Edgar Filing: DNP SELECT INCOME FUND INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

DNP SELECT INCOME FUND INC.
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(Name of Registrant as Specified In Its Charter)

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[LOGO]

DNP SELECT INCOME FUND INC.

55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312) 368-5510

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS MAY 13, 2003

The annual meeting of shareholders of DNP Select Income Fund Inc. will be
held at The Chicago Club, 81 East Van Buren Street, Chicago, Illinois, on
Tuesday, May 13, 2003 at 9:00 a.m. to:

1. Elect two directors by the holders of the Fund's common stock and one
director by the holders of the Fund's preferred stock;

2. Approve an amendment to the articles supplementary that define the terms
of Series A, B, C, D and E of the Fund's remarketed preferred stock; and

3. Transact such other business as may properly come before the meeting.

Shareholders of record at the close of business on March 14, 2003 are
entitled to vote at the meeting.

For the Board of Directors,

/s/ T. Brooks Beittel
T. Brooks Beittel
Secretary

March 21, 2003

WE NEED YOUR PROXY VOTE IMMEDIATELY.

YOUR VOTE IS VITAL. THE MEETING OF SHAREHOLDERS WILL HAVE TO BE ADJOURNED
WITHOUT CONDUCTING ANY BUSINESS IF FEWER THAN A MAJORITY OF THE SHARES ELIGIBLE
TO VOTE ARE REPRESENTED. IN THAT EVENT, THE FUND WOULD CONTINUE TO SOLICIT
VOTES IN AN ATTEMPT TO OBTAIN A QUORUM. TO AVOID THE EXPENSE OF AND THE
POSSIBLE DELAY CREATED OF BY SUCH A SOLICITATION, PLEASE RETURN YOUR PROXY CARD
IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS WILL BENEFIT FROM YOUR COOPERATION.

PROXY STATEMENT

The board of directors of DNP Select Income Fund Inc. (the "Fund") is
soliciting proxies from the shareholders for use at the annual meeting of
shareholders to be held on May 13, 2003 and at any adjournment of that meeting.
A proxy may be revoked at any time before it is voted, either by voting in
person at the meeting or by written notice to the Fund or delivery of a
later-dated proxy.

Shareholders of the Fund of record at the close of business on March 14,
2003 are entitled to notice of and to participate in the meeting. The Fund had
216,844,831 shares of common stock and 5,000 shares of remarketed preferred
stock outstanding on the record date. Each share of common stock outstanding on
the record date entitles the holder thereof to one vote for each director being
elected by the common stock (with no cumulative voting permitted) and to one
vote on each other matter. Each share of preferred stock outstanding on the
record date entitles the holder thereof to one vote for each director being
elected by the preferred stock (with no cumulative voting permitted) and to one
vote on each matter submitted for a vote of holders of preferred stock. A
plurality of votes cast at the meeting by the common stock as to the directors
representing the common stock is necessary to elect such directors. A plurality
of votes cast at the meeting by the preferred stock as to the director
representing the preferred stock is necessary to elect such director. On most
other matters, the affirmative vote of a majority of either (a) all of the
shares outstanding and entitled to be voted thereon or (b) just the shares
voted at the meeting, with the common stock and the preferred stock voting
together as a single class, is necessary for approval. An affirmative vote by
either a majority or two-thirds of the remarketed preferred stock (voting
separately as one class) or by a series thereof is also necessary to approve
certain matters adversely affecting the remarketed preferred stock or the
series. Abstentions are counted for purposes of determining whether a quorum is
present at the meeting but not for purposes of determining the number of votes
cast with respect to any voting matter. However, abstentions have the effect of
a "no" vote if the vote required is a majority of all the shares outstanding
and entitled to be voted. Any broker non-votes on a particular matter are
treated as abstentions with respect to that matter.

This proxy statement is first being mailed on or about March 21, 2003. The
Fund will bear the cost of the annual meeting and this proxy solicitation.

1. ELECTION OF DIRECTORS

The board of directors of the Fund is responsible for the overall management
and operations of the Fund. Directors are divided into three classes and are
elected to serve staggered three-year terms. At the meeting, holders of common
stock are entitled to elect two directors and holders of preferred stock are
entitled to elect one director, in each case to serve until the annual meeting
of shareholders in 2006 or until his or her successor is elected and qualified.
The persons named in the enclosed proxy intend to vote in favor of the election
of the persons named below (unless otherwise instructed). Each of the nominees
has consented to serve as a director of the Fund, if elected. In case any of
the nominees should become unavailable for election for any unforeseen reason,
the persons designated in the proxy will have the right to vote for a
substitute.

Wallace B. Behnke and Harry J. Bruce will be retiring as directors of the
Fund when their terms of office end at the annual meeting of shareholders on
May 13, 2003. Mr. Behnke has served as a director of the Fund since 1987 and
was chairman of the Fund's audit committee from 1988 to 2001. Mr. Bruce has
served as a director of the Fund since 1989. The Fund expresses its deepest
appreciation to Messrs. Behnke and Bruce for their many years of outstanding
service to the Fund and wishes them well in their retirement.

Set forth below are the names and certain biographical information about the
director nominees, the continuing directors and the 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. Except as indicated in the footnotes to the
table, no director or director nominee oversees any other portfolios in the
fund complex to which the Fund belongs.

Name, Position with the Fund,
Address Length of Time Served Principal Occupation During Past 5 Years
and Age and Term of Office and Other Affiliations
------- ------------------------- ----------------------------------------

Nominees--Independent Directors

Nancy Lampton (4)(5)(6)...... Director since Chairman and Chief Executive Officer,
3 Riverfront Plaza October 1994 Hardscuffle Inc. (insurance holding company)
Louisville, Kentucky 40202 Nominee for a term since January 2000; Chairman and Chief
Age 60 expiring in 2006 Executive Officer, American Life 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)

Christian H. Poindexter...... Nominee for a term Retired Chairman and Chief Executive Officer,
1997 Annapolis Exchange Pkwy. expiring in 2006 Constellation Energy Group, Inc. (public utility
Annapolis, Maryland 21401 holding company) (Executive Committee
Age 64 Chairman, July 2002-March 2003; Chairman
of the Board, April 1999-July 2002; Chief
Executive Officer, April 1999-October 2001;
President, April 1999-October 2000);
Chairman, Baltimore Gas and Electric
Company, January 1993-July 2002 (Chief
Executive Officer, January 1993-July 2000;
President, March 1998-October 2000;
Director, 1988-2003); Director, Mercantile
Bankshares Corporation (bank holding
company); Director, The Baltimore Life
Insurance Company

David J. Vitale (3)(5)....... Director since April 2000 Private investor and, since February 2003,
141 West Jackson Boulevard Nominee for a term Senior Adviser to the Chicago Board of
Chicago, Illinois 60604 expiring in 2006 Education; President and Chief Executive
Age 56 Officer, Board of Trade of the City of Chicago,
Inc., March 2001-November 2002; Retired
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. and Ark Investment
Management Wheels Inc.
Continuing Directors--Interested Director

Claire V. Hansen (1)(2).... Chairman and Director Senior Advisor to the Board of Directors,
55 East Monroe Street since January 1987 Phoenix Investment Partners, Ltd. since
Chicago, Illinois 60603 Current term expires 2005 November 1995; President and Chief
Age 77 Executive Officer, DNP Select Income Fund
Inc. 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
Continuing Directors--Independent Directors

Franklin A. Cole (2)(5).... Director since January 1989 Chairman, Croesus Corporation (private
54 West Hubbard Street Current term expires 2004 management and investment company); former
Chicago, Illinois 60610 Chairman and Chief Executive Officer,
Age 76 Amerifin Corporation (formerly named
Walter E. Heller International Corporation)

