the end of qe as we know it

7/28/2019 The End of QE as We Know It

1/66

DoubleLineMultiAssetGrowthFund

JeffShermanPortfolioManager,

MultiAssetGrowth

,


2/66

Disclosures

MultiAssetGrowthFund

Investmentsindebtsecuritiestypicallydecreaseinvaluewheninterestratesrise.Thisriskisusuallygreaterforlongertermdebt

securities.InvestmentsinAssetBackedandMortgageBackedSecuritiesincluderisksthatinvestorsshouldbeawareofsuchascredit

risk,prepaymentrisk,possibleilliquidityanddefault,aswellasincreasedsusceptibilitytoadverseeconomicdevelopments.TheFund

investsinforeignsecuritieswhichtypicallyinvolvegreatervolatilityandpolitical,economicandcurrencyrisksthendoinvestmentsin

domesticsecuritiesandtheissuersofwhicharetypicallysubjecttodifferentaccountingstandards.Theserisksaregreater for

investmentsinemergingmarkets.Investmentsinlowerratedandnonratedsecuritiespresentagreaterriskoflosstoprincipal and

interestthanhigherratedsecurities.TheFundmayinvestinsecuritiesrelatedtorealestate,whichmaydeclineinvalueasa resultof

. , , , ,

managementandtheriskthatapositioncouldnotbeclosedwhenmostadvantageous.Investinginderivativescouldlosemorethan

theamountinvested.Commoditylinkedderivativeinstrumentsmayinvolveadditionalcostsandriskssuchaschangesincommodity

indexvolatilityorfactorsaffectingaparticularindustryorcommodity,suchasdrought,floods,weather,livestockdisease,embargoes,

tariffsand

international

economic,

political

and

regulatory

developments.

Investing

in

derivatives

could

lose

more

than

the

amount

invested.Equitiesmaydeclineinvalueduetobothrealandperceivedgeneralmarket,economic,andindustryconditions.The Fundis

nondiversified,whichmeansthatitmayconcentrateitsassetsinasmallernumberofissuersthanadiversifiedfund.

1


3/66

FundOfferings

RetailandInstitutionalClass

Retail Inst.

Ashare Ishare

Ticker DMLAX DMLIX

MaximumSales

Charge 4.25%1 None

MinInvestment $2,000 $100,000

MinIRAInvestment $500 $5,000

ross xpense a o . .

NetExpenseRatio2 1.60% 1.35%

1. Breakpointsare

available.

Contingent

deferred

sales

load

of

up

to

0.75%

applies

in

certain

circumstances

for

A

shares.

Please

see

the

prospectus

for

additional

details.

2. TheAdviserhascontractuallyagreedtoreimburseexpensesthroughJuly24,2013.

TheFundsinvestmentobjectives,risks,chargesandexpensesmustbeconsideredcarefullybefore

investing.Theprospectuscontainsthisandotherimportantinformationabouttheinvestment

com an and it ma be obtained b callin 1 877 3546311 1 877 DLine11 or visitin

www.doublelinefunds.com.Read

it

carefully

before

investing.

Performancedataquotedrepresentspastperformance;pastperformancedoesnotguaranteefutureresults.

PastPerformancedoesnotguaranteefutureresults.Indexperformanceisnotillustrativeoffundperformance.Aninvestmentcannot

bemadedirectlyinanindex.ForstandardizedperformanceoftheMultiAssetGrowthFund,currenttothemostrecentquarterend,

. . .Opinionsexpressedassubjecttochangeatanytime,arenotforecastsandshouldnotbeconsideredinvestmentadvice.

WhiletheISharesarenoload,managementfeesandotherexpensesstillapply.Pleaserefertotheprospectusforfurtherdetails.

QuasarDistributors,

LLC,

Distributor.

2


4/66

Performance

DoubleLineMulti

Asset

Growth

Fund

Quarter

Ending

June

30,

2013

QuarterEnd

June30,20132Q2013

1YearAnnualized

Since

InceptionAnnualized

(122010to

63013)

AsofJune30,2013 IShare AShare

GrossSEC30DayYield 1.67% 1.37%

NetSEC30DayYield 1.76% 1.45%

s are . . .

