Edgar Filing: Eaton Vance Tax-Managed Diversified Equity Income Fund

Eaton Vance Tax-Managed Diversified Equity Income

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-21832

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)

October 31
Date of Fiscal Year End

April 30, 2009
Date of Reporting Period

TABLE OF CONTENTS


	Item 1. Reports to Stockholders
	Item 2. Code of Ethics
	Item 3. Audit Committee Financial Expert
	Item 4. Principal Accountant Fees and Services
	Item 5. Audit Committee of Listed registrants
	Item 6. Schedule of Investments
	Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
	Item 8. Portfolio Managers of Closed-End Management Investment Companies
	Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
	Item 10. Submission of Matters to a Vote of Security Holders
	Item 11. Controls and Procedures
	Item 12. Exhibits
Signatures
EX-99.CERT Section 302 Certifications
EX-99.906CERT Section 906 Certification

Item 1. Reports to Stockholders

IMPORTANT NOTICES REGARDING DISTRIBUTIONS,
DELIVERY OF SHAREHOLDER DOCUMENTS,
PORTFOLIO HOLDINGS, AND PROXY VOTING

Managed Distribution Plan. On March 10, 2009, the Fund received authorization from the Securities and Exchange Commission to distribute long-term capital gains to shareholders more frequently than once per year. In this connection, the Board of Trustees formally approved the implementation of a Managed Distribution Plan (MDP) to make quarterly cash distributions to common shareholders, stated in terms of a fixed amount per common share.

The Fund intends to pay quarterly cash dividends during February, May, August and November equal to $0.4625 per share. You should not draw any conclusions about the Fund’s investment performance from the amount of these distributions or from the terms of the MDP. The MDP will be subject to regular periodic review by the Fund’s Board of Trustees.

With each distribution, the Fund will issue a notice to shareholders and an accompanying press release which will provide detailed information required by the Fund’s exemptive order. The Fund’s Board of Trustees may amend or terminate the MDP at any time without prior notice to Fund shareholders; however, at this time there are no reasonably foreseeable circumstances that might cause the termination of the MDP.

Delivery of Shareholder Documents. The Securities and Exchange Commission (the “SEC”) permits funds to deliver only one copy of shareholder documents, including prospectuses, proxy statements and shareholder reports, to fund investors with multiple accounts at the same residential or post office box address. This practice is often called “householding” and it helps eliminate duplicate mailings to shareholders.

Eaton Vance, or your financial adviser, may household the mailing of your documents indefinitely unless you instruct Eaton Vance, or your financial adviser, otherwise.

If you would prefer that your Eaton Vance documents not be householded, please contact Eaton Vance at 1-800-262-1122, or contact your financial adviser.

Your instructions that householding not apply to delivery of your Eaton Vance documents will be effective within 30 days of receipt by Eaton Vance or your financial adviser.

Portfolio Holdings. Each Eaton Vance Fund and its underlying Portfolio (if applicable) will file a schedule of its portfolio holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Form N-Q will be available on the Eaton Vance website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the Securities and Exchange Commission’s website at www.sec.gov. Form N-Q may also be reviewed and copied at the SEC’s public reference room in Washington, D.C. (call 1-800-732-0330 for information on the operation of the public reference room).

Proxy Voting. From time to time, funds are required to vote proxies related to the securities held by the funds. The Eaton Vance Funds or their underlying portfolios (if applicable) vote proxies according to a set of policies and procedures approved by the Funds’ and Portfolios’ Boards. You may obtain a description of these policies and procedures and information on how the Funds or Portfolios voted proxies relating to portfolio securities during the most recent 12 month period ended June 30, without charge, upon request, by calling 1-800-262-1122. This description is also available on the SEC’s website at www. sec.gov.

Please refer to the inside back cover of this report for an important notice about
the privacy policies adopted by the Eaton Vance organization.

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

INVESTMENT UPDATE

Economic and Market Conditions

Michael A. Allison, CFA
Eaton Vance Management
Co-Portfolio Manager

Walter A. Row, CFA
Eaton Vance Management
Co-Portfolio Manager

Ronald M. Egalka
Rampart Investment Management
Co-Portfolio Manager

•

U.S. and European stocks rallied in the later stages of the six-month period that ended April 30, 2009. After the worst January in history and a dismal February, the battered equity markets, as measured by the Standard & Poor’s 500 Index (S&P 500) and the FTSE Eurotop 100 Index, exhibited renewed life in March and April. Much of the momentum was spurred by global efforts to help banks eliminate illiquid assets and revive credit. However, the rally was not enough to prevent stocks from posting negative returns for the six-month period overall, as the S&P 500 fell 8.52% and the FTSE Eurotop 100 Index lost a more modest 1.75%.

•

Growth stocks soundly outperformed value stocks for the period, reversing the trend of 2008. As investors grew less risk-averse against a more positive economic backdrop, they migrated from the traditional value sectors of financials and consumer staples to such growth areas as information technology and consumer discretionary. On the capitalization spectrum, mid-cap stocks outperformed the large- and small-cap segments of the market during the six-month period.

•

The U.S. economy, as measured by gross domestic product (GDP), continued to contract during the period, declining 6.3% (annualized) in the fourth quarter of 2008 and 5.7% (annualized) in the first quarter of 2009, according to the U.S. Department of Commerce. Most of the major GDP components contributed to the decline, but a sharp downturn in consumer spending was particularly influential.

Past performance is no guarantee of future results. Returns are historical and are calculated by determining the percentage change in net asset value or share price (as applicable) with all distributions reinvested. The Fund’s performance at share price will differ from its results at NAV. Although share price performance generally reflects investment results over time, during shorter periods, returns at share price can also be affected by factors such as changing perceptions about the Fund, market conditions, fluctuations in supply and demand for the Fund’s shares, or changes in Fund distributions. The Fund has no current intention to utilize leverage, but may do so in the future through borrowings and/or other permitted methods. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance is for the stated time period only; due to market volatility, the Fund’s current performance may be lower or higher than the quoted return. For performance as of the most recent month end, please refer to www.eatonvance.com.

Management Discussion

•		The Fund is a closed-end fund and trades on the New York Stock Exchange (NYSE) under the symbol “ETY.” At net asset value (NAV), the Fund outperformed the S&P 500 Index, the CBOE S&P 500 BuyWrite Index, the FTSE Eurotop 100 Index and its Lipper peer group average for the six months that ended April 30, 2009.

•		The Fund outperformed a blended index consisting of an 80% weighting in the S&P 500 Index and a 20% weighting in the FTSE Eurotop 100 Index (reflecting the Fund’s composition) at NAV for the six months ended April 30, 2009. (It is important to remember that the blended index does not include the hedging characteristics that are utilized by the Fund in the execution of its covered call option writing strategy.)

•		Relative to the blended index, the equity portion of the Fund had positive contributions to performance from an overweighted allocation in information technology stocks and security selection in the industrials sector during the six-month period. Stock selection in the energy and health care sectors detracted from relative performance, as did an underweighting in financials.

