2015MarketOutlookV

LiveWebcasthostedby:
JeffreyGundlach
ChiefExecutiveOfficer

January13,2015

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TABI
BloodlessVerdictoftheMarket

ChangeinGlobal10yearBondYieldsin2014
ChangeinGlobal10yBondfor2014(BPS)
700

585

600
500
400

261

300
200
100

6
0
100
200
300

254 239

226 224

184 183 173 167

127
151 150 139

86
113 97 97

3
28 21
60 47

Source:Bloomberg;Doubleline
Bps=basispoints.Pleaseseeindexdefinitionsintheappendix.Youcannotinvestdirectlyinanindex.

YieldCurvesFlattenedAcrosstheGlobein2014

Pleaseseeindexdefinitionsintheappendix.Youcannotinvestdirectlyinanindex.

Equity2014PerformanceTotalReturnUSD
Asof12/31/14

DevelopedMarketsEquityPerformanceByIndex
(2014TotalReturnUSD)
20%
15%

14.8%

13.7%
10.0%

10%

5.3%

4.9%

5%

1.2%

0.5%

0%
5%
10%

7.9%

9.6%

15%

8.3%

9.3%

10.0%

2.6%

4.2%

4.8%

5.0%

EmergingMarketsEquityPerformanceByCountry
(2014TotalReturnUSD)
54.0%

60%

44.7%

40%

30.4%

19.1% 22.9% 24.5%

21.3%

20%

4.9%

18.9%

4.4%

0%
0.4%

20%

9.4%

13.4%

9.9%
21.2%

8.7%

14.5% 13.2%
25.7%

40%
60%

Source:Bloomberg;DoubleLine
Pleaseseeindexdefinitionsintheappendix.Youcannotinvestdirectlyinanindex.

42.1%

FX:DXYvs.TradeWeightedUSDPerformance(3yrs)
December31,2011throughJanuary7,2015

Source:Bloomberg;Doubleline
FX=Foreignexchangerate.DXY=USdollarindexindicatingthegeneralinternationalvalueoftheUSdollar.ItdoesthisbyaveragingtheexchangeratesbetweentheUSDandmajorworld
currencies.

FX:LowerYieldsnowNegativeforEmergingMarkets
DeflationarySlowdowninGlobalGrowth
December31,2012throughDecember31,2014
EmergingMarketCurrenciesand10YUSTYield
75
3.1

10YUST(RHS)
2.9
80
2.7

EMFX
weaker

2.5

85

2.3

10YUSTYield

JPMorganEmergingMarketsCurrencyIndex(Inverted)$Pirce

JPMEMFX

2.1

90

1.9

Periodofnegativecorrelation
95

1.7

1.5

Source:Bloomberg;Doubleline
FX=Foreignexchangerate.10YUST=10yearUSTreasurynoteyields.JPMEMFX=atradablebenchmarkforEmergingMarketscurrencymarkets.Theindexcomprisesof10liquidcurrencies
acrossthreeequallyweightedregions,LatinAmerica,AsiaandCEEMEAversustheUSdollar.Correlation=Whensecuritiesmoveinasimilardirection.Correlationrangesbetween+1and1.
Omeannocorrelation,1meansperfectcorrelationand1meansnocorrelation.
Aninvestmentcannotbemadedirectlyinanindex.

FX:GlobalSelectedCurrenciesPerformance
2014TotalReturn

0.31%

ExpandedMajorCurrenciesPerformance
1.62%

6.35%

10%

7.09%

Asof12/31/14

17.21%

17.07%

15.85%

15.79%

12.94%

12.60%

12.06%

11.83%

10.47%

9.95%

7.45%

5.72%

5.42%

4.36%

3.91%

2.94%

2.28%

1.82%

5.04%

10.22%

20%

9.15%

%totalreturn

10%

1.12%
1.65%

0.42%

0%

30%

40.33%

40%

INR
IDR
TRY
HKD
CNY
BRL
NZD
KRW
PEN
MYR
ZAR
SGD
TWD
GBP
AUD
CAD
MXN
CLP
CHF
ILS
EUR
JPY
PLN
CZK
HUF
COP
SEK
NOK
RUB

50%

Source:Bloomberg
JPY=JapaneseYen,CNY=ChinaYuanRenminbi,HKD=HongKongDollar,IDR=IndonesianRupiah,SGD=SingaporeDollar,PEN=PeruvianNuevoSol,CHF=SwissFranc,INR= IndianRupee,GBP=
GrainBritan Pound,ILS=Isreali NewSheqel,NZD=NewZealandDollar,Eur =Euro,SEK=SwedishKrona,TWD=TaiwanDollar,AUD=Austrianlian Dollar,MYR=MalaysianRinggit,CZK=CzechKoruna,
BRL=BrazilianLira,KRW=KoreanWon,NOK=NorwegianKrone,MXN=MexicanPeso,PLN=PolishZloty,CAD=CanadianDollar,COP =ColumbianPeso,TRY=TurkishLira,CLP=ChileanPeso,ZAR=
SouthAfricanRand,HUF=HungarianForint,RUB=RussianRuble.
FX=ForeignExchange
Aninvestmentcannotbemadeinandindex.

