund will require the approval of the shareholders of the Bridgeway Fund. A shareholder meeting is being called for that purpose and shareholders of the Bridgeway Fund will receive proxy solicitation materials providing them with information about the New Fund. If approved by Bridgeway Fund shareholders, the proposed merger is expected to take effect in the first quarter of 2012. Investors should check the Bridgeway Funds website (www.bridgeway.com) for further information.
This information supplements the Prospectus and SAI of the Large-Cap Value Fund dated October 31, 2011.
Please retain this supplement for future reference.
Wonder if this going to start a trend a Bridgeway Funds?

Dear Scott, hcan we buy RIT Capital Partners in US?

5 of the top 10 holdings (not saying which rankings): RIT Capital Partners (London investment trust), AQR Risk Parity (mutual fund), Pimco Commodity RR (mutual fund), Jardine Matheson (foreign stock), Marketfield (mutual fund).
Edited to add: some additional random positions: Mutual Hedge Frontier Legends (mutual fund), Janus Overseas (mutual fund), Greenlight RE (stock), AQR Managed Futures (mutual fund), Salient MLP Energy and Infrastructure (closed end fund)

I definitely like Asia, but I think for me it's a matter of comfort and almost "putting away" investments. I have a similar belief to you that Asia will do well over time, but I think rather than being heavily in Asia (which I was about 2 years ago), I have a mixture of a few Asian stocks and funds (the largest investment being Jardine Matheson, which I've discussed before) and they are to a point where I can feel comfortable and the day-to-day is not entirely reliant upon what Asia did last night. I don't want to be heavily in US stocks, either, but I think there are global managers who I do trust to move money around the globe as they see fit - RIT Capital Partners (which is a London fund) is one I love, but the First Eagle Global/Overseas and Ivy Asset Strategy funds in the US would definitely be other good options (particularly First Eagle)
I definitely will be the first to admit that I have to keep myself from getting too into certain investments and at least have some sort of loose "cap" in mind for a particular investment. I think one can be overweight during the initial period of a particular thesis/theme, then pull back a bit to a more normal weight for what is believed to be the remainder of a long-term idea.

MTA top 4:
1. Jim Rickards: I think the way that Rickards blends geopolitics and finance is increasingly valuable and effective in today's financial markets. Clear, concise and unique in perspective (Rickards' specialty is "threat finance" and he deals with the DOD and other government agencies; he also worked with the military on a recent financial wargame.) His book, "Currency Wars" just came out last week (and is an excellent read.)
2. Meredith Whitney: Smart, unafraid to make bold calls and well, easy on the eyes.
3. David Einhorn: A manager who has presented a strong sense of ethics and continues to present himself in a straightforward manner, Einhorn continues to quietly (well, aside from the effect of his speeches on stocks like Green Mountain Coffee) go about an excellent career (iffy first half of 2011 aside.)
4. Jacob Rothschild: Has lead RIT Capital Partners (which I own) from a 3M pound in net asset value fund in 1961 to 1,984M pounds as of 3/31. Not to mention the stories he could likely tell, the connections and more. This would be my pick for someone similar to Soros.

http://www.hardingloevnerfunds.com/media/pdfs/distributions_093011.pdf
http://www.westportfunds.com/files/Tax.pdf
https://investors.oldmutualus.com/investment-center/news-commentary/press-releases-detail.aspx?documentID=472 (Old Mutual)
http://www.rsinvestments.com/files/distributions-est-2011.pdf
http://www.ivafunds.com/sites/default/files/downloads/Cap Gains Estimates 102411.pdf
http://www.sequoiafund.com/si-dividends-capital-gain.htm