Gordon B. Davidson (4)..... Director since January 1989 Of Counsel, Wyatt, Tarrant & Combs (law
PNC Plaza Current term expires 2004 firm) since September 1995 (Chairman of the
Louisville, Kentucky 40202 Executive Committee prior thereto); retired
Age 76 Director, BellSouth Corp.; 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 Current term expires 2005 early-stage businesses) since December 2001;
Lake Forest, Illinois 60045 Advisory Director, Goldman, Sachs &
Age 48 Company, 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 LLC
(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 Current term expires 2004 (economic and financial consulting firm) since
Chicago, Illinois 60601 1991; Senior Managing Director, Chicago
Age 60 Capital, Inc. (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
8477 Bay Colony Drive Current term expires 2004 Partners, Ltd. since May 1997 (Chairman,
Naples, Florida 34108 November 1995-May 1997); Chairman and
Age 72 Chief Executive Officer, Duff & Phelps
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

Carl F. Pollard (3).......... Director since April 2002 Owner, Hermitage Farm L.L.C. (Thoroughbred
10500 W. U.S. Hwy 42 Current term expires 2005 breeding) since January 1995; Chairman,
Goshen, Kentucky 40026 Columbia Healthcare Corporation 1993-1994;
Age 64 Chairman and Chief Executive 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 (and member of executive
committee), Breeders' Cup Limited, Kentucky
Derby Museum Corporation; Trustee,
Thoroughbred Owners and Breeders
Association

Officers of the Fund (other than the Chairman, for whom see above)

Nathan I. Partain......... President and Chief Executive Vice President, Duff & Phelps
55 East Monroe Street Executive Officer, since Investment Management Co. since January
Chicago, Illinois 60603 February 2001 (Executive 1997; Director of Utility Research, Phoenix
Age 46 Vice President, Chief Investment Partners, Ltd., 1989-1996
Investment Officer and (Director of Equity Research, 1993-1996 and
Assistant Secretary, Director of Fixed Income Research, 1993);
April 1998-February 2001; Director, Otter Tail Corporation
Senior Vice President,
Chief Investment Officer
and Assistant Secretary,
January-April 1998;
Senior Vice President and
Assistant Secretary, January
1997-January 1998)

T. Brooks Beittel......... Secretary and Senior Vice Senior Vice President, Duff & Phelps
55 East Monroe Street President, since January Investment Management Co. since 1993
Chicago, Illinois 60603 1995; Treasurer, January (Vice President 1987-1993)
Age 52 1995-September 2002

Michael Schatt............ Senior Vice President since Senior Vice President, Duff & Phelps
55 East Monroe Street April 1998 (Vice President, Investment Management Co. since January
Chicago, Illinois 60603 January 1997-April 1998) 1997; Managing Director, Phoenix Investment
Age 55 Partners, Ltd., 1994-1996

Joseph C. Curry, Jr....... Treasurer since September Senior Vice President, J.J.B. Hilliard,
Hilliard Lyons Center 2002; Vice President since W.L. Lyons, Inc. since 1994 (Vice President
Louisville, Kentucky 40202 April 1988 1982-1994); Vice President Hilliard Lyons
Age 58 Trust Company; President, Hilliard-Lyons
Government Fund, Inc.; Vice President,
Treasurer and Secretary, Hilliard Lyons
Growth Fund, Inc.; Treasurer, Senbanc Fund

Dianna P. Wengler......... Assistant Secretary since Vice President, J.J.B. Hilliard, W.L. Lyons,
Hilliard Lyons Center April 1988 Inc. since 1990; Vice President, Hilliard-Lyons
Louisville, Kentucky 40202 Government Fund, Inc.; Assistant Secretary,
Age 42 Hilliard Lyons Growth Fund, Inc.

--------
(1)Mr. Hansen is deemed to be an "interested person" of the Fund (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")) because of
his positions with the Fund and with Phoenix Investment Partners, Ltd.
("Phoenix Investment Partners"), parent company of Duff & Phelps Investment
Management Co., the Fund's investment adviser (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
between board meetings.

(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.
(4)Member of the nominating committee of the board of directors, which selects
nominees for election as directors and officers. 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.
(6)Elected by the holders of the Fund's preferred stock.
(7)Mr. Jeffries oversees 30 portfolios in the fund complex to which the Fund
belongs. 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.

During 2002, the board of directors held seven meetings, the audit committee
met four times, the nominating committee met three times and the contracts
committee met four times. Each director attended at least 75% in the aggregate
of the meetings of the board and of the committees on which he or she served.

The following table provides certain information relating to the equity
securities beneficially owned by each director or director nominee as of March
11, 2003, (i) in the Fund and (ii) on an aggregate basis, in any registered
investment companies overseen or to be overseen by the director or nominee
within the same family of investment companies as the Fund.

Aggregate Dollar Range
of Equity Securities in
All Funds Overseen or
to be Overseen by
Director or Nominee in
Name of Dollar Range of Equity Securities Family of Investment
Director or Nominee in the Fund Companies
------------------- --------------------------------- -----------------------

Interested Director
Claire V. Hansen over $100,000 over $100,000

Independent Directors (and Nominees)
Franklin A. Cole $10,001-$50,000 $10,001-$50,000
Gordon B. Davidson over $100,000 over $100,000
Connie K. Duckworth $50,001-$100,000 $50,001-$100,000
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
Christian H. Poindexter $50,001-$100,000 $50,001-$100,000
Carl F. Pollard over $100,000 over $100,000
David J. Vitale $10,001-$50,000 $10,001-$50,000

As of March 5, 2003, none of the foregoing directors or director nominees,
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.

The following table shows the compensation paid by the Fund to the Fund's
directors during 2002:

COMPENSATION TABLE(1)(2)

Aggregate
Compensation
from the
Name of Director Fund
---------------- ------------

Interested Director
Claire V. Hansen...... $ 0
Independent Directors
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 served 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 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 interested
persons of the Fund, the Adviser or the Administrator (as defined below) 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.

The board of directors, including all of the independent directors,
unanimously recommends a vote "FOR" the election of the three nominees for
director named above.

2. APPROVAL OF AN AMENDMENT TO THE ARTICLES SUPPLEMENTARY THAT DEFINE THE TERMS
OF A, B, C, D AND E OF THE FUND'S REMARKETED PREFERRED STOCK

The board of directors has determined that it is advisable to amend the
articles supplementary that define the terms of Series A, B, C, D and E of the
Fund's remarketed preferred stock (the "Articles Supplementary") in order to
revise the maximum dividend rates payable on the Fund's remarketed preferred
stock. The form of the proposed amendment (the "Amendment") is set forth in
Appendix A to this proxy statement.

Reasons for the Amendment

At meetings of the board of directors held on December 16, 2002 and February
21, 2003, the board of directors evaluated this proposal. Prior to and during
the meetings, the board of directors requested information it deemed necessary
to determine whether the proposal is in the best interest of the Fund and its
shareholders. Based upon its review and evaluation of the materials it received
and in consideration of all factors it deemed relevant, the board of directors
concluded that the proposal is in the best interest of the Fund and its
shareholders. Accordingly, on February 21, 2003, the board of directors
unanimously adopted a resolution setting forth the proposed Amendment,
declaring it to be advisable, directing that it be submitted for consideration
at the annual meeting of the Fund's shareholders and recommending that all
shareholders vote for its approval.

Description of the remarketed preferred stock

The Fund has two classes of stock: (i) common stock, $.001 par value per
share, of which 216,844,831 shares are currently outstanding; and (ii)
preferred stock, $.001 par value per share, of which 5,000 shares are currently
outstanding. The shares of common stock of the Fund (the "Common Shares") are
listed for trading on the New York Stock Exchange.

