Company: ETY
Filing Date: 2025-02-14
Form Type: N-2ASR
Source: 0001193125-25-026876
Chunk: 24

Company: Eaton Vance Tax-Managed Diversified Equity Income Fund
Filing Date: 2025-02-14
Form: N-2ASR
Chunk 24
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 such index, changes in actual or perceived volatility of such index and the remaining time to the options’ expiration. The trading price of index call options will also be affected by liquidity considerations and the balance of purchase and sale orders. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived and well-executed options program may be adversely affected by market behavior or unexpected events. As the writer of index call options, the Fund will forgo, during the option’s life, the opportunity to profit from increases in the value of the applicable index above the sum of the option premium received and the exercise price of the call option, but retains the risk of loss, minus the option premium received, should the value of the applicable index decline. When a call option is exercised, the Fund is required to deliver an amount of cash determined by the excess of the value of the applicable index at contract termination over the exercise price of the option. Thus, the exercise of index call options sold by the Fund may require the Fund to sell portfolio securities to generate cash at inopportune times or for unattractive prices. To the extent that the Fund writes options on indices based upon foreign stocks, the Fund generally sells options on broad-based foreign country and/or regional stock indices that are listed for trading in the United States or which otherwise qualify as Section 1256 contracts under the Code. Options on foreign indices that are listed for trading in the United States or which otherwise qualify as Section 1256 contracts under the Code may trade in substantially lower volumes and with substantially wider bid-askspreads than other options contracts on the same or similar indices that trade on other markets outside the United States. To implement its options program most effectively, the Fund may sell index options that do not qualify as Section 1256 contracts under the Code. Gain or loss on index options not qualifying as Section 1256 contracts under the Code would be realized upon disposition, lapse or settlement of the positions and would be treated as short-term gain or loss. The trading price of options may be adversely affected if the market for such options becomes less liquid or smaller. The Fund may close out a call option by buying the option instead of letting it expire or be exercised. There can be no assurance that a liquid market will exist when the Fund seeks to close out a call option position by buying the option. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in