-----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, I9jjU2DiIjecsYt+bmhwSwVJ6qSMkNmJn1ijqDMU1I0KDrrVoms/5g9DJ7kEpw0y 8H1gHd3BNcCapfM+tYMEaw== 0000950131-99-003259.txt : 19990519 0000950131-99-003259.hdr.sgml : 19990519 ACCESSION NUMBER: 0000950131-99-003259 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990518 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: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-04915 FILM NUMBER: 99629176 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 N-30B-2 1 DUFF & PHELPS UTILITIES INCOME INC. Dear Fellow Shareholders: Performance Review: During the first quarter of 1999, yields on long term U.S. Government bonds rose over one-half percent as investors became concerned that strong domestic economic growth could spark inflation. Since utility securities are sensitive to interest rate changes, valuations were reduced somewhat. For the first quarter of 1999, your Fund had a total return (market price change plus income and assuming reinvestment of dividends) of -2.6%. This compares favorably with the Standard and Poor's Utility Index which had a total return of -9.4% For the two years ending March 31, 1999 the total return for your Fund was 41.9% versus 33.6% for the Standard and Poor's Utility Index. The income portion of return came in the form of 3 monthly 6.5 cent per share dividends. The Fund has as its objective current income and is dedicated to the continuity of dividends. The 6.5 cent per month dividend, without compounding, would be 78 cents annualized or a 7.26% common stock dividend yield based on the March 31, 1999 closing market price of $10.75. That yield compares favorably with the quarter end 3.87% yield of the S&P Utility Index. Annual Shareholder Meeting: The annual meeting was held April 28, 1999 in Chicago, Illinois. Nathan Partain, the Fund's Chief Investment Officer, gave his insights regarding the current environment for utilities and the investment outlook. His comments from the annual meeting follow: "I would like to take a few moments to talk about the strategic positioning that is currently underway within the electric, gas and telephone service utility industries. The utility landscape continues to change to a more competitive environment, and for many companies the strategic question revolves around what type of company they want to be in this new utility world. In the electric industry, fundamentals remain strong and the cash flow being generated is the strongest it has been in decades. Companies are trying to decide what their core businesses will be in the future. For example, many companies are trying to decide whether to be in the generation business or to exit this business and become only a transmission and distribution company. Additionally, companies are trying to decide whether to return a portion of the strong cash flow to shareholders through stock repurchase programs or redeploy this cash flow into new non-regulated ventures. Your investment management team for the most part prefers the former strategy. The divestiture of generating assets will require investors to look at and analyze the electric industry differently. Once upon a time, it was quite simple to analyze the value of generating assets. One could derive this value by looking at the revenues, income and cash flow earned from regulated rates. The regulated rates were derived from the historical costs of those assets. Today, the value of generating assets will depend on things like the hourly electric supply and demand, the incremental cost of electric production, and the volatility and duration in power pricing. Assessing value requires more information, different information and new assumptions about plant operations and market conditions that are more difficult to forecast. It's a lot like doing the old high school geometry and finding the appropriate shaded area under the curves. Another option being pursued by electric and gas companies is a convergence/consolidation strategy. We expect continued merger and acquisition activity as companies jockey for competitive position. The current convergence events are between gas and electric companies, and the consolidation events are among electric companies. The strategy behind the gas and electric company combination is to try to put together a "one-stop- shopping" energy provider. Within the Fund, we own Duke Energy, Reliant Energy, Nipsco Industries and CMS Energy, all of which have had major