UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4915
DNP
Select Income Fund Inc.
(Exact name of registrant as specified
in charter)
200
S. Wacker Drive, Suite 500, Chicago, Illinois 60606
(Address of principal executive offices)
(Zip code)
| Alan M. Meder |
Lawrence R. Hamilton, Esq. |
| DNP Select Income Fund Inc. |
Mayer Brown LLP |
| 200 S. Wacker Drive, Suite 500 |
71 S. Wacker Drive |
| Chicago, Illinois 60606 |
Chicago, Illinois 60606 |
(Name and address of agents for service)
Registrant’s telephone number, including area code:
(312) 368-5510
Date of fiscal year end: October 31
Date of reporting period: October 31, 2017
| ITEM 1. | REPORTS TO STOCKHOLDERS |
The Annual Report to Stockholders follows.
DNP Select
Income Fund Inc.
Annual Report
October 31, 2017
Fund Distributions and
Managed Distribution Plan: DNP Select Income Fund Inc. (the “Fund”) has been paying a regular 6.5 cent per share monthly distribution on
its common stock since July 1997. In February 2007, the Board of Directors adopted a Managed Distribution Plan, which provides for the Fund to continue
to make a monthly distribution on its common stock of 6.5 cents per share. Under the Managed Distribution Plan, the Fund will distribute all available
investment income to shareholders, consistent with the Fund’s primary investment objective. If and when sufficient investment income is not
available on a monthly basis, the Fund will distribute long-term capital gains and/or return capital to its shareholders in order to maintain the
steady distribution level that has been approved by the Board. If the Fund estimates that it has distributed more than its income and capital gains in
a particular period, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the
money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment
performance and should not be confused with “yield” or “income.”
To the extent that the Fund
uses capital gains and/or return of capital to supplement its investment income, you should not draw any conclusions about the Fund’s investment
performance from the amount of the Fund’s distributions or from the terms of the Fund’s Managed Distribution Plan.
Whenever a monthly distribution
includes a capital gain or return of capital component, the Fund provides you with a written statement indicating the sources of the distribution and
the amount derived from each source. As the most recent monthly statement from the Fund indicated, the cumulative distributions paid this fiscal year
to date through November 10 were estimated to be composed of net investment income, capital gains and return of
capital.
The amounts and sources of
distributions reported monthly in statements from the Fund are only estimates and are not provided for tax reporting purposes. The actual amounts and
sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of its fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these
distributions for federal income tax purposes.
The Board reviews the operation
of the Managed Distribution Plan on a quarterly basis, with the most recent review having been conducted in December 2017, and the Adviser uses data
provided by an independent consultant to review for the Board the Managed Distribution Plan annually. The Board may amend, suspend or terminate the
Managed Distribution Plan without prior notice to shareholders if it deems such action to be in the best interests of the Fund and its shareholders.
For example, the Board might take such action if the Managed Distribution Plan had the effect of shrinking the Fund’s assets to a level that was
determined to be detrimental to Fund shareholders. The suspension or termination of the Managed Distribution Plan could have the effect of creating a
trading discount (if the Fund’s stock is trading at or above net asset value), widening an existing trading discount, or decreasing an existing
premium.
The Managed Distribution Plan
is described in a Question and Answer format on your Fund’s website, www.dnpselectincome.com, and discussed in the section of management’s
letter captioned “About Your Fund.” The tax characterization of the Fund’s distributions for the last 5 years can also be found on the
website under the “Tax Information” tab.
December 14,
2017
Dear Fellow Shareholders:
Performance Review:
Consistent with its primary objective of current income and long-term growth of income, and its Managed Distribution Plan, the Fund declared twelve
monthly distributions of 6.5 cents per share of common stock during the 2017 fiscal year. The 6.5 cent per share monthly rate, without compounding,
would be 78 cents annualized, which is equal to 6.93% of the October 31, 2017, closing price of $11.25 per share. Please refer to the inside front
cover of this report and the portion of this letter captioned “About Your Fund” for important information about the Fund and its Managed
Distribution Plan.
Your Fund had a total
return (income plus change in market price) of 20.2% for the year ended October 31, 2017, which is higher than the 13.9% total return of the composite
of the S&P 500® Utilities Index and the Bloomberg Barclays U.S. Utility Bond Index, weighted to reflect the stock and bond ratio of
the Fund. In comparison, the S&P 500® Utilities Index — a stock-only index — had a total return of 15.4% over that same
period.
On a longer-term basis, as of
October 31, 2017, your Fund had a five-year annualized total return of 10.9% on a market value basis, which is closely in line with the 11.1% return of
the composite of the S&P 500® Utilities Index and the Bloomberg Barclays U.S. Utility Bond Index, weighted to reflect the stock and
bond ratio of the Fund. In comparison, the S&P 500® Utilities Index had an annualized total return during that period of
12.5%.
The table below compares the
performance of your Fund to various market benchmarks. It is important to note that the composite and index returns referred to in this letter include
no fees or expenses, whereas the Fund’s returns are net of expenses.
Total
Return1
For the period indicated through October 31, 2017 |
| |
One Year |
Three Years
(annualized) |
Five
Years
(annualized) |
DNP Select Income Fund Inc. |
|
|
|
Market Value2 |
20.2% |
10.8% |
10.9% |
Net Asset Value3 |
15.0% |
7.8% |
12.1% |
Composite Index4 |
13.9% |
9.7% |
11.1% |
S&P 500® Utilities Index4 |
15.4% |
10.5% |
12.5% |
Bloomberg Barclays U.S. Utility Bond Index4 |
3.1% |
4.2% |
3.5% |
| 1 |
|
Past performance is not indicative of future results. Current
performance may be lower or higher than performance in historical periods. |
| 2 |
|
Total return on market value assumes a purchase of common stock
at the opening market price on the first business day and a sale at the closing market price on the last business day of the period shown in the table
and assumes reinvestment of dividends at the actual reinvestment prices obtained under the terms of the Fund’s dividend reinvestment plan. In
addition, when buying or selling stock, you would ordinarily pay brokerage expenses. Because brokerage expenses are not reflected in the above
calculations, your total return net of brokerage expenses would be lower than the total return on market value shown in the table. Source:
Administrator of the Fund. |
| 3 |
|
Total return on NAV uses the same methodology as is described
in note 2, but with use of NAV for beginning, ending and reinvestment values. Because the Fund’s expenses (ratios detailed on page
14 of this report) reduce the Fund’s NAV, they are already reflected in the Fund’s total return on NAV shown in the table. NAV
represents the underlying value of the Fund’s net assets, but the market price per share may be higher or lower than NAV. Source: Administrator of
the Fund. |
| 4 |
|
The Composite Index is a composite of the returns of the
S&P 500® Utilities Index and the Bloomberg Barclays U.S. Utility Bond Index (formerly known as the Barclays U.S. Utility Bond
Index), weighted to reflect the stock and bond ratio of the Fund. The indices are calculated on a total return basis with dividends reinvested.
Indices are unmanaged; their returns do not reflect any fees, expenses or sales charges; and they are not available for direct investment.
Performance returns for the S&P 500® Utilities Index and Bloomberg Barclays U.S. Utility Bond Index were obtained from Bloomberg
LP. |
1
Natural Disasters and the
Impact on Your Fund’s Holdings: Autumn in the U.S. was marred by natural disasters, from hurricanes in the South to wildfires in northern
California. The aftermath of these disasters has been deeply felt at the economic and, more importantly, humanitarian levels. Despite extensive damage
in those areas, Hurricane Harvey in Texas and Hurricane Irma in Florida had limited impact on the electric utility companies in the Fund’s
portfolio, CenterPoint Energy (Houston) and NextEra Energy (Florida Power & Light). That is due to the companies’ excellent preparation ahead
of the storms, years of investment in the utility network and the favorable regulatory environments permitting recovery of storm-related
costs.
With respect to the Fund’s
midstream energy holdings, it is interesting to note that oil and energy stock prices actually rallied as the hurricanes moved through Texas and
Florida. Hurricane Harvey had a major impact on both refining and chemical capacity in the Gulf Coast, knocking roughly 50% of Gulf Coast capacity
temporarily off-line. However, there was surprisingly little damage in the midstream energy space, and investors were quick to look through any
short-term negative impacts. Hurricane Irma mostly bypassed the energy infrastructure in the Gulf Coast, so there was no lasting
effect.
The northern California
wildfires were a different story, with the stock price of the Fund’s investment in PG&E Corp. (San Francisco) falling significantly over the
course of three days. While the extent of the damage caused by the wildfires was enormous, similar to the damage caused by the hurricanes, the
difference in the market’s reaction was due to California’s legal doctrine of “inverse condemnation.” That doctrine allows owners
of private property who have suffered losses attributable to public utilities to bring damage claims against the utilities, regardless of whether the
utility was negligent or at fault. Claimants simply need to prove mere causation — that the damage was caused by the utility. (A possible example
could be if high winds knock over a power line, causing a fire.) Under inverse condemnation, the state effectively uses the utility as a means to
spread the cost of wildfires across the customer base, assuming that the California Public Utilities Commission (CPUC) grants the utility rate
increases to recover the amounts it has paid to satisfy its inverse condemnation liability.
It will take months to
investigate the fires and establish the precise causes. Determination of PG&E’s liability and potential rate increases to enable PG&E to
recover any damages it is required to pay will take much longer, likely years. Critics of the utilities have already proposed legislation
that would, in effect, prevent any utility from recovering costs incurred as a result of inverse condemnation by taking away the CPUC’s discretion
to allow such cost recovery.
We believe the CPUC is aware
that financially weakening the utilities would impede their ability to modernize the electric grid and meet carbon reduction targets and
would set a troubling precedent for future investment in the state. We are concerned, however, that there will be substantial political pressures on
the CPUC to prevent utilities from passing on the costs of inverse condemnation to their customers. The effect would be to
shift the entire burden of these disaster-related costs onto investors in utility companies, which we believe would be unfair. Rather, we would urge
both politicians and regulators to allow fair recovery of these costs, so that utilities will be equipped to continue investing in their state. At this
point, PG&E’s stock price is reflecting the market’s expectation that PG&E will bear the brunt of significant liabilities. We are
hopeful that the ultimate outcome will be less onerous, but clarity and recovery will take time.
U.S. Monetary Policy: In
December of 2015, the Federal Open Market Committee (FOMC), the committee within the Federal Reserve that sets domestic monetary policy, began to
slowly reverse the highly accommodative policy of the previous seven years, when it raised the target range for the federal funds rate for the first
time in almost a decade. Since that time, the target range for the federal funds rate has been raised five times, with the most recent
change coming on December 13, 2017 when it was raised to a range of 1.25% to 1.50%. As a result, investors
are starting to believe that the era of unprecedented U.S. monetary stimulus may finally be coming to an end.
Nine years after the start of
the recession, the U.S. economy remains on track to experience steady, albeit moderate, growth over the next few quarters. Although we expect a
strengthening job market, improving housing sector and low energy prices to provide continued support for consumers, we believe that meager wage
growth, modest global growth and increased fiscal uncertainty are likely to limit U.S. growth and keep the recovery slow and
uneven.
2
Based on this economic
backdrop, the debate over the FOMC’s ability to raise the federal funds target rate to a more normal rate
is likely to continue. As a result, the fixed income market could remain highly volatile and reactive to the
tone of economic data. In the near term, we expect a measured U.S. economic recovery and relatively low global interest rates to limit
upward pressure on U.S. Treasury yields. Over the longer term, a self-sustaining economic recovery, rising inflation expectations and growing budget
deficits could set the stage for a sustained and meaningful rise in interest rates.
Board of Directors
Meeting: At the regular September 2017 Board of Directors’ meeting, the Board declared the following monthly dividends:
Cents Per Share
|
|
|
|
Record Date
|
|
Payable
Date
|
6.5 |
|
|
|
October 31 |
|
November 10 |
6.5 |
|
|
|
November 30 |
|
December 11 |
6.5 |
|
|
|
December 29 |
|
January 10 |
At the regular December 2017
Board of Directors’ meeting, the Board declared the following monthly dividends:
Cents Per Share
|
|
|
|
Record Date
|
|
Payable
Date
|
6.5 |
|
|
|
January 31 |
|
February 12 |
6.5 |
|
|
|
February 28 |
|
March 12 |
6.5 |
|
|
|
March 29 |
|
April 10 |
Also at the December
Board of Directors meeting, the Board appointed Connie M. Luecke as Vice President and Chief Investment Officer of the Fund, effective January 1, 2018.
Ms. Luecke has been with the Investment Adviser for over 25 years, working closely with Nathan I. Partain, who has served as the Fund’s Chief
Investment Officer since 1998. Ms. Luecke will continue to collaborate with Mr. Partain (who will continue as President, CEO and a director of the
Fund) on the day-to-day investment strategy and operations for the Fund. More information about Ms. Luecke is included in the “Officers of the
Fund” section of this report.
About Your Fund: The
Fund seeks to achieve its investment objectives by investing primarily in the public utility industry. Under normal market conditions, more than 65% of
the Fund’s total assets are invested in a diversified portfolio of equity and fixed income securities of public utility companies engaged in the
production, transmission or distribution of electric energy, gas or telephone services. The Fund does not use derivatives and has no
investments in complex or structured investment vehicles.
The Fund seeks to provide
investors with a stable monthly dividend that is primarily derived from current fiscal year earnings and profits. The Investment Company Act of 1940
and related SEC rules generally prohibit investment companies from distributing long-term capital gains more often than once in a twelve-month period.
However, in 2008, the SEC granted the Fund’s request for exemptive relief from that prohibition, and the Fund is now permitted, subject to certain
conditions, to make periodic distributions of long-term capital gains as frequently as twelve times a year. In connection with the exemptive relief, in
February 2008 the Board of Directors reaffirmed the current 6.5 cent per share monthly distribution rate and formalized the monthly distribution
process by adopting a Managed Distribution Plan (MDP). The Board reviews the operation of the MDP on a quarterly basis, with the most recent review
having been conducted in December 2017, and the Adviser uses data provided by an independent consultant to review for the Board the MDP annually. The
MDP is described on the inside front cover of this report and in a Question and Answer format on the Fund’s website,
www.dnpselectincome.com.
The use of leverage enables the
Fund to borrow at short-term rates and invest in higher yielding securities. As of October 31, 2017, the Fund’s total leverage consisted of $300
million of floating rate preferred stock, $300 million of fixed rate secured notes and $400 million of floating rate secured debt outstanding under a
committed loan facility. On that date the total amount of leverage represented approximately 26% of the Fund’s total assets. The amount and
type of leverage used is reviewed by the Board of Directors based on the Fund’s expected earnings relative to the anticipated costs
(including fees and expenses) associated with the leverage. In addition, the long-term
3
expected benefits of leverage are weighed against the potential effect of
increasing the volatility of both the Fund’s net asset value and the market value of its common stock. Historically, the tendency of the
U.S. yield curve to exhibit a positive slope (i.e., long-term rates higher than short-term rates) has fostered an environment in which leverage
can make a positive contribution to the earnings of the Fund. There is no assurance that this will continue to be the case in the future.
A decline in the difference between short-term and long-term rates could have an adverse effect on the income provided from leverage. If the
Fund were to conclude that the use of leverage was likely to cease being beneficial, it could modify the amount and type of leverage it uses or
eliminate the use of leverage entirely.
Along with the influence on the
income provided from leverage, the level of interest rates can be a primary driver of bond returns, including the return on your Fund’s
fixed income investments. For example, an extended environment of historically low interest rates adds an element of reinvestment risk, since
the proceeds of maturing bonds may need to be reinvested in lower yielding securities. Alternatively, a sudden or unexpected rise in
interest rates would likely reduce the total return of fixed income investments, since higher interest rates could be expected to depress
the valuations of fixed rate bonds held in a portfolio.
Maturity and duration are
measures of the sensitivity of a fund’s fixed income investments to changes in interest rates. More specifically, duration refers to the
percentage change in a bond’s price for a given change in rates (typically +/- 100 basis points). In general, the greater the average
maturity and duration of a portfolio, the greater is the potential percentage price volatility for a given change in interest rates. As of
October 31, 2017, your Fund’s fixed income investments had an average maturity of 6.2 years and duration of 4.3 years, while the
Bloomberg Barclays U.S. Utility Bond Index had an average maturity of 15.1 years and duration of 10.0 years.
In addition to your Fund’s
fixed income investments, the income-oriented equity investments held in your Fund can be adversely affected by a rise in interest rates.
However, while rising interest rates generally have a negative impact on income-oriented investments, if improved growth accompanies the rising
rates, the impact can be mitigated.
As a practical matter, it is
not possible for your Fund’s portfolio of investments to be completely insulated from unexpected moves in interest rates. Management
believes that over the long term, the conservative distribution of fixed income investments along the yield curve and the growth potential of
income-oriented equity holdings, positions your Fund to take advantage of future opportunities while limiting volatility to some degree.
