Eaton Vance Short Duration Diversified Income Fund
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: 811-21563
Eaton Vance Short Duration Diversified 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, 2023
Date of Reporting Period
Item 1. Reports to Stockholders
Eaton Vance
Short Duration Diversified Income Fund (EVG)
Annual Report
October 31, 2023
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 and a commodity trading advisor.
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.
Annual Report October 31, 2023
Eaton Vance
Short Duration Diversified Income Fund
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Management’s Discussion of Fund Performance†
Economic and Market Conditions
For fixed-income investors, the dominant event during the
12-month period ended October 31, 2023, was the series of U.S. Federal Reserve (Fed) interest rate hikes -- six during the period, and 11 in total -- that brought the federal funds rate to its highest level in 22 years.
But while the Fed’s campaign to tamp down inflation led
to negative performance for government bonds, corporate bond returns were positive during the period -- buoyed by the very factors that were fueling inflation: record low unemployment, strong job creation, and robust consumer spending.
By the summer of 2023, many economists and market observers
came around to the view that Jerome Powell’s Fed might be able to accomplish what had seldom, if ever, been done before: raise rates significantly to lower inflation and still bring the U.S. economy in for a soft landing without a
recession.
One persistent cloud over fixed-income
markets during the period, however, was fear that even after it finished raising rates, the Fed would leave rates higher for longer than investors had previously anticipated. During the final three months of the period -- and especially after the
Fed’s September 2023 meeting -- longer-term interest rates rose dramatically, as investor expectations of how high rates would go -- and how long they would stay there -- seemed to get higher and longer. As a result, shorter-duration bonds
generally outperformed longer-duration bonds for the period as a whole.
Against the backdrop of aggressive monetary tightening, U.S.
Treasurys were one of the worst-performing major fixed-income asset classes during the 12-month period, with the Bloomberg U.S. Treasury Index returning -0.63%.
In contrast, the strong U.S. economy and increasing confidence
in a soft-landing scenario served as tailwinds for investment-grade corporate bonds. Even in a rising-rate environment, the Bloomberg U.S. Corporate Bond Index returned 2.77% during the period.
High yield bonds were strong performers, with the Bloomberg
U.S. Corporate High Yield Index returning 6.23% during the period. With a resilient U.S. economy helping keep bond defaults low, and a recession looking increasingly remote, investors gravitated toward riskier investments with greater
yields.
Asset-backed securities -- including bonds
backed by automobile and consumer loans -- benefited from strong consumer balance sheets and spending during the period, with the Bloomberg U.S. Asset-Backed Securities Index returning 3.51%.
Senior loans were among the few asset classes to benefit from
rising interest rates, with the Morningstar® LSTA® US Leveraged Loan IndexSM, a broad measure of the asset class, returning 11.92% -- outperforming virtually every other major U.S. fixed-income asset class during the period.
However, mortgage-backed securities (MBS) were dogged by two
technical factors that depressed prices, causing the Bloomberg U.S. Mortgage-Backed Securities Index to return -0.82% during the period. As the Fed reduced its balance sheet, it sold off much of its MBS holdings. And several regional banks that had
been significant buyers of MBS were forced by the regional banking crisis of March 2023 to liquidate their assets. The resulting release of a significant amount of MBS into the market led MBS prices to fall and the asset class to deliver negative
returns during the period.
Fund
Performance
For the 12-month period ended October
31, 2023, Eaton Vance Short Duration Diversified Income Fund (the Fund) returned 10.20% at net asset value of its common shares (NAV). The Fund outperformed its primary benchmark, the Bloomberg U.S. Aggregate Bond Index (the Index), which returned
0.36% during the period. In addition, the Fund outperformed its custom benchmark -- consisting of 33.33% Morningstar® LSTA® US Leveraged Loan IndexSM (the Loan
Index), 33.33% ICE BofA U.S. Mortgage-Backed Securities Index (the MBS Index), and 33.34% J.P. Morgan Emerging Market Bond Index (EMBI) Global Diversified Spread Index (the EMD Index) -- which returned 7.08% during the period.
The Fund’s use of investment leverage, which is not
employed by the Index, contributed to performance versus the Index. The use of leverage magnifies exposure to the underlying investments in both up and down market environments. During a period of generally positive returns for the underlying
allocations of the Fund, leverage contributed to Index-relative performance.
The Fund’s allocation to emerging-market debt --
comprising a mix of emerging-market bonds and derivative positions -- contributed to performance and meaningfully outperformed the EMD Index during the period. Overweight sovereign credit positions in Sri Lanka and Suriname also contributed to EMD
Index-relative performance as both countries made considerable progress in their debt restructuring plans with bond holders. An overweight exposure to Romanian sovereign credit contributed as well. In contrast, top detractors from EMD Index-relative
performance included an overweight exposure to Mexican sovereign credit, and underweight exposures to Colombian and Indonesian sovereign credit.
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. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. 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.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Management’s
Discussion of Fund Performance† — continued
The Fund’s exposure to floating-rate corporate loans
contributed to returns relative to the Index, but trailed the Loan Index during the period. Selections within the software and metals & mining segments detracted most from performance relative to the Loan Index, although this was partially
offset by positive selections within the health care and professional services segments. Meanwhile, the loan allocation’s underweight exposure to BBB-rated loans, which trailed the broader Loan Index’s returns, benefited Loan
Index-relative performance during the period.
The
Fund’s allocation to agency mortgage-backed securities (MBS) detracted from performance relative to the Index. However, the allocation slightly outperformed the MBS Index. Elevated interest rate volatility for much of the period -- as well as
a challenging supply-demand environment due to the U.S. Federal Reserve’s quantitative tightening program and regional banking pressures -- led to relatively weak performance versus the Index in the agency MBS sector. Outperformance within the
MBS sleeve relative to the MBS Index was due to the Fund’s allocation to specified pools and interest-only MBS. In addition to their higher yields, interest-only MBS were generally positively impacted by rising interest rates. The Fund’s
allocation to collateralized mortgage obligations detracted from performance relative to the MBS Index during the period.
The Fund’s out-of-Index exposure to collateralized loan
obligation (CLO) debt within the Fund’s senior loan category contributed meaningfully to the Fund’s return versus the Index during the period. The Fund was primarily allocated to BB-rated CLO debt, which returned 23.86% during the
period. Elsewhere, the Fund’s allocations to commercial MBS detracted from Index-relative performance, as this portion of the Fund returned -5.81% during the period. Meanwhile, the Fund’s high yield corporate bond allocation returned
5.28% during the period, outpacing the Index and contributing to Index-relative returns.
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. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. 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.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Performance
Portfolio Manager(s) Catherine
C. McDermott, Andrew Szczurowski, CFA, Akbar A. Causer and Federico Sequeda, CFA
%
Average Annual Total Returns1,2 |
Inception
Date |
One
Year |
Five
Years |
Ten
Years |
Fund
at NAV |
02/28/2005
|
10.20%
|
1.62%
|
3.06%
|
Fund
at Market Price |
—
|
2.86
|
3.59
|
3.58
|
|
Bloomberg
U.S. Aggregate Bond Index |
—
|
0.36%
|
(0.06)%
|
0.88%
|
Blended
Index |
—
|
7.08
|
1.48
|
—
|
%
Premium/Discount to NAV3 |
|
As
of period end |
(5.24)%
|
Distributions
4 |
|
Total
Distributions per share for the period |
$0.978
|
Distribution
Rate at NAV |
8.62%
|
Distribution
Rate at Market Price |
9.09
|
%
Total Leverage5 |
|
Borrowings
|
12.30%
|
Derivatives
|
19.72
|
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.
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. Furthermore, returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. 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.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Asset
Allocation (% of total investments)1 |
Footnotes:
1 |
Including
the Fund’s use of leverage, Asset Allocation as a percentage of the Fund’s net assets amounted to 128.7%. |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡
Investment Objectives. The Fund’s investment objective is to provide a high level of current income. The Fund may, as a secondary objective, also seek capital appreciation to the extent consistent with its primary goal of high current
income.
Principal Strategies. The Fund will invest at least 25% of its net assets in each of the following three investment categories: (i) senior, secured floating rate loans made to corporate and other business entities, which are typically rated below
investment grade (“Senior Loans”); (ii) bank deposits denominated in foreign currencies, debt obligations of foreign governmental and corporate issuers, including emerging market issuers, which are denominated in foreign currencies or
U.S. dollars, and positions in foreign currencies; and (iii) mortgage-backed securities that are issued, backed or otherwise guaranteed by the U.S. Government or its agencies or instrumentalities or that are issued by private issuers. The Fund may
invest without limit, within its Senior Loans category, in collateralized loan obligations (“CLOs”) and in U.S. corporate debt obligations rated below investment grade (“U.S. High Yield Bonds”), commonly referred to as
“junk” bonds.
At least 80% of the
Fund’s total leveraged assets will be invested in its three principal investment categories, including through the use of derivatives; the Fund’s exposure to each of these categories will equal at least 25% of the Fund’s net
assets, including through the use of derivatives. Total leveraged assets are net assets plus liabilities or obligations attributable to investment leverage and the notional value of long and short forward foreign currency contracts, futures
contracts and swaps held by the Fund. The Fund may obtain investment exposures through long or short positions in derivative instruments, including derivatives with U.S. High Yield Bonds as reference instruments (such as credit default swap
indices), and through investment in other investment companies. The Fund may enter into forward commitments to buy or sell agency mortgage-backed securities (to-be-announced transaction, or “TBAs”).
The Fund may also invest in investment grade bonds, including
corporate bonds, asset-backed securities and commercial mortgage-backed securities (“CMBS”), and other permitted investments. The Fund is required to maintain (i) a weighted average portfolio credit quality of investment grade, which is
at least BBB- as determined by S&P Global Ratings or Fitch Ratings Inc., or Baa3 as determined by Moody’s Investors Service, Inc. or, if unrated, determined to be of comparable quality by the adviser and (ii) a duration of no more than
three years, including the effect of leverage.
The Fund
may execute short sales of sovereign bonds and may enter into reverse repurchase agreements.
The Fund employs leverage to seek opportunities for additional
income. Leverage may amplify the effect on the Fund’s net asset value (“NAV”) of any increase or decrease in the value of investments held. There can be no assurance that the use of borrowings will be successful. The Fund has
borrowed to establish leverage. The Fund also may establish leverage through derivatives and reverse repurchase agreements.
When deemed by the investment adviser to be relevant to its
evaluation of creditworthiness and when applicable information is available, the investment adviser considers environmental, social and/or governance issues (referred to as ESG) which may impact the prospects of an issuer (or obligor) or financial
performance of an obligation. When considered, one or more ESG issues are taken into account alongside other factors in the investment decision-making process and are not the sole determinant of whether an investment can be made or will remain in
the Fund’s portfolio.
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, social, economic, political, financial, public health crises or other disruptive events (whether real, expected or perceived) in the U.S. and global markets and include
events such as war, natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest. 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. 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.
Credit Risk. Investments in
fixed income and other debt obligations, including loans, (referred to below as “debt instruments”) are subject to the risk of non-payment of scheduled principal and interest. Changes in economic conditions or other circumstances may
reduce the capacity of the party obligated to make principal and interest payments on such instruments and may lead to defaults. Such non-payments and defaults may reduce the value of Fund shares and income distributions. The value of debt
instruments also may decline because of concerns about the issuer’s ability to make principal and interest payments. In addition, the credit ratings of debt instruments may be lowered if the financial condition of the party obligated to make
payments with respect to such instruments deteriorates. In the event of bankruptcy of the issuer of a debt instrument, the Fund could experience delays or limitations with respect to its ability to realize the benefits of any collateral securing the
instrument. In order to enforce its rights in the event of a default, bankruptcy or similar situation, the Fund may be required to retain legal or similar counsel, which may increase the Fund’s operating expenses and adversely affect net asset
value.
See Endnotes and Additional Disclosures in this report.
6
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
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 against a particular country or countries,
organizations, entities and/or individuals. 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. Adverse changes in investment regulations, capital requirements or exchange controls could adversely affect the value of the Fund’s investments. 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. Economic data as reported by sovereign entities may be delayed, inaccurate or fraudulent. In the event of a default by a sovereign entity, there are typically no assets to be seized or cash flows to be
attached. Furthermore, the willingness or ability of a sovereign entity to restructure defaulted debt may be limited. Therefore, losses on sovereign defaults may far exceed the losses from the default of a similarly rated United States debt
issuer.
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
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.
Sukuk.
The Fund may invest in Sukuk, which are foreign or emerging market securities based on Islamic principles. Sukuk are securities with cash flows similar to conventional bonds, issued by an issuer, which is usually a special purpose vehicle
incorporated by the sovereign or corporate entity seeking financing, to obtain an upfront payment in exchange for an income stream and a future promise to return capital. Such income stream may or may not be linked to a tangible asset. For Sukuk
that are not linked to a tangible asset, the Sukuk represents a contractual payment obligation of the issuer or issuing vehicle to pay income or periodic payments or distributions to the investor, and such contractual payment obligation is linked to
the issuer or issuing vehicle and not from interest on the investor’s money for Sukuk. For Sukuk linked to a tangible asset, the Fund will not have a direct interest in, or recourse to, the underlying asset or pool of assets. Sukuk involve
many of the same risks that conventional bonds incur, such as credit risk and interest rate risk, as well as the risks associated with foreign or emerging market securities. In addition to these risks, there are certain risks specific to Sukuk, such
as those relating to their structures.
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.
Interest Rate Risk. In general,
the value of income securities will fluctuate based on changes in interest rates. The value of these securities is likely to increase when interest rates fall and decline when interest rates rise. Duration measures the time-weighted expected cash
flows of a fixed-income security, while maturity refers to the amount of time until a fixed-income security matures. Generally, securities with longer durations or maturities are more sensitive to changes in interest rates than securities with
shorter durations or maturities, causing them to be more volatile. Conversely, fixed-income securities with shorter durations or maturities will be less volatile but may provide lower returns than fixed-income securities with longer durations or
maturities. The impact of interest rate changes is significantly less for floating-rate instruments that have relatively short periodic rate resets (e.g., ninety days or less). In a rising interest rate environment, the durations or maturities of
income securities that have the ability to be prepaid or called by the issuer may be extended. In a declining interest rate environment, the proceeds from prepaid or maturing instruments may have to be reinvested at a lower interest
rate.
LIBOR Transition and Associated Risk. The London Interbank Offered Rate or LIBOR historically was used throughout global banking and financial industries to determine interest rates for a variety of financial instruments (such as debt instruments and
derivatives) and borrowing arrangements. The ICE Benchmark Administration Limited, the administrator of LIBOR ceased publishing certain LIBOR settings on December 31, 2021, and ceased publishing the remaining LIBOR settings on June 30, 2023. In
addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. The Fund has exposure to instruments that were historically based on LIBOR. The impact of the transition away
from LIBOR on certain debt securities, derivatives and other financial instruments that utilize LIBOR remains uncertain. The transition away from LIBOR and the use of replacement rates may adversely affect transactions that used LIBOR as a reference
rate, financial institutions, funds and other market participants that engaged in such transactions, and the financial markets generally. Any effects of the transition away from LIBOR and the adoption of alternative reference rates, as well as other
unforeseen effects, could result in losses to the Fund. Furthermore, the risks associated with the expected discontinuation of LIBOR and transition to replacement rates may be exacerbated if an orderly transition to an alternative reference rate is
not completed in a timely manner.
Loans Risk. Loans are traded in a private, unregulated inter-dealer or inter-bank resale market and are generally subject to contractual restrictions that must be satisfied before a loan can be bought or sold. These restriction may
impede the Fund’s ability to buy or sell loans (thus affecting their liquidity) and may negatively impact the transaction price. See also “Market Risk” above. It also may take longer than seven days for transactions in loans to
settle. The types of covenants included in loan agreements generally vary depending on market conditions, the creditworthiness of the issuer, the nature of the collateral securing the loan and possibly other factors. Loans with fewer covenants that
restrict activities of the borrower may provide the borrower with more flexibility to take actions that may be detrimental to the loan holders and provide fewer investor protections in the event of such actions or if covenants are breached. The Fund
may experience relatively greater realized or unrealized losses or delays and expense in enforcing its rights with respect to loans with fewer restrictive covenants. Loans to entities located outside of the U.S. may have substantially different
lender protections and covenants as compared to loans to U.S. entities and may involve greater risks. The Fund may have difficulties and incur expense enforcing its rights with respect to
See Endnotes and
Additional Disclosures in this report.
7
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
non-U.S. loans and such loans could be subject to bankruptcy laws that are
materially different than in the U.S. Loans may be structured such that they are not securities under securities law, and in the event of fraud or misrepresentation by a borrower, lenders may not have the protection of the anti-fraud provisions of
the federal securities laws. Loans are also subject to risks associated with other types of income investments, including credit risk and risks of lower rated investments.
Mortgage- and Asset-Backed Securities Risk. Mortgage- and asset-backed securities represent interests in “pools” of commercial or residential mortgages or other assets, including consumer loans or receivables. Movements in interest rates (both
increases and decreases) may quickly and significantly reduce the value of certain types of mortgage- and asset-backed securities. Although certain mortgage- and asset-backed securities are guaranteed as to timely payment of interest and principal
by a government entity, the market price for such securities is not guaranteed and will fluctuate. The purchase of mortgage- and asset-backed securities issued by non-government entities may entail greater risk than such securities that are issued
or guaranteed by a government entity. Mortgage and asset-backed securities issued by non-government entities may offer higher yields than those issued by government entities, but may also be subject to greater volatility than government issues and
can also be subject to greater credit risk and the risk of default on the underlying mortgages or other assets. Investments in mortgage- and asset-backed securities are subject to both extension risk, where borrowers pay off their debt obligations
more slowly in times of rising interest rates, and prepayment risk, where borrowers pay off their debt obligations sooner than expected in times of declining interest rates. Asset-backed securities represent interests in a pool of assets, such as
home equity loans, CMBS, automobile receivables or credit card receivables, and include CLOs and stripped securities. Interests in CLOs are split into two or more portions, called tranches, which vary in risk, maturity, payment priority and yield.
Each CLO tranche is entitled to scheduled debt payments from the underlying loans and assumes the risk of a default by the underlying loans. The Fund will indirectly bear any management fees and expenses incurred by a CLO.
Lower Rated Investments Risk.
Investments rated below investment grade and comparable unrated investments (sometimes referred to as “junk”) are speculative because of increased credit risk relative to other fixed income investments. Changes in economic conditions or
other circumstances typically have a greater effect on the ability of issuers of lower rated investments to make principal and interest payments than they do on issuers of higher rated investments. An economic downturn generally leads to a higher
non-payment rate, and a lower rated investment may lose significant value before a default occurs. Lower rated investments typically are subject to greater price volatility and illiquidity than higher rated investments.
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 (or be unable to achieve) the return of collateral or other assets held by the counterparty. The loss on derivative transactions may substantially
exceed the initial investment. A derivative investment also involves the risks relating to the reference instrument underlying the investment.
Leverage Risk. Certain Fund
transactions may give rise to leverage. Leverage can result from a non-cash exposure to the underlying reference instrument. Leverage can increase both the risk and return potential of the Fund. The use of leverage may cause the Fund to maintain
liquid assets or 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 share price 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.
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.
Reverse Repurchase Agreements.
In the event of the insolvency of the counterparty to a reverse repurchase agreement, recovery of the securities sold by the Fund may be delayed. In a reverse repurchase agreement, the counterparty’s insolvency may result in a loss equal to
the amount by which the value of the securities sold by the Fund exceeds the repurchase price payable by the Fund. When the Fund enters into a reverse repurchase agreement, any fluctuations in the market value of either the securities sold to the
counterparty or the securities which the Fund purchases with the proceeds under the agreement would affect the value of the Fund’s assets. As a result, such agreements may increase fluctuations in the net asset value of the Fund’s
shares. Because reverse repurchase agreements are considered to be a form of borrowing by the Fund (and a loan from the counterparty), they create leverage.
See Endnotes and Additional Disclosures in this report.
8
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
Short Sale Risk. The Fund will
incur a loss as a result of a short sale if the price of the security sold short increases in value between the date of the short sale and the date on which the Fund purchases the security to replace the borrowed security. Short sale risks include,
among others, the potential loss of more money than the actual cost of the investment, and the risk that the third party to the short sale may fail to honor its contract terms, causing a loss to the Fund.
When-Issued and Forward Commitment Risk. Securities purchased on a when-issued or forward commitment basis are subject to the risk that when delivered they will be worth less than the agreed upon payment price.
U.S. Government Securities
Risk. Although certain U.S. Government-sponsored agencies (such as the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association) may be chartered or sponsored by acts of Congress, their
securities are neither issued nor guaranteed by the U.S. Treasury. U.S. Treasury securities generally have a lower return than other obligations because of their higher credit quality and market liquidity.
Cash and Money Market Instruments; Temporary Defensive Positions. The Fund may invest in cash or money market instruments, including high quality short-term instruments or an affiliated investment company that invests in such instruments. During unusual market conditions, including
for temporary defensive purposes, the Fund may invest up to 100% of its assets in cash or money market instruments, which may be inconsistent with its investment objective(s) and other policies, and as such, the Fund may not achieve its investment
objective(s) during this period. Money market instruments may be adversely affected by market and economic events, such as a sharp rise in prevailing short-term interest rates; adverse developments in the banking industry, which issues or guarantees
many money market instruments; adverse economic, political or other developments affecting issuers of money market instruments; changes in the credit quality of issuers; and default by a counterparty.
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 and there
is no guarantee that such decisions will produce the desired results or expected returns.
Recent Market Conditions. The
outbreak of COVID-19 and efforts to contain its spread have 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, and the effects of other infectious illness outbreaks, epidemics or pandemics may be short term or 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. 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 calculating its net asset value, 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 objectives. 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.
Anti-Takeover Provisions. The
Fund’s Agreement and Declaration of Trust (the “Declaration of Trust”) and Amended and Restated By-Laws include provisions that could have the effect of limiting the ability of other persons or entities to acquire control of the
Fund or to change the composition of its Board. For example, pursuant to the Fund’s Declaration of Trust, the Fund Board is divided into three classes of Trustees with each class serving for a three-year term and certain types of transactions
require the favorable vote of holders of at least 75% of the outstanding shares of the Fund.
Important Notice to Shareholders
The following information in this annual report is a summary of
certain changes since October 31, 2022. This information may not reflect all of the changes that have occurred since you purchased this Fund.
See Endnotes and Additional Disclosures in this report.
9
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
The Fund's Investment
Objectives, Principal Strategies and Principal Risks‡ — continued
Prior to October 18, 2023, the Fund’s portfolio
management team included Akbar A. Causer, Catherine M. McDermott, Federico Sequeda, Andrew Szczurowski and Eric Stein. Effective October 18, 2023, the Fund’s portfolio management team includes Akbar A. Causer, Catherine M. McDermott,
Federico Sequeda and Andrew Szczurowski.
On January 26,
2023, the Fund’s Board of Trustees voted to exempt, on a going forward basis, all prior and, until further notice, new acquisitions of Fund shares that otherwise might be deemed “Control Share Acquisitions” under the Fund’s
By-Laws from the Control Share Provisions of the Fund’s By-Laws.
See Endnotes and Additional Disclosures in this report.
10
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Endnotes and
Additional Disclosures
†
|
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. |
‡ |
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. |
|
|
1 |
Bloomberg U.S.
Aggregate Bond Index is an unmanaged index of domestic investment-grade bonds, including corporate, government and mortgage-backed securities. Morningstar® LSTA® US Leveraged Loan IndexSM is an unmanaged index of the institutional leveraged loan market. Morningstar® LSTA® Leveraged Loan indices are a product of Morningstar, Inc.
(“Morningstar”) and have been licensed for use. Morningstar® is a registered trademark of Morningstar licensed for certain use. Loan Syndications and Trading Association® and LSTA® are trademarks of the LSTA
licensed for certain use by Morningstar, and further sublicensed by Morningstar for certain use. Neither Morningstar nor LSTA guarantees the accuracy and/or completeness of the Morningstar® LSTA® US Leveraged Loan IndexSM or any data included therein, and shall have no liability for any errors, omissions, or interruptions therein. ICE BofA U.S. Mortgage-Backed Securities Index is an unmanaged
index of fixed rate residential mortgage pass-through securities issued by U.S. agencies. ICE® BofA® indices are not for redistribution or other uses; provided “as is”, without warranties, and with no liability. Eaton Vance
has prepared this report and ICE Data Indices, LLC does not endorse it, or guarantee, review, or endorse Eaton Vance’s products. BofA® is a licensed registered trademark of Bank of America Corporation in the United States and other
countries. The J.P. Morgan Emerging Market Bond Index (EMBI) Global Diversified Spread Index is the spread component of the J.P. Morgan EMBI Global Diversified. J.P. Morgan EMBI Global Diversified is a market-cap weighted index that measures
USD-denominated Brady Bonds, Eurobonds, and traded loans issued by sovereign entities. The J.P. Morgan EMBI Global Diversified Spread Index commenced on July 27, 2016; accordingly the Ten Years return is not available. Information has been obtained
from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan’s prior written approval. Copyright
2021, J.P. Morgan Chase & Co. All rights reserved. The Blended Index consists of 33.33% Morningstar® LSTA® |
|
US Leveraged Loan IndexSM, 33.33% ICE BofA U.S. Mortgage-Backed Securities Index and 33.34% J.P. Morgan EMBI Global Diversified Spread Index, rebalanced monthly. 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. |
2 |
Performance
results reflect the effects of leverage. Absent an expense waiver by the investment adviser, if applicable, the returns would be lower. |
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. The Fund’s distributions are determined by the investment adviser. 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 |
The
Fund employs leverage through derivatives and borrowings. Total leverage is shown as a percentage of the Fund’s aggregate net assets plus the absolute notional value of long and short derivatives and borrowings outstanding. Use of leverage
creates an opportunity for income, but creates risks including greater price volatility. The cost of borrowings rises and falls with changes in short-term interest rates. The Fund may be required to maintain prescribed asset coverage for its
leverage and may be required to reduce its leverage at an inopportune time. |
|
Fund profile subject to
change due to active management. |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Endnotes and
Additional Disclosures — continued
|
Additional Information
|
|
Bloomberg U.S. Treasury Index
measures the performance of U.S. Treasuries with a maturity of one year or more. Bloomberg U.S. Corporate Bond Index measures the performance of investment-grade U.S. corporate securities with a maturity of one year or more. Bloomberg U.S. Corporate
High Yield Index measures USD-denominated, non-investment grade corporate securities. Bloomberg U.S. Mortgage-Backed Securities Index measures agency mortgage-backed pass-through securities issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie
Mac (FHLMC). Bloomberg U.S. Asset-Backed Securities Index tracks the performance of U.S. dollar denominated investment grade, fixed rate asset-backed securities publicly issued in the U.S. domestic market. |
|
Duration
is a measure of the expected change in price of a bond — in percentage terms — given a one percent change in interest rates, all else being constant. Securities with lower durations tend to be less sensitive to interest rate changes.
