As filed with the Securities and Exchange Commission on April 30, 2003
Investment Company Act file no. 811-4915
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-2
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 45 [X]
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DNP SELECT INCOME FUND INC.
(Exact name of registrant as specified in charter)
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55 East Monroe Street
Chicago, Illinois 60603
(Address of principal executive offices)
Registrant's telephone number: 312/368-5510
Nathan I. Partain John R. Sagan
DNP Select Income Fund Inc. Mayer, Brown, Rowe & Maw
55 East Monroe Street 190 South LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60603
(Names and addresses of agents for service)
It is proposed that this filing will become effective:
[X] immediately upon filing.
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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PART A: INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover
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Not applicable.
Item 2. Cover Pages; Other Offering Information
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Not applicable.
Item 3. Fee Table and Synopsis
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1.
Shareholder Transaction Expenses
Sales Load (as a percentage of offering price).....................N/A
Dividend Reinvestment and Cash Purchase Plan Fees..................(1)
Annual Expenses (as a percentage of net assets attributable to common shares)
Management Fees................................................. 0.78%
Interest Payments on Borrowed Funds............................. 0.25%
Other Expenses.................................................. 0.41%
Total Annual Expenses.................................. 1.44%
Example (2) 1 year 2 years 5 years 10 years
You would pay the following expenses on a $1,000 investment,
assuming a 5% annual return $15 $30 $79 $173
(1) Shareholders that reinvest dividends and/or capital gains
distributions will be charged only brokerage fees in the event that
shares are purchased in the open market. Investors investing cash in
addition to any cash dividends reinvested will be charged brokerage
commissions plus a service fee of $2.50 per transaction. See Item
10.1(c).
(2) This Example should not be considered a representation of future
expenses, and actual expenses may be greater or lesser than
those shown.
The purpose of the foregoing table is to assist an investor in understanding
the costs and expenses that an investor will bear directly or indirectly, and
the information contained therein is not necessarily indicative of future
performance. See Item 9.
2. Not applicable.
3. Not applicable.
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Item 4. Financial Highlights
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Not applicable.
Item 5. Plan of Distribution
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Not applicable.
Item 6. Selling Shareholders
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Not applicable.
Item 7. Use of Proceeds
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Not applicable.
Item 8. General Description of the Registrant
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1. General
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(a) The Registrant, DNP Select Income Fund Inc. (the
"Fund"), is a corporation organized under the laws of the
State of Maryland on November 26, 1986.
(b) The Fund is a diversified closed-end investment company.
2. Investment Objectives and Policies
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Investment objectives
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The Fund's primary investment objectives are current income and
long-term growth of income. Capital appreciation is a secondary objective.
Principal investment strategies
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The Fund seeks to achieve its investment objectives by investing
primarily in a diversified portfolio of equity and fixed income securities of
companies in the public utilities industry. Under normal conditions, more than
65% of the Fund's total assets will be invested in securities of public
utility companies engaged in the production, transmission or distribution of
electric energy, gas or telephone services. The Fund's investment objectives
stated in the preceding paragraph and its policy of concentrating its
investments in the utilities industry are fundamental policies and may not be
changed without the approval of the holders of a "majority" (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the
outstanding shares of the common stock and the preferred stock voting together
as one class, which means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented or
(ii) more than 50% of the outstanding shares.
Fundamental investment restrictions
-----------------------------------
The following are fundamental investment restrictions of the Fund
that may be changed only with approval of the holders of a "majority" (as
defined in the 1940 Act) of the outstanding shares of the common stock and the
preferred stock voting together as one class:
1. The Fund may not invest more than 25% of its total assets
(valued at the time of investment) in securities of companies engaged
principally in any one industry other than the utilities industry,
which includes companies engaged in the production, transmission or
distribution of electric energy or gas or in telephone services,
except that this restriction does not apply to securities issued or
guaranteed by the United States Government or its agencies or
instrumentalities.
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2. The Fund may not:
(a) invest more than 5% of its total assets (valued
at the time of the investment) in the securities of any one
issuer, except that this restriction does not apply to
United States Government securities; or
(b) acquire more than 10% of the outstanding voting
securities of any one issuer (at the time of
acquisition);
except that up to 25% of the Fund's total assets (at the time of
investment) may be invested without regard to the limitations set
forth in this restriction.
3. The Fund may borrow money on a secured or unsecured basis
for any purpose of the Fund in an aggregate amount not exceeding 15%
of the value of the Fund's total assets at the time of any such
borrowing (exclusive of all obligations on amounts held as collateral
for securities loaned to other persons to the extent that such
obligations are secured by assets of at least equivalent value).
4. The Fund may not pledge, mortgage or hypothecate its
assets, except to secure indebtedness permitted by restriction 3
above. (The deposit in escrow of securities in connection with the
writing of put and call options, collateralized loans of securities
and collateral arrangements with respect to margin requirements for
futures transactions and with respect to segregation of securities in
connection with forward contracts are not deemed to be pledges or
hypothecations for this purpose.)
5. The Fund may make loans of securities to other persons to
the extent of not more than 33 1/3% of its total assets (valued at
the time of the making of loans), and may invest without limitation
in short-term obligations and publicly distributed obligations.
6. The Fund may not underwrite the distribution of
securities of other issuers, although it may acquire securities that,
in the event of a resale, might be required to be registered under
the Securities Act of 1933, as amended, because the Fund could be
regarded as an underwriter as defined in that act with respect to the
resale.
7. The Fund may not purchase or sell real estate or any
interest therein, except that the Fund may invest in securities
secured by real estate or interests therein, such as mortgage
pass-throughs, pay-throughs, collateralized mortgage obligations, and
securities issued by companies (including partnerships and real
estate investment trusts) that invest in real estate or interests
therein.
8. The Fund may acquire securities of other investment
companies to the extent (at the acquisition) of (i) not more than 3%
of the outstanding voting stock of any one investment company, (ii)
not more than 5% of the assets of the Fund in any one investment
company and (iii) not more than 10% of the assets of the Fund in all
investment companies (exclusive in each case of securities received
as a dividend or as a result of a merger, consolidation or other plan
of reorganization).
9. The Fund may not invest for the purpose of exercising
control over or management of any company.
10. The Fund may not purchase securities on margin, or make
short sales of securities, except the use of short-term credit
necessary for the clearance of purchases and sales of portfolio
securities, but it may make margin deposits in connection with
transactions in options, futures and options on futures.
11. The Fund may not purchase or sell commodities or
commodity contracts, except that it may enter into (i) stock index
futures transactions, interest rate futures transactions and options
on such future transactions and (ii) forward contracts on foreign
currencies to the extent permitted by applicable law.
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12. The Fund may not issue any security senior to its common
stock, except that the Fund may borrow money subject to investment
restriction 3 and except as permitted by the Fund's charter.
If a percentage restriction set forth above is adhered to at the time
a transaction is effected, later changes in percentages resulting from changes
in value or in the number of outstanding securities of an issuer will not be
considered a violation.
Other Significant Investment Policies
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Fixed Income Securities. The Fund purchases a fixed income security
only if, at the time of purchase, it is (i) rated investment grade by at least
two of the following three nationally recognized statistical rating
organizations: Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), and
Fitch, Inc. ("Fitch") or (ii) determined by the Fund's investment adviser to
be of investment grade and not rated below investment grade by any of the
aforementioned rating services. A fixed income security rated investment grade
has a rating of BBB- or better by Fitch, Baa3 or better by Moody's, or BBB- or
better by S&P. In making its determination that a fixed income security is
investment grade, the Fund's investment adviser will use the standards used by
a nationally recognized statistical rating organization.
Leverage. The Fund is authorized to borrow money in amounts of up to
15% of the value of its total assets at the time of such borrowings. However,
for so long as the Fund's preferred stock is rated by S&P, the Fund will limit
the aggregate amount of its borrowings to 10% of the value of its total assets
and will not incur any borrowings, unless advised by S&P that such borrowings
would not adversely affect S&P's then-current rating of the preferred stock.
Lending of Portfolio Securities. In order to generate additional
income, the Fund may from time to time lend securities from its portfolio,
with a value not in excess of 33 1/3% of its total assets, to brokers, dealers
and financial institutions such as banks and trust companies for which it will
receive collateral in cash, United States Government securities or an
irrevocable letter of credit that will be maintained in an amount equal to at
least 100% of the current market value of the loaned securities.
Rating Agency Guidelines. The Fund's preferred stock is currently
rated by Moody's, S&P and Fitch, nationally recognized statistical rating
organizations, which issue ratings for various securities reflecting the
perceived creditworthiness of those securities. The Fund intends that, so long
as shares of its preferred stock are outstanding, the composition of its
portfolio will reflect guidelines established by the foregoing rating
organizations in connection with the Fund's receipt of the highest rating for
its preferred stock from at least two of such rating organizations.
Options and Futures Transactions. The Fund may seek to increase its
current return by writing covered options. In addition, through the writing
and purchase of options and the purchase and sale of futures contracts and
related options, the Fund may at times seek to hedge against a decline in the
value of securities owned by it or an increase in the price of securities
which it plans to purchase. However, for so long as shares of the Fund's
preferred stock are rated either by Moody's or S&P, the Fund will not purchase
or sell futures contracts or related options or engage in other hedging
transactions unless Moody's or S&P, as the case may be, advises the Fund that
such action or actions will not adversely affect its then-current rating of
the Fund's preferred stock.