EMBondsvs.CorporateEMBondsvs.
LocalCurrencyEMBonds
January11,2010throughJanuary13,2015:LastFiveYears

TotalReturn

Corporate

LocalCurrency

Source:Bloomberg;Doubleline
EM=EmergingMarkets,JPEIGLBLIndex=JPMorganEMBIGlobalTotalReturnIndex,JCMDCOMP=JPMorganCorporateEMBIDiversifiedCompositeIndex,JGENGUUG=JPMorganGPI
EmergingMarketsCompositeUnhedgedUSD.Pleaseseeappendixfordefinitions.
Aninvestmentcannotbemadedirectlyinanindex.

BondandEquityMutualFundFlows
January1,2007throughDecember31,2014

BondandEquityMutualFundFlows

Cumulativenetinflowsbyyear($millions)

700,000
600,000

Equitymutualfunds

500,000

Bondmutualfunds

400,000
300,000
200,000
100,000
0
100,000
200,000
300,000

2007

2008

2009

2010

2011

2012

2013

2014

Source:Bloomberg;Doubleline

10

2014OneoftheBestYearsEverforLongBonds
AsofDecember31,2014

Source:Bianco

11

CommoditiesPerformance
December31,2013throughJanuary8,2015

Metals
Gold

Grains

Commodity
Silver

Energy

Source:Bloomberg;Doubleline
YTD=YeartoDate.DJ=DowJonesindices.Pleaseseeappendixfordefinitions.Youcannotinvestdirectlyinanindex.

12

CommodityIndex(CRB)vs.CommodityFuturesIndex
January14,2005throughJanuary8,2015

Source:Bloomberg;Doubleline
CRBCMDTIndex=Thespotmarketpriceindexisameasureofpricemovementsof22sensitivebasiccommoditieswhosemarketsare presumedtobeamongthefirsttobeinfluencedbychangesin
economicconditions.BCOM=BloombergCommodityIndexiscalculatedonanexcessreturnbasisandreflectscommodityfuturespricemovements.Rebalancesannuallyweighted2/3bytradingvolume
and1/3byworldproduction.Youcannotinvestdirectlyinanindex.

13

GoldinFX 1yearreturns
January9,2014throughJanuary12,2015

Source:Bloomberg;Doubleline
INR=IndianRupeespotprice,AUD=Australiandollarspotprice,CAD=Canadiandollarspotprice,ZAR=SouthAfricanRand spotprice,RUB=RussianRublespotprice,JPY=Japaneseyenspotprice
Youcannotinvestdirectlyinanindex.

14

GoldinFX 1yearreturns
January9,2014throughJanuary12,2015

Source:Bloomberg;Doubleline
INR=IndianRupeespotprice,AUD=Australiandollarspotprice,CAD=Canadiandollarspotprice,ZAR=SouthAfricanRand spotprice,RUB=RussianRublespotprice,JPY=Japaneseyenspotprice
Youcannotinvestdirectlyinanindex.

15

GoldMinersETFComparison
FortheYear2014

Source:Bloomberg
DUST =Direxion dailygoldminersbear3xsharesinanexchangetradedfundincorporatedintheUSAwiththeobjectiveofdailyinvestmentresultsof300%theinverse(oppositeoftheNYSEArca Gold
Minersindex.GDX=MarketvectorsgoldminersETFisanexchangetradedfundincorporatedinUSAthattrackstheperformanceoftheArca GoldMinersIndex.GLD =SPDRgoldsharesinand
investmentfundincorporatedintheUSAwiththeobjectiveisforsharestoreflecttheperformanceofthepriceofgoldbullion.
Youcannotinvestdirectlyinanindex.

16

Bitcoin
January3,2013throughJanuary5,2015

Source:Bloomberg
XBTBGNCurncy =Bitcoinspotprice.Bitcoinisavirtualcurrencythatismathbaseddigitalassetsinwhichtransactionscanbeperformedcryptographicallywithouttheneedforacentral
issuingauthority.

17

FX:USDRealEffectiveExchangeRate
June30,1982throughDecember31,2014

Source:Bloomberg
CEERUS =BOECalculatedeffectiveexchangeratesUSprovidedbytheBankofEngland.Aneffectiveexchangerateisameasureofthevalueofacurrencyagainstabasketofothercurrencies,relativeto
abasedate.FX=foreignexchange.
Youcannotinvestdirectlyinanindex.

18

TABII
BullCase

19

LaborMarket LessSlack
January1,2001throughDecember31,2014

Source:DeutscheBankGlobalMarketsResearch,January2015

20

UnemploymentRate
January1,2008throughDecember31,2014

Source:DeutscheBankGlobalMarketsResearch,January2015

21

Sales&Labor
January1,2003throughDecember31,2014

Source:NFIB,Haver Analytics,DeutscheBankGlobalMarketsResearch,January2015

22

DisabilityRecipientsintheU.S.
January1,2003throughDecember31,2014

Source:SocialSecurityAdministration,Haver Analytics,DeutscheBankGlobalMarketsResearch,January2015

23

FoodStampUsage
October31,2005throughSeptember30,2014

Source:Bloomberg
FDSPNUMIndex=SupplementalNutritionAssistanceProgramparticipationinmillions.
Youcannotinvestdirectlyinanindex.

