<PAGE>
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:
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(2) Aggregate number of securities to which transaction applies:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO DUFF & PHELPS
UTILITIES INCOME INC.
55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312) 368-5510
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1998
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 29, 1998 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. Ratify or reject the selection of Arthur Andersen LLP as independent
public accountants for the Fund;
3. Approve or disapprove an amended and restated investment advisory
agreement with Duff & Phelps Investment Management Co.; and
4. Transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on February 28, 1998 are
entitled to vote at the meeting.
For the Board of Directors,
LOGO
T. Brooks Beittel
Secretary
March 10, 1998
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.
<PAGE>
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 29, 1998 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 28,
1998 are entitled to notice of and to participate in the meeting. The Fund had
203,416,529 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 other 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.
The affirmative vote of a majority of the outstanding shares of common stock
and preferred stock, voting together as a single class, is required to approve
the Amended Advisory Agreement described under Proposal 3 below. 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 10, 1998. 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 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 2001 or until their successors are 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, 1998 and address of each of the nominees and of
1
<PAGE>
each of the other current directors are stated below. Messrs. Cole, Davidson,
Bruce and Day have been directors of the Fund since January 1989. Ms. Lampton
has been a director of the Fund since October 1994, and Mr. Sprinkel has been
a director of the Fund since April 1995. Each of the other current directors
has been a director of the Fund since the Fund commenced operations in January
1987.
NOMINEES
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, American National Bank and Trust Company of
Chicago, Aon Corporation and CNA Income Shares; age 71; 11 South
LaSalle Street, Chicago, Illinois 60602.
FRANCIS E. JEFFRIES, director (1)(2)(4)
Retired Chairman, Phoenix Duff & Phelps Corporation 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 67;
6585 Nicholas Boulevard, Naples, Florida 34108.
BERYL W. SPRINKEL, director (3)(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 74; 20140 St. Andrews
Drive, Olympia Fields, Illinois 60461.
CONTINUING DIRECTORS
WITH TERMS EXPIRING IN 1999:
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)
Senior 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 71; Citizens Plaza,
Louisville, Kentucky 40202.
2
<PAGE>
CLAIRE V. HANSEN, director and Chairman (1)(2)(4)
Senior Advisor to the Board of Directors, Phoenix Duff & Phelps
Corporation 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 72; 5601
Turtle Bay Drive, Naples, Florida 34108.
WITH TERMS EXPIRING IN 2000:
HARRY J. BRUCE, director (3)
Private investor; Chairman, Roman Holdings, Inc.; former Chairman
and Chief Executive Officer, Illinois Central Railroad Co.;
director, General Binding Corporation; age 66; 88 Woodley Road,
Winnetka, Illinois 60093.
ROBERT J. DAY, director (4)(5)
Retired Chairman and Director, USG Corporation (manufacturer of
construction materials) since June 1990 (Chairman and Chief
Executive Officer prior thereto); former Chairman of the Board,
Federal Reserve Bank of Chicago; age 73; 125 South Franklin Street,
Chicago, Illinois 60606.
NANCY LAMPTON, director (5)(6)
Chairman and Chief Executive Officer, American Life and Accident
Insurance Company of Kentucky; director, BancOne Kentucky
Corporation and Baltimore Gas and Electric; age 55; 3 Riverfront
Plaza, Louisville, Kentucky 40202.
- - --------
(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 1997, the board of directors held six meetings, the audit committee
met twice, the nominating committee met three times and the contracts
committee met twice. 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
<PAGE>
The following table shows the compensation paid by the Fund to the Fund's
current directors during 1997:
COMPENSATION TABLE(1)(2)
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
FROM THE
NAME OF DIRECTOR FUND
---------------- ------------
<S> <C>
Wallace B. Behnke............................................ $31,500
Harry J. Bruce............................................... 24,500
Franklin A. Cole............................................. 28,500
Gordon B. Davidson........................................... 26,500
Robert J. Day................................................ 31,500
Claire V. Hansen............................................. 0
Francis E. Jeffries(2)....................................... 26,500
Nancy Lampton................................................ 25,500
Beryl W. Sprinkel............................................ 25,500
</TABLE>
- - --------
(1) During 1997, 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 1997, Mr. Jeffries received aggregate compensation of $35,000 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 1999. 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
<PAGE>
3. APPROVAL OF AMENDED
AND RESTATED INVESTMENT ADVISORY AGREEMENT
Duff & Phelps Investment Management Co. serves as the Fund's investment
adviser (the "Adviser") under an investment advisory agreement (the "Current
Advisory Agreement") dated November 1, 1995. At the annual meeting,
shareholders will be asked to approve an amended and restated investment
advisory agreement (the "Amended Advisory Agreement") to change the base
amount used to calculate the Adviser's management fee.