Eaton Vance Tax-Managed Diversified Equity Income Fund Total Return Performance 10/31/08 – 4/30/09


NYSE Symbol		ETY

At Net Asset Value (NAV)			-0.78	%
At Share Price			-0.91	%

S&P 500 Index¹			-8.52	%
CBOE S&P 500 BuyWrite Index (BXM)¹			-6.10	%
FTSE Eurotop 100 Index¹			-1.75	%
Lipper Options Arbitrage/Options Strategies Funds Average¹			-3.06	%

Premium/(Discount) to NAV (4/30/09)			-8.16	%
Total Distributions per share		$	0.925
Distribution Rate²	At NAV		15.89	%
	At Share Price		17.31	%

See page 3 for more performance information.


¹		It is not possible to invest directly in an Index or a Lipper Classification. The Indices’ total returns do not reflect commissions or expenses that would have been incurred if an investor individually purchased or sold the securities represented in the Indices. The return for the FTSE Eurotop 100 Index is calculated in U.S. dollars. The Lipper total return is the average total return, at net asset value, of the funds that are in the same Lipper Classification as the Fund.

²		The Distribution Rate is based on the Fund’s most recent quarterly distribution per share (annualized) divided by the Fund’s NAV or share price at the end of the period. The Fund’s quarterly distributions may be comprised of ordinary income, net realized capital gains and return of capital.

Fund shares are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks, including possible loss of principal invested.

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

INVESTMENT UPDATE

•		At April 30, 2009, the Fund had written call options on approximately 50% of its equity holdings. The Fund seeks current earnings in large part from option premiums, which can vary with investors’ expectation of the future volatility (implied volatility) of the underlying asset. The six-month period witnessed initial high levels of implied volatility and a more moderate trend by the end of the period, in concert with the high level of actual volatility in the equity markets. The Fund was able to “monetize” some of this volatility in the form of higher premiums during the period, which provided a positive benefit to the Fund.

•		The Fund’s primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation. In pursuing its investment objectives, the Fund evaluates returns on an after-tax basis, seeking to minimize and defer shareholder federal income taxes. Under normal market conditions, the Fund’s investment program consists primarily of owning a diversified portfolio of common stocks. The Fund seeks to earn high levels of tax-advantaged income and gains by emphasizing investments in stocks that pay dividends that qualify for favorable federal income tax treatment and by writing (selling) stock index call options with respect to a portion of its common stock portfolio value.

The views expressed throughout this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. These views are subject to change at any time based upon market or other conditions, and the investment adviser disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a fund are based on many factors, may not be relied on as an indication of trading intent on behalf of any Eaton Vance fund. Portfolio information provided in the report may not be representative of the Fund’s current or future investments and may change due to active management.

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

FUND PERFORMANCE

Performance


NYSE Symbol:	ETY

Average Annual Total Returns (at share price, New York Stock Exchange)
Six Months		-0.91	%
One Year		-24.64
Life of Fund (11/30/06)		-11.55

Average Annual Total Returns (at net asset value)
Six Months		-0.78	%
One Year		-24.54
Life of Fund (11/30/06)		-8.38

Fund Composition

Top Ten Holdings¹

By total investments


Exxon Mobil Corp.	3.1	%
International Business Machines Corp.	2.5
Cisco Systems, Inc.	2.0
Hewlett-Packard Co.	1.9
Microsoft Corp.	1.9
JPMorgan Chase & Co.	1.9
QUALCOMM, Inc.	1.8
Goldcorp, Inc.	1.7
Philip Morris International, Inc.	1.7
Nestle SA	1.6


¹		Top Ten Holdings represented 20.1% of the Fund’s total investments as of 4/30/09. The Top Ten Holdings are presented without the offsetting effect of the Fund’s written option positions at 4/30/09. Excludes cash equivalents.

Common Stock Sector Weightings²

By total investments


²		Reflects the Fund’s total investments as of 4/30/09. Common Stock Sector Weightings are presented without the offsetting effect of the Fund’s written option positions at 4/30/09. Excludes cash equivalents.

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

PORTFOLIO OF INVESTMENTS (Unaudited)


Common Stocks — 98.3%

Security	Shares		Value



Aerospace & Defense — 3.8%

General Dynamics Corp.		362,188	$	18,714,254
Lockheed Martin Corp.		214,540		16,847,826
Raytheon Co.		298,740		13,512,010
United Technologies Corp.		336,152		16,417,664


			$	65,491,754




Automobiles — 0.5%

DaimlerChrysler AG		221,041	$	7,924,347


			$	7,924,347




Beverages — 2.9%

Coca-Cola Co. (The)		418,283	$	18,007,083
Diageo PLC		583,624		6,962,485
PepsiCo, Inc.		515,673		25,659,889


			$	50,629,457




Biotechnology — 3.1%

Amgen, Inc.⁽¹⁾		236,712	$	11,473,431
Biogen Idec, Inc.⁽¹⁾		211,998		10,247,983
Celgene Corp.⁽¹⁾		115,895		4,951,034
Genzyme Corp.⁽¹⁾		331,555		17,681,828
Gilead Sciences, Inc.⁽¹⁾		204,805		9,380,069


			$	53,734,345




Capital Markets — 3.9%

Credit Suisse Group		230,756	$	9,017,144
Deutsche Bank AG		66,639		3,553,672
Goldman Sachs Group, Inc.		193,363		24,847,146
Invesco, Ltd.		508,607		7,486,695
Northern Trust Corp.		228,177		12,403,702
State Street Corp.		301,317		10,283,949


			$	67,592,308




Commercial Banks — 2.7%

Banco Santander Central Hispano SA		585,659	$	5,633,417
Canadian Imperial Bank of Commerce		198,503		8,894,919
HSBC Holdings PLC		1,665,135		11,841,505
PNC Financial Services Group, Inc.		211,694		8,404,252
Wells Fargo & Co.		603,808		12,082,198


			$	46,856,291



Commercial Services & Supplies — 0.8%

Waste Management, Inc.		498,002	$	13,281,713


			$	13,281,713




Communications Equipment — 4.0%

Cisco Systems, Inc.⁽¹⁾		1,812,593	$	35,019,297
Nokia Oyj ADR		300,000		4,242,000
QUALCOMM, Inc.		734,207		31,071,640


			$	70,332,937




Computers & Peripherals — 5.9%

Apple, Inc.⁽¹⁾		194,590	$	24,485,260
Hewlett-Packard Co.		959,803		34,533,712
International Business Machines Corp.		431,798		44,565,872


			$	103,584,844




Consumer Finance — 0.2%

Discover Financial Services		425,464	$	3,459,022


			$	3,459,022




Diversified Financial Services — 1.9%

JPMorgan Chase & Co.		997,650	$	32,922,450


			$	32,922,450




Diversified Telecommunication Services — 3.0%

AT&T, Inc.		821,020	$	21,034,532
BCE, Inc.		500,000		10,700,000
Verizon Communications, Inc.		691,682		20,985,632


			$	52,720,164




Electric Utilities — 2.5%

American Electric Power Co., Inc.		392,701	$	10,359,452
E.ON AG		564,258		19,081,485
FirstEnergy Corp.		235,932		9,649,619
Iberdrola SA		538,537		4,275,230


