Gaurav

Can Eaton Vance's Tax-Advantaged Dividend Fund Sustain Its Yield?

From Page 2 of the Annual Report of this fund:

"As of August 31, 2007, the Fund's $700 million
issued and outstanding Auction Preferred Shares
(APS) equaled approximately 24% of total assets and
maintained a weighted average reset period of 21
days, which is comparable to what it was when the
Fund's leverage was originally issued. Use of financial
leverage creates an opportunity for increased capital
appreciation and income but, at the same time, creates
special risks (including the likelihood of greater
volatility of net asset value and market price of the
common shares). In the event of a rise in long-term
interest rates, the value of the Fund's portfolio could
decline, which would reduce the asset coverage for
its APS."

I dont find anything on the covered call strategy in the report. Rather, they use a approach called dividend capture strategy - which is basically trading to capture dividends.