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3
HUSSMAN STRATEGIC INTERNATIONAL FUND
Comparison of the Change in Value of a $10,000 Investment in
Hussman Strategic International Fund versus the MSCI EAFE Index (Unaudited)
Average Annual Total Returns
For Periods Ended June 30, 2012
1 Year
Since
Inception
(b)
Hussman Strategic International Fund
(a)(c)
(6.14%) 0.05%
MSCI EAFE Index
(d)
(13.83%) (1.02%)
(a)
Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares.
(b)
The Fund commenced operations on December 31, 2009.
(c)
The Fund’s expense ratio was 1.93% for the fiscal year ended June 30, 2012. The expense ratio as disclosed in the November
1, 2011 prospectus was 2.08%.
(d)
The MSCI EAFE (Europe, Australasia, and Far East) Index is a free float weighted capitalization index that is designed to
measure the equity market performance of developed markets, excluding the U.S. and Canada. As of June 30, 2012, the
MSCI EAFE Index consisted of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The Fund may not invest in all of the countries
represented in the MSCI EAFE Index and may invest in securities that are not included in the MSCI EAFE Index.
MSCI EAFE Index
Hussman Strategic International Fund (HSIEX)
$10,012
$9,747
$8,000
$8,500
$9,000
$9,500
$10,000
$10,500
$11,000
$11,500
$12,000
Past performance is not predictive of future performance.
12/31/09
3/31/10
6/30/10
9/30/10
12/31/11
3/31/12
6/30/12
12/31/10
3/31/11
6/30/11
9/30/11
4
HUSSMAN STRATEGIC DIVIDEND VALUE FUND
Comparison of the Change in Value of a $10,000 Investment in
Hussman Strategic Dividend Value Fund versus the Standard & Poor’s 500 Index
(a)
(Unaudited)
Total Return
For Period Ended June 30, 2012
Since
Inception
(c)
Hussman Strategic Dividend Value Fund
(b)(d)
(0.41%)
S&P 500 Index
2.26%
(a)
Hussman Strategic Dividend Value Fund invests primarily in securities of U.S. issuers but may invest in stocks of foreign
companies. There are no restrictions as to the market capitalization of companies. The S&P 500 Index is believed to be the
appropriate broad-based securities market index against which to compare the Fund’s long-term performance. However,
the Fund invests in securities that are not included in the S&P 500 Index, and may vary its exposure to market fluctuations
depending on market conditions.
(b)
The Fund’s return does not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption
of Fund shares.
(c)
The Fund commenced operations on February 6, 2012.
(d)
The Adviser has contractually agreed to defer its fee and/or to absorb or reimburse a portion of the Fund’s expenses until at
least February 1, 2015 to the extent necessary to limit the Fund’s ordinary operating expenses to an amount not exceeding
1.25% annually of the Fund’s average daily net assets. The gross expense ratio as disclosed in the February 1, 2012
prospectus was 2.25% (excluding acquired fund fees and expenses).
S&P 500 Index
Hussman Strategic Dividend Value Fund (HSDVX)
$10,226
$9,959
$9,500
$10,000
$10,500
$11,000
Past performance is not predictive of future performance.
2/6/12
6/30/12
2/29/12
3/31/12
5/31/12
4/30/12






