SEMI-ANNUAL REPORT

JUNE 30, 2018

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Letter to Shareholders

Dear Fellow Shareholders,

At a recent investment team meeting, my colleagues and I observed that many investors appear to be underestimating the power of the recent tax cuts and the amount of capital being repatriated to the U.S. In the first quarter alone, nearly $300 billion was repatriated by U.S. companies. To us, this type of stimulus, in conjunction with an economy that continues to do well, should be a tailwind for the next six to twelve months.

After a turbulent start to 2018, stocks rebounded in the second quarter amid solid corporate earnings and a strong jobs market. Rising trade tensions and geopolitical issues contributed to bouts of volatility, but did little to derail the market’s move higher. Even the very real possibility of a trade war and uncertainty about the historic U.S. / North Korea summit could not stop the market from moving higher. At June 30, the S&P 500 was up 2.7% year-to-date. Our Fund also returned 2.7% for the first six months of the year.

In the second quarter, we began to see the impact of the tax cuts and increased government spending, as company earnings rose and jobless claims fell. In May, the unemployment rate was 3.8%, the lowest it’s been since 1969. Optimistic consumers are spending more, buoyed by lower taxes, better job prospects, and increasing household net worth. In response to the strengthening economy, the Fed announced its second quarter-point increase in June and boosted its forecast for anticipated rate hikes in 2018 from three to four.

Consumers are not alone feeling good about their economic prospects, corporate directors and executives also are showing optimism about the future. In the first half of 2018, companies used their tax savings to provide bonuses and raises and to launch a record number of share repurchases and strategic transactions. In fact, the dollar value of merger and acquisition (M&A) activity in 2018 is on pace to be the largest in history. M&A is reshaping several industry sectors, including Telecom, Energy, and Health Care.

In our Fund, investments in Technology, Consumer Discretionary, and Health Care companies were the biggest contributors to our returns. Investments in Industrials, Financials, and Consumer Staples companies had lower returns.

Our Technology holdings were volatile in the first quarter because of fears of increased regulation and concerns over data privacy, but the sector rebounded strongly in the second quarter and finished up 12.5% for the first half of the year. Better-than-expected earnings and signs that U.S. companies will continue to spend on technology drove gains. Standouts for our Fund were Adobe Systems and salesforce.com, both of which benefited from the continued growth in cloud computing.

Consumer Discretionary stocks, led by Amazon and Advanced Auto Parts, generated strong returns for the first half of the year, increasing 12.8%. Our Fund benefited from its overweight position in Amazon. As the company continued to expand its dominant position in retail, its stock price rose 45.4% during the period. Our investment in Advanced Auto Parts, a diversified auto parts retailer, increased 21.0% since purchasing the stock in February. The company is benefitting from positive trends in the do-it-yourself market,

 

Letter to Shareholders (continued)

driving higher revenue growth. Its new management team is focused on reducing costs to improve profitability. More recently, we added Tractor Supply Company to our portfolio. We like this company for several reasons. They have a differentiated concept offering a diversified mix of products to farm, ranch, and rural customers. Tractor Supply also generates strong returns and has significant room for unit expansion. We also added Chipotle Mexican Grill to our portfolio. The fast-casual restaurant is in the midst of a turnaround following various food contamination concerns. Chipotle has a new CEO who is focused on improving execution, marketing, menu innovation, and accessibility. We see significant room for margin growth as well as unit expansion.

While negative, our holdings in industrial companies beat the return for the Industrials sector of the S&P 500. We think the sector will continue to benefit from tax cuts, increased capital investments, and strong global growth. Two industrial companies we’re invested in performed particularly well in the first half: Boeing, which increased 14.9%, and Cintas, which returned 12.8%. We added Cintas to the portfolio early in 2018; we like the company’s track record of increasing revenue and profitability. Cintas provides uniforms, supplies, and services to businesses across the U.S. We think the company will benefit from the lower corporate tax rate both directly and indirectly, as tax savings should allow its customers to hire and provide uniforms to more people.

