MetWest Investment Grade Credit Fund Q2 2024 Commentary

IMPORTANT DISCLOSURE

This material reflects the current opinions of the author but not necessarily those of TCW and such opinions are subject to change without notice. TCW, its officers, directors, employees or clients may have positions in securities or investments mentioned in this publication, which positions may change at any time, without notice. This material may include estimates, projections and other “forward-looking” statements. Actual events may differ substantially from those presented. TCW assumes no duty to update any such statements. All projections and estimates are based on current asset prices and are subject to change.

Performance Detail as of June 30, 2024

					Annualized
(%)	June	YTD	2Q	1 Year	3 Year	5 Year	10 Year	Since Inception 1
MWIGX (I Share) Inception Date 6/22/2018	0.92	0.68	0.68	5.53	-1.34	1.38	–	3.21
MUTF:MWISX (M Share) Inception Date 6/22/2018	0.90	0.45	0.63	5.32	-1.55	1.17	–	2.99
Bloomberg U.S. Intermediate Credit Index	0.71	0.93	0.73	5.60	-0.80	1.32	–	2.44-I&M
Expense Ratio (%)	I Share	M Share
Gross	3.63	3.91
Net 2	0.50	0.71

Annual fund operating expenses as stated in the Prospectus dated July 29, 2023.

The performance data presented represents past performance and is no guarantee of future results. Returns assume all income items are reinvested. 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 Fund’s website at TCW.com. 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. The since inception return for the index reflects the inception date of the MetWest Class I and Class M Share Funds. For period 6/29/2018 – 6/30/2024. Not annualized if less than one year. Expenses reflect a contractual agreement by the Adviser to reduce its fees and/or absorb certain expenses to limit the fund’s total annual operating expenses until July 31, 2024, unless terminated earlier by the Board of Trustees. Performance would have been lower if fees had not been waived in various periods.

Bloomberg U.S. Intermediate Credit Index – An index that measures the performance of investment grade, U.S. dollar-denominated, fixed-rate, taxable corporate and government-related debt with less than ten years to maturity. It is composed of a corporate and a non-corporate component that includes non-U.S. agencies, sovereigns, supranationals, and local authorities. The index is not available for direct investment; therefore its performance does not reflect a reduction for fees or expenses incurred in managing a portfolio. The securities in the index may be substantially different from those in the Fund.

“Bloomberg®” and each of the Bloomberg fixed income indices are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the index (collectively, “Bloomberg”) and have been licensed for use for certain purposes by TCW. Bloomberg is not affiliated with TCW, and Bloomberg does not approve, endorse, review, or recommend any TCW product or portfolio. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to any TCW product or portfolio.

Source: TCW, BNY Mellon

Investment Risks

It is important to note that the Fund is not guaranteed by the U.S. Government. Fixed income investments entail interest rate risk, the risk of issuer default, issuer credit risk, and price volatility risk. Funds investing in bonds can lose their value as interest rates rise and an investor can lose principal. Mortgage-backed and other asset-backed securities often involve risks that are different from or more acute than risks associated with other types of debt instruments. MBS related to floating rate loans may exhibit greater price volatility than a fixed rate obligation of similar credit quality. With respect to non-agency MBS, there are no direct or indirect government or agency guarantees of payments in pools created by non-governmental issuers. Non-agency MBS are also not subject to the same requirements for the underlying mortgages that are applicable to those mortgage-related securities that have a government or government-sponsored entity guarantee. For a complete list of Fund risks, please see the Prospectus.

