Table of Contents

 

 

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)

 

 

Deidre E. Walsh

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

October 31, 2021

Date of Reporting Period

 

 

 


Table of Contents

Item 1. Reports to Stockholders


Table of Contents

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Eaton Vance

Tax-Managed Diversified Equity Income Fund (ETY)

Annual Report

October 31, 2021

 

 

 

LOGO


Table of Contents

 

Commodity Futures Trading Commission Registration. The Commodity Futures Trading Commission (“CFTC”) has adopted regulations that subject registered investment companies and advisers to regulation by the CFTC if a fund invests more than a prescribed level of its assets in certain CFTC-regulated instruments (including futures, certain options and swap agreements) or markets itself as providing investment exposure to such instruments. The investment adviser has claimed an exclusion from the definition of “commodity pool operator” under the Commodity Exchange Act with respect to its management of the Fund. Accordingly, neither the Fund nor the adviser with respect to the operation of the Fund is subject to CFTC regulation. Because of its management of other strategies, the Fund’s adviser is registered with the CFTC as a commodity pool operator. The adviser is also registered as a commodity trading advisor.

Managed Distribution Plan. Pursuant to an exemptive order issued by the Securities and Exchange Commission (Order), the Fund is authorized to distribute long-term capital gains to shareholders more frequently than once per year. Pursuant to the Order, the Fund’s Board of Trustees approved a Managed Distribution Plan (MDP) pursuant to which the Fund makes monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share.

The Fund currently distributes monthly cash distributions equal to $0.0929 per share in accordance with the MDP. 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 and the Board 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.

The Fund may distribute more than its net investment income and net realized capital gains and, therefore, a distribution may include a return of capital. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.” With each distribution, the Fund will issue a notice to shareholders and a press release containing information about the amount and sources of the distribution and other related information. The amounts and sources of distributions contained in the notice and press release are only estimates and are not provided for tax purposes. The amounts and sources of the Fund’s distributions for tax purposes will be reported to shareholders on Form 1099-DIV for each calendar year.

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.


Table of Contents

Annual Report October 31, 2021

Eaton Vance

Tax-Managed Diversified Equity Income Fund

 

Table of Contents

  

Management’s Discussion of Fund Performance

     2  

Performance

     4  

Fund Profile

     5  

The Fund’s Investment Objectives, Principal Strategies and Principal Risks

     6  

Endnotes and Additional Disclosures

     10  

Financial Statements

     11  

Report of Independent Registered Public Accounting Firm

     23  

Federal Tax Information

     24  

Annual Meeting of Shareholders

     25  

Dividend Reinvestment Plan

     26  

Management and Organization

     28  

Privacy Notice

     31  

Important Notices

     33  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Management’s Discussion of Fund Performance1

 

 

Economic and Market Conditions

The 12-month period starting November 1, 2020 was notable for an equity rally that began in the opening month of the period and continued through period-end — except for a pause in January 2021 and a temporary retreat the following September. For the period as a whole, broad U.S. indexes generally posted strong double-digit returns as investors cheered the reopening of businesses that had been affected by the COVID-19 pandemic and the rollout of several highly effective vaccines.

The COVID-19 virus, however, continued to have a firm grip on the U.S. and global economies throughout the period. Disease rates advanced and declined with second and third waves of COVID-19 infections. Worker shortages led to global supply chain disruptions. From computer chips to shipping containers, scarcities of key items led to temporary factory shutdowns, empty store shelves, and car dealerships short of vehicles to sell. Those shortages — combined with high demand from consumers eager to spend money they had saved earlier in the pandemic — led to higher year-over-year inflation than the U.S. economy had seen in decades. Although U.S. Federal Reserve (the Fed) Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen expressed the view that inflation would likely be transitory, inflation became a key concern for investors during the period.

Still, investor optimism about a recovering economy drove stock prices up during most of the period. The only significant pullback occurred in September 2021. Unexpectedly weak job creation in August and the Fed’s announcement that it might start to taper its bond purchases — which had stimulated the economy earlier — combined to drive nearly every major U.S. stock index into negative territory for the month.

In the final month of the period, however, stock prices came roaring back, as earnings season brought news that a large majority of S&P 500® Index companies had beaten analysts’ expectations. For October 2021, the blue-chip Dow Jones Industrial Average® (DJIA) turned in its best performance since the previous March, and both the broad-market S&P 500® Index and the technology-laden Nasdaq Composite Index reported their best monthly performances since November 2020.

For the period as a whole, the S&P 500® Index returned 42.91%; the DJIA was up 37.73%; and the Nasdaq Composite Index rose 42.99%. Large-cap U.S. stocks, as measured by the Russell 1000® Index, underperformed their small-cap counterparts, as measured by the Russell 2000® Index. In the large-cap space, value and growth stocks delivered similar one-year returns, but in the small-cap space, value stocks strongly outperformed growth stocks during the period.

Fund Performance

For the 12-month period ended October 31, 2021, Eaton Vance Tax-Managed Diversified Equity Income Fund (the Fund) returned 33.85% at net asset value of its common shares (NAV), underperforming its primary benchmark, the S&P 500® Index (the Index), which returned 42.91%; but outperforming its secondary benchmark, the Cboe S&P 500 BuyWrite IndexSM, which returned 31.54%.

The Fund’s strategy of writing covered index call options (the options strategy) was the largest detractor from performance relative to the Index, as might generally be expected during a period of positive equity market performance. The options strategy, which is designed to help limit the Fund’s exposure to market volatility and provide current income, may be beneficial during periods of market weakness, but may detract from Fund performance versus the Index during periods of market strength. During this period, the Fund’s options strategy detracted from returns relative to the Index, as premium income was offset by a market rally that lasted for much of the period. Written calls, overall, ended in losses during the period.

The Fund’s common stock portfolio underperformed the Index and, thus, detracted from Fund performance relative to the Index as well. In particular, stock selections in the consumer discretionary and health care sectors, as well as stock selections and an overweight position relative to the Index in the consumer staples sector, hurt Fund performance versus the Index during the period.

In the consumer discretionary sector, the Fund’s underweight position in electric vehicle maker Tesla, Inc. (Tesla), which was added to the Index during the period, detracted from relative returns. Tesla’s stock performed strongly as vehicle deliveries and profits rose during the period. The stock received an additional boost in the final week of the period when car rental firm The Hertz Corp. announced it was purchasing 100,000 Tesla cars for its rental fleet.

In the health care sector, the Fund’s overweight position in biotechnology firm Vertex Pharmaceuticals, Inc. (Vertex), which develops drugs for serious diseases like cystic fibrosis and cancer, hurt relative returns as well. The stock price declined after Vertex reported a disappointing clinical trial for a liver treatment drug. By period-end, Vertex was sold from the Fund.

In contrast, stock selections in the financials and real estate sectors contributed to Fund performance versus the Index. In the financials sector, an overweight position in global financial services provider Goldman Sachs Group, Inc. (Goldman Sachs) aided returns relative to the Index. Record revenues for several quarters — driven by rising equity markets and increased income from trading and merger & acquisition services — drove Goldman Sachs’ stock price higher during the period.

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated net of management fees and other expenses by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested in accordance with the Fund’s Dividend Reinvestment Plan. Performance at market price will differ from performance at NAV due to variations in the Fund’s market price versus NAV, which may reflect factors such as fluctuations in supply and demand for Fund shares, changes in Fund distributions, shifting market expectations for the Fund’s future returns and distribution rates, and other considerations affecting the trading prices of closed-end funds. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance for periods less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month-end, please refer to eatonvance.com.

 

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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Management’s Discussion of Fund Performance1 — continued

 

 

Fund Distributions

Pursuant to an exemptive order issued by the Securities and Exchange Commission (the Order), the Fund is authorized to distribute long-term capital gains to shareholders more frequently than once per year. Pursuant to the Order, the Fund’s Board of Trustees approved a Managed Distribution Plan (MDP) pursuant to which the Fund makes monthly cash distributions to common shareholders. The Fund’s MDP had no effect on the Fund’s investment strategy during the most recent fiscal year and is not expected to have an effect in future periods, but distributions in excess of Fund returns will cause its per share NAV to erode. Investors should not draw any conclusions about the Fund’s investment performance from the amount of its distribution or from the terms of its MDP.

For the period from November 1, 2020 to July 31, 2021, the Fund made monthly distributions of $0.0843 per share and, for the period from August 1, 2021 to October 31, 2021, the Fund made monthly distributions of $0.0929 per share. The Fund’s distributions may be comprised of amounts characterized for federal income tax purposes as qualified and non-qualified ordinary dividends, capital gains and non-dividend distributions, also known as return of capital distributions. The federal income tax character of distributions is determined after the end of the calendar year and reported to shareholders on the Internal Revenue Service’s form 1099-DIV. For additional information, see Note 2 in the Notes to Financial Statements herein.

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated net of management fees and other expenses by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested in accordance with the Fund’s Dividend Reinvestment Plan. Performance at market price will differ from performance at NAV due to variations in the Fund’s market price versus NAV, which may reflect factors such as fluctuations in supply and demand for Fund shares, changes in Fund distributions, shifting market expectations for the Fund’s future returns and distribution rates, and other considerations affecting the trading prices of closed-end funds. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance for periods less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month-end, please refer to eatonvance.com.

 

  3  


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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Performance2

 

Portfolio Manager G.R. Nelson

 

% Average Annual Total Returns    Inception Date      One Year      Five Years      Ten Years  

Fund at NAV

     11/30/2006        33.85      14.64      12.84

Fund at Market Price

            52.78        16.88        14.88  

 

S&P 500® Index

            42.91      18.91      16.20

Cboe S&P 500 BuyWrite IndexSM

            31.54        7.88        7.88  
% Premium/Discount to NAV3                                
              1.74
Distributions4                                

Total Distributions per share for the period

            $ 1.037  

Distribution Rate at NAV

              7.76

Distribution Rate at Market Price

              7.63  

Growth of $10,000

 

This graph shows the change in value of a hypothetical investment of $10,000 in the Fund for the period indicated. For comparison, the same investment is shown in the indicated index.

 

LOGO

 

 

See Endnotes and Additional Disclosures in this report.

Past performance is no guarantee of future results. Returns are historical and are calculated net of management fees and other expenses by determining the percentage change in net asset value (NAV) or market price (as applicable) with all distributions reinvested in accordance with the Fund’s Dividend Reinvestment Plan. Performance at market price will differ from performance at NAV due to variations in the Fund’s market price versus NAV, which may reflect factors such as fluctuations in supply and demand for Fund shares, changes in Fund distributions, shifting market expectations for the Fund’s future returns and distribution rates, and other considerations affecting the trading prices of closed-end funds. Investment return and principal value will fluctuate so that shares, when sold, may be worth more or less than their original cost. Performance for periods less than or equal to one year is cumulative. Performance is for the stated time period only; due to market volatility, current Fund performance may be lower or higher than the quoted return. For performance as of the most recent month-end, please refer to eatonvance.com.

 

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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Fund Profile

 

 

Sector Allocation (% of total investments)5

 

 

LOGO

Top 10 Holdings (% of total investments)5

 

 

Microsoft Corp.

     8.2

Apple, Inc.

     6.3  

Alphabet, Inc., Class C

     5.5  

Amazon.com, Inc.

     5.1  

JPMorgan Chase & Co.

     2.8  

UnitedHealth Group, Inc.

     2.5  

Intuit, Inc.

     2.5  

Danaher Corp.

     2.4  

Bank of America Corp.

     2.4  

Eaton Corp. PLC

     2.2  

Total

     39.9
 

 

See Endnotes and Additional Disclosures in this report.

 

  5  


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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

The Fund’s Investment Objectives, Principal Strategies and Principal Risks6

 

 

Investment Objectives. The Fund’s primary investment objective is to provide current income and gains, with a secondary objective of capital appreciation.

Principal Strategies. Under normal market conditions, the Fund’s investment program consists of owning a diversified portfolio of common stocks. The Fund seeks to earn high levels of tax-advantaged income and gains by (1) investing in stocks that pay dividends that qualify for favorable federal income tax treatment and/or (2) writing (selling) stock index call options with respect to a portion of its common stock portfolio value.

Under normal market conditions, the Fund invests at least 80% of its total assets in a combination of (1) dividend-paying common stocks and (2) common stocks the value of which is subject to covered written index call options.

Typically, the Fund invests in common stocks of United States issuers. The Fund may invest up to 40% of its total assets in securities of foreign issuers, including securities evidenced by American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and European Depositary Receipts (“EDRs”). The Fund may invest up to 5% of its total assets in securities of emerging market issuers. The Fund expects that its assets will normally be invested across a broad range of industries and market sectors. The Fund may not invest 25% or more of its total assets in the securities of issuers in any single industry. The Fund may invest a portion of its assets in stocks of mid-capitalization companies.

The Fund writes call options on one or more broad-based stock indices that the Adviser believes collectively approximate the characteristics of its common stock portfolio (or that portion of its portfolio against which options are written) and that present attractive opportunities to earn options premiums. The Fund writes call options on the S&P 500® Index (the “S&P 500®”), and may also write call options on other domestic and foreign stock indices. Over time, the indices on which the Fund writes call options may vary as a result of changes in the availability and liquidity of various listed index options, changes in stock portfolio holdings, the Adviser’s evaluation of equity market conditions and other factors. Writing index call options involves a tradeoff between the option premiums received and reduced participation in potential future stock price appreciation.

The Fund may consider investments in stocks that pay dividends that qualify for federal income taxation at rates applicable to long-term capital gains, and may seek to enhance the level of tax-advantaged dividend income it receives by engaging in dividend capture trading. In a dividend capture trade, the Fund sells a stock on or shortly after the stock’s ex-dividend date and uses the sale proceeds to purchase one or more other stocks that are expected to pay dividends before the next dividend payment on the stock being sold. Through this practice, the Fund may receive more dividend payments over a given time period than if it held a single stock. By complying with applicable holding period and other requirements while engaging in dividend capture trading, the Fund may enhance the level of tax-advantaged dividend income it receives. The use of dividend capture trading strategies will expose the Fund to increased trading costs and potentially higher short-term gain or loss. The Fund may use derivatives to manage exposure to certain sectors and/or markets in connection with its use of dividend capture trading. The Fund may buy and sell equity index futures contracts for this purpose, but may also engage in other types of derivatives to manage such exposures.

