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2011-2012 Review and Outlook: MetWest Total Return Bond Fund

Is There Life After Debt?

January 10, 2012

MetWest is a wholly-owned subsidiary of The TCW Group, Inc.Presenters are registered representatives of TCW Funds Distributors, Inc. (member FINRA/SIPC)

Presented by:

Tad RivelleChief Investment OfficerFixed IncomeGroup Managing Director

Laird R. LandmannGroup Managing DirectorU.S. Fixed Income

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1 MKTcc1764 1/10/12

You should consider the investment objectives, risks, charges and expenses of the MetWest Total Return Bond Fund carefully before investing. The Funds Prospectusand Summary Prospectus contains this and other information about the Fund. To receive a free Prospectus, please call 1-800-241-4671 or you may download theProspectus from the Fund's website at http://www.mwamllc.com/literature.php. Read it carefully before you invest or send money.This presentation is for information purposes only. There is no assurance that historical occurrences or trends will be repeated or continue in the future. Pastperformance is no guarantee of future results. The third party statistical data contained herein is based on sources believed to be reliable.Any opinions expressed are current only as of the time made; are subject to change without notice; are solely those of the author and do not represent the views of TCW/MetWest as a firm or of any other portfolio manager or employee of TCW. Funds investing in U.S. government-guaranteed securities, including the MetWest TotalReturn Bond Fund, are neither insured nor guaranteed by the U.S. Government and neither the Fund nor its yield is guaranteed by the U.S. Government. Fixed incomeinvestments 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 riseand an investor can lose principal.The information contained herein may include estimates, projections and other "forward-looking" statements. Actual events may differ substantially from those

presented herein. TCW assumes no duty to update any such statements.The MetWest Funds are distributed by BNY Mellon Distributors Inc. which is not affiliated with TCW. The MetWest Funds are advised by Metropolitan West AssetManagement, LLC, which is a wholly-owned subsidiary of The TCW Group.

AgendaI. Market Review/Economic Backdrop

II. Value Based Bond Management in a Risk On/Risk Off Market

III. Economic Outlook

IV. Portfolio Strategy

V. Appendix

Securities offered through TCW Funds Distributors, Inc. (member FINRA/SIPC)

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2011 Market Review Asset Class Returns

3 MKTcc1764 1/10/12

Asset Class Returns 1

3 Yrs Ended2011 Ranking 2011 12/31/2011

Gold 10.1% 21.0%

U.S. Treasuries 9.8% 3.9%

Agency MBS 6.2% 5.8%

Developed Countries Gov. Bonds 5.6% 3.6%HY Bonds 4.4% 23.7%

U.S. Equities 2.1% 14.1%

ABX 06-1 AAA -2.0% 2.5%

Residential Housing 2 -3.0% -8.3%

Emerging Markets Debt -3.2% 8.5%Commodities -8.8% 18.9%

Emerging Markets Equities -12.5% 17.7%

European Equities -13.2% 2.6%

U.S. Financials Equities -17.1% 2.9%

3 Yrs Ended3 Yr Ranking 12/31/2011 2011

HY Bonds 23.7% 4.4%

Gold 21.0% 10.1%

Commodities 18.9% -8.8%

Emerging Markets Equities 17.7% -12.5%U.S. Equities 14.1% 2.1%

Emerging Markets Debt 8.5% -3.2%

Agency MBS 5.8% 6.2%

U.S. Treasuries 3.9% 9.8%

Developed Countries Gov. Bonds 3.6% 5.6%U.S. Financials Equities 2.9% -17.1%

European Equities 2.6% -13.2%

ABX 06-1 AAA 2.5% -2.0%

Residential Housing 2 -8.3% -3.0%

1. Annualized returns.2. Estimated value.Source: Bloomberg, Barclays, ML

Policy driven, post 2008 financial remediation process takes a pause

Wanting for Europe to catch on and catch up

= risk off assets = risk on assets

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Economic Recap: Balance Sheet Recessions Not Great For Employment

4 MKTcc1764 1/10/12

Some Improvement BUT Some Discouragement

Mar-1948 Mar-1964 Mar-1980 Mar-199654

56

58

60

62

64

66

68

Dec-2011

Civilian Labor Force Participation Rate

Jan-1971 Apr-1981 Jul-1991 Oct-200105

10152025303540

45Median Weeks Unemployed

Average Weeks Unemployed

Dec-2011

Duration of Unemployment

Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

Dec-1979 Dec-1987 Dec-1995 Dec-2003 Dec-20110

100

200

300

400

500

600

700

800

0%

2%

4%

6%

8%

10%

12%

I n i t i a l

J o b l e s s

C l a i m s

( t h o u s a n

d s )

U n e m p

l o y m e n

t R a t e

( % )

