EVERGREEN UTILITIES AND HIGH INCOME FUND OFFER TO PURCHASE FOR CASH 519,163 OF ITS ISSUED |
THE OFFER WILL EXPIRE AT5:00 P.M. EASTERN TIME ON | ||
To the Shareholders of Evergreen Utilities and High Income Fund: Evergreen Utilities and High Income Fund, a non-diversified, closed-end management investment company organized as a statutory trust under the laws of the State of Delaware (the “Fund”), is offering to purchase up to 5%, or 519,163 in the aggregate, of its issued and outstanding common shares, no par value (the “Shares”), to fulfill an undertaking made in connection with the initial public offering of the Shares. See Section 2. The offer is for cash at a price equal to the net asset value (“NAV”) per Share determined as of the close of the regular trading session of the New York Stock Exchange (the “NYSE”), on the day after the date the offer expires, and is upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal (together with any amendments or supplements thereto, the “Offer”). The Offer will expire at 5:00 p.m. Eastern Time on July 22, 2005, unless extended. The Shares are traded on the American Stock Exchange (the “AMEX”) under the symbol “ERH.” The NAV as of the close of the regular trading session of the NYSE on June 15, 2005 was $23.77 per Share. During the pendency of the Offer, current NAV quotations can be obtained from various public websites that report prices of mutual funds and stocks. The symbol for obtaining NAV quotations is “XERHX.” You may also call EquiServe Trust Company, N.A. (the “Depositary”) at 1-888-396-7866 between the hours of 9:00 a.m. and 5:00 p.m. Eastern Time, Monday through Friday (except holidays). THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 3. IMPORTANT INFORMATION Shareholders who desire to tender their Shares should either: (1) properly complete and sign the enclosed Letter of Transmittal, provide thereon the original of any required signature guarantee(s) and mail or deliver it together with the tendered Shares (in proper certificated or uncertificated form), and any other documents required by the Letter of Transmittal to the address set forth on the back of this Offer; or (2) request their broker, dealer, commercial bank, trust company or other nominee to effect the transaction on their behalf. Shareholders who desire to tender Shares registered in the name of such a firm must contact that firm to effect a tender on their behalf. Tendering Shareholders will not be obligated to pay brokerage commissions in connection with their tender of Shares, but they may be charged a fee by a firm for processing the tender(s). The Fund reserves the absolute right to reject tenders determined not to be in appropriate form. If you do not wish to tender your Shares, you need not take any action. NEITHER THE FUND NOR ITS BOARD OF TRUSTEES NOR EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC (THE “ADVISOR”) MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE FUND, ITS BOARD OF TRUSTEES OR THE ADVISOR AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER OR TO MAKE ANY REPRESENTATION OR TO GIVE ANY INFORMATION IN CONNECTION WITH THE OFFER OTHER THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, ANY SUCH RECOMMENDATION, REPRESENTATION OR INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, ITS BOARD OF TRUSTEES OR THE ADVISOR. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. |
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Evergreen Utilities and High Income Fund (the “Fund”) is offering to purchase 5%, or 519,163 in the aggregate, of its common shares for cash at a price per share equal to the per share net asset value as of the close of the regular trading session of the New York Stock Exchange (“NYSE”) on July 25, 2005 (or, if the Offer is extended, on the date after the date to which the Offer is extended) upon specified terms and subject to conditions as set forth in the tender offer documents. |
Why is the Fund making this tender offer? |
The Fund is making this tender offer pursuant to the Evergreen Enhanced Liquidity Plan, as described in the Fund’s Prospectus dated April 27, 2004 (the “Prospectus”). In the Prospectus, the Board of Trustees committed to make tender offers for the Fund’s common shares under certain circumstances and subject to certain conditions. Beginning six to eight months after the Fund’s commencement of operations (for a total of eight consecutive calendar quarters), in the event that the Fund’s common shares trade at a discount to net asset value of greater than 5% for fifteen of twenty days during a predetermined measurement period, the Fund, under normal circumstances, will make offers to purchase up to 5% of its outstanding common shares at their net asset value from all beneficial shareholders. The predetermined measurement period commenced on April 29, 2005 and ended on May 26, 2005. As of the close of business on May 19, 2005, the Fund had traded at a discount of greater than 5 percent for at least 15 days during the measurement period. |