However, a sustained and meaningful rise in interest rates from current levels would have the potential to significantly reduce the total
return of leveraged funds holding income-oriented equities and fixed income investments, including the DNP Fund. A significant rise in interest
rates would likely put downward pressure on both the net asset value and market price of such funds.
Visit us on the Web: You
can obtain the most recent shareholder financial reports and distribution information at our website,
www.dnpselectincome.com.
We appreciate your interest in
DNP Select Income Fund Inc., and we will continue to do our best to be of service to you.
Nathan I. Partain, CFA
Director, President, and
Chief
Executive Officer
Certain statements in
this report are forward-looking statements. Discussions of specific investments are for illustration only and are not intended as
recommendations of individual investments. The forward-looking statements and other views expressed herein, are those of the portfolio managers as of
the date of this report. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking
statements, and the views expressed herein are subject to change at any time, due to numerous market and other factors. The Fund disclaims any
obligation to update publicly or revise any forward-looking statements or views expressed herein.
4
DNP SELECT INCOME FUND INC.
SCHEDULE OF
INVESTMENTS
October 31, 2017
Shares
|
|
|
|
Description
|
|
Value
|
COMMON STOCKS & MLP
INTERESTS—118.9%
|
| |
|
|
|
n ELECTRIC, GAS AND WATER—84.4%
|
| 2,533,240 |
|
|
|
Alliant Energy Corp.(a) |
|
$ |
109,587,962 |
|
| 1,688,000 |
|
|
|
Ameren Corp.(a) |
|
|
104,639,120 |
|
| 900,000 |
|
|
|
American Electric Power Company, Inc. |
|
|
66,969,000 |
|
| 1,000,000 |
|
|
|
American Water Works Co.(a)(b) |
|
|
87,760,000 |
|
| 632,000 |
|
|
|
Atmos Energy Corp.(a) |
|
|
55,135,680 |
|
| 1,000,000 |
|
|
|
Black Hills Corp. |
|
|
65,260,000 |
|
| 3,071,300 |
|
|
|
CenterPoint Energy, Inc.(a) |
|
|
90,849,054 |
|
| 2,397,000 |
|
|
|
CMS Energy Corp.(a) |
|
|
115,942,890 |
|
| 379,000 |
|
|
|
Dominion Energy, Inc. |
|
|
30,752,060 |
|
| 955,000 |
|
|
|
DTE Energy Co.(a) |
|
|
105,489,300 |
|
| 1,000,000 |
|
|
|
Edison International |
|
|
79,950,000 |
|
| 1,719,400 |
|
|
|
Eversource Energy(a)(b) |
|
|
107,703,216 |
|
| 2,500,000 |
|
|
|
Great Plains Energy Inc.(a) |
|
|
82,075,000 |
|
| 747,700 |
|
|
|
NextEra Energy, Inc.(a) |
|
|
115,945,839 |
|
| 1,900,000 |
|
|
|
NiSource Inc. |
|
|
50,103,000 |
|
| 800,000 |
|
|
|
Northwest Natural Gas Co. |
|
|
53,080,000 |
|
| 2,300,000 |
|
|
|
OGE Energy Corp.(a) |
|
|
84,732,000 |
|
| 500,000 |
|
|
|
ONE Gas, Inc. |
|
|
38,490,000 |
|
| 1,000,000 |
|
|
|
Pinnacle West Capital Corp. |
|
|
87,710,000 |
|
| 1,135,000 |
|
|
|
PG&E Corp. |
|
|
65,568,950 |
|
| 1,800,000 |
|
|
|
Public Service Enterprise Group Inc.(a)(b) |
|
|
88,560,000 |
|
| 900,000 |
|
|
|
Sempra Energy(a) |
|
|
105,750,000 |
|
| 1,500,000 |
|
|
|
South Jersey Industries, Inc. |
|
|
50,955,000 |
|
| 2,000,000 |
|
|
|
Southern Co.(a) |
|
|
104,400,000 |
|
| 778,000 |
|
|
|
Spire Inc. |
|
|
61,423,100 |
|
| 1,500,000 |
|
|
|
Vectren Corp.(a) |
|
|
102,210,000 |
|
| 1,500,000 |
|
|
|
WEC Energy Group, Inc.(a) |
|
|
101,085,000 |
|
| 1,000,000 |
|
|
|
WGL Holdings Inc.(a) |
|
|
85,700,000 |
|
| 910,000 |
|
|
|
The Williams Companies, Inc. |
|
|
25,935,000 |
|
| 2,000,000 |
|
|
|
Xcel Energy Inc.(a)(b) |
|
|
99,040,000 |
|
| |
|
|
|
|
|
|
2,422,801,171 |
|
| |
|
|
|
n OIL & GAS STORAGE, TRANSPORTATION AND
PRODUCTION—21.7%
|
| 327,229 |
|
|
|
Andeavor Logistics LP |
|
|
14,784,206 |
|
| 352,765 |
|
|
|
Antero Midstream GP LP |
|
|
6,600,233 |
|
| 435,000 |
|
|
|
Antero Midstream Partners LP |
|
|
12,484,500 |
|
| 447,000 |
|
|
|
DCP Midstream LP |
|
|
14,786,760 |
|
| 614,800 |
|
|
|
Dominion Midstream Partners LP |
|
|
19,704,340 |
|
| 1,360,000 |
|
|
|
Enbridge Inc. (Canada) |
|
|
52,305,600 |
|
| 765,532 |
|
|
|
Energy Transfer Equity LP |
|
|
13,588,193 |
|
| 1,327,367 |
|
|
|
Energy Transfer Partners LP |
|
|
23,109,459 |
|
| 880,000 |
|
|
|
EnLink Midstream Partners LP |
|
|
13,472,800 |
|
| 1,276,000 |
|
|
|
Enterprise Products Partners LP |
|
|
31,262,000 |
|
| 425,000 |
|
|
|
EQT GP Holdings, LP |
|
|
11,742,750 |
|
| 176,000 |
|
|
|
EQT Midstream Partners LP |
|
|
12,858,560 |
|
| 605,000 |
|
|
|
GasLog Partners LP (Marshall Islands) |
|
|
14,368,750 |
|
| 357,000 |
|
|
|
Genesis Energy LP |
|
|
8,314,530 |
|
| 2,380,526 |
|
|
|
Kinder Morgan, Inc.(a) |
|
|
43,111,326 |
|
| 295,090 |
|
|
|
Magellan Midstream Partners LP |
|
|
20,275,634 |
|
The accompanying notes are an integral part of these
financial statements.
5
DNP SELECT INCOME FUND INC.
SCHEDULE OF
INVESTMENTS—(Continued)
October 31, 2017
Shares
|
|
|
|
Description
|
|
Value
|
| 647,185 |
|
|
|
MPLX LP |
|
$ |
22,819,743 |
|
| 753,250 |
|
|
|
Nextera Energy Partners, LP |
|
|
29,632,855 |
|
| 299,150 |
|
|
|
ONEOK, Inc. |
|
|
16,234,871 |
|
| 285,419 |
|
|
|
Phillips 66 Partners LP |
|
|
14,387,972 |
|
| 645,000 |
|
|
|
Rice Midstream Partners LP |
|
|
13,377,300 |
|
| 480,625 |
|
|
|
Shell Midstream Partners LP |
|
|
12,212,681 |
|
| 415,000 |
|
|
|
Spectra Energy Partners, LP |
|
|
17,894,800 |
|
| 510,000 |
|
|
|
Tallgrass Energy GP, LP |
|
|
12,750,000 |
|
| 415,000 |
|
|
|
Tallgrass Energy Partners LP |
|
|
18,110,600 |
|
| 500,120 |
|
|
|
Targa Resources Corp. |
|
|
20,754,980 |
|
| 1,450,000 |
|
|
|
TransCanada Corp. (Canada)(a) |
|
|
68,846,000 |
|
| 302,440 |
|
|
|
Valero Energy Partners LP |
|
|
12,992,822 |
|
| 651,460 |
|
|
|
Westlake Chemical Partners LP |
|
|
14,494,985 |
|
| 327,000 |
|
|
|
Western Gas Partners LP |
|
|
15,660,030 |
|
| 500,000 |
|
|
|
Williams Partners LP |
|
|
18,520,000 |
|
| |
|
|
|
|
|
|
621,459,280 |
|
| |
|
|
|
n TELECOMMUNICATIONS—12.8%
|
| 1,983,000 |
|
|
|
AT&T Inc.(a)(b) |
|
|
66,727,950 |
|
| 1,057,800 |
|
|
|
BCE Inc. (Canada)(a) |
|
|
48,828,048 |
|
| 800,000 |
|
|
|
CenturyLink Inc. |
|
|
15,192,000 |
|
| 690,400 |
|
|
|
Crown Castle International Corp. |
|
|
73,928,032 |
|
| 1,000,000 |
|
|
|
Orange SA (France) |
|
|
16,408,320 |
|
| 1,414,300 |
|
|
|
Telus Corp. (Canada) |
|
|
51,257,541 |
|
| 1,502,089 |
|
|
|
Verizon Communications Inc.(a) |
|
|
71,905,000 |
|
| 782,200 |
|
|
|
Vodafone Group Plc ADR (United Kingdom) |
|
|
22,668,156 |
|
| |
|
|
|
|
|
|
366,915,047 |
|
| |
|
|
|
Total Common Stocks & MLP Interests (Cost $2,463,486,168) |
|
|
3,411,175,498 |
|
PREFERRED
STOCKS—0.5%
|
| |
|
|
|
n NON-UTILITY—0.5%
|
| 234,900 |
|
|
|
Vornado Realty Trust 65/8 Series G Perpetual |
|
|
6,004,044 |
|
| 350,000 |
|
|
|
Vornado Realty Trust 65/8 Series I Perpetual |
|
|
8,939,000 |
|
| |
|
|
|
|
|
|
14,943,044 |
|
| |
|
|
|
Total Preferred Stocks (Cost $13,536,811) |
|
|
14,943,044 |
|
| Par
Value |
|
|
|
|
|
|
|
|
|
|
BONDS—14.4%
|
| |
|
|
|
n ELECTRIC, GAS AND WATER—6.9%
|
| $22,000,000 |
|
|
|
Arizona Public Service Co. 67/8%, 8/01/36(a)(b) |
|
|
29,710,677 |
|
| 10,450,000 |
|
|
|
Atmos Energy Corp. 81/2%, 3/15/19(a)(b) |
|
|
11,365,358 |
|
| 11,000,000 |
|
|
|
Cleveland Electric Illuminating Co. 87/8%, 11/15/18(a)(b) |
|
|
11,748,189 |
|
| 7,000,000 |
|
|
|
CMS Energy Corp. 5.05%, 3/15/22 |
|
|
7,689,133 |
|
| 6,750,000 |
|
|
|
Commonwealth Edison Company 6.95%, 7/15/18(a) |
|
|
7,002,556 |
|
The accompanying notes are an integral part of these
financial statements.
6
DNP SELECT INCOME FUND INC.
SCHEDULE OF
INVESTMENTS—(Continued)
October 31, 2017
Par Value
|
|
|
|
Description
|
|
Value
|
| $15,305,000 |
|
|
|
Consolidated Edison Co. of New York 71/8%, 12/01/18(a)(b) |
|
$ |
16,156,565 |
|
| 9,354,000 |
|
|
|
Dominion Resources, Inc. 6.40%, 6/15/18(a)(b) |
|
|
9,617,858 |
|
| 10,000,000 |
|
|
|
DPL Capital Trust II 81/8%, 9/01/31 |
|
|
10,003,195 |
|
| 20,000,000 |
|
|
|
Entergy Texas Inc. 71/8%, 2/01/19(a)(b) |
|
|
21,194,675 |
|
| 10,618,000 |
|
|
|
Indiana Michigan Power Co. 7.00%, 3/15/19(a)(b) |
|
|
11,330,552 |
|
| 5,000,000 |
|
|
|
Metropolitan Edison Co. 7.70%, 1/15/19(a) |
|
|
5,321,462 |
|
| 12,000,000 |
|
|
|
National Fuel Gas Co. 83/4%, 5/01/19(a)(b) |
|
|
13,093,516 |
|
| 3,350,000 |
|
|
|
Nevada Power Co. 71/8%, 3/15/19 |
|
|
3,580,886 |
|
| 10,345,000 |
|
|
|
Oncor Electric Delivery Co. LLC 7.00%, 9/01/22(a)(b) |
|
|
12,378,409 |
|
| 14,000,000 |
|
|
|
Progress Energy Inc. 7.05%, 3/15/19(a)(b) |
|
|
14,950,154 |
|
| 6,528,000 |
|
|
|
Public Service New Mexico 71/2%, 8/01/18(a) |
|
|
6,791,213 |
|
| 5,000,000 |
|
|
|
Sempra Energy 6.15%, 6/15/18 |
|
|
5,136,090 |
|
| |
|
|
|
|
|
|
197,070,488 |
|
| |
|
|
|
n OIL & GAS STORAGE, TRANSPORTATION AND
PRODUCTION—4.0%
|
| 6,488,000 |
|
|
|
Energy Transfer Partners 7.60%, 2/01/24 |
|
|
7,622,061 |
|
| 8,850,000 |
|
|
|
Energy Transfer Partners 81/4%, 11/15/29 |
|
|
11,618,831 |
|
| 5,000,000 |
|
|
|
Enterprise Products Operating LLC 61/2%, 1/31/19 |
|
|
5,273,084 |
|
| 12,826,000 |
|
|
|
EQT Corp. 81/8%, 6/01/19(a) |
|
|
14,010,639 |
|
| 8,030,000 |
|
|
|
Kinder Morgan, Inc. 6.85%, 2/15/20 |
|
|
8,841,967 |
|
| 14,445,000 |
|
|
|
Magellan Midstream Partners, LP 6.40%, 7/15/18(a)(b) |
|
|
14,923,691 |
|
| 11,000,000 |
|
|
|
ONEOK, Inc. 6.00%, 6/15/35 |
|
|
12,482,345 |
|
| 9,000,000 |
|
|
|
ONEOK Partners, LP 85/8%, 3/01/19 |
|
|
9,720,732 |
|
| 5,000,000 |
|
|
|
Plains All American Pipeline, LP 4.65%, 10/15/2025 |
|
|
5,190,266 |
|
| 12,940,000 |
|
|
|
Spectra Energy Capital, LLC 6.20%, 4/15/18(a)(b) |
|
|
13,171,649 |
|
| 2,615,000 |
|
|
|
Spectra Energy Capital, LLC 63/4%, 7/15/18 |
|
|
2,696,147 |
|
| 9,140,000 |
|
|
|
TransCanada PipeLines Ltd. (Canada) 71/8%, 1/15/19(a)(b) |
|
|
9,680,530 |
|
| |
|
|
|
|
|
|
115,231,942 |
|
| |
|
|
|
n TELECOMMUNICATIONS—3.2%
|
| 10,000,000 |
|
|
|
BellSouth Capital Funding Corp.
77/8%, 2/15/30(a)(b) |
|
|
13,247,385 |
|
| 15,000,000 |
|
|
|
CenturyLink Inc. 67/8%, 1/15/28 |
|
|
14,998,950 |
|
| 5,900,000 |
|
|
|
Comcast Corp. 7.05%, 3/15/33 |
|
|
8,201,016 |
|
| 15,000,000 |
|
|
|
Koninklijke KPN NV (Netherlands) 83/8%, 10/01/30(a) |
|
|
20,707,421 |
|
| 5,000,000 |
|
|
|
TCI Communications Inc. 71/8%, 2/15/28 |
|
|
6,573,324 |
|
The accompanying notes are an integral part of these
financial statements.
7
DNP SELECT INCOME FUND INC.
SCHEDULE OF
INVESTMENTS—(Continued)
October 31, 2017
Par Value
|
|
|
|
Description
|
|
Value
|
| $15,500,000 |
|
|
|
Verizon Global Funding Corp. 73/4%, 12/01/30 |
|
$ |
21,121,275 |
|
| 5,000,000 |
|
|
|
Vodafone Group Plc (United Kingdom) 77/8%, 2/15/30 |
|
|
6,854,179 |
|
| |
|
|
|
|
|
|
91,703,550 |
|
| |
|
|
|
n NON-UTILITY—0.3%
|
| 8,000,000 |
|
|
|
Dayton Hudson Corp. 97/8%, 7/01/20(a)(b) |
|
|
9,525,573 |
|
| |
|
|
|
|
|
|
9,525,573 |
|
| |
|
|
|
Total Bonds (Cost $377,491,971) |
|
|
413,531,553 |
|
|
|
|
|
TOTAL INVESTMENTS—133.8% (Cost $2,854,514,950) |
|
|
3,839,650,095 |
|
|
|
|
|
Secured borrowings—(13.9)% |
|
|
(400,000,000 |
) |
|
|
|
|
Secured notes—(10.5)% |
|
|
(300,000,000 |
) |
|
|
|
|
Mandatory Redeemable Preferred Shares at liquidation value—(10.5)% |
|
|
(300,000,000 |
) |
|
|
|
|
Other assets less other liabilities—1.1% |
|
|
30,890,667 |
|
|
|
|
|
NET ASSETS APPLICABLE TO COMMON STOCK—100.0% |
|
$ |
2,870,540,762 |
|
| (a) |
|
All or a portion of this security has been pledged as collateral
for borrowings and made available for loan. |
| (b) |
|
All or a portion of this security has been loaned. |
The percentage shown for each investment category is the total value of that category as a percentage of the net assets applicable to
common stock of the Fund.