Initial Jobless Claims Unemployment Rate

Unemployment Rate vs. Initial Claims

Source: Bureau of Labor Statistics, U.S. Department of Labor and Bloomberg

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Economic Recap:Policy Makers Fighting Leverage Through Rates

5 MKTcc1764 1/10/12

2008 housing crisis caused massive wealth decline

Consumer and lender behavioral changes result invelocity collapse

Federal Government spending/deficits filled the hole

Federal Reserve responds with

ZIRP

Twist

1959 1965 1972 1978 1985 1991 1998 2004 20111.500

1.600

1.700

1.800

1.900

2.0002.100

2.200

M2 Velocity

Jun-2004 Sep-2005 Dec-2006 Mar-2008 Jun-2009 Sep-2010 Dec-2011-1

0

1

2

3

45 Yr Real Yields 10 Yr Real Yields 30 Yr Real Yields

Real Yields

Source: Federal Reserve

Source: Bloomberg

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Direct Impact of ZIRP Still Muted

Nominal variables look good for housing market

Continued price erosion makes financing homesexpensive

Delaying impact of policy

However

Residential real estate is cheap

In many demographics

rents are 2x to 3x a mortgage payment

rents are firm to rising

many zip codes below wholesale constructioncosts

Dec-1975 Dec-1981 Dec-1987 Dec-1993 Dec-1999 Dec-2005 Dec-20110%

2%4%6%8%

10%12%14%16%

18%20%

30 Yr FNMA Mortgage Commitment Rate

Dec-1975 Dec-1984 Dec-1993 Dec-2002 Dec-2011-10%

-5%

0%

5%

10%

15%

20%

"Real" Mortgage Rates

Source: Bloomberg

Source: Federal Reserve, Bloomberg, Fed. Reserve Bank of St. Louis

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Developed Country Debt Burdens Have Dramatically Increased

Euro Block faces unique challenges in a balance sheet recession

Dec-2005 Dec-2006 Dec-2007 Dec-2008 Dec-2009 Dec-2010 Dec-20110

20

40

60

80

100

120

140

UK Italy Japan

Debt Burdens

Dec-2004 Feb-2006 Apr-2007 Jun-2008 Aug-2009 Oct-2010 Dec-20111.5

2.5

3.5

4.5

5.5

6.5

7.5Italy Spain U.S.

Italy & Spain 10 Year Yields

Source: IMF, Bloomberg, Fed.

Source: Bloomberg

Jun-2006 May-2007 Apr-2008 Mar-2009 Feb-2010 Jan-2011 Dec-20110.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

C B A s s e t s

I n d e x

( M a y

2 0 0 6 =

1 . 0 ) U.S.

ECB

BOE

SNB

Central Bank Balance Sheet Expansion

Jun-2006 May-2007 Apr-2008 Mar-2009 Feb-2010 Jan-2011 Dec-20110%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

C B A s s e t s a s

% o

f G D P

Fed ECB BOE SNB

Central Bank Assets as % of GDP

Source: Bloomberg, Fed. Reserve, Bank of England, Swiss National Bank, European Central Bank

Source: Bloomberg, Fed. Reserve, Bank of England, Swiss National Bank, European Central Bank, IMF

US Germany Spain

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II. Value Based Bond Management in a Risk On/Risk Off Market

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2011 MWTIX Positioning

9 MKTcc1764 1/10/12

Dec-2010 Feb-2011 Apr-2011 Jun-2011 Aug-2011 Oct-2011 Dec-2011100

150

200

250

300

350

400

450

500

Single-A Rated Financial Spreads

Source: Barclays

Dec-2010 Feb-2011 Apr-2011 Jun-2011 Aug-2011 Oct-2011 Dec-2011-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

10 Year Real Interest Rates

Dec-2010 Feb-2011 Mar-2011 May-2011 Jun-2011 Aug-2011 Sep-2011 Oct-2011 Dec-201130

32

34

36

38

40

42

4446

48

Non-Agency MBS PricesABX.HE.AAA.07-2

Source: Bloomberg

Source: Markit

Value disciplines directs strategy shift

Reduced

Dec-2010 Feb-2011 Apr-2011 Jun-2011 Aug-2011 Oct-2011 Dec-20112.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Yield Curve Slope2Y/30Y Treasury Spreads

Source: Bloomberg

Neutral

Added

Reduced

Neutral

Added

Bullet

AddedLongUST Modest

Bullet

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2011 MWTIX Positioning (contd)

10 MKTcc1764 1/10/12

Value based disciplines: Sell during remediation, add during reversal

Valuations in some sectors (Financials and Non Agency MBS) touch 2008 levels

1st half 2011 2nd half 2011 2nd half ChangePositioning Result Positioning Result

Interest Rates 0.5 years short Modest negative 0.9 years short Negateive Cost Average Lower