5
The Hussman Funds
Letter to Shareholders
August 17, 2012
Dear Shareholder,
For the fiscal year ended June 30, 2012, Strategic Growth Fund lost -5.97%,
Strategic Total Return Fund achieved a total return of 4.14%, and Strategic International
Fund lost -6.14%. For the period from February 6, 2012 through June 30, 2012,
Strategic Dividend Value had a total return of -0.41%.
From the inception of Strategic Growth Fund on July 24, 2000 through June 30,
2012, the Fund achieved an average annual total return of 5.55%, compared with
an average annual total return of 1.29% for the S&P 500 Index. An initial $10,000
investment in the Fund on July 24, 2000 would have grown to $19,043, compared
with $11,659 for the same investment in the S&P 500 Index. The deepest loss
experienced by the Fund since inception was -22.31%, compared with a maximum
loss of -55.25% for the S&P 500 Index. To put this difference in perspective, the S&P
500 Index had to advance by fully 73.61% from its 2009 low simply to reduce its loss
from -55.25% to -22.31%. The mathematics of compounding are brutal for large
losses, but are reasonably forgiving for more contained losses.
From the inception of Strategic Total Return Fund on September 12, 2002 through
June 30, 2012, the Fund achieved an average annual total return of 6.82%, compared
with an average annual total return of 5.37% for the Barclays U.S. Aggregate Bond
Index. An initial $10,000 investment in the Fund on September 12, 2002 would
have grown to $19,082, compared with $16,698 for the same investment in the
Barclays U.S. Aggregate Bond Index. The deepest loss experienced by the Fund since
inception was -11.52%, compared with a maximum loss of -5.08% for the Barclays
U.S. Aggregate Bond Index.
From the inception of Strategic International Fund on December 31, 2009
through June 30, 2012, the Fund achieved an average annual total return of 0.05%,
compared with an average annual total return of -1.02% for the MSCI EAFE Index.
An initial $10,000 investment in the Fund on December 31, 2009 would have grown
to $10,012, compared with $9,747 for the same investment in the MSCI EAFE Index.
These returns were achieved with about one quarter of the volatility of the returns for
the EAFE Index. During this period, the EAFE Index has declined by at least 19.61%
on four separate occasions. In May 2010, the EAFE Index fell 19.61%. In October
2011, the EAFE Index fell 26.48%, recovered about half of that loss, then fell again
by 25.59% from its prior peak. In June 2012, the EAFE Index fell 24.80%. Since the
inception of Strategic International Fund, its maximum decline has been -9.59%.






6
The Hussman Funds
Letter to Shareholders (continued)
From the inception of Strategic Dividend Value Fund on February 6, 2012 through
June 30, 2012, the Fund achieved a cumulative total return of -0.41%, compared
with a total return of 2.26% for the S&P 500 Index. An initial $10,000 investment
in the Fund on February 6, 2012 would be valued at $9,959 on June 30, 2012,
compared with $10,226 for the same investment in the S&P 500 Index. The deepest
loss experienced by the Fund since inception was -2.82%, compared with a maximum
loss of -9.58% for the S&P 500 Index.
Each of the Hussman Funds with at least a year of operating history has
outperformed its respective benchmark since Fund inception, and our risks have
remained well-contained. Still, the most recent market cycle has been unusually
challenging. In recent years, the stock market has experienced a convulsive pattern of
panic declines and liquidity-fueled relief rallies. In my view, the failure of the U.S. and
other countries to meaningfully restructure bad debt following the 2008-2009 credit
crisis left the global economy in a fragile recovery where job creation, aggregate
demand, and income growth have been persistently sluggish.
In the face of repeated economic softening, central banks have responded
with massive monetary interventions. These interventions have encouraged short-
lived bursts in demand and employment, but only by flooding the global economy
with near-zero interest money, prompting investors to reach for risky assets as an
alternative, with little regard for valuations. The combination of elevated valuations,
overextended price trends, increasing recession risk, and other factors has contributed
to our defensive stance in both U.S. and international equities, where our estimates of
prospective return/risk have become unusually negative in recent months.
In the bond market, the combination of aggressive monetary easing and
accelerating difficulties in Europe have supported significant demand for U.S.
Treasuries and corporate bonds, producing low yields that offer little in the way
of long-term return prospects. Given the already depressed menu of prospective
returns, the temptation to reach for yield by taking greater maturity risk or credit
risk would amount to speculation. For that reason, Strategic Total Return Fund
has maintained a conservative exposure to these risks. While this has resulted in
somewhat lower total returns in the Fund over the most recent fiscal year, compared
with the Barclays U.S. Aggregate Index, we believe that stronger long-term returns
can be achieved by selectively accepting interest-rate and credit risk when it is more
appropriately priced.






