<PAGE>
Dear Fellow Shareholders:
Performance Review: The Fund continued to pay its regular 6.5-cent monthly
dividend during the quarter. Our 6.5-cent monthly rate, without compounding,
is seventy-eight cents annualized, or a 8.05% dividend yield based on the
September 30, 1999 closing market price of $9.6875 per share of common stock.
The S&P Utilities Index and the Dow Jones Utilities Average had yields of 4.0%
and 3.8%, respectively.
Due to rising interest rates and falling equity prices for the utility
industry, your Fund had a total return with reinvested dividends of negative
6.9%, compared to negative 4.8% for the S&P Utilities Index and negative 5.0%
for the Dow Jones Utilities Average for the third quarter of 1999. Year-to-
date your Fund had a total return of negative 8.7%, compared to negative 3.7%
for the S&P Utilities Index and negative 1.9% for the Dow Jones Utilities
Average. The Lehman Brothers Utility Bond Index had a negative 2.0% total
return year-to-date.
Bonds--What's Down Is Up: As fixed-income investors well know, when interest
rates go up the prices of existing fixed coupon bonds go down. Your Fund has
over one-quarter of its assets invested in bonds and total return has been
negatively impacted by the approximate 1% rise in rates since the end of last
year. The good news is that higher interest rates provide buying opportunities
that will enhance portfolio returns in the future.
Interest rates have risen in large part because of concerns that the current
virtuous economic cycle may end badly. This cycle is characterized by record
levels of investment in information technology (computer hardware and
software), which raises productivity by reducing the hours of work required
per unit of output. The technology also rapidly expands new products and
services. The expansion absorbs the workforce no longer needed for the
previous level of production, reducing the level of unemployment. The rise in
productivity raises corporate profits, spurs additional investment and
consumption, and increases the standard of living for the average American.
Meanwhile, firms hesitate to raise prices for fear that competitors will be
able, by reason of their technology investments, to undercut price and steal
market share. Therefore, inflation falls to very low levels.
If, however, economic growth exceeds the sum of productivity growth and
workforce growth, inflationary pressures can build. Low levels of unemployment
can result in faster growth in wages and a drop in productivity. When you add
to the scenario an oil cartel that is at least temporarily holding the line on
output so that energy prices rise, inflation expectations rise and so do
interest rates. That is what the bond market is concerned about now.
Your Fund managers believe that the benefits of information technology will be
unfolding for years to come and that the expected level of inflation is quite
low. They also believe that the rise we have seen in interest rates to date is
already acting to slow growth and demand enough to allow rates to return to
lower levels. And as we noted at the outset, when interest rates decline, bond
prices and returns on current holdings rise.
Electric Utilities--Consolidation Strategies Emerge: The electric industry
continues on the path toward deregulation. Most companies are implementing
strategies that will facilitate the transition to full competition. One of the
key strategies is to merge with, acquire, or sell out to another company. As a
result, consolidation activity is proceeding at a record setting pace. Year-
to-date, 20 such transactions have been announced.
Of the 20 deals this year, 8 are electric/electric and 10 are electric/gas
combinations. The remaining 2 are investor group buyouts. The first (announced
in May) involves a leveraged buyout of TNP Enterprises (TNP). The second
(announced in October) involves the acquisition of MidAmerican Energy Company
(MEC) by an investor group led by Warren Buffett's Berkshire Hathaway. Mr.
Buffett is a world-renowned value investor and many speculate that his
entrance into the sector may be the spark needed to put the industry on the
radar screen of other value-oriented investors.
We believe that the M&A momentum is unstoppable. We expect a continuation of
the traditional electric/electric and electric/gas combinations, but not many
more deals in which investor groups take companies private.
<PAGE>
However, we expect more interest in the sector from non-traditional players
such as oil companies (Chevron already owns 20% of Dynegy) and foreign utility
companies (two such deals were announced in 1998).
The investment impact of the consolidation activity has been mixed. Selling
company share prices have been favorably impacted, with premiums over market
price averaging 25%. However, acquiring companies typically underperform
sharply initially and have limited chance for outperformance over the 12 to 18
months required to complete the transactions. A major component of our
investment analysis is the determination of whether a company will be a buyer
or a seller. We remain confident that we can continue to position the Fund's
investments into those electric utilities poised to benefit from consolidation
activity.