			$	43,365,786




Electrical Equipment — 2.1%

ABB, Ltd.⁽¹⁾		279,564	$	3,957,604
Emerson Electric Co.		609,703		20,754,290
Vestas Wind Systems A/S⁽¹⁾		184,627		11,984,414


			$	36,696,308

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

PORTFOLIO OF INVESTMENTS (Unaudited) CONT’D


Security	Shares		Value



Energy Equipment & Services — 0.8%

Diamond Offshore Drilling, Inc.		205,096	$	14,851,001


			$	14,851,001




Food & Staples Retailing — 3.4%

Carrefour SA		129,657	$	5,257,200
CVS Caremark Corp.		624,937		19,860,498
Kroger Co. (The)		204,381		4,418,717
Tesco PLC		1,025,388		5,080,600
Wal-Mart Stores, Inc.		491,145		24,753,708


			$	59,370,723




Food Products — 2.8%

Nestle SA		861,427	$	28,079,705
Nestle SA ADR		319,837		10,378,711
Unilever NV		566,760		11,214,715


			$	49,673,131




Health Care Equipment & Supplies — 2.3%

Baxter International, Inc.		218,713	$	10,607,581
Becton, Dickinson & Co.		93,781		5,671,875
Boston Scientific Corp.⁽¹⁾		877,418		7,379,085
Covidien, Ltd.		162,990		5,375,410
Medtronic, Inc.		356,536		11,409,152


			$	40,443,103




Health Care Providers & Services — 0.7%

Fresenius Medical Care AG & Co. KGaA ADR		97,630	$	3,759,731
UnitedHealth Group, Inc.		323,476		7,608,156


			$	11,367,887




Hotels, Restaurants & Leisure — 1.5%

McDonald’s Corp.		477,077	$	25,423,433


			$	25,423,433




Household Products — 2.1%

Clorox Co.		96,834	$	5,427,546
Colgate-Palmolive Co.		291,647		17,207,173
Procter & Gamble Co.		283,641		14,023,211


			$	36,657,930



Industrial Conglomerates — 2.4%

3M Co.		87,354	$	5,031,590
General Electric Co.		1,862,318		23,558,323
Philips Electronics NV		183,878		3,317,707
Siemens AG		145,329		9,771,166


			$	41,678,786




Insurance — 2.5%

ACE, Ltd.		129,307	$	5,989,500
Allianz SE		37,440		3,454,701
Chubb Corp.		45,541		1,773,822
MetLife, Inc.		309,770		9,215,658
Prudential PLC		734,221		4,220,053
Travelers Companies, Inc. (The)		215,485		8,865,053
Zurich Financial Services AG		54,031		10,040,609


			$	43,559,396




Internet Software & Services — 1.5%

Google, Inc., Class A⁽¹⁾		65,599	$	25,975,236


			$	25,975,236




IT Services — 2.1%

Accenture, Ltd., Class A		248,425	$	7,311,148
MasterCard, Inc., Class A		97,580		17,901,051
Visa, Inc., Class A		169,114		10,985,645


			$	36,197,844




Life Sciences Tools & Services — 0.5%

Thermo Fisher Scientific, Inc.⁽¹⁾		264,139	$	9,265,996


			$	9,265,996




Machinery — 1.5%

Danaher Corp.		323,637	$	18,913,346
Illinois Tool Works, Inc.		230,795		7,570,076


			$	26,483,422




Media — 2.3%

Comcast Corp., Class A		1,650,164	$	25,511,536
Time Warner, Inc.		293,337		6,403,547
Time Warner Cable, Inc.		73,630		2,373,095
Vivendi SA		238,195		6,404,837


			$	40,693,015

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

PORTFOLIO OF INVESTMENTS (Unaudited) CONT’D


Security	Shares		Value



Metals & Mining — 3.4%

Anglo American PLC		177,796	$	3,825,855
ArcelorMittal		83,309		1,951,459
BHP Billiton, Ltd. ADR		496,804		23,916,145
Goldcorp, Inc.		1,089,666		29,987,608


			$	59,681,067




Multiline Retail — 0.4%

Target Corp.		157,657	$	6,504,928


			$	6,504,928




Multi-Utilities — 1.3%

Public Service Enterprise Group, Inc.		597,835	$	17,839,396
RWE AG		64,864		4,675,943


			$	22,515,339




Oil, Gas & Consumable Fuels — 11.5%

Anadarko Petroleum Corp.		490,457	$	21,119,078
BP PLC		2,475,861		17,496,001
Chevron Corp.		243,776		16,113,594
ConocoPhillips		317,824		13,030,784
ENI SpA		584,484		12,542,521
Exxon Mobil Corp.		814,689		54,315,316
Hess Corp.		355,292		19,466,449
Occidental Petroleum Corp.		285,634		16,078,338
Royal Dutch Shell PLC, Class B		278,455		6,301,578
Total SA		354,665		17,745,929
XTO Energy, Inc.		169,031		5,858,615


			$	200,068,203




Pharmaceuticals — 7.6%

Abbott Laboratories		318,614	$	13,333,996
AstraZeneca PLC		138,225		4,839,993
Bristol-Myers Squibb Co.		483,093		9,275,386
GlaxoSmithKline PLC		605,494		9,326,531
Johnson & Johnson		491,604		25,740,385
Merck & Co., Inc.		670,235		16,246,496
Novartis AG		206,853		7,829,037
Pfizer, Inc.		594,539		7,943,041
Roche Holding AG		71,637		9,033,722
Sanofi-Aventis SA		179,473		10,393,656
Schering-Plough Corp.		477,778		10,998,450
Teva Pharmaceutical Industries, Ltd. ADR		163,785		7,188,524


			$	132,149,217



Real Estate Investment Trusts (REITs) — 0.5%

AvalonBay Communities, Inc.		77,824	$	4,421,181
Boston Properties, Inc.		98,875		4,886,403


			$	9,307,584





Semiconductors & Semiconductor Equipment — 1.1%

ASML Holding NV		918,083	$	19,417,456


			$	19,417,456




Software — 2.8%

Microsoft Corp.		1,661,866	$	33,669,405
Oracle Corp.		784,442		15,171,108


			$	48,840,513




Specialty Retail — 3.4%

Best Buy Co., Inc.		536,445	$	20,588,759
Home Depot, Inc.		528,838		13,919,016
Staples, Inc.		885,038		18,249,484
TJX Companies., Inc. (The)		206,324		5,770,882


			$	58,528,141




Tobacco — 1.7%

Philip Morris International, Inc.		825,726	$	29,891,281


			$	29,891,281




Wireless Telecommunication Services — 0.9%

Rogers Communications, Inc., Class B		284,698	$	6,997,877
Vodafone Group PLC		4,476,148		8,227,004