|
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Asset-Backed
Securities — 19.3% |
Security
|
Principal
Amount (000's omitted) |
Value
|
AMMC
CLO 15, Ltd., Series 2014-15A, Class ERR, 12.566%, (3 mo. SOFR + 7.172%), 1/15/32(1)(2) |
$
|
2,000
|
$
1,757,694 |
AMMC
CLO XII, Ltd., Series 2013-12A, Class ER, 11.807%, (3 mo. SOFR + 6.442%), 11/10/30(1)(2) |
|
1,000
|
853,784
|
Ares
XXXIIR CLO, Ltd., Series 2014-32RA, Class D, 11.476%, (3 mo. SOFR + 6.111%), 5/15/30(1)(2) |
|
1,000
|
856,831
|
Carlyle
Global Market Strategies CLO, Ltd.: |
|
|
|
Series
2012-3A, Class DR2, 12.156%, (3 mo. SOFR + 6.761%), 1/14/32(1)(2) |
|
2,000
|
1,668,694
|
Series
2014-4RA, Class D, 11.306%, (3 mo. SOFR + 5.912%), 7/15/30(1)(2) |
|
1,000
|
804,328
|
Series
2015-5A, Class DR, 12.377%, (3 mo. SOFR + 6.961%), 1/20/32(1)(2) |
|
1,000
|
817,725
|
Carlyle
US CLO, Ltd., Series 2022-6A, Class DR, 10.13%, (3 mo. SOFR + 4.75%), 10/25/36(1)(2) |
|
1,000
|
1,003,401
|
Galaxy
XV CLO, Ltd., Series 2013-15A, Class ER, 12.301%, (3 mo. SOFR + 6.906%), 10/15/30(1)(2) |
|
1,440
|
1,293,682
|
Galaxy
XXI CLO, Ltd., Series 2015-21A, Class ER, 10.927%, (3 mo. SOFR + 5.511%), 4/20/31(1)(2) |
|
1,000
|
902,158
|
Galaxy
XXV CLO, Ltd., Series 2018-25A, Class E, 11.59%, (3 mo. SOFR + 6.211%), 10/25/31(1)(2) |
|
1,250
|
1,106,564
|
Golub
Capital Partners CLO 22B, Ltd., Series 2015-22A, Class ER, 11.677%, (3 mo. SOFR + 6.262%), 1/20/31(1)(2) |
|
2,000
|
1,872,446
|
Golub
Capital Partners CLO 23M, Ltd., Series 2015-23A, Class ER, 11.427%, (3 mo. SOFR + 6.011%), 1/20/31(1)(2) |
|
2,000
|
1,853,692
|
Madison
Park Funding XXV, Ltd., Series 2017-25A, Class D, 11.74%, (3 mo. SOFR + 6.362%), 4/25/29(1)(2) |
|
3,000
|
2,798,727
|
Neuberger
Berman CLO XVIII, Ltd., Series 2014-18A, Class DR2, 11.594%, (3 mo. SOFR + 6.182%), 10/21/30(1)(2) |
|
3,000
|
2,786,799
|
NRZ
Excess Spread-Collateralized Notes, Series 2021-GNT1, Class A, 3.474%, 11/25/26(1) |
|
637
|
574,273
|
Octagon
68, Ltd., Series 2023-1A, Class D, 10/20/36(1)(3) |
|
1,000
|
1,000,000
|
Palmer
Square CLO, Ltd., Series 2013-2A, Class DRR, 11.514%, (3 mo. SOFR + 6.111%), 10/17/31(1)(2) |
|
2,000
|
1,873,650
|
Regatta
IX Funding, Ltd., Series 2017-1A, Class E, 11.664%, (3 mo. SOFR + 6.262%), 4/17/30(1)(2) |
|
2,000
|
1,854,610
|
Voya
CLO, Ltd., Series 2015-3A, Class DR, 11.877%, (3 mo. SOFR + 6.462%), 10/20/31(1)(2) |
|
2,000
|
1,601,934
|
Total
Asset-Backed Securities (identified cost $29,893,316) |
|
|
$ 27,280,992
|
Collateralized
Mortgage Obligations — 11.7% |
Security
|
Principal
Amount (000's omitted) |
Value
|
Cascade
MH Asset Trust, Series 2022-MH1, Class A, 4.25% to 10/1/27, 8/25/54(1)(4) |
$
|
471
|
$ 412,386
|
Federal
Home Loan Mortgage Corp.: |
|
|
|
Series
2113, Class QG, 6.00%, 1/15/29 |
|
133
|
131,510
|
Series
2167, Class BZ, 7.00%, 6/15/29 |
|
124
|
123,945
|
Series
2182, Class ZB, 8.00%, 9/15/29 |
|
197
|
200,402
|
Series
4273, Class PU, 4.00%, 11/15/43 |
|
420
|
357,972
|
Series
5035, Class AZ, 2.00%, 11/25/50 |
|
553
|
223,381
|
Series
5327, Class B, 6.00%, 8/25/53 |
|
1,000
|
954,179
|
Interest
Only:(5) |
|
|
|
Series
362, Class C7, 3.50%, 9/15/47 |
|
1,011
|
185,916
|
Series
2631, Class DS, 1.665%, (6.986% - 30-day average SOFR), 6/15/33(6) |
|
162
|
3,310
|
Series
2770, Class SH, 1.665%, (6.986% - 30-day average SOFR), 3/15/34(6) |
|
495
|
45,358
|
Series
2981, Class CS, 1.285%, (6.606% - 30-day average SOFR), 5/15/35(6) |
|
255
|
13,096
|
Series
3114, Class TS, 1.215%, (6.536% - 30-day average SOFR), 9/15/30(6) |
|
436
|
13,401
|
Series
3339, Class JI, 1.155%, (6.476% - 30-day average SOFR), 7/15/37(6) |
|
828
|
62,870
|
Series
4109, Class ES, 0.715%, (6.036% - 30-day average SOFR), 12/15/41(6) |
|
31
|
2,417
|
Series
4163, Class GS, 0.765%, (6.086% - 30-day average SOFR), 11/15/32(6) |
|
1,256
|
58,402
|
Series
4169, Class AS, 0.815%, (6.136% - 30-day average SOFR), 2/15/33(6) |
|
678
|
29,748
|
Series
4203, Class QS, 0.815%, (6.136% - 30-day average SOFR), 5/15/43(6) |
|
654
|
32,342
|
Series
4370, Class IO, 3.50%, 9/15/41 |
|
74
|
1,992
|
Series
4497, Class CS, 0.765%, (6.086% - 30-day average SOFR), 9/15/44(6) |
|
171
|
2,348
|
Series
4507, Class EI, 4.00%, 8/15/44 |
|
796
|
104,890
|
Series
4629, Class QI, 3.50%, 11/15/46 |
|
509
|
104,283
|
Series
4644, Class TI, 3.50%, 1/15/45 |
|
412
|
61,965
|
Series
4744, Class IO, 4.00%, 11/15/47 |
|
489
|
97,350
|
Series
4749, Class IL, 4.00%, 12/15/47 |
|
382
|
76,337
|
Series
4768, Class IO, 4.00%, 3/15/48 |
|
451
|
90,405
|
Series
4772, Class PI, 4.00%, 1/15/48 |
|
327
|
65,480
|
Series
4966, Class SY, 0.615%, (5.936% - 30-day average SOFR), 4/25/50(6) |
|
1,790
|
166,720
|
Principal
Only:(7) |
|
|
|
Series
3309, Class DO, 0.00%, 4/15/37 |
|
406
|
303,400
|
Series
4478, Class PO, 0.00%, 5/15/45 |
|
170
|
115,414
|
Federal
National Mortgage Association: |
|
|
|
Series
1994-42, Class K, 6.50%, 4/25/24 |
|
4
|
3,902
|
Series
1997-38, Class N, 8.00%, 5/20/27 |
|
57
|
58,169
|
Series
2007-74, Class AC, 5.00%, 8/25/37 |
|
462
|
450,269 |
13
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount (000's omitted) |
Value
|
Federal
National Mortgage Association: (continued) |
|
|
|
Series
2011-49, Class NT, 6.00%, (64.855% - 30-day average SOFR x 10.00, Cap 6.00%), 6/25/41(6) |
$
|
127
|
$ 115,523
|
Series
2012-134, Class ZT, 2.00%, 12/25/42 |
|
491
|
373,090
|
Series
2013-6, Class TA, 1.50%, 1/25/43 |
|
278
|
232,473
|
Series
2015-74, Class SL, 0.00%, (2.282% - 30-day average SOFR x 0.587, Floor 0.00%), 10/25/45(6) |
|
867
|
433,943
|
Series
2017-15, Class LE, 3.00%, 6/25/46 |
|
45
|
43,578
|
Interest
Only:(5) |
|
|
|
Series
2004-46, Class SI, 0.565%, (5.886% - 30-day average SOFR), 5/25/34(6) |
|
291
|
7,870
|
Series
2005-17, Class SA, 1.265%, (6.586% - 30-day average SOFR), 3/25/35(6) |
|
438
|
31,171
|
Series
2006-42, Class PI, 1.155%, (6.476% - 30-day Average SOFR), 6/25/36(6) |
|
599
|
43,594
|
Series
2006-44, Class IS, 1.165%, (6.486% - 30-day average SOFR), 6/25/36(6) |
|
540
|
36,065
|
Series
2007-50, Class LS, 1.015%, (6.336% - 30-day average SOFR), 6/25/37(6) |
|
446
|
30,216
|
Series
2008-26, Class SA, 0.765%, (6.086% - 30-day average SOFR), 4/25/38(6) |
|
563
|
41,616
|
Series
2008-61, Class S, 0.665%, (5.986% - 30-day average SOFR), 7/25/38(6) |
|
879
|
43,387
|
Series
2010-109, Class PS, 1.165%, (6.486% - 30-day average SOFR), 10/25/40(6) |
|
893
|
55,135
|
Series
2010-147, Class KS, 0.515%, (5.836% - 30-day Average SOFR), 1/25/41(6) |
|
1,070
|
31,038
|
Series
2012-52, Class AI, 3.50%, 8/25/26 |
|
87
|
2,166
|
Series
2012-118, Class IN, 3.50%, 11/25/42 |
|
1,166
|
230,245
|
Series
2012-150, Class PS, 0.715%, (6.036% - 30-day average SOFR), 1/25/43(6) |
|
1,822
|
136,022
|
Series
2012-150, Class SK, 0.715%, (6.036% - 30-day average SOFR), 1/25/43(6) |
|
768
|
60,149
|
Series
2013-23, Class CS, 0.815%, (6.136% - 30-day average SOFR), 3/25/33(6) |
|
689
|
29,931
|
Series
2014-32, Class EI, 4.00%, 6/25/44 |
|
187
|
33,229
|
Series
2014-55, Class IN, 3.50%, 7/25/44 |
|
428
|
87,074
|
Series
2014-80, Class BI, 3.00%, 12/25/44 |
|
1,001
|
177,513
|
Series
2014-89, Class IO, 3.50%, 1/25/45 |
|
354
|
75,581
|
Series
2015-14, Class KI, 3.00%, 3/25/45 |
|
782
|
128,617
|
Series
2015-52, Class MI, 3.50%, 7/25/45 |
|
416
|
83,510
|
Series
2015-57, Class IO, 3.00%, 8/25/45 |
|
1,824
|
320,999
|
Series
2015-93, Class BS, 0.715%, (6.036% - 30-day average SOFR), 8/25/45(6) |
|
450
|
18,010
|
Series
2018-21, Class IO, 3.00%, 4/25/48 |
|
792
|
140,872
|
Series
2020-23, Class SP, 0.615%, (5.936% - 30-day average SOFR), 2/25/50(6) |
|
1,411
|
132,952
|
Series
2020-45, Class IJ, 2.50%, 7/25/50 |
|
1,984
|
274,218
|
Principal
Only:(7) Series 2006-8, Class WQ, 0.00%, 3/25/36 |
|
389
|
306,774 |
Security
|
Principal
Amount (000's omitted) |
Value
|
Federal
National Mortgage Association Multifamily Connecticut Avenue Securities Trust, Series 2020-01, Class M10, 9.185%, (30-day average SOFR + 3.864%), 3/25/50(1)(2) |
$
|
998
|
$
958,647 |
Government
National Mortgage Association: |
|
|
|
Series
2021-160, Class NZ, 3.00%, 9/20/51 |
|
304
|
147,138
|
Series
2022-189, Class US, 3.222%, (22.733% - 30-day average SOFR x 3.667), 11/20/52(6) |
|
280
|
253,598
|
Series
2023-56, Class ZE, 6.00%, 4/20/53 |
|
1,030
|
919,335
|
Series
2023-96, Class BL, 6.00%, 7/20/53 |
|
1,000
|
951,076
|
Series
2023-97, Class CB, 6.00%, 7/20/53 |
|
1,000
|
966,960
|
Series
2023-115, Class AL, 6.00%, 8/20/53 |
|
500
|
476,246
|
Series
2023-149, Class S, 5.505%, (21.45% - 30-day average SOFR x 3.00%), 10/20/53(6) |
|
1,000
|
969,327
|
Interest
Only:(5) |
|
|
|
Series
2017-121, Class DS, 0.00%, (4.386% - 1 mo. SOFR, Floor 0.00%), 8/20/47(6) |
|
809
|
22,894
|
Series
2020-146, Class IQ, 2.00%, 10/20/50 |
|
5,546
|
615,966
|
Series
2021-131, Class QI, 3.00%, 7/20/51 |
|
3,301
|
418,177
|
Series
2021-193, Class IU, 3.00%, 11/20/49 |
|
6,298
|
857,457
|
Series
2021-209, Class IW, 3.00%, 11/20/51 |
|
4,804
|
630,777
|
Total
Collateralized Mortgage Obligations (identified cost $27,454,913) |
|
|
$ 16,497,718
|
Commercial
Mortgage-Backed Securities — 8.1% |
Security
|
Principal
Amount (000's omitted) |
Value
|
BAMLL
Commercial Mortgage Securities Trust: |
|
|
|
Series
2019-BPR, Class ENM, 3.719%, 11/5/32(1)(8) |
$
|
795
|
$ 269,794
|
Series
2019-BPR, Class FNM, 3.719%, 11/5/32(1)(8) |
|
1,605
|
369,682
|
BBCMS
Mortgage Trust, Series 2017-C1, Class D, 3.541%, 2/15/50(1)(8) |
|
700
|
462,400
|
COMM
Mortgage Trust, Series 2013-CR11, Class D, 4.54%, 8/10/50(1)(8) |
|
2,696
|
2,417,328
|
CSMC
Trust, Series 2020-TMIC, Class A, 8.95%, (1 mo. SOFR + 3.614%), 12/15/35(1)(2) |
|
1,000
|
998,979
|
JPMBB
Commercial Mortgage Securities Trust: |
|
|
|
Series
2014-C22, Class D, 4.559%, 9/15/47(1)(8) |
|
1,850
|
1,211,602
|
Series
2014-C25, Class D, 3.933%, 11/15/47(1)(8) |
|
360
|
152,825
|
Morgan
Stanley Bank of America Merrill Lynch Trust: |
|
|
|
Series
2014-C16, Class B, 4.281%, 6/15/47(8)(9) |
|
240
|
219,763
|
Series
2016-C29, Class D, 3.00%, 5/15/49(1)(9) |
|
1,000
|
724,848
|
Series
2016-C32, Class D, 3.396%, 12/15/49(1)(8)(9) |
|
250
|
165,101
|
Morgan
Stanley Capital I Trust, Series 2016-UBS12, Class D, 3.312%, 12/15/49(1)(9) |
|
1,000
|
523,854
|
UBS-Barclays
Commercial Mortgage Trust, Series 2013-C6, Class D, 3.97%, 4/10/46(1)(8) |
|
988
|
819,152 |
14
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount (000's omitted) |
Value
|
VMC
Finance, LLC, Series 2021-HT1, Class B, 9.949%, (1 mo. SOFR + 4.614%), 1/18/37(1)(2) |
$
|
1,000
|
$
950,022 |
Wells
Fargo Commercial Mortgage Trust: |
|
|
|
Series
2013-LC12, Class D, 3.955%, 7/15/46(1)(8) |
|
2,000
|
395,794
|
Series
2015-C31, Class D, 3.852%, 11/15/48 |
|
922
|
701,242
|
Series
2016-C35, Class D, 3.142%, 7/15/48(1) |
|
1,000
|
710,071
|
Series
2016-C36, Class D, 2.942%, 11/15/59(1) |
|
500
|
290,646
|
Total
Commercial Mortgage-Backed Securities (identified cost $15,456,506) |
|
|
$ 11,383,103
|
Security
|
Shares
|
Value
|
Commercial
Services & Supplies — 0.1% |
Monitronics
International, Inc.(10)(11) |
|
2,596
|
$
54,516 |
Phoenix
Services International, LLC(10)(11) |
|
2,365
|
22,467
|
Phoenix
Services International, LLC(10)(11) |
|
216
|
2,052
|
|
|
|
$ 79,035
|
Electronics/Electrical
— 0.0%(12) |
Skillsoft
Corp.(10)(11) |
|
585
|
$
10,998 |
|
|
|
$ 10,998
|
Entertainment
— 0.0%(12) |
New
Cineworld, Ltd.(10)(11) |
|
2,436
|
$
52,070 |
|
|
|
$ 52,070
|
Health
Care — 0.0% |
Akorn
Holding Company, LLC, Class A(10)(11)(13) |
|
6,053
|
$
0 |
|
|
|
$ 0
|
Household
Durables — 0.2% |
Serta
Simmons Bedding, Inc.(10)(11) |
|
17,110
|
$
239,540 |
Serta
SSB Equipment Co.(10)(11)(13) |
|
17,110
|
0
|
|
|
|
$ 239,540
|
Investment
Companies — 0.0% |
Jubilee
Topco, Ltd., Class A(10)(11)(13) |
|
79,130
|
$
0 |
|
|
|
$ 0
|
Nonferrous
Metals/Minerals — 0.0%(12) |
ACNR
Holdings, Inc., Class A(10)(11) |
|
587
|
$
50,189 |
|
|
|
$ 50,189
|
Security
|
Shares
|
Value
|
Oil
and Gas — 0.0%(12) |
AFG
Holdings, Inc.(10)(11)(13) |
|
3,122
|
$
6,181 |
McDermott
International, Ltd.(10)(11) |
|
12,407
|
3,350
|
|
|
|
$ 9,531
|
Pharmaceuticals
— 0.0%(12) |
Covis
Midco 1 S.a.r.l., Class A(10)(11) |
|
88
|
$
44 |
Covis
Midco 1 S.a.r.l., Class B(10)(11) |
|
88
|
45
|
Covis
Midco 1 S.a.r.l., Class C(10)(11) |
|
88
|
45
|
Covis
Midco 1 S.a.r.l., Class D(10)(11) |
|
88
|
45
|
Covis
Midco 1 S.a.r.l., Class E(10)(11) |
|
88
|
45
|
|
|
|
$ 224
|
Telecommunications
— 0.0% |
Global
Eagle Entertainment(10)(11)(13) |
|
3,588
|
$
0 |
|
|
|
$ 0
|
Total
Common Stocks (identified cost $796,849) |
|
|
$ 441,587
|
Security
|
Principal
Amount (000's omitted) |
Value
|
Aerospace
and Defense — 0.5% |
Bombardier,
Inc., 7.875%, 4/15/27(1) |
$
|
136
|
$
131,015 |
Rolls-Royce
PLC, 5.75%, 10/15/27(1) |
|
200
|
189,762
|
TransDigm,
Inc.: |
|
|
|
4.625%,
1/15/29 |
|
100
|
86,337
|
4.875%,
5/1/29 |
|
150
|
130,146
|
6.25%,
3/15/26(1) |
|
179
|
175,045
|
|
|
|
$ 712,305
|
Automotive
— 0.6% |
Clarios
Global, L.P./Clarios US Finance Co.: |
|
|
|
6.25%,
5/15/26(1) |
$
|
116
|
$
113,520 |
8.50%,
5/15/27(1) |
|
642
|
633,301
|
Ford
Motor Co., 4.75%, 1/15/43 |
|
224
|
155,881
|
|
|
|
$ 902,702
|
Building
and Development — 0.4% |
Builders
FirstSource, Inc., 4.25%, 2/1/32(1) |
$
|
500
|
$
398,526 |
Smyrna
Ready Mix Concrete, LLC, 6.00%, 11/1/28(1) |
|
192
|
177,701
|
|
|
|
$ 576,227
|
15
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount (000's omitted) |
Value
|
Business
Equipment and Services — 0.6% |
Adtalem
Global Education, Inc., 5.50%, 3/1/28(1) |
$
|
250
|
$
227,930 |
Allied
Universal Holdco, LLC/Allied Universal Finance Corp., 9.75%, 7/15/27(1) |
|
185
|
160,907
|
GEMS
MENASA Cayman, Ltd./GEMS Education Delaware, LLC, 7.125%, 7/31/26(1) |
|
460
|
443,265
|
|
|
|
$ 832,102
|
Cable
and Satellite Television — 0.4% |
CCO
Holdings, LLC/CCO Holdings Capital Corp.: |
|
|
|
4.75%,
3/1/30(1) |
$
|
75
|
$
61,976 |
5.50%,
5/1/26(1) |
|
500
|
477,331
|
|
|
|
$ 539,307
|
Chemicals
— 0.1% |
W.R.
