<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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(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>
DUFF & PHELPS
UTILITIES INCOME INC.
55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312) 368-5510
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1999
The annual meeting of shareholders of Duff & Phelps Utilities Income Inc.
will be held at The Chicago Club, 81 East Van Buren Street, Chicago, Illinois,
on Wednesday, April 28, 1999 at 9:00 a.m. to:
1. Elect four directors by the holders of the Fund's common stock;
2. Ratify or reject the selection of Arthur Andersen LLP as independent
public accountants for the Fund; and
3. Transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on February 26, 1999 are
entitled to vote at the meeting.
For the Board of Directors,
T. Brooks Beittel
Secretary
March 5, 1999
WE NEED YOUR PROXY VOTE IMMEDIATELY.
YOUR VOTE IS VITAL. THE MEETING OF SHAREHOLDERS WILL HAVE TO BE ADJOURNED
WITHOUT CONDUCTING ANY BUSINESS IF FEWER THAN A MAJORITY OF THE SHARES
ELIGIBLE TO VOTE ARE REPRESENTED. IN THAT EVENT, THE FUND WOULD CONTINUE TO
SOLICIT VOTES IN AN ATTEMPT TO OBTAIN A QUORUM. TO AVOID THE EXPENSE OF AND
THE POSSIBLE DELAY CREATED BY SUCH A SOLICITATION, PLEASE RETURN YOUR PROXY
CARD IMMEDIATELY. YOU AND ALL OTHER SHAREHOLDERS WILL BENEFIT FROM YOUR
COOPERATION.
<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 28, 1999 and at any adjournment of that meeting.
A proxy may be revoked at any time before it is voted, either by voting in
person at the meeting or by written notice to the Fund or delivery of a later-
dated proxy.
Shareholders of the Fund of record at the close of business on February 26,
1999 are entitled to notice of and to participate in the meeting. The Fund had
206,148,685 shares of common stock and 5,000 shares of remarketed preferred
stock outstanding on the record date. Each share of common stock outstanding
on the record date entitles the holder thereof to one vote for each director
being elected by the common stock (with no cumulative voting permitted) and to
one vote on each other matter. Each share of preferred stock outstanding on
the record date entitles the holder thereof to one vote on each matter
submitted for a vote of holders of preferred stock. A plurality of votes cast
at the meeting by the common stock as to the directors representing the common
stock is necessary to elect such directors. On most other matters, the
affirmative vote of a majority of either (a) all of the shares outstanding and
entitled to be voted thereon or (b) just the shares voted at the meeting, with
the common stock and the preferred stock voting together as a single class, is
necessary for approval. An affirmative vote by either a majority or two-thirds
of the remarketed preferred stock (voting separately as one class) or by a
series thereof is also necessary to approve certain matters adversely
affecting the remarketed preferred stock or the series. Abstentions are
counted for purposes of determining whether a quorum is present at the meeting
but not for purposes of determining the number of votes cast with respect to
any voting matter. However, abstentions have the effect of a no vote if the
vote required is a majority of all the shares outstanding and entitled to be
voted. Any broker non-votes on a particular matter are treated as abstentions
with respect to that matter.
This proxy statement is first being mailed on or about March 5, 1999. The
Fund will bear the cost of the annual meeting and this proxy solicitation.
1. ELECTION OF DIRECTORS
The board of directors of the Fund is responsible for the overall management
and operations of the Fund. Directors are divided into three classes and
elected to serve staggered three-year terms. At the meeting, holders of common
stock are entitled to elect three directors to serve until the annual meeting
of shareholders in 2002, or until their successors are elected and qualified,
and one director to serve until the annual meeting of shareholders in 2000 (to
complete the unexpired term of the late Robert J. Day), or until his successor
is elected and qualified. The persons named in the enclosed proxy intend to
vote in favor of the election of the persons named below (unless otherwise
instructed).
Each of the nominees has consented to serve as a director of the Fund, if
elected. In case any of the nominees should become unavailable for election
for any unforeseen reason, the persons designated in the proxy will have the
right to vote for a substitute. The name, positions with the Fund, principal
occupations during the past five years, other business affiliations, age at
February 1, 1999 and address of each of the nominees and of each of the other
current directors are stated below. Messrs. Cole, Davidson and Bruce have been
directors of the Fund since January 1989. Ms. Lampton and Messrs. Sprinkel and
Pedersen have been directors of the Fund since October 1994, April 1995 and
November 1998, respectively. Each of the other current directors has been a
director of the Fund since the Fund commenced operations in January 1987.
