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Eaton Vance Tax-Managed Diversi Message Board

  • mike57dk mike57dk Oct 28, 2013 10:19 AM Flag

    Fiscal Year end report - dividends analyzed

    The recent fiscal tear end report from fund management detailed the current and annual distributions from ETY and are worth noting as we monitor the performance / progress of the fund.
    In the 12 months ending 10/31/13 ...ETY paid out $1.0116 per share in dividends ...of which 83.1% were classified as OTHER CAPITAL or ROC.
    This is pretty much what we expected with ETY and it's managed distribution policy ...and while we typically use calendar year performance metrics ...( two months left for us in 2013 ) ...the 83% ROC number gives us a good idea of how the taxation on ETY will end the year ...
    Something like this - We receive $1.01 per share as dividend distribution ....and $0.838 will be considered tax free ROC ...leaving about $.162 of the distribution as Ordinary Income and taxed at your current Adjusted tax rate of course Ms Pelosi's additional 3.8% NIIT tax ....( depending on your income ) a 25-30% average taxation rate on the $0.162 owe about $0.05 in taxes on every $1.01 in dividend distribution paid to you from ETY in 2013.
    That's tax efficiency ....and when compared to other sources of investment income ...shows the tremendous advantage option income funds like ETY have over traditional payers ...5% Versus 30% taxation.
    The ROC received does reduce your cost basis ...very gradually ...but NOT necessarily your investment return ...
    Total Return for 2013 should shape up close to this :
    $9.37 starting price on Jan 1, 2013 ....$10.78 price today ...equals a $1.41 unrealized gain of course the $1.01 in dividends paid during the year a $2.42 Total return thus far in 2013 / $9.37 = +25.8% Total Return for the year ...( market price WILL change both up and down before 12/31 but that's the performance with a $10.78 market price )
    I take note that the NAV price is close to $12 per share ....a very nice improvement ...and represents a large discount from the $10.78 current market price ...
    Hope this is helpful - Mike

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    • I love the Freudian (?) slip/typo here:
      "The recent fiscal tear end report (...)"
      (sniff, sniff) ... LOL!

      Sentiment: Strong Buy

      • 1 Reply to ninja69turtle
      • Guilty as Charged So many folks seem absolutely determined to " trash " this fund ....perhaps because they rode it down from $20 per share to $7 at the low ...
        The reality is that NOBODY who purchased the fund on the IPO and reinvested dividends has lost a penny fact ...they have a net return of about + 5% ....not rocket science but making a little money is preferable to LOSING money ....
        I am thinking we made somewhere around + 17% last year and ( hopefully ) + 25% in 2013 ...not too shabby for a mutual fund ...
        Thanks for the comment ...Mike

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