The accompanying notes are an integral part of these
financial statements.
8
DNP SELECT INCOME FUND INC.
SCHEDULE OF
INVESTMENTS—(Continued)
October 31, 2017
The Fund’s investments are carried at fair value which is
defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most
advantageous market of the investment. The three-tier hierarchy of inputs established to classify fair value measurements for disclosure purposes is
summarized in the three broad levels listed below.
Level 1—quoted prices in active markets for identical
securities
Level 2—other significant observable inputs (including quoted
prices for similar securities, interest rates, prepayment speeds, credit risks, etc.)
Level 3—significant unobservable inputs (including the
Fund’s own assumptions in determining fair value of investments)
The inputs or methodology used for valuing securities are not
necessarily an indication of the risk associated with investing in these securities. The following is a summary of the inputs used to value each of the
Fund’s investments at October 31, 2017:
| |
|
|
|
Level 1
|
|
Level 2
|
Common stocks & MLP interests |
|
|
|
$ |
3,411,175,498 |
|
|
|
— |
|
Preferred stocks |
|
|
|
|
14,943,044 |
|
|
|
— |
|
Bonds |
|
|
|
|
— |
|
|
$ |
413,531,553 |
|
Total |
|
|
|
$ |
3,426,118,542 |
|
|
$ |
413,531,553 |
|
There were no Level 3 priced securities held and there were no
transfers between Level 1 and Level 2 related to securities held at October 31, 2017.
* |
|
Percentages are based on total investments rather than total net
assets applicable to common stock and include securities pledged as collateral for the Fund’s credit facility. |
The accompanying notes are an integral part of these
financial statements.
9
DNP SELECT INCOME FUND INC.
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 2017
ASSETS:
|
|
|
|
|
|
|
Investments at value (cost $2,854,514,950) including $353,988,571 of securities loaned |
|
|
|
$ |
3,839,650,095 |
|
Cash |
|
|
|
|
35,350,559 |
|
Receivables:
|
|
|
|
|
|
|
Interest |
|
|
|
|
7,131,874 |
|
Dividends |
|
|
|
|
7,708,089 |
|
Securities lending income |
|
|
|
|
2,022 |
|
Prepaid expenses |
|
|
|
|
185,253 |
|
Total assets |
|
|
|
|
3,890,027,892 |
|
| |
LIABILITIES:
|
|
|
|
|
|
|
Secured borrowings (Note 7) |
|
|
|
|
400,000,000 |
|
Secured notes (net of deferred offering costs of $3,097,230) (Note 7) |
|
|
|
|
296,902,770 |
|
Dividends payable on common stock |
|
|
|
|
18,687,107 |
|
Investment advisory fee (Note 3) |
|
|
|
|
1,771,552 |
|
Administrative fee (Note 3) |
|
|
|
|
413,762 |
|
Interest payable on secured notes (Note 7) |
|
|
|
|
2,428,043 |
|
Interest payable on floating rate mandatory redeemable preferred shares (Note 8) |
|
|
|
|
872,392 |
|
Interest payable on secured borrowings (Note 7) |
|
|
|
|
56,200 |
|
Accrued expenses |
|
|
|
|
252,222 |
|
Floating rate mandatory redeemable preferred shares (liquidation preference $300,000,000, net of deferred offering costs of $1,896,918) (Note 8)
|
|
|
|
|
298,103,082 |
|
Total liabilities |
|
|
|
|
1,019,487,130 |
|
NET ASSETS APPLICABLE TO COMMON STOCK |
|
|
|
$ |
2,870,540,762 |
|
| |
CAPITAL:
|
|
|
|
|
|
|
Common stock ($0.001 par value per share; 300,000,000 shares authorized and 287,493,949 shares issued and outstanding) |
|
|
|
$ |
287,494 |
|
Additional paid-in capital |
|
|
|
|
1,935,965,825 |
|
Accumulated net realized loss on investments |
|
|
|
|
(1,682 |
) |
Distributions in excess of net investment income |
|
|
|
|
(50,833,817 |
) |
Net unrealized appreciation on investments and foreign currency translation |
|
|
|
|
985,122,942 |
|
Net assets applicable to common stock |
|
|
|
$ |
2,870,540,762 |
|
NET ASSET VALUE PER SHARE OF COMMON STOCK |
|
|
|
|
$9.98 |
|
The accompanying notes are an integral part of these
financial statements.
10
DNP SELECT INCOME FUND INC.
STATEMENT OF
OPERATIONS
For the year ended
October 31, 2017
INVESTMENT INCOME:
|
|
|
|
|
|
|
Interest |
|
|
|
$ |
21,785,015 |
|
Dividends (less foreign withholding tax of $1,635,487) |
|
|
|
|
127,025,617 |
|
Less return of capital distributions (Note 2) |
|
|
|
|
(29,696,797 |
) |
Securities lending income, net |
|
|
|
|
199,230 |
|
Total investment income |
|
|
|
|
119,313,065 |
|
| |
EXPENSES:
|
|
|
|
|
|
|
Investment advisory fees (Note 3) |
|
|
|
|
20,470,989 |
|
Interest expense and amortization of deferred offering costs on preferred shares
(Note 8) |
|
|
|
|
10,279,803 |
|
Interest expense and fees on secured borrowings (Note 7) |
|
|
|
|
9,399,599 |
|
Interest expense and amortization of deferred offering costs on secured notes (Note 7) |
|
|
|
|
9,174,715 |
|
Administrative fees (Note 3) |
|
|
|
|
4,794,198 |
|
Reports to shareholders |
|
|
|
|
864,500 |
|
Custodian fees |
|
|
|
|
468,000 |
|
Professional fees |
|
|
|
|
377,600 |
|
Directors’ fees (Note 3) |
|
|
|
|
374,467 |
|
Transfer agent fees |
|
|
|
|
310,250 |
|
Other expenses |
|
|
|
|
554,625 |
|
Total expenses |
|
|
|
|
57,068,746 |
|
Net investment income |
|
|
|
|
62,244,319 |
|
| |
REALIZED AND UNREALIZED GAIN:
|
|
|
|
|
|
|
Net realized gain on investments |
|
|
|
|
126,213,457 |
|
Net change in unrealized appreciation (depreciation) on investments and foreign currency translation |
|
|
|
|
200,614,061 |
|
Net realized and unrealized gain |
|
|
|
|
326,827,518 |
|
| |
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON STOCK RESULTING FROM OPERATIONS |
|
|
|
$ |
389,071,837 |
|
The accompanying notes are an integral part of these
financial statements.
11
DNP SELECT INCOME FUND INC.
STATEMENTS OF
CHANGES IN NET ASSETS
| |
|
|
|
For the year
ended
October
31, 2017
|
|
For the year
ended
October
31, 2016
|
OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
|
$ |
62,244,319 |
|
|
$ |
76,917,027 |
|
Net realized gain |
|
|
|
|
126,213,457 |
|
|
|
103,956,251 |
|
Net change in unrealized appreciation (depreciation) |
|
|
|
|
200,614,061 |
|
|
|
227,187,351 |
|
Net increase (decrease) in net assets applicable to common stock resulting from operations |
|
|
|
|
389,071,837 |
|
|
|
408,060,629 |
|
| |
DISTRIBUTIONS TO COMMON STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
|
|
(74,460,417 |
) |
|
|
(88,105,015 |
) |
Net realized gain |
|
|
|
|
(117,352,438 |
) |
|
|
(95,011,267 |
) |
Return of capital |
|
|
|
|
(31,075,165 |
) |
|
|
(36,780,790 |
) |
Decrease in net assets from distributions to common stockholders (Note 5) |
|
|
|
|
(222,888,020 |
) |
|
|
(219,897,072 |
) |
| |
CAPITAL STOCK TRANSACTIONS:
|
|
|
|
|
|
|
|
|
|
|
Shares issued to common stockholders from dividend reinvestment of 3,838,880 and 3,865,685 shares, respectively |
|
|
|
|
39,383,563 |
|
|
|
36,559,911 |
|
Net increase in net assets derived from capital share transactions |
|
|
|
|
39,383,563 |
|
|
|
36,559,911 |
|
Total increase (decrease) in net assets |
|
|
|
|
205,567,380 |
|
|
|
224,723,468 |
|
| |
TOTAL NET ASSETS APPLICABLE TO COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
|
|
|
2,664,973,382 |
|
|
|
2,440,249,914 |
|
End of year (including distributions in excess of net investment income of $50,833,817 and $50,357,361 respectively) |
|
|
|
$ |
2,870,540,762 |
|
|
$ |
2,664,973,382 |
|
The accompanying notes are an integral part of these
financial statements.
12
DNP SELECT INCOME FUND INC.
STATEMENT OF CASH
FLOWS
For the year ended
October 31, 2017
INCREASE (DECREASE) IN
CASH
|
|
|
|
Cash flows provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Interest received |
|
|
|
$ |
28,326,057 |
|
|
|
|
|
Income dividends received |
|
|
|
|
97,200,597 |
|
|
|
|
|
Return of capital distributions on investments |
|
|
|
|
32,411,646 |
|
|
|
|
|
Securities lending income, net |
|
|
|
|
200,580 |
|
|
|
|
|
Interest paid on secured borrowings |
|
|
|
|
(9,433,867 |
) |
|
|
|
|
Interest paid on secured notes |
|
|
|
|
(8,760,000 |
) |
|
|
|
|
Interest paid on floating rate mandatory redeemable preferred shares |
|
|
|
|
(9,473,674 |
) |
|
|
|
|
Expenses paid |
|
|
|
|
(28,158,053 |
) |
|
|
|
|
Purchase of investment securities |
|
|
|
|
(432,429,747 |
) |
|
|
|
|
Proceeds from sales and maturities of investment securities |
|
|
|
|
521,578,176 |
|
|
|
|
|
Net cash provided by operating activities |
$ |
191,461,715 |
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
Distributions paid |
|
|
|
|
(222,638,493 |
) |
|
|
|
|
Proceeds from issuance of common stock under dividend reinvestment plan |
|
|
|
|
39,383,563 |
|
|
|
|
|
Net cash used in financing activities |
|
(183,254,930 |
) |
Net increase in cash and cash equivalents |
|
8,206,785 |
|
Cash and cash equivalents—beginning of year |
|
27,143,774 |
|
Cash and cash equivalents—end of year |
$ |
35,350,559 |
|
Reconciliation of net increase in net assets resulting from operations to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations |
$ |
389,071,837 |
|
Purchase of investment securities |
|
|
|
|
(432,429,747 |
) |
|
|
|
|
Proceeds from sales and maturities of investment securities |
|
|
|
|
521,578,176 |
|
|
|
|
|
Net realized gain on investments |
|
|
|
|
(126,213,457 |
) |
|
|
|
|
Net change in unrealized (appreciation) depreciation on investments |
|
|
|
|
(200,614,061 |
) |
|
|
|
|
Net amortization and accretion of premiums and discounts on debt securities |
|
|
|
|
5,889,994 |
|
|
|
|
|
Return of capital distributions on investments |
|
|
|
|
32,411,646 |
|
|
|
|
|
Amortization of deferred offering costs |
|
|
|
|
1,094,418 |
|
|
|
|
|
Decrease in interest receivable |
|
|
|
|
651,047 |
|
|
|
|
|
Increase in dividends receivable |
|
|
|
|
(128,221 |
) |
|
|
|
|
Increase in interest payable on floating rate mandatory redeemable preferred shares |
|
|
|
|
126,426 |
|
|
|
|
|
Decrease in interest payable on secured borrowings |
|
|
|
|
(34,268 |
) |
|
|
|
|
Increase in accrued expenses |
|
|
|
|
56,575 |
|
|
|
|
|
Decrease in other receivable |
|
|
|
|
1,350 |
|
|
|
|
|
Total adjustments |
|
(197,610,122 |
) |
Net cash provided by operating activities |
$ |
191,461,715 |
|
The accompanying notes are an integral part of these
financial statements.
13
DNP SELECT INCOME FUND INC.
FINANCIAL
HIGHLIGHTS—SELECTED PER SHARE DATA AND RATIOS
The table below provides
information about income and capital changes for a share of common stock outstanding throughout the periods indicated (excluding supplemental data
provided below):
| |
|
|
|
For the year ended October 31,
|
|
|
For the
ten
months
ended
October 31,
2013
|
|
For the
year ended
December
31,
2012
|
PER SHARE
DATA:
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
Net asset value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
|
$ |
9.40 |
|
|
$ |
8.72 |
|
|
$ |
10.21 |
|
|
$ |
8.98 |
|
|
$ |
8.23 |
|
|
$ |
8.33 |
|
Net investment income |
|
|
|
|
0.22 |
|
|
|
0.27 |
|
|
|
0.29 |
|
|
|
0.35 |
|
|
|
0.27 |
|
|
|
0.48 |
|
Net realized and unrealized gain (loss) |
|
|
|
|
1.14 |
|
|
|
1.19 |
|
|
|
(1.00 |
) |
|
|
1.66 |
|
|
|
1.13 |
|
|
|
0.21 |
|
Dividends on auction preferred stock from net investment income |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
Benefit to common stockholders from tender offer for preferred stock |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Net increase (decrease) from investment operations applicable to common stock |
|
|
|
|
1.36 |
|
|
|
1.46 |
|
|
|
(0.71 |
) |
|
|
2.01 |
|
|
|
1.40 |
|
|
|
0.68 |
|
Distributions on common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
|
|
(0.26 |
) |
|
|
(0.31 |
) |
|
|
(0.36 |
) |
|
|
(0.39 |
) |
|
|
(0.30 |
) |
|
|
(0.44 |
) |
Net realized gain |
|
|
|
|
(0.41 |
) |
|
|
(0.34 |
) |
|
|
(0.34 |
) |
|
|
(0.30 |
) |
|
|
(0.33 |
) |
|
|
(0.28 |
) |
Return of capital |
|
|
|
|
(0.11 |
) |
|
|
(0.13 |
) |
|
|
(0.08 |
) |
|
|
(0.09 |
) |
|
|
(0.02 |
) |
|
|
(0.06 |
) |
Total distributions |
|
|
|
|
(0.78 |
) |
|
|
(0.78 |
) |
|
|
(0.78 |
) |
|
|
(0.78 |
) |
|
|
(0.65 |
) |
|
|
(0.78 |
) |
Net asset value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
|
|
$ |
9.98 |
|
|
$ |
9.40 |
|
|
$ |
8.72 |
|
|
$ |
10.21 |
|
|
$ |
8.98 |
|
|
$ |
8.23 |
|
Per share market value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period |
|
|
|
$ |
11.25 |
|
|
$ |
10.09 |
|
|
$ |
9.77 |
|
|
$ |
10.47 |
|
|
$ |
9.70 |
|
|
$ |
9.47 |
|
RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON STOCK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
2.04 |
% |
|
|
1.86 |
% |
|
|
1.64 |
% |
|
|
1.60 |
% |
|
|
1.55 |
%* |
|
|
1.77 |
% |
Operating expenses, without leverage |
|
|
|
|
1.02 |
% |
|
|
1.04 |
% |
|
|
1.03 |
% |
|
|
1.05 |
% |
|
|
1.07 |
%* |
|
|
1.18 |
% |
Net investment income |
|
|
|
|
2.23 |
% |
|
|
2.98 |
% |
|
|
3.05 |
% |
|
|
3.67 |
% |
|
|
3.58 |
%* |
|
|
5.03 |
% |
SUPPLEMENTAL DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total return on market value(1) |
|
|
|
|
20.17 |
% |
|
|
12.08 |
% |
|
|
1.08 |
% |
|
|
17.05 |
% |
|
|
9.69 |
% |
|
|
(6.17 |
)% |
Total return on net asset value(1) |
|
|
|
|
15.04 |
% |
|
|
17.34 |
% |
|
|
(7.09 |
)% |
|
|
23.37 |
% |
|
|
17.35 |
% |
|
|
8.53 |
% |
Portfolio turnover rate |
|
|
|
|
11 |
% |
|
|
16 |
% |
|
|
15 |
% |
|
|
16 |
% |
|
|
10 |
% |
|
|
14 |
% |
Asset coverage ratio on borrowings, end of period |
|
|
|
|
553 |
% |
|
|
524 |
% |
|
|
492 |
% |
|
|
546 |
% |
|
|
400 |
% |
|
|
374 |
% |
Asset coverage ratio on total leverage (borrowings and preferred), end of period |
|
|
|
|
387 |
% |
|
|
367 |
% |
|
|
344 |
% |
|
|
382 |
% |
|
|
345 |
% |
|
|
322 |
% |
Net assets applicable to common stock, end of period (000’s omitted) |
|
|
|
$ |
2,870,541 |
|
|
$ |
2,664,973 |
|
|
$ |
2,440,250 |
|
|
$ |
2,820,578 |
|
|
$ |
2,448,236 |
|
|
$ |
2,219,458 |
|
| (1) |
|
Total return on market value assumes a purchase of
common stock at the opening market price on the first day and a sale at the closing market price on the last day of each period shown in the table and
assumes reinvestment of dividends at the actual reinvestment prices obtained under the terms of the Fund’s dividend reinvestment plan. Total
return on net asset value uses the same methodology, but with use of net asset value for beginning, ending and reinvestment values. |
The accompanying notes are an integral part of these
financial statements.