gas acquisitions over the last several years. We believe that these transactions have enhanced the gas companies products and markets while improving the earnings prospects for the combined companies. We also are seeing electric to electric combinations. The strategy behind this type of combination is expansion of customer base in order to spread fixed costs. To date, we have been less than enamored with these types of transactions due to the length of time it takes to get regulatory approval and the propensity of the regulators to siphon off the synergy savings associated with these combinations to customers and not shareholders. Within the telephone industry we also see the convergence of local, long distance and wireless services. Currently Bell Atlantic and GTE, and SBC Communications and Ameritech are trying to complete merger combinations. Our two largest equity holdings within the Fund are SBC and Bell Atlantic. There has been much recent press about the Federal Communications Commission's concerns with respect to the SBC/Ameritech and Bell Atlantic/GTE combinations. As a result, investors are anxious about the conditions that the FCC may impose on the companies to get the mergers approved and a potential delay in the approvals. We believe that most of this is political noise and that the mergers will be approved without significantly onerous conditions. The Fund continues to focus its domestic telecommunications holdings in the regional Bell operating companies. We believe that owning the last mile to the customer is the most attractive asset to own in the telecom industry. This point was validated somewhat by the high price AT&T paid for TCI, the nation's largest cable provider, in order to get access to the customers at the end of that last mile. We have also invested in equity real estate investment trusts (REITs) due to their attractive values, earnings fundamentals, and dividend yield. As of March 31, 1999, equity REITs yielded 7.96%. Based on historically low payout ratios as a percentage of earnings, we find the dividend yields to be high, secure, and compelling. The underlying health of the real estate market is on firm ground, supporting higher rents that drive the increases in earnings and dividends that equity REITs are providing. Although our REITs in 1998 did not match their superior performances of 1996 and 1997, the income from these investments did aid the Fund in meeting its primary objective to our shareholders. What is particularly interesting about REITs is that in March, it appeared that some nontraditional REIT investors started to find value in this sector. This was driven by well-publicized stories such as an investment by Warren Buffett in a retail REIT and a few management led leveraged buy-outs, supporting our view that the values in equity REITs and their yields are quite attractive. Globalization continues to be a key strategy within the utility industry. Companies are seeking new markets for growth and synergies from business combinations. Whether the trend is domestic utility companies going overseas or foreign utilities making investments within the United States, we believe that globalization will continue to be a major strategic initiative within this industry. Your Fund management team recognized this trend several years ago and has slowly and prudently increased our foreign exposure. At the end of 1998, roughly 11.6% of the equity portfolio was invested in foreign utility equities. The level of investment was down compared to the end of 1997 because we took the opportunity in mid-1998 to recognize several long-term gains in our foreign holdings and brought the gains back to the United States to invest in domestic utilities. Your Fund remains a cautious international investor. We do not have any investments in third world developing nations, Eastern Europe or Asia. Our investments continue to be primarily concentrated in Western Europe, Australia and New Zealand. Our international holdings continue to have comparable yields to our U.S. domestic holdings but have better earnings and dividend growth prospects. 