Our investments in financial companies returned less than the benchmark. An underweight position in Insurance stocks helped Fund performance, but our investments in Diversified Financials offset this benefit. We repositioned our bank holdings by reducing our investment in Wells Fargo, which has been slow to benefit from its cost-cutting program, and increasing our holdings in JPMorgan Chase, which continues to generate strong results. The company is gaining market share in many of its major business lines and is returning capital to shareholders. Another financial stock we’ve been watching for a while is Lazard Ltd, a financial advisory and asset management company. Lazard has a unique business model that is diversified across M&A advisory and asset management, providing a complementary revenue stream. In the second quarter, we were able to add the stock to our portfolio. Investors’ growing concerns about Lazard’s emerging markets exposure led to a fall in the stock price, which provided an attractive entry point for us.

For the six months ended June 30, 2018, the total return on the Fund’s net asset value (“NAV”) per share (with dividends and capital gains reinvested) was 2.7%. This compares to a 2.7% total return for the S&P 500 and a 1.7% total return for the Lipper Large-Cap Core Funds Average over the same time period. The total return on the market price of the Fund’s shares for the period was 3.3%.

For the twelve months ended June 30, 2018, the Fund’s total return on NAV was 15.8%. Comparable figures for the S&P 500 and Lipper Large-Cap Core Funds Average were 14.4% and 12.7%, respectively. The Fund’s total return on market price was 18.0%.

During the first half of this year, the Fund paid distributions to shareholders in the amount of $10.2 million, or $.10 per share, consisting of $.03 net investment income and $.01 long-term capital gain, realized in 2017, and $.06 of net investment income realized in 2018, all taxable in 2018. On July 18, 2018, an additional net investment income dividend

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Letter to Shareholders (continued)

of  $.05 per share was declared for payment on August 31, 2018. These constitute the first three payments toward our annual 6% minimum distribution rate commitment. Additionally, the Fund repurchased 619,015 shares of its Common Stock during the past six months. The shares were repurchased at an average price of $15.36 and a weighted average discount to NAV of 14.4%, resulting in a $0.02 increase to NAV per share.

Before concluding, I want to acknowledge and thank our General Counsel, Corporate Secretary, and Chief Compliance Officer Lawrence (Laurie) Hooper, who retired from the Fund on July 2, 2018. In his 21 years of service, Laurie made numerous lasting contributions to our Fund. His hard work and commitment inspired us all. We thank Laurie for his dedication to Adams Funds and wish him the very best in retirement.

We appreciate your trust in us and do not take it for granted. We intend to keep earning it by maintaining our focus on delivering consistent investment returns for shareholders by identifying quality companies that are executing at high levels and trading at attractive valuations.

By order of the Board of Directors,

Mark E. Stoeckle
Chief Executive Officer & President
July 18, 2018

Disclaimers​

This report contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Fund’s actual results are the performance of the portfolio of stocks held by the Fund, the conditions in the U.S. and international financial markets, the price at which shares of the Fund will trade in the public markets, and other factors discussed in the Fund’s periodic filings with the Securities and Exchange Commission.​

This report is transmitted to the shareholders of the Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. The rates of return will vary and the principal value of an investment will fluctuate. Shares, if sold, may be worth more or less than their original cost. Past performance is no guarantee of future investment results.

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Portfolio Highlights

June 30, 2018
(unaudited)

Ten Largest Equity Portfolio Holdings

*

Non-controlled affiliated closed-end fund

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Sector Weightings

4​

Statement of Assets and Liabilities

June 30, 2018
(unaudited)

*

See Schedule of Investments beginning on page 16.

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The accompanying notes are an integral part of the financial statements.

5

Statement of Operations

Six Months Ended June 30, 2018
(unaudited)

The accompanying notes are an integral part of the financial statements.

6​

Statements of Changes in Net Assets

The accompanying notes are an integral part of the financial statements.

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Notes to Financial Statements (unaudited)

Adams Diversified Equity Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940 (“1940 Act”) as a diversified investment company. The Fund is an internally-managed closed-end fund whose investment objectives are preservation of capital, the attainment of reasonable income from investments, and an opportunity for capital appreciation.

1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for investment companies, which require the use of estimates by Fund management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates and the valuations reflected in the financial statements may differ from the value the Fund ultimately realizes.

Affiliates — The 1940 Act defines “affiliated companies” as those companies in which the Fund owns 5% or more of the outstanding voting securities. Additionally, those companies in which the Fund owns more than 25% of the outstanding voting securities are considered to be “controlled” by the Fund. The Fund and its affiliates, Adams Natural Resources Fund, Inc. ("PEO") and Adams Funds Advisers, LLC ("AFA"), have a shared management team.