14
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS
October 31, 2017
Note 1. Organization:
DNP Select Income Fund Inc. (the
“Fund”) was incorporated under the laws of the State of Maryland on November 26, 1986. The Fund commenced operations on January 21, 1987, as
a closed-end diversified management investment company registered under the Investment Company Act of 1940 (the “1940 Act”). The primary
investment objectives of the Fund are current income and long-term growth of income. Capital appreciation is a secondary objective. In 2013, the Fund
changed its fiscal year end to October 31 from December 31.
Note 2. Significant Accounting Policies:
The following are the significant accounting policies of the
Fund:
A. Investment
Valuation: Equity securities traded on a national or foreign securities exchange or traded over-the counter and quoted on the
NASDAQ Stock Market are valued at the last reported sale price or, if there was no sale on the valuation date, then the security is valued at the mean
of the bid and ask prices, in each case using valuation data provided by an independent pricing service, and are generally classified as Level 1.
Equity securities traded on more than one securities exchange shall be valued at the last sale price on the business day as of which such value is
being determined at the close of the exchange representing the principal market for such securities and are classified as Level 1. If there was no sale
on the valuation date, then the security is valued at the mean of the closing bid and ask prices of the exchange representing the principal market for
such securities. Debt securities are valued at the mean of the bid and ask prices provided by an independent pricing service when such prices are
believed to reflect the fair value of such securities and are generally classified as Level 2. Any securities for which it is determined that market
prices are unavailable or inappropriate are valued at a fair value using a procedure determined in good faith by the Board of Directors and are
classified as Level 2 or 3 based on the valuation inputs.
B. Investment Transactions and
Investment Income: Security transactions are recorded on the trade date. Realized gains or losses from sales of securities are
determined on the identified cost basis. Dividend income is recognized on the ex-dividend date. Interest income and expense are recognized on the
accrual basis. Discounts and premiums on securities are amortized or accreted over the lives of the respective securities for financial reporting
purposes. Discounts and premiums are not amortized or accreted for tax purposes.
The Fund invests in master limited
partnerships (“MLPs”) which make distributions that are primarily attributable to return of capital. Dividend income is recorded using
management’s estimate of the percentage of income included in the distributions received from the MLP investments based on their historical
dividend results. Distributions received in excess of this estimated amount are recorded as a reduction of cost of investments (i.e., a return of
capital). The actual amounts of income and return of capital are only determined by each MLP after its fiscal year-end and may differ from the
estimated amounts. For the year ended October 31, 2017, 100% of the MLP distributions were treated as a return of capital.
15
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS—(Continued)
October 31, 2017
C. Federal Income
Taxes: It is the Fund’s intention to comply with requirements of Subchapter M of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable income and capital gains to its shareholders. Therefore, no provision for
Federal income or excise taxes is required. Management of the Fund has concluded that there are no significant uncertain tax positions that would
require recognition in the financial statements. Since tax authorities can examine previously filed tax returns, the Fund’s tax returns filed for
the tax years 2014 to 2017 are subject to review.
D. Foreign Currency
Translation: Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the date of valuation at the mean of the quoted bid and asked prices of such currencies. Purchases and sales of investment securities and
income and expense items denominated in foreign currencies are translated into U.S. dollar amounts at the rate of exchange prevailing on the respective
dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and
unrealized gain or loss on investments.
E. Use of
Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from
those estimates.
Note 3. Agreements and Management
Arrangements:
A. Adviser and
Administrator: The Fund has an Advisory Agreement with Duff & Phelps Investment Management Co. (the “Adviser”) an indirect, wholly
owned subsidiary of Virtus Investment Partners, Inc. (“Virtus”), to provide professional investment management services for the Fund and has
an Administration Agreement with J. J. B. Hilliard, W. L. Lyons, LLC (the “Administrator”) to provide administrative and management services
for the Fund. The Adviser receives a quarterly fee at an annual rate of 0.60% of the Average Weekly Managed Assets of the Fund up to $1.5 billion and
0.50% of Average Weekly Managed Assets in excess thereof. The Administrator receives a quarterly fee at annual rates of 0.20% of Average Weekly Managed
Assets up to $1 billion, and 0.10% of Average Weekly Managed Assets over $1 billion. For purposes of the foregoing calculations, “Average Weekly
Managed Assets” is defined as the average weekly value of the total assets of the Fund minus the sum of all accrued liabilities of the Fund (other
than the aggregate amount of any outstanding borrowings or other indebtedness constituting financial leverage).
B. Directors: The Fund pays
each director not affiliated with the Adviser an annual fee. Total fees paid to directors for the year ended October 31,
2017 were $374,467.
C. Affiliated Shareholder:
At October 31, 2017, Virtus Partners, Inc. (a wholly owned subsidiary of Virtus) held 226,462 shares of the Fund, which represent 0.08% of the shares
of common stock outstanding. These shares may be sold at any time.
16
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS—(Continued)
October 31, 2017
Note 4. Investment Transactions:
Purchases and sales of investment
securities (excluding short-term investments) for the year ended October 31, 2017 were $427,433,756 and $521,578,176 respectively.
Note 5. Distributions and Tax Information:
At October 31, 2017, the federal
tax cost and aggregate gross unrealized appreciation (depreciation) were as follows:
Federal Tax Cost
|
|
|
|
Unrealized
Appreciation
|
|
Unrealized
Depreciation
|
|
Net
Unrealized
Appreciation
|
$2,885,790,955 |
|
|
|
$ |
1,082,150,579 |
|
|
|
($128,291,439 |
) |
|
$ |
953,859,140 |
|
The difference between the book
basis and tax basis of unrealized appreciation (depreciation) and cost of investments is primarily attributable to MLP earnings and basis adjustments,
the tax deferral of wash sales losses, the accretion of market discount and amortization of premiums.
The Fund declares and pays monthly
dividends on its common shares of a stated amount per share. Subject to approval and oversight by the Fund’s Board of Directors, the Fund seeks to
maintain a stable distribution level (a Managed Distribution Plan) consistent with the Fund’s primary investment objective of current income. If
and when sufficient investment income is not available on a monthly basis, the Fund will distribute long-term capital gains and/or return capital in
order to maintain the $0.065 per common share distribution level. The amount and timing of distributions are determined in accordance with federal tax
regulations, which may differ from U.S. generally accepted accounting principles.
The tax character of distributions
paid to common shareholders during the years ended October 31, 2017 and 2016 was as follows:
| |
|
|
|
10/31/17
|
|
10/31/16
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
|
|
Ordinary income |
|
|
|
$ |
76,777,949 |
|
|
$ |
87,853,746 |
|
Long-term capital gains |
|
|
|
|
114,785,379 |
|
|
|
95,011,267 |
|
Return of capital |
|
|
|
|
31,075,165 |
|
|
|
36,780,790 |
|
Total distributions |
|
|
|
$ |
222,638,493 |
|
|
$ |
219,645,803 |
|
At October 31, 2017, the
components of distributable earnings on a tax basis were as follows:
Undistributed net ordinary income |
|
|
|
$ |
0 |
|
|
|
|
|
Undistributed long-term capital gains |
|
|
|
|
0 |
|
|
|
|
|
Net unrealized appreciation |
|
|
|
|
953,846,937 |
|
|
|
|
|
Other ordinary timing differences |
|
|
|
|
(19,559,494 |
) |
|
|
|
|
|
|
|
|
$ |
934,287,443 |
|
|
|
|
|
17
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS—(Continued)
October 31, 2017
Note 6. Reclassification of Capital
Accounts:
Due to inherent differences in the
recognition and distribution of income and realized gains/losses under U.S. generally accepted accounting principles and for federal
income tax purposes, permanent differences between book and tax basis reporting have been identified and appropriately reclassified on the Statement of
Assets and Liabilities. At October 31, 2017, the following reclassifications were recorded:
Paid-in capital
|
|
|
|
Accumulated net realized
loss on
investments
|
|
Distributions in excess of
net
investment income
|
$(2,878,624) |
|
|
|
$(8,861,019) |
|
$11,739,643 |
The reclassifications primarily
relate to premium amortization, MLP recharacterization of gains and recharacterization of distributions. These reclassifications have no impact on the
net asset value of the Fund.
Note 7. Debt Financing:
The Fund has a Committed Facility
Agreement (the “Facility”) with a commercial bank (the “Bank”) that allows the Fund to borrow cash up to a limit of $400,000,000.
The Fund has also issued Secured Notes (the “Notes”). The Facility and Notes rank pari passu and are senior, with priority in all respects to
the outstanding common and preferred stock as to the payment of dividends and with respect to the distribution of assets upon dissolution, liquidation
or winding up of the affairs of the Fund. Key information regarding the Facility and Notes is detailed below.
A. Borrowings Under the
Facility: Borrowings under the Facility are collateralized by certain assets of the Fund (the “Hypothecated Securities”). The Fund
expressly grants the Bank the right to re-register the Hypothecated Securities in its own name or in another name other than the Fund’s and to
pledge, repledge, hypothecate, rehypothecate, sell, lend or otherwise transfer or use the Hypothecated Securities. Interest is charged at 3 month LIBOR
(London Inter-bank Offered Rate) plus an additional percentage rate of 1.15% on the amount borrowed. A commitment fee of 0.90% on any undrawn balance
is also paid and is included in interest expense and fees on the Statement of Operations. The Bank has the ability to require repayment of the Facility
upon 179 days’ notice or following an event of default. For the year ended October 31, 2017, the average daily borrowings under the Facility and
the weighted daily average interest rate were $400,000,000 and 2.32%, respectively. As of October 31, 2017, the amount of such outstanding borrowings
was $400,000,000 and the applicable interest rate was 2.53%.
The Bank has the ability to borrow
the Hypothecated Securities (“Rehypothecated Securities”). The Fund is entitled to receive a fee from the Bank in connection with any
borrowing of Rehypothecated Securities. The fee is computed daily based on a percentage of the difference between the fair market rate as determined by
the Bank and the Fed Funds Open and is paid monthly. The Fund can designate any Hypothecated Security as ineligible for rehypothecation and can recall
any Rehypothecated Security at any time and if the Bank fails to return it (or an equivalent security) in a timely fashion, the Bank will be liable to
the Fund for the ultimate delivery of such security and certain costs associated with delayed delivery. In the event the Bank does not return the
security or an equivalent security, the Fund will have the right to, among other things, apply and set off an amount equal to 100% of the then-current
fair market value of such Rehypothecated Securities against any amounts owed to the Bank under the Facility. The Fund is entitled to receive an amount
equal to any and all interest, dividends or distributions paid or
18
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS—(Continued)
October 31, 2017
distributed with respect to
any Hypothecated Security on the payment date. At October 31, 2017, Hypothecated Securities under the Facility had a market value of $1,905,033,720 and
Rehypothecated Securities had a market value of $353,988,571. If at the close of any business day, the value of all outstanding Rehypothecated
Securities exceeds the value of the Fund’s borrowings, the Bank shall promptly, at its option, either reduce the amount of the outstanding
Rehypothecated Securities or deliver an amount of cash at least equal to the excess amount.
B. Notes: In
2016, the Fund completed a private placement of $300,000,000 of Notes in two fixed-rate series. Net proceeds from the issuances were used to reduce the
amount of the Fund’s borrowing under its Facility. The Notes are secured by a lien on all assets of the Fund of every kind, including all
securities and all other investment property, equal and ratable with the liens securing the Facility. The Notes are not listed on any exchange or
automated quotation system.
Key terms of each series of
secured notes is as follows:
Series
|
|
|
|
Amount
|
|
Rate
|
|
Maturity
|
|
Estimated Fair
Value
|
|
| A |
|
|
|
$ |
100,000,000 |
|
|
|
2.76 |
% |
|
|
7/22/23 |
|
|
$ |
97,590,000 |
|
|
|
|
|
| B |
|
|
|
|
200,000,000 |
|
|
|
3.00 |
% |
|
|
7/22/26 |
|
|
|
192,260,000 |
|
|
|
|
|
| |
|
|
|
$ |
300,000,000 |
|
|
|
|
|
|
|
|
|
|
$ |
289,850,000 |
|
|
|
|
|
The Fund incurred costs in
connection with the issuance of the Notes. These costs were recorded as a deferred charge and are being amortized over the respective life of each
series of Notes. Amortization of these offering costs of $414,715 is included under the caption “Interest expense and amortization of deferred
offering costs on secured notes” on the Statement of Operations and the unamortized balance is deducted from the carrying amount of the Notes
under the caption “Secured notes” on the Statement of Assets and Liabilities.
Holders of the Notes are entitled
to receive semi-annual interest payments until maturity. The Notes accrue interest at the annual fixed rate indicated above. The Notes are subject to
optional and mandatory redemption in certain circumstances and subject to certain prepayment penalties and premiums.
The estimated fair value of the
Notes was calculated, for disclosure purposes, based on estimated market yields and credit spreads for comparable instruments or representative indices
with similar maturity, terms and structure. The Notes are categorized as Level 2 within the fair value hierarchy.
Note 8. Floating Rate Mandatory Redeemable Preferred
Shares:
In 2014, the Fund issued 3,000
Floating Rate Mandatory Redeemable Preferred Shares (“MRP Shares”) in four series each with a liquidation preference of $100,000 per share.
Proceeds from the issuances were used to redeem all of the remaining outstanding remarketed preferred shares and to reduce the size of the Fund’s
credit facility.
19
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS—(Continued)
October 31, 2017
Key terms of each series of MRP
Shares at October 31, 2017 are as follows:
Series
|
|
|
|
Shares
Outstanding
|
|
Liquidation
Preference
|
|
Quarterly Rate
Reset
|
|
Rate
|
|
Weighted Daily
Average
Rate
|
|
Mandatory
Redemption
Date
|
A |
|
|
|
|
1,320 |
|
|
$ |
132,000,000 |
|
|
3M LIBOR + 2.00% |
|
|
3.34 |
% |
|
|
3.11 |
% |
|
4/1/2019 |
B |
|
|
|
|
600 |
|
|
|
60,000,000 |
|
|
3M LIBOR + 2.05% |
|
|
3.39 |
% |
|
|
3.16 |
% |
|
4/1/2021 |
C |
|
|
|
|
750 |
|
|
|
75,000,000 |
|
|
3M LIBOR + 2.15% |
|
|
3.49 |
% |
|
|
3.26 |
% |
|
4/1/2024 |
D |
|
|
|
|
330 |
|
|
|
33,000,000 |
|
|
3M LIBOR + 1.95% |
|
|
3.29 |
% |
|
|
3.06 |
% |
|
4/1/2021 |
|
|
|
|
|
3,000 |
|
|
$ |
300,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Fund incurred costs in
connection with the issuance of the MRP Shares. These cost were recorded as a deferred charge and are being amortized over the respective life of each
series of MRP Shares. Amortization of these deferred offering costs of $679,703 is included under the caption “Interest expense and amortization
of deferred offering costs on preferred shares” on the Statement of Operations and the unamortized balance is deducted from the carrying amount of
the MRP Shares under the caption “Floating rate mandatory redeemable preferred shares” on the Statement of Assets and
Liabilities.
Holders of the MRP Shares are
entitled to receive quarterly cumulative cash dividend payments on the first business day following each quarterly dividend date which is the last day
of each of March, June, September and December.
MRP Shares are subject to optional
and mandatory redemption in certain circumstances. The redemption price per share is equal to the sum of the liquidation preference per share plus any
accumulated but unpaid dividends plus, in some cases, an early redemption premium (which varies based on the date of redemption). The MRP Shares are
not listed on any exchange or automated quotation system. The fair value of the MRP Shares is estimated to be their liquidation preference. The MRP
Shares are categorized as Level 2 within the fair value hierarchy. The Fund is subject to certain restrictions relating to the MRP Shares such as
maintaining certain asset coverage, effective leverage ratio and overcollateralization ratio requirements. Failure to comply with these restrictions
could preclude the Fund from declaring any distributions to common shareholders and could trigger the mandatory redemption of the MRP Shares at
liquidation value.
In general, the holders of the MRP
Shares and of the Common Stock have equal voting rights of one vote per share. The holders of the MRP Shares are entitled to elect two members of the
Board of Directors, and separate class votes are required on certain matters that affect the respective interests of the MRP Shares and the Common
Stock.
