TCW Artificial Intelligence Equity Fund

Quarterly Commentary

December 31, 2018


The TCW Artificial Intelligence Equity Fund, I Share Class (the “Fund”) generated a return of -17.21% during the quarter and underperformed the Russell 3000® Growth Index return of -16.33%. The portfolio’s underperformance was due to the Fund’s overexposure to the Semiconductors subsector relative to the Russell 3000® Growth Index. Individual underperformers for the quarter included NVIDIA (NVDA; 2.34%**), Align Technology (ALGN; 1.02%**), NetApp (NTAP; 1.68%**), and Western Digital (WDC; 0.95%**). Additionally, relative weakness in the quarter came from the video game publishers Activision Blizzard (ATVI; 1.15%**) and Electronic Arts (EA; 1.07%**). Offsetting the weakness was strong performance in the quarter from core top holdings (all in the Top 12) such as Tesla (TSLA; 2.62%**), Workday (WDAY; 2.53%**), American Tower (AMT; 2.79%**), Intel (INTC; 2.91%**), and ServiceNow (NOW; 4.00%**). Additional outperformers worth mentioning were Broadcom (AVGO; 2.05%**) and Tableau Software (DATA; 1.37%**). We would also note that the index is substantially overweight in Apple (AAPL; 1.71%**) as compared to our position size (average weight of 6.92% in the index versus 1.96% in the portfolio). As a result, Apple’s significant negative performance resulted in large relative outperformance for the fund compared to the index...

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Russell 3000® Growth Index – Measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values.

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