PEO — The Fund owns 2,186,774 shares of PEO, a non-diversified, closed-end investment company, representing 8% of its outstanding shares. The Fund accounts for PEO as a portfolio investment that meets the definition of a non-controlled affiliate. During the six months ended June 30, 2018, the Fund received dividends and long-term capital gain distributions of  $393,619 and $43,735, respectively, from its investment in PEO and recognized a change in unrealized appreciation on its investment in PEO of $546,694. Directors of the Fund are also directors of PEO.

AFA — In April 2015, Fund shareholders authorized the Fund to provide investment advisory services to external parties, and the Securities and Exchange Commission granted no-action relief under section 12(d)(3) of the 1940 Act to allow the Fund to create a separate, wholly-owned entity for this purpose. The Fund provided the initial capital for the start-up costs of AFA, a Maryland limited liability company, and the Fund is the sole member and General Manager, as provided by the Operating Agreement between AFA and the Fund. This structure mitigates the risk of potential liabilities for the Fund associated with any claims that may arise against AFA during the ordinary course of conducting its business. Given that AFA is an operating company that provides no services to the Fund, the Fund accounts for AFA as a portfolio investment that meets the definition of a controlled affiliate.

AFA provides advisory services to an external party and earns advisory fee revenue based on assets under management. AFA’s profit can fluctuate due to the level of assets under management, as driven by the number of client relationships, level of client investment activity, and client investment performance, and will impact the Fund’s valuation of its investment in AFA. At June 30, 2018, AFA had assets under management of $89.9 million, entirely attributed to one client; failure to maintain this existing relationship or to develop new relationships could impact AFA’s ability to generate revenue. To the extent that AFA’s operating costs exceed its revenue earned, the Fund may be required to provide additional capital to AFA. For tax purposes, AFA’s revenues and expenses are consolidated with those of the Fund and, as such, the advisory fee

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Notes to Financial Statements (continued)

revenue generated by AFA is monitored to ensure that it does not exceed an amount that would jeopardize the Fund’s status as a regulated investment company. During the six months ended June 30, 2018, the Fund recognized a change in unrealized appreciation on its investment in AFA of  $779,000.

Expenses — The Fund and its affiliates share personnel, systems, and other infrastructure items and are charged a portion of the shared expenses. To protect the Fund from potential conflicts of interest, policies and procedures are in place covering the sharing of expenses among the entities. Expenses solely attributable to an entity are charged to that entity. Expenses that are not solely attributable to one entity are allocated in accordance with the Fund's expense sharing policy. The Fund's policy dictates that expenses, other than those related to personnel, are attributed to AFA based on the average percentage of time spent by all personnel on AFA-related activities relative to overall job functions; the remaining portion is attributed to the Fund and PEO based on relative net assets. Personnel-related expenses are attributed to AFA based on the individual's time spent on AFA-related activities; the remaining portion is attributed to the Fund and PEO based on relative time spent for portfolio managers, relative market values of portfolio securities covered for research staff, and relative net assets for all others. Expense allocations are updated quarterly, except for those related to payroll, which are updated annually.

For the six months ended June 30, 2018, expenses of $451,304 and $113,249 were charged to PEO and AFA, respectively, in accordance with the Fund’s expense sharing policy. There were no amounts due to, or due from, its affiliates at June 30, 2018.

Investment Transactions, Investment Income, and Distributions — The Fund's investment decisions are made by the portfolio management team with recommendations from the research staff. Policies and procedures are in place covering the allocation of investment opportunities among the Fund and its affiliates to protect the Fund from potential conflicts of interest. Investment transactions are accounted for on trade date. Realized gains and losses on sales of investments are recorded on the basis of specific identification. Dividend income and distributions to shareholders are recognized on the ex-dividend date.

Valuation — The Fund’s financial instruments are reported at fair value, which is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund has a Valuation Committee (“Committee”) so that financial instruments are appropriately priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight and approval by the Board of Directors, the Committee establishes methodologies and procedures to value securities for which market quotations are not readily available.