2 In closing, I want to reiterate that your Fund management team recognizes that the utility industry landscape is changing. We view these changes in a positive light and look for new investment opportunities for your Fund. However, your Fund investment management team remains confident that the landscape is not changing so fast that it will not be able to meet the primary objectives of the Fund which are current income and growth in current income." * * * Other business at the annual meeting included tabulating the shareholder vote for nominees to four board of directors seats. Three directors were elected to serve until the annual meeting of shareholders in 2002: Wallace B. Behnke, Gordon B. Davidson, and Claire V. Hansen. A fourth director, Calvin J. Pedersen, was elected to serve until the annual meeting of shareholders in 2000 (to complete the unexpired term of the late Robert J. Day). Additionally, the shareholders ratified the selection of Arthur Andersen LLP as independent public accountants for the Fund. Board of Directors Meeting: A regular meeting of the Board of Directors was held following the annual meeting. At that meeting, the Board declared the following monthly dividends:
Dividends Per Share Record Date Payable Date ------------------- ----------- ------------ 6.5 cents 5/28/99 6/10/99 6.5 cent 6/30/99 7/12/99 6.5 cent 7/30/99 8/10/99
Automatic Dividend Reinvestment Plan and Direct Deposit Service--The Fund has a dividend reinvestment plan available to all registered shareholders. Those shareholders whose shares are held for them by a brokerage house or nominee in "street-name" may not participate in the Fund's automatic dividend reinvestment plan. For those shareholders in "street-name" desiring automatic dividend reinvestment, we suggest you contact your broker or other nominee. As an added service, the Fund offers direct deposit service through electronic funds transfer to all registered shareholders currently receiving a monthly dividend check. This service is offered through The Bank of New York. For more information and/or an authorization form on automatic dividend reinvestment or direct deposit, please contact The Bank of New York. Visit us on the Web--You can obtain the most recent shareholder financial report and dividend information at our web site http://www.duffutility.com. We appreciate your interest in Duff & Phelps Utilities Income Inc., and we will continue to do our best to be of service to you. /s/ Claire V. Hansen /s/ Calvin J. Pedersen Claire V. Hansen, CFA Calvin J. Pedersen, CFA Chairman Director, President and Chief Executive Officer 3 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS (UNAUDITED) March 31, 1999 COMMON STOCKS--74.4%
Market Value Shares Company (Note 1) ------ ------- -------------- [_] ELECTRIC--35.8% 1,318,600 BEC Energy......................................... $ 48,458,550 1,017,900 Carolina Power & Light Co.......................... 38,489,344 1,352,700 CMS Energy Corp.................................... 54,192,544 450,000 Consolidated Edison Inc............................ 20,390,625 1,265,000 DQE Incorporated................................... 48,544,375 1,000,000 Duke Energy Corp................................... 54,625,000 2,058,400 Edison International............................... 45,799,400 400,000 Electricidade DePortugal ADR....................... 15,825,000 1,593,400 Endesa S.A......................................... 39,635,825 1,005,000 Entergy Corp....................................... 27,637,500 2,000,000 FirstEnergy Corp................................... 55,875,000 1,200,100 FPL Group Inc...................................... 63,905,325 686,500 National Power PLC ADR............................. 21,710,562 1,122,800 New Century Energies Inc........................... 38,245,375 2,256,600 NIPSCO Industries Inc.............................. 60,928,200 1,000,000 Pacificorp......................................... 17,250,000 1,120,000 Pinnacle West Capital Corp......................... 40,740,000 302,000 Powergen PLC ADR................................... 13,703,250 1,500,000 Reliant Energy Inc................................. 39,093,750 300,000 RWE AG ADR......................................... 13,278,930 350,000 Scottish & Southern Energy (United Kingdom)........ 3,177,966 50,000 Scottish & Southern Energy ADR..................... 4,540,245 500,000 Scottish Power PLC ADR............................. 17,593,750 2,000,000 Unicom Corp........................................ 73,125,000 -------------- 856,765,516 [_] GAS--11.8% 926,000 AGL Resources...................................... 16,262,875 225,000 CMS Energy Corp. Class G........................... 4,696,875 725,600 Columbia Energy Group.............................. 37,912,600 1,494,800 EL Paso Energy Corp................................ 48,861,275 600,000 Enron Corp......................................... 38,550,000 798,450 KN Energy.......................................... 15,919,097