A

share(NoLoad)

1.00%

0.80% 3.15%

Ashare(WithLoad) 5.21% 5.02% 1.24%

AsofJune30,2013 IShare AShare

GrossExpenseRatio 1.77% 2.02%

NetExpenseRatio 1.35% 1.60%

Performancedataquotedrepresentspastperformance;pastperformancedoesnotguaranteeoffutureresults. Theinvestmentreturnandprincipal

valueofaninvestmentwillfluctuatesothataninvestor'sshares,whenredeemed,maybeworthmoreorlessthantheiroriginal cost.Current

performanceoftheFundmaybelowerorhigherthantheperformancequoted.Performancedatacurrenttothemostrecentmonthendmaybe

obtainedbycalling2136338200orbyvisitingwww.doublelinefunds.com.

PerformancedatashownreflectstheClassAmaximumsaleschargeof4.25%.TheFundimposesaDeferredSalesChargeof0.75%onpurchasesof

1 million or more o Class A shares i redeemed within 18 months o urchase. The Fund im oses a Redem tion Fee o 1.00% on all share classes i

sharesare

sold

within

90

days

of

purchase.

Performance

data

does

not

reflect

the

deferred

sales

charge

or

the

redemption

fee.

If

it

had,

returns

wouldbereduced.* TheAdvisorhascontractuallyagreedtoreimburseexpensesthroughJuly24,2013.

Investmentperformancereflectsfeewaiversineffect.Intheabsenceofsuchwaiversineffect.Intheabsenceofsuchwaivers, totalreturnwouldbereduced.

3


5/66


6/66

DoubleLineMultiAssetGrowthFund

JeffSherman

PortfolioManager,

MultiAssetGrowth

,


7/66

GlobalUpdate"Idon'twanttogofromWildTurkeyto'ColdTurkey'overnight,"

RichardFisher,PresidentFederalReserveBankofDallas

6

Source:http://www.cnbc.com/id/100839506


8/66

WorldGDP

7

Source:TheEconomistasofDecember31,2012,TheBigPicture:http://www.ritholtz.com/blog/2012/06/10thursdayamreads34/

GDP=GrossDomesticProduct.Themonetaryvalueofallthefinishedgoodsandservicesproducedwithinacountrysbordersina specifictimeperiod,butcalculated

onanannualbasis.

RichCountries=DevelopedCountriesincludingUS,UK,JapanandEurope.

BRIC=Brazil,Russia,IndiaandChina.

OtherEmergingCountries=SouthAmerica,IndonesiaandAsia(notincludingChina).


9/66

GlobalGDPForecastsYearToDate2013throughJune30,2013(%ChangeonPreviousYear)

8GDP=Gross

Domestic

Product;

IMF

=International

Monetary

Fund

Source:TheEconomist


10/66

OECDG7InflationExcludingJapanJanuary1,1994throughMay31,2013

3.25

3.75

2.75

2.25

1.75

0.75

.

OECD=Organization

for

Economic

Co

Operation

and

Development;

G7

=major

seven

countries

Canada,

France,

Germany,

Italy,

Japan, the

United

Kingdom,

andtheUnitedStates;CPI=ConsumerPriceIndex. Seriesisanarithmeticaverageofthesixcountries.

Source:Bloomberg

9


11/66

HeadlineCPI SelectedCountriesAsofMay31,2013(%YearoverYear)

2.5

3

2 2%inflationtarget

1

1.5

0

0.5

0.5

Japan Greece Swiss Ireland Canada Portugal France Italy US Germany Spain UK

2%inflationtargetisauniversallyacceptedEconomisttargetrateforahealthyeconomy.TheUSFederalReservedoestarget a2%inflationrate.Othercountries

representedmayvaryslightlyfromthistarget.

CPI=Consumer

Price

Index;

y/y

=year

over

year

Source:Bloomberg10


12/66

PIIGSGDPGrowth1st Quarter1998through1st Quarter2013

20%

Eurozone Portugal Ireland Italy Greece Spain

10%

nge(SA)

rch31,

201

3

5%

wth

YoY%Cha

98t

hroughMa

0%

GDPGr

March31,

1

10%

PIIGS=Portugal,

Italy,

Ireland,

Greece

and

Spain;

GDP

=Gross

Domestic

Product

Source:Bloomberg,DoubleLineCapital11


13/66

PIIGSYieldsSpreadsRelativetoGermanBundsJanuary1,2010throughJuly9,2013

35%

40%

d

Portugal Italy Ireland Greece Spain

30%

toGermanBu

y09,

2013

20%

btY

ieldSprea

010throughJul

10%

15%

arSovereignD

January01,

2

0%

5%10

Y

PIIGS=Portugal,

Italy,

Ireland,

Greece

and

Spain

Source:Bloomberg,DoubleLineCapital12


14/66

EuropeisStartingtoShowSomeSignsofBottomingEurozone ManufacturingPMIUK(purple);Switzerland(Red);Germany(White);

Italy

(Green);

France

(Yellow)

Germany

13Source:

BloombergPMITMGEIndex=PurchasingManufacturersIndex(PMI).PMIisanindicatoroftheeconomichealthofthemanufacturingsectorinthevariouscountriesshown.