When will the tender offer expire, and may the offer be extended? |
The tender offer will expire at 5:00 p.m. Eastern Time on July 22, 2005, unless extended. The Fund may extend the period of time the offer will be open by issuing a press release or making some other public announcement by no later than the next business day after the Offer otherwise would have expired. See Section 15 for more information. |
What is the net asset value per Fund share and the closing sale price on the American Stock Exchange per Fund share as of a recent date? |
As of June 15, 2005, the net asset value per share was $23.77 and the closing sale price per share was $20.71. See Section 8 for details. During the pendency of the Offer, current net asset value quotations can be obtained from either: (1) various public websites that report prices of mutual funds and stocks, under the symbol “XERHX” or (2) EquiServe Trust Company, N.A. by calling (888) 396-7866 between 9:00 a.m. and 5:00 p.m. Eastern Time, Monday through Friday (except holidays). You can find the current market price per share, as quoted on the AMEX, under the symbol “ERH”. |
Will the net asset value be higher or lower on the date that the price to be paid for tendered shares is to be determined? |
No one can accurately predict the net asset value at a future date. |
What happens if I tender my shares and the net asset value on the date of determination of the tender price is lower than the then current market price per share on the AMEX? |
You would receive less money for your shares than if you had sold them on the AMEX. |
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How do I tender my shares? |
If your shares are registered in your name, you should obtain the tender offer materials, including the Offer to Purchase and the related Letter of Transmittal, read them, and if you decide to tender, complete a Letter of Transmittal and submit any other documents required by the Letter of Transmittal to the address set forth on the Letter of Transmittal. These materials must be received by EquiServe Trust Company, N.A., the Depositary, in proper form before 5:00 p.m. Eastern Time on July 22, 2005 (unless the tender offer is extended by the Fund, in which case the new deadline will be as stated in the public announcement of the extension). | |
If your shares are held by a broker, dealer, commercial bank, trust company or other nominee (e.g., in “street name”), you should contact that firm to obtain the package of information necessary to make your decision, and you can only tender your shares by directing that firm to complete, compile and deliver the necessary documents for submission to the Depositary by July 22, 2005 (or if the offer is extended, the expiration date as extended). See Section 4 for more information. |
Is there any cost to me to tender? |
The Fund will not charge a fee to process a tender. However, your broker, dealer, commercial bank, trust company or other nominee may charge you fees according to its individual policies. See the Letter of Transmittal for details. |
May I withdraw my shares after I have tendered them and, if so, by when? |
Yes, you may withdraw your shares at any time prior to 5:00 p.m. Eastern Time on July 22, 2005 (or if the Offer is extended, at any time prior to 5:00 p.m. Eastern Time on the new expiration date). Withdrawn shares may be re-tendered by following the tender procedures before the Offer expires (including any extension period). In addition, if shares tendered have not by then been accepted for payment, you may withdraw your tendered shares at any time after August 16, 2005. See Section 5 for more information. |
How do I withdraw tendered shares? |
A notice of withdrawal of tendered shares must be timely received by EquiServe Trust Company, N.A., specifying the name of the shareholder who tendered the shares, the number of shares being withdrawn (which must be all of the shares tendered), and with respect to share certificates which represent tendered shares that have been delivered or otherwise identified to EquiServe Trust Company, N.A., the name of the registered owner of such shares, if different than the person who tendered the shares. See Section 5 for more information. |
May I place any conditions on my tender of shares? |
No. |
Is there a limit on the number of shares I may tender? |
