Edgar Filing: TCW STRATEGIC INCOME FUND INC

Form N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-4980

TCW Strategic Income Fund, Inc.

(Exact name of registrant as specified in charter)

865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017

(Address of principal executive offices)

Philip K. Holl, Esq.

Secretary

865 South Figueroa Street, Suite 1800

Los Angeles, CA 90017

(Name and address of agent for service)

Registrant’s telephone number, including area code: (213) 244-0000

Date of fiscal year end: December 31

Date of reporting period: December 31, 2009

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1.

Report to Stockholders.

LOGO

TCW Insight that works for you. TM

TCW Strategic

Income Fund, Inc.

2009 Annual Report

The President’s Letter

Dear Shareholder:

We are pleased to present the 2009 annual report of the TCW Strategic Income Fund, Inc. (“TSI” or the “Fund”). TSI is a multi-asset closed-end fund managed by TCW Investment Management Company. The Fund’s current distribution policy is to pay at least 7% annually based on previous year-end net asset value (“NAV”). During 2009, quarterly dividends totaling $0.254 per share plus a special year-end distribution of $0.26 per share were paid out. The overall return of the Fund’s NAV during 2009 was 46.6% (with dividends invested). The market price to NAV discount decreased from 15.7% to 8.4% by year end. The custom index of the Fund⁽¹⁾, a blend of equity and fixed income indices, was up 26.1% during 2009.

TSI’s current underlying asset allocation includes a mix of fixed income and equity securities. The Fund exited its common equity position during the second half of the year. The Mortgage-Backed Securities (“MBS”) allocation remains the largest portion of the Fund at 92%. All sectors exhibited strong performance for the year, except for the Asset-Backed Securities (“ABS”) sector which constitutes a negligible portion of the portfolio.

The following table summarizes the performance of the five principal market sectors of the Fund during 2009:


Fund Sector	Market Value 12/31/2009		Fund Allocation 12/31/2009		2009 Sector Returns Gross of Fees
Mortgage-Backed Securities	$	254,291,259	92.0	%	34.03	%
Convertible Securities		15,176,476	5.5	%	40.34	%
Collateralized Debt Obligations		6,772,061	2.5	%	713.36	%
Common Stocks		63,677	0.0	%	26.95	%
Asset-Backed Securities		2,024	0.0	%	-53.79	%

Total	$	276,305,497	100.0	%

The above portfolio composition was a result of the following:

•

Allocation to the MBS sector increased slightly from 89.4% to 92.0% due to relative market action as well as a reallocation from common stocks. This allocation is composed of MBS with high initial credit ratings, including those backed by mortgages securitized by Government Sponsored Enterprises (“GSEs”) as well as by private label issuers. Some securities have characteristics that differ from traditional pass-through MBS, including their liquidity and sensitivity to rate changes. These securities include inverse floaters and interest-only securities. The non-GSE-backed MBS securities have greater exposure to credit risk, although TCW has purchased these with a view to capturing deep pricing discounts to ultimate recovery values, even assuming harsh losses to the underlying loan pools. Non-agency MBS holdings have minimal underlying exposure to riskier borrowers (FICO score less than 650) and are senior in the capital structure.

•

Allocation to the Collateralized Debt Obligation (“CDO”) sector increased due to market movements. Prices in the sector rallied significantly during the second half of the year resulting in the

(1)

Custom Index is a blend of the Barclays Capital Bond Index, the Citigroup High Yield Cash Pay Index, the S&P 500 Total Return Index and the Merrill Lynch All U.S. Convertibles Index.

The President’s Letter (Continued)

astronomical 713% return. Collateralized Loan Obligation (“CLO”) securities were the top performers in the sector due to improving liquidity and fundamentals in the underlying leveraged loans.

•

The Fund’s small allocation to equities returned around 27% through the latter part of September when the positions in common stocks were exited. The S&P 500 index was up around 20% over the same period.

•

The Fund started the year with $58.1 million in leverage and maintained roughly the same level throughout the year.

In summary, the Fund’s heavy allocation to MBS was the primary generator of the strong performance for 2009.

As announced in our December 4, 2009 press release, Tad Rivelle, Stephen Kane and Laird Landmann assumed portfolio management responsibilities following TCW’s announcement of a definitive purchase agreement to acquire Metropolitan West Asset Management LLC. In January 2010, Mitch Flack and Bryan Whalen were also named to the portfolio management team as co-portfolio managers.

On December 22, 2009, the TSI Board announced my appointment as President and Chief Executive Officer of the Fund. I have been with TCW since 1995 and served as a board member of TSI since March 2009. I look forward to working with the shareholders and providing a successful investment experience.

On behalf of the Board and everyone at TCW, I would like to thank you for your continued support.

Sincerely,

LOGO

Charles W. Baldiswieler

President and Chief Executive Officer

TCW Strategic Income Fund, Inc.

Schedule of Investments

December 31, 2009


Principal Amount			Fixed Income Securities	Value

			Asset Backed Securities (0.0%)
$	144,587		Ameriquest Mortgage Securities, Inc., (06-R2-M10), 2.731%, due 04/25/36⁽¹⁾⁽²⁾	$	2,024

			Total Asset Backed Securities (Cost: $2,024)		2,024

			Collateralized Debt Obligations (2.9%)
	1,500	⁽³⁾	ACA CLO, Ltd., (06-2), (144A), 21.71%, due 01/09/21 (Cost $1,395,000 ⁽⁹⁾, Acquired 11/28/2006) ^(1)(2)(4)(5)		293,662
	4,000,000		ARES CLO, (06-5RA), (144A), 0%, due 02/24/18 (Cost $3,840,000 ⁽⁹⁾, Acquired 03/08/2006) ^{(1)(2)(4)(5)(6)(7)}		400,000
	2,000,000		Avenue CLO, Ltd., (07-6A), (144A), 0%, due 07/17/19 (Cost $1,840,000 ⁽⁹⁾, Acquired 04/24/2007) ^{(1)(2)(4)(5)(6)(7)}		140,000
	10,000		Bering CDO, Ltd., (06-1A), (144A), 0%, due 09/07/46 (Cost $870,000 ⁽⁹⁾, Acquired 08/03/2006) ^{(1)(2)(4)(5)(6)(7)}		—
	1,205,250		Bering CDO, Ltd., (06-1A-C), (144A), 0%, due 09/07/46 (Cost $1,000,000 ⁽⁹⁾, Acquired 08/03/2006) ^{(1)(2)(4)(5)(6)}		—
	1,000	⁽³⁾	Centurion CDO VII, Ltd., (144A), 16.99%, due 01/30/16 (Cost $760,000 ⁽⁹⁾, Acquired 11/01/2006) ^{(1)(2)(4)(5)(8)}		268,159
	2,000,000		Clydesdale CLO, Ltd., (06-1A), (144A), 8.62%, due 12/19/18 (Cost $1,860,000 ⁽⁹⁾, Acquired 01/16/2007) ^(1)(2)(4)(5)		380,000
	1,000,000		CW Capital Cobalt, (06-2A-K), (144A), 4.05%, due 04/26/50 (Cost $1,000,000 ⁽⁹⁾, Acquired 04/12/2006) ^(1)(2)(4)(5)		20,000
	1,000,000		CW Capital Cobalt II, (06-2A-PS), (144A), 0%, due 04/26/50 (Cost $940,000 ⁽⁹⁾, Acquired 04/12/2006) ^{(1)(2)(4)(5)(6)(7)}		20,000
	1,771,501		De Meer Middle Market CLO, Ltd., (06-1A), (144A), 16.57%, due 10/20/18 (Cost $1,734,261 ⁽⁹⁾, Acquired 08/03/2006) ^(1)(2)(4)(5)		627,794
	857,103		De Meer Middle Market CLO, Ltd., (06-1A-E), (144A), 3.95%, due 10/20/18 (Cost $918,497 ⁽⁹⁾, Acquired 08/03/2006) ^(1)(2)(4)(5)		395,331
	2,000,000		Duane Street CLO, (06-3-A), (144A), 20.97%, due 01/11/21 (Cost $1,860,000 ⁽⁹⁾, Acquired 11/15/2006) ^{(1)(2)(4)(5)(8)}		346,151
	1,000,000		FM Leveraged Capital Fund, (06-2A-E), (144A), 4.24%, due 11/15/20 (Cost $1,000,000 ⁽⁹⁾, Acquired 10/31/2006) ^(1)(2)(4)(5)		250,000
	2,000	⁽³⁾	FM Leveraged Capital Fund II, (06-1A-PS), (144A), 0%, due 11/20/20 (Cost $1,860,000 ⁽⁹⁾, Acquired 10/31/2006) ^{(1)(2)(4)(5)(6)(7)}		140,000
	2,000,000		Fortius Funding, Ltd., (06-2-A), (144A), 0%, due 02/03/42 (Cost $1,900,000 ⁽⁹⁾, Acquired 11/03/2006) ^{(1)(2)(4)(5)(6)(7)}		200
	1,111,159		Fortius Funding, Ltd., (06-2-AE), (144A), 0%, due 02/03/42 (Cost $955,559 ⁽⁹⁾, Acquired 11/06/2006) ^{(1)(2)(4)(5)(6)}		111
	1,000	⁽³⁾	Fortius I Funding, Ltd., (144A), 0%, due 07/12/41 (Cost $970,000 ⁽⁹⁾, Acquired 03/13/2006) ^{(1)(2)(4)(5)(6)(7)}		100
	2,000,000		Galaxy CLO, Ltd., (06-6I), 7.24%, due 06/13/18 ⁽¹⁾⁽²⁾		480,000
	2,000,000		Galaxy CLO, Ltd., (06-7A), (144A), 22.71%, due 10/13/18 (Cost $1,900,000 ⁽⁹⁾, Acquired 08/04/2006) ^(1)(2)(4)(5)		434,757
	2,000,000		LCM CDO, LP, (5I), 20.82%, due 03/21/19 ⁽¹⁾⁽²⁾		700,000
	1,500	⁽³⁾	Mantoloking CDO, Ltd., (144A), 0%, due 09/28/46 (Cost $1,417,500 ⁽⁹⁾, Acquired 11/21/2006) ^{(1)(2)(4)(5)(6)(7)}		150
	574,974		Mantoloking CDO, Ltd., (06-1A-E), (144A), 0%, due 08/28/46 (Cost $487,728 ⁽⁹⁾, Acquired 11/21/2006) ^{(1)(2)(4)(5)(6)}		58
	3,500,000		Octagon Investment Partners X, Ltd., (06-10A), (144A), 6.3%, due 10/18/20 (Cost $3,325,000 ⁽⁹⁾, Acquired 08/10/2006) ^(1)(2)(4)(5)		926,115
	3,000,000		Prospect Park CDO, Ltd., (06-1I), 14.23%, due 07/15/20 ⁽¹⁾⁽²⁾		788,792
	1,750,000	⁽³⁾	Vertical CDO, Ltd., (06-1), (144A), 0%, due 04/22/46 (Cost $1,697,500 ⁽⁹⁾, Acquired 05/16/2006) ^{(1)(2)(4)(5)(6)(7)(8)}		4,375
	2,000,000		Vertical CDO, Ltd., (06-2A), (144A), 0%, due 05/09/46 (Cost $1,860,000 ⁽⁹⁾, Acquired 05/19/2006) ^{(1)(2)(4)(5)(6)(7)}		—
	2,394,674		Vertical CDO, Ltd., (06-2A-C), (144A), 0%, due 05/09/46 (Cost $2,171,422 ⁽⁹⁾, Acquired 05/19/2006) ^{(1)(2)(4)(5)(6)}		—
	1,000,000	⁽³⁾	Whitehorse III, Ltd., (144A), 6.16%, due 05/01/18 (Cost $900,000 ⁽⁹⁾, Acquired 02/22/2007) ^{(1)(2)(4)(5)(8)}		156,306

			Total Collateralized Debt Obligations (Cost: $4,262,307)		6,772,061

			Collateralized Mortgage Obligations (111.9%)
			Private Mortgage-Backed Securities (72.3%)
	5,250,000		Adjustable Rate Mortgage Trust, (05-11-2A3), 5.292%, due 02/25/36 ⁽¹⁾		2,253,797
	2,747,983		Adjustable Rate Mortgage Trust, (05-4-6A22), 4.915%, due 08/25/35 ⁽¹⁾		912,688
	3,624,577		American Home Mortgage Assets, (05-2-2A1A), 4.285%, due 01/25/36 ⁽¹⁾		1,919,752
	3,435,077		Banc of America Funding Corp., (07-6-A2), 0.511%, due 07/25/37 ⁽¹⁾		2,113,606
	3,000,000		Banc of America Mortgage Securities, Inc., (06-2-A2), 6%, due 07/25/46 ⁽¹⁾		2,250,702
	3,342,307		Bear Stearns Adjustable Rate Mortgage Trust, (07-4-22A1), 5.971%, due 06/25/47 ⁽¹⁾		2,435,084
	2,622,216		Bear Stearns Alternative Loan Trust, (04-8-1A), 0.581%, due 09/25/34 ⁽¹⁾		1,812,095
	2,320,788		Bear Stearns Alternative Loan Trust, (06-2-22A1), 5.815%, due 03/25/36 ⁽¹⁾		1,254,255
	2,006,885		Bear Stearns Asset-Backed Securities Trust, (06-IM1-A1), 0.461%, due 04/25/36 ⁽¹⁾		918,151
	3,500,000		CitiMortgage Alternative Loan Trust, (06-A3-1A7), 6%, due 07/25/36 ⁽¹⁾		2,513,603
	4,169,572		Citigroup Mortgage Loan Trust, Inc., (05-8-1A1A), 5.258%, due 10/25/35 ⁽¹⁾		2,941,822

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Schedule of Investments (Continued)


