Company: TSI
Filing Date: 2025-08-08
Form Type: N-2
Source: 0001193125-25-177098
Chunk: 111

Company: TCW STRATEGIC INCOME FUND INC
Filing Date: 2025-08-08
Form: N-2
Chunk 111
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 in either case causing an inability to service outstanding debt. An Underlying Fund’s investments may be among the most junior
financing in an issuer’s capital structure. In the event such issuer cannot generate adequate cash flow to meet debt obligations, the company may default on its loan agreements or be forced into bankruptcy resulting in a restructuring or
liquidation of the company, and an Underlying Fund, particularly in light of the subordinated and/or unsecured position of an Underlying Fund’s investments, may suffer a partial or total loss of capital invested in the company, which could
adversely affect the return of an Underlying Fund.

Non-PerformingInvestments

An Underlying Fund’s portfolio may include investments whose underlying collateral are
“non-performing” and that are typically highly leveraged, with significant burdens on cash flow and, therefore, involve a high degree of financial risk. During an economic downturn or recession,
securities of financially troubled or operationally troubled issuers are more likely to go into default than securities or instruments of other issuers. Securities or instruments of financially troubled issuers and operationally troubled issuers are
less liquid and more volatile than securities or instruments of companies not experiencing financial difficulties. Investment, directly or indirectly in the financially and/or operationally troubled issuers involves a high degree of credit and
market risk.

These difficulties may never be overcome and may cause borrowers to become subject to bankruptcy or other similar
administrative proceedings. There is a possibility that an Underlying Fund may incur substantial or total losses on its investments and in certain circumstances, subject an Underlying Fund to certain additional potential liabilities that may exceed
the value of an Underlying Fund’s original investment therein.

56

Payment-in-Kind(“PIK”) Income Risk

An Underlying Fund may hold investments that result in PIK income or PIK dividends. PIK income may have
a negative impact on liquidity, as it represents a non-cash component of an Underlying Fund’s taxable income that may require cash distributions to stockholders in order to maintain an Underlying
Fund’s ability to be subject to tax as a RIC. Similarly, all things being equal, the deferral associated with PIK income also increases the loan-to-value ratio at a
compounding rate. The market prices of PIK securities generally are more volatile than the market prices of interest-bearing securities and are likely to respond to a greater degree to changes in interest rates than interest-bearing securities
having similar maturities and credit quality. Because PIK