There is no limit on the number of shares that you may tender. However your tender will be proper only if you tender at least 20% of the Fund shares you own or which you are considered to own under specified federal tax rules. See Sections 1 and 14. |
What if more than 519,163 shares are tendered (and not timely withdrawn)? |
The Fund will purchase duly tendered shares from tendering shareholders pursuant to the terms and conditions of the tender offer on a pro rata basis in accordance with the number of shares tendered by each shareholder (and not timely withdrawn), unless the Fund determines not to purchase any shares. The Fund’s present intention, if the tender offer is oversubscribed, is not to purchase more than 519,163 shares. See Section 1 for more details. |
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In the two previous tender offers by the Fund, the Fund agreed to purchase all shares tendered by shareholders who owned fewer than 100 shares and tendered all of their shares. Why is this “odd lot” provision not included in this tender offer? |
Based on the experience of the first two tender offers, the Advisor determined that the odd lot provision did not appear to be serving its primary purpose, which was to give long-term shareholders in the Fund who own a small number of shares an opportunity to close out their investment at net asset value. As a result, in the Offer, if more than 519,163 shares are tendered (and not timely withdrawn), the Fund will purchase a pro rata portion of the shares tendered by each shareholder, including shareholders who own and tender fewer than 100 shares. |
If I decide not to tender, how will the tender offer affect the Fund shares I hold? |
Your percentage ownership interest in the Fund will increase after completion of the tender offer. See Section 11. |
Does the Fund have the financial resources to make payment? |
Yes. Although permitted to do so, the Fund does not expect to borrow money to finance the purchase of any tendered shares. |
If shares I tender are accepted by the Fund, when will payment be made? |
It is contemplated, subject to change, that payment for tendered shares, if accepted, will be made on or about July 27, 2005. See Section 6. |
Is my sale of shares in the tender offer a taxable transaction? |
It is anticipated that U.S. shareholders (other than those who are tax-exempt) who sell shares in the tender offer will generally recognize gain or loss for U.S. federal income tax purposes equal to the difference between the cash they receive for the shares sold and their adjusted basis in the shares. The sale date for tax purposes will be the date the Fund accepts shares for purchase. See Section 14 for details, including the nature of the income or loss and the differing rules for U.S. and non-U.S. shareholders. Please consult your tax advisor for a more complete discussion of your potential tax consequences. |
Is the Fund required to complete the tender offer and purchase all shares tendered up to the number of shares tendered for? |
Under most circumstances, yes. There are certain circumstances, however, in which the Fund will not be required to purchase any shares tendered as described in Section 3. |
Is there any reason shares tendered would not be accepted? |
In addition to those circumstances described in Section 3 under which the Fund is not required to accept tendered shares, the Fund has reserved the right to reject any and all tenders determined by it not to be in appropriate form.The Fund will reject tenders from any shareholder if less than 20% of the shares actually and constructively (as determined under the Internal Revenue Code) owned by the tendering shareholder are tendered or if the tender does not include original signature(s) or the original of any required signature guarantee(s). |
How will tendered shares be accepted for payment? |
For purposes of the Offer, the Fund will be deemed to have accepted for payment Shares that are tendered and not withdrawn when it gives oral or written notice to the EquiServe Trust Company, N.A. of its acceptance of such Shares for payment pursuant to the Offer. EquiServe Trust Company is thereafter to make such payment as directed by the Fund with funds to be deposited with it by the Fund. See Section 6. |
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What action need I take if I decide not to tender my shares? |
None. |
Does management encourage shareholders to participate in the tender offer, and will they participate in the tender offer? |
No. Neither the Fund, its Board of Trustees nor the Fund’s investment adviser is making any recommendation to tender or not to tender shares in the tender offer. No trustee or officer of the Fund intends to tender shares. See Section 10. |
