Company: TSI
Filing Date: 2025-03-05
Form Type: N-CSR
Source: 0001193125-25-046168
Chunk: 2

Company: TCW STRATEGIC INCOME FUND INC
Filing Date: 2025-03-05
Form: N-CSR
Chunk 2
---
 1

| Letter to Shareholders (Continued) |

Management Commentary For an apparently fading economy that had sufficiently convinced the Federal Reserve to initiate monetary easing in September — with a 50 basis points (bps) cut, to boot — the market emphatically cast doubts on that view to close out 2024. Embracing the growth outlook, in an expression of dissent, broad equity indexes added to accumulated year-to-dategains while, more pertinently, interest rates sold off to move higher, especially out the yield curve. The summertime reflection that brought Fed Chair Powell to an ease was labor market weakness borne of decelerating job creation and rising unemployment, even as inflation remained sticky and above its 2% target. That rate “rebellion” started on cue from the September ease, with 5-to 10-YearU.S. Treasury yields up nearly 100 bps from mid-Septemberto year-end,while the Fed eased two more times, delivering a “bear steepening” scenario. The bond market reaction was no doubt further abetted by an election outcome suggesting a more invigorated economy promising higher growth as virtue and potential tariff-induced inflationary effects as vice. Added up, though more of the rise DID come from the virtuous growth side of the ledger, it still meant for increased rates and generally disappointing bond returns as a result. As a consequence of the higher rates, fixed income returns were negative as the Bloomberg U.S. Aggregate Bond Index fell 3.1% in the fourth quarter and culminated a likewise unspectacular 1.3% advance for the year. While shorter maturity indexes delivered a flat Q4, i.e., no-to-limitedlosses, almost anything carrying duration beyond three years fell into the red and ceded earlier 2024 gains. Relatively, corporates captured a better experience for both Q4 and 2024 as higher coupons and resilient yield spreads generated considerable excess returns (to comparable duration U.S. Treasury issues) over those periods. While investment grade corporate outperformance was clear and durable, though still negative overall in Q4 due to the duration drag, high yield scratched out not only a marginally positive 0.2% Q4 return but a respectable 8.2% gain for the year also. (As an aside, this “risk on” sentiment was reflected in more buoyant equity market returns captured by the S&P 500’s 2.4% fourth quarter advance and 25% year-over-year gain,