Youcannotinvestdirectlyinanindex.


15/66

HighUnemploymentShouldKeep

the

ECB

On

An

Easing

Path

Germany

14ECB=European

Central

Bank;

EHUPEU

Index

=The

European

Union

Unemployment

rate

Index


Source:Bloomberg


16/66

Eurozone UnemploymentDecember31,1998throughMay31,2013

30Portugal Ireland Italy Greece Spain Germany Eurozone

20

25

tRate

ay31,

201

3

15

Unemployme

1998through

10

Eurozon

December31,

0

5

Source:Bloomberg,DoubleLineCapital 15


17/66

Eurozone UnemploymentUnder25YearsofAgeDecember31,1998throughMay31,2013

60

70

50

ploymentRate

May31,20

13

30

40

rAge25Unem

,1998through

20

EurozoneUnd

December3

0

10

Portugal Ireland Italy Greece Spain Germany Eurozone

Source:Bloomberg,DoubleLineCapital 16


18/66

BankofJapanBalanceSheetAssetsJuly1,1997toMay31,2013

180

120

140

n

80

100

TrillionsofY

40

60

Germany

0

20

17

Source:Bloomberg,DoubleLine Capital


19/66

JapaneseYen(JPY)SuffersDepreciation

Germany

18

Source:Bloomberg

JPY=Japanese

Yen

is

the

official

currency

of

Japan.

The

market

quote

is

the

number

of

yen

per

US

dollar.

It

is

an

independent, free

floating

currency.


20/66

Japanisstartingtoshowsignsoflife:

Japan

Nomura

Seasonal

PMI

Germany

19Source:Bloomberg

SEASPMI=TheNomura/JMMAPurchasingManagersIndex(PMI)isacompositeindicatordesignedtoprovideanoverallviewofactivityinthemanufacturingsector.



21/66

Japanisstartingtoshowsignsoflife:

Japan

Consumer

Confidence

Index

Germany

20Source:Bloomberg

JCOMSHCF=ConsumerConfidenceIndexinJapan.Measureshouseholdviewsoncurrentbuyingconditions.



22/66

EmergingMarketsPerformanceJanuary1,2013 July5,2013

10

15

20MSCIIndicesEmergingmarketshavestruggled,draggeddownbycommodityproducers

5

0

5

ormance(%

)

20

15

10

Cu

mulativePerf

35

30

25 DevelopedMarkets

EmergingMarkets

EmergingMarkets,commodityproducers

Source:Bloomberg,MorganStanleyCapitalInternational

eve ope mar e s nc u e , , apanan urope.

The MSCIEmergingMarketsIndex isafreefloatadjustedmarketcapitalizationindexthatisdesignedtomeasureequitymarketperformanceofemergingmarkets.The MSCI

EmergingMarketsIndex consistsofthefollowing21emergingmarketcountryindices:Brazil,Chile,China,Colombia,CzechRepublic,Egypt,Hungary, India,Indonesia, Korea,

Malaysia,Mexico,Morocco,Peru,Philippines,Poland,Russia,SouthAfrica,Taiwan,Thailand,andTurkey*.

TheMSCI

Emerging

Markets

Commodity

Producers

Indices

are

free

float

adjusted

market

capitalization

indices

designed

to

reflect

the

performance

of

listed

commodity

producersinemergingmarketsacrossthreeindustry(orsubindustry)categoriesasdefinedbythe GlobalIndustryClassificationStandard(GICS): energy,metalsand

agriculture.

21


23/66

ChineseRealGDPYoY Change

Germany

22GDP

=Gross

Domestic

Product;

YoY =

year

over

year


Source:Bloomberg


24/66

PBoC isTighteningInterbankLending

Germany

23PBoC =PeoplesBankofChina;SHBA3M5Index=SHIBOR3Month5Dayaverage.ItsthenationalinterbankrateinChina.CINROP7DIndex=theChineseForeignExchange

tradeover

the

past

7days,

subject

to

aone

week

lag.