Yield Curve Bullet Positive Modified bullet Neutral Add 30 Year UST

Sector Allocation Overweight OverweightNon-Agency MBS Modest positive Non-Agency MBS Negative Add/Swap

CMBS Modest positive CMBS NeutralHigh Yield Modest negative Add

Market Weight Market WeightI.G. Corporates Modest positive I.G. Corporates Modest Positive Unchanged

High Yield Modest positive

Issue Selection Emphasis on: Emphasis on:Senior, Non-Agency MBS Neutral Senior, Non-Agency MBS Modest Positive AddBank and Utility paper Senior Bank paper Negative Add/Swaps

30% Senior CMBS Bank TRUPs Modest Positive Swaps

Euro crisis/Dodd-Frank fears infected all risk/liquidity premiums

Substantial value and total return opportunities now exist

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12 MKTcc1764 1/10/12

MetWest Total Return Bond Fund Performance AttributionAs of December 31, 2011*

YTDas of December 2011

MetWest Total Return Bond Fund 5.72%

Barclays Aggregate Index1 7.84%

Out/Underperformance -2.12%

Attribution of Out/Underperformance

YTDas of December 2011

Duration (95)

Yield Curve 20

Sector Allocation (18)

Security Selection (119)

Corporates (33)

Govenrment Related (1)

ABS (85)

MBS (16)

CMBS 10

Other 5

Total Alpha (212)

The performance data presented represents past performance and is no guarantee of future results. Total returns include reinvestment of dividendsand distributions. Current performance may be lower or higher than the performance data presented. Performance data current to the most recent monthend is available on the Funds website at www.mwamllc.com/funds_monthly.php. Investment returns and principal value will fluctuate with marketconditions. The value of an investment in the Fund, when redeemed, may be worth more or less than its original purchase cost.Portfolio holdings and characteristics are subject to change at any time. It should not be assumed that an investment in the securities listed was or will be profitable.*The performance attribution analysis presented above decomposes the outperformance (alpha) of MetWest Total Return Bond Fund ("Fund") versus Barclays Capital Aggregate Index. The perfomance attribution wascalculated based on the market value weighted gross of fees performance of the four Classes of the Fund and all holdings in the fund. The analysis was performed by utilizing an industry-wide accepted methodology; additional information regarding the calculation of these performance returns is available upon request.

The Barclays Capital US Securitized Index is an unmanaged group of securities and assumes no reduction for fees and expenses in measuring returns. It is not possible to invest directly in an index.The performance returns reflect a period of unusual market conditions, and thus, the performance returns are not be indicative of future results.The performance returns are based on a registered investment company which has a different regulatory scheme and may be subject to different investment restrictions than a separate account. The inception date of theMetropolitan West Total Return Bond Fund is March 31, 1997.

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III. Economic Outlook

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A Black Swan Market

14 DFIsecEO1045 10/20/11

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Diametrically Opposing World Views Among Investors

16 DFIsecEO1045 10/20/11

Investment Thesis #1: The U.S. is going the way of Japan in the 1990s

Economic malaise, deflation Fiscal stimulus starting/stopping

Zero rates for as far as the eye can see

Investment Thesis #2: Feds pro-inflation policies will de-leverage the U.S.

Bernanke put the monetary pedal to the metal back in 2008

Zero rates implemented in December 2008 Quantitative easing begun at once vs. Japan which waited until c. 2001

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Even Mad Crowds Self-Fulfill Their Beliefs

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18 DFIsecEO1045 10/20/11

Illusion of Wealth Effect

2002 20060

10

20

30

40

50

60

70

80

90

A s s e t s

( U . S . $

T r i

l l i o n

)

Real Estate

Equipment & Software

Consumer Durable Goods

Currency, Deposits & Money Market Fund Shares

Commercial Paper

U.S. Treasury Securities

US Agencies and Agency MBS

Municipals

Corporate & Foreign Bonds

Non-Agency Mortgages

Equities

Mutual Fund Shares

Life Insurance Reserves

Pension Fund Reserves

Equity in Non-Corporate Business

Other

$77.6 Trillion

$50.1 Trillion

Source: Federal Reserve Board

Assets of Households & Nonprofit Organizations

U.S. Asset values ran up over 50% in 4 years!

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19 DFIsecEO1045 10/20/11

Fed Ignored Asset Prices

Asset prices were not an input to Fed policyBut wrong asset prices distort the allocation of labor and capital

Asset Price Markets

Goods and Service Economy

Federal Reserve

Fed

FundsRate

Inflation

Unemployment

Home Prices

Stock Valuation

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20 DFIsecEO1045 10/20/11

Home Price Bubble Resulted in Excess Leverage

Source: Deutsche Bank, LoanPerformance, DB Global Markets Research1 Approximately 50% of Nevada homes.