Principal Amount		Fixed Income Securities	Value

		Collateralized Mortgage Obligations (Continued)
		Private Mortgage-Backed Securities (Continued)
$	1,725,147	Citigroup Mortgage Loan Trust, Inc., (05-8-2A5), 5.5%, due 09/25/35	$	1,304,607
	2,425,801	Citigroup Mortgage Loan Trust, Inc., (06-AR6-1A1), 6.03%, due 08/25/36 ⁽¹⁾		1,926,049
	2,000,000	CitiMortgage Alternative Loan Trust, (06-A5-1A8), 6%, due 10/25/36		1,219,472
	3,019,357	Countrywide Alternative Loan Trust, (06-15CB-A1), 6.5%, due 06/25/36		1,819,540
	2,828,093	Countrywide Alternative Loan Trust, (06-36T2-1A4), 5.75%, due 12/25/36		1,714,828
	2,669,871	Countrywide Alternative Loan Trust, (06-5T2-A3), 6%, due 04/25/36		2,043,106
	3,000,000	Countrywide Alternative Loan Trust, (07-11T1-A21), 6%, due 05/25/37 ⁽¹⁾		1,738,431
	4,000,000	Countrywide Alternative Loan Trust, (07-12T1-A5), 6%, due 06/25/37		2,327,003
	2,947,498	Countrywide Alternative Loan Trust, (07-16CB-4A7), 6%, due 08/25/37		1,984,528
	2,899,245	Countrywide Alternative Loan Trust, (07-18CB-2A25), 6%, due 08/25/37		2,090,591
	5,501,317	Countrywide Alternative Loan Trust, (07-19-1A34), 6%, due 08/25/37		3,634,541
	3,000,000	Countrywide Alternative Loan Trust, (07-19-1A4), 6%, due 08/25/37		1,640,614
	2,634,618	Countrywide Alternative Loan Trust, (07-9T1-2A3), 6%, due 05/25/37		1,793,211
	2,314,913	Countrywide Alternative Loan Trust, (08-2R-3A1), 6%, due 08/25/37		1,554,961
	4,586,138	Countrywide Asset-Backed Certificates, (06-15-A6), 5.826%, due 10/25/46 ⁽¹⁾		2,796,528
	2,251,445	Countrywide Home Loans, (04-HYB4-B1), 3.935%, due 09/20/34 ⁽¹⁾		832,097
	167,708,354	Countrywide Home Loans, (06-14-X), 0.345%, due 09/25/36(I/O) ⁽¹⁾		1,403,970
	209,971,071	Countrywide Home Loans, (06-15-X), 0.394%, due 10/25/36(I/O) ⁽¹⁾		2,110,566
	4,107,855	Countrywide Home Loans, (06-HYB2-1A1), 4.639%, due 04/20/36 ⁽¹⁾		2,395,608
	3,900,000	Countrywide Home Loans, (07-J2-2A6), 6%, due 07/25/37 ⁽¹⁾		2,220,925
	3,450,420	Credit Suisse First Boston Mortgage Securities Corp., (05-12-1A1), 6.5%, due 01/25/36		2,366,799
	2,464,031	Credit Suisse Mortgage Capital Certificates, (06-6-1A8), 6%, due 07/25/36		1,619,032
	2,114,434	Credit Suisse Mortgage Capital Certificates, (06-7-1A3), 5%, due 08/25/36		1,514,645
	32,741,592	Credit Suisse Mortgage Capital Certificates, (06-9-7A2), 6.319%, due 11/25/36(I/O) (I/F) ⁽¹⁾		3,823,553
	2,253,960	Credit Suisse Mortgage Capital Certificates, (07-5-DB1), 7.044%, due 08/25/37 ⁽¹⁾		114,345
	5,500,000	Deutsche Alt-A Securities, Inc. Mortgage Loan Trust, (06-AB2-A2), 6.16%, due 06/25/36 ⁽¹⁾		2,880,457
	2,799,326	Deutsche Alt-A Securities, Inc. Mortgage Loan Trust, (06-AR6-A6), 0.421%, due 02/25/37 ⁽¹⁾		1,537,739
	3,439,261	GSAA Home Equity Trust, (06-13-AF6), 6.04%, due 07/25/36 ⁽¹⁾		1,887,881
	477,800	GSAA Home Equity Trust, (06-19-A1), 0.321%, due 12/25/36 ⁽¹⁾		265,126
	2,256,779	GSC Capital Corp. Mortgage Trust, (06-2-A1), 0.411%, due 05/25/36 ⁽¹⁾		826,777
	6,997,634	GSR Mortgage Loan Trust, (03-7F-1A4), 5.25%, due 06/25/33		6,205,963
	138,344	GSR Mortgage Loan Trust, (04-3F-2A10), 17.239%, due 02/25/34(I/F) ⁽¹⁾		140,106
	1,844,598	GSR Mortgage Loan Trust, (05-AR3-6A1), 5.016%, due 05/25/35 ⁽¹⁾		1,513,855
	3,899,456	GSR Mortgage Loan Trust, (06-1F-1A5), 29.253%, due 02/25/36(I/F) (TAC) ⁽¹⁾		4,267,438
	1,462,006	Indymac INDA Mortgage Loan Trust, (07-AR7-1A1), 6.158%, due 11/25/37 ⁽¹⁾		1,017,345
	12,323,301	Indymac Index Mortgage Loan Trust, (06-AR13-A4X), 5.02%, due 07/25/36(I/O) ⁽¹⁾		874,180
	3,966,368	JP Morgan Alternative Loan Trust, (07-A1-2A1), 5.918%, due 03/25/37 ⁽¹⁾		2,267,160
	4,000,000	JP Morgan Mortgage Trust, (05-A8-2A3), 4.954%, due 11/25/35 ⁽¹⁾		2,888,186
	3,710,008	JP Morgan Mortgage Trust, (07-S2-1A1), 5%, due 06/25/37		3,070,357
	3,498,911	Lehman XS Trust, (05-1-3A2B), 4.8%, due 07/25/35 ⁽¹⁾		2,832,464
	3,511,499	Lehman XS Trust, (07-14H-A211), 0.491%, due 07/25/47		1,608,049
	3,437,741	MASTR Alternative Loans Trust, (07-HF1-4A1), 7%, due 10/25/47 ⁽¹⁾		2,512,735
	2,007,557	Merrill Lynch Mortgage Backed Securities Trust, (07-2-1A1), 5.8%, due 08/25/36 ⁽¹⁾		1,401,498
	3,646,832	Morgan Stanley Mortgage Loan Trust, (06-2-6A), 6.5%, due 02/25/36		2,743,059
	2,836,360	Morgan Stanley Mortgage Loan Trust, (07-14AR-6A1), 6.097%, due 11/25/37 ⁽¹⁾		1,696,807
	2,958,272	Morgan Stanley Mortgage Loan Trust, (07-15AR-4A1), 6.418%, due 11/25/37 ⁽¹⁾		1,775,988
	7,133,539	Nomura Asset Acceptance Corp., (06-AR1-1A), 4.551%, due 02/25/36 ⁽¹⁾		2,949,502
	2,000,000	Nomura Asset Acceptance Corp., (07-1-1A2), 5.669%, due 03/25/47 ⁽¹⁾		751,514
	2,500,000	Novastar Home Equity Loan, (04-2-M4), 1.431%, due 09/25/34 ⁽¹⁾		1,507,969
	2,984,143	Prime Mortgage Trust, (06-DR1-2A1), (144A), 5.5%, due 05/25/35 ⁽⁴⁾		2,562,220
	2,401,898	Residential Accredit Loans, Inc., (05-QA7-M1), 5.256%, due 07/25/35 ⁽¹⁾		120,799
	2,543,578	Residential Accredit Loans, Inc., (06-QS1-A3), 5.75%, due 01/25/36(PAC)		1,762,280

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

December 31, 2009


Principal Amount		Fixed Income Securities	Value

		Collateralized Mortgage Obligations (Continued)
		Private Mortgage-Backed Securities (Continued)
$	5,000,000	Residential Accredit Loans, Inc., (06-QS8-A3), 6%, due 08/25/36	$	2,777,774
	1,617,550	Residential Accredit Loans, Inc., (07-QS6-A62), 5.5%, due 04/25/37(TAC)		902,782
	2,779,000	Residential Asset Securitization Trust, (05-A8CB-A3), 5.5%, due 07/25/35 ⁽¹⁾		1,591,173
	2,750,000	Residential Asset Securitization Trust, (07-A2-1A1), 6%, due 04/25/37		1,512,399
	10,767,344	Residential Asset Securitization Trust, (07-A5-AX), 6%, due 05/25/37(I/O) ⁽¹⁾		1,625,847
	220,795,091	Residential Funding Mortgage Securities, (06-S9-AV), 0.303%, due 09/25/36(I/O) ⁽¹⁾		1,273,303
	1,870,111	Residential Funding Mortgage Securities I, (07-S6-1A10), 6%, due 06/25/37		1,403,901
	5,000,000	Soundview Home Equity Loan Trust, (06-WF1-A3), 5.412%, due 10/25/36 ⁽¹⁾		2,665,039
	2,876,629	Structured Adjustable Rate Mortgage Loan Trust, (05-20-1A1), 5.897%, due 10/25/35 ⁽¹⁾		2,084,491
	3,241,873	Structured Adjustable Rate Mortgage Loan Trust, (05-23-3A1), 6.09%, due 01/25/36 ⁽¹⁾		2,385,450
	2,436,158	Structured Adjustable Rate Mortgage Loan Trust, (06-3-4A), 6%, due 04/25/36 ⁽¹⁾		1,745,079
	1,743,220	Structured Adjustable Rate Mortgage Loan Trust, (07-9-2A1), 5.893%, due 10/25/47 ⁽¹⁾		1,070,847
	879,551	Terwin Mortgage Trust, (06-17HE-A2A), (144A), 0.311%, due 01/25/38 ⁽¹⁾⁽⁴⁾		653,359
	3,994,898	Washington Mutual Alternative Mortgage Pass-Through Certificates, (05-7-3CB), 6.5%, due 08/25/35 ⁽¹⁾		3,364,633
	4,206,422	Washington Mutual Mortgage Pass-Through Certificates, (06-3-4CB), 6.5%, due 03/25/36		2,399,104
	3,916,343	Washington Mutual Mortgage Pass-Through Certificates, (07-HY6-2A1), 5.668%, due 06/25/37 ⁽¹⁾		2,630,060
	1,641,784	Wells Fargo Mortgage Backed Securities Trust, (06-11-A8), 6%, due 09/25/36		1,314,737
	2,562,673	Wells Fargo Mortgage Backed Securities Trust, (06-2-1A4), 18.752%, due 03/25/36(I/F)⁽¹⁾		2,486,871
	2,553,530	Wells Fargo Mortgage Backed Securities Trust, (06-AR10-5A1), 5.589%, due 07/25/36 ⁽¹⁾		1,836,315
	4,500,000	Wells Fargo Mortgage Backed Securities Trust, (07-8-2A10), 6%, due 07/25/37(PAC)		3,375,138
	2,822,709	Wells Fargo Mortgage Backed Securities Trust, (07-AR3-A4), 6.058%, due 04/25/37 ⁽¹⁾		2,077,157

		Total Private Mortgage-Backed Securities		164,358,018

		U.S. Government Agency Obligations (39.6%)
	3,363,740	Federal Home Loan Mortgage Corp., (2654-CO), 0%, due 08/15/33(P/O) ⁽⁶⁾		1,449,436
	3,258,000	Federal Home Loan Mortgage Corp., (2684-SN), 27.084%, due 10/15/33(I/F) ⁽¹⁾		3,543,138
	5,553,851	Federal Home Loan Mortgage Corp., (2691-CO), 0%, due 10/15/33(P/O) ⁽⁶⁾		5,040,249
	1,709,403	Federal Home Loan Mortgage Corp., (2870-EO), 0%, due 10/15/34(P/O) ⁽⁶⁾		1,221,748
	2,078,907	Federal Home Loan Mortgage Corp., (2937-SW), 19.89%, due 02/15/35(I/F) (TAC) ⁽¹⁾		2,099,006
	832,360	Federal Home Loan Mortgage Corp., (2950-GS), 21.084%, due 03/15/35(I/F) ⁽¹⁾		858,322
	2,169,175	Federal Home Loan Mortgage Corp., (2951-NS), 21.084%, due 03/15/35(I/F) ⁽¹⁾		2,072,260
	612,085	Federal Home Loan Mortgage Corp., (2962-GT), 16%, due 04/15/35(I/F) (TAC) ⁽¹⁾		625,082
	951,267	Federal Home Loan Mortgage Corp., (2990-JK), 21.072%, due 03/15/35(I/F) ⁽¹⁾		1,040,746
	871,146	Federal Home Loan Mortgage Corp., (3000-SR), 19.39%, due 03/15/35(I/F) (TAC) ⁽¹⁾		888,877
	2,222,565	Federal Home Loan Mortgage Corp., (3014-SJ), 10.92%, due 08/15/35(I/F) ⁽¹⁾		2,145,108
	1,538,289	Federal Home Loan Mortgage Corp., (3019-SQ), 34.361%, due 06/15/35(I/F) ⁽¹⁾		1,797,092
	1,437,295	Federal Home Loan Mortgage Corp., (3035-TP), 6.5%, due 12/15/33(I/F) ⁽¹⁾		1,404,450
	3,226,609	Federal Home Loan Mortgage Corp., (3063-JS), 27.758%, due 11/15/35(I/F) ⁽¹⁾		3,603,412
	501,715	Federal Home Loan Mortgage Corp., (3076-ZQ), 5.5%, due 11/15/35(PAC)		433,363
	130,808	Federal Home Loan Mortgage Corp., (3077-ZW), 4.5%, due 08/15/35		131,225
	1,045,887	Federal Home Loan Mortgage Corp., (3092-CS), 18.571%, due 12/15/35(I/F) (TAC) ⁽¹⁾		1,100,125
	1,088,928	Federal Home Loan Mortgage Corp., (3092-LO), 0%, due 12/15/35(P/O) (TAC) ⁽⁶⁾		726,052
	1,163,893	Federal Home Loan Mortgage Corp., (3092-OL), 0%, due 12/15/35(P/O) ⁽⁶⁾		721,412
	19,408,164	Federal Home Loan Mortgage Corp., (3122-SG), 5.397%, due 03/15/36(I/O) (I/F) (TAC) (PAC) ⁽¹⁾		1,485,462
	1,792,649	Federal Home Loan Mortgage Corp., (3128-OJ), 0%, due 03/15/36(P/O) ⁽⁶⁾		1,590,538
	1,362,406	Federal Home Loan Mortgage Corp., (3146-SB), 22.795%, due 04/15/36(I/F) ⁽¹⁾		1,432,734
	250,303	Federal Home Loan Mortgage Corp., (3153-NK), 22.722%, due 05/15/36(I/F) ⁽¹⁾		257,497
	1,096,371	Federal Home Loan Mortgage Corp., (3161-SA), 22.612%, due 05/15/36(I/F) ⁽¹⁾		1,127,396
	2,990,873	Federal Home Loan Mortgage Corp., (3185-SA), 10.74%, due 07/15/36(I/F) ⁽¹⁾		2,627,207
	756,958	Federal Home Loan Mortgage Corp., (3186-SB), 21.879%, due 07/15/36(I/F) ⁽¹⁾		824,334
	19,525,585	Federal Home Loan Mortgage Corp., (3323-SA), 5.877%, due 05/15/37(I/O) (I/F) ⁽¹⁾		2,009,280
	824,351	Federal Home Loan Mortgage Corp., (3330-SB), 22.979%, due 06/15/37(I/F) (TAC) ⁽¹⁾		848,205

