Metwest Floating Rate Income Fund

Quarterly Commentary

Market Review - “the more things change, the more they stay the same”

Having foreshadowed a willingness to renew monetary accommodation as early as January of this year, perhaps the Fed could be lauded for holding off action until the third quarter against the withering criticism from the President and intermittently volatile markets. But capitulate it finally did, not once but twice, with an ease of 25 basis points in September to follow one in late July, which had marked its first cut since 2008. What was notable in the redirection of policy, as highlighted by the latest meeting minutes, was a lack of consensus versus the past, underscoring uncertainty (and dispersion of opinion) among the FOMC members. The broader viewpoints suggest increased risk of policy error, particularly in the face of unrelenting political pressure. However, it wasn’t as if the more dovish faction was without support for its perspective: since the start of the year, trade tension and its fallout disaffected economic measurables in a meaningful way. As a result, global recessionary concerns mounted in the third quarter, particularly in Europe where the IHS Market Eurozone composite PMI, which captures both manufacturing and services activity, fell to 50.4 in September, the lowest reading since June 2013, and German manufacturing PMI fell to a 10-year low. Trade concerns have taken a toll on U.S. manufacturing as well, with the PMI here falling into contraction territory for the first time in three years. Not surprisingly, businesses remain skeptical of the prospective environment, as evidenced by sharp declines in survey-based measures of expectations, confidence, and spending decisions....

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S&P/LSTA Leveraged Loan Index (LLI) – Reflects the market-weighted performance of U.S. dollar-denominated institutional leveraged loan portfolios based upon real-time market weightings, spreads and interest payments.

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The index listed is not available for direct investment; therefore its performance does not reflect a reduction for fees or expenses incurred in managing a portfolio. The securities in the index may be substantially different from those in the Fund.

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This report may include estimates, projections and other "forward-looking statements." Due to numerous factors, actual events may differ substantially from those presented. TCW assumes no duty to update any such statements.

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The performance data presented represents past performance and is no guarantee of future results. Total returns include reinvestment of dividends and distributions. Current performance may be lower or higher than the performance data presented. Performance data current to the most recent month end is available on the product detail page for each Fund. Investment returns and principal value will fluctuate with market conditions. The value of an investment in the Fund, when redeemed, may be worth more or less than its original purchase cost.
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Fixed income investments entail interest rate risk, the risk of issuer default, issuer credit risk, and price volatility risk. Funds investing in bonds can lose their value as interest rates rise and an investor can lose principal.

The MetWest Funds are distributed by TCW Funds Distributors LLC.

The MetWest Funds are advised by Metropolitan West Asset Management, LLC, which is a wholly-owned subsidiary of The TCW Group, Inc.