24

DevelopedCountriesGrowthvs.OilPrices

Source:DeutscheBankResearch,January2015,EIA,OECD,Haver Analytics.Note:Rightsidescaleisinverted.GreyshadedareaindicatedU.S.recession.
G7=SevenindustrializedeconomiesincludeFrance,Germany,Italy,Japan,UnitedStates,UnitedKingdomandCanada.YoY =yearoveryear.GDP=theamountofgoodsandservices
producedwithinagivencountry.

OilPrices(Scaleinverted)

G7GDP

January1,1990throughJanuary4,2015

25

S&P500Index/AllCountryWorldLarge&MidCap
EquityIndex
January1,2010throughJanuary7,2015

Source:Bloomberg
SPX=S&P500Index.Fordefinition,pleaseseeappendix.MSCIACWIIndex=globalfreefloatindexofemerginganddeveloped worldequitymarkets.
Youcannotinvestdirectlyinanindex.

26

Cyclicalvs.DefensivePerformanceMonitor

CumulativePerformanceLongCyclicalsShortDefensives(Indexedto
8/19/94)

January7,2000throughJanuary7,2015
180

Cyclicalvs.DefensiveBasket
*basedon10ystatistics

170
160
150
140
130
120
110
Cyclicalvs.Defensive

100

"Simple10yrMov.Avg.
1StDev

90

2StDev

80

Note:SubsetsoftheS&P500index.Cyclicals=energy,materials,industrials,consumerdiscretionary,Informationtechnology; Defensives=healthcare,consumerstaples,telecoms,utilities.
Standarddeviationsarebasedon10yhistoricallookback.Standarddeviation=Measuresthedispersioninagivensetofdata.Itscalculatedasthesquarerootofvariance.
Youcannotinvestdirectlyinanindex.

27

TABIII
BearCase

28

Since1871,USEquitiesHaveNeverRisen7
ConsecutiveYearsinaRow
June30,1874throughDecember31,2014

Source:RobertShiller,YaleUniversityhttp://www.econ.yale.edu/~shiller/
S&P500indexdefinitioncanbefoundintheappendix.
Youcannotinvestdirectlyinanindex.

29

MarginDebtHigherNowthan2007
January1,1995throughDecember14,2014

Source:dshort.com,AdvisorPerspectiveshttp://www.advisorperspectives.com/dshort/charts/markets/nysemargindebt.html?NYSEmargindebtSPXgrowthsince1995.gif
Realinflationadjusteddata.S&P500Indexdefinitioncanbefoundintheappendix.Youcannotinvestdirectlyinanindex.

30

S&P500Indexvs.FederalReserveTotalAssets
December26,2008throughDecember19,2014

12/19/14

Source:Thechartstore.com
S&P500indexdefinitioncanbefoundintheappendix.QE=Quantitativeeasing.Youcannotinvestdirectlyinanindex.

31

TABIV
Forecasts

32

10yUSTreasuryYieldForecastforYearEnd2014
July11,2013throughJanuary7,2015

BloombergMedianEconomistForecastforYearEnd2014andActual10yUSTYields
3.7
3.5

MedianEconomistForecast2015
MedianEconomistForecast2014

3.3
3.1

3.01%
2.9

10yUSTYield

2.7
2.5
2.3
2.1

2.17%

1.9

1.97%

Notes:Medianeconomistforecastsfor2015isbasedonBloombergsurveydataasof12/11/14.
Source:Bloomberg;Doubleline
UST=USTreasury

33

BondYieldForecast(US,Germany,andUK)
AsofJanuary7,2015

Source:Bloomberg
G7=France,Germany,Italy,Japan,US,UKandCanada

34

Crude Oil Futures vs. Forecasts

Source:Bloomberg
WTI=WesternTexasintermediate.Agradeoflight,sweetcrudeoil.

35

USCPIandWTI
January7,2005throughJanuary7,2015

USCPIandWTI
150

USCPI
WTIYOY%(RHS)

100

WTIYoY%

CPIYoY%

50
2

1
0
0

50

3
1/7/2005

1/7/2006

1/7/2007

1/7/2008

1/7/2009

1/7/2010

1/7/2011

Source:Doubleline;Bloomberg
CPI=ConsumerPriceIndex.WTI=WestTexasintermediateCrudeoil.YoY =yearoveryear.RHS=righthandside.
Youcannotinvestdirectlyinanindex.

1/7/2012

1/7/2013

1/7/2014

100
1/7/2015

36

OfficialUSCPIandPriceStats (%YoY)
January1,2010throughJanuary4,2015

YoY =Yearoveryear.CPI=ConsumerPriceindex.Youcannotinvestdirectlyinanindex.

37

USBreakevens
September30,2011throughJanuary7,2015

Note:Breakevens demonstratespredictedinflationforaperiodoftimebycomparingTIPStoregularUStreasurysecurities.TheyieldsonbondshavedroppedmorethanTIPSimplyingthat
inflationwouldbelowerinthefuture.Youcannotinvestdirectlyinanindex.

38

US,German,French,andItalian10YearBreakevens
January11,2010throughJanuary11,2015

Source:Bloomberg
Note:Breakevens demonstratespredictedinflationforaperiodoftimebycomparingTIPStoregularUStreasurysecurities.TheyieldsonbondshavedroppedmorethanTIPSimplyingthat
inflationwouldbelowerinthefuture.DEGGBE10Index=German10yearbreakevenindex.FRGGBE10Index=French10yearbreakevenindex.GILGBE10Index=Italian10yearbreakeven
index.USGGBE10Index=US10yearbreakevenindex.Youcannotinvestdirectlyinanindex.

