Eaton Vance Tax-Managed Diversified Equity Income Fund

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form N-Q

 

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

811-21832

Investment Company Act File Number

 

 

Eaton Vance Tax-Managed Diversified

Equity Income Fund

(Exact Name of Registrant as Specified in Charter)

 

 

Two International Place, Boston, Massachusetts 02110

(Address of Principal Executive Offices)

 

 

Maureen A. Gemma

Two International Place, Boston, Massachusetts 02110

(Name and Address of Agent for Services)

 

 

(617) 482-8260

(Registrant’s Telephone Number, Including Area Code)

October 31

Date of Fiscal Year End

January 31, 2013

Date of Reporting Period

 

 

 

Item 1. Schedule of Investments

Eaton Vance

Tax-Managed Diversified Equity Income Fund

January 31, 2013

PORTFOLIO OF INVESTMENTS (Unaudited)

Common Stocks — 100.0%

 

Security    Shares      Value  

Aerospace & Defense — 1.9%

      

Boeing Co. (The)

      253,623       $ 18,735,131   

United Technologies Corp.

      163,440         14,312,441   
     

 

 

  
      $     33,047,572   
     

 

 

  

Automobiles — 0.7%

      

Bayerische Motoren Werke AG

      112,335       $ 11,314,212   
     

 

 

  
      $ 11,314,212   
     

 

 

  

Beverages — 2.3%

      

Anheuser-Busch InBev NV

      56,918       $ 5,008,134   

Beam, Inc.

      123,546         7,578,312   

Coca-Cola Co. (The)

      540,759         20,137,865   

Diageo PLC

      222,800         6,632,343   
     

 

 

  
      $ 39,356,654   
     

 

 

  

Biotechnology — 3.2%

      

Celgene Corp.(1)

      248,863       $ 24,627,483   

Gilead Sciences, Inc.(1)

      776,132         30,618,407   
     

 

 

  
      $ 55,245,890   
     

 

 

  

Capital Markets — 1.8%

      

Charles Schwab Corp. (The)

      278,261       $ 4,599,654   

Credit Suisse Group AG(1)

      174,031         5,139,623   

Deutsche Bank AG

      68,064         3,520,229   

Goldman Sachs Group, Inc. (The)

      93,418         13,812,786   

UBS AG(1)

      186,902         3,246,043   
     

 

 

  
      $ 30,318,335   
     

 

 

  

Chemicals — 3.6%

      

BASF SE

      84,898       $ 8,598,525   

Linde AG

      26,283         4,790,684   

LyondellBasell Industries NV, Class A

      203,597         12,912,122   

Monsanto Co.

      289,572         29,348,122   

PPG Industries, Inc.

      19,857         2,737,685   

Syngenta AG

      8,288         3,564,153   
     

 

 

  
      $ 61,951,291   
     

 

 

  

Commercial Banks — 6.2%

      

Banco Bilbao Vizcaya Argentaria SA

      477,882       $ 4,750,999   

Banco Santander SA

      634,421         5,310,466   

Bank of Nova Scotia (The)

      118,093         6,952,135   

Barclays PLC

      1,308,215         6,280,819   

BNP Paribas

      47,989         3,011,039   

HSBC Holdings PLC

      1,289,229         14,660,803   

Intesa Sanpaolo SpA

      1,728,701         3,523,697   

Itau Unibanco Holding SA ADR, PFC Shares

      217,243         3,743,097   

PNC Financial Services Group, Inc.

      243,381         15,040,946   

Regions Financial Corp.

      1,229,703         9,567,089   

Royal Bank of Scotland Group PLC(1)

      408,569         2,221,548   

 

1

 

 

                                                 
Security    Shares      Value  

Wells Fargo & Co.

      867,073       $ 30,200,152   
     

 

 

  
      $ 105,262,790   
     

 

 

  

Communications Equipment — 0.6%

      

QUALCOMM, Inc.

      159,037       $ 10,501,213   
     

 

 

  
      $ 10,501,213   
     

 

 

  

Computers & Peripherals — 3.1%

      

Apple, Inc.