100%

60%

80%

40%

60%

20%

0% N V M

I A Z

F L I D C

A U T

G A R

I I L O R

A L

M D

W A

V A

N M

W V

O H

M N

M O

D CI N N

J D E

W Y

100%

60%

80%

40%

60%

20%

T N

C T

K S

M S

M A

M T

N H

S C

N C

K Y

C O N

Y P AH

I T X

A R

M E

A KI A

O K

L A V T

S D N

E N D

0%

50% to 99% equity

5% to 25% equity

Negative equity

25% to 50% equity

0% to 5% equity

75% of the home mortgages 1 in Nevada are underwater

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21 DFIsecEO1045 10/20/11

Downsizing the American Dream

Source: US Census Bureau, MBA*The Adjusted Homeownership Rate is derived by reducing the numerator of the Homeownership Rate by the number of foreclosed properties and properties with seriously delinquent loans which subsequently went intodefault or are expected to go into default, based on the historical trends.

Mar-1990 Jun-1994 Sep-1998 Dec-2002 Mar-2007 Jun-201162.0%

63.0%

64.0%

65.0%

66.0%

67.0%

68.0%

69.0%

70.0%Homeownership Rate

Percent of Households That Own Their Homes

Homes that arein foreclosure or60+ delinquent}

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22 DFIsecEO1045 10/20/11

Job Creation Not Responsive to Fiscal/Monetary Stimulus

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

N o n - F a r m

P a y r o

l l s a s a

% o

f P r i o r

N o n -

F a r m

P a y r o

l l s P e a

k

Months Since Prior Employment Peak

1953

1957-1958

1960-1961

1969-1970

1973-1975

1980

1981-1982

1990-1991

2001

2007-2009

Source: BLS, TCW

Labor Market Recovery in Perspective

The Great Recession

Distorted Economy

Less mobile Labor Force

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So, How Do You Solve a Problem Like a Debt Burden?

23 DFIsecEO1045 10/20/11

Laissez-Faire Response: Allocate the Losses

Statist/Keynesian Response: Artificially Stimulate

Monetary Response: Print Money

Problem: Economic growth remains unnatural until the private sector has de-levered

Were Fromthe Governmentand Here toHelp You

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Laissez-Faire Solution to Excess Leverage

24 DFIsecEO1045 10/20/11

Involuntary de-leveraging of private sector

Bankruptcies

Foreclosures Debt forgiveness, debt rescheduling

Capitulates to the reality that loans which cant be repaid, wont be repaid

Pluses Labor, capital, homes, etc., are rapidly repriced to market-clearing levels

Economy now has good information

Efficiency enhanced

Minuses Risks destruction of banking system

May tear apart social fabric

Severe deflation, depression are likely outcomes

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25 DFIsecEO1045 10/20/11

Keynesian (Statist) Solution

Private sector leverage is transferred to the public sector

Stimulus programs

Bailouts for borrowers/lenders Federal spending raises private sector incomes

Pluses Slack resources put to work

Private sector de-leveraging accelerated

Minuses Inefficient resource allocation perpetuated

Adjusted process impeded Ricardian Equivalence may render stimulus impotent

Were Fromthe Governmentand Here toHelp You

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26 DFIsecEO1045 10/20/11

Monetarist Answer to De-Leveraging

Lift nominal GDP by embracing pro-inflation policies

Contracts are denominated in notional amounts, not real amounts

Debts that are not economically serviceable in terms of 2007 dollars mightbe serviceable in depreciated 2012 dollars

Pluses Bankruptcies, foreclosures mitigated

Nominal GDP growth accomplishes the de-leveraging seamlessly

Minuses Wealth transfer from creditors to debtors

Decreased economic efficiency

Needs a pool of fools

Higher rates of inflation tend to self-reinforce by lifting inflation expectations

Central bank may lose its credibility

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Will the U.S. Repeat the Japanese Deflation Experience?

Liquidate labor, liquidate stocks, liquidate real-estate...it will purge the rottenness out of the system.

Andrew MellonSecretary of the Treasury

(1921-1932)

27 DFIsecEO1045 10/20/11

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28 MKTcc1764 1/10/12

U.S. vs. Japan: Fundamental Economic Variables Support Risk OffU.S. vs. Japan: Real Estate Market Boom & Bust U.S. vs. Japan: Cumulative Real GDP Growth

U.S. Demographics vs. Japanese Demographics:Cumulative Labor Force Growth

-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 210

10

20

30

40

50

60

70

80

90

100

R e a

l E s t a t e

P r i c e

I n d e x

Years Since Real Estate Price Peak

Japan Urban Land Price Index 6 Major Cities (Sep '90 = 100)

S&P Case Shiller 20 City Composite (Jul' 06 = 100)

Real Estate Price Peak

Source: Bloomberg, Statistics Bureau of Japan Source: Bloomberg, BEA

Source: BLS, CBO, Bloomberg

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21-5%

0%

5%

10%

15%

20%

25%

C u m u

l a t i v e

R e a

l G D P G r o w

t h

Years Since Real Estate Price Peak

U.S.