1
<PAGE>
Nominees
With Terms Expiring in 2002:
Wallace B. Behnke, director (3)
Consulting engineer since July 1989; prior thereto, Vice Chairman,
Commonwealth Edison Company (public utility); age 72; 323 Glen
Eagle, Kiawah Island, South Carolina 29455.
Gordon B. Davidson, director (4)
Of Counsel, Wyatt, Tarrant & Combs (law firm) since September 1995
(Chairman of the Executive Committee prior thereto); retired
director, BellSouth Corp.; former Chairman of the Board and
director, Trans Financial Advisers, Inc.; age 72; Citizens Plaza,
Louisville, Kentucky 40202.
Claire V. Hansen, director and Chairman (1)(2)(4)
Senior Advisor to the Board of Directors, Phoenix Investment
Partners, Ltd. since November 1995; Senior Advisor to the Board of
Directors, Duff & Phelps Corporation, 1988-November 1995 (Chairman
of the Board, 1987-1988; Chairman of the Board and Chief Executive
Officer prior thereto); Chairman of the Board, Duff Research Inc.
and Duff & Phelps Investment Management Co., 1985-1987; age 73; 55
East Monroe Street, Chicago, Illinois 60603.
With Term Expiring in 2000:
Calvin J. Pedersen, director, President and Chief Executive Officer (1)
President and Chief Executive Officer of the Fund since March 1994;
President, Phoenix Investment Partners, Ltd. since November 1995;
President, Duff & Phelps Corporation, 1993-November 1995 (Senior
Vice President, 1986-1988 and Executive Vice President, 1989-1993);
Executive Vice President and Director, Duff & Phelps Investment
Management Co. since 1989 (Senior Vice President, 1986-1988);
President and Chief Executive Officer, Duff & Phelps Utilities Tax-
Free Income Inc. and Duff & Phelps Utility and Corporate Bond Trust
Inc.; director/trustee, Phoenix group of funds; age 57; 55 East
Monroe Street, Chicago, Illinois 60603.
Continuing Directors
With Terms Expiring in 2000:
Harry J. Bruce, director (3)
Private investor; former Chairman and Chief Executive Officer,
Illinois Central Railroad Co.; age 67; 1630 Sheridan Road, Wilmette,
Illinois 60091.
Nancy Lampton, director (5)(6)
Chairman and Chief Executive Officer, American Life and Accident
Insurance Company of Kentucky; director, Baltimore Gas and Electric
Company; age 56; 3 Riverfront Plaza, Louisville, Kentucky 40202.
2
<PAGE>
With Terms Expiring in 2001:
Franklin A. Cole, director (2)(5)
Chairman, Croesus Corporation (private management and investment
company); former Chairman and Chief Executive Officer, Amerifin
Corporation (formerly named Walter E. Heller International
Corporation); director, Aon Corporation and CNA Income Shares; age
72; 54 West Hubbard Street, Chicago, Illinois 60610.
Francis E. Jeffries, director (1)(2)(4)
Retired Chairman, Phoenix Investment Partners, Ltd. since December
1996 (Chairman, November 1995-December 1996); Chairman and Chief
Executive Officer, Duff & Phelps Corporation, June 1993-November
1995 (President and Chief Executive Officer, January 1992-June
1993); President and Chief Executive Officer, Duff & Phelps Illinois
Inc. since 1987 (President and Chief Operating Officer, 1984-1987)
and Chairman of the Board, Duff & Phelps Investment Management Co.
(1988-1993); director, The Empire District Electric Company, Duff &
Phelps Utilities Tax-Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust Inc.; director/trustee, Phoenix Funds; age 68;
6585 Nicholas Boulevard, Naples, Florida 34108.
Beryl W. Sprinkel, director (3)(5)(6)
Consulting economist since January 1989; Chairman of the Council of
Economic Advisers under President Reagan (1985-1989); member of
President Reagan's cabinet (1987-1989); Under Secretary of the
Treasury for Monetary Affairs (1981-1985); age 75; 20140 St. Andrews
Drive, Olympia Fields, Illinois 60461.
