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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number     811-21269

Evergreen Income Advantage Fund

(Exact name of registrant as specified in charter)

200 Berkeley Street
Boston, Massachusetts 02116

(Address of principal executive offices)    (Zip code)

Michael H. Koonce, Esq.
200 Berkeley Street
Boston, Massachusetts 02116

(Name and address of agent for service)

Registrant’s telephone number, including area code:   (617) 210-3200



Date of fiscal year end:

Registrant is making a quarterly filing for one of its series, Evergreen Income Advantage Fund, for the quarter ended July 31, 2006. This one series has an April 30 fiscal year end.

Date of reporting period:           July 31, 2006

Item 1 – Schedule of Investments

EVERGREEN INCOME ADVANTAGE FUND       
SCHEDULE OF INVESTMENTS       
July 31, 2006  (unaudited)       
Principal
Amount		   Value
CORPORATE BONDS  138.4%       
CONSUMER DISCRETIONARY  45.2%       
Auto Components  4.9%       
Accuride Corp., 8.50%, 02/01/2015  $ 7,250,000    $ 6,778,750 
Goodyear Tire & Rubber Co., 9.00%, 07/01/2015 þ  7,000,000    6,772,500 
Tenneco Automotive, Inc., 8.625%, 11/15/2014 þ  14,350,000    14,314,125 
TRW Automotive, Inc., 11.00%, 02/15/2013 þ  7,000,000    7,682,500 
Visteon Corp., 8.25%, 08/01/2010 þ  10,600,000    9,805,000 
      45,352,875 
Automobiles  0.9%       
General Motors Corp., 8.375%, 07/15/2033 þ  10,000,000    8,250,000 
Diversified Consumer Services  1.3%       
Carriage Services, Inc., 7.875%, 01/15/2015  3,600,000    3,528,000 
Education Management Corp.:       
   8.75%, 06/01/2014 144A  3,750,000    3,778,125 
   10.25%, 06/01/2016 144A  4,250,000    4,313,750 
      11,619,875 
Hotels, Restaurants & Leisure  6.1%       
Inn of the Mountain Gods Resort & Casino, 12.00%, 11/15/2010 þ  7,000,000    7,358,750 
Mandalay Resort Group, Ser. B, 10.25%, 08/01/2007  15,000,000    15,562,500 
MGM MIRAGE, Inc., 9.75%, 06/01/2007  13,000,000    13,406,250 
Seneca Gaming Corp., Ser. B, 7.25%, 05/01/2012 ##  1,750,000    1,715,000 
Town Sports International, Inc., 9.625%, 04/15/2011  4,057,000    4,219,280 
Universal City Development Partners, Ltd., 11.75%, 04/01/2010  12,750,000    13,865,625 
      56,127,405 
Household Durables  3.6%       
Hovnanian Enterprises, Inc., 7.75%, 05/15/2013 þ  7,000,000    6,317,500 
Jarden Corp., 9.75%, 05/01/2012 þ  9,125,000    9,535,625 
Libbey, Inc., 12.42%, 06/01/2011 144A þ  7,100,000    6,993,500 
Standard Pacific Corp., 9.25%, 04/15/2012 þ  7,000,000    6,685,000 
Technical Olympic USA, Inc., 10.375%, 07/01/2012  4,800,000    4,200,000 
      33,731,625 
Media  16.4%       
AMC Entertainment, Inc.:       
   9.875%, 02/01/2012 þ  5,000,000    5,068,750 
   Ser. B, 8.625%, 08/15/2012  11,430,000    11,730,037 
American Media Operations, Inc., Ser. B, 10.25%, 05/01/2009  7,000,000    6,571,250 
Cablevision Systems Corp., Ser. B, 8.00%, 04/15/2012 þ  14,510,000    14,437,450 
Cinemark USA, Inc., 9.00%, 02/01/2013  12,000,000    12,630,000 
Dex Media East, LLC:       
   9.875%, 11/15/2009  11,500,000    12,204,375 
   12.125%, 11/15/2012 þ  7,000,000    7,857,500 
Houghton Mifflin Co., 8.25%, 02/01/2011  7,125,000    7,231,875 
Mediacom Communications Corp., 9.50%, 01/15/2013 þ  21,250,000    21,621,875 
Paxson Communications Corp., FRN, 11.76%, 01/15/2013 144A  9,000,000    9,157,500 
R.H. Donnelley Corp., 10.875%, 12/15/2012  12,000,000    13,245,000 
Sinclair Broadcast Group, Inc., 8.00%, 03/15/2012  12,500,000    12,687,500 
Sirius Satellite Radio, Inc., 9.625%, 08/01/2013 þ  11,200,000    10,528,000 
Visant Corp., 7.625%, 10/01/2012  7,465,000    7,269,044 
      152,240,156 
Multi-line Retail  1.6%       
Neiman Marcus Group, Inc.:       
   9.00%, 10/15/2015  7,000,000    7,411,250 
   10.375%, 10/15/2015 þ  7,000,000    7,463,750 
      14,875,000 