Howdy BobC,
" First, I agree that a person's investment goals, risk tolerance, and time horizon are the most important factors in deciding how much one should allocate to stocks. But I also think it is important to remember that we are near the end of a 30-year bull market for bonds. Interest rates will go up, whether quickly or not, or by how much, we do not know. But they will go up. Folks who own long-term Treasury funds, for example, could be seriously hurt when that happens."
>>>>>I am not aware of a method to determine that a given investment sector (I relate this to the U.S.) is about to end or begin from such a long time frame of moving in one direction or another. Who says that the 30 year bond bull is finished? I don't have a problem with monitoring commonly used items; such as 50 and 200 moving averages and related techinicals. I am familiar with the theories of those who note "wave" theories that deal with a variety of time frames within other time frames. I don't believe someone like Robert Pretcher has performed any better with his investment calls, versus this house since 1978. We all know there are far too many professional and bright minds who got their investment clocks cleaned in the market melt. Many of them could have used the most simple of methods of the 50/200 day moving averages to protect some of their investments.
"Folks who own long-term Treasury funds, for example, could be seriously hurt when that happens."
>>>>>Most assuredly. Not unlike any other investment sector.
"In the meantime, high-quality companies have dividend yields that a much more attractive than CDs and short-term Treasuries. Yes, they are indeed more volatile. But we would argue that in many ways stocks as a whole are more attractive than they have been in a long time, both for pricing and for macro reasons."
>>>>>I am sure there were many from 2007 right through the burn of Lehman; who continued to attempt to determine what is and/or was undervalued; until they found what undervalued really was into March of 2009.
"Certainly one option would be to use some alternative strategies (long-short, absolute return, etc.) to reduce overall portfolio volatility, which would allow, perhaps, for a greater stock allocation than one might otherwise consider."
>>>>>Yes, except our house will exclude the long-short group.
"The future is unknown, and there are always problems and potential disasters, but I am more positive for stocks' long-term potential than bonds, for sure. You can be conservative in your stock selection, and you can be aggressive. And there are so many good managers that have done a decent job of limiting downside."
>>>>>Ah, yes; the future! I will not disagree that there are and will continue to be equity and bond sectors that will have there day to allow we investors to be in the right place at the right time. I am speaking only to the aspect of the positive; as we currently do not use etf's to "short" a market move, although this is a possible path in the future with a small percentage of our assets.
I will note, that living in Michigan; but not being involved directly with the auto industry and all of the small related supportive companies and businesses, I watched as the largest impact changes started in the mid-1980's with the auto industry. For whatever reasons, I can reflect that both the unions and auto companies appeared not to understand the changes taking place. To this day, our house has and continues to benefit from "watching" the unwind of the manufacturing sector in Michigan and similar states. Michigan and many similar states were already in a downturn and unwind much ahead of the market melt in 2008.
I/we at this house continue to attempt to use Michigan as an economic model of change with the resulting after-effects. The state still has some manfacturing, is still a large producer of various agricultural products and tourist still draws a lot of money. I use as much of what Michigan "was" and what it has and will continue to become to measure what we see in other states, the U.S. overall and the major developed countries of the world. Michigan, of course; can not print money and must balance a budget; so there are some factors that one can not directly relate or measure against other areas or governments.
But, finding the various and most complex factors that are affecting Europe, which in turn affects all of the other connected economies; and even to the extent of watching a state like California dance around its problems; we try to mesh all of this together to obtain an investment plan.
Our house remains less optimistic related to the continued unwind. And the unwind/overhang is not being allowed to unwind properly, in my opinion. I understand the grand thoughts and plans of the politicians for various programs; and some could actually allow for a slow unwind. I became age 64 this month; and I do not know that I will live to see anything in this country that will reflect in a familiar economic pattern as to what I have seen in my life.
As to investing and where to be. Yes, we all have our plan based upon what we are best suited to attempt to understand of a most complex investment world. Some of the positive gains of our investments will indeed come from the luck of being in the right place at the right time; although we may place some of this luck to the value of learned experiences and the resulting intuition.
The perversion of so many factors that affect our investments will continue. U.S. bond prices/yields are perverted by intervention of the FED, with the "hope" of folks buying or refinancing homes from the very low mortgage rates. Will the bond traders eventually force the hand of low interest rates. It is totally possible. They have other places in which to play as of today. The unemployment numbers will likely continue to be perverted, too. I fully expect to find unemployment rates to continue to move downward, and there will shouts of joy and grand speeches; but the newly employed will be at a much lower pay scale and so the gains will not be so grand for the consumer or economy.
Well, one could write a small book here about all of this, eh? Our house will attempt to preserve capital with the tough task of adjusting risk to stay ahead of the inflation creep.
Bob C., thank you for your efforts and continued input to all here, at MFO. We all become wiser from the mixing of thoughts.
Take care of you and yours,
Catch

Hi Flack and MJG ... Skeeter here.
Perhaps MJG targeted this somewhat towards me as I have been one that has used the seasonal strategy for a good number of years and posted and referenced to it frquently. It is also one that my late father used as far back into the 50's. For sure, it does not work every year ... but, it has worked more times than not. Over the past three years I have made more than enough to live off of from just investing alone ... not, counting my earned income. The subject strategy was a contributor to these returns. I agree it is not for everyone ... but, it works for me and I plan to continue to utilize it. Is it one I'd bet the farm on? Absouetly not. But, it is one that I plan to continue to put a certain percentage of my portfolio into each year ... and, by following the technicals that Flack teaches investors ... If it gets too tough and has moves against you, simply stated, just exit it. Save your capital to invest for another day.
I wish you both the very best with your investment endeavors ... and, thank you both for your contributions. From my perspective, we all learn from one another.
Have a Good Day and Good Investing,
Skeeter