GAAP establishes the following hierarchy that categorizes the inputs used to measure fair value:

•

Level 1 — fair value is determined based on market data obtained from independent sources; for example, quoted prices in active markets for identical investments;

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•

Level 2 — fair value is determined using other assumptions obtained from independent sources; for example, quoted prices for similar investments;

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•

Level 3 — fair value is determined using the Fund’s own assumptions, developed based on the best information available under the circumstances.

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9

Notes to Financial Statements (continued)

Investments in securities traded on national exchanges are valued at the last reported sale price as of the close of regular trading on the relevant exchange on the day of valuation. Over-the-counter and listed equity securities for which a sale price is not available are valued at the last quoted bid price. Money market funds are valued at net asset value. These securities are generally categorized as Level 1 in the hierarchy.

Total return swap agreements are valued using independent, observable inputs, including underlying security prices, dividends, and interest rates. These securities are generally categorized as Level 2 in the hierarchy.

The Fund’s investment in its controlled affiliate, AFA, is valued by methods deemed reasonable in good faith by the Committee. The Committee uses market-based valuation multiples, including price-to-earnings and price-to-book value, and discounted free cash flow analysis, or a combination thereof, to estimate fair value. The Committee also considers discounts for illiquid investments, such as AFA. Fair value determinations are reviewed on a regular basis and updated as needed. Due to the inherent uncertainty of the value of Level 3 assets, estimated fair value may differ significantly from the value that would have been used had an active market existed. Any change in the estimated fair value of Level 3 investments is recognized as a change in unrealized appreciation on investments in the Statement of Operations. Given the absence of market quotations or observable inputs, the Fund's investment in AFA is categorized as Level 3 in the hierarchy.

At June 30, 2018, the Fund’s investments were classified as follows:

*

Unrealized appreciation (depreciation)

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The following is a reconciliation of the change in the value of Level 3 investments:

There were no transfers between levels during the six months ended June 30, 2018.

2. FEDERAL INCOME TAXES

No federal income tax provision is required since the Fund’s policy is to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable income and gains to its shareholders. Additionally, management has analyzed the tax positions included in federal income tax returns from the previous three years that remain subject to examination and concluded no provision was required. Any income tax-related interest or penalties would be recognized as

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Notes to Financial Statements (continued)

income tax expense. At June 30, 2018, the identified cost of securities for federal income tax purposes was $1,228,419,233 and net unrealized appreciation aggregated $583,850,395, consisting of gross unrealized appreciation of $599,096,291 and gross unrealized depreciation of $15,245,896.

Distributions are determined in accordance with the Fund’s annual 6% minimum distribution rate commitment, based on the Fund’s average market price, and income tax regulations, which may differ from GAAP. Such differences are primarily related to the Fund’s retirement plans, equity-based compensation, and investment in AFA. Differences that are permanent are reclassified in the capital accounts of the Fund’s financial statements and have no impact on net assets.

3. INVESTMENT TRANSACTIONS

Purchases and sales of portfolio investments, other than short-term investments, securities lending collateral, and derivative transactions, during the six months ended June 30, 2018 were $583,634,811 and $596,594,231, respectively.

4. DERIVATIVES

During the six months ended June 30 , 2018, the Fund invested in derivative instruments. The Fund uses derivatives for a variety of purposes, including, but not limited to, the ability to gain or limit exposure to particular market sectors or securities, to provide additional income, to limit equity price risk in the normal course of pursuing its investment objectives, and/or to obtain leverage.

Total Return Swap Agreements —  Total return swap agreements are bilateral contracts between the Fund and a counterparty in which the Fund, in the case of a long contract, agrees to receive the positive total return (and pay the negative total return) of an underlying equity security and to pay a financing amount, based on a notional amount and a referenced interest rate, over the term of the contract. In the case of a short contract, the Fund agrees to pay the positive total return (and receive the negative total return) of the underlying equity security and to receive or pay a financing rate, based on a notional amount and a referenced interest rate, over the term of the contract. The fair value of each total return swap agreement is determined daily with the change in the fair value recorded as a change in unrealized appreciation on total return swap agreements in the Statement of Operations. Upon termination of a swap agreement, the Fund recognizes a realized gain (loss) on total return swap agreements in the Statement of Operations equal to the net receivable (payable) amount under the terms of the agreement.

