Statement of Assets and Liabilities (Unaudited)
|
|
|
|
|
Assets
|
|
April 30, 2020
|
|
|
|
Unaffiliated investments, at value (identified cost, $1,250,605,108)
|
|
$
|
1,682,080,031
|
|
|
|
Affiliated investment, at value (identified cost, $14,162,532)
|
|
|
14,163,952
|
|
|
|
Dividends receivable
|
|
|
2,094,422
|
|
|
|
Dividends receivable from affiliated investment
|
|
|
12,878
|
|
|
|
Receivable for premiums on written options
|
|
|
2,017,276
|
|
|
|
Tax reclaims receivable
|
|
|
24,537
|
|
|
|
Total assets
|
|
$
|
1,700,393,096
|
|
|
Liabilities
|
|
|
|
Written options outstanding, at value (premiums received, $26,502,181)
|
|
$
|
45,044,405
|
|
|
|
Due to custodian
|
|
|
2,017,276
|
|
|
|
Payable to affiliates:
|
|
|
|
|
|
|
Investment adviser fee
|
|
|
1,296,299
|
|
|
|
Trustees fees
|
|
|
7,652
|
|
|
|
Accrued expenses
|
|
|
584,656
|
|
|
|
Total liabilities
|
|
$
|
48,950,288
|
|
|
|
Net Assets
|
|
$
|
1,651,442,808
|
|
|
Sources of Net Assets
|
|
|
|
Common shares, $0.01 par value, unlimited number of shares authorized, 151,717,016 shares issued and outstanding
|
|
$
|
1,517,170
|
|
|
|
Additional paid-in capital
|
|
|
1,357,347,440
|
|
|
|
Distributable earnings
|
|
|
292,578,198
|
|
|
|
Net Assets
|
|
$
|
1,651,442,808
|
|
|
|
Net Asset Value
|
|
|
|
|
|
|
($1,651,442,808 ÷ 151,717,016 common shares issued and outstanding)
|
|
$
|
10.89
|
|
|
|
|
|
|
|
|
8
|
|
See Notes to Financial Statements.
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Statement of Operations (Unaudited)
|
|
|
|
|
Investment Income
|
|
Six Months Ended
April 30, 2020
|
|
|
|
Dividends (net foreign taxes, $7,097)
|
|
$
|
17,533,998
|
|
|
|
Dividends from affiliated investment
|
|
|
172,937
|
|
|
|
Total investment income
|
|
$
|
17,706,935
|
|
|
|
Expenses
|
|
|
|
|
|
|
Investment adviser fee
|
|
$
|
8,708,084
|
|
|
|
Trustees fees and expenses
|
|
|
46,145
|
|
|
|
Custodian fee
|
|
|
216,912
|
|
|
|
Transfer and dividend disbursing agent fees
|
|
|
9,759
|
|
|
|
Legal and accounting services
|
|
|
53,106
|
|
|
|
Printing and postage
|
|
|
280,726
|
|
|
|
Miscellaneous
|
|
|
104,927
|
|
|
|
Total expenses
|
|
$
|
9,419,659
|
|
|
|
Net investment income
|
|
$
|
8,287,276
|
|
|
|
Realized and Unrealized Gain (Loss)
|
|
|
|
|
|
|
Net realized gain (loss)
|
|
|
|
|
|
|
Investment transactions
|
|
$
|
(9,960,875
|
)
|
|
|
Investment transactions affiliated investment
|
|
|
(12,436
|
)
|
|
|
Written options
|
|
|
(43,517,812
|
)
|
|
|
Foreign currency transactions
|
|
|
114,469
|
|
|
|
Net realized loss
|
|
$
|
(53,376,654
|
)
|
|
|
Change in unrealized appreciation (depreciation)
|
|
|
|
|
|
|
Investments
|
|
$
|
(14,731,475
|
)
|
|
|
Investments affiliated investment
|
|
|
799
|
|
|
|
Written options
|
|
|
(13,686,079
|
)
|
|
|
Foreign currency
|
|
|
(7,160
|
)
|
|
|
Net change in unrealized appreciation (depreciation)
|
|
$
|
(28,423,915
|
)
|
|
|
Net realized and unrealized loss
|
|
$
|
(81,800,569
|
)
|
|
|
Net decrease in net assets from operations
|
|
$
|
(73,513,293
|
)
|
|
|
|
|
|
|
|
9
|
|
See Notes to Financial Statements.