Principal Risks

Market Discount Risk. As with any security, the market value of the common shares may increase or decrease from the amount initially paid for the common shares. The Fund’s common shares have traded both at a premium and at a discount relative to NAV. The shares of closed-end management investment companies frequently trade at a discount from their NAV. This is a risk separate and distinct from the risk that the Fund’s NAV may decrease.

Market Risk. The value of investments held by the Fund may increase or decrease in response to economic, political, financial, public health crises (such as epidemics or pandemics) or other disruptive events (whether real, expected or perceived) in the U.S. and global markets. These events may negatively impact broad segments of businesses and populations and may exacerbate pre-existing risks to the Fund. The frequency and magnitude of resulting changes in the value of the Fund’s investments cannot be predicted. Certain securities and other investments held by the Fund may experience increased volatility, illiquidity, or other potentially adverse effects in reaction to changing market conditions. Monetary and/or fiscal actions taken by U.S. or foreign governments to stimulate or stabilize the global economy may not be effective and could lead to high market volatility. No active trading market may exist for certain investments held by the Fund, which may impair the ability of the Fund to sell or to realize the current valuation of such investments in the event of the need to liquidate such assets.

Equity Securities Risk. The value of equity securities and related instruments may decline in response to adverse changes in the economy or the economic outlook; deterioration in investor sentiment; interest rate, currency, and commodity price fluctuations; adverse geopolitical, social or environmental developments; issuer and sector-specific considerations; unexpected trading activity among retail investors; or other factors. Market conditions may affect certain types of stocks to a greater extent than other types of stocks. If the stock market declines in value, the value of the Fund’s equity securities will also likely decline. Although prices can rebound, there is no assurance that values will return to previous levels.

Option Strategy Risk. The Fund’s option strategy seeks to take advantage of, and its effectiveness is dependent on, a general excess of option price-implied volatilities for the S&P 500® over realized index volatilities. This market observation is often attributed to an excess of natural buyers over natural sellers of S&P 500® index options. There can be no assurance that this imbalance will apply in the future over specific periods or generally. It is possible that the imbalance could decrease or be eliminated by actions of investors, including the Fund, that employ strategies seeking to take advantage of the imbalance, which could have an adverse effect on the Fund’s ability to achieve its investment objective.

Risk of Selling Index Call Options. The purchaser of an index call option has the right to any appreciation in the value of the index over the exercise price of the call option as of the valuation date of the option. Because their exercise is settled in cash, sellers of index call options such as the Fund cannot provide in advance for their potential settlement obligations by acquiring and holding the underlying securities. The Fund intends to mitigate the risks of its options activities by holding a diversified portfolio of stocks that the Fund’s investment adviser believes collectively approximate the characteristics of the indices on which options are written. The Fund will not, however, hold stocks that fully replicate the indices on which it writes call options. Due to tax considerations, the Fund intends to generally

 

 

See Endnotes and Additional Disclosures in this report.

 

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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

The Fund’s Investment Objectives, Principal Strategies and Principal Risks6 — continued

 

 

limit the overlap between its stock holdings (and any subset thereof) and each index on which it has outstanding options positions to less than 70% on an ongoing basis. The Fund’s stock holdings will normally include stocks not included in the indices on which it writes call options. Consequently, the Fund bears the risk that the performance of its stock portfolio will vary from the performance of the indices on which it writes call options. As the writer of index call options, the Fund will forgo, during the option’s life, the opportunity to profit from increases in the value of the applicable index above the sum of the option premium received and the exercise price of the call option, but retains the risk of loss, minus the option premium received, should the value of the applicable index decline. When a call option is exercised, the Fund will be required to deliver an amount of cash determined by the excess of the value of the applicable index at contract termination over the exercise price of the option. Thus, the exercise of index call options sold by the Fund may require the Fund to sell portfolio securities to generate cash at inopportune times or for unattractive prices. The trading price of options may be adversely affected if the market for such options becomes less liquid or smaller. The Fund may close out a call option by buying the option instead of letting it expire or be exercised. There can be no assurance that a liquid market will exist when the Fund seeks to close out a call option position by buying the option.

Derivatives Risk. The Fund’s exposure to derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other investments. The use of derivatives can lead to losses because of adverse movements in the price or value of the security, instrument, index, currency, commodity, economic indicator or event underlying a derivative (“reference instrument”), due to failure of a counterparty or due to tax or regulatory constraints. Derivatives may create leverage in the Fund, which represents a non-cash exposure to the underlying reference instrument. Leverage can increase both the risk and return potential of the Fund. Derivatives risk may be more significant when derivatives are used to enhance return or as a substitute for a cash investment position, rather than solely to hedge the risk of a position held by the Fund. Use of derivatives involves the exercise of specialized skill and judgment, and a transaction may be unsuccessful in whole or in part because of market behavior or unexpected events. Changes in the value of a derivative (including one used for hedging) may not correlate perfectly with the underlying reference instrument. Derivative instruments traded in over-the-counter markets may be difficult to value, may be illiquid, and may be subject to wide swings in valuation caused by changes in the value of the underlying reference instrument. If a derivative’s counterparty is unable to honor its commitments, the value of Fund shares may decline and the Fund could experience delays in the return of collateral or other assets held by the counterparty. The loss on derivative transactions may substantially exceed the initial investment, particularly when there is no stated limit on the Fund’s use of derivatives. A derivative investment also involves the risks relating to the reference instrument underlying the investment.

Tax-Sensitive Investing Risk. The Fund may hold a security in order to achieve more favorable tax-treatment or to sell a security in order to create tax losses. The Fund’s utilization of various tax-management techniques may be curtailed or eliminated by tax legislation, regulation or interpretations. The Fund may not be able to minimize taxable distributions to shareholders and a portion of the Fund’s distributions may be taxable.

Foreign Investment Risk. Foreign investments can be adversely affected by political, economic and market developments abroad, including the imposition of economic and other sanctions by the United States or another

country. There may be less publicly available information about foreign issuers because they may not be subject to reporting practices, requirements or regulations comparable to those to which United States companies are subject. Foreign markets may be smaller, less liquid and more volatile than the major markets in the United States, and as a result, Fund share values may be more volatile. Trading in foreign markets typically involves higher expense than trading in the United States. The Fund may have difficulties enforcing its legal or contractual rights in a foreign country. Depositary receipts are subject to many of the risks associated with investing directly in foreign instruments.

Emerging Markets Investment Risk. Investment markets within emerging market countries are typically smaller, less liquid, less developed and more volatile than those in more developed markets like the United States, and may be focused in certain economic sectors. Emerging market securities often involve greater risks than developed market securities. The information available about an emerging market issuer may be less reliable than for comparable issuers in more developed capital markets.

Currency Risk. Exchange rates for currencies fluctuate daily. The value of foreign investments may be affected favorably or unfavorably by changes in currency exchange rates in relation to the U.S. dollar. Currency markets generally are not as regulated as securities markets and currency transactions are subject to settlement, custodial and other operational risks.

Dividend Capture Trading Risk. The use of dividend capture strategies will expose the Fund to higher portfolio turnover, increased trading costs and potential for capital loss or gain, particularly in the event of significant short-term price movements of stocks subject to dividend capture trading.

Liquidity Risk. The Fund is exposed to liquidity risk when trading volume, lack of a market maker or trading partner, large position size, market conditions, or legal restrictions impair its ability to sell particular investments or to sell them at advantageous market prices. Consequently, the Fund may have to accept a lower price to sell an investment or continue to hold it or keep the position open, sell other investments to raise cash or abandon an investment opportunity, any of which could have a negative effect on the Fund’s performance. These effects may be exacerbated during times of financial or political stress.

Leverage Risk. Certain Fund transactions may give rise to leverage. Leverage can result from a non-cash exposure to an underlying reference instrument. Leverage can increase both the risk and return potential of the Fund. Leverage can also result from borrowings or issuance of preferred shares. The Fund is required to segregate liquid assets or otherwise cover the Fund’s obligation created by a transaction that may give rise to leverage. The use of leverage may cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage may cause the Fund’s NAV to be more volatile than if it had not been leveraged, as certain types of leverage may exaggerate the effect of any increase or decrease in the Fund’s portfolio securities. The loss on leveraged investments may substantially exceed the initial investment.

Risks Associated with Active Management. The success of the Fund’s investment strategy depends on portfolio management’s successful application of analytical skills and investment judgment. Active management involves subjective decisions.

 

 

See Endnotes and Additional Disclosures in this report.

 

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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

The Fund’s Investment Objectives, Principal Strategies and Principal Risks6 — continued

 

 

Recent Market Conditions. An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines, cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this coronavirus has resulted in a substantial economic downturn, which may continue for an extended period of time. Health crises caused by outbreaks of disease, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, as well as the economies of individual countries and industries, and could continue to affect the market in significant and unforeseen ways. Other epidemics and pandemics that may arise in the future may have similar effects. For example, a global pandemic or other widespread health crisis could cause substantial market volatility and exchange trading suspensions and closures. In addition, the increasing interconnectedness of markets around the world may result in many markets being affected by events or conditions in a single country or region or events affecting a single or small number of issuers. The coronavirus outbreak and public and private sector responses thereto have led to large portions of the populations of many countries working from home for indefinite periods of time, temporary or permanent layoffs, disruptions in supply chains, and lack of availability of certain goods. The impact of such responses could adversely affect the information technology and operational systems upon which the Fund and the Fund’s service providers rely, and could otherwise disrupt the ability of the employees of the Fund’s service providers to perform critical tasks relating to the Fund. Any such impact could adversely affect the Fund’s performance, or the performance of the securities in which the Fund invests and may lead to losses on your investment in the Fund.

Cybersecurity Risk. With the increased use of technologies by Fund service providers to conduct business, such as the Internet, the Fund is susceptible to operational, information security and related risks. In general, cyber incidents can result from deliberate attacks or unintentional events. Cybersecurity failures by or breaches of the Fund’s investment adviser or administrator and other service providers (including, but not limited to, the custodian or transfer agent), and the issuers of securities in which the Fund invests, may disrupt and otherwise adversely affect their business operations. This may result in financial losses to the Fund, impede Fund trading, interfere with the Fund’s ability to calculate its NAV, interfere with Fund shareholders’ ability to transact business or cause violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs.

General Fund Investing Risks. The Fund is not a complete investment program and there is no guarantee that the Fund will achieve its investment objective. It is possible to lose money by investing in the Fund. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Potential Conflicts of Interest

As a diversified global financial services firm, Morgan Stanley, the parent company of the investment adviser, engages in a broad spectrum of activities where Morgan Stanley’s interests or the interests of its clients may conflict with the interests of the Fund. Morgan Stanley advises clients and

sponsors, manages or advises other investment funds and investment programs, accounts and businesses (collectively, together with any new or successor Morgan Stanley funds, programs, accounts or businesses, (other than funds, programs, accounts or businesses sponsored, managed, or advised by former direct or indirect subsidiaries of Eaton Vance Corp. (“Eaton Vance Investment Accounts”)), the “MS Investment Accounts,” and, together with the Eaton Vance Investment Accounts, the ‘‘Affiliated Investment Accounts’’) with a wide variety of investment objectives that in some instances may overlap or conflict with a Fund’s investment objectives and present conflicts of interest. There is no assurance that conflicts of interest will be resolved in favor of Fund shareholders and, in fact, they may not be. Conflicts of interest not described below may also exist.

Material Non-public Information. It is expected that confidential or material non-public information regarding an investment or potential investment opportunity may become available to the investment adviser. If such information becomes available, the investment adviser may be precluded (including by applicable law or internal policies or procedures) from pursuing an investment or disposition opportunity with respect to such investment or investment opportunity. Morgan Stanley has established certain information barriers and other policies to address the sharing of information between different businesses within Morgan Stanley.

Investments by Morgan Stanley and its Affiliated Investment Accounts. In serving in multiple capacities to Affiliated Investment Accounts, Morgan Stanley, including the investment adviser and its investment teams, may have obligations to other clients or investors in Affiliated Investment Accounts, the fulfillment of which may not be in the best interests of a Fund or its shareholders. A Fund’s investment objectives may overlap with the investment objectives of certain Affiliated Investment Accounts. As a result, the members of an investment team may face conflicts in the allocation of investment opportunities among a Fund and other investment funds, programs, accounts and businesses advised by or affiliated with the investment adviser. Certain Affiliated Investment Accounts may provide for higher management or incentive fees or greater expense reimbursements or overhead allocations, all of which may contribute to this conflict of interest and create an incentive for the investment adviser to favor such other accounts. To seek to reduce potential conflicts of interest and to attempt to allocate investment opportunities in a fair and equitable manner, the investment adviser has implemented allocation policies and procedures. These policies and procedures are intended to give all clients of the investment adviser, including the Fund(s), fair access to investment opportunities, consistent with the requirements of organizational documents, investment strategies, applicable laws and regulations, and the fiduciary duties of the investment adviser.

Investments by Separate Investment Departments. The entities and individuals that provide investment-related services for the Fund and certain other Eaton Vance Investment Accounts (the “Eaton Vance Investment Department”) may be different from the entities and individuals that provide investment-related services to MS Investment Accounts (the “MS Investment Department” and, together with the Eaton Vance Investment Department, the “Investment Departments”). Although Morgan Stanley has implemented information barriers between the Investment Departments in accordance with internal policies and procedures, each Investment Department may engage in discussions and share information and resources with the other Investment Department on certain investment-related matters. A MS Investment Account could trade in advance of a Fund (and vice versa), might complete trades more quickly and efficiently than a

 

 

See Endnotes and Additional Disclosures in this report.

 

  8  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

The Fund’s Investment Objectives, Principal Strategies and Principal Risks6 — continued

 

 

Fund, and/or achieve different execution than a Fund on the same or similar investments made contemporaneously.

Morgan Stanley Trading and Principal Investing Activities. Notwithstanding anything to the contrary herein, Morgan Stanley will generally conduct its sales and trading businesses, publish research and analysis, and render investment advice without regard for a Fund’s holdings, although these activities could have an adverse impact on the value of one or more of the Fund’s investments, or could cause Morgan Stanley to have an interest in one or more portfolio investments that is different from, and potentially adverse to, that of a Fund.