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Schedule of Investments (Continued)


Principal Amount		Fixed Income Securities	Value

		Collateralized Mortgage Obligations (Continued)
		U.S. Government Agency Obligations (Continued)
$	2,186,060	Federal Home Loan Mortgage Corp., (3349-SD), 21.695%, due 07/15/37(I/F) ⁽¹⁾	$	2,442,758
	683,430	Federal Home Loan Mortgage Corp., (3457-PO), 0%, due 09/15/36(P/O) ⁽⁶⁾		605,154
	6,975,029	Federal Home Loan Mortgage Corp., (3459-JS), 6.017%, due 06/15/38(I/O) (I/F) ⁽¹⁾		712,721
	11,380,082	Federal Home Loan Mortgage Corp., (3561-AS), 5.617%, due 08/15/39(I/O) (I/F) ⁽¹⁾		980,197
	26,129,752	Federal National Mortgage Association, (04-53-QV), 1.59%, due 02/25/34(I/O) (I/F) ⁽¹⁾		879,541
	3,064,760	Federal National Mortgage Association, (05-1-GZ), 5%, due 02/25/35		3,095,861
	3,528,934	Federal National Mortgage Association, (05-13-JS), 22.094%, due 03/25/35(I/F) ⁽¹⁾		3,317,765
	1,368,267	Federal National Mortgage Association, (05-44-TS), 19.062%, due 03/25/35(I/F) (TAC) ⁽¹⁾		1,394,274
	1,607,584	Federal National Mortgage Association, (05-62-BO), 0%, due 07/25/35(P/O) ⁽⁶⁾		1,274,233
	1,011,212	Federal National Mortgage Association, (05-69-HO), 0%, due 08/25/35(P/O) ⁽⁶⁾		859,179
	840,677	Federal National Mortgage Association, (05-92-DT), 6%, due 10/25/35(I/F) (TAC) ⁽¹⁾		695,251
	481,882	Federal National Mortgage Association, (06-15-LO), 0%, due 03/25/36(P/O) ⁽⁶⁾		409,068
	2,138,432	Federal National Mortgage Association, (06-45-SP), 22.362%, due 06/25/36(I/F) ⁽¹⁾		2,251,824
	1,152,505	Federal National Mortgage Association, (06-57-SA), 22.142%, due 06/25/36 (I/F) ⁽¹⁾		1,284,956
	1,359,609	Federal National Mortgage Association, (06-67-DS), 24.283%, due 07/25/36 (I/F) ⁽¹⁾		1,399,435
	9,920,378	Federal National Mortgage Association, (07-42-SE), 5.879%, due 05/25/37(I/O) (I/F)⁽¹⁾		991,266
	23,315,251	Federal National Mortgage Association, (07-48-SD), 5.869%, due 05/25/37(I/O) (I/F)⁽¹⁾		2,237,187
	17,215,812	Federal National Mortgage Association, (07-53-SG), 6.369%, due 06/25/37(I/O) (I/F) ⁽¹⁾		1,800,058
	1,668,464	Federal National Mortgage Association, (07-58-SL), 15.547%, due 06/25/36 (I/F) ⁽¹⁾		1,778,601
	9,044,982	Federal National Mortgage Association, (07-65-KI), 6.389%, due 07/25/37(I/O) (I/F) ⁽¹⁾		1,015,845
	3,352,060	Federal National Mortgage Association, (08-34-GS), 6.219%, due 05/25/38(I/O) (I/F) ⁽¹⁾		321,687
	10,656,533	Federal National Mortgage Association, (08-86-SH), 6.169%, due 12/25/38(I/O) (I/F) ⁽¹⁾		1,146,258
	8,725,691	Federal National Mortgage Association, (09-69-CS), 6.519%, due 09/25/39(I/O) (I/F) ⁽¹⁾		774,314
	4,566,658	Government National Mortgage Association, (05-45-DK), 21.07%, due 06/16/35(I/F) ⁽¹⁾		4,771,407
	26,220,479	Government National Mortgage Association, (06-35-SA), 6.367%, due 07/20/36(I/O) (I/F) ⁽¹⁾		2,179,501
	47,264,739	Government National Mortgage Association, (06-61-SA), 4.517%, due 11/20/36(I/O) (I/F) (TAC) ⁽¹⁾		2,972,560
	23,604,999	Government National Mortgage Association, (08-53-TS), 6.237%, due 05/20/38(I/O) (I/F) (TAC) ⁽¹⁾		2,245,912
	29,348,434	Government National Mortgage Association, (08-58-TS), 6.167%, due 05/20/38(I/O) (I/F) (TAC) ⁽¹⁾		2,992,672

		Total U.S. Government Agency Obligations		89,933,241

		Total Collateralized Mortgage Obligations (Cost: $231,478,792)		254,291,259

		Total Fixed Income Securities (Cost: $ 235,743,123) (115.1%)		261,065,344


		Convertible Securities
		Convertible Corporate Bonds (4.5%)
		Banking (0.7%)
	907,000	Euronet Worldwide, Inc., 3.5%, due 10/15/25		851,446
	683,000	National City Corp., 4%, due 02/01/11		699,221

		Total Banking		1,550,667

		Communications (0.4%)
	1,297,000	Ciena Corp., 0.25%, due 05/01/13		984,244

		Electronics (0.6%)
	45,000	JA Solar Holdings Co., Ltd., 4.5%, due 05/15/13		35,325
	751,000	LSI Logic Corp., 4%, due 05/15/10		757,571
	220,000	Xilinx, Inc., 3.125%, due 03/15/37		204,600
	339,000	Xilinx, Inc., (144A), 3.125%, due 03/15/37⁽⁴⁾		315,270

		Total Electronics		1,312,766

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

December 31, 2009


Principal Amount		Convertible Securities	Value

		Convertible Corporate Bonds (Continued)
		Financial Services (0.3%)
$	625,000	Jefferies Group, Inc., 3.875%, due 11/01/29	$	620,313

		Healthcare Providers (0.4%)
	1,186,000	Omnicare, Inc., 3.25%, due 12/15/35		971,037

		Medical Supplies (0.1%)
	160,000	Integra LifeSciences Holdings Corp., (144A), 2.375%, due 06/01/12 ⁽⁴⁾		149,200
	160,000	Integra LifeSciences Holdings Corp., (144A), 2.75%, due 06/01/10 ⁽⁴⁾		158,800

		Total Medical Supplies		308,000

		Metals (0.2%)
	370,000	Coeur d’Alene Mines Corp., 3.25%, due 03/15/28		331,613
	224,000	Sterlite Industries India, Ltd., 4%, due 10/30/14		236,320

		Total Metals		567,933

		Oil & Gas (0.6%)
	443,000	Transocean, Inc., Class A, 1.625%, due 12/15/37		440,785
	442,000	Transocean, Inc., Class B, 1.5%, due 12/15/37		428,740
	442,000	Transocean, Inc., Class C, 1.5%, due 12/15/37		427,635

		Total Oil & Gas		1,297,160

		Pharmaceuticals (0.2%)
	357,000	United Therapeutics Corp., (144A), 0.5%, due 10/15/11 ⁽⁴⁾		514,973

		Real Estate (0.9%)
	1,517,000	Affordable Residential Communities, Inc., (144A), 7.5%, due 08/15/25 (Cost $1,516,330, Acquired 08/03/2005-05/12/2006) ^(2)(4)(5)		1,661,115
	362,000	ProLogis, 2.625%, due 05/15/38		326,252

		Total Real Estate		1,987,367

		Retailers (0.1%)
	140,000	RadioShack Corp., (144A), 2.5%, due 08/01/13 ⁽⁴⁾		157,325

		Total Convertible Corporate Bonds (Cost: $9,984,310)		10,271,785


Number of Shares
		Convertible Preferred Stocks (2.2%)
		Commercial Services (0.1%)
	10,940	United Rentals Trust I, $3.25		323,414

		Electric Utilities (0.3%)
	16,500	AES Corp., $3.375		763,125

		Financial Services (0.1%)
	2,724	Vale Capital, Ltd., Series A, $2.75		147,777
	1,612	Vale Capital, Ltd., Series B, $2.75		88,559

		Total Financial Services		236,336

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Schedule of Investments (Continued)


Number of Shares		Convertible Securities	Value

		Convertible Preferred Stocks (Continued)
		Food Products (0.1%)
	5,900	Archer-Daniels-Midland Co., $3.125	$	257,299

		Insurance (0.4%)
	13,105	Reinsurance Group of America, Inc., $2.875		828,072

		Media (0.3%)
	800	Interpublic Group of Cos., Inc., (144A), $52.50 ⁽⁴⁾		610,200

		Oil & Gas (0.3%)
	8,445	Chesapeake Energy Corp., $4.50		711,491

		Pharmaceuticals (0.2%)
	330	Mylan, Inc., $65.00		377,639

		Road & Rail (0.4%)
	660	Kansas City Southern, $51.25		797,115

		Total Convertible Preferred Stocks (Cost: $5,220,700)		4,904,691

		Total Convertible Securities (Cost: $15,205,010) (6.7%)		15,176,476


		Common Stock
		Health Care Providers & Services (0.0%)
	7,370	Concord Medical Services Holdings, Ltd. (SP ADR)(7)		63,677

		Total Common Stock (Cost: $ 81,070) (0.0%)		63,677


Principal Amount		Short-Term Investments (10.0%)

$	22,617,214	Repurchase Agreement, State Street Bank & Trust Company, 0.01%, due 01/04/10 (collateralized by $23,090,000, U.S. Treasury Bill, 0.19%, due 06/03/10, valued at $23,071,528) (Total Amount to be Received Upon Repurchase $22,617,226)		22,617,214

		Total Short-Term Investments (Cost: $22,617,214)		22,617,214

		Total Investments (Cost $273,646,417)(131.5%)		298,922,711
		Liabilities in Excess of Other Assets( –31.5%)		(71,613,006	)

		Net Assets (100.0%)	$	227,309,705

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

December 31, 2009

Notes to Schedule of Investments:

(1)

Floating or variable rate security. The interest shown reflects the rate in effect at December 31, 2009.

(2)

Illiquid security.

(3)

Represents number of preferred shares.

(4)

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2009, the value of these securities amounted to $11,585,731 or 5.1% of net assets. These securities are determined to be liquid by the Advisor, unless otherwise noted, under procedures established by and under the general supervision of the Fund’s Board of Directors.

(5)

Restricted security (Note 7).

(6)

As of December 31, 2009, security is not accruing interest.

(7)

Non-income producing security.

(8)

Fair valued security (Note 1).

(9)

Represents original acquisition cost prior to recognition of impairment in security.

CDO -

Collateralized Debt Obligation.

CLO -

Collateralized Loan Obligation.

I/F -

Inverse Floating rate security whose interest rate moves in the opposite direction of prevailing interest rates.

I/O -

Interest Only Security.

PAC -

Planned Amortization Class.

P/O -

Principal Only Security.

SP ADR -

Sponsored American Depositary Receipt. Shares of a foreign based corporation held in U.S. banks that are issued with the cooperation of the company whose stock underlies the ADR and entitles the shareholder to all dividends, capital gains and voting rights.

TAC -

Target Amortization Class.

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Investments by Industry (Unaudited)

December 31, 2009


Industry	Percentage of Net Assets
Private Mortgage-Backed Securities	72.3	%
U.S. Government Agency Obligations	39.6
Collateralized Debt Obligations	2.9
Oil & Gas	0.9
Real Estate	0.9
Banking	0.7
Electronics	0.6
Communications	0.4
Healthcare Providers	0.4
Pharmaceuticals	0.4
Financial Services	0.4
Insurance	0.4


Industry	Percentage of Net Assets
Road & Rail	0.4
Electric Utilities	0.3
Media	0.3
Metals	0.2
Commercial Services	0.1
Medical Supplies	0.1
Food Products	0.1
Retailers	0.1
Health Care Providers & Services	0.0	*
Asset Backed Securities	0.0	*
Short-Term Investments	10.0

Total	131.5	%

*	Value rounds to less than 0.1% of net assets.