The accompanying note is an integral part of this financial statement. 4 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS--(Continued) (UNAUDITED) March 31, 1999
Market Value Shares Company (Note 1) ------ ------- -------------- 400,000 National Fuel Gas Co............................... $ 15,700,000 444,700 NICOR Inc.......................................... 15,981,406 1,950,000 Utilicorp United Inc............................... 44,362,500 1,100,000 Williams Companies Inc............................. 43,450,000 -------------- 281,696,628 [_] TELECOMUNICATION--18.9% 600,000 Alltell Corp....................................... 37,425,000 1,619,000 Bell Atlantic Corp................................. 83,682,062 1,130,000 BellSouth Corp..................................... 45,270,625 664,500 Cable and Wireless ADS............................. 24,544,969 151,500 Cincinnati Bell Inc................................ 3,399,281 500,000 Royal PTT Nederland ADR............................ 19,843,750 1,837,230 SBC Communications Inc............................. 86,579,464 450,000 Tele-Danmark A/S ADR............................... 22,050,000 556,250 Telecom Corp. of New Zealand Interim ADR........... 21,693,750 142,100 Telestra Corp. ADR................................. 14,991,550 1,200,000 U.S. West Inc...................................... 66,075,000 540,000 Vivendi ADR........................................ 26,572,104 -------------- 452,127,555 [_] NON-UTILITY--7.9% 125,000 Alexandria Real Estate Equities Inc................ 3,304,687 250,000 Apartment Investment & Management Co............... 9,062,500 200,000 Avalon Bay Communities Inc......................... 6,325,000 409,000 Boston Properties Inc.............................. 12,934,625 100,000 Bradley Real Estate Inc............................ 1,812,500 253,800 CBL & Associates Properties Inc.................... 5,900,850 350,000 Centerpoint Properties Corporation................. 10,937,500 120,000 Chelsea GCA Realty Inc............................. 3,345,000 150,000 Colonial Properties Trust.......................... 3,825,000 250,000 Cornerstone Properties Inc......................... 3,656,250 50,000 Crescent Operating Inc............................. 181,250 430,000 Crescent Real Estate Equities Inc.................. 9,245,000 400,000 Developers Diversified Realty Corp................. 5,725,000 300,000 Equity Residential Properties Trust................ 12,375,000 200,000 Essex Property Trust Inc........................... 5,225,000
The accompanying note is an integral part of this financial statement. 5 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS--(Continued) (UNAUDITED) March 31, 1999
Market Value Shares Company (Note 1) ------ ------- -------------- 478,100 First Industrial Realty Trust......................... $ 11,444,519 126,300 Gables Residential Trust.............................. 2,786,494 70,000 General Growth Properties, Inc........................ 2,270,625 100,000 Golf Trust of America Inc............................. 2,237,500 72,800 Great Lakes REIT Inc.................................. 1,055,600 330,000 Highwoods Properties Inc.............................. 7,775,625 200,000 HRPT Properties Trust................................. 2,700,000 200,000 Kimco Realty Corp..................................... 7,375,000 175,000 Macerich Co........................................... 3,970,312 145,000 Mack-Cali Realty Corp................................. 4,259,375 290,000 Nationwide Health Properties.......................... 5,510,000 3,819 Omega WorldWide Inc................................... 14,321 953 Patriot American Hospitality.......................... 4,884 525,100 Reckson Associates Realty Corp........................ 10,797,369 328,416 Reckson Service Industries Inc........................ 1,477,872 81,100 Spieker Properties Inc................................ 2,858,775 205,100 Tower Realty Trust Inc................................ 3,884,081 200,000 Urban Shopping Centers Inc............................ 5,737,500 22,250 Vornado Operating Inc................................. 133,500 370,000 Vornado Realty Trust.................................. 12,765,000 200,000 Weeks Corp............................................ 5,712,500 -------------- 188,626,014 -------------- Total Common Stocks (Cost--$1,713,348,428)............ 1,779,215,713 -------------- CONVERTIBLE PREFERRED STOCKS--2.8% [_] NON-UTILITY--0.0% 35 Patriot American Hospitality 15% Pfd Series B......... 823 8,700 Tanger Factory Outlet Centers Inc. Series A........... 178,622 -------------- 179,445 [_] UTILITY--2.8% 500,000 NIPSCO Industries Inc. 7.75% 2/19/03.................. 25,250,000 789,100 Texas Utilities Co.................................... 42,068,894 -------------- 67,318,894 -------------- Total Convertible Preferred Stocks (Cost-- $64,794,218).......................................... 67,498,339 --------------