Total return swap agreements entail risks associated with counterparty credit, liquidity, and equity price risk. Such risks include that the Fund or the counterparty may default on its obligation, that there is no liquid market for these agreements, and that there may be unfavorable changes in the price of the underlying equity security. To mitigate the Fund’s counterparty credit risk, the Fund enters into master netting and collateral arrangements with the counterparty. A master netting agreement allows either party to terminate the agreement prior to termination date and to net amounts due across multiple agreements upon settlement, providing for a single net settlement with a counterparty. Pursuant to master netting arrangements, the net cumulative unrealized gain (asset) on open total return swap agreements and net cumulative unrealized loss (liability) on open total return swap agreements are presented in the Statement of Assets and Liabilities. The Fund’s policy is to net all derivative instruments subject to a netting agreement. The fair value of

11

Notes to Financial Statements (continued)

each open total return swap agreement is presented on the Schedule of Investments. During the six months ended June 30, 2018, the average daily notional amounts of open long and (short) total return swap agreements, an indicator of the volume of activity, were $48,484,915 and $(48,222,628), respectively.

A collateral arrangement requires each party to provide collateral with a value, adjusted daily and subject to a minimum transfer amount, equal to the net amount owed to the other party under the agreement. The counterparty provides cash collateral to the Fund and the Fund provides collateral by segregating portfolio securities, subject to a valuation allowance, into a tri-party account at its custodian. At June 30, 2018, securities, as denoted in the Schedule of Investments, with a value of  $495,364 were pledged by the Fund and no cash collateral was held by the Fund.

5. CAPITAL STOCK

The Fund has 10,000,000 authorized and unissued preferred shares, $0.001 par value.

During the six months ended June 30, 2018, the Fund issued 2,358 shares of its Common Stock at a weighted average price of $15.11 per share as dividend equivalents to holders of deferred stock units and restricted stock units under the 2005 Equity Incentive Compensation Plan.

On December 22, 2017, the Fund issued 3,311,063 shares of its Common Stock at a price of $14.83 per share (the average market price on December 8, 2017) to shareholders of record on November 22, 2017, who elected to take stock in payment of the year-end distribution from 2017 capital gain and investment income. During the year ended December 31, 2017, the Fund issued 3,467 shares of its Common Stock at a weighted average price of $14.78 per share as dividend equivalents to holders of deferred stock units and restricted stock units under the 2005 Equity Incentive Compensation Plan.

The Fund may purchase shares of its Common Stock from time to time, in accordance with parameters set by the Board of Directors, at such prices and amounts as the portfolio management team deems appropriate. Transactions in its Common Stock for 2018 and 2017 were as follows:

6. RETIREMENT PLANS

The Fund sponsors a qualified defined contribution plan for all employees with at least six months of service and a nonqualified defined contribution plan for eligible employees to

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Notes to Financial Statements (continued)

supplement the qualified plan. The Fund matches employee contributions made to the plans and, subject to Board approval, may also make a discretionary contribution to the plans. During the six months ended June 30, 2018, the Fund recorded matching contributions of  $254,502 and a liability, representing the 2018 discretionary contribution, of  $102,899.

7. EQUITY-BASED COMPENSATION

The Fund’s 2005 Equity Incentive Compensation Plan, adopted at the 2005 Annual Meeting and reapproved at the 2010 Annual Meeting, expired on April 27, 2015. Restricted stock awards granted prior to the Plan’s expiration remain outstanding at June 30, 2018 and vest on various dates through September 2, 2018, provided the service condition set forth in the award at grant is satisfied. Also outstanding are restricted stock units granted to nonemployee directors that are 100% vested, but payment of which has been deferred at the election of the director.

Outstanding awards were granted at fair market value on grant date (determined by the average of the high and low price on that date). Awards earn an amount equal to the Fund’s per share distribution, payable in either cash (employees) or reinvested shares (non-employee directors). Reinvested shares are fully vested and paid concurrently with the payment of the original share grant. A summary of the activity related to nonvested restricted shares and restricted stock units for the six months ended June 30, 2018 is as follows:

Compensation cost is based on the fair market value of the award on grant date and recognized on a straight-line basis over the vesting period. Any compensation cost recognized related to an award that is subsequently forfeited due to unmet service conditions is reversed. Total compensation cost related to equity-based compensation for the six months ended June 30, 2018 was $9,392. At June 30, 2018, the Fund had unrecognized compensation cost of $2,403, a component of additional capital surplus, related to nonvested awards that will be recognized over a weighted average period of 0.17 years. The total fair value of awards vested and issued during the six months ended June 30, 2018 was $596,772.