Japan

1 2 3 4 5 6 7 8 9 10 110%

1%

2%

3%

4%

5%

6%

C u m u

l a t i v e

L a b o r

F o r c e

G r o w

t h

Years After Real Estate Price Peak

U.S.

Japan

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Inflation Will Solve the Leverage Problem

Inflation is always and everywhere a monetary phenomenon. Milton Friedman

By increasing the number of dollars in circulation

Under a paper-money system, a determined government canalways generate higher spending and hence positive inflation. Ben Bernanke

29 DFIsecEO1045 10/20/11

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30 MKTcc1764 1/10/12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 210%

2%

4%

6%

8%

10%

12%

14%

16%

C u m u

l a t i v e

N o m

i n a l

G D P G r o w

t h

Years Since Real Estate Price Peak

U.S.

Japan

Governments tax nominal incomes Debt is serviced with nominal incomes not with real income

U.S. vs. Japan: The Nominal Variables Say Risk OnU.S. vs. Japan: Central Bank Target Rates U.S. vs. Japan: Cumulative Monetary Expansion

U.S. vs. Japan: Cumulative Nominal GDP Growth U.S. vs. Japan: Cumulative Inflation Since Real Estate Price PeakCumulative Inflation Since the Real Estate Price Peak

Source: Bloomberg

Source: Bloomberg, Federal Reserve1 Currency in circulation plus deposits held by depository institutions at the Federal Reserve Banks.2 Currency in circulation plus current account deposits held by financial institutions at the bank of Japan.

Source: Bloomberg Source: BLS, Statistics Bureau of Japan

0 1 2 3 4 5 6 7 8 9 100

1

2

3

4

5

6

T a r g e

t R a t e

( % )

Years Since Real Estate Price Peak

Fed Funds Target Rate

BOJ Overnight Target Rate

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 210%

50%

100%

150%

200%

250%

Cumulative MonetaryBase Growth

Years Since Real Es tate Pric e Peak

U.S. Monetary Base

Japan Monetary B ase

1

2

QuantitativeEasing 1

QuantitativeEasing 2

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20-2%

0%

2%

4%

6%

8%

10%

12%

C u m u

l a t i v e

I n f l a t i o n

G r o w

t h

Years Since Real Estate Price Peak

U.S.

Japan

Quantitative Easing 1

Quantitative Easing 2

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Financial Repression: The Care and Feeding of Pro-Inflation Policies

32 DFIsecEO1045 10/20/11Source: U.S. Treasury, Federal Reserve, TCW

Zero rates pledged through 2013

Short rates anchored

2-year, 5-year Treasury rates reprice according to the 0% rate arbitrage

Asset Liability

0.30% 2-year UST 0% Fed Loan

Operation Twist

Drives down longer-term Treasury rates

Expected 30 Year Bond Issuance(Oct'11 - Jun'12)

Fed Purchase of Long Bonds(Oct'11 - Jun'12)

$0

$50

$100

$150

B i l l i o n s

U S D

$127 B$116 B

Expected Issuance of Long U.S. Treasuries

Intended Fed Purchases of Long U.S. Treasuries(91% of total issuance)

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Reinventing the Greenspan/Bernanke Equity Put

33 DFIsecEO1045 10/20/11

Source: Bloomberg

-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 210

10

20

30

40

50

60

70

80

90

100

S t o c k

M a r

k e t I n d e x

Years Since Stock Market Peak

S&P 500 Index (Oct '07 = 100)

NIKKEI 225 Index (Dec '89 = 100)

Stock Market Peak

Quantitative Easing 1

Quantitative Easing 2

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European Policy Options

Were not just here to make a single market but a political union. Jacques Delors, EU Commission President, 1993

The European Union Treaty will lead to the

creation of the United States of Europe. Helmut Kohl, German Chancellor, 1992

34 DFIsecEO1045 10/20/11

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35 DFIsecEO1045 10/20/11

American Experience: Nearly 100 Years to Form a Modern Federal Union

1776: American Declaration of Independence

States were thought of as sovereigns

1788: U.S. Constitution ratified by the states

1832: South Carolina declares a Federal tariff nulland void within the state of South Carolina

South Carolina prepares to resist invasion

Tariff was reduced

1850s: Southerners argue that the Constitutionis a voluntary compact

The union is an agreement among states

Any state can secede

1861-1865: United States of America wages war on the eleven Confederate States of America

1865-1876: United States occupies Southern states

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Unit Labor Costs Diverged Across Europe