The accompanying note is an integral part of this financial statement. 6 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS--(Continued) (UNAUDITED) March 31, 1998 BONDS 24.8%
Ratings -------------------------- Standard Market Duff & and Value Par Value Company Phelps Moody's Poor's (Note 1) --------- ------- --------- ------- -------- ---------- [_] ELECTRIC--13.8% $24,920,000 Alabama Power Co. 9%, due 12/01/24........... AA- A1 A+ 26,682,940 3,950,000 Comed Financing II 8 1/2%, due 1/15/27........ Not Rated Baa3 BB+ 4,278,992 14,500,000 Commonwealth Edison Co. 9 3/4%, due 2/15/20........ BBB Baa2 BBB 15,446,807 7,500,000 Commonwealth Edison Co. 9 7/8%, due 6/15/20........ BBB Baa2 BBB 8,869,665 8,850,000 Commonwealth Edison Co. 8 5/8%, due 2/01/22........ BBB Baa2 BBB 9,471,668 5,000,000 Commonwealth Edison Co. 8 3/8%, due 9/15/22........ BBB Baa2 BBB 5,251,575 10,000,000 Commonwealth Edison Co. 8 3/8%, due 2/15/23........ BBB Baa2 BBB 10,544,920 6,000,000 Dominion Resources Capital Trust 7.83%, due 12/01/27........ Not Rated Baal BBB+ 5,969,850 8,000,000 Duquesne Light Co. 7.55%, due 6/15/25......... A- Baa1 BBB+ 7,899,640 5,000,000 Gulf States Utilities 8.94%, due 1/01/22......... Not Rated Baa3 BBB- 5,289,300 5,000,000 Illinois Power Co. 7 1/2%, due 7/15/25........ BBB+ Baal BBB 4,877,390 5,000,000 Louisiana Power & Light Co. 8 3/4%, due 3/01/26........ Not Rated Baa2 BBB 5,282,880 15,000,000 New York State Electric & Gas Corp. 9 7/8, due 11/01/20........ Not Rated A3 BBB+ 16,426,515 4,000,000 New York State Electric & Gas Corp. 8 7/8, due 11/01/21........ Not Rated A3 BBB+ 4,349,300 14,105,000 Pennsylvania Power & Light Co. 9 1/4%, due 10/01/19....... Not Rated A3 A- 14,895,218 16,850,000 Pennsylvania Power & Light Co. 9 3/8%, due 7/01/21........ Not Rated A3 A- 18,670,727 27,580,000 Potomac Electric Power Co. 9%, due 6/01/21............ A+ A1 A 29,960,319
The accompanying note is an integral part of this financial statement. 7 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS--(Continued) (UNAUDITED) March 31, 1998
Ratings -------------------------- Standard Market Duff & and Value Par Value Company Phelps Moody's Poor's (Note 1) --------- ------- --------- ------- -------- ----------- 10,000,000 Public Service Co. of Colorado 8 3/4%, due 3/01/22..... Not Rated A3 A- 10,686,010 17,500,000 Puget Capital Trust 8.231%, due 6/01/27..... Not Rated Baa2 BBB- 18,121,180 3,000,000 Rochester Gas & Electric Corp. 9 3/8%, due 4/01/21..... A- A3 A- 3,291,093 13,000,000 Southern Co. Capital Trust 8.14%, due 2/15/27...... Not Rated A3 BBB+ 13,973,700 29,830,000 Texas Utilities Electric Co. 9 3/4%, due 5/01/21..... A- A3 BBB+ 33,078,994 10,000,000 Texas Utilities Electric Co. 8 3/4%, due 11/01/23.... A- A3 BBB+ 10,886,440 12,600,000 Union Electric Co. 8 3/4%, due 12/01/21.... Not Rated Aa3 AA- 13,814,111 12,000,000 UtiliCorp United Inc. 8%, due 3/01/23......... BBB Baa3 BBB 12,145,992 17,700,000 Virginia Electric & Power Co. 8 1/4%, due 3/01/25..... A A2 A 19,173,578 ----------- 329,338,804 [_] GAS--3.1% 2,125,000 ANR Pipeline Co. 9 5/8%, due 11/01/21.... Not Rated Baa2 BBB+ 2,599,168 8,875,000 Enron Corp. 9.65%, due 5/15/01...... BBB+ Baa2 BBB+ 9,511,462 5,000,000 KN Energy Inc. 7 1/4%, due 3/10/28..... Not Rated Baa2 BBB- 5,111,190 7,885,000 Pennzoil Co. 10 1/8%, due 11/15/09... BBB- Bal BBB 8,537,026 10,000,000 Phillips Petroleum Co. 9.18%, due 9/15/21...... Not Rated A3 A- 10,749,130 4,500,000 Sonat Inc. 9 1/2%, due 8/15/99..... Not Rated Baa1 BBB+ 4,563,014
The accompanying note is an integral part of this financial statement. 8 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS--(Continued) (UNAUDITED) March 31, 1998