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Statement of Assets and Liabilities

December 31, 2009


ASSETS:
Investments, at Value (Cost: $273,646,417)	$	298,922,711
Interest and Dividends Receivable		2,888,347

Total Assets		301,811,058

LIABILITIES:
Payables for Borrowings		58,600,000
Distributions Payable		15,401,828
Interest Payable on Borrowings		175,365
Accrued Other Expenses		150,568
Accrued Investment Advisory Fees		147,411
Accrued Directors’ Fees and Expenses		20,446
Accrued Compliance Expense		5,735

Total Liabilities		74,501,353

NET ASSETS	$	227,309,705

NET ASSETS CONSIST OF:
Common Stock, par value $0.01 per share (75,000,000 shares authorized, 47,609,979 shares issued and outstanding)	$	476,100
Paid-in Capital		297,576,786
Accumulated Net Realized Loss on Investments		(93,251,331	)
Distributions in Excess of Net Investment Income		(2,768,144	)
Net Unrealized Appreciation on Investments		25,276,294

NET ASSETS	$	227,309,705

NET ASSET VALUE PER SHARE	$	4.77

MARKET PRICE PER SHARE	$	4.37

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Statement of Operations

Year Ended December 31, 2009


INVESTMENT INCOME:
Income
Interest	$	39,364,981
Dividends (net of foreign withholding taxes of $8)		847,995

Total Investment Income		40,212,976

Expenses
Investment Advisory Fees		1,542,429
Interest Expense		683,322
Audit and Tax Service Fees		160,441
Legal Fees		75,354
Directors’ Fees and Expenses		72,574
Miscellaneous		57,970
Proxy Expense		52,471
Transfer Agent Fees		51,893
Printing and Distribution Costs		49,643
Listing Fees		44,278
Custodian Fees		36,652
Administration Fees		33,125
Compliance Expense		30,732
Accounting Fees		28,728
Insurance Expense		14,111

Total Expenses		2,933,723

Net Investment Income		37,279,253

NET REALIZED LOSS AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS:
Net Realized Loss on Investments		(6,307,054	)
Change in Unrealized Appreciation on Investments		47,400,732

Net Realized Loss and Changes in Unrealized Appreciation on Investments		41,093,678

INCREASE IN NET ASSETS FROM OPERATIONS	$	78,372,931

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Statements of Changes in Net Assets


	Year Ended December 31, 2009			Year Ended December 31, 2008
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income	$	37,279,253		$	24,964,219
Net Realized Loss on Investments		(6,307,054	)		(53,669,239	)
Change in Unrealized Appreciation on Investments		47,400,732			16,903,425

Increase (Decrease) in Net Assets Resulting from Operations		78,372,931			(11,801,595	)

DISTRIBUTIONS TO SHAREHOLDERS:
From Net Investment Income		(24,471,531	)		(18,091,795	)

Total Increase (Decrease) in Net Assets		53,901,400			(29,893,390	)

NET ASSETS:
Beginning of Year		173,408,305			203,301,695

End of Year	$	227,309,705		$	173,408,305

Distributions in Excess of Net Investment Income	$	(2,768,144	)	$	(4,416,268	)

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Statement of Cash Flows

Year Ended December 31, 2009


CASH FLOWS FROM OPERATING ACTIVITIES:
Net Increase in Net Assets From Operations	$	78,372,931
Adjustments to Reconcile Net Increase in Net Assets Resulting From Operations to Net Cash Provided by Operating Activities:
Investments Purchased		(108,491,204	)
Proceeds from Investments Sold		94,012,139
Net Increase in Short-Term Investments		(5,680,822	)
Net Amortization/Accretion of Premium/(Discount)		(129,204	)
Increase in Interest and Dividends Receivable		(1,005,442	)
Decrease in Accrued Directors’ Fees and Expenses		(2,499	)
Increase in Accrued Compliance Expense		5,228
Increase in Accrued Investment Advisory Fees		27,063
Decrease in Interest Payable on Borrowings		(15,071	)
Decrease in Accrued Other Expenses		(50,191	)
Realized and Unrealized (Gain)/Loss on Investments		(41,093,678	)

Net Cash Provided by Operating Activities		15,949,250

CASH FLOWS USED IN FINANCING ACTIVITIES:
Distributions to Shareholders		(16,449,250	)
Increase in Borrowings		500,000

Net Cash Used in Financing Activities		(15,949,250	)

Net Change in Cash		—
Cash at Beginning of Year		—

Cash at End of Year	$	—

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year	$	698,393

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Notes to Financial Statements

December 31, 2009

Note 1 — Significant Accounting Policies:

TCW Strategic Income Fund, Inc. (the “Fund”) was incorporated in Maryland on January 13, 1987 as a diversified, closed-end investment management company and is registered under the Investment Company Act of 1940, as amended, and is traded on the New York Stock Exchange under the symbol TSI. The Fund commenced operations on March 5, 1987. The Fund’s investment objective is to seek a total return comprised of current income and capital appreciation by investing in convertible securities, marketable equity securities, investment-grade debt securities, high-yield debt securities, options, securities issued or guaranteed by the United States Government, its agencies and instrumentalities (“U.S. Government Securities”), repurchase agreements, mortgage related securities, asset-backed securities, money market securities and other securities without limit believed by the Fund’s investment advisor to be consistent with the Fund’s investment objective. TCW Investment Management Company (the “Advisor”) is the investment advisor to the Fund and is registered under the Investment Advisers Act of 1940.

The preparation of the accompanying financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

The following is a summary of the significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.

Security Valuation: Securities traded on national exchanges are valued at the last reported sales price or the mean of the current bid and asked prices if there are no sales in the trading period. Other securities which are traded on the over-the-counter market are valued at the mean of the current bid and asked prices. Short-term debt securities with maturities of 60 days or less at the time of purchase are valued at amortized cost. Other short-term debt securities are valued on a mark-to-market basis until such time as they reach a remaining maturity of 60 days, where upon they will be valued at amortized value using their value of the 61^st day prior to maturity.

The Fund invests in asset-backed securities and collateralized debt obligations securities, which are valued based on prices supplied by dealers who make markets in such securities. However, such markets have been illiquid, and therefore, the value of these securities may differ from the realizable values had a liquid market existed for these investments, and the differences could be material. At December 31, 2009, the total value of these securities amount to $6,774,085 or 3.0% of the Fund’s net assets. The Fund also invests a portion of its assets in below-investment grade debt securities, including asset-backed securities and collateralized debt obligations. The value and related income of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults.

Securities for which market quotations are not readily available, including circumstances under which it is determined by the Advisor that sale or mean prices are not reflective of a security’s market value, are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund’s Board of Directors. At December 31, 2009, four securities were fair valued with a market value of $774,991 or 0.3% of the Fund’s net assets.

Fair value is defined as the price that a fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. A

TCW Strategic Income Fund, Inc.

Notes to Financial Statements (Continued)

Note 1 — Significant Accounting Policies (Continued):

three-tier hierarchy is utilized to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk — for example, the risk inherent in a particular valuation technique used to measure fair value and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.

Level 1 — quoted prices in active markets for identical investments

Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

TCW Strategic Income Fund, Inc.

December 31, 2009

The following is a summary of the inputs used as of December 31, 2009 in valuing the Fund’s investments:


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fixed Income Securities
Asset Backed Securities	$	—	$	—	$	2,024	$	2,024

Collateralized Debt Obligations		—		—		6,772,061		6,772,061

Collateralized Mortgage Obligations
Private Mortgage-Backed Securities		—		164,358,018		—		164,358,018
U.S. Government Agency Obligations		—		89,933,241		—		89,933,241

Total Collateralized Mortgage Obligations		—		254,291,259		—		254,291,259

Total Fixed Income Securities		—		254,291,259		6,774,085		261,065,344

Convertible Securities
Convertible Corporate Bonds
Banking		—		1,550,667		—		1,550,667
Communications		—		984,244		—		984,244
Electronics		—		1,312,766		—		1,312,766
Financial Services		—		620,313		—		620,313
Healthcare Providers		—		971,037		—		971,037
Medical Supplies		—		308,000		—		308,000
Metals		—		567,933		—		567,933
Oil & Gas		—		1,297,160		—		1,297,160
Pharmaceuticals		—		514,973		—		514,973
Real Estate		—		1,987,367		—		1,987,367
Retailers		—		157,325		—		157,325

Total Convertible Corporate Bonds		—		10,271,785		—		10,271,785

Convertible Preferred Stocks
Commercial Services		—		323,414		—		323,414
Electric Utilities		763,125		—		—		763,125
Financial Services		236,336		—		—		236,336
Food Products		—		257,299		—		257,299
Insurance		828,072		—		—		828,072
Media		—		610,200		—		610,200
Oil, Gas & Consumable Fuels		711,491		—		—		711,491
Pharmaceuticals		377,639		—		—		377,639
Road & Rail		—		797,115		—		797,115

Total Convertible Preferred Stocks		2,916,663		1,988,028		—		4,904,691

Total Convertible Securities		2,916,663		12,259,813		—		15,176,476

Common Stock
Health Care Providers & Services		63,677		—		—		63,677

Short-Term Investment		—		22,617,214		—		22,617,214

Total	$	2,980,340	$	289,168,286	$	6,774,085	$	298,922,711

TCW Strategic Income Fund, Inc.

Notes to Financial Statements (Continued)

Note 1 — Significant Accounting Policies (Continued):

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:


Investments in Securities	Balance as of 12/31/08		Accrued Discounts (Premiums)		Realized Gain/Loss and Change in Unrealized Appreciation/ (Depreciation)		Net Purchases (Sales)			Net Transfers in and/or Out of Level 3		Balance as 12/31/09		Net Change in Unrealized Appreciation/ (Depreciation) from Investments Still Held as of 12/31/09
Fixed Income Securities
Asset Backed Securities	$	426,763	$	0	$	1,533,596	($	1,958,335	)	$	0	$	2,024	$	2,091,372
Collateralized Debt Obligations		5,027,235		0		1,322,049		422,777			0		6,772,061		2,509,754

Total	$	5,453,998	$	0	$	2,855,645	($	1,535,558	)	$	0	$	6,774,085	$	4,601,126

Security Transactions and Related Investment Income: Security transactions are recorded on the trade date. Dividend income is recorded on the ex-dividend date, while interest income is recorded on the accrual basis. Discounts, including original issue discounts, and premiums on securities purchased are amortized using a constant yield-to-maturity method. Realized gains and losses on investments are recorded on the basis of specific identified cost.

For certain lower credit quality securitized investments that have contractual cash flows (primarily collateralized debt obligations) which the cash flows have changed based on an evaluation of current information, the estimated yield is adjusted on a prospective basis over the remaining life of the security. In addition, impairment is recorded when the fair value of these securities is less than their amortized cost, and such difference is deemed to be permanent. When a security is impaired, the cost basis of the security is written down to fair value and the impairment write-down is reflected in the statement of operations as an increase in net realized loss on the investments and an increase in change in unrealized appreciation on investments. In 2009, the Fund recognized $764,928 of impairment write-downs on collateralized debt obligations.

Distributions: Distributions to shareholders are recorded on ex-dividend date. The Fund declares and pays, or reinvests, dividends quarterly based on the managed distribution plan adopted by the Fund’s Board of Directors. Under the Plan, the Fund will distribute a cash dividend equal to 7% of the Fund’s net asset value on an annualized basis. The distribution will be based on the Fund’s net asset value from the previous calendar year-end. The source for the dividend comes from net investment income and net realized capital gains measured on a fiscal year basis. Any portion of the distribution that exceeds income and capital gains will be treated as a return of capital. Under certain conditions, federal tax regulations cause some or all of the return of capital to be taxed as ordinary income. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences may be primarily due to differing treatments for market discount and premium, losses recognized for defaults or write-off on structured debt, losses deferred due to wash sales and spillover distributions. Permanent book and tax

TCW Strategic Income Fund, Inc.

December 31, 2009

basis differences relating to shareholder distributions will result in reclassifications to paid-in-capital and may affect net investment income per share.

Repurchase Agreements: The Fund may invest in repurchase agreements secured by U.S. Government Securities. A repurchase agreement arises when the Fund purchases a security and simultaneously agrees to resell it to the seller at an agreed upon future date. The Fund requires the seller to maintain the value of the securities, marked to market daily, at not less than the repurchase price. If the seller defaults on its repurchase obligation, the Fund could suffer delays, collection expenses and losses to the extent that the proceeds from the sale of the collateral are less than the repurchase price.

Note 2 — Federal Income Taxes:

It is the policy of the Fund to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of its net taxable income, including any net realized gains on investments, to its shareholders. Therefore, no federal income tax provision is required.

At December 31, 2009, the Fund had a total loss carryforward for federal income tax purposes of $91,772,399. The expiration of this amount is set forth in the table below.


Expiring In
2010		2011		2016		2017
$	61,853,273	$	10,749,289	$	18,803,557	$	366,280

For the year ended December 31, 2009, the Fund distributed, on a tax basis, $24,471,531 of ordinary income. For the previous year ended December 31, 2008, the Fund distributed, on a tax basis, $18,091,795, of which $16,699,782 is characterized as ordinary income for 2008.

At December 31, 2009, net unrealized appreciation (depreciation) for federal income tax purposes is comprised of the following components:


Appreciated securities	$	44,585,467
Depreciated securities		(62,717,345	)

Net unrealized depreciation	$	(18,131,878	)

Cost of securities for federal income tax purposes	$	317,054,589

The following reclassifications have been made for the permanent differences between book and tax accounting as of December 31, 2009:


	Increase (Decrease)
Undistributed/accumulated net investment income (loss)	$	(11,159,598	)
Undistributed/accumulated net realized gain (loss)	$	7,063,744
Paid-in capital	$	4,095,854

The Fund did not have any unrecognized tax benefits at December 31, 2009, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; and therefore no interest or penalties were accrued. The Fund is subject to examination by U.S. federal and state tax authorities for returns filed for the prior three and four fiscal years, respectively.

TCW Strategic Income Fund, Inc.

Notes to Financial Statements (Continued)

Note 3 — Investment Advisory and Service Fees:

As compensation for the services rendered, facilities provided, and expenses borne, the Advisor is paid a monthly fee by the Fund computed at the annual rate of 0.75% of the first $100 million of the Fund’s average managed assets and 0.50% of the Fund’s average managed assets in excess of $100 million.

In addition to the management fees, the Fund reimburses, with approval by the Fund’s Board of Directors, a portion of the Advisor’s costs associated in support of the Fund’s Rule 38a-1 compliance obligations, which is included in the Statement of Operations.

Note 4 — Purchases and Sales of Securities:

For the year ended December 31, 2009, purchases and sales or maturities of investment securities (excluding short-term investments) aggregated $104,062,262 and $67,771,546, respectively, for non-U.S. Government Securities and aggregated $3,006,375 and $8,648,747, respectively, for U.S. Government Securities.

