Eaton Vance Announces Granting of No-Action Relief for New Closed-End Fund Liquidity Protected Preferred Shares

Eaton Vance Management, a subsidiary of Eaton Vance Corp. (NYSE: EV), announced today that the staff of the Securities and Exchange Commission (the "SEC”) has granted no-action relief to allow closed-end funds sponsored by Eaton Vance to offer a new class of security called Liquidity Protected Preferred ("LPP”) shares. No-action relief provides assurance that the SEC staff will not recommend enforcement action against the requester based on the particular facts and circumstances that apply. Eaton Vance has developed LPP shares based in part on structuring advice and market intelligence provided by Merrill Lynch and other closed-end fund market participants. Eaton Vance believes that LPP shares may provide a cost-effective form of leverage for its closed-end funds (the "Funds”), including as a possible replacement for currently outstanding auction preferred shares ("APS”). Eaton Vance believes that the granting of no-action relief is an important step in the development of LPP shares. Separately, five taxable income Funds sponsored by Eaton Vance have filed with the SEC a request for exemptive relief from certain provisions of the Investment Company Act of 1940, as amended (the "1940 Act”), permitting the Funds to incur additional indebtness for the purpose of redeeming APS. A significant limitation on the ability of closed-end funds to replace APS with debt is the requirement under the 1940 Act that a fund must maintain asset coverage of 300% of outstanding indebtedness, versus a coverage requirement of 200% with respect to APS and other outstanding senior securities. In the exemptive request, the Funds have asked that the lower coverage requirement for senior equity securities be temporarily applied to indebtedness they incur to redeem APS. LPP Shares LPP shares are a new type of preferred equity securities that will pay a dividend rate that is reset weekly based on a determination of the market clearing rate by the LPP shares’ designated remarketing agent. It is anticipated that the LPP shares will receive a long-term preferred stock rating and a short-term debt rating in one of the two highest rating categories from one or more nationally recognized statistical rating organizations. Under normal circumstances, the dividend rate in each remarketing will be set as the lowest rate at which all LPP shares would be either held or bought after matching up buy, hold and sell orders. If there is an imbalance of sell orders over buys, the designated liquidity provider of the LPP shares would be obligated to purchase all LPP shares not matched with purchase orders at a price equal to the LPP share liquidation preference, plus accumulated but unpaid dividends. Different from APS, LPP shares would be supported by the unconditional purchase obligation of the designated liquidity provider. It is expected that LPP shares will be eligible for investment by money market funds (including tax-exempt money market funds for LPP shares issued by municipal income Funds), opening up a large new market of potential buyers. Eaton Vance hopes that the development of a market for LPP shares will provide a cost-effective new form of leverage for the Funds that will facilitate redeeming the balance of the Funds’ outstanding APS shares. Eaton Vance is in the process of determining the best initial application of LPP shares. It is possible that the initial issuance of LPP shares will not be used to redeem APS, and that redemption of APS with LPP shares may not occur until after the new security has been established in the market. As described in the press release dated May 20, 2008 announcing Eaton Vance’s filing of a No-Action letter with respect to LPP shares, Eaton Vance may grant a liquidity provider the right to put LPP shares it holds to Eaton Vance under certain specified circumstances (the "EVC Put Agreement”). The EVC Put Agreement is not expected to be an ongoing feature of the LPP share arrangements, but rather would be offered for a limited period only in conjunction with the initial offering of LPP shares by a Fund, in an amount not to exceed $100 million. Eaton Vance believes that, if it is required to purchase LPP shares from the liquidity provider, it would likely only be required to hold such shares for a short period and would earn returns that exceed Eaton Vance’s cost of short-term funding. Eaton Vance does not believe that there should be an ongoing requirement to offer a put right to liquidity providers once an active market develops for LPP shares. The issuance of LPP shares by one or more of the Funds is conditional upon completion of successful negotiation with a remarketing agent and liquidity provider, approval by the Funds’ Board of Trustees and rating agencies, and successful placement of the LPP share offering with money market funds and other institutional investors. There can be no certainty as to when, or if, LPP shares will be issued or an associated redemption of APS will occur. Request for Exemptive Relief As described above, five taxable income Funds have filed a request for exemptive relief from certain provisions of the 1940 Act to permit them to incur additional indebtness for the purpose of redeeming APS. In the exemptive request, the Funds have asked that the 200% coverage requirement for senior equity securities be temporarily applied to indebtedness incurred to redeem APS, rather than the 300% coverage requirement that normally applies to a Fund’s debt. The higher coverage requirement for debt versus senior equity means that a Fund may be required to reduce financial leverage to redeem APS with debt unless the requested relief is granted. There is no certainty that the SEC will grant the requested exemptive relief. If such relief is granted, the ability of the Funds to take advantage is conditional upon completion of successful negotiation with lenders and approval by the Funds’ Board of Trustees. There can be no certainty as to when, or if, the relief requested may be granted or utilized, or an associated redemption of APS shares will occur. Auction Preferred Shares Consistent with patterns in the broader market for auction rate securities, the 29 Eaton Vance-sponsored closed-end funds with then outstanding APS of approximately $5.0 billion began experienced unsuccessful auctions in February of this year, depriving APS holders of their normal liquidity mechanism. Since then, Eaton Vance has been working to restore liquidity to the Funds’ APS holders by redeeming outstanding APS at their liquidation preference amount and to provide alternative leverage to the Funds. To date, the Funds have redeemed approximately $3.3 billion of APS using replacement financing consisting of bank and commercial paper facility borrowings and tender option bonds. None of the Funds has been required to delever in connection with the refinancing to redeem APS shares. In all cases, the cost of the replacement leverage is expected, over time, to be lower than the total cost of APS based on maximum applicable rates that apply in the event of unsuccessful auctions. To view a copy of the Funds’ APS redemption announcements to date, see "press releases” on the closed-end fund section of Eaton Vance’s web site, at www.eatonvance.com. To receive a hard copy of this information, call (800) 225-6265. Eaton Vance Corp., a Boston based investment management firm, is listed on the New York Stock Exchange under the symbol EV. Through its subsidiaries, Eaton Vance Corp. manages funds and separate accounts for individuals and institutional clients. This news release contains statements that are not historical facts, referred to as "forward-looking statements.” The Company’s actual future results may differ significantly from those stated in any forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and repurchases of fund shares, the continuation investment advisory, administration, distribution and service contracts, and other risks discussed from time to time in the Company’s filings with the Securities and Exchange Commission.