Will there be additional opportunities to tender shares to the Fund? |
The Board of Trustees of the Fund (the “Board”) has committed to potentially making a tender offer in each of the Fund’s next five quarters (for a total of eight consecutive quarters) under certain circumstances and subject to certain conditions. In the event that the common shares of the Fund trade at a discount to net asset value of greater than 5% for fifteen of twenty days during a predetermined measurement period in any such quarter, the Fund, under normal circumstances, will make offers to purchase up to 5% of its outstanding common shares at their net asset value from all beneficial shareholders. The Fund will not undertake a tender offer if the Fund’s common shares are not trading at a discount to net asset value of greater than 5% for the requisite number of days. Under certain circumstances, the Board may, however, decide that the Fund should not make a tender offer even if such shares are trading at such discount for the required number of days. See Section 2. |
How do I obtain information? |
Questions and requests for assistance should be directed to EquiServe Trust Company, N.A., the Depositary for the tender offer, toll free at (888) 396-7866. Requests for additional copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer documents should be directed to EquiServe Trust Company, N.A., the Distribution Agent for the tender offer, at (732) 417-2653. If you do not own shares directly, you should obtain this information and the documents from your broker, dealer, commercial bank, trust company or other nominee, as applicable. |
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states that (1) DTC has received an express acknowledgment from the DTC participant tendering the Shares that are the subject of the Book-Entry Confirmation, (2) the DTC participant has received and agrees to be bound by the terms of the Letter of Transmittal, and (3) the Fund may enforce such agreement against the DTC participant. Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the Depositary. Notwithstanding the foregoing, if a Shareholder desires to tender Shares pursuant to the Offer and the certificates for the Shares to be tendered are not immediately available, or time will not permit the Letter of Transmittal and all documents required by the Letter of Transmittal to reach the Depositary prior to 5:00 p.m. Eastern Time on the Expiration Date, or a Shareholder cannot complete the procedures for delivery by book-entry transfer on a timely basis, then such Shareholder’s Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: |
(1) | the tender is made by or through an Eligible Institution; and | |
(2) | a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by the Fund is received by the Depositary prior to 5:00 pm Eastern Time on the Expiration Date; and | |
(3) | the certificates for all such tendered Shares, in proper form for transfer, or a Book-Entry Confirmation with respect to such Shares, as the case may be, together with a Letter of Transmittal properly completed and bearing original signature(s) and the original of any required signature guarantee(s) (or, in the case of a book-entry transfer, an Agent’s Message), and any documents required by the Letter of Transmittal, are received by the Depositary prior to 5:00 P.M. Eastern Time on the second AMEX trading day after the date of execution of the Notice of Guaranteed Delivery. |
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Net Asset Value | Market Price | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dividends/ Distributions | |||||||||||||||
High | Low | High | Low | ||||||||||||
Fiscal Year (ending August 31, 2004) | |||||||||||||||
1st Quarter | N/A* | N/A* | N/A* | N/A* | N/A* | ||||||||||
2nd Quarter | N/A* | N/A* | N/A* | N/A* | N/A* | ||||||||||
3rd Quarter | $ | 18.95 | $ | 18.25 | $ | 20.01 | $ | 20.01 | $ | — | |||||
4th Quarter | $ | 19.76 | $ | 18.76 | $ | 19.76 | $ | 17.00 | $ | 0.3000 | |||||
Fiscal Year (ending August 31, 2005) | |||||||||||||||
1st Quarter | $ | 22.31 | $ | 19.81 | $ | 19.81 | $ | 18.01 | $ | 0.3000 | |||||
2nd Quarter | $ | 23.54 | $ | 22.02 | $ | 20.89 | $ | 19.78 | $ | 0.6600 | |||||
3rd Quarter | $ | 23.34 | $ | 22.19 | $ | 20.95 | $ | 19.32 | $ | 0.3000 |
*The Fund commenced operations on April 30, 2004. As of the close of business on June 15, 2005, the Fund’s NAV was $23.77 per Share, and the high, low and closing prices per Share on the AMEX on that date were $20.89, $20.65 and $20.71, respectively. During the time the Offer is pending, current NAV quotations can be obtained by contacting the Depositary in the manner indicated in Section 1. The tendering of Shares, unless and until Shares tendered are accepted for payment and purchase, will not affect the record ownership of any such tendered Shares for purposes of entitlement to any dividends payable by the Fund. |