Natural Gas Companies Grow Earnings: Mergers and acquisitions returned to the
spotlight with the closing of two transactions: Kinder Morgan, Inc.'s
acquisition of K N Energy and El Paso Energy's merger with Sonat Inc. The
convergence of the electric and gas industries continues to be a driving
factor in mergers, with electric companies gobbling up gas companies in order
to gain synergies, expertise, and the ability to provide a variety of energy
sources to customers. The process remains far from smooth, as evidenced by one
gas company, Columbia Energy, continuing to reject its electric suitor,
NiSource, Inc., and officially declaring itself "available."
Good earnings growth in the core businesses of gas transmission and
distribution has been augmented by investments in unregulated energy-related
businesses. Enron Corp. is the prime example, with its energy trading and
marketing businesses now providing the majority of earnings, making it the
premier energy trader and supplier in the world. Other pipeline companies,
such as El Paso Energy and Kinder Morgan, Inc., are adding gas-fired electric
generation to support energy trading and marketing and to increase throughput
on their gas pipelines.
Natural gas companies are also utilizing their pipeline rights-of-way and
construction expertise to build national fiber optic communications networks.
The Williams Companies successfully pioneered this strategy in the early 90's
with the construction and sale of its telecommunications business. It has
repeated its success with the IPO in the 3rd quarter of an interest in its
Williams Communications Group subsidiary, which provides a "carrier's carrier"
service of broadband capacity. Williams' ownership in its communications
subsidiary now accounts for the majority of its stock price valuation. Enron
Corp., El Paso Energy, and Columbia Energy are all in various stages of
construction of their own fiber optic networks.
Telecommunications--The Global Consolidation Party Continues: As we discussed
in last quarter's shareholder letter, there seems to be no end in sight with
respect to the rapid consolidation in the telecommunications industry. The
most recently announced merger would combine the acquisitive MCI WorldCom with
Sprint. One of the primary reasons for this merger is that it fills the
wireless gap in MCI WorldCom's portfolio of services, transforming the company
into a powerful competitor. However, there are other implications of this
combination which are significant.
First of all, the merging of the #2 and #3 long distance companies would put
more pressure on AT&T's core long distance business, something AT&T certainly
does not need at this time as it undergoes its own transformation. In
addition, the regional Bell operating companies' (RBOCs) own entry into long
distance would be impacted by this combination. Sprint can no longer be
considered a merger option for an RBOC wanting to get into long distance
quickly once regulatory approvals are gained. This is exactly why BellSouth
came in with a last minute bid for Sprint but ultimately lost out to MCI
WorldCom. Also of importance is that MCI WorldCom, together with Sprint, would
have significant scale and scope in the long distance business, making the
RBOCs' entry into long distance more challenging. On the positive side, the
specter of this merger would
2
<PAGE>
likely improve the RBOCs' chances of obtaining regulatory approval to provide
long distance. The first test of this will be Bell Atlantic's recent filing
with the FCC for permission to offer long distance in New York. A decision is
expected before year-end.
This consolidation trend is not confined to the U.S. Mergers and acquisitions
in the European telecommunications industry are just starting to heat up as
companies strive to provide a pan-European offering. However, these
combinations are not only cross-border but cross-Atlantic as U.S. companies go
hunting to fulfill their global ambitions. Ameritech was an early U.S.
investor in European incumbent telecom providers, and SBC Communications,
Ameritech's new owner, has signaled an interest to expand further in Europe.
MCI WorldCom has invested in start-up operations in Europe and has made no
secret of its desire to do more. And once Bell Atlantic closes its merger with
GTE, we expect it to go shopping in Europe to capitalize on the huge traffic
flows between its East Coast region and the U.K.