Grace Holdings, LLC, 5.625%, 8/15/29(1) |
$
|
100
|
$
77,596 |
|
|
|
$ 77,596
|
Commercial
Services — 0.2% |
APi
Group DE, Inc., 4.75%, 10/15/29(1) |
$
|
300
|
$
257,199 |
|
|
|
$ 257,199
|
Computers
— 0.4% |
McAfee
Corp., 7.375%, 2/15/30(1) |
$
|
200
|
$
160,174 |
Presidio
Holdings, Inc., 8.25%, 2/1/28(1) |
|
362
|
342,922
|
|
|
|
$ 503,096
|
Distribution
& Wholesale — 0.1% |
Performance
Food Group, Inc., 5.50%, 10/15/27(1) |
$
|
172
|
$
161,013 |
|
|
|
$ 161,013
|
Diversified
Financial Services — 0.2% |
VistaJet
Malta Finance PLC/Vista Management Holding, Inc., 7.875%, 5/1/27(1) |
$
|
400
|
$
308,066 |
|
|
|
$ 308,066
|
Drugs
— 0.2% |
Endo
DAC/Endo Finance, LLC/Endo Finco, Inc., 5.875%, 10/15/24(1)(14) |
$
|
500
|
$
336,250 |
|
|
|
$ 336,250
|
Ecological
Services and Equipment — 0.3% |
Covanta
Holding Corp., 5.00%, 9/1/30 |
$
|
200
|
$
155,137 |
GFL
Environmental, Inc., 4.75%, 6/15/29(1) |
|
238
|
208,586
|
|
|
|
$ 363,723
|
Security
|
Principal
Amount (000's omitted) |
Value
|
Electronics/Electrical
— 0.3% |
Imola
Merger Corp., 4.75%, 5/15/29(1) |
$
|
291
|
$
253,943 |
Sensata
Technologies, Inc., 4.375%, 2/15/30(1) |
|
189
|
159,958
|
|
|
|
$ 413,901
|
Engineering
& Construction — 0.2% |
VM
Consolidated, Inc., 5.50%, 4/15/29(1) |
$
|
370
|
$
328,018 |
|
|
|
$ 328,018
|
Entertainment
— 0.5% |
Allwyn
Entertainment Financing UK PLC, 7.875%, 4/30/29(1) |
$
|
200
|
$
198,192 |
Caesars
Entertainment, Inc., 8.125%, 7/1/27(1) |
|
325
|
322,296
|
CDI
Escrow Issuer, Inc., 5.75%, 4/1/30(1) |
|
100
|
89,444
|
Jacobs
Entertainment, Inc., 6.75%, 2/15/29(1) |
|
150
|
127,631
|
|
|
|
$ 737,563
|
Financial
Intermediaries — 0.3% |
Ford
Motor Credit Co., LLC: |
|
|
|
3.625%,
6/17/31 |
$
|
206
|
$
162,956 |
4.125%,
8/17/27 |
|
300
|
272,691
|
|
|
|
$ 435,647
|
Financial
Services — 0.6% |
Vietnam
Debt and Asset Trading Corp., 1.00%, 10/10/25(15) |
$
|
1,060
|
$
901,000 |
|
|
|
$ 901,000
|
Health
Care — 1.2% |
Fortrea
Holdings, Inc., 7.50%, 7/1/30(1) |
$
|
170
|
$
164,263 |
LifePoint
Health, Inc., 5.375%, 1/15/29(1) |
|
547
|
331,938
|
Medline
Borrower, L.P., 5.25%, 10/1/29(1) |
|
500
|
426,103
|
Molina
Healthcare, Inc., 3.875%, 11/15/30(1) |
|
296
|
241,771
|
Option
Care Health, Inc., 4.375%, 10/31/29(1) |
|
400
|
334,751
|
US
Acute Care Solutions, LLC, 6.375%, 3/1/26(1) |
|
150
|
127,762
|
|
|
|
$ 1,626,588
|
Insurance
— 0.7% |
HUB
International, Ltd., 7.00%, 5/1/26(1) |
$
|
948
|
$
923,671 |
|
|
|
$ 923,671
|
Internet
Software & Services — 0.2% |
Arches
Buyer, Inc., 4.25%, 6/1/28(1) |
$
|
400
|
$
331,732 |
|
|
|
$ 331,732
|
16
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount (000's omitted) |
Value
|
Leisure
Goods/Activities/Movies — 0.7% |
Lindblad
Expeditions, LLC, 6.75%, 2/15/27(1) |
$
|
200
|
$
182,436 |
NCL
Corp., Ltd., 5.875%, 2/15/27(1) |
|
375
|
345,553
|
Viking
Cruises, Ltd., 5.875%, 9/15/27(1) |
|
540
|
486,974
|
|
|
|
$ 1,014,963
|
Media
— 0.0%(12) |
iHeartCommunications,
Inc.: |
|
|
|
6.375%,
5/1/26 |
$
|
27
|
$
22,112 |
8.375%,
5/1/27 |
|
49
|
30,152
|
|
|
|
$ 52,264
|
Metals/Mining
— 0.3% |
Cleveland-Cliffs,
Inc., 6.75%, 3/15/26(1) |
$
|
112
|
$
111,482 |
Compass
Minerals International, Inc., 6.75%, 12/1/27(1) |
|
200
|
188,580
|
Hudbay
Minerals, Inc., 4.50%, 4/1/26(1) |
|
150
|
139,762
|
|
|
|
$ 439,824
|
Nonferrous
Metals/Minerals — 0.4% |
First
Quantum Minerals, Ltd., 7.50%, 4/1/25(1) |
$
|
200
|
$
187,908 |
New
Gold, Inc., 7.50%, 7/15/27(1) |
|
381
|
357,875
|
|
|
|
$ 545,783
|
Oil
and Gas — 1.1% |
Archrock
Partners, L.P./Archrock Partners Finance Corp., 6.875%, 4/1/27(1) |
$
|
250
|
$
240,584 |
Permian
Resources Operating, LLC, 7.75%, 2/15/26(1) |
|
750
|
750,137
|
Petroleos
Mexicanos: |
|
|
|
5.35%,
2/12/28 |
|
30
|
24,234
|
6.35%,
2/12/48 |
|
71
|
39,199
|
6.50%,
3/13/27 |
|
101
|
89,180
|
6.875%,
8/4/26 |
|
367
|
339,095
|
|
|
|
$ 1,482,429
|
Pipelines
— 0.2% |
Antero
Midstream Partners, L.P./Antero Midstream Finance Corp., 5.75%, 3/1/27(1) |
$
|
100
|
$
95,673 |
Cheniere
Energy Partners, L.P., 4.50%, 10/1/29 |
|
71
|
63,628
|
Venture
Global LNG, Inc., 8.125%, 6/1/28(1) |
|
150
|
145,738
|
|
|
|
$ 305,039
|
Publishing
— 0.1% |
McGraw-Hill
Education, Inc., 5.75%, 8/1/28(1) |
$
|
134
|
$
113,083 |
|
|
|
$ 113,083
|
Security
|
Principal
Amount (000's omitted) |
Value
|
Radio
and Television — 0.1% |
Outfront
Media Capital, LLC/Outfront Media Capital Corp., 5.00%, 8/15/27(1) |
$
|
150
|
$
133,371 |
|
|
|
$ 133,371
|
Real
Estate Investment Trusts (REITs) — 0.0%(12) |
VICI
Properties, L.P./VICI Note Co., Inc., 5.75%, 2/1/27(1) |
$
|
44
|
$
42,152 |
|
|
|
$ 42,152
|
Retail
— 0.3% |
Evergreen
AcqCo 1, L.P./TVI, Inc., 9.75%, 4/26/28(1) |
$
|
44
|
$
44,439 |
Group
1 Automotive, Inc., 4.00%, 8/15/28(1) |
|
400
|
344,727
|
Kohl's
Corp., 4.625%, 5/1/31 |
|
108
|
73,969
|
|
|
|
$ 463,135
|
Retailers
(Except Food and Drug) — 0.3% |
PetSmart,
Inc./PetSmart Finance Corp., 7.75%, 2/15/29(1) |
$
|
500
|
$
460,804 |
|
|
|
$ 460,804
|
Software
and Services — 0.2% |
Fair
Isaac Corp., 4.00%, 6/15/28(1) |
$
|
250
|
$
222,905 |
|
|
|
$ 222,905
|
Technology
— 0.1% |
athenahealth
Group, Inc., 6.50%, 2/15/30(1) |
$
|
160
|
$
130,891 |
|
|
|
$ 130,891
|
Telecommunications
— 0.5% |
Ciena
Corp., 4.00%, 1/31/30(1) |
$
|
100
|
$
83,437 |
Connect
Finco S.a.r.l./Connect US Finco, LLC, 6.75%, 10/1/26(1) |
|
200
|
186,657
|
LCPR
Senior Secured Financing DAC, 6.75%, 10/15/27(1) |
|
200
|
181,204
|
Sprint
Capital Corp., 6.875%, 11/15/28 |
|
191
|
196,159
|
Viasat,
Inc., 5.625%, 4/15/27(1) |
|
42
|
36,704
|
|
|
|
$ 684,161
|
Utilities
— 0.5% |
Calpine
Corp.: |
|
|
|
4.50%,
2/15/28(1) |
$
|
250
|
$
225,657 |
4.625%,
2/1/29(1) |
|
250
|
211,359
|
5.25%,
6/1/26(1) |
|
25
|
23,950 |
17
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount (000's omitted) |
Value
|
Utilities
(continued) |
NRG
Energy, Inc., 3.375%, 2/15/29(1) |
$
|
200
|
$
163,015 |
TerraForm
Power Operating, LLC, 5.00%, 1/31/28(1) |
|
70
|
64,197
|
|
|
|
$ 688,178
|
Total
Corporate Bonds (identified cost $18,880,862) |
|
|
$ 18,046,688
|
Security
|
Shares
|
Value
|
Nonferrous
Metals/Minerals — 0.1% |
ACNR
Holdings, Inc., 15.00% (PIK)(10)(11) |
|
277
|
$
142,470 |
Total
Preferred Stocks (identified cost $0) |
|
|
$ 142,470
|
Senior
Floating-Rate Loans — 35.5%(16) |
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Aerospace
and Defense — 0.2% |
Dynasty
Acquisition Co., Inc.: |
|
|
|
Term
Loan, 9.324%, (SOFR + 4.00%), 8/24/28 |
|
154
|
$
152,361 |
Term
Loan, 9.324%, (SOFR + 4.00%), 8/24/28 |
|
66
|
65,297
|
|
|
|
$ 217,658
|
Airlines
— 0.2% |
Mileage
Plus Holdings, LLC, Term Loan, 10.798%, (SOFR + 5.25%), 6/21/27 |
|
94
|
$
96,719 |
SkyMiles
IP, Ltd., Term Loan, 9.166%, (SOFR + 3.75%), 10/20/27 |
|
240
|
246,075
|
|
|
|
$ 342,794
|
Auto
Components — 0.9% |
Adient
US, LLC, Term Loan, 8.689%, (SOFR + 3.25%), 4/10/28 |
|
79
|
$
79,467 |
Autokiniton
US Holdings, Inc., Term Loan, 9.939%, (SOFR + 4.50%), 4/6/28 |
|
171
|
167,997
|
Clarios
Global, L.P., Term Loan, 9.074%, (SOFR + 3.75%), 5/6/30 |
|
325
|
324,899
|
DexKo
Global, Inc., Term Loan, 9.402%, (SOFR + 3.75%), 10/4/28 |
|
123
|
118,181
|
Garrett
LX I S.a.r.l., Term Loan, 8.895%, (SOFR + 3.25%), 4/30/28 |
|
98
|
97,347 |
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Auto
Components (continued) |
Garrett
Motion, Inc., Term Loan, 9.883%, (SOFR + 4.50%), 4/30/28 |
|
107
|
$
107,411 |
LTI
Holdings, Inc., Term Loan, 10.189%, (SOFR + 4.75%), 7/24/26 |
|
24
|
23,020
|
RealTruck
Group, Inc.: |
|
|
|
Term
Loan, 9.189%, (SOFR + 3.75%), 1/31/28 |
|
195
|
186,332
|
Term
Loan, 10.406%, (SOFR + 5.00%), 1/31/28 |
|
100
|
95,906
|
TI
Group Automotive Systems, LLC, Term Loan, 8.689%, (SOFR + 3.25%), 12/16/26 |
|
62
|
61,679
|
|
|
|
$ 1,262,239
|
Automobiles
— 0.8% |
Bombardier
Recreational Products, Inc., Term Loan, 7.424%, (SOFR + 2.00%), 5/24/27 |
|
770
|
$
764,646 |
MajorDrive
Holdings IV, LLC: |
|
|
|
Term
Loan, 9.652%, (SOFR + 4.00%), 6/1/28 |
|
73
|
71,418
|
Term
Loan, 11.04%, (SOFR + 5.50%), 6/1/29 |
|
222
|
219,686
|
Thor
Industries, Inc., Term Loan, 8.439%, (SOFR + 3.00%), 2/1/26 |
|
41
|
40,939
|
|
|
|
$ 1,096,689
|
Beverages
— 0.1% |
Arterra
Wines Canada, Inc., Term Loan, 9.152%, (SOFR + 3.50%), 11/24/27 |
|
146
|
$
138,085 |
City
Brewing Company, LLC, Term Loan, 9.164%, (SOFR + 3.50%), 4/5/28 |
|
98
|
72,576
|
|
|
|
$ 210,661
|
Biotechnology
— 0.0%(12) |
Alkermes,
Inc., Term Loan, 7.949%, (SOFR + 2.50%), 3/12/26 |
|
68
|
$
67,043 |
|
|
|
$ 67,043
|
Building
Products — 0.4% |
Gardner
Denver, Inc., Term Loan, 7.174%, (SOFR + 1.75%), 3/1/27 |
|
163
|
$
163,870 |
Ingersoll-Rand
Services Company, Term Loan, 7.174%, (SOFR + 1.75%), 3/1/27 |
|
37
|
37,225
|
LHS
Borrower, LLC, Term Loan, 10.174%, (SOFR + 4.75%), 2/16/29 |
|
122
|
107,379
|
Oscar
AcquisitionCo, LLC, Term Loan, 9.99%, (SOFR + 4.50%), 4/29/29 |
|
124
|
120,733
|
Standard
Industries, Inc., Term Loan, 7.953%, (SOFR + 2.50%), 9/22/28 |
|
156
|
156,106
|
|
|
|
$ 585,313
|
18
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Capital
Markets — 1.1% |
Advisor
Group, Inc., Term Loan, 9.824%, (SOFR + 4.50%), 8/17/28 |
|
169
|
$
168,432 |
Aretec
Group, Inc.: |
|
|
|
Term
Loan, 9.674%, (SOFR + 4.25%), 10/1/25 |
|
191
|
190,664
|
Term
Loan, 9.924%, (SOFR + 4.50%), 8/9/30 |
|
100
|
97,131
|
Brookfield
Property REIT, Inc., Term Loan, 7.924%, (SOFR + 2.50%), 8/27/25 |
|
104
|
102,985
|
EIG
Management Company, LLC, Term Loan, 9.177%, (SOFR + 3.75%), 2/22/25 |
|
47
|
47,250
|
FinCo
I, LLC, Term Loan, 8.383%, (SOFR + 3.00%), 6/27/29 |
|
175
|
174,650
|
Franklin
Square Holdings, L.P., Term Loan, 7.674%, (SOFR + 2.25%), 8/1/25 |
|
71
|
71,339
|
Hudson
River Trading, LLC, Term Loan, 8.439%, (SOFR + 3.00%), 3/20/28 |
|
342
|
337,215
|
LPL
Holdings, Inc., Term Loan, 7.165%, (SOFR + 1.75%), 11/12/26 |
|
193
|
192,941
|
Victory
Capital Holdings, Inc., Term Loan, 7.772%, (SOFR + 2.25%), 7/1/26 |
|
123
|
122,831
|
|
|
|
$ 1,505,438
|
Chemicals
— 1.8% |
Aruba
Investments, Inc., Term Loan, 9.424%, (SOFR + 4.00%), 11/24/27 |
|
98
|
$
96,017 |
CPC
Acquisition Corp., Term Loan, 9.402%, (SOFR + 3.75%), 12/29/27 |
|
109
|
86,019
|
Gemini
HDPE, LLC, Term Loan, 8.645%, (SOFR + 3.00%), 12/31/27 |
|
111
|
110,349
|
INEOS
Enterprises Holdings II Limited, Term Loan, 7.783%, (3 mo. EURIBOR + 4.00%), 7/7/30 |
EUR
|
25
|
25,684
|
INEOS
Styrolution US Holding, LLC, Term Loan, 8.189%, (SOFR + 2.75%), 1/29/26 |
|
391
|
384,809
|
INEOS
US Finance, LLC: |
|
|
|
Term
Loan, 8.924%, (SOFR + 3.50%), 2/18/30 |
|
125
|
122,623
|
Term
Loan, 9.174%, (SOFR + 3.75%), 11/8/27 |
|
498
|
492,172
|
Lonza
Group AG, Term Loan, 9.415%, (SOFR + 3.93%), 7/3/28 |
|
269
|
228,705
|
Momentive
Performance Materials, Inc., Term Loan, 9.824%, (SOFR + 4.50%), 3/29/28 |
|
124
|
118,778
|
Nouryon
Finance B.V., Term Loan, 9.434%, (SOFR + 4.00%), 4/3/28 |
|
164
|
160,109
|
Olympus
Water US Holding Corporation, Term Loan, 10.39%, (SOFR + 5.00%), 11/9/28 |
|
350
|
348,163
|
Tronox
Finance, LLC, Term Loan, 8.116%, (SOFR + 2.50%), 3/10/28(17) |
|
208
|
204,511
|
W.R.
Grace & Co.-Conn., Term Loan, 9.402%, (SOFR + 3.75%), 9/22/28 |
|
147
|
145,095
|
|
|
|
$ 2,523,034
|
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Commercial
Services & Supplies — 1.0% |
Allied
Universal Holdco, LLC, Term Loan, 9.174%, (SOFR + 3.75%), 5/12/28 |
|
460
|
$
437,219 |
EnergySolutions,
LLC, Term Loan, 9.382%, (SOFR + 4.00%), 9/20/30 |
|
147
|
146,317
|
Garda
World Security Corporation, Term Loan, 9.746%, (SOFR + 4.25%), 10/30/26 |
|
170
|
169,970
|
GFL
Environmental, Inc., Term Loan, 7.912%, (SOFR + 2.50%), 5/31/27 |
|
111
|
111,528
|
LABL,
Inc., Term Loan, 10.424%, (SOFR + 5.00%), 10/29/28 |
|
98
|
92,828
|
Monitronics
International, Inc., Term Loan, 13.145%, (SOFR + 7.50%), 6/30/28 |
|
143
|
144,739
|
Phoenix
Services International, LLC, Term Loan, 11.427%, (SOFR + 6.10%), 6/30/28 |
|
28
|
26,513
|
Tempo
Acquisition, LLC, Term Loan, 8.074%, (SOFR + 2.75%), 8/31/28 |
|
124
|
123,994
|
TruGreen
Limited Partnership, Term Loan, 9.424%, (SOFR + 4.00%), 11/2/27 |
|
97
|
91,463
|
|
|
|
$ 1,344,571
|
Communications
Equipment — 0.2% |
CommScope,
Inc., Term Loan, 8.689%, (SOFR + 3.25%), 4/6/26 |
|
264
|
$
228,617 |
|
|
|
$ 228,617
|
Consumer
Staples Distribution & Retail — 0.1% |
Peer
Holding III B.V., Term Loan, 10/19/30(18) |
|
150
|
$
149,437 |
|
|
|
$ 149,437
|
Containers
& Packaging — 0.7% |
Berlin
Packaging, LLC, Term Loan, 9.189%, (SOFR + 3.75%), 3/11/28(17) |
|
172
|
$
167,840 |
Clydesdale
Acquisition Holdings, Inc., Term Loan, 9.599%, (SOFR + 4.18%), 4/13/29 |
|
74
|
71,775
|
Pregis
TopCo Corporation, Term Loan, 9.074%, (SOFR + 3.75%), 7/31/26 |
|
96
|
95,446
|
Pretium
Packaging, LLC, Term Loan - Second Lien, 9.995%, (SOFR + 4.60%), 10/2/28 |
|
92
|
70,121
|
Proampac
PG Borrower, LLC, Term Loan, 10.585%, (SOFR + 4.50%), 9/15/28 |
|
175
|
173,177
|
Reynolds
Group Holdings, Inc.: |
|
|
|
Term
Loan, 8.689%, (SOFR + 3.25%), 2/5/26 |
|
128
|
127,762
|
Term
Loan, 8.689%, (SOFR + 3.25%), 9/24/28 |
|
147
|
146,483
|
Trident
TPI Holdings, Inc., Term Loan, 9.652%, (SOFR + 4.00%), 9/15/28 |
|
123
|
121,250
|
|
|
|
$ 973,854
|
19
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Diversified
Consumer Services — 0.2% |
Belron
Finance US, LLC, Term Loan, 8.057%, (SOFR + 2.43%), 4/13/28 |
|
122
|
$
122,012 |
KUEHG
Corp., Term Loan, 10.39%, (SOFR + 5.00%), 6/12/30 |
|
200
|
200,089
|
|
|
|
$ 322,101
|
Diversified
Telecommunication Services — 0.3% |
Altice
France S.A., Term Loan, 10.894%, (SOFR + 5.50%), 8/15/28 |
|
205
|
$
182,764 |
GEE
Holdings 2, LLC: |
|
|
|
Term
Loan, 13.50%, (SOFR + 8.00%), 3/24/25 |
|
32
|
28,816
|
Term
Loan - Second Lien, 13.75%, (SOFR + 8.25%), 7.00% cash, 6.75% PIK, 3/23/26 |
|
71
|
42,821
|
Virgin
Media Bristol, LLC, Term Loan, 8.699%, (SOFR + 3.25%), 1/31/29 |
|
175
|
171,924
|
|
|
|
$ 426,325
|
Electrical
Equipment — 0.2% |
Brookfield
WEC Holdings, Inc., Term Loan, 8.189%, (SOFR + 2.75%), 8/1/25 |
|
310
|
$
309,653 |
|
|
|
$ 309,653
|
Electronic
Equipment, Instruments & Components — 0.6% |
Chamberlain
Group, Inc., Term Loan, 8.674%, (SOFR + 3.25%), 11/3/28 |
|
221
|
$
215,052 |
Creation
Technologies, Inc., Term Loan, 11.176%, (SOFR + 5.50%), 10/5/28 |
|
148
|
139,993
|
II-VI
Incorporated, Term Loan, 8.189%, (SOFR + 2.75%), 7/2/29 |
|
137
|
137,016
|
Mirion
Technologies, Inc., Term Loan, 8.402%, (SOFR + 2.75%), 10/20/28 |
|
84
|
83,556
|
Robertshaw
US Holding Corp.: |
|
|
|
Term
Loan, 13.49%, (SOFR + 8.00%), 8.49% cash, 5.00% PIK, 2/28/27 |
|
34
|
33,909
|
Term
Loan - Second Lien, 12.49%, (SOFR + 7.00%), 2/28/27 |
|
142
|
119,810
|
Verifone
Systems, Inc., Term Loan, 9.653%, (SOFR + 4.00%), 8/20/25 |
|
166
|
155,117
|
|
|
|
$ 884,453
|
Energy
Equipment & Services — 0.1% |
Ameriforge
Group, Inc.: |
|
|
|
Term
Loan, 16.731%, (SOFR + 13.00%), 12/29/23(13)(19) |
|
11
|
$
9,159 |
Term
Loan, 18.456%, (SOFR + 13.00%), 13.456% cash, 5.00% PIK, 12/29/23(13)(17) |
|
90
|
71,903 |
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Energy
Equipment & Services (continued) |
Lealand
Finance Company B.V., Term Loan, 12.439%, (SOFR + 7.00%), 9.439% cash, 3.00% PIK, 6/30/25 |
|
31
|
$
17,180 |
|
|
|
$ 98,242
|
Engineering
& Construction — 0.4% |
Aegion
Corporation, Term Loan, 10.395%, (SOFR + 4.75%), 5/17/28 |
|
74
|
$
73,108 |
American
Residential Services, LLC, Term Loan, 9.152%, (SOFR + 3.50%), 10/15/27 |
|
97
|
97,128
|
Northstar
Group Services, Inc., Term Loan, 10.939%, (SOFR + 5.50%), 11/12/26 |
|
186
|
186,121
|
USIC
Holdings, Inc., Term Loan, 8.939%, (SOFR + 3.50%), 5/12/28 |
|
166
|
160,998
|
|
|
|
$ 517,355
|
Entertainment
— 0.2% |
Crown
Finance US, Inc., Term Loan, 7.381%, (SOFR + 1.50%), 7/31/28 |
|
52
|
$
53,396 |
Renaissance
Holding Corp., Term Loan, 10.074%, (SOFR + 4.75%), 4/5/30 |
|
150
|
148,156
|
Vue
International Bidco PLC: |
|
|
|
Term
Loan, 12.13%, (6 mo. EURIBOR + 8.00%), 6/30/27 |
EUR
|
12
|
12,283
|
Term
Loan, 12.63%, (6 mo. EURIBOR + 8.50%), 6.13% cash, 6.50% PIK, 12/31/27 |
EUR
|
83
|
39,086
|
|
|
|
$ 252,921
|
Equity
Real Estate Investment Trusts (REITs) — 0.1% |
Iron
Mountain, Inc., Term Loan, 7.189%, (1 mo. USD LIBOR + 1.75%), 1/2/26 |
|
118
|
$
118,014 |
|
|
|
$ 118,014
|
Financial
Services — 0.5% |
Ditech
Holding Corporation, Term Loan, 0.00%, 3/28/24(14) |
|
254
|
$
27,945 |
GTCR
W Merger Sub, LLC, Term Loan, 9/20/30(18) |
|
425
|
422,420
|
NCR
Atleos, LLC, Term Loan, 10.176%, (SOFR + 4.75%), 3/27/29 |
|
200
|
192,041
|
|
|
|
$ 642,406
|
Food
& Staples Retailing — 0.1% |
US
Foods, Inc., Term Loan, 7.439%, (SOFR + 2.00%), 9/13/26 |
|
187
|
$
186,875 |
|
|
|
$ 186,875
|
20
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Food
Products — 0.2% |
Froneri
International, Ltd., Term Loan, 7.674%, (SOFR + 2.25%), 1/29/27 |
|
290
|
$
288,648 |
|
|
|
$ 288,648
|
Health
Care Equipment & Supplies — 0.3% |
Bayou
Intermediate II, LLC, Term Loan, 10.128%, (SOFR + 4.50%), 8/2/28 |
|
123
|
$
117,900 |
Gloves
Buyer, Inc., Term Loan, 10.439%, (SOFR + 5.00%), 12/29/27 |
|
100
|
96,259
|
Journey
Personal Care Corp., Term Loan, 9.981%, (6 mo. USD LIBOR + 4.25%), 3/1/28 |
|
171
|
164,487
|
|
|
|
$ 378,646
|
Health
Care Providers & Services — 1.9% |
AEA
International Holdings (Lux) S.a.r.l., Term Loan, 9.402%, (SOFR + 3.75%), 9/7/28 |
|
147
|
$
147,006 |
BW
NHHC Holdco, Inc., Term Loan - Second Lien, 13.39%, (SOFR + 8.00%), 1/15/26 |
|
145
|
124,050
|
Cano
Health, LLC, Term Loan, 9.533%, (SOFR + 4.00%), 11/23/27(17) |
|
76
|
44,586
|
CHG
Healthcare Services, Inc., Term Loan, 8.689%, (SOFR + 3.25%), 9/29/28 |
|
147
|
145,599
|
CNT
Holdings I Corp., Term Loan, 8.926%, (SOFR + 3.50%), 11/8/27 |
|
98
|
97,134
|
Covis
Finco S.a.r.l., Term Loan, 12.04%, (SOFR + 6.50%), 2/18/27 |
|
109
|
78,389
|
Electron
BidCo, Inc., Term Loan, 8.439%, (SOFR + 3.00%), 11/1/28 |
|
123
|
122,038
|
Ensemble
RCM, LLC, Term Loan, 9.233%, (SOFR + 3.75%), 8/3/26 |
|
243
|
243,450
|
Envision
Healthcare Corporation: |
|
|
|
Term
Loan, 0.00%, 3/31/27(14) |
|
76
|
90,102
|
Term
Loan - Second Lien, 0.00%, 3/31/27(14) |
|
534
|
93,527
|
Medical
Solutions Holdings, Inc., Term Loan, 8.773%, (SOFR + 3.25%), 11/1/28 |
|
197
|
184,261
|
National
Mentor Holdings, Inc.: |
|
|
|
Term
Loan, 9.187%, (SOFR + 3.75%), 3/2/28(17) |
|
319
|
279,078
|
Term
Loan, 9.24%, (SOFR + 3.75%), 3/2/28 |
|
9
|
8,299
|
Phoenix
Guarantor, Inc., Term Loan, 8.689%, (SOFR + 3.25%), 3/5/26 |
|
263
|
261,101
|
Radnet
Management, Inc., Term Loan, 8.498%, (SOFR + 3.00%), 4/21/28 |
|
140
|
140,122
|
Select
Medical Corporation, Term Loan, 8.324%, (SOFR + 3.00%), 3/6/27 |
|
373
|
372,048
|
Surgery
Center Holdings, Inc., Term Loan, 9.203%, (SOFR + 3.75%), 8/31/26 |
|
195
|
195,212
|
|
|
|
$ 2,626,002
|
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Health
Care Technology — 0.9% |
Imprivata,
Inc., Term Loan, 9.189%, (SOFR + 3.75%), 12/1/27 |
|
171
|
$
170,198 |
MedAssets
Software Intermediate Holdings, Inc., Term Loan, 9.439%, (SOFR + 4.00%), 12/18/28 |
|
148
|
117,276
|
Navicure,
Inc., Term Loan, 9.439%, (SOFR + 4.00%), 10/22/26 |
|
242
|
242,132
|
PointClickCare
Technologies, Inc., Term Loan, 8.765%, (SOFR + 3.00%), 12/29/27 |
|
98
|
97,378
|
Project
Ruby Ultimate Parent Corp., Term Loan, 8.689%, (SOFR + 3.25%), 3/10/28 |
|
171
|
167,550
|
Symplr
Software, Inc., Term Loan, 9.983%, (SOFR + 4.50%), 12/22/27 |
|
146
|
128,771
|
Verscend
Holding Corp., Term Loan, 9.439%, (SOFR + 4.00%), 8/27/25 |
|
312
|
312,381
|
|
|
|
$ 1,235,686
|
Hotels,
Restaurants & Leisure — 1.8% |
1011778
B.C. Unlimited Liability Company, Term Loan, 7.574%, (SOFR + 2.25%), 9/20/30 |
|
844
|
$
839,520 |
Carnival
Corporation, Term Loan, 8.689%, (SOFR + 3.25%), 10/18/28 |
|
368
|
362,296
|
ClubCorp
Holdings, Inc., Term Loan, 8.181%, (1 mo. USD LIBOR + 2.75%), 9/18/26 |
|
247
|
241,812
|
Fertitta
Entertainment, LLC, Term Loan, 9.324%, (SOFR + 4.00%), 1/27/29 |
|
226
|
221,111
|
IRB
Holding Corp., Term Loan, 8.424%, (SOFR + 3.00%), 12/15/27 |
|
244
|
241,453
|
Playa
Resorts Holding B.V., Term Loan, 9.585%, (SOFR + 4.25%), 1/5/29 |
|
199
|
198,128
|
SeaWorld
Parks & Entertainment, Inc., Term Loan, 8.439%, (SOFR + 3.00%), 8/25/28 |
|
123
|
122,449
|
Stars
Group Holdings B.V. (The), Term Loan, 7.902%, (SOFR + 2.25%), 7/21/26 |
|
343
|
343,195
|
|
|
|
$ 2,569,964
|
Household
Durables — 0.3% |
ACProducts,
Inc., Term Loan, 9.902%, (SOFR + 4.25%), 5/17/28 |
|
269
|
$
214,378 |
Serta
Simmons Bedding, LLC, Term Loan, 12.90%, (SOFR + 7.50%), 6/29/28 |
|
252
|
249,662
|
|
|
|
$ 464,040
|
Household
Products — 0.1% |
Kronos
Acquisition Holdings, Inc., Term Loan, 9.402%, (SOFR + 3.75%), 12/22/26 |
|
195
|
$
190,961 |
|
|
|
$ 190,961
|
21
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Independent
Power and Renewable Electricity Producers — 0.1% |
Calpine
Construction Finance Company L.P., Term Loan, 7.574%, (SOFR + 2.25%), 7/31/30 |
|
160
|
$
158,598 |
|
|
|
$ 158,598
|
Insurance
— 1.4% |
Alliant
Holdings Intermediate, LLC, Term Loan, 8.835%, (SOFR + 3.50%), 11/5/27 |
|
149
|
$
148,433 |
AmWINS
Group, Inc., Term Loan, 7.689%, (SOFR + 2.25%), 2/19/28 |