Morgan Stanley’s Investment Banking and Other Commercial Activities. Morgan Stanley advises clients on a variety of mergers, acquisitions, restructuring, bankruptcy and financing transactions. Morgan Stanley may act as an advisor to clients, including other investment funds that may compete with a Fund and with respect to investments that a Fund may hold. Morgan Stanley may give advice and take action with respect to any of its clients or proprietary accounts that may differ from the advice given, or may involve an action of a different timing or nature than the action taken, by a Fund.

General Process for Potential Conflicts. All of the transactions described above involve the potential for conflicts of interest between the investment adviser, related persons of the investment adviser and/or their clients. The Investment Advisers Act of 1940, as amended (the “Advisers Act”), the Investment Company Act of 1940, as amended (the “1940 Act”), and the Employee Retirement Income Security Act, as amended (“ERISA”) impose certain requirements designed to decrease the possibility of conflicts of interest between an investment adviser and its clients. In some cases, transactions may be permitted subject to fulfillment of certain conditions. Certain other transactions may be prohibited. In addition, the investment adviser has instituted policies and procedures designed to prevent conflicts of interest from arising and, when they do arise, to ensure that it effects transactions for clients in a manner that is consistent with its fiduciary duty to its clients and in accordance with applicable law.

 

 

See Endnotes and Additional Disclosures in this report.

 

  9  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Endnotes and Additional Disclosures

 

1 

The views expressed in this report are those of the portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance and the Fund(s) disclaim any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as “forward-looking statements.” The Fund’s actual future results may differ significantly from those stated in any forward-looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund’s filings with the Securities and Exchange Commission.

 

2 

S&P 500® Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. S&P Dow Jones Indices are a product of S&P Dow Jones Indices LLC (“S&P DJI”) and have been licensed for use. S&P® and S&P 500® are registered trademarks of S&P DJI; Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); S&P DJI, Dow Jones and their respective affiliates do not sponsor, endorse, sell or promote the Fund, will not have any liability with respect thereto and do not have any liability for any errors, omissions, or interruptions of the S&P Dow Jones Indices. Cboe S&P 500 BuyWrite IndexSM measures the performance of a hypothetical buy-write strategy on the S&P 500® Index. Unless otherwise stated, index returns do not reflect the effect of any applicable sales charges, commissions, expenses, taxes or leverage, as applicable. It is not possible to invest directly in an index.

 

3 

The shares of the Fund often trade at a discount or premium to their net asset value. The discount or premium may vary over time and may be higher or lower than what is quoted in this report. For up-to-date premium/discount information, please refer to https://funds.eatonvance.com/closed-end-fund-prices.php.

 

4 

The Distribution Rate is based on the Fund’s last regular distribution per share in the period (annualized) divided by the Fund’s NAV or market price at the end of the period. The Fund’s distributions may be comprised of amounts characterized for federal income tax purposes as qualified and non-qualified ordinary dividends, capital gains and nondividend distributions, also known as return of capital. For additional information about nondividend distributions, please refer to Eaton Vance Closed-End Fund Distribution Notices (19a) posted on our website, eatonvance.com. The Fund will determine the federal income tax character of distributions paid to a shareholder after the end of the calendar year. This is reported on the IRS form 1099-DIV and provided to the shareholder shortly after each year-end. For information about the tax character of distributions made in prior calendar years, please refer to Performance-Tax Character of Distributions on the Fund’s webpage available at eatonvance.com. In recent years, a significant portion of the Fund’s distributions has been characterized as a return of capital. The Fund’s distributions are determined by the investment adviser based on its current assessment

  of the Fund’s long-term return potential. Fund distributions may be affected by numerous factors including changes in Fund performance, the cost of financing for leverage, portfolio holdings, realized and projected returns, and other factors. As portfolio and market conditions change, the rate of distributions paid by the Fund could change.

 

5 

Depictions do not reflect the Fund’s option positions. Excludes cash and cash equivalents.

 

6 

The information contained herein is provided for informational purposes only and does not constitute a solicitation of an offer to buy or sell Fund shares. Common shares of the Fund are available for purchase and sale only at current market prices in secondary market trading.

Fund profile subject to change due to active management.

Additional Information

Dow Jones Industrial Average® is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. Nasdaq Composite Index is a market capitalization-weighted index of all domestic and international securities listed on Nasdaq. Source: Nasdaq, Inc. The information is provided by Nasdaq (with its affiliates, are referred to as the “Corporations”) and Nasdaq’s third party licensors on an “as is” basis and the Corporations make no guarantees and bear no liability of any kind with respect to the information or the Fund. Russell 1000® Index is an unmanaged index of 1,000 U.S. large-cap stocks. Russell 2000® Index is an unmanaged index of 2,000 U.S. small-cap stocks.

 

 

  10  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Portfolio of Investments

 

 

Common Stocks — 100.4%

 

Security   Shares     Value  
Aerospace & Defense — 0.7%  

Huntington Ingalls Industries, Inc.

    75,203     $ 15,245,904  
      $ 15,245,904  
Automobiles — 2.3%  

General Motors Co.(1)

    512,207     $ 27,879,427  

Tesla, Inc.(1)

    20,952       23,340,528  
      $ 51,219,955  
Banks — 7.9%  

Bank of America Corp.(2)

    1,142,362     $ 54,582,056  

JPMorgan Chase & Co.(2)

    376,013       63,880,849  

M&T Bank Corp.

    112,767       16,590,281  

Wells Fargo & Co.(2)

    777,093       39,756,078  
      $ 174,809,264  
Beverages — 2.2%  

Constellation Brands, Inc., Class A

    74,099     $ 16,065,404  

PepsiCo, Inc.

    206,047       33,297,195  
      $ 49,362,599  
Building Products — 1.2%  

Johnson Controls International PLC

    361,689     $ 26,537,122  
      $ 26,537,122  
Capital Markets — 2.9%  

Charles Schwab Corp. (The)

    393,787     $ 32,302,348  

Goldman Sachs Group, Inc. (The)(2)

    77,749       32,137,549  
      $ 64,439,897  
Containers & Packaging — 0.8%  

Packaging Corp. of America

    130,254     $ 17,892,992  
      $ 17,892,992  
Diversified Telecommunication Services — 1.1%  

Verizon Communications, Inc.(2)

    447,674     $ 23,722,245  
      $ 23,722,245  
Electric Utilities — 1.0%  

NextEra Energy, Inc.(2)

    256,785     $ 21,911,464  
      $ 21,911,464  
Security   Shares     Value  
Electrical Equipment — 2.2%  

Eaton Corp. PLC(2)

    301,726     $ 49,712,376  
      $ 49,712,376  
Entertainment — 4.6%  

Live Nation Entertainment, Inc.(1)

    208,245     $ 21,063,982  

Netflix, Inc.(1)(2)

    63,274       43,678,675  

Walt Disney Co. (The)(1)(2)

    212,405       35,911,313  
      $ 100,653,970  
Equity Real Estate Investment Trusts (REITs) — 2.8%  

EastGroup Properties, Inc.(2)

    183,176     $ 36,228,549  

Mid-America Apartment Communities, Inc.

    121,757       24,863,997  
      $ 61,092,546  
Food Products — 1.0%  

Mondelez International, Inc., Class A(2)

    352,867     $ 21,433,142  
      $ 21,433,142  
Health Care Equipment & Supplies — 3.6%  

Danaher Corp.(2)

    175,472     $ 54,706,905  

Intuitive Surgical, Inc.(1)

    67,669       24,437,306  
      $ 79,144,211  
Health Care Providers & Services — 2.5%  

UnitedHealth Group, Inc.(2)

    121,757     $ 56,065,446  
      $ 56,065,446  
Hotels, Restaurants & Leisure — 1.9%  

Hilton Worldwide Holdings, Inc.(1)

    139,861     $ 20,132,991  

Starbucks Corp.

    204,122       21,651,221  
      $ 41,784,212  
Household Products — 1.9%  

Procter & Gamble Co. (The)(2)

    298,988     $ 42,752,294  
      $ 42,752,294  
Insurance — 1.0%  

MetLife, Inc.

    350,946     $ 22,039,409  
      $ 22,039,409  
Interactive Media & Services — 5.5%  

Alphabet, Inc., Class C(1)(2)

    41,357     $ 122,640,461  
      $ 122,640,461  
 

 

  11   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Portfolio of Investments — continued

 

 

Security   Shares     Value  
Internet & Direct Marketing Retail — 5.2%  

Amazon.com, Inc.(1)(2)

    34,096     $ 114,986,373  
      $ 114,986,373  
IT Services — 4.2%  

Accenture PLC, Class A(2)

    132,499     $ 47,539,316  

Visa, Inc., Class A(2)

    211,176       44,720,742  
      $ 92,260,058  
Life Sciences Tools & Services — 3.7%  

Charles River Laboratories International, Inc.(1)

    50,314     $ 22,574,885  

Thermo Fisher Scientific, Inc.(2)

    68,041       43,074,716  

Waters Corp.(1)

    46,554       17,110,923  
      $ 82,760,524  
Machinery — 1.5%  

Caterpillar, Inc.(2)

    75,362     $ 15,374,601  

PACCAR, Inc.

    187,922       16,841,570  
      $ 32,216,171  
Metals & Mining — 1.2%  

Franco-Nevada Corp.

    189,797     $ 27,108,706  
      $ 27,108,706  
Oil, Gas & Consumable Fuels — 3.3%  

Chevron Corp.

    279,036     $ 31,946,832  

EOG Resources, Inc.(2)

    290,486       26,858,335  

Pioneer Natural Resources Co.

    70,764       13,231,453  
      $ 72,036,620  
Pharmaceuticals — 2.6%  

Eli Lilly & Co.

    151,696     $ 38,646,073  

Zoetis, Inc.

    82,365       17,807,313  
      $ 56,453,386  
Road & Rail — 2.0%  

CSX Corp.(2)

    1,246,213     $ 45,075,524  
      $ 45,075,524  
Semiconductors & Semiconductor Equipment — 3.9%  

Micron Technology, Inc.

    289,709     $ 20,018,892  

NVIDIA Corp.

    75,254       19,240,190  

Texas Instruments, Inc.(2)

    254,257       47,668,102  
      $ 86,927,184  
Security   Shares     Value  
Software — 12.9%  

Adobe, Inc.(1)

    36,418     $ 23,684,810  

Intuit, Inc.(2)

    89,527       56,043,007  

Microsoft Corp.(2)

    555,067       184,071,319  

Palantir Technologies, Inc., Class A(1)

    864,888       22,383,301  
      $ 286,182,437  
Specialty Retail — 2.5%  

Best Buy Co., Inc.(2)

    146,823     $ 17,947,644  

Lowe’s Cos., Inc.(2)

    156,250       36,534,375  
      $ 54,482,019  
Technology Hardware, Storage & Peripherals — 6.4%  

Apple, Inc.(2)

    948,984     $ 142,157,803  
      $ 142,157,803  
Textiles, Apparel & Luxury Goods — 2.5%  

Capri Holdings, Ltd.(1)

    293,647     $ 15,633,766  

NIKE, Inc., Class B(2)

    235,815       39,449,492  
      $ 55,083,258  
Tobacco — 1.4%  

Philip Morris International, Inc.

    318,205     $ 30,083,101  
      $ 30,083,101  

Total Common Stocks
(identified cost $1,177,233,868)

 

  $ 2,220,272,673  
Short-Term Investments — 1.1%

 

Description   Units     Value  

Eaton Vance Cash Reserves Fund, LLC, 0.09%(3)

    25,003,342     $ 25,003,342  

Total Short-Term Investments
(identified cost $25,003,342)

 

  $ 25,003,342  

Total Investments — 101.5%
(identified cost $1,202,237,210)

 

  $ 2,245,276,015  

Total Written Call Options — (1.4)%
(premiums received $10,676,649)

 

  $ (30,239,020

Other Assets, Less Liabilities — (0.1)%

 

  $ (3,112,487

Net Assets — 100.0%

 

  $ 2,211,924,508  
 

 

  12   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Portfolio of Investments — continued

 

 

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

 

(1) 

Non-income producing security.

 

(2) 

Security (or a portion thereof) has been pledged as collateral for written options.

 

(3) 

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 October 31, 2021.

 

Written Call Options — (1.4)%

 

Exchange-Traded Options — (1.4)%

 

Description   Number of
Contracts
    Notional
Amount
    Exercise
Price
    Expiration
Date
    Value  

S&P 500 Index

    192     $ 88,423,296     $ 4,390       11/1/21     $ (4,127,040

S&P 500 Index

    193       88,883,834       4,350       11/3/21       (4,909,920

S&P 500 Index

    192       88,423,296       4,450       11/5/21       (3,021,120

S&P 500 Index

    192       88,423,296       4,450       11/8/21       (3,052,800

S&P 500 Index

    193       88,883,834       4,390       11/10/21       (4,215,120

S&P 500 Index

    193       88,883,834       4,490       11/12/21       (2,497,420

S&P 500 Index

    194       89,344,372       4,500       11/15/21       (2,390,080

S&P 500 Index

    192       88,423,296       4,560       11/17/21       (1,497,600

S&P 500 Index

    190       87,502,220       4,585       11/19/21       (1,221,700

S&P 500 Index

    190       87,502,220       4,580       11/22/21       (1,328,100

S&P 500 Index

    190       87,502,220       4,610       11/24/21       (1,028,850

S&P 500 Index

    191       87,962,758       4,620       11/26/21       (949,270

Total

 

  $ (30,239,020
 

 

  13   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Statement of Assets and Liabilities

 

 

Assets    October 31, 2021  

Unaffiliated investments, at value (identified cost, $1,177,233,868)

   $ 2,220,272,673  

Affiliated investment, at value (identified cost, $25,003,342)

     25,003,342  

Dividends receivable

     1,720,335  

Dividends receivable from affiliated investment

     772  

Receivable for investments sold

     7,137,419  

Receivable for premiums on written options

     771,318  

Receivable from the transfer agent

     689,854  

Tax reclaims receivable

     129,923  

Total assets

   $ 2,255,725,636  
Liabilities

 

Written options outstanding, at value (premiums received, $10,676,649)

   $ 30,239,020  

Payable for investments purchased

     6,859,244  

Payable for closed written options

     4,269,072  

Payable to affiliates:

  