1

EVERGREEN INCOME ADVANTAGE FUND       
SCHEDULE OF INVESTMENTS  continued       
July 31, 2006  (unaudited)       
Principal
Amount		   Value
CORPORATE BONDS  continued       
CONSUMER DISCRETIONARY  continued       
Specialty Retail  5.4%       
American Achievement Corp., 8.25%, 04/01/2012  $ 6,155,000    $ 6,093,450 
Baker & Taylor, Inc., 11.50%, 07/01/2013 144A  8,000,000    8,040,000 
Central Garden & Pet Co., 9.125%, 02/01/2013  7,000,000    7,227,500 
Linens 'n Things, Inc., 11.13%, 01/15/2014 144A þ  4,250,000    3,963,125 
PETCO Animal Supplies, Inc., 10.75%, 11/01/2011  10,000,000    10,612,500 
United Auto Group, Inc., 9.625%, 03/15/2012  13,500,000    14,141,250 
      50,077,825 
Textiles, Apparel & Luxury Goods  5.0%       
Levi Strauss & Co.:       
   9.75%, 01/15/2015  14,025,000    14,445,750 
   12.25%, 12/15/2012  6,500,000    7,312,500 
Norcross Safety Products, LLC, Ser. B, 9.875%, 08/15/2011  2,750,000    2,873,750 
Oxford Industries, Inc., 8.875%, 06/01/2011  12,000,000    12,120,000 
Unifi, Inc., 11.50%, 05/15/2014 144A  6,000,000    5,835,000 
Warnaco Group, Inc., 8.875%, 06/15/2013  3,200,000    3,284,000 
      45,871,000 
CONSUMER STAPLES  5.1%       
Food & Staples Retailing  2.3%       
Ingles Markets, Inc., 8.875%, 12/01/2011 þ  7,000,000    7,350,000 
Rite Aid Corp., 12.50%, 09/15/2006  13,675,000    13,845,938 
      21,195,938 
Food Products  1.5%       
Del Monte Foods Co., 8.625%, 12/15/2012  13,220,000    13,781,850 
Personal Products  1.3%       
Playtex Products, Inc., 8.00%, 03/01/2011  12,100,000    12,599,125 
ENERGY  14.4%       
Energy Equipment & Services  4.4%       
Dresser-Rand Group, Inc.:       
   7.375%, 11/01/2014  5,616,000    5,391,360 
   10.125%, 04/15/2011  10,500,000    10,710,000 
GulfMark Offshore, Inc., 7.75%, 07/15/2014 þ  4,100,000    4,007,750 
Hanover Compressor Co., 8.75%, 09/01/2011  7,000,000    7,332,500 
Parker Drilling Co., 9.625%, 10/01/2013 þ  11,955,000    13,030,950 
      40,472,560 
Oil, Gas & Consumable Fuels  10.0%       
ANR Pipeline Co., 8.875%, 03/15/2010  2,735,000    2,903,892 
Chesapeake Energy Corp.:       
   7.50%, 09/15/2013  7,000,000    7,078,750 
   7.75%, 01/15/2015  7,750,000    7,846,875 
El Paso Corp., 7.875%, 06/15/2012 þ  7,000,000    7,192,500 
El Paso Production Holding Co., 7.75%, 06/01/2013  10,500,000    10,723,125 
Overseas Shipholding Group, Inc., 8.25%, 03/15/2013  12,050,000    12,532,000 
Plains Exploration & Production Co., 8.75%, 07/01/2012  12,999,000    13,665,199 
Premcor Refining Group, Inc., 9.50%, 02/01/2013  6,500,000    7,082,907 
Targa Resources, Inc., 8.50%, 11/01/2013 144A  7,250,000    7,141,250 
Williams Cos.:       
   7.50%, 01/15/2031  6,750,000    6,530,625 
   8.125%, 03/15/2012  9,750,000    10,261,875 
      92,958,998 