- - --------
(1) "Interested person" of the Fund (as defined in the Investment Company Act
of 1940 (the "1940 Act")) as an officer of the Fund or as a current or
former officer or director of the Fund's investment adviser.
(2) Member of the executive committee of the board of directors, which has
authority, with certain exceptions, to exercise the powers of the board
between board meetings.
(3) Member of the audit committee of the board of directors, which makes
recommendations regarding the selection of the Fund's independent public
accountants and meets with representatives of the accountants to determine
the scope of and review the results of each audit.
(4) Member of the nominating committee of the board of directors, which
selects nominees for election as directors and officers. The nominating
committee does not consider nominees recommended by shareholders.
(5) Member of the contracts committee of the board of directors, which makes
recommendations regarding the Fund's contractual arrangements for
investment management and administrative services, including the terms and
conditions of such contracts.
(6) Elected by the holders of the Fund's preferred stock.
----------------
During 1998, the board of directors held six meetings, the audit committee
met twice, the nominating committee met four times and the contracts committee
met once. With the exception of Mr. Sprinkel, who was out of the country on a
single day on which both the board and the two committees on which he served
met, each director attended at least 75% in the aggregate of the meetings of
the board and of the committees on which he or she served.
3
<PAGE>
The following table shows the compensation paid by the Fund to the Fund's
current directors during 1998:
COMPENSATION TABLE(1)(2)
<TABLE>
<CAPTION>
Aggregate
Compensation
from the
Name of Director Fund
---------------- ------------
<S> <C>
Wallace B. Behnke............................................ $25,500
Harry J. Bruce............................................... 24,500
Franklin A. Cole............................................. 28,500
Gordon B. Davidson........................................... 28,774
Claire V. Hansen............................................. 0
Francis E. Jeffries(2)....................................... 28,500
Nancy Lampton................................................ 24,500
Calvin J. Pedersen........................................... 0
Beryl W. Sprinkel............................................ 23,500
</TABLE>
- - --------
(1) During 1998, each director not affiliated with the Adviser received an
annual fee of $17,500 (and an additional $3,000 if the director served as
chairman of a committee of the board of directors) plus an attendance fee
of $1,000 for each meeting of the board of directors or of a committee of
the board of directors attended in person or by telephone. Directors and
officers affiliated with the Adviser receive no compensation from the Fund
for their services as such. In addition to the amounts shown in the table
above, all directors and officers who are not interested persons of the
Fund, the Adviser or the Administrator are reimbursed for the expenses
incurred by them in connection with their attendance at a meeting of the
board of directors or a committee of the board of directors. The Fund does
not have a pension or retirement plan applicable to directors or officers
of the Fund.
(2) During 1998, Mr. Jeffries received aggregate compensation of $75,000 for
service as a director of the Fund and as a director of two other investment
companies in the same fund complex as the Fund. No other director received
compensation for service as a director of any other investment company in
the same fund complex as the Fund.
2. SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected Arthur Andersen LLP as independent public
accountants for the Fund until the annual meeting of shareholders held in 2000.
Arthur Andersen LLP has served as independent public accountants for the Fund
since the Fund commenced operations. The selection is being submitted for
ratification or rejection by the shareholders as required by the 1940 Act. A
representative of Arthur Andersen LLP is expected to be present at the meeting
of shareholders and will be available to respond to appropriate questions and
have an opportunity to make a statement if the representative so desires.
Ratification or rejection of the selection of independent public accountants
will be determined by a majority of the votes cast.
The board of directors unanimously recommends a vote "FOR" ratification of
the selection of Arthur Andersen LLP.
4
<PAGE>
OTHER BUSINESS
Management is not aware of any other matters that will come before the
meeting. If any other business should come before the meeting, however, your
proxy, if signed and returned, will give discretionary authority to the
persons designated in it to vote according to their best judgment.
OTHER INFORMATION
The Adviser and Phoenix Investment Partners. Duff & Phelps Investment
Management Co. serves as the Fund's investment adviser (the "Adviser") under
an investment advisory agreement (the "Advisory Agreement") dated May 1, 1998.
The Adviser is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd.