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Statements of Changes in Net Assets
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Net Assets
|
|
Six Months Ended
April 30, 2020
(Unaudited)
|
|
|
Year Ended
October 31, 2019
|
|
|
|
|
From operations
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
8,287,276
|
|
|
$
|
15,065,428
|
|
|
|
|
Net realized gain (loss)
|
|
|
(53,376,654
|
)
|
|
|
90,237,036
|
|
|
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
(28,423,915
|
)
|
|
|
48,062,137
|
|
|
|
|
Net increase (decrease) in net assets from operations
|
|
$
|
(73,513,293
|
)
|
|
$
|
153,364,601
|
|
|
|
|
Distributions to shareholders
|
|
$
|
(76,518,053
|
)*
|
|
$
|
(97,061,994
|
)
|
|
|
|
Tax return of capital to shareholders
|
|
$
|
|
|
|
$
|
(54,494,528
|
)
|
|
|
|
Capital share transactions
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from shelf offering, net of offering costs (see Note 5)
|
|
$
|
16,857,924
|
|
|
$
|
1,882,126
|
|
|
|
|
Reinvestment of distributions
|
|
|
2,252,483
|
|
|
|
3,118,883
|
|
|
|
|
Net increase in net assets from capital share transactions
|
|
$
|
19,110,407
|
|
|
$
|
5,001,009
|
|
|
|
|
Net increase (decrease) in net assets
|
|
$
|
(130,920,939
|
)
|
|
$
|
6,809,088
|
|
|
Net Assets
|
|
|
|
|
At beginning of period
|
|
$
|
1,782,363,747
|
|
|
$
|
1,775,554,659
|
|
|
|
|
At end of period
|
|
$
|
1,651,442,808
|
|
|
$
|
1,782,363,747
|
|
*
|
A portion of the distributions may be deemed a tax return of capital at year-end. See Note 2.
|
|
|
|
|
|
|
|
10
|
|
See Notes to Financial Statements.
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
April 30, 2020
(Unaudited)
|
|
|
Year Ended October 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Net asset value Beginning of period
|
|
$
|
11.870
|
|
|
$
|
11.860
|
|
|
$
|
11.960
|
|
|
$
|
11.140
|
|
|
$
|
12.010
|
|
|
$
|
12.340
|
|
|
|
|
|
|
|
|
Income (Loss) From Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(1)
|
|
$
|
0.055
|
|
|
$
|
0.101
|
|
|
$
|
0.082
|
|
|
$
|
0.100
|
|
|
$
|
0.119
|
|
|
$
|
0.211
|
|
|
|
|
|
|
|
|
Net realized and unrealized gain (loss)
|
|
|
(0.530
|
)
|
|
|
0.921
|
|
|
|
0.830
|
|
|
|
1.732
|
|
|
|
0.023
|
|
|
|
0.471
|
|
|
|
|
|
|
|
|
Total income (loss) from operations
|
|
$
|
(0.475
|
)
|
|
$
|
1.022
|
|
|
$
|
0.912
|
|
|
$
|
1.832
|
|
|
$
|
0.142
|
|
|
$
|
0.682
|
|
|
|
|
|
|
|
|
Less Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
$
|
(0.506
|
)*
|
|
$
|
(0.100
|
)
|
|
$
|
(0.081
|
)
|
|
$
|
(0.096
|
)
|
|
$
|
(0.095
|
)
|
|
$
|
(0.212
|
)
|
|
|
|
|
|
|
|
From net realized gain
|
|
|
|
|
|
|
(0.548
|
)
|
|
|
(0.486
|
)
|
|
|
(0.285
|
)
|
|
|
(0.071
|
)
|
|
|
(0.800
|
)
|
|
|
|
|
|
|
|
Tax return of capital
|
|
|
|
|
|
|
(0.364
|
)
|
|
|
(0.445
|
)
|
|
|
(0.631
|
)
|
|
|
(0.846
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
$
|
(0.506
|
)
|
|
$
|
(1.012
|
)
|
|
$
|
(1.012
|
)
|
|
$
|
(1.012
|
)
|
|
$
|
(1.012
|
)
|
|
$
|
(1.012
|
)
|
|
|
|
|
|
|
|
Premium from common shares sold through shelf offering (see Note 5)(1)
|
|
$
|
0.001
|
|
|
$
|
0.000
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
Net asset value End of period
|
|
$
|
10.890
|
|
|
$
|
11.870
|
|
|
$
|
11.860
|
|
|
$
|
11.960
|
|
|
$
|
11.140
|
|
|
$
|
12.010
|
|
|
|
|
|
|
|
|
Market value End of period
|
|
$
|
10.370
|
|
|
$
|
11.920
|
|
|
$
|
11.460
|
|
|
$
|
11.640
|
|
|
$
|
10.290
|
|
|
$
|
11.310
|
|
|
|
|
|
|
|
|
Total Investment Return on Net Asset Value(3)
|
|
|
(4.01
|
)%(4)
|
|
|
9.24
|
%
|
|
|
7.75
|
%
|
|
|
17.51
|
%
|
|
|
1.98
|
%
|
|
|
6.38
|
%
|
|
|
|
|
|
|
|
Total Investment Return on Market Value(3)
|
|
|
(8.98
|
)%(4)
|
|
|
13.53
|
%
|
|
|
6.98
|
%
|
|
|
23.81
|
%
|
|
|
0.04
|
%
|
|
|
5.57
|
%
|
|
|
|
|
|
|
|
Ratios/Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000s omitted)
|
|
$
|
1,651,443
|
|
|
$
|
1,782,364
|
|
|
$
|
1,775,555
|
|
|
$
|
1,787,846
|
|
|
$
|
1,665,148
|
|
|
$
|
1,795,490
|
|
|
|
|
|
|
|
|
Ratios (as a percentage of average daily net assets):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses(5)
|
|
|
1.08
|
%(6)
|
|
|
1.07
|
%
|
|
|
1.07
|
%
|
|
|
1.08
|
%
|
|
|
1.08
|
%
|
|
|
1.07
|
%
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.95
|
%(6)
|
|
|
0.86
|
%
|
|
|
0.66
|
%
|
|
|
0.86
|
%
|
|
|
1.05
|
%
|
|
|
1.72
|
%
|
|
|
|
|
|
|
|
Portfolio Turnover
|
|
|
25
|
%(4)
|
|
|
57
|
%
|
|
|
48
|
%
|
|
|
75
|
%
|
|
|
86
|
%
|
|
|
85
|
%
|
(1)
|
Computed using average shares outstanding.
|
(2)
|
Amount is less than $0.0005.
|
(3)
|
Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested.
Distributions are assumed to be reinvested at prices obtained under the Funds dividend reinvestment plan.
|
(5)
|