2

EVERGREEN INCOME ADVANTAGE FUND       
SCHEDULE OF INVESTMENTS  continued       
July 31, 2006  (unaudited)       
Principal
Amount		 Value
CORPORATE BONDS  continued       
FINANCIALS  9.4%       
Consumer Finance  5.7%       
CCH II Capital Corp., 10.25%, 09/15/2010  $ 14,250,000    $ 14,463,750 
Ford Motor Credit Corp., 9.75%, 09/15/2010 144A  15,000,000    14,858,565 
Northern Telecom Capital Corp., 7.875%, 06/15/2026  9,000,000    7,650,000 
Terra Capital, Inc., 11.50%, 06/01/2010  9,300,000    10,090,500 
Triad Financial Corp., Ser. B, 11.125%, 05/01/2013  6,500,000    6,240,000 
      53,302,815 
Insurance  1.0%       
Crum & Forster Holdings Corp., 10.375%, 06/15/2013 þ  8,750,000    8,968,750 
Real Estate Investment Trusts  2.7%       
Crescent Real Estate Equities Co., 9.25%, 04/15/2009  10,425,000    10,802,906 
Omega Healthcare Investors, Inc., 7.00%, 04/01/2014  1,400,000    1,354,500 
Saxon Capital, Inc., 12.00%, 05/01/2014 144A þ  5,000,000    5,100,000 
Thornburg Mortgage, Inc., 8.00%, 05/15/2013  7,825,000    7,668,500 
      24,925,906 
HEALTH CARE  7.1%       
Health Care Equipment & Supplies  1.6%       
Universal Hospital Services, Inc., 10.125%, 11/01/2011  14,715,000    15,303,600 
Health Care Providers & Services  5.5%       
Extendicare Health Services, Inc., 9.50%, 07/01/2010  13,000,000    13,633,750 
HCA, Inc., 8.75%, 09/01/2010  19,750,000    19,947,500 
IASIS Healthcare Corp., 8.75%, 06/15/2014  10,600,000    10,229,000 
Select Medical Corp., 7.625%, 02/01/2015  8,150,000    6,968,250 
      50,778,500 
INDUSTRIALS  6.0%       
Commercial Services & Supplies  1.9%       
Allied Waste North America, Inc., 9.25%, 09/01/2012  16,500,000    17,613,750 
Machinery  4.1%       
Case New Holland, Inc., 9.25%, 08/01/2011  23,250,000    24,615,937 
Commercial Vehicle Group, Inc., 8.00%, 07/01/2013  3,950,000    3,767,313 
RBS Global, Inc., 9.50%, 08/01/2014 144A  9,250,000    9,296,250 
      37,679,500 
INFORMATION TECHNOLOGY  5.5%       
Electronic Equipment & Instruments  1.0%       
Da-Lite Screen Co., Inc., 9.50%, 05/15/2011  8,850,000    9,358,875 
IT Services  2.8%       
SunGard Data Systems, Inc.:       
    9.125%, 08/15/2013  21,350,000    21,910,437 
    10.25%, 08/15/2015  4,150,000    4,227,813 
      26,138,250 
Software  1.7%       
UGS Corp., 10.00%, 06/01/2012  14,060,000    15,202,375 
MATERIALS  23.9%       
Chemicals  9.1%       
Equistar Chemicals, LP, 10.625%, 05/01/2011    14,000,000      15,120,000 
Ethyl Corp., 8.875%, 05/01/2010  12,000,000    12,315,000 
Huntsman Advanced Materials, LLC, 11.625%, 10/15/2010  7,000,000    7,743,750 