Temporary Investments. For temporary defensive purposes, the Fund may
be invested primarily in money market securities. These securities include
securities issued or guaranteed by the United States Government and its
agencies and instrumentalities, commercial paper and certificates of deposit.
To the extent that the Fund engages in such defensive investments, it may not
achieve its investment objectives.
Nonfundamental Restrictions. The Fund may not (i) invest in
securities subject to legal or contractual restrictions on resale, if, as a
result of such investment, more than 10% of the Fund's total assets would be
invested in such securities, or (ii) acquire 5% or more of the outstanding
voting securities of a public utility company.
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Each of the policies and restrictions described above may be changed
by the board of directors without the approval of the Fund's shareholders. If
a percentage restriction set forth above is adhered to at the time a
transaction is effected, later changes in percentages resulting from changes
in value or in the number of outstanding securities of an issuer will not be
considered a violation.
3. Risk Factors
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Leverage. As of December 31, 2002, the Fund had outstanding
indebtedness of $197,955,439 and five series of preferred stock with
an aggregate liquidation preference of $500 million. The dividend
rate on each series of preferred stock is reset every 49 days through
a remarketing procedure. As of April 11, 2003, the dividend rate on
the five series of preferred stock averaged 1.23% and the interest
rate on the Fund's outstanding indebtedness averaged 1.52%. The Fund
must experience an annual return of 0.42% on its portfolio in order
to cover annual interest and dividend payments on the Fund's
outstanding indebtedness and preferred stock.
Leverage creates certain risks for holders of common stock, including
higher volatility of both the net asset value and market value of the
common stock. Fluctuations in dividend rates on the preferred stock
and interest rates on the Fund's indebtedness will affect the
dividend to holders of common stock. Holders of the common stock
receive all net income from the Fund remaining after payment of
dividends on the preferred stock and interest on the Fund's
indebtedness, and generally are entitled to a pro rata share of net
realized capital gains, if any.
Upon any liquidation of the Fund, the holders of shares of preferred
stock will be entitled to liquidating distributions (equal to
$100,000 per share of preferred stock plus any accumulated and unpaid
dividends thereon) and the holders of the Fund's indebtedness will be
entitled to receive repayment of outstanding principal plus
accumulated and unpaid interest thereon before any distribution is
made to holders of common stock.
The leverage obtained through the issuance of the preferred stock and
from the Fund's presently outstanding indebtedness has provided
holders of common stock with a higher dividend than such holders
would have otherwise received. However, there can be no assurance
that the Fund will be able to continue to realize such a higher net
return on its investment portfolio. Changes in certain factors could
cause the relationship between the dividends paid on the preferred
stock and interest paid on the Fund's indebtedness to increase
relative to the dividend and interest rates on the portfolio
securities in which the Fund may be invested. Under such conditions
the benefit of leverage to holders of common stock will be reduced
and the Fund's leveraged capital structure could result in a lower
rate of return to holders of common stock than if the Fund were not
leveraged. The Fund is required by the 1940 Act to maintain an asset
coverage of 200% on outstanding preferred stock and 300% on
outstanding indebtedness. If the asset coverage declines below those
levels (as a result of market fluctuations or otherwise), the Fund
may be required to sell a portion of its investments at a time when
it may be disadvantageous to do so.
The following table illustrates the effects of leverage on a return
to common stockholders. The figures appearing in the table are
hypothetical and actual returns may be greater or less than those
appearing in the table.
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Assumed annual return on -10.00% -5.00% 0.00% 5.00% 10.00%
portfolio (net of expenses)
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Corresponding annual return -15.15% -7.97% 0.79% 6.40% 13.58%
to common stockholder
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Investments in Securities of Foreign Issuers. While the Fund is
prohibited from investing 15% or more of its assets in securities of
foreign issuers, the Fund may be exposed to certain risks as a result
of foreign investments. Investing in securities of foreign issuers
involves certain considerations not typically associated with
investing in securities of U.S. companies, including (a) controls on
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foreign investment and limitations on repatriation of invested
capital and on the Fund's ability to exchange local currencies for
U.S. dollars, (b) greater price volatility, substantially less
liquidity and significantly smaller market capitalization of
securities markets, (c) currency devaluations and other currency
exchange rate fluctuations, (d) more substantial government
involvement in the economy, (e) higher rates of inflation, (f) less
government supervision and regulation of the securities markets and
participants in those markets and (g) political uncertainty and other
considerations. The Fund will treat investments in countries with
repatriation restrictions as illiquid for purposes of any applicable
limitations under the 1940 Act; however, as a closed-end fund, the
Fund is not currently limited under that Act in the amount of
illiquid securities it may acquire. Because of the limited forward
market for the purchase of U.S. dollars in most foreign countries and
the limited circumstances in which the Fund expects to hedge against
declines in the value of foreign country currencies generally, the
Fund will be adversely affected by devaluations of foreign country
currencies against the U.S. dollar to the extent the Fund is invested
in securities denominated in currencies experiencing a devaluation.
The Fund's fundamental investment policies permit the Fund to enter
into currency hedging transactions.
In addition, accounting, auditing and financial reporting standards
in foreign countries are different from U.S. standards. As a result,
certain material disclosures may not be made and less information may
be available to the Fund and other investors than would be the case
if the Fund's investments were restricted to securities of U.S.
issuers. Moreover, it may be more difficult to obtain a judgment in a
court outside the United States. Interest and dividends paid on
securities held by the Fund and gains from the disposition of such
securities may be subject to withholding taxes imposed by foreign
countries.
Anti-takeover Provisions. Certain provisions of the Fund's charter
may be regarded as "anti-takeover" provisions because they could have
the effect of limiting the ability of other entities or persons to
acquire control of the Fund. See Item 10.l(e).
Premium/Discount From Net Asset Value. Shares of closed-end
investment companies trade in the market above, at and below net
asset value. This characteristic of shares of closed-end investment
companies is a risk separate and distinct from the risk that the
Fund's net asset value may decline. Since inception, the Fund's
common stock has generally traded at a premium to net asset value.
For example, in the two-year period ended December 31, 2002, as of
the close of business of the New York Stock Exchange on the last day
in each week on which the New York Stock Exchange was open (the date
the Fund calculates its net asset value per share), the Fund's shares
were trading at a premium to net asset value 100% of the time. The
Fund usually does not calculate its net asset value per share on any
other day and does not know whether the Fund's shares were trading at
a premium to net asset value on such days. The Fund is not able to
predict whether its shares will trade above, at or below net asset
value in the future.
Dividend Captures. The Fund acts to increase its dividend income
using a strategy called "dividend capture." During 2002, dividend
captures accounted for approximately 30% of the Fund's investment
income. Under this strategy, the Fund purchases shares of stock of a
particular issuer immediately prior to the market close on the
stock's ex-dividend date and then writes a covered call option on the
same number of shares of that issuer. The call option expires at
10:00 a.m. on the immediately following trading day. Because the Fund
is the holder of the stock at the market close on the ex-dividend
date, it is entitled to receive the dividend on the stock. However,
under normal circumstances, the holder of the call option will elect
to exercise the option and thus the Fund will have disposed of the
stock by 10:00 a.m. on the trading day immediately following the
ex-dividend date. The use of dividend captures entails certain costs
and risks. Because the market price of the stock generally declines
by the amount of the dividend immediately after the ex-dividend date,
the Fund experiences a capital loss on the stock approximating the
amount of the captured dividend. In addition, the Fund incurs
transaction costs in connection with the purchase of the stock and
the sale of the option. In 2002 such transaction costs equaled
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approximately 0.3% of the value of the stock. It is also possible
that the issuer of the stock could experience a material adverse
event during the period between the time of purchase of the stock and
the time of expiration of the option that would cause a decline in
the market value of the stock significantly in excess of the expected
decline that reflects the amount of the dividend. If this occurred,
the option holder would likely decline to exercise the option, and
the Fund would continue to hold the stock. Because of the possibility
that the call option will not be exercised, the Fund utilizes the
dividend capture strategy only in connection with equity securities
that the Adviser has determined to be suitable for inclusion in the
Fund's portfolio for a more extended period.
4. Other Policies
--------------
None.