Source:Bloomberg


25/66

ShanghaiCompositeEquityIndex

Germany

24TheShanghaiStockExchangeCompositeIndexisacapitalizationweightedindex.TheindextracksthedailyperformanceofallAsharesandBshareslistedontheShanghai

StockExchange.

The

index

was

developed

on

December

19,1990

with

abase

value

of

100.


Source:Bloomberg


26/66

U.S.Update Easierfinancialconditionswillpromoteeconomicgrowth.Forexample,lower

mortgagerateswillmakehousingmoreaffordableandallowmore

homeownersto

refinance.

Lower

corporate

bond

rates

will

encourage

investment.Andhigherstockpriceswillboostconsumerwealthandhelp

ncreasecon ence,w c cana sospurspen ng. ncrease spen ngw

leadtohigherincomesandprofitsthat,inavirtuouscircle,willfurther

support

economic

expansion.

[Emphasis

Added]

BenS.BernankeNovember3,2010

25

Source:http://www.washingtonpost.com/wp dyn/content/article/2010/11/03/AR2010110307372.html


27/66

NewsFlowConcerningTaperingandQESeptember28,2011throughJuly5,2013

26Source:Bloomberg

Tapering=Agradualdecreaseorslowing.Inthiscase,itsthegradualslowingofQuantitativeEasing(QE)programbytheFederalReserve.Thechartillustratedthenewsrelated

storiesrelatedtoQEandTaperingofthecurrentbondbuyingprogram.


28/66

FederalFundsRateProjections

Source:USFederalReserve,StateStreetGlobalAdvisors

Asof

May

31,

2013

through

2015

and

beyond

projections. 27


29/66

VelocityofMoneyandtheMoneySupplyMarch1,1970throughMarch31,2013

2.1

2.2

$16,000

$18,000

Economic Activit M2 * V

2

$12,000

$14,000

ey

inBillion

sUS

M2($)

Velocity($)

{RHS}

1.8

1.9

$8,000

$10,000

loc

ityofMo

viit

yandM2

1.7

$4,000

$6,000V

EconomicAct

Germany

1.5

1.6

$0

$2,000

M2=measureofmoneysupply;USD=U.S.dollar;Velocity=therateatwhichmoneyisexchanged.InthiscaseVelocityistheratioofnominalGDPtoameasureofthemoney

supply(M2).

The

turnover

rate

of

the

money

supply.

RHS

=right

hand

side

yaxis

Source:USFederalReserve,,DoubleLineCapital28


30/66

5YearBreakevenInflationRateDecember31,2007throughJuly8,2013

3.55

3.75

5YearBreakevenInflationRate 20002013AverageInflationRate

2.95

3.15

3.35

tionRate

(%)

ly8,

2013

2.55

2.75

BreakevenInfl

ber

31,

2007

J

2.15

2.35

5YearFed

Decem

1.75

1.95

Source: StLouisFED,DoubeLine Capital

Breakeveninflation

rate

=Is

the

difference

between

the

nominal

yield

on

ta fixed

rate

investment

and

the

real

yield

(fixed

spread0

on

an

inflation

linked

investment

of

similar

maturityandcreditquality.29


31/66

U.S.CorePersonalConsumptionExpendituresMarch30,1960 March31,2013

Germany

30Source:Bloomberg

EHCCUSIndex

=the

US

Core

PCE

(Annual

YoY %)

Personal

Consumption

Expenditures

prices

excluding

food

and

energy

prices.


32/66

ISMPMIvs.GDPDecember31,1986 May31,2013

6%65

2%

4%

55

inRealUSD

31,

201

3

31,

201

3

0%

45

50

ChangeinGD

31,

1986

Ma

ISM

PMI

31,

1986

Ma

4%

2%

40

YearonYear

December

December

ISMPMI LHS

6%30

35

RealGDP

Year

on

Year

(RHS)

31ISM

=

Institute

of

Supply

Management;

PMI

=

Purchasing

Managers

Index;

GDP

=

Gross

Domestic

Product;

USD

=

U.S.

dollarLHS=lefthandsideyaxis;RHS=righthandsideyaxis

Source:BureauofLaborStatistics,DoubleLineCapital


33/66

RealGDPLeadsChangesinUnemploymentDecember31,2002 May31,2013

6%

8%

350

550

SD

usands)

2%

4%

150

GDPinR

ealU

y31,

2013

ploymen

t(tho

y31,

2013

2%

0%

250

50

terChangein

r31

,2002

M

angeinUnem

r31

,2002

M

6%

4%

450

uarteronQua

Decembe

rlyAverageC

Decembe

RealGDPYearonYear(RHS)

