DoubleLine Total Return Bond Fund Webcast Recap

Blockhead

Originally aired on March 10, 2015

About this Webcast Recap
On March 10, 2015, Chief Executive Officer and Chief Investment Officer Jeffrey Gundlach held a webcast
discussing the DoubleLine Total Return Bond Fund (DBLTX/DLTNX) titled Blockhead.
This recap is not intended to represent a complete transcript of the webcast. It is not intended as solicitation to
buy or sell securities. If you are interested in hearing more of Mr. Gundlachs views, please listen to the full
version of this webcast on www.doublelinefunds.com under the blue Events tab. You can use the Jump To
feature to navigate to each slide. You can also learn more about future webcasts by viewing the 2015 webcast
schedule at www.doublelinefunds.com under Events.
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Recap
Central Bank Policy
European Central Bank (ECB)
o Sovereign net bond issuance has been negative as a result of ECB purchases
o Its difficult to make the case for rising yields in Europe given the negative net supply
due to ECB repurchase program or quantitative easing (QE)
o Mr. Gundlach believes the 10-year U.S. Treasury (UST) is more likely to dip below 2%
again than reach 3% during 2015
o Approximately 70% of European companies have higher yields on their stock than
their corporate debt
The Federal Reserve (Fed) Policy
The Fed
o In prior Fed tightening cycles, hourly earnings tended to rise with higher rates
o Mr. Gundlach believes the Fed will want to raise rates if is employment data remains
positive and oil stabilizes
Inflation
o Inflation as measured by the Pricestats Index year-over-year (YoY) is already negative
indicating deflation
o U.S. Core Consumer Prince Index (CPI) (using Eurozone definition) is also negative
o Mr. Gundlach does not believe inflation is a problem now but may be one several
years down the road
o Inflation outlook today is eerily similar to that of 1939; read Jim Grants latest issue
of Interest Rate Observer
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DoubleLine Total Return Bond Fund Webcast Recap

Originally aired March 10, 2015
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Recap
U.S. Dollar (USD) & Rates
o Speculative positioning is now 60% net long the USD
- Mr. Gundlach believes the USD could strengthen further
o Peak maturities in Fed-held Treasuries come due 2018-2019
o High Yield and Bank Loan also mature around the same time, 2018-2022
o Mr. Gundlach believes the Fed may follow the path of other central banks, which have
hiked rates and subsequently lowered them
Demographics
Japan, China and Europe have population-age distributions that have continued to widen as
citizens get older
The wider population-age distribution is not a problem now but may be down the road
The Bloodless Verdict of the Market
Year-to-Date (YTD) Winners:
o Convertible bonds (V0S0), High Yield bonds (J0A0) and Investment Grade Corporate
bonds (C0A0)
o By credit quality: CCC-rated (JOA3) and BB-rated (JOA1)
YTD Losers:
o Treasury Inflation-Protected Securities (TIPS) and local currency Emerging Markets
(EM)
Commodities
o Gold is holding up pretty well against a USD that has appreciated by 20%
o Mr. Gundlach believes gold will be supported by negative yields globally and could
trade up to $1,400 during 2015
Equities
o Historically, the largest cap-weighted stock in the S&P 500 has underperformed the
index as a whole
o Stock buybacks have been a huge source of demand in the equity market
o Growth (as measured by the Russell 1000 Growth) outperforming Value (as measured
by the Russell 1000 Value)
- Mr. Gundlach believes earnings of value companies may be impacted by the
stronger USD
o Since 2012 the S&P 500 has continued to outperform:
- European equities as measured by the MSCI EAFE Index
- EM equities as measured by the MSCI Emerging Markets Index
o Mr. Gundlach believes the Indian stock market (BSE) is a good long-term investment
(20+ years)
Interest Rates
o 2-year UST yields have risen for nearly 4 straight years
o 30-year UST yields may have put in a low during January and have had marginal price
action since
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DoubleLine Total Return Bond Fund Webcast Recap

Originally aired March 10, 2015
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Recap
Valuation
o We believe investment grade corporate bonds are overvalued having benefited
from strong performance as a result of a longer duration and low defaults
o High Yield bonds appear fairly valued after entering 2014 the most overvalued in
history
- Mr. Gundlach believes some of the High Yield Energy names will cheapen as oil
may reaches a new low in coming weeks
o We believe Agency Mortgage-Backed Securities (MBS) are fairly valued
o We believe EM fixed income is fairly valued; the prospect for EM worsens with a
stronger USD
o We believe TIPS are cheap but DoubleLine does not own any because of the weak
outlook for inflation
The DoubleLine Total Return Fund (DBLTX/DLTNX)
Characteristics
o Average dollar price of around $100
o The fund still holds a small amount of UST
o MBS characteristics
- Less than 1% in more esoteric securities (Interest Only, Interest Floater, etc.)
- Subprime MBS
Severities are worse than they were a few years ago due to the properties
lack of upkeep while awaiting foreclosure
Question and Answer
Mr. Gundlach is negative on the long-term future of old school car manufacturers due
to the potential efficiency of car use from Uber, driver-less cars, etc.
The bond market is more like the 04-06 than other Fed tightening eras because the Fed
is still active in the market. If the Fed raises rates, the long-end of the curve should
benefit
UST v. German Bunds: UST offers additional yield and should not be hurt by a strong USD
Mr. Gundlach believes Puerto Rico municipal bonds may head lower, but would be a
buyer should prices fall to the low 80s. He remains agnostic about the volatility. Puerto
Rico Municipals are attractive to wealthy clients, particularly in a high tax state.