39

USDollarandInflation
January31,2005throughJanuary6,2015

Source:Bloomberg
DXYCurncy=USDollarspotprice.CPI=ConsumerPriceIndex.Youcannotinvestdirectlyinanindex.

40

TABV
InterestRateTrends

41

US2yearTreasuryvs.German2yearTreasury
January8,2010throughJanuary12,2015

Source:Bloomberg
GT2=US2yearTreasury.GTDEM2Y=German2yeartreasuryindex.Youcannotinvestdirectlyinanindex.

42

US,Germany&Japan5yearBondYields

Source:Bloomberg
GT5=USGovernmentgeneric5yearTreasury.GTJPY5=Japanese5yearTreasury.GTDEM5=German5yearTreasury.Youcannotinvestdirectlyinanindex.

43

US,German,JapaneseandSwiss10YearYields

Source:Bloomberg
GT10=USGovernmentgeneric10yearTreasury.GTJPY10=Japanese10yearTreasury.GTDEM10=German10yearTreasury.GTCHF10Y =Swiss10yearTreasury.You
cannotinvestdirectlyinanindex.

44

Eurozone2YearYields
October1,2013throughJanuary7,2015

Source:Bloomberg,DoubleLine
Germany,France,Italy,SpainandIrelands2yearTreasuryyields..Youcannotinvestdirectlyinanindex.

45

GreekYields(%)

Itlaian &SpanishYields(%)

Greece10YearYieldsBreakingDownwardTrend

Source:Bloomberg
Youcannotinvestdirectlyinanindex.

46

Greek10YearYieldvs.GoldSpot
January11,2010throughJanuary8,2015

Source:Bloomberg
GGGB10YR=Greek10yearTreasuryIndex.Youcannotinvestdirectlyinanindex.

47

CentralBankPolicyRates
January1,2004throughDecember31,2014

Source:Deutche BankResearch,January2015.
EurozoneconsistsofAustria,Belguim,Cyprus,Estonia,Finland,France,Germany,Greece,Ireland,Itlay,Latvia,Lithuania,Luxembourg,Malta,theNetherlands,Portugal,Slovakia,Slovenia,
andSpain.

48

TABVI
Oil

49

OilPricesRequiredtoBalanceBudget
AsofOctober10,2014

Source:WallStreetJournalhttp://www.wsj.com/articles/oilpriceslumpstrainsbudgetsofsomeopecmembers1412952367

50

Oil(WTI)vs.HighYieldvs.Inverse10YearUSTYield
vs.S&P500
January13,2012throughJanuary12,2015

Source:Bloomberg
CL1COMBComdty =WestTexasIntermediate(WTI)isalight,sweetcrudeoilfuturescontract.SPXT=S&PP500Index.SBCXPCAPIndex=Citigroup HighYieldCashPayCappedIndex.
USGG10YrIndex=Generic10yearUSTreasury.Youcannotinvestdirectlyinanindex.

51

Oil(WTI)vs.NaturalGas
January13,2005throughJanuary12,2015

Source:Bloomberg
CL1COMBComdty =WestTexasIntermediate(WTI)isalight,sweetcrudeoilfuturescontract.NG1Comdty =GenericNaturalgasfuturescontract.Youcannotinvestdirectlyinanindex.

52

USShaleBreakevenPoints
AsofOctober10,2014

Source:USGlobalInvestors,EveryoneLovesaDiscount ButWherestheSupportforOilPrices?,November7,2014
http://www.usfunds.com/investorlibrary/investoralert/?pageNum=9&nextNID=BF9D8F35AF2A838E891B004B005607A1#.VK7DyfJmyUk

53

EnergySectorWeightingAcrossCreditand
EquityIndices
AsofNovember25,2014

Pleaseseeappendixfordefinitions.
Youcannotinvestdirectlyinanindex.

54

USOil&GasProducersHaveNotReliedHeavilyon
BankLoans
December31,2000throughSeptember30,2014

Source:Gavekal Data/Macrobond
Youcannotinvestdirectlyinanindex.

55

OnlySmallShareofCapexGoestoEnergySector
January1,1960throughDecember31,2014

Source:DeutscheBankResearch,January2015
Capex=capitalexpenditure.Youcannotinvestdirectlyinanindex.

56

HYEnergyandMetalsRemainUnderPressure
December31,2013throughJanuary6,2015

HYSpreads
900

HY
800

HYEnergy

GOVTOAS

700

600

500

400

300

Source:Bloomberg,DoubleLine
HY=HighYield,HYEnergy=Theenergysectorofthehighyieldmarket.
Youcannotinvestdirectlyinanindex.

57

TABVII
ClosingThoughts

58

China HomePricesareFalling
January1,2010throughDecember31,2014

Source:DeutscheBankResearch,January2015
Youcannotinvestdirectlyinanindex.

59

WhenCouldDefaultFearsBecomeanIssue?
AsofDecember1,2014

Source:CitigroupResearch,December1,2014
HY=HighYield.Youcannotinvestdirectlyinanindex.

Years
60

RetailSalesvs.OnlineSales
January1,1995throughDecember31,2014

Source:DeutscheBankResearch,January2015
Youcannotinvestdirectlyinanindex.