Investment adviser fee

     1,815,687  

Trustees’ fees

     8,487  

Accrued expenses

     609,618  

Total liabilities

   $ 43,801,128  

Net Assets

   $ 2,211,924,508  
Sources of Net Assets

 

Common shares, $0.01 par value, unlimited number of shares authorized, 154,067,440 shares issued and outstanding

   $ 1,540,674  

Additional paid-in capital

     1,169,394,851  

Distributable earnings

     1,040,988,983  

Net Assets

   $ 2,211,924,508  
Net Asset Value

 

($2,211,924,508 ÷ 154,067,440 common shares issued and outstanding)

   $ 14.36  

 

  14   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Statement of Operations

 

 

Investment Income   

Year Ended

October 31, 2021

 

Dividends (net of foreign taxes, $172,354)

   $ 30,000,624  

Dividends from affiliated investment

     13,946  

Total investment income

   $ 30,014,570  
Expenses         

Investment adviser fee

   $ 20,261,125  

Trustees’ fees and expenses

     98,928  

Custodian fee

     487,268  

Transfer and dividend disbursing agent fees

     18,837  

Legal and accounting services

     143,088  

Printing and postage

     603,303  

Miscellaneous

     144,720  

Total expenses

   $ 21,757,269  

Net investment income

   $ 8,257,301  
Realized and Unrealized Gain (Loss)         

Net realized gain (loss) —

 

Investment transactions

   $ 193,232,276  

Investment transactions — affiliated investment

     177  

Written options

     (44,211,168

Foreign currency transactions

     14,011  

Net realized gain

   $ 149,035,296  

Change in unrealized appreciation (depreciation) —

 

Investments

   $ 452,993,162  

Written options

     (33,290,587

Foreign currency

     (4,198

Net change in unrealized appreciation (depreciation)

   $ 419,698,377  

Net realized and unrealized gain

   $ 568,733,673  

Net increase in net assets from operations

   $ 576,990,974  

 

  15   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Statements of Changes in Net Assets

 

 

     Year Ended October 31,  
Increase (Decrease) in Net Assets    2021      2020  

From operations —

     

Net investment income

   $ 8,257,301      $ 14,068,269  

Net realized gain (loss)

     149,035,296        (65,075,630

Net change in unrealized appreciation (depreciation)

     419,698,377        162,417,365  

Net increase in net assets from operations

   $ 576,990,974      $ 111,410,004  

Distributions to shareholders

   $ (75,925,108    $ (14,097,789

Tax return of capital to shareholders

   $ (82,017,375    $ (139,158,730

Capital share transactions —

     

Proceeds from shelf offering, net of offering costs (see Note 5)

   $ 29,036,373      $ 16,857,924  

Reinvestment of distributions

     4,212,005        2,252,483  

Net increase in net assets from capital share transactions

   $ 33,248,378      $ 19,110,407  

Net increase (decrease) in net assets

   $ 452,296,869      $ (22,736,108
Net Assets                  

At beginning of year

   $ 1,759,627,639      $ 1,782,363,747  

At end of year

   $ 2,211,924,508      $ 1,759,627,639  

 

  16   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Financial Highlights

 

 

     Year Ended October 31,  
      2021      2020      2019      2018     2017  

Net asset value — Beginning of year

   $ 11.600      $ 11.870      $ 11.860      $ 11.960     $ 11.140  
Income (Loss) From Operations                                            

Net investment income(1)

   $ 0.054      $ 0.093      $ 0.101      $ 0.082     $ 0.100  

Net realized and unrealized gain

     3.740        0.648        0.921        0.830       1.732  

Total income from operations

   $ 3.794      $ 0.741      $ 1.022      $ 0.912     $ 1.832  
Less Distributions                                            

From net investment income

   $ (0.054    $ (0.093    $ (0.100    $ (0.081   $ (0.096

From net realized gain

     (0.445             (0.548      (0.486     (0.285

Tax return of capital

     (0.538      (0.919      (0.364      (0.445     (0.631

Total distributions

   $ (1.037    $ (1.012    $ (1.012    $ (1.012   $ (1.012

Premium from common shares sold through shelf offering (see Note 5)(1)

   $ 0.003      $ 0.001      $ 0.000 (2)     $     $  

Net asset value — End of year

   $ 14.360      $ 11.600      $ 11.870      $ 11.860     $ 11.960  

Market value — End of year

   $ 14.610      $ 10.340      $ 11.920      $ 11.460     $ 11.640  

Total Investment Return on Net Asset Value(3)

     33.85      7.02      9.24      7.75     17.51

Total Investment Return on Market Value(3)

     52.78      (5.01 )%       13.53      6.98     23.81
Ratios/Supplemental Data                                            

Net assets, end of year (000’s omitted)

   $ 2,211,925      $ 1,759,628      $ 1,782,364      $ 1,775,555     $ 1,787,846  

Ratios (as a percentage of average daily net assets):

             

Expenses

     1.07      1.08      1.07      1.07     1.08

Net investment income

     0.40      0.80      0.86      0.66     0.86

Portfolio Turnover

     36      40      57      48     75

 

(1) 

Computed using average shares outstanding.

 

(2) 

Amount is less than $0.0005.

 

(3) 

Returns are historical and are calculated by determining the percentage change in net asset value or market value with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan.

 

  17   See Notes to Financial Statements.


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Notes to Financial Statements

 

 

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 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 (U.S. GAAP). The Fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.

A  Investment Valuation — The following methodologies are used to determine the market value or fair value of investments.

Equity Securities. Equity securities listed on a U.S. securities exchange generally are valued at the last sale or closing price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and ask prices on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ National Market System 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 ask prices.

Derivatives. U.S. exchange-traded options are valued at the mean between the bid and ask prices at valuation time as reported by the Options Price Reporting Authority. Non-U.S. exchange-traded options and over-the-counter options are valued by a third party pricing service using techniques that consider factors including the value of the underlying instrument, the volatility of the underlying instrument and the period of time until option expiration.

Foreign Securities and Currencies. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by a third party pricing service. The pricing 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 Fund’s 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.

Affiliated Fund. The Fund may invest in Eaton Vance Cash Reserves Fund, LLC (Cash Reserves Fund), an affiliated investment company managed by Eaton Vance Management (EVM). While Cash Reserves Fund is not a registered money market mutual fund, it conducts all of its investment activities in accordance with the requirements of Rule 2a-7 under the 1940 Act. Investments in Cash Reserves Fund are valued at the closing net asset value per unit on the valuation day. Cash Reserves Fund generally values its investment securities based on available market quotations provided by a third party pricing service.

Fair Valuation. 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 “fair value”, which is 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 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 or entities, 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 or entity’s financial statements, and an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.

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 provided for in accordance with the Fund’s understanding of the applicable countries’ tax rules and rates. In consideration of recent decisions rendered by European courts, the Fund has filed additional tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within these countries. Due to the uncertainty as to the ultimate resolution of these proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment, no amounts are reflected in the Fund’s financial statements for such outstanding reclaims.

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.

As of October 31, 2021, the Fund had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. The Fund files a U.S. federal income tax return annually after its fiscal year-end, which is subject to examination by the Internal Revenue Service for a period of three years from the date of filing.

 

  18  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Notes to Financial Statements — continued

 

 

E  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.

F  Use of Estimates — The preparation of the financial statements in conformity with U.S. GAAP 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.

G  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. Under Massachusetts law, if certain conditions prevail, shareholders of a Massachusetts business trust (such as the Fund) could be deemed to have personal liability for the obligations of the Fund. However, the Fund’s Declaration of Trust contains an express disclaimer of liability on the part of Fund shareholders and the By-laws provide that the Fund shall assume, upon request by the shareholder, the defense on behalf of any Fund shareholders. Moreover, the By-laws also provide for indemnification out of Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. 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.

H  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. When an index option is exercised, the Fund is required to deliver an amount of cash determined by the excess of the exercise price of the option over the value of the index (in the case of a put) or the excess of the value of the index over the exercise price of the option (in the case of a call) at contract termination. 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.

2  Distributions to Shareholders and Income Tax Information

Subject to its Managed Distribution Plan, the Fund makes monthly 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. Distributions are recorded on the ex-dividend date. Distributions to shareholders are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As required by U.S. GAAP, only distributions in excess of tax basis earnings and profits are 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.

The tax character of distributions declared for the years ended October 31, 2021 and October 31, 2020 was as follows:

 

     Year Ended October 31,  
      2021      2020  

Ordinary income

   $ 8,140,877      $ 14,097,789  

Long-term capital gains

   $ 67,784,231      $  

Tax return of capital

   $ 82,017,375      $ 139,158,730  

As of October 31, 2021, the components of distributable earnings (accumulated loss) on a tax basis were as follows:

 

   

Net unrealized appreciation

   $ 1,040,988,983  
   

Distributable earnings

   $ 1,040,988,983  

 

  19  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Notes to Financial Statements — continued

 

 

The cost and unrealized appreciation (depreciation) of investments, including open derivative contracts, of the Fund at October 31, 2021, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

   $ 1,204,277,865  

Gross unrealized appreciation

   $ 1,044,792,030  

Gross unrealized depreciation

     (3,793,880

Net unrealized appreciation

   $ 1,040,998,150  

3  Investment Adviser Fee and Other Transactions with Affiliates

The investment adviser fee is earned by EVM as compensation for investment advisory services rendered to the Fund. On March 1, 2021, Morgan Stanley acquired Eaton Vance Corp. (the “Transaction”) and EVM became an indirect, wholly-owned subsidiary of Morgan Stanley. In connection with the Transaction, the Fund entered into a new investment advisory agreement (the “New Agreement”) with EVM, which took effect on March 1, 2021. The Fund’s prior fee reduction agreement was incorporated into the New Agreement. Pursuant to the New Agreement (and the Fund’s investment advisory agreement and related fee reduction agreement with EVM in effect prior to March 1, 2021), the fee is computed at an annual rate as a percentage of the Fund’s average daily gross assets, as defined in the New Agreement (and the Fund’s investment advisory agreement with EVM in effect prior to March 1, 2021), as follows and is payable monthly:

 

Average Daily Gross Assets    Annual Fee Rate  

Up to and including $1.5 billion

     1.000

Over $1.5 billion up to and including $3 billion

     0.980

Over $3 billion up to and including $5 billion

     0.960

Over $5 billion

     0.940

For purposes of this calculation, gross assets represent net assets plus obligations attributable to investment leverage. During the year ended October 31, 2021, the Fund had no obligations attributable to investment leverage. For the year ended October 31, 2021, the Fund’s investment adviser fee amounted to $20,261,125 or 0.99% of the Fund’s average daily gross assets. The Fund may invest its cash in Cash Reserves Fund. EVM does not currently receive a fee for advisory services provided to Cash Reserves Fund. EVM also serves as administrator of the Fund, but receives no compensation.

Trustees and officers of the Fund who are members of EVM’s organization 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 the year ended October 31, 2021, 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 $724,436,306 and $894,759,929, respectively, for the year ended October 31, 2021.

5  Common Shares of Beneficial Interest and Shelf Offering

Common shares issued by the Fund pursuant to its dividend reinvestment plan for the years ended October 31, 2021 and October 31, 2020 were 303,534 and 186,395, respectively.

In August 2012, the Board of Trustees initially approved a share repurchase program for the Fund. Pursuant to the reauthorization of the share repurchase program by the Board of Trustees in March 2019, the Fund is authorized to repurchase up to 10% of its common shares outstanding as of the last day of the prior calendar year at market prices when shares are trading at a discount to net asset value. The share repurchase program does not obligate the Fund to purchase a specific amount of shares. There were no repurchases of common shares by the Fund for the years ended October 31, 2021 and October 31, 2020.

Pursuant to a registration statement filed with and declared effective on May 9, 2019 by the SEC, the Fund is authorized to issue up to an additional 22,462,218 common shares through an equity shelf offering program (the “shelf offering”). Under the shelf offering, the Fund, subject to market

 

  20  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Notes to Financial Statements — continued

 

 

conditions, may raise additional capital from time to time and in varying amounts and offering methods at a net price at or above the Fund’s net asset value per common share.

During the years ended October 31, 2021 and October 31, 2020, the Fund sold 2,046,890 and 1,361,759 common shares, respectively, and received proceeds (net of offering costs) of $29,036,373 and $16,857,924, respectively, through its shelf offering. The net proceeds in excess of the net asset value of the shares sold were $435,532 and $139,775 for the years ended October 31, 2021 and October 31, 2020, respectively. Offering costs (other than the applicable sales commissions) incurred in connection with the shelf offering were borne directly by EVM. Eaton Vance Distributors, Inc. (EVD), an affiliate of EVM, is the distributor of the Fund’s shares and is entitled to receive a sales commission from the Fund of 1.00% of the gross sales price per share, a portion of which is re-allowed to sales agents. The Fund was informed that the sales commissions retained by EVD during the years ended October 31, 2021 and October 31, 2020 were $58,660 and $34,057, respectively.

6  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 do 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 obligations under these financial instruments at October 31, 2021 is included in the Portfolio of Investments. At October 31, 2021, the Fund had sufficient cash and/or securities to cover commitments under these contracts.

The Fund is subject to equity price risk in the normal course of pursuing its investment objectives. The Fund writes index call options above the current value of the index to generate premium income. In writing index call options, the Fund in effect, sells potential appreciation in the value of the applicable index above the exercise price in exchange for the option premium received. The Fund retains the risk of loss, minus the premium received, should the value of the underlying index decline.

The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) and whose primary underlying risk exposure is equity price risk at October 31, 2021 was as follows:

 

     Fair Value  
Derivative    Asset Derivative      Liability Derivative(1)  

Written options

   $         —      $ (30,239,020

 

(1) 

Statement of Assets and Liabilities location: Written options outstanding, at value.

The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations and whose primary underlying risk exposure is equity price risk for the year ended October 31, 2021 was as follows:

 

Derivative    Realized Gain(Loss)
on Derivatives Recognized
in Income
(1)
     Change in Unrealized
Appreciation (Depreciation) on
Derivatives Recognized in Income
(2)
 

Written options

   $ (44,211,168    $ (33,290,587

 

(1) 

Statement of Operations location: Net realized gain (loss) – Written options.

 

(2) 

Statement of Operations location: Change in unrealized appreciation (depreciation) – Written options.