TotalChangeinEmployment(LHS)

10%

8%

850

650 Q

Qua

rt

32GDP

=

Gross

Domestic

ProductLHS=lefthandsideyaxis;RHS=righthandsideyaxis

Source:FederalReserve,BureauLaborandStatistics,Bloomberg,DoubleLine


34/66

U.S.UnemploymentRateandEmploymenttoPopulationRatioDecember31,1990throughJune30,2013

1258U.S.EmploymentCrisis:SlackintheLaborMarket

10

59

60013

(%)

013

USEmploymenttoPopulationRatio(LHS)

USUnemploymentRate(RHS)

6

61

62

en

tRate(%)

90

June30,

opu

lationRati

90

June30,

2

463

64Unemploy

cember31,

1

ploymenttoP

cember31,

19

0

65

66

DEm D

LHS

=

left

hand

side

y

axis;

RHS

=

right

hand

side

y

axisSource:USCensusBureau,Bloomberg,DoubleLineCapital 33


35/66

GettingBacktoFullEmployment

theCommittee

decided

to

keep

the

target

range

for

the

federal

funds

rate

at

0to

1/4

percent

and

currently

anticipatesthatthisexceptionallylowrangeforthefederalfundsratewillbeappropriateatleastaslongas

theunemploymentrateremainsabove61/2percent[EmphasisAdded],inflationbetweenoneandtwoyearsaheadisprojectedtobenomorethanahalfpercentagepointabovetheCommittees2percentlongerrungoal,

..BenS.BernankeDecember12,2012

Slow Grind Back to Full Employment

Germany

Source:http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm

34


36/66

JobsCreatedSincetheEndoftheRecession(in000s)February28,2010throughJune30,2013

192

290

Mining&Logging

Construction

739409

504

RetailTrade

WholesaleTrade

Manufacturing

135

46

5

,

Financial&

Insurance

Information

Utilities

247

708

692

Education

Temporary

Professional

167

1,295

1,020

OtherServices

Leisure/Hospitality

Healthcare

Source:Bloomberg 35

619

1000 500 0 500 1000 1500

Government


37/66

AverageHourlyEarningsbyIndustryJune30,2012throughJune30,2013(YoY %Change)

1.67%

3.87%

Construction

Mining&Logging

1.90%

3.43%

2.05%

RetailTrade

WholesaleTrade

Manufacturing

3.50%

0.31%

Utilities

Transportation&Warehousing

1.71%

3.98%

.

ProfessionalBusinessServices

FinancialActivities

2.45%

0.60%

1.82%

OtherService

Leisure&Hospitality

Education&Health

MayCPICoreInflation1.7%

36

Source:Bloomberg

YoY =Year

over

year

change

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%


38/66

U.S.HouseholdNetWealthMarch31,1998 March31,2013

Source:Bloomberg,

Bureau

of

Labor

and

Statistics,

Federal

Reserve

NWORVALUIndex=USHouseholdNetWorthinnominal$values.ThesectorrepresentstheB100reportfromtheFederalReserveFlowofFunds.Thesevaluesare

updatedbothQuarterlyandyearly.

37


39/66

EquityandRealEstateMarch1970 March2013

$25

$20EquityHoldings(DirectandIndirect)

$10

$

Trillions,NS

$5

$0

Source:FederalReserve,NSA=NonSeasonallyAdjusted

38

35 Y f P d i i


40/66

35YearsofProductivityJanuary1,1947throughDecember31,2011

39Source:http://stateofworkingamerica.org/charts/productivityandrealmedianfamilyincomegrowth19472009/


41/66

MedianHomePriceintheU.S.July31,2007 May31,2013

Germany

40

Source: Bloomberg

ETSLMPIndex=USExistingHomSalesMedianPriceIndexisthetotalsinglefamily,townhomes,condominiumsandcoopssalesare basedonclosings.

Youcannot

invest

directly

in

an

index.


42/66

U.S.10YearTreasuryvs.30yearFixedMortgageRateJune30,2003 July8,2013

Germany

41Source: Bloomberg

GT10=US

10

year

Treasury

rate.

ILM3NAVG

Index

=Bankrate.com

US

30

year

fixed

mortgage

rates,

with

and

without

points.

This

index

is

the

overnight

national

average.