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Six Months Ended February 28, 2005 (Unaudited) | Year Ended August 31, 2004 (Audited) (a) | |||||
---|---|---|---|---|---|---|
STATEMENT OF ASSETS AND LIABILITIES | ||||||
(AT END OF PERIOD) | ||||||
Total assets | $ | 358,823,785 | $ | 348,443,690 | ||
Total liabilities | $ | 26,694,178 | $ | 41,060,232 | ||
Preferred shares at redemption value | $ | 80,159,904 | $ | 80,055,663 | ||
Net assets | $ | 251,969,703 | $ | 227,327,795 | ||
Net asset value per Share | $ | 23.05 | $ | 19.76 | ||
Shares outstanding | 10,929,750 | 11,505,000 | ||||
STATEMENT OF OPERATIONS | ||||||
Investment income | $ | 9,669,802 | $ | 9,907,003 | ||
Net expenses | $ | 1,908,983 | $ | (968,720 | ) | |
Net investment income | $ | 7,760,819 | $ | 8,938,283 | ||
Net gain (loss) on investment transactions | $ | 9,911,722 | $ | 3,776,166 | ||
Dividends to preferred shareholders | $ | (861,394 | ) | $ | 237,018 | |
Net increase (decrease) in net assets from operations | $ | 48,330,703 | $ | 12,477,431 | ||
(a) For the period from April 30, 2004 (commencement of operations), to August 31, 2004. |
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SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD |
Six Months Ended February 28, 2005 (Unaudited) | Year Ended August 31, 2004 (Audited) (a) | |||||
---|---|---|---|---|---|---|
Income From Investment Operations | ||||||
Net investment income | 0.57 | 0.77 | ||||
Net realized and unrealized gain (loss) on investment transactions | 3.68 | 0.32 | ||||
Net increase (decrease) in net asset value from operations | 4.25 | 1.09 | ||||
Dividends and Distributions | ||||||
Dividends from net investment income | (0.96 | ) | (0.30 | ) | ||
Total dividends and distributions | (0.96 | ) | (0.30 | ) | ||
Offering costs charged to capital | 0 | (0.13 | ) | |||
Net asset value, end of period | $ | 23.05 | $ | 19.76 | ||
Market value, end of period | $ | 20.70 | $ | 18.29 | ||
TOTAL INVESTMENT RETURN | ||||||
Total investment return based on: | ||||||
Market value (b) | 18.62% | (7.05% | ) | |||
RATIOS | ||||||
Expenses to average net assets (c) | 1.56%(e | ) | 1.31%(e | ) | ||
Expenses to average net assets excluding interest expense (d) | 1.22%(e | ) | 1.02%(e | ) | ||
Net investment income to average net assets | 6.36%(e | ) | 12.05%(e | ) |
(a) | For the period from April 30, 2004 (commencement of operations), to August 31, 2004. |
(b) | Total return is calculated assuming a purchase of common stock on the first day and a sale of common stock on the last day of the period reported. Dividends and distributions are assumed for the purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan. Total return does not reflect brokerage commissions or sales charges. |
(c) | The ratio of expenses to average net assets excludes expense reductions. |
(d) | The ratio of expenses to average net assets excludes interest expense and expense reductions. |
(e) | Annualized. |
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Name and Position | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||
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Gerald M. McDonnell, Trustee | 100 | 0.001 | % | |||||
Richard J. Shima, Trustee | 800 | 0.008 | % | |||||
David M. Richardson, Trustee | 2,040 | 0.020 | % | |||||
Richard K. Wagoner, Trustee | 100 | 0.001 | % |
Pursuant to an Investment Advisory and Management Agreement dated as of March 18, 2004 with the Advisor (the “Advisory Agreement”), the Fund employs the Advisor to manage the investment of the assets of the Fund. The Advisor, whose business address and telephone numbers are 200 Berkeley Street, Boston, Massachusetts 02116-5034 and 800-225-1587, has been the Fund’s investment adviser since the Fund’s commencement of operations. The Advisor is a wholly owned subsidiary of Wachovia Bank, N.A. Wachovia Bank, N.A., located at 201 South College Street, Charlotte, North Carolina 28288-0630, is a subsidiary of Wachovia Corporation, formerly First Union Corporation. For services provided by the Advisor under the Advisory Agreement, the Fund pays the Advisor monthly, as compensation for the services rendered and expenses paid by it, an annual fee equal to 0.60% of the Fund’s average daily Total Assets. “Total Assets” means the net assets of the Fund (plus borrowings or other leverage for investment purposes to the extent excluded in calculating net assets). Because the fee paid to the Advisor is determined on the basis of the Fund’s Total Assets, the Advisor’s interest