7
The Hussman Funds
Letter to Shareholders (continued)
The Hussman Funds
Letter to Shareholders (continued)
Notes on an extraordinary market cycle
As disciplined investors, we try to validate every aspect of our investment strategy
in historical data. The last several years have been trying in that respect. As a result
of conditions related to the global credit crisis of 2008-2009, we have implemented
two changes to our hedging approach. One of these resulted from a proactive effort
to make our approach more robust to extreme outcomes, even though our existing
approach was performing quite well in real time. A second, smaller change was
remedial, to reduce the cost of hedging with index put options in an environment
where major central bank interventions have become commonplace.
Undoubtedly, our largest challenge emerged during the credit crisis in 2008-
2009. While we had anticipated much of that crisis, and avoided much of the market’s
losses as a result, it became clear by late-2008 that the events that were unfolding
were outside of anything seen in the post-war period on which our existing methods
were based. At that time, the existing hedging model used by Strategic Growth Fund
was performing quite well in real-time. In fact, one dollar invested in Strategic Growth
Fund at inception had, by March 2009, grown to four times the value of a dollar
invested in the S&P 500 Index. The Fund was ahead of the S&P 500 Index, with
dramatically lower risk, on every standard and non-standard performance horizon.
Still, I was becoming concerned about whether the market’s return/risk prospects
should be estimated from the standpoint of post-war data or Depression-era data.
Taking our existing hedging methods to Depression-era data, I found that they
performed acceptably from the standpoint of overall returns, with much smaller losses
than a passive buy-and-hold approach, but they still allowed several very deep interim
losses even when trend-following methods were emphasized. The stock market lost
about 85% of its value in the Depression (requiring a seven-fold gain to break-even).
By 1931, even after the stock market had declined to very attractive valuations from
a post-war perspective, it still lost another two-thirds of its value in less than a year. I
viewed the potential losses to be intolerable, and worked to solve that “two data sets”
problem.
I insisted that our hedging approach should perform well even in the most extreme
conditions. The simple phrase for this is “stress testing,” but that phrase makes the
effort seem very clean and clinical, and understates the uncertainty of that period.
After testing many alternative approaches, our requirements were satisfied when we
developed much more robust “ensemble methods” to estimate market return and risk
prospects. Unfortunately, this was achieved only after missing a substantial rebound
in the stock market.






8
The Hussman Funds
Letter to Shareholders (continued)
More recently, we introduced a smaller change in our hedging approach, by
restricting the set of periods in which Strategic Growth Fund establishes “staggered
strike” hedge positions (which raise the strike price of our index put options to protect
more strongly against market weakness). In an environment where central banks
have attempted to provide the equivalent of free “put options” to investors, paying
additional premiums for real ones resulted in a loss in the value more frequently than
would have occurred in the past. In Strategic Growth Fund, this time-decay resulted
in a modest but persistent tendency of the Fund to decline during extended liquidity-
driven market advances. The additional restrictions reserve our most defensive stance
for conditions that have historically been associated with awful market outcomes,
without compromising the returns that those positions have typically contributed
over the complete market cycle. As I have noted in the Hussman Funds weekly
commentaries, conditions since March 2, 2012 have been extreme enough to survive
these restrictions, and we have established a defensive stance in recent months that I
do not expect us to require frequently or maintain indefinitely.
The Hussman Funds seek to achieve strong returns over the complete market
cycle (bull market and bear market combined), with smaller periodic losses than
experienced by a passive “buy-and-hold” investment approach. Given this goal, it
is important to evaluate the performance of Strategic Growth Fund from a full cycle
perspective:


Period


Cycle
HSGFX Return
Cumulative,
Annual
SPX Return
Cumulative,
Annual
HSGFX
Deepest
Loss
SPX
Deepest
Loss
07/24/2000 -
10/09/2007
Bull Peak to
Bull Peak
119.79%,
11.54%
20.70%,
2.64%
-6.98% -47.41%
10/09/2002 -
03/09/2009
Bear Trough to
Bear Trough
37.95%,
5.14%
-1.25%,
-0.20%
-21.45% -55.25%
10/09/2007 -
08/17/2012
Bull Peak to
Bull Peak
-17.05%,
-3.78%
0.90%,
0.18%
-22.31% -55.25%
Cycle dates other than Fund inception date (07/24/2000) correspond to peaks and troughs of Standard &
Poors 500 Index (SPX), using total returns.
As a result of the significant challenges we’ve faced during the most recent
market cycle, the cumulative shortfall of Strategic Growth Fund versus the S&P 500
Index during this cycle has been nearly 18% (-3.95% annually). Meanwhile, the Fund
has experienced a fraction of the loss endured by the S&P 500 during major declines.
Undoubtedly, performance windows that include 2009 through early-2010 will carry
the ghost of our “miss” during that period for some time. We don’t suggest that investors