20
DNP SELECT INCOME FUND INC.
NOTES TO FINANCIAL
STATEMENTS—(Continued)
October 31, 2017
Note 9. Indemnifications:
Under the Fund’s
organizational documents, its Officers and Directors are indemnified against certain liabilities arising out of the performance of their duties to the
Fund. In addition, in the normal course of business, the Fund enters into contracts that provide general indemnifications to other parties. The
Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not
occurred. However, the Fund has not had prior claims or losses pursuant to these arrangements and expects the risk of loss to be
remote.
Note 10. Subsequent Events:
Management has evaluated the
impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent
events requiring recognition or disclosure in these financial statements.
21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Board of Directors and
Shareholders of
DNP Select Income Fund Inc.
We have
audited the accompanying statement of assets and liabilities of DNP Select Income Fund Inc. (the Fund), including the schedule of investments, as of
October 31, 2017, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We
were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our
procedures included confirmation of securities owned as of October 31, 2017, by correspondence with the custodian. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DNP
Select Income Fund Inc. at October 31, 2017, the results of its operations and its cash flows for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein in conformity with U.S.
generally accepted accounting principles.
Chicago, Illinois
December 14,
2017
22
TAX INFORMATION
(Unaudited)
For the year ended October 31,
2017, the Fund makes the following disclosures for federal income tax purposes. The percentage, or the maximum amount allowable, of its ordinary income
dividends to qualify for the lower tax rates (“QDI”) applicable to individual shareholders, the percentage of ordinary income dividends
earned by the Fund which qualifies for the dividends received deduction (“DRD”) for corporate shareholders, and the long-term capital gains
dividends (“LTCG”) taxable at a 20% rate, or lower depending on the shareholder’s income ($ reported in thousands) are listed below. The
actual percentage of QDI, DRD and LTCG for the calendar year will be designated in year-end tax statements.
QDI
|
|
|
|
DRD
|
|
LTCG
|
100% |
|
|
|
100% |
|
$120,462 |
INFORMATION ABOUT
PROXY VOTING BY THE FUND (Unaudited)
The Fund’s Board of Directors
has adopted proxy voting policies and procedures. These proxy voting policies and procedures may be changed at any time by the Fund’s Board of
Directors.
A description of the policies and
procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling
the Administrator toll-free at (833) 604-3163 or is available on the Fund’s website
www.dnpselectincome.com or on the SEC’s website www.sec.gov.
Information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12 month period ended June 30 is available without charge, upon request, by
calling the Administrator toll-free at (833) 604-3163 or is available on the Fund’s website at
www.dnpselectincome.com or on the SEC’s website at www.sec.gov.
INFORMATION ABOUT THE
FUND’S PORTFOLIO HOLDINGS (Unaudited)
The Fund files its complete
schedule of portfolio holdings with the SEC for the first and third fiscal quarters of each fiscal year (quarters ended January 31 and July 31) on Form
N-Q. The Fund’s Form N-Q is available on the SEC’s web site at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference
Room in Washington D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling (800) 732-0330. In addition,
the Fund’s Form N-Q is available without charge, upon request, by calling the Administrator toll-free at (833) 604-3163 or is
available on the Fund’s website at www.dnpselectincome.com.
ADDITIONAL INFORMATION
(Unaudited)
Since October 31, 2016: (i) there
have been no material changes in the Fund’s investment objectives or policies that have not been approved by the shareholders; (ii) there have
been no changes in the Fund’s charter or by-laws that would delay or prevent a change in control of the Fund which have not been approved by the
shareholders; (iii) there have been no material changes in the principal risk factors associated with an investment in the fund; and (iv) there have
been no changes in the persons who are primarily responsible for the day-to-day management of the Fund’s portfolio other than that Connie M.
Luecke will succeed Nathan I. Partain as Chief Investment Officer of the Fund effective January 1, 2018, as discussed in the management letter on page
3. Additional information about Ms. Luecke’s business experience is provided on page 27.
Additional information, if any
relating to the Fund’s directors and officers, in addition to such information as is found elsewhere in this Annual Report, may be requested by
contacting the Fund at the address provided in this report.
23
INFORMATION ABOUT
DIRECTORS AND OFFICERS OF THE FUND (Unaudited)
Set forth below are the names and
certain biographical information about the directors of the Fund. Directors are divided into three classes and are elected to serve staggered
three-year terms. All of the directors are elected by the holders of the Fund’s common stock, except for Mr. Genetski and Ms.
McNamara, who are elected by the holders of the Fund’s preferred stock. All of the current directors of the Fund, with the exception of Mr.
Partain, are classified as independent directors because none of them are “interested persons” of the Fund, as defined in the 1940 Act. Mr.
Partain is an “interested person” of the Fund by reason of his position as President and Chief Executive Officer of the Fund and President,
Chief Investment Officer and employee of the Adviser. The term “Fund Complex” refers to the Fund and all the other investment companies
advised by affiliates of Virtus.
The address for all directors is
c/o Duff & Phelps Investment Management Co., 200 South Wacker Drive, Suite 500, Chicago, Illinois 60606. All of the Fund’s directors currently
serve on the Board of Directors of three other registered closed-end investment companies that are advised by Duff & Phelps Investment Management
Co.: Duff & Phelps Global Utility Income Fund Inc. (“DPG”), Duff & Phelps Utility and Corporate Bond Trust Inc. (“DUC”) and
DTF Tax-Free Income Inc. (“DTF”).
DIRECTORS OF THE FUND
(Unaudited)
Name and Age
|
|
|
|
Position(s)
Held
with
Fund
|
|
Term of Office and
Length of
Time Served
|
|
Principal
Occupation(s)
During Past 5 Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen
by Director
|
|
Other Directorships
Held by the Director
|
Independent Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald C. Burke
Age: 57 |
|
|
|
Director |
|
Term expires 2018; Director since 2014 |
|
Retired since 2009; President and Chief Executive Officer, Blackrock U.S. Funds 2007–2009; Managing Director, Blackrock, Inc.
2006–2009; Managing Director, Merrill Lynch Investment Managers 1990–2006 |
|
91 |
|
Director, Avista Corp. (energy company); Trustee, Goldman Sachs Fund Complex 2010–2014; Director, BlackRock Luxembourg and
Cayman Funds
2006–2010 |
Robert J. Genetski
Age: 75 |
|
|
|
Director |
|
Term expires 2019; Director since 2001 |
|
Co-owner, Good Industries, Inc. (branding company) since 2014; President, Robert Genetski & Associates, Inc. (economic and
financial consulting firm) since 1991; Senior Managing Director, Chicago Capital Inc. (financial services firm) 1995–2001; former Senior Vice
President and Chief Economist, Harris Trust & Savings Bank, author of several books |
|
4 |
|
|
|
|
24
Name and Age
|
|
|
|
Position(s)
Held
with
Fund
|
|
Term of Office and
Length of
Time Served
|
|
Principal
Occupation(s)
During Past 5 Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen
by Director
|
|
Other Directorships
Held by the Director
|
Clifford W. Hoffman
Age: 67 |
|
|
|
Director |
|
Term expires 2018; Director
since 2016 |
|
Retired since 2012; Audit Partner, Deloitte & Touche LLP 1985–2012 (Audit Manager 1974–1985) |
|
4 |
|
The Goodman Group LLC (non-profit senior living facility provider) |
Philip R. McLoughlin
Age: 71 |
|
|
|
Director |
|
Term expires 2019; Director since 2009 |
|
Private investor since 2010; Partner, CrossPond Partners, LLC (investment management consultant) 2006–2010; Managing Director,
SeaCap Partners LLC (strategic advisory firm) 2009–2010 |
|
95 |
|
Chairman of the Board, The World Trust Fund (closed-end fund) since 2010 (Director since 1991) |
Geraldine M. McNamara
Age: 66 |
|
|
|
Director |
|
Term expires 2020; Director since 2009 |
|
Private investor since 2006; Managing Director, U.S. Trust Company of New York 1982–2006 |
|
91 |
|
|
Eileen A. Moran
Age: 63 |
|
|
|
Director |
|
Term expires 2018; Director since 2008 |
|
Private investor since 2011; President and Chief Executive Officer, PSEG Resources L.L.C. (investment company)
1990–2011 |
|
4 |
|
|
David J. Vitale
Age: 71 |
|
|
|
Director and Chairman of the Board |
|
Term expires 2020;
Director since 2000 |
|
Chairman of the Board of DNP, DUC and DTF since 2009 and DPG since 2011; Chairman, Urban Partnership Bank since 2010; President,
Chicago Board of Education 2011–2015; Senior Advisor to the CEO, Chicago Public Schools 2007–2008 (Chief Administrative Officer
2003–2007); President and Chief Executive Officer, Board of Trade of the City of Chicago, Inc. 2001–2002; Vice Chairman and Director, Bank
One Corporation 1998–1999; Vice Chairman and Director, First Chicago NBD Corporation, and President, The First National Bank of Chicago
1995–1998; Vice Chairman, First Chicago Corporation and The First National Bank of Chicago 1993–1998 (Director 1992–1998; Executive Vice
President 1986–1993) |
|
4 |
|
Director, United Continental Holdings, Inc. (airline holding company; f/k/a UAL Corporation), Urban Partnership Bank, Ariel Capital
Management, LLC and Wheels, Inc. (automobile fleet management) |
25
Name and Age
|
|
|
|
Position(s)
Held
with
Fund
|
|
Term of Office and
Length of
Time Served
|
|
Principal
Occupation(s)
During Past 5 Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen
by Director
|
|
Other Directorships
Held by the Director
|
Interested Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nathan I. Partain, CFA
Age: 61 |
|
|
|
Director, President and Chief Executive Officer (Chief Investment Officer through December
2017) |
|
Term expires 2019; Director since 2007 |
|
President and Chief Investment Officer of the Adviser since 2005 (Executive Vice President 1997–2005); Director of Utility
Research, Duff & Phelps Investment Research Co. 1989–1996 (Director of Equity Research 1993–1996 and Director of Fixed Income Research
1993); President and Chief Executive Officer of the Fund since 2001 and Chief Investment Officer since 1998 (Executive Vice President 1998–2001;
Senior Vice President 1997–1998); President and Chief Executive Officer of DUC and DTF since 2004 and of DPG since 2011 |
|
4 |
|
Chairman of the Board and Director, Otter Tail Corporation (manages diversified operations in the electric, plastics, manufacturing
and other business operations sectors) |
26
OFFICERS OF THE FUND
(Unaudited)
The officers of the Fund are
elected at the annual meeting of the board of directors of the Fund and serve until their respective successors are chosen and qualified. The officers
receive no compensation from the Fund, but are also officers of the Fund’s investment adviser or the Fund’s administrator and receive
compensation in such capacities. Information about Nathan I. Partain, the President and Chief Executive Officer of the Fund, is provided above under
the caption “Interested Director”. The address for all officers listed below is c/o Duff & Phelps Investment Management Co., 200 South
Wacker Drive, Suite 500, Chicago, Illinois 60606, except as noted.
Name, Address and Age
|
|
|
|
Position(s) Held with Fund
and
Length of Time Served
|
|
Principal Occupation(s) During Past 5
Years
|
Connie M. Luecke, CFA
Age: 59 |
|
|
|
Vice President and Chief Investment Officer (effective January 2018) |
|
Senior Managing Director of the Adviser since 2015 (Senior Vice President 1998-2014; Managing Director 1996-1998; various positions with an
Adviser affiliate 1992-1995); Portfolio Manager of Virtus Total Return Fund since 2016; Portfolio Manager of Virtus Duff & Phelps Global
Infrastructure Fund since 2004 |
Alan
M. Meder, CFA, CPA
Age: 58 |
|
|
|
Treasurer, Principal Financial and Accounting Officer and Assistant Secretary since 2011 (Assistant Treasurer 2010–2011) |
|
Chief Risk Officer of the Adviser since 2001 and Senior Managing Director since 2014 (Senior Vice President 1994–2014); Member, Board of
Governors of CFA Institute 2008–2014 (Chair of the Board of Governors of CFA Institute 2012–2013; Vice Chairman of the Board 2011–2012);
Financial Accounting Standards Advisory Council Member 2011–2014 |
Daniel J. Petrisko, CFA
Age: 57 |
|
|
|
Senior Vice President since January 2017 and Assistant Secretary since 2015 (Vice President 2015–2016) |
|
Executive Managing Director of the Adviser since March 2017 (Senior Managing Director 2014–February
2017; Senior Vice President 1997–2014; Vice President 1995–1997) |
William J. Renahan
Age: 48 |
|
|
|
Vice
President and Secretary since 2015 |
|
Secretary of the Adviser since 2014 and General Counsel since 2015; Senior Legal Counsel and Vice President, Virtus Investment Partners, Inc.
since 2012; Managing Director, Legg Mason, Inc. (and predecessor firms) 1999–2012 |
Joyce B. Riegel
Age: 63 |
|
|
|
Chief Compliance Officer since 2004 |
|
Chief Compliance Officer of the Adviser since 2002 and Senior Managing Director since 2014 (Senior Vice President 2004–2014; Vice President
2002–2004) |
Dianna P. Wengler
J.J.B. Hilliard,
W.L. Lyons, LLC
500 West Jefferson Street
Louisville, KY 40202
Age: 57 |
|
|
|
Vice
President since 2006 and Assistant Secretary since 1988 (Assistant Vice President
2004–2006) |
|
Senior Vice President, J.J.B. Hilliard, W.L. Lyons, LLC since 2016 (Vice President 1990–2015); Senior Vice President, Hilliard-Lyons
Government Fund, Inc. 2006–2010 (Vice President 1998–2006; Treasurer 1988–2010) |
27
DISTRIBUTION
REINVESTMENT AND CASH PURCHASE PLAN (Unaudited)
DNP Select Income Fund Inc. (the
“Fund”) maintains a Distribution Reinvestment and Cash Purchase Plan (the “plan”). Under the plan, shareholders may elect to have
all distributions paid on their common stock automatically reinvested by Computershare Trust Company, N.A. (the “Agent”) as plan agent for
shareholders, in additional shares of common stock of the Fund. Only registered shareholders may participate in the plan. The plan permits a nominee,
other than a depository, to participate on behalf of those beneficial owners for whom it is holding shares who elect to participate. However, some
nominees may not permit a beneficial owner to participate without transferring the shares into the owner’s name. Shareholders who do not elect to
participate in the plan will receive all distributions in cash paid by check mailed directly to the shareholder (or, if the shareholder’s shares
are held in street or other nominee name, then to such shareholder’s nominee) by the Agent as dividend disbursing agent. Registered shareholders
may also elect to have cash dividends deposited directly into their bank accounts.
When a distribution is reinvested
under the plan, the number of shares of common stock equivalent to the cash dividend or distribution is determined as follows:
(i) If the
current market price of the shares equals or exceeds their net asset value, the Fund will issue new shares to the plan at the greater of current net
asset value or 95% of the then current market price, without any per share fees (or equivalent purchase costs).
(ii) If the
current market price of the shares is less than their net asset value, the Agent will receive the distributions in cash and will purchase the
reinvestment shares in the open market or in private purchases for the participants’ accounts. Each participant will pay a per share fee, (or
equivalent purchase costs) incurred in connection with such purchases. Purchases are made through a broker selected by the Agent that may be an
affiliate of the Agent. Shares are allocated to the accounts of the respective participants at the average price per share, plus per share fees paid by
the Agent for all shares purchased by it in reinvestment of the distribution(s) paid on a particular day and in concurrent purchases of shares for
voluntary additional share investment.
The time of valuation is the close
of trading on the New York Stock Exchange on the most recent day preceding the date of payment of the distribution on which that exchange is open for
trading. As of that time, the Fund’s administrator compares the net asset value per share as of the time of the close of trading on the New York
Stock Exchange, and determines which of the alternative procedures described above are to be followed.
The reinvestment shares are
credited to the participant’s plan account in the Fund’s stock records maintained by the Agent, including a fractional share to six decimal
places. The Agent sends to each participant a written statement of all transactions in the participant’s share account, including information that
the participant will need for income tax records. Shares held in the participant’s plan account have full distribution and voting rights.
Distributions paid on shares held in the participant’s plan account will also be reinvested.
The cost of administering the plan
is borne by the Fund. There is no brokerage commission on shares issued directly by the Fund. However, participants do pay a per share fee incurred in
connection with purchases by the Agent for reinvestment of distributions and voluntary cash payments.
The automatic reinvestment of
distributions does not relieve participants of any income taxes that may be payable (or required to be withheld) on distributions.
28
Plan participants may purchase
additional shares of common stock through the plan by delivering to the Agent a check for at least $100, but not more than $5,000, in any month. The
Agent will use such funds to purchase shares in the open market or in private transactions.