All this merger activity has, in general, been a positive for our investments
in the telecommunications industry in terms of capital appreciation. However,
one potential downside has been the trend to significantly reduce or eliminate
entirely the dividends these companies pay. Two prominent examples are U S
WEST, which will cut its dividend to approximately $0.05/share from
$2.14/share when it merges with Qwest, and Cincinnati Bell, which eliminated
its dividend when it announced its acquisition of IXC Communications. Even for
those companies that continue to pay a dividend, the growth rate of dividends
has slowed or been flat, which has resulted in much lower yields than
investors have been accustomed to receiving. While perhaps not significant in
the short term, we believe that, in the long term, this trend may lead the
Fund to consider increased participation in different types of investments in
the utility industries which pay higher dividends (i.e. convertible and
preferred securities). In that way, the Fund would continue to benefit from
this dynamic growth industry and still be committed to its shareholder
dividend.
Board of Directors Meeting: At the regular October Board of Directors meeting,
the Board declared the following monthly dividend:
<TABLE>
<CAPTION>
Payable
Cents Per Share Record Date Date
--------------- ----------- -------
<S> <C> <C>
6.5 cents November 30 December 10
</TABLE>
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 at 1-800-432-8224 or
http://stock.bankofny.com.
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
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS
(UNAUDITED)
September 30, 1999
COMMON STOCKS--74.0%
<TABLE>
<CAPTION>
Market
Value
Shares Company (Note 1)
------ ------- --------------
<C> <S> <C>
[_] ELECTRIC--32.4%
221,300 Carolina Power & Light Co. .......................... $ 7,828,487
1,352,700 CMS Energy Corp. .................................... 45,907,256
1,465,000 DQE Incorporated..................................... 57,318,125
1,300,000 Duke Energy Corp. ................................... 71,662,500
2,658,400 Edison International................................. 64,632,350
400,000 Electricidade DePortugal ADR......................... 12,600,000
1,593,400 Endesa S.A. ......................................... 30,473,775
1,005,000 Entergy Corp. ....................................... 29,082,188
2,000,000 FirstEnergy Corp. ................................... 51,000,000
1,200,100 FPL Group Inc. ...................................... 60,455,037
686,500 National Power PLC ADR............................... 21,882,188
2,256,600 NiSource Inc. ....................................... 49,927,275
1,318,600 NSTAR................................................ 51,095,750
1,120,000 Pinnacle West Capital Corp. ......................... 40,740,000
302,000 Powergen PLC ADR..................................... 12,570,750
1,800,000 Reliant Energy Inc. ................................. 48,712,500
350,000 Scottish & Southern Energy (United Kingdom)............ 3,245,224
200,000 Scottish & Southern Energy ADR....................... 18,544,140
500,000 Scottish Power PLC ADR............................... 18,125,000
2,000,000 Unicom Corp. ........................................ 73,875,000
--------------
769,677,545
[_] GAS--13.3%
926,000 AGL Resources........................................ 15,047,500
225,000 CMS Energy Corp. Class G............................. 5,287,500
825,600 Columbia Energy Group................................ 45,717,600
1,494,800 El Paso Energy Corp. ................................ 59,511,725
1,400,000 Enron Corp. ......................................... 57,750,000
400,000 National Fuel Gas Co. ............................... 18,875,000
594,700 NICOR Inc. .......................................... 22,115,406
2,050,000 Utilicorp United Inc. ............................... 43,178,125
1,300,000 Williams Companies Inc. ............................. 48,668,750
--------------
316,151,606
</TABLE>
The accompanying note is an integral part of this financial statement.