in determining whether to leverage the Fund may differ from the interests of the Fund. The Fund’s average daily Total Assets are determined for the purpose of calculating the management fee by taking the average of all the daily determinations of Total Assets during a given calendar month. The fees are payable for each calendar month as soon as practicable after the end of that month. During the fiscal year ended August 31, 2004, the Fund paid to the Advisor fees totaling $534,261 pursuant to the Advisory Agreement. The Fund effected an initial tender offer that expired on January 24, 2005 pursuant to which 575,250 Shares were accepted on January 27, 2005 for purchase at a price of $22.08 per share, which was the NAV of such shares as of January 25, 2005. The Fund effected a second tender offer that expired on April 20, 2005 pursuant to which 546,487 Shares were accepted on April 22, 2005 for purchase at the price of $22.62 per share, which was the NAV of such shares as of April 21, 2005. Based upon the Fund’s records and upon information provided to the Fund, except as described in this Section 10, there have not been any other transactions in Shares that were effected during the past sixty days by any Trustee or executive officer of the Fund, any person controlling the Fund, any director or executive officer of any corporation or other person ultimately in control of the Fund, any associate or minority-owned subsidiary of the Fund or any executive officer or director of any subsidiary of the Fund. Based upon information provided or available to the Fund, no Trustee, officer or affiliate of the Fund intends to tender Shares pursuant to the Offer. The Offer does not, however, restrict the purchase of Shares pursuant to the Offer from any such person. Except as set forth in this Offer, neither the Fund, nor, to the best of the Fund’s knowledge, any of the Fund’s officers or Trustees, nor any of the officers or directors of any of its subsidiaries, is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly to the Offer with respect to any securities of the Fund, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations. |
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For purposes of this discussion, the term “U.S. Shareholder” refers to a Shareholder who is a citizen and/or resident of the U.S., or a corporation, partnership or other entity created or organized in or under the laws of the U.S. or any political subdivision thereof, or estate the income of which is subject to U.S. federal income taxation regardless of the source of such income, or trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and (B) one or more United States persons have the authority to control all substantial decisions of the trust. The term “Non-U.S. Shareholder” refers to a Shareholder who is not a U.S. Shareholder. Based on the foregoing and subject to the limitations stated, it is the opinion of Ropes & Gray LLP that the following discussion of federal income tax consequences of selling Shares to the Fund pursuant to the Offer is materially accurate. U.S. Shareholders. Although not free from doubt, a U.S. Shareholder who tenders at least 20% of the Shares owned by such Shareholder (or attributed to the Shareholder under Section 318 of the Code) should realize capital gain or loss on sale of the Shares tendered so long as (A) the Shareholder holds such Shares as capital assets and (B) the Shareholder’s percentage ownership of the Fund (determined after applying the ownership attribution rules under Section 318 of the Code) is less than 5% after the tender and is reduced as a result of the tender. Such gain or loss will equal the difference between the price paid by the Fund for the Shares sold by the Shareholder pursuant to the Offer and the Shareholder’s adjusted tax basis in such Shares. The sale date of such Shares for tax purposes should be the date the Fund accepts Shares for purchase. The gain or loss will be treated as either long-term or short-term if the Shares have been held at that time for more than one year or for one year or less. Any such long-term capital gain realized by a non-corporate U.S. Shareholder will be taxed at a maximum federal income tax rate of 15%. This discussion does not address the tax treatment of a tendering Shareholder whose percentage ownership of the Fund (determined after applying the ownership attribution rules under Section 318 of the Code) immediately after the tender is 5% or more. Those Shareholders should consult their own tax advisors on the specific tax consequences to them of participating or not participating in the Offer. In the unlikely event that a tendering Shareholder’s proportionate ownership of the Fund (determined after applying the ownership attribution rules under Section 318 of the Code) were not reduced as a result of the tender, or if for any other reason redemption of shares by a shareholder were not treated as a sale or exchange of the shares for federal income tax purposes, such Shareholder would be deemed to receive a distribution from the Fund with respect to the Shares held (or deemed held under Section 318 of the Code) by the Shareholder after the tender. The amount of this distribution would equal the price paid by the Fund to such Shareholder for the Shares sold. The distribution would be taxable as a dividend, i.e., as ordinary income, to the extent of the Fund’s current or accumulated earnings and profits allocable to such distribution. The adjusted basis of the Shares held (or deemed held under Section 318 of the Code) by the Shareholder after the tender would be increased by the Shareholder’s adjusted tax basis in the Shares sold in the tender and decreased by the portion of such distribution not treated as a dividend. If the portion of the distribution not treated as a dividend exceeded the adjusted tax basis of the Shares held (or deemed held under Section 318 of the Code) by the Shareholder after the tender (determined after increasing such basis by the adjusted tax basis of the Shares sold in the tender), such excess portion of the distribution would be a capital gain in the hands of the Shareholder. In the case of a tendering U.S. Shareholder that is a corporation treated as receiving a distribution from the Fund pursuant to the Offer, special basis adjustments may also apply with respect to any Shares of such U.S. Shareholder not repurchased pursuant to the Offer. Provided that no tendering Shareholder is treated as receiving a dividend as a result of selling Shares pursuant to the Offer, Shareholders who do not sell Shares pursuant to the Offer will not realize constructive distributions on their Shares as a result of other Shareholders selling Shares in the Offer. In the event that any tendering Shareholder were deemed to receive a dividend, Shareholders whose proportionate ownership of the Fund increased as a result of the tender might be deemed to receive a constructive distribution in an amount equal to the increase in their proportionate ownership of the Fund as a result of the tender. Such constructive distribution would be treated as a dividend to the extent of current accumulated earnings and profits allocable to it. Under the “wash sale” rules under the Code, a loss recognized on Shares sold pursuant to the Offer will ordinarily be disallowed to the extent a U.S. Shareholder acquires Shares within 30 days before or after the date the Shares are sold pursuant to the Offer and, in that event, the basis and holding period of the Shares acquired will be adjusted to reflect the disallowed loss. |
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The Offer is not being made to, nor will the Fund accept tenders from, or on behalf of, owners of Shares in any jurisdiction in which the making of the Offer or its acceptance would not comply with the securities or “blue sky” laws of that jurisdiction. The Fund is not aware of any jurisdiction in which the making of the Offer or the acceptance of tenders of, purchase of, or payment for, Shares in accordance with the Offer would not be in compliance with the laws of such jurisdiction. The Fund, however, reserves the right to exclude Shareholders in any jurisdiction in which it is asserted that the Offer cannot lawfully be made or tendered Shares cannot lawfully be accepted, purchased or paid for. So long as the Fund makes a good faith effort to comply with any state law deemed applicable to the Offer, the Fund believes that the exclusion of holders residing in any such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on the Fund’s behalf by one or more brokers or dealers licensed under the laws of such jurisdiction. EVERGREEN UTILITIES AND HIGH INCOME FUND June 20, 2005 |
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EQUISERVE TRUST COMPANY, N.A., DEPOSITARY | ||||||
Telephone Number: (888) 396-7866 (For questions about the offer) | ||||||
By First Class Mail: | By Registered, Certified Or Express Mail or Overnight Courier: | By Hand: | ||||
EquiServe Trust Company, N.A. Attn: Corporate Actions P.O. Box 859208 Braintree, MA 02185-9208 | EquiServe Trust Company, N.A. Attn: Corporate Actions 161 Bay State Drive Braintree, MA 02184 | EquiServe Trust Company, N.A 17 Battery Park Place. 11th Floor New York, NY 10004 | ||||
EQUISERVE TRUST COMPANY, N.A., DISTRIBUTION AGENT EquiServe Trust Company, N.A. | ||||||
EVERGREEN UTILITIES AND HIGH INCOME FUND June 20, 2005 |