The average number of written options contracts outstanding during the year ended October 31, 2021, which is indicative of the volume of this derivative type, was 2,385 contracts.

 

  21  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Notes to Financial Statements — continued

 

 

7  Investments in Affiliated Funds

At October 31, 2021, the value of the Fund’s investment in affiliated funds was $25,003,342, which represents 1.1% of the Fund’s net assets. Transactions in affiliated funds by the Fund for the year ended October 31, 2021 were as follows:

 

Name   Value,
beginning of
period
    Purchases     Sales
proceeds
    Net
realized
gain (loss)
    Change in
unrealized
appreciation
(depreciation)
    Value,
end of
period
    Dividend
income
    Units,
end of
period
 

Short-Term Investments

 

Eaton Vance Cash Reserves Fund, LLC

  $ 17,537,671     $ 301,018,358     $ (293,552,864   $ 177     $     $ 25,003,342     $ 13,946       25,003,342  

8  Fair Value Measurements

Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

 

 

Level 1 – quoted prices in active markets for identical investments

 

 

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

 

Level 3 – significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)

In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

At October 31, 2021, the hierarchy of inputs used in valuing the Fund’s investments and open derivative instruments, which are carried at value, were as follows:

 

Asset Description    Level 1      Level 2      Level 3      Total  

Common Stocks

   $ 2,220,272,673 *     $      $         —      $ 2,220,272,673  

Short-Term Investments

            25,003,342               25,003,342  

Total Investments

   $ 2,220,272,673      $ 25,003,342      $      $ 2,245,276,015  

Liability Description

 

                          

Written Call Options

   $ (30,239,020    $      $      $ (30,239,020

Total

   $ (30,239,020    $      $      $ (30,239,020

 

*

The level classification by major category of investments is the same as the category presentation in the Portfolio of Investments.

9  Risks and Uncertainties

Pandemic Risk

An outbreak of respiratory disease caused by a novel coronavirus was first detected in China in late 2019 and subsequently spread internationally. This coronavirus has resulted in closing borders, enhanced health screenings, changes to healthcare service preparation and delivery, quarantines, cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. Health crises caused by outbreaks, such as the coronavirus outbreak, may exacerbate other pre-existing political, social and economic risks and disrupt normal market conditions and operations. The impact of this outbreak has negatively affected the worldwide economy, the economies of individual countries, individual companies, and the market in general, and may continue to do so in significant and unforeseen ways, as may other epidemics and pandemics that may arise in the future. Any such impact could adversely affect the Fund’s performance, or the performance of the securities in which the Fund invests.

 

  22  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Report of Independent Registered Public Accounting Firm

 

 

To the Trustees and Shareholders of Eaton Vance Tax-Managed Diversified Equity Income Fund:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of Eaton Vance Tax-Managed Diversified Equity Income Fund (the “Fund”), including the portfolio of investments, as of October 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

December 16, 2021

We have served as the auditor of one or more Eaton Vance investment companies since 1959.

 

  23  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Federal Tax Information (Unaudited)

 

 

The Form 1099-DIV you receive in February 2022 will show the tax status of all distributions paid to your account in calendar year 2021. Shareholders are advised to consult their own tax adviser with respect to the tax consequences of their investment in the Fund. As required by the Internal Revenue Code and/or regulations, shareholders must be notified regarding the status of qualified dividend income for individuals, the dividends received deduction for corporations and capital gains dividends.

Qualified Dividend Income.  For the fiscal year ended October 31, 2021, the Fund designates approximately $28,896,503, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for the reduced tax rate of 15%.

Dividends Received Deduction.  Corporate shareholders are generally entitled to take the dividends received deduction on the portion of the Fund’s dividend distribution that qualifies under tax law. For the Fund’s fiscal 2021 ordinary income dividends, 100% qualifies for the corporate dividends received deduction.

Capital Gains Dividends.  The Fund hereby designates as a capital gain dividend with respect to the taxable year ended October 31, 2021, $67,784,231 or, if subsequently determined to be different, the net capital gain of such year.

 

  24  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Annual Meeting of Shareholders (Unaudited)

 

 

The Fund held its Annual Meeting of Shareholders on August 12, 2021. The following action was taken by the shareholders:

Proposal 1:   The election of Mark R. Fetting, Valerie A. Mosley, Helen Frame Peters and Marcus L. Smith as Class III Trustees of the Fund, each for a three-year term ending in 2024.

 

     Number of Shares  
Nominee for Trustee    For      Withheld  

Mark R. Fetting

     77,581,789        50,920,116  

Valerie A. Mosley

     77,497,219        51,004,686  

Helen Frame Peters

     77,475,393        51,026,512  

Marcus L. Smith

     77,558,818        50,943,087  

 

  25  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Dividend Reinvestment Plan

 

 

The Fund offers a dividend reinvestment plan (Plan) pursuant to which shareholders automatically have distributions reinvested in common shares (Shares) of the Fund unless they elect otherwise through their investment dealer. On the distribution payment date, if the NAV 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 NAV per Share or 95% of the market price. Otherwise, Shares generally will be purchased on the open market by American Stock Transfer & Trust Company, LLC, the Plan agent (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 the Fund’s transfer agent re-register your Shares in your name or you will not be able to participate.

The Agent’s service fee for handling distributions will be paid by the Fund. Plan participants 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 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 Agent to sell part or all of his or her Shares and remit the proceeds, the 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 Agent. Any inquiries regarding the Plan can be directed to the Agent at 1-866-439-6787.

 

  26  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

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

 

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, LLC

P.O. Box 922

Wall Street Station

New York, NY 10269-0560

 

  27  


Table of Contents

Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Management and Organization

 

 

Fund Management.  The Trustees of Eaton Vance Tax-Managed Diversified Equity Income Fund (the Fund) are responsible for the overall management and supervision of the Fund’s affairs. The Trustees and officers of the Fund are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. The “Noninterested Trustees” consist of those Trustees who are not “interested persons” of the Fund, as that term is defined under the 1940 Act. The business address of each Trustee and officer is Two International Place, Boston, Massachusetts 02110. As used below, “EVC” refers to Eaton Vance Corp., “EV” refers to EV LLC, “EVM” refers to Eaton Vance Management, “BMR” refers to Boston Management and Research and “EVD” refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. Effective March 1, 2021, each of EVM, BMR, EVD and EV are indirect, wholly owned subsidiaries of Morgan Stanley. Each officer affiliated with EVM may hold a position with other EVM affiliates that is comparable to his or her position with EVM listed below. Each Trustee oversees 138 portfolios (with the exception of Messrs. Faust and Wennerholm and Ms. Frost who oversee 137 portfolios) in the Eaton Vance Complex (including all master and feeder funds in a master feeder structure). Each officer serves as an officer of certain other Eaton Vance funds.

 

Name and Year of Birth    Fund
Position(s)
  

Term Expiring.

Trustee Since(1)

    

Principal Occupation(s) and Other Directorships

During Past Five Years and Other Relevant Experience

Interested Trustee

Thomas E. Faust Jr.

1958

  

Class I

Trustee

  

Until 2022.

Trustee since 2007.

    

Chairman of Morgan Stanley Investment Management, Inc. (MSIM), member of the Board of Managers and President of EV, Chief Executive Officer of EVM and BMR, and Director of EVD. Formerly, Chairman, Chief Executive Officer and President of EVC. Trustee and/or officer of 137 registered investment companies. Mr. Faust is an interested person because of his positions with MSIM, BMR, EVM, EVD, and EV, which are affiliates of the Fund, and his former position with EVC, which was an affiliate of the Fund prior to March 1, 2021.

Other Directorships in the Last Five Years. Formerly, Director of EVC (2007-2021) and Hexavest Inc. (investment management firm) (2012-2021).

Noninterested Trustees

Mark R. Fetting

1954

  

Class III

Trustee

  

Until 2024.

Trustee since 2016.

    

Private investor. Formerly held various positions at Legg Mason, Inc. (investment management firm) (2000-2012), including President, Chief Executive Officer, Director and Chairman (2008-2012), Senior Executive Vice President (2004-2008) and Executive Vice President (2001-2004). Formerly, President of Legg Mason family of funds (2001-2008). Formerly, Division President and Senior Officer of Prudential Financial Group, Inc. and related companies (investment management firm) (1991-2000).

Other Directorships in the Last Five Years. None.

Cynthia E. Frost

1961

  

Class I

Trustee

  

Until 2022.

Trustee since 2014.

    

Private investor. Formerly, Chief Investment Officer of Brown University (university endowment) (2000-2012). Formerly, Portfolio Strategist for Duke Management Company (university endowment manager) (1995-2000). Formerly, Managing Director, Cambridge Associates (investment consulting company) (1989-1995). Formerly, Consultant, Bain and Company (management consulting firm) (1987-1989). Formerly, Senior Equity Analyst, BA Investment Management Company (1983-1985).

Other Directorships in the Last Five Years. None.

George J. Gorman

1952

  

Chairperson of the Board and Class II

Trustee

  

Until 2023.

Chairperson of the Board since 2021 and Trustee since 2014.

    

Principal at George J. Gorman LLC (consulting firm). Formerly, Senior Partner at Ernst & Young LLP (a registered public accounting firm) (1974-2009).

Other Directorships in the Last Five Years. None.

Valerie A. Mosley

1960

  

Class III

Trustee

  

Until 2024.

Trustee since

2014.

    

Chairwoman and Chief Executive Officer of Valmo Ventures (a consulting and investment firm). Founder of Upward Wealth, Inc., dba BrightUP, a fintech platform. Formerly, Partner and Senior Vice President, Portfolio Manager and Investment Strategist at Wellington Management Company, LLP (investment management firm) (1992-2012). Formerly, Chief Investment Officer, PG Corbin Asset Management (1990-1992). Formerly worked in institutional corporate bond sales at Kidder Peabody (1986-1990).

Other Directorships in the Last Five Years. Director of DraftKings, Inc. (digital sports entertainment and gaming company) (since September 2020). Director of Groupon, Inc. (e-commerce provider) (since April 2020). Director of Envestnet, Inc. (provider of intelligent systems for wealth management and financial wellness) (since 2018). Formerly, Director of Dynex Capital, Inc. (mortgage REIT) (2013-2020).

 

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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Management and Organization — continued

 

 

Name and Year of Birth    Fund
Position(s)
  

Term Expiring.

Trustee Since(1)

    

Principal Occupation(s) and Other Directorships

During Past Five Years and Other Relevant Experience

Noninterested Trustees (continued)

William H. Park

1947

  

Class II

Trustee

  

Until 2023.

Trustee since 2003.

    

Private investor. Formerly, Consultant (management and transactional) (2012-2014). Formerly, Chief Financial Officer, Aveon Group L.P. (investment management firm) (2010-2011). Formerly, Vice Chairman, Commercial Industrial Finance Corp. (specialty finance company) (2006-2010). Formerly, President and Chief Executive Officer, Prizm Capital Management, LLC (investment management firm) (2002-2005). Formerly, Executive Vice President and Chief Financial Officer, United Asset Management Corporation (investment management firm) (1982-2001). Formerly, Senior Manager, Price Waterhouse (now PricewaterhouseCoopers) (a registered public accounting firm) (1972-1981).

Other Directorships in the Last Five Years. None.

Helen Frame Peters

1948

  

Class III

Trustee

  

Until 2024.

Trustee since 2008.

    

Professor of Finance, Carroll School of Management, Boston College. Formerly, Dean, Carroll School of Management, Boston College (2000-2002). Formerly, Chief Investment Officer, Fixed Income, Scudder Kemper Investments (investment management firm) (1998-1999). Formerly, Chief Investment Officer, Equity and Fixed Income, Colonial Management Associates (investment management firm) (1991-1998).

Other Directorships in the Last Five Years. None.

Keith Quinton

1958

  

Class II

Trustee

  

Until 2023.

Trustee since 2018.

    

Private investor, researcher and lecturer. Formerly, Independent Investment Committee Member at New Hampshire Retirement System (2017-2021). Formerly, Portfolio Manager and Senior Quantitative Analyst at Fidelity Investments (investment management firm) (2001-2014).

Other Directorships in the Last Five Years. Formerly, Director (2016-2021) and Chairman (2019-2021) of New Hampshire Municipal Bond Bank.

Marcus L. Smith

1966

   Class III
Trustee
  

Until 2024.

Trustee since 2018.

    

Private investor. Formerly, Portfolio Manager at MFS Investment Management (investment management firm) (1994-2017).

Other Directorships in the Last Five Years. Director of First Industrial Realty Trust, Inc. (an industrial REIT) (since 2021). Director of MSCI Inc. (global provider of investment decision support tools) (since 2017). Formerly, Director of DCT Industrial Trust Inc. (logistics real estate company) (2017-2018).

Susan J. Sutherland

1957

  

Class II

Trustee

  

Until 2023.

Trustee since 2015.

    

Private investor. Director of Ascot Group Limited and certain of its subsidiaries (insurance and reinsurance) (since 2017). Formerly, Director of Hagerty Holding Corp. (insurance) (2015-2018) and Montpelier Re Holdings Ltd. (insurance and reinsurance) (2013-2015). Formerly, Associate, Counsel and Partner at Skadden, Arps, Slate, Meagher & Flom LLP (law firm) (1982-2013).

Other Directorships in the Last Five Years. Director of Kairos Acquisition Corp. (insurance/InsurTech acquisition company) (since 2021).

Scott E. Wennerholm

1959

  

Class I

Trustee

  

Until 2022.

Trustee since 2016.

    

Private investor. Formerly, Trustee at Wheelock College (postsecondary institution) (2012-2018). Formerly, Consultant at GF Parish Group (executive recruiting firm) (2016-2017). Formerly, Chief Operating Officer and Executive Vice President at BNY Mellon Asset Management (investment management firm) (2005-2011). Formerly, Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm) (1997-2004). Formerly, Vice President at Fidelity Investments Institutional Services (investment management firm) (1994-1997).

Other Directorships in the Last Five Years. None.

 

Name and

Year of Birth

   Fund
Position(s)
     Officer
Since
(2)
    

Principal Occupation(s)

During Past Five Years

Principal Officers who are not Trustees

Edward J. Perkin

1972

   President      2014      Vice President and Chief Equity Investment Officer of EVM and BMR. Also Vice President of Calvert Research and Management (“CRM”) since 2016.