The purchase price of such shares
may be more than or less than net asset value per share. The Fund will not issue new shares or supply treasury shares for such voluntary additional
share investment. Purchases will be made commencing with the time of the first distribution payment after receipt of the funds for additional
purchases, and may be aggregated with purchases of shares for reinvestment of the distribution. Shares will be allocated to the accounts of
participants purchasing additional shares at the weighted average price per share, plus a service charge imposed by the Agent and a per share fee paid
by the Agent for all shares purchased by it, including for reinvestment of distributions. Funds sent to the Agent for voluntary additional share
investment may be recalled by the participant by telephone, internet or written notice received by the Agent not later than two business days before
the next distribution payment date. If for any reason a regular monthly distribution is not paid by the Fund, funds for voluntary additional share
investment will be returned to the participant, unless the participant specifically directs that they continue to be held by the Agent for subsequent
investment. Participants will not receive interest on voluntary additional funds held by the Agent pending investment.
A shareholder may leave the plan
at any time by telephone, Internet or written notice to the Agent. If your letter of termination is received by the Agent after the record date for a
distribution, it may not be effective until the next distribution. Upon discontinuing your participation, you will have two choices (i) if you so
request by telephone, through the Internet or in writing, the Agent will sell your shares and send you a check for the net proceeds after deducting the
Agent’s sales fees (currently $5.00) and any per share fee (currently $0.04) or (ii) if you so request by telephone, through the Internet or in
writing, you will receive from the Agent a certificate for the number of whole non-certificated shares in your share account, and a check in payment of
the value of a fractional share, less applicable fees. If and when it should be determined that the only balance remaining in your plan account is a
fraction of a single share, your participation may be deemed to have terminated, and the Agent will mail you a check for the value of your fractional
share less applicable fees, determined as in the case of other terminations.
The Fund may change, suspend or
terminate the plan at any time, and will promptly mail a notice of such action to the participants at their last address of record with the
Agent.
For more information regarding,
and an authorization form for, the plan, please contact the Agent at 1-877-381-2537 or on the Agent’s website,
www.computershare.com/investor.
Information on the plan is also
available on the Fund’s website at www.dnpselectincome.com.
29
Board of Directors
DAVID J. VITALE,
Chairman
DONALD C. BURKE
ROBERT J. GENETSKI
CLIFFORD W. HOFFMAN
PHILIP R. MCLOUGHLIN
GERALDINE M. MCNAMARA
EILEEN A. MORAN
NATHAN I. PARTAIN, CFA
Officers
NATHAN I. PARTAIN, CFA
President, Chief Executive
Officer and
Chief Investment Officer
DANIEL J. PETRISKO, CFA
Senior Vice President and Assistant
Secretary
WILLIAM J. RENAHAN
Vice President and
Secretary
DIANNA P. WENGLER
Vice President and Assistant
Secretary
ALAN M. MEDER, CFA, CPA
Treasurer and Assistant
Secretary
JOYCE B. RIEGEL
Chief Compliance
Officer
DNP
Select
Income Fund Inc.
Common stock listed on the New York
Stock Exchange under
the symbol DNP
200 South Wacker Drive, Suite 500
Chicago, IL 60606
(312) 368-5510
Shareholder inquiries please
contact:
Transfer Agent and
Dividend Disbursing
Agent
Computershare
P.O. Box 43078
Providence, RI
02940
(877) 381-2537
Investment Adviser
Duff & Phelps Investment
Management Co.
200
South Wacker Drive, Suite 500
Chicago, IL 60606
(312) 368-5510
Administrator
J.J.B. Hilliard, W.L. Lyons, LLC
500 West Jefferson
Street
Louisville, KY 40202
(833) 604-3163
Custodian
The Bank of New York Mellon
Legal Counsel
Mayer Brown LLP
Independent Registered Public Accounting
Firm
Ernst & Young LLP
As of the end of the period covered by this report, the registrant
has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer
(the “Code of Ethics”). The registrant’s principal financial officer also performs the functions of principal
accounting officer.
The text of the registrant’s Code of Ethics is posted on the
registrant’s web site at www.dnpselectincome.com. In the event that the registrant makes any amendment to or grants any waiver
from the provisions of its Code of Ethics, the registrant intends to disclose such amendment or waiver on its web site within five
business days.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT |
The registrant’s board of directors has determined that four
members of its audit committee: Donald C. Burke, Clifford W. Hoffman, Philip R. McLoughlin and David J. Vitale, are audit committee
financial experts and that each of them is “independent” for purposes of this Item.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The following table sets forth the aggregate audit and non-audit
fees billed to the registrant for each of the last two fiscal years for professional services rendered by the registrant’s
principal accountant, Ernst & Young LLP, an independent registered public accounting firm (the “Independent Auditor”)
| | |
Fiscal year ended | |
Fiscal year ended |
| | |
October 31, 2017 | |
October 31, 2016 |
| | |
| | | |
|
| (a) Audit Fees (1) | |
| $75,600 | | |
$75,600 |
| (b) Audit-Related Fees (2)(6) | |
| 0 | | |
0 |
| (c) Tax Fees (3)(6) | |
| 26,575 | | |
26,100 |
| (d) All Other Fees (4)(6) | |
| 0 | | |
0 |
| (e) Aggregate Non-Audit Fees (5)(6) | |
| 26,575 | | |
26,100 |
| (1) | Audit Fees are fees billed
for professional services rendered by the Independent Auditor for the audit of the registrant’s annual financial statements
and for the services that are normally provided by the Independent Auditor in connection with the statutory and regulatory filings
or engagements. |
| (2) | Audit-Related Fees are
billed for assurance and related services by the Independent Auditor that are reasonably related to the performance of the audit
of the registrant’s financial statements and are not reported under the caption “Audit Fees”. |
| (3) | Tax Fees are fees billed
for professional services rendered by the Independent Auditor for tax compliance, tax advice and tax planning. In both periods
shown in the table, such services consisted of preparation of the registrant’s annual federal and state income tax returns
and excise tax returns. |
| (4) | All Other Fees are fees
billed for products and services provided by the Independent Auditor, other than the services reported under the captions “Audit
Fees”, “Audit-Related Fees” and “Tax Fees”. |
| (5) | Aggregate Non-Audit Fees
are non-audit fees billed by the Independent Auditor for services rendered to the registrant, the registrant’s investment
adviser (the “Adviser”) and any entity controlling, controlled by or under common control with the Adviser that provides
ongoing services to the registrant (collectively, the “Covered Entities”). During both periods shown in |
the
table, no portion of such fees related to services rendered by the Independent Auditor to the Adviser or any other Covered Entity.
| (6) | No portion of these fees
was approved by the registrant’s audit committee after the beginning of the engagement pursuant to the waiver of the pre-approval
requirement for certain de minimis non-audit services described in Section 10A of the Securities Exchange Act of
1934 (the ‘Exchange Act”) and applicable regulations. |
The audit committee of the board of directors of the registrant
(the “Audit Committee”) jointly with the audit committee of the board of directors of Duff & Phelps Global Utility
Income Fund Inc. (“DPG”), Duff & Phelps Utility and Corporate Bond Trust Inc. (“DUC”) and DTF Tax-Free
Income Inc. (“DTF”), has adopted a Joint Audit Committee Pre-Approval Policy to govern the provision by the Independent
Auditor of the following services: (i) all engagements for audit and non-audit services to be provided by the Independent Auditor
to the registrant and (ii) all engagements for non-audit services to be provided by the Independent Auditor to the Adviser or any
other Covered Entity, if the engagement relates directly to the operations and financial reporting of the registrant. With respect
to non-audit services rendered by the Independent Auditor to the Adviser or any other Covered Entity that were not required to
be pre-approved by the Audit Committee because they do not relate directly to the operations and financial reporting of the registrant,
the Audit Committee has nonetheless considered whether the provision of such services is compatible with maintaining the independence
of the Independent Auditor.
Set forth below is a copy of the Joint Audit Committee Pre-Approval
Policy (omitting data in the appendices relating to DPG, DUC and DTF).
DNP SELECT INCOME FUND INC. (“DNP”)
DUFF & PHELPS GLOBAL UTILITY INCOME FUND
INC. (“DPG”)
DUFF & PHELPS UTILITY AND CORPORATE BOND
TRUST INC. (“DUC”)
DTF TAX-FREE INCOME INC. (“DTF”)
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL
POLICY
(adopted on December 13, 2017)
I.
Statement of Principles
Under the Sarbanes-Oxley Act of 2002 (the “Act”),
the Audit Committee of the Board of Directors of each of DNP Select Income Fund Inc., Duff & Phelps Global Utility Income Fund
Inc., Duff & Phelps Utility and Corporate Bond Trust Inc. and DTF Tax-Free Income Inc. (each a “Fund” and, collectively,
the “Funds”)(1) is responsible for the appointment, compensation and oversight of the work of the independent
auditor. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed
by the independent auditor in order to assure that they do not impair the auditor’s independence from the Fund. To implement
these provisions of the
| (1) | This Joint Audit Committee Pre-Approval Policy has been
adopted by the Audit Committee of each Fund. Solely for the sake of clarity and simplicity, this Joint Audit Committee Pre-Approval
Policy has been drafted as if there is a single Fund, a single Audit Committee and a single Board. The terms “Audit Committee”
and “Board” mean the Audit Committee and Board of each Fund, respectively, unless the context otherwise requires.
The Audit Committee and the Board of each Fund, however, shall act separately and in the best interests of its respective Fund. |
Act, the Securities and Exchange Commission (the “SEC”)
has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the
Audit Committee’s administration of the engagement of the independent auditor. Accordingly, the Audit Committee has adopted
this Audit and Non-Audit Services Pre-Approval Policy (this “Policy”), which sets forth the procedures and the conditions
pursuant to which services proposed to be performed by the independent auditor may be pre-approved.
The SEC’s rules establish two different approaches
to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration
of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval
of the Audit Committee (“specific pre-approval”). The Audit Committee believes that the combination of these two approaches
in this Policy will result in an effective and efficient procedure to pre-approve services performed by the independent auditor.
As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval
by the Audit Committee if it is to be provided by the independent auditor. Any proposed services exceeding pre-approved cost levels
or budgeted amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will
consider whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee will also
consider whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such
as its familiarity with the Fund’s business, people, culture, accounting systems, risk profile and other factors, and whether
the service might enhance the Fund’s ability to manage or control risk or improve audit quality. All such factors will be
considered as a whole, and no one factor should necessarily be determinative.
Under the SEC’s rules, the Audit Committee must pre-approve
non-audit services provided not only to the Fund but also to the Fund’s investment adviser and other affiliated entities
that provide ongoing services to the Fund if the independent accountant’s services to those affiliated entities have a direct
impact on the Fund’s operations or financial reporting.
The Audit Committee is also mindful of the relationship between
fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine, for each fiscal year,
the appropriate ratio between the total amount of fees for audit, audit-related and tax services (including any audit-related or
tax service fees for affiliates that are subject to pre-approval) and the total amount of fees for certain permissible non-audit
services classified as “all other” services (including any such services for affiliates that are subject to pre-approval).
The appendices to this Policy describe the audit, audit-related,
tax and “all other” services that have the general pre-approval of the Audit Committee. The term of any general pre-approval
is 12 months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. The Audit
Committee will annually
review and pre-approve the services that may be provided
by the independent auditor without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based on subsequent determinations.
The purpose of this Policy is to set forth the procedures
by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee’s responsibilities
to pre-approve services performed by the independent auditor to management.
The independent auditor has reviewed this Policy and believes
that implementation of this Policy will not adversely affect the auditor’s independence.
II.
Delegation
As provided in the Act and the SEC’s rules, the Audit
Committee may delegate either type of pre-approval authority to one or more of its members who are independent directors. Any member
to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee
at its next scheduled meeting. In accordance with the foregoing provisions, the Audit Committee has delegated pre-approval authority
to its chairman, since under the Audit Committee’s charter each member of the Audit Committee, including the chairman, is
required to be an independent director.
III.
Audit Services
The annual audit services engagement terms and fees will
be subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and
other procedures required to be performed by the independent auditor to be able to form an opinion on the Fund’s financial
statements. These other procedures include information systems and procedural reviews and testing performed in order to understand
and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will monitor
the audit services engagement as necessary, but no less than on a semiannual basis, and will also approve, if necessary, any changes
in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items.
In addition to the annual audit services engagement approved
by the Audit Committee, the Audit Committee may grant general pre-approval to other audit services, which are those services that
only the independent auditor reasonably can provide. Other audit services may include statutory audits and services associated
with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC
or other documents issued in connection with securities offerings.
The Audit Committee has pre-approved the audit services in
Appendix A. All other audit services not listed in Appendix A must be specifically pre-approved by the Audit Committee.
IV.
Audit-Related Services
Audit-related services are assurance and related services
that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally
performed by the independent auditor. Because the Audit Committee believes that the provision of audit-related services does not
impair the independence of the auditor and is consistent with the SEC’s rules on auditor independence, the Audit Committee
may grant general pre-approval to audit-related services. Audit-related services include, among others, accounting consultations
related to accounting, financial reporting or disclosure matters not classified as “audit services”; assistance with
understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded
audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory
reporting matters; and assistance with internal control reporting requirements under Form N-SAR.
The Audit Committee has pre-approved the audit-related services
in Appendix B. All other audit-related services not listed in Appendix B must be specifically pre-approved by the Audit Committee.
V.
Tax Services
The Audit Committee believes that the independent auditor
can provide tax services to the Fund such as tax compliance, tax planning and tax advice without impairing the auditor’s
independence, and the SEC has stated that the independent auditor may provide such services. Hence, the Audit Committee believes
it may grant general pre-approval to those tax services that have historically been provided by the auditor, that the Audit Committee
has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC’s rules
on auditor independence. The Audit Committee will not permit the retention of the independent auditor in connection with a transaction
initially recommended by the independent auditor, the sole business purpose of which may be tax avoidance and the tax treatment
of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Fund’s
Administrator or outside counsel to determine that the tax planning and reporting positions are consistent with this Policy.
Pursuant to the preceding paragraph, the Audit Committee
has pre-approved the tax services in Appendix C. All tax services involving large and complex transactions not listed in Appendix
C must be specifically pre-approved by the Audit Committee, including: tax services proposed to be provided by the independent
auditor to any executive officer or director of the Fund, in his or her individual capacity, where such services are paid for by
the Fund.
VI.
All Other Services
The Audit Committee believes, based on the SEC’s rules
prohibiting the independent auditor from providing specific non-audit services, that other types of non-audit services are permitted.
Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified
as all other services that it
believes are routine and recurring services, would not impair
the independence of the auditor and are consistent with the SEC’s rules on auditor independence.
The Audit Committee has pre-approved the “all other”
services in Appendix D. Permissible “all other” services not listed in Appendix D must be specifically pre-approved
by the Audit Committee.
A list of the SEC’s prohibited non-audit services is
attached to this Policy as Appendix E. The SEC’s rules and relevant guidance should be consulted to determine the precise
definitions of these services and the applicability of exceptions to certain of the prohibitions.
VII.
Pre-Approval Fee Levels or Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all services
to be provided by the independent auditor will be established annually by the Audit Committee. (Note that separate amounts may
be specified for services to the Fund and for services to other affiliated entities that are subject to pre-approval.) Any proposed
services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful
of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services. For
each fiscal year, the Audit Committee may determine the appropriate ratio between the total amount of fees for audit, audit-related
and tax services for the Fund (including any audit-related or tax services fees for affiliates that are subject to pre-approval),
and the total amount of fees for services classified as “all other” services (including any such services for affiliates
that are subject to pre-approval).
VIII.
Procedures
All requests or applications for services to be provided
by the independent auditor that do not require specific approval by the Audit Committee will be submitted to the Fund’s Administrator
and must include a detailed description of the services to be rendered. The Administrator will determine whether such services
are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee
will be informed on a timely basis of any such services rendered by the independent auditor.
Requests or applications to provide services that require
specific approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditor and the Fund’s
Administrator, and must include a joint statement as to whether, in their view, the request or application is consistent with the
SEC’s rules on auditor independence.
The Audit Committee has designated the Fund’s Administrator
to monitor the performance of all services provided by the independent auditor and to determine whether such services are in compliance
with this Policy. The Administrator will report to the Audit Committee on a periodic basis on the results of its monitoring. Both
the
Administrator and any member of management will immediately
report to the Chairman of the Audit Committee any breach of this Policy that comes to their attention.
IX.
Additional Requirements
The Audit Committee has determined to take additional measures
on an annual basis to meet its responsibility to oversee the work of the independent auditor and to assure the auditor’s
independence from the Fund, such as reviewing a formal written statement from the independent auditor delineating all relationships
between the independent auditor and the Fund, consistent with applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant's communications with the Audit Committee concerning independence, and discussing with
the independent auditor its methods and procedures for ensuring independence.