Under the Fund's charter, authority is expressly granted to the board of
directors to authorize the issuance of one or more series of preferred stock
and to fix the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemptions, of such series. On November 16, 1988, the board
exercised that authority and caused the Fund to file Articles Supplementary
designating 5,000 of the authorized shares of preferred stock of the Fund as
five series of remarketed preferred stock of the Fund (collectively, the
"Preferred Shares"), as indicated in the following table:

Number of Liquidation Value Mandatory
Series Shares per Share Issue Date Redemption Date
------ --------- ----------------- ---------- ---------------

A... 1,000 $100,000 11/17/1988 11/28/2012
B... 1,000 $100,000 11/17/1988 11/18/2015
C... 1,000 $100,000 11/17/1988 11/07/2018
D... 1,000 $100,000 12/20/1988 12/22/2021
E... 1,000 $100,000 12/20/1988 12/11/2024

The initial public offerings of these series of Preferred Shares were
effected pursuant to registration statements on Form N-2 filed in July and
August of 1988 with the Securities and Exchange Commission under the 1940 Act
and the Securities Act of 1933, as amended. Each Preferred Share was sold for
an initial public offering price equal to the liquidation value per share
($100,000). The Preferred Shares are subject to the remarketing procedures
described below, and are not traded on any stock exchange.

The Fund issued the Preferred Shares in order to use the proceeds to
increase the assets of the Fund available for investment with the goal of
increasing the net investment income available for distribution to the holders
of the Fund's Common Shares, consistent with the Fund's income-oriented
objectives. The Fund is generally able to take advantage of favorable interest
rate spreads between the dividend rates that it pays on the Preferred Shares
and the interest rates that it receives on investments purchased with the
proceeds of the Preferred Shares.

Each series of Preferred Shares had an initial dividend rate that was
payable for an initial dividend period of 49 days or more. This initial
dividend rate and the ending date of the initial dividend period were set forth
in the public offering documents for each series. All subsequent dividend
periods consist of 49 days (with such adjustments as may be needed to prevent a
dividend period from ending on a non-business day). At the end of each dividend
period for a series, the remarketing agent conducts a remarketing of the
Preferred Shares of that series. In connection with each remarketing, the
remarketing agent sets a new dividend rate for that series for the upcoming
dividend period. The remarketing agent sets the dividend rate at a level
designed to enable all tendering holders to sell their Preferred Shares at a
price equal to their liquidation value of $100,000, subject to a maximum
dividend rate as discussed below. However, there is no guarantee that tendering
holders will be able to sell their Preferred Shares through the remarketing
process. Preferred Shares which are tendered but not sold through the
remarketing process remain the property of the tendering holders.

The Articles Supplementary establishing the terms of the Preferred Shares
provide that the dividend rate set by the remarketing agent for any series of
Preferred Shares for any dividend period may not exceed a maximum dividend
rate, which is defined as a specified percentage (the "Applicable Percentage")
of the "AA" Composite Commercial Paper Rate in effect on the date the dividend
is set. The Applicable Percentage varies depending on the credit ratings
assigned to the applicable series of Preferred Shares by Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Ratings Services ("S&P"). The
lower of the two ratings is used to determine the Applicable Percentage in
accordance with the following table:

Credit Ratings
------------------------------
Moody's S&P Applicable Percentage
---------------- ------------- ---------------------

"aa3" or higher AA- or higher 110%
"a3" to "a1" A- to A+ 125%
"baa3" to "baa1" BBB- to BBB+ 150%
Below "baa3" Below BBB- 200%

In the event of any failure by the Fund to pay a dividend or the redemption
price of any Preferred Shares called for redemption, the Applicable Percentage
will become 200% for all subsequent dividend periods. The Preferred Shares were
initially assigned, and have always maintained, the highest available rating
from Moody's and S&P, and consequently the Applicable Percentage has at all
times been 110%.

Dividends on each Preferred Share are cumulative from the date of original
issue and are payable, when, as and if declared by the board of directors of
the Fund, on the applicable dividend payment dates. The dividend payment date
with respect to each dividend period is the day following the end of that
dividend period.

Pursuant to the Articles Supplementary, the Fund designates dividends paid
on the Preferred Shares as qualifying for the corporate dividends received
deduction to the extent such dividends do not exceed the Fund's qualifying
income. Distributions on the Common Shares are designated as eligible for the
dividends received deduction only to the extent that any qualifying income
remains after distributions are made on the Preferred Shares.

Recent developments affecting the remarketed preferred stock

At meetings of the board of directors held on December 16, 2002 and February
21, 2003, the board of directors discussed an anomaly that has occurred in the
market for municipal obligations since mid-2002, causing tax-advantaged yields
to exceed taxable yields, at times by a significant margin. On a number of
recent Preferred

Share remarketing dates, the tax-advantaged dividend rate in the marketplace
has exceeded 110% of the "AA" Composite Commercial Paper Rate, with the
consequence that the remarketing agent has been unable to set the dividend rate
at a level that would enable all tendering holders to sell their Preferred
Shares at a price equal to their liquidation value of $100,000.

In order to avoid a remarketing failure during this period, the remarketing
agent, as a temporary measure, has purchased for its own account those
Preferred Shares that were tendered but not otherwise initially purchased in
the remarketing process. The Fund believes that any remarketing failure would
likely have a material and permanent adverse effect on the willingness of
investors to purchase the Preferred Shares in any future remarketing (even
after the market dislocation corrected itself) and would likely permanently
raise the market-clearing dividend rate that the Fund would be required to pay.
Based upon its review and evaluation of the materials it received, the board of
directors has concluded that the Applicable Percentages set forth in the
Articles Supplementary are no longer providing the remarketing agent with the
ability to set a competitive market dividend rate that will enable all
tendering holders to sell their Preferred Shares at a price equal to their
liquidation value of $100,000.

The board of directors believes that a well-functioning, liquid market for
the Preferred Shares is critical, not only to meeting the expectations of the
holders of the Preferred Shares for an orderly remarketing process as described
in the Preferred Share public offering documents, but also to the Fund's
ability to maintain the leverage that is an integral component of the Fund's
ability to achieve its objective of seeking current income for the holders of
its Common Shares. It is, of course, impossible to predict the duration or
extent of the current market dislocation, but the board of directors is
concerned that the dislocation has persisted for three quarters and continues
to affect the ability of the remarketing agent to remarket the Preferred
Shares. If a remarketing failure occurs, the market would be likely to penalize
the Fund by requiring it to pay an above-market dividend rate on the Preferred
Shares in the future, and this would reduce the Fund's net income available for
distribution to the holders of its Common Shares. Consequently, the board of
directors believes that it is imperative, considering the best interests of
both the holders of the Preferred Shares and the holders of the Common Shares,
to restore the equilibrium in the Preferred Share remarketing process that
existed prior to the recent market dislocation.

Description of the Amendment

Based on its consideration of the above factors, the board of directors has
concluded that it is in the best interests of the Fund and its shareholders to
amend the Articles Supplementary in order to increase the Applicable
Percentages to levels that will allow the remarketing agent once again to set a
competitive market dividend rate that will enable all tendering holders to sell
their Preferred Shares at their liquidation value of $100,000. Accordingly, the
board of directors has declared the Amendment to be advisable and unanimously
recommends that the Fund's shareholders approve the Amendment. The Amendment
would increase the Applicable Percentages to the levels set forth in the
following table.

Credit Ratings
------------------------------ Applicable Percentage
Moody's S&P After Amendment
---------------- ------------- ---------------------

"aa3" or higher AA- or higher 150%
"a3" to "a1" A- to A+ 175%
"baa3" to "baa1" BBB- to BBB+ 200%
Below "baa3" Below BBB- 225%

The new Applicable Percentages are comparable to the percentages being used by
new issuers of remarketed preferred stock. The Amendment would further provide
that the board of directors will have the authority to lower the caps for the
Applicable Percentages if the board of directors determines and the rating
agencies advise the Fund in writing that such change will not adversely affect
their then-current ratings on the Preferred Shares.

