EVG Eaton Vance Short Duration Diversified Income Fund

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

Table of Contents
Management’s Discussion of Fund Performance	2
Performance	4
Fund Profile	5
The Fund's Investment Objectives, Principal Strategies and Principal Risks	6
Endnotes and Additional Disclosures	11
Financial Statements	13
Report of Independent Registered Public Accounting Firm	49
Federal Tax Information	50
Dividend Reinvestment Plan	51
Board of Trustees’ Contract Approval	53
Management and Organization	57
Privacy Notice	60
Potential Conflicts of Interest	62
Important Notices	68

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 Index^SM, 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 Index^SM (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.

2

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.

3

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.

4

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Fund Profile

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%.

5

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

11

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.

12

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

Eaton Vance

Short Duration Diversified Income Fund

October 31, 2023

Portfolio of Investments — continued

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

Statement of Operations

	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