THE ADVISER AND PHOENIX DUFF & PHELPS. 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 $10.8 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 $11 billion.
The address of the Adviser is 55 East Monroe Street, Chicago, Illinois
60603. The Adviser is a wholly-owned subsidiary of Phoenix Duff & Phelps
Corporation, a Delaware corporation ("Phoenix Duff & Phelps"), which has its
principal offices at 56 Prospect Street, Hartford, Connecticut 06115.
Approximately 60 percent of the outstanding common stock of Phoenix Duff &
Phelps is owned by PM Holdings, Inc., a Connecticut corporation, which is a
wholly-owned subsidiary of Phoenix Home Life Mutual Insurance Company, a New
York mutual life insurance company. Each of the parent companies of Phoenix
Duff & Phelps has its principal offices at 100 Bright Meadows Boulevard,
Enfield, Connecticut 06083.
The directors of the Adviser are Clyde E. Bartter, Philip R. McLoughlin and
Calvin J. Pedersen. The principal occupations of Mr. Pedersen are shown under
"Other Information--Officers of the Fund" below. Mr. Bartter is President and
Mr. McLoughlin is Chief Executive Officer of the Adviser. The business address
of Mr. Bartter is 600 Ohio Savings Plaza, Cleveland, Ohio 44114. The business
address of Mr. Pedersen is 55 East Monroe Street, Chicago, Illinois 60603. The
business address of Mr. McLoughlin is 56 Prospect Street, Hartford,
Connecticut 06115.
CURRENT ADVISORY AGREEMENT. Under the terms of the Current 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 Current 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. The management fee paid by the Fund to the
Adviser for 1997 was $12,730,134.
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
5
<PAGE>
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 Current Advisory Agreement provides 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 in connection with the Current Advisory
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 Current Advisory Agreement.
Unless earlier terminated as described below, the Current Advisory Agreement
continues 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 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 each of the common stock and the preferred
stock voting separately by class: (i) 67% of the shares of the class
represented at a meeting at which more than 50% of the outstanding shares of
the class are represented; or (ii) more than 50% of the outstanding shares of
the class. The Current 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 Current Advisory Agreement were terminated, shareholder approval
would be required to enter into a new agreement. The Fund's shareholders
approved the Current Advisory Agreement at a special meeting held on September
12, 1995 in connection with the merger of Phoenix Securities Group, Inc., a
wholly-owned subsidiary of PM Holdings, Inc., into Duff & Phelps Corporation
(which was renamed Phoenix Duff & Phelps Corporation). At a meeting held on
October 17, 1997, the board of directors of the Fund, including all of the
directors who are not interested persons of the Fund or the Adviser in
attendance at the meeting voting separately as a class, voted to approve the
continuation of the Current Advisory Agreement for a twelve-month period
commencing November 1, 1997.
SERVICE AGREEMENT. The Fund is also a party to a service agreement dated
November 1, 1995 (the "Service Agreement") with the Adviser and Phoenix Duff &
Phelps. Under the terms of the Service Agreement, Phoenix Duff & Phelps 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 Current Advisory Agreement is
solely that of the Adviser, for which Phoenix Duff & Phelps assumes no
responsibility, except as described in the preceding sentence. The Adviser
reimburses Phoenix Duff & Phelps for any costs, direct or indirect, that are
fairly attributable to the services performed and the facilities provided by
Phoenix Duff & Phelps under the Service Agreement. The Fund does not pay any
fees pursuant to the Service Agreement.