Thank you for the response and a very interesting discussion of the Laudus fund.
I'm seeing new generations of alternative strategies appear for retail investors - in terms of managed futures products, there was the Rydex Managed Futures fund (not actively managed, positions changed only once a month), then the AQR Managed Futures fund (actively managed), now you have funds that allocate to hedge funds/commodity trading advisors (Mutual Hedge Frontier Legends, Grant Park Managed Futures).
Now, new generations do not mean that they're any good, but they offer the retail investor a product with much more flexibility and greater potential (emphasis on potential) to keep up with the market. Additionally, in terms of some "all-weather" strategies like managed futures, consistent (minor) returns. Arbitrage funds are another.
In terms of long/short funds or "market neutral" funds, I suppose it comes down to management, timing and many other issues. One (well, I) can also lean towards issues with funds going long/short on various fundamental metrics in a market that's less and less about fundamentals. The structure of a mutual fund also makes me wonder if a lot of these "hedge fund" like strategies are also difficult to consistently pull off to any great degree without the ability to trade heavily in the manner of many hedge funds (most of whom are also getting paid 2 and 20).
Marketfield (MFLDX) is one long-short fund that's done well given that it doesn't take the short element of the strategy quite as seriously and has demonstrated use of varied levels of shorting to dial up/down risk, whereas many funds in the category appear to desire (or be required) to have a consistently higher level of short positions. Again, timing, but it's done well so far and demonstrated a pretty strong ability to make macro bets and time risk exposure.
In terms of an actual hedge fund, Greenlight RE (GLRE) is a reinsurance company whose float is invested with David Einhorn's hedge fund, Greenlight Capital. It's a roundabout way of investing in a hedge fund, but more liquid than some of the other options. More managers are looking into this structure to try for stable money. Not a hedge fund, but another remarkably successful company with this structure is Fairfax Financial (FRFHF.PK), whose investments are run by successful value investor Prem Watsa (who bet against subprime in 2008, resulting in a positive return for Fairfax.)
I don't think one should have a massive portion of one's portfolio in alternative strategies and there are going to be funds that are gimmicks (many of which will likely get weeded out at some point, as some weirder ETFs have that either don't get interest or instances where people simply lose interest after the initial hype) or just plain mediocre, but I think there is a place for some of the better funds out there in one's portfolio to offer more loosely correlated returns and provide somewhat of a balance.

Reply to @scott:
Hi Scott,
Thank you for your information packed reply to my WSJ article reference on Hedge Fund-lite mutual fund alternatives. You certainly have studied mutual fund options in this arena. I’m sure many MFO participants will benefit from your insights.
I no longer invest in mutual fund Hedge Fund strategy simulators; their strategies are too complex and often too convoluted to satisfy my conservative mindset. I now prefer simple, transparent approaches that are easily understood. That was not the case a decade ago.
In the past, I seriously considered and actually purchased a fund that featured long and short position tactics. The fund that I owned for over five years was a Barr Rosenberg originated Laudus market neutral fund. Performance results were mixed; overall rewards disappointed; the approach was anchored in exotic analytical models that Rosenberg’s team developed to more automate the decision process. Timing for a fund employing a market neutral philosophy is a daunting task that not many have successfully conquered.
You may recall that Rosenberg was a mathematical wiz-kid who Peter Bernstein highlighted in his groundbreaking book “Capital Ideas”. Rosenberg integrated the concepts of Markowitz, Tobin, and Sharpe into realistic models for daily investment guidelines. In the 1970s, Rosenberg was a kingpin in risk management, both from an educational perspective and as an active money manager. BARRA is his invention and bears his name. He enjoyed great success, both professionally and personally.
After several iterations his surviving investment operation (AXA Rosenberg Group LLC) firm ran into a reporting transparency issue with Charles Schwab and suffered a setback in distribution and, especially, in public trust. That occurred a few years past with the Laudus Rosenberg Global Long/Short Equity (RMSIX) fund. The issue was some coding error that was not properly reported. I believe Barr Rosenberg is not formally engaged with the firms that he founded, and is essentially retired.
From a September 22 release titled “Axa’s Barr Rosenberg to Pay $2.5 Million SEC Fine, Is Banned From Industry” from the Bloomberg business news agency: “Axa Rosenberg Group LLC’s co- founder Barr M. Rosenberg agreed to pay $2.5 million to settle claims by the U.S. Securities and Exchange Commission, which accused him of securities fraud for concealing a coding error in his firm’s investment model.” He can easily afford the fine, but the ban certainly erodes and diminishes his stature as a financial founding father. Too bad.
I had abandoned the market neutral hedging concept a few years earlier. Timing both buys, sells, and shorts is just too challenging a chore. It just adds too many dimensions to the decision process, even when directed by a sophisticated model and coupled to a fast machine with ample computing power. I have never been impressed with the historical performance record delivered by the various market neutral approaches.
Once again, thank you for your well crafted and informative reply.
Best Wishes.