Excludes the effect of custody fee credits, if any, of less than 0.005%. Effective September 1, 2015, custody fee credits, which were earned on cash deposit
balances, were discontinued by the custodian.
|
*
|
A portion of the distributions may be deemed from net realized gain or a tax return of capital at year-end. See
Note 2.
|
|
|
|
|
|
|
|
11
|
|
See Notes to Financial Statements.
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Notes to Financial Statements (Unaudited)
1 Significant Accounting Policies
Eaton Vance
Tax-Managed Diversified Equity Income Fund (the Fund) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, closed-end management investment company. The Funds primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation.
The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the
United States of America (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
A Investment Valuation The following methodologies are used to determine the
market value or fair value of investments.
Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the
last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and ask prices on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ
Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid
and ask prices.
Derivatives. U.S. exchange-traded options are valued at the mean between the bid and ask prices at valuation time as reported by
the Options Price Reporting Authority. Non U.S. exchange-traded options and over-the-counter options are valued by a third party pricing service using techniques that
consider factors including the value of the underlying instrument, the volatility of the underlying instrument and the period of time until option expiration.
Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing
service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on
the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of
regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Funds Trustees have approved the use of a fair value service that values such securities to reflect market trading that
occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities.
Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a
registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the
closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.
Fair Valuation. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using
methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that most fairly reflects the securitys fair value, which is the amount that the Fund might reasonably expect to receive for the
security upon its current sale in the ordinary course. Each such determination is based on a consideration of relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type
of security, the existence of any contractual restrictions on the securitys disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies or entities, quotations or relevant information
obtained from broker/dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the companys or entitys financial
statements, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
B Investment Transactions Investment transactions for financial statement purposes
are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C Income Dividend income is recorded on the
ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as
the Fund is informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Funds understanding of the applicable countries
tax rules and rates. In consideration of recent decisions rendered by European courts, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to
various administrative and judicial proceedings within these countries. Due to the uncertainty as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, no amounts are
reflected in the financial statements for such outstanding reclaims.
D Federal Taxes The Funds policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net
investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.
As of April 30, 2020, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S.
federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Notes to Financial Statements (Unaudited) continued
E Foreign Currency Translation Investment valuations, other assets, and liabilities initially expressed in foreign currencies are
translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency
exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange rates are recorded for financial statement purposes as net realized
gains and losses on investments. That portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
F Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP 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 expense during the reporting period. Actual results could differ from those estimates.