Vote required to approve the Amendment

Because the Articles Supplementary are a part of the Fund's charter, the
Amendment will require the approval of (i) the holders of a majority of the
Fund's outstanding Common Shares and Preferred Shares, voting as a single
class, and (ii) the holders of two-thirds of the Fund's outstanding Preferred
Shares, voting separately as a class.

When the Amendment would become effective

If approved by the Fund's shareholders, the Amendment would become effective
as of the date when it is filed with the State Department of Assessments and
Taxation of the State of Maryland or as of such other date as set forth in the
Amendment, not to exceed 30 days after the Amendment is filed with the
Department. It is expected that the Amendment, if approved by the shareholders,
would be filed as soon as practicable following the date of the annual meeting.
The exact timing of the filing, however, would be determined by the Fund, and
the Fund reserves the right to delay the filing for up to six months following
shareholder approval. In addition, the Fund reserves the right, notwithstanding
shareholder approval and without further action by the shareholders, to elect
not to proceed with the Amendment if, at any time prior to the effective time,
the board of directors, in its sole discretion, determines that the Amendment
is no longer in the best interests of the Fund or its shareholders.

Federal income tax consequences

The following is a summary of the material anticipated federal income tax
consequences of the Amendment to shareholders of the Fund. This summary is
based on the federal income tax laws now in effect and as currently interpreted
and does not take into account possible changes in such laws or
interpretations, including amendments to applicable statutes, regulations and
proposed regulations or changes in judicial or administrative rulings, some of
which may have retroactive effect. This summary is provided for general
information only and does not purport to address all aspects of the possible
federal income tax consequences of the Amendment and is not intended as tax
advice to any person. In particular, and without limiting the foregoing, this
summary does not consider the federal income tax consequences to shareholders
of the Fund in light of their individual investment circumstances or to holders
subject to special treatment under the federal income tax laws. The summary
also does not address any consequences of the Amendment under any state, local
or foreign tax laws.

The holders of the Preferred Shares are generally corporations that qualify
for the "dividends received deduction" for federal income tax purposes.
Pursuant to the Articles Supplementary, the Fund designates dividends paid on
the Preferred Shares as qualifying for the corporate dividends received
deduction to the extent such dividends do not exceed the Fund's qualifying
income. Distributions on the Common Shares are designated as eligible for the
dividends received deduction only to the extent that any qualifying income
remains after distributions are made on the Preferred Shares. The ability of
the Fund to designate income in this manner was confirmed by a private letter
ruling issued by the Internal Revenue Service (the "IRS") to the Fund in 1988.

Because it is not certain that the Fund can continue to rely on the 1988
private letter ruling if the terms of the Preferred Shares are amended in the
manner proposed, the Fund has requested a new private letter ruling from the
IRS (described below) that would permit the Fund to continue designating
qualifying income to the Preferred Shares. Although the IRS has issued Revenue
Ruling 89-81 to generally prohibit the designation of income to specific
classes of stock, that revenue ruling also provided that any regulated
investment company that made such a disproportionate designation pursuant to a
rule described in a registration statement that was filed with the SEC before
June 13, 1989 could continue to do so (the "grandfather clause").

Because of the importance to the Fund and the holders of the Preferred
Shares of being able to designate dividends-received eligible income to
dividends paid on the Preferred Shares, the Fund has requested from the IRS a
private letter ruling stating that, if the proposed amendment to the Fund's
charter is adopted, (i) the "grandfather clause" of Revenue Ruling 89-81 will
apply to the Preferred Shares; (ii) the payment of dividends by the Fund on the
Preferred Shares will not be considered preferential under section 562(c) of
the Internal Revenue Code so that the Fund will be entitled to deduct all
dividends paid by it to the holders of the Preferred Shares; and (iii)
dividends paid by the Fund will be eligible for the dividends received
deduction under section 243 of the Internal Revenue Code in accordance with the
Fund's designation. On December 18, 2002, representatives of the Fund had a
presubmission meeting with representatives of the IRS in Washington. The formal
ruling request was then submitted to the IRS on December 23, 2002.

At this time there can be no assurance that the Fund will receive the IRS
rulings it is requesting or that the private letter ruling will be issued
before the time of the annual meeting of shareholders at which the vote will be
held on approval of the proposed Amendment. If the IRS does not rule favorably
and the amendment is nonetheless adopted, the Fund might need to designate
dividends paid on the Preferred Shares and Common Shares as qualifying for the
corporate dividends received deduction on a pro rata basis. This would reduce
the amount of Preferred Share dividends eligible for the dividends received
deduction and increase the amount of Common Share dividends eligible for the
dividends received deduction. Because less of the Preferred Share dividends
would be eligible for the dividends received deduction, the Fund would need to
pay a higher dividend rate on the Preferred Shares in order to remain
competitive in the market, thus increasing the Fund's cost of leverage. The
adoption of the proposed Amendment would not result in taxable gain or loss for
the holders of the Preferred Shares or the holders of the Common Shares.

Recommendation of the Board of Directors

The board of directors unanimously recommends a vote "FOR" the proposal to
amend the Articles Supplementary that define the terms of Series A, B, C, D and
E of the Fund's remarketed preferred stock in order to increase the maximum
dividend rates payable on those series of stock.

The Fund reserves the right, notwithstanding shareholder approval and
without further action by the shareholders, to elect not to proceed with the
Amendment if, at any time prior to the effective date of the Amendment, the
board of directors, in its sole discretion, determines that the Amendment is no
longer in the best interests of the Fund or its shareholders.

OTHER BUSINESS

Management is not aware of any other matters that will come before the
meeting. If any other business should come before the meeting, however, your
proxy, if signed and returned, will give discretionary authority to the persons
designated in it to vote according to their best judgment.

OTHER INFORMATION

The Adviser and Phoenix Investment Partners. Duff & Phelps Investment
Management Co. serves as the Fund's investment adviser under an investment
advisory agreement (the "Advisory Agreement") dated May 1, 1998. The Adviser is
a wholly-owned subsidiary of 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. The
address of the Adviser is 55 East Monroe 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.

Under the terms of the Advisory Agreement, the Adviser furnishes continuing
investment supervision to the Fund and is responsible for the management of the
Fund's portfolio, subject to the overall control of the board of directors of
the Fund. Currently, the Adviser has ten professionals (i.e., research analysts
and portfolio managers), along with support staff, assigned to the operation of
the Fund. Eight of the ten professionals have the CFA (Chartered Financial
Analyst) designation and one is a CPA (Certified Public Accountant). The
Adviser furnishes, at its own expense, office space, equipment and personnel to
the Fund in connection with the performance of its investment management
responsibilities, and pays all other expenses incurred by it in connection with
managing the assets of the Fund not payable by the Fund's administrator
pursuant to the administration agreement. The Advisory Agreement also includes
the conditions under which the Fund may use any name derived from or similar to
"Duff & Phelps." For its services the Adviser receives from the Fund a
quarterly management fee, payable out of the Fund's assets, at an annual rate
of 0.60 of 1% of the average weekly net assets of the Fund up to $1.5 billion
and 0.50 of 1% of average weekly net assets in excess of $1.5 billion. For
purposes of calculating the management fee, the Fund's 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 of commercial paper issued by the Fund. The
management fee paid by the Fund to the Adviser for 2002 was $13,776,089.

