Company: TSI
Filing Date: 2025-08-08
Form Type: N-2
Source: 0001193125-25-177098
Chunk: 92

Company: TCW STRATEGIC INCOME FUND INC
Filing Date: 2025-08-08
Form: N-2
Chunk 92
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 below its expected investment income if the capital returned cannot be invested in transactions with equal or greater yields.

46

Credit Spread Risk

Credit spread risk is the risk that credit spreads (i.e., the difference in yield between securities that is due to differences in their credit
quality) may increase when the market expects below- investment-grade bonds to default more frequently. Widening credit spreads may quickly reduce the market values of below-investment-grade and unrated securities. In recent years, the U.S. capital
markets experienced extreme volatility and disruption following the spread of COVID-19, the conflict between Russia and Ukraine and other economic disruptions, which increased the spread between yields
realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. Central banks and governments played a key role in reintroducing liquidity to parts of the capital markets. Future exits of these financial
institutions from the market may reintroduce temporary illiquidity. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on the Fund’s business, financial condition, results of operations and cash
flows. The Adviser tends to focus on credit swap risk at a portfolio level, to seek to ensure any potential return volatility is within an acceptable level.

Industry and Sector Risk

Although the
Fund does not employ an industry or sector focus, the percentage of the Fund’s assets invested in specific industries or sectors will increase from time to time based on the portfolio management team’s perception of investment
opportunities. The Fund may be overweight in certain industries and sectors at various times relative to its benchmark index. If the Fund invests a significant portion of its assets in a particular industry or sector, the Fund is subject to the risk
that companies in the same industry or sector are likely to react similarly to legislative or regulatory changes, adverse market conditions, increased competition, or other factors generally affecting that market segment. In such cases, the Fund
would be exposed to an increased risk that the value of its overall portfolio will decrease because of events that disproportionately affect certain industries and/or sectors. The industries and sectors in which the Fund may be overweighted will
vary. Furthermore, investments in particular industries or sectors may be more volatile than the broader market as a whole, and the Fund’s investments in these industries and sectors may be disproportionately susceptible to losses even if not
overweighted.

Risks Factors from Holdings in Underlying Funds

In addition to the Risk Factors described above, the Fund may be subject to the following Risk