3

EVERGREEN INCOME ADVANTAGE FUND       
SCHEDULE OF INVESTMENTS  continued       
July 31, 2006  (unaudited)       
Principal
Amount		 Value
CORPORATE BONDS  continued       
MATERIALS  continued       
Chemicals  continued       
Huntsman International, LLC, 11.50%, 07/15/2012  $ 15,085,000    $ 16,895,200 
Lyondell Chemical Co.:       
   9.50%, 12/15/2008  1,178,000    1,216,285 
   10.50%, 06/01/2013  11,565,000    12,750,413 
   11.125%, 07/15/2012 þ  4,435,000    4,850,781 
Tronox Worldwide, LLC, 9.50%, 12/01/2012  12,750,000    13,228,125 
      84,119,554 
Containers & Packaging  5.5%       
Crown Americas, Inc., 7.75%, 11/15/2015 144A  5,000,000    4,956,250 
Graham Packaging Co., 9.875%, 10/15/2014 þ  7,250,000    7,086,875 
Graphic Packaging International, Inc.:       
   8.50%, 08/15/2011  5,000,000    5,050,000 
   9.50%, 08/15/2013 þ  10,000,000    10,050,000 
Owens-Brockway Glass Containers, Inc.:       
   8.25%, 05/15/2013  10,525,000    10,709,187 
   8.75%, 11/15/2012  12,150,000    12,879,000 
      50,731,312 
Metals & Mining  5.3%       
Freeport-McMoRan Copper & Gold, Inc.:       
   6.875%, 02/01/2014 þ  4,750,000    4,655,000 
   10.125%, 02/01/2010  9,680,000    10,357,600 
Indalex Holding Corp., 11.50%, 02/01/2014 144A  9,000,000    9,202,500 
United States Steel Corp., 10.75%, 08/01/2008  22,675,000    24,602,375 
      48,817,475 
Paper & Forest Products  4.0%       
Bowater, Inc., 9.375%, 12/15/2021 þ  7,000,000    6,720,000 
Buckeye Technologies, Inc., 8.50%, 10/01/2013  7,500,000    7,350,000 
Georgia Pacific Corp.:       
   8.00%, 01/15/2024 þ  4,170,000    3,971,925 
   8.125%, 05/15/2011  5,000,000    5,012,500 
Verso Paper Holdings, LLC:       
   9.125%, 08/01/2014 144A #  4,175,000    4,195,875 
   11.375%, 08/01/2016 144A #  10,000,000    10,000,000 
      37,250,300 
TELECOMMUNICATION SERVICES  13.6%       
Diversified Telecommunication Services  5.8%       
Citizens Communications Co., 9.25%, 05/15/2011  7,000,000    7,630,000 
Consolidated Communications, Inc. 9.75%, 04/01/2012  7,800,000    8,151,000 
Insight Midwest, LP:       
   9.75%, 10/01/2009  8,000,000    8,180,000 
   10.50%, 11/01/2010  8,000,000    8,360,000 
Qwest Communications International, Inc.:       
   7.875%, 09/01/2011  7,300,000    7,592,000 
   8.875%, 03/15/2012  13,000,000    14,072,500 
      53,985,500 
Wireless Telecommunication Services  7.8%       
Alamosa Holdings, Inc., 11.00%, 07/31/2010  3,400,000    3,731,500 
American Cellular Corp., 10.00%, 08/01/2011  5,500,000    5,788,750 
Centennial Communications Corp.:       
   10.00%, 01/01/2013  3,500,000    3,508,750 
   10.125%, 06/15/2013  10,000,000    10,600,000 
Dobson Communications Corp., 8.375%, 11/01/2011  3,500,000    3,640,000 

4

EVERGREEN INCOME ADVANTAGE FUND       
SCHEDULE OF INVESTMENTS  continued       
July 31, 2006  (unaudited)       
Principal
Amount		   Value
CORPORATE BONDS  continued       
TELECOMMUNICATION SERVICES  continued       
Wireless Telecommunication Services  continued       
Horizon PCS, Inc., 11.375%, 07/15/2012  $ 4,975,000    $ 5,609,312 
Rural Cellular Corp.:       
   8.25%, 03/15/2012  13,500,000    14,006,250 
   9.75%, 01/15/2010 þ  7,350,000    7,405,125 
Sprint Nextel Corp., Inc., Ser. D, 7.375%, 08/01/2015  10,000,000    10,255,280 
UbiquiTel, Inc., 9.875%, 03/01/2011  3,375,000    3,687,188 
US Unwired, Inc., Ser. B, 10.00%, 06/15/2012  3,325,000    3,674,125 
      71,906,280 
UTILITIES  8.2%       
Electric Utilities  2.2%       
Reliant Energy, Inc.:       
   9.25%, 07/15/2010  7,000,000    7,210,000 
   9.50%, 07/15/2013  13,000,000    13,390,000 
      20,600,000 
Independent Power Producers & Energy Traders  6.0%       
AES Corp., 9.00%, 05/15/2015 144A  16,250,000    17,550,000 
Dynegy, Inc., 8.375%, 05/01/2016 144A  21,250,000    20,984,375 
Mirant Americas Generation, LLC, 8.50%, 10/01/2021  7,000,000    6,545,000 
Mirant North America, LLC., 7.375%, 12/31/2013 144A  10,525,000    10,169,781 
      55,249,156 
                 Total Corporate Bonds   (cost $1,303,807,525)       1,281,086,130 
YANKEE OBLIGATIONS-CORPORATE  8.5%       
CONSUMER DISCRETIONARY  1.1%       
Media  1.1%       
IMAX Corp., 9.625%, 12/01/2010  9,950,000    10,447,500 
FINANCIALS  0.9%       
Diversified Financial Services  0.9%       
Ship Finance International, Ltd., 8.50%, 12/15/2013  8,640,000    8,164,800 
INFORMATION TECHNOLOGY  0.8%       
Electronic Equipment & Instruments  0.8%       
Celestica, Inc., 7.875%, 07/01/2011 þ  7,805,000    7,765,975 
MATERIALS  2.3%       
Chemicals  0.8%       
Ineos Group Holdings plc, 8.50%, 02/15/2016 144A þ  7,500,000    7,068,750 
Metals & Mining  1.5%       
Novelis, Inc., 8.00%, 02/15/2015 144A  14,750,000    14,344,375 
TELECOMMUNICATION SERVICES  3.4%       
Wireless Telecommunication Services  3.4%       
Intelsat, Ltd.:       
   9.25%, 06/15/2016 144A  13,900,000    14,282,250 
   11.25%, 06/15/2016 144A  4,800,000    4,872,000 
Rogers Wireless, Inc.:       
   7.50%, 03/15/2015 þ  4,350,000    4,480,500 
   9.625%, 05/01/2011  7,000,000    7,770,000 
      31,404,750 
                 Total Yankee Obligations-Corporate  (cost $79,778,187)      79,196,150 
DEBT OBLIGATIONS  1.4%       
Blue Grass Energy Corp. Loan, 10.40%, 12/30/2013 #  (cost $12,450,000)  12,450,000    12,543,126 