4
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS--(Continued)
(UNAUDITED)
September 30, 1999
<TABLE>
<CAPTION>
Market
Value
Shares Company (Note 1)
------ ------- --------------
<C> <S> <C>
[_] TELECOMUNICATION--20.2%
600,000 Alltell Corp. ..................................... $ 42,225,000
1,619,000 Bell Atlantic Corp. ............................... 108,978,938
1,130,000 BellSouth Corp. ................................... 50,850,000
615,000 Cable and Wireless ADS............................. 20,371,875
500,000 Royal PTT Nederland ADR............................ 22,250,000
1,837,230 SBC Communications Inc. ........................... 93,813,557
900,000 Tele-Danmark A/S ADR............................... 26,662,500
556,250 Telecom Corp. of New Zealand Interim ADR........... 17,800,000
568,400 Telestra Corp. ADR................................. 14,991,550
1,025,000 U.S. West Inc. .................................... 58,489,063
1,620,000 Vivendi ADR........................................ 22,756,464
--------------
479,188,947
[_] NON-UTILITY--8.1%
125,000 Alexandria Real Estate Equities Inc. .............. 3,679,687
250,000 Apartment Investment & Management Co. ............. 9,562,500
200,000 Avalon Bay Communities Inc. ....................... 6,775,000
409,000 Boston Properties Inc. ............................ 12,551,187
100,000 Bradley Real Estate Inc. .......................... 1,837,500
328,800 CBL & Associates Properties Inc. .................. 8,035,050
350,000 Centerpoint Properties Corporation................. 11,571,875
120,000 Chelsea GCA Realty Inc. ........................... 3,795,000
225,000 Cornerstone Properties Inc. ....................... 3,431,250
305,000 Crescent Real Estate Equities Inc. ................ 5,490,000
400,000 Developers Diversified Realty Corp. ............... 5,600,000
276,000 Dukes-Weeks Realty Corp. .......................... 5,382,000
300,000 Equity Residential Properties Trust................ 12,712,500
250,000 Essex Property Trust Inc. ......................... 8,734,375
278,100 First Industrial Realty Trust...................... 6,882,975
250,000 General Growth Properties, Inc. ................... 7,875,000
100,000 Golf Trust of America Inc. ........................ 1,975,000
49,000 General Lakes REIT Inc. ........................... 738,063
330,000 Highwoods Properties Inc. ......................... 8,538,750
100,000 HRPT Properties Trust.............................. 1,162,500
200,000 Kimco Realty Corp. ................................ 7,150,000
</TABLE>
The accompanying note is an integral part of this financial statement.
5
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS--(Continued)
(UNAUDITED)
September 30, 1999
<TABLE>
<CAPTION>
Market
Value
Shares Company (Note 1)
------ ------- --------------
<C> <S> <C>
185,000 Macerich Co. ...................................... $ 4,278,125
145,000 Mack-Cali Realty Corp. ............................ 3,887,812
290,000 Nationwide Health Properties....................... 4,821,250
525,100 Reckson Associates Realty Corp. ................... 10,928,644
171,545 Reckson Associates Realty Corp. Class B............ 3,752,547
278,416 Reckson Service Industries Inc. ................... 4,402,453
32,900 Smith Charles E. Residential Realty Inc. .......... 1,124,769
181,100 Spieker Properties Inc. ........................... 6,281,906
200,000 Urban Shopping Centers Inc. ....................... 5,800,000
22,250 Vornado Operating Inc. ............................ 133,500
370,000 Vornado Realty Trust............................... 12,025,000
--------------
190,916,218
--------------
Total Common Stocks (Cost--$1,622,815,142)......... 1,755,934,316
--------------
PREFERRED STOCKS--5.0%
[_] NON-UTILITY--1.2%
500,000 Cox Communications Inc. 7% 8/16/02................. 28,875,000
--------------
28,875,000
[_] UTILITY--3.8%
700,000 Duke Capital Financing Trust III 8 3/8% 8/31/29.... 17,937,500
500,000 NiSource Industries Inc. 7.75% 2/19/03............. 21,437,500
789,100 Texas Utilities Co. ............................... 38,912,494
450,900 Utilicorp United Inc. 9 3/4% 11/16/02.............. 11,385,225
--------------
89,672,719
--------------
Total Preferred Stocks (Cost--$118,385,253)........ 118,547,719
--------------
</TABLE>
The accompanying note is an integral part of this financial statement.
6
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS--(Continued)
(UNAUDITED)
September 30, 1999
BONDS 23.3%
<TABLE>
<CAPTION>
Ratings
--------------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
--------- ------- --------- ------- -------- ----------
<C> <S> <C> <C> <C> <C>
[_] ELECTRIC--12.6%
$ 5,000,000 AES Ironwood Corp.
8.857%, due 11/30/25....... Not Rated Baa3 BBB-- 4,887,475
24,920,000 Alabama Power Co.
9%, due 12/01/24........... AA-- A1 A+ 25,640,362
3,950,000 Comed Financing II
8 1/2%, due 1/15/27........ Not Rated Baa3 BBB-- 4,076,661
14,500,000 Commonwealth Edison Co.
