Closed-End Funds
- Product Update - August 28, 2008
- Webinar on Evergreen’s Closed End Funds – May 1, 2008
- Conference Call on Auction Rate Securities - March 24, 2008
- Product Update - February 26, 2008
- Policy for the Consideration of Trustee Nominees
- Policy Concerning Trustee Attendance at Annual Meetings of Shareholders
- Process for Delivering Shareholder Communications to the Board of Trustees
Product Update - August 28, 2008
Earlier this year, Evergreen Investments announced that the firm had secured debt financing from a multi-seller commercial paper conduit administered by a major financial institution that would be used by the funds to redeem some or all of each funds' outstanding auction preferred shares (APS).
We are pleased to report that Evergreen has completed all of the redemptions announced in April, which comprises $694 million of the $970 million total in APS, or 72% of all outstanding shares. A table summarizing the total number of shares, par amounts and redemption dates for each of the three funds is listed below.
| Evergreen Utilities and High Income Fund (ERH) | ||||
| Series | CUSIP | Total Shares Redeemed | Total Amount Redeemed | Redemption Date |
| M28 | 30034Q208 | 3200 | $80,000,000 | May 20, 2008 |
| Evergreen Multi-Sector Income Fund (ERC) | ||||
| Series | CUSIP | Total Shares Redeemed | Total Amount Redeemed | Redemption Date |
| M7 | 30024Y401 | 2560 | $64,000,000 | May 27, 2008 |
| W7 | 30024Y500 | 2560 | $64,000,000 | May 29, 2008 |
| F7 | 30024Y609 | 2560 | $64,000,000 | June 2, 2008 |
| T28 | 30024Y203 | 2560 | $64,000,000 | June 18, 2008 |
| Th28 | 30024Y302 | 2560 | $64,000,000 | June 6, 2008 |
| Evergreen Income Advantage Fund (EAD) | ||||
| Series | CUSIP | Total Shares Redeemed | Total Amount Redeemed | Redemption Date |
| T7 | 30023Y402 | 1920 | $48,000,000 | May 28, 2008 |
| W7 | 30023Y501 | 1920 | $48,000,000 | May 29, 2008 |
| Th7 | 30023Y600 | 1920 | $48,000,000 | May 30, 2008 |
| F7 | 30023Y709 | 1920 | $48,000,000 | June 2, 2008 |
| M28 | 30023Y204 | 2040 | $51,000,000 | June 10, 2008 |
| W28 | 30023Y303 | 2040 | $51,000,000 | May 29, 2008 |
As we've noted in prior communications, securities regulations require that closed-end funds have at least $2 of assets for every $1 of auction-rates securities issued. As a result, we were not able to redeem 100% of the outstanding APS on Evergreen Multi-Sector Income Fund (ERC) and Evergreen Income Advantage Fund (EAD). Evergreen is continuing to examine alternatives for providing liquidity to the remaining balance of APS in these funds.
Although no determination has been made, we continue to aggressively explore all possible options, including:
- Assessing additional borrowing options should the SEC temporarily relax the asset coverage requirements for debt;
- Putable auction rate market preferreds that would make the securities potentially eligible for investment by money market funds; or
- Derivative solutions that may provide the ability to provide economic impacts similar to leveraged fixed income strategies.
Until we liquidate the outstanding APS, Evergreen will continue to pay the holders of these securities interest at the maximum rates indicated in the statement of preference and highlighted in the table below.
| Current AMPS Rates | ||||
| Fund | Fitch Rating* | Moody's Rating* | Reset Rate | Max Rate** |
| Evergreen Income Advantage Fund (EAD) | AAA | Aaa | 150% x AA Financial Composite Commercial Paper Rate | 3.623% |
| Evergreen Multi-Sector Income Fund (ERC) | AAA | Aaa | Greater of: 125% x LIBOR, or LIBOR + 125 basis points | 3.629% |
| *As of 3.06.08. As outlined in each fund's registration
statement, the maximum rate is determined with reference to a short-term
interest rate benchmark, and will change over time as the benchmark rate
changes. **Based on most recent auction through August 20, 2008 | ||||
Additionally, you may have recently read or heard about various regulatory settlements by major broker dealer firms to purchase auction rate securities from their clients. These actions will allow for significant capital to be returned to shareholders impacted by auction failures and will help provide additional liquidity to the marketplace.
We will continue to keep you posted on developments by periodically updating the Evergreen Investments Web site.
Thank you for your support.
These closed-end funds are no longer offered as an initial public offering and are only offered through broker/dealers on the secondary market. Unlike an open-end mutual fund, a closed-end fund (CEF) offers a fixed number of shares for sale. After the initial public offering, shares are bought and sold in the secondary marketplace and the market price of the shares is determined by supply and demand, not by net asset value, often at a lower price than the NAV. A closed-end fund is not required to buy its shares back from investors upon request.