Hi Mark and good morning.
I beat you up this morning by about 30 minutes. It is now about 6:40 Eastern and the sun is now coming up over the Carolinas. I would say that the answer to your question is a simple one. Simply stated one’s equity allocation would be related to one’s tolerance for risk. Usually a capital presentation portfolio does have some equity in it about 10 to 20 percent. A conservative allocation would have about and up to the 40% range in equity. A moderate allocation would be one that has up to about 60% in equities and an aggressive allocation would have up to about 80% in equities. These are by my rule of thumb and the allocations will vary somewhat by brokerage house.
So again, it can be said, that ones tolerance for risk will determine one’s equity allocation within one’s portfolio. And, don’t forget cash … this will vary too based upon certain factors. And, with this bonds fill in the rest.
Have a good day and good investing,
Skeeter

Below are some hyperlinks (at least I hope they work) to pages to mutual fund estimated distributions. The name of the funds are in the hyperlink or in parenthesis.
http://www.quakerfunds.com/products_6_3_3.php
http://www.odysseyfunds.com/prices_and_performance/distribution_information.html
http://www.artisanfunds.com/distributions/current.cfm
http://www.oldmutualus.com/companies/templates/mf_perf.asp?couFlag=0&curFlag=0&assetID=19&affiliate=2&product=95&IsAIMR=0 (Acadian Funds)
http://www.tweedy.com/resources/library_docs/general/2011 Estimated Distributions 09-30-11.pdf
http://www.nuveen.com/Home/Documents/Viewer.aspx?fileId=49964
https://www.oppenheimerfunds.com/digitalAssets/Cap_Gains_Estimates_Consumer-ec6595bc-23fb-498c-99cd-0ccebe6e8698.pdf
http://individual.troweprice.com/public/Retail/Planning-&-Research/Tax-Planning/Dividend-Distributions
http://www.longleafpartners.com/pdfs/11CapGainEst.pdf
http://ga.natixis.com/us/investor/1250199163837/Capital+Gains+Update+2011
http://www.fpafunds.com/pdfs/2011_CG_Estimates.pdf
http://clipperfund.com/estimated_capital_gains
http://astonfunds.com/shareholders/distributions-capital-gains
https://www.principalfunds.com/investor/aboutus/news/article-093011-Capital-Gains-Estimates.htm
or https://www.principalfunds.com/investor/docs/MM3682-09.pdf
http://firsteaglefunds.com/downloads/all/Distribution estimates_publicwebsite2011 09 30.pdf
https://www.franklintempleton.com/funds/fund-capital-gain-distributions
or https://www.franklintempleton.com/share/pdf/lit/GOF_PAKCG.pdf

Those looking for actual hedge funds can find some "feeder funds" on the pink sheets, including Third Point Offshore (TPNTF.PK) and Brevan Howard Macro (BHMDF.PK), but those are traded funds and are EXTREMELY (!!!) thinly traded "foreign ordinaries" (they trade officially on the London market.) Additionally, Greenlight RE (GLRE on the nasdaq) is a reinsurance company that invests with David Einhorn's hedge fund, Greenlight Capital. So, it's a roundabout way to invest with Einhorn. A couple of other hedge funds looking for stable capital are also going the reinsurance route this year - Third Point and (I believe) SAC Capital. Bill Ackman will also be listing a fund, although it's yet to be seen where it will be listed.
In terms of alternative funds, one of the best long-short funds is Marketfield (MFLDX) and in terms of alternative strategies, Natixis offers a few fine offerings. I like Rydex's Long-Short Commodity Fund a bit as a supporting player, but otherwise am not terribly fond of the Rydex funds. Timing and modeling are issues not unique to alternative funds, as well.

A few years back I was looking for microcap funds. I purchased Pinnacle Value for my wife's IRA, and Perrit Emerging Opportunities for my own. It was good until the crash. After a couple years, I moved my Perrit fund to Royce Microcap (ryotx). Ryoce lost much less than PREOX during the crash.
Although PREOX has gained more than the Royce fund since the bottom, as of April/May of this year the Royce fund nearly regained everything it lost. PREOX was still some 20% below its peak. I am happy to be with Royce over PREOX. Had I stayed in, I would be ahead because PREOX has been beating RYOTX the past 2 years,but I don't worry as much. As I am 60, I prefer to avoid the wilder swings.
Pinnacle Value has shown steady gains in the same period, gaining ~ 11% since Sept. 2007. What I expect of it is that it will beat inflation and money market returns, with relatively little risk.