BOSTON, March 9, 2021 /PRNewswire/ -- Eaton Vance
Short Duration Diversified Income Fund (NYSE: EVG) (the "Fund")
today announced that its Board of Trustees (the "Board") has taken
the actions described below.
Conditional Tender Offer. The Board has authorized
a conditional cash tender offer for up to 25% of the Fund's
outstanding common shares at a price per share equal to 99% of the
Fund's net asset value per share as of the close of regular trading
on the New York Stock Exchange on the date the tender offer
expires. The tender offer is conditioned on shareholder
approval of a new investment advisory agreement with Eaton Vance
Management ("EVM"), the Fund's investment adviser, at the upcoming
special meeting of shareholders discussed below.
Additional terms and conditions of the tender offer will be set
forth in the associated Fund offering materials and additional
press releases, as applicable. If the number of shares
tendered in the tender offer exceeds the maximum amount of the
tender offer, the Fund will purchase shares from tendering
shareholders on a pro rata basis (disregarding fractional shares).
Accordingly, there is no assurance that the Fund will purchase all
of a shareholder's tendered common shares in the tender
offer. The Fund may determine not to accept shares tendered
in the tender offer under various circumstances, as will be set
forth in the offering materials.
Conditional Distribution Rate Increase. The Fund
also announced today that, if shareholders approve the new
investment advisory agreement at the upcoming special meeting of
shareholders discussed below, it will increase its regular monthly
distribution on common shares to an annual rate equal to 10 percent
of the Fund's then-current net asset value ($0.109 per share as of March 2, 2021), representing an increase of
approximately 45 percent from the March
2021 distribution of $0.075
per share. The distribution increase will commence with the
first monthly distribution announced following shareholder approval
of the new investment advisory agreement. By raising the
Fund's regular monthly distribution, the Board seeks to enhance
long-term shareholder value.
The Fund's distributions may include amounts from sources other
than net investment income. When that is the case,
shareholders will be notified. The final determination of the
tax character of Fund distributions will occur after the end of
each calendar year, at which time that determination will be
reported to shareholders. The Fund's distributions in any
period may be more or less than the net return earned by the Fund
on its investments, and therefore should not be used as a measure
of performance or confused with "yield" or "income." Distributions
in excess of Fund returns will cause the Fund's net assets and net
asset value per share to erode. For the fiscal year beginning on
November 1, 2020 through February 28, 2021, the Fund has distributed
$0.30 per share, 73.5 percent of
which is estimated to be sourced from ordinary income and 26.5
percent of which is estimated to be return of capital. If the
Fund had adopted the conditional distribution rate increase on
November 1, 2020 and the condition
described above has been satisfied, its distributions for the
fiscal year to date through February 28,
2021 on a pro forma basis would have been approximately
$0.454 per share, an estimated 48.6
percent of which would have been sourced from ordinary income and
an estimated 51.4 percent from return of capital. Investors
should not draw any conclusions about the Fund's investment
performance from the amount of its distributions.
Fund distributions may be affected by numerous factors,
including changes in Fund performance, the cost of leverage,
portfolio holdings, realized and projected returns, and other
factors. There can be no assurance that future Board action, an
unanticipated change in market conditions or other unforeseen
factors will not result in a change in the Fund's distributions at
a future time.
Upcoming Special Shareholder Meeting. The Fund also
announced today that its Board has set a record date of
March 19, 2021 for determining those
shareholders entitled to notice of, and the right to vote at, a
special meeting of shareholders to be held on May 7, 2021 and any adjournment or postponement
thereof. At the meeting, shareholders will be asked to
approve a new investment advisory agreement for the Fund with
EVM.
As previously disclosed, the Board approved an interim
investment advisory agreement with EVM (the "Interim Agreement"),
which took effect upon completion of the acquisition of Eaton Vance
Corp. by Morgan Stanley (NYSE: MS) on March
1, 2021. The Interim Agreement allows EVM to continue
to manage the Fund for up to an additional 150 days to provide more
time for proxy solicitation and the Board's consideration of
different options for the Fund. The terms of the Interim
Agreement are substantially identical to those of the Fund's prior
investment advisory agreement except for term and escrow provisions
required by applicable law.
The Fund intends to file a definitive proxy statement with
the U.S. Securities and Exchange Commission (the "SEC").
Shareholders are advised to read the proxy statement when
available, as it will contain important information. When filed
with the SEC, the proxy statement and other documents filed by the
Fund will be available free of charge on the SEC website,
www.sec.gov. Copies of the proxy statement will also be mailed to
each shareholder of record as of March 19,
2021.
Eaton Vance Corp. was acquired by Morgan Stanley on March 1, 2021. Its Eaton Vance Management,
Parametric, Atlanta Capital and Calvert investment affiliates are
now part of Morgan Stanley Investment Management, the asset
management division of Morgan Stanley.
About the Fund
Except pursuant to a tender offer, common shares of the Fund are
available for purchase or sale only through secondary market
trading at their current market price. Shares of closed-end funds
(such as the Fund) often trade at a discount from their net asset
value. The market price of a closed-end fund's shares may vary from
net asset value based on factors affecting the supply and demand
for shares, such as fund distribution rates relative to similar
investments, investors' expectations for future distribution
changes, the clarity of a fund's investment strategy and future
return expectations, and investors' confidence in the underlying
markets in which the fund invests. Fund shares are subject to
investment risk, including possible loss of principal invested.
Shares of the Fund are not FDIC-insured and are not deposits or
other obligations of, or guaranteed by, any bank. The Fund is not a
complete investment program and you may lose money investing in the
Fund. An investment in the Fund may not be appropriate for all
investors. Before investing, prospective investors should consider
carefully the Fund's investment objective, risks, charges and
expenses.
This announcement is not a recommendation, an offer to purchase
or a solicitation of an offer to sell shares of the Fund. The
Fund has not commenced the conditional tender offer described in
this release. The tender offer will be made only if the
condition described above is satisfied, and only by an offer to purchase, a related
letter of transmittal and other documents filed with the SEC as
exhibits to a tender offer statement on Schedule TO, with all such
documents available on the SEC's website at www.sec.gov. For
the tender offer, the Fund will also make available to shareholders
without charge the offer to purchase and the letter of
transmittal. Shareholders should read these documents
carefully, as they would contain important information about the
tender offer.
Shares of closed-end funds often trade at a discount from their
net asset value. The market price of Fund shares may vary from net
asset value based on factors affecting the supply and demand for
shares, such as Fund distribution rates relative to similar
investments, investors' expectations for future distribution
changes, the clarity of the Fund's investment strategy and future
return expectations, and investors' confidence in the underlying
markets in which the Fund invests. Fund shares are subject to
investment risk, including possible loss of principal invested. No
Fund is a complete investment program and you may lose money
investing in a Fund. An investment in a Fund may not be appropriate
for all investors. Before investing, prospective investors should
consider carefully the Fund's investment objective, risks, charges
and expenses.
This press release is for informational purposes only and is
not intended to, and does not, constitute an offer to purchase or
sell shares of the Fund. Additional information about the Fund,
including performance and portfolio characteristic information, is
available at www.eatonvance.com.
Statements in this press release that are not historical
facts may be forward-looking statements as defined by the U.S.
securities laws. You should exercise caution in interpreting and
relying on forward-looking statements because they are subject to
uncertainties and other factors that may be beyond the Fund's
control and could cause actual results to differ materially from
those set forth in the forward-looking statements.
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SOURCE Eaton Vance Management