Appendix A
Pre-Approved Audit Services for Fiscal Year Ending in
2018
Dated: December 13, 2017
| Service |
| |
| 1. Services required under generally accepted auditing standards to perform the audit of the annual financial statements of the Fund, including performance of tax qualification tests relating to the Fund’s regulated investment company status and issuance of an internal control letter for the Fund’s Form N-SAR |
| 2. Reading of the Fund’s semi-annual financial statements |
| 3. Consultations by the Fund’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard setting bodies (Note: Under SEC rules, some consultations may be “audit-related” services rather than “audit” services) |
Appendix B
Pre-Approved Audit-Related Services for Fiscal Year Ending
in 2018
Dated: December 13, 2017
| Service |
| |
| |
|
1. Services associated
with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection
with securities offerings (e.g., comfort letters, consents), and assistance in responding to SEC comment letters |
| 2. Agreed-upon or expanded audit procedures related to accounting records required to respond to or comply with financial, accounting or regulatory reporting matters |
| 3. Consultations by the Fund’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be “audit” services rather than “audit-related” services) |
| 4. General assistance with implementation of the requirements of SEC rules or listing standards promulgated pursuant to the Sarbanes-Oxley Act |
Appendix
C
Pre-Approved Tax Services for Fiscal
Year Ending in 2018
Dated: December 13, 2017
| Service |
| |
| 1. Preparation of federal and state tax returns, including excise tax returns, and review of required distributions to avoid excise tax |
| 2. Preparation of state tax returns |
| 3. Consultations with the Fund’s management as to the tax treatment of transactions or events |
| 4. Tax advice and assistance regarding statutory, regulatory or administrative developments |
Appendix D
Pre-Approved “All Other” Services for Fiscal
Year Ending in 2018
Dated: December 13, 2017
Appendix E
Prohibited Non-Audit Services
| ■ | Bookkeeping or other services related to the accounting
records or financial statements of the audit client |
| ■ | Financial information systems design and implementation |
| ■ | Appraisal or valuation services, fairness opinions
or contribution-in-kind reports |
| ■ | Internal audit outsourcing services |
| ■ | Broker-dealer, investment adviser or investment banking
services |
| ■ | Expert services unrelated to the audit |
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS |
The registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). The
members of the committee are Donald C. Burke, Robert J. Genetski, Clifford W. Hoffman, Philip R. McLoughlin, Geraldine M. McNamara,
Eileen A. Moran and David J. Vitale.
A schedule of investments is included as part of the report to shareholders
filed under Item 1 of this report.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT
COMPANIES |
DNP
SELECT INCOME FUND INC.
DTF
TAX FREE INCOME INC.
DUFF
& PHELPS UTILITY AND CORPORATE BOND TRUST INC.
DUFF
& PHELPS GLOBAL UTILITY INCOME FUND INC.
PROXY VOTING POLICIES AND PROCEDURES
Last Revised June 19, 2014
| I. | Definitions. As used in these Policies and Procedures, the following terms
shall have the meanings ascribed below: |
| A. | “Adviser”
refers to Duff & Phelps Investment Management Co. |
| B. | “Adviser’s
Act” refers to the Investment Adviser’s Act of 1940, as amended. |
| C. | “corporate governance
matters” refers to changes involving the corporate ownership or structure of an issuer whose voting securities are within
a portfolio holding, including changes in the state of incorporation, changes in capital structure, including increases and decreases
of capital and preferred stock issuance, mergers and other corporate restructurings, and anti-takeover provisions such as staggered
boards, poison pills, and supermajority voting provisions. |
| D. | “Delegate”
refers to the Adviser, any proxy committee to which the Adviser delegates its responsibilities hereunder and any qualified, independent
organization engaged by the Adviser to vote proxies on behalf of the Fund. |
| E. | “executive compensation
matters” refers to stock option plans and other executive compensation issues including votes on “say on pay”
and “golden parachutes.” |
| F. | “Fund” refers
to DNP Select Income Fund Inc., DTF Tax-Free Income Inc., Duff & Phelps Utility and Corporate Bond Trust Inc., Duff &
Phelps Global Utility Income Fund Inc. or Duff & Phelps Diversified Income Fund Inc. as the case may be. |
| G. | “Investment Company
Act” refers to the Investment Company Act of 1940, as amended. |
| H. | “portfolio holding”
refers to any company or entity whose voting securities are held within the investment portfolio of the Fund as of the date a
proxy is solicited. |
| I. | “proxy contests”
refer to any meeting of shareholders of an issuer for which there are at least two sets of proxy statements and proxy cards, one
solicited by management and the others by a dissident or group of dissidents. |
| J. | “social issues”
refers to social, political and environmental issues. |
| K. | “takeover”
refers to “hostile” or “friendly” efforts to effect radical change in the voting control of the board
of directors of a company. |
| II. | General policy. It is the intention
of the Fund to exercise voting stock ownership rights in portfolio holdings in a manner that is reasonably anticipated to further
the best economic interests of shareholders of the Fund. Accordingly, the Fund or its Delegate(s) shall endeavor to analyze and
vote all proxies that are considered likely to have financial implications, and, where appropriate, to participate in corporate
governance, shareholder proposals, management communications and legal proceedings. The Fund and its Delegate(s) must also identify
potential or actual conflicts of interests in voting proxies and address any such conflict of interest in accordance with these
Policies and Procedures. |
| III. | Factors to consider
when voting. |
| A. | The Delegate may abstain from voting when it concludes
that the effect on shareholders’ economic interests or the value of the portfolio holding is indeterminable or insignificant. |
| B. | In analyzing anti-takeover
measures, the Delegate shall vote on a case-by-case basis taking into consideration such factors as overall long-term financial
performance of the target company relative to its industry competition. Key measures which shall be considered include, without
limitation, five-year annual compound growth rates for sales, operating income, net income, and total shareholder returns (share
price appreciation plus |
dividends). Other financial indicators
that will be considered include margin analysis, cash flow, and debt levels.
| C. | In analyzing proxy
contests for control, the Delegate shall vote on a case-by-case basis taking into consideration such factors as long-term
financial performance of the target company relative to its industry; management’s track record; background to the proxy
contest; qualifications of director nominees (both slates); strategic plan of dissident slate and quality of critique against
management; evaluation of what each side is offering shareholders; strategic plan of dissident slate and quality of critique against
management as well as the likelihood that the proposed objectives and goals can be met; and stock ownership positions. |
| D. | In analyzing contested
elections for director, the Delegate shall vote on a case-by-case basis taking into consideration such factors as the qualifications
of all director nominees. The Delegate shall also consider the independence and attendance record of board and key committee members.
A review of the corporate governance profile shall be completed highlighting entrenchment devices that may reduce accountability. |
| E. | In analyzing corporate
governance matters, the Delegate shall vote on a case-by-case basis taking into consideration such factors as tax and economic
benefits associated with amending an issuer’s state of incorporation, dilution or improved accountability associated with
changes in capital structure, management proposals to require a supermajority shareholder vote to amend charters and bylaws and
bundled or “conditioned” proxy proposals. |
| F. | In analyzing executive
compensation matters and management matters, the Delegate shall vote on a case-by-case basis, taking into consideration a
company’s overall pay program and demonstrated pay-for-performance philosophy, and generally disfavoring such problematic
pay practices as (i) repricing or replacing of underwater stock options, (ii) excessive perquisites or tax gross-ups and (iii)
change-in-control payments that are excessive or are payable based on a “single trigger” (i.e., without involuntary
job loss or substantial diminution of duties). With respect to the advisory vote on the frequency of “say on pay”
votes, the Delegate shall vote in favor of the option that received majority support from shareholders in the most recent advisory
vote. If no option received majority support and the board implemented an option that is less frequent than that which received
a plurality, but not majority of votes cast, additional factors will be taken into consideration on a case-by-case basis, including
the board’s rationale for implementing a less recurring “say on pay” vote, ownership structure, compensation
concerns and ‘say on pay” support level from the prior year. |
| G. | The Delegate shall generally vote against shareholder proposals on social issues,
except where the Delegate determines that a different position would be in the clear economic interests of the Fund and its
shareholders. |
| IV. | Responsibilities of
Delegates. |
| A. | In the absence of a specific
direction to the contrary from the Board of Directors of the Fund, the Adviser will be responsible for voting proxies for all
portfolio holdings in accordance with these Policies and Procedures, or for delegating such responsibility as described below. |
| B. | The Adviser may delegate
the administration of proxy activities hereunder to a proxy committee established from time to time by the Adviser and may engage
one or more qualified, independent organizations to vote proxies on behalf of the Fund. The Adviser |
shall be responsible
for the ensuring that any such Delegate is informed of and complies with these Policies and Procedures.
| C. | In voting proxies on behalf
of the Fund, each Delegate shall have a duty of care to safeguard the best interests of the Fund and its shareholders and to act
in accordance with these Policies and Procedures. |
| D. | No Delegate shall accept
direction or inappropriate influence from any other client or third party, or from any director, officer or employee of any affiliated
company, and shall not cast any vote inconsistent with these Policies and Procedures without obtaining the prior approval of the
Board of Directors of the Fund or its duly authorized representative. |
| A. | The Fund and its Delegate(s)
seek to avoid actual or perceived conflicts of interest in the voting of proxies for portfolio holdings between the interests
of Fund shareholders, on the one hand, and those of the Adviser or any affiliated person of the Fund or the Adviser, on the other
hand. The Board of Directors may take into account a wide array of factors in determining whether such a conflict exists, whether
such conflict is material in nature, and how to properly address or resolve the same. |
| B. | While each conflict situation
varies based on the particular facts presented and the requirements of governing law, the Board of Directors or its duly authorized
representative may take the following actions, among others, or otherwise give weight to the following factors, in addressing
material conflicts of interest in voting (or directing Delegates to vote) proxies pertaining to portfolio holdings: (i) vote
pursuant to the recommendation of the proposing Delegate; (ii) abstain from voting; or (iii) rely on the recommendations
of an established, independent third party with qualifications to vote proxies, such as Institutional Shareholder Services. |
| C. | The Adviser shall notify
the Board of Directors of the Fund promptly after becoming aware that any actual or potential conflict of interest exists and
shall seek the Board of Directors’ recommendations for protecting the best interests of Fund’s shareholders. The Adviser
shall not waive any conflict of interest or vote any conflicted proxies without the prior written approval of the Board of Directors
or its duly authorized representative. |
| A. | A copy of the current Proxy Voting Policies and Procedures
and the voting records for the Fund, reconciling proxies with portfolio holdings and recording proxy voting guideline compliance
and justification, shall be kept in an easily accessible place and available for inspection either physically or through electronic
posting on an approved website. |
| B. | In the event that a determination, authorization or
waiver under these Policies and Procedures is requested at a time other than a regularly scheduled meeting of the Board of Directors,
the Chairman of the Audit Committee shall be the duly authorized representative of the Board of Directors with the authority and
responsibility to interpret and apply these Policies and Procedures and shall provide a report of his or her determinations at
the next following meeting of the Board of Directors. |
| C. | The Adviser shall present a report of any material deviations
from these Policies and Procedures at every regularly scheduled meeting of the Board of Directors and shall provide such other
reports as the Board of Directors may request from time to time. The Adviser shall provide to the Fund or any shareholder a record
of its effectuation of proxy voting pursuant to these Policies and Procedures at such times and in such format or |
medium as the Fund shall reasonably
request. The Adviser shall be solely responsible for complying with its disclosure and reporting requirements under applicable
laws and regulations, including, without limitation, Rule 206(4)-6 under the Advisers Act as amended. The Adviser shall gather,
collate and present information relating to its proxy voting activities and those of each Delegate in such format and medium as
the Fund shall determine from time to time in order for the Fund to discharge its disclosure and reporting obligations pursuant
to Rule 30b1-4 under the Investment Company Act.
| D. | The Adviser shall pay all costs associated with proxy
voting for portfolio holdings pursuant to these Policies and Procedures and assisting the Fund in providing public notice of the
manner in which such proxies were voted, except that the Fund shall pay the costs associated with any filings required under the
Investment Company Act. |
| E. | In performing its duties hereunder, any Delegate or
authorized committee may engage the services of a research and/or voting adviser, the cost of which shall be borne by such Delegate.
The Adviser may delegate its voting responsibilities hereunder to a Proxy Committee established by the Adviser. |
| F. | These Policies and Procedures shall be presented to
the Board of Directors annually for their amendment and/or approval. |
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES |
In this Item, the term “Fund” refers
to the registrant, DNP Select Income Fund Inc.
The Fund’s Portfolio Managers
A team of investment professionals employed
by Duff & Phelps Investment Management Co., the Fund’s investment adviser (the “Adviser”), is responsible
for the day-to-day management of the Fund’s portfolio. The members of that investment team and their respective areas of
responsibility and expertise, as of December 29, 2017, are as follows:
Nathan I. Partain, CFA, has led the
Fund’s portfolio management team since 1998 and has served on the Fund’s portfolio management team since 1996. He has
been President, Chief Executive Officer and Chief Investment Officer of the Fund since 2001 (Executive Vice President and Chief
Investment Officer from 1998 to 2001). Mr. Partain has been President and Chief Investment Officer of the Adviser since 2005 (Executive
Vice President from 1997 to 2005), President and Chief Executive Officer of DTF Tax-Free Income Inc. (“DTF”) and Duff
& Phelps Utility and Corporate Bond Trust Inc. (“DUC”), two other closed-end utilities oriented funds, since 2004
and Duff & Phelps Global Utility Income Fund Inc. (“DPG”), another closed-end utilities oriented fund, since 2011.
Mr. Partain has final investment authority with respect to the Fund’s entire investment portfolio. He joined the Duff &
Phelps organization in 1987 and has served since then in positions of increasing responsibility. He is also chairman of the board
and a director of Otter Tail Corporation (chairman since 2011 and director since 1993).
Daniel J. Petrisko, CFA, has served
on the Fund’s portfolio management team since 2004 and has been a Senior Vice President since January 2017 and Assistant
Secretary since 2015 (Vice President 2015-2016). He has been an Executive Managing Director of the Adviser since March 2017 (Senior
Managing Director from 2014- February 2017, Senior Vice President from 1997 – 2014 and Vice President from 1995 – 1997).
He is also the chief investment officer of DUC. Mr. Petrisko concentrates his research on fixed-income securities and has investment
authority with respect to the Fund’s fixed-income portfolio. He joined the Duff & Phelps organization in 1995 and has
served since then in positions of increasing responsibility.
Other Accounts Managed by the Fund’s
Portfolio Managers
The following table provides information as
of October 31, 2017 regarding the other accounts besides the Fund that are managed by the portfolio managers of the Fund. As noted
in the table, portfolio managers of the Fund may also manage or be members of management teams for other mutual funds within the
same fund complex or other similar accounts. For purposes of this disclosure, the term “fund complex” includes the
Fund and all other investment companies advised by affiliates of Virtus Investment Partners, Inc. (“Virtus”), the Adviser’s
ultimate parent company. As of October 31, 2017, the Fund’s portfolio managers did not manage any accounts with respect to
which the advisory fee is based on the performance of the account, nor do they manage any hedge funds.
| |
|
Registered Investment |
|
Other Pooled Investment |
|
|
|
|
|
|
|
| |
|
Companies (1) |
|
Vehicles (2) |
|
|
Other Accounts (3) |
| |
|
|
|
Name
of
Portfolio
Manager |
|
Number of
Accounts |
|
Total Assets
(in millions) |
|
Number of
Accounts |
|
Total Assets
(in millions) |
|
Number of
Accounts |
|
Total Assets
(in millions) |
| |
|
|
|
|
|
|
| Nathan I. Partain |
|
0 |
|
$ |
— |
|
|
0 |
|
— |
|
|
0 |
|
|
— |
|
| Daniel J. Petrisko |
|
1 |
|
$ |
393 |
|
|
0 |
|
— |
|
|
8 |
|
|
$1,762 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Registered Investment Companies include all open and closed-end mutual funds. For Registered Investment Companies, assets represent net assets of all open-end investment companies and gross assets of all closed- end investment companies. |
| |
| (2) |
Other Pooled Investment Vehicles include, but are not limited to, securities of issuers exempt from registration under Section 3(c) of the Investment Company Act of 1940, such as private placements and hedge funds. |
| |
| (3) |
Other Accounts include, but are not limited to, individual managed accounts, separate accounts, institutional accounts, pension funds and collateralized bond obligations. |
| |
There may be certain inherent conflicts of
interest that arise in connection with the portfolio managers’ management of the Fund’s investments and the investments
of any other accounts they manage. Such conflicts could include aggregation of orders for all accounts managed by a particular
portfolio manager, the allocation of purchases across all such accounts, the allocation of IPOs and any soft dollar arrangements
that the Adviser may have in place that could benefit the Fund and/or such other accounts. The Adviser has adopted policies and
procedures designed to address any such conflicts of interest to ensure that all management time, resources and investment opportunities
are allocated equitably. There have been no material compliance issues with respect to any of these policies and procedures during
the Fund’s most recent fiscal year.
Compensation of the Fund’s Portfolio
Managers
The following is a description of the compensation
structure, as of October 31, 2017, of the Fund’s portfolio managers.