Deidre E. Walsh

1971

   Vice President and Chief Legal Officer      2009      Vice President of EVM and BMR. Also Vice President of CRM.

James F. Kirchner

1967

   Treasurer      2007      Vice President of EVM and BMR. Also Vice President of CRM.

 

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Eaton Vance

Tax-Managed Diversified Equity Income Fund

October 31, 2021

 

Management and Organization — continued

 

 

Name and

Year of Birth

   Fund
Position(s)
     Officer
Since
(2)
    

Principal Occupation(s)

During Past Five Years

Principal Officers who are not Trustees (continued)

Kimberly M. Roessiger

1985

   Secretary      2021      Vice President of EVM and BMR.

Richard F. Froio

1968

   Chief Compliance Officer      2017      Vice President of EVM and BMR since 2017. Formerly, Deputy Chief Compliance Officer (Adviser/Funds) and Chief Compliance Officer (Distribution) at PIMCO (2012-2017) and Managing Director at BlackRock/Barclays Global Investors (2009-2012).

 

(1)

Year first appointed to serve as Trustee for a fund in the Eaton Vance family of funds. Each Trustee has served continuously since appointment unless indicated otherwise.

(2)

Year first elected to serve as officer of a fund in the Eaton Vance family of funds when the officer has served continuously. Otherwise, year of most recent election as an officer of a fund in the Eaton Vance family of funds. Titles may have changed since initial election. Each officer serves until his or her successor is elected.

 

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Eaton Vance Funds

 

Privacy Notice    April 2021

 

 

FACTS    WHAT DOES EATON VANCE DO WITH YOUR
PERSONAL INFORMATION?
      
  
Why?    Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
   
      
What?   

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

 

   Social Security number and income

   investment experience and risk tolerance

   checking account number and wire transfer instructions

   
      
How?    All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Eaton Vance chooses to share; and whether you can limit this sharing.
   
      

 

Reasons we can share your
personal information
   Does Eaton Vance share?    Can you limit this sharing?
For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus    Yes    No
For our marketing purposes — to offer our products and services to you    Yes    No
For joint marketing with other financial companies    No    We don’t share
For our investment management affiliates’ everyday business purposes — information about your transactions, experiences, and creditworthiness    Yes    Yes
For our affiliates’ everyday business purposes — information about your transactions and experiences    Yes    No
For our affiliates’ everyday business purposes — information about your creditworthiness    No    We don’t share
For our investment management affiliates to market to you    Yes    Yes
For our affiliates to market to you    No    We don’t share
For nonaffiliates to market to you    No    We don’t share

 

To limit our sharing   

Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.com

 

Please note:

 

If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are no longer our customer, we continue to share your information as described in this notice. However, you can contact us at any time to limit our sharing.

   
      
   
Questions?    Call toll-free 1-800-262-1122 or email: EVPrivacy@eatonvance.com
   
      

 

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Eaton Vance Funds

 

Privacy Notice — continued    April 2021

 

 

Page 2     

 

Who we are
Who is providing this notice?   Eaton Vance Management, Eaton Vance Distributors, Inc., Eaton Vance Trust Company, Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd., Eaton Vance Global Advisors Limited, Eaton Vance Management’s Real Estate Investment Group, Boston Management and Research, Calvert Research and Management, Eaton Vance and Calvert Fund Families and our investment advisory affiliates (“Eaton Vance”) (see Investment Management Affiliates definition below)
What we do
How does Eaton Vance protect my personal information?   To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We have policies governing the proper handling of customer information by personnel and requiring third parties that provide support to adhere to appropriate security standards with respect to such information.
How does Eaton Vance collect my personal information?  

We collect your personal information, for example, when you

 

   open an account or make deposits or withdrawals from your account

   buy securities from us or make a wire transfer

   give us your contact information

 

We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.

Why can’t I limit all sharing?  

Federal law gives you the right to limit only

 

   sharing for affiliates’ everyday business purposes — information about your creditworthiness

   affiliates from using your information to market to you

   sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing. See below for more on your rights under state law.

Definitions
Investment Management Affiliates   Eaton Vance Investment Management Affiliates include registered investment advisers, registered broker-dealers, and registered and unregistered funds. Investment Management Affiliates does not include entities associated with Morgan Stanley Wealth Management, such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.
Affiliates  

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

   Our affiliates include companies with a Morgan Stanley name and financial companies such as Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.

Nonaffiliates  

Companies not related by common ownership or control. They can be financial and nonfinancial companies.

 

   Eaton Vance does not share with nonaffiliates so they can market to you.

Joint marketing  

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

   Eaton Vance doesn’t jointly market.

Other important information

Vermont: Except as permitted by law, we will not share personal information we collect about Vermont residents with Nonaffiliates unless you provide us with your written consent to share such information.

 

California: Except as permitted by law, we will not share personal information we collect about California residents with Nonaffiliates and we will limit sharing such personal information with our Affiliates to comply with California privacy laws that apply to us.

 

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Eaton Vance Funds

 

IMPORTANT NOTICES

 

 

Delivery of Shareholder Documents.  The Securities and Exchange Commission (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. American Stock Transfer & Trust Company, LLC (“AST”), the closed-end funds transfer agent, or your financial intermediary, may household the mailing of your documents indefinitely unless you instruct AST, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact AST or your financial intermediary. Your instructions that householding not apply to delivery of your Eaton Vance documents will typically be effective within 30 days of receipt by AST or your financial intermediary.

Portfolio Holdings.  Each Eaton Vance Fund and its underlying Portfolio(s) (if applicable) files a schedule of portfolio holdings on Part F to Form N-PORT with the SEC. Certain information filed on Form N-PORT may be viewed on the Eaton Vance website at www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the EDGAR database on the SEC’s website at www.sec.gov.

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 and by accessing the SEC’s website at www.sec.gov.

Share Repurchase Program.  The Fund’s Board of Trustees has approved a share repurchase program authorizing the Fund to repurchase up to 10% of its common shares outstanding as of the last day of the prior calendar year in open-market transactions at a discount to net asset value. The repurchase program does not obligate the Fund to purchase a specific amount of shares. The Fund’s repurchase activity, including the number of shares purchased, average price and average discount to net asset value, is disclosed in the Fund’s annual and semi-annual reports to shareholders.

Additional Notice to Shareholders.  If applicable, a Fund may also redeem or purchase its outstanding preferred shares in order to maintain compliance with regulatory requirements, borrowing or rating agency requirements or for other purposes as it deems appropriate or necessary.

Closed-End Fund Information.  Eaton Vance closed-end funds make fund performance data and certain information about portfolio characteristics available on the Eaton Vance website shortly after the end of each month. Other information about the funds is available on the website. The funds’ net asset value per share is readily accessible on the Eaton Vance website. Portfolio holdings for the most recent month-end are also posted to the website approximately 30 days following the end of the month. This information is available at www.eatonvance.com on the fund information pages under “Individual Investors — Closed-End Funds”.

 

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Investment Adviser and Administrator

Eaton Vance Management

Two International Place

Boston, MA 02110

Custodian

State Street Bank and Trust Company

State Street Financial Center, One Lincoln Street

Boston, MA 02111

Transfer Agent

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, NY 11219

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

200 Berkeley Street

Boston, MA 02116-5022

Fund Offices

Two International Place

Boston, MA 02110

 


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LOGO

 

LOGO

2897    10.31.21


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Item 2. Code of Ethics

The registrant (sometimes referred to as the “Fund”) 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. The registrant has not amended the code of ethics as described in Form N-CSR during the period covered by this report. The registrant has not granted any waiver, including an implicit waiver, from a provision of the code of ethics as described in Form N-CSR during the period covered by this report.

Item 3. Audit Committee Financial Expert

The registrant’s Board of Trustees (the “Board”) has designated George J. Gorman, William H. Park and Scott E. Wennerholm, each an independent trustee, as audit committee financial experts. Mr. Gorman is a certified public accountant who is the Principal at George J. Gorman LLC (a consulting firm). Previously, Mr. Gorman served in various capacities at Ernst & Young LLP (a registered public accounting firm), including as Senior Partner. Mr. Gorman also has experience serving as an independent trustee and audit committee financial


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expert of other mutual fund complexes. Mr. Park is a certified public accountant who is a private investor. Previously, he served as a consultant, as the Chief Financial Officer of Aveon Group, L.P. (an investment management firm), as the Vice Chairman of Commercial Industrial Finance Corp. (specialty finance company), as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm), as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (an institutional investment management firm) and as a Senior Manager at Price Waterhouse (now PricewaterhouseCoopers) (a registered public accounting firm). Mr. Wennerholm is a private investor. Previously, Mr. Wennerholm served as a Trustee at Wheelock College (postsecondary institution), as a Consultant at GF Parish Group (executive recruiting firm), Chief Operating Officer and Executive Vice President at BNY Mellon Asset Management (investment management firm), Chief Operating Officer and Chief Financial Officer at Natixis Global Asset Management (investment management firm), and Vice President at Fidelity Investments Institutional Services (investment management firm).

Item 4. Principal Accountant Fees and Services

(a) –(d)

The following table presents the aggregate fees billed to the registrant for the registrant’s fiscal years ended October 31, 2020 and October 31, 2021 by the registrant’s principal accountant, Deloitte & Touche LLP (“D&T”), for professional services rendered for the audit of the registrant’s annual financial statements and fees billed for other services rendered by D&T during such periods.

 

Fiscal Years Ended

   10/31/20      10/31/21  

Audit Fees

   $ 50,200      $ 52,250  

Audit-Related Fees(1)

   $ 0      $ 0  

Tax Fees(2)

   $ 8,796      $ 9,146  

All Other Fees(3)

   $ 0      $ 0  
  

 

 

    

 

 

 

Total

   $ 58,996      $ 61,396  
  

 

 

    

 

 

 

 

(1)

Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under the category of audit fees.

(2)

Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation and other related tax compliance/planning matters.

(3)

All other fees consist of the aggregate fees billed for products and services provided by the principal accountant other than audit, audit-related, and tax services.

(e)(1) The registrant’s audit committee has adopted policies and procedures relating to the pre-approval of services provided by the registrant’s principal accountant (the “Pre-Approval Policies”). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the audit committee.

The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant’s audit committee at least annually. The registrant’s audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant’s principal accountant.


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(e)(2) No services described in paragraphs (b)-(d) above were approved by the registrant’s audit committee pursuant to the “de minimis exception” set forth in Rule 2-01 (c)(7)(i)(C) of Regulation S-X.

(f) Not applicable.

(g) The following table presents (i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the registrant by D&T for the registrant’s fiscal years ended October 31, 2020 and October 31, 2021; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the Eaton Vance organization by D&T for the same time periods.

 

Fiscal Years Ended

   10/31/20      10/31/21  

Registrant

   $ 8,796      $ 9,146  

Eaton Vance(1)

   $ 51,800      $ 51,800  

 

(1)

The investment adviser to the registrant, as well as any of its affiliates that provide ongoing services to the registrant, are subsidiaries of Morgan Stanley.

(h) The registrant’s audit committee has considered whether the provision by the registrant’s principal accountant of non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5. Audit Committee of Listed Registrants

The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934, as amended. George J. Gorman, William H. Park, Helen Frame Peters and Scott E. Wennerholm (Chair) are the members of the registrant’s audit committee.

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 the Fund 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 Policies annually. 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, or any committee, sub-committee or group of independent trustees identified by the Board, which will instruct the investment adviser on the appropriate course of action. If the Board Members are unable to meet and the failure to vote a proxy would have a material adverse impact on the Fund, the investment adviser may vote such proxy, provided that it discloses the existence of the material conflict to the Chairperson of the Fund’s Board as soon as practicable and to the Board at its next meeting.


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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 in accordance with customized proxy voting guidelines (the “Guidelines”) and/or refer them back to the investment adviser pursuant to the Policies.

The Agent is required to establish and maintain adequate internal controls and policies in connection with the provision of proxy voting services, including methods to reasonably ensure that its analysis and recommendations are not influenced by a conflict of interest. The Guidelines include voting guidelines for matters relating to, among other things, the election of directors, approval of independent auditors, executive compensation, corporate structure and anti-takeover defenses. The investment adviser may cause the Fund to abstain from voting from time to time where it determines that the costs associated with voting a proxy outweigh the benefits derived from exercising the right to vote or it is unable to access or access timely ballots or other proxy information, among other stated reasons. The Agent will refer Fund proxies to the investment adviser for instructions under circumstances where, among others: (1) the application of the Guidelines is unclear; (2) a particular proxy question is not covered by the Guidelines; or (3) the Guidelines require input from the investment adviser. When a proxy voting issue has been referred to the investment adviser, the analyst (or portfolio manager if applicable) covering the company subject to the proxy proposal determines the final vote (or decision not to vote) and the investment adviser’s Proxy Administrator (described below) instructs the Agent to vote accordingly for securities held by the Fund. Where more than one analyst covers a particular company and the recommendations of such analysts voting a proposal conflict, the investment adviser’s Global Proxy Group (described below) will review such recommendations and any other available information related to the proposal and determine the manner in which it should be voted, which may result in different recommendations for the Fund that may differ from other clients of the investment adviser.

The investment adviser has appointed a Proxy Administrator to assist in the coordination of the voting of client proxies (including the Fund’s) in accordance with the Guidelines and the Policies. The investment adviser and its affiliates have also established a Global Proxy Group. The Global Proxy Group develops the investment adviser’s positions on all major corporate issues, creates the Guidelines and oversees the proxy voting process. The Proxy Administrator maintains a record of all proxy questions that have been referred by the Agent, all applicable recommendations, analysis and research received and any resolution of the matter. Before instructing the Agent to vote contrary to the Guidelines or the recommendation of the Agent, the Proxy Administrator will provide the Global Proxy Group with the Agent’s recommendation for the proposal along with any other relevant materials, including the basis for the analyst’s recommendation. The Proxy Administrator will then instruct the Agent to vote the proxy in the manner determined by the Global Proxy Group. A similar process will be followed if the Agent has a conflict of interest with respect to a proxy. The investment adviser will report to the Fund’s Board any votes cast contrary to the Guidelines or Agent recommendations, as applicable, no less than annually.