|
608
|
603,452
|
AssuredPartners,
Inc., Term Loan, 8.939%, (SOFR + 3.50%), 2/12/27 |
|
24
|
23,895
|
HUB
International Limited, Term Loan, 9.662%, (SOFR + 4.25%), 6/20/30 |
|
546
|
546,660
|
NFP
Corp., Term Loan, 8.689%, (SOFR + 3.25%), 2/16/27 |
|
48
|
46,809
|
Ryan
Specialty Group, LLC, Term Loan, 8.424%, (SOFR + 3.00%), 9/1/27 |
|
267
|
267,000
|
USI,
Inc., Term Loan, 9.14%, (SOFR + 3.75%), 11/22/29 |
|
376
|
376,112
|
|
|
|
$ 2,012,361
|
Interactive
Media & Services — 0.1% |
Getty
Images, Inc., Term Loan, 9.99%, (SOFR + 4.50%), 2/19/26 |
|
92
|
$
92,567 |
Match
Group, Inc., Term Loan, 7.298%, (SOFR + 1.75%), 2/13/27 |
|
100
|
99,719
|
|
|
|
$ 192,286
|
IT
Services — 2.4% |
Asurion,
LLC: |
|
|
|
Term
Loan, 8.689%, (SOFR + 3.25%), 12/23/26 |
|
486
|
$
470,675 |
Term
Loan, 8.689%, (SOFR + 3.25%), 7/31/27 |
|
39
|
37,294
|
Term
Loan, 9.424%, (SOFR + 4.00%), 8/19/28 |
|
220
|
210,553
|
Term
Loan - Second Lien, 10.689%, (SOFR + 5.25%), 1/31/28 |
|
50
|
43,646
|
Endure
Digital, Inc., Term Loan, 9.422%, (SOFR + 3.50%), 2/10/28 |
|
440
|
409,427
|
Gainwell
Acquisition Corp., Term Loan, 9.49%, (SOFR + 4.00%), 10/1/27 |
|
828
|
793,175
|
Go
Daddy Operating Company, LLC, Term Loan, 7.824%, (SOFR + 2.50%), 11/9/29 |
|
578
|
579,416
|
Informatica,
LLC, Term Loan, 8.189%, (SOFR + 2.75%), 10/27/28 |
|
369
|
369,086
|
Rackspace
Technology Global, Inc., Term Loan, 8.206%, (SOFR + 2.75%), 2/15/28 |
|
219
|
98,883 |
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
IT
Services (continued) |
Sedgwick
Claims Management Services, Inc., Term Loan, 9.074%, (SOFR + 3.75%), 2/24/28 |
|
167
|
$
166,799 |
Skopima
Merger Sub, Inc., Term Loan, 9.439%, (SOFR + 4.00%), 5/12/28 |
|
221
|
213,924
|
|
|
|
$ 3,392,878
|
Leisure
Products — 0.2% |
Amer
Sports Oyj, Term Loan, 7.948%, (3 mo. EURIBOR + 4.00%), 3/30/26 |
EUR
|
263
|
$
275,842 |
|
|
|
$ 275,842
|
Life
Sciences Tools & Services — 0.5% |
Catalent
Pharma Solutions, Inc., Term Loan, 7.453%, (SOFR + 2.00%), 2/22/28 |
|
144
|
$
140,514 |
Packaging
Coordinators Midco, Inc., Term Loan, 9.152%, (SOFR + 3.50%), 11/30/27 |
|
220
|
217,378
|
Sotera
Health Holdings, LLC, Term Loan, 8.395%, (SOFR + 2.75%), 12/11/26 |
|
100
|
99,600
|
Star
Parent, Inc., Term Loan, 9.386%, (3 mo. USD LIBOR + 4.00%), 9/27/30 |
|
200
|
191,396
|
|
|
|
$ 648,888
|
Machinery
— 1.7% |
Albion
Financing 3 S.a.r.l., Term Loan, 10.924%, (SOFR + 5.25%), 8/17/26 |
|
221
|
$
221,062 |
Alliance
Laundry Systems, LLC, Term Loan, 8.932%, (SOFR + 3.50%), 10/8/27 |
|
162
|
161,972
|
American
Trailer World Corp., Term Loan, 9.174%, (SOFR + 3.75%), 3/3/28 |
|
34
|
32,089
|
Apex
Tool Group, LLC, Term Loan, 10.689%, (SOFR + 5.25%), 2/8/29 |
|
264
|
225,264
|
Conair
Holdings, LLC, Term Loan, 9.189%, (SOFR + 3.75%), 5/17/28 |
|
221
|
204,927
|
CPM
Holdings, Inc., Term Loan, 9.827%, (SOFR + 4.50%), 9/28/28 |
|
47
|
46,561
|
EMRLD
Borrower, L.P., Term Loan, 8.38%, (SOFR + 3.00%), 5/31/30 |
|
175
|
174,891
|
Filtration
Group Corporation, Term Loan, 8.939%, (SOFR + 3.50%), 10/21/28 |
|
98
|
97,388
|
Gates
Global, LLC, Term Loan, 7.924%, (SOFR + 2.50%), 3/31/27 |
|
287
|
287,296
|
Icebox
Holdco III, Inc., Term Loan, 9.402%, (SOFR + 3.75%), 12/22/28 |
|
123
|
120,870
|
SPX
Flow, Inc., Term Loan, 9.924%, (SOFR + 4.50%), 4/5/29 |
|
174
|
173,003 |
22
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Machinery
(continued) |
Titan
Acquisition Limited, Term Loan, 8.731%, (3 mo. USD LIBOR + 3.00%), 3/28/25 |
|
402
|
$
395,979 |
Vertical
US Newco, Inc., Term Loan, 9.381%, (SOFR + 3.50%), 7/30/27 |
|
194
|
193,017
|
|
|
|
$ 2,334,319
|
Media
— 0.8% |
CSC
Holdings, LLC: |
|
|
|
Term
Loan, 7.699%, (1 mo. USD LIBOR + 2.25%), 7/17/25 |
|
430
|
$
417,994 |
Term
Loan, 7.699%, (1 mo. USD LIBOR + 2.25%), 1/15/26 |
|
143
|
137,803
|
Gray
Television, Inc.: |
|
|
|
Term
Loan, 7.929%, (SOFR + 2.50%), 1/2/26 |
|
85
|
84,849
|
Term
Loan, 8.429%, (SOFR + 3.00%), 12/1/28 |
|
147
|
141,736
|
Hubbard
Radio, LLC, Term Loan, 9.69%, (1 mo. USD LIBOR + 4.25%), 3/28/25 |
|
72
|
60,756
|
iHeartCommunications,
Inc., Term Loan, 8.439%, (SOFR + 3.00%), 5/1/26 |
|
67
|
56,987
|
Magnite,
Inc., Term Loan, 10.538%, (SOFR + 5.00%), 4/28/28(17) |
|
98
|
98,300
|
Sinclair
Television Group, Inc., Term Loan, 7.939%, (SOFR + 2.50%), 9/30/26 |
|
96
|
81,055
|
|
|
|
$ 1,079,480
|
Metals/Mining
— 0.2% |
PMHC
II, Inc., Term Loan, 9.807%, (SOFR + 4.25%), 4/23/29 |
|
199
|
$
181,536 |
Zekelman
Industries, Inc., Term Loan, 7.449%, (SOFR + 2.00%), 1/24/27 |
|
119
|
119,387
|
|
|
|
$ 300,923
|
Oil,
Gas & Consumable Fuels — 0.5% |
Freeport
LNG Investments, LLP, Term Loan, 9.177%, (SOFR + 3.50%), 12/21/28 |
|
98
|
$
95,964 |
Matador
Bidco S.a.r.l., Term Loan, 9.924%, (SOFR + 4.50%), 10/15/26 |
|
131
|
131,338
|
Oryx
Midstream Services Permian Basin, LLC, Term Loan, 8.692%, (SOFR + 3.25%), 10/5/28 |
|
146
|
146,454
|
QuarterNorth
Energy Holding, Inc., Term Loan - Second Lien, 13.439%, (SOFR + 8.00%), 8/27/26 |
|
55
|
55,160
|
UGI
Energy Services, LLC, Term Loan, 8.674%, (SOFR + 3.25%), 2/22/30 |
|
218
|
218,221
|
|
|
|
$ 647,137
|
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Personal
Products — 0.2% |
HLF
Financing S.a.r.l., Term Loan, 7.939%, (SOFR + 2.50%), 8/18/25 |
|
131
|
$
129,456 |
Sunshine
Luxembourg VII S.a.r.l., Term Loan, 9.24%, (SOFR + 3.75%), 10/1/26 |
|
146
|
146,240
|
|
|
|
$ 275,696
|
Pharmaceuticals
— 1.1% |
Bausch
Health Companies, Inc., Term Loan, 10.689%, (SOFR + 5.25%), 2/1/27 |
|
394
|
$
309,036 |
Elanco
Animal Health Incorporated, Term Loan, 7.165%, (SOFR + 1.75%), 8/1/27 |
|
270
|
264,162
|
Jazz
Financing Lux S.a.r.l., Term Loan, 8.939%, (SOFR + 3.50%), 5/5/28 |
|
220
|
220,426
|
Mallinckrodt
International Finance S.A.: |
|
|
|
DIP
Loan, 13.439%, (SOFR + 8.00%), 8/28/24 |
|
30
|
30,769
|
DIP
Loan, 13.451%, (SOFR + 8.00%), 8/28/24 |
|
56
|
58,315
|
Term
Loan, 12.703%, (SOFR + 7.25%), 9/30/27 |
|
625
|
476,101
|
Term
Loan, 12.953%, (SOFR + 7.50%), 9/30/27 |
|
209
|
159,405
|
|
|
|
$ 1,518,214
|
Professional
Services — 1.2% |
AlixPartners,
LLP, Term Loan, 8.189%, (SOFR + 2.75%), 2/4/28 |
|
219
|
$
219,390 |
Camelot
U.S. Acquisition, LLC: |
|
|
|
Term
Loan, 8.439%, (SOFR + 3.00%), 10/30/26 |
|
224
|
224,440
|
Term
Loan, 8.439%, (SOFR + 3.00%), 10/30/26 |
|
144
|
144,251
|
CoreLogic,
Inc., Term Loan, 8.939%, (SOFR + 3.50%), 6/2/28 |
|
390
|
355,903
|
Deerfield
Dakota Holding, LLC, Term Loan, 9.14%, (SOFR + 3.75%), 4/9/27 |
|
314
|
304,297
|
Employbridge
Holding Company, Term Loan, 10.407%, (SOFR + 4.75%), 7/19/28 |
|
221
|
192,317
|
Techem
Verwaltungsgesellschaft 675 mbH, Term Loan, 6.275%, (6 mo. EURIBOR + 2.38%), 7/15/25 |
EUR
|
111
|
116,916
|
Trans
Union, LLC, Term Loan, 7.689%, (SOFR + 2.25%), 12/1/28 |
|
186
|
185,834
|
|
|
|
$ 1,743,348
|
Real
Estate Management & Development — 0.4% |
Cushman
& Wakefield U.S. Borrower, LLC: |
|
|
|
Term
Loan, 8.189%, (SOFR + 2.75%), 8/21/25 |
|
19
|
$
19,213 |
Term
Loan, 8.674%, (SOFR + 3.25%), 1/31/30 |
|
406
|
389,104
|
Term
Loan, 9.324%, (SOFR + 4.00%), 1/31/30 |
|
167
|
159,586
|
|
|
|
$ 567,903
|
23
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Road
& Rail — 0.4% |
Grab
Holdings, Inc., Term Loan, 9.939%, (SOFR + 4.50%), 1/29/26 |
|
154
|
$
154,794 |
Kenan
Advantage Group, Inc., Term Loan, 9.477%, (SOFR + 3.75%), 3/24/26 |
|
340
|
339,879
|
Uber
Technologies, Inc., Term Loan, 8.159%, (SOFR + 2.75%), 3/3/30 |
|
110
|
110,322
|
|
|
|
$ 604,995
|
Semiconductors
& Semiconductor Equipment — 0.2% |
Altar
Bidco, Inc., Term Loan, 8.142%, (SOFR + 3.10%), 2/1/29(17) |
|
173
|
$
171,501 |
Ultra
Clean Holdings, Inc., Term Loan, 9.191%, (SOFR + 3.75%), 8/27/25 |
|
152
|
152,366
|
|
|
|
$ 323,867
|
Software
— 6.3% |
Applied
Systems, Inc., Term Loan, 9.89%, (SOFR + 4.50%), 9/18/26 |
|
674
|
$
676,616 |
AppLovin
Corporation, Term Loan, 8.424%, (SOFR + 3.10%), 8/16/30 |
|
208
|
207,538
|
AQA
Acquisition Holding, Inc., Term Loan, 9.895%, (SOFR + 4.25%), 3/3/28 |
|
122
|
121,386
|
Astra
Acquisition Corp.: |
|
|
|
Term
Loan, 10.902%, (SOFR + 5.25%), 10/25/28 |
|
148
|
101,808
|
Term
Loan - Second Lien, 14.527%, (SOFR + 8.88%), 10/25/29 |
|
250
|
131,218
|
Banff
Merger Sub, Inc.: |
|
|
|
Term
Loan, 9.189%, (SOFR + 3.75%), 10/2/25 |
|
342
|
341,704
|
Term
Loan - Second Lien, 10.939%, (SOFR + 5.50%), 2/27/26 |
|
125
|
124,505
|
Central
Parent, Inc., Term Loan, 9.406%, (SOFR + 4.00%), 7/6/29 |
|
323
|
321,225
|
CentralSquare
Technologies, LLC, Term Loan, 9.29%, (SOFR + 3.75%), 8/29/25 |
|
194
|
183,419
|
Ceridian
HCM Holding, Inc., Term Loan, 7.939%, (SOFR + 2.50%), 4/30/25 |
|
214
|
214,106
|
Cloud
Software Group, Inc., Term Loan, 9.99%, (SOFR + 4.50%), 3/30/29(17) |
|
224
|
213,157
|
Cloudera,
Inc., Term Loan, 9.174%, (SOFR + 3.75%), 10/8/28 |
|
393
|
379,081
|
Constant
Contact, Inc., Term Loan, 9.687%, (SOFR + 4.00%), 2/10/28 |
|
270
|
251,158
|
Cornerstone
OnDemand, Inc., Term Loan, 9.189%, (SOFR + 3.75%), 10/16/28 |
|
197
|
186,473
|
Delta
TopCo, Inc.: |
|
|
|
Term
Loan, 9.069%, (SOFR + 3.75%), 12/1/27 |
|
219
|
216,301
|
Term
Loan - Second Lien, 12.569%, (SOFR + 7.25%), 12/1/28 |
|
300
|
297,750 |
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Software
(continued) |
E2open,
LLC, Term Loan, 8.939%, (SOFR + 3.50%), 2/4/28 |
|
122
|
$
120,739 |
ECI
Macola Max Holding, LLC, Term Loan, 9.402%, (SOFR + 3.75%), 11/9/27 |
|
195
|
193,923
|
Epicor
Software Corporation: |
|
|
|
Term
Loan, 8.689%, (SOFR + 3.25%), 7/30/27 |
|
96
|
96,018
|
Term
Loan, 9.074%, (SOFR + 3.75%), 7/30/27 |
|
125
|
125,359
|
GoTo
Group, Inc., Term Loan, 10.283%, (SOFR + 4.75%), 8/31/27 |
|
267
|
169,321
|
Greeneden
U.S. Holdings II, LLC, Term Loan, 9.403%, (SOFR + 4.00%), 12/1/27 |
|
122
|
121,629
|
Imperva,
Inc., Term Loan, 9.627%, (SOFR + 4.00%), 1/12/26 |
|
97
|
97,144
|
Ivanti
Software, Inc., Term Loan, 9.907%, (SOFR + 4.25%), 12/1/27 |
|
214
|
190,638
|
Magenta
Buyer, LLC: |
|
|
|
Term
Loan, 10.645%, (SOFR + 5.00%), 7/27/28 |
|
289
|
202,045
|
Term
Loan - Second Lien, 13.895%, (SOFR + 8.25%), 7/27/29 |
|
75
|
32,475
|
Maverick
Bidco, Inc., Term Loan, 9.283%, (SOFR + 3.75%), 5/18/28 |
|
123
|
119,930
|
McAfee,
LLC, Term Loan, 9.165%, (SOFR + 3.75%), 3/1/29 |
|
395
|
378,295
|
Open
Text Corporation, Term Loan, 8.174%, (SOFR + 2.75%), 1/31/30 |
|
194
|
194,524
|
Polaris
Newco, LLC, Term Loan, 9.439%, (SOFR + 4.00%), 6/2/28 |
|
368
|
347,885
|
Proofpoint,
Inc., Term Loan, 8.689%, (SOFR + 3.25%), 8/31/28 |
|
368
|
362,809
|
RealPage,
Inc., Term Loan, 8.439%, (SOFR + 3.00%), 4/24/28 |
|
392
|
383,403
|
Sabre
GLBL, Inc., Term Loan, 9.674%, (SOFR + 4.25%), 6/30/28 |
|
175
|
149,917
|
SolarWinds
Holdings, Inc., Term Loan, 9.074%, (SOFR + 3.75%), 2/5/27 |
|
249
|
248,983
|
SS&C
European Holdings S.a.r.l., Term Loan, 7.189%, (SOFR + 1.75%), 4/16/25 |
|
121
|
121,416
|
SS&C
Technologies, Inc., Term Loan, 7.189%, (SOFR + 1.75%), 4/16/25 |
|
128
|
128,581
|
Ultimate
Software Group, Inc. (The): |
|
|
|
Term
Loan, 8.764%, (SOFR + 3.25%), 5/4/26 |
|
608
|
605,539
|
Term
Loan, 9.233%, (SOFR + 3.75%), 5/4/26 |
|
240
|
239,719
|
Veritas
US, Inc., Term Loan, 10.439%, (SOFR + 5.11%), 9/1/25 |
|
388
|
329,459
|
|
|
|
$ 8,927,196
|
24
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Borrower/Description
|
Principal
Amount* (000's omitted) |
Value
|
Specialty
Retail — 0.9% |
Great
Outdoors Group, LLC, Term Loan, 9.402%, (SOFR + 3.75%), 3/6/28 |
|
389
|
$
386,750 |
Hoya
Midco, LLC, Term Loan, 8.633%, (SOFR + 3.25%), 2/3/29 |
|
74
|
73,953
|
Les
Schwab Tire Centers, Term Loan, 8.692%, (SOFR + 3.25%), 11/2/27 |
|
438
|
437,203
|
Mattress
Firm, Inc., Term Loan, 9.95%, (6 mo. USD LIBOR + 4.25%), 9/25/28 |
|
165
|
163,576
|
PetSmart,
Inc., Term Loan, 9.174%, (SOFR + 3.75%), 2/11/28 |
|
220
|
217,758
|
|
|
|
$ 1,279,240
|
Trading
Companies & Distributors — 1.0% |
Electro
Rent Corporation, Term Loan, 11.002%, (SOFR + 5.50%), 11/1/24 |
|
258
|
$
242,407 |
Park
River Holdings, Inc., Term Loan, 8.907%, (SOFR + 3.25%), 12/28/27 |
|
97
|
92,415
|
Spin
Holdco, Inc., Term Loan, 9.664%, (SOFR + 4.00%), 3/4/28 |
|
585
|
502,871
|
SRS
Distribution, Inc., Term Loan, 8.939%, (SOFR + 3.50%), 6/2/28 |
|
147
|
143,564
|
White
Cap Buyer, LLC, Term Loan, 9.074%, (SOFR + 3.75%), 10/19/27 |
|
315
|
313,619
|
Windsor
Holdings III, LLC, Term Loan, 9.815%, (SOFR + 4.50%), 8/1/30 |
|
150
|
149,725
|
|
|
|
$ 1,444,601
|
Transportation
Infrastructure — 0.1% |
Brown
Group Holding, LLC, Term Loan, 8.174%, (SOFR + 2.75%), 6/7/28 |
|
184
|
$
181,402 |
|
|
|
$ 181,402
|
Wireless
Telecommunication Services — 0.1% |
Digicel
International Finance Limited, Term Loan, 8.902%, (3 mo. USD LIBOR + 3.25%), 5/28/24 |
|
118
|
$
108,199 |
|
|
|
$ 108,199
|
Total
Senior Floating-Rate Loans (identified cost $52,345,551) |
|
|
$ 50,037,013
|
Sovereign
Government Bonds — 14.6% |
Security
|
Principal
Amount* (000's omitted) |
Value
|
Albania
— 0.3% |
Albania
Government International Bond, 5.90%, 6/9/28(15) |
EUR
|
427
|
$
437,515 |
|
|
|
$ 437,515
|
Angola
— 0.1% |
Republic
of Angola, 8.75%, 4/14/32(15) |
|
230
|
$
179,625 |
|
|
|
$ 179,625
|
Argentina
— 0.4% |
Republic
of Argentina: |
|
|
|
0.75%
to 7/9/27, 7/9/30(4) |
|
194
|
$
54,467 |
1.00%,
7/9/29 |
|
248
|
67,117
|
3.50%
to 7/9/29, 7/9/41(4) |
|
410
|
108,420
|
3.625%
to 7/9/24, 7/9/35(4) |
|
450
|
112,315
|
4.25%
to 7/9/24, 1/9/38(4) |
|
770
|
234,515
|
|
|
|
$ 576,834
|
Bahrain
— 0.5% |
Kingdom
of Bahrain: |
|
|
|
5.625%,
9/30/31(15) |
|
350
|
$
306,066 |
6.75%,
9/20/29(15) |
|
200
|
193,535
|
7.375%,
5/14/30(15) |
|
200
|
198,228
|
|
|
|
$ 697,829
|
Barbados
— 0.3% |
Government
of Barbados, 6.50%, 10/1/29(1) |
|
385
|
$
363,240 |
|
|
|
$ 363,240
|
Benin
— 0.4% |
Benin
Government International Bond: |
|
|
|
4.875%,
1/19/32(15) |
EUR
|
241
|
$
191,321 |
4.95%,
1/22/35(15) |
EUR
|
100
|
72,009
|
6.875%,
1/19/52(15) |
EUR
|
445
|
309,530
|
|
|
|
$ 572,860
|
Chile
— 0.6% |
Chile
Government International Bond: |
|
|
|
2.45%,
1/31/31 |
|
200
|
$
161,637 |
2.55%,
7/27/33 |
|
550
|
413,388 |
25
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount* (000's omitted) |
Value
|
Chile
(continued) |
Chile
Government International Bond: (continued) |
|
|
|
3.50%,
4/15/53 |
|
340
|
$
212,592 |
|
|
|
$ 787,617
|
Costa
Rica — 0.1% |
Costa
Rica Government International Bond, 6.55%, 4/3/34(15) |
|
200
|
$
190,833 |
|
|
|
$ 190,833
|
Croatia
— 0.1% |
Croatia
Government International Bond, 1.75%, 3/4/41(15) |
EUR
|
100
|
$
71,563 |
|
|
|
$ 71,563
|
Dominican
Republic — 0.4% |
Dominican
Republic: |
|
|
|
5.875%,
1/30/60(15) |
|
191
|
$
136,372 |
6.00%,
7/19/28(15) |
|
200
|
190,320
|
6.40%,
6/5/49(15) |
|
160
|
126,142
|
6.85%,
1/27/45(15) |
|
150
|
125,573
|
|
|
|
$ 578,407
|
Ecuador
— 0.2% |
Republic
of Ecuador, 2.50%, 7/31/40(15) |
|
1,260
|
$
311,865 |
|
|
|
$ 311,865
|
Egypt
— 0.3% |
Arab
Republic of Egypt: |
|
|
|
8.50%,
1/31/47(15) |
|
318
|
$
166,139 |
8.70%,
3/1/49(15) |
|
200
|
106,000
|
8.875%,
5/29/50(15) |
|
200
|
106,852
|
|
|
|
$ 378,991
|
El
Salvador — 0.3% |
Republic
of El Salvador: |
|
|
|
5.875%,
1/30/25(15) |
|
26
|
$
23,953 |
6.375%,
1/18/27(15) |
|
173
|
142,314
|
7.65%,
6/15/35(15) |
|
10
|
7,049
|
8.25%,
4/10/32(15) |
|
242
|
191,110
|
|
|
|
$ 364,426
|
Security
|
Principal
Amount* (000's omitted) |
Value
|
Ethiopia
— 0.2% |
Ethiopia
Government International Bond, 6.625%, 12/11/24(15) |
|
400
|
$
253,915 |
|
|
|
$ 253,915
|
Ghana
— 0.3% |
Ghana
Government International Bond: |
|
|
|
7.625%,
5/16/29(14)(15) |
|
200
|
$
85,706 |
7.75%,
4/7/29(14)(15) |
|
290
|
124,726
|
8.125%,
3/26/32(14)(15) |
|
290
|
122,986
|
8.627%,
6/16/49(14)(15) |
|
320
|
134,024
|
|
|
|
$ 467,442
|
Guatemala
— 0.1% |
Guatemala
Government International Bond, 5.375%, 4/24/32(15) |
|
200
|
$
178,339 |
|
|
|
$ 178,339
|
Hungary
— 0.4% |
Hungary
Government International Bond: |
|
|
|
2.125%,
9/22/31(15) |
|
310
|
$
224,089 |
6.25%,
9/22/32(1)(15) |
|
400
|
385,526
|
|
|
|
$ 609,615
|
India
— 0.2% |
Export-Import
Bank of India, 2.25%, 1/13/31(15) |
|
368
|
$
282,813 |
|
|
|
$ 282,813
|
Indonesia
— 0.9% |
Indonesia
Government International Bond: |
|
|
|
3.55%,
3/31/32 |
|
554
|
$
468,364 |
4.65%,
9/20/32 |
|
400
|
367,212
|
4.85%,
1/11/33 |
|
400
|
374,400
|
|
|
|
$ 1,209,976
|
Ivory
Coast — 0.4% |
Ivory
Coast Government International Bond: |
|
|
|
6.625%,
3/22/48(15) |
EUR
|
325
|
$
231,691 |
6.875%,
10/17/40(15) |
EUR
|
512
|
393,768
|
|
|
|
$ 625,459
|
Jordan
— 0.1% |
Kingdom
of Jordan, 7.375%, 10/10/47(15) |
|
200
|
$
151,828 |
|
|
|
$ 151,828
|
26
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount* (000's omitted) |
Value
|
Kazakhstan
— 0.2% |
Kazakhstan
Government International Bond, 6.50%, 7/21/45(15) |
|
210
|
$
206,816 |
|
|
|
$ 206,816
|
Kenya
— 0.1% |
Government
of Kenya, 7.25%, 2/28/28(15) |
|
200
|
$
162,910 |
|
|
|
$ 162,910
|
Lebanon
— 0.0%(12) |
Lebanese
Republic: |
|
|
|
5.80%,
4/14/20(14)(15) |
|
20
|
$
1,287 |
6.10%,
10/4/22(14)(15) |
|
337
|
20,999
|
6.15%,
6/19/20(14) |
|
26
|
1,673
|
6.375%,
3/9/20(14) |
|
385
|
24,768
|
6.40%,
5/26/23(14) |
|
6
|
375
|
6.65%,
11/3/28(14)(15) |
|
65
|
4,274
|
6.85%,
5/25/29(14) |
|
2
|
128
|
8.20%,
5/17/33(14) |
|
70
|
4,548
|
8.25%,
5/17/34(14) |
|
58
|
3,868
|
|
|
|
$ 61,920
|
Mexico
— 0.8% |
Mexico
Government International Bond: |
|
|
|
4.875%,
5/19/33 |
|
451
|
$
396,329 |
5.00%,
4/27/51 |
|
400
|
296,495
|
5.40%,
2/9/28 |
|
415
|
408,113
|
|
|
|
$ 1,100,937
|
Nigeria
— 0.5% |
Republic
of Nigeria: |
|
|
|
7.375%,
9/28/33(15) |
|
440
|
$
332,182 |
7.625%,
11/28/47(15) |
|
200
|
135,546
|
7.696%,
2/23/38(15) |
|
403
|
288,385
|
|
|
|
$ 756,113
|
North
Macedonia — 0.5% |
North
Macedonia Government International Bond: |
|
|
|
1.625%,
3/10/28(15) |
EUR
|
370
|
$
319,202 |
6.96%,
3/13/27(15) |
EUR
|
345
|
370,406
|
|
|
|
$ 689,608
|
Oman
— 0.5% |
Oman
Government International Bond: |
|
|
|
5.375%,
3/8/27(15) |
|
200
|
$
193,921 |
Security
|
Principal
Amount* (000's omitted) |
Value
|
Oman
(continued) |
Oman
Government International Bond: (continued) |
|
|
|
6.25%,
1/25/31(15) |
|
200
|
$
194,719 |
7.375%,
10/28/32(15) |
|
351
|
365,324
|
|
|
|
$ 753,964
|
Panama
— 0.4% |
Panama
Bonos del Tesoro, 6.375%, 7/25/33(1)(15) |
|
20
|
$
18,286 |
Panama
Government International Bond, 6.70%, 1/26/36 |
|
622
|
584,868
|
|
|
|
$ 603,154
|
Paraguay
— 0.2% |
Republic
of Paraguay, 4.95%, 4/28/31(15) |
|
259
|
$
236,117 |
|
|
|
$ 236,117
|
Peru
— 0.4% |
Peruvian
Government International Bond: |
|
|
|
2.783%,
1/23/31 |
|
150
|
$
120,456 |
3.00%,
1/15/34 |
|
360
|
273,455
|
3.30%,
3/11/41 |
|
170
|
113,066
|
|
|
|
$ 506,977
|
Romania
— 0.9% |
Romania
Government International Bond: |
|
|
|
1.75%,
7/13/30(15) |
EUR
|
192
|
$
155,117 |
2.00%,
1/28/32(15) |
EUR
|
4
|
3,054
|
2.00%,
4/14/33(15) |
EUR
|
198
|
144,464
|
2.124%,
7/16/31(15) |
EUR
|
7
|
5,510
|
2.75%,
2/26/26(15) |
EUR
|
84
|
85,210
|
2.75%,
4/14/41(15) |
EUR
|
122
|
76,483
|
3.375%,
1/28/50(15) |
EUR
|
258
|
162,050
|
3.624%,
5/26/30(15) |
EUR
|
2
|
1,833
|
3.75%,
2/7/34(15) |
EUR
|
14
|
11,730
|
4.625%,
4/3/49(15) |
EUR
|
435
|
341,489
|
6.625%,
9/27/29(15) |
EUR
|
235
|
256,385
|
|
|
|
$ 1,243,325
|
Serbia
— 0.3% |
Serbia
Government International Bond, 2.125%, 12/1/30(15) |
|
605
|
$
445,736 |
|
|
|
$ 445,736
|
Sri
Lanka — 0.5% |
Sri
Lanka Government International Bond: |
|
|
|
5.75%,
4/18/23(14)(15) |
|
370
|
$
194,216 |
27
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Security
|
Principal
Amount* (000's omitted) |
Value
|
Sri
Lanka (continued) |
Sri
Lanka Government International Bond: (continued) |
|
|
|
6.20%,
5/11/27(14)(15) |
|
650
|
$
327,242 |
6.85%,
11/3/25(14)(15) |
|
410
|
214,207
|
|
|
|
$ 735,665
|
Suriname
— 1.1% |
Republic
of Suriname, 9.25%, 10/26/26(14)(15) |
|
1,737
|
$
1,585,013 |
|
|
|
$ 1,585,013
|
Ukraine
— 0.2% |
Ukraine
Government International Bond: |
|
|
|
0.00%,
GDP-Linked, 8/1/41(14)(15)(20) |
|
83
|
$
34,806 |
7.75%,
9/1/24(14)(15) |
|
376
|
121,362
|
7.75%,
9/1/25(14)(15) |
|
100
|
30,969
|
7.75%,
9/1/28(14)(15) |
|
200
|
57,070
|
|
|
|
$ 244,207
|
United
Arab Emirates — 0.7% |
Finance
Department Government of Sharjah: |
|
|
|
4.375%,
3/10/51(15) |
|
670
|
$
408,238 |
6.50%,
11/23/32(1)(15) |
|
540
|
524,323
|
|
|
|
$ 932,561
|
Uruguay
— 0.3% |
Uruguay
Government Bond: |
|
|
|
4.375%,
1/23/31 |
|
150
|
$
142,066 |
5.10%,
6/18/50 |
|
210
|
182,463
|
5.75%,
10/28/34 |
|
140
|
140,446
|
|
|
|
$ 464,975
|
Uzbekistan
— 0.3% |
Republic
of Uzbekistan: |
|
|
|
4.75%,
2/20/24(15) |
|
240
|
$
238,463 |
5.375%,
2/20/29(15) |
|
200
|
178,254
|
|
|
|
$ 416,717
|
Zambia
— 0.1% |
Zambia
Government International Bond, 5.375%, 9/20/22(14)(15) |
|
200
|
$
110,011 |
|
|
|
$ 110,011
|
Total
Sovereign Government Bonds (identified cost $23,428,587) |
|
|
$ 20,547,718
|
Borrower/Description
|
Principal
Amount (000's omitted) |
Value
|
Tanzania
— 0.9% |
Government
of the United Republic of Tanzania, Term Loan, 12.174%, (6 mo. USD LIBOR + 6.30%), 4/28/31(2) |
$
|
1,288
|
$
1,257,494 |
Total
Sovereign Loans (identified cost $1,288,235) |
|
|
$ 1,257,494
|
U.S.