			$	15,224,881



Total Common Stocks
(identified cost $2,193,038,370)			$	1,712,361,239




Investment Funds — 0.4%

Security	Shares		Value



Capital Markets — 0.4%

SPDR S&P Homebuilders ETF		648,948	$	7,021,617



Total Investment Funds
(identified cost $7,053,026)			$	7,021,617

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

PORTFOLIO OF INVESTMENTS (Unaudited) CONT’D


Short-Term Investments — 2.6%

	Interest
Description	(000’s omitted)		Value


Cash Management Portfolio, 0.13%⁽²⁾	$	46,010	$	46,010,041



Total Short-Term Investments
(identified cost $46,010,041)			$	46,010,041



Total Investments — 101.3%
(identified cost $2,246,101,437)			$	1,765,392,897


Covered Call Options Written — (2.3)%

	Number of		Strike		Expiration
Description	Contracts		Price		Date		Value


S&P 500 Index		2,569	$	840		5/16/09	$	(14,067,844	)
S&P 500 Index		2,921		845		5/16/09		(11,917,680	)
S&P 500 Index		2,406		850		5/16/09		(8,661,600	)
S&P 500 Index		1,035		855		5/16/09		(3,410,325	)
S&P 500 Index		1,040		860		5/16/09		(2,891,200	)



Total Covered Call Options Written (premiums received $31,850,399)							$	(40,948,649	)



Other Assets, Less Liabilities — 1.0%							$	17,657,059



Net Assets — 100.0%							$	1,742,101,307

ADR - American Depository Receipt


(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 April 30, 2009.


Country Concentration of Portfolio

	Percentage
Country	of Net Assets			Value


United States		76.6	%	$	1,333,860,759
Switzerland		4.8			84,326,032
United Kingdom		4.5			78,121,605
Canada		3.2			56,580,404
Germany		3.0			52,221,045
France		2.3			39,801,622
Netherlands		1.9			33,949,877
Australia		1.4			23,916,145
Bermuda		0.9			14,797,843
Italy		0.7			12,542,521
Denmark		0.7			11,984,414
Spain		0.6			9,908,647
Israel		0.4			7,188,524
Finland		0.2			4,242,000
Luxembourg		0.1			1,951,459


Total Investments		101.3	%	$	1,765,392,897

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

FINANCIAL STATEMENTS (Unaudited)

Statement of Assets and Liabilities


As of April 30, 2009

Assets

Unaffiliated investments, at value (identified cost, $2,200,091,396)	$	1,719,382,856
Affiliated investment, at value (identified cost, $46,010,041)		46,010,041
Cash		2,924
Foreign currency, at value (identified cost, $830,216)		827,610
Receivable for investments sold		12,984,032
Dividends receivable		3,191,613
Interest receivable from affiliated investment		6,012
Tax reclaims receivable		2,303,614


Total assets	$	1,784,708,702





Liabilities

Written options outstanding, at value (premiums received, $31,850,399)	$	40,948,649
Payable to affiliate for investment adviser fee		1,377,008
Payable to affiliate for Trustees’ fees		4,208
Accrued expenses		277,530


Total liabilities	$	42,607,395


Net Assets	$	1,742,101,307





Sources of Net Assets

Common shares, $0.01 par value, unlimited number of shares authorized, 149,711,079 shares issued and outstanding	$	1,497,111
Additional paid-in capital		2,601,422,306
Accumulated net realized loss (computed on the basis of identified cost)		(248,518,672	)
Accumulated distributions in excess of net investment income		(122,429,029	)
Net unrealized depreciation (computed on the basis of identified cost)		(489,870,409	)


Net Assets	$	1,742,101,307





Net Asset Value

($1,742,101,307 ¸ 149,711,079 common shares issued and outstanding)	$	11.64

Statement of Operations


For the Six Months Ended
April 30, 2009

Investment Income

Dividends (net of foreign taxes, $1,020,745)	$	24,911,913
Interest income allocated from affiliated investment		436,549
Expenses allocated from affiliated investment		(235,155	)


Total investment income	$	25,113,307





Expenses

Investment adviser fee	$	8,381,691
Trustees’ fees and expenses		23,824
Custodian fee		259,450
Printing and postage		241,638
Legal and accounting services		45,195
Transfer and dividend disbursing agent fees		10,704
Miscellaneous		97,088


Total expenses	$	9,059,590


Deduct —
Reduction of custodian fee	$	2


Total expense reductions	$	2



Net expenses	$	9,059,588



Net investment income	$	16,053,719





Realized and Unrealized Gain (Loss)

Net realized gain (loss) —
Investment transactions (identified cost basis)	$	(304,737,019	)
Written options		160,960,417
Foreign currency transactions		(88,367	)


Net realized loss	$	(143,864,969	)


Change in unrealized appreciation (depreciation) —
Investments (identified cost basis)	$	84,449,416
Written options		(13,891,369	)
Foreign currency		54,303


Net change in unrealized appreciation (depreciation)	$	70,612,350



Net realized and unrealized loss	$	(73,252,619	)



Net decrease in net assets from operations	$	(57,198,900	)

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

FINANCIAL STATEMENTS CONT’D

Statements of Changes in Net Assets


	Six Months Ended
Increase (Decrease)	April 30, 2009			Year Ended
in Net Assets	(Unaudited)			October 31, 2008

From operations —
Net investment income	$	16,053,719		$	39,955,338
Net realized loss from investment transactions, written options and foreign currency transactions		(143,864,969	)		(9,750,732	)
Net change in unrealized appreciation (depreciation) of investments, written options and foreign currency		70,612,350			(749,166,169	)


Net decrease in net assets from operations	$	(57,198,900	)	$	(718,961,563	)


Distributions —
From net investment income	$	(138,482,748	)*	$	(35,731,879	)
Tax return of capital		—			(241,233,617	)


Total distributions	$	(138,482,748	)	$	(276,965,496	)



Net decrease in net assets	$	(195,681,648	)	$	(995,927,059	)





Net Assets

At beginning of period	$	1,937,782,955		$	2,933,710,014


At end of period	$	1,742,101,307		$	1,937,782,955





Accumulated distributions in excess of net investment income included in net assets

At end of period	$	(122,429,029	)	$	—


*	A portion of the distributions may be deemed a tax return of capital at year-end. See Note 2.

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

FINANCIAL STATEMENTS CONT’D

Financial Highlights


	Six Months Ended
	April 30, 2009			Year Ended			Period Ended
	(Unaudited)			October 31, 2008			October 31, 2007⁽¹⁾

Net asset value — Beginning of period	$	12.940		$	19.600		$	19.100	⁽²⁾





Income (loss) from operations

Net investment income⁽³⁾	$	0.107		$	0.267		$	1.314
Net realized and unrealized gain (loss)		(0.482	)		(5.077	)		0.583


Total income (loss) from operations	$	(0.375	)	$	(4.810	)	$	1.897





Less distributions

From net investment income	$	(0.925	)*	$	(0.239	)	$	(1.290	)
Tax return of capital		—			(1.611	)		(0.098	)


Total distributions	$	(0.925	)	$	(1.850	)	$	(1.388	)



Offering costs charged to paid-in capital⁽³⁾	$	—		$	—		$	(0.009	)



Net asset value — End of period	$	11.640		$	12.940		$	19.600



Market value — End of period	$	10.690		$	11.900		$	17.130



Total Investment Return on Net Asset Value⁽⁴⁾		(0.78	)%⁽⁸⁾		(26.02	)%		10.26	%⁽⁵⁾⁽⁸⁾



Total Investment Return on Market Value⁽⁴⁾		(0.91	)%⁽⁸⁾		(22.15	)%		(3.63	)%⁽⁵⁾⁽⁸⁾





Ratios/Supplemental Data

Net assets, end of period (000’s omitted)	$	1,742,101		$	1,937,783		$	2,933,710
Ratios (As a percentage of average daily net assets):
Expenses before custodian fee reduction⁽⁶⁾		1.08	%⁽⁷⁾		1.05	%		1.06	%⁽⁷⁾
Net investment income		1.86	%⁽⁷⁾		1.56	%		7.27	%⁽⁷⁾
Portfolio Turnover		23	%⁽⁸⁾		95	%		221	%⁽⁸⁾


(1)		For the period from the start of business, November 30, 2006, to October 31, 2007.