The investment adviser’s Global Proxy Group is responsible for monitoring and resolving possible material conflicts with respect to proxy voting. Because the Guidelines are predetermined and designed to be in the best interests of shareholders, application of the Guidelines to vote client proxies should, in most cases, adequately address any possible conflict of interest. The investment adviser will monitor situations that may result in a conflict of interest between any of its clients and the investment adviser or any of its affiliates by maintaining a list of significant existing and prospective corporate clients. The Proxy Administrator will compare such list with the names of companies of which he or she has been referred a proxy statement (the “Proxy Companies”). If a company on the list is also a Proxy Company, the Proxy Administrator will report that fact to the Global


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Proxy Group. If the Proxy Administrator intends to instruct the Agent to vote in a manner inconsistent with the Guidelines, the Global Proxy Group will first determine, in consultation with legal counsel if necessary, whether a material conflict exists. If it is determined that a material conflict exists, the investment adviser will seek instruction on how the proxy should be voted from the Fund’s Board, or any committee or subcommittee identified by the Board. If a matter is referred to the Global Proxy Group, the decision made and basis for the decision will be documented by the Proxy Administrator and/or Global Proxy Group.

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

Eaton Vance Management (“EVM” or “Eaton Vance”) is the investment adviser of the Fund. G.R. Nelson is responsible for the overall and day-to-day management of the Fund’s investments. Mr. Nelson is a Vice President of EVM, has been an equity analyst at EVM since 2004 , has been a portfolio manager of the Fund since December 2019 and manages other Eaton Vance funds. This information is provided as of the date of filing this report.

The following table shows, as of the Fund’s most recent fiscal year end, the number of accounts the portfolio manager managed in each of the listed categories and the total assets (in millions of dollars) in the accounts managed within each category. The table also shows the number of accounts with respect to which the advisory fee is based on the performance of the account, if any, and the total assets (in millions of dollars) in those accounts.

 

     Number of
All
Accounts
     Total Assets of All
Accounts
     Number of Accounts
Paying a
Performance Fee
     Total Assets
of Accounts Paying
a Performance Fee
 

G.R. Nelson

           

Registered Investment Companies

     7      $ 7,133.9        0      $ 0  

Other Pooled Investment Vehicles

     0      $ 0        0      $ 0  

Other Accounts

     2      $ 2.3        0      $ 0  

The following table shows the dollar range of Fund shares beneficially owned by the portfolio manager as of the Fund’s most recent fiscal year end.

 

Portfolio Manager

  

Dollar Range of Equity Securities

Beneficially Owned in the Fund

G.R. Nelson    None

Potential for Conflicts of Interest. It is possible that conflicts of interest may arise in connection with a portfolio manager’s management of the Fund’s investments on the one hand and the investments of other accounts for which a portfolio manager is responsible on the other. For example, a portfolio manager may have conflicts of interest in allocating management time, resources and investment opportunities among the Fund and other accounts he advises. In addition, due to differences in the investment strategies or restrictions between the Fund and the other accounts, the portfolio manager may take action with respect to another account that differs from the action taken with respect to the Fund. In some cases, another account managed by a portfolio manager may compensate the investment adviser based on the performance of the securities held by that account. The existence of such a performance based fee may create additional conflicts of interest for the portfolio manager in the allocation of management time, resources and investment opportunities. Whenever conflicts of interest


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arise, the portfolio manager will endeavor to exercise his discretion in a manner that he believes is equitable to all interested persons. EVM has adopted several policies and procedures designed to address these potential conflicts including a code of ethics and policies that govern the investment adviser’s trading practices, including among other things the aggregation and allocation of trades among clients, brokerage allocations, cross trades and best execution.

Compensation Structure for EVM

Compensation of EVM’s portfolio managers and other investment professionals has the following primary components: (1) a base salary and (2) discretionary variable compensation that is comprised of cash bonus and depending on eligibility, may also include deferred compensation consisting of restricted shares of Morgan Stanley stock and deferred cash that are subject to a fixed vesting and distribution schedule. EVM’s investment professionals also receive certain retirement, insurance and other benefits that are broadly available to EVM’s employees. Compensation of EVM’s investment professionals is reviewed primarily on an annual basis. Cash bonuses and deferred compensation awards, and adjustments in base salary are typically paid or put into effect shortly after the December 31st fiscal year end of Morgan Stanley.

Method to Determine Compensation. EVM compensates its portfolio managers based on company and team business results, and individual performance, including the scale and complexity of their portfolio responsibilities and the total return performance of managed funds and accounts versus the benchmark(s) stated in the prospectus, as well as an appropriate peer group (as described below). In addition to rankings within peer groups of funds on the basis of absolute performance, consideration may also be given to relative risk-adjusted performance. Risk-adjusted performance measures include, but are not limited to the Sharpe ratio, which uses standard deviation and excess return to determine reward per unit of risk. Fund performance is normally evaluated primarily versus peer groups of funds as determined by Lipper Inc. and/or Morningstar, Inc. When a fund’s peer group as determined by Lipper or Morningstar is deemed by EVM’s management not to provide a fair comparison, performance may instead be evaluated primarily against a custom peer group or market index. In evaluating the performance of a fund and its manager, primary emphasis is normally placed on three-year performance, with secondary consideration of performance over longer and shorter periods. For funds that are tax-managed or otherwise have an objective of after-tax returns, performance is measured net of taxes. For other funds, performance is evaluated on a pre-tax basis. For funds with an investment objective other than total return (such as current income), consideration will also be given to the fund’s success in achieving its objective. For managers responsible for multiple funds and accounts, investment performance is evaluated on an aggregate basis, based on averages or weighted averages among managed funds and accounts. Funds and accounts that have performance-based advisory fees are not accorded disproportionate weightings in measuring aggregate portfolio manager performance.

The compensation of portfolio managers with other job responsibilities (such as heading an investment group or providing analytical support to other portfolios) will include consideration of the scope of such responsibilities and the managers’ performance in meeting them.

EVM seeks to compensate portfolio managers commensurate with their responsibilities and performance, and competitive with other firms within the investment management industry. EVM participates in investment-industry compensation surveys and utilizes survey data as a factor in determining salary and variable compensation levels for portfolio managers and other investment professionals. Salaries and variable compensation are also influenced by the operating performance of EVM and Morgan Stanley. While the salaries of EVM’s portfolio managers are comparatively fixed, variable compensation may fluctuate significantly from year to year, based on changes in company and team performance, manager performance and other factors as described herein. For a high performing portfolio manager, variable compensation may represent a substantial portion of total compensation.


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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 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

No activity to report for the registrant’s most recent fiscal year end.

Item 13. 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.
(c)   Registrant’s notices to shareholders pursuant to Registrant’s exemptive order granting an exemption from Section  19(b) of the 1940 Act and Rule 19b-1 thereunder regarding distributions paid pursuant to the Registrant’s Managed Distribution Plan.


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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/ Edward J. Perkin

  Edward J. Perkin
  President
Date:   December 17, 2021

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/ James F. Kirchner

  James F. Kirchner
  Treasurer
Date:   December 17, 2021
By:  

/s/ Edward J. Perkin

  Edward J. Perkin
  President
Date:   December 17, 2021

Eaton Vance Tax-Managed Diversified Equity Income Fund

FORM N-CSR

Exhibit 13(a)(2)(i)

CERTIFICATION

I, James F. Kirchner, certify that:

1.    I have reviewed this report on Form N-CSR of Eaton Vance Tax-Managed Diversified Equity Income Fund;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 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; and

5.    The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:   December 17, 2021      

/s/ James F. Kirchner

        James F. Kirchner
        Treasurer


Eaton Vance Tax-Managed Diversified Equity Income Fund

FORM N-CSR

Exhibit 13(a)(2)(ii)

CERTIFICATION

I, Edward J. Perkin, certify that:

1.    I have reviewed this report on Form N-CSR of Eaton Vance Tax-Managed Diversified Equity Income Fund;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 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; and

5.    The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:   December 17, 2021      

/s/ Edward J. Perkin

        Edward J. Perkin
        President

Form N-CSR Item 13(b) Exhibit

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certify in their capacity as Treasurer and President, respectively, of Eaton Vance Tax-Managed Diversified Equity Income Fund (the “Fund”), that:

 

(a)

The Annual Report of the Fund on Form N-CSR for the period ended October 31, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(b)

The information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Fund for such period.

A signed original of this written statement required by section 906 has been provided to the Fund and will be retained by the Fund and furnished to the Securities and Exchange Commission or its staff upon request.

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Date: December 17, 2021

/s/ James F. Kirchner

James F. Kirchner
Treasurer
Date: December 17, 2021

/s/ Edward J. Perkin

Edward J. Perkin
President

Form N-CSR Item 13(c) Exhibit

 

LOGO

Dear Eaton Vance Fund Shareholder:

This notice provides shareholders of the Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE: ETY) with important information concerning the distribution declared in May 2021. You are receiving this notice as a requirement of the Fund’s managed distribution plan (Plan). The Board of Trustees approved the implementation of the Plan to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share. This information is sent to you for informational purposes only and is an estimate of the sources of the May distribution. It is not determinative of the tax character of the Fund’s distributions for the 2021 calendar year.

The amounts and sources of distributions reported in this notice are estimates, are not being provided for tax reporting purposes and the distribution may later be determined to be from other sources including realized short-term gains, long-term gains, to the extent permitted by law, and return of capital. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Distribution Period: May 2021

Distribution Amount per Common Share: $0.0843

The following table sets forth an estimate of the sources of the Fund’s May distribution and its cumulative distributions paid this fiscal year to date. Amounts are expressed on a per common share basis and as a percentage of the distribution amount.

 

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Source

   Current
Distribution
     % of Current
Distribution
    Cumulative
Distributions for the
Fiscal Year-to-Date1
     % of the Cumulative
Distributions for the  Fiscal
Year-to-Date1
 

Net Investment Income

   $ 0.0035        4.1   $ 0.0254        4.3

Net Realized Short-Term Capital Gains

   $ 0.0000        0.0   $ 0.0000        0.0

Net Realized Long-Term Capital Gains

   $ 0.0808        95.9   $ 0.2343        39.7

Return of Capital or Other Capital Source(s)

   $ 0.0000        0.0   $ 0.3304        56.0

Total per common share

   $ 0.0843        100.0   $ 0.5901        100.0

 

  1

The Fund’s fiscal year is November 1, 2020 to October 31, 2021

IMPORTANT DISCLOSURE: You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and/or tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.


Set forth in the table below is information relating to the Fund’s performance based on its net asset value (NAV) for certain periods.    

 

Average annual total return at NAV for the 5-year period ended on April 30, 20211

     13.44

Annualized current distribution rate expressed as a percentage of NAV as of April 30, 20212

     7.45

Cumulative total return at NAV for the fiscal year through April 30, 20213

     21.85

Cumulative fiscal year to date distribution rate as a percentage of NAV as of April 30, 20214

     3.72

 

  1

Average annual total return at NAV represents the change in NAV of the Fund, with all distributions reinvested, for the 5-year period ended on April 30, 2021.

  2

The annualized current distribution rate is the cumulative distribution rate annualized as a percentage of the Fund’s NAV as of April 30, 2021.

  3

Cumulative total return at NAV is the percentage change in the Fund’s NAV for the period from the beginning of its fiscal year to April 30, 2021 including distributions paid and assuming reinvestment of those distributions.

  4

Cumulative fiscal year distribution rate for the period from the beginning of its fiscal year to April 30, 2021 measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund’s NAV as of April 30, 2021.

If you have any questions regarding this information, please contact your investment advisor or an Eaton Vance Investor Services associate at 1-866-328-6681. Our associates are available to assist you Monday-Friday 8:30 a.m. to 5:30 p.m., Eastern Time.

 

NOTE: This correspondence is for informational purposes only and should not be relied upon to project the tax character of actual Fund distributions for the 2021 calendar year.

NO ACTION IS REQUIRED ON YOUR PART.

Eaton Vance Tax-Managed Diversified Equity Income Fund

May 28, 2021


LOGO

Dear Eaton Vance Fund Shareholder:

This notice provides shareholders of the Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE: ETY) with important information concerning the distribution declared in June 2021. You are receiving this notice as a requirement of the Fund’s managed distribution plan (Plan). The Board of Trustees approved the implementation of the Plan to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share. This information is sent to you for informational purposes only and is an estimate of the sources of the June distribution. It is not determinative of the tax character of the Fund’s distributions for the 2021 calendar year.

The amounts and sources of distributions reported in this notice are estimates, are not being provided for tax reporting purposes and the distribution may later be determined to be from other sources including realized short-term gains, long-term gains, to the extent permitted by law, and return of capital. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Distribution Period: June 2021

Distribution Amount per Common Share: $0.0843

The following table sets forth an estimate of the sources of the Fund’s June distribution and its cumulative distributions paid this fiscal year to date. Amounts are expressed on a per common share basis and as a percentage of the distribution amount.

 

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Source

   Current
Distribution
     % of Current
Distribution
    Cumulative
Distributions for the
Fiscal Year-to-Date1
     % of the Cumulative
Distributions for the  Fiscal
Year-to-Date1
 

Net Investment Income

   $ 0.0035        4.2   $ 0.0290        4.3

Net Realized Short-Term Capital Gains

   $ 0.0000        0.0   $ 0.0000        0.0

Net Realized Long-Term Capital Gains

   $ 0.0808        95.8   $ 0.2954        43.8

Return of Capital or Other Capital Source(s)

   $ 0.0000        0.0   $ 0.3500        51.9

Total per common share

   $ 0.0843        100.0   $ 0.6744        100.0

 

  1

The Fund’s fiscal year is November 1, 2020 to October 31, 2021

IMPORTANT DISCLOSURE: You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and/or tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.


Set forth in the table below is information relating to the Fund’s performance based on its net asset value (NAV) for certain periods.

 

Average annual total return at NAV for the 5-year period ended on May 31, 20211

     13.19

Annualized current distribution rate expressed as a percentage of NAV as of May 31, 20212

     7.43

Cumulative total return at NAV for the fiscal year through May 31, 20213

     22.87

Cumulative fiscal year to date distribution rate as a percentage of NAV as of May 31, 20214

     4.34

 

  1

Average annual total return at NAV represents the change in NAV of the Fund, with all distributions reinvested, for the 5-year period ended on May 31, 2021.

  2

The annualized current distribution rate is the cumulative distribution rate annualized as a percentage of the Fund’s NAV as of May 31, 2021.