9 3/4%, due 2/15/20........ BBB+ Baa1 BBB+ 15,214,575
7,500,000 Commonwealth Edison Co.
9 7/8%, due 6/15/20........ BBB+ Baa1 BBB+ 8,403,203
8,850,000 Commonwealth Edison Co.
8 5/8%, due 2/01/22........ BBB+ Baa1 BBB+ 9,017,601
5,000,000 Commonwealth Edison Co.
8 3/8%, due 9/15/22........ BBB+ Baa1 BBB+ 4,978,995
10,000,000 Commonwealth Edison Co.
8 3/8%, due 2/15/23........ BBB+ Baa1 BBB+ 9,975,110
24,000,000 Dominion Resources Capital
Trust
7.83%, due 12/01/27........ BBB Baa1 BBB 22,744,680
5,000,000 Gulf States Utilities
8.94%, due 1/01/22......... Not Rated Baa3 BBB-- 5,264,645
5,000,000 Illinois Power Co.
7 1/2, due 7/15/25......... BBB+ Baa1 BBB 4,698,545
5,000,000 Louisianna Power & Light Co.
8 3/4, due 3/01/26......... Not Rated Baa2 BBB 5,031,530
15,000,000 New York State Electric &
Gas Corp.
9 7/8%, due 11/01/20....... Not Rated A3 A 16,071,465
4,000,000 New York State Electric &
Gas Corp.
8 7/8%, due 11/01/21....... Not Rated A3 A 4,114,976
27,580,000 Potomac Electric Power Co.
9%, due 6/01/21............ A+ A1 A 29,224,402
10,000,000 Public Service Co. of
Colorado
8 3/4%, due 3/01/22........ A A3 A 10,233,650
22,750,000 Puget Capital Trust
8.231%, due 6/01/27........ Not Rated Baa2 BBB-- 22,450,587
</TABLE>
The accompanying note is an integral part of this financial statement.
7
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS--(Continued)
(UNAUDITED)
September 30, 1999
<TABLE>
<CAPTION>
Ratings
--------------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
--------- ------- --------- ------- -------- -----------
<C> <S> <C> <C> <C> <C>
3,000,000 Rochester Gas & Electric
Corp.
9 3/8%, due 4/01/21...... A- A3 A- 3,218,808
13,000,000 Southern Co. Capital Trust
8.14%, due 2/15/27....... Not Rated Baa2 BBB- 12,703,028
29,830,000 Texas Utilities Electric
Co.
9 3/4%, due 5/01/21...... A- A3 BBB+ 32,324,265
10,000,000 Texas Utilities Electric
Co.
8 3/4%, due 11/01/23..... A- A3 BBB+ 10,399,760
4,600,000 Union Electric Co.
8 3/4%, due 12/01/21..... Not Rated Aa3 AA- 4,842,107
12,000,000 UtiliCorp United Inc.
8%, due 3/01/23.......... BBB Baa3 BBB 11,502,816
5,000,000 Virginia Electric & Power
Co.
8 5/8%, due 10/01/24..... A A2 A 5,058,505
17,700,000 Virginia Electric & Power
Co.
8 1/4%, due 3/01/25 A A2 A 17,686,176
-----------
299,763,927
[_] GAS--2.4%
2,125,000 ANR Pipeline Co.
9 5/8%, due 11/01/21..... Not Rated Baa1 BBB+ 2,518,973
8,875,000 Enron Corp.
9.65%, due 5/15/01....... BBB+ Baa2 BBB+ 9,241,040
5,000,000 KN Energy Inc.
7 1/4%, due 3/01/28...... Not Rated Baa2 BBB- 4,549,730
10,000,000 Phillips Petroleum Co.
9.18%, due 9/15/21....... Not Rated A3 A- 10,331,930
5,000,000 Southern California Gas
Co.
8 3/4%, due 10/01/21..... AA A1 AA- 5,174,075
6,488,000 Southern Union Co.
7.60%, due 2/01/24....... Not Rated Baa3 BBB+ 6,178,951
10,000,000 TE Products Pipeline Co.