61

Mall REIT Valuations Have Been Driven

up due to Yield Seeking

Source:Bloomberg
BBREMALLIndex=IsacapitalizationweightedsubindexoftheBloombergREITIndex.Itsbasedonregionalmallpropertiescomprising75%ofmoreofinvestedassetsandwasdeveloped
withabasevalueof100asofDecember31,1993.Youcannotinvestdirectlyinanindex.

62

2015MarketOutlookV

LiveWebcasthostedby:
JeffreyGundlach
ChiefExecutiveOfficer

January13,2015

U.S. Aggr
1
getIndexA
Back
IWS?requ
to In

IndexDescriptions
BarclaysCapitalUSAggregateIndex TheBarclaysCapitalUSAggregateIndexrepresentssecuritiesthatareSECregistered,taxable,anddollardenominated.The
indexcoverstheUSinvestmentgradefixedratebondmarket,withindexcomponentsforgovernmentandcorporatesecurities,mortgagepassthroughsecurities,
andassetbackedsecurities.Thesemajorsectorsaresubdividedintomorespecificindicesthatarecalculatedandreportedona regularbasis.
BarclaysCapitalUSTreasuryIndex ThisindexistheUSTreasurycomponentoftheUSGovernmentindex.PublicobligationsoftheUSTreasurywitharemaining
maturityofoneyearormore.
BarclaysCapitalUSTreasury10YearIndex Thisindexisthe10yearcomponentoftheUSGovernmentindex.
BarclaysCapitalCapitalUSTreasury30YearIndex Thisindexisthe30yearcomponentoftheUSGovernmentindex.
BarclaysCapitalUSHighYieldIndex TheBarclaysCapitalUSHighYieldIndexcoverstheuniverseoffixedrate,noninvestmentgradedebt.Eurobondsanddebt
issuerfromcountriesdesignatedasemergingmarkets(e.g.Argentina,Brazil,Venezuela,etc.)areexcluded,butCanadianand globalbonds(SECregistered)of
issuersinnonEMGcountriesareincluded.Originalissuezereos,stepupcouponstructures,144Asandpayinkind(PIK,asofOctober1,2009)arealsoincluded.
BofAMerrillLynchUSGovernmentIndex(GOAO) TheMerrillLynchUSGovernmentIndextrackstheperformanceofUSgovernment(i.e.securitiesinthe
TreasuryandAgencyindices.)
BofA MerrillLynchUSCorporateIndex(COAO)InvestmentGrade TheMerrillLynchCorporateIndextrackstheperformanceofUSdollardenominated
investmentgradecorporatedebtpubliclyissuedintheUSdomesticmarket.Qualifyingsecuritiesmusthaveaninvestmentgraderating(basedonanaverageof
Moodys,S&PandFitch)andaninvestmentgraderatedcountryofrisk(basedonanaverageofMoodys,S&PandFitchforeigncurrencylongtermsovereigndebt
ratings).Securitiesmusthaveatleastoneyearremainingtermtofinalmaturity,afixedcouponscheduleandaminimumamountoutstandingof$250MM.
BofAMerrillLynchUSAllConvertiblesIndex(VOSO) TheMerrillLynchAllConvertibleIndexisaruledrivenindex.whichincludesallbondsandpreferredstocks
ofU.S.registeredcompanies,whichhave$50millionormoreinaggregatemarketvalueandareconvertiblesinU.S.dollardenominatedcommonstocks,ADRsor
cashequivalents.Pleasenoteaninvestorcannotinvestdirectlyinanindex.
CRBCommodityIndex(CRY) Anunweightedgeometricaverageofsomeimportantcommodities.Itaveragespricesacross17commoditiesandacrosstime.The
indextracksenergy,grains,industrials,livestock,preciousmetals,andagriculturals.
S&P500(SPX) S&P500isafreefloatcapitalizationweightedindexpublishedsince1957ofthepricesof500largecapcommonstocksactively tradedinthe
UnitedStates.
StandardDeviation Sigma=standarddeviation.Itshowshowmuchvariationthereisfromtheaverage(mean,orexpected/budgetedvalue).Alow standard
deviationindicatedthatthedatapointtendtobeveryclosetothemean,whereashighstandarddeviationindicatedthatthe dateisspreadoutoveralargerange
ofvalues.
DowJones UBSDJCommodityIndex TheDowJonesUBS CommodityindexiscomposedofcommoditiestradedonU.S.exchanges,withtheexceptionof
aluminum,nickelandzinc,whichtradeontheLondonMetalExchange(LME).
Silver(XAG)=SilverSpotPricequotedinUSD/lb.
Gold=GoldSpotPrice(Golds)TheGoldSpotpriceisquotedasUSDollarperTroyOunce.
CrudeOil=Crudeoilvariesgreatlyinappearancedependingonitscomposition.WestTexasintermediate(WTI)=Texaslightsweetcrudeisusedasabenchmarkin
oilpricing.Itslightbecauseofthelowdensityandsweetbecauseoflowsulfur.Brentcrude=Isamajortradingclassificationofsweetlightcrude.Brentistheoil
makeralsoknownasBrentBlend.
VolatilityIndex(VIX)TheVIXshowsthemarket'sexpectationof30dayvolatility.Itisconstructedusingtheimpliedvolatilitiesofawiderangeof S&P500index
options. Thisvolatilityismeanttobeforwardlookingandiscalculatedfrombothcallsandputs. TheVIXisawidelyusedmeasureofmarketriskandisoften
referredtoas the"investorfeargauge".
64