  3

Cumulative total return at NAV is the percentage change in the Fund’s NAV for the period from the beginning of its fiscal year to May 31, 2021 including distributions paid and assuming reinvestment of those distributions.

  4

Cumulative fiscal year distribution rate for the period from the beginning of its fiscal year to May 31, 2021 measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund’s NAV as of May 31, 2021.

If you have any questions regarding this information, please contact your investment advisor or an Eaton Vance Investor Services associate at 1-866-328-6681. Our associates are available to assist you Monday-Friday 8:30 a.m. to 5:30 p.m., Eastern Time.

 

NOTE: This correspondence is for informational purposes only and should not be relied upon to project the tax character of actual Fund distributions for the 2021 calendar year.

NO ACTION IS REQUIRED ON YOUR PART.

Eaton Vance Tax-Managed Diversified Equity Income Fund

June 30, 2021


LOGO

Dear Eaton Vance Fund Shareholder:

This notice provides shareholders of the Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE: ETY) with important information concerning the distribution declared in July 2021. You are receiving this notice as a requirement of the Fund’s managed distribution plan (Plan). The Board of Trustees approved the implementation of the Plan to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share. This information is sent to you for informational purposes only and is an estimate of the sources of the July distribution. It is not determinative of the tax character of the Fund’s distributions for the 2021 calendar year.

The amounts and sources of distributions reported in this notice are estimates, are not being provided for tax reporting purposes and the distribution may later be determined to be from other sources including realized short-term gains, long-term gains, to the extent permitted by law, and return of capital. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Distribution Period: July 2021

Distribution Amount per Common Share: $0.0843

The following table sets forth an estimate of the sources of the Fund’s July distribution and its cumulative distributions paid this fiscal year to date. Amounts are expressed on a per common share basis and as a percentage of the distribution amount.

 

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Source

   Current
Distribution
     % of Current
Distribution
    Cumulative
Distributions for the
Fiscal Year-to-Date1
     % of the Cumulative
Distributions for the  Fiscal
Year-to-Date1
 

Net Investment Income

   $ 0.0040        4.7   $ 0.0333        4.4

Net Realized Short-Term Capital Gains

   $ 0.0000        0.0   $ 0.0000        0.0

Net Realized Long-Term Capital Gains

   $ 0.0803        95.3   $ 0.3976        52.4

Return of Capital or Other Capital Source(s)

   $ 0.0000        0.0   $ 0.3278        43.2

Total per common share

   $ 0.0843        100.0   $ 0.7587        100.0

 

  1

The Fund’s fiscal year is November 1, 2020 to October 31, 2021

IMPORTANT DISCLOSURE: You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and/or tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.


Set forth in the table below is information relating to the Fund’s performance based on its net asset value (NAV) for certain periods.

 

Average annual total return at NAV for the 5-year period ended on June 30, 20211

     13.64

Annualized current distribution rate expressed as a percentage of NAV as of June 30, 20212

     7.33

Cumulative total return at NAV for the fiscal year through June 30, 20213

     25.44

Cumulative fiscal year to date distribution rate as a percentage of NAV as of June 30, 20214

     4.88

 

  1

Average annual total return at NAV represents the change in NAV of the Fund, with all distributions reinvested, for the 5-year period ended on June 30, 2021.

  2

The annualized current distribution rate is the cumulative distribution rate annualized as a percentage of the Fund’s NAV as of June 30, 2021.

  3

Cumulative total return at NAV is the percentage change in the Fund’s NAV for the period from the beginning of its fiscal year to June 30, 2021 including distributions paid and assuming reinvestment of those distributions.

  4

Cumulative fiscal year distribution rate for the period from the beginning of its fiscal year to June 30, 2021 measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund’s NAV as of June 30, 2021.

If you have any questions regarding this information, please contact your investment advisor or an Eaton Vance Investor Services associate at 1-866-328-6681. Our associates are available to assist you Monday-Friday 8:30 a.m. to 5:30 p.m., Eastern Time.

 

NOTE: This correspondence is for informational purposes only and should not be relied upon to project the tax character of actual Fund distributions for the 2021 calendar year.

NO ACTION IS REQUIRED ON YOUR PART.

Eaton Vance Tax-Managed Diversified Equity Income Fund

July 30, 2021


LOGO

Dear Eaton Vance Fund Shareholder:

This notice provides shareholders of the Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE: ETY) with important information concerning the distribution declared in August 2021. You are receiving this notice as a requirement of the Fund’s managed distribution plan (Plan). The Board of Trustees approved the implementation of the Plan to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share. This information is sent to you for informational purposes only and is an estimate of the sources of the August distribution. It is not determinative of the tax character of the Fund’s distributions for the 2021 calendar year.

The amounts and sources of distributions reported in this notice are estimates, are not being provided for tax reporting purposes and the distribution may later be determined to be from other sources including realized short-term gains, long-term gains, to the extent permitted by law, and return of capital. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Distribution Period: August 2021

Distribution Amount per Common Share: $0.0929

The following table sets forth an estimate of the sources of the Fund’s August distribution and its cumulative distributions paid this fiscal year to date. Amounts are expressed on a per common share basis and as a percentage of the distribution amount.

 

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Source

   Current
Distribution
     % of Current
Distribution
    Cumulative
Distributions for the
Fiscal Year-to-Date1
     % of the Cumulative
Distributions for the  Fiscal
Year-to-Date1
 

Net Investment Income

   $ 0.0075        8.1   $ 0.0409        4.8

Net Realized Short-Term Capital Gains

   $ 0.0000        0.0   $ 0.0000        0.0

Net Realized Long-Term Capital Gains

   $ 0.0854        91.9   $ 0.5220        61.3

Return of Capital or Other Capital Source(s)

   $ 0.0000        0.0   $ 0.2887        33.9

Total per common share

   $ 0.0929        100.0   $ 0.8516        100.0

 

  1

The Fund’s fiscal year is November 1, 2020 to October 31, 2021

IMPORTANT DISCLOSURE: You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and/or tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.


Set forth in the table below is information relating to the Fund’s performance based on its net asset value (NAV) for certain periods.

 

Average annual total return at NAV for the 5-year period ended on July 31, 20211

     13.38

Annualized current distribution rate expressed as a percentage of NAV as of July 31, 20212

     7.26

Cumulative total return at NAV for the fiscal year through July 31, 20213

     27.39

Cumulative fiscal year to date distribution rate as a percentage of NAV as of July 31, 20214

     5.44

 

  1

Average annual total return at NAV represents the change in NAV of the Fund, with all distributions reinvested, for the 5-year period ended on July 31, 2021.

  2

The annualized current distribution rate is the cumulative distribution rate annualized as a percentage of the Fund’s NAV as of July 31, 2021.

  3

Cumulative total return at NAV is the percentage change in the Fund’s NAV for the period from the beginning of its fiscal year to July 31, 2021 including distributions paid and assuming reinvestment of those distributions.

  4

Cumulative fiscal year distribution rate for the period from the beginning of its fiscal year to July 31, 2021 measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund’s NAV as of July 31, 2021.

If you have any questions regarding this information, please contact your investment advisor or an Eaton Vance Investor Services associate at 1-866-328-6681. Our associates are available to assist you Monday-Friday 8:30 a.m. to 5:30 p.m., Eastern Time.

 

NOTE: This correspondence is for informational purposes only and should not be relied upon to project the tax character of actual Fund distributions for the 2021 calendar year.

NO ACTION IS REQUIRED ON YOUR PART.

Eaton Vance Tax-Managed Diversified Equity Income Fund

August 31, 2021


LOGO

Dear Eaton Vance Fund Shareholder:

This notice provides shareholders of the Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE: ETY) with important information concerning the distribution declared in September 2021. You are receiving this notice as a requirement of the Fund’s managed distribution plan (Plan). The Board of Trustees approved the implementation of the Plan to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share. This information is sent to you for informational purposes only and is an estimate of the sources of the September distribution. It is not determinative of the tax character of the Fund’s distributions for the 2021 calendar year.

The amounts and sources of distributions reported in this notice are estimates, are not being provided for tax reporting purposes and the distribution may later be determined to be from other sources including realized short-term gains, long-term gains, to the extent permitted by law, and return of capital. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Distribution Period: September 2021

Distribution Amount per Common Share: $0.0929

The following table sets forth an estimate of the sources of the Fund’s September distribution and its cumulative distributions paid this fiscal year to date. Amounts are expressed on a per common share basis and as a percentage of the distribution amount.

 

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Source

   Current
Distribution
     % of Current
Distribution
    Cumulative
Distributions for the
Fiscal Year-to-Date1
     % of the Cumulative
Distributions for the  Fiscal
Year-to-Date1
 

Net Investment Income

   $ 0.0066        7.1   $ 0.0472        5.0

Net Realized Short-Term Capital Gains

   $ 0.0000        0.0   $ 0.0000        0.0

Net Realized Long-Term Capital Gains

   $ 0.0466        50.2   $ 0.5686        60.2

Return of Capital or Other Capital Source(s)

   $ 0.0397        42.7   $ 0.3287        34.8

Total per common share

   $ 0.0929        100.0   $ 0.9445        100.0

 

  1

The Fund’s fiscal year is November 1, 2020 to October 31, 2021

IMPORTANT DISCLOSURE: You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and/or tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.


Set forth in the table below is information relating to the Fund’s performance based on its net asset value (NAV) for certain periods.

 

Average annual total return at NAV for the 5-year period ended on August 31, 20211

     13.84

Annualized current distribution rate expressed as a percentage of NAV as of August 31, 20212

     7.86

Cumulative total return at NAV for the fiscal year through August 31, 20213

     30.43

Cumulative fiscal year to date distribution rate as a percentage of NAV as of August 31, 20214

     6.01

 

  1

Average annual total return at NAV represents the change in NAV of the Fund, with all distributions reinvested, for the 5-year period ended on August 31, 2021.

  2

The annualized current distribution rate is the cumulative distribution rate annualized as a percentage of the Fund’s NAV as of August 31, 2021.

  3

Cumulative total return at NAV is the percentage change in the Fund’s NAV for the period from the beginning of its fiscal year to August 31, 2021 including distributions paid and assuming reinvestment of those distributions.

  4

Cumulative fiscal year distribution rate for the period from the beginning of its fiscal year to August 31, 2021 measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund’s NAV as of August 31, 2021.

If you have any questions regarding this information, please contact your investment advisor or an Eaton Vance Investor Services associate at 1-866-328-6681. Our associates are available to assist you Monday-Friday 8:30 a.m. to 5:30 p.m., Eastern Time.

 

NOTE: This correspondence is for informational purposes only and should not be relied upon to project the tax character of actual Fund distributions for the 2021 calendar year.

NO ACTION IS REQUIRED ON YOUR PART.

Eaton Vance Tax-Managed Diversified Equity Income Fund

September 30, 2021


LOGO

Dear Eaton Vance Fund Shareholder:

This notice provides shareholders of the Eaton Vance Tax-Managed Diversified Equity Income Fund (NYSE: ETY) with important information concerning the distribution declared in October 2021. You are receiving this notice as a requirement of the Fund’s managed distribution plan (Plan). The Board of Trustees approved the implementation of the Plan to make monthly cash distributions to common shareholders, stated in terms of a fixed amount per common share. This information is sent to you for informational purposes only and is an estimate of the sources of the October distribution. It is not determinative of the tax character of the Fund’s distributions for the 2021 calendar year.

The amounts and sources of distributions reported in this notice are estimates, are not being provided for tax reporting purposes and the distribution may later be determined to be from other sources including realized short-term gains, long-term gains, to the extent permitted by law, and return of capital. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

Distribution Period: October 2021

Distribution Amount per Common Share: $0.0929

The following table sets forth an estimate of the sources of the Fund’s October distribution and its cumulative distributions paid this fiscal year to date. Amounts are expressed on a per common share basis and as a percentage of the distribution amount.

 

Eaton Vance Tax-Managed Diversified Equity Income Fund

 

Source

   Current
Distribution
     % of Current
Distribution
    Cumulative
Distributions for the
Fiscal Year-to-Date1
     % of the Cumulative
Distributions for the  Fiscal
Year-to-Date1
 

Net Investment Income

   $ 0.0072        7.8   $ 0.0550        5.3

Net Realized Short-Term Capital Gains

   $ 0.0000        0.0   $ 0.0000        0.0

Net Realized Long-Term Capital Gains

   $ 0.0000        0.0   $ 0.5125        49.4

Return of Capital or Other Capital Source(s)

   $ 0.0857        92.2   $ 0.4699        45.3

Total per common share

   $ 0.0929        100.0   $ 1.0374        100.0

 

  1

The Fund’s fiscal year is November 1, 2020 to October 31, 2021

IMPORTANT DISCLOSURE: You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Plan. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and/or tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.


Set forth in the table below is information relating to the Fund’s performance based on its net asset value (NAV) for certain periods.

 

Average annual total return at NAV for the 5-year period ended on September 30, 20211

     12.85

Annualized current distribution rate expressed as a percentage of NAV as of September 30, 20212

     8.25

Cumulative total return at NAV for the fiscal year through September 30, 20213

     25.12

Cumulative fiscal year to date distribution rate as a percentage of NAV as of September 30, 20214

     6.99

 

  1

Average annual total return at NAV represents the change in NAV of the Fund, with all distributions reinvested, for the 5-year period ended on September 30, 2021.

  2

The annualized current distribution rate is the cumulative distribution rate annualized as a percentage of the Fund’s NAV as of September 30, 2021.

  3

Cumulative total return at NAV is the percentage change in the Fund’s NAV for the period from the beginning of its fiscal year to September 30, 2021 including distributions paid and assuming reinvestment of those distributions.

  4

Cumulative fiscal year distribution rate for the period from the beginning of its fiscal year to September 30, 2021 measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund’s NAV as of September 30, 2021.

If you have any questions regarding this information, please contact your investment advisor or an Eaton Vance Investor Services associate at 1-866-328-6681. Our associates are available to assist you Monday-Friday 8:30 a.m. to 5:30 p.m., Eastern Time.

 

NOTE: This correspondence is for informational purposes only and should not be relied upon to project the tax character of actual Fund distributions for the 2021 calendar year.

NO ACTION IS REQUIRED ON YOUR PART.

Eaton Vance Tax-Managed Diversified Equity Income Fund

October 29, 2021