      97,226       $ 44,267,970   

EMC Corp.(1)

      324,818         7,993,771   
     

 

 

  
      $ 52,261,741   
     

 

 

  

Consumer Finance — 0.9%

      

American Express Co.

      251,154       $ 14,770,367   
     

 

 

  
      $ 14,770,367   
     

 

 

  

Diversified Financial Services — 4.1%

      

Bank of America Corp.

      2,079,183       $ 23,536,351   

Citigroup, Inc.

      609,493         25,696,225   

JPMorgan Chase & Co.

      428,138         20,143,893   
     

 

 

  
      $ 69,376,469   
     

 

 

  

Diversified Telecommunication Services — 2.3%

      

AT&T, Inc.

      570,467       $ 19,846,547   

CenturyLink, Inc.

      423,429         17,127,703   

Deutsche Telekom AG

      232,495         2,856,246   
     

 

 

  
      $ 39,830,496   
     

 

 

  

Electric Utilities — 3.0%

      

American Electric Power Co., Inc.

      257,104       $ 11,644,240   

Duke Energy Corp.

      108,156         7,434,643   

Edison International

      161,770         7,795,696   

Enel SpA

      573,649         2,501,210   

PPL Corp.

      277,219         8,396,964   

Southern Co. (The)

      153,213         6,776,611   

SSE PLC

      319,852         7,199,235   
     

 

 

  
      $ 51,748,599   
     

 

 

  

Electrical Equipment — 1.9%

      

ABB, Ltd.(1)

      309,717       $ 6,639,315   

Emerson Electric Co.

      379,580         21,730,955   

Schneider Electric SA

      44,819         3,409,728   
     

 

 

  
      $ 31,779,998   
     

 

 

  

Energy Equipment & Services — 1.8%

      

Halliburton Co.

      460,123       $ 18,717,804   

National Oilwell Varco, Inc.

      159,080         11,794,191   
     

 

 

  
      $ 30,511,995   
     

 

 

  

Food & Staples Retailing — 1.4%

      

Costco Wholesale Corp.

      229,498       $ 23,486,825   
     

 

 

  
      $ 23,486,825   
     

 

 

  

Food Products — 3.5%

      

Danone SA

      45,394       $ 3,144,609   

Hershey Co. (The)

      113,358         9,006,293   

Kraft Foods Group, Inc.

      144,357         6,672,181   

Mondelez International, Inc., Class A

      304,692         8,467,391   

 

2

 

 

                                                 
Security    Shares      Value  

Nestle SA

      291,091       $ 20,439,672   

Unilever NV

      286,140         11,593,317   
     

 

 

  
      $     59,323,463   
     

 

 

  

Health Care Equipment & Supplies — 1.8%

      

Abbott Laboratories

      251,893       $ 8,534,135   

Covidien PLC

      345,024         21,508,796   
     

 

 

  
      $ 30,042,931   
     

 

 

  

Health Care Providers & Services — 0.7%

      

Express Scripts Holding Co.(1)

      215,675       $ 11,521,358   
     

 

 

  
      $ 11,521,358   
     

 

 

  

Hotels, Restaurants & Leisure — 1.3%

      

McDonald’s Corp.

      231,457       $ 22,055,537   
     

 

 

  
      $ 22,055,537   
     

 

 

  

Household Products — 2.9%

      

Colgate-Palmolive Co.

      203,612       $ 21,861,821   

Procter & Gamble Co.

      314,015         23,601,367   

Svenska Cellulosa AB, Class B

      150,927         3,659,096   
     

 

 

  
      $ 49,122,284   
     

 

 

  

Industrial Conglomerates — 3.5%

      

Danaher Corp.

      366,447       $ 21,961,169   

General Electric Co.

      1,153,817         25,707,043   

Siemens AG

      104,342         11,432,078   
     

 

 

  
      $ 59,100,290   
     

 

 

  

Insurance — 2.3%

      

ACE, Ltd.

      133,630       $ 11,402,648   

Aflac, Inc.

