TCW Relative Value Large Cap Fund

Quarterly Commentary

December 31, 2018

Investment Environment

The combination of tense trade negotiations between the U.S. and China, signs of slowing global economic growth, interest rate hike jitters, and the prospect of a protracted U.S. government shutdown triggered a dramatic sell-off in equities in the fourth quarter. Before being upended by the worst December since 1931, October’s S&P 500 performance was the worst month in more than seven years accompanied by a rare simultaneous decline in bond prices. U.S. equities bounced back in November though the road was bumpy. While the same causes that led to the sharp decline in October (and again in December) still hovered, investors had reasons to be optimistic. Early in the quarter, the Bureau of Labor Statistics report showed robust jobs growth in October along with 3.1% (year-over-year) wage growth and the unemployment rate at 3.7%, close to a fifty-year low. Stocks then got a big boost upon the outcome of the midterm elections which resulted in the Democrats taking back control of the House of Representatives. Equities got a further lift after Britain and the European Union agreed on a Brexit deal, though Prime Minister Theresa May postponed her country’s early December Parliamentary vote as indications suggested it would most likely be rejected. The markets rallied after Fed Chairman Jerome Powell’s speech on November 28 to the Economics Club of New York. However, November’s rosier outlook dissipated in December with fears of the Fed maintaining its independence, U.S. cabinet level/military disagreements, a partial U.S. government shutdown, and the looming March 1st U.S./China truce deadline...

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Russell 1000® Value Index – Measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

Forward Looking Statement

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.

Portfolio Characteristics & Holdings

Portfolio characteristics and holdings are subject to change at any time.

A Word About Risk

Equity investments entail equity risk and price volatility risk. The value of stocks and other equity securities will change based on changes in a company's financial condition and in overall market and economic conditions.

About Performance
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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