IndexDescriptions

BofAMerrillLynchUSDollarEmergingMarketsSovereignPlusIndex(IGOV)
ThisindextrackstheperformanceofUSdollardenominatedemergingmarketandcrossoversovereigndebtpubliclyissuedintheeurobondorUSdomesticmarket.
QualifyingcountriesmusthaveaBB1orlowerforeigncurrencylongtermsovereigndebtrating(basedonanaverageofMoodys,S&P,andFitch).
BofAMerrillLynchU.S.HighYieldCashPayIndex(J0A0)BelowInvestmentGrade
TheMerrillLynchHighYieldIndextrackstheperformanceofUSdollardenominatedbelowinvestmentgradecorporatedebt,currentlyinacouponpayingperiod,
thatispubliclyissuedintheUSdomesticmarket.Qualifyingsecuritiesmusthaveabelowinvestmentgraderating(basedonanaverageofMoodys,S&PandFirth
foreigncurrencylongtermsovereigndebtratings).Musthaveoneyearremainingtofinalmaturityandaminimumoutstandingamountof$100MM.
BofAMerrillLynchInternationalGovernmentIndex(NOGO)
TheMerrillLynchInternationalIndextrackstheperformanceofAustralia,Canadian,French,German,Japan,Dutch,SwissandUKinvestmentgradesovereigndebt
publiclyissuedanddenominatedintheissuersowndomesticmarketandcurrency.Qualifyingsecuritiesmusthaveatleastoneyearremainingtermtofinalmaturity,
afixedcouponscheduleandaminimumamountoutstanding.
BofA MerrillLynchU.S.MunicipalSecuritiesIndex(UOA0)
ThisindextrackstheperformanceofUSdollardenominatedinvestmentgradetaxexemptdebtpubliclyissuedbyUSstatesandterritories,andtheirpolitical
subdivisions,intheUSdomesticmarket.Qualifyingsecuritiesmusthaveatleastoneyearremainingtermtofinalmaturity,afixedcouponscheduleandan
investmentgraderating(basedonMoodys,S&PandFitch).Minimumsizevarybasedontheinitialtermtofinalmaturityattime ofissuance.
BarclaysCapitalGlobalEmergingMarketsIndex TheBarclaysCapitalGlobalEmergingMarketsIndexrepresentstheunionoftheUSDdenominatedUSEmerging
MarketsindexandthepredominatelyEURdenominatedPanEuroEmergingMarketsIndex,coveringemergingmarketsinthefollowingregions:Americas,Europe,
MiddleEast,Africa,andAsia.AswithotherfixedincomebenchmarksprovidedbyBarclaysCapital,theindexisrulesbased,whichallowsforanunbiasedviewofthe
marketplaceandeasyreplicability.
DrawDown Thepeaktotroughdeclineduringaspecificrecordperiodofaninvestment,fundorcommodity.Adrawdownisusuallyquotedasthepercentage
betweenthepeakandthetrough.
TIPS TreasuryInflationProtection.Atreasurysecuritythatisindexedtoinflationinordertoprotectinvestorsfromthenegativeeffectsofinflation.TIPSare
consideredanextremelylowriskinvestmentsincetheyarebackedbytheU.S.governmentandsincetheirparvalueriseswithinflation,asmeasuredbythe
ConsumerPriceIndex,whiletheirinterestrateremainsfixed.
CPI ConsumerPriceIndex.Ameasurethatexaminestheweightedaverageofpricesofabasketofconsumergoodsandservices,such astransportation,foodand
medicalcare.
CashFlow Cashflowmeasuresthecashgeneratingcapabilityofacompanybyaddingnoncashcharges(e.g.depreciation)andinterestexpensetopretaxincome.