(2)		Net asset value at beginning of period reflects the deduction of the sales load of $0.90 per share paid by the shareholder from the $20.00 offering price.

(3)		Computed using average shares outstanding.

(4)		Returns are historical and are calculated by determining the percentage change in market value or net asset value with all distributions reinvested.

(5)		Total investment return on net asset value is calculated assuming a purchase at the offering price of $20.00 less the sales load of $0.90 per share paid by the shareholder on the first day and a sale at the net asset value on the last day of the period reported with all distributions reinvested. Total investment return on market value is calculated assuming a purchase at the offering price of $20.00 less the sales load of $0.90 per share paid by the shareholder on the first day and a sale at the current market price on the last day of the period reported with all distributions reinvested.

(6)		Excludes the effect of custody fee credits, if any, of less than 0.005%.

(7)		Annualized.

(8)		Not annualized.

*		A portion of the distributions may be deemed a tax return of capital at year-end. See Note 2.

See notes to financial statements

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

NOTES TO FINANCIAL STATEMENTS (Unaudited)

1 Significant Accounting Policies

Eaton Vance Tax-Managed Diversified Equity Income Fund (the Fund) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, closed-end management investment company. The Fund’s primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation. The Fund pursues its investment objectives by investing primarily in a diversified portfolio of common stocks. Under normal market conditions, the Fund seeks to generate current earnings in part by employing an options strategy of writing index call options with respect to a portion of its common stock portfolio.

The following is a summary of significant accounting policies of the Fund. The policies are in conformity with accounting principles generally accepted in the United States of America.

A Investment Valuation — Equity securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the-counter market, by an independent pricing service. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on any exchange on which the option is listed or, in the absence of sales on such date, at the mean between the closing bid and asked prices therefore as reported by the Options Price Reporting Authority. Over-the-counter options are valued based on broker quotations, when available and deemed reliable. Short-term debt securities with a remaining maturity of sixty days or less are generally valued at amortized cost, which approximates market value. If short-term debt securities are acquired with a remaining maturity of more than sixty days, they will be valued by a pricing service. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. The independent service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments that have a strong correlation to the fair-valued securities. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Fund in a manner that most fairly reflects the security’s value, or the amount that the Fund might reasonably expect to receive for the security upon its current sale in the ordinary course. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. These factors may include, but are not limited to, the type of security, the existence of any contractual restrictions on the security’s disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies, quotations or relevant information obtained from broker-dealers or other market participants, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company’s financial condition, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.

The Fund may invest in Cash Management Portfolio (Cash Management), an affiliated investment company managed by Boston Management and Research, a subsidiary of Eaton Vance Management (EVM). Cash Management values its investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 of the 1940 Act, pursuant to which Cash Management must comply with certain conditions. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, Cash Management may value its investment securities based on available market quotations provided by a pricing service.

B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.

C Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Fund is informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D

provided for in accordance with the Fund’s understanding of the applicable countries’ tax rules and rates. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.

D Federal Taxes — The Fund’s policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its net investment income, and all or substantially all of its net realized capital gains. Accordingly, no provision for federal income or excise tax is necessary.

At October 31, 2008, the Fund, for federal income tax purposes, had a capital loss carryforward of $99,781,516 which will reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. Such capital loss carryforward will expire on October 31, 2015.

As of April 30, 2009, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Fund’s federal tax returns filed since the start of business on November 30, 2006 to October 31, 2008 remains subject to examination by the Internal Revenue Service.

E Expense Reduction — State Street Bank and Trust Company (SSBT) serves as custodian of the Fund. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Fund maintains with SSBT. All credit balances, if any, used to reduce the Fund’s custodian fees are reported as a reduction of expenses in the Statement of Operations.

F Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in foreign currency exchange rates are recorded for financial statement purposes as net realized gains and losses on investments. That portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.

G Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.

H Indemnifications — Under the Fund’s organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Fund, and shareholders are indemnified against personal liability for the obligations of the Fund. Additionally, in the normal course of business, the Fund enters into agreements with service providers that may contain indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.

I Written Options — Upon the writing of a call or a put option, the premium received by the Fund is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written, in accordance with the Fund’s policies on investment valuations discussed above. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as a writer of an option, may have no control over whether the underlying securities or other assets may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the securities or other assets underlying the written option. The Fund may also bear the risk of not being able to enter into a closing transaction if a liquid secondary market does not exist.

J Purchased Options — Upon the purchase of a call or put option, the premium paid by the Fund is included in the Statement of Assets and Liabilities as an investment. The amount of the investment is subsequently marked-to-market to reflect the current market value of the option purchased, in accordance with the Fund’s policies on investment valuations discussed above. If an option which the Fund had purchased expires on the stipulated expiration date, the Fund will realize a loss in the amount of the cost of the option. If the Fund enters into a closing sale transaction, the Fund will realize a gain or loss, depending on whether the sales proceeds from the

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D

closing sale transaction are greater or less than the cost of the option. If the Fund exercises a put option, it will realize a gain or loss from the sale of the underlying security, and the proceeds from such sale will be decreased by the premium originally paid. If the Fund exercises a call option, the cost of the security which the Fund purchases upon exercise will be increased by the premium originally paid. The risk associated with purchasing options is limited to the premium originally paid.

K Interim Financial Statements — The interim financial statements relating to April 30, 2009 and for the six months then ended have not been audited by an independent registered public accounting firm, but in the opinion of the Fund’s management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial statements.

2 Distributions to Shareholders

Subject to its Managed Distribution Plan, the Fund intends to make quarterly distributions from its cash available for distribution, which consists of the Fund’s dividends and interest income after payment of Fund expenses, net option premiums and net realized and unrealized gains on stock investments. The Fund intends to distribute all or substantially all of its net realized capital gains, if any. Distributions are recorded on the ex-dividend date. The Fund distinguishes between distributions on a tax basis and a financial reporting basis. Accounting principles generally accepted in the United States of America require that only distributions in excess of tax basis earnings and profits be reported in the financial statements as a return of capital. Permanent differences between book and tax accounting relating to distributions are reclassified to paid-in capital. For tax purposes, distributions from short-term capital gains are considered to be from ordinary income. Distributions in any year may include a substantial return of capital component. For the six months ended April 30, 2009, the amount of distributions estimated to be a tax return of capital was approximately $120,339,000. The final determination of tax characteristics of the Fund’s distributions will occur at the end of the year, at which time it will be reported to the shareholders.