Note 5 — Security Lending:

The Fund can lend securities to brokers. The brokers must provide collateral, which must be maintained at not less than 100% of the value of the loaned securities, to secure the obligation. The Fund receives income, net of broker fees, by investing the collateral. The Fund did not lend securities any time during the year ended December 31, 2009.

Note 6 — Directors’ Fees:

Directors who are not affiliated with the Advisor received, as a group, fees and expenses of $72,574 from the Fund for the year ended December 31, 2009. Certain Officers and/or Directors of the Fund are also Officers and/or Directors of the Advisor.

Note 7 — Restricted Securities:

The Fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. There were no restricted securities (excluding Rule 144A issues) at December 31, 2009. However, certain 144A securities were deemed illiquid as of December 31, 2009 and therefore were considered restricted. Aggregate cost and fair value of such securities held at December 31, 2009 were as follows:


	Aggregate Cost		Aggregate Value		Value as a Percentage of Fund’s Net Assets
Total of Restricted Securities	$	4,298,700	$	6,464,384	2.8	%

Note 8 — Loan Outstanding:

The Fund is permitted to have borrowings for investment purposes. The Fund has entered into a line of credit agreement with The Bank of New York Mellon which permits the Fund to borrow up to $60 million at a rate, per annum, equal to the Federal Funds Rate plus 1.00%. The average daily loan balance during the period for which loans were outstanding amounted to $58,552,055, and the weighted average interest

TCW Strategic Income Fund, Inc.

December 31, 2009

rate was 1.17%. Interest expense for the line of credit was $683,322 for the year ended December 31, 2009. The maximum outstanding loan balance during the year ended December 31, 2009 was $58,600,000 and is the same balance at December 31, 2009.

Note 9 — Indemnifications:

Under the Fund’s organizational documents, its Officers and Directors may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund, and shareholders are indemnified against personal liability for the obligations of the Fund. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. The Fund has not accrued any liability in connection with such indemnification.

Note 10 — Subsequent Events:

The Advisor has evaluated the possibility of subsequent events existing in this report through February 19, 2010. The Advisor has determined that there are no material events that would require recognition or disclosure in this report through this date.

TCW Strategic Income Fund, Inc.

Financial Highlights


	Year Ended December 31,
	2009			2008			2007			2006			2005
Net Asset Value Per Share, Beginning of Year	$	3.64		$	4.27		$	5.60		$	5.35		$	5.78

Income from Operations:
Net Investment Income ⁽¹⁾		0.78			0.52			0.38			0.30			0.21
Net Realized and Unrealized Gain (Loss) on Investments		0.86			(0.77	)		(1.28	)		0.33			(0.25	)

Total from Investment Operations		1.64			(0.25	)		(0.90	)		0.63			(0.04	)

Less Distributions:
Distributions from Net Investment Income		(0.51	)		(0.38	)		(0.43	)		(0.38	)		(0.40	)

Capital Activity:
Impact to Capital for Shares Repurchased		—			—			—			—			0.01

Total From Capital Activity		—			—			—			—			0.01

Net Asset Value Per Share, End of Year	$	4.77		$	3.64		$	4.27		$	5.60		$	5.35

Market Value Per Share, End of Year	$	4.37		$	3.07		$	3.67		$	5.11		$	4.69

Total Investment Return ⁽²⁾		60.97	%		(6.32	)%		(20.70	)%		17.50	%		(5.17	)%
Net Asset Value Total Return ⁽³⁾		46.61	%		(6.03	)%		(16.54	)%		12.16	%		(0.36	)%

Ratios/Supplemental Data:
Net Assets, End of Year (in thousands)	$	227,310		$	173,408		$	203,302		$	266,518		$	254,924
Ratio of Expenses Before Interest Expense to Average Net Assets		1.12	%		1.10	%		0.86	%		1.00	%		0.89	%
Ratio of Interest Expense to Average Net Assets		0.34	%		0.65	%		0.32	%		0.55	%		—	%
Ratio of Total Expenses to Average Net Assets		1.47	%		1.75	%		1.18	%		1.55	%		0.89	%
Ratio of Net Investment Income to Average Net Assets		18.62	%		12.89	%		7.60	%		5.52	%		3.73	%
Portfolio Turnover Rate		30.31	%		42.44	%		74.98	%		174.33	%		56.04	%

(1)

Computed using average shares outstanding throughout the year.

(2)

Based on market price per share, adjusted for reinvestment of distributions.

(3)

Based on net asset value per share, adjusted for reinvestment of distributions.

See accompanying notes to financial statements.

TCW Strategic Income Fund, Inc.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of

Directors of TCW Strategic Income Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of TCW Strategic Income Fund, Inc. (the “Fund”), including the schedule of investments, as of December 31, 2009, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of TCW Strategic Income Fund, Inc. as of December 31, 2009, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

LOGO

Los Angeles, California

February 19, 2010

TCW Strategic Income Fund, Inc.

Voting Information (Unaudited)

Report of Annual Meeting of Shareholders

The Annual Meeting of Shareholders of the Fund was held on September 15, 2009. At the meeting, the following matters were submitted to a shareholder vote: (i) the election of Charles W. Baldiswieler, Samuel P. Bell, Richard W. Call, David S. DeVito, Matthew K. Fong, John A. Gavin, Patrick C. Haden and Charles A. Parker as Directors to serve until their successors are elected and qualify (each nominee was elected with Mr. Baldiswieler receiving 40,189,291 affirmative votes and 1,259,293 votes withheld, Mr. Bell receiving 40,103,429 affirmative votes and 1,345,155 votes withheld, Mr. Call receiving 40,024,333 affirmative votes and 1,424,251 votes withheld, Mr. DeVito receiving 40,148,668 affirmative votes and 1,299,916 votes withheld, Mr. Fong receiving 40,188,961 affirmative votes and 1,259,623 votes withheld, Mr. Gavin receiving 40,054,030 affirmative votes and 1,394,554 votes withheld, Mr. Haden receiving 40,193,700 affirmative votes and 1,254,884 votes withheld, and Mr. Parker receiving 40,107,100 affirmative votes and 1,341,484 votes withheld); and (ii) the conversion of the Fund to an open-end investment company pursuant to the Fund’s Articles of Incorporation, and adoption of an amendment and restatement of the Articles of Incorporation to effectuate the proposal (votes for 2,630,993, votes against 15,635,176 and abstentions 398,698). 47,609,979 shares were outstanding on the record date of the meeting and 41,448,584 shares with respect to proposal (i) entitled to vote were present in person or proxy at the meeting and 18,664,867 shares with respect to proposal (ii) entitled to vote were present in person or proxy at the meeting.

TCW Strategic Income Fund, Inc.

Supplemental Information (Unaudited)

Proxy Voting Guidelines

The policies and procedures that the Fund uses to determine how to vote proxies are available without charge. The Board of Directors of the Fund has delegated the Fund’s proxy voting authority to the Advisor.

Disclosure of Proxy Voting Guidelines

The proxy voting guidelines of the Advisor are available:

By calling 1-(877) 829-4768 to obtain a hard copy; or

By going to the SEC website at http://www.sec.gov.

When the Fund receives a request for a description of the Advisor’s proxy voting guidelines, it will be sent out via first class mail (or other means designed to ensure equally prompt delivery) within three business days of receiving the request.

The Advisor, on behalf of the Fund, must prepare and file Form N-PX with the SEC not later than August 31 of each year, which must include the Fund’s proxy voting record for the most recent twelve-month period ended June 30 of that year. The Fund’s proxy voting record for the most recent twelve-month period ended June 30 is available:

By calling 1-(877) 829-4768 to obtain a hard copy; or

By going to the SEC website at http://www.sec.gov.

When the Fund receives a request for the Fund’s proxy voting record, it will send the information disclosed in the Fund’s most recently filed report on Form N-PX via first class mail (or other means designed to ensure equally prompt delivery) within three business days of receiving the request. The Fund also discloses its proxy voting record on its website as soon as is reasonably practicable after its report on Form N-PX is filed with the SEC.

Availability of Quarterly Portfolio Schedule

The Fund files a complete schedule of its portfolio holdings with the SEC for the first and third quarters of its fiscal year on Form N-Q. The Form N-Q is available by calling 1-(877) 829-4768 to obtain a hard copy. You may also obtain the Fund’s Form N-Q:

By going to the SEC website at http://www.sec.gov.; or

By visiting the SEC’s Public Reference Room in Washington, D.C. and photocopying it (Phone 1-800-SEC-0330 for information on the operation of the SEC’s Public Reference Room).

Corporate Governance Listing Standards

In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed Company Manual, the Fund’s Annual CEO Certification certifying compliance with NYSE’s Corporate Governance Listing Standards was submitted to the Exchange on October 20, 2009.

TCW Strategic Income Fund, Inc.

What You Should Know

At TCW, we recognize the importance of keeping information about you secure and confidential. We do not sell or share your nonpublic personal and financial information with marketers or others outside our affiliated group of companies.

We carefully manage information among our affiliated group of companies to safeguard your privacy and to provide you with consistently excellent service.

We are providing this notice to you to comply with the requirements of Regulation S-P, “Privacy of Consumer Financial Information,” issued by the United States Securities and Exchange Commission.

Our Privacy Policy

We, The TCW Group, Inc. and its subsidiaries, the TCW Funds, Inc., and TCW Strategic Income Fund, Inc. (collectively, “TCW”) are committed to protecting the nonpublic personal and financial information of our customers and consumers who obtain or seek to obtain financial products or services primarily for personal, family or household purposes. We fulfill our commitment by establishing and implementing policies and systems to protect the security and confidentiality of this information.

In our offices, we limit access to nonpublic personal and financial information about you to those TCW personnel who need to know the information in order to provide products or services to you. We maintain physical, electronic and procedural safeguards to protect your nonpublic personal and financial information.

Categories of Information We Collect

We may collect the following types of nonpublic personal and financial information about you from the following sources:

•

Your name, address and identifying numbers, and other personal and financial information, from you and from identification cards and papers you submit to us, on applications, subscription agreements or other forms or communications.

•

Information about your account balances and financial transactions with us, our affiliated entities, or nonaffiliated third parties, from our internal sources, from affiliated entities and from nonaffiliated third parties.

•

Information about your account balances and financial transactions and other personal and financial information, from consumer credit reporting agencies or other nonaffiliated third parties, to verify information received from you or others.

Categories of Information We Disclose to Nonaffiliated Third Parties

•

We may disclose your name, address and account and other identifying numbers, as well as information about your pending or past transactions and other personal financial information, to nonaffiliated third parties, as necessary to execute, process, service and confirm your securities transactions and mutual fund transactions, to administer and service your account and commingled investment vehicles in which you are invested, or to market our products and services through joint marketing arrangements.

TCW Strategic Income Fund, Inc.

•

We may disclose nonpublic personal and financial information concerning you to law enforcement agencies, federal regulatory agencies, self-regulatory organizations or other nonaffiliated third parties, if required or requested to do so by a court order, judicial subpoena or regulatory inquiry.

We do not otherwise disclose your nonpublic personal and financial information to nonaffiliated third parties, except where we believe in good faith that disclosure is required or permitted by law. Because we do not disclose your nonpublic personal and financial information to nonaffiliated third parties, our Customer Privacy Policy does not contain opt-out provisions.

Categories of Information We Disclose to Our Affiliated Entities

•

We may disclose your name, address and account and other identifying numbers, account balances, information about your pending or past transactions and other personal financial information to our affiliated entities for any purpose.

•

We regularly disclose your name, address and account and other identifying numbers, account balances and information about your pending or past transactions to our affiliates to execute, process and confirm securities transactions or mutual fund transactions for you, to administer and service your account and commingled investment vehicles in which you are invested, or to market our products and services to you.

Information About Former Customers

We do not disclose nonpublic personal and financial information about former customers to nonaffiliated third parties unless required or requested to do so by a court order, judicial subpoena or regulatory inquiry, or otherwise where we believe in good faith that disclosure is required or permitted by law.

Questions

Should you have any questions about our Customer Privacy Policy, please contact us by email or by regular mail at the address set out at the bottom of this policy.

Reminder About TCW’s Financial Products

Financial products offered by The TCW Group, Inc. and its subsidiaries, the TCW Funds, Inc. and TCW Strategic Income Fund, Inc.:

•

Are not guaranteed by a bank;

•

Are not obligations of The TCW Group, Inc. or of its subsidiaries;

•

Are not insured by the Federal Deposit Insurance Corporation; and

•

Are subject to investment risks, including possible loss of the principal amount committed or invested, and earnings thereon.

TCW Strategic Income Fund, Inc.

Dividend Reinvestment Plan

Shareholders who wish to add to their investment may do so by making an election to participate in the Dividend Reinvestment Plan (the “Plan”). Under the Plan, your dividend is used to purchase shares on the open market whenever shares, including the related sales commission, are selling below the Fund’s net assets value per share. You will be charged a pro-rata portion of brokerage commissions on open-market purchases under the Plan. If the market price, including commission, is above the net asset value, you will receive shares at a price equal to the higher of the net asset value per share on the payment date or 95% of the closing market price on the payment date. Generally, for tax purposes, shareholders participating in the Plan will be treated as having received a distribution from the Fund in cash equal to the value of the shares purchased from them under the Plan.

To enroll in the plan, if your shares are registered in your name, write to the BNY Mellon Shareowner Services (“BNY”), P.O. Box #358035, Pittsburgh, PA 15252-8035, or call toll free at (866) 227-8179. If your shares are held by a brokerage firm, please call your broker. If you participate in the Plan through a broker, you may not be able to transfer your shares to another broker and continue to participate in the Plan if your new broker does not permit such participation. If you no longer want to participate in the Plan, please contact the BNY or your broker. You may elect to continue to hold shares previously purchased on your behalf or to sell your shares and receive the proceeds, net of any brokerage commissions. If you need additional information or assistance, please call our investor relations department at (877) 829-4768 or visit our website at www.tcw.com. As always, we would be pleased to accommodate your investment needs.

TCW Strategic Income Fund, Inc.