5. Share Price Data
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The Fund's common stock has been listed on the New York Stock
Exchange since January 21, 1987 (trading symbol DNP). Since the commencement
of trading, the Fund's common stock has most frequently traded at a premium to
net asset value, but has periodically traded at a slight discount. The
following table shows the range of the market prices of the Fund's common
stock, net asset value of the Fund's shares corresponding to such high and low
prices and the premium to net asset value presented by such high and low
prices:
Market Premium (Discount)
Market Price Net Asset Value at to Net Asset Value at
Quarter Ended ------------ ------------------ ---------------------
------------- Market Market Market Market
High Low High Low High Low
---- --- ---- --- ---- ---
2003 March 31 $ 10.7500 $ 9.6900 $ 7.51 $ 6.85 43.14% 41.46%
2002 December 31 10.0000 8.1900 7.31 6.35 36.80% 28.98%
September 30 10.4300 7.8500 7.61 7.09 37.06% 10.72%
June 30 11.6200 9.1500 9.09 8.63 27.83% 6.03%
March 31 11.3700 10.9000 9.32 9.13 22.00% 19.39%
2001 December 31 11.2500 10.7000 9.56 9.26 17.68% 15.55%
September 30 11.2000 10.2000 9.77 9.13 14.64% 11.72%
June 30 11.2000 10.4300 10.23 9.96 9.48% 4.72%
March 31 10.9800 9.5625 9.88 9.80 11.13% (2.42%)
On April 11, 2003, the net asset value was $7.01, trading prices ranged
between $10.30 and $10.44 (representing a premium to net asset value of 46.93%
and 48.93%, respectively) and the closing price was $10.37 (representing a
premium to net asset value of 47.93%).
6. Business Development Companies
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Not applicable.
Item 9. Management
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1. General
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(a) Board of Directors
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The business and affairs of the Fund are managed under
the direction of the board of directors.
(b) Investment Adviser
------------------
The Fund's investment adviser (the "Adviser") is
Duff & Phelps Investment Management Co., 55 East Monroe
-7-
Street, Chicago, Illinois 60603. The Adviser (together with
its predecessor) has been in the investment advisory
business for more than 60 years and, excluding the Fund,
currently has more than $3.9 billion in client accounts
under discretionary management. The Adviser acts as adviser
to two other closed-end investment companies registered
under the 1940 Act and as sub-adviser to four open-end
investment companies registered under the 1940 Act. The
Adviser is a wholly-owned subsidiary of Phoenix Investment
Partners, Ltd. ("Phoenix Investment Partners"), which is an
indirect, wholly-owned subsidiary of The Phoenix Companies,
Inc. Prior to May 11, 1998, Phoenix Investment Partners was
known as Phoenix Duff & Phelps Corporation. Phoenix
Investment Partners, through its subsidiaries, provides
investment management, investment research, financial
consulting and investment banking services.
The Adviser is responsible for the management of
the Fund's investment portfolio, subject to the overall
control of the board of directors of the Fund.
Under the terms of an investment advisory agreement
between the Fund and the Adviser (the "Advisory Agreement"),
the Adviser receives from the Fund a quarterly fee at an
annual rate of .60% of the average weekly net asset value of
the Fund up to $1.5 billion and .50% of average weekly net
assets in excess of $1.5 billion. The net assets for each
weekly period are determined by averaging the net assets at
the end of a week with the net assets at the end of the
prior week. For purposes of the foregoing calculation, "net
assets" are defined as the sum of (i) the aggregate net
asset value of the Fund's common stock, (ii) the aggregate
liquidation preference of the Fund's preferred stock and
(iii) the aggregate proceeds to the Fund of commercial paper
issued by the Fund.
Under the terms of a service agreement among the
Adviser, Phoenix Investment Partners, and the Fund (the
"Service Agreement"), Phoenix Investment Partners makes
available to the Adviser the services, on a part-time basis,
of its employees and various facilities to enable the
Adviser to perform certain of its obligations to the Fund.
However, the obligation of performance under the Advisory
Agreement is solely that of the Adviser, for which Phoenix
Investment Partners assumes no responsibility, except as
described in the preceding sentence. The Adviser reimburses
Phoenix Investment Partners for any costs, direct or
indirect, fairly attributable to the services performed and
the facilities provided by Phoenix Investment Partners under
the Service Agreement. The Fund does not pay any fees
pursuant to the Service Agreement.
(c) Portfolio Management
--------------------
The Fund's portfolio is managed by Nathan I.
Partain and T. Brooks Beittel. Mr. Partain has been
responsible for the management of the equity investments in
the Fund's portfolio since January 1998. He has been
President and Chief Executive Officer of the Fund since
February 2001 (Executive Vice President April 1998-February
2001, Chief Investment Officer January 1998-February 2001,
Senior Vice President January 1997-April 1998, Assistant
Secretary January 1997-February 2001); Executive Vice
President, Duff & Phelps Investment Management Co. since
January 1997; and Director of Utility Research, Phoenix
Investment Partners, Ltd., 1989-1996 (Director of Equity
Research, 1993-1996 and Director of Fixed Income Research,
1993). Mr. Beittel has been responsible for the management
of the fixed income investments in the Fund's portfolio
since April 1994. He has been Secretary and Senior Vice
President of the Fund since January 1995 (Treasurer January
1995-September 2002) and Senior Vice President, Duff &
Phelps Investment Management Co. since 1993 (Vice President
1987-1993).
(d) Administrator
-------------
The Fund's administrator (the "Administrator") is
J.J.B. Hilliard, W.L. Lyons, Inc., Hilliard Lyons Center,
Louisville, Kentucky 40202. The Administrator is a
wholly-owned subsidiary of The PNC Financial Services Group,
-8-
Inc. Under the terms of an administration agreement (the
"Administration Agreement"), the Administrator provides all
management and administrative services required in
connection with the operation of the Fund not required to be
provided by the Adviser pursuant to the Advisory Agreement,
as well as the necessary office facilities, equipment and
personnel to perform such services. For its services, the
Administrator receives from the Fund a quarterly fee at
annual rates of .25% of the Fund's average weekly net assets
up to $100 million, .20% of the Fund's average weekly net
assets from $100 million to $1.0 billion and .10% of average
weekly net assets over $1.0 billion. The net assets for each
weekly period are determined by averaging the net assets at
the end of a week with the net assets at the end of the
prior week. For purposes of the foregoing calculation, "net
assets" are defined as the sum of (i) the aggregate net
asset value of the Fund's common stock, (ii) the aggregate
liquidation preference of the Fund's preferred stock and
(iii) the aggregate proceeds to the Fund of commercial paper
issued by the Fund.
(e) Custodian
---------
The Fund's custodian is The Bank of New York,
Church Street Station, Post Office Box 11258, New York, New
York 10286. The transfer agent and dividend disbursing agent
for the Fund's common and preferred stock is The Bank of New
York, Church Street Station, P.O. Box 11258, New York, New
York 10286.
(f) Expenses
--------
The Fund is responsible for all expenses not paid
by the Adviser or the Administrator, including brokerage
fees.
(g) Affiliated Brokerage
--------------------
The Fund has paid, and in the future may pay, broker
commissions to the Administrator. See Item 21.2.
2. Non-resident Managers.
----------------------
Not applicable.
3. Control Persons.
----------------
The Fund does not consider that any person
"controls" the Fund within the meaning of this item. For
information concerning the Fund's officers and directors,
see Item 18. No person is known by the Fund to own of record
or beneficially five percent or more of any class of the
Fund's outstanding equity securities.
Item 10. Capital Stock, Long-Term Debt, and Other Securities
------- ---------------------------------------------------
1. Capital Stock.
--------------
(a) Common Stock. Holders of common stock, $.001 par value
per share, of the Fund are entitled to dividends when and as
declared by the board of directors, to one vote per share in
the election of directors (with no right of cumulation), and
to equal rights per share in the event of liquidation. They
have no preemptive rights. There are no redemption,
conversion or sinking fund provisions. The shares are not
liable to further calls or to assessment by the Fund.
(b) Preferred Stock. Holders of preferred stock, $.001 par
value per share, of the Fund are entitled to receive
dividends before the holders of the common stock and are
entitled to receive the liquidation value of their shares
($100,000 per share) before any distributions are made to
the holders of the common stock, in the event the Fund is
ever liquidated. Each share of preferred stock is entitled
-9-
to one vote per share. The holders of the preferred stock
have the right to elect two directors of the Fund at all
times and to elect a majority of the directors if at any
time dividends on the preferred stock are unpaid for two
years. In addition to any approval by the holders of the
shares of the Fund that might otherwise be required, the
approval of the holders of a majority of the outstanding
shares of the preferred stock, voting separately as a class,
will be required under the 1940 Act to adopt any plan of
reorganization that would adversely affect the holders of
preferred stock and to approve, among other things, changes
in the Fund's sub-classification as a closed-end investment
company, changes in its investment objectives or changes in
its fundamental investment restrictions.
Subject to certain restrictions, the Fund may, and under
certain circumstances is required to, redeem shares of its
preferred stock at a price of $100,000 per share, plus
accumulated but unpaid dividends. The shares of preferred
stock are not liable to further calls or to assessment by
the Fund. There are no preemptive rights or sinking fund or
conversion provisions. The Fund, may, however, upon the
occurrence of certain events, authorize the exchange of its
current preferred stock on a share-for-share basis for a
separate series of authorized but unissued preferred stock
having different dividend privileges.
(c) Dividend Reinvestment Plan. Under the Fund's dividend
reinvestment plan shareholders may elect to have all
dividends and capital gains distributions paid on their
common stock automatically reinvested by The Bank of New
York, as agent for shareholders, in additional shares of
common stock of the Fund. 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
Bank of New York as dividend disbursing agent. Registered
shareholders may also elect to have cash dividends deposited
directly into their bank accounts.