9
The Hussman Funds
Letter to Shareholders (continued)
The Hussman Funds
Letter to Shareholders (continued)
should overlook that period, but it is important to recognize that our defensiveness
reflected the necessity of stress-testing our methods against Depression-era data, and
does not reflect the stance that investors should expect the Fund to adopt in future
cycles, even under identical conditions and evidence.
Due to the Fund’s ability to hedge potential market declines, performance
comparisons to the S&P 500 are often very favorable toward the Fund when the
performance window comprises a peak-to-trough decline for the S&P 500.
Conversely, performance comparisons are often unfavorable toward the Fund when
the performance window comprises a trough-to-peak advance for the S&P 500.
For example, measured over the peak-to-trough period from July 24, 2000
through March 9, 2009, Strategic Growth Fund achieved a cumulative total return of
105.57% (8.71% annually) compared with a cumulative loss for the S&P 500 Index
of -45.99% (-6.89% annually). In contrast, measured over the trough-to-peak period
from October 9, 2002 through August 17, 2012, Strategic Growth Fund achieved
a cumulative total return of 22.34% (2.07%) compared with a cumulative gain for
the S&P 500 Index of 122.65% (8.46%). In both cases, return comparisons can be
distorted by the choice of performance window. Measuring across market cycles,
either peak-to-peak or trough-to-trough, helps to minimize these effects. Even over
shorter horizons, performance comparisons are likely to be less distorted by evaluating
performance between two intermediate-term market peaks or two intermediate-term
market troughs, rather than choosing a period that comprises a trough-to-peak
market advance or a peak-to-trough market decline.
Portfolio composition
As of June 30, 2012, Strategic Growth Fund had net assets of $4,936,808,483,
and held 116 stocks in a wide variety of industries. The largest sector holdings as a
percentage of net assets were health care (33.1%), consumer discretionary (24.1%),
consumer staples (17.5%), and information technology (17.3%). The smallest sector
weights were in energy (3.4%), telecommunications (1.4%), financials (1.0%), and
materials (0.8%).
Strategic Growth Fund’s holdings of individual stocks as of June 30, 2012 were
valued at $4,866,437,440. Against these stock positions, the Fund held 26,500
option combinations (long put option/short call option) on the S&P 500 Index, 8,000
option combinations on the Russell 2000 Index and 2,000 option combinations on
the Nasdaq 100 Index. Each option combination behaves as a short sale on the
underlying index, with a notional value of $100 times the index value. On June 30,
2012, the S&P 500 Index closed at 1,362.16, while the Russell 2000 Index and the






10
The Hussman Funds
Letter to Shareholders (continued)
Nasdaq 100 Index closed at 798.49 and 2,615.72, respectively. The Fund’s total
hedge therefore represented a short position of $4,771,660,000, an amount equal
to 98.05% of the dollar value of the Fund’s long investment positions in individual
stocks.
Strategic Growth Fund’s hedging positions are intended to provide a hedge
against the effect of general market fluctuations on the Fund’s portfolio during periods
where we view the expected return/risk profile of the stock market to be unfavorable.
However, the Fund’s hedging strategy does not eliminate market risk or provide
complete protection against adverse movements in the prices of individual securities
or sectors in which the Fund invests. The Fund may experience a loss even when it is
“fully hedged” if the returns of the stocks held by the Fund fall short of the returns of
the securities and financial instruments used to hedge or if the exercise prices of the
Fund’s call and put option hedges differ, so that the combined loss on these options
during a market advance exceeds the gain on the underlying stock index.
Though the performance of Strategic Growth Fund’s diversified portfolio cannot
be attributed to any narrow group of stocks, the following holdings achieved gains
in excess of $20 million during the fiscal year ended June 30, 2012: Biogen Idec,
Panera Bread, AutoZone, Amgen, and eBay. Holdings with losses in excess of $20
million during this same period were BMC Software, Research in Motion, Dell, Best
Buy, Endo Health Solutions, Illumina, SunPower, and First Solar.
Strategic Growth Fund continues to be very manageable, with substantial
flexibility to respond to changing market conditions, low market impact of trading,
and commission costs well below estimated industry averages. The Fund’s positions
in individual stocks generally represent less than a single day’s average trading
volume in those securities. Even during the volatile and often low-volume trading of
the past year, the Fund’s average market impact of trading (the difference between
the last sale at the time of order placement and the actual price at which the Fund’s
stock transactions are executed) has been a fraction of 1%, and the Fund’s average
commission on its stock transactions was 1.3 cents per share, compared with industry
averages estimated to be several times that amount. Finally, the Fund’s expense ratio
during its fiscal year ended June 30, 2012 was 1.05%. According to recent statistics,
the average expense ratio among the limited group of mutual funds pursuing similar
strategies and classified as “long-short” by Morningstar is 1.68%.