The Service Agreement provides that the Adviser and Phoenix Duff & Phelps
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 Duff & Phelps, as
the case may be, in connection with the Service 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
Service Agreement.
6
<PAGE>
Unless earlier terminated as described below, the Service Agreement
continues 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 Phoenix
Duff & Phelps 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 each of the common stock and the
preferred stock voting separately by class: (i) 67% of the shares of the class
represented at a meeting at which more than 50% of the outstanding shares of
the class are represented; or (ii) more than 50% of the outstanding shares of
the class. 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 Duff & Phelps, 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 are not interested persons of the Fund or
Phoenix Duff & Phelps in attendance at the meeting voting separately as a
class, voted to approve the continuation of the Service Agreement for a
twelve-month period commencing November 1, 1997.
AMENDED ADVISORY AGREEMENT. The Amended Advisory Agreement differs from the
Current Advisory Agreement only with respect to (i) the base amount used to
calculate the Adviser's management fee, (ii) the effective date of the
agreement and (iii) the date stated for termination absent annual continuance.
A copy of the Amended Advisory Agreement is attached hereto as Attachment A.
The Amended Advisory Agreement would change the base amount used to
calculate the Adviser's management fee as follows. Under the Current Advisory
Agreement, the management fee is calculated by multiplying a specified annual
rate by a base amount equal to the Fund's average weekly net assets. The
Fund's net assets are defined as the sum of (i) the aggregate net asset value
of the Fund's common stock and (ii) the aggregate liquidation preference of
the Fund's preferred stock. Under the Amended Advisory Agreement, the
management fee would be calculated by multiplying a specified annual rate by a
base amount (the "New Base Amount") equal to 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. Under the Amended Advisory Agreement, the
annual rate would be 0.60 of 1% of that portion of the New Base Amount which
does not exceed $1.5 billion and 0.50 of 1% of that portion of the New Base
Amount which exceeds $1.5 billion. The foregoing percentages are unchanged
from the Current Advisory Agreement, but the fees payable under the Amended
Advisory Agreement will differ from those payable under the Current Advisory
Agreement to the extent that the New Base Amount differs from the base amount
used under the Current Advisory Agreement.
The aggregate amount of the management fee during the year ended December
31, 1997 was $12,730,134. Had the Amended Advisory Agreement been in effect
during 1997, the aggregate amount of the management fee would have been
$13,220,043. The difference between the actual fee and the fee had the Amended
Advisory Agreement been in effect represents 3.8% of the actual fee for 1997.
The following table shows the Fund's expenses expressed as a percentage of
average net assets attributable to common shares (i) based on actual expenses
incurred during the year ended December 31, 1997 and (ii) on a pro forma basis
as if the Amended Advisory Agreement had been in effect during 1997.
7
<PAGE>
<TABLE>
<CAPTION>
ANNUAL EXPENSES
(AS A PERCENTAGE OF NET ASSETS
ATTRIBUTABLE TO COMMON SHARES)
----------------------------------
1997 1997
(ACTUAL) (PRO FORMA)
--------------- ----------------
<S> <C> <C>
Management Fee(1)................... .73 .75
Interest Payments on Borrowed Funds. .32 .32
Other Expenses...................... .40 .40
--------------- ---------------
TOTAL ANNUAL EXPENSES............... 1.45 1.47
=============== ===============
</TABLE>
- - --------
(1) As a percentage of average total net assets (including both common and
preferred shares), actual and pro forma Management Fees for 1997 were .56%
and .59%, respectively.
EXAMPLE: The following table shows the expenses a shareholder of the Fund
would pay on an investment of $1,000, assuming a 5% annual return and
redemption at the end of each period. This example should not be considered a
representation of future return or expenses. Actual return or expenses may be
greater or less than those shown.