When a dividend or 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 shares of the common stock are
trading at net asset value or at a premium above
net asset value at the valuation date, the Fund
issues new shares of common stock at the greater of
net asset value or 95% of the then current market
price.
(ii) If shares of the common stock are
trading at a discount from net asset value at the
valuation date, The Bank of New York receives the
dividend or distribution in cash and uses it to
purchase shares of common stock in the open market,
on the New York Stock Exchange or elsewhere, for
the participants' accounts. Shares are allocated to
participants' accounts at the average price per
share, plus commissions, paid by The Bank of New
York for all shares purchased by it. If, before The
Bank of New York has completed its purchases, the
market price exceeds the net asset value of a
share, the average purchase price per share paid by
The Bank of New York may exceed the net asset value
of the Fund's shares, resulting in the acquisition
of fewer shares than if the dividend or
distribution had been paid in shares issued by the
Fund.
-10-
The valuation date is the business day immediately preceding
the date of payment of the dividend or distribution. On that
date, the Administrator compares that day's net asset value
per share and the closing price per share on the New York
Stock Exchange and determines which of the two alternative
procedures described above will be followed.
The reinvestment shares are credited to the participant's
plan account in the Fund's stock records maintained by The
Bank of New York, including a fractional share to four
decimal places. The Bank of New York will send participants
written confirmation of all transactions in the
participant's plan account, including information
participants will need for tax records. Shares held in the
participant's plan account have full dividend and voting
rights. Dividends and 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 pro rata share
of brokerage commissions incurred on any open market
purchases of shares by The Bank of New York.
The automatic reinvestment of dividends and distributions
does not relieve participants of any income taxes that may
be payable (or required to be withheld) on dividends or
distributions.
If the closing market price of shares of the Fund's common
stock should be equal to or greater than their net asset
value on the valuation date, the participants in the plan
would receive shares priced at the higher of net asset value
or 95% of the market price. Consequently they would receive
more shares at a lower per share price than if they had used
the cash distribution to purchase Fund shares on the payment
date in the market at the market price plus commission.
If the market price should be less than net asset value on
the valuation date, the cash distribution for the plan
participants would be used by The Bank of New York to
purchase the shares to be received by the participants,
which would be at a discount from net asset value unless the
market price should rise during the purchase period so that
the average price and commission exceeded net asset value as
of the payment date. Also, since the Fund does not redeem
its shares, the price on resale may be less or more than the
net asset value.
Plan participants may purchase additional shares of common
stock through the plan by delivering to The Bank of New York
a check for at least $100, but not more than $5,000, in any
month. The Bank of New York 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
following the second business day 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 average price per share,
plus a service charge of $2.50 imposed by The Bank of New
York and a pro rata share of any brokerage commission (or
equivalent purchase costs) paid by The Bank of New York in
connection with such purchases. Funds sent to the bank for
voluntary additional share reinvestment may be recalled by
the participant by written notice received by The Bank of
New York not later than two business days before the next
dividend payment date. If for any reason a regular monthly
dividend is not paid by the Fund, funds for voluntary
additional share investment will be returned to the
participant, unless the participant specifically directs
that such funds continue to be held by The Bank of New York
for subsequent investment. Participants will not receive
interest on voluntary additional funds held by The Bank of
New York pending investment.
-11-
A shareholder may leave the plan at any time by written
notice to The Bank of New York. To be effective for any
given distribution, notice must be received by the Bank at
least seven business days before the record date for that
distribution. When a shareholder leaves the plan: (i) such
shareholder may request that The Bank of New York sell such
shareholder's shares held in such shareholder's plan account
and send such shareholder a check for the net proceeds
(including payment of the value of a fractional share,
valued at the closing price of the Fund's common stock on
the New York Stock Exchange on the date discontinuance is
effective) after deducting The Bank of New York's $5.00
charge and any brokerage commission (or equivalent sale
cost) or (ii) if no request is made, such shareholder will
receive a certificate for the number of full shares held in
such shareholder's plan account, along with a check for any
fractional share interest, valued at the closing price of
the Fund's common stock on the New York Stock Exchange on
the date discontinuance is effective. If and when it is
determined that the only balance remaining in a
shareholder's plan account is a fraction of a single share,
such shareholder's participation will be deemed to have
terminated, and The Bank of New York will send to such
shareholder a check for the value of such fractional share,
valued at the closing price of the Fund's common stock on
the New York Stock Exchange on the date discontinuance is
effective.
The Fund may change, suspend or terminate the plan at any
time upon mailing a notice to participants.
For more information regarding, and an authorization form
for, the dividend reinvestment plan, please contact The Bank
of New York at 1-877-381-2537 or on the World Wide Web at
http://stock.bankofny.com.
(d) Capital Gains Distribution Reinvestment Plan. Unless
otherwise indicated by a holder of shares of common stock of
the Fund that does not participate in the Fund's dividend
reinvestment plan, all distributions in respect of capital
gains distributions on shares of common stock held by such
holder will be automatically invested by The Bank of New
York, as agent of the common shareholders participating in
the plan, in additional shares of common stock of the Fund.
Distributions in respect of capital gains distributions on
shares of common stock that participate in the Fund's
dividend reinvestment plan will be reinvested in accordance
with the terms of such plan.
In any year in which the Fund declares a capital gains
distribution, the Fund after the declaration of such
dividend and prior to its payment, will provide to each
registered holder of Fund common stock that does not
participate in the Fund's dividend reinvestment plan a cash
election card. A registered shareholder may elect to receive
cash in lieu of shares in respect of a capital gains
distribution by signing the cash election card in the
name(s) of the registered shareholder(s), and mailing the
card to The Bank of New York.
If a holder's shares of common stock, or some of them, are
registered in the name of a broker or other nominee, and the
holder wishes to receive a capital gains distribution in
cash in lieu of shares of common stock, such shareholder
must exercise that election through its nominee (including
any depositor of shares held in a securities depository).
-12-
When a distribution is reinvested under the plan, the number
of reinvestment shares is determined as follows:
(i) If, at the time of valuation, the
shares are being traded in the securities markets
at net asset value or at a premium over net asset
value, the reinvestment shares are obtained by The
Bank of New York directly from the Fund, at a price
equal to the greater of net asset value or 95% of
the then current market price, without any
brokerage commissions (or equivalent purchase
costs).
(ii) If, at the time of valuation, the
shares are being traded in the securities markets
at a discount from net asset value, The Bank of New
York receives the distribution in cash, and uses it
to purchase shares in the open market, including on
the New York Stock Exchange, or in private
purchases. Shares of common stock are allocated to
participants at the average price per share, plus
any brokerage commissions (or equivalent
transaction costs), paid by The Bank of New York
for all shares purchased by it in reinvestment of
the distribution(s) paid on a particular day.
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 dividend or distribution on which
that exchange is open for trading. As of that time, the
Administrator compares the net asset value per share as of
the time of the close of trading on the New York Stock
Exchange on that day and the last reported sale price per
share on the New York Stock Exchange, and determines which
of the alternative procedures described above are to be
followed.
If as of any day on which the last reported sale price of
the Fund's shares on the New York Stock Exchange is required
to be determined pursuant to this plan, no sales of the
shares are reported on that exchange, the mean of the bid
prices and of the asked prices on that exchange as of the
time of the close of trading on the exchange will be
substituted.
No certificates will be issued representing fractional
shares, nor will The Bank of New York purchase fractional
shares in the market. The Bank of New York will send to all
registered holders of common stock that do not participate
in the Fund's dividend reinvestment plan certificates for
all shares of common stock purchased or issued pursuant to
the capital gains distribution plan and cash in lieu of
fractional shares of common stock.
The Fund may change, suspend or terminate the plan at any
time upon mailing a notice to participants.
(e) Anti-takeover provisions of charter and bylaws. The
Fund's charter includes provisions that could have the
effect of limiting the ability of other entities or persons
to acquire control of the Fund or to change the composition
of its board of directors and could have the effect of
depriving shareholders of an opportunity to sell their
shares at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of
the Fund. The board of directors is divided into three
classes, each having a term of three years. At each annual
meeting of shareholders, the term of one class will expire.
This provision could delay for up to two years the
replacement of a majority of the board of directors. A
director may be removed from office only by vote of the
holders of at least 75% of the shares of preferred stock or
of common stock, as the case may be, entitled to be voted on
the matter.
-13-
The Fund's charter requires the favorable vote of the
holders of at least 75% of the shares of preferred stock and
common stock of the Fund entitled to be voted on the matter,
voting together as a single class, to approve, adopt or
authorize the following:
(i) a merger or consolidation of the Fund
with another corporation,
(ii) a sale of all or substantially all of
the Fund's assets (other than in the regular course
of the Fund's investment activities), or
(iii) a liquidation or dissolution of the
Fund, unless such action has been approved, adopted
or authorized by the affirmative vote of two-thirds
of the total number of directors fixed in
accordance with the bylaws, in which case the
affirmative vote of the holders of a majority of
the outstanding shares of preferred stock and
common stock entitled to be voted on the matter,
voting together as a single class, is required.