Affordability of a $1 000 Mortgage


43/66

Affordabilityofa$1,000MortgageJune30,1998 July5,2013

8.00%

9.00%

$250,000

$300,000

ment AffordableMortgagefora$1,000Monthly Payment(LHS)

6.00%

7.00%

$200,000

Mortgage

Rate

0Month

lyPay Average30YearFixed U.S.HomeMortgageRate(bankrate.com)(RHS)

3.00%

4.00%

5.00

$100,000

$150,000

e3

0YearFixed

ou

ntwith$1,0

1.00%

2.00%

$50,000

Averag

MortgageA

0.00%$0

LHS=lefthandsideyaxis;RHS=righthandsideyaxis

Source:BureauofEconomicAnalysis,DoubleLineCapital

42

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00%MortgageInterestRate

U S H h ld D b


44/66

U.S.HouseholdDebtJanuary1,2003throughMarch31,2013

1515Trillions of Dollars

Total Debt Balance and its CompositionTrillions of Dollars

1212

2013Q1 Total: $11.23 Trillion

99

3

6

3

6

00

Source:FRNBY

43

Source: FRBNY Consumer Credit Panel/Equifax

Home Price vs Owners Equivalent Rent


45/66

HomePricevs.OwnersEquivalentRentJanuary31,2000 April30,2013

220CaseShillerHomePriceIndex

CPIownersequivalentrent

180

200

160

120

140

100

Source:BureauofEconomicAnalysis,CaseShiller

44Standard

&

Poors

Case

Shiller Home

Price

Index

are

constant

quality

house

price

indices

for

the

United

States.

The

indices

reflect

prices

in

real

terms,

which

means

they

are

correctedforinflation.


U S Fi i l M k t P f 5 Y P i Hi t


46/66

U.S.FinancialMarketPerformance5YearPriceHistoryOctober31,2008throughMay31,2013

Possiblylower

expected

return

in

years

to

come,

as

liquidity

has

been

the

main

driver

ofUSassetperformancesince2008

1.8200

FedBalanceSheetExpansion$Trn(RHS) USEquities

1.2

1.4

1.6

160

180

($Trillions

)

)

Commodities USCredit

UST DXY

0.8

1

120

140

eS

heetExpansion

wthof100

20

08

July8,

201

0.4

0.6

80

100

eralReserveBalan

Gro

(October31

0.2

0

0.2

40

60

Fed

Source:Bloomberg,Datastream, SGCrossAssetResearch

Pleasesee

index

definitions

on

pages

73

77.

US

Equities

=S&P

500

Index.

Commodities

=Dow

Jones

Commodity

Index.

US

Credit

=

BofA/Merrill

Lynch

US

Credit

Index.

USD

Index=DXYofDXYDollarIndexspotPrice.EquityVolatilityreferstothevolatilityoftheS&P500Index.


45

U S Treasury 2 Year and 10 Year Rate Spread


47/66

U.S.Treasury2Yearand10YearRateSpreadJuly9,2008toJuly8,2013

Source:Bloomberg

USYC2Y10=Markit MatrixUSSell2yearTreasury&buya10yearbondyieldspread.TheratesarecomprisedofMarketMatrixUSspreadrates.Thisspreadisacalculated

Bloombergyieldspreadthatreplicatedthecurrent2yearUSTreasurynoteandbuyingthecurrent10yearUSTreasuryNotethenfactoringthedifferencesby100.

46

U S Treasury 10 Year and 30 Year Rate Spread


48/66

U.S.Treasury10Yearand30YearRateSpreadJuly9,2008toJuly8,2013

Source:Bloomberg

USYC1030Index=MarketMatrixUSSell10yearUsTreasurybondstobuy30yearUSTreasurybonds.Theratesarecomprisedof MarketMatrixUSgenericspreadrates.

Thespread

is

calculated

by

Bloomberg

using

current

10

year

US

treasury

note

and

buying

the

current

30

year

US

Treasury

bond

then

factoring

the

differences

by

100.

Youcannotinvestdirectlyinanindex.47

Commodities vs. the S&P 500


49/66

Commoditiesvs.theS&P500December31,2008throughJuly8,2013

2500

zed)

S&P500TotalReturn

CRBTotalReturnIndexNormalizedtoS&P50012/31/2009

2000

eturn(N

ormali

8,

2013

July31,2011

July8,2013

S&P500Total

Return

1000

1500

v

s.CRBTotal

r3

1,

2008Jul 46.26%

CRB Total

Return

10.59%

500

500TotalRetur

Decemb

0

S

&P

Source:Bloomberg,DoubleLine Capital

S&P500=SPXIndexistheStandard&Poors500Indexisacapitalizationweightedindexof500stocks.Designedtomeasureperformance ofthebroaddomesticeconomy

through

changes

in

the

aggregate

market

value

of

500

stocks

representing

major

industries.