36 DFIsecEO1045 10/20/11

Rising productivity in Northern Europe reduced unit labor costs in the North

Competitiveness of Germany enhanced vs. Italy, Spain

Equilibrium could have been restored via:

Migration of labor

Appreciation of the (non-existent) German currency (Deutsche Mark)

Depreciation of the (non-existent) Peseta, Lira

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201090

100

110

120

130

140

150

U n

i t L a b o r

C o s t

I n d e x

( 1 9 9 9 =

1 0 0 )

France

Germany

Italy

Spain

Portugal

Unit Labor Costs in the Euro Area

Source: Bloomberg, OECD, TCW

Germany

Spain

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European Trade Imbalances Created National Creditors/Debtors

37 DFIsecEO1045 10/20/11

Eurozone current account was near balanced

However, some countries ran surpluses (e.g. Germany) and others (Spain, Greece) deficits

Wide imbalances within Eurozone meant vast increase in borrowing by importing countries

German surpluses were recycled into a Spanish real estate bubble

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201-300

-200

-100

0

100

200

300

U S D B i l l i o n s

Intra-Eurozone Current Account (Imbalances)

Source: IMF, TCW

Germany

Spain

Eurozone

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Can Europe Go Back to National Currencies?

38 DFIsecEO1045 10/20/11

Toothpaste cant be put back into the tube

Creation of a northern Euro/southern Euro or restoring national currencieswould catalyze:

Immediate, massive appreciation of Deutsche Mark

Depreciation of Lira, Peseta

German labor would be repriced causing deflation, depression across northern Europe

Southern Europe would hyperinflate

How would anyone know which Euro assets and which Euro liabilities would convert into Deutsche Mark,Franc, Lira, etc.?

Massive uncertainty would cause a run on the banks

Sovereign governments would have to guarantee the banks

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Options for Resolution

39 DFIsecEO1045 10/20/11

Abandon the Euro: Financial Anarchy

Series of one time fixes: Recapitalizebanks, enlarge EFSF, ECB Italian,Spanish bond purchases

Establish a Fiscal Union: Tax and Transferthroughout the EU, ECB powers enlarged

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Conclusions

40 DFIsecEO1045 10/20/11

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Conclusions: Out of the Valley of Debt

41 DFIsecEO1045 10/20/11

The Federal Reserve is choosing the least bad policy choice

Necessary consequence is that U.S. inflation will rise

Which will support nominal GDP growth

Thereby facilitating de-leveraging via currency debasement

Failure to reprice asset markets, labor markets, etc., have consequences too

Inefficient resource allocation

Painfully slow real GDP growth

High unemployment to continue

Europe has no feasible choice but to move towards a stronger union

ECB will operate more like the Fed

Can draw upon Feds dollar swap lines

Political leadership likely will avoid hard choices and grand solutions, favor short-term fixes

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IV. Portfolio Strategy

(Developed)

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Strategy For a Financially Repressive World

Beware interest rate duration

Fed reflation efforts

Long-term Federal budget imbalance Potential end of mercantilism (Pool of Fools)

Fed balance sheet unwind

Fed policy and eventually all policy pushes for reflation and disintermediationof low risk assets

Eventual reduction in risk premia (credit, MBS, EMD)

Focus on undervalued assets that can survive the trade

Securities which benefit from reflation:(non-agency MBSSenior only; CMBS30% and 40% Seniors)

Secured high yield Systemically critical banks (Senior debt, TRUPs)

Investment Grade Corporates

(Developed)

How does 0% sound,does zero work for you?

>

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44 MKTcc1764 1/10/12

MetWest Total Return Bond Fund Summary CharacteristicsAs of December 31, 2011

Sector CompositionMetWest Barclays

TR Bond Fund Aggregate

U.S. Government 10.4% 42.0%U.S. IG Credit1 17.3% 23.9%U.S. High Yield 6.2% 0.0%Agency MBS 29.9% 31.8%Non-Agency MBS 16.6% 0.0%CMBS 8.1% 2.0%ABS 5.0% 0.2%International Fixed Income 0.0% 0.0%Emerging Markets Fixed Income 0.0% 0.0%Cash & Equivalents 6.5% 0.0%

Quality Composition 2,3MetWest Barclays

TR Bond Fund Aggregate

AAA 57.3% 75.1%AA 6.9% 5.1%A 9.0% 10.7%BBB 7.6% 9.1%BB 4.6% 0.0%B & Below 14.6% 0.0%

MetWest BarclaysTR Bond Fund Aggregate

Portfolio Duration 4.1 Years 5.0 Years

Average Maturity 7.1 Years 7.1 Years

1 Includes Corporates, Municipals, Supranationals, and USD-denominated Sovereigns and Foreign Agencies of developed countries.2 Quality ratings by Moody's, Standard & Poor's and Fitch, such as "AAA" refer to portfolio securities and not to the fund itself. When ratings vary, the highest rating is used. Securities rated below BBB are considered

more speculative and are subject to greater risks than higher rated bonds. Portfolio composition may change at any time. Holdings rated below B were purchased at B or better.3 MetWest receives credit quality ratings on the underlying securities held by the Fund from Moodys, Standard & Poors and Fitch. MetWest created the Quality Composition breakdown by taking the highest rating o

the three rating agencies when two or three of the agencies rate a security. If only one agency rated a security, MetWest will use that rating. Securities that are not rated by any of the three agencies are shown in theunrated category.

