Company: TSI
Filing Date: 2025-08-08
Form Type: N-2
Source: 0001193125-25-177098
Chunk: 29

Company: TCW STRATEGIC INCOME FUND INC
Filing Date: 2025-08-08
Form: N-2
Chunk 29
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 tests, to adopt and implement a derivatives risk management program (including the appointment of a derivatives risk manager and the implementation of certain testing requirements), and meet
certain reporting requirements in respect of derivatives. To the extent the Fund uses derivative instruments (excluding certain currency and interest rate hedging transactions) in a limited amount, it will not be subject to the full requirements of
Rule 18f-4. Under Rule 18f-4, a closed-end fund that is not a limited user of derivatives, as defined under the rule, generally
must comply with an outer limit on fund leverage risk based on value-at-risk, or “VaR.” This outer limit is based on a relative VaR test that compares a
fund’s VaR to the VaR of a “designated reference portfolio” for that fund. A fund generally can use either an index that meets certain requirements or the fund’s own securities portfolio (excluding derivatives transactions) as
its designated reference portfolio. If a fund’s derivatives risk manager reasonably determines that a designated reference portfolio would not provide an appropriate reference portfolio for purposes of the relative VaR test, the fund would be
required to comply with an absolute VaR test. A closed-end fund’s VaR is not permitted to exceed 250% of the VaR of the fund’s designated reference portfolio under the relative VaR test or 25% of the
fund’s net assets under the absolute VaR test.

In addition, under Rule 18f-4, unless the
Fund qualifies as a limited user of derivatives, it needs to implement a written derivatives risk management program. The program must include risk guidelines as well as stress testing, backtesting, internal reporting and escalation, and program
review elements. A derivatives risk manager approved by the Fund’s board of directors administers the program. The Fund’s derivatives risk manager has to report to the Fund’s Board on the derivatives risk management program’s
implementation and effectiveness to facilitate the Board’s oversight of the Fund’s derivatives risk management. Rule 18f-4 also provides that a fund is permitted to engage in reverse repurchase
agreements and similar financing transactions so long as the fund meets the asset coverage requirements under Section 18 of the 1940 Act; that is, the value of the Fund’s total assets less all liabilities and indebtedness not represented
by senior securities (for these purposes, “total net assets”) is at least 300% of the senior securities representing indebtedness (effectively limiting the use of leverage through senior