BOSTON, March 24 /PRNewswire-FirstCall/ -- Eaton Vance Short Duration Diversified Income Fund, a diversified closed-end investment company (NYSE Alternext US: EVG) (the "Fund"),currently invests at least 25% of its net assets in each of three fixed income sectors: (i) mortgage-backed securities, (ii) senior loans and (iii) foreign obligations, including derivative instruments. In addition, at least 80% of the Fund's total assets must be invested in the aggregate in these three sectors. With respect to the balance of the Fund's assets, the Fund is authorized to invest in other assets, including unsecured loans, other floating rate debt securities, such as notes, bonds and asset backed securities (such as special purpose trusts investing in bank loans), credit-linked notes, synthetic lease financings, tranches of collateralized obligations, investment grade fixed income debt obligations and money market instruments, such as commercial paper ("permitted additional investments"). The Trustees of the Fund recently approved commercial mortgage-backed securities ("CMBS") as another permitted additional investment for the Fund. CMBS include securities that reflect an interest in, and are secured by, mortgage loans on commercial real estate property. The risks associated with CMBS include the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. CMBS may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities. Under normal market conditions, the Fund expects to continue to maintain a dollar-weighted average portfolio credit quality of investment grade. The Trustees also authorized the Fund to execute short sales of sovereign bonds, provided that not more than 15% of its net assets is held as collateral for such sales at any one time, and to enter into reverse repurchase agreements. A short sale involves the sale of a security that is borrowed from a broker or other institution to complete the sale. Short sales expose the Fund to the risk that it will be required to acquire securities to replace the borrowed securities (also known as "covering" the short position) at a time when the securities sold short have appreciated in value, thus resulting in a loss to the Fund. Under a reverse repurchase agreement, possession of a portfolio instrument is temporarily transferred to another party in return for cash, with the counterparty agreeing to return the instrument at an agreed upon time (normally within seven days) and price, which reflects an interest payment. Any fluctuations in the market value of the instrument transferred could affect the market value of the Fund's assets. Because reverse repurchase agreements may be considered to be the practical equivalent of borrowing funds, they constitute a form of leverage. In conjunction with the foregoing, a non-fundamental investment policy of the Fund was revised to provide that the Fund may not make short sales of securities or maintain a short position, unless at all times when a short position is open (i) it owns an equal amount of such securities or securities convertible or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short or (ii) it holds in a segregated account cash or other liquid securities (to the extent required under the Investment Company Act of 1940) in an amount equal to the current market value of the securities sold short. The Fund is managed by Eaton Vance Management, a subsidiary of Eaton Vance Corp. (NYSE:EV), based in Boston, one of the oldest investment management firms in the United States, with a history dating back to 1924. Eaton Vance and its affiliates managed $121.9 billion in assets as of January 31, 2009, offering individuals and institutions a broad array of investment products and wealth management solutions. The Company's long record of providing exemplary service and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today's most discerning investors. For more information about Eaton Vance, visit http://www.eatonvance.com/. DATASOURCE: Eaton Vance Short Duration Diversified Income Fund CONTACT: Eaton Vance, Investor Contact: +1-800-262-1122 Web Site: http://www.eatonvance.com/

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