Glossary of Terms

Agency MBS– The purchase of mortgage-backed securities issued by government-sponsored enterprises such as Ginnie Mae, Fannie Mae or Freddie Mac. Amortization– The paying off of debt with a fixed repayment schedule in regular installments over a period of time. Asset-Backed Securities– A financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities. Basis Point (‘bps’)– One hundredth of one percent, used chiefly in expressing differences of interest rates. Bloomberg Aggregate Bond Index or “the Agg”– Is a broad-based fixed-income index used by bond traders and the managers of mutual funds and exchange-traded funds (ETFs) as a benchmark to measure their relative performance. Bond– A fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer. Capital Expenditure (‘capex’)– Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. Cash Flow– The movement of money into or out of a business, project, or financial product. CMBS (Commercial Mortgage-Backed Securities)– A debt obligation that represents claims to the cash flows from pools of mortgage loans on commercial property. CLO(Collateralized Loan Obligations) – A special purpose vehicle (SPV) with securitization payments in the form of different tranches. Financial institutions back this security with receivables from loans. Collateral – Property or other assets that a borrower offers a lender to secure a loan. Cohort– A group who shared a particular characteristic or a particular time span. Core Consumer Price Index (Core CPI)– A measure that examines the weighted average of prices of a basket of consumer goods and services excluding food and energy. Core PCE Index– Measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Corporate – Of or relating to a bond issued by a corporation as opposed to a bond issued by the U.S. Treasury, a non-U.S. government or a municipality. Corporate Credit– A term that is used in written investment materials and commentaries to refer to a corporation’s debt or to the corporate debt market as a whole. Coupon– The interest rate stated on a bond when it’s issued. The coupon is typically paid semiannually. CPI (Consumer Price Index)– A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. Cyclical– A cyclical stock is a stock highly correlated to changes in the economy. Duration– A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. Federal Reserve(the Fed) – The central bank of the United States which regulates the U.S. monetary and financial system. Floating Rate– Any interest rate that changes on a periodic basis. The change is usually tied to movement of an outside indicator, such as the prime interest rate. FOMC(Federal Open Market Committee) – The branch of the Federal Reserve Board that determines the direction of monetary policy. GDP (Gross Domestic Product)– The market value of all final goods and services produced within a country in a given period of time. High Yield– A bond that is rated below investment grade. Inflation– A condition of a rise in the general level of prices of goods and services in an economy over a period of time. Inflationary– Of, associated with, or tending to cause inflation. Investment Grade– A bond that is rated Baa3/BBB- or higher by Moody’s, Standard & Poors and Fitch. Labor Market– The nominal market in which workers find paying work, employers find willing workers, and wage rates are determined. Liquidity– The ability to convert an asset to cash quickly. MBS(Mortgage-Backed Securities) – A type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by a accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution. Monetary Policy– The actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. Non-agency – Mortgage backed securities made up of mortgage loans that are not guaranteed by a government-supported agency. Non-Agency MBS– Mortgage backed securities sponsored by private companies other than government sponsored enterprises such as Fannie Mae or Freddie Mac. Non-cyclical– Non-cyclical stocks repeatedly outperform the market when economic growth slows. Non-cyclical securities are generally profitable regardless of economic trends because they produce or distribute goods and services we always need, including things like food, power, water, and gas. Overweight – A condition where the portfolio exposure to a given asset class (or risk measure) exceeds that of the benchmark index. PCE (Personal Consumption Expenditure)– The primary measure of consumer spending on goods and services in the U.S. economy. S&P 500– The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The index actually has 503 components because three of them have two share classes listed. Securitized– When a bank pools together different kinds of loans to clear them off its balance sheet, to free up credit for new lenders, and to create new securities that can be marketed and sold to investors. Spread– The difference between the bid and the ask price of a security or asset. Stagflation– A condition of slow economic growth and relatively high unemployment, accompanied by a rise in prices, or inflation. Tightening– Short for tight monetary policy. A situation in which a central bank enacts relatively high target interest rates to lower the available of credit. Effectively “tightening” the supply of credit. Total Return– The rate of return on a security, including income from dividends and interest, as well as appreciation or depreciation in the price of the security, over a given time period of time. Tranches– Are segments created from a pool of securities—usually debt instruments such as bonds or mortgages—that are divvied up by risk, time to maturity, or other characteristics in order to be marketable to different investors. Each portion or tranche of a securitized or structured product is one of several related securities offered at the same time, but with varying risks, rewards and maturities to appeal to a diverse range of investors. Treasury Yield– The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Underperform– When an investment is underperforming, it is not keeping pace with other securities or indices. Underweight– A condition where a portfolio does not hold a sufficient amount of a particular security when compared to the security’s weight in the underlying benchmark portfolio. Unemployment Rate– The percentage of the total labor force that is unemployed but actively seeking employment and willing to work. U.S. Treasuries (U.S. Treasury Securities) – Bills, notes and bonds that are debt obligations of the U.S. government. Valuations– The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective. Volatility– A measure of the risk of price moves for a security calculated from the standard deviation of day to day logarithmic historical price changes. Yield– The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value. Yield Curve – A curve on a graph in which the yield of fixed-interest securities is plotted against the length of time they have to run to maturity. Yield Premium– Additional return. Yield Spread– The difference between yield of a risky asset and the yield of a risk-free asset with similar maturity and duration profile.