-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H+SfZr2ZBxXA9ZgKxzyrEPExxkgBosyeKbs2nbBr+2xr22bZJqDj5ygEewJKXvcE Er2660pLzf+k5rNt+/3U7Q== 0000950131-99-001336.txt : 19990316 0000950131-99-001336.hdr.sgml : 19990316 ACCESSION NUMBER: 0000950131-99-001336 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990428 FILED AS OF DATE: 19990305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUFF & PHELPS UTILITIES INCOME INC CENTRAL INDEX KEY: 0000806628 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 363480989 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 811-04915 FILM NUMBER: 99557651 BUSINESS ADDRESS: STREET 1: PO BOX 32760 CITY: LOUISVILLE STATE: KY ZIP: 40232 BUSINESS PHONE: 3123685510 MAIL ADDRESS: STREET 1: PO BOX 32760 CITY: LOUISVILLE STATE: KY ZIP: 40232 FORMER COMPANY: FORMER CONFORMED NAME: DUFF & PHELPS SELECTED UTILITIES INC DATE OF NAME CHANGE: 19910429 DEF 14A 1 DUFF & PHELPS UTILITIES INCOME INC. SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] 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 DUFF & PHELPS UTILITIES INCOME INC. - - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: DUFF & PHELPS UTILITIES INCOME INC. 55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312) 368-5510 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS APRIL 28, 1999 The annual meeting of shareholders of Duff & Phelps Utilities Income Inc. will be held at The Chicago Club, 81 East Van Buren Street, Chicago, Illinois, on Wednesday, April 28, 1999 at 9:00 a.m. to: 1. Elect four directors by the holders of the Fund's common stock; 2. Ratify or reject the selection of Arthur Andersen LLP as independent public accountants for the Fund; and 3. Transact such other business as may properly come before the meeting. Shareholders of record at the close of business on February 26, 1999 are entitled to vote at the meeting. For the Board of Directors, T. Brooks Beittel Secretary March 5, 1999 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 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 Duff & Phelps Utilities Income Inc. (the "Fund") is soliciting proxies from the shareholders for use at the annual meeting of shareholders to be held April 28, 1999 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 February 26, 1999 are entitled to notice of and to participate in the meeting. The Fund had 206,148,685 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 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. 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 5, 1999. 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 elected to serve staggered three-year terms. At the meeting, holders of common stock are entitled to elect three directors to serve until the annual meeting of shareholders in 2002, or until their successors are elected and qualified, and one director to serve until the annual meeting of shareholders in 2000 (to complete the unexpired term of the late Robert J. Day), or until his 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. The name, positions with the Fund, principal occupations during the past five years, other business affiliations, age at February 1, 1999 and address of each of the nominees and of each of the other current directors are stated below. Messrs. Cole, Davidson and Bruce have been directors of the Fund since January 1989. Ms. Lampton and Messrs. Sprinkel and Pedersen have been directors of the Fund since October 1994, April 1995 and November 1998, respectively. Each of the other current directors has been a director of the Fund since the Fund commenced operations in January 1987. 1 Nominees With Terms Expiring in 2002: Wallace B. Behnke, director (3) Consulting engineer since July 1989; prior thereto, Vice Chairman, Commonwealth Edison Company (public utility); age 72; 323 Glen Eagle, Kiawah Island, South Carolina 29455. Gordon B. Davidson, director (4) Of Counsel, Wyatt, Tarrant & Combs (law firm) since September 1995 (Chairman of the Executive Committee prior thereto); retired director, BellSouth Corp.; former Chairman of the Board and director, Trans Financial Advisers, Inc.; age 72; Citizens Plaza, Louisville, Kentucky 40202. Claire V. Hansen, director and Chairman (1)(2)(4) Senior Advisor to the Board of Directors, Phoenix Investment Partners, Ltd. since November 1995; 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 Research Inc. and Duff & Phelps Investment Management Co., 1985-1987; age 73; 55 East Monroe Street, Chicago, Illinois 60603. With Term Expiring in 2000: Calvin J. Pedersen, director, President and Chief Executive Officer (1) President and Chief Executive Officer of the Fund since March 1994; President, Phoenix Investment Partners, Ltd. since November 1995; President, Duff & Phelps Corporation, 1993-November 1995 (Senior Vice President, 1986-1988 and Executive Vice President, 1989-1993); Executive Vice President and Director, Duff & Phelps Investment Management Co. since 1989 (Senior Vice President, 1986-1988); President and Chief Executive Officer, Duff & Phelps Utilities Tax- Free Income Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.; director/trustee, Phoenix group of funds; age 57; 55 East Monroe Street, Chicago, Illinois 60603. Continuing Directors With Terms Expiring in 2000: Harry J. Bruce, director (3) Private investor; former Chairman and Chief Executive Officer, Illinois Central Railroad Co.; age 67; 1630 Sheridan Road, Wilmette, Illinois 60091. Nancy Lampton, director (5)(6) Chairman and Chief Executive Officer, American Life and Accident Insurance Company of Kentucky; director, Baltimore Gas and Electric Company; age 56; 3 Riverfront Plaza, Louisville, Kentucky 40202. 