G Indemnifications Under the Funds organizational documents, its
officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust
(such as the Fund) could be deemed to have personal liability for the obligations of the Fund. However, the Funds Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Fund shall assume, upon request by the shareholder, the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for
indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. Additionally, in the normal course of business, the Fund
enters into agreements with service providers that may contain indemnification clauses. The Funds 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.
H Written Options Upon the writing of a call or a put
option, the premium received by the Fund is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option written, in accordance with the Funds policies on investment valuations discussed above.
Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine
the realized gain or loss. When an index option is exercised, the Fund is required to deliver an amount of cash determined by the excess of the exercise price of the option over the value of the index (in the case of a put) or the excess of the
value of the index over the exercise price of the option (in the case of a call) at contract termination. If a put option on a security is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as a writer
of an option, may have no control over whether the underlying securities or other assets may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities or other assets underlying
the written option. The Fund may also bear the risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.
I Interim Financial Statements The interim financial statements relating to April 30, 2020 and for the six months then ended
have not been audited by an independent registered public accounting firm, but in the opinion of the Funds management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the
financial statements.
2 Distributions to Shareholders and Income Tax Information
Subject to its Managed Distribution Plan, the Fund makes monthly distributions from its cash available for distribution, which consists of the Funds dividends
and interest income after payment of Fund expenses, net option premiums and net realized and unrealized gains on stock investments. The Fund intends to distribute all or substantially all of its net realized capital gains. Distributions are recorded
on the ex-dividend date. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax
basis earnings and profits are reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital.
For tax purposes, distributions from short-term capital gains are considered to be from ordinary income. Distributions in any year may include a substantial return of capital component. For the six months ended April 30, 2020, the amount of
distributions estimated to be a tax return of capital was approximately $68,781,000. The final determination of tax characteristics of the Funds distributions will occur at the end of the year, at which time it will be reported to the
shareholders.
The cost and unrealized appreciation (depreciation) of investments, including open derivative contracts, of the Fund at April 30,
2020, as determined on a federal income tax basis, were as follows:
|
|
|
|
|
|
|
Aggregate cost
|
|
$
|
1,241,863,585
|
|
|
|
Gross unrealized appreciation
|
|
$
|
448,186,704
|
|
|
|
Gross unrealized depreciation
|
|
|
(38,850,711
|
)
|
|
|
Net unrealized appreciation
|
|
$
|
409,335,993
|
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Notes to Financial Statements (Unaudited) continued
3 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee
is earned by EVM as compensation for management and investment advisory services rendered to the Fund. Pursuant to the investment advisory agreement and subsequent fee reduction agreement, the fee is computed at an annual rate of 1.00% of the
Funds average daily gross assets up to and including $1.5 billion, 0.98% over $1.5 billion up to and including $3 billion and at reduced rates on daily gross assets over $3 billion, and is payable monthly. Gross assets as
referred to herein represent net assets plus obligations attributable to investment leverage, if any. The fee reduction cannot be terminated without the consent of a majority of Trustees and a majority of shareholders. For the six months ended
April 30, 2020, the Funds investment adviser fee amounted to $8,708,084 or 1.00% (annualized) of the Funds average daily gross assets. The Fund invests its cash in Cash Reserves Fund. EVM does not currently receive a fee for
advisory services provided to Cash Reserves Fund. EVM also serves as administrator of the Fund, but receives no compensation.
Trustees and officers of
the Fund who are members of EVMs organization receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with EVM may elect to defer receipt of all or a percentage of
their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended April 30, 2020, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of EVM.
4 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $426,917,567 and $496,809,267, respectively, for the six months ended April 30, 2020.
5 Common Shares of Beneficial Interest and Shelf Offering
Common shares issued by the Fund pursuant to its dividend reinvestment plan for the six months ended April 30, 2020 and the year ended October 31, 2019 were 186,395 and 262,676, respectively.
In August 2012, the Board of Trustees initially approved a share repurchase program for the Fund. Pursuant to the reauthorization of the share repurchase program by
the Board of Trustees in March 2019, the Fund is authorized to repurchase up to 10% of its common shares outstanding as of the last day of the prior calendar year at market prices when shares are trading at a discount to net asset value. The
share repurchase program does not obligate the Fund to purchase a specific amount of shares. There were no repurchases of common shares by the Fund for the six months ended April 30, 2020 and the year ended October 31, 2019.