("Phoenix Investment Partners"), which is an indirect, majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company. Prior to May 11,
1998, Phoenix Investment Partners was known as Phoenix Duff & Phelps
Corporation. The address of the Adviser is 55 East Monroe Street, Chicago,
Illinois 60603.
The Adviser (together with its predecessor) has been in the investment
advisory business for more than 60 years and, excluding the Fund, currently
has more than $12.2 billion in client accounts under discretionary management.
The Adviser also provides non-discretionary investment advisory and portfolio
consulting services to corporate and public retirement funds and endowment
funds aggregating more than $7.2 billion.
Under the terms of the Advisory Agreement, the Adviser furnishes continuing
investment supervision to the Fund and is responsible for the management of
the Fund's portfolio, subject to the overall control of the board of directors
of the Fund. Currently, the Adviser has nine professionals (i.e., research
analysts and portfolio managers), along with support staff, assigned to the
operation of the Fund. Seven of the nine professionals have the CFA (Chartered
Financial Analyst) designation and one is a CPA (Certified Public Accountant).
The Adviser furnishes, at its own expense, office space, equipment and
personnel to the Fund in connection with the performance of its investment
management responsibilities, and pays all other expenses incurred by it in
connection with managing the assets of the Fund not payable by the Fund's
administrator pursuant to the administration agreement. The Advisory Agreement
also includes the conditions under which the Fund may use "Duff & Phelps" in
its name. For its services the Adviser receives from the Fund a quarterly
management fee, payable out of the Fund's assets, at an annual rate of 0.60 of
1% of the average weekly net assets of the Fund up to $1.5 billion and 0.50 of
1% of average weekly net assets in excess of $1.5 billion. For purposes of
calculating the management fee, the Fund's net assets are defined as the sum
of (i) the aggregate net asset value of the Fund's common stock, (ii) the
aggregate liquidation preference of the Fund's preferred stock and (iii) the
aggregate proceeds of commercial paper issued by the Fund. The management fee
paid by the Fund to the Adviser for 1998 was $14,713,237.
Except for the expenses borne by the Adviser and the Administrator (as
described below) pursuant to their respective agreements with the Fund, the
Fund pays all expenses incurred in its operations, including, among other
things, expenses for legal, accounting and auditing services, taxes, interest,
costs of printing and distributing shareholder reports, proxy materials,
prospectuses and stock certificates, charges of custodians, registrars,
transfer agents, dividend disbursing agents, dividend reinvestment plan agents
and remarketing agents, Securities and Exchange Commission fees, fees and
expenses of non-interested directors, insurance, brokerage costs, litigation
and other extraordinary or non-recurring expenses.
5
<PAGE>
The Fund is also a party to a service agreement dated May 1, 1998 (the
"Service Agreement") with the Adviser and Phoenix Investment Partners. Under
the terms of the Service Agreement, Phoenix Investment Partners makes
available to the Adviser the services of its employees and various facilities
to enable the Adviser to perform certain of its obligations to the Fund.
However, the obligation of performance under the Advisory Agreement is solely
that of the Adviser, for which Phoenix Investment Partners assumes no
responsibility, except as described in the preceding sentence. The Adviser
reimburses Phoenix Investment Partners for any costs, direct or indirect, that
are fairly attributable to the services performed and the facilities provided
by Phoenix Investment Partners under the Service Agreement. The Fund does not
pay any fees pursuant to the Service Agreement.
The Advisory Agreement and the Service Agreement both provide that the
Adviser shall not be liable to the Fund or its shareholders for any loss
suffered as a consequence of any act or omission of the Adviser or Phoenix
Investment Partners, as the case may be, in connection with the respective
agreements except by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations under the Advisory Agreement.