<TABLE>
<CAPTION>
1997 1997
PERIOD (ACTUAL) (PRO FORMA)
------ -------- -----------
<S> <C> <C>
1 year.............................................. $ 15 $ 15
3 years............................................. 46 46
5 years............................................. 79 80
10 years............................................. 174 176
</TABLE>
If approved by the shareholders of the Fund at the annual meeting, the
Amended Advisory Agreement will become effective on May 1, 1998 and extend
through April 30, 2000. The terms governing continuation or early termination
of the Amended Advisory Agreement are unchanged from the terms governing
continuation or early termination of the Current Advisory Agreement. If the
Amended Advisory Agreement is not approved, the Current Advisory Agreement
will remain in effect until October 31, 1998, subject to further continuation
or earlier termination as described above.
If the Amended Advisory Agreement is approved, the Fund will also enter into
an amended Administration Agreement (see discussion below under "Other
Information--The Administrator") in order to use the same base amount to
calculate the Administrator's administrative fee that is used to calculate the
Adviser's management fee.
BOARD OF DIRECTORS REVIEW AND RECOMMENDATION. On October 17, 1997, the board
of directors of the Fund, including all of the directors who are not
interested persons of the Fund or the Adviser, met in person to consider
whether it would be in the best interests of the Fund and its shareholders to
enter into the Amended Advisory Agreement. In considering the best interests
of the Fund and its shareholders, the directors (including all of the
directors who were not interested persons of the Fund or the Adviser) took
into account all factors that they deemed relevant. The factors considered
included the nature, quality and extent of the services furnished to the Fund
by the Adviser; the necessity of the Adviser maintaining and enhancing its
ability to retain and attract capable personnel to serve the Fund; the
increased complexity of the securities markets; the investment record of the
Fund; the expense ratio of the Fund; data on investment performance, advisory
fees and expense ratios of comparable investment companies; the profitability
to the Adviser of the Current Advisory Agreement; benefits to the Adviser from
the revised fee calculation in the Amended Advisory Agreement; current and
developing conditions in the financial services industry; and the financial
resources of the Adviser and the continuance of appropriate incentives to
assure that the Adviser will continue to furnish high-quality services to the
Fund.
8
<PAGE>
After reviewing and discussing the terms and provisions of the New Advisory
Agreement in light of the foregoing factors, the board of directors of the
Fund has concluded that the proposed fee change is in the best interests of
the Fund and its shareholders because it aligns the Adviser's compensation
more closely with the actual value of the assets under management. The Fund's
portfolio is comprised of assets purchased with the proceeds of the Fund's
common stock, preferred stock and commercial paper. Yet, when the management
fee is calculated under the Current Advisory Agreement, a significant
component of the Fund's portfolio, consisting of assets purchased with the
proceeds of the Fund's commercial paper, is excluded from the net assets of
the Fund. As a result, the Adviser's compensation does not accurately reflect
the full size and scope of the Fund's portfolio. The board of directors of the
Fund believes that including the aggregate proceeds of the Fund's commercial
paper will yield a truer picture of the Fund's net assets and a fairer basis
for calculating the Adviser's compensation.
Based on the foregoing considerations, on October 17, 1997, the board of
directors of the Fund, including the directors who are not interested persons
of the Fund or the Adviser voting separately as a class, unanimously voted to
approve the Amended Advisory Agreement and to recommend its approval to the
shareholders of the Fund.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT.
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 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 November 1, 1995. 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 Hilliard-Lyons,
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 Current Advisory Agreement, as well as the necessary office facilities,
equipment and personnel to perform such services. For its services during
1997, 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 from $1.0 billion to $1.5
billion and 0.06 of 1% of average weekly net assets in excess of $1.5 billion.
9
<PAGE>
Effective on January 1, 1998, the Administration Agreement was amended to
provide for an annual rate of 0.10 of 1% of average weekly net assets in
excess of $1.0 billion. The total administrative fee paid by the Fund to the
Administrator for 1997 was $2,997,616.
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 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 are not interested persons of the
Fund or the Administrator in attendance at the meeting voting separately as a
class, voted to approve the continuation of the Administration Agreement
(amended as described above to modify the annual rates used to calculate the
administrative fee) for a twelve-month period commencing November 1, 1997. If
the Amended Advisory Agreement is approved by the shareholders of the Fund at
the annual meeting, the Fund will also enter into an amended Administration
Agreement, to become effective on May 1, 1998 and extend through April 30,
2000, in order to use the same base amount to calculate the Administrator's
administrative fee that is used to calculate the Adviser's management fee. See
"Approval of Amended and Restated Investment Advisory Agreement--Amended
Advisory Agreement."