Government Agency Mortgage-Backed Securities — 22.0% |
Security
|
Principal
Amount (000's omitted) |
Value
|
Federal
Home Loan Mortgage Corp.: |
|
|
|
4.196%,
(COF + 1.254%), 1/1/35(21) |
$
|
189
|
$
184,714 |
5.00%,
8/1/52 |
|
2,446
|
2,258,491
|
6.00%,
3/1/29 |
|
421
|
420,732
|
6.15%,
7/20/27 |
|
43
|
42,483
|
6.50%,
7/1/32 |
|
278
|
281,518
|
7.00%,
4/1/36 |
|
322
|
331,013
|
7.50%,
11/17/24 |
|
6
|
6,521
|
9.00%,
3/1/31 |
|
3
|
2,891
|
Federal
National Mortgage Association: |
|
|
|
4.44%,
(6 mo. RFUCCT + 1.54%), 9/1/37(21) |
|
120
|
119,768
|
5.00%,
with various maturities to 2040 |
|
595
|
575,974
|
5.50%,
30-Year, TBA(22) |
|
300
|
284,777
|
5.50%,
with various maturities to 2033 |
|
430
|
424,934
|
6.00%,
11/1/23 |
|
1
|
1,039
|
6.334%,
(COF + 2.004%), 7/1/32(21) |
|
84
|
85,284
|
6.50%,
with various maturities to 2036 |
|
685
|
693,829
|
7.00%,
with various maturities to 2037 |
|
274
|
280,053
|
Government
National Mortgage Association: |
|
|
|
4.50%,
10/15/47 |
|
117
|
106,897
|
5.00%,
6/20/52 |
|
1,941
|
1,803,264
|
5.50%,
30-Year, TBA(22) |
|
10,700
|
10,235,007
|
5.50%,
with various maturities to 2062 |
|
936
|
895,365
|
6.00%,
30-Year, TBA(22) |
|
11,000
|
10,779,453
|
6.00%,
7/20/53 |
|
249
|
245,531
|
6.50%,
30-Year, TBA(22) |
|
800
|
798,516
|
7.50%,
8/15/25 |
|
14
|
13,937
|
8.00%,
3/15/34 |
|
215
|
219,391
|
9.50%,
7/15/25 |
|
0
(23) |
56
|
Total
U.S. Government Agency Mortgage-Backed Securities (identified cost $31,833,661) |
|
|
$ 31,091,438
|
28
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Short-Term
Investments — 3.4% |
Security
|
Shares
|
Value
|
Morgan
Stanley Institutional Liquidity Funds - Government Portfolio, Institutional Class, 5.25%(24) |
|
4,286,237
|
$
4,286,237 |
Total
Affiliated Fund (identified cost $4,286,237) |
|
|
$ 4,286,237
|
U.S.
Treasury Obligations — 0.4% |
Security
|
Principal
Amount (000's omitted) |
Value
|
U.S.
Treasury Bills, 0.00%, 11/30/23(25) |
$
|
500
|
$
497,872 |
Total
U.S. Treasury Obligations (identified cost $497,855) |
|
|
$ 497,872
|
Total
Short-Term Investments (identified cost $4,784,092) |
|
|
$ 4,784,109
|
Total
Investments — 128.7% (identified cost $206,162,572) |
|
|
$181,510,330
|
Less
Unfunded Loan Commitments — (0.0)%(12) |
|
|
$
(1,073) |
Net
Investments — 128.7% (identified cost $206,161,499) |
|
|
$181,509,257
|
Other
Assets, Less Liabilities — (28.7)% |
|
|
$
(40,467,506) |
Net
Assets — 100.0% |
|
|
$141,041,751
|
The
percentage shown for each investment category in the Portfolio of Investments is based on net assets. |
*
|
In
U.S. dollars unless otherwise indicated. |
(1) |
Security
exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be sold in certain transactions in reliance on an exemption from registration (normally to qualified institutional buyers). At October 31,
2023, the aggregate value of these securities is $55,323,353 or 39.2% of the Fund's net assets. |
(2) |
Variable
rate security. The stated interest rate represents the rate in effect at October 31, 2023. |
(3) |
When-issued,
variable rate security whose interest rate will be determined after October 31, 2023 |
(4) |
Step
coupon security. Interest rate represents the rate in effect at October 31, 2023. |
(5) |
Interest
only security that entitles the holder to receive only interest payments on the underlying mortgages. Principal amount shown is the notional amount of the underlying mortgages on which coupon interest is calculated. |
(6) |
Inverse
floating-rate security whose coupon varies inversely with changes in the interest rate index. The stated interest rate represents the coupon rate in effect at October 31, 2023. |
(7) |
Principal
only security that entitles the holder to receive only principal payments on the underlying mortgages. |
(8) |
Weighted
average fixed-rate coupon that changes/updates monthly. Rate shown is the rate at October 31, 2023. |
(9) |
Represents
an investment in an issuer that may be deemed to be an affiliate (see Note 8). |
(10) |
Non-income
producing security. |
(11) |
Security
was acquired in connection with a restructuring of a Senior Loan and may be subject to restrictions on resale. |
(12) |
Amount
is less than 0.05% or (0.05)%, as applicable. |
(13) |
For fair
value measurement disclosure purposes, security is categorized as Level 3 (see Note 9). |
(14) |
Issuer
is in default with respect to interest and/or principal payments or has declared bankruptcy. For a variable rate security, interest rate has been adjusted to reflect non-accrual status. |
(15) |
Security
exempt from registration under Regulation S of the Securities Act of 1933, as amended, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. At October 31, 2023, the aggregate value of these securities is $15,295,042 or 10.8% of the Fund's net assets.
|
(16) |
Senior
floating-rate loans (Senior Loans) often require prepayments from excess cash flows or permit the borrowers to repay at their election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be
predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, Senior Loans will typically have an expected average life of approximately two to four years. Senior Loans
typically have rates of interest which are redetermined periodically by reference to a base lending rate, plus a spread. These base lending rates are primarily the Secured Overnight Financing Rate (“SOFR”) (or the London Interbank
Offered Rate (“LIBOR”) for those loans whose rates reset prior to the discontinuance of LIBOR on June 30, 2023) and secondarily, the prime rate offered by one or more major United States banks (the “Prime Rate”). Base lending
rates may be subject to a floor, or minimum rate. Rates for SOFR are generally 1 or 3-month tenors and may also be subject to a credit spread adjustment. Senior Loans are generally subject to contractual restrictions that must be satisfied before
they can be bought or sold. |
(17) |
The stated
interest rate represents the weighted average interest rate at October 31, 2023 of contracts within the senior loan facility. Interest rates on contracts are primarily redetermined either monthly or quarterly by reference to the indicated base
lending rate and spread and the reset period. |
(18) |
This
Senior Loan will settle after October 31, 2023, at which time the interest rate will be determined. |
(19) |
Unfunded
or partially unfunded loan commitments. The stated interest rate reflects the weighted average of the reference rate and spread for the funded portion, if any, and the commitment fees on the portion of the loan that is unfunded. At October 31,
2023, the total value of unfunded loan commitments is $856. See Note 1F for description. |
29
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
(20) |
Amounts
payable in respect of the security are contingent upon and determined by reference to Ukraine’s GDP and Real GDP Growth Rate. Principal amount represents the notional amount used to calculate payments due to the security holder and does not
represent an entitlement for payment. |
(21) |
Adjustable
rate mortgage security whose interest rate generally adjusts monthly based on a weighted average of interest rates on the underlying mortgages. The coupon rate may not reflect the applicable index value as interest rates on the underlying mortgages
may adjust on various dates and at various intervals and may be subject to lifetime ceilings and lifetime floors and lookback periods. Rate shown is the coupon rate at October 31, 2023. |
(22) |
TBA
(To Be Announced) securities are purchased on a forward commitment basis with an approximate principal amount and maturity date. The actual principal amount and maturity date are determined upon settlement. |
(23) |
Principal
amount is less than $500. |
(24) |
May be
deemed to be an affiliated investment company. The rate shown is the annualized seven-day yield as of October 31, 2023. |
(25) |
Security
(or a portion thereof) has been pledged to cover collateral requirements on open derivative contracts. |
Forward
Foreign Currency Exchange Contracts (Centrally Cleared) |
Currency
Purchased |
Currency
Sold |
Settlement
Date |
Value/Unrealized
Appreciation (Depreciation) |
EUR
|
78,028
|
USD
|
83,554
|
12/20/23
|
$
(808) |
USD
|
1,764,056
|
EUR
|
1,647,388
|
12/20/23
|
17,069
|
USD
|
671,662
|
EUR
|
627,241
|
12/20/23
|
6,499
|
USD
|
636,654
|
EUR
|
594,548
|
12/20/23
|
6,160
|
USD
|
607,426
|
EUR
|
567,253
|
12/20/23
|
5,878
|
USD
|
452,919
|
EUR
|
422,965
|
12/20/23
|
4,382
|
USD
|
118,847
|
EUR
|
112,618
|
12/20/23
|
(579)
|
USD
|
184,916
|
EUR
|
175,224
|
12/20/23
|
(902)
|
USD
|
279,871
|
EUR
|
265,202
|
12/20/23
|
(1,365)
|
|
|
|
|
|
$36,334
|
Forward
Foreign Currency Exchange Contracts (OTC) |
Currency
Purchased |
Currency
Sold |
Counterparty
|
Settlement
Date |
Unrealized
Appreciation |
Unrealized
(Depreciation) |
USD
|
1,444,534
|
EUR
|
1,362,717
|
Standard
Chartered Bank |
11/2/23
|
$
2,644 |
$
— |
EUR
|
262,792
|
USD
|
276,822
|
Citibank,
N.A. |
11/3/23
|
1,249
|
—
|
USD
|
1,442,209
|
EUR
|
1,362,716
|
Standard
Chartered Bank |
12/4/23
|
—
|
(1,528)
|
|
|
|
|
|
|
$3,893
|
$(1,528)
|
Futures
Contracts |
Description
|
Number
of Contracts |
Position
|
Expiration
Date |
Notional
Amount |
Value/Unrealized
Appreciation (Depreciation) |
Interest
Rate Futures |
|
|
|
|
|
U.S.
5-Year Treasury Note |
26
|
Long
|
12/29/23
|
$ 2,716,391
|
$
(20,332) |
U.S.
Ultra 10-Year Treasury Note |
14
|
Long
|
12/19/23
|
1,523,594
|
(49,500)
|
Euro-Bobl
|
(12)
|
Short
|
12/7/23
|
(1,476,558)
|
8,507
|
Euro-Bund
|
(6)
|
Short
|
12/7/23
|
(818,906)
|
7,888
|
30
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
Futures
Contracts (continued) |
Description
|
Number
of Contracts |
Position
|
Expiration
Date |
Notional
Amount |
Value/Unrealized
Appreciation (Depreciation) |
Interest
Rate Futures (continued) |
|
|
|
|
|
Euro-Buxl
|
(5)
|
Short
|
12/7/23
|
$ (637,082)
|
$
53,434 |
U.S.
2-Year Treasury Note |
(4)
|
Short
|
12/29/23
|
(809,688)
|
1,312
|
U.S.
5-Year Treasury Note |
(33)
|
Short
|
12/29/23
|
(3,447,727)
|
26,625
|
U.S.
10-Year Treasury Note |
(20)
|
Short
|
12/19/23
|
(2,123,437)
|
71,618
|
U.S.
Long Treasury Bond |
(7)
|
Short
|
12/19/23
|
(766,063)
|
40,201
|
U.S.
Ultra-Long Treasury Bond |
(15)
|
Short
|
12/19/23
|
(1,688,438)
|
196,556
|
|
|
|
|
|
$336,309
|
Credit
Default Swaps - Sell Protection (Centrally Cleared) |
Reference
Entity |
Notional
Amount* (000's omitted) |
Contract
Annual Fixed Rate** |
Current
Market Annual Fixed Rate*** |
Termination
Date |
Value
|
Unamortized
Upfront Receipts (Payments) |
Unrealized
Appreciation (Depreciation) |
Brazil
|
$
2,518 |
1.00%
(pays quarterly)(1) |
1.81%
|
12/20/28
|
$
(87,743) |
$
91,037 |
$
3,294 |
Colombia
|
5,000
|
1.00%
(pays quarterly)(1) |
2.20
|
12/20/28
|
(257,566)
|
279,820
|
22,254
|
Croatia
|
5,000
|
1.00%
(pays quarterly)(1) |
0.86
|
12/20/28
|
36,485
|
(45,014)
|
(8,529)
|
Hungary
|
2,200
|
1.00%
(pays quarterly)(1) |
1.59
|
12/20/28
|
(55,127)
|
48,366
|
(6,761)
|
Indonesia
|
3,000
|
1.00%
(pays quarterly)(1) |
0.98
|
12/20/28
|
5,974
|
(18,500)
|
(12,526)
|
Mexico
|
2,500
|
1.00%
(pays quarterly)(1) |
1.21
|
12/20/28
|
(20,783)
|
21,873
|
1,090
|
Peru
|
2,000
|
1.00%
(pays quarterly)(1) |
1.00
|
12/20/28
|
2,436
|
(16,903)
|
(14,467)
|
Total
|
$22,218
|
|
|
|
$
(376,324) |
$360,679
|
$
(15,645) |
Credit
Default Swaps - Sell Protection (OTC) |
Reference
Entity |
Counterparty
|
Notional
Amount* (000's omitted) |
Contract
Annual Fixed Rate** |
Current
Market Annual Fixed Rate*** |
Termination
Date |
Value
|
Unamortized
Upfront Receipts (Payments) |
Unrealized
Appreciation (Depreciation) |
Brazil
|
Citibank,
N.A. |
$
1,050 |
1.00%
(pays quarterly)(1) |
2.57%
|
12/20/31
|
$
(101,516) |
$
123,815 |
$
22,299 |
Mexico
|
Citibank,
N.A. |
688
|
1.00%
(pays quarterly)(1) |
1.74
|
12/20/31
|
(31,788)
|
25,018
|
(6,770)
|
Romania
|
Barclays
Bank PLC |
4,000
|
1.00%
(pays quarterly)(1) |
1.59
|
6/20/28
|
(90,624)
|
197,251
|
106,627
|
Total
|
|
$5,738
|
|
|
|
$(223,928)
|
$346,084
|
$122,156
|
31
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Portfolio of
Investments — continued
*
|
If the Fund
is the seller of credit protection, the notional amount is the maximum potential amount of future payments the Fund could be required to make if a credit event, as defined in the credit default swap agreement, were to occur. At October 31, 2023,
such maximum potential amount for all open credit default swaps in which the Fund is the seller was $27,956,000. |
**
|
The
contract annual fixed rate represents the fixed rate of interest received by the Fund (as a seller of protection) on the notional amount of the credit default swap contract. |
***
|
Current
market annual fixed rates, utilized in determining the net unrealized appreciation or depreciation as of period end, serve as an indicator of the market’s perception of the current status of the payment/performance risk associated with the
credit derivative. The current market annual fixed rate of a particular reference entity reflects the cost, as quoted by the pricing vendor, of selling protection against default of that entity as of period end and may include upfront payments
required to be made to enter into the agreement. The higher the fixed rate, the greater the market perceived risk of a credit event involving the reference entity. A rate identified as “Defaulted” indicates a credit event has occurred
for the reference entity. |
(1) |
Upfront
payment is exchanged with the counterparty as a result of the standardized trading coupon. |
Abbreviations:
|
COF
|
– Cost
of Funds 11th District |
DIP
|
– Debtor
In Possession |
EURIBOR
|
– Euro
Interbank Offered Rate |
GDP
|
– Gross
Domestic Product |
LIBOR
|
– London
Interbank Offered Rate |
OTC
|
– Over-the-counter
|
PIK
|
– Payment
In Kind |
RFUCCT
|
– Refinitiv
USD IBOR Consumer Cash Fallbacks Term |
SOFR
|
– Secured
Overnight Financing Rate |
TBA
|
– To
Be Announced |
Currency
Abbreviations: |
EUR
|
– Euro
|
USD
|
– United
States Dollar |
32
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Statement of Assets
and Liabilities
|
October
31, 2023 |
Assets
|
|
Unaffiliated
investments, at value (identified cost $199,793,581) |
$
175,589,454 |
Affiliated
investments, at value (identified cost $6,367,918) |
5,919,803
|
Cash
|
1,646,359
|
Deposits
for derivatives collateral: |
|
Futures
contracts |
231,708
|
Centrally
cleared derivatives |
4,530,091
|
OTC
derivatives - swap contracts |
146,000
|
Foreign
currency, at value (identified cost $1,183,186) |
1,193,224
|
Interest
receivable |
1,447,103
|
Interest
and dividends receivable from affiliated investments |
30,579
|
Receivable
for investments sold |
853,691
|
Receivable
for variation margin on open centrally cleared derivatives |
36,355
|
Receivable
for open forward foreign currency exchange contracts |
3,893
|
Receivable
for open swap contracts |
128,926
|
Tax
reclaims receivable |
115
|
Prepaid
upfront fees on notes payable |
15,254
|
Trustees'
deferred compensation plan |
76,520
|
Prepaid
expenses |
4,021
|
Total
assets |
$191,853,096
|
Liabilities
|
|
Notes
payable |
$
25,500,000 |
Payable
for investments purchased |
974,338
|
Payable
for when-issued/delayed delivery/forward commitment securities |
23,044,339
|
Payable
for variation margin on open futures contracts |
8,765
|
Payable
for open forward foreign currency exchange contracts |
1,528
|
Payable
for open swap contracts |
6,770
|
Upfront
receipts on open non-centrally cleared swap contracts |
346,084
|
Payable
to affiliates: |
|
Investment
adviser fee |
142,223
|
Trustees'
fees |
935
|
Trustees'
deferred compensation plan |
76,520
|
Accrued
expenses |
709,843
|
Total
liabilities |
$
50,811,345 |
Net
Assets |
$141,041,751
|
Sources
of Net Assets |
|
Common
shares, $0.01 par value, unlimited number of shares authorized |
$
134,427 |
Additional
paid-in capital |
192,943,893
|
Accumulated
loss |
(52,036,569)
|
Net
Assets |
$141,041,751
|
Common
Shares Issued and Outstanding |
13,442,697
|
Net
Asset Value Per Common Share |
|
Net
assets ÷ common shares issued and outstanding |
$
10.49 |
33
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
|
Year
Ended |
|
October
31, 2023 |
Investment
Income |
|
Dividend
income |
$
5,848 |
Dividend
income from affiliated investments |
316,330
|
Interest
and other income |
13,764,831
|
Interest
income from affiliated investments |
94,415
|
Total
investment income |
$14,181,424
|
Expenses
|
|
Investment
adviser fee |
$
1,559,452 |
Trustees’
fees and expenses |
11,136
|
Custodian
fee |
210,216
|
Transfer
and dividend disbursing agent fees |
18,705
|
Legal
and accounting services |
150,910
|
Printing
and postage |
103,939
|
Interest
expense and fees |
1,791,493
|
Miscellaneous
|
38,464
|
Total
expenses |
$
3,884,315 |
Deduct:
|
|
Waiver
and/or reimbursement of expenses by affiliates |
$
10,425 |
Total
expense reductions |
$
10,425 |
Net
expenses |
$
3,873,890 |
Net
investment income |
$10,307,534
|
Realized
and Unrealized Gain (Loss) |
|
Net
realized gain (loss): |
|
Investment
transactions |
$
(5,537,289) |
Futures
contracts |
1,293,147
|
Swap
contracts |
1,521,416
|
Foreign
currency transactions |
(70,708)
|
Forward
foreign currency exchange contracts |
(29,413)
|
Net
realized loss |
$
(2,822,847) |
Change
in unrealized appreciation (depreciation): |
|
Investments
|
$
6,167,062 |
Investments
- affiliated investments |
(66,902)
|
Futures
contracts |
(653,352)
|
Swap
contracts |
245,648
|
Foreign
currency |
74,354
|
Forward
foreign currency exchange contracts |
17,745
|
Net
change in unrealized appreciation (depreciation) |
$
5,784,555 |
Net
realized and unrealized gain |
$
2,961,708 |
Net
increase in net assets from operations |
$13,269,242
|
34
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Statements of Changes
in Net Assets
|
Year
Ended October 31, |
|
2023
|
2022
|
Increase
(Decrease) in Net Assets |
|
|
From
operations: |
|
|
Net
investment income |
$
10,307,534 |
$
7,502,830 |
Net
realized loss |
(2,822,847)
|
(10,891,448)
|
Net
change in unrealized appreciation (depreciation) |
5,784,555
|
(18,552,322)
|
Net
increase (decrease) in net assets from operations |
$
13,269,242 |
$
(21,940,940) |
Distributions
to shareholders |
$
(11,686,317) |
$
(8,946,641) |
Tax
return of capital to shareholders |
$
(1,463,018) |
$
(7,133,373) |
Capital
share transactions: |
|
|
Reinvestment
of distributions |
$
38,345 |
$
253,334 |
Net
increase in net assets from capital share transactions |
$
38,345 |
$
253,334 |
Net
increase (decrease) in net assets |
$
158,252 |
$
(37,767,620) |
Net
Assets |
|
|
At
beginning of year |
$
140,883,499 |
$
178,651,119 |
At
end of year |
$141,041,751
|
$140,883,499
|
35
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
|
Year
Ended |
|
October
31, 2023 |
Cash
Flows From Operating Activities |
|
Net
increase in net assets from operations |
$
13,269,242 |
Adjustments
to reconcile net increase in net assets from operations to net cash provided by operating activities: |
|
Investments
purchased |
(413,443,226)
|
Investments
sold and principal repayments |
418,888,343
|
Decrease
in short-term investments, net |
1,722,463
|
Net
amortization/accretion of premium (discount) |
219,194
|
Amortization
of prepaid upfront fees on notes payable |
37,719
|
Increase
in interest receivable |
(60,746)
|
Increase
in interest and dividends receivable from affiliated investments |
(5,918)
|
Decrease
in receivable for variation margin on open futures contracts |
74,179
|
Increase
in receivable for variation margin on open centrally cleared derivatives |
(36,355)
|
Increase
in receivable for open swap contracts |
(81,718)
|
Decrease
in receivable for closed swap contracts |
100,384
|
Decrease
in receivable from the transfer agent |
37,822
|
Increase
in tax reclaims receivable |
(115)
|
Increase
in Trustees’ deferred compensation plan |
(76,520)
|
Increase
in prepaid expenses |
(153)
|
Decrease
in payable for variation margin on open centrally cleared derivatives |
(38,094)
|
Increase
in payable for variation margin on open futures contracts |
8,765
|
Decrease
in payable for open swap contracts |
(54,612)
|
Decrease
in upfront receipts on open non-centrally cleared swap contracts |
(307,975)
|
Decrease
in payable to affiliate for investment adviser fee |
(1,051)
|
Decrease
in payable to affiliate for Trustees' fees |
(463)
|
Increase
in payable to affiliate for Trustees' deferred compensation plan |
76,520
|
Increase
in accrued expenses |
342,091
|
Decrease
in unfunded loan commitments |
(61,226)
|
Net
change in unrealized (appreciation) depreciation from investments |
(6,100,160)
|
Net
change in unrealized (appreciation) depreciation from forward foreign currency exchange contracts (OTC) |
(12,475)
|
Net
realized loss from investments |
5,537,289
|
Net
cash provided by operating activities |
$
20,033,204 |
Cash
Flows From Financing Activities |
|
Cash
distributions paid |
$
(13,110,990) |
Proceeds
from notes payable |
3,000,000
|
Repayments
of notes payable |
(9,500,000)
|
Payment
of upfront fees on notes payable |
(37,500)
|
Net
cash used in financing activities |
$
(19,648,490) |
Net
increase in cash and restricted cash* |
$
384,714 |
Cash
and restricted cash at beginning of year (including foreign currency) |
$
7,362,668 |
Cash
and restricted cash at end of year (including foreign currency) |
$
7,747,382 |
Supplemental
disclosure of cash flow information: |
|
Noncash
financing activities not included herein consist of: |
|
Reinvestment
of dividends and distributions |
$
38,345 |
Cash
paid for interest and fees on borrowings |
1,481,730
|
*
|
Includes
net change in unrealized (appreciation) depreciation on foreign currency of $(15,837). |
36
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Statement of Cash
Flows — continued
The
following table provides a reconciliation of cash and restricted cash reported within the Statement of Assets and Liabilities that sum to the total of such amounts shown on the Statement of Cash Flows.
|
|
|
October
31, 2023 |
Cash
|
$
1,646,359 |
Deposits
for derivatives collateral: |
|
Futures
contracts |
231,708
|
Centrally
cleared derivatives |
4,530,091
|
OTC
derivatives - swap contracts |
146,000
|
Foreign
currency |
1,193,224
|
Total
cash and restricted cash as shown on the Statement of Cash Flows |
$7,747,382
|
37
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
|
Year
Ended October 31, |
|
2023
|
2022
|
2021
|
2020
|
2019
|
Net
asset value — Beginning of year |
$
10.480 |
$
13.310 |
$
13.230 |
$
14.520 |
$
14.750 |
Income
(Loss) From Operations |
|
|
|
|
|
Net
investment income(1) |
$
0.767 |
$
0.559 |
$
0.708 |
$
0.486 |
$
0.731 |
Net
realized and unrealized gain (loss) |
0.221
|
(2.191)
|
0.428
|
(0.871)
|
(0.121)
|
Total
income (loss) from operations |
$
0.988 |
$
(1.632) |
$
1.136 |
$
(0.385) |
$
0.610 |
Less
Distributions |
|
|
|
|
|
From
net investment income |
$
(0.869) |
$
(0.667) |
$
(0.602) |
$
(0.764) |
$
(0.840) |
Tax
return of capital |
(0.109)
|
(0.531)
|
(0.490)
|
(0.141)
|
—
|
Total
distributions |
$
(0.978) |
$
(1.198) |
$
(1.092) |
$
(0.905) |
$
(0.840) |
Discount
on tender offer(1) |
$
— |
$
— |
$
0.036 |
$
— |
$
— |
Net
asset value — End of year |
$
10.490 |
$
10.480 |
$
13.310 |
$
13.230 |
$
14.520 |
Market
value — End of year |
$
9.950 |
$
10.640 |
$
13.530 |
$
11.850 |
$
13.210 |
Total
Investment Return on Net Asset Value(2) |
10.20%
|
(12.67)%
|
9.29%
|
(1.80)%
|
4.93%
|
Total
Investment Return on Market Value(2) |
2.86%
|
(12.71)%
|
23.94%
|
(3.32)%
|
10.87%
|
Ratios/Supplemental
Data |
|
|
|
|
|
Net
assets, end of year (000’s omitted) |
$141,042
|
$140,883
|
$178,651
|
$236,628
|
$259,649
|
Ratios
(as a percentage of average daily net assets): |
|
|
|
|
|
Expenses
excluding interest and fees |
1.44%
(3) |
1.47%
(3) |
1.35%
|
1.48%
|
1.41%
|
Interest
and fee expense(4) |
1.24%
|
0.75%
|
0.28%
|
0.57%
|
1.14%
|
Total
expenses |
2.68%
(3) |
2.22%
(3) |
1.63%
|
2.05%
|
2.55%
|
Net
investment income |
7.14%
|
4.70%
|
5.16%
|
3.59%
|
4.97%
|
Portfolio
Turnover |
231%
(5) |
182%
(5) |
76%
(5) |
47%
|
46%
|
Senior
Securities: |
|
|
|
|
|
Total
notes payable outstanding (in 000’s) |
$
25,500 |
$
32,000 |
$
43,000 |
$
55,000 |
$
85,000 |
Asset
coverage per $1,000 of notes payable(6) |
$
6,531 |
$
5,403 |
$
5,155 |
$
5,302 |
$
4,055 |
(1) |
Computed
using average common shares outstanding. |
(2) |
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.
|
(3) |
Includes
a reduction by the investment adviser of a portion of its adviser fee due to the Fund's investment in the Liquidity Fund (equal to less than 0.01% and less than 0.005% of average daily net assets for the years ended October 31, 2023 and 2022,
respectively). |
(4) |
Interest
and fee expense relates to borrowings for the purpose of financial leverage (see Note 7). |
(5) |
Includes
the effect of To Be Announced (TBA) transactions. |
(6) |
Calculated
by subtracting the Fund’s total liabilities (not including the notes payable) from the Fund’s total assets, and dividing the result by the notes payable balance in thousands. |
38
See Notes to Financial Statements.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements
1 Significant Accounting Policies
Eaton Vance Short Duration Diversified 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 investment objective is to provide a high level of current
income. The Fund may, as a secondary objective, also seek capital appreciation to the extent consistent with its primary goal of high current income.