Except for the expenses borne by the Adviser and the Administrator (as
described below) pursuant to their respective agreements with the Fund, the
Fund pays all expenses incurred in its operations, including, among other
things, expenses for legal, accounting and auditing services, taxes, interest,
costs of printing and distributing shareholder reports, proxy materials,
prospectuses and stock certificates, charges of custodians, registrars,
transfer agents, dividend disbursing agents, dividend reinvestment plan agents
and remarketing agents, Securities and Exchange Commission fees, fees and
expenses of non-interested directors, insurance, brokerage costs, litigation
and other extraordinary or non-recurring expenses.

The Fund is also a party to a service agreement dated May 1, 1998 (the
"Service Agreement") with the Adviser and Phoenix Investment Partners. Under
the terms of the Service Agreement, Phoenix Investment Partners makes available
to the Adviser the services 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, that are 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.

The Advisory Agreement and the Service Agreement both provide that the
Adviser shall not be liable to the Fund or its shareholders for any loss
suffered as a consequence of any act or omission of the Adviser or Phoenix
Investment Partners, as the case may be, in connection with the respective
agreements except by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations under the Advisory Agreement.

At the annual meeting held on April 29, 1998, the Fund's shareholders
approved the Advisory Agreement for a two-year term beginning on May 1, 1998
and ending on April 30, 2000. At a meeting held on October 17, 1997, the Board
of Directors of the Fund, including all of the directors who were not
interested persons of the Fund or Phoenix Investment Partners in attendance at
the meeting voting separately as a class, approved the Service Agreement for a
two-year term beginning on May 1, 1998 and ending on April 30, 2000, contingent
on the above-referenced approval of the Advisory Agreement by the shareholders
of the Fund. Unless earlier terminated as described below, the Advisory
Agreement and the Service Agreement may be continued from year to year, if
approved annually (i) by a majority of the directors of the Fund who are not
interested persons of the Fund or the Adviser, in the case of the Advisory
Agreement, or Phoenix Investment Partners, in the case of the Service
Agreement, and (ii) by either the board of directors of the Fund or the holders
of a majority of the outstanding shares of the Fund as defined in the 1940 Act.
A majority of the outstanding shares of the Fund as defined in the 1940 Act
means the following vote of the common stock and the preferred stock voting
together as a single class: (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. At meetings held on January 26, 2000,
February 23, 2001, February 22, 2002 and February 21, 2003, the Board of
Directors of the Fund, including all of the directors of the Fund who were not
interested persons of the Fund or the Adviser, in the case of the Advisory
Agreement, or Phoenix Investment Partners, in the case of the Service
Agreement, in attendance at the meeting voting separately as a class, voted to
continue the Advisory Agreement and the Service Agreement for an additional
one-year term. Accordingly, the term of these agreements currently extends to
April 30, 2004.

The Advisory Agreement may be terminated without penalty on 60 days' written
notice by any party thereto or by a vote of the shareholders of the Fund and
would terminate automatically if it were assigned by any party. If the Advisory
Agreement were terminated, shareholder approval would be required to enter into
a new agreement. The Service Agreement may be terminated without penalty on 60
days' written notice by any party thereto and would terminate automatically if
it were assigned by any party unless a majority of the Fund's board of
directors, including a majority of the directors who are not interested persons
of the Fund or Phoenix Investment Partners, approves continuation of the
Service Agreement.

The Administrator. J.J.B. Hilliard, W.L. Lyons, Inc. serves as the Fund's
administrator (the "Administrator") under an administration agreement (the
"Administration Agreement") dated May 1, 1998. The Administrator (together with
its predecessors) has been engaged in the investment business as a securities
broker-dealer and investment adviser since 1854. It also serves as
administrator and investment adviser to Hilliard-Lyons Government Fund, Inc., a
money market mutual fund, and Hilliard Lyons Growth Fund, Inc., an open-end
mutual fund, and as investment adviser to Senbanc Fund, an open-end mutual
fund. The Administrator is a wholly-owned subsidiary of The PNC Financial
Services Group, Inc. Its principal address is Hilliard Lyons Center,
Louisville, Kentucky 40202.

Under the terms of 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 0.25 of 1% of the Fund's average weekly
net assets up to $100 million, 0.20 of 1% of the Fund's average weekly net
assets from $100 million to $1.0 billion, 0.10 of 1% of average weekly net
assets in excess of $1.0 billion. For purposes of calculating the
administrative fee, the Fund's 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 of commercial paper issued by the Fund. The total administrative fee
paid by the Fund to the Administrator for 2002 was $3,505,218.

The Administration Agreement provides that the Administrator shall not be
liable to the Fund or its shareholders for any loss suffered as a consequence
of any act or omission of the Administrator in connection with the agreement
except by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations under the agreement.

At a meeting held on October 17, 1997, the board of directors of the Fund,
including all of the directors who were not interested persons of the Fund or
the Administrator in attendance at the meeting voting separately as a class,
approved the Administration Agreement for a two-year term beginning on May 1,
1998 and ending on April 30, 2000, contingent on approval of the Advisory
Agreement by the shareholders of the Fund (which approval was granted at the
annual meeting held on April 29, 1998). Unless earlier terminated as described
below, the Administration Agreement may be continued from year to year, if
approved annually (i) by a majority of the directors of the Fund who are not
interested persons of the Fund or the Administrator and (ii) by either the
board of directors of the Fund or the holders of a majority of the outstanding
shares of the Fund as defined in the 1940 Act. The Administration Agreement may
be terminated without penalty on 60 days' written notice by any party thereto
or by a vote of the shareholders of the Fund. At meetings held on January 26,
2000, February 23, 2001, February 22, 2002 and February 21, 2003, the Board of
Directors of the Fund, including all of the directors of the Fund who were not
interested persons of the Fund or the Administrator in attendance at the
meeting voting separately as a class, voted to continue the Administration
Agreement for an additional one-year term. Accordingly, the term of this
agreement currently extends to April 30, 2004.

Portfolio Transactions. The Adviser has discretion to select brokers and
dealers to execute portfolio transactions initiated by the Adviser and to
select the markets in which such transactions are to be executed. In executing
portfolio transactions and selecting brokers or dealers, the primary
responsibility of the Adviser is to seek the best combination of net price and
execution for the Fund. The Fund ordinarily purchases securities in the primary
markets, and in assessing the best net price and execution available to the
Fund, the Adviser considers all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis).

In selecting brokers or dealers to execute particular 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 (the "1934
Act")), statistical quotations, specifically the quotations necessary to
determine the Fund's net asset value, and other information provided to the
Fund and/or 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. The Adviser does not engage brokers whose
commissions it believes to be unreasonable in relation to services provided. 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.

The Advisory Agreement requires the Adviser to provide fair and equitable
treatment to the Fund in the selection of portfolio investments and the
allocation of investment opportunities between the Fund and the Adviser's other
investment management clients, but does not obligate the Adviser to give the
Fund exclusive or preferential treatment. It is likely that from time to time
the Adviser may make similar investment decisions for the Fund and its other
clients. In some cases, the simultaneous purchase or sale of the same security
by the Fund and another client of the Adviser could have a detrimental effect
on the price or volume of the security to be purchased or sold, as far as the
Fund is concerned. In other cases, coordination with transactions for other
clients and the ability to participate in volume transactions could benefit the
Fund.

Although the Fund purchases securities for investment income or capital
appreciation, or both, and not for short-term trading profits, it may dispose
of securities without regard to the time they have been held when such action
appears advisable to the Adviser.

During 2002, the Fund paid brokerage commissions aggregating $8,486,229 in
connection with its portfolio transactions, not including the gross
underwriting spread on securities purchased in underwritten public offerings or
the spread in over-the-counter transactions with firms acting as principal.