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U.S. Aggr
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IndexDescriptions
BofA/MerrillLynchHighYieldCashPayCCCratedIndex(JOA3) .AcomponentoftheBofA/MerrillLynchHighYieldCashPayIndexconcentratingonCCCrated
HighYieldcreditonly.
BofA MerrillLynchUSTreasuryIndex(G0Q0)TheMerrillLynchUSTreasuryIndextrackstheperformanceofUSdollardenominatedsovereigndebtpublicly
issuedbytheUSgovernmentinitsdomesticmarket.Qualifyingsecuritiesmusthaveatleastoneyearremainingtermtofinal maturity,afixedcouponschedule
andaminimumamountoutstandingof$1billion.
BofA MerrillLynchMunicipalIndexTheMerrillLynchMunicipal
BofAMerrillLynchCurrent10yearUSTIndex Thisindexisthe10yearcomponentoftheUSGovernmentindex.
BofAMerrillLynchCurrent30yearUSTIndex Thisindexisthe30yearcomponentoftheUSGovernmentindex.
JPMorganCorporateEMBIBroadDiversifiedIndex(JBCDCOMP) Thisindextrackstheperformanceofinvestmentgradecorporatedebtpublicallyissuedacrossa
rangeofemergingmarketcountries.
ShanghaiIndex TheShanghaiStockExchangeCompositeisacapitalizationweightedindextrackingdailypriceperformanceofallAandBshareslistedonthe
ShanghaiStockExchange.ThisindexwasdevelopedDecember19,1990withabasevalueof100.
NASDAQ Acomputerizedsystemthatfacilitatestradingandprovidespricequotationsonmorethan5,000ofthemoreactivelytradedover thecounterstocks.
Createdin1971,theNasdaqwastheworld'sfirstelectronicstockmarket.
Transports TheIndustrialsSectorincludescompanieswhosebusinessesaredominatedbyoneofthefollowingactivities:Themanufactureand distributionof
capitalgoods,includingaerospace&defense,construction,engineering&buildingproducts,electricalequipmentandindustrial machinery
Utilities Apublicutilityisabusinessthatfurnishesaneverydaynecessitytothepublicatlarge.Publicutilitiesprovidewater,electricity,naturalgas,telephone
service,andotheressentials.Utilitiesmaybepubliclyorprivatelyowned,butmostareoperatedasprivatebusinesses.
BasisPoint Abasispointisaunitthatisequalto1/100th of1%,andisusedtodenotethechangeinafinancialinstrument.
REIT RealEstateTrust.Asecuritythatsellslikeastockonthemajorexchangesandinvestsinrealestatedirectly,eitherthrough propertiesormortgages
Duration Durationisacommonlyusedmeasureofthepotentialvolatilityofthepriceofadebtsecurity,ortheaggregatemarketvalueofaportfolioofdebt
securities,priortomaturity.Securitieswithalongerdurationgenerallyhavemorevolatilepricesthansecuritiesofcomparablequalitywithashorterduration.
Argentina(MERVALIndex) Isbasketweighted,themarketvalueofthestockportfolio,selectedaccordingtoparticipationintheBuenosAiresStockExchange.
Chile(IPSAIndex) Thisindexistotalreturnindexandcomposedofthe40stockswiththehighestaverageannualtradingvolumeintheSantiago StockExchange.
Venezuela(IBVCIndex) IBCindexfromtheCaracasStockExchangeiscapweightedofthe15mostliquidstockstraded.
Columbia(GBCIndex) IGBCindexfromtheColumbianstockexchangeisliquidweightedofthemostliquidstockstraded.
Taiwan(TWSEIndex) CapweightedindexofalllistedcommonsharestradedontheTaiwanstockexchange.
Singapore(FSSTIIndex) StraitsTimesIndexdisseminatedbyFTSEcomprisedoftop30SGXmainboardlistedcompaniesontheSingaporestockexchangeby full
capitalization.
Malaysia(FBMKLCIIndex) FTSEBurmaMalaysiaKLCIindexcomprisesthelargest30companiesbyfullmarketcaponBursaMalaysiasmainboard.
Thailand(SETIndex) BangkokSETindexiscapweightedindexofstockstradedontheStockExchangeofThailand.
Indonesia(JCIIndex) TheJakartastockpriceindexisamodifiedcapweightedindexofallstockslistedontheregularboardofIndonesiaStockExchange.
Philippines(PCOMPIndex) PhilippinestockexchangePSEi IndexiscapweightedcomposedofstocksrepresentativeoftheIndustrial,properties,services,
holdingfirms,financialandoil&miningsectorsofthePSE.
Poland(MCPOIndex) WarsawstockexchangeismarketcapweightingofallcompaniestradingontheWarsawStockExchangeinmillionofzloty.
Czechoslovakia(PXIndex) PraguestockexchangeindexreplacedPX50andPXDindices.Freefloating.
Russia(ROSIndex) CSFirstBostonRussianstockmarketindexiscapweightedbasedon30stocks&denominatedinUSdollars.
Hungary(BUXIndex) Budapeststockexchangeiscapweightedindexadjustedforfreefloat.Tracksthedailypriceofsharestradedontheexchange.
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IndexDescriptions
BofA/MerrillLynchInflationLinkedIndex(G0Q1) TheBofAMerrillLynchUSInflationLinkedTreasuryIndextrackstheperformanceofUSdollardenominated
inflationlinkedsovereigndebtpubliclyissuedbytheUSgovernmentinitsdomesticmarket.
CitigroupTIPS(SBUSILSI) . Itmeasuresthereturnsoftheinflationlinkedbondswithfixedratecouponpaymentsthatarelinkedtoaninflationindex.The priceof
eachissueintheUSLSIisadjustedbyusinganindexratio.Theindexratioisdeterminedbydividingthecurrentinflationindexlevelbytheinflationindexlevelat
thetimeofissueofthesecurity.Theinflationindexispublishedonamonthlybasis,andtheintramonthindexratioiscalculatedusinglinear
interpolation.
Russell2000 measurestheperformanceofthesmallcapsegmentoftheUSequityuniverse.Russell2000isasubsetoftheRussell3000indexrepresenting
approximately10%ofthetotalmarketcapitalizationofthatindex.
S&PGSCI isacompositeindexofcommoditysectorreturnrepresentinganunleveraged,longonlyinvestmentincommodityfuturesthatisbroadlydiversified
acrossthespectrumofcommodities.
BarclaysCapitalUS30YearTIPSIndex .BarclaysCapital30yearTIPSontherunindexquotedinUSDollarstradedintraday
DAX ThisindexistheGermanStockIndexisatotalreturnindexof30selectedGermanbluechipstockstradedontheFrankfurtStockExchange.
CAC40 ThisindexthemostwidelyusedindicatoroftheParismarket,reflectstheperformanceofthe40largestequitieslistedinFrance,measuredbyfreefloat
marketcapitalizationandliquidity.
FTSE100 Isacapitalizationweightedindexofthe100mosthighlycapitalizedcompaniestradedontheLondonStockExchange.
MexicoIPC TheMexicanIPCindexisacapitalizationweightedindexoftheleadingstockstradedontheMexicanStockExchange.
HangSeng TheHangSengChinaEnterprisesIndexisafreefloatcapitalizationweightedindexcomprisedofHshareslistedontheHongKong StockExchangeand
includedintheHangSengMainlandCompositeIndex.
KOSPI ThisindexisacapitalizedweightedindexofallcommonsharesontheKoreanStockExchanges.
Nikkei225 TheNikkei225Stockaverageisapriceweightedaverageof225topratedJapanesecompanieslistedintheFirstSectionofthe TokyoStockExchange.
AustraliaAORD S&P/ASXAllOrdinariesrepresents500largestcompaniesintheAustralianequitiesmarket.Indexconstitutesaredrawnfromeligiblecompanies
listedontheAustralianStockExchange.
BrazilBovespaIndex(IBOV)TheBovespaIndexisagrossreturnindexweightedbytradedvolumeandiscomprisedofthemostliquidstockstradedontheSao
PauloStockExchange.TheBovespaIndexhasbeendivided10timesbyafactorof10sinceJanuary1,1985.
ShanghaiIndex(SHCOMP)TheShanghaiStockExchangeCompositeIndexisacapitalizationweightedindex.TheindextracksthedailyperformanceofallAshares
andBshareslistedontheShanghaiStockExchange.TheindexwasdevelopedonDecember19,1990withabasevalueof100.
BSEIndiaSensitiveIndex(Sensex)TheSensexisacapweightedindex.Theselectionoftheindexmembershasbeenmadeonthebasisofliquidity,depthand
floatingstockadjustmentdepthandindustryrepresentation.
EuroStoxx 50(sx5E)Index ComprisedofEuropesleading50bluechipstocksform12Eurozonecountries.
Switzerland(SMI)Index SwissmarketindexofthelargestandmostliquidstocksontheGeneva,ZurichandBaslestockexchanges.
Italy(FTSEMIB)Index consistsof40mostliquidandcapitalizedstocksontheBorsa Italiana.
Spain(IBEX35)Index IBEX35istheofficialindexoftheSpanishContinuousmarketcomprisedof35mostliquidstocks.
Canada(TXEQ) TheS&P/TorontoStockExchangeequityindexiscapweighteddesignedtomeasuremarketactivityofstockslistedontheTSX.
Turkey(XU100Index) Borsa Istanbul100indexiscapweightedcomposedofNationalMarketcompanies.
SouthAfrica(TOP40Index) TheFTSE/JSETop40indexiscapweighted.Companiesincludedarethe40largestbymarketcapitalization.
S&PLSTALevLoanIndex(BankLoans) CreatedbytheLeveragedCommentary&Data(LCD)teamatS&PCapitalIQ,thereviewprovides an overviewandoutlook
oftheleveragedloanmarketaswellasanexpansivereviewoftheS&PLeveragedLoanIndexandsubindexes. Thereviewconsistsofindexgeneralcharacteristics,
results,riskreturnprofile,default/distressstatistics, andrepaymentanalysis.Itisnotpossibletoinvestdirectlyinanindex.
Citigroup3MonthTBill(SBMMTB3) 3MonthUSTBillinUSdollars.