11
The Hussman Funds
Letter to Shareholders (continued)
As of June 30, 2012, Strategic Total Return Fund had net assets of $2,621,064,847.
Treasury notes, Treasury bonds, Treasury Inflation-Protected Securities (TIPS) and
money market funds represented 83.4% of the Fund’s net assets. Shares of exchange-
traded funds, precious metals shares, energy shares and utility shares accounted for
1.5%, 13.5%, 0.7% and 0.9% of net assets, respectively.
In Strategic Total Return Fund, during the fiscal year ended June 30, 2012,
portfolio gains in excess of $10 million were achieved in U.S. Treasury Note (1.75%,
due 5/31/2016), U.S. Treasury Note (2.125%, due 8/15/2021), Randgold Resources
ADR, and Newmont Mining. Holdings with losses in excess of $5 million during this
same period were Barrick Gold and Agnico-Eagle Mines.
As of June 30, 2012, Strategic International Fund had net assets of $87,719,728
and held 106 stocks in a wide variety of industries. The largest sector holdings as a
percent of net assets were in consumer discretionary (10.6%), health care (10.4%),
consumer staples (9.4%), telecommunications (9.1%), information technology (8.5%),
and industrials (5.6%). The smallest sector weights were in utilities (3.0%), energy
(1.8%) and materials (1.6%). Shares of exchange-traded funds (ETFs) and money
market funds accounted for 6.3% and 28.8% of net assets, respectively. The total
value of equities and exchange-traded funds held by the Fund was $58,094,909.
In order to hedge the impact of general market fluctuations, as of June 30, 2012
Strategic International Fund held 150 option combinations (long put option/short
call option) on the S&P 500 Index, and was short 750 futures on the Euro STOXX 50
Index and 150 futures on the FTSE 100 Index. The combined notional value of these
hedges was $55,015,858, an amount equal to 94.7% of the value of equity and
ETF shares held by the Fund. When the Fund is in a hedged investment position, the
primary driver of Fund returns is expected to be the difference in performance between
the stocks owned by the Fund and the indices that are used to hedge.
While Strategic International Fund is widely diversified and its performance is
affected by numerous investment positions, the hedging strategy of the Fund was
primarily responsible for the reduced sensitivity of the Fund to market fluctuations
from the Fund’s inception through June 30, 2012. Individual equity holdings having
portfolio gains in excess of $175,000 during the fiscal year ended June 30, 2012
included Bunzl, Alimentation Couche-Tard, Next plc, and Novo Nordisk A/S. Holdings
with portfolio losses in excess of $300,000 during this same period included Yamada
Denki, Mobistar, Abengoa, Enel S.P.A, Telecom Argentina, and Norbert Dentressangle.






12
The Hussman Funds
Letter to Shareholders (continued)
As of June 30, 2012, Strategic Dividend Value Fund had net assets of
$4,998,194, and held 67 stocks in a wide variety of industries. The largest sector
holdings as a percentage of net assets were consumer staples (15.4%), health care
(13.5%), consumer discretionary (10.7%), and information technology (9.1%). The
smallest sector weights were in energy (5.9%), industrials (2.4%), materials (2.0%),
and financials (1.1%).
Strategic Dividend Value Fund’s holdings of individual stocks as of June 30,
2012 were valued at $3,002,575. Against these stock positions, the Fund also held
10 option combinations (long put option/short call option) on the S&P 500. The
combined notional value of these hedges was $1,362,160, an amount equal to
45.4% of the value of equity investments held by the Fund.
Supplementary information including quarterly returns and equity-only performance
is available on the Hussman Funds website: www.hussmanfunds.com.
Present conditions
In recent months, our measures of leading economic pressures have indicated
the likelihood of an oncoming U.S. recession. Our view is based on the analysis of
leading/coincident/lagging indicators, as well as more statistical methods that extract
“unobserved components” from a broad range of economic indicators. The weakness
developing in the most leading components of U.S. data closely reflects accelerating
weakness in European data. European output continues in its steepest contraction
since 2009.
In my view, the repeated monetary interventions of recent years have been an
attempt to contain the unfinished effect of the 2008-2009 economic downturn. I
believe that the global economy is moving into another recession because policy-
makers have not effectively addressed the debt problems that produced the first one,
leaving the economy unusually vulnerable to aftershocks.
To understand where we are, it is helpful to understand how we got here. In
the U.S., lawmakers repealed the Glass-Steagall Act in 1999, removing the firewall
between traditional banking and more speculative activities, and allowing those
activities to have the effective protection of the U.S. government. This combination,
in my view, helped to encourage speculation that resulted in a U.S. housing bubble
and subsequent mortgage crisis. In Europe, a currency union was created without
adequate control on the government deficits of individual countries, allowing
peripheral European countries to run large budget deficits and finance them at the
same interest rates as their stronger neighbors. The global recession and collapse