In addition, the holders of a majority of the outstanding
shares of the preferred stock, voting separately as a class,
would be required under the 1940 Act to adopt any plan of
reorganization that would adversely affect the holders of
the preferred stock.
Finally, conversion of the Fund to an open-end investment
company would require an amendment to the charter. Such an
amendment would require the favorable vote of the holders of
a majority of the shares of preferred stock and common stock
entitled to be voted on the matter voting separately by
class. At any time, the amendment would have to be declared
advisable by the board of directors prior to its submission
to shareholders. Shareholders of an open-end investment
company may require the company to redeem their shares of
common stock at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their net asset
value, less such redemption charge, if any, as might be in
effect at the time of a redemption. In addition, conversion
to an open-end investment company would require redemption
of all outstanding shares of the preferred stock.
The board of directors has determined that the 75% voting
requirements described above, which are greater than the
minimum requirements under Maryland law or the 1940 Act, are
in the best interests of shareholders generally. Reference
should be made to the charter on file with the Securities
and Exchange Commission (the "SEC") for the full text of
these provisions.
2. Long-Term Debt.
--------------
Not applicable.
3. General
-------
Not applicable.
4. Taxes.
-----
The Fund intends to continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as it
has in each year since the inception of its operations, so as to
be relieved of Federal income tax on net investment income and
net capital gains distributed to shareholders.
-14-
Dividends paid by the Fund from its ordinary income and
distributions of the Fund's net realized short-term capital
gains are taxable to shareholders as ordinary income.
Shareholders may be proportionately liable for taxes on
income and gains of the Fund but shareholders not subject to
tax on their income will not be required to pay tax on
amounts distributed to them. The Fund will inform
shareholders of the amount and nature of the income or
gains. Dividends from ordinary income may be eligible for
the dividends-received deduction available to corporate
shareholders. Under its charter, the Fund is required to
designate dividends paid on its preferred stock as
qualifying for the dividends-received deduction to the
extent such dividends do not exceed the Fund's qualifying
income. In the event the Fund is required to allocate all of
its qualifying income to dividends on the preferred stock,
dividends payable on the common stock will not be eligible
for the dividends-received deduction. Any distributions
attributable to the Fund's net realized long-term capital
gains are taxable to shareholders as long-term capital
gains, regardless of the holding period of shares of the
Fund.
The Fund intends to distribute substantially all its net
investment income and net realized capital gains in the year
earned or realized. A dividend reinvestment plan is
available to all holders of common stock of the Fund. Under
the dividend reinvestment plan, all cash distributions to
participating shareholders are reinvested in additional
shares of common stock. See Item 10.1(c).
5. Outstanding Securities
----------------------
(4)
(3) Amount Outstanding
(2) Amount Held by at 3/31/2003
(1) Amount the Fund or for Exclusive of Amount
Title of Class Authorized its Account Shown Under (3)
-------------- ---------- ----------- ---------------
Common, $.001
par value 250,000,000 -0- 216,844,831
Preferred, $.001
par value 100,000,000 -0- 5,000
6. Securities Ratings.
------------------
Not applicable.
Item 11. Defaults and Arrears on Senior Securities
------- -----------------------------------------
Not applicable.
Item 12. Legal Proceedings
------- -----------------
There are no pending legal proceedings to which the Fund, any
subsidiary of the Fund, or the Adviser is a party.
Item 13. Table of Contents of the Statement of Additional Information
------- ------------------------------------------------------------
Not applicable.
-15-
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 14. Cover Page
------- ----------
Not applicable.
Item 15. Table of Contents
------- -----------------
Not applicable.
Item 16. General Information and History
------- -------------------------------
During the past five years, the Fund has not engaged in any business
other than that of an investment company and has not been the subject of any
bankruptcy, receivership or similar proceedings, or any other material
reorganization, readjustment or succession. The Fund's name was changed from
Duff & Phelps Utilities Income Inc. on April 23, 2002.
Item 17. Investment Objective and Policies
------- ---------------------------------
1. See Item 8.2.
2. See Item 8.2.
3. See Item 8.2.
4. The Fund's portfolio turnover rate was 197.27% in 2002, 213.48% in
2001 and 229.70% in 2000. During the last two fiscal years, the Fund's
portfolio turnover rate has been influenced by a number of factors: (i) the
Fund's proactive response to changes in the telecommunications, gas and
electric industries and (ii) a lower level of dividend captures due to higher
contributions to income from the Fund's leverage (see Item 8.3 for an
explanation of dividend captures).
Item 18. Management
------- ----------
1. Set forth below are the names and certain biographical information
about the directors and officers of the Fund. Except as indicated in the
table, directors are elected by the holders of the Fund's common stock. The
officers are elected at the annual meeting of the board of directors of the
Fund.
Name, Position(s) Held With the Fund, Principal Occupation(s)
Address Length of Time Served During Past 5 Years
and Age and Term of Office and Other Affiliations
------- ------------------ ----------------------
Interested Director
Claire V. Hansen (1)(2) Chairman and director Senior Advisor to the Board of Directors, Phoenix
55 East Monroe Street since January 1987. Investment Partners, Ltd. since November 1995;
Chicago, Illinois 60603 Term expires in 2005. President and Chief Executive Officer of the Fund,
Age: 77 January 2000-February 2001; Senior Advisor to the
Board of Directors, Duff & Phelps Corporation,
1988-November 1995 (Chairman of the Board,
1987-1988; Chairman of the Board and Chief
Executive Officer prior thereto); Chairman of the
Board, Duff & Phelps Investment Management Co.,
1985-1987.
Independent Directors
Wallace B. Behnke(3) Director since January 1987. Consulting engineer since July 1989; prior thereto,
323 Glen Eagle Term expires in 2003. Vice Chairman, Commonwealth Edison Company (public
Kiawah Island, utility).
South Carolina 29455
Age: 77
Harry J. Bruce(3) Director since January 1989. Private investor; former Chairman and Chief
1630 Sheridan Road Term expires in 2003. Executive Officer, Illinois Central Railroad Co.
Wilmette, Illinois 60091.
Age: 71
-16-
Name, Position(s) Held With the Fund, Principal Occupation(s)
Address Length of Time Served During Past 5 Years
and Age and Term of Office and Other Affiliations
------- ------------------ ----------------------
Franklin A. Cole(2)(5) Director since January 1989. Chairman, Croesus Corporation (private management
54 West Hubbard Street Term expires in 2004. and investment company); former Chairman and Chief
Chicago, Illinois 60610. Executive Officer, Amerifin Corporation (formerly
Age: 76 named Walter E. Heller International Corporation).
Gordon B. Davidson(4) Director since January 1989. Of Counsel, Wyatt, Tarrant & Combs (law firm) since
PNC Plaza Term expires in 2004. September 1995 (Chairman of the Executive Committee
Louisville, Kentucky 40202 prior thereto); retired director, BellSouth Corp.;
Age: 76 former Chairman of the Board and director, Trans
Financial Advisers, Inc.
Connie K. Duckworth (3)(5) Director since April 2002. Partner, Eight Wings Enterprises (investor in
77 Stone Gate Lane Term expires in 2005. early-stage businesses) since December 2001;
Lake Forest, Illinois 60045 Advisory Director, Goldman, Sachs & Company,
Age 48 December 2000-December 2001 (Managing Director,
December 1996-December 2000, Partner 1990-1996,
Chief Operating Officer of Firmwide Diversity
Committee 1990-1995); Chair, The Committee of 200
(organization of women business leaders); Member,
Circle Financial Group, Ltd. (private investment
company); Director, Third Age Media Inc. (internet
marketing company); Member (2002) and Chair
(2003), Policyowners' Examining Committee,
Northwestern Mutual Life Insurance Company.
Robert J. Genetski (4)(5)(6) Director since April 2001. President, Robert Genetski & Associates, Inc.
195 North Harbor Drive Term expires in 2004. (economic and financial consulting firm) since 1991;
Chicago, Illinois 60601 Senior Managing Director, Chicago Capital, Inc.
Age: 60 (financial services firm) 1995-2001; former Senior
Vice President and Chief Economist, Harris Trust
& Savings Bank; author of several books; regular
contributor to the Nikkei Financial Daily.
Francis E. Jeffries (2)(4)(7) Director since January 1987. Retired Chairman, Phoenix Investment Partners, Ltd.
8477 Bay Colony Drive Term expires in 2004. since May 1997 (Chairman, November 1995-May 1997);
Naples, Florida 34108 Chairman and Chief Executive Officer, Duff & Phelps
Age: 72 Corporation, June 1993-November 1995 (President and
Chief Executive Officer, January 1992-June 1993);
Chairman of the Board, Duff & Phelps Investment
Management Co. 1988-1993; director, The Empire
District Electric Company.
Nancy Lampton (4)(5)(6) Director since October 1994. Chairman and Chief Executive Officer, Hardscuffle
3 Riverfront Plaza Term expires in 2003. Inc. (insurance holding company) since 2000;
Louisville, Kentucky 40202 Chairman and Chief Executive Officer, American Life
Age: 60 and Accident Insurance Company of Kentucky since
1971; director, Constellation Energy Group, Inc.