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.
Senior Floating-Rate Loans. Interests in senior floating-rate loans (Senior Loans) are valued generally at the average mean of bid and ask quotations obtained from a third party pricing service. Senior Loans, for which a valuation is not available
or deemed unreliable, are fair valued by the investment adviser utilizing one or more of the valuation techniques described below to assess the likelihood that the borrower will make a full repayment of the loan underlying such Senior Loan. If the
investment adviser believes that there is a reasonable likelihood of full repayment, the investment adviser will determine fair value using a matrix pricing approach that considers the yield on the Senior Loan relative to yields on other Senior
Loans issued by companies of comparable credit quality. If the investment adviser believes there is not a reasonable likelihood of full repayment, the investment adviser will determine fair value using analyses that include, but are not limited to:
(i) a comparison of the value of the borrower’s outstanding equity and debt to that of comparable public companies; (ii) a discounted cash flow analysis; or (iii) when the investment adviser believes it is likely that a borrower will be
liquidated or sold, an analysis of the terms of such liquidation or sale. In certain cases, the investment adviser will use a combination of analytical methods to determine fair value, such as when only a portion of a borrower’s assets are
likely to be sold. In conducting its assessment and analyses for purposes of determining fair value of a Senior Loan, the investment adviser will use its discretion and judgment in considering and appraising relevant factors. Junior Loans (i.e.,
subordinated loans and second lien loans) are valued in the same manner as Senior Loans.
Debt Obligations. Debt
obligations are generally valued on the basis of valuations provided by third party pricing services, as derived from such services’ pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and
ask prices, broker/dealer quotations, prices or yields of securities with similar characteristics, interest rates, anticipated prepayments, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The
pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Short-term debt obligations purchased with a remaining maturity of sixty days or
less for which a valuation from a third party pricing service is not readily available may be valued at amortized cost, which approximates fair value.
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. Futures contracts
are valued at the closing settlement price established by the board of trade or exchange on which they are traded. Forward foreign currency exchange contracts are generally valued at the mean of the average bid and average ask prices that are
reported by currency dealers to a third party pricing service at the valuation time. Such third party pricing service valuations are supplied for specific settlement periods and the Fund’s forward foreign currency exchange contracts are valued
at an interpolated rate between the closest preceding and subsequent settlement period reported by the third party pricing service. Swaps are normally valued using valuations provided by a third party pricing service. Such pricing service valuations
are based on the present value of fixed and projected floating rate cash flows over the term of the swap contract, and in the case of credit default swaps, based on credit spread quotations obtained from broker/dealers and expected default recovery
rates determined by the pricing service using proprietary models. Future cash flows on swaps are discounted to their present value using swap rates provided by electronic data services or by broker/dealers.
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.
Other.
Investments in management investment companies (including money market funds) that do not trade on an exchange are valued at the net asset value as of the close of each business day.
Fair Valuation. In connection
with Rule 2a-5 of the 1940 Act, the Trustees have designated the Fund’s investment adviser as its valuation designee. Investments for which valuations or market quotations are not readily available or are deemed unreliable are valued by the
investment adviser, as valuation designee, at fair value using methods that most fairly reflect 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,
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
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—Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Fees associated
with loan amendments are recognized immediately. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities.
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, 2023, 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.
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 Unfunded Loan Commitments—The Fund may enter into certain loan agreements all or a portion of which may be unfunded. The Fund is
obligated to fund these commitments at the borrower's discretion. These commitments, if any, are disclosed in the accompanying Portfolio of Investments. At October 31, 2023, the Fund had sufficient cash and/or securities to cover these
commitments.
G 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.
H Indemnifications—Under the Fund’s organizational documents, its officers and Trustees may be indemnified against
certain liabilities and expenses arising out of the performance of their duties to the Fund. 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.
I Futures
Contracts—Upon entering into a futures contract, the Fund is required to deposit with the broker,
either in cash or securities, an amount equal to a certain percentage of the contract amount (initial margin). Subsequent payments, known as variation margin, are made or received by the Fund each business day, depending on the daily
fluctuations in the value of the underlying security, and are recorded as unrealized gains or losses by the Fund. Gains (losses) are realized upon the expiration or closing of the futures contracts. Should market conditions change unexpectedly, the
Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. Futures contracts have minimal counterparty risk as they are exchange traded and the clearinghouse for the exchange is substituted as the counterparty,
guaranteeing counterparty performance.
J Forward Foreign Currency Exchange Contracts—The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific
foreign currency at a fixed price on a future date. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded as unrealized until such time as the
contracts have been closed. While forward foreign currency exchange contracts are privately negotiated agreements between the Fund and a counterparty, certain contracts may be “centrally cleared”, whereby all payments made or received by
the Fund pursuant to the contract are with a central clearing party (CCP) rather than the original counterparty. The CCP guarantees the performance of the original parties to the contract. Upon entering into centrally cleared contracts, the Fund is
required to deposit with the CCP, either in cash or securities, an amount of initial margin determined by the CCP, which is subject to adjustment. For centrally cleared contracts, the daily change in valuation is recorded as a receivable or payable
for variation margin and settled in cash with the CCP daily. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from movements in the value of a foreign currency
relative to the U.S. dollar. In the case of centrally cleared contracts, counterparty risk is minimal due to protections provided by the CCP.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
K Credit Default
Swaps—When the Fund is the buyer of a credit default swap contract, the Fund is entitled to receive
the par (or other agreed-upon) value of a referenced debt obligation (or basket of debt obligations) from the counterparty (or CCP in the case of a centrally cleared swap) to the contract if a credit event by a third party, such as a U.S. or foreign
corporate issuer or sovereign issuer, on the debt obligation occurs. In return, the Fund pays the counterparty a periodic stream of payments over the term of the contract provided that no credit event has occurred. If no credit event occurs, the
Fund would have spent the stream of payments and received no proceeds from the contract. When the Fund is the seller of a credit default swap contract, it receives the stream of payments, but is obligated to pay to the buyer of the protection an
amount up to the notional amount of the swap and in certain instances take delivery of securities of the reference entity upon the occurrence of a credit event, as defined under the terms of that particular swap agreement. Credit events are contract
specific but may include bankruptcy, failure to pay, restructuring, obligation acceleration and repudiation/moratorium. If the Fund is a seller of protection and a credit event occurs, the maximum potential amount of future payments that the Fund
could be required to make would be an amount equal to the notional amount of the agreement. This potential amount would be partially offset by any recovery value of the respective referenced obligation, or net amount received from the settlement of
a buy protection credit default swap agreement entered into by the Fund for the same referenced obligation. As the seller, the Fund may create economic leverage to its portfolio because, in addition to its total net assets, the Fund is subject to
investment exposure on the notional amount of the swap. The interest fee paid or received on the swap contract, which is based on a specified interest rate on a fixed notional amount, is accrued daily as a component of unrealized appreciation
(depreciation) and is recorded as realized gain upon receipt or realized loss upon payment. The Fund also records an increase or decrease to unrealized appreciation (depreciation) in an amount equal to the daily valuation. For centrally cleared
swaps, the daily change in valuation is recorded as a receivable or payable for variation margin and settled in cash with the CCP daily. All upfront payments and receipts, if any, are amortized over the life of the swap contract as realized gains or
losses. Those upfront payments or receipts for non-centrally cleared swaps are recorded as other assets or other liabilities, respectively, net of amortization. For financial reporting purposes, unamortized upfront payments or receipts, if any, are
netted with unrealized appreciation or depreciation on swap contracts to determine the market value of swaps as presented in Notes 6 and 9. These transactions involve certain risks, including the risk that the seller may be unable to fulfill the
transaction. In the case of centrally cleared swaps, counterparty risk is minimal due to protections provided by the CCP.
L When-Issued Securities and Delayed Delivery
Transactions—The Fund may purchase securities on a delayed delivery, when-issued or forward
commitment basis, including TBA (To Be Announced) securities. Payment and delivery may take place after the customary settlement period for that security. At the time the transaction is negotiated, the price of the security that will be delivered is
fixed. Securities purchased on a delayed delivery, when-issued or forward commitment basis are marked-to-market daily and begin earning interest on settlement date. Such security purchases are subject to the risk that when delivered they will be
worth less than the agreed upon payment price. Losses may also arise if the counterparty does not perform under the contract. A forward purchase commitment may also be closed by entering into an offsetting commitment. If an offsetting commitment is
entered into, the Fund will realize a gain or loss on investments based on the price established when the Fund entered into the commitment.
M Stripped Mortgage-Backed Securities—The Fund may invest in Interest Only (IO) and Principal Only (PO) securities, a form of stripped
mortgage-backed securities, whereby the IO security receives all the interest and the PO security receives all the principal on a pool of mortgage assets. The yield to maturity on an IO security is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the yield to maturity from these securities. If the underlying mortgages experience greater than
anticipated prepayments of principal, the Fund may fail to recoup its initial investment in an IO security. The market value of IO and PO securities can be unusually volatile due to changes in interest rates.
2 Distributions to Shareholders and Income Tax
Information
The Fund intends to make monthly
distributions to shareholders and at least one distribution annually of all or substantially all of its net realized capital gains. In its distributions, the Fund intends to include amounts attributable to the imputed interest on foreign currency
exposures through long and short positions in forward currency exchange contracts (represented by the difference between the foreign currency spot rate and the foreign currency forward rate) and the imputed interest derived from certain other
derivative positions. 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. In certain circumstances, a portion of distributions to shareholders may include a return of capital component.
The tax character of distributions declared for the years ended
October 31, 2023 and October 31, 2022 was as follows:
|
Year
Ended October 31, |
|
2023
|
2022
|
Ordinary
income |
$11,686,317
|
$8,946,641
|
Tax
return of capital |
$
1,463,018 |
$7,133,373
|
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
As of
October 31, 2023, the components of distributable earnings (accumulated loss) on a tax basis were as follows:
Deferred
capital losses |
$
(26,675,706) |
Net
unrealized depreciation |
(25,360,863)
|
Accumulated
loss |
$(52,036,569)
|
At October 31, 2023, the Fund, for
federal income tax purposes, had deferred capital losses of $26,675,706 which would reduce its taxable income arising from future net realized gains on investment transactions, if any, to the extent permitted by the Internal Revenue Code, and thus
would reduce the amount of distributions to shareholders, which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. The deferred capital losses are treated as arising on the first day of the
Fund’s next taxable year and retain the same short-term or long-term character as when originally deferred. Of the deferred capital losses at October 31, 2023, $10,002,745 are short-term and $16,672,961 are long-term.
The cost and unrealized appreciation (depreciation) of
investments, including open derivative contracts, of the Fund at October 31, 2023, as determined on a federal income tax basis, were as follows:
Aggregate
cost |
$
206,928,992 |
Gross
unrealized appreciation |
$
2,704,316 |
Gross
unrealized depreciation |
(28,091,477)
|
Net
unrealized depreciation |
$
(25,387,161) |
3 Investment Adviser Fee and Other Transactions
with Affiliates
The investment adviser fee is earned by
Eaton Vance Management (EVM), an indirect, wholly-owned subsidiary of Morgan Stanley, as compensation for investment advisory services rendered to the Fund. The fee is computed at an annual rate of 0.75% of the Fund’s average daily total
leveraged assets, subject to the limitation described below, and is payable monthly. Total leveraged assets as referred to herein represent the value of all assets of the Fund (including assets acquired with financial leverage), plus the notional
value of long and short forward foreign currency contracts and futures contracts and swaps based upon foreign currencies, issuers or markets held by the Fund, minus all accrued expenses incurred in the normal course of operations, but not excluding
any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility/commercial paper program or the issuance of debt securities), (ii)
the issuance of preferred stock or other similar preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund’s investment objectives and policies, and/or (iv) any other means. Accrued
expenses includes other liabilities other than indebtedness attributable to leverage. The notional value of a contract for purposes of calculating total leveraged assets is the stated dollar value of the underlying reference instrument at the time
the derivative position is entered into and remains constant throughout the life of the derivative contract. However, the derivative contracts are marked-to-market daily and any unrealized appreciation or depreciation is reflected in the
Fund’s net assets. When the Fund holds both long and short forward currency contracts in the same foreign currency, the offsetting positions are netted for purposes of determining total leveraged assets. When the Fund holds other long and
short positions in foreign obligations in a given country denominated in the same currency, total leveraged assets are calculated by excluding the smaller of the long or short position.
The investment advisory agreement provides that if investment
leverage exceeds 40% of the Fund's total leveraged assets, EVM shall not be entitled to receive the above described compensation with respect to total leveraged assets in excess of this amount. As of October 31, 2023, the Fund's investment leverage
was 32% of its total leveraged assets. For the year ended October 31, 2023, the investment adviser fee amounted to $1,559,452 or 0.75% of the Fund’s average daily total leveraged assets and 1.08% of the Fund's average daily net assets.
The Fund may invest in a money market fund, the Institutional
Class of the Morgan Stanley Institutional Liquidity Funds - Government Portfolio (the “Liquidity Fund”), an open-end management investment company managed by Morgan Stanley Investment Management Inc., a wholly-owned subsidiary of Morgan
Stanley. The investment adviser fee paid by the Fund is reduced by an amount equal to its pro rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Fund. For the year ended October 31, 2023,
the investment adviser fee paid was reduced by $10,425 relating to the Fund’s investment in the Liquidity Fund.
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. Certain officers and Trustees of the Fund are officers of EVM.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
4 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term
obligations and including maturities, paydowns, principal repayments on Senior Loans and TBA transactions, for the year ended October 31, 2023 were as follows:
|
Purchases
|
Sales
|
Investments
(non-U.S. Government) |
$
37,714,599 |
$
43,993,671 |
U.S.
Government and Agency Securities |
376,693,276
|
374,412,998
|
|
$414,407,875
|
$418,406,669
|
5 Common Shares of
Beneficial Interest
Common shares issued by the Fund
pursuant to its dividend reinvestment plan for the years ended October 31, 2023 and October 31, 2022 were
3,567 and 21,555, respectively.
In November 2013, 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, 2023 and October 31, 2022.
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 forward foreign currency exchange contracts, futures contracts and swap contracts 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, 2023 is included in the Portfolio of Investments. At October 31, 2023, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
In the normal course of pursuing its investment objectives, the
Fund is subject to the following risks:
Credit Risk: The
Fund enters into credit default swap contracts to enhance total return and/or as a substitute for the purchase of securities.
Foreign Exchange Risk: The Fund holds foreign currency
denominated investments. The value of these investments and related receivables and payables may change due to future changes in foreign currency exchange rates. To hedge against this risk, the Fund enters into forward foreign currency exchange
contracts.
Interest Rate Risk: The Fund utilizes various
interest rate derivatives including futures contracts to manage the duration of its portfolio and to hedge against fluctuations in securities prices due to interest rates.
The Fund enters into over-the-counter (OTC) derivatives
that may contain provisions whereby the counterparty may terminate the contract under certain conditions, including but not limited to a decline in the Fund's net assets below a certain level over a certain period of time, which would trigger a
payment by the Fund for those derivatives in a liability position. At October 31, 2023, the fair value of derivatives with credit-related contingent features in a net liability position was $225,456. The aggregate fair value of assets pledged as
collateral by the Fund for such liability was $340,170 at October 31, 2023.
The OTC derivatives in which the Fund invests are subject
to the risk that the counterparty to the contract fails to perform its obligations under the contract. To mitigate this risk, the Fund has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master
Agreement”) or similar agreement with substantially all its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains,
among other things, set-off provisions in the event of a default and/or termination event as defined under the relevant ISDA Master Agreement. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the
counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the
event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy or insolvency.
Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA
Master Agreements, which would cause the counterparty to accelerate payment by the Fund of any net liability owed to it.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
The
collateral requirements for derivatives traded under an ISDA Master Agreement are governed by a Credit Support Annex to the ISDA Master Agreement. Collateral requirements are determined at the close of business each day and are typically based on
changes in market values for each transaction under an ISDA Master Agreement and netted into one amount for such agreement. Generally, the amount of collateral due from or to a counterparty is subject to a minimum transfer threshold amount before a
transfer is required, which may vary by counterparty. Collateral pledged for the benefit of the Fund and/or counterparty is held in segregated accounts by the Fund’s custodian and cannot be sold, re-pledged, assigned or otherwise used
while pledged. The portion of such collateral representing cash, if any, is reflected as deposits for derivatives collateral and, in the case of cash pledged by a counterparty for the benefit of the Fund, a corresponding liability on the Statement
of Assets and Liabilities. Securities pledged by the Fund as collateral, if any, are identified as such in the Portfolio of Investments.
The fair value of open derivative instruments (not considered
to be hedging instruments for accounting disclosure purposes) by risk exposure at October 31, 2023 was as follows:
|
Fair
Value |
Statement
of Assets and Liabilities Caption |
Credit
|
Foreign
Exchange |
Interest
Rate |
Total
|
Accumulated
loss |
$
44,895* |
$
39,988* |
$
406,141* |
$
491,024 |
Receivable
for open forward foreign currency exchange contracts |
—
|
3,893
|
—
|
3,893
|
Total
Asset Derivatives |
$
44,895 |
$43,881
|
$406,141
|
$
494,917 |
Derivatives
not subject to master netting or similar agreements |
$
44,895 |
$39,988
|
$406,141
|
$
491,024 |
Total
Asset Derivatives subject to master netting or similar agreements |
$
— |
$
3,893 |
$
— |
$
3,893 |
Accumulated
loss |
$
(421,219)* |
$
(3,654)* |
$
(69,832)* |
$
(494,705) |
Payable
for open forward foreign currency exchange contracts |
—
|
(1,528)
|
—
|
(1,528)
|
Payable/Receivable
for open swap contracts; Upfront payments/receipts on open non-centrally cleared swap contracts |
(223,928)
|
—
|
—
|
(223,928)
|
Total
Liability Derivatives |
$(645,147)
|
$
(5,182) |
$
(69,832) |
$(720,161)
|
Derivatives
not subject to master netting or similar agreements |
$(421,219)
|
$
(3,654) |
$
(69,832) |
$(494,705)
|
Total
Liability Derivatives subject to master netting or similar agreements |
$(223,928)
|
$
(1,528) |
$
— |
$(225,456)
|
*
|
For
futures contracts and centrally cleared derivatives, amount represents value as shown in the Portfolio of Investments. Only the current day’s variation margin on open futures contracts and centrally cleared derivatives is reported within the
Statement of Assets and Liabilities as Receivable or Payable for variation margin on open futures contracts and centrally cleared derivatives, as applicable. |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
The Fund's derivative
assets and liabilities at fair value by risk, which are reported gross in the Statement of Assets and Liabilities, are presented in the table above. The following tables present the Fund's derivative assets and liabilities by counterparty, net of
amounts available for offset under a master netting agreement and net of the related collateral received by the Fund for such assets and pledged by the Fund for such liabilities as of October 31, 2023.
Counterparty
|
Derivative
Assets Subject to Master Netting Agreement |
Derivatives
Available for Offset |
Non-cash
Collateral Received(a) |
Cash
Collateral Received(a) |
Net
Amount of Derivative Assets(b) |
Citibank,
N.A. |
$
1,249 |
$
(1,249) |
$
— |
$
— |
$
— |
Standard
Chartered Bank |
2,644
|
(1,528)
|
—
|
—
|
1,116
|
|
$3,893
|
$(2,777)
|
$
— |
$
— |
$1,116
|
Counterparty
|
Derivative
Liabilities Subject to Master Netting Agreement |
Derivatives
Available for Offset |
Non-cash
Collateral Pledged(a) |
Cash
Collateral Pledged(a) |
Net
Amount of Derivative Liabilities(c) |
Barclays
Bank PLC |
$
(90,624) |
$
— |
$
27,881 |
$
62,743 |
$
— |
Citibank,
N.A. |
(133,304)
|
1,249
|
132,055
|
—
|
—
|
Standard
Chartered Bank |
(1,528)
|
1,528
|
—
|
—
|
—
|
|
$(225,456)
|
$2,777
|
$159,936
|
$62,743
|
$ —
|
(a) |
In some
instances, the total collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
(b) |
Net
amount represents the net amount due from the counterparty in the event of default. |
(c) |
Net
amount represents the net amount payable to the counterparty in the event of default. |
The effect of derivative instruments (not considered to be
hedging instruments for accounting disclosure purposes) on the Statement of Operations by risk exposure for the year ended October 31, 2023 was as follows:
Statement
of Operations Caption |
Credit
|
Foreign
Exchange |
Interest
Rate |
Total
|
Net
realized gain (loss): |
|
|
|
|
Futures
contracts |
$
— |
$
— |
$
1,293,147 |
$
1,293,147 |
Swap
contracts |
1,521,416
|
—
|
—
|
1,521,416
|
Forward
foreign currency exchange contracts |
—
|
(29,413)
|
—
|
(29,413)
|
Total
|
$1,521,416
|
$(29,413)
|
$1,293,147
|
$2,785,150
|
Change
in unrealized appreciation (depreciation): |
|
|
|
|
Futures
contracts |
$
— |
$
— |
$
(653,352) |
$
(653,352) |
Swap
contracts |
245,648
|
—
|
—
|
245,648
|
Forward
foreign currency exchange contracts |
—
|
17,745
|
—
|
17,745
|
Total
|
$
245,648 |
$
17,745 |
$
(653,352) |
$
(389,959) |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
The
average notional cost of futures contracts and average notional amounts of other derivative contracts outstanding during the year ended October 31, 2023, which are indicative of the volume of these derivative types, were approximately as
follows:
Futures
Contracts — Long |
Futures
Contracts — Short |
Forward
Foreign Currency Exchange Contracts* |
Swap
Contracts |
$639,000
|
$11,648,000
|
$6,444,000
|
$31,862,000
|
*
|
The
average notional amount for forward foreign currency exchange contracts is based on the absolute value of notional amounts of currency purchased and currency sold. |
7 Credit Agreement
The Fund has entered into a Credit Agreement (the Agreement)
with a bank to borrow up to a limit of $75 million ($85 million prior to March 14, 2023) pursuant to a 364-day revolving line of credit. Borrowings under the Agreement are secured by the assets of the Fund. Interest is charged at a rate above the
Secured Overnight Financing Rate (SOFR) and is payable monthly. Under the terms of the Agreement, in effect through March 12, 2024, the Fund pays a commitment fee of 0.15% on the borrowing limit. In connection with the renewal of the Agreement on
March 14, 2023, the Fund paid an upfront fee of $37,500, which is being amortized to interest expense through March 12, 2024. The unamortized balance at October 31, 2023 is approximately $15,000 and is included in prepaid upfront fees on notes
payable on the Statement of Assets and Liabilities. The Fund is required to maintain certain net asset levels during the term of the Agreement. At October 31, 2023, the Fund had borrowings outstanding under the Agreement of $25,500,000 at an annual
interest rate of 6.27%. Based on the short-term nature of the borrowings under the Agreement and the variable interest rate, the carrying amount of the borrowings at October 31, 2023 approximated its fair value. If measured at fair value, borrowings
under the Agreement would have been considered as Level 2 in the fair value hierarchy (see Note 9) at October 31, 2023. For the year ended October 31, 2023, the average borrowings under the Agreement and the average annual interest rate (excluding
fees) were $27,652,055 and 5.89%, respectively.
8 Affiliated Investments
At October 31, 2023, the value of the Fund’s investment
in issuers and funds that may be deemed to be affiliated was $5,919,803, which represents 4.2% of the Fund’s net assets. Transactions in such investments by the Fund for the year ended October 31, 2023 were as follows:
Name
|
Value,
beginning of period |
Purchases
|
Sales
proceeds |
Net
realized gain (loss) |
Change
in unrealized appreciation (depreciation) |
Value,
end of period |
Interest/
Dividend income |
Principal
amount/ Shares, end of period |
Commercial
Mortgage-Backed Securities |
|
|
|
|
|
|
|
|
Morgan
Stanley Bank of America Merrill Lynch Trust: |
|
|
|
|
|
|
|
|
Series
2014-C16, Class B, 4.281%, 6/15/47 |
$
— |
$
218,550 |
$
— |
$
— |
$
604 |
$
219,763 |
$
7,851 |
$
240,000 |
Series
2016-C29, Class D, 3.00%, 5/15/49 |
755,772
|
—
|
—
|
—
|
(36,719)
|
724,848
|
35,795
|
1,000,000
|
Series
2016-C32, Class D, 3.396%, 12/15/49 |
181,046
|
—
|
—
|
—
|
(17,539)
|
165,101
|
10,084
|
250,000
|
Morgan
Stanley Capital I Trust, Series 2016-UBS12, Class D, 3.312%, 12/15/49 |
529,537
|
—
|
—
|
—
|
(13,248)
|
523,854
|
40,685
|
1,000,000
|
Short-Term
Investments |
Liquidity
Fund |
5,734,874
|
64,105,847
|
(65,554,484)
|
—
|
—
|
4,286,237
|
316,330
|
4,286,237
|
Total
|
|
|
|
$ —
|
$(66,902)
|
$5,919,803
|
$410,745
|
|
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
9 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, 2023, the hierarchy of inputs used in valuing
the Fund’s investments and open derivative instruments, which are carried at fair value, were as follows:
Asset
Description |
Level
1 |
Level
2 |
Level
3* |
Total
|
Asset-Backed
Securities |
$
— |
$
27,280,992 |
$
— |
$
27,280,992 |
Collateralized
Mortgage Obligations |
—
|
16,497,718
|
—
|
16,497,718
|
Commercial
Mortgage-Backed Securities |
—
|
11,383,103
|
—
|
11,383,103
|
Common
Stocks |
10,998
|
424,408
|
6,181
|
441,587
|
Corporate
Bonds |
—
|
18,046,688
|
—
|
18,046,688
|
Preferred
Stocks |
—
|
142,470
|
—
|
142,470
|
Senior
Floating-Rate Loans (Less Unfunded Loan Commitments) |
—
|
49,954,878
|
81,062
|
50,035,940
|
Sovereign
Government Bonds |
—
|
20,547,718
|
—
|
20,547,718
|
Sovereign
Loans |
—
|
1,257,494
|
—
|
1,257,494
|
U.S.
Government Agency Mortgage-Backed Securities |
—
|
31,091,438
|
—
|
31,091,438
|
Short-Term
Investments: |
|
|
|
|
Affiliated
Fund |
4,286,237
|
—
|
—
|
4,286,237
|
U.S.