S A S

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Focus Sector: Non-Agency MBSCredit Snapshot Keep Your Eyes On the Horizon

Source: First American CoreLogic Loan Performance, TCW

J u n - 2 0 0 7

D e c - 2

0 0 7 J u n

- 2 0 0 8 D e

c - 2 0 0 8

J u n - 2 0 0 9

D e c - 2

0 0 9 J u n

- 2 0 1 0 D e

c - 2 0 1 0

J u n - 2 0 1 1

D e c - 2

0 1 1-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

J u n - 2 0

0 7

D e c - 2

0 0 7

J u n - 2 0

0 8

D e c - 2

0 0 8

J u n - 2 0

0 9

D e c - 2

0 0 9

J u n - 2 0

1 0

D e c - 2

0 1 0

J u n - 2 0

1 1

D e c - 2

0 1 10.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Prime

Alt-A

Option ARM

Subprime

J u n - 2 0 0 7

D e c - 2 0 0 7 J u n

- 2 0 0 8 D e

c - 2 0 0 8 J u n - 2 0 0 9

D e c - 2 0 0 9 J u n

- 2 0 1 0 D e

c - 2 0 1 0 J u n - 2 0 1 1

D e c - 2 0 1 1

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%12 Months Clean to 60 DQ Roll Rates Severity

Voluntary Prepayments

F S N A MBS

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Focus Sector: Non-Agency MBSModified ModificationsAn Unappreciated Change for the Better...

Source: First American CoreLogic Loan Performance, TCW

M a r - 2 0

0 8 J u n

- 2 0 0 8 S e p

- 2 0 0 8 D e

c - 2 0 0 8 M a

r - 2 0 0 9 J u n

- 2 0 0 9 S e p

- 2 0 0 9 D e

c - 2 0 0 9 M a

r - 2 0 1 0 J u n

- 2 0 1 0 S e p

- 2 0 1 0 D e

c - 2 0 1 0 M a

r - 2 0 1 1 J u n

- 2 0 1 1 S e p

- 2 0 1 1 D e

c - 2 0 1 1

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Prime

Alt-A

Option Arm

Subprime

0 10 20 30 40 500.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Months

2011

2010

2009

2008

2007

Modifications by Sector Recidivism by Vintage

The Benefit of AffordabilityFocused Modifications

Capitalization-BasedModifications

Modifications Are Up Substantially... ...And So Are Their Effectiveness

F S t N A MBS

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Focus Sector: Non-Agency MBSWhat HPA & Employment Forecast Is EmbeddedIn Non-Agency RMBS Prices?

0% Year 1 -10% Year 1 -20% Year 1 -30% Year 1

+3% Years 2+ 0% Years 2+ 0% Years 2+ 0% Years 2+

5% 6% 10% 15%

11.45% 10.72% 9.54% 7.77%

Annual HPA

Long Term Unemployment*

Loss-Adjusted Yields

The loss-adjusted yields shown above are derived from cashflows generated using a proprietary TCW logistical regression model on a representative sample of non-agency MBS, with certain assumptions embedded inthe model. This analysis is presented here for illustrative purposes only. Actual realized yields will differ, perhaps significantly, from the results shown above.*Unemployment rate labeled in these scenarios is the eventual and terminal rate achieved after ramping up or down over the course of 3-7 years.

Scenarios

1 2 3 4

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Focus Sector: Investment Grade Corporate BondsBarclays Credit Spreads Index OASAs of December 31, 2011

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

100

200

300

400

500

600

700

800

900

O A S ( b p s )

Credit Index Non-Corporates Industrials Utilities Financials

49 MKTcc1764 1/10/12

Source: Barclays Capital

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Focus Secto r: High YieldCredit Cycle Analysis: High Yield Corporate Fun damentals