Portfolio Managers

Effective January 2010, the current portfolio managers of the Fund are Tad Rivelle, Stephen Kane, Laird Landmann, Mitch Flack and Bryan Whalen. Their biographical information and experience are presented below.


Portfolio Manager		Business Experience During the Last Five Years
Mitch Flack		Portfolio manager and Managing Director, the Advisor, Metropolitan West Asset Management, LLC, Trust Company of the West and TCW Asset Management Company. Portfolio manager, partner and a mortgage specialist with Metropolitan West Asset Management Company, LLC since March 2001.
Stephen Kane, CFA		Portfolio manager and Managing Director, the Advisor, Metropolitan West Asset Management, LLC, Trust Company of the West and TCW Asset Management Company. Portfolio manager, founding partner with Metropolitan West Asset Management Company, LLC since August 1996.
Laird R. Landmann		Portfolio manager and Group Managing Director, the Advisor, Metropolitan West Asset Management, LLC, Trust Company of the West and TCW Asset Management Company. Portfolio manager and a founding partner with Metropolitan West Asset Management Company, LLC since August 1996.
Tad Rivelle		Portfolio manager and Group Managing Director, the Advisor, Metropolitan West Asset Management, LLC, Trust Company of the West and TCW Asset Management Company. Chief Investment Officer, portfolio manager and a founding partner with Metropolitan West Asset Management, LLC since August 1996.
Bryan Whalen, CFA		Portfolio manager and Managing Director, the Advisor, Metropolitan West Asset Management, LLC, Trust Company of the West and TCW Asset Management Company. Portfolio manager and a partner with Metropolitan West Asset Management Company, LLC since 2004.

TCW Strategic Income Fund, Inc.

Directors and Officers (Unaudited)

A board of eight directors is responsible for overseeing the operations of the Fund. The directors of the Fund, and their business addresses and their principal occupations for the last five years are set forth below.


Name, Address, Age and Position with Fund ⁽¹⁾	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Other Directorships held by Director
Charles W. Baldiswieler (51) ⁽²⁾ President and Chief Executive Officer	Mr. Baldiswieler has served as a director of the Fund since March 2009.	Group Managing Director, Advisor, TCW Asset Management Company and Trust Company of the West.	TCW Funds, Inc. (mutual fund).
Samuel P. Bell (73)	Mr. Bell has served as a director of the Fund since October 2002.	Private Investor. Former President, Los Angeles Business Advisors (not-for-profit business organization).	Point 360 (post production services), Broadway National Bank (banking), TCW Funds, Inc. (mutual fund).
Richard W. Call (85)	Mr. Call has served as a director of the Fund since February 1987.	Private Investor.	TCW Funds, Inc. (mutual fund).
David S. DeVito (47)⁽²⁾ Treasurer and Chief Financial Officer	Mr. DeVito has served as a director of the Fund since January 2008.	Executive Vice President and Chief Administrative Officer, the Advisor, The TCW Group, Inc., Trust Company of the West and TCW Asset Management Company; Treasurer and Chief Financial Officer, TCW Funds, Inc.	None.
Matthew K. Fong (56)	Mr. Fong has served as a director of the Fund since April 1999.	President, Strategic Advisory Group (consulting firm).	Seismic Warning Systems, Inc., PGP LLP (private equity fund), and TCW Funds, Inc. (mutual fund).
John A. Gavin (78)	Mr. Gavin has served as a director of the Fund since May 2001.	Founder and Chairman of Gamma Holdings (international capital consulting firm).	Causeway Capital (mutual fund), TCW Funds, Inc. (mutual fund), Hotchkis and Wiley Funds (mutual fund).
Patrick C. Haden (56) Chairman	Mr. Haden has served as a director of the Fund since May 2001.	General Partner, Riordan, Lewis & Haden (private equity firm).	Tetra Tech, Inc. (environmental consulting), and TCW Funds, Inc. (mutual fund).
Charles A. Parker (75)	Mr. Parker has served as a director of the Fund since May 1988.	Private Investor.	Horace Mann Educators Corp. (insurance corporation), Burridge Center for Research in Security Prices (University of Colorado), and TCW Funds, Inc. (mutual fund).

(1)

The address of each Independent Director is c/o Bingham McCutchen LLP, Counsel to the Independent Directors, 355 South Grand Avenue, Los Angeles, CA 90071.

(2)

The address for the Interested Directors is 865 South Figueroa Street, Los Angeles, CA 90017.

TCW Strategic Income Fund, Inc.

The officers of the Fund who are not directors of the Fund are:


Name and Address	Position(s) Held with Fund	Principal Occupation(s) During Past 5 Years ⁽²⁾
Thomas D. Lyon (50) *	Senior Vice President	Managing Director, the Advisor, TCW Asset Management Company and Trust Company of the West.
Hilary G.D. Lord (53) *	Senior Vice President, Chief Compliance Officer	Managing Director and Chief Compliance Officer, the Advisor, The TCW Group, Inc., Trust Company of the West and TCW Asset Management Company; Senior Vice President and Chief Compliance Officer, TCW Funds, Inc.
Philip K. Holl (60) *	Secretary and Associate General Counsel	Senior Vice President and Associate General Counsel, the Advisor, Trust Company of the West and TCW Asset Management Company; Secretary and Associate General Counsel, TCW Funds, Inc.
Michael E. Cahill (58) *	Senior Vice President, General Counsel and Assistant Secretary	Executive Vice President, General Counsel and Secretary, the Advisor, The TCW Group, Inc., Trust Company of the West and TCW Asset Management Company; General Counsel, TCW Funds, Inc.
Peter A. Brown (54) *	Senior Vice President	Managing Director, the Advisor, The TCW Group, Inc., Trust Company of the West and TCW Asset Management Company.
George N. Winn (41) *	Assistant Treasurer	Senior Vice President of Trust Company of the West, TCW Asset Management Company and the Advisor, Assistant Treasurer, TCW Funds, Inc.

(2)

Positions with The TCW Group, Inc. and its affiliates may have changed over time.

*	Address is 865 South Figueroa Street, Los Angeles, California 90017

LOGO

TCW Insight that works for you. TM

TCW Strategic Income Fund, Inc.

865 South Figueroa Street

Los Angeles, California 90017

866 227 8179

www.tcw.com

Investment Advisor

TCW Investment Management Company

865 South Figueroa Street

Los Angeles, California 90017

Transfer Agent, Dividend Reinvestment and

Disbursement Agent and Registrar

BNY Mellon Shareowner Services

P.O. Box #35835

Pittsburgh, Pennsylvania 15252

Independent Registered Public Accounting Firm

Deloitte & Touche, LLP

350 South Grand Avenue

Los Angeles, California 90071

Custodian & Administrator

State Street Bank & Trust Company

200 Clarendon Street

Boston, Massachusetts 02116

Legal Counsel

Dechert LLP

1775 Eye Street N.W.

Washington, D.C. 20006

Directors

Charles W. Baldiswieler

Director, President, and Chief Executive Officer

Samuel P. Bell

Director

Richard W. Call

Director

David S. DeVito

Director, Treasurer and Chief Financial Officer

Matthew K. Fong

Director

John A. Gavin

Director

Patrick C. Haden

Chairman

Charles A. Parker

Director

Officers

Thomas D. Lyon

Senior Vice President

Hilary G.D. Lord

Senior Vice President,

Chief Compliance Officer

Philip K. Holl

Secretary and Associate General Counsel

Michael E. Cahill

Senior Vice President, General Counsel

and Assistant Secretary

Peter A. Brown

Senior Vice President

George N. Winn

Assistant Treasurer

TSlant9445 1/7/10

Item 2.

Code of Ethics. The registrant has adopted a code of ethics that applies to its principal executive officer and principal financial officer or persons performing similar functions. The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, please contact the registrant at (877) 829-4768.

Item 3.

Audit Committee Financial Expert. The registrant has two audit committee financial experts, Samuel P. Bell and Charles A. Parker, who are independent of management, serving on its audit committee.

Item 4.

Principal Accountant Fees and Services.

(a)

Audit Fees Paid by Registrant


2009		2008
$75,000		$72,050

(b)

Audit-Related Fees Paid by Registrant


2009		2008
0		0

(c)

Tax Fees Paid by Registrant


2009		2008
$4,500		$4,500

Fees were for the preparation and filing of the registrant’s corporate returns.

(d)

All Other Fees Paid by Registrant


2009		2008
$3,500		0

(e)

(1) The registrant’s audit committee approves each specific service the auditor will perform for the registrant. Accordingly, the audit committee has not established pre-approval policies or procedures for services that the auditor may perform for the registrant.

(e)

(2) None

(f)

Not applicable.

(g)

No non-audit fees except as disclosed in Item 4(c) above were billed by the registrant’s accountant for services rendered to the registrant, or rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant.

(h)

Not applicable.

Item 5.

Audit of Committee of Listed Registrants.

(a)

The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The registrant’s audit committee members, consisting solely of independent directors are:

Samuel P. Bell

Richard W. Call

Matthew K. Fong

John A. Gavin

Patrick C. Haden

Charles A. Parker

Item 6.

Schedule of Investments. Not Applicable.

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Proxy Voting Guidelines and Procedures

May 2008

Introduction

Certain affiliates of The TCW Group, Inc. (these affiliates are collectively referred to as “TCW”) act as investment advisors for a variety of clients, including mutual funds. If TCW has responsibility for voting proxies in connection with these investment advisory duties, or has the responsibility to specify to an agent of the client how to vote the proxies, TCW exercises such voting responsibilities for its clients through the corporate proxy voting process. TCW believes that the right to vote proxies is a significant asset of its clients’ holdings. In order to provide a basis for making decisions in the voting of proxies for its clients, TCW has established a proxy voting committee (the “Proxy Committee”) and adopted these proxy voting guidelines and procedures (the “Guidelines”). The Proxy Committee generally meets quarterly (or at such other frequency as determined by the Proxy Committee), and its duties include establishing proxy

voting guidelines and procedures, overseeing the internal proxy voting process, and reviewing proxy voting issues. The members of the Proxy Committee include TCW personnel from the investment, compliance, legal and marketing departments. TCW also uses outside proxy voting services (each an “Outside Service”) to help manage the proxy voting process. An Outside Service facilitates TCW’s voting according to the Guidelines (or, if applicable, according to guidelines submitted by TCW’s clients) and helps maintain TCW’s proxy voting records. All proxy voting and record keeping by TCW is, of course, dependent on the timely provision of proxy ballots by custodians, clients and other third parties. Under specified circumstances described below involving potential conflicts of interest, an Outside Service may also be requested to help decide certain proxy votes. In certain limited circumstances, particularly in the area of structured financing, TCW may enter into voting agreements or other contractual obligations that govern the voting of shares. In the event of a conflict between any such contractual requirements and the Guidelines, TCW will vote in accordance with its contractual obligations.

Philosophy

The Guidelines provide a basis for making decisions in the voting of proxies for clients of TCW. When voting proxies, TCW’s utmost concern is that all decisions be made solely in the interests of the client and with the goal of maximizing the value of the client’s investments. With this goal in mind, the Guidelines cover various categories of voting decisions and generally specify whether TCW will vote for or against a particular type of proposal. TCW’s underlying philosophy, however, is that its portfolio managers, who are primarily responsible for evaluating the individual holdings of TCW’s clients, are best able to determine how to further client interests and goals. The portfolio managers may, in their discretion, take into account the recommendations of TCW management, the Proxy Committee, and an Outside Service.

Overrides and Conflict Resolution

Individual portfolio managers, in the exercise of their best judgment and discretion, may from time to time override the Guidelines and vote proxies in a manner that they believe will enhance the economic value of clients’ assets, keeping in mind the best interests of the beneficial owners. A portfolio manager choosing to override the Guidelines must deliver a written rationale for each such decision to TCW’s Proxy Specialist (the “Proxy Specialist”), who will maintain such documentation in TCW’s proxy voting records and deliver a quarterly report to the Proxy Committee of all votes cast other than in accordance with the Guidelines. If the Proxy Specialist believes there is a question regarding a portfolio manager’s vote, she will obtain the approval of TCW’s Director of Research (the “Director of Research”) for the vote before submitting it. The Director of Research will review the portfolio manager’s vote and make a determination. If the Director of Research believes it appropriate, she may elect to convene the Proxy Committee.

It is unlikely that serious conflicts of interest will arise in the context of TCW’s proxy voting, because TCW does not engage in investment banking or the managing or advising of public companies. In the event a potential conflict of interest arises in the context of voting proxies for TCW’s clients, the primary means by which TCW will avoid a conflict is by casting such votes solely in the interests of its clients and in the interests of maximizing the value of their portfolio holdings. In this regard, if a potential conflict of interest arises, but the proxy vote to be decided is predetermined hereunder to be cast either in favor or against, then TCW will vote accordingly.

On the other hand, if a potential conflict of interest arises, and there is no predetermined vote, or the Guidelines themselves refer such vote to the portfolio manager for decisions, or the portfolio manager would like to override a predetermined vote, then TCW will undertake the following analysis.

First, if a potential conflict of interest is identified because the issuer soliciting proxy votes is itself a client of TCW’s (or because an affiliate of such issuer, such as a pension or profit sharing plan sponsored by such issuer, is a client of TCW’s), then the Proxy Specialist will determine whether such relationship may be deemed not to be material to TCW. A relationship will be deemed not to be material, and no further conflict analysis will be required, if the assets managed for that client by TCW represent, in the aggregate, 0.25% (25 basis points) or less of TCW’s total assets under management. On the other hand, if the assets managed for that client by TCW exceed in the aggregate, 0.25% (25 basis points) of TCW’s total assets under management, then the Proxy Committee will investigate whether the relationship should be deemed to be material under the particular circumstances. If the relationship is deemed not to be material, then no further conflict analysis will be required. If a material conflict is deemed to have arisen, then TCW will refrain completely from exercising its discretion with respect to voting the proxy with respect to such vote and will, instead, refer that vote to an Outside Service for its independent consideration as to how the vote should be cast.