Pursuant to a registration statement filed with and declared effective on May 9, 2019 by the SEC, the Fund is authorized to issue up to an additional
22,462,218 common shares through an equity shelf offering program (the shelf offering). Under the shelf offering, the Fund, subject to market conditions, may raise additional capital from time to time and in varying amounts and offering
methods at a net price at or above the Funds net asset value per common share.
During the six months ended April 30, 2020 and the year ended
October 31, 2019, the Fund sold 1,361,759 and 158,062 common shares, respectively, and received proceeds (net of offering costs) of $16,857,924 and $1,882,126, respectively, through its shelf offering. The net proceeds in excess of the net
asset value of the shares sold were $139,775 and $15,939, respectively. Offering costs (other than the applicable sales commissions) incurred in connection with the shelf offering were borne directly by EVM. Eaton Vance Distributors, Inc. (EVD), an
affiliate of EVM, is the distributor of the Funds shares and is entitled to receive a sales commission from the Fund of 1.00% of the gross sales price per share, a portion of which is re-allowed to sales
agents. The Fund was informed that the sales commissions retained by EVD during the six months ended April 30, 2020 and the year ended October 31, 2019 were $34,057 and $3,802, respectively.
6 Financial Instruments
The Fund may
trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include written options and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and do not
necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. A summary of obligations under these
financial instruments at April 30, 2020 is included in the Portfolio of Investments. At April 30, 2020, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
The Fund is subject to equity price risk in the normal course of pursuing its investment objectives. The Fund writes index call options above the current value of
the index to generate premium income. In writing index call options, the Fund in effect, sells potential appreciation in the value of the applicable index above the exercise price in exchange for the option premium received. The Fund retains the
risk of loss, minus the premium received, should the value of the underlying index decline.
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Notes to Financial Statements (Unaudited) continued
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is equity price risk at April 30, 2020 was
as follows:
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Derivative
|
|
Asset Derivative
|
|
|
Liability Derivative(1)
|
|
|
|
|
Written options
|
|
$
|
|
|
|
$
|
(45,044,405
|
)
|
(1)
|
Statement of Assets and Liabilities location: Written options outstanding, at value.
|
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is equity price risk for
the six months ended April 30, 2020 was as follows:
|
|
|
|
|
|
|
|
|
Derivative
|
|
Realized Gain(Loss)
on Derivatives Recognized
in Income(1)
|
|
|
Change in Unrealized
Appreciation (Depreciation) on
Derivatives Recognized in
Income(2)
|
|
|
|
|
Written options
|
|
$
|
(43,517,812
|
)
|
|
$
|
(13,686,079
|
)
|
(1)
|
Statement of Operations location: Net realized gain (loss) Written options.
|
(2)
|
Statement of Operations location: Change in unrealized appreciation (depreciation) Written options.
|
The average number of written options contracts outstanding during the six months ended April 30, 2020, which is indicative of the volume of this derivative
type, was 2,761 contracts.
7 Overdraft Advances
Pursuant to the custodian agreement, State Street Bank and Trust Company (SSBT) may, in its discretion, advance funds to the Fund to make properly authorized payments. When such payments result in an overdraft, the
Fund is obligated to repay SSBT at the current rate of interest charged by SSBT for secured loans (currently, the Federal Funds rate plus 2%). This obligation is payable on demand to SSBT. SSBT has a lien on the Funds assets to the extent
of any overdraft. At April 30, 2020, the Fund had a payment due to SSBT pursuant to the foregoing arrangement of $2,017,276. Based on the short-term nature of these payments and the variable interest rate, the carrying value of the overdraft
advances approximated its fair value at April 30, 2020. If measured at fair value, overdraft advances would have been considered as Level 2 in the fair value hierarchy (see Note 9) at April 30, 2020. The Funds average overdraft
advances during the six months ended April 30, 2020 were not significant.
8 Investments in Affiliated Funds
At April 30, 2020, the value of the Funds investment in affiliated funds was $14,163,952 which represents 0.9% of the Funds net assets.
Transactions in affiliated funds by the Fund for the six months ended April 30, 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of affiliated fund
|
|
Value,
beginning of
period
|
|
|
Purchases
|
|
|
Sales
proceeds
|
|
|
Net
realized
gain (loss)
|
|
|
Change in
unrealized
appreciation
(depreciation)
|
|
|
Value, end of
period
|
|
|
Dividend
income
|
|
|
Units, end
of period
|
|
|
Short-Term Investments
|
|
|
|
|
|
|
|
|
|
|
Eaton Vance Cash Reserves Fund, LLC
|
|
$
|
15,233,398
|
|
|
$
|
245,122,878
|
|
|
$
|
(246,180,687
|
)
|
|
$
|
(12,436
|
)
|
|
$
|
799
|
|
|
$
|
14,163,952
|
|
|
$
|
172,937
|
|
|
|
14,163,952
|
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Notes to Financial Statements (Unaudited) continued
9 Fair Value Measurements
Under generally accepted accounting principles for fair value
measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. 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 a funds own assumptions in determining the fair value of investments)
|
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is
determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those
securities.