Unless earlier terminated as described below, the Advisory Agreement and the
Service Agreement both continue until May 1, 2000, and thereafter from year to
year, if approved annually (i) by a majority of the directors of the Fund who
are not interested persons of the Fund or the Adviser, in the case of the
Advisory Agreement, or Phoenix Investment Partners, in the case of the Service
Agreement, and (ii) by either the board of directors of the Fund or the
holders of a majority of the outstanding shares of the Fund as defined in the
1940 Act. A majority of the outstanding shares of the Fund as defined in the
1940 Act means the following vote of the common stock and the preferred stock
voting together as a single class: (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented; or
(ii) more than 50% of the outstanding shares. The Advisory Agreement may be
terminated without penalty on 60 days' written notice by any party thereto or
by a vote of the shareholders of the Fund and would terminate automatically if
it were assigned by any party. If the Advisory Agreement were terminated,
shareholder approval would be required to enter into a new agreement. The
Fund's shareholders approved the Advisory Agreement at the annual meeting held
on April 29, 1998. The Service Agreement may be terminated without penalty on
60 days' written notice by any party thereto and would terminate automatically
if it were assigned by any party unless a majority of the Fund's board of
directors, including a majority of the directors who are not interested
persons of the Fund or Phoenix Investment Partners, approves continuation of
the Service Agreement. At a meeting held on October 17, 1997, the board of
directors of the Fund, including all of the directors who were not interested
persons of the Fund or Phoenix Investment Partners in attendance at the
meeting voting separately as a class, voted to approve the Service Agreement,
contingent on approval of the Advisory Agreement by the shareholders of the
Fund (which approval was granted at the annual meeting held on April 29,
1998).
The Administrator. J.J.B. Hilliard, W.L. Lyons, Inc. serves as the Fund's
administrator (the "Administrator") under an administration agreement (the
"Administration Agreement") dated May 1, 1998. The Administrator (together
with its predecessors) has been engaged in the investment business as a
securities broker-dealer and investment adviser since 1854. It also serves as
administrator and investment adviser to Hilliard-Lyons Government Fund, Inc.,
a money market mutual fund, and Hilliard Lyons Growth Fund, Inc., an open-end
mutual fund, and is a wholly-owned subsidiary of PNC Bank Corp. Its principal
address is Hilliard Lyons Center, Louisville, Kentucky 40202.
6
<PAGE>
Under the terms of the Administration Agreement, the Administrator provides
all management and administrative services required in connection with the
operation of the Fund not required to be provided by the Adviser pursuant to
the Advisory Agreement, as well as the necessary office facilities, equipment
and personnel to perform such services. For its services during 1998, the
Administrator received from the Fund a quarterly fee at annual rates of 0.25
of 1% of the Fund's average weekly net assets up to $100 million, 0.20 of 1%
of the Fund's average weekly net assets from $100 million to $1.0 billion,
0.10 of 1% of average weekly net assets in excess of $1.0 billion. For
purposes of calculating the administrative fee, the Fund's net assets are
defined as the sum of (i) the aggregate net asset value of the Fund's common
stock, (ii) the aggregate liquidation preference of the Fund's preferred stock
and (iii) the aggregate proceeds of commercial paper issued by the Fund. The
total administrative fee paid by the Fund to the Administrator for 1998 was
$3,692,647.
The Administration Agreement provides that the Administrator shall not be
liable to the Fund or its shareholders for any loss suffered as a consequence
of any act or omission of the Administrator in connection with the agreement
except by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations under the agreement.
Unless earlier terminated as described below, the Administration Agreement
continues until May 1, 2000, and thereafter from year to year, if approved
annually (i) by a majority of the directors of the Fund who are not interested
persons of the Fund or the Administrator and (ii) by either the board of
directors of the Fund or the holders of a majority of the outstanding shares
of the Fund as defined in the 1940 Act. The Administration Agreement may be
terminated without penalty on 60 days' written notice by any party thereto or
by a vote of the shareholders of the Fund. At a meeting held on October 17,
1997, the board of directors of the Fund, including all of the directors who
were not interested persons of the Fund or the Administrator in attendance at
the meeting voting separately as a class, voted to approve the Administration
Agreement, contingent on approval of the Advisory Agreement by the
shareholders of the Fund (which approval was granted at the annual meeting
held on April 29, 1998).
Officers of the Fund. As noted above under "Election of Directors," Mr.
Hansen is Chairman and Mr. Pedersen is President and Chief Executive Officer
of the Fund. The name, positions with the Fund, principal occupation during
the past five years, age at February 1, 1999 and address of each other
executive officer of the Fund is set forth below. The officers are elected at
the annual meeting of the board of directors.