The Adviser is a wholly-owned indirect subsidiary
of Virtus Investment Partners, Inc. (“Virtus”). Virtus and its affiliated investment management firms, including the
Adviser, believe that their compensation programs are adequate and competitive to attract and retain high-caliber investment professionals.
The Fund’s portfolio managers receive a base salary, an incentive bonus opportunity, and a benefits package, as detailed
below.
Highly-compensated individuals participate
in a long-term incentive compensation program, including potential awards of Virtus restricted stock units (“RSUs”)
with multi-year vesting, subject to Virtus board approval, and may also take advantage of opportunities to defer their current
tax liability.
Base Salary: Each portfolio manager
is paid a fixed base salary, which is determined by Virtus and the Adviser and is designed to be competitive in light of the individual’s
experience and responsibilities. Virtus management utilizes results of an investment industry compensation survey conducted by
an independent third party in evaluating competitive market compensation for its investment management professionals.
Incentive
Bonus: Incentive bonus pools are based on firm profits. The short-term incentive payment is generally paid in cash,
but a portion may be made in Virtus RSUs. Individual payments are assessed using comparisons of actual investment performance with
specific peer group or index measures established at the beginning of each calendar year. Performance of the Fund managed is measured
over one-, three- and five-year periods. Generally, an individual manager’s participation is based on the performance of
each fund managed as weighted roughly by total assets in each of these funds. Incentive
bonus compensation of the Fund’s portfolio managers is currently comprised of two main components:
First, 70% of the incentive bonus is based
on: (i) the pre-tax performance of the Fund, as measured by earnings per share and total return over a one,-three,-and five-year
period against specified benchmarks and/or peer groups; (ii) the success of the individual manager in achieving assigned goals;
and (iii) a subjective assessment of the manager’s contribution to the efforts of the team. The total return component of
the performance portion of portfolio managers’ incentive bonus compensation is compared to a composite of the S&P Utility
Market Price Index and the Bloomberg Barclays U.S. Utility Bond Index. Portfolio Managers who manage more than one product may
have other components in their formulaic calculation that are appropriate to the other products, weighted according to the proportion
of the manager’s time that is allocated to each specific product.
Second, 30% of the target incentive is based
on financial measures of Virtus. These financial measures include adjusted earnings before interest, tax, depreciation and amortization;
gross inflows, and product investment performance. A portion of the total incentive bonus can be paid in Virtus RSUs that vest
over three years.
The performance portion of the portfolio managers’
incentive bonus compensation is not based on the value of assets held in the Fund’s portfolio (except to the extent that
the level of assets in the Fund’s portfolio affects the advisory fee received by the Adviser and thus, indirectly, the profitability
of Virtus).
Other Benefits: Portfolio managers
are eligible to participate in a 401(k) plan, health insurance, and other benefits offered generally to the firm’s employees
that could include granting of RSUs in Virtus stock.
Equity Ownership of Portfolio Managers
The following table sets forth the dollar range
of equity securities in the Fund beneficially owned, as of October 31, 2017, by each of the portfolio managers identified above.
| |
Name of Portfolio Manager |
|
Dollar Range of
Equity Securities in the Fund |
|
| |
Nathan I. Partain |
|
$500,001 - $1,000,000 |
|
| |
Daniel J. Petrisko |
|
none |
|
| |
|
|
|
|
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
During the period covered by this report, no
purchases were made by or on behalf of the registrant or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3)
under the Exchange Act) of shares or other units of any class of the registrant’s equity securities that is registered by
the registrant pursuant to Section 12 of the Exchange Act.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
No changes to the procedures by which shareholders
may recommend nominees to the registrant’s board of directors have been implemented after the registrant last provided disclosure
in response to the requirements of Item 22(b)(15) of Schedule 14A (i.e., in the registrant’s Proxy Statement dated
March 14, 2017) or this Item.
| ITEM 11. | CONTROLS AND PROCEDURES |
(a) The registrant’s principal executive
officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective, based on an evaluation of
those controls and procedures made as of a date within 90 days of the filing date of this report as required by Rule 30a-3(b) under
the 1940 Act and Rule 13a-15(b) under the Exchange Act.
(b) There has been no change in the registrant’s
internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal
quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting.
| ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES |
| (a) SECURITIES LENDING ACTIVITIES |
| |
|
|
| Gross income from securities lending activities |
$ 284,660 |
| |
|
|
| Fees paid to securities lending agent from a revenue split |
$ (85,430) |
| |
|
|
| Net income from securities lending activities |
$ 199,230 |
(b) The registrant does not have a standalone
securities lending program. However, the provisions of the registrant’s committed facility agreement with a commercial bank
(which is collateralized by certain portfolio securities of the registrant) allow the bank to borrow securities pledged by the
registrant and lend them to third parties and affiliates of the bank. The bank shares with the registrant a portion of the revenue
it receives from lending those securities. The above-described provisions of the registrant’s committed facility operate
in a manner similar to a securities lending program. In connection with those borrowing and lending activities, the bank performs
the following services:
| · | monitoring daily the
value of the loaned securities and collateral (i.e., the collateral posted by the party borrowing the securities, not the registrant’s
collateral under the facility) |
| · | requiring additional
collateral as necessary (as above) |
| · | cash collateral management |
| · | qualified dividend management |
| · | negotiation of loan
terms |
| · | selection of securities
to be loaned |
| · | recordkeeping and account
servicing |
| · | monitoring dividend
activity and material proxy votes relating to loaned securities, and |
| · | arranging for return
of loaned securities to the registrant at loan termination |
| (a)
Exhibit 99.CERT |
Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
| (b)
Exhibit 99.906CERT |
Certifications pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 |
(c) Copies of the Registrant’s notices to shareholders
pursuant to Rule 19a-1 under the 1940 Act which accompanied distributions paid during the six months ended October 31, 2017 pursuant
to the Registrant’s Managed Distribution Plan are filed herewith as required by the terms of the Registrant’s exemptive
order issued on August 26, 2008.
DNP SELECT INCOME FUND INC.
Section 19(a) Notice
|
Notification of Sources of Distribution
Distribution Period |
May 2017 |
| Distribution Amount Per Share of Common Stock |
$0.065 |
The following table sets forth the estimated
amounts of the current distribution, payable June 12, 2017, together with the cumulative distributions paid this fiscal year to
date from the following sources. All amounts are expressed per share of common stock based on U.S. generally accepted accounting
principles, which may differ from federal income tax regulations.
| Distribution Estimates |
May 2017 |
Year-to-date (YTD) |
| Sources |
Per Share Amount |
% of Current
Distribution |
Per Share Amount |
% of Cumulative
Distributions |
| Net Investment Income |
$0.018 |
28% |
$0.164 |
36% |
| Net Realized Short-Term Capital Gains |
- |
- |
- |
- |
| Net Realized Long-Term Capital Gains |
0.013 |
20% |
0.291 |
64% |
| Return of Capital (or Other Capital Source) |
0.034 |
52% |
- |
- |
| Total (per common share) |
$0.065 |
100% |
$0.455 |
100% |
| |
|
|
|
|
| April 30, 2017 |
|
| Average annual total return* on NAV for the 5 years |
|
|
13.13% |
| Annualized current distribution rate as a percentage of NAV |
|
|
7.86% |
| Cumulative total return on NAV for the fiscal year |
|
|
9.96% |
| Cumulative fiscal year distributions as a percentage of NAV |
|
|
3.93% |
The Fund will issue a separate 19(a) notice
at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions
about the Fund's investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution
plan.
The Fund estimates that it has distributed
more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital
may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution
does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported
in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the
amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of the fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the
past five annual returns.
DNP SELECT INCOME FUND INC.
Section 19(a) Notice
|
Notification of Sources of Distribution
Distribution Period |
June 2017 |
| Distribution Amount Per Share of Common Stock |
$0.065 |
The following table sets forth the estimated
amounts of the current distribution, payable July 10, 2017, together with the cumulative distributions paid this fiscal year to
date from the following sources. All amounts are expressed per share of common stock based on U.S. generally accepted accounting
principles, which may differ from federal income tax regulations.
| Distribution Estimates |
June 2017 |
Year-to-date (YTD) |
| Sources |
Per Share Amount |
% of Current
Distribution |
Per Share Amount |
% of Cumulative
Distributions |
| Net Investment Income |
$0.025 |
39% |
$0.187 |
36% |
| Net Realized Short-Term Capital Gains |
0.003 |
4% |
0.005 |
1% |
| Net Realized Long-Term Capital Gains |
- |
- |
0.328 |
63% |
| Return of Capital (or Other Capital Source) |
0.037 |
57% |
- |
- |
| Total (per common share) |
$0.065 |
100% |
$0.520 |
100% |
| |
|
|
|
|
| May 31, 2017 |
|
| Average annual total return* on NAV for the 5 years |
|
|
13.58% |
| Annualized current distribution rate as a percentage of NAV |
|
|
7.78% |
| Cumulative total return on NAV for the fiscal year |
|
|
11.79% |
| Cumulative fiscal year distributions as a percentage of NAV |
|
|
4.54% |
The Fund will issue a separate 19(a) notice
at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions
about the Fund's investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution
plan.
The Fund estimates that it has distributed
more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital
may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution
does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported
in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the
amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of the fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the
past five annual returns.
DNP SELECT INCOME FUND INC.
Section 19(a) Notice
|
Notification of Sources of Distribution
Distribution Period |
July 2017 |
| Distribution Amount Per Share of Common Stock |
$0.065 |
The following table sets forth the estimated
amounts of the current distribution, payable August 10, 2017, together with the cumulative distributions paid this fiscal year
to date from the following sources. All amounts are expressed per share of common stock based on U.S. generally accepted accounting
principles, which may differ from federal income tax regulations.
| Distribution Estimates |
July 2017 |
Year-to-date (YTD) |
| Sources |
Per Share Amount |
% of Current
Distribution |
Per Share Amount |
% of Cumulative
Distributions |
| Net Investment Income |
$0.015 |
24% |
$0.205 |
35% |
| Net Realized Short-Term Capital Gains |
0.012 |
18% |
0.017 |
3% |
| Net Realized Long-Term Capital Gains |
0.010 |
15% |
0.363 |
62% |
| Return of Capital (or Other Capital Source) |
0.028 |
43% |
- |
- |
| Total (per common share) |
$0.065 |
100% |
$0.585 |
100% |
| |
|
|
|
|
| June 30, 2017 |
|
| Average annual total return* on NAV for the 5 years |
|
|
12.81% |
| Annualized current distribution rate as a percentage of NAV |
|
|
8.01% |
| Cumulative total return on NAV for the fiscal year |
|
|
9.39% |
| Cumulative fiscal year distributions as a percentage of NAV |
|
|
5.34% |
The Fund will issue a separate 19(a) notice
at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions
about the Fund's investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution
plan.
The Fund estimates that it has distributed
more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital
may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution
does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported
in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the
amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of the fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the
past five annual returns.
DNP SELECT INCOME FUND INC.
Section 19(a) Notice
|
Notification of Sources of Distribution
Distribution Period |
August 2017 |
| Distribution Amount Per Share of Common Stock |
$0.065 |
The following table sets forth the estimated
amounts of the current distribution, payable September 11, 2017, together with the cumulative distributions paid this fiscal year
to date from the following sources. All amounts are expressed per share of common stock based on U.S. generally accepted accounting
principles, which may differ from federal income tax regulations.
| Distribution Estimates |
August 2017 |
Year-to-date (YTD) |
| Sources |
Per Share Amount |
% of Current
Distribution |
Per Share Amount |
% of Cumulative
Distributions |
| Net Investment Income |
$0.021 |
33% |
$0.228 |
35% |
| Net Realized Short-Term Capital Gains |
- |
- |
0.006 |
1% |
| Net Realized Long-Term Capital Gains |
- |
- |
0.351 |
54% |
| Return of Capital (or Other Capital Source) |
0.044 |
67% |
0.065 |
10% |
| Total (per common share) |
$0.065 |
100% |
$0.650 |
100% |
| |
|
|
|
|
| July 31, 2017 |
|
| Average annual total return* on NAV for the 5 years |
|
|
11.98% |
| Annualized current distribution rate as a percentage of NAV |
|
|
7.79% |
| Cumulative total return on NAV for the fiscal year |
|
|
13.09% |
| Cumulative fiscal year distributions as a percentage of NAV |
|
|
5.85% |
The Fund will issue a separate 19(a) notice
at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions
about the Fund's investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution
plan.
The Fund estimates that it has distributed
more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital
may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution
does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported
in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the
amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of the fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the
past five annual returns.
DNP SELECT INCOME FUND INC.
Section 19(a) Notice
|
Notification of Sources of Distribution
Distribution Period |
September 2017 |
| Distribution Amount Per Share of Common Stock |
$0.065 |
The following table sets forth the estimated
amounts of the current distribution, payable October 10, 2017, together with the cumulative distributions paid this fiscal year
to date from the following sources. All amounts are expressed per share of common stock based on U.S. generally accepted accounting
principles, which may differ from federal income tax regulations.
| Distribution Estimates |
September 2017 |
Year-to-date (YTD) |
| Sources |
Per Share Amount |
% of Current
Distribution |
Per Share Amount |
% of Cumulative
Distributions |
| Net Investment Income |
$0.025 |
38% |
$0.250 |
35% |
| Net Realized Short-Term Capital Gains |
- |
- |
0.007 |
1% |
| Net Realized Long-Term Capital Gains |
0.023 |
36% |
0.379 |
53% |
| Return of Capital (or Other Capital Source) |
0.017 |
26% |
0.079 |
11% |
| Total (per common share) |
$0.065 |
100% |
$0.715 |
100% |
| |
|
|
|
|
| August 31, 2017 |
|
| Average annual total return* on NAV for the 5 years |
|
|
13.80% |
| Annualized current distribution rate as a percentage of NAV |
|
|
7.69% |
| Cumulative total return on NAV for the fiscal year |
|
|
15.40% |
| Cumulative fiscal year distributions as a percentage of NAV |
|
|
6.41% |
The Fund will issue a separate 19(a) notice
at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions
about the Fund's investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution
plan.
The Fund estimates that it has distributed
more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital
may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution
does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported
in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the
amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of the fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the
past five annual returns.
DNP SELECT INCOME FUND INC.
Section 19(a) Notice
|
Notification of Sources of Distribution
Distribution Period |
October 2017 |
| Distribution Amount Per Share of Common Stock |
$0.065 |
The following table sets forth the estimated
amounts of the current distribution, payable November 10, 2017, together with the cumulative distributions paid this fiscal year
to date from the following sources. All amounts are expressed per share of common stock based on U.S. generally accepted accounting
principles, which may differ from federal income tax regulations.
| Distribution Estimates |
October 2017 |
Year-to-date (YTD) |
| Sources |
Per Share Amount |
% of Current
Distribution |
Per Share Amount |
% of Cumulative
Distributions |
| Net Investment Income |
$0.010 |
16% |
$0.265 |
34% |
| Net Realized Short-Term Capital Gains |
- |
- |
0.008 |
1% |
| Net Realized Long-Term Capital Gains |
0.015 |
23% |
0.390 |
50% |
| Return of Capital (or Other Capital Source) |
0.040 |
61% |
0.117 |
15% |
| Total (per common share) |
$0.065 |
100% |
$0.780 |
100% |
| |
|
|
|
|
| September 30, 2017 |
|
| Average annual total return* on NAV for the 5 years |
|
|
12.62% |
| Annualized current distribution rate as a percentage of NAV |
|
|
7.89% |
| Cumulative total return on NAV for the fiscal year |
|
|
13.23% |
| Cumulative fiscal year distributions as a percentage of NAV |
|
|
7.23% |
The Fund will issue a separate 19(a) notice
at the time of each monthly distribution using the most current financial information available. You should not draw any conclusions
about the Fund's investment performance from the amount of this distribution or from the terms of the Fund’s managed distribution
plan.
The Fund estimates that it has distributed
more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital
may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution
does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
The amounts and sources of distributions reported
in this notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the
amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of the fiscal year and
may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell
you how to report these distributions for federal income tax purposes.
* Simple arithmetic average of each of the
past five annual returns.
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.
| (Registrant) |
DNP SELECT INCOME FUND INC. |
| |
|
| By (Signature and Title) |
/s/ Nathan I. Partain |
| |
|
| |
Nathan I. Partain |
| |
President and Chief Executive Officer |
| |
(Principal Executive Officer) |
| Date |
December 29, 2017 |
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 (Signature and Title) |
/s/ Nathan I. Partain |
| |
|
| |
Nathan I. Partain |
| |
President and Chief Executive Officer |
| |
(Principal Executive Officer) |
| Date |
December 29, 2017 |
| By (Signature and Title) |
/s/ Alan M. Meder |
| |
|
| |
Alan M. Meder |
| |
Treasurer and Assistant Secretary |
| |
(Principal Financial and Accounting Officer) |
| Date |
December 29, 2017 |