Shareholders. The following table shows shares of common stock of the Fund
as to which each director, each nominee for director, and all directors and
officers of the Fund as a group, had or shared power over voting or disposition
at March 11, 2003. The directors and officers of the Fund owned no shares of
the Fund's remarketed preferred stock. Shares are held with sole power over
voting and disposition except as noted. The shares of common stock held by each
of the persons listed below and by all directors and officers as a group
represented less than 1% of the outstanding common stock.

Shares of
common stock
------------

Franklin A. Cole (1)................................. 3,264
Gordon B. Davidson (2)............................... 25,000
Connie K. Duckworth (1).............................. 10,000
Robert J. Genetski................................... 10,000
Claire V. Hansen (2)................................. 28,810
Francis E. Jeffries (2).............................. 46,651
Nancy Lampton (1)(2)................................. 56,631
Christian H. Poindexter (1).......................... 10,000
Carl F. Pollard...................................... 20,000
David J. Vitale...................................... 1,000
Directors and officers as a group (15 persons) (1)(2) 231,745

--------

(1)Mr. Cole, Ms. Duckworth, Ms. Lampton and Mr. Poindexter had shared power to
vote and/or dispose of 3,264, 10,000, 50,500 and 10,000, respectively, of
the shares listed. The directors and officers had shared power to vote
and/or dispose of 79,465, in the aggregate, of the shares listed as owned by
the directors and officers as a group.

(2)Messrs. Davidson, Hansen and Jeffries and Ms. Lampton disclaim beneficial
ownership of 7,000, 10,020, 9,205 and 51,200, respectively, of the shares
listed. The directors and officers disclaim beneficial ownership of 83,634,
in the aggregate, of the shares listed as owned by the directors and
officers as a group.

At March 11, 2003, no person was known by the Fund to own beneficially 5% or
more of the outstanding shares of the Fund (as determined in accordance with
Rule 13d-3 under the 1934 Act).

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the 1934 Act requires the Fund's officers and directors, and persons who own
more than 10% of a registered class of the Fund's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and greater
than 10% shareholders are required by Securities and Exchange Commission
regulations to furnish the Fund with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of Section 16(a) forms furnished
to the Fund, or written representations that no Forms 5 were required, the Fund
believes that during 2002 all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners were complied
with.

Report of the Audit Committee. The audit committee is composed of five
directors and acts under a written charter that was adopted by the board of
directors on April 25, 2000 and amended and restated on February 21, 2003. A
copy of the charter is attached as Appendix B to this proxy statement. Each of
the members of the audit committee is independent as defined in the listing
standards of the New York Stock Exchange. In connection with the audit of the
Fund's 2002 audited financial statements, the audit committee: (1) reviewed and
discussed the Fund's 2002 audited financial statements with management, (2)
discussed with the independent public accountants the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, (3) received and reviewed the written disclosures and
the letter from the independent public accountants required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
as amended, and (4) discussed with the independent public accountants their
independence from the Fund and its management. Based on the foregoing reviews
and discussions, the audit committee recommended to the board of directors that
the financial statements referred to above be included in the Fund's Annual
Report to Shareholders for filing with the Securities and Exchange Commission.

The Audit Committee

David J. Vitale, Chairman
Wallace B. Behnke
Harry J. Bruce
Connie K. Duckworth
Carl F. Pollard

Independent Public Accountants. The 1940 Act requires that the Fund's
independent public accountants be selected by the vote, cast in person, of a
majority of the members of the board of directors who are not interested
persons of the Fund. In accordance with that provision, the firm of Ernst &
Young LLP ("Ernst & Young"), which has served as the Fund's independent public
accountants since June 12, 2002, has been selected as independent public
accountants of the Fund to perform the audit of the financial books and records
of the Fund for the year ending December 31, 2003. A representative of Ernst &
Young is expected to be present at the meeting of shareholders and will be
available to respond to appropriate questions and have an opportunity to make a
statement if the representative so desires.

Change in Auditors During 2002. On June 12, 2002, the board of directors,
acting upon the recommendation of its audit committee, voted to dismiss Arthur
Andersen LLP ("Andersen") as the Fund's independent public accountants for 2002
and to appoint Ernst & Young to replace Andersen. Andersen's report on the
financial statements of the Fund for each of the fiscal years ended December
31, 2000 and December 31, 2001 did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. During the fiscal years ended December
31, 2000 and December 31, 2001, and the interim period between December 31,
2001 and June 12, 2002, there were no disagreements between the Fund and
Andersen on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement(s), if
not resolved to the satisfaction of Andersen, would have caused it to make
reference to the subject matter of the disagreement(s) in connection with its
reports. During the fiscal years ended December 31, 2000 and December 31, 2001,
and the interim period between December 31, 2001 and June 12, 2002, there were
no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K
promulgated by the Securities and Exchange Commission.

Audit Fees. Ernst & Young billed aggregate fees of $48,000 for professional
services rendered for (i) the audit of the Fund's 2002 financial statements and
(ii) the review of the financial statements included in the Fund's semi-annual
report for the six months ended June 30, 2002.

Financial Information Systems Design and Implementation Fees. No fees were
billed by Ernst & Young or Andersen for professional services rendered to the
Fund during 2002 in connection with financial information systems design and
implementation. During 2002, neither Ernst & Young nor Andersen rendered
financial information systems design or implementation services to the Adviser
or to any entity controlling, controlled by or under common control with the
Adviser that provides services to the Fund.

All Other Fees. The aggregate of all other fees billed by Ernst & Young and
Andersen for professional services rendered to the Fund during 2002 was
$31,350. Those services included quarterly reporting required by the rating
agencies that rate the Fund's preferred stock and commercial paper, review of
1940 Act filings, preparation of income tax returns and other tax consultation
services. During 2002, neither Ernst & Young nor Andersen rendered professional
services to the Adviser or to any entity controlling, controlled by or under
common control with the Adviser that provides services to the Fund.

All non-audit services provided by the Fund's independent public accountants
are preapproved by (i) the Fund's audit committee or (ii) the chairman of the
audit committee, to whom the committee has delegated the authority to grant
such preapprovals between scheduled meetings of the committee. In deciding
whether to grant such preapproval, the audit committee or the chairman of the
audit committee, as the case may be, considers whether the provision of such
non-audit services is compatible with maintaining the independence of the
Fund's independent public accountants.

Solicitation of Proxies. Proxies will be solicited by mail. Proxies may be
solicited by Fund personnel personally or by telephone, telegraph or mail, but
such persons will not be specially compensated for such services. The Fund will
inquire of any record holder known to be a broker, dealer, bank or other
nominee as to whether other persons are the beneficial owners of shares held of
record by such persons. If so, the Fund will supply additional copies of
solicitation materials for forwarding to beneficial owners, and will make
reimbursement for reasonable out-of-pocket costs. In addition, the Fund may
hire a proxy solicitor to assist the Fund in the solicitation of proxies at a
fee of approximately $20,000, plus out-of-pocket expenses.

Shareholder Proposals. Any shareholder proposal to be considered for
inclusion in the Fund's proxy statement and form of proxy for the 2004 annual
meeting of shareholders should be received by the Secretary of the Fund no
later than November 21, 2003. Under the circumstances described in, and upon
compliance with, Rule 14a-4(c) under the 1934 Act, the Fund may solicit proxies
in connection with the 2004 annual meeting which confer discretionary authority
to vote on any shareholder proposals of which the Secretary of the Fund does
not receive notice by February 4, 2004.

Annual and Semi-annual Reports. The Fund will provide without charge to any
shareholder who so requests, a copy of the Fund's annual report for the year
ended December 31, 2002 and the Fund's semi-annual report for the six months
ended June 30, 2002. Requests for copies of such reports should be directed to
the Administrator at (888) 878-7845 (toll-free). Copies of such reports are
also available by accessing the Fund's web site at www.dnpselectincome.com.