T. Brooks Beittel, Secretary, Treasurer and Senior Vice President, since
January 1995
Senior Vice President, Duff & Phelps Investment Management Co. since
1993 (Vice President 1987-1993); age 48; 55 East Monroe Street,
Chicago, Illinois 60603.
Nathan I. Partain, Executive Vice President, Chief Investment Officer and
Assistant Secretary, since April 1998 (Senior Vice President, Chief
Investment Officer and Assistant Secretary, January-April 1998; Senior Vice
President and Assistant Secretary, January 1997-January 1998)
Executive Vice President, Duff & Phelps Investment Management Co. since
January 1997; Director of Utility Research, Phoenix Investment
Partners, Ltd., 1989-1996 (Director of Equity Research, 1993-1996 and
Director of Fixed Income Research, 1993); director, Otter Tail Power
Company; age 42, 55 East Monroe Street, Chicago, Illinois 60603.
7
<PAGE>
Michael Schatt, Senior Vice President, since April 1998 (Vice President,
January 1997-April 1998)
Senior Vice President, Duff & Phelps Investment Management Co. since
January 1997; Managing Director, Phoenix Investment Partners, Ltd.,
1994-1996; Self-employed consultant, 1994; Director of Real Estate
Advisory Practice, Coopers & Lybrand, 1990-1994; age 51; 55 East Monroe
Street, Chicago, Illinois 60603.
Joseph C. Curry, Jr., Vice President, since April 1988
Senior Vice President, J.J.B. Hilliard, W.L. Lyons, Inc. since 1994
(Vice President 1982-1994); Vice President Hilliard Lyons Trust
Company; President, Hilliard-Lyons Government Fund, Inc.; Treasurer and
Secretary, Hilliard Lyons Growth Fund, Inc.; age 54; Hilliard Lyons
Center, Louisville, Kentucky 40202.
Dianna P. Wengler, Assistant Secretary, since April 1988
Vice President, J.J.B. Hilliard, W.L. Lyons, Inc. since 1990; Vice
President, Hilliard-Lyons Government Fund, Inc.; Assistant Secretary,
Hilliard Lyons Growth Fund, Inc.; age 38; Hilliard Lyons Center,
Louisville, Kentucky 40202.
Portfolio Transactions. The Adviser has discretion to select brokers and
dealers to execute portfolio transactions initiated by the Adviser and to
select the markets in which such transactions are to be executed. In executing
portfolio transactions and selecting brokers or dealers, the primary
responsibility of the Adviser is to seek the best combination of net price and
execution for the Fund. The Fund ordinarily purchases securities in the
primary markets, and in assessing the best net price and execution available
to the Fund, the Adviser considers all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any (for the specific transaction and on
a continuing basis).
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the Adviser is
authorized to consider "brokerage and research services" (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934 (the "1934
Act")), statistical quotations, specifically the quotations necessary to
determine the Fund's net asset value, and other information provided to the
Fund and/or the Adviser (or their affiliates). The Adviser is also authorized
to cause the Fund to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction. The Adviser must determine in good
faith, however, that such commission was reasonable in relation to the value
of the brokerage and research services provided, viewed in terms of that
particular transaction or in terms of all the accounts over which the Adviser
exercises investment discretion. The Adviser does not engage brokers whose
commissions it believes to be unreasonable in relation to services provided.
It is possible that certain of the services received by the Adviser
attributable to a particular transaction will benefit one or more other
accounts for which investment discretion is exercised by the Adviser.
The Advisory Agreement requires the Adviser to provide fair and equitable
treatment to the Fund in the selection of portfolio investments and the
allocation of investment opportunities between the Fund and the Adviser's
other investment management clients, but does not obligate the Adviser to give
the Fund exclusive or
8
<PAGE>
preferential treatment. It is likely that from time to time the Adviser may
make similar investment decisions for the Fund and its other clients. In some
cases, the simultaneous purchase or sale of the same security by the Fund and
another client of the Adviser could have a detrimental effect on the price or
volume of the security to be purchased or sold, as far as the Fund is
concerned. In other cases, coordination with transactions for other clients
and the ability to participate in volume transactions could benefit the Fund.
Although the Fund purchases securities for investment income or capital
appreciation, or both, and not for short-term trading profits, it may dispose
of securities without regard to the time they have been held when such action
appears advisable to the Adviser.