CRB

Total

Return

Index

=

Commodity

Research

Bureau

measures

the

spot

price

movementsof22sensitivebasiccommoditieswhosemarketsarepresumedtobeamongthefirsttobeinfluencedbychangesintheeconomicconditions.


48

Gold Spot Price vs the Monetary Base


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GoldSpotPricevs.theMonetaryBaseJanuary2,2006 July9,2013

49

Source:Bloomberg

Golds =GoldcommodityIndex.ThegoldspotpricequotedinUSdollarspertroyounces.FARBASTIndex=TheUSconditionofallFederalReserveBankstotalassetsfrom

consolidated

statements

of

condition

of

all

Federal

Reserve

Banks.

You

cannot

invest

directly

in

an

index.

Brent Crude WTI Crude Spread


51/66

BrentCrude WTICrudeSpreadDecember31,2009 July4,2013

C01=Brent

Crude

Spot

Price;

CL1

=WTI

Crude

Spot

Price

Source:Bloomberg

50

Copper Spot Price


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CopperSpotPriceJuly9,2012toJuly9,2013

Source:Bloomberg

HG1COMBCommodity=Generic1st futurescontract.Copperistheworldsthirdmostwidelyusedmetal,afterironandaluminum,andisprimarilyusedinhighlycyclical

industriessuch

as

construction

machinery

manufacturing.

51


53/66

MultiAssetGrowthPortfolio

52

M lti A t G th F d Phil h


54/66

MultiAssetGrowthFundPhilosophy

The DoubleLine MultiAsset Growth Fund provides a flexible global asset allocation framework that

volatility and avoid catastrophic principal losses.

53

Investment Process


55/66

InvestmentProcess

MarketTimeliness

Typical

Portfolio

Allocation

TopDownSecularTrendsLongTermApprox.35%

Cycle IntermediateApprox.50%

Market Micro

Structure ShortTermApprox.15%

54

Asset Class Outlook Over Time


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AssetClassOutlookOverTime

DoubleLines outlookforthevariousassetclassesappearingreenfortheclassesweviewas

favorable,yellowforclassesweviewwithcaution,andredforanegativeoutlook.

ShortTerm MediumTerm LongTerm

FixedIncome

Equities

Commodities

FX(USD)

Cash

Source:DoubleLineCapitalLP

55

MultiAssetGrowthPortfolioBreakdown


57/66

AsofJune30,2013

RealAssets

6.6%

Cash

2.2%

U.S.Fixed

IncomeInternational

Equity

.

U.S.Equity

International

FixedIncome

10.5%

15.8%

Netamountinc u esS ortpositions.

Source:DoubleLineCapitalLPasofJune30,2013

FixedIncome=Referstoinvestmentswhicharenotequity,thatobligatestheborrower/issuertomakepaymentsonafixedschedule.

InternationalFixedIncome=Referstoinvestmentsininternationalbonds.

Equities=Equityinvestmentsrefertostocksorcapitalandgrowthequityinpubliccompaniesthatissuestock.

RealAssets

=A

non

financial

asset

is

an

asset

with

aphysical

value

such

as

land,

property

or

some

type

of

object.

Portfolioallocationsaresubjecttochangeatanytime.

56


58/66

DoubleLineMulti

Asset

Growth

Fund

JeffShermanPortfolioManager,

MultiAssetGrowth

,


59/66


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63/66

Disclaimer


64/66

ImportantInformationRegardingThisReportThisreportwaspreparedasaprivatecommunicationandwasnotintendedforpubliccirculation.Clientsorprospectsmayauthorizedistributiontotheir

consultantsorotheragents.

Issueselectionprocessesandtoolsillustratedthroughoutthispresentationaresamplesandmaybemodifiedperiodically.Suchchartsarenottheonlytoolsused

y e nves men eams,areex reme ysop s ca e ,mayno a wayspro uce e n en e resu san areno n en e oruse ynonpro ess ona s.

DoubleLinehasnoobligationtoproviderevisedassessmentsintheeventofchangedcircumstances.Whilewehavegatheredthisinformationfromsources

believed

to

be

reliable,

DoubleLine

cannot

guarantee

the

accuracy

of

the

information

provided.