At April 30, 2020, the hierarchy of inputs used in valuing the Funds investments and open derivative instruments, which are
carried at value, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Common Stocks
|
|
|
|
|
|
|
Communication Services
|
|
$
|
146,702,710
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
146,702,710
|
|
|
|
|
|
|
Consumer Discretionary
|
|
|
213,710,508
|
|
|
|
|
|
|
|
|
|
|
|
213,710,508
|
|
|
|
|
|
|
Consumer Staples
|
|
|
122,169,220
|
|
|
|
|
|
|
|
|
|
|
|
122,169,220
|
|
|
|
|
|
|
Energy
|
|
|
51,799,037
|
|
|
|
|
|
|
|
|
|
|
|
51,799,037
|
|
|
|
|
|
|
Financials
|
|
|
187,887,737
|
|
|
|
|
|
|
|
|
|
|
|
187,887,737
|
|
|
|
|
|
|
Health Care
|
|
|
229,870,801
|
|
|
|
27,741,195
|
|
|
|
|
|
|
|
257,611,996
|
|
|
|
|
|
|
Industrials
|
|
|
120,798,619
|
|
|
|
|
|
|
|
|
|
|
|
120,798,619
|
|
|
|
|
|
|
Information Technology
|
|
|
450,783,754
|
|
|
|
|
|
|
|
|
|
|
|
450,783,754
|
|
|
|
|
|
|
Materials
|
|
|
40,911,484
|
|
|
|
|
|
|
|
|
|
|
|
40,911,484
|
|
|
|
|
|
|
Real Estate
|
|
|
39,837,365
|
|
|
|
|
|
|
|
|
|
|
|
39,837,365
|
|
|
|
|
|
|
Utilities
|
|
|
49,867,601
|
|
|
|
|
|
|
|
|
|
|
|
49,867,601
|
|
|
|
|
|
|
Total Common Stocks
|
|
$
|
1,654,338,836
|
|
|
$
|
27,741,195
|
*
|
|
$
|
|
|
|
$
|
1,682,080,031
|
|
|
|
|
|
|
Short-Term Investments
|
|
$
|
|
|
|
$
|
14,163,952
|
|
|
$
|
|
|
|
$
|
14,163,952
|
|
|
|
|
|
|
Total Investments
|
|
$
|
1,654,338,836
|
|
|
$
|
41,905,147
|
|
|
$
|
|
|
|
$
|
1,696,243,983
|
|
|
|
|
Liability Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Call Options
|
|
$
|
(45,044,405
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(45,044,405
|
)
|
|
|
|
|
|
Total
|
|
$
|
(45,044,405
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(45,044,405
|
)
|
*
|
Includes foreign equity securities whose values were adjusted to reflect market trading of comparable securities or other correlated instruments that
occurred after the close of trading in their applicable foreign markets.
|
10 Risks and Uncertainties
An outbreak of respiratory disease caused by a novel coronavirus that was first detected in China in December 2019 has spread rapidly internationally.
This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines, cancellations, disruptions to supply chains and customer activity, as well as general concern and
uncertainty. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and individual companies and can affect the market in general in significant and unforeseen ways. Health crises
caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks and disrupt normal market conditions and operations. The near-term impact of this
coronavirus has resulted in substantial market volatility, which may have an adverse effect on the Funds investments.
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Board of Trustees Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the
1940 Act), provides, in substance, that the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year
only if its continuation is approved on an annual basis by a vote of the funds board of trustees, including a majority of the trustees who are not interested persons of the fund (independent trustees), cast in person at
a meeting called for the purpose of considering such approval.
At a meeting held on April 22, 2020 (the April 2020 Meeting), the Boards
of Trustees/Directors comprised of the same individuals (collectively, the Board) that oversees a majority of the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the
Eaton Vance Funds), including a majority of the independent trustees (the Independent Trustees), voted to approve the continuation of existing investment advisory agreements and
sub-advisory agreements1 for each of the Eaton Vance Funds for an additional one-year period.
The Board relied upon the affirmative recommendation of its Contract Review Committee, which is a committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information
furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including information specifically requested by the Board) for a series of formal meetings held between February and April 2020.
Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees, to the extent such information was relevant to the Contract Review Committees annual evaluation of the investment
advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory
agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable to all or groups of Eaton Vance Funds, which is
referenced immediately below, and information applicable to the particular Eaton Vance Fund covered by this report (additional fund-specific information is referenced below under Results of the Contract Review Process). (For funds that
invest through one or more underlying portfolios, references to each fund in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
|
|
|
A report from an independent data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the
independent data provider (comparable funds);
|
|
|
|
A report from an independent data provider comparing each funds total expense ratio (and its components) to those of comparable funds;
|
|
|
|
A report from an independent data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe
ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices, over various time periods;
|
|
|
|
In certain instances, data regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in
consultation with the Portfolio Management Committee of the Board;
|
|
|
|
Comparative information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in
managing other accounts (which may include other mutual funds, collective investment funds and institutional accounts) using investment strategies and techniques similar to those used in managing such fund(s), if any;
|
|
|
|
Profitability analyses with respect to the adviser and sub-adviser to each of the funds;
|
Information about Portfolio Management and Trading
|
|
|
Descriptions of the investment management services provided to each fund, as well as each of the funds investment strategies and policies;
|
|
|
|
The procedures and processes used to determine the fair value of fund assets, when necessary, and actions taken to monitor and test the effectiveness of such
procedures and processes;
|
|
|
|
Information about the policies and practices of each funds adviser and sub-adviser (in the context of a sub-adviser, only those with trading responsibilities) with respect to trading, including their processes for seeking best execution of portfolio transactions;
|
|
|
|
Information about the allocation of brokerage transactions and the benefits, if any, received by the adviser and
sub-adviser (in the context of a sub-adviser, only those with trading responsibilities) to each fund as a result of brokerage allocation, including, as applicable,
information concerning the acquisition of research through client commission arrangements and policies with respect to soft dollars;
|
|
|
|
Data relating to the portfolio turnover rate of each fund;
|
Information about each Adviser and Sub-adviser
|
|
|
Reports detailing the financial results and condition of the adviser and sub-adviser to each fund;
|
|
|
|
Information regarding the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for
portfolio managers and certain other investment professionals, information relating to their responsibilities with respect to managing other mutual funds and investment accounts, as applicable;
|
1
|
Not all Eaton Vance Funds have entered into a sub-advisory agreement with a
sub-adviser. Accordingly, references to sub-adviser or sub-advisory agreement in this
Overview section may not be applicable to the particular Eaton Vance Fund covered by this report.
|
Eaton Vance
Tax-Managed Diversified Equity Income Fund
April 30, 2020
Board of Trustees Contract Approval continued
|
|
|
The Code of Ethics of the adviser and its affiliates and the sub-adviser of each fund, together with information relating
to compliance with, and the administration of, such codes;
|
|
|
|
Policies and procedures relating to proxy voting and the handling of corporate actions and class actions;
|
|
|
|
Information concerning the resources devoted to compliance efforts undertaken by the adviser and its affiliates and the
sub-adviser of each fund, if any, including descriptions of their various compliance programs and their record of compliance;
|
|
|
|
Information concerning the business continuity and disaster recovery plans of the adviser and its affiliates and the
sub-adviser of each fund, if any;
|
|
|
|
A description of Eaton Vance Managements and Boston Management and Researchs oversight of sub-advisers,
including with respect to regulatory and compliance issues, investment management and other matters;
|
Other Relevant Information
|
|
|
Information concerning the nature, cost and character of the administrative and other non-investment advisory services
provided by Eaton Vance Management and its affiliates;
|
|
|
|
Information concerning oversight of the relationship with the custodian, subcustodians and fund accountants by the adviser and/or administrator to each of the
funds;
|
|
|
|
For an Eaton Vance Fund structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where relevant, the closed-end funds market prices, trading volume data, distribution rates and other relevant matters; and
|
|
|
|
The terms of each investment advisory agreement and sub-advisory agreement.
|
During the various meetings of the Board and its committees throughout the twelve months ended April 2020, the Trustees received information from portfolio
managers and other investment professionals of the advisers and sub-advisers of the funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing
the funds investment objectives. The Trustees also received information regarding risk management techniques employed in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and
regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board and its committees, the Independent Trustees held regular teleconferences to discuss, among other topics, matters relating
to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review
Committee was advised throughout the contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee, with the advice of such counsel, exercised their own business
judgment in determining the material factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached
with respect to each investment advisory agreement and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the
Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each investment advisory agreement and sub-advisory agreement. In evaluating each
investment advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the Contract Review Committee were also informed by multiple
years of analysis and discussion with the adviser and sub-adviser to each of the Eaton Vance Funds.