3 Investment Adviser Fee and Other Transactions with Affiliates

The investment adviser fee is earned by EVM as compensation for management and investment advisory services rendered to the Fund. Pursuant to the investment advisory agreement and subsequent fee reduction agreement, the fee is computed at an annual rate of 1.00% of its average daily gross assets up to and including $1.5 billion, 0.985% (0.98% beginning May 1, 2009) over $1.5 billion up to and including $3 billion, 0.97% (0.96% beginning May 1, 2009) over $3 billion up to and including $5 billion, and 0.955% (0.94% beginning May 1, 2009) on average daily gross assets over $5 billion, and is payable monthly. Gross assets as referred to herein represent net assets plus obligations attributable to investment leverage, if any. The fee reduction cannot be terminated without the consent of the Trustees and shareholders. The portion of the adviser fee payable by Cash Management on the Fund’s investment of cash therein is credited against the Fund’s adviser fee. For the six months ended April 30, 2009, the Fund’s adviser fee totaled $8,606,892 of which $225,201 was allocated from Cash Management and $8,381,691 was paid or accrued directly by the Fund. For the six months ended April 30, 2009, the Fund’s adviser fee, including the portion allocated from Cash Management, was 1.00% (annualized) of the Fund’s average daily gross assets. Pursuant to a sub-advisory agreement, EVM has delegated the investment management of the Fund’s options strategy to Rampart Investment Management Company, Inc. (Rampart). EVM pays Rampart a portion of its advisory fee for sub-advisory services provided to the Fund. EVM also serves as administrator of the Fund, but receives no compensation.

Except for Trustees of the Fund who are not members of EVM’s organization, officers and Trustees receive remuneration for their services to the Fund out of the investment adviser fee. Trustees of the Fund who are not affiliated with EVM may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For six months ended April 30, 2009, no significant amounts have been deferred. Certain officers and Trustees of the Fund are officers of EVM.

4 Purchases and Sales of Investments

Purchases and sales of investments, other than short-term obligations, aggregated $388,410,741 and $393,975,896, respectively, for the six months ended April 30, 2009.

5 Common Shares of Beneficial Interest

The Fund may issue common shares pursuant to its dividend reinvestment plan. There were no transactions in common shares for the six months ended April 30, 2009 and the year ended October 31, 2008.

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D

6 Federal Income Tax Basis of Investments

The cost and unrealized appreciation (depreciation) of investments of the Fund at April 30, 2009, as determined on a federal income tax basis, were as follows:


Aggregate cost	$	2,246,180,505


Gross unrealized appreciation	$	27,848,927
Gross unrealized depreciation		(508,636,535	)


Net unrealized depreciation	$	(480,787,608	)

7 Financial Instruments

The Fund may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include written options and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. A summary of written call options at April 30, 2009 is included in the Portfolio of Investments.

Written call options activity for the six months ended April 30, 2009 was as follows:


	Number of			Premiums
	Contracts			Received

Outstanding, beginning of period		14,680		$	70,390,742
Options written		68,943			261,249,168
Options terminated in closing purchase transactions		(63,762	)		(284,930,187	)
Options expired		(9,890	)		(14,859,324	)


Outstanding, end of period		9,971		$	31,850,399

All of the assets of the Fund are subject to segregation to satisfy the requirements of the escrow agent. At April 30, 2009, the Fund had sufficient cash and/or securities to cover commitments under these contracts.

8 Risks Associated with Foreign Investments

Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Certain foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on the removal of funds or other assets of the Fund, political or financial instability or diplomatic and other developments which could affect such investments. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker-dealers and issuers than in the United States.

9 Fair Value Measurements

The Fund adopted Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 157 (FAS 157), “Fair Value Measurements”, effective November 1, 2008. FAS 157 established a three-tier hierarchy to prioritize the assumptions, referred to as inputs, 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)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

At April 30, 2009, the inputs used in valuing the Fund’s investments, which are carried at value, were as follows:


		Investments in		Other Financial
	Valuation Inputs	Securities		Instruments*

Level 1	Quoted Prices	$	1,512,905,219	$	(40,948,649	)
Level 2	Other Significant Observable Inputs		252,487,678		—
Level 3	Significant Unobservable Inputs		—		—


Total		$	1,765,392,897	$	(40,948,649	)


*		Other financial instruments include written call options.

The Fund held no investments or other financial instruments as of October 31, 2008 whose fair value was determined using Level 3 inputs.

Eaton Vance Tax-Managed Diversified Equity Income Fund as of April 30, 2009

NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT’D

10 Recently Issued Accounting Pronouncement

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (FAS 161), “Disclosures about Derivative Instruments and Hedging Activities”. FAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities, including qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk related contingent features in derivative instruments. FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Management is currently evaluating the impact the adoption of FAS 161 will have on the Fund’s financial statement disclosures.

Eaton Vance Tax-Managed Diversified Equity Income Fund

DIVIDEND REINVESTMENT PLAN

The Fund offers a dividend reinvestment plan (the Plan) pursuant to which shareholders automatically have distributions reinvested in common shares (the Shares) of the Fund unless they elect otherwise through their investment dealer. On the distribution payment date, if the net asset value per Share is equal to or less than the market price per Share plus estimated brokerage commissions, then new Shares will be issued. The number of Shares shall be determined by the greater of the net asset value per Share or 95% of the market price. Otherwise, Shares generally will be purchased on the open market by the Plan Agent. Distributions subject to income tax (if any) are taxable whether or not shares are reinvested.

If your shares are in the name of a brokerage firm, bank, or other nominee, you can ask the firm or nominee to participate in the Plan on your behalf. If the nominee does not offer the Plan, you will need to request that your shares be re-registered in your name with the Fund’s transfer agent, American Stock Transfer & Trust Company, or you will not be able to participate.

The Plan Agent’s service fee for handling distributions will be paid by the Fund. Each participant will be charged their pro rata share of brokerage commissions on all open-market purchases.

Plan participants may withdraw from the Plan at any time by writing to the Plan Agent at the address noted on the following page. If you withdraw, you will receive shares in your name for all Shares credited to your account under the Plan. If a participant elects by written notice to the Plan Agent to have the Plan Agent sell part or all of his or her Shares and remit the proceeds, the Plan Agent is authorized to deduct a $5.00 fee plus brokerage commissions from the proceeds.

If you wish to participate in the Plan and your shares are held in your own name, you may complete the form on the following page and deliver it to the Plan Agent.

Any inquiries regarding the Plan can be directed to the Plan Agent, American Stock Transfer & Trust Company, at 1-866-439-6787.

Eaton Vance Tax-Managed Diversified Equity Income Fund

APPLICATION FOR PARTICIPATION IN DIVIDEND REINVESTMENT PLAN

This form is for shareholders who hold their common shares in their own names. If your common shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it will participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank, or nominee is unable to participate on your behalf, you should request that your common shares be re-registered in your own name which will enable your participation in the Plan.