OFFICERS OF THE FUND. As noted above under "Election of Directors," Mr.
Hansen is chairman of the Fund. The name, positions with the Fund, principal
occupation during the past five years, age at February 1, 1998 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.
CALVIN J. PEDERSEN, President and Chief Executive Officer, since March 1994
President, Phoenix Duff & Phelps Corporation 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 56; 55 East Monroe
Street, Chicago, Illinois 60603.
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 47; 55 East Monroe Street,
Chicago, Illinois 60603.
NATHAN I. PARTAIN, Senior Vice President, Chief Investment Officer and
Assistant Secretary, since January 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 Duff & Phelps
Corporation, 1989-1996 (Director of Equity Research, 1993- 1996 and
Director of Fixed Income Research, 1993); director, Otter Tail Power
Company; age 41, 55 East Monroe Street, Chicago, Illinois 60603.
10
<PAGE>
MICHAEL SCHATT, Vice President, since January 1997
Senior Vice President, Duff & Phelps Investment Management Co. since
January 1997; Managing Director, Phoenix Duff & Phelps Corporation,
1994-1996; Self-employed consultant, 1994; Director of Real Estate
Advisory Practice, Coopers & Lybrand, 1990-1994; age 50; 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 and Director, Hilliard-Lyons Government Fund, Inc.;
Vice President, Treasurer and Secretary, Hilliard Lyons Growth Fund,
Inc.; age 53; 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 and Treasurer, Hilliard-Lyons Government Fund, Inc.; Vice
President, Hilliard Lyons Growth Fund, Inc.; age 37; 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), 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 Current 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
11
<PAGE>
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 1997, the Fund paid brokerage commissions aggregating $7,462,774 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 $39,022 or approximately 0.5% of total brokerage
commissions in 1997 for effecting transactions involving 0.4%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, 1997.
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.
<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
---------
<S> <C>
Wallace B. Behnke............................................... 2,441
Harry J. Bruce.................................................. 21,095
Franklin A. Cole(1)(2).......................................... 28,307
Gordon B. Davidson(2)........................................... 18,000
Robert J. Day................................................... 14,600
Claire V. Hansen(2)............................................. 28,810
Francis E. Jeffries(2).......................................... 75,244
Nancy Lampton(1)(2)............................................. 5,768
Beryl W. Sprinkel............................................... 300
Directors and officers as a group (15 persons)(1)(2)............ 213,919
</TABLE>
- - --------
(1) Mr. Cole and Ms. Lampton had shared power to vote and/or dispose of 28,307
and 2,500, respectively, of the shares listed. The directors and officers
had shared power to vote and/or dispose of 43,669 of the shares listed as
owned by the directors and officers as a group.
(2) Messrs. Cole, Davidson, Hansen and Jeffries and Ms. Lampton disclaim
beneficial ownership of 25,043, 7,000, 10,010, 5,434 and 2,500,
respectively, of the shares listed. The directors and officers disclaim
beneficial ownership of 53,910, in the aggregate, of the shares listed as
owned by the directors and officers as a group.
At February 28, 1998, 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 Securities Exchange Act of 1934).
12
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Securities Exchange Act of 1934 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 review of the
copies of such forms furnished to the Fund, or written representations that no
Forms 5 were required, the Fund believes that during 1997 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 1998 annual
meeting of shareholders should be received by the Secretary of the Fund no
later than November 10, 1998.
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, 1997 and the Fund's semi-annual report for the six months
ended June 30, 1997. 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 10, 1998
13
<PAGE>
ATTACHMENT A
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
DUFF & PHELPS UTILITIES INCOME INC., a Maryland corporation registered under
the Investment Company Act of 1940 ("1940 Act") as a closed-end diversified
management investment company ("Fund"), and DUFF & PHELPS INVESTMENT
MANAGEMENT CO., an Illinois corporation registered under the Investment
Advisers Act of 1940 as an investment adviser ("Manager"), agree that:
1. ENGAGEMENT OF MANAGER. Manager shall manage the investment and
reinvestment of the assets of Fund, subject to the supervision of the board
of directors of Fund, for the period and on the terms set forth in this
Advisory Agreement. Manager shall give due consideration to the investment
policies and restrictions and the other statements concerning Fund in
Fund's charter, bylaws, and registration statements under the 1940 Act and
the Securities Act of 1933 ("1933 Act"), and to the provisions of the
Internal Revenue Code applicable to Fund as a regulated investment company.
