TCW Relative Value Mid Cap Fund

Quarterly Commentary

December 31, 2017

Investment Environment

U.S. equities turned in another solid quarter on the heels of mostly solid earnings reports as well as the anticipation of the tax relief program which President Trump signed into law on December 22. The tax bill should have a greater impact on small and mid caps as they generally pay much higher effective tax rates than large caps many of whom have off shore lower tax jurisdictions. After two quarters of double-digit growth, 3Q:17 earnings for Russell Midcap companies gained nearly 5% in the third quarter (dominated by Information Technology names) albeit somewhat dampened by the hurricanes and significant property and casualty write-downs. While earnings had been driven more by cost cutting and restructuring efforts in previous quarters, Russell Midcap companies experienced accelerating top line growth in 2017 with ~7% year-over-year growth in the third quarter. The third release of 3Q 2017 GDP showed a resilient U.S. economy expanding at a 3.2% rate (quarter-over-quarter) with the rise reflecting increases in consumer spending, inventory investment, business investment, and exports. The U.S. dollar’s decline over the quarter (as well as the calendar year) along with stronger U.S. and global growth propelled commodity and related sectors in general. For example, West Texas Intermediate† crude was up 16.9% in the quarter and 12.5% for the year while Russell Midcap Energy stocks, as a group, returned 6.9% and -6.4%, respectively...

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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.


Russell Midcap® Value Index – A market capitalization-weighted index of medium-capitalization, value-oriented stocks of U.S. companies.

Portfolio Characteristics & Holdings

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

A Word About Risk

Equity investments entail equity 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. Funds investing in mid and small cap companies involve special risks including higher volatility and lower liquidity.

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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The TCW Funds are distributed by TCW Funds Distributors LLC