Treasury Obligations |
—
|
497,872
|
—
|
497,872
|
Total
Investments |
$
4,297,235 |
$
177,124,779 |
$
87,243 |
$
181,509,257 |
Forward
Foreign Currency Exchange Contracts |
$
— |
$
43,881 |
$
— |
$
43,881 |
Futures
Contracts |
406,141
|
—
|
—
|
406,141
|
Swap
Contracts |
—
|
44,895
|
—
|
44,895
|
Total
|
$
4,703,376 |
$
177,213,555 |
$
87,243 |
$
182,004,174 |
Liability
Description |
|
|
|
|
Forward
Foreign Currency Exchange Contracts |
$
— |
$
(5,182) |
$
— |
$
(5,182) |
Futures
Contracts |
(69,832)
|
—
|
—
|
(69,832)
|
Swap
Contracts |
—
|
(645,147)
|
—
|
(645,147)
|
Total
|
$
(69,832) |
$
(650,329) |
$ —
|
$
(720,161) |
*
|
None
of the unobservable inputs for Level 3 assets, individually or collectively, had a material impact on the Fund. |
Level 3 investments at the beginning and/or end of the period
in relation to net assets were not significant and accordingly, a reconciliation of Level 3 assets for the year ended October 31, 2023 is not presented.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Notes to Financial
Statements — continued
10 Risks and Uncertainties
Risks Associated with Foreign Investments
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. 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. Securities that trade or are denominated in currencies other than the U.S. dollar may
be adversely affected by fluctuations in currency exchange rates.
Emerging market securities often involve greater risks than
developed market securities. 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. The information available about an emerging market issuer may be less reliable than for comparable issuers in more developed capital markets. Governmental actions can have a significant effect on the economic conditions in emerging market
countries. It may be more difficult to make a claim or obtain a judgment in the courts of these countries than it is in the United States. The possibility of fraud, negligence, undue influence being exerted by an issuer or refusal to recognize
ownership exists in some emerging markets. Disruptions due to work stoppages and trading improprieties in foreign securities markets have caused such markets to close. Emerging market securities are also subject to speculative trading, which
contributes to their volatility.
Economic data as
reported by sovereign entities may be delayed, inaccurate or fraudulent. In the event of a default by a sovereign entity, there are typically no assets to be seized or cash flows to be attached. Furthermore, the willingness or ability of a sovereign
entity to restructure defaulted debt may be limited. Therefore, losses on sovereign defaults may far exceed the losses from the default of a similarly rated U.S. debt issuer.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Report of Independent
Registered Public Accounting Firm
To the
Trustees and Shareholders of Eaton Vance Short Duration Diversified Income Fund:
Opinion on the Financial Statements and Financial
Highlights
We have audited the accompanying
statement of assets and liabilities of Eaton Vance Short Duration Diversified Income Fund (the “Fund”), including the portfolio of investments, as of October 31, 2023, the related statements of operations and cash flows 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, 2023, and the results of its operations and its cash flows 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 and senior loans owned as of October 31, 2023, by correspondence with the custodian, brokers and agent banks; when replies were not received from brokers and
agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
December 19, 2023
We have served as the auditor of one
or more Eaton Vance investment companies since 1959.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Federal Tax
Information (Unaudited)
The
Form 1099-DIV you receive in February 2024 will show the tax status of all distributions paid to your account in calendar year 2023. 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 and 163(j) interest dividends.
Qualified Dividend Income. For
the fiscal year ended October 31, 2023, the Fund designates approximately $6,589, 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%.
163(j) Interest Dividends. For the fiscal year ended October 31, 2023, the Fund designates 50.20% of distributions from net investment income as a 163(j) interest dividend.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Dividend Reinvestment
Plan
The Fund offers a dividend reinvestment plan (Plan)
pursuant to which shareholders may elect to have distributions automatically reinvested in common shares (Shares) of the Fund. You may elect to participate in the Plan by completing the Dividend Reinvestment Plan Application Form. If you do not
participate, you will receive all distributions in cash paid by check mailed directly to you by Equiniti Trust Company, LLC (EQ) as dividend paying agent. 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 EQ, 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.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
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 Short Duration Diversified
Income Fund
c/o Equiniti Trust Company, LLC
P.O. Box 922
Wall Street Station
New York, NY 10269-0560
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Board of
Trustees’ Contract Approval
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the “1940
Act”), provides, in substance, that the investment advisory agreement between a fund and its investment adviser will continue in effect from year-to-year only if its continuation is approved on an annual basis by a vote of the fund’s
board of trustees, including a majority of the trustees who are not “interested persons” of the fund (“independent trustees”), cast in person at a meeting called for the purpose of considering such approval.
At a meeting held on June 8, 2023, the Boards of
Trustees/Directors (collectively, the “Board”) that oversee the registered investment companies advised by Eaton Vance Management or its affiliate, Boston Management and Research (the “Eaton Vance Funds”), including a
majority of the independent trustees (the “Independent Trustees”), voted to approve the continuation of existing investment advisory agreements and sub-advisory
agreements1 for each of the Eaton Vance Funds for an additional one-year period. The Board relied upon the affirmative recommendation of its Contract Review Committee, which is
a committee exclusively comprised of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished by the adviser and sub-adviser to each of the Eaton Vance Funds (including information
specifically requested by the Board) for a series of formal meetings held between April and June 2023, as well as certain additional information provided in response to specific requests from the Independent Trustees as members of the Contract
Review Committee. Members of the Contract Review Committee also considered information received at prior meetings of the Board and its committees, to the extent such information was relevant to the Contract Review Committee’s annual evaluation
of the investment advisory agreements and sub-advisory agreements.
In connection with its evaluation of the investment advisory
agreements and sub-advisory agreements, the Board considered various information relating to the Eaton Vance Funds. This included information applicable to all or groups of Eaton Vance Funds, which is referenced immediately below, and information
applicable to the particular Eaton Vance Fund covered by this report (each “Eaton Vance Fund” is referred to below as a “fund”). (For funds that invest through one or more underlying portfolios, references to “each
fund” in this section may include information that was considered at the portfolio-level.)
Information about Fees, Performance and Expenses
• A report from an independent
data provider comparing advisory and other fees paid by each fund to such fees paid by comparable funds, as identified by the independent data provider (“comparable funds”);
• A report from an independent
data provider comparing each fund’s total expense ratio (and its components) to those of comparable funds;
• A report from an independent
data provider comparing the investment performance of each fund (including, as relevant, total return data, income data, Sharpe ratios and information ratios) to the investment performance of comparable funds and, as applicable, benchmark indices,
over various time periods;
• In certain instances, data
regarding investment performance relative to customized groups of peer funds and blended indices identified by the adviser in consultation with the Portfolio Management Committee of the Board (a committee exclusively comprised of Independent
Trustees);
• Comparative
information concerning the fees charged and services provided by the adviser and sub-adviser to each fund in managing other accounts (which may include other mutual funds, collective investment funds and institutional accounts) using investment
strategies and techniques similar to those used in managing such fund(s), if any;
• Profitability analyses with
respect to the adviser and sub-adviser to each of the funds;
Information about Portfolio Management and Trading
• Descriptions of the investment
management services provided to each fund, as well as each of the funds’ investment strategies and policies;
• The procedures and processes
used to determine the value of fund assets, including, when necessary, the determination of “fair value” and actions taken to monitor and test the effectiveness of such procedures and processes;
• Information about the policies
and practices of each fund’s adviser and sub-adviser with respect to trading, including their processes for seeking best execution of portfolio transactions;
• Information about the
allocation of brokerage transactions and the benefits, if any, received by the adviser and sub-adviser to each fund as a result of brokerage allocation, including, as applicable, information concerning the acquisition of research through client
commission arrangements and policies with respect to “soft dollars”;
• Data relating to the portfolio
turnover rate of each fund and related information regarding active management in the context of particular strategies;
Information about each Adviser and Sub-adviser
• Reports detailing the
financial results and condition of the adviser and sub-adviser to each fund;
• Information regarding the
individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and, for portfolio managers and certain other investment professionals, information relating to their responsibilities
with respect to managing other mutual funds and investment accounts, as applicable;
1 Not all Eaton Vance Funds have entered into a sub-advisory agreement with a sub-adviser. Accordingly, references to
“sub-adviser” or “sub-advisory agreement” in this “Overview” section may not be applicable to the particular Eaton Vance Fund covered by this report.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Board of
Trustees’ Contract Approval — continued
• Information regarding the
adviser’s and its parent company’s (Morgan Stanley’s) efforts to retain and attract talented investment professionals, including in the context of a competitive marketplace for talent, as well as the ongoing unique environment
presented by hybrid, remote and other alternative work arrangements;
• Information regarding the
adviser’s compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals’ investments in the fund(s) they manage;
• The Code of Ethics of the
adviser and its affiliates and the sub-adviser of each fund, together with information relating to compliance with, and the administration of, such codes;
• Policies and procedures
relating to proxy voting, including regular reporting with respect to fund proxy voting activities;
• Information regarding the
handling of corporate actions and class actions, as well as information regarding litigation and other regulatory matters;
• Information concerning the
resources devoted to compliance efforts undertaken by the adviser and its affiliates and the sub-adviser of each fund, if any, including descriptions of their various compliance programs and their record of compliance;
• Information concerning the
business continuity and disaster recovery plans of the adviser and its affiliates and the sub-adviser of each fund, if any;
• A description of Eaton Vance
Management’s and Boston Management and Research’s oversight of sub-advisers, including with respect to regulatory and compliance issues, investment management and other matters;
Other Relevant Information
• Information regarding
ongoing initiatives to further integrate and harmonize, where applicable, the investment management and other departments of the adviser and its affiliates with the overall investment management infrastructure of Morgan Stanley, in light of Morgan
Stanley’s acquisition of Eaton Vance Corp. on March 1, 2021;
• Information concerning the
nature, cost and character of the administrative and other non-investment advisory services provided by Eaton Vance Management and its affiliates;
• Information concerning
oversight of the relationship with the custodian, subcustodians, fund accountants, and other third-party service providers by the adviser and/or administrator to each of the funds;
• Information concerning efforts
to implement policies and procedures with respect to various recently adopted regulations applicable to the funds, including Rule 12d1-4 (the Fund-of-Funds Rule), Rule 18f-4 (the Derivatives Rule) and Rule 2a-5 (the Fair Valuation Rule);
• For an Eaton Vance Fund
structured as an exchange-listed closed-end fund, information concerning the benefits of the closed-end fund structure, as well as, where relevant, the closed-end fund’s market prices (including as compared to the closed-end fund’s net
asset value (NAV)), trading volume data, continued use of auction preferred shares (where applicable), distribution rates and other relevant matters;
• The risks which the adviser
and/or its affiliates incur in connection with the management and operation of the funds, including, among others, litigation, regulatory, entrepreneurial, and other business risks (and the associated costs of such risks); and
• The terms of each investment
advisory agreement and sub-advisory agreement.
During the
various meetings of the Board and its committees over the course of the year leading up to the June 8, 2023 meeting, the Board received information from portfolio managers and other investment professionals of the advisers and sub-advisers of the
funds regarding investment and performance matters, and considered various investment and trading strategies used in pursuing the funds’ investment objectives. The Board also received information regarding risk management techniques employed
in connection with the management of the funds. The Board and its committees evaluated issues pertaining to industry and regulatory developments, compliance procedures, fund governance and other issues with respect to the funds, and received and
participated in reports and presentations provided by Eaton Vance Management, Boston Management and Research and fund sub-advisers, with respect to such matters. In addition to the formal meetings of the Board and its committees, the Independent
Trustees held regular teleconferences to discuss, among other topics, matters relating to the continuation of investment advisory agreements and sub-advisory agreements.
The Contract Review Committee was advised throughout the
contract review process by Goodwin Procter LLP, independent legal counsel for the Independent Trustees. The members of the Contract Review Committee, with the advice of such counsel, exercised their own business judgment in determining the material
factors to be considered in evaluating each investment advisory agreement and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each investment advisory agreement and sub-advisory
agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with
respect to each investment advisory agreement and sub-advisory agreement. In evaluating each investment advisory agreement and sub-advisory agreement, including the fee structures and other terms contained in such agreements, the members of the
Contract Review Committee were also informed by multiple years of analysis and discussion with the adviser and sub-adviser to each of the Eaton Vance Funds.
Results of the Contract Review Process
Based on its consideration of the foregoing, and such other
information it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuation of the investment advisory agreement between Eaton Vance Short Duration Diversified Income Fund (the
“Fund”) and Eaton Vance Management (the “Adviser”), including its fee structure, is in the interests of shareholders and, therefore, recommended to the Board approval of the agreement. Based on the recommendation of the
Contract Review Committee, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Fund.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Board of
Trustees’ Contract Approval — continued
Nature, Extent and Quality of Services
In considering
whether to approve the investment advisory agreement for the Fund, the Board evaluated the nature, extent and quality of services provided to the Fund by the Adviser.
The Board considered the Adviser’s management
capabilities and investment processes in light of the types of investments held by the Fund, including the education, experience and number of investment professionals and other personnel who provide portfolio management, investment research, and
similar services to the Fund. In particular, the Board considered the abilities and experience of the Adviser’s investment professionals in analyzing factors such as credit risk and special considerations relevant to investing in senior,
secured floating rate loans, foreign debt obligations, including debt of emerging market issuers, and mortgage-backed securities. The Board considered the Adviser’s in-house research capabilities as well as other resources available to
personnel of the Adviser. The Board also took into account the resources dedicated to portfolio management and other services, the compensation methods of the Adviser and other factors, including the reputation and resources of the Adviser to
recruit and retain highly qualified research, advisory and supervisory investment professionals. In addition, the Board considered the time and attention devoted to the Eaton Vance Funds, including the Fund, by senior management, as well as the
infrastructure, operational capabilities and support staff in place to assist in the portfolio management and operations of the Fund, including the provision of administrative services. The Board also considered the business-related and other risks
to which the Adviser or its affiliates may be subject in managing the Fund. The Board considered the deep experience of the Adviser and its affiliates with managing and operating funds organized as exchange-listed closed-end funds, such as the Fund.
In this regard, the Board considered, among other things, the Adviser’s and its affiliates’ experience with implementing leverage arrangements, monitoring and assessing trading price discounts and premiums and adhering to the
requirements of securities exchanges.
The Board
considered the compliance programs of the Adviser and relevant affiliates thereof. The Board considered compliance and reporting matters regarding, among other things, personal trading by investment professionals, disclosure of portfolio holdings,
late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also considered the responses of the Adviser and its affiliates to requests in recent years from regulatory
authorities, such as the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
The Board considered other administrative services provided or
overseen by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large fund complex offering exposure to a variety
of asset classes and investment disciplines.
After
consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory
agreement.
Fund Performance
The Board
compared the Fund’s investment performance to that of comparable funds identified by an independent data provider (the peer group), as well as an appropriate benchmark index and a custom benchmark index. The Board’s review included
comparative performance data with respect to the Fund for the one-, three-, five- and ten-year periods ended December 31, 2022. In this regard, the Board noted that the performance of the Fund was lower than the median performance of the
Fund’s peer group for the three-year period. The Board also noted that the performance of the Fund was higher than its primary benchmark index and lower than its custom benchmark index for the three-year period. After considering the relative
underperformance of the Fund over the longer term, the Board noted that the Fund’s performance record had improved relative to its peer group in more recent periods. On the basis of the foregoing and other relevant information provided by the
Adviser in response to inquiries from the Contract Review Committee, the Board concluded that the performance of the Fund was satisfactory.
Management Fees and
Expenses
The Board considered contractual fee rates payable by the Fund
for advisory and administrative services (referred to collectively as “management fees”). As part of its review, the Board considered the Fund’s management fees and total expense ratio for the one-year period ended December 31,
2022, as compared to those of comparable funds, before and after giving effect to any undertaking to waive fees or reimburse expenses. The Board also considered factors that had an impact on the Fund’s total expense ratio relative to
comparable funds.
After considering the foregoing
information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services are
reasonable.
Profitability and “Fall-Out”
Benefits
The Board considered the level of profits realized by the
Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to marketing support or other
payments by the Adviser and its affiliates to third parties in respect of distribution or other services.
The Board concluded that, in light of the foregoing factors and
the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are deemed not to be excessive.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Board of
Trustees’ Contract Approval — continued
The
Board also considered direct or indirect fall-out benefits received by the Adviser and its affiliates in connection with their respective relationships with the Fund, including the benefits of research services that may be available to the Adviser
as a result of securities transactions effected for the Fund and other investment advisory clients.
Economies of
Scale
In
reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the
Fund increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from economies of scale, if any, with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the
increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may
have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the Fund currently shares in the benefits from economies of scale, if any, when they are realized by the Adviser. The Board also considered the
fact that the Fund is not continuously offered and that the Fund’s assets are not expected to increase materially in the foreseeable future. Accordingly, the Board concluded that the implementation of breakpoints in the advisory fee schedule
is not warranted at this time.
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Management and
Organization
Fund
Management. The Board of Trustees of the Fund (the “Board”) is responsible for the overall management and supervision of the affairs of the Fund. The Board members 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. Each Trustee holds office until the annual meeting for the year in which his or her term expires and until his or her
successor is elected and qualified, subject to a prior death, resignation, retirement, disqualification or removal. Under the terms of the Fund’s current Trustee retirement policy, an Independent Trustee must retire and resign as a Trustee on
the earlier of: (i) the first day of July following his or her 74th birthday; or (ii), with limited exception, December 31st of the 20th year in which he or she has served as a Trustee. However, if such retirement and resignation would cause the
Fund to be out of compliance with Section 16 of the 1940 Act or any other regulations or guidance of the Securities and Exchange Commission, then such retirement and resignation will not become effective until such time as action has been taken for
the Fund to be in compliance therewith. 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 Board
member and officer is Two International Place, Boston, Massachusetts 02110. As used below, “BMR” refers to Boston Management and Research, “EV” refers to EV LLC, “EVM” refers to Eaton Vance
Management, “MSIM" refers to Morgan Stanley Investment Management Inc. and “EVD” refers to Eaton Vance Distributors, Inc. EV is the trustee of each of EVM and BMR. 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 127 funds in the Eaton Vance fund complex
(including both funds and portfolios in a hub and spoke structure).
Name
and Year of Birth |
Fund
Position(s) |
Length
of Service |
Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
Interested Trustee
|
Anchal
Pachnanda(1) 1980 |
Class
I Trustee |
Until
2024. 3 years. Since 2023. |
Co-Head of
Strategy of MSIM (since 2019). Formerly, Head of Strategy of MSIM (2017-2019). Ms. Pachnanda is an interested person because of her position with MSIM, which is an affiliate of the Fund. Other
Directorships. None. |
Noninterested Trustees
|
Alan
C. Bowser(2) 1962 |
Class
II Trustee |
Until
2025. 3 years. Since 2023. |
Private investor.
Formerly, Chief Diversity Officer, Partner and a member of the Operating Committee, and formerly served as Senior Advisor on Diversity and Inclusion for the firm’s chief executive officer, Co-Head of the Americas Region, and Senior Client
Advisor of Bridgewater Associates, an asset management firm (2011- 2023). Other Directorships. Independent Director of Stout Risius Ross (a middle market professional services advisory firm) (since 2021).
|
Mark
R. Fetting 1954 |
Class
III Trustee |
Until
2026. 3 years. 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. None. |
Cynthia
E. Frost 1961 |
Class
I Trustee |
Until
2024. 3 years. 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. None. |
George
J. Gorman 1952 |
Chairperson
of the Board and Class II Trustee |
Until
2025. 3 years. 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. None. |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Management and
Organization — continued
Name
and Year of Birth |
Fund
Position(s) |
Length
of Service |
Principal
Occupation(s) and Other Directorships During Past Five Years and Other Relevant Experience |
Noninterested Trustees
(continued) |
Valerie
A. Mosley 1960 |
Class
III Trustee |
Until
2026. 3 years. 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. Director of DraftKings, Inc. (digital sports entertainment and gaming company) (since September 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) and Director of Groupon, Inc. (e-commerce provider) (2020-2022). |
Keith
Quinton 1958 |
Class
II Trustee |
Until
2025. 3 years. 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. Formerly, Director (2016-2021) and Chairman (2019-2021) of New Hampshire Municipal Bond Bank. |
Marcus
L. Smith 1966 |
Class
III Trustee |
Until
2026. 3 years. Since 2018. |
Private investor
and independent corporate director. Formerly, Chief Investment Officer, Canada (2012-2017), Chief Investment Officer, Asia (2010-2012), Director of Asian Research (2004-2010) and portfolio manager (2001-2017) at MFS Investment Management
(investment management firm). Other Directorships. 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
2025. 3 years. 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. Director of Kairos Acquisition Corp. (insurance/InsurTech acquisition
company) (2021-2023). |
Scott
E. Wennerholm 1959 |
Class
I Trustee |
Until
2024. 3 years. 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. None. |
Nancy
A. Wiser 1967 |
Class
III Trustee |
Until
2026. 3 years. Since 2022. |
Formerly,
Executive Vice President and the Global Head of Operations at Wells Fargo Asset Management (2011-2021). Other Directorships. None. |
Name
and Year of Birth |
Fund
Position(s) |
Length
of Service |
Principal
Occupation(s) During Past Five Years |
Principal
Officers who are not Trustees |
Kenneth
A. Topping 1966 |
President
|
Since
2023 |
Vice
President and Chief Administrative Officer of EVM and BMR and Chief Operating Officer for Public Markets at MSIM. Also Vice President of Calvert Research and Management (“CRM”) since 2021. Formerly, Chief Operating Officer for Goldman
Sachs Asset Management 'Classic’ (2009-2020). |
Deidre
E. Walsh 1971 |
Vice
President and Chief Legal Officer |
Since
2009 |
Vice
President of EVM and BMR. Also Vice President of CRM. |
James
F. Kirchner 1967 |
Treasurer
|
Since
2007 |
Vice
President of EVM and BMR. Also Vice President of CRM. |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
Management and
Organization — continued
Name
and Year of Birth |
Fund
Position(s) |
Length
of Service |
Principal
Occupation(s) During Past Five Years |
Principal
Officers who are not Trustees (continued) |
Nicholas
S. Di Lorenzo 1987 |
Secretary
|
Since
2022 |
Formerly,
associate (2012-2021) and counsel (2022) at Dechert LLP. |
Richard
F. Froio 1968 |
Chief
Compliance Officer |
Since
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) Ms. Pachnanda began serving as Trustee effective April 1, 2023.
(2) Mr. Bowser began serving as Trustee effective January 4, 2023.
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: [email protected]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: [email protected] |
Privacy
Notice — continued |
April 2021
|
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 informationWe 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 youState 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. |
Eaton Vance
Short Duration Diversified Income Fund
October 31, 2023
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, including financial advisory services, investment management activities, lending, commercial
banking, sponsoring and managing private investment funds, engaging in broker-dealer transactions and principal securities, commodities and foreign exchange transactions, research publication and other activities. In the ordinary course of its
business, Morgan Stanley is a full-service investment banking and financial services firm and therefore engages in activities where Morgan Stanley’s interests or the interests of its clients may conflict with the interests of a Fund or
Portfolio, if applicable, (collectively for the purposes of this section, “Fund” or “Funds”). Morgan Stanley advises clients and sponsors, manages or advises other investment funds and investment programs, accounts and
businesses (collectively, together with the Morgan Stanley funds, any new or successor 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. In addition, Morgan Stanley or the investment adviser may also from time to time create
new or successor Affiliated Investment Accounts that may compete with a Fund and present similar conflicts of interest. The discussion below enumerates certain actual, apparent and potential 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.
The discussions below with respect to actual, apparent and
potential conflicts of interest also may be applicable to or arise from the MS Investment Accounts whether or not specifically identified.
Material Non-public and Other 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. The investment adviser may also
from time to time be subject to contractual ‘‘stand-still’’ obligations and/or confidentiality obligations that may restrict its ability to trade in certain investments on a Fund’s behalf. In addition, the investment
adviser may be precluded from disclosing such information to an investment team, even in circumstances in which the information would be beneficial if disclosed. Therefore, the investment team may not be provided access to material non-public
information in the possession of Morgan Stanley that might be relevant to an investment decision to be made on behalf of a Fund, and the investment team may initiate a transaction or sell an investment that, if such information had been known to it,
may not have been undertaken. In addition, certain members of the investment team may be recused from certain investment-related discussions so that such members do not receive information that would limit their ability to perform functions of their
employment with the investment adviser or its affiliates unrelated to that of a Fund. Furthermore, access to certain parts of Morgan Stanley may be subject to third party confidentiality obligations and to information barriers established by Morgan
Stanley in order to manage potential conflicts of interest and regulatory restrictions, including without limitation joint transaction restrictions pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”). Accordingly,
the investment adviser’s ability to source investments from other business units within Morgan Stanley may be limited and there can be no assurance that the investment adviser will be able to source any investments from any one or more parts
of the Morgan Stanley network.
The investment
adviser may restrict its investment decisions and activities on behalf of the Funds in various circumstances, including because of applicable regulatory requirements or information held by the investment adviser or Morgan Stanley. The investment
adviser might not engage in transactions or other activities for, or enforce certain rights in favor of, a Fund due to Morgan Stanley’s activities outside the Funds. In instances where trading of an investment is restricted, the investment
adviser may not be able to purchase or sell such investment on behalf of a Fund, resulting in the Fund’s inability to participate in certain desirable transactions. This inability to buy or sell an investment could have an adverse effect on a
Fund’s portfolio due to, among other things, changes in an investment’s value during the period its trading is restricted. Also, in situations where the investment adviser is required to aggregate its positions with those of other Morgan
Stanley business units for position limit calculations, the investment adviser may have to refrain from making investments due to the positions held by other Morgan Stanley business units or their clients. There may be other situations where the
investment adviser refrains from making an investment due to additional disclosure obligations, regulatory requirements, policies, and reputational risk, or the investment adviser may limit purchases or sales of securities in respect of which Morgan
Stanley is engaged in an underwriting or other distribution capacity.
Morgan Stanley has established certain information barriers and
other policies to address the sharing of information between different businesses within Morgan Stanley. As a result of information barriers, the investment adviser generally will not have access, or will have limited access, to certain information
and personnel in other areas of Morgan Stanley relating to business transactions for clients (including transactions in investing, banking, prime brokerage and certain other areas), and generally will not manage the Funds with the benefit of the
information held by such other areas. Morgan Stanley, due to its access to and knowledge of funds, markets and securities based on its prime brokerage and other businesses, may make decisions based on information or take (or refrain from taking)
actions with respect to interests in investments of the kind held (directly or indirectly) by the Funds in a manner that may be adverse to the Funds, and will not have any obligation or other duty to share information with the investment
adviser.
In limited circumstances, however, including for
purposes of managing business and reputational risk, and subject to policies and procedures and any applicable regulations, Morgan Stanley personnel, including personnel of the investment adviser, on one side of an information barrier may have
access to information and personnel on the other side of the information barrier through “wall crossings.” The investment adviser faces conflicts of interest in determining whether to engage in such wall crossings. Information obtained
in connection with such wall crossings may limit or restrict the ability of the investment adviser to engage in or otherwise effect transactions on behalf of the Funds (including purchasing or selling securities that the investment adviser may
otherwise have purchased or sold for a Fund in the absence of a wall crossing). In managing conflicts of interest that arise because of the foregoing, the investment adviser generally will be subject to fiduciary requirements. The investment adviser
may also implement internal information
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Potential Conflicts of
Interest — continued
barriers or ethical
walls, and the conflicts described herein with respect to information barriers and otherwise with respect to Morgan Stanley and the investment adviser will also apply internally within the investment adviser. As a result, a Fund may not be permitted
to transact in (e.g., dispose of a security in whole or in part) during periods when it otherwise would have been able to do so, which could adversely affect a Fund. Other investors in the security that are not subject to such restrictions may be
able to transact in the security during such periods. There may also be circumstances in which, as a result of information held by certain portfolio management teams in the investment adviser, the investment adviser limits an activity or transaction
for a Fund, including if the Fund is managed by a portfolio management team other than the team holding such information.
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.