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IndexDescriptions

EuroInvestmentGrade(BERCIndex) BloombergEURInvestmentGradeEuropeanCorporateBondIndexisrulesbased,marketvalueweightedindexengineered
tomeasureinvestmentgrade,fixedratepubliclyissuedsecuritiesintheEuropeanbondmarket.
EuroHighYield(BEUHIndex) TheBloombergEURHighYieldCorporateBondindexisrulesbased,marketvalueweightedindexengineeredtomeasurehigh
yield,fixedratepubliclyissuedsecuritiesintheEuropeanbondmarket.
EuroStoxx 600(SXXPIndex) TheStoxx Europe600isderivedfromtheSTOXXEuropeTotalMarketIndex(TMI)andisasubsetoftheSTOXXGlobal1800index.It
representsthelarge,midandsmallcapcompaniesacross18countriesoftheEuropeanregion.

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Disclaimer
ImportantInformationRegardingThisReport
Thisreportwaspreparedasaprivatecommunicationandwasnotintendedforpubliccirculation.Clientsorprospectsmayauthorizedistributiontotheir
consultantsorotheragents.
Issueselectionprocessesandtoolsillustratedthroughoutthispresentationaresamplesandmaybemodifiedperiodically.Suchchartsarenottheonlytoolsused
bytheinvestmentteams,areextremelysophisticated,maynotalwaysproducetheintendedresultsandarenotintendedforusebynonprofessionals.
DoubleLinehasnoobligationtoproviderevisedassessmentsintheeventofchangedcircumstances.Whilewehavegatheredthisinformationfromsources
believedtobereliable,DoubleLinecannotguaranteetheaccuracyoftheinformationprovided.Securitiesdiscussedarenotrecommendationsandarepresented
asexamplesofissueselectionorportfoliomanagementprocesses.Theyhavebeenpickedforcomparisonorillustrationpurposesonly.Nosecuritypresented
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