      208,202         11,047,198   

Allianz SE

      31,696         4,535,289   

AXA SA

      356,429         6,599,268   

Prudential PLC

      340,666         5,171,281   
     

 

 

  
      $ 38,755,684   
     

 

 

  

Internet & Catalog Retail — 1.9%

      

Amazon.com, Inc.(1)

      121,408       $ 32,233,824   
     

 

 

  
      $ 32,233,824   
     

 

 

  

Internet Software & Services — 3.2%

      

eBay, Inc.(1)

      323,504       $ 18,093,579   

Google, Inc., Class A(1)

      47,602         35,972,355   
     

 

 

  
      $ 54,065,934   
     

 

 

  

IT Services — 4.8%

      

Accenture PLC, Class A

      291,081       $ 20,925,813   

International Business Machines Corp.

      168,839         34,286,136   

Teradata Corp.(1)

      211,279         14,083,858   

Visa, Inc., Class A

      83,328         13,158,324   
     

 

 

  
      $ 82,454,131   
     

 

 

  

Machinery — 0.9%

      

Deere & Co.

      170,980       $ 16,082,379   
     

 

 

  
      $ 16,082,379   
     

 

 

  

Media — 3.0%

      

Comcast Corp., Class A

      553,182       $ 21,065,170   

Virgin Media, Inc.

      120,070         4,729,557   

Walt Disney Co. (The)

      468,328         25,233,513   
     

 

 

  
      $ 51,028,240   
     

 

 

  

 

3

 

 

                                                 
Security    Shares      Value  

Metals & Mining — 1.5%

      

Anglo American PLC

      128,438       $ 3,841,759   

ArcelorMittal

      258,275         4,431,858   

BHP Billiton, Ltd. ADR

      88,062         6,932,241   

Freeport-McMoRan Copper & Gold, Inc.

      214,523         7,561,936   

Glencore International PLC

      548,000         3,420,825   
     

 

 

  
      $ 26,188,619   
     

 

 

  

Multi-Utilities — 0.8%

      

National Grid PLC

      403,800       $ 4,421,466   

Sempra Energy

      119,017         8,932,226   
     

 

 

  
      $ 13,353,692   
     

 

 

  

Multiline Retail — 2.0%

      

Dollar General Corp.(1)

      490,001       $ 22,647,846   

Macy’s, Inc.

      274,001         10,825,780   
     

 

 

  
      $ 33,473,626   
     

 

 

  

Oil, Gas & Consumable Fuels — 9.7%

      

Alpha Natural Resources, Inc.(1)

      153,580       $ 1,360,719   

Anadarko Petroleum Corp.

      149,499         11,962,910   

BP PLC

      1,332,877         9,866,641   

Chevron Corp.

      107,654         12,396,358   

ConocoPhillips

      358,500         20,793,000   

ENI SpA

      203,631         5,086,203   

EOG Resources, Inc.

      68,076         8,508,138   

Exxon Mobil Corp.

      303,314         27,289,160   

Occidental Petroleum Corp.

      192,799         17,018,368   

Phillips 66

      283,058         17,144,823   

Royal Dutch Shell PLC, Class B

      494,662         17,979,428   

Statoil ASA

      232,431         6,192,540   

Total SA

      170,001         9,212,749   
     

 

 

  
      $ 164,811,037   
     

 

 

  

Pharmaceuticals — 7.3%

      

Allergan, Inc.

      162,733       $ 17,088,592   

AstraZeneca PLC

      172,680         8,343,850   

Bayer AG

      115,622         11,409,891   

GlaxoSmithKline PLC

      189,684         4,338,819   

Johnson & Johnson

      185,461         13,709,277   

Novo Nordisk A/S, Class B

      58,342         10,740,300   

Pfizer, Inc.

      1,075,613         29,342,723   

Roche Holding AG PC

      69,467         15,354,913   

Sanofi

      141,378         13,782,404   
     

 

 

  
      $ 124,110,769   
     

 

 

  

Real Estate Investment Trusts (REITs) — 1.1%

      

AvalonBay Communities, Inc.

      54,184       $ 7,032,541   

Boston Properties, Inc.

      107,429         11,310,125   
     

 

 

  
      $ 18,342,666   
     

 

 

  

Road & Rail — 1.3%

      

Union Pacific Corp.