7.51%, due 1/15/28....... Not Rated Baa2 BBB+ 9,284,630
9,000,000 Trans-Canada Pipeline
9 1/8%, due 4/20/06...... Not Rated A3 BBB 9,677,880
-----------
56,957,209
</TABLE>
The accompanying note is an integral part of this financial statement.
8
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS--(Continued)
(UNAUDITED)
September 30, 1999
<TABLE>
<CAPTION>
Ratings
--------------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
--------- ------- --------- ------- -------- -----------
<C> <S> <C> <C> <C> <C>
[_] TELECOMMUNICATION--
7.1%
44,000,000 AT & T Corp.
8.35%, due 1/15/25....... AA-- A1 AA-- 44,497,464
35,428,000 GTE Corp
9 3/8%, due 12/01/00..... A-- Baa1 A 36,640,417
6,000,000 GTE Corp.
10 1/4%, due 11/01/20.... A-- Baa1 A 6,473,250
10,000,000 GTE California Inc.
8.07%, due 4/15/24....... AA A2 AA-- 9,952,590
6,625,000 GTE Corp.
7.90%, due 2/01/27....... A-- Baa1 A 6,606,609
11,995,000 Mountain States Telephone
9 1/2%, due 5/01/00...... Not Rated A2 A+ 12,223,553
13,750,000 New England Telephone &
Telegraph
9%, due 8/01/31.......... AA Aa2 AA 14,221,488
10,000,000 New York Telephone Co.
7 5/8%, due 2/01/23...... A A2 A+ 9,795,660
20,740,000 New York Telephone Co.
9 3/8%, due 7/15/31...... A A2 A+ 22,698,603
5,000,000 US West Communications
8 7/8%, due 6/01/31...... AA-- A2 A+ 5,149,420
-----------
168,259,054
[_] NON-UTILITY--1.2%
8,000,000 Dayton Hudson Corp.
9 7/8%, due 7/01/20...... A-- A3 A-- 10,027,968
19,940,000 EOP Operating LP
7%, due 4/19/29.......... BBB+ Baa1 BBB+ 17,684,407
-----------
27,712,375
-----------
Total Bonds (Cost--$577,554,122)...................... 552,692,565
-----------
</TABLE>
The accompanying note is an integral part of this financial statement.
9
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
STATEMENT OF NET ASSETS--(Continued)
(UNAUDITED)
September 30, 1999
<TABLE>
<CAPTION>
Ratings
-----------------------
Standard Market
Duff & and Value
Par Value Company Phelps Moody's Poor's (Note 1)
--------- ------- ------ ------- -------- --------------
<C> <S> <C> <C> <C> <C>
U.S. TREASURY
OBLIGATIONS--3.0%
66,000,000 U.S. Treasury Bonds
11 3/4%, due 2/15/01........... 71,300,658
--------------
Total U.S. Treasury Obligations
(Cost--$78,725,547)............. 71,300,658
--------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--0.0%
596,042 Federal National Mortgage
Association
8%, due 5/01/05................ 608,689
--------------
Total U.S. Government Agency
Obligations (Cost--$596,042).... 608,689
--------------
CASH AND OTHER ASSETS LESS LIABILITIES--
(5.2%)..................................... (125,179,599)
--------------
NET ASSETS
(equivalent to $9.02 per share of common
stock based on 207,720,704 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).................................... $2,373,904,348
==============
</TABLE>
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.
- --------
(1) The market values for securities are determined as follows: Securities
traded on a national securities exchange or traded over-the-counter and
quoted on the NASDAQ System are valued at last sales prices. Securities so
traded for which there were no sales and other securities are valued at
the mean of the most recent bid-asked quotations. Bonds not traded on a
securities exchange nor quoted on the NASDAQ System are valued at fair
value using a procedure determined in good faith by the Board of Directors
which includes the use of a pricing service. Each money market instrument
having a maturity of 60 days or less is valued on an amortized cost basis.
Other assets and securities are valued at a fair value, as determined in
good faith by the Board of Directors.
10
<PAGE>
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
(312) 368-5510
Shareholder inquiries please contact
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
(800) 432-8224
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
(888) 878-7845
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
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Duff & Phelps
Utilities Income Inc.
[LOGO] 3rd
Third Quarter
Report
September 30,
1999