Manager shall be deemed for all purposes to be an independent contractor
and not an agent of Fund, and unless otherwise expressly provided or
authorized, shall have no authority to act for or represent Fund in any
way.
Manager is authorized to make the decisions to buy and sell securities of
Fund, to place Fund's portfolio transactions with securities broker-
dealers, and to negotiate the terms of transactions, on behalf of Fund.
Manager is authorized to exercise discretion within Fund's policy
concerning allocation of its portfolio brokerage, as permitted by law,
including but not limited to section 28(e) of the Securities Exchange Act
of 1934, and in so doing shall not be required to make any reduction in its
investment advisory fees.
2. EXPENSES TO BE PAID BY MANAGER. Manager shall furnish, at its own
expense, office space to Fund and all necessary office facilities,
equipment and personnel for managing the assets of Fund. Manager shall also
assume and pay all other expenses incurred by it in connection with
managing the assets of Fund, except that Manager shall not assume and pay
any expenses that J.J.B. Hilliard, W.L. Lyons, Inc. ("Hilliard/Lyons") is
obligated to pay under the Administration Agreement ("Administration
Agreement") between Fund and Hilliard/Lyons.
3. EXPENSES TO BE PAID BY FUND. Fund shall pay all charges of
depositories, custodians and other agencies for the safekeeping and
servicing of its cash, securities and other property and of its transfer
agents and registrars and its dividend disbursing, dividend reinvestment,
redemption and remarketing agents, if any, including any charges for
bookkeeping services provided by Fund's custodian; all charges of legal
counsel and of independent auditors; all compensation of directors other
than those affiliated with Manager, Duff & Phelps Inc. or Hilliard/Lyons
and all expenses incurred in connection with their services to Fund; all
expenses of publication of notices and reports to its shareholders; all
expenses of proxy solicitations of Fund or its board of directors; all
expenses of printing of Fund's prospectus and registration statement and
mailing copies of the prospectus; all taxes and corporate fees payable to
federal, state or other governmental agencies, domestic or foreign; all
stamp or other transfer taxes; all expenses of printing and mailing
certificates for shares of Fund; all expenses of bond and insurance
coverage required by law or deemed advisable by Fund's board of directors;
all expenses of maintaining the registration of Fund under the 1940 Act;
all interest expenses; and all fees, dues and expenses incurred by Fund in
connection with membership in any trade association or other investment
company organization. In addition to the payment of expenses, Fund shall
also pay all brokers' commissions and other charges relative to the
purchase and sale of portfolio securities.
4. COMPENSATION OF MANAGER. For the services to be rendered and the
charges and expenses to be assumed and to be paid by Manager hereunder,
Fund shall pay Manager a quarterly fee at an annual rate of 0.60 of 1% of
the Average Weekly Net Assets of the Fund which does not exceed $1.5
billion and 0.50 of 1% of Average Weekly Net Assets in excess of $1.5
billion, as determined by valuations made as of the last business day of
each calendar week ending during the quarter, which fee shall be payable on
the first business day of the next quarter. For purposes of the foregoing
calculation, Average Weekly Net Assets shall be equal to the sum of (i) the
aggregate net asset value of the Fund's common stock, (ii) the aggregate
liquidation preference of the Fund's preferred stock and (iii) the
aggregate proceeds to the Fund of commercial paper issued by the Fund.
<PAGE>
5. SERVICES OF MANAGER NOT EXCLUSIVE. The services of Manager to Fund
hereunder are not to be deemed exclusive, and Manager shall be free to
render similar services to others so long as its services under this
Advisory Agreement are not impaired by such other activities.