      165,349       $ 21,736,780   
     

 

 

  
      $ 21,736,780   
     

 

 

  

Semiconductors & Semiconductor Equipment — 0.2%

      

Broadcom Corp., Class A

      125,445       $ 4,070,690   
     

 

 

  
      $ 4,070,690   
     

 

 

  

 

4

 

 

                                                 
Security    Shares      Value  

Software — 2.2%

      

Microsoft Corp.

      587,164       $ 16,129,395   

Oracle Corp.

      391,526         13,903,088   

SAP AG

      83,684         6,862,699   
     

 

 

  
      $ 36,895,182   
     

 

 

  

Specialty Retail — 1.1%

      

Home Depot, Inc. (The)

      149,833       $ 10,026,824   

Industria de Diseno Textil SA

      43,482         6,077,381   

Kingfisher PLC

      725,941         3,102,211   
     

 

 

  
      $ 19,206,416   
     

 

 

  

Textiles, Apparel & Luxury Goods — 1.8%

      

Adidas AG

      38,724       $ 3,596,208   

Compagnie Financiere Richemont SA, Class A

      42,000         3,450,028   

LVMH Moet Hennessy Louis Vuitton SA

      32,049         6,034,098   

NIKE, Inc., Class B

      317,851         17,179,847   
     

 

 

  
      $ 30,260,181   
     

 

 

  

Tobacco — 1.4%

      

British American Tobacco PLC

      120,651       $ 6,270,424   

Philip Morris International, Inc.

      194,192         17,119,967   
     

 

 

  
      $ 23,390,391   
     

 

 

  

Wireless Telecommunication Services — 1.0%

      

Rogers Communications, Inc., Class B

      74,236       $ 3,451,232   

Vodafone Group PLC

      4,962,479         13,543,393   
     

 

 

  
      $ 16,994,625   
     

 

 

  

Total Common Stocks
(identified cost $1,331,220,826)

       $ 1,699,385,176   
     

 

 

  

Short-Term Investments — 0.1%

      

 

                                                 
Description    Interest
(000’s omitted)		      Value  

Eaton Vance Cash Reserves Fund, LLC, 0.12%(2)

    $ 1,428       $ 1,428,405   
     

 

 

  

Total Short-Term Investments
(identified cost $1,428,405)

       $ 1,428,405   
     

 

 

  

Total Investments — 100.1%
(identified cost $1,332,649,231)

       $ 1,700,813,581   
     

 

 

  
                                                                                                   

Call Options Written — (0.9)%

            
Description    Number of
Contracts		      Strike
Price		      Expiration
Date		      Value  

S&P 500 Index

      1,460       $ 1,475         2/8/13       $ (3,927,400 ) 

S&P 500 Index

      1,395         1,470         2/16/13         (4,540,725 ) 

S&P 500 Index

      1,255         1,475         2/22/13         (3,865,400 ) 

S&P 500 Index

      1,535         1,500         3/1/13         (2,632,525 ) 
           

 

 

  

Total Call Options Written
(premiums received $10,592,763)

             $ (14,966,050 ) 
           

 

 

  

 

5

 

 

                                                                                                   

Other Assets, Less Liabilities — 0.8%

             $ 13,385,783   
           

 

 

  

Net Assets — 100.0%

             $ 1,699,233,314   
           

 

 

  

The percentage shown for each investment category in the Portfolio of Investments is based on net assets.

 

ADR

   -   American Depositary Receipt

PC

   -   Participation Certificate

PFC Shares

   -   Preference Shares

 

(1) Non-income producing security.

 

(2) Affiliated investment company available to Eaton Vance portfolios and funds which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of January 31, 2013. Net income allocated from the investment in Eaton Vance Cash Reserves Fund, LLC for the fiscal year to date ended January 31, 2013 was $5,372.

