Company: ETY
Filing Date: 2025-02-19
Form Type: 424B5
Source: 0001193125-25-029518
Chunk: 59

Company: Eaton Vance Tax-Managed Diversified Equity Income Fund
Filing Date: 2025-02-19
Form: 424B5
Chunk 59
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 limited to, stock dividend yields and payment schedules, overlap between the Fund’s stock holdings and the indices on which it has outstanding options positions, realization of tax‑loss harvesting (i.e., periodically selling positions that have depreciated in value to realize capital losses that can be used to offset capital gains realized by the Fund) opportunities and other tax management considerations. The Adviser believes that a strategy of owning a portfolio of common stocks and selling covered call options (a “buy‑write strategy”) with respect to a portion thereof can provide current income and gains and attractive risk-adjusted returns. The Fund will sell only “covered” call options. Although the Fund generally writes stock index call options with respect to only a portion of its common stock portfolio value, the Fund may in market circumstances deemed appropriate by the Adviser write covered index call options on up to 100% of the value of its assets. To avoid being subject to the “straddle rules” under federal income tax law, the Fund intends to generally limit the overlap between its stock holdings (and any subset thereof) and each index on which it has outstanding options positions to less than 70% on an ongoing basis. Under the “straddle rules,” “offsetting positions with respect to personal property” generally are considered to be straddles. In general, investment positions will be offsetting if there is a substantial diminution in the risk of loss from holding one position by reason of holding one or more other positions. The Fund expects that the index call options it writes will not be considered straddles because its stock holdings will be sufficiently dissimilar from the components of each index on which it has open call options

positions under applicable guidance established by the IRS. Under certain circumstances, however, the Fund may enter into options transactions or certain other investments that may constitute positions in a straddle. In addition, in keeping with the Fund’s strategy, described below, of selling index call options and purchasing index put options that qualify for treatment as Section 1256 contracts under the Code on which capital gains and losses are generally treated as 60% long-term and 40% short-term, regardless of holding period, the Fund may be limited in the manner in which it writes options on indices based upon foreign stocks. Because many foreign-traded stock index options do not currently qualify for treatment as Section 1256 contracts under the Code, the Fund generally intends to sell options on broad-based foreign country and/or regional stock indices that are listed for trading in the United States or which otherwise qualify Section