DoubleLine Total Return Bond Fund Webcast Recap

Originally aired March 10, 2015
Definitions:
Barclays Capital US Aggregate Index - The Barclays Capital US Aggregate Index represents securities that are SEC-registered, taxable, and
dollar denominated. The index covers the US investment grade fixed rate bond market, with index components for government and
corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific
indices that are calculated and reported on a regular basis.
Barclays Capital Global Emerging Markets Index - The Barclays Capital Global Emerging Markets Index represents the union of the USDdenominated US Emerging Markets index and the predominately EUR-denominated Pan Euro Emerging Markets Index, covering emerging
markets in the following regions: Americas, Europe, Middle East, Africa, and Asia. As with other fixed income benchmarks provided by
Barclays Capital, the index is rules-based, which allows for an unbiased view of the marketplace and easy replicability.
BSE India Sensitive Index (Sensex) -The Sensex is a cap-weighted index. The selection of the index members has been made on the basis of
liquidity, depth and floating-stock-adjustment depth and industry representation.
Basis Point- A basis point is a unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument.
Duration Duration is a commonly used measure of the potential volatility of the price of a debt security, or the aggregate market value of
a portfolio of debt securities, prior to maturity. Securities with a longer duration generally have more volatile prices than securities of
comparable quality with a shorter duration.
Gross Domestic Product (GDP) - The monetary value of all the finished goods and services produced within a country's borders in a specific
time period, though GDP is usually calculated on an annual basis.
Investment Grade - A level of credit rating for stocks regarded as carrying a minimal risk to investors. Ratings are based on corporate bond
model. The higher the rating the more likely the bond will pay back par/100 cents on the dollar.
U.S. Dollar Spot Index (DXY) - A weighted geometric mean of the United States dollar's value relative to a basket of 6 major foreign
currencies, including the Euro, Japanese yen, Pound sterling, Canadian dollar, Swedish krona and Swiss franc.
One may not directly invest in an index.
S&P 500 (SPX)- S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks
actively traded in the United States.
BSE India Sensitive Index (Sensex) -The Sensex is a cap-weighted index. The selection of the index members has been made on the basis of
liquidity, depth and floating-stock-adjustment depth and industry representation.
BofA/Merrill Lynch High Yield Cash Pay CCC rated Index (J0A3) .A component of the BofA/Merrill Lynch High Yield Cash Pay Index
concentrating on CCC rated High Yield credit only.
BofA/Merrill Lynch High Yield Cash Pay BBrated Index (J0A1) .A component of the BofA/Merrill Lynch High Yield Cash Pay Index
concentrating on BB rated High Yield credit only.
BofA Merrill Lynch U.S. High Yield Cash Pay Index (J0A0) Below Investment Grade- This index tracks the performance of US dollar
denominated below investment grade corporate debt, currently in a coupon paying period, that is publicly issued in the US domestic
market. Qualifying securities must have a below investment grade rating (based on an average of Moodys, S&P and Firth foreign currency
long term sovereign debt ratings). Must have one year remaining to final maturity and a minimum outstanding amount of $100MM.
BofA Merrill Lynch US All Convertibles Index (VOSO) - The Merrill Lynch All Convertible Index is a rule driven index. which includes all
bonds and preferred stocks of U.S.-registered companies, which have $50 million or more in aggregate market value and are convertibles in
U.S. dollar-denominated common stocks, ADRs or cash equivalents. Please note an investor cannot invest directly in an index.
Russell 1000 Growth Index measures the performance of large-cap growth segment of the US equity universe.
Russell 1000 Value Index measures the performance of the large-cap growth segment of the U.S. equity universe.
MSCI EAFE Index - Is a free float weighted equity index that covers developed countries in Europe, Australia, Israel and the Far East.
MSCI Emerging Markets Index (MXEF) is a free float weighted equity index that covers emerging countries.
Consumer Price Index (CPI) - A measure that examines the weighted average of prices of a basket of consumer goods and services, such as
transportation, food and medical care.
One cannot invest directly in an index.

DoubleLine Total Return Bond Fund Webcast Recap

Originally aired March 10, 2015
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