(public utility holding company), Brinly-Hardy
Corporation (lawn and garden tractor accessories),
Thorium Power Corporation (designer of
non-proliferative fuel for nuclear energy needs).
-17-
Name, Position(s) Held With the Fund, Principal Occupation(s)
Address Length of Time Served During Past 5 Years
and Age and Term of Office and Other Affiliations
------- ------------------ ----------------------
Carl F. Pollard (3) Director since April 2002. Owner, Hermitage Farm L.L.C. (thoroughbred breeding)
10500 W. U.S. Hwy 42 Term expires in 2005. since January 1995; Chairman, Columbia Healthcare
Goshen, Kentucky 40026 Corporation 1993-1994; Chairman and Chief Executive
Age 64 Officer, Galen Health Care, Inc. March-August 1993;
President and Chief Operating Officer, Humana
Inc. 1991-1993 (previously Senior Executive Vice
President, Executive Vice President and Chief
Financial Officer); Chairman and Director,
Churchill Downs Incorporated; Director, National
City Bank, Kentucky (Executive Committee),
Breeders' Cup Limited, Kentucky Derby Museum
Corporation; Trustee, Thoroughbred Owners and
Breeders Association.
David J. Vitale (3)(5) Director since April 2000. Private investor and, since February 2003, Senior
141 West Jackson Boulevard Term expires in 2003. Adviser to the Chicago Board of Education; President
Chicago, Illinois 60604 and Chief Executive Officer, Board of Trade of the
Age: 56 City of Chicago, Inc. March 2001-November 2002;
Retired bank executive 1999-2001; 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); Director, Ariel Capital
Management, Inc.; Ark Investment Management,
Wheels Inc.
Officers of the Fund (other than the Chairman, for whom see above)
Nathan I. Partain President and Chief Executive Executive Vice President, Duff & Phelps Investment
55 East Monroe Street Officer since February 2001 Management Co. since January 1997; Director of
Chicago, Illinois 60603 (Executive Vice President April Utility Research, Phoenix Investment Partners, Ltd.,
Age: 46 1998-February 2001, Chief 1989-1996 (Director of Equity Research, 1993-1996
Investment Officer January and Director of Fixed Income Research, 1993);
1998-February 2001, Senior Vice director, Otter Tail Corporation.
President January 1997-April 1998,
Assistant Secretary January
1997-February 2001).
T. Brooks Beittel Secretary and Senior Vice Senior Vice President, Duff & Phelps Investment
55 East Monroe Street President since January 1995 Management Co. since 1993 (Vice President 1987-1993).
Chicago, Illinois 60603 (Treasurer January 1995-
Age: 53 September 2002).
Michael Schatt Senior Vice President Fund since Senior Vice President, Duff & Phelps Investment
55 East Monroe Street April 1998 (Vice President January Management Co. since January 1997; Managing
Chicago, Illinois 60603 1997-April 1998. Director, Phoenix Investment Partners, Ltd.,
Age: 56 1994-1996.
Joseph C. Curry, Jr. Treasurer since September 2002; Senior Vice President, J.J.B. Hilliard, W.L. Lyons,
Hilliard Lyons Center Vice President since April 1988. Inc. since 1994 (Vice President 1982-1994); Vice
Louisville, Kentucky 40202 President, Hilliard Lyons Trust Company; President,
Age: 58 Hilliard-Lyons Government Fund, Inc.; Treasurer and
Secretary, Hilliard Lyons Growth Fund, Inc.;
Treasurer, Senbanc Fund.
Dianna P. Wengler Assistant Secretary since April Vice President, J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center 1988. since 1990; Vice President, Hilliard-Lyons
Louisville, Kentucky 40202 Government Fund, Inc.; Assistant Secretary, Hilliard
Age: 42 Lyons Growth Fund, Inc.
---------------------------------------------------
(1) Mr. Hansen is deemed to be an "interested person" of the Fund (as
defined in the 1940 Act) because of his positions with the
Fund and with Phoenix Investment Partners (parent company of the
Adviser).
(2) Member of the executive committee of the board of directors, which
has authority, with certain exceptions, to exercise the powers of the
board of directors between board meetings. The executive committee
acted once during 2002 by unanimous written consent in lieu of a
meeting.
-18-
(3) Member of the audit committee of the board of directors, which makes
recommendations regarding the selection of the Fund's independent
public accountants and meets with representatives of the accountants
to determine the scope of and review the results of each audit. The
audit committee met four times during 2002.
(4) Member of the nominating committee of the board of directors, which
selects nominees for election as directors and officers. The
nominating committee met three times during 2002. The nominating
committee does not consider nominees recommended by shareholders.
(5) Member of the contracts committee of the board of directors, which
makes recommendations regarding the Fund's contractual arrangements
for investment management and administrative services, including the
terms and conditions of such contracts. The contracts committee met
four times during 2002.
(6) Director elected by holders of preferred stock.
(7) Mr. Jeffries oversees 29 portfolios in the Fund Complex to which
the Fund belongs.
2. Included in Item 18.1.
3. Not applicable.
4. Not applicable.
5. Included in Item 18.1.
6. Included in Item 18.1.
7. The following table provides certain information relating to
the equity securities beneficially owned, as of December 31,
2002, by each director (i) in the Fund and (ii) on an
aggregate basis, in any registered investment companies
overseen by the director within the same family of
investment companies as the Fund.
Aggregate Dollar
Range of Equity
Securities in All Funds
Overseen or to be
Dollar Range of Overseen by Director
Name of Equity Securities or Nominee in Family
Director in the Fund of Investment Companies
-------- ----------- -----------------------
Interested Director
Claire V. Hansen over $100,000 over $100,000
Independent Directors
Wallace B. Behnke $10,001-$50,000 $10,001-$50,000
Harry J. Bruce over $100,000 over $100,000
Franklin A. Cole $10,001-$50,000 $10,001-$50,000
Gordon B. Davidson over $100,000 over $100,000
Connie K. Duckworth none (1) none (1)
Robert J. Genetski $50,001-$100,000 $50,001-$100,000
Francis E. Jeffries over $100,000 over $100,000
Nancy Lampton over $100,000 over $100,000
Carl F. Pollard over $100,000 over $100,000
David J. Vitale $10,001-$50,000 $10,001-$50,000
-------------------
(1) Ms. Duckworth purchased equity shares in the Fund on March 5, 2003. As a
result of this purchase the dollar range of equity securities owned by
her in the Fund (and in all registered investment companies overseen by
her within the same family of investment companies as the Fund) became
$50,001-$100,000.
-19-
8. As of December 31, 2002, none of the foregoing directors, or
their immediate family members, owned any securities of the
Adviser or any person (other than a registered investment
company) directly or indirectly controlling, controlled by
or under common control with the Adviser.
9. Mr. Jeffries was formerly a shareholder and member of senior
management of Duff & Phelps Corporation, predecessor to
Phoenix Investment Partners. Under the terms of his
employment contract, Phoenix Investment Partners continued
to pay through 2001 the annual premium on life insurance
policies owned by Mr. Jeffries. The amount of such premiums
in 2000 and 2001 was $62,682 and $22,989, respectively. In
2000, Mr. Jeffries received $283,554 for the repurchase of
his common shares in Phoenix Investment Partners and
$228,850 for the purchase of outstanding unexercised
options, which transactions were effected at the then market
value for such shares and options.
10. Included in Item 18.9.
11. Included in Item 18.9.
12. Not applicable.
13. Approval of Advisory Agreement. Each year, the board of
directors of the Fund, including a majority of the directors
who are not interested persons of the Fund or the Adviser
voting separately as a class, is required to approve the
renewal of the Advisory Agreement. The board of directors
requests and evaluates, and the Adviser furnishes, such
information as the board determines to be reasonably
necessary to evaluate the terms of the Advisory Agreement.
The board of directors also retains an independent
consultant on an annual basis to provide detailed
comparative data regarding the Adviser's fees, expense
ratios and investment performance.
In arriving at their decision to renew the current Advisory
Agreement, the directors reviewed the foregoing information
and took into account all factors that they deemed relevant
to the best interests of the shareholders of the Fund. Such
factors included the following: (i) the nature, quality and
extent of the services furnished to the Fund by the Adviser;
(ii) fees paid by other mutual funds for similar services;
(iii) the profitability to the Adviser of its relationship
with the Fund; (iv) the continuation of appropriate
incentives to assure that the Adviser will be able to
continue to furnish high-quality services to the Fund; (v)
the capabilities of the team of investment professionals
employed by the Adviser who perform services for the Fund;
(vi) the necessity of the Adviser maintaining and enhancing
its ability to attract and retain capable personnel to serve
the Fund; (vii) the investment performance over time of the
Fund compared to various market indices and other mutual
funds; (viii) the extent to which the Fund's stock trades at
a premium or a discount to net asset value; (ix) the
benefits of any economies of scale that may be available to
the Adviser; and (x) the direct and indirect benefits the
Adviser receives from its relationship with the Fund,
including brokerage and soft dollar arrangements (see
description in Item 21.3 below).