Morgan Stanley
currently invests and plans to continue to invest on its own behalf and on behalf of its Affiliated Investment Accounts in a wide variety of investment opportunities globally. Morgan Stanley and its Affiliated Investment Accounts, to the extent
consistent with applicable law and policies and procedures, will be permitted to invest in investment opportunities without making such opportunities available to a Fund beforehand. Subject to the foregoing, Morgan Stanley may offer investments that
fall into the investment objectives of an Affiliated Investment Account to such account or make such investment on its own behalf, even though such investment also falls within a Fund’s investment objectives. A Fund may invest in opportunities
that Morgan Stanley and/or one or more Affiliated Investment Accounts has declined, and vice versa. All of the foregoing may reduce the number of investment opportunities available to a Fund and may create conflicts of interest in allocating
investment opportunities. Investors should note that the conflicts inherent in making such allocation decisions may not always be resolved to a Fund’s advantage. There can be no assurance that a Fund will have an opportunity to participate in
certain opportunities that fall within their investment objectives.
To seek to reduce potential conflicts of interest and to
attempt to allocate such 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 Funds, 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. Each client of the
investment adviser that is subject to the allocation policies and procedures, including each Fund, is assigned an investment team and portfolio manager(s) by the investment adviser. The investment team and portfolio managers review investment
opportunities and will decide with respect to the allocation of each opportunity considering various factors and in accordance with the allocation policies and procedures. The allocation policies and procedures are subject to change. Investors
should note that the conflicts inherent in making such allocation decisions may not always be resolved to the advantage of a Fund.
It is possible that Morgan Stanley or an Affiliated Investment
Account, including another Eaton Vance fund, will invest in or advise a company that is or becomes a competitor of a company of which a Fund holds an investment. Such investment could create a conflict between the Fund, on the one hand, and Morgan
Stanley or the Affiliated Investment Account, on the other hand. In such a situation, Morgan Stanley may also have a conflict in the allocation of its own resources to the portfolio investment. Furthermore, certain Affiliated Investment Accounts
will be focused primarily on investing in other funds which may have strategies that overlap and/or directly conflict and compete with a Fund.
In addition, certain investment professionals who are involved
in a Fund’s activities remain responsible for the investment activities of other Affiliated Investment Accounts managed by the investment adviser and its affiliates, and they will devote time to the management of such investments and other
newly created Affiliated Investment Accounts (whether in the form of funds, separate accounts or other vehicles), as well as their own investments. In addition, in connection with the management of investments for other Affiliated Investment
Accounts, members of Morgan Stanley and its affiliates may serve on the boards of directors of or advise companies which may compete with a Fund’s portfolio investments. Moreover, these Affiliated Investment Accounts managed by Morgan Stanley
and its affiliates may pursue investment opportunities that may also be suitable for a Fund.
It should be noted that Morgan Stanley may, directly or
indirectly, make large investments in certain of its Affiliated Investment Accounts, and accordingly Morgan Stanley’s investment in a Fund may not be a determining factor in the outcome of any of the foregoing conflicts. Nothing herein
restricts or in any way limits the activities of Morgan Stanley, including its ability to buy or sell interests in, or provide financing to, equity and/or debt instruments, funds or portfolio companies, for its own accounts or for the accounts of
Affiliated Investment Accounts or other investment funds or clients in accordance with applicable law.
Different clients of the investment adviser, including a Fund,
may invest in different classes of securities of the same issuer, depending on the respective clients’ investment objectives and policies. As a result, the investment adviser and its affiliates, at times, will seek to satisfy fiduciary
obligations to certain clients owning one class of securities of a particular issuer by pursuing or enforcing rights on behalf of those clients with respect to such class of securities, and those activities may have an adverse effect on another
client which owns a different class of securities of such issuer. For example, if one client holds debt securities of an issuer and another client holds equity securities of the same issuer, if the issuer experiences financial or operational
challenges, the investment adviser and its affiliates may seek a liquidation of the issuer on behalf of the client that holds the debt securities, whereas the client holding the
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Potential Conflicts of
Interest — continued
equity securities may
benefit from a reorganization of the issuer. Thus, in such situations, the actions taken by the investment adviser or its affiliates on behalf of one client can negatively impact securities held by another client. These conflicts also exist as
between the investment adviser’s clients, including the Funds, and the Affiliated Investment Accounts managed by Morgan Stanley.
The investment adviser and its affiliates may give advice and
recommend securities to other clients which may differ from advice given to, or securities recommended or bought for, a Fund even though such other clients’ investment objectives may be similar to those of the Fund.
The investment adviser and its affiliates manage long and short
portfolios. The simultaneous management of long and short portfolios creates conflicts of interest in portfolio management and trading in that opposite directional positions may be taken in client accounts, including client accounts managed by the
same investment team, and creates risks such as: (i) the risk that short sale activity could adversely affect the market value of long positions in one or more portfolios (and vice versa) and (ii) the risks associated with the trading desk receiving
opposing orders in the same security simultaneously. The investment adviser and its affiliates have adopted policies and procedures that are reasonably designed to mitigate these conflicts. In certain circumstances, the investment adviser invests on
behalf of itself in securities and other instruments that would be appropriate for, held by, or may fall within the investment guidelines of its clients, including a Fund. At times, the investment adviser may give advice or take action for its own
accounts that differs from, conflicts with, or is adverse to advice given or action taken for any client.
From time to time, conflicts also arise due to the fact that
certain securities or instruments may be held in some client accounts, including a Fund, but not in others, or that client accounts may have different levels of holdings in certain securities or instruments. In addition, due to differences in the
investment strategies or restrictions among client accounts, the investment adviser may take action with respect to one account that differs from the action taken with respect to another account. In some cases, a client account 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 investment adviser in the allocation of management time, resources
and investment opportunities. The investment adviser 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.
In addition, at times an investment adviser investment team
will give advice or take action with respect to the investments of one or more clients that is not given or taken with respect to other clients with similar investment programs, objectives, and strategies. Accordingly, clients with similar
strategies will not always hold the same securities or instruments or achieve the same performance. The investment adviser’s investment teams also advise clients with conflicting programs, objectives or strategies. These conflicts also exist
as between the investment adviser’s clients, including the Funds, and the Affiliated Investment Accounts managed by Morgan Stanley.
The investment adviser maintains separate trading desks by
investment team and generally based on asset class, including two trading desks trading equity securities. These trading desks operate independently of one another. The two equity trading desks do not share information. The separate equity trading
desks may result in one desk competing against the other desk when implementing buy and sell transactions, possibly causing certain accounts to pay more or receive less for a security than other accounts. In addition, Morgan Stanley and its
affiliates maintain separate trading desks that operate independently of each other and do not share trading information with the investment adviser. These trading desks may compete against the investment adviser trading desks when implementing buy
and sell transactions, possibly causing certain Affiliated Investment Accounts to pay more or receive less for a security than other Affiliated Investment Accounts.
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. The sharing of information and resources between the Investment Departments is designed to further increase the knowledge and effectiveness of each Investment Department. Because each Investment
Department generally makes investment decisions and executes trades independently of the other, the quality and price of execution, and the performance of investments and accounts, can be expected to vary. In addition, each Investment Department may
use different trading systems and technology and may employ differing investment and trading strategies. As a result, a MS Investment Account could trade in advance of the Fund (and vice versa), might complete trades more quickly and efficiently
than the Fund, and/or achieve different execution than the Fund on the same or similar investments made contemporaneously, even when the Investment Departments shared research and viewpoints that led to that investment decision. Any sharing of
information or resources between the Investment Department servicing the Fund and the MS Investment Department may result, from time to time, in the Fund simultaneously or contemporaneously seeking to engage in the same or similar transactions as an
account serviced by the other Investment Department and for which there are limited buyers or sellers on specific securities, which could result in less favorable execution for the Fund than such account. The Eaton Vance Investment Department will
not knowingly or intentionally cause the Fund to engage in a cross trade with an account serviced by the MS Investment Department, however, subject to applicable law and internal policies and procedures, the Fund may conduct cross trades with other
accounts serviced by the Eaton Vance Investment Department. Although the Eaton Vance Investment Department may aggregate the Fund’s trades with trades of other accounts serviced by the Eaton Vance Investment Department, subject to applicable
law and internal policies and procedures, there will be no aggregation or coordination of trades with accounts serviced by the MS Investment Department, even when both Investment Departments are seeking to acquire or dispose of the same investments
contemporaneously.
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Potential Conflicts of
Interest — continued
Payments
to Broker-Dealers and Other Financial Intermediaries. The investment adviser and/or EVD may pay compensation, out of their own funds and not as an expense of the Funds, to certain financial intermediaries (which may
include affiliates of the investment adviser and EVD), including recordkeepers and administrators of various deferred compensation plans, in connection with the sale, distribution, marketing and retention of shares of the Funds and/or shareholder
servicing. For example, the investment adviser or EVD may pay additional compensation to a financial intermediary for, among other things, promoting the sale and distribution of Fund shares, providing access to various programs, mutual fund
platforms or preferred or recommended mutual fund lists that may be offered by a financial intermediary, granting EVD access to a financial intermediary’s financial advisors and consultants, providing assistance in the ongoing education and
training of a financial intermediary’s financial personnel, furnishing marketing support, maintaining share balances and/or for sub-accounting, recordkeeping, administrative, shareholder or transaction processing services. Such payments are in
addition to any distribution fees, shareholder servicing fees and/or transfer agency fees that may be payable by the Funds. The additional payments may be based on various factors, including level of sales (based on gross or net sales or some
specified minimum sales or some other similar criteria related to sales of the Funds and/or some or all other Eaton Vance funds), amount of assets invested by the financial intermediary’s customers (which could include current or aged assets
of the Funds and/or some or all other Eaton Vance funds), a Fund’s advisory fee, some other agreed upon amount or other measures as determined from time to time by the investment adviser and/or EVD. The amount of these payments may be
different for different financial intermediaries.
The prospect of receiving, or the receipt of, additional
compensation, as described above, by financial intermediaries may provide such financial intermediaries and their financial advisors and other salespersons with an incentive to favor sales of shares of the Funds over other investment options with
respect to which these financial intermediaries do not receive additional compensation (or receive lower levels of additional compensation). These payment arrangements, however, will not change the price that an investor pays for shares of the Funds
or the amount that the Funds receive to invest on behalf of an investor. Investors may wish to take such payment arrangements into account when considering and evaluating any recommendations relating to Fund shares and should review carefully any
disclosures provided by financial intermediaries as to their compensation. In addition, in certain circumstances, the investment adviser may restrict, limit or reduce the amount of a Fund’s investment, or restrict the type of governance or
voting rights it acquires or exercises, where the Fund (potentially together with Morgan Stanley) exceeds a certain ownership interest, or possesses certain degrees of voting or control or has other interests.
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. Furthermore, from time to time, the investment adviser or its affiliates may invest “seed” capital in a Fund, typically to enable the Fund to commence investment operations and/or achieve sufficient
scale. The investment adviser and its affiliates may hedge such seed capital exposure by investing in derivatives or other instruments expected to produce offsetting exposure. Such hedging transactions, if any, would occur outside of a
Fund.
Morgan Stanley’s sales and trading,
financing and principal investing businesses (whether or not specifically identified as such, and including Morgan Stanley’s trading and principal investing businesses) will not be required to offer any investment opportunities to a Fund.
These businesses may encompass, among other things, principal trading activities as well as principal investing.
Morgan Stanley’s sales and trading, financing and
principal investing businesses have acquired or invested in, and in the future may acquire or invest in, minority and/or majority control positions in equity or debt instruments of diverse public and/or private companies. Such activities may put
Morgan Stanley in a position to exercise contractual, voting or creditor rights, or management or other control with respect to securities or loans of portfolio investments or other issuers, and in these instances Morgan Stanley may, in its
discretion and subject to applicable law, act to protect its own interests or interests of clients, and not a Fund’s interests.
Subject to the limitations of applicable law, a Fund may
purchase from or sell assets to, or make investments in, companies in which Morgan Stanley has or may acquire an interest, including as an owner, creditor or counterparty.
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. Morgan Stanley may give advice and provide recommendations to persons competing with a Fund and/or any of a Fund’s investments that are contrary to the Fund’s
best interests and/or the best interests of any of its investments.
Morgan Stanley could be engaged in financial advising, whether
on the buy-side or sell-side, or in financing or lending assignments that could result in Morgan Stanley’s determining in its discretion or being required to act exclusively on behalf of one or more third parties, which could limit a
Fund’s ability to transact with respect to one or more existing or potential investments. Morgan Stanley may have relationships with third-party funds, companies or investors who may have invested in or may look to invest in portfolio
companies, and there could be conflicts between a Fund’s best interests, on the one hand, and the interests of a Morgan Stanley client or counterparty, on the other hand.
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Potential Conflicts of
Interest — continued
To the
extent that Morgan Stanley advises creditor or debtor companies in the financial restructuring of companies either prior to or after filing for protection under Chapter 11 of the U.S. Bankruptcy Code or similar laws in other jurisdictions, the
investment adviser’s flexibility in making investments in such restructurings on a Fund’s behalf may be limited.
Morgan Stanley could provide investment banking services to
competitors of portfolio companies, as well as to private equity and/or private credit funds; such activities may present Morgan Stanley with a conflict of interest vis-a-vis a Fund’s investment and may also result in a conflict in respect of
the allocation of investment banking resources to portfolio companies.
To the extent permitted by applicable law, Morgan Stanley may
provide a broad range of financial services to companies in which a Fund invests, including strategic and financial advisory services, interim acquisition financing and other lending and underwriting or placement of securities, and Morgan Stanley
generally will be paid fees (that may include warrants or other securities) for such services. Morgan Stanley will not share any of the foregoing interest, fees and other compensation received by it (including, for the avoidance of doubt, amounts
received by the investment adviser) with a Fund, and any advisory fees payable will not be reduced thereby.
Morgan Stanley may be engaged to act as a financial advisor to
a company in connection with the sale of such company, or subsidiaries or divisions thereof, may represent potential buyers of businesses through its mergers and acquisition activities and may provide lending and other related financing services in
connection with such transactions. Morgan Stanley’s compensation for such activities is usually based upon realized consideration and is usually contingent, in substantial part, upon the closing of the transaction. Under these circumstances, a
Fund may be precluded from participating in a transaction with or relating to the company being sold or participating in any financing activity related to merger or acquisition.
The involvement or presence of Morgan Stanley in the investment
banking and other commercial activities described above (or the financial markets more broadly) may restrict or otherwise limit investment opportunities that may otherwise be available to the Funds. For example, issuers may hire and compensate
Morgan Stanley to provide underwriting, financial advisory, placement agency, brokerage services or other services and, because of limitations imposed by applicable law and regulation, a Fund may be prohibited from buying or selling securities
issued by those issuers or participating in related transactions or otherwise limited in its ability to engage in such investments.
Morgan Stanley’s Marketing Activities. Morgan Stanley is engaged in the business of underwriting, syndicating, brokering, administering, servicing, arranging and advising on the distribution of a wide variety of securities and other investments in which a
Fund may invest. Subject to the restrictions of the 1940 Act, including Sections 10(f) and 17(e) thereof, a Fund may invest in transactions in which Morgan Stanley acts as underwriter, placement agent, syndicator, broker, administrative agent,
servicer, advisor, arranger or structuring agent and receives fees or other compensation from the sponsors of such products or securities. Any fees earned by Morgan Stanley in such capacity will not be shared with the investment adviser or the
Funds. Certain conflicts of interest, in addition to the receipt of fees or other compensation, would be inherent in these transactions. Moreover, the interests of one of Morgan Stanley’s clients with respect to an issuer of securities in
which a Fund has an investment may be adverse to the investment adviser’s or a Fund’s best interests. In conducting the foregoing activities, Morgan Stanley will be acting for its other clients and will have no obligation to act in the
investment adviser’s or a Fund’s best interests.
Client Relationships. Morgan
Stanley has existing and potential relationships with a significant number of corporations, institutions and individuals. In providing services to its clients, Morgan Stanley may face conflicts of interest with respect to activities recommended to
or performed for such clients, on the one hand, and a Fund, its shareholders or the entities in which the Fund invests, on the other hand. In addition, these client relationships may present conflicts of interest in determining whether to offer
certain investment opportunities to a Fund.
In
acting as principal or in providing advisory and other services to its other clients, Morgan Stanley may engage in or recommend activities with respect to a particular matter that conflict with or are different from activities engaged in or
recommended by the investment adviser on a Fund’s behalf.
Principal Investments. To the
extent permitted by applicable law, there may be situations in which a Fund’s interests may conflict with the interests of one or more general accounts of Morgan Stanley and its affiliates or accounts managed by Morgan Stanley or its
affiliates. This may occur because these accounts hold public and private debt and equity securities of many issuers which may be or become portfolio companies, or from whom portfolio companies may be acquired.
Transactions with Portfolio Companies of Affiliated Investment
Accounts. The companies in which a Fund may invest may be counterparties to or participants in agreements, transactions or other arrangements with portfolio companies or other entities of portfolio investments of
Affiliated Investment Accounts (for example, a company in which a Fund invests may retain a company in which an Affiliated Investment Account invests to provide services or may acquire an asset from such company or vice versa). Certain of these
agreements, transactions and arrangements involve fees, servicing payments, rebates and/or other benefits to Morgan Stanley or its affiliates. For example, portfolio entities may, including at the encouragement of Morgan Stanley, enter into
agreements regarding group procurement and/or vendor discounts. Morgan Stanley and its affiliates may also participate in these agreements and may realize better pricing or discounts as a result of the participation of portfolio entities. To the
extent permitted by applicable law, certain of these agreements may provide for commissions or similar payments and/or discounts or rebates to be paid to a portfolio entity of an Affiliated Investment Account, and such payments or discounts or
rebates may also be made directly to Morgan Stanley or its affiliates. Under these arrangements, a particular portfolio company or other entity may benefit to a greater degree than the other participants, and the funds, investment vehicles and
accounts (which may
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October 31, 2023
Potential Conflicts of
Interest — continued
or may not include a
Fund) that own an interest in such entity will receive a greater relative benefit from the arrangements than the Eaton Vance funds, investment vehicles or accounts that do not own an interest therein. Fees and compensation received by portfolio
companies of Affiliated Investment Accounts in relation to the foregoing will not be shared with a Fund or offset advisory fees payable.
Investments in Portfolio Investments of Other Funds. To the extent permitted by applicable law, when a Fund invests in certain companies or other entities, other funds affiliated with the investment adviser may have made or may be making an investment in such companies or
other entities. Other funds that have been or may be managed by the investment adviser may invest in the companies or other entities in which a Fund has made an investment. Under such circumstances, a Fund and such other funds may have conflicts of
interest (e.g., over the terms, exit strategies and related matters, including the exercise of remedies of their respective investments). If the interests held by a Fund are different from (or take priority over) those held by such other funds, the
investment adviser may be required to make a selection at the time of conflicts between the interests held by such other funds and the interests held by a Fund.
Allocation of Expenses.
Expenses may be incurred that are attributable to a Fund and one or more other Affiliated Investment Accounts (including in connection with issuers in which a Fund and such other Affiliated Investment Accounts have
overlapping investments). The allocation of such expenses among such entities raises potential conflicts of interest. The investment adviser and its affiliates intend to allocate such common expenses among a Fund and any such other Affiliated
Investment Accounts on a pro rata basis or in such other manner as the investment adviser deems to be fair and equitable or in such other manner as may be required by applicable law.
Temporary Investments. To more
efficiently invest short-term cash balances held by a Fund, the investment adviser may invest such balances on an overnight “sweep” basis in shares of one or more money market funds or other short-term vehicles. It is anticipated that
the investment adviser to these money market funds or other short-term vehicles may be the investment adviser (or an affiliate) to the extent permitted by applicable law, including Rule 12d1-1 under the 1940 Act.
Transactions with Affiliates.
The investment adviser and any investment sub-adviser might purchase securities from underwriters or placement agents in which a Morgan Stanley affiliate is a member of a syndicate or selling group, as a result of
which an affiliate might benefit from the purchase through receipt of a fee or otherwise. Neither the investment adviser nor any investment sub-adviser will purchase securities on behalf of a Fund from an affiliate that is acting as a manager of a
syndicate or selling group. Purchases by the investment adviser on behalf of a Fund from an affiliate acting as a placement agent must meet the requirements of applicable law. Furthermore, Morgan Stanley may face conflicts of interest when the Funds
use service providers affiliated with Morgan Stanley because Morgan Stanley receives greater overall fees when they are used.
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 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. The
investment adviser seeks to ensure that potential or actual conflicts of interest are appropriately resolved taking into consideration the overriding best interests of the client.
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. Equiniti Trust Company, LLC (“EQ”), the closed-end funds transfer agent, or your financial intermediary, may household the mailing of your documents
indefinitely unless you instruct EQ, or your financial intermediary, otherwise. If you would prefer that your Eaton Vance documents not be householded, please contact EQ 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 EQ 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 “Closed-End Funds & Term Trusts.”
Investment Adviser and Administrator
Eaton Vance Management
Two International Place
Boston, MA 02110
Custodian
State Street Bank and Trust Company
One Congress Street, Suite 1
Boston, MA 02114-2016
Transfer Agent
Equiniti 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
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 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 expert of other mutual fund complexes. 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, 2022 and
October 31, 2023 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 |
|
10/31/22 |
|
|
10/31/23 |
|
Audit Fees |
|
$ |
102,933 |
|
|
$ |
92,600 |
|
Audit-Related Fees(1) |
|
$ |
0 |
|
|
$ |
0 |
|
Tax Fees(2) |
|
$ |
350 |
|
|
$ |
0 |
|
All Other Fees(3) |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
103,283 |
|
|
$ |
92,600 |
|
|
|
|
|
|
|
|
|
|
(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.
(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, 2022 and
October 31, 2023; 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 |
|
10/31/22 |
|
|
10/31/23 |
|
Registrant |
|
$ |
350 |
|
|
$ |
0 |
|
Eaton Vance(1) |
|
$ |
52,836 |
|
|
$ |
0 |
|
(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.
(i) Not applicable.
(j) Not applicable.
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, Keith Quinton, Scott E. Wennerholm (Chair), and Nancy A. Wiser 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.
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 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” of “Eaton Vance”) is the investment adviser of the Fund. Akbar A. Causer, Catherine M.
McDermott, Federico Sequeda, and Andrew Szczurowski comprise the investment team responsible for the overall and day-to-day management of the Fund’s investments.
Mr. Causer is a Vice President of EVM, has been a portfolio manager of the Fund since September 2021 and has been employed by EVM since 2017.
Ms. McDermott is a Vice President of EVM and has been a portfolio manager of the Fund since January 2008. Mr. Sequeda is a Vice President of EVM, has been a portfolio manager of the Fund since September 2021 and has been employed by EVM
for more than five years. Mr. Szczurowski is a Vice President of EVM and has been a portfolio manager of the Fund since November 2011. Ms. McDermott and Mr. Szczurowski have managed other Eaton Vance portfolios for more than five
years. 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 each 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 |
|
Akbar A. Causer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered Investment Companies |
|
|
2 |
|
|
$ |
1,878.9 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Pooled Investment Vehicles |
|
|
8 |
|
|
$ |
2,438.8 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Accounts |
|
|
2 |
|
|
$ |
155.2 |
|
|
|
0 |
|
|
$ |
0 |
|
Catherine C. McDermott |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered Investment Companies |
|
|
6 |
|
|
$ |
3,688.3 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Pooled Investment Vehicles |
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Accounts |
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
Federico Sequeda, CFA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered Investment Companies |
|
|
5 |
|
|
$ |
9,462.2 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Pooled Investment Vehicles |
|
|
2 |
|
|
$ |
261.2 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Accounts |
|
|
1 |
|
|
$ |
137.6 |
|
|
|
0 |
|
|
$ |
0 |
|
Andrew Szczurowski(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered Investment Companies |
|
|
6 |
|
|
$ |
11,795.5 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Pooled Investment Vehicles |
|
|
2 |
|
|
$ |
83.7 |
|
|
|
0 |
|
|
$ |
0 |
|
Other Accounts |
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
(1) |
This portfolio manager serves as portfolio manager of one or more registered investment companies and/or pooled
investment vehicles that invest or may invest in one or more underlying registered investment companies and/or separate pooled investment vehicles in the Eaton Vance family of funds. The underlying investment companies may be managed by this
portfolio manager or another portfolio manager. |
The following table shows the dollar range of Fund shares beneficially owned by each
portfolio manager as of the Fund’s most recent fiscal year end.
|
|
|
Portfolio Manager |
|
Dollar Range of Equity Securities Beneficially Owned in the Fund |
Akbar A. Causer |
|
None |
Catherine C. McDermott |
|
None |
Federico Sequeda, CFA |
|
None |
Andrew Szczurowski |
|
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 or she 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 arise, the portfolio manager will endeavor to exercise his or her discretion in a manner that he or she 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
The
compensation structure of Eaton Vance and its affiliates that are investment advisers (for purposes of this section “Eaton Vance”) is based on a total reward system of base salary and incentive compensation, which is paid either in the
form of cash bonus, or for employees meeting the specified deferred compensation eligibility threshold, partially as a cash bonus and partially as mandatory deferred compensation. Deferred compensation granted to Eaton Vance employees is generally
granted as a mix of deferred cash awards under the Investment Management Alignment Plan (IMAP) and equity-based awards in the form of stock units. The portion of incentive compensation granted in the form of a deferred compensation award and the
terms of such awards are determined annually by the Compensation, Management Development and Succession Committee of Morgan Stanley.
Base salary
compensation. Generally, portfolio managers receive base salary compensation based on the level of their position with the adviser.
Incentive
compensation. In addition to base compensation, portfolio managers may receive discretionary year-end compensation. Incentive compensation may include:
|
• |
|
A mandatory program that defers a portion of incentive compensation into restricted stock units or other awards
based on Morgan Stanley common stock or other plans that are subject to vesting and other conditions. |
|
• |
|
IMAP is a cash-based deferred compensation plan designed to increase the alignment of participants’
interests with the interests of clients. For eligible employees, a portion of their deferred compensation is mandatorily deferred into IMAP on an annual basis. Awards granted under IMAP are notionally invested in referenced funds available pursuant
to the plan, which are funds advised by MSIM and its affiliates that are investment advisers. Portfolio managers are required to notionally invest a minimum of 40% of their account balance in the designated funds that they manage and are included in
the IMAP notional investment fund menu. |
|
• |
|
Deferred compensation awards are typically subject to vesting over a multi-year period and are subject to
cancellation through the payment date for competition, cause (i.e., any act or omission that constitutes a breach of obligation to the Funds, including failure to comply with internal compliance, ethics or risk management standards, and failure or
refusal to perform duties satisfactorily, including supervisory and management duties), disclosure of proprietary information, and solicitation of employees or clients. Awards are also subject to clawback through the payment date if an
employee’s act or omission (including with respect to direct supervisory responsibilities) causes a restatement of the firm’s consolidated financial results, constitutes a violation of the firm’s global risk management principles,
policies and standards, or causes a loss of revenue associated with a position on which the employee was paid and the employee operated outside of internal control policies. |
Eaton Vance compensates employees based on principles of pay-for-performance,
market competitiveness and risk management. Eligibility for, and the amount of any, discretionary compensation is subject to a multi-dimensional process. Specifically, consideration is given to one or more of the following factors, which can vary by
portfolio management team and circumstances:
|
• |
|
Revenue and profitability of the business and/or each fund/account managed by the portfolio manager
|
|
• |
|
Revenue and profitability of the Firm |
|
• |
|
Return on equity and risk factors of both the business units and Morgan Stanley |
|
• |
|
Assets managed by the portfolio manager |
|
• |
|
External market conditions |
|
• |
|
New business development and business sustainability |
|
• |
|
Contribution to client objectives |
|
• |
|
Team, product and/or MSIM and its affiliates that are investment advisers (including Eaton Vance) performance
|
|
• |
|
The pre-tax investment performance of the funds/accounts managed by the
portfolio manager (which may, in certain cases, be measured against the applicable benchmark(s) and/or peer group(s) over one, three and five-year periods) |
|
• |
|
Individual contribution and performance |
Further, the firm’s Global Incentive Compensation Discretion Policy requires compensation managers to consider Further the only legitimate, business
related factors when exercising discretion in determining variable incentive compensation, including adherence to Morgan Stanley’s core values, conduct, disciplinary actions in the current performance year, risk management and risk outcomes.
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
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 Short Duration Diversified Income Fund
|
|
|
By: |
|
/s/ Kenneth A. Topping |
|
|
Kenneth A. Topping |
|
|
President |
|
|
Date: |
|
December 22, 2023 |
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 22, 2023 |
|
|
By: |
|
/s/ Kenneth A. Topping |
|
|
Kenneth A. Topping |
|
|
President |
|
|
Date: |
|
December 22, 2023 |