2 With Terms Expiring in 2001: Franklin A. Cole, director (2)(5) Chairman, Croesus Corporation (private management and investment company); former Chairman and Chief Executive Officer, Amerifin Corporation (formerly named Walter E. Heller International Corporation); director, Aon Corporation and CNA Income Shares; age 72; 54 West Hubbard Street, Chicago, Illinois 60610. Francis E. Jeffries, director (1)(2)(4) Retired Chairman, Phoenix Investment Partners, Ltd. since December 1996 (Chairman, November 1995-December 1996); Chairman and Chief Executive Officer, Duff & Phelps Corporation, June 1993-November 1995 (President and Chief Executive Officer, January 1992-June 1993); President and Chief Executive Officer, Duff & Phelps Illinois Inc. since 1987 (President and Chief Operating Officer, 1984-1987) and Chairman of the Board, Duff & Phelps Investment Management Co. (1988-1993); director, The Empire District Electric Company, Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.; director/trustee, Phoenix Funds; age 68; 6585 Nicholas Boulevard, Naples, Florida 34108. Beryl W. Sprinkel, director (3)(5)(6) Consulting economist since January 1989; Chairman of the Council of Economic Advisers under President Reagan (1985-1989); member of President Reagan's cabinet (1987-1989); Under Secretary of the Treasury for Monetary Affairs (1981-1985); age 75; 20140 St. Andrews Drive, Olympia Fields, Illinois 60461. - - -------- (1) "Interested person" of the Fund (as defined in the Investment Company Act of 1940 (the "1940 Act")) as an officer of the Fund or as a current or former officer or director of the Fund's investment 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. ---------------- During 1998, the board of directors held six meetings, the audit committee met twice, the nominating committee met four times and the contracts committee met once. With the exception of Mr. Sprinkel, who was out of the country on a single day on which both the board and the two committees on which he served met, 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. 3 The following table shows the compensation paid by the Fund to the Fund's current directors during 1998: COMPENSATION TABLE(1)(2)
Aggregate Compensation from the Name of Director Fund ---------------- ------------ Wallace B. Behnke............................................ $25,500 Harry J. Bruce............................................... 24,500 Franklin A. Cole............................................. 28,500 Gordon B. Davidson........................................... 28,774 Claire V. Hansen............................................. 0 Francis E. Jeffries(2)....................................... 28,500 Nancy Lampton................................................ 24,500 Calvin J. Pedersen........................................... 0 Beryl W. Sprinkel............................................ 23,500
- - -------- (1) During 1998, each director not affiliated with the Adviser received an annual fee of $17,500 (and an additional $3,000 if the director served as chairman of a committee of the board of directors) plus an attendance fee of $1,000 for each meeting of the board of directors or 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 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 1998, Mr. Jeffries received aggregate compensation of $75,000 for service as a director of the Fund and as a director of two 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. 2. SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS The board of directors has selected Arthur Andersen LLP as independent public accountants for the Fund until the annual meeting of shareholders held in 2000. Arthur Andersen LLP has served as independent public accountants for the Fund since the Fund commenced operations. The selection is being submitted for ratification or rejection by the shareholders as required by the 1940 Act. A representative of Arthur Andersen LLP 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. Ratification or rejection of the selection of independent public accountants will be determined by a majority of the votes cast. The board of directors unanimously recommends a vote "FOR" ratification of the selection of Arthur Andersen LLP. 4 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 (the "Adviser") under an investment advisory agreement (the "Advisory Agreement") dated May 1, 1998. The Adviser is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd. ("Phoenix Investment Partners"), which is an indirect, majority-owned subsidiary of Phoenix Home Life Mutual Insurance Company. 