During 1998, the Fund paid brokerage commissions aggregating $9,040,180 in
connection with its portfolio transactions, not including the gross
underwriting spread on securities purchased in underwritten public offerings
or the spread in over-the-counter transactions with firms acting as principal.
The Administrator received $5,750 or approximately 0.06% of total brokerage
commissions in 1998 for effecting transactions involving 0.04% of the
aggregate dollar amount of transactions in which the Fund paid brokerage
commissions.
Shareholders. The following table shows shares of common stock of the Fund
as to which each director, and all directors and officers of the Fund as a
group, had or shared power over voting or disposition at December 31, 1998.
The directors and officers of the Fund owned no shares of the Fund's
remarketed preferred stock. Shares are held with sole power over voting and
disposition except as noted. The shares of common stock held by each of the
persons listed below and by all directors and officers as a group represented
less than 1% of the outstanding common stock.
<TABLE>
<CAPTION>
Shares
of
common
stock
-------
<S> <C>
Wallace B. Behnke (1)............................................. 2,513
Harry J. Bruce.................................................... 21,095
Franklin A. Cole (1)(2)........................................... 3,264
Gordon B. Davidson (2)............................................ 22,000
Claire V. Hansen (2).............................................. 28,810
Francis E. Jeffries (2)........................................... 82,131
Nancy Lampton (1)(2).............................................. 51,041
Calvin J. Pedersen................................................ 10,515
Beryl W. Sprinkel................................................. 300
Directors and officers as a group (14 persons)(1)(2).............. 232,101
</TABLE>
- - --------
(1) Messrs. Behnke, Cole and Pedersen and Ms. Lampton had shared power to vote
and/or dispose of 2,513, 3,264, 3,503 and 47,500, respectively, of the
shares listed. The directors and officers had shared power to vote and/or
dispose of 61,022, in the aggregate, of the shares listed as owned by the
directors and officers as a group.
(2) Messrs. Davidson, Hansen and Jeffries and Ms. Lampton disclaim beneficial
ownership of 7,000, 10,020, 6,725 and 47,500, respectively, of the shares
listed. The directors and officers disclaim beneficial ownership of
75,487, in the aggregate, of the shares listed as owned by the directors
and officers as a group.
At February 26, 1999, no person was known by the Fund to own beneficially 5%
or more of the outstanding shares of the Fund (as determined in accordance
with Rule 13d-3 under the 1934 Act).
9
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the
1934 Act requires the Fund's officers and directors, and persons who own more
than 10% of a registered class of the Fund's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and greater
than 10% shareholders are required by Securities and Exchange Commission
regulations to furnish the Fund with copies of all Section 16(a) forms they
file. In February 1999, Mr. Curry filed a Form 5 to report two sales during
1998 of shares of common stock of the Fund, each of which sales should have
been previously reported on a Form 4. Other than the foregoing, and based
solely on a review of the copies of Section 16(a) forms furnished to the Fund,
or written representations that no Forms 5 were required, the Fund believes
that during 1998 all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with.
Solicitation of Proxies. Proxies will be solicited by mail. Proxies may be
solicited by Fund personnel personally or by telephone, telegraph or mail, but
such persons will not be specially compensated for such services. The Fund will
inquire of any record holder known to be a broker, dealer, bank or other
nominee as to whether other persons are the beneficial owners of shares held of
record by such persons. If so, the Fund will supply additional copies of
solicitation materials for forwarding to beneficial owners, and will make
reimbursement for reasonable out-of-pocket costs. In addition, the Fund may
hire a proxy solicitor to assist the Fund in the solicitation of proxies at a
fee of approximately $15,000, plus out-of-pocket expenses.
Shareholder Proposals. Any shareholder proposal to be considered for
inclusion in the Fund's proxy statement and form of proxy for the 2000 annual
meeting of shareholders should be received by the Secretary of the Fund no
later than November 6, 1999. Under the circumstances described in, and upon
compliance with, Rule 14a-4(c) under the 1934 Act, the Fund may solicit proxies
in connection with the 2000 annual meeting which confer discretionary authority
to vote on any shareholder proposals of which the Secretary of the Fund does
not receive notice by January 20, 2000.