The following authorization and appointment is given with the understanding that I may terminate it at any time by terminating my participation in the Plan as provided in the terms and conditions of the Plan.

Please print exact name on account:

Shareholder signature Date

Please sign exactly as your common shares are registered. All persons whose names appear on the share certificate must sign.

YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO RECEIVE YOUR DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.

This authorization form, when signed, should be mailed to the following address:

Eaton Vance Tax-Managed Diversified Equity Income Fund

c/o American Stock Transfer & Trust Company

P.O. Box 922

Wall Street Station

New York, NY 10269-0560

Number of Employees

The Fund is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company and has no employees.

Number of Shareholders

As of April 30, 2009, our records indicate that there are 141 registered shareholders and approximately 103,484 shareholders owning the Fund shares in street name, such as through brokers, banks, and financial intermediaries.

If you are a street name shareholder and wish to receive our reports directly, which contain important information about the Fund, please write or call:

Eaton Vance Distributors, Inc.

Two International Place

Boston, MA 02110

1-800-262-1122

New York Stock Exchange symbol

The New York Stock Exchange symbol is ETY.

Eaton Vance Tax-Managed Diversified Equity Income Fund

BOARD OF TRUSTEES’ ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS

Overview of the Contract Review Process

The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund’s board of trustees, including by a vote of a majority of the trustees who are not “interested persons” of the fund (“Independent Trustees”), cast in person at a meeting called for the purpose of considering such approval.

At a meeting of the Boards of Trustees (each a “Board”) of the Eaton Vance group of mutual funds (the “Eaton Vance Funds”) held on April 27, 2009, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Contract Review Committee of the Board (formerly the Special Committee), which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished for a series of meetings of the Contract Review Committee held in February, March and April 2009. Such information included, among other things, the following:

Information about Fees, Performance and Expenses


	•	An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds;
	•	An independent report comparing each fund’s total expense ratio and its components to comparable funds;
	•	An independent report comparing the investment performance of each fund to the investment performance of comparable funds over various time periods;
	•	Data regarding investment performance in comparison to relevant peer groups of funds and appropriate indices;
	•	Comparative information concerning fees charged by each adviser for managing other mutual funds and institutional accounts using investment strategies and techniques similar to those used in managing the fund;
	•	Profitability analyses for each adviser with respect to each fund;

Information about Portfolio Management


	•	Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed, and any changes in portfolio management processes and personnel;
	•	Information concerning the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through “soft dollar” benefits received in connection with the funds’ brokerage, and the implementation of a soft dollar reimbursement program established with respect to the funds;
	•	Data relating to portfolio turnover rates of each fund;
	•	The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes;

Information about each Adviser


	•	Reports detailing the financial results and condition of each adviser;
	•	Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts;
	•	Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes;
	•	Copies of or descriptions of each adviser’s proxy voting policies and procedures;
	•	Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions;
	•	Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates;

Other Relevant Information


	•	Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates;
	•	Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds’ administrator; and
	•	The terms of each advisory agreement.

Eaton Vance Tax-Managed Diversified Equity Income Fund

BOARD OF TRUSTEES’ ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS CONT’D

In addition to the information identified above, the Contract Review Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve-month period ended April 30, 2009, the Board met eighteen times and the Contract Review Committee, the Audit Committee, the Governance Committee, the Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee, each of which is a Committee comprised solely of Independent Trustees, met seven, five, six, six and six times, respectively. At such meetings, the Trustees received, among other things, presentations by the portfolio managers and other investment professionals of each adviser relating to the investment performance of each fund and the investment strategies used in pursuing the fund’s investment objective.

For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund’s investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.

The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each advisory and sub-advisory agreement.

Results of the Process

Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuance of the investment advisory agreement of Eaton Vance Tax-Managed Diversified Equity Income Fund (the “Fund”) with Eaton Vance Management (the “Adviser”), and the sub-advisory agreement with Rampart Investment Management Company, Inc. (“Rampart,” or the “Sub-adviser”) including the fee structure of each agreement, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the respective agreements. The Board accepted the recommendation of the Contract Review Committee as well as the factors considered and conclusions reached by the Contract Review Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement and the sub-advisory agreement for the Fund.

Nature, Extent and Quality of Services

In considering whether to approve the investment advisory and sub-advisory agreements of the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser and the Sub-adviser.

The Board considered the Adviser’s and the Sub-adviser’s management capabilities and investment process with respect to the types of investments held by the Fund, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Fund. With respect to the Adviser, the Board considered the Adviser’s responsibilities supervising the Sub-adviser and coordinating the Sub-adviser’s activities in implementing the Fund’s investment strategy. In particular, the Board evaluated the abilities and experience of such investment personnel in analyzing factors such as tax efficiency and special considerations relevant to investing in stocks and selling call options on various indexes. With respect to Rampart, the Board considered Rampart’s business reputation and its options strategy and its past experience in implementing this strategy. The Board also took into account the resources dedicated to portfolio management and other services, including the compensation paid to recruit and retain investment personnel, and the time and attention devoted to the Fund by senior management.

The Board also reviewed the compliance programs of the Adviser and Sub-adviser and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated the responses of the Adviser and its affiliates to requests from regulatory authorities such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.

The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large family of funds.

Eaton Vance Tax-Managed Diversified Equity Income Fund

BOARD OF TRUSTEES’ ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS CONT’D

The Board considered the Adviser’s recommendations for Board action and other steps taken in response to the unprecedented dislocations experienced in the capital markets over recent periods, including sustained periods of high volatility, credit disruption and government intervention. In particular, the Board considered the Adviser’s efforts and expertise with respect to each of the following matters as they relate to the Fund and/or other funds within the Eaton Vance family of funds: (i) negotiating and maintaining the availability of bank loan facilities and other sources of credit used for investment purposes or to satisfy liquidity needs; (ii) establishing the fair value of securities and other instruments held in investment portfolios during periods of market volatility and issuer-specific disruptions; and (iii) the ongoing monitoring of investment management processes and risk controls.

After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser and Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the respective investment advisory and sub-advisory agreements.

Fund Performance

The Board compared the Fund’s investment performance to a relevant universe of similarly managed funds identified by an independent data provider and appropriate benchmark indices. The Board reviewed comparative performance data for one-year period ended September 30, 2008 for the Fund. The Board concluded that the performance of the Fund was satisfactory.

Management Fees and Expenses

The Board reviewed contractual investment advisory fee rates, including any administrative fee rates, payable by the Fund (referred to as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the year ended September 30, 2008, as compared to a group of similarly managed funds selected by an independent data provider.

After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services and the Fund’s total expense ratio are reasonable.

Profitability

The Board reviewed the level of profits realized by the Adviser and relevant affiliates thereof, including the Sub-adviser, in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized with and without regard to revenue sharing or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser and its affiliates in connection with its relationship with the Fund, including the benefits of research services that may be available to the Adviser as a result of securities transactions affected for the Fund and other advisory clients.

The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates, including the Sub-adviser, are reasonable.