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 $12.2 billion in client accounts under discretionary management. The Adviser also provides non-discretionary investment advisory and portfolio consulting services to corporate and public retirement funds and endowment funds aggregating more than $7.2 billion. 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 nine professionals (i.e., research analysts and portfolio managers), along with support staff, assigned to the operation of the Fund. Seven of the nine 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 "Duff & Phelps" in its name. 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 1998 was $14,713,237. 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. 5 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. Unless earlier terminated as described below, the Advisory Agreement and the Service Agreement both continue until May 1, 2000, and thereafter 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. 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 Fund's shareholders approved the Advisory Agreement at the annual meeting held on April 29, 1998. 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. 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, voted to approve the Service Agreement, 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). 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 is a wholly-owned subsidiary of PNC Bank Corp. Its principal address is Hilliard Lyons Center, Louisville, Kentucky 40202. 6 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 during 1998, the Administrator received 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 1998 was $3,692,647. 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. Unless earlier terminated as described below, the Administration Agreement continues until May 1, 2000, and thereafter 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 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, voted to approve the Administration Agreement, 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). Officers of the Fund. As noted above under "Election of Directors," Mr. Hansen is Chairman and Mr. Pedersen is President and Chief Executive Officer of the Fund. The name, positions with the Fund, principal occupation during the past five years, age at February 1, 1999 and address of each other executive officer of the Fund is set forth below. The officers are elected at the annual meeting of the board of directors. T. Brooks Beittel, Secretary, Treasurer and Senior Vice President, since January 1995 Senior Vice President, Duff & Phelps Investment Management Co. since 1993 (Vice President 1987-1993); age 48; 55 East Monroe Street, Chicago, Illinois 60603. Nathan I. Partain, Executive Vice President, Chief Investment Officer and Assistant Secretary, since April 1998 (Senior Vice President, Chief Investment Officer and Assistant Secretary, January-April 1998; Senior Vice President and Assistant Secretary, January 1997-January 1998) Executive Vice President, Duff & Phelps Investment Management Co. since January 1997; Director of Utility Research, Phoenix Investment Partners, Ltd., 1989-1996 (Director of Equity Research, 1993-1996 and Director of Fixed Income Research, 1993); director, Otter Tail Power Company; age 42, 55 East Monroe Street, Chicago, Illinois 60603. 7 Michael Schatt, Senior Vice President, since April 1998 (Vice President, January 1997-April 1998) Senior Vice President, Duff & Phelps Investment Management Co. since January 1997; Managing Director, Phoenix Investment Partners, Ltd., 1994-1996; Self-employed consultant, 1994; Director of Real Estate Advisory Practice, Coopers & Lybrand, 1990-1994; age 51; 55 East Monroe Street, Chicago, Illinois 60603. Joseph C. Curry, Jr., Vice President, since April 1988 Senior Vice President, J.J.B. Hilliard, W.L. Lyons, Inc. since 1994 (Vice President 1982-1994); Vice President Hilliard Lyons Trust Company; President, Hilliard-Lyons Government Fund, Inc.; Treasurer and Secretary, Hilliard Lyons Growth Fund, Inc.; age 54; Hilliard Lyons Center, Louisville, Kentucky 40202. Dianna P. Wengler, Assistant Secretary, since April 1988 Vice President, J.J.B. Hilliard, W.L. Lyons, Inc. since 1990; Vice President, Hilliard-Lyons Government Fund, Inc.; Assistant Secretary, Hilliard Lyons Growth Fund, Inc.; age 38; Hilliard Lyons Center, Louisville, Kentucky 40202. 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 8 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 1998, the Fund paid brokerage commissions aggregating $9,040,180 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. The Administrator received $5,750 or approximately 0.06% of total brokerage commissions in 1998 for effecting transactions involving 0.04% of the aggregate dollar amount of transactions in which the Fund paid brokerage commissions. Shareholders. The following table shows shares of common stock of the Fund as to which each director, and all directors and officers of the Fund as a group, had or shared power over voting or disposition at December 31, 1998. 