Second, a potential conflict of interest may arise because an employee of TCW sits on the Board of a public company. The Proxy Specialist is on the distribution list for an internal chart that shows any Board seats in public companies held by TCW personnel. If the Proxy Specialist confirms that such Board member is not the portfolio manager and, that the portfolio manager has not spoken with such Board member, then such conflict of interest will not be deemed to be material and no further conflict analysis will be required. If, on the other hand, either the particular Board member is the portfolio manager or there has been communication concerning such proxy vote between the portfolio manager and the particular Board member, then the Proxy Specialist will provide the Proxy Committee with the facts and vote rationale so that it can determine and vote the securities. The vote by the Proxy Committee will be documented.

Third, a potential conflict of interest may arise if the issuer is an affiliate of TCW. It is currently not anticipated that this would be the case, but if this were to arise TCW will refrain completely from exercising its discretion with respect to voting the proxy with respect to such a vote and will, instead, refer that vote to an Outside Service for its independent consideration as to how the vote should be cast.

Finally, if any other portfolio manager conflict is identified with respect to a given proxy vote, the Proxy Committee will remove such vote from the conflicted portfolio manager and will itself consider and cast the vote.

Proxy Voting Information and Recordkeeping

Upon request, TCW provides proxy voting records to its clients. These records state how votes were cast on behalf of client accounts, whether a particular matter was proposed by the company or a shareholder, and whether or not TCW voted in line with management recommendations.

TCW is prepared to explain to clients the rationale for votes cast on behalf of client accounts. To obtain proxy voting records, a client should contact the Proxy Specialist.

TCW or an Outside Service will keep records of the following items: (i) these Proxy Voting Guidelines and any other proxy voting procedures; (ii) proxy statements received regarding client securities (unless such statements are available on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system); (iii) records of votes cast on behalf of clients (if maintained by an Outside Service, that Outside Service will provide copies of those records promptly upon request); (iv) records of written requests for proxy voting information and TCW’s response (whether a client’s request was oral or in writing); and (v) any documents prepared by TCW that were material to making a decision how to vote, or that memorialized the basis for the decision. Additionally, TCW or an Outside Service will maintain any documentation related to an identified material conflict of interest.

TCW or an Outside Service will maintain these records in an easily accessible place for at least five years from the end of the fiscal year during which the last entry was made on such record. For the first two years, TCW or an Outside Service will store such records at its principal office.

International Proxy Voting

While TCW utilizes these Proxy Voting Guidelines for both international and domestic portfolios and clients, there are some significant differences between voting U.S. company proxies and voting non-U.S. company proxies. For U.S. companies, it is relatively easy to vote proxies, as the proxies are automatically received and may be voted by mail or electronically. In most cases, the officers of a U.S. company soliciting a proxy act as proxies for the company’s shareholders.

For proxies of non-U.S. companies, however, it is typically both difficult and costly to vote proxies. The major difficulties and costs may include: (i) appointing a proxy; (ii) knowing when a meeting is taking place; (iii) obtaining relevant information about proxies, voting procedures for foreign shareholders, and restrictions on trading securities that are subject to proxy votes; (iv) arranging for a proxy to vote; and (v) evaluating the cost of voting. Furthermore, the operational hurdles to voting proxies vary by country. As a result, TCW considers whether or not to vote an international proxy based on the particular facts and curcumstances. However, when TCW believes that an issue to be voted is likely to affect the economic value of the portfolio securities, that its vote may influence the ultimate outcome of the contest, and that the benefits of voting the proxy exceed the expected costs, TCW will make every reasonable effort to vote such proxies.

Guidelines

The proxy voting decisions set forth below refer to proposals by company management except for the categories of “Shareholder Proposals” and “Social Issue Proposals.” The voting decisions in these latter two categories refer to proposals by outside shareholders.

Governance

•

For director nominees in uncontested elections

•

For management nominees in contested elections

•

For ratifying auditors, except against if the previous auditor was dismissed because of a disagreement with the company or if the non-audit services exceed 51% of fees

•

For changing the company name

•

For approving other business

•

For adjourning the meeting

•

For technical amendments to the charter and/or bylaws

•

For approving financial statements

Capital Structure

•

For increasing authorized common stock

•

For decreasing authorized common stock

•

For amending authorized common stock

•

For the issuance of common stock, except against if the issued common stock has superior voting rights

•

For approving the issuance or exercise of stock warrants

•

For authorizing preferred stock, except against if the board has unlimited rights to set the terms and conditions of the shares

•

For increasing authorized preferred stock, except against if the board has unlimited rights to set the terms and conditions of the shares

•

For decreasing authorized preferred stock

•

For canceling a class or series of preferred stock

•

For amending preferred stock

•

For issuing or converting preferred stock, except against if the shares have voting rights superior to those of other shareholders

•

For eliminating preemptive rights

•

For creating or restoring preemptive rights

•

Against authorizing dual or multiple classes of common stock

•

For eliminating authorized dual or multiple classes of common stock

•

For amending authorized dual or multiple classes of common stock

•

For increasing authorized shares of one or more classes of dual or multiple classes of common stock, except against if it will allow the company to issue additional shares with superior voting rights

•

For a stock repurchase program

•

For a stock split

•

For a reverse stock split, except against if the company does not intend to proportionally reduce the number of authorized shares

Mergers and Restructuring

•

For merging with or acquiring another company

•

For recapitalization

•

For restructuring the company

•

For bankruptcy restructurings

•

For liquidations

•

For reincorporating in a different state

•

For a leveraged buyout of the company

•

For spinning off certain company operations or divisions

•

For the sale of assets

•

Against eliminating cumulative voting

•

For adopting cumulative voting

Board of Directors

•

For limiting the liability of directors

•

For setting the board size

•

For allowing the directors to fill vacancies on the board without shareholder approval

•

Against giving the board the authority to set the size of the board as needed without shareholder approval

•

For a proposal regarding the removal of directors, except against if the proposal limits the removal of directors to cases where there is legal cause

•

For non-technical amendments to the company’s certificate of incorporation, except against if an amendment would have the effect of reducing shareholders’ rights

•

For non-technical amendments to the company’s by laws, except against if an amendment would have the effect of reducing shareholder’s rights

Anti-Takeover Provisions

•

Against a classified board

•

Against amending a classified board

•

For repealing a classified board

•

Against ratifying or adopting a shareholder rights plan (poison pill)

•

Against redeeming a shareholder rights plan (poison pill)

•

Against eliminating shareholders’ right to call a special meeting

•

Against limiting shareholders’ right to call a special meeting

•

For restoring shareholders’ right to call a special meeting

•

Against eliminating shareholders’ right to act by written consent

•

Against limiting shareholders’ right to act by written consent

•

For restoring shareholders’ right to act by written consent

•

Against establishing a supermajority vote provision to approve a merger or other business combination

•

For amending a supermajority vote provision to approve a merger or other business combination, except against if the amendment would increase the vote required to approve the transaction

•

For eliminating a supermajority vote provision to approve a merger or other business combination

•

Against adopting supermajority vote requirements (lock-ins) to change certain bylaw or charter provisions

•

Against amending supermajority vote requirements (lock-ins) to change certain bylaw or charter provisions

•

For eliminating supermajority vote requirements (lock-ins) to change certain bylaw or charter provisions

•

Against expanding or clarifying the authority of the board of directors to consider factors other than the interests of shareholders in assessing a takeover bid

•

Against establishing a fair price provision

•

Against amending a fair price provision

•

For repealing a fair price provision

•

For limiting the payment of greenmail

•

Against adopting advance notice requirements

•

For opting out of a state takeover statutory provision

•

Against opt into a state takeover statutory provision

Compensation

•

For adopting a stock incentive plan for employees, except decide on a case-by-case basis if the plan dilution is more than 15% of outstanding common stock or if the potential dilution from all company plans, including the one proposed, is more than 20% of outstanding common stock

•

For amending a stock incentive plan for employees, except decide on a case-by-case basis if the minimum potential dilution from all company plans, including the one proposed, is more than 20% of outstanding common stock

•

For adding shares to a stock incentive plan for employees, except decide on a case-by-case basis if the plan dilution is more than 15% of outstanding common stock or if the potential dilution from all company plans, including the one proposed, is more than 20% of outstanding common stock

•

For limiting per-employee option awards

•

For extending the term of a stock incentive plan for employees

•

Case-by-case on assuming stock incentive plans

•

For adopting a stock incentive plan for non-employee directors, except decide on a case-by-case basis if the plan dilution is more than 5% of outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of outstanding common equity

•

For amending a stock incentive plan for non-employee directors, except decide on a case-by-case basis if the minimum potential dilution from all plans, including the one proposed, is more than 10% of outstanding common equity

•

For adding shares to a stock incentive plan for non-employee directors, except decide on a case-by-case basis if the plan dilution is more than 5% of outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity

•

For adopting an employee stock purchase plan, except against if the proposed plan allows employees to purchase stock at prices of less than 75% of the stock’s fair market value

•

For amending an employee stock purchase plan, except against if the proposal allows employees to purchase stock at prices of less than 75% of the stock’s fair market value

•

For adding shares to an employee stock purchase plan, except against if the proposed plan allows employees to purchase stock at prices of less than 75% of the stock’s fair market value

•

For adopting a stock award plan, except decide on a case-by-case basis if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity

•

For amending a stock award plan, except against if the amendment shortens the vesting requirements or lessens the performance requirements

•

For adding shares to a stock award plan, except decide on a case-by-case basis if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity

•

For adopting a stock award plan for non-employee directors, except decide on a case-by-case basis if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity

•

For amending a stock award plan for non-employee directors, except decide on a case-by-case basis if the minimum potential dilution from all plans is more than 10% of the outstanding common equity.

•

For adding shares to a stock award plan for non-employee directors, except decide on a case-by-case basis if the plan dilution is more than 5% of the outstanding common equity or if the minimum potential dilution from all plans, including the one proposed, is more than 10% of the outstanding common equity

•

For approving an annual bonus plan

•

For adopting a savings plan

•

For granting a one-time stock option or stock award, except decide on a case-by-case basis if the plan dilution is more than 15% of the outstanding common equity

•

For adopting a deferred compensation plan

•

For approving a long-term bonus plan

•

For approving an employment agreement or contract

•

For amending a deferred compensation plan

•

For exchanging underwater options (options with a per-share exercise price that exceeds the underlying stock’s current market price)

•

For amending an annual bonus plan

•

For reapproving a stock option plan or bonus plan for purposes of OBRA

•

For amending a long-term bonus plan

Shareholder Proposals

•

For requiring shareholder ratification of auditors

•

Against requiring the auditors to attend the annual meeting

•

Against limiting consulting by auditors

•

Against requiring the rotation of auditors

•

Against restoring preemptive rights

•

For asking the company to study sales, spin-offs, or other strategic alternatives

•

For asking the board to adopt confidential voting and independent tabulation of the proxy ballots

•

Against asking the company to refrain from counting abstentions and broker non-votes in vote tabulations

•

Against eliminating the company’s discretion to vote unmarked proxy ballots.

•

For providing equal access to the proxy materials for shareholders

•

Against requiring a majority vote to elect directors

•

Against requiring the improvement of annual meeting reports

•

Against changing the annual meeting location

•

Against changing the annual meeting date

•

Against asking the board to include more women and minorities as directors.

•

Against seeking to increase board independence

•

Against limiting the period of time a director can serve by establishing a retirement or tenure policy

•

Against requiring minimum stock ownership by directors

•

Against providing for union or employee representatives on the board of directors

•

For increasing disclosure regarding the board’s role in the development and monitoring of the company’s long-term strategic plan

•

For increasing the independence of the nominating committee

•

For creating a nominating committee of the board

•

Against urging the creation of a shareholder committee

•

Against asking that the chairman of the board of directors be chosen from among the ranks of the non-employee directors

•

Against asking that a lead director be chosen from among the ranks of the non-employee directors

•

For adopting cumulative voting

•

Against requiring directors to place a statement of candidacy in the proxy statement

•

Against requiring the nomination of two director candidates for each open board seat

•

Against making directors liable for acts or omissions that constitute a breach of fiduciary care resulting from a director’s gross negligence and/or reckless or willful neglect

•

For repealing a classified board

•

Against asking the board to redeem or to allow shareholders to vote on a poison pill shareholder rights plan

•

For eliminating supermajority provisions

•

For reducing supermajority provisions

•

Against repealing fair price provisions

•

For restoring shareholders’ right to call a special meeting

•

For restoring shareholders’ right to act by written consent

•

For limiting the board’s discretion to issue targeted share placements or requiring shareholder approval before such block placements can be made

•

For seeking to force the company to opt out of a state takeover statutory provision

•

Against reincorporating the company in another state

•

For limiting greenmail payments

•

Against advisory vote on compensation

•

Against restricting executive compensation

•

For enhance the disclosure of executive compensation

•

Against restricting director compensation

•

Against capping executive pay

•

Against calling for directors to be paid with company stock

•

Against calling for shareholder votes on executive pay

•

Against calling for the termination of director retirement plans

•

Against asking management to review, report on, and/or link executive compensation to non-financial criteria, particularly social criteria

•

Against seeking shareholder approval to reprice or replace underwater stock options

•

For banning or calling for a shareholder vote on future golden parachutes

•

Against seeking to award performance-based stock options

•

Against establishing a policy of expensing the costs of all future stock options issued by the company in the company’s annual income statement

•

Against requesting that future executive compensation be determined without regard to any pension fund income

•

Against approving extra benefits under Supplemental Executive Retirement Plans (SERPs)

•

Against requiring option shares to be held

•

For creating a compensation committee

•

Against requiring that the compensation committee hire its own independent compensation consultants-separate from the compensation consultants working with corporate management-to assist with executive compensation issues

•

For increasing the independence of the compensation committee

•

For increasing the independence of the audit committee

•

For increasing the independence of key committees

Social Issue Proposals

•

Against asking the company to develop or report on human rights policies

•

For asking the company to review its operations’ impact on local groups, except against if the proposal calls for action beyond reporting

•

Against asking the company to limit or end operations in Burma

•

For asking management to review operations in Burma

•

For asking management to certify that company operations are free of forced labor

•

Against asking management to implement and/or increase activity on each of the principles of the U.S. Business Principles for Human Rights of Workers in China.