Country Concentration of Portfolio

 

                                                 
Country    Percentage of
Net Assets		     Value  

United States

      73.8 %    $     1,254,871,748   

United Kingdom

      6.9        117,294,845   

Switzerland

      4.1        69,236,395   

Germany

      4.1        68,916,061   

France

      2.7        45,193,895   

Ireland

      2.5        42,434,609   

Netherlands

      1.4        24,505,439   

Spain

      0.9        16,138,846   

Italy

      0.7        11,111,110   

Denmark

      0.6        10,740,300   

Canada

      0.6        10,403,367   

Australia

      0.4        6,932,241   

Norway

      0.4        6,192,540   

Belgium

      0.3        5,008,134   

Luxembourg

      0.3        4,431,858   

Brazil

      0.2        3,743,097   

Sweden

      0.2        3,659,096   
  

 

 

    

 

 

  

Total Investments

      100.1 %    $ 1,700,813,581   
  

 

 

    

 

 

  

The cost and unrealized appreciation (depreciation) of investments of the Fund at January 31, 2013, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

    $     1,333,231,678   
  

 

 

  

Gross unrealized appreciation

    $ 382,430,383   

Gross unrealized depreciation

      (14,848,480 ) 
  

 

 

  

Net unrealized appreciation

    $ 367,581,903   
  

 

 

  

 

6

 

 

Written options activity for the fiscal year to date ended January 31, 2013 was as follows:

 

     Number of
Contracts		     Premiums
Received		  

Outstanding, beginning of period

      5,900      $ 6,140,573   

Options written

      18,795        30,881,547   

Options terminated in closing purchase transactions

      (16,040 )          (22,956,403 ) 

Options expired

      (3,010 )      (3,472,954 ) 
  

 

 

    

 

 

  

Outstanding, end of period

      5,645      $ 10,592,763   
  

 

 

    

 

 

  

All of the assets of the Fund are subject to segregation to satisfy the requirements of the escrow agent. At January 31, 2013, 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 price of the underlying index decline.

At January 31, 2013, the aggregate fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in a liability position and whose primary underlying risk exposure is equity price risk was $14,966,050.

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 fund’s 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 January 31, 2013, the hierarchy of inputs used in valuing the Fund’s investments and open derivative instruments, which are carried at value, were as follows:

 

Asset Description    Level 1     Level 2     Level 3      Total  
Common Stocks          

Consumer Discretionary

    $ 165,997,898      $ 33,574,138      $ —       $ 199,572,036   

Consumer Staples

      137,932,022        56,747,595        —         194,679,617   

Energy

      146,985,471        48,337,561        —         195,323,032   

Financials

      208,855,207        67,971,104        —         276,826,311   

Health Care

      156,950,771        63,970,177        —         220,920,948   

Industrials

      140,265,898        21,481,121        —         161,747,019   

Information Technology

      233,386,192        6,862,699        —         240,248,891   

Materials

      59,492,106        28,647,804        —         88,139,910   

Telecommunication Services

      40,425,482        16,399,639        —         56,825,121   

Utilities

      50,980,380        14,121,911        —         65,102,291   

Total Common Stocks

    $ 1,341,271,427      $ 358,113,749 *    $ —       $ 1,699,385,176   

Short-Term Investments

    $ —      $ 1,428,405      $ —       $ 1,428,405   

Total Investments

    $     1,341,271,427      $     359,542,154      $ —       $     1,700,813,581   
Liability Description                              

Call Options Written

    $ (14,966,050 )    $ —      $ —       $ (14,966,050 ) 

Total

    $ (14,966,050 )    $ —      $ —       $ (14,966,050 ) 

 

7

 

 

* 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.

The Fund held no investments or other financial instruments as of October 31, 2012 whose fair value was determined using Level 3 inputs. At January 31, 2013, there were no investments transferred between Level 1 and Level 2 during the fiscal year to date then ended.

For information on the Fund’s policy regarding the valuation of investments and other significant accounting policies, please refer to the Fund’s most recent financial statements included in its semiannual or annual report to shareholders.

 

8

 

 

Item 2. Controls and Procedures

(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant on this Form N-Q has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant on this Form N-Q has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

(b) There have been no changes in the registrant’s internal controls over financial reporting during the fiscal quarter for which the report is being filed that have materially affected, or are reasonably likely to materially affect the registrant’s internal control over financial reporting.

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.

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

By:

  

/s/ Walter A. Row, III

  Walter A. Row, III
  President

Date: March 25, 2013

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:

  

/s/ Walter A. Row, III

  Walter A. Row, III
  President

Date: March 25, 2013

 

By:

  

/s/ James F. Kirchner

  James F. Kirchner
  Treasurer

Date: March 25, 2013