Economies of Scale

In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, including the Sub-adviser, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases and decreases. The Board also considered the fact that the Fund is not continuously offered, and noted that, at its request, the Adviser had agreed to add breakpoints to the Fund’s advisory fee effective May 1, 2008. Based upon the foregoing, the Board concluded that the benefits from economies of scale are currently being shared equitably by the Adviser and its affiliates, including the Sub-adviser, and the Fund and that, assuming reasonably foreseeable increases in the assets of the Fund, the structure of the advisory fee, which includes breakpoints at several asset levels, can be expected to cause the Adviser and its affiliates and the Fund to continue to share such benefits equitably.

Eaton Vance Tax-Managed Diversified Equity Income Fund

OFFICERS AND TRUSTEES


Officers Duncan W. Richardson President Michael A. Allison Vice President Thomas E. Faust Jr. Vice President and Trustee Walter A. Row, III Vice President Judith A. Saryan Vice President Barbara E. Campbell Treasurer Maureen A. Gemma Secretary and Chief Legal Officer Paul M. O’Neil Chief Compliance Officer		Trustees Ralph F. Verni Chairman Benjamin C. Esty Allen R. Freedman William H. Park Ronald A. Pearlman Helen Frame Peters Heidi L. Steiger Lynn A. Stout

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IMPORTANT NOTICE ABOUT PRIVACY

The Eaton Vance organization is committed to ensuring your financial privacy. Each of the financial institutions identified below has in effect the following policy (“Privacy Policy”) with respect to nonpublic personal information about its customers:


•	Only such information received from you, through application forms or otherwise, and information about your Eaton Vance fund transactions will be collected. This may include information such as name, address, social security number, tax status, account balances and transactions.

•	None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account). In the normal course of servicing a customer’s account, Eaton Vance may share information with unaffiliated third parties that perform various required services such as transfer agents, custodians and broker/dealers.

•	Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information.

•	We reserve the right to change our Privacy Policy at any time upon proper notification to you. Customers may want to review our Policy periodically for changes by accessing the link on our homepage: www.eatonvance.com.

Our pledge of privacy applies to the following entities within the Eaton Vance organization: the Eaton Vance Family of Funds, Eaton Vance Management, Eaton Vance Investment Counsel, Boston Management and Research, and Eaton Vance Distributors, Inc.

In addition, our Privacy Policy only applies to those Eaton Vance customers who are individuals and who have a direct relationship with us. If a customer’s account (i.e., fund shares) is held in the name of a third-party financial adviser/broker-dealer, it is likely that only such adviser’s privacy policies apply to the customer. This notice supersedes all previously issued privacy disclosures.

For more information about Eaton Vance’s Privacy Policy, please call 1-800-262-1122.

Investment Adviser and Administrator of
Eaton Vance Tax-Managed Diversified Equity Income Fund

Eaton Vance Management

Two International Place

Boston, MA 02110

Sub-Adviser of Eaton Vance Tax-Managed Diversified Equity Income Fund

Rampart Investment Management Company, Inc.

One International Place

Boston, MA 02110

Custodian

State Street Bank and Trust Company

200 Clarendon Street

Boston, MA 02116

Transfer Agent

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, NY 10038

Eaton Vance Tax-Managed Diversified Equity Income Fund

Two International Place

Boston, MA 02110


2897-6/09	CE-TMDEISRC

Item 2. Code of Ethics

The registrant has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122.

Item 3. Audit Committee Financial Expert

The registrant’s Board has designated William H. Park, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is the Vice Chairman of Commercial Industrial Finance Corp (specialty finance company). Previously, he served as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm) and as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (“UAM”) (a holding company owning institutional investment management firms).

Item 4. Principal Accountant Fees and Services

Not required in this filing

Item 5. Audit Committee of Listed registrants

Not required in this filing.

Item 6. Schedule of Investments

Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

The Board of Trustees of the Trust has adopted a proxy voting policy and procedure (the “Fund Policy”), pursuant to which the Trustees have delegated proxy voting responsibility to the Fund’s investment adviser and adopted the investment adviser’s proxy voting policies and procedures (the “Policies”) which are described below. The Trustees will review the Fund’s proxy voting records from time to time and will annually consider approving the Policies for the upcoming year. In the event that a conflict of interest arises between the Fund’s shareholders and the investment adviser, the administrator, or any of their affiliates or any affiliate of the Fund, the investment adviser will generally refrain from voting the proxies related to the companies giving rise to such conflict until it consults with the Board’s Contract Review Committee except as contemplated under the Fund Policy. The Board’s Contract Review Committee will instruct the investment adviser on the appropriate course of action.

The Policies are designed to promote accountability of a company’s management to its shareholders and to align the interests of management with those shareholders. An independent proxy voting service (“Agent”), currently Institutional Shareholder Services, Inc., has been retained to assist in the voting of proxies through the provision of vote analysis, implementation and recordkeeping and disclosure services. The investment adviser will generally vote proxies through the Agent. The Agent is required to vote all proxies and/or refer then back to the investment adviser pursuant to the Policies. It is generally the policy of the investment adviser to vote in accordance with the recommendation of the Agent. The Agent shall refer to the investment adviser proxies relating to mergers and restructurings, and the disposition of assets, termination, liquidation and mergers contained in mutual fund proxies. The investment adviser will normally vote against anti-takeover measures and other proposals designed to limit the ability of shareholders to act on possible transactions, except in the case of closed-end management investment companies. The investment adviser generally supports management on social and environmental proposals. The investment adviser may abstain from voting from time to time where it determines that the costs associated with voting a proxy outweighs the benefits derived from

exercising the right to vote or the economic effect on shareholders interests or the value of the portfolio holding is indeterminable or insignificant.

In addition, the investment adviser will monitor situations that may result in a conflict of interest between the Fund’s shareholders and the investment adviser, the administrator, or any of their affiliates or any affiliate of the Fund by maintaining a list of significant existing and prospective corporate clients. The investment adviser’s personnel responsible for reviewing and voting proxies on behalf of the Fund will report any proxy received or expected to be received from a company included on that list to the personal of the investment adviser identified in the Policies. If such personnel expects to instruct the Agent to vote such proxies in a manner inconsistent with the guidelines of the Policies or the recommendation of the Agent, the personnel will consult with members of senior management of the investment adviser to determine if a material conflict of interests exists. If it is determined that a material conflict does exist, the investment adviser will seek instruction on how to vote from the Contract Review Committee.

Information on how the Fund voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available (1) without charge, upon request, by calling 1-800-262-1122, and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not required in this filing.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

No such purchases this period.

Item 10. Submission of Matters to a Vote of Security Holders.

No Material Changes.

Item 11. 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 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 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits


(a)(1)		Registrant’s Code of Ethics – Not applicable (please see Item 2).

(a)(2)(i)		Treasurer’s Section 302 certification.

(a)(2)(ii)		President’s Section 302 certification.

(b)		Combined Section 906 certification.

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/ Duncan W. Richardson Duncan W. Richardson
		President


Date:		June 15, 2009

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/ Barbara E. Campbell Barbara E. Campbell
		Treasurer


Date:		June 15, 2009


By:		/s/ Duncan W. Richardson Duncan W. Richardson
		President


Date:		June 15, 2009

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