6. LIMITATION OF LIABILITY OF MANAGER. Manager shall not be liable to
Fund or its shareholders for any loss suffered by Fund or its shareholders
from or as a consequence of any act or omission of Manager, or of any of
the directors, officers, employees or agents of Manager, in connection with
or pursuant to this Advisory Agreement, except by reason of willful
misfeasance, bad faith or gross negligence on the part of Manager in
performance of its duties or by reason of reckless disregard by Manager of
its obligations and duties under this Advisory Agreement.
7. DURATION AND RENEWAL. Unless terminated as provided in section 8, this
Advisory Agreement shall continue in effect until April 30, 2000, and
thereafter from year to year only so long as such continuance is
specifically approved at least annually (a) by a majority of those
directors who are not "interested persons" (as defined in section 2(a)(19)
of the 1940 Act) of Fund or of Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) by either the
board of directors of Fund or vote of the holders of a "majority of the
outstanding shares of Fund" (which term as used throughout this Advisory
Agreement shall be construed in accordance with the definition of "vote of
a majority of the outstanding voting securities of a company" in section
2(a)(42) of the 1940 Act).
8. TERMINATION. This Advisory Agreement may be terminated at any time,
without payment of any penalty, by the board of directors of Fund, or by a
vote of the holders of a majority of the outstanding shares of Fund, upon
60 days' written notice to Manager. This Advisory Agreement may be
terminated by Manager at any time upon 60 days' written notice to Fund.
This Advisory Agreement shall terminate automatically in the event of its
assignment (as defined in section 2(a)(4) of the 1940 Act).
9. AMENDMENT. This Advisory Agreement may not be amended without the
affirmative vote (a) of a majority of those directors who are not
"interested persons" of Fund or of Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) of the holders
of a majority of the outstanding shares of Fund.
10. USE OF MANAGER'S NAME. The Fund may use the name "Duff & Phelps
Utilities Income Inc." or any other name derived from the name "Duff &
Phelps" only for so long as this Advisory Agreement or any extension,
renewal or amendment hereof remains in effect, including any similar
agreement with any organization which shall have succeeded to the business
of the Manager as investment adviser. At such time as this Advisory
Agreement or any extension, renewal or amendment hereof, or such other
similar agreement shall no longer be in effect, the Fund will (by corporate
action, if necessary) cease to use any name derived from the name "Duff &
Phelps," any name similar thereto or any other name indicating that it is
advised by or otherwise connected with the Manager, or with any
organization which shall have succeeded to the Manager's business as
investment adviser.
Duff & Phelps Utilities Income Inc.
By: _________________________________
Its ______________________________
Duff & Phelps Investment Management
Co.
By: _________________________________
Its ______________________________
Dated as of May , 1998
2
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
PROXY SOLICITED BY MANAGEMENT FROM COMMON SHAREHOLDERS
FOR MEETING TO BE HELD ON APRIL 29, 1998
Robert J. Day, Gordon B. Davidson 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 29, 1998, 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, 2 and 3 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: Franklin A. Cole and Francis E. Jeffries
(INSTRUCTIONS: To withhold authority to vote for either nominee, mark
the "Exceptions" box and write the name of that nominee 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____
3. Approval of the amended and restated investment advisory agreement with
Duff & Phelps Investment Management Co.
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: __________________________, 1998
_______________________________________
_______________________________________
(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
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
PROXY SOLICITED BY MANAGEMENT FROM PREFERRED SHAREHOLDERS
FOR MEETING TO BE HELD ON APRIL 29, 1998
Robert J. Day, Gordon B. Davidson 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 29, 1998, 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" each of the
following proposals.
1. Election of Director: Beryl W. Sprinkel
FOR____ WITHHOLD____
2. Ratification of the selection of Arthur Andersen LLP as independent
public accountants of the Fund.
FOR____ WITHHOLD____ ABSTAIN____
3. Approval of the amended and restated investment advisory agreement
with Duff & Phelps Investment Management Co.
FOR____ WITHHOLD____ ABSTAIN____
If no specific instructions are provided, this proxy will be voted "FOR"
proposals 1, 2 and 3 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 , 1998 (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.