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 ------- Wallace B. Behnke (1)............................................. 2,513 Harry J. Bruce.................................................... 21,095 Franklin A. Cole (1)(2)........................................... 3,264 Gordon B. Davidson (2)............................................ 22,000 Claire V. Hansen (2).............................................. 28,810 Francis E. Jeffries (2)........................................... 82,131 Nancy Lampton (1)(2).............................................. 51,041 Calvin J. Pedersen................................................ 10,515 Beryl W. Sprinkel................................................. 300 Directors and officers as a group (14 persons)(1)(2).............. 232,101
- - -------- (1) Messrs. Behnke, Cole and Pedersen and Ms. Lampton had shared power to vote and/or dispose of 2,513, 3,264, 3,503 and 47,500, respectively, of the shares listed. The directors and officers had shared power to vote and/or dispose of 61,022, 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, 6,725 and 47,500, respectively, of the shares listed. The directors and officers disclaim beneficial ownership of 75,487, in the aggregate, of the shares listed as owned by the directors and officers as a group. At February 26, 1999, 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). 9 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. In February 1999, Mr. Curry filed a Form 5 to report two sales during 1998 of shares of common stock of the Fund, each of which sales should have been previously reported on a Form 4. Other than the foregoing, and 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 1998 all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with. 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 $15,000, 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 2000 annual meeting of shareholders should be received by the Secretary of the Fund no later than November 6, 1999. 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 2000 annual meeting which confer discretionary authority to vote on any shareholder proposals of which the Secretary of the Fund does not receive notice by January 20, 2000. 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, 1998 and the Fund's semi-annual report for the six months ended June 30, 1998. Requests for copies of such reports should be directed to the Administrator at (800) 680-4367 (toll-free). 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 5, 1999 10 DUFF & PHELPS UTILITIES INCOME INC. PROXY SOLICITED BY MANAGEMENT FROM COMMON SHAREHOLDERS FOR MEETING TO BE HELD ON APRIL 28, 1999 Harry J. Bruce, Franklin A. Cole and Nancy Lampton or any of them, each with full power of substitution, are authorized to vote all shares of common stock of Duff & Phelps Utilities Income Inc. owned by the undersigned at the meeting of shareholders to be held April 28, 1999, 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.) DUFF & PHELPS UTILITIES INCOME INC. P.O. BOX 11435 NEW YORK, NY 10203-0435 Your Board of Directors unanimously recommends a vote "FOR" each of the following proposals. 1. Election of Directors: FOR all nominees____ WITHHOLD AUTHORITY to vote____ *EXCEPTIONS____ listed below for all nominees listed below. Nominees: Wallace B. Behnke, Gordon B. Davidson, Claire V. Hansen and Calvin J. Pedersen (INSTRUCTIONS: To withhold authority to vote for individual nominees, mark the "Exceptions" box and write the name of those nominees in the space provided below.) *Exceptions ____________________________________________________________________ 2. Ratification of the selection of Arthur Andersen LLP as independent public accountants of the Fund. FOR____ AGAINST ____ ABSTAIN____ Change of Address or Comments Mark Here ____ 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. Dated: _______________________________, 1999 _______________________________________ _______________________________________ (Signature(s) of Shareholder(s)) Votes must be indicated (x) in Black or Blue ink. Please Vote, Date, and Sign and Return Promptly in the Enclosed Envelope DUFF & PHELPS UTILITIES INCOME INC. PROXY SOLICITED BY MANAGEMENT FROM PREFERRED SHAREHOLDERS FOR MEETING TO BE HELD ON APRIL 28, 1999 Harry J. Bruce, Franklin A. Cole and Nancy Lampton or any of them, each with full power of substitution, are authorized to vote all shares of preferred stock of Duff & Phelps Utilities Income Inc. owned by the undersigned at the meeting of shareholders to be held April 28, 1999, 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. Ratification of the selection of Arthur Andersen LLP as independent public accountants of the Fund. FOR WITHHOLD ABSTAIN If no specific instructions are provided, this proxy will be voted "FOR" proposal 1 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 , 1999 (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. -----END PRIVACY-ENHANCED MESSAGE-----