Annual and Semi-annual Reports. The Fund will provide without charge to any
shareholder who so requests, a copy of the Fund's annual report for the year
ended December 31, 1998 and the Fund's semi-annual report for the six months
ended June 30, 1998. Requests for copies of such reports should be directed to
the Administrator at (800) 680-4367 (toll-free).
General. A list of shareholders entitled to be present and vote at the annual
meeting will be available at the offices of the Fund, 55 East Monroe Street,
Chicago, Illinois 60603, for inspection by any shareholder during regular
business hours for ten days prior to the date of the meeting.
Failure of a quorum to be present at the annual meeting will necessitate
adjournment and will give rise to additional expense.
All shareholders are requested to sign, date and mail proxies promptly in the
return envelope provided.
March 5, 1999
10
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
PROXY SOLICITED BY MANAGEMENT FROM COMMON SHAREHOLDERS
FOR MEETING TO BE HELD ON APRIL 28, 1999
Harry J. Bruce, Franklin A. Cole and Nancy Lampton or any of them, each
with full power of substitution, are authorized to vote all shares of common
stock of Duff & Phelps Utilities Income Inc. owned by the undersigned at the
meeting of shareholders to be held April 28, 1999, and at any adjournment of the
meeting. They shall vote in accordance with the instructions set forth on the
reverse side hereof.
If no specific instructions are provided, this proxy will be voted "FOR"
proposals 1 and 2 and in the discretion of the proxies upon such other business
as may properly come before the meeting.
(Continued and to be signed on other side.)
DUFF & PHELPS UTILITIES INCOME INC.
P.O. BOX 11435
NEW YORK, NY 10203-0435
<PAGE>
Your Board of Directors unanimously recommends a vote "FOR" each of the
following proposals.
1. Election of Directors:
FOR all nominees____ WITHHOLD AUTHORITY to vote____ *EXCEPTIONS____
listed below for all nominees listed below.
Nominees: Wallace B. Behnke, Gordon B. Davidson, Claire V. Hansen and Calvin J.
Pedersen
(INSTRUCTIONS: To withhold authority to vote for individual nominees, mark the
"Exceptions" box and write the name of those nominees in the space provided
below.)
*Exceptions ____________________________________________________________________
2. Ratification of the selection of Arthur Andersen LLP as independent public
accountants of the Fund.
FOR____ AGAINST ____ ABSTAIN____
Change of Address or
Comments Mark Here ____
IMPORTANT: Please sign exactly as your name
or names appear on the shareholder records
of the Fund. If you sign as agent or in any
other representative capacity, please state
the capacity in which you sign. Where there
is more than one owner, each should sign.
Dated: _______________________________, 1999
_______________________________________
_______________________________________
(Signature(s) of Shareholder(s))
Votes must be indicated (x) in Black or Blue
ink.
Please Vote, Date, and Sign and Return Promptly in the Enclosed Envelope
<PAGE>
DUFF & PHELPS UTILITIES INCOME INC.
PROXY SOLICITED BY MANAGEMENT FROM PREFERRED SHAREHOLDERS
FOR MEETING TO BE HELD ON APRIL 28, 1999
Harry J. Bruce, Franklin A. Cole and Nancy Lampton or any of them, each with
full power of substitution, are authorized to vote all shares of preferred
stock of Duff & Phelps Utilities Income Inc. owned by the undersigned at the
meeting of shareholders to be held April 28, 1999, and at any adjournment of
the meeting. They shall vote in accordance with the instructions set forth
below.
Your Board of Directors unanimously recommends a vote "FOR" the following
proposal.
1. Ratification of the selection of Arthur Andersen LLP as independent public
accountants of the Fund.
FOR WITHHOLD ABSTAIN
If no specific instructions are provided, this proxy will be voted "FOR"
proposal 1 and in the discretion of the proxies upon such other business as may
properly come before the meeting.
(Continued and to be signed on other side.)
Dated , 1999 (please fill in, sign and date this proxy and mail it in the
envelope provided.)
-----------------------------------
-----------------------------------
(Signature(s) of Shareholder(s))
IMPORTANT: Please sign exactly as
your name or names appear on the
shareholder records of the Fund.
If you sign as agent or in any
other representative capacity,
please state the capacity in which
you sign. Where there is more than
one owner, each should sign.