Securities

discussed

are

not

recommendations

and

are

presented

asexamplesofissueselectionorportfoliomanagementprocesses.Theyhavebeenpickedforcomparisonorillustrationpurposesonly.Nosecuritypresented

withiniseitherofferedforsaleorpurchase.DoubleLinereservestherighttochangeitsinvestmentperspectiveandoutlook withoutnoticeasmarketconditions

dictate or as additional information becomes available.

ImportantInformationRegardingRiskFactorsInvestmentstrategiesmaynotachievethedesiredresultsduetoimplementationlag,othertimingfactors,portfoliomanagementdecisionmaking,economicor

marketconditionsorotherunanticipatedfactors.Theviewsandforecastsexpressedinthismaterialareasofthedateindicated,aresubjecttochangewithout

notice,maynotcometopassanddonotrepresentarecommendationorofferofanyparticularsecurity,strategy,orinvestment. Pastperformanceisno

guaranteeof

future

results.

ImportantInformationRegardingDoubleLineInpreparingtheclientreports(andinmanagingtheportfolios),DoubleLineanditsvendorspriceseparateaccountportfolio securitiesusingvarioussources,

includingindependentpricingservicesandfairvalueprocessessuchasbenchmarking.

ToreceiveacomplimentarycopyofDoubleLinescurrentFormADVPartII(whichcontainsimportantadditionaldisclosureinformation),acopyofthe

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Services.

63

Disclaimer


65/66

ImportantInformationRegardingDoubleLinesInvestmentStyleDoubleLineseekstomaximizeinvestmentresultsconsistentwithourinterpretationofclientguidelinesandinvestmentmandate.WhileDoubleLineseeksto

maximizereturnsforourclientsconsistentwithguidelines,DoubleLinecannotguaranteethatDoubleLinewilloutperformaclient'sspecifiedbenchmarkorthe

market. Additionally,thenatureofportfoliodiversificationimpliesthatcertainholdingsandsectorsinaclient'sportfolio mayberisinginpricewhileothersare

falling;or,thatsomeissuesandsectorsareoutperformingwhileothersareunderperforming.Suchoutorunderperformancecanbetheresultofmanyfactors,

suchasbutnotlimitedtoduration/interestrateexposure,yieldcurveexposure,bondsectorexposure,ornewsorrumorsspecifictoasinglename.

DoubleLineisanactivemanagerandwilladjustthecompositionofclientsportfoliosconsistentwithourinvestmentteamsjudgmentconcerningmarket

conditionsandanyparticularsectororsecurity.TheconstructionofDoubleLineportfoliosmaydiffersubstantiallyfromthe constructionofanyofavarietyof

bondmarket

indices.

As

such,

aDoubleLine

portfolio

has

the

potential

to

underperform

or

outperform

abond

market

index.

Since

markets

can

remain

inefficientlypricedforlongperiods,DoubleLinesperformanceisproperlyassessedoverafullmultiyearmarketcycle.

Clientsarerequestedtocarefullyreviewallportfolioholdingsandstrategies,includingbycomparingthecustodialstatementtoanystatementsreceivedfrom

DoubleLine.Clientsshould promptlyinformDoubleLineofanypotentialorperceivedpolicyorguidelineinconsistencies.Inparticular,DoubleLineunderstands

thatguidelineenablinglanguageissubjecttointerpretationandDoubleLinestronglyencouragesclientstoexpressanycontrastinginterpretationassoonas

practical.ClientsarealsorequestedtonotifyDoubleLineofanyupdatestoClientsorganization,suchas(butnotlimitedto) addingaffiliates(includingbroker

dealeraffiliates),issuingadditionalsecurities,namechanges,mergersorotheralterationstoClientslegalstructure.

DoubleLineisaregisteredtrademarkofDoubleLineCapitalLP.

2013 DoubleLine Ca ital LP

64

Announcements


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WebcastNews

Phili Barach A ril2 2013DoubleLine LowDurationBondFund

Tuesday,April2,20131:15pmPDT/4:15pmEDT

LuzPadilla May7,2013DoubleLine EmergingMarketsBondFund

Tuesday,May7,20131:15pmPDT/4:15pmEDT

JeffreyGundlach June4,2013ou e ne o a

e urn

on

un

an

ore

xe

ncome

un

Tuesday,June 4,20131:15pmPDT/4:15pmEDT

o ece ve resen a on es:

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