In voting
its approval of the continuation of existing investment advisory agreements and sub-advisory agreements at the April 2020 Meeting, the Board relied on an order issued by the Securities and Exchange Commission
on March 25, 2020, which provided temporary relief from the in-person voting requirements under Section 15 of the 1940 Act in response to the impacts of the
COVID-19 pandemic.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other information it deemed relevant, including the factors and conclusions described below, the Contract
Review Committee concluded that the continuation of the investment advisory agreement between Eaton Vance Tax-Managed Diversified Equity Income Fund (the Fund) and Eaton Vance Management (the
Adviser), including its fee structure, is in the interests of shareholders and, therefore, recommended to the Board approval of the agreement. Based on the recommendation of the Contract Review Committee, the Board, including a majority
of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Fund.
Nature, Extent and
Quality of Services
In considering whether to approve the investment advisory agreement for the Fund, the Board evaluated the nature, extent and quality
of services provided to the Fund by the Adviser.
The Board considered the Advisers management capabilities and investment processes in light of
the types of investments held by the Fund, including the education, experience and number of investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund, including recent
changes to such personnel. In particular, the Board considered the abilities and experience of the Advisers
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Board of Trustees Contract Approval continued
investment professionals in analyzing factors such as tax efficiency and special considerations relevant to investing in stocks and selling covered S&P 500 Index call options. The Board also took into account
the resources dedicated to portfolio management and other services, the compensation methods of the Adviser and other factors, including the reputation and resources of the Adviser to recruit and retain highly qualified research, advisory and
supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the infrastructure, operational capabilities and support staff in
place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks to which the Adviser or its affiliates may be subject in
managing the Fund. The Board considered the deep experience of the Adviser and its affiliates with managing and operating funds organized as exchange-listed closed-end funds, such as the Fund. In this regard,
the Board considered, among other things, the Advisers and its affiliates experience monitoring and assessing trading price discounts and premiums and adhering to the requirements of securities exchanges.
The Board considered the compliance programs of the Adviser and relevant affiliates thereof. The Board considered compliance and reporting matters regarding, among
other things, personal trading by investment professionals, disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the
responses of the Adviser and its affiliates to requests in recent years from regulatory authorities, such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board considered other administrative services provided or overseen by Eaton Vance Management and its affiliates, including transfer agency and accounting
services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety of asset classes and investment disciplines.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a
whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Funds investment performance to that of comparable funds identified by an independent data provider (the peer group), as well as
appropriate benchmark indices and a custom peer group of similarly managed funds. The Boards review included comparative performance data with respect to the Fund for the one-, three-, five- and ten-year periods ended September 30, 2019. In this regard, the Board noted that the performance of the Fund was higher than the median performance of the Funds peer group and custom peer group for the
three-year period. The Board also noted that the performance of the Fund was higher than its secondary benchmark index and lower than its primary benchmark index for the three-year period. The Board concluded that the performance of the Fund was
satisfactory.
Management Fees and Expenses
The Board considered contractual fee rates payable by the Fund for advisory and administrative services (referred to collectively as management fees). As part of its review, the Board considered the
Funds management fees and total expense ratio for the one-year period ended September 30, 2019, as compared to those of comparable funds, before and after giving effect to any undertaking to waive
fees or reimburse expenses. The Board also considered factors that had an impact on the Funds total expense ratio relative to comparable funds.
After considering the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the
management fees charged for advisory and related services are reasonable.
Profitability and Fall-Out Benefits
The Board considered the level of profits realized by the Adviser and relevant
affiliates thereof in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other payments by the
Adviser and its affiliates to third parties in respect of distribution or other services.
The Board concluded that, in light of the foregoing factors
and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
The
Board also considered direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their respective relationships with the Fund, including the benefits of research
services that may be available to the Adviser as a result of securities transactions effected for the Fund and other investment advisory clients.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the
extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately
measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The
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Board of Trustees Contract Approval continued
Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of
the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in the benefits from economies of scale, if any,
when they are realized by the Adviser. The Board also considered the fact that the Fund is not continuously offered in the same manner as an open-end fund and that the Fund is authorized to issue additional
common shares through a shelf offering. The Board also concluded that the structure of the advisory fee, which includes breakpoints at several asset levels, will allow the Fund to continue to benefit from any economies of scale in the future.
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