Source: Morgan Stanley

1 9 9 8

1 9 9 9

2 0 0 1

2 0 0 2

2 0 0 4

2 0 0 5

2 0 0 7

2 0 0 8

2 0 1 0

0%

2%

4%

6%

8%10%

12%

14%

16%

Median: 8%

2 0 1 1 1 9 9

8 1 9 9

9 2 0 0

1 2 0 0

2 2 0 0

4 2 0 0

5 2 0 0

7 2 0 0

8 2 0 1

0-20%-15%-10%-5%0%5%

10%15%20%25%30%

2 0 1 1

Cash/Debt Ratio Last 12 Months Sales Growth

... as well as declining cash balances and declining sales growth

Focus Sector: High Yield

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Focus Sector: High YieldHigh Yield Excess Return Prospects Dependent on Credit Cycle StagePre-Recession 1High Yield OAS +420

Recession 2High Yield OAS +1,000 bps

Current3High Yield OAS +699

Analysis assumes no interest rate or curve shape shift nor spread changes. Analysis for illustrative purposes only1. Example from September 2007. Assume bell-shaped default distribution. Uses maturity schedule as of September 2007.2. Example: typical recession risk premium. Front end weighted default distribution. Uses maturity schedule as of September 2008.3. Default distribution centered around year 2. Uses maturity schedule as of December 2011.

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V. Appendix

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The primary risks affecting this Fund are interest rate risk (including extension risk and prepayment risk), liquidity risk,market risk, and credit risk.

Interest rate risk refers to the possibility that the value of the Funds portfolio investments may fall since fixed income securities

generally fall in value when interest rates rise. Extension risk is the possibility that rising interest rates may cause owners of the underlying mortgages to pay off their mortgages at a

slower than expected rate. This particular risk may effectively change a security which was considered short or intermediate term into along-term security. Long-term securities generally drop in value more dramatically in response to rising interest rates than short orintermediate-term securities.

Prepayment risk refers to the possibility that falling interest rates may cause owners of the underlying mortgages to pay off theirmortgages at a faster than expected rate. This tends to reduce returns since the funds prepaid will have to be reinvested at the thenlower prevailing rates.

Liquidity risk refers to the possibility that the Fund may lose money or be prevented from earning capital gains if it cannot sell a securityat the time and price that is most beneficial to the Fund.

Market risk is the possibility that the returns from the types of securities that the Fund invests in will underperform returns from thevarious general securities markets or different asset classes.

Credit risk refers to the loss in the value of a security based on a default in the payment of principle and/or interest of the security, orthe perception of the market of such default. The value of the Funds share price will fluctuate up or down based on the value of theportfolio holdings, which can be affected by these risks.

The information contained herein may include estimates, projections, and other forward-looking statements. Actual events may differ substantially from those presented herein. TCW assumes no duty to update anysuch statements.Any opinions expressed are current only as of the time made and are subject to change without notice. The views expressed herein are solely those of the author and do not represent the views of TCW as a firm or of anyother portfolio manager or employee of TCW.

A Word About Risk

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BiographiesInvestment Management Team

54 MKTcc1764 1/10/12

Tad RivelleChief Investment OfficerFixed IncomeGroup Managing Director

Tad Rivelle is Chief Investment Officer, Fixed Income,

overseeing investment management of all U.S. fixedincome products at TCW, including fixed income mutualfunds offered by both TCW and MetWest. He also overseesall of TCWs fixed income research and commentary,which includes daily updates on the economy and thecredit markets published on www.tcw.com. He is also aportfolio manager of numerous TCW and MetWestproducts, including the MetWest Total Return Bond Fund,

TCW Total Return Bond Fund, TCW Core Fixed Bond Fund,and the TCW Strategic Income Fund. Prior to joining TCW,Tad served as Chief Investment Officer for MetWest.Under Tads leadership, the MetWest investment teamwas recognized as Morningstar's Fixed Income Managerof the Year for 2005. Prior to founding MetWest, Tad wasco-director of fixed income at Hotchkis and Wiley. He wasalso a portfolio manager and vice president at PIMCO.Tad holds a bachelor's degree in physics from YaleUniversity, a master's degree in applied mathematicsfrom University of Southern California, and an MBAfrom UCLA Anderson School of Management.

Laird R. LandmannGroup Managing DirectorU.S. Fixed Income

Mr. Landmann is a Generalist Portfolio Manager in the

U.S. Fixed Income Group. He joined TCW in 2009 duringthe acquisition of Metropolitan West Asset ManagementLLC (MetWest). Mr. Landmann currently co-manages manyof TCW and MetWests mutual funds, including the MetWestTotal Return Bond Fund, the MetWest High Yield Bond Fundand the TCW Core Fixed Income Fund, and leads the fixedincome groups risk management efforts He is a memberof the MetWest investment team that was recognized as

Morningstar's Fixed Income Manager of the Year for 2005and has been nominated for the award six times. Prior tofounding MetWest in 1996, Mr. Landmann was a principaland the co-director of fixed income at Hotchkis and Wiley.He also served as a portfolio manager and vice presidentat PIMCO. Mr. Landmann holds a BS in Economics fromDartmouth College and an MBA from the University of Chicago Booth School of Business.