General. A list of shareholders entitled to be present and vote at the
annual meeting will be available at the offices of the Fund, 55 East Monroe
Street, Chicago, Illinois 60603, for inspection by any shareholder during
regular business hours for ten days prior to the date of the meeting.

Failure of a quorum to be present at the annual meeting will necessitate
adjournment and will give rise to additional expense.

All shareholders are requested to sign, date and mail proxies promptly in
the return envelope provided.

March 21, 2003

APPENDIX A

DNP SELECT INCOME FUND INC.

PROPOSED AMENDMENT TO THE FUND'S CHARTER

The Corporation's Articles Supplementary designating Remarketed Preferred
Stock Series A, Series B, Series C, Series D and Series E are hereby amended as
follows:

Part I, Paragraph 1, Definitions, is amended by deleting the definitions of
"Maximum Dividend Rate" and "Non-Payment Period Rate" and replacing them with
the following definitions:

"Maximum Dividend Rate" for any Dividend Period at any Dividend Reset
Date shall apply to a cash dividend, and be the Applicable Percentage of the
applicable "AA" Composite Commercial Paper Rate. The Applicable Percentage
shall vary with the lower of the credit rating or ratings assigned to the
shares of RP by Moody's and S&P (or if Moody's or S&P or both shall not make
such rating available, the equivalent of either or both of such ratings by a
Substitute Rating Agency or two Substitute Rating Agencies or, in the event
that only one such rating shall be available, such rating) on each Dividend
Reset Date as follows:

Credit Ratings
------------------------------ Applicable
Moody's S&P Percentage
---------------- ------------- ----------

"aa3" or higher AA- or higher 150%
"a3" to "a1" A- to A+ 175%
"baa3" to "baa1" BBB- to BBB+ 200%
Below "baa3" Below BBB- 225%

Notwithstanding the foregoing, the Board of Directors shall have the
authority from time to time to change the Applicable Percentage associated
with any of the above credit rating categories to a level below or equal to
the percentage set forth in the table above, provided that the Board of
Directors determines and the Rating Agencies advise the Corporation in
writing that such change will not adversely affect their then-current
ratings on the RP. The Remarketing Agent shall round each applicable Maximum
Dividend Rate to the nearest one-thousandth (0.001) of one percent per
annum, with any such number ending in five ten-thousandths (0.0005) of one
percent being rounded upwards to the nearest one-thousandth (0.001) of one
percent. The Remarketing Agent shall not round the applicable "AA" Composite
Commercial Paper Rate as part of their calculation of any Maximum Dividend
Rate.

"Non-Payment Period Rate" means, initially, 225% of the applicable "AA"
Composite Commercial Paper Rate, provided that the Board of Directors shall
have the authority to adjust, modify, alter or change from time to time the
initial Non-Payment Period Rate if the Board of Directors determines and the
Rating Agencies advise the Corporation in writing that such adjustment,
modification, alteration or change will not adversely affect their
then-current ratings on the RP.

APPENDIX B

DNP SELECT INCOME FUND INC.

AUDIT COMMITTEE CHARTER
(as amended and restated on February 21, 2003)

Purpose

.. The Audit Committee has been established by the Board of Directors to
monitor (1) the integrity of the Fund's financial statements, (2) the
Fund's compliance with legal and regulatory requirements, (3) the
qualifications, independence and performance of the Fund's independent
public accountants and (4) the performance by the Fund's service providers
of the Fund's internal audit function.

.. The Audit Committee shall have the sole authority to make recommendations
to the Board of Directors regarding the appointment of any independent
public accounting firm retained by the Fund for the purpose of preparing or
issuing an audit report or related work and shall be directly responsible
for determining the compensation and overseeing the work of any independent
public accounting firm so appointed.

.. The Audit Committee shall cause to be prepared and shall approve any
reports required by the rules of the Securities and Exchange Commission to
be included in the Fund's annual proxy statement.

.. The function of the Audit Committee is oversight; it is not the duty of the
Committee to plan or conduct audits or to determine that the Fund's
financial statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and applicable
rules and regulations. These are the responsibilities of management and the
independent public accountants.

Composition

.. The Audit Committee shall consist of at least three directors, including a
chairman, appointed by the Board of Directors upon the recommendation of
the Nominating Committee. Audit Committee members may be removed and
replaced by the Board at any time.

.. Each member of the Audit Committee shall satisfy the independence,
experience and financial expertise requirements of the applicable rules of
the New York Stock Exchange ("NYSE") and Section 10A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
promulgated thereunder.

.. Members of the Audit Committee shall receive no compensation from the Fund
other than (i) reimbursement of expenses and (ii) fixed fees established by
the Board with respect to service on the Board and committees thereof and
attendance at Board and committee meetings.

.. Except as expressly provided in this Charter, the Bylaws of the Fund, the
Corporate Governance Guidelines of the Fund, the rules of the NYSE or any
applicable law or regulation, the Audit Committee shall establish its own
rules of procedure.

Responsibilities and Powers

.. To carry out its purposes, the Audit Committee shall have the following
responsibilities and powers:

General

.. Meet at least twice a year, or more frequently as circumstances may require.

.. Review and reassess the adequacy of this Charter at least annually and
recommend any proposed changes to the Board of Directors for approval.

.. Review annually the Audit Committee's own performance and report the
results of such review to the Board of Directors.

.. Meet regularly with representatives of the Fund's investment adviser,
administrator and independent public accountants in separate executive
sessions to review and discuss any issues arising from the administrator's
and independent public accountant's perspective relating to the accounting,
financial reporting and internal audit functions performed by the Fund and,
where applicable, by service providers on behalf of the Fund.

.. Review with the Fund's investment adviser, administrator and independent
public accountants the adequacy and effectiveness of the accounting and
financial controls of the Fund, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where
new or more detailed controls or procedures are desirable or necessary.

.. Discuss with management the guidelines and policies that govern the process
by which management assesses and manages the Fund's major financial risk
exposures.

.. To the extent the Committee deems necessary or appropriate, request any
officer of the Fund, any employee or representative of the Fund's
administrator or investment adviser, or the Fund's outside counsel or
independent public accountants to attend any meeting of the Audit Committee
or to meet with any members of, or consultants to, the Committee.

.. Review with the Fund's outside counsel any legal matters that the counsel
believes may have a material impact on the Fund's accounting and financial
reporting policies or practices.

.. To the extent the Committee deems necessary or appropriate, retain special
legal, accounting or other consultants to advise the Committee.

.. To the extent the Committee deems necessary or appropriate, conduct or
authorize investigations into any matters within the scope of the
Committee's responsibilities.

.. Approve the establishment of procedures for the receipt, retention, and
treatment of complaints received by the Fund regarding accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of the Fund's administrator or investment adviser
of concerns regarding questionable accounting or auditing matters.

.. Perform such other oversight functions as are assigned by law or
regulation, NYSE rule, the Fund's Charter or Bylaws, or the Board of
Directors.

Independent Audit

.. Make recommendations to the Board of Directors regarding the appointment by
the independent directors of the Fund of any independent public accounting
firm retained by the Fund for the purpose of preparing or issuing an audit
report or related work, and be directly responsible for determining the
compensation and overseeing the work (including resolution of disagreements
between management and the auditor regarding financial reporting) of any
independent public accounting firm so appointed, i.e., each such
independent public accounting firm shall report directly to the Audit
Committee.

.. Pre-approve the scope, fees and terms of all audit and non-audit services
provided by the Fund's independent public accountants, as required by the
provisions of Section 10A of the Exchange Act and the rules promulgated
thereunder.