In comparing the Fund's expenses and investment performance
to those of other mutual funds, the directors took note of
the fact that there are no other closed-end income-oriented
funds that have a utilities and REIT investment focus, an
equity and fixed-income asset mix and an asset level and
leverage policy comparable to the Fund. While expressly
declining to use investment performance as the sole, or even
the primary, measure of the quality of the Adviser's
services, the directors noted that the Fund's investment
performance during 2002, which was generally a difficult
year for the securities markets, had enabled the Fund to pay
all of its regular monthly dividends in 2002. The directors
also viewed the fact that the Fund's stock traded at an
-20-
average premium of 28.19% to net asset value during 2002 as
evidence that investors take a favorable view of the extent
to which the Fund has been meeting its primary objective of
providing current income for shareholders. With respect to
investment personnel, the directors considered the fact that
the specific individuals who manage the Fund's portfolio
bring a significant depth of experience to their jobs, have
worked together for many years and are well respected in the
industry. With respect to expenses, the directors noted that
the management fees paid by the Fund were at or below the
median levels paid by other leveraged closed-end domestic
equity funds. It should be emphasized that, in arriving at
their decision, the directors did not single out any one
factor or group of factors as being more important than
other factors. Rather, the directors considered all factors
together in light of the totality of circumstances presently
facing the Fund, recognizing that different circumstances
might lead them to weigh the various factors differently
when considering the best interests of the Fund and its
shareholders.
Based on the foregoing considerations, the board of
directors of the Fund, including a majority of the directors
who are not interested persons of the Fund or the Adviser
voting separately as a class, determined that the fees
payable to the Adviser under the Advisory Agreement were
fair and reasonable to the Fund and that the renewal of the
Advisory Agreement for a one-year period ending on April 30,
2004 was in the best interests of the Fund and its
shareholders.
14. The following table shows the compensation paid by the Fund
to the Fund's current directors during 2002:
COMPENSATION TABLE (1)(2)
Aggregate
Compensation
from the
Name of Director Fund
---------------- ------------
Interested Director
Claire V. Hansen.............................................. $ 0
Independent Directors
Wallace B. Behnke............................................. $ 39,125
Harry J. Bruce................................................ 31,625
Franklin A. Cole.............................................. 45,541
Gordon B. Davidson............................................ 41,541
Connie K. Duckworth........................................... 30,640
Robert J. Genetski............................................ 42,625
Francis E. Jeffries (2)....................................... 39,125
Nancy Lampton................................................. 43,125
Carl F. Pollard............................................... 27,140
David J. Vitale............................................... 49,041
------------------------------------
(1) Each director not affiliated with the Adviser receives an annual fee
of $25,000 (and an additional $5,000 if the director serves as
chairman of a committee of the board of directors) plus an attendance
fee of $2,000 for each meeting of the board of directors and $1,500
for each meeting of a committee of the board of directors attended in
person or by telephone. Directors and officers affiliated with the
Adviser or the Administrator receive no compensation from the Fund
for their services as such. In addition to the amounts shown in the
table above, all directors and officers who are not affiliated with
the Adviser or the Administrator are reimbursed for the expenses
incurred by them in connection with their attendance at a meeting of
the board of directors or a committee of the board of directors. The
Fund does not have a pension or retirement plan applicable to
directors or officers of the Fund.
(2) During 2002, Mr. Jeffries received aggregate compensation of $145,375
for service as a director of the Fund and as a director or trustee of
30 other investment companies in the same fund complex as the Fund.
No other director received compensation for service as a director of
any other investment company in the same fund complex as the Fund.
-21-
15. Codes of Ethics. Each of the Fund and the Adviser has
adopted an Amended and Restated Code of Ethics
(collectively, the "Codes") under Rule 17j-1 of the 1940
Act. The Codes impose significant restrictions on the
ability of personnel subject to the Codes to engage in
personal securities transactions. Among other things, the
Codes generally prohibit covered personnel from knowingly
buying or selling securities (except for mutual funds, U.S.
government securities and money market instruments) that are
being purchased, sold or considered for purchase or sale by
the Fund unless the proposed purchases are approved in
advance by the Adviser's compliance officer. The Codes also
contain certain reporting requirements and compliance
procedures. The Codes can be reviewed and copied at the
Public Reference Room of the SEC in Washington, D.C.
Information on the operation of the Public Reference Room
may be obtained by calling the SEC at 1-202-942-8090. The
Codes are also available at the EDGAR Database on the SEC's
Internet site at http://www.sec.gov. Copies of the Codes may
also be obtained, after paying a duplicating fee, by
electronic request at the following E-mail address:
publicinfo@sec.gov, or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102. The SEC file number
for documents filed by the Fund under the 1940 Act is
811-4915.
Item 19. Control Persons and Principal Holders of Securities
------- ---------------------------------------------------
1. The Fund does not consider that any person "controls" the
Fund within the meaning of this item. For information
concerning the Fund's officers and directors, see Item 18.
2. No person is known by the Fund to own of record or
beneficially five percent or more of any class of the Fund's
outstanding equity securities.
3. As of December 31, 2002, the officers and directors of the
Fund owned in the aggregate 245,703 shares of Common Stock,
representing less than 1% of the Fund's outstanding Common
Stock.
Item 20. Investment Advisory and Other Services
------- --------------------------------------
1. The Adviser is a wholly-owned subsidiary of Phoenix
Investment Partners, which is an indirect, wholly-owned
subsidiary of The Phoenix Companies, Inc. Phoenix Investment
Partners and its subsidiaries provide investment management
services to institutional and private clients and to the
life insurance subsidiaries of The Phoenix Companies, Inc.
See Item 18 for the names and capacities of affiliated
persons of the Fund who are also affiliated persons of the
Adviser.
For a discussion of the method of calculating the advisory
fee under the Advisory Agreement, see Item 9.1(b). The
investment advisory fees paid by the Fund totaled
$13,776,089 in 2002, $15,284,267 in 2001 and $14,719,244 in
2000.
2. See Item 9.1(b) for a discussion of the Service Agreement.
3. No fees, expenses or costs of the Fund were paid by persons
other than the Adviser or the Fund.
4. See Item 9.1 (d) for a discussion of the Administration
Agreement. The administrative fees paid by the Fund totaled
$3,505,218 in 2002, $3,806,813 in 2001 and $3,693,849 in
2000.
5. Not applicable.
6. See Item 9.1 (e).
7. The Fund's independent public accountant is Ernst & Young
LLP.
-22-
8. Not applicable.
Item 21. Brokerage Allocation and Other Practices
------- ----------------------------------------
1. The Adviser has discretion to select brokers and dealers to
execute portfolio transactions initiated by the Adviser. The Fund
paid brokerage commissions in the aggregate amount of $8,486,229,
$9,015,619 and $7,158,821 during 2002, 2001 and 2000, respectively,
not including the gross underwriting spread on securities purchased
in underwritten public offerings.
2. The Fund did not pay any brokerage commissions during 2002, 2001
or 2000 to any broker that (1) is an affiliated person of the Fund,
(2) is an affiliated person of an affiliated person of the Fund or
(3) has an affiliated person that is an affiliated person of the Fund
or the Adviser.
3. In selecting brokers or dealers to execute portfolio transactions
and in evaluating the best net price and execution available, the
Adviser is authorized to consider "brokerage and research services"
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934), statistical quotations, specifically the
quotations necessary to determine the Fund's net asset value, and
other information provided to the Fund and/or to the Adviser (or
their affiliates). The Adviser is also authorized to cause the Fund
to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction which is
in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction. The Adviser must
determine in good faith, however, that such commission was reasonable
in relation to the value of the brokerage and research services
provided, viewed in terms of that particular transaction or in terms
of all the accounts over which the Adviser exercises investment
discretion. It is possible that certain of the services received by
the Adviser attributable to a particular transaction will benefit one
or more other accounts for which investment discretion is exercised
by the Adviser.
4. Neither the Fund nor the Adviser, during the last fiscal year,
pursuant to an agreement or understanding with a broker or otherwise
through an internal allocation procedure, directed the Fund's
brokerage transactions to a broker or brokers because of research
services.
5. The Fund has not acquired during its most recent fiscal year
securities of its regular brokers or dealers as defined in Rule 10b-1
under the 1940 Act, or their parents.
Item 22. Tax Status
------- ----------
The Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as it has in each year since
the inception of its operations, so as to be relieved of Federal income tax on
net investment income and net capital gains distributed to shareholders.
Dividends paid by the Fund from its ordinary income and distributions
of the Fund's net realized short-term capital gains are taxable to
shareholders as ordinary income. Dividends from ordinary income may be
eligible for the dividends-received deduction available to corporate
shareholders. Under its charter, the Fund is required to designate dividends
paid on its preferred stock as qualifying for the dividends-received deduction
to the extent such dividends do not exceed the Fund's qualifying income. In
the event the Fund is required to allocate all of its qualifying income to
dividends on the preferred stock, dividends payable on the common stock will
not be eligible for the dividends-received deduction. Any distributions
attributable to the Fund's net realized long-term capital gains are taxable to
shareholders as long-term capital gains, regardless of the holding period of
shares of the Fund.