Ratings -------------------------- Standard Market Duff & and Value Par Value Company Phelps Moody's Poor's (Note 1) --------- ------- --------- ------- -------- ----------- 5,000,000 Southern California Gas Co. 8 3/4%, due 10/01/21..... AA- A1 AA- 5,405,550 6,488,000 Southern Union Co. 7.60%, due 2/01/24....... Not Rated Baa3 BBB+ 6,640,552 10,000,000 TE Products Pipeline Co. 7.51%, due 1/15/28....... Not Rated Baa2 BBB+ 9,933,060 9,000,000 Trans-Canada Pipeline 9 1/8%, due 4/20/06...... Not Rated A3 A- 10,049,940 ----------- 73,100,092 [_] TELECOMMUNICATION-- 7.6% 44,000,000 AT&T Corp. 8.35%, due 1/15/25....... AA- A1 AA- 48,189,988 35,428,000 GTE Corp 9 3/8%, due 12/01/00..... A- Baa1 A 37,513,080 6,000,000 GTE Corp. 10 1/4%, due 11/01/20.... A- Baa1 A 6,675,090 10,000,000 GTE California Inc. 8.07%, due 4/15/24....... AA A2 AA- 10,768,300 6,625,000 GTE Corp. 7.90%, due 2/01/27....... A- Baa1 A 7,039,308 11,995,000 Mountain States Telephone 9 1/2%, due 5/01/00...... Not Rated A2 A+ 12,474,752 13,750,000 New England Telephone & Telegraph 9%, due 8/01/31.......... AA Aa2 AA 14,852,090 10,000,000 New York Telephone Co. 7 5/8%, due 2/01/23...... A A2 A+ 10,470,000 20,740,000 New York Telephone Co. 9 3/8%, due 7/15/31...... A A2 A+ 23,252,402 4,900,000 Southwestern Bell Telephone 7.20%, due 10/15/26...... AA Aa3 AA 4,982,967 5,000,000 US West Communications 8 7/8%, due 6/01/31...... AA- A2 A+ 5,502,855 ----------- 181,720,832
The accompanying note is an integral part of this financial statement. 9 DUFF & PHELPS UTILITIES INCOME INC. STATEMENT OF NET ASSETS--(Continued) (UNAUDITED) March 31, 1998
Ratings ----------------------- Standard Market Duff & and Value Par Value Company Phelps Moody's Poor's (Note 1) --------- ------- ------ ------- -------- -------------- [_] NON-UTILITY--0.4% 8,000,000 Dayton Hudson Corp. 9 7/8%, due 7/01/20..... A- A3 A- 10,605,024 -------------- 10,605,024 -------------- Total Bonds (Cost--$594,356,113).................. 594,764,752 -------------- U.S. TREASURY OBLIGATIONS--3.0% 66,000,000 U.S. Treasury Bonds 11 3/4%, due 2/15/01.... 73,837,500 -------------- Total U.S. Treasury Obligations (Cost-- $78,725,547)...................................... 73,837,500 -------------- U.S. GOVERNMENT AGENCY OBLIGATIONS--0.0% 722,815 Federal National Mortgage Association 8%, due 5/01/05.................................. 751,304 -------------- Total U.S. Government Agency Obligations (Cost-- $746,984)......................................... 751,304 -------------- CASH AND OTHER ASSETS LESS LIABILITIES--(5.1%)............... (122,032,526) -------------- NET ASSETS (equivalent to $9.18 per share of common stock based on 206,370,767 shares of common stock outstanding, authorized 250,000,000 shares, $.001 par value per share and 5,000 shares remarketed preferred stock outstanding, authorized 100,000,000 shares, liquidation preference $100,000 per share, $.001 par value per share)........................... $2,394,035,082 ==============
The percentage shown for each investment category is the total value of that category as a percentage of the total net assets of the Fund. The accompanying note is an integral part of this financial statement. 10 Board of Directors WALLACE B. BEHNKE HARRY J. BRUCE FRANKLIN A. COLE GORDON B. DAVIDSON CLAIRE V. HANSEN, CFA FRANCIS E. JEFFRIES, CFA NANCY LAMPTON CALVIN J. PEDERSEN, CFA BERYL W. SPRINKEL Officers CLAIRE V. HANSEN, CFA Chairman CALVIN J. PEDERSEN, CFA President and Chief Executive Officer NATHAN I. PARTAIN, CFA Executive Vice President and Chief Investment Officer T. BROOKS BEITTEL, CFA Senior Vice President, Secretary and Treasurer MICHAEL SCHATT Senior Vice President JOSEPH C. CURRY, JR. Vice President DIANNA P. WENGLER Assistant Secretary Duff & Phelps Utilities Income Inc. Common stock listed on the New York Stock Exchange under the symbol DNP 55 East Monroe Street Chicago, Illinois 60603 (800) 680-4367 (312) 368-5510 Investment Adviser Duff & Phelps Investment Management Co. 55 East Monroe Street Chicago, Illinois 60603 Administrator J.J.B. Hilliard, W.L. Lyons, Inc. Hilliard Lyons Center Louisville, Kentucky 40202 (502) 588-8400 Transfer Agent Dividend Disbursing Agent and Custodian The Bank of New York Shareholder Relations Church Street Station P.O. Box 11258 New York, New York 10286-1258 1-800-432-8224 Legal Counsel Mayer, Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Independent Public Accountants Arthur Andersen LLP 33 West Monroe Street Chicago, Illinois 60603 11 Duff & Phelps Utilities Income Inc. First Quarter Report March 31, 1999 [LOGO] -----END PRIVACY-ENHANCED MESSAGE-----