.. To the extent the Committee deems necessary or appropriate, delegate to one
or more designated members of the Audit Committee the authority to grant
pre-approvals of audit and non-audit services, provided that the decisions
of any member(s) to whom authority is so delegated shall be presented to
the full Audit Committee at each of its scheduled meetings

.. Review the experience and qualifications of the lead partner of the
independent public accountant team.

.. Assure that the lead audit partner of the independent public accountants is
rotated at least every five years as required by Section 10A of the
Exchange Act.

.. Obtain and review a report from the independent public accountants at least
annually regarding (1) the accounting firm's internal quality-control
procedures, (2) any material issues raised by the most recent
quality-control review, or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities within the
preceding five years respecting one or more independent audits carried out
by the firm, (3) any steps taken to deal with any such issues and (4) all
relationships between the independent public accountants and the Fund.

.. As frequently as deemed necessary, evaluate the qualifications and
performance of the independent public accounting firm, including
considering whether the accounting firm's quality controls are adequate,
and taking into account the opinions of management and the Fund's
administrator.

.. At least annually, evaluate the independence of the independent public
accounting firm, including whether the provision of non-audit services is
compatible with maintaining the accounting firm's independence.

.. Discuss with the independent public accountants any communications between
the Fund's audit team and the audit firm's national office respecting
auditing or accounting issues presented by the engagement.

.. Discuss with management and the independent public accountants any
accounting adjustments that were noted or proposed by the independent
public accountants but were passed (as immaterial or otherwise).

.. Review disclosures made by the Fund's principal executive officer and
principal financial officer regarding compliance with their certification
obligations as required under the Sarbanes-Oxley Act of 2002 and the rules
promulgated thereunder, including the Fund's disclosure controls and
procedures and internal controls for financial reporting and evaluations
thereof.

.. Review the reports of the independent public accountants mandated by
Section 10A of the Exchange Act and obtain from the independent public
accountants assurance that no illegal acts (as defined in Section 10A of
the Exchange Act) have been detected or have otherwise come to the
attention of such accountants in the course of the audit.

Financial Statement Review

.. Review and discuss with the Fund's management and independent public
accountants the Fund's audited financial statements, including the matters
required to be discussed pursuant to Statement of Auditing Standards No. 61.

.. Review and discuss with the Board of Directors, management and the
independent public accountants, as applicable, (1) major issues regarding
accounting principles and financial statement presentations, including any
significant changes in the Fund's selection or application of accounting
principles, and major issues as to the adequacy of the Fund's internal
controls and any special audit steps adopted in light of material control
deficiencies; (2) analyses prepared by management and/or the independent
public accountants setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial
statements, including analyses of the effects of alternative GAAP methods
on the financial statements; (3) any material written communications
between the independent public accountants and the Fund, such as any
management letter or schedule of unadjusted differences, and the Fund's
response to such communications; (4) any problems, difficulties or
differences encountered in the course of the audit work, including any
disagreements with management or restrictions on the scope of the
independent public accountants' activities or on access to requested
information and management's response thereto; and (5) the effect of
regulatory and accounting initiatives on the financial statements of the
Fund.

.. Review and discuss with the independent public accountants the form of
opinion the auditors propose to render to the Fund's Board and shareholders
on the Fund's financial statements.

.. Make recommendations to the Board of Directors regarding inclusion of the
Fund's audited financial statements in the Fund's annual report to
shareholders.

Investment Company-Specific Functions

.. Assist the Board of Directors in fulfilling its good faith obligation under
Section 2(a)(41) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), to determine the fair value of securities in the
Fund's portfolio for which market quotations are not readily available by
reviewing, in consultation with the Fund's independent public accountants,
fair value pricing methodologies developed by the Fund's management and
recommending the same for adoption by the Board of Directors.

.. Ensure that the agreed-upon procedures for the production of quarterly
basic maintenance reports on the Fund's remarketed preferred stock and
commercial paper are carried out.

.. Ensure that any necessary tax qualification tests relating to the Fund's
regulated investment company status are performed.

Reporting Responsibilities

.. Keep regular minutes of Committee meetings and report the same to the Board
of Directors when required.

.. Report to the Board of Directors on the Committee's activities on a regular
basis and make such recommendations for action by the Board as it may deem
appropriate.

.. Cause to be prepared and approve any reports required by the rules of the
Securities and Exchange Commission to be included in the Fund's annual
proxy statement.

DNP SELECT INCOME FUND INC.

PROXY SOLICITED BY MANAGEMENT FROM COMMON SHAREHOLDERS
FOR MEETING TO BE HELD ON MAY 13, 2003

Franklin A. Cole, Francis E. Jeffries and Robert J. Genetski or any of
them, each with full power of substitution, are authorized to vote all shares of
common stock of DNP Select Income Fund Inc. owned by the undersigned at the
meeting of shareholders to be held May 13, 2003, and at any adjournment of the
meeting. They shall vote in accordance with the instructions set forth on the
reverse side hereof.

If no specific instructions are provided, this proxy will be voted "FOR"
proposals 1 and 2 and in the discretion of the proxies upon such other business
as may properly come before the meeting.

(Continued and to be signed on other side.)

DNP SELECT INCOME FUND INC.
P.O. BOX 11435
NEW YORK, NY 10203-0435

Please Vote, Date, and
_____ Sign and Return Promptly _____ Votes must be indicated
in the Enclosed Envelope (x) in Black or Blue ink

Your Board of Directors unanimously recommends a vote "FOR" each of the
following proposals.

1. Election of directors:

FOR ALL____ WITHHOLD ____ *EXCEPTIONS ____
FOR ALL

Nominees: Christian H. Poindexter and David J. Vitale

(INSTRUCTIONS: To withhold authority to vote for any nominee, mark the
"Exceptions" box and write the name of that nominee in the space provided
below.)

*Exceptions ___________________________________________________________________

2. Approval of an amendment to the articles supplementary that define the
terms of Series A, B, C, D and E of the Fund's remarketed preferred stock.

FOR____ AGAINST ____ ABSTAIN____

To change your address, please mark this box. ____

IMPORTANT: Please sign exactly as your
name or names appear on the shareholder
records of the Fund. If you sign as
agent or in any other representative
capacity, please state the capacity in
which you sign. Where there is more
than one owner, each should sign.

Date: _________________________________

---------------------------------------
Share Owner sign here

---------------------------------------
Co-Owner sign here

DNP SELECT INCOME FUND INC.

PROXY SOLICITED BY MANAGEMENT FROM PREFERRED SHAREHOLDERS
FOR MEETING TO BE HELD ON MAY 13, 2003

Franklin A. Cole, Francis E. Jeffries and Robert J. Genetski or any of them,
each with full power of substitution, are authorized to vote all shares of
preferred stock of DNP Select Income Fund Inc. owned by the undersigned at the
meeting of shareholders to be held May 13, 2003, and at any adjournment of the
meeting. They shall vote in accordance with the instructions set forth below.

Your Board of Directors unanimously recommends a vote "FOR" the following
proposal.

1. Election of director: Nancy Lampton

FOR______ WITHHOLD______

2. Approval of an amendment to the articles supplementary that define the
terms of Series A, B, C, D and E of the Fund's remarketed preferred stock.

FOR______ WITHHOLD______ ABSTAIN______

If no specific instructions are provided, this proxy will be voted "FOR"
proposals 1 and 2 and in the discretion of the proxies upon such other business
as may properly come before the meeting.

(Continued and to be signed on other side.)

Dated , 2003 (please fill in, sign and date this proxy and mail it in the
envelope provided.)

----------------------------------

----------------------------------
(Signature(s) of
Shareholder(s))

IMPORTANT: Please sign
exactly as your name or names
appear on the shareholder
records of the Fund. If you
sign as agent or in any other
representative capacity,
please state the capacity in
which you sign. Where there
is more than one owner, each
should sign.