8. OFFICER AND DIRECTOR COMPENSATION

The aggregate remuneration paid by the Fund during the six months ended June 30, 2018 to officers and directors amounted to $4,292,809, of which $295,332 was paid to independent directors. These amounts represent the taxable income to the Fund’s officers and directors and, therefore, may differ from the amounts reported in the accompanying Statement of Operations that are recorded and expensed in accordance with GAAP. At June 30, 2018, $1,482,086 was due to officers and directors, representing amounts related to estimated cash compensation and estimated retirement plan discretionary contributions payable to officers, and reinvested dividend payments on restricted stock awards payable to directors.

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Notes to Financial Statements (continued)

9. PORTFOLIO SECURITIES LOANED

The Fund makes loans of securities to approved brokers to earn additional income. The loans are collateralized by cash and/or U.S. Treasury and government agency obligations valued at 102% of the value of the securities on loan. The market value of the loaned securities is calculated based upon the most recent closing prices and any additional required collateral is delivered to the Fund on the next business day. On loans collateralized by cash, the cash collateral is invested in a registered money market fund. The Fund accounts for securities lending transactions as secured financing and retains a portion of the income from lending fees and interest on the investment of cash collateral. The Fund also continues to receive dividends on the securities loaned. Gain or loss in the fair value of securities loaned that may occur during the term of the loan will be for the account of the Fund. At June 30, 2018, the Fund had no securities on loan. The Fund is indemnified by the custodian, serving as lending agent, for the loss of loaned securities and has the right under the lending agreement to recover the securities from the borrower on demand.

10. OPERATING LEASE COMMITMENTS

The Fund and its affiliates lease office space and equipment under operating lease agreements expiring at various dates through the year 2026. The Fund recognized rental expense of $154,504 for the six months ended June 30, 2018, and its estimated portion of the minimum rental commitments are as follows:

In February 2016, the Financial Accounting Standards Board updated the guidance on accounting for leases. The updated guidance requires lessees to recognize assets and liabilities that arise from lease transactions. The Fund will adopt the new standard on January 1, 2019, and is evaluating the full impact of adoption.

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Financial Highlights

(a)

Total investment return assumes reinvestment of all distributions at the price received in the Fund’s dividend reinvestment plan.

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(b)

Ratios and portfolio turnover presented on an annualized basis.

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(c)

Ratios of expenses to average net assets were 0.67% and 0.63% in 2015 and 2013, respectively, after adjusting for non-recurring pension-related settlement charges. The adjusted ratios of net investment income to average net assets were 1.08% and 1.50% in 2015 and 2013, respectively.​

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15

Schedule of Investments

June 30, 2018

(unaudited)

16​

Schedule of Investments (continued)

June 30, 2018

(unaudited)

17

Schedule of Investments (continued)

June 30, 2018

(unaudited)

18​

Schedule of Investments (continued)

June 30, 2018

(unaudited)

Total Return Swap Agreements — 0.0%

19

Schedule of Investments (continued)

June 30, 2018

(unaudited)

(a)

Common stocks are listed on the New York Stock Exchange or NASDAQ and are valued at the last reported sale price on the day of valuation.

​

(b)

Presently non-dividend paying.

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(c)

Non-controlled affiliate, a closed-end sector fund, registered as an investment company under the Investment Company Act of 1940.

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(d)

Controlled affiliate valued using fair value procedures.

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(e)

Rate presented is as of period-end and represents the annualized yield earned over the previous seven days.

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(f)

Counterparty for all open total return swap agreements is Morgan Stanley.​

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(g)

A portion of the position is pledged as collateral for open total return swap agreements.​

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Principal Changes in Portfolio Securities

During the Six Months Ended June 30, 2018
(unaudited)

21

Principal Changes in Portfolio Securities (continued)

During the Six Months Ended June 30, 2018
(unaudited)

*

Received cash and shares of AT&T Inc. pursuant to an acquisition

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The transactions presented above are those purchases or sales during the period that exceeded .30% of period-end net assets.

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Historical Financial Statistics

(unaudited)