5

EVERGREEN INCOME ADVANTAGE FUND       
SCHEDULE OF INVESTMENTS  continued       
July 31, 2006  (unaudited)       
  Shares   Value
SHORT-TERM INVESTMENTS  21.7%       
MUTUAL FUND SHARES  21.7%       
Evergreen Institutional Money Market Fund ø ##  25,494,022    $ 25,494,022  
Navigator Prime Portfolio þþ  175,408,667    175,408,667  
                Total Short-Term Investments  (cost $200,902,689)      200,902,689  
Total Investments  (cost $1,596,938,401)  170.0%      1,573,728,095  
Other Assets and Liabilities and Preferred Shares  (70.0%)      (647,990,180 ) 
Net Assets Applicable to Common Shareholders  100.0%      $ 925,737,915  

þ All or a portion of this security is on loan. 
144A Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. This security has been determined to be 
liquid under guidelines established by the Board of Trustees, unless otherwise noted. 
## All or a portion of this security has been segregated for when-issued or delayed delivery securities. 
# When-issued or delayed delivery security 
ø Evergreen Investment Management Company, LLC is the investment advisor to both the Fund and the money market fund. 
þþ Represents investment of cash collateral received from securities on loan. 
 
Summary of Abbreviations 
FRN  Floating Rate Note 

At July 31, 2006, the Fund had the following open interest rate swap agreements:

Expiration Notional
Amount		 Counterparty Cash Flows Paid
by the Fund		 Cash Flows Received
by the Fund		 Unrealized
Gain
11/26/2006    $105,000,000    Merrill Lynch & Co., Inc.    Fixed – 2.79%    Floating-5.35%1    $   945,042 
7/02/2008      100,000,000    JPMorgan Chase & Co.    Fixed – 2.74%    Floating-5.35%1      5,051,638 
11/26/2008       65,000,000    Merrill Lynch & Co., Inc.    Fixed – 3.59%    Floating-5.39%2      2,440,067 

1 This rate represents the 1 month USD London InterBank Offered Rate (LIBOR) effective for the period of July 3, 2006 through August 2, 2006. 
2 This rate represents the 1 month USD London InterBank Offered Rate (LIBOR) effective for the period of July 26, 2006 through August 28, 2006. 

On July 31, 2006, the aggregate cost of securities for federal income tax purposes was $1,597,006,401. The gross unrealized appreciation and depreciation on securities based on tax cost was $12,762,650 and $36,040,956, respectively, with a net unrealized depreciation of $23,278,306.

6

Item 2 — Controls and Procedures

(a) The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-Q was recorded, processed, summarized, and reported timely.

(b) There has been no change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting.

Item 3 — Exhibits

File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.

(a) Separate certifications for the registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX-99.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Evergreen Income Advantage Fund

By: /s/ Dennis H. Ferro                            
  Dennis H. Ferro,
  Principal Executive Officer

Date:         September 27, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Dennis H. Ferro                            
  Dennis H. Ferro,
  Principal Executive Officer

Date:         September 27, 2006

By: /s/ Kasey Phillips                            
  Kasey Phillips
  Principal Financial Officer

Date:         September 27, 2006