The Fund intends to distribute substantially all its net investment
income and net realized capital gains in the year earned or realized. A
dividend reinvestment plan is available to all holders of common stock of the
Fund. Under the dividend reinvestment plan, all cash distributions to
participating shareholders are reinvested in additional shares of common
stock. See Item 10.1(c).
-23-
As of December 31, 2002, the Fund had tax capital loss carry forwards
of $199,205,932 which expire beginning on December 31, 2003. For the period
from November 1, 2002 through December 31, 2002 the Fund incurred net realized
capital losses of $181,983,140. The Fund intends to treat these losses as
having occurred on January 1, 2003.
Item 23. Financial Statements
------- --------------------
The financial statements listed below are incorporated herein by
reference from the Fund's Annual Report to Shareholders for the year ended
December 31, 2002 as filed on Form N-CSR with the Securities and Exchange
Commission on February 28, 2003 (no. 811-4915). All other portions of the
Annual Report to Shareholders are not incorporated herein by reference and are
not part of the Registration Statement. A copy of the Annual Report to
Shareholders may be obtained without charge by writing to the Fund at its
address at 55 East Monroe Street, Chicago, Illinois 60603 or by calling the
Administrator toll-free at 888-878-7845.
- Report of independent public accountants
- Schedule of Investments at December 31, 2002
- Balance Sheet at December 31, 2002
- Statement of Operations for the year ended December 31, 2002
- Statement of Changes in Net Assets for the years ended
December 31, 2002 and 2001
- Statement of Cash Flows for the year ended December 31, 2002
- Notes to Financial Statements
- Financial Highlights - Selected Per Share Data and Ratios
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
------- ---------------------------------
1. Financial Statements
In Part B:
Report of independent public accountants
Schedule of Investments at December 31, 2002
Balance Sheet at December 31, 2002
Statement of Operations for the year ended
December 31, 2002
Statement of Changes in Net Assets for the years
ended December 31, 2002 and 2001
Statement of Cash Flows for the year ended
December 31, 2002
Notes to Financial Statements
Financial Highlights - Selected Per Share Data
and Ratios
In Part C:
None
-24-
2. Exhibits
a.1 Articles of Incorporation (Incorporated by
reference from post-effective amendment no. 44 to
Registrant's registration statement under the
Investment Company Act of 1940 on Form N-2, no.
811-4915)
a.2 Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no. 811-4915)
a.3 Second Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no. 811-4915)
a.4 Form of Articles Supplementary creating Remarketed
Preferred Stock, Series A, B, C, D and E
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no. 811-4915)
a.5 Form of Articles Supplementary creating Remarketed
Preferred Stock, Series I (Incorporated by
reference from post-effective amendment no. 44 to
Registrant's registration statement under the
Investment Company Act of 1940 on Form N-2, no.
811-4915)
a.6 Third Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no.
811-4915)
a.7 Fourth Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no. 811-4915)
a.8 Fifth Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no. 811-4915)
a.9 Sixth Amendment to Articles of Incorporation
(Incorporated by reference from post-effective
amendment no. 44 to Registrant's registration
statement under the Investment Company Act of 1940
on Form N-2, no. 811-4915)
b. Bylaws (as amended through February 21, 2003)
c. None
d.1 Specimen common stock certificate (Incorporated by
reference from Registrant's registration statement
on Form N-2, no. 33-10421)
d.2 Form of certificate of Remarketed Preferred Stock,
Series A (Incorporated by reference from
pre-effective amendment no. 2 to Registrant's
registration statement on Form N-2, no. 33-22933)
-25-
d.3 Form of certificate of Remarketed Preferred Stock,
Series B (Incorporated by reference from
pre-effective amendment no. 1 to Registrant's
registration statement on Form N-2, no. 33-24101)
d.4 Form of certificate of Remarketed Preferred Stock,
Series C (Incorporated by reference from
pre-effective amendment no. 1 to Registrant's
registration statement on Form N-2, no. 33-24100)
d.5 Form of certificate of Remarketed Preferred Stock,
Series D (Incorporated by reference from
pre-effective amendment no. 1 to Registrant's
registration statement on Form N-2, no. 33-24102)
d.6 Form of certificate of Remarketed Preferred Stock,
Series E (Incorporated by reference from
pre-effective amendment no. 1 to Registrant's
registration statement on Form N-2, no. 33-24099)
d.7 Form of certificate of Remarketed Preferred Stock,
Series I (Incorporated by reference from
pre-effective amendment no. 2 to Registrant's
registration statement on Form N-2, no. 33-22933)
e. None
f. None
g.1 Investment Advisory Agreement (Incorporated by
reference from post-effective amendment no. 39 to
Registrant's registration statement under the
Investment Company Act of 1940 on Form N-2, no.
811-4915)
g.2 Service Agreement (Incorporated by reference from
post-effective amendment no. 39 to Registrant's
registration statement under the Investment Company
Act of 1940 on Form N-2, no. 811-4915)
g.3 Administration Agreement (Incorporated by
reference from post-effective amendment no. 39 to
Registrant's registration statement under the
Investment Company Act of 1940 on Form N-2, no.
811-4915)
h. Not applicable
i. Not applicable
j.1 Custody Agreement
j.2 Foreign Custody Manager Agreement
k.1 Fund Accounting Agreement
k.2 Form of Remarketing Agreement (Incorporated by
reference from exhibit k.3 to pre-effective
amendment no. 3 to Registrant's registration
statement on Form N-2, no. 33-22933)
k.3 Form of Paying Agent Agreement (Incorporated by
reference from exhibit k-4 to pre-effective
amendment no. 3 to Registrant's registration
statement on Form N-2, no. 33-22933)
-26-
l. Not applicable
m. Not applicable
n. Not applicable
o. Not applicable
p. Subscription Agreement for initial capital
(Incorporated by reference from Registrant's
registration statement on Form N-2, no. 33-10421)
q. Not applicable
r.1 Amended and Restated Code of Ethics of Registrant
r.2 Amended and Restated Code of Ethics of Duff &
Phelps Investment Management Co. (investment
adviser to Registrant)
Item 25. Marketing Arrangements
------- ----------------------
Not applicable.
Item 26. Other Expenses of Issuance and Distribution
------- -------------------------------------------
Not applicable.
Item 27. Persons Controlled by or Under Common Control
------- ---------------------------------------------
The Fund does not consider that it is controlled, directly or
indirectly, by any person. The information on Item 20 is incorporated by
reference.
Item 28. Number of Holders of Securities
------- -------------------------------
Number of
Record Holders
Title of Class March 31, 2003
-------------- --------------
Common Stock, $.001 par value 26,740
Preferred Stock, $.001 par value 1
Item 29. Indemnification
------- ---------------
Section 2-418 of the General Corporation Law of Maryland authorizes
the indemnification of directors and officers of Maryland corporations under
specified circumstances.
Article Ninth of the Registrant's Articles of Incorporation (Exhibit
a.1 to this registration statement) provides that the Registrant shall
indemnify its directors and officers under specified circumstances; the
provision contains the exclusion required by section 17(h) of the Investment
Company Act of 1940.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person in connection with the securities being
registered), the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
-27-
The Registrant, its directors and officers, the Adviser and persons
affiliated with them are insured under a policy of insurance maintained by the
Registrant and the Adviser, within the limits and subject to the limitations
of the policy, against certain expenses in connection with the defense of
actions, suits or proceedings and certain liabilities that might be imposed as
a result of such actions, suits or proceedings, to which they are parties by
reason of being or having been such directors or officers. The policy
expressly excludes coverage for any director or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been finally adjudicated or may be established or who
willfully fails to act prudently.
Item 30. Business and Other Connections of Investment Adviser
------- ----------------------------------------------------
Neither Duff & Phelps Investment Management Co., nor any of its
directors or executive officers, has at any time during the past two years
been engaged in any other business, profession, vocation or employment of a
substantial nature either for its or his own account or in the capacity of
director, officer, employee, partner or trustee, except as indicated in this
Registration Statement.
Item 31. Location of Accounts and Records
------- --------------------------------
All accounts, books and other documents required to be maintained by
Section 31 (a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Fund (55 East Monroe Street,
Chicago, Illinois 60603), the Adviser, the Administrator and the Fund's
custodian and transfer agents. See Items 9.1(b), 9.1(d) and 9.1(e) for the
addresses of the Adviser, the Administrator and the Fund's custodian and
transfer agents.
Item 32. Management Services
------- -------------------
Not applicable.
Item 33. Undertakings
------- ------------
Not applicable.
-28-
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this amendment to its registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago, and State of Illinois, on April 30, 2003.
DNP SELECT INCOME FUND INC.
By: /s/ Nathan I. Partain
--------------------------------------
Nathan I. Partain
President and Chief Executive Officer
-29-
EXHIBIT INDEX
Sequential
Exhibit No. Description Page No.
----------- ----------- --------
b Bylaws (as amended through February 21, 2003)
j.1 Custody Agreement
j.2 Foreign Custody Manager Agreement
k.1 Fund Accounting Agreement
r.1 Amended and Restated Code of Ethics of Registrant
r.2 Amended and Restated Code of Ethics of Duff & Phelps Investment
Management Co. (investment adviser to Registrant)