•

Against asking management to develop social, economic, and ethical criteria that the company could use to determine the acceptability of military contracts and to govern the execution of the contracts

•

Against asking management to create a plan of converting the company’s facilities that are dependent on defense contracts toward production for commercial markets

•

Against asking management to report on the company’s government contracts for the development of ballistic missile defense technologies and related space systems

•

Against asking management to report on the company’s foreign military sales or foreign offset activities

•

Against asking management to limit or end nuclear weapons production

•

Against asking management to review nuclear weapons production

•

Against asking the company to establish shareholder-designated contribution programs

•

Against asking the company to limit or end charitable giving

•

For asking the company to increase disclosure of political spending and activities

•

Against asking the company to limit or end political spending

•

For requesting disclosure of company executives’ prior government service

•

Against requesting affirmation of political nonpartisanship

•

For asking management to report on or change tobacco product marketing practices, except against if the proposal calls for action beyond reporting

•

Against severing links with the tobacco industry

•

Against asking the company to review or reduce tobacco harm to health

•

For asking management to review or promote animal welfare, except against if the proposal calls for action beyond reporting

•

For asking the company to report or take action on pharmaceutical drug pricing or distribution, except against if the proposal asks for more than a report

•

Against asking the company to take action on embryo or fetal destruction

•

For asking the company to review or report on nuclear facilities or nuclear waste, except against if the proposal asks for cessation of nuclear-related activities or other action beyond reporting

•

For asking the company to review its reliance on nuclear and fossil fuels, its development or use of solar and wind power, or its energy efficiency, except vote against if the proposal asks for more than a report.

•

Against asking management to endorse the Ceres principles

•

For asking the company to control generation of pollutants, except against if the proposal asks for action beyond reporting or if the company reports its omissions and plans to limit their future growth or if the company reports its omissions and plans to reduce them from established levels

•

For asking the company to report on its environmental impact or plans, except against if management has issued a written statement beyond the legal minimum

•

For asking management to report or take action on climate change, except against if management acknowledges a global warming threat and has issued company policy or if management has issued a statement and committed to targets and timetables or if the company is not a major emitter of greenhouse gases

•

For asking management to report on, label, or restrict sales of bioengineered products, except against if the proposal asks for action beyond reporting or calls for a moratorium on sales of bioengineered products

•

Against asking the company to preserve natural habitat

•

Against asking the company to review its developing country debt and lending criteria and to report to shareholders on its findings

•

Against requesting the company to assess the environmental, public health, human rights, labor rights, or other socioeconomic impacts of its credit decisions

•

For requesting reports and/or reviews of plans and/or policies on fair lending practices, except against if the proposal calls for action beyond reporting

•

Against asking the company to establish committees to consider issues related to facilities closure and relocation of work

•

For asking management to report on the company’s affirmative action policies and programs, including releasing its EEO-1 forms and providing statistical data on specific positions within the company, except against if the company releases its EEO-1 reports

•

Against asking management to drop sexual orientation from EEO policy

•

Against asking management to adopt a sexual orientation non-discrimination policy

•

For asking management to report on or review Mexican operations

•

Against asking management to adopt standards for Mexican operations

•

Against asking management to review or implement the MacBride principles

•

Against asking the company to encourage its contractors and franchisees to implement the MacBride principles

•

For asking management to report on or review its global labor practices or those of its contractors, except against if the company already reports publicly using a recognized standard or if the resolution asks for more than a report

•

Against asking management to adopt, implement, or enforce a global workplace code of conduct based on the International Labor Organization’s core labor conventions

•

For requesting reports on sustainability, except against if the company has already issued a report in GRI format

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

(a)

Portfolio Managers


Mitch Flack		Portfolio manager and Managing Director, Metropolitan West Asset Management, LLC, TCW Investment Management Company, Trust Company of the West and TCW Asset Management Company. Portfolio manager, partner and a mortgage specialist with Metropolitan West Asset Management Company, LLC since March 2001.

Stephen Kane		Portfolio manager and Managing Director, Metropolitan West Asset Management, LLC, TCW Investment Management Company, Trust Company of the West and TCW Asset Management Company. Portfolio manager, founding partner with Metropolitan West Asset Management Company, LLC since August 1996.

Laird R. Landmann		Portfolio manager and Group Managing Director, Metropolitan West Asset Management, LLC, TCW Investment Management Company, Trust Company of the West and TCW Asset Management Company. Portfolio manager and a founding partner with Metropolitan West Asset Management Company, LLC since August 1996.

Tad Rivelle		Portfolio manager and Group Managing Director, Metropolitan West Asset Management, LLC, TCW Investment Management Company, Trust Company of the West and TCW Asset Management Company. Chief Investment Officer, portfolio manager and a founding partner with Metropolitan West Asset Management, LLC since August 1996.

Bryan Whalen		Portfolio manager and Managing Director, Metropolitan West Asset Management, LLC, TCW Investment Management Company, Trust Company of the West and TCW Asset Management Company. Portfolio manager and a partner with Metropolitan West Asset Management Company, LLC since 2004.

(b)

Other Accounts Managed as of December 31, 2009 in millions


	Registered Investment Companies		Other Pooled Investment Vehicles		Other Accounts		Registered Investment Companies		Other Pooled Investment Vehicles		Other Accounts
	Number of Accounts	Total Assets	Number of Accounts	Total Assets	Number of Accounts	Total Assets	Number of Accounts	Total Assets	Number of Accounts	Total Assets	Number of Accounts	Total Assets
Mitch Flack	10	16,958.2	46	18,866.7	281	35,411.5	0	0	34	13,556.9	18	3,359.7
Stephen Kane	13	10,636.7	52	19,848.1	350	42,390.8	0	0	34	13,556.9	18	3,359.7
Laird Landmann	13	10,636.7	52	19,848.1	350	42,390.8	0	0	34	13,556.9	18	3,359.7
Tad Rivelle	16	17,848.1	52	19,848.1	350	42,390.8	0	0	34	13,556.9	18	3,359.7
Bryan Whalen	10	16,958.2	46	18,866.7	281	35,411.5	0	0	34	13,556.9	18	3,359.7

(c)

Conflicts

Actual or potential conflicts of interest may arise when a portfolio manager has management responsibilities to more than one account (including the Fund), such as devotion of unequal time and attention to the management of the accounts, inability to allocate limited investment opportunities across a broad band of accounts and incentive to allocate opportunities to an account where the portfolio manager or The TCW Group of Companies (“TCW”) has a greater financial incentive, such as a performance fee account or where an account or fund managed by a portfolio manager has a higher fee sharing arrangement than the portfolio manager’s fee sharing percentage with respect to the Fund. TCW has adopted policies and procedures reasonably designed to address these types of conflicts and TCW believes its policies and procedures serve to operate in a manner that is fair and equitable among its clients, including the Fund.

(d)

Portfolio Manager Compensation

The overall objective of the compensation program for portfolio managers is for the Advisor to attract what it considers competent and expert investment professionals and to retain them over the long-term. Compensation is comprised of several components which, in the aggregate are designed to achieve these objectives and to reward the portfolio managers for their contribution to the success of their clients and the Advisor and its affiliates within The TCW Group (collectively, “TCW”). Portfolio managers are compensated through a combination of base salary, profit sharing based compensation (“profit sharing”), bonus and equity incentive participation in the Advisor’s immediate parent, The TCW Group, Inc. and/or ultimate parent, Société Générale (“equity incentives”). Profit sharing and equity incentives generally represent most of the portfolio managers’ compensation. In some cases, portfolio managers are eligible for discretionary bonuses.

Salary. Salary is agreed to with managers at time of employment and is reviewed from time to time. It does not change significantly and often does not constitute a significant part of the portfolio manager’s compensation.

Profit Sharing. Profit sharing is linked quantitatively to a fixed percentage of income relating to accounts in the investment strategy area for which the portfolio managers are responsible and is paid quarterly. Profit sharing may be determined on a gross basis, without the deduction of expenses; in most cases, revenues are allocated to a pool and profit sharing compensation is paid out after the deduction of group expenses. The profit sharing percentage used to compensate a portfolio manager for management of the Fund is generally the same as that used to compensate them for all other client accounts they manage in the same strategy for TCW, with limited exceptions involving grandfathered accounts (accounts that become clients of TCW before or after a specified date or former clients of a manager that joined TCW from another firm), firm capital of TCW or accounts sourced through a distinct distribution channel. Income included in a profit sharing pool will relate to the products managed by the portfolio manager. In some cases, the pool includes revenues related to more than one equity or fixed income product where the portfolio managers work together as a team, in which case each participant in the pool is entitled to profit sharing derived from all the included products. In certain cases, a portfolio manager may also participate in a profit sharing pool that includes revenues from products besides the strategies offered in the TCW Funds or the Fund, including alternative investment products (as described below); the portfolio manger would be entitled to participate in such pool where he or she supervises, is involved in the management of, or is associated with a group, other members of which manage, such products. Profit sharing arrangements are generally the result of agreement between the portfolio manager and TCW, although in some cases they may be discretionary based on supervisor allocation.

In some cases, the profit sharing percentage is subject to increase based on the relative pre-tax performance of the investment strategy composite returns, net of fees and expenses, to that of the benchmark. The measurement of performance relative to the benchmark can be based on single year or multiple year metrics, or a combination thereof. The benchmark used is the one associated with the Fund managed by the portfolio manager as disclosed in the prospectus. Benchmarks vary from strategy to strategy but, within a given strategy, the same benchmark applies to all accounts, including the Fund.

Certain accounts of TCW (but not the Funds) have a performance (or incentive) fee in addition to or in lieu of an asset-based fee. For these accounts, the profit sharing pool from which the portfolio managers’ profit sharing compensation is paid will include the performance fees. For investment strategies investing in marketable securities such as those employed in the Funds, the performance fee normally consists of an increased asset-based fee, the increased percentage of which is tied to the performance of the account relative to a benchmark (usually the benchmark associated with the strategy). In these marketable securities strategies, the profit sharing percentage applied relative to performance fees is generally the same as it is for the asset-based fees chargeable to the Fund. In the case of alternative investment strategies and TCW’s “alpha” “strategies”, performance fees are based on the account achieving net gains over a specified

rate of return to the account or to a class of securities in the account. Profit sharing for alternative investment strategies may also include structuring or transaction fees. “Alpha strategies” are those in which the strategy seeks to provide incremental risk-adjusted return relative to a LIBOR rate of return through alpha and beta isolation techniques, that include the use of options, forwards and derivative instruments. “Alternative investment strategies” include (a) mezzanine or other forms of privately placed financing, distressed investing, private equity, project finance, real estate investments, leveraged strategies (including short sales) and other similar strategies not employed by the Funds or (b) strategies employed by the Funds that are offered in structured vehicles, such as collateralized loan obligations or collateralized debt obligations or in private funds (sometimes referred to as hedge funds). In the case of certain alternative investment products in which a portfolio manager may be entitled to profit sharing compensation, the profit sharing percentage for performance fees may be lower or higher than the percentage applicable to the asset-based fees.

Discretionary Bonus/Guaranteed Minimums. In general, portfolio managers do not receive discretionary bonuses. However, in some cases where portfolio managers do not receive profit sharing or where the company has determined the combination of salary and profit sharing does not adequately compensate the portfolio manager, discretionary bonuses may be paid by TCW. Also, pursuant to contractual arrangements, some portfolio managers may be entitled to a mandatory bonus if the sum of their salary and profit sharing does not meet certain minimum thresholds.

Equity Incentives. All portfolio managers participate in equity incentives based on overall firm performance of TCW and its affiliates, through stock ownership or participation in stock option or stock appreciation plans of TCW and/or Société Générale. The TCW 2001 and 2005 TCW Stock Option Plans provide eligible portfolio managers the opportunity to participate in an effective economic interest in TCW, the value of which is tied to TCW’s annual financial performance as a whole. Participation is generally determined in the discretion of TCW, taking into account factors relevant to the portfolio manager’s contribution to the success of TCW. Portfolio managers participating in the TCW 2001 or 2005 TCW Stock Option Plan will also generally participate in Société Générale’s Stock Option Plan which grants options on its common stock, the value of which may be realized after certain vesting requirements are met. Some portfolio managers are direct stockholders of TCW and/or Société Générale, as well.

Other Plans and Compensation Vehicles. Portfolio managers may also participate in a deferred compensation plan that is generally available to a wide-range of officers of TCW, the purpose of which is to allow the participant to defer portions of income to a later date while accruing earnings on a tax-deferred basis based on performance of TCW-managed products selected by the participant. Portfolio managers may also elect to participate in TCW’s 401(k) plan, to which they may contribute a portion of their pre- and post-tax compensation to the plan for investment on a tax-deferred basis.

(e)

Share Ownership in Registrant as of December 31, 2009

Portfolio

Manager

None

$1
to
$10K

$10K
to
$50K

$50K
to
$100K

$100K
to
$500K

$500K
to
$1 Mill

Over
$1 Mill

Mitch Flack

Stephen Kane

Laird Landmann

Tad Rivelle

Bryan Whalen

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. None.

Item 10.

Submission of Matters to a vote of Security Holders. Not Applicable.

Item 11.

Controls and Procedures.

(a)

The Chief Executive Officer and Chief Financial Officer have concluded that the registrant’s disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940) provide reasonable assurances that material information relating to the registrant is made known to them by the appropriate persons as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 and 15d-15(b) under the Exchange Act.

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12.

Exhibits.


(a)		EX-99.CODE – Code of Ethics (filed herewith)

(b)		EX-99.CERT – Section 302 Certifications (filed herewith).
		EX-99.906CERT – Section 906 Certification (filed herewith).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)		TCW Strategic Income Fund, Inc.

By (Signature and Title)		/s/ CHARLES W. BALDISWIELER
		Charles W. Baldiswieler
		Chief Executive Officer

Date		February 26, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



By (Signature and Title)		/s/ CHARLES W. BALDISWIELER
		Charles W. Baldiswieler
		Chief Executive Officer

Date		February 26, 2010



By (Signature and Title)		/s/ DAVID S. DEVITO
		David S. DeVito
		Chief Financial Officer

Date		February 26, 2010